-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DtKpgosGX9iTtgpIpsSt4kYnjU6TEUF9BhqSnwQzZac8xjZ15KoM5Hh6njSj/AYU RlnOugsMxpFO9fETe0c+oQ== 0000850994-01-500007.txt : 20020410 0000850994-01-500007.hdr.sgml : 20020410 ACCESSION NUMBER: 0000850994-01-500007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LAS VEGAS SANDS INC CENTRAL INDEX KEY: 0000850994 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] IRS NUMBER: 043010100 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-42147 FILM NUMBER: 1785196 BUSINESS ADDRESS: STREET 1: 3355 LAS VEGAS BLVD SOUTH RM 1A CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 702414452 MAIL ADDRESS: STREET 1: 3355 LAS VEGAS BOULEVARD SOUTH CITY: LAS VEGAS STATE: NV ZIP: 89109 10-Q 1 lvsi3rd10q.txt 3RD QUARTER ================================================================================ LAS VEGAS SANDS, INC. UNITED STATES SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from _______ to ______ ---------- Commission File Number 333-42147 ---------- LAS VEGAS SANDS, INC. (Exact name of registration as specified in its charter) Nevada 04-3010100 - ---------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 3355 Las Vegas Boulevard South, Room 1A Las Vegas, Nevada 89109 - --------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (702) 414-1000 ----------------------------------------------------- (Registrant's telephone number, including area code) -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of November 13, 2001 Class Outstanding at November 13, 2001 - -------------------------------------- ----------------------------------- Common Stock, $.10 par value 925,000 shares ================================================================================ LAS VEGAS SANDS, INC. Table of Contents Part I FINANCIAL INFORMATION Item 1. Consolidated Balance Sheets At September 30, 2001 (unaudited) and December 31, 2000 .................................1 Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2001 (unaudited) and September 30, 2000 (unaudited) ....................2 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2001 (unaudited) and September 30, 2000 (unaudited) ....................................3 Notes to Consolidated Financial Statements.........................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ..............................27 Item 3. Quantitative and Qualitative Disclosures About Market Risk........34 Part II OTHER INFORMATION Item 1. Legal Proceedings.................................................35 Item 6. Exhibits and Reports on Form 8-K..................................36 Signatures........................................................37
Part I Financial Information Item 1. Financial Statements LAS VEGAS SANDS, INC. Consolidated Balance Sheets (In thousands, except share data) September 30, December 31, 2001 2000 ------------- ------------ Unaudited ASSETS Current assets: Cash and cash equivalents ............................... $ 55,489 $ 42,606 Restricted cash and investments ......................... 2,631 2,549 Accounts receivable, net ................................ 54,355 64,328 Inventories ............................................. 4,413 3,868 Prepaid expenses ........................................ 5,264 3,672 ----------- ----------- Total current assets ........................................ 122,152 117,023 Property and equipment, net ................................. 1,104,262 1,062,093 Deferred offering costs, net ................................ 20,538 22,314 Other assets, net ........................................... 35,581 30,955 ----------- ----------- $ 1,282,533 $ 1,232,385 =========== =========== LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable ........................................ $ 26,700 $ 23,835 Construction payables ................................... 36,499 6,212 Construction payables-contested ......................... 7,232 7,232 Accrued interest payable ................................ 27,619 13,277 Other accrued liabilities ............................... 59,895 76,735 Current maturities of long-term debt .................... 24,113 50,119 ----------- ----------- Total current liabilities ................................... 182,058 177,410 Other long-term liabilities ................................. 5,197 10,494 Long-term debt .............................................. 916,359 863,293 ----------- ----------- 1,103,614 1,051,197 ----------- ----------- Redeemable Preferred Interest in Venetian Casino Resort, LLC, a wholly owned subsidiary ............................... 183,435 168,012 ----------- ----------- Commitments and contingencies Stockholder's equity: Common stock, $.10 par value, 3,000,000 shares authorized, 925,000 shares issued and outstanding ............................... 92 92 Capital in excess of par value .......................... 78,817 94,240 Accumulated deficit since June 30, 1996 ................. (83,425) (81,156) ----------- ----------- (4,516) 13,176 ----------- ----------- $ 1,282,533 $ 1,232,385 =========== =========== - ------------ The accompanying notes are an integral part of these consolidated financial statements.
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LAS VEGAS SANDS, INC. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2001 2000 2001 2000 --------- --------- --------- --------- Revenues: Casino ...................................................... $ 61,392 $ 72,363 $ 174,133 $ 229,997 Rooms ....................................................... 43,688 45,038 159,702 140,549 Food and beverage ........................................... 11,731 13,873 49,088 49,472 Retail and other ............................................ 16,783 17,234 51,513 48,419 --------- ---------- --------- --------- 133,594 148,508 434,436 468,437 Less-promotional allowances .................................... (10,440) (11,971) (32,384) (34,597) --------- ---------- --------- --------- Net revenues ................................................ 123,154 136,537 402,052 433,840 --------- ---------- --------- --------- Operating expenses: Casino ...................................................... 33,814 40,297 109,970 120,931 Rooms ....................................................... 12,415 13,244 39,271 36,587 Food and beverage ........................................... 6,333 6,673 23,581 24,575 Retail and other ............................................ 8,845 8,252 23,876 21,431 Provision for doubtful accounts ............................. 5,767 3,214 14,656 14,554 General and administrative .................................. 22,911 25,079 68,337 69,836 Corporate expense ........................................... 763 1,657 4,741 4,501 Rental expense .............................................. 2,074 2,142 6,287 8,028 Depreciation and amortization ............................... 9,827 10,456 30,338 31,245 --------- ---------- --------- --------- 102,749 111,014 321,057 331,688 --------- ---------- --------- --------- Operating income ............................................... 20,405 25,523 80,995 102,152 --------- ---------- --------- --------- Other income (expense): Interest income ............................................. 329 359 1,135 1,199 Interest expense, net of amounts capitalized ................ (26,713) (30,558) (83,016) (89,762) --------- ---------- --------- --------- Income (loss) before extraordinary item ........................ (5,979) (4,676) (886) 13,589 Extraordinary item-loss on early retirement of debt ......... (1,383) -- (1,383) (2,785) --------- ---------- --------- --------- Net income (loss) .............................................. $ (7,362) $ (4,676) $ (2,269) $ 10,804 ========= ========== ========= ========= Basic and diluted income (loss) per share before extraordinary item .......................................... $ (12.24) $ (10.20) $ (17.63) $ (0.15) ========= ========== ========= ========= Basic and diluted income (loss) per share ...................... $ (13.74) $ (10.20) $ (19.13) $ (3.16) ========= ========== ========= ========= - ---------------- The accompanying notes are an integral part of these consolidated financial statements.
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LAS VEGAS SANDS, INC. Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) Nine Months Ended September 30, 2001 2000 --------- --------- Cash flows from operating activities: Net income (loss) ............................................ $ (2,269) $ 10,804 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization ........................ 30,338 31,245 Amortization of debt offering costs and original issue discount ..................................... 6,046 6,296 Loss on early retirement of debt ..................... 1,383 2,785 Non cash interest on completion guaranty loan ........ 1,940 1,730 Provision for doubtful accounts ...................... 14,656 14,554 Changes in operating assets and liabilities: Accounts receivable ................................ (4,683) (28,256) Inventories ........................................ (545) 854 Prepaid expenses ................................... (1,592) 1 Other assets ....................................... (4,626) (15,056) Accounts payable ................................... 2,865 3,787 Accrued interest payable ........................... 14,342 21,479 Other accrued liabilities .......................... (22,137) 26,184 --------- --------- Net cash provided by operating activities .................... 35,718 76,407 --------- --------- Cash flows from investing activities: (Increase) decrease in restricted cash ....................... (82) 8,808 Capital expenditures ......................................... (42,220) (10,607) Construction of Casino Resort ................................ -- (12,827) --------- --------- Net cash used in investing activities ........................ (42,302) (14,626) --------- --------- Cash flows from financing activities: Repayments on bank credit facility-tranche A term loan ....... (103,125) (35,625) Repayments on bank credit facility-tranche B term loan ....... (49,750) (125) Proceeds from bank credit facility-tranche B term loan ....... -- 50,000 Repayments on bank credit facility-tranche C term loan ....... (5,750) -- Proceeds from bank credit facility-tranche C term loan ....... 5,750 -- Repayments on bank credit facility-term ...................... (382) -- Proceeds from bank credit facility-term ...................... 152,750 -- Repayments on bank credit facility-revolver .................. (8,000) (50,160) Proceeds from bank credit facility-revolver .................. 48,000 11,000 Repayments on FF&E credit facility ........................... (16,121) (11,236) Proceeds from Phase II Subsidiary unsecured bank loan ........ 1,092 -- Payments of deferred offering costs .......................... (4,997) (2,460) --------- --------- Net cash provided by (used in) financing activities .......... 19,467 (38,606) --------- --------- Increase in cash and cash equivalents ........................ 12,883 23,175 Cash and cash equivalents at beginning of period ............. 42,606 26,252 --------- --------- Cash and cash equivalents at end of period ................... $ 55,489 $ 49,427 ========= ========= Supplemental disclosure of cash flow information: Cash payments for interest ................................. $ 61,917 $ 60,053 ========= ========= - ----------- The accompanying notes are an integral part of these consolidated financial statements.
3 Notes to Financial Statements Note 1 Organization and Basis of Presentation The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. The year end balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. In addition, certain amounts in the 2000 financial statements have been reclassified to conform with the 2001 presentation. In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair presentation of the results for the interim period have been included. The interim results reflected in the unaudited financial statements are not necessarily indicative of expected results for the full year. Las Vegas Sands, Inc. ("LVSI") is a Nevada corporation. On April 28, 1989, LVSI commenced gaming operations in Las Vegas, Nevada, by acquiring the Sands Hotel and Casino (the "Sands"). On June 30, 1996, LVSI closed the Sands and subsequently demolished the facility to make way for a planned two-phase hotel-casino resort. The first phase of the hotel-casino resort (the "Casino Resort") includes 3,036 suites, casino space approximating 116,000 square feet (the "Casino"), approximately 500,000 square feet of convention space and approximately 475,000 gross leasable square feet of retail shops and restaurants (the "Mall"). Construction of the Casino Resort commenced in April 1997. The Casino and certain suites and facilities at the Casino Resort opened on May 4, 1999 and the Mall opened on June 19, 1999. The consolidated financial statements include the accounts of LVSI and its wholly owned subsidiaries (the "Subsidiaries"), including Venetian Casino Resort, LLC ("Venetian"), Grand Canal Shops Mall, LLC (the "Mall Subsidiary"), Grand Canal Shops Mall Subsidiary, LLC (the "New Mall Subsidiary"), Lido Casino Resort, LLC (the "Phase II Subsidiary"), Mall Intermediate Holding Company, LLC ("Mall Intermediate"), Grand Canal Shops Mall Construction, LLC ("Mall Construction"), Lido Intermediate Holding Company, LLC ("Lido Intermediate"), Grand Canal Shops Mall Holding Company, LLC, Grand Canal Shops Mall MM Subsidiary, Inc., Lido Casino Resort Holding Company, LLC, Grand Canal Shops Mall MM, Inc. and Lido Casino Resort MM, Inc. (collectively, the "Company"). Each of LVSI and the Subsidiaries is a separate legal entity and the assets of each such entity are intended to be available only to the creditors of such entity. Venetian was formed on March 20, 1997 to own and operate certain portions of the Casino Resort. LVSI is the managing member and owns 100% of the common voting equity in Venetian. The entire preferred interest in Venetian is owned by Interface Group Holding Company, Inc. ("Interface Holding"), which is wholly owned by LVSI's sole stockholder (the "Sole Stockholder") . Mall Intermediate and Lido Intermediate are special purpose companies, which are wholly-owned subsidiaries of Venetian. They are guarantors or co-obligors of certain indebtedness related to the construction of the Casino Resort. The New Mall Subsidiary, an indirect wholly-owned subsidiary of LVSI, was formed on December 9, 1999 and owns and operates the Mall. The Casino Resort is physically connected to the approximately 1.15 million square foot Sands Expo and Convention Center (the "Expo Center"). Interface Group-Nevada, Inc. ("IGN"), the owner of the Expo Center, is beneficially owned by the Sole Stockholder. Venetian, the New Mall Subsidiary and IGN transact business with each other and are parties to certain agreements. Note 2 Per Share Data Basic and diluted income (loss) per share are calculated based upon the weighted average number of shares outstanding. The weighed average number of shares outstanding used in the computation of income (loss) per share of common stock was 925,000 for all periods presented. There were no options or warrants to purchase common stock outstanding during any period presented. The net income (loss) available to common stockholders used in computing the basic and diluted income (loss) per share includes accrued preferred dividends of approximately $5.3 million and $15.4 million, respectively, for the three and nine month periods ended September 30, 2001 and $4.7 million and $13.7 million, respectively, for the three and nine month periods ended September 30, 2000. The accrued dividends have been reflected as a charge against capital in excess of par value in the accompanying financial statements. 4 Notes to Financial Statements (Continued) Note 3 Property and Equipment
Property and equipment consists of the following (in thousands): September 30, December 31, 2001 2000 ------------ ------------ Land and land improvements ..................... $ 111,747 $ 109,863 Building and improvements ...................... 839,646 832,429 Equipment, furniture, fixtures and leasehold improvements ....................... 135,772 134,008 Construction in progress ....................... 113,591 52,129 ----------- ----------- 1,200,756 1,128,429 Less: accumulated depreciation and amortization (96,494) (66,336) ----------- ----------- $ 1,104,262 $ 1,062,093 =========== ===========
During the three and nine month periods ended September 30, 2001, the Company capitalized interest expense of $0.8 million and $1.4 million, respectively. No interest was capitalized in 2000 as the Company was not engaged in active construction or development during such period. As of September 30, 2001, construction in progress represented project design and shared facilities costs for the planned second phase of the Casino Resort (the "Phase II Resort") to be owned by the Phase II Subsidiary, and ongoing capital improvement projects at the Casino Resort. Note 4 Long-Term Debt Long-term debt consists of the following (in thousands):
September 30, December 31, 2001 2000 ------------- ------------ Indebtedness of the Company and its Subsidiaries other than the New Mall Subsidiary and the Phase II Subsidiary: - --------------------------------------- 12 1/4% Mortgage Notes, due November 15, 2004 ...... $ 425,000 $ 425,000 14 1/4% Senior Subordinated Notes, due November 15, 2005 (Net of unamortized discount of $3,607 in 2001 and $4,263 in 2000 ............. 93,893 93,237 Bank Credit Facility-Tranche A Term Loan ........... -- 103,125 Bank Credit Facility-Tranche B Term Loan ........... -- 49,750 Bank Credit Facility-Term Loan ..................... 152,368 -- Bank Credit Facility-Revolver Loan ................. 40,000 -- FF&E Credit Facility ............................... 59,108 75,229 Subordinated Owner Indebtedness: - -------------------------------- Completion Guaranty Loan ........................... 29,011 27,071 Indebtedness of the New Mall Subsidiary: - ---------------------------------------- Mall Tranche A Take-out Loan ....................... 105,000 105,000 Mall Tranche B Take-out Loan ....................... 35,000 35,000 Indebtedness of the Phase II Subsidiary: - ---------------------------------------- Bank Loan .......................................... 1,092 -- Less: current maturities ........................... (24,113) (50,119) ----------- ----------- Total long-term debt ............................... $ 916,359 $ 863,293 =========== ===========
5 Notes to Financial Statements (Continued) Note 4 Long-Term Debt (Continued) In connection with the financing for the Casino Resort, the Company entered into a series of transactions during 1997 to provide for the development and construction of the Casino Resort. In November 1997, the Company issued $425.0 million aggregate principal amount of Mortgage Notes (the "Mortgage Notes") and $97.5 million aggregate principal amount of Senior Subordinated Notes (the "Senior Subordinated Notes" and, together with the Mortgage Notes, the "Notes") in a private placement. On June 1, 1998, LVSI and Venetian completed an exchange offer to exchange the Notes for other notes with substantially the same terms. In November 1997, LVSI and Venetian and a syndicate of lenders entered into a Bank Credit Facility (the "Bank Credit Facility") providing for multiple draw term loans to the Company for construction and development of the Casino Resort. On September 17, 2001, the Company entered into its second amendment and restatement of the Bank Credit Facility in order to (1) combine the $97.5 million tranche A term loan, $49.5 million tranche B term loan and $5.8 million tranche C term loan into a single term loan of $152.8 million, (2) modify the Company's scheduled amortization payments to now repay $381,875 per quarter until December 2002, to be followed by two bullet payments of $75.2 million during each of March 2003 and June 2003, (3) extend the commitment termination date of the Company's $40.0 million revolving credit line (the "Revolver") from September 15, 2001 to June 30, 2003, (4) eliminate the "cash sweep" provision of such agreement in connection with any excess cash flows of the Company, and (5) modify the financial covenants. Each of the term loan and revolving loans under the Bank Credit Facility has an interest rate of 350 basis points over LIBOR. The Company recorded a $1.4 million extraordinary loss on early retirement of debt in connection with this transaction. In December 1997, the Company also entered into an agreement (the "FF&E Credit Facility") with certain lenders to provide for $97.7 million of financing for certain furniture, fixtures and equipment to be secured under the FF&E Credit Facility and an electrical substation. On September 28, 2001, the Company entered into a fourth amendment to the FF&E Credit Facility in order to modify its financial covenants to substantially match those under the amended and restated Bank Credit Facility and consent to the amendments to the Bank Credit Facility. The Company's debt instruments contain certain restrictions that, among other things, limit the ability of the Company and/or certain subsidiaries to incur additional indebtedness, issue disqualified stock or equity interests, pay dividends or make other distributions, repurchase equity interests or certain indebtedness, create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell assets of the Company without prior approval of the lenders or noteholders. Financial covenants included in the Bank Credit Facility and the FF&E Credit Facility include a minimum fixed charge ratio, maximum leverage ratio, minimum consolidated adjusted EBITDA standard, minimum equity standard and maximum capital expenditures standard. The financial covenants in the Bank Credit Facility and the FF&E Credit Facility involving EBITDA are applied on a rolling four quarter basis, and the Company's compliance with financial covenants can be temporarily affected if the Company experiences a decline in hotel occupancy or room rates, or an unusually low win percentage in a particular quarter, which is not offset in subsequent quarters or by other results of operations. As a result of these fluctuations, no assurance can be given that the Company will be in compliance with its financial covenants. Although the Company has remained in compliance with its financial covenants under the Bank Credit Facility and the FF&E Credit Facility, meeting certain financial covenant tests in the third quarter of 2001 was difficult due to a decline in visitor volume to Las Vegas after the terrorist attacks of September 11, 2001 and an extremely low win percentage for certain quarters during the rolling four quarter measurement period. The Company's financial covenants allow the Sole Stockholder to increase EBITDA for measurement purposes in two consecutive quarters by issuing a standby letter of credit to the Company's lenders. The Company used this letter of credit mechanism in the amount of $6.9 million to meet the minimum EBITDA covenant test during the third quarter of 2001. In the short term, the Company remains in a challenging business environment and no assurance can be given that it will remain in compliance with its existing financial covenants. If visitor volume to Las Vegas returns to normal levels, the Company does anticipate that results and operations and its overall win percentage will return to normal levels over time. 6 Notes to Financial Statements (Continued) Note 4 Long-Term Debt (Continued) On November 12, 1999, an advance of approximately $23.5 million was made under the Sole Stockholder's completion guaranty (the "Completion Guaranty"). Interest expense added to the principal balance increased the balance of the Completion Guaranty to $29.0 million as of September 30, 2001. Advances made under the Completion Guaranty up to $25.0 million (excluding accrued interest) are treated as a junior loan from the Sole Stockholder to Venetian that is subordinated in right of payment to the indebtedness under the Bank Credit Facility, the FF&E Credit Facility and the Notes. On December 20, 1999, certain take-out lenders (collectively, the "Tranche A Take-out Lender") funded a $105.0 million tranche A take-out loan to the New Mall Subsidiary (the "Tranche A Take-out Loan"). The proceeds were used to repay indebtedness under the mall construction loan facility for the Mall. The indebtedness under the Tranche A Take-out Loan is secured by first priority liens on the assets that comprise the Mall (the "Mall Assets"). Also, on December 20, 1999, an entity wholly-owned by the Sole Stockholder funded a tranche B take-out loan to provide $35.0 million in financing to the New Mall Subsidiary (the "Tranche B Take-out Loan" and, together with the Tranche A Take-out Loan, the "Mall Take-out Financing"). The proceeds, along with $105.0 million of proceeds from the Tranche A Take-out Loan, were used to repay the mall construction loan facility in full. In February 2001, the Phase II Subsidiary entered into an unsecured bank line of credit, as amended on May 31, 2001, for $1,092,000 and payable on July 15, 2002. This line of credit bears interest at LIBOR plus 100 basis points. The proceeds of the line of credit were used to fund payments of Phase II Subsidiary operating costs. On October 19, 2001, the Phase II Subsidiary entered into a loan agreement providing for a $17.5 million term and revolving loan, with a one time option to increase such loan to $30.0 million (the "Phase II Subsidiary Credit Facility"). The Phase II Subsidiary Credit Facility is secured by the Phase II Subsidiary's land on the site located adjacent to the Casino Resort (the "Phase II Land"), as well as the Phase II Subsidiary's leasehold interest in a five year lease of the Phase II Land to Venetian for an annual rental payment of $8.0 million (the "Phase II Lease"). The Phase II Subsidiary immediately drew $12.5 million for a letter of credit under the revolver portion of the Phase II Subsidiary Credit Facility (the "Letter of Credit") pursuant to the terms of and to be provided as credit support for the Bank Credit Facility. The Letter of Credit will be reduced by $3.125 million at the end of each of the next four fiscal quarters that the Company makes its required interest payments under the Bank Credit Facility, and will be released in full upon the earlier of October 31, 2002 or immediately following the first fiscal quarter period ending after September 30, 2001 in which the Company's consolidated adjusted EBITDA equals or exceeds $30.0 million. The remaining portion of the Phase II Subsidiary Credit Facility and proceeds from rental payments from Venetian to the Phase II Subsidiary under the Phase II Lease are each available for any Phase II Resort pre-development expenses (up to $30 million after October 19, 2001) or may be loaned or distributed by the Phase II Subsidiary to the Company for other liquidity needs. The Phase II Subsidiary Credit Facility bears interest at LIBOR plus 400 basis points and is due on June 30, 2003. Note 5 Redeemable Preferred Interest in Venetian Casino Resort, LLC During 1997, Interface Holding contributed $77.1 million in cash to Venetian in exchange for a Series A preferred interest (the "Series A Preferred Interest") in Venetian. By its terms, the Series A Preferred Interest was convertible at any time into a Series B preferred interest in Venetian (the "Series B Preferred Interest"). In August 1998, the Series A Preferred Interest was converted into the Series B Preferred Interest. The rights of the Series B Preferred Interest include the accrual of a preferred return of 12% from the date of contribution in respect of the Series A Preferred Interest. Until the indebtedness under the Bank Credit Facility is repaid and cash payments are permitted under the restricted payment covenants of the indentures entered into in connection with the Notes (the "Indentures"), the preferred return on the Series B Preferred Interest will accrue and will not be paid in cash. Commencing in November 2009, distributions must be made to the extent of the positive capital account of the holder. During the second and third quarters of 1999, Interface Holding contributed $37.3 million and $7.1 million, respectively, in cash in exchange for an additional Series B Preferred Interest. During the three and nine month periods ended September 30, 2001 and September 30, 2000, $5.3 million and $15.4 million and $4.7 million and $13.7 million, respectively, were accrued on the Series B Preferred Interest related to the contributions made. Since 1997, no distributions of preferred interest or preferred return have been paid on the Series B Preferred Interest. 7 Notes to Financial Statements (Continued) Note 6 Commitments and Contingencies The Company is party to litigation matters and claims related to its operations and the construction of the Casino Resort. Except as described below, the Company does not expect that the final resolution of these matters will have a material impact on the financial position, results of operation or cash flows of the Company. The construction of the principal components of the Casino Resort was undertaken by Lehrer McGovern Bovis, Inc. (the "Construction Manager") pursuant to a construction management agreement and certain amendments thereto (as so amended, the "Construction Management Contract"). The Construction Management Contract established a final guaranteed maximum price (the "Final GMP") of $645.0 million, so that, subject to certain exceptions (including an exception for cost overruns due to "scope changes"), the Construction Manager was responsible for any costs of the work covered by the Construction Management Contract in excess of the Final GMP. The obligations of the Construction Manager under the Construction Management Contract are guaranteed by Bovis, Inc. ("Bovis" and such guaranty, the "Bovis Guaranty"), the Construction Manager's direct parent at the time the Construction Management Contract was entered into. Bovis' obligations under the Bovis Guaranty are guaranteed by The Peninsular and Oriental Steam Navigation Company ("P&O"), a British public company and the Construction Manager's ultimate parent at the time the Construction Management Contract was entered into (such guaranty, the "P&O Guaranty"). On July 30, 1999, Venetian filed a complaint against the Construction Manager and Bovis in United States District Court for the District of Nevada. The action alleges breach of contract by the Construction Manager of its obligations under the Construction Management Contract and a breach of contract by Bovis of its obligations under the Bovis Guaranty, including failure to fully pay trade contractors and vendors and failure to meet the April 21, 1999 guaranteed completion date. The Company amended this complaint on November 23, 1999 to add P&O as an additional defendant. The suit is intended to ask the courts, among other remedies, to require the Construction Manager and its guarantors to pay its contractors, to compensate Venetian for the Construction Manager's failure to perform its duties under the Construction Management Contract and to pay the Company the agreed upon liquidated damages penalty for failure to meet the guaranteed substantial completion date. Venetian seeks total damages in excess of $50.0 million. The Construction Manager subsequently filed motions to dismiss the Company's complaint on various grounds, which the Company opposed. The Construction Manager's principal motions to date have either been denied by the court or voluntarily withdrawn. In response to Venetian's breach of contract claims against the Construction Manager, Bovis and P&O, the Construction Manager filed a complaint on August 3, 1999 against Venetian in the District Court of Clark County, Nevada. The action alleges a breach of contract and quantum meruit claim under the Construction Management Contract and also alleges that Venetian defrauded the Construction Manager in connection with the construction of the Casino Resort. The Construction Manager seeks damages, attorney's fees and costs and punitive damages. In the lawsuit, the Construction Manager claims that it is owed approximately $90.0 million from Venetian and its affiliates. This complaint was subsequently amended by the Construction Manager, which also filed an additional complaint against the Company relating to work done and funds advanced with respect to the contemplated development of the Phase II Resort. Based upon its review of the complaints, discovery taken to date, the fact that the Construction Manager still has not provided Venetian with reasonable documentation to support such claims, and the Company's belief that the Construction Manager has materially breached its agreements with the Company, the Company believes that the Construction Manager's claims are without merit and intends to vigorously defend itself and pursue its claims against the Construction Manager in any litigation. In connection with these disputes, as of December 31, 1999 the Construction Manager and its subcontractors filed mechanics liens against the Casino Resort for $145.6 million and $182.2 million, respectively. The Company believes that a major reason these lien amounts exceed the Construction Manager's claims of $90.0 million is based upon a duplication of liens through the inclusion of lower tier claims by subcontractors in the liens of higher tier contractors, including the lien of the Construction Manager. As of December 31, 1999, the Company had purchased surety bonds for virtually all of the claims underlying these liens (other than approximately $15.0 million of claims with respect to which the Construction Manager purchased bonds). As a result, there can be no foreclosure of the Casino Resort in connection with the claims of Construction Manager and its subcontractors. However, the Company will be required to pay or immediately reimburse the bonding company if and to the extent that the underlying claims are judicially determined to be valid. If such claims are not settled, it is likely to take a significant amount of time for their validity to be judicially determined. 8 Notes to Financial Statements (Continued) Note 6 Commitments and Contingencies (Continued) The Company believes that these claims are, in general, unsubstantiated, without merit, overstated and/or duplicative. The Construction Manager itself has publicly acknowledged that at least some of the claims of its subcontractors are without merit. In addition, the Company believes that pursuant to the Construction Management Contract and the Final GMP, the Construction Manager is responsible for payment of any subcontractors' claims to the extent they are determined to be valid. The Company may also have a variety of other defenses to the liens that have been filed, including, for example, the fact that the Construction Manager and its subcontractors previously waived or released their right to file liens against the Casino Resort. The Company intends to vigorously defend itself in any lien proceedings. On August 9, 1999, the Company notified the insurance companies providing coverage under its liquidated damages insurance policy (the "LD Policy") that it has a claim under the LD Policy. The LD Policy provides insurance coverage for the failure of the Construction Manager to achieve substantial completion of the portions of the Casino Resort covered by the Construction Management Contract within 30 days of the April 21, 1999 deadline, with a maximum liability under the LD Policy of approximately $24.1 million and with coverage being provided, on a per-day basis, for days 31-120 of the delay in the achievement of substantial completion. Because the Company believes that substantial completion was not achieved until at the earliest November 12, 1999, the Company's claim under the LD Policy is for the above-described maximum liability of $24.1 million. The Company expects the LD Policy insurers to assert many of the same claims and defenses that the Construction Manager has or will assert in the above-described litigations. Liability under the LD Policy may ultimately be determined by binding arbitration. In June 2000, the Company purchased an insurance policy (the "Insurance Policy") for loss coverage in connection with all litigation relating to the construction of the Casino Resort (the "Construction Litigation"). Under the Insurance Policy, the Company will self-insure the first $45.0 million and the insurer will insure up to the next $80.0 million of any possible covered losses. The Insurance Policy provides coverage for any amounts determined in the Construction Litigation to be owed to the Construction Manager or its subcontractors relating to claimed delays, inefficiencies, disruptions, lack of productivity/unauthorized overtime or schedule impact, allegedly caused by the Company during construction of the Casino Resort, as well as any defense costs. The insurance is in addition to, and does not affect, any scope change guarantees provided by the Sole Stockholder pursuant to the Completion Guaranty. All of the pending litigation described above is in preliminary stages and it is not yet possible to determine its ultimate outcome. If any litigation or other proceedings concerning the claims of the Construction Manager or its subcontractors were decided adversely to the Company, such litigation or other lien proceedings could have a material adverse effect on the financial position, results of operations or cash flows of the Company to the extent such litigation is not covered by the Insurance Policy. Note 7 Summarized Financial Information Venetian and LVSI are co-obligors of the Notes and certain other indebtedness related to construction of the Casino Resort and are jointly and severally liable for such indebtedness (including the Notes). Venetian, Mall Intermediate, Mall Construction and Lido Intermediate (collectively, the "Subsidiary Guarantors") are wholly-owned subsidiaries of LVSI. The Subsidiary Guarantors have jointly and severally guaranteed (or are co-obligors of) such debt on a full and unconditional basis. No other subsidiary of LVSI is an obligor or guarantor of any of the Casino Resort financing. Because the New Mall Subsidiary is not a guarantor of any indebtedness of the Company (other than the Mall Take-out Financing), creditors of the Company's entities comprising the Company other than the New Mall Subsidiary (including the holders of the Notes but excluding creditors of the New Mall Subsidiary) do not have a direct claim against the Mall Assets. As a result, indebtedness of the entities comprising the Company other than the New Mall Subsidiary (including the Notes) is, with respect to the Mall Assets, effectively subordinated to indebtedness of the New Mall Subsidiary. The New Mall Subsidiary is not restricted by any of the debt instruments of LVSI, Venetian or the Company's other subsidiary guarantors (including the Indentures) from incurring any indebtedness. The terms of the Tranche A Take-out Loan prohibit the New Mall Subsidiary from paying dividends or making distributions to any of the other entities comprising the Company unless payments under the Tranche A Take-out Loan are current, and, with certain limited exceptions, prohibit the New Mall Subsidiary from making any loans to such entities. Any additional indebtedness incurred by the New Mall Subsidiary may include additional restrictions on the ability of the New Mall Subsidiary to pay any such dividends and make any such distributions or loans. 9 Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) Prior to October 1998, Venetian owned approximately 44 acres of land on or near the Las Vegas Strip (the "Strip"), on the site of the former Sands. Such property includes the site on which the Casino Resort was constructed. Approximately 14 acres of such land was transferred to the Phase II Subsidiary in October 1998. On December 31, 1999, an additional 1.75 acres of land was contributed indirectly by the Sole Stockholder to the Phase II Subsidiary. The Phase II Resort is planned to be constructed adjacent to the Casino Resort. Because the Phase II Subsidiary will not be a guarantor of the Company's indebtedness, creditors of the Company (including the holders of the Notes) will not have a direct claim against the assets of the Phase II Subsidiary. As a result, the indebtedness of the Company (including the Notes) will be effectively subordinated to indebtedness of the Phase II Subsidiary. The Phase II Subsidiary is not subject to any of the restrictive covenants of the debt instruments of the Company (including the Notes). Any indebtedness incurred by the Phase II Subsidiary subsequent to the Phase II Subsidiary Credit Facility may include material restrictions on the ability of the Phase II Subsidiary to pay dividends or make distributions or loans to the Company and its subsidiaries. Separate financial statements and other disclosures concerning each of Venetian and the Subsidiary Guarantors are not presented below because management believes that they are not material to investors. Summarized financial information of LVSI, Venetian, the Subsidiary Guarantors and the non-guarantor subsidiaries on a combined basis as of September 30, 2001 and December 31, 2000 and for the three and nine month periods ended September 30, 2001 and September 30, 2000 is as follows (in thousands): 10
Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED BALANCE SHEETS September 30, 2001 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ------------ ------------- ----------- ------------ Cash and cash equivalents ................ $ 32,614 $ 18,652 $ 4 $ 4 Restricted cash and investments .......... -- 1,518 -- -- Intercompany receivable .................. 49,341 -- -- -- Accounts receivable, net ................. 41,187 11,546 -- -- Inventories .............................. -- 4,413 -- -- Prepaid expenses ......................... 905 4,038 -- -- ----------- ----------- ----------- ----------- Total current assets ................... 124,047 40,167 4 4 Property and equipment, net .............. -- 885,535 -- -- Investment in Subsidiaries ............... 126,022 67,120 -- -- Deferred offering costs, net ............. -- 17,816 -- -- Other assets, net ........................ 4,622 27,173 -- -- ----------- ----------- ----------- ----------- $ 254,691 $ 1,037,811 $ 4 $ 4 =========== =========== =========== =========== Accounts payable ......................... $ 3,311 $ 22,962 $ -- $ -- Construction payable ..................... -- 33,584 -- -- Construction payable-contested ........... -- 7,232 -- -- Intercompany payables .................... -- 26,674 -- -- Accrued interest payable ................. -- 26,640 -- -- Other accrued liabilities ................ 16,834 41,663 -- -- Current maturities of long term debt ..... -- 23,021 -- -- ----------- ----------- ----------- ----------- Total current liabilities .............. 20,145 181,776 -- -- Other long-term liabilities .............. -- 5,197 -- -- Long-term debt ........................... -- 776,359 -- -- ----------- ----------- ----------- ----------- 20,145 963,332 -- -- Redeemable Preferred Interest in Venetian -- 183,435 -- -- ----------- ----------- ----------- ----------- Stockholder's equity ..................... 234,546 (108,956) 4 4 ----------- ----------- ----------- ----------- $ 254,691 $ 1,037,811 $ 4 $ 4 =========== =========== =========== ===========
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED BALANCE SHEETS, CONTINUED September 30, 2001 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Other Shops Mall Non-Guarantor Consolidating/ Subsidiary Subsidiaries Eliminating LLC (1) (2) Entries Total ------------ ------------- ------------ ----------- Cash and cash equivalents ................ $ 4,154 $ 61 $ -- $ 55,489 Restricted cash and investments .......... 1,113 -- -- 2,631 Intercompany receivable .................. -- -- (49,341) -- Accounts receivable, net ................. 1,622 -- -- 54,355 Inventories .............................. -- -- -- 4,413 Prepaid expenses ......................... 321 -- -- 5,264 ----------- ----------- ----------- ----------- Total current assets ................... 7,210 61 (49,341) 122,152 Property and equipment, net .............. 136,924 81,803 -- 1,104,262 Investment in Subsidiaries ............... -- -- (193,142) -- Deferred offering costs, net ............. 2,422 300 -- 20,538 Other assets, net ........................ 3,786 -- -- 35,581 ----------- ----------- ----------- ----------- $ 150,342 $ 82,164 $ (242,483) $ 1,282,533 =========== =========== =========== =========== Accounts payable ......................... $ 427 $ -- $ -- $ 26,700 Construction payable ..................... -- 2,915 -- 36,499 Construction payable-contested ........... -- -- -- 7,232 Intercompany payables .................... 22,667 -- (49,341) -- Accrued interest payable ................. 966 13 -- 27,619 Other accrued liabilities ................ 1,327 71 -- 59,895 Current maturities of long term debt ..... -- 1,092 -- 24,113 ----------- ----------- ----------- ----------- Total current liabilities .............. 25,387 4,091 (49,341) 182,058 Other long-term liabilities .............. -- -- -- 5,197 Long-term debt ........................... 140,000 -- -- 916,359 ----------- ----------- ----------- ----------- 165,387 4,091 (49,341) 1,103,614 Redeemable Preferred Interest in Venetian -- -- -- 183,435 ----------- ----------- ----------- ----------- Stockholder's equity ..................... (15,045) 78,073 (193,142) (4,516) ----------- ----------- ----------- ----------- $ 150,342 $ 82,164 $ (242,483) $ 1,282,533 =========== =========== =========== =========== - ------------ (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no assets or liabilities as of September 30, 2001. (2) Land with a historical cost basis of $29,169 was transferred from Venetian, a co-obligor of the Notes, to the Phase II Subsidiary, a non-guarantor subsidiary, in October 1998 and land with a value of $11.8 million was indirectly contributed by the Sole Stockholder during December 1999.
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED BALANCE SHEETS December 31, 2000 GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ------------ ------------- ----------- ------------ Cash and cash equivalents ............... $ 35,332 $ 4,260 $ 4 $ 4 Restricted cash and investments ......... -- 1,471 -- -- Intercompany receivable ................. 42,917 -- -- -- Accounts receivable, net ................ 45,609 17,686 -- -- Inventories ............................. -- 3,868 -- -- Prepaid expenses ........................ 458 2,897 -- -- ----------- ----------- ----------- ----------- Total current assets .................. 124,316 30,182 4 4 Property and equipment, net ............. -- 840,960 -- -- Investment in Subsidiaries .............. 126,022 67,120 -- -- Deferred offering costs, net ............ -- 18,335 -- -- Other assets, net ....................... 4,928 22,120 -- -- ----------- ----------- ----------- ----------- $ 255,266 $ 978,717 $ 4 $ 4 =========== =========== =========== =========== Accounts payable ........................ $ 4,794 $ 18,036 $ -- $ -- Construction payable .................... -- 3,297 -- -- Construction payable-contested .......... -- 7,232 -- -- Intercompany payables ................... -- 20,391 -- -- Accrued interest payable ................ -- 11,498 -- -- Other accrued liabilities ............... 27,939 47,380 -- -- Current maturities of long term debt .... -- 50,119 -- -- ----------- ----------- ----------- ----------- Total current liabilities ............. 32,733 157,953 -- -- Other long-term liabilities ............. -- 10,494 -- -- Long-term debt .......................... -- 723,293 -- -- ----------- ----------- ----------- ----------- 32,733 891,740 -- -- Redeemable Preferred Interest in Venetian -- 168,012 -- -- ----------- ----------- ----------- ----------- Stockholder's equity .................... 222,533 (81,035) 4 4 ----------- ----------- ----------- ----------- $ 255,266 $ 978,717 $ 4 $ 4 =========== =========== =========== ===========
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED BALANCE SHEETS (Continued) December 31, 2000 NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Other Shops Mall Non-Guarantor Consolidating/ Subsidiary Subsidiaries Eliminating LLC (1) (2) Entries Total ------------ ------------- ------------ ------------ Cash and cash equivalents ............... $ 2,972 $ 34 $ -- $ 42,606 Restricted cash and investments ......... 1,078 -- -- 2,549 Intercompany receivable ................. -- -- (42,917) -- Accounts receivable, net ................ 973 60 -- 64,328 Inventories ............................. -- -- -- 3,868 Prepaid expenses ........................ 317 -- -- 3,672 ----------- ----------- ----------- ----------- Total current assets .................. 5,340 94 (42,917) 117,023 Property and equipment, net ............. 140,185 80,948 -- 1,062,093 Investment in Subsidiaries .............. -- -- (193,142) -- Deferred offering costs, net ............ 3,979 -- -- 22,314 Other assets, net ....................... 3,907 -- -- 30,955 ----------- ----------- ----------- ----------- $ 153,411 $ 81,042 $ (236,059) $ 1,232,385 =========== =========== =========== =========== Accounts payable ........................ $ 1,005 $ -- $ -- $ 23,835 Construction payable .................... -- 2,915 -- 6,212 Construction payable-contested .......... -- -- -- 7,232 Intercompany payables ................... 22,526 -- (42,917) -- Accrued interest payable ................ 1,779 -- -- 13,277 Other accrued liabilities ............... 1,363 53 -- 76,735 Current maturities of long term debt .... -- -- -- 50,119 ----------- ----------- ----------- ----------- Total current liabilities ............. 26,673 2,968 (42,917) 177,410 Other long-term liabilities ............. -- -- -- 10,494 Long-term debt .......................... 140,000 -- -- 863,293 ----------- ----------- ----------- ----------- 166,673 2,968 (42,917) 1,051,197 Redeemable Preferred Interest in Venetian -- -- -- 168,012 ----------- ----------- ----------- ----------- Stockholder's equity .................... (13,262) 78,074 (193,142) 13,176 ----------- ----------- ----------- ----------- $ 153,411 $ 81,042 $ (236,059) $ 1,232,385 =========== =========== =========== =========== - ------------ (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no assets or liabilities as of December 31, 2000. (2) Land with a historical cost basis of $29,169 was transferred from Venetian, a co-obligor of the Notes, to the Phase II Subsidiary, a non-guarantor subsidiary, in October 1998 and land with a value of $11.8 million was indirectly contributed by the Sole Stockholder during December 1999.
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS For the three months ended September 30, 2001 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ------------ ------------- ----------- ------------ Revenues: Casino .................................. $ 61,392 $ -- $ -- $ -- Room .................................... -- 43,688 -- -- Food and beverage ....................... -- 11,731 -- -- Retail and other ........................ 179 19,634 -- -- ----------- ----------- ----------- ----------- Total revenue ........................... 61,571 75,053 -- -- Less promotional allowance .............. -- (10,440) -- -- ----------- ----------- ----------- ----------- Net revenues ............................ 61,571 64,613 -- -- ----------- ----------- ----------- ----------- Operating expenses: Casino .................................. 45,377 -- -- -- Room .................................... -- 12,415 -- -- Food and beverage ....................... -- 6,333 -- -- Retail and other ........................ -- 5,795 -- -- Provision for doubtful accounts ......... 5,501 266 -- -- General and administrative .............. 674 21,867 -- -- Corporate expense ....................... (233) 996 -- -- Rental expense .......................... 287 1,235 -- -- Depreciation and amortization ........... -- 8,667 -- -- ----------- ----------- ----------- ----------- 51,606 57,574 -- -- ----------- ----------- ----------- ----------- Operating income (loss) ................. 9,965 7,039 -- -- ----------- ----------- ----------- ----------- Other income (expense): Interest income ..................... 104 192 -- -- Interest expense .................... -- (23,001) -- -- ----------- ----------- ----------- ----------- Income (loss) before extraordinary item . 10,069 (15,770) -- -- Loss on early retirement of debt .... -- (1,383) -- -- ----------- ----------- ----------- ----------- Net income (loss) ....................... $ 10,069 $ (17,153) $ -- $ -- =========== =========== =========== ===========
15
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS (Continued) For the three months ended September 30, 2001 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Shops Mall Other Consolidating/ Subsidiary Non-Guarantor Eliminating LLC (1) Subsidiaries Entries Total ------------ ------------- ------------ ------------ Casino .................................. $ -- $ -- $ -- $ 61,392 Room .................................... -- -- -- 43,688 Food and beverage ....................... -- -- -- 11,731 Retail and other ........................ 8,854 -- (11,884) 16,783 ----------- ----------- ----------- ----------- Total revenue ........................... 8,854 -- (11,884) 133,594 Less promotional allowance .............. -- -- -- (10,440) ----------- ----------- ----------- ----------- Net revenues ............................ 8,854 -- (11,884) 123,154 ----------- ----------- ----------- ----------- Operating expenses: Casino .................................. -- -- (11,563) 33,814 Room .................................... -- -- -- 12,415 Food and beverage ....................... -- -- -- 6,333 Retail and other ........................ 3,371 -- (321) 8,845 Provision for doubtful accounts ......... -- -- -- 5,767 General and administrative .............. 369 1 -- 22,911 Corporate expense ....................... -- -- -- 763 Rental expense .......................... 552 -- -- 2,074 Depreciation and amortization ........... 1,160 -- -- 9,827 ----------- ----------- ----------- ----------- 5,452 1 (11,884) 102,749 ----------- ----------- ----------- ----------- Operating income (loss) ................. 3,402 (1) -- 20,405 ----------- ----------- ----------- ----------- Other income (expense): Interest income ..................... 33 -- -- 329 Interest expense .................... (3,712) -- -- (26,713) ----------- ----------- ----------- ----------- Income (loss) before extraordinary item . (277) (1) -- (5,979) Loss on early retirement of debt .... -- -- -- (1,383) ----------- ----------- ----------- ----------- Net income (loss) ....................... $ (277) $ (1) $ -- $ (7,362) =========== =========== =========== =========== - ------------ (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no revenues or expenses as of September 30, 2001.
16
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS For the three months ended September 30, 2000 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ------------ ------------- ----------- ------------ Revenues: Casino ................................... $ 72,363 $ -- $ -- $ -- Room ..................................... -- 45,038 -- -- Food and beverage ........................ -- 13,873 -- -- Retail and other ......................... 337 19,730 -- -- ----------- ----------- ----------- ----------- Total revenue ............................ 72,700 78,641 -- -- Less promotional allowance ............... -- (11,971) -- -- ----------- ----------- ----------- ----------- Net revenues ............................. 72,700 66,670 -- -- ----------- ----------- ----------- ----------- Operating expenses: Casino ................................... 51,456 -- -- -- Room ..................................... -- 13,244 -- -- Food and beverage ........................ -- 6,673 -- -- Retail and other ......................... -- 4,688 -- -- Provision for doubtful accounts .......... 2,614 600 -- -- General and administrative ............... 1,136 23,622 -- 5 Corporate expense ........................ 655 1,002 -- -- Rental expense ........................... 118 1,462 -- -- Depreciation and amortization ............ -- 9,324 -- -- ----------- ----------- ----------- ----------- 55,979 60,615 -- 5 ----------- ----------- ----------- ----------- Operating income (loss)................... 16,721 6,055 -- (5) ----------- ----------- ----------- ----------- Other income (expense): Interest income ...................... 147 192 -- -- Interest expense ..................... -- (25,873) -- -- ----------- ----------- ----------- ----------- Income (loss) before extraordinary item .. 16,868 (19,626) -- (5) Loss on early retirement of debt ..... -- -- -- -- ----------- ----------- ----------- ----------- Net income (loss) ........................ $ 16,868 $ (19,626) $ -- $ (5) =========== =========== =========== ===========
17
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS (Continued) For the three months ended September 30, 2000 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Shops Mall Other Consolidating/ Subsidiary Non-Guarantor Eliminating LLC (1) Subsidiaries Entries Total ------------ ------------- ------------ ------------ Revenues: Casino ................................... $ -- $ -- $ -- $ 72,363 Room ..................................... -- -- -- 45,038 Food and beverage ........................ -- -- -- 13,873 Retail and other ......................... 8,850 -- (11,683) 17,234 ----------- ----------- ----------- ----------- Total revenue ............................ 8,850 -- (11,683) 148,508 Less promotional allowance ............... -- -- -- (11,971) ----------- ----------- ----------- ----------- Net revenues ............................. 8,850 -- (11,683) 136,537 ----------- ----------- ----------- ----------- Operating expenses: Casino ................................... -- -- (11,159) 40,297 Room ..................................... -- -- -- 13,244 Food and beverage ........................ -- -- -- 6,673 Retail and other ......................... 4,088 -- (524) 8,252 Provision for doubtful accounts .......... -- -- -- 3,214 General and administrative ............... 295 21 -- 25,079 Corporate expense ........................ -- -- -- 1,657 Rental expense ........................... 562 -- -- 2,142 Depreciation and amortization ............ 1,132 -- -- 10,456 ----------- ----------- ----------- ----------- 6,077 21 (11,683) 111,014 ----------- ----------- ----------- ----------- Operating income ......................... 2,773 (21) -- 25,523 ----------- ----------- ----------- ----------- Other income (expense): Interest income ...................... 20 -- -- 359 Interest expense ..................... (4,685) -- -- (30,558) ----------- ----------- ----------- ----------- Income (loss) before extraordinary item .. (1,892) (21) -- (4,676) Loss on early retirement of debt ..... -- -- -- -- ----------- ----------- ----------- ----------- Net income (loss) ........................ $ (1,892) $ (21) $ -- $ (4,676) =========== =========== =========== =========== - ------------ (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no revenues or expenses as of September 30, 2000.
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS For the nine months ended September 30, 2001 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ----------- ------------- ----------- ------------ Revenues: Casino ................................... $ 174,133 $ -- $ -- $ -- Room ..................................... -- 159,702 -- -- Food and beverage ........................ -- 49,088 -- -- Retail and other ......................... 620 60,482 -- -- ----------- ----------- ----------- ----------- Total revenue ............................ 174,753 269,272 -- -- Less promotional allowance ............... -- (32,384) -- -- ----------- ----------- ----------- ----------- Net revenues ............................. 174,753 236,888 -- -- ----------- ----------- ----------- ----------- Operating expenses: Casino ................................... 144,380 -- -- -- Room ..................................... -- 39,271 -- -- Food and beverage ........................ -- 23,581 -- -- Retail and other ......................... -- 15,419 -- -- Provision for doubtful accounts .......... 14,390 266 -- -- General and administrative ............... 2,046 65,087 -- -- Corporate expense ........................ 1,849 2,892 -- -- Rental expense ........................... 566 4,085 -- -- Depreciation and amortization ............ -- 26,721 -- -- ----------- ----------- ----------- ----------- 163,231 177,322 -- -- ----------- ----------- ----------- ----------- Operating income (loss) .................. 11,522 59,566 -- -- ----------- ----------- ----------- ----------- Other income (expense): Interest income ...................... 491 541 -- -- Interest expense ..................... -- (71,222) -- -- ----------- ----------- ----------- ----------- Income (loss) before extraordinary item... 12,013 (11,115) -- -- Loss on early retirement of debt ..... -- (1,383) -- -- ----------- ----------- ----------- ----------- Net income (loss) ........................ $ 12,013 $ (12,498) $ -- $ -- =========== =========== =========== ===========
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS (Continued) For the nine months ended September 30, 2001 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Shops Mall Other Consolidating/ Subsidiary Non-Guarantor Eliminating LLC (1) Subsidiaries Entries Total ------------ ------------- ------------ ------------ Revenues: Casino ................................... $ -- $ -- $ -- $ 174,133 Room ..................................... -- -- -- 159,702 Food and beverage ........................ -- -- -- 49,088 Retail and other ......................... 25,680 -- (35,269) 51,513 ----------- ----------- ----------- ----------- Total revenue ............................ 25,680 -- (35,269) 434,436 Less promotional allowance ............... -- -- -- (32,384) ----------- ----------- ----------- ----------- Net revenues ............................. 25,680 -- (35,269) 402,052 ----------- ----------- ----------- ----------- Operating expenses: Casino ................................... -- -- (34,410) 109,970 Room ..................................... -- -- -- 39,271 Food and beverage ........................ -- -- -- 23,581 Retail and other ......................... 9,316 -- (859) 23,876 Provision for doubtful accounts .......... -- -- -- 14,656 General and administrative ............... 1,203 1 -- 68,337 Corporate expense ........................ -- -- -- 4,741 Rental expense ........................... 1,636 -- -- 6,287 Depreciation and amortization ............ 3,617 -- -- 30,338 ----------- ----------- ----------- ----------- 15,772 1 (35,269) 321,057 ----------- ----------- ----------- ----------- Operating income (loss) .................. 9,908 (1) -- 80,995 ----------- ----------- ----------- ----------- Other income (expense): Interest income ...................... 103 -- -- 1,135 Interest expense ..................... (11,794) -- -- (83,016) ----------- ----------- ----------- ----------- Income (loss) before extraordinary item... (1,783) (1) -- (886) Loss on early retirement of debt ..... -- -- -- (1,383) ----------- ----------- ----------- ----------- Net income (loss) ........................ $ (1,783) $ (1) $ -- $ (2,269) =========== =========== =========== =========== - ------------ (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no revenues or expenses as of September 30, 2001.
