SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 12, 2004
LAS VEGAS SANDS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 333-42147 04-3010100
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3355 LAS VEGAS BOULEVARD SOUTH
ROOM 1A 89109
LAS VEGAS, NEVADA (Zip Code)
(Address of principal executive offices)
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Registrant's telephone number, including area code: (702) 414-1000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS AND REGULATION FD DISCLOSURE.
On April 12, 2004, we announced that we had agreed to sell the approximately 500,000 square foot Grand Canal Shoppes, and the multi-level retail space in our proposed Phase II resort, which will sit adjacent to The Venetian, to GGP Limited Partnership for an aggregate purchase price of $766 million plus a percentage of net operating income relating to the Phase II resort's retail space. The sale includes all of the restaurant and retail space on the casino level of The Venetian. The sale is subject to standard closing conditions and is expected to close on or about May 17, 2004. The purchase agreement relating to the sale of the Grand Canal Shoppes, the agreement relating to the Phase II resort and the press release announcing this transaction, are attached as Exhibits 10.1, 10.2 and 99.1, respectively, to this report on Form 8-K.
Exhibit Number Title
-------------- -----
10.1 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.
10.2 Agreement, made as of April 12, 2004, by and between Lido
Casino Resort, LLC and GGP Limited Partnership.
99.1 Press Release of Las Vegas Sands, Inc., dated April 12,
2004.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 16, 2004
LAS VEGAS SANDS, INC.
By: /s/ Harry D. Miltenberger
-----------------------------------
Name: Harry D. Miltenberger
Title: Vice President-Finance
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Exhibit Number Title
-------------- -----
10.1 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.
10.2 Agreement, made as of April 12, 2004, by and between Lido
Casino Resort, LLC and GGP Limited Partnership.
99.1 Press Release of Las Vegas Sands, Inc., dated April 12,
2004.
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Exhibit 10.1
GRAND CANAL SHOPS MALL MM SUBSIDIARY, INC.
and
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC
Sellers,
and
GGP LIMITED PARTNERSHIP
Purchaser.
PURCHASE AND SALE AGREEMENT
April ____, 2004
Property
The Grand Canal Shoppes, Las Vegas, Nevada
TABLE OF CONTENTS
Page
1. Definitions.....................................................................................2
2. Agreement to Sell and Purchase.................................................................13
3. Purchase Price.................................................................................13
3.1 Purchase Price........................................................................13
3.2 Escrow Provisions.....................................................................14
3.3 Letters of Credit.....................................................................17
4. Permitted Encumbrances.........................................................................19
4.1 Definitions...........................................................................19
5. The Closing....................................................................................20
5.1 Closing Date..........................................................................20
5.2 Actions at Closing....................................................................21
6. Apportionments.................................................................................21
6.1 Rents.................................................................................21
6.2 Leasing Costs.........................................................................30
6.3 Ancillary Income......................................................................31
6.4 Additional Items......................................................................31
6.5 Adjustment Statement..................................................................37
6.6 Gift Certificates.....................................................................37
6.7 Survival..............................................................................37
7. Actions to be Taken and Documents to be Delivered at or Prior to the Closing...................37
7.1 The Sellers' Deliveries...............................................................37
7.2 Purchaser's Deliveries................................................................43
7.3 Access to Records.....................................................................45
7.4 Due Diligence.........................................................................45
8. As Is; Representations and Warranties of the Sellers...........................................47
8.1 No Implied Representations............................................................47
8.2 "As-Is" Purchase......................................................................49
8.3 Representations and Warranties of the Sellers.........................................50
8.4 No Independent Investigation..........................................................58
8.5 Effect of Estoppels...................................................................58
8.6 Survival of Warranties, etc...........................................................59
9. Representations and Warranties of Purchaser....................................................62
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9.1 Purchaser's Warranties................................................................62
9.2 Remaking of Warranties; Survival......................................................63
10. Conditions to the Obligation of the Sellers to Close...........................................63
10.1 Purchase Price........................................................................63
10.2 Representations and Warranties........................................................64
10.3 Performance of Obligations............................................................64
10.4 No Injunctions........................................................................64
10.5 SNDA's................................................................................64
10.6 Other Conditions......................................................................64
11. Conditions to the Obligation of Purchaser to Close.............................................65
11.1 Representations and Warranties........................................................65
11.2 Performance of Obligations............................................................68
11.3 Casino Level SNDA.....................................................................69
11.4 All Sellers to Close..................................................................69
11.5 No Injunctions........................................................................69
11.6 Title.................................................................................69
11.7 Other Conditions......................................................................70
12. Risk of Loss Upon Casualty or Taking...........................................................70
13. Operation of the Property Until Closing; Tax Returns...........................................72
13.1 Standard of Operation.................................................................72
13.2 Tax Returns...........................................................................73
14. Title to the Membership Interests and the Property.............................................73
14.1 Title to the Membership Interests.....................................................73
14.2 Title Defects.........................................................................73
14.3 Waiver by Purchaser...................................................................75
14.4 Full Performance; Survival............................................................76
15. Brokers, etc...................................................................................76
15.1 Purchaser's Representation............................................................76
15.2 The Sellers' Representation...........................................................76
15.3 Survival..............................................................................77
16. Default; Remedies..............................................................................77
16.1 Purchaser's Default...................................................................77
16.2 The Sellers' Default..................................................................78
16.3 Survival..............................................................................78
17. Estoppels......................................................................................78
17.1 Required Estoppels....................................................................78
17.2 The Sellers' Estoppels................................................................79
17.3 Variance between Estoppels and Forms Annexed as Exhibits..............................81
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17.4 All Estoppels to be Delivered.........................................................81
18. Notices .......................................................................................82
19. Further Assurances.............................................................................83
20. Captions ......................................................................................84
21. Governing Law; Construction....................................................................84
22. Entire Agreement; No Third Party Beneficiary, etc..............................................85
23. Waivers; Extensions............................................................................85
24. Pronouns ......................................................................................86
25. Transaction Expenses; Fees and Disbursements of Counsel, etc...................................86
25.1 Transaction Expenses..................................................................86
25.2 Other Expenses........................................................................87
25.3 Survival..............................................................................87
26. Assignment.....................................................................................87
26.1 General Prohibition...................................................................87
26.2 Affiliates............................................................................87
26.3 Assignor Remains Liable...............................................................88
27. Counterparts...................................................................................88
28. No Recording...................................................................................88
29. Confidentiality................................................................................89
30. Prevailing Party's Attorneys' Fees.............................................................89
31. Indemnification................................................................................90
32. Waiver of Jury Trial...........................................................................91
33. Partnership Liabilities........................................................................92
33.1 The Sellers' Indemnification..........................................................92
33.2 Exclusions to the Sellers' Indemnification............................................93
34. Arbitration....................................................................................95
34.1 Final and Binding.....................................................................95
34.2 Rules.................................................................................95
34.3 Arbitration Governing Law.............................................................96
34.4 Written Opinion.......................................................................96
34.5 Arbitration Fees......................................................................96
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35. REA ......................................................................................96 36. Joint and Several Liability....................................................................97 37. Guaranty ......................................................................................97 38. ATM Agreement..................................................................................97 39. Canyon Ranch Spa Space.........................................................................98 40. Additional Sellers' Post-Closing Obligation....................................................99 |
Schedule of Exhibits
Exhibit A Membership Interests
Exhibit B Description of Land
Exhibit C List of Documents Constituting the Other Agreements
Exhibit D Permitted Encumbrances
Exhibit E Survey
Exhibit F Form of Assignment of Membership Interests
Exhibit G Schedule of Leases
Exhibit H Schedule of Delinquencies
Exhibit I Schedule of Violations
Exhibit J Pending Condemnations
Exhibit K Schedule of Pending Litigation
Exhibit L Schedule of Material Personal Property
Exhibit M Environmental Reports
Exhibit N Sellers' Representation Certificate
Exhibit O Pending Lease Transactions
Exhibit P Form of REA Estoppel
Exhibit Q Form of Tenant Estoppel
Exhibit R Form of Sellers' Estoppel Letter
Exhibit S [Reserved]
Exhibit T Amended and Restated REA
Exhibit U Reserved
Exhibit V VCR Showroom Lease
Exhibit W Gondola Lease
Exhibit X VCR Office Lease
Exhibit Y Casino Level Master Lease
Exhibit Z ATM Agreement
Exhibit AA Form of SNDA
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the __ day of April, 2004 by and between each of Grand Canal Shops Mall Subsidiary, LLC, a Delaware limited liability company ("Mall Subsidiary"), and Grand Canal Shops Mall MM Subsidiary, Inc., a Nevada corporation, each having an office at 3355 Las Vegas Boulevard South, Las Vegas, Nevada 89019, as sellers (each, a "Seller" and collectively, the "Sellers"), and GGP Limited Partnership, a Delaware limited partnership with an office at 110 North Wacker Drive, Chicago, Illinois 60606, as purchaser ("Purchaser").
W I T N E S S E T H:
WHEREAS, Grand Canal Shops II, LLC, a Delaware limited liability company ("Owner") is the owner in fee simple of The Grand Canal Shoppes, a retail shopping mall located in Las Vegas, Nevada physically consisting of the Land, Improvements and Personal Property and also contractually and legally consisting of the Leases, REA, VCR Showroom Lease, the Gondola Lease, the VCR Office Lease, the Casino Level Master Lease, the Other Agreements and Intangible Personal Property (all such physical and contractual items, collectively, the "Grand Canal Shoppes");
WHEREAS, as of the Closing Date Owner will be the lessee under the Casino Level Master Lease;
WHEREAS, the Sellers collectively own all of the membership interests (the "Membership Interests") in Owner, in the percentages set forth on Exhibit A attached hereto and made a part hereof;
WHEREAS, the Sellers desire to sell the Membership Interests to Purchaser; and
WHEREAS, Purchaser desires to purchase the Membership Interests from the Sellers, subject to and upon all of the terms, covenants and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual undertakings in this Agreement, the parties hereto agree as follows:
1. Definitions. Wherever used in this Agreement, the following terms shall have the meanings set forth in this Article 1 unless the context of this Agreement clearly requires another interpretation:
"Adjustment Point" - shall have the meaning set forth in Article 6.
"Amended and Restated REA" - shall have the meaning set forth in the definition of "REA" below.
"ATM Agreement" - shall mean that certain ATM Agreement dated November 20, 2002 between Ultron, Inc. and VCR attached hereto and made a part hereof as Exhibit Z.
"Bank" - shall have the meaning set forth in Section 3.3
"Basket" - shall have the meaning set forth in Section 8.6.2.
"Buon Giorno Lease" - shall mean that certain Lease by and between Grand Canal Shops Mall Construction, LLC ("GCSMC"), as landlord, and VCR, as tenant, dated as of April 1, 1999, the landlord's interest in which was assigned to Owner pursuant to that certain Sale and Contribution Agreement dated November 14, 1997 by and between VCR and GCSMC, as sellers, and Grand Canal Shops Mall, LLC, as purchaser, that certain Second Sale And Contribution Agreement dated December __, 1999 by and between Grand Canal Shops Mall, LLC, as seller, and Mall Subsidiary, as
purchaser, and that certain Third Sale and Contribution Agreement dated June 4, 2002 by and between Mall Subsidiary, as seller, and Owner, as purchaser.
"Business Day" - shall mean any day other than a Saturday, a Sunday or a day on which national banking institutions located in New York City are authorized or required to close.
"Cap" - shall have the meaning set forth in Section 8.6.2.
"Casino Level Master Lease" - shall mean that certain Casino Level Restaurant/Retail Master Lease by and between VCR, as landlord, and Owner, as tenant, covering certain restaurant and retail space described therein.
"Casualty" - shall mean any damage to or destruction of the Property or any portion thereof caused by fire or other casualty, whether or not insured.
"Closing" - shall mean the closing of the sale of the Membership Interests by the Sellers to Purchaser provided for in Article 5.
"Closing Date" - shall have the meaning set forth in Section 5.1.
"Deposit" - shall have the meaning set forth in Section 3.1.1.
"Diamond Resort Lease" - shall mean that certain Concession Agreement by and between Owner and Marriott Ownership Resorts, Inc., dated February 18, 2004.
"Diamond Resort Lease Guaranty" - shall mean that certain Guarantee Agreement dated as of February 18, 2004 from Marriott International, Inc. to Owner.
"Environmental Report" - shall mean that certain Phase I Environmental Site Assessment issued by Converse Consultants as Converse Project No. 04-43101-01, dated January 20, 2004.
"Escrow Agent" - shall have the meaning set forth in Section 3.2.
"Estoppel Claims" - shall have the meaning set forth in Section 17.3.
"Excluded Liabilities" - shall have the meaning set forth in Section 33.1.
"Exhibits" - shall mean the exhibits attached to this Agreement, each of which shall be deemed to form part of this Agreement whether or not so stated in this Agreement.
"GCSMC" - shall have the meaning set forth in the definition of Buon Giorno Lease.
"Goldman" - shall have the meaning set forth in Section 15.1.
"Gondola Lease" - shall mean that certain Lease by and between Owner, as landlord, and VCR, as tenant, dated as of the Closing Date and covering, among other things, the gondola within the Property.
"Governmental Authorities" - shall mean all agencies, bureaus, departments and officials of federal, state, county, municipal and local governments and public authorities having jurisdiction over the Property or any part thereof.
"Grand Canal Shoppes" shall have the meaning set forth in the first "Whereas" clause of this Agreement.
"Impositions" - shall mean all real estate and personal property taxes, general and special assessments, water and sewer charges, road maintenance and other infrastructure charges, license fees and other fees and charges assessed or imposed by Governmental Authorities or quasi-Governmental Authorities upon the Land, Improvements and/or Personal Property.
"Improvements" - shall mean all buildings, facilities, structures and improvements now located or hereafter erected on the parcel of Land described as
Parcel 2 on Exhibit B attached hereto and made a part hereof, and all fixtures constituting a part thereof.
"Income" - shall have the meaning set forth in subsection 3.2.1.
"Indemnified Party" - shall have the meaning set forth in Article 31.
"Intangible Personal Property" - shall mean, with respect to the Property, all right, title and interest of Owner and the Sellers, if any, in and to all intangible personal property used in connection with the operation of the Property and including, without limitation, good will, going concern value, radius restriction and operating agreements of Tenants, all telephone numbers listed after the name of the Property, all names (including, without limitation, the name "The Grand Canal Shoppes"), trade names, designations, logos and service marks, websites, domain names and the appurtenant good will, used in connection with operation of the Property (other than the names or variations thereof of the Managing Agent and Tenants), the right to own, develop, lease and manage the Property and all similar items of intangible personal property owned by Owner and utilized solely in connection with the operation of the Property, but excluding any cash or cash equivalents held by Owner (subject, however, to the provisions of Article 6).
"Interface" - shall have the meaning set forth in the definition of REA.
"International News Lease" - shall mean that certain Lease by and between Grand Canal Shops Mall Subsidiary, LLC, as landlord and VCR, as tenant, dated July 5, 2001, the landlord's interest in which was assigned to Owner pursuant to that certain Third Sale And Contribution Agreement dated June 4, 2002 by and between Mall Subsidiary, as seller, and Owner, as purchaser.
"knowledge" - with respect to the Sellers shall mean, without independent investigation, the actual knowledge of any of Michael Mathis, Robert Goldstein and Harry Miltenberger.
"Land" - shall mean, subject to Article 39 hereof, the respective lots, pieces or parcels of land and/or air space more particularly described in Exhibit B, together with all appurtenances thereto.
"Leases" - shall mean all leases, licenses, concessions and other forms of agreement, written or oral, however denominated, wherein Owner (or VCR, with respect to any such agreements covering any space covered by the Casino Level Master Lease)
(as a party named therein or the successor thereto) grants to any party or parties, other than the Managing Agent, the right of use or occupancy of any portion of the Property or the space covered by the Casino Level Master Lease, and all renewals, modifications, amendments, guaranties, assignments and other agreements affecting the same, but expressly excluding the REA, the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease and the Casino Level Master Lease.
"Leasing Costs" - shall have the meaning set forth in Section 6.2.
"Leasing Cut-Off Date" - shall mean the date hereof.
"Legal Requirements" - shall mean all statutes, laws, ordinances, rules, regulations, executive orders and requirements of all Governmental Authorities which are applicable to the Property or any part thereof or the use or manner of use thereof, or to Owner, Tenants or occupants thereof in connection with such ownership, occupancy or use.
"Letters of Credit" - shall have the meaning set forth in Section 3.3.
"Lido" - shall have the meaning set forth in the definition of REA.
"Madame Tussaud Lease" - shall mean that certain Lease dated May 15, 1998, by and between GCSMC, as landlord and Madame Tussaud Las Vegas, Inc., as tenant, as amended by that certain First Amendment to Lease dated September 22, 1999, by and between GCSMC, as landlord and Madame Tussaud Las Vegas, Inc., as tenant, as amended by that certain Second Amendment to Lease dated February 1, 2000, by and between Mall Subsidiary, as landlord and Madame Tussaud Las Vegas, Inc., as tenant, the landlord's interest in which was assigned to Owner pursuant to that certain Sale and Contribution Agreement dated November 14, 1997 by and between VCR and GCSMC, as sellers, and Grand Canal Shops Mall, LLC, as purchaser, that certain Second Sale And Contribution Agreement dated December __, 1999 by and between Grand Canal Shops Mall, LLC, as seller, and Mall Subsidiary, as purchaser, and that certain Third Sale And Contribution Agreement dated June 4, 2002 by and between Mall Subsidiary, as seller, and Owner, as purchaser.
"Mall Property" - shall mean The Grand Canal Shoppes, excluding all of Owner's right, title and interest in, to and under the Casino Level Master Lease and the space covered by the Casino Level Master Lease.
"Mall Subsidiary" - shall have the meaning set forth in the Preamble to this Agreement.
"Management Agreement" - shall mean the agreement for the management of the Property dated as of April 23, 1997 between Las Vegas Sands, Inc. and the Managing Agent (as amended).
"Managing Agent" - shall mean Forest City Commercial Management, Inc.
"Material Loss" - shall have the meaning set forth in Section 11.1.
"Membership Interests" - shall have the meaning set forth in the third "Whereas" clause of this Agreement.
"New Lease Notice" - shall have the meaning set forth in Section 13.2.
"Other Agreements" - shall mean all contracts, agreements and documents pertaining to the Property to which Owner or its predecessor in interest is a party and by which Owner is bound, other than the REA, the Management Agreement, the Leases, the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease, the Casino Level Master Lease and the ATM Agreement and including, without limitation, all service contracts, construction contracts, leases of personal property and utility agreements. The Other Agreements are listed in Exhibit C attached hereto and made a part hereof.
"Owner" - shall have the meaning set forth in the first "Whereas" clause of this Agreement.
"Permitted Encumbrances" - shall have the meaning set forth in Section 4.1.
"Personal Property" - shall mean all apparatus, machinery, devices, appurtenances, equipment, furniture, furnishings, promotional and marketing fund accounts and other items of personal property (other than Intangible Personal Property) owned by Owner and located at and used in connection with the ownership, operation or maintenance of the Property, including, without limitation, (a) computer and peripheral equipment, computer software, and data contained on hard drives and on diskettes, and
(b) all records, books of account and papers of Owner relating to the construction, ownership, management and operations of the Property or Owner, including without limitation, architect's drawings, blue prints and as-built plans, maintenance logs, copies of warranties and guaranties, licenses and permits, instruction books, employee manuals, records and correspondence relating to insurance claims, financial statements, operating budgets, paper and electronic media copies of data and other information relating to the Property available from personal computers, third-party structural, mechanical, geotechnical or other engineering studies, third-party soil test reports, third-party environmental reports, third-party underground storage tank reports, third-party feasibility studies, third-party appraisals, third-party ADA surveys or reports, third-party OSHA asbestos surveys, third-party marketing studies, mall documents and compilations, organizational documents, lease summaries and originals and/or copies of Leases, the REA and the Other Agreements and correspondence related thereto (but excluding, in all events, all privileged or confidential information, all proprietary information and all internal correspondence, memorandum and other communications).
"Preclosing Basket" - shall have the meaning set forth in Section 11.1.
"Property" - shall mean, collectively, the Grand Canal Shoppes; all of Owner's right, title and interest in, to and under the Casino Level Master Lease; and, as the context requires, the space covered by the Casino Level Master Lease.
"Protected Party" - shall have the meaning set forth in Article 31.
"Purchase Price" - shall have the meaning set forth in Section 3.1.
"Purchaser" - shall have the meaning set forth in the Preamble of this Agreement.
"REA" - shall mean that certain Amended and Restated Reciprocal Easement,
Use and Operating Agreement dated as of November 14, 1997, among Interface-Group
- Nevada, Inc ("Interface"), Venetian Casino Resort, LLC ("VCR") and Grand Canal
Shops Mall Construction, LLC, as amended by (i) that certain First Amendment to
Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as
of December 20, 1999 among Interface, Grand Canal Shops Mall Subsidiary, LLC,
Lido Casino Resort, LLC ("Lido") and VCR; (ii) that certain Second Amendment to
Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as
of June 4, 2002, among VCR, Lido, Owner and Interface and (iii) that certain
Third Amendment to Amended and Restated Reciprocal Easement, Use and Operating
Agreement dated as of June 28, 2002 among VCR, Lido, Owner and Interface, and as
the same will be amended and restated on the Closing Date pursuant to that
certain Second Amended and Restated Reciprocal Easement, Use and Operating
Agreement among VCR, Lido, Owner and Interface (the "Amended and Restated REA")
"Remaining Balance" - shall have the meaning set forth in Section 3.1.2.
"Rents" - shall mean all fixed, minimum, additional, percentage, overage and escalation rents, common area and/or Property maintenance charges, advertising and promotional charges, insurance charges, rubbish removal charges, sprinkler charges, shoppers aid charges, water charges, utility charges, HVAC charges and other amounts payable under the Leases.
"Required Tenants" - shall have the meaning set forth Section 17.2.
"Rules" - shall have the meaning set forth in Section 34.2.
"Sephora Lease" - shall mean that certain Lease by and between Grand Canal Shops Mall Construction, LLC, as landlord and DFS Group, L.P., as tenant, dated November 23, 1998, as amended by that certain First Amendment to Lease by and between Grand Canal Shops Mall Subsidiary, LLC, as landlord, and Sephora USA, LLC, as tenant, dated March 30, 2000, as amended by that certain Second Amendment to Lease by and between Grand Canal Shops Mall Subsidiary, LLC, as landlord, and Sephora USA, LLC, as tenant, dated April 10, 2000, the landlord's interest in which was assigned to Owner pursuant to that certain Sale and Contribution Agreement dated November 14, 1997 by and between VCR and GCSMC, as sellers, and Grand Canal Shops Mall, LLC, as purchaser, that certain Second Sale And Contribution Agreement dated December __, 1999 by and between Grand Canal Shops Mall, LLC, as seller, and Mall Subsidiary, as purchaser, and that certain Third Sale And Contribution Agreement dated June 4, 2002 by and between Mall Subsidiary, as seller, and Owner, as purchaser.
"Sellers" - shall have the meaning set forth in the Preamble to this Agreement.
"Sellers' Copies" - shall mean any executed original counterparts of the instrument in question in Owner's or the Sellers' possession or, if an executed original counterpart is not in Owner's, the Sellers' or the Managing Agent's possession, such conformed or photostatic copies as may be in Owner's, the Sellers' or the Managing Agent's possession.
"Sellers' Estoppel Letter" - shall have the meaning set forth in Section 17.2.
"Seller's Representations" - shall have the meaning set forth in Section 8.6.1.
"SNDAs" - shall have the meaning set forth in subsection 11.3.
"Taking" - shall mean a taking of all or any portion of the Land and/or improvements in condemnation or by exercise of the power of eminent domain or by an agreement in lieu thereof.
"Tao Nightclub Lease" - shall mean that certain Lease by and between Owner, as landlord and Buddha Entertainment, LLC, as tenant, dated June 3, 2003.
"Tao Restaurant Lease" - shall mean that certain Lease by and between Owner, as landlord and Asia Las Vegas LLC, as tenant, dated June 3, 2003.
"Tenants" - shall mean the tenants, licensees, concessionaires or other users or occupants under Leases.
"Title Company" - shall mean Lawyers Title Insurance Corporation.
"VCR" - shall have the meaning set forth in the definition of REA.
"VCR Kiosk Lease" - shall mean that certain Concession Agreement by and between Grand Canal Shops Mall Subsidiary, LLC, as landlord, and VCR, as tenant, dated as of March 23, 2000, as amended pursuant to that certain First Amendment to Concession Agreement by and between Owner, as landlord, and VCR, as tenant, dated as of February 9, 2004.
"VCR Leases" - shall mean the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease, the International News Lease, the Buon Giorno Lease, and the VCR Kiosk Lease
"VCR Office Lease" - shall mean that certain Lease by and between Owner, as landlord, and VCR, as tenant, dated as of the Closing Date covering certain office space described therein.
"VCR Showroom Lease" - shall mean that certain Lease by and between Owner, as landlord, and VCR, as tenant, dated as of the Closing Date and covering, among other things, certain theater space in the Property.
"VCR's Representations" shall have the meaning set forth in subsection 8.6.2 hereof.
"Violations" - shall mean, with respect to the Property, violations of Legal Requirements existing with respect to the Property.
2. Agreement to Sell and Purchase. Upon and subject to the terms and conditions of this Agreement, the Sellers agree to sell and assign the Membership Interests to Purchaser and Purchaser agrees to purchase the Membership Interests from the Sellers, to assume the obligations in respect thereof accruing from and after the Closing Date and to pay to the Sellers the Purchase Price. Wherever in this Agreement any monies, including with respect to the Purchase Price, are to be paid to the Sellers, the Sellers shall jointly instruct Purchaser as to what portion is to be paid to each Seller; absent any such instruction, each Seller shall be paid its pro rata share of the applicable monies in accordance with the percentages set forth on Exhibit A.
3. Purchase Price.
3.1 Purchase Price. The purchase price for the Membership Interests shall
be (a) SEVEN HUNDRED SIXTY SIX MILLION AND NO/100 DOLLARS ($766,000,000.00) (the
"Purchase Price"). The Purchase Price for the
Property shall be increased or decreased, for Purchaser's accounting purposes only, by any subsequent adjustments as determined under Section 6.1.5. The Purchase Price shall be payable by Purchaser as follows:
3.1.1 Five percent (5%) of the Purchase Price (the "Deposit") shall be
paid by Purchaser to Escrow Agent simultaneously herewith, either by wire
transfer of immediately available federal funds to an account designated by
Escrow Agent, or in the form of one or more Letters of Credit in accordance with
Section 3.3. Except as expressly provided in this Agreement, the Deposit shall
be non-refundable.
3.1.2 The balance of the Purchase Price, plus or minus adjustments and credits provided for in Article 6 and any other applicable provisions of this Agreement (the "Remaining Balance") shall be paid in cash at the Closing, by wire transfer of immediately available federal funds to an account or accounts designated by the Sellers.
3.2 Escrow Provisions.
3.2.1 The Title Company (referred to in this Section and sometimes in other sections hereof as "Escrow Agent") shall hold the Deposit in escrow in an interest-bearing bank account until the Closing or such other time as is specified herein, and shall pay over or apply the Deposit in accordance with the terms of this Section 3.2. The party that receives all interest and other income earned on the Deposit (the "Income") pursuant to the provisions of this Agreement shall be responsible for paying any income taxes thereon. The tax identification numbers of the parties hereto shall be furnished to Escrow Agent upon request.
3.2.2 If the Closing occurs, the Deposit shall be paid to the Sellers and credited against the Purchase Price and the Income shall be paid to or at the direction of Purchaser. If this Agreement is terminated pursuant to Section 16.1, the Deposit and the Income shall be paid to the Sellers as liquidated and agreed upon damages for Purchaser's default. If the Closing does not occur for any reason other than termination of this Agreement pursuant to Section 16.1, then, subject to the provisions of Section 16.2, the Deposit and the Income shall be paid to Purchaser.
3.2.3 Escrow Agent shall not be required to make any disposition of the Deposit or the Income unless (i) Escrow Agent is directed to do so in writing by the Sellers and Purchaser or (ii) Escrow Agent is directed to do so in writing by the party which claims to be entitled to receive the Deposit and the Income and the other party does not object to such disposition within ten (10) days after written notice of such direction is given by Escrow Agent to the other party or (iii) Escrow Agent is directed to do so by a final order or judgment of a court as hereinafter provided. The notice given by Escrow Agent pursuant to clause (ii) above shall state in capital letters that failure of the addressee to object to the disposition of the Deposit and the Income described in such notice within ten (10) days after the giving thereof shall constitute a waiver of the addressee's right to contest or object to such disposition. In the event that any dispute shall arise with respect to the entitlement of either party to the Deposit or the Income, Escrow Agent shall continue to hold the Deposit and the Income until otherwise directed by written instruction from the Sellers and Purchaser or a final order or judgment of a court of competent jurisdiction entered in an action or proceeding to which Escrow Agent is a party. In addition, in the event of any such dispute, Escrow
Agent shall have the right at any time to commence an action in interpleader and to deposit the Deposit and/or the Income with the clerk of a court of appropriate jurisdiction in the State of New York. Upon the commencement of such action and the making of such deposit, Escrow Agent shall be released and discharged from and of all further obligations and responsibilities hereunder. For the purposes of this subsection 3.2.3, no dispute shall be deemed to exist as to entitlement of either party to the Deposit and the Income if the party receiving notice from Escrow Agent pursuant to clause (ii) of this subsection 3.2.3 objects to the disposition of the Deposit and the Income provided for in such notice more than ten (10) days after the giving of such notice by Escrow Agent.
3.2.4 The parties hereto acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that with respect to the Deposit and the Income Escrow Agent shall not be deemed to be the agent of any of the parties hereto and that Escrow Agent shall not be liable to either of the parties hereto for any act or omission on its part unless taken or suffered in bad faith, in willful disregard of this Agreement or involving gross negligence on the part of Escrow Agent. Escrow Agent may act upon any instrument or other writing and upon signatures believed by it to be genuine, without any duty of independent verification. Escrow Agent shall not be bound by any modification of this Agreement unless the same is in writing and signed by the parties hereto and a counterpart thereof is delivered to Escrow Agent and, if Escrow Agent's duties, rights or liabilities hereunder are affected, unless Escrow Agent shall have given its prior consent thereto in writing. Escrow Agent shall not be required or obligated to determine any questions of law or fact. The parties
hereto shall jointly and severally indemnify and hold harmless Escrow Agent from and against all costs, claims and expenses, including reasonable attorneys' fees and litigation costs, incurred by Escrow Agent in connection with the performance of its duties under this Section 3.2 (including, without limitation, in an interpleader action or other litigation regarding the disposition of the Deposit and the Income), except with respect to acts or omissions taken or suffered by Escrow Agent in breach of this Agreement or involving bad faith, gross negligence or willful misconduct on the part of Escrow Agent.
3.2.5 Escrow Agent shall have no liability for the selection of any particular account or investment made by the parties hereto, for fluctuations in the value of said account or investment, for the amount of interest or other income earned on said account or investment or for any loss incurred in connection therewith.
3.2.6 Escrow Agent has acknowledged its agreement to the provisions of this Section 3.2 by signing this Agreement, and Escrow Agent has executed this Agreement solely for such purpose.
3.2.7 References in succeeding provisions of this Agreement to the Deposit shall be deemed to be references both to the Deposit and the Income.
3.3 Letters of Credit. At Purchaser's option, the Deposit may be paid by Purchaser simultaneously herewith by Purchaser's delivering to Mall Subsidiary one or more clean, irrevocable stand-by letters of credit (the "Letters of Credit") in an aggregate amount equal to the Deposit in favor of Mall Subsidiary, the form of each of which shall comply with the next sentence and shall otherwise be
reasonably acceptable to the Sellers and each of which shall be issued by a bank (the "Bank") with a Issuer Financial Strength Rating from S&P of A or better (without a negative credit watch if such rating is A) or a Senior Unsecured Debt Rating or Issuer Rating from Moody's of A-2 or better (without a negative credit watch if such rating is A-2). Each of the Letters of Credit shall initially have an expiration date not earlier than sixty (60) days after the initial Closing Date provided for in the first sentence of Section 5.1 hereof, and each shall provide that it can be drawn on by the Mall Subsidiary upon delivery by Mall Subsidiary to the Bank of a written notice stating that Mall Subsidiary is entitled to draw upon such Letter of Credit pursuant to the terms of this Agreement. If one or more Letters of Credit are delivered by Purchaser: (i) if the Closing occurs, the Letters of Credit shall be returned by Mall Subsidiary to Purchaser at the Closing and the Remaining Balance shall in such case be increased by the amount of the Letters of Credit; (ii) if the Closing does not occur under circumstances in which Purchaser is entitled to a return of the Deposit, the Letters of Credit shall be promptly returned by Mall Subsidiary to Purchaser; and (iii) if (A) the Sellers shall at any time be entitled to receive the proceeds of the Deposit or (B) Mall Subsidiary shall be holding any Letters of Credit thirty (30) days prior to the expiration date thereof and Purchaser shall not theretofore have delivered to Mall Subsidiary an endorsement to such Letters of Credit signed by the issuer thereof extending such expiration date for a minimum of sixty (60) days or replacement Letters of Credit meeting the requirements of the first and second sentences of this Section 3.3 and bearing an expiration date at least sixty (60) days following the expiration date of the original Letters of Credit, then in either such case Mall Subsidiary shall be entitled to draw the full amount of such Letters of Credit and
either retain such amount (in the case of clause (A)) or pay such amount to
Escrow Agent (in the case of clause (B), in which event the provisions of
Section 3.2 shall apply with respect to such amount).
4. Permitted Encumbrances.
4.1 Definitions. It shall be a condition precedent to Purchaser's obligations hereunder that at the Closing title to the Property shall be subject only to the following matters ("Permitted Encumbrances"):
4.1.1 the matters set forth in Exhibit D;
4.1.2 liens for Impositions which are not due and payable as of the Closing Date or which are apportioned in accordance with Article 6;
4.1.3 liens for Impositions which are paid directly by Tenants in occupancy on the Closing Date to the entity imposing same;
4.1.4 the state of facts shown on the survey described in Exhibit E attached hereto and made a part hereof, and any state of facts a physical inspection of the Property would show;
4.1.5 zoning, subdivision, environmental, building and all other Legal Requirements presently existing, or enacted prior to the Closing, applicable to the ownership, use or development of or the right to maintain or operate the Property, or have space therein used and occupied by Tenants;
4.1.6 all Leases in effect on the date of this Agreement, any extensions or renewals of such Leases pursuant to options contained therein which do not require the consent of Owner thereunder and any extensions, renewals or amendments of such Leases or additional or substituted Leases made
between the date hereof and the Closing Date in accordance with the provisions of Article 13;
4.1.7 the VCR Showroom Lease;
4.1.8 the Gondola Lease;
4.1.9 the VCR Office Lease;
4.1.10 mechanics liens, lis pendens and notices of commencement arising from work or other obligations, the payment for which is the responsibility of any Tenant in occupancy on the Closing Date under a Lease then in effect and not Owner (provided that any security posted by such Tenant with respect to the foregoing remains for the benefit of Owner following Closing (unless such security expires by its terms prior to Closing));
4.1.11 the REA;
4.1.12 the Other Agreements;
4.1.13 all exceptions to title which, taken together, would not interfere in any respect (other than to a de minimus extent) with the current use and operation of the Property; and
4.1.14 all other matters affecting title to the Property which are hereafter accepted or required to be accepted or are waived by Purchaser as provided in Article 14.
5. The Closing.
5.1 Closing Date. The closing of the transactions provided for in this Agreement (the "Closing") shall be held on May 17, 2004 (the "Closing Date") at the offices of Paul, Weiss, Rifkind, Wharton & Garrison LLP, 1285 Avenue of the
Americas, New York, New York 10019-6064. Time shall be of the essence with respect to Purchaser's obligation to consummate the Closing on the Closing Date. The Sellers shall have the right to adjourn the Closing Date one or more times for a combined aggregate of not more than ninety (90) days to cure exceptions to title, obtain estoppel certificates or satisfy other closing conditions. Any such adjournment may be effected by written notice to Purchaser given on or prior to the then scheduled Closing Date, in which case (a) the adjourned Closing Date shall be set forth in such notice and shall be a Business Day not less than five (5) Business Days after the giving of such notice and (b) time shall be of the essence with respect to Purchaser's obligation to consummate the Closing no later than three (3) Business Days after the adjourned Closing Date.
5.2 Actions at Closing. At the Closing, the parties shall deliver and accept the documents and instruments and take all other action required of them pursuant to this Agreement.
6. Apportionments. At the Closing (except where a later date is specifically provided for in this Article), the items set forth below shall be adjusted as of 11:59 P.M. on the day preceding the Closing Date (the "Adjustment Point") and the net amount thereof shall be paid by Purchaser to the Sellers or credited by the Sellers to Purchaser, as the case may be, at the Closing. For the purpose of this Article 6, the term "Owner" shall, with respect to all matters relating to Leases covering space covered by the Casino Level Master Lease, refer to Owner and VCR (as landlord under such Leases until the Casino Level Master Lease is executed and delivered).
6.1 Rents. Rents as and when collected. Any Rents collected by or on behalf of Owner (which, for purposes of this Section 6.1, shall include Rents
collected by any successor to Owner and by any property manager or other agent acting for Owner or any such successor) subsequent to the Closing (whether due and payable prior to or subsequent to the Adjustment Point) shall be adjusted as of the Adjustment Point, and any portion thereof properly allocable to periods prior to the Adjustment Point, net of costs of collection properly allocable thereto, if any, shall be paid by Purchaser or Owner to the Sellers within fifteen (15) days after the end of the calendar month in which received by or on behalf of Owner, but subject to the further provisions of this Section 6.1 in the case of Rents due prior to the Adjustment Point. If prior to the Closing Owner shall have collected any Rents (which, for the purposes of this Section 6.1, shall include Rents collected by any agent acting for Owner) which are properly allocable in whole or in part to periods subsequent to the Adjustment Point, the portion thereof so allocable to periods subsequent to the Adjustment Point, net of costs of collection properly allocable thereto, if any, shall be credited to Purchaser by the Sellers at the Closing. As used in this Section 6.1 the term "costs of collection" shall mean and include reasonable attorneys' fees and other costs incurred in collecting any Rents, but shall not include the regular fees payable to any property manager of the Property, the payroll costs of any of the Sellers', Owner's or Purchaser's employees or any other internal costs or overhead of the Sellers, Owner or Purchaser.
6.1.1 The Sellers shall deliver to Purchaser at Closing a list of all Tenants that are delinquent in payment of Rents as of the Adjustment Point (without giving effect to any unexpired grace periods), which list shall set forth the amount of each such delinquency, the period to which each such delinquency relates and the nature of the amount due, itemizing separately fixed monthly rent, tax
reimbursements, common area maintenance charges, electric charges, charges for tenant services, charges for overtime services, percentage rent and other charges, if any. The first amounts collected by or on behalf of Owner from each delinquent Tenant, net of costs of collection, if any, shall (a) first be deemed to be in payment of Rents (or the specific components of Rents) for the month in which the Closing occurs, (b) next, up to $50,000 in the aggregate for all Tenants shall be deemed to be in payment of Rents (or the specific component of rents) which are delinquent (without giving effect to any unexpired grace periods) as of the last day of the month immediately preceding the month in which the Closing occurs, as set forth on such list, (c) next be deemed to be in payment of Rents (or the specific components of Rents) then due on account of any month after the month in which the Closing occurs and (d) then, to the extent not already applied pursuant to clause (b) of this sentence, be deemed to be in payment of Rents (or the specific components of Rents) which are delinquent (without giving effect to any unexpired grace periods) as of the last day of the month immediately preceding the month in which the Closing occurs, all as set forth on such list. Any amounts collected by or on behalf of Owner from each Tenant which, in accordance with the preceding sentence, are allocable to the month in which the Closing occurs (as adjusted as of the Adjustment Point) or any prior month, net of costs of collection properly allocable thereto, if any, shall be paid promptly by Purchaser to the Sellers.
6.1.2 Purchaser shall cause Owner and any successors to Owner to exert reasonable efforts for a period of two (2) years after the Closing to bill and collect any delinquencies set forth on the list delivered by the Sellers pursuant to subsection 6.1.1 and the amount thereof, as, when and to the extent collected by or on
behalf of Owner shall, if due to the Sellers pursuant to the provisions of subsection 6.1.1, be paid by Owner to the Sellers net of costs of collection, if any, properly allocable thereto, promptly after the collection thereof by Owner. In no event shall Purchaser or Owner be obligated to institute any actions or proceedings or to seek the eviction of any Tenant in order to collect any such delinquencies.
6.1.3 Following the Closing, Purchaser shall submit or cause to be submitted to the Sellers, within 30 days after the end of each calendar quarter up to and including the calendar quarter ending on March 31, 2006 but only so long as any delinquencies that existed as of the Adjustment Point remain outstanding, a statement which sets forth all collections made by or on behalf of Owner from the Tenants which owe such delinquencies through the end of such calendar quarter. The Sellers or their designee shall have the right from time to time following the Closing until 90 days after receipt by the Sellers of the last quarterly statement required hereunder, at the Sellers' expense during business hours and on reasonable prior notice to Purchaser, to examine and audit so much of the books and records of Purchaser or Owner (or any successor of Owner) as relate to such delinquencies in order to verify the collections reported by Purchaser or Owner (or any successor of Owner) in such quarterly statements.
6.1.4 Nothing contained in this Section 6.1 shall be deemed to prohibit the Sellers, at their own expense, from instituting any actions or proceedings in their own name against any Tenant after the Closing in order to collect the amount of any delinquencies due in whole or in part to the Owner from such Tenant that are allocable to periods prior to the Adjustment Point; provided, however, that in no
event shall the Sellers be entitled in any such action or proceeding to seek to evict any Tenant, to recover possession of its space or to terminate its Lease. If requested by the Sellers, Purchaser shall or shall cause Owner to join in any such action or proceeding, or permit the same to be bought in Purchaser's or Owner's name or in the names of the Sellers, Purchaser and Owner, all at the Sellers' sole cost and expense. Purchaser shall not, and shall not cause Owner to, waive or settle any delinquency owed in whole or in part to the Sellers without the prior written consent of the Sellers in each instance.
