UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2006
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or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number
001-32373
LAS VEGAS SANDS CORP.
(Exact name of registrant as
specified in its charter)
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Nevada
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27-0099920
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(State or other jurisdiction
of
incorporation or organization)
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(IRS Employer
Identification No.)
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3355 Las Vegas Boulevard
South
Las Vegas, Nevada
(Address of principal
executive offices)
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89109
(Zip Code)
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Registrants telephone number, including Area Code:
(702) 414-1000
Securities registered pursuant to Section 12(b) of the
Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock ($0.001 par
value)
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities
Act. Yes
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No
o
Indicate by check mark if the
registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the
Act. Yes
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No
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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 (or for such shorter
period that the registrant was required to file such reports);
and (2) has been subject to such filing requirements for
the past
90 days. Yes
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No
o
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K
(§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrants
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. No
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Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in
Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated
filer
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Accelerated
filer
o
Non-accelerated
filer
o
Indicate by check mark whether the
registrant is a shell company (as defined in
Rule 12b-2
of the
Act). Yes
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No
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As of June 30, 2006, the
aggregate market value of the registrants common stock
held by non-affiliates of the registrant was $8,218,219,702
based on the closing sale price on that date as reported on the
New York Stock Exchange.
The Company had
354,682,930 shares of common stock outstanding as of
February 23, 2007.
DOCUMENTS
INCORPORATED BY REFERENCE
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Description of document
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Part of the
Form 10-K
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Portions of the definitive Proxy
Statement to be used in connection with the registrants
2007 Annual Meeting of Stockholders
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Part III (Item 10
through Item 14)
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Las Vegas
Sands Corp.
Table of
Contents
ii
PART I
ITEM 1.
BUSINESS
Overview
Las Vegas Sands Corp. and its subsidiaries (we or
the Company) own and operate The Venetian Resort
Hotel Casino (also referred to as The Venetian) and
The Sands Expo and Convention Center (also referred to as
The Sands Expo Center) in Las Vegas, Nevada, and The
Sands Macao Casino (also referred to as The Sands
Macao) in Macao, China. We are also in the process of
developing additional integrated resorts and properties in Las
Vegas and Macao, including The Palazzo Resort Hotel Casino (also
referred to as The Palazzo), which will be adjacent
to and connected with The Venetian, The Venetian Macao Resort
Hotel Casino (also referred to as The Venetian
Macao) and other casino resort properties on the Cotai
Strip
TM
in Macao. We recently were awarded licenses to develop Marina
Bay Sands, an integrated resort in Singapore, and Sands
Bethworks in Bethlehem, Pennsylvania. We also are exploring
other integrated resort opportunities in Asia, Europe and the
United States.
Our
Company
Las Vegas Sands Corp. was incorporated as a Nevada corporation
in August 2004. Our common stock is traded on the New York Stock
Exchange (the NYSE) under the symbol
LVS. Immediately prior to our initial public
offering in December 2004, we acquired 100% of the capital stock
of Las Vegas Sands, Inc., a Nevada corporation and the direct or
indirect owner and operator of The Venetian, The Sands Expo
Center and The Sands Macao, by merging Las Vegas Sands, Inc.
with and into our wholly-owned subsidiary, with Las Vegas Sands,
Inc. as the surviving subsidiary. Las Vegas Sands, Inc. was
incorporated in Nevada in April 1988. In July 2005, Las Vegas
Sands, Inc. was converted into a limited liability company and
changed its name to Las Vegas Sands, LLC.
Our principal executive office is located at 3355 Las Vegas
Boulevard South, Las Vegas, Nevada 89109. Our telephone number
at that address is
(702) 414-1000.
Our website address is
www.lasvegassands.com.
The
information on our website is not part of this Annual Report on
Form 10-K.
Our Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
proxy statements and other Securities and Exchange Commission
(SEC) filings, and any amendments to those reports
that we file with or furnish to the SEC under the Securities
Exchange Act of 1934 are made available free of charge on our
website as soon as reasonably practicable after they are
electronically filed with, or furnished to, the SEC.
This Annual Report on
Form 10-K
contains certain forward-looking statements. See
Item 7 Managements Discussion and
Analysis of Financial Condition and Results of
Operations Special Note Regarding
Forward-Looking Statements.
We review the results of operations based on the following
geographic segments: (1) Las Vegas, which includes The
Venetian, The Sands Expo Center and The Palazzo (currently under
construction) and (2) Macao, which includes The Sands
Macao, The Venetian Macao (currently under construction) and
other development projects. In addition, Singapore, which
includes the Marina Bay Sands (currently in development), will
be reported as a separate segment. See
Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 15 Segment
Information.
Operations
The
Venetian
The Venetian opened in May 1999. The Venetian currently has
4,027 single and multiple bedroom suites situated in a 3,014
suite 35-story,
three-winged tower rising above the casino and the 1,013 suite,
12-story Venezia tower situated above a parking garage. During
2006, the average daily room rate at The Venetian was $239 and
the average daily occupancy was 98.7%.
The casino at The Venetian has approximately 120,000 gross
square feet of gaming space and is situated adjacent to the
hotel lobby. The Venetian casino floor is accessible from each
of the hotel, The Grand Canal Shops mall, The Congress Center,
The Sands Expo Center and the Las Vegas Strip. The Venetian
casino and its adjacent
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amenities are stylized with architectural and interior design
features reminiscent of Venices Renaissance era. The
gaming facilities include approximately 1,700 slot machines of
various denominations, including popular multi-property, linked
progressive games and a sportsbook room. The Venetian
casinos 135 table games feature the traditional games of
blackjack, craps, baccarat and roulette, Asian games such as Pai
Gow and Pai Gow Poker, and popular progressive table games such
as Caribbean Stud and Let It Ride. Our new poker room opened in
April 2006 with 39 poker tables, as well as convenient food
service for players. For its premium customers, The Venetian
recently expanded its gaming salon, which includes baccarat,
blackjack and roulette. This facility provides Asian influenced
private dining rooms, direct access to private cash-out windows
at the casino cage and direct access to the casinos credit
department.
The Venetian also contains numerous restaurants and two food
courts (the majority of which were sold to General Growth
Partners (GGP) as part of The Grand Canal Shops mall
sale in 2004), and a theater/entertainment complex. In October
2005, the Blue Man Group performance art production opened in a
new theater at The Venetian. The Broadway musical
Phantom-The Las Vegas Spectacular opened in a new
state-of-the-art
theater in June 2006. In October 2006, we opened an additional
show, Gordie Brown at The Venetian. In addition, The
Venetian also provides a variety of amenities for its guests,
including the Canyon Ranch Spa, which is operated by Canyon
Ranch.
The Venetian has an exhibition space that houses the Guggenheim
Hermitage Museum, an art museum featuring masterpiece
collections from the Guggenheim Museum in New York, the State
Hermitage Museum in St. Petersburg, Russia and other museums.
The
Sands Expo Center and The Congress Center
With approximately 1.2 million gross square feet of exhibit
and meeting space, including four exhibit halls and
approximately 20 meeting rooms, The Sands Expo Center is one of
the largest overall trade show and convention facilities in the
United States (as measured by net leasable square footage). We
also own and operate The Congress Center, an approximately
1.1 million gross square foot meeting and conference
facility that links The Sands Expo Center and the rest of The
Venetian. The Congress Center includes extensive ballroom
facilities, a meeting complex and an exhibition hall. Together,
The Sands Expo Center and The Congress Center offer
approximately 2.3 million gross square feet of
state-of-the-art
exhibition and meeting facilities, which can be configured to
provide small, mid-size or large meeting rooms
and/or
accommodate large-scale multi-media events or trade shows.
Management believes that these combined facilities, together
with the
on-site
amenities offered by The Venetian, offer a flexible and
expansive space for large-scale trade shows and conventions.
Management markets The Congress Center to complement the
operations of The Sands Expo Center for business conferences and
upscale business events typically held during the mid-week
period, thereby generating room-night demand and driving average
daily room rates during the weekday move-in/move-out phases of
The Sands Expo Centers events. Events at The Sands Expo
Center and The Congress Center typically take place during the
week when Las Vegas hotels and casinos experience lower demand,
unlike weekends and holidays during which occupancy and room
rates are at their peak. Our goal is to draw from attendees and
exhibitors at The Sands Expo Center and The Congress Center to
maintain mid-week demand at the hotel from this higher budget
market segment, when room demand would otherwise be derived from
the mid-week lower-budget tour and travel group market segment.
In 2006, approximately 1.1 million visitors attended trade
shows and conventions at The Sands Expo Center during
approximately 160 show days.
The
Sands Macao
We own and operate The Sands Macao, the first Las Vegas-style
casino in Macao, pursuant to a
20-year
gaming subconcession. The Sands Macao is situated near the
Macao-Hong Kong Ferry Terminal on a waterfront parcel centrally
located between the Gonbei border gate and the central business
district. This location provides The Sands Macao primary access
to a large customer base, particularly the approximately
6.6 million visitors who arrived in Macao by ferry in 2006.
The Sands Macao includes approximately 229,000 square feet
of gaming facilities. The Sands Macao has approximately 790
table games, including baccarat, Sic-Bo, Fan-Tan, 3 card
baccarat, 3 card poker, stud poker, blackjack and roulette, and
approximately 1,380 slot machines or similar electronic gaming
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devices. The Sands Macao also includes numerous restaurants, a
spacious Paiza Club offering services and amenities to premium
customers, luxurious VIP suites and spa facilities, private VIP
gaming room facilities, a theater and other high end services
and amenities. We are currently building The Sands Macao hotel
tower which will consist of approximately 240 additional rooms
and is expected to open in September 2007.
United
States Development Projects
The
Palazzo
We are building The Palazzo, which will be situated adjacent to
and north of The Venetian. The Palazzo will be directly
connected to both The Venetian and The Sands Expo Center and to
a pedestrian bridge over Sands Avenue to the sidewalk adjacent
to the Wynn Las Vegas resort. The Palazzo is scheduled to open
in fall 2007. The Palazzo hotel will be a 50-floor luxury tower
with approximately 3,025 suites and will include over 375
concierge-level suites. The Palazzo will also include an
enclosed shopping, dining and entertainment complex of
approximately 450,000 square feet (the Phase II
mall).
The casino at The Palazzo is expected to cover approximately
105,000 square feet and have approximately 120 table games
and 1,350 slot machines. The Palazzos casino will be
differentiated from The Venetians casino in terms of look,
feel and experience. The Palazzo casinos design is also
expected to attract a large number of walk-in players given its
proximity to both The Venetian and the Las Vegas Strip. The
Palazzo casinos table games will feature the traditional
games of blackjack, craps, baccarat and roulette, Asian games
such as Pai Gow and Pai Gow Poker, and progressive table games
such as Caribbean Stud and Let It Ride. The Palazzos
casino will target high-end table games customers and premium
slot customers, and will feature a high-end slot area with
special products and services. The casino at The Palazzo will be
accessible from each of The Palazzos hotel, the
Phase II mall, The Congress Center, The Sands Expo Center
and the Las Vegas Strip. The Palazzo also will include a theater
that is expected to host a major production or Broadway show.
We have contracted to sell the Phase II mall to GGP at its
completion. The Phase II mall will connect directly with
The Grand Canal Shops mall and will offer approximately 450,000
net leasable square feet of shopping, dining and entertainment
space in two levels located within The Palazzos main
structure, between the casino level and the hotel tower.
Visitors and guests will be able to access the Phase II
mall from several different locations, including from the Las
Vegas Strip, The Palazzos hotel and casino, The Grand
Canal Shops mall, The Sands Expo Center and The Congress Center.
We are in the early stages of constructing a high rise
residential condominium tower which will consist of
approximately 270 luxury condominiums and will be situated
between The Palazzo and The Venetian. The condominium tower is
currently expected to open in late fall 2008 at an estimated
cost ranging from $600.0 million to $700.0 million.
Sands
Bethworks
On December 20, 2006, the Pennsylvania Gaming Control Board
announced that our subsidiary, Sands Bethworks Gaming, LLC
(Sands Bethworks Gaming), had been awarded a
Pennsylvania gaming license. The award of the license is subject
to appeals and the actual license will be awarded after the
appeal period ends. We intend to develop a gaming, hotel,
shopping and dining complex (the Sands Bethworks)
located on the site of the Historic Bethlehem Steel Works in
Bethlehem, Pennsylvania, which is about 70 miles from
midtown Manhattan, New York. In its first phase, the
124-acre
development is expected to feature a 300-room hotel,
200,000 square feet of retail space, 3,000 slot machines,
and a variety of dining options. An additional 2,000 slot
machines will be added in a subsequent phase. The complex is
also expected be home to the National Museum of Industrial
History, an arts and cultural center, and the broadcast home of
the local PBS affiliate. We currently expect the cost to develop
and construct the Sands Bethworks will be approximately
$600.0 million and expect to open the complex in 2008.
Macao
Development Projects
The
Cotai Strip
We are building The Venetian Macao on the Cotai Strip. The
Venetian Macao will be an all-suites hotel, casino and
convention center complex with a Venetian-style theme similar to
that of The Venetian in Las Vegas. The
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Venetian Macao will also feature a 39-floor luxury hotel tower
of approximately 3,000 suites, approximately 1.0 million
square feet of retail and dining offerings, and a convention
center and meeting room complex of approximately
1.2 million square feet. The Venetian Macao is scheduled to
open in summer 2007.
In addition to the development of The Venetian Macao, we are
developing multiple other properties on the Cotai Strip. We have
submitted development plans to the Macao government for six
casino-resort developments in addition to The Venetian Macao on
an area of approximately 200 acres located on the Cotai
Strip (which we refer to as parcels 1, 2, 3,
5, 6, 7 and 8). The developments are expected to include
hotels, exhibition and conference facilities, casinos,
showrooms, shopping malls, spas, world-class restaurants and
entertainment facilities and other attractions and amenities, as
well as common public areas. We have commenced construction or
pre-construction on all seven parcels of the Cotai Strip. We
plan to own and operate all of the casinos in these developments
under our Macao gaming subconcession. More specifically, we
intend to develop our Cotai Strip properties as follows:
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Parcel 2 is intended to be a Four Seasons hotel and casino,
which will be adjacent to The Venetian Macao and is expected to
be a boutique hotel with approximately 400 luxury hotel rooms,
approximately 800,000 square feet of Four Seasons-serviced
luxury apartments, distinctive dining experiences, a full
service spa and other amenities, an approximately
45,000 square foot casino and approximately
210,000 square feet of upscale retail offerings. We will
own the entire development. We have entered into an exclusive
non-binding letter of intent and are currently negotiating
definitive agreements under which Four Seasons Hotels Inc. will
manage the hotel and serviced luxury apartments under its Four
Seasons brand.
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Parcel 5 is intended to include a three-hotel complex with
approximately 2,450 luxury and mid-scale hotel rooms, serviced
luxury apartments, a casino and a retail shopping mall. We will
own the entire development and have entered into a management
agreement with Shangri-La Hotels and Resorts to manage two
hotels under its Shangri-La and Traders brands. In
addition, we are negotiating with Starwood Hotels &
Resorts Worldwide to manage a hotel and serviced luxury
apartments under its St. Regis brand.
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Parcel 6 is intended to include a two-hotel complex with
approximately 4,000 luxury and mid-scale hotel rooms, a casino
and a retail shopping mall physically connected to the mall in
the Shangri-La/Traders hotel podium. We will own the entire
development and are negotiating with Starwood Hotels &
Resorts Worldwide to manage the hotels under its Sheraton brand.
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Parcels 7 and 8 are each intended to include a two-hotel complex
with approximately 3,000 luxury and mid-scale hotel rooms on
each parcel, serviced luxury vacation suites, a casino and
retail shopping malls that are physically connected. We will own
the entire development and have entered into non-binding
agreements with Hilton Hotels to manage Hilton and Conrad brand
hotels and serviced luxury vacation suites on parcel 7 and
Fairmont Raffles Holdings to manage Fairmont and Raffles brand
hotel complexes and serviced luxury vacation suites on parcel 8.
We are currently negotiating definitive agreements with Hilton
Hotels and Fairmont Raffles Holdings.
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For parcel 3, we have signed a non-binding memorandum of
agreement with an independent developer. We are currently
negotiating the definitive agreement pursuant to which we will
partner with this developer to build a multi-hotel complex,
which may include a Cosmopolitan hotel. In addition, we have
signed a non-binding letter of intent with Intercontinental
Hotels Group to manage hotels under the Intercontinental and
Holiday Inn International brands, and serviced luxury vacation
suites under the Intercontinental brand, on the site. We are
currently negotiating definitive agreements with
Intercontinental Hotels Group. In total, the multi-hotel complex
is intended to include approximately 3,600 hotel rooms, serviced
luxury vacation suites, a casino and a retail shopping mall.
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The casino at The Venetian Macao is currently planned to have
approximately 850 table games and 4,100 slot machines when it
opens in summer 2007, and is designed to have a final capacity
of approximately 1,150 table games and 7,000 slot machines. The
Four Seasons resort is currently planned to feature
approximately 130 table games and 400 slot machines. The casinos
on parcels 3, 5, 6, 7 and 8 are each currently planned
to include approximately 325 table games and 1,750 slot
machines. Upon completion, our developments on the Cotai Strip
are currently planned to feature total gaming capacity of
approximately 2,900 table games and 16,000 slot machines.
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In February 2007, we received the final draft of the land
concession agreement from the Macao government pursuant to which
we were awarded a concession by lease for parcels 1, 2 and
3 on the Cotai Strip, including the sites on which we are
building The Venetian Macao and the Four Seasons hotel. We have
accepted the conditions of the draft land concession and have
made an initial premium payment of $106.5 million towards
the aggregate land premium of $323.7 million. Additionally,
$24.1 million has been paid or will be paid in the form of
the cost of the reclamation work and other works done on the
land and the installation costs of an electrical substation with
the remaining amount payable over time. The land concession will
not become effective until the date it is published in
Macaos Official Gazette. Once the land concession is
effective, we will be required to make additional land premium
and annual rent payments relating to parcels 1, 2 and 3 in
the amounts and at the times specified in the land concession.
We currently estimate that the cost of developing and building
The Venetian Macao will be approximately $2.4 billion
(exclusive of the aggregate land concession payment of
$323.7 million for parcels 1, 2 and 3). During May
2006, our subsidiary, Venetian Macau Limited, and its
subsidiaries (VML) obtained a $2.5 billion
credit facility to fund The Sands Macao expansion and to
partially fund the design, development, construction and
pre-opening costs for The Venetian Macao, the Four Seasons hotel
and some of our other development projects on the Cotai Strip,
and to pay related fees and expenses. Currently, we expect the
total cost of development on the Cotai Strip to be in the range
of $9.0 billion to $11.0 billion. We will need to
arrange additional debt financing to finance those costs as well.
We do not yet have all the necessary Macao government approvals
that we will need in order to develop the Cotai Strip
developments. We have commenced construction on our other Cotai
Strip properties on land for which we have not yet been granted
land concessions. If we do not obtain land concessions, we could
lose all or a substantial part of our investment in these other
Cotai Strip properties. As of December 31, 2006, we have
invested approximately $100.0 million in our other Cotai
Strip properties.
Hengqin
Island Development Project
The Company has entered into a non-binding letter of intent with
the Zhuhai Municipal Peoples Government of the
Peoples Republic of China to work with it to create a
master plan for, and develop, a leisure and convention
destination resort on Hengqin Island, located approximately one
mile from the Cotai Strip, but within mainland China. The
Company is actively preparing design concepts for the
destination resort. On January 10, 2007, the Zhuhai
Government established a Project Coordination Committee to act
as a government liaison empowered to work directly with the
Company to advance the development of the project. We have
interfaced with this committee and are actively working with the
committee as we continue to advance our plans. The project
remains subject to a number of conditions, including further
governmental approvals.
Singapore
Development Project
In August 2006, the Companys wholly-owned subsidiary,
Marina Bay Sands Pte. Ltd. (MBS), entered into a
development agreement (the Development Agreement)
with the Singapore Tourism Board (STB) to build and
operate an integrated resort called Marina Bay Sands in
Singapore. The Marina Bay Sands will be a large integrated
resort that includes three 54-story hotel towers (totaling
approximately 2,600 suites) linked at their roofs by a Skypark
with pools, cafes and other recreation facilities, a casino, an
enclosed retail, dining and entertainment complex of
approximately 750,000 net leasable square feet, a
convention center and meeting room complex of approximately
1.2 million square feet, theaters, and a landmark iconic
structure at the bay-front promenade that contains an
approximately 150,000 square foot Art/Science museum. We
expect the cost to develop and construct the Marina Bay Sands
integrated resort will be approximately $3.6 billion,
inclusive of the land premiums, taxes and other fees. The Marina
Bay Sands is expected to open in 2009.
5
United
Kingdom Development Projects
In December 2006, the Company announced that one of its
affiliates and Cantor Gaming, an affiliate of the global
financial services company Cantor Fitzgerald, have agreed to
launch an online casino and poker site initially aimed at
serving the United Kingdom market. Cantor Gaming will provide an
online casino and poker destination featuring Las Vegas
Sands brands. The site will offer casino games, including
blackjack, roulette, baccarat, video poker, slots and online
poker. The offering will be part of a full
end-to-end
gaming service, including customer age and location
verification, online payment processing and customer services.
The site is expected to be launched during the second quarter of
2007. The site will be hosted, and the operator will be
licensed, in compliance with the laws of Alderney, British
Channel Islands. It will not accept U.S. customers.
The United Kingdom government recently announced that the
countrys first regional super casino would be built in
Manchester. A tender process for the operator of that facility
is to be undertaken and we intend to participate in the tender
process. In addition, we have existing agreements to develop and
lease gaming and entertainment facilities with Sheffield United
and Glasgow Rangers football clubs in the United Kingdom. Our
ability to eventually develop and lease gaming and entertainment
facilities under these agreements is subject to a number of
conditions, including the passage of legislation to expand the
number of authorized regional casinos and our ability to obtain
a gaming license.
Other
Development Projects
We are currently exploring the possibility of operating
integrated resorts in additional Asian jurisdictions, the United
States and Europe.
The Las
Vegas Market
The Las Vegas market has shown consistent growth over both the
near and long terms in both visitation and expenditures and has
one of the highest hotel occupancy rates 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 over the last five years, from approximately
35.0 million visitors in 2001 to approximately
38.9 million visitors in 2006. We believe that the growth
in the Las Vegas market has been enhanced by:
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the increased capacity of the city to host large-scale trade
shows and conventions;
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the introduction of large luxury and themed destination resorts
in Las Vegas that attract new visitors to Las Vegas while also
gaining share from older, smaller
and/or
undifferentiated resorts; and
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the increased capacity of McCarran International Airport.
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Las
Vegas as a Trade Show, Convention and Meeting
Destination
According to the LVCVA, Las Vegas has been among the most
popular trade show and convention destinations in the United
States in recent years. The LVCVA reports that trade show
attendance rose from approximately 5.0 million to
approximately 6.3 million between 2001 and 2006.
The majority of the room demand from trade show and convention
attendees is generated during weekdays while tourist visits to
Las Vegas are higher on weekends. As a result, the trade show
convention market segments have been specifically targeted as
prime avenues for driving mid-week traffic to Las Vegas.
Trade shows are held for the purpose of getting sellers and
buyers of products or services together in order to conduct
business. Trade shows differ from conventions in that trade
shows typically require substantial amounts of space for
exhibition purposes and participant circulation. Conventions
generally are 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 worlds largest
shows, including extensive hotel and motel facilities, three
convention centers (the Las Vegas Convention Center (the
LVCC), the Mandalay Bay Convention Center and The
Sands Expo Center), convenient air service from major cities
throughout the United States and other countries, and
significant entertainment opportunities.
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Expanding
Hotel Market
Las Vegas has been among the most popular travel destinations in
the United States in recent years, with hotel occupancy rates
among the highest of any major market in the country. To
accommodate this popularity, Las Vegas has experienced a period
of rapid hotel development, with the number of hotel and motel
rooms in Las Vegas increasing from approximately 126,600 in 2001
to approximately 132,600 in 2006 according to the LVCVA.
Growth
of Las Vegas Retail Sector and Non-Gaming Revenues
An increasing number of destination resorts are developing
non-gaming entertainment to complement their gaming activities
in order to draw additional visitors and increase the spend per
visitor. According to the LVCVA, while gaming revenues in Clark
County increased from approximately $7.6 billion in 2001 to
approximately $10.6 billion in 2006 (a 7.0% compound annual
growth rate), non-gaming tourist revenues increased from
approximately $24.3 billion in 2001 to approximately
$28.8 billion in 2006 (a 3.5% compound annual growth rate).
The newer, large luxury and themed Las Vegas destination resorts
have been designed to capitalize on this growth by providing
better quality hotel rooms at higher rates and by providing
expanded shopping, dining and entertainment venues, as well as
meeting facilities, to their patrons.
Infrastructure
Improvements
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 2005 (the last full year for which data is
available) visitors to Las Vegas arrived by the following
methods of transportation: 47% by air; 53% by ground, including
auto, bus and recreational vehicle.
During recent years, the facilities of McCarran International
Airport have been expanded to accommodate the increased number
of airlines and passengers that it services. The number of
passengers traveling through McCarran International Airport has
increased from approximately 35.2 million in 2001 to
approximately 46.2 million in 2006.
Competition
for Our Las Vegas Operations
The hotel/casino industry is highly competitive. Hotels on the
Las Vegas Strip compete with other hotels on and off the Las
Vegas Strip, including with hotels in downtown Las Vegas. The
Venetian also competes with a large number of hotels and motels
near Las Vegas. Many of our competitors are subsidiaries or
divisions of large public companies and may have significant
financial and other competitive resources. In particular, the
acquisition of Mandalay Resort Group by MGM MIRAGE and the
acquisition of Caesars Entertainment, Inc. by Harrahs
Entertainment, Inc. created two of the worlds largest
gaming companies as measured by revenues.
Hotel/Casino
Properties
Competitors of The Venetian include resorts on the Las Vegas
Strip, such as the Bellagio, the Mandalay Bay Resort &
Casino, Wynn Las Vegas and Caesars, and properties off the Las
Vegas Strip. Several large projects also are expected to open in
the next several years. Some of these facilities are or will be
operated by companies that may have significant name recognition
and financial and marketing resources and may target the same
demographic groups as we do.
We also compete with legalized gaming from casinos located on
Native American tribal lands. The governor of California has
entered into compacts with numerous tribes in California and has
announced the execution of a number of new compacts with no
limits on the number of gaming machines, which was limited under
the prior compacts. The federal government has approved numerous
compacts in California and casino-style gaming is now legal on
those tribal lands. While the competitive impact on our
operations in Las Vegas from the continued growth of Native
American gaming establishments in California remains uncertain,
the proliferation of gaming in California and other areas
located in the same region as The Venetian could have an adverse
effect on our financial condition, results of operations or cash
flows.
The hotel/casino operation of The Venetian also competes, to
some extent, with other hotel/casino facilities in Nevada and in
Atlantic City, hotel/casino and other resort facilities
elsewhere in the country and the world, Internet
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gaming websites and state lotteries. In addition, certain states
have legalized, and others may legalize, casino gaming in
specific areas. The continued proliferation of gaming venues
could significantly and adversely affect our business. In
particular, the legalization of casino gaming in or near major
metropolitan areas from which we traditionally attract
customers, such as New York, Los Angeles, San Francisco,
Chicago and Boston, could have a material adverse effect on our
business. The current global trend toward liberalization of
gaming restrictions and the resulting proliferation of gaming
venues could result in a decrease in the number of visitors to
our Las Vegas facilities, by attracting customers close to home
and away from Las Vegas, which could adversely affect our
financial condition, results of operations or cash flows.
Trade
Show and Convention Facilities
Las Vegas generally competes with trade show and convention
facilities located in and around major U.S. cities,
including Atlanta, Chicago, New York and Orlando. Within Las
Vegas, The Sands Expo Center and The Congress Center compete
with the LVCC, which is located off the Las Vegas Strip and
currently has approximately 3.2 million gross square feet
of convention and exhibit facilities. In addition to the LVCC,
the Mandalay Bay Resort & Casino has nearly
1.0 million square feet of convention space. The MGM Grand
Hotel and Casino has a conference and meeting facility of
approximately 881,000 square feet and the Mirage has
approximately 170,000 gross square feet of meeting space.
The Wynn Las Vegas Resort has 200,000 square feet of
convention, meeting and reception space and plans to have
additional convention space at its proposed Encore facility. The
conference and meeting facilities at these hotel resorts are The
Congress Centers primary Las Vegas competition. Boyd
Gaming Corporations Echelon Place is expected to include
approximately 1.0 million square feet of convention and
meeting space when it opens in 2010. The LVCC and the Mandalay
Bay Convention Center are the primary competitors of The Sands
Expo Center. A major expansion project for the LVCC is expected
to be completed no earlier than 2010. We believe the LVCC
expansion project will make it more competitive with private
convention and meeting providers like us. To the extent that any
of the competitors of The Venetian can offer a hotel/casino
experience that is integrated with substantial trade show and
convention, conference and meeting facilities, The
Venetians competitive advantage in attracting trade show
and convention, conference and meeting attendees could be
adversely affected. In addition, other American cities are in
the process of developing, or have announced plans to develop,
convention center and other meeting, trade and exhibition
facilities that may compete with ours.
The Macao
Market
Introduction
Macao is regarded as one of the largest and fastest-growing
gaming markets in the world. Macao benefits from being the only
market in China to offer legalized casino gaming.
Macao
as a Gaming and Resort Destination
In May 2004, The Sands Macao became the first Las Vegas-style
casino to open in Macao. Our high-quality gaming product has
enabled us to capture a meaningful share of the overall market,
including the VIP player market segment, in Macao.
Gaming revenues in Macao in 2006 reached a record
$6.98 billion, a 22.0% increase over 2005. Visits to Macao
were up 17.6% in 2006, compared to 2005. According to Macao
government statistics, during 2006, 48.6% of visitors traveling
to Macao stayed overnight in hotels and guestrooms and, for
those who stayed overnight in hotels and guestrooms, the average
length of stay was only 1 or 2 nights. We expect this length of
stay to increase with increased visitation, the expansion of
gaming and non-gaming amenities including retail and
entertainment offerings, and the addition of upscale hotel
resort accommodations in Macao.
Table games are the dominant form of gaming in Asia. Baccarat is
the most popular game, followed by other traditional U.S. and
Asian games. Slot machines are offered in Macao, but they are
few in number because the structure of the gaming market in
Macao has historically favored table gaming. However, with the
increase in the mass market gaming in Macao, this is changing
and slot machines of international standards are becoming an
important feature of the market. We expect the slot machine
business to grow in Macao and we intend to continue to introduce
more modern and popular products to appeal to the Asian
marketplace.
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We believe that as new facilities and standards of service are
introduced, Macao will become an even more desirable tourist
destination. The improved experience of visitors to Macao should
lead to longer stays and an increased number of return trips
from existing feeder markets and the opening of several new
feeder markets. In addition, we believe that a wealthier Chinese
middle class will lead to increased travel to Macao and generate
increased demand for gaming entertainment and casino resort
offerings. We also believe that the combination of less onerous
travel restrictions, greater ability of Chinese citizens to
bring renminbi (the Chinese currency) to Macao, increasing
regional wealth and the opening of world-class facilities will
convert Macao from primarily a day-trip market to a
multi-day
travel destination similar to Las Vegas, where the LVCVA
estimates that the average visitor stays approximately three
nights.
Proximity
to Major Asian Cities
Approximately 1.0 billion people are estimated to live
within a
three-hour
flight from Macao and approximately 3.0 billion people are
estimated to live within a
five-hour
flight from Macao. According to Macao government statistics,
86.0% of the tourists who visited Macao in 2006 came from Hong
Kong or mainland China and the dominant feeder markets to Macao
have been and continue to be Hong Kong and China. Although the
absolute number of visitors from Hong Kong continues to grow,
that market has shrunk as a percentage of the total visitor
distribution from 67.2% in 1997 to 31.6% in 2006, while visitors
from mainland China made up 54.5% of total visitors in 2006. The
number of visitors from mainland China has exhibited significant
growth from 1997 to 2006, with a 43.6% compound annual growth
rate in the number of visitors for that period. Until recently,
mainland Chinese were only permitted to visit Macao as part of a
tour group. Now that these travel restrictions have eased for
mainland Chinese from most urban centers and economically
developed regions, individual travel to Macao is expected to
increase, generating increased demand for casino offerings.
Gaming customers from Hong Kong, southeast China, Taiwan and
other locations in Asia can reach Macao in a relatively short
period of time, using a variety of methods of transportation,
and visitors from more distant locations in Asia can take
advantage of short travel times by air to Macao, Zhuhai,
Shenzhen or to Hong Kong (followed by a road, ferry or
helicopter trip to Macao). The relatively easy access from major
population centers promotes Macao as a popular gaming
destination in Asia.
Macao draws a significant number of gaming customers from both
visitors and residents of Hong Kong. One of the major methods of
transportation to Macao from Hong Kong is the jetfoil ferry
service. Macao is also accessible from Hong Kong by helicopter.
In addition, the proposed bridge linking Hong Kong, Macao and
Zhuhai is expected to reduce the travel time between central
Hong Kong and Macao. The bridge is expected be completed
somewhere between 2011 and 2015.
Macao International Airport provides direct air service to many
major cities in Asia, such as Manila, Singapore, Taipei,
Bangkok, Beijing, Seoul and Shanghai, with links to numerous
other major Asian destinations.
The Macao pataca and the Hong Kong dollar are linked to each
other and, in many cases, are used interchangeably in Macao.
However, currency exchange controls and restrictions on the
export of currency by certain countries may negatively impact
the success of our operations. For example, there are currently
existing currency exchange controls and restrictions on the
export of the renminbi, the currency of China. In addition,
restrictions on the export of the renminbi may impede the flow
of gaming customers from China to Macao, inhibit the growth of
gaming in Macao and negatively impact our gaming operations.
Competition
in Macao
Gaming in Macao is administered through government-sanctioned
concessions awarded to three different concessionaires. The
Macao government is precluded by contract from granting any
additional gaming concessions until 2009. In addition, the
current laws only permit three gaming concessions, although
future subconcessions are permitted. However, the laws could
change and permit the Macao government to grant additional
gaming concessions before 2009. If the Macao government were to
allow additional competitors to operate in Macao through the
grant of additional concessions or subconcessions, we would face
additional competition, which could have a material adverse
effect on our financial condition, results of operations or cash
flows.
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SJM holds one of the three concessions. SJM, controlled by
Stanley Ho, currently operates 17 facilities throughout Macao.
Historically, SJM was the only gaming operator in Macao, with
over 40 years of operating experience in Macao. Many of its
17 casinos are relatively small facilities that are offered as
amenities in hotels, however a number are large operations
enjoying significant recognition by gaming customers in the
marketplace. SJM was obligated to invest at least approximately
4.7 billion patacas (approximately $586.8 million at
exchange rates in effect on December 31, 2006) by
March 31, 2009 under its concession agreement with the
government of Macao. SJMs projects include the Grand
Lisboa, the upgrade of the Lisboa Hotel, Macaos largest
hotel which opened in February 2007, the Fishermans Wharf
entertainment complex, which opened in December 2005, and other
projects. In addition, MGM MIRAGE has entered into a joint
venture agreement with Stanley Hos daughter, Pansy Ho
Chiu-king, to develop, build and operate two major hotel casino
resorts in Macao. Pursuant to this agreement, in April 2005, MGM
Grand Paradise Limited, a joint venture between Pansy Ho
Chiu-king and MGM MIRAGE, obtained a subconcession allowing it
to conduct gaming operations in Macao. The MGM Grand Macau is
scheduled to open in the fourth quarter of 2007. The resort will
feature approximately 600 rooms, 345 table games, 1,035 slot
machines, restaurants and entertainment amenities.
Galaxy Casino Company Limited (Galaxy) holds a
concession and has the ability to operate casino properties
independent of us. Galaxy is obligated to invest at least
4.4 billion patacas (approximately $549.3 million at
exchange rates in effect on December 31, 2006) by June
2012 under its concession agreement with the government of
Macao. Galaxy currently operates five casinos in Macao.
Galaxys StarWorld Hotel & Casino opened in
October 2006. The property has over 500 hotel rooms and a
140,000 square foot gaming floor with approximately 300
table games and 370 slot machines.
Wynn Resorts (Macau), S.A. (Wynn Macau), a
subsidiary of Wynn Resorts, Limited, holds the third concession.
Wynn Macau opened in September 2006 and includes an
approximately 600 room hotel, a casino and other non-gaming
amenities. Wynn Macau has announced plans to expand the property
to include additional gaming space. In 2006, Wynn Macau sold its
subconcession right under its gaming concession to an affiliate
of Publishing and Broadcasting Limited (PBL) for
$900.0 million. The subconcession right permits the PBL
affiliate to receive a gaming subconcession from the Macao
government.
We will also face competition from casinos located in other
areas of Asia, such as the major gaming and resort destination
Genting Highlands Resort, located outside of Kuala Lumpur,
Malaysia and casinos in South Korea and the Philippines, as well
as pachinko and pachislot parlors in Japan. We will also
encounter competition from other major gaming centers located
around the world, such as Australia, New Zealand and Las Vegas,
and cruise ships that offer gaming.
Advertising
and Marketing
We advertise in many types of media, including television,
radio, newspapers, magazines and billboards, to promote general
market awareness of The Venetian as a unique vacation, business
and convention destination due to our first-class hotel, casino,
retail stores, restaurants and other amenities. The Sands Macao
also provides advertising and direct marketing of its casino. We
actively engage in direct marketing, which is targeted at
specific market segments, including the premium slot and table
games markets.
Regulation
and Licensing
State
of Nevada
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. Our
gaming operations are also subject to the licensing and
regulatory control of the Nevada Gaming Commission (the
Nevada Commission), the Nevada Gaming Control Board
(the Nevada Board) and the Clark County Liquor and
Gaming Licensing Board (the CCLGLB and together with
the Nevada Commission and the Nevada Board, the Nevada
Gaming Authorities).
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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:
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the prevention of unsavory or unsuitable persons from having a
direct or indirect involvement with gaming at any time or in any
capacity;
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the establishment and maintenance of responsible accounting
practices and procedures;
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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;
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the prevention of cheating and fraudulent practices; and
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the establishment of a source of state and local revenues
through taxation and licensing fees.
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Any change in such laws, regulations and procedures could have
an adverse effect on our gaming operations or on the operation
of The Venetian and The Palazzo.
Las Vegas Sands, LLC is licensed by the Nevada Gaming
Authorities to operate The Venetian. The gaming license requires
the periodic payment of fees and taxes and is not transferable.
Las Vegas Sands, LLC is also registered as an intermediary
company of Venetian Casino Resort, LLC. Venetian Casino Resort,
LLC is licensed as a manufacturer and distributor of gaming
devices. Las Vegas Sands, LLC and Venetian Casino Resort, LLC
are collectively referred to as the licensed
subsidiaries. Las Vegas Sands Corp. is registered with the
Nevada Commission as a publicly-traded corporation (the
registered corporation). As such, we must
periodically 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 the
profits from the licensed subsidiaries without first obtaining
licenses and approvals from the Nevada Gaming Authorities.
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 licensee. We and the
licensed subsidiaries possess all state and local government
registrations, approvals, permits and licenses required in order
for us to engage in gaming activities at The Venetian. We will
apply for all state and local government registrations,
approvals, permits and licenses that may be required in order
for us to engage in gaming activities at The Palazzo.
The Nevada Gaming Authorities may investigate any individual who
has a material relationship to or material involvement with us
or the licensed subsidiaries 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 licensed subsidiaries must file
applications with the Nevada Gaming Authorities and may be
required to be licensed by the Nevada Gaming Authorities. Our
officers, directors and key employees who are actively and
directly involved in the gaming activities of the licensed
subsidiaries may be required to be licensed or found suitable 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 have an
inappropriate relationship with us or the licensed subsidiaries,
we would have to sever all relationships with such person. In
addition, the Nevada Commission may require us or the licensed
subsidiaries to terminate the employment of any person who
refuses to file appropriate applications. Determinations of
suitability or questions pertaining to licensing are not subject
to judicial review in Nevada.
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We and the licensed subsidiaries are required to submit periodic
detailed financial and operating reports to the Nevada
Commission. Substantially all of our and our licensed
subsidiaries material loans, leases, sales of securities
and similar financing transactions must be reported to or
approved by the Nevada Commission.
If it were determined that we or a licensed subsidiary violated
the Nevada Act, the registration and gaming licenses we then
hold could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory
procedures. In addition, we 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 casinos, and, under certain circumstances, earnings
generated during the supervisors appointment (except for
the reasonable rental value of the casinos) 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 our gaming operations.
Any beneficial holder of our voting securities, regardless of
the number of shares owned, may be required to file an
application, be investigated, and have its suitability as a
beneficial holder of our 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
our voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of
more than 10% of our 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, an
institutional investor as defined in the Nevada Act,
which acquires more than 10% but not more than 15% of our voting
securities, may apply to the Nevada Commission for a waiver of
such finding of suitability if such institutional investor holds
the voting securities only for investment purposes.
An institutional investor will be deemed to hold voting
securities only for investment purposes if it acquires and holds
the voting securities in the ordinary course of business as an
institutional investment and not for the purpose of causing,
directly or indirectly, the election of a majority of the
members of our board of directors, any change in our corporate
charter, by-laws, management, policies or our operations or any
of our gaming affiliates, or any other action which the Nevada
Commission finds to be inconsistent with holding our voting
securities only for investment purposes. Activities that are
deemed consistent with holding voting securities only for
investment purposes include:
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voting on all matters voted on by stockholders;
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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 management, policies or
operations; and
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such other activities as the Nevada Commission may determine to
be consistent with such investment intent.
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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. If the beneficial holder of nonvoting
securities who must be licensed or 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. We are subject to disciplinary
action if, after we receive notice that a person is
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unsuitable to be a stockholder or to have any other relationship
with us or a licensed subsidiary, we, or any of the licensed
subsidiaries:
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allow that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person;
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pay remuneration in any form to that person for services
rendered or otherwise; or
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fail to pursue all lawful efforts to require such unsuitable
person to relinquish his or her voting securities for cash at
fair market value.
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Our charter documents include provisions intended to help us
comply with these requirements.
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 such 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:
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pays to the unsuitable person any dividend, interest, or any
distribution whatsoever;
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recognizes any voting right by such unsuitable person in
connection with such securities;
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pays the unsuitable person remuneration in any form; or
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makes any payment to the unsuitable person by way of principal,
redemption, conversion, exchange, liquidation or similar
transaction.
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We are 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 and we are 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. We are also required to render maximum
assistance in determining the identity of the beneficial owner.
The Nevada Commission has the power to require our stock
certificates to bear a legend indicating that such securities
are subject to the Nevada Act. However, to date the Nevada
Commission has not imposed such a requirement on us.
We cannot make a public offering of any securities without the
prior approval of the Nevada Commission if the securities or the
proceeds from the offering are intended to be used to construct,
acquire or finance gaming facilities in Nevada, or to retire or
extend obligations incurred for such purposes. On
November 16, 2006, the Nevada Commission granted us prior
approval to make public offerings for a period of two years,
subject to certain conditions (the shelf approval).
The shelf approval includes prior approval by the Nevada
Commission permitting us to place restrictions on the transfer
of the membership interests and to enter into agreements not to
encumber the membership interests of Las Vegas Sands, LLC.
However, the shelf approval may be rescinded for good cause
without prior notice upon the issuance of an interlocutory stop
order by the Chairman of the Nevada Board. The shelf approval
does not constitute a finding, recommendation, or approval by
the Nevada Commission or the Nevada Board as to the investment
merits of any securities offered under the shelf approval. Any
representation to the contrary is unlawful.
Changes in our control through a merger, consolidation, stock or
asset acquisition, management or consulting agreement, or any
act or conduct by any person whereby he or she obtains control,
shall not occur without the prior approval of the Nevada
Commission. Entities seeking to acquire control of a registered
corporation must satisfy the Nevada Board 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.
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
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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 Nevadas
gaming industry and to further Nevadas policy to:
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assure the financial stability of corporate gaming operators and
their affiliates;
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preserve the beneficial aspects of conducting business in the
corporate form; and
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promote a neutral environment for the orderly governance of
corporate affairs.
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Approvals are, in certain circumstances, required from the
Nevada Commission before we 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 board of directors in response
to a tender offer made directly to the registered
corporations stockholders for the purposes of acquiring
control of the registered corporation.
License fees and taxes, computed in various ways depending upon
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:
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a percentage of the gross revenues received;
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the number of gaming devices operated; or
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the number of table games operated.
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The tax on gross revenues received is generally 6.75%. In
addition, an excise tax is paid by us on charges for admission
to any facility where certain forms of live entertainment are
provided. Venetian Casino Resort, LLC, is also required to pay
certain fees and taxes to the State of Nevada as a licensed
manufacturer and distributor.
Any person who is licensed, required to be licensed, registered,
required to be registered, or under common control with such
persons (collectively, licensees), and who proposes
to become involved in a gaming operation outside of Nevada, is
required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the
expenses of any investigation by the Nevada Board into their
participation in such foreign gaming operation. 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 any
foreign jurisdiction pertaining to such foreign gaming
operation, fail to conduct such 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 such foreign operation who
has been denied a license or a finding of suitability in Nevada
on the ground of personal unsuitability or who has been found
guilty of cheating at gambling.
The sale of alcoholic beverages by the licensed subsidiaries on
the casino premises and The Sands Expo Center is subject to
licensing, control and regulation by the applicable local
authorities. Our licensed subsidiaries have obtained the
necessary liquor licenses to sell alcoholic beverages. All
licenses are revocable and are not transferable. The agencies
involved have full power to limit, condition, suspend or revoke
any such licenses, and any such disciplinary action could (and
revocation of such licenses would) have a material adverse
effect upon our operations.
Commonwealth
of Pennsylvania
Sands Bethworks Gaming is subject to the rules and regulations
promulgated by the Pennsylvania Gaming Control Board
(PaGCB).
In December 2005, we submitted a proposal to obtain one of two
category 2 at large gaming licenses available in
Pennsylvania. When the applications were considered by the PaGCB
in December 2006, there were five applicants for the two
at large licenses. On December 20, 2006, we
were awarded one of the licenses and a
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location in the Pocono Mountains was awarded the other category
2 at large license. On the same day, two category 2
licenses were awarded to applicants for locations in
Philadelphia, one category 2 license was awarded to an applicant
in Pittsburgh, and six race tracks were awarded permanent
category 1 licenses. The principal difference between category 1
and category 2 licenses is that the former is available only to
certain race tracks. A category 1 or category 2 licensee is
authorized to open with up to 3,000 slot machines and to
increase to up to 5,000 slot machines upon approval of the
PaGCB, which may not take effect earlier than six months after
opening. Although the PaGCB announced the award of our license
on December 20, 2006, we have not been issued the license
because the PaGCB stated that the license would not be issued
until all appeals were decided. To date, one of the unsuccessful
applicants for a category 2 at large license has
announced its intention to file an appeal, which will be heard
by the Pennsylvania Supreme Court. Issuance of the license
requires, among other things, the payment of a
$50.0 million license fee. Just prior to opening of Sands
Bethworks, we will be required to make a deposit of
$5.0 million to cover weekly withdrawals of our appropriate
share of the cost of regulation and the amount withdrawn must be
replenished weekly.
We must notify the PaGCB if we become aware of any proposed or
contemplated change of more than 5% of the ownership interests
of Sands Bethworks Gaming or of more than 5% of the ownership
interests of any entity that owns, directly or indirectly, at
least 20% of Sands Bethworks Gaming, including Las Vegas Sands
Corp. The acquisition of more than 20% of the ownership
interests of Sands Bethworks Gaming or of any entity that owns,
directly or indirectly, at least 20% of Sands Bethworks Gaming
would be defined as a change of control under applicable
Pennsylvania gaming law and regulations. Upon a change of
control, the acquirer of the ownership interests would be
required to qualify for licensure and to pay a new license fee
of $50.0 million. The PaGCB retains the discretion to
eliminate the need for qualification and may reduce the license
fee upon a change of control. Any acquirer of membership
interests in connection with a change of control that is found
to be not qualified for licensure must divest its acquired
interests within 120 days or the time period specified by
the PaGCB.
Macao
Concession and Our Subconcession
In June 2002, the Macao government granted a concession to
operate casinos in Macao to Galaxy. Galaxy was one of three
entities to be granted a casino license in Macao. During
December 2002, we entered into a subconcession agreement with
Galaxy, which was approved by the Macao government. The
subconcession agreement allows us to develop and operate certain
casino projects in Macao, including The Sands Macao and The
Venetian Macao separately from Galaxy. Under the subconcession
agreement, we are obligated to develop and open The Venetian
Macao and a convention center by December 2007. We are also
obligated to operate casino games of chance or games of other
forms in Macao and to invest, or cause to be invested, at least
4.4 billion patacas (approximately $549.3 million at
exchange rates in effect on December 31, 2006) in
various development projects in Macao by June 2009. We have been
informed by the Macao government that the construction and
development costs of The Sands Macao can be applied to the
fulfillment of this total investment obligation. As a result, as
of December 31, 2005, we had invested the required amounts.
We are currently scheduled to open The Venetian Macao in summer
2007. If we fail to meet the December 2007 deadline under our
subconcession, the Macao government has the right, after
consultation with our concessionaire, Galaxy, to unilaterally
terminate our subconcession to operate The Sands Macao or any of
our other casino operations in Macao, without compensation to
us. If this occurs, we may lose our right to continue to operate
The Sands Macao and our investment to date in the construction
of The Venetian Macao. See Risk
Factors Risks Related to Our Business
There are significant risks associated with our planned
construction projects, which could adversely affect our
financial condition, results of operations or cash flows from
these planned facilities
If the Galaxy concession is terminated for any reason, the
subconcession will remain in effect. The subconcession may be
terminated by agreement between ourselves and Galaxy. Galaxy is
not entitled to terminate the subconcession unilaterally.
However, the Macao government, with the consent of Galaxy, may
terminate the subconcession under certain circumstances. Galaxy
will develop hotel and casino projects separately from us. In
October 2006, Galaxy opened its StarWorld Hotel &
Casino in Macao. The property has over 500 hotel rooms and a
140,000 square foot gaming floor with approximately 300
table games and 370 slot machines.
We are subject to licensing and control under applicable Macao
law. We are required to be licensed by the Macao gaming
authorities to operate a casino. We must pay periodic fees and
taxes, and our gaming license is not
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transferable. We must periodically submit detailed financial and
operating reports to the Macao gaming authorities and furnish
any other information that the Macao gaming authorities may
require. No person may acquire any rights over the shares or
assets of VML without first obtaining the approval of the Macao
gaming authorities. Similarly, no person may enter into
possession of its premises or operate them through a management
agreement or any other contract or through step in rights
without first obtaining the approval of, and receiving a license
from, the Macao gaming authorities. The transfer or creation of
encumbrances over ownership of shares representing the share
capital of VML or other rights relating to such shares, and any
act involving the granting of voting rights or other
stockholders rights to persons other than the original
owners, would require the approval of the Macao government and
the subsequent report of such acts and transactions to the Macao
gaming authorities.
Our subconcession agreement requires approval of the Macao
government for transfers of shares, or of any rights over such
shares, in any of the direct or indirect stockholders in VML,
including us, provided that such shares or rights are directly
or indirectly equivalent to an amount that is equal or higher
than 5% of the share capital in VML. This approval requirement
will not apply, however, if the securities are listed and
tradable on a stock market. In addition, this agreement requires
that the Macao government be given notice of the creation of any
encumbrance or the grant of voting rights or other
stockholders rights to persons other than the original
owners on shares in any of the direct or indirect stockholders
in VML, including us, provided that such shares or rights are
indirectly equivalent to an amount that is equal or higher than
5% of the share capital in VML. This notice requirement will not
apply, however, to securities listed and tradable on a stock
exchange.
The Macao gaming authorities may investigate any individual who
has a material relationship to, or material involvement with, us
to determine whether our suitability
and/or
financial capacity is affected by this individual. Our
shareholders with 5% or more of the share capital, directors and
some of our key employees must apply for and undergo a finding
of suitability process and maintain due qualification during the
subconcession term, and accept the persistent and long-term
inspection and supervision exercised by the Macao government.
VML is required to immediately notify the Macao government
should VML become aware of any fact that may be material to the
appropriate qualification of any shareholder who owns 5% of the
share capital, or any director or key employee. Changes in
licensed positions must be reported to the Macao gaming
authorities, and in addition to their authority to deny an
application for a finding of suitability or licensure, the Macao
gaming authorities have jurisdiction to disapprove a change in
corporate position. If the Macao gaming authorities were to find
one of our officers, directors or key employees unsuitable for
licensing, we would have to sever all relationships with that
person. In addition, the Macao gaming authorities may require us
to terminate the employment of any person who refuses to file
appropriate applications.
Any person who fails or refuses to apply for a finding of
suitability after being ordered to do so by the Macao gaming
authorities may be found unsuitable. Any stockholder found
unsuitable and who holds, directly or indirectly, any beneficial
ownership of the common stock of a registered corporation beyond
the period of time prescribed by the Macao gaming authorities
may lose his rights to the shares. We will be subject to
disciplinary action if, after we receive notice that a person is
unsuitable to be a stockholder or to have any other relationship
with us, we:
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pay that person any dividend or interest upon its shares;
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allow that person to exercise, directly or indirectly, any
voting right conferred through shares held by that person;
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pay remuneration in any form to that person for services
rendered or otherwise; or
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fail to pursue all lawful efforts to require that unsuitable
person to relinquish its shares.
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The Macao gaming authorities also have the authority to approve
all persons owning or controlling the stock of any corporation
holding a gaming license.
The Macao gaming authorities also require prior approval for the
creation of liens and encumbrances over VMLs assets and
restrictions on stock in connection with any financing.
The Macao gaming authorities must give their prior approval to
changes in control of VML through a merger, consolidation, stock
or asset acquisition, management or consulting agreement or any
act or conduct by any person
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whereby he or she obtains control. Entities seeking to acquire
control of a registered corporation must satisfy the Macao
gaming authorities concerning a variety of stringent standards
prior to assuming control. The Macao Gaming 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.
The Macao gaming authorities may consider that some management
opposition to corporate acquisitions, repurchases of voting
securities and corporate defense tactics affecting Macao gaming
licensees, and registered corporations that are affiliated with
those operations, may be injurious to stable and productive
corporate gaming.
The Macao gaming authorities also have the power to supervise
gaming licensees in order to:
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assure the financial stability of corporate gaming operators and
their affiliates;
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preserve the beneficial aspects of conducting business in the
corporate form; and
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promote a neutral environment for the orderly governance of
corporate affairs.
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The subconcession agreement requires the Macao gaming
authorities prior approval of any recapitalization plan
proposed by VMLs board of directors. The Chief Executive
of Macao could also require VML to increase its share capital if
he deemed it necessary.
Non-compliance with these obligations could lead to the
revocation of VMLs gaming subconcession.
The Sands Macao was constructed and is operated, and The
Venetian Macao Hotel Resort Casino is being constructed and will
be operated, under our subconcession agreement. This
subconcession excludes the following gaming activities: mutual
bets, lotteries, raffles, interactive gaming and games of chance
or other gaming, betting or gambling activities on ships or
planes. Our subconcession is exclusively governed by Macao law.
We are subject to the exclusive jurisdiction of the courts of
Macao in case of any potential dispute or conflict relating to
our subconcession.
Our subconcession agreement expires on June 26, 2022.
Unless our subconcession is extended, on that date, all our
casino operations and related equipment in Macao will
automatically be transferred to the Macao government without
compensation to us and we will cease to generate any revenues
from these operations. Beginning on June 27, 2017, the
Macao government may redeem our subconcession by giving us at
least one year prior notice and by paying us fair compensation
or indemnity. The amount of such compensation or indemnity will
be determined based on the amount of revenue generated during
the tax year prior to the redemption. See Risk
Factors Risks Associated with Our International
Operations We will stop generating any revenues from
our Macao gaming operations if we cannot secure an extension of
our subconcession in 2022 or if the Macao government exercises
its redemption right at any time beginning on December 26,
2017.
The Macao government also has the right, after consultation, to
unilaterally terminate, without compensation to us, the
subconcession at any time upon the occurrence of specified
events of default. See Risk Factors Risks
Associated with Our International Operations The
Macao government can terminate our subconcession under certain
circumstances without compensation to us, which would have a
material adverse effect on our financial condition, results of
operations or cash flows. The subconcession agreement does
not provide a specific cure period within which any such events
of default may be cured. We must rely on consultations and
negotiations with the Macao government to give us an opportunity
to remedy any such default. Accordingly, we are dependent on our
continuing communications and good faith negotiations with the
Macao government to ensure that we are performing our
obligations under the subconcession in a manner that would avoid
a default thereunder.
The subconcession agreement contains various general covenants
and obligations and other provisions, the compliance with which
is subjective. We have the following obligations under the
subconcession agreement:
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ensure the proper operation and conduct of casino games;
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employ people with appropriate qualifications;
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operate and conduct casino games of chance in a fair and honest
manner without the influence of criminal activities; and
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safeguard and ensure Macaos interests in tax revenue from
the operation of casinos and other gaming areas.
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In addition, the subconcession agreement requires us to maintain
a certain minimum level of insurance. Failure to satisfy these
requirements could result in a default under the subconcession.
We are also subject to certain reporting requirements in Macao,
including to the Macao Gambling Inspection and Coordination
Bureau.
Under the subconcession, we are obligated to pay to the Macao
government an annual premium with a fixed portion and a variable
portion based on the number and type of gaming tables employed
and gaming machines operated by us. The fixed portion of the
premium is equal to 30.0 million patacas (approximately
$3.7 million at exchange rates in effect on
December 31, 2006). The variable portion is equal to
300,000 patacas per gaming table reserved exclusively for
certain kinds of games or players, 150,000 patacas per gaming
table not so reserved and 1,000 patacas per electrical or
mechanical gaming machine, including slot machines
(approximately $37,454, $18,727 and $125, respectively, at
exchange rates in effect on December 31, 2006), subject to
a minimum of 45.0 million patacas (or $5.6 million at
exchange rates in effect on December 31, 2006). We also
have to pay a special gaming tax of 35% of gross gaming revenues
and applicable withholding taxes. We must also contribute 4% of
our gross gaming revenue to utilities designated by the Macao
government, a portion of which must be used for promotion of
tourism in Macao. This percentage will be subject to change in
2010.
Currently, the gaming tax in Macao is calculated as a percentage
of gross gaming revenue. However, unlike Nevada, gross gaming
revenue does not include deductions for credit losses. As a
result, if we extend credit to our customers in Macao and are
unable to collect on the related receivables from them, we have
to pay taxes on our winnings from these customers even though we
were unable to collect on the related receivables from them. We
are currently offering credit to customers in Macao on a very
limited basis. If the laws are not changed, our business in
Macao may not be able to realize the full benefits of extending
credit to our customers. Although there are proposals to revise
the gaming tax laws in Macao, there can be no assurance that the
laws will be changed.
We have received an exemption from Macaos corporate income
tax on profits generated by the operation of casino games of
chance for the five-year period ending December 31, 2008.
See Risk Factors Risks Associated with Our
International Operations We are currently not
required to pay corporate income taxes on our casino gaming
operations in Macao. This tax exemption expires at the end of
2008.
Employees
We directly employ approximately 6,300 employees in connection
with The Venetian, approximately 180 employees in connection
with The Sands Expo Center and approximately 8,800 employees in
connection with The Sands Macao. In addition, we hire temporary
employees on an as needed basis at The Venetian. The
Venetians employees are not covered by collective
bargaining agreements. Most, but not all, major casino resorts
situated on the Las Vegas Strip have collective bargaining
contracts covering at least some of the labor force at such
sites. We believe that we have good relations with our employees.
The unions currently on the Las Vegas Strip include Local 226
Culinary, Workers Union of the Hotel Employees and Restaurant
Employees International Union, the Operating Engineers Union and
the Teamsters Union. Prior to and since the opening of The
Venetian, Local 226 has requested that we recognize it as the
bargaining agent for employees of The Venetian. We have declined
to do so, believing that current and 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, Local 226 has engaged in certain confrontational and
obstructive tactics, including contacting potential customers,
tenants, and investors, objecting to various administrative
approvals and picketing. Local 226 has engaged in these types of
tactics with respect to The Venetian and may continue to do so.
Although we believe we will be able to operate despite such
dispute, no assurance can be given that we will be able to do so
or that the failure to do so would not result in a material
adverse effect on our financial condition, results of operations
or cash flows. Although no assurances can be given, if employees
decide to be represented by labor unions, management does not
believe that such representation would have a material impact
upon our financial condition, results of operations or cash
flows.
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We are not aware of any union activity at The Sands Macao.
Certain culinary personnel are hired from time to time for trade
shows and conventions at The Sands Expo Center and are covered
under a collective bargaining agreement between Local 226 and
The Sands Expo Center. This collective bargaining agreement
expired in December 2000. As a result, The Sands Expo Center is
operating under the terms of the expired bargaining agreement
with respect to these employees.
Intellectual
Property
Our principal intellectual property consists of, among others,
the Sands, Venetian, Palazzo
and Paiza trademarks, all of which have been
registered in various classes in the United States. In addition,
we have also applied to register the marks Cotai
Strip, Macau Strip, and Asias Las
Vegas, among others, in connection with our development
projects in Macao and other marks in connection with our
Singapore and Pennsylvania projects. We have also registered
and/or
applied to register many of our trademarks in various foreign
jurisdictions. These trademarks are brand names under which we
market our properties and services. We consider these brand
names to be important to our business since they have the effect
of developing brand identification. We believe that the name
recognition, reputation and image that we have developed attract
customers to our facilities. Once granted, our trademark
registrations are of perpetual duration so long as they are
periodically renewed. It is our intent to maintain our trademark
registrations.
Agreements
Relating to the Malls
The
Grand Canal Shops Mall Sale and Lease Agreement
On April 12, 2004, we entered into an agreement with GGP to
sell The Grand Canal Shops mall and lease to GGP certain
restaurant and other retail space at the casino level of The
Venetian for approximately $766.0 million. We completed the
sale of The Grand Canal Shops mall on May 17, 2004. In
addition, on the same date we leased to GGP 19 spaces on the
casino level of The Venetian currently occupied by various
retail and restaurant tenants for 89 years with annual rent
of one dollar per year, and GGP assumed our interest as landlord
under the various space leases associated with these 19 spaces.
In addition, on the same date we agreed with GGP to:
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continue to be obligated to fulfill certain lease termination
and asset purchase agreements;
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lease the Blue Man Group Theater space located within The Grand
Canal Shops mall from GGP for a period of 25 years, subject
to an additional 50 years of extension options, with
initial fixed minimum rent of $3.3 million per year;
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lease the gondola retail store and the canal space located
within The Grand Canal Shops mall from GGP for a period of
25 years, subject to an additional 50 years of
extension options, with initial fixed minimum rent of
$3.5 million per year; and
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lease certain office space from GGP for a period of
10 years, subject to an additional 65 years of
extension options, with initial annual rent of $0.9 million.
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The lease payments relating to the Blue Man Group Theater, the
canal space within The Grand Canal Shops mall and the office
space from GGP are subject to automatic increases of 5% in the
sixth lease year and each subsequent fifth lease year.
Development
Agreement
A subsidiary of The Palazzo and GGP entered into a development
agreement whereby The Palazzo subsidiary agreed to construct the
Phase II mall, and GGP agreed to buy 100% of the membership
interests in Phase II Mall Subsidiary, LLC, which will own
the Phase II mall when it opens, on the terms described
below. The Palazzo subsidiary has assigned substantially all of
its obligations under the development agreement to Phase II
Mall Holding, LLC, but has agreed to remain jointly and
severally liable to GGP for all such obligations. The Palazzo
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subsidiary agreed to substantially complete construction of the
Phase II mall (subject to
force majeure
and certain
other delays) no later than the earlier of:
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36 months after the date when The Palazzo subsidiary
receives sufficient permits to begin construction of the
Phase II mall; and
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March 1, 2008.
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In the event that the Phase II mall is not substantially
completed on or before the stated date, GGP is entitled to
receive liquidated damages in the amount of $5,000 per day
for the first six months and $10,000 per day for an
additional six months after the completion deadline has passed.
If substantial completion has not occurred on or before one year
after the above deadline, Phase II Mall Holding, LLC and
The Palazzo subsidiary will be jointly and severally obligated
to pay GGP liquidated damages in the amount of
$100.0 million.
In the event that Phase II Mall Holding, LLC, and The
Palazzo subsidiary comply with all of their obligations under
the development agreement and GGP fails to acquire the
membership interests in the entity owning the Phase II
mall, Phase II Mall Holding, LLC will be entitled to:
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sue GGP for specific performance;
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liquidated damages in the amount of $100.0 million; or
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purchase the interest of GGP in The Grand Canal Shops mall for
(a) the lesser of (i) $766.0 million and
(ii) the fair market value minus
(b) $100.0 million.
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The purchase price that GGP has agreed to pay for the
Phase II mall is the greater of
(i) $250.0 million and (ii) the Phase II
malls net operating income for months 19 through 30 of its
operations (assuming that the rent due from all tenants in month
30 was actually due in each of months 19 through
30) divided by a capitalization rate. The capitalization
rate is 0.06 for every dollar of net operating income up to
$38.0 million and 0.08 for every dollar of net operating
income above $38.0 million. On the date the Phase II
mall opens to the public, GGP will be obligated to make an
initial purchase price payment based on projected net operating
income for the first 12 months of operations (but in no
event less than $250.0 million). Every six months
thereafter until the 24 month anniversary of the opening
date, the required purchase price will be adjusted (up or down,
but never to less than $250.0 million) based on projected
net operating income for the upcoming 12 months. The
final purchase price adjustment (subject to audit
thereafter) will be made on the
30-month
anniversary of the Phase II malls opening date and
will be based on the formula described in the first two
sentences of this paragraph. For all purchase price and purchase
price adjustment calculations, net operating income
will be calculated by using the accrual method of
accounting and, for purposes of calculating the final purchase
price adjustment, by applying the base rent payable by all
tenants in the last month of the applicable
12-month
period to the entire
12-month
period.
Disputes under the development agreement will be resolved by
arbitration or an independent expert selected by the parties.
Cooperation
Agreement
Our business plan calls for each of The Venetian, The Congress
Center, The Grand Canal Shops mall, The Sands Expo Center, The
Palazzo and the Phase II mall, though separately owned, to
be integrally related components of one facility. In
establishing the terms for the integrated operation of these
components, the cooperation agreement sets forth agreements
regarding, among other things, encroachments, easements,
operating standards, maintenance requirements, insurance
requirements, casualty and condemnation, joint marketing, the
construction of The Palazzo, and the sharing of some facilities
and related costs. Subject to applicable law, the cooperation
agreement binds all current and future owners of The Sands Expo
Center, The Venetian, The Grand Canal Shops mall, The Palazzo,
The Congress Center and the Phase II mall, and has priority
over the liens securing Las Vegas Sands, LLCs amended and
restated senior secured credit facility (the Senior
Secured Credit Facility) and any liens securing any
indebtedness of The Grand Canal Shops mall, The Sands Expo
Center, The Palazzo or Phase II mall. Accordingly, subject
to applicable law, the obligations in the cooperation agreement
will run with the land if any of the components
change hands. Although certain of the provisions in the
cooperation agreement apply only to The Sands Expo Center, The
Venetian and The Grand Canal Shops mall, it is contemplated that
similar
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provisions will be added to the cooperation agreement with
respect to The Palazzo and the Phase II mall prior to their
opening.
Operating Covenants.
The cooperation agreement
regulates certain aspects of the operation of The Sands Expo
Center, The Grand Canal Shops mall and The Venetian. For
example, under the cooperation agreement, we are obligated to
operate The Venetian continuously and to use it exclusively in
accordance with standards of first-class Las Vegas
Boulevard-style hotels and casinos. We are also obligated to
operate and to use The Sands Expo Center exclusively in
accordance with standards of first-class convention, trade show
and exposition centers. The owner of The Grand Canal Shops mall
is obligated to operate The Grand Canal Shops mall exclusively
in accordance with standards of first-class restaurant and
retail complexes. For so long as The Venetian is operated in
accordance with a Venetian theme, the owner of The
Grand Canal Shops mall must operate The Grand Canal Shops mall
in accordance with the overall Venetian theme.
Maintenance and Repair.
We must maintain The
Venetian as well as some common areas and common facilities that
are to be shared with The Grand Canal Shops mall. The cost of
maintenance of all shared common areas and common facilities is
to be shared between us and the owner of The Grand Canal Shops
mall. We must also maintain, repair, and restore The Sands Expo
Center and certain common areas and common facilities located in
The Sands Expo Center. The owner of The Grand Canal Shops mall
must maintain, repair, and restore The Grand Canal Shops mall
and certain common areas and common facilities located in The
Grand Canal Shops mall.
Insurance.
We and the owner of The Grand Canal
Shops mall must also maintain minimum types and levels of
insurance, including property damage, general liability and
business interruption insurance. The cooperation agreement
establishes an insurance trustee to assist in the implementation
of the insurance requirements.
Parking.
The cooperation agreement also
addresses issues relating to the use of The Venetians
parking facilities, the use of parking facilities planned in
connection with The Palazzo and easements for access. The
Venetian, The Grand Canal Shops mall and The Sands Expo Center
may use the parking spaces in The Venetians parking garage
on a first come, first served basis, as long as each
property retains use of sufficient spaces to comply with
specified minimum parking standards. This means that each
property shall have the right to use, at a minimum, sufficient
spaces to comply with applicable laws and to conduct its
business as permitted under the cooperation agreement. The
Venetians parking garage is owned, maintained, and
operated by us, with the proportionately allocated operating
costs billed to the owner of The Grand Canal Shops mall. After
the completion of the parking garage to be built in connection
with The Palazzo, The Venetian, The Grand Canal Shops mall, The
Sands Expo Center and, when completed, the Phase II mall
will have the right to use The Palazzo parking garage, with the
operating costs proportionately allocated among each facility.
Each party to the cooperation agreement has granted to the
others non-exclusive easements and rights to use the roadways
and walkways on each others properties for vehicular and
pedestrian access to the parking garages.
Utility Easement.
All property owners have
also granted each other all appropriate and necessary easement
rights to utility lines servicing The Venetian, The Grand Canal
Shops mall, The Palazzo, the Phase II mall and The Sands
Expo Center.
Consents, Approvals and Disputes.
If any
current or future party to the cooperation agreement has a
consent or approval right or has discretion to act or refrain
from acting, the consent or approval of such party will only be
granted and action will be taken or not taken only if a
commercially reasonable owner would do so and such consent,
approval, action or inaction would not have a material adverse
effect on the property owned by such property owner. The
cooperation agreement provides for the appointment of an
independent expert to resolve some disputes between the parties,
as well as for expedited arbitration for other disputes.
Sale of The Grand Canal Shops mall by GGP.
We
have a right of first offer in connection with any proposed sale
of The Grand Canal Shops mall by GGP. We also have the right to
receive notice of any default of GGP sent by its mortgagee, if
any, and the right to cure such default subject to our meeting
certain net worth tests.
HVAC
Services Agreement and Related Documents
Atlantic-Pacific Las Vegas, LLC, a subsidiary of Thermal Western
Holdings, Inc., is the heating, ventilation and air conditioning
(HVAC) provider to The Venetian, The Sands Expo
Center, Venezia tower and The Palazzo
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(collectively referred to as the Property). Thermal
energy (i.e., heating and air conditioning) is provided to the
Property by the HVAC provider using certain heating and air
conditioning-related and other equipment (the HVAC
Equipment). In addition, the HVAC provider provides us
with other energy-related services. The central HVAC plant is
located on land owned by us, which has been leased to the HVAC
provider for a nominal annual rent. Except for equipment added
since the opening of The Venetian, the HVAC plant and 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 Property, including The Grand Canal Shops mall.
The HVAC provider paid all costs (HVAC costs) in
connection with the purchase and installation of the HVAC plant
and equipment in connection with the original construction of
The Venetian, which costs totaled $70.0 million. The HVAC
provider has entered into separate service contracts
(collectively, the HVAC service agreements) with
Venetian Casino Resort, LLC (which as amended includes The
Palazzo), Interface Group-Nevada, Inc. (Interface
Group-Nevada) and the owner of The Grand Canal Shops mall,
for the provision of heat and cooling requirements at agreed-to
rates. The charges payable by all users include a fixed
component that enables the HVAC provider to recover 85% of the
HVAC costs over the initial term of the service contracts, with
interest at a fixed annual rate of 7.1%. 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 $0.7 million 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 owner of The
Grand Canal Shops mall is liable for the obligations of each
mall tenant. The HVAC service agreements expire in 2009, at
which time the users will have the right, but not the
obligation, to collectively either extend the term of their
agreements for five years (with a second, additional five-year
renewal option) each or purchase the HVAC plant and equipment in
accordance with purchase provisions set forth in the HVAC
service agreements.
ITEM 1A.
RISK FACTORS
You should carefully consider the risk factors set forth below
as well as the other information contained in this Annual Report
on
Form 10-K
in connection with evaluating the Company. Additional risks and
uncertainties not currently known to us or that we currently
deem to be immaterial may also materially and adversely affect
our business, financial condition, results of operations or cash
flows. Certain statements in Risk Factors are
forward-looking statements. See Item 7
Managements Discussion and Analysis of Financial Condition
and Results of Operations Special
Note Regarding Forward-Looking Statements.
Risks
Related to Our Business
Our
business is particularly sensitive to reductions in
discretionary consumer spending as a result of downturns in the
economy.
Consumer demand for hotel casino resorts, trade shows and
conventions and for the type of luxury amenities we offer may be
particularly sensitive to downturns in the economy. Changes in
consumer preferences or discretionary consumer spending brought
about by factors such as fears of war, future acts of terrorism,
general economic conditions, disposable consumer income, fears
of recession and changes in consumer confidence in the economy
could reduce customer demand for the luxury products and leisure
services we offer, thus imposing practical limits on pricing and
harming our operations.
Our
business is sensitive to the willingness of our customers to
travel. Acts of terrorism, regional political events and
developments in the conflicts in Iraq, Afghanistan and elsewhere
could cause severe disruptions in air travel that reduce the
number of visitors to our facilities, resulting in a material
adverse effect on our financial condition, results of operations
or cash flows.
We are dependent on the willingness of our customers to travel.
A substantial number of our customers for The Venetian use air
travel to come to Las Vegas. On September 11, 2001, acts of
terrorism occurred in New York City, Pennsylvania and
Washington, D.C. As a result of these terrorist acts,
domestic and international travel was severely disrupted, which
resulted in a decrease in customer visits to Las Vegas,
including to The Venetian and The Sands
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Expo Center. In addition, developments in the conflicts in Iraq,
Afghanistan and elsewhere, and regional issues such as tension
between the Peoples Republic of China and Taiwan and
issues relating to North Korea could have a similar effect on
domestic and international travel. Most of our customers travel
to reach either The Venetian or The Sands Macao. Only a small
amount of our business is generated by local residents.
Management cannot predict the extent to which disruptions in air
or other forms of travel as a result of any further terrorist
act, outbreak of hostilities or escalation of war would
adversely affect our financial condition, results of operations
or cash flows.
An
outbreak of highly infectious disease could adversely affect the
number of visitors to our facilities and disrupt our operations,
resulting in a material adverse effect on our financial
condition, results of operations or cash flows.
In 2003, Taiwan, China, Hong Kong, Singapore and certain other
regions experienced an outbreak of a highly contagious form of
atypical pneumonia now known as severe acute respiratory
syndrome (SARS). As a result of the outbreak, there
was a decrease in travel to and from, and economic activity in,
affected regions, including Macao. In addition, there have been
recent fears concerning the spread of an avian flu
in Asia. Potential future outbreaks of SARS, avian flu or other
highly infectious diseases may adversely affect the number of
visitors to The Sands Macao, The Venetian, The Sands Expo Center
and other properties we are developing in Las Vegas or Macao and
our other projects. Furthermore, an outbreak might disrupt our
ability to adequately staff our business and could generally
disrupt our operations. If any of our customers or employees is
suspected of having contracted certain highly contagious
diseases, we may be required to quarantine these customers or
employees or the affected areas of our facilities and
temporarily suspend part or all of our operations at affected
facilities. Any new outbreak of such a highly infectious disease
could have a material adverse effect on our financial condition,
results of operations or cash flows.
There
are significant risks associated with our planned construction
projects, which could adversely affect our financial condition,
results of operations or cash flows from these planned
facilities.
Our ongoing and future construction projects, such as The
Palazzo, The Venetian Macao, Marina Bay Sands and Sands
Bethworks, entail significant risks. Construction activity
requires us to obtain qualified contractors and subcontractors,
the availability of which may be uncertain. Construction
projects are subject to cost overruns and delays caused by
events outside of our control or, in certain cases, our
contractors control, such as shortages of materials or
skilled labor, unforeseen engineering, environmental and/or
geological problems, work stoppages, weather interference,
unanticipated cost increases and unavailability of construction
materials or equipment. Construction, equipment or staffing
problems or difficulties in obtaining any of the requisite
materials, licenses, permits, allocations and authorizations
from governmental or regulatory authorities could increase the
total cost, delay, jeopardize or prevent the construction or
opening of such projects or otherwise affect the design and
features of The Palazzo, The Venetian Macao, Marina Bay Sands,
Sands Bethworks or other projects. In addition, the number of
ongoing projects and their locations throughout the world
present unique challenges and risks to our management structure.
If our management is unable to successfully manage our worldwide
construction projects, it could have an adverse impact on our
financial condition, results of operations or cash flows.
We have not entered into a fixed-price or guaranteed maximum
price contract with a single construction manager or general
contractor for the construction of The Palazzo, The Venetian
Macao or Marina Bay Sands. As a result, we will rely heavily on
our in-house development and construction team to manage
construction costs and coordinate the work of the various trade
contractors. The lack of any fixed-price contract with a
construction manager or general contractor will put more of the
risk of cost-overruns on us. If we are unable to manage costs or
we are unable to raise additional capital required to complete
The Palazzo, The Venetian Macao, Marina Bay Sands or Sands
Bethworks, we may not be able to open or complete these
projects, which may have an adverse impact on our business and
prospects for growth.
The anticipated costs and completion dates for The Palazzo, The
Venetian Macao, Marina Bay Sands, Sands Bethworks and our other
projects are based on budgets, designs, development and
construction documents and schedule estimates that we have
prepared with the assistance of architects and other
construction development consultants and that are subject to
change as the design, development and construction documents are
finalized and more actual construction work is performed. A
failure to complete The Palazzo, The Venetian Macao, Marina Bay
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Sands, Sands Bethworks or our other projects on budget or on
schedule may adversely affect our financial condition, results
of operations or cash flows. See Risks
Associated with our International Operations We are
required to build and open The Venetian Macao and a convention
center by December 2007. Unless we meet this deadline or obtain
an extension, we may lose our right to continue to operate The
Sands Macao or any other facilities developed under the
subconcession.
In May 2006, we entered into a $2.5 billion facility for
the partial financing of The Sands Macao expansion, The Venetian
Macao and our other Cotai Strip developments. A significant
portion of The Sands Macaos cash flows will also be used
to finance the construction of The Venetian Macao. If The Sands
Macaos cash flows and the credit facility are not
sufficient, additional equity or debt financings may be needed
to finance the remainder of the construction of The Venetian
Macao.
In addition, this credit facility will not cover all of the
costs of our other Cotai Strip developments. We expect that the
construction of the other Cotai Strip developments will require
significant additional debt
and/or
equity financings. We cannot assure you that we will obtain all
the financing required for the construction and opening of The
Sands Macao expansion, The Venetian Macao or our other Cotai
Strip developments.
In addition, the debt agreements to fund the construction of The
Palazzo and The Venetian Macao contain significant conditions
that must be satisfied in order for us to be able to continue to
use the proceeds available under these facilities, including:
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having sufficient funds available so that construction costs of
The Palazzo or The Venetian Macao are in balance for
purposes of the applicable debt instruments;
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obtaining various consents and other agreements from third
parties, including trade contractors; and
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other customary conditions.
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We expect the cost to develop and construct the Marina Bay Sands
integrated resort to be approximately $3.6 billion,
inclusive of the land premium, taxes and other fees. In August
2006, MBS entered into agreements providing for approximately
$1.44 billion of financing for the Marina Bay Sands. We
expect that the construction of the Marina Bay Sands will
require significant additional debt
and/or
equity financings. We cannot assure you that we will obtain all
the financing required for the construction and opening of the
Marina Bay Sands.
The failure to obtain the necessary financing, or satisfy these
funding conditions, could adversely affect our ability to
construct The Palazzo, The Venetian Macao, our other planned
Cotai Strip developments, Marina Bay Sands, Sands Bethworks and
our other development projects.
Because
we are currently dependent upon three properties in two markets
for all of our cash flow, we will be subject to greater risks
than a gaming company with more operating properties or that
operates in more markets.
We currently do not have material assets or operations other
than The Venetian, The Sands Expo Center and The Sands Macao. As
a result, we will be entirely dependent upon these properties
for all of our cash flow until we complete the development of
other properties.
Given that our operations are currently conducted at two
properties in Las Vegas and one property in Macao and that a
large portion of our planned future development is in Las Vegas
and Macao, we will be subject to greater degrees of risk than a
gaming company with more operating properties in more markets.
The risks to which we will have a greater degree of exposure
include the following:
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local economic and competitive conditions;
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inaccessibility due to inclement weather, road construction or
closure of primary access routes;
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decline in air passenger traffic due to higher ticket costs or
fears concerning air travel;
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changes in local and state governmental laws and regulations,
including gaming laws and regulations;
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natural and other disasters, including the risk of typhoons in
the South China region or outbreaks of infectious diseases;
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an increase in the cost of electrical power for our Las Vegas
properties as a result of, among other things, power shortages
in California or other western states with which Nevada shares a
single regional power grid;
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changes in the availability of water; and
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a decline in the number of visitors to Las Vegas or Macao.
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Our
substantial debt could impair our financial condition, results
of operations or cash flows. We may need to incur additional
debt to finance our planned construction projects.
We are highly leveraged and have substantial debt service
obligations. As of December 31, 2006, we had approximately
$4.14 billion of long-term debt outstanding. We expect that
our Cotai Strip developments, Marina Bay Sands and Sands
Bethworks will be financed in large part by additional debt. See
There are significant risks associated with
our planned construction projects, which could adversely affect
our financial condition, results of operations or cash flows
from these planned facilities.
This substantial indebtedness could have important consequences
to us. For example, it could:
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make it more difficult for us to satisfy our debt obligations;
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increase our vulnerability to general adverse economic and
industry conditions;
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impair our ability to obtain additional financing in the future
for working capital needs, capital expenditures, development
projects, acquisitions or general corporate purposes;
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require us to dedicate a significant portion of our cash flow
from operations to the payment of principal and interest on our
debt, which would reduce the funds available for our operations;
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limit our flexibility in planning for, or reacting to, changes
in the business and the industry in which we operate;
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place us at a competitive disadvantage compared to our
competitors that have less debt; and
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subject us to higher interest expense in the event of increases
in interest rates to the extent a portion of our debt is and
will continue to be at variable rates of interest.
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The
terms of our debt instruments may restrict our current and
future operations, particularly our ability to finance
additional growth, respond to changes or take some actions that
may otherwise be in our best interests.
Our and our subsidiaries current debt instruments contain,
and any future debt instruments, including the debt instruments
for the financing of our other Cotai Strip developments and
Marina Bay Sands, likely will contain, a number of restrictive
covenants that impose significant operating and financial
restrictions on us and our subsidiaries.
Las Vegas Sands, LLCs Senior Secured Credit Facility and
the credit facility for the construction of The Venetian Macao
include covenants restricting, among other things, the ability
of Las Vegas Sands, LLC or VML, respectively, to:
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incur additional debt, including guarantees or credit support;
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incur liens securing indebtedness;
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dispose of assets;
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make certain acquisitions;
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pay dividends or make distributions and make other restricted
payments, such as purchasing equity interests, repurchasing
junior indebtedness or making investments in third parties;
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enter into sale and leaseback transactions;
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engage in any new businesses;
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issue preferred stock; and
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enter into transactions with our stockholders and our affiliates.
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Las Vegas Sands, LLCs Senior Secured Credit Facility also
includes financial covenants, including requirements that Las
Vegas Sands, LLC satisfy:
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a minimum consolidated net worth test;
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a maximum consolidated capital expenditure test;
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a minimum consolidated interest coverage ratio; and
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a maximum consolidated leverage ratio.
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VMLs credit facility for the construction of The Venetian
Macao also includes financial covenants, including requirements
that VML satisfy:
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a minimum consolidated EBITDA test for a period of time, and
from and after certain construction and operational thresholds
are met, a minimum consolidated interest coverage ratio test and
a maximum consolidated leverage ratio test; and
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a maximum consolidated capital expenditure test.
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The debt facilities for the Marina Bay Sands contain customary
affirmative and negative covenants, including limitations on
liens, indebtedness, investments, acquisitions and asset sales,
restricted payments, affiliate transactions and use of proceeds
from the facilities. The facilities also contain events of
defaults, including a nationalization of the Marina Bay Sands,
the termination of our Development Agreement with the Singapore
Tourism Board, the termination of the lease for the land
underlying the Marina Bay Sands or the failure of the Singapore
casino license to be awarded.
The indenture governing our $250.0 million in aggregate
principal amount of 6.375% senior notes also restricts,
among other things, our ability to incur liens and enter into
certain sale and lease-back transactions.
Our future debt or other contracts could contain financial or
other covenants more restrictive than those applicable under the
above instruments.
Our
insurance coverage may not be adequate to cover all possible
losses that our properties could suffer. In addition, our
insurance costs may increase and we may not be able to obtain
the same insurance coverage in the future.
Although we have all-risk property insurance for The Venetian,
The Sands Expo Center and The Sands Macao covering damage caused
by a casualty loss (such as fire and natural disasters), each
policy has certain exclusions. In addition, our property
insurance coverage for The Venetian, The Sands Expo Center and
The Sands Macao is in an amount that may be significantly less
than the expected replacement cost of rebuilding the complex if
there was a total loss. Our level of insurance coverage for The
Venetian and The Sands Expo Center may not be adequate to cover
all losses in the event of a major casualty. In addition,
certain casualty events, such as labor strikes, nuclear events,
acts of war, loss of income due to cancellation of room
reservations or conventions due to fear of terrorism,
deterioration or corrosion, insect or animal damage and
pollution, might not be covered at all under our policies.
Therefore, certain acts could expose us to heavy, uninsured
losses.
We also have builders risk insurance for many of our
projects in Las Vegas, Macao and Singapore, including The
Palazzo, The Venetian Macao, The Sands Macao hotel tower
expansion and the Marina Bay Sands. Builders risk
insurance provides coverage for projects during their
construction for damage caused by a casualty loss (such as fire
and natural disasters). In general, our builders risk
coverage is subject to the same exclusions, risks and
deficiencies as those described above for our all-risk property
coverage. Our level of builders risk insurance coverage
may not be adequate to cover all losses in the event of a major
casualty. In addition, delays occasioned by
26
major casualty events may adversely affect our ability to meet
the deadlines imposed by the Macao government to complete The
Venetian Macao and the convention center we are building in
Macao or our expected opening dates for our other projects. We
are not insured against this risk.
In addition, although we currently have insurance coverage for
occurrences of terrorist acts with respect to The Venetian, The
Sands Expo Center and The Sands Macao and for certain losses
that could result from these acts, our terrorism coverage is
subject to the same risks and deficiencies as those described
above for our all-risk property coverage. The lack of sufficient
insurance for these types of acts could expose us to heavy
losses in the event that any damages occur, directly or
indirectly, as a result of terrorist attacks or otherwise, which
could have a significant negative impact on our operations.
In addition to the damage caused to our property by a casualty
loss (such as fire, natural disasters, acts of war or
terrorism), we may suffer business disruption as a result of
these events or be subject to claims by third parties injured or
harmed. While we carry business interruption insurance and
general liability insurance, this insurance may not be adequate
to cover all losses in such event.
We renew our insurance policies on an annual basis. The cost of
coverage may become so high that we may need to further reduce
our policy limits or agree to certain exclusions from our
coverage. Among other factors, it is possible that the
situations in Iraq and Afghanistan, regional political tensions,
homeland security concerns, other catastrophic events or any
change in government legislation governing insurance coverage
for acts of terrorism could materially adversely affect
available insurance coverage and result in increased premiums on
available coverage (which may cause us to elect to reduce our
policy limits), additional exclusions from coverage or higher
deductibles. Among other potential future adverse changes, in
the future we may elect to not, or may not be able to, obtain
any coverage for losses due to acts of terrorism.
Our debt instruments and other material agreements require us to
maintain a certain minimum level of insurance. Failure to
satisfy these requirements could result in an event of default
under these debt instruments or material agreements.
We
depend on the continued services of key managers and employees.
If we do not retain our key personnel or attract and retain
other highly skilled employees, our business will
suffer.
Our ability to maintain our competitive position is dependent to
a large degree on the services of our senior management team,
including Sheldon G. Adelson. Mr. Adelson, William P.
Weidner, Bradley H. Stone, Robert G. Goldstein, Robert P. Rozek
and Scott D. Henry have each entered into employment agreements.
However, we cannot assure you that any of these individuals will
remain with us. We currently do not have a life insurance policy
on any of the members of the senior management team. The death
or loss of the services of any of our senior managers or the
inability to attract and retain additional senior management
personnel could have a material adverse effect on our business.
We are
controlled by a principal stockholder whose interest in our
business may be different than yours.
Mr. Adelson and trusts for the benefit of Mr. Adelson
and/or
his
family members beneficially own approximately 69% of our
outstanding common stock. Accordingly, Mr. Adelson
exercises significant influence over our business policies and
affairs, including the composition of our board of directors and
any action requiring the approval of our stockholders, including
the adoption of amendments to our articles of incorporation and
the approval of a merger or sale of substantially all of our
assets. The concentration of ownership may also delay, defer or
even prevent a change in control of our company and may make
some transactions more difficult or impossible without the
support of Mr. Adelson. Because Mr. Adelson and trusts
for the benefit of Mr. Adelson
and/or
his
family members own more than 50% of the voting power of our
company, we are considered a controlled company under the New
York Stock Exchange listing standards. As such, the NYSE
corporate governance requirements that our board of directors
and our compensation committee be independent, do not apply to
us. As a result, the ability of our independent directors to
influence our business policies and affairs may be reduced. The
interests of Mr. Adelson may conflict with your interests.
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We are
a parent company and our primary source of cash is and will be
distributions from our subsidiaries.
We are a parent company with limited business operations of our
own. Our main asset is the capital stock of our subsidiaries. We
conduct most of our business operations through our direct and
indirect subsidiaries. Accordingly, our primary sources of cash
are dividends and distributions with respect to our ownership
interests in our subsidiaries that are derived from the earnings
and cash flow generated by our operating properties. Our
subsidiaries might not generate sufficient earnings and cash
flow to pay dividends or distributions in the future. Our
subsidiaries payments to us will be contingent upon their
earnings and upon other business considerations. In addition,
our subsidiaries debt instruments and other agreements,
including Las Vegas Sands, LLCs Senior Secured Credit
Facility and the Macao credit facility, limit or prohibit
certain payments of dividends or other distributions to us. We
expect that the debt instruments for the financing of our other
developments, including our other Cotai Strip developments and
Marina Bay Sands in Singapore, will contain similar restrictions.
We are
currently in the development stage of several projects that are
subject to a variety of contingencies that may ultimately
prevent the realization of such plans.
We have several new projects in development, including building
and operating six casino resort developments on the Cotai Strip
in addition to The Venetian Macao. These projects are subject to
a number of contingencies. For example, we cannot assure you
that the Macao government will approve our master plan for the
development of those Cotai Strip properties or that we will
raise all the financing required for the completion of these
projects. See There are significant risks
associated with our planned construction projects, which could
adversely affect our financial condition, results of operations
or cash flows from these planned facilities. In addition,
although we expect that several of the hotel properties will be
managed or developed by third parties, we cannot assure you that
we will reach satisfactory agreements with third parties to
manage or develop these properties.
We are also exploring opportunities for casino gaming operations
in certain other jurisdictions, such as the United Kingdom, and
are also exploring the development of a leisure and convention
destination resort on Hengqin Island in China. In a number of
jurisdictions, current laws do not permit unlimited licenses for
casino gaming of the type we propose to develop or we are
competing for a limited number of available licenses. These
projects are subject to a number of contingencies, including,
but not limited to, adverse developments in applicable
legislation, our ability to procure necessary governmental
licenses
and/or
approvals, our ability to reach satisfactory, final agreements
with necessary third parties or meet the conditions provided for
under those agreements, and our ability to raise sufficient
financing to fund such projects. In addition, luxury casino
resort projects require substantial amounts of capital.
As a result, our various plans for the development of our
operations may not ultimately be realized as currently planned,
or at all. Even if we are successful in launching any of these
ventures, we cannot assure you that any of these projects would
be successful, or that their operations would not have a
material adverse effect on our financial position, results of
operations or cash flows.
Risks
Associated with Our Las Vegas Operations
We
face significant competition in Las Vegas which could materially
adversely affect our financial condition, results of operations
or cash flows. Some of our competitors have substantially
greater resources and access to capital than we have and several
of them are expanding or renovating their facilities. In
addition, any significant downturn in the trade show and
convention business would significantly and adversely affect our
mid-week occupancy rates and business.
The hotel, resort and casino business in Las Vegas is highly
competitive. The Venetian competes with a large number of major
hotel-casinos and a number of smaller casinos located on and
near the Las Vegas Strip and in and near Las Vegas. We also
compete, to some extent, with other hotel-casino facilities in
Nevada and in Atlantic City, as well as hotel casinos and other
resort facilities and vacation destinations elsewhere in the
United States and around the world. Many of our competitors are
subsidiaries or divisions of large public companies and may have
greater financial and other resources than we have. In
particular, the acquisition of Mandalay Resort Group by
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MGM MIRAGE and the acquisition of Caesars Entertainment Inc. by
Harrahs Entertainment, Inc. created two of the
worlds largest gaming companies as measured by revenues.
In addition, various competitors on the Las Vegas Strip are
expanding and renovating their existing facilities. If demand
for hotel rooms does not keep up with the increase in the number
of hotel rooms, competitive pressures may cause reductions in
average room rates.
We also compete with legalized gaming from casinos located on
Native American tribal lands, including those located in
California. While the competitive impact on our operations in
Las Vegas from the continued growth of Native American gaming
establishments in California remains uncertain, the
proliferation of gaming in California and other areas located in
the same region as The Venetian could have an adverse effect on
our results of operations.
In addition, certain states have legalized, and others may
legalize, casino gaming in specific areas, including
metropolitan areas from which we traditionally attract
customers, such as New York, Los Angeles, San Francisco and
Boston. A number of states have permitted or are considering
permitting gaming at racinos, on Native American
reservations and through expansion of state lotteries. The
current global trend toward liberalization of gaming
restrictions and resulting proliferation of gaming venues could
result in a decrease in the number of visitors to our Las Vegas
facilities by attracting customers close to home and away from
Las Vegas, which could adversely affect our financial condition,
results of operations or cash flows.
As a result of the large number of trade shows and conventions
held in Las Vegas, The Sands Expo Center and The Congress Center
provide recurring demand for mid-week room nights for business
travelers who attend these events. The attendance level at the
trade shows and conventions that we host contributes to our
higher-than-average
mid-week occupancy rates. The Sands Expo Center and The Congress
Center presently compete with other large convention centers,
including convention centers in Las Vegas and other cities.
Competition will be increasing for The Congress Center and The
Sands Expo Center as a result of planned additional convention
and meeting facilities, as well as the enhancement or expansion
of existing convention and meeting facilities, in Las Vegas.
Also, other American cities are in the process of developing, or
have announced plans to develop, convention centers and other
meeting, trade and exhibition facilities that may materially
adversely affect us. To the extent that these competitors are
able to capture a substantially larger portion of the trade show
and convention business, there could be a material adverse
impact on our financial position, results of operations or cash
flows.
The
loss of our gaming license or our failure to comply with the
extensive regulations that govern our operations could have an
adverse effect on our financial condition, results of operations
or cash flows.
Our gaming operations and the ownership of our securities are
subject to extensive regulation by the Nevada Gaming Commission,
the Nevada State Gaming Control Board and the Clark County
Liquor and Gaming Licensing Board. The Nevada Gaming Authorities
have broad authority with respect to licensing and registration
of our business entities and individuals investing in or
otherwise involved with us.
Although we currently are registered with, and Las Vegas Sands,
LLC and Venetian Casino Resort, LLC currently hold gaming
licenses issued by, the Nevada Gaming Authorities, these
authorities may, among other things, revoke the gaming license
of any corporate entity or the registration of a registered
corporation or any entity registered as a holding company of a
corporate licensee for violations of gaming regulations.
In addition, the Nevada Gaming Authorities may, under certain
conditions, revoke the license or finding of suitability of any
officer, director, controlling person, stockholder, noteholder
or key employee of a licensed or registered entity. If our
gaming licenses were revoked for any reason, the Nevada Gaming
Authorities could require the closing of the casino, which would
have a material adverse effect on our business. In addition,
compliance costs associated with gaming laws, regulations or
licenses are significant. Any change in the laws, regulations or
licenses applicable to our business or gaming licenses could
require us to make substantial expenditures or could otherwise
have a material adverse effect on our financial condition,
results of operations or cash flows.
The Nevada State Gaming Control Board investigates or reviews
the records of gaming companies for compliance with gaming
regulations as part of its regular oversight functions.
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In addition, Sands Bethworks will be subject to the rules and
regulations promulgated by the Pennsylvania Gaming Control Board.
For a more complete description of the gaming regulatory
requirements affecting our business, see
Item 1 Business Regulation
and Licensing.
Certain
beneficial owners of our voting securities may be required to
file an application with, and be investigated by, the Nevada
Gaming Authorities, and the Nevada Gaming Commission may
restrict the ability of a beneficial owner to receive any
benefit from our voting securities and may require the
disposition of shares of our voting securities, if a beneficial
owner is found to be unsuitable.
Any person who acquires beneficial ownership of more than 10% of
our voting securities will be required to apply to the Nevada
Gaming Commission for a finding of suitability within
30 days after the Chairman of the Nevada State Gaming
Control Board mails a written notice requiring the filing. Under
certain circumstances, an institutional investor as
defined under the regulations of the Nevada Gaming Commission,
which acquires beneficial ownership of more than 10% but not
more than 15% of our voting securities, may apply to the Nevada
Gaming Commission for a waiver of such finding of suitability
requirement if the institutional investor holds our voting
securities only for investment purposes. In addition, any
beneficial owner of our voting securities, regardless of the
number of shares beneficially owned, may be required at the
discretion of the Nevada Gaming Commission to file an
application for a finding of suitability as such. In either
case, a finding of suitability is comparable to licensing and
the applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting the investigation.
Any person who fails or refuses to apply for a finding of
suitability as a beneficial owner of our voting securities
within 30 days after being ordered to do so by the Nevada
Gaming Authorities may be found unsuitable. Any stockholder
found unsuitable by the Nevada Gaming Commission to be a
beneficial owner of our voting securities and who continues to
hold, directly or indirectly, beneficial ownership of our voting
securities beyond the period of time as may be prescribed by the
Nevada Gaming Commission may be guilty of a criminal offense. We
will be subject to disciplinary action if, after we receive
notice that a person is unsuitable to be a beneficial owner of
our voting securities or to have any other relationship with us
or a licensed subsidiary, we or any of the licensed subsidiaries:
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pay that person any dividend or interest upon our voting
securities;
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allow that person to exercise, directly or indirectly, any
voting right conferred through our voting securities held by
that person;
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pay that person any remuneration in any form for services
rendered or otherwise; or
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fail to pursue all lawful efforts to require that person to
relinquish our voting securities for cash at fair market value.
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For a more complete description of the Nevada gaming regulatory
requirements applicable to beneficial owners of our voting
securities, see Item 1
Business Regulation and Licensing State
of Nevada.
The
construction and operation of The Palazzo could have an adverse
effect on The Venetian.
We have commenced construction on The Palazzo, which will
consist of a hotel, casino, dining and entertainment complex,
condominium tower and meeting and conference center space on an
approximately 14 acre site adjacent to The Venetian.
Although we intend to construct The Palazzo with minimal impact
on The Venetian, we cannot guarantee that the construction will
not disrupt the operations of The Venetian or that it will be
implemented as planned. Therefore, the construction of The
Palazzo may adversely impact the businesses, operations and
revenues of The Venetian. We also cannot assure you that The
Palazzo will be as financially successful as The Venetian. If
demand for the additional hotel rooms at The Palazzo is not
strong, the lack of demand may adversely affect the occupancy
rates and room rates realized by us. In addition, because the
business concept for The Palazzo is very similar to that of The
Venetian, there may not be enough demand to fill the combined
hotel room capacity of The Palazzo and The Venetian.
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Our
failure to substantially complete construction of the
Phase II mall by an
agreed-upon
deadline will result in our having to pay substantial liquidated
damages and cause an event of default under our debt
instruments.
Under our agreement with GGP, we have agreed to substantially
complete construction of the Phase II mall before the
earlier of 36 months after the date on which sufficient
permits are received to begin construction of the Phase II
mall and March 1, 2008. These dates may be extended due to
force majeure or certain other delays. In the event that we do
not substantially complete construction of the Phase II
mall on or before the earlier of these two dates (as these dates
may be extended as described in the preceding sentence), we must
pay liquidated damages of $5,000 per day, for up to six
months, until substantial completion (increasing to
$10,000 per day, for up to the next six months, if
substantial completion does not occur by the end of six months
after the completion deadline). If substantial completion has
not occurred on or before one year after the deadline, we will
be required to pay total liquidated damages in the amount of
$100.0 million. In addition, failure to substantially
complete construction of the Phase II mall by the
agreed-upon
deadline would constitute an event of default under Las Vegas
Sands, LLCs Senior Secured Credit Facility.
If we
are unable to maintain an acceptable working relationship with
GGP
and/or
if GGP breaches any of its material agreements with us, there
could be a material adverse effect on our financial condition,
results of operations or cash flows.
We have entered into agreements with GGP under which, among
other things:
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GGP has agreed to purchase the Phase II mall from us;
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GGP has agreed to operate The Grand Canal Shops mall subject to,
and in accordance with, the cooperation agreement;
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leases for the Phase II mall, a joint opening date of the
Phase II mall and The Palazzo and certain aspects of the
design of the Phase II mall must be jointly approved by us
and GGP; and
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we lease from GGP certain office space and space located within
The Grand Canal Shops mall, in which we built the Blue Man Group
theater (which opened in October 2005) and in which the
canal and the gondola retail store are located.
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Each of the above-described agreements with GGP could be
adversely affected in ways that could have a material adverse
effect on our financial condition, results of operations or cash
flows if we do not maintain an acceptable working relationship
with GGP. For example:
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if we are unable to agree with GGP on leases for the
Phase II mall, the purchase price we will ultimately be
paid for the Phase II mall could be substantially reduced,
and there would, at least for a certain period of time, be an
empty or partially empty mall within The Palazzo;
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the success of the opening of The Palazzo may be adversely
affected if there is not an
agreed-upon
joint opening date for The Palazzo and the Phase II mall;
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completion of the construction of the Phase II mall would
be delayed during any period of time that we are not in
agreement with GGP as to certain design elements of the
Phase II mall; and
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the cooperation agreement that will govern the relationship
between the Phase II mall and The Palazzo requires that the
owners cooperate in various ways and take various joint actions,
which will be more difficult to accomplish, especially in a
cost-effective manner, if the parties do not have an acceptable
working relationship.
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There could be similar material adverse consequences to us if
GGP breaches any of its agreements to us, such as its agreement
to purchase the Phase II mall from us, its agreement under
the cooperation agreement to operate The Grand Canal Shops mall
consistent with the standards of first-class restaurant and
retail complexes and the overall Venetian theme, and its various
obligations as our landlord under the leases described above.
Although the various agreements with GGP do provide us with
various remedies in the event of any breaches by GGP and also
include various dispute-resolution procedures and mechanisms,
these remedies, procedures and mechanisms may
31
be inadequate to prevent a material adverse effect on our
operations and financial condition if breaches by GGP occur or
if we do not maintain an acceptable working relationship with
GGP.
We
extend credit to a large portion of our customers and we may not
be able to collect gaming receivables from our credit
players.
We conduct our gaming activities on a credit basis as well as a
cash basis. This credit is unsecured. Table games players
typically are extended more credit than slot players, and
high-stakes players typically are extended more credit than
patrons who tend to wager lower amounts. High-end gaming is more
volatile than other forms of gaming, and variances in win-loss
results attributable to high-end gaming may have a significant
positive or negative impact on cash flow and earnings in a
particular quarter.
At The Venetian, credit play is significant while at The Sands
Macao table games play is primarily cash play. We extend credit
to those customers whose level of play and financial resources
warrant, in the opinion of management, an extension of credit.