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LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS For the nine months ended September 30, 2000 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ----------- ------------- ----------- ------------ Revenues: Casino ................................... $ 229,997 $ -- $ -- $ -- Room ..................................... -- 140,549 -- -- Food and beverage ........................ -- 49,472 -- -- Retail and other ......................... 947 58,727 -- -- ----------- ----------- ----------- ----------- Total revenue ............................ 230,944 248,748 -- -- Less promotional allowance ............... -- (34,597) -- -- ----------- ----------- ----------- ----------- Net revenues ............................. 230,944 214,151 -- -- ----------- ----------- ----------- ----------- Operating expenses: Casino ................................... 154,408 -- -- -- Room ..................................... -- 36,587 -- -- Food and beverage ........................ -- 24,575 -- -- Retail and other ......................... -- 13,429 -- -- Provision for doubtful accounts .......... 12,954 1,200 -- -- General and administrative ............... 2,898 66,040 -- 6 Corporate expense ........................ 1,798 2,703 -- -- Rental expense ........................... 1,932 4,428 -- -- Depreciation and amortization ............ -- 27,836 -- -- ----------- ----------- ----------- ----------- 173,990 176,798 -- 6 ----------- ----------- ----------- ----------- Operating income (loss) .................. 56,954 37,353 -- (6) ----------- ----------- ----------- ----------- Other income (expense): Interest income ...................... 426 717 -- -- Interest expense ..................... -- (76,492) -- -- ----------- ----------- ----------- ----------- Income (loss) before extraordinary item .. 57,380 (38,422) -- (6) Loss on early retirement of debt ..... -- (2,785) -- -- ----------- ----------- ----------- ----------- Net income (loss) ........................ $ 57,380 $ (41,207) $ -- $ (6) =========== =========== =========== ===========
21
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF OPERATIONS (Continued) For the nine months ended September 30, 2000 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Shops Mall Other Consolidating/ Subsidiary Non-Guarantor Eliminating LLC (1) Subsidiaries Entries Total ------------ ------------- ------------ ------------ Revenues: Casino ................................... $ -- $ -- $ -- $ 229,997 Room ..................................... -- -- -- 140,549 Food and beverage ........................ -- -- -- 49,472 Retail and other ......................... 22,957 -- (34,212) 48,419 ----------- ----------- ----------- ----------- Total revenue ............................ 22,957 -- (34,212) 468,437 Less promotional allowance ............... -- -- -- (34,597) ----------- ----------- ----------- ----------- Net revenues ............................. 22,957 -- (34,212) 433,840 ----------- ----------- ----------- ----------- Operating expenses: Casino ................................... -- -- (33,477) 120,931 Room ..................................... -- -- -- 36,587 Food and beverage ........................ -- -- -- 24,575 Retail and other ......................... 8,737 -- (735) 21,431 Provision for doubtful accounts .......... 400 -- -- 14,554 General and administrative ............... 871 21 -- 69,836 Corporate expense ........................ -- -- -- 4,501 Rental expense ........................... 1,668 -- -- 8,028 Depreciation and amortization ............ 3,409 -- -- 31,245 ----------- ----------- ----------- ----------- 15,085 21 (34,212) 331,688 ----------- ----------- ----------- ----------- Operating income (loss) .................. 7,872 (21) -- 102,152 ----------- ----------- ----------- ----------- Other income (expense): Interest income ...................... 56 -- -- 1,199 Interest expense ..................... (13,270) -- -- (89,762) ----------- ----------- ----------- ----------- Income (loss) before extraordinary item .. (5,342) (21) -- 13,589) Loss on early retirement of debt ..... -- -- -- (2,785) ----------- ----------- ----------- ----------- Net income (loss) ........................ $ (5,342) $ (21) $ -- $ 10,804 =========== =========== =========== =========== - ------------ (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no revenues or expenses as of JSeptember 30, 2000.
22
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF CASH FLOWS For the nine months ended September 30, 2001 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ------------ ------------- ----------- ------------ Net cash provided by operating activities .............. $ 3,706 $ 30,490 $ -- $ -- ----------- ----------- ----------- ----------- Cash flows from investing activities: (Increase) decrease in restricted cash ............... -- (47) -- -- Capital expenditures ................................. -- (41,009) -- -- ----------- ----------- ----------- ----------- Net cash used in investing activities .................. -- (41,056) -- -- ----------- ----------- ----------- ----------- Cash flows from financing activities: Repayments on bank credit facility-tranche A term loan -- (103,125) -- -- Repayments on bank credit facility-tranche B term loan -- (49,750) -- -- Repayments on bank credit facility-tranche C term loan -- (5,750) -- -- Proceeds from bank credit facility-tranche C term loan -- 5,750 -- -- Repayments on bank credit facility-term .............. -- (382) -- -- Proceeds on bank credit facility-term ................ -- 152,750 -- -- Repayments on bank credit facility-revolver .......... -- (8,000) -- -- Proceeds from bank credit facility-revolver .......... -- 48,000 -- -- Repayments on FF&E credit facility ................... -- (16,121) -- -- Proceeds from Phase II Subsidiary unsecured bank loan -- -- -- -- Payments of deferred offering costs .................. -- (4,697) -- -- Net increase (decrease) in intercompany accounts ..... (6,424) 6,283 -- -- ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities .... (6,424) 24,958 -- -- ----------- ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents ....... (2,718) 14,392 -- -- Cash and cash equivalents at beginning of period ....... 35,332 4,260 4 4 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period ............. $ 32,614 $ 18,652 $ 4 $ 4 =========== =========== =========== ===========
23
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF CASH FLOWS (Continued) For the nine months ended September 30, 2001 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Shops Mall Other Consolidating/ Subsidiary Non-Guarantor Eliminating LLC (1) Subsidiaries Entries Total ------------ ------------- ------------ ------------ Net cash provided by operating activities .............. $ 1,432 $ 90 $ -- $ 35,718 ----------- ----------- ----------- ----------- Cash flows from investing activities: (Increase) decrease in restricted cash ............... (35) -- -- (82) Capital expenditures ................................. (356) (855) -- (42,220) ----------- ----------- ----------- ----------- Net cash used in investing activities .................. (391) (855) -- (42,302) ----------- ----------- ----------- ----------- Cash flows from financing activities: Repayments on bank credit facility-tranche A term loan -- -- -- (103,125) Repayments on bank credit facility-tranche B term loan -- -- -- (49,750) Repayments on bank credit facility-tranche C term loan -- -- -- (5,750) Proceeds from bank credit facility-tranche C term loan -- -- -- 5,750 Repayments on bank credit facility-term .............. -- -- -- (382) Proceeds on bank credit facility-term ................ -- -- -- 152,750 Repayments on bank credit facility-revolver .......... -- -- -- (8,000) Proceeds from bank credit facility-revolver .......... -- -- -- 48,000 Repayments on FF&E credit facility ................... -- -- -- (16,121) Proceeds from Phase II Subsidiary unsecured bank loan -- 1,092 -- 1,092 Payments of deferred offering costs .................. -- (300) -- (4,997) Net increase (decrease) in intercompany accounts ..... 141 -- -- -- ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities .... 141 792 -- 19,467 ----------- ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents ....... 1,182 27 -- 12,883 Cash and cash equivalents at beginning of period ....... 2,972 34 -- 42,606 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period ............. $ 4,154 $ 61 $ -- $ 55,489 =========== =========== =========== =========== - ----------- (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no cash flows as of September 30, 2001.
24
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF CASH FLOWS For the nine months ended September 30, 2000 (Unaudited) GUARANTOR SUBSIDIARIES -------------------------- Lido Mall Venetian Intermediate Intermediate Las Vegas Casino Resort Holding Holding Sands, Inc. LLC Company LLC Company LLC ------------ ------------- ----------- ------------ Net cash provided by (used in) operating activities ... $ 47,154 $ 25,351 $ -- $ (6) ----------- ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sale of investments .................... -- 7,679 -- -- Capital expenditures ................................. -- (10,011) -- -- Construction of Casino Resort ........................ -- (12,827) -- -- ----------- ----------- ----------- ----------- Net cash provided by (used in) investing activities .... -- (15,159) -- -- ----------- ----------- ----------- ----------- Cash flows from financing activities: Proceeds from capital contributions .................. -- (30) -- 5 Repayments on bank credit facility-tranche A term loan -- (35,625) -- -- Repayments on bank credit facility-tranche B term loan -- (125) -- -- Proceeds from bank credit facility-tranche B term loan -- 50,000 -- -- Repayments on bank credit facility-revolver .......... -- (50,160) -- -- Proceeds from bank credit facility-revolver .......... -- 11,000 -- -- Repayments on FF&E credit facility ................... -- (11,236) -- -- Payments of deferred offering costs .................. -- (2,379) -- -- Net increase (decrease) in intercompany accounts ..... (36,636) 40,728 -- -- ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities .... (36,636) 2,173 -- 5 ----------- ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents ....... 10,518 12,365 -- (1) Cash and cash equivalents at beginning of period ....... 23,961 2,237 4 5 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period ............. $ 34,479 $ 14,602 $ 4 $ 4 =========== =========== =========== ===========
25
LAS VEGAS SANDS, INC. Notes to Financial Statements (Continued) Note 7 Summarized Financial Information (Continued) CONDENSED STATEMENTS OF CASH FLOWS (Continued) For the nine months ended September 30, 2000 (Unaudited) NON-GUARANTOR SUBSIDIARIES ----------------------------- Grand Canal Shops Mall Other Consolidating/ Subsidiary Non-Guarantor Eliminating LLC (1) Subsidiaries Entries Total ------------ ------------- ------------ ------------ Net cash provided by (used in) operating activities ... $ 3,923 $ (15) $ -- $ 76,407 ----------- ----------- ----------- ----------- Cash flows from investing activities: Proceeds from sale of investments .................... 1,129 -- -- 8,808 Capital expenditures ................................. (596) -- -- (10,607) Construction of Casino Resort ........................ -- -- -- (12,827) ----------- ----------- ----------- ----------- Net cash provided by (used in) investing activities .... 533 -- -- (14,626) ----------- ----------- ----------- ----------- Cash flows from financing activities: Proceeds from capital contributions .................. 5 20 -- -- Repayments on bank credit facility-tranche A term loan -- -- -- (35,625) Repayments on bank credit facility-tranche B term loan -- -- -- (125) Proceeds from bank credit facility-tranche B term loan -- -- -- 50,000 Repayments on bank credit facility-revolver .......... -- -- -- (50,160) Proceeds from bank credit facility-revolver .......... -- -- -- 11,000 Repayments on FF&E credit facility ................... -- -- -- (11,236) Payments of deferred offering costs .................. (81) -- -- (2,460) Net increase (decrease) in intercompany accounts ..... (4,092) -- -- -- ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities .... (4,168) 20 -- (38,606) ----------- ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents ....... 288 5 -- 23,175 Cash and cash equivalents at beginning of period ....... -- 45 -- 26,252 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period ............. $ 288 $ 50 $ -- $ 49,427 =========== =========== =========== =========== - -------------- (1) The assets and liabilities of Mall Construction, a guarantor, were transferred to the Mall Subsidiary, a non-guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the New Mall Subsidiary on December 20, 1999. As a result, Mall Construction had no cash flows as of September 30, 2000.
26 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and the notes thereto and other financial information included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. See "-Special Note Regarding Forward-Looking Statements." General - ------- The Company owns and operates the Casino Resort, a large-scale Venetian-themed hotel, casino, retail, meeting and entertainment complex in Las Vegas, Nevada. The Casino Resort includes the first all-suites hotel on the Strip with 3,036 suites; a gaming facility of approximately 116,000 square feet; an enclosed retail, dining and entertainment complex of approximately 445,000 net leasable square feet; and a meeting and conference facility of approximately 500,000 square feet. The Company is party to litigation matters and claims related to its operations and construction of the Casino Resort that it does not expect to have a material adverse effect on its financial position, result of operation or cash flows. See "Part II, Item 1 - Legal Proceedings." The Company opened additional attractions at the Casino Resort on October 7, 2001, including the Guggenheim Las Vegas Museum and the Guggenheim Hermitage Museum. During September 2001, the Company suspended its plans to develop and construct (1) an approximately 1,000-room hotel tower on top of the Casino Resort's existing parking garage and an approximately 1,000-parking space expansion to the parking garage (collectively, the "Phase IA Addition") and (2) approximately 150,000 square feet of additional convention center space on the Phase II Land. Operating Results - ----------------- Third Quarter Ended September 30, 2001 compared to Third Quarter Ended September 30, 2000. Operating Revenues ------------------ Consolidated net revenues for the third quarter of 2001 were $123.2 million, representing a decrease of $13.3 million when compared with $136.5 million of consolidated net revenues during the third quarter of 2000. The decrease in net revenues was primarily due to a decline of casino revenue at the Casino Resort. The Casino Resort's casino revenues were $61.4 million in the third quarter of 2001, a decrease of $11.0 million when compared to $72.4 million during the third quarter of 2000. The decrease was attributable to more stringent table games marketing parameters implemented during the third quarter of 2001 and decreased visitor traffic to Las Vegas after the terrorist attacks of September 11, 2001. Table games drop (volume) decreased to $214.1 million in the third quarter of 2001 from $294.1 million during the third quarter of 2000. Slot handle (volume) in the third quarter of 2001 decreased to $475.7 million from $505.3 million reported during the third quarter of 2000, as a result of decreased visitor traffic to Las Vegas after September 11, 2001. The Casino Resort's room rates increased, and occupancy levels decreased in the third quarter of 2001 as compared to the third quarter of 2000. The Casino Resort achieved room revenues during the third quarter of 2001 of $43.7 million, compared to $45.0 million during the third quarter of 2000. The Casino Resort's average daily room rate increased to $181 in the third quarter of 2001 compared to $168 during the third quarter of 2000. The increase in room rates occurred in all major segments of the Casino Resort's hotel rooms business, including the mid-week, group and convention business, and the weekend retail business. The occupancy of available guestrooms was 87.1% during the third quarter of 2001 compared to 96.0% during the third quarter of 2000. 27 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Food and beverage, retail and other revenues were $20.0 million during the third quarter of 2001 compared to $22.8 million during the third quarter of 2000. The decrease was attributable to lower room occupancy and banquet sales associated with the Casino Resort's group room business. The Mall generated rental and related revenues of $8.5 million during the third quarter of 2001 compared to $8.3 million during the third quarter of 2000. The increase was attributable to additional tenants and increased proceeds from rents calculated on tenant gross revenues. Operating Expenses ------------------ Consolidated operating expenses were $102.7 million in the third quarter of 2001, compared to $111.0 million during the third quarter of 2000. The decrease in operating expenses was primarily attributable to lower operating revenues and business volumes in all departments of the Casino Resort. Corporate expenses totaled $0.8 million during the third quarter of 2001, as compared to $1.7 million during the third quarter of 2000, as a result of a reduction in a corporate bonus program. Rental expenses primarily related to the Casino Resort's heating, ventilation and air conditioning plant for the third quarter of 2001 were $2.1 million, including $1.5 million for the Casino Resort and $0.6 million for the Mall. Rental expenses were also $2.1 million in the third quarter of 2000. The Mall incurred operating expenses of $5.5 million during the third quarter of 2001 compared to $6.1 million during the third quarter of 2000. The decrease in Mall operating expenses was attributable to decreases in advertising, and increased allocation of utility cost and property taxes to tenant common area maintenance charges during the third quarter of 2001. Interest Income (Expense) ------------------------- Net interest expense was $26.7 million in the third quarter of 2001, compared to $30.6 million in the same period of 2000. Of the interest expense incurred during the third quarter of 2001, $23.0 million was related to the Casino Resort (excluding the Mall) and $3.7 million was related to the Mall. The decrease in interest expense was attributable to decreases in interest rates on the Company's variable rate debt during the third quarter of 2001 and capitalization of interest in connection with current construction projects. Interest income for the quarter ended September 30, 2001 was $0.3 million as compared to $0.4 million in the same period in 2000. Nine Months Ended September 30, 2001 compared to Nine Months Ended September 30, 2000. Operating Revenues ------------------ Consolidated net revenues for the nine months ended September 30, 2001 were $402.1 million, representing a decrease of $31.7 million when compared with $433.8 million of consolidated net revenues during the nine months ended September 30, 2000. The Casino Resort's casino revenues were $174.1 million for the nine months ended September 30, 2001, a decrease of $55.9 million when compared to $230.0 million during the nine months ended September 30, 2000. The decreases in net revenues and casino revenues were attributable to more stringent table games marketing parameters implemented during the third quarter of 2001, a decline in travel to Las Vegas after the terrorist attacks of September 11, 2001, and an unusually low table games win percentage. The table games historical win percentage is reasonably predictable over time, but may vary considerably during shorter periods. Table games drop (volume) decreased to $782.4 million for the nine months ended September 30, 2001 from $859.1 million during the nine months ended September 30, 2000. Slot revenue for the nine months ended September 30, 2001 increased to $76.9 million from $75.9 million reported during the nine months ended September 30, 2000. The slot handle (volume) was $1.408 billion for the nine months ended September 30, 2001 compared to $1.421 billion during the nine months ended September 30, 2000. 28 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) The Casino Resort's room rates increased and occupancy levels decreased during the nine months ended September 30, 2001. The Casino Resort achieved room revenues during the nine months ended September 30, 2001 of $159.7 million, compared to $140.5 million during the nine months ended September 30, 2000. The Casino Resort's average daily room rate increased to $205 for the nine months ended September 30, 2001 compared to $177 during the nine months ended September 30, 2000. The increase in room rates occurred in all major segments of the Casino Resort's hotel rooms business, including the mid-week, group and convention business, and the weekend retail business. The occupancy of available guestrooms was 94.4% during the nine months ended September 30, 2001 compared to 95.5% during the nine months ended September 30, 2000. Food and beverage, retail and other revenues were $75.8 million during the nine months ended September 30, 2001 compared to $75.7 million during the nine months ended September 30, 2000. The increase was attributable to banquet sales associated with the Casino Resort group room business. The Mall generated rental and related revenues of $24.8 million during the nine months ended September 30, 2001 compared to $22.2 million during the nine months ended September 30, 2000. The increase was attributable to additional tenants and increased proceeds from rents calculated on tenant gross revenues. Operating Expenses ------------------ Consolidated operating expenses were $321.1 million for the nine months ended September 30, 2001, compared with $331.7 million during the nine months ended September 30, 2000. The decrease in operating expenses was primarily attributable to lower business volumes related to decreased travel to Las Vegas after September 11, 2001 and reduced marketing expenses associated with lower casino revenue. Corporate expenses totaled $4.7 million during the nine months ended September 30, 2001, as compared to $4.5 million during the nine months ended September 30, 2000. Rental expenses primarily related to the Casino Resort's heating, ventilation and air conditioning plant for the nine months ended September 30, 2001 were $6.3 million, including $4.7 million for the Casino Resort and $1.6 million for the Mall. Rental expenses were $8.0 million for the nine months ended September 30, 2000. The decline in rental expense was primarily attributable to reduced usage of rented or participation gaming devices during 2001. The Mall incurred operating expenses of $15.8 million during the nine months ended September 30, 2001 compared to $15.1 million during the nine months ended September 30, 2000. The increase in Mall operating expenses was attributable to increases in advertising, property taxes and utility cost during the nine months ended September 30, 2001. Interest Income (Expense) ------------------------- Net interest expense was $83.0 million for the nine months ended September 30, 2001, compared to $89.8 million in the same period of 2000. Of the $83.0 million incurred during the nine months ended September 30, 2001, $71.2 million was related to the Casino Resort (excluding the Mall) and $11.8 million was related to the Mall. The decrease in interest expense was attributable to decreases in interest rates on the Company's variable rate debt during the nine months ended September 30, 2001 and capitalization of interest in connection with current construction projects. Interest income for the nine months ended September 30, 2001 was $1.1 million, as compared to $1.2 million for the same period in 2000. Other Factors Affecting Earnings - -------------------------------- During the third quarter of 2001, the Casino Resort recorded an extraordinary item of $1.4 million for loss on early retirement of debt relating to the restructuring of the Bank Credit Facility. See Part I, Item 1. Financial Statements - Notes to Financial Statements - Note 4 Long-Term Debt. 29 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) During early 2000, the Company modified its business strategy as it relates to premium casino customers and marketing to foreign premium casino customers. The Company has generally raised its betting limits for table games to be competitive with other premium resorts on the Strip. There are additional risks associated with this change in strategy, including risk of bad debts, risks to profitability margins in a highly competitive market and the need for additional working capital to accommodate possible higher levels of trade receivables and foreign currency fluctuations associated with collection of trade receivables in other countries. The Company has opened domestic and foreign marketing offices as well as bank collection accounts in several foreign countries to accommodate this change in business strategy, thereby increasing marketing costs. Liquidity and Capital Resources - ------------------------------- Cash Flow and Capital Expenditures ---------------------------------- As of September 30, 2001 and December 31, 2000, the Company held cash and cash equivalents of $58.1 million and $45.2 million, respectively. Net cash provided by operating activities for the first nine months of 2001 was $35.7 million, compared with $76.4 million for the same period in 2000. The Company's operating cash flow in the first nine months of 2001 was negatively impacted by a $55.9 million decrease in casino revenue, as compared to the prior year's nine-month period. Net trade receivables were $54.4 million as of September 30, 2001 and $64.3 million as of December 31, 2000. Capital expenditures paid from operating cash flow during the first nine months of 2001 were $42.2 million, including expenditures for the two Guggenheim Museum projects and the Phase IA Addition. Capital expenditures for the same period in 2000 were $10.6 million for a variety of ongoing capital improvement projects and $12.8 million for construction of the Casino Resort. The Casino Resort's capital expenditures for the fourth quarter of 2001 and for the first quarter of 2002 are expected to total approximately $12.0 million and $20.0 million, respectively. These expenditures primarily relate to liquidation of construction payables and commitments related to the Phase IA Addition and other capital expenditure projects undertaken during the first nine months of 2001. Although the Company suspended its Phase IA Addition project during the third quarter of 2001, it will continue certain design, planning and permitting of the project during the fourth quarter of 2001. Litigation Contingencies, Debt Service Payments and Available Resources ----------------------------------------------------------------------- As discussed in "Part I, Item 1 - Financial Statements - Notes to Financial Statements - Note 6 Commitments and Contingencies" above, the Company is a party to certain litigation matters and claims related to construction of the Casino Resort. If the Company is required to pay any of the Construction Manager's contested construction costs (the "Contested Construction Costs") which are not covered by the Insurance Policy, the Company may use cash received from the following sources to fund such costs: (i) the LD Policy, (ii) the Construction Manager, Bovis and P&O pursuant to the Construction Management Contract, the Bovis Guaranty and the P&O Guaranty, respectively, (iii) third parties, pursuant to their liability to the Company under their agreements with the Company, (iv) amounts received from the Phase II Subsidiary for shared facilities designed and constructed to accommodate the operations of the Casino Resort and the Phase II Resort, (v) the Sole Stockholder, pursuant to his liability under the Completion Guaranty, (vi) borrowings under the Revolver, (vii) additional debt or equity financings, and (viii) operating cash flow. The Sole Stockholder has remaining liability of approximately $5.0 million under the Completion Guaranty to fund excess construction costs (which liability is collateralized with cash and cash equivalents). If the Company were required to pay substantial Contested Construction Costs, and if it were unable to raise or obtain the funds from the sources described above, there could be a material adverse effect on the Company's financial position, results of operations or cash flows. During the third quarter of 2001, the Company paid principal payments of $381,875 and $5.4 million on the Bank Credit Facility and the FF&E Credit Facility, respectively. The Company currently has debt service payments due, including principal payments on the Bank Credit Facility and the FF&E Credit Facility aggregating $5.8 million during the last quarter of 2001 and $23.0 million during 2002. Based on current interest rates under the Bank Credit Facility and the FF&E Credit Facility, the Company has estimated total interest payments (excluding noncash amortization of debt offering costs) of (1) approximately $37.5 million during the last quarter of 2001, and $81.9 million during fiscal 2002 for indebtedness secured by the Casino Resort and (2) approximately $2.9 million during the last quarter of 2001 and $11.3 million during fiscal 2002 for indebtedness secured by the Mall. 30 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) On September 17, 2001, the Company entered into its second amendment and restatement of the Bank Credit Facility in order to (1) combine the $97.5 million tranche A term loan, $49.5 million tranche B term loan and $5.8 million tranche C term loan into a single term loan of $152.8 million, (2) modify the Company's scheduled amortization payments to now repay $381,875 per quarter until December 2002, to be followed by two bullet payments of $75.2 million during each of March 2003 and June 2003, (3) extend the commitment termination date of the Revolver from September 15, 2001 to June 30, 2003, (4) eliminate the "cash sweep" provision of such agreement in connection with any excess cash flows of the Company, and (5) modify the financial covenants. On September 28, 2001, the Company entered into a fourth amendment to the FF&E Credit Facility in order to modify its financial covenants to substantially match those under the amended and restated Bank Credit Facility and consent to the amendments to the Bank Credit Facility. On October 19, 2001, the Phase II Subsidiary entered into the Phase II Subsidiary Credit Facility. The Phase II Subsidiary Credit Facility is secured by the Phase II Land, as well as the Phase II Subsidiary's leasehold interest in the Phase II Lease. The Phase II Subsidiary immediately drew $12.5 million for the Letter of Credit pursuant to the terms of and to be provided as credit support for the Bank Credit Facility. The Letter of Credit will be reduced by $3.125 million at the end of each of the next four fiscal quarters that the Company makes its required interest payments under the Bank Credit Facility, and will be released in full upon the earlier of October 31, 2002 or immediately following the first fiscal quarter period ending after September 30, 2001 in which the Company's consolidated adjusted EBITDA equals or exceeds $30.0 million. The remaining portion of the Phase II Subsidiary Credit Facility and proceeds from rental payments from Venetian to the Phase II Subsidiary under the Phase II Lease are each available for any Phase II Resort pre-development expenses (up to $30 million after October 19, 2001) or may be loaned or distributed by the Phase II Subsidiary to the Company for other liquidity needs. For the next twelve months, the Company expects to fund its operations, capital expenditures and debt service requirements from existing cash balances, operating cash flow, borrowings under the Revolver to the extent that funds are available, and loans or distributions from the Phase II Subsidiary as a result of borrowings under the Phase II Subsidiary Credit Facility. As of September 30, 2001, all of the Company's $40.0 million Revolver availability was drawn. The Company's debt instruments contain certain restrictions that, among other things, limit the ability of the Company and/or certain subsidiaries to incur additional indebtedness, issue disqualified stock or equity interests, pay dividends or make other distributions, repurchase equity interests or certain indebtedness, create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell assets of the Company without prior approval of the lenders or noteholders. Financial covenants included in the Bank Credit Facility and FF&E Credit Facility include a minimum fixed charge ratio, maximum leverage ratio, minimum consolidated adjusted EBITDA standard, minimum equity standard and maximum capital expenditures standard. The financial covenants in the Bank Credit Facility and the FF&E Credit Facility involving EBITDA are applied on a rolling four quarter basis, and the Company's compliance with financial covenants can be temporarily affected if the Company experiences a decline in hotel occupancy or room rates, or an unusually low win percentage in a particular quarter, which is not offset in subsequent quarters or by other results of operations. As a result of these fluctuations, no assurance can be given that the Company will be in compliance with its financial covenants. Although the Company has remained in compliance with its financial covenants under the Bank Credit Facility and the FF&E Credit Facility, meeting certain financial covenant tests in the third quarter of 2001 was difficult due to a decline in visitor volume to Las Vegas after the terrorist attacks of September 11, 2001 and an extremely low win percentage for certain quarters during the rolling four quarter measurement period. The Company's financial covenants allow the Sole Stockholder to increase EBITDA for measurement purposes in two consecutive quarters by issuing a standby letter of credit to the Company's lenders. The Company used this letter of credit mechanism in the amount of $6.9 million to meet the minimum EBITDA covenant test during the third quarter of 2001. In the short term, the Company remains in a challenging business environment and no assurance can be given that it will remain in compliance with its existing financial covenants. If visitors volume to Las Vegas returns to normal levels, the Company does anticipate that results and operations and its overall win percentage will return to normal levels over time. 31 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) If the Company is required to pay certain significant Contested Construction Costs, or if the Company is unable to meet its debt service requirements, the Company will seek, if necessary and to the extent permitted under the Indentures and the terms of the Bank Credit Facility and the FF&E Credit Facility or any other credit facility then outstanding, additional financing through bank borrowings or debt or equity financings. Also, there can be no assurance that new business developments or unforeseen events will not occur resulting in the need to raise additional funds. There also can be no assurance that additional or replacement financing, if needed, will be available to the Company, and, if available, that the financing will be on terms favorable to the Company, or that the Sole Stockholder or any of his affiliates will provide any such financing. New Mall Subsidiary and Transfer of Mall Assets ----------------------------------------------- On November 12, 1999, Mall Construction transferred the Mall Assets to the Mall Subsidiary. Upon such transfer, the Mall Assets were released as security to the holders of the Mortgage Notes and for the indebtedness under the Bank Credit Facility, the indebtedness under the $140.0 million mall construction loan facility (the "Mall Construction Loan Facility") was assumed by the Mall Subsidiary and all entities comprising the Company, other than the Mall Subsidiary, were released from all obligations under the Mall Construction Loan Facility. On December 20, 1999, the Mall Construction Loan Facility was paid off in full with the proceeds of the Mall Take-out Financing. The Mall Take-out Financing is secured by a $20.0 million guaranty made by the Sole Stockholder (the "Mall Take-out Guaranty"). The annual interest rate on the Tranche A Take-out Loan is 350 basis points over 30 day LIBOR. The Tranche A Take-out Loan is due in full on December 20, 2002 and no principal payments are due thereunder until such date. The Tranche B Take-out Loan bears interest at 14% per annum. The initial maturity date is December 20, 2004 with a right of extension to December 20, 2007. No principal payments are due until maturity. Also on December 20, 1999, the Mall Assets were transferred from the Mall Subsidiary to the New Mall Subsidiary, the obligor under the Mall Take-out Financing. Because the New Mall Subsidiary is not a guarantor of any indebtedness of the Company (other than the Mall Take-out Financing), creditors of the Company (including the holders of the Notes but excluding creditors of the New Mall Subsidiary) do not have a direct claim against the Mall Assets. As a result, indebtedness of the entities comprising the Company other than the New Mall Subsidiary (including the Notes) is now, with respect to the Mall Assets, effectively subordinated to indebtedness of the New Mall Subsidiary. The New Mall Subsidiary is not restricted by any of the debt instruments of LVSI, Venetian or the Company's other subsidiary guarantors (including the Indentures) from incurring any indebtedness. The terms of the Tranche A Take-out Loan prohibit the New Mall Subsidiary from paying dividends or making distributions to any of the other entities comprising the Company unless payments under the Tranche A Take-out Loan are current, and, with certain limited exceptions, prohibit the New Mall Subsidiary from making any loans to such entities. Any additional indebtedness incurred by the New Mall Subsidiary may include additional restrictions on the ability of the New Mall Subsidiary to pay any such dividends and make any such distributions or loans. Phase II Resort and Transfer of Phase II Land --------------------------------------------- If the Phase II Subsidiary determines to construct the Phase II Resort, the Phase II Subsidiary will be required to raise substantial debt and/or equity financings. Currently, there are no commitments to fund the construction costs of the Phase II Resort. The Phase II Land was transferred to the Phase II Subsidiary in 1998. On December 31, 1999, an additional 1.75 acres of land was contributed indirectly by the Sole Stockholder to the Phase II Subsidiary. The development of the Phase II Resort may require obtaining additional regulatory approvals. The Company has not yet set a date to begin construction of the Phase II Resort. The Phase II Subsidiary has outstanding project payables in the amount of $2.9 million to be funded from future equity contributions or borrowings by the Phase II Subsidiary. During the first quarter of 2001, the Phase II Subsidiary borrowed $1.1 million under a bank line of credit, which is due and payable on July 15, 2002. The proceeds were used to fund payments of Phase II Subsidiary operating costs. See also " - Litigation Contingencies, Debt Service Payments and Available Resources" for a description of the Phase II Subsidiary Credit Facility. 32 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Because the Phase II Subsidiary is not a guarantor of the Company's indebtedness, creditors of the Company (including the holders of the Notes) do not have a direct claim against the assets of the Phase II Subsidiary. As a result, the existing indebtedness of the Company (including the Notes) is effectively subordinated to indebtedness of the Phase II Subsidiary. The Phase II Subsidiary is not subject to any of the restrictive covenants of the debt instruments of the Company (including, without limitation, the covenants with respect to the limitations on indebtedness and restrictions on the ability to pay dividends or to make distributions or loans to the Company and its subsidiaries). Any indebtedness to be incurred by the Phase II Subsidiary, subsequent to the Phase II Subsidiary Credit Facility may include material restrictions on the ability of the Phase II Subsidiary to pay dividends or make distributions or loans to the Company and its subsidiaries. The debt instruments of the Company limit the ability of LVSI, Venetian or any of their subsidiaries to guarantee or otherwise become liable for any indebtedness of the Phase II Subsidiary. Such debt instruments also restrict the sale or other disposition by the Company and its subsidiaries of capital stock of the Phase II Subsidiary, including the sale of any such capital stock to the Sole Stockholder or any affiliate of the Sole Stockholder. In addition, prior to commencement of construction of the Phase II Resort, Venetian has the right to approve the plans and specifications for the Phase II Resort. Risk Related to the Subordination Structure of the Mortgage Notes - ----------------------------------------------------------------- The Mortgage Notes represent senior secured debt obligations of LVSI and Venetian, secured by second priority liens on the collateral securing the Mortgage Notes (the "Note Collateral"). However, the guarantees of the Mortgage Notes by its subsidiaries, Mall Intermediate and Lido Intermediate (collectively, the "Subordinated Guarantors"), are unsecured, subordinated debt obligations of such guarantors. The structure of these guarantees present certain risks for holders of the Mortgage Notes. For example, if the Note Collateral were insufficient to pay the debt secured by such liens, or such liens were found to be invalid, then holders of the Mortgage Notes would have a senior claim against any remaining assets of LVSI and Venetian. In contrast, because of the subordination provision with respect to the Subordinated Guarantors, holders of the Mortgage Notes will always be fully subordinated to the claims of holders of senior indebtedness of the Subordinated Guarantors. Other Matters - ------------- In June 1998, the Financial Accounting Standards Board adopted Statement of Financial Accounting Standards No. 133 ("SFAS 133") entitled "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. If specific conditions are met, a derivative may be specifically designated as a hedge of specific financial exposures. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and, if used in hedging activities, it depends on its effectiveness as a hedge. SFAS 133 as amended is effective for all fiscal quarters of fiscal years beginning after December 31, 2000. SFAS 133 should not be applied retroactively to financial statements of prior periods. The Company adopted SFAS 133 on January 1, 2001. Because of the Company's minimal use of derivatives, the adoption of SFAS 133 did not have a significant effect on the Company's earnings or financial position. Special Note Regarding Forward-Looking Statements - ------------------------------------------------- Certain statements in this section and elsewhere in this Quarterly Report on Form 10-Q (as well as information included in oral statements or other written statements made or to be made by the Company) constitute "forward-looking statements." Such forward-looking statements include the discussions of the business strategies of the Company and expectations concerning future operations, margins, profitability, liquidity and capital resources. In addition, certain portions of this Form 10-Q, the words: "anticipates", "believes", "estimates", "seeks", "expects", "plans", "intends" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Although the Company believes that such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such 33 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) factors include, among others, the risks associated with entering into a new venture and new construction, competition and other planned construction in Las Vegas, government regulation related to the casino industry (including the legalization of gaming in certain jurisdictions, such as Native American reservations in the State of California), leverage and debt service (including sensitivity to fluctuations in interest rates), uncertainty of casino spending and vacationing in casino resorts in Las Vegas, disruptions or reductions in travel to Las Vegas, the September 11, 2001 attack or other terrorist incidents, occupancy rates and average daily room rates in Las Vegas, demand for all-suites rooms, the popularity of Las Vegas as a convention and trade show destination, the completion of infrastructure projects in Las Vegas, including the current expansion of the Las Vegas Convention Center and the recent expansion of McCarran International Airport, litigation risks, including the outcome of the pending disputes with the Construction Manager and its subcontractors, and general economic and business conditions which may impact levels of disposable income of consumers and pricing of hotel rooms. Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The Company's primary exposure to market risk is interest rate risk associated with its long-term debt. The Company attempts to manage its interest rate risk by managing the mix of its long-term fixed-rate borrowings and variable rate borrowings under the Bank Credit Facility, the Tranche A Take-out Loan and the FF&E Credit Facility, and by use of interest rate cap and floor agreements. The ability to enter into interest rate cap and floor agreements will allow the Company to manage its interest rate risk associated with its variable rate debt. See "Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" and "Part 1, Item 1 - Financial Statements - Notes to Financial Statements - Note 4 Long-Term Debt." 34 Part II OTHER INFORMATION Item 1. Legal Proceedings The Company is party to litigation matters and claims related to its operations and the construction of the Casino Resort. For more information, see the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and "Part I, Item 1 - Financial Statements - Notes to Financial Statements Note 6 Commitments and Contingencies." 35 Part II OTHER INFORMATION Items 2 through 5 of Part II are not applicable. Item 6. Exhibits and Reports on Form 8-K (a) List of Exhibits
Exhibit No. Description of Document - ----------- ----------------------- 10.1 Amended and Restated Credit Agreement, dated as of September 17, 2001, by and among Las Vegas Sands, Inc. and Venetian Casino Resort, LLC, as Borrowers, the lenders party thereto and The Bank of Nova Scotia, as Lead Arranger and Administrative Agent.* 10.2 Fourth Amendment to Term Loan and Security Agreement, dated as of September 28, 2001, by and among Las Vegas Sands, Inc. and Venetian Casino Resort, LLC, as joint and several obligors, the financial institutions party thereto and General Electric Capital Corporation, as Administrative Agent.* 10.3 Credit Agreement, dated as of October 19, 2001, by and among Lido Casino Resort, LLC, as Borrower, the lenders party thereto and the Bank of Nova Scotia, as Administrative Agent.* - ---------- * Filed herewith.
(b) Reports on Form 8-K No report on Form 8-K was filed during the quarter ended September 30, 2001. 36 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. LAS VEGAS SANDS, INC. November 13, 2001 By: /s/ Sheldon G. Adelson --------------------------- Sheldon G. Adelson Chairman of the Board, Chief Executive Officer and Director November 13, 2001 By: /s/ Harry D. Miltenberger -------------------------- Harry D. Miltenberger Vice President-Finance (principal financial and accounting officer) 37 EX-10 3 exhibit10-1.txt AMENDED AND RESTATED CREDIT AGREEMENT LAS VEGAS SANDS, INC. and VENETIAN CASINO RESORT, LLC AMENDED AND RESTATED CREDIT AGREEMENT This AMENDED AND RESTATED CREDIT AGREEMENT is dated as of September 17, 2001 and entered into by and among LAS VEGAS SANDS, INC. ("LVSI"), a Nevada corporation, and VENETIAN CASINO RESORT, LLC ("Venetian"), a Nevada limited liability company, as joint and several obligors (each of LVSI and Venetian, a "Borrower" and, collectively, the "Borrowers"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "Lender" and collectively as "Lenders"), and THE BANK OF NOVA SCOTIA ("Scotiabank"), as Lead Arranger (in such capacity the "Arranger"), and Scotiabank, as administrative agent for Lenders (in such capacity, the "Administrative Agent") and solely for the purposes of subsection 10.22, Sheldon G. Adelson. R E C I T A L S --------------- WHEREAS, pursuant to that certain Credit Agreement dated as of November 14, 1997, as amended by the First Amendment thereto dated as of January 30, 1998, and further amended by the Limited Waiver and Second Amendment to Credit Agreement dated as of November 12, 1999, by and among Borrowers, Lenders and Administrative Agent (such Credit Agreement, as amended, the "Initial Credit Agreement" ), lenders extended the senior secured credit facilities set forth in the Initial Credit Agreement to Borrowers to provide a portion of the financings necessary to develop and construct the Project (this and other capitalized terms used herein shall have the meanings given in subsection 1.1 of this Agreement), and in the case of the Revolving Loans, to provide working capital for the Project hotel and casino following the Completion Date; WHEREAS, Borrowers financed the development and construction of the Project with (i) equity contributions to Borrowers from Adelson consisting of the Real Estate Contribution (approximately 14 acres of which has been released to the Phase II Subsidiary upon the completion of a subdivision of such land) and cash in an aggregate amount of $320,000,000, (ii) proceeds of the issuance of senior secured Mortgage Notes in an aggregate principal amount of not less than $425,000,000, (iii) proceeds of the issuance of Subordinated Notes of approximately $90,000,000 in cash, (iv) the proceeds of the Interim Mall Facility (as defined in the Initial Credit Agreement) in an aggregate principal amount of not less than $140,000,000, (v) the proceeds of an equipment finance loan from the FF&E Lenders of not less than approximately $98,000,000 to finance furniture, fixtures and equipment (including, without limitation, gaming equipment and power station equipment) a portion of which may be financed on an interim basis with proceeds of the revolving loan portion of the senior secured credit facilities contemplated hereby, (vi) the proceeds of a contribution from a joint venture between Atlantic Thermal Systems, Inc., and Pacific Enterprises Energy Services, in an amount up to approximately $70,000,000 as necessary to purchase, construct and install (x) certain equipment that is located at or used in connection with the heating, ventilation and air conditioning facility for the Project and (y) certain equipment that is part of the Project's mechanical and/or electrical systems, and (vii) the term loan portion of the senior secured credit facilities contemplated hereby; WHEREAS, pursuant to that certain Amended and Restated Credit Agreement dated as of June 14, 2000, as amended by the First Amendment thereto dated as of March 15, 2001, and the Limited Waiver, Consent and Second Amendment thereto dated as of June 29, 2001, each by and among Borrowers, Lenders and Administrative Agent (such Credit Agreement, as amended, the "Existing Credit Agreement"), Lenders amended and restated the terms of the Initial Credit Agreement to (i) provide additional term loans in the aggregate principal amount of $50,000,000, (ii) revise the financial covenants set forth in the Initial Credit Agreement and (iii) make certain other amendments to the Initial Credit Agreement; WHEREAS, the parties to the Existing Credit Agreement desire to amend and restate the Existing Credit Agreement in order to (i) revise the amortization schedule for the existing Terms Loans (as defined in the Existing Credit Agreement), the financial covenants set forth in the Existing Credit Agreement and the mandatory prepayment provisions of the Existing Credit Agreement, (ii) extend the Revolving Loan Commitment Termination Date, (iii) combine the Tranche A Term Loan, Tranche B Term Loan and Tranche C Term Loan into one tranche (to be referred to as the Term Loan) and (iv) make certain other amendments to the Existing Credit Agreement; and 1 WHEREAS, it is the intention of Borrowers and Administrative Agent and each of the Lenders that this amendment and restatement of the Existing Credit Agreement shall not constitute a refinancing of the Loans outstanding on the Closing Date and that all Obligations hereunder and under the other Loan Documents, shall continue to be secured by the grant to Administrative Agent, on behalf of Lenders, of a First Priority Lien on the First Priority Collateral; that the Subsidiary Guaranty previously executed by each Subsidiary of Borrowers shall continue in full force and effect and that each Subsidiary other than the Intermediate Holding Companies shall continue to secure all of the Obligations under the Subsidiary Guaranty by granting to Administrative Agent, on behalf of Lenders, a First Priority Lien on the First Priority Collateral. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Borrowers, Lenders and the Agent agree as follows: Section 1. DEFINITIONS 1.1 Certain Defined Terms. - --- ---------------------- The following terms used in this Agreement shall have the following meanings: "Adelson" means Sheldon G. Adelson, an individual. "Adelson Completion Guaranty" means that certain Completion Guaranty dated as of the November 14, 1997 executed by Adelson in favor of the Administrative Agent, Interim Mall Lender and the Mortgage Notes Indenture Trustee (acting on behalf of the Mortgage Note Holders). "Adelson Intercreditor Agreement" means the Intercreditor Agreement (Adelson) dated as of November 14, 1997 among Adelson, Venetian, Mall Construction Subsidiary, Administrative Agent, Mortgage Note Indenture Trustee, Interim Mall Lender and the Subordinated Notes Indenture Trustee in substantially the form of Exhibit XVI hereto. "Adelson Subordination Agreement" has the meaning assigned to that term in subsection 5.19. "Additional Contingent Claims" has the meaning assigned to that term in subsection 5.17A. "Additional Billboard Space" has the meaning assigned to that term in the Cooperation Agreement. "Additional Indebtedness" has the meaning assigned to that term in subsection 7.1(xv). "Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (i) the arithmetic average (rounded upward to the nearest 1/16 of one percent) of the offered quotations, if any, to first class banks in the interbank Eurodollar market Lenders for U.S. dollar deposits of amounts in same day funds comparable to the respective principal amounts of the Eurodollar Rate Loans of Scotiabank for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such Interest Period as of approximately 10:00 A.M. (New York time) on such Interest Rate Determination Date by (ii) a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including any marginal, emergency, supplemental, special or other reserves) applicable on such Interest Rate Determination Date to any member bank of the Federal Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation D (or any successor category of liabilities under Regulation D). "Administrative Agent" has the meaning assigned to that term in the introduction to this Agreement and also means and includes any successor Administrative Agent appointed pursuant to subsection 9.5. "Advance Confirmation Notice" has the meaning assigned that term in the Disbursement Agreement. "Affected Lender" has the meaning assigned to that term in subsection 2.6C. "Affected Loans" has the meaning assigned to that term in subsection 2.6C. 2 "Affiliate", as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Agent" means, individually, each of the Administrative Agent and the Arranger, and "Agents" means Administrative Agent and the Arranger, collectively. "Aggregate Amounts Due" has the meaning assigned to that term in subsection 10.5. "Agreement" means this Amended and Restated Credit Agreement dated as of September 17, 2001. "Anticipated Future Work" has the meaning assigned to that term in the Disbursement Agreement. "Applicable Tax Percentage" means the highest aggregate effective marginal rate of federal, state and local income tax or, when applicable, alternative minimum tax, to which any direct or indirect member or S corporation shareholder of the Borrowers subject to the highest marginal rate of tax would be subject in the relevant year of determination (as certified to the Administrative Agent by a nationally recognized tax accounting firm), taking into account only that member's or S corporation shareholder's share of income and deductions attributable to its interest in the Borrowers. "Applied Amount" has the meaning assigned to that term in subsection 2.4B(iv)(b). "Approved Equipment Funding Commitment" has the meaning assigned that term in the Disbursement Agreement. "Arranger" has the meaning assigned to such term in the introduction to this Agreement. "Asset Sale" means the sale by a Borrower or any of its Subsidiaries to any Person of (i) any of the stock of any of such Person's Subsidiaries, (ii) substantially all of the assets of any division or line of business of a Borrower or any of its Subsidiaries, or (iii) any other assets (whether tangible or intangible) of a Borrower or any of its Subsidiaries (other than (a) inventory or goods (other than equipment) sold in the ordinary course of business, (b) any other assets to the extent that the aggregate fair market value of such assets sold during any Fiscal Year, is less than or equal to $1,000,000 or (c) any transfers or dispositions permitted by clauses (ii), (vii) through (xix), inclusive, and (xxi) of subsection 7.7). "Assignment Agreement" means an Assignment Agreement in substantially the form of Exhibit VII annexed hereto. "Bank Agent" has the meaning assigned to that term in the Conforming Adelson L/C Drawing Agreement. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy", as now and hereafter in effect, or any successor statute. "Base Rate" means, at any time, the higher of (x) the Prime Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate. "Base Rate Loans" means Loans bearing interest at rates determined by reference to the Base Rate as provided in subsection 2.2A. "Billboard" means H & H of Nevada, LLC. "Billboard Master Lease" means that certain Lease Agreement dated November 14, 1997 by and between Venetian and New Mall Subsidiary, as successor to Mall Subsidiary (as successor to Mall Construction Subsidiary) pursuant to which the New Mall Subsidiary, as successor to Mall Subsidiary (as successor to Mall Construction Subsidiary), is leasing from Venetian the Additional Billboard Space. 3 "Billboard Operating Lease" means that certain Amended and Restated Restaurant Lease dated June 26, 1997 by and between New Mall Subsidiary, as successor to Mall Subsidiary and Venetian and Billboard, as successor to B.L. International of Nevada, Inc. (together with all assignments, modifications, amendments, riders and addenda thereto). "Borrowers" has the meaning assigned to that term in the introduction to this Agreement and shall mean, as the context requires, any or all of the Borrowers. "Business Day" means (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or Nevada or is a day on which banking institutions located in either such state are authorized or required by law or other governmental action to close, and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day described in clause (i) above and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Lease", as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Cash" means (i) money, (ii) currency or (iii) a credit balance in a Deposit Account. "Cash Equivalents" means (a) [intentionally deleted], (b)(i) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or obligations fully guaranteed by the United States of America, (ii) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any other agency or instrumentality of the United States, (iii) interest-bearing demand or time deposits (which may be represented by certificates of deposit) issued by banks having general obligations rated (on the date of acquisition thereof) at least "A" or the equivalent by Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. (together with its successors, "S&P") or Moody's Investors Service, Inc. (together with its successors, "Moody's") (S&P and Moody's together with any other nationally recognized credit rating agency if neither of such corporations is then currently rating the pertinent currently rating the pertinent obligations, a "Rating Agency") or, if not so rated, secured at all times, in the manner and to the extent provided by law, by collateral security in clause (i) or (ii) of this definition, of a market value of no less than the amount of monies so invested, (iv) commercial paper rated (on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency issued by any Person, (v) repurchase obligations for underlying securities of the types described in clause (i) or (ii) above, entered into with any commercial bank or any other financial institution having long-term unsecured debt securities rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency in connection with which such underlying securities are held in trust or by a third-party custodian, (vi) guaranteed investment contracts of any financial institution which has a long-term debt rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency, (vii) obligations (including both taxable and non-taxable municipal securities) issued or guaranteed by, and any other obligations the interest on which is excluded from income for Federal income tax purposes issued by, and any state of the United States of America or District of Columbia or the Commonwealth of Puerto Rico or any political subdivision, agency, authority or instrumentality thereof, which issuer or guarantor has (A) a short-term debt rated (on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency and (B) a long-term debt rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency, (viii) investment contracts of any financial institution either (A) fully secured by (1) direct obligations of the United States, (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States or (3) securities or receipts evidencing ownership interest in obligations or special portions thereof described in clause (1) or (2), in each case guaranteed as full faith and credit obligations of the United States of America, having a market value at least equal to 102% of the amount deposited thereunder, or (B) with long-term debt rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating 4 Agency and short-term debt rated (on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency, (ix) a contract or investment agreement with a provider or guarantor (A) which provider or guarantor is rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency (provided that if a guarantor is a party to the rating, the guaranty must be unconditional and must be confirmed in writing prior to any assignment by the provider to any subsidiary of such guarantor), (B) providing that monies invested shall be payable to the Disbursement Agent while the Disbursement Agreement is in effect and thereafter to Administrative Agent without condition (other than notice) and without brokerage fee or other penalty, upon not more than two Business Days' notice for application when and as required or permitted under the Collateral Documents, and (C) stating that such contract or agreement is unconditional, expressly disclaiming any right of setoff and providing for immediate termination in the event of insolvency of the provider and termination upon demand of the Disbursement Agent while the Disbursement Agreement is in effect and thereafter to Administrative Agent (which demand shall only be made at the direction of the Borrowers) after any payment or other covenant default by the provider, or (x) any debt instruments of any Person which instruments are rated (on the date of acquisition thereof) at least "A," "A2", "A-1" or "P-1" or the equivalent by any Rating Agency, provided that in each case of clauses (i) through (x), such investments are denominated in Dollars and maturing not more than 13 months from the date of acquisition thereof; (c) investments in any money market fund which is rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency; (d) investments in mutual funds sponsored by any securities broker-dealer of recognized national standing having an investment policy that requires substantially all the invested assets of such fund to be invested in investments described in any one or more of the foregoing clauses and having a rating of at least "A" or "A2" or the equivalent by any Rating Agency; or (e) investments in both taxable and nontaxable (i) periodic auction reset securities which have final maturities between one and 30 years from the date of issuance and are repriced through a dutch auction or other similar method every 35 days or (ii) auction preferred shares which are senior securities of leveraged closed end municipal bond funds and are repriced pursuant to a variety of rate reset periods, in each case having a rating (on the date of acquisition thereof) of at least "A" or "A2" or the equivalent of any Rating Agency. "Casino Lease" means that certain Casino Lease between Venetian as lessor and LVSI as lessee dated effective as of November 14, 1997 with respect to the operation of the casino for the Project. "Central Plant" means the "New HVAC Plant", as such term is defined in the Cooperation Agreement. "Certificate re Non-Bank Status" means a certificate substantially in the form of Exhibit IX annexed hereto delivered by a Lender to Administrative Agent pursuant to subsection 2.7B(iii). "Class" means, as applied to Lenders, each of the following two classes of Lenders: (i) Lenders having Term Loan Exposure and (ii) Lenders having Revolving Loan Exposure. "Closing Date" means the date, on or before September 21, 2001, on which this Agreement is executed and delivered and all conditions for the occurrence thereof set forth in subsection 4.1 shall have been satisfied or waived by Administrative Agent. "Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute. "Collateral" means, collectively, all of the real, personal and mixed property (including capital stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations. "Collateral Account Agreements" has the meaning assigned to that term in the Disbursement Agreement. 5 "Collateral Documents" means the Company Security Agreement, the Deed of Trust, the Mall Construction Subsidiary Security Agreement, the Collateral Account Agreements (other than the Mortgage Notes Collateral Account Agreement), any Subsidiary Security Agreements and all other instruments or documents delivered by a Loan Party pursuant to the Existing Credit Agreement, this Agreement or any of the other Loan Documents in order to grant to Intercreditor Agent, Disbursement Agent or Administrative Agent, on behalf of Lenders, a Lien on any real, personal or mixed property of that Loan Party as security for the Obligations. "Commercial Letter of Credit" means any letter of credit or similar instrument issued for the purpose of providing the financing payment mechanism in connection with the purchase of any materials, goods or services by a Borrower in the ordinary course of business of such Borrower. "Commitment" means the commitment of a Lender to make Loans as set forth in subsection 2.1A, and "Commitments" means such commitments of all Lenders in the aggregate. "Company Security Agreement" means the Company Security Agreement executed and delivered by Borrowers and Mall Construction Subsidiary on November 14, 1997, substantially in the form of Exhibit XII annexed hereto. "Completion Date" means November 12, 1999. "Completion Guaranty" means each of the Direct Construction Guaranty, the Indirect Construction Guaranty and the Adelson Completion Guaranty or any one of them and "Completion Guaranties" means the Direct Construction Guaranty, the Indirect Construction Guaranty and the Adelson Completion Guaranty collectively. "Completion Guaranty Loan" means any amounts advanced by Adelson under the Adelson Completion Guaranty, which is treated as a loan to Venetian in an aggregate principal amount not to exceed $25,000,000 at any time, plus accrued and unpaid interest thereon, evidenced by a Completion Guaranty Note and subject to the terms of the Adelson Intercreditor Agreement. "Completion Guaranty Note" means a note in the form attached to the Interim Mall Credit Agreement (as in effect on November 14, 1997). "Compliance Certificate" means a certificate substantially in the form of Exhibit IV annexed hereto delivered to Administrative Agent and Lenders by Borrowers pursuant to subsection 6.1(iv). "Conforming Adelson L/C" means an unconditional, direct pay letter of credit which (a) is obtained by Adelson or one of his Affiliates (but not Borrowers or any of their Subsidiaries), (b) either (x) has an expiration date of not less than twenty-four (24) months or (y) has an expiration date of not less than twelve (12) months with an automatic extension of one twelve (12) month period unless the issuer of such letter of credit gives Drawing Agent not less than sixty (60) days prior written notice that it will not renew the letter of credit for such successive term, (c) either (x) is irrevocable or (y) provides that the issuer will deliver not less than sixty (60) days prior written notice to Drawing Agent of its intention to revoke such letter of credit, (d) is issued by a financial institution acceptable to each of the Agents in their reasonable judgment and (e) is otherwise in form and substance acceptable to each of the Agents in their reasonable judgment, provided that any such letter of credit shall only qualify as a Conforming Adelson L/C if it states that it may be drawn upon by the Conforming Adelson L/C Drawing Agent and applied in accordance with the terms of this Agreement and the Conforming Adelson L/C Drawing Agreement upon the occurrence of any Conforming Adelson L/C Draw Event, and provided further that neither Borrower nor any of their Subsidiaries shall have any obligations (contingent or otherwise) in respect of any such letter of credit. 