6.1.5 With respect to that portion of the Rents which constitute percentage or overage rents, or other amounts payable by Tenants based upon sales, receipts or income of such entities, the following shall apply: (i) at the Closing and/or, in the case of percentage or overage rents which are in arrears or are payable in other than monthly installments, subsequent to the Closing, percentage or overage rents shall be apportioned as provided in the other subsections of this Section 6.1 in the case of Rents generally (the parties agreeing to apportion such rents to a period of time prior to the Adjustment Point or a period of time subsequent to the Adjustment Point (or both) as directed by the applicable Tenants or as otherwise made clear by the circumstances surrounding the payment of such rents); and (ii) following the end of the fiscal year on account of which such percentage or overage rents are payable by each Tenant and receipt by Owner of any final payment on account thereof due from such Tenant, Purchaser shall (1) pay or cause to be paid to the Sellers net of costs of collection, if any, the amount, if any, by which (a) the amount of percentage or overage rents paid by such Tenant on account of such entire fiscal year multiplied by a fraction, the numerator of which is the number of months (including any fraction of a month expressed as a
fraction) of such fiscal year which occurred prior to the Adjustment Point and the denominator of which is 12 or such lesser number of months (including any fraction of a month expressed as a fraction) as may have elapsed in such fiscal year prior to the expiration of the Lease in question, exceeds (b) all amounts received by Owner prior to the Adjustment Point on account of the percentage or overage rents in question for such fiscal year (excluding any such amounts credited to Purchaser pursuant to the provisions of this Article 6) and (2) retain all portions of any such final payment not payable to the Sellers pursuant to clause (1) of this sentence. If the amount described in clause 1(b) of the preceding sentence exceeds the amount described in clause 1(a) of the preceding sentence, the Sellers shall pay such excess to Purchaser. Upon request of Purchaser, the Sellers shall advise Purchaser of the amount of percentage or overage rents collected by Owner from each Tenant prior to the Closing Date. If after the Closing, Purchaser or Owner collects any payments of percentage or overage rents that are paid in respect of a fiscal year which ended prior to the Closing, all such payments, net of costs of collection, if any, shall be promptly paid to the Sellers. If on the Closing Date, Owner shall be conducting any audits of payments of percentage or overage rents previously made by Tenants for fiscal years prior to the ones in effect on the Closing Date, the Sellers may, in their sole discretion and at their sole cost and expense, continue all or any such audits, or obligate Purchaser to cause Owner (or any successor of Owner) to either assign its right to continue all or any such audits to the Sellers or continue all or any such audits "in-house" until completion thereof at the Sellers' direction, and the Sellers shall collect and retain any amounts payable by reason thereof. In addition, the Sellers shall have the right to initiate, and then conduct (or, at the Sellers' option, obligate Purchaser
to cause Owner (or any successor of Owner) to conduct at the Sellers' direction and sole cost and expense), such (in-house) audits subsequent to the Closing in respect of any fiscal years prior to the one in effect on the Closing Date, and either the Sellers or Purchaser shall have the right to initiate and then conduct (or, at the Sellers' option, obligate Purchaser to cause Owner (or any successor of Owner) to initiate and then conduct), such audits subsequent to the Closing in respect of the fiscal year in which the Closing Date occurs (in which case both the Sellers and Purchaser shall jointly instruct Owner (or its successor) as to how to conduct such audit and shall cooperate with each other with respect thereto). Any payments to the Sellers pursuant to this subsection 6.1.5 shall be considered an adjustment to the Purchase Price for Purchaser's accounting purposes.
6.1.6 (A) With respect to that portion of Rents which are payable on an annual, semi-annual or other non-monthly basis or on a monthly, but estimated, basis (e.g., common area costs and insurance costs) (any such portion, "Special Rent"), Purchaser shall cause Owner to use reasonable efforts to bill and collect or cause to be billed and collected all such payments which become due after the Closing (but, subject to the provisions of subsection 6.1.4 above, shall have no obligation to initiate or prosecute any litigation with respect to, or evict any Tenant for non-payment of, Special Rent), which payments, to the extent allocable to periods prior to the Adjustment Point in accordance with the allocation method described in subsection 6.1.6(B) below, shall be paid by Owner to the Sellers promptly after receipt thereof, net of costs of collection, if any, properly allocable thereto. With respect to the Special Rents which are billed on an estimated basis during the fiscal or other period for which
paid, at the end of such fiscal or other period Purchaser shall determine whether the items in question have been overbilled or underbilled in accordance with provisions of the applicable Leases and the method of billing previously followed by Owner; provided, however, that unless and until, with respect to any Lease at the Mall Property, the Sellers and the applicable Tenant agree otherwise or there is a binding non-appealable judgment that requires otherwise, all such determinations by Purchaser shall (with respect to periods prior to and after the Adjustment Point) be consistent with the amounts payable by Owner (and any successor of Owner) pursuant to Schedule II of the Amended and Restated REA. If Purchaser determines that there has been an overbilling and an overbilled amount has been received, Purchaser shall cause Owner to reimburse such amount to the Tenants which paid the excess amount and the Sellers shall pay to Owner the portion of such reimbursement which is properly allocable (pursuant to subsection 6.1.6(B) below) to the period prior to the Adjustment Point. If Purchaser determines that there has been an underbilling, the additional amount shall be billed or caused to be billed by Owner to the Tenants, as applicable, and any amount received by Owner, net of costs of collection, if any, to the extent properly allocable (pursuant to subsection 6.1.6(B) below) to periods prior to the Adjustment Point shall promptly be paid by Owner to the Sellers. Purchaser's determination of any amounts underbilled or overbilled shall in each case be subject to (a) the proviso clause of the second sentence of this subsection 6.1.6(A) and (b) the approval of the Sellers, which approval shall not be unreasonably withheld. In connection with any annual true-up of estimated common area maintenance or other charges paid during the course of any fiscal year, the Sellers shall have the right to furnish to Purchaser schedules and other information to be utilized
in calculating amounts due in connection with such true-up for the portion of the fiscal year elapsed prior to the Closing Date (and/or, if applicable, the prior fiscal year), and Purchaser agrees to calculate amounts due (x) in accordance with the proviso clause of the second sentence of this subsection 6.1.6(A) and (y) on the basis of the schedules and information furnished by the Sellers.
(B) Special Rent shall be allocated as follows: First, calculate the total applicable Special Rent payments received, divided by the aggregate applicable expenses paid by Owner during the applicable period (such quotient, the "Recovery Ratio"). Second, calculate the aggregate applicable expenses paid by Owner prior to the Adjustment Point, multiplied by the Recovery Ratio (such product, the "Deemed Recovery Amount"). If the applicable Special Rent payments received prior to the Adjustment Point exceed the Deemed Recovery Amount, the Sellers shall promptly pay such excess to Purchaser; if such Special Rent payments are less than the Deemed Recovery Amount, Purchaser shall promptly pay such deficiency to the Sellers. All calculations of expenses paid by Owner pursuant to this subsection 6.1.6(B) shall (with respect to periods prior to and after the Adjustment Point) be consistent with the proviso clause of the second sentence of subsection 6.1.6(A) above.
6.1.7 Notwithstanding anything to the contrary set forth in this Section 6.1, (i) subject to the last sentence of subsection 6.4.1, all amounts paid by Tenants on account of Impositions shall (net of costs of collection, if any, properly allocable thereto) be apportioned between the Sellers and Purchaser in the same manner as the Impositions to which they relate are apportioned pursuant to subsection 6.4.1, and (ii) subject to the last sentence of subsections 6.4.2 and 6.4.3 and the provisions of subsection 6.1.6, all amounts paid by Tenants on account of utilities shall (net of costs of collection, if any, properly allocable thereto) be apportioned between the Sellers and Purchaser in the same manner as the utilities to which they relate.
6.1.8 Any advance rental deposits or payments held by Owner on the Closing Date and applicable to periods of time subsequent to the Adjustment Point, and any security deposits held by Owner on the Closing Date, together with interest thereon, if any, which, under the terms of the applicable Leases and/or applicable law, is payable to the Tenants thereunder, shall be retained by Owner at the Closing.
6.2 Leasing Costs. The Sellers shall pay (or cause Owner to pay prior to the Adjustment Point) and (to the extent not paid prior to the Adjustment Point) indemnify Purchaser and Owner in respect of all leasing commissions, costs of tenant alterations and improvements performed or to be performed for Tenants at the expense of the landlord thereof (or allowances payable by the landlord in lieu thereof), moving and other allowances, if any, and fees and disbursements of architects, engineers and attorneys (collectively "Leasing Costs") in respect of (i) all Leases executed by or on behalf of all parties thereto on or before the Leasing Cut-Off Date, (ii) any renewal of any Lease which resulted from the exercise by a Tenant of an option, or from an agreement executed by or on behalf of all parties thereto, on or before the Leasing Cut-Off Date and (iii) any increase of the space demised by any Lease resulting from the exercise of an option by a Tenant, or from an agreement executed by all of the parties thereto, on or before the Leasing Cut-Off Date. Purchaser shall cause Owner (and any successors of Owner) to pay, and shall indemnify the Sellers in respect of, all Leasing Costs not covered by the preceding sentence. If any Leasing Costs not covered by the first sentence of this Section 6.2 shall be paid by the Sellers and/or Owner prior to the Closing, Purchaser shall reimburse the Sellers for the documented amount thereof at the Closing.
6.3 Ancillary Income. Ancillary income received by Owner (and any successors to Owner) in connection with the furnishing of utilities from the Property to third parties, the leasing of kiosks, antennae, baby strollers and other items and the like shall be adjusted as of the Adjustment Point between the Sellers and Purchaser.
6.4 Additional Items. At the Closing, the following additional items shall be apportioned between the Sellers and Purchaser as of the Adjustment Point, with the Sellers to be obligated for or entitled to amounts apportioned to the period through the Adjustment Point and Purchaser to be obligated for or entitled to amounts apportioned to the period following the Adjustment Point:
6.4.1 Impositions payable by Owner in respect of the Property shall be adjusted on the basis of the fiscal year for which the same are imposed, whether or not yet due and payable as of the Closing Date. If an Imposition is not due and payable until after the Closing Date and the assessed valuation or the tax rate or any other factor upon which the amount of the Imposition will be based has not been fixed at the Closing Date, then the parties shall at the Closing apportion such Imposition based on the most recently available assessed valuation and tax rate, and shall make a final adjustment of such item within thirty (30) days following the date on which the actual assessed valuation and tax rate or any other factor applicable to such Imposition becomes known and, if necessary, upon receipt of actual bills. In the case of special assessments payable in installments, the installment for the fiscal year in which the Adjustment Point occurs shall be apportioned by the Sellers and Purchaser as provided above and Purchaser or Owner shall be responsible for paying all subsequent installments thereof. If any Tenant in occupancy at the Closing Date is obligated to pay any Impositions directly to the applicable taxing authority, such Impositions shall not be apportioned.
6.4.2 Water and sewer charges, if any, payable by Owner on the basis of the period or periods for which the same are payable. If there are water meters at the Property, the Sellers shall furnish readings to a date not more than thirty (30) days prior to the Closing Date, and the unfixed meter charges and the unfixed sewer charges, if any, based thereon for the intervening time shall be apportioned on the basis of such last readings. Any water and sewer charges payable by Tenants in occupancy on the Closing Date directly to the entity or entities furnishing such services shall not be apportioned.
6.4.3 Utilities and fuel payable by Owner, including without limitation electricity and gas. The Sellers shall endeavor to have the meters for such utilities read the day on which the Adjustment Point occurs and will pay the bills rendered to it on the basis of such readings. If the Sellers do not obtain such a meter reading with respect to any such utility, the adjustment therefor shall be made on the basis of the most recently issued bills therefor which are based on meter readings not earlier than thirty (30) days prior to the Adjustment Point. The Sellers will receive a credit in an amount equal to any cash security deposits held by any utility companies (with interest thereon, if any, in the amount equal to the amount accrued on such security deposits), and at and after the Closing Owner shall retain all right, title and interest in and to such security deposits. Purchaser will make its own arrangements for any surety bonds required by any utility companies within ten (10) Business Days following the Closing Date, and any bonds previously furnished may, at the Purchaser's option, be cancelled on or after the Closing. If fuel oil, propane or other fuel is used at the Property, the Sellers shall deliver to Purchaser at the Closing statements of the suppliers of such fuel dated within three days of the Adjustment Point setting forth the quantity of fuel on hand and the cost paid by Owner therefor, and Purchaser shall pay to the Sellers at the Closing the cost of such fuel (including taxes thereon, if any) as shown on such statements. Charges for any utilities payable by Tenants in occupancy on the Closing Date directly to the utility companies furnishing the same shall not be apportioned.
6.4.4 Charges payable by Owner under the Other Agreements.
6.4.5 Contributions payable by Owner to merchants' and other associations, and to promotional and marketing funds and activities at the Property, it being understood that the Sellers shall be reimbursed at the Closing for marketing or promotional expenditures paid for prior to the Closing to the extent that the advertisements or other items covered by such expenditures will appear or take place on or after the Closing Date and the Purchaser shall receive a credit to the Purchase Price in the amount equal to marketing or promotional expenditures not paid for prior to the Closing to the extent that the advertisements or other items covered by such expenditures have appeared or taken place prior to the Closing Date.
6.4.6 If on the Closing Date, there are pending any tax certiorari
proceedings and/or protests of real estate tax assessments relating to the
Property in respect of the real estate taxes payable for the then-current tax
fiscal year, then (i) the Sellers shall have the right to direct the prosecution
by Owner or its successor (and Purchaser shall cause Owner or such successor to
follow such directions) of such proceedings or protests and collect any refunds
payable in respect thereof if on the Closing Date more than half of such fiscal
year shall have elapsed, and (ii) Owner (and Purchaser, as the owner of all of
the Membership Interests) shall have the right to retain control of the
prosecution of such proceedings or protests and collect any refunds payable in
respect thereof if on the Closing Date half of such fiscal year or less shall
have elapsed; provided, however, that no settlement of any such proceedings or
protests shall be made without the prior written approval of the other party
hereto, such approval not to be unreasonably withheld or delayed. The Sellers or
their designee shall have the right to take over the prosecution of any such
proceedings or protests in the name of Owner with respect to any prior periods
without the participation or approval of Purchaser (and Purchaser shall cause
Owner to execute all documents reasonably requested by the Sellers in connection
therewith, at the Sellers' expense), and Purchaser shall have the right to
direct the prosecution and settlement by Owner of any such proceedings or
protests for any tax fiscal year which commences on or after the Closing Date
without the participation or approval of the Sellers, provided that no such
settlement by or at the direction of the Sellers or Purchaser pursuant to this
sentence shall, without the written consent of the other, include any agreement
or settlement with respect to real estate tax assessments relating to a tax
fiscal year as to which the other party has, pursuant to this sentence, the
right to direct the prosecution and settlement of proceedings and protests. With
respect to any refund to which the Sellers are entitled pursuant to this
subsection 6.4.6, the Sellers are hereby authorized to negotiate any check made
payable to Owner in respect of such refund. Within thirty (30) days after
receipt by the Sellers of a refund for the fiscal year in which the Closing
occurs or any prior period, the Sellers shall submit to Purchaser a schedule
showing the amount of such refund, net of the costs and expenses of obtaining
the same, which is payable to each Tenant then in possession at the Property (or
to Owner, to the extent the same had been paid by Owner), and shall remit to
Owner the aggregate of all amounts so payable. If any such refund shall be
received by Owner, Purchaser shall cause Owner to notify the Sellers of such
refund and upon the Sellers' delivery to Purchaser (which delivery shall occur
no later than thirty (30) days after notice to the Sellers of such refund) of a
schedule of the amount of such refund, net of the costs and expenses of
obtaining the same, which is payable to each Tenant then in possession at the
Property, Purchaser shall cause Owner to immediately remit such refund to the
applicable Tenants. From time to time after the Closing, Purchaser shall cause
Owner, upon request, to advise the Sellers of the names of any Tenants which are
in occupancy at the Closing but cease to be in occupancy thereafter. Purchaser
shall cause Owner to promptly pay any amounts so received from the Sellers to
the Tenants in possession pursuant to and in accordance with the schedule
submitted to it by the Sellers and Purchaser shall indemnify and hold the
Sellers harmless from and against all claims, demands, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
asserted against, imposed on or incurred by the Sellers by reason of the failure
by Owner to make any such payment to a Tenant in possession. The Sellers shall
indemnify and hold Purchaser and Owner harmless from and against all claims,
demands, liabilities and expenses (including, without limitation, reasonable
attorneys' fees) asserted against, imposed on or incurred by Purchaser or Owner
by reason of (i) any claim by a Tenant no longer in possession at the Property
that it is entitled to a portion of any such refund, but only with respect to
the period prior to the Adjustment Point and (ii) any claim by a Tenant in
possession at the Property that it is entitled to more than the amount paid to
it by Purchaser in accordance with the schedule furnished by the Sellers to
Purchaser, but only with respect to the period prior to the Adjustment Point.
The amount of any refund obtained by the Sellers or Purchaser (or Owner) in
respect of the fiscal year in which the Closing occurs as a result of any such
proceeding or protest, or the settlement thereof, net of costs and expenses
payable by the Sellers or Purchaser (or Owner) in connection therewith and the
amount of such refund payable to Tenants, shall be apportioned between Purchaser
and the Sellers in the manner that real estate taxes for such year were
apportioned pursuant to subsection 6.4.1, and the portion of such amount
properly allocable to the period prior to the Adjustment Point shall be paid by
Purchaser (or Owner) to the Sellers or the amount properly allocable to the
period subsequent to the Adjustment Point shall be paid by the Sellers to
Purchaser or Owner, as the case may be.
6.4.7 "Gross receipts" taxes payable by Owner with respect to Rents received shall be adjusted consistent with how the underlying Rents are adjusted in accordance with this Article 6.
6.4.8 Subject to Article 33, any other items of income or expense relating to the Property, and all liabilities of Owner, which, in accordance with generally accepted business practices, should be apportioned between the Sellers and Purchaser.
6.5 Adjustment Statement. The Sellers will deliver to Purchaser, not later than three (3) Business Days prior to the Closing, a copy of a proposed adjustment statement showing all adjustments to be made at the Closing. The parties shall then endeavor to agree upon such statement or any modification thereof so that it or such modification can be executed by them at the Closing. To the extent that there is an error or omission in any of the adjustments made pursuant to such statement and the same is discovered following the Closing, the parties agree to rectify the same as promptly as possible following such discovery.
6.6 Gift Certificates. At Closing, the Sellers shall deliver to Purchaser a schedule showing the estimated amount, if any, of unredeemed gift certificates issued by Owner or Managing Agent. From and after the Closing, the Sellers shall reimburse Purchaser on demand for any documented amount due by reason of the redemption of any gift certificates issued by Owner or Managing Agent and dated prior to the Closing.
6.7 Survival. The provisions of this Article 6 shall survive until April 30, 2006.
7. Actions to be Taken and Documents to be Delivered at or Prior to the Closing.
7.1 The Sellers' Deliveries. At or prior to the Closing, the Sellers will deliver or cause to be delivered to Purchaser each of the instruments and documents listed in the following provisions of this Section 7.1, executed and acknowledged where appropriate by the Sellers and/or the other party or parties thereto:
7.1.1 An assignment by each Seller to Purchaser of the applicable Membership Interest(s) in the form of Exhibit F attached hereto and made a part hereof, together with the Sellers' Copies of the limited liability company agreement of Owner and a certified copy of the Certificate of Formation of Owner.
7.1.2 The Sellers' Copies of each of the Leases and all guarantees described in the first sentence of subsection 8.3.6.1, including the Diamond Resort Lease Guaranty.
7.1.3 The Sellers' Copies of each of the Other Agreements.
7.1.4 An executed copy of an agreement between Owner and the Managing
Agent terminating the Management Agreement as of or prior to the Closing Date.
The Sellers shall use reasonable efforts, but shall be under no obligation, to
have such agreement provide that (a) Owner shall have no continuing liability
for pre-Closing obligations under the Management Agreement (the parties hereby
acknowledging and confirming that the Sellers' indemnification obligation under
Section 33.1 below with respect to such pre-Closing obligations shall apply
whether or not such agreement so provides) and (b) Managing Agent waives any
lien rights it may have with respect to such obligations.
7.1.5 Counterparts of (i) the VCR Showroom Lease, the Gondola Lease and the VCR Office Lease, each substantially in the form of Exhibits V, W and X attached hereto and made a part hereof, respectively, executed by VCR, (ii) the Casino Level Master Lease substantially in the form of Exhibit Y attached hereto, with such changes thereto requested by Owner's proposed new mortgage lender that do not increase (other than to a de minimis extent) VCR's obligations thereunder or decrease (other than to a de minimis extent) VCR's benefits thereunder, executed by VCR and (iii) the Amended and Restated REA, substantially in the form of Exhibit T attached hereto and made a part hereof, with such changes thereto requested by the "SECC's" proposed new mortgage lender and/or Owner's proposed new mortgage lender that do not increase (other than to a de minimis extent) VCR's obligations thereunder or decrease (other than to a de minimis extent) VCR's benefits or Owner's rights and obligations thereunder.
7.1.6 The certificate of the Sellers provided for in subsection 8.6.3.
7.1.7 The estoppel letters provided for in Article 17.
7.1.8 Any consents required under the Other Agreements for the sale of the Membership Interests by the Sellers to Purchaser; provided, however, that it shall not be a condition to Purchaser's obligations under this Agreement that any such consent shall be obtained, but the Sellers shall be obligated to pay and indemnify Purchaser from and against any damages, penalties or other sums that may be payable to the other party to such Other Agreement by reason of the Sellers' failure to obtain such consent, which obligations shall survive the Closing.
7.1.9 A certificate that each Seller is not a "foreign person" within the meaning ofss. 1445 of the Internal Revenue Code of 1986, as amended.
7.1.10 Counterparts of an adjustment statement summarizing all adjustments in respect of the Purchase Price made at the Closing pursuant to Article 6.
7.1.11 All sales tax, transfer tax and other tax returns, if any, which the Sellers are required by law to execute and deliver, either individually or together with Purchaser, to any Governmental Authority as a result of the sale of the Membership Interests.
7.1.12 The Schedule provided for in Section 6.1.1.
7.1.13 Resolutions or other evidence that each Seller has duly authorized
(i) the transactions contemplated by this Agreement and (ii) the execution by
each Seller of this Agreement and the documents, instruments and agreements to
be executed and delivered by the Sellers pursuant hereto, together with an
incumbency certificate as to the authority of the person(s) executing and
delivering this Agreement and such documents, instruments and agreements on
behalf of the Sellers.
7.1.14 Resolutions or other evidence that VCR has duly authorized the execution and delivery of the Casino Level Master Lease, together with an incumbency certificate as to the authority of the person(s) executing and delivering the Casino Level Master Lease on behalf of VCR.
7.1.15 Good standing certificates for Owner and the Sellers issued by the applicable governmental authority, dated no earlier than thirty (30) days prior to Closing.
7.1.16 All records and files which are in the possession of the Sellers, VCR, Owner or the Managing Agent relating to the current operation and maintenance of the Property, including without limitation, to the extent in the possession of such parties, current tax bills, current water, sewer, utility and fuel bills, payroll records, billing records for Tenants, Tenant files, repair and maintenance records and the like which affect or relate to the Property, plans, drawings, blue prints and specifications for the Property, all warranties and guaranties of manufacturers, suppliers and contractors in effect on the Closing Date, certificates of occupancy and other licenses and permits and keys to the Property. Delivery of such materials, as well as the documents referred to in subsections 7.1.2 and 7.1.3, shall be effectuated pursuant to arrangements made by the Managing Agent, Owner, VCR and the property manager retained by Purchaser to operate the Property.
7.1.17 If applicable, a written direction to Escrow Agent to deliver the Deposit (but not the Income) to the Sellers.
7.1.18 If applicable, the Letters of Credit.
7.1.19 If and to the extent required under the REA, one or more notices of the Closing.
7.1.20 Reasonable and customary affidavits and other documentation and information reasonably required by the Title Company in order to issue the Owner's Policy to Owner and/or a mortgagee policy to Purchaser's lender, including, without limitation, such documentation as is reasonably requested by the Title Company to cause the issuance of a non-imputation endorsement to the Owner's Policy.
7.1.21 A letter of resignation from the "Independent Director" of Owner (or a legally effective termination of such director from the Sellers).
7.1.22 If applicable, counterparts of the lease described in Article 39 below, executed by VCR.
7.1.23 Counterparts of a memorandum of the Casino Level Master Lease, in proper recordable form.
7.1.24 An executed amendment to the Best Production contract in existence as of the date hereof which amendment shall amend said contract such that it does not cover the "gondoliers," provided that if such amendment is not delivered by the Sellers at the Closing (the Sellers hereby agreeing to use commercially reasonable efforts to cause such amendment to be executed and delivered as of the Closing), Purchaser shall nevertheless be obligated to close and the Sellers and Purchaser agree (a) to use commercially reasonable efforts to cause such amendment to be executed and delivered after the Closing and (b) to cause VCR and Owner to enter into documents reasonably satisfactory to each to cause VCR to enjoy the benefits and to be liable for the obligations under such contract with respect to the "gondoliers," and Owner to enjoy the benefits and be liable for the obligations under such contract with respect to all other matters covered thereunder. Clauses (a) and (b) of the preceding sentence shall survive the Closing.
7.1.25 A letter or agreement executed and delivered by all "Owners" and countersigned or approved by the "Mortgage Notes Indenture Trustee" (as such terms are defined in the REA) confirming, or other evidence reasonably satisfactory to Purchaser demonstrating, that (a) the REA does not prohibit any Owner from maintaining insurance that is in excess or in addition to the insurance required to be maintained under the REA and (b) if any such additional or excess insurance is maintained by any Owner and such Owner pays all the premiums with respect thereto, such Owner shall be entitled to receive all of the proceeds payable thereunder and apply such proceeds as it elects (or shall be entitled to first priority with respect to such proceeds if any such insurance covers other portions of the "Venetian" and/or "SECC" (as such terms are defined in the REA) in addition to the Property).
7.1.26 Rent direction letters from the Managing Agent and/or Owner's existing mortgage lender, as reasonably requested by Purchaser, each in form and substance reasonably satisfactory to Purchaser.
7.1.27 All other instruments and documents, if any, to be executed, acknowledged and/or delivered by the Sellers pursuant to any of the other provisions of this Agreement.
7.2 Purchaser's Deliveries. At or prior to the Closing, Purchaser shall deliver or cause to be delivered to the Sellers or the other parties indicated below each of the payments, documents and instruments listed in this Section 7.2, such instruments and documents to be executed and acknowledged where appropriate:
7.2.1 The Remaining Balance, as set forth in Section 3.1.2.
7.2.2 All sales tax, transfer tax and other tax returns, if any, certificates of value and similar documents which Purchaser is required by law to execute and deliver, either individually or together with the Sellers (including, without limitation, those required under Section 7.1.11), to any Governmental Authority as a result of the sale.
7.2.3 Counterparts of each of the instruments and documents listed in subsection 7.1.1 (executed by Purchaser in order to evidence Purchaser's assumption of the Membership Interests) and in subsections 7.1.5, 7.1.10, 7.1.17, 7.1.19 and 7.1.23 (executed by Purchaser, as managing member and on behalf of Owner).
7.2.4 Proof reasonably satisfactory to the Sellers as to the due authorization on the part of Purchaser of (i) the transaction contemplated by this Agreement, and (ii) the execution and delivery of this Agreement and the documents, instruments and agreements to be executed and delivered by Purchaser pursuant hereto, together with an incumbency certificate as to the authority of the person(s) executing and delivering this Agreement and such documents, instruments and agreements on behalf of Purchaser.
7.2.5 A good standing certificate from the Secretary of State of Delaware for Purchaser, dated within fifteen (15) days of the Closing Date.
7.2.6 If applicable, a written instruction to Escrow Agent, executed by Purchaser, to pay the Deposit to the Sellers and to pay the Income as Purchaser directs.
7.2.7 The update certificate required pursuant to Section 9.2.
7.2.8 If applicable, counterparts of the lease described in subsection 7.1.22, executed by Purchaser, as managing member and on behalf of Owner.
7.2.9 All other payments, instruments and documents, if any, to be executed, acknowledged and/or delivered by Purchaser pursuant to any of the other provisions of this Agreement.
7.3 Access to Records. Purchaser agrees that for a period of three (3) years following the Closing it shall, and shall cause Owner to, retain and make available to the Sellers, any designee thereof or any Governmental Authority having jurisdiction over the Sellers for inspection and copying, at the Sellers' expense, on reasonable advance notice at reasonable times at the place in the continental United States where Purchaser or Owner then maintains its records in respect of the Property, all documents and records concerning the Property or Owner delivered by the Sellers or the Managing Agent in connection with the Closing. If Purchaser shall desire to destroy any such records prior to the expiration of such three (3) year period, Purchaser shall first notify the Sellers and permit the Sellers to take delivery of the records in question; and if the Sellers fail to do so with in ninety (90) days after such notice from Purchaser, Purchaser shall then be free to destroy the same. The provisions of this Section 7.3 shall survive the Closing.
7.4 Due Diligence.
7.4.1 From the date of this Agreement until the Closing Date or any termination of this Agreement, the Sellers shall, after reasonable advance notice from Purchaser, cause Owner (and VCR with respect to the space covered by the Casino Level Master Lease) to afford Purchaser and its authorized agents and representatives access to the Property subject to (i) the Sellers' and VCR's reasonable regulations relating to the security of the Property and the Property's business, and (ii) the further provisions of this Section 7.4. In addition, any inspection of the Property pursuant to the foregoing (which inspection may include examination of structural components and utility systems and the conducting of appropriate tests thereof) shall be subject to the following limitations: (i) a representative of the Sellers shall have the right to be present when Purchaser conducts any such inspection; (ii) any such inspection shall be conducted so as to cause the least interference with the operation of the Property and the business of the Tenants or other occupants thereat as is reasonably possible; and (iii) no so-called "Phase II" environmental inspection of the Property, and no tests that physically alter any component of the Property or the land thereunder, shall be performed without the prior written consent of the Sellers (and/or VCR, as applicable), which consent shall not be unreasonably withheld or delayed. In all events, the foregoing rights of Purchaser are subject to the terms and provisions of all rights of Tenants and all Legal Requirements. Prior to obtaining access to the Property, Purchaser shall cause its agents and representatives to (i) obtain comprehensive general liability insurance on an occurrence basis naming Owner and VCR as additional insureds with a combined single limit not less than $5,000,000 and otherwise on terms reasonably satisfactory to the Sellers covering any accident arising in connection with the activities or presence of Purchaser or its agents or contractors on the Property and (ii) deliver a certificate of insurance verifying such coverage to the Sellers. Purchaser shall promptly, at it sole cost and expense, repair any damage to the Property caused by examination or tests made pursuant to the foregoing. Purchaser shall promptly furnish the Sellers with copies of all written reports, summaries, analyses and the like obtained or prepared by third-parties for Purchaser in connection with all inspections, examinations and tests made or conducted pursuant to the foregoing.
7.4.2 Purchaser agrees to defend, indemnify and hold the Sellers and VCR harmless from and against any and all Losses arising out of or in connection with the exercise by Purchaser of its rights under subsection 7.4.1 or any violation by Purchaser of subsection 7.4.1 (but not with respect to any pre-existing condition at the Property discovered by such inspections, examinations or tests to the extent not exacerbated by such inspections, examinations or tests).
7.4.3 Subject to the limitations set forth in this Agreement, the Sellers shall cause Owner and VCR to cooperate with Purchaser's examination of the Property and shall provide Purchaser with whatever information or documents pertaining to the Property which Purchaser may reasonably request and which is possessed or reasonably obtainable by the Sellers.
7.4.4 The provisions of subsection 7.4.2 shall survive the Closing, and the last two sentences of subsection 7.4.1 and the provisions of subsection 7.4.2 shall survive any termination of this Agreement.
8. As Is; Representations and Warranties of the Sellers.
8.1 No Implied Representations. Purchaser acknowledges that except as
expressly set forth in this Agreement and in the documents and instruments
delivered by the Sellers at the Closing, neither the Sellers nor any affiliate,
agent or representative or purported agent or representative of the Sellers has
made, and the Sellers and such other persons and entities are not liable for or
bound in any manner by, any express or implied warranties, guaranties, promises,
statements, inducements, representations or information (including, without
limitation, any information set forth in that certain Confidential Information
Memorandum prepared by Goldman and any supplements thereto or changes therein,
the Environmental Report, or any other offering materials heretofore furnished
to Purchaser) pertaining to (a) the Membership Interests; (b) Owner or the
assets and liabilities (including contingent liabilities) thereof; or (c) the
Property, the physical condition thereof, environmental matters, the income,
expenses or operation thereof or the Personal Property or Intangible Personal
Property, the uses which can be lawfully made of the Property under applicable
zoning or other laws or any other matter or thing with respect to the Property,
including, without limitation, any existing or prospective Leases, the REA or
Other Agreements. Without limiting the foregoing, Purchaser acknowledges and
agrees that, except as expressly set forth in this Agreement and in the
documents and instruments delivered by the Sellers at the Closing, the Sellers
are not liable for or bound by (and Purchaser has not relied upon) any verbal or
written statements, representations, real estate brokers' "set-ups" or offering
materials or any other information respecting the Membership Interests, Owner or
the Property furnished by the Sellers or any broker, employee, agent, consultant
or other person representing or purportedly representing the Sellers. If the
Sellers or its agents have delivered or hereafter deliver to Purchaser or its
agents any information, report, survey, analysis or similar documentation
prepared by a third party unrelated to the Sellers, the Sellers neither
expressly nor impliedly warrant or represent to Purchaser the truth, accuracy or
completeness thereof and expressly disclaim any liability whatsoever with
respect thereto or any obligation independently to investigate the matters
contained therein; and Purchaser hereby acknowledges that the Sellers have or
are providing such information, reports, surveys, analysis or other third-party
documents to Purchaser as an accommodation only and that Purchaser shall be
responsible for the verification and review thereof. Nothing contained in this
Section 8.1 shall be deemed to impair, limit or otherwise affect Purchaser's
rights under this Agreement in respect of the express representations and
warranties of the Sellers set forth in this Agreement and the other provisions
hereof binding upon the Sellers. The provisions of this Section 8.1 shall
survive the Closing or any termination of this Agreement.
8.2 "As-Is" Purchase. Purchaser represents that it has inspected the Property, the physical and environmental condition and the uses thereof and the fixtures, equipment and Personal Property to its satisfaction, that it has independently investigated, analyzed and appraised the value and profitability of the Membership Interests and the Property, the creditworthiness of Tenants, and the presence of hazardous materials, if any, in, on or under the Property, that it has reviewed the Leases listed on Exhibit G attached hereto and made a part hereof, the Diamond Resorts Lease Guaranty, the REA, the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease, the Casino Level Master Lease, the Other Agreements and all other documents referred to herein, that it is thoroughly acquainted with all of the foregoing and that Purchaser, in purchasing the Membership Interests, is relying upon its own investigations, analyses, studies and appraisals and not upon any information provided to Purchaser by or on behalf of the Sellers with respect thereto (except to the extent covered by any warranties or representations of the Sellers set forth in this Agreement, in any Sellers' Estoppel Letter or in any other document or instrument delivered by the Sellers in connection with the Closing). Purchaser agrees, in purchasing the Membership Interests, to accept the Property "as is" and in its condition as of the date hereof, reasonable wear and tear between the date hereof and the Closing Date excepted, and Purchaser shall assume the risk that adverse matters, including but not limited to, construction defects and adverse physical and environmental conditions, may not have been revealed by Purchaser's investigations; and Purchaser, upon closing, shall be deemed to have waived, relinquished and released the Sellers from and against any and all claims, demands, causes of action, losses, damages, liabilities, costs and expenses (including, attorneys' fees and court costs) of any and every kind or character, known or unknown, which Purchaser might have asserted or alleged against the Sellers by reason of or arising out of any latent or patent construction defects or physical conditions, violations of applicable laws (including, without limitation, environmental laws) and any and all other acts, omissions, events, circumstances or matters with respect to the Property, subject, however, to the provisions of Article 33 hereof and to Purchaser's rights and remedies provided for in this Agreement in the event of the breach of any of the Sellers' warranties, representations and covenants contained herein, in any Sellers' Estoppel Letter or in any other document or instrument delivered by the Sellers in connection with the Closing. The provisions of this Section 8.2 shall survive the Closing.
8.3 Representations and Warranties of the Sellers. The Sellers hereby jointly and severally represent and warrant to Purchaser as follows:
8.3.1 Each Seller and Owner is duly formed and validly existing and in good standing under the laws of its state of formation. Each Seller and Owner is duly qualified to do business in the state in which the Property is located, to the extent required by Legal Requirements in the case of the Sellers. Each Seller has full power and authority to enter into this Agreement and to perform its obligations hereunder in accordance with the terms hereof. The execution, delivery and performance by each Seller of this Agreement and the documents to be executed by each Seller pursuant hereto have been duly and validly authorized by all necessary action on the part of each Seller. This Agreement constitutes the legal, valid and binding obligation of the Sellers, enforceable against the Sellers in accordance with its terms, subject as to enforceability to the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or other similar laws affecting the rights of creditors generally and to general principles of equity.
8.3.2 None of the Sellers is a "foreign person" as defined in Section 1445 of the Internal Revenue Code of 1986, as amended. Owner is treated as a partnership for federal income tax purposes.
8.3.3 Execution by each Seller of this Agreement and all documents provided for herein to be executed by such Seller, and performance by each Seller of the provisions hereof and thereof, will not violate or result in any breach of, or constitute a default under, any law, regulation, rule, order or judgment of any governmental authority to which such Seller or Owner is subject, or any agreement, indenture, Lease, mortgage, deed of trust, bank loan, credit agreement or other agreement or instrument to which such Seller or Owner is a party or by which such Seller or Owner is bound, where such breach or default might (i) adversely affect Owner or the Property or (ii) materially adversely affect such Seller's ability to perform its obligations hereunder or under such other documents. No Seller is presently in default under any note, evidence of indebtedness, lease, contract, license, undertaking or other agreement where the liability thereunder might (i) adversely affect Owner or the Property or (ii) materially adversely affect such Seller's ability to perform its obligations under this Agreement or any document executed by such Seller pursuant hereto.
8.3.4 With respect to the Membership Interests:
8.3.4.1 The Membership Interests constitute all of the membership and management interests in Owner.
8.3.4.2 The Sellers have heretofore made available, and at Closing shall deliver, to Purchaser a true, correct and complete copy of the limited liability company agreement and certificate of formation of Owner, as amended. Such limited liability company agreement, as amended, is in full force and effect on the date hereof.
8.3.4.3 The Membership Interests are owned by the Sellers, free and clear of all liens, security interests, options and encumbrances and have not been pledged or hypothecated as of the date hereof to any third party (except for any pledge or hypothecation that will be released at or prior to Closing). Neither Owner nor any Seller has granted, issued or entered into, and neither Owner nor any Seller is bound by, any options, rights, commitments, agreements, arrangements or undertakings of any kind (other than this Agreement) which obligate or could obligate either of the Sellers to transfer its Membership Interest or any part thereof or interest therein or which grant to any other person (other than the "Independent Director") or entity any voting, management or other right in respect of the Membership Interests.
8.3.5 VCR had and has (or will have as of the Closing Date) the full power and authority to enter into the VCR Leases and the Casino Level Master Lease and to perform its obligations thereunder in accordance with the terms thereof. Prior to the Closing, VCR and Owner shall execute and deliver the Casino Level Master Lease. As of the Closing Date, the execution, delivery and performance by VCR of the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease and the Casino Level Master Lease shall have been duly and validly authorized by all necessary action on the part of VCR. On the Closing Date, the VCR Leases and the Casino Level Master Lease will constitute the legal, valid and binding obligations of VCR, enforceable against VCR in accordance with their terms, subject as to enforceability to the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or other similar laws affecting the rights of creditors generally and to general principles of equity.
8.3.6 With respect to the Leases:
8.3.6.1 Exhibit G annexed hereto is a true, correct and complete list of all of the Leases and guarantees thereof (including the Diamond Resorts Lease Guaranty) in effect on the date hereof, true, correct and complete copies of which have heretofore been made available and/or delivered to Purchaser for review. As of the date hereof, none of the Leases have been modified, amended or supplemented (whether orally or in writing) except as set forth in Exhibit G. No Tenant has the option to purchase the Property (or a portion thereof) or a right of first refusal, first offer or first negotiation in respect of the sale of the Membership Interests to a third party or in respect of the Casino Level Master Lease.
8.3.6.2 Exhibit H attached hereto and made a part hereof is a true, correct and complete list of Tenants that are delinquent in the payment of Rents as of the date of such list, which schedule sets forth the information specified in the first sentence of subsection 6.1.1.
8.3.6.3 Except as set forth in Exhibit G, to the Sellers' knowledge each of the Leases and guarantees listed in Exhibit G is in full force and effect as of the date hereof. Except as set forth in Exhibit G, to the Sellers' knowledge Owner (and VCR, as applicable) has not received written notice which is still outstanding from any Tenant under a Lease listed in Exhibit G (i) that Owner (and/or VCR, as applicable) has defaulted in performing any of its material obligations under such Lease or (ii) that such Tenant is entitled to any reduction in, refund of or counterclaim or offset against, or is otherwise disputing, any Rents paid, payable or to become payable by such Tenant thereunder or is entitled to cancel or terminate such Lease or to be released of any of its material obligations thereunder. With the exception of delinquencies in the payment of Rents, to the Sellers' knowledge no material default exists under any Lease by the Tenant thereunder except as set forth in Exhibit G.
8.3.6.4 Except as set forth in Exhibit G, all leasing commissions in respect of the current terms of Leases which were entered into on or before the Leasing Cut-Off Date have been, or by the Closing Date will have been, paid in full by Owner (and/or VCR, as applicable).
8.3.6.5 On or prior to the Closing Date, all tenant alterations which
Owner (and/or VCR, as applicable) is obligated to perform at Owner's (and/or
VCR's, as applicable) expense pursuant to its obligations under the Leases
(excluding Leases signed after the date hereof in accordance with Section 13.1)
will have been performed.
8.3.7 With respect to the REA:
8.3.7.1 The REA is in full force and effect as of the date hereof. As of the date hereof, the Owner has not received written notice from any party to the REA that Owner has defaulted in performing any of its material obligations under the REA. To the Sellers' knowledge, as of the date hereof, no material default exists under the REA on the part of any of the parties thereto.
8.3.7.2 There are no due but unpaid obligations of Owner under or in respect of the REA.
8.3.8 With respect to the Other Agreements:
8.3.8.1 Exhibit C annexed hereto is a true, correct and complete list of all Other Agreements affecting the Property (excluding Other Agreements that will be terminated as of the Closing Date). True, correct and complete copies of all of the Other Agreements, and all amendments and supplements thereto, listed on Exhibit C have heretofore been made available and/or delivered to Purchaser for review. Except as set forth in Exhibit C, all Other Agreements can be terminated by Owner (or VCR, as applicable) on not more than sixty (60) days' notice without penalty.
8.3.8.2 To the Sellers' knowledge, each of the Other Agreements is in full force and effect on the date hereof, and Owner and VCR have not received written notice from any party to any Other Agreement which is still outstanding that Owner or VCR has defaulted in performing any of its material obligations under such Other Agreement. None of the Other Agreements listed on Exhibit C has heretofore been amended or supplemented (whether orally or in writing) except as set forth on Exhibit C.
8.3.9 To the Sellers' knowledge, as of the date hereof and except as set forth in Exhibit I attached hereto and made a part hereof, Owner and VCR have not received (i) any written notice of any material Violation with respect to the Property from any Governmental Authority which has not heretofore been complied with or (ii) any written notice from any Governmental Authority which is still outstanding of any failure by Owner or VCR to obtain any material certificate, permit, license or approval with respect to the Property, or any intended revocation, modification or cancellation of any of the same.
8.3.10 Except as set forth in Exhibit J attached hereto and made a part hereof, no condemnation, eminent domain or similar proceeding in which Owner or VCR have been served with process or of which Owner or VCR have otherwise received written notice is pending with respect to all or any material part of the Property, and no Seller has any knowledge that any such proceeding is threatened or contemplated.
8.3.11 To the Sellers' knowledge, as of the date hereof Owner and VCR have not received any written notice which is still outstanding of any violation of any restriction, condition, covenant or agreement contained in any easement, restrictive covenant or any similar instrument or agreement which constitutes a Permitted Encumbrance.