For the year ended December 31, 2006, our table games drop
at The Venetian was approximately 62.6% from credit-based guest
wagering. These large receivables could have a significant
impact on our operating results if deemed uncollectible.
While gaming debts evidenced by a credit instrument, including
what is commonly referred to as a marker, and
judgments on gaming debts are enforceable under the current laws
of Nevada, and Nevada judgments on gaming debts are enforceable
in all states under the Full Faith and Credit Clause of the
U.S. Constitution, other jurisdictions may determine that
enforcement of gaming debts is against public policy. Although
courts of some foreign nations will enforce gaming debts
directly and the assets in the United States of foreign debtors
may be reached to satisfy a judgment, judgments on gaming debts
from U.S. courts are not binding on the courts of many
foreign nations.
Risks
Associated with Our International Operations
Conducting
business in Macao and Singapore has certain political and
economic risks which may affect the financial condition, results
of operations or cash flows of our Asian
operations.
We currently own and operate a casino in Macao and are
developing and plan to operate one or more hotels, additional
casinos and convention centers in Macao, including The Venetian
Macao. We also plan to own and operate the Marina Bay Sands in
Singapore. Accordingly, our business development plans,
financial condition, results of operations or cash flows may be
materially and adversely affected by significant political,
social and economic developments in Macao, throughout the rest
of China and in Singapore, and by changes in policies of the
governments or changes in laws and regulations or the
interpretations thereof. Our operations in Macao are, and our
operations in Singapore will be, also exposed to the risk of
changes in laws and policies that govern operations of companies
based in those countries. Tax laws and regulations may also be
subject to amendment or different interpretation and
implementation, thereby adversely affecting our profitability
after tax. Further, the percentage of our gross gaming revenues
that we must contribute annually to the Macao authorities is
subject to change in 2010. These changes may have a material
adverse effect on our financial condition, results of operations
or cash flows.
As we expect a significant number of consumers to come to The
Sands Macao and The Venetian Macao from China, general economic
conditions and policies in China could have a significant impact
on our financial prospects. Any slowdown in economic growth or
reversal of Chinas current policies of liberalizing
restrictions on travel and currency movements could adversely
impact the number of visitors from China to our Macao properties
as well as the amounts they are willing to spend in the casino.
Current Macao laws and regulations concerning gaming and gaming
concessions are, for the most part, fairly recent and there is
little precedent on the interpretation of these laws and
regulations. We believe that our organizational structure and
operations are in compliance in all material respects with all
applicable laws and regulations of Macao. However, these laws
and regulations are complex and a court or an administrative or
regulatory body may in the future render an interpretation of
these laws and regulations, or issue regulations, that differs
from our interpretation, which could have a material adverse
effect on our financial condition, results of operations or cash
flows. The Marina Bay Sands will be the first gaming facility to
open in Singapore following the
32
governments adoption of gaming legislation in 2005.
Accordingly, the laws and regulations relating to gaming and
their interpretations are untested.
In addition, our activities in Macao are, and our operations in
Singapore will be, subject to administrative review and approval
by various government agencies. We cannot assure you that we
will be able to obtain all necessary approvals, which may
materially affect our long-term business strategy and
operations. Macao and Singapore laws permit redress to the
courts with respect to administrative actions. However, such
redress is largely untested in relation to gaming issues.
We are
required to build and open The Venetian Macao and a convention
center by December 2007. Unless we meet this deadline or obtain
an extension, we may lose our right to continue to operate The
Sands Macao or any other facilities developed under the
subconcession.
Under our subconcession agreement, we are obligated to develop
and open The Venetian Macao and a convention center by December
2007. Construction of The Venetian Macao is subject to
significant development and construction risks, including
construction, equipment and staffing problems or delays and
difficulties in obtaining required materials, licenses, permits
and authorizations from governmental regulatory authorities, not
all of which have been obtained. Construction projects are
subject to cost overruns and delays caused by events not within
our control or, in certain cases, our contractors control,
such as shortages of materials or skilled labor, unforeseen
engineering, environmental
and/or
geological problems, work stoppages, weather interference,
unanticipated cost increases and unavailability of construction
materials or equipment. We have obtained a $2.5 billion
credit facility for the financing of The Venetian Macao and our
other Cotai Strip developments. In addition, our ability to
incur additional debt or to make positive investments in the
entity constructing The Venetian Macao is limited under the
terms of the debt instruments of Las Vegas Sands, LLC and may
prevent us from fulfilling our construction obligations. See
Risks Related to Our
Business The terms of our debt instruments may
restrict our current and future operations, particularly our
ability to finance additional growth, respond to changes or take
some actions that may otherwise be in our best interests
and Risks Related to Our Business
There are significant risks associated with our planned
construction projects, which could adversely affect our
financial condition, results of operations or cash flows from
these planned facilities. We are currently scheduled to
open The Venetian Macao in summer 2007. We have received an
extension of the original completion deadline from the Macao
authorities. Although we believe that we will be able to
complete these projects by the December 2007 deadline or obtain
another extension of the deadline, if we fail to do so, the
Macao government has the right, after consultation with our
concessionaire, Galaxy, to unilaterally terminate our
subconcession to operate The Sands Macao or any of our other
casino operations in Macao, without compensation to us. The loss
of our subconcession would prohibit us from conducting gaming
operations in Macao, which could have a material adverse effect
on our financial condition, results of operations or cash flows.
We are
constructing some of our Cotai Strip properties on land for
which we have not yet been granted concessions. If we do not
obtain land concessions, we could lose all or a substantial part
of our investment in these sites and would not be able to open
and operate the projects as planned.
We have not yet obtained land concessions from the Macao
government for the sites we refer to as parcels 5, 6,
7 and 8. If we do not obtain land concessions for these sites,
we will not be able to open and operate these projects and we
could lose all or a substantial part of our investment in these
other Cotai Strip properties. As of December 31, 2006, we
have invested approximately $100.0 million in these Cotai
Strip properties.
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The
Macao government can terminate our subconcession under certain
circumstances without compensation to us, which would have a
material adverse effect on our financial condition, results of
operations or cash flows.
The Macao government has the right, after consultation with
Galaxy, to unilaterally terminate our subconcession in the event
of serious non-compliance by VML with its basic obligations
under the subconcession and applicable Macao laws. The following
reasons for termination are included in the subconcession:
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the operation of gaming without permission or operation of
business which does not fall within the business scope of the
subconcession;
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suspension of operations of our gaming business in Macao without
reasonable grounds for more than seven consecutive days or more
than 14 non-consecutive days within one calendar year;
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unauthorized transfer of all or part of our gaming operations in
Macao;
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failure to pay taxes, premiums, levies or other amounts payable
to the Macao government;
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failure to resume operations following the temporary assumption
of operations by the Macao government;
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repeated failure to comply with decisions of the Macao
government;
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failure to provide or supplement the guarantee deposit or the
guarantees specified in the subconcession within the prescribed
period;
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bankruptcy or insolvency of VML;
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fraudulent activity by VML;
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serious and repeated violation by VML of the applicable rules
for carrying out casino games of chance or games of other forms
or the operation of casino games of chance or games of other
forms;
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the grant to any other person of any managing power over
VML; or
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failure by a controlling shareholder in VML to dispose of its
interest in VML following notice from the gaming authorities of
another jurisdiction in which such controlling shareholder is
licensed to operate casino games of chance to the effect that
such controlling shareholder can no longer own shares in VML.
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These events could lead to the termination of our subconcession
without compensation to us regardless of whether they occurred
with respect to us or with respect to our affiliates who will
operate our Macao properties. Upon such termination, all of our
casino gaming operations and related equipment in Macao would be
automatically transferred to the Macao government without
compensation to us and we would cease to generate any revenues
from these operations. In many of these instances, the
subconcession agreement does not provide a specific cure period
within which any such events may be cured and, instead, we would
rely on consultations and negotiations with the Macao government
to give us an opportunity to remedy any such default. In
addition, the subconcession agreement contains various general
covenants and obligations and other provisions, the
determination as to compliance with which is subjective. We
cannot assure you that we will perform such covenants in a way
that satisfies the requirements of the Macao government and,
accordingly, we will be dependent on our continuing
communications and good faith negotiations with the Macao
government to ensure that we are performing our obligations
under the subconcession in a manner that would avoid a default
thereunder.
Our subconcession also allows the Macao government to request
various changes in the plans and specifications of our Macao
properties and to make various other decisions and
determinations that may be binding on us. For example, the Macao
government has the right to require that we contribute
additional capital to our Macao subsidiaries or that we provide
certain deposits or other guarantees of performance in any
amount determined by the Macao government to be necessary. VML
is limited in its ability to raise additional capital by the
need to first obtain the approval of the Macao gaming and
governmental authorities before raising certain debt or equity.
As a result, we cannot assure you that we will be able to comply
with these requirements or any other requirements of the Macao
government or with the other requirements and obligations
imposed by our subconcession.
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Furthermore, pursuant to the subconcession agreement, we are
obligated to comply not only with the terms of that agreement,
but also with laws and regulations that the Macao government
might promulgate in the future. We cannot assure you that we
will be able to comply with any such order or that any such
order would not adversely affect our ability to construct or
operate our Macao properties. If any disagreement arises between
us and the Macao government regarding the interpretation of, or
our compliance with, a provision of the subconcession agreement,
we will be relying on the consultation process with the
applicable Macao governmental agency described above. During any
such consultation, however, we will be obligated to comply with
the terms of the subconcession agreement as interpreted by the
Macao government.
Our failure to comply with the terms of our subconcession in a
manner satisfactory to the Macao government could result in the
termination of our subconcession. Under our subconcession, we
would not be compensated if the Macao government decided to
terminate the subconcession because of our failure to perform.
The loss of our subconcession would prohibit us from conducting
gaming operations in Macao, which could have a material adverse
effect on our financial condition, results of operations or cash
flows.
We
will stop generating any revenues from our Macao gaming
operations if we cannot secure an extension of our subconcession
in 2022 or if the Macao government exercises its redemption
right at any time beginning on December 26,
2017.
Our subconcession agreement expires on June 26, 2022.
Unless our subconcession is extended, on that date, all of our
casino operations and related equipment in Macao will be
automatically transferred to the Macao government without
compensation to us and we will cease to generate any revenues
from these operations. Beginning on December 26, 2017, the
Macao government may redeem the subconcession agreement by
providing us at least one year prior notice. In the event the
Macao government exercises this redemption right, we are
entitled to fair compensation or indemnity. The amount of such
compensation or indemnity will be determined based on the amount
of revenue generated during the tax year prior to the
redemption. We cannot assure you that we will be able to renew
or extend our subconcession agreement on terms favorable to us
or at all. We also cannot assure you that if our subconcession
is redeemed, the compensation paid will be adequate to
compensate us for the loss of future revenues.
Our
Macao operations face intense competition, which could have a
material adverse effect on our financial condition, results of
operations or cash flows.
The hotel, resort and casino businesses are highly competitive.
Our Macao operations currently compete with numerous other
casinos located in Macao. In addition, we expect competition to
increase in the near future from local and foreign casino
operators. SJM, which currently operates 17 gaming facilities in
Macao, had a commitment to invest at least 4.7 billion
patacas (approximately $586.8 million at exchange rates in
effect on December 31, 2006) in gaming, entertainment
and related projects in Macao by March 31, 2009. These
projects include the Grand Lisboa, the upgrade of the Lisboa
Hotel, Macaos largest hotel, the Fishermans Wharf
entertainment complex, which opened in December 2005, and a
number of additional new casino hotel projects. In addition, MGM
MIRAGE has entered into a joint venture agreement with Stanley
Hos daughter, Pansy Ho Chiu-king, to develop, build and
operate two major hotel-casino resorts in Macao. In April 2005,
MGM Grand Paradise Limited, a joint venture between Pansy Ho
Chiu-king and MGM MIRAGE, obtained a subconcession allowing it
to conduct gaming operations in Macao. The MGM Grand Macau is
scheduled to open in the fourth quarter of 2007. The resort will
feature approximately 600 rooms, 345 table games, 1,035 slot
machines, restaurants and entertainment amenities.
In addition, Wynn Macau, a subsidiary of our competitor, Wynn
Resorts, Limited, has also received a concession from the Macao
government. Wynn Macau opened in September 2006 and includes an
approximately 600-room hotel, a casino and other non-gaming
amenities. Wynn Macau has announced plans to expand the property
to include additional gaming space. The expansion is scheduled
to open by the third quarter of 2007. In 2006, Wynn Macau sold
its subconcession right under its gaming concession to an
affiliate of PBL for $900 million. The subconcession right
permits the PBL affiliate to receive a gaming subconcession from
the Macao government.
Under its concession, Galaxy is also obligated to invest
4.4 billion patacas (approximately $549.3 million at
exchange rates in effect on December 31, 2006) in
development projects in Macao by June 2012. Galaxy currently
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operates five casinos in Macao. In October 2006, Galaxys
StarWorld Hotel & Casino opened. The property has over
500 hotel rooms and a 140,000 square foot gaming floor with
approximately 300 table games and 370 slot machines.
We will also compete to some extent with casinos located
elsewhere in Asia, such as Malaysias Genting Highlands, as
well as gaming venues in Australia, New Zealand and elsewhere in
the world, including Las Vegas. In addition, certain countries
have legalized, and others may in the future legalize, casino
gaming, including Hong Kong, Japan, Taiwan and Thailand. We also
expect competition from cruise ships operating out of Hong Kong
and other areas of Asia that offer gaming. The proliferation of
gaming venues in Southeast Asia could significantly and
adversely affect our financial condition, results of operations
or cash flows.
The
Macao and Singapore governments could grant additional rights to
conduct gaming in the future, which could have a material
adverse effect on our financial condition, results of operations
or cash flows.
We hold a subconcession under one of only three gaming
concessions authorized by the Macao government to operate
casinos in Macao. The Macao government is precluded from
granting any additional gaming concessions until 2009. However,
we cannot assure you that the laws will not change and permit
the Macao government to grant additional gaming concessions
before 2009. In addition, the Macao government permits existing
concessionaires to grant subconcessions. If the Macao government
were to allow additional competitors to operate in Macao through
the grant of additional concessions or subconcessions, we would
face additional competition, which could have a material adverse
effect on our financial condition, results of operations or cash
flows.
We hold one of two licenses granted by the Singapore government
to develop an integrated resort, including a casino. The
Singapore government has said that it will not license another
casino for at least ten years. If the Singapore government were
to license additional casinos before then, we would face
additional competition which could have a material adverse
effect on our financial condition, results of operations or cash
flows.
We may
not be able to attract and retain professional staff necessary
for our existing and future properties in Macao and our
operations in Singapore.
Our success depends in large part upon our ability to attract,
retain, train, manage and motivate skilled employees. There is
significant competition in Macao for employees with the skills
required to perform the services we offer and competition for
such persons is likely to increase. We expect competition in
Singapore for employees with the skills we require as we develop
and open the Marina Bay Sands. There can be no assurance that a
sufficient number of skilled employees will continue to be
available, or that we will be successful in training, retaining
and motivating current or future employees. If we are unable to
attract, retain and train skilled employees, our ability to
adequately manage and staff our existing and planned casino and
resort properties in Macao and Singapore could be impaired,
which could have a material adverse effect on our business,
financial condition, results of operations or cash flows.
We are
dependent upon gaming junket operators for a significant portion
of our gaming revenues in Macao.
Junket operators, who organize tours, or junkets, for high
roller customers to casinos, are responsible for a significant
portion of our gaming revenues in Macao. With the rise in gaming
in Macao, the competition for relationships with junket
operators has increased. While we are undertaking initiatives to
strengthen our relationships with our current junket operators,
there can be no assurance that we will be able to maintain, or
grow, our relationships with junket operators. If we are unable
to maintain or grow our relationships with junket operators, our
ability to grow our gaming revenues will be hampered and we may
seek alternative ways to develop relationships with high roller
customers, which may not be as profitable as our junket programs.
In addition, the quality of junket operators is important to our
reputation and our ability to continue to operate in compliance
with our gaming licenses. While we strive for excellence in our
associations with junket operators, we cannot assure you that
the junket operators with whom we are associated will meet the
high standards we insist
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upon. If a junket operator falls below our standards, we may
suffer reputational harm, as well as worsening relationships
with, and possibly sanctions from, gaming regulators with
authority over our operations.
Our
business could be adversely affected by the limitations of the
pataca exchange markets and restrictions on the export of the
renminbi.
Our revenues in Macao are denominated in patacas, the legal
currency of Macao, and Hong Kong dollars. Although currently
permitted, we cannot assure you that patacas will continue to be
freely exchangeable into U.S. dollars. Also, because the
currency market for patacas is relatively small and undeveloped,
our ability to convert large amounts of patacas into
U.S. dollars over a relatively short period may be limited.
As a result, we may experience difficulty in converting patacas
into U.S. dollars.
We are currently prohibited from accepting wagers in renminbi,
the currency of China. There are currently restrictions on the
export of the renminbi outside of mainland China, including to
Macao. Restrictions on the export of the renminbi may impede the
flow of gaming customers from China to Macao, inhibit the growth
of gaming in Macao and negatively impact our gaming operations.
On July 21, 2005, the Peoples Bank of China announced
that the renminbi will no longer be pegged to the
U.S. dollar, but will be allowed to float in a band (and,
to a limited extent, increase in value) against a basket of
foreign currencies. The Macao pataca is pegged to the Hong Kong
dollar. Certain Asian countries have publicly asserted their
desire to eliminate the peg of the Hong Kong dollar to the
U.S. dollar. As a result, we cannot assure you that the
Hong Kong dollar and the Macao pataca will continue to be pegged
to the U.S. dollar or that the current peg rate for these
currencies will remain at the same level. The floating of the
renminbi and possible changes to the peg of the Hong Kong dollar
may result in severe fluctuations in the exchange rate for these
currencies. Any change in such exchange rates could have a
material adverse effect on our operations and on our ability to
make payments on certain of our debt instruments. We do not
currently hedge for foreign currency risk.
Certain
gaming laws apply to our planned gaming activities and
associations in other jurisdictions where we operate or plan to
operate.
Certain Nevada gaming laws also apply to our gaming activities
and associations in jurisdictions outside the State of Nevada.
We are required to comply with certain reporting requirements
concerning our proposed gaming activities and associations
occurring outside the State of Nevada, including Macao and other
jurisdictions. We will also be subject to disciplinary action by
the Nevada Gaming Commission if we:
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knowingly violate any laws of the foreign jurisdiction
pertaining to the foreign gaming operation;
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fail to conduct the foreign gaming operation in accordance with
the standards of honesty and integrity required of Nevada gaming
operations;
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engage in any activity or enter into any association that is
unsuitable for us because it poses an unreasonable threat to the
control of gaming in Nevada, reflects or tends to reflect
discredit or disrepute upon the State of Nevada or gaming in
Nevada, or is contrary to the gaming policies of Nevada;
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engage in any activity or enter into any association that
interferes with the ability of the State of Nevada to collect
gaming taxes and fees; or
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employ, contract with or associate with any person in the
foreign gaming operation who has been denied a license or a
finding of suitability in Nevada on the ground of personal
unsuitability, or who has been found guilty of cheating at
gambling.
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In addition, if the Nevada State Gaming Control Board determines
that one of our actual or intended activities or associations in
a foreign gaming operation may violate one or more of the
foregoing, we can be required by it to file an application with
the Nevada Gaming Commission for a finding of suitability of
such activity or association. If the Nevada Gaming Commission
finds that the activity or association in the foreign gaming
operation is unsuitable or prohibited, we will either be
required to terminate the activity or association, or will be
prohibited from undertaking the activity or association.
Consequently, should the Nevada Gaming Commission find that our
gaming
37
activities or associations in Macao or certain other
jurisdictions where we operate are unsuitable, we may be
prohibited from undertaking our planned gaming activities or
associations in those jurisdictions.
The Macao gaming authorities exercise similar powers for
purposes of assessing suitability in relation to our activities
in jurisdictions outside of Macao.
We may
not be able to monetize some of our real estate
assets.
Part of our business strategy in Macao relies upon our ability
to profitably operate
and/or
sell
certain of our real estate assets once developed, including
vacation suites and retail malls, and to use the proceeds of
these operations and sales to refinance, or repay in part our
construction loans for these assets, as well as to provide
investment capital for additional development both in Macao and
elsewhere. Our ability to sell these assets will be subject to
market conditions, the receipt of necessary government approvals
and other factors. If we are unable to profitably operate
and/or
monetize these real estate assets, we will have to seek
alternative sources of capital to refinance in part our
construction loans and for other investment capital. These
alternative sources of capital may not be available on
commercially reasonable terms or at all.
VML
may have financial and other obligations to foreign workers
hired by its contractors under government labor
quotas.
The Macao government has granted VML a quota to permit it to
hire foreign workers. VML has effectively allocated this quota
to its contractors for the construction of The Venetian Macao
and other projects on the Cotai Strip. VML, however, remains
ultimately liable for all employer obligations relating to these
employees, including for payment of wages and taxes and
compliance with labor and workers compensation laws. VML
requires each contractor to whom it has allocated part of its
labor quota to indemnify VML for any costs or liabilities VML
incurs as a result of such contractors failure to fulfill
employer obligations. VMLs agreements with its contractors
also contain provisions that permit it to retain some payments
for up to one year after the contractors complete work on the
projects. We cannot assure you that VMLs contractors will
fulfill their obligations to employees hired under the labor
quotas or to VML under the indemnification agreements, or that
the amount of any indemnification will be sufficient to pay for
any obligations VML may owe to employees hired by contractors
under VMLs quotas. Until we make final payments to our
contractors, we have offset rights to collect amounts they may
owe us, including amounts owed under the indemnities relating to
employer obligations. After we have made the final payments, it
may be more difficult for us to enforce any unpaid indemnity
obligations.
The
transportation infrastructure in Macao may need to be expanded
to meet increased visitation in Macao.
Macao is in the process of expanding its transportation
infrastructure to service the increased number of visitors to
Macao. If the planned expansions of transportation facilities to
and from Macao are delayed or not completed, and Macaos
transportation infrastructure is insufficient to meet the
demands of an increased volume of visitors to Macao, the
desirability of Macao as a gaming and tourist destination, as
well as the results of operations of our Macao properties, could
be negatively impacted.
We are
currently not required to pay corporate income taxes on our
casino gaming operations in Macao. This tax exemption expires at
the end of 2008.
We have had the benefit of a temporary corporate tax exemption
in Macao, effective May 18, 2004, which exempts us from
paying corporate income tax on profits generated by the
operation of casino games. We will continue to benefit from this
tax exemption through the end of 2008. We cannot assure you that
this tax exemption will be extended beyond the expiration date
and we do not expect this tax exemption to apply to our
non-gaming activities.
Macao
is susceptible to severe typhoons that may disrupt
operations.
Macao is susceptible to severe typhoons. Macao consists of a
peninsula and two islands off the coast of mainland China. On
some occasions, typhoons have caused a considerable amount of
damage to Macaos
38
infrastructure and economy. In the event of a major typhoon or
other natural disaster in Macao, our business may be severely
disrupted and our results of operations could be adversely
affected. Although we have insurance coverage with respect to
these events, we cannot assure you that our coverage will be
sufficient to fully indemnify us against all direct and indirect
costs, including loss of business, that could result from
substantial damage to, or partial or complete destruction of,
our Macao properties or other damage to the infrastructure or
economy of Macao.
Our
Singapore concession can be terminated under certain
circumstances without compensation to us, which would have a
material adverse effect on our financial condition, results of
operations or cash flows.
The Development Agreement between MBS and the STB contains
events of default which could permit the STB to terminate the
agreement without compensation to us. If the Development
Agreement is terminated under certain circumstances, we could
lose our right to open and operate the Marina Bay Sands and our
investment in Marina Bay Sands could be lost.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
We own an approximately 60-acre parcel of land on which The
Venetian and The Sands Expo Center sit and on which The Palazzo
is being constructed. We own this parcel of land in fee simple,
subject to certain easements, encroachments and other
non-monetary encumbrances and the security interests described
below.
Las Vegas Sands, LLCs Senior Secured Credit Facility is,
subject to certain exceptions, secured by a first priority
security interest (subject to permitted liens) in substantially
all of Las Vegas Sands, LLCs property. The Phase II
mall construction loan is secured by first priority security
interests in substantially all of the assets of Phase II
Mall Subsidiary, LLC and Phase II Mall Holding, LLC. The
Sands Expo Center mortgage loan is secured by a first priority
mortgage on The Sands Expo Center and by certain other related
collateral.
We have received a concession from the Macao government to use a
six acre land site for The Sands Macao. We do not own the land
site in Macao. However, the land concession, which will expire
in 2028 and is renewable, grants us exclusive use of the land.
The land concession requires us to pay a premium which is
payable over a number of years. In addition, we are also
obligated to pay rent annually for the term of the land
concession. The rent amount may be revised every five years by
the Macao government. See Item 8
Financial Statements and Supplementary Data Notes to
Consolidated Financial Statements
Note 11 Commitments and
Contingencies Macao Concession and
Subconcession for more information on our payment
obligation under this land concession.
In February 2007, we received the final draft of the land
concession agreement from the Macao government pursuant to which
we were awarded a concession by lease for parcels 1, 2 and
3 on the Cotai Strip, including the sites on which we are
building The Venetian Macao and the Four Seasons hotel. We have
accepted the conditions of the draft land concession and have
made an initial premium payment of $106.5 million towards
the aggregate land premium of $323.7 million. Additionally,
$24.1 million has been paid or will be paid in the form of
the cost of the reclamation work and other works done on the
land and the installation costs of an electrical substation with
the remaining amount payable over time. The land concession will
not become effective until the date it is published in
Macaos Official Gazette. Once the land concession is
effective, we will be required to make additional land premium
and annual rent payments relating to parcels 1, 2 and 3 in
the amounts and at the times specified in the land concession.
The land concession has a
25-year
term
and is renewable.
We do not yet have all the necessary Macao government approvals
that we will need in order to develop the Cotai Strip
developments. We have commenced construction on our other Cotai
Strip properties on land for which we have not yet been granted
land concessions. If we do not obtain land concessions, we could
lose all or a substantial part of our investment in these other
Cotai Strip properties.
39
In August 2006, MBS entered into the Development Agreement with
STB to build and operate an integrated resort called Marina Bay
Sands in Singapore. Under the Development Agreement, the Company
paid SGD$1.2 billion (approximately US$782.5 million
at exchange rates in effect on December 31, 2006) in
premium payments for the lease of the land on which the resort
will be built plus an additional SGD$105.6 million
(approximately US$68.9 million at exchange rates in effect
on December 31, 2006) for various taxes and other
fees. Of this combined amount, $806.0 million has been
capitalized on the balance sheet as leasehold interest in land
with $4.8 million amortized as of December 31, 2006.
The Company will amortize this asset over 60 years, which
is the length of the lease agreement.
The Sands Bethworks development will be located on the
approximately
124-acre
site of the Historic Bethlehem Steel Works in Bethlehem,
Pennsylvania, which is about 70 miles from midtown
Manhattan, New York. The property is owned by the Company
through its joint venture with Bethworks Now, LLC.
In 2004, we entered into a long-term lease with a third party
for airspace in which part of the Phase II mall will be
constructed. In addition, in December 2006 and subject to
recording a certain commercial subdivision map, we closed on an
agreement to acquire the airspace above that leased space in
order to build the proposed condominium tower.
ITEM 3.
LEGAL PROCEEDINGS
In addition to the matters described below, we are party to
various legal matters and claims arising in the ordinary course
of business. Management has made certain estimates for potential
litigation costs based upon consultation with legal counsel.
Actual results could differ from these estimates; however in the
opinion of management, such litigation and claims will not have
a material adverse impact on our financial position, results of
operations or cash flows.
The
Palazzo Construction Litigation
Lido Casino Resort, LLC (Lido), a wholly-owned
subsidiary of the Company, and its construction manager, Taylor
International Corp. (Taylor), filed suit in March
2006 in the United States District Court for the District of
Nevada (the District Court) against Malcolm Drilling
Company, Inc. (Malcolm), the contractor on The
Palazzo project responsible for completing certain foundation
work (the District Court Case). Lido and Taylor
claim in the District Court Case that Malcolm was in default of
its contract for performing defective work, failing to correct
defective work, failing to complete its work and causing delay
to the project. Malcolm responded by filing a Notice of a Lien
with the Clerk of Clark County, Nevada in March 2006 in the
amount of approximately $19.0 million (the
Lien). In April 2006, Lido and Taylor moved in the
District Court Case to strike or, in the alternative, to reduce
the amount of, the Lien, claiming, among other things, that the
Lien was excessive for including claims for disruption and
delay, which Lido and Taylor claim are not lienable under Nevada
law (the Lien Motion). Malcolm responded in April
2006 by filing a complaint against Lido and Taylor in District
Court of Clark County, Nevada seeking to foreclose on the Lien
against Taylor, claiming breach of contract, a cardinal change
in the underlying contract, unjust enrichment against Lido and
Taylor and bad faith and fraud against Taylor (the State
Court Case), and simultaneously filed a motion in the
District Court Case, seeking to dismiss the District Court Case
on abstention grounds (the Abstention Motion). In
response, in June 2006, Lido filed a motion to dismiss the State
Court Case based on the principle of the prior
pending District Court Case (the Motion to
Dismiss). In June 2006, the Abstention Motion was granted
in part by the United States District Court, the District Court
Case was stayed pending the outcome of the Motion to Dismiss in
the State Court Case and the Lien Motion was denied without
prejudice. Lido and Malcolm then entered into a stipulation
under which Lido withdrew the Motion to Dismiss, and in July
2006 filed a replacement lien motion in the State Court Case.
The lien motion in the State Court Case was denied in August
2006 and Lido and Taylor filed a permitted interlocutory notice
of appeal to the Supreme Court of Nevada in September 2006. This
matter is in the preliminary stages and based upon the advice of
legal counsel, management has determined that based on
proceedings to date, it is currently unable to determine the
probability of the outcome of this matter. Lido intends to
defend itself against the claims pending in the State Court Case.
40
Litigation
Relating to Macao Operations
On October 15, 2004, Richard Suen and Round Square Company
Limited filed an action against Las Vegas Sands Corp., Las Vegas
Sands Inc., Sheldon G. Adelson and William P. Weidner in the
District Court of Clark County, Nevada, asserting a breach of an
alleged agreement to pay a success fee of $5.0 million and
2.0% of the net profit from the Companys Macao resort
operations to the plaintiffs as well as other related claims. In
March 2005, Las Vegas Sands Corp. was dismissed as a party
without prejudice based on a stipulation to do so between the
parties. On May 17, 2005, the plaintiffs filed their first
amended complaint. On February 2, 2006, defendants filed a
motion for partial summary judgment with respect to
plaintiffs fraud claims against all the defendants. On
March 16, 2006, an order was filed by the court granting
defendants motion for partial summary judgment. Pursuant
to the order filed March 16, 2006, plaintiffs fraud
claims set forth in the first amended complaint were dismissed
with prejudice as against all defendants. The order also
dismissed with prejudice the first amended complaint against
defendants Sheldon G. Adelson and William P. Weidner. This
action is in a preliminary stage and based upon the advice of
legal counsel, management has determined that based on
proceedings to date, it is currently unable to determine the
probability of the outcome of this matter. The Company intends
to defend this matter vigorously.
On January 26, 2006, Clive Basset Jones, Darryl Steven
Turok (a/k/a Dax Turok) and Cheong Jose Vai Chi
(a/k/a Cliff
Cheong), filed an action against Las Vegas Sands Corp., Las
Vegas Sands, LLC, Venetian Venture Development, LLC and various
unspecified individuals and companies in the District Court of
Clark County, Nevada. The plaintiffs assert breach of an
agreement to pay a success fee in an amount equal to 5% of the
ownership interest in the entity that owns and operates the
Macau SAR gaming subconcession as well as other related claims.
In April 2006, Las Vegas Sands Corp. was dismissed as a party
without prejudice based on a stipulation to do so between the
parties. Other than the complaint which has been filed, and the
Companys answer, there is currently no pending activity in
the matter. This action is in a preliminary stage and discovery
has begun. Based upon the advice of legal counsel, management
has determined that based on proceedings to date, it is
currently unable to determine the probability of the outcome of
this matter. The Company intends to defend this matter
vigorously.
On February 5, 2007, Asian American Entertainment
Corporation, Limited (AAEC) filed an action against
Las Vegas Sands, Inc. (LVSI), Venetian Casino
Resort, LLC (VCR), Venetian Venture Development, LLC
(Venetian Venture Development), William P. Weidner
and David Friedman in the United States District Court for the
District of Nevada. The plaintiffs assert breach of contract by
LVSI, VCR and Venetian Venture Development of an agreement under
which AAEC would work to obtain a gaming license in Macao and,
if successful, AAEC would jointly operate a casino, hotel and
related facilities in Macao with Venetian Venture Development
and Venetian Venture Development would receive fees and a
minority equity interest in the venture and breach of fiduciary
duties by all of the defendants. The plaintiffs have requested
an unspecified amount of actual, compensatory and punitive
damages, disgorgement of profits related to our Macao gaming
license. Other than the complaint which has been filed, there is
currently no pending activity in the matter. This action is in a
preliminary stage. Based upon the advice of legal counsel,
management has determined that based on proceedings to date, it
is currently unable to determine the probability of the outcome
of this matter. The Company intends to defend this matter
vigorously.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
41
PART II
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ITEM 5.
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MARKET
FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
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Market
Information
The Companys common stock began trading on the NYSE on
December 14, 2004 under the symbol LVS. The
following table sets forth the high and low sales prices for the
common stock on the NYSE for the fiscal quarter indicated.
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High
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Low
|
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2005
|
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|
|
|
|
|
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First Quarter
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$
|
51.40
|
|
|
$
|
41.41
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|
Second Quarter
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|
$
|
45.34
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|
|
$
|
33.10
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|
Third Quarter
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|
$
|
40.73
|
|
|
$
|
30.87
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|
Fourth Quarter
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|
$
|
46.44
|
|
|
$
|
29.08
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|
2006
|
|
|
|
|
|
|
|
|
First Quarter
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|
$
|
58.03
|
|
|
$
|
38.44
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|
Second Quarter
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|
$
|
78.90
|
|
|
$
|
54.68
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|
Third Quarter
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|
$
|
77.86
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|
|
$
|
57.68
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|
Fourth Quarter
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|
$
|
97.25
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|
|
$
|
66.06
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|
2007
|
|
|
|
|
|
|
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First Quarter (through
February 23, 2007)
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$
|
109.45
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|
$
|
89.88
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As of February 23, 2007, there were 354,682,930 shares
of our common stock issued and outstanding that were held by
214 stockholders of record.
Dividends
We have not declared or paid any dividends since our formation
in August 2004. We do not expect to pay dividends on our common
stock in the future. We expect to retain our future earnings, if
any, for use in the operation and expansion of our business. Our
board of directors will determine whether to pay dividends in
the future based on conditions then existing, including our
earnings, financial condition and capital requirements, as well
as economic and other conditions our board may deem relevant.
Our ability to declare and pay dividends on our common stock is
subject to the requirements of Nevada law. In addition, we are a
parent company with limited business operations of our own.
Accordingly, our primary sources of cash are dividends and
distributions with respect to our ownership interest in our
subsidiaries that are derived from the earnings and cash flow
generated by our operating properties.
Our subsidiaries long-term debt arrangements place
material restrictions on those companies ability to pay
cash dividends to the Company. This will restrict our ability to
pay cash dividends other than from cash on hand. See
Item 7 Managements Discussion and
Analysis of Financial Condition and Results of
Operations Liquidity and Capital
Resources Restrictions on Distributions and
Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 8 Long-Term
Debt.
In 2004, Las Vegas Sands, Inc. declared and paid
$107.9 million of dividends as tax distributions to all of
its stockholders at the time, including its principal
stockholder. In 2004, Las Vegas Sands, Inc. also declared a
$21.1 million dividend to its stockholders which was paid
in January 2005. These tax distributions were made in order to
provide these stockholders with funds to pay taxes attributable
to taxable income of Las Vegas Sands, Inc. (including taxable
income of Las Vegas Sands, Inc. associated with the sale of The
Grand Canal Shops mall) that flowed through to them by virtue of
Las Vegas Sands, Inc.s status as a subchapter
S corporation for income tax purposes. As a result of its
conversion to a taxable C corporation for income tax
purposes, Las Vegas Sands, Inc. (now known as Las Vegas Sands,
LLC) is no longer making these tax distributions.
42
Immediately prior to the July 29, 2004 acquisition of
Interface Group Holding Company, Inc. (Interface
Holding) by Las Vegas Sands, Inc., Interface Holding
distributed approximately $15.2 million to its sole
stockholder. The distribution was comprised of
$12.9 million of cash, $1.9 million of receivables due
from the principal stockholder of Interface Holding and
$0.4 million of certain fixed and other assets.
Recent
Sales of Unregistered Securities
There has not been any sales by the Company of equity securities
in the last fiscal year that have not been registered under the
Securities Act of 1933.
Performance
Graph
The following performance graph compares the performance of our
Common Stock with the performance of the Standard &
Poors 500 Index and a peer group of companies, during the
period from the Companys initial public offering on
December 15, 2004 through December 31, 2006. The
selected peer group for 2006 is comprised of three gaming
companies considered to be the Companys closest
competitors: Harrahs Entertainment, Inc., MGM MIRAGE and
Wynn Resorts Limited. The selected peer group for 2004 included
these three companies, as well as Caesars Entertainment,
Inc. and Mandalay Resort Group. In 2005, Caesars
Entertainment Inc. was acquired by Harrahs Entertainment,
Inc. and Mandalay Resort Group merged with MGM MIRAGE. The graph
plots the changes in value of an initial $100 investment over
the indicated time period, assuming all dividends are reinvested.
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Cumulative Total Return
|
|
|
12/15/04
|
|
12/31/04
|
|
12/31/05
|
|
12/31/06
|
Las Vegas Sands Corp.
|
|
$
|
100.00
|
|
|
$
|
103.09
|
|
|
$
|
84.77
|
|
|
$
|
192.18
|
|
S&P 500
|
|
$
|
100.00
|
|
|
$
|
103.40
|
|
|
$
|
108.48
|
|
|
$
|
125.62
|
|
Peer Group
|
|
$
|
100.00
|
|
|
$
|
104.38
|
|
|
$
|
102.83
|
|
|
$
|
148.30
|
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The performance graph should not be deemed filed or incorporated
by reference into any other Company filing under the Securities
Act of 1933 or the Exchange Act of 1934, except to the extent
the Company specifically incorporates the performance graph by
reference therein.
ITEM 6.
SELECTED FINANCIAL DATA
The historical selected financial data set forth below should be
read in conjunction with Item 7
Managements Discussion and Analysis of Financial Condition
and Results of Operations and the consolidated financial
statements and notes thereto included elsewhere in this Annual
Report on
Form 10-K.
The statements of
43
operations and cash flow data for the years ended
December 31, 2006, 2005 and 2004, and the balance sheet
data at December 31, 2006 and 2005 are derived from, and
are qualified by reference to, the audited consolidated
financial statements included elsewhere in this Annual Report on
Form 10-K.
The statements of operations and cash flow data for the years
ended December 31, 2003 and 2002 and the balance sheet data
at December 31, 2004, 2003 and 2002 are derived from the
Companys audited consolidated 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.
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|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
(1)
|
|
|
2003
|
|
|
2002
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
STATEMENT OF OPERATIONS
DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
revenues
(1)
|
|
$
|
2,340,178
|
|
|
$
|
1,824,225
|
|
|
$
|
1,258,570
|
|
|
$
|
736,610
|
|
|
$
|
657,544
|
|
Promotional allowances
|
|
|
(103,319
|
)
|
|
|
(83,313
|
)
|
|
|
(61,514
|
)
|
|
|
(44,856
|
)
|
|
|
(34,208
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
2,236,859
|
|
|
|
1,740,912
|
|
|
|
1,197,056
|
|
|
|
691,754
|
|
|
|
623,336
|
|
Operating expenses
|
|
|
1,662,762
|
|
|
|
1,251,461
|
|
|
|
578,588
|
|
|
|
505,628
|
|
|
|
463,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
574,097
|
|
|
|
489,451
|
|
|
|
618,468
|
|
|
|
186,126
|
|
|
|
159,935
|
|
Interest expense, net
|
|
|
(69,662
|
)
|
|
|
(63,181
|
)
|
|
|
(130,337
|
)
|
|
|
(120,317
|
)
|
|
|
(121,432
|
)
|
Other income (expense)
|
|
|
(189
|
)
|
|
|
(1,334
|
)
|
|
|
(131
|
)
|
|
|
825
|
|
|
|
1,045
|
|
Loss on early retirement of
debt
(2)
|
|
|
|
|
|
|
(137,000
|
)
|
|
|
(6,553
|
)
|
|
|
|
|
|
|
(51,392
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
504,246
|
|
|
|
287,936
|
|
|
|
481,447
|
|
|
|
66,634
|
|
|
|
(11,844
|
)
|
Benefit (provision) for income
taxes
(3)
|
|
|
(62,243
|
)
|
|
|
(4,250
|
)
|
|
|
13,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
$
|
495,183
|
|
|
$
|
66,634
|
|
|
$
|
(11,844
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
$
|
1.25
|
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
$
|
0.21
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
$
|
1.24
|
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
$
|
0.20
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.44
|
|
|
$
|
0.01
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
1,925,291
|
|
|
$
|
860,621
|
|
|
$
|
465,748
|
|
|
$
|
279,948
|
|
|
$
|
136,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
(In thousands)
|
|
|
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,126,458
|
|
|
$
|
3,879,739
|
|
|
$
|
3,601,478
|
|
|
$
|
1,917,035
|
|
|
$
|
1,606,762
|
|
Long-term debt
|
|
$
|
4,136,152
|
|
|
$
|
1,625,901
|
|
|
$
|
1,485,064
|
|
|
$
|
1,525,116
|
|
|
$
|
1,343,762
|
|
Stockholders equity
|
|
$
|
2,075,154
|
|
|
$
|
1,609,538
|
|
|
$
|
1,316,001
|
|
|
$
|
162,108
|
|
|
$
|
100,384
|
|
|
|
|
(1)
|
|
The Sands Macao opened on May 18, 2004.
|
|
(2)
|
|
In April 2002, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 145 Rescission of
FASB Statements Nos. 4, 44 and 64 and Amendment of FASB
Statement No. 13. SFAS No. 145 addresses
the presentation for losses on early retirements of debt in the
statement of operations to the extent they do not meet the
requirements of Accounting Principles Board (APB)
Opinion No. 30. The Company has adopted
SFAS No. 145 and no longer presents losses on early
retirements of debt as an extraordinary item.
|
|
(3)
|
|
Prior to December 2004, Las Vegas Sands, Inc. had elected to be
taxed as an S corporation and its wholly-owned subsidiaries
were either limited liability companies or S corporations,
each of which was a pass-through entity for federal income tax
purposes.
|
44
|
|
|
(4)
|
|
Earnings (loss) per share and shares outstanding for all periods
presented retroactively reflect the impact of the Companys
first quarter 2002 stock split and 2004 pre-initial public
offering stock split. The 2002 stock split increased the number
of shares of common stock outstanding from 246,080,299 to
266,032,755. The 2004 acquisition of Interface Holding from our
principal stockholder increased the number of shares of common
stock outstanding to 326,188,348. The 2004 initial public
offering and stock option exercises increased the number of
shares of common stock outstanding by 28,910,907 to 354,160,692.
The impact of outstanding options to purchase
1,463,180 shares of the Companys common stock has not
been included in the computation of diluted earnings (loss) per
share for the year ended December 31, 2002, as their impact
would have been antidilutive.
|
|
|
ITEM 7.
|
MANAGEMENTS
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 audited consolidated
financial statements, and the notes thereto and other financial
information included in this
Form 10-K.
Certain statements in this Managements Discussion
and Analysis of Financial Condition and Results of
Operations are forward-looking statements. See
Special Note Regarding Forward-Looking
Statements.
Operations
We own and operate The Venetian, a Renaissance Venice-themed
resort situated on the Las Vegas Strip (the Strip).
The Venetian includes the first all-suites hotel on the Strip
with 4,027 suites; a gaming facility of approximately
120,000 gross square feet; an enclosed retail, dining and
entertainment complex of approximately 440,000 net leasable
square feet (The Grand Canal Shops or the
Mall), which was sold to a third party in 2004; a
meeting and conference facility of approximately
1.1 million square feet; and The Sands Expo Center with
approximately 1.2 million square feet. Approximately 42.9%
of our gross revenue at The Venetian for the year ended
December 31, 2006 was derived from gaming and 57.1% was
derived from hotel rooms, food and beverage, and other sources.
The percentage of non-gaming revenue for The Venetian reflects
the resorts emphasis on the group convention and trade
show business and the resulting higher occupancy and room rates
during mid-week periods.
We also own and operate The Sands Macao, a Las Vegas-style
casino in Macao, China, which opened on May 18, 2004. The
Sands Macao now offers over 229,000 square feet of gaming
facilities after our expansion, which was completed in August
2006, as well as several restaurants, VIP facilities, a theatre
and other high-end amenities. In addition, we continue to
progress according to plan on our expansion of the hotel tower,
which we expect to complete during summer 2007 and to cost
approximately $100.1 million. Approximately 96.2% of The
Sands Macaos gross revenue for the year ended
December 31, 2006 was derived from gaming activities, with
the remainder primarily derived from food and beverage services.
United
States Development Projects
The
Palazzo
We are currently constructing The Palazzo, a second resort
similar in size to The Venetian, which is situated on a
14-acre
site
next to The Venetian and The Sands Expo Center. The Palazzo is
expected to consist of an all-suites, 50-floor luxury hotel
tower with approximately 3,025 suites, a gaming facility of
approximately 105,000 square feet and an enclosed shopping,
dining and entertainment complex of approximately
450,000 square feet, which we have contracted to sell to a
third party. The Palazzo is expected to open in fall 2007 at a
cost estimated to be approximately $1.85 billion (exclusive
of land, furniture, fixtures and equipment), of which the
Phase II mall is expected to cost approximately
$280.0 million (exclusive of certain incentive payments to
executives made in July 2004). In addition, we expect that
additional capital expenditures will be required to build out
stores and restaurants to be located in the Phase II mall.
In connection with the sale of The Grand Canal Shops mall, we
entered into an agreement with GGP, the purchaser of The Grand
Canal Shops mall, to sell GGP the Phase II mall upon
completion of construction. The purchase price that GGP has
agreed to pay for the Phase II mall is the greater of
(i) $250.0 million and (ii) the Phase II
malls net operating income for months 19 through 30 of its
operations
45
divided by a capitalization rate. The capitalization rate is
6.0% on the first $38.0 million of net operating income and
8.0% on the net operating income above $38.0 million.
We are in the early stages of constructing a high rise
residential condominium tower which will consist of
approximately 270 luxury condominiums and will be situated
between The Palazzo and The Venetian. The condominium tower is
currently expected to open in late fall 2008 at an estimated
cost ranging from $600.0 million to $700.0 million.
Sands
Bethworks
On December 20, 2006, the Pennsylvania Gaming Control Board
announced that our subsidiary, Sands Bethworks Gaming, had been
awarded a Pennsylvania gaming license. The award of the license
is subject to appeals and the actual license will be awarded
once the appeal period ends. We intend to develop a gaming,
hotel, shopping and dining complex located on the site of the
Historic Bethlehem Steel Works in Bethlehem, Pennsylvania, which
is about 70 miles from midtown Manhattan, New York. In its
first phase, the
124-acre
development is expected to feature a 300-room hotel,
200,000 square feet of retail space, 3,000 slot machines
and a variety of dining options. An additional 2,000 slot
machines will be added in a subsequent phase. We currently
expect the cost to develop and construct the Sands Bethworks
will be approximately $600.0 million and expect the complex
to open in 2008.
Macao
Development Projects
The
Cotai Strip
We are building The Venetian Macao in Macao, China, an
approximately 3,000 all-suites hotel, casino and convention
center complex with a Venetian-style theme similar to that of
The Venetian in Las Vegas. Under our gaming subconcession in
Macao, we are obligated to develop and open The Venetian Macao
and a convention center by December 2007. We currently expect to
open The Venetian Macao in summer 2007. If we fail to meet the
December 2007 deadline and that deadline is not extended, we
could lose our right to continue to operate The Sands Macao or
any other facilities developed under our Macao gaming
subconcession, and our investment to date in The Venetian Macao
could be lost.
In addition to the development of The Venetian Macao, we are
developing multiple other properties on the Cotai Strip. We have
submitted development plans to the Macao government for six
casino-resort developments in addition to The Venetian Macao on
an area of approximately 200 acres located on the Cotai
Strip (parcels 1, 2, 3, 5, 6, 7 and 8). The
developments are expected to include hotels, exhibition and
conference facilities, casinos, showrooms, shopping malls, spas,
world-class restaurants and entertainment facilities and other
attractions and amenities, as well as common public areas. We
have commenced construction or pre-construction on all seven
parcels of the Cotai Strip. We plan to own and operate all of
the casinos in these developments under our Macao gaming
subconcession. More specifically, we intend to develop our Cotai
Strip properties as follows:
|
|
|
|
|
Parcel 2 is intended to be a Four Seasons hotel and casino,
which will be adjacent to The Venetian Macao and is expected to
be a boutique hotel with approximately 400 luxury hotel rooms,
approximately 800,000 square feet of Four Seasons-serviced
luxury apartments, distinctive dining experiences, a full
service spa and other amenities, an approximately
45,000 square foot casino and approximately
210,000 square feet of upscale retail offerings. We will
own the entire development. We have entered into an exclusive
non-binding letter of intent and are currently negotiating
definitive agreements under which Four Seasons Hotels Inc. will
manage the hotel and serviced luxury apartments under its Four
Seasons brand.
|
|
|
|
Parcel 5 is intended to include a three-hotel complex with
approximately 2,450 luxury and mid-scale hotel rooms, serviced
luxury apartments, a casino and a retail shopping mall. We will
own the entire development and have entered into a management
agreement with Shangri-La Hotels and Resorts to manage two
hotels under its Shangri-La and Traders brands. In
addition, we are negotiating with Starwood Hotels &
Resorts Worldwide to manage a hotel and serviced luxury
apartments under its St. Regis brand.
|
|
|
|
Parcel 6 is intended to include a two-hotel complex with
approximately 4,000 luxury and mid-scale hotel rooms, a casino
and a retail shopping mall physically connected to the mall in
the Shangri-La/Traders hotel
|
46
|
|
|
|
|
podium. We will own the entire development and are negotiating
with Starwood Hotels & Resorts Worldwide to manage the
hotels under its Sheraton brand.
|
|
|
|
|
|
Parcels 7 and 8 are intended to each include a two-hotel complex
with approximately 3,000 luxury and mid-scale hotel rooms on
each parcel, serviced luxury vacation suites, a casino and
retail shopping malls that are physically connected. We will own
the entire development and have entered into non-binding
agreements with Hilton Hotels to manage Hilton and Conrad brand
hotels and serviced luxury vacation suites on parcel 7 and
Fairmont Raffles Holdings to manage Fairmont and Raffles brand
hotel complexes and serviced luxury vacation suites on parcel 8.
We are currently negotiating definitive agreements with Hilton
Hotels and Fairmont Raffles Holdings.
|
|
|
|
For parcel 3, we have signed a non-binding memorandum of
agreement with an independent developer. We are currently
negotiating the definitive agreement pursuant to which we will
partner with this developer to build a multi-hotel complex,
which may include a Cosmopolitan hotel. In addition, we have
signed a non-binding letter of intent with Intercontinental
Hotels Group to manage hotels under the Intercontinental and
Holiday Inn International brands, and serviced luxury vacation
suites under the Intercontinental brand, on the site. We are
currently negotiating definitive agreements with
Intercontinental Hotels Group. In total, the multi-hotel complex
is intended to include approximately 3,600 hotel rooms, serviced
luxury vacation suites, a casino and a retail shopping mall.
|
The casino at The Venetian Macao is currently planned to have
approximately 850 table games and 4,100 slot machines when it
opens in summer 2007, and is designed to have a final capacity
of approximately 1,150 table games and 7,000 slot machines. The
Four Seasons resort is currently planned to feature
approximately 130 table games and 400 slot machines. The casinos
on sites 3, 5, 6, 7 and 8 are each currently planned
to include approximately 325 table games and 1,750 slot
machines. Upon completion, our developments on the Cotai Strip
are currently planned to feature total gaming capacity of
approximately 2,900 table games and 16,000 slot machines.
In February 2007, we received the final draft of the land
concession agreement from the Macao government pursuant to which
we were awarded a concession by lease for parcels 1, 2 and
3 on the Cotai Strip, including the sites on which we are
building The Venetian Macao and the Four Seasons hotel. We have
accepted the conditions of the draft land concession and have
made an initial premium payment of $106.5 million towards
the aggregate land premium of $323.7 million. Additionally,
$24.1 million has been paid or will be paid in the form of
the cost of the reclamation work and other works done on the
land and the installation costs of an electrical substation with
the remaining amount payable over time. The land concession will
not become effective until the date it is published in
Macaos Official Gazette. Once the land concession is
effective, we will be required to make additional land premium
and annual rent payments relating to parcels 1, 2 and 3 in
the amounts and at the times specified in the land concession.
We have also commenced construction on our other Cotai Strip
properties on land for which we have not yet been granted land
concessions. If we do not obtain land concessions, we could lose
all or a substantial part of our investment in these other Cotai
Strip properties.
We currently estimate that the cost of developing and building
The Venetian Macao will be approximately $2.4 billion
(exclusive of the aggregate land concession payment of
$323.7 million for parcels 1, 2 and 3). During May
2006, VML obtained a $2.5 billion credit facility to
fund The Sands Macao expansion and to partially fund the
design, development, construction and pre-opening costs for The
Venetian Macao, the Four Seasons hotel and some of our other
development projects on the Cotai Strip, and to pay related fees
and expenses. Currently, we expect the total cost of development
on the Cotai Strip to be in the range of $9.0 billion to
$11.0 billion. We will need to arrange additional debt
financing to finance those costs as well.
We do not yet have all the necessary Macao government approvals
that we will need in order to develop the Cotai Strip
developments. We have commenced construction on our other Cotai
Strip properties on land for which we have not yet been granted
land concessions. If we do not obtain land concessions, we could
lose all or a substantial part of our investment in these other
Cotai Strip properties. As of December 31, 2006, we have
invested approximately $100.0 million in our other Cotai
Strip properties.
47
Hengqin
Island Development Project
We have entered into a non-binding letter of intent with the
Zhuhai Municipal Peoples Government of the Peoples
Republic of China to work with it to create a master plan for,
and develop, a leisure and convention destination resort on
Hengqin Island, located approximately one mile from the Cotai
Strip, but within mainland China. We are actively preparing
preliminary design concepts for presentation to the government.
On January 10, 2007, the Zhuhai Government established a
Project Coordination Committee to act as a government liaison
empowered to work directly with the Company to advance the
development of the project. We have interfaced with this
committee and are actively working with the committee as we
continue to advance our plans. The project remains subject to a
number of conditions, including further governmental approvals.
Singapore
Development Project
In August 2006, our wholly-owned subsidiary, MBS, entered into
the Development Agreement with the STB to build and operate an
integrated resort called Marina Bay Sands in Singapore. The
Marina Bay Sands will be a large integrated resort that includes
three 54-story hotel towers (totaling approximately 2,600
suites) linked at their roofs by a Skypark with pools, cafes and
other recreation facilities, a casino, an enclosed retail,
dining and entertainment complex of approximately
750,000 net leasable square feet, a convention center and
meeting room complex of approximately 1.2 million square
feet, theaters, and a landmark iconic structure at the bay-front
promenade that contains an approximately 150,000 square
foot Art/Science museum.
Under the Development Agreement, we paid $1.2 billion
Singapore dollars (SGD) (approximately
US$782.5 million at exchange rates in effect on
December 31, 2006) in premium payments for the lease
of the land on which the resort will be built plus an additional
SGD$105.6 million (approximately US$68.9 million at
exchange rates in effect on December 31, 2006) for
various taxes and other fees. Of this combined amount,
$806.0 million has been capitalized on the balance sheet as
a leasehold interest in land with $4.8 million amortized as
of December 31, 2006. We will amortize this asset over
60 years, which is the length of the lease agreement. Of
the remaining $45.4 million, $39.7 million was
recorded as a receivable (which was collected in January
2007) and $5.7 million has been capitalized on the
balance sheet as construction in progress. In addition to the
fees above, we provided a deposit of SGD$192.6 million
(approximately US$125.6 million at exchange rates in effect
on December 31, 2006) as a security deposit for the
construction of the integrated resort, which is currently being
satisfied by bank guarantees. Also in August 2006, MBS entered
into a two-year SGD$2.21 billion (approximately
US$1.44 billion at exchange rates in effect on
December 31, 2006) bridge facility to finance the
above payments and to provide for near-term development
expenditures. We expect the cost to develop and construct the
Marina Bay Sands integrated resort will be approximately
$3.6 billion, inclusive of the land premium, taxes and
other fees discussed above. The Marina Bay Sands is expected to
open in 2009.
United
Kingdom Development Projects
In December 2006, we announced that one of our affiliates and
Cantor Gaming, an affiliate of the global financial services
company Cantor Fitzgerald, have agreed to launch an online
casino and poker site initially aimed at serving the United
Kingdom market. Cantor Gaming will provide an online casino and
poker destination featuring Las Vegas Sands brands. The site
will offer casino games, including blackjack, roulette,
baccarat, video poker, slots and online poker. The offering will
be part of a full
end-to-end
gaming service, including customer age and location
verification, online payment processing and customer services.
The site is expected to be launched during the second quarter of
2007. The site will be hosted, and the operator will be
licensed, in compliance with the laws of Alderney, British
Channel Islands. It will not accept U.S. customers.
The United Kingdom government recently announced that the
countrys first regional super casino would be built in
Manchester. A tender process for the operator of that facility
is to be undertaken and we intend to participate in the tender
process. In addition, we have existing agreements to develop and
lease gaming and entertainment facilities with Sheffield United
and Glasgow Rangers football clubs in the United Kingdom. Our
ability to eventually develop and lease gaming and entertainment
facilities under these agreements is subject to a number of
conditions, including the passage of legislation to expand the
number of authorized regional casinos and our ability to obtain
a gaming license.
48
Other
Development Projects
We are currently exploring the possibility of operating
integrated resorts in additional Asian jurisdictions, the United
States and Europe.
Critical
Accounting Policies and Estimates
The preparation of our consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires our management to make
estimates and judgments that affect the reported amounts of
assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. These
estimates and judgments are based on historical information,
information that is currently available to us and on various
other assumptions that management believes to be reasonable
under the circumstances. Actual results could vary from those
estimates and we may change our estimates and assumptions in
future evaluations. Changes in these estimates and assumptions
may have a material effect on our results of operations and
financial condition. We believe that the critical accounting
policies discussed below affect our more significant judgments
and estimates used in the preparation of our consolidated
financial statements.
Allowance
for Doubtful Accounts
We maintain an allowance, or reserve, for doubtful accounts at
our operating casino resorts, The Venetian and The Sands Macao.
We regularly evaluate the allowance for doubtful accounts. At
The Venetian, where credit or marker play is significant, we
apply standard reserve percentages to aged account balances
under a specified dollar amount and specifically analyze the
collectibility of each account with a balance over the specified
dollar amount, based upon the age of the account, the
customers financial condition, collection history and any
other known information. We also monitor regional and global
economic conditions and forecasts in our evaluation of the
adequacy of the recorded reserves. At The Sands Macao, where
credit or marker play is not significant, we apply a standard
reserve percentage to aged account balances. The mix of credit
play as a percentage of total casino play has decreased
significantly since 2005 due to the continued growth of The
Sands Macao where table games play is primarily cash play, while
The Venetian credit table games play represents approximately
62.6% of total table games play. Our allowance for doubtful
accounts was 22.8% and 26.9% of gross casino and hotel accounts
receivable for the years ended December 31, 2006 and 2005,
respectively.
Self-Insurance
Accruals
We maintain accruals for health and workers compensation
self-insurance, which are classified in other accrued
liabilities in the consolidated balance sheets. We determine the
adequacy of these accruals by periodically evaluating the
historical experience and projected trends related to these
accruals and in consultation with outside actuarial experts. If
such information indicates that the accruals are overstated or
understated, or if business conditions indicate we should adjust
the assumptions utilized, we will reduce or provide for
additional accruals as appropriate.
Litigation
Accrual
We are subject to various claims and legal actions. We estimate
the accruals for these claims and legal actions in accordance
with SFAS No. 5, Accounting for
Contingencies, and include such accruals in other accrued
liabilities in the consolidated balance sheets.
Property
and Equipment
At December 31, 2006, we had net property and equipment of
$4.58 billion, representing 64.3% of our total assets. We
depreciate property and equipment on a straight-line basis over
their estimated useful lives. The estimated useful lives are
based on the nature of the assets as well as current operating
strategy and legal considerations such as contractual life.
Future events, such as property expansions, property
developments, new competition, or new regulations, could result
in a change in the manner in which we use certain assets
requiring a change in the estimated useful lives of such assets.
49
For assets to be held and used, fixed assets are reviewed for
impairment whenever indicators of impairment exist. If an
indicator of impairment exists, the Company first groups its
assets with other assets and liabilities at the lowest level for
which identifiable cash flows are largely independent of the
cash flows of other assets and liabilities (the asset
group). Secondly, the Company estimates the undiscounted
future cash flows that are directly associated with and expected
to arise from the use of and eventual disposition of such asset
group. The Company estimates the undiscounted cash flows over
the remaining useful life of the primary asset within the asset
group. If the undiscounted cash flows exceed the carrying value,
no impairment is indicated. If the undiscounted cash flows do
not exceed the carrying value, then an impairment is measured
based on fair value compared to carrying value, with fair value
typically based on a discounted cash flow model. If an asset is
still under development, future cash flows include remaining
construction costs.
Stock-Based
Compensation
SFAS No. 123R, Share-Based Payment,
requires the recognition of compensation expense in the
consolidated statements of operations related to the fair value
of employee stock-based compensation. Determining the fair value
of stock-based awards at the grant date requires judgment,
including estimating the expected term that stock options will
be outstanding prior to exercise, the associated volatility and
the expected dividends. Expected volatilities are based on the
historical volatilities from a selection of companies from our
peer group due to our lack of historical information. We used
the simplified method for estimating expected option life, as
the options qualify as plain-vanilla options. We
believe that the valuation technique and the approach utilized
to develop the underlying assumptions are appropriate in
calculating the fair values of our stock options granted.
Judgment is also required in estimating the amount of
stock-based awards expected to be forfeited prior to vesting. If
actual forfeitures differ significantly from these estimates,
stock-based compensation expense could be materially impacted.
Prior to adopting SFAS No. 123R, we applied APB
Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations, in accounting for
our stock-based compensation plans. All employee stock options
were granted with an exercise price equal to the fair market
value (as defined in the Companys 2004 Equity Award
Plan). The Company adopted SFAS No. 123R effective
January 1, 2006. During the year ended December 31,
2006, we recorded stock-based compensation expense of
$14.7 million. No such expense was recorded in 2005 and
2004. As of December 31, 2006, there was $55.8 million
of unrecognized compensation cost, net of estimated forfeitures
of 8.0%, related to nonvested stock options and there was
$2.1 million of unrecognized compensation cost related to
nonvested restricted stock. The stock option and restricted
stock costs are expected to be recognized over a weighted
average period of 3.2 years and 1.9 years,
respectively.
Income
Taxes
We are subject to income taxes in the United States, and in
several states and foreign jurisdictions in which we operate. We
account for income taxes in accordance with
SFAS No. 109, Accounting for Income Taxes.
Under SFAS No. 109, deferred tax assets and
liabilities are recognized based on differences between
financial statement and tax basis of assets and liabilities
using enacted tax rates. SFAS No. 109 requires the
recognition of deferred tax assets, net of any applicable
valuation allowances, related to net operating loss
carryforwards, tax credits and other temporary differences. The
standard requires recognition of a future tax benefit to the
extent that realization of such benefit is more likely than not;
otherwise, a valuation allowance is applied.
Our income tax returns are subject to examination by the
Internal Revenue Service (IRS) and other tax
authorities. While positions taken in tax returns are sometimes
subject to uncertainty in the tax laws, we do not take such
positions unless we have substantial authority to do
so under the Internal Revenue Code and applicable regulations.
We may take positions on our tax returns based on substantial
authority that are not ultimately accepted by the IRS.
We assess potential unfavorable outcomes based on the criteria
of SFAS No. 5. We establish a tax reserve if an
unfavorable outcome is probable and the amount of the
unfavorable outcome can be reasonably estimated. We assess the
potential outcomes of tax uncertainties on a quarterly basis. In
determining whether the probable criterion of
SFAS No. 5 is met, we presume that the taxing
authority will focus on the exposure and we assess the probable
outcome of a particular issue based upon the relevant legal and
technical merits. We also apply our judgment regarding the
potential actions by the tax authorities and resolution through
the settlement process.
50
We maintain required tax reserves until such time as the
underlying issue is resolved. When actual results differ from
reserve estimates, we will adjust the income tax provision and
our tax reserves in the period resolved. For tax years that are
examined by taxing authorities, we will adjust tax reserves in
the year the tax examinations are settled. For tax years that
are not examined by taxing authorities, we will adjust tax
reserves in the year that the statute of limitations expires.
Our estimate of the potential outcome for any uncertain tax
issue is highly judgmental, and we believe we have adequately
provided for any reasonable and foreseeable outcomes related to
uncertain tax matters.
Recent
Accounting Pronouncements
In June 2006, the FASB ratified the consensus reached on
Emerging Issues Task Force (EITF) Issue
No. 06-03,
How Sales Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income
Statement (that is, Gross Versus Net Presentation). The
EITF reached a consensus that the presentation of taxes on
either a gross or net basis is an accounting policy decision
that requires disclosure. EITF Issue
No. 06-03
is effective for the first interim or annual reporting period
beginning after December 15, 2006. Taxes collected from the
our customers are and have been recorded on a net basis. We have
no intention of modifying this accounting policy. As such, the
adoption of EITF Issue
No. 06-03
will not have an effect on our results from operations or
financial position.
In July 2006, the FASB issued Interpretation (FIN)
No. 48, Accounting for Uncertainty in Income
Taxes, which provides guidance for the accounting for
uncertainty in income taxes recognized in the financial
statements in accordance with SFAS No. 109.
FIN No. 48 provides guidance on the financial
statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN No. 48 also
provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosures, and
transition. FIN No. 48 will require entities to assess
the likelihood that uncertain tax positions will be accepted by
the applicable taxing authority and then measure the amount of
benefit to be recognized for these purposes which are considered
greater than 50% likely to be sustained. FIN No. 48 is
effective for fiscal years beginning after December 15,
2006. We will adopt FIN No. 48 as of January 1,
2007, as required. We are currently evaluating the impact of
adopting this standard, but believe that there will be a
reduction to opening retained earnings in an amount that will
not exceed $12.0 million.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value, and expands
disclosures about fair value measurements.
SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurement.
SFAS No. 157 does not require any new fair value
measurements and we do not expect the application of this
standard to change its current practices. The provisions of
SFAS No. 157 are effective for financial statements
issued for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years.
Summary
Financial Results
The following table summarizes our results of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
2006
|
|
|
Change
|
|
|
2005
|
|
|
Change
|
|
|
2004
|
|
|
|
(In thousands, except for percentages)
|
|
|
Net revenues
|
|
$
|
2,236,859
|
|
|
|
28.5
|
%
|
|
$
|
1,740,912
|
|
|
|
45.4
|
%
|
|
$
|
1,197,056
|
|
Operating expenses
|
|
|
1,662,762
|
|
|
|
32.9
|
%
|
|
|
1,251,461
|
|
|
|
116.3
|
%
|
|
|
578,588
|
|
Operating income
|
|
|
574,097
|
|
|
|
17.3
|
%
|
|
|
489,451
|
|
|
|
(20.9
|
)%
|
|
|
618,468
|
|
Income before income taxes
|
|
|
504,246
|
|
|
|
75.1
|
%
|
|
|
287,936
|
|
|
|
(40.2
|
)%
|
|
|
481,447
|
|
Net income
|
|
|
442,003
|
|
|
|
55.8
|
%
|
|
|
283,686
|
|
|
|
(42.7
|
)%
|
|
|
495,183
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Net Revenues Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Operating expenses
|
|
|
74.3
|
%
|
|
|
71.9
|
%
|
|
|
48.3
|
%
|
Operating income
|
|
|
25.7
|
%
|
|
|
28.1
|
%
|
|
|
51.7
|
%
|
Income before income taxes
|
|
|
22.5
|
%
|
|
|
16.5
|
%
|
|
|
40.2
|
%
|
Net income
|
|
|
19.8
|
%
|
|
|
16.3
|
%
|
|
|
41.4
|
%
|
Our historical financial results during the years ended
December 31, 2005 and 2004 will not be indicative of our
future results, among other things, for the following items
which are not anticipated to occur to this magnitude in the near
future: we sold The Grand Canal Shops mall on May 17, 2004
and recognized a gain of $417.6 million; we paid incentive
payments of $63.2 million related to the Phase II mall
sale to certain of our executives in July 2004; we incurred a
loss on disposal of assets of $31.6 million in 2004 related
primarily to demolition of space to accommodate the construction
of a showroom; we incurred a stock-based compensation charge of
$49.2 million related to our initial public offering in
2004; and we incurred a loss on retirement of debt of
$137.0 million during 2005 related to the redemption of the
11% Mortgage Notes and VMLs senior secured notes.
Key
operating revenue measurements
The Venetians operating revenue is dependent upon the
volume of customers who stay at the hotel, which affects the
price that can be charged for hotel rooms and the volume of
table games and slot machine play. The Sands Macao is almost
wholly dependent on casino customers that visit the casino on a
daily basis. Hotel revenues are not material for The Sands
Macao. Visitors to The Sands Macao arrive by ferry, automobile,
bus, airplane or helicopter from Hong Kong, cities in China and
other Southeast Asian cities in close proximity to Macao.
The following are the key measurements we use to evaluate
operating revenue:
Casino revenue measurements for Las
Vegas:
Table games drop and slot handle are
volume measurements. Win or hold percentage represents the
percentage of drop or handle that is won by the casino and
recorded as casino revenue. Table games drop represents the sum
of markers issued (credit instruments) less markers paid at the
table, plus cash deposited in the table drop box. Slot handle is
the gross amount wagered or coin placed into slot machines in
aggregate for the period cited. Drop and handle are
abbreviations for table games drop and slot handle. Based upon
our mix of table games, our table games produce a statistical
average table win percentage (calculated before discounts) as
measured as a percentage of table game drops of 20.0% to 22.0%
and slot machines produce a statistical average slot machine win
percentage (calculated before slot club cash incentives) as
measured as a percentage of slot machine handle generally
between 6.0% and 7.0%.
Casino revenue measurements for Macao:
We view
Macao table games as being segregated into two groups,
consistent with the Macao markets convention: Rolling Chip
play (all VIP play) and Non-Rolling Chip play (mostly non-VIP
players). The volume measurement for Rolling Chip play is
non-negotiable gaming chips wagered. The volume measurement for
Non-Rolling Chip is table games drop as described above. Rolling
Chip volume and Non-Rolling Chip volume are not equivalent
because, since Rolling Chip volume is a measure of amounts
wagered versus dropped, Rolling Chip volume is substantially
higher than drop. Slot handle at The Sands Macao is the gross
amount wagered or coins placed into slot machines in aggregate
for the period cited.
We view Rolling Chip table games win as a percentage of Rolling
Chip volume and we view
Non-Rolling
Chip table games win as a percentage of drop. Win or hold
percentage represents the percentage of Rolling Chip volume,
Non-Rolling Chip drop or slot handle that is won by the casino
and recorded as casino revenue. Based upon our mix of table
games in Macao, our Rolling Chip table games win percentage
(calculated before discounts and commissions) as measured as a
percentage of Rolling Chip volume is expected to be 2.7% to 3.0%
and our Non-Rolling Chip table games are expected to produce a
statistical average table win percentage as measured as a
percentage of table game drop (before discounts and commissions)
of 18.0% to 20.0%. Similar to Las Vegas, our Macao slot machines
produce a statistical average slot machine win percentage as
measured as a percentage of slot machine handle of generally
between 6.0% and 7.0%.
52
Actual win may vary from the statistical average. Generally,
slot machine play at The Venetian and The Sands Macao is
conducted on a cash basis. The Venetians table games
revenue is approximately 62.6% from credit based guests wagering
for the year ended December 31, 2006 and The Sands
Macaos table game play is conducted primarily on a cash
basis.
Hotel revenue measurements:
Hotel occupancy
rate, which is the average percentage of available hotel rooms
occupied during a period, and average daily room rate, which is
the average price of occupied rooms per day, are used as
performance indicators. Revenue per available room represents a
summary of hotel average daily room rates and occupancy. Because
not all available rooms are occupied, average daily room rates
are higher than revenue per available room.
Year
Ended December 31, 2006 compared to the Year Ended
December 31, 2005
Operating
Revenues
Our net revenues consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
1,676,061
|
|
|
$
|
1,250,090
|
|
|
|
34.1
|
%
|
Rooms
|
|
|
350,606
|
|
|
|
323,560
|
|
|
|
8.4
|
%
|
Food and beverage
|
|
|
187,819
|
|
|
|
147,510
|
|
|
|
27.3
|
%
|
Convention, retail and other
|
|
|
125,692
|
|
|
|
103,065
|
|
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,340,178
|
|
|
$
|
1,824,225
|
|
|
|
28.3
|
%
|
Less promotional
allowances
|
|
|
(103,319
|
)
|
|
|
(83,313
|
)
|
|
|
(24.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,236,859
|
|
|
$
|
1,740,912
|
|
|
|
28.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues were $2.24 billion for the year
ended December 31, 2006, an increase of $495.9 million
compared to $1.74 billion for the year ended
December 31, 2005. The increase in net revenues was due
primarily to an increase in casino revenue of
$426.0 million. This increase is primarily attributable to
the growth of our operations at The Sands Macao due primarily to
the formal introduction of our Rolling Chip program in March
2005 and the casino expansion in August 2006.
Casino revenues for the year ended December 31, 2006
increased $426.0 million as compared the year ended
December 31, 2005. Of the increase, $382.1 million was
attributable to the growth of our casino operations at The
53
Sands Macao due primarily to the formal introduction of our
Rolling Chip program in March 2005 and casino expansion in
August 2006. The following table summarizes the results of
our casino revenue activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
The Sands Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
1,264,290
|
|
|
$
|
882,175
|
|
|
|
43.3
|
%
|
Non-Rolling Chip table games drop
|
|
$
|
4,178,655
|
|
|
$
|
4,002,635
|
|
|
|
4.4
|
%
|
Non-Rolling Chip table games win
percentage
|
|
|
18.6
|
%
|
|
|
16.5
|
%
|
|
|
2.1
|
pts
|
Rolling Chip volume
|
|
$
|
17,114,962
|
|
|
$
|
9,982,942
|
|
|
|
71.4
|
%
|
Rolling Chip win percentage
|
|
|
3.2
|
%
|
|
|
2.4
|
%
|
|
|
0.8
|
pts
|
Slot handle
|
|
$
|
1,048,795
|
|
|
$
|
720,085
|
|
|
|
45.6
|
%
|
Slot hold percentage
|
|
|
7.7
|
%
|
|
|
8.4
|
%
|
|
|
(0.7
|
)pts
|
The Venetian
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
411,771
|
|
|
$
|
367,915
|
|
|
|
11.9
|
%
|
Table games drop
|
|
$
|
1,266,931
|
|
|
$
|
1,184,468
|
|
|
|
7.0
|
%
|
Table games win percentage
|
|
|
22.0
|
%
|
|
|
20.0
|
%
|
|
|
2.0
|
pts
|
Slot handle
|
|
$
|
2,136,267
|
|
|
$
|
2,039,224
|
|
|
|
4.8
|
%
|
Slot hold percentage
|
|
|
6.2
|
%
|
|
|
6.3
|
%
|
|
|
(0.1
|
)pts
|
In our experience, average win percentages remain steady when
measured over extended periods of time, but can vary
considerably within shorter time periods as a result of the
statistical variances that are associated with games of chance
in which large amounts are wagered.
Room revenues for the year ended December 31, 2006
increased $27.0 million as compared to the year ended
December 31, 2005. The increase was attributable to the
increase in the average daily room rate as well as a slight
increase in the occupancy rate. The following table summarizes
the results of our room revenue activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Change
|
|
|
The Venetian
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily room rate
|
|
$
|
239
|
|
|
$
|
225
|
|
|
|
6
|
.2
|
%
|
Occupancy rate
|
|
|
98.7
|
%
|
|
|
97.3
|
%
|
|
|
1
|
.4
|
pts
|
Revenue per available room
|
|
$
|
236
|
|
|
$
|
218
|
|
|
|
8
|
.3
|
%
|
Food and beverage revenues were $187.8 million for the year
ended December 31, 2006, an increase of $40.3 million
as compared to $147.5 million for the year ended
December 31, 2005. The increase was primarily attributable
to food and beverage revenues at The Venetian, which increased
$32.2 million due to increased group business resulting
primarily from approximately 450,000 square feet of
additional meeting space at the property.
Convention, retail and other revenues for the year ended
December 31, 2006 increased $22.6 million as compared
to the year ended December 31, 2005. The increase in
primarily attributable to $7.6 million of additional
convention revenues from The Sands Expo Center and
$10.4 million in revenues associated with the Blue Man
Group, the Phantom of the Opera and the Gordie Brown
performances, which began in October 2005, June 2006 and October
2006, respectively.
54
Operating
Expenses
The breakdown of operating expenses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
925,033
|
|
|
$
|
656,590
|
|
|
|
40.9
|
%
|
Rooms
|
|
|
85,651
|
|
|
|
82,058
|
|
|
|
4.4
|
%
|
Food and beverage
|
|
|
89,113
|
|
|
|
76,736
|
|
|
|
16.1
|
%
|
Convention, retail and other
|
|
|
64,315
|
|
|
|
58,068
|
|
|
|
10.8
|
%
|
Provision for doubtful accounts
|
|
|
18,067
|
|
|
|
9,358
|
|
|
|
93.1
|
%
|
General and administrative
|
|
|
230,355
|
|
|
|
192,806
|
|
|
|
19.5
|
%
|
Corporate expense
|
|
|
59,570
|
|
|
|
38,297
|
|
|
|
55.5
|
%
|
Rental expense
|
|
|
13,478
|
|
|
|
14,841
|
|
|
|
(9.2
|
)%
|
Pre-opening expense
|
|
|
37,673
|
|
|
|
3,732
|
|
|
|
909.5
|
%
|
Development expense
|
|
|
26,112
|
|
|
|
22,238
|
|
|
|
17.4
|
%
|
Depreciation and amortization
|
|
|
110,771
|
|
|
|
95,296
|
|
|
|
16.2
|
%
|
Loss on disposal of assets
|
|
|
2,624
|
|
|
|
1,441
|
|
|
|
82.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
1,662,762
|
|
|
$
|
1,251,461
|
|
|
|
32.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses were $1.66 billion for the year ended
December 31, 2006, an increase of $411.3 million as
compared to $1.25 billion for the year ended
December 31, 2005. The increase in operating expenses was
primarily attributable to the higher operating revenues and
growth of our operating businesses in Macao and to a lesser
extent in Las Vegas, as more fully described below.
Casino department expenses for the year ended December 31,
2006 increased $268.4 million as compared to the year ended
December 31, 2005. Of the increase in casino expenses,
$176.1 million was due to the 39.0% gross win tax on casino
revenues in Macao. Despite the higher gross win tax, casino
operating margins at The Sands Macao are similar to those at The
Venetian primarily because of lower labor, marketing and sales
expenses in Macao. As the Rolling Chip volume increases as a
percentage of our total gaming operations, casino margins will
decrease due to the commissions paid under the Rolling Chip
program. The remaining increase was primarily attributable to
the additional payroll related expenses related to the continued
growth of our operations at The Sands Macao and the casino
expansion in August 2006.
Food and beverage expense increased $12.4 million and
convention, retail and other expense increased
$6.2 million. These increases were primarily due to the
associated increase in the respective revenue categories as
noted above.
The provision for doubtful accounts was $18.1 million for
the year ended December 31, 2006, compared to
$9.4 million for the year ended December 31, 2005, due
primarily to an increase in casino and hotel receivables during
the year. The amount of this provision can vary over short
periods of time because of factors specific to the customers who
owe us money from gaming activities at any given time. We
believe that the amount of our provision for doubtful accounts
in the future will depend upon the state of the economy, our
credit standards, our risk assessments and the judgment of our
employees responsible for granting credit.
General and administrative expenses for the year ended
December 31, 2006 increased $37.6 million as compared
to the year ended December 31, 2005. The increase was
attributable to the growth of our operating businesses in Las
Vegas and Macao as well as $7.1 million related to
stock-based compensation expense recorded in connection with the
adoption of SFAS No. 123R.
Corporate expense for the year ended December 31, 2006
increased $21.3 million as compared to the year ended
December 31, 2005. Of the increase in corporate expense,
$19.5 million was related to payroll and other
55
operating expenses as we increase our headcount in the corporate
area to support our continued expansion activities and
$5.4 million related to stock-based compensation recorded
in connection with the adoption of SFAS No. 123R,
partially offset by a $5.0 million charitable contribution
that was made in 2005 that did not recur in 2006.
Pre-opening and development expenses were $37.7 million and
$26.1 million, respectively, for the year ended
December 31, 2006, compared to $3.7 million and
$22.2 million, respectively, for the year ended
December 31, 2005. Pre-opening expense represents personnel
and other costs incurred prior to the opening of new ventures
which are expensed as incurred. Pre-opening expenses for the
year ended December 31, 2006 were primarily related to The
Venetian Macao project and to the expansion of The Sands Macao.
Development expense includes the costs associated with the
Companys evaluation and pursuit of new business
opportunities, which are also expensed as incurred. Development
expenses for the year ended December 31, 2006 were
primarily related to our activities in Singapore, Pennsylvania
and Europe. We expect that pre-opening and development expenses
will continue to increase as we progress with The Venetian Macao
and other Cotai Strip projects in Macao, The Palazzo in Las
Vegas, Marina Bay Sands in Singapore, Hengqin Island and
Pennsylvania, as well as our continued pursuit of development
opportunities elsewhere.
Depreciation and amortization expense for the year ended
December 31, 2006 increased $15.5 million as compared
to the year ended December 31, 2005. The increase was
primarily due to additional depreciation expense as a result of
capital improvements at The Venetian and The Sands Macao.
Interest
Expense
The following table summarizes information related to interest
expense on long-term debt:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except for percentages)
|
|
|
Interest cost
|
|
$
|
230,447
|
|
|
$
|
118,992
|
|
Less: Capitalized interest
|
|
|
(94,594
|
)
|
|
|
(22,700
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
135,853
|
|
|
$
|
96,292
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
215,975
|
|
|
$
|
111,066
|
|
Average total debt balance
|
|
$
|
2,898,936
|
|
|
$
|
1,520,913
|
|
Weighted average interest rate
|
|
|
7.9
|
%
|
|
|
7.8
|
%
|
Interest expense, net of amounts capitalized, for the year ended
December 31, 2006 increased $39.6 million as compared
to the year ended December 31, 2005. This increase is
primarily attributable to an increase in our average long-term
debt balances resulting primarily from the completion of the
$2.5 billion Macao credit facility, in May 2006, to support
our development activities in Macao and the $1.44 billion
Singapore bridge facility, in August 2006, to support the
development of the Marina Bay Sands. We expect interest expense
will continue to increase as our long-term debt balances and
interest rates increase. This increase was offset by the
capitalization of $94.6 million of interest during the year
ended December 31, 2006, compared to $22.7 million of
capitalized interest during the year ended December 31,
2005. We expect capitalized interest will continue to increase
as The Venetian Macao and The Palazzo projects approach their
anticipated 2007 opening dates and as we increase our
construction activities on the Cotai Strip, at Marina Bay Sands
and Sands Bethworks.
Other
Factors Affecting Earnings
Interest income for the year ended December 31, 2006 was
$66.2 million, an increase of $33.1 million as
compared to $33.1 million for the year ended
December 31, 2005. The increase was attributable to
additional invested cash balances, primarily from our borrowings
under the Senior Secured Credit Facility and the Macao credit
facility.
The loss on early retirement of debt of $137.0 million
during the year ended December 31, 2005 was the result of
the redemption of Las Vegas Sands, Inc.s
$843.6 million in aggregate principal amount of 11%
mortgage notes and VMLs $120.0 million in aggregate
principal amount of senior secured notes.
56
Our effective income tax rate for the year ended
December 31, 2006 was 12.3%. The effective tax rate for the
year was significantly lower than the federal statutory rate due
primarily to a zero effective tax rate on our Macao net income
as a result of a temporary income tax exemption in Macao on
gaming operations, which is set to expire at the end of 2008.
The effective tax rate was 1.5% for the year ended
December 31, 2005 primarily due to the tax benefit
associated with the loss on early retirement of debt in the 2005
period, as well as the application of the aforementioned Macao
temporary income tax exemption.
Year
Ended December 31, 2005 compared to the Year Ended
December 31, 2004
Operating
Revenues
Our net revenues consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2005
|
|
|
2004
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
1,250,090
|
|
|
$
|
708,564
|
|
|
|
76.4
|
%
|
Rooms
|
|
|
323,560
|
|
|
|
312,003
|
|
|
|
3.7
|
%
|
Food and beverage
|
|
|
147,510
|
|
|
|
121,566
|
|
|
|
21.3
|
%
|
Convention, retail and
other
(1)
|
|
|
103,065
|
|
|
|
116,437
|
|
|
|
(11.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,824,225
|
|
|
$
|
1,258,570
|
|
|
|
44.9
|
%
|
Less promotional
allowances
|
|
|
(83,313
|
)
|
|
|
(61,514
|
)
|
|
|
(35.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
1,740,912
|
|
|
$
|
1,197,056
|
|
|
|
45.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Grand Canal Shops mall was sold and certain other retail and
restaurant venues were leased to GGP on May 17, 2004.
|
Consolidated net revenues were $1.74 billion for the year
ended December 31, 2005, an increase of $543.9 million
compared to $1.2 billion for the year ended
December 31, 2004. The increase in net revenues was due
primarily to an increase in casino revenue of
$541.5 million. This increase is attributable to our
operation of The Sands Macao for a full year in 2005, compared
to just over seven months in 2004. The increase in net revenues
was partially offset by a decrease in convention, retail and
other revenue of $13.4 million, primarily as a result of
the sale of The Grand Canal Shops mall and the lease of certain
other retail and restaurant venues on May 17, 2004.
Casino revenues for the year ended December 31, 2005
increased $541.5 million as compared to the year ended
December 31, 2004. Of the increase, $494.6 million was
attributable to the operation of The Sands Macao for a full year
in 2005, compared to just over seven months in 2004 and the
increased volumes associated with the introduction of the
Rolling Chip program in March 2005. In addition, there was a
$46.9 million increase at The Venetian due to an increase
in table game drop of $161.6 million and an increase of
2.7 percentage points in our win percentage. In our
experience, average win percentages remain steady when measured
over extended periods of time, but can vary considerably within
shorter time periods as a result of the statistical variances
that are associated with games of chance in which large amounts
are wagered.
Room revenues for the year ended December 31, 2005
increased $11.6 million as compared to the year ended
December 31, 2004. The increase was attributable to the
increase in average daily room rate from $220 in 2004 to $225 in
2005 as well as a slight increase in occupancy rate from 97.0%
in 2004 to 97.3% in 2005 at The Venetian. The Venetian generated
revenue per available room of $218 for the year ended
December 31, 2005 as compared to $213 for the year ended
December 31, 2004.
Food and beverage revenues for the year ended December 31,
2005 increased $25.9 million as compared to the year ended
December 31, 2004. Of this increase, $15.2 million was
attributable to increased business volumes at The Sands Macao as
well as a full year of operations versus just over seven months
in the prior year. Food and beverage revenues at The Venetian
increased $10.7 million due to increased hotel occupancy
and general group business at the property.
57
Convention, retail and other revenues for the year ended
December 31, 2005 decreased $13.4 million as compared
to the year ended December 31, 2004. Convention, retail and
other revenues during 2004 include revenue of $15.9 million
related to the operations of The Grand Canal Shops mall and the
lease of retail outlets in The Venetian. The Grand Canal Shops
mall was sold and certain other retail and restaurant venues
were leased to GGP on May 17, 2004.
Operating
Expenses
The breakdown of operating expenses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2005
|
|
|
2004
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
656,590
|
|
|
$
|
340,241
|
|
|
|
93.0
|
%
|
Rooms
|
|
|
82,058
|
|
|
|
77,249
|
|
|
|
6.2
|
%
|
Food and beverage
|
|
|
76,736
|
|
|
|
64,176
|
|
|
|
19.6
|
%
|
Convention, retail and
other
(1)
|
|
|
58,068
|
|
|
|
60,055
|
|
|
|
(3.3
|
)%
|
Provision for doubtful accounts
|
|
|
9,358
|
|
|
|
7,959
|
|
|
|
17.6
|
%
|
General and administrative
|
|
|
192,806
|
|
|
|
173,088
|
|
|
|
11.4
|
%
|
Corporate expense
|
|
|
38,297
|
|
|
|
126,356
|
|
|
|
(69.7
|
)%
|
Rental expense
|
|
|
14,841
|
|
|
|
12,033
|
|
|
|
23.3
|
%
|
Pre-opening expense
|
|
|
3,732
|
|
|
|
19,025
|
|
|
|
(80.4
|
)%
|
Development expense
|
|
|
22,238
|
|
|
|
14,901
|
|
|
|
49.2
|
%
|
Depreciation and amortization
|
|
|
95,296
|
|
|
|
69,432
|
|
|
|
37.3
|
%
|
Loss on disposal of assets
|
|
|
1,441
|
|
|
|
31,649
|
|
|
|
(95.4
|
)%
|
Gain on sale of The Grand Canal
Shops mall
|
|
|
|
|
|
|
(417,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
1,251,461
|
|
|
$
|
578,588
|
|
|
|
116.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The Grand Canal Shops mall was sold and certain other retail and
restaurant venues were leased to GGP on May 17, 2004.
|
Operating expenses were $1.25 billion for the year ended
December 31, 2005, compared to $578.6 million for the
year ended December 31, 2004. Excluding the gain on the
sale of The Grand Canal Shops mall, total operating expenses for
the year ended December 31, 2004 were $996.2 million.
The increase in operating expenses was primarily attributable to
the higher operating revenues and business volumes associated
with the opening and operations of The Sands Macao. This
increase was partially offset by a decrease in corporate expense
of $88.1 million, related to $63.2 million of
incentive payments paid to certain of our executives in July
2004 from the Phase II mall sale and a $49.2 million
stock-based compensation expense resulting from stock options
granted during July 2004.
Casino department expenses for the year ended December 31,
2005 increased $316.3 million as compared to the year ended
December 31, 2004. The increase was primarily attributable
to the additional casino expenses related to the opening of The
Sands Macao in May 2004, a full year of expenses from that
property during the 2005 period and increased slot machine and
table games volume at The Venetian. Of the $316.3 million
increase in casino expenses, $229.6 million was due to the
39.0% gross win tax on casino revenues in Macao. Despite the
higher gross win tax, casino operating margins at The Sands
Macao are similar to those at The Venetian primarily because of
lower labor, marketing and sales expenses in Macao. Food and
beverage expense increased $12.6 million, primarily related
to the increased food and beverage revenue noted above.
The provision for doubtful accounts was $9.4 million for
the year ended December 31, 2005, compared to
$8.0 million for the year ended December 31, 2004. The
amount of this provision can vary over short periods of time
because of factors specific to the customers who owe us money
from gaming activities at any given time. We believe
58
that the amount of our provision for doubtful accounts in the
future will depend upon the state of the economy, our credit
standards, our risk assessments and the judgment of our
employees responsible for granting credit.
General and administrative costs increased $19.7 million,
primarily as a result of the full year of operations for The
Sands Macao in 2005 as compared to just over seven months in
2004.
Corporate expense for the year ended December 31, 2005
decreased $88.1 million as compared to the year ended
December 31, 2004. The decrease was primarily the result of
$112.4 million of expenses related to incentive payments
paid to certain of our executives in July 2004 from the
Phase II mall sale and stock-based compensation expense
resulting from stock options granted during July 2004, partially
offset by a $5.0 million charitable contribution during the
first quarter of 2005 and the addition of corporate staff in the
2005 period, including the reassignment of some employees from
Venetian Casino Resort, LLC to Las Vegas Sands Corp. as we built
our corporate infrastructure as a new public company.
Pre-opening and development expenses were $3.7 million and
$22.2 million, respectively, for the year ended
December 31, 2005, compared to $19.0 million and
$14.9 million, respectively, for the year ended
December 31, 2004. Pre-opening expense for the year ended
December 31, 2004 included $18.0 million related to
The Sands Macao which opened in May 2004. Pre-opening expense
for the year ended December 31, 2005 primarily related to
The Venetian Macao and The Palazzo projects. We expect that
pre-opening expense will increase as these projects get closer
to their 2007 opening dates. The increase in development
expenses was primarily related to our activities in Macao, the
United Kingdom, Singapore and Pennsylvania.
Depreciation and amortization expense for the year ended
December 31, 2005 increased $25.9 million as compared
to the year ended December 31, 2004. The increase was
primarily the result of placing into service assets of The Sands
Macao during the second quarter of 2004 and a full year of
depreciation expense from that property during 2005 and due to
various expansion projects placed into service at The Venetian,
including new luxury suites, an entertainment theater and
meeting rooms. In addition, there was $7.0 million of
cumulative depreciation expense related to amounts capitalized
in connection with litigation settlements related to the
original construction of The Venetian recorded during 2005.
The loss on disposal of assets for the year ended
December 31, 2005 was $1.4 million as compared to
$31.6 million for the year ended December 31, 2004.
The loss on disposal of assets of $31.6 million in 2004
resulted primarily from the demolition of space to accommodate
the construction of a showroom at The Venetian.
Interest
Expense
The following table summarizes information related to interest
expense on long-term debt:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands, except for percentages)
|
|
|
Interest cost
|
|
$
|
118,992
|
|
|
$
|
142,678
|
|
Less: Capitalized interest
|
|
|
(22,700
|
)
|
|
|
(4,601
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
96,292
|
|
|
$
|
138,077
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
111,066
|
|
|
$
|
128,641
|
|
Average total debt balance
|
|
$
|
1,520,913
|
|
|
$
|
1,620,134
|
|
Weighted average interest rate
|
|
|
7.8
|
%
|
|
|
8.8
|
%
|
Interest expense, net of amounts capitalized, for the year ended
December 31, 2005 decreased $41.8 million as compared
to the year ended December 31, 2004. Of the net interest
expense incurred for the year ended December 31, 2005,
$70.8 million was related to The Venetian,
$4.7 million was related to The Sands Macao,
$12.7 million was related to litigation settlements and
$8.1 million was related to The Sands Expo Center. This
decrease is primarily attributable to the replacement of a
higher fixed rate debt instrument with lower variable rate bank
debt. During the first quarter of 2005, we retired Las Vegas
Sands, Inc.s $843.6 million in aggregate principal
amount of 11% mortgage notes and VMLs $120.0 million
in aggregate principal amount of senior secured notes. In
59
addition, during the first quarter of 2005, we increased our
borrowings under our Senior Secured Credit Facility and issued
$250.0 million in aggregate principal amount of
6.375% Senior Notes. The decrease was also due to the
capitalization of $22.7 million of interest during the year
ended December 31, 2005, compared to $4.6 million of
capitalized interest during the year ended December 31,
2004. We capitalized interest costs associated with our
construction projects, principally The Venetian Macao and The
Palazzo. We expect that capitalized interest will continue to
increase as the projects approach their planned openings in 2007.
Other
Factors Affecting Earnings
Interest income for the year ended December 31, 2005 was
$33.1 million, an increase of $25.4 million as
compared to $7.7 million for the year ended
December 31, 2004. The increase was due to the increase in
invested cash and cash equivalent balances, primarily from our
December 2004 initial public offering and our 2005 borrowings
under Las Vegas Sands, LLCs Senior Secured Credit Facility.
The loss on early retirement of debt of $137.0 million
during the year ended December 31, 2005 was the result of
the redemption of Las Vegas Sands, Inc.s
$843.6 million in aggregate principal amount of 11%
mortgage notes and VMLs $120.0 million in aggregate
principal amount of senior secured notes.
Our effective income tax rate for the year ended
December 31, 2005 was 1.5%. The effective tax rate for the
year is significantly lower than the federal statutory rate due
primarily to a zero effective tax rate on our Macao net income
as a result of a temporary income tax exemption in Macao, which
is to expire at the end of 2008. Prior to December 2004, Las
Vegas Sands, Inc. had elected to be taxed as an
S corporation and its wholly-owned subsidiaries were either
limited liability companies or S corporations, each of
which was a pass-through entity for federal income tax purposes.
60
Liquidity
and Capital Resources
Cash
Flows Summary
Our cash flows consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Net cash provided by (used in)
operations
|
|
$
|
(196,720
|
)
|
|
$
|
589,916
|
|
|
$
|
373,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of The Grand
Canal Shops mall, net of transaction costs
|
|
|
|
|
|
|
|
|
|
|
649,568
|
|
Capital expenditures
|
|
|
(1,925,291
|
)
|
|
|
(860,621
|
)
|
|
|
(465,748
|
)
|
Change in restricted cash
|
|
|
(310,565
|
)
|
|
|
(265,386
|
)
|
|
|
(235,675
|
)
|
Change in receivables from
shareholders
|
|
|
|
|
|
|
|
|
|
|
205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(2,235,856
|
)
|
|
|
(1,126,007
|
)
|
|
|
(51,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from initial public
offering of common stock, net of transactions costs
|
|
|
|
|
|
|
(487
|
)
|
|
|
739,193
|
|
Dividends paid to stockholders
|
|
|
|
|
|
|
(21,052
|
)
|
|
|
(125,027
|
)
|
Proceeds from exercise of stock
options
|
|
|
7,226
|
|
|
|
313
|
|
|
|
11,964
|
|
Repayments of long-term debt
|
|
|
(132,746
|
)
|
|
|
(969,127
|
)
|
|
|
(561,566
|
)
|
Proceeds from long term-debt
|
|
|
2,619,995
|
|
|
|
812,222
|
|
|
|
785,000
|
|
Other
|
|
|
(51,493
|
)
|
|
|
(124,587
|
)
|
|
|
(29,178
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities
|
|
|
2,442,982
|
|
|
|
(302,718
|
)
|
|
|
820,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
814
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
and cash equivalents
|
|
$
|
11,220
|
|
|
$
|
(838,052
|
)
|
|
$
|
1,142,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows Operating Activities
The Venetians slot machine and retail hotel rooms
businesses are generally conducted on a cash basis, its table
games and group hotel businesses are conducted on a cash and
credit basis and its banquet business is conducted primarily on
a credit basis resulting in operating cash flows being generally
affected by changes in operating income and accounts
receivables. The Sands Macao table games and slot machine play
is currently conducted primarily on a cash basis. Net cash used
by operating activities for the year ended December 31,
2006 was $196.7 million, a decrease of $786.6 million
as compared to the net cash provided by operating activities of
$589.9 million for the year ended December 31, 2005.
The primary factor contributing to the net cash used by
operating activities was a one-time $786.7 million land
concession payments made to the Singapore government for the
Marina Bay Sands project in conjunction with the signing of the
development agreement in August 2006.
Cash
Flows Investing Activities
Capital expenditures for the year ended December 31, 2006
totaled $1.93 billion. This includes $98.5 million for
construction and development activities at The Sands Macao,
$1.02 billion for construction and development activities
at The Venetian Macao, $100.7 million in construction and
development activities at the other Macao development projects,
$530.5 million for construction and development activities
at The Palazzo, $109.1 million on expansions, improvements
and maintenance capital expenditures at The Venetian and The
Sands Expo Center in Las Vegas, $49.5 million for corporate
activities and $13.1 million for construction and
development activities in Singapore.
61
Restricted cash increased $310.6 million for the year ended
December 31, 2006, primarily as a result of adding
$465.4 million in net restricted cash from the Macao credit
facility to be used for Macao related construction, offset by a
decrease of $174.8 million in net restricted cash used for
The Palazzo related construction.
Cash
Flows Financing Activities
For the year ended December 31, 2006, net cash flows
provided from financing activities were $2.44 billion,
which were primarily attributable to net borrowings of
$1.3 billion under the Macao credit facility,
$892.1 million under the Singapore credit facility,
$229.1 million under the senior secured revolving facility
and $86.0 million from the Phase II Mall construction
loan, $34.8 million from the FF&E credit facilities,
offset by the repayment of the $50.0 million credit
facility of Venetian Venture Development Intermediate Limited.
Capital
and Liquidity
As of December 31, 2006, we held unrestricted cash and cash
equivalents of $468.1 million. We expect to fund our
operations, capital expenditures at The Venetian, The Sands Expo
Center and The Sands Macao (other than The Sands Macao expansion
construction) and debt service requirements from existing cash
balances, operating cash flow and borrowings under our Las Vegas
and Macao revolving credit facilities. We have a
$450.0 million senior secured revolving credit facility in
Las Vegas, of which $189.9 million was available as of
December 31, 2006. We have a $500.0 million senior
secured revolving credit facility in Macao for working capital
needs; however under the Macao credit facility, we are required
to secure the land concession in order to fully draw against the
facility. We have asked our lenders to amend the Macao Credit
Facility to remove this requirement, among others.
We are constructing The Palazzo and currently estimate that
construction will be completed in fall 2007 and that our cost to
develop and construct The Palazzo could reach as high as
approximately $1.85 billion (exclusive of land, furniture,
fixtures and equipment), of which the Phase II mall is
expected to cost approximately $280.0 million (exclusive of
certain incentive payments to executives made in July 2004). In
addition, we expect that additional capital expenditures will be
required to build out stores and restaurants located in The
Palazzo. As of December 31, 2006, we had paid approximately
$1.04 billion in design, development and construction costs
for The Palazzo. We intend to use $374.8 million (plus the
interest earnings) of the proceeds from the $970.0 million
Term B Facility and $200.0 million from the Term B Delayed
Draw Facility from the Senior Secured Credit Facility,
$135.5 million of proceeds from the Phase II Mall
construction loan, cash on hand, borrowings under the revolving
facility under the Senior Secured Credit Facility and operating
cash flow to fund the remaining development and construction
costs for The Palazzo (including the Phase II mall) and to
pay related fees and expenses.
In December 2006, the Company and a group of lenders, with
General Electric Capital Corporation, as administrative agent
for the lenders, entered into a $142.9 million credit
facility, which included the refinancing of the previous
FF&E facility of $7.9 million (the FF&E Term
Funded Credit Facility) and an additional
$135.0 million (the FF&E Term Delayed Draw Credit
Facility). The proceeds from the FF&E Term Delayed
Draw Credit Facility were and will be used to finance certain
equipment, fixtures, furniture and other goods (the
Specified FF&E) at The Palazzo and The Venetian
and the facility is secured by the Specified FF&E and
guaranteed by certain domestic subsidiaries of the Company. The
FF&E Term Delayed Draw Credit Facility provides for a
54-month
delayed draw loan. Interest on this term loan is either
three-month LIBOR plus 2.0% or base rate plus 1.0% and is
payable quarterly. The FF&E Term Delayed Draw Credit
Facility is subject to ten quarterly principal payments
beginning on April 1, 2008 in an amount equal to 5.0% of
the aggregate principal amount as of April 1, 2008, with
the remaining amount due in four equal installments on
October 1, 2010, January 1, 2011, April 1, 2011
and June 15, 2011. As of December 31, 2006,
$37.6 million has been drawn under the FF&E Term
Delayed Draw Credit Facility.
We are in the early stages of constructing a high rise
residential condominium tower, which will consist of
approximately 270 luxury condominiums and will be situated
between The Palazzo and The Venetian. The condominium tower is
currently expected to open in late fall 2008 at an estimated
cost ranging from $600.0 million to $700.0 million. We
intend to obtain long-term financing in an amount necessary to
fund the construction of the condominium tower.
On May 25, 2006, two of our subsidiaries, VML US Finance
LLC (the Borrower) and Venetian Macau Limited, as
guarantor, entered into a credit agreement (the Macao
Credit Facility) for the funding of The Sands
62
Macao expansion, and partial funding for the construction of The
Venetian Macao and some of our other Cotai Strip developments.
The Macao Credit Facility consists of a $1.2 billion funded
term B loan (the Macao Term B Facility), a
$700.0 million delayed draw term B loan (the Macao
Term B Delayed Draw Facility), a $100.0 million
funded local currency term loan (the Macao Local Term
Facility) and a $500.0 million revolving credit
facility (the Macao Revolving Facility). As of
December 31, 2006, $1.3 billion has been drawn under
the Macao Term B Facility and the Macao Local Term Facility. As
of December 31, 2006, no amounts are outstanding under the
Macao Revolving Facility and no amounts have been drawn under
the Macao Term B Delayed Draw Facility. In addition, the
majority of The Sands Macaos cash flows are expected to be
used to finance a portion of the construction of The Venetian
Macao and certain other Macao developments.