6 "Conforming Adelson L/C Draw Event" shall mean, during the time that the Conforming Adelson L/C remains in full force and effect, the occurrence of any of the following (a) an Event of Default (which is continuing and has not been waived) (i) set forth in subsection 8.1 hereof (failure to make payments when due), (ii) set forth in subsection 8.2 hereof (default under Other Indebtedness or Contingent Obligations), (iii) set forth in subsection 8.6 hereof (involuntary bankruptcy; appointment of receiver, etc.) or subsection 8.7 hereof (voluntary bankruptcy, appointment of receiver, etc.), (iv) set forth in subsection 8.13 (default under or termination of Operative Documents), and (v) resulting from a breach of any of the covenants set forth in subsection 7.6 hereof (financial covenants); (b) a draw on the Conforming Adelson L/C by or on behalf of the agent under the FF&E Facility; (c) if such Conforming Adelson L/C has a maturity of less than twenty-four (24) months, either (x) Drawing Agent's receipt of notice from the issuer of the Conforming Adelson L/C that such issuer will not renew the Conforming Adelson L/C or (y) the date that is five days prior to the expiration of the Conforming Adelson L/C if the Administrative Agent has not received evidence of the renewal thereof, provided that the Administrative Agent may not draw down on the Conforming Adelson L/C under such circumstances if and only if (1) the failure to obtain the renewal of such Conforming Adelson L/C was not caused by Adelson or his Affiliates and Adelson and/or his Affiliates have made reasonable efforts to obtain the renewal thereof and (2) Adelson or his Affiliates substitute cash equity in Borrowers in an amount equal to the face amount of the Conforming Adelson L/C in lieu of the Conforming Adelson L/C on or before the date that is five (5) days prior to the expiration thereof (such equity to be substituted for the withdrawn Conforming Adelson L/C in the calculation of Consolidated Adjusted EBITDA); or (d) Drawing Agent's receipt of notice from the issuer of the Conforming Adelson L/C that such issuer intends to revoke, terminate or cancel the Conforming Adelson L/C provided that the Administrative Agent may not draw down on the Adelson Conforming L/C under such circumstances if and only if Adelson or his Affiliates substitute cash equity in Borrowers in an amount equal to the face amount of the Conforming Adelson L/C in lieu of the Conforming Adelson L/C on or before the date that is five (5) days prior to the revocation, termination or cancellation thereof (such equity to be substituted for the withdrawn Conforming Adelson L/C in the calculation of Consolidated Adjusted EBITDA). "Conforming Adelson L/C Drawing Agent" means the "Drawing Agent" as defined in the Conforming Adelson L/C Drawing Agreement. "Conforming Adelson L/C Drawing Agreement" means the Conforming Adelson Drawing Agreement, dated as of June 14, 2000, among the Conforming Adelson L/C Drawing Agent, the Administrative Agent and General Electric Capital Corporation, as agent for the FF&E Lenders under the FF&E Facility Agreement described in clause (i) of the definition of "FF&E Facility Agreement" herein, pursuant to which drawings, if any, on the Conforming Adelson L/Cs shall be made and the proceeds thereof distributed ratably to the Lenders and the FF&E Lenders, as such agreement may be amended, restated or otherwise modified. "Consolidated Adjusted EBITDA" means, for any period, the sum of the amounts (without duplication) for such period of (i) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) provision for taxes based on income to the extent deducted in calculating Consolidated Net Income, (iv) total depreciation expense, (v) total amortization expense, and (vi) other non-cash items reducing Consolidated Net Income (including without limitation any reductions to Consolidated Net Income as a result of minority or preferred interests of Venetian) less other non-cash items increasing Consolidated Net Income, all of the foregoing as determined on a consolidated basis for Borrowers and their Subsidiaries in conformity with GAAP. Any cash equity contributions made by Adelson or any of his Affiliates (other than one of the Borrowers) to Borrowers and/or the face amount of any Conforming Adelson L/C delivered to Drawing Agent for the benefit of the Lenders and the FF&E Lenders during any quarter and during a period of fifteen (15) days following such quarter, in an aggregate amount for such cash equity contributions and face amounts of Conforming Adelson L/Cs not to exceed $15,000,000 per quarter, may at the written election of Borrowers be included in Consolidated Adjusted EBITDA for such quarter for all purposes hereunder, provided that Borrowers may not include such cash equity contributions or the face amount of the Conforming Adelson L/C, or any combination thereof, in Consolidated Adjusted EBITDA (a) if any Conforming Adelson L/C Draw Event or any Event of Default or Potential Event of Default has occurred and is continuing at the time such cash contribution is made or such Conforming Adelson L/C is provided to Drawing Agent or (b) in any 7 event, after two consecutive quarters unless, following any exercise of such election to include any such cash equity contributions and/or face amount of any Conforming Adelson L/C in Consolidated Adjusted EBITDA, Borrowers have thereafter been in compliance with subsection 7.6 on a rolling four quarter basis on any test date occurring after such election (without giving affect to any previous cash contributions or Conforming Adelson L/C). "Consolidated Capital Expenditures" means, for any period, the sum of (i) the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of Capital Leases which is capitalized on the consolidated balance sheet of Borrowers) by Borrowers and their Subsidiaries during that period that, in conformity with GAAP, are included in "additions to property, plant or equipment" or comparable items reflected in the consolidated statement of cash flows of Borrowers plus (ii) to the extent not covered by clause (i) of this definition, any expenditures by Borrowers (excluding any Excluded Subsidiaries) during that period to acquire (by purchase or otherwise) the business, property or fixed assets of any Person, or the stock or other evidence of beneficial ownership of any Person that, as a result of such acquisition, becomes a Subsidiary of the Borrowers or either of them; provided, however, that any expenditures related to the construction of the Phase I-A Project or the Guggenheim Projects shall be excluded from such definition. "Consolidated Cash Interest Expense" means, for any period, Consolidated Interest Expense for such period, excluding, however, any interest expense not payable in Cash (including amortization of discount and amortization of debt issuance costs). "Consolidated Current Assets" means, as at any date of determination, the total assets of Borrowers and their Subsidiaries on a consolidated basis (excluding any Excluded Subsidiaries) which may properly be classified as current assets in conformity with GAAP, excluding Cash and cash equivalents. "Consolidated Current Liabilities" means, as at any date of determination, the total liabilities of Borrowers and their Subsidiaries on a consolidated basis (excluding any Excluded Subsidiaries) which may properly be classified as current liabilities in conformity with GAAP, excluding the current portions of Funded Debt and any liabilities otherwise classified as current liabilities in conformity with GAAP to the extent incurred under the Operative Documents with respect to construction of the Project, the Phase I-A Tower and the Guggenheim Projects. "Consolidated Excess Cash Flow" means, for any period, an amount (if positive) equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA and (b) the Consolidated Working Capital Adjustment minus (ii) the sum, without duplication, of the amounts for such period of (a) voluntary and scheduled repayments of Consolidated Total Debt to the extent actually paid (excluding repayments of Revolving Loans except to the extent the Commitments are permanently reduced in connection with such repayments), (b) Consolidated Capital Expenditures (net of any proceeds of any related financings with respect to such expenditures), (c) Consolidated Cash Interest Expense other than any interest expense in respect of Employee Repurchase Notes, (d) any amounts distributed by Borrowers for tax payments in accordance with subsection 7.5 with respect to such period and (without duplication) the provision for current taxes based on income of Borrowers (excluding any Subsidiaries) and payable by Borrowers to any Governmental Instrumentality in cash with respect to such period, (e) any amounts distributed to Borrowers or their Subsidiaries from New Mall Subsidiary, Mall Subsidiary, Mall Direct Holdings, New Mall Manager or Mall Manager following the sale or other disposition of all or any portion of the Mall or any interest therein (including by sale or other disposition of any equity interest in New Mall Subsidiary, Mall Subsidiary, Mall Direct Holdings, Mall Holdings, Mall Manager or New Mall Manager) or any issuance of debt or equity securities of such entities to the extent included in Consolidated Adjusted EBITDA up to the amount of the proceeds of such sale, disposition or issuance (net of any distribution for Permitted Quarterly Tax Distributions made in accordance with the last sentence of subsection 2.4B(iii)(g)) and (f) the amount of any Conforming Adelson L/C to the extent included in Consolidated Adjusted EBITDA. 9 "Consolidated Fixed Charges" means, for any period, the sum (without duplication) of the amounts for such period of (i) Consolidated Cash Interest Expense, (ii) scheduled repayments of principal on Indebtedness (other than repayment of the Revolving Loan on the Revolving Loan Commitment Termination Date and scheduled payments of the Term Loans on March 31, 2003), (iii) any amounts distributed by Borrowers for tax payments in accordance with subsection 7.5 with respect to such period and (without duplication) provisions for taxes based on income payable by Borrowers to any Governmental Instrumentality, (iv) Consolidated Rental Payments, and (v) Consolidated Capital Expenditures, all of the foregoing as determined on a consolidated basis for Borrowers and their Subsidiaries in conformity with GAAP. "Consolidated Interest Expense" means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Borrowers and their Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Borrowers, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Interest Rate Agreements, but excluding, however, any amounts referred to in subsection 2.3 payable to Agents and Lenders on or before November 14, 1997 and any fees and expenses payable to Agents and Lenders in connection with this Agreement and fees and expenses payable to the FF&E Lenders and their agent in connection with the FF&E Facility Agreement in each case, prior to the Closing Date and any fees and expenses payable to the FF&E Lenders and their agent in connection with the FF&E Facility Agreement (2001) prior to the closing date of such facility. "Consolidated Net Income" means, for any period, the net income (or loss) of Borrowers and their Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded (i) the income (or loss) of any Person (other than a Subsidiary of a Borrower), except to the extent of the amount of dividends or other distributions actually paid to Borrowers or any of their Subsidiaries by such Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it is merged into or consolidated with Borrowers or that Person's assets are acquired by Borrowers, (iii) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan, (iv) dividends or distributions from any Excluded Subsidiary to Borrowers or any Subsidiary which are used to fund Permitted Quarterly Tax Distributions and (v) (to the extent not included in clauses (i), (ii) and (iii) above) any net extraordinary gains or net non-cash extraordinary losses, including, without limitation, any refinancing costs or charges. "Consolidated Net Worth" means, as of any date of determination, (i) the sum of the following items, as shown on the consolidated balance sheet of LVSI and its Subsidiaries as of such date (a) the common equity of LVSI and its Subsidiaries, (b)(1) the aggregate liquidation preference of preferred stock or preferred membership interests of LVSI and its Subsidiaries and (2) any increase in depreciation and amortization resulting from any purchase accounting treatment from an acquisition or related financing; (ii) less any goodwill incurred subsequent to November 14, 1997 and (iii) less any write up of assets (in excess of fair market value) after November 14, 1997, in each case on a consolidated basis for LVSI and its Subsidiaries, determined in accordance with GAAP; provided, that in calculating Consolidated Net Worth, any gain or loss from any Asset Sale shall be excluded. "Consolidated Rental Payments" means, for any period, the aggregate amount of all rents paid or payable by Borrowers and their Subsidiaries on a consolidated basis (excluding any Excluded Subsidiaries) during that period under all Capital Leases to which either Borrower or any of their respective Subsidiaries is a party as lessee. Notwithstanding the foregoing, payments under the HVAC Services Agreement and the Phase II Lease shall in no event be included in Consolidated Rental Payments. "Consolidated Total Debt" means, as at any date of determination, the aggregate stated balance sheet amount of all Indebtedness of Borrowers and their Subsidiaries, determined on a consolidated basis in accordance with GAAP, excluding, however, any Employee Purchase Notes entered into in accordance with subsection 7.1(xi). 10 "Consolidated Working Capital" means, as at any date of determination, the excess (or deficit) of Consolidated Current Assets over Consolidated Current Liabilities. "Consolidated Working Capital Adjustment" means, for any period on a consolidated basis, the amount (which may be a negative number) by which Consolidated Working Capital as of the beginning of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period. "Construction Agency Agreement" means that certain Construction Agency Agreement dated as of November 14, 1997 by and between HVAC Provider and Venetian. "Construction Consultant" means Tishman Construction Corporation of Nevada, or any other person designated from time to time by the Administrative Agent, the Interim Mall Lender and the Mortgage Notes Indenture Trustee, in their sole discretion, acting pursuant to the Intercreditor Agreement, to serve as the Construction Consultant under the Disbursement Agreement. "Construction Consultant Engagement Agreement" means that certain engagement letter dated November 14, 1997 by and among the Construction Consultant, Borrowers, Administrative Agent, Interim Mall Lender, Goldman Sachs Mortgage Company, the Mortgage Notes Indenture Trustee and Goldman Sachs & Co. "Construction Litigation" has the meaning assigned to that term in subsection 5.17A. "Construction Management Agreement" means that certain Construction Management Agreement dated as of February 15, 1997 between Borrowers and Construction Manager for the construction of the Project as amended and assigned to Venetian pursuant to a certain Assignment, Assumption and Amendment of Construction Management Agreement dated as of November 14, 1997. "Construction Manager" means Lehrer McGovern Bovis Inc., a New York corporation and its successors and assigns permitted under the Construction Management Agreement. "Construction Related Obligations" means certain Legal Requirements in connection with the development of the Project including, without limitation, obligations under the Harrah's Shared Roadway Agreement and the obligations referred to in clause (v) of the definition of "Standby Letter of Credit". "Contingent Obligation", as applied to any Person, means any direct or indirect liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, (ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, or (iii) under Interest Rate Agreements. Contingent Obligations shall include (a) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another, (b) the obligation to make take-or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement, and (c) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (Y) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the amount to which such Contingent Obligation is specifically limited. 12 "Contractors" means any architects, consultants, designers, contractors, sub-contractors, suppliers, laborers or any other Person engaged by any Borrower(s) in connection with the design, engineering, installation and construction of the Project (other than Construction Manager). "Contracts" means, collectively, the contracts entered into, from time to time, between any Borrower(s) and any Contractor for performance of services or sale of goods in connection with the design, engineering, installation or construction of the Project. "Contractual Obligation", as applied to any Person, means any provision of any Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "Cooperation Agreement" means that certain Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as of November 14, 1997 by and between LVSI, Venetian, Mall Construction Subsidiary (replaced by New Mall Subsidiary pursuant to an amendment dated December 20, 1999), Phase II Subsidiary and Interface. "Deed of Trust" means that certain Deed of Trust, Assignment of Rents and Leases and Security Agreement in the form of Exhibit XIII annexed hereto, dated effective as of November 14, 1997 granted by Borrowers to the Title Company, for the benefit of Administrative Agent, as agent for the Lenders. "Deposit Account" means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "Direct Construction Guarantor" means Bovis, Inc., a New York corporation or any successor permitted under the Direct Construction Guaranty. "Direct Construction Guaranty" means that certain Guaranty of Performance and Completion dated as of August 19, 1997 executed by the Direct Construction Guarantor in favor of LVSI. "Disbursement Agent" means Scotiabank, in its capacity as Disbursement Agent under the Disbursement Agreement, and any successor Disbursement Agent appointed pursuant to the terms of the Disbursement Agreement. "Disbursement Agreement" means that certain Funding Agents' Disbursement and Administration Agreement dated as of November 14, 1997 among Borrowers, the Mall Construction Subsidiary, the Administrative Agent, the Mortgage Notes Indenture Trustee, the Interim Mall Lender, the HVAC Provider and the Disbursement Agent. "Disbursement Agreement Event of Default" means any Event of Default under and as defined in the Disbursement Agreement. "Dollars" and the sign "$" mean the lawful money of the United States of America. "Eighth Month Certificate" has the meaning set forth in the Disbursement Agreement. "Eligible Assignee" means (A) (i) a commercial bank organized under the laws of the United States or any state thereof; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; and (iv) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act) which extends credit or buys loans as one of its businesses including insurance companies, mutual funds and lease financing companies; and (B) any Lender and any Affiliate of any Lender; provided that no Affiliate of Borrowers shall be an Eligible Assignee; provided further that so long as no Event of Default shall have occurred and be continuing, no (i) Person that owns or operates a casino located in the State of Nevada or the State of New Jersey (or is an Affiliate of such a Person) (provided that a passive investment constituting less than 20% of the common stock of any 13 such casino shall not constitute ownership thereof for the purposes of this definition), (ii) Person that owns or operates a convention, trade show or exhibition facility in Las Vegas, Nevada or Clark County, Nevada (or an Affiliate of such a Person) (provided that a passive investment constituting less than 20% of the common stock of any such convention or trade show facility shall not constitute ownership for the purpose of this definition), or (iii) union pension fund (provided that any intermingled fund or managed account which has as part of its assets under management the assets of a union pension fund shall not be disqualified from being an Eligible Assignee hereunder so long as the manager of such fund is not controlled by a union), shall be an Eligible Assignee, in each case which Person shall not have been denied an approval or a license, or found unsuitable under the Nevada Gaming Laws applicable to Lenders. "Employee Benefit Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA which is or was maintained or contributed to by Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates. "Employee Repurchase Notes" has the meaning set forth in subsection 7.1. "Environmental Claim" means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any governmental authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law, (ii) in connection with any Hazardous Materials or any actual or alleged Hazardous Materials Activity, or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment. "Environmental Laws" means any and all current or future statutes, ordinances, orders, rules, regulations, guidance documents, judgments, Permits, or any other requirements of governmental authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity, (ii) the generation, use, storage, transportation or disposal of Hazardous Materials, or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to Borrowers or any of its Subsidiaries or any Facility, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.ss. 1251 et seq.), the Clean Air Act (42 U.S.C.ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C.ss. 651 et seq.), the Oil Pollution Act (33 U.S.C.ss. 2701 et seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.ss. 11001 et seq.), each as amended or supplemented, any analogous present or future state or local statutes or laws, and any regulations promulgated pursuant to any of the foregoing. "Equipment Component" has the meaning assigned to that term in the Disbursement Agreement. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto. "ERISA Affiliate" means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Borrowers or any of their Subsidiaries shall continue to be considered an ERISA Affiliate of Borrowers or such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Borrowers or such Subsidiary and with respect to liabilities arising after such period for which Borrowers or such Subsidiary could be liable under the Code or ERISA. 14 "ERISA Event" means (i) a "reportable event" within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Code) or the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Borrowers, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Code or pursuant to ERISA with respect to any Pension Plan. "Estimation Period" means the period for which a shareholder, partner or member, who is an individual is required to estimate for federal income tax purposes his allocation of taxable income from a Subchapter S corporation or a partnership for federal income tax purposes in connection with determining his estimated federal income tax liability for such period. "Eurodollar Rate Loans" means Loans bearing interest at rates determined by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A. "Event of Default" means each of the events set forth in Section 8. "Event of Loss" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (A) any loss, destruction or damage of such property or asset; (B) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; or (C) any settlement in lieu of clause (B) above. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "Excluded Subsidiary" means any Person excluded from the definition of Subsidiary by virtue of the last sentence of such definition set forth in this subsection 1.1 (including, without limitation, New Mall Subsidiary, Mall Subsidiary, Phase II 15 Subsidiary, Mall Direct Holdings, Phase II Direct Holdings, Mall Manager, New Mall Manager, Phase II Manager and any other Person designated as an Excluded Subsidiary under Section 7.3(x)). "Existing Credit Agreement" has the meaning set forth in the third Recital. "Facilities" means any and all real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Borrowers or any of their Subsidiaries or any of their respective predecessors or Affiliates including, without limitation, the Site. "FDIC" means the Federal Deposit Insurance Corporation. "Federal Funds Effective Rate" means, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by Administrative Agent. "FF&E Facility" means the commitments, credit facilities, equipment leases or similar agreements with the FF&E Lenders in an aggregate principal amount of approximately $132,700,000 (plus accrued and unpaid interest thereon) to finance the purchase and installment of the Specified FF&E. "FF&E Facility Agreement" means (i) that certain credit agreement dated December 22, 1997 among Borrowers, General Electric Capital Corporation and the other FF&E Lenders party thereto as amended by (x) a Limited Waiver and First Amendment to Term Loan and Security Agreement dated as of November 12, 1999, (y) a Limited Waiver and Second Amendment to Term Loan and Security Agreement dated as of June 13, 2000 and (z) a Limited Waiver, Consent and Third Amendment to Term Loan and Security Agreement dated as of June 29, 2001 (as further amended, restated, supplemented or modified from time to time), (ii) the FF&E Facility Agreement (2001) and (iii) such other agreements among FF&E Lender(s) and Borrowers providing for all or a portion of the FF&E Facility (not covered under clause (i) or (ii)) on substantially the same terms as the financing described in clause (i) or (ii) above, or otherwise reasonably satisfactory to the Arranger and Administrative Agent (as amended, restated, supplemented or modified from time to time), provided in each case that the applicable FF&E Lenders have entered into intercreditor agreement(s) in form and substance satisfactory to the Administrative Agent. "FF&E Facility Agreement (2001)" means (i) the credit agreement entered into or to be entered into among Venetian, LVSI and the lenders party thereto, evidencing the debt facility on the terms satisfactory to the Administrative Agent (the "FF&E Letter Agreement"), (ii) such other agreements among certain lender(s), Venetian and LVSI, providing for all or a portion of the FF&E Facility (not covered under clause (i)) on substantially the same terms as the financing described in clause (i) above, or otherwise reasonably satisfactory to Scotiabank, as Administrative Agent, provided in each case that the applicable lenders have entered into intercreditor agreement(s) in form and substance satisfactory to Scotiabank, as Administrative Agent. "FF&E Intercreditor Agreement" means that certain Intercreditor Agreement dated as of December 22, 1997 entered into among the Administrative Agent, the Mortgage Notes Indenture Trustee, the Interim Mall Lender and General Electric Capital Corporation as agent for the FF&E Lenders and such other Persons as may be necessary parties thereunder (as amended, restated, supplemented or modified from time to time). "FF&E Intercreditor Agreement (2001)" means the intercreditor agreement(s) entered into or to be entered into among Scotiabank, as Administrative Agent, Scotiabank, as administrative agent under the Lido Facility Agreement, the lenders party to the FF&E Facility Agreement (2001) and such other Persons as may be necessary parties thereunder, in each case in form and substance satisfactory to Scotiabank, as Administrative Agent. 16 "FF&E Lenders" means (i) General Electric Capital Corporation, and the other lenders that are parties to the FF&E Facility Agreements described in clauses (i) and (ii) of the definition of such term and (ii) any other lenders under any other FF&E Facility Agreement. "FF&E Letter Agreement" has the meaning set forth in the definition of "FF&E Facility Agreement (2001)". "Final Completion" has the meaning set forth in the Disbursement Agreement. "Final Completion Date" has the meaning set forth in the Disbursement Agreement. "Financial Plan" has the meaning assigned to that term in subsection 6.1(xiii). "Financing Agreements" means, collectively, this Agreement, the Disbursement Agreement, the Interim Mall Credit Agreement, the Mortgage Notes Indenture, the Collateral Documents, the Other Security Documents, the Mortgage Notes, any Approved Equipment Funding Commitment, the FF&E Facility Agreements, any Completion Guaranty Note, any Substitute Tranche B Note (as such term is defined in the Initial Credit Agreement), and any other loan or security agreements entered into by Borrowers or any of their Subsidiaries on, prior to or after November 14, 1997 (excluding the Permanent Mall Loan Agreement) to finance the Project in accordance with subsection 7.13 and, while applicable, the Disbursement Agreement. "First Priority" means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien (other than Liens permitted pursuant to subsection 7.2) to which such Collateral is subject. "First Priority Collateral" means all assets, property, real, personal and mixed of Borrowers and their Subsidiaries, other than real or personal property or other assets acquired or leased by Borrowers or their Subsidiaries pursuant to subsection 7.1(viii), and any proceeds of such property or other assets or such indebtedness and any related collateral accounts in which such proceeds are held, the Mortgage Notes Proceeds Account, the GECC Proceeds Account, the Interim Mall Proceeds Account, the HVAC Component, the stock or membership interests of Subsidiaries and Excluded Subsidiaries, provided, that any assets expressly excluded from the Lien in favor of Administrative Agent on behalf of Lenders under the Collateral Documents shall not constitute First Priority Collateral and provided further to the extent that the Lien of Administrative Agent in favor of the Lenders in any of the Specified FF&E shall be or has been released in accordance with the terms of the Company Security Agreement, such Specified FF&E shall thereafter be excluded from the First Priority Collateral. "Fiscal Quarter" means a fiscal quarter of any Fiscal Year. "Fiscal Year" means the fiscal year of Borrowers ending on December 31 of each calendar year. "Former Lender" has the meaning assigned to that term in subsection 10.7(a). "Funded Debt", as applied to any Person, means all Indebtedness of that Person (including any current portions thereof) which by its terms or by the terms of any instrument or agreement relating thereto matures more than one year from, or is directly renewable or extendable at the option of that Person to a date more than one year from (including an option of that Person under a revolving credit or similar agreement obligating the lender or lenders to extend credit over a period of one year or more from), the date of the creation thereof. "Funding and Payment Office" means (i) the office of Administrative Agent located at 600 Peachtree Street NE, Suite 2700, Atlanta, Georgia 30308 or (ii) such other office of Administrative Agent as may from time to time hereafter be designated as such in a written notice delivered by Administrative Agent to Borrowers and each Lender. "Funding Date" means the date of the funding of a Loan. "GAAP" means, subject to the limitations on the application thereof set forth in subsection 1.2, generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of 17 Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the Closing Date. "Gaming License" means every license, franchise or other authorization to own, lease, operate or otherwise conduct gaming activities of the Borrowers or any of their Subsidiaries, including without limitation, all such licenses granted under the Nevada Gaming Control Act, and the regulations promulgated pursuant thereto, and other applicable federal, state, foreign or local laws. "GECC Proceeds Account" means any account funded solely by proceeds of loans made pursuant to any FF&E Facility Agreement. "GMAC Guaranty" means the guaranty dated as of November 14, 1997 by Adelson in favor of Interim Mall Lender. "Governmental Acts" has the meaning assigned to that term in subsection 3.5A. "Governmental Instrumentality" means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity, (including the Nevada Gaming Authorities, any zoning authority, the FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law. "Guggenheim Projects" means (a) the proposed Guggenheim Las Vegas Exhibit Hall to be constructed adjacent to the Project and (b) the proposed exhibition space to be constructed within the hotel to display artwork from the Guggenheim Museum and the State Hermitage Museum. "Harrah's Shared Roadway Agreement" has the meaning assigned that term in the Disbursement Agreement. "Hazardous Materials" means (i) any chemical, material or substance at any time defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste", "infectious waste", "toxic substances", or any other term or expression intended to define, list or classify substances by reason of properties harmful to health, safety or the indoor or outdoor environment (including harmful properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive materials; (vi) any asbestos-containing materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which contains any oil or dielectric fluid containing polychlorinated biphenyls; (ix) pesticides; and (x) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment. "Hazardous Materials Activity" means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing. "HVAC Ground Lease" means that certain Ground Lease made effective as of November 14, 1997 between Venetian and the HVAC Provider. 18 "HVAC Component" means, collectively (i) the Central Plant and (ii) the "Other Facilities", as defined in each HVAC Services Agreement. "HVAC Provider" means Sempra Energy Solutions, a California corporation (successor to Atlantic-Pacific, Las Vegas LLC, a Delaware limited liability company) or its permitted successors under the HVAC Services Agreement. "HVAC Services Agreements" means collectively (i) that certain Energy Services Agreement dated as of November 14, 1997 between Venetian and the HVAC Provider, (ii) the HVAC Ground Lease, (iii) the Construction Agency Agreement (iv) that certain Energy Services Agreement dated as of November 14, 1997 between Mall Construction Subsidiary and the HVAC Provider and (v) all other agreements between the HVAC Provider and the Borrowers or its Subsidiaries (and any amendments of any agreements described in clause (i), (ii), (iii) and (iv) above), as approved by Scotiabank, as Administrative Agent, in its sole discretion. "Improvements" means the buildings, fixtures and other improvements to be situated on the Site. "Included Taxes" has the meaning assigned to that term in subsection 2.7B(i). "Indebtedness", as applied to any Person, means (i) all indebtedness for borrowed money, (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money, (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA and trade payables and accruals incurred in the ordinary course of business), and (v) all indebtedness secured by any Lien on any property or asset owned or held and under Contracts by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person. Obligations under Interest Rate Agreements constitute Contingent Obligations and not Indebtedness. All obligations under the Financing Agreements shall constitute Indebtedness. Obligations under the HVAC Services Agreement, the Phase I-A Lease and the Phase II Lease shall be treated as service contracts or operating leases and not Indebtedness. "Indemnitee" has the meaning assigned to that term in subsection 10.3. "Indentures" means the Mortgage Notes Indenture and the Subordinated Notes Indenture or either one of them. "Independent Consultants" means collectively the Construction Consultant, the Insurance Advisor or in either case their successors appointed pursuant to the Disbursement Agreement. "Independent Financial Advisor" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the judgment of LVSI's Board of Directors, (i) qualified to perform the task for which it has been engaged and (ii) disinterested and independent with respect to LVSI and its Subsidiaries and each Affiliate of LVSI and Adelson. "Indirect Construction Guarantor" means The Peninsular and Oriental Steam Navigation Company, a corporation organized under the laws of England and Wales. "Indirect Construction Guaranty" means that certain Guaranty dated as of August 19, 1997 executed by Indirect Construction Guarantor in favor of LVSI. "Initial Credit Agreement" has the meaning set forth in the first Recital. "Insurance Advisor" means Sedgwick James of Tennessee, Inc., or its successor, appointed pursuant to the Disbursement Agreement. "Intellectual Property" means all patents, trademarks, trade names, copyrights, technology, know-how and processes used in or necessary for the conduct of the business of Borrowers as proposed to be conducted pursuant to the Operative Documents that are material to the condition (financial or otherwise), business or operations of the Borrowers. "Intercreditor Agent" means Scotiabank, in its capacity as 19 Intercreditor Agent under the Intercreditor Agreement, and any successor Intercreditor Agent appointed pursuant to the terms of the Intercreditor Agreement. "Intercreditor Agreement" means that certain Intercreditor Agreement dated as of November 14, 1997 among the Administrative Agent, the Intercreditor Agent, the Mortgage Notes Indenture Trustee, the Interim Mall Lender and the Subordinated Notes Indenture Trustee, in substantially the form of Exhibit XIV annexed hereto. "Interest Payment Date" means (i) with respect to any Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after November 14, 1997, and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan that in the case of each Interest Period of longer than three months "Interest Payment Date" shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period. "Interest Period" has the meaning assigned to that term in subsection 2.2B. "Interest Rate Agreement" means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement or arrangement. "Interest Rate Determination Date" means, with respect to any Interest Period, two Business Days prior to the first day of such Interest Period. "Interface" means Interface Group-Nevada, Inc., a Nevada corporation. "Interface Lease" means the lease agreement dated November 1, 1996 between Interface and LVSI. "Interim Mall Credit Agreement" means that certain Credit Agreement dated as of November 14, 1997 among Borrowers, Mall Construction Subsidiary and Interim Mall Lender. "Interim Mall Lender" means GMAC Commercial Mortgage Corporation and its permitted successors and assigns. "Interim Mall Proceeds Account" has the meaning assigned that term in the Disbursement Agreement. "Intermediate Holding Companies" means Mall Holdings and the Phase II Holdings. "Investment" means (i) any direct or indirect purchase or other acquisition by Borrowers or any of their Subsidiaries of, or of a beneficial interest in, any Securities of any other Person (including any Subsidiary), (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by Borrowers or any of their Subsidiaries from any Person, of any equity Securities of any Subsidiary of Borrowers, or (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Borrowers or any of their Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business other than Interest Rate Agreements required or permitted hereunder to hedge against fluctuations in interest rates. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment. "Issuing Lender" means, with respect to any Letter of Credit, the Lender which agrees or is otherwise obligated to issue such Letter of Credit, determined as provided in subsection 3.1B(ii). "Joint Venture" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership, limited liability company or other legal form; provided that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "Legal Requirements" means all laws, statutes, orders, decrees, injunctions, licenses, permits, approvals, agreements and 20 regulations of any Governmental Instrumentality having jurisdiction over the matter in question. "Lender" and "Lenders" means the persons identified as "Lenders" and listed on the signature pages of this Agreement, whether or not executed by such Lenders, together with their successors and permitted assigns pursuant to subsection 10.1; provided that the term "Lenders", when used in the context of a particular Commitment, shall mean Lenders having that Commitment. "Letter of Credit" or "Letters of Credit" means Commercial Letters of Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders for the account of Borrowers pursuant to subsection 3.1. "Letter of Credit Usage" means, as at any date of determination, the sum of (i) the maximum aggregate amount which is or at any time thereafter may become available for drawing under all Letters of Credit then outstanding plus (ii) the aggregate amount of all drawings under Letters of Credit honored by Issuing Lenders and not theretofore reimbursed by Borrowers (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B). "Leverage Ratio" has the meaning assigned that term in subsection 7.6B. "Lido Facility" means the credit facilities in an aggregate principal amount of $80,000,000 to, among other things, (a) finance construction of a conference center to be built on the Phase II Land and (b) to fund the Phase I-A Subsidiary Non-Recourse Loan, the proceeds of which will be used to prepay rent owed to Venetian under the Phase I-A Lease, and thereafter applied by Venetian to finance the construction of the Phase I-A Tower. "Lido Facility Agreement" means a credit agreement in the aggregate principal amount of $80,000,000, between Phase II Subsidiary, Scotiabank and the other lenders party thereto from time to time, on the terms set forth in the commitment letter dated July 16, 2001 with respect to the Lido Facility, and/or such other terms as may be satisfactory to Administrative Agent. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC). "Liquidated Damages" means any proceeds or liquidated damages paid pursuant to any obligation, default or breach under the Contracts and Indirect Construction Guaranty and Direct Construction Guaranty (net of actual and documented reasonable costs incurred by Borrowers in connection with adjustment or settlement thereof, including taxes and any reasonable provisions made in respect of such costs and expenses (including any such taxes paid or payable by an owner of either Borrower or any of its Subsidiaries)). For purposes of this definition, so-called "liquidated damages" insurance policies shall be deemed to be Contracts. "Loan" or "Loans" means one or more of the Term Loans or the Revolving Loans or any combination thereof. "Loan Documents" means this Agreement, the Notes, the Letters of Credit (and any applications for, or reimbursement agreements or other documents or certificates executed by Borrowers in favor of an Issuing Lender relating to, the Letters of Credit) the Subsidiary Guaranties, the Disbursement Agreement and the Collateral Documents. "Loan Exposure" means, with respect to any Lender as of any date of determination, the sum of (i) such Lender's Term Loan Exposure and (ii) such Lender's Revolving Loan Exposure. "Loan Party" means each Borrower, Mall Construction Subsidiary, each Intermediate Holding Company and each other Subsidiary of a Borrower which may hereafter become a party to any Loan Document and "Loan Parties" means all such Persons, collectively. "Loss Proceeds" has the meaning assigned to that term in the Disbursement Agreement. 21 "LVSI" means Las Vegas Sands, Inc., a Nevada corporation. "Mall" means the retail mall component of the Project described in more detail on Exhibit T-7 to the Disbursement Agreement. "Mall Construction Subsidiary" means Grand Canal Shops Mall Construction, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Venetian. "Mall Construction Subsidiary Security Agreement" means the Security Agreement executed and delivered by Mall Construction Subsidiary on November 14, 1997, substantially in the form of Exhibit XIX annexed hereto. "Mall Direct Holdings" means Grand Canal Shops Mall Holding Company, LLC, a Delaware limited liability company. "Mall Escrow Agreement" has the meaning set forth in the Disbursement Agreement. "Mall Holdings" means Mall Intermediate Holding Company LLC, a Delaware limited liability company and a wholly-owned Subsidiary of Venetian. "Mall Management Agreement" means that certain Management Agreement between LVSI and Mall Operator pursuant to which Mall Operator has agreed to perform certain management services related to the Mall, as the same has been assigned to Mall Subsidiary and subsequently to New Mall Subsidiary. "Mall Manager" means Grand Canal Shops Mall MM, Inc., a Nevada corporation and a wholly-owned subsidiary of LVSI. "Mall Operator" means Forest City Commercial Management, Inc., an Ohio corporation, and any replacement Mall Operator selected in accordance with the terms hereof. "Mall Parcel" means the mall space subdivided from the Site as one or more legally separate parcel and recorded with the applicable Governmental Authorities as described in more detail in Exhibit T-7 to the Disbursement Agreement. "Mall Parcel Creation Date" has the meaning assigned to that term in the Disbursement Agreement. "Mall Release Date" means November 12, 1999. "Mall Retainage/Punchlist Account" has the meaning set forth in the Disbursement Agreement. "Mall Subsidiary" means Grand Canal Shops Mall LLC, a Delaware limited liability company. "Margin Stock" has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Material Adverse Effect" means (i) a material adverse effect upon the business, operations, properties, assets, condition (financial or otherwise) or prospects of either (a) Borrowers and any of their Subsidiaries, taken as a whole or (b) Borrowers and any of their Subsidiaries and Excluded Subsidiaries, taken as a whole or (ii) the material impairment of the ability of any Loan Party to observe or perform, or of Administrative Agent or Lenders to enforce, the Obligations. "Material Contract" means any contract or other arrangement to which any Borrower(s), or any of their Subsidiaries are a party (other than the Loan Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect. "Maximum Consolidated Capital Expenditures Amount" has the meaning assigned to that term in subsection 7.14. "Mortgage Notes" means the 12.25% Mortgage Notes due 2004 issued by Borrowers pursuant to the Mortgage Notes Indenture. "Mortgage Notes Collateral Account Agreement" has the meaning assigned to that term in the Disbursement Agreement. "Mortgage Note Holders" means the holders of the Mortgage Notes. "Mortgage Notes Indenture" means that certain Indenture dated as of November 14, 1997 between Borrowers, certain guarantors named therein and the Mortgage Notes Indenture Trustee. 22 "Mortgage Notes Indenture Trustee" means US Bank Trust National Association (formerly known as First Trust National Association) in its capacity as the trustee under the Mortgage Notes Indenture and its successors in such capacity. "Mortgage Notes Proceeds" means the gross proceeds from the issuance of the Mortgage Notes in the amount of at least $425,000,000 (before deduction for underwriter's discounts, fees and expenses). "Mortgage Notes Proceeds Account" has the meaning set forth in the Disbursement Agreement. "Mortgage Policy" has the meaning assigned to that term in the Existing Credit Agreement. "Mortgaged Property" means the real property described in Schedule 5.5. "Multiemployer Plan" means any Employee Benefit Plan which is a "multiemployer plan" as defined in Section 3(37) of ERISA. "Net Asset Sale Proceeds" means the aggregate cash proceeds received by any Borrower or any of its Subsidiaries in respect of any Asset Sale, net of (i) the direct costs relating to such Asset Sale (including, without limitation legal, accounting and investment banking fees and expenses, employee severance and termination costs, any trade payables or similar liabilities related to the assets sold and required to be paid by the seller as a result thereof and sales, finders' or broker's commission), and any relocation expenses incurred as a result thereof and taxes paid or payable as result thereof (including, without limitation, any such taxes paid or payable by an owner of Borrower or any of its Subsidiaries) (after taking into account any available tax credits or deductions and any tax sharing arrangements), (ii) amounts required to be applied to the repayment of Indebtedness secured by a Lien (or amounts permitted by the terms of such Indebtedness to be otherwise reinvested in the Project to the extent so reinvested) which is prior to the Lien under the Collateral Documents on the asset or assets that are the subject of such Asset Sale, (iii) amounts required to be applied to the repayment of the Phase I-A Subsidiary Non-Recourse Loan or any FF&E Facility Agreement, (iv) all distributions and other payments required to be made to minority interest holders in a Subsidiary or joint venture as a result of the Asset Sale and (v) any reserve for adjustment in respect of the sale price of such asset or assets or any liabilities associated with the asset disposed of in such Asset Sale. "Net Loss Proceeds" means the aggregate cash proceeds received by any Borrower or any of its Subsidiaries in respect of any Event of Loss, including, without limitation, insurance proceeds, condemnation awards or damages awarded by any judgment, net of the direct costs in recovery of such Net Loss Proceeds (including, without limitation, legal, accounting, appraisal and insurance adjuster fees and expenses) and any taxes paid or payable as a result thereof (including, without limitation, any such taxes paid or payable by an owner of Borrower or any of its Subsidiaries) (after taking into account any available tax credits or deductions and any tax sharing arrangements) and amounts required to be applied to the repayment of the Phase I-A Subsidiary Non-Recourse Loan, any FF&E Facility Agreement or any Indebtedness secured by a Lien (or amounts permitted by the terms of such Indebtedness to be otherwise reinvested in the Project to the extent so reinvested) which is prior to the Liens of Lenders under the Collateral Documents on the asset or assets that are the subject of the Event of Loss. Notwithstanding the foregoing, all proceeds of so-called "liquidated damages" insurance policies shall not be Net Loss Proceeds but shall be Liquidated Damages. "Net Pension Proceeds" has the meaning assigned to that term in subsection 2.4B(iii)(c). "Net Proceeds" has the meaning assigned to that term in subsection 2.4B(iii)(d). "Nevada Gaming Authorities" shall mean, collectively, the Nevada Gaming Commission, the Nevada State Gaming Control Board, and the Clark County Liquor and Gaming Licensing Board. "Nevada Gaming Laws" shall mean the Nevada Gaming Control Act, as modified in Chapter 463 of the Nevada Revised Statutes, as amended from time to time, and the regulations of the Nevada Gaming Commission promulgated thereunder, as amended from time to time. 23 "New Mall Manager" means Grand Canal Shops Mall MM Subsidiary, Inc., a Nevada corporation and a wholly-owned subsidiary of Mall Manager. "New Mall Subsidiary" means Grand Canal Shops Mall Subsidiary, LLC, a Delaware limited liability company. "Non-Recourse Financing" means Indebtedness incurred in connection with the purchase or lease of personal or real property useful in the business of Borrowers and their Subsidiaries and (i) as to which the lender upon default may seek recourse or payment as against a Borrower or any of its Subsidiaries only through the return or sale of the property or equipment so purchased or leased and (ii) may not otherwise assert a valid claim for payment on such Indebtedness against a Borrower or any of its Subsidiaries or any other property of a Borrower or any of its Subsidiaries. "Non-US Lender" has the meaning assigned to that term in subsection 2.7B(iii)(a). "Notes" means one or more of the Term Notes or Revolving Notes or any combination thereof. "Notice of Borrowing" means a notice substantially in the form of Exhibit I-A annexed hereto delivered by Borrowers to Administrative Agent pursuant to subsection 2.1B with respect to a proposed borrowing. "Notice of Conversion/Continuation" means a notice substantially in the form of Exhibit II annexed hereto delivered to Administrative Agent pursuant to subsection 2.2D with respect to a proposed conversion or continuation of the applicable basis for determining the interest rate with respect to the Loans specified therein. "Notice of Funding Request" has the meaning assigned that term in the Disbursement Agreement. "Notice of Issuance of Letter of Credit" means a notice substantially in the form of Exhibit XV annexed hereto delivered by Borrowers to Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a Letter of Credit. "Obligations" means all obligations of every nature of each Loan Party from time to time owed to Administrative Agent, Arranger, Lenders or any of them under the Loan Documents, whether for principal, interest, reimbursement of amounts drawn under Letters of Credit, fees, expenses, indemnification or otherwise. "Officers' Certificate" means, as applied to any corporation, a certificate executed on behalf of such corporation by its chairman of the board (if an officer) or its president or one of its vice presidents and by its chief financial officer or its treasurer (in their capacity as such officer); provided that every Officers' Certificate with respect to the compliance with a condition precedent to the making of any Loans hereunder shall include (i) a statement that the officer or officers making or giving such Officers' Certificate have read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signers, they have made or have caused to be made such examination or investigation as is reasonably necessary to enable them to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signers, such condition has been complied with in all material respects. "Opening Conditions" has the meaning set forth in the Disbursement Agreement. "Opening Date" means the date on which the hotel, casino, or mall portion of the Project opened for business. "Operating Lease" means, as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) that is not a Capital Lease other than any such lease under which that Person is the lessor. "Operative Documents" means the Financing Agreements and the Project Documents. "Organizational Documents" means (i) with respect to any corporation, its certificate or articles of incorporation and its 24 bylaws, (ii) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (iii) with respect to any general partnership, its partnership agreement, (iv) with respect to any limited liability company, its articles or certificate of organization and its operating agreement and (v) with respect to any other entity, its equivalent organizational, governing documents. "Other Indebtedness" means (i) the Indebtedness of any Borrower or any of its Subsidiaries evidenced by the Mortgage Notes, (ii) the Indebtedness of any Borrower or any of its Subsidiaries evidenced by the Subordinated Notes, (iii) [intentionally omitted], (iv) the Indebtedness of any Borrower or any of its Subsidiaries evidenced by the FF&E Facility Agreements, (v) any Indebtedness of any Borrower or any of its Subsidiaries in respect of any Completion Guaranty Loan and (vi) any Indebtedness of any Borrower under an Employee Repurchase Note. "Other Security Documents" means, the Security Documents as defined in the Disbursement Agreement, other than the Collateral Documents. "Outside Completion Deadline" means April 21, 1999, as such date was extended pursuant to Section 6.4 of the Disbursement Agreement. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Code or Section 302 of ERISA. "Permanent Mall Lender" means any lender party from time to time to the Permanent Mall Loan Agreement including, but not limited to, Goldman Sachs Mortgage Company, Scotiabank and any permitted successor or replacement thereto. "Permanent Mall Loan Agreement" means that certain Loan Agreement dated as of December 20, 1999 by and among New Mall Subsidiary, as borrower, Goldman Sachs Mortgage Company, as Syndication Agent, Scotiabank, as Collateral Agent and Administrative Agent, and the Permanent Mall Lenders party thereto from time to time. "Permits" means all authorizations, consents, decrees, permits, waivers, privileges, approvals from and filings with all Governmental Instrumentalities including, without limitation, the Nevada Gaming Authorities necessary for the realization of the Project in accordance with the Operative Documents. "Permitted Employee Repurchase" has the meaning set forth in subsection 7.1. "Permitted Liens" means the following types of Liens (excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by ERISA, any such Lien relating to or imposed in connection with any Environmental Claim, and any such Lien expressly prohibited by any applicable terms of any of the Collateral Documents provided in each case that such Liens do not secure Indebtedness for borrowed money): (i) Liens for taxes, assessments or governmental charges or claims the payment of which is not, at the time, required by subsection 6.3; (ii) statutory Liens of landlords, statutory Liens of banks and rights of set-off, statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law, in each case incurred in the ordinary course of business (a) for amounts not yet overdue or (b) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of 5 days) are being contested in good faith by appropriate proceedings, so long as (1) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts, and (2) in the case of a Lien with respect to any portion of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral on account of such Lien; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), incurred in the ordinary course of business (a) 25 for amounts not yet overdue or (b) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of 5 days) are being contested in good faith by appropriate proceedings, so long as (1) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts and (2) in the case of a Lien with respect to any portion of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral on account of such Lien; (iv) any attachment or judgment Lien not constituting an Event of Default under subsection 8.8; (v) leases or subleases granted to third parties in accordance with any applicable terms of this Agreement and the Collateral Documents and not interfering in any material respect with the ordinary conduct of the business of a Borrower or any of its Subsidiaries; (vi) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of a Borrower or any of its Subsidiaries or result in a material diminution in the value of any Collateral as security for the Obligations; (vii) leases permitted under subsection 7.7 and any leasehold mortgage in favor of any party financing the lessee under any lease permitted under subsection 7.7 provided that (a) none of the Borrowers nor any of their Subsidiaries is liable for the payment of any principal of, or interest, premiums or fees on, such financing and (b) the affected lease and leasehold mortgage are expressly made subject and subordinate to the Lien of the Deed of Trust; (viii) Liens created or contemplated by the Cooperation Agreement; (ix) Liens on real property of Borrowers arising pursuant to that certain Harrah's Shared Roadway Agreement (as in effect on November 14, 1997); (x) Liens incurred in connection with the construction of a pedestrian bridge or a pedestrian tunnel under Las Vegas Boulevard and Sands Avenue provided that such Liens will not (i) materially interfere with, impair or detract from the operation of the business of Borrowers and their Subsidiaries or the construction or operation of the Project and (ii) cause a material decrease in the value of the Collateral. (xi) Liens arising from filing UCC financing statements relating solely to leases permitted by this Agreement; (xii) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (xiii) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property; (xiv) licenses of patents, trademarks and other intellectual property rights granted by a Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of such Borrower or such Subsidiary; and (xv) Liens created under the HVAC Services Agreements; (xvi) Liens created under the Predevelopment Agreement (as in effect on November 14, 1997); (xvii) easements, restrictions, rights of way, encroachments and other minor defects or irregularities in title incurred in connection with the traffic study relating to increased traffic on Las Vegas Boulevard as a result of completion of the Project; (xviii) Liens incurred in connection with Interest Rate Agreements required or permitted to be maintained hereunder and any Interest Rate Agreement intended to hedge interest rate risk in respect of the FF&E Facility; (xix) [Intentionally omitted.] (xx) prior to the Final Completion Date any "Permitted Liens" under the Disbursement Agreement; and 26 (xxi) Liens listed on Schedule 7.7. "Permitted Quarterly Tax Distributions" means quarterly distributions of Tax Amounts determined on the basis of the estimated taxable income of LVSI or Venetian, as the case may be (in each case including any such taxable income attributable to such entity's ownership of interest in any other pass-through entity for Federal income tax purposes except that if all or any portion of the Completion Guaranty Loan is outstanding and held by Adelson or a Related Party and is not paying current cash interest, then such estimated taxable income shall be determined without giving effect to any non-cash interest payments on such loans held by Adelson or the Related Parties to the extent such non-cash interest is deductible), for the related Estimation Period, as in a statement filed with the Administrative Agent, provided, however, that (A) prior to any distributions of Tax Amounts the Borrowers shall deliver an officers' certificate with a statement to the effect that in the case of distributions to be made by Venetian, Venetian qualifies as a partnership or a substantially similarly treated pass-through entity for federal income tax purposes or that, in the case of distributions to be made by LVSI, LVSI qualifies as a Subchapter S corporation under the Code or a substantially similarly treated pass-through entity for federal income tax purposes, as the case may be, and (B) at the time of such distributions, the most recent audited financial statements of LVSI reflect that LVSI was treated as a Subchapter S corporation under the Code or a substantially similarly treated pass-through entity for federal income tax purposes and Venetian was treated as a partnership or substantially similarly treated pass-through entity for Federal income tax purposes for the period covered by such financial statements; provided, further, that, for an Estimation Period that includes a True-up Determination Date, (A) if the True-up Amount is due to the members or shareholders, as the case may be, the Permitted Quarterly Tax Distribution payable by LVSI or Venetian, as the case may be, for the Estimation Period shall be increased by such True-up Amount, and (B) if the True-up Amount is due to LVSI or Venetian, the Permitted Quarterly Tax Distribution payable by LVSI or Venetian as the case may be, for the Estimation Period shall be reduced by such True-up Amount and the excess, if any, of the True-up Amount over such Permitted Quarterly Tax Distribution shall be applied to reduce the immediately following Permitted Quarterly Tax Distribution(s) until such True-up Amount is entirely offset. The amount of Permitted Quarterly Tax Distribution relating to an Estimation Period including a True-up Determination Date shall be determined by a Tax Amounts CPA, and the amount of Permitted Quarterly Tax Distribution relating to all other Estimation Periods shall be determined by LVSI or Venetian, as the case may be. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments (whether federal, state or local, domestic or foreign, and including political subdivisions thereof) and agencies or other administrative or regulatory bodies thereof. "Phase I-A Lease" means that certain Lease Agreement to be entered between Venetian and the Phase I-A Subsidiary in form and substance satisfactory to Scotiabank, as Administrative Agent, in its sole discretion. "Phase I-A Project" means the construction of the Phase I-A Tower. "Phase I-A Subsidiary" means Venetian Phase I-A Tower, LLC, a limited liability company to be organized under the laws of Nevada in form and substance satisfactory to Scotiabank, as Administrative Agent. "Phase I-A Subsidiary Non-Recourse Loan" means the non-recourse loan to be made by Phase II Subsidiary, to the Phase I-A Subsidiary with proceeds from the Lido Facility, in form and substance satisfactory to Scotiabank, as Administrative Agent. "Phase I-A Tower" means (i) an approximately 1,000 room hotel expansion to be constructed by Venetian on the parking garage of the Project together with (ii) an expansion of such parking garage. "Phase II" means a hotel, casino and mall complex proposed to be developed on the Phase II Land. 27 "Phase II Casino Lease" means the gaming operations lease between the Phase II Subsidiary and LVSI or Venetian pursuant to which LVSI or Venetian will operate the gaming operations of the Phase II, entered into in accordance with subsection 7.10. "Phase II Direct Holdings" means Lido Casino Resort Holding Company, LLC, a Delaware limited liability company. "Phase II Holdings" means Lido Intermediate Holding Company, LLC, a Delaware limited liability company, and a wholly-owned Subsidiary of Venetian. "Phase II Land" means the real property consisting of approximately 14 acres of the Real Estate Contribution as described in more detail in Exhibit T-5 of the Disbursement Agreement together with all improvements thereon. "Phase II Lease" has the meaning assigned to that term in subsection 8.20. "Phase II Manager" means Lido Casino Resort MM, Inc., a Nevada corporation, and wholly-owned subsidiary of LVSI and the managing member of Phase II Subsidiary. "Phase II Release Conditions" has the meaning assigned to that term in the Disbursement Agreement. "Phase II Subsidiary" means Lido Casino Resort, LLC, a Nevada limited liability company. "Plans and Specifications" has the meaning assigned to that term in the Disbursement Agreement. "Potential Event of Default" means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default. "Predevelopment Agreement" means the Sands Resort Hotel Casino Agreement dated February 18, 1997 by and between Clark County and LVSI. "Prime Rate" means the rate that Scotiabank announces from its New York office from time to time as its Dollar prime lending rate, as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Scotiabank or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "Proceedings" has the meaning assigned to that term in subsection 6.1(x). "Pro Rata Share" means (i) with respect to all payments, computations and other matters relating to the Term Loan Commitment or the Term Loan of any Lender, the percentage obtained by dividing (x) the Term Loan Exposure of that Lender by (y) the aggregate Term Loan Exposure of all Lenders, (ii) with respect to all payments, computations and other matters relating to the Revolving Loan Commitment or the Revolving Loans of any Lender or any Letters of Credit issued or participations therein purchased by any Lender, the percentage obtained by dividing (x) the Revolving Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all Lenders, and (iii) for all other purposes with respect to each Lender, the percentage obtained by dividing (x) the sum of the Term Loan Exposure of that Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of the aggregate Term Loan Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to subsection 10.1. The Pro Rata Share of each Lender as of the Closing Date for purposes of each of clauses (i), (ii) and (iii) of the preceding sentence is set forth opposite the name of that Lender in Schedule 2.1 annexed hereto. "Professional Services Agreement" means that certain Agreement between Owner and Architect dated as of November 14, 1997, between Borrowers and Project Architect. "Project" means the Venetian-themed hotel, casino, retail, meeting and entertainment complex, with related heating, ventilation and air conditioning and power station facilities to be developed at the Site, all as more particularly described in Exhibit T-1 to the Disbursement Agreement (but not including the Phase I-A Tower or the Guggenheim Projects). 