8.3.12 There is no pending material litigation against the Owner or VCR affecting the Property or otherwise, in respect of which Owner or VCR have been served with process or otherwise received written notice except for (i) claims for personal injury, property damage or worker's compensation for which the insurance carrier has not disclaimed liability and in which the amounts claimed do not exceed the applicable insurance policy limits, and (ii) other litigation shown on Exhibit K attached hereto and made a part hereof. No Seller has knowledge of any threatened material litigation affecting Owner, VCR or the Property except litigation of the nature described in clause (i) above and as described on Exhibit K.
8.3.13 All material fixtures, equipment and articles of personal property attached or appurtenant to or used in connection with the Property and located thereat, except those belonging to Tenants, subtenants of Tenants and independent contractors or utility companies, and items which are leased by Owner, are owned by Owner, and are or will at Closing be free from all liens and encumbrances. A schedule of the material items of personal property owned by Owner, which in any event includes all items of personal property having a cost of $5,000 or more, is attached hereto as Exhibit L and made a part hereof, which Exhibit separately identifies any leased personal property, the leases for which are listed on Exhibit L. Owner owns all Intangible Personal Property free from all liens and encumbrances.
8.3.14 Neither Owner nor the Sellers have any employees or agreements with any employees who will continue performing services after the Closing in connection with the operation of the Property.
8.3.15 Exhibit M attached hereto and made a part hereof lists all
environmental reports relating to Hazardous Materials at the Property which the
Sellers caused to be prepared and heretofore delivered to Purchaser in
connection with this transaction. As used herein, the term "Hazardous Materials"
means (i) toxic wastes, hazardous materials, hazardous substances or other
substances which are prohibited or regulated by any federal, state or local law
or regulation addressing environmental protection or pollution control matters,
(ii) hazardous levels of asbestos, (iii) polychlorinated biphenyls (PCBs) and
(iv) oil, petroleum and their by-products. Except as disclosed or as may be
disclosed in the reports listed on Exhibit M, and except with respect to
cleaning fluids and similar substances which may be used in the routine
operation or maintenance of the Property, to the Sellers' knowledge, no
Hazardous Materials are present in, on or under the Property in quantities or
amounts which would be in violation of Legal Requirements applicable thereto.
Owner and VCR have not received any written notice from any Governmental
Authority or other person or entity that any condition exists at the Property
which constitutes or has resulted in a violation of any Legal Requirement
relating to Hazardous Materials or that any claim is being asserted against
Owner or VCR by reason of any such violation.
8.4 No Independent Investigation. All representations and warranties made herein by the Sellers which are based on the Sellers' knowledge are made, and are hereby acknowledged by Purchaser to be made, without independent investigation regarding the facts contained therein and are otherwise limited as provided in the definition of "knowledge."
8.5 Effect of Estoppels. If prior to, on or after the Closing Date, a Tenant has provided an estoppel letter to Purchaser which sets forth information consistent with any item as to which the Sellers have made a representation or warranty, then, from and after the delivery of such estoppel letter, the Sellers' representation and warranty in respect of such information shall thereafter be null and void and of no further force or effect, such representation and warranty shall not be deemed to have been remade as of the Closing Date pursuant to subsection 8.6.3 hereof, and Purchaser shall rely solely on the information set forth in such estoppel letter; provided, however, that the foregoing shall not effect in any way Purchaser's rights pursuant to Sections 8.6 and 11.1 hereof in the event that any such estoppel is inconsistent with the Sellers' representations and warranties hereunder. The provisions of this Section 8.5 shall survive the Closing.
8.6 Survival of Warranties, etc.
8.6.1 All of the Sellers' representations and warranties contained in
Section 8.3 (other than those contained in subsections 8.3.1, 8.3.2, 8.3.3,
8.3.4 and 8.3.5, all of which shall survive the Closing without limitation as to
time), and all certifications, representations and warranties made by the
Sellers in the Sellers' certificate delivered to Purchaser pursuant to
subsection 8.6.3 and in any Sellers' Estoppel Letter, shall survive until one
(1) year after the date of the Closing; provided, however, that the Sellers'
liability for any breach of such warranties, representations and certifications
shall not expire as to any breach or alleged breach thereof if notice of such
breach or alleged breach (which notice must, with reasonable specificity,
describe the facts causing or leading to such breach or alleged breach) is given
by Purchaser to the Sellers prior to one (1) year after the date of the Closing
and, if such notice is given, legal proceedings are instituted in respect of
such breach or alleged breach within six (6) months after such notice is given.
All representations, warranties and certificates of the Sellers covered by the
preceding sentence (including the first parenthetical clause thereof) are
collectively referred to herein as "Sellers' Representations."
8.6.2 Notwithstanding anything to the contrary set forth in this Article 8, but subject to the last sentence of this subsection 8.6.2, (i) the Sellers shall have no liability to Purchaser for breach of any Sellers' Representation unless, and only to the extent that, (x) Sellers' liability for such breach shall not have expired pursuant to subsection 8.6.1 above and (y) the damages suffered by Purchaser by reason of all such breaches, together with the damages suffered by Purchaser by reason of all breaches of representations and warranties made by VCR in Section 17.1 of the Casino Level Master Lease ("VCR's Representations"), exceed $2,500,000 in the aggregate (the "Basket") (inclusive of damages in respect of breaches discovered prior to the Closing (other than any such damages in excess of the Preclosing Basket but less than the Basket), which breaches are discussed in more detail in Section 11.1), (ii) in no event shall the Sellers be liable to Purchaser for consequential, indirect or punitive damages in respect of any such breach and (iii) in no event shall the Sellers' and VCR's aggregate liability to Purchaser for all such breaches (inclusive of damages in respect of breaches discovered prior to the Closing, subject to subsections 11.1.1 and 11.1.3), and breaches of VCR Representations, exceed $8,000,000 (the "Cap"). Notwithstanding anything to the contrary set forth herein, the limitations of the Basket and the Cap shall not apply to a breach of a representation or warranty contained in subsections 8.3.1, 8.3.2, 8.3.3, 8.3.4 and 8.3.5.
8.6.3 All of the Sellers' representations and warranties set forth in
Section 8.3 shall be deemed to have been remade on and as of the Closing Date
and the Sellers shall deliver to Purchaser at the Closing a certificate to that
effect in the form of Exhibit N attached hereto and made a part hereof, which
certificate shall be subject to all limitations on liability and survival,
limitations on the Sellers' knowledge and other matters set forth elsewhere in
this Agreement (to the same effect as if the statements made in such certificate
were included in Section 8.3). Notwithstanding the foregoing, if any matter or
event shall have occurred between the date hereof and the date of the Closing
which makes any such warranty or representation untrue in any material respect,
the Sellers shall have the right to disclose such matter or event in the
certificate above provided for, and if the Sellers shall do so, the provisions
of Section 11.1 shall apply.
8.6.4 Notwithstanding anything to the contrary set forth in this Article
8 or elsewhere in the Agreement, if prior to the Closing Purchaser has or
obtains knowledge that any of the Sellers' Representations is untrue in any
respect, and Purchaser nevertheless proceeds with the Closing without notifying
the Sellers in writing of such fact, then (a) the provisions of Section 11.1
shall not apply with respect thereto and (b) the breach by the Sellers of the
Sellers' Representations as to which Purchaser shall have such knowledge shall
be waived by Purchaser and the Sellers shall have no liability to Purchaser or
its successors or assigns in respect thereof. For the purposes of this
subsection 8.6.4, Purchaser shall be deemed to have or to have obtained
knowledge of any such matter or thing if such matter or thing (i) was set forth
in any notice, written study, report, memorandum, letter or other document
furnished to Purchaser on or prior to the Closing Date by or on behalf of the
Sellers (including, without limitation, by the Sellers' attorneys, the Managing
Agent or Goldman), by any affiliates, agents or representatives of Purchaser, by
third-party consultants retained by Purchaser or by Purchaser's accountants or
attorneys (including in-house accountants or attorneys), (ii) was set forth in
any Tenant estoppel letter, (iii) was set forth in the Environmental Report,
(vi) was set forth in any of the recorded documents evidencing the Permitted
Encumbrances or (v) was otherwise known to any of Joel Bayer and Tad Wefel.
8.6.5 The provisions of this Section 8.6, subject to the limitation set forth in subsection 8.6.1, shall survive the Closing.
9. Representations and Warranties of Purchaser.
9.1 Purchaser's Warranties. Purchaser warrants and represents to the Sellers as follows:
9.1.1 Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.
9.1.2 Purchaser has full power and authority to enter into this Agreement and perform its obligations hereunder in accordance with the terms hereof. The execution, delivery and performance of this Agreement by Purchaser and the documents to be executed by Purchaser pursuant hereto have been duly and validly authorized by all necessary action on the part of Purchaser. This Agreement constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject as to enforceability to the effect of applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the rights of creditors generally and to general principles of equity. No bankruptcy, insolvency, reorganization, arrangement or moratorium proceeding, or allegation of fraudulent conveyance, is now pending or threatened against Purchaser.
9.1.3 Execution by Purchaser of this Agreement and all documents provided for herein to be executed by Purchaser, and performance by Purchaser of the provisions hereof and thereof, will not violate or result in any breach of, or constitute a default under, any law, regulation, order or judgment of any Governmental Authority to which Purchaser is subject, or any agreement, indenture, mortgage, deed of trust, bank loan, credit agreement or any other instrument to which Purchaser is a party or by which Purchaser is bound, where such breach or default might adversely affect Purchaser's ability to perform its obligations hereunder or under such other documents. Purchaser is not in default under any note, evidence of indebtedness, lease, contract, license, undertaking or other agreement where the liability thereunder might adversely affect Purchaser's ability to perform its obligations under this Agreement or such other documents.
9.2 Remaking of Warranties; Survival. All of Purchaser's representations and warranties set forth in this Article 9 shall be deemed to have been remade on and as of the Closing Date. Such representations and warranties, as remade, shall survive the Closing without limitation as to time.
10. Conditions to the Obligation of the Sellers to Close. The obligation of the Sellers to close under this Agreement is expressly conditioned upon the fulfillment by and as of the Closing Date of each of the conditions listed below, provided, that the Sellers, at their election, may waive all or any of such conditions, which election shall be conclusively evidenced by the Sellers proceeding with and completing the closing of the transaction provided for herein:
10.1 Purchase Price. Purchaser shall have paid to the Sellers the Purchase Price as provided in Article 3 hereof and all other amounts due to the Sellers as of the Closing Date hereunder.
10.2 Representations and Warranties. All representations and warranties of Purchaser set forth in Article 9 shall be true and correct in all material respects on and as of the Closing Date as if made on and as of such date.
10.3 Performance of Obligations. Purchaser shall have executed and/or delivered or caused to be delivered at the Closing all documents and executed counterparts of documents and instruments required by this Agreement to be executed and/or delivered by Purchaser at or prior to the Closing and shall have taken all other actions and fulfilled all other covenants and conditions required of Purchaser at or prior to the Closing under this Agreement.
10.4 No Injunctions. There shall be no binding injunction, order or judgment of any court having proper jurisdiction prohibiting the Sellers from consummating the Closing.
10.5 SNDA's. The Sellers shall have received SNDAs from Owner's new mortgage lender (if any as of the Closing Date) covering the VCR Showroom Lease, VCR Office Lease and Gondola Lease, each to be in form substantially similar to the SNDAs described in Section 11.3 or in any other form reasonably satisfactory to Sellers. Purchaser hereby agrees to use diligent efforts to cause such SNDAs to be executed and delivered at the Closing.
10.6 Other Conditions. Any other condition to the obligation of the Sellers to consummate the Closing which is set forth in any other provision of this Agreement shall have been satisfied in all material respects.
If any of the foregoing conditions is not satisfied and, as a result, the Closing does not occur, the Deposit shall be returned to Purchaser, this Agreement shall terminate and neither party shall have any further rights or obligations under this Agreement except as otherwise specifically provided herein; provided, however, that if any such condition is not satisfied due to Purchaser's default, the Sellers shall have the rights provided for in Section 16.1.
11. Conditions to the Obligation of Purchaser to Close. The obligation of Purchaser to close under this Agreement is expressly conditioned upon the fulfillment by and as of the Closing Date of each of the conditions listed below, provided that Purchaser, at its election, may waive all or any of such conditions, which election shall be conclusively evidenced by Purchaser's proceeding with and completing the closing of the transaction provided for herein:
11.1 Representations and Warranties. Subject to the further provisions of
this Section 11.1, all representations and warranties of the Sellers set forth
in Section 8.3 and all of VCR's Representations, shall be true and correct on
and as of the Closing Date as if made on and as of such date (without reference
to any modifications thereof contained in the certificate delivered by the
Sellers to Purchaser pursuant to subsection 8.6.3), except for breaches thereof
which do not in the aggregate result in a Material Loss. As used in this Section
11.1, "Material Loss" means an aggregate diminution in value of the Property as
a result of the applicable breaches in excess of One Million and No/100 Dollars
($1,000,000.00) (such amount, the "Preclosing Basket"). With respect to all
breaches of said representation and warranties, the Sellers and Purchaser hereby
agree that notwithstanding the foregoing or any other provision of this
Agreement to the contrary, Purchaser shall not be entitled to terminate this
Agreement, obtain a reduction in the Purchase Price or have any other remedy,
claim or relief, if between the date of this Agreement and the Closing Date, (a)
one or more Tenants go into default under its or their Leases, increase the
period in respect of which it or they are delinquent in the payment of Rents or
any component thereof, vacate in whole or in part any space it or they occupy in
the Property, become the subject of any bankruptcy or insolvency proceeding
(whether voluntary or involuntary) or otherwise suffer any material adverse
change, Purchaser hereby acknowledging that it has assessed the quality and
strength of the Tenants under the Leases listed on Exhibit G and has assumed the
risk that any of the foregoing described events may occur with respect to any
Tenants between the date hereof and the Closing Date; (b) any litigation not
listed on Exhibit K or otherwise known to Purchaser as of the date hereof is
commenced and such litigation is either of the nature described in clause (i) of
the first sentence of Section 8.3.12 or will not have a material adverse effect
on the value of the Property or its continuing operations or the Sellers'
ability to perform its obligations under this Agreement (provided, however, that
such litigation shall be included within the Excluded Liabilities set forth in
Section 33.1 and Purchaser shall have the indemnification rights with respect to
such litigation set forth in said Section 33.1); or (c) there is any other
change in facts or circumstances between the date hereof and the Closing Date
that causes any of the Sellers' representations and warranties set forth in
Section 8.3 to not be true and correct on and as of the Closing Date as if made
on and as of such date, but such change does not represent, and was not caused
by, a violation of Article 13.
11.1.1 If the parties agree on or prior to the Closing Date that there has been a Material Loss and agree on the amount thereof, and if such amount is not more than Twenty Million Dollars ($20,000,000.00), the condition precedent to Closing described in this Section 11.1 shall nevertheless be deemed satisfied if the Sellers, at their sole option, at the Closing either (without giving effect to clause (iii) of subsection 8.6.2, except with respect to post-Closing claims by the Purchaser with respect to other breaches) pay to Purchaser the amount by which the Material Loss exceeds the Preclosing Basket or give a credit to Purchaser against the Purchase Price for such excess amount (which payment or credit shall be in full satisfaction of all of Purchaser's claims in connection with the applicable breaches).
11.1.2 If, prior to the Closing, the parties do not agree on whether there is a Material Loss or the amount thereof, then at or prior to the Closing, Purchaser shall provide a written notice to the Sellers stating Purchaser's good faith estimate of the aggregate diminution in value of the Property, together with a description of Purchaser's methodology and basis for determining such amount. Within five (5) Business Days of the Sellers' receipt of such written notice, the Sellers shall have the right to elect to proceed to an arbitration proceeding, conducted in accordance with Article 34, by delivering to Purchaser a written notice stating the Sellers' good faith estimate of the aggregate diminution in value of the Property, together with a description of the Sellers' methodology and basis for determining such amount. In any ensuing arbitration proceeding, each party shall be bound by their respective written estimates and the arbitrator shall choose either (i) the Sellers' good faith estimate of the amount in dispute or (ii) Purchaser's good faith estimate of the amount in dispute.
11.1.3 If the Sellers elect to initiate an arbitration proceeding under
Section 11.1.2 hereof, then at the Sellers' option, either (i) the Closing shall
be adjourned, pending the outcome of the arbitration (and in such event, the
Closing shall occur ten (10) business days following the outcome of the
arbitration) or (ii) the parties shall proceed to Closing and (x) the Sellers
shall, at Closing, pay or allow Purchaser a credit against the Purchase Price
equal to the excess, if any, of the Sellers' good faith estimate of the amount
in dispute over the Preclosing Basket, and (y) the Sellers shall, at Closing,
pursuant to documents reasonably satisfactory to Purchaser, either deposit in
escrow with Escrow Agent, in cash, the amount by which Purchaser's good faith
estimate of the amount in dispute exceeds the Sellers' good-faith estimate of
such amount, or deliver to Escrow Agent an irrevocable, standby letter of credit
(in form and substance, and from a bank, reasonably satisfactory to Purchaser)
in such amount; provided however, that if Purchaser's good faith estimate of the
Material Loss is in excess of Twenty Million Dollars ($20,000,000.00), clause
(i) of this sentence shall in all events apply. If the arbitrator decides, or it
is settled by the parties, that the aggregate diminution in value of the
Property (above the amount of the Preclosing Basket) exceeded the Sellers' good
faith estimate of the amount in dispute over the Preclosing Basket, then (x) if
such decision or settlement is made prior to the Closing, the provisions of
subsection 11.1.1 shall apply and (y) if such decision or settlement is made
after the Closing, Purchaser's claims shall be satisfied pursuant to the escrow
arrangements described above (without giving effect to clause (iii) of
subsection 8.6.2, except with respect to post-Closing claims by the Purchaser
with respect to other breaches). The terms of this subsection 11.1.3 shall
survive the Closing.
11.2 Performance of Obligations. The Sellers shall have executed and/or delivered or caused to be delivered at Closing all of the documents and instruments required by this Agreement to be executed and/or delivered by the Sellers at or prior to the Closing and shall have taken all other actions and fulfilled all other covenants and conditions required of the Sellers at or prior to the Closing under this Agreement in all material respects.
11.3 Casino Level SNDA. Purchaser shall have received from the mortgage lenders for the hotel/casino (or the trustee(s) or agent(s) thereof) one or more executed subordination, non-disturbance and attornment agreements ("SNDAs"), in substantially the form attached hereto as Exhibit AA or any other form reasonably acceptable to Purchaser, with respect to the Casino Level Master Lease. The Sellers hereby agree to use diligent efforts to obtain such SNDAs from such lenders.
11.4 All Sellers to Close. The Sellers shall simultaneously close the transactions contemplated by this Agreement with Purchaser, it being understood and agreed that Purchaser shall have no obligation to close the transactions contemplated hereby with only one of the Sellers.
11.5 No Injunctions. There shall be no binding injunction, order or judgment of any court having proper jurisdiction prohibiting Purchaser from consummating the Closing.
11.6 Title. The Title Company, or any other reputable title company,
shall be willing to issue an owner's policy of title insurance in the amount of
the Purchase Price, subject to the standard printed exclusions from coverage
contained in the ALTA Owner's title policy and the payment of premiums, insuring
(a) fee title to the Property, other than the space which is the subject of the
Casino Level Master Lease, (b) leasehold title to the space which is the subject
of the Casino Level Master Lease, and (c) all of Owner's easement rights under
the REA, in each case free of encumbrances other than Permitted Encumbrances,
which policy shall include a non-imputation endorsement in such title company's
standard form or any other form reasonably acceptable to Purchaser.
11.7 Other Conditions. Any other condition to the obligation of Purchaser to consummate the Closing which is set forth in any other provisions of this Agreement shall have been satisfied in all material respects.
If any of the foregoing conditions is not satisfied and, as a result, the Closing does not occur, the Deposit shall be returned to Purchaser, this Agreement shall terminate and neither party shall have any further rights or obligations under this Agreement except as otherwise specifically provided herein; provided, however, that if any such condition is not satisfied due to the Sellers' default, Purchaser shall have the rights provided for in Section 16.2.
12. Risk of Loss Upon Casualty or Taking. If prior to the Closing the
Property shall suffer any damage by fire or other casualty, the cost to repair
(excluding repairs which are Tenants' obligation to make) which is reasonably
expected to exceed 15% of the Purchase Price, or if any proceeding shall be
instituted for the taking in condemnation or by eminent domain of any material
portion of the Property, Purchaser shall have the right to terminate this
Agreement by giving written notice to the Sellers within ten (10) Business Days
(but in no event later than the Closing Date) after the Purchaser first becomes
aware of such damage or taking. The Sellers agree to give Purchaser prompt
written notice of the occurrence of any such damage or taking. If this Agreement
is so terminated, the Escrow Agent shall return the Deposit to Purchaser (and
the Sellers and Purchaser shall execute a written instruction to Escrow Agent to
do so) and neither party shall have any further obligations or liabilities
hereunder, or otherwise with respect to the subject matter hereof, except as
otherwise expressly provided herein. If Purchaser does not properly elect such
option to terminate, or if the damage or taking shall not be of sufficient
magnitude to entitle Purchaser to terminate this Agreement pursuant to this
Article 12, this Agreement and the obligations of the Sellers and Purchaser
hereunder shall remain in full force and effect, and Purchaser shall acquire the
Membership Interests notwithstanding such damage to or taking of the Property
and shall pay the full Purchase Price therefor, except that (a) at the Closing
the Sellers shall pay (and/or cause VCR to pay, as applicable) over to Purchaser
or Owner (or Owner shall retain) Owner's share (pursuant to the REA) of the
amount of insurance proceeds or taking award, if any, received by Owner (and/or
VCR, as applicable) prior to the date of the Closing, (b) Purchaser shall
receive a credit against the Purchase Price for the amount of any deductible and
(c) prior to the Closing the Sellers shall not permit Owner or VCR to settle or
compromise any claim for such proceeds or award without the prior consent of
Purchaser, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Sellers (and/or VCR, as applicable) shall be
entitled to receive or retain (i) out of such casualty insurance proceeds or
award, any amounts expended by Owner or VCR prior to the Closing to restore or
protect the Property (provided that any such restoration or protection by the
Owner or VCR shall be subject to Purchaser's approval, not to be unreasonably
withheld) and (ii) rental or business interruption proceeds allocable to periods
prior to the Adjustment Point, which entitlement shall survive the Closing.
13. Operation of the Property Until Closing; Tax Returns.
13.1 Standard of Operation. From the date hereof until the Closing, the
Sellers shall (a) cause Owner and VCR to maintain the Property (other than the
portions thereof which are Tenants' responsibility to maintain under Leases) in
the same manner and condition that exists on the date hereof, as such condition
shall be altered by reason of Casualty, Taking and/or normal wear and tear
(provided, that in all events the Sellers shall not be obligated to cause Owner
or VCR to make any capital improvements, repairs or replacements to the
Property); (b) cause Owner to pay its debts (or in good faith contest the same)
as they become due; (c) without the express written consent of Purchaser, not
permit Owner or VCR to (i) materially modify any Lease, (ii) enter into any new
Lease or extend or renew an existing Lease, except for new Leases or Leases
renewals or extensions set forth in the list of pending lease transactions
contained in Exhibit O attached hereto and made a part hereof (it being
understood and agreed that the terms of any such new Lease or Lease renewal or
extension shall be deemed to comply with said Exhibit O if the fixed rent
provided for in the new Lease or Lease renewal or extension is not less than the
fixed rent provided therefor in Exhibit O and all other material terms of such
new Lease or Lease renewal or extension are substantially as provided for, or
more favorable to Owner than, those set forth in Exhibit O) (other than renewals
or extensions resulting from the exercise by a Tenant of a currently existing
renewal or extension option), (iii) cancel or terminate any Lease or take any
action to enforce any Lease which would have the effect of canceling or
terminating the same, or waive payment of any post-Closing rent or performance
by any Tenant of any post-Closing material covenant in its Lease, (iv) amend or
modify, consent to the assignment of or waive any material right under the REA,
(v) with the exception of Tenant alterations, make any material alterations to
the Property or enter into any new contracts, or extend or renew or cancel any
Other Agreement, relating to material capital expenditures, (vi) enter into any
other new contracts or extend, renew or cancel any of the Other Agreements,
except for contracts executed in the ordinary and usual course and business and
in accordance with past practices and policies which can be terminated without
penalty or payment upon not more than sixty (60) days prior notice, (vii) enter
into any material agreement the effect of which is to cause the Sellers to be
unable to assign the Membership Interests to Purchaser, or (viii) materially
amend any of the organizational documents of Owner; and (d) cause Owner and VCR
to otherwise operate the Property in the ordinary course of business and
consistent with current practice.
13.2 Tax Returns. Subsequent to the Closing the Sellers shall prepare timely and file, or cause to be prepared and timely filed, all federal, state and local income tax returns for Owner for the period ending on the Closing Date and pay all amounts due as shown on said returns, which obligations shall survive the Closing.
14. Title to the Membership Interests and the Property.
14.1 Title to the Membership Interests. On the Closing Date, the Membership Interests shall be assigned and transferred by the Sellers to Purchaser free and clear of all liens and encumbrances.
14.2 Title Defects. If on the Closing Date the Sellers shall be unable to cause title to the Property to be free and clear of all exceptions to title other than Permitted Encumbrances, then the Sellers shall be entitled, but shall not be obligated, to adjourn the Closing for one or more periods not to exceed ninety (90) days in the aggregate for the purpose of causing title to be placed in the condition called for by this Agreement. If on the Closing Date, as the same may be adjourned as above provided, title to the Property is not free and clear of all exceptions to title other than Permitted Encumbrances, Purchaser may terminate this Agreement by notice to the Sellers delivered on or prior to the Closing Date, as the same may have been extended, in which event this Agreement shall be terminated and of no further force or effect, and neither party shall have any obligations of any nature to the other hereunder or by reason hereof, except as to those obligations hereunder that are specifically stated to survive such termination, and the Deposit shall be distributed by Escrow Agent in accordance with Section 3.2.2 (and the Sellers shall join with Purchaser in executing a written instruction to Escrow Agent to do so); provided, however, that in the event that title to the Property is not free and clear of all exceptions to title other than Permitted Encumbrances due to a breach of the proviso clause of the next sentence, Purchaser shall have the rights set forth in Section 16.2. Neither the Sellers nor Owner shall be under any obligation to take any steps or to institute or prosecute any action or proceedings, or expend any sums of money, to remove from title to the Property any defect, encumbrance or objection to title; provided, however, that the Sellers shall be responsible for discharging (and at or prior to the Closing shall discharge) any liens, encumbrances or other title defects which do not constitute Permitted Encumbrances, which can be discharged solely by the payment of a sum of money and which arise solely on account of actions or failures to act by Owner or VCR. The Sellers may use any part of the Purchase Price to discharge the same, provided that the Sellers shall deliver to Purchaser at the Closing instruments in recordable form sufficient to discharge such liens and encumbrances of record. Except for the Sellers' failure to discharge such monetary liens or encumbrances as aforesaid, the Sellers shall not be deemed in default of this Agreement, and Purchaser shall not be entitled to damages of any kind, if the Sellers shall fail or be unable to cause title to the Property to be in the condition called for by this Agreement, nor shall Purchaser, in such circumstances, be entitled to specific performance of this Agreement (unless the same is due to a default by the Sellers under this Agreement). In no event shall the Sellers or Owner be obligated to discharge any mechanic's or similar lien created by a Tenant in occupancy at the Closing whose Lease is in full force and effect, but the Sellers shall cause Owner (or VCR, as applicable) to use reasonable efforts to cause such Tenant to do so. For purposes of this Section 14.2, the Sellers shall be deemed to have cured or removed any title exception if the Title Company or any other reputable title insurance company shall be prepared to issue to Owner an owner's policy of title insurance for the Property (at standard rates or with the Sellers paying any additional premium in connection with such exception) dated as of the Closing Date insuring over such exception, or providing affirmative coverage or an endorsement with respect thereto that is reasonably satisfactory to Purchaser.
14.3 Waiver by Purchaser. Purchaser, at its election, may at the Closing accept the Membership Interests notwithstanding the fact that the then-existing state of title to the Membership Interests and/or Property may be subject to one or more title exceptions or defects not provided for in this Agreement, without reduction of the Purchase Price or any credit or allowance on account thereof or any claim against the Sellers by reason thereof.
14.4 Full Performance; Survival. The acceptance of the assignment of Membership Interests and other closing documents by Purchaser from the Sellers shall be deemed full performance on the part of the Sellers of all of their obligations under this Agreement, except as to any such obligation which is specifically stated in this Agreement to survive the Closing or is expressly contained in documents delivered at Closing. Except where otherwise expressly provided in this Agreement, none of the provisions of this Agreement shall survive the Closing.
15. Brokers, etc.
15.1 Purchaser's Representation. Purchaser represents and warrants to the Sellers that neither Purchaser, nor any affiliate thereof, has dealt with any broker, finder or like agent who might claim a commission or fee in connection with the transaction contemplated in this Agreement or on account of introducing the parties, the preparation or submission of brochures, the negotiation or execution of this Agreement or the closing of the transaction contemplated herein, other than Goldman Sachs & Co. ("Goldman"). Purchaser agrees to indemnify and hold harmless the Sellers and their successors and assigns and affiliates from and against any and all claims, losses, liabilities and expenses, including without limitation reasonable attorneys' fees, disbursements and charges, arising out of any claim or demand for commissions or other compensation for bringing about this transaction by any broker, finder or similar agent or party other than Goldman who claims to have dealt with Purchaser or any affiliate thereof in connection with this transaction.
15.2 The Sellers' Representation. The Sellers represent and warrant to Purchaser that the fees of Goldman shall be paid by the Sellers pursuant to a separate agreement. The Sellers agree to indemnify and hold harmless Purchaser and its successors and assigns from and against any and all claims, losses, liabilities and expenses, including without limitation reasonable attorneys' fees, disbursements and charges, arising out of any claim or demand for commissions or other compensation for bringing about this transaction by any broker, finder or similar agent or party, including, without limitation, Goldman, who claims to have dealt with any Seller or any affiliate thereof but not with Purchaser in connection with this transaction.
15.3 Survival. The provisions of this Article 15 shall survive the Closing or the termination of this Agreement.
16. Default; Remedies.
16.1 Purchaser's Default. If at the Closing Date the conditions to the obligation of the Sellers to close title as set forth in Article 10 have not been fulfilled on account of the default of Purchaser in performing any of its obligations hereunder, and the Closing does not occur as a result thereof, then the Sellers shall be entitled as their sole and exclusive remedy to terminate this Agreement and receive the Deposit from the Escrow Agent (and/or draw on any Letters of Credit) as liquidated damages for Purchaser's default (and in such circumstances Purchaser shall, if applicable, join with the Sellers in a written instruction to Escrow Agent to pay the Deposit to the Sellers). The Sellers and Purchaser agree that it would be impractical or impossible to fix actual damages in the case of a default by Purchaser and that the Deposit (whether in the form of cash held by Escrow Agent and/or any Letters of Credit) is a reasonable estimate of the Sellers' damages in such event.
16.2 The Sellers' Default. If at the Closing Date the conditions to the obligation of Purchaser to close title as set forth in Article 11 have not been fulfilled on account of the default of the Sellers hereunder, and the Closing shall not occur as a result thereof, then Purchaser shall be entitled to pursue, at its election, either of the following as its sole and exclusive remedy: (i) terminate this Agreement and have the Deposit returned to it by the Escrow Agent, or (ii) seek specific performance of the Sellers' obligations under this Agreement. Purchaser hereby waives any right to sue the Sellers for damages (including consequential and punitive damages) for any default by the Sellers hereunder but if the Closing occurs such waiver shall not apply to damages to which Purchaser may be entitled hereunder by reason of any breach by the Sellers of any of their indemnities, warranties or representations hereunder which survive the Closing; provided, however, that in the event the remedy of specific performance is unavailable to Purchaser, Purchaser may seek damages (but not consequential, indirect or punitive damages) from the Sellers.
16.3 Survival. The provisions of this Article 16 shall survive the termination of this Agreement.
17. Estoppels.
17.1 Required Estoppels. At or before the Closing, and as a condition to Purchaser's obligation to close, the Sellers shall cause Owner (and/or VCR, as applicable) to deliver to Purchaser the following estoppel letters:
17.1.1 estoppel letters from each of the parties (other than Owner) to the REA, such estoppel letters to be in substantially the form of Exhibit P attached hereto and made a part hereof and dated as of the Closing Date; and
17.1.2 estoppel letters from Tenants at the Property which occupy in excess of seventy percent (70%) of the then-occupied gross leasable area of the Property in the aggregate and in all events including the Tenant under each of the VCR Leases, the Tao Restaurant Lease, the Tao Nightclub Lease and the Diamond Resort Lease (such tenants, the "Required Tenants"), such estoppel letters to be in substantially the form of Exhibit Q attached hereto and made a part hereof and dated not more than thirty (30) days prior to the Closing Date; provided, however, that if any Lease provides for the form or content of an estoppel letter, Purchaser shall accept an estoppel letter as called for therein if any Tenant refuses to execute one in the form annexed hereto as Exhibit Q after being requested to do so by Owner (or VCR, as applicable). For purposes of this subsection 17.1.2 and Section 17.2, (a) the VCR Showroom Lease, the Gondola Lease and the VCR Office Lease shall be deemed to be Leases, (b) VCR shall be deemed to be in occupancy on the Closing Date of the space covered by the VCR Showroom Lease, the Gondola Lease and the VCR Office Lease, (c) the space covered by the Gondola Lease shall be deemed to only be the space covered by the Emporio d'Gondola store and (d) the execution and delivery by VCR on the Closing Date of the VCR Showroom Lease, the Gondola Lease and the VCR Office Lease shall be deemed to be execution and delivery by VCR of satisfactory tenant estoppel letters with respect to such Leases.
17.2 The Sellers' Estoppels. If Owner and VCR shall be unable to obtain
all of the estoppel letters required by Section 17.1, then the Sellers shall
have the right (but not the obligation) to provide to Purchaser, and Purchaser
shall accept in lieu of the missing estoppel letter(s), one or more estoppel
letters signed by the Sellers in the form of Exhibit R attached hereto and made
a part hereof (a "Sellers' Estoppel Letter"), with respect to any Tenants (other
than the Required Tenants, for which no Sellers' Estoppel Letter may be
delivered by the Sellers in lieu of the Required Tenants' estoppel letters)
selected by the Sellers, to the extent necessary to achieve the seventy percent
(70%) requirement set forth in Section 17.1.2. Furthermore, it shall be a
condition precedent to Purchaser's obligation to consummate the Closing that the
Sellers deliver to Purchaser a Seller's Estoppel Letter for the Madame Tussaud
Lease and for the Sephora Lease, if the Tenant under the applicable Lease does
not deliver an estoppel letter. Notwithstanding the foregoing, in no event shall
Purchaser be required to proceed to Closing if the Sellers are unable to deliver
estoppel letters signed by Tenants who aggregate at least fifty percent (50%) of
the then-occupied gross leasable area of the Property. Statements made by the
Sellers in a Sellers' Estoppel Letter shall constitute warranties and
representations by the Sellers which shall survive the Closing for the period,
and shall otherwise be subject to all of the limitations, set forth in Section
8.6 and any other applicable provisions of this Agreement. If the Sellers
deliver any Sellers' Estoppel Letters and, subsequent to the Closing, the
Sellers receive an estoppel letter, the Sellers shall deliver such estoppel
letter to Purchaser and in such case, (1) to the extent such estoppel letter
conforms with a Sellers' Estoppel Letter for the Tenant in question, such
Sellers' Estoppel Letter shall be and become of no further force or effect or
(2) if no Sellers' Estoppel Letter was delivered for the Tenant in question, the
Sellers shall designate one or more of Sellers' Estoppel Letters delivered
pursuant to this Section 17.2 which, in the aggregate, comprise not more than
the same percentage of the gross leasable area of the Property as the Tenant in
question, and such Sellers' Estoppel Letter(s) shall be of no further force or
effect.
17.3 Variance between Estoppels and Forms Annexed as Exhibits. The Sellers shall not be in breach or default under this Agreement, and, subject to the further provisions of this sentence, Purchaser shall not have the right to elect to not consummate the Closing, if one or more estoppel letters signed by any Tenants set forth allegations or facts at variance with statements in the forms of estoppel letters annexed hereto as exhibits or information set forth in other exhibits to this Agreement or otherwise set forth claims, defenses, or other adverse matters (collectively, "Estoppel Claims"), but it shall be a condition to Purchaser's obligation to close the transactions provided for herein that such Estoppel Claims (excluding Estoppel Claims which, under the terms of this Agreement, any instrument or document delivered pursuant hereto or any other agreement of the Sellers executed and delivered on or prior to the Closing Date, it is the Sellers' obligation to pay or rectify), taken as a whole, do not reveal facts of which Purchaser had no knowledge (including any deemed knowledge pursuant to clauses (i), (iii), (iv) and (v) of the last sentence of subsection 8.6.4) on or before the date of this Agreement and which result in a Material Loss.
17.4 All Estoppels to be Delivered. The Sellers agree that notwithstanding the fact that estoppel letters are not required from all of the Tenants, as specified in Section 17.1, the Sellers shall request all Tenants to execute estoppel letters in the forms annexed hereto as Exhibit Q and the Sellers shall use commercially reasonable efforts to obtain all such estoppel letters.
18. Notices. Except as otherwise provided in this Agreement, all notices,
demands, requests, consents, approvals or other communications which are
required or permitted to be given under this Agreement or which either party
desires to give with respect to this Agreement shall be in writing and shall be
delivered by hand or sent by telecopy (with the original sent by hand,
first-class mail, postage prepaid), or sent postage prepaid, by registered or
certified mail, return receipt requested, or by reputable overnight courier
service addressed to the party to be notified as follows (or to such other
address as such party shall have specified at least three (3) Business Days
prior thereto by like notice) and shall be deemed given when so delivered by
hand or telecopied, and if mailed, three (3) Business Days after mailing (one
(1) Business Day in case of overnight courier service), as follows:
if to the Sellers, to:
Grand Canal Shops Mall MM Subsidiary, Inc.
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89019
Attn: Fred Kraus
Tel: (702) 414-4409
Fax (702) 414-4421
With copies at the same time to:
Grand Canal Shops Mall Subsidiary, LLC.
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89019
Attn: Robert Goldstein
Tel: (702) 414-4420
Fax: (702) 414-4950
and:
Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 Attn: Harris B. Freidus, Esq.
Tel: (212) 373-3064
Fax: (212) 492-0064
if to Purchaser, to:
GGP Limited Partnership
c/o General Growth Properties, Inc.
110 North Wacker Drive
Chicago, IL 60606
Attn: Joel Bayer
with copies at the same time to:
Neal, Gerber & Eisenberg
Two North LaSalle Street
Suite 2200
Chicago, IL 60602
Attn: Marshall E. Eisenberg, Esq. & Douglas M. Ellis, Esq.
if to Guarantor, to:
Venetian Casino Resort, LLC
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89019
Attn: Fred Kraus
Tel: (702) 414-4409
Fax (702) 414-4421
and:
Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 Attn: Harris B. Freidus, Esq.
Tel: (212) 373-3064
Fax: (212) 492-0064
19. Further Assurances. Each of the Sellers and Purchaser agrees, at any
time and from time to time after the Closing, to execute, acknowledge, where
appropriate, and deliver such further instruments and documents and to take such
other action as the other party may reasonably request in order to carry out the
intents and purposes of this Agreement, provided that such request is made by
notice given within one (1) year after the Closing Date. If required by the
other party, the party making the request will bear the reasonable cost
involved. Neither party shall be required to execute any instrument or document
pursuant to this Article 19 which would increase the liability or obligations of
such party over that provided for in this Agreement and the instruments and
documents executed by such party pursuant hereto. Without limiting the
foregoing, the Sellers shall, upon the request of Purchaser from time to time,
provide signed "representation letters" with respect to revenues and expenses of
Owner for the period prior to Closing to enable Purchaser's accountants to
render an opinion on Purchaser's or any of its affiliates' financial statements
(including financial statements with respect to the Property), provided that (a)
the same shall be at no third party (out of pocket) cost to the Sellers and
Purchaser shall reimburse the Sellers for all reasonable cost and expenses
incurred by the Sellers in connection therewith within fifteen (15) days written
notice and (b) the Sellers shall have no liability with respect to any
inaccuracies or mistakes in said letters. The provisions of this Article 19
shall survive the Closing.
20. Captions. The article and section titles or captions in this Agreement and the Table of Contents and the Schedule of Exhibits prefixed hereto are for convenience only and shall not be deemed to be part of this Agreement.
21. Governing Law; Construction. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of New York applicable to contracts negotiated, executed and to be performed wholly within such State. Each party hereto acknowledges that it was represented by counsel in connection with this Agreement and the transactions contemplated herein, that it and its counsel reviewed and participated in the preparation and negotiation of this Agreement and the documents and instruments to be delivered hereunder, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or the documents and instruments to be delivered hereunder.
22. Entire Agreement; No Third Party Beneficiary, etc. This Agreement, including all Exhibits, contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings, if any, with respect thereto. The parties have made no representations with respect to the subject matter of this Agreement and have given no warranties with respect to the subject matter hereof except as expressly provided herein and/or expressly provided in the documents delivered at Closing. This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein. The parties do not intend to confer any benefit hereunder on any person, firm, corporation or other entity other than the parties hereto, except that VCR shall be a third-party beneficiary of the provisions of subsections 7.4.1 and 7.4.2 hereof. The provisions of this Article 22 shall survive the Closing or termination of this Agreement.
23. Waivers; Extensions. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof or of any other agreement or provision herein contained. No extension of time for performance of any obligations or acts shall be deemed an extension of the time for performance of any other obligations or acts. Whenever in this Agreement it is provided that a document must be dated within a specified number of days prior to the Closing Date, the reference to the Closing Date in each such provision shall be deemed to be the scheduled Closing Date set forth in the first sentence of Section 5.1 and not any date to which such Closing Date may be adjourned pursuant to the provisions hereof. The provisions of this Article 23 shall survive the Closing or termination of this Agreement.
24. Pronouns. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the parties may require.
25. Transaction Expenses; Fees and Disbursements of Counsel, etc.
25.1 Transaction Expenses. The Sellers shall pay recording fees and charges for documents required to remove exceptions to title which do not constitute Permitted Encumbrances and/or the cost of causing the Title Company to omit or insure over any such exceptions, the fees of Goldman and one-half (1/2) of the cost of any escrow fee charged by Escrow Agent in connection with this transaction. Purchaser shall pay recording charges (except as provided in the preceding sentence) and one-half (1/2) of the cost of any escrow fee charged by Escrow Agent in connection with this transaction. The Sellers shall pay any documentary stamp taxes and surtaxes, transfer taxes and similar charges payable in connection with the transfer of the Membership Interests by the Sellers to Purchaser. Purchaser shall pay the cost of updating the survey and the premiums for the owner's (and any lender's) policies of title insurance and all endorsements thereto issued to Purchaser or Owner (or any lenders) at Closing.
25.2 Other Expenses. Subject to Section 25.1, each party shall pay its own expenses in connection with the transaction contemplated in this Agreement, including the fees, disbursements and charges of its own counsel, accountants, consultants, experts and other advisors in connection with the negotiation and preparation of this Agreement and the Closing.
25.3 Survival. The provisions of this Article 25 shall survive the Closing or the termination of this Agreement.
26. Assignment.
26.1 General Prohibition. Subject to the further provisions of this Article 26, Purchaser shall not, without the prior written consent of the Sellers, assign this Agreement or its rights hereunder, in whole or in part, to any other person or entity. Any transfer of fifty percent (50%) or more of the direct or indirect equity, beneficial or voting interests in Purchaser at any level or tier of ownership, whether in one transaction or a series of transactions, shall constitute an assignment for purposes of this Article 26.