In February 2007, we received the final draft of the land
concession agreement from the Macao government pursuant to which
we were awarded a concession by lease for parcels 1, 2 and
3 on the Cotai Strip, including the sites on which we are
building The Venetian Macao and the Four Seasons hotel. We have
accepted the conditions of the draft land concession and have
made an initial premium payment of $106.5 million towards
the aggregate land premium of $323.7 million. Additionally,
$24.1 million has been paid or will be paid in the form of
the cost of the reclamation work and other works done on the
land and the installation costs of an electrical substation with
the remaining amount payable over time. The land concession will
not become effective until the date it is published in
Macaos Official Gazette. Once the land concession is
effective, we will be required to make additional land premium
and annual rent payments relating to parcels 1, 2 and 3 in
the amounts and at the times specified in the land concession.
We currently estimate that the cost of developing and building
The Venetian Macao will be approximately $2.4 billion
(exclusive of the aggregate land concession payment of
$323.7 million for parcels 1, 2 and 3). If we are
unable to obtain the amendment to the Macao Credit Facility
described above, we will not be able to draw any further funds
from the Macao Credit Facility in order to fund construction
activities and we will have to seek additional financing for
this purpose. Although we have not yet finalized our estimate of
the costs of our other Cotai Strip developments, we expect the
total cost of development on the Cotai Strip to be in the range
of $9.0 billion to $11.0 billion. We will have to
incur additional debt to finance completion of our Cotai Strip
developments.
On August 18, 2006, MBS entered into agreements (together,
the Singapore Credit Facility) providing for a
SGD$1.1 billion (approximately US$717.3 million at
exchange rates in effect on December 31,
2006) floating rate notes facility (the Singapore
Floating Rate Notes) and a SGD$1.1 billion
(approximately US$717.3 million at exchange rates in effect
on December 31, 2006) term loan facility (the
Singapore Term Loan). The Singapore Floating Rate
Notes consist of a funded SGD$788.6 million (approximately
US$514.2 million at exchange rates in effect on
December 31, 2006) facility and a
SGD$315.4 million (approximately US$205.7 million at
exchange rates in effect on December 31, 2006) delayed
draw facility. The Singapore Term Loan consists of a funded
SGD$596.0 million (approximately US$388.7 million at
exchange rates in effect on December 31,
2006) facility, a SGD$315.4 million (approximately
US$205.7 million at exchange rates in effect on
December 31, 2006) delayed draw facility, and a
SGD$192.6 million (approximately US$125.6 million at
exchange rates in effect on December 31,
2006) facility to provide bank guarantees for a security
deposit required to be delivered to the STB under the
Development Agreement. As of December 31, 2006,
SGD$798.2 million (approximately US$520.5 million at
exchange rates in effect on December 31, 2006) has
been drawn on the Singapore Floating Rate Notes,
SGD$603.5 million (approximately US$393.5 million at
exchange rates in effect on December 31, 2006) has
been drawn on the Singapore Term Loan, and
SGD$192.6 million (approximately US$125.6 million at
exchange rates in effect on December 31, 2006) under
the Singapore Term Loan has been committed to provide a
guarantee for a security deposit required to be delivered to the
STB under the Development Agreement. The Singapore Credit
Facility matures in August 2008.
We currently expect the cost to develop and construct the Marina
Bay Sands will be approximately $3.6 billion, inclusive of
the land premium, taxes and other fees previously paid. We
entered into the Singapore Credit Facility to satisfy near-term
development costs and some of our obligations under the
Development Agreement. We intend to obtain long-term financing
in an amount necessary to fund the construction of the Marina
Bay Sands.
On December 20, 2006, the Pennsylvania Gaming Control Board
announced that Sands Bethworks Gaming had been awarded a
Pennsylvania gaming license. We will develop a gaming, hotel,
shopping and dining complex located on the site of the Historic
Bethlehem Steel Works in Bethlehem, Pennsylvania. We currently
expect the cost
63
to develop and construct the complex will be approximately
$600.0 million. We intend to obtain long-term financing in
an amount necessary to fund the construction of Sands Bethworks.
We have announced that we have agreed to purchase ten ferries at
a cost of approximately $153.8 million to bring customers
to and from the Cotai Strip, including The Venetian Macao and
our other Cotai Strip developments. The first ferries are
scheduled to be delivered in late 2007. We intend to obtain
long-term financing in an amount sufficient to fund the purchase
of the ferries.
Aggregate
Indebtedness and Other Known Contractual Obligations
Our total long-term indebtedness and other known contractual
obligations are summarized below as of December 31, 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than
|
|
|
|
|
|
|
1 Year
|
|
|
2-3 Years
|
|
|
4-5 Years
|
|
|
5 Years
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Long-Term Debt
Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Secured Credit
Facility Term
B
(1)
|
|
$
|
|
|
|
$
|
16,975
|
|
|
$
|
953,025
|
|
|
$
|
|
|
|
$
|
970,000
|
|
Senior Secured Credit
Facility Term B
Delayed
(1)
|
|
|
|
|
|
|
3,500
|
|
|
|
196,500
|
|
|
|
|
|
|
|
200,000
|
|
Senior Secured Credit
Facility Revolving
Facility
(1)
|
|
|
|
|
|
|
|
|
|
|
260,128
|
|
|
|
|
|
|
|
260,128
|
|
FF&E Credit
Facility Term
Funded
(2)
|
|
|
1,800
|
|
|
|
5,595
|
|
|
|
|
|
|
|
|
|
|
|
7,395
|
|
FF&E Credit
Facility Term Delayed
Draw
(2)
|
|
|
|
|
|
|
13,154
|
|
|
|
24,428
|
|
|
|
|
|
|
|
37,582
|
|
Phase II Mall Construction
Loan
(3)
|
|
|
|
|
|
|
114,500
|
|
|
|
|
|
|
|
|
|
|
|
114,500
|
|
Macao Credit Facility
Term
B
(4)
|
|
|
|
|
|
|
18,000
|
|
|
|
24,000
|
|
|
|
1,158,000
|
|
|
|
1,200,000
|
|
Macao Credit Facility
Local
Term
(4)
|
|
|
|
|
|
|
37,500
|
|
|
|
62,500
|
|
|
|
|
|
|
|
100,000
|
|
Singapore Credit
Facility Term
Loan
(5)
|
|
|
|
|
|
|
393,510
|
|
|
|
|
|
|
|
|
|
|
|
393,510
|
|
Singapore Credit
Facility Floating Rate
Notes
(5)
|
|
|
|
|
|
|
520,502
|
|
|
|
|
|
|
|
|
|
|
|
520,502
|
|
The Sands Expo Center Mortgage
Loan
(6)
|
|
|
4,686
|
|
|
|
86,182
|
|
|
|
|
|
|
|
|
|
|
|
90,868
|
|
6.375% Senior
Notes
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
248,153
|
|
|
|
248,153
|
|
Fixed interest payments
|
|
|
15,937
|
|
|
|
31,875
|
|
|
|
31,875
|
|
|
|
50,469
|
|
|
|
130,156
|
|
Variable interest
payments
(8)
|
|
|
271,430
|
|
|
|
454,962
|
|
|
|
291,916
|
|
|
|
103,469
|
|
|
|
1,121,777
|
|
Contractual
Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVAC Provider fixed
payments
(9)
|
|
|
6,826
|
|
|
|
10,238
|
|
|
|
|
|
|
|
|
|
|
|
17,064
|
|
Former
Tenants
(10)
|
|
|
650
|
|
|
|
1,300
|
|
|
|
1,300
|
|
|
|
8,027
|
|
|
|
11,277
|
|
Employment
Agreements
(11)
|
|
|
8,380
|
|
|
|
15,560
|
|
|
|
|
|
|
|
|
|
|
|
23,940
|
|
Macao Subsidiary Land
Lease
(12)
|
|
|
2,988
|
|
|
|
3,150
|
|
|
|
324
|
|
|
|
2,758
|
|
|
|
9,220
|
|
Mall
Leases
(13)
|
|
|
7,660
|
|
|
|
15,544
|
|
|
|
16,086
|
|
|
|
137,611
|
|
|
|
176,901
|
|
Macao Fixed Gaming
Tax
(14)
|
|
|
9,363
|
|
|
|
18,727
|
|
|
|
18,727
|
|
|
|
98,317
|
|
|
|
145,134
|
|
Ferries Purchase
Commitment
(15)
|
|
|
99,735
|
|
|
|
35,574
|
|
|
|
|
|
|
|
|
|
|
|
135,309
|
|
Parking Lot
Lease
(16)
|
|
|
1,200
|
|
|
|
2,400
|
|
|
|
2,400
|
|
|
|
110,400
|
|
|
|
116,400
|
|
Other Operating
Leases
(17)
|
|
|
16,584
|
|
|
|
20,411
|
|
|
|
1,526
|
|
|
|
2,757
|
|
|
|
41,278
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
447,239
|
|
|
$
|
1,819,159
|
|
|
$
|
1,884,735
|
|
|
$
|
1,919,961
|
|
|
$
|
6,071,094
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Senior Secured Credit Facility consists of a
$970.0 million single draw term B loan facility, a
$200.0 million term B delayed draw facility that was fully
drawn on August 19, 2005 and a $450.0 million
revolving credit facility. At December 31, 2006, the
amounts borrowed were $1.17 billion under the Term B
facilities (including the delayed draw) and $260.1 million
under the revolving credit facility. The term B
|
64
|
|
|
|
|
facility and delayed draw facility will mature on June 15,
2011 and are subject to quarterly amortization payments
commencing in the first quarter after substantial completion of
The Palazzo. The revolving credit facility matures on
February 22, 2010 and has no interim amortization. As of
December 31, 2006, the amount available for borrowing under
the revolving credit facility was $189.9 million.
|
|
|
|
|
(2)
|
The FF&E Credit Facility consists of a $7.9 million
single draw term facility and a $135.0 million delayed draw
term facility. At December 31, 2006, the amounts borrowed
were $45.0 million under the facilities. The single draw
term facility will mature on July 1, 2008 and is subject to
quarterly amortization payments with one final payment of
$3.7 million on October 1, 2008. The delayed draw term
facility is subject to ten quarterly principal payments
beginning on April 1, 2008 in an amount equal to 5.0% of
the aggregate principal amount as of April 1, 2008, with
the remaining amount due in four equal installments on
October 1, 2010, January 1, 2011, April 1, 2011
and June 15, 2011.
|
|
|
(3)
|
The Phase II Mall Construction Loan commitment is
$250.0 million and is due March 30, 2008.
|
|
|
(4)
|
Amount represents the borrowings under the Macao Credit
Facility, which consists of a $1.2 billion funded term B
loan (the Macao Term B Facility), a
$700.0 million delayed draw term B loan (the Macao
Term B Delayed Draw Facility), a $100.0 million
funded local currency term loan (the Macao Local Term
Facility) and a $500.0 million revolving credit
facility (the Macao Revolving Facility). As of
December 31, 2006, no amounts are outstanding under the
Macao Revolving Facility and no amounts have been drawn under
the Macao Term B Delayed Draw Facility. The Macao Revolving
Facility and the Macao Local Term Facility have a five year
maturity. The Macao Term B Delayed Draw Facility and the Macao
Term B Facility mature in six and seven years, respectively. The
Macao Term B Delayed Draw Facility and the Macao Term B Facility
are subject to nominal amortization for the first five and six
years, respectively, in the first quarter following substantial
completion of The Venetian Macao, with the remainder of the
loans payable in four equal installments in the last year
immediately preceding their respective maturity dates. Following
the substantial completion of The Venetian Macao, the Macao
Local Term Facility is subject to quarterly amortization in an
amount of approximately $6.3 million per quarter, with the
remainder of the loan payable in four equal installments in the
last year immediately preceding the maturity date.
|
|
|
(5)
|
Amount represents the borrowings under the Singapore Credit
Facility, which consists of a SGD$1.1 billion
(approximately US$717.3 million at exchange rates in effect
on December 31, 2006) floating rate notes facility
(the Singapore Floating Rate Notes) and a
SGD$1.1 billion (approximately US$717.3 million at
exchange rates in effect on December 31, 2006) term
loan facility (the Singapore Term Loan). The
Singapore Floating Rate Notes consist of a funded
SGD$788.6 million (approximately US$514.2 million at
exchange rates in effect on December 31,
2006) facility and a SGD$315.4 million (approximately
US$205.7 million at exchange rates in effect on
December 31, 2006) delayed draw facility. The
Singapore Term Loan consists of a funded SGD$596.0 million
(approximately US$388.7 million at exchange rates in effect
on December 31, 2006) facility, a
SGD$315.4 million (approximately US$205.7 million at
exchange rates in effect on December 31, 2006) delayed
draw facility, and a SGD$192.6 million (approximately
US$125.6 million at exchange rates in effect on
December 31, 2006) facility to provide bank guarantees
in relation to a security deposit required to be delivered to
the STB under the Development Agreement. The Singapore Credit
Facility matures in full on August 22, 2008.
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|
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(6)
|
Principal payments will increase should Interface Group-Nevada
achieve certain cash flow levels as defined in the loan
agreement. The Sands Expo Center mortgage loan will mature on
February 10, 2009 if all renewal options are exercised with
monthly amortization payments.
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(7)
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The 6.375% Senior Notes are due on February 15, 2015.
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(8)
|
Based on December 31, 2006 LIBOR rates of 5.4% plus the
applicable interest rate spread in accordance with the
respective debt agreements.
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(9)
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We are party to a services agreement with a third party for HVAC
services for The Venetian. The total remaining payment
obligation under this arrangement was $17.1 million as of
December 31, 2006, payable in equal monthly installments
through July 1, 2009. We have the right to terminate the
agreement based upon the failure of the HVAC provider under this
agreement to provide HVAC services. Upon the sale of The Grand
Canal Shops mall on May 17, 2004, GGP assumed the
responsibility for $1.6 million of annual payments to this
HVAC provider.
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65
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(10)
|
We are party to tenant lease termination and asset purchase
agreements. The total remaining payment obligation under these
arrangements was $11.3 million as of December 31,
2006. Under the agreement for The Grand Canal Shops mall sale,
we are obligated to fulfill the lease termination and asset
purchase agreements.
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(11)
|
We are party to employment agreements with seven of our senior
executives, with remaining terms of one to three years.
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(12)
|
VML is party to a long-term land lease of 25 years. The
total remaining payment obligation under this lease was
$9.2 million as of December 31, 2006.
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(13)
|
We are party to certain leaseback agreements for the Blue Man
Group theater, gondola and certain office space related to The
Grand Canal Shops mall sale. The total remaining payments due as
of December 31, 2006 were $176.9 million.
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(14)
|
In addition to the 39% gross gaming win tax in Macao (which is
not included in this table as the amount we pay is variable in
nature), we are required to pay an annual fixed gaming tax of
approximately $9.4 million per year to the government of
Macao through the termination of the gaming subconcession.
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(15)
|
During 2006, we entered in commitments to purchase ten ferries
to be built over the next two years for our Macao operations.
The total remaining payment obligation as of December 31,
2006 was $135.3 million.
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(16)
|
We are party to a long-term lease agreement of 99 years for
a parking structure located adjacent to The Venetian. As of
December 31, 2006, total remaining payments due were
$116.4 million.
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|
(17)
|
We are party to certain operating leases for real estate,
various equipment and service arrangements. The total remaining
payments due as of December 31, 2006 were
$41.3 million.
|
Off-Balance
Sheet Arrangements
We have not entered into any transactions with special purpose
entities, nor have we engaged in any derivative transactions
other than simple interest rate caps. During 1997, we entered
into operating lease arrangements with the HVAC provider. Under
the terms of these operating lease agreements, we will purchase
HVAC energy and services over initial terms expiring in 2009
with an option to collectively extend the terms of these
agreements for two consecutive five-year periods. We have fixed
payment obligations due during the next twelve months of
$6.8 million under the operating lease agreements with the
HVAC provider.
The total remaining payment obligations under these arrangements
was $17.1 million as of December 31, 2006, payable in
equal monthly installments through July 1, 2009. We have
the right to terminate the agreements based upon the failure of
the HVAC provider to provide HVAC services. Upon the sale of The
Grand Canal Shops mall on May 17, 2004, GGP assumed the
responsibility for $1.6 million of annual payments to the
HVAC provider. We have no other off-balance sheet arrangements.
Dividends
In 2004, Las Vegas Sands, Inc. declared and paid
$107.9 million of dividends as tax distributions to all of
its stockholders at the time, including its principal
stockholder. In 2004, Las Vegas Sands, Inc. also declared a
$21.1 million dividend to its stockholders which was paid
in January 2005. These tax distributions were made in order to
provide these stockholders with funds to pay taxes attributable
to taxable income of Las Vegas Sands, Inc. (including taxable
income of Las Vegas Sands, Inc. associated with the sale of The
Grand Canal Shops mall) that flowed through to them by virtue of
Las Vegas Sands, Inc.s status as a subchapter
S corporation for income tax purposes. As a result of its
conversion to a taxable C corporation for income tax
purposes, Las Vegas Sands, Inc. (now known as Las Vegas Sands,
LLC) is no longer making these tax distributions.
Immediately prior to the July 29, 2004 acquisition of
Interface Group Holding Company, Inc. (Interface
Holding) by Las Vegas Sands, Inc., Interface Holding
distributed approximately $15.2 million to its sole
stockholder. The distribution was comprised of
$12.9 million of cash, $1.9 million of receivables due
from the principal stockholder of Interface Holding and
$0.4 million of certain fixed and other assets.
66
Restrictions
on Distributions
We are a parent company with limited business operations. Our
main asset is the stock and membership interests of our
subsidiaries. The debt instruments of our principal operating
subsidiary, Las Vegas Sands, LLC, contain significant
restrictions on the payment of dividends and distributions to us
by Las Vegas Sands, LLC. In particular, the Senior Secured
Credit Facility prohibits Las Vegas Sands, LLC from paying
dividends or making distributions to us, or investing in us,
with limited exceptions. Las Vegas Sands, LLC may make certain
distributions to us to cover taxes and certain reasonable and
customary operating costs. In addition, Las Vegas Sands, LLC may
make distributions to us in order to enable us to pay dividends
on our common stock so long as construction of The Palazzo is
substantially complete and certain financial leverage tests are
satisfied, which distributions may not exceed $25.0 million
or $50.0 million during any twelve-month period depending
on our financial leverage ratio at the time of such
distributions.
In addition, the debt instrument of our subsidiary,
Phase II Mall Subsidiary, LLC (the Phase II Mall
Subsidiary), restricts the payment of dividends and
distributions to us. Subject to limited exceptions, the
Phase II mall construction loan prohibits the Phase II
Mall Subsidiary from paying dividends or making distributions to
us, or making investments in us, other than tax distributions
and a limited basket amount.
The debt instruments of our subsidiaries, including the Macao
Credit Facility for the construction of The Venetian Macao and
the Singapore Credit Facility for the construction of the Marina
Bay Sands contain certain restrictions that, among other things,
limit the ability of our 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 some or all of our assets or the assets
of the applicable company without prior approval of the lenders
or noteholders. Financial covenants included in our Senior
Secured Credit Facility and our Macao Credit Facility include a
minimum interest coverage ratio, a maximum leverage ratio, a
minimum net worth covenant and maximum capital expenditure
limitations. See Item 8 Financial
Statements and Supplementary Data Notes to
Consolidated Financial Statements
Note 8 Long-Term Debt.
Inflation
We believe that inflation and changing prices have not had a
material impact on our net sales, revenues or income from
continuing operations during the past three fiscal years.
Special
Note Regarding Forward-Looking Statements
This report contains forward-looking statements that are made
pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include the discussions of our business strategies and
expectations concerning future operations, margins,
profitability, liquidity, and capital resources. In addition, in
certain portions included in this report, the words:
anticipates, believes,
estimates, seeks, expects,
plans, intends and similar expressions,
as they relate to our company or its management, are intended to
identify forward-looking statements. Although we believe that
these forward-looking statements are reasonable, we cannot
assure you that any forward-looking statements will prove to be
correct. These forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause
our actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by these forward-looking statements.
These factors include, among others, the risks associated with:
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general economic and business conditions which may impact levels
of disposable income, consumer spending and pricing of hotel
rooms;
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the uncertainty of tourist behavior related to spending and
vacationing at casino resorts in Las Vegas and Macao;
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disruptions or reductions in travel due to conflicts with Iraq
and any future terrorist incidents;
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outbreaks of infectious diseases, such as severe acute
respiratory syndrome or avian flu, in our market areas;
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67
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our dependence upon three properties in two markets for all of
our cash flow;
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new developments, construction and ventures, including The
Palazzo, The Venetian Macao and other Cotai Strip developments,
Marina Bay Sands in Singapore, and Sands Bethworks;
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our ability to obtain sufficient funding for our developments,
including our developments on the Cotai Strip and in Singapore;
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the passage of new legislation and receipt of governmental
approvals for our proposed developments in Macao, Singapore and
other jurisdictions where we are planning to operate;
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our substantial leverage and debt service (including sensitivity
to fluctuations in interest rates and other capital markets
trends);
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our insurance coverage, including the risk that we have not
obtained sufficient coverage against acts of terrorism or will
only be able to obtain additional coverage at significantly
increased rates;
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government regulation of the casino industry, including gaming
license regulation, the legalization of gaming in certain
domestic jurisdictions, including Native American reservations,
and regulation of gaming on the Internet;
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increased competition and additional construction in Las Vegas,
including recent and upcoming increases in hotel rooms, meeting
and convention space and retail space;
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fluctuations in the demand for all-suites rooms, occupancy rates
and average daily room rates in Las Vegas;
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the popularity of Las Vegas as a convention and trade show
destination;
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new taxes or changes to existing tax rates;
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our ability to meet certain development deadlines in Macao and
Singapore;
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our ability to maintain our gaming subconcession in Macao;
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the completion of infrastructure projects in Macao;
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increased competition and other planned construction projects in
Macao; and
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any future litigation.
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All future written and verbal forward-looking statements
attributable to us or any person acting on our behalf are
expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. New risks
and uncertainties arise from time to time, and it is impossible
for us to predict these events or how they may affect us.
Readers are cautioned not to place undue reliance on these
forward-looking statements. We assume no obligation to update
any forward-looking statements after the date of this report as
a result of new information, future events or developments,
except as required by federal securities laws.
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. Our primary
exposure to market risk is interest rate risk associated with
our long-term debt. We attempt to manage our interest rate risk
by managing the mix of our long-term fixed-rate borrowings and
variable rate borrowings, and by use of interest rate cap
agreements. The ability to enter into interest rate cap
agreements allows us to manage our interest rate risk associated
with our variable rate debt. We do not hold or issue financial
instruments for trading purposes and do not enter into
derivative transactions that would be considered speculative
positions. Our derivative financial instruments consist
exclusively of interest rate cap agreements, which do not
qualify for hedge accounting. Interest differentials resulting
from these agreements are recorded on an accrual basis as an
adjustment to interest expense.
To manage exposure to counterparty credit risk in interest rate
cap agreements, we enter into agreements with highly rated
institutions that can be expected to fully perform under the
terms of such agreements. Frequently, these institutions are
also members of the bank group providing our credit facilities,
which management believes further minimizes the risk of
nonperformance.
68
The table below provides information about our financial
instruments that are sensitive to changes in interest rates. For
debt obligations, the table presents notional amounts and
weighted average interest rates by contractual maturity dates.
Notional amounts are used to calculate the contractual payments
to be exchanged under the contract. Weighted average variable
rates are based on December 31, 2006 LIBOR rates plus the
applicable interest rate spread in accordance with the
respective debt agreements. The information is presented in
U.S. dollar equivalents, which is the Companys
reporting currency, for the years ending December 31:
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Fair
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2007
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2008
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2009
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2010
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2011
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Thereafter
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Total
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Value
(1)
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(In millions, except for percentages)
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LIABILITIES
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Short-term debt
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Variable rate
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$
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6.5
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$
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$
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$
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$
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$
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$
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6.5
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$
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6.5
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Average interest
rate
(2)
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8.6
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%
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8.6
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%
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8.6
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%
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Long term debt
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Fixed rate
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$
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$
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$
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$
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$
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$
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250.0
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$
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250.0
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$
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243.4
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Average interest
rate
(2)
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6.4
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%
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6.4
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%
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6.8
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%
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Variable rate
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$
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$
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1,153.1
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$
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56.2
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$
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897.7
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$
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622.9
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$
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1,158.0
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$
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3,887.9
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$
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3,887.9
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Average interest
rate
(2)
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5.6
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%
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7.2
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%
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7.1
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%
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7.1
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%
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8.1
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%
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7.0
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%
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7.0
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%
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ASSETS
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Cap
Agreements
(3)
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|
$
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|
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|
$
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0.1
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|
$
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0.5
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|
|
$
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|
$
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|
$
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$
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0.6
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|
$
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0.6
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(1)
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The fair values are based on the borrowing rates currently
available for debt instruments with similar terms and maturities
and market quotes of our publicly traded debt.
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(2)
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Based upon contractual interest rates for fixed rate
indebtedness or current LIBOR rates for variable rate
indebtedness.
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(3)
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As of December 31, 2006, we have five interest rate cap
agreements with a fair value of $0.6 million based on a
quoted market value from the institution holding the agreement.
|
Borrowings under the Senior Secured Credit Facility bear
interest at our election at LIBOR plus 1.75% or the base rate
plus 0.75% per annum, subject to downward adjustments based
upon our credit rating. The weighted average interest rate for
the Senior Secured Credit Facility was 7.0% for the year ended
December 31, 2006. Borrowings under the $250.0 million
Phase II mall construction loan facility bear interest at
our election at either a base rate plus 0.75% per annum or
at LIBOR plus 1.75% per annum. The weighted average
interest rate for the Phase II mall construction loan was
7.1% for the year ended December 31, 2006. Borrowings under
The Sands Expo Center mortgage loan bear interest at an interest
rate equal to LIBOR plus 3.75%. The weighted average interest
rate for The Sands Expo Center mortgage loan was 8.8% for the
year ended December 31, 2006. Borrowings under the Macao
Credit Facility bear interest at our election, at either an
adjusted Eurodollar rate (or in the case of the Local Term Loan,
adjusted HIBOR) plus 2.75% per annum or at an alternative
base rate plus 1.75% per annum, and is subject to a
downward adjustment of 0.25% per annum from the beginning
of the first interest period following the substantial
completion of The Venetian Macao. The weighted average interest
rates for the Macao Local Term Facility and the Macao Term B
Facility were 6.9% and 8.1%, respectively, for the year ended
December 31, 2006. Borrowings under the Singapore Credit
Facility bear interest at the Singapore SWAP Offer Rate plus a
spread of 1.35% per annum during the first twelve months
that amounts are outstanding and a spread of 1.6% per annum
during the second twelve months that amounts are outstanding.
The weighted average interest rate for the Singapore Floating
Rate Notes and the Singapore Term loan was 5.0% for the year
ended December 31, 2006.
Foreign currency transaction gains and losses were not material
to our results of operations for the year ended
December 31, 2006, but may be in future periods in relation
to activity associated with our Macao and Singapore
subsidiaries. Therefore, we may be vulnerable to changes in
U.S. dollar/pataca and U.S. dollar/Singapore dollar
exchange rates. We do not hedge our exposure to foreign
currency; however, we maintain a significant amount of our
operating funds in the same currencies in which we have
obligations thereby reducing our exposure to currency
fluctuations.
See also Liquidity and Capital Resources and
Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 8 Long Term
Debt.
69
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ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
INDEX TO
FINANCIAL STATEMENTS
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Financial Statements:
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71
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73
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74
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75
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76
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78
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Financial Statement Schedule:
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121
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122
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The financial information included in the financial statement
schedule should be read in conjunction with the consolidated
financial statements. All other financial statement schedules
have been omitted because they are not applicable or the
required information is included in the consolidated financial
statements or the notes thereto.
70
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors and Stockholders of Las Vegas Sands Corp.
We have completed integrated audits of Las Vegas Sands
Corp.s 2006 and 2005 consolidated financial statements and
of its internal control over financial reporting as of
December 31, 2006 and an audit of its 2004 consolidated
financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our
opinions, based on our audits, are presented below.
Consolidated
financial statements
In our opinion, the consolidated financial statements listed in
the accompanying index, present fairly, in all material
respects, the financial position of Las Vegas Sands Corp. and
its subsidiaries (the Company) at December 31,
2006 and 2005, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2006 in conformity with accounting principles
generally accepted in the United States of America. These
financial statements are the responsibility of the
Companys 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 the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit of financial statements 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 our opinion.
As described in Note 2 to the consolidated financial
statements, the Company changed the manner in which it accounts
for share-based payments in 2006.
Internal
control over financial reporting
Also, in our opinion, managements assessment, included in
Managements Annual Report on Internal Control Over
Financial Reporting appearing under Item 9A, that the
Company maintained effective internal control over financial
reporting as of December 31, 2006 based on criteria
established in
Internal Control Integrated
Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), is
fairly stated, in all material respects, based on those
criteria. Furthermore, in our opinion, the Company maintained,
in all material respects, effective internal control over
financial reporting as of December 31, 2006, based on
criteria established in
Internal Control
Integrated Framework
issued by the COSO. The Companys
management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our
responsibility is to express opinions on managements
assessment and on the effectiveness of the Companys
internal control over financial reporting based on our audit. We
conducted our audit of internal control over financial reporting
in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over
financial reporting was maintained in all material respects. An
audit of internal control over financial reporting includes
obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and
evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we consider
necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinions.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made
71
only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 27, 2007
72
LAS VEGAS
SANDS CORP.
Consolidated Balance Sheets
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December 31,
|
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|
2006
|
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2005
|
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(In thousands, except share data)
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|
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ASSETS
|
Current assets:
|
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|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
468,066
|
|
|
$
|
456,846
|
|
Restricted cash
|
|
|
398,762
|
|
|
|
71,717
|
|
Accounts receivable, net
|
|
|
173,683
|
|
|
|
84,778
|
|
Inventories
|
|
|
12,291
|
|
|
|
9,967
|
|
Deferred income taxes
|
|
|
15,688
|
|
|
|
7,946
|
|
Prepaid expenses and other
|
|
|
25,067
|
|
|
|
13,452
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,093,557
|
|
|
|
644,706
|
|
Property and equipment, net
|
|
|
4,582,325
|
|
|
|
2,600,468
|
|
Deferred financing costs, net
|
|
|
70,381
|
|
|
|
30,973
|
|
Restricted cash
|
|
|
555,132
|
|
|
|
571,143
|
|
Deferred income taxes
|
|
|
|
|
|
|
11,332
|
|
Leasehold interest in land, net
|
|
|
801,195
|
|
|
|
|
|
Other assets, net
|
|
|
23,868
|
|
|
|
21,117
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
7,126,458
|
|
|
$
|
3,879,739
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
51,038
|
|
|
$
|
34,803
|
|
Construction payables
|
|
|
329,375
|
|
|
|
163,932
|
|
Accrued interest payable
|
|
|
8,496
|
|
|
|
7,918
|
|
Other accrued liabilities
|
|
|
318,901
|
|
|
|
246,390
|
|
Income taxes payable
|
|
|
20,352
|
|
|
|
|
|
Current maturities of long-term
debt
|
|
|
6,486
|
|
|
|
7,325
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
734,648
|
|
|
|
460,368
|
|
Other long-term liabilities
|
|
|
10,742
|
|
|
|
9,804
|
|
Deferred income taxes
|
|
|
324
|
|
|
|
|
|
Deferred gain on sale of The Grand
Canal Shops mall
|
|
|
64,665
|
|
|
|
68,129
|
|
Deferred rent from The Grand Canal
Shops mall transaction
|
|
|
104,773
|
|
|
|
105,999
|
|
Long-term debt
|
|
|
4,136,152
|
|
|
|
1,625,901
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
5,051,304
|
|
|
|
2,270,201
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
(Note 11)
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $.001 par
value, 1,000,000,000 shares authorized, 354,492,452 and
354,179,580 shares issued and outstanding
|
|
|
354
|
|
|
|
354
|
|
Capital in excess of par value
|
|
|
990,429
|
|
|
|
964,660
|
|
Deferred compensation
|
|
|
|
|
|
|
(150
|
)
|
Accumulated other comprehensive
income (loss)
|
|
|
(580
|
)
|
|
|
1,726
|
|
Retained earnings
|
|
|
1,084,951
|
|
|
|
642,948
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,075,154
|
|
|
|
1,609,538
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders equity
|
|
$
|
7,126,458
|
|
|
$
|
3,879,739
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
73
LAS VEGAS
SANDS CORP.
Consolidated Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands, except share and per share data)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
1,676,061
|
|
|
$
|
1,250,090
|
|
|
$
|
708,564
|
|
Rooms
|
|
|
350,606
|
|
|
|
323,560
|
|
|
|
312,003
|
|
Food and beverage
|
|
|
187,819
|
|
|
|
147,510
|
|
|
|
121,566
|
|
Convention, retail and other
|
|
|
125,692
|
|
|
|
103,065
|
|
|
|
116,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,340,178
|
|
|
|
1,824,225
|
|
|
|
1,258,570
|
|
Less-promotional allowances
|
|
|
(103,319
|
)
|
|
|
(83,313
|
)
|
|
|
(61,514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
2,236,859
|
|
|
|
1,740,912
|
|
|
|
1,197,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
925,033
|
|
|
|
656,590
|
|
|
|
340,241
|
|
Rooms
|
|
|
85,651
|
|
|
|
82,058
|
|
|
|
77,249
|
|
Food and beverage
|
|
|
89,113
|
|
|
|
76,736
|
|
|
|
64,176
|
|
Convention, retail and other
|
|
|
64,315
|
|
|
|
58,068
|
|
|
|
60,055
|
|
Provision for doubtful accounts
|
|
|
18,067
|
|
|
|
9,358
|
|
|
|
7,959
|
|
General and administrative
|
|
|
230,355
|
|
|
|
192,806
|
|
|
|
173,088
|
|
Corporate expense
|
|
|
59,570
|
|
|
|
38,297
|
|
|
|
126,356
|
|
Rental expense
|
|
|
13,478
|
|
|
|
14,841
|
|
|
|
12,033
|
|
Pre-opening expense
|
|
|
37,673
|
|
|
|
3,732
|
|
|
|
19,025
|
|
Development expense
|
|
|
26,112
|
|
|
|
22,238
|
|
|
|
14,901
|
|
Depreciation and amortization
|
|
|
110,771
|
|
|
|
95,296
|
|
|
|
69,432
|
|
Loss on disposal of assets
|
|
|
2,624
|
|
|
|
1,441
|
|
|
|
31,649
|
|
Gain on sale of The Grand Canal
Shops mall
|
|
|
|
|
|
|
|
|
|
|
(417,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,662,762
|
|
|
|
1,251,461
|
|
|
|
578,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
574,097
|
|
|
|
489,451
|
|
|
|
618,468
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
66,191
|
|
|
|
33,111
|
|
|
|
7,740
|
|
Interest expense, net of amounts
capitalized
|
|
|
(135,853
|
)
|
|
|
(96,292
|
)
|
|
|
(138,077
|
)
|
Other expense
|
|
|
(189
|
)
|
|
|
(1,334
|
)
|
|
|
(131
|
)
|
Loss on early retirement of debt
|
|
|
|
|
|
|
(137,000
|
)
|
|
|
(6,553
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
504,246
|
|
|
|
287,936
|
|
|
|
481,447
|
|
Benefit (provision) for income taxes
|
|
|
(62,243
|
)
|
|
|
(4,250
|
)
|
|
|
13,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
$
|
495,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
1.25
|
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
1.24
|
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
354,277,941
|
|
|
|
354,161,165
|
|
|
|
326,486,740
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
355,264,444
|
|
|
|
354,526,604
|
|
|
|
326,848,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited pro forma data
(reflecting change in tax status):
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before income taxes
|
|
|
|
|
|
|
|
|
|
$
|
481,447
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
(141,737
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
$
|
339,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share of
common stock (reflecting change in tax status):
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
$
|
1.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
74
LAS VEGAS
SANDS CORP.
Consolidated
Statements of Stockholders Equity and Comprehensive
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
Capital
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Receivables
|
|
|
in Excess
|
|
|
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
|
|
from
|
|
|
of Par
|
|
|
Deferred
|
|
|
Income
|
|
|
Retained
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Stockholders
|
|
|
Value
|
|
|
Compensation
|
|
|
(Loss)
|
|
|
Earnings
|
|
|
Total
|
|
|
|
(In thousands, except share data)
|
|
|
Balance at January 1,
2004
|
|
|
324,658,394
|
|
|
$
|
325
|
|
|
$
|
(2,113
|
)
|
|
$
|
155,607
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,289
|
|
|
$
|
162,108
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
495,183
|
|
|
|
495,183
|
|
Capital contributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
420
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(144,210
|
)
|
|
|
(144,210
|
)
|
Receivables from stockholders
|
|
|
|
|
|
|
|
|
|
|
2,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,113
|
|
Issuances of stock options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,230
|
|
Exercises of stock options
|
|
|
2,121,345
|
|
|
|
2
|
|
|
|
|
|
|
|
11,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,964
|
|
Issuance of common stock in
connection with initial public offering, net of transaction
costs of $54,855
|
|
|
27,380,953
|
|
|
|
27
|
|
|
|
|
|
|
|
739,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
739,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2004
|
|
|
354,160,692
|
|
|
|
354
|
|
|
|
|
|
|
|
956,385
|
|
|
|
|
|
|
|
|
|
|
|
359,262
|
|
|
|
1,316,001
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,686
|
|
|
|
283,686
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,726
|
|
|
|
|
|
|
|
1,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285,412
|
|
Exercises of stock options
|
|
|
10,800
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
Tax benefit from stock option
exercises
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,149
|
|
Issuance of restricted stock
|
|
|
8,088
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
|
|
(300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
Initial public offering transaction
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2005
|
|
|
354,179,580
|
|
|
|
354
|
|
|
|
|
|
|
|
964,660
|
|
|
|
(150
|
)
|
|
|
1,726
|
|
|
|
642,948
|
|
|
|
1,609,538
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
442,003
|
|
|
|
442,003
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,306
|
)
|
|
|
|
|
|
|
(2,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,697
|
|
Exercises of stock options
|
|
|
240,912
|
|
|
|
|
|
|
|
|
|
|
|
7,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,226
|
|
Tax benefit from stock option
exercises
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,876
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
16,817
|
|
Issuance of restricted stock
|
|
|
71,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2006
|
|
|
354,492,452
|
|
|
$
|
354
|
|
|
$
|
|
|
|
$
|
990,429
|
|
|
$
|
|
|
|
$
|
(580
|
)
|
|
$
|
1,084,951
|
|
|
$
|
2,075,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
75
LAS VEGAS
SANDS CORP.
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
$
|
495,183
|
|
Adjustments to reconcile net
income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
110,771
|
|
|
|
95,296
|
|
|
|
69,432
|
|
Amortization of deferred financing
costs and original issue discount
|
|
|
13,894
|
|
|
|
9,192
|
|
|
|
9,818
|
|
Amortization of deferred gain and
rent
|
|
|
(4,690
|
)
|
|
|
(4,692
|
)
|
|
|
(2,926
|
)
|
Deferred rent from The Grand Canal
Shops mall transaction
|
|
|
|
|
|
|
|
|
|
|
109,220
|
|
Loss on early retirement of debt
|
|
|
|
|
|
|
137,000
|
|
|
|
6,553
|
|
Loss on disposal of assets
|
|
|
2,624
|
|
|
|
1,441
|
|
|
|
31,649
|
|
Stock-based compensation expense
|
|
|
14,728
|
|
|
|
150
|
|
|
|
49,230
|
|
Gain on sale of The Grand Canal
Shops mall
|
|
|
|
|
|
|
|
|
|
|
(417,576
|
)
|
Provision for doubtful accounts
|
|
|
18,067
|
|
|
|
9,358
|
|
|
|
7,959
|
|
Tax benefit from stock option
exercises
|
|
|
(1,401
|
)
|
|
|
8,149
|
|
|
|
|
|
Deferred income taxes
|
|
|
3,914
|
|
|
|
(5,542
|
)
|
|
|
(13,736
|
)
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(106,972
|
)
|
|
|
(37,554
|
)
|
|
|
(10,344
|
)
|
Inventories
|
|
|
(2,324
|
)
|
|
|
(1,957
|
)
|
|
|
(1,759
|
)
|
Prepaid expenses and other
|
|
|
(13,124
|
)
|
|
|
(2,457
|
)
|
|
|
(17,746
|
)
|
Leasehold interest in land
|
|
|
(786,700
|
)
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
16,235
|
|
|
|
1,420
|
|
|
|
13,479
|
|
Accrued interest payable
|
|
|
578
|
|
|
|
(1,269
|
)
|
|
|
4,378
|
|
Other accrued liabilities
|
|
|
73,449
|
|
|
|
97,695
|
|
|
|
40,555
|
|
Income taxes payable
|
|
|
22,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
operating activities
|
|
|
(196,720
|
)
|
|
|
589,916
|
|
|
|
373,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of The Grand
Canal Shops mall, net of transaction costs
|
|
|
|
|
|
|
|
|
|
|
649,568
|
|
Change in restricted cash
|
|
|
(310,565
|
)
|
|
|
(265,386
|
)
|
|
|
(235,675
|
)
|
Change in receivables from
stockholders
|
|
|
|
|
|
|
|
|
|
|
205
|
|
Capital expenditures
|
|
|
(1,925,291
|
)
|
|
|
(860,621
|
)
|
|
|
(465,748
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(2,235,856
|
)
|
|
|
(1,126,007
|
)
|
|
|
(51,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from initial public
offering of common stock, net of transaction costs
|
|
|
|
|
|
|
(487
|
)
|
|
|
739,193
|
|
Dividends paid to shareholders
|
|
|
|
|
|
|
(21,052
|
)
|
|
|
(125,027
|
)
|
Proceeds from exercise of stock
options
|
|
|
7,226
|
|
|
|
313
|
|
|
|
11,964
|
|
Contributions from shareholders
|
|
|
|
|
|
|
|
|
|
|
420
|
|
Tax benefit from stock option
exercises
|
|
|
1,401
|
|
|
|
|
|
|
|
|
|
Repayments on 11% mortgage notes
|
|
|
|
|
|
|
(843,640
|
)
|
|
|
(6,360
|
)
|
Proceeds from 6.375% senior
notes, net of discount
|
|
|
|
|
|
|
247,722
|
|
|
|
|
|
Proceeds from senior secured
credit facility-term B
|
|
|
|
|
|
|
305,000
|
|
|
|
665,000
|
|
Proceeds from senior secured
credit facility-term B delayed
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
Proceeds from Venetian
Intermediate credit facility
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Proceeds from Venetian Macao
Limited revolver
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Proceeds from The Sands Expo
Center mortgage loan
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
|
(In thousands)
|
|
|
Proceeds from Macao credit facility
|
|
|
1,350,000
|
|
|
|
|
|
|
|
|
|
Proceeds from Singapore credit
facility
|
|
|
892,076
|
|
|
|
|
|
|
|
|
|
Proceeds from senior secured
credit facility-revolver
|
|
|
254,129
|
|
|
|
31,000
|
|
|
|
|
|
Proceeds from phase II mall
construction loan
|
|
|
86,000
|
|
|
|
28,500
|
|
|
|
|
|
Proceeds from FF&E credit
facility and other long term debt
|
|
|
37,790
|
|
|
|
|
|
|
|
|
|
Repayments on Venetian
Intermediate credit facility
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
Repayments on Macao credit facility
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
Repayments on senior secured
credit facility-revolver
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
Repayments on The Sands Expo
Center mortgage loan
|
|
|
(4,733
|
)
|
|
|
(3,687
|
)
|
|
|
(711
|
)
|
Repayments on FF&E credit
facility and other long-term debt
|
|
|
(3,013
|
)
|
|
|
(1,800
|
)
|
|
|
(2,400
|
)
|
Repayments on secured mall facility
|
|
|
|
|
|
|
|
|
|
|
(120,000
|
)
|
Repayments on senior secured
credit facility-term A and B-prior
|
|
|
|
|
|
|
|
|
|
|
(294,583
|
)
|
Repayments on Venetian Macao
Limited senior secured notes- tranches A and B
|
|
|
|
|
|
|
(120,000
|
)
|
|
|
|
|
Repayments on Venetian Macao
Limited revolver
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
Repayments on Interface
Group-Nevada note payable
|
|
|
|
|
|
|
|
|
|
|
(127,512
|
)
|
Repurchase premiums incurred in
connection with refinancing transactions
|
|
|
|
|
|
|
(113,311
|
)
|
|
|
|
|
Payments of deferred financing
costs
|
|
|
(52,894
|
)
|
|
|
(11,276
|
)
|
|
|
(29,598
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities
|
|
|
2,442,982
|
|
|
|
(302,718
|
)
|
|
|
820,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
814
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
11,220
|
|
|
|
(838,052
|
)
|
|
|
1,142,105
|
|
Cash and cash equivalents at
beginning of year
|
|
|
456,846
|
|
|
|
1,294,898
|
|
|
|
152,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end
of year
|
|
$
|
468,066
|
|
|
$
|
456,846
|
|
|
$
|
1,294,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash
flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for interest
|
|
$
|
215,975
|
|
|
$
|
111,066
|
|
|
$
|
128,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for taxes
|
|
$
|
34,750
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and
financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment asset
acquisitions included in construction payables
|
|
$
|
329,375
|
|
|
$
|
163,932
|
|
|
$
|
87,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization of deposit to purchase
property and equipment
|
|
$
|
|
|
|
$
|
10,000
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
acquisitions included in accounts payable
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash distribution to principal
shareholder
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Declared and unpaid dividends
included in accrued liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
21,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred gain on sale of The Grand
Canal Shops mall
|
|
$
|
|
|
|
$
|
|
|
|
$
|
77,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in other assets related
to The Grand Canal Shops mall sale
|
|
$
|
|
|
|
$
|
|
|
|
$
|
13,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
77
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
Note 1
|
Organization
and Business of Company
|
Las Vegas Sands Corp. (LVSC or the
Company) was incorporated in Nevada during August
2004 and completed an initial public offering of its common
stock in December 2004. Immediately prior to the initial public
offering LVSC acquired 100% of the capital stock of Las Vegas
Sands, Inc., which was converted into a Nevada limited liability
company, Las Vegas Sands, LLC (LVSLLC) in July 2005.
The acquisition of LVSLLC by LVSC has been accounted for as a
reorganization of entities under common control, in a manner
similar to
pooling-of-interests.
LVSCs common stock is traded on the New York Stock
Exchange under the symbol LVS.
Operations
The Company owns and operates The Venetian Resort Hotel Casino
(The Venetian), a Renaissance Venice-themed resort
situated on the Las Vegas Strip (the Strip). The
Venetian includes the first all-suites hotel on the Strip with
4,027 suites; a gaming facility of approximately
120,000 gross square feet; an enclosed retail, dining and
entertainment complex of approximately 440,000 net leasable
square feet (The Grand Canal Shops or the
Mall), which was sold to a third party in 2004; a
meeting and conference facility of approximately
1.1 million square feet; and an expo and convention center
of approximately 1.2 million square feet (The Sands
Expo Center).
The Company also owns and operates The Sands Macao Casino
(The Sands Macao), the first Las Vegas-style casino
in Macao, China, which opened on May 18, 2004. The Sands
Macao now offers over 229,000 square feet of gaming
facilities after its expansion, which was completed in August
2006, as well as several restaurants, VIP facilities and other
high-end amenities. In addition, the Company continues to
progress according to plan on the expansion of the hotel tower,
which is expected to be completed in September 2007.
United
States Development Projects
The
Palazzo
The Company is currently constructing The Palazzo Resort Hotel
Casino (The Palazzo), a second resort similar in
size to The Venetian, which is situated on a
14-acre
site
next to The Venetian and The Sands Expo Center. The Palazzo is
expected to consist of an all-suites, 50-floor luxury hotel
tower with approximately 3,025 suites, a gaming facility of
approximately 105,000 square feet and an enclosed shopping,
dining and entertainment complex of approximately
450,000 square feet (the Phase II mall),
which the Company has contracted to sell to a third party. The
Palazzo is expected to open in fall 2007. In connection with the
sale of The Grand Canal Shops mall, the Company entered into an
agreement with General Growth Partners (GGP), the
purchaser of The Grand Canal Shops mall, to sell GGP the
Phase II mall upon completion of construction. The purchase
price that GGP has agreed to pay for the Phase II mall is
the greater of (i) $250.0 million and (ii) the
Phase II malls net operating income for months 19
through 30 of its operations divided by a capitalization rate.
The capitalization rate is 6.0% on the first $38.0 million
of net operating income and 8.0% on the net operating income
above $38.0 million.
The Company is currently constructing a high rise residential
condominium tower, which will consist of approximately
270 luxury condominiums and will be situated between The
Palazzo and The Venetian. The condominium tower is currently
expected to open in late fall 2008.
Sands
Bethworks
On December 20, 2006, the Pennsylvania Gaming Control Board
announced that a subsidiary, Sands Bethworks Gaming, LLC
(Sands Bethworks Gaming), had been awarded a
Pennsylvania gaming license. The award of the license is subject
to appeal and the actual license will be awarded after the
appeal period ends. Sands Bethworks Gaming will develop a
gaming, hotel, shopping and dining complex (the Sands
Bethworks) located on the site of the Historic Bethlehem
Steel Works in Bethlehem, Pennsylvania, which is about
70 miles from midtown Manhattan, New York. In its first
phase, the
124-acre
development is expected to feature a 300-room hotel,
200,000 square feet of retail space, 3,000 slot
machines and a variety of dining options. An additional
2,000 slot
78
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
machines will be added in a subsequent phase. The Sands
Bethworks is also expected be home to the National Museum of
Industrial History, an arts and cultural center, and the
broadcast home of the local PBS affiliate. The Company expects
to open Sands Bethworks in 2008.
Macao
Development Projects
The Cotai
Strip
The Company is building The Venetian Macao Resort Hotel Casino
(The Venetian Macao) in Macao, China, an
approximately 3,000 all-suites hotel, casino and convention
center complex with a Venetian-style theme similar to that of
The Venetian in Las Vegas. Under its gaming subconcession in
Macao, the Company is obligated to develop and open The Venetian
Macao and a convention center by December 2007. The Company
currently expects to open The Venetian Macao in summer 2007. If
the Company fails to meet the December 2007 deadline and that
deadline is not extended, the Company could lose its right to
continue to operate The Sands Macao or any other facilities
developed under its Macao gaming subconcession, and its
investment to date in The Venetian Macao and its other Cotai
Strip
TM
developments could be lost.
In February 2007, the Company received the final draft of the
land concession agreement from the Macao government pursuant to
which the Company was awarded a concession by lease for
parcels 1, 2 and 3 on the Cotai Strip, including the sites
on which it is building The Venetian Macao and the Four Seasons
hotel. The Company has accepted the conditions of the draft land
concession and has made an initial premium payment of
$106.5 million towards the aggregate land premium of
$323.7 million. Additionally, $24.1 million has been
paid or will be paid in the form of the cost of the reclamation
work and other works done on the land and the installation costs
of an electrical substation with the remaining amount payable
over time. The land concession will not become effective until
the date it is published in Macaos Official Gazette. Once
the land concession is effective, the Company will be required
to make additional land premium and annual rent payments
relating to parcels 1, 2 and 3 in the amounts and at the
times specified in the land concession. The Company has also
commenced construction on its other Cotai Strip properties on
land for which it has not yet been granted land concessions. If
the Company does not obtain land concessions, it could lose all
or a substantial part of its investment in these other Cotai
Strip properties.
In addition to the development of The Venetian Macao, the
Company is developing multiple other properties on the Cotai
Strip. The Company submitted development plans to the Macao
government for six casino-resort developments in addition to The
Venetian Macao on an area of approximately 200 acres
located on the Cotai Strip (which are referred to as
parcels 1, 2, 3, 5, 6, 7 and 8). The developments
are expected to include hotels, exhibition and conference
facilities, casinos, showrooms, shopping malls, spas,
world-class restaurants and entertainment facilities and other
attractions and amenities, as well as common public areas. The
Company has commenced construction or pre-construction on all
seven parcels of the Cotai Strip. The Company plans to own and
operate all of the casinos in these developments under its Macao
gaming subconcession. More specifically, the Company intends to
develop its other Cotai Strip properties as follows:
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|
|
Parcel 2 is intended to be a Four Seasons hotel and casino,
which will be adjacent to The Venetian Macao and is expected to
be a boutique hotel with approximately 400 luxury hotel rooms,
approximately 800,000 square feet of Four Seasons-serviced
luxury apartments, distinctive dining experiences, a full
service spa and other amenities, an approximately
45,000 square foot casino and approximately
210,000 square feet of upscale retail offerings. The
Company will own the entire development. The Company has entered
into an exclusive non-binding letter of intent and is currently
negotiating definitive agreements under which Four Seasons
Hotels Inc. will manage the hotel and serviced luxury apartments
under its Four Seasons brand.
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|
|
Parcel 5 is intended to include a three-hotel complex with
approximately 2,450 luxury and mid-scale hotel rooms, serviced
luxury apartments, a casino and a retail shopping mall. The
Company will own the entire development and has entered into a
management agreement with Shangri-La Hotels and Resorts to
manage
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79
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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|
|
two hotels under its Shangri-La and Traders brands. In
addition, the Company is negotiating with Starwood
Hotels & Resorts Worldwide to manage a hotel and
serviced luxury apartments under its St. Regis brand.
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|
|
|
Parcel 6 is intended to include a two-hotel complex with
approximately 4,000 luxury and mid-scale hotel rooms, a casino
and a retail shopping mall physically connected to the mall in
the Shangri-La/Traders hotel podium. The Company will own the
entire development and is negotiating with Starwood
Hotels & Resorts Worldwide to manage the hotels under
its Sheraton brand.
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Parcels 7 and 8 are intended to each include a two-hotel complex
with approximately 3,000 luxury and mid-scale hotel rooms on
each parcel, serviced luxury vacation suites, a casino and
retail shopping malls that are physically connected. The Company
will own the entire development and has entered into non-binding
agreements with Hilton Hotels to manage Hilton and Conrad brand
hotels and serviced luxury vacation suites on parcel 7 and
Fairmont Raffles Holdings to manage Fairmont and Raffles brand
hotel complexes and serviced luxury vacation suites on parcel 8.
The Company is currently negotiating definitive agreements with
Hilton Hotels and Fairmont Raffles Holdings.
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|
For parcel 3, the Company has signed a non-binding
memorandum of agreement with an independent developer. The
Company is currently negotiating the definitive agreement
pursuant to which it will partner with this developer to build a
multi-hotel complex, which may include a Cosmopolitan hotel. In
addition, the Company has signed a non-binding letter of intent
with Intercontinental Hotels Group to manage hotels under the
Intercontinental and Holiday Inn International brands, and
serviced luxury vacation suites under the Intercontinental
brand, on the site. The Company is currently negotiating
definitive agreements with Intercontinental Hotels Group. In
total, the multi-hotel complex is intended to include
approximately 3,600 hotel rooms, serviced luxury vacation
suites, a casino and a retail shopping mall.
|
Hengqin
Island Development Project
The Company has entered into a non-binding letter of intent with
the Zhuhai Municipal Peoples Government of the
Peoples Republic of China to work with it to create a
master plan for, and develop, a leisure and convention
destination resort on Hengqin Island, located approximately one
mile from the Cotai Strip, but within mainland China. The
Company is actively preparing design concepts for the
destination resort. On January 10, 2007, the Zhuhai
Government established a Project Coordination Committee to act
as a government liaison empowered to work directly with the
Company to advance the development of the project. The Company
has interfaced with this committee and is actively working with
the committee as the Company continues to advance its plans. The
project remains subject to a number of conditions, including
further governmental approvals.
Singapore
Development Project
In August 2006, the Companys wholly-owned subsidiary,
Marina Bay Sands Pte. Ltd. (MBS), entered into a
development agreement (the Development Agreement)
with the Singapore Tourism Board (STB) to build and
operate an integrated resort called Marina Bay Sands in
Singapore. The Marina Bay Sands will be a large integrated
resort that includes three 54-story hotel towers (totaling
approximately 2,600 suites) linked at their roofs by a Skypark
with pools, cafes and other recreation facilities, a casino, an
enclosed retail, dining and entertainment complex of
approximately 750,000 net leasable square feet, a
convention center and meeting room complex of approximately
1.2 million square feet, theaters, and a landmark iconic
structure at the bay-front promenade that contains an
approximately 150,000 square foot Art/Science museum.
Under the Development Agreement, the Company paid
$1.2 billion Singapore dollars (SGD)
(approximately US$782.5 million at exchange rates in effect
on December 31, 2006) in premium payments for the
lease of
80
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the land on which the resort will be built plus an additional
SGD$105.6 million (approximately US$68.9 million at
exchange rates in effect on December 31, 2006) for
various taxes and other fees. Of this combined amount,
$806.0 million has been capitalized on the balance sheet as
a leasehold interest in land with $4.8 million amortized as
of December 31, 2006. The Company will amortize this asset
over 60 years, which is the length of the lease agreement.
Of the remaining $45.4 million, $39.7 million was
recorded as a receivable (which was collected in January 2007
and further discussed at Note 4 Accounts
Receivable, Net) and $5.7 million has been capitalized on
the balance sheet as construction in progress. In addition to
the fees above, the Company provided a deposit of
SGD$192.6 million (approximately US$125.6 million at
exchange rates in effect on December 31, 2006) as a
security deposit for the construction of the integrated resort,
which is currently being satisfied by bank guarantees. Also in
August 2006, MBS entered into a two-year SGD$2.21 billion
(approximately US$1.44 billion at exchange rates in effect
on December 31, 2006) bridge facility to finance the
above payments and to provide for near-term development
expenditures. See Note 8 Long-Term
Debt Singapore Credit Facility.
United
Kingdom Development Projects
In December 2006, the Company announced that one of its
affiliates and Cantor Gaming, an affiliate of the global
financial services company Cantor Fitzgerald, have agreed to
launch an online casino and poker site initially aimed at
serving the United Kingdom market. Cantor Gaming will provide an
online casino and poker destination featuring Las Vegas
Sands brands. The site will offer casino games, including
blackjack, roulette, baccarat, video poker, slots and online
poker. The offering will be part of a full
end-to-end
gaming service, including customer age and location
verification, online payment processing, and customer services.
The site is expected to be launched during the second quarter of
2007. The site will be hosted, and the operator will be
licensed, in compliance with the laws of Alderney, British
Channel Islands. It will not accept U.S. customers.
Other
Development Projects
The Company is currently exploring the possibility of operating
integrated resorts in additional Asian jurisdictions, the United
States and Europe.
Note 2
Summary of Significant Accounting Policies
Principles
of Consolidation
The consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of
Estimates
The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires the Company to make estimates
and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of
contingent assets and liabilities. These estimates and judgments
are based on historical information, information that is
currently available to the Company and on various other
assumptions that the Company believes to be reasonable under the
circumstances. Actual results could vary from those estimates.
Cash
and Cash Equivalents
Cash and cash equivalents consist of cash and short-term
investments with original maturities of less than 90 days.
Such investments are carried at cost which approximates their
fair value. Cash equivalents are placed with high credit quality
financial institutions and are primarily in money market funds.
81
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Accounts
Receivable and Credit Risk
Accounts receivable are principally comprised of casino and
hotel receivables, which do not bear interest and are recorded
at cost. The Company extends credit to approved casino customers
following background checks and investigations of
creditworthiness. At December 31, 2006 and 2005, 88.7% and
85.6%, respectively, of the Companys casino 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.
The allowance for doubtful accounts represents the
Companys best estimate of the amount of probable credit
losses in the Companys existing accounts receivable. The
Company determines the allowance based on specific customer
information, historical write-off experience and current
industry and economic data. Account balances are charged off
against the allowance when the Company believes it is probable
the receivable will not be recovered. Management believes that
there are no concentrations of credit risk for which an
allowance has not been established. Although management believes
that the allowance is adequate, it is possible that the
estimated amount of cash collections with respect to accounts
receivable could change.
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 and
operating supplies.
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, which do not exceed the
lease term for leasehold improvements, as:
|
|
|
|
Building and improvements
|
|
15 to 40 years
|
Furniture, fixtures and equipment
|
|
3 to 15 years
|
Leasehold improvements
|
|
5 to 10 years
|
Airplanes
|
|
20 years
|
Maintenance and repairs 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 consolidated statements of
operations.
The Company evaluates its property and equipment and other
long-lived assets for impairment in accordance with the
Financial Accounting Standards Boards (FASB)
Statement of Financial Accounting Standards (SFAS)
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. For assets to be disposed of, the
Company recognizes the asset to be sold at the lower of carrying
value or fair value less costs of disposal. Fair value for
assets to be disposed of is estimated based on comparable asset
sales, solicited offers, or a discounted cash flow model.
For assets to be held and used, fixed assets are reviewed for
impairment whenever indicators of impairment exist. If an
indicator of impairment exists, the Company first groups its
assets with other assets and liabilities at the lowest level for
which identifiable cash flows are largely independent of the
cash flows of other assets and liabilities (the asset
group). Secondly, the Company estimates the undiscounted
future cash flows that are directly associated with and expected
to arise from the use of and eventual disposition of such asset
group. The Company estimates the undiscounted cash flows over
the remaining useful life of the primary asset within the asset
group. If the undiscounted cash flows exceed the carrying value,
no impairment is indicated. If the undiscounted cash flows do
not exceed the carrying value, then an impairment is measured
based on fair value compared to carrying value, with fair value
typically based on a discounted cash flow model. If an asset is
still under development, future cash flows include remaining
construction costs.
82
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Interest costs associated with major construction projects are
capitalized and included in the cost of the projects. When no
debt is incurred specifically for construction projects,
interest is capitalized on amounts expended using the
weighted-average cost of the Companys outstanding
borrowings. Capitalization of interest ceases when the project
is substantially complete or construction activity is suspended
for more than a brief period. During the years ended
December 31, 2006 and 2005, the Company capitalized
interest expense of $94.6 million and $22.7 million,
respectively.
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Deferred
Financing Costs and Original Issue Discounts
|
Deferred financing costs and original issue discounts are
amortized to interest expense based on the terms of the related
debt instruments using the effective interest method.
|
|
|
Leasehold
Interest in Land
|
Leasehold interest in land represents payments made for the use
of land over an extended period of time. The leasehold interest
will be amortized on a straight-line basis over the length of
the lease agreement. Such assets are not qualifying assets for
purposes of capitalizing interest and as such, are not included
in the base which is used to determine capitalized interest.
Revenue
Recognition and Promotional Allowances
Casino revenue is the aggregate of gaming wins and losses. Cash
discounts and other cash incentives to customers related to
gaming play are recorded as a reduction of gross casino
revenues. Hotel revenue recognition criteria are met at the time
of occupancy. Food and beverage revenue recognition criteria are
met at the time of service. Deposits for future hotel occupancy
or food and beverage services contracts are recorded as deferred
income until revenue recognition criteria are met. Cancellation
fees for hotel and food and beverage services are recognized
upon cancellation by the customer. Convention revenues are
recognized when the related service is rendered or the event is
held. Minimum rental revenues are included in convention, retail
and other revenue and are recognized on a straight-line basis
over the terms of the related lease.
In accordance with industry practice, the retail value of
accommodations, food and beverage, and other services furnished
to hotel/casino guests without charge is included in gross
revenue and then deducted as promotional allowances. The
estimated retail value of such promotional allowances is
included in operating revenues as follows (in thousands):
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|
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|
|
Revenue
|
|
|
|
Year Ended December 31,
|
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|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Food and beverage
|
|
$
|
44,768
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|
|
$
|
34,760
|
|
|
$
|
22,042
|
|
Rooms
|
|
|
48,005
|
|
|
|
42,354
|
|
|
|
36,994
|
|
Convention, retail and other
|
|
|
10,546
|
|
|
|
6,199
|
|
|
|
2,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
103,319
|
|
|
$
|
83,313
|
|
|
$
|
61,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The estimated departmental cost of providing such promotional
allowances is included primarily in casino operating expenses as
follows (in thousands):
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Estimated Cost
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Food and beverage
|
|
$
|
29,302
|
|
|
$
|
23,153
|
|
|
$
|
12,715
|
|
Rooms
|
|
|
11,505
|
|
|
|
10,862
|
|
|
|
9,292
|
|
Convention, retail and other
|
|
|
5,040
|
|
|
|
5,973
|
|
|
|
2,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
45,847
|
|
|
$
|
39,988
|
|
|
$
|
24,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frequent
Players Program
The Company has established promotional clubs to encourage
repeat business from frequent and active slot machine customers
and table games patrons. Members earn points based on gaming
activity and such points can be redeemed for cash. The Company
accrues for club points as a reduction to gaming revenue based
upon the estimates for expected redemptions.
Pre-Opening
and Development Expenses
The Company accounts for costs incurred in the development and
pre-opening phases of new ventures in accordance with Statement
of Position
98-5,
Reporting on the Costs of
Start-Up
Activities. Pre-opening expense represents personnel and
other costs incurred prior to the opening of new ventures and
are expensed as incurred. Development expense includes the costs
associated with the Companys evaluation and pursuit of new
business opportunities, which are also expensed as incurred.
Advertising
Costs
Costs for advertising are expensed as incurred. Advertising
costs included in general and administrative expense were
$6.0 million, $4.6 million and $3.3 million for
the years ended December 31, 2006, 2005 and 2004,
respectively.
Currency
Translation
The Company accounts for currency translation in accordance with
SFAS No. 52, Foreign Currency Translation.
Balance sheet accounts are translated at the exchange rate in
effect at each balance sheet date and income statement accounts
are translated at the average exchange rates during the year.
Translation adjustments resulting from this process are charged
or credited to other comprehensive income.
Comprehensive
Income
Comprehensive income includes net income and all other
non-stockholder changes in equity, or other comprehensive
income. Elements of the Companys comprehensive income are
reported in the accompanying consolidated statements of
stockholders equity and comprehensive income, and the
cumulative balance of these elements consisted solely of foreign
currency translation adjustments.
84
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Earnings
Per Share
The weighted average number of common and common equivalent
shares used in the calculation of basic and diluted earnings per
share consisted of the following:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Weighted-average common shares
outstanding (used in the calculation of basic earnings per share)
|
|
|
354,277,941
|
|
|
|
354,161,165
|
|
|
|
326,486,740
|
|
Potential dilution from stock
options and restricted stock
|
|
|
986,503
|
|
|
|
365,439
|
|
|
|
362,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common and common
equivalent shares (used in the calculations of diluted earnings
per share)
|
|
|
355,264,444
|
|
|
|
354,526,604
|
|
|
|
326,848,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2006 and 2005, outstanding
options to purchase 882,900 and 42,820 of common stock,
respectively, were not included in the calculation of diluted
earnings per share because their effect was antidilutive. There
were no antidilutive options for the year ended
December 31, 2004.
Stock-Based
Employee Compensation
Effective January 1, 2006, the Company adopted the
provisions of SFAS No. 123R, Share-Based
Payment, which establishes accounting for equity
instruments exchanged for employee services. Under the
provisions of SFAS No. 123R, stock-based compensation
cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized over the employees
requisite service period (generally the vesting period of the
equity grant). Prior to January 1, 2006, the Company
accounted for stock-based compensation to employees in
accordance with Accounting Principles Board (APB)
Opinion No. 25 Accounting for Stock Issued to
Employees, and related interpretations. The Company also
followed the disclosure requirements of SFAS No. 123,
Accounting for Stock-Based Compensation, as amended
by SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure. The
Company elected to adopt the modified prospective application
transition method as provided by SFAS No. 123R and,
accordingly, financial statement amounts for the prior periods
presented in this
Form 10-K
have not been restated to reflect the fair value method of
recording stock-based compensation. The Companys
stock-based employee compensation plan is more fully discussed
in Note 12 Stock-Based Employee Compensation.
85
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company had previously adopted the provisions of
SFAS No. 123, as amended by SFAS No. 148,
for disclosure purposes only. Had the Company accounted for the
plan under the fair value method allowed by
SFAS No. 123, the Companys net income and
earnings per share would have been adjusted to the following pro
forma amounts (dollars in thousands, except per share data):
|
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|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2005
|
|
|
2004
|
|
|
Net income, as reported
|
|
$
|
283,686
|
|
|
$
|
495,183
|
|
Add: Stock-based compensation
expense included in reported net income, net of tax
|
|
|
96
|
|
|
|
49,230
|
|
Deduct: Total stock-based employee
compensation expense determined under the minimum value method
|
|
|
|
|
|
|
(57,310
|
)
|
Deduct: Total stock-based employee
compensation expense determined under Black-Scholes
option-pricing model, net of tax
|
|
|
(3,791
|
)
|
|
|
(222
|
)
|
|
|
|
|
|
|
|
|
|
Pro forma net income
|
|
$
|
279,991
|
|
|
$
|
486,881
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share, as
reported
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share, pro forma
|
|
$
|
0.79
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share, as
reported
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share, pro
forma
|
|
$
|
0.79
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes
Prior to its merger into a wholly-owned subsidiary of LVSC (the
Merger) in December 2004 and its conversion into a
LLC in 2005, LVSLLC had elected to be taxed as an
S corporation and its wholly-owned subsidiaries were either
limited liability companies or S corporations, each of
which was a pass-through entity for federal income tax purposes.
Nevada does not levy a corporate income tax and the Company has
a temporary income tax exemption in Macao through 2008.
Accordingly, no provision for federal, state, or foreign income
taxes is included in the consolidated statements of operations
for the period from January 1, 2004 through the Merger in
December 2004. LVSLLCs debt instruments provided for
dividends to be paid to stockholders to pay income taxes
associated with its taxable income attributable to each
stockholder during the period LVSLLC was taxed as an
S corporation. During 2004, LVSLLC declared and accrued
$129.0 million of tax dividends.
As a result of the Merger and the completion of LVSCs
initial public offering in December 2004, the Company is now
subject to federal and certain state income taxes. For
information purposes, the consolidated statements of operations
also include unaudited pro forma amounts for the income taxes
that would have been recorded if the Company had historically
been a C corporation.
The Company adopted SFAS No. 109, Accounting for
Income Taxes, effective with the date of the Merger. Under
SFAS No. 109, deferred tax assets and liabilities are
recognized based on differences between financial statement and
tax basis of assets and liabilities using enacted tax rates.
SFAS No. 109 requires the recognition of deferred tax
assets, net of any applicable valuation allowances, related to
net operating loss carryforwards, tax credits and other
temporary deductible differences. The standard requires
recognition of a future tax benefit to the extent that
realization of such benefit is more likely than not; otherwise,
a valuation allowance is applied.
The Companys income tax returns are subject to examination
by the Internal Revenue Service (IRS) and other tax
authorities. While positions taken in tax returns are sometimes
subject to uncertainty in the tax laws, the Company does not
take such positions unless it has substantial
authority to do so under the Internal Revenue Code and
applicable regulations. The Company may take positions on its
tax returns based on substantial authority that are not
ultimately accepted by the IRS. There are currently no income
tax returns being examined by the IRS.
86
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company assesses potential unfavorable outcomes based on the
criteria of SFAS No. 5, Accounting for
Contingencies. The Company establishes a tax reserve if an
unfavorable outcome is probable and the amount of the
unfavorable outcome can be reasonably estimated. The Company
assesses the potential outcomes of tax uncertainties on a
quarterly basis. In determining whether the probable criterion
of SFAS No. 5 is met, the Company presumes that the
taxing authority will focus on the exposure and it assesses the
probable outcome of a particular issue based upon the relevant
legal and technical merits. The Company also applies judgment
regarding the potential actions by the tax authorities and
resolution through the settlement process.
The Company maintains required tax reserves until such time as
the underlying issue is resolved. When actual results differ
from reserve estimates, the Company will adjust the income tax
provision and its tax reserves in the period resolved. For tax
years that are examined by taxing authorities, the Company will
adjust tax reserves in the year the tax examinations are
settled. For tax years that are not examined by taxing
authorities, the Company will adjust tax reserves in the year
that the statute of limitations expires. The Companys
estimate of the potential outcome for any uncertain tax issue is
highly judgmental, and it believes it has adequately provided
for any reasonable and foreseeable outcomes related to uncertain
tax matters.
Tax
Indemnification
In connection with the conversion of LVSLLC from a subchapter S
corporation to a taxable C corporation for income tax purposes,
LVSLLC entered into an indemnification agreement pursuant to
which it agreed to:
|
|
|
|
|
indemnify those of the Companys stockholders who were
stockholders of Las Vegas Sands, Inc. prior to the 2004 initial
public offering against certain tax liabilities incurred by
these stockholders as a result of adjustments (pursuant to a
determination by, or a settlement with, a taxing authority or
court, or pursuant to the filing of an amended tax return) to
the taxable income of Las Vegas Sands, Inc. with respect to
taxable periods during which Las Vegas Sands, Inc. was a
subchapter S corporation for income tax purposes; and
|
|
|
|
indemnify the Principal Stockholder against certain tax
liabilities incurred by him as a result of adjustments (pursuant
to a determination by, or a settlement with, a taxing authority
or court, or pursuant to the filing of an amended tax return) to
the taxable income of Interface Holdings with respect to taxable
periods during which Interface Holdings was a subchapter S
corporation for income tax purposes.
|
Accounting
for Derivative Instruments and Hedging Activities
Generally accepted accounting principles require that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value. If specific conditions are met, a derivative may be
specifically designated as a hedge of specific financial
exposures. The accounting for changes in the fair value of a
derivative depends on the intended use of the derivative and, if
used in hedging activities, it depends on its effectiveness as a
hedge.
The Company has a policy aimed at managing interest rate risk
associated with its current and anticipated future borrowings.
This policy enables the Company to use any combination of
interest rate swaps, futures, options, caps and similar
instruments. To the extent the Company employs such financial
instruments pursuant to this policy, and the instruments qualify
for hedge accounting, they are accounted for as hedging
instruments. In order to qualify for hedge accounting, the
underlying hedged item must expose the Company to risks
associated with market fluctuations and the financial instrument
used must be designated as a hedge and must reduce the
Companys exposure to market fluctuation throughout the
hedge period. If these criteria are not met, a change in the
market value of the financial instrument is recognized as a gain
or loss in results of operations in the period of change.
Otherwise, gains and losses are recognized in comprehensive
income or loss except to the extent that the financial
instrument is disposed of prior to maturity. Net interest paid
or received pursuant to the financial instrument is included as
interest expense in the period.
87
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Recent
Accounting Pronouncements
In June 2006, the FASB ratified the consensus reached on
Emerging Issues Task Force (EITF) Issue
No. 06-03,
How Sales Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income
Statement (that is, Gross Versus Net Presentation). The
EITF reached a consensus that the presentation of taxes on
either a gross or net basis is an accounting policy decision
that requires disclosure. EITF
Issue No. 06-03
is effective for the first interim or annual reporting period
beginning after December 15, 2006. Taxes collected from the
Companys customers are and have been recorded on a net
basis. The Company has no intention of modifying this accounting
policy. As such, the adoption of EITF
Issue No. 06-03
will not have an effect on the Companys results from
operations or financial position.
In July 2006, the FASB issued Interpretation (FIN)
No. 48, Accounting for Uncertainty in Income
Taxes, which provides guidance for the accounting for
uncertainty in income taxes recognized in the financial
statements in accordance with SFAS No. 109.
FIN No. 48 provides guidance on the financial
statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN No. 48 also
provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosures, and
transition. FIN No. 48 will require entities to assess
the likelihood that uncertain tax positions will be accepted by
the applicable taxing authority and then measure the amount of
benefit to be recognized for these purposes which are considered
greater than 50% likely to be sustained. FIN No. 48 is
effective for fiscal years beginning after December 15,
2006. The Company will adopt FIN No. 48 as of
January 1, 2007, as required. The Company is currently
evaluating the impact of adopting this standard, but believes
that there will be a reduction to opening retained earnings in
an amount that will not exceed $12.0 million.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value, and expands
disclosures about fair value measurements.
SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurement.
SFAS No. 157 does not require any new fair value
measurements and the Company does not expect the application of
this standard to change its current practices. The provisions of
SFAS No. 157 are effective for financial statements
issued for fiscal years beginning after November 15, 2007
and interim periods within those fiscal years.
Reclassifications
The consolidated financial statements for prior years reflect
certain reclassifications to conform to the current year
presentation, which have no effect on amounts previously
reported in the Companys balance sheets, statements of
operations or statements of cash flows. Casino discounts of
$19.5 million previously included in the allowance for
doubtful accounts and discounts is now offset against gross
casino accounts receivable.
Note 3
Restricted Cash
As required by the Companys Senior Secured Credit Facility
(See Note 8 Long-Term Debt Senior
Secured Credit Facility), certain proceeds pursuant to draws
under this facility have been deposited into restricted
accounts, invested in cash and pledged to a disbursement agent
for the Senior Secured Credit Facility lenders. This restricted
cash amount will be used as required for The Palazzo project
costs under disbursement terms specified in this facility. The
disbursement account is subject to a security interest in favor
of the lenders under the Senior Secured Credit Facility. As of
December 31, 2006 and 2005, The Palazzo disbursement
account balance was $374.8 million and $571.1 million,
respectively.
As required by the Companys Macao credit facility entered
into in May 2006 (See Note 8 Long-Term
Debt Macao Credit Facility), certain proceeds
pursuant to draws under this facility have been deposited into
restricted accounts, invested in cash and pledged to a
disbursement agent for the Macao credit facility lenders. This
restricted cash amount will be used as required for The Sands
Macao, The Venetian Macao and other Cotai Strip project costs
under disbursement terms specified in this facility. The
disbursement account is subject to a security
88
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
interest in favor of the lenders under the Macao credit
facility. As of December 31, 2006, the restricted cash
balance was $465.4 million.
Restricted cash also includes $19.3 million and
$21.7 million consisting primarily of advance customer
deposits for convention facility rentals that have been paid
pursuant to contractual terms for the years ended
December 31, 2006 and 2005, respectively, and are
classified as restricted in accordance with The Sands Expo
Center mortgage loan (See Note 8 Long-Term
Debt The Sands Expo Center Mortgage Loan). In
addition, restricted cash includes a restricted cash deposit of
$50.0 million related to the gaming license in Pennsylvania
as of December 31, 2006 and 2005, $19.6 million
related to the Marina Bay Sands project in Singapore as of
December 31, 2006 and $24.8 million related to The
Palazzo and the Phase II mall as of December 31, 2006.
Note 4
Accounts Receivable, Net
Accounts receivable consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Casino
|
|
$
|
119,514
|
|
|
$
|
79,815
|
|
Hotel
|
|
|
36,160
|
|
|
|
29,943
|
|
Other
|
|
|
53,485
|
|
|
|
4,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,159
|
|
|
|
114,258
|
|
Less: allowance for doubtful
accounts
|
|
|
(35,476
|
)
|
|
|
(29,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
173,683
|
|
|
$
|
84,778
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2006, other receivables include a
$39.7 million receivable relating to goods and services
taxes paid in connection with obtaining the leasehold interest
in land, which the Company has recovered from the Singapore
government in January 2007.
Note 5
Property and Equipment, Net
Property and equipment consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Land and land improvements
|
|
$
|
207,144
|
|
|
$
|
202,285
|
|
Building and improvements
|
|
|
1,622,783
|
|
|
|
1,454,462
|
|
Equipment, furniture, fixtures and
leasehold improvements
|
|
|
528,882
|
|
|
|
351,219
|
|
Construction in progress
|
|
|
2,694,180
|
|
|
|
957,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,052,989
|
|
|
|
2,965,718
|
|
Less: accumulated depreciation and
amortization
|
|
|
(470,664
|
)
|
|
|
(365,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,582,325
|
|
|
$
|
2,600,468
|
|
|
|
|
|
|
|
|
|
|
89
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Construction in progress consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
The Sands Macao
|
|
$
|
17,443
|
|
|
$
|
22,153
|
|
The Venetian Macao
|
|
|
1,544,622
|
|
|
|
448,830
|
|
Other Macao Development Projects
|
|
|
130,355
|
|
|
|
31
|
|
The Palazzo and Phase II Mall
|
|
|
916,302
|
|
|
|
454,227
|
|
Other
|
|
|
85,458
|
|
|
|
32,511
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,694,180
|
|
|
$
|
957,752
|
|
|
|
|
|
|
|
|
|
|
Note 6
Leasehold Interest in Land, Net
In August 2006, MBS entered into the Development Agreement with
STB to build and operate an integrated resort called Marina Bay
Sands in Singapore. Under the Development Agreement, the Company
paid SGD$1.2 billion (approximately US$782.5 million
at exchange rates in effect on December 31, 2006) in
premium payments for the lease of the land on which the resort
will be built, plus an additional SGD$105.6 million
(approximately US$68.9 million at exchange rates in effect
on December 31, 2006) for various taxes and other
fees. Of this combined amount, $806.0 million has been
capitalized on the balance sheet as leasehold interest in land
with $4.8 million amortized as of December 31, 2006.
The Company will amortize this asset on a straight-line basis
over 60 years, which is the length of the lease agreement
(approximately US$13.4 million annually at exchange rates
in effect on December 31, 2006).
Note 7
Other Accrued Liabilities
Other accrued liabilities consist of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Customer deposits
|
|
$
|
78,313
|
|
|
$
|
72,274
|
|
Payroll and related
|
|
|
65,350
|
|
|
|
43,301
|
|
Taxes and licenses
|
|
|
78,922
|
|
|
|
49,407
|
|
Outstanding gaming chips and tokens
|
|
|
51,752
|
|
|
|
46,033
|
|
Other accruals
|
|
|
44,564
|
|
|
|
35,375
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
318,901
|
|
|
$
|
246,390
|
|
|
|
|
|
|
|
|
|
|
90
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 8
Long-Term Debt
Long-term debt consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Corporate and
U.S. Related:
|
|
|
|
|
|
|
|
|
Senior Secured Credit
Facility Term B
|
|
$
|
970,000
|
|
|
$
|
970,000
|
|
Senior Secured Credit
Facility Term B delayed
|
|
|
200,000
|
|
|
|
200,000
|
|
Senior Secured Credit
Facility Revolving Facility
|
|
|
260,128
|
|
|
|
31,000
|
|
6.375% Senior Notes (net of
original issue discount of $1,847 and $2,075, respectively)
|
|
|
248,153
|
|
|
|
247,925
|
|
The Sands Expo Center Mortgage Loan
|
|
|
90,868
|
|
|
|
95,601
|
|
Phase II Mall Construction
Loan
|
|
|
114,500
|
|
|
|
28,500
|
|
FF&E Credit
Facility Term Funded
|
|
|
7,395
|
|
|
|
10,200
|
|
FF&E Credit
Facility Term Delayed Draw
|
|
|
37,582
|
|
|
|
|
|
Macao Related:
|
|
|
|
|
|
|
|
|
Macao Credit Facility
Term B
|
|
|
1,200,000
|
|
|
|
|
|
Macao Credit Facility
Local Term
|
|
|
100,000
|
|
|
|
|
|
Venetian Intermediate Credit
Facility
|
|
|
|
|
|
|
50,000
|
|
Singapore Related:
|
|
|
|
|
|
|
|
|
Singapore Credit
Facility Term Loan
|
|
|
393,510
|
|
|
|
|
|
Singapore Credit
Facility Floating Rate Notes
|
|
|
520,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,142,638
|
|
|
|
1,633,226
|
|
Less: current maturities
|
|
|
(6,486
|
)
|
|
|
(7,325
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
4,136,152
|
|
|
$
|
1,625,901
|
|
|
|
|
|
|
|
|
|
|
Senior
Secured Credit Facility
On February 22, 2005, LVSLLC and Venetian Casino Resort,
LLC entered into an amended and restated senior secured credit
facility with a syndicate of lenders in an aggregate amount of
$1.62 billion (the Senior Secured Credit
Facility). The Senior Secured Credit Facility amended and
restated an existing senior secured credit facility and provides
for a $970.0 million senior secured funded term loan
facility (the Term B Facility), a
$200.0 million senior secured delayed draw facility (the
Term B Delayed Draw Facility), which was drawn in
full in August 2005; and a $450.0 million senior secured
revolving facility (the Revolving Facility) of which
$260.1 million was drawn as of December 31, 2006.
The Term B Facility and Term B Delayed Draw Facility mature on
June 15, 2011 and are subject to quarterly amortization
payments in the amount of $2.9 million from the first full
fiscal quarter following substantial completion of The Palazzo
until June 30, 2010, followed by approximately four equal
quarterly amortization payments of approximately
$284.5 million each until the maturity date. The Revolving
Facility matures in February 2010 and has no interim
amortization. As a result of the $260.1 million draw, the
amount available for working capital loans under the Revolving
Facility is $189.9 million as of December 31, 2006.
The indebtedness under the Senior Secured Credit Facility is
guaranteed by certain of the Companys subsidiaries (the
Guarantors). The obligations under the Senior
Secured Credit Facility and the guarantees of the Guarantors are
secured by a first-priority security interest in substantially
all of LVSLLCs and its wholly-owned subsidiary, Venetian
Casino Resort, LLCs (the owner of The Venetian), and the
Guarantors assets, other than
91
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
capital stock. Venetian Macau Limited, Venetian Cotai Limited,
Venetian Intermediate and the Companys other Macao
subsidiaries are not guarantors or restricted subsidiaries under
the Senior Secured Credit Facility. Borrowings under the Senior
Secured Credit Facility bear interest, at the Companys
option, at either an adjusted Eurodollar rate or at an
alternative base rate, plus a spread of 1.75% or 0.75%,
respectively, which spreads will decrease by 0.25% if the loans
achieve a rating of Ba2 or higher by Moodys and BB or
higher by Standard & Poors, subject to certain
additional conditions. The Company will also pay a standby fee
of 0.5% per annum on the undrawn amounts under the
Revolving Facility. The Senior Secured Credit Facility contains
affirmative, negative and financial covenants customary to such
financings. These covenants include restrictions on, among other
things, the ability of the borrowers to incur additional debt,
dispose of assets, and enter into sale and leaseback
transactions. The financial covenants include a minimum
consolidated net worth test, a minimum consolidated interest
coverage ratio, a maximum consolidated capital expenditure test
and a maximum consolidated leverage ratio. In addition, there
are provisions that limit or prohibit certain payments of
dividends or other distributions to LVSC. At December 31,
2006, the net assets of LVSLLC were $1.92 billion, a
substantial portion of which were restricted under the terms of
the Senior Secured Credit Facility.
The weighted average interest rate for the Senior Secured Credit
Facility was 7.0% and 5.3% during the years ended
December 31, 2006 and 2005, respectively.
The Company is required to hedge 50% of the outstanding
indebtedness, which is achieved through interest rate cap
agreements to limit the impact of increases in interest rates on
its floating rate debt derived from the Senior Secured Credit
Facility. If the fixed portion of the Companys outstanding
indebtedness falls below 50%, then the Company is obligated to
fix a portion of its floating rate debt to meet the 50%
requirement. To meet this requirement the Company entered into
an interest rate cap agreement during 2005 with a
$500.0 million notional amount that expires on
March 30, 2008 and a second interest rate cap agreement
during 2006 with a $50.0 million notional amount that also
expires on March 30, 2008. The provisions of the interest
rate cap agreements entitle the Company to receive from the
counterparties the amounts, if any, by which the selected market
interest rates exceed the strike rates of 5.75% and 6.5% as
stated in the respective agreements. There was no net effect on
interest expense as a result of the interest rate cap agreements
for the years ended December 31, 2006 and 2005.
Senior
Notes
On February 10, 2005, LVSC sold in a private placement
transaction $250.0 million in aggregate principal amount of
its 6.375% Senior Notes due 2015 (the Senior
Notes) with an original issue discount of
$2.3 million. Net proceeds after offering costs and
original issue discount were $244.8 million. The Senior
Notes will mature on February 15, 2015. LVSC has the option
to redeem all or a portion of the Senior Notes at any time prior
to February 15, 2010 at a make-whole redemption
price. Thereafter, LVSC has the option to redeem all or a
portion of the Senior Notes at any time at fixed prices that
decline ratably over time. In addition, before February 15,
2008, LVSC may redeem up to 35% of the aggregate principal
amount of the Senior Notes with the proceeds of certain equity
offerings at a redemption price equal to 106.375% of the
principal amount of the Senior Notes. The Senior Notes are
unsecured senior obligations of LVSC and are jointly and
severally guaranteed on a senior unsecured basis by certain of
LVSCs existing domestic subsidiaries (including LVSLLC and
Venetian Casino Resort, LLC). The indenture governing the Senior
Notes contains covenants that, subject to certain exceptions and
conditions, limit the ability of LVSC and the subsidiary
guarantors to enter into sale and leaseback transactions in
respect of their principal properties, create liens on their
principal properties and consolidate, merge or sell all or
substantially all their assets. The net proceeds of the Senior
Notes offering were utilized to complete the retirement of the
11% Mortgage Notes as further described below. In June 2005, the
Senior Notes were exchanged for substantially similar Senior
Notes, which had been registered under the federal securities
laws.
92
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The
Sands Expo Center Mortgage Loan
On July 30, 2004, a wholly-owned subsidiary of the Company,
Interface Group Holding Company, Inc. (Interface),
entered into a $100.0 million mortgage loan (The
Sands Expo Center Mortgage Loan). Interfaces
obligations under the loan are secured by a first priority
mortgage on The Sands Expo Center and by certain other related
collateral. On July 31, 2006, Interface exercised its first
one-year renewal option, extending the maturity date to
August 1, 2007, unless it exercises its remaining one-year
and subsequent six-month renewal options. If Interface exercises
all of the renewal options then the loan must be repaid no later
than January 30, 2009. The loan amortizes pursuant to a
20-year
mortgage schedule, based on a 9.25% interest rate amortization.
If cash flow of Interface (as defined by the loan agreement) is
available after the payment of interest and mandatory
amortization, tax and insurance reserve amounts, operating
expenses, capital expenditures and a reserve for advanced
customer deposits, additional principal payments must be made
equal to the difference between (i) the principal payments
necessary to amortize the loan pursuant to a
15-year
schedule, based on a 7.0% interest rate and (ii) the
amortization payment required by the aforementioned 9.25%
amortization schedule. The loan bears interest at an interest
rate equal to LIBOR plus 3.75%. The loan may be prepaid in whole
or in part at par. The weighted average interest rate on The
Sands Expo Center Mortgage Loan was 8.8% and 6.9% during the
years ended December 31, 2006 and 2005, respectively. At
December 31, 2006, the Company has classified this debt as
long-term because it has both the ability and intent to exercise
the second one-year renewal option.
Phase II
Mall Construction Loan
On September 30, 2004, two wholly-owned subsidiaries of the
Company, Phase II Mall Holding, LLC and Phase II Mall
Subsidiary, LLC (the Phase II Mall Subsidiary),
entered into a construction loan agreement with a group of
lenders. The agreement provides for delayed draw loans in an
aggregate principal amount of $250.0 million. The proceeds
are being used to fund the design, development and construction
of the Phase II mall. The loan is secured by a
first-priority security interest in substantially all of the
borrowers assets, other than capital stock. The loan bears
interest, at the borrowers option, at either an adjusted
Eurodollar rate plus 1.75% or an alternative base rate plus
0.75%. Interest is payable on the base rate loans on a quarterly
basis and is payable on Eurodollar rate loans at the end of the
applicable interest period. The loan is due in full upon the
earlier of March 31, 2008 or the sale of the Phase II
mall and there is no interim amortization. As of
December 31, 2006, there was $114.5 million
outstanding under this facility. The Phase II Mall
Subsidiary will also pay a standby fee of 0.375% per annum
on the undrawn amounts under the construction loan. The weighted
average interest rate on the Phase II mall construction
loan was 7.1% and 5.5% for the years ended December 31,
2006 and 2005, respectively.
To meet the requirements of the Phase II mall construction
loan, the Company entered into an interest rate cap agreement
during December 2004 (the Phase II Mall Cap
Agreement) with a maximum $125.0 million notional
amount for a term equal to the term of the Phase II mall
construction loan. The provisions of the Phase II Mall Cap
Agreement entitle the Company to receive from the counterparties
the amounts, if any, by which the selected market interest rates
exceed the strike rate of 6.0% as stated in such agreement.
There was no net effect on interest expense as a result of the
Phase II Mall Cap Agreement for the years ended
December 31, 2006 and 2005. The notional amount of the
Phase II Mall Cap Agreement (which expires on June 1,
2007) at December 31, 2006 was $107.0 million.
FF&E
Financing
In September 2003, the Company and a lender entered into a
credit facility (the FF&E Term Funded Credit
Facility) to provide $15.0 million of financing for
an expansion of The Venetian. The proceeds from the FF&E
Term Funded Credit Facility were used to finance certain
furniture, fixtures and equipment (the Term Funded
Specified FF&E) for this expansion and the facility
was secured by the Term Funded Specified FF&E. The FF&E
Term Funded Credit Facility provides for a
60-month
basic term loan. Interest on this term loan is three-month LIBOR
plus 3.0% and is payable quarterly. In December 2006, this
facility was refinanced as part of the new credit
93
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
facility discussed below. In connection with the refinancing,
the terms of the remaining amounts outstanding under the
FF&E Term Funded Credit Facility were amended to change the
interest rate to three-month LIBOR plus 2.0% and to capitalize
the interest due for the fourth quarter of 2006 to the principal
balance of this term loan. The FF&E Term Funded Credit
Facility is subject to nineteen quarterly amortization payments
of $600,000 beginning January 1, 2004, and one final
payment of approximately $3.7 million on October 1,
2008. The weighted average interest rate for the FF&E Term
Funded Credit Facility was 8.0% and 6.3% during the years ended
December 31, 2006 and 2005, respectively.
In December 2006, the Company and a group of lenders, with
General Electric Capital Corporation, as administrative agent to
the lenders, entered into an additional $135.0 million of
furniture, fixture and equipment financing (the FF&E
Term Delayed Draw Credit Facility). The proceeds from the
FF&E Term Delayed Draw Credit Facility were and will be used
to finance certain equipment, fixtures, furniture and other
goods (the Term Delayed Draw Specified FF&E) at
The Palazzo and The Venetian and the facility is secured by the
Term Delayed Draw Specified FF&E. The FF&E Term Delayed
Draw Credit Facility provides for a
54-month
delayed draw loan. Interest on this term loan is either
three-month LIBOR plus 2.0% or base rate plus 1.0% and is
payable quarterly. The FF&E Term Delayed Draw Credit
Facility is subject to ten quarterly principal payments
beginning on April 1, 2008 in an amount equal to 5% of the
aggregate principal amount as of April 1, 2008, with the
remaining amount due in four equal installments on
October 1, 2010, January 1, 2011, April 1, 2011
and June 15, 2011. The Company will also pay a standby fee
of 0.75% per annum on the undrawn amounts under the
FF&E Term Delayed Draw Credit Facility. The weighted average
interest rate for the FF&E Term Delayed Draw Credit Facility
was 7.5% during the year ended December 31, 2006.
Macao
Credit Facility
On May 25, 2006, two subsidiaries of the Company, VML US
Finance, LLC (the Borrower) and Venetian Macau
Limited, as guarantor, entered into a credit agreement (the
Macao Credit Facility). The Macao Credit Facility
consists of a $1.2 billion funded term B loan (the
Macao Term B Facility), a $700.0 million
delayed draw term B loan (the Macao Term B Delayed Draw
Facility), a $100.0 million funded local currency
term loan (the Macao Local Term Facility) and a
$500.0 million revolving credit facility (the Macao
Revolving Facility). As of December 31, 2006, no
amounts are outstanding under the Macao Revolving Facility and
no amounts have been drawn under the Macao Term B Delayed Draw
Facility. Under the Macao Credit Facility, the Company is
required to secure the land concession in order to fully draw
against the facility. In February 2007, the Company has asked
its lenders to amend the Macao Credit Facility to remove this
requirement, among others.
In February 2007, the Company received the final draft of the
land concession agreement from the Macao government pursuant to
which the Company was awarded a concession by lease for
parcels 1, 2 and 3 on the Cotai Strip, including the sites
on which it is building The Venetian Macao and the Four Seasons
hotel. The Company has accepted the conditions of the draft land
concession and has made an initial premium payment of
$106.5 million towards the aggregate land premium of
$323.7 million. Additionally, $24.1 million has been
paid or will be paid in the form of the cost of the reclamation
work and other works done on the land and the installation costs
of an electrical substation with the remaining amount payable
over time. The land concession will not become effective until
the date it is published in Macaos Official Gazette. Once
the land concession is effective, the Company will be required
to make additional land premium and annual rent payments
relating to parcels 1, 2 and 3 in the amounts and at the
times specified in the land concession.
The indebtedness under the Macao Credit Facility is guaranteed
by Venetian Macau Limited, Venetian Cotai Limited and certain of
the Companys other foreign subsidiaries (the Macao
Guarantors). The obligations under the Macao Credit
Facility and the guarantees of the Macao Guarantors are secured
by a first-priority security interest in substantially all of
the Borrowers and the Macao Guarantors assets, other
than (1) capital stock of the Borrower and the Macao
Guarantors, (2) assets that will secure permitted
furniture, fixtures and equipment financings, (3) Venetian
Macau Limiteds gaming subconcession contract and
(4) certain other assets.
94
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Borrowings under the Macao Credit Facility bear interest, at the
Companys option, at either an adjusted Eurodollar rate
(or, in the case of the Macao Local Term Facility, adjusted
HIBOR) or at an alternative base rate, plus a spread of 2.75% or
1.75%, respectively (6.7% for the Macao Local Term Facility and
8.1% for the Macao Term B Facility at December 31, 2006).
These spreads will be decreased by 0.25% from the beginning of
the first interest period following the substantial completion
of The Venetian Macao. The Borrower will also pay standby fees
of 0.5% and 1.375% per annum on the undrawn amounts under
the Macao Revolving Facility and the Macao Term B Delayed Draw
Facility, respectively.
The weighted average interest rates for the Macao Local Term
Facility and the Macao Term B Facility were 6.9% and 8.1%,
respectively, for the year ended December 31, 2006.
To meet the requirements of the Macao Credit Facility, the
Company entered into an interest rate cap agreement during
September 2006 (the Macao Cap Agreement) with a
$1.0 billion notional amount which expires on
September 21, 2009. The provisions of the Macao Cap
Agreement entitle the Company to receive from the counterparties
the amounts, if any, by which the selected market interest rates
exceed the strike rate of 6.75% as stated in such agreement.
There was no net effect on interest expense as a result of the
Macao Cap Agreement for the year ended December 31, 2006.
The Macao Revolving Facility and the Macao Local Term Facility
have a five year maturity. The Macao Term B Delayed Draw
Facility and the Macao Term B Facility mature in six and seven
years, respectively. The Macao Term B Delayed Draw Facility and
the Macao Term B Facility are subject to nominal amortization
for the first five and six years, respectively, in the first
quarter following substantial completion of The Venetian Macao,
with the remainder of the loans payable in four equal
installments in the last year immediately preceding their
respective maturity dates. Following the substantial completion
of The Venetian Macao, the Macao Local Term Facility is subject
to quarterly amortization in an amount of approximately
$6.3 million per quarter, with the remainder of the loan
payable in four equal installments in the last year immediately
preceding the maturity date.
The Macao Credit Facility contains affirmative and negative
covenants customary for such financings, including, but not
limited to, limitations on incurring additional liens, incurring
additional indebtedness, making certain investments, paying
dividends and other restricted payments, and acquiring and
selling assets. The Macao Credit Facility also requires the
Borrower and the Macao Guarantors to comply with financial
covenants, including, but not limited to, minimum EBITDA for a
period of time and, thereafter, ratios of EBITDA to interest
expense and total indebtedness to EBITDA, as well as maximum
capital expenditures. The Macao Credit Facility also contains
events of default customary for such financings.
Singapore
Credit Facility
On August 18, 2006, MBS entered into agreements (together,
the Singapore Credit Facility) providing for a
SGD$1.1 billion (approximately US$717.3 million at
exchange rates in effect on December 31,
2006) floating rate notes facility (the Singapore
Floating Rate Notes) and a SGD$1.1 billion
(approximately US$717.3 million at exchange rates in effect
on December 31, 2006) term loan facility (the
Singapore Term Loan). The Singapore Floating Rate
Notes consist of a funded SGD$788.6 million (approximately
US$514.2 million at exchange rates in effect on
December 31, 2006) facility and a
SGD$315.4 million (approximately US$205.7 million at
exchange rates in effect on December 31, 2006) delayed
draw facility. The Singapore Term Loan consists of a funded
SGD$596.0 million (approximately US$388.7 million at
exchange rates in effect on December 31,
2006) facility, a SGD$315.4 million (approximately
US$205.7 million at exchange rates in effect on
December 31, 2006) delayed draw facility, and a
SGD$192.6 million (approximately US$125.6 million at
exchange rates in effect on December 31,
2006) facility to provide bank guarantees for a security
deposit required to be delivered to the STB under the
Development Agreement. As of December 31, 2006,
SGD$798.2 million (approximately US$520.5 million at
exchange rates in effect on December 31, 2006) has
been drawn on the Singapore Floating Rate Notes,
SGD$603.5 million (approximately US$393.5 million at
exchange rates in effect on December 31, 2006) has
been drawn on the Singapore Term Loan, and
SGD$192.6 million (approximately US$125.6 million at
exchange
95
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
rates in effect on December 31, 2006) under the
Singapore Term Loan has been committed to provide a guarantee
for a security deposit required to be delivered to the STB under
the Development Agreement.
The indebtedness under the Singapore Floating Rate Notes is
guaranteed by LVSC on an unsecured basis and the indebtedness
under the Singapore Term Loan is secured by a first-priority
security interest in substantially all of MBS assets,
other than capital stock and certain other assets.
Borrowings under both the Singapore Floating Rate Notes and the
Singapore Term Loan bear interest at the Singapore SWAP Offer
Rate plus a spread of 1.35% per annum during the first twelve
months that amounts are outstanding under such facilities and a
spread of 1.60% per annum during the second twelve months
that amounts are outstanding (5.0% at December 31, 2006).
MBS will also pay a standby fee of 0.375% per annum on the
undrawn amounts under the Singapore Credit Facility. The
Singapore Credit Facility has a two year maturity and the
aggregate amount outstanding matures in full on August 22,
2008. MBS is permitted, at its option, to redeem or prepay all
or a portion of the outstanding Singapore Credit Facility, at
par, without premium or penalty, under certain circumstances.
The weighted average interest rate for the Singapore Floating
Rate Notes and the Singapore Term Loan was 5.0% for the year
ended December 31, 2006.
The Singapore Credit Facility contains affirmative and negative
covenants customary for such financings, including, but not
limited to, limitations on liens, indebtedness, investments,
acquisitions and asset sales, restricted payments, affiliate
transactions and use of proceeds from the facility, as well as
requirements to comply with applicable law and maintain adequate
insurance.
Mortgage
Notes
On June 4, 2002, LVSLLC and Venetian Casino Resort, LLC
issued $850.0 million in aggregate principal amount of 11%
mortgage notes due 2010 (the Mortgage Notes). The
Mortgage Notes bore interest at 11%, payable each
June 15th and December 15th. The Mortgage Notes
were redeemable at the option of LVSLLC and Venetian Casino
Resort, LLC at prices ranging from 100% to 105.5% commencing on
or after June 15, 2006, as set forth in the Mortgage Notes
and the indenture pursuant to which the Mortgage Notes were
issued (the Indenture). Prior to June 15, 2006,
LVSLLC and Venetian Casino Resort, LLC could redeem the Mortgage
Notes at their principal amount plus an applicable make-whole
premium. On or prior to June 15, 2005, the Company could
redeem up to 35% of the Mortgage Notes with the net cash
proceeds of one or more offerings of equity securities at a
redemption price of 111% of the principal amount of the Mortgage
Notes, plus accrued and unpaid interest.
As a result of the consummation of the Mall Sale on May 17,
2004 (as further described in Note 10 Mall
Sale), LVSLLC and Venetian Casino Resort, LLC were obligated to
use the Excess Proceeds (as defined under the Indenture) from
the Mall Sale to make an offer to purchase the maximum principal
amount of Mortgage Notes that could be purchased out of the
Excess Proceeds of the Mall Sale at an offer price in cash equal
to 100% of the principal amount of the Mortgage Notes, plus
accrued and unpaid interest and liquidated damages, if any, to
the closing date of the offer (the Asset Sale
Offer). The Asset Sale Offer closed on June 6, 2004,
and $6.4 million of Mortgage Notes were tendered and
re-purchased by the Company.
During February 2005, LVSLLC and Venetian Casino Resort, LLC
exercised an equity claw back under the Indenture pursuant to
which the Company retired $291.1 million of the Mortgage
Notes and paid $32.0 million of redemption premiums with
the proceeds from LVSCs initial public offering.