28 "Project Architect" means collectively, TSA of Nevada, LLP, and WAT&G, Inc. Nevada. "Project Budget" has the meaning assigned that term in the Disbursement Agreement. "Project Costs" has the meaning assigned to that term in the Disbursement Agreement. "Project Documents" means the Construction Management Agreement, the Completion Guaranties, the Contracts, the Cooperation Agreement, the Professional Services Agreement, the HVAC Services Agreements, the HVAC Ground Lease, the Mall Management Agreement, the Predevelopment Agreement, the Billboard Master Lease, the Harrah's Shared Roadway Agreement, the Services Agreement, the Sale and Contribution Agreement, the Casino Lease, the Treadway Agreement, the Work Continuation Agreement, the operating agreements for each of Venetian and the Intermediate Holding Companies and any other document or agreement entered into on, prior to or after November 14, 1997, in accordance with Section 7.13 and, while applicable, the Disbursement Agreement relating to the development, construction, maintenance or operation of the Project provided, that following the Mall Release Date any contracts and agreements relating to the Mall which are transferred to Mall Subsidiary or New Mall Subsidiary shall no longer constitute Project Documents. "Project Schedule" has the meaning assigned that term in the Disbursement Agreement. "Quarterly Date" means the last day of each Fiscal Quarter. "Quarterly Payment Period" means the period commencing on the tenth day and ending and including the twentieth day of each month in which federal estimated tax payments are due (provided that payments in respect of estimated state income taxes due in January may instead, at the option of Borrowers, be paid during the last five days of the immediately preceding December). "Real Estate Contribution" has the meaning assigned to that term in the Initial Credit Agreement. "Register" has the meaning assigned to that term in subsection 2.1D. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Reimbursement Date" has the meaning assigned to that term in subsection 3.3B. "Related Parties" means and shall include: (i) Family Members, as hereafter defined; (ii) directors of LVSI or Venetian and employees of LVSI or Venetian who are senior managers or officers of LVSI, Venetian, Interface or any of their Affiliates; (iii) any person who receives an interest in LVSI or Venetian from any individual referenced in clauses (i)-(ii) in a gratuitous transfer, whether by gift, bequest or otherwise, to the extent of such interest; (iii) the estate of any individual referenced in clauses (i)-(iii); (iv) a trust for the benefit of one or more of the individuals referenced in clauses (i)-(iii); and/or (v) an entity owned or controlled, directly or indirectly, by one or more of the individuals, estates of trusts referenced in clauses (i)-(iv). For the purpose of this paragraph, a "Family Member" shall include: (i) Sheldon G. Adelson; (ii) Dr. Miriam Adelson; (iii) any sibling of either of the foregoing; (iv) any issue of any one or more of the individuals referenced in the preceding clauses (i)-(iii); and (v) the spouse or issue of the spouse of one or more of the individuals referenced in the preceding clauses (i)-(iv). "Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), including the movement of any Hazardous Materials through the air, soil, surface water or groundwater. 29 "Requisite Class Lenders" means, at any time of determination (i) for the Class of Lenders having Term Loan Exposure, Lenders having or holding more than 50% of the sum of the aggregate Term Loan Exposure of all Lenders and (ii) for the Class of Lenders having Revolving Loan Exposure, Lenders having or holding more than 50% of the aggregate Revolving Loan Exposure of all Lenders. "Requisite Lenders" means Lenders having or holding more than 50% of the sum of the aggregate Loans and unused Commitment of all Lenders. "Restaurant Leases" means together (i) the lease between Valentino Las Vegas, LLC, a Nevada limited liability company and Venetian dated as of May 15, 1999, (ii) the lease between Positano Las Vegas, LLC, a Nevada limited liability company and New Mall Subsidiary, as successor-in-interest to Mall Construction Subsidiary dated as of November 4, 1999 and (iii) the lease between Carnevale Coffee Bar, LLC, a Nevada limited liability company and New Mall Subsidiary, dated as of April 26, 2000. "Restricted Junior Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of either Borrower now or hereafter outstanding, except a dividend or distribution payable solely in shares of that class of stock to the holders of that class (or the accretion of such dividends or distribution), (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of either Borrower now or hereafter outstanding, (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of either Borrower now or hereafter outstanding, (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to Other Indebtedness and (v) any payment in respect of a repayment or reimbursement of amounts advanced to Borrowers or any of their Subsidiaries by Adelson or any Affiliate of Adelson under the Adelson Completion Guaranty. "Revolving Loan Availability Date" means the date on which Construction Consultant delivers the Six-Month Certificate to Administrative Agent. "Revolving Loan Commitment" means the commitment of a Lender to make Revolving Loans to Borrowers pursuant to subsection 2.1A(ii), and "Revolving Loan Commitments" means such commitments of all Lenders in the aggregate. "Revolving Loan Commitment Termination Date" means June 30, 2003. "Revolving Loan Exposure" means, with respect to any Lender as of any date of determination (i) prior to the termination of the Revolving Loan Commitments, that Lender's Revolving Loan Commitment and (ii) after the termination of the Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (in each case net of any participations purchased by other Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all participations purchased by that Lender in any outstanding Letters of Credit or any unreimbursed drawings under any Letters of Credit. "Revolving Loans" means the Loans made by Lenders to Borrowers pursuant to subsection 2.1A(ii). "Revolving Notes" means (i) the promissory notes of Borrowers issued pursuant to subsection 2.1E (ii) on the Closing Date and (ii) any promissory notes issued by Borrowers pursuant to the last sentence of subsection 10.1B(i) in connection with assignments of the Revolving Loan Commitments and Revolving Loans of any Lenders, in each case substantially in the form of Exhibit III-B annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Sale and Contribution Agreement" means that certain Sale and Contribution Agreement dated as of November 14, 1997 among Venetian, Mall Construction Subsidiary and Mall Subsidiary. 30 "Sands Expo and Convention Center" means the exposition and meeting facilities commonly known as the Sands Expo and Convention Center. "Scotiabank" has the meaning assigned to that term in the introduction to this Agreement. "Securities" means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. "Securities Act" means the Securities Act of 1933, as amended from time to time, and any successor statute. "Services Agreement" means that amended and restated Services Agreement dated as of November 14, 1997, by and among LVSI, Interface, Interface Holding Company, Inc., and the parties stated on the schedule thereto. "Site" means the land on which the Project is to be constructed as described in more detail in Exhibit T-4 to the Disbursement Agreement. "Six-Month Certificate" has the meaning set forth in the Disbursement Agreement. "Solvent" means, with respect to any Person, that as of the date of determination both (A) (i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Specified FF&E" means any furniture, fixtures, equipment and other personal property financed with the proceeds from the FF&E Facility. "Standby Letter of Credit" means any standby letter of credit or similar instrument issued for the purpose of supporting (i) Indebtedness of Borrowers in respect of industrial revenue or development bonds or financings, (ii) workers' compensation liabilities of Borrowers, (iii) the obligations of third party insurers of Borrowers arising by virtue of the laws of any jurisdiction requiring third party insurers, (iv) obligations with respect to Capital Leases or Operating Leases of Borrowers or with respect to the Harrah's Shared Roadway Agreement, (v) performance, payment, deposit or surety obligations of Borrowers, in any case if required by law or governmental rule or regulation (including, without limitation, if required by any Governmental Instrumentality or otherwise necessary in order to obtain any Permit related to the Project) or in accordance with custom and practice in the industry and (vi) Construction Related Obligations; provided that Standby Letters of Credit may not be issued for the purpose of supporting (a) trade payables or (b) any Indebtedness constituting "antecedent debt" (as that term is used in Section 547 of Bankruptcy Code). "Stop Funding Notice" has the meaning set forth in the Disbursement Agreement. "Subordinated Indebtedness" means (i) any Indebtedness in respect of the Subordinated Notes or the Completion Guaranty and (ii) any Indebtedness in respect of Employee Repurchase Notes. 31 "Subordinated Notes" means the $97,500,000 in aggregate principal amount of split coupon Senior Subordinated Notes due 2005 of Borrowers issued pursuant to the Subordinated Notes Indenture. "Subordinated Notes Indenture" means the Indenture dated as of November 14, 1997 between Borrowers, certain guarantors named therein and the Subordinated Notes Indenture Trustee. "Subordinated Notes Indenture Trustee" means First Union National Bank in its capacity as trustee under the Subordinated Notes Indenture and its successors in such capacity. "Subsidiary" means, with respect to any Person, (i) any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership or limited liability company of which more than 50% of such entities' capital accounts, distribution rights, general or limited partnership interests or membership interests are owned or controlled directly or indirectly by such Person or one of more other Subsidiaries of that Person or a combination thereof. Notwithstanding the foregoing, any Subsidiary described in subsection 7.3(x) that the Borrowers elect to designate as an Excluded Subsidiary, New Mall Subsidiary, Mall Subsidiary, Phase II Subsidiary, Phase II Manager, Phase II Direct Holdings, New Mall Manager, Mall Manager and Mall Direct Holdings and their respective Subsidiaries shall not constitute Subsidiaries under this Agreement or any other Loan Document, except for purposes of Article 5 (representations and warranties) (other than subsection 5.8) and subsection 6.1 (as specified therein) and for purposes of any definitions as used in Article 5 or subsection 6.1. "Subsidiary Guarantor" means each of the Intermediate Holding Companies and any other Subsidiary of any of the Borrowers that executes and delivers a counterpart of the Subsidiary Guaranty on November 14, 1997 or from time to time thereafter pursuant to subsection 6.13. "Subsidiary Guaranty" means the Subsidiary Guaranty executed and delivered by each of the Intermediate Holding Companies and existing Subsidiaries of Borrowers on November 14, 1997 and to be executed and delivered by additional Subsidiaries of Borrowers from time to time thereafter in accordance with subsection 6.13, substantially in the form of Exhibit XI annexed hereto, as such Subsidiary Guaranty may hereafter be amended, supplemented or otherwise modified from time to time. "Subsidiary Security Agreement" means each Subsidiary Security Agreement executed and delivered by any Subsidiary Guarantor other than the Intermediate Holding Companies from time to time thereafter in accordance with subsection 6.13, in each case substantially in the form of Exhibit VIII and Exhibit VIII-A (with respect to the Phase I-A Subsidiary) annexed hereto, as such Subsidiary Security Agreement may be amended, supplemented or otherwise modified from time to time, and "Subsidiary Security Agreements" means all such Subsidiary Security Agreements, collectively. "Superior Facilities" has the meaning assigned to that term in subsection 7.1(xv). "Supplemental Agent" has the meaning assigned to that term in subsection 9.1B. "Supplier Joint Venture" means any Person that supplies or provides materials or services to any Borrower, the Construction Manager or any contractor in the Project and in which a Borrower or one of its Subsidiaries have Investments. "Substitute Lender" has the meaning assigned to that term in subsection 10.7(a). "Tax" or "Taxes" means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided that "Tax on the overall net income" of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that 32 Person is organized or in which that Person's principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to be doing business on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its lending office). "Tax Amount" means, with respect to a Estimation Period or a taxable year, as the case may be an amount equal to (A) the product of (x) the taxable income (including all separate items of income) of LVSI or Venetian, as the case may be, for such Estimation Period or taxable year, as the case may be, and (y) the Applicable Tax Percentage reduced by (B) to the extent not previously taken into account, any income tax benefit attributable to LVSI or Venetian, as the case may be, which could be utilized (without regard to the actual utilization) by its members or shareholders, as the case may be, in the current or prior taxable year, or portion thereof, commencing on or after November 14, 1997 (including any tax losses or tax credits), computed at the Applicable Tax Percentage of the year that such benefit is taken into account for purposes of this computation; provided, however, that, the computation of Tax Amount shall also take into account (C) the deductibility of state and local taxes for federal income tax purposes, and (D) any difference in the Applicable Tax Percentage resulting from the nature of taxable income (such as capital gain as opposed to ordinary income). "Tax Amounts CPA" means a nationally recognized certified public accounting firm. "Title Company" means, Lawyers Title of Nevada, Inc. or an Affiliate thereof and/or one or more other title insurance companies reasonably satisfactory to Administrative Agent. "Term Loan Commitment" means the commitment of a Lender to make a Term Loan to Borrowers pursuant to subsection 2.1A(i) of this Agreement, and "Term Loan Commitments" means such commitments of all Lenders in the aggregate. "Term Loan Exposure" means, with respect to any Lender as of any date of determination, the outstanding principal amount of the Term Loans made by that Lender. "Term Loan" or "Term Loans" means one or more of the Loans made by Lenders to Borrowers pursuant to subsection 2.1A(i) of this Agreement. "Term Notes" means (i) the promissory notes of Borrowers issued pursuant to subsection 2.1E(i) of the Existing Credit Agreement on June 14, 2000, (ii) promissory notes of Borrowers to be issued on the Closing Date pursuant to subsection 2.1E(i) and (iii) any promissory notes issued by Borrowers pursuant to the last sentence of subsection 10.1B(i) hereof or, of the Existing Credit Agreement if issued prior to the Closing Date, in connection with assignments of the Term Loan Commitments or Term Loans of any Lenders, in each case substantially in the form of Exhibit III-A annexed hereto. "Total Utilization of Revolving Loan Commitments" means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of reimbursing the applicable Issuing Lender for any amount drawn under any Letter of Credit but not yet so applied) plus (ii) the Letter of Credit Usage. "Transaction Costs" means the fees, costs and expenses payable by Borrowers on or before November 14, 1997 in connection with the transactions contemplated by the Loan Documents and the Project Documents. "Treadway Agreement" means that certain Time and Materials Agreement dated February 10, 1997 by and between LVSI and Treadway Industries of Phoenix, Inc., an Arizona corporation. "True-up Amount" means, in respect of a particular taxable year, an amount determined by the Tax Amounts CPA equal to the difference between (i) the aggregated Permitted Quarterly Tax Distributions actually distributed in respect of such taxable year, without taking into account any adjustments to such Permitted Quarterly Tax Distributions made with respect to any other taxable year (including any adjustment to take into account a True-up Amount for the immediately preceding taxable year) and (ii) the Tax Amount permitted to be distributed in respect of 33 such year as determined by reference to LVSI's Internal Revenue Service Form 1120-S or Venetian's IRS Form 1065 filed for such year; provided, however, that if there is an audit or other adjustment with respect to a return filed by the LVSI or Venetian (including a filing of an amended return), upon a final determination or resolution of such audit or other adjustment, the Tax Amounts CPA shall redetermine the True-up Amount for the relevant taxable year. The amount equal to the excess, if any, of the amount described in clause (i) above over the amount described in clause (ii) above shall be referred to as the "True-up Amount due to LVSI" or the "True-up Amount due to Venetian", as the case may be and the excess, if any, of the amount described in clause (ii) over the amount described in clause (i) shall be referred to as the "True-up Amount due to the shareholders or members." "True-up Determination Date" means the date on which the Tax Amounts CPA delivers a statement to the Administrative Agent indicating the True-up Amount; provided, however, that the True-up Determination Date shall not be later than 30 days after the occurrence of an event requiring the determination of the True-up Amount (including, the filing of the federal and state tax returns or the final determination or resolution of an audit or other adjustment, as the case may be). "UCC" means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction. "Unadjusted Eurodollar Rate Component" has the meaning assigned to that term in subsection 6.8. "Venetian" means Venetian Casino Resort, LLC, a Nevada limited liability company. "Withdrawal Period" has the meaning assigned to that term in subsection 10.7(b). "Work Continuation Agreement" has the meaning set forth in the Disbursement Agreement. 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations - --- ------------------------------------------------------------------ Under Agreement. ---------------- Except as otherwise expressly provided in this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Borrowers to Lenders pursuant to clauses (i), (ii), (iii), (iv) and (xiii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in subsection 6.1(v)). Calculations in connection with the definitions, covenants and other provisions of this Agreement shall utilize accounting principles and policies in conformity with those used to prepare the financial statements referred to in subsection 5.3. 1.3 Other Definitional Provisions and Rules of Construction. - --- -------------------------------------------------------- A. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. B. References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. C. The use in any of the Loan Documents of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. D. Any reference to any agreement or instrument shall be deemed to include a reference to such agreement or instrument as assigned, amended, supplemented or otherwise modified from time to time in accordance with subsection 7.13 and, while applicable, the Disbursement Agreement. E. Any reference to a term defined in the Disbursement Agreement shall have the meaning assigned to it in the Disbursement Agreement whether or not such agreement remains in effect. 34 Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS 2.1 Commitments; Making of Loans; the Register; Notes. - --- -------------------------------------------------- A. Commitments. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrowers herein set forth and, while in effect, the representations and warranties set forth in the Disbursement Agreement, each Lender hereby severally agrees to make the Loans described in this subsection 2.1.A. (i) Term Loans. Each Lender, which had a Term Loan Commitment under the Existing Credit Agreement, has loaned to Borrowers an aggregate amount not exceeding its Pro Rata Share of the aggregate amount of the Term Loan Commitments under the Existing Credit Agreement, which amount was used for the purposes identified in subsection 2.5A. Each Lender having a Tranche B Term Loan Commitment or Tranche C Term Loan Commitment (each as defined in the Existing Credit Agreement) has loaned to Borrowers an aggregate amount not exceeding its Pro Rata Share of the Tranche B Term Loan Commitments or Tranche C Term Loan Commitments, as applicable. Effective as of the Closing Date, the aggregate outstanding amount of Tranche B Term Loans and Tranche C Term Loans (each as defined in the Existing Credit Agreement) shall be converted to Term Loans. The amount of each Lender's outstanding Tranche A Term Loan; Tranche B Term Loan and Tranche C Term Loan as of the opening of business on the Closing Date is set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate amount of the Tranche A Term Loans, Tranche B Term Loans and Tranche C Term Loans as of the opening of business on the Closing Date is $152,750,000. Amounts borrowed under this subsection 2.1A and subsequently repaid or prepaid may not be reborrowed. For the avoidance of doubt, all Term Loans made under the Existing Credit Agreement shall continue under this Agreement and all Tranche B Term Loans and Tranche C Term Loans made under the Existing Credit Agreement shall, from and after the Closing Date, continue under this Agreement as Term Loans. (ii) Revolving Loans. Each Lender severally agrees, subject to the limitations set forth below with respect to the maximum amount of Revolving Loans permitted to be outstanding from time to time, to lend to Borrowers from time to time during the period from November 14, 1997 to but excluding the Revolving Loan Commitment Termination Date an aggregate amount not exceeding its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments to be used for the purposes identified in subsection 2.5B. The amount of each Lender's Revolving Loan Commitment as of the Closing Date is set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate amount of the Revolving Loan Commitments as of the Closing Date is $40,000,000; provided that the Revolving Loan Commitments of Lenders shall be adjusted to give effect to any assignments of the Revolving Loan Commitments pursuant to subsection 10.1B; and provided, further that the amount of the Revolving Loan Commitments shall be reduced from time to time by the amount of any reductions thereto made pursuant to subsections 2.4B(ii) and 2.4B(iii). Each Lender's Revolving Loan Commitment shall expire on the Revolving Loan Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Loan Commitments shall be paid in full no later than that date. Amounts borrowed under this subsection 2.1A(ii) may be repaid and reborrowed to but excluding the Revolving Loan Commitment Termination Date. For the avoidance of doubt, all Revolving Loans made and Letters of Credit issued under the Existing Credit Agreement shall continue under this Agreement. Anything contained in this Agreement to the contrary notwithstanding, in no event shall the Total Utilization of Revolving Loan Commitments at any time exceed the Revolving Loan Commitments then in effect. (iii) [Intentionally omitted]. B. Borrowing Mechanics. Term Loans or Revolving Loans made on any Funding Date (other than Revolving Loans made pursuant to subsection 3.3B for the purpose of reimbursing any Issuing Lender for the amount of a drawing under a Letter of Credit issued by it), shall be in an aggregate minimum amount of (y) $3,000,000 and integral multiples of $1,000,000 in excess of that amount in the case of Term Loans and (z) $1,000,000 and integral multiples of $500,000 in the case of Revolving Loans. Whenever Borrowers desire that Lenders make Revolving Loans they shall deliver to Administrative Agent a Notice of Borrowing no later than 10:00 A.M. (New York City time) at least three Business Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least one Business Day in advance of the proposed Funding Date (in the case of a Base Rate 35 Loan). The Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the amount of Revolving Loans requested, (iii) whether such Revolving Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (iv) in the case of any Loans requested to be made as Eurodollar Rate Loans, the initial Interest Period requested therefor. Borrowers shall notify Administrative Agent and Disbursement Agent prior to the funding of any Revolving Loans in the event that any of the matters to which Borrowers are required to certify in the applicable Notice of Borrowing is no longer true and correct as of the applicable Funding Date, and the acceptance by Borrowers of the proceeds of any Revolving Loans shall constitute a re-certification by Borrowers, as of the applicable Funding Date, as to the matters to which Borrowers are required to certify in the applicable Notice of Borrowing. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Borrowers shall be bound to make a borrowing in accordance therewith. C. Disbursement of Funds. All Loans under this Agreement shall be made by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligation to make a Loan requested hereunder nor shall the Commitment of any Lender to make the particular type of Loan requested be increased or decreased as a result of a default by any other Lender in that other Lender's obligation to make a Loan requested hereunder. Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1B, Administrative Agent shall notify each Lender of the proposed borrowing. Each Lender shall make the amount of its Loan available to Administrative Agent not later than 12:00 Noon (New York City time) on the applicable Funding Date, in same day funds in Dollars, at the Funding and Payment Office. Except as provided in subsection 3.3B with respect to Revolving Loans used to reimburse any Issuing Lender for the amount of a drawing under a Letter of Credit issued by it, upon satisfaction or waiver of the conditions precedent specified in subsection 4.2, Administrative Agent shall make the aggregate amount of the Loans received by Administrative Agent from Lenders available by crediting the account of Borrowers at the Funding and Payment Office in the amount of such Loans. Unless Administrative Agent shall have been notified by any Lender prior to the Funding Date for any Loans that such Lender does not intend to make available to Administrative Agent the amount of such Lender's Loan requested on such Funding Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Funding Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrowers a corresponding amount on such Funding Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Administrative Agent shall promptly notify Borrowers and Borrowers shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the rate payable under this Agreement for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Borrowers may have against any Lender as a result of any default by such Lender hereunder. D. The Register. (i) Administrative Agent shall maintain, at its address referred to in subsection 10.9, a register for the recordation of the names and addresses of Lenders and the Commitments and Loans of each Lender from time to time (the "Register"). The Register shall be available for inspection by Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice. (ii) Administrative Agent shall record in the Register the Commitment and the Loans from time to time of each Lender, and each repayment or prepayment in respect of the principal amount of the Loans of each Lender. Any such recordation shall be conclusive and binding on Borrowers and each Lender, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lender's Commitments or Borrowers' Obligations in respect of any applicable Loans. 36 (iii) Each Lender shall record on its internal records (including the Notes held by such Lender) the amount of each Loan made by it and each payment in respect thereof. Any such recordation shall be conclusive and binding on Borrowers, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lender's Commitments or Obligations in respect of any applicable Loans; and provided, further that in the event of any inconsistency between the Register and any Lender's records, the recordations in the Register shall govern. (iv) Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. E. Notes. (i) In exchange for the outstanding Tranche A Term Notes, Borrower shall execute and deliver on the Closing Date (or thereafter in the case of an assignment) to each Lender having a Tranche A Term Loan Commitment (or to Administrative Agent for that Lender) a Term Note, with a maturity of June 30, 2003, substantially in the form of Exhibit III-A attached hereto to replace that Lender's Tranche A Term Note, in the principal amount of that Lender's Tranche A Term Loan Commitment and with other appropriate insertions. (ii) In exchange for the outstanding Tranche B Term Notes, Borrowers shall execute and deliver on the Closing Date (or thereafter in the case of an assignment) to each Lender having a Tranche B Term Loan Commitment (or to Administrative Agent for that Lender) a Term Note, with a maturity of June 30, 2003, substantially in the form of Exhibit III-A annexed hereto to replace that Lender's Tranche B Term Note, in the principal amount of that Lender's Tranche B Term Loan Commitment and with other appropriate insertions. (iii) In exchange for the outstanding Tranche C Term Notes, Borrowers shall execute and deliver on the Closing Date (or thereafter in the case of an assignment) to each Lender having a Tranche C Term Loan Commitment (or to Administrative Agent for that Lender) a Term Note, with a maturity of June 30, 2003, substantially in the form of Exhibit III-A annexed hereto to replace that Lender's Tranche C Term Note, in the principal amount of that Lender's Tranche C Term Loan Commitment and with other appropriate insertions. (iv) In exchange for the outstanding Revolving Notes, Borrowers shall execute and deliver on the Closing Date (or thereafter in the case of an assignment) to each Lender having a Revolving Loan Commitment (or to Administrative Agent for that Lender) a Revolving Note, with a maturity of June 30, 2003, substantially in the form of Exhibit III-B annexed hereto to evidence that Lender's Revolving Loans, in the principal amount of that Lender's Revolving Loan Commitment, and with other appropriate insertions. (v) To the extent that a Lender fails to deliver an outstanding Note under Clauses (i), (ii), (iii) or (iv) above, Borrowers shall not be obligated to issue a new Note and such outstanding Note shall be deemed amended as provided for in this Agreement. Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by Administrative Agent as provided in subsection 10.1B(ii). Any request, authority or consent of any person or entity who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, assignee or transferee of that Note or of any Note or Notes issued in exchange therefor. 37 2.2 Interest on the Loans. - --- ---------------------- A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7, each Loan shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the Adjusted Eurodollar Rate. The applicable basis for determining the rate of interest with respect to any Loan shall be selected by Borrowers initially at the time a Notice of Borrowing is given with respect to such Loan pursuant to subsection 2.1B, and the basis for determining the interest rate with respect to any Loan may be changed from time to time pursuant to subsection 2.2D. If on any day a Loan is outstanding with respect to which notice has not been delivered to Administrative Agent in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest, then for that day that Loan shall bear interest determined by reference to the Base Rate. (i) Revolving Loans. Subject to the provisions of subsections 2.2E and 2.7, the Revolving Loans shall bear interest through maturity as follows: (a) if a Base Rate Loan, then (x) from the date of funding of such Loan until June 14, 2000, at the sum of the Base Rate plus the Applicable Margin (as defined in the Initial Credit Agreement), (y) from June 14, 2000 until the Closing Date, at the sum of the Base Rate plus 2.00%, and (z) from and after the Closing Date, at the sum of the Base Rate plus 2.50%; or (b) if a Eurodollar Rate Loan, then (x) from the date of funding of such Loan until June 14, 2000, at the sum of the Adjusted Eurodollar Rate plus the Applicable Margin, (y) from June 14, 2000 until the Closing Date, at the sum of the Adjusted Eurodollar Rate plus 3.00%, and (z) from and after the Closing Date, at the sum of the Adjusted Eurodollar Rate plus 3.50%. (ii) Term Loans. Subject to the provisions of subsections 2.2E and 2.7, the Term Loans shall bear interest through maturity as follows: (a) if a Base Rate Loan, then (x) from the date of funding of such Loan until June 14, 2000, at the sum of the Base Rate plus the Applicable Margin, (y) from June 14, 2000 until the Closing Date, at the sum of the Base Rate plus 2.00%, and (z) from and after the Closing Date, at the sum of the Base Rate plus 2.50%; or (b) if a Eurodollar Rate Loan, then (x) from the date of funding of such Loan until June 14, 2000, at the sum of the Adjusted Eurodollar Rate plus the Applicable Margin, (y) from June 14, 2000 until the Closing Date, at the sum of the Adjusted Eurodollar Rate plus 3.00%, and (z) from and after the Closing Date, at the sum of the Adjusted Eurodollar Rate plus 3.50%. B. Interest Periods. In connection with each Eurodollar Rate Loan, Borrowers may, pursuant to the applicable Notice of Funding Request, Notice of Borrowing or Notice of Conversion/Continuation, as the case may be, select an interest period (each an "Interest Period") to be applicable to such Loan, which Interest Period shall be, at Borrowers' option, either a one, two, three or six month period; provided that: (i) the initial Interest Period for any Eurodollar Rate Loan shall commence on the Funding Date in respect of such Loan, in the case of a Loan initially made as a Eurodollar Rate Loan, or on the date specified in the applicable Notice of Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate Loan; (ii) in the case of immediately successive Interest Periods applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of Conversion/Continuation, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires; (iii) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; 38 (iv) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (v) of this subsection 2.2B, end on the last Business Day of a calendar month; (v) no Interest Period with respect to any portion of the Loans shall extend beyond June 30, 2003; (vi) no Interest Period shall extend beyond a date on which Borrowers are required to make a scheduled payment of principal of the Loans or a permanent reduction of the Revolving Loan Commitments is scheduled to occur unless the sum of (a) the aggregate principal amount of Loans that are Base Rate Loans plus (b) the aggregate principal amount of Loans that are Eurodollar Rate Loans with Interest Periods expiring on or before such date plus (c) the excess of the Commitments then in effect over the aggregate principal amount of the Loans then outstanding equals or exceeds the principal amount required to be paid on the Loans or the permanent reduction of the Commitments that is scheduled to occur, on such date; (vii) there shall be no more than 8 Interest Periods outstanding at any time; and (viii) in the event Borrowers fail to specify an Interest Period for any Eurodollar Rate Loan in the applicable Notice of Funding Request, Notice of Borrowing or Notice of Conversion/Continuation, Borrowers shall be deemed to have selected an Interest Period of one month. For the avoidance of doubt, any Loan made prior to the Closing Date shall continue with the Interest Period it had under the Existing Credit Agreement subject to the provisions of subsection 2.2D below. C. Interest Payments. Subject to the provisions of subsection 2.2E, interest on each Loan shall be payable in arrears on and to each Interest Payment Date applicable to that Loan, upon any prepayment of that Loan (to the extent accrued on the amount being prepaid) and at maturity (including final maturity). D. Conversion or Continuation. Subject to the provisions of subsection 2.6, Borrowers shall have the option (i) to convert at any time all or any part of its outstanding Loans equal to $3,000,000 and integral multiples of $1,000,000 in excess of that amount from Loans bearing interest at a rate determined by reference to one basis to Loans bearing interest at a rate determined by reference to an alternative basis or (ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $3,000,000 and integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the expiration date of an Interest Period applicable thereto. Borrowers shall deliver a Notice of Conversion/Continuation to Administrative Agent no later than 10:00 A.M. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify (i) the proposed conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan to be converted/continued, (iii) the nature of the proposed conversion/continuation, (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has occurred and is continuing. In lieu of delivering the above-described Notice of Conversion/Continuation, Borrowers may give Administrative Agent telephonic notice by the required time of any proposed conversion/continuation under this subsection 2.2D; provided that such notice shall be promptly confirmed in writing by delivery of a Notice of Conversion/Continuation to Administrative Agent on or before the proposed conversion/continuation date. Upon receipt of written or telephonic notice of any proposed conversion/continuation under this subsection 2.2D, Administrative Agent shall promptly transmit such notice by telefacsimile or telephone to each Lender. Neither Administrative Agent nor any Lender shall incur any liability to Borrowers in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to act on behalf of Borrowers or for otherwise acting in good faith under this subsection 2.2D, and upon conversion or continuation of the applicable basis for determining the interest rate with respect to any Loans in accordance with this Agreement pursuant to any such telephonic notice Borrowers shall have effected a conversion or continuation, as the case may be, hereunder. 39 Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Borrowers shall be bound to effect a conversion or continuation in accordance therewith. E. Default Rate. Upon the occurrence and during the continuation of any Event of Default, the outstanding principal amount of all Loans and, to the extent permitted by applicable law, any interest payments thereon not paid when due and any fees and other amounts then due and payable hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable upon demand at a rate that is 2% per annum in excess of the interest rate otherwise payable under this Agreement with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in the interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this subsection 2.2E is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. F. Computation of Interest. Interest on the Loans shall be computed on the basis of (i) a 360-day year, in the case of Eurodollar Rate Loans and (ii) a 365-day year, in respect of Base Rate Loans, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. 2.3 Fees. - --- ----- A. Commitment Fees. Borrowers agree to pay to Administrative Agent, for distribution to each Lender in proportion to that Lender's Pro Rata Share, commitment fees for the period from and including the Closing Date to and excluding the Revolving Loan Commitment Termination Date equal to the average of the daily excess of the Revolving Loan Commitments over the sum of (i) the aggregate principal amount of outstanding Revolving Loans but not the Letter of Credit Usage plus (ii) the Letter of Credit Usage multiplied by half of 1% per annum, such commitment fees to be calculated on the basis of a 360-day year and the actual number of days elapsed and to be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after November 14, 1997, and on the Revolving Loan Commitment Termination Date. B. Annual Administrative Fee. Borrowers agree to pay to Administrative Agent an annual administrative fee in the amount and at the times separately agreed to by the Administrative Agent and the Borrower. C. Other Fees. Borrowers agree to pay to the Arranger and Administrative Agent such other fees in the amounts and at the times separately agreed upon between Borrowers and the Arranger and Administrative Agent. 2.4 Repayments, Prepayments and Reductions in Commitments; General - --- -------------------------------------------------------------- Provisions Regarding Payments. ------------------------------ A. Scheduled Payments of Term Loans. Term Loans. Borrowers shall make principal payments on the Term Loans in installments on each of the following dates in the aggregate amount set forth opposite such date in the table set forth below: 40
Scheduled Repayment Date of Term Loans - ------------------- ------------- September 30, 2001 $ 381,875 December 31, 2001 $ 381,875 March 31, 2002 $ 381,875 June 30, 2002 $ 381,875 September 30, 2002 $ 381,875 December 31, 2002 $ 381,875 March 31, 2003 $ 75,229,375 June 30, 2003 $ 75,229,375 ------------ Total $152,750,000 ============
; provided that the scheduled installments of principal of the Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loans in accordance with subsection 2.4B(iv), and the final installment payable by Borrowers in respect of the Term Loans on such date shall be in an amount, if such amount is different from that specified above, sufficient to repay all amounts owing by Borrowers under this Agreement with respect to the Term Loans. B. Prepayments and Unscheduled Reductions in Commitments. (i) Voluntary Prepayments. Borrowers may, upon not less than one Business Day's prior written or telephonic notice, in the case of Base Rate Loans, and three Business Days' prior written or telephonic notice, in the case of Eurodollar Rate Loans, in each case given to Administrative Agent by 12:00 Noon (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time prepay any Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount; provided, however, that with respect to any Eurodollar Rate Loan not prepaid on the expiration of the Interest Period applicable thereto Borrowers shall pay any amount payable pursuant to subsection 2.6D. Notice of prepayment having been given as aforesaid, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in subsection 2.4B(iv). (ii) Voluntary Reductions of Commitments. Borrowers may, upon not less than three Business Days' prior written or telephonic notice confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Loan Commitments in an amount up to the amount by which the Revolving Loan Commitments exceed the Total Utilization of Revolving Loan Commitments at the time of such proposed termination or reduction; provided that any such partial reduction of the Revolving Loan Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount. Borrowers' notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Loan Commitments shall be effective on the date specified in Borrowers' notice and shall reduce the Revolving Loan Commitment of each Lender proportionately to its Pro Rata Share. Any such voluntary reduction of the Revolving Loan Commitments shall be applied as specified in subsection 2.4B(iv). (iii) Mandatory Prepayments and Mandatory Reductions of Commitments. The Loans shall be prepaid and/or the Commitments shall be permanently reduced in the amounts and under the circumstances set forth below, all such prepayments and/or reductions to be applied as set forth below or as more specifically provided in subsection 2.4B(iv): 41 (a) Prepayments and Reductions From Net Asset Sale Proceeds. No later than the first Business Day following the date of receipt by Borrowers or any of their Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset Sale (other than Net Asset Sale Proceeds in respect of the sale of (i) any obsolete worn out or surplus assets or assets no longer used or useful in the business of the Project, (ii) construction equipment having a fair market value not in excess of $4,000,000 prior to Completion or during the first year following Completion, and (iii) any heating, ventilation, air conditioning and similar property, with a fair market value in the aggregate not exceeding $2,500,000 sold to the HVAC Provider pursuant to documents reasonably satisfactory to Scotiabank, as Administrative Agent, but only in each case to the extent reinvested in the business of Borrowers or such Subsidiary within 180 days of receipt), Borrowers shall prepay the Loans and/or the Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds. (b) Prepayments and Reductions from Net Loss Proceeds and Liquidated Damages. No later than the second Business Day on which Loss Proceeds or Liquidated Damages are required to be applied to prepayment of Loans under subsection 5.20 of the Disbursement Agreement (if applicable) or Article X, Sections 5, 12(d) and 13, Article XI, Section 1 or Article XII, sections 8-9 of the Cooperation Agreement (as applicable), Borrowers shall prepay the Term Loans and/or the Commitments shall be permanently reduced in an amount equal to the Loss Proceeds or Liquidated Damages, as applicable, available for such application under subsection 5.20 of the Disbursement Agreement, Article X, Sections 5, 12(d) and 13, Article XI Section 1 and Article XII, Sections 8-9 of the Cooperation Agreement (as applicable) but not exceeding that portion thereof determined to be payable to Lenders in accordance with Section 4.5 of the Intercreditor Agreement. (c) Prepayments and Reductions Due to Reversion of Surplus Assets of Pension Plans. On the first Business Day following the date of return to Borrowers or any of their Subsidiaries of any surplus assets of any pension plan of Borrowers or any for their Subsidiaries, Borrowers shall prepay the Loans and/or the Commitments shall be permanently reduced in an aggregate amount (such amount being the "Net Pension Proceeds") equal to 100% of such returned surplus assets, net of transaction costs and expenses incurred in obtaining such return, including incremental taxes payable as a result thereof. (d) Prepayments and Reductions Due to Issuance of Debt or Equity. On the first Business Day following the date of receipt by Borrowers or any of their Subsidiaries, of the proceeds (including Cash, real property or other property) (any such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses, being "Net Proceeds") from the issuance of any debt or equity of Borrowers or any of their Subsidiaries (other than any debt expressly permitted under subsection 7.1 and any equity issuances to employees of Borrowers upon exercise of options issued pursuant to employment agreements and option plans as in effect on November 14, 1997), Borrowers shall prepay the Loans and/or the Commitments shall be permanently reduced in an aggregate amount equal to (i) in the case of any equity issuance which, individually or together with all equity issuances on or after the Closing Date, results in the receipt by Borrowers or any of their Subsidiaries of Net Proceeds in excess of $200,000,000 (excluding any proceeds described in clause (y) of the next sentence), 100% of such Net Proceeds in excess of such $200,000,000 and (ii) in the case of any debt, 100% of such Net Proceeds. Notwithstanding the foregoing, (y) Borrowers shall not be required to prepay the Loans and/or reduce Commitments from any proceeds (including Cash, real property or other property), of equity contributions from, or equity issuances to, Adelson or any of his Affiliates (other than the Subsidiaries) to LVSI or Venetian that are used for the expansion or improvement of the Project, the Phase I-A Project or the Guggenheim Projects or to pay operating costs with respect thereto or to make contributions to Excluded Subsidiaries and (z) any portion of the Net Proceeds of equity issuances not required to be applied to prepay the Loans and/or to reduce the Commitments shall, in any event, be used to make contributions to Excluded Subsidiaries or used for the expansion or improvement of the Project, the Phase I-A Project or the Guggenheim Projects or to pay operating costs with respect thereto. (e) [Intentionally omitted]. (f) [Intentionally omitted]. 42 (g) Prepayments from Certain Distributions from Mall Subsidiary. On the date of receipt by Borrowers or any of their Subsidiaries of any dividends or distributions in Cash or Cash Equivalents from New Mall Subsidiary, Mall Subsidiary, Mall Direct Holdings, New Mall Manager or Mall Manager following the sale or other disposition of all or any portion of the Mall or any interest therein (including any equity interest in Mall Direct Holdings, Mall Subsidiary, New Mall Subsidiary, Mall Manager or New Mall Manager), Borrowers shall prepay the Loans and/or the Commitments shall be permanently reduced in an amount equal to 100% of such dividends or distributions. Notwithstanding the foregoing, any dividends or distributions from New Mall Subsidiary, Mall Subsidiary, Mall Direct Holdings, New Mall Manager or Mall Manager which are applied by Borrowers within 15 days of receipt to fund Permitted Quarterly Tax Distributions need not be applied to prepay the Loans or to reduce Commitments, but such exclusion shall not reduce the amounts otherwise required to be applied to prepay Loans and/or reduce Commitments as provided above. (h) Prepayments From Funds Returned to Administrative Agent. To the extent no other provision of this subsection 2.4B(iii) would otherwise apply, no later than the Business Day following the date on which funds representing the proceeds of Loans are returned or distributed to Administrative Agent on behalf of Lenders under Section 2.11 or 2.12 of the Disbursement Agreement, Administrative Agent shall apply such funds to prepay the Loans and/or the Commitment shall be permanently reduced in an amount equal to the amount of funds so returned or distributed. (i) Other Prepayments. To the extent no other provision of this subsection 2.4B(iii) would apply, if any funds would be required to be used to redeem and/or prepay the Mortgage Notes and/or the Subordinated Notes (other than funds from the Mortgage Notes Proceeds Account) if not otherwise used to repay the Loans, then no later than one Business Day prior to the date on which Borrowers would otherwise be required to use such funds to effect such prepayment or redemption of the Mortgage Notes and/or Subordinated Notes, Borrowers shall prepay the Loans and/or the Commitments shall be permanently reduced in an amount equal to the amount of funds which would otherwise be used to redeem and/or prepay Mortgage Notes and/or Subordinated Notes. (j) Calculations of Net Proceeds Amounts; Additional Prepayments and Reductions Based on Subsequent Calculations. Concurrently with any prepayment of the Loans and/or if applicable the reduction of Commitments pursuant to subsections 2.4B(iii)(a)-(i), Borrowers shall deliver to Administrative Agent an Officers' Certificate demonstrating the calculation of the amount (the "Net Proceeds Amount") of the applicable Net Asset Sale Proceeds or Loss Proceeds or Liquidated Damages, the applicable Net Pension Proceeds, Net Proceeds (as such terms are defined in subsections 2.4B(iii)(c) and (d)), or the amount of the subsidiary distribution or other amounts, as the case may be, that gave rise to such prepayment and/or reduction. In the event that Borrowers shall subsequently determine that the actual Net Proceeds Amount was greater than the amount set forth in such Officers' Certificate, Borrowers shall promptly make an additional prepayment of the Term Loans (and/or, if applicable, the Commitments shall be permanently reduced) in an amount equal to the amount of such excess, and Borrowers shall concurrently therewith deliver to Administrative Agent an Officers' Certificate demonstrating the derivation of the additional Net Proceeds Amount resulting in such excess. (k) Prepayments Due to Reductions or Restrictions of Revolving Loan Commitments. Borrowers shall from time to time prepay the Revolving Loans to the extent necessary so that the Total Utilization of Revolving Loan Commitments shall not at any time exceed the Revolving Loan Commitments then in effect. (l) [Intentionally omitted]. (m) [Intentionally omitted]. (n) Drawings on Conforming Adelson L/Cs. In the event that any Conforming Adelson L/C Draw Event shall have occurred, Administrative Agent may direct the Conforming Adelson L/C Drawing Agent to draw down on each outstanding Conforming Adelson L/C in its entirety and shall apply the proceeds received from the Conforming Adelson L/C Drawing Agent: first to prepay outstanding amounts under (i) the Term Loans and (ii) Revolving Loans, each on a pro rata basis to the full extent thereof and to permanently reduce the Revolving Loan Commitments by the amount of such prepayment of Revolving Loans and second to the extent of any remaining amount of proceeds drawn by Drawing Agent, to 43 further permanently reduce the Revolving Loan Commitments. For the avoidance of doubt, a Conforming Adelson L/C Draw Event shall be in addition to an Event of Default described in Section 8 hereof and (i) the Administrative Agent shall not be required to exercise any rights or remedy under Section 8 hereof in order to draw on the Conforming Adelson L/Cs and (ii) any drawing on a Conforming Adelson L/C shall not be deemed to be a waiver of any Event of Default. Notwithstanding the foregoing, at the request of Borrowers, the Administrative Agent shall instruct the Conforming Adelson L/C Drawing Agent to release any Conforming Adelson L/C or a portion thereof in its possession to Borrowers, provided that each of the following conditions shall have been satisfied: (i) no Conforming Adelson L/C Draw Event shall have occurred, (ii) Borrowers shall at such time be in compliance with subsection 7.6 and shall have been in compliance therewith for the preceding four consecutive quarters (without giving effect to any such Conforming Adelson L/C or a portion thereof), (iii) no Event of Default or Potential Event of Default shall have occurred and (iv) since the last day of the preceding calendar year, no event or change shall have occurred that caused, in any case or in the aggregate, a Material Adverse Effect. (iv) Application of Prepayments and Unscheduled Reductions of Revolving Loan Commitments. (a) Application of Voluntary Prepayments by Type of Loan and Order of Maturity. Any voluntary prepayments pursuant to subsection 2.4B(i) shall be applied as specified by Borrowers in the applicable notice of prepayment; provided that in the event Borrowers fail to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied first to repay outstanding Revolving Loans to the full extent thereof on a pro rata basis, second to repay outstanding Term Loans on a pro rata basis and third to permanently reduce the Revolving Loan Commitments to the full extent thereof. (b) Application of Mandatory Prepayments by Type of Loans. Any amount (the "Applied Amount") required to be applied as a mandatory prepayment of the Term Loans and/or a reduction of the Revolving Loan Commitments pursuant to subsections 2.4B(iii)(a)-(j) shall be applied to first prepay the Term Loans on a pro rata basis to the full extent thereof, second, to the extent of any remaining portion of the Applied Amount, to prepay the Revolving Loans to the full extent thereof and to further permanently reduce the Revolving Loan Commitments by the amount of such prepayment, and third, to the extent of any remaining portion of the Applied Amount, to further permanently reduce the Revolving Loan Commitments to the full extent thereof. Any amount required to be applied as a mandatory prepayment pursuant to subsection 2.4B(iii)(n) shall be applied in accordance with terms of such subsection. (c) Application of Mandatory Prepayments of Term Loans to the Scheduled Installments of Principal Thereof. Any mandatory prepayments of the Term Loans pursuant to subsection 2.4B(iii)(a)-(d), (f), (g), (h), (i) or (j) shall be applied to reduce the scheduled installments of principal of the Term Loans set forth in subsection 2.4A, on a pro rata basis, and any mandatory prepayments of the Term Loans pursuant to subsection 2.4B(iii)(n) shall be applied to reduce the scheduled installments of principal of the Term Loans set forth in subsection 2.4A, in inverse order of maturity. (d) Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans. Considering Loans being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Borrowers pursuant to subsection 2.6D. C. General Provisions Regarding Payments. (i) Manner and Time of Payment. All payments by Borrowers of principal, interest, fees and other Obligations hereunder and under the Notes shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 Noon (New York City time) on the date due at the Funding and Payment Office for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrowers on the next succeeding Business Day. Borrowers hereby authorize Administrative Agent to charge their accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and 44 expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose). (ii) Application of Payments to Principal and Interest. All payments in respect of the principal amount of any Loan shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments shall be applied to the payment of interest before application to principal. (iii) Apportionment of Payments. Aggregate principal and interest payments in respect of Loans shall be apportioned among all outstanding Loans proportionately to Lenders' respective Pro Rata Shares. Administrative Agent shall promptly distribute to each Lender, at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request, its Pro Rata Share of all such payments received by Administrative Agent and the commitment fees of such Lender when received by Administrative Agent pursuant to subsection 2.3. Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if, pursuant to the provisions of subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter. (iv) Payments on Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of the commitment fees hereunder, as the case may be. (v) Notation of Payment. Each Lender agrees that before disposing of any Note held by it, or any part thereof (other than by granting participations therein), that Lender will make a notation thereon of all Loans evidenced by that Note and all principal payments previously made thereon and of the date to which interest thereon has been paid; provided that the failure to make (or any error in the making of) a notation of any Loan made under such Note shall not limit or otherwise affect the obligations of Borrowers hereunder or under such Note with respect to any Loan or any payments of principal or interest on such Note. 2.5 Use of Proceeds. - --- ---------------- A. Term Loans. The proceeds of the Term Loans shall be applied by Borrowers to pay Project Costs in accordance with the Disbursement Agreement (including costs and expenses incurred by Borrowers in connection with the transactions contemplated hereby), all in accordance with the Disbursement Agreement or to pay indebtedness under this Agreement. B. Revolving Loans. The proceeds of the Revolving Loans shall be applied by Borrowers for working capital and general corporate purposes. C. Margin Regulations. No portion of the proceeds of any borrowing under this Agreement shall be used by Borrowers or any of their Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. 2.6 Special Provisions Governing Eurodollar Rate Loans. - --- --------------------------------------------------- Notwithstanding any other provision of this Agreement to the contrary, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: A. Determination of Applicable Interest Rate. As soon as practicable after 10:00 A.M. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrowers and each Lender. B. Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the interbank Eurodollar market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the 45 basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Borrowers and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrowers and Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Borrowers with respect to the Loans in respect of which such determination was made shall be deemed to be made with respect to Base Rate Loans. C. Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Borrowers and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order not in effect on the date such Person became a Lender (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) would cause such Lender material financial hardship as a result of contingencies occurring after the date of this Agreement which materially and adversely affect the interbank Eurodollar market or the position of such Lender in that market, then, and in any such event, such Lender shall be an "Affected Lender" and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Borrowers and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender (which such Affected Lender shall do at the earliest practicable date), (b) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Borrowers pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected Loans") shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (d) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Except as provided in the immediately preceding sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement. D. Compensation For Breakage or Non-Commencement of Interest Periods. Borrowers shall compensate each Lender, upon written request by that Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by that Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any reason (other than a default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in an Advance Confirmation Notice, Notice of Borrowing or a telephonic request for borrowing, as applicable, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Conversion/Continuation or a telephonic request for conversion or continuation, (ii) if any prepayment (including any prepayment pursuant to subsection 2.4B(i)) or other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Borrowers, or (iv) as a consequence of any other default by Borrowers in the repayment of its Eurodollar Rate Loans when required by the terms of this Agreement. E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of that Lender. F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A shall be made as though that Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this subsection 2.6 and under subsection 2.7A. 46 G. Eurodollar Rate Loans After Default. After the occurrence of and during the continuation of a Potential Event of Default or an Event of Default, (i) Borrowers may not elect to have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest Period then in effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any Advance Confirmation Notice, Notice of Borrowing or Notice of Conversion/Continuation given by Borrowers with respect to a requested borrowing or conversion/continuation that has not yet occurred shall be deemed made with respect to Base Rate Loans. 2.7 Increased Costs; Taxes; Capital Adequacy. - --- ----------------------------------------- A. Compensation for Increased Costs and Taxes. Subject to the provisions of subsection 2.7B (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of its obligations hereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the interbank Eurodollar market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrowers shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrowers (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this subsection 2.7A, which statement shall be conclusive and binding upon all parties hereto absent manifest error. B. Withholding of Taxes. (i) Payments to Be Free and Clear. All sums payable by Borrowers under this Agreement and the other Loan Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of Borrowers or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment, all such non-excluded Taxes being hereinafter collectively referred to as "Included Taxes". (ii) Grossing-up of Payments. If Borrowers or any other Person is required by law to make any deduction or withholding on account of any such Included Tax from any sum paid or payable by Borrowers to Administrative Agent or any Lender under any of the Loan Documents: 47 (a) Borrowers shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Borrowers become aware of it; (b) Borrowers shall pay any such Included Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on Borrowers) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (c) the sum payable by Borrowers in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (d) within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of payment of any Included Tax which it is required by clause (b) above to pay, Borrowers shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided that no such additional amount shall be required to be paid to any Lender under clause (c) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof) or after the date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date of this Agreement or at the date of such Assignment Agreement, as the case may be, in respect of payments to such Lender. (iii) Evidence of Exemption from U.S. Withholding Tax. (a) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof (for purposes of this subsection 2.7B(iii), a "Non-US Lender") shall deliver to Administrative Agent for transmission to Borrowers, on or prior to November 14, 1997 (in the case of each Lender listed on the signature pages hereof) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Borrowers or Administrative Agent (each in the reasonable exercise of its discretion), (1) two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents or (2) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor form), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Loan Documents. (b) Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly (1) deliver to Administrative Agent for transmission to Borrowers two new original copies of Internal Revenue Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two original copies of 48 Internal Revenue Service Form W-8BEN or W-8ECI, as the case may be, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents or (2) notify Administrative Agent and Borrowers of its inability to deliver any such forms, certificates or other evidence. (c) Borrowers shall not be required to pay any additional amount to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have failed to satisfy the requirements of clause (a) or (b)(1) of this subsection 2.7B(iii); provided that if such Lender shall have satisfied the requirements of subsection 2.7B(iii)(a) on November 14, 1997 (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Borrowers of their obligation to pay any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in subsection 2.7B(iii)(a). C. Capital Adequacy Adjustment. If any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof after the date hereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Commitments or Letters of Credit or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Borrowers from such Lender of the statement referred to in the next sentence, Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to Borrowers (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis of the calculation of such additional amounts, which statement shall be conclusive and binding upon all parties hereto absent manifest error. 