26.2 Affiliates. Notwithstanding anything to the contrary contained in this Article 26, Purchaser may assign its rights hereunder to any Affiliate (as hereinafter defined) of Purchaser. For purposes of this Article 26, (x) "Affiliate" means any entity controlled by Purchaser, an entity in which Purchaser directly or indirectly owns fifty percent (50%) or more of the voting rights and/or beneficial interests, or an entity that is under common control with Purchaser and (y) "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the entity in question, whether through the ownership of voting stock, by contract or otherwise.
26.3 Assignor Remains Liable. In connection with any assignment permitted or consented to hereunder, such assignee shall assume in writing all of the assignor's obligations under the Agreement pursuant to an assumption agreement in form and substance reasonably satisfactory to the Sellers, provided that the Purchaser originally named herein shall not be relieved from its obligations under this Agreement. Any other purported or attempted assignment or delegation without obtaining the Sellers' prior written consent or not otherwise permitted hereunder shall be void and of no force and effect. No consent given by the Sellers to any transfer or assignment of Purchaser's rights or obligations hereunder shall be construed as a consent to any other transfer or assignment of Purchaser's rights or obligations hereunder.
27. Counterparts. This Agreement may be executed in counterparts, each of which (or any combination of which, signed by all of the parties) shall be deemed an original, but all of which, taken together, shall constitute one and the same instrument.
28. No Recording. The parties agree that neither this Agreement nor any memorandum or notice hereof shall be recorded or filed in any public records except as required by law (and except for filings with any court (but not in any real estate, county or state recording office) pursuant to any litigation). If Purchaser violates the terms of this Article, the Sellers, in addition to any other rights or remedies it may have, may immediately terminate this Agreement by giving notice to Purchaser of its election so to do and receive and retain the Deposit as liquidated damages in accordance with Section 16.1. The provisions of this Article shall survive the Closing or any termination of this Agreement.
29. Confidentiality. The parties hereto agree that, except as required by law (including securities laws, rules and regulations), each will treat as confidential the terms of this Agreement and the transaction contemplated herein and that prior to Closing neither will issue a press release, advertisement or other public communication with respect to this Agreement or relating to the transaction contemplated herein without the prior approval of the other party. In addition, Purchaser agrees that, prior to Closing, it will treat as confidential all non-public information relating to the Property furnished to Purchaser by or on behalf of the Sellers and that it will not disclose any such information to other persons or entities except for its attorneys, accountants and consultants, if any, its lenders, the Title Company, its insurance companies and insurance brokers, its partners or investors, if any, or as may be compelled or required by law (including securities laws, rules and regulations). If this Agreement is terminated or the Closing does not otherwise occur, Purchaser shall redeliver to the Sellers all materials with respect to the Property furnished to it by or at the behest of the Sellers and shall destroy all copies thereof and notes relating thereto and certify to the Sellers in writing that it has done so. The preceding provisions of this Article 29 shall survive any termination of this Agreement. On the Closing Date, the parties shall either issue a joint press release reasonably satisfactory to each or, if each issues its own press release, each such release must be reasonably satisfactory to the other.
30. Prevailing Party's Attorneys' Fees. In connection with any litigation, including appellate proceedings, initiated by a party hereto against the other party hereto and arising out of this Agreement or any instrument or document executed pursuant hereto, the party adjudicated to be the substantially prevailing party shall be entitled to recover reasonable attorneys' fees and disbursements from the other party. The provisions of this Article shall survive the Closing or the termination of this Agreement.
31. Indemnification. Any party entitled to indemnification by the other party pursuant to any provision of this Agreement or under any instrument or document executed and delivered pursuant hereto (the "Protected Party") shall give prompt notice to the other party (the "Indemnifying Party") of any claim, demand or action asserted, made or instituted against the Protected Party which is covered by such indemnification; provided, however, that the Protected Party's failure to do so shall not relieve the Indemnifying Party of its indemnification obligations except to the extent that the Indemnifying Party has been materially prejudiced by such failure. The Indemnifying Party shall have the right, by notice to the Protected Party, to assume the defense of any claim, demand or action with respect to which the Protected Party is entitled to indemnification hereunder, but only if, in such notice, the Indemnifying Party acknowledges that such claim, demand or action is covered by the indemnity in question. If the Indemnifying Party gives such notice, (i) such defense shall be conducted by counsel selected by the Indemnifying Party and approved by the Protected Party, such approval not to be unreasonably withheld or delayed (provided, however, that the Protected Party's approval shall not be required with respect to counsel designated by the Indemnifying Party's insurer), (ii) so long as the Indemnifying Party is conducting such defense with reasonable diligence, the Indemnifying Party shall have the right to control said defense and shall not be required to pay the fees or disbursements of any counsel engaged by the Protected Party for services rendered after the Indemnifying Party has given the notice provided for above to the Protected Party or prior to the time that the Protected Party has given to the Indemnifying Party the notice required by the first sentence of this Article 31, and (iii) the Indemnifying Party shall have the right, without the consent of the Protected Party, to settle such claim, demand or action, but only provided that the Indemnifying Party pays all amounts due in connection with or by reason of such settlement and, as part thereof, the Protected Party is unconditionally released from all liability in respect of such claim, demand or action. The Protected Party shall have the right to participate in the defense of any claim, demand or action being defended by the Indemnifying Party at the expense of the Protected Party, but the Indemnifying Party shall have the right to control such defense. In no event shall the Protected Party (a) settle any such claim, demand or action without the consent of the Indemnifying Party or (b) if any such claim, demand or action is covered by the Indemnifying Party's liability insurance, take or omit to take any action which would cause the insurer not to defend such claim, demand or action or to disclaim liability in respect thereof. The provisions of this Article 31 shall survive the Closing or any termination of this Agreement.
32. Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT EITHER PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THE PROPERTY, THE MEMBERSHIP INTERESTS, THE ASSIGNMENT INSTRUMENT OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH, OR IN RESPECT OF ANY COURSE OF CONDUCT, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE PARTIES TO ENTER INTO THIS TRANSACTION AND SHALL SURVIVE THE CLOSING OR THE TERMINATION OF THIS AGREEMENT.
33. Partnership Liabilities. It is the intention of the Sellers and Purchaser that, notwithstanding the fact that Purchaser is purchasing the Membership Interests, Purchaser shall not be obligated to pay or discharge any liabilities or other obligations which Purchaser would not assume or be liable for if Purchaser were purchasing the fee interest in the Property instead of the Membership Interests.
33.1 The Sellers' Indemnification. In order to implement the foregoing,
but subject to the provisions of Section 33.2, the Sellers hereby defend,
indemnify and agree to hold harmless Purchaser and any affiliate of Purchaser
which receives an assignment of any of the Membership Interests from the Sellers
at Closing (Purchaser and any such affiliates shall, for purpose of this Article
33, be referred to collectively as "Purchaser") from and against all
liabilities, obligations, debts, claims, causes of action, judgments and damages
which may be asserted against, imposed on or incurred by Owner after the Closing
by reason of any of the following: (i) any obligations of Owner for borrowed
money which was incurred prior to the Closing; (ii) any claims against the Owner
under Leases for overpaid Rents or other charges, for failure of the landlord
thereof to perform any of its obligations thereunder or for misapplication of
security deposits, in each case with respect to any period prior to the Closing;
(iii) any claims made by any party (other than Owner) to any of the Other
Agreements with respect to any period prior to the Closing; (iv) all obligations
and payments due from Owner to creditors with respect to any period prior to the
Closing; (v) any amounts due and payable by Owner to the Managing Agent
(including, without limitation, those arising out of the termination of the
Management Agreement); (vi) all obligations with respect to existing litigation
against Owner, or any litigation in connection with the actions or omissions of
Owner, instituted against Owner after the date hereof or on or after the Closing
Date to the extent based on any event occurring prior to the Adjustment Point;
(vii) any income, excise, franchise or other taxes payable by Owner in respect
of any period prior to the Adjustment Point; (viii) any other liabilities,
obligations, debts, claims, causes of action, judgments or damages which may be
imposed upon, incurred by or asserted against Owner in connection with the
actions or omissions of Owner and which are based on any event occurring prior
to the Closing (including, but not limited to, Owner's obligations under the ATM
Agreement and under that certain Release and Termination of Leasehold Agreement
by and between WB Stage 16 and Owner, dated January 3, 2003); (ix) any
liabilities or obligations relating to any property of Owner (other than the
Property or related property) or any activities of Owner (other than the
ownership and operation of the Property and related property); and (x) any fine,
penalty or the like that is imposed or assessed by a governmental authority for
the period prior to the Closing, whether or not imposed or assessed before or
after the Closing (the foregoing, collectively, the "Excluded Liabilities").
33.2 Exclusions to the Sellers' Indemnification. The indemnity of the Sellers set forth in this Article 33 shall not apply to (and the term Excluded Liabilities shall be deemed not to include) any of the following or to any liability, obligation, debt, claim, cause of action, judgment or damage based on any of the following: (a) any matter accruing after the Adjustment Point except to the extent the Sellers are expressly obligated in respect thereof under other provisions of this Agreement; (b) any matter expressly assumed by Purchaser or Owner or as to which the Sellers are expressly relieved of any obligations or responsibilities under the terms of this Agreement; (c) any obligation, liability, debt, claim, cause of action, judgment or damage that would have been incurred, suffered or assumed by Purchaser if Purchaser had acquired the Property by deed (or assignment of lease in the case of the Casino Level Master Lease) and assumed all liabilities and obligations of Owner accruing post-Closing under or in respect of the Leases, the REA, the Other Agreements, the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease and the Casino Level Master Lease; (d) any matter or item to the extent an apportionment has been made or is provided for with respect thereto in this Agreement; (e) any matter relating to title to the Property; (f) any matter relating to the physical condition of the Property (including any Personal Property) including, without limitation, the need for any required repairs or replacements or any condition at the Property which violates applicable building, zoning, use, occupancy, fire, safety, health, environmental, disability or other laws, ordinances or codes; (g) any claim with respect to personal injury, death or property damage which occurs on or after the Closing Date; (h) any matter to the extent covered by any insurance policy maintained by Owner (or by VCR pursuant to the REA if such policy covers Owner and the Property) after the Closing; (i) any matter relating to the Property's non-compliance with any applicable laws, ordinances, orders or regulations (including, without limitation, any cost associated with environmental compliance); and (j) any Estoppel Claims. Without limiting the generality of clauses (f) and (i) above, but in amplification thereof, if any Tenant or other party claims that Owner is in default because it failed to make any required repairs, replacements or improvements, or if any governmental authority or other party asserts that the Property is in violation of any applicable laws, ordinances or codes, unless otherwise expressly provided elsewhere in this Agreement the Sellers shall have no liability, responsibility or obligation to make any such repairs, replacements or improvements, or to comply with any such laws, ordinances or codes or to remedy any violation thereof, or to pay the cost thereof, even if the condition which gives rise to the need therefore occurred prior to the Closing, it being understood and agreed that except as otherwise expressly provided elsewhere in this Agreement Purchaser has agreed to acquire the Membership Interests on the basis that the Property will be in "as is" condition and that the Sellers shall not be obligated to make any repairs, replacements or improvements thereto or remedy any conditions therein which are in violation of any applicable laws, ordinances or codes.
34. Arbitration.
34.1 Final and Binding. In any circumstance for which arbitration is specifically provided for herein, the party desiring such arbitration shall give notice to JAMS/Endispute (or its successor) and to the other party to this Agreement. Such arbitration shall be a final and binding arbitration upon the parties.
34.2 Rules. The arbitration will be conducted by a sole arbitrator in accordance with the provisions of JAMS/Endispute's Streamlined Arbitration Rules and Procedures (the "Rules") in effect on the date of commencement of the arbitration. The arbitrator shall be selected by agreement of the parties from JAMS/Endispute's panel of neutrals in accordance with those Rules, unless the parties agree otherwise. The arbitrator shall (unless not possible given JAMS/Endispute's panel of neutrals) have professional experience in the commercial real estate business.
34.3 Arbitration Governing Law. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C.ss.1-16, to the exclusion of state laws inconsistent therewith or that would produce a different result. The place of arbitration shall be New York, New York.
34.4 Written Opinion. The arbitrator shall not be required to render a written, reasoned opinion with respect to the award unless either party requests otherwise, provided that the requesting party pays all fees and expenses of the arbitrator in connection with such opinion. Non-appealable, final judgment upon the arbitrator's decision may be entered by any court having jurisdiction thereof, and the parties consent to jurisdiction in the federal and state courts located in the County of Clark, State of Nevada for this purpose. The provisions of this Article 34 may be enforced by any court of competent jurisdiction.
34.5 Arbitration Fees. The prevailing party in any arbitration shall be entitled to recover from the non-prevailing party all costs, fees and expenses in connection with such arbitration, including attorneys' fees and the fees and expenses of the arbitrator, and such recovery shall be part of the arbitrator's award.
35. REA. Purchaser hereby acknowledges and confirms that affiliates of the Sellers own properties adjoining, above, below and connected to the Property and which, together with the Property, are encumbered by the REA. Purchaser acknowledges that compliance by Owner after the Closing with the provisions of the REA (including Sections IV(B)(2) and XIV(3)(d) of the Amended and Restated REA) is a critical component of the transaction contemplated by this Agreement and that the Sellers would not be entering into this Agreement without Owner remaining bound by and obligated under the REA after the Closing. The provisions of this Article 35 shall survive the Closing.
36. Joint and Several Liability. Notwithstanding any other provision hereof, any liability or obligation of the Sellers or either Seller under any provision of this Agreement, whether for any post-Closing adjustment pursuant to Article 6, breach of a representation or warranty, breach of a covenant, indemnification or otherwise, is a joint and several liability or obligation of the Sellers.
37. Guaranty. By executing this Agreement, VCR hereby agrees to be liable for all of the Sellers' post-Closing liabilities and obligations contained in this Agreement and in the other documents executed and delivered by Seller in connection with this Agreement and the Closing, it being expressly understood that VCR is signing this Agreement solely in its capacity as guarantor as stated in this Article 37.
38. ATM Agreement. Notwithstanding anything contained in this Agreement to the contrary, during the term of the ATM Agreement, VCR shall retain all of its rights and obligations under such agreement including, but not limited to, the right to receive a portion of the revenues generated by the automatic teller machines located on the Property. Neither Purchaser nor Owner shall do anything which shall cause VCR and/or Ultron, Inc. to be in breach of the ATM Agreement. The provisions of this Article 38 shall survive the Closing.
39. Canyon Ranch Spa Space. Sellers and Purchaser acknowledge and confirm although it is their intent that the Property not include any space currently occupied by Canyon Ranch for use as a spa (as opposed to the separately demised Canyon Ranch retail store) or the lease covering such spa space, as of the date hereof the Land includes certain such space. Sellers are attempting to cause such space to be subdivided from the rest of the Land prior to the Closing, and if that occurs, the Property conveyed at the Closing shall not include such space or such lease. If, however, as of the Closing Date such space is part of one of the legal parcels in which Grand Canal Shoppes is situated, then (a) at the Closing the Sellers shall cause VCR to execute, and Purchaser shall execute as the managing member and on behalf of Owner, a lease of such space, which lease shall (i) provide that Owner shall lease such space to VCR for a term of ninety-nine years and for a base rent of $1 per year; (ii) provide that each of VCR and Owner shall use diligent efforts (at VCR's sole cost and expense) to cause such subdivision to be effectuated, and that immediately upon such subdivision, such space shall be conveyed by Owner to VCR for $1, (iii) provide for the structuring of such conveyance in such a way so as to avoid real property transfer tax (e.g. transfer of membership interests), (iv) provide for substantially the same rights and obligations between the parties with respect to such space that would apply if such space were part of the "Phase I Hotel/Casino" (as such term is defined in the REA); (iv) not permit Owner to terminate such lease for any reason; (v) contain "leasehold mortgagee protection provisions" substantially similar to such provisions in the Casino Level Master Lease, and (vi) in all other respects be reasonably satisfactory to the Sellers and Purchaser. The provisions of this Article 39 shall survive the Closing.
40. Additional Sellers' Post-Closing Obligation. The Sellers shall be liable and responsible for all allowances payable to Tenants in lieu of tenant alterations which were payable prior to the Closing. The provisions of this Article 40 shall survive the Closing.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day and year first above written.
SELLERS:
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC.
By: Mall Intermediate Holding Company, LLC,
its managing member
By: Venetian Casino Resort, LLC,
its managing member
By: Las Vegas Sands, Inc.,
its managing member
By: /s/ Robert G. Goldstein
------------------------------
Name: Robert G. Goldstein
Title: Senior Vice President
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GRAND CANAL SHOPS
MALL MM SUBSIDIARY, INC.
By: /s/ Robert G. Goldstein
-------------------------------------
Name: Robert G. Goldstein
Title: Senior Vice President
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PURCHASER:
GGP LIMITED PARTNERSHIP
By: /s/ Joel Bayer
-------------------------------
Name: Joel Bayer
Title: Senior Vice President
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The undersigned has executed this Agreement solely for the purpose of agreeing to be bound by the provisions of Article 37:
VENETIAN CASINO RESORT, LLC
By: Las Vegas Sands, Inc., as managing member
By: /s/ Robert G. Goldstein
-----------------------
Name: Robert G. Goldstein
Title: Senior Vice President
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The undersigned has executed this Agreement solely for the purpose of agreeing to be bound by the provisions of Section 3.2 and the last parenthetical clause of the last sentence of Section 3.3:
LAWYERS TITLE INSURANCE CORPORATION
By: /s/ Lawrence R. Vaughan
-------------------------
Name: Lawrence R. Vaughan
Title: Vice President
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Exhibit 10.2
AGREEMENT
BETWEEN
LIDO CASINO RESORT, LLC
AND
GGP LIMITED PARTNERSHIP
DATED: AS OF APRIL 12, 2004
TABLE OF CONTENTS
PAGE
------
ARTICLE 1 CERTAIN DEFINITIONS...................................................................2
ARTICLE 2 DESIGN OF MALL IMPROVEMENTS..........................................................10
ARTICLE 3 CONSTRUCTION OF MALL IMPROVEMENTS....................................................14
ARTICLE 4 DESIGN OF BUILD-OUT OF PHASE II MALL.................................................22
ARTICLE 5 CONSTRUCTION OF BUILD-OUT............................................................23
ARTICLE 6 ACCESS TO PHASE II LAND; RELATED MATTERS.............................................26
ARTICLE 7 TIMING FOR DESIGN AND CONSTRUCTION...................................................27
ARTICLE 8 AMENDED REA AND COREA................................................................29
ARTICLE 9 CONSULTATION; DISPUTE RESOLUTION.....................................................30
ARTICLE 10 MALL II BUYER CONDITIONS............................................................33
ARTICLE 11 DEVELOPER CONDITIONS................................................................35
ARTICLE 12 WAIVER OF CONDITIONS................................................................36
ARTICLE 13 CLOSING.............................................................................37
ARTICLE 14 CLOSING DELIVERIES; RELATED MATTERS.................................................37
ARTICLE 15 REPRESENTATIONS AND WARRANTIES OF DEVELOPER; CERTAIN AGREEMENTS....................39
ARTICLE 16 REPRESENTATIONS AND WARRANTIES OF MALL II BUYER; CERTAIN AGREEMENTS.................46
ARTICLE 17 TRANSACTION EXPENSES; TITLE INSURANCE...............................................49
ARTICLE 18 DAMAGE OR DESTRUCTION; CONDEMNATION.................................................50
ARTICLE 19 REMOVAL OF TITLE DEFECTS............................................................51
ARTICLE 20 CLOSING AND OTHER PAYMENTS..........................................................52
ARTICLE 21 PRE-CLOSING REMEDIES................................................................56
ARTICLE 22 POST-CLOSING REMEDIES...............................................................58
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ARTICLE 23 NOTICES.............................................................................58 ARTICLE 24 MISCELLANEOUS.......................................................................59 SCHEDULES AND EXHIBITS Schedule "1" - Phase II Land Schedule "2" - Leasehold Airspace Schedule "3" - Phase IA Airspace Schedule "4" - Continuing Service Contracts Schedule "5" - Permitted Encumbrances Schedule "6" - Consents and Exceptions to Representations of the Parties Schedule "7" - Miscellaneous Closing Deliveries Schedule "8" - Authorized Representatives; Notice Addresses Schedule "9" - Construction Safety & Health Manual Schedule "10" - Organizational Representations of Developer and Mall II Buyer Schedule "11" - Definition of Substantial Completion Schedule "12" - REA Schedule "13" - Mall II Buyer Legal Rates Schedule "14" - Tenant Handbook Schedule "15" - Cost Sharing Allocations Schedule "16" - Master Lease Agreement Schedule "17" - Intentionally Omitted Schedule "18" - Leases Schedule "19" - Gaming Provisions for Leases Schedule "20" - Work Continuation Agreement Exhibit A - Standards Document, attaching Leasing Plans and Character Sketches Exhibit B - Developer's Representation Certificate |
INDEX OF DEFINED TERMS
TERM SECTION ---- ------- Adjustment Payment....................................................................................20.2 Affiliate..............................................................................................1.1 Agreement..............................................................................................1.1 Amended REA............................................................................................8.1 amended................................................................................................1.2 amendment..............................................................................................1.2 Anticipated Completion Date............................................................................3.8 As-Built Floor Area....................................................................................2.3 Assignment............................................................................................14.1 at Developer's expense.................................................................................1.2 at Mall II Buyer's expense.............................................................................1.2 Authorized Representative..............................................................................1.1 Back-Of-House Areas..................................................................................Ex. A Basket...............................................................................................15.12 Building...............................................................................................1.1 Build-Out..............................................................................................1.1 Build-Out Notice.......................................................................................3.7 Build-Out Work.........................................................................................1.1 Business Day...........................................................................................1.1 Buyer Delay............................................................................................1.1 Buyer Liquidated Damages Amount........................................................................7.1 Buyer's Proposed Final Checklist.......................................................................3.8 by hand.................................................................................................23 C of O.................................................................................................3.7 Cap..................................................................................................15.12 Cap Rate..............................................................................................20.2 Casino Shops..............................................................................WHEREAS Clause E CE Warranty Work.......................................................................................3.4 Character Sketches...................................................................................Ex. A Close-Out..............................................................................................3.4 Closing................................................................................................1.1 Closing Date..........................................................................................13.1 Closing Instruments....................................................................................1.1 Closing Payment.......................................................................................20.2 Common Area..........................................................................................Ex. A Common Area Plans......................................................................................2.1 Common Elements........................................................................................1.1 Competitor.............................................................................................1.1 Condemnation..........................................................................................18.1 Construction Delay.....................................................................................1.1 Construction Safety & Health Manual....................................................................5.4 Consultant.............................................................................................1.1 Contractor Warranty....................................................................................3.4 |
Control................................................................................................1.1 COREA..................................................................................................8.2 CPI................................................................................................Sch. 15 CPI Adjustment.....................................................................................Sch. 15 CPI Increase.......................................................................................Sch. 15 day....................................................................................................1.2 Defective Work.........................................................................................3.4 delay..................................................................................................1.2 Demising Walls.........................................................................................2.2 Developer.........................................................................................Preamble Developer Delay........................................................................................1.1 Developer Indemnitees..................................................................................5.2 Developer Liquidated Damages Amount...................................................................21.2 Developer's Architect..................................................................................1.1 Developer's Representation Certificate...............................................................15.12 Developer's Warranty...................................................................................3.4 Development............................................................................................1.1 Direct Costs...........................................................................................5.4 Disputing Parties......................................................................................9.2 Earn-Out Date.........................................................................................20.2 Earn-Out Payment......................................................................................20.2 Encumbrance............................................................................................1.1 Exceptions Notice......................................................................................3.8 Exclusive Mall Equipment...............................................................................1.1 Fee Mall Space.........................................................................................1.1 Fees and Costs.........................................................................................1.1 Field Changes..........................................................................................3.3 Final Construction Drawings and Specs..................................................................2.1 Final Date............................................................................................20.3 Final Demising Wall Plan...............................................................................2.2 First-Class............................................................................................1.1 Floor Area ............................................................................................1.1 Force Majeure..........................................................................................1.1 Gaming Authority.......................................................................................1.1 Gaming Licenses........................................................................................1.1 Government Authorities.................................................................................1.1 H/C I Owner............................................................................................1.1 H/C II Space...........................................................................................1.1 Hazardous Material(s)..................................................................................1.1 Impositions............................................................................................1.1 include................................................................................................1.2 including..............................................................................................1.2 Independent Expert.....................................................................................9.4 Initial Construction Drawings and Specs................................................................2.1 Initial Demising Wall Plan.............................................................................2.2 Initial Plans..........................................................................................2.1 |
Initial Market Disruption Date........................................................................20.2 Inspection Period......................................................................................3.8 Institutional Investor.................................................................................1.1 Interest Rate..........................................................................................1.1 Interim Liquidated Damages.............................................................................7.1 Interim Payment Date(s)...............................................................................20.2 Interim Substantial Completion Notices.................................................................3.8 knowledge............................................................................................15.10 Landlord Build-Out.....................................................................................1.1 Landlord Build-Out Work................................................................................1.1 law....................................................................................................1.2 laws...................................................................................................1.2 Lease..................................................................................................1.1 Leasing Plans........................................................................................Ex. A Lease Damages..........................................................................................7.1 Leasehold.................................................................................WHEREAS Clause B Leasehold Airspace........................................................................WHEREAS Clause B Leasehold Mall Space...................................................................................1.1 Leasing Costs..........................................................................................1.1 Legal Proceeding.......................................................................................1.1 Legal Requirements.....................................................................................1.1 Major Event...........................................................................................18.1 Mall Equipment.........................................................................................1.1 Mall Opening Date......................................................................................7.2 Mall I Buyer...........................................................................................1.1 Mall I Call Price.....................................................................................21.2 Mall I LLC.............................................................................................1.1 Mall II Buyer.....................................................................................Preamble Mall II Buyer Monthly Statement........................................................................3.2 Mall II Buyer Site Representative......................................................................9.1 Mall II LLC...............................................................................WHEREAS Clause D Mall II Unit Warranty Work.............................................................................3.4 Mall II Unit...........................................................................................1.1 Mall Improvements......................................................................................1.1 Mall Indemnitees.......................................................................................3.5 Mall Space................................................................................WHEREAS Clause D Market Disruption Event...............................................................................20.2 Master Lease Agreement....................................................................WHEREAS Clause E McCarran Passengers...................................................................................20.2 Membership Interests......................................................................WHEREAS Clause G month..................................................................................................1.2 Mortgage...............................................................................................1.1 No-Offset Clause.......................................................................................3.4 notice.................................................................................................1.2 Open for Business......................................................................................7.2 Opening Date...........................................................................................7.2 |
Outside Substantial Completion Date....................................................................7.1 Palazzo Casino Resort.....................................................................WHEREAS Clause C party..................................................................................................1.2 Permitted Encumbrances.................................................................................1.1 Person.................................................................................................1.1 Phase I Hotel/Casino...................................................................................1.1 Phase I Mall...........................................................................................1.1 Phase I Mall Sale Agreement............................................................................1.1 Phase IA Airspace......................................................................................1.1 Phase IA Conference Center.............................................................................1.1 Phase II Automobile Parking Area.......................................................................1.1 Phase II Hotel/Casino..................................................................................1.1 Phase II Land.............................................................................WHEREAS Clause A Phase II Mall Documents................................................................................1.1 Phase II Mall.............................................................................WHEREAS Clause E Projected Fee Floor Area...............................................................................2.3 Proposed Final Checklist...............................................................................3.8 Projected Leasehold Floor Area.........................................................................2.3 Proposed Lease........................................................................................16.4 Proposed Tenant.......................................................................................16.4 Punch List Items...................................................................................Sch. 11 Punch List Work........................................................................................3.8 REA.......................................................................................WHEREAS Clause J Recalculated Earn-Out.................................................................................20.3 recorded...............................................................................................1.2 Required Fee Floor Area................................................................................2.3 Required Leasehold Floor Area..........................................................................2.3 Required Mall Improvement Permits .....................................................................1.1 Retail and Restaurant Tenant Areas...................................................................Ex. A Service Contract.......................................................................................1.1 Shared Mall Expenses...................................................................................8.2 Site Logistics Procedures..............................................................................5.4 SNDA..................................................................................................10.1 Standards Document.....................................................................................2.1 State..................................................................................................1.1 subject to the terms of this Agreement.................................................................1.2 Substantial Completion ............................................................................Sch. 12 Tenant.................................................................................................1.1 Tenant Build-Out.......................................................................................1.1 Tenant Build-Out Work..................................................................................1.1 Tenant Handbook........................................................................................5.1 Tenant Payments.......................................................................................16.3 Tenant Space...........................................................................................1.1 Title Defect..........................................................................................19.1 Title Insurance Commitment.............................................................................1.1 Title Insurer(s).......................................................................................1.1 |
Tsunami...............................................................................................10.1 Unit Owner.............................................................................................1.1 Use and Occupancy......................................................................................1.1 utilities..............................................................................................1.2 utility................................................................................................1.2 Venetian Casino Resort................................................................... WHEREAS Clause J |
AGREEMENT
This AGREEMENT made as of April 12, 2004 by and between LIDO CASINO RESORT, LLC, a Nevada limited liability company with an office at 3355 Las Vegas Boulevard South, Room 1C, Las Vegas, NV 89109 ("DEVELOPER") and GGP Limited Partnership, a Delaware limited partnership with an address at 110 North Wacker Drive, Chicago, Illinois 60606 ("MALL II BUYER").
INTRODUCTORY STATEMENT
A. WHEREAS, Developer is the owner in fee simple of that certain parcel of land located in the County of Clark, State of Nevada as the same is more particularly described on SCHEDULE "1" attached hereto and made a part hereof (the "PHASE II LAND"); and
B. WHEREAS, pursuant to that certain Commercial Lease dated as of March 1, 2004, by and between CAP II - Buccaneer, LLC, as landlord, and Developer, as tenant, Developer is the holder of a leasehold interest (the "LEASEHOLD") in and to that certain airspace described on SCHEDULE "2" attached hereto and made a part hereof (the "LEASEHOLD AIRSPACE"); and
C. WHEREAS, Developer intends to construct and operate a mixed use development on the Phase II Land and within the Leasehold Airspace (such mixed use development, including, without limitation, a hotel, casino, restaurant and retail facility to be located on the Phase II Land and the Phase II Automobile Parking Area, but excluding the Phase IA Airspace, the Phase IA Conference Center and any other buildings and improvements located within the Phase IA Airspace, the "PALAZZO CASINO Resort"); and
D. WHEREAS, prior to Closing, Developer will assign and convey a portion of the Palazzo Casino Resort consisting of a proposed mall with retail shops and restaurants, together with those certain rights in the Common Elements as are described herein, located in the airspace above the Phase II Land and/or portions of the Leasehold Airspace (the "MALL SPACE") to an entity created for the exclusive purpose of owning the mall to be constructed in the Mall Space and being the lessee under the Master Lease Agreement ("MALL II LLC"); and
E. WHEREAS, Developer intends to enter into that certain Casino Level Restaurant/Retail Master Lease Agreement by and between Developer and Mall II LLC (the "MASTER LEASE AGREEMENT") in substantially the form attached hereto as SCHEDULE "16" whereby Developer will lease to Mall II LLC certain retail stores in the Phase II Hotel/Casino (the "CASINO SHOPS" and, together with the Mall Space, the "PHASE II MALL"); and
F. WHEREAS, Developer will design and construct, for the consideration described in Article 20 herein, the Mall Improvements, including the Common Elements and the Demising Walls for Tenant Spaces located in the Phase II
Mall simultaneously with the construction of the Palazzo Casino Resort pursuant to the terms of this Agreement; and
G. WHEREAS, upon the Closing Date, as defined herein, Developer will sell and Mall II Buyer will purchase all of the limited liability company interests in Mall II LLC (the "MEMBERSHIP INTERESTS") on the terms and conditions set forth herein; and
H. WHEREAS, Mall II Buyer and Developer will jointly implement, at Developer's expense, the Build-Out of tenant spaces located in the Phase II Mall, as described below; and
I. WHEREAS, the Standards Document governing construction of the Mall Improvements is attached hereto as EXHIBIT "A" and made a part hereof, the Phase II Mall is depicted with greater particularity as the shaded areas on the Leasing Plans attached to the Standards Document attached to this Agreement as EXHIBIT "A;" and
J. WHEREAS, that certain Second Amended and Restated Reciprocal Easement Agreement to be entered into by and among H/C I Owner, Developer, Grand Canal Shops II, LLC and Interface Group-Nevada, Inc. (the "REA") governs certain aspects of the construction of the Palazzo Casino Resort and sets forth the agreements of the parties thereto regarding the operation of the Palazzo Casino Resort and that certain Venetian-themed complex containing a hotel and casino and restaurant and retail space located adjacent to the Palazzo Casino Resort (the "VENETIAN CASINO RESORT") and provides for the further amendment and/or restatement of the REA to set forth additional agreements regarding the admission of Mall II LLC as a party to the REA; and
K. WHEREAS, The Palazzo Casino Resort and the Phase II Mall are each intended to be First-Class projects of their type and to make optimal use of the Phase II Land and the Leasehold Airspace, which is unique in its location on Las Vegas Boulevard adjacent to the Venetian Casino Resort.
NOW, THEREFORE, in consideration of the promises and obligations of Developer and Mall II Buyer set forth in this Agreement, subject to the terms of this Agreement and intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
1.1 The following words and phrases have the following meanings in this Agreement:
"Affiliate" when used with respect to a Person, shall mean a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified. The term "control" (including the
terms controlling, controlled by and under common control with), as used herein, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through (i) the ownership of fifty percent (50%) or more of the voting rights with respect to such Person, or (ii) ownership in such Person of thirty-three and one-third percent (331/3%) or more of all equity, capital and profits interests.
"Agreement" means this Agreement and the Exhibits and Schedules attached hereto (or subsequently incorporated herein through amendments hereto), as the same may be otherwise amended from time to time.
"Authorized Representative" means an Authorized Representative of each party identified on SCHEDULE "8" hereto.
"Building" means the improvements to be constructed on the Phase II Land and within the Leasehold Airspace, including the Phase II Hotel/Casino and the Phase II Mall.
"Build-Out" means Tenant Build-Out and Landlord Build-Out.
"Build-Out Work" means the work of Developer or Tenants, as applicable, necessary to accomplish the Build-Out.
"Business Day" means any day other than Saturday or Sunday or a federal holiday and/or the day upon which it is observed.
"Buyer Delay" means any act or omission of Mall II Buyer, any tenant, or their respective employees, agents, contractors or subcontractors in connection with the Build-Out Work on the Phase II Land or otherwise, and/or any delay constituting a Buyer Delay under this Agreement.
"Closing" means the closing of the assignment of the Membership Interests to Mall II Buyer and the other transactions occurring contemporaneously therewith as contemplated under this Agreement.
"Closing Instruments" means all instruments, agreements, and documents required to be executed and/or delivered by Developer, Mall II LLC or Mall II Buyer, respectively, at the Closing under this Agreement.
"Common Elements" means the common areas and facilities of the Palazzo Casino Resort as to which any, all, or some Unit Owners will have access, interest, and/or rights of use pursuant to the Amended REA. The Common Elements include the "Common Areas" and the "Back-of-House Area" described in the Initial Plans.
"Competitor" shall mean a Person that (i) owns or operates (or is an Affiliate of an entity that owns or operates) a hotel located in Clark County, Nevada or
Macau, a convention center located in Clark County, Nevada or Macau or any casino and/or (ii) is a union pension fund.
"Construction Delay" shall mean any delay caused by an act or omission of either party, any tenant, or their respective employees, agents, contractors or subcontractors in connection with the design and construction of the Mall Improvements that is deemed a Construction Delay under this Agreement.
"Consultant" means an architect, engineer, or other consultant, and/or any of their respective subconsultants, engaged by a Person with respect to the design and construction of the Mall Improvements and/or the Build-Out, or any other portion of the Phase II Land or the Building, as applicable.
"Control" shall have the meaning ascribed to it in the definition of "Affiliate."
"Developer Delay" means any act or omission of the Developer or its employees, agents, contractors or subcontractors in connection with construction of the Mall II Improvements on the Phase II Land and/or any other delay constituting a Developer Delay under this Agreement.
"Developer's Architect" means HKS Inc. of Nevada (or any successor designated by Developer).
"Development" means the portion of the Building (including the Mall Improvements, the Phase II Hotel/Casino and the Build-Out) proposed to be constructed by Developer on the Phase II Land and Leasehold Airspace.
"Encumbrance" means a Mortgage, security agreement, security interest, lien, levy, lease, pledge, hypothecation, charge, claim, license, judgment, covenant, easement, and/or any other encumbrance or restriction of any and every kind whatsoever.
"Exclusive Mall Equipment" means those portions of the Mall Equipment that will be used exclusively by or for the benefit of Mall II LLC and the Phase II Mall and which shall be of a First-Class standard of a similar quality to that equipment installed in the Phase I Mall.
"Fee Mall Space" means that portion of the Phase II Mall built on the Phase II Land, including the Casino Shops, to be assigned from Developer to Mall II LLC.
"Fees and Costs" means reasonable fees of attorneys, architects, engineers, expert witnesses, consultants, and other Persons, and costs charged by, or reimbursable to, the foregoing.
"First-Class" means, as of any point in time, in compliance with the highest standards or of the highest quality, or both, as applicable, in accordance with
then-recognized standards in the industry in question; PROVIDED, however, that wherever the foregoing shall be used in connection with the Phase II Mall, its meaning shall be with reference to the highest standards or of the highest quality, or both, as applicable, prevailing as of the date hereof on Las Vegas Boulevard, Clark County, Nevada, and that wherever the foregoing shall be used in connection with the Phase II Hotel/Casino, its meaning shall be with reference to a standard no less than that of the Phase I Hotel/Casino as of the date hereof.
"Floor Area" means the area in square feet of a designated space measured from the interior faces of the exterior walls. Calculation of Floor Area includes those spaces occupied by columns, but excludes the spaces occupied by stairwells, elevators and mechanical shafts.
"Force Majeure" means any failure of or delay in the availability of any public utility; any strikes, labor disputes, or unusual delays or shortages encountered in transportation, fuel, material or labor supplies; casualties; acts of God or the public enemy; governmental embargo restrictions, or actions or inactions of any Government Authority (including any delays in issuing approvals, building permits, certificates of occupancy or other similar permits or certificates); injunctions; delays caused by the other party; or other acts or occurrences beyond the reasonable control of a party (provided that any of the foregoing events or occurrences shall not be Force Majeure if caused by the party claiming Force Majeure).
"Gaming Authorities" means the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board and any other agency or subdivision of the State of Nevada, or any other agency or subdivision thereof, or of any other Government Authority regulating gaming.
"Gaming Licenses" means every license, franchise or other authorization to own, lease, operate or otherwise operate gaming activities at the Venetian Casino Resort or the Palazzo Casino Resort, including all such licenses granted under the Nevada Gaming Control Act, as codified in Chapter 463 of the Nevada Revised Statutes, as amended from time to time, and the regulations of the Nevada State Gaming Commission promulgated thereunder, as amended from time to time, and other applicable federal, state, local or foreign rules.
"Government Authority" means the United States; the State; Clark County; any other municipal government authority; any other political subdivision of any of the foregoing; and any agency, authority, department, court, commission or other legal entity of any of the foregoing.
"H/C I Owner" means the Venetian Casino Resort, LLC.
"H/C II Space" means, collectively, (x) the Phase II Land and any buildings and other improvements located thereon, less and except the Phase IA Airspace, the Phase IA Conference Center and any improvements located within the
Phase IA Airspace and (y) the Leasehold Airspace and any buildings and other improvements located therein.
"Hazardous Material(s)" means materials, substances, fluids, chemicals, gases, or other compounds the presence, use, storage, emission, drainage, leakage, effusion, modification, or disposition of which is prohibited by law or is subject by law to specific procedures, controls, or restrictions, or which are otherwise deemed toxic, poisonous, or unsafe. However, "Hazardous Materials" shall not include substances which are used in compliance with applicable laws in the ordinary course of a business use. "Hazardous Materials" include, in any event, asbestos, lead paint, and PCBs.
"Impositions" means all real estate and personal property taxes, general and special assessments, water and sewer charges, road maintenance and other infrastructure charges, license fees and other fees and charges assessed or imposed by Government Authorities or quasi-Government Authorities upon the Phase II Mall.
"Institutional Investor" means a savings bank, savings and loan association, a commercial bank or trust company (whether acting individually, or in any fiduciary capacity), an insurance company, an educational institution, a corporate employees', or state, municipal or similar public employees' welfare or other pension or retirement fund or system, an investment bank, a mutual fund or a commercial finance company.
"Interest Rate" means the rate at which Mall II Buyer can borrow funds under the corporate credit line of General Growth Properties, Inc. as of the Closing Date, Earn-Out Date, an Interim Payment Date or the Final Date, as applicable.
"Landlord Build-Out" means the installations, furnishing, finishes, fixtures, equipment, fitting-out and other tenant improvement work to be constructed by the landlord under any Lease in order to prepare the Tenant Spaces for occupancy by Tenants, provided that, in all events, Landlord Build-Out does not include any Tenant Build-Out.
"Landlord Build-Out Work" means the work of Developer necessary to accomplish the Landlord Build-Out.
"Lease" means any lease, license, occupancy agreement or other agreement (including any use or occupancy arrangements created pursuant to Section 365 of the Bankruptcy Code or otherwise in connection with any bankruptcy or insolvency proceeding in respect of any tenant or occupant) demising or otherwise permitting the possession, occupancy, use or enjoyment of the Phase II Mall or any part thereof (including, without limitation, any concession or kiosk space), and every modification, supplement or extension thereof.
"Leasehold Mall Space" means that portion of the Phase II Mall to be built in the Leasehold Airspace.
"Leasing Costs" shall mean, with respect to all Leases in the aggregate, the sum of all leasing commissions payable by Mall II LLC, or Developer on behalf of Mall II LLC, to third party brokers, the cost of all tenant improvement allowances payable by or tenant improvement work to be performed by Mall II LLC, or Developer on behalf of Mall II LLC, in connection with the commencement of a Lease and as required under such Lease, legal fees payable by Mall II LLC, or Developer on behalf of Mall II LLC, to outside attorneys or to Mall II Buyer's in-house counsel at the rates set forth on SCHEDULE "13" attached hereto and made a part hereof, and all other amounts paid or payable by Mall II LLC, or Developer on behalf of Mall II LLC, to a Tenant or third party in connection with the commencement of a Lease.
"Legal Proceeding" means an action, litigation, arbitration, administrative proceeding, and other legal or equitable proceeding of any kind.
"Legal Requirements" mean all statutes, laws, ordinances, rules, regulations, executive orders and requirements of all Government Authorities which are applicable to the Phase II Mall or any part thereof or the use or manner of use thereof, or to owners or occupants thereof in connection with such ownership, occupancy or use.
"Mall Equipment" means machinery, equipment, fixtures, and other tangible personal property which do not constitute real property and which will be installed in, affixed to, and/or constructed as part of, the Mall Improvements.
"Mall I Buyer" means the "Purchaser" under and as defined in the Phase I Mall Sale Agreement.
"Mall I LLC" means Grand Canal Shops II, LLC.