Additionally, LVSLLC and Venetian Casino Resort, LLC retired
$542.3 million in aggregate principal amount of the
Mortgage Notes pursuant to a tender offer plus a make-whole
premium and accrued interest of $90.3 million, with
proceeds from the Senior Notes offering, cash on hand and
proceeds from the Senior Secured Credit Facility. The total
consideration paid to the tendering holders was
$1,166.56 per $1,000 principal amount of Mortgage Notes
(including a consent payment of $30 per $1,000 principal
amount of Mortgage Notes tendered prior to February 1,
2005). During March 2005, LVSLLC and Venetian Casino Resort, LLC
redeemed the remaining $10.2 million aggregate principal
amount of
96
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
the outstanding Mortgage Notes at a price equal to 100% of the
principal amount thereof plus a make-whole premium and accrued
interest.
The Company incurred a charge of approximately
$132.8 million for loss on early retirement of indebtedness
during 2005 as a result of retiring the Mortgage Notes.
Venetian
Intermediate Credit Facility
On March 27, 2003, Venetian Intermediate entered into a
credit agreement (the Venetian Intermediate Credit
Agreement) with a lender to provide $50.0 million of
financing for The Sands Macao. The credit facility was paid in
full during 2006.
|
|
|
Scheduled
Maturities of Long-Term Debt
|
Maturities of long-term debt outstanding at December 31,
2006 are summarized as follows (in thousands):
|
|
|
|
|
2007
|
|
$
|
6,486
|
|
2008
|
|
|
1,153,139
|
|
2009
|
|
|
56,279
|
|
2010
|
|
|
897,650
|
|
2011
|
|
|
622,931
|
|
Thereafter
|
|
|
1,408,000
|
|
|
|
|
|
|
|
|
$
|
4,144,485
|
|
|
|
|
|
|
|
|
|
Fair
Values of Long-Term Debt
|
The fair value of the Senior Notes as of December 31, 2006
and 2005 were $243.4 million and $241.3 million,
respectively. The fair value of the Senior Notes is based on
quoted market prices. The fair values of other indebtedness
approximate their respective carrying amounts based on the
nature of these variable interest rate facilities. The fair
value of the interest rate cap agreements is based upon quotes
from brokers which was $0.6 million as of December 31,
2006 and 2005.
Note 9
Income Taxes
The components of the (benefit) provision for income taxes are
as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Federal:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
58,329
|
|
|
$
|
1,627
|
|
|
$
|
|
|
Deferred
|
|
|
3,914
|
|
|
|
2,623
|
|
|
|
47
|
|
Recognition of net deferred tax
assets upon C Corporation conversion
|
|
|
|
|
|
|
|
|
|
|
(13,783
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax (benefit)
provision
|
|
$
|
62,243
|
|
|
$
|
4,250
|
|
|
$
|
(13,736
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The reconciliation of the statutory federal income tax rate and
the Companys effective tax rate for the years ended
December 31 and from the C Corporation conversion date,
December 17, 2004, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
|
Year Ended December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Statutory federal income tax rate
|
|
|
35.00
|
%
|
|
|
35.00
|
%
|
|
|
35.00
|
%
|
Increase (decrease) in tax rate
resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign and U.S. tax rate
differential
|
|
|
(16.41
|
)%
|
|
|
(23.14
|
)%
|
|
|
(25.45
|
)%
|
Tax exempt income of foreign
subsidiary (Macao)
|
|
|
(10.20
|
)%
|
|
|
(14.07
|
)%
|
|
|
(13.67
|
)%
|
Valuation allowance
|
|
|
1.26
|
%
|
|
|
2.61
|
%
|
|
|
4.44
|
%
|
Other, net
|
|
|
2.69
|
%
|
|
|
1.08
|
%
|
|
|
0.22
|
%
|
Net deferred tax assets recognized
upon termination of S corporation election
|
|
|
|
|
|
|
|
|
|
|
(158.64
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
12.34
|
%
|
|
|
1.48
|
%
|
|
|
(158.10
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated income before taxes for U.S. and international
operations for the years ended December 31, 2006 and 2005
and from the C Corporation conversion date, December 17,
2004, through December 31, 2004 is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
|
Year Ended December 31,
|
|
|
December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Domestic
|
|
$
|
162,592
|
|
|
$
|
3,271
|
|
|
$
|
80
|
|
International
|
|
|
341,654
|
|
|
|
284,665
|
|
|
|
8,608
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
504,246
|
|
|
$
|
287,936
|
|
|
$
|
8,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The primary tax affected components of the Companys net
deferred tax assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Bad debt reserve
|
|
$
|
12,170
|
|
|
$
|
10,230
|
|
Accrued expenses
|
|
|
7,314
|
|
|
|
3,525
|
|
Deferred gain on the sale of the
Mall
|
|
|
60,945
|
|
|
|
62,587
|
|
Net operating loss carryforward
|
|
|
|
|
|
|
3,053
|
|
Charitable contribution
carryforward
|
|
|
|
|
|
|
2,825
|
|
Other
|
|
|
4,712
|
|
|
|
1,565
|
|
Net operating loss carryforward of
foreign subsidiaries
|
|
|
23,582
|
|
|
|
17,386
|
|
Less: Valuation allowance
|
|
|
(23,582
|
)
|
|
|
(17,386
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
85,141
|
|
|
|
83,785
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
(67,807
|
)
|
|
|
(62,698
|
)
|
Prepaid expenses
|
|
|
(1,970
|
)
|
|
|
(1,809
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(69,777
|
)
|
|
|
(64,507
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
15,364
|
|
|
$
|
19,278
|
|
|
|
|
|
|
|
|
|
|
98
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Domestic operating loss carryforwards were $8.7 million and
$8.2 million for the years ended December 31, 2005 and
2004, respectively. These losses were fully utilized during the
year ended December 31, 2006. Operating loss carryforwards
of the foreign subsidiaries were $195.2 million,
$118.3 million and $29.1 million for the years ended
December 31, 2006, 2005 and 2004, respectively. These
losses begin to expire in 2007.
At December 31, 2006 and 2005, there was a
$23.6 million and $17.4 million, respectively,
valuation allowance provided on the foreign net operating loss
carryforwards and other foreign deferred tax assets because
management believes these assets do not meet the more
likely than not criteria for recognition under
SFAS No. 109. Management believes all other deferred
tax assets are more likely than not to be realized because of
the future reversal of existing taxable temporary differences
and expected future taxable income. Accordingly, there are no
other valuation allowances provided at December 31, 2006
and 2005.
Undistributed earnings of a subsidiary are accounted for as a
temporary difference, except that deferred tax liabilities are
not recorded for undistributed earnings of a foreign subsidiary
that are deemed to be indefinitely reinvested in the foreign
jurisdiction. The Company has a plan for reinvestment of
undistributed earnings of its foreign subsidiaries which
demonstrates that such earnings will be indefinitely reinvested
in the applicable jurisdictions. Should the Company change its
plans, it would be required to record a significant amount of
deferred tax liabilities. For the years ended December 31,
2006 and 2005, the amount of undistributed earnings of foreign
subsidiaries that the Company does not intend to repatriate was
$719.1 million and $373.1 million, respectively.
Should these earnings be distributed in the form of dividends or
otherwise, the distributions would be subject to
U.S. federal income tax at the statutory rate of 35%, less
foreign tax credits applicable to distributions, if any. In
addition, such distributions would be subject to withholding
taxes in the various tax jurisdictions.
As mentioned in Note 2 Summary of Significant
Accounting Policies, the Company has a temporary income tax
exemption in Macao through 2008. Had the Company been required
to pay income taxes in Macao, consolidated net income would have
been reduced by $45.2 million and $35.3 million, and
diluted earning per share would have been reduced by $0.12 and
$0.10 per share for the years ended December 31, 2006
and 2005, respectively.
Note 10
Mall Sale
Mall
Sale and Related Matters
On April 12, 2004, the Company entered into an agreement to
sell The Grand Canal Shops mall and lease certain restaurant and
other retail space at the casino level of The Venetian (the
Master Lease) to GGP for approximately
$766.0 million (the Mall Sale). The Mall Sale
closed on May 17, 2004 and the Company realized a gain of
$417.6 million in connection with the Mall Sale. In
conjunction with the Mall Sale, the Company repaid all of its
$120.0 million secured Mall facility and redeemed
$6.4 million of the Mortgage Notes pursuant to the Asset
Sale Offer. Under the Master Lease agreement, The Venetian
leased nineteen spaces on the casino level of The Venetian
currently occupied by various tenants to GGP for 89 years
with annual rent of one dollar per year and GGP assumed the
various leases. Under generally accepted accounting principles,
the Master Lease agreement does not qualify as a sale of the
related assets, which were not separately legally demised.
Accordingly, $109.2 million of the transaction has been
deferred as prepaid operating lease payments to The Venetian,
which will amortize into income on a straight-line basis over
the
89-year
lease term. During the years ended December 31, 2006, 2005
and 2004, $1.2 million, $1.2 million and
$0.8 million, respectively, of this deferred item was
amortized and is included in convention, retail and other
revenue. In addition, the Company agreed with GGP to:
(i) continue to be obligated to fulfill certain lease
termination and asset purchase agreements as further described
in Note 11 Commitments and
Contingencies Other Ventures and Commitments;
(ii) lease the Blue Man Group Theater space located within
The Grand Canal Shops mall from GGP for a period of
25 years with fixed minimum rent of $3.3 million per
year with cost of living adjustments; (iii) operate the
Gondola ride under an operating agreement for a period of
25 years for an annual fee of $3.5 million; and
(iv) lease certain office space from GGP for a period of
10 years, subject to extension options for a period of up
to 65 years, with annual rent of approximately
$0.9 million. The lease payments
99
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
under clauses (ii) through (iv) above are subject to
automatic increases beginning on the sixth lease year. The net
present value of the lease payments under clauses (ii)
through (iv) is $77.2 million. Under generally
accepted accounting principles, a portion of the transaction
must be deferred in an amount equal to the present value of the
minimum lease payments set forth in the lease back agreements.
This deferred gain will be amortized to reduce lease expense on
a straight-line basis over the life of the leases. During the
years ended December 31, 2006, 2005 and 2004,
$3.5 million, $3.5 million and $2.1 million,
respectively, of this deferred item was amortized and is
included as an offset to convention, retail and other expense.
As of December 31, 2006, the Company was obligated under
(ii), (iii), and (iv) above to make future payments as
follows (in thousands):
|
|
|
|
|
2007
|
|
$
|
7,660
|
|
2008
|
|
|
7,660
|
|
2009
|
|
|
7,884
|
|
2010
|
|
|
8,043
|
|
2011
|
|
|
8,043
|
|
Thereafter
|
|
|
137,611
|
|
|
|
|
|
|
|
|
$
|
176,901
|
|
|
|
|
|
|
Phase
II Mall
The Company formed the Phase II Mall Subsidiary on
July 1, 2004 to develop and construct the Phase II
mall. In connection with the Mall Sale, the Company entered into
an agreement with GGP to construct and sell the Phase II
mall for an amount equal to the greater of
(i) $250.0 million; or (ii) the Phase II
malls net operating income for months 19 through 30 of its
operations (assuming that the rent due from all tenants in month
30 was actually due in each of months 19 through 30) divided by
a capitalization rate. The capitalization rate is 0.06 for every
dollar of net operating income up to $38.0 million and 0.08
for every dollar of net operating income above
$38.0 million. On the date the Phase II mall opens to
the public, GGP will be obligated to make an initial purchase
price payment based on projected net operating income for the
first 12 months of operations (but in no event less than
$250.0 million). Every six months thereafter until the
24 month anniversary of the opening date, the required
purchase price will be adjusted (up or down, but never to less
than $250.0 million) based on projected net operating
income for the upcoming 12 months. The final
purchase price adjustment (subject to audit thereafter) will be
made on the
30-month
anniversary of the Phase II malls opening date based
on the formula described above. For all purchase price and
purchase price adjustment calculations, net operating
income will be calculated by using the accrual
method of accounting and, for purposes of calculating the final
purchase price adjustment, by applying the base rent payable by
all tenants in the last month of the applicable
12-month
period to the entire
12-month
period. The Phase II mall is expected to cost approximately
$280.0 million (excluding incentive payments described
below). Under the Mall Sale agreement, the Company has agreed to
substantially complete construction of the Phase II mall
before the earlier of 36 months after the date on which
sufficient permits are received to allow the Phase II Mall
Subsidiary to begin construction of the Phase II mall or
March 1, 2008. These dates may be extended due to force
majeure or certain other delays. In the event that the Company
does not substantially complete construction of the
Phase II mall on or before the earlier of these two dates
(as such dates may be extended as described in the preceding
sentences), the Company must pay liquidated damages of
$5,000 per day for the first six months and
$10,000 per day for the following six months if substantial
completion does not occur by the end of six months after the
completion deadline. If substantial completion has not occurred
on or before one year after the deadline, the Company will be
required to pay total liquidated damages in the amount of
$100.0 million. In addition, failure to substantially
complete construction of the Phase II mall before the
agreed-upon
deadline would constitute an event of default under the Senior
Secured Credit Facility and the Companys disbursement
agreement.
100
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In the event that the Company complies with all of its
obligations under the aforementioned agreement with GGP
concerning the Phase II mall, and GGP fails to acquire the
membership interests in the entity owning the Phase II
mall, the Company will be entitled to:
|
|
|
|
|
sue GGP for specific performance;
|
|
|
|
liquidated damages in the amount of $100.0 million; or
|
|
|
|
purchase the interest of GGP in The Grand Canal Shops mall for
the lesser of (i) $766.0 million and (ii) the
fair market value minus $100.0 million.
|
The Company made an equity contribution to the Phase II
Mall Subsidiary of $63.2 million on July 15, 2004,
which was used to make certain incentive payments and pay
related payroll taxes to the Principal Stockholder and other
senior executives of the Company for their work in connection
with the Phase II mall sale and related financing
transactions. The Company made additional equity contributions
of $25.8 million during 2004 as required under the
Phase II mall construction loan agreement (See
Note 8 Long-Term Debt Phase II
Mall Construction Loan) and further equity contributions of
$7.9 million and $13.0 million during 2005 and 2006,
respectively.
Note 11
Commitments and Contingencies
Litigation
The Company is involved in other litigation in addition to those
noted below, arising in the normal course of business.
Management has made certain estimates for potential litigation
costs based upon consultation with legal counsel. Actual results
could differ from these estimates; however, in the opinion of
management, such litigation and claims will not have a material
effect on the Companys financial condition, results of
operations or cash flows.
The
Palazzo Construction Litigation
Lido Casino Resort, LLC (Lido), a wholly-owned
subsidiary of the Company, and its construction manager, Taylor
International Corp. (Taylor), filed suit in March
2006 in the United States District Court for the District of
Nevada (the District Court) against Malcolm Drilling
Company, Inc. (Malcolm), the contractor on The
Palazzo project responsible for completing certain foundation
work (the District Court Case). Lido and Taylor
claim in the District Court Case that Malcolm was in default of
its contract for performing defective work, failing to correct
defective work, failing to complete its work and causing delay
to the project. Malcolm responded by filing a Notice of a Lien
with the Clerk of Clark County, Nevada in March 2006 in the
amount of approximately $19.0 million (the
Lien). In April 2006, Lido and Taylor moved in the
District Court Case to strike or, in the alternative, to reduce
the amount of, the Lien, claiming, among other things, that the
Lien was excessive for including claims for disruption and
delay, which Lido and Taylor claim are not lienable under Nevada
law (the Lien Motion). Malcolm responded in April
2006 by filing a complaint against Lido and Taylor in District
Court of Clark County, Nevada seeking to foreclose on the Lien
against Taylor, claiming breach of contract, a cardinal change
in the underlying contract, unjust enrichment against Lido and
Taylor and bad faith and fraud against Taylor (the State
Court Case), and simultaneously filed a motion in the
District Court Case, seeking to dismiss the District Court Case
on abstention grounds (the Abstention Motion). In
response, in June 2006, Lido filed a motion to dismiss the State
Court Case based on the principle of the prior
pending District Court Case (the Motion to
Dismiss). In June 2006, the Abstention Motion was granted
in part by the United States District Court, the District Court
Case was stayed pending the outcome of the Motion to Dismiss in
the State Court Case and the Lien Motion was denied without
prejudice. Lido and Malcolm then entered into a stipulation
under which Lido withdrew the Motion to Dismiss, and in July
2006 filed a replacement lien motion in the State Court Case.
The lien motion in the State Court Case was denied in August
2006 and Lido and Taylor filed a permitted interlocutory notice
of appeal to the Supreme Court of Nevada in September 2006. This
matter is in the preliminary stages and based upon the advice of
legal counsel, management has determined that based on
proceedings to date, it is currently unable to determine the
probability of the outcome of this matter. Lido intends to
defend itself against the claims pending in the State Court Case.
101
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Litigation
Relating to Macao Casino
On October 15, 2004, Richard Suen and Round Square Company
Limited filed an action against Las Vegas Sands Corp., Las Vegas
Sands Inc., Sheldon G. Adelson and William P. Weidner in the
District Court of Clark County, Nevada, asserting a breach of an
alleged agreement to pay a success fee of $5.0 million and
2.0% of the net profit from the Companys Macao resort
operations to the plaintiffs as well as other related claims. In
March 2005, Las Vegas Sands Corp. was dismissed as a party
without prejudice based on a stipulation to do so between the
parties. On May 17, 2005, the plaintiffs filed their first
amended complaint. On February 2, 2006, defendants filed a
motion for partial summary judgment with respect to
plaintiffs fraud claims against all the defendants. On
March 16, 2006, an order was filed by the court granting
defendants motion for partial summary judgment. Pursuant
to the order filed March 16, 2006, plaintiffs fraud
claims set forth in the first amended complaint were dismissed
with prejudice as against all defendants. The order also
dismissed with prejudice the first amended complaint against
defendants Sheldon G. Adelson and William P. Weidner. This
action is in a preliminary stage and based upon the advice of
legal counsel, management has determined that based on
proceedings to date, it is currently unable to determine the
probability of the outcome of this matter. The Company intends
to defend this matter vigorously.
On January 26, 2006, Clive Basset Jones, Darryl Steven
Turok (a/k/a Dax Turok) and Cheong Jose Vai Chi
(a/k/a
Cliff
Cheong), filed an action against Las Vegas Sands Corp., Las
Vegas Sands, LLC, Venetian Venture Development, LLC and various
unspecified individuals and companies in the District Court of
Clark County, Nevada. The plaintiffs assert breach of an
agreement to pay a success fee in an amount equal to 5% of the
ownership interest in the entity that owns and operates the
Macau SAR gaming subconcession as well as other related claims.
In April 2006, Las Vegas Sands Corp. was dismissed as a party
without prejudice based on a stipulation to do so between the
parties. Other than the complaint which has been filed, and the
Companys answer, there is currently no pending activity in
the matter. This action is in a preliminary stage and discovery
has begun. Based upon the advice of legal counsel, management
has determined that based on proceedings to date, it is
currently unable to determine the probability of the outcome of
this matter. The Company intends to defend this matter
vigorously.
On February 5, 2007, Asian American Entertainment
Corporation, Limited (AAEC) filed an action against
Las Vegas Sands, Inc. (LVSI), Venetian Casino
Resort, LLC (VCR), Venetian Venture Development, LLC
(Venetian Venture Development), William P. Weidner
and David Friedman in the United States District Court for the
District of Nevada. The plaintiffs assert breach of contract by
LVSI, VCR and Venetian Venture Development of an agreement under
which AAEC would work to obtain a gaming license in Macao and,
if successful, AAEC would jointly operate a casino, hotel and
related facilities in Macao with Venetian Venture Development
and Venetian Venture Development would receive fees and a
minority equity interest in the venture and breach of fiduciary
duties by all of the defendants. The plaintiffs have requested
an unspecified amount of actual, compensatory and punitive
damages, disgorgement of profits related to the Companys
Macao gaming license. Other than the complaint which has been
filed, there is currently no pending activity in the matter.
This action is in a preliminary stage and based upon the advice
of legal counsel, management has determined that based on
proceedings to date, it is currently unable to determine the
probability of the outcome of this matter. The Company intends
to defend this matter vigorously.
Macao
Concession and Subconcession
On June 26, 2002, the Macao government granted a concession
to operate casinos in Macao through June 26, 2022, subject
to certain qualifications, to Galaxy Casino Company Limited
(Galaxy), a consortium of Macao and Hong Kong-based
investors. During December 2002, Venetian Macau Limited
(Venetian Macau) and Galaxy entered into a
subconcession agreement which was recognized and approved by the
Macao government and allows Venetian Macau to develop and
operate casino projects, including The Sands Macao, separately
from Galaxy. Beginning on December 26, 2017, the Macao
government may redeem the subconcession agreement by providing
the Company at lease one year prior notice.
102
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Under the subconcession agreement, Venetian Macau was obligated
to develop and open The Venetian Macao by June 2006 and a
convention center by December 2006, and invest, or cause to be
invested, at least 4.4 billion patacas (approximately
$549.3 million at exchange rates in effect on
December 31, 2006) in various development projects in
Macao by June 2009. The Company has spent more than the required
minimum amount. In February 2006, the Company received an
extension of the June and December 2006 construction deadlines
for The Venetian Macao and the convention center to December
2007. The Company currently expects to open The Venetian Macao
and the convention center in summer 2007. If the Company fails
to meet the December 2007 deadline, the Company could lose its
right to continue to operate The Sands Macao or any other
facilities developed under its Macao gaming subconcession and
its investment to date in construction of The Venetian Macao and
other Cotai Strip properties could be lost. To support this
obligation, a Macao bank and a subsidiary of the Company, Lido
Casino Resort Holding Company, LLC, have guaranteed
500.0 million patacas (approximately $62.4 million at
exchange rates in effect on December 31, 2006) of
Venetian Macaus legal and contractual obligations to the
Macao government until March 31, 2007. Venetian Macau has
granted a junior lien on the Venetian Macaus rights over
the land upon which The Sands Macao is constructed to support
the guarantee issued by the Macao bank under the Venetian Macau
subconcession.
Under the subconcession, the Company is obligated to pay to the
Macao government an annual premium with a fixed portion and a
variable portion based on the number and type of gaming tables
it employs and gaming machines it operates. The fixed portion of
the premium is equal to 30.0 million patacas (approximately
$3.7 million at exchange rates in effect on
December 31, 2006). The variable portion is equal to
300,000 patacas per gaming table reserved exclusively for
certain kinds of games or players, 150,000 patacas per gaming
table not so reserved and 1,000 patacas per electrical or
mechanical gaming machine, including slot machines
(approximately $37,454, $18,727 and $125, respectively, at
exchange rates in effect on December 31, 2006), subject to
a minimum of 45.0 million patacas (or $5.6 million at
exchange rates in effect on December 31, 2006). The Company
is also obligated to pay a special gaming tax of 35% of gross
gaming revenues and applicable withholding taxes. The Company
must also contribute 4% of its gross gaming revenue to utilities
designated by the Macao government, a portion of which must be
used for promotion of tourism in Macao. As of December 31,
2006, the Company was obligated under its subconcession to make
minimum future payments of approximately $9.4 million in
each of the next five years and approximately $98.3 million
thereafter through June 2022. These amounts are expected to
increase substantially as the Company completes The Venetian
Macao in 2007, which is planned to have approximately 850 table
games and approximately 4,100 slots with a final capacity of
approximately 1,150 table games and 7,000 slot machines, and the
other Cotai Strip properties, which are planned to have
approximately 1,750 table games and approximately 9,000 slot
machines in total.
Currently, the gaming tax in Macao is calculated as a percentage
of gross gaming revenue. However, unlike Nevada, gross gaming
revenue does not include deductions for credit losses. As a
result, if the Company extends credit to its customers in Macao
and is unable to collect on the related receivables, the Company
must pay taxes on its winnings from these customers even though
it was unable to collect on the related receivables. If the laws
are not changed, the Companys business in Macao may not be
able to realize the full benefits of extending credit to its
customers. Although there are proposals to revise the gaming tax
laws in Macao, there can be no assurance that the laws will be
changed.
Singapore
Development Project
On August 23, 2006, the Company entered into the
Development Agreement, which requires it to construct and
operate the Marina Bay Sands in accordance with the
Companys proposal for this integrated resort and in
accordance with that agreement. Based on the proposal the
Company submitted to the Singapore government, it will cost
approximately $3.6 billion, inclusive of the land premium,
taxes and other fees previously paid to develop and construct
the Marina Bay Sands. As discussed in Note 8
Long-Term Debt Singapore Credit Facility, the
Company entered into the Singapore Credit Facility to satisfy
near-term development costs and to satisfy some of its
103
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
obligations under the Development Agreement. The Company intends
to obtain long-term financing in an amount necessary to fund the
construction of the Marina Bay Sands.
Leases
Venetian
Macau
During 2003, Venetian Macau entered into a
25-year
land
lease agreement with the Macao government for a six acre parcel
of land on which The Sands Macao was constructed. The land
concession will expire in 2028 and is renewable. The land
concession requires the Company to pay a premium which is
payable over a number of years. In addition, the Company is also
obligated to pay rent annually for the term of the land
concession. The rent amount may be revised every five years by
the Macao government. As of December 31, 2006, Venetian
Macau was obligated under its leases to make future payments as
follows (in thousands):
|
|
|
|
|
2007
|
|
$
|
2,988
|
|
2008
|
|
|
2,988
|
|
2009
|
|
|
162
|
|
2010
|
|
|
162
|
|
2011
|
|
|
162
|
|
Thereafter
|
|
|
2,758
|
|
|
|
|
|
|
|
|
$
|
9,220
|
|
|
|
|
|
|
During the years ended December 31, 2006, 2005 and 2004,
the Company recorded $0.8 million, $0.7 million and
$0.5 million, respectively, in rental expense related to
this land lease.
In February 2007, the Company received the final draft of the
land concession agreement from the Macao government pursuant to
which the Company was awarded a concession by lease for
parcels 1, 2 and 3 on the Cotai Strip, including the sites
on which it is building The Venetian Macao and the Four Seasons
hotel. The Company has accepted the conditions of the draft land
concession and has made an initial premium payment of
$106.5 million towards the aggregate land premium of
$323.7 million. Additionally, $24.1 million has been
paid or will be paid in the form of the cost of the reclamation
work and other works done on the land and the installation costs
of an electrical substation with the remaining amount payable
over time. The land concession will not become effective until
the date it is published in Macaos Official Gazette. Once
the land concession is effective, the Company will be required
to make additional land premium and annual rent payments
relating to parcels 1, 2 and 3 in the amounts and at the
times specified in the land concession.
Energy
Services Agreements
During 1997, Venetian Casino Resort, LLC, Interface and others
entered into separate energy service agreements with a heating,
ventilation 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 Casino Resort, LLC, Interface and others over initial
terms expiring in 2009 with an option to collectively extend the
terms of their agreements for two consecutive five-year periods.
The HVAC plant was constructed 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.
104
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
As of December 31, 2006, Venetian Casino Resort, LLC and
Interface were obligated under the energy services agreements to
make future minimum payments as follows (in thousands):
|
|
|
|
|
2007
|
|
$
|
6,826
|
|
2008
|
|
|
6,826
|
|
2009
|
|
|
3,412
|
|
|
|
|
|
|
Total minimum payments
|
|
$
|
17,064
|
|
|
|
|
|
|
Expenses incurred under the energy services agreements were
$6.8 million, $6.8 million and $7.4 million for
the years ended December 31, 2006, 2005 and 2004,
respectively.
Operating
Lease Agreements
The Company leases real estate and various equipment under
operating lease arrangements and is also party to several
service agreements with terms in excess of one year.
At December 31, 2006, the Company was obligated under
non-cancelable operating leases to make future minimum lease
payments as follows (in thousands):
|
|
|
|
|
2007
|
|
$
|
17,784
|
|
2008
|
|
|
14,667
|
|
2009
|
|
|
8,144
|
|
2010
|
|
|
2,528
|
|
2011
|
|
|
1,398
|
|
Thereafter
|
|
|
113,157
|
|
|
|
|
|
|
Total minimum payments
|
|
$
|
157,678
|
|
|
|
|
|
|
Expenses incurred under these operating lease agreements totaled
$8.3 million, $7.0 million and $2.4 million for
the years ended December 31, 2006, 2005 and 2004,
respectively.
The Company is party to other operating lease agreements, which
are short-term and variable-rate in nature. Expenses incurred
under these operating lease agreements totaled
$1.5 million, $1.6 million and $1.7 million for
the years ended December 31, 2006, 2005 and 2004,
respectively.
Other
Ventures and Commitments
The Company has entered into employment agreements with seven of
the Companys senior executives, with remaining terms of
one to three years. As of December 31, 2006, the Company
was obligated to make future payments as follows (in thousands):
|
|
|
|
|
2007
|
|
$
|
8,380
|
|
2008
|
|
|
8,123
|
|
2009
|
|
|
7,437
|
|
|
|
|
|
|
Total minimum payments
|
|
$
|
23,940
|
|
|
|
|
|
|
During 2003, the Company entered into three lease termination
and asset purchase agreements with The Grand Canal Shops mall
tenants. In each case, the Company has obtained title to
leasehold improvements and other fixed assets, which were
originally purchased by The Grand Canal Shops mall tenants, and
which have been recorded at estimated fair market value, which
approximated the discounted present value of the Companys
obligation to the former tenants. As of December 31, 2006,
the Company was obligated under these agreements to make future
payments of $0.7 million for each of the next five years
and $8.0 million thereafter.
105
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During 2006, the Company entered into commitments to purchase
ferries to be built over the next two years for the
Companys Macao operations. As of December 31, 2006,
the Company was obligated to make future payments of
$99.7 million and $35.6 million during the years ended
December 31, 2007 and 2008, respectively.
Note 12
Stock-Based Employee Compensation
The Company has two nonqualified stock option plans, the 1997
Plan and the 2004 Plan, which are described below. The plans
provide for the granting of stock options pursuant to the
applicable provisions of the Internal Revenue Code and
regulations. The compensation expense for the year ended
December 31, 2006 was $14.7 million, which is
comprised of $13.4 million from stock options and
$1.3 million from restricted stock. In accordance with APB
Opinion No. 25, the Company did not recognize compensation
expense for employee stock option awards for the years ended
December 31, 2005 and 2004, for those options where the
exercise price of the Companys employee stock awards
equaled the market price of the underlying stock on the date of
grant. The total income tax benefit recognized in the
consolidated statement of operations for the year ended
December 31, 2006 for stock-based compensation arrangements
was $3.6 million. Compensation cost associated with
individuals responsible for construction activities was
capitalized as part of property and equipment in the amount of
$2.1 million for the year ended December 31, 2006. For
the year ended December 31, 2006, basic and diluted
earnings per share were $0.03 lower than if the Company had
continued to account for stock-based compensation under APB
Opinion No. 25.
LVSLLC
1997 Fixed Stock Option Plan
The 1997 Plan provides for 19,952,457 shares (on a
post-split basis) of common stock of LVSLLC to be reserved for
issuance to officers and other key employees or consultants of
LVSLLC or any LVSLLC Affiliates or Subsidiaries (each as defined
in the 1997 Plan) pursuant to options granted under the 1997
Plan.
The 1997 Plan provides that the Principal Stockholder may, at
any time, assume the 1997 Plan or certain obligations under the
1997 Plan, in which case the Principal Stockholder will have all
the rights, powers and responsibilities granted LVSLLC or its
board of directors under the 1997 Plan with respect to such
assumed obligations. The Principal Stockholder assumed
LVSLLCs obligations under the 1997 Plan to sell shares to
optionees upon the exercise of their options with respect to
options granted prior to July 15, 2004. LVSLLC is
responsible for all other obligations under the 1997 Plan. LVSC
assumed all of the obligations of LVSLLC and the Principal
Stockholder under the 1997 Plan (other than the obligation of
the Principal Stockholder to issue 984,321 shares under
options granted prior to July 15, 2004), in connection with
its initial public offering.
On July 30, 2004, fully vested options to purchase
3,052,460 shares of common stock were granted to employees
of the Company by the board of directors under the
Companys stock option plan at an exercise price of
$5.64 per share. The fair value of the common stock at the
dates of grant for the stock options granted during July 2004
was originally estimated by management based principally upon a
May 31, 2004 valuation of the fair value of the common
stock of LVSLLC and its subsidiaries by an unaffiliated
valuation specialist. The Company did not deem it necessary to
obtain an additional third party valuation at the time of the
option grants in July because it had already received an
independent valuation as of a date (May 31) very close
in time to the option grant dates. However, in retrospective
review and given the proximity of the July 2004 grant dates to
the proposed initial public offering date, the Company believed
at the time it prepared its third quarter financial statements
that the fair value of its common stock of $21.77 per
share, based upon the mid-point of a preliminary estimated range
for the proposed valuation in connection with the initial public
offering, was the best estimate of the fair value of the common
stock underlying the options at their date of grant. As a
result, the intrinsic value of the fully vested options granted
during the year ended December 31, 2004 of
$49.2 million ($16.13 per share) was recorded as
compensation expense and is included in corporate expense in the
accompanying consolidated statements of operations. The
principal factors used to determine the mid-point of the
preliminary estimated range of the shares to be sold in the
Companys initial public offering were (i) the
projections of the Companys three operating properties,
The Venetian, The Sands Macao and The Sands Expo Center, and two
future projects, The Venetian Macao and The Palazzo,
(ii) the trading
106
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
multiples of gaming, hospitality and other leisure industry
companies and (iii) discount rates appropriate for
comparable projects.
The fully vested options to purchase the 3,052,460 shares
could only be exercised by the delivery of cash or check, or its
equivalent. Four employees of the Company received options to
purchase 942,820, 707,115, 471,410, and 931,115, respectively,
shares of common stock. On August 2, 2004, one employee
exercised all of the options granted to him. Another employee
exercised options granted to him to acquire 353,558 shares
of common stock on August 2, 2004 and 353,557 shares
of common stock on November 30, 2004. Another employee
exercised options granted to him to purchase 235,705 shares
of common stock on August 2, 2004 and 235,705 shares
of common stock on November 30, 2004. The final employee
exercised all of the options granted to him during 2005. The
Board of Directors agreed not to grant any additional stock
options under the 1997 Plan following the initial public
offering and there were no options outstanding under it during
the year ended December 31, 2006.
The weighted average grant date value of 3,052,460 options
granted under the 1997 Plan during 2004 was $21.44 per
share and was computed under the minimum value method with the
following weighted average assumptions; risk free interest rate
of 3.84%; no expected dividends; and an expected life of
1
/
2
year. The total intrinsic value of options exercised under the
1997 Plan during the years ended December 31, 2005 and 2004
were $38.2 million and $34.2 million, respectively.
Las
Vegas Sands Corp. 2004 Equity Award Plan
The Company adopted the 2004 Plan for grants of option to
purchase its common stock. The purpose of the 2004 Plan is to
give the Company a competitive edge in attracting, retaining,
and motivating employees, directors and consultants and to
provide the Company with a stock plan providing incentives
directly related to increases in its stockholder value. Any of
the Companys subsidiaries or affiliates
employees, directors or officers and many of its consultants are
eligible for awards under the 2004 Plan. The 2004 Plan provides
for an aggregate of 26,344,000 shares of the Companys
common stock to be available for awards. The 2004 Plan has a
term of ten years and no further awards may be granted after the
expiration of the term. The compensation committee may grant
awards of nonqualified stock options, incentive (qualified)
stock options, stock appreciation rights, restricted stock
awards, restricted stock units, stock bonus awards, performance
compensation awards or any combination of the foregoing. As of
December 31, 2006, there were 21,436,738 shares
available for grant under the 2004 Plan.
Stock option awards are granted with an exercise price equal to
the fair market value (as defined in the 2004 Plan) of the
Companys stock on the date of grant. The outstanding stock
options generally vest over four years and have
10-year
contractual terms. Compensation cost for all stock option
grants, which all have graded vesting, is net of estimated
forfeitures and is recognized on a straight-line basis over the
awards respective requisite service periods. The Company
estimates the fair value of stock options using the
Black-Scholes option-pricing model. Expected volatilities are
based on the historical volatilities from a selection of
companies from the Companys peer group due to the
Companys lack of historical information. The Company used
the simplified method for estimating expected option life, as
the options qualify as plain-vanilla options. The
risk-free interest rate for periods equal to the expected term
of the stock option is based on the U.S. Treasury yield
curve in effect at the time of grant.
The fair value of each option grant was estimated on the grant
date using the Black-Scholes option-pricing model with the
following weighted average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Weighted average volatility
|
|
|
31.25
|
%
|
|
|
31.45
|
%
|
|
|
40.00
|
%
|
Expected term (in years)
|
|
|
6.0
|
|
|
|
6.0
|
|
|
|
6.0
|
|
Risk-free rate
|
|
|
4.54
|
%
|
|
|
4.14
|
%
|
|
|
3.66
|
%
|
Expected dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
107
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The weighted average grant date fair value of 3,164,243 options,
304,820 options and 2,185,783 options granted under the 2004
Plan during the years ended December 31, 2006, 2005 and
2004, respectively, was $21.24, $13.87 and $12.78 per
share, respectively. The total intrinsic value of options
exercised under the 2004 Plan during the years ended
December 31, 2006 and 2005 was $10.3 million and
$0.1 million, respectively.
A summary of the status of the Companys 2004 Plan for the
year ended December 31, 2006 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
Life (Years)
|
|
|
Value
|
|
|
Outstanding at January 1, 2006
|
|
|
2,097,960
|
|
|
$
|
29.83
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3,164,243
|
|
|
|
53.48
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(240,912
|
)
|
|
|
30.01
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(445,789
|
)
|
|
|
35.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2006
|
|
|
4,575,502
|
|
|
$
|
45.61
|
|
|
|
8.83
|
|
|
$
|
200,727,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31,
2006
|
|
|
352,075
|
|
|
$
|
29.29
|
|
|
|
7.97
|
|
|
$
|
21,191,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Awards
A summary of the status of the Companys nonvested
restricted shares for the year ended December 31, 2006 is
presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
|
Nonvested at January 1, 2006
|
|
|
8,088
|
|
|
$
|
37.09
|
|
Granted
|
|
|
77,829
|
|
|
|
44.00
|
|
Vested
|
|
|
(8,088
|
)
|
|
|
37.09
|
|
Forfeited
|
|
|
(5,869
|
)
|
|
|
42.59
|
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2006
|
|
|
71,960
|
|
|
$
|
44.12
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006, there was $55.8 million of
unrecognized compensation cost, net of estimated forfeitures of
8.0%, related to nonvested stock options and there was
$2.1 million of unrecognized compensation cost related to
nonvested restricted stock. The stock option and restricted
stock costs are expected to be recognized over a weighted
average period of 3.2 years and 1.9 years,
respectively.
For the year ended December 31, 2006, cash received from
stock option exercises was $7.2 million and the tax benefit
realized for the tax deductions from those exercises totaled
$1.9 million. For the year ended December 31, 2005, no
cash was received from stock option exercises; however, the tax
benefit realized for the tax deduction from those exercises
totaled $8.1 million.
Note 13
Employee Benefit Plans
The Company is self-insured for health care and workers
compensation benefits for its employees. The liability for
claims filed and estimates of claims incurred but not filed is
included in other accrued liabilities in the consolidated
balance sheet.
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
108
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
tax-deferred earnings as a retirement fund. The Company matches
150% of the first $390 of employee contributions and 50% of
employee contributions in excess of $390 up to a maximum of 5%
of participating employees eligible gross wages. For the
years ended December 31, 2006, 2005 and 2004, the
Companys matching contributions under the savings plan
were $4.5 million, $3.1 million and $2.7 million,
respectively.
Participation in Venetian Macaus provident retirement fund
is available for all permanent employees after a three-month
probation period. Venetian Macau contributes 5% of each
employees basic salary to the fund and the employee is
eligible to receive 30% of these contributions after working for
three consecutive years, gradually increasing to 100% after
working for ten years. For the year ended December 31,
2006, Venetian Macaus contributions into the provident
fund were $4.9 million. No contributions were made during
2005 and 2004.
Note 14
Related Party Transactions
The Principal Stockholder is a partner in four entities that
operate restaurants in The Venetian. The terms and conditions of
the leases granted by the Company for such restaurants were at
amounts which management believed would be no more favorable
than those negotiated with independent third parties. Valentino
Las Vegas, LLC and Night Market, LLC paid The Venetian
$0.5 million and Postrio Las Vegas, LLC and Carnevale
Coffee Bar, LLC paid the Grand Canal Shops II, LLC
$0.5 million for the year ended December 31, 2004. The
Company purchased the lease interest and assets of Carnevale
Coffee Bar, LLC during 2003 for $3.1 million, payable in
installments of $0.6 million during 2003, and
$0.3 million annually over ten years, beginning in 2004
through September 1, 2013. As a result of the sale of the
Mall (See Note 10 Mall Sale), there were no
amounts paid to the Company for the years ended
December 31, 2006 and 2005 from the entities noted above.
The Company paid approximately $4.3 million,
$3.0 million and $3.1 million during the years ended
December 31, 2006, 2005 and 2004, respectively, to a travel
agent and charter tour operator for travel related services,
which is controlled by the Principal Stockholder.
During the year ended December 31, 2005, the Principal
Stockholder purchased certain banquet room and catering goods
and services from The Venetian of approximately
$1.0 million. No such goods or services were purchased
during 2006.
The Company purchased hotel guest amenities from a company that
is controlled by the Principal Stockholders brother. The
total amount paid was approximately $1.2 million,
$1.8 million and $2.4 million during the years ended
December 31, 2006, 2005 and 2004, respectively. In 2004,
the Company also paid the Principal Stockholders brother a
finders fee of $1.3 million in connection with
securing an agreement with a laundry provider.
During the years ended December 31, 2006 and 2005, the
Company incurred and paid certain expenses totaling
$1.3 million and $0.7 million, respectively, to its
Principal Stockholder related to the Companys use of his
personal aircraft for business purposes. In addition, during the
years ended December 31, 2006 and 2005, the Company charged
and received from the Principal Stockholder $3.3 million
and $1.2 million, respectively, related to aviation costs
incurred by the Company for the Principal Stockholders use
of Company aviation personnel and assets for personal purposes.
As of December 31, 2004, the Company incurred certain
expenses and had certain payables totaling $1.7 million and
$0.9 million, respectively to its Principal Stockholder
related to the Companys use of his personal aircraft for
business purposes.
109
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 15
Segment Information
The Company reviews the results of operations based on the
following geographic segments: (1) Las Vegas, which
includes The Venetian, The Sands Expo Center and The Palazzo
(currently under construction) and (2) Macao, which
includes The Sands Macao, The Venetian Macao (currently under
construction) and other development projects. In addition,
Singapore, which includes the Marina Bay Sands (currently in
development), will be reported as a separate segment. Effective
April 1, 2006, the Company changed its segments based upon
changes in the information used by the chief operating decision
maker to include The Sands Expo Center within the Las Vegas
segment. The information for the years ended December 31,
2005 and 2004 has been reclassified to conform to the current
presentation. The Companys segment information is as
follows for the three years ended December 31, 2006, 2005
and 2004 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas
|
|
$
|
959,700
|
|
|
$
|
844,313
|
|
|
$
|
799,846
|
|
Macao
|
|
|
1,277,159
|
|
|
|
896,599
|
|
|
|
397,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,236,859
|
|
|
$
|
1,740,912
|
|
|
$
|
1,197,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDAR
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas
|
|
$
|
368,570
|
|
|
$
|
323,549
|
|
|
$
|
314,759
|
|
Macao
|
|
|
455,755
|
|
|
|
341,747
|
|
|
|
159,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjusted EBITDAR
|
|
|
824,325
|
|
|
|
665,296
|
|
|
|
474,288
|
|
Other Operating Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
|
(59,570
|
)
|
|
|
(38,297
|
)
|
|
|
(126,356
|
)
|
Rental expense
|
|
|
(13,478
|
)
|
|
|
(14,841
|
)
|
|
|
(12,033
|
)
|
Depreciation and amortization
|
|
|
(110,771
|
)
|
|
|
(95,296
|
)
|
|
|
(69,432
|
)
|
Gain (loss) on disposal of assets
|
|
|
(2,624
|
)
|
|
|
(1,441
|
)
|
|
|
385,927
|
|
Pre-opening expense
|
|
|
(37,673
|
)
|
|
|
(3,732
|
)
|
|
|
(19,025
|
)
|
Development expense
|
|
|
(26,112
|
)
|
|
|
(22,238
|
)
|
|
|
(14,901
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
574,097
|
|
|
|
489,451
|
|
|
|
618,468
|
|
Other Non-Operating Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
66,191
|
|
|
|
33,111
|
|
|
|
7,740
|
|
Interest expense, net of amounts
capitalized
|
|
|
(135,853
|
)
|
|
|
(96,292
|
)
|
|
|
(138,077
|
)
|
Other expense
|
|
|
(189
|
)
|
|
|
(1,334
|
)
|
|
|
(131
|
)
|
Loss on early retirement of debt
|
|
|
|
|
|
|
(137,000
|
)
|
|
|
(6,553
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
504,246
|
|
|
|
287,936
|
|
|
|
481,447
|
|
Benefit (provision) for income
taxes
|
|
|
(62,243
|
)
|
|
|
(4,250
|
)
|
|
|
13,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
$
|
495,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Adjusted EBITDAR is net income before interest, income taxes,
depreciation and amortization, pre-opening expense, development
expense, other expense, gain (loss) on disposal of assets, loss
on early retirement of debt, rental expense and corporate
expense. Adjusted EBITDAR is used by management as the primary
measure of operating performance of its properties and to
compare the operating performance of its properties with those
of its competitors.
|
110
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Sands Corp. and Other
|
|
$
|
49,506
|
|
|
$
|
529
|
|
|
$
|
40,032
|
|
Las Vegas:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian
|
|
|
109,119
|
|
|
|
138,015
|
|
|
|
117,578
|
|
The Palazzo
|
|
|
530,455
|
|
|
|
333,835
|
|
|
|
110,342
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Sands Macao
|
|
|
98,498
|
|
|
|
39,486
|
|
|
|
190,049
|
|
The Venetian Macao
|
|
|
1,023,861
|
|
|
|
348,305
|
|
|
|
7,747
|
|
Other Development Projects
|
|
|
100,695
|
|
|
|
451
|
|
|
|
|
|
Singapore
|
|
|
13,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures
|
|
$
|
1,925,291
|
|
|
$
|
860,621
|
|
|
$
|
465,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
Las Vegas Sands Corp. and Other
|
|
$
|
209,701
|
|
|
$
|
307,679
|
|
Las Vegas:
|
|
|
|
|
|
|
|
|
The Venetian
|
|
|
1,991,566
|
|
|
|
2,080,931
|
|
The Palazzo
|
|
|
1,179,157
|
|
|
|
605,320
|
|
Macao:
|
|
|
|
|
|
|
|
|
The Sands Macao
|
|
|
537,990
|
|
|
|
425,597
|
|
The Venetian Macao
|
|
|
2,138,535
|
|
|
|
459,333
|
|
Other Development Projects
|
|
|
170,441
|
|
|
|
879
|
|
Singapore
|
|
|
899,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated assets
|
|
$
|
7,126,458
|
|
|
$
|
3,879,739
|
|
|
|
|
|
|
|
|
|
|
Note 16
Dividends
Immediately prior to the July 29, 2004 acquisition of
Interface by LVSLLC, Interface distributed approximately
$15.2 million to its sole stockholder, who is also the
Principal Stockholder of LVSC. The distribution was comprised of
$12.9 million of cash, $1.9 million of receivables due
from the Principal Stockholder and $0.4 million of certain
fixed and other assets. Additionally, as further described in
Note 2 Summary of Significant Accounting
Policies, the Company declared tax distributions to its
stockholders of $129.0 million during 2004. There were no
dividends declared during 2006 and 2005.
Note 17
Condensed Consolidating Financial Information
LVSC is the obligor under the 6.375% Senior Notes due 2015
issued by LVSC on February 10, 2005. LVSLLC, Venetian
Casino Resort, LLC, Mall Intermediate Holding Company, LLC,
Venetian Venture Development, LLC, Venetian Transport, LLC,
Venetian Marketing, Inc., Lido Intermediate Holding Company, LLC
and Lido Casino Resort, LLC (collectively, the Guarantor
Subsidiaries) have jointly and severally guaranteed the
6.375% Senior Notes on a full and unconditional basis.
The condensed consolidating financial information of the
Company, the Guarantor Subsidiaries and the non-guarantor
subsidiaries on a combined basis as of December 31, 2006
and 2005, and for each of the three years in the period ended
December 31, 2006, is as follows (in thousands).
111
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING BALANCE SHEETS
December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
69,100
|
|
|
$
|
84,581
|
|
|
$
|
314,385
|
|
|
$
|
|
|
|
$
|
468,066
|
|
Restricted cash
|
|
|
50,076
|
|
|
|
67,742
|
|
|
|
280,944
|
|
|
|
|
|
|
|
398,762
|
|
Intercompany receivables
|
|
|
170,844
|
|
|
|
59,004
|
|
|
|
|
|
|
|
(229,848
|
)
|
|
|
|
|
Accounts receivable, net
|
|
|
137
|
|
|
|
120,707
|
|
|
|
52,839
|
|
|
|
|
|
|
|
173,683
|
|
Intercompany notes receivable
|
|
|
73,154
|
|
|
|
52,736
|
|
|
|
|
|
|
|
(125,890
|
)
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
10,100
|
|
|
|
2,191
|
|
|
|
|
|
|
|
12,291
|
|
Deferred income taxes
|
|
|
1,583
|
|
|
|
14,171
|
|
|
|
|
|
|
|
(66
|
)
|
|
|
15,688
|
|
Prepaid expenses and other
|
|
|
1,793
|
|
|
|
7,826
|
|
|
|
15,448
|
|
|
|
|
|
|
|
25,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
366,687
|
|
|
|
416,867
|
|
|
|
665,807
|
|
|
|
(355,804
|
)
|
|
|
1,093,557
|
|
Property and equipment, net
|
|
|
85,758
|
|
|
|
2,231,110
|
|
|
|
2,265,457
|
|
|
|
|
|
|
|
4,582,325
|
|
Investment in subsidiaries
|
|
|
1,919,079
|
|
|
|
831,931
|
|
|
|
|
|
|
|
(2,751,010
|
)
|
|
|
|
|
Deferred financing costs, net
|
|
|
1,176
|
|
|
|
23,113
|
|
|
|
46,092
|
|
|
|
|
|
|
|
70,381
|
|
Restricted cash
|
|
|
|
|
|
|
328,556
|
|
|
|
226,576
|
|
|
|
|
|
|
|
555,132
|
|
Deferred income taxes
|
|
|
|
|
|
|
907
|
|
|
|
4,141
|
|
|
|
(5,048
|
)
|
|
|
|
|
Leasehold interest in land, net
|
|
|
|
|
|
|
|
|
|
|
801,195
|
|
|
|
|
|
|
|
801,195
|
|
Other assets, net
|
|
|
78
|
|
|
|
12,468
|
|
|
|
11,322
|
|
|
|
|
|
|
|
23,868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,372,778
|
|
|
$
|
3,844,952
|
|
|
$
|
4,020,590
|
|
|
$
|
(3,111,862
|
)
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
884
|
|
|
$
|
26,749
|
|
|
$
|
23,405
|
|
|
$
|
|
|
|
$
|
51,038
|
|
Construction payables
|
|
|
674
|
|
|
|
67,068
|
|
|
|
261,633
|
|
|
|
|
|
|
|
329,375
|
|
Intercompany payables
|
|
|
|
|
|
|
43,261
|
|
|
|
186,587
|
|
|
|
(229,848
|
)
|
|
|
|
|
Accrued interest payable
|
|
|
5,977
|
|
|
|
763
|
|
|
|
1,756
|
|
|
|
|
|
|
|
8,496
|
|
Other accrued liabilities
|
|
|
13,231
|
|
|
|
138,312
|
|
|
|
167,358
|
|
|
|
|
|
|
|
318,901
|
|
Intercompany notes payable
|
|
|
|
|
|
|
|
|
|
|
125,890
|
|
|
|
(125,890
|
)
|
|
|
|
|
Income taxes payable
|
|
|
20,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,352
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
(66
|
)
|
|
|
|
|
Current maturities of long-term
debt
|
|
|
|
|
|
|
1,800
|
|
|
|
4,686
|
|
|
|
|
|
|
|
6,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
41,118
|
|
|
|
277,953
|
|
|
|
771,381
|
|
|
|
(355,804
|
)
|
|
|
734,648
|
|
Other long-term liabilities
|
|
|
2,981
|
|
|
|
174,675
|
|
|
|
2,524
|
|
|
|
|
|
|
|
180,180
|
|
Deferred income taxes
|
|
|
5,372
|
|
|
|
|
|
|
|
|
|
|
|
(5,048
|
)
|
|
|
324
|
|
Long-term debt
|
|
|
248,153
|
|
|
|
1,473,245
|
|
|
|
2,414,754
|
|
|
|
|
|
|
|
4,136,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
297,624
|
|
|
|
1,925,873
|
|
|
|
3,188,659
|
|
|
|
(360,852
|
)
|
|
|
5,051,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
2,075,154
|
|
|
|
1,919,079
|
|
|
|
831,931
|
|
|
|
(2,751,010
|
)
|
|
|
2,075,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
and liabilities
|
|
$
|
2,372,778
|
|
|
$
|
3,844,952
|
|
|
$
|
4,020,590
|
|
|
$
|
(3,111,862
|
)
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING BALANCE SHEETS
December 31,
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Cash and cash equivalents
|
|
$
|
202,196
|
|
|
$
|
87,173
|
|
|
$
|
167,477
|
|
|
$
|
|
|
|
$
|
456,846
|
|
Restricted cash
|
|
|
50,052
|
|
|
|
3
|
|
|
|
21,662
|
|
|
|
|
|
|
|
71,717
|
|
Intercompany receivables
|
|
|
2,207
|
|
|
|
3,373
|
|
|
|
4,195
|
|
|
|
(9,775
|
)
|
|
|
|
|
Accounts receivable, net
|
|
|
245
|
|
|
|
81,204
|
|
|
|
3,329
|
|
|
|
|
|
|
|
84,778
|
|
Intercompany notes receivable
|
|
|
121,784
|
|
|
|
|
|
|
|
|
|
|
|
(121,784
|
)
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
8,584
|
|
|
|
1,383
|
|
|
|
|
|
|
|
9,967
|
|
Deferred income taxes
|
|
|
11,748
|
|
|
|
(2,871
|
)
|
|
|
(931
|
)
|
|
|
|
|
|
|
7,946
|
|
Prepaid expenses and other
|
|
|
436
|
|
|
|
6,141
|
|
|
|
6,875
|
|
|
|
|
|
|
|
13,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
388,668
|
|
|
|
183,607
|
|
|
|
203,990
|
|
|
|
(131,559
|
)
|
|
|
644,706
|
|
Property and equipment, net
|
|
|
38,471
|
|
|
|
1,744,352
|
|
|
|
817,645
|
|
|
|
|
|
|
|
2,600,468
|
|
Investment in subsidiaries
|
|
|
1,441,500
|
|
|
|
480,619
|
|
|
|
|
|
|
|
(1,922,119
|
)
|
|
|
|
|
Deferred financing costs, net
|
|
|
1,322
|
|
|
|
26,442
|
|
|
|
3,209
|
|
|
|
|
|
|
|
30,973
|
|
Restricted cash
|
|
|
|
|
|
|
571,143
|
|
|
|
|
|
|
|
|
|
|
|
571,143
|
|
Deferred income taxes
|
|
|
3,130
|
|
|
|
5,852
|
|
|
|
2,350
|
|
|
|
|
|
|
|
11,332
|
|
Other assets, net
|
|
|
79
|
|
|
|
12,485
|
|
|
|
8,553
|
|
|
|
|
|
|
|
21,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,873,170
|
|
|
$
|
3,024,500
|
|
|
$
|
1,035,747
|
|
|
$
|
(2,053,678
|
)
|
|
$
|
3,879,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
50
|
|
|
$
|
20,614
|
|
|
$
|
14,139
|
|
|
$
|
|
|
|
$
|
34,803
|
|
Construction payables
|
|
|
|
|
|
|
54,234
|
|
|
|
109,698
|
|
|
|
|
|
|
|
163,932
|
|
Intercompany payables
|
|
|
|
|
|
|
|
|
|
|
9,775
|
|
|
|
(9,775
|
)
|
|
|
|
|
Accrued interest payable
|
|
|
5,977
|
|
|
|
1,157
|
|
|
|
784
|
|
|
|
|
|
|
|
7,918
|
|
Other accrued liabilities
|
|
|
8,053
|
|
|
|
116,029
|
|
|
|
122,308
|
|
|
|
|
|
|
|
246,390
|
|
Intercompany notes payable
|
|
|
|
|
|
|
|
|
|
|
121,784
|
|
|
|
(121,784
|
)
|
|
|
|
|
Current maturities of long-term
debt
|
|
|
|
|
|
|
2,400
|
|
|
|
4,925
|
|
|
|
|
|
|
|
7,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
14,080
|
|
|
|
194,434
|
|
|
|
383,413
|
|
|
|
(131,559
|
)
|
|
|
460,368
|
|
Other long-term liabilities
|
|
|
1,627
|
|
|
|
179,766
|
|
|
|
2,539
|
|
|
|
|
|
|
|
183,932
|
|
Long-term debt
|
|
|
247,925
|
|
|
|
1,208,800
|
|
|
|
169,176
|
|
|
|
|
|
|
|
1,625,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
263,632
|
|
|
|
1,583,000
|
|
|
|
555,128
|
|
|
|
(131,559
|
)
|
|
|
2,270,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
1,609,538
|
|
|
|
1,441,500
|
|
|
|
480,619
|
|
|
|
(1,922,119
|
)
|
|
|
1,609,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
and liabilities
|
|
$
|
1,873,170
|
|
|
$
|
3,024,500
|
|
|
$
|
1,035,747
|
|
|
$
|
(2,053,678
|
)
|
|
$
|
3,879,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
For the
year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
|
$
|
411,771
|
|
|
$
|
1,264,290
|
|
|
$
|
|
|
|
$
|
1,676,061
|
|
Rooms
|
|
|
|
|
|
|
343,995
|
|
|
|
6,611
|
|
|
|
|
|
|
|
350,606
|
|
Food and beverage
|
|
|
|
|
|
|
141,284
|
|
|
|
51,129
|
|
|
|
(4,594
|
)
|
|
|
187,819
|
|
Convention, retail and other
|
|
|
33,408
|
|
|
|
55,842
|
|
|
|
72,275
|
|
|
|
(35,833
|
)
|
|
|
125,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
33,408
|
|
|
|
952,892
|
|
|
|
1,394,305
|
|
|
|
(40,427
|
)
|
|
|
2,340,178
|
|
Less promotional
allowances
|
|
|
(625
|
)
|
|
|
(66,140
|
)
|
|
|
(36,554
|
)
|
|
|
|
|
|
|
(103,319
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
32,783
|
|
|
|
886,752
|
|
|
|
1,357,751
|
|
|
|
(40,427
|
)
|
|
|
2,236,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
|
187,431
|
|
|
|
737,839
|
|
|
|
(237
|
)
|
|
|
925,033
|
|
Rooms
|
|
|
|
|
|
|
85,420
|
|
|
|
231
|
|
|
|
|
|
|
|
85,651
|
|
Food and beverage
|
|
|
|
|
|
|
66,524
|
|
|
|
24,107
|
|
|
|
(1,518
|
)
|
|
|
89,113
|
|
Convention, retail and other
|
|
|
|
|
|
|
34,464
|
|
|
|
35,036
|
|
|
|
(5,185
|
)
|
|
|
64,315
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
17,645
|
|
|
|
422
|
|
|
|
|
|
|
|
18,067
|
|
General and administrative
|
|
|
|
|
|
|
178,682
|
|
|
|
85,160
|
|
|
|
(33,487
|
)
|
|
|
230,355
|
|
Corporate expense
|
|
|
59,220
|
|
|
|
|
|
|
|
350
|
|
|
|
|
|
|
|
59,570
|
|
Rental expense
|
|
|
|
|
|
|
11,841
|
|
|
|
1,637
|
|
|
|
|
|
|
|
13,478
|
|
Pre-opening expense
|
|
|
|
|
|
|
1,369
|
|
|
|
36,304
|
|
|
|
|
|
|
|
37,673
|
|
Development expense
|
|
|
3,280
|
|
|
|
(35
|
)
|
|
|
22,867
|
|
|
|
|
|
|
|
26,112
|
|
Depreciation and amortization
|
|
|
2,906
|
|
|
|
64,567
|
|
|
|
43,298
|
|
|
|
|
|
|
|
110,771
|
|
Loss on disposal of assets
|
|
|
|
|
|
|
684
|
|
|
|
1,940
|
|
|
|
|
|
|
|
2,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,406
|
|
|
|
648,592
|
|
|
|
989,191
|
|
|
|
(40,427
|
)
|
|
|
1,662,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(32,623
|
)
|
|
|
238,160
|
|
|
|
368,560
|
|
|
|
|
|
|
|
574,097
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
12,457
|
|
|
|
31,571
|
|
|
|
30,186
|
|
|
|
(8,023
|
)
|
|
|
66,191
|
|
Interest expense, net of amounts
capitalized
|
|
|
(16,921
|
)
|
|
|
(73,615
|
)
|
|
|
(53,340
|
)
|
|
|
8,023
|
|
|
|
(135,853
|
)
|
Other income (expense)
|
|
|
2,422
|
|
|
|
(478
|
)
|
|
|
(2,133
|
)
|
|
|
|
|
|
|
(189
|
)
|
Income from equity investment in
subsidiaries
|
|
|
470,823
|
|
|
|
342,579
|
|
|
|
|
|
|
|
(813,402
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
436,158
|
|
|
|
538,217
|
|
|
|
343,273
|
|
|
|
(813,402
|
)
|
|
|
504,246
|
|
Benefit (provision) for income
taxes
|
|
|
5,845
|
|
|
|
(67,394
|
)
|
|
|
(694
|
)
|
|
|
|
|
|
|
(62,243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
442,003
|
|
|
$
|
470,823
|
|
|
$
|
342,579
|
|
|
$
|
(813,402
|
)
|
|
$
|
442,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
For the
year ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
|
$
|
367,915
|
|
|
$
|
882,175
|
|
|
$
|
|
|
|
$
|
1,250,090
|
|
Rooms
|
|
|
|
|
|
|
318,830
|
|
|
|
4,730
|
|
|
|
|
|
|
|
323,560
|
|
Food and beverage
|
|
|
|
|
|
|
119,301
|
|
|
|
31,108
|
|
|
|
(2,899
|
)
|
|
|
147,510
|
|
Convention, retail and other
|
|
|
17,909
|
|
|
|
39,047
|
|
|
|
65,328
|
|
|
|
(19,219
|
)
|
|
|
103,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
17,909
|
|
|
|
845,093
|
|
|
|
983,341
|
|
|
|
(22,118
|
)
|
|
|
1,824,225
|
|
Less promotional
allowances
|
|
|
(762
|
)
|
|
|
(56,951
|
)
|
|
|
(25,600
|
)
|
|
|
|
|
|
|
(83,313
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
17,147
|
|
|
|
788,142
|
|
|
|
957,741
|
|
|
|
(22,118
|
)
|
|
|
1,740,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
|
166,912
|
|
|
|
489,678
|
|
|
|
|
|
|
|
656,590
|
|
Rooms
|
|
|
|
|
|
|
81,778
|
|
|
|
280
|
|
|
|
|
|
|
|
82,058
|
|
Food and beverage
|
|
|
|
|
|
|
62,819
|
|
|
|
14,172
|
|
|
|
(255
|
)
|
|
|
76,736
|
|
Convention, retail and other
|
|
|
|
|
|
|
29,317
|
|
|
|
32,705
|
|
|
|
(3,954
|
)
|
|
|
58,068
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
9,101
|
|
|
|
257
|
|
|
|
|
|
|
|
9,358
|
|
General and administrative
|
|
|
|
|
|
|
148,043
|
|
|
|
62,672
|
|
|
|
(17,909
|
)
|
|
|
192,806
|
|
Corporate expense
|
|
|
38,200
|
|
|
|
|
|
|
|
97
|
|
|
|
|
|
|
|
38,297
|
|
Rental expense
|
|
|
|
|
|
|
13,280
|
|
|
|
1,561
|
|
|
|
|
|
|
|
14,841
|
|
Pre-opening expense
|
|
|
|
|
|
|
678
|
|
|
|
3,054
|
|
|
|
|
|
|
|
3,732
|
|
Development expense
|
|
|
646
|
|
|
|
217
|
|
|
|
21,375
|
|
|
|
|
|
|
|
22,238
|
|
Depreciation and amortization
|
|
|
2,037
|
|
|
|
64,954
|
|
|
|
28,305
|
|
|
|
|
|
|
|
95,296
|
|
Loss on disposal of assets
|
|
|
|
|
|
|
1,117
|
|
|
|
324
|
|
|
|
|
|
|
|
1,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,883
|
|
|
|
578,216
|
|
|
|
654,480
|
|
|
|
(22,118
|
)
|
|
|
1,251,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(23,736
|
)
|
|
|
209,926
|
|
|
|
303,261
|
|
|
|
|
|
|
|
489,451
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
12,365
|
|
|
|
20,005
|
|
|
|
9,775
|
|
|
|
(9,034
|
)
|
|
|
33,111
|
|
Interest expense, net of amounts
capitalized
|
|
|
(9,178
|
)
|
|
|
(71,271
|
)
|
|
|
(24,877
|
)
|
|
|
9,034
|
|
|
|
(96,292
|
)
|
Other expense
|
|
|
|
|
|
|
(1,211
|
)
|
|
|
(123
|
)
|
|
|
|
|
|
|
(1,334
|
)
|
Loss on early retirement of debt
|
|
|
|
|
|
|
(132,834
|
)
|
|
|
(4,166
|
)
|
|
|
|
|
|
|
(137,000
|
)
|
Income from equity investment in
subsidiaries
|
|
|
298,967
|
|
|
|
284,534
|
|
|
|
|
|
|
|
(583,501
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
278,418
|
|
|
|
309,149
|
|
|
|
283,870
|
|
|
|
(583,501
|
)
|
|
|
287,936
|
|
Benefit (provision) for income
taxes
|
|
|
5,268
|
|
|
|
(10,182
|
)
|
|
|
664
|
|
|
|
|
|
|
|
(4,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
283,686
|
|
|
$
|
298,967
|
|
|
$
|
284,534
|
|
|
$
|
(583,501
|
)
|
|
$
|
283,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
For the
year ended December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
|
$
|
320,990
|
|
|
$
|
387,574
|
|
|
$
|
|
|
|
$
|
708,564
|
|
Rooms
|
|
|
|
|
|
|
311,680
|
|
|
|
323
|
|
|
|
|
|
|
|
312,003
|
|
Food and beverage
|
|
|
|
|
|
|
108,511
|
|
|
|
15,896
|
|
|
|
(2,841
|
)
|
|
|
121,566
|
|
Convention, retail and other
|
|
|
|
|
|
|
41,037
|
|
|
|
78,597
|
|
|
|
(3,197
|
)
|
|
|
116,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
782,218
|
|
|
|
482,390
|
|
|
|
(6,038
|
)
|
|
|
1,258,570
|
|
Less promotional
allowances
|
|
|
|
|
|
|
(53,210
|
)
|
|
|
(8,304
|
)
|
|
|
|
|
|
|
(61,514
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
|
|
|
|
729,008
|
|
|
|
474,086
|
|
|
|
(6,038
|
)
|
|
|
1,197,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
|
143,925
|
|
|
|
196,427
|
|
|
|
(111
|
)
|
|
|
340,241
|
|
Rooms
|
|
|
|
|
|
|
77,108
|
|
|
|
141
|
|
|
|
|
|
|
|
77,249
|
|
Food and beverage
|
|
|
|
|
|
|
55,599
|
|
|
|
10,367
|
|
|
|
(1,790
|
)
|
|
|
64,176
|
|
Convention, retail and other
|
|
|
|
|
|
|
25,763
|
|
|
|
37,561
|
|
|
|
(3,269
|
)
|
|
|
60,055
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
7,959
|
|
|
|
|
|
|
|
|
|
|
|
7,959
|
|
General and administrative
|
|
|
|
|
|
|
128,535
|
|
|
|
44,953
|
|
|
|
(400
|
)
|
|
|
173,088
|
|
Corporate expense
|
|
|
|
|
|
|
62,793
|
|
|
|
64,031
|
|
|
|
(468
|
)
|
|
|
126,356
|
|
Rental expense
|
|
|
|
|
|
|
9,869
|
|
|
|
2,164
|
|
|
|
|
|
|
|
12,033
|
|
Pre-opening expense
|
|
|
|
|
|
|
995
|
|
|
|
18,030
|
|
|
|
|
|
|
|
19,025
|
|
Development expense
|
|
|
|
|
|
|
3,741
|
|
|
|
11,160
|
|
|
|
|
|
|
|
14,901
|
|
Depreciation and amortization
|
|
|
|
|
|
|
51,524
|
|
|
|
17,908
|
|
|
|
|
|
|
|
69,432
|
|
Loss on disposal of assets
|
|
|
|
|
|
|
31,536
|
|
|
|
113
|
|
|
|
|
|
|
|
31,649
|
|
Gain on sale of The Grand Canal
Shops
|
|
|
|
|
|
|
(417,576
|
)
|
|
|
|
|
|
|
|
|
|
|
(417,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,771
|
|
|
|
402,855
|
|
|
|
(6,038
|
)
|
|
|
578,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
547,237
|
|
|
|
71,231
|
|
|
|
|
|
|
|
618,468
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
506
|
|
|
|
7,114
|
|
|
|
4,924
|
|
|
|
(4,804
|
)
|
|
|
7,740
|
|
Interest expense, net of amounts
capitalized
|
|
|
|
|
|
|
(119,983
|
)
|
|
|
(22,898
|
)
|
|
|
4,804
|
|
|
|
(138,077
|
)
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
(131
|
)
|
|
|
|
|
|
|
(131
|
)
|
Loss on early retirement of debt
|
|
|
|
|
|
|
(5,406
|
)
|
|
|
(1,147
|
)
|
|
|
|
|
|
|
(6,553
|
)
|
Preferred return on Redeemable
Preferred Interest in Venetian Casino
Resort, LLC
|
|
|
|
|
|
|
(16,826
|
)
|
|
|
16,826
|
|
|
|
|
|
|
|
|
|
Income from equity investment in
subsidiaries
|
|
|
494,677
|
|
|
|
69,572
|
|
|
|
|
|
|
|
(564,249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
495,183
|
|
|
|
481,708
|
|
|
|
68,805
|
|
|
|
(564,249
|
)
|
|
|
481,447
|
|
Benefit for income taxes
|
|
|
|
|
|
|
12,969
|
|
|
|
767
|
|
|
|
|
|
|
|
13,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
495,183
|
|
|
$
|
494,677
|
|
|
$
|
69,572
|
|
|
$
|
(564,249
|
)
|
|
$
|
495,183
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the
year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Net cash provided by (used in)
operating activities
|
|
$
|
(28,167
|
)
|
|
$
|
182,485
|
|
|
$
|
(351,038
|
)
|
|
$
|
|
|
|
$
|
(196,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(24
|
)
|
|
|
174,848
|
|
|
|
(485,389
|
)
|
|
|
|
|
|
|
(310,565
|
)
|
Capital expenditures
|
|
|
(49,519
|
)
|
|
|
(542,665
|
)
|
|
|
(1,333,107
|
)
|
|
|
|
|
|
|
(1,925,291
|
)
|
Notes receivable to Non-Guarantor
Subsidiaries
|
|
|
(115,000
|
)
|
|
|
(75,000
|
)
|
|
|
|
|
|
|
190,000
|
|
|
|
|
|
Repayment of notes receivable from
Non-Guarantor Subsidiaries
|
|
|
165,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
(190,000
|
)
|
|
|
|
|
Intercompany receivable to Las
Vegas Sands Corp.
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
(20,000
|
)
|
|
|
|
|
Repayment of receivable from Las
Vegas Sands Corp.
|
|
|
|
|
|
|
(20,000
|
)
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Intercompany receivable to
Non-Guarantor Subsidiaries
|
|
|
(104,464
|
)
|
|
|
(31,408
|
)
|
|
|
|
|
|
|
135,872
|
|
|
|
|
|
Capital contributions to
subsidiaries
|
|
|
(9,549
|
)
|
|
|
(6,993
|
)
|
|
|
|
|
|
|
16,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
investing activities
|
|
|
(113,556
|
)
|
|
|
(456,218
|
)
|
|
|
(1,818,496
|
)
|
|
|
152,414
|
|
|
|
(2,235,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock
options
|
|
|
7,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,226
|
|
Tax benefit from stock option
exercises
|
|
|
1,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,401
|
|
Capital contributions received
|
|
|
|
|
|
|
9,549
|
|
|
|
6,993
|
|
|
|
(16,542
|
)
|
|
|
|
|
Borrowings from Las Vegas Sands
Corp.
|
|
|
|
|
|
|
|
|
|
|
219,464
|
|
|
|
(219,464
|
)
|
|
|
|
|
Borrowings from Guarantor
Subsidiaries
|
|
|
20,000
|
|
|
|
|
|
|
|
106,408
|
|
|
|
(126,408
|
)
|
|
|
|
|
Repayment on borrowings from
Guarantor Subsidiaries
|
|
|
(20,000
|
)
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
45,000
|
|
|
|
|
|
Repayment on borrowings from Las
Vegas Sands Corp.
|
|
|
|
|
|
|
|
|
|
|
(165,000
|
)
|
|
|
165,000
|
|
|
|
|
|
Proceeds from Macao credit facility
|
|
|
|
|
|
|
|
|
|
|
1,350,000
|
|
|
|
|
|
|
|
1,350,000
|
|
Proceeds from Singapore credit
facility
|
|
|
|
|
|
|
|
|
|
|
892,076
|
|
|
|
|
|
|
|
892,076
|
|
Proceeds from senior secured credit
facility-revolver
|
|
|
|
|
|
|
254,129
|
|
|
|
|
|
|
|
|
|
|
|
254,129
|
|
Proceeds from phase II mall
construction loan
|
|
|
|
|
|
|
|
|
|
|
86,000
|
|
|
|
|
|
|
|
86,000
|
|
Proceeds from FF&E credit
facility and other long-term debt
|
|
|
|
|
|
|
37,715
|
|
|
|
75
|
|
|
|
|
|
|
|
37,790
|
|
Repayments on Venetian Intermediate
credit facility
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
(50,000
|
)
|
Repayments on Macao credit facility
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
(50,000
|
)
|
Repayment on senior secured credit
facility-revolver
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(25,000
|
)
|
Repayments on FF&E credit
facility and other long-term debt
|
|
|
|
|
|
|
(2,999
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
(3,013
|
)
|
Repayments on The Sands Expo Center
mortgage loan
|
|
|
|
|
|
|
|
|
|
|
(4,733
|
)
|
|
|
|
|
|
|
(4,733
|
)
|
Payments of deferred financing costs
|
|
|
|
|
|
|
(2,253
|
)
|
|
|
(50,641
|
)
|
|
|
|
|
|
|
(52,894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities
|
|
|
8,627
|
|
|
|
271,141
|
|
|
|
2,315,628
|
|
|
|
(152,414
|
)
|
|
|
2,442,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
814
|
|
|
|
|
|
|
|
814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
(133,096
|
)
|
|
|
(2,592
|
)
|
|
|
146,908
|
|
|
|
|
|
|
|
11,220
|
|
Cash and cash equivalents at
beginning of year
|
|
|
202,196
|
|
|
|
87,173
|
|
|
|
167,477
|
|
|
|
|
|
|
|
456,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of
year
|
|
$
|
69,100
|
|
|
$
|
84,581
|
|
|
$
|
314,385
|
|
|
$
|
|
|
|
$
|
468,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the year ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Net cash provided by (used in)
operating activities
|
|
$
|
(4,102
|
)
|
|
$
|
218,117
|
|
|
$
|
375,901
|
|
|
$
|
|
|
|
$
|
589,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(50,052
|
)
|
|
|
(213,007
|
)
|
|
|
(2,327
|
)
|
|
|
|
|
|
|
(265,386
|
)
|
Capital expenditures
|
|
|
(1,217
|
)
|
|
|
(429,103
|
)
|
|
|
(430,301
|
)
|
|
|
|
|
|
|
(860,621
|
)
|
Capital contributions to
subsidiaries
|
|
|
(564,260
|
)
|
|
|
(63,741
|
)
|
|
|
|
|
|
|
628,001
|
|
|
|
|
|
Note receivable from Las Vegas
Sands Corp.
|
|
|
(121,784
|
)
|
|
|
|
|
|
|
|
|
|
|
121,784
|
|
|
|
|
|
Intercompany payment for airplane
transfer
|
|
|
(40,000
|
)
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
(777,313
|
)
|
|
|
(665,851
|
)
|
|
|
(432,628
|
)
|
|
|
749,785
|
|
|
|
(1,126,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction costs, initial public
offering
|
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
Dividends paid to shareholders
|
|
|
|
|
|
|
(21,052
|
)
|
|
|
|
|
|
|
|
|
|
|
(21,052
|
)
|
Proceeds from exercise of stock
options
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
Capital contributions received
|
|
|
|
|
|
|
564,260
|
|
|
|
63,741
|
|
|
|
(628,001
|
)
|
|
|
|
|
Borrowings from Las Vegas Sands
Corp.
|
|
|
|
|
|
|
|
|
|
|
121,784
|
|
|
|
(121,784
|
)
|
|
|
|
|
Repayments on 11% mortgage notes
|
|
|
|
|
|
|
(843,640
|
)
|
|
|
|
|
|
|
|
|
|
|
(843,640
|
)
|
Proceeds from 6.375% senior
note, net of discount
|
|
|
247,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,722
|
|
Proceeds from senior secured credit
facility-term B
|
|
|
|
|
|
|
305,000
|
|
|
|
|
|
|
|
|
|
|
|
305,000
|
|
Proceeds from senior secured credit
facility-term B delayed
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
Proceeds from phase II mall
construction loan
|
|
|
|
|
|
|
|
|
|
|
28,500
|
|
|
|
|
|
|
|
28,500
|
|
Repayments on Venetian Macao senior
secured notes-tranches A and B
|
|
|
|
|
|
|
|
|
|
|
(120,000
|
)
|
|
|
|
|
|
|
(120,000
|
)
|
Proceeds from senior secured credit
facility-revolver
|
|
|
|
|
|
|
31,000
|
|
|
|
|
|
|
|
|
|
|
|
31,000
|
|
Repayments on FF&E credit
facility
|
|
|
|
|
|
|
(1,800
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,800
|
)
|
Repayments on The Sands Expo Center
mortgage loan
|
|
|
|
|
|
|
|
|
|
|
(3,687
|
)
|
|
|
|
|
|
|
(3,687
|
)
|
Repurchase premiums incurred in
connection with refinancing transactions
|
|
|
|
|
|
|
(113,311
|
)
|
|
|
|
|
|
|
|
|
|
|
(113,311
|
)
|
Payments of deferred financing costs
|
|
|
(1,438
|
)
|
|
|
(9,783
|
)
|
|
|
(55
|
)
|
|
|
|
|
|
|
(11,276
|
)
|
Net change in intercompany accounts
|
|
|
(7,426
|
)
|
|
|
35,895
|
|
|
|
(28,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in)
financing activities
|
|
|
238,684
|
|
|
|
146,569
|
|
|
|
61,814
|
|
|
|
(749,785
|
)
|
|
|
(302,718
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
757
|
|
|
|
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
|
|
(542,731
|
)
|
|
|
(301,165
|
)
|
|
|
5,844
|
|
|
|
|
|
|
|
(838,052
|
)
|
Cash and cash equivalents at
beginning of year
|
|
|
744,927
|
|
|
|
388,338
|
|
|
|
161,633
|
|
|
|
|
|
|
|
1,294,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of
year
|
|
$
|
202,196
|
|
|
$
|
87,173
|
|
|
$
|
167,477
|
|
|
$
|
|
|
|
$
|
456,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the year ended December 31, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Net cash provided by operating
activities
|
|
$
|
515
|
|
|
$
|
156,232
|
|
|
$
|
216,622
|
|
|
$
|
|
|
|
$
|
373,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of The Grand
Canal Shops, net of transaction costs
|
|
|
|
|
|
|
649,568
|
|
|
|
|
|
|
|
|
|
|
|
649,568
|
|
Change in restricted cash
|
|
|
|
|
|
|
(356,018
|
)
|
|
|
120,343
|
|
|
|
|
|
|
|
(235,675
|
)
|
Notes receivable from stockholders
|
|
|
|
|
|
|
843
|
|
|
|
(638
|
)
|
|
|
|
|
|
|
205
|
|
Capital expenditures
|
|
|
|
|
|
|
(210,926
|
)
|
|
|
(254,822
|
)
|
|
|
|
|
|
|
(465,748
|
)
|
Capital contributions to
subsidiaries
|
|
|
|
|
|
|
(183,895
|
)
|
|
|
|
|
|
|
183,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing
activities
|
|
|
|
|
|
|
(100,428
|
)
|
|
|
(135,117
|
)
|
|
|
183,895
|
|
|
|
(51,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from initial public
offering of common stock, net of transaction costs
|
|
|
739,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
739,193
|
|
Dividends paid to shareholders
|
|
|
|
|
|
|
(112,107
|
)
|
|
|
(12,920
|
)
|
|
|
|
|
|
|
(125,027
|
)
|
Proceeds from exercise of stock
options
|
|
|
|
|
|
|
11,964
|
|
|
|
|
|
|
|
|
|
|
|
11,964
|
|
Contributions from shareholders
|
|
|
|
|
|
|
|
|
|
|
420
|
|
|
|
|
|
|
|
420
|
|
Capital contribution from Venetian
Casino Resort, LLC
|
|
|
|
|
|
|
|
|
|
|
94,882
|
|
|
|
(94,882
|
)
|
|
|
|
|
Capital contribution from Las Vegas
Sands, Inc.
|
|
|
|
|
|
|
|
|
|
|
89,013
|
|
|
|
(89,013
|
)
|
|
|
|
|
Repayments on 11% mortgage notes
|
|
|
|
|
|
|
(6,360
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,360
|
)
|
Repayments on secured mall facility
|
|
|
|
|
|
|
|
|
|
|
(120,000
|
)
|
|
|
|
|
|
|
(120,000
|
)
|
Repayments on senior secured credit
facility-term A and B
|
|
|
|
|
|
|
(294,583
|
)
|
|
|
|
|
|
|
|
|
|
|
(294,583
|
)
|
Proceeds from senior secured credit
facility-term B
|
|
|
|
|
|
|
665,000
|
|
|
|
|
|
|
|
|
|
|
|
665,000
|
|
Proceeds from Venetian Macao
Limited revolver
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
10,000
|
|
Repayments on Venetian Macao
Limited revolver
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
(10,000
|
)
|
Proceeds from Venetian Intermediate
credit facility
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
10,000
|
|
Repayments on FF&E credit
facility
|
|
|
|
|
|
|
(2,400
|
)
|
|
|
|
|
|
|
|
|
|
|
(2,400
|
)
|
Repayments on Interface Nevada note
payable
|
|
|
|
|
|
|
|
|
|
|
(127,512
|
)
|
|
|
|
|
|
|
(127,512
|
)
|
Proceeds from The Sands Expo Center
mortgage loan
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
100,000
|
|
Repayments on The Sands Expo Center
mortgage loan
|
|
|
|
|
|
|
|
|
|
|
(711
|
)
|
|
|
|
|
|
|
(711
|
)
|
Payments of deferred financing costs
|
|
|
|
|
|
|
(22,396
|
)
|
|
|
(7,202
|
)
|
|
|
|
|
|
|
(29,598
|
)
|
Net change in intercompany accounts
|
|
|
5,219
|
|
|
|
(9,187
|
)
|
|
|
3,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing
activities
|
|
|
744,412
|
|
|
|
229,931
|
|
|
|
29,938
|
|
|
|
(183,895
|
)
|
|
|
820,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash
equivalents
|
|
|
744,927
|
|
|
|
285,735
|
|
|
|
111,443
|
|
|
|
|
|
|
|
1,142,105
|
|
Cash and cash equivalents at
beginning of year
|
|
|
|
|
|
|
102,603
|
|
|
|
50,190
|
|
|
|
|
|
|
|
152,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of
year
|
|
$
|
744,927
|
|
|
$
|
388,338
|
|
|
$
|
161,633
|
|
|
$
|
|
|
|
$
|
1,294,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 18
Selected Quarterly Financial Results (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
Total
|
|
|
|
(In thousands, except per share data)
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
530,364
|
|
|
$
|
517,007
|
|
|
$
|
553,228
|
|
|
$
|
636,260
|
|
|
$
|
2,236,859
|
|
Operating income
|
|
|
148,880
|
|
|
|
125,415
|
|
|
|
133,478
|
|
|
|
166,324
|
|
|
|
574,097
|
|
Net income
|
|
|
121,783
|
|
|
|
109,329
|
|
|
|
97,251
|
|
|
|
113,640
|
|
|
|
442,003
|
|
Basic earnings per share
|
|
|
0.34
|
|
|
|
0.31
|
|
|
|
0.27
|
|
|
|
0.32
|
|
|
|
1.25
|
|
Diluted earnings per share
|
|
|
0.34
|
|
|
|
0.31
|
|
|
|
0.27
|
|
|
|
0.32
|
|
|
|
1.24
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
403,794
|
|
|
$
|
398,821
|
|
|
$
|
437,622
|
|
|
$
|
500,675
|
|
|
$
|
1,740,912
|
|
Operating income
|
|
|
125,336
|
|
|
|
114,143
|
|
|
|
108,484
|
|
|
|
141,488
|
|
|
|
489,451
|
|
Net income
|
|
|
7,112
|
|
|
|
86,429
|
|
|
|
80,096
|
|
|
|
110,049
|
|
|
|
283,686
|
|
Basic earnings per share
|
|
|
0.02
|
|
|
|
0.24
|
|
|
|
0.23
|
|
|
|
0.31
|
|
|
|
0.80
|
|
Diluted earnings per share
|
|
|
0.02
|
|
|
|
0.24
|
|
|
|
0.23
|
|
|
|
0.31
|
|
|
|
0.80
|
|
Because earnings per share amounts are calculated using the
weighted average number of common and dilutive common equivalent
shares outstanding during each quarter, the sum of the per share
amounts for the four quarters may not equal the total earnings
per share amounts for the respective year.
120
Report of
Independent Registered Public Accounting Firm on Financial
Statement Schedule
To the Board of Directors of Las Vegas Sands Corp.
Our audits of the consolidated financial statements, of
managements assessment of the effectiveness of internal
control over financial reporting and of the effectiveness of
internal control over financial reporting referred to in our
report dated February 27, 2007 appearing in this Annual
Report on
Form 10-K
also included an audit of the financial statement schedule
listed in Item 15 (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 consolidated
financial statements.
/s/ PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 27, 2007
121
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
For the Years Ended December 31, 2006, 2005 and 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
for
|
|
|
Write-offs,
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
Doubtful
|
|
|
net of
|
|
|
at End
|
|
Description
|
|
of Year
|
|
|
Accounts
|
|
|
Recoveries
|
|
|
of Year
|
|
|
|
(In thousands)
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
$
|
20,861
|
|
|
|
7,959
|
|
|
|
(8,511
|
)
|
|
$
|
20,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
$
|
20,309
|
|
|
|
9,358
|
|
|
|
(187
|
)
|
|
$
|
29,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
29,480
|
|
|
|
18,067
|
|
|
|
(12,071
|
)
|
|
$
|
35,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The allowance for doubtful accounts schedule for prior years has
been reclassified to conform to the current year presentation.
Specifically, $9.3 million, $14.2 million and
$19.5 million as of December 31, 2003, 2004 and 2005,
respectively, of casino discounts previously included in the
allowance have been excluded and have been directly offset
against gross casino accounts receivable. This had no effect on
amounts previously reported in the Companys balance
sheets, statements of operations or statements of cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
|
|
|
|
|
|
at End
|
|
Description
|
|
of Year
|
|
|
Additions
|
|
|
Deductions
|
|
|
of Year
|
|
|
Deferred income tax asset
valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
$
|
|
|
|
|
6,175
|
|
|
|
|
|
|
$
|
6,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
$
|
6,175
|
|
|
|
11,211
|
|
|
|
|
|
|
$
|
17,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
17,386
|
|
|
|
6,196
|
|
|
|
|
|
|
$
|
23,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122
|
|
ITEM 9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports that the
Company files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized, and reported within the
time periods specified in the SECs rules and forms and
that such information is accumulated and communicated to our
management, including our principal executive officer and
principal financial officer, as appropriate, to allow for timely
decisions regarding required disclosure. The Companys
Chief Executive Officer and its Chief Financial Officer have
evaluated the disclosure controls and procedures (as defined in
the Securities Exchange Act of 1934
Rules 13a-15(e)
and
15d-15(e))
of the Company as of December 31, 2006 and have concluded
that they are effective to provide reasonable assurance that the
desired control objectives were achieved.
It should be noted that any system of controls, however well
designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system are met.
In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed
in achieving its stated goals under all potential future
conditions, regardless of how remote.
Changes
in Internal Control over Financial Reporting
There were no changes in the Companys internal control
over financial reporting that occurred during the fourth quarter
covered by this Annual Report on
Form 10-K
that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over
financial reporting.
Managements
Annual Report on Internal Control Over Financial
Reporting
The Companys management is responsible for establishing
and maintaining adequate internal control over financial
reporting, as defined in
Rules 13a-15(f)
and
15d-15(f)
of
the Securities Exchange Act of 1934. The Companys internal
control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with generally accepted
accounting principles. The Companys internal control over
financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of the Companys assets;
(2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles and that the Companys receipts and expenditures
are being made only in accordance with authorizations of its
management and directors; and
(3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition
of the Companys assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
The Companys management assessed the effectiveness of the
Companys internal control over financial reporting as of
December 31, 2006. In making this assessment, the
Companys management used the framework set
123
forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated
Framework.
Based on this assessment, management concluded that, as of
December 31, 2006, the Companys internal control over
financial reporting is effective based on this framework.
Managements assessment of the effectiveness of the
Companys internal control over financial reporting as of
December 31, 2006 has been audited by
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report that appears
beginning on page 71 herein, which expresses unqualified
opinions on managements assessment and on the
effectiveness of the Companys internal control over
financial reporting as of December 31, 2006.
|
|
ITEM 9B.
|
OTHER
INFORMATION
|
None.
PART III
|
|
ITEM 10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
We incorporate by reference the information responsive to this
Item appearing in our definitive Proxy Statement for our 2007
Annual Meeting of Stockholders, which we expect to file with the
Securities and Exchange Commission on or about April 27,
2007 (the Proxy Statement). We have adopted a Code
of Business Conduct and Ethics which is posted on our website at
www.lasvegassands.com
, along with any amendments or
waivers to the Code.
|
|
ITEM 11.
|
EXECUTIVE
COMPENSATION
|
We incorporate by reference the information responsive to this
Item appearing in the Proxy Statement.
|
|
ITEM 12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
|
We incorporate by reference the information responsive to this
Item appearing in the Proxy Statement.
|
|
ITEM 13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
We incorporate by reference the information responsive to this
Item appearing in the Proxy Statement.
|
|
ITEM 14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES
|
We incorporate by reference the information responsive to this
Item appearing in the Proxy Statement.
124
PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a)
Documents filed as part of the Annual Report on
Form 10-K.
(1) List of Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders Equity and
Comprehensive Income
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) List of Financial Statement Schedules
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule
Schedule II Valuation and Qualifying Accounts
(3) List of Exhibits
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
3
|
.1
|
|
Certificate of Amended and
Restated Articles of Incorporation of Las Vegas Sands Corp.
(incorporated by reference from Exhibit 3.1 to the
Companys Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
3
|
.2
|
|
Amended and Restated By-laws of
Las Vegas Sands Corp. (incorporated by reference from
Exhibit 3.2 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
4
|
.1
|
|
Form of Specimen Common Stock
Certificate of Las Vegas Sands Corp. (incorporated by reference
from Exhibit 4.1 to the Companys Amendment No. 2
to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
4
|
.2
|
|
Indenture, dated as of
February 10, 2005, by and among Las Vegas Sands Corp., each
of the Guarantors party thereto and U.S. Bank National
Association, Trustee (the
6.375% Notes Indenture) (incorporated by
reference from Exhibit 4.2 to our Current Report on
Form 8-K
dated as of February 15, 2005).
|
|
4
|
.3
|
|
Supplemental Indenture to the
6.375% Notes Indenture, dated as of February 22,
2005 (incorporated by reference from Exhibit 4.1 to the
Companys Current Report on
Form 8-K
dated as of February 23, 2005).
|
|
4
|
.4*
|
|
Letter regarding certain debt
instruments.
|
|
10
|
.1
|
|
Amended and Restated Credit
Agreement, dated as of February 22, 2005, among Las Vegas
Sands, Inc. and Venetian Casino Resort, LLC, the lenders listed
therein, Goldman Sachs Credit Partners, L.P., The Bank of Nova
Scotia, Wells Fargo Foothill, Inc., CIT Group/Equipment
Financing, Inc. and Commerzbank AG (incorporated by reference
from Exhibit 4.1 to the Companys Current Report on
Form 8-K
dated as of March 10, 2005).
|
|
10
|
.2
|
|
First Amendment to Amended and
Restated Credit Agreement, dated as of September 16, 2005,
by and among Las Vegas Sands, Inc. and Venetian Casino Resort,
LLC, the lenders listed therein, The Bank of Nova Scotia,
Commerzbank AG, The CIT Group/Equipment Financing, Inc., Wells
Fargo Foothill, Inc. and Goldman Sachs Credit Partners, L.P.
(incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
filed on November 15, 2005).
|
|
10
|
.3
|
|
Amended and Restated Security
Agreement, dated as of August 20, 2004, by and among Las
Vegas Sands, Inc., Venetian Casino Resort, LLC, the Subsidiary
Guarantors party thereof and The Bank of Nova Scotia, as
Intercreditor Agent (incorporated by reference from
Exhibit 4.4 to the Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
125
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.4
|
|
First Amendment to Amended and
Restated Security Agreement, dated as of September 30,
2004, by and between Las Vegas Sands, Inc., Venetian Casino
Resort, LLC, the subsidiary guarantors as defined therein, and
The Bank of Nova Scotia, as intercreditor agent, for and on
behalf of each bank secured party as defined therein,
U.S. Bank National Association, as trustee, and the
intercreditor agent (incorporated by reference from
Exhibit 10.64 to the Companys Amendment No. 2
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.5
|
|
Supplement to Security Agreement,
dated as of September 30, 2004, among the debtors as
defined in the Amended and Restated Security Agreement, dated as
of August 20, 2004, in favor of The Bank of Nova Scotia, as
intercreditor agent for each of the secured parties as defined
in the Amended and Restated Security Agreement (incorporated by
reference from Exhibit 10.67 to the Companys
Amendment No. 2 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.6
|
|
Second Amendment to Amended and
Restated Security Agreement, dated as of February 22, 2005,
by and between Las Vegas Sands, Inc., Venetian Casino Resort,
LLC, the subsidiary guarantors as defined therein, and The Bank
of Nova Scotia, as intercreditor agent, for and on behalf of
each bank secured party as defined therein, U.S. Bank
National Association, as trustee, and the intercreditor agent
(incorporated by reference from Exhibit 10.68 to the
Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.7
|
|
Amended and Restated Deed of
Trust, Leasehold Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing, dated as of
February 22, 2005, made by Venetian Casino Resort, LLC and
Las Vegas Sands, Inc., jointly and severally as trustor, to
First American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia (as administrative agent), as
beneficiary (incorporated by reference from Exhibit 10.3 to
the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.8
|
|
Amended and Restated Subsidiary
Guaranty, dated as of February 22, 2005, by the Subsidiary
Guarantors party thereto for the benefit of The Bank of Nova
Scotia, as Administrative Agent (incorporated by reference from
Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.9
|
|
Amended and Restated Environmental
Indemnity Agreement, dated as of February 22, 2005, by and
among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, and
Lido Casino Resort, LLC, to and for the benefit of The Bank of
Nova Scotia, as Administrative Agent for itself and for the
other lenders under the Bank Agreement (incorporated by
reference from Exhibit 10.5 to the Companys Quarterly
Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.10
|
|
Indemnity Agreement, dated as of
August 25, 2000, by and among Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC, Grand Canal Shops Mall Subsidiary,
LLC, Grand Canal Shops Mall Construction, LLC, Grand Canal Shops
Mall, LLC, Interface Group Holding Company, and American
Insurance Companies (of which American Home Assurance Company is
a member company) (incorporated by reference from
Exhibit 10.8 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.11
|
|
Energy Services Agreement, dated
as of November 14, 1997, by and between Atlantic Pacific
Las Vegas, LLC and Venetian Casino Resort, LLC (incorporated by
reference from Exhibit 10.3 to Las Vegas Sands, Inc.s
Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.12
|
|
Energy Services Agreement
Amendment No. 1, dated as of July 1, 1999, by and
between Atlantic Pacific Las Vegas, LLC and Venetian Casino
Resort, LLC (incorporated by reference from Exhibit 10.8 to
Las Vegas Sands, Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1999).
|
|
10
|
.13
|
|
Energy Services Agreement, dated
as of November 14, 1997, by and between Atlantic-Pacific
Las Vegas, LLC and Interface Group-Nevada, Inc. (incorporated by
reference from Exhibit 10.8 to Amendment No. 1 of the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.14
|
|
Energy Services Agreement
Amendment No. 1, dated as of July 1, 1999, by and
between Atlantic-Pacific Las Vegas, LLC and Interface
Group-Nevada, Inc. (incorporated by reference from
Exhibit 10.9 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
126
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.15
|
|
Ground Lease, dated
November 14, 1997, between Venetian Casino Resort, LLC and
Atlantic Pacific Las Vegas, LLC (incorporated by reference from
Exhibit 10.10 to Las Vegas Sands, Inc.s Registration
Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.16
|
|
Amended and Restated Services
Agreement, dated as of November 14, 1997, by and among Las
Vegas Sands, Inc., Venetian Casino Resort, LLC, Interface Group
Holding Company, Inc., Interface Group-Nevada, Inc., Lido Casino
Resort MM, Inc., Grand Canal Shops Mall MM Subsidiary, Inc. and
certain subsidiaries of Venetian Casino Resort, LLC named
therein (incorporated by reference from Exhibit 10.15 to
Amendment No. 1 to Las Vegas Sands, Inc.s
Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.17
|
|
Construction Agency Agreement,
dated as of November 14, 1997, by and between Venetian
Casino Resort, LLC and Atlantic Pacific Las Vegas, LLC
(incorporated by reference from Exhibit 10.21 to Las Vegas
Sands, Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.18
|
|
Sands Resort Hotel and Casino
Agreement, dated as of February 18, 1997, by and between
Clark County and Las Vegas Sands, Inc. (incorporated by
reference from Exhibit 10.27 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.19
|
|
Addendum to Sands Resort
Hotel & Casino Agreement, dated as of
September 16, 1997, by and between Clark County and Las
Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.20 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.20
|
|
Improvement Phasing Agreement by
and between Clark County and Lido Casino Resort, LLC
(incorporated by reference from Exhibit 10.21 to the
Companys Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.21
|
|
Amended and Restated Las Vegas
Sands, Inc. 1997 Fixed Stock Option Plan (the 1997 Stock
Option Plan) (incorporated by reference from
Exhibit 10.10 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.22
|
|
First Amendment to the 1997 Stock
Option Plan, dated June 4, 2002 (incorporated by reference
from Exhibit 10.11 to Las Vegas Sands, Inc.s
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.23
|
|
Assumption Agreement, dated as of
January 2, 2002, by Sheldon G. Adelson with respect to the
1997 Stock Option Plan (incorporated by reference from
Exhibit 10.5 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2002).
|
|
10
|
.24
|
|
Assumption Agreement, dated as of
July 15, 2004, by Las Vegas Sands, Inc. with respect to the
1997 Stock Option Plan (incorporated by reference from
Exhibit 10.25 to the Companys Registration Statement
on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.25
|
|
Assignment and Assumption
Agreement, dated as of December 20, 2004. by and among Las
Vegas Sands, Inc., Las Vegas Sands Corp. and Sheldon G. Adelson
(incorporated by reference from Exhibit 10.27 to the
Companys Current Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.26
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and William P. Weidner (incorporated by
reference from Exhibit 10.27 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.27
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Bradley H. Stone (incorporated by
reference from Exhibit 10.30 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.28
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Robert G. Goldstein (incorporated by
reference from Exhibit 10.33 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
127
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.29
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Sheldon G. Adelson (incorporated by
reference from Exhibit 10.36 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.30
|
|
Employment Agreement, dated as of
December 9, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Bradley K. Serwin (incorporated by
reference from Exhibit 10.66 to the Companys Current
Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.31
|
|
Catastrophic Equity Protection
Insurance Agreement, dated as of June 28, 2000, by and
among American Home Assurance Company, Las Vegas Sands, Inc. and
Venetian Casino Resort, LLC (incorporated by reference from
Exhibit 10.15 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.32
|
|
Concession Contract for Operating
Casino Games of Chance or Games of Other Forms in the Macao
Special Administrative Region, June 26, 2002, by and among
the Macao Special Administrative Region and Galaxy Casino
Company Limited (incorporated by reference from
Exhibit 10.40 to Las Vegas Sands, Inc.s
Form 10-K
for the year ended December 31, 2002).
|
|
10
|
.33
|
|
Land concession, dated as of
December 10, 2003, issued by the Macao Special
Administrative Region to Venetian Macau (incorporated by
reference from Exhibit 10.39 to the Companys
Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.34
|
|
Subconcession Contract for
Operating Casino Games of Chance or Games of Other Forms in the
Macao Special Administrative Region, dated December 19,
2002, between Galaxy Casino Company Limited, as concessionaire,
and Venetian Macau S.A., as subconcessionaire (incorporated by
reference from Exhibit 10.65 to the Companys
Amendment No. 5 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 10, 2004).
|
|
10
|
.35
|
|
Purchase Agreement, dated
April 12, 2004, by and among Grand Canal Shops Mall
Subsidiary, LLC, Grand Canal Shops Mall MM Subsidiary, Inc. and
GGP Limited Partnership (incorporated by reference from
Exhibit 10.1 to Las Vegas Sands, Inc.s
Form 8-K
filed on April 16, 2004).
|
|
10
|
.36
|
|
Agreement, made as of
April 12, 2004, by and between Lido Casino Resort, LLC and
GGP Limited Partnership (incorporated by reference from
Exhibit 10.2 to Las Vegas Sands, Inc.s
Form 8-K
filed on April 16, 2004).
|
|
10
|
.37
|
|
Second Amended and Restated
Reciprocal Easement, Use and Operating Agreement, dated as of
May 17, 2004, by and among Venetian Casino Resort, LLC,
Interface Group-Nevada, Inc., Grand Canal Shops II, LLC and
Lido Casino Resort, LLC (incorporated by reference from
Exhibit 10.42 to the Companys Registration Statement
on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.38
|
|
First Amendment to Second Amended
and Restated Reciprocal Easement, Use and Operating Agreement,
dated as of July 30, 2004, by and among Venetian Casino
Resort, LLC, Interface Group-Nevada, Inc., Grand Canal
Shops II, LLC and Lido Casino Resort, LLC (incorporated by
reference from Exhibit 10.43 to the Companys
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.39
|
|
Registration Rights Agreement,
dated as of December 20, 2004, by and among Las Vegas Sands
Corp. and the stockholders named therein (incorporated by
reference from Exhibit 10.39 to the Companys Current
Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.40
|
|
Form of Notice of Restricted Stock
Award under the Las Vegas Sands Corp. 2004 Equity Award Plan
(incorporated by reference from Exhibit 10.40 to the
Companys Annual Report on
Form 10-K
filed on March 2, 2006).
|
|
10
|
.41
|
|
Las Vegas Sands Corp. 2004 Equity
Award Plan (incorporated by reference from Exhibit 10.41 to
the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.42
|
|
Las Vegas Sands Corp. Executive
Cash Incentive Plan (incorporated by reference from
Exhibit 10.42 to the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.43
|
|
Agreement, dated as of
July 8, 2004, by and between Sheldon G. Adelson and Las
Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.47 to the Companys Registration Statement
on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
128
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.44
|
|
Aircraft Time Sharing Agreement,
dated as of June 18, 2004, by and between Interface
Operations LLC and Las Vegas Sands, Inc. (incorporated by
reference from Exhibit 10.48 to the Companys
Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.45
|
|
Venetian Hotel Service Agreement,
dated as of June 28, 2001, by and between Venetian Casino
Resort, LLC and Interface Group-Nevada, Inc. d/b/a Sands Expo
and Convention Center (incorporated by reference from
Exhibit 10.49 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.46
|
|
First Amendment to Venetian Hotel
Service Agreement, dated as of June 28, 2004, by and
between Venetian Casino Resort, LLC and Interface Group-Nevada,
Inc. d/b/a Sands Expo and Convention Center (incorporated by
reference from Exhibit 10.50 to the Companys
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.47
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Scott D. Henry (incorporated by reference
from Exhibit 10.51 to the Companys Amendment
No. 4 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.48
|
|
Assignment and Assumption
Agreement, dated as of November 8, 2004, by and among Las
Vegas Sands, Inc., Venetian Casino Resort, LLC, Interface Group
Holding Company, Inc., Interface Group-Nevada, Inc., Interface
Operations LLC, Lido Casino Resort MM, Inc., Grand Canal Shops
Mall MM Subsidiary, Inc. and certain subsidiaries of Venetian
Casino Resort, LLC named therein (incorporated by reference from
Exhibit 10.52 to the Companys Amendment No. 2
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.49
|
|
Construction Loan Agreement, dated
September 30, 2004, by and among Phase II Mall
Holding, LLC and Phase II Mall Subsidiary, LLC, as
borrowers, the lenders party thereto, The Bank of Nova Scotia,
as the Sole Lead Arranger and the Sole Bookrunner, and Sumitomo
Mitsui Banking Corporation, as the Syndication Agent
(incorporated by reference from Exhibit 4.1 to Las Vegas
Sands, Inc.s Report on
Form 8-K
filed on October 20, 2004).
|
|
10
|
.50
|
|
Deed of Trust, Leasehold Deed of
Trust, Assignment of Rents and Leases, Security Agreement and
Fixture Filing, dated September 30, 2004, made by
Phase II Mall Holding, LLC and Phase II Mall
Subsidiary, LLC jointly and severally as trustor, to First
American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia, in its capacity as
Administrative Agent, as beneficiary (incorporated by reference
from Exhibit 10.54 to the Companys Amendment
No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.51
|
|
Security Agreement, dated as of
September 30, 2004, by and among Phase II Mall
Holding, LLC, Phase II Mall Subsidiary, LLC, and each
subsidiary from time to time party thereto, and The Bank of Nova
Scotia, in its capacity as Administrative Agent for and on
behalf of each Secured Party (incorporated by reference from
Exhibit 10.55 to the Companys Amendment No. 1
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.52
|
|
Master Disbursement Agreement,
dated as of September 30, 2004, among Lido Casino Resort,
LLC, Phase II Mall Holding, LLC, Phase II Mall
Subsidiary, LLC, The Bank of Nova Scotia, as the Bank Agent, The
Bank of Nova Scotia, as the Phase II Mall Agent, Goldman
Sachs Credit Partners L.P. as the Bank Arranger and The Bank of
Nova Scotia, as the Disbursement Agent (incorporated by
reference from Exhibit 10.56 to the Companys
Amendment No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.53
|
|
First Amendment to Master
Disbursement Agreement, dated as of February 22, 2005,
among Lido Casino Resort, LLC, Phase II Mall Holding, LLC,
Phase II Mall Subsidiary, LLC, The Bank of Nova Scotia, as
the Bank Agent, The Bank of Nova Scotia, as the Phase II
Mall Agent, Goldman Sachs Credit Partners L.P. and The Bank of
Nova Scotia, as the Joint Bank Arrangers, and The Bank of Nova
Scotia, as the Disbursement Agent (incorporated by reference
from Exhibit 10.67 to the Companys Quarterly Report
on
Form 10-Q
filed on May 16, 2005).
|
129
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.54
|
|
Amended and Restated Deed of
Trust, Assignment of Rents and Leases, Security Agreement and
Fixture Filing, dated as of February 22, 2005, made by Lido
Casino Resort, LLC, as trustor, to First American
Title Insurance Company, as trustee, for the benefit of The
Bank of Nova Scotia, in its capacity as Administrative Agent, as
beneficiary (incorporated by reference from Exhibit 10.53
to the Companys Annual Report on
Form 10-K
(Reg.