2.8 Obligation of Lenders to Mitigate. - --- ---------------------------------- Each Lender and Issuing Lender agrees that, as promptly as practicable after the officer of such Lender or Issuing Lender responsible for administering the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender or Issuing Lender to become an Affected Lender or that would entitle such Lender or Issuing Lender to receive payments under subsection 2.7 or subsection 3.6 it will, to the extent not inconsistent with the internal policies of such Lender or Issuing Lender and any applicable legal or regulatory restrictions, use reasonable efforts (i) to make, issue, fund or maintain the Commitments of such Lender or Issuing Lender or the affected Loans or Letters of Credit of such Lender or Issuing Lender through another lending or Letters of Credit office of such Lender or Issuing Lender or (ii) take such other measures as such Lender or Issuing Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender or Issuing Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender or Issuing Lender pursuant to subsection 2.7 would be materially reduced and if, as determined by such Lender or Issuing Lender in its sole discretion, the making, issuing, funding or maintaining of such Commitments or Loans or Letters of Credit through such other lending or Letters of Credit office or in accordance with such other measures, as the case may be, would not otherwise materially adversely affect such Commitments or Loans or Letters of Credit or the interests of such Lender or Issuing Lender; provided that such Lender or Issuing Lender will not be obligated to utilize such other lending or Letters of Credit office pursuant to this subsection 2.8 if such Lender or Issuing Lender would incur incremental expenses as a result of utilizing such other lending office as described in clause (i) above. A certificate as to the amount of any 49 such expenses payable by Borrowers pursuant to this subsection 2.8 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender or Issuing Lender to Borrowers (with a copy to Administrative Agent) shall be conclusive absent manifest error. Each Lender and Issuing Lender agrees that it will not request compensation under subsection 2.7 unless such Lender or Issuing Lender requests compensation from borrowers under other lending arrangements with such Lender or Issuing Lender who are similarly situated. 2.9 Obligations Joint and Several. - --- ------------------------------ Anything herein to the contrary notwithstanding, each Borrower hereby agrees and acknowledges that the obligation of each Borrower for payment of the Obligations shall be joint and several with the obligations of the other Borrower hereunder regardless of which Borrower actually receives the proceeds or benefits of any borrowing hereunder. Each Borrower hereby agrees and acknowledges that it will receive substantial benefits from the Loans and credit facilities made available under this Agreement. Each Borrower agrees that its joint and several obligation to pay all Obligations hereunder is irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than the indefeasible payment in full of the Obligations, and the liability of each Borrower with respect to the Obligations shall not be affected, reduced or impaired by (i) consideration of the amount of proceeds of the Loans received by any Borrower relative to the aggregate amount of the Loans, (ii) the dissolution or termination of or any increase, decrease or change in personnel of, Borrower, (iii) the insolvency or business failure of, or any assignment for the benefit of creditors by, or the commencement of any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceedings by or against the other Borrower or (iv) the appointment of a receiver for, or the attachment, restraint of or making or levying of any order of court or legal process affecting, the property of the other Borrower. Each Borrower agrees that a separate action or actions may be brought and prosecuted against such Borrower whether or not action is brought against the other Borrower and whether or not the other Borrower is joined in any such action or actions. Either Borrower's payment of a portion, but not all, of the Obligations shall in no way limit, affect, modify or abridge such Borrower's liability for that portion of the Obligations which is not paid. Each Borrower hereby waives any right to require the Administrative Agent or any Lender, as a condition of payment or performance of the Obligations by such Borrower, to proceed against the other Borrower or any other Person, to exhaust any security held from any Borrower, or pursue any other remedy in the power of the Administrative Agent or any Lender. Each Borrower hereby waives any defense arising by reason of incapacity, lack of authority or any disability or other defense that may be available to the other Borrower and any defenses or benefits that may be derived or afforded by law which would limit the liability of or exonerate any guarantor or surety with respect to the obligations, or which may conflict with the terms and provisions of this Agreement, other than the indefeasible payment in full of the Obligations. Any indebtedness of a Borrower now or hereafter held by the other Borrower is hereby subordinated in right of payment to the Obligations, and any such indebtedness of a Borrower to the other Borrower collected or received by such other Borrower after an Event of Default has occurred and is continuing shall be held in trust for the Administrative Agent on behalf of the Lenders and shall forthwith be paid over to the Administrative Agent for the benefit of the Lenders to be credited and applied against the Obligations but without affecting, impairing or limiting in any manner the liability of such other Borrower under any other provision of this Agreement. Section 3. LETTERS OF CREDIT 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations - --- --------------------------------------------------------------------- Therein. -------- A. Letters of Credit. In addition to Borrowers requesting that Lenders make Revolving Loans pursuant to subsection 2.1A(ii), Borrowers may request, in accordance with the provisions of this subsection 3.1, from time to time during the period from November 14, 1997 to but excluding the Revolving Loan Commitment Termination Date, that one or more Lenders issue Letters of Credit for the account of Borrowers for the purposes specified in the definitions of Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrowers herein set forth, any one or more Lenders may, but (except as provided in subsection 3.1B(ii)) shall not be obligated to, issue such Letters of Credit in accordance with the provisions of this subsection 3.1; provided that Borrowers shall not request that any Lender issue (and no Lender shall issue): 50 (i) any Letter of Credit if, after giving effect to such issuance, the Total Utilization of Revolving Loan Commitments would exceed the Revolving Loan Commitments then in effect; (ii) any Letter of Credit if, after giving effect to such issuance, the Letter of Credit Usage would exceed $15,000,000; (iii) any Standby Letter of Credit having an expiration date later than the earlier of (a) the Revolving Loan Commitment Termination Date and (b) the date which is one year from the date of issuance of such Standby Letter of Credit; provided that the immediately preceding clause (b) shall not prevent any Issuing Lender from agreeing that a Standby Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each unless such Issuing Lender elects not to extend for any such additional period; and provided, further that such Issuing Lender shall elect not to extend such Standby Letter of Credit if it has knowledge that an Event of Default has occurred and is continuing (and has not been waived in accordance with subsection 10.6) at the time such Issuing Lender must elect whether or not to allow such extension; (iv) any Commercial Letter of Credit having an expiration date (a) later than the earlier of (X) the date which is 30 days prior to the Revolving Loan Commitment Termination Date and (Y) the date which is 180 days from the date of issuance of such Commercial Letter of Credit or (b) that is otherwise unacceptable to the applicable Issuing Lender in its reasonable discretion; or (v) any Letter of Credit denominated in a currency other than Dollars. B. Mechanics of Issuance. (i) Notice of Issuance. Whenever Borrowers desire the issuance of a Letter of Credit, they shall deliver to Administrative Agent a Notice of Issuance of Letter of Credit substantially in the form of Exhibit XV annexed hereto no later than 12:00 Noon (New York City time) at least three Business Days (in the case of Standby Letters of Credit) or five Business Days (in the case of Commercial Letters of Credit), or in each case such shorter period as may be agreed to by the Issuing Lender in any particular instance, in advance of the proposed date of issuance. The Notice of Issuance of Letter of Credit shall specify (a) the proposed date of issuance (which shall be a Business Day), (b) whether the Letter of Credit is to be a Standby Letter of Credit or a Commercial Letter of Credit, (c) the face amount of the Letter of Credit, (d) the expiration date of the Letter of Credit, (e) the name and address of the beneficiary, and (f) either the verbatim text of the proposed Letter of Credit or the proposed terms and conditions thereof, including a precise description of any documents to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of the Letter of Credit, would require the Issuing Lender to make payment under the Letter of Credit; provided that the Issuing Lender, in its reasonable discretion, may require changes in the text of the proposed Letter of Credit or any such documents; and provided, further that no Letter of Credit shall require payment against a conforming draft to be made thereunder on the same business day (under the laws of the jurisdiction in which the office of the Issuing Lender to which such draft is required to be presented is located) that such draft is presented if such presentation is made after 10:00 A.M. (in the time zone of such office of the Issuing Lender) on such business day. Borrowers shall notify the applicable Issuing Lender (and Administrative Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance of any Letter of Credit in the event that any of the matters to which Borrowers are required to certify in the applicable Notice of Issuance of Letter of Credit is no longer true and correct as of the proposed date of issuance of such Letter of Credit, and upon the issuance of any Letter of Credit Borrowers shall be deemed to have re-certified, as of the date of such issuance, as to the matters to which Borrowers are required to certify in the applicable Notice of Issuance of Letter of Credit. (ii) Determination of Issuing Lender. Upon receipt by Administrative Agent of a Notice of Issuance of Letter of Credit pursuant to subsection 3.1B(i) requesting the issuance of a Letter of Credit, in the event Administrative Agent elects to issue such Letter of Credit, Administrative Agent shall promptly so notify Borrowers, and Administrative Agent shall be the Issuing Lender with respect thereto. In the event that Administrative Agent, in its sole discretion, elects not to issue such Letter of Credit, Administrative Agent shall promptly so 51 notify Borrowers, whereupon Borrowers may request any other Lender to issue such Letter of Credit by delivering to such Lender a copy of the applicable Notice of Issuance of Letter of Credit. Any Lender so requested to issue such Letter of Credit shall promptly notify Borrowers and Administrative Agent whether or not, in its sole discretion, it has elected to issue such Letter of Credit, and any such Lender which so elects to issue such Letter of Credit shall be the Issuing Lender with respect thereto. In the event that all other Lenders shall have declined to issue such Letter of Credit, notwithstanding the prior election of Administrative Agent not to issue such Letter of Credit, Administrative Agent shall be obligated to issue such Letter of Credit and shall be the Issuing Lender with respect thereto, notwithstanding the fact that the Letter of Credit Usage with respect to such Letter of Credit and with respect to all other Letters of Credit issued by Administrative Agent, when aggregated with Administrative Agent's outstanding Revolving Loans, may exceed Administrative Agent's Revolving Loan Commitment then in effect. (iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance with subsection 10.6) of the conditions set forth in subsection 4.3, the Issuing Lender shall issue the requested Letter of Credit in accordance with the Issuing Lender's standard operating procedures. (iv) Notification to Lenders. Upon the issuance of any Letter of Credit the applicable Issuing Lender shall promptly notify Administrative Agent and each other Lender of such issuance, which notice shall be accompanied by a copy of such Letter of Credit. Promptly after receipt of such notice (or, if Administrative Agent is the Issuing Lender, together with such notice), Administrative Agent shall notify each Lender of the amount of such Lender's respective participation in such Letter of Credit, determined in accordance with subsection 3.1C. (v) Reports to Lenders. Within 15 days after the end of each calendar quarter ending after November 14, 1997, so long as any Letter of Credit shall have been outstanding during such calendar quarter, each Issuing Lender shall deliver to each other Lender a report setting forth for such calendar quarter the daily aggregate amount available to be drawn under the Letters of Credit issued by such Issuing Lender that were outstanding during such calendar quarter. C. Lenders' Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from the Issuing Lender a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender's Pro Rata Share of the maximum amount which is or at any time may become available to be drawn thereunder. 3.2 Letter of Credit Fees. - --- ---------------------- Borrowers agree to pay the following amounts with respect to Letters of Credit issued hereunder: (i) with respect to each Standby Letter of Credit, (a) a fronting fee, payable directly to the applicable Issuing Lender for its own account, equal to the greater of (X) $5,000 and (Y) 0.25% per annum of the daily amount available to be drawn under such Standby Letter of Credit and (b) a letter of credit fee, payable to Administrative Agent for the account of Lenders, equal to the product of (y) (A) until June 14, 2000, a percentage equal to the Applicable Margin (as defined in the Initial Credit Agreement) for Eurodollar Rate Loans, (B) from June 14, 2000 until the Closing Date, 3.00% times and (C) from and after the Closing Date, 3.50% times, (z) the daily maximum amount available to be drawn under such Standby Letter of Credit, each such fronting fee or letter of credit fee to be payable in arrears on and to (but excluding) each March 31, June 30, September 30 and December 31 of each year and computed on the basis of a 360-day year for the actual number of days elapsed; (ii) with respect to each Commercial Letter of Credit, (a) a fronting fee, payable directly to the applicable Issuing Lender for its own account, equal to 0.25% per annum of the daily amount available to be drawn under such Commercial Letter of Credit and (b) a letter of credit fee, payable to Administrative Agent for the account of Lenders, equal to the product of (y) (A) until June 14, 2000, a percentage equal to the Applicable Margin (as defined in the Initial Credit Agreement) for Eurodollar Rate Loans, (B) from June 14, 2000 until the Closing Date, 3.00% times and (C) from and after the Closing Date, 3.50% times, (z) the daily maximum amount available to be drawn under such Commercial 52 Letter of Credit, each such fronting fee or letter of credit fee to be payable in arrears on and to (but excluding) each March 31, June 30, September 30 and December 31 of each year and computed on the basis of a 360-day year for the actual number of days elapsed; and (iii) with respect to the issuance, amendment or transfer of each Letter of Credit and each payment of a drawing made thereunder (without duplication of the fees payable under clauses (i) and (ii) above), documentary and processing charges payable directly to the applicable Issuing Lender for its own account in accordance with such Issuing Lender's standard schedule for such charges in effect at the time of such issuance, amendment, transfer or payment, as the case may be. For purposes of calculating any fees payable under clauses (i) and (ii) of this subsection 3.2, the daily amount available to be drawn under any Letter of Credit shall be determined as of the close of business on any date of determination. Promptly upon receipt by Administrative Agent of any amount described in clause (i)(b) or (ii)(b) of this subsection 3.2, Administrative Agent shall distribute to each Lender its Pro Rata Share of such amount. 3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit. - --- ------------------------------------------------------------------- A. Responsibility of Issuing Lender With Respect to Drawings. In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. B. Reimbursement by Borrowers of Amounts Paid Under Letters of Credit. In the event an Issuing Lender has determined to honor a drawing under a Letter of Credit issued by it, such Issuing Lender shall immediately notify Borrowers and Administrative Agent, and Borrowers shall reimburse such Issuing Lender on or before the Business Day immediately following the date on which such drawing is honored (the "Reimbursement Date") in an amount in Dollars and in same day funds equal to the amount of such honored drawing; provided that, anything contained in this Agreement to the contrary notwithstanding, unless Borrowers shall have notified Administrative Agent and such Issuing Lender prior to 10:00 A.M. (New York City time) on the date such drawing is honored that Borrowers intend to reimburse such Issuing Lender for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, Borrowers shall be deemed to have given a timely Notice of Borrowing to Administrative Agent requesting Lenders to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing and Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by Agent to reimburse such Issuing Lender for the amount of such honored drawing; and provided, further that if for any reason proceeds of Revolving Loans are not received by such Issuing Lender on the Reimbursement Date in an amount equal to the amount of such honored drawing, Borrowers shall reimburse such Issuing Lender, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its obligation to make Revolving Loans on the terms and conditions set forth in this Agreement, and Borrowers shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this subsection 3.3B. C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of Credit. (i) Payment by Lenders. In the event that Borrowers shall fail for any reason to reimburse any Issuing Lender as provided in subsection 3.3B in an amount equal to the amount of any drawing honored by such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall promptly notify each other Lender of the unreimbursed amount of such honored drawing and of such other Lender's respective participation therein based on such Lender's Pro Rata Share. Each Lender shall make available to such Issuing Lender an amount equal to its respective participation, in Dollars and in same day funds, at the office of such Issuing Lender specified in such notice, not later than 12:00 Noon (New York City time) on the first business day (under the laws of the jurisdiction in which such office of such Issuing Lender is located) after the date notified by such Issuing Lender. In the event that any Lender fails to make available to such Issuing Lender on such business day the amount of such Lender's participation in such Letter of Credit as provided in this subsection 3.3C, such Issuing Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate customarily used by such Issuing Lender for 53 the correction of errors among banks for three Business Days and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be deemed to prejudice the right of any Lender to recover from any Issuing Lender any amounts made available by such Lender to such Issuing Lender pursuant to this subsection 3.3C in the event that it is determined by the final judgment of a court of competent jurisdiction that the payment with respect to a Letter of Credit by such Issuing Lender in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of such Issuing Lender. (ii) Distribution to Lenders of Reimbursements Received From Borrowers. In the event any Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of any drawing honored by such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such honored drawing such other Lender's Pro Rata Share of all payments subsequently received by such Issuing Lender from Borrowers in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. D. Interest on Amounts Paid Under Letters of Credit. (i) Payment of Interest by Borrowers. Borrowers agree to pay to each Issuing Lender, with respect to drawings honored under any Letters of Credit issued by it, interest on the amount paid by such Issuing Lender in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by Borrowers (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the period from the date such drawing is honored to but excluding the Reimbursement Date, the rate then in effect under this Agreement with respect to Revolving Loans that are Base Rate Loans and (b) thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise payable under this Agreement with respect to Revolving Loans that are Base Rate Loans. Interest payable pursuant to this subsection 3.3D(i) shall be computed on the basis of a 365-day year for the actual number of days elapsed in the period during which it accrues and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. (ii) Distribution of Interest Payments by Issuing Lender. Promptly upon receipt by any Issuing Lender of any payment of interest pursuant to subsection 3.3D(i) with respect to a drawing honored under a Letter of Credit issued by it, (a) such Issuing Lender shall distribute to each other Lender, out of the interest received by such Issuing Lender in respect of the period from the date such drawing is honored to but excluding the date on which such Issuing Lender is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B), the amount that such other Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period pursuant to subsection 3.2 if no drawing had been honored under such Letter of Credit, and (b) in the event such Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of such honored drawing, such Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such honored drawing such other Lender's Pro Rata Share of any interest received by such Issuing Lender in respect of that portion of such honored drawing so reimbursed by other Lenders for the period from the date on which such Issuing Lender was so reimbursed by other Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by Borrowers. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. 3.4 Obligations Absolute. - --- --------------------- The obligation of Borrowers to reimburse each Issuing Lender for drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and 54 shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), any Issuing Lender or other Lender or any other Person or, in the case of a Lender, against Borrowers, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrowers or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by the applicable Issuing Lender under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrowers; (vi) any breach of this Agreement or any other Loan Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Potential Event of Default shall have occurred and be continuing; provided, in each case, that payment by the applicable Issuing Lender under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of such Issuing Lender under the circumstances in question (as determined by a final judgment of a court of competent jurisdiction). 3.5 Indemnification; Nature of Issuing Lenders' Duties. - --- --------------------------------------------------- A. Indemnification. In addition to amounts payable as provided in subsection 3.6, Borrowers hereby agree to protect, indemnify, pay and save harmless each Issuing Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which such Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing Lender, other than as a result of (a) the gross negligence or willful misconduct of such Issuing Lender as determined by a final judgment of a court of competent jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor by such Issuing Lender of a proper demand for payment made under any Letter of Credit issued by it or (ii) the failure of such Issuing Lender to honor a drawing under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called "Governmental Acts"). B. Nature of Issuing Lenders' Duties. As between Borrowers and any Issuing Lender, Borrowers assume all risks of the acts and omissions of, or misuse of the Letters of Credit issued by such Issuing Lender by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, such Issuing Lender shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under 55 such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Lender, including without limitation any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Lender's rights or powers hereunder. In furtherance and extension and not in limitation of the specific provisions set forth in the first paragraph of this subsection 3.5B, any action taken or omitted by any Issuing Lender under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put such Issuing Lender under any resulting liability to Borrowers. Notwithstanding anything to the contrary contained in this subsection 3.5, Borrowers shall retain any and all rights it may have against any Issuing Lender for any liability arising solely out of the gross negligence or willful misconduct of such Issuing Lender, as determined by a final judgment of a court of competent jurisdiction. 3.6 Increased Costs and Taxes Relating to Letters of Credit. - --- -------------------------------------------------------- Subject to the provisions of subsection 2.7B (which shall be controlling with respect to the matters covered thereby), in the event that any Issuing Lender or Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by any Issuing Lender or Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Issuing Lender or Lender (or its applicable lending or letter of credit office) to any additional Tax (other than any Tax on the overall net income of such Issuing Lender or Lender) with respect to the issuing or maintaining of any Letters of Credit or the purchasing or maintaining of any participations therein or any other obligations under this Section 3, whether directly or by such being imposed on or suffered by any particular Issuing Lender; (ii) imposes, modifies or holds applicable any reserve (including without limitation any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement in respect of any Letters of Credit issued by any Issuing Lender or participations therein purchased by any Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Issuing Lender or Lender (or its applicable lending or letter of credit office) regarding this Section 3 or any Letter of Credit or any participation therein; and the result of any of the foregoing is to increase the cost to such Issuing Lender or Lender of agreeing to issue, issuing or maintaining any Letter of Credit or agreeing to purchase, purchasing or maintaining any participation therein or to reduce any amount received or receivable by such Issuing Lender or Lender (or its applicable lending or letter of credit office) with respect thereto; then, in any case, Borrowers shall promptly pay to such Issuing Lender or Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts as may be necessary to compensate such Issuing Lender or Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Issuing Lender or Lender shall deliver to Borrowers a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Issuing Lender or Lender under this subsection 3.6, which statement shall be conclusive and binding upon all parties hereto absent manifest error. Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT The obligations of Lenders to make Loans hereunder are subject to the satisfaction of the following conditions. The conditions applicable to the funding of Term Loans and any Revolving Loans made and the issuance of any Letters of Credit issued, prior to the Closing Date are as set forth in the Existing Credit Agreement or the Initial Credit Agreement and have been satisfied or waived. 56 4.1 Conditions to the Occurrence of the Closing Date. - --- ------------------------------------------------- The conditions to the occurrence of the Closing Date are: A. Borrowers' Documents. Borrowers shall have delivered to Lenders (or to Administrative Agent for Lenders with sufficient originally executed copies, where appropriate, for each Lender and its counsel) the following with respect to Borrowers, each, unless otherwise noted, dated the Closing Date: (i) Copies of the Organizational Documents of such Person, certified by the Secretary of State of its jurisdiction of organization if such certification is generally available dated a recent date prior to the Closing Date and in each other case, by such Person's secretary or assistant secretary; (ii) To the extent generally available, a good standing certificate from the Secretary of State of its jurisdiction of organization and a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of such jurisdiction, each dated a recent date prior to the Closing Date; (iii) Resolutions of the Board of Directors of such Person approving and authorizing the execution, delivery and performance of the Loan Documents being executed on the Closing Date to which it is a party, certified as of the Closing Date by the corporate secretary or an assistant secretary of such Person as being in full force and effect without modification or amendment; (iv) Signature and incumbency certificates of the officers of such Person executing the Loan Documents being executed on the Closing Date to which it is a party; (v) Such other documents as Administrative Agent may reasonably request. B. Notes. Delivery to Administrative Agent of all promissory notes or other instruments duly endorsed, where appropriate, in a manner satisfactory to Administrative Agent evidencing Borrowers' obligation to repay the Term Loans and Revolving Loans. C. No Material Adverse Effect. Since December 31, 2000, no Material Adverse Effect shall have occurred. D. Sixth Amendment to Deed of Trust. Administrative Agent shall have received from Borrowers (a) a fully executed and notarized sixth amendment to the Deed of Trust, in form and substance reasonably satisfactory to Administrative Agent, duly recorded in the appropriate filing or recording office in the jurisdiction in which the Mortgaged Property is located, or evidence that such sixth amendment to the Deed of Trust has been irrevocably delivered to the Title Company for such recordation, and (b) such title insurance endorsements to the Mortgage Policy (as such term is defined in the Initial Credit Agreement) insuring the interest of the Lenders in the real property securing the Facilities has been obtained, as of the Closing Date, subject only to Permitted Liens, in form and substance satisfactory to the Arrangers and the Administrative Agent. E. Security Interests in Personal and Mixed Property. Administrative Agent shall have received evidence reasonably satisfactory to it that Borrowers shall have taken or caused to be taken all actions, executed and delivered or caused to be executed and delivered all such agreements, documents and instruments, and made or caused to be made all such filings and recordings that may be necessary or in the reasonable opinion of Administrative Agent, desirable in order to maintain in favor of Administrative Agent, for the benefit of Lenders, a valid and perfected First Priority security interest in the First Priority Collateral securing all of the Obligations (including, without limitation, Obligations in respect of the Term Loans). F. Opinions of Counsel to Borrowers. Lenders and their respective counsel shall have received (i) originally executed copies of one or more favorable written opinions of Paul, Weiss, Rifkind, Wharton & Garrison, counsel for Borrowers and their Subsidiaries, and (ii) originally executed copies of one or more favorable written opinions of Lionel Sawyer & Collins, Nevada counsel for Borrowers and their Subsidiaries, each in form and substance reasonably satisfactory to Administrative Agent and its counsel, dated as of the Closing Date and setting forth substantially the matters in the opinions designated in Exhibits V-A and V-B annexed hereto, respectively, and as to such other matters as Administrative Agent acting on behalf of Lenders may reasonably request. Borrowers hereby acknowledge and confirm that they have requested such counsel to deliver such opinions to Lenders. 57 G. Fees. Borrowers shall have paid to Arranger and Administrative Agent, for distribution (as appropriate) to Agents and Lenders, the fees payable on the Closing Date referred to in subsection 2.3. H. Completion of Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found reasonably acceptable by Administrative Agent, acting on behalf of Lenders, and its counsel shall be reasonably satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request. I. No Event of Default Under Existing Credit Agreement. No Event of Default or Potential Event of Default under (and as defined in) the Existing Credit Agreement shall have occurred and be continuing or would result from the effectiveness of this Amendment. J. Approvals of Amendment. All Lenders shall have approved this Amendment, such approval to be evidenced by execution of a counterpart of this Agreement by each of the Lenders and receipt by Borrowers and Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. K. Certain Approvals and Agreements. The Borrowers and their Subsidiaries shall have obtained all third party consents, waivers, amendments, approvals and the like that may be necessary under the Borrowers' existing contracts and agreements (including any other Indebtedness) in connection with this Amendment and the amendment to the other Loan Documents, and the Borrowers and their subsidiaries shall otherwise be in material compliance with such agreements; except where the failure to have obtained any such consent, waiver, amendment or approval or the failure to be in compliance herewith shall not, individually or in the aggregate, have a Material Adverse Effect. L. [Intentionally Deleted.] M. FF&E Facility Agreements. Borrowers shall have received written consent from the FF&E Lenders under the FF&E Facility Agreement described in clause (i) of the definitions thereof to the execution, delivery and performance of this Agreement in form and substance satisfactory to the Administrative Agent. N. Surety Bonds. Borrowers shall have obtained from American International Group, Inc., an affiliate thereof or from a Person reasonably acceptable to Administrative Agent in form and substance satisfactory to Administrative Agent surety bonds covering any and all mechanics liens filed against the Hotel/Casino (as defined in the Disbursement Agreement). O. [Intentionally Deleted.] P. Certificates of Occupancy. Administrative Agent shall have received a copy of the final certificate of occupancy or other appropriate permits for each of the Hotel/Casino, the Mall and the Central Plant (as such terms are defined in the Disbursement Agreement). Each Lender by execution and delivery of a signature page hereto on the Closing Date confirms that it is satisfied that each of the conditions set forth above in this subsection 4.1 has been satisfied provided that neither such confirmation nor any extension of credit hereunder shall preclude any Agent or Lender from later asserting that (and enforcing any rights or remedies it may have if), any representation, warranty or certification made or deemed made by Borrowers or any of their Affiliates in connection therewith was not true and accurate when made. 4.2 Conditions to all Loans on or after the Closing Date. - --- ----------------------------------------------------- The obligations of Lenders to make Loans on or after the Closing Date on any Funding Date are subject to the following further conditions precedent: A. Administrative Agent shall have received before that Funding Date, in accordance with the provisions of subsection 2.1B, an originally executed Notice of Borrowing, in each case signed by the chief executive officer, the chief financial officer or the treasurer of each Borrower or of the managing member of such Borrower or by any executive officer of such Borrower or managing member designated by any of the above-described officers on behalf of Borrowers in a writing delivered to Administrative Agent. B. As of that Funding Date: (i) [Intentionally omitted]; (ii) The representations and warranties contained herein and in the other Loan Documents shall be true, correct and complete in all material respects on and as of that Funding Date to the same 58 extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all material respects on and as of such earlier date; (iii) No event shall have occurred and be continuing or would result from the consummation of the borrowing contemplated by such Notice of Borrowing that would constitute an Event of Default or a Potential Event of Default (except as set forth in Schedule 5.18 annexed hereto); (iv) Each Loan Party shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before that Funding Date; (v) No order, judgment or decree of any court, arbitrator or governmental authority shall purport to enjoin or restrain any Lender from making the Loans to be made by it on that Funding Date; (vi) The making of the Loans requested on such Funding Date shall not violate any law including, Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System; and (vii) There shall not be pending or, to the knowledge of Borrowers, threatened, any action, suit, proceeding, governmental investigation or arbitration against or affecting Borrowers or any of their Subsidiaries or any property of Borrowers or any of their Subsidiaries that is required to be disclosed under, and has not been disclosed by Borrowers in writing pursuant to, subsection 5.6 or 6.1(x) prior to the making of the last preceding Loans (or, in the case of the initial Revolving Loans, prior to the execution of this Agreement), and there shall have occurred no development not so disclosed in any such action, suit, proceeding, governmental investigation or arbitration so disclosed, that, in either event, in the reasonable opinion of Administrative Agent or of Requisite Lenders, would have a Material Adverse Effect. 4.3 Conditions to Letters of Credit. - --- -------------------------------- The issuance of any Letter of Credit hereunder (whether or not the applicable Issuing Lender is obligated to issue such Letter of Credit) on or after the Closing Date is subject to the following conditions precedent: A. [Intentionally omitted]. B. On or before the date of issuance of such Letter of Credit, Administrative Agent shall have received, in accordance with the provisions of subsection 3.1B(i), an originally executed Notice of Issuance of Letter of Credit, in each case signed by the chief executive officer, the chief financial officer or the treasurer of each of the Borrowers or the managing member of such Borrower or by any executive officer of each of the Borrowers or managing member designated by any of the above-described officers on behalf of each of the Borrowers in a writing delivered to Administrative Agent, together with all other information specified in subsection 3.1B(i) and such other documents or information as the applicable Issuing Lender may reasonably require in connection with the issuance of such Letter of Credit. C. On the date of issuance of such Letter of Credit, all conditions precedent described in subsection 4.2B shall be satisfied to the same extent as if the issuance of such Letter of Credit were the making of a Loan and the date of issuance of such Letter of Credit were a Funding Date. Section 5. BORROWERS' REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Agreement and to make or continue the Loans, as applicable, and to induce Issuing Lenders to issue or continue Letters of Credit, as applicable, Borrowers represent and warrant to each Lender that, on the Closing Date, on each Funding Date for Revolving Loans on or after the Revolving Loan Availability Date and on the date of issuance of each Letter of Credit on or after the Revolving Loan Availability Date, the following statements are true, correct and complete 5.1 Organization, Powers, Qualification, Good Standing, Business and - --- ---------------------------------------------------------------- Subsidiaries. ------------- A. Organization and Powers. Each Loan Party is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization as specified in Schedule 5.1A annexed hereto. Each Loan Party has all requisite corporate or limited liability 59 company power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents and Project Documents to which it is a party and to carry out the transactions contemplated thereby. B. Qualification and Good Standing. Each Loan Party is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had and will not have a Material Adverse Effect. C. Ownership of Borrowers. The equity interests in each of the Borrowers is duly authorized, validly issued and (if applicable) fully paid and nonassessable and, as of November 14, 1997, none of such equity interests constitute Margin Stock. Schedule 5.1C, as it may be supplemented from time to time, correctly sets forth the ownership of each Borrower. D. Subsidiaries. All of the Subsidiaries of Borrowers are identified in Schedule 5.1D annexed hereto, as said Schedule 5.1D may be supplemented from time to time pursuant to the provisions of subsection 6.1(xvi). The equity interests of each of the Subsidiaries of Borrowers identified in Schedule 5.1D annexed hereto (as so supplemented) is duly authorized, validly issued and (if applicable), fully paid and nonassessable and none of such equity interests constitutes Margin Stock. Each of the Subsidiaries of Borrowers identified in Schedule 5.1D annexed hereto (as so supplemented) is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its respective jurisdiction of organization set forth therein, has all requisite corporate or limited liability company power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, and is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, in each case except where failure to be so qualified or in good standing or a lack of such corporate power and authority has not had and will not have a Material Adverse Effect. Schedule 5.1D annexed hereto (as so supplemented) correctly sets forth the ownership interest of Borrowers and each of its Subsidiaries in each of the Subsidiaries of Borrowers identified therein. E. Rights to Acquire Equity. There are no options, warrants, convertible securities or other rights to acquire any equity interests in any Borrower or any of their Subsidiaries (other than the New Mall Subsidiary and Phase II Subsidiary) except as set forth as Schedule 5.1E. F. Conduct of Business. Borrowers and their Subsidiaries (other than the New Mall Subsidiary and the Phase II Subsidiary) are engaged only in the businesses permitted to be engaged in pursuant to subsection 7.12. 5.2 Authorization of Borrowing, etc. - --- -------------------------------- A. Authorization of Borrowing. The execution, delivery and performance of the Loan Documents and the Project Documents have been duly authorized by all necessary corporate action on the part of each Loan Party that is a party thereto. B. No Conflict. The execution, delivery and performance by Loan Parties of the Loan Documents and Project Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents and such Project Documents do not and will not (i) violate any provision of (a) any law or any governmental rule or regulation applicable to Borrowers or any of their Subsidiaries, (b) the Certificate or Articles of Incorporation, Bylaws or operating agreements of Borrowers or any of their Subsidiaries or (c) any order, judgment or decree of any court or other agency of government binding on Borrowers or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrowers or any of their Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrowers or any of their Subsidiaries (other than any Liens created under any of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Borrowers or any of their Subsidiaries except for such approvals or consents which will be obtained on or before the Closing Date and disclosed in writing to Lenders and except for such violations, conflicts, approvals and consents the failure of which to obtain could reasonably be expected to have a Material Adverse Effect. C. Governmental Consents. The execution, delivery and performance by Loan Parties of the Loan Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. 60 D. Binding Obligation. Each of the Loan Documents and Project Documents has been duly executed and delivered by Loan Parties that are parties hereto or thereto, as applicable, and is the legally valid and binding obligation of Loan Parties, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability, whether brought in a proceeding in equity or at law. E. Valid Issuance of Mortgage Notes and Subordinated Notes. Borrowers have the corporate or limited liability company power and authority to issue the Mortgage Notes and the Subordinated Notes. The Mortgage Notes and the Subordinated Notes are legally valid and binding obligations of Borrowers, enforceable against Borrowers in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. The issuance and sale of Mortgage Notes and the Subordinated Notes, either (a) have been registered or qualified under applicable federal and state securities laws or (b) are exempt therefrom. The Loans and all other monetary Obligations hereunder are and will be within the definition of "Senior Debt" and "Permitted Indebtedness" included in such provisions. 5.3 Financial Condition. - --- -------------------- Borrowers have heretofore delivered to Lenders, at Lenders' request, the following financial statements and information: (i) the audited consolidated and consolidating balance sheets of LVSI and its Subsidiaries as at December 31, 2000 and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of Borrowers and their Subsidiaries for the Fiscal Year then ended and (ii) the unaudited consolidated and consolidating balance sheets of LVSI and its Subsidiaries as at June 30, 2001 and the related unaudited consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its Subsidiaries for the six months then ended. All such statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position (on a consolidated and, where applicable, consolidating basis) of the entities described in such financial statements as at the respective dates thereof and the results of operations and cash flows (on a consolidated and, where applicable, consolidating basis) of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. Except for obligations under the Operative Documents, Borrowers do not (and will not following the funding of the initial Loans) have any Contingent Obligation, contingent liability or liability for taxes, long-term lease or forward or long-term commitment that is not reflected in the foregoing financial statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, financial condition or prospects of Borrowers and their Subsidiaries taken as a whole. 5.4 No Material Adverse Change; No Restricted Junior Payments. - --- ---------------------------------------------------------- Since December 31, 2000, no event or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect. Except as set forth on Schedule 5.4, neither of Borrowers nor any of their Subsidiaries have directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Junior Payment or agreed to do so except as permitted by subsection 7.5. 5.5 Title to Properties; Liens; Real Property. - --- ------------------------------------------ A. Title to Properties; Liens. Borrowers and their Subsidiaries have (i) good marketable and insurable fee simple title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal property), all of their respective material properties and assets reflected in the financial statements referred to in subsection 5.3 or in the most recent financial statements delivered pursuant to subsection 6.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under subsection 7.7. Except as permitted by this Agreement, all such properties and assets are held free and clear of Liens. B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto contains a true, accurate and complete list of (i) all material properties owned by Borrowers or any of their Subsidiaries and (ii) all material leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting real estate of properties owned by Borrowers or any of their Subsidiaries (exclusive of any retail and restaurant leases in the Mall) regardless of whether a Borrower or such Subsidiary is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Except as specified in Schedule 5.5 annexed hereto, each 61 agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and Borrowers do not have knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legally valid and binding obligation of each applicable Borrower, enforceable against such Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles except to the extent that the failure of such agreement to be in full force and effect could not reasonably be expected to have a Material Adverse Effect. 5.6 Litigation; Adverse Facts. - --- -------------------------- Except as set forth in Schedule 5.6 and Schedule 5.17 annexed hereto, there are no actions, suits, proceedings, arbitrations or governmental investigations (whether or not purportedly on behalf of Borrowers or any of their Subsidiaries) at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign (including any Environmental Claims) that are pending or, to the knowledge of Borrowers, threatened against or affecting Borrowers or any of their Subsidiaries or any property of Borrowers or any of their Subsidiaries and that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither Borrowers nor any of their Subsidiaries (i) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or (ii) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. 5.7 Payment of Taxes. - --- ----------------- Except to the extent permitted by subsection 6.3, all tax returns and reports of Borrowers required to be filed by them have been timely filed, and all taxes shown on such tax returns to be due and payable and all material assessments, fees and other governmental charges upon Borrowers and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Borrowers know of no proposed tax assessment against Borrowers or any of their Subsidiaries which is not being actively contested by Borrowers or such Subsidiary in good faith and by appropriate proceedings; provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor. 5.8 Performance of Agreements; Materially Adverse Agreements; Material - --- ------------------------------------------------------------------ Contracts. ---------- A. Neither Borrowers nor any of their Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences of such default or defaults, if any, would not have a Material Adverse Effect. B. Schedule 5.8 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date. Except as described on Schedule 5.8, all such Material Contracts are, to the knowledge of Borrowers, in full force and effect and no material defaults currently exist thereunder. 5.9 Governmental Regulation. - --- ------------------------ Neither Borrowers nor any of their Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or the Interstate Commerce Act or registration under the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness other than the Nevada Gaming Laws or which may otherwise render all or any portion of the Obligations unenforceable. Incurrence of the Obligations under the Loan Documents complies with all applicable provisions of the Nevada Gaming Laws. 5.10 Securities Activities. - ---- ---------------------- A. Neither Borrowers nor any of their Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. B. Following application of the proceeds of each Loan, not more than 25% of the value of the assets (either of Borrowers only or of Borrowers and their Subsidiaries on a consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or subject to any restriction contained in any agreement 62 or instrument, between Borrowers and any Lender or any Affiliate of any Lender, relating to Indebtedness and within the scope of subsection 8.2, will be Margin Stock. 5.11 Employee Benefit Plans. - ---- ----------------------- A. Borrowers, each of their Subsidiaries and each of their respective ERISA Affiliates are in material compliance with all applicable provisions and requirements of ERISA and the regulations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Code is so qualified. B. No ERISA Event has occurred or is reasonably expected to occur which has resulted or would be reasonably likely to result in a liability in the aggregate amount of $1,000,000 or more. C. Except to the extent required under Section 4980B of the Code or except as set forth in Schedule 5.11 annexed hereto, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates. D. As of the most recent valuation date for any Pension Plan, the amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), does not exceed $1,000,000. E. As of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Borrowers, their Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA, does not exceed $1,000,000. 5.12 Certain Fees. - ---- ------------- No broker's or finder's fee or commission will be payable with respect to this Agreement or any of the transactions contemplated hereby except as set forth on Schedule 5.12 (other than fees payable to Agents and Lenders under subsection 2.3), and each Borrower hereby indemnifies Lenders against, and agrees that it will hold Lenders harmless from, any claim, demand or liability for any such broker's or finder's fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim, demand or liability. 5.13 Environmental Protection. - ---- ------------------------- Except as set forth in Schedule 5.13 annexed hereto: (i) neither Borrowers nor any of their Subsidiaries nor any of their respective Facilities or operations relating to the Site, the Project or the Phase I-A Project are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to (a) any Environmental Law, (b) any Environmental Claim, or (c) any Hazardous Materials Activity; (ii) neither Borrowers nor any of their Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss. 9604) or any comparable state law; (iii) there are and, to Borrowers' knowledge, have been no conditions, occurrences, or Hazardous Materials Activities on the Site or any other Facility relating to the Project or the Phase I-A Project which could reasonably be expected to form the basis of an Environmental Claim against Borrowers or any of their Subsidiaries; (iv) neither Borrowers nor any of their Subsidiaries nor, to Borrowers' knowledge, any predecessor of Borrowers or any of their Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Facility, and none of Borrowers' or any of their Subsidiaries' operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent; 63 (v) compliance with all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws will not, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect. Notwithstanding anything in this subsection 5.13 to the contrary, no event or condition has occurred or is occurring with respect to Borrowers or any of their Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity, including any matter disclosed on Schedule 5.13 annexed hereto, which individually or in the aggregate has had or could reasonably be expected to have a Material Adverse Effect. 5.14 Employee Matters. - ---- ----------------- There is no strike or work stoppage in existence or threatened involving Borrowers that could reasonably be expected to have a Material Adverse Effect. 5.15 Solvency. - ---- --------- Each Borrower is and, upon the incurrence of any Obligations by such Borrower on any date on which this representation is made, will be, Solvent. 5.16 Matters Relating to Collateral. - ---- ------------------------------- A. Creation, Perfection and Priority of Liens. The execution and delivery of the Collateral Documents by Borrowers and their Subsidiaries, together with the actions taken on or prior to the Closing Date pursuant to subsection 4.1 are effective to create in favor of Administrative Agent for the benefit of Lenders, as security for the respective Secured Obligations (as defined in the applicable Collateral Document in respect of any Collateral), a valid and perfected First Priority Lien on all of the First Priority Collateral, and all filings and other actions necessary to perfect and maintain the perfection and priority status of such Liens have been duly made or taken and remain in full force and effect, other than the filing of any UCC financing statements delivered to Administrative Agent for filing (but not yet filed) and the periodic filing of UCC continuation statements in respect of UCC financing statements filed by or on behalf of Administrative Agent. B. Permits. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the pledge or grant by Borrowers and their Subsidiaries of the Liens purported to be created in favor of Administrative Agent pursuant to any of the Collateral Documents or (ii) the exercise by Administrative Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created pursuant to any of the Collateral Documents or created or provided for by applicable law), except for filings or recordings contemplated by subsection 5.16A or as set forth in Schedule 5.16B. C. Absence of Third-Party Filings. Except such as may have been filed in favor of Administrative Agent as contemplated by subsection 5.16A or filed to perfect a Lien permitted under subsection 7.2, no effective UCC financing statement, fixture filing or other instrument similar in effect covering all or any part of the Collateral is on file in any filing or recording office. D. Information Regarding Collateral. All information supplied to Administrative Agent by or on behalf of Borrowers with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral) is accurate and complete in all material respects. 5.17 Construction Litigation. - ---- ------------------------ A. The litigation arising out of the lawsuit filed by Borrowers against the Construction Manager in United States District Court for the District of Nevada and the countersuit filed by the Construction Manager against the Borrowers and any other outstanding lawsuit, action, claim or Lien arising out of or relating to the construction of the Mall or the Project (the "Construction Litigation"), including any claim made or Lien filed by Construction Manager or any contractor or subcontractor or to the bonding company insuring over any Lien relating to or binding upon the Mall, the Project or to Venetian, LVSI, Mall Construction Subsidiary or any of their Affiliates in connection therewith, and any judgment or settlement amount owed by the Borrowers to the Construction Manager or any contractor or subcontractor or to the bonding company insuring over any such Lien as a result of the Construction Litigation (such amount, the "Additional Contingent Claims") cannot reasonably be expected to have, when taken in the aggregate, a Material Adverse Effect; 64 B. The status summary of the Construction Litigation attached hereto as Schedule 5.17 annexed hereto is true and correct in all material respects as of the date hereof. C. Borrowers have sufficient Available Funds such that Available Funds will equal or exceed Remaining Costs after giving effect to the Additional Contingent Claims as a Remaining Cost (as such capitalized terms are defined in the Disbursement Agreement). 5.18 No Event of Default. - ---- -------------------- No Event of Default or Potential Event of Default exists or is continuing (other than those Events of Default and Potential Events of Default set forth on Schedule 5.18 annexed hereto). 5.19 Adelson Subordination Agreement. - ---- -------------------------------- Adelson has complied with the terms and conditions of that certain Subordination and Intercreditor Agreement (Trade Claims) dated as of November 12, 1999 by and among Scotiabank, as bank agent, the Company and Mall Construction Subsidiary and Adelson (the "Adelson Subordination Agreement"). 5.20 Status of Certain Agreements. - ---- ----------------------------- A. Except as set forth on Schedule 5.20A, there have been no Liens created or contemplated by the Cooperation Agreement other than those created or contemplated by such agreement as in effect on November 14, 1997. B. Except as set forth on Schedule 5.20B, there have been no Liens created under the HVAC Services Agreement other than those created by such agreement as in effect on November 14, 1997. C. Except as set forth on Schedule 5.20C or as otherwise reasonably approved by Scotiabank, as Administrative Agent, Borrowers are not party to any agreement or plan pursuant to which Borrowers may repurchase or redeem employee options or stock other than employment agreements and stock option plans or agreements as in effect on November 14, 1997. D. Except as set forth on Schedule 5.20D, there have been no amendments, supplements or modifications to documents evidencing Other Indebtedness as in effect on November 14, 1997. Section 6. BORROWERS' AFFIRMATIVE COVENANTS Borrowers covenant and agree that, so long as any of the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all Letters of Credit, unless the Requisite Lenders shall otherwise give prior written consent, Borrowers shall perform, and shall cause each of their Subsidiaries to perform, all covenants set forth in Article 5 of the Disbursement Agreement (while in effect), and all covenants set forth in this Section 6. 