"Mall II Unit" means the Phase II Mall excluding the Common Elements contained therein.
"Mall Improvements" means certain improvements relating to the Phase II Mall portion of the Palazzo Casino Resort (and also certain Common Elements and/or other items) to be designed and constructed by Developer, as described in Articles 2 and 3 of this Agreement and the Initial Plans, as the same may be modified pursuant to the terms of this Agreement.
"Mortgage" means a mortgage or deed of trust.
"Permitted Encumbrances" means the Encumbrances described in SCHEDULE "5."
"Person" means an individual person, a corporation, partnership, trust, joint venture, limited liability company, proprietorship, estate, association, land trust, other trust, Government Authority or other incorporated or unincorporated enterprise, entity or organization of any kind.
"Phase I Hotel/Casino" means the hotel/casino to be operated in the Venetian Casino Resort.
"Phase I Mall" shall have the meaning ascribed to it in the REA.
"Phase I Mall Sale Agreement" means that certain Purchase and Sale Agreement dated as of even date herewith by and among Grand Canal Shops Mall MM Subsidiary, Inc., Grand Canal Shops Mall Subsidiary, LLC and Mall I Buyer.
"Phase IA Airspace" means a portion of the airspace above the Phase II Land, as more particularly described in SCHEDULE "3" attached hereto and made a part hereof.
"Phase IA Conference Center" means the approximately 150,000 square feet of additional meeting and conference space located in the Phase IA Airspace.
"Phase II Automobile Parking Area" means a new and separate parking structure that Developer intends to construct on the Phase II Land for the use by, among others, Developer and Mall II LLC.
"Phase II Hotel/Casino" means the hotel/casino constructed and operated by Developer in the H/C II Space.
"Phase II Mall Documents" means the following: (a) all drawings, plans, contracts, licenses, warranties and specifications for the Mall Improvements to be delivered to Mall II LLC at the Closing, and all operating manuals for the Exclusive Mall Equipment; and (b) Developer's books, records, and correspondence pertaining to the Service Contracts assumed by Mall II LLC or to which Mall II LLC will remain a party (if any) and the operation, maintenance and repair of the Exclusive Mall Equipment.
"Required Mall Improvement Permits" means all permits and approvals of and from applicable Government Authorities which are necessary for the construction and completion of the Mall Improvements and the delivery of same to Mall II Buyer (specifically excluding, without limitation, temporary or permanent certificates of occupancy for individual Tenant Spaces).
"Service Contract" means any contract or agreement to which Developer or Mall II LLC is a party for the furnishing of management, maintenance, repairs, supplies, or other services exclusively to the Phase II Mall, and all amendments thereof, which will have a term expiring after the Closing Date (and which cannot be cancelled without penalty on not more than 30 days' prior notice).
"State" means the State of Nevada.
"Tenant" means the tenant, licensee, occupant or other user to which rights are granted under a Lease.
"Tenant Build-Out" means the installations, furnishing, finishes, fixtures, equipment, fitting-out and other tenant improvement work to be constructed by any Tenant as required or permitted under the Leases in order to prepare the Tenant Spaces for occupancy by Tenants.
"Tenant Build-Out Work" means the work of Tenants necessary to accomplish the Tenant Build-Out.
"Tenant Space" means the portions of the Phase II Mall to be demised to and occupied by individual Tenants.
"Title Insurance Commitment" means a commitment to issue an owner's policy of title insurance insuring the fee simple title in the Fee Mall Space and leasehold title to the Leasehold Mall Space and the Casino Shops in Title Insurer's standard form.
"Title Insurer(s)" means any title insurance company or companies selected by Mall II Buyer to issue the Title Insurance Commitment.
"Unit Owner" means any entity which is a party to the REA or the Amended REA and such party's respective successors and assigns.
"Use and Occupancy" means use and occupancy as described in this Agreement of the Phase II Mall by Mall II LLC for Mall II Buyer's intended purposes.
1.2 Wherever used in this Agreement:
(a) the words "include" or "including" shall be construed as incorporating, also, "but not limited to" or "without limitation;"
(b) the word "day" means a calendar day unless otherwise specified;
(c) the phrase "at Developer's expense" shall mean at the sole cost and expense of Developer, but the payments to be made to Developer pursuant to Article 20 herein shall be unaffected by the use of such phrase;
(d) the phrase "at Mall II Buyer's expense," shall mean at the sole cost and expense of Mall II Buyer;
(e) the word "party" means each signatory to this Agreement;
(f) the word "law" (or "laws") means any law, rule, regulation, order, statute, ordinance, resolution, regulation, code, decree, judgment, injunction, mandate or other legally binding requirement of a Government Authority applicable in the particular context;
(g) the word "notice" shall mean notice in writing (whether or not specifically so stated);
(h) "month" means a calendar month unless otherwise specified;
(i) the word "amended" means "amended, modified, extended, renewed, changed, or otherwise revised"; and the word "amendment" means "amendment, modification, extension, change, renewal, or other revision;"
(j) the phrase "subject to the terms of this Agreement" means "upon and subject to all terms, covenants, conditions and provisions of this Agreement;"
(k) the word "delay" means a delay or interference to a particular schedule which (i) will require more than a minimal rearrangement of (or delay in) other activities or commitments by the affected party; (ii) was not caused by action or inaction of the affected party; and (iii) is the sole cause of the rearrangement of (or delay in) other activities or commitments by the affected party;
(l) the word "recorded" means submitted to the Recorder's Office of Clark County, Nevada; and
(m) the words "utility" (or "utilities") means gas, water, chilled water, sewer, electricity, steam, power, and other utilities of any kind.
1.3 For purposes of this Agreement and except as set forth in Section 15.10, a party shall be deemed to have knowledge or notice of a matter if such matter is actually known by, or if written notice disclosing such matter has been given to an officer, director or individual general partner, member, manager, or shareholder of such party or of a Person controlling such party.
1.4 Other words and phrases are defined elsewhere in this Agreement and listed in the Index of Defined Terms.
ARTICLE 2
DESIGN OF MALL IMPROVEMENTS
2.1 INITIAL PLANS AND CREATION OF CONSTRUCTION DRAWINGS.
(a) THE STANDARDS DOCUMENT. EXHIBIT "A" attached hereto and made a part hereof is that certain Palazzo Casino Resort, Retail Standards Document which contains a description of certain details of the development and construction of the Mall Improvements (the "STANDARDS DOCUMENT"). The Character Sketches attached to the Standards Document are intended to illustrate the look and feel of the Beverly Hills/Rodeo Drive theme only and shall not be binding as to the particulars of the design or layout shown. Developer shall have the right to change the Beverly Hills/Rodeo Drive theme upon prior notice to and written consent by Mall II Buyer, which consent shall not be unreasonably withheld or delayed.
(b) COMMON AREA PLANS. Promptly upon execution of this
Agreement, Developer and Mall II Buyer shall negotiate expeditiously and in good
faith to develop a plan that is consistent with the Standards Document for the
location of the public common areas that will become part of the Common Elements
(the "COMMON AREA PLANS" and, together with the Standards Document, as the same
may be revised pursuant to this Agreement, the "INITIAL PLANS"). Developer and
Mall II Buyer shall agree upon a Common Area Plan no later than ninety (90) days
following the date of execution of this Agreement. In the event that Developer
and Mall II Buyer, despite good faith efforts, have not agreed upon a Common
Area Plan as of such date, then the same shall constitute a Construction Delay
(the duration of which shall be one (1) day for each day after said ninety (90)
day period that the parties shall have failed to agree on a Common Area Plan).
(c) CONSTRUCTION DRAWINGS AND SPECS.
(i) DEVELOPMENT OF CONSTRUCTION DRAWINGS AND SPECS. Developer will proceed, in consultation with Mall II Buyer, with the development of construction drawings and specifications for the Mall Improvements. To this end, Developer shall give to Mall II Buyer, for review, the construction drawings and specifications at 50%, 75% and 100% of completion (each of the foregoing, the "INITIAL CONSTRUCTION DRAWINGS AND SPECS"). Within ten (10) Business Days after the receipt by Mall II Buyer of each of the Initial Construction Drawings and Specs, time being of the essence, Mall II Buyer will have the right to submit comments to Developer and to object to any feature shown in the Initial Construction Drawings and Specs that deviates from the Initial Plans. Developer and Mall II Buyer will consult to resolve any issues, but Developer may proceed with the development of the construction drawings and specifications notwithstanding Mall II Buyer's objection, subject to Mall II Buyer's rights under this Section 2.1(c) and Article 10. To the extent that any feature is not in conformance with the Initial Plans, Developer shall correct such feature in the Initial Construction Drawings and Specs at Developer's Expense. If any feature shown in any Initial Construction Drawings and Specs is in accordance with the Initial Plans and Mall II Buyer requests a change to such feature, such request shall be considered a request for a change to the Initial Plans and shall be subject to Developer's approval pursuant to Section 3.3(b) of this Agreement. Developer will furnish interpretations, explanations and additional information if and as requested by Mall II Buyer within the ten (10) Business Day period provided for in this Section, but the same shall not have the effect of extending said ten-Business Day period.
(ii) MALL II BUYER APPROVAL OF CONSTRUCTION DRAWINGS AND SPECS. Within ten (10) Business Days after the receipt by Mall II Buyer of the final version of the Initial Construction Drawings and Specs (i.e., at 100% completion), time being of the essence, Mall II Buyer shall approve such Initial Construction Drawings and Specs or submit specific objections to any feature shown in such final Initial Construction Drawings and Specs that deviates from the Initial Plans. Developer and Mall II Buyer will consult, in good faith, to resolve such objections. In the event such Initial Construction Drawings and Specs shall deviate from the Initial Plans, Developer shall revise such Initial Construction Drawings and Specs one or more times and resubmit the
same to Mall II Buyer for approval, which shall be given or denied, in each
case, within ten (10) Business Days, time being of the essence. At such time as
Mall II Buyer approves such Initial Construction Drawings and Specs as in
accordance with the Initial Plans (or waives any deviation), Mall II Buyer shall
deliver a written notice to Developer approving such Initial Construction
Drawings and Specs (as so approved and as the same may be modified pursuant to
the terms of this Agreement, the "FINAL CONSTRUCTION DRAWINGS AND SPECS"). If
Mall II Buyer shall withhold or delay (beyond the then-applicable ten (10)
Business Day period) its approval of any Initial Construction Drawings and Specs
for any reason, unless the same shall deviate from the Initial Plans, then the
same shall constitute a Construction Delay (the duration of which shall be one
(1) day for each day after said ten (10) Business Day period that the Final
Construction Drawings and Specs are not approved) for the purposes of this
Agreement. If any feature shown in any Final Construction Drawings and Specs is
in accordance with the Initial Plans and Mall II Buyer requests a change to such
feature, such request shall be considered a request for a change to the Initial
Plans and shall be subject to Developer's approval pursuant to Section 3.3(b) of
this Agreement. In the event Developer desires to amend the Final Construction
Drawings and Specs in any material respect, such amendment shall be subject to
Mall II Buyer's review and approval in accordance with this subsection
2.1(c)(ii), except that Mall II Buyer shall have five (5) Business Days to
respond to any request for amendment.
2.2 ELEMENTS OF DESIGN OF THE MALL IMPROVEMENTS; DEMISING WALLS.
(a) ELEMENTS OF THE STANDARDS DOCUMENT. The Standards Document identifies the components of the Mall Improvements and set forth certain locational, dimensional and design requirements pertaining to the Phase II Mall. In particular, the Standards Document contains descriptions of (i) the back-of-house area (for circulation of mall tenants and employees), (ii) the publicly accessible Common Elements that will serve as access to the retail spaces and the Phase II Hotel/Casino and (iii) the standards for construction of certain elements of retail and restaurant Tenant Spaces.
(b) REQUIRED ELEMENTS OF THE PHASE II HOTEL/CASINO. The drawings and written specifications and requirements in the Initial Plans do not include details for the Phase II Hotel/Casino or certain of the Common Elements located outside the Phase II Mall. The Developer shall be obligated to design and construct a First-Class hotel and casino with no less than 2,000 guest rooms on the Phase II Land and in the Leasehold Airspace; provided, that the completion of such hotel and casino shall not be a condition precedent to Closing, except as expressly provided in this Agreement.
(c) DEMISING WALLS. The Initial Plans do not set forth the location of demising walls between the Tenant Spaces or between the Tenant Spaces and the Common Elements of the Phase II Mall (the "DEMISING WALLS"), which have not yet been finally determined. The location of the Demising Walls shall be determined jointly by Mall II Buyer and Developer as the parties identify Tenants for the retail and restaurant Tenant Spaces in two stages, described as follows:
(i) Upon final determination of the Common Area Plans by the parties, Mall II Buyer and Developer shall negotiate expeditiously and in good faith to develop a plan for the location of the Demising Walls that is consistent with the Initial Plans and/or the Final Construction Drawings and Specs, if the same have been agreed upon, identifying whether each Tenant Space will be occupied by a restaurant or retail tenant, showing the specifications and points of connection with the Tenant Space of all utilities required for each such Tenant Space and identifying the location of smoke walls (as the same may be modified in accordance with this Agreement, the "INITIAL DEMISING WALL PLAN"). Mall II Buyer and Developer shall agree upon an Initial Demising Wall Plan no later than six (6) months after the date of execution of this Agreement. In the event that Mall II Buyer and Developer, despite good faith efforts, have not agreed upon an Initial Demising Wall Plan by such date, the same shall constitute a Construction Delay (the duration of which shall be one (1) day for each day after said six (6) month period that the parties shall have failed to agree on an Initial Demising Wall Plan).
(ii) Upon the final determination of the Initial Demising Wall Plan, Mall II Buyer and Developer shall negotiate expeditiously and in good faith to supplement the same to show the location, consistent with the Initial Plans, of all Demising Walls (as the same may be modified in accordance with this Agreement, the "FINAL DEMISING WALL PLAN"). Mall II Buyer and Developer shall agree upon a Final Demising Wall Plan no later than one (1) year after the date of execution of this Agreement. In the event that Mall II Buyer and Developer, despite good faith efforts, have not agreed upon a Final Demising Wall Plan by such date, the same shall constitute a Construction Delay (the duration of which shall be one (1) day for each day after said one (1) year period that the parties have failed to agree on a Final Demising Wall Plan).
2.3 CALCULATION OF FLOOR AREA.
(a) The Phase II Mall is intended to consist of 118,000 square feet of Floor Area of Leasehold Mall Space (the "PROJECTED LEASEHOLD FLOOR AREA") and 279,018 square feet of Floor Area of Fee Mall Space (the "PROJECTED FEE FLOOR AREA"). Mall II Buyer and Developer acknowledge and agree that the actual as-built Floor Area of the Leasehold Mall Space and the Fee Mall Space may be greater or less than the Projected Leasehold Floor Area and the Projected Fee Floor Area, respectively. Developer may, subject to the following provisions of this Section 2.3, deliver to Mall II LLC an actual as-built Floor Area of the Leasehold Mall Space and/or the Fee Mall Space that varies from the Projected Leasehold Floor Area and the Projected Fee Floor Area, provided that (x) (unless reductions in Floor Area are necessary in order to comply with Legal Requirements, to obtain Required Mall Improvement Permits or to make design changes that are reasonably necessary to insure the efficient operation of the Building, in which event the Required Leasehold Floor Area and the Required Fee Floor Area shall be further reduced as so required) (i) the Floor Area of the Leasehold Mall Space shall not be less than 95% of the Projected Leasehold Floor Area (the "REQUIRED LEASEHOLD FLOOR AREA") and (ii) the Floor Area of the Fee Mall Space shall not be less 95% of the Projected Fee Floor Area (the "REQUIRED FEE FLOOR AREA") and (y) in no event shall (i) the as-built Floor Area of the Leasehold Mall Space be greater than 105% of the
Projected Leasehold Floor Area or (ii) the as-built Floor Area of the Fee Mall Space be greater than 105% of the Projected Fee Floor Area, without the prior consent of Mall II Buyer, not to be unreasonably withheld or delayed.
(b) As promptly as possible after Developer delivers to Mall II Buyer the notice of the Anticipated Completion Date, Developer and Mall II Buyer shall attempt to agree on the as-built square footage of the Floor Area included in the Mall Improvements for each of the Leasehold Mall Space and the Fee Mall Space (the "AS-BUILT FLOOR AREA"). If Developer and Mall II Buyer are unable to agree on which portions of the Mall Improvements are As-Built Floor Area or any calculation of As-Built Floor Area, Developer and Mall II Buyer shall engage an Independent Expert to resolve such disputes pursuant to the provisions of Article 9.
2.4 CONSULTANTS. Developer and Mall II Buyer each shall engage its own Consultants with respect to the design and construction of the Development and the Build-Out. Developer's and Mall II Buyer's Consultants shall consult with each other for purposes of coordinating filings with the relevant Government Authorities and related matters. Developer shall endeavor to deliver all contracts with the general contractor, if other than Developer, and primary subcontractors to Mall II Buyer no later than five (5) Business Days prior to execution of such contracts. The delivery of such contracts to Mall II Buyer shall be for informational purposes only and Mall II Buyer's consent shall not be required to any contracts.
ARTICLE 3
CONSTRUCTION OF MALL IMPROVEMENTS
3.1 CONSTRUCTION BY DEVELOPER.
(a) At Developer's expense, Developer shall construct the Mall Improvements substantially in accordance with the Final Construction Drawings and Specs and this Agreement, subject to Section 3.3 of this Agreement. Developer shall construct the improvements to the standard of a First-Class Mall of a level of quality substantially similar to that of the "Grand Canal Shoppes at the Venetian" as of the date hereof. Developer shall diligently pursue all Required Mall Improvement Permits. Developer shall cause the Mall Improvements to be constructed free from material fault or defect; of good quality; in a workman-like manner and incorporating only new materials and equipment; by means and methods complying with applicable Legal Requirements and insurance requirements; and so as to operate properly and otherwise in accordance with the requirements of the Final Construction Drawings and Specs.
(b) At Developer's expense, Developer shall complete, repair, replace, rebuild and/or correct promptly all Mall Improvement work which is incorrect, defective, incomplete, omitted, or not otherwise in compliance with the Final Construction Drawings and Specs, as the same may have been modified pursuant to the provisions of Section 3.3 of this Agreement, which Developer discovers, or of which
Mall II Buyer or Mall II LLC gives written notice to Developer, prior to Substantial Completion.
3.2 INSPECTION BY MALL II BUYER. Mall II Buyer shall have the right during usual business hours, at Mall II Buyer's expense and upon reasonable notice to Developer, (a) to inspect the construction work of the Mall Improvements to ascertain that the performance of such work adheres to the Final Construction Drawings and Specs, and (b) without limiting the foregoing, to review shop drawings for the Mall Improvement work. In any event, during the last week of each month (or on such other regularly-established monthly date as Developer shall designate as the regular inspection date), Mall II Buyer and/or its Consultants shall inspect the Mall Improvements construction work performed since the prior inspection. Based on such observation, Mall II Buyer shall furnish to Developer a statement, in a form to be agreed by the parties, relating to Mall II Buyer's objections with respect to the construction work (the "MALL II BUYER MONTHLY STATEMENT"). However, issuance of the Mall II Buyer Monthly Statement will not be construed as Mall II Buyer's acceptance of work which is defective, incomplete, or otherwise not in compliance with the Final Construction Drawings and Specs, or as Mall II Buyer's waiver of any rights under this Agreement, or as Mall II Buyer's release of Developer or any of Developer's contractors or any surety from any warranty, guarantee, or obligation provided under this Agreement or the Final Construction Drawings and Specs or the applicable construction contract(s).
3.3 CONSTRUCTION CHANGES.
(a) Changes to the Mall Improvements (whether before or after commencement of construction) made by Developer that are consistent with the Final Construction Drawings and Specs (or the Initial Plans, if the Final Construction Drawings and Specs have not been agreed to pursuant to the terms of this Agreement) and the Initial Demising Wall Plan or Final Demising Wall Plan, after the same have been agreed to, may be made without Mall II Buyer's approval, subject to Section 2.3. Changes to the Mall Improvements requested by Developer that are not consistent with the Final Construction Drawings and Specs (or the Initial Plans, if the Final Construction Drawings and Specs have not been agreed to pursuant to the terms of this Agreement) and changes to the Initial Demising Wall Plan, the Final Demising Wall Plan or the Common Area Plan, after the same have been agreed to by Developer and Mall II Buyer, shall be subject to Mall II Buyer's approval, which shall not be unreasonably withheld or delayed if such change will not result in a failure of Developer to deliver the Required Leasehold Floor Area or the Required Fee Floor Area.
(b) Changes in the Final Construction Drawings and Specs (or the Standards Document, if the Final Construction Drawings and Specs have not been agreed to pursuant to the terms of this Agreement), the Mall Improvements, the Initial Demising Wall Plan, the Final Demising Wall Plan and the Common Area Plan, after the same have been agreed to by Developer and Mall II Buyer, that are requested by Mall II Buyer shall be subject to Developer's approval, which shall not be unreasonably withheld or delayed if such change (i) will not require more than DE MINIMIS changes to the Building other than the Mall II Unit, (ii) will not cause, in Developer's reasonable
judgment, a material delay in the completion of the Development, (iii) will not adversely effect the Phase II Hotel/Casino and (iv) will not increase by more than a DE MINIMIS amount the cost of constructing the Building and/or the Mall II Unit unless Mall II Buyer agrees to pay such cost increase as and when incurred.
(c) If a change in the Initial Plans, the Final Construction Drawings and Specs, the Initial Demising Wall Plan, the Final Demising Wall Plan, after the same have been agreed to, or the Mall Improvements is required by law or in order to obtain any Required Mall Improvement Permits, Developer shall advise and promptly consult with Mall II Buyer as to the particular requirements and the solution or solutions it is considering. If such change is required by any Governmental Authority in order to issue a Required Mall Improvement Permit, or if such change is consistent with the Standards Document, Developer shall not be required to obtain Mall II Buyer's prior written approval for the proposed manner of compliance; provided that, to the extent economically feasible, Developer will make such change in the way that has the least impact on the Initial Plans, the Final Construction Drawings and Specs, the Initial Demising Wall Plan, the Final Demising Wall Plan and the Mall Improvements and the Final Construction Drawings and Specs shall be modified accordingly. With respect to any other such change, Developer and Mall II Buyer shall reasonably agree on necessary and appropriate changes to be made to the Initial Plans, the Final Construction Drawings and Specs, the Initial Demising Wall Plan, the Final Demising Wall Plan and/or the Mall Improvements in order to comply with the Legal Requirements or obtain the necessary permits, as applicable. In the event that Developer proposes a method of compliance and Mall II Buyer requests that Developer choose another method of compliance, Mall II Buyer shall pay to Developer or reimburse Developer at Closing for any incremental costs (over the cost of the method chosen by Developer) to effect such other method of compliance. Developer shall pay any change costs associated with changes in the Mall Improvements due to requirements of laws or inability to obtain necessary permits, except as provided in the immediately preceding sentence, but shall not pay associated fees of Mall II Buyer's Consultants (unless the legal compliance requirement was a result of negligent acts or omissions of Developer or its Consultants, as reasonably determined by the Independent Expert).
(d) In this Agreement, "FIELD CHANGES" means minor and routine changes necessitated by conditions in the field which are customarily resolved by architects and construction managers and have no material cost or design ramifications. Field Changes in the Mall Improvements and the Build-Out shall be subject to approval by Developer's site representative (who shall act promptly) in cooperation with Mall II Buyer's Site Representative (who shall act promptly).
3.4 CONSTRUCTION WARRANTIES.
(a) This Section governs construction warranties or guaranties covering or otherwise applicable to those portions of the Mall Improvements which will be part of the Common Elements ("CE WARRANTY WORK") and those portions of the Mall Improvements which will NOT be part of the Common Elements but will be the
responsibility of Mall II LLC and/or Mall II Buyer to maintain in accordance with the Amended REA (collectively, "MALL II UNIT WARRANTY WORK").
(b) As to both CE Warranty Work and Mall II Unit Warranty Work, Developer shall include in its contracts with construction contractors warranty/guaranty provisions customary for the type or category of work involved (any such provision, a "CONTRACTOR WARRANTY") under which the respective contractor will be required, at its expense, to repair, replace, and/or correct work which is incorrect, defective, incomplete, or not otherwise in compliance with the Final Construction Drawings and Specs ("DEFECTIVE WORK"). Developer shall use commercially reasonable efforts to obtain the agreement of the respective contractor (i) that Mall II LLC and Mall II Buyer shall be the beneficiaries of, and may enforce directly, the contractor's Contractor Warranty as to any Mall II Unit Warranty Work and/or CE Warranty Work located in the Phase II Mall and (ii) that Mall II LLC and/or Mall II Buyer (and/or other Unit Owners) may enforce their applicable warranties without set-off or defense by reason of disputes between the Contractor and Developer (a "NO-OFFSET CLAUSE"). Any such Contractor Warranty for CE Warranty Work may also provide that other Unit Owners are third party beneficiaries.
(c) As to both CE Warranty Work and Mall II Unit Warranty Work, until Developer has closed out the applicable contract and made final payment (including release of retainage) to a contractor ("Close-Out"), Developer shall use best efforts, at Developer's expense, to enforce the applicable Contractor Warranty in accordance with its terms and conditions so as to cause such contractor, at such contractor's expense, to repair, replace, and/or correct Defective Work of which Developer becomes aware or of which either Mall II LLC and/or Mall II Buyer gives notice to Developer. If there is any dispute regarding whether any work performed is Defective Work, Developer and Mall II Buyer shall submit the dispute for resolution to the Independent Expert, and the determination of the Independent Expert shall be binding.
(d) After Close-Out of a contract with a Contractor Warranty for CE Warranty Work, Developer shall assign Developer's rights with respect to such Contractor Warranty to the party responsible for maintaining such Common Element, if not Developer.
(e) After Close-Out of a contract with a Contractor Warranty for Mall II Unit Warranty Work, Developer shall assign (on a non-exclusive basis) Developer's rights with respect to such Contractor Warranty to Mall II LLC. If Developer obtains and delivers to Mall II LLC a No-Offset Clause from a particular contractor, Mall II LLC may thereafter enforce the Contractor Warranty against such contractor, and Developer will have no further obligations to do so. However, if Developer is unable to obtain a No-Offset Clause from a particular contractor and the contractor raises on-going claims with Developer as a defense in any claim by Mall II LLC for Defective Work against such contractor, then Developer shall use Developer's best efforts, at Developer's expense, to enforce the applicable Contractor Warranty in accordance with its terms and conditions so as to cause such contractor, at such
contractor's expense, to repair, replace, and/or correct such Defective Work. Moreover, if Developer has failed to obtain any Contractor Warranty that Mall II LLC can enforce for the work of a particular contractor relating to any particular Mall II Unit Warranty Work, Developer shall be responsible, at Developer's expense, to repair, replace, and/or correct Defective Work in the work of such contractor for a period of time equal to the length of a typical warranty period for such work or one year from the date the item or work is placed in service if there is no typical warranty period.
(f) Developer will permit Mall II Buyer and its Consultants to review, and will consult with them concerning, the text, terms, and conditions of proposed Contractor Warranties for contractors who will perform the Mall Improvement work which could become either CE Warranty Work or Mall II Unit Warranty Work.
(g) In the event that Developer does not engage a general contractor to construct the Mall Improvements, at Closing, Developer shall deliver to Mall II Buyer a warranty covering the construction of the Mall Improvements on terms consistent with those typically offered by general contractors with respect to similar projects (the "DEVELOPER'S WARRANTY"). In such event, the covenants with respect to construction contracts and warranties thereunder set forth in Section 3.4(b), the first sentence of Section 3.4(c) and Sections 3.4(d) and 3.4(e) shall be inapplicable and Developer shall retain the right to enforce all Contractor Warranties.
(h) The provisions of this Section 3.4 shall survive the Closing.
3.5 DEVELOPER'S INDEMNIFICATION.
(a) Developer agrees (at Developer's expense) to indemnify, defend and hold harmless Mall II LLC, Mall II Buyer and their respective directors, officers, stockholders, partners, members and employees (the foregoing collectively the "MALL INDEMNITEES") from and against any loss, liability, damage, cost, or expense (including Fees and Costs) which any of them may suffer, or which may be asserted against any of them, in whole or in part by reason of, or in connection with: (i) any bodily injury, sickness, disease or death of or to any person or persons, or any damage to or destruction of property, arising out of or resulting from acts or omissions of Developer, Mall II LLC (to the extent taken or occurring prior to Closing) or Developer's contractors or subcontractors in connection with the Mall Improvements or other construction work relating to the Development, whether on the Phase II Land or elsewhere; (ii) any failure by Developer, Mall II LLC (to the extent occurring prior to Closing) or Developer's contractors or subcontractors to comply with applicable Legal Requirements or insurance requirements; (iii) the use or misuse by Developer, Mall II LLC (to the extent occurring prior to Closing) or Developer's contractors or subcontractors of Hazardous Materials on the Phase II Land; (iv) infringement of patent rights, licensing or royalty agreements, or trade secrets by Developer, Mall II LLC (to the extent occurring prior to Closing) or Developer's contractors or subcontractors in connection with the Mall Improvements or other construction work relating to the Development, whether on the Phase II Land or elsewhere; (v) any liens filed against the Phase II Mall by any Person claiming by, through, or under Developer or Mall II LLC (to
the extent relating to claims accruing before Closing); and/or (vi) any claims under Developer's Warranty.
(b) Developer shall defend any Legal Proceedings commenced against any
of the Mall Indemnitees concerning any matter covered by the foregoing
indemnification. Developer shall give Mall II Buyer copies of documents served
in any such Legal Proceeding and shall advise Mall II Buyer regularly as to the
status of the same. If Developer fails to defend diligently against any such
Legal Proceeding, or if Mall II Buyer reasonably believes that Developer's
interest in such Legal Proceeding is adverse to Mall II Buyer's interest
therein, Mall II Buyer shall have the right (but not the obligation), upon ten
(10) Business Day's prior written notice, to defend the same at Developer's
expense. Developer shall not settle any such Legal Proceeding without the
written consent of Mall II Buyer (unless such settlement shall release each Mall
Indemnitee against whom liability has been asserted from all liability with
respect to such Legal Proceeding without contribution from such Indemnitee). No
Mall Indemnitee may settle any such Legal Proceeding without the written consent
of Developer, which consent shall not be unreasonably withheld or delayed.
(c) Mall II Buyer shall notify Developer promptly of every Legal Proceeding or claim which may be covered by the indemnification in (a) above. Developer's obligations under this Section 3.5 shall not be limited or defined by the amount of insurance carried by Developer or by limitations on amount or type of damages under worker's compensation acts or other laws relating to employee benefits.
(d) This Section shall not require indemnification of any Mall II Buyer Indemnitee TO THE EXTENT of the negligence or willful misconduct of Mall II Buyer, or of Mall II LLC after the transfer of the Membership Interests to Mall II Buyer, any of their respective agents or affiliated Persons, or another Mall Indemnitee.
(e) The provisions of this Section 3.5 shall survive the Closing.
3.6 INSURANCE COVERAGES. At Developer's expense, Developer shall include Mall II LLC and Mall II Buyer as an additional insured on each policy of liability insurance carried by Developer with respect to the Development with an aggregate limit of not less than $25,000,000. Alternatively, the parties may agree that Mall II LLC, Mall II Buyer and Developer may be included as insureds under one or more liability policies covering the Mall Improvements and the entire Development. Developer will carry, at Developer's expense, a policy of builder's risk insurance for full replacement value (exclusive of footings and foundations) on a completed value (reporting) basis and upon other commercially standard terms and conditions covering construction of the Mall Improvements.
3.7 COORDINATION OF BUILD-OUT. All Landlord Build-Out Work will be performed and coordinated by Developer upon consultation with Mall II Buyer. The parties recognize that it may be necessary or appropriate for Tenants and their contractors and subcontractors to have access to the Phase II Mall before the Closing to supervise and perform Tenant Build-Out Work, including any Tenant Build-
Out Work which should be completed early in the process of constructing the Mall Improvements (such as, for example, installation of wiring and conduit) to avoid uncovering of completed Mall Improvement work after commencement of Tenant Build-Out or otherwise to avoid re-doing of, or disruption to, the Mall Improvement work. Mall II Buyer understands that the contractors and subcontractors of any Tenant supervising and performing any Tenant Build-Out Work will be subject to the direction and coordination of Developer and its construction manager and Mall II Buyer and/or Developer shall so inform each Tenant. Developer shall give written notice to Mall II Buyer (a "BUILD-OUT NOTICE") when, in Developer's good faith judgment, the Mall Improvements or a portion thereof have reached a stage of construction where it is safe and appropriate for Tenants to have access to the Mall I Improvements or such portion of the Mall Improvements for the purposes of supervising and performing the Tenant Build-Out Work and such access will not interfere unreasonably with construction of the Mall Improvements. At the Developer's election and based on the progress of construction of the Building, the Build-Out Notice may be given as one notice or a series of notices, each of which may give Tenants and their respective contractors and subcontractors access to all or a portion of the Mall II Improvements. After the giving of a Build-Out Notice, Tenant's contractors shall have the right to enter the portions of the Phase II Mall covered by such Build-Out Notice upon twenty-four (24) hours prior telephonic notice to Developer for the purposes of performing the Tenant Build-Out Work. Developer shall reasonably accommodate the scheduling of Tenant Build-Out Work (if any), provided that the same will not interfere with the progress of the Mall Improvement work. After the commencement of the Tenant Build-Out Work, Developer may, from time to time, restrict Mall II Buyer's, any Tenant's or their respective contractor's or subcontractor's access to the Mall Improvements in order to complete other necessary construction work in the Mall Improvements and on the Phase II Land. Developer shall use good faith efforts to keep such work disruptions to a minimum and to schedule such disruptions so as to cause minimal disruption to the completion of the Tenant Build-Out Work. Developer will obtain at its expense permits with respect to Landlord Build-Out Work that it is performing and Developer and Mall II Buyer shall jointly cause each Tenant to obtain, all permits and approvals for construction of the Tenant Build-Out Work that such Tenant is performing, other than the Required Mall Improvement Permits (which Developer shall obtain at Developer's Expense). All Landlord Build-Out Work shall be performed at the sole expense of Developer, and Mall II Buyer shall not be responsible to pay any amount in regard of the Landlord Build-Out Work. Entry by any Tenant or its contractors or subcontractors to perform Tenant Build-Out Work shall not be deemed acceptance of the Mall Improvements by Mall II Buyer or a waiver of Mall II Buyer's rights under this Agreement. Mall II Buyer and Developer shall jointly cause Tenants and any contractors and subcontractors, in performing the Tenant Build-Out Work, to take all reasonable steps to minimize interference with construction of the Mall Improvements and any other construction, shall comply with the Site Logistics Procedures and the Tenant Handbook, and shall jointly cause Tenants to repair any damage to the Mall Improvements (or other work in the Building) caused by Mall II Buyer, the Tenants or any contractors and subcontractors in the performance of the Tenant Build-Out Work. In no event shall the Tenant Build-Out Work performed by the Tenants or any of their respective contractors or subcontractors involve any modification
to the Mall II Improvements (without the prior consent of Developer) or otherwise adversely affect Developer's ability to obtain a temporary certificate of occupancy or a certificate of occupancy (a "C OF O") for any portion of the Building. In the event that the performance of the Tenant Build-Out Work by Tenant causes any delay in Developer obtaining a C of O for any portion of the Building, such delay shall constitute a Construction Delay.
3.8 SUBSTANTIAL COMPLETION; ACCEPTANCE PROCEDURE.
(a) "SUBSTANTIAL COMPLETION" is defined in SCHEDULE "11" attached hereto and made a part hereof.
(b) In addition to the Interim Substantial Completion Notices described in the following Section 3.8(c), Developer shall give Mall II Buyer at least ninety (90) days' prior notice of Developer's good faith estimate of the date of the anticipated occurrence of Substantial Completion of all of the Mall Improvements (the "ANTICIPATED COMPLETION DATE"). When Developer determines that Substantial Completion has occurred, Developer shall cause Developer's Architect to prepare and submit to Mall II Buyer a list of remaining items to be completed which it believes to be Punch List Items (as defined in SCHEDULE "11") (a "PROPOSED FINAL CHECKLIST"). Within five (5) Business Days after Mall II Buyer's receipt of the Proposed Final Checklist (the "INSPECTION PERIOD"), Mall II Buyer shall conduct one or more inspection(s) of the Mall Improvements. If Mall II Buyer believes that Substantial Completion has not yet occurred, Mall II Buyer shall give Developer notice during the Inspection Period specifying why Mall II Buyer believes that Substantial Completion has not yet occurred and setting forth with sufficient specificity a list of work that Mall II Buyer believes is still required to achieve Substantial Completion (an "EXCEPTIONS NOTICE"). In the event an Exceptions Notice is delivered, subject to Section 3.8(c) below, Developer shall cure or correct the conditions or matters specified in the Exceptions Notice and shall cause Developer's Architect to deliver another Proposed Final Checklist. If Mall II Buyer still believes that Substantial Completion has not occurred, Mall II Buyer shall give another Exceptions Notice, and the same procedure shall be repeated until Mall II Buyer agrees (or the Independent Expert in good faith determines) that Substantial Completion has occurred. If Mall II Buyer agrees (or the Independent Expert in good faith determines) that Substantial Completion has occurred, Mall II Buyer shall give Developer a notice (a "BUYER'S PROPOSED FINAL CHECKLIST") during the Inspection Period specifying items not included on the Proposed Final Checklist which remain to be completed or corrected. For purposes of determining Developer's obligations with respect to items specified on any Buyer's Proposed Final Checklist, the term "Buyer's Proposed Final Checklist" shall mean the list of Punch List Items submitted by Mall II Buyer in accordance with this subsection as amended following resolution as provided hereby by Developer and Mall II Buyer of any dispute with respect thereto. Following delivery of the Proposed Final Checklist to Mall II Buyer by Developer and/or the Buyer's Proposed Final Checklist to Developer by Mall II Buyer, as the case may be, then, subject to Force Majeure delays, Developer shall cause to be completed the items set forth in the Proposed Final Checklist and Buyer's Proposed Final Checklist, if any (collectively, "PUNCH LIST WORK") as soon as reasonably possible, and in all events prior to the Opening Date, except to the extent
that minor items of Punch List Work that do not adversely effect the operation of the Phase II Mall may be completed after the Opening Date. Developer's indemnification in Section 3.5 and the insurance coverages set forth in Section 3.6 shall apply to all Punch List Work. Developer shall reimburse Mall II Buyer or a Tenant, as applicable, for costs and expenses incurred by reason of any damage caused by Developer or its contractors or subcontractors to the Tenant Build-Out or any other property of Mall II Buyer or such Tenant.
(c) Prior to giving the Anticipated Completion Notice described in
Section 3.8(b) above, Developer may give interim substantial completion notices
(the "INTERIM SUBSTANTIAL COMPLETION NOTICES") for portions of the Mall Space as
the same near Substantial Completion. The same procedure set forth in Section
3.8(b) of delivery of a Proposed Final Checklist, followed by an Exceptions
Notice and then the Buyer's Proposed Final Checklist shall apply following the
delivery of any Interim Substantial Completion Notices.
(d) If Developer fails to commence the Punch List Work within thirty
(30) days after Substantial Completion of the entire Mall Improvements, subject
to Force Majeure, or if Developer does not thereafter diligently prosecute such
Punch List Work to completion, and if Mall II Buyer notifies Developer that
Developer is in default of its obligations to commence and diligently prosecute
the Punch List Work to completion and of Mall II Buyer's intention to undertake
the Punch List Work, then fifteen (15) days thereafter if the Punch List Work is
not completed or being diligently prosecuted to completion by Developer, Mall II
Buyer shall have the right (but not the obligation) to undertake the Punch List
Work itself (or through other Persons) at Developer's expense; and if and to the
extent that Mall II Buyer does so, Developer shall pay upon demand the
reasonable costs so incurred by Mall II Buyer.
(e) Any dispute under this Section shall be submitted to the Independent Expert for resolution. As to any matter so submitted, the time periods specified in Sections 3.8(b) or 3.8(c) above shall be tolled until the date a decision is reached or issued by the Independent Expert.
(f) The provisions of this Section 3.8 shall survive the Closing.
ARTICLE 4
DESIGN OF BUILD-OUT OF PHASE II MALL
4.1 DESIGN OF BUILD-OUT. Mall II Buyer and Developer will jointly design the Landlord Build-Out, and Mall II Buyer and Developer will jointly cause the Tenants to design the Tenant Build-Out of the Tenant Spaces, so that the Phase II Mall will be a First-Class mall with a Beverly Hills/Rodeo Drive theme and an upscale neo-classical style as provided in the Initial Plans. Developer shall have the right to deal directly with Tenants and the Tenant's' contractors to the extent necessary for the coordination of the Build-Out design and construction.
4.2 BUILD-OUT DESIGN SUBMISSIONS FOR COORDINATION. Developer will coordinate the Tenant Build-Out with the construction of the Mall Improvements and the Landlord Build-Out and Mall II Buyer and Developer will jointly supervise Tenants to ensure that the Tenant Build-Out is performed in accordance with the Initial Plans, the Final Construction Drawings and Specs, the Initial Demising Wall Plan, the Final Demising Wall Plan, this Agreement, the Construction Safety & Health Manual, the Tenant Handbook, the Site Logistics Procedures, the Work Continuation Agreement, the REA or the Amended REA. Developer shall have the right to review and approve, in its reasonable judgment, the consultant or contractors agreements for any Build-Out Work for which it is required to pay. Mall II Buyer shall endeavor to deliver, or cause Tenants to deliver, such contracts to Developer.
ARTICLE 5
CONSTRUCTION OF BUILD-OUT
5.1 CONSTRUCTION OF BUILD-OUT. Developer will undertake the construction of the Landlord Build-Out, including agreement, upon consultation with Mall II Buyer, on the terms and conditions of any contracts to construct the Landlord Build-Out. Developer will ensure that the Landlord Build-Out is performed in accordance with the Initial Plans, the Final Construction Drawings and Specs, the Initial Demising Wall Plan, the Final Demising Wall Plan, this Agreement, the Site Logistics Procedures, the Construction Safety & Health Manual, the guidelines of the Tenant Handbook set forth in SCHEDULE "14" attached hereto and made a part hereof, as the same may be modified to reflect the theme and layout of the Phase II Mall and from time to time by Developer (the "TENANT HANDBOOK") and the Work Continuation Agreement set forth in SCHEDULE "20" attached hereto and made a part hereof. Developer will obtain at its expense with regard to any Landlord Build-Out, and Developer and Mall II Buyer will cause Tenants to obtain with respect to any Tenant Build-Out, all permits and approvals for construction of the Tenant Build-Out other than the Required Mall Improvement Permits (which Developer shall obtain at Developer's expense). The Landlord Build-Out shall be constructed of good quality; in a workman-like manner and incorporating only new materials and equipment; and by means and methods complying with applicable Legal Requirements and insurance requirements. Developer shall commence the Landlord Build-Out Work, and Mall II Buyer and Developer shall jointly cause Tenants to commence the Tenant Build-Out Work no later than promptly after delivery of the Build-Out Notice, subject to Force Majeure, Developer Delays, Construction Delays and the Site Logistics Procedures. Developer shall be responsible to pay all Leasing Costs in connection with the Landlord Build-Out.