No. 333-42147)
filed on April 1, 2005).
|
|
10
|
.55
|
|
Environmental Indemnity Agreement,
dated as of September 30, 2004, by and among Phase II
Mall Holding, LLC, Phase II Mall Subsidiary, LLC, Las Vegas
Sands, Inc., Lido Casino Resort, LLC and Venetian Casino Resort,
LLC to and for the benefit of The Bank of Nova Scotia as
administrative agent for itself and the other agents and lenders
under the Construction Loan Agreement (incorporated by reference
from Exhibit 10.59 to the Companys Amendment
No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.56
|
|
Assignment and Assumption of
Agreement and First Amendment to Agreement, dated
September 30, 2004, made by Lido Casino Resort, LLC, as
assignor, to Phase II Mall Holding, LLC, as assignee, and
to GGP Limited Partnership, as buyer (incorporated by reference
from Exhibit 10.60 to the Companys Amendment
No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.57
|
|
Tax Indemnification Agreement,
dated as of December 17, 2004, by and among Las Vegas Sands
Corp., Las Vegas Sands, Inc. and the stockholders named therein
(incorporated by reference from Exhibit 10.56 to the
Companys Current Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.58
|
|
Las Vegas Sands Corp. Deferred
Compensation Plan (incorporated by reference from
Exhibit 10.63 to the Companys Amendment No. 2
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.59
|
|
Disbursement Collateral
Account Agreement, dated as of September 30, 2004, by
and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC,
Lido Casino Resort, LLC, The Bank of Nova Scotia, as custodian
and in its capacity as a securities intermediary, and the Bank
of Nova Scotia, in its capacity as the intercreditor agent, for
and on behalf of each bank intercreditor agent as defined
therein, U.S. Bank National Association, as trustee for and
on behalf of the mortgage note holders under the mortgage notes
indenture as defined therein, and the intercreditor agent
(incorporated by reference from Exhibit 10.68 to the
Companys Amendment No. 2 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.60
|
|
First Amendment to Disbursement
Collateral Account Agreement, dated as of February 22,
2005, by and among Las Vegas Sands, Inc., Venetian Casino
Resort, LLC, Lido Casino Resort, LLC, The Bank of Nova Scotia,
as custodian and in its capacity as a securities intermediary,
and the Bank of Nova Scotia, in its capacity as the
intercreditor agent, for and on behalf of each bank
intercreditor agent as defined therein, U.S. Bank National
Association, as trustee for and on behalf of the mortgage note
holders under the mortgage notes indenture as defined therein,
and the intercreditor agent (incorporated by reference from
Exhibit 10.69 to the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.61
|
|
Form of Restricted Stock Award
Agreements under the 2004 Equity Award Plan (incorporated by
reference from Exhibit 10.70 to the Companys
Amendment No. 4 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.62
|
|
Form of Stock Option Agreements
under the 2004 Equity Award Plan (incorporated by reference from
Exhibit 10.71 to the Companys Amendment No. 4
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.63
|
|
Aircraft Interchange Agreement,
dated as of January 1, 2005, by and between Interface
Operations LLC and Las Vegas Sands Corp. (incorporated by
reference from Exhibit 10.2 to the Companys Quarterly
Report on
Form 10-Q
filed on November 15, 2005).
|
|
10
|
.64
|
|
Aircraft Time Share Agreement,
dated as of January 1, 2005, by and between Interface
Operations LLC and Las Vegas Sands Corp. (incorporated by
reference from Exhibit 10.3 to the Companys Quarterly
Report on
Form 10-Q
filed on November 15, 2005).
|
|
10
|
.65
|
|
Form of Notice of Grant of Stock
Option under the Las Vegas Sands Corp. 2004 Equity Award Plan
(incorporated by reference from Exhibit 10.65 to the
Companys Quarterly Report on
Form 10-K
filed on March 2, 2006).
|
130
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.66
|
|
Credit Agreement, dated as of
May 25, 2006, by and among VML US Finance LLC, Venetian
Macau Limited, the financial institutions listed therein as
lenders, The Bank of Nova Scotia, Banco Nacional Ultramarino,
S.A., Sumitomo Mitsui Banking Corporation, Goldman Sachs Credit
Partners L.P., Lehman Brothers Inc. and Citigroup Global
Markets, Inc. (incorporated by reference from Exhibit 10.1
to the Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.67
|
|
Disbursement Agreement, dated as
of May 25, 2006, by and among VML US Finance LLC, Venetian
Cotai Limited, Venetian Macau Limited and The Bank of Nova
Scotia (incorporated by reference from Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.68
|
|
Employment Agreement, dated as of
June 1, 2006, among Las Vegas Sands Corp., Las Vegas Sands,
LLC and Robert Rozek (incorporated by reference from
Exhibit 10.3 to the Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.69
|
|
Amendment No. 1, dated as of
June 20, 2006 and effective as of June 8, 2006, to
Employment Agreement, dated as of November 18, 2004, among
Las Vegas Sands Corp., Las Vegas Sands, LLC and Scott D. Henry
(incorporated by reference from Exhibit 10.4 to the
Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.70
|
|
Facility Agreement, dated as of
August 18, 2006, among Marina Bay Sands Pte. Ltd., Goldman
Sachs (Singapore) Pte., DBS Bank Ltd., UOB Asia Limited,
Oversea Chinese Banking Corporation Limited and the
financial institutions listed therein as Original Lenders
(incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.71
|
|
Purchase Agreement, dated as of
August 18, 2006, among Marina Bay Sands Pte. Ltd., the
Purchasers named therein, Las Vegas Sands Corp., Goldman Sachs
(Singapore) Pte. and DBS Bank Ltd. (incorporated by reference
from Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.72
|
|
Development Agreement, dated
August 23, 2006, between the Singapore Tourism Board and
Marina Bay Sands Pte. Ltd. (incorporated by reference from
Exhibit 10.3 to the Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.73
|
|
Third Amended and Restated
Reciprocal Easement, Use and Operating Agreement, dated as of
July 26, 2006, by and among Venetian Casino Resort, LLC,
Lido Casino Resort, LLC, Phase II Mall Subsidiary, LLC,
Grand Canal Shops II, LLC, and Interface Group-Nevada, Inc.
(incorporated by reference from Exhibit 10.4 to the
Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.74*
|
|
FF&E Facility Credit
Agreement, dated as of December 14, 2006, among Las Vegas
Sands, LLC, Venetian Casino Resort, LLC and Lido Casino Resort,
LLC, as borrowers, the Financial Institutions named therein as
Lenders and General Electric Capital Corporation, as
Administrative Agent.
|
|
10
|
.75
|
|
Form of Restricted Stock Award
Agreement (incorporated by reference from Exhibit 10.1 to
the Companys Current Report on
Form 8-K
filed on February 9, 2007).
|
|
10
|
.76*
|
|
First Amendment, dated as of
February 5, 2007, to the Las Vegas Sands Corp. 2004 Equity
Award Plan.
|
|
10
|
.77*
|
|
Amendment No. 2, dated as of
July 1, 2006, between Atlantic-Pacific Las Vegas, LLC and
Venetian Casino Resort, LLC.
|
|
10
|
.78*
|
|
First Amendment to Lease, dated as
of July 11, 2006, between Grand Canal Shops II, LLC
and Venetian Casino Resort, LLC.
|
|
21
|
.1*
|
|
Subsidiaries of Las Vegas Sands
Corp.
|
|
23
|
.1*
|
|
Consent of PricewaterhouseCoopers
LLP.
|
|
31
|
.1*
|
|
Certification of the Chief
Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31
|
.2*
|
|
Certification of the Chief
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32
|
.1*
|
|
Certification of Chief Executive
Officer of Las Vegas Sands Corp. pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
32
|
.2*
|
|
Certification of Chief Financial
Officer of Las Vegas Sands Corp. pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
131
|
|
*
|
Filed herewith.
|
|
|
Confidential treatment has been requested and granted with
respect to portions of this exhibit, and such confidential
portions have been deleted and replaced with ** and
filed separately with the Securities and Exchange Commission
pursuant to Rule 406 under the Securities Act of 1933.
|
132
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this Annual Report on
Form 10-K
to be signed on its behalf by the undersigned thereunto duly
authorized.
LAS VEGAS SANDS CORP.
February 28, 2007
Sheldon G. Adelson,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on
Form 10-K
has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/
Sheldon
G. Adelson
Sheldon
G. Adelson
|
|
Chairman of the Board, Chief
Executive Officer and Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
Irwin
Chafetz
Irwin
Chafetz
|
|
Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
Charles
D. Forman
Charles
D. Forman
|
|
Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
Andrew
R. Heyer
Andrew
R. Heyer
|
|
Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
Michael
A. Leven
Michael
A. Leven
|
|
Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
James
L. Purcell
James
L. Purcell
|
|
Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
Irwin
A. Siegel
Irwin
A. Siegel
|
|
Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
William
P. Weidner
William
P. Weidner
|
|
President, Chief Operating
Officer
and Director
|
|
February 28, 2007
|
|
|
|
|
|
/s/
Robert
P. Rozek
Robert
P. Rozek
|
|
Senior Vice President
and Chief Financial Officer
|
|
February 28, 2007
|
133
Index to
Exhibits
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
3
|
.1
|
|
Certificate of Amended and
Restated Articles of Incorporation of Las Vegas Sands Corp.
(incorporated by reference from Exhibit 3.1 to the
Companys Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
3
|
.2
|
|
Amended and Restated By-laws of
Las Vegas Sands Corp. (incorporated by reference from
Exhibit 3.2 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
4
|
.1
|
|
Form of Specimen Common Stock
Certificate of Las Vegas Sands Corp. (incorporated by reference
from Exhibit 4.1 to the Companys Amendment No. 2
to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
4
|
.2
|
|
Indenture, dated as of
February 10, 2005, by and among Las Vegas Sands Corp., each
of the Guarantors party thereto and U.S. Bank National
Association, Trustee (the
6.375% Notes Indenture) (incorporated by
reference from Exhibit 4.2 to our Current Report on
Form 8-K
dated as of February 15, 2005).
|
|
4
|
.3
|
|
Supplemental Indenture to the
6.375% Notes Indenture, dated as of February 22,
2005 (incorporated by reference from Exhibit 4.1 to the
Companys Current Report on
Form 8-K
dated as of February 23, 2005).
|
|
4
|
.4*
|
|
Letter regarding certain debt
instruments.
|
|
10
|
.1
|
|
Amended and Restated Credit
Agreement, dated as of February 22, 2005, among Las Vegas
Sands, Inc. and Venetian Casino Resort, LLC, the lenders listed
therein, Goldman Sachs Credit Partners, L.P., The Bank of Nova
Scotia, Wells Fargo Foothill, Inc., CIT Group/Equipment
Financing, Inc. and Commerzbank AG (incorporated by reference
from Exhibit 4.1 to the Companys Current Report on
Form 8-K
dated as of March 10, 2005).
|
|
10
|
.2
|
|
First Amendment to Amended and
Restated Credit Agreement, dated as of September 16, 2005,
by and among Las Vegas Sands, Inc. and Venetian Casino Resort,
LLC, the lenders listed therein, The Bank of Nova Scotia,
Commerzbank AG, The CIT Group/Equipment Financing, Inc., Wells
Fargo Foothill, Inc. and Goldman Sachs Credit Partners, L.P.
(incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
filed on November 15, 2005).
|
|
10
|
.3
|
|
Amended and Restated Security
Agreement, dated as of August 20, 2004, by and among Las
Vegas Sands, Inc., Venetian Casino Resort, LLC, the Subsidiary
Guarantors party thereof and The Bank of Nova Scotia, as
Intercreditor Agent (incorporated by reference from
Exhibit 4.4 to the Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.4
|
|
First Amendment to Amended and
Restated Security Agreement, dated as of September 30,
2004, by and between Las Vegas Sands, Inc., Venetian Casino
Resort, LLC, the subsidiary guarantors as defined therein, and
The Bank of Nova Scotia, as intercreditor agent, for and on
behalf of each bank secured party as defined therein,
U.S. Bank National Association, as trustee, and the
intercreditor agent (incorporated by reference from
Exhibit 10.64 to the Companys Amendment No. 2
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.5
|
|
Supplement to Security Agreement,
dated as of September 30, 2004, among the debtors as
defined in the Amended and Restated Security Agreement, dated as
of August 20, 2004, in favor of The Bank of Nova Scotia, as
intercreditor agent for each of the secured parties as defined
in the Amended and Restated Security Agreement (incorporated by
reference from Exhibit 10.67 to the Companys
Amendment No. 2 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.6
|
|
Second Amendment to Amended and
Restated Security Agreement, dated as of February 22, 2005,
by and between Las Vegas Sands, Inc., Venetian Casino Resort,
LLC, the subsidiary guarantors as defined therein, and The Bank
of Nova Scotia, as intercreditor agent, for and on behalf of
each bank secured party as defined therein, U.S. Bank
National Association, as trustee, and the intercreditor agent
(incorporated by reference from Exhibit 10.68 to the
Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
134
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.7
|
|
Amended and Restated Deed of
Trust, Leasehold Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing, dated as of
February 22, 2005, made by Venetian Casino Resort, LLC and
Las Vegas Sands, Inc., jointly and severally as trustor, to
First American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia (as administrative agent), as
beneficiary (incorporated by reference from Exhibit 10.3 to
the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.8
|
|
Amended and Restated Subsidiary
Guaranty, dated as of February 22, 2005, by the Subsidiary
Guarantors party thereto for the benefit of The Bank of Nova
Scotia, as Administrative Agent (incorporated by reference from
Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.9
|
|
Amended and Restated Environmental
Indemnity Agreement, dated as of February 22, 2005, by and
among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, and
Lido Casino Resort, LLC, to and for the benefit of The Bank of
Nova Scotia, as Administrative Agent for itself and for the
other lenders under the Bank Agreement (incorporated by
reference from Exhibit 10.5 to the Companys Quarterly
Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.10
|
|
Indemnity Agreement, dated as of
August 25, 2000, by and among Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC, Grand Canal Shops Mall Subsidiary,
LLC, Grand Canal Shops Mall Construction, LLC, Grand Canal Shops
Mall, LLC, Interface Group Holding Company, and American
Insurance Companies (of which American Home Assurance Company is
a member company) (incorporated by reference from
Exhibit 10.8 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.11
|
|
Energy Services Agreement, dated
as of November 14, 1997, by and between Atlantic Pacific
Las Vegas, LLC and Venetian Casino Resort, LLC (incorporated by
reference from Exhibit 10.3 to Las Vegas Sands, Inc.s
Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.12
|
|
Energy Services Agreement
Amendment No. 1, dated as of July 1, 1999, by and
between Atlantic Pacific Las Vegas, LLC and Venetian Casino
Resort, LLC (incorporated by reference from Exhibit 10.8 to
Las Vegas Sands, Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1999).
|
|
10
|
.13
|
|
Energy Services Agreement, dated
as of November 14, 1997, by and between Atlantic-Pacific
Las Vegas, LLC and Interface Group-Nevada, Inc. (incorporated by
reference from Exhibit 10.8 to Amendment No. 1 of the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.14
|
|
Energy Services Agreement
Amendment No. 1, dated as of July 1, 1999, by and
between Atlantic-Pacific Las Vegas, LLC and Interface
Group-Nevada, Inc. (incorporated by reference from
Exhibit 10.9 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.15
|
|
Ground Lease, dated
November 14, 1997, between Venetian Casino Resort, LLC and
Atlantic Pacific Las Vegas, LLC (incorporated by reference from
Exhibit 10.10 to Las Vegas Sands, Inc.s Registration
Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.16
|
|
Amended and Restated Services
Agreement, dated as of November 14, 1997, by and among Las
Vegas Sands, Inc., Venetian Casino Resort, LLC, Interface Group
Holding Company, Inc., Interface Group-Nevada, Inc., Lido Casino
Resort MM, Inc., Grand Canal Shops Mall MM Subsidiary, Inc. and
certain subsidiaries of Venetian Casino Resort, LLC named
therein (incorporated by reference from Exhibit 10.15 to
Amendment No. 1 to Las Vegas Sands, Inc.s
Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.17
|
|
Construction Agency Agreement,
dated as of November 14, 1997, by and between Venetian
Casino Resort, LLC and Atlantic Pacific Las Vegas, LLC
(incorporated by reference from Exhibit 10.21 to Las Vegas
Sands, Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)).
|
|
10
|
.18
|
|
Sands Resort Hotel and Casino
Agreement, dated as of February 18, 1997, by and between
Clark County and Las Vegas Sands, Inc. (incorporated by
reference from Exhibit 10.27 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)).
|
135
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.19
|
|
Addendum to Sands Resort
Hotel & Casino Agreement, dated as of
September 16, 1997, by and between Clark County and Las
Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.20 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.20
|
|
Improvement Phasing Agreement by
and between Clark County and Lido Casino Resort, LLC
(incorporated by reference from Exhibit 10.21 to the
Companys Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.21
|
|
Amended and Restated Las Vegas
Sands, Inc. 1997 Fixed Stock Option Plan (the 1997 Stock
Option Plan) (incorporated by reference from
Exhibit 10.10 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.22
|
|
First Amendment to the 1997 Stock
Option Plan, dated June 4, 2002 (incorporated by reference
from Exhibit 10.11 to Las Vegas Sands, Inc.s
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.23
|
|
Assumption Agreement, dated as of
January 2, 2002, by Sheldon G. Adelson with respect to the
1997 Stock Option Plan (incorporated by reference from
Exhibit 10.5 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2002).
|
|
10
|
.24
|
|
Assumption Agreement, dated as of
July 15, 2004, by Las Vegas Sands, Inc. with respect to the
1997 Stock Option Plan (incorporated by reference from
Exhibit 10.25 to the Companys Registration Statement
on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.25
|
|
Assignment and Assumption
Agreement, dated as of December 20, 2004. by and among Las
Vegas Sands, Inc., Las Vegas Sands Corp. and Sheldon G. Adelson
(incorporated by reference from Exhibit 10.27 to the
Companys Current Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.26
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and William P. Weidner (incorporated by
reference from Exhibit 10.27 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.27
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Bradley H. Stone (incorporated by
reference from Exhibit 10.30 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.28
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Robert G. Goldstein (incorporated by
reference from Exhibit 10.33 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.29
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Sheldon G. Adelson (incorporated by
reference from Exhibit 10.36 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.30
|
|
Employment Agreement, dated as of
December 9, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Bradley K. Serwin (incorporated by
reference from Exhibit 10.66 to the Companys Current
Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.31
|
|
Catastrophic Equity Protection
Insurance Agreement, dated as of June 28, 2000, by and
among American Home Assurance Company, Las Vegas Sands, Inc. and
Venetian Casino Resort, LLC (incorporated by reference from
Exhibit 10.15 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002).
|
|
10
|
.32
|
|
Concession Contract for Operating
Casino Games of Chance or Games of Other Forms in the Macao
Special Administrative Region, June 26, 2002, by and among
the Macao Special Administrative Region and Galaxy Casino
Company Limited (incorporated by reference from
Exhibit 10.40 to Las Vegas Sands, Inc.s
Form 10-K
for the year ended December 31, 2002).
|
|
10
|
.33
|
|
Land concession, dated as of
December 10, 2003, issued by the Macao Special
Administrative Region to Venetian Macau (incorporated by
reference from Exhibit 10.39 to the Companys
Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
136
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.34
|
|
Subconcession Contract for
Operating Casino Games of Chance or Games of Other Forms in the
Macao Special Administrative Region, dated December 19,
2002, between Galaxy Casino Company Limited, as concessionaire,
and Venetian Macau S.A., as subconcessionaire (incorporated by
reference from Exhibit 10.65 to the Companys
Amendment No. 5 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 10, 2004).
|
|
10
|
.35
|
|
Purchase Agreement, dated
April 12, 2004, by and among Grand Canal Shops Mall
Subsidiary, LLC, Grand Canal Shops Mall MM Subsidiary, Inc. and
GGP Limited Partnership (incorporated by reference from
Exhibit 10.1 to Las Vegas Sands, Inc.s
Form 8-K
filed on April 16, 2004).
|
|
10
|
.36
|
|
Agreement, made as of
April 12, 2004, by and between Lido Casino Resort, LLC and
GGP Limited Partnership (incorporated by reference from
Exhibit 10.2 to Las Vegas Sands, Inc.s
Form 8-K
filed on April 16, 2004).
|
|
10
|
.37
|
|
Second Amended and Restated
Reciprocal Easement, Use and Operating Agreement, dated as of
May 17, 2004, by and among Venetian Casino Resort, LLC,
Interface Group-Nevada, Inc., Grand Canal Shops II, LLC and
Lido Casino Resort, LLC (incorporated by reference from
Exhibit 10.42 to the Companys Registration Statement
on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.38
|
|
First Amendment to Second Amended
and Restated Reciprocal Easement, Use and Operating Agreement,
dated as of July 30, 2004, by and among Venetian Casino
Resort, LLC, Interface Group-Nevada, Inc., Grand Canal
Shops II, LLC and Lido Casino Resort, LLC (incorporated by
reference from Exhibit 10.43 to the Companys
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.39
|
|
Registration Rights Agreement,
dated as of December 20, 2004, by and among Las Vegas Sands
Corp. and the stockholders named therein (incorporated by
reference from Exhibit 10.39 to the Companys Current
Report on
Form 8-K
dated as of March 31, 2005).
|
|
10
|
.40
|
|
Form of Notice of Restricted Stock
Award under the Las Vegas Sands Corp. 2004 Equity Award Plan
(incorporated by reference from Exhibit 10.40 to the
Companys Annual Report on
Form 10-K
filed on March 2, 2006).
|
|
10
|
.41
|
|
Las Vegas Sands Corp. 2004 Equity
Award Plan (incorporated by reference from Exhibit 10.41 to
the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.42
|
|
Las Vegas Sands Corp. Executive
Cash Incentive Plan (incorporated by reference from
Exhibit 10.42 to the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.43
|
|
Agreement, dated as of
July 8, 2004, by and between Sheldon G. Adelson and Las
Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.47 to the Companys Registration Statement
on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.44
|
|
Aircraft Time Sharing Agreement,
dated as of June 18, 2004, by and between Interface
Operations LLC and Las Vegas Sands, Inc. (incorporated by
reference from Exhibit 10.48 to the Companys
Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.45
|
|
Venetian Hotel Service Agreement,
dated as of June 28, 2001, by and between Venetian Casino
Resort, LLC and Interface Group-Nevada, Inc. d/b/a Sands Expo
and Convention Center (incorporated by reference from
Exhibit 10.49 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.46
|
|
First Amendment to Venetian Hotel
Service Agreement, dated as of June 28, 2004, by and
between Venetian Casino Resort, LLC and Interface Group-Nevada,
Inc. d/b/a Sands Expo and Convention Center (incorporated by
reference from Exhibit 10.50 to the Companys
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.47
|
|
Employment Agreement, dated as of
November 18, 2004, by and among Las Vegas Sands Corp., Las
Vegas Sands, Inc. and Scott D. Henry (incorporated by reference
from Exhibit 10.51 to the Companys Amendment
No. 4 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
137
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.48
|
|
Assignment and Assumption
Agreement, dated as of November 8, 2004, by and among Las
Vegas Sands, Inc., Venetian Casino Resort, LLC, Interface Group
Holding Company, Inc., Interface Group-Nevada, Inc., Interface
Operations LLC, Lido Casino Resort MM, Inc., Grand Canal Shops
Mall MM Subsidiary, Inc. and certain subsidiaries of Venetian
Casino Resort, LLC named therein (incorporated by reference from
Exhibit 10.52 to the Companys Amendment No. 2
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.49
|
|
Construction Loan Agreement, dated
September 30, 2004, by and among Phase II Mall
Holding, LLC and Phase II Mall Subsidiary, LLC, as
borrowers, the lenders party thereto, The Bank of Nova Scotia,
as the Sole Lead Arranger and the Sole Bookrunner, and Sumitomo
Mitsui Banking Corporation, as the Syndication Agent
(incorporated by reference from Exhibit 4.1 to Las Vegas
Sands, Inc.s Report on
Form 8-K
filed on October 20, 2004).
|
|
10
|
.50
|
|
Deed Of Trust, Leasehold Deed of
Trust, Assignment of Rents and Leases, Security Agreement and
Fixture Filing, dated September 30, 2004, made by
Phase II Mall Holding, LLC and Phase II Mall
Subsidiary, LLC jointly and severally as trustor, to First
American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia, in its capacity as
Administrative Agent, as beneficiary (incorporated by reference
from Exhibit 10.54 to the Companys Amendment
No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.51
|
|
Security Agreement, dated as of
September 30, 2004, by and among Phase II Mall
Holding, LLC, Phase II Mall Subsidiary, LLC, and each
subsidiary from time to time party thereto, and The Bank of Nova
Scotia, in its capacity as Administrative Agent for and on
behalf of each Secured Party (incorporated by reference from
Exhibit 10.55 to the Companys Amendment No. 1
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.52
|
|
Master Disbursement Agreement,
dated as of September 30, 2004, among Lido Casino Resort,
LLC, Phase II Mall Holding, LLC, Phase II Mall
Subsidiary, LLC, The Bank of Nova Scotia, as the Bank Agent, The
Bank of Nova Scotia, as the Phase II Mall Agent, Goldman
Sachs Credit Partners L.P. as the Bank Arranger and The Bank of
Nova Scotia, as the Disbursement Agent (incorporated by
reference from Exhibit 10.56 to the Companys
Amendment No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.53
|
|
First Amendment to Master
Disbursement Agreement, dated as of February 22, 2005,
among Lido Casino Resort, LLC, Phase II Mall Holding, LLC,
Phase II Mall Subsidiary, LLC, The Bank of Nova Scotia, as
the Bank Agent, The Bank of Nova Scotia, as the Phase II
Mall Agent, Goldman Sachs Credit Partners L.P. and The Bank of
Nova Scotia, as the Joint Bank Arrangers, and The Bank of Nova
Scotia, as the Disbursement Agent (incorporated by reference
from Exhibit 10.67 to the Companys Quarterly Report
on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.54
|
|
Amended and Restated Deed of
Trust, Assignment of Rents and Leases, Security Agreement and
Fixture Filing, dated as of February 22, 2005, made by Lido
Casino Resort, LLC, as trustor, to First American
Title Insurance Company, as trustee, for the benefit of The
Bank of Nova Scotia, in its capacity as Administrative Agent, as
beneficiary (incorporated by reference from Exhibit 10.53
to the Companys Annual Report on
Form 10-K
(Reg.
No. 333-42147)
filed on April 1, 2005).
|
|
10
|
.55
|
|
Environmental Indemnity Agreement,
dated as of September 30, 2004, by and among Phase II
Mall Holding, LLC, Phase II Mall Subsidiary, LLC, Las Vegas
Sands, Inc., Lido Casino Resort, LLC and Venetian Casino Resort,
LLC to and for the benefit of The Bank of Nova Scotia as
administrative agent for itself and the other agents and lenders
under the Construction Loan Agreement (incorporated by reference
from Exhibit 10.59 to the Companys Amendment
No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.56
|
|
Assignment and Assumption of
Agreement and First Amendment to Agreement, dated
September 30, 2004, made by Lido Casino Resort, LLC, as
assignor, to Phase II Mall Holding, LLC, as assignee, and
to GGP Limited Partnership, as buyer (incorporated by reference
from Exhibit 10.60 to the Companys Amendment
No. 1 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.57
|
|
Tax Indemnification Agreement,
dated as of December 17, 2004, by and among Las Vegas Sands
Corp., Las Vegas Sands, Inc. and the stockholders named therein
(incorporated by reference from Exhibit 10.56 to the
Companys Current Report on
Form 8-K
dated as of March 31, 2005).
|
138
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.58
|
|
Las Vegas Sands Corp. Deferred
Compensation Plan (incorporated by reference from
Exhibit 10.63 to the Companys Amendment No. 2
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.59
|
|
Disbursement Collateral
Account Agreement, dated as of September 30, 2004, by
and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC,
Lido Casino Resort, LLC, The Bank of Nova Scotia, as custodian
and in its capacity as a securities intermediary, and the Bank
of Nova Scotia, in its capacity as the intercreditor agent, for
and on behalf of each bank intercreditor agent as defined
therein, U.S. Bank National Association, as trustee for and
on behalf of the mortgage note holders under the mortgage notes
indenture as defined therein, and the intercreditor agent
(incorporated by reference from Exhibit 10.68 to the
Companys Amendment No. 2 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.60
|
|
First Amendment to Disbursement
Collateral Account Agreement, dated as of February 22,
2005, by and among Las Vegas Sands, Inc., Venetian Casino
Resort, LLC, Lido Casino Resort, LLC, The Bank of Nova Scotia,
as custodian and in its capacity as a securities intermediary,
and the Bank of Nova Scotia, in its capacity as the
intercreditor agent, for and on behalf of each bank
intercreditor agent as defined therein, U.S. Bank National
Association, as trustee for and on behalf of the mortgage note
holders under the mortgage notes indenture as defined therein,
and the intercreditor agent (incorporated by reference from
Exhibit 10.69 to the Companys Quarterly Report on
Form 10-Q
filed on May 16, 2005).
|
|
10
|
.61
|
|
Form of Restricted Stock Award
Agreements under the 2004 Equity Award Plan (incorporated by
reference from Exhibit 10.70 to the Companys
Amendment No. 4 Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.62
|
|
Form of Stock Option Agreements
under the 2004 Equity Award Plan (incorporated by reference from
Exhibit 10.71 to the Companys Amendment No. 4
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.63
|
|
Aircraft Interchange Agreement,
dated as of January 1, 2005, by and between Interface
Operations LLC and Las Vegas Sands Corp. (incorporated by
reference from Exhibit 10.2 to the Companys Quarterly
Report on
Form 10-Q
filed on November 15, 2005).
|
|
10
|
.64
|
|
Aircraft Time Share Agreement,
dated as of January 1, 2005, by and between Interface
Operations LLC and Las Vegas Sands Corp. (incorporated by
reference from Exhibit 10.3 to the Companys Quarterly
Report on
Form 10-Q
filed on November 15, 2005).
|
|
10
|
.65
|
|
Form of Notice of Grant of Stock
Option under the Las Vegas Sands Corp. 2004 Equity Award Plan
(incorporated by reference from Exhibit 10.65 to the
Companys Quarterly Report on
Form 10-K
filed on March 2, 2006).
|
|
10
|
.66
|
|
Credit Agreement, dated as of
May 25, 2006, by and among VML US Finance LLC, Venetian
Macau Limited, the financial institutions listed therein as
lenders, The Bank of Nova Scotia, Banco Nacional Ultramarino,
S.A., Sumitomo Mitsui Banking Corporation, Goldman Sachs Credit
Partners L.P., Lehman Brothers Inc. and Citigroup Global
Markets, Inc. (incorporated by reference from Exhibit 10.1
to the Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.67
|
|
Disbursement Agreement, dated as
of May 25, 2006, by and among VML US Finance LLC, Venetian
Cotai Limited, Venetian Macau Limited and The Bank of Nova
Scotia (incorporated by reference from Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.68
|
|
Employment Agreement, dated as of
June 1, 2006, among Las Vegas Sands Corp., Las Vegas Sands,
LLC and Robert Rozek (incorporated by reference from
Exhibit 10.3 to the Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.69
|
|
Amendment No. 1, dated as of
June 20, 2006 and effective as of June 8, 2006, to
Employment Agreement, dated as of November 18, 2004, among
Las Vegas Sands Corp., Las Vegas Sands, LLC and Scott D. Henry
(incorporated by reference from Exhibit 10.4 to the
Companys Quarterly Report on
Form 10-Q
filed on August 9, 2006).
|
|
10
|
.70
|
|
Facility Agreement, dated as of
August 18, 2006, among Marina Bay Sands Pte. Ltd., Goldman
Sachs (Singapore) Pte., DBS Bank Ltd., UOB Asia Limited,
Oversea Chinese Banking Corporation Limited and the
financial institutions listed therein as Original Lenders
(incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
139
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.71
|
|
Purchase Agreement, dated as of
August 18, 2006, among Marina Bay Sands Pte. Ltd., the
Purchasers named therein, Las Vegas Sands Corp., Goldman Sachs
(Singapore) Pte. and DBS Bank Ltd. (incorporated by reference
from Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.72
|
|
Development Agreement, dated
August 23, 2006, between the Singapore Tourism Board and
Marina Bay Sands Pte. Ltd. (incorporated by reference from
Exhibit 10.3 to the Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.73
|
|
Third Amended and Restated
Reciprocal Easement, Use and Operating Agreement, dated as of
July 26, 2006, by and among Venetian Casino Resort, LLC,
Lido Casino Resort, LLC, Phase II Mall Subsidiary, LLC,
Grand Canal Shops II, LLC, and Interface Group-Nevada, Inc.
(incorporated by reference from Exhibit 10.4 to the
Companys Quarterly Report on
Form 10-Q
filed on November 9, 2006).
|
|
10
|
.74*
|
|
FF&E Facility Credit
Agreement, dated as of December 14, 2006, among Las Vegas
Sands, LLC, Venetian Casino Resort, LLC and Lido Casino Resort,
LLC, as borrowers, the Financial Institutions named therein as
Lenders and General Electric Capital Corporation, as
Administrative Agent.
|
|
10
|
.75
|
|
Form of Restricted Stock Award
Agreement (incorporated by reference from Exhibit 10.1 to
the Companys Current Report on
Form 8-K
filed on February 9, 2007).
|
|
10
|
.76*
|
|
First Amendment, dated as of
February 5, 2007, to the Las Vegas Sands Corp. 2004 Equity
Award Plan.
|
|
10
|
.77*
|
|
Amendment No. 2, dated as of
July 1, 2006, between Atlantic-Pacific Las Vegas, LLC and
Venetian Casino Resort, LLC.
|
|
10
|
.78*
|
|
First Amendment to Lease, dated as
of July 11, 2006, between Grand Canal Shops II, LLC
and Venetian Casino Resort, LLC.
|
|
21
|
.1*
|
|
Subsidiaries of Las Vegas Sands
Corp.
|
|
23
|
.1*
|
|
Consent of PricewaterhouseCoopers
LLP.
|
|
31
|
.1*
|
|
Certification of the Chief
Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31
|
.2*
|
|
Certification of the Chief
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32
|
.1*
|
|
Certification of Chief Executive
Officer of Las Vegas Sands Corp. pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
32
|
.2*
|
|
Certification of Chief Financial
Officer of Las Vegas Sands Corp. pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
|
|
Confidential treatment has been requested and granted with
respect to portions of this exhibit, and such confidential
portions have been deleted and replaced with ** and
filed separately with the Securities and Exchange Commission
pursuant to Rule 406 under the Securities Act of 1933.
|
140
Exhibit 10.74
Execution copy
FF&E FACILITY CREDIT AGREEMENT
DATED AS OF DECEMBER 14, 2006
AMONG
LAS VEGAS SANDS, LLC,
VENETIAN CASINO RESORT, LLC,
and
LIDO CASINO RESORT, LLC,
as Borrowers,
THE LENDERS LISTED HEREIN,
as Lenders,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent
GE CAPITAL MARKETS, INC.,
as Lead Arranger
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
Section 1. Definitions
|
|
|
2
|
|
|
|
|
1.1 Certain Defined Terms
|
|
|
2
|
|
|
|
|
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement
|
|
|
48
|
|
|
|
|
1.3 Other Definitional Provisions and Rules of Construction
|
|
|
48
|
|
|
|
|
|
|
Section 2. Amounts and Terms of Commitments and Loans
|
|
|
48
|
|
|
|
|
2.1 Commitments; Making of Loans; the Register; Notes
|
|
|
48
|
|
|
|
|
2.2 Interest on the Loans
|
|
|
52
|
|
|
|
|
2.3 Fees
|
|
|
55
|
|
|
|
|
2.4 Repayments, Prepayments and Reductions in Commitments; General Provisions Regarding Payments
|
|
|
56
|
|
|
|
|
2.5 Use of Proceeds
|
|
|
61
|
|
|
|
|
2.6 Special Provisions Governing Eurodollar Rate Loans
|
|
|
61
|
|
|
|
|
2.7 Increased Costs; Taxes; Capital Adequacy
|
|
|
63
|
|
|
|
|
2.8 Obligation of Lenders to Mitigate
|
|
|
67
|
|
|
|
|
2.9 Obligations Joint and Several
|
|
|
68
|
|
|
|
|
2.10 Right of Financing
|
|
|
68
|
|
|
|
|
2.11 Reliance on Notices; Appointment of Borrower Representative
|
|
|
69
|
|
|
|
|
|
|
Section 3. [Intentionally Omitted.]
|
|
|
69
|
|
|
|
|
|
|
Section 4. Conditions to Loans
|
|
|
69
|
|
|
|
|
4.1 Conditions to the Occurrence of the Closing Date
|
|
|
69
|
|
|
|
|
4.2 Additional Conditions to Loans on or after the Closing Date
|
|
|
75
|
|
|
|
|
|
|
Section 5. Borrowers Representations and Warranties
|
|
|
77
|
|
|
|
|
5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries
|
|
|
77
|
|
|
|
|
5.2
Authorization of Borrowing, etc.
|
|
|
78
|
|
|
|
|
5.3 Financial Condition
|
|
|
79
|
|
|
|
|
5.4 No Material Adverse Change
|
|
|
80
|
|
|
|
|
5.5 Title to Properties; Liens; Real Property
|
|
|
80
|
|
|
|
|
5.6 Litigation; Adverse Facts
|
|
|
81
|
|
|
|
|
5.7 Payment of Taxes
|
|
|
81
|
|
|
|
|
5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts
|
|
|
81
|
|
i
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
|
|
Page
|
|
5.9 Governmental Regulation
|
|
|
82
|
|
|
|
|
5.10 Securities Activities
|
|
|
82
|
|
|
|
|
5.11 Employee Benefit Plans
|
|
|
82
|
|
|
|
|
5.12 Certain Fees
|
|
|
83
|
|
|
|
|
5.13 Environmental Protection
|
|
|
83
|
|
|
|
|
5.14 Employee Matters
|
|
|
84
|
|
|
|
|
5.15 Solvency
|
|
|
84
|
|
|
|
|
5.16 Matters Relating to Collateral
|
|
|
84
|
|
|
|
|
5.17 [Intentionally Omitted]
|
|
|
85
|
|
|
|
|
5.18 Accuracy of Information
|
|
|
85
|
|
|
|
|
5.19 Bank Credit Facility Documents; Advances under Disbursement Agreement
|
|
|
85
|
|
|
|
|
|
|
Section 6. Borrowers Affirmative Covenants
|
|
|
85
|
|
|
|
|
6.1 Financial Statements and Other Reports
|
|
|
85
|
|
|
|
|
6.2
Corporate Existence, etc.
|
|
|
92
|
|
|
|
|
6.3 Payment of Taxes and Claims; Tax Consolidation
|
|
|
92
|
|
|
|
|
6.4 Maintenance of Properties; Insurance; Application of Net Loss Proceeds
|
|
|
93
|
|
|
|
|
6.5 Inspection; Lender Meeting
|
|
|
96
|
|
|
|
|
6.6 Compliance with Laws, etc.; Permits
|
|
|
97
|
|
|
|
|
6.7 Environmental Covenant.
|
|
|
98
|
|
|
|
|
6.8 Compliance with Material Contracts
|
|
|
100
|
|
|
|
|
6.9 Discharge of Liens
|
|
|
100
|
|
|
|
|
6.10 Further Assurances
|
|
|
101
|
|
|
|
|
6.11 Future Subsidiaries or Restricted Subsidiaries
|
|
|
102
|
|
|
|
|
6.12 [Intentionally Omitted]
|
|
|
103
|
|
|
|
|
6.13 Interest Rate Protection
|
|
|
103
|
|
|
|
|
6.14 [Intentionally Omitted]
|
|
|
104
|
|
|
|
|
6.15 Landlords Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases
|
|
|
104
|
|
|
|
|
6.16 Modification of Certain Agreements
|
|
|
104
|
|
|
|
|
|
|
Section 7. Borrowers Negative Covenants
|
|
|
104
|
|
|
|
|
7.1 Indebtedness
|
|
|
104
|
|
ii
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
|
|
Page
|
|
7.2 Liens and Related Matters
|
|
|
107
|
|
|
|
|
7.3 Investments; Joint Ventures; Formation of Subsidiaries
|
|
|
109
|
|
|
|
|
7.4 Contingent Obligations
|
|
|
112
|
|
|
|
|
7.5 Restricted Payments
|
|
|
114
|
|
|
|
|
7.6 Financial Covenants
|
|
|
116
|
|
|
|
|
7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions
|
|
|
117
|
|
|
|
|
7.8 Sales and Lease-Backs
|
|
|
120
|
|
|
|
|
7.9 Sale or Discount of Receivables
|
|
|
121
|
|
|
|
|
7.10 Transactions with Shareholders and Affiliates
|
|
|
121
|
|
|
|
|
7.11 Disposal of Subsidiary Stock
|
|
|
124
|
|
|
|
|
7.12 Conduct of Business
|
|
|
124
|
|
|
|
|
7.13 Certain Restrictions on Changes to Certain Documents
|
|
|
125
|
|
|
|
|
7.14 Consolidated Capital Expenditures
|
|
|
126
|
|
|
|
|
7.15 Fiscal Year
|
|
|
127
|
|
|
|
|
7.16 [Intentionally Omitted]
|
|
|
127
|
|
|
|
|
7.17 [Intentionally Omitted]
|
|
|
127
|
|
|
|
|
7.18 Declaration of Restricted Subsidiaries
|
|
|
127
|
|
|
|
|
7.19 Intentionally Omitted
|
|
|
127
|
|
|
|
|
7.20 Commonality of Obligors and Restricted Subsidiaries
|
|
|
127
|
|
|
|
|
|
|
Section 8. Events of Default
|
|
|
127
|
|
|
|
|
8.1 Failure to Make Payments When Due
|
|
|
127
|
|
|
|
|
8.2 Default under Other Indebtedness or Contingent Obligations
|
|
|
127
|
|
|
|
|
8.3 Breach of Certain Covenants
|
|
|
128
|
|
|
|
|
8.4 Breach of Warranty
|
|
|
128
|
|
|
|
|
8.5 Other Defaults Under Loan Documents
|
|
|
128
|
|
|
|
|
8.6
Involuntary Bankruptcy; Appointment of Receiver, etc.
|
|
|
129
|
|
|
|
|
8.7
Voluntary Bankruptcy; Appointment of Receiver, etc.
|
|
|
129
|
|
|
|
|
8.8 Judgments and Attachments
|
|
|
130
|
|
|
|
|
8.9 Dissolution
|
|
|
130
|
|
|
|
|
8.10 Employee Benefit Plans
|
|
|
130
|
|
|
|
|
8.11 Change in Control
|
|
|
130
|
|
|
|
|
8.12 Failure of Guaranty; Repudiation of Obligations
|
|
|
130
|
|
iii
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
|
|
Page
|
|
8.13 Default Under or Termination of Operative Documents
|
|
|
131
|
|
|
|
|
8.14 Default Under or Termination of Permits
|
|
|
131
|
|
|
|
|
8.15 Intentionally Omitted
|
|
|
131
|
|
|
|
|
8.16 Certain Investments in any Excluded Subsidiary
|
|
|
131
|
|
|
|
|
8.17 Conforming Adelson L/C
|
|
|
131
|
|
|
|
|
|
|
Section 9. Agents and Arranger
|
|
|
132
|
|
|
|
|
9.1 Appointment
|
|
|
132
|
|
|
|
|
9.2 Powers and Duties; General Immunity
|
|
|
133
|
|
|
|
|
9.3 Representations and Warranties; No Responsibility for Appraisal of Credit Worthiness
|
|
|
135
|
|
|
|
|
9.4 Right to Indemnity
|
|
|
136
|
|
|
|
|
9.5 Successor Administrative Agent
|
|
|
136
|
|
|
|
|
9.6 Collateral Documents and Subsidiary Guaranty
|
|
|
136
|
|
|
|
|
9.7 Intercreditor Agreements
|
|
|
137
|
|
|
|
|
9.8 Appointment of Arranger
|
|
|
138
|
|
|
|
|
|
|
Section 10. Miscellaneous
|
|
|
138
|
|
|
|
|
10.1 Assignments and Participations in Loans
|
|
|
138
|
|
|
|
|
10.2 Expenses
|
|
|
141
|
|
|
|
|
10.3 Indemnity
|
|
|
142
|
|
|
|
|
10.4 Set-Off; Security Interest in Deposit Accounts
|
|
|
143
|
|
|
|
|
10.5 Ratable Sharing
|
|
|
143
|
|
|
|
|
10.6 Amendments and Waivers
|
|
|
144
|
|
|
|
|
10.7 Certain Matters Affecting Lenders
|
|
|
145
|
|
|
|
|
10.8 Independence of Covenants
|
|
|
146
|
|
|
|
|
10.9 Notices
|
|
|
146
|
|
|
|
|
10.10 Survival of Representations, Warranties and Agreements
|
|
|
146
|
|
|
|
|
10.11 Failure or Indulgence Not Waiver; Remedies Cumulative
|
|
|
147
|
|
|
|
|
10.12 Marshalling; Payments Set Aside
|
|
|
147
|
|
|
|
|
10.13 Severability
|
|
|
147
|
|
|
|
|
10.14 Obligations Several; Independent Nature of Lenders Rights
|
|
|
147
|
|
|
|
|
10.15 Headings
|
|
|
147
|
|
|
|
|
10.16 Applicable Law
|
|
|
148
|
|
iv
TABLE OF CONTENTS
(Continued)
|
|
|
|
|
|
|
Page
|
|
10.17 Successors and Assigns
|
|
|
148
|
|
|
|
|
10.18 Consent to Jurisdiction and Service of Process
|
|
|
148
|
|
|
|
|
10.19 Waiver of Jury Trial
|
|
|
149
|
|
|
|
|
10.20 Confidentiality
|
|
|
149
|
|
|
|
|
10.21 Counterparts; Effectiveness
|
|
|
150
|
|
|
|
|
10.22 USA Patriot Act
|
|
|
150
|
|
|
|
|
10.23 Electronic Execution of Assignments
|
|
|
150
|
|
|
|
|
10.24 Gaming Authorities
|
|
|
150
|
|
|
|
|
10.25 Termination of Disbursement Agreement
|
|
|
151
|
|
|
|
|
10.26 Press Releases and Related Matters
|
|
|
151
|
|
|
|
|
SCHEDULES
|
2.1
|
|
Lenders Commitments, Pro Rata Shares, Notice Information
|
5.1A
|
|
Jurisdiction of Organizations
|
5.1C
|
|
Ownership of the Borrowers
|
5.1D
|
|
Subsidiaries of the Borrowers
|
5.1E
|
|
Options
|
5.2
|
|
Governmental Consents
|
5.5
|
|
Mortgaged Real Property and Material Real Estate
|
5.6
|
|
Litigation
|
5.8
|
|
Material Contracts
|
5.11
|
|
Employee Benefit Plans
|
5.13
|
|
Environmental Matters
|
5.16B
|
|
Permits
|
7.1
|
|
Indebtedness Existing on the Closing Date
|
7.2
|
|
Liens Existing on the Closing Date
|
7.3
|
|
Investments Existing on the Closing Date
|
7.7
|
|
Leases Existing on the Closing Date
|
7.10
|
|
Affiliate Transactions Existing on the Closing Date
|
7.13C
|
|
Cooperation Agreement Amendment
|
A
|
|
Designated FF&E
|
v
EXHIBITS
|
|
|
A-1
|
|
Form of Term Delayed Draw Loan Note
|
A-2
|
|
Form of Term Funded Loan Note
|
B-1
|
|
Form of Borrowing Notice
|
B-2
|
|
Form of Borrowing Base Certificate
|
B-3
|
|
Form of Construction Consultant Certificate
|
B-4
|
|
Form of Conversion/Continuation Notice
|
C
|
|
Form of Compliance Certificate
|
D-1
|
|
Form of Assignment Agreement
|
D-2
|
|
Form of Certificate of Non-Bank Status
|
E
|
|
Form of Security Agreement
|
F
|
|
Form of Subsidiary Guaranty
|
G
|
|
Form of Intercreditor Agreement
|
H
|
|
Form of Financial Condition Certificate
|
I-1
|
|
Form of Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
|
I-2
|
|
Form of Opinion of Lionel Sawyer & Collins
|
J
|
|
Phase II Project Insurance Requirements
|
K
|
|
Schedule of Security Filings
|
L
|
|
Form of Tax Sharing Agreement
|
LAS VEGAS SANDS, LLC,
VENETIAN CASINO RESORT, LLC
and
LIDO CASINO RESORT, LLC
FF&E FACILITY CREDIT AGREEMENT
This
FF&E FACILITY CREDIT AGREEMENT
is dated as of December 14, 2006 and entered into by and
among
LAS VEGAS SANDS, LLC
, a Nevada limited liability company formerly known as Las Vegas Sands,
Inc. (
LVSI
),
VENETIAN CASINO RESORT, LLC
, a Nevada limited liability company (
Venetian
),
LIDO
CASINO RESORT, LLC,
a Nevada limited liability company (
LCR
), as joint and several obligors (each
of LVSI, Venetian and LCR, a
Borrower
and, collectively, the
Borrowers
),
THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
(each individually referred to herein as a
Lender
and collectively as the
Lenders
), and
GENERAL ELECTRIC CAPITAL CORPORATION
, a Delaware
corporation (in its individual capacity,
GE Capital
), as administrative agent for the Lenders (in
such capacity, the
Administrative Agent
).
R E C I T A L S
WHEREAS
, LVSI and Venetian and certain of their Affiliates (such capitalized terms and other
capitalized terms used in these recitals have the meanings given in subsection 1.1 of this
Agreement) own and operate the Existing Facility;
WHEREAS
, LCR (an indirect, wholly-owned subsidiary of LVSI and Venetian) owns the Site and is
developing and constructing and intends to operate the Phase II Project;
WHEREAS
, the Phase II Mall Subsidiary (an indirect, wholly-owned subsidiary of the Borrowers)
owns the Phase II Mall, and the Phase II Mall Borrowers have entered into the Mall Financing
Agreement to finance the development and construction of the Phase II Mall and related transaction
expenses;
WHEREAS
, Borrowers have requested that Lenders extend term credit facilities to Borrowers of
up to One Hundred Forty-Two Million Nine Hundred Thirty Four Thousand One Hundred Seventy Four
Dollars and Ninety Six Cents ($142,934,174.96) in the aggregate for the purpose of advancing up to
Seven Million Nine Hundred Thirty Four Thousand One Hundred Seventy Four Dollars and Ninety Six
Cents ($7,934,174.96) to be applied to refinance the Existing FF&E Note and up to One Hundred
Thirty-Five Million Dollars ($135,000,000) to be applied to finance or refinance the acquisition by
any Borrower of certain equipment, fixtures, furniture, furnishings and other goods to be used for
or installed at the Phase II Hotel/Casino (as hereinafter defined) and/or the Existing Facility,
and for these purposes, Lenders are willing to make certain loans and other extensions of credit to
Borrowers of up to such amount upon the terms and conditions set forth herein; and
WHEREAS
, the Lenders party hereto have agreed to make Term Loans hereunder in an amount up to
their respective commitments as set forth on Schedule 2.1 attached hereto.
NOW, THEREFORE,
the parties hereto agree as follows:
Section 1.
Definitions
.
1.1
Certain Defined Terms
.
The following terms used in this Agreement shall have the following meanings:
Adelson
means Sheldon G. Adelson, an individual.
Adjusted Eurodollar Rate
means, for any Interest Rate Determination Date with respect to an
Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by
dividing
(a) the
arithmetic average (rounded upward to the nearest 1/100 of one percent) of the offered quotations,
if any, to first class banks in the interbank Eurodollar market for Dollar deposits of amounts in
same day funds comparable to the respective principal amounts of the Eurodollar Rate Loans of the
Administrative Agent for which the Adjusted Eurodollar Rate is then being determined with
maturities comparable to such Interest Period as of approximately 10:00 A.M. (New York time) on
such Interest Rate Determination Date
by
(b) a percentage equal to 100%
minus
the
stated maximum rate of all reserve requirements (including any marginal, emergency, supplemental,
special or other reserves) applicable on such Interest Rate Determination Date to any member bank
of the Federal Reserve System in respect of Eurocurrency liabilities as defined in Regulation D
(or any successor category of liabilities under Regulation D).
Administrative Agent
is defined in the preamble and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5.
Administrative Agents Fee Letter
means the fee letter, dated as of the Closing Date among
the Administrative Agent and the Borrowers.
Affected Lender
is defined in subsection 2.6C.
Affected Loans
is defined in subsection 2.6C.
Affiliate
, as applied to any Person, means any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with, that Person
(excluding, however, any trustee under, or any committee with responsibility for administering any
Pension Plan). With respect to any Lender or Approved Fund, a Person shall be deemed to be
controlled by another Person if such other Person possesses, directly or indirectly, power to
vote 51% or more of the securities (on a fully diluted basis) having ordinary voting power for the
election of directors, managing general partners or managers, as the case may be. With respect to
all other Persons, control (including, with correlative meanings, the terms controlling,
controlled by and under common control with), as applied to any such other Person, means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities or by contract or
otherwise; provided, however, the beneficial owner of 20% or more of the voting Securities of a
Person shall be deemed to have control.
2
Agent
means, individually, the Administrative Agent and the Arranger, and
Agents
means the
Administrative Agent and the Arranger, collectively.
Aggregate Amounts Due
is defined in subsection 10.5.
Agreement
means, on any date, this FF&E Facility Credit Agreement dated as of the Closing
Date and as thereafter from time to time amended, supplemented, amended and restated or otherwise
modified from time to time and in effect on such date.
Alternative Vendor Financing
has the meaning ascribed to it in Section 2.10.
Applicable Margin
means (a) for Loans accruing interest as Base Rate Loans, 1.00%, and (b)
for Loans accruing interest as Eurodollar Rate Loans, 2.00%;
provided
,
however
,
that
(A) at any time that the Bank Credit Facility Loans are rated Ba2 or higher by Moodys and BB
or higher by S&P (or any equivalent rating by Moodys or S&P) (in each case with at least a stable
outlook), as evidenced by an Officers Certificate of the Borrower Representative, the Applicable
Margin for the Loans referred to in clauses (a) and (b) above shall be immediately decreased by
0.25% to 0.75% and 1.75%, respectively;
further
,
provided
, that:
(i) if at any time a public or private debt rating is provided by one but not both of
Moodys and S&P, the Applicable Margin shall be determined by reference to the public or
private debt rating provided by the agency which gives such rating, without regard to the
requirement above that there be two ratings;
(ii) if at any time no debt rating for the Bank Credit Facility Loans is provided by
Moodys and no debt rating for the Bank Credit Facility Loans is provided by S&P, any
existing 0.25% decrease in the Applicable Margin pursuant to this clause (A) shall
automatically rescind; and
(iii) if at any time the Bank Credit Facility Loans are rated below Ba2 by Moodys or
below BB by S&P (or any equivalent rating by Moodys or S&P) (in each case with at least a
stable outlook), any existing 0.25% decrease in the Applicable Margin pursuant to this
clause (A) shall automatically rescind; or
(B) if after the Closing Date the interest rate margin applicable to Bank Credit Facility
Loans based upon the Adjusted Eurodollar Rate (as defined in the Bank Credit Agreement as in effect
on the date hereof or any substantially equivalent definition) is reduced to or below 1.50% (or
with respect to Bank Credit Facility Loans based upon the Base Rate (as defined in the Bank Credit
Agreement as in effect on the date hereof or any substantially equivalent definition), to or below
0.50%), (a) the Applicable Margin for Loans accruing interest as Base Rate Loans shall be reduced
on a single occasion by 0.25% to 0.75% and (b) the Applicable Margin for Loans accruing interest as
Eurodollar Rate Loans shall be reduced on a single occasion by 0.25% to 1.75%, as applicable;
further
,
provided
, that: (i) Lenders receive the benefit of any more favorable
terms provided to the Bank Administrative Agent or other agent or Bank Lender under the Bank Credit
Agreement in connection with any such reduction of the interest rate margin(s) applicable to the
Bank Credit Facility Loans, and (ii) if the interest rate margin applicable to Bank Credit Facility
Loans based upon the Adjusted Eurodollar Rate is later increased above
3
1.50% (or with respect to Bank Credit Facility Loans based upon the Base Rate, above 0.50%),
any existing 0.25% decrease in the Applicable Margin pursuant to this clause (B) shall
automatically rescind;
provided
,
further
that in no event pursuant to clauses (A) or (B) of this
proviso will (a) the Applicable Margin for Loans accruing interest as Base Rate Loans be reduced
below 0.75% and (b) the Applicable Margin for Loans accruing interest as Eurodollar Rate Loans be
reduced below 1.75%.
Applied Amount
is defined in subsection 2.4B(iv)(b)(1).
Approved Fund
means, (i) a fund that invests in bank loans, or (ii) relative to any Lender,
any other fund that invests in bank loans and is advised or managed by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.
Arranger
means GE Capital Markets, Inc., as Lead Arranger.
Asset Sale
means the sale by a Borrower or any of its Restricted Subsidiaries to any Person
of (a) any of the stock of any of such Persons Restricted Subsidiaries, (b) substantially all of
the assets of any division or line of business of a Borrower or any of its Restricted Subsidiaries,
or (c) any other assets (whether tangible or intangible) of a Borrower or any of its Restricted
Subsidiaries (other than (i) inventory or goods sold in the ordinary course of business, (ii) any
other assets to the extent that the aggregate fair market value of such assets sold during any
Fiscal Year is less than or equal to $5,000,000 or (iii) any sales, transfers or dispositions
permitted by subsection 7.7 (other than subsection 7.7 (iv)).
Assignment Agreement
means an Assignment Agreement in substantially the form of
Exhibit
D-1
annexed hereto.
Assignment Effective Date
is defined in subsection 10.1B(ii).
Authorized Officer
means, relative to any Loan Party, those of its officers, general
partners or managing members (as applicable) or those of the officers of the general partners or
managing members (as applicable) whose signatures and incumbency shall have been certified to the
Administrative Agent and the Lenders pursuant to subsection 4.1A.
Bank Administrative Agent
means and includes The Bank of Nova Scotia, in its capacity as
administrative agent for the Bank Credit Facility existing on the Closing Date (or any successor
thereto) and any administrative agent or similar agent for any other Bank Credit Facility (or any
successor thereto).
Bank Agents
means and includes, collectively, the Bank Administrative Agent and any other
agents under any Bank Credit Facility Documents, as well as any successor to any of the foregoing.
Bank Credit Agreement
means and includes that certain Amended and Restated Credit Agreement,
dated as of February 22, 2005, as amended by the First Amendment thereto dated as of September 16,
2005, among, LVSI, Venetian, the lenders listed therein, the Bank
4
Administrative Agent, the Bank Syndication Agent and Wells Fargo Foothill, Inc., CIT
Group/Equipment Financing, Inc. and Commerzbank AG, as documentation agents, as the same may be
amended, renewed, extended, substituted, refinanced, restructured, replaced, restated, supplemented
or otherwise modified from time to time, and shall also include any other agreement or agreements
which refinances or otherwise replaces, substitutes or refunds such Bank Credit Agreement.
Bank Credit Facility
means and includes one or more debt or credit facilities (including any
Bank Credit Agreement) with banks or other institutional lenders providing for revolving credit
loans, term loans, receivables financing or letters of credit, in each case, as any of the
foregoing, in whole or in part, in one or more instances, may be amended, renewed, extended,
substituted, refinanced, restructured, replaced, restated, supplemented or otherwise modified from
time to time (including, without limitation, any successive renewals, extensions, substitutions,
refinancings, restructurings, replacements, supplementations or other modifications of the
foregoing and including, without limitation, any amendment increasing the amount of Indebtedness
incurred or available to be borrowed thereunder, extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby or deleting, adding or substituting one or more parties
thereto (whether or not such added or substituted parties are banks or other institutional
lenders)), whether any such amendment, renewal, extension, substitution, refinancing,
restructuring, replacement, restatement, supplement or other modification (1) occurs simultaneously
or not with the termination or repayment of a prior Bank Credit Facility or (2) occurs on one or
more separate occasions.
Bank Credit Facility Closing Date
means February 22, 2005.
Bank Credit Facility Collateral Documents
means and includes (i) in connection with the Bank
Credit Facility existing on the Closing Date, the Security Agreement, the Deeds of Trust and
the Collateral Account Agreement, each as defined in the related Bank Credit Agreement, and all
other documents delivered by a Loan Party pursuant to any of the Loan Documents in order to
grant to the Administrative Agent or the Intercreditor Agent, on behalf of the Secured
Parties, a Lien (or to perfect such Lien) on any Collateral as security for the Obligations,
as each such quoted term is defined in the related Bank Credit Agreement, as well as (ii) any
similar or other collateral documents that are otherwise provided to secure any obligations in
connection with such Bank Credit Facility or any other Bank Credit Facility.
Bank Credit Facility Documents
means (i) with respect to the Bank Credit Agreement, each
Bank Credit Agreement and all other agreements, instruments, documents and certificates executed
and delivered in connection therewith and the transactions contemplated thereby (including the
Disbursement Agreement) and (ii) with respect to any Bank Credit Facility (other than the Bank
Credit Agreement), the credit or loan agreement with respect to such Bank Credit Facility and all
other agreements, instruments, documents and certificates executed and delivered in connection with
therewith.
Bank Credit Facility Loans
means and includes the loans made pursuant to any Bank Credit
Agreement.
5
Bank Intercreditor Agent
means The Bank of Nova Scotia in its capacity as intercreditor
agent under the Bank Credit Facility Documents for the Bank Credit Facility existing on the Closing
Date or any successor thereto.
Bank Lenders
means and includes the lenders under any Bank Credit Agreement.
Bank Mortgaged Property
means and includes the real property described in
Schedule
5.5
, as well as any other real property that is subject to a Lien to secure any obligations
under any Bank Credit Facility Documents.
Bank Syndication Agent
means and includes Goldman Sachs Credit Partners L.P., in its
capacity as syndication agent under the Bank Credit Facility Documents for the Bank Credit Facility
existing on the Closing Date and any syndication agent or similar agent under any other Bank Credit
Facility Documents, including, in each case, any successor thereto.
Bankruptcy Code
means Title 11 of the United States Code entitled Bankruptcy, as now and
hereafter in effect, or any successor statute.
Base Rate
means, at any time, the higher of (a) the Prime Rate or (b) the rate which is 1/2
of 1% in excess of the Federal Funds Effective Rate.
Base Rate Loans
means Loans bearing interest at rates determined by reference to the Base
Rate as provided in subsection 2.2A.
Borrower Representative
is defined in subsection 2.11.
Borrowers
is defined in the preamble and shall mean, as the context requires, all or any of
the Borrowers.
Borrowing Availability
means as of any date of determination, the lesser of (i) the
aggregate amount of the Term Delayed Draw Loan Commitments of all Lenders less the aggregate
original principal amount of Term Delayed Draw Loans theretofore advanced hereunder, and (ii) the
Borrowing Base less the aggregate amount of Delayed Draw Term Loans outstanding as of such date.
Borrowing Base
means, with respect to any Borrowing Base Certificate delivered from time to
time, an amount equal to the sum at such time of 100% of the Total Permitted Costs of Eligible FF&E
set forth in such Borrowing Base Certificate, in each case, less any Reserves established by
Administrative Agent in its reasonable determination at such time.
Borrowing Base Certificate
means a certificate to be executed and delivered from time to
time by each Borrower in the form attached to the Agreement as
Exhibit B-2
.
Borrowing Notice
means a notice substantially in the form of
Exhibit B-1
annexed
hereto delivered by the Borrowers to the Administrative Agent pursuant to subsection 2.1C with
respect to a proposed borrowing.
Bovis
is defined in the definition of Construction Litigation hereinbelow.
6
Business Day
means (a) for all purposes other than as covered by clause (b) below, any day
excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New
York or Nevada or is a day on which banking institutions located in either such state are
authorized or required by law or other governmental action to close, and (b) with respect to all
notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or
any Eurodollar Rate Loans, any day that is a Business Day described in clause (a) above and that is
also a day for trading by and between banks in Dollar deposits in the London interbank market.
Capital Lease
, as applied to any Person, means any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of that Person. For purposes of this Agreement and each other
Loan Document, the amount of a Persons obligation under a Capital Lease shall be the capitalized
amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the
date of the last payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a premium or a penalty.
Cash
means money, currency or a credit balance (in each case denominated in Dollars) in a
Deposit Account.
Cash Equivalents
means (a) Dollars, (b) (i) direct obligations of the United States
(including obligations issued or held in book-entry form on the books of the Department of the
Treasury of the United States) or obligations fully guaranteed by the United States, (ii)
obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any other
agency or instrumentality of the United States, (iii) interest-bearing demand or time deposits
(which may be represented by certificates of deposit) issued by banks having general obligations
rated (on the date of acquisition thereof) at least A or the equivalent by Standard & Poors
Ratings Group, a division of McGraw Hill, Inc., or Moodys Investors Service, Inc. (together with
their respective successors and with any other nationally recognized credit rating agency if
neither of such corporations is then currently rating the pertinent obligations, a
Rating Agency
)
or, if not so rated, secured at all times, in the manner and to the extent provided by law, by
collateral security in clause (i) or (ii) of this definition, of a market value of no less than the
amount of monies so invested, (iv) commercial paper rated (on the date of acquisition thereof) at
least A-1 or P-1 or the equivalent by any Rating Agency issued by any Person, (v) repurchase
obligations for underlying securities of the types described in clause (i) or (ii) above, entered
into with any commercial bank or any other financial institution having long-term unsecured debt
securities rated (on the date of acquisition thereof) at least A or A2 or the equivalent by any
Rating Agency in connection with which such underlying securities are held in trust or by a
third-party custodian, (vi) guaranteed investment contracts of any financial institution which has
a long-term debt rated (on the date of acquisition thereof) at least A or A2 or the equivalent
by any Rating Agency, (vii) obligations (including both taxable and non-taxable municipal
securities) issued or guaranteed by, and any other obligations the interest on which is excluded
from income for Federal income tax purposes issued by, any state of the United States or District
of Columbia or the Commonwealth of Puerto Rico or any political subdivision, agency, authority or
instrumentality thereof, which issuer or guarantor has (A) a short-term debt rated (on the date of
acquisition thereof) at least A-1 or P-1 or the equivalent
7
by any Rating Agency and (B) a long-term debt rated (on the date of acquisition thereof) at
least A or A2 or the equivalent by any Rating Agency, (viii) investment contracts of any
financial institution either (A) fully secured by (1) direct obligations of the United States, (2)
obligations of a Person controlled or supervised by and acting as an agency or instrumentality of
the United States or (3) securities or receipts evidencing ownership interest in obligations or
special portions thereof described in clause (1) or (2), in each case guaranteed as full faith and
credit obligations of the United States, having a market value at least equal to 102% of the amount
deposited thereunder, or (B) with long-term debt rated (on the date of acquisition thereof) at
least A or A2 or the equivalent by any Rating Agency and short-term debt rated (on the date of
acquisition thereof) at least A-1 or P-1 or the equivalent by any Rating Agency, (ix) a
contract or investment agreement with a provider or guarantor (A) which provider or guarantor is
rated (on the date of acquisition thereof) at least A or A2 or the equivalent by any Rating
Agency (provided that if a guarantor is a party to the rating, the guaranty must be unconditional
and must be confirmed in writing prior to any assignment by the provider to any subsidiary of such
guarantor), (B) providing that monies invested shall be payable to the Administrative Agent without
condition (other than notice) and without brokerage fee or other penalty, upon not more than two
Business Days notice for application when and as required or permitted under the Collateral
Documents, and (C) stating that such contract or agreement is unconditional, expressly disclaiming
any right of setoff and providing for immediate termination in the event of insolvency of the
provider and termination upon demand of the Administrative Agent (which demand shall only be made
at the direction of the Borrowers) after any payment or other covenant default by the provider, or
(x) any debt instruments of any Person which instruments are rated (on the date of acquisition
thereof) at least A, A2, A-1 or P-1 or the equivalent by any Rating Agency,
provided
that in each case of clauses (i) through (x), such investments are denominated in
Dollars and maturing not more than 13 months from the date of acquisition thereof; (c) investments
in any money market fund which is rated (on the date of acquisition thereof) at least A or A2
or the equivalent by any Rating Agency; (d) investments in mutual funds sponsored by any securities
broker-dealer of recognized national standing having an investment policy that requires
substantially all the invested assets of such fund to be invested in investments described in any
one or more of the foregoing clauses and having a rating of at least A or A2 or the equivalent
by any Rating Agency; or (e) investments in both taxable and nontaxable (i) periodic auction reset
securities which have final maturities between one and 30 years from the date of issuance and are
repriced through a Dutch auction or other similar method every 35 days or (ii) auction preferred
shares which are senior securities of leveraged closed end municipal bond funds and are repriced
pursuant to a variety of rate reset periods, in each case having a rating (on the date of
acquisition thereof) of at least A or A2 or the equivalent of any Rating Agency.
Casino Lease
means the Casino Lease between Venetian and LVSI, dated as of November 14,
1997, as amended effective as of October 1, 2002, with respect to the operation of the casino for
the Existing Facility.
Casino Level Mall Lease
means the Casino Level Restaurant/Retail Master Lease between
Venetian and Grand Canal, dated as of May 14, 2004, with respect to the lease of certain restaurant
and retail space on the casino floor of the Existing Facility to Grand Canal.
8
Category of Goods
means Eligible FF&E of the same general type and description, such as
television sets, case goods, etc.
Central Park West Site
means the approximately 15 acres of real property owned by LVSI
located near the intersection of Sands Avenue and Koval Lane upon which an apartment complex
commonly known as Central Park West Apartments is currently located.
Central Plant
means the Electric Substation and the HVAC Space, as each such term is
defined in the Cooperation Agreement (as in effect on the date hereof) (or, at a Borrowers
request, with the consent of the Administrative Agent, as amended, amended and restated,
supplemented, replaced, refinanced or otherwise modified with respect to such defined term).
Certificate of Non-Bank Status
means a certificate substantially in the form of
Exhibit
D-2
annexed hereto delivered by a Lender to the Administrative Agent pursuant to subsection
2.7B(iii).
Change of Control
means any sale, pledge or other transfer (excluding any transfer of
Securities by Adelson for the purposes of providing estate planning and gifts reasonably acceptable
to the Administrative Agent) of Securities whereby (a) (i) Adelson and/or his Affiliates or Related
Parties cease to own, directly or indirectly, at least 35% of the voting Securities of LVSC, or
(ii) any Person or group of Persons (other than Adelson and/or his Affiliates or Related Parties),
owns directly or indirectly, a greater percentage of the voting Securities of LVSC than Adelson
and/or his Affiliates or Related Parties, (b) except as otherwise permitted by subsection 7.7
(iii), (iv), (vi), (viii), (xv) or (xvii), LVSC ceases to own (either directly, or indirectly) 100%
of the common equity interests of LVSI, or LVSI ceases to own (either directly, or indirectly
through one or more Subsidiary Guarantors) 100% of the common equity interests of Venetian, or
Venetian ceases to own (either directly, or indirectly through one or more Subsidiary Guarantors)
100% of the common equity interests of LCR, (c) except as otherwise permitted by subsection 7.7
(iii), (iv), (vi), (viii), (xv) or (xvii), Venetian and LVSI cease to own directly or indirectly
100% of the equity Securities of each of their Restricted Subsidiaries, Interface and the Phase II
Mall Borrowers prior to the Phase II Mall Sale; or (d) a Change of Control (or similar term) as
defined in any Bank Credit Agreement, the indenture relating to the LVSC Notes or any other
instrument evidencing Indebtedness of the Borrowers or any other Loan Party permitted hereunder and
issued after the Closing Date in excess of $75,000,000 shall occur. The sale of equity securities
of Phase II Mall Subsidiary pursuant to the Phase II Mall Sale shall not be a change of control
under this Agreement.
Closing Date
means the date on which all conditions set forth in subsection 4.1 have been
satisfied and the funding of the Term Funded Loans occurs.
Code
means the Internal Revenue Code of 1986, as amended to the date hereof and from time to
time hereafter, and any successor statute.
Collateral
means, collectively, all of the property (whether personal, real, mixed or
otherwise) in which Liens are granted pursuant to the Collateral Documents as security for the
Obligations.
9
Collateral Documents
means the Security Agreement and all other instruments or documents
delivered by a Loan Party pursuant to any of the Loan Documents in order to grant to the
Administrative Agent, on behalf of the Secured Parties, a Lien (or to perfect such Lien) on any
Collateral as security for the Obligations.
Collateral Sale
means the sale or other disposition (other than in connection with a Event
of Loss) by a Borrower or any of its Restricted Subsidiaries to any Person of any Collateral,
except to the extent that either (i) the aggregate original principal amount financed hereunder
with respect to all such Collateral disposed of does not exceed $4,000,000 in the aggregate or (ii)
prior to or promptly (and, in any event, within 120 days) following such disposal, such Collateral
shall be replaced with other property that (A) has utility and a value at least substantially equal
to that of the replaced property when first acquired in the reasonable determination of the
Borrowers and (B) is subject to a First Priority perfected Lien in favor of Administrative Agent
for the benefit of the Secured Parties; provided that pending any such replacement, if the
aggregate amount of the Net Collateral Sale Proceeds exceeds $3,000,000 at any time, the amount in
excess of $3,000,000 shall promptly (and in any event within five Business Days) after received, be
deposited in a separate and segregated interest-bearing cash collateral account maintained by the
Administrative Agent and under its exclusive dominion and control, subject to a First Priority
perfected Lien in favor of Administrative Agent for the benefit of the Secured Parties.
Collateral Schedule
means a collateral schedule in the form of
Exhibit A
to the
Security Agreement (or such other form as may be acceptable to Administrative Agent) describing the
equipment, fixtures, furniture, furnishings and other goods to be financed by a Loan hereunder (or
any replacements thereof or substitutions therefor) and pursuant to which the Borrowers grant a
security interest in favor of Administrative Agent (for the benefit of the Administrative Agent and
Lenders) in all such equipment, fixtures, furniture, furnishings and other goods (as well as any
replacements thereof or substitutions therefor).
Commitment
means the commitment of a Lender to make Loans as set forth in subsection 2.1A
and
Commitments
means such commitments of all Lenders in the aggregate.
Commitment Termination Event
means (a) the occurrence of any Event of Default with respect
to any Borrower described in subsection 8.6 or 8.7 or (b) the occurrence and continuance of any
other Event of Default and either (i) the declaration of all or any portion of the Loans to be due
and payable, or (ii) the giving of notice by the Administrative Agent, acting at the direction of
the Requisite Lenders, to the Borrowers that the Commitments have been terminated.
Compliance Certificate
means a certificate substantially in the form of
Exhibit C
annexed hereto delivered to the Administrative Agent and the Lenders by the Borrowers pursuant to
subsection 6.1(iv).
Conforming Adelson L/C
means an unconditional, direct pay letter of credit which (a) is
obtained by Adelson or one of his Affiliates (but not the Borrowers or any of their Restricted
Subsidiaries), (b) either (i) has an expiration date of not less than twenty-four months or (ii)
has an expiration date of not less than twelve months with an automatic extension of one
10
twelve month period unless the issuer of such letter of credit gives the Bank Administrative Agent
not less than sixty days prior written notice that it will not renew the letter of credit for such
successive term, (c) either (i) is irrevocable or (ii) provides that the issuer will deliver not
less than sixty days prior written notice to the Bank Administrative Agent of its intention to
revoke such letter of credit, (d) is issued by a financial institution acceptable to the Bank
Administrative Agent in its reasonable judgment and (e) is otherwise in form and substance
acceptable to the Bank Administrative Agent in its reasonable judgment,
provided
that any
such letter of credit shall only qualify as a Conforming Adelson L/C if it states that it may be
drawn upon by the Bank Administrative Agent and applied in accordance with the terms of the Bank
Credit Agreement upon the occurrence of any Conforming Adelson L/C Draw Event, and
provided
further
that no Borrower nor any of their Restricted Subsidiaries shall have any
obligations (contingent or otherwise) in respect of any such letter of credit or any reimbursement
agreement applicable thereto.
Conforming Adelson L/C Draw Event
shall mean, during the time that the Conforming Adelson
L/C remains in full force and effect, the occurrence of any of the following (a) an Event of
Default (which is continuing and has not been waived) set forth in subsections 8.1, 8.2, 8.6, 8.7,
8.13 (or any similar Event of Default under any Bank Credit Agreement) or resulting from a breach
of any of the covenants set forth in subsection 7.6 (or any similar breach under any Bank Credit
Agreement); (b) if such Conforming Adelson L/C has a maturity of less than twenty-four months,
either (x) the Bank Administrative Agents receipt of notice from the issuer of the Conforming
Adelson L/C that such issuer will not renew the Conforming Adelson L/C or (y) the date that is five
days prior to the expiration of the Conforming Adelson L/C if the Bank Administrative Agent has not
received evidence of the renewal thereof, unless Adelson or his Affiliates substitute cash equity
in the Borrowers in an amount equal to the face amount of the Conforming Adelson L/C in lieu of the
Conforming Adelson L/C on or before the date that is five days prior to the expiration thereof
(such equity to be substituted for the withdrawn Conforming Adelson L/C in the calculation of
Consolidated Adjusted EBITDA); or (c) the Bank Administrative Agents receipt of notice from the
issuer of the Conforming Adelson L/C that such issuer intends to revoke, terminate or cancel the
Conforming Adelson L/C, unless Adelson or his Affiliates substitute cash equity in Borrowers in an
amount equal to the face amount of the Conforming Adelson L/C in lieu of the Conforming Adelson L/C
on or before the date that is five days prior to the revocation, termination or cancellation
thereof (such equity to be substituted for the withdrawn Conforming Adelson L/C in the calculation
of Consolidated Adjusted EBITDA).
Consolidated Adjusted EBITDA
means, for any period, the sum of the amounts (without
duplication) for such period of (a) Consolidated Net Income, (b) Consolidated Interest Expense, (c)
provision for taxes based on income to the extent deducted in calculating Consolidated Net Income,
(d) total depreciation expense, (e) total amortization expense, (f) total pre-opening expenses, (g)
total development expenses, and (h) other non-cash items reducing Consolidated Net Income
(including any reductions to Consolidated Net Income as a result of minority or preferred interests
of Venetian)
less
other non-cash items increasing Consolidated Net Income, all of the
foregoing as determined on a consolidated basis for the Borrowers and their Restricted Subsidiaries
in conformity with GAAP. Any cash equity contributions made by Adelson or any of his Affiliates
(other than one of the Borrowers or their Restricted Subsidiaries) to the Borrowers and/or the face
amount of any Conforming Adelson L/C delivered to the Bank
11
Administrative Agent for the benefit of the Bank Lenders during any quarter and during a
period of fifteen days following such quarter, in an aggregate amount for such cash equity
contributions and face amounts of Conforming Adelson L/Cs not to exceed $20,000,000 per quarter,
may at the written election of the Borrowers be included in Consolidated Adjusted EBITDA for such
quarter for all purposes hereunder,
provided
that the Borrowers may not include such cash
equity contributions or the face amount of the Conforming Adelson L/C, or any combination thereof,
in Consolidated Adjusted EBITDA (a) if any Conforming Adelson L/C Draw Event or any Event of
Default or Potential Event of Default has occurred and is continuing at the time such cash
contribution is made or such Conforming Adelson L/C is provided to the Bank Administrative Agent or
(b) in any event, after two consecutive quarters unless, following any exercise of such election to
include any such cash equity contributions and/or face amount of any Conforming Adelson L/C in
Consolidated Adjusted EBITDA, the Borrowers have thereafter been in compliance with subsection 7.6
on a rolling four quarter basis occurring after such election (without giving affect to any
previous cash contributions or Conforming Adelson L/C) for at least one Fiscal Quarter.
Consolidated Capital Expenditures
means, for any period, the sum of (a) the aggregate of all
expenditures (whether paid in cash or other consideration or accrued as a liability and including
that portion of Capital Leases which is capitalized on the consolidated balance sheet of the
Borrowers) by the Borrowers and their Restricted Subsidiaries during that period that, in
conformity with GAAP, are included in additions to property, plant or equipment or comparable
items reflected in the consolidated statement of cash flows of the Borrowers and their Restricted
Subsidiaries
plus
(b) to the extent not covered by clause (a) of this definition, any
expenditures by the Borrowers or their Restricted Subsidiaries during that period to acquire (by
purchase or otherwise) the business, property or fixed assets of any Person, or the stock or other
evidence of beneficial ownership of any Person that, as a result of such acquisition, becomes a
Restricted Subsidiary of the Borrowers;
provided
,
however
, that any expenditures
for Phase II Project Costs shall not be included in Consolidated Capital Expenditures; and,
provided
further
that Consolidated Capital Expenditures shall not include any
adjustment to the original cost of the Phase I Project or any similar balance sheet adjustment as a
result of any settlement of or any judgment, payment, cost, expenditure or charge relating to, the
Construction Litigation.
Consolidated Interest Coverage Ratio
means, as of any Quarterly Date, the ratio computed for
the period consisting of the Fiscal Quarter as to which such Quarterly Date relates and each of the
three immediately preceding Fiscal Quarters of (a) Consolidated Adjusted EBITDA (for all such
Fiscal Quarters) to (b) the sum (for all such Fiscal Quarters) of Consolidated Interest Expense.
Consolidated Interest Expense
means, for any period, total interest expense (including that
portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of the
Borrowers and their Restricted Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrowers (other than non-cash interest on Permitted Subordinated
Indebtedness), including all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers acceptance financing and net costs under Hedging Agreements,
plus
(except for purposes of calculating the Consolidated Interest Coverage Ratio in
connection with a Permitted Employee Repurchase pursuant to subsection 7.5
12
(vii)) all Restricted Payments made by Borrowers to LVSC in accordance with subsection
7.5(xiv) of this Agreement, but excluding, however, amortization of debt issuance costs and
deferred financing fees including any amounts referred to in subsection 2.3 payable to the Agents
or Lenders, any fees and expenses payable to the Agents or Lenders in connection with this
Agreement, any fees and expenses payable to the Bank Agents or Bank Lenders in connection with the
Bank Credit Agreement, and fees and expenses payable to the holders of the Indebtedness incurred
under the Mall Financing Agreement in each case, on or prior to the Closing Date.
Consolidated Leverage Ratio
means, as of any date, the ratio of (a) Consolidated Total Debt
outstanding on such date to (b) Consolidated Adjusted EBITDA computed for the period consisting of,
if such date is a Quarterly Date, the Fiscal Quarter ending on such date and each of the three
immediately preceding Fiscal Quarters, or if such date is not a Quarterly Date, the four full
Fiscal Quarters most recently ended.
Consolidated Net Income
means, for any period, the net income (or loss) of the Borrowers and
their Restricted Subsidiaries on a consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP and before any reduction in respect of preferred stock
dividends;
provided
that there shall be excluded, without duplication, (a) the income (or
loss) of any Person (other than a Restricted Subsidiary of a Borrower), except to the extent of the
amount of dividends or other distributions actually paid to the Borrowers or any of their
Restricted Subsidiaries by such Person during such period, (b) the income (or loss) of any Person
accrued prior to the date it is merged into or consolidated with Borrowers or a Restricted
Subsidiary or that Persons assets are acquired by the Borrowers or a Restricted Subsidiary, (c)
any after-tax gains or losses attributable to (i) Asset Sales, (ii) returned surplus assets of any
Pension Plan or (iii) the disposition of any Securities or the extinguishment of any Indebtedness
of any Person or any of its Restricted Subsidiaries, (d) dividends or distributions from any
Excluded Subsidiary to the Borrowers or any Restricted Subsidiary which are used to fund Permitted
Quarterly Tax Distributions, (e) the effect of non-cash accounting adjustments resulting from a
change in the tax status of a flow-through tax entity to a C-corporation or other entity taxed
similarly, (f) any net extraordinary gains or net extraordinary losses, (g) any refinancing costs,
amortization or charges (including premiums, costs, amortization and charges associated with the
Refinancing or any permitted refinancing of the LVSC Notes); and (h) to the extent it reduces
Consolidated Net Income, the effect of any payment, expenditure, cost or charge relating to the
Construction Litigation (or any settlement or judgment thereof);
provided
that the
aggregate amount excluded from the calculation of Consolidated Net Income pursuant to this
subsection (h) shall not exceed $45.0 million;
provided
,
further
, that no effect
shall be given to any non-cash minority or preferred interest in Venetian for purposes of computing
Consolidated Net Income.
Consolidated Net Worth
means, as of any date of determination, (a) the sum of the following
items, as shown on the consolidated balance sheet of LVSI and its Subsidiaries as of such date (i)
the common equity of LVSI and its Subsidiaries, (ii)(A) the aggregate liquidation preference of
preferred stock or preferred membership interests of LVSI and its Subsidiaries and (B) any increase
in depreciation and amortization resulting from any purchase accounting treatment from an
acquisition or related financing; (b)
less
any goodwill incurred subsequent to August 20,
2004 and (c)
less
any write up of assets (in excess of fair market value) after August
13
20, 2004 and, in each case on a consolidated basis for LVSI and its Subsidiaries, determined
in accordance with GAAP;
provided
, that in calculating Consolidated Net Worth, (i) any gain
or loss from any Asset Sale or the disposition of any securities or the extinguishment of any
Indebtedness of any Person or any of its Subsidiaries (including all extraordinary gains and losses
and all expenses, amortization and charges associated with the Refinancing and the issuance of the
LVSC Notes) shall be excluded, (ii) any change or reduction of net worth related to a conversion
from flow-through tax entities to taxable entities shall be excluded, (iii) any change or reduction
of net worth related to currency fluctuations or any conversion of currencies shall be excluded;
and (iv) regardless whether Venetian is a Subsidiary of LVSI or is wholly-owned, Venetian shall be
assumed at all times to be a wholly-owned Subsidiary of LVSI, and no effect shall be given to any
preferred interest in Venetian for purposes of calculating Consolidated Net Worth.
Consolidated Senior Leverage Ratio
means, at any time of determination, the ratio of (a)
Consolidated Total Senior Debt outstanding on such date to (b) Consolidated Adjusted EBITDA
computed for the period consisting of the most recently ended Fiscal Quarter and each of the three
immediately preceding Fiscal Quarters.
Consolidated Total Debt
means, as at any date of determination: ((i) the aggregate stated
balance sheet amount of all Indebtedness of the Borrowers and their Restricted Subsidiaries (other
than any Shareholder Subordinated Indebtedness), determined on a consolidated basis in accordance
with GAAP; plus (ii) all Indebtedness of LVSC that is guaranteed by Borrowers and/or any of their
respective Restricted Subsidiaries), less (iii) the Mortgage Notes Repayment Expenses (as defined
in the Bank Credit Agreement as in effect on the date hereof).
Consolidated Total Senior Debt
means as at any date of determination, Consolidated Total
Debt,
less
Indebtedness evidenced by the LVSC Notes, LVSC Permitted Indebtedness, Permitted
Subordinated Indebtedness, and Indebtedness incurred under any Employee Repurchase Notes.
Construction Consultant
means Tishman Construction Corporation of Nevada, or any other
person reasonably acceptable to the Administrative Agent designated from time to time to serve as
the Construction Consultant.
Construction Consultant Certificate
means a certificate in the form of Exhibit B-3 and
otherwise in form and substance reasonably satisfactory to Administrative Agent.
Construction Litigation
means the litigation arising out of the lawsuit filed by LVSI and
Venetian against Lehrer McGovern Bovis Inc., a New York corporation (
Bovis
), in the United States
District Court for the District of Nevada and the countersuit filed by Bovis against LVSI and
Venetian and any other outstanding lawsuit, action, claim or Lien arising out of or relating to the
construction of the Existing Facility, including any claim made or Lien filed by Bovis or any
contractor or subcontractor or to the bonding company insuring over any Lien relating to or binding
upon the Existing Facility or to Venetian, LVSI, or any of their Affiliates in connection
therewith.
14
Construction Management Agreement
is defined in the Disbursement Agreement (as in effect on
the date hereof (or, at a Borrowers request, with the consent of the Administrative Agent, as
amended, amended and restated, supplemented, replaced, refinanced or otherwise modified with
respect to such defined term).
Contingent Obligation
, as applied to any Person, means any direct or indirect liability,
contingent or otherwise, of that Person (a) with respect to any Indebtedness, lease, dividend or
other obligation of another if the primary purpose or intent thereof by the Person incurring the
Contingent Obligation is to provide assurance to the obligee of such obligation of another that
such obligation of another will be paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof, (b) with respect to any letter of credit issued for the account of
that Person or as to which that Person is otherwise liable for reimbursement of drawings, or (c)
under Hedging Agreements. Contingent Obligations shall include (a) the direct or indirect
guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (b) the obligation to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an agreement, and (c) any liability
of such Person for the obligation of another through any agreement (contingent or otherwise) (i) to
purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise) or (ii) to maintain the solvency or any
balance sheet item, level of income or financial condition of another if, in the case of any
agreement described under subclauses (i) or (ii) of this sentence, the primary purpose or intent
thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the
amount to which such Contingent Obligation is specifically limited. Notwithstanding the foregoing,
Contingent Obligations shall not include any surety bonds for claims underlying mechanics liens and
any reimbursement obligations with respect thereto so long as such reimbursement obligations are
not then due or are promptly paid when due.
Contracts
means, collectively, the contracts entered into, from time to time, between any
Borrower(s) and any contractor for performance of services or sale of goods in connection with the
design, engineering, installation or construction of the Phase II Project.
Contractual Obligation
means, as applied to any Person, any provision of any Security issued
by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking,
agreement or other instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
Conversion/Continuation Notice
means a notice substantially in the form of
Exhibit
B-4
annexed hereto delivered to the Administrative Agent pursuant to subsection 2.2D with
respect to a proposed conversion or continuation of the applicable basis for determining the
interest rate with respect to the Loans specified therein.
15
Cooperation Agreement
means that certain Third Amended and Restated Reciprocal Easement, Use
and Operating Agreement, dated as of July 26, 2006, by and among Venetian, LCR, Grand Canal, Phase
II Mall Subsidiary and Interface.
COREA
is defined in the Disbursement Agreement (as in effect on the date hereof or, at a
Borrowers request, with the consent of the Administrative Agent, as amended, amended and restated,
supplemented, replaced, refinanced or otherwise modified with respect to such defined term).
Deposit Account
means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.
Designated FF&E
means all of the equipment, fixtures, furniture, furnishings and goods that
are listed on
Schedule A
hereto.
Disbursement Account
is defined in the Disbursement Agreement (as in effect on the date
hereof).
Disbursement Agent
has the meaning given in the Disbursement Agreement.
Disbursement Agreement
means the Master Disbursement Agreement, entered into among the Bank
Administrative Agent, Goldman Sachs Credit Partners, Inc., as bank arranger, The Bank of Nova
Scotia, as Disbursement Agent, LCR, the Phase II Mall Borrowers, and the administrative agent under
the Mall Financing Agreement, dated as of September 30, 2004, as amended by that certain First
Amendment to Master Disbursement Agreement, dated as of February 22, 2005, entered into among the
Bank Administrative Agent, Goldman Sachs Credit Partners, Inc. and The Bank of Nova Scotia, as
joint bank arranger, the other Bank Agents party thereto, The Bank of Nova Scotia, as Disbursement
Agent, LCR, the Phase II Mall Borrowers and the administrative agent under the Mall Financing
Agreement, and as further amended, supplemented, amended and restated, modified, replaced or
extended from time to time.
Dollars
and the sign
$
mean the lawful money of the United States.
Domestic FF&E
means any equipment, fixtures, furniture, furnishings and other goods financed
hereunder other than Imported FF&E.
Eligible Assignee
means (a) (i) a commercial bank organized under the laws of the United
States or any state thereof; (ii) a savings and loan association or savings bank organized under
the laws of the United States or any state thereof; (iii) a commercial bank organized under the
laws of any other country or a political subdivision thereof;
provided
that (1) such bank
is acting through a branch or agency located in the United States or (2) such bank is organized
under the laws of a country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other Person which is an
accredited investor (as defined in Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses including insurance companies, mutual funds and lease financing
companies; (b) any Approved Fund; and (c) any Lender and any Affiliate of any Lender;
provided
that no Borrower, any Affiliate of the Borrowers, Adelson and/or his Affiliates
16
or Related Parties shall be an Eligible Assignee;
provided
further
that so
long as no Event of Default shall have occurred and be continuing, no (i) Person that owns or
operates a casino located in Singapore, Macau, the United Kingdom, Hungary, the States of Nevada,
New Jersey, Pennsylvania or Michigan (or is an Affiliate of such a Person) (
provided
that a
passive investment constituting less than 10% of the common stock of any such casino shall not
constitute ownership thereof for the purposes of this definition), (ii) Person that owns or
operates a convention, trade show, conference center or exhibition facility in Singapore, Macau,
the United Kingdom, Hungary, Las Vegas, Nevada or Clark County, Nevada or the States of New Jersey,
Pennsylvania or Michigan (or an Affiliate of such a Person) (
provided
that a passive
investment constituting less than 10% of the common stock of any such convention or trade show
facility shall not constitute ownership for the purpose of this definition), or (iii) union pension
fund (
provided
that any intermingled fund or managed account which has as part of its
assets under management the assets of a union pension fund shall not be disqualified from being an
Eligible Assignee hereunder so long as the manager of such fund is not controlled by a union),
shall be an Eligible Assignee, in each case which Person shall not have been denied an approval or
a license, or found unsuitable under the Nevada Gaming Laws applicable to Lenders.
Eligible FF&E
means all of the equipment, fixtures, furniture, furnishings and goods that
are (a) Designated FF&E (or such other equipment, fixtures, furniture, furnishings and goods as may
be reasonably acceptable to Administrative Agent), (b) owned by a Borrower (or to be owned by a
Borrower upon or immediately following funding of the related Term Delayed Draw Loan hereunder) and
(c) reflected in the most recent Borrowing Base Certificate delivered to Administrative Agent in
connection with a Term Delayed Draw Loan pursuant to subsection 2.1, except any equipment,
fixtures, furniture, furnishings and goods to which any of the exclusionary criteria set forth
below applies (which may not be included in the Borrowing Base Certificate). Administrative Agent
shall have the right, in consultation with the Borrowers, to establish, modify or eliminate
Reserves against Eligible FF&E from time to time in its reasonable credit judgment. Eligible FF&E
funded by any Term Delayed Draw Loan shall not include any equipment, fixtures, furniture,
furnishings and goods of any Borrower, as the case may be, that:
(i) has not been inspected by the Construction Consultant and found to conform, in all
material respects, to its description in
Schedule A
unless otherwise approved by
Administrative Agent;
(ii) the invoice for such equipment, fixtures, furniture, furnishings and goods is not
reasonably acceptable to Administrative Agent in form and substance;
(iii) is purchased from an Affiliate of any Loan Party (except, in each case, to the
extent that the circumstances and purchase details have been disclosed in writing to, and
such purchase is at fair market value and on arms-length terms or is otherwise reasonably
approved by, the Administrative Agent);
(iv) is not owned (or will not be owned upon or immediately following funding of the
related Term Delayed Draw Loan) by such Borrower free and clear of all Liens and rights of
any other Person, except for the Liens in favor of (A) Administrative Agent, on behalf of
the Secured Parties, (B) Liens in favor of any Bank Agent or any other Person which Liens
shall be released on or prior to the date the applicable Term
17
Delayed Draw Loan is made with respect thereto and (C) other Permitted Liens that are
either (x) subordinate to the Liens in favor of the Administrative Agent on behalf of the
Secured Parties or (y) otherwise acceptable to the Administrative Agent);
(v) is located outside of the United States;
(vi) as to which Administrative Agents Lien, on behalf of itself and Lenders, therein
is not a First Priority perfected Lien;
(vii) is (A) to be used solely in the development or operation of the Phase II Mall or
(B) otherwise not to be used in the development or operation of the Phase II Hotel/Casino or
the Existing Facility;
(viii) has not been delivered to or is not physically located at the site of the Phase
II Hotel/Casino or the Existing Facility and installed or able to be installed in a
reasonable period of time (to the extent installation is required), or is not held in safe
custody pending such delivery and/or installation;
(ix) fails to meet all of the following criteria: (i) is located on premises owned by
a Borrower or leased by a Borrower, or is stored with a bailee, warehouseman or similar
Person, and (ii) (w) if located on any premises owned by a Borrower and subject to any
mortgage or deed of trust (other than any mortgage or deed of trust in favor of the Bank
Agent and/or the Bank Lenders existing on the Closing Date), a satisfactory mortgagee waiver
or other agreement has been delivered to Administrative Agent (it being understood that in
connection with any refinancing of the Bank Credit Facility provisions substantially similar
to the provisions in paragraph 3(f) of the Intercreditor Agreement will satisfy this
subclause (w)), (x) if located on any premises leased by a Borrower, a satisfactory landlord
waiver or other agreement has been delivered to the Administrative Agent or (y) if stored
with a bailee, warehouseman or similar Person, a satisfactory bailee letter or other
agreement, has been delivered to the Administrative Agent or, in the case of clauses (w),
(x) and (y) Reserves satisfactory to Administrative Agent have been established with respect
thereto;
(x) was not acquired by a Borrower within six months (or, in the case of the initial
Funding Date, 18 months) before the requested Funding Date therefor, was not new when
acquired by such Borrower, is obsolete or, in Administrative Agents reasonable credit
judgment, is damaged or is not fully assembled or able to be assembled in a reasonable
period of time, in reasonably good working order and condition for its intended purpose;
(xi) is not covered by applicable manufacturers warranties or casualty insurance
reasonably acceptable to Administrative Agent;
(xii) has failed to pass inspections or tests required by any Governmental
Instrumentality, or failed to have any licenses, registrations or permits required by any
Governmental Instrumentality as of the applicable date of such requirement, except, that any
license, registration or permit that is not material may be obtained within five (5)
Business Days of such requirement;
18
(xiii) as to which any of the representations or warranties pertaining thereto set
forth in the Loan Documents is untrue or incorrect in any material respect;
(xiv) is (A) carpet, (B) tile or other floor covering, (C) wallpaper or other
wall-covering, (D) eating utensils, dinnerware, glassware or other breakable kitchen-related
items used in a kitchen, (E) curtains, (F) mattresses, linens or other items related to
bedding, (G) a motor vehicle or (H) is a base for a slot machine or a stool to be used in
conjunction with a slot machine unless, in each case, the related slot machine is also being
financed with the proceeds of the Term Loans; or
(xx) has intellectual property affixed thereto, embedded therein, or necessary to the
operation thereof, and the transfer or assignment of any rights to such intellectual
property will impede Administrative Agent in the exercise of its remedies, unless the
inclusion of such equipment, fixture, furniture, furnishing and good is otherwise consented
to by Administrative Agent.
Employee Benefit Plan
means any employee benefit plan as defined in Section 3(3) of ERISA
which is or was maintained or contributed to by the Borrowers, any of their Subsidiaries or any of
their respective ERISA Affiliates.
Employee Repurchase Notes
is defined in subsection 7.1(ix).
Environmental Claim
means any investigation, notice, notice of violation, claim, action,
suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise),
by any governmental authority or any other Person, arising (a) pursuant to or in connection with
any actual or alleged violation of any Environmental Law, (b) in connection with any Hazardous
Materials or any actual or alleged Hazardous Materials Activity, or (c) in connection with any
actual or alleged damage, injury, threat or harm to health, safety, natural resources or the
environment.
Environmental Laws
means any and all current or future statutes, ordinances, orders, rules,
regulations, guidance documents, judgments, Permits, or any other requirements of governmental
authorities relating to (a) environmental matters, including those relating to any Hazardous
Materials Activity, (b) the generation, use, storage, transportation or disposal of Hazardous
Materials, or (c) occupational safety and health, industrial hygiene, land use or the protection of
human, plant or animal health or welfare, in any manner applicable to the Borrowers or any of their
Subsidiaries or any of their Facilities, including the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9601
et
seq
.), the Hazardous Materials
Transportation Act (49 U.S.C. § 1801
et
seq
.), the Resource Conservation and
Recovery Act (42 U.S.C. § 6901
et
seq
.), the Federal Water Pollution Control Act
(33 U.S.C. § 1251
et
seq
.), the Clean Air Act (42 U.S.C. § 7401
et
seq
.), the Toxic Substances Control Act (15 U.S.C. § 2601
et
seq
.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. §136
et
seq
.), the
Occupational Safety and Health Act (29 U.S.C. § 651
et
seq
.), the Oil Pollution Act
(33 U.S.C. § 2701
et
seq
.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. § 11001
et
seq
.), the Nevada Hazardous Materials law (NRS Chapter 459),
the Nevada Solid Waste/Disposal of Garbage or Sewage law (NRS 444.440 to 444.650, inclusive), the
Nevada Water Controls/Pollution law (NRS Chapter 445A), the Nevada Air Pollution law (NRS
19
Chapter 445B), the Nevada Cleanup of Discharged Petroleum law (NRS 590.700 to 590.920,
inclusive), the Nevada Control of Asbestos law (NRS 618.750 to 618.850), the Nevada Appropriation
of Public Waters law (NRS 533.324 to 533.4385, inclusive), the Nevada Artificial Water Body
Development Permit law (NRS 502.390), the Nevada Protection of Endangered Species, Endangered
Wildlife Permit (NRS 503.585), Endangered Flora Permit law (NRS 527.270), the Atomic Energy Act of
1954 (42 U.S.C. Section 2011 et seq.), the Safe Drinking Water Act (42 U.S.C. Sections 300f
et
seq.
), the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C. Sections 1201
et seq.
),
and the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901
et seq.
), each
as amended or supplemented, any analogous present or future state or local statutes or laws, and
any regulations promulgated pursuant to any of the foregoing.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and any successor thereto.