6.1 Financial Statements and Other Reports. - --- --------------------------------------- Borrowers will maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. Borrowers will deliver to Administrative Agent and Lenders: (i) Monthly Financials: as soon as available and in any event within 30 days after the end of each month, the consolidated and consolidating balance sheets of LVSI and its Subsidiaries as at the end of such month and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its Subsidiaries for such month and for the period from the beginning of the then current Fiscal Year to the end of such month, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, to the extent prepared on a monthly basis, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of LVSI and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments; (ii) Quarterly Financials: as soon as available and in any event within 45 days after the end of each Fiscal Quarter, 65 (a) the consolidated and consolidating balance sheets of LVSI and its subsidiaries (including the Excluded Subsidiaries) as at the end of such Fiscal Quarter and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its subsidiaries (including the Excluded Subsidiaries) for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter), setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of LVSI and its subsidiaries (including the Excluded Subsidiaries) as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments; (b) the consolidated balance sheets of LVSI and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders' equity and cash flows of LVSI and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of LVSI and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments; (c) the consolidated balance sheets of New Mall Subsidiary and its subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders' equity and cash flows of New Mall Subsidiary and its subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of New Mall Subsidiary and its subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments; and (d) a narrative report describing the operations of LVSI and its subsidiaries (including the Excluded Subsidiaries) in the form prepared for presentation to senior management for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter; (iii) Year-End Financials: as soon as available and in any event within 90 days after the end of each Fiscal Year, (a) the consolidated and consolidating balance sheets of LVSI and its subsidiaries (including the Excluded Subsidiaries) as at the end of such Fiscal Year and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its subsidiaries (including the Excluded Subsidiaries) for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of LVSI and its subsidiaries (including the Excluded Subsidiaries) as at the dates indicated and the results of their operations and their cash flows for the periods indicated; (b) the consolidated balance sheets of LVSI and its Subsidiaries as at the end of such Fiscal Year and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of LVSI and its Subsidiaries as 66 at the dates indicated and the results of their operations and their cash flows for the periods indicated; (c) the consolidated balance sheets of New Mall Subsidiary and its subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, stockholders' equity and cash flows of New Mall Subsidiary and its subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of LVSI, that they fairly present, in all material respects, the financial condition of Mall Subsidiary and its subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated; (d) a narrative report describing the operations of LVSI and its subsidiaries (including the Excluded Subsidiaries) in the form prepared for presentation to senior management for such Fiscal Year; and (e) in the case of such consolidated financial statements specified in subdivisions (a) to (c) above, a report thereon of Price Waterhouse LLP or other independent certified public accountants of recognized national standing selected by Borrowers and reasonably satisfactory to Administrative Agent, which report shall be unqualified as to scope of audit, shall express no doubts about the ability of the Persons covered thereby to continue as a going concern, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of LVSI and its subsidiaries (including the Excluded Subsidiaries), LVSI and its Subsidiaries and Mall Subsidiary and its subsidiaries, respectively as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iv) Officers' and Compliance Certificates: together with each delivery of financial statements of LVSI and its Subsidiaries pursuant to subdivisions (ii) and (iii) above, (a) an Officers' Certificate of LVSI stating that the signers, on behalf of LVSI, have reviewed the terms of this Agreement and have made, or caused to be made under their supervision, a review in reasonable detail of the transactions and condition of LVSI and its Subsidiaries (and, to the extent applicable, New Mall Subsidiary, Mall Subsidiary, New Mall Manager, Mall Manager, Mall Direct Holdings, Phase II Subsidiary, Phase II Manager, Phase II Direct Holdings and their respective subsidiaries) during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signers do not have knowledge of the existence as at the date of such Officers' Certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action Borrowers have taken, is taking and proposes to take with respect thereto; and (b) a Compliance Certificate demonstrating in reasonable detail compliance during and at the end of the applicable accounting periods with the restrictions contained in Section 7; (v) Reconciliation Statements: if, as a result of any change in accounting principles and policies from those used in the preparation of the audited financial statements referred to in subsection 5.3, the consolidated financial statements of LVSI and its subsidiaries delivered pursuant to subdivisions (i), (ii), (iii) or (xiii) of this subsection 6.1 will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then (a) together with the first delivery of financial statements pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following such change, consolidated financial statements of LVSI and its subsidiaries for (y) the current Fiscal Year to the effective date of such change and (z) the two full Fiscal Years immediately preceding the Fiscal Year in which such change is made, in each case prepared on a pro forma basis as if such change had been in effect during such periods, and (b) together with each delivery of financial statements for LVSI and its subsidiaries pursuant to subdivision (i), (ii), (iii) or (xiii) of this subsection 6.1 following such change, a written statement of the chief accounting officer or chief financial officer of LVSI setting forth the differences (including any 67 differences that would affect any calculations relating to the financial covenants set forth in subsection 7.6) which would have resulted if such financial statements had been prepared without giving effect to such change; (vi) Accountants' Certification: together with each delivery of consolidated financial statements pursuant to subdivision (iii) above, a written statement by the independent certified public accountants giving the report thereon (a) stating that their audit examination has included a review of the terms of this Agreement and the other Loan Documents as they relate to accounting matters, (b) stating whether, in connection with their audit examination, any condition or event that constitutes an Event of Default or Potential Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided that such accountants shall not be liable by reason of any failure to obtain knowledge of any such Event of Default or Potential Event of Default that would not be disclosed in the course of their audit examination, and (c) stating that based on their audit examination nothing has come to their attention that causes them to believe either or both that the information contained in the certificates delivered therewith pursuant to subdivision (iv) above is not correct or that the matters set forth in the Compliance Certificates delivered therewith pursuant to clause (b) of subdivision (iv) above for the applicable Fiscal Year are not stated in accordance with the terms of this Agreement; (vii) Accountants' Reports: promptly upon receipt thereof (unless restricted by applicable professional standards), copies of all reports submitted to Borrowers by independent certified public accountants in connection with each annual, interim or special audit of the financial statements of LVSI and its subsidiaries made by such accountants, including any comment letter submitted by such accountants to management in connection with their annual audit; (viii) SEC Filings, Press Releases and Other Financial Reports: promptly upon their becoming available, copies of (a) all financial statements, reports, notices and proxy statements sent or made available generally by Borrowers or any of their subsidiaries to their security holders, (b) all regular and periodic reports and all registration statements (other than on Form S-8 or a similar form) and prospectuses, if any, filed by Borrowers or any of their subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, (c) all press releases and other statements made available generally by Borrowers and any of their subsidiaries to the public concerning material developments in the business of Borrowers and their subsidiaries and (d) to the extent prepared, any financial statements and reports concerning any subsidiaries of Borrowers (including Excluded Subsidiaries not delivered pursuant to clauses (i), (ii) or (iii) above); (ix) Events of Default, etc.: promptly upon any officer of Borrowers obtaining knowledge (a) of any condition or event that constitutes an Event of Default or Potential Event of Default, or becoming aware that any Lender has given any notice (other than to Administrative Agent) or taken any other action with respect to a claimed Event of Default or Potential Event of Default, (b) that any Person has given any notice to Borrowers and their Subsidiaries or taken any other action with respect to a claimed default or event or condition of the type referred to in subsection 8.2, (c) of any condition or event that would be required to be disclosed in a current report filed by Borrowers with the Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the Closing Date) if Borrowers were required to file such reports under the Exchange Act, or (d) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, an Officers' Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given or action taken by any such Person and the nature of such claimed Event of Default, Potential Event of Default, default, event or condition, and what action Borrowers have taken, are taking and propose to take with respect thereto; (x) Litigation or Other Proceedings: (a) promptly upon any officer of Borrowers obtaining knowledge of (X) the non-frivolous institution of, or threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting Borrowers and their Subsidiaries, or any property of Borrowers and their 68 Subsidiaries (collectively, "Proceedings") not previously disclosed in writing by Borrowers to Lenders or (Y) any material development in any Proceeding that, in any case: (1) if adversely determined, has a reasonable possibility of giving rise to a Material Adverse Effect; or (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby; written notice thereof together with such other information as may be reasonably available to Borrowers to enable Lenders and their counsel to evaluate such matters; and (b) within twenty days after the end of each Fiscal Quarter, a schedule of all Proceedings involving an alleged liability of, or claims against or affecting, Borrowers or any of their Subsidiaries equal to or greater than $1,000,000, and promptly after request by Administrative Agent such other information as may be reasonably requested by Administrative Agent to enable Administrative Agent and its counsel to evaluate any of such Proceedings; (xi) ERISA Events: promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Borrowers or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; (xii) ERISA Notices: with reasonable promptness, copies of (a) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Borrowers, any of their Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (b) all notices received by Borrowers or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; (xiii) Financial Plans: as soon as practicable and in any event no later than the Completion Date and 30 days prior to the beginning of each Fiscal Year thereafter, a consolidated and consolidating plan and financial forecast for such Fiscal Year (or portion thereof from the Completion Date through the end of such Fiscal Year) and each subsequent Fiscal Year through the final maturity date of the Term Loans (the "Financial Plan" for such Fiscal Years), including (a) forecasted consolidated and consolidating balance sheets and forecasted consolidated and consolidating statements of income and cash flows of LVSI and its Subsidiaries for such Fiscal Years, together with a pro forma Compliance Certificate for such Fiscal Years and an explanation of the assumptions on which such forecasts are based, (b) forecasted consolidated and consolidating statements of income and cash flows of LVSI and its Subsidiaries for each month of such Fiscal Years, together with an explanation of the assumptions on which such forecasts are based, and (c) such other information and projections for such Fiscal Years as any Lender may reasonably request; (xiv) Insurance: as soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance reasonably satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Borrowers and their Subsidiaries and all material insurance coverage planned to be maintained by Borrowers and their Subsidiaries in the immediately succeeding Fiscal Year; (xv) Board of Directors: with reasonable promptness, written notice of any change in the members of the Board of Directors of LVSI or any of its corporate Subsidiaries. (xvi) New Subsidiaries: promptly upon any Person becoming a Subsidiary of either of Borrowers, a written notice setting forth with respect to such Person (a) the date on which such Person became a Subsidiary of either of Borrowers and (b) all of the data required to be set forth in Schedule 5.1 annexed hereto with respect to all Subsidiaries of either of Borrowers (it being understood that such written notice shall be deemed to supplement Schedule 5.1 annexed hereto for all purposes of this Agreement); (xvii) Material Contracts: promptly, and in any event within ten Business Days after any Material Contract of Borrowers or any of their Subsidiaries is terminated or amended in a manner that is materially adverse to Borrowers or any of their Subsidiaries or 69 any new Material Contract is entered into, or upon becoming aware of any material default by any Party under a Material Contract, a written statement describing such event with copies of such material amendments or new contracts, and an explanation of any actions being taken with respect thereto; (xviii) UCC Search Report: As promptly as practicable after the date of delivery to Administrative Agent of any UCC financing statement executed by any Loan Party pursuant to subsection 6.12, copies of completed UCC searches evidencing the proper filing, recording and indexing of all such UCC financing statement and listing all other effective financing statements that name such Loan Party as debtor, together with copies of all such other financing statements not previously delivered to Administrative Agent by or on behalf of such Loan Party; (xix) Notices under Operative Documents: promptly upon receipt, copies of all notices provided to the Borrowers or their Affiliates pursuant to any Operative Documents relating to material defaults or material delays and promptly upon execution and delivery thereof, copies of all amendments to any of the Operative Documents; and (xx) Other Information: with reasonable promptness, such other information and data with respect to Borrowers or any of their Subsidiaries as from time to time may be reasonably requested by any Lender. 6.2 Corporate Existence, etc. - --- ------------------------- Borrowers will, and will cause each of their Subsidiaries to, at all times preserve and keep in full force and effect their corporate or limited liability company existence and all rights and franchises material to its business; provided, however that Borrowers and their Subsidiaries may merge or consolidate as permitted pursuant to subsection 7.7 of this Agreement and provided, further, that no Borrower nor any such Subsidiary shall be required to preserve any such right or franchise if the Board of Directors of the applicable Borrower or Subsidiary (or the managing member thereof, if applicable) shall determine (and shall so notify the Administrative Agent), that the preservation thereof is no longer desirable in the conduct of the business of such Borrower or Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to Borrowers and their Subsidiaries or Lenders. 6.3 Payment of Taxes and Claims; Tax Consolidation. - --- ----------------------------------------------- A. Borrowers will, and will cause each of their Subsidiaries to, pay all material taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty accrues thereon, and all material claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such charge or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (1) such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor and (2) in the case of a charge or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such charge or claim. B. Borrowers will not, nor will they permit any of their Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Borrowers or any of their Subsidiaries) unless Borrower and its Subsidiaries shall have entered into, a tax sharing agreement with such Person, in form and substance satisfactory to Administrative Agent. 6.4 Maintenance of Properties; Insurance; Application of Net Loss Proceeds. - --- ----------------------------------------------------------------------- A. Maintenance of Properties. Borrowers will, and will cause each of their Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Borrowers and their Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof except to the extent that the Borrowers determine in good faith not to maintain, repair, renew or replace such property if such property is no longer desirable in the conduct of their business and the failure to do so is not disadvantageous in any material respect to the Borrowers and their Subsidiaries or the Lenders. 70 B. Insurance. Borrowers will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Borrowers, and their Subsidiaries as may customarily be carried or maintained under similar circumstances by corporations of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for corporations similarly situated in the industry. Without limiting the generality of the foregoing, Borrowers will maintain or cause to be maintained the insurance coverage required to be maintained under the Disbursement Agreement, while applicable, and the Cooperation Agreement, such insurance coverage to be provided by such insurance provider, in such amounts with such deductibles and covering such risks as are at all times required under the Disbursement Agreement, while applicable, and the Cooperation Agreement and to include, if the Mortgaged Property is located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards, flood insurance in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System. C. Application of Net Loss Proceeds. Borrowers shall (i) apply Loss Proceeds and Liquidated Damages to restore, replace or rebuild the Project in accordance with the Cooperation Agreement, (ii) apply Liquidated Damages, to repay any Completion Guaranty Loan in accordance with subsection 7.5 hereof and the Adelson Intercreditor Agreement, and (iii) apply any Loss Proceeds and Liquidated Damages not applied as provided in clauses (i) and (ii) to prepay the Loans in accordance with the Cooperation Agreement and subsection 2.4B(iii)(b) hereof. Administrative Agent shall, and Borrowers hereby authorize Administrative Agent to, apply such Loss Proceeds and Liquidated Damages to prepay the Loans as provided in subsection 2.4B(iii)(b). 6.5 Inspection; Lender Meeting. - --- --------------------------- A. Inspection Rights. Borrowers shall, and shall cause each of their Subsidiaries to, permit any authorized representatives designated by any Lender to visit and inspect any of the properties of Borrowers and their Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, if requested by Administrative Agent (provided that any Borrower may, if it so chooses, be present at or participate in any such discussion), all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested. B. Lender Meeting. Borrowers will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Borrowers' corporate offices (or at such other location as may be agreed to by Borrowers and Administrative Agent) at such time as may be agreed to by Borrowers and Administrative Agent. 6.6 Compliance with Laws, etc.; Permits. - --- ------------------------------------ A. Borrowers shall and shall cause each of their Subsidiaries and all other Persons on or occupying any Facilities to, comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority (including all Environmental Laws), noncompliance with which could reasonably be expected to cause, individually or in the aggregate, a Material Adverse Effect. B. Borrowers shall, and shall cause each of their Subsidiaries to, from time to time obtain, maintain, retain, observe, keep in full force and effect and comply in all material respects with the terms, conditions and provisions of all Permits as shall now or hereafter be necessary under applicable laws except any thereof the noncompliance with which could not reasonably be expected to have a Material Adverse Effect. 6.7 Environmental Review and Investigation, Disclosure, Etc.; Borrowers' - --- -------------------------------------------------------------------- Actions Regarding Hazardous Materials Activities,Environmental Claims --------------------------------------------------------------------- and Violations of Environmental Laws. ------------------------------------- A. Environmental Review and Investigation. Borrowers agree that Administrative Agent may, from time to time and in its reasonable discretion, (i) retain, at Borrowers' expense, an independent professional consultant to review any environmental audits, investigations, analyses and reports relating to Hazardous Materials in respect of the Site, the Project or the Phase I-A Project prepared by or for Borrowers and (ii) conduct their own investigation of any Facility; provided that, in the case of any Facility no longer owned, leased, operated or used by Borrowers or any of their Subsidiaries, Borrowers shall only be obligated to use their best efforts to obtain permission for 71 Administrative Agent's professional consultant to conduct an investigation of such Facility. For purposes of conducting such a review and/or investigation, Borrowers hereby grant to Administrative Agent and its agents, employees, consultants and contractors the right to enter into or onto any Facilities currently owned, leased, operated or used by Borrowers or any of their Subsidiaries and to perform such tests on such property (including taking samples of soil, groundwater and suspected asbestos-containing materials) as are reasonably necessary in connection therewith. Any such investigation of any Facility shall be conducted, unless otherwise agreed to by Borrowers and Administrative Agent, during normal business hours and, to the extent reasonably practicable, shall be conducted so as not to interfere with the ongoing operations at such Facility or to cause any damage or loss to any property at such Facility. Borrowers and Administrative Agent hereby acknowledge and agree that any report of any investigation conducted at the request of Administrative Agent pursuant to this subsection 6.7A will be obtained and shall be used by Administrative Agent and Lenders for the purposes of Lenders' internal credit decisions, to monitor and police the Loans and to protect Lenders' security interests, if any, created by the Loan Documents. Administrative Agent agrees to deliver a copy of any such report to Borrowers with the understanding that Borrowers acknowledge and agree that (x) they will indemnify and hold harmless Administrative Agent and each Lender from any costs, losses or liabilities relating to Borrowers' use of or reliance on such report, (y) neither Administrative Agent nor any Lender makes any representation or warranty with respect to such report, and (z) by delivering such report to Borrowers, neither Administrative Agent nor any Lender is requiring or recommending the implementation of any suggestions or recommendations contained in such report. B. Environmental Disclosure. Borrowers will deliver to Administrative Agent and Lenders: (i) Environmental Audits and Reports. As soon as practicable following receipt thereof, copies of all environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Borrowers or any of their Subsidiaries or by independent consultants, governmental authorities or any other Persons, with respect to significant environmental matters at any Facility or with respect to any Environmental Claims; (ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon the occurrence thereof, written notice describing in reasonable detail (a) any Release required to be reported to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (b) any remedial action taken by Borrowers or any other Person in response to (1) any Hazardous Materials Activities the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect, or (2) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect. (iii) Written Communications Regarding Environmental Claims, Releases, Etc. As soon as practicable following the sending or receipt thereof by Borrowers or any of their Subsidiaries, a copy of any and all written communications with respect to (a) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect, (b) any Release required to be reported to any federal, state or local governmental or regulatory agency, and (c) any request for information from any governmental agency that suggests such agency is investigating whether Borrowers or any of their Subsidiaries may be potentially responsible for any Hazardous Materials Activity. (iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt written notice describing in reasonable detail (a) any proposed acquisition of stock, assets, or property by Borrowers or any of their Subsidiaries that could reasonably be expected to (1) expose Borrowers or any of their Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (2) affect the ability of Borrowers or any of their Subsidiaries to maintain in full force and effect all material Permits required under any Environmental Laws for their respective operations and (b) any proposed action to be taken by Borrowers or any of their Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Borrowers or any of their Subsidiaries to any material additional obligations or requirements under any Environmental Laws that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 72 (v) Other Information. With reasonable promptness, such other documents and information as from time to time may be reasonably requested by Administrative Agent in relation to any matters disclosed pursuant to this subsection 6.7. C. Borrowers' Actions Regarding Hazardous Materials Activities, Environmental Claims and Violations of Environmental Laws. (i) Remedial Actions Relating to Hazardous Materials Activities. Borrowers shall promptly undertake, and shall cause each of their Subsidiaries promptly to undertake, any and all investigations, studies, sampling, testing, abatement, cleanup, removal, remediation or other response actions necessary to remove, remediate, clean up or abate any Hazardous Materials Activity on, under or about any Facility that is in violation of any Environmental Laws or that presents a material risk of giving rise to an Environmental Claim. In the event Borrowers or any of their Subsidiaries undertake any such action with respect to any Hazardous Materials, Borrowers or such Subsidiary shall conduct and complete such action in compliance with all applicable Environmental Laws and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, Borrowers' or such Subsidiary's liability with respect to such Hazardous Materials Activity is being contested in good faith by Borrowers or such Subsidiary. (ii) Actions with Respect to Environmental Claims and Violations of Environmental Laws. Borrowers shall promptly take, and shall cause each of their Subsidiaries promptly to take, any and all actions necessary to (i) cure any material violation of applicable Environmental Laws by Borrowers or their Subsidiaries and (ii) make an appropriate response to any Environmental Claim against Borrowers or any of their Subsidiaries and discharge any obligations it may have to any Person thereunder. 6.8 Interest Rate Protection. - --- ------------------------- Borrowers, at all times, shall maintain in effect one or more Interest Rate Agreements with respect to the Term Loans, each such Interest Rate Agreement to be for a term and in form and substance reasonably satisfactory to Administrative Agent, which Interest Rate Agreements shall effectively limit the Unadjusted Eurodollar Rate Component (as hereinafter defined) of the interest costs to Borrowers with respect to an aggregate notional principal amount of not less than 50.0% of the aggregate principal amount of the Term Loans outstanding from time to time (based on the assumption that such notional principal amount was a Eurodollar Rate Loan with an Interest Period of three months) to a rate equal to not more than 9.0% per annum. For purposes of this subsection 6.8, the term "Unadjusted Eurodollar Rate Component" means that component of the interest costs to Borrowers in respect of a Eurodollar Rate Loan that is based upon the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate. 6.9 Compliance with Material Contracts. - --- ----------------------------------- Borrowers shall, and shall cause each of their Subsidiaries to, comply, duly and promptly, in all material respects with its respective obligations and enforce all of its respective rights under all Material Contracts, including all Operative Documents except where the failure to comply could not reasonably be expected to have a Material Adverse Effect. 6.10 [Intentionally omitted]. - ---- ------------------------ 6.11 Payment of Liens. - ---- ----------------- A. Removal by Borrowers. In the event that, notwithstanding the covenants contained in subsection 7.2, a Lien not otherwise permitted under subsection 7.2 may encumber the Mortgaged Property or other item of Collateral or any portion thereof, the Borrowers shall promptly discharge or cause to be discharged by payment to the lienor or lien claimant or promptly secure removal by bonding or deposit with the county clerk or otherwise or, at the Administrative Agent's option, and if obtainable promptly obtain title insurance against, any such Lien or mechanics' or materialmen's claims of lien filed or otherwise asserted against the Mortgaged Property or any other item of Collateral or any portion thereof within 60 days after the date of notice thereof; provided that, compliance with the provisions of this subsection 6.11 shall not be deemed to constitute a waiver of the provisions of subsection 7.2. The Borrowers shall exhibit to the Administrative Agent upon request all receipts or other satisfactory evidence of payment, bonding, deposit of taxes, assessments, Liens or any other item which may cause any such Lien to be filed against the Mortgaged Property or other item of Collateral of any Borrower or any of its Subsidiaries. Each Borrower and each of its Subsidiaries shall fully preserve the Lien and the priority of each of the Deed of Trust and the other 73 Collateral Documents without cost or expense to the Administrative Agent or the Lenders. B. Removal by the Agent. If any Borrower or any of its Subsidiaries fails to promptly discharge, remove or bond off any such Lien or mechanics' or materialmen's claim of lien as described above, which is not being contested by either Borrower or any of its Subsidiaries in good faith by appropriate proceedings promptly instituted and diligently conducted, within 30 days after the receipt of notice thereof, then the Administrative Agent may, but shall not be required to, procure the release and discharge of such Lien, mechanics' or materialmen's claim of lien and any judgment or decree thereon, and in furtherance thereof may, in its sole discretion, effect any settlement or compromise with the lienor or lien claimant or post any bond or furnish any security or indemnity as the Administrative Agent, in its sole discretion, may elect. In settling, compromising or arranging for the discharge of any Liens under this subsection, the Administrative Agent shall not be required to establish or confirm the validity or amount of the Lien. The Borrowers agree that all costs and expenses expended or otherwise incurred pursuant to this subsection 6.11 (including reasonable attorneys' fees and disbursements) by the Administrative Agent shall be paid by the Borrowers in accordance with the terms hereof. 6.12 Further Assurances. - ---- ------------------- A. Assurances. Without expense or cost to the Administrative Agent or the Lenders, each Borrower shall, and shall cause each of its Subsidiaries to, from time to time hereafter, execute, acknowledge, file, record, do and deliver all and any further acts, deeds, conveyances, mortgages, deeds of trust, deeds to secure debt, security agreements, hypothecations, pledges, charges, assignments, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Administrative Agent may from time to time reasonably require in order to carry out more effectively the purposes of this Agreement or the other Loan Documents, including to subject any items of Collateral, intended to now or hereafter be covered, to the Liens created by the Collateral Documents, to perfect and maintain such Liens, and to assure, convey, assign, transfer and confirm unto the Administrative Agent the property and rights hereby conveyed and assigned or intended to now or hereafter be conveyed or assigned or which any Borrower or any such Subsidiary may be or may hereafter become bound to convey or to assign to the Administrative Agent or for carrying out the intention of or facilitating the performance of the terms of this Agreement, or any other Loan Documents or for filing, registering or recording this Agreement or any other Loan Documents. Promptly upon a reasonable request each Borrower shall, and shall cause each of its Subsidiaries to, execute and deliver, and hereby authorizes the Agent to execute and file in the name of such Borrower or Subsidiary, to the extent the Administrative Agent may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments to evidence more effectively the Liens of the Collateral Documents upon the Collateral. Each Borrower hereby ratifies and confirms the grant of security interests and Liens made by such Borrower in favor of the Administrative Agent in and to the Collateral pursuant to the Collateral Documents as security for the Obligations. B. Filing and Recording Obligations. Borrowers shall pay or cause to be paid all filing, registration and recording fees and all expenses incident to the execution and acknowledgment of the Deed of Trust or any other Loan Document, including any instrument of further assurance described in subsection 6.12A, and shall pay or cause to be paid all mortgage recording taxes, transfer taxes, general intangibles taxes and governmental stamp and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution, delivery, filing, recording or registration of any Collateral Document or any other Loan Document, the Casino Lease and the Billboard Master Lease or memoranda thereof, including any instrument of further assurance described in subsection 6.12A, or by reason of its interest in, or measured by amounts payable under, the Notes, any Collateral Document or any other Loan Document, including any instrument of further assurance described in subsection 6.12A, and shall pay all stamp taxes and other taxes required to be paid on the Notes or any other Loan Document, but excluding in the case of each Lender and the Administrative Agent, Taxes imposed on its income by a jurisdiction under the laws of which it is organized or in which its principal executive office is located or in which its applicable lender office for funding or booking its Loans hereunder is located. If any Borrower fails to make or cause to be made any of the payments described in the preceding sentence within 15 days after notice thereof from the Administrative Agent (or such shorter period as is necessary to protect the loss of or diminution in value of any Collateral by reason of tax foreclosure or otherwise, as determined by the Administrative Agent, in its sole discretion) accompanied by documentation verifying the nature and amount of such payments, the Administrative Agent may (but shall not be obligated to) pay the amount due and such Borrower shall reimburse all amounts in accordance with the terms hereof. C. Costs of Defending and Upholding the Lien. The Administrative Agent may, upon at least five days' prior notice to the Borrower, (i) appear in and defend any action or proceeding, in the name and on behalf of the Administrative Agent or the Lenders in which the Administrative Agent or any 74 Lender is named or which the Administrative Agent in its sole discretion determines is reasonably likely to materially adversely affect the Mortgaged Property, any other Collateral, any Collateral Document, the Lien thereof or any other Loan Document and (ii) institute any action or proceeding which the Administrative Agent reasonably determines should be instituted to protect the interest or rights of the Administrative Agent and the Lenders in the Mortgaged Property or other Collateral or under this Agreement or any other Loan Document. The Borrowers agree that all reasonable costs and expenses expended or otherwise incurred pursuant to this subsection (including reasonable attorneys' fees and disbursements) by the Administrative Agent shall be paid by the Borrowers or reimbursed to the Administrative Agent, as the case may be, promptly after demand. D. Costs of Enforcement. The Borrowers agree to bear and shall pay or reimburse the Administrative Agent and the Lenders in accordance with the terms of subsection 10.2 for all reasonable sums, costs and expenses incurred by the Administrative Agent and the Lenders (including reasonable attorneys' fees and the expenses and fees of any receiver or similar official) of or incidental to the collection of any of the Obligations, any foreclosure (or transfer in lieu of foreclosure) of this Agreement, any Collateral Document or any other Loan Document or any sale of all or any portion of the Mortgaged Property or all or any portion of the other Collateral. 6.13 Execution of Subsidiary Guaranty and Personal Property Collateral - ---- ----------------------------------------------------------------- Documents by Certain Subsidiaries and Future Subsidiaries. ---------------------------------------------------------- A. Execution of Subsidiary Guaranty and Personal Property Collateral Documents. In the event that any Person becomes a Subsidiary on or after November 14, 1997, Borrowers will promptly notify Administrative Agent of that fact and, provided such Subsidiary is not an Excluded Subsidiary or is excluded from the definition of Subsidiary Guarantor, cause such Subsidiary to execute and deliver to Administrative Agent a counterpart of the Subsidiary Guaranty and a Subsidiary Security Agreement and to take all such further actions and execute all such further documents and instruments as may be necessary or, in the reasonable opinion of Administrative Agent, desirable to create in favor of Administrative Agent, for the benefit of Lenders, a valid and perfected First Priority Lien on all of the personal and mixed property assets of such Subsidiary which constitute First Priority Collateral. Notwithstanding the foregoing (i) the Subsidiaries described in Section 7.3(x) shall not be required to become Subsidiary Guarantors or enter into any Subsidiary Security Agreement and (ii) the Phase I-A Subsidiary shall enter into a Subsidiary Security Agreement in the form of Exhibit VIII-A. B. Subsidiary Charter Documents, Legal Opinions, Etc. Borrowers shall deliver to Administrative Agent, together with such Loan Documents, (i) certified copies of such Subsidiary's Certificate or Articles of Incorporation or equivalent limited liability company documents, together with a good standing certificate from the Secretary of State of the jurisdiction of its incorporation and each other state in which such Person is qualified as a foreign corporation to do business and, to the extent generally available, a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each of such jurisdictions, each to be dated a recent date prior to their delivery to Administrative Agent, (ii) a copy of such Subsidiary's Bylaws, certified by its corporate secretary or an assistant secretary as of a recent date prior to their delivery to Administrative Agent, (iii) a certificate executed by the secretary or an assistant secretary of such Subsidiary as to (a) the fact that the attached resolutions of the Board of Directors or managing member of such Subsidiary approving and authorizing the execution, delivery and performance of such Loan Documents are in full force and effect and have not been modified or amended and (b) the incumbency and signatures of the officers of such Subsidiary executing such Loan Documents, and (iv) a favorable opinion of counsel to such Subsidiary, in form and substance reasonably satisfactory to Administrative Agent and its counsel, as to (a) the due organization and good standing of such Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary of such Loan Documents, (c) the enforceability of such Loan Documents against such Subsidiary, (d) such other matters (including matters relating to the creation and perfection of Liens in any Collateral pursuant to such Loan Documents) as Administrative Agent may reasonably request, all of the foregoing to be reasonably satisfactory in form and substance to Administrative Agent and its counsel. C. Real Estate Collateral Documents. Borrowers shall deliver to Administrative Agent together with such Loan Documents all such further documents and instruments and take such further action necessary to create in favor of Administrative Agent, for the benefit of Lenders, a valid and perfected first priority security interest on any real property assets of such Subsidiary, as Administrative Agent may reasonably request from time to time. Section 7. BORROWERS' NEGATIVE COVENANTS Borrowers covenant and agree that, so long as any of the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all 75 Letters of Credit, unless Requisite Lenders shall otherwise give prior written consent, Borrowers shall perform, and shall cause each of their Subsidiaries to perform, all of the covenants set forth in Article 6 of the Disbursement Agreement (while in effect) and all of the covenants set forth in this Section 7. 7.1 Indebtedness. - --- ------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (i) Borrowers and their Subsidiaries may become and remain liable with respect to the Obligations; (ii) Borrowers and their Subsidiaries may become and remain liable with respect to Contingent Obligations permitted by subsection 7.4 and (other than with respect to clauses (iv) and (v) of subsection 7.4) upon any matured obligations actually arising pursuant thereto, the Indebtedness corresponding to the Contingent Obligations so extinguished; (iii) Borrowers may become and remain liable for Indebtedness represented by the Mortgage Notes in an aggregate principal amount not to exceed at any time $425,000,000, reduced by any principal payments required to be made thereon; (iv) any Borrower may become and remain liable with respect to Indebtedness to the other Borrower or any of its Subsidiaries, and any Subsidiary of Borrowers may become and remain liable with respect to Indebtedness to Borrowers or any other Subsidiary of Borrowers; provided that (a) all such intercompany Indebtedness shall be evidenced by promissory notes, (b) all such intercompany Indebtedness owed by Borrowers to any of their Subsidiaries shall be subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of the applicable promissory notes or an intercompany subordination agreement, (c) any payment by any Subsidiary of Borrowers under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any intercompany Indebtedness owed by such Subsidiary to Borrowers or to any of their Subsidiaries for whose benefit such payment is made, and (d) the aggregate principal amount of all Indebtedness to any Subsidiaries described in subsection 7.3(x) hereof shall not exceed $10,000,000 at any time outstanding; (v) Borrowers may become and remain liable for Indebtedness represented by the Subordinated Notes in an aggregate principal amount not to exceed at any time $97,500,000 reduced by any principal payments required to be made thereon; (vi) Borrowers and their Subsidiaries may become and remain liable for Indebtedness under the FF&E Facility Agreement in an aggregate principal amount not to exceed at any time $132,700,000 (plus any accrued and unpaid interest thereon added to principal) reduced by any principal payments required to be made thereon; (vii) [Intentionally omitted]; (viii) Borrowers and their Subsidiaries may become and remain liable for Non-Recourse Financing used to finance the purchase or lease of personal or real property for use in the business of a Borrower or one of its Subsidiaries provided that (x) such Non-Recourse Financing represents at least 75% of the purchase price of such personal or real property and (y) the Indebtedness incurred pursuant to this clause (viii) shall not exceed $50,000,000 at any time; (ix) Borrowers may become and remain liable for Indebtedness in respect of any Completion Guaranty Loan in an aggregate amount not to exceed $25,000,000 (plus any accrued and unpaid interest thereon added to principal); (x) Borrowers and their Subsidiaries may become and remain liable for additional Indebtedness to the extent permitted under and on the terms described in the Intercreditor Agreement; (xi) Borrowers may become and remain liable for Indebtedness to employees of Borrowers ("Employee Repurchase Notes") incurred in connection with any repurchase of employee options or stock upon death, disability, termination or exercise of any redemption or put of such option or stock of such employee in accordance with employment agreements or option plans or agreements as in effect on the Closing Date ("Permitted Employee Repurchases") provided that such Indebtedness shall be unsecured and subordinated on 76 terms not less favorable to Borrowers and the Lenders than the terms of the Subordinated Notes and shall expressly provide that payments thereon shall be required only to the extent not restricted by any Financing Agreement; (xii) Borrowers may become and remain liable for Indebtedness incurred for the purpose of financing all or any part of the purchase or lease of gaming equipment to be used in connection with the casino located at the casino resort to be owned by Phase II Subsidiary or any casino to be operated within Phase II in the aggregate amount at any time outstanding not to exceed $10,000,000; provided, that upon default under such Indebtedness, the lender under such Indebtedness may seek recourse or payment against the Borrowers and their Subsidiaries only through the return or sale of the property or equipment so purchased or leased and may not otherwise assert a valid claim for payment on such Indebtedness against the Borrowers and their Subsidiaries or any other property of the Borrowers and their Subsidiaries. (xiii) Borrowers may become and remain liable with respect to other Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any time outstanding; (xiv) [Intentionally omitted]; and (xv) Borrowers may incur Indebtedness in an aggregate principal amount not to exceed $15,000,000 (plus any accrued and unpaid interest thereon added to principal) at any time outstanding ("Additional Indebtedness"), provided that (a) such Additional Indebtedness shall not be secured by, directly or indirectly, any Liens on any property or assets owned directly or indirectly by Venetian or LVSI or any Subsidiary of Venetian or LVSI or by any stock, securities, membership interest, partnership interest or other direct or indirect equity interests in Venetian or LVSI or any Subsidiary of Venetian or LVSI; (b) such Additional Indebtedness shall be subordinated to all Obligations under this Agreement and all Indebtedness under the Mortgage Notes Indenture, the Subordinated Notes Indenture and the FF&E Facility (collectively, the "Superior Facilities") on terms reasonably acceptable to the Administrative Agent and the Arranger and no payments in respect thereof may be made or demanded prior to the payment in full of all Obligations (and further the principal of such Additional Indebtedness may not be paid back until all Obligations and all Indebtedness with respect to the Superior Facilities has been paid in full and this covenant of Borrowers shall survive the earlier termination of this Credit Agreement), other than payment of interest in kind provided that any instruments or documents evidencing such payments contain the same terms and conditions as the Additional Indebtedness (provided that such subordination shall not prohibit the exchange of any note evidencing any such Additional Indebtedness or of the payment of any amounts under any such note in whole or in part for securities of any Borrower) provided that no Restricted Junior Payment may be made in respect of such securities; (c) prior to incurring any Additional Indebtedness all documents and instruments evidencing such Indebtedness shall be delivered to Administrative Agent and the Arranger and such documents and instruments shall (x) incorporate the terms set forth in the other clauses of this proviso and otherwise be in form and substance reasonably satisfactory to Administrative Agent and the Arranger (y) provide that the Lenders shall be third party beneficiaries of such documents and instruments and (z) contain provisions prohibiting any amendment, modification or waiver thereof binding on Borrowers or their Subsidiaries without the prior written consent of Administrative Agent and the Arranger (which consent shall not be unreasonably withheld); and (d) the Additional Indebtedness shall be permitted under the other Superior Facilities and all other agreements to which the Borrowers are a party, and prior to the incurrence thereof counsel to the Borrowers shall have delivered an opinion to the Lenders to that effect (with respect to the Superior Facilities only) in form and substance reasonably satisfactory (including reasonably satisfactory assumptions) to the Administrative Agent and the Arranger on behalf of the Lenders. 7.2 Liens and Related Matters. - --- -------------------------- A. Prohibition on Liens. Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of such Borrower or Subsidiary, whether now owned or 77 hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the Uniform Commercial Code of any State or under any similar recording or notice statute, except: (i) Permitted Liens; (ii) Liens granted pursuant to the Collateral Documents; (iii) Liens securing Indebtedness permitted under clause (iii) of subsection 7.1, provided that such Liens are junior in priority (other than in respect of the Mortgage Notes Proceeds Account) to the Liens securing the Obligations; (iv) [Intentionally omitted]; (v) Liens securing Indebtedness permitted under clause (vi) of subsection 7.1, provided that such Liens attach only to the Specified FF&E and to any proceeds of such Specified FF&E or Indebtedness and related collateral accounts in which such proceeds are held; (vi) Liens securing Indebtedness permitted under clause (viii) of subsection 7.1, provided that such Liens extend only to the real property or personal property purchased or leased with the proceeds of such Non-Recourse Financing and to any proceeds of such property or Indebtedness and related collateral accounts in which such proceeds are held, and either (i), in the case of the Phase I-A Non-Recourse Loan, the proceeds of such Non-Recourse Financing shall be paid by the Phase I-A Subsidiary to Venetian as rent pursuant to the Phase I-A Lease within 180 days of the incurrence of such Indebtedness and (ii), in all other cases, such property is leased or acquired within 180 days of the incurrence of such Indebtedness; (vii) Liens in favor of the Mortgage Note Holders or other Persons securing Indebtedness advanced by any such Person and permitted under (x) of subsection 7.1 to the extent that such Liens are permitted under the Intercreditor Agreement, provided that such Liens in favor of the Mortgage Note Holders or such other Persons are junior (other than in respect of the Mortgage Notes Proceeds Account) to the Liens securing the Obligations; (viii) Liens securing Indebtedness permitted under clause (xii) of subsection 7.1 provided that such Liens attach only to the casino equipment purchased or leased with the proceeds of such Indebtedness and such assets are acquired or leased within 180 days of the incurrence of such Indebtedness; (ix) [Intentionally omitted]; (x) Liens described in Schedule 7.2 annexed hereto; and (xi) Other Liens securing Indebtedness in an aggregate amount not to exceed $5,000,000 at any time outstanding. Notwithstanding the foregoing, the Borrowers shall not permit the Intermediate Holding Companies to create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind of the Intermediate Holding Companies, Mall Direct Holdings and Mall Subsidiary other than Permitted Liens which do not secure Indebtedness. B. Equitable Lien in Favor of Lenders. If Borrowers or any of their Subsidiaries, shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Liens excepted by the provisions of subsection 7.2A, they shall make or cause to be made effective provision whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided that, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not permitted by the provisions of subsection 7.2A. C. No Further Negative Pledges. Except with respect to specific property encumbered to secure payment of particular Indebtedness or leases or to be sold pursuant to an executed agreement with respect to an Asset Sale, none of the Borrowers nor any of their Subsidiaries, shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired other than (w) as provided herein or in the other Loan Documents, (x) as set forth in the documents evidencing the Phase I-A Subsidiary Non-Recourse Loan, (y) as set forth in the documents evidencing Other Indebtedness as in effect on the Closing Date including any refinancing thereof permitted hereunder provided that the provisions regarding the creation or assumption of Liens is not less favorable to Borrowers, such Subsidiary or Lenders than those set forth in the documents 78 evidencing the Indebtedness being refinanced or (z) as required by applicable law or any applicable rule or order of any Gaming Authority. D. No Restrictions on Subsidiary Distributions to Borrowers or Other Subsidiaries. Except as provided herein and as provided in the documents evidencing the Phase I-A Subsidiary Non-Recourse Loan, Borrowers will not, and will not permit any of their Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any of their Subsidiaries to (i) pay dividends or make any other distributions on any of such Subsidiary's capital stock owned by Borrowers or any other Subsidiary of Borrowers, (ii) repay or prepay any Indebtedness owed by any such Subsidiaries to Borrowers, (iii) make loans or advances to Borrowers, or (iv) transfer any of its property or assets to Borrowers other than (x) as provided herein or in the other Loan Documents, (y) as set forth in the documents evidencing Other Indebtedness as in effect on November 14, 1997 including any refinancing thereof permitted hereunder provided that the provisions regarding dividends, distributions, repayments of Indebtedness, loans and advances and transfers of assets are not less favorable to Borrowers, such Subsidiary or Lenders than those set forth in the documents evidencing the Indebtedness being refinanced or (z) as required by applicable law or any applicable rule or order of any Gaming Authority. 7.3 Investments; Joint Ventures; Formation of Subsidiaries. - --- ------------------------------------------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including any Joint Venture or otherwise form or create any Subsidiary, except: (i) Borrowers and their Subsidiaries may make and own Investments in Cash Equivalents; (ii) Borrowers may continue to own their existing Investments in the Intermediate Holding Companies, the Excluded Subsidiaries and Mall Construction Subsidiary described in Schedule 7.3 annexed hereto, provided that Borrowers and their Subsidiaries may not make any additional Investments in such Persons except as permitted by clauses (iv) and (v) below; (iii) Borrowers may (a) form the Phase I-A Subsidiary, (b) enter into the Phase I-A Lease and (c) make Investments in the Phase I-A Subsidiary to service the Phase I-A Subsidiary Non-Recourse Loan and to make any lease payments or other payments that may be required under the Phase I-A Lease, the Cooperation Agreement or any other agreement entered into by the Phase I-A Subsidiary; (iv) Borrowers may transfer a 1% managing membership interest in each of Phase II Subsidiary and Phase II Direct Holdings to Phase II Manager; (v) Borrower and their Subsidiaries may invest in New Mall Subsidiary or Phase II Subsidiary any cash or other property contributed to Borrowers by Adelson or any of his Affiliates for such purpose; (vi) So long as no Event of Default or Potential Event of Default shall have occurred and be continuing or would result therefrom, Borrowers may form and make Investments in new Subsidiaries and in Supplier Joint Ventures; provided that (a) the aggregate amount of all such Investments shall not at any time exceed $10,000,000, (b) no such Subsidiary or Supplier Joint Venture shall own or operate or possess any material license, franchise or right used in connection with the ownership or operation of the Project or any material Project assets, (c) in the case of any Investment in a Supplier Joint Venture, LVSI shall have delivered an Officers' Certificate which certifies that in the reasonable judgment of such officer the Investment in such Supplier Joint Venture will result in an economic benefit to Borrowers (taking into account such Investment) as a result of a reduction in the cost of the goods or services being acquired from the Supplier Joint Venture over the life of the Investment and (d) none of the Borrowers, nor any other Subsidiary of the Borrower shall incur any liabilities or contingent obligations in respect of the obligations of such Subsidiary or Joint Venture; (vii) Borrowers may make Consolidated Capital Expenditures permitted by subsection 7.14; (viii) Borrowers may make loans or advances to their employees (a) to fund the exercise price of options granted under Borrowers' stock option plans or agreements or employment agreements as in effect on the Closing Date and (b) for other purposes in an amount not to exceed $1,000,000 in the aggregate outstanding at any time; 79 (ix) Borrowers and their Subsidiaries may hold investments consisting of securities received in settlement of debt created in the ordinary course of business and owing to the Borrowers or any Subsidiary or in satisfaction of judgments; (x) Borrowers may (x) create one or more Subsidiaries for the purpose of establishing foreign or domestic offices for marketing or to otherwise further the business of the Borrowers as described in Section 7.12 hereof (at their election, Borrowers may designate any such Subsidiary to be an Excluded Subsidiary) and (y) make Investments in any or all of such Subsidiaries in an aggregate amount not to exceed $10,000,000; (xi) Borrowers may make and own other Investments in an aggregate amount not to exceed at any time $5,000,000. 7.4 Contingent Obligations. - --- ----------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create or become or remain liable with respect to any Contingent Obligation, except: (i) Borrowers may become and remain liable with respect to Contingent Obligations under Interest Rate Agreements which are (a) required under subsection 6.8 or under the terms of any other Financing Agreements or (b) entered into to hedge against interest rate fluctuations in respect of up to 50% of the principal amount of the Indebtedness outstanding under clause (vi) of subsection 7.1 so long as such Interest Rate Agreements are on substantially the same terms as those entered into to satisfy subsection 6.8 hereof and all obligations thereunder are secured solely by Liens included in Permitted Liens under clause (xx) of the definition thereof; (ii) Borrowers and their Subsidiaries may become and remain liable with respect to Contingent Obligations under the Loan Documents; (iii) Borrowers and their Subsidiaries may become and remain liable with respect to the Contingent Obligations for the Indebtedness permitted under clauses (iii), (v), (viii), (x) and (xiii) of subsection 7.1, provided that any such Contingent Obligations of the Intermediate Holding Companies are subordinate to the Obligations on terms at least as favorable to the Lender as those relating to the subordination of the Intermediate Holding Company guaranties set forth in Section 11.07 of the Mortgage Notes Indenture (as in effect on November 14, 1997); (iv) to the extent such incurrence does not result in the incurrence by Borrowers or any of their Subsidiaries of any obligation for the payment of borrowed money, Borrowers may become and remain liable with respect to Contingent Obligations incurred solely in respect of performance bonds, completion guaranties and standby letters of credit or bankers' acceptances, provided that such Contingent Obligations are incurred in the ordinary course of business and do not at any time exceed $10,000,000 in the aggregate; (v) Borrowers and their Subsidiaries may become and remain liable for customary indemnities under Project Documents as in effect on November 14, 1997; and (vi) Borrowers may become and remain liable with respect to other Contingent Obligations, provided that the maximum aggregate liability, contingent or otherwise, of Borrowers in respect of all such Contingent Obligations shall at no time exceed $5,000,000. 7.5 Restricted Junior Payments. - --- --------------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Junior Payment, except: (i) Borrowers may make regularly scheduled or required payments of principal and interest in respect of any Other Indebtedness of Borrowers in accordance with the terms of, and only to the extent required by the agreement pursuant to which such Other Indebtedness was issued provided that (a) any such payments shall be subject to the terms of the Intercreditor Agreement, the Adelson Intercreditor Agreement, the Adelson Subordination Agreement, the Adelson Completion Guaranty and any FF&E Intercreditor Agreements, as applicable, (b) any such payments in respect of any Completion Guaranty Note and any Employee 80 Repurchase Note may be made only to the extent no Event of Default or Potential Event of Default shall then exist and be continuing or would result therefrom and (c) any such payments in respect of any Employee Repurchase Note may be made only to the extent that the ratio of Consolidated Adjusted EBITDA without giving effect to any Conforming Adelson L/C pursuant to the last sentence of the definition of Consolidated Adjusted EBITDA to Consolidated Fixed Charges for the four Fiscal Quarter period ended on the most recent Quarterly Date preceding such payment or such shorter period tested on such Quarterly Date under subsection 7.6A (determined on a pro forma basis (as though such payment on the Employee Repurchase Note had been made during the period tested as of such Quarterly Date under subsection 7.6A) would have been in compliance with the requirements of subsection 7.6A as certified to Administrative Agent by the chief financial officer of Borrowers, on behalf of Borrowers, at the time of such payment; (ii) Borrowers may prepay any FF&E Facility from the portion of any Loss Proceeds or net proceeds from Asset Sales of collateral under such FF&E Facility (as permitted under subsection 7.7(iv)) required to be so applied in accordance with such FF&E Facility; (iii) LVSI may make cash distributions in respect of its common stock in an aggregate amount not to exceed $8,000,000 per year to, or repurchase common stock from, senior managers or officers of LVSI who may become holders of LVSI common stock as a result of the exercise of stock options, provided that nothing in this subsection 7.5(iii) shall be deemed to permit cash distributions or payments to Adelson or any Family Member (as defined in the definition of "Related Parties"); (iv) Borrowers may exchange up to $15,000,000 in shares of LVSI common stock held by Adelson for up to $15,000,000 of preferred membership interest in Venetian; (v) [Intentionally omitted]; (vi) Borrowers and their Subsidiaries may redeem or purchase any equity interests in Borrowers or their Subsidiaries or any Indebtedness to the extent required by any Nevada Gaming Authority in order to preserve a material Gaming License, provided that so long as such efforts do not jeopardize any material Gaming License, Borrowers shall have diligently tried to find a third-party purchaser for such equity interests or Indebtedness and no third-party purchasers acceptable to the Nevada Gaming Authority is willing to purchase such equity interests or Indebtedness within a time period acceptable to the Nevada Gaming Authority; (vii) for so long as LVSI is a corporation under Subchapter S of the Code or a substantially similarly treated pass-through entity or Venetian is a limited liability company that is treated as a partnership or a substantially similarly treated pass-through entity for Federal income tax purposes (as evidenced by an opinion of counsel at least annually), Borrowers may each make cash distributions to shareholders or members, during each Quarterly Period, in an aggregate amount not to exceed the Permitted Quarterly Tax Distribution in respect of the related Estimation Period, and if any portion of the Permitted Quarterly Tax Distribution is not distributed during such Quarterly Payment Period, the Permitted Quarterly Tax Distribution payable during the immediately following four quarter period shall be increased by such undistributed portion; provided that Borrowers may not make any such distribution to pay taxes attributable to income of New Mall Subsidiary or Phase II Subsidiary or any of their subsidiaries unless Borrowers have received from the applicable holding companies of New Mall Subsidiary or Phase II Subsidiary, as applicable, a cash distribution for such purpose in respect of the applicable Estimation Period in an equal amount; (viii) Borrowers and their wholly-owned Subsidiaries may make intercompany payments between such entities and intercompany payments from any Subsidiary of a Borrower to any wholly-owned Subsidiary of Borrowers or any Borrower; (ix) Borrowers may make Permitted Employee Repurchases so long as (a) no Event of Default or Potential Event of Default shall exist and be continuing or would result therefrom and (b) the ratio of Consolidated Adjusted EBITDA without giving effect to any Conforming Adelson L/C pursuant to the last sentence of the definition of Consolidated Adjusted EBITDA to Consolidated Fixed Changes for the four Fiscal Quarter period ended as of the most recent Quarterly Date prior to such repurchase or such shorter period tested on such immediately preceding Quarterly Date under subsection 7.6A (determined on a pro forma basis as though such 81 Permitted Employee Repurchase had been made during the period tested as of such Quarterly Date under subsection 7.6A) would have been in compliance with the requirements of subsection 7.6A as certified to Administrative Agent by the chief financial officer of Borrowers, on behalf of Borrowers, at the time of such payment; (x) Borrowers may make repurchases of capital stock of LVSI deemed to occur upon exercise of stock options to the extent such capital stock represents a portion of the exercise price of such options; and (xi) Borrowers may make payments on any Completion Guaranty Loan (a) prior to Final Completion, from amounts permitted to be deposited in the Guaranty Deposit Account subject to the terms of the Adelson Completion Guaranty and the Disbursement Agreement, (b) on Final Completion Date from amounts which are advanced to Borrowers pursuant to subsection 2.12 of the Disbursement Agreement for the purpose of making such payments, (c) after Final Completion Date from Liquidated Damages and (d) on Final Completion Date, from amounts which are returned to Mall Construction Subsidiary from funds in the Mall Retainage/Punchlist Account in accordance with the Mall Escrow Agreement, up to the aggregate amount previously deposited into the Mall Retainage/Punchlist Account from the Guaranty Deposit Account, provided in each case that such payments shall be permitted only to the extent allowed under the Adelson Intercreditor Agreement and only so long as no Event of Default or Potential Event of Default shall then exist and be continuing or would result therefrom. 7.6 Financial Covenants. - --- -------------------- A. Minimum Fixed Charge Coverage Ratio. Borrowers shall not permit the ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges for any four-Fiscal Quarter period ending on any Quarterly Date set forth below to be less than the correlative ratio indicated:
Minimum Fixed Charge Period Coverage Ratio =========================================== ============== Each of the Quarters ending on December 31, 1.05:1 1999, March 31, 2000, June 30, 2000 and September 30, 2000 Each of the Quarters ending on December 31, 1.05:1 2000, March 31, 2001, June 30, 2001 and September 30, 2001 Each of the Quarters ending on December 31, 1.10:1 2001 and the last day of each calendar quarter thereafter
B. Maximum Leverage Ratio. Borrowers shall not permit the ratio (the "Leverage Ratio") of (i) Consolidated Total Debt as of such Quarterly Date to (ii) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on such Quarterly Date ending on any Quarterly Date set forth below to exceed the correlative ratio indicated: 82
Maximum Period Leverage Ratio ========================================== ============== Each of the Quarters ending on December 4.75:1 31, 1999, March 31, 2000, June 30, 2000, September 30, 2000, December 31, 2000 and March 31, 2001 The Quarter ending on June 30, 2001 4.50:1 Each of the Quarters ending on September 6.00:1 30, 2001, December 31, 2001 and March 31, 2002 The Quarter ending on June 30, 2002 5.50:1 The Quarter ending on September 30, 2002 5.00:1 Each of the Quarters ending on December 4.90:1 31, 2002 and the last day of each calendar quarter thereafter
C. Minimum Consolidated Adjusted EBITDA. Borrowers shall not permit Consolidated Adjusted EBITDA for any four Fiscal Quarter period ending on any Quarterly Date set forth below to be less than the correlative amount indicated:
Minimum Consolidated Period Adjusted EBITDA ========================================= ===================== The Quarter ending on December 31, 1999 $ 30,000,000 The Quarter ending on March 31, 2000 $ 75,000,000 The Quarter ending on June 30, 2000 $100,000,000 The Quarter ending on September 30, 2000 $150,000,000 The Quarter ending on December 31, 2000 $155,000,000 Each of the Quarters ending on March 31, $160,000,000 2001 and June 30, 2001 The Quarter ending on September 30, 2001 $145,000,000 The Quarter ending on December 31, 2001 $150,000,000 The Quarter ending on March 31, 2002 $155,000,000 The Quarter ending on June 30, 2002 $160,000,000 The Quarter ending on September 30, 2002 $165,000,000 The Quarter ending on December 31, 2002 $170,000,000 The Quarter ending on March 31, 2003, and $180,000,000 the last day of each calendar quarter thereafter