5.2 MALL II BUYER'S INDEMNIFICATION.
(a) Mall II Buyer agrees (at Mall II Buyer's expense) to indemnify, defend and hold harmless Developer and Mall II LLC (such indemnification of Mall II LLC only prior to the assignment of the Membership Interests to Mall II Buyer) and their respective directors, officers, stockholders, partners, members, and
employees (the foregoing collectively the "DEVELOPER INDEMNITEES") from and against loss, liability, damage, cost, or expense (including Fees and Costs) which any of them may suffer, or which may be asserted against any of them, in whole or in part by reason of, or in connection with: (i) any bodily injury, sickness, disease or death of or to any person or persons, or any damage to or destruction of property, arising out of or resulting from acts or omissions of Mall II Buyer, Mall II LLC (to the extent taken or occurring after Closing), or their respective contractors or subcontractors in connection with any act or omission of any such party in respect of the Phase II Land or the Mall Improvements; (ii) any failure by Mall II Buyer, Mall II LLC (to the extent occurring after Closing), or their respective contractors or subcontractors to comply with applicable Legal Requirements or insurance requirements; (iii) the use or misuse by Mall II Buyer or Mall II LLC (to the extent occurring after Closing) or their respective contractors or subcontractors of Hazardous Materials on the Phase II Land or in the Leasehold Airspace; (iv) infringement of patent rights, licensing or royalty agreements, or trade secrets by Mall II Buyer or Mall II LLC (to the extent occurring after Closing), or their respective contractors or subcontractors; and/or (v) any liens filed against the Building and/or the Phase II Land or the Leasehold Airspace by any Person claiming by, through, or under Mall II Buyer, Mall II LLC (to the extent occurring after Closing) other than liens filed as a result of Developer's failure to pay any Leasing Costs.
(b) Mall II Buyer shall defend any Legal Proceedings commenced against any of Developer Indemnitees concerning any matter covered by the foregoing indemnification. Mall II Buyer shall give Developer copies of documents served in any such Legal Proceeding and shall advise Developer regularly as to the status of the same. If Mall II Buyer fails to defend diligently against any such Legal Proceeding, or if Developer reasonably believes that Mall II Buyer's interest in such Legal Proceeding is adverse to Developer's interest therein, Developer shall have the right (but not the obligation), upon ten (10) Business Day's prior written notice, to defend the same at Mall II Buyer's expense. Mall II Buyer shall not settle any such Legal Proceeding without the written consent of Developer (unless such settlement shall release each Developer Indemnitee against whom liability has been asserted from all liability with respect to such Legal Proceeding without contribution from such Indemnitee). No Developer Indemnitee may settle any such Legal Proceeding without the written consent of Mall II Buyer, which shall not be unreasonably withheld.
(c) Developer shall notify Mall II Buyer promptly of every Legal Proceeding or claim which may be covered by the indemnification in (a) above. Mall II Buyer's obligations under this Section 5.2 shall not be limited or defined by the amount of insurance carried by Mall II Buyer or by limitations on the amount or type of damages under worker's compensation acts or other laws relating to employee benefits.
(d) This Section shall not require indemnification of any Developer Indemnitee TO THE EXTENT of the negligence or willful misconduct of Developer, Mall II LLC (prior to the transfer of the Membership Interests to Mall II Buyer), any of their respective agents or another Developer Indemnitee.
(e) The provisions of this Section 5.2 shall survive the Closing.
5.3 INSURANCE COVERAGES. Mall II Buyer and Developer shall jointly cause each Tenant with access to the Tenant Spaces to perform the Tenant Build-Out to include Developer and Mall II LLC as additional insureds on each policy of liability insurance carried by such Tenant, as applicable, with respect to the Tenant Build-Out with a limit of not less than $10,000,000 with respect to any Tenant. Mall II Buyer and Developer shall jointly cause each such Tenant to furnish certificates evidencing all such insurance coverages to Developer before such Tenant starts work in the Phase II Mall. Alternatively, the parties may agree that Mall II Buyer, Mall II LLC and Developer may be included as insureds under one or more liability policies covering the Build-Out and the entire Building.
5.4 SITE LOGISTICS PROCEDURES AND PLAN. Within a reasonable time before Developer or a Tenant, as applicable, commences the Build-Out (so that Mall II Buyer and Developer may plan and schedule site mobilization, logistics, and materials deliveries), Developer shall promulgate procedures and a plan (the "SITE LOGISTICS PROCEDURES") for mobilization, logistics, and access applicable to all Persons performing construction work or services in the Building, including work hours; delivery, handling and storage of materials; staging, hoisting, use of elevators and loading docks, location of trailers; and other such matters. All Persons performing work in the Building shall be required to abide by the Construction Safety & Health Manual described on SCHEDULE "9" attached hereto and made a part hereof, as the same may be modified by Developer to reflect the Phase II Mall layout and other relevant facts (the "CONSTRUCTION SAFETY & HEALTH MANUAL") and either Developer or H/C I Owner may, from time to time, update and revise the Construction Safety & Health Manual in its reasonable discretion. The parties acknowledge that staging, hoisting, etc. may need to be integrated into the design and is crucial to construction sequencing. The Site Logistics Procedures: (a) shall not discriminate against any Tenant in such matters; (b) shall afford any Tenant performing Tenant Build-Out Work regular but non-exclusive use of hoists and elevators for orderly and regular access to the areas of the Building in which Tenant will perform any Tenant Build-Out; (c) shall allow any Tenant orderly and regular access to those areas of the Building outside the Phase II Mall which such Tenant must access to supervise or perform the Tenant Build-Out; and (d) shall allow for sufficient facilities, equipment and access to permit the orderly and continuous prosecution and completion of the construction of the Tenant Build-Out by Tenants and the contractors and subcontractors of Tenants during normal working hours (and on an overtime basis if a Tenant elects to perform work on an overtime basis and other construction work is permitted on an overtime basis). The Site Logistics Procedures shall specify that Developer will provide hoists and operating engineers to operate hoists and service elevators (but only so long as such docks, hoists and elevators are available for use as of such date). However, notwithstanding the foregoing, the Site Logistics Procedures may provide that, starting on a date prior to the opening for business of any portion of the Phase II Hotel/Casino, the access of Tenants (and their respective contractors' and subcontractors') for supervision and construction of the Tenant Build-Out shall be limited to the loading docks, hoists and service elevators (but only so long as such docks, hoists and elevators are available for use as of such date). Developer shall not discriminate against the Tenants in applying the Site Logistics Procedures or otherwise in Developer's administration of construction
work on, or access to or through, the Building. The Site Logistics Procedures shall not impose any cost or charge for access to or through, or use of, any facilities or areas of the Building EXCEPT FOR pass-through without markup of actual labor, utility or equipment charges or other third-party costs (collectively, "DIRECT COSTS") for use of facilities as to which labor or special equipment are required and are specifically chargeable to or paid by Developer (including overtime where applicable). The costs of the hoists and service elevators shall not be included in Direct Costs, except to the extent which a Tenant requests overtime service. If direct hourly rates do not apply, Developer shall pay, unless the applicable Tenant shall be required to pay, 100% of Direct Costs for equipment and facilities used exclusively by any Tenant and an equitable portion of Direct Costs for equipment and facilities also used by others as and to the extent actually used by any Tenant based on such Tenant's percentage of use of special equipment and facilities (including overtime where applicable). Developer shall provide dumpsters for use in connection with the Tenant Build-Out. Mall II Buyer shall be responsible for cleaning their own work area and removing their own trash to the provided dumpsters. Each Tenant shall pay for the dumpster service as a part of the Direct Costs in accordance with their Tenant Space's proportionate percentage of the total leasable Floor Area.
5.5 INSPECTION BY DEVELOPER. Developer shall have the right (and Mall II Buyer and Developer shall endeavor to include such a right in the Leases) during usual business hours, at Developer's expense and upon reasonable notice to Mall II Buyer or Tenants, to inspect the Tenant Build-Out Work to ascertain that the performance of such work adheres to the Leases and design plans agreed to by Mall II Buyer, Developer and Tenants.
ARTICLE 6
ACCESS TO PHASE II LAND; RELATED MATTERS
6.1 ACCESS. After the date hereof, Developer shall allow Mall II Buyer and its Consultants, construction manager, contractors and representatives to visit, inspect, and review the Phase II Land and the Building and matters relating to the Phase II Land and the Building during working hours on Business Days upon reasonable advance telephonic notice. Mall II Buyer's indemnification in Section 5.2 and the insurance coverages set forth in Section 5.3 shall apply to all inspections of the Phase II Land pursuant to this Article. In connection with the joint leasing efforts described herein, Developer shall cooperate with Mall II Buyer, including, without limitation, making available to Mall II Buyer marketing materials with respect to the Phase II Hotel/Casino and (subject to the provisions of this Section 6.1) permitting Mall II Buyer to conduct tours of the Phase II Mall and the Phase II Hotel/Casino with prospective tenants. Developer will also allow Mall II Buyer and its representatives (during working hours on Business Days upon reasonable advance telephonic notice) to review and copy information in Developer's possession (other than information which Developer deems confidential) which may affect or relate to Mall II Buyer's review or inspection of the design or construction of the Mall Improvements, Mall II Buyer's participation in the design and construction of the Build-Out, and/or Mall II Buyer's ownership and/or operation of the Phase II Mall after the Closing or which Mall II Buyer may otherwise
reasonably request to confirm, verify or inquire into matters covered by this Agreement, including the physical condition of the Phase II Land, plans, surveys, title examinations, construction contracts, etc. Developer and Developer's Consultants and representatives shall cooperate reasonably with Mall II Buyer's Consultants and representatives in such matters. Any visits to, or inspections at, the Phase II Land or the Building by Mall II Buyer or its representatives shall not interfere with construction or other work in progress and shall be subject to site safety concerns.
6.2 INDEMNITY. Mall II Buyer agrees to indemnify Developer from and
against loss, cost, expense, damage, charge, claim or liability (including Fees
and Costs) which Developer may suffer, incur, or pay out by reason of the acts
or omissions of Mall II Buyer and its Consultants and representatives in making
any inspections of the Phase II Land and the Building pursuant to Section 6.1
(but not with respect to any condition at the Phase II Land or the Building
discovered by any inspections, examinations or tests). Mall II Buyer and its
Consultants shall have liability insurance in effect which covers any activities
on the Phase II Land or in the Building before the Closing in accordance with
Section 6.1. The provisions of this Section 6.2 shall survive the Closing.
ARTICLE 7
TIMING FOR DESIGN AND CONSTRUCTION
7.1 SUBSTANTIAL COMPLETION.
(a) Developer shall give Mall II Buyer quarterly updates of the progress of construction of the Mall Improvements and the Palazzo Casino Resort and monthly updates for the six (6) months immediately preceding the date on which Developer expects to achieve Substantial Completion. Developer shall achieve Substantial Completion by the date that is the earlier of (i) thirty-six (36) months after the date on which sufficient permits are received to allow Developer to begin construction in compliance with Legal Requirements and (ii) March 1, 2008, as the same may be extended due to Force Majeure, Construction Delays or Buyer Delays (the "OUTSIDE SUBSTANTIAL COMPLETION DATE"). In the event that, despite Developer's diligent efforts, Substantial Completion has not occurred by the Outside Substantial Completion Date and Developer shall nevertheless be endeavoring diligently to complete the Mall Improvements, then so long as Mall II Buyer is not in default of any obligations under this Agreement, Mall II Buyer shall be entitled to liquidated damages (the "INTERIM LIQUIDATED DAMAGES") in the amount of $5,000 per day for each day after the Outside Substantial Completion Date on which Substantial Completion has not occurred up to and including the date that is six (6) months after the Outside Substantial Completion Date and $10,000 per day for each day from and after said date to and including the date that is one (1) year after the Outside Substantial Completion Date on which Substantial Completion has not occurred. During the one year period during which Interim Liquidated Damages are payable, Developer shall also reimburse Mall II Buyer for actual out-of-pocket damages incurred and paid to Tenants under said Tenant's Leases (including any reduced rent, rent abatements or other rent concessions under said
Tenant's Leases) resulting from Developer's delay in achieving Substantial Completion ("LEASE DAMAGES").
(b) If Substantial Completion has not occurred on or before the date that is one (1) year after the Outside Substantial Completion Date, subject to extension for Force Majeure, Construction Delays and Buyer Delays, then Mall II Buyer and Developer agree that it would be impracticable and extremely difficult to ascertain the actual damage to Mall II Buyer as a result of the failure of Developer to achieve Substantial Completion by such date and that the Buyer Liquidated Damages Amount is a reasonable estimate of the damages which Mall II Buyer will incur as a result of such failure and, in such an event, Developer shall pay to Mall II Buyer the Buyer Liquidated Damages Amount and Developer shall be responsible to pay the Lease Damages. The "BUYER LIQUIDATED DAMAGES AMOUNT" as used in this Agreement shall mean one hundred million dollars ($100,000,000).
7.2 OPENING DATE.
(a) Commencing upon the notification from Developer to Mall II Buyer of the Anticipated Completion Date as provided in Section 3.8, Mall II Buyer and Developer shall negotiate in good faith, based on the work required to complete the Phase II Mall and the Phase II Hotel/Casino, to agree on an appropriate date for the Phase II Mall and the Phase II Hotel/Casino to open for business (the "OPENING DATE"). Developer shall cause the Phase II Hotel Casino to open for business no later than the Opening Date. "OPEN FOR BUSINESS" as used in connection with the Phase II Hotel/Casino shall mean that the casino is open for business to the general public and at least one thousand (1,000) guest rooms are available for occupancy by hotel guests. The Opening Date shall be extended one day for each day of delay due to Force Majeure, Construction Delays or Buyer Delays. If Developer shall fail to cause the Phase II Hotel/Casino to Open for Business by the Opening Date, as extended as described in the prior sentence, Developer shall pay to Mall II Buyer the amount of $5,000 per day for each day after the Opening Date on which the Phase II Hotel/Casino fails to Open for Business up to and including the one hundred and eighty-first (181st) day following the Opening Date and $10,000 per day for each day from the one hundred and eighty-first (181st) day following the Opening Date through the one year anniversary of the Opening Date on which the Phase II Hotel/Casino fails to Open for Business. From and after the date that is one year after the Opening Date, if the Phase II Hotel/Casino is not Open for Business, Developer shall reimburse Mall II Buyer for any actual damages incurred as a result of the delayed opening for business of the Phase II Hotel/Casino.
(b) Mall II Buyer shall use commercially reasonable efforts to cause the Phase II Mall to Open for Business on the Opening Date, but in no event shall the Phase II Mall Open for Business later than the latest of (i) four (4) months after the date on which Substantial Completion is achieved, (ii) the date on which the Phase II Hotel/Casino opens for business or (iii) the Opening Date (the "MALL OPENING Date"). "OPEN FOR BUSINESS" as used in connection with the Phase II Mall shall mean that the Phase II Mall has held a public grand opening. The Mall Opening Date shall be extended one day for each day of delay due to Force Majeure or Developer Delays. If Mall II
Buyer shall fail to cause the Phase II Mall to Open for Business by the Mall Opening Date, as extended as described in the prior sentence, Mall II Buyer shall reimburse Developer for any actual damages incurred as a result of the delayed opening for business of the Phase II Mall.
(c) The provisions of this Section 7.2 shall survive the Closing.
ARTICLE 8
AMENDED REA AND COREA
8.1 AMENDED REA. The Phase II Mall is part of a complex consisting of
the Venetian Casino Resort and the Palazzo Casino Resort. The Venetian Casino
Resort and the Palazzo Casino Resort each include several component sections
each owned by a different Unit Owner. The REA is the document that governs the
relationship, including, among other things, cost allocations and easements,
among the various Unit Owners. Prior to the Closing, Developer, Mall II Buyer
and the other Unit Owners shall prepare an amendment and/or restatement of the
REA to be entered into by and among the Unit Owners (the "AMENDED REA") to
reflect the construction of the Palazzo Casino Resort and the acquisition of the
Membership Interests by Mall II Buyer. Negotiations regarding the Amended REA
will follow as soon as practicable following the date hereof and each of
Developer and Mall II Buyer must act in good faith and reasonably in connection
with such negotiations. The Amended REA shall amend the terms of the REA to
provide for, among other things, (i) appropriate mutual operating covenants,
(ii) joint marketing and advertising, (iii) certain shared casino or mall
operations, (iv) the sharing of customer information, (v) the joint purchasing
of insurance, (vi) shared security operations, (vii) easements, encroachments
and other similar rights necessary or desirable for the operation of the various
components of the Venetian Casino Resort and the Palazzo Casino Resort, (viii) a
requirement that Mall II LLC pay its share of those common maintenance, utility
costs and other items as set forth on SCHEDULE "15 attached hereto and made a
part hereof (subject to variables set forth in SCHEDULE "15), (ix) parking, (x)
that Mall I Buyer shall cause the governing documents between Mall I LLC and
Mall I Buyer and their respective lenders to provide that Developer and its
Affiliates are permitted transferees of Mall I LLC's interest in the Phase I
Mall or Mall I Buyer's interest in Mall I LLC and that Developer or any of its
Affiliates shall be permitted to assume such financing in connection with the
exercise by Developer of its rights under Section 21.2 and (xi) any other
matters that would be of mutual benefit to the Unit Owners. In the event that
the Unit Owners are not able to agree on the terms of the Amended REA the matter
shall be referred to an Independent Expert in accordance with the provisions of
Article 9.
8.2 COREA. No later than thirty (30) days prior to the opening of the Phase II Mall, unless Mall I LLC and Mall II LLC agree otherwise, there must be in place an executed construction, operation and reciprocal easement agreement ("COREA") between Mall I LLC and Mall II LLC. Negotiations regarding the COREA will follow as soon as practicable following the date hereof and each of Mall I LLC and Mall II LLC must act in good faith and reasonably in connection with
such negotiations. The COREA must, among other things, (i) be an agreement that
a commercially reasonable owner of the Phase I Mall and of the Phase II Mall
would execute, (ii) provide that, unless the prior written consent of Mall I LLC
has been obtained, the Phase II Mall shall not contain more than five hundred
thousand (500,000) square feet of gross leasable area, (iii) contain guidelines
relating to the design of the Phase II Mall (including, without limitation, the
connection(s) between the Phase I Mall and the Phase II Mall), and relating to
alterations and maintenance of the Phase I Mall and the Phase II Mall, so that,
among other things, the malls are architecturally harmonious and constructed and
maintained in a first-class manner, (iv) provide for the joint maintenance,
leasing, marketing, management and operation, of the Phase I Mall and the Phase
II Mall, (v) require each of Mall I LLC and Mall II LLC to pay (A) all operating
and other expenses that are directly allocable to either mall and (B) an
equitable portion of all operating and other expenses that are not directly
allocable to either mall but otherwise relate to the "integrated mall" ("SHARED
MALL EXPENSES"), (vi) provide for approval of a leasing plan and, with respect
to all operating expenses that should appropriately be Shared Mall Expenses, an
operating budget prior to commencement of operation of the Phase II Mall and
each year thereafter, (vii) provide that each of Mall I LLC and Mall II LLC is
entitled to receive and retain, for its own account, all revenue generated by
the Phase I Mall or the Phase II Mall, as applicable, (viii) allow each of Mall
I LLC and Mall II LLC to sell and finance its mall and, in connection therewith,
to assign or mortgage its interest in the COREA, (ix) provide for the granting
of appropriate easements across each of the Phase I Mall and the Phase II Mall,
(x) contain provisions relating to restoration of the Phase I Mall and the Phase
II Mall after casualty and condemnation, (xi) contain a mechanism to resolve
disputes under the COREA and (xii) require Mall II LLC to grant to Mall I LLC an
easement for the location and operation by Mall I LLC of the gondola ride
through certain areas of the Phase II Mall. In the event that Mall I LLC and
Mall II LLC are not able to agree on the terms of the COREA the matter shall be
referred to an Independent Expert in accordance with the provisions of Article
9.
ARTICLE 9
CONSULTATION; DISPUTE RESOLUTION
9.1 CONSULTATION; MALL II BUYER'S SITE REPRESENTATIVE. The parties will consult with each other regularly concerning the evolving design, respectively, of the Mall Improvements and of the Build-Out and also of the construction of the Mall Improvements and the Build-Out while in progress. For this purpose the parties shall exchange drawings, specifications, shop drawings, submittals, excerpts of meeting minutes, and other materials that may be necessary or appropriate to further the purposes of this Agreement. Mall II Buyer shall appoint a representative who shall be assigned full time to the Phase II Mall as the on-site representative of Mall II Buyer (the "MALL II BUYER SITE REPRESENTATIVE"). The Mall II Buyer Site Representative shall be the primary point of contact between Developer and Mall II Buyer as to the matters contemplated by this Agreement, including, without limitation, the delivery of the Mall II Buyer Monthly Statement, the development of the Common Area Plans, the Initial Demising Wall Plan and the Final Demising Wall Plan, coordinating the Tenant Build-
Out Work by the Tenants, their contractors and subcontractors and any requested
changes to the Final Construction Drawings and Specs, the Initial Demising Wall
Plan, the Final Demising Wall Plan, the Standards Document or the Common Area
Plans. The Mall II Buyer Site Representative shall have authority to make
decisions and execute agreements in regard to the Phase II Mall, and to exercise
any rights of Mall II Buyer under this Agreement, on behalf of Mall II Buyer and
Developer shall be entitled to rely on any instructions, consents or approvals
given by the Mall II Buyer Site Representative as if they are the instructions
of Mall II Buyer. Each party may invite representatives of the other (including
the Mall II Buyer Site Representative) from time to time, to attend such party's
regular job or project meetings to discuss matters of interest or concern. This
Section shall not require disclosure of confidential or sensitive materials or
require attendance at meetings in which disputes with the other party,
unresolved positions, or matters not involving the other party are to be
discussed.
9.2 RESOLUTION OF DISPUTES.
(a) In the event there is a dispute among any of the parties (the
"DISPUTING PARTIES") regarding the amount of any Interim Payment and the
Disputing Parties cannot, with respect to such dispute, resolve such dispute
prior to the time set forth for payment of such Interim Payment, then the matter
in question shall be resolved in accordance with the further provisions of this
Section 9.2(a). In the event of any such disagreement, Developer and Mall II
Buyer shall promptly notify the Independent Expert (as defined below) of such
disagreement and of their desire that such disagreement be resolved by the
Independent Expert. Developer and Mall II Buyer shall each present to the
Independent Expert the amount they believe to be the correct amount of the
Interim Payment in dispute and any documentation necessary to support such
position. The Independent Expert may only decide in favor of the amount
presented by either Developer or Mall II Buyer, and may not make a
ruling/determination other than in favor of one of the two amounts presented.
(b) In the event that there is a dispute among the Disputing Parties that this Agreement provides will be resolved by an Independent Expert arising out of or relating to this Agreement, other than those disputes in regard of the amount of any Interim Payment described in Section 9.2(a) above. and the Disputing Parties cannot, with respect to any such dispute, resolve such dispute within the time period set forth in Section 9.3 of this Agreement, then the matter(s) in question shall be resolved in accordance with the further provisions of this 9.2(b). In the event of any such disagreement, the Disputing Parties shall promptly notify the Independent Expert (as defined below) of such disagreement and of their desire that such disagreement be resolved by the Independent Expert. The Independent Expert shall be instructed to render its decision within the time period set forth in Section 9.3 below after such notification. Each of the Disputing Parties shall be entitled to present evidence and arguments to the Independent Expert, which evidence and arguments may include the relevant provisions hereof. During the pendency of such dispute-resolution procedure, the Disputing Parties shall continue their performance under this Agreement, including with respect to the matter that is the subject of such procedure. The determination of the Independent Expert acting as above provided (i) shall be conclusive and binding upon the
parties to this Agreement and (ii) shall in no event modify, amend or supplement this Agreement in any manner. The Independent Expert shall be required to give written notice to the Disputing Parties stating its determination, and shall furnish to each party to this Agreement a signed copy of such determination. Each of the Disputing Parties shall pay half of the fees and expenses of the Independent Expert and all other expenses of the above-described dispute resolution procedure (not including the attorneys' fees, witness fees and similar expenses of the Disputing Parties, which shall be borne separately by each of the Disputing Parties).
9.3 SUBMISSION OF DISPUTES TO INDEPENDENT EXPERT.
(a) SUBMISSIONS ON AN EXPEDITED BASIS. Disputes referred to the Independent Expert pursuant to the terms of this Agreement which are reasonably likely to cause a delay in Substantial Completion, other than the determination of Substantial Completion itself which shall be made in accordance with Section 3.8, may be submitted for determination by an Independent Expert on an expedited basis at any time if the Disputing Parties have been unable to settle such dispute. The Independent Expert shall deliberate on an expedited basis on such matters and shall render its decision within five (5) Business Days after notification of the dispute. If the Independent Expert notifies the Disputing Parties that it is impracticable to make a determination of such dispute within such five (5) Business Day period, the deadline for the rendering of a decision shall be extended as long as necessary as the Independent Expert proceeding diligently shall take to resolve such dispute. Notwithstanding the submission of such disputes to the Independent Expert, the Disputing Parties may proceed with construction in regard to the disputed matter in the manner in which Developer (in connection with disputes regarding Substantial Completion, the Mall Improvements or the Landlord Build-Out) has determined, in good faith, is appropriate and in compliance with this Agreement. If the Independent Expert determines that one of the Disputing Parties has proceeded in a manner that is in breach of the terms of this Agreement, such party shall be liable to the other for all loss, liability, damage, cost, or expense (including Fees and Costs) which the other party may suffer, or which may be asserted against such party arising from such breach.
(b) SUBMISSIONS ON AN ORDINARY BASIS. In any matter other than those set forth in Section 9.3(a) above that this Agreement specifies shall be resolved by an Independent Expert, in the event that the Disputing Parties cannot, without respect to any such dispute, resolve such dispute (a) by the Closing Date, the applicable Interim Payment Date, the Earn-Out Date or the Final Date, with respect to disputes regarding the Closing Payment, any Adjustment Payment, the Earn-Out Payment or the Recalculated Earn-Out, respectively, or (b) within thirty (30) days, then the matter(s) in question shall be resolved in accordance with Section 9.2. The Independent Expert shall be instructed to render its decision within thirty (30) days (or any shorter time reasonably agreed to by the Disputing Parties) after such notification.
9.4 IDENTITY OF INDEPENDENT EXPERT. As used herein, the "INDEPENDENT EXPERT" shall mean (a) with respect to any dispute pertaining to architectural, construction or engineering matters, an appropriately licensed and/or
registered (as applicable), reputable and independent architect or engineer; (b) with respect to any dispute pertaining to hotel, casino, restaurant or retail complex operation or management, a reputable and independent Person with experience in pertinent commercial real estate operation and management; and (c) with respect to any other dispute, a licensed, reputable and independent certified public accountant, in each of (a), (b) or (c) reasonably acceptable to the Disputing Parties. In all events, the Independent Expert shall (i) not be affiliated with Developer, Mall II LLC or Mall II Buyer (or any Affiliate of any of them) and (ii) have at least ten (10) years of relevant experience and expertise with respect to large commercial real estate projects in Las Vegas, Nevada and/or Clark County, Nevada. In the event that Developer and Mall II Buyer can not agree on the selection of an Independent Expert to resolve disputes under Section 9.2(a) or (b) above, each of Developer and Mall II Buyer shall choose an individual who satisfies the Independent Expert requirements of this Section 9.4. Those individuals so chosen shall confer in good faith to select a third individual who shall be the Independent Expert for the purposes of this Agreement and the choice so made shall be binding on Mall II Buyer and Developer. Proceedings before or involving dispute resolution under this Article in and of themselves shall not constitute events of Force Majeure.
9.5 The provisions of this Article 9 shall survive the Closing.
ARTICLE 10
MALL II BUYER CONDITIONS
10.1 CONDITIONS TO MALL II BUYER'S OBLIGATIONS. Mall II Buyer's obligation to consummate the Closing under this Agreement shall be subject to satisfaction of each of the following conditions at or before the Closing:
(a) Developer shall have caused a commercial subdivision of the Palazzo Casino Resort in order to cause the Phase II Mall and the Phase II Hotel/Casino to become legal parcels which are separate and distinct from each other and from the Phase II Land capable of being conveyed in fee simple.
(b) Developer shall have formed Mall II LLC and conveyed Developer's fee interest in the Fee Mall Space and Developer's leasehold interest in the Leasehold Mall Space to Mall II LLC.
(c) Substantial Completion shall have occurred.
(d) Title Insurer shall be willing to issue an owner's policy of title insurance in the amount of the Closing Payment, subject to payment of premiums, insuring fee title to the Fee Mall Space and leasehold title to the Leasehold Mall Space and the Casino Shops as being vested in Mall II LLC, free of Encumbrances other than Permitted Encumbrances, which policy shall include a non-imputation endorsement in Title Insurer's standard form and reasonably acceptable to Mall II Buyer.
(e) Developer shall have executed and delivered to Mall II Buyer an Assignment of the Membership Interests in a form reasonably acceptable to Mall II Buyer.
(f) All representations and warranties of Developer (without reference to any modifications thereof contained in Developer's Representation Certificate) contained in this Agreement that are required to be true, correct and complete as of the Closing Date shall be true, correct and complete in all material respects subject, however, to matters known to Mall II Buyer as of the date hereof.
(g) Developer shall not be in default in any material respect, as of the Closing Date, under Developer's covenants, agreements and undertakings on behalf of itself or Mall II LLC in this Agreement.
(h) Developer shall have executed and delivered all Closing Instruments required to be executed and delivered by Developer at or prior to the Closing.
(i) Developer or H/C I Owner shall have obtained such insurance coverage, if any, that it is required to obtain pursuant to the terms of the Amended REA; and if and to the extent that such policy is not yet effective, Developer shall have in force a policy of builder's risk insurance which shall cover the Mall Improvements until such time as the foregoing insurance coverage required by the Amended REA becomes effective. In either case, a certificate of such policy shall have been delivered to Mall II Buyer.
(j) There shall exist no Hazardous Materials in or on the Phase II Land or the Development that would prevent Use and Occupancy of the Phase II Mall and/or the Common Elements by Mall II Buyer.
(k) No petition for relief or similar Legal Proceeding has been filed (unless dismissed within 60 days) pursuant to the United States Bankruptcy Code with respect to Mall II LLC or the Developer and there shall be no binding injunction, order or judgment of any court having proper jurisdiction prohibiting Mall II Buyer from consummating the Closing.
(l) Developer shall have delivered a certificate stating that it is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code, as amended.
(m) Developer and Mall II LLC shall have entered into the Master Lease Agreement and a memorandum thereof in recordable form shall have been delivered to the Title Insurer for recording.
(n) Las Vegas Asia Corp.("TSUNAMI") shall have surrendered its leasehold interest in the Phase I Mall and shall have delivered possession of such space to Mall I LLC if the same is required pursuant to Section 15.14 of this Agreement.
(o) Mall II LLC shall have received from each lender holding a mortgage encumbering the fee interest in the Casino Shops an executed subordination, non-disturbance and attornment agreement (the "SNDA") in form reasonably acceptable to Mall II Buyer, with respect to the Master Lease Agreement. Developer hereby agrees to use commercially reasonable efforts to obtain such SNDA from any such lender.
(p) All exterior barricades, lifts and hoists shall have been removed to the extent that the same interfere with the Phase II Hotel/Casino and/or the Phase II Mall being Open for Business, the Phase II Automobile Parking Area shall be open and all building systems in the Phase II Mall (including, without limitation, HVAC and life and safety) shall have been tested and verified as being in working order.
(q) All Tenant Payments held by Developer pursuant to Section 16.3(c), if any, shall be transferred to an account maintained in the name of Mall II LLC.
(r) The Phase II Hotel/Casino shall be Open for Business.
(s) Any other condition to Mall II Buyer's obligations which are specifically set forth in this Agreement shall have been fulfilled.
ARTICLE 11
DEVELOPER CONDITIONS
11.1 CONDITIONS TO DEVELOPER'S OBLIGATIONS. The obligations of Developer to be performed at the Closing shall be subject to satisfaction of the following conditions:
(a) All representations and warranties of Mall II Buyer in this Agreement shall be true, correct, and complete in all material respects as of the Closing Date.
(b) Mall II Buyer shall not be in default in any material respect, as of the Closing Date, under any covenant, agreement or undertaking of Mall II Buyer under this Agreement.
(c) Mall II Buyer shall have executed and delivered all Closing Instruments required to be executed and delivered by Mall II Buyer at or prior to the Closing.
(d) Mall II Buyer shall have delivered the Closing Payment to Developer as set forth in Section 20.2(a) of this Agreement.
(e) Any other conditions to Developer's obligations which are specifically set forth in this Agreement shall have been fulfilled.
ARTICLE 12
WAIVER OF CONDITIONS
12.1 MALL II BUYER'S WAIVER. Mall II Buyer shall have the right to waive compliance by Developer and/or any other party with any condition set forth in Article 10.
12.2 DEVELOPER'S WAIVER. Developer shall have the right to waive compliance by Mall II Buyer of any condition set forth in Article 11.
12.3 WRITTEN WAIVER. Any waiver under Section 12.1 or 12.2 must be in writing and must refer specifically to the condition being waived. If the Closing occurs, the conditions in Articles 10 and 11 shall be deemed to have been satisfied unless specified to the contrary in writing, whether or not specifically waived; provided, however, that neither party shall be released from any obligations which survive the Closing.
12.4 NOTICE BY DEVELOPER. Subject to Section 15.12, if, before the Closing Date, either party becomes aware that any of Developer's representations and warranties in this Agreement are untrue, incorrect, or incomplete in any material respect (provided that such representations and warranties were true, correct and complete when originally made), such party shall give notice to the other party as promptly as practicable. Thereafter, Developer shall have the right to cure or correct the problem prior to the Closing Date.
12.5 NOTICE BY MALL II BUYER. Subject to the last two sentences of
Section 16.1, if, before the Closing Date, either party becomes aware that any
of Mall II Buyer's representations and warranties in this Agreement are untrue,
incorrect or incomplete in any material respect (provided that such
representations and warranties were true, correct and complete when originally
made), such party shall give notice to the other party as promptly as
practicable. Thereafter, Mall II Buyer shall have the right to cure or correct
the problem prior to the Closing Date.
12.6 COVENANT TO SATISFY CONDITIONS. Developer and Mall II Buyer each hereby agree to use commercially reasonable efforts to cause each of the conditions precedent to the obligations of the other party to be fully satisfied, performed and discharged on and as of the Closing Date, except that neither party shall have any obligation to expend any funds or incur any liabilities or obligations which it would not otherwise be required to spend or incur under the provisions of this Agreement.
ARTICLE 13
CLOSING
13.1 THE CLOSING. The Closing shall take place at the offices of Developer's counsel (or at another location in Clark County, Nevada or New York City, New York designated by Developer) at 10 am on the Mall Opening Date, time being of the essence (the "CLOSING DATE").
13.2 DELIVERY OF POSSESSION. Developer shall deliver possession of the Phase II Mall to Mall II Buyer at the Closing (if Mall II Buyer is not already in possession), subject only to the Permitted Encumbrances, the Site Logistics Procedures and this Agreement.
ARTICLE 14
CLOSING DELIVERIES; RELATED MATTERS
14.1 DEVELOPER'S DELIVERIES. Subject to the terms of this Agreement, Developer shall execute and deliver to Mall II Buyer or Mall II LLC, as applicable, at or prior to the Closing:
(a) an assignment of the Membership Interests to Mall II Buyer (the "ASSIGNMENT");
(b) a General Assignment/Bill of Sale assigning to Mall II LLC the Exclusive Mall Equipment;
(c) the Amended REA;
(d) the Developer's Representation Certificate;
(e) the Developer's Warranty, if applicable;
(f) notices to Tenants from the appropriate parties informing them of the termination of any lockbox agreements in effect immediately prior to the Closing and instructing Tenants to pay rent in such a manner as directed by Mall II Buyer;
(g) Developer's copies of any Leases executed by Mall II LLC and Tenants;
(h) Developer's copies of any Service Contract that shall survive the Closing;
(i) all sales tax, transfer tax and other tax returns, if any, which the Developer is required by law to execute and deliver, either individually or together
with Mall II Buyer, to any Government Authority as a result of the sale of the Membership Interests;
(j) All records and files which are in the possession of the Developer relating to the operation and maintenance of the Phase II Mall, including without limitation, to the extent in the possession of Developer, current tax bills, current water, sewer, utility and fuel bills, payroll records, billing records for Tenants, Tenant files, repair and maintenance records and the like which affect or relate to the Phase II Mall, plans, drawings, blue prints and specifications for the Phase II Mall, certificates of occupancy and other licenses and permits and keys to the Phase II Mall; and
(k) any other instruments or documents to be executed and/or delivered by Developer pursuant to SCHEDULE "7" or other provisions of this Agreement.
14.2 MALL II BUYER'S DELIVERIES. Subject to the terms of this Agreement, Mall II Buyer shall execute and/or deliver to Developer at or prior to the Closing:
(a) the Closing Payment;
(b) the Amended REA;
(c) All sales tax, transfer tax and other tax returns, if any, certificates of value and similar documents which Mall II Buyer is required by law to execute and deliver, either individually or together with Developer to any Government Authority as a result of the purchase of the Membership Interests.
(d) Counterparts of each of the instruments and documents listed in
Section 14.1 for which Mall II Buyer's execution is necessary to give effect to
such instrument or documents;
(e) Any payment for change costs required pursuant to Sections 3.3(b) or 3.3(c); and
(f) any instruments or documents to be executed and/or delivered by Mall II Buyer pursuant to SCHEDULE "7" or any other provisions of this Agreement.
14.3 UTILITY DEPOSITS AND ESCROWS. If applicable, at the Closing, Developer shall assign to Mall II LLC all deposits or escrows held for Developer's account at or by any public utility company in connection with public utility services furnished solely to the Phase II Mall. Mall II LLC shall pay, or Developer or Mall II Buyer shall cause Mall II LLC to pay, to Developer, at the Closing, for the amount of the deposits or escrows so assigned and will become responsible for public utility charges due thereafter with respect to the Phase II Mall. Alternatively, Developer may terminate such public utility accounts. Prior to the Closing Date, Developer shall notify all such public utility companies in writing (with copies to Mall II LLC) of the applicable transfer of service.
14.4 DELIVERY OF PHASE II MALL DOCUMENTS. At the Closing subject to the terms of this Agreement, Developer shall deliver to Mall II LLC Developer's originals (or, if Developer has no originals, true and complete copies) of the Phase II Mall Documents; provided, however, that to the extent certain of the operating manuals that constitute the Phase II Mall Documents are not available to Developer at the time of Closing, Developer shall deliver them to Mall II Buyer as promptly as possible thereafter.
14.5 PERFORMANCE OF COVENANTS AND RESPONSIBILITIES. At the Closing, Developer shall keep and perform all covenants and responsibilities to be performed at the Closing under this Agreement by Developer or by Mall II LLC.
14.6 DELIVERY OF SURVEY. At Developer's expense, Developer shall deliver to Mall II LLC, at the Closing, an "as-built" survey (dated or updated to a date not earlier than sixty (60) days before the Closing Date) which shows the Phase II Mall as constructed within the Building at the point of construction as of such date. Upon completion of construction of the Development, Developer shall deliver a final version of such survey, showing the Development "as-built."
14.7 APPROVALS, ETC. Developer shall use commercially reasonable efforts to obtain or complete, as applicable, all approvals, authorizations, consents or other actions by or filings with any Person (if any) which are required to be obtained or completed by Developer prior to or in connection with the execution and delivery of this Agreement or any of the Closing Instruments or in connection with any other action required to be taken by Developer hereunder at or before the Closing, including those listed in SCHEDULE "6" (if any), shall have been obtained or completed, as the case may be; however, it shall not be a condition to Mall II Buyer's obligations under this Agreement that any such approval, authorization or consent shall be obtained, but Developer shall be obligated to pay and indemnify Mall II Buyer from and against any damages, penalties or other sums that may be payable to the other Party by reason of Developer's failure to obtain such consent, which obligations shall survive the Closing.
ARTICLE 15
REPRESENTATIONS AND WARRANTIES
OF DEVELOPER; CERTAIN AGREEMENTS
15.1 REPRESENTATIONS AND WARRANTIES OF DEVELOPER. Developer represents and warrants to Mall II Buyer as follows:
(a) The representations and warranties of Developer set forth in SCHEDULE "10," Part One attached hereto and made a part hereof, regarding its organization and ownership, authorization of this Agreement and other matters, are true and correct as of the date hereof. The representations and warranties of Developer set forth in SCHEDULE "10," Part Three attached hereto and made a part hereof, regarding the organization and ownership of Mall II LLC, authorization of this Agreement on behalf of Mall II LLC and other matters, shall be true and correct as of the Closing Date.
(b) Except as set forth in SCHEDULE "6," there are no approvals, authorizations, consents or other actions by or filings with any Person which are required to be obtained or completed by Developer in connection with the execution and delivery of this Agreement or any of the Closing Instruments or in connection with any other action required to be taken by Developer hereunder at or before the Closing.
(c) Except as set forth in SCHEDULE "6," to Developer's actual knowledge, there are no outstanding judgments, orders, writs, injunctions or decrees of any Government Authority, no pending Legal Proceedings, and no proceedings to foreclose any Mortgage, security instrument, lien or other claim, in each case, against Developer in connection with the Phase II Land or the Development.
(d) Developer has received no written notice of any taking, or proposed taking, of the Phase II Land or the Phase II Mall in Condemnation (excluding sidewalk or street takings).
(e) Except as set forth on SCHEDULE "18," attached hereto and made a part hereof, Developer has not entered into any leases with respect to the Phase II Mall and no third party has any right, option or election to rent space in the Phase II Mall.
(f) Developer is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code, as amended.
(g) With respect to the Membership Interests and Mall II LLC:
(i) The Membership Interests shall constitute all of the membership and management interests in Mall II LLC at all times after the formation of Mall II LLC.
(ii) Developer will upon completion, and as of the Closing Date, deliver to Mall II Buyer a true, correct and complete copy of the limited liability company agreement and certificate of formation of Mall II LLC, as amended. Developer and Mall II Buyer shall consult as to the form of limited liability company agreement of Mall II LLC and Mall II Buyer shall have reasonable approval rights as to the form of such Agreement except to the extent that certain provisions are required by a lender in order to obtain the necessary financing for the development, which provisions shall not require Mall II Buyer's consent.
(iii) As of Closing, the Membership Interests shall be owned by Developer, free and clear of all liens, security interests, options and encumbrances and have not been pledged or hypothecated as of the date hereof to any third party (except for any pledge or hypothecation that will be released at or prior to Closing Date). Neither Developer nor Mall II LLC will grant, issue or enter into and neither Developer nor Mall II LLC will be bound by any options, rights, commitments, agreements, arrangements or undertakings of any kind (other than this Agreement) which will obligate or could obligate Developer or Mall II LLC to transfer the Membership Interests or any part thereof or interest therein or grant to any other person or entity any voting, management or other right in respect of the Membership Interests.
(iv) Mall II LLC will pay all Impositions and other federal, state and local taxes as they become due.
(v) Mall II LLC will elect to be taxed as a partnership.
(h) With respect to the REA:
(i) SCHEDULE "12" attached hereto and made a part hereof is a true, correct and complete, but non-executed, copy of the REA.
(ii) As of the date hereof, the REA is in full force and effect, and Developer has not received written notice from any party to the REA that Developer has defaulted in performing any of its material obligations under the REA. To Developer's knowledge, as of the date hereof, no material default exists under the REA on the part of any of the parties thereto.
(iii) There are no unpaid obligations of Developer due and payable under or in respect of the REA.