ERISA Affiliate
means, as applied to any Person, (a) any corporation which is a member of a
controlled group of corporations within the meaning of Section 414(b) of the Code of which that
Person is a member; (b) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section 414(c) of the Code
of which that Person is a member; and (c) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Code of which that Person, any corporation described in
clause (a) above or any trade or business described in clause (b) above is a member. Any former
ERISA Affiliate of the Borrowers or any of their Subsidiaries shall continue to be considered an
ERISA Affiliate of the Borrowers or such Subsidiary within the meaning of this definition with
respect to the period such entity was an ERISA Affiliate of the Borrowers or such Subsidiary and
with respect to liabilities arising after such period for which Borrowers or such Subsidiary could
be liable under the Code or ERISA.
ERISA Event
means (a) a reportable event within the meaning of Section 4043 of ERISA and
the regulations issued thereunder with respect to any Pension Plan (excluding those for which the
provision for 30-day notice to the PBGC has been waived by regulation); (b) the failure to meet the
minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or
not waived in accordance with Section 412(d) of the Code) or the failure to make by its due date a
required installment under Section 412(m) of the Code with respect to any Pension Plan or the
failure to make any required contribution to a Multiemployer Plan; (c) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to
terminate such plan in a distress termination described in Section 4041(c) of ERISA; (d) the
withdrawal by the Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA; (e) the institution by the
PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition
which might constitute grounds under ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; (f) the imposition of liability on Borrowers, any of their
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of
ERISA or by reason of the application of Section 4212(c) of ERISA; (g) the withdrawal of the
Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of
20
Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by the Borrowers, any of their Subsidiaries or any of their
respective ERISA Affiliates of notice from any 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 or 4042 of ERISA; (h) the occurrence of an act or omission which
could give rise to the imposition on Borrowers, any of their Subsidiaries or any of their
respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any
Employee Benefit Plan; (i) the assertion of a material claim (other than routine claims for
benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates in
connection with any Employee Benefit Plan; (j) receipt from the PBGC of notice of the failure of
any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a)
of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part
of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (k)
the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Code or pursuant to ERISA
with respect to any Pension Plan.
Estimation Period
means the period for which a shareholder, partner or member, who is an
individual is required to estimate for federal income tax purposes his allocation of taxable income
from a Subchapter S corporation or any entity that is treated as a partnership for federal income
tax purposes in connection with determining his estimated federal income tax liability for such
period.
Eurodollar Rate Loans
means Loans bearing interest at rates determined by reference to the
Adjusted Eurodollar Rate as provided in subsection 2.2A.
Event of Default
is defined in Section 8.
Event of Force Majeure
has the meaning given in the form of Disbursement Agreement.
Event of Loss
means, with respect to any property or asset (tangible or intangible, real or
personal) constituting Collateral or any property or asset securing any Bank Credit Facility, any
of the following: (a) any loss, destruction or damage of such property or asset; (b) any actual
condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such
property or asset, or confiscation of such property or asset or the requisition of the use of such
property or asset; or (c) any settlement in lieu of clause (b) above.
Exchange Act
means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.
Excluded Subsidiary
means (a) Lido Casino Resort Holding Company, LLC, Interface, Phase II
Mall Subsidiary, Phase II Mall Subsidiary Holdings, Venetian Interactive LLC, Sands Pennsylvania,
Inc., Sands Bathworks Gaming, LLC and Silver State Marble LLC, (b) Venetian Venture Development
Intermediate I and its Subsidiaries, Venetian Venture Development Intermediate II, Venetian Venture
Development Intermediate Limited, VML US
21
Finance, LLC, Venetian Macau Finance Company, Venetian Macau Limited, Venetian Cotai Limited,
Venetian Global Holdings Limited and its Subsidiaries, Venetian Orient Limited, World Sourcing
Services Limited, Venetian Travel Limited, Venetian Marketing Services, Limited, and all other
foreign Subsidiaries of LVSI (other than any foreign Subsidiaries designated as Non-Guarantor
Restricted Subsidiaries pursuant to subsection 7.3(iii), (viii) or (xii) and any foreign
Subsidiaries designated as Restricted Subsidiaries pursuant to subsection 7.18), and (c) any
domestic entities formed after the Closing Date, substantially all of the operations of which are
conducted outside the State of Nevada and that are designated as Excluded Subsidiaries by the
Borrowers under subsection 7.3(iii), (viii) or (xii).
Existing Facility
means The Venetian Resort Hotel Casino, a Venetian-themed hotel, casino,
retail, meeting and entertainment complex located at 3355 Las Vegas Boulevard South, Las Vegas,
Nevada 89109 (located in Clark County, Nevada).
Existing FF&E Note
means that certain promissory note, dated as of September 12, 2003,
executed by Venetian and LVSI and in favor of General Electric Capital Corporation.
Existing Site
means the land on which the Existing Facility is constructed.
Facilities
means any and all real property (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by the
Borrowers or any of their Restricted Subsidiaries.
FDIC
means the Federal Deposit Insurance Corporation.
Federal Funds Effective Rate
means, for any period, a fluctuating interest rate equal for
each day during such period to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing selected by the
Administrative Agent.
FF&E Deposit Loans
means any Bank Credit Facility Loans the proceeds of which are applied to
fund advances or deposits with respect to Specified FF&E pursuant to the terms of the Disbursement
Agreement.
Final Completion
is defined in the Disbursement Agreement (as in effect on the date hereof).
Final Completion Date
means the date on which Final Completion occurs.
Financial Plan
is defined in subsection 6.1(xiii).
First Priority
means, with respect to any Lien created in any Collateral pursuant to any
Collateral Document, that such Lien is the only Lien (other than Permitted Liens arising solely by
operation of law) to which such Collateral is subject.
22
Fiscal Quarter
means a fiscal quarter of any Fiscal Year.
Fiscal Year
means the fiscal year of the Borrowers ending on December 31 of each calendar
year.
Foreign Excluded Subsidiaries
means foreign subsidiaries that are Excluded Subsidiaries.
Former Lender
is defined in subsection 10.7(a).
Funding and Payment Account
means (a) the following account of the Administrative Agent:
ABA No. 021 001 033
Account Number 50279513
Deutsche Bank, New York, New York
Account Name: GECC CIF Collection Account
Reference: Las Vegas Sands/CFN8634
or (b) such other account of the Administrative Agent or of a third party or sub-agent, as
appropriate, as may from time to time hereafter be designated as such in a written notice delivered
by the Administrative Agent to the Borrower Representative and each Lender.
Funding Date
means the date of the funding of a Loan.
GAAP
means, subject to the limitations on the application thereof set forth in subsection
1.2, generally accepted accounting principles set forth in opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of the accounting
profession in the United States of America, in each case as the same are applicable to the
circumstances as of the Closing Date.
Gaming License
means every license, franchise or other authorization to own, lease, operate
or otherwise conduct gaming activities of the Borrowers or any of their Restricted Subsidiaries,
including all such licenses granted under the Nevada Gaming Laws, and other applicable federal,
state, foreign or local laws.
GE Capital
is defined in the preamble.
GGP
means GGP Limited Partnership, a Delaware limited partnership, and any successor thereto
by merger or by operation of law.
Gondola Lease
means the Lease between Venetian and Grand Canal, dated as of May 17, 2004,
with respect to the lease of the gondola amusement ride concession and related retail space.
Governmental Acts
is defined in subsection 3.5A.
23
Governmental Instrumentality
means any national, state or local government (whether domestic
or foreign), any political subdivision thereof or any other governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, body, agency, bureau or entity,
(including the Nevada Gaming Authorities, any zoning authority, the FDIC, the Comptroller of the
Currency or the Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.
Grand Canal
means Grand Canal Shops II, LLC.
Hard Costs
means, with respect to any equipment, fixtures, furniture, furnishings and other
goods financed hereunder, an amount equal to the actual invoiced purchase price thereof (net of any
and all discounts, credits, commissions, rebates and allowances) after excluding any installation
costs, sales taxes, freight, delivery charges and other soft costs.
Harrahs Lease
means that certain Agreement of Lease dated January 24, 2005 between Harrahs
Las Vegas, Inc. as landlord and LCR, as tenant.
Harrahs Shared Roadway Agreement
means the Agreement, dated as of January 16, 1998, between
Venetian and Harrahs Casino Resort.
Hazardous Materials
means (a) any chemical, material or substance at any time defined as or
included in the definition of hazardous substances, hazardous wastes, hazardous materials,
extremely hazardous waste, acutely hazardous waste, radioactive waste, biohazardous waste,
pollutant, toxic pollutant, contaminant, restricted hazardous waste, infectious waste,
toxic substances, or any other term or expression intended to define, list or classify substances
by reason of properties harmful to health, safety or the indoor or outdoor environment (including
harmful properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, TCLP toxicity or EP toxicity or words of similar import under any
applicable Environmental Laws); (b) any oil, petroleum, petroleum fraction or petroleum derived
substance; (c) any drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal resources; (d) any
flammable substances or explosives; (e) any radioactive materials; (f) any asbestos-containing
materials; (g) urea formaldehyde foam insulation; (h) electrical equipment which contains any oil
or dielectric fluid containing polychlorinated biphenyls; (i) pesticides; and (j) any other
chemical, material or substance, exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to the health and safety of the owners,
occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.
Hazardous Materials Activity
means any past, current, proposed or threatened activity, event
or occurrence involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement, removal, remediation,
disposal, disposition or handling of any Hazardous Materials, and any corrective action or response
action with respect to any of the foregoing.
24
Hedging Agreements
means (a) currency exchange or interest rate swap agreements, currency
exchange or interest rate cap agreements and currency exchange or interest rate collar agreements
and (b) other agreements or arrangements designed to protect against fluctuations in currency
exchange or interest rates.
HVAC Component
means, collectively (a) the Central Plant and (b) the Other Facilities, as
defined in each HVAC Services Agreement (as in effect on the date hereof or, at a Borrowers
request, with the consent of the Administrative Agent, as amended, amended and restated,
supplemented, replaced, refinanced or otherwise modified with respect to each such defined term).
HVAC Ground Lease
means the Ground Lease made effective as of November 14, 1997, between
Venetian and the HVAC Provider.
HVAC Provider
means Sempra Energy Solutions, a California corporation (successor to
Atlantic-Pacific, Las Vegas LLC, a Delaware limited liability company) or its permitted successors
under the HVAC Services Agreements.
HVAC Services Agreements
means collectively (a) the Energy Services Agreement, dated as of
November 14, 1997, as amended on July 1, 1999, between Venetian and the HVAC Provider as modified
by that certain settlement agreement dated as of April 25, 2005 and as further amended by an
amendment dated as of July 1, 2006, (b) the HVAC Ground Lease, and (c) all other agreements between
the HVAC Provider and the Borrowers or their Restricted Subsidiaries (and any amendments of such
other agreements or the agreements described in clauses (a) or (b) above), as approved by the
Administrative Agent, in its reasonable discretion.
IEL
means Interface Employee Leasing, LLC, a Nevada limited liability company.
Imported FF&E
means any equipment, furniture, fixtures, furnishings, goods or other items of
personal property manufactured or assembled in, or sourced from, Asia and acquired (or to be
acquired) by a Borrower directly from the manufacturer or assembler or indirectly through a
supplier or other vendor.
Improvement Phasing Agreement
means the Improvement Phasing Agreement, dated on or about
August 11, 2004, between Clark County, Nevada and LCR.
In Balance
has the meaning given in the Disbursement Agreement (as in effect on the date
hereof or, at a Borrowers request, with the consent of the Administrative Agent, as amended,
amended and restated, supplemented, replaced, refinanced or otherwise modified with respect to such
defined term).
Included Taxes
is defined in subsection 2.7B(i).
Indebtedness
, as applied to any Person, means (a) all indebtedness for borrowed money, (b)
that portion of obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP, (c) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for borrowed money, (d)
any obligation owed for all or any part of the deferred purchase price of property or services
25
(excluding any such obligations incurred under ERISA and trade payables and accruals incurred
in the ordinary course of business), and (e) all indebtedness secured by any Lien on any property
or asset owned or held and under contracts by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that
Person. Obligations under Hedging Agreements constitute Contingent Obligations and not
Indebtedness. Obligations under the HVAC Services Agreements shall be treated as service contracts
or operating leases and not as Indebtedness. Additionally, Indebtedness shall not include (i) any
amount of the liability in respect of an operating lease that at such time would not be required to
be capitalized and reflected as a liability on the balance sheet in accordance with GAAP or (ii)
any surety bonds for claims underlying mechanics liens and any reimbursement obligations with
respect thereto so long as such reimbursement obligations are not then due, or are promptly paid
when due or (iii) any indebtedness that has been either satisfied or discharged or defeased through
covenant defeasance or legal defeasance.
Indemnified Liabilities
is defined in subsection 10.3.
Indemnitees
is defined in subsection 10.3.
Independent Financial Advisor
means an accounting, appraisal or investment banking or
financial advisory firm of nationally or internationally recognized standing that is not an
Affiliate of LVSI and Adelson and his Related Parties.
Intercompany Mall Note
means that certain intercompany note made by Phase II Mall Subsidiary
in favor of Venetian evidencing loans to finance the development and construction of the Phase II
Mall, which note has been pledged as collateral pursuant to the Security Agreement (as defined in
the Bank Credit Agreement).
Intercreditor Agreement
means the Agreement Among Creditors, dated as of the Closing Date,
between the Administrative Agent and Bank Administrative Agent attached hereto as
Exhibit
G
.
Interest Payment Date
means (a) with respect to any Loan that is a Base Rate Loan, each
Quarterly Payment Date, and (b) with respect to any Loan that is a Eurodollar Rate Loan, the last
day of each Interest Period applicable to such Loan;
provided
,
however
, that in the
case of each Interest Period of longer than three months Interest Payment Date shall also include
each Quarterly Payment Date.
Interest Period
is defined in subsection 2.2B.
Interest Rate Determination Date
means, with respect to any Interest Period, two Business
Days prior to the first day of such Interest Period.
Interface
means Interface Group-Nevada, Inc., a Nevada corporation.
Interface Holding
means Interface Group Holding Company, Inc., a Nevada corporation.
Interface Parent
means Interface GroupNevada Parent, Inc., a Nevada corporation.
26
Investment
means, relative to any Person, (a) any direct or indirect purchase or other
acquisition by such Person of, or of a beneficial interest in, any Securities of any other Person
(including any Subsidiary), (b) any direct or indirect purchase or other acquisition for value, by
such Person from any Person, of any equity Securities of any Person, or (c) any direct or indirect
loan, advance (other than advances to employees for moving, entertainment and travel expenses,
drawing accounts and similar expenditures in the ordinary course of business) or capital
contribution by such Person to any other Person, including all Indebtedness and accounts receivable
from that other Person that are not current assets or did not arise from sales to that other Person
in the ordinary course of business other than Hedging Agreements required or permitted hereunder to
hedge against fluctuations of interest rates or currency exchange risk. The amount of any
Investment shall be the original cost of such Investment
plus
the cost of all additions
thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment less all returns of principal or equity thereon or
repayments thereof.
Joint Venture
means a Supplier Joint Venture or any other joint venture, partnership or
other similar arrangement, whether in corporate, partnership, limited liability company or other
legal form;
provided
that in no event shall any Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
LCR
is defined in the preamble.
LCR Holdings
means Lido Intermediate Holding Company, LLC, a Delaware limited liability
company, and a wholly-owned Subsidiary of Venetian.
Legal Requirements
means all laws, statutes, orders, decrees, injunctions, licenses,
permits, approvals, agreements and regulations of any Governmental Instrumentality having
jurisdiction over the matter in question.
Lender
and
Lenders
is defined in the preamble, together with their successors and
permitted assigns pursuant to subsection 10.1;
provided
that the term Lenders, when used
in the context of a particular Commitment, shall mean Lenders having that Commitment.
Lien
means, with respect to any asset, any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title retention agreement
or any lease in the nature thereof).
Lien Protection Account
has the meaning given in the Disbursement Agreement (as in effect on
the date hereof).
Loan
or
Loans
means one or more of the Term Loans or any combination thereof.
Loan Documents
means this Agreement, the Notes, the Subsidiary Guaranty, the Collateral
Documents and each other agreement that expressly states by its terms that it is a Loan Document.
27
Loan Party
means each Borrower, Subsidiary Guarantor and Restricted Subsidiary which
hereafter executes and delivers a supplement to the Subsidiary Guaranty and the Security Agreement
in accordance with subsection 6.11A, which may hereafter become a party to any Loan Document and
Loan Parties
means all such Persons, collectively.
LVSC
means Las Vegas Sands Corp., a Nevada corporation and its successors.
LVSC Corporate Services Agreement
means the Services Agreement, dated as of February 17,
2005, between LVSC and LVSI.
LVSC Notes
means (x) $250.0 million in principal amount of 6.375% Senior Notes issued by
LVSC due 2015 and (y) Indebtedness issued in exchange for, or the proceeds of which are used to
repay, refinance, renew, substitute, refund or defease the Indebtedness evidenced by the LVSC
Notes;
provided
that with respect to the Indebtedness referred to in clause (y), (a) no
Potential Event of Default or Event of Default shall be caused by the incurrence thereof (including
the use of the proceeds thereof to refinance, replace, substitute or refund the LVSC Notes), (b)
the principal amount of such Indebtedness shall not exceed the principal amount of LVSC Notes so
refinanced, renewed, replaced, substituted or refunded (plus Refinancing Fees), (c) there shall be
no scheduled amortization of principal on any portion of such Indebtedness until a date six months
following the final maturity date of the Loans and (d) the applicable final maturity date of any
tranche of such Indebtedness shall not be earlier than the date six months following the final
maturity date of the Loans.
LVSC Notes Documents
means the LVSC Notes, the LVSC Notes Indenture and the guarantees
thereof.
LVSC Notes Indenture
means the Indenture dated as of February 10, 2005 between LVSC and the
LVSC Notes Indenture Trustee as supplemented by a Supplemental Indenture, dated as of February 22,
2005, among LVSC, the subsidiary guarantors party thereto and the LVSC Notes Indenture Trustee.
LVSC Notes Indenture Trustee
means U.S. Bank National Association in its capacity as the
trustee under the LVSC Notes Indenture and its successors in such capacity.
LVSC Permitted Indebtedness
shall mean Indebtedness of LVSC;
provided
that (a) no
Potential Event of Default or Event of Default shall be caused by the incurrence thereof or of any
related guarantees; (b) there shall be no scheduled amortization of principal on any portion of
such LVSC Permitted Indebtedness until a date six months following the final maturity date of the
Loans; (c) the applicable final maturity date of such LVSC Permitted Indebtedness shall be a date
not earlier than six months following the final maturity date of the Loans; (d) the covenants,
defaults (and events of default), redemption and other prepayment events, remedies, acceleration
rights, subordination provisions and other material terms applicable to such LVSC Permitted
Indebtedness shall be no more restrictive to the Borrowers, taken as a whole, than such provisions
contained in either (i) any Bank Credit Agreement or (ii) this Agreement, as reasonably determined
by the Board of Directors of LVSC; and (e) such Indebtedness, any related guarantees or any related
Contingent Obligations shall not be secured by any assets or property of the Borrowers or any
Restricted Subsidiary;
provided
, further, that up to $50.0
28
million of LVSC Permitted Indebtedness shall not be subject to the provisions of subsections
(b), (c) and (d) hereof.
LVSC Permitted Credit Facility Refinancing Indebtedness
means LVSC Permitted Indebtedness
issued in exchange for, or the proceeds of which are used to permanently repay, refinance,
substitute or refund the Term B Loans under the Bank Credit Agreement;
provided
that the
principal amount of such LVSC Permitted Credit Facility Refinancing Indebtedness shall not exceed
the principal amount of such Term B Loans, as refinanced, substituted or refunded (plus
Refinancing Fees).
LVSI
is defined in the preamble.
Macau
means the Macau Special Administrative Region of the Peoples Republic of China.
Macau Excluded Subsidiaries
means Venetian Macau Finance Company, Venetian Macau, Limited,
Venetian Cotai Limited, Venetian Venture Development Intermediate Limited, Venetian Venture
Development Intermediate II, Venetian Venture Development Intermediate I, Venetian Global Holdings
Limited, Venetian Resort Development Limited, VML US Finance, LLC, Venetian Orient Limited,
Venetian Travel Limited, and any other Person in which Borrower or any Subsidiary Guarantor has at
any time, directly or indirectly, an Investment, whose purpose is to own, manage, develop,
construct, maintain or operate the Macau Project or any other project in the Peoples Republic of
China or assist in any of the foregoing, or any Person which owns any such Person, in each case
which is an Excluded Subsidiary.
Macau Project
means one or more hotels, casinos, conference centers and retail and
entertainment complexes owned and operated by certain Affiliates of the Borrowers in Macau pursuant
to a sub-concession approved by the Government of Macau.
MAI Appraisal
means an appraisal conducted by a member of the Appraisal Institute in
accordance with the standards of the Appraisal Institute.
Mall Financing Agreement
means the Construction Loan Agreement dated September 30, 2004
among the Phase II Mall Borrowers, The Bank of Nova Scotia as administrative agent, and the lenders
party thereto, pursuant to which the lenders thereunder have agreed to provide certain loans to the
Phase II Mall Borrowers, together with all related agreements, instruments and documents executed
or delivered pursuant thereto at any time (including all mortgages, guarantees, security agreements
and all other collateral and security documents), in each case as such agreements, instruments and
documents may be amended (including any amendment and restatement thereof) or otherwise modified
from time to time.
Mall Permitted Refinancing Indebtedness
means Indebtedness issued in exchange for, or the
proceeds of which are used to extend, refinance, renew, replace, substitute or refund, Indebtedness
evidenced by the Mall Financing Agreement;
provided
that (a) the principal amount of such
Mall Permitted Refinancing Indebtedness shall not exceed the principal amount of Indebtedness under
the Mall Financing Agreement so extended, refinanced, renewed, replaced, substituted or refunded
(plus Refinancing Fees), and (b) the terms of such Mall Permitted Refinancing Indebtedness shall
not be (in the good faith judgment of the Borrowers),
29
taken as a whole, materially worse for the Phase II Mall Borrowers or the Lenders than the
terms of the Mall Financing Agreement as then in effect.
Margin Stock
is defined in Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
Master Lease
is defined in the Disbursement Agreement (as in effect on the date hereof or,
at a Borrowers request, with the consent of the Administrative Agent, as amended, amended and
restated, supplemented, replaced, refinanced or otherwise modified with respect to such defined
term).
Material Adverse Effect
means (a) a material adverse effect upon the business, operations,
properties, assets, condition (financial or otherwise) or prospects of either (i) Borrowers and
their Restricted Subsidiaries, taken as a whole or (ii) the Borrowers and their Subsidiaries, taken
as a whole or (b) the material impairment of the ability of any Loan Party to observe or perform,
or of the Administrative Agent or Lenders to enforce, the Obligations; or (c) a material adverse
effect on the Collateral taken as a whole.
Material Contract
means any Contract or other arrangement to which any Borrower(s) or any of
their Restricted Subsidiaries are a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected to have a Material
Adverse Effect.
Maturity Date
means June 15, 2011.
Maximum Consolidated Capital Expenditures Amount
is defined in subsection 7.14.
Moodys
means Moodys Investor Services, Inc., or any successor thereto, and if such Person
shall for any reason no longer perform the function of a securities rating agency, Moodys shall be
deemed to refer to any other rating agency designated by the Borrowers with the written consent of
the Administrative Agent (such consent not to be unreasonably withheld).
Mortgage Policy
is defined in subsection 4.1D(ii) of the Bank Credit Agreement (as in effect
on the date hereof or, at a Borrowers request, with the consent of the Administrative Agent, as
amended, amended and restated, supplemented, replaced, refinanced or otherwise modified with
respect to such defined term).
Multiemployer Plan
means any Employee Benefit Plan which is a multiemployer plan as
defined in Section 3(37) of ERISA.
Net Collateral Sale Proceeds
means the aggregate cash proceeds received by any Borrower or
any of its Restricted Subsidiaries in respect of any Collateral Sale, net of (a) the direct costs
relating to such Collateral Sale (including legal, accounting and investment banking fees and
expenses, or similar liabilities related to the assets sold and required to be paid by the seller
as a result thereof and sales, finders or brokers commission), and any relocation expenses
incurred as a result thereof and taxes paid or payable as result thereof (including any such taxes
paid or payable by an owner of any Borrower or any of its Restricted Subsidiaries), and (b) any
30
reserve for adjustment in respect of the sale price of the Collateral disposed of or any
liabilities associated with such Collateral in such Collateral Sale and the deduction of
appropriate amounts provided by the seller as a reserve in accordance with GAAP against any
liabilities associated with the Collateral disposed of in the Collateral Sale and retained by a
Borrower or any Restricted Subsidiary.
Net Loss Proceeds
means the aggregate cash proceeds received by any Borrower or any of its
Restricted Subsidiaries in respect of any Event of Loss, including insurance proceeds and proceeds
from condemnation awards or damages awarded by any judgment, net of the direct costs in recovery of
such Net Loss Proceeds (including legal, accounting, appraisal and insurance adjuster fees and
expenses) and any taxes paid or payable as a result thereof (including any such taxes paid or
payable by an owner of any Borrower or any of its Restricted Subsidiaries), and any amounts
required to be reinvested in other assets or expended or applied to restore or replace any property
or assets, pursuant to the Cooperation Agreement to the extent so reinvested, expended or applied
and, if derived from assets other than the Collateral, amounts required to be applied to the
repayment of any Indebtedness secured by a Lien (or amounts permitted by the terms of such
Indebtedness to be otherwise reinvested in other assets of such Borrower or such Restricted
Subsidiary to the extent so reinvested) which is prior to the Liens securing the Bank Credit
Facility on the asset or assets that are the subject of the Event of Loss. Notwithstanding the
foregoing, all proceeds of so-called liquidated damages, subguard and business interruption
insurance policies shall not be Net Loss Proceeds.
Net Pension Proceeds
is defined in subsection 2.4B(iii)(c).
Net Proceeds
is defined in subsection 2.4B(iii)(d).
Net Proceeds Amount
is defined in subsection 2.4B(iii)(e).
Nevada Gaming Authorities
shall mean, collectively, the Nevada Gaming Commission, the Nevada
State Gaming Control Board, and the Clark County Liquor and Gaming Licensing Board.
Nevada Gaming Laws
shall mean the Nevada Gaming Control Act, as modified in Chapter 463 of
the Nevada Revised Statutes, as amended from time to time, and the regulations of the Nevada Gaming
Commission promulgated thereunder, as amended from time to time.
Non-Guarantor Restricted Subsidiary
means: (i) certain foreign subsidiaries designated as
such by the Borrowers pursuant to the terms hereof (which shall on the Closing Date include
Venetian Far East Limited); and (ii) Grand Canal Shops Mall MM Subsidiary, Inc. and its
Subsidiaries.
Non-Recourse Financing
means Indebtedness incurred in connection with the construction,
installation, purchase or lease of personal or real property or equipment or Specified FF&E (a) as
to which the lender upon default may seek recourse or payment against a Borrower or any of its
Restricted Subsidiaries only through the return or foreclosure or sale of the property or equipment
or the Specified FF&E so constructed, purchased or leased and to any proceeds of such property and
Indebtedness and the related collateral account in which such proceeds are held and (b) may not
otherwise assert a valid claim for payment on such
31
Indebtedness against a Borrower or any of its Restricted Subsidiaries or any other property of
a Borrower or any of its Restricted Subsidiaries, except, in each of the foregoing clauses (a) and
(b), in the case of customary non-recourse exceptions, including fraud and environmental
indemnities.
Non-US Lender
is defined in subsection 2.7B(iii)(a).
Notes
means one or more of the Term Notes, or any combination thereof.
Obligations
means all obligations of every nature of each Loan Party from time to time owed
to the Agents and/or Lenders under the Loan Documents, whether for principal, interest, premium, if
any, fees, expenses, indemnification or otherwise including interest accruing on the Loans during
the pendency of any proceeding of the type described in subsections 8.6 or 8.7, whether or not
allowed in such proceeding.
Office Space Lease
means the Lease between Venetian and Grand Canal, dated as of May 17,
2004, with respect to the lease of certain office space to Venetian.
Officers Certificate
means, as applied to any corporation or other entity, a certificate
executed on behalf of such corporation or other entity by its chairman of the board (if an officer)
or its president or one of its vice presidents and by its chief financial officer, Vice President -
Finance or its treasurer (in each case in their capacity as such officer) or, if such entity does
not have any such officer, any such officer of its managing member or managing partner, as
applicable.
Operating Lease
means, as applied to any Person, any lease (including leases that may be
terminated by the lessee at any time) of any property (whether real, personal or mixed) that is not
a Capital Lease other than any such lease under which that Person is the lessor.
Operative Documents
means the Loan Documents, the LVSC Notes Documents as to which the
Borrowers or any of the Restricted Subsidiaries are a party, documents related to LVSC Permitted
Indebtedness guaranteed by the Borrowers or their Restricted Subsidiaries as to which the Borrowers
or any of their Restricted Subsidiaries are a party, the Bank Credit Facility Documents, the Resort
Complex Operative Documents and the Project Documents.
Organizational Documents
means (a) with respect to any corporation, its certificate or
articles of incorporation and its bylaws, (b) with respect to any limited partnership, its
certificate of limited partnership and its partnership agreement, (c) with respect to any general
partnership, its partnership agreement, (d) with respect to any limited liability company, its
articles or certificate of organization and its operating agreement and (e) with respect to any
other entity, its equivalent organizational, governing documents.
Other FF&E Facility
means any credit facility, vendor financing, mortgage financing,
purchase money obligation, capital lease or similar arrangement incurred to finance or refinance
construction, purchase or lease of furniture, fixtures, equipment (including Specified FF&E) or
other real or personal property acquired after February 22, 2005 pursuant to subsections 7.1(vii),
(xi) or (xviii) (but in each case excluding any Collateral).
32
Other Indebtedness
means the Indebtedness of any Borrower or any of its Restricted
Subsidiaries incurred under any Employee Repurchase Note.
Outside Completion Deadline
means March 1, 2008, as the same may be from time to time
extended pursuant to Section 6.3 of the Disbursement Agreement (as in effect on the date hereof).
Patriot Act
is defined in subsection 10.22.
PBGC
means the Pension Benefit Guaranty Corporation or any successor thereto.
Pension Plan
means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Code or Section 302 of ERISA.
Percentage
means, as the context may require, any Lenders Term Delayed Draw Percentage or
Term Funded Percentage.
Permits
means all material authorizations, consents, decrees, permits, waivers, privileges,
approvals from and filings with all Governmental Instrumentalities necessary for the realization of
the Phase II Project in accordance with the Project Documents and the Resort Complex Operative
Documents, the Plans and Specifications, the Project Budget, and any other material building,
construction, land use, environmental or other material permit, license, franchise, approval,
consent and authorization (including planning board approvals from applicable Governmental
Instrumentalities and approvals required under the Nevada Gaming Laws) required for or in
connection with the construction, ownership, use, occupation and operation of the Phase II Project
and the transactions provided for in this Agreement and the other Operative Documents.
Permitted Employee Repurchases
is defined in subsection 7.1(ix).
Permitted Liens
means the following types of Liens (excluding any such Lien imposed pursuant
to Section 401(a)(29) or 412(n) of the Code or by ERISA, any such Lien relating to or imposed in
connection with any Environmental Claim, and any such Lien expressly prohibited by any applicable
terms of any of the Collateral Documents):
(i) Liens on Collateral granted pursuant to the Collateral Documents;
(ii) Liens on assets other than Collateral securing Indebtedness permitted under
subsection 7.1(vii), provided that such Liens extend only to the real property or personal
property and any related assets that are constructed, purchased or leased with the proceeds
of such Non-Recourse Financing and to any proceeds of such property or Indebtedness and
related collateral accounts in which such proceeds are held, and such property is
constructed, leased or acquired within 180 days of the incurrence of such Indebtedness or
the drawing of such funds;
(iii) Liens on assets other than Collateral securing Indebtedness and Contingent
Liabilities permitted under subsections 7.1 (x) or (xvi) and Contingent Obligations relating
thereto permitted under subsection 7.4;
33
(iv) Liens on assets other than Collateral existing on the Closing Date and described
in
Schedule 7.2
annexed hereto;
(v) other Liens on assets other than Collateral securing Indebtedness in an aggregate
amount not to exceed $15,000,000 at any time outstanding;
(vi) Liens for taxes, assessments or governmental charges or claims the payment of
which is not, at the time, required by subsection 6.3;
(vii) statutory Liens of landlords, statutory Liens of banks and rights of set-off,
statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen and materialmen,
and other Liens imposed by law, in each case incurred in the ordinary course of business or
in connection with the construction of the Resort Complex (a) for amounts not yet overdue,
(b) for amounts that are overdue and that (in the case of any such amounts overdue for a
period in excess of 5 days) are being contested in good faith by appropriate proceedings, so
long as (1) such reserves (including through funds on deposit in the Lien Protection Account
which, in the aggregate with all amounts on deposit therein shall not exceed $20,000,000) or
other appropriate provisions, if any, as shall be required by GAAP shall have been made for
any such contested amounts, and (2) in the case of a Lien with respect to any portion of the
Collateral or any property or assets securing any Bank Credit Facility, such contest
proceedings conclusively operate to stay the sale of any portion of such collateral on
account of such Lien or (c) with respect to Liens of mechanics, repairmen, workmen and
materialmen, with respect to which the Borrowers have obtained a title insurance endorsement
insuring against losses arising therewith or if such Lien arises in the ordinary course of
business or in the construction of the Resort Complex, the Borrowers have bonded such Lien
within a reasonable time after becoming aware of the existence thereof (provided that in
connection with any Lien on Collateral, such title insurance or bonding is reasonably
acceptable to the Administrative Agent);
(viii) Liens incurred or deposits made in the ordinary course of business in connection
with workers compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed money),
incurred in the ordinary course of business or in connection with the construction of the
Resort Complex (a) for amounts not yet overdue, (b) for amounts that are overdue and that
(in the case of any such amounts overdue for a period in excess of five days) are being
contested in good faith by appropriate proceedings, so long as (1) such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been made for any
such contested amounts and (2) in the case of a Lien with respect to any portion of the
Collateral or any property or assets securing any Bank Credit Facility, such contest
proceedings conclusively operate to stay the sale of any portion of such collateral on
account of such Lien or (c) with respect to Liens of mechanics, repairmen, workmen and
materialmen, with respect to which the Borrowers have obtained a title insurance endorsement
insuring against losses arising therewith or if such Lien arises in the ordinary course of
business or in the construction of
34
the Resort Complex, the Borrowers have bonded such Lien within a reasonable time after
becoming aware of the existence thereof (provided that in connection with any Collateral,
such title insurance or bonding is reasonably acceptable to the Administrative Agent);
(ix) (a) Liens on assets other than Collateral to secure a stay of process in
proceedings to enforce a contested liability, or required in connection with the institution
of legal proceedings or in connection with any other order or decree in any such proceeding
or in connection with any contest of any tax or other governmental charge, or deposits with
a governmental agency entitling the Borrowers or a Restricted Subsidiary to maintain
self-insurance or to participate in other specified insurance arrangements, or (b) any
attachment or judgment Lien not constituting an Event of Default under subsection 8.8;
provided
that such Liens referred to in this clause (ix) to the extent such liens
secure Indebtedness, shall not exceed the amounts specified in subsection 7.1(viii);
(x) leases or subleases with respect to assets other than Collateral granted to third
parties in accordance with any applicable terms of this Agreement and the Collateral
Documents and not interfering in any material respect with the ordinary conduct of the
business of a Borrower or any of its Restricted Subsidiaries;
(xi) (a) easements, rights-of-way, avagational servitudes, restrictions, encroachments,
and other minor defects or irregularities in title and other similar charges or
encumbrances, in each case which do not and will not interfere in any material respect with
the ordinary conduct of the business of a Borrower or any of its Restricted Subsidiaries or
result in a material diminution in the value of any Collateral as security for the
Obligations and (b) any Liens or other exceptions to title that appear in the Mortgage
Policy, as the same may be updated from time to time in accordance with subsection 4.2D of
the Bank Credit Agreement;
(xii) leases with respect to assets other than Collateral permitted under subsection
7.7(vii), (x), (xx), (xxi) and (xxv) and any leasehold mortgage in favor of any party
financing the lessee under any lease permitted under subsection 7.7(vii), (x), (xx) and
(xxi),
provided
that none of the Borrowers nor any of their Restricted Subsidiaries
is liable for the payment of any principal of, or interest, premiums or fees on, such
financing;
(xiii) Liens on real property of Borrowers (other than Collateral) arising pursuant to
the Harrahs Shared Roadway Agreement and any similar Liens arising pursuant to any
amendments thereto or required under a lease or other transaction relating to the
construction of a parking garage on real property owned by Harrahs Casino Resort adjacent
to the Existing Site;
(xiv) Liens arising from filing UCC financing statements relating solely to leases of
assets other than Collateral permitted by this Agreement;
(xv) Liens in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation of goods;
35
(xvi) any zoning or similar law or right reserved to or vested in any governmental
office or agency to control or regulate the use of any real property;
(xvii) licenses of patents, trademarks and other intellectual property rights granted
by a Borrower or any of its Restricted Subsidiaries in the ordinary course of business and
not interfering in any material respect with the ordinary conduct of the business of such
Borrower or such Restricted Subsidiary;
(xviii) (a) Liens on assets other than Collateral created under the HVAC Services
Agreements and (b) easements, access rights, licenses-to-use or similar agreements with
respect to the Collateral provided for under the HVAC Services Agreements, in each case, as
in effect on the date hereof or substantially similar in nature to those so in effect;
(xix) Liens on assets other than Collateral created under the Predevelopment Agreement
and the Improvement Phasing Agreement;
(xx) Liens on assets other than Collateral incurred in connection with Hedging
Agreements in respect of any Indebtedness;
provided
that such Liens only extend to
the collateral securing such Indebtedness with the same priority thereto;
(xxi) Liens on assets (other than Collateral) securing any obligations under any Bank
Credit Facility;
provided
, that (i) in the case of the Bank Credit Facility existing
on the Closing Date, the Administrative Agent and the Bank Administrative Agent shall have
entered into the Intercreditor Agreement and (ii) in the case of any other Bank Credit
Facility, the Administrative Agent shall have entered into an intercreditor agreement (in
substantially the same form as the Intercreditor Agreement or otherwise reasonably
satisfactory to the Administrative Agent) or an amendment to the Intercreditor Agreement
with the Bank Administrative Agent reasonably satisfactory to the Administrative Agent for
such other Bank Credit Facility and all other relevant parties thereto;
(xxii) Liens contemplated by the Cooperation Agreement;
(xxiii) Liens on assets other than Collateral securing Indebtedness permitted pursuant
to (a) subsections 7.1(v), (vi), (viii) and (xvii) and (b) subsections 7.1(xi) and (xiv);
(xxiv) Liens on property other than Collateral of a Person existing at the time such
Person became a Restricted Subsidiary, is merged into or consolidated with or into, or wound
up into, one of the Borrowers or any Restricted Subsidiary of the Borrowers;
provided
, that such Liens were in existence prior to the consummation of, and were
not entered into in contemplation of, such acquisition, merger or consolidation or winding
up and do not extend to any other assets other than those of the Person acquired by, merged
into or consolidated with one of the Borrowers or such Restricted Subsidiary;
(xxv) Liens on property other than Collateral existing at the time of acquisition
thereof by the Borrowers or any Restricted Subsidiary of the Borrowers;
36
provided
that such Liens were in existence prior to the consummation of, and
were not entered into in contemplation of, such acquisition and do not extend to any other
assets other than those so acquired;
(xxvi) Liens on assets other than Collateral incurred in connection with the
construction of a pedestrian bridge over Las Vegas Boulevard and Sands Avenue provided that
such Liens will not (i) materially interfere with, impair or detract from the operation of
the business of Borrower and their Subsidiaries or the construction or operation of the
Resort Complex and (ii) cause a material decrease in the value of the Collateral;
(xxvii) easements, restrictions, rights of way, encroachments and other minor defects
or irregularities in title incurred in connection with the traffic study relating to
increased traffic on Las Vegas Boulevard and Sands Avenue as a result of completion of the
Resort Complex;
(xxviii) [Intentionally Omitted];
(xxix) Liens on assets other than Collateral incurred in connection with the exchange
of or other transaction with respect to the Central Park West Site in accordance with the
terms of subsection 7.7(xxiv); and
(xxx) Liens incurred in the ordinary course of business in favor of entities acting as
agent on behalf of a Loan Party for the purposes of performing duties in connection with the
entry and release of goods, post entry services and other dealings with U.S. Customs and
Border Protection pursuant to a customs power of attorney or similar arrangement;
provided
that such Liens shall be limited to assets in the actual or constructive
possession or control of such agent;
provided
that other than with respect to Liens of the type set forth under clauses (i)
through (iv), (v), (ix), (xii), (xx), (xxi), and (xxiii) through (xxv), (xxviii) and (xxx) above,
such Liens do not secure Indebtedness for borrowed money.
Permitted Subordinated Indebtedness
means any Indebtedness of the Borrowers or any
Subsidiary Guarantor (a) for which no installment of principal matures earlier than twelve months
after the Maturity Date and (b) for which the payment of principal and interest is subordinated in
right of payment to the Obligations pursuant to documentation containing redemption and other
prepayment events, maturities, amortization schedules, covenants, events of default, remedies,
acceleration rights, subordination provisions and other material terms reasonably satisfactory to
the Administrative Agent.
Person
means natural persons, corporations, limited partnerships, general partnerships,
limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal, state or local,
domestic or foreign, and including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.
37
Phase I Mall Operative Documents
means the Office Space Lease, the Gondola Lease, the
Theater Lease, and the Casino Level Mall Lease.
Phase II Hotel/Casino
means the portion of the Phase II Project which consists of an
approximately 3,000-room hotel, casino and meeting complex (commonly known as the Palazzo) owned
by LCR, to be designed, developed, constructed and operated by LCR, excluding the Phase II Mall and
certain space leased by LCR to the Phase II Mall Subsidiary pursuant to the terms of the Master
Lease.
Phase II Hotel/Casino Equity Account
has the meaning given in the Disbursement Agreement.
Phase II Mall
means a commercial mall facility to be built in connection with the Phase II
Project to be located within certain airspace within the Phase II Project a portion of which (i)
has been leased by Phase II Mall Subsidiary from LCR pursuant to the Phase II Mall Lease and which
shall eventually be transferred from LCR to the Phase II Mall Subsidiary upon its designation as a
separate legal parcel in accordance with the Disbursement Agreement, (ii) has been leased by Phase
II Mall Subsidiary pursuant to the Walgreens Lease, and (iii) shall be leased by Phase II Mall
Subsidiary from LCR pursuant to the Master Lease.
Phase II Mall Air Parcel
has the meaning given in the Disbursement Agreement.
Phase II Mall Borrower Taxes
is defined in subsection 6.3C.
Phase II Mall Borrowers
means the Phase II Mall Subsidiary and Phase II Mall Subsidiary
Holdings.
Phase II Mall Lease
means that certain Indenture of Lease, dated September 30, 2004 by and
between LCR and the Phase II Mall Subsidiary.
Phase II Mall Outside Substantial Completion Date
means the
Outside Substantial Completion
Date
as defined in Section 7.1(a) of the Phase II Mall Sale Agreement (as in effect on the date
hereof).
Phase II Mall Sale
means the sale of the equity interests in the Phase II Mall Subsidiary
pursuant to the terms of the Phase II Mall Sale Agreement.
Phase II Mall Sale Agreement
means that certain Agreement, dated as of April 12, 2004, as
amended, between LCR and GGP, as amended and assigned by LCR to Phase II Mall Subsidiary Holdings
pursuant to the terms of that certain Assignment and Assumption Agreement and First Amendment to
Agreement, dated as of September 30, 2004, among LCR, as the assignor, Phase II Mall Subsidiary
Holdings, as the assignee, and GGP.
Phase II Mall Sale Reimbursement Agreement
means that certain Reimbursement Agreement, dated
September 30, 2004 between LCR and Phase II Mall Subsidiary Holdings.
38
Phase II Mall Sale Reserve Account
means the reserve account to be established by Phase II
Mall Subsidiary Holdings pursuant to the terms of the Phase II Mall Sale Reimbursement Agreement
and pledged to LCR thereunder.
Phase II Mall Subsidiary
means Phase II Mall Subsidiary, LLC, a Delaware limited liability
company, and a wholly-owned direct Subsidiary of Phase II Mall Subsidiary Holdings.
Phase II Mall Subsidiary Holdings
means Phase II Mall Holding, LLC, a Nevada limited
liability company, and a wholly-owned indirect Subsidiary of LCR Holdings.
Phase II Mall Substantial Completion
is defined in the Disbursement Agreement (as in effect
on the date hereof).
Phase II Project
means an approximately 3,000 room hotel, casino, retail and meeting complex
(commonly known as The Palazzo Resort Hotel Casino) to be integrated with the Existing Facility and
located on approximately 14 acres of land adjacent to the Existing Facility, which will include the
Phase II Mall and certain retail stores which will be leased by LCR to the Phase II Mall Subsidiary
pursuant to the terms of the Master Lease.
Phase II Project Costs
means costs related to the design, development, construction,
engineering, procurement and pre-opening of the Phase II Project (other than such costs related or
allocable to the Phase II Mall) incurred prior to the Final Completion Date, in no event including
operating costs of the Phase II Project after the Substantial Completion Date.
Plans and Specifications
has the meaning given in the Disbursement Agreement.
Potential Event of Default
means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default.
Predevelopment Agreement
means the Sands Resort Hotel Casino Agreement, dated as of February
18, 1997, amended as of September 16, 1997, between Clark County, Nevada and LVSI.
Pre-IPO Distribution
means the distribution by LVSI to its shareholders that was declared on
December 12, 2004 and paid on January 10, 2005.
Prime Rate
means the rate publicly quoted from time to time by The Wall Street Journal as
the prime rate (or, if The Wall Street Journal ceases quoting a prime rate, the highest per annum
rate of interest published by the Federal Reserve Board in Federal Reserve statistical release H.15
(519) entitled Selected Interest Rates as the Bank prime loan rate or its equivalent). The Prime
Rate is a reference rate and does not necessarily represent the lowest or best rate actually
charged to any customer. The Administrative Agent or any other Lender may make commercial loans or
other loans at rates of interest at, above or below the Prime Rate.
Prior Transactions
means:
(i) 100% of the membership interests in Grand Canal were sold to GGP for net cash
proceeds at closing of at least $515,000,000;
39
(ii) Lido Casino Resort Holding Company distributed 100% of the membership interests of
LCR to LCR Holdings;
(iii) Venetian established Phase II Mall Subsidiary Holdings and the Phase II Mall
Subsidiary;
(iv) Adelson contributed 100% of the equity interests of Interface Holdings Company,
Inc, to LVSI, LVSI made an equity contribution of approximately $27,000,000 to Interface,
and Interface applied a portion of the proceeds of such equity to the prepayment of
pre-existing indebtedness of Interface; and
(v) Interface repaid all of its remaining pre-existing indebtedness with the proceeds
of a commercial mortgage loan of $100,000,000.
Proceedings
is defined in subsection 6.1(x).
Procurement Services Agreement
means the Corporate Services Agreement effective as of March
1, 2005 among LVSI, Venetian Macau Limited and World Sourcing Services Limited.
Project Budget
is defined in the Disbursement Agreement (as in effect on the date hereof or,
at a Borrowers request, with the consent of the Administrative Agent, as amended, amended and
restated, supplemented, replaced, refinanced or otherwise modified with respect to such defined
term).
Project Documents
means the Phase II Mall Lease, the Phase II Mall Sale Agreement, the
Construction Management Agreement, the COREA and any document or agreement related to the design,
development, construction or pre-opening of the Phase II Project and entered into on, prior to or
after the Closing Date, in accordance with subsection 7.13.
Pro Rata Share
means (a) with respect to all payments, computations and other matters
relating to the Term Loan Commitment or the Term Loans of any Lender, the percentage obtained by
dividing
(i) the Term Loan Exposure of that Lender
by
(ii) the aggregate Term Loan
Exposure of all Lenders, (b) with respect to all payments, computations and other matters relating
to the Term Delayed Draw Loan Commitment or the Term Delayed Draw Loans of any Lender, the
percentage obtained by
dividing
(i) the Term Delayed Draw Loan Exposure of that Lender
by
(ii) the aggregate Term Delayed Draw Loan Exposure of all Lenders, (c) with respect to
all payments, computations and other matters relating to the Term Funded Loan Commitment or the
Term Funded Loans of any Lender, the percentage obtained by
dividing
(i) the Term Funded
Loan Exposure of that Lender
by
(ii) the aggregate Term Funded Loan Exposure of all
Lenders, and (d) for all other purposes with respect to each Lender, the percentage obtained by
dividing
(i) the Term Loan Exposure of that Lender by (ii) the aggregate Term Loan
Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The Pro Rata Share of each Lender as of the
Closing Date for purposes of each of clauses (a), (b), (c) and (d) of the preceding sentence is set
forth opposite the name of that Lender in
Schedule 2.1
annexed hereto.
Quarterly Date
means March 31, June 30, September 30 and December 31.
40
Quarterly Payment Date
means each April 1, July 1, October 1, and January 1.
Rating Agencies
is defined in the definition of Cash Equivalents.
Refinancing
means the refinancing of the all amounts outstanding under the Existing FF&E
Note.
Refinancing Fees
means with respect to any extension, refinancing, defeasance, renewal,
replacement, substitution, refunding, repurchase, repayment or redemption of Indebtedness, or any
tender for or call of Indebtedness, any reasonable fees, expenses, premiums, make-whole payments,
and accrued and unpaid interest refinanced or paid or incurred in connection therewith.
Register
is defined in subsection 2.1D(i).
Regulation D
means Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
Related Parties
means: (a) Family Members (defined below); (b) directors of LVSC, LVSI or
Venetian and employees of LVSC, LVSI or Venetian who are senior managers or officers of LVSC, LVSI,
Venetian, Interface or any of their Affiliates; (c) any Person who receives an interest in LVSC,
LVSI or Venetian from any individual referenced in clauses (a)-(b) in a gratuitous transfer,
whether by gift, bequest or otherwise, to the extent of such interest; (d) the estate of any
individual referenced in clauses (a)-(c); (e) a trust for the benefit of one or more of the
individuals referenced in clauses (a)-(c); and/or (f) an entity owned or controlled, directly or
indirectly, by one or more of the individuals, estates or trusts referenced in clauses (a)-(e).
For the purpose of this paragraph, a Family Member shall include: (a) Sheldon G. Adelson; (b)
Dr. Miriam Adelson; (c) any sibling of either of the foregoing; (d) any issue of any one or more of
the individuals referenced in the preceding clauses (a)-(c); and (e) the spouse or issue of the
spouse of one or more of the individuals referenced in the preceding clauses (a)-(d).
Related Soft Costs
means, with respect to any equipment, fixtures, furniture, furnishings
and other goods financed hereunder, the invoiced price (net of any and all discounts, credits,
commissions, rebates and allowances) of the installation costs, storage costs, insurance, sales,
use, value added and similar taxes, freight and delivery charges and (to the extent, specifically
disclosed to, and approved by, the Administrative Agent) administrative costs in each case related
to such equipment, fixtures, furniture, furnishings and other goods.
Release
means any release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into
the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers
or other closed receptacles containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or groundwater.
Requisite Lenders
means (a) at any time that GE Capital as a Lender holds more than 50% of
the sum of the aggregate outstanding principal amount of all Loans and unused amount of the
Commitments of all Lenders (and provided that there are then at least two other Lenders
41
which are not Affiliates of each other), at least two Lenders then holding more than 50% of
the sum of the aggregate outstanding principal amount of all Loans and unused amount of the
Commitments of all Lenders and (b) at any other time, one or more Lenders then holding more than
50% of the sum of the aggregate outstanding principal amount of all Loans and unused amount of the
Commitments of all Lenders.
Reserves
means, with respect to any Borrowing Base, reserves established by Administrative
Agent from time to time in its reasonable discretion against Eligible FF&E pursuant to this
Agreement.
Resort Complex
means the Existing Facility and the Phase II Project.
Resort Complex Operative Documents
means the Cooperation Agreement, the Harrahs Shared
Roadway Agreement, the HVAC Services Agreements, the Phase I Mall Operative Documents, the
Predevelopment Agreement, the Improvement Phasing Agreement, the Services Agreement, the Site
Easements, the Master Lease, and the Walgreens Lease.
Replacement Collateral
has the meaning ascribed to it in subsection 6.4D.
Restricted Payment
means (a) any dividend or other distribution, direct or indirect, on
account of any shares of any class of equity Securities of any Borrower now or hereafter
outstanding, except a dividend or distribution payable solely in shares of that class of equity
Securities to the holders of that class (or the accretion of such dividends or distribution), (b)
any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of equity Securities of any Borrower now or
hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class of equity Securities
of any Borrower now or hereafter outstanding, and (d) any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect to the Employee
Repurchase Notes and Permitted Subordinated Indebtedness.
Restricted Subsidiary
means each Subsidiary of LVSI (other than Venetian) that is not an
Excluded Subsidiary.
SECC
means the exposition and meeting facilities commonly known as the Sands Expo and
Convention Center.
Secured Parties
means, collectively, the Agents and Lenders.
Securities
means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly known as
securities or any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.
42
Securities Act
means the Securities Act of 1933, as amended from time to time, and any
successor statute.
Security Agreement
means the Security Agreement executed and delivered by each Borrower and
each Subsidiary Guarantor, dated as of the Closing Date, in substantially the form attached hereto
as
Exhibit E
.
Senior Management
means with respect to any Borrower, the President, Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer or any Executive Vice President or Senior
Vice President of such Borrower.
Services Agreement
means the amended and restated Services Agreement, dated as of November
14, 1997, among LVSI, Interface, Interface Group Holding Company, Inc., and the parties stated on
the schedule thereto, as assigned by that certain Assignment and Assumption Agreement, dated as of
November 8, 2004, by and among LVSI, Interface Holding, Interface, the parties stated on the
schedule thereto and Interface Operations LLC.
Shareholder Subordinated Indebtedness
means Permitted Subordinated Indebtedness held by
Adelson, his Affiliates and/or his Related Parties that has a maturity date after the Maturity Date
of the Term Loans, that does not pay any cash interest, that does not bind the obligor(s) thereon
by the provisions of any covenants other than customary affirmative covenants, and that does not
contain any cross-default provisions to any other Indebtedness of such obligor(s).
Site
means the real property consisting of approximately 14 acres adjoining the Existing
Site and owned by LCR.
Site Easement
means any easement appurtenant, easement in gross, license agreement and other
right running for the benefit of the Borrowers, the Existing Facility, the Phase II Project, the
HVAC Component or appurtenant to the Site and/or the Existing Site which benefits or burdens the
Resort Complex, including those certain easements and licenses described in the Title Insurance
Policies.
Solvent
means, with respect to any Person, that as of the date of determination both (a) (i)
the then fair saleable value of the property of such Person is (A) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (B) not less than the amount that
will be required to pay the probable liabilities on such Persons then existing debts as they
become absolute and matured considering all financing alternatives and potential asset sales
reasonably available to such Person; (ii) such Persons capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (iii) such Person does
not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond
its ability to pay such debts as they become due; and (b) such Person is solvent within the
meaning given that term and similar terms under applicable laws relating to fraudulent transfers
and conveyances. For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to become an actual or matured
liability.
43
Specified FF&E
means any furniture, fixtures, equipment and other personal property that is
acquired after the Closing Date and financed or refinanced with the proceeds from an Other FF&E
Facility and not with the proceeds of any borrowings made under this Agreement (other than costs
related to transportation, installation and sales taxes), including each and every item or unit of
equipment acquired with the proceeds thereof, each and every item or unit of equipment acquired by
substitution or replacement thereof; all parts, components and other items pertaining to such
property; all documents (including all warehouse receipts, dock receipts, bills of lading and the
like); all licenses (other than Gaming Licenses), warranties, guarantees, service contracts and
related rights and interests covering all or any portion of such property; and to the extent not
otherwise included, all proceeds (including insurance proceeds) of any of the foregoing and all
accessions to, substitutions and replacements for, and the rents, profits and products of, each of
the foregoing (including collateral accounts) and such other collateral reasonably determined by
the Administrative Agent in its reasonable discretion; provided that Specified FF&E shall not
include the Collateral.
Stop Funding Notice
is defined in the Disbursement Agreement (as in effect on the date
hereof) and includes any substantially similar notice that has the effect of stopping disbursements
under the Disbursement Agreement.
Subsidiary
means, with respect to any Person, (a) any corporation, partnership, limited
liability company, association, joint venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership interests entitled (without regard to
the occurrence of any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof and (b) any partnership or limited liability company of which more
than 50% of such entities capital accounts, distribution rights, general or limited partnership
interests or membership interests are owned or controlled directly or indirectly by such Person or
one of more other Subsidiaries of that Person or a combination thereof.
Subsidiary Guarantor
means each Restricted Subsidiary that is not a Non-Guarantor Restricted
Subsidiary.
Subsidiary Guaranty
means the Subsidiary Guaranty, dated as of the Closing Date, executed
and delivered by each Subsidiary Guarantor and attached hereto as
Exhibit F
.
Substantial Completion
has the meaning given in the Disbursement Agreement (as in effect on
the date hereof or, at a Borrowers request, with the consent of the Administrative Agent, as
amended, amended and restated, supplemented, replaced, refinanced or otherwise modified with
respect to such defined term).
Substantial Completion Date
means the date on which Substantial Completion occurs.
Substitute Lender
is defined in subsection 10.7(a).
Supplemental Agent
is defined in subsection 9.1B.
44
Supplier Joint Venture
means any Person that supplies or provides materials or services to
any Borrower or any contractor in the Resort Complex and in which a Borrower or one of its
Restricted Subsidiaries have Investments.
S&P
means Standard & Poors Ratings Group, a division of The McGraw Hill Corporation, or any
successor thereto, and if such Person shall for any reason no longer perform the function of a
securities rating agency, S&P shall be deemed to refer to any other rating agency designated by the
Borrowers with the written consent of the Administrative Agent (such consent not to be unreasonably
withheld).
Tax
or
Taxes
means any present or future tax, levy, impost, duty, charge, fee, deduction
or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed;
provided
that
Tax on the overall net
income
of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which
that Person is organized or in which that Persons principal office (and/or, in the case of a
Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender,
its lending office) is deemed to be doing business on all or part of the net income, profits or
gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise
in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of
a Lender, its lending office).
Term Delayed Draw Loan
is defined in subsection 2.1A(ii).
Tax Sharing Agreement
means the Tax Sharing Agreement to be entered into among LVSC, LVSI,
VCR, LCR and certain other subsidiaries of LVSI substantially in the form attached hereto as
Exhibit L
.
Term Delayed Draw Loan Commitment
means the commitment of a Lender to make a Term Delayed
Draw Loan to the Borrowers pursuant to subsection 2.1A(ii) of this Agreement, and
Term Delayed
Draw Loan Commitments
means such commitments of all Lenders in the aggregate.
Term Delayed Draw Loan Commitment Amount
means $135,000,000.
Term Delayed Draw Loan Commitment Termination Date
means the earlier of (a) the occurrence
of a Commitment Termination Event, (b) the date on which the full amount of Term Loans available to
be borrowed have been borrowed or (c) December 31, 2007.
Term Delayed Draw Loan Exposure
means, with respect to any Lender as of any date of
determination, (a) prior to the Term Delayed Draw Loan Commitment Termination Date, that Lenders
Term Delayed Draw Loan Commitment and the aggregate outstanding principal amount of the Term
Delayed Draw Loans made by that Lender and (b) after the Term Delayed Draw Loan Commitment
Termination Date, the outstanding principal amount of the Term Delayed Draw Loans made by that
Lender.
Term Delayed Draw Loan Lender
is defined in subsection 2.1A(ii).
45
Term Delayed Draw Percentage
means, relative to any Lender, the applicable percentage
relating to Term Delayed Draw Loans set forth opposite its name on
Schedule 2.1
hereto
under the Term Delayed Draw Loan Commitment column or set forth in a Assignment Agreement under the
Term Delayed Draw Loan Commitment column, as such percentage may be adjusted from time to time
pursuant to Assignment Agreements executed by such Lender and its assignee Lender and delivered
pursuant to subsection 10.1B. A Lender shall not have any Term Delayed Draw Loan Commitment if its
percentage under the Term Delayed Draw Loan Commitment column is zero.
Term Funded Loan
means a Term Funded Loan made by a Lender to Borrowers pursuant to
subsection 2.1A(i).
Term Funded Loan Commitment
means the commitment of a Lender to make a Term Funded Loan to
the Borrowers pursuant to subsection 2.1A(i) of this Agreement, and
Term Funded Loan Commitments
means such commitments of all Lenders in the aggregate.
Term Funded Loan Commitment Amount
means the aggregate amount of each Lenders Term Funded
Loan Commitment set forth in
Schedule 2.1
.
Term Funded Loan Exposure
means, with respect to any Lender as of any date of determination,
the outstanding principal amount of the Term Funded Loans made by that Lender.
Term Funded Loan Lender
is defined in subsection 2.1A(i).
Term Funded Percentage
means, relative to any Lender, the applicable percentage relating to
Term Funded Loans set forth opposite its name on
Schedule 2.1
hereto under the Term Funded
Loan Commitment column or set forth in an Assignment Agreement under the Term Funded Loan
Commitment column, as such percentage may be adjusted from time to time pursuant to Assignment
Agreements executed by such Lender and its assignee Lender and delivered pursuant to subsection
10.1B. A Lender shall not have any Term Funded Loan Commitment if its percentage under the Term
Funded Loan Commitment column is zero.
Term Loan Lender
or
Term Loan Lenders
means one or more of the Term Delayed Draw Loan
Lenders and/or Term Funded Loan Lenders.
Term Loan
or
Term Loans
means one or more of the Term Delayed Draw Loans and/or Term
Funded Loans made by Lenders to the Borrowers pursuant to subsection 2.1A(ii) or (iii) of this
Agreement.
Term Loan Commitment
means the Term Funded Loan Commitment and the Term Delayed Draw Loan
Commitment of a Lender.
Term Loan Exposure
means, with respect to any Lender as of any date of determination, the
Term Funded Loan Exposure and the Term Delayed Draw Loan Exposure of such Lender on such date.
Term Note
means a joint and several promissory note of the Borrowers payable to any Lender,
in the form of
Exhibit A
annexed hereto (as such promissory note may be amended,
46
endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of
the Borrowers to such Lender resulting from outstanding Term Loans, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal thereof.
Termination Date
means the date on which all payment Obligations (other than with respect to
contingent obligations (including indemnity claims) (i) for which no claim has been asserted as of
such date or (ii) for which a claim has been made and has been cash collateralized to the
Administrative Agents reasonable satisfaction) have been repaid in full in cash and all
Commitments shall have terminated.
Theater Lease
means the Lease between Venetian and Grand Canal, dated as of May 17, 2004,
with respect to the lease of certain showroom space to Venetian.
Title Insurance Policies
means the A.L.T.A. policy of title insurance issued to the Bank
Administrative Agent pursuant to the Bank Credit Agreement, including all amendments thereto,
endorsements thereof and substitutions or replacements therefor.
Total Permitted Costs
means, with respect to any equipment, fixtures, furniture, furnishings
and other goods financed hereunder, an amount equal to the sum of its Hard Costs and Related Soft
Costs; p
rovided
, that the aggregate Related Soft Costs of all Domestic FF&E financed
hereunder shall not exceed 25% of the aggregate Total Permitted Costs of all such Domestic FF&E;
and
provided
,
further
, that the aggregate Related Soft Costs of all Imported FF&E
financed hereunder shall not exceed 30% of the aggregate Total Permitted Costs of all such Imported
FF&E.
Transactions
is defined in subsection 4.1I(iii).
Transaction Costs
means the fees, costs and expenses payable by the Borrowers on or before
the Closing Date in connection with this Agreement, the other Loan Documents, and the initial Loan
hereunder.
Unamortized Term Loan Balance
means, at any time with respect to any units or items of
Collateral, an amount as reasonably determined by Administrative Agent equal to the product of (i)
the then outstanding aggregate principal balance of all Term Loans, multiplied by (ii) a fraction
in which (A) the numerator is an amount equal to the original Hard Costs of such units or items of
Collateral and (B) the denominator is an amount equal to the aggregate original Hard Costs of all
then existing units or items of Collateral (including those units or items referenced in the
numerator).
UCC
means the Uniform Commercial Code as in effect from time to time in the State of New
York;
provided
, that if, with respect to any UCC financing statement or by reason of any
provisions of law, the perfection or the effect of perfection or non-perfection of the security
interests granted to the Administrative Agent pursuant to the applicable Loan Document is governed
by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New
York, then UCC means the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions of each Loan Document and any UCC financing statement
relating to such perfection or effect of perfection or non-perfection.
47
United States
or
U.S.
means the United States, its fifty states and the District of
Columbia.
Venetian
is defined in the preamble.
Walgreens Lease
means that certain Commercial Lease dated as of February 2004 between LCR
and Cap IIBuccaneer, LLC, a New Mexico limited liability company, as assigned in accordance with
the terms of the Bank Credit Agreement by LCR to the Phase II Mall Subsidiary.
Withdrawal Period
is defined in subsection 10.7(b).
1.2
Accounting Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement
.
Except as otherwise expressly provided in this Agreement (including the last sentence of this
subsection 1.2), all accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information required to be
delivered by the Borrowers to Lenders pursuant to clauses (i), (ii), (iii), (iv) and (xiii) of
subsection 6.1 shall be prepared in accordance with GAAP as in effect at the time of such
preparation (and delivered together with the reconciliation statements provided for in subsection
6.1(v)). Calculations in connection with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in conformity with those used to prepare
the financial statements referred to in subsection 5.3. For the purposes of this Agreement,
consolidated with respect to any Person shall mean, unless expressly stated to be otherwise, such
Person consolidated with its Restricted Subsidiaries and shall not include any Excluded Subsidiary;
provided that the parties acknowledge that such definition of Consolidated is not in accordance
with GAAP to the extent that Excluded Subsidiaries are not consolidated with such Person.
1.3
Other Definitional Provisions and Rules of Construction
.
A. Any of the terms defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference.
B. References to Sections and subsections shall be to Sections and subsections,
respectively, of this Agreement unless otherwise specifically provided.
C. The use in any of the Loan Documents of the word include or including, when following
any general statement, term or matter, shall not be construed to limit such statement, term or
matter to the specific items or matters set forth immediately following such word or to similar
items or matters, whether or not nonlimiting language (such as without limitation or but not
limited to or words of similar import) is used with reference thereto, but rather shall be deemed
to refer to all other items or matters that fall within the broadest possible scope of such general
statement, term or matter.
D. Except as may be otherwise expressly provided herein, any reference to any agreement or
instrument shall be deemed to include a reference to such agreement or instrument
48
as assigned, amended, supplemented or otherwise modified from time to time, but only to the
extent not in violation of any other provisions hereof.
Section 2.
Amounts and Terms of Commitments and Loans.
2.1
Commitments; Making of Loans; the Register; Notes.
A.
Commitments
. Subject to the terms and conditions of this Agreement, each Lender
hereby severally agrees to make the Loans described in this subsection 2.1A.
(i)
Term Funded Loans
. In a single borrowing, on the Closing Date, each Lender
that has a Term Funded Loan Commitment (referred to as a
Term Funded Loan Lender
), agrees
that it will severally make loans (relative to such Lender, its
Term Funded Loans
) to
Borrowers equal to such Lenders Term Funded Percentage of the aggregate amount of the
borrowing of the Term Funded Loans requested by such Borrowers to be made on such day. No
amounts paid or prepaid with respect to Term Funded Loans may be reborrowed. No Term Funded
Loan Lender shall be permitted or required to make any Term Funded Loan if, after giving
effect thereto, the aggregate outstanding principal amount of all Term Funded Loans of such
Term Funded Loan Lender would exceed such Lenders Term Funded Percentage of the then
existing Term Funded Loan Commitment Amount. Each Lenders Term Funded Loan Commitment
shall expire following the making of the Term Funded Loans on the Closing Date.
(ii)
Term Delayed Draw Loans
. From time to time on any Business Day occurring
from and after the Closing Date but on or prior to the Term Delayed Draw
Loan
Commitment Termination Date, each Lender that has a Term Delayed Draw Loan Commitment
(referred to as a
Term Delayed Draw Loan Lender
), agrees that it will severally make loans
(relative to such Lender, its
Term Delayed Draw Loans
) to any Borrower equal to such
Lenders Term Delayed Draw Percentage of the aggregate amount of each borrowing of the Term
Delayed Draw Loans requested by such Borrower to be made on such day. No amounts paid or
prepaid with respect to Term Delayed Draw Loans may be reborrowed. No Term Delayed Draw
Loan Lender shall be permitted or required to make any Term Delayed Draw Loan if, after
giving effect thereto, the aggregate original principal amount of all Term Delayed Draw
Loans of such Term Delayed Draw Loan Lender would exceed such Lenders Term Delayed Draw
Percentage of the then existing Term Delayed Draw Loan Commitment Amount. The amount of any
Term Delayed Draw Loans to be made at any time shall not exceed the Borrowing Availability
at such time as determined by reference to the applicable Borrowing Base Certificate. Each
Lenders Term Delayed Draw Loan Commitment shall expire on the Term Delayed Draw Loan
Commitment Termination Date. Attached hereto as
Schedule A
is a list of Designated
FF&E that may be purchased by a Borrower with the proceeds of the Term Delayed Draw Loans
(which Schedule A may be amended from time to time with the consent of the Administrative
Agent).
B.
Borrowing Mechanics
. Term Delayed Draw Loans made on any Funding Date shall be in
an aggregate minimum amount of $2,000,000.
49
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Borrowing Notice for a
Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination
Date, and Borrowers shall be bound to make a borrowing in accordance therewith.
C.
Lending of Funds
. All Loans under this Agreement shall be made by the Lenders
simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no
Lender shall be responsible for any default by any other Lender in that other Lenders obligation
to make a Loan requested hereunder nor shall the Commitment of any Lender to make the particular
type of Loan requested be increased or decreased as a result of a default by any other Lender in
that other Lenders obligation to make a Loan requested hereunder. Promptly after receipt by the
Administrative Agent of a Borrowing Notice pursuant to subsection 2.1D and, in the case of any Term
Delayed Draw Loan, a Borrowing Base Certificate (covering all then existing Eligible FF&E including
the Designated FF&E to be financed or refinanced with the proceeds of such Term Delayed Draw
Loans), the Administrative Agent shall notify each Lender of the proposed borrowing. Each Lender
shall make the amount of its Loan available to the Administrative Agent not later than 12:00 Noon
(New York City time) on the applicable Funding Date (which in the case of Term Loans (other than
the initial Loans on the Closing Date) shall be the date specified in the applicable Borrowing
Notice), in same day funds in Dollars, via wire transfer to the Funding and Payment Account, and
the Administrative Agent shall make such funds available to the Borrowers no later than 1:00 p.m.
(New York City time) on the applicable Funding Date.
Any Borrowing Notice with respect to a Term Delayed Draw Loan must be given no later than noon
(New York time) five (5) Business Days (or such lesser number of days as agreed to by
Administrative Agent with respect to the Borrowing Notice to be delivered on the Closing Date)
prior to the proposed Funding Date and shall include the information required in
Exhibit
B-1
and such other information as may be reasonably required by Administrative Agent,
including identification of the units or items of Designated FF&E (or other equipment, fixtures,
furniture, furnishings and goods reasonably acceptable to Administrative Agent) to be financed or
refinanced with the proceeds of such Term Delayed Draw Loans and the total cost thereof (including
separate breakouts of (i) the portion of such total cost which consists of Hard Costs, Related Soft
Costs and any other cost elements and (ii) with respect to each unit or item, the Hard Costs
thereof and, to the extent available to the Borrowers, the Related Soft Costs and any other cost
elements thereof). Each Borrower shall notify Administrative Agent in writing, as soon as possible
and in any event immediately before the applicable Funding Date, if any of the matters certified in
such Borrowing Notice is no longer true and correct in all material respects as of such Funding
Date. In the case of any Term Delayed Draw Loan, each Borrowing Notice shall be accompanied by a
Borrowing Base Certificate (covering all then existing Eligible FF&E including the Designated FF&E
to be financed or refinanced with the proceeds of such Term Delayed Draw Loans) together with such
supporting detail and documentation as shall be requested by Administrative Agent in its reasonable
discretion.
Unless the Administrative Agent shall have been notified by any Lender prior to the Funding
Date for any Loans that such Lender does not intend to make available to the Administrative Agent
the amount of such Lenders Loan requested on such Funding Date, the Administrative Agent may
assume that such Lender has made such amount available to the
50
Administrative Agent on such Funding Date and the Administrative Agent may, in its sole
discretion, but shall not be obligated to, make available to the Borrowers a corresponding amount
on such Funding Date. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest thereon, for each day from
such Funding Date until the date such amount is paid to the Administrative Agent, at the customary
rate set by the Administrative Agent for the correction of errors among banks for three Business
Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount
forthwith upon Administrative Agents demand therefor, the Administrative Agent shall promptly
notify Borrowers and Borrowers shall immediately pay such corresponding amount to the
Administrative Agent together with interest thereon, for each day from such Funding Date until the
date such amount is paid to the Administrative Agent, at the rate payable under this Agreement for
Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that the Borrowers may
have against any Lender as a result of any default by such Lender hereunder.
D.
The Register
.
(i) The Administrative Agent (or its agent or sub-agent appointed by it) shall
maintain, as agent for the Borrower, at its address referred to in subsection 10.9, a
register for the recordation of the names and addresses of Lenders and the Commitments and
Loans of each Lender from time to time (the
Register
). The Register, as in effect at the
close of business on the preceding Business Day, shall be available for inspection by the
Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(ii) The Administrative Agent shall record, or shall cause to be recorded, in the
Register the Commitment and the Loans (in accordance with the provisions of subsection 10.1)
from time to time of each Lender, and each repayment or prepayment in respect of the
principal amount of the Loans of each Lender. Any such recordation shall be conclusive and
binding on Borrowers and each Lender, absent manifest error;
provided
that failure
to make any such recordation, or any error in such recordation, shall not affect any
Lenders Commitments or the Obligations of any Loan Party in respect of any applicable
Loans.
(iii) Each Lender shall record on its internal records (including the Notes held by
such Lender) the amount of each Loan made by it and each payment in respect thereof. Any
such recordation shall be conclusive and binding on Borrowers, absent manifest error;
provided
that failure to make any such recordation, or any error in such
recordation, shall not affect any Lenders Commitments or the Obligations of any Loan Party
in respect of any applicable Loans; and
provided
,
further
that in the event
of any inconsistency between the Register and any Lenders records, the recordations in the
Register shall govern.
(iv) The Administrative Agent and Lenders shall deem and treat the Persons listed as
Lenders in the Register as the holders and owners of the corresponding
51
Commitments and Loans listed therein for all purposes hereof, and no assignment or
transfer of any such Commitment or Loan shall be effective, in each case unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall have been accepted
by the Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the applicable
Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof,
and any request, authority or consent of any Person who, at the time of making such request
or giving such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, assignee or transferee of the corresponding
Commitments or Loans.
E.
Notes
. The Borrowers agree that, upon request to the Administrative Agent by any
Lender, the Borrowers will execute and deliver to such Lender a Note evidencing the Loans made by,
and payable to the order of, such Lender in a maximum principal amount equal to such Lenders
Percentage of the original applicable Commitment. Each Borrower hereby irrevocably authorizes each
Lender to make (or cause to be made) appropriate notations on the grid attached to such Lenders
Note (or on any continuation of such grid), which notations, if made, shall evidence,
inter
alia
, the date of, the outstanding principal amount of, and the interest rate and Interest
Period applicable to the Loans evidenced thereby. Such notations shall, to the extent not
inconsistent with notations made by the Administrative Agent in the Register, be conclusive and
binding on each Obligor absent manifest error;
provided
,
however
, that the failure
of any Lender to make any such notations shall not limit or otherwise affect any Obligations of any
Loan Party.
2.2
Interest on the Loans
.
A.
Rate of Interest
. Subject to the provisions of subsections 2.6 and 2.7, each Loan
shall bear interest on the unpaid principal amount thereof from the date made through maturity
(whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the
Adjusted Eurodollar Rate. The applicable basis for determining the rate of interest with respect
to any Loan shall be selected by the Borrowers initially at the time a Borrowing Notice is given
with respect to such Loan pursuant to subsection 2.1C, and the basis for determining the interest
rate with respect to any Loan may be changed from time to time pursuant to subsection 2.2D. If on
any day a Loan is outstanding with respect to which notice has not been delivered to the
Administrative Agent in accordance with the terms of this Agreement specifying the applicable basis
for determining the rate of interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate. Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest at a rate per annum as follows:
(a) if a Base Rate Loan, then from the date of funding of such Loan at the sum of the
Base Rate
plus
the Applicable Margin for such Loans; or
(b) if a Eurodollar Rate Loan, then from the date of funding of such Loan at the sum of
the Adjusted Eurodollar Rate
plus
the Applicable Margin for such Loans.
All Eurodollar Rate Loans shall bear interest from and including the first day of the applicable
Interest Period to (but not including) the last day of such Interest Period at the interest rate
determined as applicable to such Eurodollar Rate Loan.
52
B.
Interest Periods
. In connection with each Eurodollar Rate Loan, the Borrowers may,
pursuant to the applicable Borrowing Notice or Conversion/Continuation Notice, as the case may be,
select an interest period (each an
Interest Period
) to be applicable to such Loan, which Interest
Period shall be, at Borrowers option, either a one, two, three or six month period;
provided
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall commence on the
Funding Date in respect of such Loan, in the case of a Loan initially made as a Eurodollar
Rate Loan, or on the date specified in the applicable Conversion/Continuation Notice, in the
case of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable to a Eurodollar
Rate Loan continued as such pursuant to a Conversion/Continuation Notice, each successive
Interest Period shall commence on the day on which the next preceding Interest Period
expires;
(iii) if an Interest Period would otherwise expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day; provided that, if any
Interest Period would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such Interest Period
shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall, subject to subsection 2.2B(v), end on the last Business
Day of a calendar month;
(v) no Interest Period with respect to any portion of the Loans shall extend beyond the
Maturity Date for such Loans;
(vi) no Interest Period shall extend beyond a date on which Borrowers are required to
make a scheduled payment of principal of the Loans is scheduled to occur unless the sum of
(a) the aggregate principal amount of Loans that are Base Rate Loans
plus
(b) the
aggregate principal amount of Loans that are Eurodollar Rate Loans with Interest Periods
expiring on or before such date
plus
(c) the excess of the Commitments then in
effect over the aggregate principal amount of the Loans then outstanding equals or exceeds
the principal amount required to be paid on the Loans or the permanent reduction of the
Commitments that is scheduled to occur, on such date;
(vii) there shall be no more than nine (9) Interest Periods outstanding at any time;
(viii) in the event Borrowers fail to specify an Interest Period for any Eurodollar
Rate Loan in the applicable Borrowing Notice or Conversion/Continuation Notice, the
Borrowers shall be deemed to have selected an Interest Period of one month; and
53
(ix) the Borrowers may not select an Interest Period of greater than one month
until sixty days after the Closing Date (unless prior thereto the Administrative Agent
provides written notice that the syndication has been completed).
C.
Interest Payments
. Subject to the provisions of subsection 2.2E, interest on each
Loan shall be payable in arrears on each Interest Payment Date with respect to such Loan, shall be
payable in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the extent
accrued on the amount being prepaid, and shall be payable in arrears at maturity of the Loans,
including final maturity of the Loans;
provided
,
however
, with respect to any
voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the
applicable Interest Payment Date.
D.
Conversion or Continuation
. Subject to the provisions of subsection 2.6, the
Borrowers shall have the option (i) to convert at any time all or any part of its outstanding Loans
equal to $2,000,000 and integral multiples of $500,000 in excess of that amount from Loans bearing
interest at a rate determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of any Interest Period
applicable to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$2,000,000 and integral multiples of $500,000 in excess of that amount as a Eurodollar Rate Loan;
provided,
however
, that a Eurodollar Rate Loan may only be converted into a Base
Rate Loan on the expiration date of an Interest Period applicable thereto.
Borrowers shall deliver a Conversion/Continuation Notice to the Administrative Agent no later
than 1:00 p.m. (New York City time) at least one Business Day in advance of the proposed conversion
date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance
of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of,
a Eurodollar Rate Loan). A Conversion/Continuation Notice shall specify (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan
to be converted/continued, (iii) the nature of the proposed conversion/continuation, (iv) in the
case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest
Period, and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that
no Potential Event of Default or Event of Default has occurred and is continuing. In lieu of
delivering the above-described Conversion/Continuation Notice, the Borrowers may give the
Administrative Agent telephonic notice by the required time of any proposed conversion/continuation
under this subsection 2.2D;
provided
that such notice shall be promptly confirmed in
writing by delivery of a Conversion/Continuation Notice to the Administrative Agent on or before
the proposed conversion/continuation date. Upon receipt of written or telephonic notice of any
proposed conversion/continuation under this subsection 2.2D, the Administrative Agent shall
promptly transmit such notice by telefacsimile or telephone to each Lender.
Neither the Administrative Agent nor any Lender shall incur any liability to the Borrowers in
acting upon any telephonic notice referred to above that the Administrative Agent believes in good
faith to have been given by a duly authorized officer or other Person authorized to act on behalf
of the Borrowers or for otherwise acting in good faith under this subsection 2.2D, and upon
conversion or continuation of the applicable basis for determining the interest rate with respect
to any Loans in accordance with this Agreement pursuant to any such
54
telephonic notice Borrowers shall have effected a conversion or continuation, as the case may
be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Conversion/Continuation
Notice for conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and
Borrowers shall be bound to effect a conversion or continuation in accordance therewith.
E.
Default Rate
. Upon the occurrence and during the continuation of any Event of
Default, the outstanding principal amount of all Loans and, to the extent permitted by applicable
law, any interest payments thereon not paid when due and any fees and other amounts then due and
payable hereunder, shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable upon demand at a
rate that is 2% per annum in excess of the interest rate otherwise payable under this Agreement
with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate
which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans);
provided
that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in the interest rate is effective
such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear
interest payable upon demand at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement for Base Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of the Administrative Agent or any Lender.
F.
Computation of Interest
. Interest on the Loans shall be computed on the basis of
(i) a 360-day year, in the case of Eurodollar Rate Loans and (ii) a 365 or 366 day year, in respect
of Base Rate Loans, in each case for the actual number of days elapsed in the period during which
it accrues. In computing interest on any Loan, (i) the date of the making of such Loan or the
first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being
converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such
Base Rate Loan, as the case may be, shall be included, and (ii) the date of payment of such Loan or
the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate
Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to
such Eurodollar Rate Loan, as the case may be, shall be excluded;
provided
that if a Loan
is repaid on the same day on which it is made, one days interest shall be paid on that Loan.
2.3
Fees
.
A.
Commitment Fees
. The Borrowers agree to pay to the Administrative Agent, for
distribution to each Term Delayed Draw Loan Lender in proportion to that Lenders Pro Rata Share,
commitment fees for the period from and including the Closing Date to and excluding the Term
Delayed Draw Loan Commitment Termination Date equal to the average of the daily unused Term Delayed
Draw Loan Commitments
multiplied by
0.75% per annum, in each case such commitment fees to
be calculated on the basis of a 360-day year and the actual number of
55
days elapsed and to be payable quarterly in arrears on each Quarterly Payment Date, commencing
on the first such date to occur after the Closing Date, and on the Term Delayed Draw Loan
Commitment Termination Date, as applicable.
B.
Annual Administrative Fee
. The Borrowers agree to pay to the Administrative Agent
an annual administrative fee in the amount and at the times set forth in the Administrative Agents
Fee Letter.
C.
Prepayment Fee
. Except as otherwise provided in the last sentence of this
subsection 2.3C, if Borrowers pay after acceleration or prepay all or any portion of the Term
Loans, whether voluntarily or involuntarily and whether (in the case of a prepayment) before or
after acceleration of the Obligations, or if any of the Term Delayed Draw Loan Commitments are
otherwise terminated or partially reduced by Borrowers, Borrowers shall pay to Administrative Agent
(for the ratable benefit of those Term Lenders whose Term Loans are being prepaid or repaid) as
liquidated damages and compensation for the costs of being prepared to make funds available
hereunder an amount equal to the Applicable Percentage (as defined below) multiplied by the
principal amount of the outstanding Term Loans paid after acceleration or prepaid or, without
duplication, Term Delayed Draw Loan Commitments terminated or partially reduced by Borrowers. As
used herein, the term Applicable Percentage shall mean (x) one percent (1%) in the case of a
repayment, prepayment, termination or reduction on or prior to December 31, 2007, (y)
three-quarters of one percent (0.75%), in the case of a repayment, prepayment , termination or
reduction after December 31, 2007 but on or prior to December 31, 2008, and (z) zero percent (0%),
in the case of a repayment, prepayment, termination or reduction after December 31, 2008. The
Borrowers agree that the Applicable Percentages are a reasonable calculation of Term Lenders lost
profits in view of the difficulties and impracticality of determining actual damages resulting from
an early prepayment of the Tem Loans or early termination of the Term Loan Commitments.
Notwithstanding the foregoing, (i) no prepayment fee shall be payable by Borrowers upon (x) any
mandatory payments or prepayment made pursuant to subsection 2.4A or subsection 2.4B(iii) (except
subsection 2.4B(iii)(d) with respect to debt incurred in connection with the refinancing of the
Obligations pursuant to a new credit facility);
provided
that in the case of such mandatory
prepayment the transactions giving rise thereto are permitted hereunder, (y) any prepayment
required by any order of a Governmental Authority, or (z) any prepayment pursuant to subsection
10.7B and (ii) if the Obligations are refinanced pursuant to a new credit facility, each of those
Term Lenders participating in such refinancing shall not be entitled to any amounts payable under
this subsection 2.3C arising out of such refinancing.
D.
Other Fees
. The Borrowers agree to pay to the Administrative Agent such other fees
in the amounts and at the times as set forth in the Fee Letter or as may be otherwise agreed by
them in writing.
2.4
Repayments, Prepayments and Reductions in Commitments; General Provisions Regarding
Payments
.
The Borrowers shall repay, in full, the unpaid principal amount of each Loan upon the
applicable Maturity Date therefor. Prior thereto, payments and prepayments of the Loans shall or
may be made as set forth below.
56
A.
Scheduled Payments of Term Loans
.
(i)
Term Funded Loans
. Borrowers shall make principal payments on the Term
Funded Loans in eight (8) installments on each Quarterly Payment Date, commencing January 1,
2007, in an amount equal to $600,000 each, except that the final installment due on October
1, 2008 shall be in an amount sufficient to repay all amounts owing by the Borrowers under
this Agreement with respect to the Term Funded Loans (as such amounts may be reduced in
connection with any voluntary or mandatory prepayments of the Term Funded Loans in
accordance with subsection 2.4B(iv)).
(ii)
Term Delayed Draw Loans
. Borrowers shall make principal payments on the
Term Delayed Draw Loans in installments on each Quarterly Payment Date for Term Delayed Draw
Loans commencing April 1, 2008, in an amount equal to 5.00% of the aggregate principal
amount of the Term Delayed Draw Loans outstanding on April 1, 2008, with the remainder due
in four equal installments on the final three Interest Payment Dates for Term Delayed Draw
Loans preceding, and on, the Maturity Date;
provided
further
that the
scheduled installments of principal of the Term Delayed Draw Loans set forth above shall be
reduced in connection with any voluntary or mandatory prepayments of the Term Delayed Draw
Loans in accordance with subsection 2.4B(iv), and the final installment payable by the
Borrowers in respect of the Term Delayed Draw Loans on such date shall be in an amount, if
such amount is different from that specified above, sufficient to repay all amounts owing by
the Borrowers under this Agreement with respect to the Term Delayed Draw Loans.
B.
Prepayments and Unscheduled Reductions in Commitments
.
(i)
Voluntary Prepayments
. The Borrowers may, upon not less than one Business
Days prior written or telephonic notice, in the case of Base Rate Loans, and three Business
Days prior written or telephonic notice, in the case of Eurodollar Rate Loans, in each case
given to the Administrative Agent by 1:00 p.m. (New York City time) on the date required
and, if given by telephone, promptly confirmed in writing to the Administrative Agent (which
original written or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to time prepay any
Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000
and integral multiples of $500,000 in excess of that amount;
provided
,
however
, that with respect to any Eurodollar Rate Loan not prepaid on the expiration
of the Interest Period applicable thereto the Borrowers shall pay any amount payable
pursuant to subsection 2.6D. Notice of prepayment having been given as aforesaid, the
principal amount of the Loans specified in such notice shall become due and payable on the
prepayment date specified therein, unless such notice is in connection with a refinancing of
the Loans in which case such notice may be conditioned on consummation of such refinancing.
Any such voluntary prepayment shall be applied as specified in subsection 2.4B(iv). Any
such voluntary prepayment of the Loans must be accompanied by the payment of any prepayment
fee required by subsection 2.3C.
57
(ii)
Voluntary Reductions of Commitments
. The Borrowers may, upon not less
than three Business Days prior written or telephonic notice confirmed in writing to the
Administrative Agent (which original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time and from time
to time terminate in whole or permanently reduce in part any then remaining and unutilized
Term Delayed Draw Loan Commitments;
provided
that any such partial reduction of such
Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount. The Borrowers notice to the Administrative Agent shall
designate the date (which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of such Commitments shall
be effective on the date specified in Borrowers notice (unless such notice is in connection
with a refinancing of the Loans in which case such notice may be conditioned on consummation
of such refinancing) and shall reduce such Commitment of each Lender proportionately to its
Pro Rata Share. Any such voluntary reduction of the Commitments shall be applied as
specified in subsection 2.4B(iv). Any such voluntary termination or reduction of the Term
Delayed Draw Loan Commitments must be accompanied by the payment of any prepayment fee
required by subsection 2.3(c).
(iii)
Mandatory Prepayments
. The outstanding principal balance of the Loans
shall be prepaid in the amounts and under the circumstances set forth below, all such
prepayments to be applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a)
Prepayments From Sale of Collateral
. Promptly following (and in any event
within five (5) Business Days after) receipt by any Loan Party of any Net Collateral Sale
Proceeds in respect of any Collateral Sale, the Borrowers shall prepay the Loans in an
aggregate amount equal to the greater of (i) such Net Collateral Sale Proceeds or (ii) the
Unamortized Term Loan Balance associated with the Collateral disposed of in such Collateral
Sale.
(b)
Prepayments from Net Loss Proceeds of Collateral
. Except as may be
otherwise expressly permitted by subsection 6.4D, promptly upon (and in any event within
five (5) Business Days after) receipt by any Loan Party of any Net Loss Proceeds resulting
from an Event of Loss with respect to any of the Collateral, the Borrowers shall prepay the
Loans in an amount equal to the greater of (i) the amount of such Net Loss Proceeds or (ii)
the Unamortized Term Loan Balance associated with such Collateral.
(c)
Prepayments Due to Reversion of Surplus Assets of Pension Plans
. To the
extent not applied to repay the Bank Credit Facilities in accordance with the terms thereof,
on the fifth Business Day following the date of return to the Borrowers or any of their
Restricted Subsidiaries of any surplus assets of any pension plan of the Borrowers or any
for their Restricted Subsidiaries, the Borrowers shall prepay the Loans in an aggregate
amount (such amount being the
Net Pension Proceeds
) equal to 100% of such returned surplus
assets, net of transaction costs and expenses incurred in obtaining such return, including
incremental taxes payable as a result thereof.
58
(d)
Prepayments Due to Incurrence of Debt
. To the extent not applied to repay
the Bank Credit Facilities in accordance with the terms thereof, on the fifth Business Day
following the date of receipt by the Borrowers or any of their Restricted Subsidiaries, of
the proceeds (including Cash, real property or other property) (any such proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses associated
therewith, including reasonable legal fees and expenses, being
Net Proceeds
) from the
incurrence of any debt of the Borrowers or any of their Restricted Subsidiaries (other than
any debt expressly permitted under subsection 7.1), the Borrowers shall prepay the Loans in
an aggregate amount equal to 100% of such Net Proceeds.
(e)
Calculations of Net Proceeds Amounts; Additional Prepayments Based on
Subsequent Calculations
. Concurrently with any prepayment of the Loans pursuant to
subsections 2.4B(iii)(a)-(d), the Borrowers shall deliver to the Administrative Agent an
Officers Certificate demonstrating the calculation of the amount (the
Net Proceeds
Amount
) of the applicable Net Collateral Sale Proceeds, Net Loss Proceeds, Net Pension
Proceeds or Net Proceeds, as the case may be, that gave rise to such prepayment. In the
event that the Borrowers shall subsequently determine that the actual Net Proceeds Amount
was greater than the amount set forth in such Officers Certificate, the Borrowers shall
promptly make an additional prepayment of the Loans in an amount equal to the amount of such
excess, and Borrowers shall concurrently therewith deliver to the Administrative Agent an
Officers Certificate demonstrating the derivation of the additional Net Proceeds Amount
resulting in such excess.
(f)
Drawings on Conforming Adelson L/Cs.
To the extent not applied to pay or
prepay the Obligations under any Bank Credit Agreement in accordance with the terms
thereof, on the fifth Business Day following the date of receipt by any Bank Administrative
Agent of any proceeds from any drawing on any Conforming Adelson L/C, the Borrowers shall
prepay the Loans in an aggregate amount equal to 100% of such draw proceeds.
Notwithstanding the foregoing, it is understood and agreed that at the request of the
Borrowers, the relevant Bank Administrative Agent may release any Conforming Adelson L/C or
a portion thereof in its possession to the Borrowers provided that each of the following
conditions shall have been satisfied: (i) no Conforming Adelson L/C Draw Event shall have
occurred and be continuing, (ii) the Borrowers shall at such time be in compliance with
subsection 7.6 and shall have been in compliance therewith for the preceding four
consecutive quarters (without giving effect to any such Conforming Adelson L/C or a portion
thereof or any substitute cash equity contribution by Adelson or his Affiliates), (iii) no
Event of Default or Potential Event of Default shall have occurred and be continuing and
(iv) since the last day of the preceding calendar year, no event or change shall have
occurred that caused, in any case or in the aggregate, a Material Adverse Effect.
(iv)
Application of Prepayments
.
(a)
Application of Voluntary Prepayments by Type of Loan and Order of Maturity
.
Any voluntary prepayments pursuant to subsection 2.4B(i) shall be applied to
59
repay outstanding Term Loans on a pro rata basis (in accordance with subsection
2.4B(iv)(c)).
(b)
Application of Mandatory Prepayments by Type of Loans
.
(1)
General Application
. Any amount (the
Applied Amount
) required
to be applied as a mandatory prepayment of the Term Loans pursuant to subsection
2.4B(iii) shall be applied to prepay the Term Loans on a pro rata basis to the full
extent thereof.
(2)
Term Delayed Draw Loans
. If, at any time prior to the Term
Delayed Draw Loan Commitment Termination Date, any mandatory prepayments of Loans
are required pursuant to subsection 2.4B(iii), the Applied Amount shall be applied
first to the prepayment of then outstanding Term Loans (until paid in full) and if
any excess remains, any then remaining and unutilized Term Delayed Draw Loan
Commitments shall be permanently reduced by the amount of such excess.
(c)
Application of Prepayments of Term Loans to the Scheduled Installments of
Principal Thereof
. Any prepayments of a tranche of Term Loans pursuant to subsection
2.4B(i) or subsection 2.4B(iii) shall be applied to reduce the scheduled installments of
principal of such tranche of Term Loans (as set forth in subsection 2.4A) on a pro rata
basis.
(d)
Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans
.
Considering Loans being prepaid separately, any prepayment thereof shall be applied first to
Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in
each case in a manner which minimizes the amount of any payments required to be made by the
Borrowers pursuant to subsection 2.6D.
C.
General Provisions Regarding Payments
.
(i)
Manner and Time of Payment
. All payments by the Borrowers of principal,
interest, fees and other Obligations hereunder and under the Notes shall be made in Dollars
in same day funds, without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to the Administrative Agent not later than 1:00 p.m. (New York City
time) on the date due via wire transfer to the Funding and Payment Account for the account
of Lenders; for purposes of computing interest and fees, funds received by the
Administrative Agent after that time on such due date shall be deemed to have been paid by
the Borrowers on the next succeeding Business Day.
(ii)
Application of Payments to Principal and Interest
. All payments in
respect of the principal amount of any Loan shall include payment of accrued interest on the
principal amount being repaid or prepaid, and all such payments shall be applied to the
payment of interest before application to principal.
(iii)
Apportionment of Payments
. Aggregate principal and interest payments in
respect of Loans shall be apportioned among all outstanding Loans
60
proportionately to Lenders respective Pro Rata Shares. The Administrative Agent (or
its agent or sub-agent appointed by it) shall promptly distribute to each Lender, at its
primary address set forth on
Schedule 2.1
or at such other address as such Lender
may request, its Pro Rata Share of all such payments received by the Administrative Agent
and the commitment fees of such Lender when received by the Administrative Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Conversion/Continuation Notice is
withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu
of its Pro Rata Share of any Eurodollar Rate Loans, the Administrative Agent shall give
effect thereto in apportioning payments received thereafter.
(iv)
Payments on Business Days
. Whenever any payment to be made hereunder
shall be stated to be due on a day that is not a Business Day, such payment shall be made on
the next succeeding Business Day.
(v)
Notation of Payment
. Each Lender agrees that before disposing of any Note
held by it, or any part thereof (other than by granting participations therein), that Lender
will make a notation thereon of all Loans evidenced by that Note and all principal payments
previously made thereon and of the date to which interest thereon has been paid;
provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under such Note with respect to any Loan or any payments of principal
or interest on such Note.
2.5
Use of Proceeds
.
A.
Term Funded Loans
. The proceeds of the Term Funded Loans shall be applied by the
Borrowers to repay in full the then outstanding principal balance of the Existing FF&E Note.
B.
Term Delayed Draw Loans
. The proceeds of the Term Delayed Draw Loans shall be
applied by the Borrowers to finance or refinance the acquisition by a Borrower of units or items of
Designated FF&E.
C.
Margin Regulations
. No portion of the proceeds of any borrowing under this
Agreement shall be used by the Borrowers or any of their Subsidiaries in any manner that might
cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of
such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6
Special Provisions Governing Eurodollar Rate Loans
.
Notwithstanding any other provision of this Agreement to the contrary, the following
provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered:
61
A.
Determination of Applicable Interest Rate
. As soon as practicable after 10:00 A.M.
(New York City time) on each Interest Rate Determination Date, the Administrative Agent shall
determine (which determination shall, absent manifest error, be final, conclusive and binding upon
all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest
rate is then being determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to the Borrowers and each Lender.
B.
Inability to Determine Applicable Interest Rate
. In the event that the
Administrative Agent shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto), on any Interest Rate Determination Date with respect to any
Eurodollar Rate Loans, that by reason of circumstances affecting the interbank Eurodollar market
adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on
the basis provided for in the definition of Adjusted Eurodollar Rate, the Administrative Agent
shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to the
Borrowers and each Lender of such determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrowers and
Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Borrowing
Notice or Conversion/Continuation Notice given by the Borrowers with respect to the Loans in
respect of which such determination was made shall be deemed to be made with respect to Base Rate
Loans.
C.
Illegality or Impracticability of Eurodollar Rate Loans
. In the event that on any
date any Lender shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after consultation with Borrowers and the
Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order not in effect on the date such Person became a
Lender (or would conflict with any such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith would not be unlawful), or
(ii) would cause such Lender material financial hardship as a result of contingencies occurring
after the date of this Agreement which materially and adversely affect the interbank Eurodollar
market or the position of such Lender in that market, then, and in any such event, such Lender
shall be an
Affected Lender
and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to the Borrowers and the Administrative Agent of such determination
(which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (a)
the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected Lender (which such
Affected Lender shall do at the earliest practicable date), (b) to the extent such determination by
the Affected Lender relates to a Eurodollar Rate Loan then being requested by the Borrowers
pursuant to a Borrowing Notice or a Conversion/Continuation Notice, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected
Lenders obligation to maintain its outstanding Eurodollar Rate Loans (the
Affected Loans
) shall
be terminated at the earlier to occur of the expiration of the Interest Period then in effect with
respect to the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination. Except as provided in
the immediately preceding
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sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than
an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in
accordance with the terms of this Agreement.
D.
Compensation For Breakage or Non-Commencement of Interest Periods
. The Borrowers
shall compensate each Lender, upon written request by that Lender (which request shall set forth
the basis for requesting such amounts), for all reasonable losses, expenses and liabilities
(including any interest paid by that Lender to lenders of funds borrowed by it to make or carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection
with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur
on a date specified therefor in a Borrowing Notice or a telephonic request for borrowing, as
applicable, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or
continuation, (ii) if any prepayment (including any prepayment pursuant to subsection 2.4B(i)) or
other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date
prior to the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any
of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by
the Borrowers, or (iv) as a consequence of any other default by the Borrowers in the repayment of
its Eurodollar Rate Loans when required by the terms of this Agreement.
E.
Booking of Eurodollar Rate Loans
. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an
Affiliate of that Lender.
F.
Assumptions Concerning Funding of Eurodollar Rate Loans
. Calculation of all
amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A shall be made as
though that Lender had actually funded each of its relevant Eurodollar Rate Loans through the
purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (a) of
the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate
Loan and having a maturity comparable to the relevant Interest Period and through the transfer of
such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender
in the United States;
provided
,
however
, that each Lender may fund each of its
Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized
only for the purposes of calculating amounts payable under this subsection 2.6 and under subsection
2.7A.
G.
Eurodollar Rate Loans After Default
. After the occurrence of and during the
continuation of a Potential Event of Default or an Event of Default, (i) Borrowers may not elect to
have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan after the expiration
of any Interest Period then in effect for that Loan and (ii) subject to the provisions of
subsection 2.6D, any Borrowing Notice or Conversion/Continuation Notice given by the Borrowers with
respect to a requested borrowing or conversion/continuation that has not yet occurred shall be
deemed made with respect to Base Rate Loans.
2.7
Increased Costs; Taxes; Capital Adequacy
.
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A.
Compensation for Increased Costs and Taxes
. Subject to the provisions of
subsection 2.7B (which shall be controlling with respect to the matters covered thereby), in the
event that any Lender shall determine (which determination shall, absent manifest error, be final
and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule, regulation or
order), or any determination of a court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other governmental or
quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any additional Tax
(other than any Tax on the overall net income of such Lender) with respect to this Agreement
or any of its obligations hereunder or any payments to such Lender (or its applicable
lending office) of principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any marginal,
emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or other liabilities in
or for the account of, or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than with respect to a Tax matter) on or
affecting such Lender (or its applicable lending office) or its obligations hereunder or the
interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make,
making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender
(or its applicable lending office) with respect thereto; then, in any such case, the Borrowers
shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Lender shall deliver to the Borrowers (with a copy to the
Administrative Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection 2.7A, which statement
shall be conclusive and binding upon all parties hereto absent manifest error.
B.
Withholding of Taxes
.
(i)
Payments to Be Free and Clear
. All sums payable by the Borrowers under
this Agreement and the other Loan Documents shall (except to the extent required by law) be
paid free and clear of, and without any deduction or withholding on account
64
of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied,
collected, withheld or assessed by or within the United States or any political subdivision
in or of the United States or any other jurisdiction from or to which a payment is made by
or on behalf of the Borrowers or by any federation or organization of which the United
States or any such jurisdiction is a member at the time of payment, all such non-excluded
Taxes being hereinafter collectively referred to as
Included Taxes
.
(ii)
Grossing-up of Payments
. If the Borrowers or any other Person is required
by law to make any deduction or withholding on account of any such Included Tax from any sum
paid or payable by the Borrowers to the Administrative Agent or any Lender under any of the
Loan Documents:
(a) the Borrowers shall notify Administrative Agent of any such requirement or any
change in any such requirement as soon as the Borrowers become aware of it;
(b) the Borrowers shall pay any such Included Tax before the date on which penalties
attach thereto, such payment to be made (if the liability to pay is imposed on the
Borrowers) for its own account or (if that liability is imposed on Administrative Agent or
such Lender, as the case may be) on behalf of and in the name of the Administrative Agent or
such Lender;
(c) the sum payable by the Borrowers in respect of which the relevant deduction,
withholding or payment is required shall be increased to the extent necessary to ensure
that, after the making of that deduction, withholding or payment, the Administrative Agent
or such Lender, as the case may be, receives on the due date a net sum equal to what it
would have received had no such deduction, withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is required by law to make any
deduction or withholding, and within 30 days after the due date of payment of any Included
Tax which it is required by clause (b) above to pay, the Borrowers shall deliver to the
Administrative Agent evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or other
authority;
provided
that no such additional amount shall be required to be paid to any Lender under
clause (c) above except to the extent that any change after the date hereof (in the case of each
Lender listed on the signature pages hereof) or after the date of the Assignment Agreement pursuant
to which such Lender became a Lender (in the case of each other Lender) in any such requirement for
a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate
of such deduction, withholding or payment from that in effect at the date of this Agreement or at
the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender;
provided
however
that in the case of an assignment, if the assignor was entitled to
additional amounts pursuant to this subsection 2.7B, then such assignee shall be entitled to such
additional amounts.