D. Minimum Consolidated Net Worth. Borrowers shall not permit Consolidated Net Worth at any Quarterly Date to be less than $120,000,000 plus an amount equal to the sum of 85% of Consolidated Net Income for all periods from November 14, 1997 through such Quarterly Date (net of all net losses for Borrowers and their Subsidiaries on a consolidated basis for the same period). 7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions. - --- ----------------------------------------------------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, alter the corporate, capital or legal structure (except with respect to changes in capital structure to the extent a Change of Control does not occur as a result thereof) of any Borrower, or any of its Subsidiaries, or enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, property or assets, whether now owned or hereafter acquired, or acquire by purchase or otherwise all or substantially all the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business of any Person, except: (i) Borrowers may make Consolidated Capital Expenditures permitted under subsection 7.14; 83 (ii) Borrowers and their Subsidiaries may dispose of obsolete, worn out or surplus assets or assets no longer used or useful in the business of Borrowers and the Subsidiaries in each case to the extent made in the ordinary course of business, provided that either (i) such disposal does not materially adversely affect the Mortgaged Property or (ii) prior to or promptly following such disposal any such property shall be replaced with other property of substantially equal utility and a value at least substantially equal to that of the replaced property when first acquired and free from any security of any other Person subject only to Permitted Liens and by such removal and replacement Borrowers and their Subsidiaries shall be deemed to have subjected such replacement property to the lien of the Collateral Documents in favor of Lenders, as applicable; (iii) Borrowers and their Subsidiaries may sell or otherwise dispose of assets in transactions that do not constitute Asset Sales, provided that the consideration received for such assets shall be in an amount at least equal to the fair market value thereof except under subsections 7.7(v), (vii)-(ix) and (xi) below; (iv) subject to subsection 7.11, Borrowers and their Subsidiaries may make Asset Sales of assets having a fair market value not in excess of (x) $4,000,000 in respect of the sale or other disposition of construction equipment prior to or during the first year following the Completion Date and (y) $2,000,000 with respect to any other Asset Sales; provided in each case that (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof; (2) the sole consideration received shall be cash; and (3) the proceeds of such Asset Sales shall be applied as required by subsection 2.4B(iii)(a); (v) Borrowers and their Subsidiaries may enter into the Phase I-A Lease; (vi) Borrowers and their Subsidiaries may enter into the Phase II Lease; (vii) Borrowers and their Subsidiaries may enter into any leases with respect to any space on or within the Project; (viii) Borrowers may enter into the HVAC Ground Lease. (ix) LVSI may lease the casino from Venetian pursuant to the Casino Lease; (x) Borrower may enter into sale(s) transactions in accordance with the terms set forth in Section 2.4B(iii)(a)(iii); (xi) Either Borrower may be merged with the other Borrower; (xii) Either Borrower may sell, lease or otherwise transfer assets to another Borrower or to a wholly-owned Subsidiary of such Borrower to the extent permitted by subsection 7.3 and any wholly-owned Subsidiary of a Borrower may sell, lease or otherwise transfer assets to any other wholly-owned Subsidiary of such Borrower (other than the Intermediate Holding Companies) or to the other Borrower; (xiii) Mall Construction Subsidiary may be merged with or liquidated into Venetian; (xiv)Borrower may dedicate space for the purpose of constructing (i) a mass transit system, (ii) a pedestrian bridge over or a pedestrian tunnel under Las Vegas Boulevard and Sands Avenue or similar structures to facilitate pedestrians or traffic and (iii) a right turn lane or other roadway dedication at or near the Project; provided in each case that such dedication does not materially impair the use or operations of the Project; (xv) Borrowers may license trademarks and trade names in the ordinary course of business; (xvi) Mall Construction Subsidiary may enter into or take by assignment the Mall Management Agreement and assign its interest therein to Mall Subsidiary and Mall Subsidiary may assign its interest therein to New Mall Subsidiary; (xvii) Borrowers may make the transfers permitted under subsections 7.3(iii), (iv), (v) and (x). (xviii) Venetian and Mall Construction Subsidiary (or Mall Subsidiary or New Mall Subsidiary, as applicable) may enter into the Billboard Master Lease and the other Master Leases (as 84 defined in that certain FADAA Limited Waiver dated as of November 12, 1999 among inter alia Borrowers, Mall Construction Subsidiary and Scotiabank as bank agent); (xix) Borrowers and their Subsidiaries may transfer any assets leased or acquired with proceeds of a Non-Recourse Financing permitted under subsection 7.1 or other financing permitted under subsection 7.1(xii) to the lender providing such financing upon default, expiration or termination of such Non-Recourse Financing or other financing; (xx) Borrowers may sell receivables for fair market value in the ordinary course of business; and (xxi) incurrence of Liens permitted under subsection 7.2, provided that any leases, other than those described in clauses (v) and (vi) above (whether or not constituting Permitted Liens), shall be permitted only to the extent provided in clause (vii) above and the last paragraph of this subsection 7.7. Notwithstanding the foregoing provisions of this subsection 7.7, clause (vii) shall be subject to the additional provisos that: (a) no Event of Default or Potential Event of Default shall exist and be continuing at the time of such transaction or lease or would occur after as a result of entering into such transaction or lease (or immediately after any renewal or extension thereof at the option of Borrowers or one of their Subsidiaries), (b) such transaction or lease will not materially interfere with, impair or detract from the operation of the business of Borrowers and their Subsidiaries, (c) such transaction or lease is at a fair market rent or value (in light of other similar or comparable prevailing commercial transactions) and contains such other terms such that the lease, taken as a whole, is commercially reasonable and fair to Borrowers and their Subsidiaries in light of prevailing or comparable transactions in other casinos, hotels, hotel attractions or shopping venues, (d) no gaming or casino operations (other than the operation of arcades and games for children) may be conducted on any space that is subject to such transaction or lease other than by Borrowers and (e) no lease may provide that the Borrowers or any of their Subsidiaries may subordinate its fee, condominium or leasehold interest to any lessee or any party financing any lessee; provided that Administrative Agent on behalf of Lenders shall agree to provide the tenant under any such lease with a Subordination, Non-Disturbance and Attornment Agreement with the tenant under any such lease substantially in the form of Exhibit VIII hereto with such changes as Administrative Agent may approve, which approval shall not be unreasonably withheld or delayed. Administrative Agent on behalf of Lenders shall also provide such agreement to the tenant under the Phase I-A Lease and under the Guggenheim Projects. 7.8 Sales and Lease-Backs. - --- ---------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, (i) which Borrowers or any of their Subsidiaries has sold or transferred or is to sell or transfer to any other Person or (ii) which Borrowers or any of their Subsidiaries intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by Borrowers or any of their Subsidiaries to any Person in connection with such lease, except that Borrowers and their Subsidiaries may enter into sale-leaseback transactions in connection with any Non-Recourse Financing permitted hereunder or such other financings permitted under clause (xii) of subsection 7.1 to the extent that the assets subject to such sale-leaseback are acquired contemporaneously with, or within 180 days prior to, such Non-Recourse Financing or such other financings and with the proceeds thereof and neither Borrower nor any of its Subsidiaries theretofore held any interest in such assets and except that (a) Venetian may enter into the Phase II Lease with Phase II Subsidiary and (b) Borrowers and their Subsidiaries may enter into the Phase I-A Lease, provided that all other applicable terms and conditions with respect to such leases set forth in this Agreement are satisfied. 7.9 Sale or Discount of Receivables. - --- -------------------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable other than an assignment for purposes of collection in the ordinary course of business. 7.10 Transactions with Shareholders and Affiliates. - ---- ---------------------------------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or 85 the rendering of any service) with any holder of 5% or more of any class of equity Securities of any Borrower or with any Affiliate of a Borrower or of any such holder, except, that Borrowers may enter into and permit to exist: (i) transactions that are on terms that are not less favorable to that Borrower or Subsidiary, as the case may be, than those that might be obtained at the time from Persons who are not such a holder or Affiliate if (a) Borrowers have delivered to Administrative Agent (1) with respect to any transaction involving an amount in excess of $500,000, an Officers Certificate certifying that such transaction complies with this subsection 7.10, (2) with respect to any transaction involving an amount in excess of $1,000,000, a resolution adopted by a majority of the disinterested non-employee directors of the applicable Borrower or Subsidiary approving such transaction and an Officers Certificate certifying that such transaction complies with this subsection 7.10, at the time such transaction is entered into and (c) with respect to any such transaction that involves aggregate payments in excess of $10,000,000 or that is a loan transaction involving a principal amount in excess of $10,000,000, an opinion as to the fairness to the applicable Borrower or Subsidiary from a financial point of view issued by an Independent Financial Advisor at the time such transaction is entered into, (ii) the Services Agreement; (iii) purchases of materials or services from a Joint Venture Supplier by the Borrowers or any of their Subsidiaries in the ordinary course of business on arm's length terms; (iv) any employment, indemnification, noncompetition or confidentiality agreement entered into by Borrowers or any of their Subsidiaries with their employees or directors in the ordinary course of business; (v) loans or advances to employees of Borrowers or their Subsidiaries permitted under subsection 7.3(viii); (vi) the payment of reasonable fees to directors of Borrowers and their Subsidiaries who are not employees of Borrowers or their Subsidiaries; (vii) the grant of stock options or similar rights to employees and directors of Borrowers pursuant to plans approved by the Board of Directors of LVSI and any repurchases of stock or options of Borrowers from such employees to the extent permitted by subsection 7.5; (viii) transactions between or among Borrowers and any of their wholly-owned Subsidiaries; (ix) the transactions contemplated by the Adelson Completion Guaranty; (x) the transactions contemplated by the Cooperation Agreement; (xi) the transactions contemplated by the HVAC Services Agreement; (xii) the use of the Congress Center by the owner of the Sands Expo and Convention Center; provided that Venetian receives fair market value for the use of such property; (xiii) the transactions contemplated by the Phase I-A Lease, the Phase II Lease and any other agreements with respect to the Lido Facility (including, without limitation, the agreements relating to the Phase I-A Non-Recourse Loan); (xiv) [Intentionally omitted]; (xv) [Intentionally omitted]; (xvi) Borrowers may enter into and perform their obligations under a gaming operations lease agreement with Phase II Subsidiary relating to the casino to be in the casino resort owned by the Phase II Subsidiary on terms substantially similar to those of the Casino Lease except that (a) the rent payable under such lease shall be equal to all revenues derived from such casino minus the sum of (1) the operating costs related to such casino (including an allocated portion (based on gaming revenue) of the Borrower's administrative costs related to its gaming operations) and (2) the lesser of $250,000 or 1.0% of such casino's operating income (or zero if there is an operating loss) (determined in accordance with GAAP), (b) the Borrowers may agree that they shall operate the casino in the casino resort owned by 86 the Phase II Subsidiary and the casino in the Project in substantially similar manners and (c) the Borrowers may agree to have common gaming and surveillance operations in such casinos (based on equal allocations of revenues and operating costs). (xvii) employees of Interface may participate in the Las Vegas Sands Inc. 401(k) Retirement Plan if Interface reimburses the Borrowers for a pro rata portion of the administrative expenses of such plan based on the number of employees of each of Interface and LVSI participating in such plan; (xviii) transactions contemplated by the Interface Lease; (xix) the Borrowers may reimburse Yona Aviation Services, Inc., or its successors for its operating and lease costs related to the use of its aircraft by the Borrower's employees (based on the actual allocated costs and time of usage); (xx) transactions contemplated by the Restaurant Leases; and (xxi) transactions contemplated by the Billboard Master Lease and the other Master Leases. 7.11 Disposal of Subsidiary Stock. - ---- ----------------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of Venetian or any of Borrowers' Subsidiaries (other than the sale of preferred membership interests in Venetian to Adelson or an Affiliate of Adelson), except (i) to qualify directors if required by applicable law and (ii) to the extent required by any Nevada Gaming Authority in order to preserve a material Gaming License. 7.12 Conduct of Business. - ---- -------------------- Borrowers shall not, and shall not permit any of their Subsidiaries to, engage in any business other than (i) in the case of LVSI, the casino gaming, hotel, retail and entertainment mall and resort business and any activity or business incidental, directly related or similar thereto (including operating the conference center and meeting facilities), or any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, recreation, convention, trade show, meeting, retail sales or other activity or business designated to promote, market, support, develop, construct or enhance the casino gaming, hotel, retail and entertainment mall and resort business operated by Borrowers and their Subsidiaries, including, without limitation, participating in the Supplier Joint Ventures and ownership of Mall Manager, Phase II Manager and Venetian, (ii) in the case of Venetian and its Subsidiaries (other than those listed in clause (iii) below), (a) development, construction and the operation of the Project, the Phase I-A Project and the Guggenheim Projects, (b) the casino gaming, hotel, retail and entertainment mall and resort business (including operating a conference center and meeting facilities) at the Project, the Phase I-A Project and the Guggenheim Projects and any activity or business incidental, directly related or similar thereto, or any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, recreation, convention, trade show, meeting, retail sales, or other activity or business designated to promote, market, support, develop, construct or enhance the casino gaming, hotel, retail and entertainment mall and resort business operated at the Project by Borrowers and their Subsidiaries, including, without limitation, the creation of the Phase I-A Subsidiary and the Phase I-A Project and participating in the Supplier Joint Venturers, and (c) ownership of equity interests in Subsidiaries, including the Intermediate Holding Companies and (iii) in the case of Intermediate Holding Companies, the ownership of equity interests in Mall Direct Holdings, Phase II Direct Holdings and the delivery of guarantees in favor of the Lenders, the Mortgage Noteholders and the holders of the Subordinated Notes. Borrower shall not permit the Excluded Subsidiaries set forth below to engage in any business other than (i) in the case of Mall Manager and Phase II Manager, ownership of 1% managing membership interests in Mall Subsidiary and Mall Direct Holdings and Phase II Direct Holdings and Phase II Subsidiary, respectively, (ii) in the case of New Mall Subsidiary, ownership of the Mall and other matters reasonably incidental thereto; (iii) in the case of Mall Direct Holdings and Phase II Direct Holdings, ownership of equity interests in Mall Subsidiary and Phase II Subsidiary, respectively; (iv) in the case of Mall Subsidiary, ownership of equity interests in New Mall Subsidiary; (v) Mall Manager may hold the equity interests in New Mall Manager and (vi) in the case of New Mall Manager, ownership of a 1% managing membership interest in New Mall Subsidiary. 87 7.13 Certain Restrictions on Changes to Operative Documents, Permits, - ---- ---------------------------------------------------------------- Project Budget or Project Schedule. ----------------------------------- A. Modifications of Certain Operative Documents and Permits; New Material Contracts or Permits. Borrowers shall not, and shall not permit any of their Subsidiaries to, agree to any material amendment to, or waive any of its material rights under, any Permit or Material Contract or enter into new Material Contracts or Permits (it being understood that any Material Contracts which are covered by clause B or C below shall also be subject to the restrictions set forth therein) without in each case obtaining the prior written consent of Requisite Lenders if in any such case, such amendment or waiver or new Material Contract or Permit could reasonably be expected to have a Material Adverse Effect or otherwise adversely affect Lenders in any material respect. B. Amendments of Documents Relating to Other Indebtedness. Borrowers shall not, and shall not permit any of their Subsidiaries to, amend or otherwise change the terms of any Financing Agreements (other than the Loan Documents) or permit the termination thereof (other than in accordance with the terms thereof), or enter into any new Financing Agreements or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate or fees on such Other Indebtedness, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto or otherwise change such event of default in a manner more favorable to the Borrower or such Subsidiary than the existing event of default), change the commitment thereunder, change the redemption, prepayment or defeasance provisions thereof, change the subordination provisions thereof (or of any guaranty thereof), or change any collateral therefor (other than to release such collateral), or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of the Indebtedness or obligations evidenced thereby (or a trustee or other representative on their behalf) which would be materially adverse to Borrowers, such Subsidiary or Lenders, provided, that (i) Borrowers may modify the terms of the Interim Mall Credit Facility or any agreement relating thereto to the extent expressly permitted by the Intercreditor Agreement, (ii) Borrowers may amend the terms of any other Financing Agreement solely to increase the principal amount thereof to the extent expressly permitted by the Intercreditor Agreement and (iii) Borrowers may enter into an Approved Equipment Funding Commitment to the extent permitted by the definition of such term and may amend, supplement or terminate an existing Approved Equipment Funding Commitment for the purpose of replacing all or a portion of it with such new Approved Equipment Funding Commitment. C. Certain Other Restrictions on Amendments. Borrowers shall not, and shall not permit any of their Subsidiaries to, agree to any material amendment to, or waive any of its material rights under the Cooperation Agreement which would require the consent of the Administrative Agent pursuant to Article XIV, Section 26 thereof, including, but not limited to, any material amendment to, or any waiver of material rights under Article III, Sections 1 and 3, Article IV, Section 1, Article IX(b)-(e), Articles X-XII and Article XIV, Sections 1, 3, 4, 6, 7, 8, 14 and 26, without obtaining the prior written consent of the Administrative Agent, which consent shall not be unreasonably withheld or delayed. D. Consent to Certain Agreements. Notwithstanding the foregoing provisions of this subsection 7.13, on or after the Closing Date, Borrowers may enter into (i) the HVAC Services Agreement (and any amendments thereto), (ii) the FF&E Facility Agreement (2001) (and any amendments thereto) and (iii) the Cooperation Agreement (and any amendments thereto), in each case, in form and substance satisfactory to the Administrative Agent; and (iv) the Fourth Amendment to Term Loan and Security Agreement to be entered into among the FF&E Lenders, Venetian and LVSI, either on (x) the terms set forth in Exhibit XXI and such other terms as are satisfactory in form and substance to the Administrative Agent or (y) such terms as are satisfactory in form and substance to the Administrative Agent. The Administrative Agent is hereby authorized by the Lenders and the Arranger to execute, deliver and perform that certain amended and restated Conforming Adelson L/C Drawing Agreement (the "Amended and Restated Conforming Adelson L/C Drawing Agreement") in substantially the form of Exhibit XX attached hereto and to request the release of the Conforming Adelson L/C held on the date hereof by the Conforming Adelson L/C Drawing Agent in accordance with the terms of the Amended and Restated Conforming Adelson L/C Drawing Agreement. 7.14 Consolidated Capital Expenditures. - ---- ---------------------------------- Borrowers shall not, and shall not permit their Subsidiaries to, make or incur Consolidated Capital Expenditures, in any four Fiscal Quarter period indicated below, in an aggregate amount in excess of the corresponding amount (the "Maximum Consolidated Capital Expenditures Amount") set forth below opposite such four Fiscal Quarter period; provided that the Maximum Consolidated Capital Expenditures Amount for any four Fiscal Quarters shall be increased by 88 an amount equal to the excess, if any, of the Maximum Consolidated Capital Expenditures Amount for the previous four Fiscal Quarter period over the actual amount of Consolidated Capital Expenditures for such previous four Fiscal Quarter period:
Maximum Four Fiscal Consolidated Capital Quarter Expenditures Amount ==================================== ==================== Fiscal Quarter ending December 31, $15,000,000 1999, Fiscal Quarter ending March 31, 2000, Fiscal Quarter ending June 30, 2000 and Fiscal Quarter ending September 30, 2000 Fiscal Quarter ending December 31, $25,000,000 2000, Fiscal Quarter ending March 31, 2001 and Fiscal Quarter ending June 30, 2001 Fiscal Quarter ending September 30, $33,000,000 2001, Fiscal Quarter ending December 31, 2001, Fiscal Quarter ending March 31, 2002, Fiscal Quarter ending June 30, 2002, Fiscal Quarter ending September 30, 2002, Fiscal Quarter ending December 31, 2002, Fiscal Quarter ending March 31, 2003 and Fiscal Quarter ending June 30, 2003
;provided further (x) that the aggregate amount of construction costs expended by Borrowers on the Guggenheim Project shall not exceed $38,000,000, and (y) the aggregate amount of construction costs expended by Borrowers on the construction of the Phase I-A Tower and expansion of the parking garage described under clause (ii) of the definition of Phase I-A Tower (excluding any costs associated with the construction of the HVAC Component incurred pursuant any HVAC Services Agreements) shall not exceed $30,000,000; provided, however, that upon the execution by all parties thereto of the Lido Facility Agreement, the HVAC Services Agreement (as it relates to the Phase I-A Tower) and the Fourth Amendment to Term Loan Agreement and Security Agreement and with the consent of Lenders having or holding at least 66 2/3% of the sum of the aggregate Loans and unused Commitment of all Lenders, such amount described in clause (y) shall be increased to $250,000,000. 7.15 Fiscal Year. - ---- ------------ Neither Borrower shall change its Fiscal Year-end from December 31. 7.16 Zoning and Contract Changes and Compliance. - ---- ------------------------------------------- Without the prior written approval of the Administrative Agent, the Borrowers shall not, and shall not permit any of their Subsidiaries to, initiate or consent to any zoning downgrade of the Mortgaged Property or seek any material variance under any existing zoning ordinance or use or permit the use of the Mortgaged Property in any manner that could result in such use becoming a non-conforming use (other than a non-conforming use permissible under automatic grandfathering provisions) under any zoning ordinance or any other applicable land use law, rule or regulation. The Borrowers shall not, and shall not permit any of their Subsidiaries to, initiate or consent to any change in any laws, requirements of Governmental Authorities or obligations created by private contracts which now or hereafter could reasonably be likely to materially and adversely affect the ownership, occupancy, use or operation of the Mortgaged Property without the prior written consent of the Administrative Agent. 7.17 No Joint Assessment; Separate Lots. - ---- ----------------------------------- Without the prior written approval of the Administrative Agent, which approval may be granted, withheld, conditioned or delayed in its sole discretion, the Borrowers shall not suffer, permit or initiate, and shall not permit any of their Subsidiaries to, suffer, permit or initiate, the joint assessment of the Mortgaged Property (i) with any other real property constituting a separate tax lot and (ii) with any portion of the Mortgaged Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any Taxes which may be levied against any such personal property shall be assessed or levied or charged to the Mortgaged 89 Property as a single lien. The Mortgaged Property is comprised of one or more parcels, each of which, to the knowledge of the Borrowers, constitutes a separate tax lot and none of which constitutes a portion of any other tax lot. 7.18 Certain Covenants Applicable to New Mall Subsidiary and Other Mall - ---- ------------------------------------------------------------------ Related Companies. ------------------ A. Line of Business. Borrowers shall not permit New Mall Subsidiary to engage in any business other than (i) acquiring, developing, constructing, owning, holding, managing, marketing and operating of the Mall, (ii) any activity and business incidental, directly related or similar thereto, and (iii) engaging in any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto including any retail, restaurant, entertainment or other activity or business designed to promote, market, support, develop, construct or enhance the retail, restaurant and entertainment business of the Mall (including, owning and operating joint ventures to supply materials or services for the construction or operation of the Mall). Borrowers shall not permit Mall Direct Holdings, Mall Subsidiary or Mall Manager to engage in any business or any transaction except (i) Mall Direct Holdings may hold equity interests in Mall Subsidiary, (ii) Mall Subsidiary may hold equity interests in New Mall Subsidiary, (iii) Mall Manager may hold a 1% managing membership interest in Mall Direct Holdings and Mall Subsidiary and may own the equity interests in New Mall Manager and (iv) New Mall Manager may hold a 1% managing membership interest in New Mall Subsidiary. B. Restrictions on Investment. Borrowers shall not permit New Mall Subsidiary to purchase or acquire any Securities, loan, advance, capital contribution or other investment of any kind except (i) advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business, (ii) any such investments in Cash Equivalents and similar liquid Investments permitted under the Financing Agreements to which it is a party; (iii) any investments in Joint Ventures with third parties to develop and operate restaurants in the Mall in an aggregate amount not to exceed $5,000,000 at any time; (iv) other such investments reasonably necessary for the operation, maintenance and improvement of the Mall in an aggregate amount not to exceed $2,500,000 at any time; (v) loans or advances to employees made in the ordinary course of business of the New Mall Subsidiary in an aggregate amount not to exceed $500,000 at any time; and (vi) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to New Mall Subsidiary or in satisfaction of judgments. C. Affiliate Transactions. Borrowers shall not permit New Mall Subsidiary to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service), with any holder of 5% or more of any class of equity Securities of any Borrower or New Mall Subsidiary or with any Affiliate of a Borrower or New Mall Subsidiary or any such holder, provided that New Mall Subsidiary may enter into or permit to exist (i) transactions that are not less favorable to New Mall Subsidiary than those that might be obtained at the time from Persons who are not such a holder or Affiliate if Borrowers have delivered to Administrative Agent (a) with respect to any transaction involving an amount in excess of $500,000, an Officers Certificate certifying that such transaction complies with this clause (i), (b) with respect to any transaction involving an amount in excess of $1,000,000, a resolution adopted by a majority of the disinterested non-employee directors of the Borrowers approving such transaction and an Officers Certificate certifying that such transaction complies with this clause (i) and (c) with respect to any such transaction that involves aggregate payments in excess of $10,000,000 or that is a loan transaction involving a principal amount in excess of $10,000,000, an opinion as to the fairness to New Mall Subsidiary from a financial point of view issued by an Independent Financial Advisor at the time such transaction is entered into, (ii) transactions contemplated or permitted by the Sale and Contribution Agreement, the Second Sale and Contribution Agreement dated December 20, 1999 between Mall Subsidiary and New Mall Subsidiary, the Permanent Mall Loan Agreement as in effect on the date hereof, the HVAC Services Agreements, the Services Agreement, the Restaurant Leases, the Billboard Master Lease and the other Master Leases (as defined in that certain FADAA Limited Waiver dated as of November 12, 1999 among inter alia Borrowers, Mall Construction Subsidiary and Scotiabank as bank agent) and the Cooperation Agreement, (v) any guarantees by Adelson of Indebtedness of New Mall Subsidiary, (vi) purchases of materials or services from a Joint Venture Supplier by the New Mall Subsidiary in the ordinary course of business on arm's length terms; (vii) any employment, indemnification, noncompetition or confidentiality agreement entered into by New Mall Subsidiary with its employees or directors in the ordinary course of business, (viii) loans or advances to employees of New Mall Subsidiary, but in any event not to exceed $500,000 in the aggregate outstanding at any one time and (ix) the payment of reasonable fees to directors of New Mall Subsidiary or its managing member who are not employees of New Mall Subsidiary. D. Restricted Junior Payments. Borrowers shall not permit New Mall Subsidiary, Mall Subsidiary, Mall Direct Holdings, Mall Manager or New Mall Manager (the "Excluded Mall Subsidiaries") to make any payments or distributions which would constitute Restricted Junior Payments described in clauses (i) 90 through (iii) inclusive of the definition of Restricted Junior Payments if the reference to Borrower in each such clause were a reference to the applicable Excluded Mall Subsidiary unless such payments or distributions are made (i) to the Borrowers or their Subsidiaries or another Excluded Mall Subsidiary (for further distribution to Borrowers or their Subsidiaries) or (ii) pro rata on all equity interests of the applicable Excluded Mall Subsidiary (so that Borrowers receive a portion of such payment or distribution equal to the direct or indirect ownership interest of Borrowers in such Excluded Mall Subsidiary). 7.19 Limitation on Declaration of Restricted Subsidiaries. - ---- ----------------------------------------------------- Borrowers shall not declare or permit to be designated as a "Restricted Subsidiary" under either of the Mortgage Note Indenture or Subordinated Notes Indenture any Affiliate which is an Excluded Subsidiary. 7.20 Payments to Adelson. - ---- -------------------- Borrowers shall not directly or indirectly make any payment to or for the benefit of Adelson until the Additional Contingent Claims shall be finally determined and paid in full except for (i) payments made pursuant to and as permitted by the Adelson Subordination Agreement, (ii) payments made in respect of Adelson's taxes, salary and as reimbursement for reasonable expenses, in each case, if and to the extent permitted under the Facility Agreements, and (iii) payments made to Affiliates that are required under the Cooperation Agreement or any other arm's-length agreement entered into with an Affiliate, provided that nothing contained herein shall be deemed to permit any such payment to or for the benefit of Adelson if such payment shall be otherwise prohibited or restricted under any other provision of this Agreement (including, without limitation, subsections 7.5 or 7.10) or any other agreement or document. 7.21 Interest Payments. - ---- ------------------ On or prior to October 22, 2001, the Borrowers agree to provide a $12.5 million letter of credit (which amount shall be reduced on a quarterly basis to reflect interest payments made) to the Lenders to support interest payments on the Loans through October 31, 2002 on terms satisfactory to the Administrative Agent and issued by a financial institution acceptable to the Administrative Agent; provided, however that such letter of credit shall be released upon the earlier of (x) October 31, 2002 or (y) immediately following the first Fiscal Quarter period ending after September 30, 2001 in which Consolidated Adjusted EBITDA equals or exceeds $30 million for such Fiscal Quarter period (without giving effect to cash equity contributions made by Adelson or any of his Affiliates to Borrowers or any Conforming Adelson L/C) so long as no Event of Default or Default is existing and continuing on such date. Section 8. EVENTS OF DEFAULT If any of the following conditions or events set forth in subsections 8.1 through 8.20 inclusive below shall occur or if prior to the Final Completion Date any Disbursement Agreement Event of Default shall occur (any such conditions or events collectively "Events of Default"): 8.1 Failure to Make Payments When Due. - --- ---------------------------------- Failure by Borrowers to pay any installment of principal on any Loan when due, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; failure by Borrowers to pay when due any amount payable to an Issuing Lender in reimbursement of any drawings; or failure by Borrowers to pay any interest on any Loan or any fee or any other amount due under this Agreement within five days after the date due; or 8.2 Default under Other Indebtedness or Contingent Obligations. - --- ----------------------------------------------------------- (i) Failure of any Borrower or any of its Subsidiaries, to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in subsection 8.1) or Contingent Obligations in an individual principal amount of $2,500,000 or more or with an aggregate principal amount of $5,000,000 or more, in each case beyond the end of any grace period provided therefor; or (ii) breach or default by any Borrower or any of its Subsidiaries with respect to any other material term of (a) one or more items of Indebtedness or Contingent Obligations in the individual or aggregate principal amounts referred to in clause (i) above or (b) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness or Contingent Obligation(s), if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise); or 91 8.3 Breach of Certain Covenants. - --- ---------------------------- Failure of Loan Parties to perform or comply with any term or condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement provided that the failure to perform or comply with any such provision incorporated by reference from the Disbursement Agreement shall constitute an Event of Default hereunder only to the extent such failure to perform or comply constitutes a Disbursement Agreement Event of Default; or 8.4 Breach of Warranty. - --- ------------------- Any representation, warranty, certification or other statement made by Borrowers or any of their Subsidiaries in any Loan Document or in any statement or certificate at any time given by Borrowers or any of their Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect on the date as of which made provided that the failure to perform or comply with any such provision incorporated by reference from the Disbursement Agreement shall constitute an Event of Default hereunder only to the extent such failure to perform or to comply constitutes a Disbursement Agreement Event of Default; or 8.5 Other Defaults Under Loan Documents. - --- ------------------------------------ Any Loan Party shall default in the performance of or compliance with any term contained in this Agreement or any of the other Loan Documents, other than any such term referred to in any other subsection of this Section 8, and such default shall not have been remedied or waived within 30 days after the earlier of (i) an officer of Borrowers or such Loan Party becoming aware of such default or (ii) receipt by Borrowers and such Loan Party of notice from Administrative Agent or any Lender of such default provided that the failure to perform or comply with any such provision incorporated by reference from the Disbursement Agreement shall constitute an Event of Default hereunder only to the extent such failure to perform or comply constitutes a Disbursement Agreement Event of Default; or 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. - --- ----------------------------------------------------- (i) A court having jurisdiction in the premises shall enter a decree or order for relief in respect of a Borrower or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against a Borrower or any of its Subsidiaries, under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over a Borrower or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of a Borrower or any of its Subsidiaries, for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of a Borrower or any of its Subsidiaries, and any such event described in this clause (ii) shall continue for 60 days unless dismissed, bonded or discharged; or 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. - --- --------------------------------------------------- (i) A Borrower or any of its Subsidiaries shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or a Borrower or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) a Borrower or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due and in each case a period of 30 days shall have elapsed; or the Board of Directors of a Borrower or any of its Subsidiaries (or any committee thereof) or of its managing member shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (i) above or this clause (ii); or 8.8 Judgments and Attachments. - --- -------------------------- Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $2,500,000 or (ii) in the aggregate at any time an amount in excess of $5,000,000 (in 92 either case not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against a Borrower or any of its Subsidiaries or any of their respective assets and shall remain unpaid and undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any event later than five days prior to the date of any proposed sale thereunder); or 8.9 Dissolution. - --- ------------ Any order, judgment or decree shall be entered against a Borrower or any of its Subsidiaries decreeing the dissolution or split up of such Person and such order shall remain undischarged or unstayed for a period in excess of 30 days; or 8.10 Employee Benefit Plans. - ---- ----------------------- There shall occur one or more ERISA Events which individually or in the aggregate results in or might reasonably be expected to result in liability of a Borrower, or any of its Subsidiaries or any of their respective ERISA Affiliates in excess of $2,500,000 during the term of this Agreement; or there shall exist an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), which exceeds $5,000,000; or 8.11 Change in Control. - ---- ------------------ As a result of any sale, pledge or other transfer, either (a) Adelson and the Related Parties shall cease to beneficially own and control directly or indirectly at least 70% of the issued and outstanding shares of capital stock of LVSI, entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Board of Directors of LVSI; (b) Adelson or any Related Party (as applicable but excluding any of the persons specified in clause (ii) of the definition of Related Parties) shall not have invested the proceeds of any sale, or transfer of shares of LVSI by Adelson or any Related Party (as applicable) in the business of Borrowers (including any Excluded Subsidiary) or (c) LVSI shall cease to own 100% of the equity Securities of Venetian other than any preferred equity of Venetian owned by Interface or another Affiliate of Adelson or (d) Borrowers shall cease to own 100% of the equity securities of each of their Subsidiaries, Mall Manager and Phase II Manager, (e) Mall Manager and Mall Holdings together shall cease to own 100% of Mall Direct Holdings and Phase II Holdings and Phase II Manager together shall cease to own 100% of Phase II Direct Holdings, (f) Mall Direct Holdings shall cease to own not less than 99% of the equity securities in Mall Subsidiary or (g) Mall Subsidiary shall cease to own not less than 80% of the equity securities in New Mall Subsidiary or (h) Mall Manager shall cease to own not less than 100% of the equity securities in New Mall Manager or (i) Phase II Direct Holdings shall cease to own at least 51% of the equity securities in Phase II Subsidiary or (j) the sole managing member of Mall Direct Holdings, Phase II Direct Holdings, Intermediate Holding Companies, Mall Subsidiary and Phase II Subsidiary shall cease to be LVSI, Venetian or (directly or indirectly) a wholly-owned Subsidiary of LVSI or Venetian or (k) the sole managing member of New Mall Subsidiary shall cease to be LVSI, Venetian, or (directly or indirectly) a wholly-owned Subsidiary of LVSI or Venetian or (l) any "Change of Control" (as defined in either of the Indentures) shall occur; or 8.12 Failure of Guaranty; Repudiation of Obligations. - ---- ------------------------------------------------ At any time after the execution and delivery thereof, (i) the Subsidiary Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force or effect (other than in accordance with its terms), or shall be declared null and void by a Governmental Instrumentality of competent jurisdiction, (ii) any Collateral Document shall cease to be in full force and effect (other than by reason of a release of Collateral thereunder in accordance with the terms hereof or thereof, the satisfaction in full of the Obligations or any other termination of such Collateral Document in accordance with the terms hereof or thereof) or shall be declared null and void by a Governmental Instrumentality of competent jurisdiction, or Administrative Agent shall not have or shall cease to have a valid and perfected First Priority Lien in the First Priority Collateral for any reason other than the failure of Administrative Agent or any Lender to take any action within its control, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability prior to the indefeasible payment in full of all Obligations, the cancellation of all outstanding Letters of Credit and the termination of all Commitments, including with respect to future advances by Lenders, under any Loan Document to which it is a party or (vi) the subordination provisions in the Subordinated Notes, the Employee Repurchase Notes, any Completion Guaranty Note or in any other instrument required under any provision of this Agreement to be subordinated to the Obligations shall cease to be enforceable against the holder thereof; or 93 8.13 Default Under or Termination of Operative Documents. - ---- ---------------------------------------------------- Any of the Operative Documents shall terminate or be terminated or canceled, prior to its stated expiration date or either Borrower shall be in default (after the giving of any applicable notice and the expiration of any applicable grace period) or any Affiliate of the Borrowers shall be in default (after the giving of any applicable notice and the expiration of any applicable grace period) under any of the Operative Documents; provided that a default or termination under any Project Document shall constitute an Event of Default hereunder only if such default or termination may reasonably be expected to cause a Material Adverse Effect; or 8.14 Default Under or Termination of Permits. - ---- ---------------------------------------- A Borrower or any of its Subsidiaries shall fail to observe, satisfy or perform, or there shall be a violation or breach of, any of the material terms, provisions, agreements, covenants or conditions attaching to or under the issuance to such Person of any material Permit, including the gaming license held by LVSI or any such Permit or any material provision thereof shall be terminated or fail to be in full force and effect or any Governmental Instrumentality shall challenge or seek to revoke any such Permit if such failure to perform, breach or termination could reasonably be expected to have a Material Adverse Effect; or 8.15 Default Under or Termination of Cooperation Agreement. - ---- ------------------------------------------------------ Any default by Interface shall occur under Article III, Section 3 of the Cooperation Agreement beyond any applicable notice or cure periods; or 8.16 Bankruptcy or Dissolution of New Mall Subsidiary. - ---- ------------------------------------------------- Any event or circumstance described under subsections 8.6 or 8.7 hereof shall occur with respect to New Mall Subsidiary, Mall Subsidiary, New Mall Manager, Mall Manager or Mall Direct Holdings which would constitute an Event of Default if such Excluded Subsidiary were a Subsidiary of Borrowers for purposes of those subsections; or 8.17 Acceleration of Obligations of New Mall Subsidiary. - ---- --------------------------------------------------- New Mall Subsidiary shall be in breach or default with respect to any term of one or more items or Indebtedness or Contingent Obligation(s) in an individual principal amount of $2,500,000 or more or an aggregate principal amount of $5,000,000 or more, if as result thereof the holders of such Indebtedness or Contingent Obligations) (or an agent or trustee acting on their behalf) have caused that Indebtedness or Contingent Obligation(s) to become due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or 8.18 Certain Investments in any Excluded Subsidiary. - ---- ----------------------------------------------- Adelson or any of his Affiliates (other than Borrowers and their wholly-owned Subsidiaries) shall acquire or hold any Investment in any Excluded Subsidiary or any Person which any Excluded Subsidiary controls or holds an Investment other than (a) in the case of New Mall Subsidiary or Phase II Subsidiary, through transactions expressly permitted under subsection 7.18 or purchases of public debt securities in the secondary market and (b) in the case of Phase II Subsidiary or any of its subsidiaries, investments arising through loans, completion guaranties or other guaranties substantially similar to those provided in connection with the development of the Project and permitted under clause (a) of this subsection 8.18; or 8.19 Conforming Adelson L/C. - ---- ----------------------- Except as released as permitted under subsections 2.4B(iii)(n) and Section 7.13, any Conforming Adelson L/C shall cease to be in full force and effect at any time prior to twenty-four (24) months from and after the date of its delivery to Drawing Agent other than following a drawing in full by Drawing Agent or, if permitted under the definition of Conforming Adelson L/C Draw Event, the replacement of such Conforming Adelson L/C with a cash equity contribution in Borrowers in the amount of the Conforming Adelson L/C; or 8.20 Default Under or Termination of the Phase II Lease. - ---- --------------------------------------------------- Any default occurring after the expiration of applicable grace periods under the lease to be entered into by Phase II Subsidiary, as lessor, and Venetian, as lessee, for the Phase II Land and the conference center to be constructed thereon in form and substance satisfactory to Scotiabank, as Administrative Agent, in its sole discretion ("Phase II Lease"), whereby such 94 lease shall terminate or be terminated or cancelled prior to the stated expiration date therefor. THEN (i) upon the occurrence of any Event of Default described in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on the Loans, (b) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (whether or not any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letter of Credit), and (c) all other Obligations shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by Borrowers, and the obligation of each Lender to make any Loan, the obligation of Administrative Agent to issue any Letter of Credit and the right of any Lender to issue any Letter of Credit hereunder shall thereupon terminate, and (ii) upon the occurrence and during the continuation of any other Event of Default, Administrative Agent shall, upon the written request or with the written consent of Requisite Lenders, by written notice to Borrowers, declare all or any portion of the amounts described in clauses (a) and (b) above to be, and the same shall forthwith become, immediately due and payable, and the obligation of each Lender to make any Loan, the obligation of Administrative Agent to issue any Letter of Credit and the right of any Lender to issue any Letter of Credit hereunder shall thereupon terminate; provided that the foregoing shall not affect in any way the obligations of Lenders under subsection 3.3C(i). Any amounts described in clause (b) above, when received by Administrative Agent, shall be held by Administrative Agent pursuant to a cash collateral arrangement reasonably satisfactory to Administrative Agent. Notwithstanding anything contained in the preceding paragraph, if at any time within 60 days after an acceleration of the Loans pursuant to clause (ii) of such paragraph Borrowers shall pay all arrears of interest and all payments on account of principal which shall have become due otherwise than as a result of such acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Potential Events of Default (other than non-payment of the principal of and accrued interest on the Loans, in each case which is due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to Borrowers, may at their option rescind and annul such acceleration and its consequences; but such action shall not affect any subsequent Event of Default or Potential Event of Default or impair any right consequent thereon. The provisions of this paragraph are intended merely to bind Lenders to a decision which may be made at the election of Requisite Lenders and are not intended, directly or indirectly, to benefit Borrowers, and such provisions shall not at any time be construed so as to grant Borrowers the right to require Lenders to rescind or annul any acceleration hereunder or to preclude Administrative Agent or Lenders from exercising any of the rights or remedies available to them under any of the Loan Documents, even if the conditions set forth in this paragraph are met. Section 9. AGENTS 9.1 Appointment. - --- ------------ A. Appointment of Administrative Agent. Scotiabank is hereby appointed Administrative Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Administrative Agent to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. Scotiabank is hereby further appointed Arranger hereunder and under the other Loan Documents and each Lender hereby authorizes Arranger to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. Each Agent agrees to act upon the express conditions contained in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 9 are solely for the benefit of each Agent and Lenders; Borrowers shall have no rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrowers or any of their Subsidiaries. Upon the Closing Date all obligations of Arranger hereunder shall terminate. B. Appointment of Supplemental Agents. It is the purpose of this Agreement and the other Loan Documents that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as agent or trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or any of the other Loan Documents, and in particular in case of the enforcement of any of the Loan Documents, or in case any Agent deems that by reason of any present or future law of any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or in any of the other Loan Documents or take any other action which may be desirable or necessary in connection therewith, it may be necessary that such Agent appoint an additional individual or institution as a 95 separate trustee, co-trustee, collateral agent or collateral co-agent (any such additional individual or institution being referred to herein individually as a "Supplemental Agent" and collectively as "Supplemental Agents"). In the event that an Agent appoints a Supplemental Agent with respect to any Collateral, (i) each and every right, power, privilege or duty expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to an Agent with respect to such Collateral shall be exercisable by and vest in such Supplemental Agent to the extent, and only to the extent, necessary to enable such Supplemental Agent to exercise such rights, powers and privileges with respect to such Collateral and to perform such duties with respect to such Collateral, and every covenant and obligation contained in the Loan Documents and necessary to the exercise or performance thereof by such Supplemental Agent shall run to and be enforceable by either such Agent or such Supplemental Agent, and (ii) the provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to Agent shall inure to the benefit of such Supplemental Agent and all references therein to Agent shall be deemed to be references to Administrative Agent and/or such Supplemental Agent, as the context may require. Should any instrument in writing from Borrowers or any other Loan Party be required by any Supplemental Agent so appointed for more fully and certainly vesting in and confirming to him or it such rights, powers, privileges and duties, Borrowers shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by the appropriate Agent. In case any Supplemental Collateral Agent, or a successor thereto, shall die, become incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Agent, to the extent permitted by law, shall vest in and be exercised by Administrative Agent until the appointment of a new Supplemental Agent. 9.2 Powers and Duties; General Immunity. - --- ------------------------------------ A. Powers; Duties Specified. Each Lender irrevocably authorizes Administrative Agent to take such action on such Lender's behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to Administrative Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Administrative Agent shall have only those duties and responsibilities that are expressly specified in this Agreement and the other Loan Documents. Administrative Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. Administrative Agent shall not have, by reason of this Agreement or any of the other Loan Documents, a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon Administrative Agent any obligations in respect of this Agreement or any of the other Loan Documents except as expressly set forth herein or therein. B. No Responsibility for Certain Matters. Administrative Agent shall not be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any other Loan Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by Administrative Agent to Lenders or by or on behalf of Borrowers to Administrative Agent or any Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of Borrowers or any other Person liable for the payment of any Obligations, nor shall Administrative Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or the use of the Letters of Credit or as to the existence or possible existence of any Event of Default or Potential Event of Default. Anything contained in this Agreement to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof. C. Exculpatory Provisions. Neither Administrative Agent nor any of its officers, directors, employees or agents shall be liable to Lenders for any action taken or omitted by Administrative Agent under or in connection with any of the Loan Documents except to the extent caused by Administrative Agent's gross negligence or willful misconduct. Administrative Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection with this Agreement or any of the other Loan Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until Administrative Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), Administrative Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to rely, 96 and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Borrowers and their Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or (where so instructed) refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6). D. Administrative Agent Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Administrative Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, Administrative Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless the context clearly otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Borrowers or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrowers for services in connection with this Agreement and otherwise without having to account for the same to Lenders. E. Administrative Agent Determinations. To the extent the Administrative Agent is entitled or required to make any determinations under the Intercreditor Agreement, the Adelson Intercreditor Agreement, the Adelson Subordination Agreement or any FF&E Intercreditor Agreement, the Administrative Agent shall make such determinations upon the advice of Requisite Lenders. 9.3 Representations and Warranties; No Responsibility For Appraisal of Credit Worthiness. ------------------ Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Borrowers and their Subsidiaries in connection with the making of the Loans and the issuance of the Letters of Credit hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrowers and their Subsidiaries. Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. 9.4 Right to Indemnity. - --- ------------------- Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify Administrative Agent, to the extent that Administrative Agent shall not have been reimbursed by Borrowers, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Administrative Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Administrative Agent's gross negligence or willful misconduct. If any indemnity furnished to Administrative Agent for any purpose shall, in the opinion of Administrative Agent, be insufficient or become impaired, Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. 9.5 Successor Administrative Agent. - --- ------------------------------- Administrative Agent may resign at any time by giving 30 days' prior written notice thereof to Lenders and Borrowers, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Borrowers and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days' notice to Borrowers, to appoint a successor Administrative Agent (provided that such successor is or simultaneously therewith becomes a Lender). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor 97 Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 9.6 Collateral Documents and Subsidiary Guaranties. - --- ----------------------------------------------- Each Lender hereby further authorizes Administrative Agent, on behalf of and for the benefit of Lenders, to enter into each Collateral Document and Subsidiary Guaranty as secured party or beneficiary (as applicable), and each Lender agrees to be bound by the terms of each Collateral Document and Subsidiary Guaranty; provided that Administrative Agent shall not (i) enter into or consent to any material amendment, modification, termination or waiver of any provision contained in any Collateral Document or Subsidiary Guaranty, or (ii) release any Collateral (except as otherwise expressly permitted or required pursuant to the terms of this Agreement or the applicable Collateral Document), in each case without the prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all Lenders); provided further, however, that, without further written consent or authorization from Lenders, Administrative Agent may execute any documents or instruments necessary to (i) release any Subsidiary from the Subsidiary Guaranty to the extent the stock of such Subsidiary is sold in a transaction permitted under this Agreement or otherwise consented to by Requisite Lenders in accordance with subsection 10.6, (ii) release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted by this Agreement or to which Requisite Lenders have otherwise consented in accordance with subsection 10.6 and (iii) release any Lien encumbering any item of Collateral acquired after the Closing Date the purchase of which was financed with funds from the FF&E Facility Agreement (2001) and the other Collateral permitted under Section 7.2(A)(vi). Anything contained in any of the Loan Documents to the contrary notwithstanding, Borrowers, Administrative Agent and each Lender hereby agree that (X) no Lender shall have any right individually to realize upon any of the Collateral under any Collateral Document, it being understood and agreed that all powers, rights and remedies under the Collateral Documents and each Guaranty may be exercised solely by Administrative Agent for the benefit of Lenders in accordance with the terms thereof, and (Y) in the event of a foreclosure by Administrative Agent on any of the Collateral pursuant to a public or private sale, Administrative Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Administrative Agent, as agent for and representative of Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Administrative Agent at such sale. 9.7 Disbursement Agreement and Intercreditor Agreement. - --- --------------------------------------------------- Each Lender hereby further authorizes Administrative Agent, on behalf of and for the benefit of Lenders, to enter into the Disbursement Agreement, the Intercreditor Agreement, the Adelson Intercreditor Agreement, the Adelson Subordination Agreement, the FF&E Intercreditor Agreement (2001) and any FF&E Intercreditor Agreements and any other intercreditor agreements in the form of the Adelson Intercreditor Agreement entered into by Administrative Agent with any subsequent holders of a Completion Guaranty Note, and each Lender agrees to be bound by the terms of the Disbursement Agreement, the Intercreditor Agreement and each other such intercreditor agreement; provided that Administrative Agent shall not enter into or consent to any amendment, modification, termination or waiver of any provision contained in the Disbursement Agreement, the Intercreditor Agreement or any other such intercreditor agreement without the prior consent of Requisite Lenders (or, if such amendment, modification, termination or waiver would result in a change that under subsection 10.6 would require the consent of all Lenders, then the prior consent of all Lenders). 9.8 Appointment of Lead Arranger after November 14, 1997. - --- ----------------------------------------------------- Scotiabank is hereby appointed Lead Arranger hereunder and under the other Loan Documents and each Lender hereby authorizes such Lead Arranger to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. The Lead Arranger agrees to act upon the express conditions contained in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 9 are solely for the benefit of each of the Lead Arranger and Lenders; Borrowers shall have no rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, the Lead Arranger shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrowers or 98 any of their Subsidiaries. Upon the Closing Date all obligations of the Lead Arranger hereunder shall terminate. Section 10. MISCELLANEOUS 10.1 Assignments and Participations in Loans. - ---- ---------------------------------------- A. General. Subject to subsection 10.1B, each Lender shall have the right at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii) sell participations to any Eligible Assignee or any other Person with the approval of Borrowers in, all or any part of its Commitments or any Loan or Loans made by it or its Letters of Credit or participations therein or any other interest herein or in any other Obligations owed to it; provided that no such sale, assignment, transfer or participation shall, without the consent of Borrowers, require Borrowers to file a registration statement with the Securities and Exchange Commission or apply to qualify such sale, assignment, transfer or participation under the securities laws of any state; provided, further that no such sale, assignment or transfer described in clause (i) above shall be effective unless and until an Assignment Agreement effecting such sale, assignment or transfer shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii) and provided, further that no such sale, assignment, transfer or participation of any Letter of Credit or any participation therein may be made separately from a sale, assignment, transfer or participation of a corresponding interest in the Commitment and the Loans of the Lender effecting such sale, assignment, transfer or participation. Except as otherwise provided in this subsection 10.1, no Lender shall, as between Borrowers and such Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment or transfer of, or any granting of participations in, all or any part of its Commitments or the Loans, the Letters of Credit or participations therein, or the other Obligations owed to such Lender. B. Assignments. (i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of Credit or participation therein, or other Obligation may in whole or in part (a) be assigned, in any amount to another Lender, or to an Affiliate of the assigning Lender or another Lender, or may be pledged to an Eligible Assignee in support of its obligations to such assignee (without releasing the pledging Lender from any of its obligations hereunder), with the giving of notice to Borrowers and Administrative Agent; provided that if such assignment relates to Revolving Loans or Revolving Loan Commitments, the assignee shall represent that it has the financial resources to fulfill its commitments hereunder and such assignment is consented to by Administrative Agent and Issuing Lender (such consent not to be unreasonably withheld or delayed) or (b) be assigned in an aggregate amount of not less than $1,000,000 (or such lesser amount as shall constitute the aggregate amount of the Commitments, Loans, Letters of Credit and participations therein, and other Obligations of the assigning Lender) to any other Eligible Assignee with the consent of Borrowers and Administrative Agent (which consent shall not be unreasonably withheld or delayed); provided that any such assignment in accordance with either clause (a) or (b) above shall effect a pro rata assignment (based on the respective principal amounts thereof then outstanding or in effect) of both the Term Loan Commitment and the Term Loans of the assigning Lender, on the one hand, and the Revolving Loan Commitment and the Revolving Loans of the assigning Lender, on the other hand, except where such Lender does not hold both Revolving Loan Commitments or Revolving Loans and Term Loan Commitments or Term Loans. To the extent of any such assignment in accordance with either clause (a) or (b) above, the assigning Lender shall be relieved of its obligations with respect to its Commitments, Loans, Letters of Credit or participations therein, or other Obligations or the portion thereof so assigned. The assignor or assignee to each such assignment shall execute and deliver to Administrative Agent, for its acceptance and recording in the Register, an Assignment Agreement, together with a processing and recordation fee of $3,500 in respect of assignments, and such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery, acceptance and recordation, from and after the effective date specified in such Assignment Agreement, (y) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (z) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination of 99 this Agreement under subsection 10.9B) and be released from its obligations under this Agreement (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto; provided that, anything contained in any of the Loan Documents to the contrary notwithstanding, if such Lender is the Issuing Lender with respect to any outstanding Letters of Credit such Lender shall continue to have all rights and obligations of an Issuing Lender with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder). The Commitments hereunder shall be modified to reflect the Commitment of such assignee and any remaining Commitment of such assigning Lender and, if any such assignment occurs after the issuance of Notes hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon new Notes shall be issued to the assignee and to the assigning Lender, substantially in the form of Exhibits III-A and III-B annexed hereto, as applicable, with appropriate insertions, to reflect the new Commitments and/or outstanding Loans, as the case may be, of the assignee and the assigning Lender. (ii) Acceptance by Administrative Agent; Recordation in Register. Upon its receipt of an Assignment Agreement executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with the processing and recordation fee referred to in subsection 10.1B(i) and any forms, certificates or other evidence with respect to United States federal income tax withholding matters that such assignee may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if Administrative Agent has consented to the assignment evidenced thereby (to the extent such consent is required pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a counterpart thereof as provided therein (which acceptance shall evidence any required consent of Administrative Agent to such assignment), (b) record the information contained therein in the Register, and (c) give prompt notice thereof to Borrowers. Administrative Agent shall maintain a copy of each Assignment Agreement delivered to and accepted by it as provided in this subsection 10.1B(ii). C. Participations. The holder of any participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except action directly affecting (i) the extension of the scheduled final maturity date of any Loan allocated to such participation, (ii) a reduction of the principal amount of or the rate of interest payable on any Loan allocated to such participation, or (iii) releasing all or substantially all of the Collateral, and all amounts payable by Borrowers hereunder (including amounts payable to such Lender pursuant to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold such participation. Borrowers and each Lender hereby acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5, (a) any participation will give rise to a direct obligation of Borrowers to the participant and (b) the participant shall be considered to be a "Lender". D. Assignments to Federal Reserve Banks. In addition to the assignments and participations permitted under the foregoing provisions of this subsection 10.1, any Lender may assign and pledge all or any portion of its Loans, the other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided that (i) no Lender shall, as between Borrowers and such Lender, be relieved of any of its obligations hereunder as a result of any such assignment and pledge and (ii) in no event shall such Federal Reserve Bank be considered to be a "Lender" or be entitled to require the assigning Lender to take or omit to take any action hereunder. E. Information. Each Lender may furnish any information concerning Borrowers and their Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants), subject to subsection 10.20. F. Representations of Lenders. Each Lender listed on the signature pages hereof hereby represents and warrants (i) that it is an Eligible Assignee described in clause (A) of the definition thereof; (ii) that it has experience and expertise in the making of loans such as the Loans; and (iii) that it will make its Loans for its own account in the ordinary course of its business and without a view to distribution of such Loans within the meaning of the Securities Act or the Exchange Act or other federal or state securities laws (it being understood that, subject to the provisions of this subsection 10.1, the disposition of such Loans or any interests therein shall at all times remain within its exclusive control). Each Lender that becomes a party hereto pursuant 100 to an Assignment Agreement shall be deemed to agree that the representations and warranties of such Lender contained in Section 2(c) of such Assignment Agreement are incorporated herein by this reference. 