15.2 MORTGAGES. Developer shall pay and discharge at or prior to the Closing any and every Mortgage against the Mall II Unit (and no Mortgage shall constitute a Permitted Encumbrance).
15.3 SERVICE CONTRACTS. At or prior to the Closing, Developer shall terminate all Service Contracts (effective as of the soonest possible date), other than those listed on SCHEDULE "4" attached hereto and made a part hereof and any other Service Contract which Mall II Buyer elects in its sole discretion by notice on or before sixty (60) days prior to Closing to have Mall II LLC assume. Developer shall pay all termination costs in connection therewith.
15.4 EMPLOYEES. Developer will have no employees engaged in the operation, management, or repair of the Building who are required to become employees of Mall II Buyer or Mall II LLC at or after the Closing. Mall II LLC will not have employees at any time, without the prior written consent of Mall II Buyer, not to be unreasonably withheld or delayed.
15.5 TITLE. Developer will have good title (free of Encumbrances other than Permitted Encumbrances) to all items of Exclusive Mall Equipment on the Closing Date. Developer will own and have full authority to use the Phase II Mall Documents and to transfer the same to Mall II LLC as set forth in this Agreement.
15.6 HAZARDOUS MATERIALS. Developer shall provide Mall II Buyer with a copy of reports, inspections, or analyses concerning the presence (or possible presence) of Hazardous Materials in or on the Phase II Land or the Building which Developer commissions or receives with reasonable promptness after receipt
thereof. If requested by Developer, Mall II Buyer shall reimburse Developer for the reasonable costs of copying such documents for Mall II Buyer.
15.7 LEGAL PROCEEDINGS. Developer shall notify Mall II Buyer of any Legal Proceedings against Developer in connection with the Phase II Land or the Development (other than "slip and fall" or similar Legal Proceedings covered by insurance or other Legal Proceedings which will not adversely affect Developer's ability to convey the Membership Interests to Mall II Buyer or performance of Developer's obligations under this Agreement), or any notice of Condemnation (or proposed Condemnation) of the Phase II Land or the Building in each case promptly after receipt of the same (and upon request Developer shall provide Mall II Buyer with copies of relevant documents to the extent in Developer's possession).
15.8 LIENS. Developer shall bond or otherwise discharge of record, at Developer's expense, any liens filed against the Phase II Mall before or after the Closing by any contractor or subcontractor of Developer (or any other Persons claiming through or under Developer).
15.9 NO IMPLIED REPRESENTATIONS. Mall II Buyer acknowledges that except as expressly set forth in this Agreement, neither Developer nor any agent or representative or purported agent or representative of Developer has made, and Developer is not liable for or bound in any manner by, any express or implied warranties, guaranties, promises, statements, inducements, representations or information (including, without limitation, any information set forth in materials heretofore furnished to Mall II Buyer by Goldman Sachs) pertaining to the Mall Improvements, the Phase II Mall, the Palazzo Casino Resort or any part thereof, the physical condition thereof, environmental matters, income, expenses or the operation thereof, the uses which can be lawfully made of the same under applicable zoning or other laws or any other matter or thing with respect thereto. Without limiting the foregoing, Mall II Buyer acknowledges and agrees that, except as expressly set forth in this Agreement, Developer is not liable for or bound by (and Mall II Buyer has not relied upon) any verbal or written statements, representations, or offering materials or any other information respecting the Phase II Mall or the Palazzo Casino Resort furnished by Developer or any broker, employee, agent, consultant or other person representing or purportedly representing Developer. If Developer or its agents have delivered or hereafter deliver to Mall II Buyer or its agents any information, report, survey, analysis or similar documentation prepared by a third party unrelated to Developer, Developer neither expressly or impliedly warrants or represents to Mall II Buyer the truth, accuracy or completeness thereof and expressly disclaims any liability whatsoever with respect thereto or any obligation independently to investigate the matters contained therein; and Mall II Buyer hereby acknowledges that Developer has or is providing such information, reports, surveys, analysis or other third-party documents to Mall II Buyer as an accommodation only and that Mall II Buyer shall be responsible for the verification and review thereof. Nothing contained in this Section 15.9 shall be deemed to impair, limit or otherwise affect Mall II Buyer's rights under this Agreement in respect of the representations and warranties of Developer set forth in this Agreement and the other provisions hereof binding upon Developer, and the disclaimers
of this Section15.9 shall not apply to any information so represented or warranted by Developer. The provisions of this Section 15.9 shall survive the Closing Date or any termination of this Agreement.
15.10 KNOWLEDGE. All representations and warranties made herein by Developer which are based on Developer's knowledge are made, and are hereby acknowledged by Mall II Buyer to be made, to the actual knowledge of Robert Goldstein and Harry Miltenberger, without independent investigation regarding the facts contained therein.
15.11 DEVELOPER'S OBLIGATIONS TO CONSTRUCT MALL IMPROVEMENTS. So long as this Agreement is in full force and effect and Mall II Buyer is not in material default, Developer shall not construct any improvements in the Mall Space other than the Mall Improvements for use as a retail mall in accordance with this Agreement.
15.12 SURVIVAL OF DEVELOPER'S WARRANTIES, ETC.
(a) Unless otherwise specified in connection with a representation or warranty, all of Developer's representations and warranties contained in this Article 15 (other than those contained in Sections 15.1(a), 15(b), 15(c) and 15.1(g), which shall survive the Closing Date without limitation as to time), as remade as of the Closing Date as provided in Section 15.12(c) and subject to any modifications thereof made in any certificate provided for in said Section 15.12(c), shall survive until one (1) year after the Closing Date; provided, however, that Developer's liability for any breach of such warranties, representations and certifications shall not expire as to any breach or alleged breach thereof if notice of such breach or alleged breach is given by Mall II Buyer to Developer prior to one (1) year after the Closing Date and, if such notice is given, legal proceedings are instituted in respect of such breach or alleged breach within six (6) months after such notice is given. Developer's obligations to perform the Landlord Build-Out Work and to pay Leasing Costs shall survive until the Earn-Out Date and shall apply to all Leases executed prior to the Earn-Out Date, with respect to Landlord Build-Out Work and Leasing Costs which are to be performed or are incurred before the Earn-Out Date.
(b) Notwithstanding anything to the contrary set forth in this Article 15, subject to the last sentence of this Section 15.12(b), (i) Developer shall have no liability to Mall II Buyer for breach of any warranty and representation set forth in this Article 15 unless and except to the extent that the damages due to Mall II Buyer by reason of all such breaches exceed Two Hundred Fifty Thousand Dollars ($250,000) (the "BASKET"), (ii) in no event shall Developer be liable to Mall II Buyer for consequential or punitive damages in respect of any such breach and (iii) in no event shall Developer's liability to Mall II Buyer for all such breaches exceed Two Million Dollars ($2,000,000) (the "CAP"). Notwithstanding anything to the contrary set forth herein, the limitations on the Basket and Cap shall not apply to a breach of a representation or warranty contained in Sections 15.1(a), 15.1(b), 15.1(c) or 15.1(g).
(c) All of Developer's representations and warranties set forth in this Article 15 shall be remade on and as of the Closing Date in Developer's Representation Certificate (the "DEVELOPER'S REPRESENTATION CERTIFICATE") in the form of EXHIBIT B attached hereto and made a part hereof, which certificate shall be delivered to Mall II Buyer on the Closing Date. Notwithstanding the foregoing or anything else set forth in this Agreement, if any matter or event shall have occurred between the date hereof and the Closing Date or Developer shall otherwise become aware of any fact which makes any such warranty or representation untrue in any material respect, Developer shall have the duty to disclose such fact in Developer's Representation Certificate, and if Developer does so, Developer shall not be liable to Mall II Buyer following the Closing Date for the breach of the warranty or representation in question which results from the occurrence or existence of such fact, but in no event shall Mall II Buyer be obligated to close hereunder unless the conditions precedent to Mall II Buyer's obligation to close set forth in this Agreement (including, without limitation, in Section 15.1(a)) shall have been fulfilled.
(d) Notwithstanding anything to the contrary set forth in this Article 15 or elsewhere in this Agreement, if prior to the Closing Date, Mall II Buyer has or obtains knowledge that any of Developer's warranties or representations set forth in this Article 15 is untrue in any respect, and Mall II Buyer nevertheless proceeds with the Closing, then the breach by Developer of the warranties, representations or certifications as to which Mall II Buyer shall have or obtained such knowledge shall be waived by Mall II Buyer and Developer shall have no liability to Mall II Buyer or its successors or assigns in respect thereof.
15.13 INDEMNIFICATION. Developer shall, at Developer's expense, indemnify, defend and hold harmless Mall II LLC from and against any loss, liability, damage, cost, or expense (including Fees and Costs) which Mall II LLC may suffer, or which may be asserted against Mall II LLC, in whole or in part by reason of, or in connection with any liabilities, obligations, debts, claims, causes of action, judgments and damages which may be asserted against, imposed on or incurred by Mall II LLC after the Closing Date, and which do not result from an act or omission of Mall II Buyer prior to closing, by reason of any of the following: (i) any obligation of Mall II LLC for borrowed money which was incurred prior to the Closing; (ii) any claims made against Mall II LLC by any party with respect to any period prior to the Closing Date; (iii) all obligations and payments due from Mall II LLC to trade creditors with respect to any period prior to the Closing Date; (iv) all obligations with respect to existing litigation against Mall II LLC, or any litigation in connection with the actions or omissions of Mall II LLC, instituted against Mall II LLC on or after the Closing Date to the extent based on any event occurring prior to the Closing Date; (v) any income, excise or franchise taxes or any other federal, state or local taxes payable by Mall II LLC in respect of any period prior to the Closing Date; (vi) any other liabilities, obligations, debts, claims, causes of action, judgments or damages which may be imposed upon, incurred by or asserted against Mall II LLC and which are based on any event occurring prior to the Closing Date; (vii) any fine, penalty or the like that is imposed or assessed by a governmental authority for the period prior to the Closing Date, whether or not imposed or assessed
after the Closing Date; and (viii) any liabilities relating to any employees of
Developer or Mall II LLC to the extent their employment relates to the period
prior to the Closing Date, and any liabilities under employee benefit plans or
collective bargaining agreements of Developer or Mall II LLC with respect to
such employment prior to the Closing Date. Notwithstanding the foregoing, but
without limiting any indemnification expressly provided for in Section 3.5 of
this Agreement, in no event shall the indemnification provided for in this
Section 15.13 apply to any claim, liability, obligation, debt, cause of action,
judgment or damage asserted against or imposed upon Mall II Buyer or Mall II LLC
under or in respect of any Lease or on account of the Landlord Build-Out, except
to the extent that Developer is obligated to pay any Leasing Costs or undertakes
to construct the Landlord Build-Out pursuant to the terms of this Agreement.
15.14 TSUNAMI. If it is necessary that Tsunami surrender its leasehold interest in the Phase I Mall because it is anticipated that its demised space or a portion thereof will need to be occupied by an anchor tenant in accordance with the Common Area Plan, the Initial Demising Wall Plan, the Final Demising Wall Plan agreed to by Developer and Mall II Buyer, or any Lease executed by Mall II LLC in accordance with the provisions hereof, Developer shall use commercially reasonable efforts at Developer's sole expense to obtain the surrender of such leasehold interest. If it is not necessary for Tsunami to surrender its leasehold interests as aforesaid, or if Tsunami surrenders its leasehold interest and not all of its space is required for such anchor tenant, Mall II Buyer and Developer agree that such space (or the aforesaid unused portion of such space) shall remain part of the Phase I Mall notwithstanding anything in this Agreement to the contrary. If Tsunami does surrender all or a portion of its leasehold interest, then the surrendered portion anticipated to be used for the anchor tenant shall be considered part of the Phase II Mall.
15.15 MISCELLANEOUS COVENANTS OF DEVELOPER.
(a) From the date hereof until the Closing, Developer shall not (a) permit Mall II LLC to enter into, modify or amend any Lease except with Mall II Buyer's prior written consent, (b) enter into any agreement the effect of which is to cause Developer to be unable to assign the Membership Interests to Mall II Buyer, or (c) amend any of the organizational documents of Mall II LLC except as Developer may be required by a lender to amend the same in order to obtain the necessary financing.
(b) Subsequent to the Closing, Developer shall prepare timely and file, or cause to be prepared and timely filed, all federal, state and local income tax returns for Mall II LLC for the period ending on the Closing Date and pay all amounts due as shown on said returns, which obligations shall survive the Closing.
ARTICLE 16
REPRESENTATIONS AND WARRANTIES
OF MALL II BUYER; CERTAIN AGREEMENTS
16.1 REPRESENTATIONS AND WARRANTIES OF MALL II BUYER. Mall II Buyer represents and warrants to Developer as follows:
(a) SCHEDULE "10," Part Two, which sets forth representations and warranties by Mall II Buyer concerning its organization and ownership, authorization of this Agreement, and other matters, is incorporated herein by reference.
(b) Except as set forth in SCHEDULE "6," there are no approvals, authorizations, consents or other actions by or filings with any Person which are required to be obtained or completed by Mall II Buyer in connection with the execution and delivery of this Agreement or any of the Closing Instruments or in connection with any other action required to be taken by Mall II Buyer hereunder at or before the Closing.
(c) To Mall II Buyer's actual knowledge, there are no outstanding judgments, orders, writs, injunctions, or decrees of any Government Authority, no pending Legal Proceedings or material threats of Legal Proceedings, against Mall II Buyer which would have a material adverse effect on Mall II Buyer's performance of its obligations under this Agreement or the Closing Instruments.
(d) No petition for relief or similar Legal Proceeding has been filed (and not dismissed within 60 days) pursuant to the United States Bankruptcy Code with respect to Mall II Buyer.
The representations and warranties of Mall II Buyer in this Section are true, correct, and complete in all material respects as of the date of this Agreement. Before the Closing Date, Mall II Buyer shall give Developer updates of SCHEDULES "6" AND "10" so that, with the information and revisions then reflected in such updates, the representations and warranties in this Section shall be true, correct and complete as of the Closing Date.
16.2 LIENS. Developer shall bond or otherwise discharge of record, at Developer's expense, any liens filed against the Building in connection with the Landlord Build-Out or any contractor or subcontractor of Developer (or any other Persons claiming through or under Developer). Developer and Mall II Buyer shall cooperate in order to cause each Tenants to bond or otherwise discharge of record, at such Tenant's expense, any liens filed against the Building in connection with the Tenant Build-Out by any contractor or subcontractor of such Tenant (or any other Persons claiming through or under Tenant).
16.3 RETAIL AND RESTAURANT LEASES.
(a) From and after the date hereof and continuing until the Earn-Out Date, Mall II Buyer and Developer shall be jointly responsible for the leasing
of retail and restaurant space in the Phase II Mall. Developer (prior to the Closing Date) and Mall II Buyer (from and after the Closing Date until the Earn-Out Date) shall cause Mall II LLC, as landlord, to enter into Leases for retail stores and restaurants to be located in the Phase II Mall with tenants jointly selected by Mall II Buyer and Developer and on terms mutually acceptable to Mall II Buyer and Developer. Mall II Buyer and Developer shall lease space in the Phase II Mall, including any retail carts or kiosks located in the Phase II Mall, to tenants who are retail or restaurant tenants appropriate for and consistent with, a quality and standard for the Phase II Mall and its aggregate occupant mix that is not less than the quality and standard of the "Grand Canal Shoppes at the Venetian" as of the date hereof. In addition, all Leases for restaurants executed prior to the Earn-Out Date shall be entered into with tenants operating "specialty 2-star" restaurants or better. The consent of both of Mall II Buyer and Developer shall be necessary for the execution of any Lease prior to the Earn-Out Date. Both parties will use commercially reasonable efforts to include a 15% administrative fee and provisions for reimbursement of a 3% management fee in all Leases.
(b) From and after the date hereof and continuing until the Earn-Out
Date (and from and after the Earn-Out Date until the Final Date (as defined in
Section 20.3) to the extent the Recalculated Earn-Out (as defined in Section
20.3) would or might be affected), no Lease amendment that would or might affect
net operating income through the Earn-Out Date or termination agreement shall be
entered into unless approved by both Mall II Buyer and Developer, no monetary or
other material obligation in any Lease that accrues prior to the Earn-Out Date
shall be waived unless such waiver is approved by both Mall II Buyer and
Developer, and no Lease shall be terminated unless such termination is approved
by both Mall II Buyer and Developer. From and after the date hereof until the
Final Date, (i) if Developer requests that Mall II LLC conduct an audit of a
tenant to determine if such tenant, with respect to any period of time prior to
the Earn-Out Date, underpaid "percentage" or "overage" rent, Mall II Buyer shall
cause Mall II LLC to diligently conduct such audit "in-house" in accordance with
procedures reasonably agreed to by Mall II Buyer and Developer, and shall keep
Developer informed of the results of such audit and (ii) if any tenant exercises
its right to conduct an audit of Mall II LLC's "CAM" charges or other
recoverable expenses, Developer and Mall II Buyer shall, subject to compliance
with the applicable Lease provisions, jointly make all decisions in connection
therewith and in connection with any proposed settlement with such tenant
related thereto, and Mall II Buyer shall cause Mall II LLC to take actions
consistent with such decisions.
(c) Prior to the Closing Date, any security deposit or other payment received from Tenants ("TENANT PAYMENTS") shall be held by Mall II LLC or, if Mall II LLC has not yet been formed, by Developer in a separate interest bearing account. Promptly after the formation of Mall II LLC, Developer shall transfer any Tenant Payments so held by Developer to an account of Mall II LLC. Prior to the Closing, all Tenant Payments held by Developer or by Mall II LLC pursuant to this Section 16.3 (c) shall be maintained in an interest-bearing account. At the Closing, the Tenant Payments will remain the possession of Mall II LLC and there shall be no adjustment made to the Closing Payment or any other payments due under this Agreement in respect of such Tenant Payments.
16.4 COMPLIANCE WITH GAMING LAWS BY TENANTS. Mall II Buyer acknowledges that Developer and Affiliates of Developer conduct businesses that are or may be subject to and exist because of privileged licenses issued by Gaming Authorities. Therefore, not less than thirty (30) days prior to Mall II LLC entering into any Lease (a "PROPOSED LEASE"), Mall II Buyer and Developer shall cause the tenant under such Proposed Lease (the "PROPOSED TENANT"), if such Proposed Tenant is a corporation, to disclose to Mall II Buyer and Developer the names of all of its officers and directors. Unless it is a publicly traded corporation on a national stock exchange, the Proposed Tenant shall disclose to Mall II Buyer and Developer all direct and indirect ownership interests in the Proposed Tenant and all lenders or sources of financing. If requested to do so by Developer, Mall II Buyer shall require a Proposed Tenant to obtain any license, qualification, clearance or the like which shall be requested or required of any Proposed Tenant by any Gaming Authority or any regulatory authority having jurisdiction over Developer or any Affiliate of Developer. If a Proposed Tenant fails to satisfy such requirement or if Developer or any Affiliate of Developer is directed not to involve itself in business with a Proposed Tenant by any such authority, or if Developer shall in good faith determine that a Proposed Tenant, or any of its officers, directors, employees, agents, designees or representatives, or a partner, owner, member, or shareholder, or any lender or financial participant (a) is or might be engaged in, or is about to be engaged in, any activity or activities, or (b) was or is involved in any relationship, either of which could or does jeopardize Developer's business, reputation or such licenses, or those of its Affiliates, or if any such license is threatened to be, or is, denied, curtailed, suspended or revoked, then Mall II LLC, at Developer's direction, shall not enter into the Proposed Lease with the Proposed Tenant. Any Lease entered into in violation of this Section 16.4 shall be deemed null and void and of no force or effect. All Leases shall include the provision set forth in SCHEDULE "19" attached hereto and made a part hereof. To the extent any Lease shall not include the provision set forth in SCHEDULE "19," such Lease shall be null and void and of no force or effect. Developer and its successors and assigns shall be a third-party beneficiaries of the provision described in SCHEDULE "19" (and the applicable Leases shall so provide) and Developer and its successors and assigns shall have the right to take all appropriate action to enforce such provision, including initiating and prosecuting to completion eviction proceedings. The provisions of this Section 16.4 shall survive until the Closing at which point the inclusion of gaming provisions in the Leases or Proposed Leases shall be governed by the Amended REA.
16.5 COMPLIANCE WITH GAMING LAWS BY MALL II BUYER. Mall II Buyer acknowledges that Developer and Affiliates of Developer conduct businesses that are or may be subject to and exist because of privileged licenses issued by Gaming Authorities. Mall II Buyer has disclosed to Developer the names of all of its officers and directors on Part Two of SCHEDULE "10." Mall II Buyer has also disclosed on SCHEDULE "10" all direct and indirect ownership interests in Mall II Buyer (excluding (i) any holders of publicly traded shares of General Growth Properties, Inc. or (ii) any limited partners of GGP Limited Partnership that are Institutional Investors) and all lenders or sources of financing that are not Institutional Investors. Mall II Buyer shall promptly notify Developer of any occurrence which might make the information set forth on SCHEDULE "10" incorrect or incomplete. If requested to do so by Developer, Mall II Buyer
shall obtain any license, qualification, clearance or the like which shall be
requested or required of Mall II Buyer by any Gaming Authority or any regulatory
authority having jurisdiction over Developer or any Affiliate of Developer. If
Mall II Buyer fails to satisfy such requirement or if Developer or any Affiliate
of Developer is directed not to involve itself in business with Mall II Buyer by
any such Gaming Authority, or if Developer shall in good faith determine that
Mall II Buyer, or any of its officers, directors, employees, agents, designees
or representatives, or a partner, owner, member, or shareholder, or any lender
or financial participant (a) is or might be engaged in, or is about to be
engaged in, any activity or activities, or (b) was or is involved in any
relationship, either of which could or does jeopardize Developer's business,
reputation or such licenses, or those of its Affiliates, or if any such license
is threatened to be, or is, denied, curtailed, suspended or revoked, then Mall
II Buyer, at Developer's direction, shall immediately (i) terminate any
relationship with the individual or entity which is the source of the problem or
(ii) cease the activity creating the problem. If Mall II Buyer does not comply
with item (i) or (ii) above, then Developer may require Mall II Buyer to
specifically perform such obligation (the parties recognizing that damages or
other remedies would be inadequate under the circumstances). The provisions of
this Section 16.5 shall survive until the Closing at which point Mall II Buyer's
compliance with the Gaming Authorities shall be governed by the Amended REA.
16.6 REMAKING OF WARRANTIES; SURVIVAL. All of Mall II Buyer's representations and warranties set forth in this Article 16 shall be deemed to have been remade on and as of the Closing Date, and Mall II Buyer shall deliver a certificate at Closing recertifying such representations and warranties. Such representations and warranties, as remade, shall survive the Closing without limitation as to time. The covenants made by Mall II Buyer in Article 4, Article 5 and this Article 16 shall survive the Closing without limitation as to time.
ARTICLE 17
TRANSACTION EXPENSES; TITLE INSURANCE
17.1 FEES AND COSTS OF ATTORNEYS AND CONSULTANTS. Except as otherwise provided herein, each party shall pay the Fees and Costs of its own attorneys and Consultants in connection with this Agreement and the transactions contemplated hereunder.
17.2 TITLE PREMIUMS. Mall II Buyer shall pay the costs for the issuance of the Title Insurance Commitment and the insurance effected pursuant thereto.
17.3 REAL PROPERTY TRANSFER TAXES. Developer shall pay on or prior to the Closing Date all State and County real property transfer taxes (if any) payable in connection with the conveyance of the Membership Interests to Mall II Buyer.
17.4 APPORTIONMENTS. Real property taxes, water and sewage charges and utilities and fuel charges to be paid with respect to the Phase II Mall shall be apportioned at the Closing, with Developer to be responsible for Mall II LLC's
obligations in regard thereto through the day preceding the Closing Date and Mall II Buyer to be responsible for Mall II LLC's obligations in regard thereto for the period including and following the Closing Date.
17.5 PAYMENTS UNDER AMENDED REA. Mall II Buyer's obligation to cause Mall II LLC to pay any and all charges apportioned to Mall II LLC under the terms of the Amended REA will commence as of the Closing Date.
17.6 The provisions of this Article 17 shall survive the Closing.
ARTICLE 18
DAMAGE OR DESTRUCTION; CONDEMNATION
18.1 MAJOR EVENT. As used herein, "MAJOR EVENT" means the giving of official notice by a Government Authority of a condemnation or taking under the power of eminent domain of any part of the Building or the Phase II Land (a "CONDEMNATION"), which Condemnation involves all or a substantial portion of the Phase II Land or the Building so that Developer would be unable to satisfy the conditions set forth in Article 10.
18.2 TERMINATION AFTER MAJOR EVENT. Developer shall give notice to Mall II Buyer of the occurrence of a Major Event, in which event, this Agreement shall terminate thirty (30) days after the giving of such notice. If this Agreement is terminated as aforesaid, neither Mall II Buyer nor Developer shall have any further rights or obligations to the other hereunder, except those that survive termination.
18.3 RESTORATION AFTER CASUALTY OR CONDEMNATION. If (a) (after Developer commences construction) a fire or other casualty occurs to the Mall Improvements or (b) a Condemnation that is not a Major Event shall occur, Developer shall proceed, at Developer's expense, to reconstruct or restore the damaged or taken portions of the Mall Improvements or the Phase II Land and thereafter will complete restoration and reconstruction as promptly as possible; and the Closing Date or the Outside Substantial Completion Date and, if the same has been agreed to, the Opening Date shall be adjourned automatically, taking into account all relevant facts and circumstances, to allow for such restoration or reconstruction. There shall be no adjustment made to the Closing Payment or the Earn-Out Payment in regard of such reconstruction.
18.4 WAIVER. This Article constitutes an express waiver by the parties of any law apportioning risk of loss under contracts for the sale or purchase of real property.
18.5 INSURANCE PROCEEDS. All proceeds of insurance and/or condemnation payable by reason of a Major Event or other casualty or condemnation affecting the Building before the Closing shall belong to Developer.
ARTICLE 19
REMOVAL OF TITLE DEFECTS
19.1 TITLE DEFECT. "TITLE DEFECT" means any Encumbrance recorded against, or otherwise affecting, the Phase II Mall which is NOT a Permitted Encumbrance. ---
19.2 NOTICE AND REMOVAL OF TITLE DEFECTS. On or before the Closing Date, Mall II Buyer shall promptly give Developer notice of any Title Defect of which it becomes aware. If Mall II Buyer gives notice to Developer of any such Title Defect, Developer may adjourn the Closing for a period or periods not exceeding forty-five (45) days in the aggregate in order to remove the Title Defect(s) specified in Mall II Buyer's notice. Upon the expiration of such period(s) (or on the Closing Date if sooner and if Developer does not so adjourn the Closing), if Developer is unable (subject to Article 21 hereof) or is not required to satisfy the conditions in Section 10.1(d) of this Agreement, then provided that the Title Defect does not prevent the operation by Mall II LLC of a mall in the Mall Space, Mall II Buyer shall accept such title as Developer is then able to provide and the Closing Payment shall be reduced in an amount equal to the amount by which such Title Defect(s) reduce the value of the Phase II Mall, as such reduction shall be determined by the Developer and Mall II Buyer after good faith consultations. If Developer and Mall II Buyer are unable to agree on the amount of the reduction in the Closing Payment, an Independent Expert shall determine the amount pursuant to Article 9.
19.3 DISCHARGE OF MORTGAGES AND LIENS. Developer agrees, without further notice from Mall II Buyer, to pay and discharge at the Closing all Mortgages against the Phase II Mall, and to remove and discharge of record, by payment, bonding or otherwise, other liens of record against the Phase II Mall which may be satisfied by payment of money only and which are not Permitted Encumbrances. Except as specified in this Section, Developer shall have no obligation to remove or cure Encumbrances.
19.4 TITLE AFFIDAVITS. At or before the Closing, Developer shall execute
and deliver to the Title Insurer such affidavits as are customarily given by a
seller to induce the Title Insurer to issue the title policy described in
Section 10.1(d) including, without limitation, a non-imputation endorsement
thereto.
19.5 JUDGMENT SEARCHES. If a search of the title discloses judgments, bankruptcies or other returns against other Persons having names the same as or similar to those of Developer or Mall II LLC, Developer will establish to the satisfaction of Mall II Buyer and the Title Insurer that such judgments, bankruptcies or other returns are not against Developer or Mall II LLC.
ARTICLE 20
CLOSING AND OTHER PAYMENTS
20.1 Upon and subject to the terms and conditions of this Agreement, the Developer agrees to sell and assign the Membership Interests to Mall II Buyer and Mall II Buyer agrees to purchase the Membership Interests from the Developer, to assume the obligations in respect thereof accruing from and after the Closing Date and to pay to Developer the Closing Payments, the Adjustments Payments, the Earn-Out Payment, the Recalculated Earn-Out and any other payment due pursuant to the terms of this Agreement.
20.2 PAYMENTS. Developer agrees to construct the Phase II Mall substantially in accordance with the Initial Plans (before the Final Construction Drawings and Specs are agreed to by Mall II Buyer and Developer) and Final Construction Drawings and Specs (once the same are agreed to by Mall II Buyer and Developer) and the terms of this Agreement, and, in consideration therefor, Mall II Buyer shall make the following payments to Developer:
(a) CLOSING PAYMENT. At the Closing, Mall II Buyer shall pay to Developer by wire transfer of immediately available federal funds to an account designated by Developer an amount (the "CLOSING Payment") equal to the greater of (i) two hundred and fifty million dollars ($250,000,000) and (ii) the projected net operating income divided by the Cap Rate. As used in this Agreement, the "CAP RATE" shall mean (A) .06 for every dollar of net operating income up to thirty-eight million dollars ($38,000,000) and (B) (without modifying or nullifying clause (A)) .08 for every dollar of net operating income including and above thirty-eight million dollars ($38,000,000). If, despite good faith efforts by Developer and Mall II Buyer to arrive at an appropriate amount of the Closing Payment, there is a disagreement over the amount of the Closing Payment, the parties shall agree to close despite such disagreement and Mall II Buyer shall pay to Developer the entire undisputed portion of the Closing Payment subject to the following sentence. Upon resolution by Mall II Buyer and Developer (or by the Independent Expert) of the disputed amount, Mall II Buyer shall also pay to Developer interest at the Interest Rate on the amount calculated pursuant to this Section 20.2(a), to the extent unpaid, for the period from the Closing Date to the date on which the Closing Payment is made to Developer.
(b) ADJUSTMENT PAYMENTS.
(1) On the Business Day immediately preceding each of the six (6) month anniversary, the twelve (12) month anniversary, the eighteen (18) month anniversary and the twenty-four (24) month anniversary of the Closing Date (each an "INTERIM PAYMENT DATE" and, collectively, the "INTERIM PAYMENT DATES"), Mall II Buyer shall pay to Developer by wire transfer of immediately available federal funds to an account designated by Developer an amount (each an "ADJUSTMENT PAYMENT" and, collectively, the "ADJUSTMENT PAYMENTS") equal to the positive difference, if any, between
(i) the net operating income divided by the Cap Rate and (ii) (A) the sum of the Closing Payment and the net aggregate amount of any Adjustment Payments made to Developer, if any, made on previous Interim Payment Dates MINUS (B) the amount of any free rent granted to Tenants under any Leases included in the calculation of net operating income as of such Interim Payment Date for the period from the immediately prior Interim Payment Date (or the Closing Date, for the first Adjustment Payment) up to and including such Interim Payment Date. If, despite good faith efforts by Developer and Mall II Buyer to arrive at an appropriate amount of any Adjustment Payment, there is a disagreement over the amount of such Adjustment Payment from Mall II Buyer to Developer, Mall II Buyer shall pay to Developer the entire undisputed portion of the Adjustment Payment, if any, subject to the following sentence. Upon resolution by Mall II Buyer and Developer (or by the Independent Expert) of the disputed amount, Mall II Buyer shall also pay to Developer, as part of each Adjustment Payment, interest at the Interest Rate on the amount calculated pursuant to this Section 20.2(b), to the extent unpaid, for the period from the Interim Payment Date to the date on which the applicable Adjustment Payment is made to Developer.
(2) In the event that, on any Interim Payment Date, the amount set forth in clause (ii) is greater than the amount set forth clause (i) of Section 20.2(b)(1), Developer shall pay the amount of such difference to Mall II Buyer by wire transfer of immediately available federal funds to an account designated by Mall II Buyer. If, despite good faith efforts by Developer and Mall II Buyer to arrive at an appropriate amount of any Adjustment Payment from Developer to Mall II Buyer, there is a disagreement over the amount of such Adjustment Payment, Developer shall pay to Mall II Buyer the entire undisputed portion of the Adjustment Payment, if any, subject to the following sentence. Upon resolution by Mall II Buyer and Developer (or by the Independent Expert) of the disputed amount, Developer shall also pay to Mall II Buyer, as part of each such payment, interest at the Interest Rate on the amount calculated pursuant to the preceding sentence, to the extent unpaid, for the period from the Interim Payment Date to the date on which such payment is made to Mall II Buyer. Notwithstanding the foregoing, Developer shall have no obligation to make any payments pursuant to this Section 20.2(b)(2) which would have the effect of reducing the net aggregate amount received by Developer from Mall II Buyer pursuant to the Closing Payments and the Adjustment Payments (excluding amounts received that constitute interest on amounts not paid on the date due) below two hundred and fifty million dollars ($250,000,000).
(c) EARN-OUT PAYMENT.
(1) On the date that is thirty (30) months after the Closing Date (the "EARN-OUT DATE"), Mall II Buyer shall pay to Developer by wire transfer of immediately available federal funds to an account designated by Developer, an amount (with interest as provided below, the "EARN-OUT PAYMENT") equal to the positive difference, if any, between (i) the net operating income divided by the Cap Rate and (ii) (A) the sum of the Closing Payment and the net aggregate amount of all Adjustment Payments made to Developer, if any, MINUS (B) the amount of any free rent granted to Tenants under any Leases included in the calculation of net operating income as of the
Earn-Out Date for the period from the final Interim Payment Date up to and including the Earn-Out Date. If, despite good faith efforts by Developer and Mall II Buyer to arrive at an appropriate amount of the Earn-Out Payment from Mall II Buyer to Developer, there is a disagreement over the amount of the Earn-Out Payment, Mall II Buyer shall pay to Developer the entire undisputed portion of the Earn-Out Payment, if any, that the parties can agree is payable from Mall II Buyer to Developer, subject to the following sentence. Upon resolution by Mall II Buyer and Developer (or by the Independent Expert) of the disputed amount, Mall II Buyer shall also pay to Developer, as part of the Earn-Out Payment, interest at the Interest Rate on the amount calculated pursuant to this Section 20.2(c), to the extent unpaid, for the period from the Earn-Out Date to the date on which the Earn-Out Payment is made to Developer. In the event that a Market Disruption Event shall occur, then Developer shall have the right, but not the obligation, to extend the Earn-Out Date up to one day for each day that such Market Disruption Event shall continue. A "MARKET DISRUPTION EVENT" shall have been deemed to have occurred on the first day of the month (the "INITIAL MARKET DISRUPTION DATE") when, in response to a specific event or series of events (for example a contagious disease outbreak or terrorist event which results in decreased numbers of travelers), the total number of airline passengers enplaning and deplaning at McCarran International Airport, Las Vegas, Nevada, in any given month, as reported by the Las Vegas Convention and Visitors Authority in either its "MONTHLY EXECUTIVE SUMMARY" or its annual "YEAR-TO-DATE EXECUTIVE SUMMARY" (or some other verifiable source of such similar statistical information) ("MCCARRAN PASSENGERS") decreases more than twenty percent (20%) as compared to the same month in the prior year. Such Market Disruption Event shall be deemed to continue until the last day of the month in which the number of McCarran Passengers for such month is equal to or greater than the number of McCarran Passengers in the same month in the prior year, but in no event shall the Earn-Out Date be delayed for longer than one (1) year due to such Market Disruption Event.
(2) In the event that, on the Earn-Out Date, the amount set forth in clause (ii) is greater than the amount set forth in clause (i) of Section 20.2(c)(1), Developer shall pay the amount of such difference to Mall II Buyer by wire transfer of immediately available federal funds to an account designated by Mall II Buyer. If, despite good faith efforts by Developer and Mall II Buyer to arrive at an appropriate amount of the Earn-Out Payment from Developer to Mall II Buyer, there is a disagreement over the amount of the Earn-Out Payment, Developer shall pay to Mall II Buyer the entire undisputed portion of the Earn-Out Payment, if any, that the parties can agree is due from Developer to Mall II Buyer, subject to the following sentence. Upon resolution by Mall II Buyer and Developer (or by the Independent Expert) of the disputed amount, Developer shall also pay to Mall II Buyer, as part of each such payment, interest at the Interest Rate on the amount calculated pursuant to the preceding sentence, to the extent unpaid, for the period from the Earn-Out Date to the date on which such payment is made to Mall II Buyer. Notwithstanding the foregoing, Developer shall have no obligation to make any payments pursuant to this Section 20.2(c)(2) which would have the effect of reducing the net aggregate amount received by Developer from Mall II Buyer pursuant to the Closing Payment, all Adjustment Payments and the Earn-Out Payment (excluding amounts received that constitute interest on amounts not paid on the date due) below two hundred and fifty million dollars ($250,000,000).
(d) OTHER. Any other payment required by the terms of this Agreement.
20.3 RECALCULATED EARN-OUT. On the eighteen-month anniversary of the Earn-Out Date (the "FINAL Date"), each of the parties shall identify by notice to the other any items that should have been appropriately included as operating income or operating expenses as of the Earn-Out Date had the parties been aware of such item (by way of example, and without limitation, any adjustment made pursuant to a Tenant audit) and recalculate the net operating income and the Earn-Out Payment taking those items into account (the "RECALCULATED EARN-OUT"). On the Final Date, Mall II Buyer shall pay to Developer the positive difference, if any, between the Recalculated Earn-Out less the Earn-Out Payment actually made on the Earn-Out Date. If the Recalculated Earn-Out is less the Earn-Out Payment, Developer shall pay to Mall II Buyer the amount of such difference. If, despite good faith efforts by Developer and Mall II Buyer to arrive at an appropriate amount of the Recalculated Earn-Out from Mall II Buyer to Developer or from Developer to Mall II Buyer, there is a disagreement over the amount of the Recalculated Earn-Out, Developer shall pay to Mall II Buyer the entire undisputed portion of the Recalculated Earn-Out, if any, that the parties can agree is due from Developer to Mall II Buyer, or Mall II Buyer shall pay to Developer the entire undisputed portion of the Recalculated Earn-Out, if any, that the parties can agree is due from Mall II Buyer to Developer, subject to the following sentence. Upon resolution by Mall II Buyer and Developer (or by the Independent Expert) of the disputed amount, the party determined to owe money to the other shall pay to the other, as part of each such payment, interest at the Interest Rate on the amount calculated pursuant to the preceding sentence, to the extent unpaid, for the period from the Earn-Out Date to the date on which such payment is made to the other party. Notwithstanding the foregoing, Developer shall have no obligation to make any payments pursuant to this Section 20.3 which would have the effect of reducing the net aggregate amount received by Developer from Mall II Buyer pursuant to the Closing Payment, all Adjustment Payments, the Earn-Out Payment and the Recalculated Earn-Out (excluding amounts received that constitute interest on amounts not paid on the date due) below two hundred and fifty million dollars ($250,000,000).
20.4 INDEPENDENT EXPERT. Any dispute in the calculation of the Closing Payment, the Adjustment Payments, the Earn-Out Payment or the Recalculated Earn-Out shall be resolved by an Independent Expert in accordance with Article 9 of this Agreement.
20.5 AUDITS. Developer or its designee shall have the right, from time to time following the Closing, until 90 days after receipt by Developer of the Recalculated Earn-Out, at the Developer's expense during business hours and on reasonable prior notice to Mall II LLC, to examine and audit so much of the books and records of Mall II Buyer or Mall II LLC as relate to the calculation of the Closing Payment, any of the Interim Payment, the Earn-Out Payment or the Recalculated Earn-Out to verify the operating income and operating expenses reported by Mall II Owner or Mall II LLC (or any successor of Mall II LLC) in connection with such payments.
ARTICLE 21
PRE-CLOSING REMEDIES
21.1 MALL II BUYER'S REMEDIES.
(a) If Developer has failed to achieve Substantial Completion by the Outside Substantial Completion Date, Mall II Buyer's remedies shall be as set forth in Section 7.1.
(b) If Substantial Completion has occurred, but any other condition to
Mall II Buyer's obligation to close under this Agreement as set forth in Section
10.1 has not been satisfied, then Mall II Buyer shall give notice to Developer
setting forth the conditions that have not been satisfied. Developer shall have
a reasonable period of time, not to exceed one hundred twenty days (and in no
event after the Outside Substantial Completion Date) to satisfy such conditions.
If (1) Developer shall fail to satisfy such conditions within such cure period,
(2) the conditions set forth in this Agreement to Developer's obligation to
close have been satisfied and (3) Mall II Buyer is not otherwise in default of
its obligations under this Agreement, then:
(i) Mall II Buyer shall be entitled to bring a Legal Proceeding for specific performance of Developer's obligations under this Agreement, and, if specific performance is available as a remedy to Mall II Buyer, it shall be the sole and exclusive remedy for Developer's default. Mall II Buyer may recover from Developer (which Developer shall pay upon demand) all Fees and Costs paid or incurred by Mall II Buyer to secure specific performance under this Agreement.
(ii) If Mall II Buyer is unable to obtain specific performance of Developer's obligations under this Agreement, Mall II Buyer shall be entitled to terminate this Agreement, in which event Developer shall pay to Mall II Buyer upon demand the Buyer Liquidated Damages Amount as liquidated damages.
(iii) If Developer has breached this Agreement by constructing a project on the Phase II Land and in the Leasehold Airspace that does not include a substantial mall component or by selling either the Phase II Mall or the Membership Interests to a third party. and Mall II Buyer is unable to obtain specific performance of Developer's obligations under this Agreement, Mall II Buyer shall be entitled to terminate this Agreement and, at Mall II Buyer's election, either (A) require Developer to pay to Mall II Buyer upon demand the Buyer Liquidated Damages Amount as liquidated damages or (B) bring a Legal Proceeding against Developer to recover Mall II Buyer's actual damages.
(c) In the event that Mall II Buyer exercises its remedy to receive Buyer Liquidated Damages under Section 7.1 or Section 21.1(b)(iii) and Developer shall, subsequent to the exercise of such remedy, achieve Substantial Completion of the Mall Improvements or a substantial retail component on the Phase II Land or in the Leasehold Airspace, Mall II Buyer shall have the right to consummate the
purchase of the Membership Interests (if such improvements have been conveyed to Mall II LLC) or the purchase of such improvements and the fee and leasehold interests associated therewith (if such improvements have not been conveyed to Mall II LLC) within thirty (30) days following notice from Developer to Mall II Buyer that Substantial Completion has occurred on the terms of this Agreement. If Mall II Buyer shall exercise such right, Mall II Buyer shall return the Buyer Liquidated Damages Amount to Developer and shall not receive a credit for such amounts against the purchase price for the Membership Interests. This provision shall survive the termination of this Agreement.