(iii) Evidence of Exemption from U.S. Withholding Tax.
65
(a) Each Lender that is organized under the laws of any jurisdiction other than the
United States or any state or other political subdivision thereof (a
Non-US Lender
) shall
deliver to the Administrative Agent for transmission to the Borrowers, on or prior to the
Closing Date (in the case of each Lender listed on the signature pages hereof) or on or
prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as may be necessary in the determination
of the Borrowers or Administrative Agent (each in the reasonable exercise of its
discretion), (1) two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or
any successor forms), properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the Code or the regulations
issued thereunder to establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the Loan Documents or (2) if
such Lender is not a bank or other Person described in Section 881(c)(3) of the Code, a
Certificate of Non-Bank Status together with two original copies of Internal Revenue Service
Form W-8BEN or W-8ECI (or any successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption required under the
Code or the regulations issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to any payments to
such Lender of interest payable under any of the Loan Documents. Notwithstanding the
foregoing, no Lender shall be obligated to provide any documentation pursuant to this
subsection 2.7B(iii)(a) if such Lender is not legally able to do so.
(b) Each Lender required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to subsection
2.7B(iii)(a) hereby agrees, from time to time after the initial delivery by such Lender of
such forms, certificates or other evidence, whenever a lapse in time or change in
circumstances renders such forms, certificates or other evidence obsolete or inaccurate in
any material respect, that such Lender shall promptly (1) deliver to the Administrative
Agent for transmission to the Borrowers a Certificate of Non-Bank Status and two original
copies of Internal Revenue Service Form W-8BEN or W-8ECI, as the case may be, properly
completed and duly executed by such Lender, together with any other certificate or statement
of exemption required in order to confirm or establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to payments to
such Lender under the Loan Documents or (2) notify Administrative Agent and Borrowers of its
inability to deliver any such forms, certificates or other evidence.
(c) Borrowers shall not be required to pay any additional amount to any Non-US Lender
under subsection 2.7B(ii)(c) if such Lender shall have failed to satisfy the requirements of
clause (a) or (b)(1) of this subsection 2.7B(iii);
provided
that if such Lender
shall have satisfied the requirements of subsection 2.7B(iii)(a) on the Closing Date (in the
case of each Lender listed on the signature pages hereof) or on the date of the Assignment
Agreement pursuant to which it became a Lender (in the case of each other Lender), nothing
in this subsection 2.7B(iii)(c) shall relieve Borrowers of their obligation to pay any
additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event
66
that, as a result of any change in any applicable law, treaty or governmental rule,
regulation or order, or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender is not subject to
withholding as described in subsection 2.7B(iii)(a).
C.
Capital Adequacy Adjustment
. If any Lender shall have determined that the
adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or
regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof after the date hereof by any governmental authority,
central bank or comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the effect of reducing
the rate of return on the capital of such Lender or any corporation controlling such Lender as a
consequence of, or with reference to, such Lenders Loans or Commitments or other obligations
hereunder with respect to the Loans or the Letters of Credit to a level below that which such
Lender or such controlling corporation could have achieved but for such adoption, effectiveness,
phase-in, applicability, change or compliance (taking into consideration the policies of such
Lender or such controlling corporation with regard to capital adequacy), then from time to time,
within five Business Days after receipt by the Borrowers from such Lender of the statement referred
to in the next sentence, the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender or such controlling corporation on an after-tax basis for such
reduction. Such Lender shall deliver to the Borrowers (with a copy to the Administrative Agent) a
written statement, setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all parties hereto absent
manifest error.
2.8
Obligation of Lenders to Mitigate
.
Each Lender agrees that, as promptly as practicable after the officer of such Lender
responsible for administering the Loans of such Lender becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender to receive payments under subsection 2.7 or subsection 3.6 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 the
Commitments of such Lender or the affected Loans of such Lender or (ii) take such other measures as
such Lender may deem reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts which would
otherwise be required to be paid to such Lender pursuant to subsection 2.7 would be materially
reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding
or maintaining of such Commitments or Loans through such other lending office or in accordance with
such other measures, as the case may be, would not otherwise materially adversely affect such
Commitments or Loans or the interests of such Lender;
provided
that such Lender will not be
obligated to utilize such other lending office pursuant to this subsection 2.8 if such Lender would
incur incremental expenses as a result of utilizing such other lending office as described in
clause (i) above. A certificate as to the amount
67
of any such expenses payable by the Borrowers pursuant to this subsection 2.8 (setting forth
in reasonable detail the basis for requesting such amount) submitted by such Lender to the
Borrowers (with a copy to the Administrative Agent) shall be conclusive absent manifest error.
Each Lender agrees that it will not request compensation under subsection 2.7 unless such Lender
requests compensation from borrowers under other lending arrangements with such Lender who are
similarly situated.
2.9
Obligations Joint and Several
.
Anything herein to the contrary notwithstanding, each Borrower hereby agrees and acknowledges
that the obligation of each Borrower for payment of the Obligations shall be joint and several with
the obligations of each other Borrower hereunder regardless of which Borrower actually receives the
proceeds or benefits of any borrowing hereunder. Each Borrower hereby agrees and acknowledges that
it will receive substantial benefits from the Loans and credit facilities made available under this
Agreement.
Each Borrower agrees that its joint and several obligation to pay all Obligations hereunder is
irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other than the
indefeasible payment in full of the Obligations, and the liability of each Borrower with respect to
the Obligations shall not be affected, reduced or impaired by (i) consideration of the amount of
proceeds of the Loans received by any Borrower relative to the aggregate amount of the Loans, (ii)
the dissolution or termination of or any increase, decrease or change in personnel of, any
Borrower, (iii) the insolvency or business failure of, or any assignment for the benefit of
creditors by, or the commencement of any bankruptcy, reorganization, arrangement, moratorium or
other debtor relief proceedings by or against any other Borrower or (iv) the appointment of a
receiver for, or the attachment, restraint of or making or levying of any order of court or legal
process affecting, the property of any other Borrower. Each Borrower agrees that a separate action
or actions may be brought and prosecuted against such Borrower whether or not action is brought
against any other Borrower and whether or not any other Borrower is joined in any such action or
actions. Any Borrowers payment of a portion, but not all, of the Obligations shall in no way
limit, affect, modify or abridge such Borrowers liability for that portion of the Obligations
which is not paid.
Each Borrower hereby waives any right to require the Administrative Agent or any Lender, as a
condition of payment or performance of the Obligations by such Borrower, to proceed against any
other Borrower or any other Person, to exhaust any security held from any Borrower, or pursue any
other remedy in the power of the Administrative Agent or any Lender. Each Borrower hereby waives
any defense arising by reason of incapacity, lack of authority or any disability or other defense
that may be available to any other Borrower and any defenses or benefits that may be derived or
afforded by law which would limit the liability of or exonerate any guarantor or surety with
respect to the Obligations, or which may conflict with the terms and provisions of this Agreement,
other than the indefeasible payment in full of the Obligations.
A. Any indebtedness of any Borrower, any Subsidiary Guarantor or any other Restricted
Subsidiary now or hereafter held by any Borrower is hereby subordinated in right of payment to the
Obligations.
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2.10
Right of Financing
. So long as (i) there is any remaining Borrowing
Availability, (ii) the applicable units or items of equipment, fixtures, furniture, furnishings or
goods qualify as Eligible FF&E, and (iii) the conditions of subsections 4.1 and 4.2 are otherwise
satisfied (except in the case of any such failed condition that is in the reasonable control of the
Borrowers), the Term Delayed Draw Lenders shall have the right, unless otherwise approved by the
Administrative Agent, to finance on the terms and conditions set forth in this Agreement and the
other Loan Documents, to the extent the Term Delayed Draw Lenders have theretofore made any Term
Delayed Draw Loans to purchase any units or items of a particular Category of Goods, all units and
items (other than slot machines and slot related equipment, such as cash redemption machines) that
otherwise fall within the same Category of Goods.
2.11
Reliance on Notices; Appointment of Borrower Representative
. Administrative
Agent shall be entitled to rely upon, and shall be fully protected in relying upon, any Borrowing
Notice, Borrowing Base Certificate, Conversion/Continuation Notice, Compliance Certificate,
Financial Condition Certificate, Officers Certificate or other notice, certificate, instruction or
communication believed by Administrative Agent to be genuine. Administrative Agent may assume that
each Person executing and delivering any such notice, certificate, instruction or communication in
accordance herewith was duly authorized, unless the responsible individual acting thereon for
Administrative Agent has actual knowledge to the contrary. Each Borrower hereby designates LVSI as
its representative and agent on its behalf for the purposes of issuing any and all of the foregoing
notices, certificates, instructions or communications (including instructions with respect to the
disbursement of the proceeds of the Loans and selecting interest rate options), giving and
receiving all other notices and consents hereunder or under any of the other Loan Documents and
taking all other actions (including in respect of compliance with covenants) on behalf of any
Borrower or Borrowers under the Loan Documents (LVSI in such capacity, the
Borrower
Representative
). Borrower Representative hereby accepts such appointment. Administrative Agent
and each Lender may regard any notice or other communication pursuant to any Loan Document from
Borrower Representative as a notice or communication from all Borrowers, and may give any notice or
communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower
Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made on its behalf by
Borrower Representative shall be deemed for all purposes to have been made by such Borrower and
shall be binding upon and enforceable against such Borrower to the same extent as if the same had
been made directly by such Borrower.
Section 3.
[Intentionally Omitted.]
Section 4.
Conditions to Loans.
The obligations of Lenders to make Loans hereunder are subject to the satisfaction (or waiver)
of the following conditions.
4.1
Conditions to the Occurrence of the Closing Date
.
The conditions to the occurrence of the Closing Date are:
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A.
Loan Parties Documents
. The Borrowers shall have delivered to the Administrative
Agent the following with respect to each Loan Party, each, unless otherwise noted, dated the
Closing Date:
(i) copies of the Organizational Documents of such Person, certified by the Secretary
of State of its jurisdiction of organization if such certification is generally available
dated a recent date prior to the Closing Date and in each other case, by such Persons
secretary or assistant secretary;
(ii) to the extent generally available, a good standing certificate from the Secretary
of State of its jurisdiction of organization and a certificate or other evidence of good
standing as to payment of any applicable franchise or similar taxes from the appropriate
taxing authority of such jurisdiction, each dated a recent date prior to the Closing Date;
(iii) resolutions of the Board of Directors of such Person approving and authorizing
the execution, delivery and performance of the Loan Documents being executed on the Closing
Date to which it is a party, certified as of the Closing Date by the corporate secretary or
an assistant secretary of such Person as being in full force and effect without modification
or amendment;
(iv) signature and incumbency certificates of the officers of such Person executing the
Loan Documents being executed on the Closing Date to which it is a party; and
(v) such other documents as Administrative Agent may reasonably request,
all of which shall be reasonably satisfactory to the Administrative Agent.
B.
Notes
. The Administrative Agent shall have received all Notes requested by Lenders
prior to the Closing Date executed by the Borrowers.
C.
No Material Adverse Change
. Since December 31, 2005 there shall not have been any
adverse change, or any development involving a prospective adverse change, in or affecting the
general affairs, management, financial position, liabilities (contingent or otherwise), members
equity or results of operations of the Borrowers and their Subsidiaries, taken as a whole, which
the Administrative Agent or any Lender, in its reasonable judgment, deems material.
D.
Subsidiary Guaranty
. The Administrative Agent shall have received, with
counterparts for each Lender, the Subsidiary Guaranty for each Subsidiary Guarantor, dated as of
the Closing Date, duly executed and delivered by an Authorized Officer of each Subsidiary
Guarantor.
E.
Security Agreement
. The Administrative Agent shall have received, with
counterparts for each Lender, the Security Agreement in the form attached hereto as
Exhibit
E
,
70
dated as of the Closing Date, duly executed and delivered by an Authorized Officer of each
Loan Party.
F.
Security Interests in Personal and Mixed Property
. The Administrative Agent shall
have received evidence reasonably satisfactory to it that the Borrowers shall have taken or caused
to be taken all such actions, executed and delivered or caused to be executed and delivered all
such agreements, documents and instruments, and made or caused to be made all such filings and
recordings (other than the filing or recording of items described in clauses (iv) and (v) below)
that may be necessary or, in the reasonable opinion of the Administrative Agent, desirable in order
to create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and
(upon such filing and recording) perfected First Priority security interest in the Collateral.
Such actions shall include the following:
(i)
Schedules to Collateral Documents
. Delivery to the Administrative Agent of
accurate and complete schedules to all of the applicable Collateral Documents;
(ii)
Instruments
. Delivery to the Administrative Agent of any and all
documents or other instruments (duly endorsed, where appropriate, in a manner satisfactory
to the Administrative Agent) evidencing any Collateral;
(iii)
[Intentionally omitted]
;
(iv)
Lien Searches and UCC Termination Statements
. Delivery to the
Administrative Agent of (a) the results of a recent search, by a Person reasonably
satisfactory to the Administrative Agent, of all effective UCC financing statements and
fixture filings and all judgment and tax lien filings which may have been made with respect
to any personal or mixed property of any Loan Party, together with copies of all such
filings disclosed by such search, and (b) UCC termination statements duly executed by all
applicable Persons for filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings disclosed in such search
(other than any such financing statements or fixture filings in respect of Liens permitted
to remain outstanding pursuant to the terms of this Agreement);
(v)
UCC Financing Statements and Fixture Filings
. Delivery to the
Administrative Agent of UCC financing statements and, where appropriate, fixture filings,
duly executed by each applicable Loan Party with respect to all personal and mixed property
Collateral of such Loan Party, for filing in all jurisdictions as may be necessary or, in
the reasonable opinion of the Administrative Agent, desirable to perfect the security
interests created in such Collateral pursuant to the Collateral Documents, including those
listed on
Exhibit K.
G.
Solvency Assurances
. On the Closing Date, the Lenders shall have received a
Financial Condition Certificate from the Borrowers dated the Closing Date, substantially in the
form of
Exhibit H
hereto and with appropriate attachments and otherwise reasonably
satisfactory to the Administrative Agent, in each case demonstrating that, after giving effect to
the transactions contemplated by this Agreement including the borrowing of the full amount of
71
Commitments as contemplated hereunder, and the other Loan Documents, the Borrowers will be
Solvent.
H.
Opinions of Counsel
. The Lenders and their respective counsel shall have received
(i) originally executed copies of one or more favorable written opinions of Paul, Weiss, Rifkind,
Wharton & Garrison, counsel for the Loan Parties, and (ii) originally executed copies of one or
more favorable written opinions of Lionel Sawyer & Collins, Nevada counsel for the Loan Parties,
each in form and substance reasonably satisfactory to the Administrative Agent and its counsel,
dated as of the Closing Date and setting forth substantially the matters in the opinions designated
in
Exhibits I-1
and I
-2
hereto, respectively, and as to such other matters as the
Administrative Agent may reasonably request. The Borrowers hereby acknowledge and confirm that
they have requested such counsel to deliver such opinions to Lenders.
I.
Consummation of Transactions
.
(i) The Administrative Agent shall have received evidence satisfactory to it that all
actions necessary to consummate the transactions contemplated hereby (including the making
of the initial Loans on the Closing Date) shall have been taken in accordance with all Legal
Requirements.
(ii) The Bank Agents and Bank Lenders shall have provided all necessary consents and
approvals for this Agreement and the other Loan Documents and the transactions contemplated
hereby and thereby.
(iii) The following transactions (the
Transactions
) shall be consummated by the
Borrowers concurrently with the initial Loan hereunder:
(a) The Existing FF&E Note shall have been paid in full with the proceeds of the Term
Funded Loans; and
(b) Not less than Thirty Million ($30,000,000) of Term Delayed Draw Loans shall be
advanced on the Closing Date;
and the terms and documentation of the foregoing Transactions shall be reasonably satisfactory in
all respects to the Administrative Agent and its counsel.
J.
Intercreditor Agreement
. The Administrative Agent shall have received, with
counterparts for each Lender, the Intercreditor Agreement in the form attached hereto as
Exhibit G
, dated as of the Closing Date, duly executed and delivered by an Authorized
Officer of each Loan Party, the Bank Administrative Agent and each other party thereto.
K.
Fees and Costs
. The Borrowers shall have paid to Administrative Agent (i) for
distribution (as appropriate) to Agents and Lenders, the fees payable on the Closing Date and (ii)
to the extent that invoices therefor have been provided on or before the Closing Date, all costs
and expenses of the Administrative Agent to the extent reimbursable by the Borrowers under Section
10.2.
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L.
Completion of Proceedings
. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents incidental thereto
not previously found reasonably acceptable by the Administrative Agent, acting on behalf of
Lenders, and its counsel shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel, and the Administrative Agent and its counsel shall have
received all such counterpart originals or certified copies of such documents as Administrative
Agent may reasonably request.
M.
Service of Process
. The Administrative Agent shall have received a letter from
Corporation Service Company, presently located at 80 State Street, Albany, New York 12207 or any
other Person reasonably satisfactory to the Administrative Agent consenting to its appointment by
each Loan Party in each case in form and substance acceptable to Administrative Agent, as each such
Persons agent to receive service of process in New York, New York.
N.
Litigation
. There shall be no actions, suits, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of the Borrowers or any of their
Subsidiaries) at law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign
(including any Environmental Claims) that are pending or, to the knowledge of the Borrowers,
threatened against or affecting Borrowers or any of their Subsidiaries or any property of the
Borrowers or any of their Subsidiaries that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.
O.
Investment in Phase II Project
. Administrative Agent shall have received evidence
in form and substance reasonably satisfactory to Administrative Agent that as of May 31, 2006 at
least $500,000,000 of Cash has been invested by the Borrowers in the Phase II Project.
P.
Cash on Hand
. Administrative Agent shall have received evidence in form and
substance reasonably satisfactory to Administrative Agent that Borrowers and their Subsidiaries had
Cash on hand (including restricted cash) as of May 31, 2006 of at least $500,000,000.
Q.
Insurance
. The Borrowers shall have insurance complying with the requirement of
subsection 6.4B in place and in full force and effect, and the Administrative Agent shall have
received a certificate from the Borrowers insurance broker reasonably satisfactory to them (i)
stating that such insurance is in place and in full force and effect, (ii) confirming that the
Administrative Agent has been named, on behalf of itself and the Lenders, as an additional insured
or, with respect to the Collateral, loss payee, as its interests may appear, and (iii) otherwise in
form and substance reasonably satisfactory to the Administrative Agent.
R.
Financial Statements
. The Administrative Agent shall have received all financial
statements required to be delivered by the Borrowers and their Subsidiaries pursuant to clauses (i)
and (ii) of subsection 5.3 of this Agreement.
S.
Consents and Approvals
. All necessary material governmental, shareholder and
third-party approvals and consents required to have been obtained by the Closing Date in connection
with the Transactions shall have either (a) been received and shall be in full force and
73
effect, and all applicable waiting periods shall have expired without any action being taken
by any applicable authority, or (b) been received pending the expiration of any such applicable
waiting period and shall be reasonably expected to be obtained upon the termination of such waiting
period, and all further such approvals to be obtained between the Closing Date and the date upon
which the Phase II Hotel/Casino and the Phase II Mall are expected to be substantially completed
shall be obtainable without material difficulty prior to the time that it becomes required.
T.
Customary Closing Documents
. All documents required to be delivered under and in
connection with this Agreement, and other information including, without limitation, corporate
records, documents from public officials and officers certificates and other information
(including other information and documentation required by customer identification programs
pursuant to the Patriot Act), shall have been delivered and shall be reasonably satisfactory to the
Administrative Agent. The definitive documentation evidencing the Loans shall be in form and
substance acceptable to the Administrative Agent and the Lenders.
U.
Transaction Documents
. The Administrative Agent shall have received copies of the
Bank Credit Agreement, the Bank Credit Facility Collateral Documents and all other material Bank
Credit Facility Documents (including the Disbursement Agreement), the Mall Financing Agreement, the
LVSC Notes Documents, the Cooperation Agreement, the HVAC Services Agreement, and the Phase II Mall
Sale Agreement certified as true, correct and complete copies (as of the Closing Date and, if and
to the extent requested by the Administrative Agent, as of the date hereof) by an Authorized
Officer of the Borrower Representative.
V.
Real Estate
. Administrative Agent shall have received copies of existing title
insurance policies setting forth the name of the legal owner of, and a legal description for, each
premises to which any fixtures to be financed or refinanced hereunder are, or are expected to be,
affixed.
W.
Subordinated Indebtedness
. Administrative Agent shall have received evidence that
any Indebtedness of any Loan Party held by any other Loan Party, any Restricted Subsidiary,
Affiliate or any Related Party, including any Shareholder Subordinated Indebtedness, and any other
Permitted Subordinated Indebtedness, shall be subordinated to the Obligations and the documentation
with respect thereto (including, without limitation, the maturity thereof, the interest rate
applicable thereto, the required payments with respect thereto, and the covenants, events of
default and subordination provisions with respect thereto) shall be in form and substance,
satisfactory to Administrative Agent.
X.
Fee Letter
. Duly executed originals of the Administrative Agents Fee Letter.
Y.
Officers Certificate
. Administrative Agent shall have received duly executed
originals of one or more certificates of an Authorized Officer of each Borrower, dated the Closing
Date, stating (a) that, except as otherwise disclosed in writing to the Administrative Agent, since
December 31, 2005, (i) no event or condition has occurred or is existing which could reasonably be
expected to have a Material Adverse Effect; (ii) no litigation has been commenced which could
reasonably be expected to have a Material Adverse Effect or challenges any of the transactions
contemplated by the Agreement and the other Loan Documents; and (iii)
74
except for liabilities under the Bank Credit Agreement and as otherwise reflected in the
financial statements delivered pursuant to this Agreement, there has been no material increase in
liabilities, liquidated or contingent, and no material decrease in assets of any Borrower or any of
its Restricted Subsidiaries; and (b) that the Loans under this Agreement are permitted to be
incurred under the Bank Credit Agreement and the LVSC Notes Documents and the Liens securing the
Obligations are permitted thereunder.
Z.
Landlord and Other Waivers
. Administrative Agent, on behalf of Term Lenders, shall
have received landlord waivers and consents, bailee letters and mortgagee agreements in form and
substance reasonably satisfactory to Administrative Agent, in each case as required pursuant to
subsection 6.15.
AA.
Construction Consultant Engagement Letter
. Administrative Agent shall have
received an engagement letter (or an amendment to the existing engagement letter) executed by the
Construction Consultant, in form and substance reasonably satisfactory to Administrative Agent
BB.
Flow of Funds
. Administrative Agent shall have received a flow of funds
memorandum (including, payment direction authorization for the disbursement of the Term Loan
proceeds to be advanced on the initial Funding Date) in form and substance reasonably satisfactory
to Administrative Agent.
CC.
Project Certifications
. The Borrowers shall have delivered to the Administrative
Agent an Officers Certificate certifying that (i) the Phase II Project is In Balance on a pro
forma basis after giving effect to the transactions contemplated on the Closing Date and (ii)
Substantial Completion is expected to be completed on or before March 1, 2008.
Each Lender by execution and delivery of a signature page hereto on the Closing Date confirms that
it is satisfied that each of the conditions set forth above in this subsection 4.1 has been
satisfied provided that neither such confirmation nor any extension of credit hereunder shall
preclude any Agent or Lender from later asserting that (and enforcing any rights or remedies it may
have if), any representation, warranty or certification made or deemed made by the Borrowers or any
of their Affiliates in connection therewith was not true and accurate in all material respects when
made.
4.2
Additional Conditions to Loans on or after the Closing Date
.
The obligations of Lenders to make Loans on or after the Closing Date on any Funding Date are
subject to the following further conditions precedent:
A.
Borrowing Notice; Borrowing Base Certificate; Construction Consultant Certificate;
Collateral Schedules and Releases
. Administrative Agent shall have received before that
Funding Date, in accordance with the provisions hereof, the following in form and substance
reasonably satisfactory to Administrative Agent:
(i) an originally executed Borrowing Notice signed by an Authorized Officer of the
Borrower Representative accompanied by, in the case of any Term Delayed Draw Loan, (A) a
list identifying the units or items of Designated FF&E (or other
75
equipment, fixtures, furniture, furnishings and goods reasonably acceptable to
Administrative Agent) to be financed or refinanced with the proceeds of such Term Delayed
Draw Loan (including the total cost thereof with separate breakouts of (i) the portion of
such total cost which consists of Hard Costs, Related Soft Costs and any other cost elements
and (ii) with respect to each unit or item, the Hard Costs thereof and, to the extent
available to the Borrowers, the Related Soft Costs and any other cost elements thereof) and
(B) copies of invoices, any documents of title, and any other documentation related to such
units or items as required herein or as Administrative Agent may have otherwise reasonably
requested,
(ii) in the case of any Term Delayed Draw Loan, an originally executed Borrowing Base
Certificate signed by an Authorized Officer of the Borrower Representative,
(iii) in the case of any Term Delayed Draw Loan, a Construction Consultant Certificate
with respect to such Loan duly executed by the Construction Consultant, and
(iv) a Collateral Schedule to the Security Agreement duly executed by an Authorized
Officer on behalf of each of the Borrowers that describes (a) in the case of the Term Funded
Loan, all collateral securing the Existing FF&E Note and (b) in the case of any Term Delayed
Draw Loan, the Eligible FF&E to be financed or refinanced by such Term Delayed Draw Loan, in
each case (both clauses (a) and (b)), in a manner reasonably satisfactory to the
Administrative Agent and accompanied by all UCC-3 or other financing statement release forms
or other release documentation reasonably requested by Administrative Agent (including such
forms and documentation duly executed by the Bank Administrative Agent).
B.
Representations and Certain Other Matters
. As of such Funding Date:
(i) The representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of that Funding Date
to the same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete in all material
respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Borrowing Notice that would constitute an
Event of Default or a Potential Event of Default;
(iii) Each Loan Party shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or satisfied by it
on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or governmental authority
shall purport to enjoin or restrain any Lender from making the Loans to be made by it on
that Funding Date;
76
(v) The making of the Loans requested on such Funding Date shall not violate any law
including, Regulation T, Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System; and
(vi) There shall not be pending or, to the knowledge of the Borrowers, threatened, any
action, suit, proceeding, governmental investigation or arbitration against or affecting
Borrowers or any of their Subsidiaries or any property of the Borrowers or any of their
Subsidiaries that is required to be disclosed under, and has not been disclosed by the
Borrowers in writing pursuant to, subsection 5.6 or 6.1(x) prior to the making of the last
preceding Loans (or, in the case of the initial Loans, prior to the execution of this
Agreement), and there shall have occurred no development not so disclosed in any such
action, suit, proceeding, governmental investigation or arbitration so disclosed, that, in
either event, in the reasonable opinion of the Administrative Agent, would have a Material
Adverse Effect.
C.
Borrowing Availability
. After giving effect to the funding of each Term Delayed
Draw Loan, (i) the then outstanding principal amount of the Term Delayed Draw Loans shall not
exceed the Borrowing Base as set forth in the most recently delivered Borrowing Base Certificate
and (ii) the original principal amount of the Term Delayed Draw Loans advanced hereunder shall not
exceed the aggregate amount of the Term Delayed Draw Loan Commitments of all Lenders.
D.
Disbursement Agreement Conditions
. Without limiting any other provision hereof,
all of the conditions precedent set forth in the Disbursement Agreement to any advance or
disbursement thereunder have been satisfied or waived with respect to the most recent request for
an advance or disbursement thereunder.
E.
Stop Funding Notice
. No Stop Funding Notice has been issued and remains
outstanding under the Disbursement Agreement
F.
Events of Default under Disbursement Agreement
. No Event of Default shall have
occurred under Section 7.1.2, 7.1.6(c) or 7.1.8(b) of the Disbursement Agreement (i) as in effect
on the date hereof or (ii) as the same may be hereafter amended, supplemented or otherwise modified
without giving effect to any waiver by the applicable parties to the Disbursement Agreement of any
such Event of Default.
Section 5.
Borrowers Representations and Warranties
.
In order to induce Lenders to enter into this Agreement and to make Loans, the Borrowers
represent and warrant to each Lender that, on the Closing Date and on each Funding Date, each of
the following statements are true, correct and complete.
5.1
Organization, Powers, Qualification, Good Standing, Business and Subsidiaries
.
A.
Organization and Powers
. Each Loan Party is a corporation or limited liability
company duly organized, validly existing and in good standing under the laws of its jurisdiction of
organization as specified in
Schedule 5.1A
annexed hereto. Each Loan Party has all
requisite corporate or limited liability company power and authority to own and operate its
properties, to
77
carry on its business as now conducted and as proposed to be conducted, to enter into the Loan
Documents and the other Operative Documents to which it is a party and to carry out the
transactions contemplated thereby.
B.
Qualification and Good Standing
. Each Loan Party is qualified to do business and
in good standing in every jurisdiction where its assets are located and wherever necessary to carry
out its business and operations, except in jurisdictions where the failure to be so qualified or in
good standing has not had and would not reasonably be expected to have a Material Adverse Effect.
C.
Ownership of the Borrowers
. The equity interests in each of the Borrowers are duly
authorized, validly issued and (if applicable) fully paid and nonassessable and, as of the Closing
Date, none of such equity interests constitute Margin Stock.
Schedule 5.1C
, as it may be
supplemented from time to time, correctly sets forth the ownership of each Borrower.
D.
Subsidiaries
. All of the Subsidiaries of the Borrowers are identified in
Schedule 5.1D
annexed hereto, as said
Schedule 5.1D
may be supplemented from time
to time pursuant to the provisions of subsection 6.1(xvi). The equity interests of each of the
Subsidiaries of the Borrowers identified in
Schedule 5.1D
annexed hereto (as so
supplemented) are duly authorized, validly issued and (if applicable), fully paid and nonassessable
and none of such equity interests constitutes Margin Stock. Each of the Subsidiaries of the
Borrowers identified in
Schedule 5.1D
annexed hereto (as so supplemented) is a corporation
or limited liability company duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization set forth therein, has all requisite corporate or
limited liability company power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to do business and in
good standing in every jurisdiction where its assets are located and wherever necessary to carry
out its business and operations, in each case except where failure to be so qualified or in good
standing or a lack of such corporate power and authority has not had and would not reasonably be
expected to have a Material Adverse Effect.
Schedule 5.1D
annexed hereto (as so
supplemented) correctly sets forth the percentage ownership interest of the Borrowers and each of
their Subsidiaries in each of the Subsidiaries of the Borrowers identified therein. On the Closing
Date, Grand Canal Shops Mall MM Subsidiary, Inc. has no material assets or liabilities.
Schedule 5.1D
correctly identifies as of the Closing Date whether each Subsidiary of a
Borrower is a Restricted Subsidiary, a Subsidiary Guarantor, a Non-Guarantor Restricted
Subsidiary, an Excluded Subsidiary and/or a Supplier Joint Venture hereunder.
E.
Rights to Acquire Equity
. There are no options, warrants, convertible securities
or other rights to acquire any equity interests in any Borrower or any of their Restricted
Subsidiaries except as set forth as
Schedule 5.1E
.
F.
Conduct of Business
. The Borrowers and their Restricted Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to subsection 7.12.
5.2
Authorization of Borrowing, etc.
78
A.
Authorization of Documents
. The execution, delivery and performance of the Loan
Documents and the Project Documents have been duly authorized by all necessary corporate action on
the part of each Loan Party that is a party thereto.
B.
No Conflict
. The execution, delivery and performance by Loan Parties of the Loan
Documents, the Project Documents and the Resort Complex Operative Documents to which they are
parties and the consummation of the transactions contemplated by the Loan Documents, the Project
Documents and the Resort Complex Operative Documents do not and will not (i) violate any provision
of (a) any Legal Requirement applicable to the Borrowers or any of their Subsidiaries, (b) the
Certificate or Articles of Incorporation, Bylaws or operating agreements of the Borrowers or any of
their Subsidiaries or (c) any order, judgment or decree of any Governmental Instrumentality binding
on the Borrowers or any of their Subsidiaries, (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
the Borrowers or any of their Subsidiaries, (iii) result in or require the creation or imposition
of any Lien upon any of the properties or assets of the Borrowers or any of their Subsidiaries
(other than any Liens created under any of the Loan Documents in favor of the Administrative Agent
on behalf of Lenders), or (iv) require any approval of any Person under any Contractual Obligation
of the Borrowers or any of their Subsidiaries except for such approvals or consents which will be
obtained on or before the Closing Date and disclosed in writing to Lenders and except for such
violations, conflicts, approvals and consents the failure of which to obtain would not reasonably
be expected to have a Material Adverse Effect.
C.
Governmental Consents
. Other than as set forth on
Schedule 5.2
, the
execution, delivery and performance by the Loan Parties of the Loan Documents to which they are
parties and the consummation of the transactions contemplated by the Loan Documents 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.
D.
Binding Obligation
. Each of the Loan Documents, the Project Documents and the
Resort Complex Operative Documents has been duly executed and delivered by Loan Parties that are
parties hereto or thereto, as applicable, and is the legally valid and binding obligation of Loan
Parties, enforceable against such Loan Party in accordance with its 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, whether
brought in a proceeding in equity or at law.
5.3
Financial Condition
.
The Borrowers have heretofore delivered to Lenders, at Lenders request, the following
financial statements and information: (i) the audited consolidated balance sheets of LVSI and its
Subsidiaries as at each of December 31, 2004, and December 31, 2005, and the related consolidated
statements of income, stockholders or members equity and cash flows of LVSI and its Subsidiaries
for the Fiscal Years then ended; and (ii) the unaudited consolidated balance sheets of LVSI and its
Subsidiaries as at March 31, 2006, June 30, 2006 and September 30, 2006 and the related unaudited
consolidated statements of income and cash flows of LVSI and its Subsidiaries for each such
three-month period then ended. The Borrowers have heretofore
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delivered the quarterly report on Form 10-Q for the quarter ending September 30, 2006, of LVSC
filed with the Securities and Exchange Commission which includes a condensed consolidating
financial information note that contains a column covering the Borrowers and the Subsidiary
Guarantors under the title Guarantor Subsidiaries set forth in the notes to the Financial
Statements contained in LVSCs quarterly report on Form 10-Q). All such statements and schedules
were prepared in conformity with GAAP and fairly present, in all material respects, the financial
position (on a consolidated and, to the extent expressly provided hereinabove, consolidating basis)
of the entities described in such financial statements as at the respective dates thereof and the
results of operations and cash flows (on a consolidated and, to the extent expressly provided
hereinabove, consolidating basis) of the entities described therein for each of the periods then
ended, subject, in the case of any such unaudited financial statements, to changes resulting from
audit and normal year-end adjustments. As of the date hereof, except for obligations under the
Operative Documents, and guarantees of the LVSC Notes, the Borrowers do not (and will not following
the funding of the initial Loans) have any Contingent Obligation, contingent liability or liability
for taxes, long-term lease or forward or long-term commitment that is not reflected in the
foregoing financial statements or the notes thereto and which in any such case is material in
relation to the business, operations, properties, assets, financial condition or prospects of the
Borrowers and their Subsidiaries taken as a whole.
5.4
No Material Adverse Change
.
Since December 31, 2005, no event or change has occurred that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect.
5.5
Title to Properties; Liens; Real Property
.
A.
Title to Properties; Liens
. The Borrowers and their Subsidiaries have (i) good
marketable and insurable fee simple title to (in the case of fee interests in real property), (ii)
valid leasehold interests in (in the case of leasehold interests in real or personal property) and
(iii) good title to (in the case of all other personal property), all of their respective material
properties and assets reflected in the financial statements referred to in subsection 5.3 or in the
most recent financial statements delivered pursuant to subsection 6.1, in each case except for
assets disposed of since the date of such financial statements in the ordinary course of business
or as otherwise permitted under subsection 7.7. Except as permitted by this Agreement, all such
properties and assets are held free and clear of Liens.
B.
Real Property
. As of the Closing Date,
Schedule 5.5
annexed hereto
contains a true, accurate and complete list of (i) all material real property owned by the
Borrowers or any of their Restricted Subsidiaries and (ii) all material leases, subleases or
assignments of leases (together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting real estate or real properties owned by the Borrowers or any
of their Restricted Subsidiaries (exclusive of any retail and restaurant leases) regardless of
whether a Borrower or such Subsidiary is the landlord or tenant (whether directly or as an assignee
or successor in interest) under such lease, sublease or assignment. As of the Closing Date, each
agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect
and Borrowers do not have knowledge of any material default that has occurred and is continuing
thereunder, and each such agreement constitutes the legally valid and binding obligation of each
applicable
80
Borrower, enforceable against such Borrower in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors rights generally or by equitable principles except to the extent
that the failure of such agreement to be in full force and effect could not reasonably be expected
to have a Material Adverse Effect.
5.6
Litigation; Adverse Facts
.
Except as set forth in
Schedule 5.6
, there are no actions, suits, proceedings,
arbitrations or governmental investigations (whether or not purportedly on behalf of the Borrowers
or any of their Subsidiaries) at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including any Environmental Claims) that are pending or, to the knowledge of the
Borrowers, threatened against or affecting Borrowers or any of their Subsidiaries or any property
of the Borrowers or any of their Subsidiaries and that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. None of the Borrowers nor any of
their Subsidiaries (i) is in violation of any applicable laws (including Environmental Laws) that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect, or (ii) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign,
that, individually or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect.
5.7
Payment of Taxes
.
Except to the extent permitted by subsection 6.3, all tax returns and reports of the Borrowers
required to be filed by them have been timely filed, and all taxes shown on such tax returns to be
due and payable and all material assessments, fees and other governmental charges upon Borrowers
and upon their respective properties, assets, income, businesses and franchises which are due and
payable have been paid when due and payable. The Borrowers know of no proposed tax assessment
against Borrowers or any of their Subsidiaries which is not being actively contested by the
Borrowers or such Subsidiary in good faith and by appropriate proceedings;
provided
that
such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8
Performance of Agreements; Materially Adverse Agreements; Material Contracts
.
A. None of the Borrowers nor any of their Restricted Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions contained
in any of its Contractual Obligations, and no condition exists that, with the giving of notice or
the lapse of time or both, would constitute such a default, except where the consequences of such
default or defaults, if any, would not reasonably be expected to have a Material Adverse Effect.
81
B.
Schedule 5.8
contains a true, correct and complete list of all the Material
Contracts in effect on the Closing Date. As of the Closing Date, all such Material Contracts are,
to the knowledge of the Borrowers, in full force and effect and no material defaults currently
exist thereunder.
5.9
Governmental Regulation
.
None of the Borrowers nor any of their Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 2005, the Federal Power Act, or the Interstate Commerce Act or
registration under the Investment Company Act of 1940 or under any other federal or state statute
or regulation which may limit its ability to incur Indebtedness other than the Nevada Gaming Laws
or which may otherwise render all or any portion of the Obligations unenforceable. Incurrence of
the Obligations under the Loan Documents complies with all applicable provisions of the Nevada
Gaming Laws.
5.10
Securities Activities
.
A. None of the Borrowers nor any of their Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
B. Following the application of the proceeds of each Loan, not more than 25% of the value of
the assets (either of the Borrowers only or of the Borrowers and their Subsidiaries on a
consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or subject to any
restriction contained in any agreement or instrument, between Borrowers and any Lender or any
Affiliate of any Lender, relating to Indebtedness and within the scope of subsection 8.2, will be
Margin Stock. None of the proceeds of the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock or for any other
purpose that would cause any of the Loans to be considered a purpose credit within the meaning of
Regulations U of the Federal Reserve Board.
5.11
Employee Benefit Plans
.
A. Borrowers, each of their Subsidiaries and each of their respective ERISA Affiliates are in
material compliance with all applicable provisions and requirements of ERISA and the regulations
thereunder with respect to each Employee Benefit Plan, and have performed all their obligations
under each Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify under
Section 401(a) of the Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur which has resulted or would
be reasonably likely to result in a liability in the aggregate amount of $1,000,000 or more.
C. Except to the extent required under Section 4980B of the Code or as set forth in
Schedule 5.11
annexed hereto, no Employee Benefit Plan provides health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former employee of the
Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates.
82
D. As of the most recent valuation date for any Pension Plan, the amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all
Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which
assets exceed benefit liabilities), does not exceed $1,000,000.
E. As of the most recent valuation date for each Multiemployer Plan for which the actuarial
report is available, the potential liability of the Borrowers, their Subsidiaries and their
respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the
meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete
withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e)
of ERISA, does not exceed $5,000,000.
5.12
Certain Fees
.
No brokers or finders fee or commission will be payable with respect to this Agreement or
any of the transactions contemplated hereby (other than fees payable to Agents and Lenders under
subsection 2.3), and each Borrower hereby indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any such brokers or finders fees
alleged to have been incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim,
demand or liability.
5.13
Environmental Protection
.
Except as set forth in
Schedule 5.13
annexed hereto or as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect:
(i) none of the Borrowers nor any of their Subsidiaries nor any of their respective
Facilities or operations relating to the Resort Complex, the Existing Site or the Site are
subject to any outstanding written order, consent decree or settlement agreement with any
Person relating to (a) any Environmental Law, (b) any Environmental Claim, or (c) any
Hazardous Materials Activity;
(ii) none of the Borrowers nor any of their Subsidiaries has received any letter or
request for information under Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law;
(iii) there are, and to the Borrowers knowledge, have been, no conditions,
occurrences, or Hazardous Materials Activities on any of the Facilities which could
reasonably be expected to form the basis of an Environmental Claim against Borrowers or any
of their Subsidiaries;
(iv) none of the Borrowers nor any of their Subsidiaries nor, to the Borrowers
knowledge, any predecessor of the Borrowers or any of their Subsidiaries has filed any
notice under any Environmental Law indicating past or present treatment of Hazardous
Materials at any Facility, and none of the Borrowers or any of their Subsidiaries
operations involves the generation, transportation, treatment, storage or
83
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state
equivalent; and
(v) compliance with all current or reasonably foreseeable future requirements pursuant
to or under Environmental Laws will not, individually or in the aggregate, have a reasonable
possibility of giving rise to a Material Adverse Effect.
Notwithstanding anything in this subsection 5.13 to the contrary, no event or condition has
occurred or is occurring with respect to the Borrowers or any of their Subsidiaries relating to any
Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity,
including any matter disclosed on
Schedule 5.13
annexed hereto, which individually or in
the aggregate has had or could reasonably be expected to have a Material Adverse Effect.
5.14
Employee Matters
.
There is no strike or work stoppage in existence or threatened involving the Borrowers or
their Restricted Subsidiaries that could reasonably be expected to have a Material Adverse Effect.
5.15
Solvency
.
Each Loan Party is and, upon the incurrence of any Obligations by such Loan Party on any date
on which this representation is made, will be, Solvent.
5.16
Matters Relating to Collateral
.
A.
Creation, Perfection and Priority of Liens
. The execution and delivery of the
Collateral Documents by the Borrowers and their Restricted Subsidiaries, together with the actions
taken on or prior to the Closing Date pursuant to subsection 4.1 are effective to create in favor
of the Administrative Agent for the benefit of the Secured Parties, as security for the
Obligations, subject to the exceptions contained in the Security Agreement, a valid and perfected
First Priority Lien on all of the Collateral, and all filings and other actions necessary to
perfect and maintain the perfection and priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing statements
delivered to the Administrative Agent for filing (but not yet filed), and the periodic filing of
UCC continuation statements in respect of UCC financing statements filed by or on behalf of the
Administrative Agent. The fixture filings set forth on Schedule K hereto cover each premises to
which any fixtures to be financed or refinanced hereunder are, or are expected to be, affixed and
the name of the legal owner of, and the legal description of, each such premises is accurately set
forth in the fixture filing therefor.
B.
Permits
. No authorization, approval or other action by, and no notice to or filing
with, any Governmental Instrumentality is required for either (i) the pledge or grant by the
Borrowers and their Restricted Subsidiaries of the Liens purported to be created in favor of the
Administrative Agent pursuant to any of the Collateral Documents or (ii) the exercise by the
Administrative Agent of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or provided for by
84
applicable law), except for filings or recordings contemplated by subsection 5.16A or as set
forth in
Schedule 5.16B
.
C.
Absence of Third-Party Filings
. Except such as may have been filed in favor of the
Administrative Agent as contemplated by subsection 5.16A, no effective UCC financing statement,
fixture filing or other instrument similar in effect covering all or any part of the Collateral is
on file in any filing or recording office.
D.
Information Regarding Collateral
. All information supplied to the Administrative
Agent by or on behalf of the Borrowers with respect to any of the Collateral (in each case taken as
a whole with respect to any particular Collateral) is accurate and complete in all material
respects.
5.17 [
Intentionally Omitted
].
5.18
Accuracy of Information
. None of the factual information (other than
projections and pro forma financial information as to which no representation is made under this
subsection), taken as a whole, furnished by or on behalf of the Borrowers or any of other the Loan
Parties in writing to the Arranger, the Administrative Agent or any Lender for inclusion in the
confidential information memorandum delivered to the Lenders contains any untrue statement of a
material fact or omitted to state any material fact necessary to make such information, taken as a
whole, not misleading.
5.19
Bank Credit Facility Documents; Advances under Disbursement Agreement
. The
Borrowers have delivered to the Administrative Agent complete and correct copies of the Bank Credit
Agreement, the Bank Credit Facility Collateral Documents and the other material Bank Credit
Facility Documents (including the Disbursement Agreement) as well as all exhibits and schedules
thereto. No Potential Event of Default or Event of Default as defined in the Bank Credit Agreement
has occurred and is continuing. The Disbursement Agreement is effective and all of the conditions
precedent set forth in Section 3.1 of the Disbursement Agreement have been satisfied or permanently
waived. The conditions precedent set forth in Sections 3.2, 3.3 and 3.4 of the Disbursement
Agreement to the advances referred to in such Sections have been satisfied and such advances have
been made.
Section 6.
Borrowers Affirmative Covenants
.
The Borrowers covenant and agree with each Lender and each Agent that, until the Termination
Date, the Borrowers shall perform all covenants set forth in this Section 6.
6.1
Financial Statements and Other Reports
.
The Borrowers will maintain a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in conformity with
GAAP. The Borrowers will deliver to the Administrative Agent (which will promptly deliver to the
Lenders):
(i)
Monthly Financials
: as soon as available and in any event within 45 days
after the end of each month, the consolidated balance sheets of LVSI and its
85
Subsidiaries as at the end of such month and the related consolidated statements of
income and cash flows of LVSI and its Subsidiaries for such month and for the period from
the beginning of the then current Fiscal Year to the end of such month, setting forth in
each case, all in reasonable detail and certified by the chief financial officer or Senior
Vice President Finance of LVSC, on behalf of LVSI, that they fairly present, in all
material respects, the financial condition of LVSI and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end adjustments;
(ii)
Quarterly Financials
: as soon as available and in any event within 45
days after the end of each Fiscal Quarter,
(a) (x) the consolidated balance sheet of LVSI and its Subsidiaries as at the end of
such Fiscal Quarter and the related consolidated statements of income and cash flows of LVSI
and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the
then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of the previous
Fiscal Year, all in reasonable detail; (y) the quarterly report on Form 10-Q for such Fiscal
Quarter of LVSC filed with the Securities and Exchange Commission which includes a condensed
consolidating financial information note that contains a column covering the Borrowers and
the Subsidiary Guarantors under the title Guarantor Subsidiaries contained in LVSCs
quarterly report on Form 10-Q so long as the LVSC Notes or any refinancing or replacement
thereof are outstanding requiring such footnote disclosure under the rules and regulations
of the Securities and Exchange Commission (or, alternatively, if such disclosure is no
longer required by such rules and regulations, a separate schedule containing substantially
the same information as would have been contained in such disclosure); and (z) the financial
statements set forth in clause (x) shall be certified by the chief financial officer or
Senior Vice President Finance of of LVSI or LVSC, on behalf of LVSI, that they fairly
present, in all material respects, the financial condition of LVSI and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end adjustments;
(b) [Intentionally Omitted];
(c) a narrative report describing the operations of LVSI and its Subsidiaries in the
form prepared for presentation to senior management for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter
(which for avoidance of doubt shall be the Managements Discussions and Analysis contained
in LVSCs quarterly report on Form 10-Q);
(iii)
Year-End Financials
: as soon as available and in any event within 90
days after the end of each Fiscal Year,
(a) (x) the consolidated balance sheet of LVSI and its Subsidiaries as at the end of
such Fiscal Year and the related consolidated statements of income and cash flows of LVSI
and its Subsidiaries for such Fiscal Year, setting forth in each case in
86
comparative form the corresponding figures for the previous Fiscal Year, all in
reasonable detail; (y) the annual report on Form 10-K for such Fiscal Year of LVSC filed
with the Securities and Exchange Commission which includes a condensed consolidating
financial information note that contains a column covering the Borrowers and the Subsidiary
Guarantors under the title Guarantor Subsidiaries contained in LVSCs annual report on
Form 10-K so long as the LVSC Notes or any refinancing or replacement thereof are
outstanding requiring such footnote disclosure under the rules and regulations of the
Securities and Exchange Commission (or, alternatively, if such disclosure is no longer
required by such rules and regulations, a separate schedule containing substantially the
same information as would have been contained in such disclosure); and (z) the financial
statements set forth in clause (x) shall be certified by the chief financial officer or
Senior Vice President Finance of LVSI or LVSC, on behalf of LVSI, that they fairly
present, in all material respects, the financial condition of LVSI and its Subsidiaries as
at the dates indicated and the results of their operations and their cash flows for the
periods indicated;
(b) [Intentionally Omitted];
(c) a narrative report describing the operations of LVSI and its Subsidiaries in the
form prepared for presentation to senior management for such Fiscal Year (which for
avoidance of doubt shall be the Managements Discussion and Analysis contained in LVSCs
annual report on Form 10-K); and
(d) in the case of such consolidated financial statements specified in clause (a)
above, a report thereon of PricewaterhouseCoopers or other independent certified public
accountants of recognized national standing selected by the Borrowers and reasonably
satisfactory to the Administrative Agent, which report shall be unqualified as to scope of
audit, shall express no doubts about the ability of the Persons covered thereby to continue
as a going concern, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of LVSI and its
Subsidiaries as at the dates indicated and the results of their operations and their cash
flows for the periods indicated in conformity with GAAP (except as otherwise disclosed in
such financial statements) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with generally accepted
auditing standards;
(iv)
Officers and Compliance Certificates
: together with each delivery of
financial statements of LVSI and its Subsidiaries pursuant to clauses (ii) and (iii) above,
(a) an Officers Certificate of LVSI stating that the signers, on behalf of LVSI, have
reviewed the terms of this Agreement and have made, or caused to be made under their
supervision, a review in reasonable detail of the transactions and condition of LVSI and its
Subsidiaries during the accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such accounting period, and
that the signers do not have knowledge of the existence as at the date of such Officers
Certificate, of any condition or event that constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Borrowers have taken, are
87
taking and propose to take with respect thereto; and (b) a Compliance Certificate (in
the form of
Exhibit C
hereto) demonstrating in reasonable detail compliance during
and at the end of the applicable accounting periods with the restrictions contained in
Section 7;
(v)
Reconciliation Statements
: if, as a result of any change in accounting
principles and policies from those used in the preparation of the audited financial
statements referred to in subsection 5.3, the consolidated financial statements delivered
pursuant to clauses (i), (ii), (iii) or (xiii) of this subsection 6.1 will differ in any
material respect from the consolidated financial statements that would have been delivered
pursuant to such clauses had no such change in accounting principles and policies been made,
then (a) together with the first delivery of financial statements pursuant to clauses (i),
(ii), (iii) or (xiii) of this subsection 6.1 following such change, consolidated financial
statements of LVSI and its Subsidiaries for (y) the current Fiscal Year to the effective
date of such change and (z) the two full Fiscal Years immediately preceding the Fiscal Year
in which such change is made, in each case prepared on a pro forma basis as if such change
had been in effect during such periods, and (b) together with each delivery of financial
statements for LVSI and its Subsidiaries pursuant to clauses (i), (ii), (iii) or (xiii) of
this subsection 6.1 following such change, a written statement of the chief accounting
officer or chief financial officer of LVSI setting forth the differences (including any
differences that would affect any calculations relating to the financial covenants set forth
in subsection 7.6) which would have resulted if such financial statements had been prepared
without giving effect to such change;
(vi)
Accountants Certification
: together with each delivery of consolidated
financial statements pursuant to clause (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating, in connection with their
audit examination, nothing has come to their attention that would lead them to believe that
any condition or event that constitutes an Event of Default or Potential Event of Default
insofar as it relates to accounting matters, exists and if such a condition or event has
come to their attention, specifying the nature and period of existence thereof;
provided
that such accountants shall not be liable, directly or indirectly, by
reason of any failure to obtain knowledge of any such Event of Default or Potential Event of
Default that would not be disclosed in the course of their audit examination, and (b)
stating that based on their audit examination nothing has come to their attention that
causes them to believe either or both that the information contained in the certificates
delivered therewith pursuant to clause (iv) above is not correct or that the matters set
forth in the Compliance Certificates delivered therewith pursuant to clause (iv)(b) above
for the applicable Fiscal Year are not stated in accordance with the terms of this Agreement
insofar as they relate to accounting matters provided that such accountants shall not be
liable directly or indirectly by reason of any failure to obtain knowledge of any such Event
of Default or Potential Event of Default that would not be disclosed in the course of their
audit examination;
(vii)
Accountants Reports
: promptly upon receipt thereof (unless restricted
by applicable professional standards), copies of all final reports submitted to the
Borrowers by independent certified public accountants in connection with each annual,
interim or special audit of the financial statements of LVSI and its Subsidiaries
88
made by such accountants, including (unless specifically restricted by such accountants
or the terms of the letter) any comment letter submitted to management in connection with
their annual audit;
(viii)
SEC Filings, Press Releases and Other Financial Reports
: promptly upon
their becoming available, copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by the Borrowers or any of their Subsidiaries to
their security holders, (b) all material regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if any, filed by the
Borrowers or any of their Subsidiaries with any securities exchange or with the Securities
and Exchange Commission or any Governmental Instrumentality, (c) all press releases and
other statements made available generally by the Borrowers and any of their Restricted
Subsidiaries to the public concerning material developments in the business of the Borrowers
and their Subsidiaries and (d) to the extent prepared, any financial statements and reports
concerning any Subsidiaries of the Borrowers not delivered pursuant to clauses (i), (ii) or
(iii) above;
(ix)
Events of Default, etc.
: promptly upon any officer of the Borrowers
obtaining knowledge (a) of any condition or event that constitutes an Event of Default or
Potential Event of Default, or becoming aware that any Lender has given any notice (other
than to the Administrative Agent) or taken any other action with respect to a claimed Event
of Default or Potential Event of Default, (b) that any Person has given any notice to the
Borrowers and their Restricted Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type referred to in subsection 8.2, (c) of any
condition or event that would be required to be disclosed in a current report filed by the
Borrowers with the Securities and Exchange Commission on Form 8-K (Items 2.01, 4.01, 5.01,
7.01 and 8.01 of such Form as in effect on the Closing Date) if the Borrowers were required
to file such reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers Certificate specifying the nature and period of existence of such
condition, event or change, or specifying the notice given or action taken by any such
Person and the nature of such claimed Event of Default, Potential Event of Default, default,
event or condition, and what action Borrowers have taken, are taking and propose to take
with respect thereto;
(x)
Litigation or Other Proceedings
: (a) promptly upon any officer of the
Borrowers obtaining knowledge of (X) the non-frivolous institution of, or threat of, any
action, suit, proceeding (whether administrative, judicial or otherwise), governmental
investigation or arbitration against or affecting Borrowers and their Restricted
Subsidiaries, or any property of the Borrowers and their Restricted Subsidiaries
(collectively,
Proceedings
) not previously disclosed in writing by the Borrowers to
Lenders or (Y) any material development in any Proceeding that, in any case:
(1) has a reasonable possibility of giving rise to a Material Adverse Effect;
or
89
(2) seeks to enjoin or otherwise prevent the consummation of, or to recover
any damages or obtain relief as a result of, the transactions contemplated hereby;
written notice thereof together with such other information as may be reasonably available to the
Borrowers to enable Lenders and their counsel to evaluate such matters; and (b) within twenty days
after the end of each Fiscal Quarter, a schedule of all Proceedings involving an alleged liability
of, or claims against or affecting, the Borrowers or any of their Subsidiaries equal to or greater
than $10,000,000, and promptly after request by the Administrative Agent such other information as
may be reasonably requested by the Administrative Agent to enable Administrative Agent and its
counsel to evaluate any of such Proceedings;
(xi)
ERISA Events
: promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof,
what action Borrowers or any of their respective ERISA Affiliates has taken, is taking or
proposes to take with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect thereto;
(xii)
ERISA Notices
: with reasonable promptness, copies of (a) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the Borrowers, any
of their Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (b) all notices received by the Borrowers or any
of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA
Event; and (c) copies of such other documents or governmental reports or filings relating to
any Employee Benefit Plan as Administrative Agent shall reasonably request;
(xiii)
Financial Plans
: as soon as practicable and in any event no later than
30 days prior to the beginning of each Fiscal Year, a plan and financial forecast for such
Fiscal Year for LVSI, VCR and LCR (the
Financial Plan
for such Fiscal Year), including (a)
a forecasted consolidated statement of income and cash flows of LVSI and VCR for such Fiscal
Year, (b) a forecasted consolidated statement of income and cash flows of LCR for such
Fiscal Year, and (c) such other information and projections for such Fiscal Year as any
Lender may reasonably request;
(xiv)
Insurance
: as soon as practicable and in any event by the last day of
each Fiscal Year, a report in form and substance reasonably satisfactory to the
Administrative Agent outlining all material insurance coverage maintained as of the date of
such report by the Borrowers and their Restricted Subsidiaries and all material insurance
coverage planned to be maintained by the Borrowers and their Restricted Subsidiaries in the
immediately succeeding Fiscal Year;
(xv)
Board of Directors
: with reasonable promptness, written notice of any
change in the members of the Board of Directors of LVSI or LVSC;
90
(xvi)
New Subsidiaries
: promptly upon any Person becoming a Subsidiary of any
of the Borrowers (other than a Subsidiary of an Excluded Subsidiary, in which case (a)
within 45 days of the close of the calendar quarter during which such event occurs if such
event occurs during any of the first three calendar quarters of the given year or (b) within
90 days of the close of the fourth calendar quarter of the given year if such event occurs
during the fourth calendar quarter of such year), a written notice setting forth with
respect to such Person (a) the date on which such Person became a Subsidiary of any of the
Borrowers and (b) all of the data required to be set forth in
Schedule 5.1D
with
respect to all Subsidiaries of any of the Borrowers (it being understood that such written
notice shall be deemed to supplement
Schedule 5.1D
for all purposes of this
Agreement);
(xvii)
Material Contracts
: promptly, and in any event within ten Business Days
after any Material Contract of the Borrowers or any of their Restricted Subsidiaries is
terminated or amended in a manner that is materially adverse to the Borrowers or any of
their Restricted Subsidiaries or any new Material Contract is entered into, or upon becoming
aware of any material default by any party under a Material Contract, a written statement
describing such event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;
(xviii) [
Intentionally Omitted
];
(xix)
Notices under Operative Documents
: promptly upon receipt, copies of all
notices provided to the Borrowers or their Affiliates pursuant to any Operative Documents
relating to material defaults or material delays and promptly upon execution and delivery
thereof, copies of all amendments to any of the Operative Documents;
(xx)
Exception Reports
: promptly upon receipt, copies of all exception reports
provided to the Borrowers by the Nevada Gaming Authorities and the equivalent authorities in
Macau or any other relevant jurisdiction;
(xxi)
Notices of Phase II Project Status/Delays/Overruns
: promptly after Senior
Management of any of the Borrowers has determined that it is probable that any of the events
described in (i)-(v) below will occur, a written notice of any such event or circumstance:
(i) the extension of the Outside Completion Deadline beyond March 1, 2008, (ii) the
Substantial Completion Date being unlikely to occur on or before the Outside Completion
Deadline, (iii) the Phase II Project being unlikely to commence operations and open to the
general public within seventy-five (75) days after the Outside Completion Deadline, (iv)
Phase II Mall Substantial Completion being unlikely to occur on or before the Phase II Mall
Outside Substantial Completion Date, or (v) the Phase II Project not being In Balance;
(xxii)
Collateral Reports
: (A) upon Administrative Agents request (and in
any event no less frequently than fifteen (15) Business Days after the end of each Fiscal
Quarter and prepared by the Borrowers as of the last day of the immediately preceding Fiscal
Quarter), with respect to each Borrower, a summary of Collateral by location and type, in
each case in form and substance reasonably acceptable to Administrative Agent
91
and accompanied by such supporting detail and documentation as shall be reasonably
requested by Administrative Agent; (B) to the extent available to the Borrowers, such
certificates and reports from the Construction Consultant as may be contemplated hereby or
otherwise be requested by Administrative Agent in its reasonable discretion from time to
time; and (C) such other reports, statements and reconciliations with respect to the
Borrowing Base or Collateral as Administrative Agent shall from time to time request in its
reasonable discretion; and
(xxiii)
Other Information
: with reasonable promptness, such other information
and data with respect to the Borrowers or any of their Subsidiaries as from time to time may
be reasonably requested by any Lender.
6.2
Corporate Existence, etc.
The Borrowers will, and will cause each of their Restricted Subsidiaries to, at all times
preserve and keep in full force and effect their corporate or limited liability company existence
and all rights and franchises material to its business;
provided
,
however
that the
Borrowers and their Restricted Subsidiaries may merge, consolidate or convert as permitted pursuant
to subsection 7.7 of this Agreement and
provided
,
further
, that no Borrower nor any
such Restricted Subsidiary shall be required to preserve any such right or franchise if the Board
of Directors of the applicable Borrower or Restricted Subsidiary (or the managing member thereof,
if applicable) shall determine (and shall so notify the Administrative Agent), that the
preservation thereof is no longer desirable in the conduct of the business of such Borrower or
Restricted Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrowers and their Restricted Subsidiaries or Lenders.
6.3
Payment of Taxes and Claims; Tax Consolidation
.
A. The Borrowers will, and will cause each of their Restricted Subsidiaries to, pay all
material Taxes, assessments and other governmental charges imposed upon it or any of its properties
or assets or in respect of any of its income, businesses or franchises before any penalty accrues
thereon, and all material claims (including claims for labor, services, materials and supplies) for
sums that have become due and payable and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine shall be incurred with respect
thereto;
provided
that no such charge or claim need be paid if it is being contested in
good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (1)
such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (2) in the case of a charge or claim which has or may become a
Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale
or other disposition of any portion of the Collateral to satisfy such charge or claim.
B. The Borrowers will not, nor will they permit any of their Restricted Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person (other than
Borrowers or any of their Restricted Subsidiaries) unless the Borrowers and their Restricted
Subsidiaries shall have entered into the Tax Sharing Agreement or another tax sharing agreement
with such Person, in form and substance satisfactory to the Administrative Agent.
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C. If and to the extent that any Borrower or Restricted Subsidiary makes a payment or
distribution to any direct or indirect shareholder or member other than a Borrower or Restricted
Subsidiary with respect to Taxes that are attributable to either Phase II Mall Borrower or any
Subsidiary of either Phase II Mall Borrower (including in connection with the Phase II Mall Sale)
(
Phase II Mall Borrower Taxes
), then the Borrowers will promptly cause (i) such Phase II Mall
Borrower or Subsidiary thereof, (ii) any other Excluded Subsidiary, or (iii) LVSC to reimburse such
Borrower or Restricted Subsidiary for such Phase II Mall Borrower Taxes;
provided
, however,
that such reimbursement shall not be required to the extent that the amount of such reimbursement
is treated as an Investment permitted under subsections 7.3 (vii), (viii), (xiii), (xiv), (xv) or
(xvi).
6.4
Maintenance of Properties; Insurance; Application of Net Loss Proceeds
.
A.
Maintenance of Properties
. The Borrowers will, and will cause each of their
Restricted Subsidiaries to, maintain or cause to be maintained in good repair, working order and
condition, ordinary wear and tear excepted, the Collateral and all other material properties used
or useful in the business of the Borrowers and their Restricted Subsidiaries and from time to time
will make or cause to be made all appropriate repairs, renewals and replacements thereof except to
the extent that the Borrowers determine in good faith not to maintain, repair, renew or replace
such property if such property is no longer desirable in the conduct of their business and the
failure to do so is not disadvantageous in any material respect to the Borrowers and their
Restricted Subsidiaries or the Lenders. The Borrowers will operate the Existing Facility and, upon
Substantial Completion, the Phase II Project, at standards of operation at least equivalent to the
standards of operation of the Existing Facility on the Closing Date.
B.
Insurance
. The Borrowers will maintain or cause to be maintained, with financially
sound and reputable insurers, such public liability insurance, third party property damage
insurance, business interruption insurance and casualty insurance with respect to liabilities,
losses or damage in respect of the assets, properties and businesses of the Borrowers, and their
Restricted Subsidiaries as may from time to time customarily be carried or maintained under similar
circumstances by corporations of established reputation engaged in similar businesses, in each case
in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and
otherwise on such terms and conditions as shall be customary for corporations similarly situated in
the industry;
provided
that the amounts described in the proviso to the next sentence of
this subsection 6.4B shall be deemed satisfactory to fulfill the requirements of this sentence as
to the types of insurance described in such proviso, and deductibles in accordance with the
Cooperation Agreement shall be deemed customary for purposes of this sentence. Without limiting
the generality of the foregoing, the Borrowers will maintain or cause to be maintained with regard
to the Phase II Project prior to the amendment to the Cooperation Agreement contemplated by Section
3.4.3 of the Disbursement Agreement, the insurance coverages set forth on
Exhibit J
, and
with regard to the Existing Facility, and after such amendment to the Cooperation Agreement, with
regard to the Phase II Project, the insurance coverage required to be maintained under the
Cooperation Agreement, such insurance coverage to be provided by such insurance provider, in such
amounts with such deductibles and covering such risks as are at all times required under the
Cooperation Agreement and to include, if the Bank Mortgaged Property is located in an area
designated by the Federal Emergency Management Agency as having special flood or mud slide hazards,
flood insurance in
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compliance with any applicable regulations of the Board of Governors of the Federal Reserve
System;
provided
that, notwithstanding the provisions of the Cooperation Agreement, (i) the
Borrowers will maintain or cause to be maintained with respect to the Existing Facility, and after
the amendment to the Cooperation Agreement, with regard to the Phase II Project, (x) all-risk
property insurance, as such term is used in the insurance industry, on a loss-limit basis in a
minimum amount not less than $1,000,000,000 (
provided
that such insurance may include
coverage of the SECC and the retail portion of the Existing Facility within said loss limit), (y)
flood and earthquake property insurance with a sub-limit for catastrophic perils in a minimum
amount not less than $250,000,000 per event (provided that such insurance coverage may include
coverage of the SECC and the retail portion of the Existing Facility within said sub-limit), and
(z) unless the Borrowers provide evidence reasonably satisfactory to the Administrative Agent that
an independent third-party insurance consultant has confirmed such insurance is not available to
the Borrowers on commercially reasonable terms at such time, property insurance covering terrorism
and non-terrorist acts with no sub-limit for certified terrorist acts and a sub-limit for
non-certified terrorist acts in a minimum amount not less than $200,000,000, and (ii) the Borrowers
will use commercially reasonable efforts to acquire and maintain or cause to be maintained, to the
extent available at commercially reasonable rates, with respect to the Existing Facility, and after
the amendment to the Cooperation Agreement, the Phase II Project, excess liability insurance that
specifically does not exclude terrorism for losses that exceed $45,000,000 per event (it being
understood that the Borrowers do not have, and are not required to have, such insurance on the
Closing Date). Notwithstanding anything to the contrary contained herein, the parties agree that
the insurance requirements with respect to each of the Existing Facility and the Phase II Project
in the aforementioned amendment to the Cooperation Agreement will be substantially similar to those
set forth for the Existing Facility in the Cooperation Agreement as of the date hereof. Such
insurance shall name the Administrative Agent on behalf of the Lenders as an additional insured or,
with respect to the Collateral, loss payee, as its interests may appear, on terms reasonably
satisfactory to the Administrative Agent.
C.
Application of Net Loss Proceeds from Property Other than Collateral
. The
Borrowers shall (i) subject to the terms of the Disbursement Agreement and the Bank Credit
Agreement, apply Net Loss Proceeds from property and assets other than Collateral to restore,
replace or rebuild the Resort Complex in accordance with the Cooperation Agreement and (ii)
otherwise apply any such Net Loss Proceeds to prepay the Bank Loans.
D.
Reinvestment of Net Loss Proceeds from Collateral
.
Notwithstanding the provisions of subsection 2.4B(iii)(b), the Borrowers may elect not to
apply Net Loss Proceeds resulting from an Event of Loss with respect to any of the Collateral to
the prepayment of the Obligations to the extent that:
(i) the Borrowers intend to apply such Net Loss Proceeds within the earlier of (A) 365 days
following receipt of such Net Loss Proceeds or (B) 910 days following such Event of Loss to repair
or restore the affected Collateral substantially to the condition that existed immediately prior to
the Event of Loss or replace the affected Collateral (with items of substantially the same function
and condition that existed immediately prior to such Event of Loss) for use in connection with the
Existing Facility and/or Phase II Hotel/Casino (as the case may be) and the
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Administrative Agent will have a First Priority perfected security interest for the benefit of
the Secured Parties in such Collateral (including any replacements thereof);
(ii) if there has also been an Event of Loss which materially and adversely affects the
operations of the Existing Facility or Phase II Project (as the case may be), the Borrowers intend
to repair, restore or rebuild the affected portions of the Existing Facility or Phase II Project
(as the case may be) within the earlier of (A) 700 days following receipt of the insurance proceeds
relating to such Event of Loss or (B) 910 days following such Event of Loss;
(iii) if the Net Loss Proceeds which pertain to the affected Collateral at any time exceed
$3,000,000 in the aggregate, such Net Loss Proceeds in excess of $3,000,000 shall be deposited,
promptly (and in any event within five Business Days) after received in a separate and segregated
interest-bearing cash collateral account maintained by the Administrative Agent and under its
exclusive dominion and control, subject to a First Priority perfected security interest in favor of
Administrative Agent for the benefit of itself and the other Secured Parties (or, on or after the
Insurance Modification Date, any such account maintained by another party reasonably acceptable to
Administrative Agent or, prior to the Insurance Modification Date, any such account maintained by
the Bank Agent as trustee for the Administrative Agent in accordance with the Cooperation
Agreement) and, in any event, an amount not less than the full replacement value of all such
Collateral has been deposited into such cash collateral account within 545 days following the Event
of Loss to the extent (but only to the extent) in excess of $3,000,000;
(iv) there has not occurred any Event of Default or Potential Event of Default which is then
continuing; and
(v) within 90 days after the Event of Loss the Borrowers have furnished to the Administrative
Agent a certificate of an Authorized Officer of the Borrower Representative to the foregoing
effect.
In such event, the Administrative Agent shall, so long as the Borrowers have provided a
certificate evidencing compliance with the requirements of clause (v) of the preceding sentence,
hold all such Net Loss Proceeds with respect to the Collateral paid to the Administrative Agent on
behalf of the Borrowers, and turn over such proceeds to the Borrowers when requested by the
Borrowers from time to time to enable the Borrowers to rebuild, restore or replace such Collateral;
provided that, (i) to the extent required under clause (iii) of the immediately preceding sentence,
amounts of Net Loss Proceeds in excess of $3,000,000 (and the income and proceeds thereof) shall be
held by the Administrative Agent in a cash collateral account until delivered to the Borrower as
provided in this sentence, (ii) the Administrative Agent shall not be required to turn over any
such proceeds unless it has, or will have contemporaneously with the use of such proceeds, for the
benefit of itself and of the Secured Parties a First Priority Perfected security interest in any
rebuilt, restored or Replacement Collateral (as defined below), and (iii) Borrowers at the time of
any such turn over of proceeds would have satisfied the conditions set forth in
Sections 4.2B,
4.2D, 4.2E and 4.2F
.
In addition, within 270 days after the date of any Event of Loss with respect to any
Collateral, the Borrower Representative shall deliver to the Administrative Agent a certificate of
an Authorized Officer of the Borrower Representative specifying that the Borrowers either:
95
(A) have (i) determined to replace the affected Collateral or to repair or
restore such Collateral, (ii) obtained, or expect to obtain in a timely manner, all
required consents and approvals of all Existing Facility and/or Phase II Project (as
the case may be) lenders, and all required Permits of Governmental Authorities,
necessary to replace, repair or restore the affected Collateral within 910 days
following such Event of Loss and (iii) received from their insurance, restoration
and/or construction consultants (to the extent applicable) reasonable assurances
concerning the feasibility of the replacement, repair or restoration of the
Collateral in such time period; or
(B) have elected not to replace, repair, restore or rebuild the Collateral (as
the case may be);
provided
,
however
, that if the total cost of replacing the Collateral or
repairing or restoring the damage or loss to the Collateral produced by the Event of Loss is
neither in excess of $6,000,000 nor, when added to the corresponding costs with respect to all
other Events of Loss relating to Collateral occurring during the preceding twelve months, in excess
of $12,000,000 in the aggregate, then in lieu of including in such officers certificate evidence
of compliance with the requirements specified in subclauses (i), (ii) and (iii) of clause (A) of
this sentence, the Borrower Representative may in the officers certificate delivered pursuant to
such clause (A) set forth the evidence necessary to demonstrate that such costs are within such
dollar limits. If the Borrowers shall either (I) deliver an officers certificate to the effect
set forth in clause (B) of the immediately preceding sentence, or (II) fail to deliver the
officers certificate otherwise required under clause (A) of the immediately preceding sentence
within the 270-day time period referred to in the preceding sentence, the Administrative Agent
promptly thereafter shall apply the balance in the cash collateral account referred to above to the
prepayment of the Obligations in the manner specified in subsection 2.4B(iii)(b).
In connection with the replacement of any Collateral, the Borrowers shall have delivered to
the Administrative Agent a list of replacement units and items of equipment, fixtures, furniture,
furnishings and goods (of good quality, substantially equal aggregate value with the aggregate
value of the units and items damaged or destroyed in the Event of Loss and otherwise reasonably
satisfactory to the Administrative Agent as collateral (collectively, the
Replacement
Collateral
).
Upon the earlier of (i) the failure of the Borrower to apply the Net Loss Proceeds to the
replacement, repair or reconstruction of affected Collateral (x) 365 days following receipt of such
Net Loss Proceeds or (y) 910 days following the related Event of Loss, (ii) the occurrence and
continuation of any Event of Default, (iii) completion of the repair, restoration or replacement of
all affected Collateral, or (iv) any failure to comply in any material respect with the
requirements of this subsection 6.4D, all amounts, if any, remaining in the cash collateral account
shall be applied to the prepayment of the Obligations in the manner specified in subsection
2.4B(iii)(b).
Notwithstanding anything to the contrary contained herein (including the immediately preceding
sentence), the Borrowers shall apply the proceeds resulting from an Event of Loss
96
with respect to Collateral to repair, replace or restore the affected Collateral to the extent
required by the Cooperation Agreement.
6.5
Inspection; Lender Meeting
.
A.
Inspection Rights
.
(i) The Borrowers shall, and shall cause each of their Restricted Subsidiaries to,
permit any authorized representatives designated by the Administrative Agent to visit and
inspect any of the properties of the Borrowers and their Restricted Subsidiaries, to
inspect, copy and take extracts from its and their financial and accounting records, and to
discuss its and their affairs, finances and accounts with its and their officers and
independent public accountants, if requested by the Administrative Agent (provided that any
designated representatives of the Borrowers may, if they so choose, be present at or
participate in any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
(ii) The Borrowers shall, and shall cause each of their Restricted Subsidiaries to,
permit any authorized representatives designated by a Term Lender to visit and inspect any
of the properties of the Borrowers and their Restricted Subsidiaries, to inspect, copy and
take extracts from its and their financial and accounting records, and to discuss its and
their affairs, finances and accounts with its and their officers and independent public
accountants, if requested by such Term Lender (provided that any designated representatives
of the Borrowers may, if they so choose, be present at or participate in any such
discussion), all upon reasonable notice and at such reasonable times during normal business
hours,
provided
that (i) any such Term Lender shall be responsible for all of the
expenses it incurs as a result of such visit and inspection and (ii) so long as no Default
or Event of Default exists, no more than two (2) such visits and inspections by the Term
Lenders (other than the Administrative Agent) may occur in any calendar quarter.
B.
Lender Meeting
. The Borrowers will, upon the request of the Administrative Agent
or Requisite Lenders, participate in a meeting of the Administrative Agent and the Lenders once
during each Fiscal Year to be held at Borrowers corporate offices (or at such other location as
may be agreed to by the Borrowers and the Administrative Agent) at such time as may be agreed to by
the Borrowers and the Administrative Agent.
6.6
Compliance with Laws, etc.; Permits
.
A. The Borrowers shall and shall cause each of their Restricted Subsidiaries and all other
Persons on or occupying any Facilities to, comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority (including all Environmental Laws),
noncompliance with which could reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect. In addition, the Borrowers shall and shall cause each of their Restricted
Subsidiaries to (i) ensure that no person who, directly or indirectly, owns a controlling interest
in, or otherwise controls, any Borrower or any of their Subsidiaries is or shall
97
be (A) listed on the Specially Designated Nationals and Blocked Person List maintained by the
Office of Foreign Assets Control (
OFAC
), Department of the Treasury, and/or any other
similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or
regulation, or (B) a person designated under Sections 1(b), (c) or (d) of Executive Order No. 13224
(September 23, 2001), any related enabling legislation or any other similar Executive Orders, and
(ii) comply in all material respects with all applicable Bank Secrecy Act (
BSA
) laws,
regulations and government guidance on BSA compliance and on the prevention and detection of money
laundering violations.
B. The Borrowers shall, and shall cause each of their Restricted Subsidiaries to, from time to
time obtain, maintain, retain, observe, keep in full force and effect and comply in all material
respects with the terms, conditions and provisions of all Permits as shall now or hereafter be
necessary under applicable laws except any thereof the noncompliance with which could not
reasonably be expected to have a Material Adverse Effect.
6.7
Environmental Covenant
.
A.
Environmental Review and Investigation
. The Borrowers agree that the
Administrative Agent may, from time to time and in its reasonable discretion, (i) retain, at
Borrowers expense, an independent professional consultant to review any environmental audits,
investigations, analyses and reports relating to Hazardous Materials in respect of the Existing
Site, the Site, the Existing Facility and the Phase II Project prepared by or for Borrowers and
(ii) conduct their own investigation of any Facility;
provided
that, in the case of any
Facility no longer owned, leased, operated or used by the Borrowers or any of their Subsidiaries,
the Borrowers shall only be obligated to use their best efforts to obtain permission for the
Administrative Agents professional consultant to conduct an investigation of such Facility. For
purposes of conducting such a review and/or investigation, the Borrowers hereby grant to the
Administrative Agent and their respective agents, employees, consultants and contractors the right
to enter into or onto any Facilities currently owned, leased, operated or used by the Borrowers or
any of their Subsidiaries and to perform such tests on such property (including taking samples of
soil, groundwater and suspected asbestos-containing materials) as are reasonably necessary in
connection therewith. Any such investigation of any Facility shall be conducted, unless otherwise
agreed to by the Borrowers and the Administrative Agent, during normal business hours and, to the
extent reasonably practicable, shall be conducted so as not to interfere with the ongoing
operations at such Facility or to cause any damage or loss to any property at such Facility. The
Borrowers and the Administrative Agent hereby acknowledge and agree that any report of any
investigation conducted at the request of the Administrative Agent pursuant to this subsection 6.7A
will be obtained and shall be used by the Administrative Agent and Lenders for the purposes of
Lenders internal credit decisions, to monitor and police the Loans and to protect Lenders
security interests created by the Loan Documents. The Administrative Agent agrees to deliver a
copy of any such report to the Borrowers with the understanding that the Borrowers acknowledge and
agree that (x) they will indemnify and hold harmless the Administrative Agent and each Lender from
any costs, losses or liabilities relating to the Borrowers use of or reliance on such report, (y)
none of the Administrative Agent nor any Lender makes any representation or warranty with respect
to such report, and (z) by delivering such report to the Borrowers, none of the Administrative
Agent nor any Lender is requiring or
98
recommending the implementation of any suggestions or recommendations contained in such
report.
B.
Environmental Disclosure
. The Borrowers will deliver to the Administrative Agent
and Lenders:
(i)
Certain Pre-Closing and Post-Closing Deliveries
. On or before the Closing
Date, a letter or letters from Converse Consultants in form and substance reasonably
satisfactory to the Administrative Agent, describing the history and current status of the
investigation, collection and treatment of soil and ground water contaminated by Hazardous
Materials at the Phase II Hotel/Casino. After the Closing Date, within thirty (30) days of
the Final Completion Date of the Phase II Hotel/Casino, a Phase One environmental site
assessment (conforming to the standard E-1527-00 of the American Society for Testing and
Materials) of the Phase II Hotel/Casino, in form and substance reasonably satisfactory to
the Administrative Agent.
(ii)
Environmental Audits and Reports
. As soon as practicable following
receipt thereof, copies of all environmental audits, investigations, analyses and reports of
any kind or character, whether prepared by personnel of the Borrowers or any of their
Subsidiaries or by independent consultants, governmental authorities or any other Persons,
with respect to significant environmental matters at any Facility or with respect to any
Environmental Claims;
(iii)
Notice of Certain Releases, Remedial Actions, Etc.
Promptly upon the
occurrence thereof, written notice describing in reasonable detail (a) any Release required
to be reported to any federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (b) any remedial action taken by the Borrowers or any other
Person in response to (1) any Hazardous Materials Activities the existence of which has a
reasonable possibility of resulting in one or more Environmental Claims having, individually
or in the aggregate, a Material Adverse Effect, or (2) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of resulting in a Material
Adverse Effect.
(iv)
Written Communications Regarding Environmental Claims, Releases, Etc.
As
soon as practicable following the sending or receipt thereof by the Borrowers or any of
their Subsidiaries, a copy of any and all written communications with respect to (a) any
Environmental Claims that, individually or in the aggregate, have a reasonable possibility
of giving rise to a Material Adverse Effect, (b) any Release required to be reported to any
federal, state or local governmental or regulatory agency, and (c) any request for
information from any governmental agency that suggests such agency is investigating whether
Borrowers or any of their Subsidiaries may be potentially responsible for any Hazardous
Materials Activity.
(v)
Notice of Certain Proposed Actions Having Environmental Impact
. Prompt
written notice describing in reasonable detail (a) any proposed acquisition of stock,
assets, or property by the Borrowers or any of their Subsidiaries that could reasonably be
expected to (1) expose Borrowers or any of their Subsidiaries to, or result
99
in, Environmental Claims that could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect or (2) affect the ability of the Borrowers or any
of their Subsidiaries to maintain full force and effect all material Permits required under
any Environmental Laws for their respective operations and (b) any proposed action to be
taken by the Borrowers or any of their Subsidiaries to modify current operations in a manner
that could reasonably be expected to subject Borrowers or any of their Subsidiaries to any
material additional obligations or requirements under any Environmental Laws that could
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(vi)
Other Information
. With reasonable promptness, such other documents and
information as from time to time may be reasonably requested by the Administrative Agent in
relation to any matters disclosed pursuant to this subsection 6.7.
C.
Borrowers Actions Regarding Environmental Laws
.
(i)
Remedial Actions Relating to Hazardous Materials Activities
. The Borrowers
shall promptly undertake, and shall cause each of their Subsidiaries promptly to undertake,
any and all investigations, studies, sampling, testing, abatement, cleanup, removal,
remediation or other response actions necessary to remove, remediate, clean up or abate any
Hazardous Materials Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an Environmental Claim
(including implementation of the recommendations set forth in the two Converse Consultants
reports dated February 17, 2004). In the event Borrowers or any of their Subsidiaries
undertake any such action with respect to any Hazardous Materials, the Borrowers or such
Subsidiary shall conduct and complete such action in compliance with all applicable
Environmental Laws and in accordance with the policies, orders and directives of all
Governmental Instrumentality except when, and only to the extent that, the Borrowers or
such Subsidiarys liability with respect to such Hazardous Materials Activity is being
contested in good faith by the Borrowers or such Subsidiary.
(ii)
Actions with Respect to Environmental Claims and Violations of Environmental
Laws
. The Borrowers shall promptly take, and shall cause each of their Subsidiaries
promptly to take, any and all actions necessary to (a) cure any material violation of
applicable Environmental Laws by the Borrowers or their Subsidiaries and (b) make an
appropriate response to any Environmental Claim against Borrowers or any of their
Subsidiaries and discharge any obligations it may have to any Person thereunder.
6.8
Compliance with Material Contracts
.
The Borrowers shall, and shall cause each of their Restricted Subsidiaries to, comply, duly
and promptly, in all material respects with its respective obligations and enforce all of its
respective rights under all Material Contracts and all Operative Documents except where the failure
to comply could not reasonably be expected to have a Material Adverse Effect.
6.9
Discharge of Liens
.
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A.
Removal by the Borrowers
. In the event that, notwithstanding the covenants
contained in subsection 7.2, a Lien which is not a Permitted Lien may encumber any Collateral or
any portion thereof, the Borrowers shall promptly discharge or cause to be discharged by payment to
the lienor or Lien claimant or promptly secure removal by bonding or deposit with the county clerk
or otherwise or, at the Administrative Agents option, and if obtainable promptly obtain title
insurance against, any such Lien or mechanics or materialmens claims of Lien filed or otherwise
asserted against such Collateral or any portion thereof within 60 days after the date of notice
thereof;
provided
that, compliance with the provisions of this subsection 6.9 shall not be
deemed to constitute a waiver of the provisions of subsection 7.2. The Borrowers shall exhibit to
the Administrative Agent upon request all receipts or other satisfactory evidence of payment,
bonding, deposit of taxes, assessments, Liens or any other item which may cause any such Lien to be
filed against any Collateral. Each Borrower and each of its Restricted Subsidiaries shall fully
preserve the Lien and the priority of each Collateral Document without cost or expense to the
Administrative Agent or the Lenders.
B.
Removal by the Agent
. If any Borrower or any of its Restricted Subsidiaries fails
to promptly discharge, remove or bond off any such Lien or mechanics or materialmens claim of
Lien as described above, which is not being contested by any Borrower or any of its Restricted
Subsidiaries in good faith by appropriate proceedings promptly instituted and diligently conducted,
within 30 days after the receipt of notice thereof, then the Administrative Agent may, but shall
not be required to, procure the release and discharge of such Lien, mechanics or materialmens
claim of Lien and any judgment or decree thereon, and in furtherance thereof may, in its sole
discretion, effect any settlement or compromise with the lienor or Lien claimant or post any bond
or furnish any security or indemnity as the Administrative Agent, in its sole discretion, may
elect. In settling, compromising or arranging for the discharge of any Liens under this
subsection, the Administrative Agent shall not be required to establish or confirm the validity or
amount of the Lien. The Borrowers agree that all costs and expenses expended or otherwise incurred
pursuant to this subsection 6.9 (including reasonable attorneys fees and disbursements) by the
Administrative Agent shall be paid by the Borrowers in accordance with the terms hereof.
6.10
Further Assurances
.
A.
Assurances
. Without expense or cost to the Administrative Agent or the Lenders,
each Borrower shall, and shall cause each Subsidiary Guarantor to, from time to time hereafter,
execute, acknowledge, file, record, do and deliver all and any further acts, deeds, conveyances,
mortgages, deeds of trust, deeds to secure debt, security agreements, hypothecations, pledges,
charges, assignments, financing statements and continuations thereof, notices of assignment,
transfers, certificates, assurances and other instruments as the Administrative Agent may from time
to time reasonably require in order to carry out more effectively the purposes of this Agreement or
the other Loan Documents, including to subject any items of Collateral, intended to now or
hereafter be covered, to the Liens created by the Collateral Documents, to perfect and maintain
such Liens, and to assure, convey, assign, transfer and confirm unto the Administrative Agent the
property and rights hereby conveyed and assigned or intended to now or hereafter be conveyed or
assigned or which any Loan Party may be or may hereafter become bound to convey or to assign to the
Administrative Agent or for carrying out the intention of or facilitating the performance of the
terms of this Agreement, or
101
any other Loan Documents or for filing, registering or recording this Agreement or any other
Loan Documents. Promptly upon a reasonable request each Borrower shall, and shall cause each
Subsidiary Guarantor to, execute and deliver, and hereby authorizes the Administrative Agent to
execute and file in the name of such Loan Party, to the extent the Administrative Agent may
lawfully do so, one or more financing statements, chattel mortgages or comparable security
instruments to evidence more effectively the Liens of the Collateral Documents upon the Collateral.
B.
Filing and Recording Obligations
. The Borrowers shall pay or cause to be paid all
filing, registration and recording fees and all expenses incident to the execution and
acknowledgment of any Loan Document, including any instrument of further assurance described in
subsection 6.10A, and shall pay or cause to be paid all transfer taxes, general intangibles taxes
and governmental stamp and other taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution, delivery, filing, recording or registration of any Collateral
Document or any other Loan Document (or any amendments thereto), including any instrument of
further assurance described in subsection 6.10A, or by reason of its interest in, or measured by
amounts payable under, the Notes, any Collateral Document or any other Loan Document, including any
instrument of further assurance described in subsection 6.10A, and shall pay all stamp taxes and
other taxes required to be paid on the Notes or any other Loan Document, but excluding in the case
of each Lender and the Administrative Agent, Taxes imposed on its income by a jurisdiction under
the laws of which it is organized or in which its principal executive office is located or in which
its applicable lender office for funding or booking its Loans hereunder is located. If any
Borrower fails to make or cause to be made any of the payments described in the preceding sentence
within 15 days after notice thereof from the Administrative Agent (or such shorter period as is
necessary to protect the loss of or diminution in value of any Collateral by reason of tax
foreclosure or otherwise, as determined by the Administrative Agent, in its sole discretion)
accompanied by documentation verifying the nature and amount of such payments, the Administrative
Agent may (but shall not be obligated to) pay the amount due and such Borrower shall reimburse all
amounts in accordance with the terms hereof.
C.
Costs of Defending and Upholding the Lien
. The Administrative Agent may, upon at
least five days prior notice to the Borrowers, (i) appear in and defend any action or proceeding,
in the name and on behalf of the Administrative Agent or the Lenders in which the Administrative
Agent or any Lender is named or which the Administrative Agent in its sole discretion determines is
reasonably likely to materially adversely affect any Collateral, any Collateral Document, the Lien
thereof or any other Loan Document and (ii) institute any action or proceeding which the
Administrative Agent reasonably determines should be instituted to protect the interest or rights
of the Administrative Agent and the Lenders in the Collateral or under any Loan Document. The
Borrowers agree that all reasonable costs and expenses expended or otherwise incurred pursuant to
this subsection (including reasonable attorneys fees and disbursements) by the Administrative
Agent shall be paid by the Borrowers or reimbursed to the Administrative Agent, as the case may be,
promptly after demand.
D.
Costs of Enforcement
. The Borrowers agree to bear and shall pay or reimburse the
Administrative Agent and the Lenders in accordance with the terms of subsection 10.2 for all
reasonable sums, costs and expenses incurred by the Administrative Agent and the Lenders
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(including reasonable attorneys fees and the expenses and fees of any receiver or similar
official) of or incidental to the collection of any of the Obligations, any foreclosure (or
transfer in lieu of foreclosure) of this Agreement, any Collateral Document or any other Loan
Document or any sale of all or any portion of the Collateral.
6.11
Future Subsidiaries or Restricted Subsidiaries
.
A.
Execution of Subsidiary Guaranty and Collateral Documents
. In the event that on or
after the Closing Date any Person becomes a Subsidiary, the Borrowers will promptly notify
Administrative Agent of that fact (provided that if such Person is an Excluded Subsidiary, then
Borrowers are required to notify the Administrative Agent of such fact as follows: (a) if such fact
occurs during any of the first three calendar quarters of any given year, within 45 days of the
close of the calendar quarter during which such fact occurs; or (b) if such fact occurs during the
last calendar quarter of any given year, within 90 days of the close of such calendar quarter), and
(i) in such event (provided such Subsidiary is not an Excluded Subsidiary or a Non-Guarantor
Restricted Subsidiary) or (ii) in the event that any Excluded Subsidiary or Non-Guarantor
Restricted Subsidiary becomes a Subsidiary Guarantor, the Borrowers will cause such Restricted
Subsidiary to execute and deliver to the Administrative Agent a supplement to the Subsidiary
Guaranty.
B.
Subsidiary Charter Documents, Legal Opinions, Etc.
The Borrowers shall deliver to
the Administrative Agent, together with such Loan Documents, (i) certified copies of such
Subsidiary Guarantors Certificate or Articles of Incorporation or equivalent limited liability
company documents, together with a good standing certificate from the Secretary of State of the
jurisdiction of its organization and each other state in which such Person is qualified as a
foreign corporation to do business and, to the extent generally available, a certificate or other
evidence of good standing as to payment of any applicable franchise or similar taxes from the
appropriate taxing authority of each of such jurisdictions, each to be dated a recent date prior to
their delivery to the Administrative Agent, (ii) a copy of such Subsidiary Guarantors bylaws or
operating agreement, certified by its corporate secretary or an assistant secretary (or their
equivalent) as of a recent date prior to their delivery to the Administrative Agent, (iii) a
certificate executed by the secretary or an assistant secretary of such Subsidiary Guarantor as to
(a) the fact that the attached resolutions of the Board of Directors or managing member of such
Subsidiary Guarantor approving and authorizing the execution, delivery and performance of such Loan
Documents are in full force and effect and have not been modified or amended and (b) the incumbency
and signatures of the officers of such Subsidiary Guarantor executing such Loan Documents, and (iv)
a favorable opinion of counsel to such Subsidiary Guarantor, in form and substance reasonably
satisfactory to the Administrative Agent and its counsel, as to (a) the due organization and good
standing of such Subsidiary Guarantor, (b) the due authorization, execution and delivery by such
Subsidiary Guarantor of such Loan Documents, (c) the enforceability of such Loan Documents against
such Subsidiary Guarantor, (d) such other matters as Administrative Agent may reasonably request,
all of the foregoing to be reasonably satisfactory in form and substance to the Administrative
Agent and its counsel.
C.
Non-Material Subsidiaries
. If at any time after the Closing Date Grand Canal Shops
Mall MM Subsidiary, Inc. acquires any material assets, the Borrowers will cause such
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Non-Guarantor Restricted Subsidiary to become a Subsidiary Guarantor pursuant to the terms of
subsections 6.11A and 6.11B.
6.12
[Intentionally Omitted]
.
6.13
Interest Rate Protection
. The Borrowers shall enter into and maintain in effect
one or more interest rate protection agreements for a term of not less than the lesser of (a) three
years or (b) the remaining life to maturity of the Term Loans, and otherwise in form and substance
reasonably satisfactory to the Administrative Agent, with respect to a notational amount of
Indebtedness such that not less than 50% of the sum of (x) the total Indebtedness of the Borrowers
and their (other than Macau Excluded Subsidiaries) and (y) the LVSC Notes and LVSC Permitted
Indebtedness guaranteed by the Borrowers, in each case outstanding at any time shall be either (i)
subject to such interest rate protection agreements for a period of not less than three years, or
if shorter, the remaining term of the Loans, or (ii) fixed rate Indebtedness.
6.14
[Intentionally Omitted]
.
6.15
Landlords Agreements, Mortgagee Agreements, Bailee Letters and Real Estate
Purchases
. (a) If there are any mortgaged premises, leased premises or bailment arrangements
in existence on the Closing Date (other than any mortgage or deed of trust to secure the
obligations in connection with the Bank Credit Facility existing on the Closing Date) with respect
to the location or expected location of any Collateral, each Borrower shall use commercially
reasonable efforts to obtain and deliver to the Administrative Agent a duly executed mortgagee
agreement, landlords agreement or bailee letter (as the case may be) from the relevant mortgagee,
landlord or bailee (as the case may be) which agreement or letter shall contain a waiver or
subordination of all Liens or claims that the mortgagee, landlord or bailee may assert against the
Collateral (at that location), shall afford the Administrative Agent with reasonable access to the
Collateral (at that location) and shall be otherwise be reasonably satisfactory in form and
substance to Administrative Agent. If the Administrative Agent has not received any such mortgagee
agreement, landlords agreement or bailee letter, the affected Collateral (at that location) may,
in Administrative Agents discretion, be excluded from the Borrowing Base or be subject to such
Reserves as the Administrative Agent may be deem necessary or appropriate in its reasonable credit
judgment. (b) After the Closing Date, no real property where any of the Collateral is (or is
expected to be) located shall be mortgaged (other than any mortgage or deed of trust to secure
obligations in connection with the Bank Credit Facility existing on the Closing Date) or leased,
and no Collateral shall be the subject of any bailment, by any Borrower unless and until such
Borrower obtains and delivers to the Administrative Agent a duly executed mortgagee agreement,
landlords agreement or bailee letter (as the case may be) from the relevant mortgagee, landlord or
bailee (as the case may be) in the form contemplated in clause (a) above or, in connection with any
refinancing of the Bank Credit Facility, in a form substantially similar to the provisions in
paragraph 3(f) of the Intercreditor Agreement.
6.16
Modification of Certain Agreements
. On or prior to September 30, 2007, Borrowers
shall use their best efforts to amend the Cooperation Agreement (the date that is the last date of
such amendment, the Insurance Modification Date), to allow proceeds resulting from an Event of
Loss with respect to any of the Collateral to be paid directly to Administrative
104
Agent or otherwise to provide for the allocation of such proceeds in a manner reasonably
acceptable to the Administrative Agent. The parties hereto agree and acknowledge that the
preceding sentence (i) does not require the Borrowers to pay any amounts (other than reasonable
expenses in the ordinary course) in order to effect such amendment to the Cooperation Agreement and
(ii) does not require Borrowers to make any material contractual concessions relating to the
Cooperation Agreement or any other agreements in order to obtain such amendment to the Cooperation
Agreement.
Section 7.
Borrowers Negative Covenants
.
The Borrowers covenant and agree with each Lender and each Agent that until the Termination
Date, the Borrowers shall perform all of the covenants set forth in this Section 7.
7.1
Indebtedness
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly
or indirectly liable with respect to, any Indebtedness, except:
(i) Indebtedness in respect of the Obligations;
(ii) Indebtedness existing on the Closing Date and set forth on
Schedule 7.1
and refinancing of such Indebtedness in a principal amount not in excess of that which is
outstanding on the Closing Date (as such principal amount has been permanently reduced
following the Closing Date)(plus Refinancing Fees);
(iii) Borrowers and their Subsidiaries may become and remain liable with respect to
Contingent Obligations permitted by subsection 7.4 and upon any matured obligations actually
arising pursuant thereto, the Indebtedness corresponding to the Contingent Obligations so
extinguished;
(iv) the Borrowers and the Subsidiary Guarantors may become and remain liable for
Indebtedness represented by a Bank Credit Facility;
(v) any Loan Party may become and remain liable with respect to Indebtedness owed to
any Borrower or any Restricted Subsidiary;
provided
that all such intercompany
Indebtedness shall be subordinated in right of payment to the payment in full of the
Obligations in a manner reasonable acceptable to Administrative Agent pursuant to the terms
of the applicable promissory notes or an intercompany subordination agreement;
(vi) Non-Guarantor Restricted Subsidiaries may become liable for Indebtedness owing to
any Loan Party in an aggregate principal amount not to exceed $12,000,000 at any time
outstanding, and any Non-Guarantor Restricted Subsidiary may become and remain liable with
respect to Indebtedness owing to any other Non-Guarantor Restricted Subsidiary;
105
(vii) the Borrowers and their Restricted Subsidiaries may become and remain liable for
Non-Recourse Financing used to finance the construction, installation, purchase or lease of
personal or real property (including Specified FF&E) for use in the business of a Borrower
or one of its Restricted Subsidiaries
provided
that the Indebtedness incurred
pursuant to this clause (vii) (and any refinancings of such Indebtedness) shall not exceed
$75,000,000 (plus Refinancing Fees) outstanding at any time;
(viii) to the extent that such incurrence does not result in the incurrence by the
Borrowers or any of their Restricted Subsidiaries of any obligation for the payment of
borrowed money of others, Indebtedness of the Borrowers or a Restricted Subsidiary incurred
solely in respect of (x) performance bonds, completion guarantees, standby letters of credit
or bankers acceptances, letters of credit in order to provide security for workers
compensation claims, payment obligations in connection with self insurance or similar
requirements, surety and similar bonds, statutory claims of lessors, licensees, contractors,
franchisees or customers, bonds securing the performance of judgments or a stay of process
in proceedings to enforce a contested liability or in connection with any order or decree in
any legal proceeding,
provided
, that such Indebtedness was incurred in the ordinary
course of business of the Borrowers or any of their Restricted Subsidiaries and in an
aggregate principal amount outstanding under this clause (x) at any one time of less than
$55,000,000 and (y) bonds securing the performance of judgments or a stay of process in
proceedings to enforce a contested liability or in connection with any order or decree in
any legal proceeding, to the extent that such Indebtedness is in an aggregate principal
amount outstanding under this clause (y) at any one time of less than $45,000,000;
(ix) the Borrowers or any Subsidiary Guarantor may become and remain liable for
Indebtedness to employees, former employees, directors or former directors of the Borrowers
or permitted transferees of such individuals (
Employee Repurchase Notes
) incurred in
connection with any repurchase of employee options or stock upon death, disability,
termination or exercise of any redemption or put of such option or stock of such employee in
accordance with employment agreements or option plans or agreements as in effect on the
Closing Date or approved by the Board of Directors of LVSI (
Permitted Employee
Repurchases
);
provided
that such Indebtedness shall be unsecured and subordinated
to the Obligations in a manner reasonable acceptable to Administrative Agent and shall
expressly provide that payments thereon shall be required only to the extent not restricted
by this Agreement;
(x) the Borrowers and their Restricted Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to exceed, at any time
outstanding $60,000,000;
(xi) the incurrence by the Borrowers or any Restricted Subsidiary of (a) Indebtedness
(which may include Capital Lease obligations, mortgage financings or purchase money
obligations), in each case incurred for the purpose of financing all or any part of the
purchase price or cost of construction, installation and/or improvement of property, plant
or equipment used in the business of the Borrowers or the construction,
106
installation, purchase or lease of real or personal property or equipment (including
Specified FF&E) (including any refinancings thereof), in an aggregate principal amount not
to exceed, at any time outstanding, $50,000,000 (plus any Refinancing Fees) and (b) Capital
Lease obligations incurred in connection with the leasing of gaming equipment (including
Specified FF&E) to be used in connection with the casino located at the Phase II Project in
the aggregate amount at any time outstanding (and any refinancing of such Capital Lease
obligations) not to exceed $15,000,000 (plus any Refinancing Fees);
(xii) Indebtedness arising from any agreement entered into by any of the Borrowers or
any of their Restricted Subsidiaries providing for indemnification, purchase price
adjustment or similar obligations, in each case, incurred or assumed in connection with an
Asset Sale;
(xiii) Indebtedness incurred to fund Investments in Excluded Subsidiaries such that the
aggregate amount of such Indebtedness incurred (including any refinancings thereof) does not
exceed $125,000,000 (plus any Refinancing Fees) under this clause at any time outstanding;
(xiv) to the extent it constitutes Indebtedness, obligations under Hedging Agreements
that are incurred (a) with respect to any Indebtedness that is permitted by the terms of
this Agreement to be outstanding, (b) for the purpose of fixing or hedging currency exchange
rate risk with respect to any currency exchanges, or (c) for the purpose of fixing or
hedging commodities risk in connection with commodities to which a Borrower or a Restricted
Subsidiary has actual exposure in connection with Phase II Project Costs and not for
speculative purposes;
(xv) so long as no Potential Event of Default (other than any such Potential Event of
Default that would be cured by the incurrence thereof) or Event of Default has occurred and
is continuing or would result therefrom, the Borrowers or any Subsidiary Guarantor may incur
Permitted Subordinated Indebtedness;
(xvi) so long as no Potential Event of Default or Event of Default has occurred and is
continuing or would result therefrom, Permitted Subordinated Indebtedness or other
Indebtedness;
provided
that at the time of incurrence, (a) the Borrowers
Consolidated Senior Leverage Ratio does not exceed 2.25:1.0 on a pro forma basis after
giving effect to the incurrence of such Indebtedness and the use of proceeds from such
Indebtedness, (b) the Borrowers use the proceeds of such Indebtedness to finance Investments
permitted hereunder in Excluded Subsidiaries or Non-Guarantor Restricted Subsidiaries and
(c) such Indebtedness is not secured by a Lien on any of the Collateral;
(xvii) Indebtedness owed by any Restricted Subsidiary to any Borrower or Restricted
Subsidiary constituting an Investment permitted under subsections 7.3 (xiii), (xiv) or (xx);
provided
that all such intercompany Indebtedness due from any Loan Party shall be
subordinated in right of payment, in a manner reasonably satisfactory to Administrative
Agent, to the payment in full of the Obligations pursuant to the terms of the applicable
promissory notes or an intercompany subordination agreement; and
107
(xviii) the incurrence by the Borrowers or any Restricted Subsidiary of Indebtedness
incurred to finance the Borrowers or such Restricted Subsidiarys obligations under the
HVAC Services Agreements or to expand, add to or extend the Borrowers or any Restricted
Subsidiarys heating, ventilation, air conditioning or energy systems (including the
Specified FF&E), in an aggregate amount at any time outstanding (including any refinancings
thereof), not to exceed $15,000,000 (plus any Refinancing Fees).
7.2
Liens and Related Matters
.
A.
Prohibition on Liens
. The Borrowers shall not, and shall not permit any of their
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any
Lien on or with respect to any property or asset of any kind (including any document or instrument
in respect of goods or accounts receivable) of such Borrower or Restricted Subsidiary, whether now
owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of,
or permit to remain in effect, any financing statement or other similar notice of any Lien with
respect to any such property, asset, income or profits under the Uniform Commercial Code of any
state or under any similar recording or notice statute, except Permitted Liens.
B.
[Intentionally Omitted.]
C.
No Further Negative Pledges
. Except with respect to capital stock of any Macau
Excluded Subsidiaries or specific property encumbered to secure payment of particular Indebtedness
or leases or to be sold pursuant to an executed agreement with respect to an Asset Sale, none of
the Borrowers nor any of their Restricted Subsidiaries shall enter into any agreement prohibiting
the creation or assumption of any Lien upon any of its properties or assets, whether now owned or
hereafter acquired other than (i) as provided herein or in the other Loan Documents, (ii) as
provided in the Bank Credit Facility Documents, the LVSC Note Documents, an Other FF&E Facility and
the guarantees and collateral documents relating thereto, or in any agreement relating to any LVSC
Permitted Indebtedness or to any other Indebtedness permitted to be secured by Permitted Liens
other than Indebtedness permitted to be incurred pursuant to subsections 7.1 (v), (vi) or (xvii)
including any refinancing thereof permitted hereunder provided that the provisions regarding the
creation or assumption of Liens is not less favorable to the Borrowers, such Restricted Subsidiary
or the lenders than those set forth in the documents evidencing the Indebtedness being refinanced,
or (iii) as required by applicable law or any applicable rule or order of any Gaming Authority.
D.
No Restrictions on Subsidiary Distributions to the Borrowers or Other Subsidiaries
.
The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, create or
otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of
any kind on the ability of any of their Restricted Subsidiaries to (i) pay dividends or make any
other distributions on any of such Restricted Subsidiarys capital stock owned by the Borrowers or
any other Restricted Subsidiary of the Borrowers, (ii) repay or prepay any Indebtedness owed by any
such Restricted Subsidiaries to the Borrowers, (iii) make loans or advances to the Borrowers, or
(iv) transfer any of its property or assets to the Borrowers other than (a) as provided herein or
in the other Loan Documents, (b) as provided in the Bank Credit Facility Documents or Other FF&E
Facility (including any permitted refinancing thereof) and
108
any related collateral documents and guarantees, or in any agreement relating to Permitted
Subordinated Indebtedness or any other Indebtedness permitted to be incurred pursuant to subsection
7.1(ii), (vii), (xi) or (xvii) including any refinancing thereof permitted hereunder
provided
that the provisions regarding dividends, distributions, repayments of
Indebtedness, loans and advances and transfers of assets are not less favorable to the Borrowers,
such Restricted Subsidiary or the lenders than those set forth in the documents evidencing the
Indebtedness being refinanced, (c) by reason of customary non-assignment provisions in leases
entered into the ordinary course of business and consistent with past practices and any leases
permitted hereunder, (d) purchase money obligations for property or Capital Lease obligations for
property or equipment, including Specified FF&E, acquired or leased in the ordinary course of
business that impose restrictions of the nature set forth in clause (iv) above on the property so
acquired, (e) any instrument governing Indebtedness or Securities of any Person that is an Excluded
Subsidiary as in effect on the day that such Person becomes a Restricted Subsidiary, which
encumbrance or restriction is not applicable to any Person or the properties or assets of any
Person, other than the Person and its Restricted Subsidiaries or the property or assets of the
Person and its Restricted Subsidiaries, (f) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar agreements
relating to the assets or property of such Joint Ventures or covered by such joint venture
agreements, (g) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business, (h) any instrument governing
Indebtedness or equity Securities of a Person acquired by the Borrowers or any Restricted
Subsidiary as in effect at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, (i) customary restrictions
imposed by asset sale or stock purchase agreements relating to the sale of assets or by the
Borrowers or any Restricted Subsidiary, (j) with respect to restrictions of the type set forth in
clause (iv) above, as set forth in any agreement relating to Indebtedness permitted to be secured
by Permitted Liens other than Indebtedness permitted to be incurred pursuant to subsections 7.1 (v)
or (xvii) so long as such restrictions only extend to the assets secured by such Permitted Liens,
(k) any encumbrances or restrictions imposed by any amendments, modifications, restatements,
renewals, increases, supplements, extensions, refundings, replacements or refinancings in whole or
in part of the contracts, instruments or obligations referred to in clauses (a) through (j) above
(
provided
, that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith judgment of LVSIs
Board of Directors, no more restrictive with respect to such dividend and other payments
restrictions than those contained in the dividend or other payment restrictions prior to such
amendment, modification, restatement, renewal, increase, supplement, extension, refunding,
replacement or refinancing), or (l) as required by applicable law or any applicable rule or order
of any Gaming Authority.
7.3
Investments; Joint Ventures; Formation of Subsidiaries
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any Joint Venture or
otherwise form or create any Restricted Subsidiary, except:
109
(i) the Borrowers and their Restricted Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Investments existing on the Closing Date and described in
Schedule 7.3
;
(iii) Investments (including the formation or creation of a Subsidiary) by any Borrower
in another Borrower or in any Restricted Subsidiaries or by any Restricted Subsidiary in the
Borrowers or other Restricted Subsidiaries;
provided
, that the aggregate amount of
such Investments made by any Loan Party in or to Non-Guarantor Restricted Subsidiaries shall
not exceed $12,000,000 at any time;
(iv) any Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with this Agreement;
(v) receivables owing to the Borrowers or any Restricted Subsidiary if created or
acquired in the ordinary course of business and payable or dischargeable in accordance with
customary trade terms;
provided
,
however
, that such trade terms may include
such concessionary trade terms as the Borrowers or any such Restricted Subsidiary deems
reasonable under the circumstances;
(vi) payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business;
(vii) the Borrowers and their Restricted Subsidiaries may invest in any Non-Guarantor
Restricted Subsidiary, in any Excluded Subsidiary or in any Joint Venture any cash or other
property contributed to the Borrowers either (x) in exchange for common equity or (y) in the
form of Shareholder Subordinated Indebtedness, by Adelson or any of his Affiliates or
Related Persons for such purpose;
(viii) so long as no Event of Default or Potential Event of Default shall have occurred
and be continuing or would result therefrom, the Borrowers or any of their Restricted
Subsidiaries may form and make Investments in new or existing Non-Guarantor Restricted
Subsidiaries, Excluded Subsidiaries and in Joint Ventures;
provided
that (a) the
aggregate amount of all such Investments (exclusive of any such Investments existing on the
Closing Date and described in
Schedule 7.3
) shall not at any time exceed
$25,000,000, (b) no Supplier Joint Venture shall own or operate or possess any material
license, franchise or right used in connection with the ownership or operation of the Resort
Complex or any material Project assets, (c) in the case of any Investment in a Supplier
Joint Venture, LVSI shall have delivered an Officers Certificate which certifies that in
the reasonable judgment of such officer the Investment in such Supplier Joint Venture will
result in an economic benefit to the Borrowers (taking into account such Investment) as a
result of a reduction in the cost of the goods or services being acquired from the Supplier
Joint Venture over the life of the Investment and (d) in the case of an Excluded Subsidiary
or Joint Venture, unless otherwise permitted by subsection 7.4, none
110
of the Borrowers, nor any other Restricted Subsidiary of the Borrowers shall incur any
liabilities or Contingent Obligations in respect of the obligations of such Excluded
Subsidiary or Joint Venture;
(ix) the Borrowers or any of their Restricted Subsidiaries may make Consolidated
Capital Expenditures permitted by subsection 7.14;
(x) the Borrowers or any of their Restricted Subsidiaries may make loans or advances to
their employees or directors or former employees or directors (a) to fund the exercise price
of options granted under the Borrowers stock option plans or agreements or employment
agreements, in each case, as approved by LVSIs Board of Directors or (b) for other purposes
in an amount not to exceed $2,000,000 in the aggregate outstanding at any time;
(xi) the Borrowers and their Restricted Subsidiaries may hold investments consisting of
securities or other obligations received in settlement of debt created in the ordinary
course of business and owing to the Borrowers or any Restricted Subsidiary or in
satisfaction of judgments;
(xii) the Borrowers and their Restricted Subsidiaries may (x) create one or more
Subsidiaries for the purpose of establishing foreign or domestic offices for marketing or to
otherwise further the business of the Borrowers as described in subsection 7.12 hereof (at
their election, the Borrowers may designate any such Subsidiary to be an Excluded
Subsidiary) and (y) make Investments in any or all of such Subsidiaries in an aggregate
amount not to exceed at any time $15,000,000;
(xiii) the Borrowers and the Restricted Subsidiaries may make any Investments in any of
the Excluded Subsidiaries, Non-Guarantor Restricted Subsidiaries or Joint Ventures, not to
exceed at any time (a) $100,000,000 in the aggregate for Cash and Cash Equivalents and (b)
$200,000,000 in the aggregate for any guarantee of Indebtedness of, or performance by, any
Excluded Subsidiaries or Non-Guarantor Restricted Subsidiaries by the Borrowers or any of
their Restricted Subsidiaries, which Contingent Obligation is permitted under subsection
7.4;
provided
that, notwithstanding the foregoing, Borrowers and the Restricted
Subsidiaries may not make Investments in Joint Ventures in excess of $50,000,000 in the
aggregate.
(xiv) the Borrowers and any of their Restricted Subsidiaries may make Investments in
any of the Excluded Subsidiaries or Non-Guarantor Restricted Subsidiaries in an amount equal
to the sum of (1) 50% of (A) the Consolidated Net Income of the Borrowers and their
Restricted Subsidiaries for the period (taken as one accounting period) from July 1, 2004 to
the end of the LVSIs most recently ended Fiscal Quarter for which internal financial
statements are available (or, in the case such Consolidated Net Income for such period is a
deficit, minus 100% of such deficit) less (B) the amount paid or to be paid in respect of
such period pursuant to subsection 7.5(v) to shareholders or members other than the
Borrowers, plus (2) without duplication, 100% of the aggregate net cash proceeds received by
the Borrowers since July 1, 2004 from capital contributions (other than: (i) cash equity
contributions made by Adelson or any of
111
his Affiliates to be included in Consolidated Adjusted EBITDA to meet the financial
covenants set forth in subsection 7.6 or (ii) cash equity contributions funded from
Indebtedness issued by LVSC which Indebtedness has been guaranteed by Borrowers or any of
their respective Restricted Subsidiaries) or the issue or sale of equity Securities or debt
Securities of the Borrowers that have been converted into or exchanged for such equity
Securities of the Borrowers (other than equity Securities or such debt Securities of the
Borrowers sold to a Restricted Subsidiary of the Borrowers), plus (3) the Appraised Value of
the SECC if contributed, distributed or transferred without consideration (other than the
assumption of liability taken into consideration in calculating the amount under this
clause) to the Borrowers or any Subsidiary Guarantor, minus the amount of any liability
assumed in connection with the contribution, distribution or transfer of such assets (which
contribution, distribution or transfer may be in the form of all of the Capital Stock of an
entity whose only material assets consist of the SECC) plus (4) to the extent not otherwise
included in the Borrowers and their Restricted Subsidiaries Consolidated Net Income, 100%
of the cash dividends or distributions or the amount of the cash principal and interest
payments received since July 1, 2004, by the Borrowers or any Restricted Subsidiary from any
Excluded Subsidiary or in respect of any Joint Venture (other than dividends or
distributions to pay obligations of or with respect to such Excluded Subsidiary such as
income taxes) until the entire amount of the Investment in such Excluded Subsidiary has been
received or the entire amount of such Investment in a Joint Venture has been returned, as
the case may be, and 50% of such amounts thereafter; provided, however that in the event
that the Borrowers convert an Excluded Subsidiary to a Restricted Subsidiary, the Borrowers
may add back to this clause the aggregate amount of any Investment in such Subsidiary that
was an Investment made pursuant to subsection 7.3(ix) at the time of such Investment;
(xv) the Borrowers and any of their Restricted Subsidiaries may make Investments out of
the proceeds of the substantially concurrent sale or issuance of equity Securities of the
Borrowers (or, to the extent the proceeds of such issuance are contributed to the Borrowers
or their Restricted Subsidiaries, LVSC); provided that the amount of any net cash proceeds
from the sale of such equity Securities shall be excluded from clause (xiv)(2) above;
(xvi) the Borrowers and their Restricted Subsidiaries may make and own other
Investments in an aggregate amount not to exceed at any time $30,000,000; and
(xvii) the Borrowers and their Restricted Subsidiaries may incur any Contingent
Obligation permitted under subsection 7.4 to the extent such Contingent Obligation
constitutes an Investment; and
(xviii) Venetian may own Investments in the Phase II Mall Subsidiary in the form of
the Intercompany Mall Note.
Notwithstanding anything to the contrary in this subsection 7.3, any cash Investments made in
either Phase II Mall Borrower shall be made in the form of intercompany loans from Venetian to the
Phase II Mall Subsidiary and shall increase the principal amount of the Intercompany Mall Note by
the amount of such Investment.
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7.4
Contingent Obligations
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any Contingent
Obligation, except:
(i) the Borrowers and the Subsidiary Guarantors may become and remain liable with
respect to Contingent Obligations under Rate Protection Agreements (as defined in the Bank
Credit Agreement as in effect on the date hereof or, at a Borrowers request, with the
consent of the Administrative Agent, as amended, amended and restated, supplemented,
replaced, refinanced or otherwise modified with respect to such defined term) or other
Hedging Agreements;
(ii) the Borrowers and their Restricted Subsidiaries may become and remain liable with
respect to the Contingent Obligations (a) for Indebtedness permitted under subsection 7.1 to
the extent a Borrower or a Restricted Subsidiary is permitted to incur such Indebtedness
under subsection 7.1 or (b) for other obligations of wholly-owned Restricted Subsidiaries;
(iii) the Loan Parties may become and remain liable for customary indemnities under the
Project Documents;
(iv) the Borrowers and their Restricted Subsidiaries may become and remain liable with
respect to other Contingent Obligations, provided that the maximum aggregate liability,
contingent or otherwise, of the Borrowers and their Restricted Subsidiaries in respect of
all such Contingent Obligations shall at no time exceed $12,500,000;
(v) the Borrowers and their Restricted Subsidiaries may become liable for Contingent
Obligations made on behalf of Excluded Subsidiaries, Non-Guarantor Restricted Subsidiaries,
Joint Ventures or LVSC (with respect to LVSC Permitted Indebtedness, in which event the
Contingent Obligations shall be unsecured) in an amount, when aggregated (without
duplication) with the amount of Investments made in Cash and Cash Equivalents pursuant to
subsection 7.3(xiii) and Contingent Obligations incurred pursuant to this clause, not to
exceed $300,000,000 at any time, so long as both before and after giving effect to the
incurrence of such Contingent Obligations, no Potential Event of Default or Event of Default
has occurred or is continuing;
provided
that, notwithstanding the foregoing,
Borrowers and the Restricted Subsidiaries may not become liable for Contingent Obligations
made on behalf of Joint Ventures in excess of $50,000,000 in the aggregate;
(vi) the Borrowers and their Restricted Subsidiaries may become liable for unsecured
Contingent Obligations made on behalf of LVSC with respect to LVSC Permitted Indebtedness in
a principal amount, which, when aggregated together (without duplication) with the amount of
Investments made pursuant to subsections 7.3(viii), (xiv) and (xvi), shall not exceed the
aggregate amount of Investments that are permitted under subsections 7.3(viii), (xiv) and
(xvi), so long as both before and after giving effect to the
113
incurrence of such Contingent Obligations, no Potential Event of Default or Event of
Default has occurred or is continuing;
(vii) the Borrowers and their Restricted Subsidiaries may become liable for unsecured
Contingent Obligations made on behalf of LVSC with respect to the LVSC Permitted Credit
Facility Refinancing Indebtedness, so long as both before and after giving effect to the
incurrence of such Contingent Obligations, no Potential Event of Default or Event of
Default has occurred or is continuing;
(viii) the Borrowers and their Restricted Subsidiaries may become liable for unsecured
Contingent Obligations made on behalf of LVSC with respect to LVSC Permitted Indebtedness so
long as: (a) the Consolidated Leverage Ratio on the date that such Contingent Obligations
are incurred (after giving effect to such guaranteed Indebtedness) is no greater than
3.0:1.0 and (b) so long as both before and after giving effect to the incurrence of such
Contingent Obligation, no Potential Event of Default or Event of Default has occurred or is
continuing;
(ix) Investments permitted under subsection 7.3 to the extent they constitute
Contingent Obligations; and
(x) the Borrowers and the Restricted Subsidiaries may become and remain liable with
respect to unsecured Contingent Obligations made on behalf of LVSC in respect of the LVSC
Notes.
7.5
Restricted Payments
.
Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to, directly or
indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment, except:
(i) the Borrowers may make regularly scheduled or required payments of principal and
interest in respect of any Other Indebtedness or Permitted Subordinated Indebtedness of the
Borrowers in accordance with the terms of, and only to the extent required by the agreement
pursuant to which such Other Indebtedness or Permitted Subordinated Indebtedness was issued
provided
that (a) any such payments in respect of any Employee Repurchase Note or
Permitted Subordinated Indebtedness may be made only to the extent no Event of Default or
Potential Event of Default shall then exist and be continuing or would result therefrom and
(b) any such payments in respect of any Employee Repurchase Note may be made only to the
extent that the Consolidated Interest Coverage Ratio without giving effect to any Conforming
Adelson L/C or substitute cash equity contribution by Adelson or his Affiliates pursuant to
the last sentence of the definition of Consolidated Adjusted EBITDA for the four Fiscal
Quarter period ended on the most recent Quarterly Date preceding such payment or such
shorter period tested on such Quarterly Date under subsection 7.6A (determined on a pro
forma basis as though such payment on the Employee Repurchase Note had been made during the
period tested as of such Quarterly Date under subsection 7.6A) would have been in compliance
with the requirements of subsection 7.6A as certified to the Administrative Agent by the
chief
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financial officer of the Borrowers, on behalf of the Borrowers, at the time of such
payment;
(ii)
[Intentionally omitted]
;
(iii)
[Intentionally omitted]
;
(iv) the Borrowers and their Subsidiaries may redeem or purchase any equity interests
in the Borrowers or their Subsidiaries or any Indebtedness of the Borrowers or their
Subsidiaries to the extent required by any Nevada Gaming Authority or any other applicable
gaming authority in order to preserve a material Gaming License, provided that so long as
such efforts do not jeopardize any material Gaming License, the Borrowers shall have
diligently tried to find a third-party purchaser for such equity interests or Indebtedness
and no third-party purchaser acceptable to the Nevada Gaming Authority is willing to
purchase such equity interests or Indebtedness within a time period acceptable to the Nevada
Gaming Authority;
(v) catch up cash distributions in an amount not to exceed $15,000,000 to LVSC
pursuant to subsection 7.5(v) of the Bank Credit Agreement in effect on the date hereof
relating to LVSCs 2006 tax year;
(vi) (a) the Loan Parties may make Restricted Payments to other Loan Parties, (b) any
Non-Guarantor Restricted Subsidiary may make Restricted Payments to Loan Parties, and (c)
any Non-Guarantor Restricted Subsidiary may make Restricted Payments to any other
Non-Guarantor Restricted Subsidiary;
(vii) the Borrowers may make Permitted Employee Repurchases so long as (a) no Event of
Default or Potential Event of Default shall exist and be continuing or would result
therefrom and (b) the Consolidated Interest Coverage Ratio (without giving effect to any
Conforming Adelson L/C or substitute cash equity contribution by Adelson or his Affiliates
pursuant to the last sentence of the definition of Consolidated Adjusted EBITDA) for the
four Fiscal Quarter period ended as of the most recent Quarterly Date prior to such
repurchase or such shorter period tested on such immediately preceding Quarterly Date under
subsection 7.6A (determined on a pro forma basis as though such Permitted Employee
Repurchase had been made during the period tested as of such Quarterly Date under subsection
7.6A) would have been in compliance with the requirements of subsection 7.6A as certified to
the Administrative Agent by the chief financial officer of the Borrowers, on behalf of the
Borrowers, at the time of such payment;
(viii) the Borrowers may make repurchases of capital stock of any of the Borrowers
deemed to occur upon exercise of stock options to the extent such capital stock represents a
portion of the exercise price of such options;
(ix)
[Intentionally omitted]
;
(x) the Borrowers and their Restricted Subsidiaries may make cash Restricted Payments
to LVSC to enable LVSC (A) to pay franchise taxes, accounting,
115
legal and other fees required to maintain its corporate existence and to provide for
any other reasonable and customary operating costs, and (B) to enable LVSC to pay customary
and reasonable costs and expenses of a proposed offering of securities or incurrence of
Indebtedness of LVSC that is not consummated;
(xi) the Borrowers and their Restricted Subsidiaries shall be entitled to make payments
to LVSC pursuant to a tax sharing agreement described in subsection 7.10;
(xii) LVSI may make cash distributions to LVSC to enable LVSC to pay dividends on its
common stock;
provided
that (a) the Substantial Completion Date has occurred, and
(b) the Consolidated Leverage Ratio on the date of such payment is no greater than 4.0:1.0;
provided
further
that such payments shall not exceed $25,000,000 in any
twelve-month period unless the Consolidated Leverage Ratio on each Quarterly Date and date
of such payment occurring during such twelve-month period is no greater than 3.0:1.0, in
which case such payments shall not exceed $50,000,000;
provided
further
that, at any time when (1) the Bank Credit Facilities are rated at least Baa3 (with at least
a stable outlook) from Moodys and BBB- (with at least a stable outlook) from S&P (or any
equivalent rating by Moodys or S&P), (2) the Consolidated Leverage Ratio is no greater than
3.0:1.0, and (3) the Consolidated Interest Coverage Ratio is at least 2.5:1.0, the foregoing
restrictions on the amount of any such dividends or distributions shall not apply;
(xiii) the Borrowers may make other Restricted Payments in an amount not to exceed
$20,000,000; and
(xiv) the Borrowers may pay dividends or make distributions to LVSC to allow LVSC to
make scheduled interest payments and pay liquidated damages on (a) any LVSC Permitted
Indebtedness guaranteed by the Borrowers and/or their Restricted Subsidiaries in compliance
with subsection 7.4(iv), (v), (vi), (vii) or (viii), and (b) the LVSC Notes.
7.6
Financial Covenants
.
A.
Minimum Consolidated Interest Coverage Ratio
. The Borrowers will not permit the
Consolidated Interest Coverage Ratio as of the last day of any Fiscal Quarter occurring during any
period set forth below to be less than the ratio set forth opposite such period:
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|
|
|
|
|
|
Minimum
|
|
|
Consolidated
|
|
|
Interest
|
Period
|
|
Coverage Ratio
|
From the Closing Date through (and including) the last day
of the Fiscal Quarter in which the Substantial Completion
Date occurs
|
|
|
1.4:1.0
|
|
|
|
|
|
|
The first
Fiscal Quarter after the Fiscal Quarter in which
the Substantial Completion Date occurs and thereafter
|
|
|
1.6:1.0
|
|
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B.
Maximum Consolidated Leverage Ratio
. The Borrowers shall not permit the
Consolidated Leverage Ratio as of the last day of any Fiscal Quarter occurring during any period
set forth below to be greater than the ratio set forth opposite such period:
|
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|
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Maximum
|
|
|
Consolidated
|
Period
|
|
Leverage Ratio
|
From the Closing Date through (and including) the last day
of the Fiscal Quarter in which the Substantial Completion
Date occurs
|
|
|
7.25:1.0
|
|
|
|
|
|
|
The first two Fiscal Quarters after the Fiscal Quarter in
which the Substantial Completion Date occurs
|
|
|
6.75:1.0
|
|
|
|
|
|
|
The third and fourth Fiscal Quarters after the Fiscal
Quarter in which the Substantial Completion Date occurs
|
|
|
6.25:1.0
|
|
|
|
|
|
|
The fifth and sixth Fiscal Quarters after the Fiscal
Quarter in which the Substantial Completion Date occurs
|
|
|
5.75:1.0
|
|
|
|
|
|
|
The seventh Fiscal Quarter after the Fiscal Quarter in
which the Substantial Completion Date occurs and thereafter
|
|
|
5.0:1.0
|
|
C.
[Intentionally Omitted.]
7.7
Restriction on Fundamental Changes; Asset Sales and Acquisitions
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to, alter
the corporate, capital or legal structure (except with respect to changes in capital structure to
the extent a Change of Control does not occur as a result thereof) of any Borrower, or any of its
Restricted Subsidiaries, or enter into any transaction of merger or consolidation, or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or
sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business, property or assets, whether now owned or
hereafter acquired (other than inventory in the ordinary course of business), or acquire by
purchase or otherwise all or substantially all the business, property or fixed assets of, or stock
or other
117
evidence of beneficial ownership of, any Person or any division or line of business of any
Person, except:
(i) as permitted under the terms of this Agreement or any other Loan Document;
(ii) the Borrowers and their Restricted Subsidiaries may dispose of obsolete, worn out
or surplus assets or assets no longer used or useful in the business of the Borrowers and
their Restricted Subsidiaries in each case to the extent in the ordinary course of business,
provided that either (A) such disposal does not materially adversely affect the total value
of either the Collateral or the other assets of the Borrowers and Subsidiary Guarantors or
(B) prior to or promptly following such disposal any such property shall be replaced with
other property of substantially equal utility and a value at least substantially equal to
that of the replaced property when first acquired and free from any Liens other than
Permitted Liens;
(iii) the Borrowers and their Restricted Subsidiaries may sell or otherwise dispose of
(A) assets (which are not Collateral) in transactions that do not constitute Asset Sales and
(B) Collateral in transactions that do not constitute Collateral Sales;
(iv) the Borrowers and their Restricted Subsidiaries may make Asset Sales of assets
(other than Collateral) having a fair market value not in excess of $20,000,000;
provided
in each case that (1) the consideration received for such assets shall be
in an amount at least equal to the fair market value thereof in the judgment of the Board of
Directors of LVSI; (2) at least 75% of the consideration received shall be cash or Cash
Equivalents; and (3) the proceeds of such Asset Sales shall be applied as required by the
Bank Credit Agreement;
(v) the Borrowers and their Restricted Subsidiaries may have an Event of Loss;
(vi) the Restricted Subsidiaries may issue equity Securities to any Borrower or to any
other Restricted Subsidiary or the Borrowers may issue equity Securities to each other;
(vii) the Borrowers and their Restricted Subsidiaries may (a) enter into any leases
with respect to any space on or within the Existing Facility or the Phase II Project
(including the Phase II Mall Lease (which Phase II Mall Lease may be terminated in
accordance with its terms upon conveyance of the parcels covered thereby by LCR to Phase II
Mall Subsidiary) and the Master Lease), (b) be a party to any lease in effect on the Closing
Date, each of which lease of real property is set forth on
Schedule 7.7
hereto (as
such lease may be amended, modified or supplemented in accordance with the terms of this
Agreement) or (c) enter into any other lease (other than a lease of Collateral) in
connection with the business of the Borrowers and their Restricted Subsidiaries as may be
permitted under subsection 7.12;
(viii) (a) any Borrower may be merged with (or liquidated into) another Borrower and
any Subsidiary Guarantor may be merged with (or liquidated into) any
118
other Subsidiary Guarantor or any Borrower and (b) any Non-Guarantor Restricted
Subsidiary may be merged with (or liquidated into) any Restricted Subsidiary;
(ix) [Intentionally Omitted];
(x) (a) any Borrower may sell, lease or otherwise transfer assets to another Borrower
or, except with respect to Collateral, to a wholly-owned Subsidiary Guarantor and any
wholly-owned Subsidiary Guarantor may sell, lease or otherwise transfer assets to any other
wholly-owned Subsidiary Guarantor or to a Borrower, and (b) the Borrowers and their
Restricted Subsidiaries may sell, lease or otherwise transfer assets (other than Collateral)
to Excluded Subsidiaries, Non-Guarantor Restricted Subsidiaries and Joint Ventures to the
extent constituting Investments permitted by
subsection 7.3
;
(xi) the Borrowers may dedicate space for the purpose of constructing (i) a mass
transit system, (ii) a pedestrian bridge over Las Vegas Boulevard and Sands Avenue or
similar structures to facilitate pedestrians or traffic, (iii) a right turn lane or other
roadway dedication at or near the Resort Complex and (iv) other improvements reasonably
requested by a Governmental Instrumentality;
provided
in each case that such
dedication does not materially impair the use or operations of any portion of the Resort
Complex;
(xii) the Borrowers may license trademarks and trade names in the ordinary course of
business;
(xiii) the Borrowers and their Restricted Subsidiaries may transfer any assets leased
or acquired with proceeds of a Non-Recourse Financing permitted under subsection 7.1 or any
other financing permitted under subsection 7.1 and secured by a Permitted Lien to the lender
providing such financing upon default, expiration or termination of such Non-Recourse
Financing or other financing;
(xiv) the Borrowers may sell receivables for fair market value in the ordinary course
of business;
(xv) any Borrower may merge into a holding company in order to create a new holding
company parent, to change its place of organization or to convert LVSI into a C
corporation or a limited liability company or partnership, and LVSI may convert into a
limited liability company or partnership so long as it gives the Administrative Agent at
least forty five days notice (or thirty days notice in the case of a conversion of LVSI
into a limited liability company or partnership) before it changes its name, identity or
corporate structure and shall execute and deliver such instruments and documents as may
reasonably be required by the Administrative Agent to maintain a prior perfected security
interest in the Collateral;
(xvi) the Borrowers and their Restricted Subsidiaries may incur Liens permitted under
subsection 7.2;
119
(xvii) the consummation of the Refinancing and the Transactions no later than the
Closing Date, and any other transactions contemplated thereby;
(xviii) [Intentionally Omitted];
(xix) the Borrowers may transfer two certain parcels of land, one located on Sands
Avenue and part of the Central Park West site and a second located along Las Vegas Boulevard
to Clark County, in exchange for a parcel of land located at approximately the southeast
corner of Las Vegas Boulevard and Sands Avenue;
(xx) the Borrowers may be a party to the HVAC Ground Lease;
(xxi) LVSI may lease the casino within the Existing Facility from Venetian pursuant to
the Casino Lease;
(xxii) [Intentionally Omitted];
(xxiii) the consummation of one or more public offerings of the equity Securities of
LVSC;
(xxiv) the transfer, exchange, subdivision or similar transaction with respect to the
Central Park West Site with an adjoining, adjacent or nearby property owner under which a
substantially equivalent amount (or more valuable parcel) of land as comprises the Central
Part West Site would be obtained or retained, as the case may be, by a Borrower or a
Restricted Subsidiary, which substantially equivalent (or more valuable) property to be
obtained or retained by such Borrower or Restricted Subsidiary occupies a more favorable
location with respect to the Existing Site and the SECC; and
(xxv) LVSI may lease the casino within the Phase II Project pursuant to a lease with
LCR in substantially the form of the Casino Lease or as otherwise reasonably acceptable to
the Administrative Agent.
Notwithstanding the foregoing provisions of this subsection 7.7, clause (vii) shall be subject
to the additional provisos that: (a) no Event of Default or Potential Event of Default shall exist
and be continuing at the time of such transaction or lease or would occur after or as a result of
entering into such transaction or lease (or immediately after any renewal or extension thereof at
the option of the Borrowers or one of their Restricted Subsidiaries), (b) such transaction or lease
will not materially interfere with, impair or detract from the operation of the business of the
Borrowers and their Restricted Subsidiaries, (c) such transaction or lease is at a fair market rent
or value (in light of other similar or comparable prevailing commercial transactions) and contains
such other terms such that the lease, taken as a whole, is commercially reasonable and fair to the
Borrowers and their Restricted Subsidiaries in light of prevailing or comparable transactions in
other casinos, hotels, hotel attractions or shopping venues or other applicable venues, (d) no
gaming or casino operations (other than the operation of arcades and games for children) may be
conducted on any space that is subject to such transaction or lease other than by the Borrowers and
their Restricted Subsidiaries, (e) no lease may provide that the Borrowers or any of their
Restricted Subsidiaries may subordinate its fee, condominium or leasehold interest to any lessee or
any party financing any lessee (except as provided in the Casino Level Mall Lease),
120
and (f) with respect to the Collateral, the tenant under such lease shall provide
Administrative Agent on behalf of the Lenders with a subordination and access agreement in form and
substance reasonably satisfactory to Administrative Agent.
Further notwithstanding the foregoing provisions of this subsection 7.7, any sale, transfer,
conveyance, assignment or other voluntary disposition of any Collateral (other than in connection
with sales or other dispositions that do not constitute Collateral Sales) shall be subject to the
further conditions that (a) no Event of Default shall exist and be continuing at the time thereof,
(b) the consideration received for such sale, transfer, conveyance, assignment or other disposition
shall be in an amount at least equal to the fair market value thereof in the judgment of the Senior
Management of LVSI, (c) except as permitted by subsections 7.7(ii), (v), (x) and (xvi), not less
than 75% of the consideration therefor shall be cash or Cash Equivalents and paid in full upon such
sale, transfer, conveyance, assignment or other disposition, (d) the Net Collateral Sale Proceeds
derived therefrom shall be applied as required by subsection 2.4B(iii)(a), and (e) nothing herein
shall permit any lease, licensing or similar transaction by any Borrower as landlord, lessor,
licensor or similar party with respect to all or any part of the Collateral.
7.8
Sales and Lease-Backs
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with
respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real,
personal or mixed), whether now owned or hereafter acquired, (i) which Borrowers or any of their
Restricted Subsidiaries has sold or transferred or is to sell or transfer to any other Person or
(ii) which Borrowers or any of their Restricted Subsidiaries intends to use for substantially the
same purpose as any other property which has been or is to be sold or transferred by the Borrowers
or any of their Restricted Subsidiaries to any Person in connection with such lease, except that
(a) the Borrowers and their Restricted Subsidiaries may enter into sale-leaseback transactions in
connection with any Non-Recourse Financing permitted hereunder to the extent that the assets
subject to such sale-leaseback are acquired contemporaneously with, or within 180 days prior to,
such Non-Recourse Financing or such other financings and with the proceeds thereof and no Borrower
nor any of its Restricted Subsidiaries theretofore held any interest in such asset, and (b) LCR may
enter into and remain liable under the Master Lease and Venetian may remain liable under the Phase
I Mall Operative Documents.
7.9
Sale or Discount of Receivables
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for less than the face
value thereof, any of its notes or accounts receivable other than an assignment for purposes of
collection in the ordinary course of business.
7.10
Transactions with Shareholders and Affiliates
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including the purchase,
sale,
121
lease or exchange of any property or the rendering of any service) with any Borrower or with
any Affiliate of a Borrower, except, that the Borrowers and their Restricted Subsidiaries may enter
into and permit to exist:
(i) transactions that are on terms that are not less favorable to that Borrower or
Restricted Subsidiary, as the case may be, than those that might be obtained at the time
from Persons who are not such an Affiliate if (a) Borrowers have delivered to the
Administrative Agent (1) with respect to any transaction involving an amount in excess of
$1,000,000, an Officers Certificate certifying that such transaction complies with this
subsection 7.10, (2) with respect to any transaction involving an amount in excess of
$2,000,000, a resolution adopted by a majority of the disinterested non-employee directors
of the applicable Borrower or Restricted Subsidiary approving such transaction and an
Officers Certificate certifying that such transaction complies with this subsection 7.10, at
the time such transaction is entered into and (c) with respect to any such transaction that
involves aggregate payments in excess of $15,000,000 or that is a loan transaction involving
a principal amount in excess of $15,000,000, an opinion as to the fairness of the financial
terms to the applicable Borrower or Restricted Subsidiary from a financial point of view
issued by an Independent Financial Advisor at the time such transaction is entered into,
(ii) the Services Agreement, the LVSC Corporate Services Agreement and the Procurement
Services Agreement;
(iii) purchases of materials or services from a Supplier Joint Venture by the Borrowers
or any of their Restricted Subsidiaries in the ordinary course of business on arms length
terms;
(iv) any employment, compensation, indemnification, noncompetition or confidentiality
agreement or arrangement entered into by the Borrowers or any of their Restricted
Subsidiaries with their employees or directors or directors of LVSC in the ordinary course
of business or as approved by a majority of the independent members of the board of
directors of the Borrowers or any of their Restricted Subsidiaries (or by a committee of
such board, the majority of which consists of independent directors) in its reasonable
determination, including the employment agreements referred to in subsection 6.14;
(v) loans or advances to employees of the Borrowers or their Restricted Subsidiaries
permitted under subsection 7.3(vi) or (x);
(vi) the payment of reasonable fees to directors of the Borrowers and their Restricted
Subsidiaries who are not employees of the Borrowers or their Restricted Subsidiaries;
(vii) the grant of restricted stock, stock options, performance based incentive awards
or similar rights to employees and directors of any of the Borrowers or directors of LVSC
pursuant to agreements or plans approved by the Board of Directors of
122
LVSI and any repurchases of stock or options of the Borrowers from such employees or
directors to the extent permitted by subsection 7.5;
(viii) transactions between or among Borrowers and any of their wholly-owned Restricted
Subsidiaries;
(ix) the transactions contemplated by each Project Document;
(x) the transactions contemplated by the Cooperation Agreement;
(xi) the transactions contemplated by the HVAC Services Agreements;
(xii) the use of the Congress Center or the meeting space in the Existing Facility by
Interface;
provided
that Venetian receives fair market value for the use of such
property;
(xiii) employees of Interface may participate in LVSIs 401(k) Retirement Plan if
Interface reimburses the Borrowers for a pro rata portion of the administrative expenses of
such plan based on the number of employees of each of Interface and LVSI participating in
such plan;
(xiv) the Borrowers may reimburse Yona Aviation Services, Inc., or its successors for
its operating and lease costs related to the use of its aircraft by the Borrowers employees
(based on allocated costs);
(xv) the preferred reservation system agreement, one or more meeting services
agreements, one or more agreements for the use of any space in the SECC, and one or more
management or operating agreements with respect to the SECC;
(xvi) (i) license agreements with a Macau Excluded Subsidiary and (ii) any other
agreements with a Macau Excluded Subsidiary, provided the terms of such other agreement
under clause (ii) or any amendment to such agreement are no less favorable to the Borrowers
or the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Borrowers or such Restricted Subsidiary with an unrelated
Person;
(xvii)
[Intentionally omitted]
;
(xviii) Shareholder Subordinated Indebtedness;
(xix) issuances of Securities by the Borrowers;
(xx) Investments in, and licenses and other agreements with, Joint Ventures permitted
hereunder;
(xxi) the Master Lease, the Phase II Mall Lease, the Reimbursement Agreement, the
Intercompany Mall Note, the Disbursement Agreement and the
123
transactions contemplated thereunder, and the transfer of the Phase II Air Parcel to
the Phase II Mall Subsidiary;
(xxii) any agreement by an Excluded Subsidiary to pay Management Fees to the Borrowers
or a Restricted Subsidiary directly or indirectly;
(xxiii) any registration rights agreement to provide for the registration under the
Securities Act of the capital stock interests held by Affiliates;
(xxiv) transactions contemplated by the Casino Lease;
(xxv) Investments permitted by subsection 7.3 and Restricted Payments permitted by
Subsection 7.5;
(xxvi) transactions consummated on or prior to the Closing Date in connection with the
Refinancing, the Prior Transactions and the Transactions;
(xxvii) [Intentionally Omitted];
(xxviii) transactions permitted by subsection 7.7;
(xxix) transactions contemplated by the Tax Sharing Agreement or another tax sharing
agreement with LVSC in form and substance reasonably satisfactory to the Administrative
Agent;
(xxx) an agreement with Interface to provide audio visual, telecommunications,
electrical, janitorial and other related services to group customers of the Existing
Facility;
(xxxi) transactions and agreements set forth on
Schedule 7.10
;
(xxxii) one or more management or services agreements among the Borrowers, LVSC and/or
IEL providing for certain corporate, managerial, aviation and/or hotel services and any
amendments, modifications or supplements thereto, and the transactions contemplated thereby,
provided that such amendments or modifications are approved by the Administrative Agent,
such approval not to be unreasonably withheld or delayed (it being agreed that any increase
or decrease to the allocation of indirect costs to LVSI of less than 10% shall be deemed to
be reasonable and shall not require any approval);
(xxxiii) one or more leases by the Borrowers on fair market terms (as reasonably
determined by management of the Borrowers) of space in the Phase II Mall prior to the sale
of the Phase II Mall to GGP; and
(xxxiv) the use of the SECC by the Borrowers;
provided
that the Borrowers pay a
fair market rate (as reasonably determined by management of the Borrowers) for the use of
such property.
124
7.11
Disposal of Subsidiary Stock
.
Except in connection with (i) a Restricted Payment permitted by subsection 7.5 (xiii) or (xv)
or (ii) a transaction (including a liquidation, dissolution, conveyance, sale, lease, transfer or
other disposition) permitted by subsection 7.7 (iii), (iv), (viii), (ix), (x) or (xvii), the
Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to, directly or
indirectly sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or
other equity Securities of Venetian or any of the Restricted Subsidiaries, except (i) to qualify
directors if required by applicable law and (ii) to the extent required by any Nevada Gaming
Authority or any other gaming authority in order to preserve a material Gaming License;
provided
however, that the valuation of such Restricted Subsidiary for purposes of
determining whether such sale, assignment, pledge or disposition is permitted under subsection
7.5(xiii) or subsection 7.7 (iii), (iv) or (x) as the case may be, shall be the fair market value
of such Restricted Subsidiary as a going concern, as determined by the board of directors of LVSC.
7.12
Conduct of Business
.
The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to, engage
in any business activity except those business activities engaged in on the Closing Date and any
activity or business incidental, related or similar thereto, or any business or activity that is a
reasonable extension, development or expansion thereof or ancillary thereto, including any internet
gaming, hotel, entertainment, recreation, convention, trade show, meeting, retail sales, or other
activity or business designated to promote, market, support, develop, construct or enhance the
casino gaming, hotel, retail and entertainment mall and resort business operated by the Borrowers
and their Restricted Subsidiaries.
7.13
Certain Restrictions on Changes to Certain Documents
.
A.
Modifications of Certain Operative Documents and Permits; New Material Contracts or
Permits
. The Borrowers shall not, and shall not permit any of their Restricted Subsidiaries
to, agree to any material amendment to, or waive any of its material rights under, any Permit or
Material Contract or enter into new Material Contracts (other than Project Documents permitted by,
and in accordance with the terms of, the Disbursement Agreement and the Cooperation Agreement) or
Permits (it being understood that any Material Contracts which are covered by clause B or C below
shall also be subject to the restrictions set forth therein) without in each case obtaining the
prior written consent of Requisite Lenders if in any such case, such amendment or waiver or new
Material Contract or Permit could reasonably be expected to have a Material Adverse Effect or
otherwise adversely affect Lenders in any material respect.
B.
Amendments of Documents Relating to Preferred Equity and Other Indebtedness
.
Except in connection with the termination of the preferred equity interests of any Borrower, the
Borrowers shall not, and shall not permit any of their Restricted Subsidiaries to, amend or
otherwise change the terms of any preferred equity interests of any Borrower (for so long as any
such preferred equity interests are outstanding) or any such Restricted Subsidiary or documents
governing Permitted Subordinated Indebtedness (except in connection with a defeasance or permitted
refinancing thereof) or permit the termination thereof (other than in accordance with the terms
thereof), or make any payment consistent with an amendment thereof
125
or change thereto (except in connection with a defeasance or permitted refinancing thereof),
if the effect of such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer any additional rights
on the holders of the Indebtedness or obligations evidenced thereby (or a trustee or other
representative on their behalf) which would be materially adverse to the Borrowers, such Restricted
Subsidiary or the Lenders.
C.
Certain Other Restrictions on Amendments
. The Borrowers shall not, and shall not
permit any of their Subsidiaries to, agree to any material amendment to, or waive any of its
material rights under the Resort Complex Operative Documents which would adversely affect the
Lenders in connection with this Agreement or the transactions contemplated hereby, including any
material amendment to, or any waiver of material rights under Article III, Sections 1 and 3,
Article IV, Section A, Article IX(b)-(e), Articles X-XII and Article XIV, Sections 1, 3, 5, 7, 8,
9, 15 and 27 of the Cooperation Agreement, without obtaining the prior written consent of the
Administrative Agent, which consent shall not be unreasonably withheld or delayed;
provided
,
however
, that no consent of the Administrative Agent or any Lender shall
be required to amend in a commercially reasonable manner the Cooperation Agreement solely in
respect of the matters described on Schedule 7.13C hereto pursuant to the Fourth Amended and
Restated REA (as defined in the Cooperation Agreement on the date hereof).
D.
Consent to Certain Agreements
. Notwithstanding the foregoing provisions of this
subsection 7.13, on or after the Closing Date, the Borrowers may enter into amendments to the HVAC
Services Agreement (to provide for the provision of heating, ventilation and air conditioning to
the Phase II Project) and the Cooperation Agreement (to (i) cover the relationship between the
Existing Facility and the Phase II Project and/or the relationship between the Phase II Project and
the Phase II Mall, and to otherwise reflect the fact that the integrated complex includes, or will
include, the Existing Facility and the Phase II Project, and (ii) replace the reference to one (1)
year in the second sentence of Section 13 of Article X with a reference to three (3) years), in
each case, pursuant to the terms of Section 6.1 of the Disbursement Agreement (while still in
effect), and in each case in form and substance reasonably satisfactory to the Administrative
Agent.
E.
Modifications of Disbursement Agreement
. Prior to the Final Completion Date, none
of the Borrowers nor any of their Restricted Subsidiaries shall permit (i) any provision of the
Disbursement Agreement to be amended, waived or otherwise modified if such amendments, waivers or
other modifications, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or otherwise adversely affect Lenders in connection with this Agreement or
the transactions contemplated hereby in any material respect, or (ii) the Disbursement Agreement to
be terminated, cancelled or otherwise revoked (except that it may be terminated, cancelled or
revoked in connection with a refinancing, replacement or repayment of the Bank Credit Agreement).
F.
Modification to Tax Sharing Agreement
. The Borrowers shall not permit any
amendment or other modification to the Tax Sharing Agreement that would be adverse in any material
respect to the Lenders in connection with this Agreement or the transactions contemplated hereby.
126
7.14
Consolidated Capital Expenditures
.
A. The Borrowers shall not, and shall not permit their Restricted Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any period indicated below, in an aggregate amount in
excess of the corresponding amount (the
Maximum Consolidated Capital Expenditures Amount
) set
forth below opposite such period;
provided
that any such amount referred to below, if not
expended in the period in which it is permitted, may be carried over for expenditure in (but only
in) the next succeeding such period;
provided
further
that the Maximum Consolidated
Capital Expenditures Amount for any period beginning January 1, 2005 or later and consisting of
fewer than a full Fiscal Year shall be pro rated for the number of days in such period:
|
|
|
|
|
|
|
Maximum
|
Four Fiscal Quarter
|
|
Consolidated Capital
|
Period
|
|
Expenditures Amount
|
The Fiscal Year beginning January 1, 2005 and ending
December 31, 2005
|
|
$
|
120,000,000
|
|
|
|
|
|
|
The Fiscal Year beginning January 1, 2006 and ending
December 31, 2006
|
|
$
|
90,000,000
|
|
|
|
|
|
|
Each subsequent Fiscal Year (or, in the case of the
Fiscal Year in which the Maturity Date occurs,
portion thereof) through the Maturity Date
|
|
$
|
250,000,000
|
|
B. Notwithstanding the foregoing, the Borrowers and their Restricted Subsidiaries may make or
incur Consolidated Capital Expenditures (which Consolidated Capital Expenditures will not be
included in any determination of Maximum Consolidated Capital Expenditures under the foregoing
subsection 7.14A) (i) with the proceeds of equity contributions to the Borrowers or any of their
Restricted Subsidiaries by any Person other than a Borrower or any Restricted Subsidiary, provided
that (x) no Event of Default or Potential Event of Default shall have occurred and be continuing
when such Consolidated Capital Expenditure is made or incurred and (y) the applicable Borrower or
Restricted Subsidiary notifies the Administrative Agent in writing that such proceeds (or
applicable portion thereof) are to be used for Consolidated Capital Expenditures or (ii) with
insurance proceeds received by the Borrowers or any of their Restricted Subsidiaries from any Event
of Loss so long as such Consolidated Capital Expenditures are to replace, repair or restore any
properties or assets in respect of which such proceeds were paid.
7.15
Fiscal Year
.
No Borrower shall change its Fiscal Year-end from December 31.
7.16 [
Intentionally Omitted
].
7.17 [
Intentionally Omitted
].
7.18
Declaration of Restricted Subsidiaries
.
127
The Borrowers may designate any Excluded Subsidiary to be a Restricted Subsidiary under this
Agreement;
provided
that no Event of Default has occurred or would occur as a result of
such designation;
provided
further
that, so long as any Bank Credit Agreement is
effective, each Subsidiary that is a Restricted Subsidiary under such Bank Credit Agreement shall
also be a Restricted Subsidiary under this Agreement.
7.19
Intentionally Omitted
.
7.20
Commonality of Obligors and Restricted Subsidiaries
. No Subsidiary of any
Borrower that is not a Borrower or Subsidiary Guarantor hereunder shall be a borrower or guarantor
under any of the Bank Credit Facility Documents or shall grant a Lien upon any of its assets to
secure any of the obligations under any of the Bank Credit Facility Documents.
Section 8.
Events of Default
.
If any of the following conditions or events set forth in this Section shall occur (any such
conditions or events collectively
Events of Default
):
8.1
Failure to Make Payments When Due
.
Failure by the Borrowers to pay any installment of principal on any Loan when due, whether at
stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or
otherwise; or failure by the Borrowers to pay any interest on any Loan or any fee or any other
amount due under this Agreement within five days after the date due; or
8.2
Default under Other Indebtedness or Contingent Obligations
.
(i) Failure of any Borrower or any of its Restricted Subsidiaries (or any of their respective
Subsidiaries) to pay when due any principal of or interest on or any other amount payable in
respect of one or more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations with an aggregate principal amount of $30,000,000 or more, in each
case beyond the end of any grace period provided therefor; (ii) breach or default by any Borrower
or any of its Restricted Subsidiaries with respect to any other material term of (a) one or more
items of Indebtedness or Contingent Obligations in the individual or aggregate principal amounts
referred to in clause (i) above or (b) any loan agreement, mortgage, indenture or other agreement
relating to such item(s) of Indebtedness or Contingent Obligation(s), if the effect of such breach
or default is to cause, or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior to its stated maturity or
the stated maturity of any underlying obligation, as the case may be (in each case at the end of
any grace period provided therefor); or (iii) any breach or default by any party of the type
referred to in subsections 8.2 (i) or (ii) above of the LVSC Notes Documents or any documents
related to the LVSC Permitted Indebtedness, in each case that are guaranteed by the Borrowers or
any of their Restricted Subsidiaries; or
8.3
Breach of Certain Covenants
.
Failure of Loan Parties to perform or comply with any term or condition contained in:
128
(i) subsection 2.5, 6.2, 6.12 or Section 7 of this Agreement;
(ii) Section 7.1.8(b) of the Disbursement Agreement (a) as in effect on the date hereof
or (b) as such section may be hereafter amended, supplemented or otherwise modified;
(iii) Section 7.1.2 of the Disbursement Agreement (a) as in effect on the date hereof
or (b) as such section may be hereafter amended, supplemented or otherwise modified; or
(iv) Section 7.1.6(c) of the Disbursement Agreement (a) as in effect on the date hereof
or (b) as such section may be hereafter amended, supplemented or otherwise modified.
8.4
Breach of Warranty
.
Any representation, warranty, certification or other statement made by the Borrowers or any of
their Restricted Subsidiaries in any Loan Document or in any statement or certificate at any time
given by the Borrowers or any of their Restricted Subsidiaries in writing pursuant hereto or
thereto or in connection herewith or therewith shall be false in any material respect on the date
as of which made; or
8.5
Other Defaults Under Loan Documents
.
(i) Any Loan Party shall default in the performance of or compliance with any term contained
in this Agreement or any of the other Loan Documents, other than any such term referred to in any
other subsection of this Section 8, and such default shall not have been remedied or waived within
30 days after the earlier of (x) an officer of the Borrowers or such Loan Party becoming aware of
such default or (y) receipt by the Borrowers and such Loan Party of notice from Administrative
Agent or any Lender of such default; or (ii) except as provided in clauses (ii), (iii) and (iv) of
subsection 8.3, an Event of Default shall have occurred and be continuing under the Disbursement
Agreement (it being understood that if such Event of Default is cured (but not waived), then the
related Event of Default under this Section 8.5(ii) shall automatically be deemed cured); or
8.6
Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) A court having jurisdiction in the premises shall enter a decree or order for relief in
respect of a Borrower or any of its Restricted Subsidiaries or either Phase II Mall Borrower in an
involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, which decree or order is not stayed; or any other similar
relief shall be granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against a Borrower or any of its Restricted Subsidiaries or either Phase II Mall
Borrower, under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over a Borrower or any of its Restricted Subsidiaries or either Phase II Mall
Borrower, or over all or a substantial part of its property,
129
shall have been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of a Borrower or any of its Restricted Subsidiaries or
either Phase II Mall Borrower, for all or a substantial part of its property; or a warrant of
attachment, execution or similar process shall have been issued against any substantial part of the
property of a Borrower or any of its Restricted Subsidiaries or either Phase II Mall Borrower, and
any such event described in this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
8.7
Voluntary Bankruptcy; Appointment of Receiver, etc.
(i) A Borrower or any of its Restricted Subsidiaries or either Phase II Mall Borrower shall
have an order for relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case,
or to the conversion of an involuntary case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a receiver, trustee or other custodian for
all or a substantial part of its property; or a Borrower or any of its Restricted Subsidiaries or
either Phase II Mall Borrower shall make any assignment for the benefit of creditors; or (ii) a
Borrower or any of its Restricted Subsidiaries or either Phase II Mall Borrower shall be unable, or
shall fail generally, or shall admit in writing its inability, to pay its debts as such debts
become due and in each case a period of 30 days shall have elapsed; or the Board of Directors of a
Borrower or any of its Restricted Subsidiaries or either Phase II Mall Borrower (or any committee
thereof) or of its managing member shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to in clause (i) above or this clause (ii); or
8.8
Judgments and Attachments
.
Any money judgment, writ or warrant of attachment or similar process involving in the
aggregate at any time an amount in excess of $30,000,000 (in either case not adequately covered by
insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall
be entered or filed against a Borrower or any of its Restricted Subsidiaries or any of their
respective assets and shall remain unpaid and undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any proposed sale
thereunder); or
8.9
Dissolution
.
Any order, judgment or decree shall be entered against a Borrower or any of its Restricted
Subsidiaries decreeing the dissolution or split up of such Person and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
8.10
Employee Benefit Plans
.
There shall occur one or more ERISA Events which individually or in the aggregate results in
or might reasonably be expected to result in liability of a Borrower, or any of its Restricted
Subsidiaries or any of their respective ERISA Affiliates in excess of $10,000,000 during the term
of this Agreement; or there shall exist an amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension
130
Plans (excluding for purposes of such computation any Pension Plans with respect to which
assets exceed benefit liabilities), which exceeds $25,000,000; or
8.11
Change in Control
.
A Change of Control shall occur; or
8.12
Failure of Guaranty; Repudiation of Obligations
.
At any time after the execution and delivery thereof, (i) the Subsidiary Guaranty for any
reason, other than the satisfaction in full of all Obligations, shall cease to be in full force or
effect (other than in accordance with its terms), or shall be declared null and void by a
Governmental Instrumentality of competent jurisdiction, (ii) any Collateral Document shall cease to
be in full force and effect (other than by reason of a release of Collateral thereunder in
accordance with the terms hereof or thereof, the satisfaction in full of the Obligations or any
other termination of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void by a Governmental Instrumentality of competent jurisdiction, or the
Administrative Agent shall not have or shall cease to have a valid and perfected First Priority
Lien in the Collateral for any reason other than the failure of the Administrative Agent or any
Lender to take any action within its control, except as otherwise contemplated in any Loan
Document, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document
in writing or deny in writing that it has any further liability prior to the Termination Date or
(vi) the subordination provisions in the Employee Repurchase Notes or in any other instrument
required under any provision of this Agreement to be subordinated to the Obligations shall cease to
be enforceable against the holder thereof; or
8.13
Default Under or Termination of Operative Documents
.
Except in connection with a refinancing, repayment or defeasance thereof as permitted by the
Loan Documents, any of the Operative Documents (other than the Phase II Mall Sale Agreement, any
LVSC Notes Documents or any documents relating to LVSC Permitted Indebtedness and any Other FF&E
Facility) shall terminate or be terminated or canceled, prior to its stated expiration date or any
Borrower shall be in default (after the giving of any applicable notice and the expiration of any
applicable grace period) or any of their Subsidiaries shall be in default (after the giving of any
applicable notice and the expiration of any applicable grace period) under any such Operative
Document;
provided
that a default or termination under any Project Document or Resort
Complex Operative Document shall constitute an Event of Default hereunder only if such default or
termination would reasonably be expected to cause a Material Adverse Effect, either individually or
in the aggregate; or
8.14
Default Under or Termination of Permits
.
A Borrower or any of its Restricted Subsidiaries shall fail to observe, satisfy or perform, or
there shall be a violation or breach of, any of the material terms, provisions, agreements,
covenants or conditions attaching to or under the issuance to such Person of any material Permit,
including the Gaming License held by LVSI or any such Permit or any material provision thereof
shall be terminated or fail to be in full force and effect or any Governmental Instrumentality
shall
131
challenge or seek to revoke any such Permit if such failure to perform, breach or termination
could reasonably be expected to have a Material Adverse Effect; or
8.15
Intentionally Omitted
.
8.16
Certain Investments in any Excluded Subsidiary
.
Adelson or any of his Affiliates (other than the Borrowers and their Subsidiaries) shall
directly acquire or hold any Investment in any Excluded Subsidiary or any Person which any Excluded
Subsidiary controls or in which any Excluded Subsidiary holds an Investment other than (a)
purchases of its public debt securities in the secondary market, (b) in the case of Foreign
Excluded Subsidiaries, Investments through loans or other indebtedness or guaranties, (c) in the
case of Excluded Subsidiaries, guarantees, (d) in the case of Excluded Subsidiaries in order to
avoid, prevent or cure a default under agreements relating to such Excluded Subsidiaries
Indebtedness, any Investments, or (e) in the case of Excluded Subsidiaries, Investments by LVSC
through loans or other indebtedness; or
8.17
Conforming Adelson L/C.
Except as released as permitted under subsections 2.4B(iii)(f), any Conforming Adelson L/C
shall cease to be in full force and effect at any time prior to twenty-four months from and after
the date of its delivery to the Bank Administrative Agent other than following a drawing in full by
the Bank Administrative Agent (with the application of the proceeds from such drawing applied to
pay or prepay the Bank Credit Facility or the Loans in accordance with subsection 2.4B(iii)(f)
hereof) or, if permitted under the definition of Conforming Adelson L/C Draw Event, the replacement
of such Conforming Adelson L/C with a cash equity contribution in the Borrowers in the amount of
the Conforming Adelson L/C.
THEN
(i) upon the occurrence of any Event of Default described in subsection 8.6 or 8.7, each of
(a) the unpaid principal amount of and accrued interest on the Loans, and (b) all other Obligations
shall automatically become immediately due and payable, without presentment, demand, protest or
other requirements of any kind, all of which are hereby expressly waived by the Borrowers, and the
obligation of each Lender to make any Loan, and (ii) upon the occurrence and during the
continuation of any other Event of Default, the Administrative Agent shall, upon the written
request or with the written consent of Requisite Lenders, by written notice to the Borrowers,
declare all or any portion of the amounts described in clauses (a) and (b) above to be, and the
same shall forthwith become, immediately due and payable, and the obligation of each Lender to make
any Loan.
Notwithstanding anything contained in the preceding paragraph, if at any time within 60 days
after an acceleration of the Loans pursuant to clause (ii) of such paragraph the Borrowers shall
pay all arrears of interest and all payments on account of principal which shall have become due
otherwise than as a result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal of and accrued
interest on the Loans, in each case which is due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by written
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notice to the Borrowers, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default or Potential Event
of Default or impair any right consequent thereon. The provisions of this paragraph are intended
merely to bind Lenders to a decision which may be made at the election of Requisite Lenders and are
not intended, directly or indirectly, to benefit the Borrowers, and such provisions shall not at
any time be construed so as to grant the Borrowers the right to require Lenders to rescind or annul
any acceleration hereunder or to preclude Administrative Agent or Lenders from exercising any of
the rights or remedies available to them under any of the Loan Documents, even if the conditions
set forth in this paragraph are met.
Section 9.
Agents and Arranger
.
9.1
Appointment
.
A.
Appointment of the Administrative Agent
. GE Capital is hereby appointed
Administrative Agent hereunder and under the other Loan Documents and each Lender hereby authorizes
the Administrative Agent to act as its agent in accordance with the terms of this Agreement and the
other Loan Documents. The Administrative Agent agrees to act upon the express conditions contained
in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 9
(other than the second proviso to the first sentence of subsection 9.6 and the second sentence of
subsection 9.6) are solely for the benefit of the Administrative Agent and the Lenders; the
Borrowers shall have no rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, the Administrative Agent shall act solely
as an agent of the Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Borrowers or any of their
Subsidiaries.
B.
Appointment of Supplemental Agents
. It is the purpose of this Agreement and the
other Loan Documents that there shall be no violation of any law of any jurisdiction denying or
restricting the right of banking corporations or associations to transact business as agent or
trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or
any of the other Loan Documents, and in particular in case of the enforcement of any of the Loan
Documents, or in case the Administrative Agent deems that by reason of any present or future law of
any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or in any
of the other Loan Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that the Administrative Agent appoint an additional
individual or institution as a separate collateral agent or collateral co-agent (any such
additional individual or institution being referred to here individually as a
Supplemental Agent
and collectively as
Supplemental Agents
).
In the event that the Administrative Agent appoints a Supplemental Agent with respect to any
Collateral, (i) each and every right, power, privilege or duty expressed or intended by this
Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to the
Administrative Agent with respect to such Collateral shall be exercisable by and vest in such
Supplemental Agent to the extent, and only to the extent, necessary to enable such Supplemental
Agent to exercise such rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation contained
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in the Loan Documents and necessary to the exercise or performance thereof by such
Supplemental Agent shall run to and be enforceable by either the Administrative Agent or such
Supplemental Agent, and (ii) the provisions of this Section 9 and of subsections 10.2 and 10.3 that
refer to the Administrative Agent shall inure to the benefit of such Supplemental Agent and all
references therein to the Administrative Agent shall be deemed to be references to the
Administrative Agent and/or such Supplemental Agent, as the context may require.
Should any instrument in writing from the Borrowers or any other Loan Party be required by any
Supplemental Agent so appointed for more fully and certainly vesting in and confirming to it such
rights, powers, privileges and duties, the Borrowers shall, or shall cause such Loan Party to,
execute, acknowledge and deliver any and all such instruments promptly upon request by such
Supplemental Agent or the Administrative Agent. In case any Supplemental Agent, or a successor
thereto, shall resign or be removed, all the rights, powers, privileges and duties of such
Supplemental Agent, to the extent permitted by law, shall vest in and be exercised by the
Administrative Agent until the appointment of a new Supplemental Agent.
9.2
Powers and Duties; General Immunity
.
A.
Powers; Duties Specified
. Each Lender irrevocably authorizes Administrative Agent
to take such action on such Lenders behalf and to exercise such powers, rights and remedies
hereunder and under the other Loan Documents as are specifically delegated or granted to the
Administrative Agent by the terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. The Administrative Agent shall have only those
duties and responsibilities that are expressly specified in this Agreement and the other Loan
Documents. The Administrative Agent may exercise such powers, rights and remedies and perform such
duties by or through its agents or employees. The Administrative Agent shall not have, by reason
of this Agreement or any of the other Loan Documents, a fiduciary relationship in respect of any
Lender; and nothing in this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon Administrative Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly set forth herein
or therein.
B.
No Responsibility for Certain Matters
. The Administrative Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or made in any written
or oral statements or in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by the Administrative Agent to Lenders or by or on behalf of
the Borrowers, or for the financial condition or business affairs of the Borrowers or any other
Person liable for the payment of any Obligations, nor shall Administrative Agent be required to
ascertain or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or as to the existence or possible existence of any Event of Default or
Potential Event of Default. Anything contained in this Agreement to the contrary notwithstanding,
the Administrative Agent shall not have any liability arising from confirmations of the amount of
outstanding Loans or the component amounts thereof.
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C.
Exculpatory Provisions
. Neither Administrative Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken or omitted by the
Administrative Agent under or in connection with any of the Loan Documents except to the extent
caused by the Administrative Agents gross negligence or willful misconduct. The Administrative
Agent shall be entitled to refrain from any act or the taking of any action (including the failure
to take an action) in connection with this Agreement or any of the other Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or thereunder unless and
until Administrative Agent shall have received instructions in respect thereof from Requisite
Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6)
and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case
may be), the Administrative Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with such instructions.
Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by the proper Person or
Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments
of attorneys (who may be attorneys for the Borrowers and their Subsidiaries), accountants, experts
and other professional advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against Administrative Agent as a result of the Administrative Agent acting or (where so
instructed) refraining from acting under this Agreement or any of the other Loan Documents in
accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D.
Administrative Agent Entitled to Act as Lender
. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or obligations upon,
the Administrative Agent in its individual capacity as a Lender hereunder. With respect to its
participation in the Loans, the Administrative Agent shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term Lender or Lenders or any similar term
shall, unless the context clearly otherwise indicates, include Administrative Agent in its
individual capacity. The Administrative Agent and its Affiliates may accept deposits from, lend
money to and generally engage in any kind of banking, trust, financial advisory or other business
with the Borrowers or any of its Affiliates as if it were not performing the duties specified
herein, and may accept fees and other consideration from the Borrowers for services in connection
with this Agreement and otherwise without having to account for the same to Lenders.
E.
Administrative Agent Determinations
. To the extent the Administrative Agent is
entitled or required to make any determinations under the Intercreditor Agreement or any other
intercreditor agreement, the Administrative Agent shall make such determinations upon the advice of
Requisite Lenders.
F.
Delegation of Duties
. The Administrative Agent may perform any and all of its
duties and exercise its rights and powers under this Agreement or under any other Loan Document by
or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all of its duties and
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exercise its rights and powers by or through their respective Affiliates. The exculpatory,
indemnification and other provisions of this subsection 9.2 and of subsection 9.4 shall apply to
any Affiliates of the Administrative Agent and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as well as activities
as the Administrative Agent. All of the rights, benefits, and privileges (including the exculpatory
and indemnification provisions) of this subsection 9.2 and of subsection 9.4 shall apply to any
such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective
activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding
anything herein to the contrary, with respect to each sub-agent appointed by the Administrative
Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to
all such rights, benefits and privileges (including exculpatory rights and rights to
indemnification) and shall have all of the rights and benefits of a third party beneficiary,
including an independent right of action to enforce such rights, benefits and privileges (including
exculpatory rights and rights to indemnification) directly, without the consent or joinder of any
other Person, against any or all of the Loan Parties and the Lenders, (ii) such rights, benefits
and privileges (including exculpatory rights and rights to indemnification) shall not be modified
or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have
obligations to the Administrative Agent and not to any Loan Party, Lender or any other Person and
no Loan Party, Lender or any other Person shall have any rights, directly or indirectly, as a third
party beneficiary or otherwise, against such sub-agent.
9.3
Representations and Warranties; No Responsibility for Appraisal of Credit
Worthiness
.
Each Lender represents and warrants that it has made its own independent investigation of the
financial condition and affairs of the Borrowers and their Subsidiaries in connection with the
making of the Loans and that it has made and shall continue to make its own appraisal of the
creditworthiness of the Borrowers and their Subsidiaries. The Administrative Agent shall not have
any duty or responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession before the making of
the Loans or at any time or times thereafter, and the Administrative Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4
Right to Indemnity
.
Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify Administrative
Agent, to the extent that Administrative Agent shall not have been reimbursed by the Borrowers, for
and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Administrative Agent in
exercising its powers, rights and remedies or performing its duties hereunder or under the other
Loan Documents or otherwise in its capacity as Administrative Agent in any way relating to or
arising out of this Agreement or the other Loan Documents;
provided
that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or
136
disbursements resulting from Administrative Agents gross negligence or willful misconduct.
If any indemnity furnished to the Administrative Agent for any purpose shall, in the opinion of the
Administrative Agent, be insufficient or become impaired, the Administrative Agent may call for
additional indemnity and cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished.
9.5
Successor Administrative Agent
.
Administrative Agent may resign at any time by giving 30 days prior written notice thereof to
Lenders and the Borrowers, and the Administrative Agent may be removed at any time with or without
cause by an instrument or concurrent instruments in writing delivered to the Borrowers and the
Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any
such removal, Requisite Lenders shall have the right, upon five Business Days notice to the
Borrowers, to appoint a successor Administrative Agent (provided that such successor is or
simultaneously therewith becomes a Lender). Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring or removed Administrative Agent and the retiring or removed Administrative
Agent shall be discharged from its duties and obligations under this Agreement. After any retiring
or removed Administrative Agents resignation or removal hereunder as Administrative Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.
9.6
Collateral Documents and Subsidiary Guaranty
.
Each Lender hereby further authorizes the Administrative Agent, on behalf of and for the
benefit of Lenders, to enter into each Collateral Document and Subsidiary Guaranty as secured party
or beneficiary (as applicable), and each Lender agrees to be bound by the terms of each Collateral
Document and Subsidiary Guaranty;
provided
that the Administrative Agent shall not (i)
enter into or consent to any material amendment, modification, termination or waiver of any
provision contained in any Collateral Document or Subsidiary Guaranty, or (ii) release any
Collateral (except as otherwise expressly permitted or required pursuant to the terms of this
Agreement or the applicable Collateral Document), in each case without the prior consent of
Requisite Lenders (or, if required pursuant to subsection 10.6, all Lenders);
provided
further
,
however
, that, without further written consent or authorization from
Lenders, the Administrative Agent may execute any documents or instruments necessary to (i) release
any Subsidiary from the Subsidiary Guaranty to the extent the stock of such Restricted Subsidiary
is sold, transferred or otherwise disposed of in a transaction permitted under this Agreement or
otherwise consented to by the Lenders in accordance with subsection 10.6 and (ii) release any Lien
encumbering any item of Collateral that is the subject of a sale or other disposition of assets
permitted by this Agreement or in connection with a Non-Recourse Financing or any other
Indebtedness secured by a Permitted Lien or to which the Lenders have otherwise consented in
accordance with subsection 10.6. In connection with any disposition or release of any Collateral
pursuant to the terms of any Loan Document, at the Borrowers request and expense, the
Administrative Agent shall (without recourse and without any representation or warranty) execute
and deliver to the Borrowers such documents (including UCC-3 termination statements) as the
Borrowers may
137
reasonably request to evidence or effect such disposition or release. Anything contained in
any of the Loan Documents to the contrary notwithstanding, the Borrowers, the Administrative Agent
and each Lender hereby agree that (X) no Lender shall have any right individually to realize upon
any of the Collateral under any Collateral Document, it being understood and agreed that all
powers, rights and remedies under the Collateral Documents and each Guaranty may be exercised
solely by the Administrative Agent for the benefit of Lenders in accordance with the terms thereof,
and (Y) in the event of a foreclosure by the Administrative Agent on any of the Collateral pursuant
to a public or private sale, the Administrative Agent or any Lender may be the purchaser of any or
all of such Collateral at any such sale and the Administrative Agent, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their respective individual
capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any collateral payable by the Administrative Agent at such sale.
9.7
Intercreditor Agreements
.
Each Lender hereby further authorizes the Administrative Agent, on behalf of and for the
benefit of Lenders, to enter into the Intercreditor Agreement and any other intercreditor
agreements consented to by the Requisite Lenders (provided the Requisite Lenders consent shall not
be required for the Administrative Agent to enter into any other intercreditor agreement to the
extent contemplated by clause (xxi)(ii) of the definition of Permitted Liens hereunder), and each
Lender agrees to be bound by the terms of the Intercreditor Agreement and each other such
intercreditor agreement. Notwithstanding the foregoing, the Administrative Agent shall not enter
into or consent to any amendment, modification, termination or waiver of any provision contained in
the Intercreditor Agreement or any such other intercreditor agreement without the prior consent of
Requisite Lenders (or, if such amendment, modification, termination or waiver would result in a
change that under subsection 10.6 would require the consent of all Lenders, then the prior consent
of all Lenders); provided the Requisite Lenders consent shall not be required for the
Administrative Agent to enter into or consent to any amendment, modification, termination or waiver
of the Intercreditor Agreement or any other intercreditor agreement to the extent contemplated by
clause (xxi)(ii) of the definition of Permitted Liens hereunder.
9.8
Appointment of Arranger
.
GE Capital Markets, Inc. is hereby appointed as Arranger hereunder and under the other Loan
Documents and each Lender hereby authorizes such Arranger to act as its agent in accordance with
the terms of this Agreement and the other Loan Documents. The Arranger agrees to act upon the
express conditions contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this subsection 9.8 are solely for the benefit of the Arranger and the Lenders; the
Borrowers shall have no rights as a third party beneficiary of any of the provisions thereof. In
performing its functions and duties under this Agreement, the Arranger does not assume and shall
not be deemed to have assumed any obligation towards or relationship of agency or trust with the
Lenders or for the Borrowers or any of their Subsidiaries. Upon the Termination Date all
obligations of the Arranger hereunder shall terminate.
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Section 10.
Miscellaneous.
10.1
Assignments and Participations in Loans.
A.
General
. Subject to subsection 10.1B, each Lender shall have the right at any time
to (i) sell, assign or transfer to any Eligible Assignee, or (ii) sell participations to any
Eligible Assignee or any other Person (and in the case of any other Person, with the approval of
the Borrowers) in all or any part of its Commitments or any Loan or Loans made by it or any other
interest herein or in any other Obligations owed to it;
provided
that no such sale,
assignment, transfer or participation shall, without the consent of the Borrowers, require the
Borrowers to file a registration statement with the Securities and Exchange Commission or apply to
qualify such sale, assignment, transfer or participation under the securities laws of any state;
provided
,
further
that no such sale, assignment or transfer described in clause (i)
above shall be effective unless and until an Assignment Agreement effecting such sale, assignment
or transfer shall have been accepted by the Administrative Agent and recorded in the Register as
provided in subsection 10.1B(ii). Except as otherwise provided in this subsection 10.1, no Lender
shall, as between the Borrowers and such Lender, be relieved of any of its obligations hereunder as
a result of any sale, assignment or transfer of, or any granting of participations in, all or any
part of its Commitments or the Loans or the other Obligations owed to such Lender.
B.
Assignments
.
(i)
Amounts and Terms of Assignments
. Each Commitment, Loan or participation
therein, or other Obligation may in whole or in part (a) be assigned, in any amount to
another Lender, or to an Affiliate of the assigning Lender or another Lender or an Approved
Fund, or may be pledged by a Lender in support of its obligations to such pledgee (without
releasing the pledging Lender from any of its obligations hereunder), or (b) be assigned in
an aggregate amount of not less than $1,000,000 (or such lesser amount (i) if
contemporaneous assignments approved by Administrative Agent in its sole discretion
aggregating not less than $1,000,000 are being made by one or more Eligible Assignees which
are Affiliates or (ii) as shall constitute the aggregate amount of the Commitments, Loans,
and other obligations of the assigning Lender) to any Eligible Assignee, in each case, with
the giving of notice to the Borrowers and the Administrative Agent;
provided
that if
any assignment permitted by this clause (b) relates to Term Delayed Draw Loan Commitments
prior to the Term Delayed Draw Loan Commitment Termination Date, the assignee shall
represent that it has the financial resources to fulfill its commitments hereunder and such
assignment is consented to by the Administrative Agent (in its sole discretion, not to be
unreasonably withheld or delayed), and at any time other than when an Event of Default has
occurred and is continuing, such assignee shall be acceptable to the Borrowers, such consent
not to be unreasonably withheld or delayed. Anything herein to the contrary
notwithstanding, all assignments, participations and pledges shall be made on pro rata basis
with respect to the assigning Lenders Term Funded Loans, Term Funded Loan Commitments, Term
Delayed Draw Loans and Term Delayed Draw Loan Commitments. To the extent of any such
assignment in accordance herewith, the assigning Lender shall be relieved of its obligations
with respect to its Commitments, Loans and other Obligations to the extent so assigned. The
assignor or assignee to each such assignment shall execute and deliver to the Administrative
Agent,
139
for its acceptance and recording in the Register, an Assignment Agreement, together
with a processing and recordation fee of $2,000 in respect of assignments, and in each case
such forms, certificates or other evidence, if any, with respect to United States federal
income tax withholding matters as the assignee under such Assignment Agreement may be
required to deliver to the Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon
such execution, delivery, acceptance and recordation, from and after the Assignment
Effective Date, (y) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment Agreement, relinquish its rights (other than any
rights which survive the termination of this Agreement under subsection 10.10B) and be
released from its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lenders rights and
obligations under this Agreement, such Lender shall cease to be a party hereto. The
Commitments hereunder shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any such assignment occurs after the
issuance of Notes hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its applicable Notes to the
Administrative Agent for cancellation, and thereupon new Notes shall be issued to the
assignee and to the assigning Lender, with appropriate insertions, to reflect the new
Commitments and/or outstanding Loans, as the case may be, of the assignee and the assigning
Lender.
(ii)
Acceptance by the Administrative Agent; Recordation in Register
. Upon its
receipt of an Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing and recordation
fee referred to in subsection 10.1B(i) if applicable, and any forms, certificates or other
evidence with respect to United States federal income tax withholding matters that such
assignee may be required to deliver to the Administrative Agent pursuant to subsection
2.7B(iii)(a), the Administrative Agent shall, if Administrative Agent has consented to the
assignment evidenced thereby (to the extent such consent is required pursuant to subsection
10.1B(i)), (a) accept such Assignment Agreement by executing a counterpart thereof as
provided therein (which acceptance shall evidence any required consent of the Administrative
Agent to such assignment), (b) record the information contained therein in the Register (on
the same Business Day as it is received if received by 12:00 noon and on the following
Business Day if received after such time) and (c) give prompt notice thereof to the
Borrowers. The Administrative Agent shall maintain a copy of each Assignment Agreement
delivered to and accepted by it as provided in this subsection 10.1B(ii). The date of such
execution of a counterpart or recordation of a transfer shall be referred to herein as the
Assignment Effective Date
.
C.
[Intentionally Omitted
.]
D.
Participations
. The holder of any participation, other than an Affiliate or an
Approved Fund of the Lender granting such participation, shall not be entitled to require such
Lender to take or omit to take any action hereunder except action directly affecting (i) the
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extension of the scheduled final maturity date of any Loan allocated to such participation,
(ii) a reduction of the principal amount of or the rate of interest payable on any Loan allocated
to such participation, or (iii) releasing all or substantially all of the Collateral, and all
amounts payable by the Borrowers hereunder (including amounts payable to such Lender pursuant to
subsections 2.6D and 2.7) shall be determined as if such Lender had not sold such participation.
The Borrowers and each Lender hereby acknowledge and agree that, solely for purposes of subsections
10.4 and 10.5, (a) any participation will give rise to a direct obligation of the Borrowers to the
participant and (b) the participant shall be considered to be a Lender.
E.
Assignments to Federal Reserve Banks and Trustees
. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection 10.1, (i) any Lender
may assign and pledge all or any portion of its Loans, the other Obligations owed to such Lender,
and its Notes to any Federal Reserve Bank 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 or (ii) upon notice to the Administrative Agent any Lender may pledge all or any
portion of its Loans, Commitments, the other Obligations owed to such Lender, and its Notes, to its
creditors, to its trustee (solely in its capacity as trustee) or other representative, in support
of its obligations to such creditor or trustee;
provided
that (i) no Lender shall, as
between the Borrowers and such Lender, be relieved of any of its obligations hereunder as a result
of any such assignment and pledge and (ii) in no event shall such Federal Reserve Bank or such
creditor or trustee be considered to be a Lender or be entitled to require the assigning Lender
to take or omit to take any action hereunder.
F.
Information
. Each Lender may furnish any information concerning the Borrowers and
their Subsidiaries in the possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to subsection 10.20.
G.
Representations of Lenders
. Each Lender listed on the signature pages hereof or
succeeding to an interest in the Commitments and Loans, as the case may be, hereby represents and
warrants as of the Closing Date, or as of the applicable Assignment Effective Date that (i) it is
an Eligible Assignee described in clause (A) of the definition thereof; (ii) it has experience and
expertise in the making of and/or investing in loans such as the Loans; and (iii) it will make its
Loans for its own account in the ordinary course of its business and without a view to distribution
of such Loans within the meaning of the Securities Act or the Exchange Act or other federal or
state securities laws (it being understood that, subject to the provisions of this subsection 10.1,
the disposition of such Loans or any interests therein shall at all times remain within its
exclusive control). Each Lender that becomes a party hereto pursuant to an Assignment Agreement
shall be deemed to agree that the representations and warranties of such Lender contained in
Section 2(c) of such Assignment Agreement are incorporated herein by this reference.
H. Notwithstanding anything to the contrary in this subsection 10.1, the rights of the Lenders
to make assignments of, and grant participations in, any or all of its Commitments or any Loan made
by it, or any interest therein, herein or in any other Obligations owed to any such Lender, shall
be subject to the approval of the Nevada Gaming Authorities, to the extent required by the Nevada
Gaming Laws.
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10.2
Expenses
.
Whether or not the transactions contemplated hereby shall be consummated, the Borrowers agree
to pay promptly (i) all the actual and reasonable costs and expenses of preparation of the Loan
Documents and any consents, amendments, waivers or other modifications thereto; (ii) all the costs
of furnishing all opinions by counsel for the Borrowers (including any opinions requested by
Lenders as to any legal matters arising hereunder) and of the Borrowers performance of and
compliance with all agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable fees, expenses and
disbursements of counsel to the Administrative Agent in connection with the negotiation,
preparation, execution and administration of the Loan Documents and in connection with any
consents, amendments, waivers or other modifications to any Loan Documents (whether or not
effective or executed) and any other documents or matters requested by the Borrowers; (iv) all the
actual costs and reasonable expenses of creating and perfecting Liens in favor of the
Administrative Agent on behalf of Lenders pursuant to any Collateral Document, including filing and
recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to the Administrative Agent
and of counsel providing any opinions that Administrative Agent or Requisite Lenders may request in
respect of the Collateral Documents or the Liens created pursuant thereto; (v) all the actual costs
and reasonable expenses (including the reasonable fees, expenses and disbursements of any auditors,
accountants or appraisers and any environmental or other consultants, advisors and agents employed
or retained by the Administrative Agent or its counsel) of obtaining and reviewing any appraisals
provided for under any Loan Documents, any environmental audits or reports provided for under
subsection 6.7B; (vi) the custody or preservation of any of the Collateral; (vii) all other actual
and reasonable costs and expenses incurred by the Agents in connection with the syndication of the
Commitments and the negotiation, preparation and execution of the Loan Documents and any consents,
amendments, waivers or other modifications thereto and the transactions contemplated thereby; and
(viii) after the occurrence of an Event of Default, all costs and expenses, including reasonable
attorneys fees (including allocated costs of internal counsel) and costs of settlement, incurred
by the Administrative Agent and Lenders in enforcing any Obligations of or in collecting any
payments due from any Loan Party hereunder or under the other Loan Documents by reason of such
Event of Default (including in connection with the sale of, collection from, or other realization
upon any of the Collateral or the enforcement of any Loan Document) or in connection with any
refinancing or restructuring of the credit arrangements provided under this Agreement in the nature
of a work-out or pursuant to any insolvency or bankruptcy proceedings.
10.3
Indemnity
.
In addition to the payment of expenses pursuant to subsection 10.2, whether or not the
transactions contemplated hereby shall be consummated, the Borrowers agree with the Administrative
Agent and Lenders to defend (subject to the Borrowers selection of counsel with the consent of the
Indemnitee, which shall not be unreasonably withheld), indemnify, pay and hold harmless the
Administrative Agent, the Arranger and Lenders, and the officers, directors, employees, agents,
sub-agents and affiliates of the Administrative Agent, the Arranger and
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Lenders (collectively called the
Indemnitees
), from and against any and all Indemnified
Liabilities (as hereinafter defined);
provided
that the Borrowers shall not have any
obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful misconduct of that
Indemnitee as determined by a final judgment of a court of competent jurisdiction.
As used herein,
Indemnified Liabilities
means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties, actions, judgments,
suits, claims (including Environmental Claims), costs (including the costs of any investigation,
study, sampling, testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of
counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a
party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing
this indemnity), whether direct, indirect or consequential and whether based on any federal, state
or foreign laws, statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on
contract or otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of (i) any Operative Documents (other than
LVSC Notes Documents or LVSC Permitted Indebtedness) or the transactions contemplated hereby or
thereby (including Lenders agreement to make the Loans hereunder) or the use or intended use of
the proceeds thereof or the use or intended use of any thereof, or any enforcement of any of the
Loan Documents (including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Subsidiary Guaranty), (ii) the statements contained in the
commitment letter delivered by any Lender to the Borrowers with respect thereto, or (iii) any
Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice of the Borrowers
or any of their Subsidiaries.
To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in
this subsection 10.3 may be unenforceable in whole or in part because they are violative of any law
or public policy, the Borrowers shall contribute the maximum portion that it is permitted to pay
and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4
Set-Off; Security Interest in Deposit Accounts
.
In addition to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance of any Event of
Default each Lender is hereby authorized by the Borrowers at any time or from time to time, without
notice to the Borrowers or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including
trust accounts) and any other Indebtedness at any time held or owing by that Lender to or for the
credit or the account of the Borrowers against and on account of the obligations and liabilities of
the Borrowers to that Lender under this Agreement and the other
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Loan Documents, including all claims of any nature or description arising out of or connected
with this Agreement or any other Loan Document, irrespective of whether or not (i) that Lender
shall have made any demand hereunder or (ii) the principal of or the interest on the Loans or any
other amounts due hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contingent or unmatured. The Borrowers
hereby further grant to the Administrative Agent and each Lender a security interest in all
deposits and accounts maintained with the Administrative Agent or such Lender as security for the
Obligations.
10.5
Ratable Sharing
.
The Lenders hereby agree among themselves that if any of them shall, whether by voluntary
payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms
of this Agreement), by realization upon security, through the exercise of any right of set-off or
bankers Lien, by counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal,
interest, amounts payable in respect of fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the
Aggregate Amounts Due
to such
Lender) which is greater than the proportion received by any other Lender in respect of the
Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater
payment shall (i) notify Administrative Agent and each other Lender of the receipt of such payment
and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the receipt by such seller
of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such
recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them;
provided
that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or
reorganization of the Borrowers or otherwise, those purchases shall be rescinded and the purchase
prices paid for such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. The Borrowers expressly consent to the foregoing
arrangement and agree that any holder of a participation so purchased may exercise any and all
rights of bankers Lien, set-off or counterclaim with respect to any and all monies owing by the
Borrowers to that holder with respect thereto as fully as if that holder were owed the amount of
the participation held by that holder.
10.6
Amendments and Waivers
.
A. No amendment, modification, termination or waiver of any provision of this Agreement or of
the Notes or other Loan Documents, and no consent to any departure by the Borrowers therefrom,
shall in any event be effective without the written concurrence of Requisite Lenders (or the
Administrative Agent only if this Agreement or such Loan Document expressly so provides);
provided
that no amendment, modification, termination, waiver or consent shall, unless
approved in writing and signed by the Borrowers and all the Lenders, do any of the following:
reduce the principal of, or interest on, the Loans or any fees hereunder (other than any waiver of
any increase in the interest rate applicable to any of the Loans pursuant to
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subsection 2.2E); unless expressly permitted by any Loan Document, permit any Borrower to
assign or delegate any of its rights or Obligations under the Loan Documents; change in any manner
the definition of Pro Rata Share or the definition of Requisite Lenders (it being understood
that, with the consent of Requisite Lenders, additional extensions of credit pursuant to this
Agreement may be included in Pro Rata Share and Requisite Lenders on substantially the same
terms as the Term Loan Commitments and the Term Loans); change in any manner any provision of this
Agreement which, by its terms, expressly requires the approval or concurrence of all Lenders;
postpone any date fixed for the payment in respect of principal of, or interest on, the Loans or
any fees hereunder; release any Lien granted in favor of the Administrative Agent with respect to
25% or more in aggregate fair market value of the Collateral other than in accordance with the
terms of the Loan Documents (it being understood that the granting of additional Liens on
Collateral is not a release of a Lien on such Collateral); release any Subsidiary Guarantor from
its obligations under the Subsidiary Guaranty, other than in accordance with the terms of the Loan
Documents; change in any manner the provisions contained in subsections 9.1, 10.5 or 10.6;
provided
,
further
that (i) any such amendment, modification, termination, waiver or
consent which increases the amount of the Commitment for any Lender shall be effective only if
evidenced by a writing signed by or on behalf of such Lender and (ii) any release of Liens on
Collateral granted to the Administrative Agent with respect to less than 25% in aggregate fair
market value of the Collateral shall only require the consent of the Requisite Lenders and the
Administrative Agent.
B. In addition, (i) any amendment, modification, termination or waiver of any of the
provisions contained in Section 4 shall be effective only if evidenced by a writing signed by or on
behalf of the Administrative Agent and Requisite Lenders, (ii) no amendment, modification,
termination or waiver of any provision of any Note shall be effective without the written
concurrence of the Lender which is the holder of that Note except that to the extent such
amendment, modification, termination or waiver would not otherwise require the consent of all
Lenders, only the holder of such Note or Notes up to the amount constituting Requisite Lenders
shall be required hereunder and (iii) no amendment, modification, termination or waiver of any
provision of Section 9 or of any other provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of the Administrative Agent shall be effective without the
written concurrence of the Administrative Agent.
C. Administrative Agent may, but shall have no obligation to, with the concurrence of any
Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on the Borrowers in any case shall entitle the
Borrowers to any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance with this subsection
10.6 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed
by the Borrowers, on the Borrowers.
D. Notwithstanding the foregoing, if any Lender does not agree to any amendment hereunder
requiring the consent of all Lenders and consented to by Lenders having or holding at least a
majority of the sum of the aggregate Loans and unused Commitment of all Lenders, then the Borrowers
may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in
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accordance with and subject to the restrictions contained in subsection 10.1, including as a
condition precedent to such assignment, (i) Administrative Agents consent to the assignee unless
not otherwise required by subsection 10.1 and (ii) payment by the Borrowers of the registration fee
set forth in subsection 10.1B(i), if applicable), all its interests, rights and obligations under
this Agreement to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment);
provided
that (i) such Lender shall have
received irrevocable payment in full in cash of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, and accrued fees and all other Obligations and other amounts
payable to it hereunder (including amounts payable pursuant to subsection 2.6D) from the assignee
or the Borrowers and (ii) such assignment (together with any other assignments pursuant to this
subsection 10.6D or otherwise) will result in such amendment being approved.
10.7
Certain Matters Affecting Lenders
.
A. If (i) any Nevada Gaming Authority shall determine that any Lender does not meet
suitability standards prescribed under the Nevada Gaming Regulations or (ii) any other gaming
authority with jurisdiction over the gaming business of the Borrowers shall determine that any
Lender does not meet its suitability standards (in any such case, a
Former Lender
), the
Administrative Agent or the Borrowers shall have the right (but not the duty) to designate bank(s)
or other financial institution(s) (in each case, a
Substitute Lender
) which may be any Lender or
Lenders that agree to become a Substitute Lender and to assume the rights and obligations of the
Former Lender, subject to receipt by the Administrative Agent of evidence that such Substitute
Lender is an Eligible Assignee. The Substitute Lender shall assume the rights and obligations of
the Former Lender under this Agreement. The Borrowers shall bear the costs and expenses of any
Lender required by any Nevada Gaming Authority, or any other gaming authority with jurisdiction
over the gaming business of the Borrowers, to file an application for a finding of suitability in
connection with the investigation of an application by the Borrowers for a license to operate a
gaming establishment, in connection with such application for a finding of suitability.
B. Notwithstanding the provisions of subsection 10.7(a), if any Lender becomes a Former
Lender, and if the Administrative Agent or the Borrowers fail to find a Substitute Lender pursuant
to subsection 10.7(a) within any time period specified by the appropriate gaming authority for the
withdrawal of a Former Lender (the
Withdrawal Period
), the Borrowers shall immediately prepay in
full the outstanding principal amount of Loans made by such Former Lender, together with accrued
interest thereon to the earlier of (x) the date of payment or (y) the last day of any Withdrawal
Period.
10.8
Independence of Covenants
.
All covenants hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action is taken or
condition exists.
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10.9
Notices
.
Unless otherwise specifically provided herein, any notice or other communication herein
required or permitted to be given shall be in writing and may be personally served or sent by
telefacsimile or United States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid and properly
addressed;
provided
that notices to the Administrative Agent shall not be effective until
received;
provided
further
, any such notice or other communication shall at the
request of the Administrative Agent be provided to any sub-agent appointed pursuant to subsection
9.2F hereto as designated by the Administrative Agent from time to time. For the purposes hereof,
the address of each party hereto shall be (i) as to the Borrowers or the Administrative Agent, set
forth under such partys name on the signature pages hereof or such other address as shall be
designated by such Person in a written notice delivered to the other parties hereto and (ii) as to
each other Lender, such other address as set forth on
Schedule 2.1
or as shall be
designated by such party in a written notice delivered to the Administrative Agent.
10.10
Survival of Representations, Warranties and Agreements
.
A. All representations, warranties and agreements made herein shall survive the execution and
delivery of this Agreement and the making of the Loans.
B. Notwithstanding anything in this Agreement or implied by law to the contrary, the
agreements of the Borrowers set forth in subsections 2.6D, 2.7, 3.6, 10.2, 10.3 and 10.4 and the
agreements of Lenders set forth in subsections 9.2C, 9.4, 10.5 and 10.20 shall survive the payment
of the Loans and the reimbursement of any amounts drawn thereunder, and the termination of this
Agreement.
10.11
Failure or Indulgence Not Waiver; Remedies Cumulative
.
No failure or delay on the part of the Administrative Agent or any Lender in the exercise of
any power, right or privilege hereunder or under any other Loan Document shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
10.12
Marshalling; Payments Set Aside
.
Neither Administrative Agent nor any Lender shall be under any obligation to marshal any
assets in favor of the Borrowers or any other party or against or in payment of any or all of the
Obligations. To the extent that the Borrowers make a payment or payments to the Administrative
Agent or Lenders (or to the Administrative Agent for the benefit of Lenders), or Administrative
Agent or Lenders enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or
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federal law, common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and effect as if such
payment or payments had not been made or such enforcement or setoff had not occurred.
10.13
Severability
.
In case any provision in or obligation under this Agreement or the Notes shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.14
Obligations Several; Independent Nature of Lenders Rights
.
The obligations of Lenders hereunder are several and no Lender shall be responsible for the
obligations or Commitments or representations of any other Lender hereunder. Nothing contained
herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto,
shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any
other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate
and independent debt, and each Lender shall be entitled to protect and enforce its rights arising
out of this Agreement, subject to the second sentence of subsection 9.6 and it shall not be
necessary for any Lender to be joined as an additional party in any proceeding for such purpose.
10.15
Headings
.
Section and subsection 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 or be given
any substantive effect.
10.16
Applicable Law
.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.17
Successors and Assigns
.
This Agreement shall be binding upon the parties hereto and their respective successors and
assigns and shall inure to the benefit of the parties hereto and the successors and assigns of
Lenders (it being understood that Lenders rights of assignment are subject to subsection 10.1).
No Borrowers rights or obligations hereunder nor any interest therein may be assigned or delegated
by the Borrowers without the prior written consent of all Lenders.
10.18
Consent to Jurisdiction and Service of Process
.
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ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWERS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING
AND DELIVERING THIS AGREEMENT, BORROWERS, FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
IRREVOCABLY
(I) ACCEPT GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS;
(II) WAIVE ANY DEFENSE OF
FORUM NON CONVENIENS
;
(III) AGREE THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE BORROWERS
AT THEIR ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.9;
(IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER BORROWERS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
(V) AGREE THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST BORROWERS IN THE COURTS OF ANY
OTHER JURISDICTION; AND
(VI) AGREE THAT THE PROVISIONS OF THIS SUBSECTION 10.18 RELATING TO JURISDICTION AND
VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.
10.19
Waiver of Jury Trial
.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be filed in any court
and that relate to the subject matter of this transaction, including contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business relationship, that
each has already relied on this
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waiver in entering into this Agreement, and that each will continue to rely on this waiver in
their related future dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SUBSECTION 10.19 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
10.20
Confidentiality
.
Each Lender shall hold all non-public information obtained pursuant to the requirements of
this Agreement for a period of three (3) years following the Termination Date in accordance with
such Lenders customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking or investment practices, it being understood and agreed by
the Borrowers that in any event a Lender may make disclosures to Affiliates of such Lender or
disclosures reasonably required by any bona fide assignee, transferee or participant in connection
with the contemplated assignment or transfer by such Lender of any Loans or any participations
therein (provided that such assignee, transferee or participant agrees to also be bound by this
subsection 10.20), or disclosures reasonably required in connection the exercise by the Agent or
any of the Lenders of any right or remedy under the Loan Documents or in connection with any
litigation to which any of the Agents, Lenders or Indemnitees is a party, or disclosures required
or requested by any governmental agency or representative thereof or pursuant to legal process;
provided
that, unless specifically prohibited by applicable law or court order, each Lender
shall notify the Borrowers of any request in connection with exercising remedies or in connection
with litigation or any request by any Governmental Instrumentality or representative thereof (other
than any such request in connection with any examination of the financial condition of such Lender
by such governmental agency) for disclosure of any such non-public information; and
provided
,
further
that in no event shall any Lender be obligated or required to
return any materials furnished by the Borrowers or any of their Subsidiaries. For purposes of this
paragraph, non-public information shall not include information that is not acquired from the
Borrowers or any of their Subsidiaries or Affiliates (or Persons acting on behalf of or retained by
the Borrowers or any of their Subsidiaries or Affiliates), Persons retained by or acting on behalf
of the Arranger, Agents and/or Lenders in connection with this Agreement and the transactions
contemplated hereby or Persons known by such Lender to be under an obligation of confidentiality to
the Borrowers (it being understood that the Agents, Arranger, Lenders and their respective
Affiliates shall be under an obligation of confidentiality).
10.21
Counterparts; Effectiveness
.
This Agreement and any amendments, waivers, consents or supplements hereto or in connection
herewith 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
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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.
10.22
USA Patriot Act
.
Each Lender hereby notifies the Borrowers that pursuant to the requirements of the USA Patriot
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
Patriot Act
), it is
required to obtain, verify and record information that identifies the Borrowers, which information
includes the names and addresses of the Borrowers and other information that will allow such Lender
to identify the Borrowers in accordance with the Patriot Act.
10.23
Electronic Execution of Assignments
.
The words execution, signed, signature, and words of like import in any Assignment
Agreement shall be deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or enforceability as a manually
executed signature or the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any applicable law, including the Federal Electronic Signatures in
Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any
other similar state laws based on the Uniform Electronic Transactions Act.
10.24
Gaming Authorities
.
The Arranger, the Administrative Agent and each Lender agree to cooperate with the Nevada
Gaming Authorities or any other applicable gaming authority in connection with the administration
of their regulatory jurisdiction over the Borrowers and their Restricted Subsidiaries, including to
the extent not inconsistent with the internal policies of such Lender and any applicable legal or
regulatory restrictions the provision of such documents or other information as may be requested by
any such Nevada Gaming Authority or other gaming authority relating to the Arranger, the
Administrative Agent or any of the Lenders, or the Borrowers or any of their Subsidiaries, or to
the Loan Documents. Notwithstanding any other provision of the Agreement, the Borrowers expressly
authorize each Agent and Lender to cooperate with the Nevada Gaming Authorities and such other
gaming authorities as described above.
10.25
Termination of Disbursement Agreement
. Upon termination of the Disbursement
Agreement without replacement, (i) each of the following sections (or portions thereof) shall be
automatically deleted and be of no further force and effect: Section 4.2D, Section 4.2E, Section
4.2F (other than respect to Section 7.1.6(c) of the Disbursement Agreement as such section (a) is
in effect on the date hereof or (b) may be hereafter amended, supplemented or otherwise modified),
the third and fourth sentences of Section 5.19, Section 7.13E, clauses (ii) and (iii) of Section
8.3, and clause (ii) of Section 8.5 and (ii) the words Disbursement Agreement and in the first
sentence of Section 7.13A shall be automatically deleted.
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10.26
Press Releases and Related Matters
. Each Loan Party executing this Agreement
agrees to use commercially reasonable efforts to assure that neither it nor its Affiliates will in
the future issue any press releases or other public disclosure using the name of GE Capital or its
affiliates or referring to this Agreement or the other Loan Documents without at least two (2)
Business Days prior notice to GE Capital and without the prior consent of GE Capital (which
consent shall be deemed to have been given by GE Capital if GE Capital has not objected to such
press release or other public disclosure within two Business Days after its receipt thereof
provided that such press release or other public disclosure was sent by electronic mail with a
subject line Venetian Consent to Press Release to (i) Christopher H. Craig at
chriscraig@paulhastings.com and (ii) Edward Reynolds at ned.reynolds@ge.com or, in each case, to
such other party and/or address as may be designated by the Administrative Agent to Borrower
Representative unless (and only to the extent that) such Loan Party or Affiliate is unable to do so
under applicable law (including applicable securities regulations) and stock exchange rules and
regulations and then, in any event, such Loan Party or Affiliate will consult with GE Capital
before issuing such press release or other public disclosure. Each Loan Party consents to the
publication by Administrative Agent or any Lender of advertising material relating to the financing
transactions contemplated by this Agreement using any Borrowers name. Administrative Agent
reserves the right to provide to industry trade organizations information necessary and customary
for inclusion in league table measurements.
[Signature Page Follows]
152
[GE FF&E CREDIT AGREEMENT LVSI, VCR &LCR]
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.
BORROWERS:
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LAS VEGAS SANDS, LLC
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By:
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/s/ Robert P. Rozek
Name: Robert P. Rozek
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Title: Senior Vice President and
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Chief Financial Officer
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Notice Address:
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3355 Las Vegas Boulevard South
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Las Vegas, Nevada 89109
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Attention: General Counsel of Las Vegas Sands Corp.
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Telefax: (702) 733-5088
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VENETIAN CASINO RESORT, LLC
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By:
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/s/ Robert P. Rozek
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Name: Robert P. Rozek
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Title: Senior Vice President and
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Chief Financial Officer
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Notice Address:
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3355 Las Vegas Boulevard South
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Las Vegas, Nevada 89109
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Attention: General Counsel of Las Vegas Sands
Corp.
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Telefax: (702) 733-5088
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S-1
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LIDO CASINO RESORT, LLC
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By:
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/s/ Robert P. Rozek
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Name: Robert P. Rozek
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Title: Senior Vice President and
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Chief Financial Officer
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Notice Address:
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3355 Las Vegas Boulevard South
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Las Vegas, Nevada 89109
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Attention: General Counsel of Las Vegas
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Sands Corp.
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Telefax: (702) 733-5088
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LENDERS:
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GENERAL ELECTRIC CAPITAL CORPORATION,
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as a Lender and Administrative Agent
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By:
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/s/ Richard ONeill
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Name: Richard ONeill
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Title: Vice President
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Notice Address:
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GE Commercial & Industrial Finance, Inc.
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401 Merritt 7
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2nd Floor
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Norwalk, CT 06856
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Attention: Las Vegas Sands Account Manager
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Telefax:: (203) 229-1980
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With copies to:
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Paul, Hastings, Janofsky & Walker, LLP
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75 East 55th Street
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New York, NY 10022
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Attention: Christopher H. Craig
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Telefax:: (212) 230-7889
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and
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General Electric Capital Corporation
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401 Merritt 7
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Norwalk, CT 06856
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Attention: Corporate Counsel
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Telefax: (203) 956-4001
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