21.2 DEVELOPER'S REMEDIES. If all conditions to Mall II Buyer's obligations to close under this Agreement are satisfied and Mall II Buyer shall fail to close title hereunder and deliver the Closing Payment and the Closing Instruments on the Closing Date, Developer may exercise any of the following remedies:
(a) Developer shall be entitled to bring a Legal Proceeding for specific performance of Mall II Buyer's obligations under this Agreement. Developer may recover from Mall II Buyer (which Mall II Buyer shall pay upon demand) all Fees and Costs paid or incurred by Developer to secure specific performance under this Agreement; or
(b) As Mall II Buyer and Developer agree that it would be impracticable and extremely difficult to ascertain the actual damages to Developer as a result of the failure of Mall II Buyer to deliver the Closing Payment and the Closing Instruments on the Closing Date and that a reasonable estimate of the damages which Developer would incur as a result of such failure is the amount of one hundred million dollars ($100,000,000) (the "DEVELOPER LIQUIDATED DAMAGES AMOUNT"), Developer may terminate this Agreement, in which event upon Developer's demand, Mall II Buyer shall pay to Developer the Developer Liquidated Damages Amount as liquidated damages for Mall II Buyer's default; or
(c) As further provided in the Amended REA, Developer may terminate this
agreement and, within sixty (60) days after termination of this Agreement, elect
to purchase the limited liability company membership interests of Mall I LLC
owned by Mall I Buyer for a purchase price (the "MALL I CALL PRICE") equal to
(i) the LESSER of (y) the purchase price paid for the limited liability company
membership interests in Mall I LLC by Mall I Buyer pursuant to the Phase I Mall
Sale Agreement and (z) the fair market value of the limited liability company
membership interests in Mall I LLC as of the date that Developer has achieved
Substantial Completion less (ii) the Developer Liquidated Damages Amount; or
(d) If Developer exercises the remedy set forth in Section 21.2(c) above and if the Mall I Call Price is less than the then-outstanding indebtedness secured by the Phase I Mall or the interest in Mall I LLC, Developer may purchase the limited liability company interests in Grand Canal Shops II LLC for the amount of such indebtedness (whether by paying or assuming the same) and bring a Legal Proceeding
against Mall II Buyer for the difference between the amount so paid or assumed (including any costs incurred in connection therewith) and the Mall I Call Price.
21.3 DEFAULT UNDER PHASE I MALL SALE AGREEMENT. In the event that the transaction described in the Phase I Mall Sale Agreement is not consummated as contemplated by such agreement, this Agreement shall automatically terminate. If the transaction set forth in the Phase I Mall Sale Agreement is not consummated due to a default by either Grand Canal Shops Mall MM Subsidiary, Inc. or Grand Canal Shops Mall Subsidiary, LLC under the Phase I Mall Sale Agreement, upon Mall II Buyer's demand, Developer shall pay to Mall II Buyer the Mall II Buyer Liquidated Damages Amount as liquidated damages for the termination of this Agreement. If the transaction set forth in the Phase I Mall Sale Agreement is not consummated due to a default by Mall I Buyer under the Phase I Mall Sale Agreement, upon Developer's demand, Mall II Buyer shall pay to Developer the Developer Liquidated Damages Amount as liquidated damages for the termination of this Agreement.
ARTICLE 22
POST-CLOSING REMEDIES
After the Closing Date, except for (and excluding) those breaches of obligations or other matters for which this Agreement provides specific and exclusive remedies to a particular party (including, without limitation, Section 21.2(c)), each party retains, and may pursue, all rights available at law or in equity by reason of the other party's failure to keep or perform such other party's agreements or obligations under this Agreement pertaining to the period after the Closing Date. The provisions of this Article 22 shall survive the Closing.
ARTICLE 23
NOTICES
All notices, consents or other communications under this Agreement must be in writing and addressed to each party at its respective Notice Address set forth on SCHEDULE "8" attached hereto and made a part hereof (or at any other address which the respective parties may designate by notice given to the other party from time to time). Any notice required by this Agreement to be given or made within a specified period of time, on or before a date certain, shall be deemed given or made if sent by hand, by fax with confirmed answerback received, or by registered or certified mail (return receipt requested and postage and registry fees prepaid). Delivery "BY HAND" shall include delivery by commercial express or courier service. A notice sent by registered or certified mail shall be deemed given on the date of receipt (or attempted delivery if refused) indicated on the return receipt. All other notices shall be deemed given when actually received. A notice may be given by a party or by its legal counsel.
ARTICLE 24
MISCELLANEOUS
24.1 FURTHER ASSURANCES. Each of the parties shall take such actions and sign and deliver such other instruments and documents as may be reasonable, necessary or appropriate to effectuate the transactions contemplated under this Agreement; provided, however, that the taking of such acts or the execution of such documents will not result in material cost or liability to the respective party which is not otherwise required under this Agreement. Without limiting the foregoing, Developer shall, upon the request of Mall II Buyer from time to time, provide signed representation letters with respect to revenues and expenses of Mall II LLC for the period prior to Closing to enable Mall II Buyer's accountants to render an opinion on Mall II Buyer's or any of its Affiliates' financial statements, provided that the same shall be at no third party (out of pocket) cost to Developer and Mall II Buyer shall reimburse Developer for all reasonable cost and expenses incurred by Developer within fifteen (15) days written notice of same.
24.2 GOVERNING LAW. This Agreement shall be governed and construed in accordance with the laws of the State (without regard to principles of conflicts of law).
24.3 AMENDMENT. This Agreement shall not be modified, waived, or amended except by written agreement executed by all the parties.
24.4 INTEGRATION. This Agreement, together with the Schedules and Exhibits hereto, and any other binder of documents, agreements or instruments which is specifically stated to form a part of this Agreement or to relate thereto, constitute(s) the entire agreement between the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings of the parties relating thereto.
24.5 NO WAIVER. Except as expressly provided in this Agreement, no delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof or as a waiver of any other right, power or privilege hereunder, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise hereunder. Except as otherwise provided in this Agreement, the rights and remedies of each party under this Agreement are cumulative and are not exclusive of any rights or remedies which the party may otherwise have at law or in equity.
24.6 COUNTERPARTS. This Agreement may be executed (a) in counterparts, a complete set of which together shall constitute an original and (b) in duplicates, each of which shall constitute an original. Copies of this Agreement showing the signatures of the respective parties, whether produced by photographic, facsimile, digital, computer, or other reproduction, may be used for all purposes as originals.
24.7 SUCCESSORS AND ASSIGNS. This Agreement (and all terms thereof, whether so expressed or not), shall be binding upon the respective permitted successors, assigns and legal representatives of the parties and shall inure to the benefit of and be enforceable by the parties and their respective permitted successors, assigns and legal representatives.
24.8 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto or subsequently incorporated herein are (and shall be deemed) parts of this Agreement. The headings of this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
24.9 ASSIGNMENT RESTRICTIONS. Subject to the other provisions of this
Section 24.9, neither Mall II Buyer nor Developer may assign this Agreement, or
any of its rights or obligations herein or hereunder, without the prior written
consent of the other, except an assignment as collateral security to secure a
loan or an assignment made in connection with a foreclosure or deed-in-lieu of
foreclosure of such loan (which are hereby expressly permitted hereunder). Any
attempted assignments in violation of this Section shall be null and void.
Notwithstanding the foregoing, Mall II Buyer shall have the right to assign this
Agreement or its rights hereunder (without the consent of Developer), in whole
or in part, to any Affiliate of Mall II Buyer (i) provided that such Affiliate
is not a Competitor of Developer and (ii) such assignment would not, in the good
faith judgment of Developer, jeopardize any of Developer's or Developer's
Affiliates Gaming Licenses. Any attempted assignments in violation of this
Section shall be null and void. Mall II Buyer shall not be released from any of
its obligations pursuant to this Agreement by virtue of such assignment.
24.10 AUTHORIZATION. The signature of any one of a party's Authorized Representatives, acting alone, shall constitute the duly authorized, valid and binding act of the party for whom the respective person is the Authorized Representative. A party may change (or add) Authorized Representative(s) at any time by notice to the other party; and each party shall be entitled to rely upon the written certificate or consent of any person designated by the other party as an Authorized Representative.
24.11 JURISDICTION. Each party irrevocably submits to the jurisdiction of the courts of (and service of process in) the State and agrees that any action or proceeding arising out of or relating to this Agreement may be brought and/or defended in such courts.
24.12 SEVERABILITY. If any term, covenant, condition or provision of this Agreement is determined by a final judgment to be invalid or unenforceable, the remaining terms, covenants, conditions and provisions of this Agreement shall not be affected thereby; and each other term, covenant, condition and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
24.13 NO THIRD PERSONS. Nothing in this Agreement, express or implied, is intended: (a) to confer on any Person, other than the parties hereto, any rights, obligations, liabilities, or remedies; (b) to constitute Mall II Buyer as a partner or co-venturer of Developer; or (c) to waive any claim or right of any party hereto against any Person who is not a party hereto.
24.14 CONSTRUCTION. This Agreement shall be construed without regard to any presumption requiring construction against the party drafting this Agreement.
24.15 BROKERS. Developer and Mall II Buyer each represent and warrant to the other that such party has not had any conversations or dealings with any broker, finder, or similar party in connection with the transactions contemplated hereby other than Goldman Sachs. Each party shall indemnify the other from and against any and all claims, liabilities, losses, damages, costs, or expenses (including Fees and Costs) arising out of a breach of the foregoing representation by such party. This Section shall survive the Closing or termination of this Agreement.
24.16 ATTORNEYS' FEES. In event of any Legal Proceeding between or among Mall II Buyer and Developer concerning this Agreement, the substantially prevailing party shall be entitled to reimbursement from the other party for the Fees and Costs of such proceeding incurred by the prevailing party.
24.17 RULE AGAINST PERPETUITIES. If this Agreement or any covenants or
provisions herein would otherwise be unlawful, void or voidable for violation of
the Rule against Perpetuities, then the same shall continue until the earlier of
(a) January 1, 2030 and (b) twenty-one (21) years after the death of the
survivor of the descendants of the former President of the United States, George
H.W. Bush, living on the date of this Agreement.
24.18 RECORDATION. The parties agree that this Agreement shall not be recorded.
24.19 CONFIDENTIALITY.
(a) Each of the Parties hereto agrees that, except as required by law (including securities laws, rules and regulations), each will treat as confidential the terms of this Agreement and the transaction contemplated herein and that prior to Closing neither will issue a press release, advertisement or other public communication with respect to this Agreement or relating to the transaction contemplated herein without the prior approval of the other party. In addition, Mall II Buyer agrees that it will treat as confidential all non-public information relating to the Venetian Casino Resort and the Palazzo Casino Resort and all components thereof furnished to Mall II Buyer by or on behalf of Developer and that it will not disclose any such information to other persons or entities except for its attorneys, accountants and consultants, if any, its lenders, the Title Insurer, its insurance companies and insurance brokers, its partners or investors, if any, or as may be compelled or required by law (including securities laws, rules and regulations).
If this Agreement is terminated or the Closing does not otherwise occur, Mall II Buyer shall return to Developer all materials with respect to the Venetian Casino Resort and the Palazzo Casino Resort and all components thereof furnished to it by or at the behest of Developer and shall destroy all copies thereof and notes relating thereto and certify to the Developer in writing that it has done so. The preceding provisions of this Section 24.19 shall survive any termination of this Agreement. On the Closing Date, the parties shall either issue a joint press release reasonably satisfactory to each or, if each issues its own press release, each such release must be reasonably satisfactory to the other.
(b) Each of the parties hereto agrees that, except as required by law (including securities laws, rules and regulations), it will treat as confidential and not disclose the terms of this Agreement, including, without limitation, the methods of calculating net operating income to any Tenants or potential Tenants.
24.20 LEASEHOLD SPACE. At the option of the Developer, the Leasehold Space may be conveyed to Mall II Buyer as a fee interest rather than a leasehold interest, in which event the closing deliveries of Developer will be modified accordingly. All references herein to such leasehold interest shall be deemed revised, as appropriate, to reflect such transfer of a fee interest.
[Signatures begin on the following page.]
In witness whereof, Developer and Mall II Buyer have executed this Agreement as of the date first above written.
LIDO CASINO RESORT, LLC
By: Lido Casino Resort Holding Company, LLC
By: Lido Intermediate Holding Company, LLC
By: Venetian Casino Resort, LLC
By: Las Vegas Sands, Inc.
By: /S/ ROBERT G. GOLDSTEIN
-----------------------
Name: Robert G. Goldstein
Title: Senior Vice President
|
[Signatures continue on the following page.]
GGP LIMITED PARTNERSHIP
By: General Growth Properties, Inc.
By: /S/ JOEL BAYER
Name: Joel Bayer
Title: Senior Vice President
|
SCHEDULES AND EXHIBITS
Schedule "1" - Phase II Land Schedule "2" - Leasehold Airspace Schedule "3" - Phase IA Airspace Schedule "4" - Continuing Service Contracts Schedule "5" - Permitted Encumbrances Schedule "6" - Consents and Exceptions to Representations of the Parties Schedule "7" - Miscellaneous Closing Deliveries Schedule "8" - Authorized Representatives; Notice Addresses Schedule "9" - Construction Safety & Health Manual Schedule "10" - Organizational Representations of Developer and Mall II Buyer Schedule "11" - Definition of Substantial Completion Schedule "12" - REA Schedule "13" - Mall II Buyer Legal Rates Schedule "14" - Tenant Handbook Schedule "15" - Cost Sharing Allocations Schedule "16" - Master Lease Agreement Schedule "17" - Intentionally Omitted Schedule "18" - Leases Schedule "19" - Gaming Provisions Schedule "20" - Work Continuation Agreement Exhibit A - Standards Document attaching Leasing Plans and Character Sketches Exhibit B - Developer's Representation Certificate |
SCHEDULE "1"
PHASE II LAND
Schedule "1" - Page 1
SCHEDULE "2"
LEASEHOLD AIRSPACE
Schedule "2" - Page 1
SCHEDULE "3"
PHASE IA AIRSPACE
Schedule "3" - Page 1
SCHEDULE "4"
CONTINUING SERVICE CONTRACTS
1. An Energy Services Agreement with Sempra that conforms with the requirements set forth in the REA.
2. All public utility supply and distribution services, water, sewer and electricity provided by such entities as Nevada Power, Las Vegas Valley Water District and Clark County Water Reclamation District, pursuant to statutory and regulatory standards and pricing.
Schedule "4" - Page 1
SCHEDULE "5"
PERMITTED ENCUMBRANCES
1. Liens for Impositions which are not due and payable as of the Closing Date or which are apportioned in accordance with Section 17.4.
2. The state of facts shown on the survey to be delivered prior to Closing Date described in Section 14.6 and any state of facts a physical inspection of the Property would show (provided the same do not disclose any matter materially adverse to the property which is not disclosed in the Standards Document and which has not otherwise been disclosed in writing to Mall II Buyer prior to the date hereof).
3. Zoning, subdivision, environmental, building and all other Legal Requirements presently existing, or enacted prior to the Closing Date, applicable to the ownership, use or development of or the right to maintain or operate the Phase II Mall or have space therein used and occupied by tenants.
4. Leases reasonably satisfactory to Mall II Buyer reflecting the expansions contemplated by Section 30.1 of each of the "Gondola Lease" and the "VCR Showroom Lease" (as such terms are defined in the Mall I Agreement).
5. The REA and, when executed, the Amended REA.
6. Liens or Encumbrances arising as a result of the act or omission of Mall II Buyer, its Consultants, agents, employees or Affiliates or acts of Tenants and their contractors or subcontractors.
7. Rights of Tenants, as tenants only, under the Leases.
8. Sewer, water, electric, plumbing, heating, gas, telephone and other utility easements and easements for ingress and egress for construction, installation, operation and maintenance of municipal service facilities and utilities, and all other covenants and other encumbrances of record that do not interfere in any material respect with the use or operation of the Phase II Mall.
9. Promptly after the signing of this Agreement, Mall II Buyer and Developer shall review the title report received in respect of the Mall Space and shall reasonably agree upon additional items that should be added to this Schedule "5" as Permitted Encumbrances.
Schedule "5" - Page 1
SCHEDULE "6"
CONSENTS AND EXCEPTIONS (IF ANY) TO REPRESENTATIONS OF THE PARTIES
1. Exceptions (If Any) to Developer's Representations: Developer advises that:
NONE
2. Exceptions (If Any) to Mall II Buyer's Representations: Mall II Buyer advises Developer that:
NONE
Schedule "6" - Page 1
SCHEDULE "7"
MISCELLANEOUS CLOSING DELIVERIES
FROM DEVELOPER TO MALL II BUYER:
1. Organizational Documentation of Developer:
(a) certified copy of certificate of formation;
(b) certificate(s) of good standing dated as of a date within 14 days of the Closing Date, evidencing that Developer is in good standing in the State;
(c) certificate of resolutions of the members of Developer authorizing this Agreement and the transactions contemplated thereby on behalf of Developer and Mall II LLC, if such is required; and
(d) certificate of incumbency of Persons executing the Agreement on behalf of Developer.
2. Organizational Documentation of Mall II LLC:
(a) certified copy of certificate of formation;
(b) certificate(s) of good standing dated as of a date within 14 days of the Closing Date, evidencing that Mall II LLC is in good standing in the State; and
(c) certified copy of Operating Agreement.
FROM MALL II BUYER TO DEVELOPER:
3. Organization Documentation:
(a) certified copy of certificate of limited partnership;
(b) certificate of good standing dated as of a date within 14 days of the Closing Date evidencing that Mall II Buyer is in good standing in the State;
(c) certificate of resolutions of the partners of Mall II Buyer authorizing this Agreement and the transactions contemplated thereby; and
(d) certificate of incumbency of Persons executing the Agreement on behalf of Mall II Buyer.
Schedule "7" - Page 1
SCHEDULE "8"
AUTHORIZED REPRESENTATIVES; NOTICE ADDRESSES
FOR DEVELOPER:
Sheldon G. Adelson, Chairman of the Board and Treasurer
William P. Weidner, President
Bradley H. Stone, Executive Vice President
Robert G. Goldstein, Senior Vice President
Harry D. Miltenberger, Secretary
Lido Casino Resort, LLC
3355 Las Vegas Boulevard South
Room 1C
Las Vegas, NV 89109
Tel: (702) 414-4409
Fax (702) 414-4421
Attention: Fred Kraus
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019 Tel.: (212) 373-3000 Fax: (212) 757-3990 Attention: Harris B. Freidus, Esq.
FOR MALL II BUYER:
Schedule "8" - Page 1
Joel Bayer
Tad Wefel
Tim Gardels
GGP Limited Partnership 110 North Wacker Drive Chicago, Illinois 60606 Tel.: (312) 960-5015 Fax: (312) 960-5475 Attention: Joel Bayer
with a copy to:
Neal, Gerber & Eisenberg, LLP Two North LaSalle St., Suite 2100 Chicago, Illinois 60602 Tel.: (312) 269-8000 Fax: (312) 269-1747 Attention: Marshall E. Eisenberg, Esq.
Schedule "8" - Page 1
SCHEDULE "9"
CONSTRUCTION SAFETY & HEALTH MANUAL
Schedule "9" - Page 1
SCHEDULE "10"
ORGANIZATIONAL REPRESENTATIONS OF DEVELOPER AND MALL II BUYER
PART ONE - DEVELOPER:
1. Developer is a limited liability company duly organized, validly existing, and in good standing under the laws of the State and duly qualified to transact business in the State.
Developer has all necessary power and lawful authority to own and operate its assets and properties and to carry on its business (including all transactions contemplated under this Agreement and the Closing Instruments).
Developer has delivered to Mall II Buyer a true, correct, and complete copy of the certificate of formation by which Developer was formed, together with all amendments thereof.
The execution and delivery by Developer of this Agreement and the Closing Instruments, and the consummation by Developer of the transactions contemplated thereby, have been duly authorized by all necessary action of Developer and duly approved by all members and managers of Developer whose approval is required.
The execution and delivery of this Agreement and the Closing Instruments by Developer, and the consummation of the transactions contemplated hereby, will not: (i) violate any provision of Developer's certificate of organization or the limited liability operating agreement of Developer; or (ii) to the actual knowledge of Developer and except for the failure to secure any consents specified in SCHEDULE "6," result in the acceleration of any material indebtedness of Developer.
PART TWO - MALL II BUYER:
1. Mall II Buyer is a limited partnership duly organized and validly existing under the laws of the State of Delaware.
Mall II Buyer has all necessary power and lawful authority to own and operate its assets and properties and to carry on its business (including all transactions contemplated under this Agreement and the Closing Instruments).
Mall II Buyer has delivered to Developer true and complete copies of the certificate of limited partnership of Mall II Buyer by which Mall II Buyer was formed, together with all amendments thereof.
The execution and delivery of this Agreement and the Closing Instruments by Mall II Buyer, and the consummation by Mall II Buyer of the transactions contemplated thereby, have been duly authorized by all necessary action of Mall II Buyer and duly approved by the directors of Mall II Buyer.
Schedule "10" - Page 1
The execution and delivery of this Agreement and the Closing Instruments by Mall II Buyer, and the consummation of the transactions contemplated thereby, will not: (a) violate any provision of Mall II Buyer's operating agreement; (b) require the consent of any other Person except as set forth in SCHEDULE "6"; (c) violate any judgment, order, injunction, award or decree of any Government Authority against or binding upon Mall II Buyer or upon the property or business of Mall II Buyer; (d) result in the acceleration of any material indebtedness of Mall II Buyer.
The officers and directors of Mall II Buyer are as follows:
Mall II Buyer has no officers or directors.
The following are all holders of direct and indirect ownership interests in Mall II Buyer, other than those public shareholders of General Growth Properties, Inc. or those limited partners of GGP Limited Partnership:
SEE ATTACHED
The following are all lenders or sources of financing to Mall II Buyer:
None, other than institutional investors, as of execution of the Agreement.
PART THREE - MALL II LLC:
1. Mall II LLC is a limited liability company duly organized and validly existing under the laws of a state as determined by Mall II Buyer and Developer.
2. Mall II LLC has all necessary power and lawful authority to own and operate its assets and properties and to carry on its business (including all transactions contemplated under this Agreement and the Closing Instruments).
3. Developer has delivered to Mall II Buyer a true, correct, and complete copies of the certificate of formation of Mall II LLC and the Limited Liability Company Agreement of Mall II LLC, together with all amendments thereof.
4. Prior to the Assignment, Mall II LLC was wholly owned by Developer. Developer has consented to and approved consummation by Mall II LLC of the transactions contemplated by this Agreement.
5. The consummation by Mall II LLC of the transactions contemplated by this Agreement will not: (a) violate any provision of Mall II LLC's Limited Liability Company Agreement; (b) require the consent of any other Person except as set forth in SCHEDULE "6," (c) violate any judgment, order, injunction, award or decree of any Government Authority against or binding upon Mall II LLC or upon the property or business of Mall II LLC; (d) result in the acceleration of any material indebtedness of Mall II LLC.
Schedule "10" - Page 2
SCHEDULE "11"
DEFINITIONS OF SUBSTANTIAL COMPLETION AND PUNCH LIST ITEMS
1. "SUBSTANTIAL COMPLETION" means and shall be deemed to have occurred when:
(a) All Mall Improvement construction work is complete in accordance with the Final Construction Drawings and Specs, as they may be revised pursuant to Section 3.3 of the Agreement, and the requirements of Section 3.1 excepting Punch List Items (defined below) and utilities except to the extent described below;
(b) All services bringing utilities to the Phase II Mall that are required to be provided by Developer are installed to the point of connection with the Tenant Space (in each case as specified in the Final Demising Wall Plan) but not activated, tested or operating, and temporary electric service and water sufficient for construction of the Build-Out is available to the Mall Space but Developer shall not be obligated to bring the same to each Tenant Space; and installations relating to telephone and telecommunications required to be provided by Developer are installed;
(c) Developer's Architect has certified that, in Developer's Architect's opinion, all conditions to Substantial Completion have been met except for their certifications and/or confirmations pursuant to this paragraph;
(d) Mall II Buyer has received a copy of the certification (stating that Mall II Buyer may rely thereupon) from Developer's Architect to Developer that, to the Developer's Architects' professional knowledge, information and belief, and to the level of observation provided in the Developer's Architects' agreement with Developer, the Mall Improvement construction work exclusively performed by Developer, but excluding any Tenant Spaces or other items relating to the Build-Out, complies with all applicable building codes;
(e) Developer has delivered to Mall II Buyer a record of all filings with the buildings department of Clark County with respect to the Mall Improvements through the date of Substantial Completion, including reports and results of all controlled inspections for the Phase II Mall;
(f) Developer has delivered to Mall II Buyer copies of the Required Mall Improvement Permits;
(g) All Demising Walls have been constructed as provided in the Final Demising Wall Plan; and
(h) Developer shall have delivered to Mall II Buyer a final certificate of occupancy (or temporary certificate subject to the satisfaction of non-material conditions, provided that full occupancy is permitted thereunder and a permanent certificate of occupancy is obtained as promptly as possible thereafter) for the
Schedule "11" - Page 1
Mall Improvements exclusive of the Tenant Spaces. Mall II Buyer and Developer acknowledge that the certificate of occupancy, permanent or temporary, covering the Tenant Spaces shall be the responsibility of Mall II Buyer to obtain.
For purposes of this Agreement, "PUNCH LIST ITEMS" means minor touch-ups, corrections, and repairs, and completion of other minor work, none of which is necessary for Mall II Buyer to operate the Phase II Mall.
Schedule "11" - Page 2
SCHEDULE "12"
REA
Schedule "12" - Page 1
SCHEDULE "13"
MALL II BUYER LEGAL RATES
Mall II Buyer will provide legal services to support joint leasing efforts at an attorney rate of $325 per hour through 12/31/2005 and $350 per hour thereafter. Paralegal time will be billed at a significantly lower rate.
Schedule "13" - Page 1
SCHEDULE "14"
TENANT HANDBOOK
Schedule "14" - Page 1
SCHEDULE "15"
COST SHARING ALLOCATIONS
SECTION REFERENCES ON THIS SCHEDULE "15" ARE TO THOSE CORRESPONDING SECTIONS OF THE REA, UNLESS OTHERWISE SPECIFIED.
MALL I OWNER'S AND MALL II OWNER'S SHARE OF
HOTEL/CASINO/MALL/SECC COMMON AREA CHARGES*
------------------------------ --------------------------------------- --------------------------------------
EXPENSE ITEM MALL I OWNER'S SHARE MALL II OWNER'S SHARE
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Maintenance of the Base $185,000 per Accounting Period,** Same as Mall I Owner's Share.
Building, Building Core and subject to CPI Adjustment.***
Shell, H/C-Mall Common Areas
and other common structures
and equipment)
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Pest Control and Fire The portion of all actual Same as Mall I Owner's Share.
Extinguishers out-of-pocket costs related to pest
control and fire extinguisher service that is
related or allocable to the Phase I Mall, as
shown on bills received by the H/C I Owner from
the entities providing such pest control and fire
extinguisher services.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Parking Garage Cleaning $30,000 per Accounting Period, Same as Mall I Owner's Share.
subject to CPI Adjustment.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Parking Garage Security $85,000 per Accounting Period, Same as Mall I Owner's Share.
subject to CPI Adjustment.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Mall Valet Parking Charge $125,000 per Accounting Period, Same as Mall I Owner's Share.
subject to CPI Adjustment.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Off-Site Employee Parking $760,000 per Accounting Period, Same as Mall I Owner's Share.
subject to CPI Adjustment and further subject to
equitable adjustments (as determined by the
Independent Expert if Mall I Owner and H/C I
Owner cannot agree) if: (i) there are any rent
increases under the existing lease for the
off-site employee parking lot, (ii) the existing
lease for the off-site employee parking lot is
terminated and H/C I Owner enters into a new
lease for a new off-site employee parking lot,
and/or (iii) the existing lease for the off-site
employee parking lot is terminated and H/C I
Owner constructs a new off-site employee parking
facility on land it or an Affiliate or a
third-party owns. Any such equitable adjustment
pursuant to clause (iii) of the preceding
sentence shall be based on Mall I Owner's
equitable share, based on the respective off-site
employee parking needs of each Owner, of the fair
market rent for the applicable land (unless
leased from a third party and so already
addressed by clause (ii) of the preceding
sentence) and constructed facility.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Insurance Carried by H/C I Mall I Owner's share of the Same as Mall I Owner's Share.
Owner Pursuant to the applicable insurance premiums shall
Provisions of Article X be determined by the applicable
insurance carriers, pursuant to, and in
accordance with the procedures described in,
Section 1(c) of Article VI.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
HVAC Plant and HVAC For each Accounting Period, the Same as Mall I Owner's
Share, Facilities --Operating Costs following annualized monthly charges subject
to adjustment by the ratio (other than the costs of itemized on the December 10,
2003 of (a) Gross Square Footage of the water, electricity and Sempra Energy
Solutions invoice Mall II Property (including master natural gas)**** addressed
to Grand Canal Shops Mall, leased casino level retail space and
LLC and attached hereto as Appendix I the
Walgreen's Air Rights Parcel) to this Schedule
II, subject to CPI (b) Gross Square Footage of
the Mall Adjustment: Procurement Charge; I
Property.
Central Plant; Other Facilities; Central Plant
Real Estate Taxes; and Other Facilities Real
Estate Taxes.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
HVAC Plant - Water, $1,500,000 for 2004, adjusted Same as Mall I Owner's Share,
Electricity and Natural Gas annually thereafter as follows: For subject to
adjustment by the ratio Costs**** every one percent (1%) increase in of (a)
Gross Square Footage of the
the amounts charged by the applicable Mall II Property (including master
electricity providers and leased casino level retail space and
transporters from the first day of the Walgreen's Air Rights Parcel)
the prior Accounting Period to the (b) Gross Square Footage of the Mall
first day of the applicable I Property.
Accounting Period (assuming no change
in the amount of electricity provided
and transported), there shall be an
eight-tenths of one percent (.8%)
increase in the amount owed by Mall I
Owner. For every one percent (1%)
increase in the amounts charged by
the applicable natural gas providers
and transporters from the first day
of the prior Accounting Period to the
first day of the applicable
Accounting Period (assuming no change
in the amount of natural gas provided
and transported), there shall be an
eighteen one-hundredths of one
percent (.18%) increase in the amount
owed by Mall I Owner. For every one
percent (1%) increase in the amounts
charged by the applicable water
providers and transporters from the
first day of the prior Accounting
Period to the first day of the
applicable Accounting Period
(assuming no change in the amount of
water provided and transported),
there shall be a two one-hundredths
of one percent (.02%) increase in the
amount owed by Mall I Owner.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
HVAC Plant and HVAC For each Accounting Period, the sum Same as Mall I Owner's
Share, Facilities --Amortization of of (x) $1,645,000 PLUS (y) the amount
subject to adjustment by the ratio Initial HVAC Plant and HVAC of payments to be
made by Mall I of (a) Gross Square Footage of the Facilities Construction Owner
pursuant to paragraph 1(g) of Mall II Property (including master Costs and Other
Capital Schedule 4.2 of its ESA (without leased casino level retail space and
Expenditures**** giving effect to this Schedule II or the Walgreen's Air Rights
Parcel)
the Agreement); provided, however, (b) Gross Square Footage of the Mall
that if, in any Accounting Period, I Property.
the applicable major repairs,
replacements and capital investments
(excluding those relating to the
Other Facilities (as defined in
Mall I Owner's ESA)) exceed
$5 million, and either Mall I Owner
or H/C I Owner believes that Mall I
Owner's "Proportionate Share" (as
defined in Mall I Owner's ESA) is
not, taking into account all relevant
factors, Mall I Owner's equitable
share of such repairs, replacements
and investments, then the actual
equitable share, as agreed to by
Mall I Owner and H/C I Owner (or, if
such parties cannot agree, as
determined by the Independent Expert)
shall be deemed to be Mall I Owner's
"Proportionate Share" for purposes of
calculating the amount described in
the foregoing clause (y).
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Water $120,000 for 2004, adjusted annually Same as Mall I Owner's Share,
thereafter based on the percentage subject to adjustment by the ratio
increase, if any, in amounts charged of (a) Gross Leasable Square Footage
by the applicable water providers and of the Mall II Property (including
transporters from the first day of Level 92' Retail Space and the
the prior Accounting Period to the Walgreen's Air Rights Parcel) (b)
first day of the applicable Gross Leasable Square Footage of the
Accounting Period (assuming no change Mall I Property.
in the amount of water provided).
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Sewer $96,000 for 2004, adjusted annually Same as Mall I Owner's Share,
thereafter based on the percentage subject to adjustment by the ratio
increase, if any, in the amounts of (a) Gross Square Footage of the
charged by the applicable utility Mall II Property (including Level
companies from the first day of the 92' Retail Space and the Walgreen's
prior Accounting Period to the last Air Rights Parcel) (b) Gross Square
day of the applicable Accounting Footage of the Mall I Property.
Period.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
CAM Electric $240,000 for 2004, adjusted annually Same as Mall I Owner's Share,
thereafter based on the percentage subject to adjustment by the ratio
increase, if any, in the amounts of (a) Gross Common Area Square
charged by the applicable electricity Footage of the Mall II Property
providers and transporters from the (including Level 92' Retail Space
first day of the prior Accounting and the Walgreen's Air Rights
Period to the first day of the Parcel) (b) Gross Common Area Square
applicable Accounting Period Footage of the Mall I Property.
(assuming no change in the amount of
electricity provided).
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Legal/Accounting If it is reasonably necessary for, or Same as Mall I Owner's Share.
if Mall I Owner requests, H/C I Owner
to perform, or engage third parties
to perform, legal or accounting
services on behalf of Mall I Owner,
such charges shall be paid for by Mall I Owner in
an amount equal to the actual out-of-pocket costs
incurred by H/C I Owner on account of such
services. If the legal or accounting services
benefit more than one Owner, the costs shall be
divided equally among the Owners.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Electric Substation capital 15% of all such expenditures. 15% of all capital expenditures
expenditures (I.E., related to the Phase II Electrical
----
expenditures that, under Substation, excluding the initial
generally accepted cost of construction, if any.
accounting principles
consistently applied, cannot
be expensed in the year in
which they are incurred)
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
Fire Suppression/Sprinkler 100% of all costs incurred by H/C I Same as Mall I Owner's Share.
Systems Owner in connection with its
obligations under Section 1(b) of Article V, to
the extent such obligations relate to those
portions of all fire suppression systems
(including sprinklers) located within the Mall I
Space.
------------------------------ --------------------------------------- --------------------------------------
------------------------------ --------------------------------------- --------------------------------------
All costs and expenses 100% of such costs. Same as Mall I Owner's Share.
caused by, attributable to
or necessitated by (i) Mall
I Owner's or any Mall I Occupant's moving property in or out of the Mall I Space
or installation or removal of furniture, fixtures or other property, (ii) the
performance by Mall I Owner or any Mall I Occupant of any Alterations, (iii) the
negligence or willful misconduct of Mall I Owner or any Mall I Occupant or the
agents, employees, contractors, invitees and other Permittees of either of them,
(iv) any breach by Mall I Owner of the Agreement, or (v) any breach by any Phase
I Mall Tenant of its Lease.
------------------------------ --------------------------------------- --------------------------------------
|
NOTES:
*Whenever any definite amount (subject to CPI Adjustment or any other adjustment) is set forth on this chart as a payment for a certain category of expenses, such amount (adjusted for CPI or as otherwise adjusted) shall be due and payable by Mall I Owner to H/C I Owner without regard to the amount actually incurred by H/C I Owner in respect of that category of expenses (and thus, no Supporting Documentation pursuant to Section 3(e) of Article V shall be required to be provided in connection therewith).
**All specified amounts in Schedule II shall be appropriately pro-rated for 2004 (except for purposes of calculating future CPI Adjustments).
***"CPI ADJUSTMENT," as used on this Schedule II, shall be calculated as follows: Each specified dollar amount that is subject to CPI Adjustment shall be adjusted as of the first day of each Accounting Period, beginning with the 2005 Accounting Period, by multiplying such dollar amount (as it may have previously been adjusted pursuant to this sentence) by the percentage that is the sum of (x) one hundred percent (100%), plus (y) one hundred percent (100%) of the CPI Increase (as defined in the following sentence). "CPI INCREASE" shall mean the percentage increase or decrease, if any, that has occurred in the CPI from the calendar month which is sixteen months prior to the calendar month in which the applicable Accounting Period begins to the calendar month which is four months prior to the calendar month in which the applicable Accounting Period begins. (For example, if a CPI Adjustment is being calculated for the Accounting Period that begins January 1, 2007, the CPI Increase would be the percentage increase that has occurred in the CPI from September, 2005 to September, 2006). As so adjusted, such amount will be utilized until the next CPI Adjustment is calculated as of the first day of the next Accounting Period. "CPI" means the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the United States Department of Labor, U.S. City Average, All Items 1982-1984=100, or any successor thereto appropriately adjusted. If the Consumer Price Index ceases to be published, and there is no successor thereto, such other index as the parties hereto reasonably agree upon (or, if they cannot so agree, such other index as the Independent Expert shall determine in accordance with Article 9), as appropriately adjusted, shall be substituted for the Consumer Price Index.
****Only applicable during the Sempra Term.
SCHEDULE "16"
MASTER LEASE AGREEMENT
Schedule "16" - Page 1
SCHEDULE "17"
INTENTIONALLY OMITTED
Schedule "17" - Page 1
SCHEDULE "18"
LEASES
No third party has a right, option or election to lease space in the Phase II Mall other than those rights, options or elections contained in "Leases" (as defined in the Phase I Mall Sale Agreement).
Schedule "18" - Page 1
SCHEDULE "19"
GAMING PROVISION FOR LEASES
"Tenant acknowledges that Landlord and the Lido Casino Resort,
LLC and their affiliates are businesses that are or may be subject to privileged
licenses issued by governmental authorities relating to casino gaming ("GAMING
AUTHORITIES"). If a corporation, Tenant shall disclose the names of all officers
and directors of Tenant, and unless a publicly traded corporation on a national
stock exchange, Tenant shall disclose to Landlord all ownership interests in
Tenant and all lenders or sources of financing. If requested to do so by
Landlord, Tenant shall obtain any license, qualification, clearance or the like
which shall be requested or required of Tenant by any Gaming Authority or any
regulatory authority having jurisdiction over Landlord or any affiliate of
Landlord. If Tenant fails to satisfy such requirement or if Landlord or any
affiliate of Landlord is directed to cease business with Tenant by any such
authority, or if Landlord shall in good faith determine, in Landlord's
reasonable judgment, that Tenant, or any of its officers, directors, employees,
agents, designees or representatives, or partner, owner, member, or shareholder,
or any lender or financial participant (a) is or might be engaged in, or is
about to be engaged in, any activity or activities, or (b) was or is involved in
any relationship, either of which could or does jeopardize Landlord's business,
reputation or such licenses, or those of its affiliates, or if any such license
is threatened to be, or is, denied, curtailed, suspended or revoked, then Tenant
shall immediately (i) terminate any relationship with the individual or entity
which is the source of the problem, or (ii) cease the activity creating the
problem. If Tenant does not comply with item (i) or (ii) above, then Landlord
(x) may require Tenant to specifically perform such obligation (the parties
recognizing that damages or other remedies would be inadequate under the
circumstances) or (y) may terminate this Lease without liability to either
party; provided, however, if any matter described herein is reasonably
susceptible to cure, Tenant shall have a reasonable time within which to effect
such cure (but in no event longer than the time available to fully comply with
any requirement imposed by any Gaming Authority or any other Requirement) and
Landlord shall not have the right to terminate this Lease during such cure
period."
Schedule "19" - Page 1
SCHEDULE "20"
WORK CONTINUATION AGREEMENT
Schedule "20" - Page 1
EXHIBIT A
STANDARDS DOCUMENT
Exhibit A - Page 2
EXHIBIT B
DEVELOPER'S REPRESENTATION CERTIFICATE
LIDO CASINO RESORT, LLC
By: Lido Casino Resort Holding Company, LLC
By: Lido Intermediate Holding Company, LLC
By: Venetian Casino Resort, LLC
By: Las Vegas Sands, Inc.
Title:
Exhibit B - Page 1
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE: Contact: Ron Reese (702) 414-4334
THE VENETIAN ANNOUNCES SALE OF
THE GRAND CANAL SHOPPES
SALE COULD NET $1.4 BILLION FOR STRIP GIANT
LAS VEGAS, NEVADA (APRIL 12, 2004) -The Venetian Resort-Hotel-Casino announced today it has agreed to sell the 500,000 square foot Grand Canal Shoppes, and the multi-level retail space in its proposed Phase II resort, which will sit adjacent to The Venetian. The sale is subject to standard closing conditions and is expected to close on or about May 17, 2004.
General Growth Properties, Inc. will pay $766 million for the existing Grand Canal Shoppes. In addition, on the Phase II retail space, General Growth will pay a six percent capitalization rate on the first $38 million of net operating income and eight percent thereafter, leading Venetian executives to believe the total agreement could be worth approximately $1.4 billion.
"Since our Phase II property is budgeted to produce the same-type of financial results as The Venetian, it is reasonable to assume that total proceeds could reach or exceed $1.4 billion," said William Weidner, president and C.O.O. of Las Vegas Sands, Inc., The Venetian's parent company. "General Growth Properties sees the long-term benefit of helping develop Las Vegas' premiere resort destination with us, and we are extremely pleased to have them be a part of developing that destination."
The announcement of the mall sale coupled with the May opening of the Sands Macao, the impending groundbreaking on the Phase II property, and the recent financial performance of The Venetian, has the company poised to become one of the most dominant players in the gaming industry.
"Clearly, this kind of cash transaction gives our company tremendous financial flexibility," said Weidner "We could use this cash infusion to pay down indebtedness,
finance our second mega-resort in Las Vegas, continue our expansion efforts in Macao, or pursue any other opportunities that may arise. The options before us are endless."
Weidner said the Phase II property will feature more than 3,000 new suites, and when combined with The Venetian, will house more than 2.3 million square feet of meeting area with six additional ballrooms and 315 conference rooms. The two resorts will combine to feature 30 world-class restaurants, eight swimming pools, and two versions of the Canyon Ranch SpaClub, named by CONDE NAST TRAVELER as one of the world's finest.
While ownership of the Grand Canal Shoppes will change hands, Venetian executives are quick to point out that the mall will still be housed under The Venetian's roof. "By attracting more than 13 million visitors per year, The Grand Canal Shoppes clearly plays an important role in the overall success of The Venetian," said Brad Stone, executive vice president of Las Vegas Sands, Inc. "On top of the financial freedom this sale gives us, we are fortunate that we will continue to benefit from having one of the most successful retail venues in the country located within our walls."
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the Company's control, which may cause material differences in actual results, performance or other expectations. These factors include, but are not limited to general economic conditions, competition, new ventures, government regulation, legalization of gaming, interest rates, future terrorist acts, insurance, and other factors detailed in the reports filed by Las Vegas Sands, Inc. with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Las Vegas Sands, Inc. assumes no obligation to update such information.
ABOUT THE VENETIAN RESORT-HOTEL-CASINO
The Venetian Resort-Hotel-Casino, a recipient of the Exxon/Mobile Four Star Award and AAA's Four Diamond Award, is one of the world's most luxurious resort and convention destinations. Re-creating Venice's legendary landmarks, the resort offers unmatched service and quality for leisure and corporate guests. Located in the heart of the Las Vegas Strip, The Venetian features The Grand Canal Shoppes, an indoor streetscape complete with gondolas and singing gondoliers, the Canyon Ranch SpaClub, world-class gaming, exquisite restaurants, the Guggenheim-Hermitage Museum, and a wide variety of entertainment venues on its premises, as well as extensive convention and corporate services.
For additional information, please visit The Venetian website at www.venetian.com.