10.2 Expenses. - ---- --------- Whether or not the transactions contemplated hereby shall be consummated, Borrowers agree to pay promptly (i) all the actual and reasonable costs and expenses of preparation of the Loan Documents and any consents, amendments, waivers or other modifications thereto; (ii) all the costs of furnishing all opinions by counsel for Borrowers (including any opinions requested by Lenders as to any legal matters arising hereunder) and of Borrowers' performance of and compliance with all agreements and conditions on its part to be performed or complied with under this Agreement and the other Loan Documents including with respect to confirming compliance with environmental, insurance and solvency requirements; (iii) the reasonable fees, expenses and disbursements of counsel to Administrative Agent in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Borrowers; provided that the fees and costs of such counsel for the preparation and negotiation of the Loan Documents may not exceed $350,000; (iv) all the actual costs and reasonable expenses of creating and perfecting Liens in favor of Administrative Agent on behalf of Lenders pursuant to any Collateral Document, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums, and reasonable fees, expenses and disbursements of counsel to Administrative Agent and of counsel providing any opinions that Administrative Agent or Requisite Lenders may request in respect of the Collateral Documents or the Liens created pursuant thereto; (v) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any auditors, accountants or appraisers and any environmental or other consultants, advisors and agents employed or retained by Administrative Agent or its counsel) of obtaining and reviewing any appraisals provided for under any Loan Documents or the Disbursement Agreement, any environmental audits or reports provided for under subsection 6.8B or under the Disbursement Agreement; and (vi) the custody or preservation of any of the Collateral; (vii) all other actual and reasonable costs and expenses incurred by Administrative Agent in connection with the syndication of the Commitments and the negotiation, preparation and execution of the Loan Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (viii) after the occurrence of an Event of Default, all costs and expenses, including reasonable attorneys' fees (including allocated costs of internal counsel) and costs of settlement, incurred by Administrative Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents by reason of such Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of any Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. 10.3 Indemnity. - ---- ---------- In addition to the payment of expenses pursuant to subsection 10.2, whether or not the transactions contemplated hereby shall be consummated, Borrowers agree to defend (subject to Borrowers' selection of counsel with the consent of the Indemnitee, which shall not be unreasonably withheld), indemnify, pay and hold harmless Administrative Agent, Arranger and Lenders, and the officers, directors, employees, agents and affiliates of Administrative Agent, Arranger and Lenders (collectively called the "Indemnitees"), from and against any and all Indemnified Liabilities (as hereinafter defined); provided that Borrowers shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise solely from the gross negligence or willful misconduct of that Indemnitee as determined by a final judgment of a court of competent jurisdiction. As used herein, "Indemnified Liabilities" means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, actions, judgments, suits, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Loan Documents or the Project 101 Documents or the transactions contemplated hereby or thereby (including Lenders' agreement to make the Loans hereunder or the use or intended use of the proceeds thereof or the use or intended use of any thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of any Guaranty), (ii) the statements contained in the commitment letter delivered by any Lender to Borrowers with respect thereto, or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Borrowers or any of their Subsidiaries. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this subsection 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, Borrowers shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. 10.4 Set-Off; Security Interest in Deposit Accounts. - ---- ----------------------------------------------- In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is hereby authorized by Borrowers at any time or from time to time, without notice to Borrowers or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by that Lender to or for the credit or the account of Borrowers against and on account of the obligations and liabilities of Borrowers to that Lender under this Agreement, the Letters of Credit and participations therein and the other Loan Documents, including all claims of any nature or description arising out of or connected with this Agreement, the Letters of Credit and participations therein or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any demand hereunder or (ii) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 9 and although said obligations and liabilities, or any of them, may be contingent or unmatured. Borrowers hereby further grants to Administrative Agent and each Lender a security interest in all deposits and accounts maintained with Administrative Agent or such Lender as security for the Obligations. 10.5 Ratable Sharing. - ---- ---------------- Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms of this Agreement), by realization upon security, through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to that Lender hereunder or under the other Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify Administrative Agent and each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrowers or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrowers expressly consent to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by Borrowers to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. 10.6 Amendments and Waivers. - ---- ----------------------- A. No amendment, modification, termination or waiver of any provision of this Agreement or of the Notes, and no consent to any departure by Borrowers therefrom, shall in any event be effective without the written concurrence of Requisite Lenders; provided that no amendment, modification, termination, waiver or consent shall, unless approved in writing and signed by 102 Borrowers and all the Lenders, do any of the following: reduce the principal of, or interest on, the Loans or any fees hereunder (other than any waiver of any increase in the interest rate applicable to any of the Loans pursuant to subsection 2.2E); change in any manner the definition of "Pro Rata Share" or the definition of "Requisite Lenders" (it being understood that, with the consent of Requisite Lenders, additional extensions of credit pursuant to this Agreement may be included in "Pro Rata Share" and "Requisite Lenders" on substantially the same terms as the Term Loan Commitments and the Term Loans and the Revolving Loan Commitments and the Revolving Loans); change in any manner any provision of this Agreement which, by its terms, expressly requires the approval or concurrence of all Lenders; postpone any date fixed for the payment in respect of principal of, or interest on, the Loans or any fees hereunder; release any Lien granted in favor of Administrative Agent with respect to 25% or more in aggregate fair market value of the Collateral; releases any Subsidiary Guarantor from its obligations under its Guaranty, other than in accordance with the terms of the Loan Documents; change in any manner the provisions contained in subsections 7.21, 9.1 or this subsection 10.6; or waive any provision of subsection 7.21; provided further that any such amendment, modification, termination, waiver or consent which increases the amount of the Commitment for any Lender shall be effective only if evidenced by a writing signed by or on behalf of such Lender. B. In addition, (i) any amendment, modification, termination or waiver of any of the provisions contained in Section 4 shall be effective only if evidenced by a writing signed by or on behalf of Administrative Agent and Requisite Lenders, (ii) no amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the Lender which is the holder of that Note except that to the extent such amendment, modification, termination or waiver would not otherwise require the consent of all Lenders, only the holder of such Note or Notes up to the amount constituting Requisite Lenders shall be required hereunder and (iii) no amendment, modification, termination or waiver of any provision of Section 9 or of any other provision of this Agreement which, by its terms, expressly requires the approval or concurrence of Administrative Agent shall be effective without the written concurrence of Administrative Agent. C. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrowers in any case shall entitle Borrowers to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this subsection 10.6 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by Borrowers, on Borrowers. To the extent the Bank Agent is entitled or required to make any determinations under the Intercreditor Agreement, the Adelson Intercreditor Agreement or any FF&E Intercreditor Agreement, Bank Agent shall make such determinations upon the advice of Requisite Lenders. D. Notwithstanding the foregoing, if any Lender does not agree to any amendment hereunder requiring the consent of all Lenders and consented to by Lenders having or holding at least 66 2/3% of the sum of the aggregate Loans and unused Commitment of all Lenders, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in subsection 10.1, including, without limitation, as a condition precedent to such assignment, (i) Administrative Agent's consent to the assignee unless not otherwise required by subsection 10.1 and (ii) payment of the registration fee set forth in subsection 10.1B(i)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) such Lender shall have received irrevocable payment in full in cash of an amount equal to the outstanding principal of its Loans, accrued interest thereon, and accrued fees and all other Obligations and other amounts payable to it hereunder from the assignee or the Borrowers and (ii) such assignment will result in such amendment being approved. 10.7 Certain Matters Affecting Lenders. - ---- ---------------------------------- (a) If (i) the Nevada Gaming Commission shall determine that any Lender does not meet suitability standards prescribed under the Nevada Gaming Regulations or (ii) any other gaming authority with jurisdiction over the gaming business of Borrowers shall determine that any Lender does not meet its suitability standards (in any such case, a "Former Lender"), the Administrative Agent or the Borrowers shall have the right (but not the duty) to designate bank(s) or other financial institution(s) (in each case, a "Substitute Lender," which may be any Lender or Lenders that agree to become a Substitute Lender and to assume the rights and obligations of the Former Lender, subject to receipt by the Administrative Agent of evidence that such Substitute Lender is an Eligible Assignee. The Substitute Lender shall assume the rights and obligations of the Former Lender under this Agreement. Borrowers shall bear the costs and expenses of any Lender required by the Nevada Gaming Commission, or any other gaming authority with jurisdiction over the gaming business of Borrowers, to file an application for a finding of suitability in connection with the investigation of 103 an application by Borrowers for a license to operate a gaming establishment, in connection with such application for a finding of suitability. (b) Notwithstanding the provisions of subsection (a) of this subsection 10.7, if any Lender becomes a Former Lender, and if the Administrative Agent or the Borrowers fail to find a Substitute Lender pursuant to subsection (a) of this subsection 10.7 within any time period specified by the appropriate gaming authority for the withdrawal of a Former Lender (the "Withdrawal Period"), the Borrowers shall immediately prepay in full the outstanding principal amount of Loans made by such Former Lender, together with accrued interest thereon to the earlier of (x) the date of payment or (y) the last day of any Withdrawal Period. 10.8 Independence of Covenants. - ---- -------------------------- All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Event of Default if such action is taken or condition exists. 10.9 Notices. - ---- -------- Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Administrative Agent shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or (i) as to Borrowers and Administrative Agent, such other address as shall be designated by such Person in a written notice delivered to the other parties hereto and (ii) as to each other party, such other address as shall be designated by such party in a written notice delivered to Administrative Agent. 10.10 Survival of Representations, Warranties and Agreements. - ----- ------------------------------------------------------- A. All representations, warranties and agreements made herein shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit hereunder. B. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of Borrowers set forth in subsections 2.6D, 2.7, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections 9.2C, 9.4, 10.5 and 10.20 shall survive the payment of the Loans and the reimbursement of any amounts drawn thereunder, and the termination of this Agreement. 10.11 Failure or Indulgence Not Waiver; Remedies Cumulative. - ----- ------------------------------------------------------ No failure or delay on the part of Administrative Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. 10.12 Marshalling; Payments Set Aside. - ----- -------------------------------- Neither Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of Borrowers or any other party or against or in payment of any or all of the Obligations. To the extent that Borrowers make a payment or payments to Administrative Agent or Lenders (or to Administrative Agent for the benefit of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 104 10.13 Severability. - ----- ------------- In case any provision in or obligation under this Agreement or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.14 Obligations Several; Independent Nature of Lenders' Rights. - ----- ----------------------------------------------------------- The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitments of any other Lender hereunder. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose. 10.15 Headings. - ----- --------- Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 10.16 Applicable Law. - ----- --------------- THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 10.17 Successors and Assigns. - ----- ----------------------- This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders (it being understood that Lenders' rights of assignment are subject to subsection 10.1). Neither Borrowers' rights or obligations hereunder nor any interest therein may be assigned or delegated by Borrowers without the prior written consent of all Lenders. 10.18 Consent to Jurisdiction and Service of Process. - ----- ----------------------------------------------- ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWERS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, BORROWERS, FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, IRREVOCABLY (I) ACCEPT GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVE ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREE THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO BORROWERS AT THEIR ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.9; (IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER BORROWERS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREE THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST BORROWERS IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREE THAT THE PROVISIONS OF THIS SUBSECTION 10.18 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. 105 10.19 Waiver of Jury Trial. - ----- --------------------- EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on this waiver in entering into this Agreement, and that each will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.19 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. 10.20 Confidentiality. - ----- ---------------- Each Lender shall hold all non-public information obtained pursuant to the requirements of this Agreement in accordance with such Lender's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking or investment practices, it being understood and agreed by Borrowers that in any event a Lender may make disclosures to Affiliates of such Lender or disclosures reasonably required by any bona fide assignee, transferee or participant in connection with the contemplated assignment or transfer by such Lender of any Loans or any participations therein (provided that such assignee, transferee or participant agrees to also be bound by this subsection 10.20), or disclosures required or requested by any governmental agency or representative thereof or pursuant to legal process; provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify Borrowers of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information; and provided, further that in no event shall any Lender be obligated or required to return any materials furnished by Borrowers or any of their Subsidiaries. 10.21 Counterparts; Effectiveness. - ----- ---------------------------- This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective as of the date hereof. 10.22 Restriction on Adelson Indebtedness. - ----- ------------------------------------ Each of the Borrowers and Adelson agrees that the Borrowers and their Subsidiaries shall not incur any Indebtedness owed to Adelson or any of his Affiliates (other than with respect to the Affiliates of Adelson, the Borrowers and their Subsidiaries), except upon terms and conditions (including subordination provisions) that are in form and substance satisfactory to the Administrative Agent and Adelson. The foregoing restriction shall not apply to any Indebtedness of the Borrowers and their Subsidiaries (i) existing on the Closing Date and held on the Closing Date by a Person or Persons unaffiliated with Adelson, (ii) incurred in connection with any FF&E Facility Agreement or any financing of the HVAC Component or similar equipment or property, (iii) incurred under the Phase I-A Subsidiary Non-Recourse Loan, (iv) incurred under the Completion Guaranty Loan or (v) incurred under Employee Repurchase Notes. Adelson acknowledges that the execution, delivery and performance of this Agreement shall not alter, modify or affect in any manner the subordination provisions applicable to Indebtedness in respect of the Completion Guaranty Loan. Nothing in this Section 10.22 shall in any way modify the provisions of Section 7.5. 106 10.23 Gaming Authorities. - ----- ------------------- The Arranger, the Administrative Agent and each Lender agree to cooperate with the Nevada Gaming Authorities in connection with the administration of their regulatory jurisdiction over the Borrowers and their Subsidiaries, including, without limitation, to the extent not inconsistent with the internal policies of such Lender or Issuing Lender and any applicable legal or regulatory restrictions the provision of such documents or other information as may be requested by any such Nevada Gaming Authority relating to the Arranger, the Administrative Agent or any of the Lenders, or Borrowers or any of their Subsidiaries, or to the Loan Documents. Notwithstanding any other provision of the Agreement, Borrowers expressly authorize each Agent and Lender to cooperate with the Nevada Gaming Authorities as described above. 10.24 Automatic Amendment of this Agreement. - ----- -------------------------------------- If the Borrowers shall not have entered into an amendment to the FF&E Facility Agreement described in clause (i) of the definition thereof in accordance with the terms of Section 7.13D on or before September 30, 2001, the provisions of Sections 6 and 7 (and any definitions used in such sections) shall be automatically amended so that such provisions are the same as those in the Existing Credit Agreement immediately prior to the effectiveness of this Agreement. Borrowers agree to execute any documents reasonably requested by the Administrative Agent to confirm the foregoing. [Remainder of page intentionally left blank] 107 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BORROWERS: LAS VEGAS SANDS, INC. By: /s/David Friedman ------------------------------- Name: David Friedman Title: Secretary Notice Address: 3355 Las Vegas Boulevard South Room 1A Las Vegas, Nevada 89109 Attention: General Counsel Telefax: (702) 733-5499 VENETIAN CASINO RESORT, LLC By: Las Vegas Sands, Inc. its managing member By: /s/David Friedman ------------------------------- Name: David Friedman Title: Secretary Notice Address: 3355 Las Vegas Boulevard South Room 1A Las Vegas, Nevada 89109 Attention: General Counsel Telefax: (702) 733-5499 S-1 For purpose of subsection 10.22 only: SHELDON G. ADELSON By: /s/Sheldon G. Adelson ------------------------------- LENDERS: THE BANK OF NOVA SCOTIA, individually and as a Lender, Lead Arranger and Administrative Agent By: /s/Alan W. Pendergast ------------------------------- Name: Alan W. Pendergast Title: Managing Director Notice Address: The Bank of Nova Scotia 580 California Street, Suite 2100 San Francisco, California 94104 Attention: Alan Pendergast Telefax: (415) 397-0791 With copy to: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attention: Marianne Velker Telefax: (404) 888-8998 S-2 FOOTHILL INCOME TRUST, L.P. By: /s/R. Michael Bohannon ------------------------------- Name: R. Michael Bohannon Title: Managing Member Notice Address: Foothill Income Trust, L.P. 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attention: Mike Bohannon Telefax: 310-453-7470 FOOTHILL INCOME TRUST II, L.P. By: /s/R. Michael Bohannon ------------------------------- Name: R. Michael Bohannon Title: Managing Member Notice Address: Foothill Income Trust, L.P. 2450 Colorado Avenue Suite 3000 West Santa Monica, California 90404 Attention: Mike Bohannon Telefax: 310-453-7470 S-3 THE INTERNATIONAL COMMERCIAL BANK OF CHINA, NEW YORK AGENCY By: /s/Wen-Hui Wang ------------------------------- Name: Wen-Hui Wang Title: A.V.P. & Deputy General Manager Notice Address: International Commercial Bank of China 360 Lexington Avenue, 6th Floor New York, New York 10017 Attention: M. S. Wu Telefax: 646-865-1373 S-4 OPPENHEIMER SENIOR FLOATING RATE FUND By: /s/David Foxhoven ------------------------------- Name: David Foxhoven Title: A.V.P. Notice Address: Oppenheimer Senior Floating Rate Fund P.O. Box 5061 Denver, CO 80217-5061 Attention: Elton Baggett Fund Analyst III Telefax: (303) 768-4383 S-5 CSAM FUNDING I By: /s/David Lerner ------------------------------- Name: David Lerner Title: Director Notice Address: CSAM Funding I 466 Lexington Avenue, 14th Floor New York, NY 10017 Attention: Judith Drummond Telefax: (713) 216-3572 S-6 Acknowledgement and Consent Each of the undersigned is a Loan Party to the Existing Credit Agreement and is a party to certain Subsidiary Guaranties, Collateral Documents and/or Loan Documents. Each of the undersigned confirms that it has reviewed the terms and provisions of the foregoing Amended and Restated Credit Agreement (the "Amended and Restated Credit Agreement"), including any documents referred to therein, and confirms and agrees that, notwithstanding the effectiveness of the Amended and Restated Credit Agreement, the obligations of the undersigned under the Subsidiary Guaranties, the Collateral Documents and/or the Loan Documents to which it is a party shall not be impaired or affected and each such Subsidiary Guaranty, Loan Document and/or Collateral Document shall continue in full force and effect and is hereby ratified and confirmed. Mall Construction Subsidiary hereby ratifies and confirms the grant of security interests and Liens made by such Mall Construction Subsidiary in favor of the Administrative Agent in and to the Collateral pursuant to the Collateral Documents as security for the Obligations. Each of the undersigned acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in the Amended and Restated Credit Agreement, it is not required by the terms of the Existing Credit Agreement, the Subsidiary Guaranties, the Collateral Documents or any other Loan Document to which it is a party to consent to the amendment and restatement of the Existing Credit Agreement effected pursuant to the Amended and Restated Credit Agreement and (ii) nothing in the Existing Credit Agreement, the Amended and Restated Credit Agreement, the Subsidiary Guaranties, the Collateral Documents or any other Loan Document to which it is a party shall be deemed to require the consent of the undersigned to any future amendments. Capitalized terms used in the foregoing two paragraphs and not otherwise defined therein, shall be used as defined in the Amended and Restated Credit Agreement. MALL INTERMEDIATE HOLDING COMPANY, LLC By: VENETIAN CASINO RESORT, LLC, its sole member By: LAS VEGAS SANDS, INC., its managing member By: /s/David Friedman --------------------------------------- Name: David Friedman Title: Secretary Notice Address: Mall Intermediate Holding Company, LLC 3355 Las Vegas Boulevard South Room 1H Las Vegas, Nevada 89109 Attn: General Counsel Telefax: (702) 733-5499 S1-1 LIDO INTERMEDIATE HOLDING COMPANY, LLC By: VENETIAN CASINO RESORT, LLC, its sole member By: LAS VEGAS SANDS, INC., its managing member By: /s/David Friedman --------------------------------------- Name: David Friedman Title: Secretary Notice Address: Lido Intermediate Holding, LLC 3355 Las Vegas Boulevard South Room 1F Las Vegas, Nevada 89109 Attn: General Counsel Telefax: (702) 733-5499 GRAND CANAL SHOPS MALL CONSTRUCTION, LLC By: VENETIAN CASINO RESORT, LLC, its sole member By: LAS VEGAS SANDS, INC., its managing member By: /s/David Friedman ----------------------------- Name: David Friedman Title: Secetary Notice Address: Grand Canal Shops Mall Construction, LLC 3355 Las Vegas Boulevard South Room 1G Las Vegas, Nevada 89109 Attn: General Counsel Telefax: (702) 733-5499 S1-2 AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF SEPTEMBER 17, 2001 AMONG LAS VEGAS SANDS, INC., and VENETIAN CASINO RESORT, LLC as Borrowers, THE LENDERS LISTED HEREIN, as Lenders, THE BANK OF NOVA SCOTIA as Lead Arranger, and THE BANK OF NOVA SCOTIA as Administrative Agent TABLE OF CONTENTS Page ---- Section 1. DEFINITIONS.................................................2 1.1 Certain Defined Terms.......................................2 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement ...........................34 1.3 Other Definitional Provisions and Rules of Construction ..............................................34 Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.................35 2.1 Commitments; Making of Loans; the Register; Notes..........35 2.2 Interest on the Loans......................................38 2.3 Fees.......................................................40 2.4 Repayments, Prepayments and Reductions in Commitments; General Provisions Regarding Payments ........40 2.5 Use of Proceeds............................................45 2.6 Special Provisions Governing Eurodollar Rate Loans.........45 2.7 Increased Costs; Taxes; Capital Adequacy...................47 2.8 Obligation of Lenders to Mitigate..........................49 2.9 Obligations Joint and Several..............................50 Section 3. LETTERS OF CREDIT..........................................50 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein ........................50 3.2 Letter of Credit Fees......................................52 3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit .........................................53 3.4 Obligations Absolute.......................................54 3.5 Indemnification; Nature of Issuing Lenders' Duties.........55 3.6 Increased Costs and Taxes Relating to Letters of Credit ....................................................56 Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT..................56 4.1 Conditions to the Occurrence of the Closing Date...........57 4.2 Conditions to all Loans on or after the Closing Date ......................................................58 4.3 Conditions to Letters of Credit............................59 Section 5. BORROWERS' REPRESENTATIONS AND WARRANTIES..................59 5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries .......................59 5.2 Authorization of Borrowing, etc............................60 5.3 Financial Condition........................................61 5.4 No Material Adverse Change; No Restricted Junior Payments ..................................................61 5.5 Title to Properties; Liens; Real Property..................61 5.6 Litigation; Adverse Facts..................................62 5.7 Payment of Taxes...........................................62 5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts ............................62 5.9 Governmental Regulation....................................62 1 5.10 Securities Activities......................................62 5.11 Employee Benefit Plans.....................................63 5.12 Certain Fees...............................................63 5.13 Environmental Protection...................................63 5.14 Employee Matters...........................................64 5.15 Solvency...................................................64 5.16 Matters Relating to Collateral.............................64 5.17 Construction Litigation....................................64 5.18 No Event of Default........................................65 5.19 Adelson Subordination Agreement............................65 5.20 Status of Certain Agreements...............................65 Section 6. BORROWERS' AFFIRMATIVE COVENANTS...........................65 6.1 Financial Statements and Other Reports.....................65 6.2 Corporate Existence, etc ..................................70 6.3 Payment of Taxes and Claims; Tax Consolidation ............70 6.4 Maintenance of Properties; Insurance; Application of Net Loss Proceeds ......................................70 6.5 Inspection; Lender Meeting ................................71 6.6 Compliance with Laws, etc.; Permits .......................71 6.7 Environmental Review and Investigation, Disclosure, Etc.; Borrowers' Actions Regarding Hazardous Materials Activities, Environmental Claims and Violations of Environmental Laws ...............71 6.8 Interest Rate Protection ..................................73 6.9 Compliance with Material Contracts ........................73 6.10 [Intentionally omitted] ...................................73 6.11 Payment of Liens ..........................................73 6.12 Further Assurances ........................................74 6.13 Execution of Subsidiary Guaranty and Personal Property Collateral Documents by Certain Subsidiaries and Future Subsidiaries ..............................................75 Section 7. BORROWERS' NEGATIVE COVENANTS .............................75 7.1 Indebtedness ..............................................76 7.2 Liens and Related Matters .................................77 7.3 Investments; Joint Ventures; Formation of Subsidiaries ....79 7.4 Contingent Obligations ....................................80 7.5 Restricted Junior Payments ................................80 7.6 Financial Covenants .......................................82 7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions ..........................................83 7.8 Sales and Lease-Backs .....................................85 7.9 Sale or Discount of Receivables ...........................85 7.10 Transactions with Shareholders and Affiliates .............85 7.11 Disposal of Subsidiary Stock ..............................87 7.12 Conduct of Business .......................................87 2 7.13 Certain Restrictions on Changes to Operative Documents, Permits, Project Budget or Project Schedule ..................................................88 7.14 Consolidated Capital Expenditures .........................88 7.15 Fiscal Year ...............................................89 7.16 Zoning and Contract Changes and Compliance ................89 7.17 No Joint Assessment; Separate Lots ........................89 7.18 Certain Covenants Applicable to New Mall Subsidiary and Other Mall Related Companies ...............90 7.19 Limitation on Declaration of Restricted Subsidiaries ..............................................91 7.20 Payments to Adelson .......................................91 7.21 Interest Payments .........................................91 Section 8. EVENTS OF DEFAULT .........................................91 8.1 Failure to Make Payments When Due .........................91 8.2 Default under Other Indebtedness or Contingent Obligations ...............................................91 8.3 Breach of Certain Covenants ...............................92 8.4 Breach of Warranty ........................................92 8.5 Other Defaults Under Loan Documents .......................92 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc ......92 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc ........92 8.8 Judgments and Attachments .................................92 8.9 Dissolution ...............................................93 8.10 Employee Benefit Plans ....................................93 8.11 Change in Control .........................................93 8.12 Failure of Guaranty; Repudiation of Obligations ...........93 8.13 Default Under or Termination of Operative Documents .................................................94 8.14 Default Under or Termination of Permits ...................94 8.15 Default Under or Termination of Cooperation Agreement .................................................94 8.16 Bankruptcy or Dissolution of New Mall Subsidiary ..........94 8.17 Acceleration of Obligations of New Mall Subsidiary ........94 8.18 Certain Investments in any Excluded Subsidiary ............94 8.19 Conforming Adelson L/C ....................................94 8.20 Default Under or Termination of the Phase II Lease ........94 Section 9. AGENTS ....................................................95 9.1 Appointment ...............................................95 9.2 Powers and Duties; General Immunity .......................96 9.3 Representations and Warranties; No Responsibility For Appraisal of Credit Worthiness ........................97 9.4 Right to Indemnity ........................................97 9.5 Successor Administrative Agent ............................97 9.6 Collateral Documents and Subsidiary Guaranties ............98 9.7 Disbursement Agreement and Intercreditor Agreement ........98 3 9.8 Appointment of Lead Arranger after November 14, 1997 ......98 Section 10. MISCELLANEOUS .............................................99 10.1 Assignments and Participations in Loans ...................99 10.2 Expenses..................................................101 10.3 Indemnity.................................................101 10.4 Set-Off; Security Interest in Deposit Accounts............102 10.5 Ratable Sharing...........................................102 10.6 Amendments and Waivers....................................102 10.7 Certain Matters Affecting Lenders.........................103 10.8 Independence of Covenants.................................103 10.9 Notices...................................................104 10.10 Survival of Representations, Warranties and Agreements ...............................................104 10.11 Failure or Indulgence Not Waiver; Remedies Cumulative ...............................................104 10.12 Marshalling; Payments Set Aside...........................104 10.13 Severability..............................................105 10.14 Obligations Several; Independent Nature of Lenders' Rights ..........................................105 10.15 Headings..................................................105 10.16 Applicable Law............................................105 10.17 Successors and Assigns....................................105 10.18 Consent to Jurisdiction and Service of Process............105 10.19 Waiver of Jury Trial......................................106 10.20 Confidentiality...........................................106 10.21 Counterparts; Effectiveness...............................106 10.22 Restriction on Adelson Indebtedness.......................106 10.23 Gaming Authorities........................................107 10.24 Automatic Amendment of this Agreement.....................107 Signature pages ............................................................S-1 Acknowledgement and Consent................................................S1-1 4 SCHEDULES 2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES 5.1A JURISDICTION OF ORGANIZATIONS 5.1C OWNERSHIP OF BORROWERS 5.1D SUBSIDIARIES OF BORROWERS 5.1E OPTIONS 5.4 RESTRICTED JUNIOR PAYMENTS 5.5 REAL PROPERTY 5.6 LITIGATION 5.8 MATERIAL CONTRACTS 5.11 CERTAIN EMPLOYEE BENEFIT PLANS 5.12 CERTAIN FEES 5.13 ENVIRONMENTAL MATTERS 5.16 PERMITS 5.17 CONSTRUCTION LITIGATION 5.18 EVENTS OF DEFAULT AND POTENTIAL EVENTS OF DEFAULT 5.20A COOPERATION AGREEMENT LIENS 5.20B HVAC SERVICES AGREEMENT LIENS 5.20C ADDITIONAL EMPLOYMENT AGREEMENTS/OPTION PLANS OR AGREEMENTS 5.20D AMENDMENTS TO OTHER INDEBTEDNESS DOCUMENTS 7.2 CERTAIN EXISTING LIENS 7.3 CERTAIN EXISTING INVESTMENTS 5 EXHIBITS I-A FORM OF NOTICE OF BORROWING FOR REVOLVING LOANS II FORM OF NOTICE OF CONVERSION/CONTINUATION III-A FORM OF TERM NOTE III-B FORM OF REVOLVING NOTE IV FORM OF COMPLIANCE CERTIFICATE V-A FORM OF OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON V-B FORM OF OPINION OF LIONEL SAWYER & COLLINS VI [INTENTIONALLY OMITTED] VII FORM OF ASSIGNMENT AGREEMENT VIII FORM OF SUBSIDIARY SECURITY AGREEMENT VIII-A FORM OF PHASE I-A SUBSIDIARY SECURITY AGREEMENT IX FORM OF CERTIFICATE RE NON-BANK STATUS X [INTENTIONALLY OMITTED] XI FORM OF SUBSIDIARY GUARANTY XII FORM OF COMPANY SECURITY AGREEMENT XIII FORM OF DEED OF TRUST XIV FORM OF INTERCREDITOR AGREEMENT (CREDIT PARTIES) XV FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT XVI FORM OF INTERCREDITOR AGREEMENT (ADELSON) XVII FORM OF DISBURSEMENT AGREEMENT XVIII FORM OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT XIX FORM OF MALL CONSTRUCTION SUBSIDIARY SECURITY AGREEMENT XX FORM OF CONFORMING ADELSON L/C DRAWING AGREEMENT XXI FF&E LETTER AGREEMENT 6 EX-10 4 exhibit10-2.txt FOURTH AMEND. TO TERM LOAN AND SECURITY AGREEMENT FOURTH AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT THIS FOURTH AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT (this "Agreement") is dated as of September 28, 2001 and entered into by and among LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI" ), and VENETIAN CASINO RESORT, LLC, a Nevada limited liability company ("VCR"), as joint and several obligors (each of LVSI and VCR, a "Borrower" and, collectively, the "Borrowers"), GENERAL ELECTRIC CAPITAL CORPORATION, as administrative agent (in such capacity, the "Administrative Agent") for the financial institutions party to the Original Equipment Loan Agreement hereinafter referred to, and the financial institutions listed on the signature pages hereto and executing a counterpart hereof, and is made with reference to the Term Loan and Security Agreement, dated as of December 22, 1997, by and among the Borrowers, the financial institutions parties thereto (collectively, the "Lenders"), the Administrative Agent and BancBoston Leasing Inc., as co-agent, as amended by a Limited Waiver and First Amendment to Term Loan and Security Agreement, dated as of November 12, 1999, a Limited Waiver and Second Amendment to Term Loan and Security Agreement, dated as of June 13, 2000, and a Limited Waiver, Consent and Third Amendment to Term Loan and Security Agreement, dated as of June 29, 2001, among LVSI, VCR, the Administrative Agent and certain of the Lenders (as so amended, the "Original Equipment Loan Agreement"). Capitalized terms used herein which are defined in the Original Equipment Loan Agreement and are not otherwise defined herein are used herein with the meanings ascribed to them in the Original Equipment Loan Agreement. WHEREAS, the Borrowers, the Administrative Agent and the Lenders desire to enter into this Agreement to make certain amendments to the terms and provisions of the Original Equipment Loan Agreement; NOW, THEREFORE, in consideration of the premises and the covenants herein contained, the parties hereto agree as follows: Section 1. AMENDMENTS - --------------------- Subject to the terms and conditions set forth herein, the Administrative Agent, the Requisite Lenders, and the Borrowers hereby agree to the following amendments to the Original Equipment Loan Agreement: (A) Section 1.11(c) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(c) In the event that any Conforming Adelson L/C Draw Event shall have occurred, the Administrative Agent may direct the Conforming Adelson L/C Drawing Agent to draw down on each outstanding Conforming Adelson L/C in its entirety. In such event, the Administrative Agent shall apply all proceeds of each such drawing which are received by the Administrative Agent from the Conforming Adelson L/C Drawing Agent to the immediate prepayment of the Obligations, such prepayment to be applied in each case in the manner specified in sections 1.13(b) and (c). For the avoidance of doubt, (i) a Conforming Adelson L/C Draw Event shall be in addition to an Event of Default described in section 8.1, (ii) the Administrative Agent shall not be required to exercise any rights or remedies under section 8 in order to direct the Conforming Adelson L/C Drawing Agent to draw on the Conforming Adelson L/Cs and (iii) any drawing on a Conforming Adelson L/C shall not be deemed to be a waiver of any Event of Default. Notwithstanding the foregoing, at the request of Borrowers, the Administrative Agent shall instruct the Conforming Adelson L/C Drawing Agent to release to the Borrowers any Conforming Adelson L/C in the possession of such Drawing Agent provided that each of the following conditions shall have been satisfied: (i) no Conforming Adelson L/C Draw Event shall have occurred, (ii) the Borrowers shall at such time be in compliance with section 6.9 and shall have been in compliance therewith for the preceding four consecutive calendar quarters (without giving effect to any such Conforming Adelson L/C), (iii) no Event of Default or Default shall have occurred and (iv) since the last day of the immediately preceding calendar year no event or change shall have occurred that caused, in any case or in the aggregate, a Material Adverse Effect, it being understood that for these purposes the application of the covenant values set forth in subsections (a), (b), (c) and (d) of section 6.9 of this Agreement as in effect from and after September 28, 2001 to Fiscal Quarters preceding the Fiscal Quarter ending on September 30, 2001 shall be limited to the determination of whether the condition set forth in clause (ii) of this sentence has been met, except in the case of multiple Fiscal Quarter periods ending on or after September 30, 2001, in which case the covenant values set forth in such subsections (a), (b), (c) and (d) shall be deemed to have been in effect throughout such multiple Fiscal Quarter period." (B) The first sentence of section 1.20(a) of the Original Equipment Loan Agreement is hereby amended by inserting therein, after the phrase "or any of the other Financing Agreements," the phrase "or any amendment to or restatement of any of the foregoing,". (C) The parenthetical phrase contained in Section 1.20(c) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(as of September 28, 2001)". -1- (D) Section 3.9(b) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(b) As of September 28, 2001, none of LVSI, VCR, Grand Canal Shops Mall Holding Company, LLC, Lido Casino Resort Holding Company, LLC, Grand Canal Shops Mall MM, Inc., Lido Casino Resort MM, Inc., the Mall Construction Subsidiary, Grand Canal Shops Mall, LLC and Lido Casino Resort, LLC has any direct Subsidiaries or directly owns the whole or any part of the issued share capital or other direct ownership of any company, corporation or other Person other than the Excepted Entities specified with respect to each in this section 3.9(b), all of which Excepted Entities are wholly-owned Subsidiaries. For purposes of this Agreement, the "Excepted Entities" consist of (i) in the case of LVSI: VCR, Lido Casino Resort MM, Inc., Grand Canal Shops Mall MM, Inc. and Venetian Marketing, Inc., (ii) in the case of VCR: Mall Intermediate Holding Company, LLC, Lido Intermediate Holding Company, LLC, the Mall Construction Subsidiary and LVSI Asset Protection, LLC, (iii) in the case of Mall Intermediate Holding Company, LLC and Lido Intermediate Holding Company, LLC: Grand Canal Shops Holding Company, LLC and Lido Casino Resort Holding Company, LLC, respectively, (iv) in the case of Grand Canal Shops Mall Holding Company, LLC and Lido Casino Resort Holding Company, LLC,: Grand Canal Shops Mall, LLC and Lido Casino Resort, LLC, respectively, (v) in the case of Grand Canal Shops Mall, LLC: Grand Canal Shops Mall Subsidiary, LLC and (vi) in the case of Grand Canal Shops Mall MM, Inc.: Grand Canal Shops Mall MM Subsidiary, Inc.. As of September 28, 2001, there are no Excepted Entities in the case of any of the Mall Construction Subsidiary, Lido Casino Resort, LLC, or Lido Casino Resort MM, Inc. All of the corporations and limited liability companies referred to in this section 3.9(b) are organized and subsist under the laws of the State of Delaware (Nevada, in the case of LVSI, VCR, Lido Casino Resort, LLC, Grand Canal Shops Mall MM, Inc., Lido Casino Resort MM, Inc., Grand Canal Shops Mall MM Subsidiary, Inc., Venetian Marketing, Inc. and LVSI Asset Protection, LLC). Each Borrower shall promptly inform the Administrative Agent of any change hereafter occurring in the state of facts represented in this section 3.9(b)." (E) Subsections (i) through (iii), inclusive of section 3.18 of the Original Equipment Loan Agreement are hereby amended to read as follows: "(i) none of the Borrowers and their Subsidiaries nor any of their respective Facilities or operations relating to the Site or the Project or the Phase I-A Project are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, Environmental Claim, or Hazardous Materials Activity; (ii) none of the Borrowers and their Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss.9604) or any comparable state law; (iii) there are not and to the Borrowers' knowledge have not been, any conditions, occurrences or Hazardous Materials Activities on the Site or any other Facility relating to the Project or the Phase I-A Project which could reasonably be expected to form the basis of an Environmental Claim against any of the Borrowers or their Subsidiaries, and, without limitation upon the generality of the foregoing, there are no underground tanks present on the Site or any other Facility (including without limitation any Facility related to the Phase I-A Project)". (F) The Original Equipment Loan Agreement is hereby supplemented by adding immediately following section 3.33 thereof a new section 3.34 to read as follows: "3.34 Status of Certain Agreements, etc. Except as set forth in Schedule 3.34 (with reference to the applicable subclause of this sentence in each case), (i) there have been no Liens created or contemplated by the Cooperation Agreement other than those created or contemplated by such agreement as in effect on December 22, 1997, (ii) there have been no Liens created under the HVAC Services Agreement other than those created or contemplated by such agreement as in effect on December 22, 1997, (iii) neither Borrower is a party to any employment agreement or option plan or agreement pursuant to which either Borrower may repurchase or redeem employee options or stock other than employment agreements and stock option plans or agreements as in effect on December 22, 1997 and except for employment agreements and option plans and agreements entered into after September 28, 2001 with the prior approval of the Administrative Agent not to be unreasonably withheld, and (iv) there have been no amendments, supplements or modifications to documents evidencing Other Indebtedness as in effect on December 22, 1997 nor any additional documents entered into after December 22, 1997 pursuant to which any Other Indebtedness has been or may hereafter be incurred." (G) Subsection (3) of section 4.1(x) of the Original Equipment Loan Agreement is hereby amended to read as follows: -2- "(3) Any (i) fact, circumstance, condition or occurrence at, on or arising from the Site, the Project or the Phase I-A Project that results in noncompliance with any Environmental Law which noncompliance has resulted or could reasonably be expected to result in a Material Adverse Effect, and (ii) pending, or to either the Borrower's knowledge threatened, Environmental Claim against any of the Borrowers, the Construction Manager and any contractor arising in connection with their occupying or conducting operations on or at the Project or the Site or at the Phase I-A Project, which could reasonably be expected to have a Material Adverse Effect;". (H) Subsection 5 of section 4.1(x) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(5) any proposed material change in the nature or scope of the Project or the Phase I-A Project or the businesses or operations of either of the Borrowers;". (I) Section 6.1 of the Original Equipment Loan Agreement is hereby amended by deleting the word "and" at the end of subsection (s) thereof, by deleting subsection (t) thereof, and by adding in the place of such deleted subsection (t) the following additional subsections: "(t) the Borrowers may incur Liens permitted under section 6.5, provided that any leases, other than the Phase I-A Lease and the Phase II Lease (whether or not such leases constitute Permitted Liens), shall be permitted only to the extent provided in clause (g) of this section 6.1 and the last sentence of this section 6.1; "(u) the Borrowers and their Subsidiaries may enter into the Phase I-A Lease, provided that in no event shall any of the Collateral be physically located on the premises covered by such Lease; "(v) the Borrowers and their Subsidiaries may enter into the Phase II Lease, provided that in no event shall any of the Collateral be physically located on the premises covered by such Lease; "(w) the Borrowers and their Subsidiaries may (i) form the Phase I-A Subsidiary, (ii) make investments in the Phase I-A Subsidiary to service the Phase I-A Subsidiary Non-Recourse Loan and to make any lease payments or other payments that may be required under any of (I) the Phase I-A Lease, (II) the Cooperation Agreement or (III) any other agreement entered into by the Phase I-A Subsidiary with the approval of the Administrative Agent not to be unreasonably withheld; "(x) the Borrowers may (i) create one or more subsidiaries for the purpose of establishing foreign or domestic offices for marketing or to otherwise further the business of the Borrowers as described in section 6.17 hereof and at their election the Borrowers may, immediately after such creation, designate any one or more of such Subsidiaries to be an Excluded Subsidiary and (ii) make investments in amounts not to exceed in the aggregate $10,000,000 with respect to all of such Subsidiaries and Excluded Subsidiaries referred to in clause (i); "(y) the Borrowers and their Subsidiaries may sell to the HVAC Provider any heating, ventilation, air conditioning and similar property, with a fair market value not to exceed $2,500,000 in the aggregate with respect to all of such sales, pursuant to documents approved by the Administrative Agent such approval not to be unreasonably withheld; and "(z) the Borrowers may make the transfers contemplated by section 6.2(k) and may transfer to the Phase II Manager a 1% managing membership interest in each of the Phase II Subsidiary and Phase II Direct Holdings." (J) The last sentence of Section 6.1 of the Original Equipment Loan Agreement is hereby amended to read as follows: "Notwithstanding the foregoing provisions of this section 6.1, clauses (g) and (as they relate to leases) (t) shall be subject to the additional provisos that: (i) no Event of Default or Default would occur as a result of entering into such transaction or lease (or immediately after any renewal or extension thereof at the option of the Borrowers or one of their Subsidiaries), (ii) such transaction or lease will not materially interfere with, impair or detract from the operation of the businesses of the Borrowers and their Subsidiaries, (iii) such transaction or lease is at a fair market rent or value (in light of other similar or comparable prevailing commercial transactions) and contains such other terms such that the lease, taken as a whole, is commercially reasonable and fair to the Borrowers and their Subsidiaries in light of prevailing or comparable transactions in other casinos, hotels, hotel attractions or shopping venues and (iv) no gaming or casino operations (other than the operation of arcades and games for children) may be conducted on any space that is subject to such transaction or lease other than by one or more of the Borrowers." (K) Subsection (k) of Section 6.2 of the Original Equipment Loan Agreement is hereby redesignated as subsection (m) thereof and, immediately preceding such -3- subsection (m) as so redesignated, the following new subsections (k) and (l) are hereby added to such Section 6.2: "(k) the Borrowers may (a) form the Phase I-A Subsidiary, (b) enter into the Phase I-A Lease and (c) make Investments in the Phase I-A Subsidiary to service the Phase I-A Subsidiary Non-Recourse Loan and to make any lease payments or other payments that may be required under (I) the Phase I-A Lease, (II) the Cooperation Agreement or (III) any other agreement entered into by the Phase I-A Subsidiary with the approval of the Administrative Agent not to be unreasonably withheld;" "(l) the Borrowers may (I) create one or more Subsidiaries for the purpose of establishing foreign or domestic offices for marketing or to otherwise further the business of the Borrowers as described in Section 6.17 hereof and at their election the Borrowers may designate any one or more of such Subsidiaries to be an Excluded Subsidiary or Excluded Subsidiaries and (II) make Investments therein in amounts not to exceed in the aggregate $10,000,000 with respect to all of such Subsidiaries and Excluded Subsidiaries referred to in clause (I);". (L) Section 6.3(d) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(d) either Borrower may become and remain liable with respect to Indebtedness to the other Borrower or any of its Subsidiaries, and any Subsidiary of the Borrowers may become and remain liable with respect to Indebtedness to the Borrowers or any other Subsidiary of Borrowers; provided that (i) all such intercompany Indebtedness shall be evidenced by promissory notes, (ii) all such intercompany Indebtedness owed by the Borrowers to any of their Subsidiaries shall be fully subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of the applicable promissory notes or an intercompany subordination agreement, (iii) any payment by any Subsidiary of the Borrowers under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any intercompany Indebtedness owed by such Subsidiary to the Borrowers or to any of their Subsidiaries for whose benefit such payment is made, and (d) the aggregate principal amount of all Indebtedness of and other Investments in any Subsidiaries described in section 6.2(l) hereof shall not exceed $10,000,000 at any time outstanding;". (M) Section 6.3(g) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(g) The Borrowers and their Subsidiaries may become and remain liable for Indebtedness under the Phase I-A Equipment Loan Agreement in principal amounts not to exceed at any one time outstanding in the aggregate $35,000,000;". (N) Section 6.3(h) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(h) the Borrowers and their Subsidiaries may become and remain liable for Non-Recourse Financing, other than Alternate Vendor Financing, used to finance the purchase or lease of personal or real property for use in the business of a Borrower or one of its Subsidiaries, provided that (i) such Non-Recourse Financing represents at least 75% of the purchase price of such personal or real property and (ii) the Indebtedness incurred pursuant to this section 6.3(h) shall not exceed $50,000,000 at any time outstanding in the aggregate;". (O) Section 6.3(k) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(k) the Borrowers may become and remain liable for Indebtedness to employees of the Borrowers ("Employee Repurchase Notes") incurred in connection with any repurchase of employee options or stock upon death, disability, termination or exercise of any redemption or put of such option or stock of such employee in accordance with employment agreements or option plans or agreements as in effect on September 28, 2001 ("Permitted Employee Repurchases"), provided that such Indebtedness shall be unsecured and subordinated on terms not less favorable to the Borrowers and the Lenders than the terms of the Subordinated Notes and shall expressly provide that payments thereon shall be required only to the extent permitted by section 6.8(a) hereof and not restricted by any other Financing Agreement;". (P) Section 6.4 of the Original Equipment Loan Agreement is hereby amended by deleting "and" at the end of subsection (t) thereof, by substituting "; and" for the period at the end of subsection (u) thereof and by adding after such subsection (u) the following additional subsection: "(v) the transactions contemplated by the Phase I-A Lease, the Phase II Lease and any other agreements, approved in each case by the Administrative Agent and the administrative agent with respect to the Lido Bank Credit Facility (including without limitation the agreement relating to the Phase I-A Non-Recourse Loan)." -4- (Q) Section 6.5(a)(vi) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(vi) Liens securing Indebtedness permitted under clause (h) of section 6.3, provided that such Liens shall attach only to the real or personal property purchased or leased with the proceeds of the Non-Recourse Financing referred to in such clause and to any proceeds of such property or Indebtedness and related collateral accounts in which such proceeds are held and either (i) in the case of the Phase I-A Non-Recourse Loan, the proceeds of such Non-Recourse Financing shall be paid by the Phase I-A Subsidiary to VCR as rent pursuant to the Phase I-A Lease within 180 days after the incurrence of such Indebtedness and (ii) in all other cases such property shall be leased or acquired within 180 days after the incurrence of such Indebtedness;". (R) Section 6.5(a) of the Original Equipment Loan Agreement is hereby amended by striking the word "and" at the end of clause (xii), by redesignating clause (xiii) thereof as clause (xiv) and by inserting immediately before such clause (xiv) as so redesignated the following new clause (xiii): "(xiii) Liens securing Indebtedness incurred under the Phase I-A Equipment Loan Agreement, provided that such Liens attach only to the furniture, furnishings, fixtures, equipment and other property acquired with the proceeds of such Indebtedness (or acquired with the proceeds of other Indebtedness which other Indebtedness is being refinanced with the Indebtedness incurred under the Phase I-A Equipment Loan Agreement) and to any proceeds of such acquired furniture, furnishings, fixtures, equipment and other property or to any proceeds of such Indebtedness incurred under the Phase I-A Equipment Loan Agreement or to any related collateral account, under the control of the lenders or an agent therefor, in which such proceeds are held, or both, but shall not in any event attach to any of the Collateral; and". (S) Section 6.5(c) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(c) No Further Negative Pledges. Except with respect to specific property encumbered to secure payment of particular Indebtedness or leases or to be sold pursuant to an executed agreement with respect to an Asset Sale and except as otherwise provided under the Phase I-A Equipment Loan Agreement, neither Borrower, nor any Subsidiary, shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than (w) as provided herein, (x) as set forth in the documents evidencing the Phase I-A Subsidiary Non-Recourse Loan and the Phase I-A Equipment Loan Agreement, (y) as set forth in the documents evidencing Other Indebtedness as in effect on the Closing Date including any refinancing thereof permitted hereunder, provided that the provisions regarding the creation or assumption of Liens is not less favorable to the applicable Borrower or Subsidiary or to the Lenders hereunder than those set forth in the documents evidencing the indebtedness being refinanced or (z) as required by applicable law or any applicable rule or order of any Gaming Authority." (T) Section 6.5(d) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(d) No Restrictions on Subsidiary Distributions to Borrowers or Other Subsidiaries. Except as provided in the documents evidencing the Phase I-A Subsidiary Non-Recourse Loan or in the Phase I-A Equipment Loan Agreement, the Borrowers will not, and will not permit any of their Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any of their Subsidiaries to (i) pay dividends or make any other distributions on any of such Subsidiary's capital stock owned by either Borrower or any other Subsidiary of a Borrower, (ii) repay or prepay any Indebtedness owed by any of such Subsidiaries to either or both of the Borrowers, (iii) make loans or advances to the Borrowers, or (iv) transfer any of its property or assets to either or both of the Borrowers other than (x) as provided herein or in the other Loan Documents, (y) as set forth in the documents evidencing Other Indebtedness as in effect on December 22, 1997, including any refinancing, renewal, replacement or substitution thereof permitted hereunder, provided, that the provisions regarding dividends, distributions, repayments of Indebtedness, loans and advances and transfers of assets are not less favorable to the applicable Borrower or Borrowers or Subsidiary or Subsidiaries or to the Lenders hereunder than those set forth in the documents evidencing the Indebtedness being refinanced, renewed, replaced or substituted for or (z) as required by applicable law or any applicable rule or order of the Nevada Gaming Authority." (U) Sections 6.8(b) and (c) of the Original Equipment Loan Agreement are hereby amended to read as follows: "(b) LVSI may make cash distributions in respect of its common stock to, or repurchase common stock of LVSI from, senior managers or officers of LVSI who may become holders of LVSI common stock as a result of the exercise of stock options, in the aggregate amount of $8,000,000 per year -5- with respect to all of such cash distributions and purchase prices of common stock repurchases, provided that nothing in this section 6.8(b) shall be deemed to permit cash distributions or payments to any one or more of (i) Sheldon G. Adelson; (ii) Dr. Miriam Adelson; (iii) any sibling of either of the foregoing; (iv) any issue of any one or more of the individuals referenced in the preceding clauses (i) through (iii); and (v) the spouse or issue of the spouse of one or more of the individuals referenced in the preceding clauses (i) through (iv);". "(c) LVSI may exchange those shares of the capital stock of LVSI presently held by Sheldon G. Adelson which were issued to and acquired by him upon the conversion of the $15,000,000 aggregate principal amount of indebtedness incurred under the permission contained in section 6.3(q) of this Agreement (as in effect on January 1, 1998) for a preferred membership interest in VCR having a fair valuation of up to $15,000,000;". (V) Section 6.9 of the Original Equipment Loan Agreement is hereby amended and restated in its entirety to read as follows: "6.9 Financial Covenants. The Borrowers shall not breach or fail to comply with any of the following covenants, each of which shall be calculated in accordance with GAAP consistently applied (and based upon the financial statements delivered hereunder): (a) Minimum Fixed Charge Coverage Ratio. The Borrowers shall not permit the ratio of (i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges for any four-Fiscal Quarter period (or for any Quarterly Date prior to September 30, 2000, the period from October 1, 1999 to such date ) ending on any Quarterly Date set forth below to be less than the ratio set forth opposite that Fiscal Quarter in the following table:
Minimum Fixed Charge Quarterly Dates Coverage Ratio ============================================= ========================= December 31, 1999, March 31, 2000, June 30, 1.05:1 2000 and September 30, 2000 December 31, 2000, March 31, 2001, June 30, 1.05:1 2001 and September 30, 2001 December 31, 2001 and the last day of each 1.10:1 calendar quarter thereafter
(b) Maximum Leverage Ratio. The Borrowers shall not permit the ratio (the "Leverage Ratio") of (i) Consolidated Total Debt as of such Quarterly Date to (ii) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on any Quarterly Date set forth below (or for any Quarterly Date prior to September 30, 2000, the period from October 1, 1999 to such date) to exceed the ratio set forth opposite such Quarterly Date in the following table; provided that for purposes of calculating Consolidated Adjusted EBITDA pursuant to this subsection 6.9(b) for any period ending prior to the first anniversary of the Completion Date which is less than four Fiscal Quarters, Consolidated Adjusted EBITDA shall be calculated on an annualized basis: -6-
Maximum Quarterly Date(s) Leverage Ratio =========================================== ============================ December 31, 1999, March 31, 2000, June 4.75:1 30, 2000, September 30, 2000, December 31, 2000 and March 31, 2001 June 30, 2001 4.50:1 September 30, 2001, December 31, 2001 and 6.00:1 March 31, 2002 June 30, 2002 5.50:1 September 30, 2002 5.00:1 December 31, 2002 and the last day of 4.90:1 each calendar quarter thereafter
(c) Minimum Consolidated Adjusted EBITDA. The Borrowers shall not permit Consolidated Adjusted EBITDA for any four Fiscal Quarter period (or, in the case of any Quarterly Date prior to September 30, 2000, the period from October 1, 1999 to such date) ending on any Quarterly Date set forth below to be less than the correlative amount indicated in the table set forth below, provided that for purposes of calculating Consolidated Adjusted EBITDA pursuant to this subsection 6.9(c) for the first, second, third and fourth Quarterly Dates, if the period tested is less than one, two, three or four full Fiscal Quarters, respectively, Consolidated Adjusted EBITDA shall be multiplied by a fraction of the numerator of which is 90, 182, 273 and 365, respectively, and the denominator of which is the number of days elapsed in the relevant test period:
Minimum Consolidated Quarterly Date(s) Adjusted EBITDA -------------------------------- -------------------- December 31, 1999 $ 30,000,000 March 31, 2000 $ 75,000,000 June 30, 2000 $100,000,000 September 30, 2000 $150,000,000 December 31, 2000 $155,000,000 March 31, 2001 and June 30, 2001 $160,000,000 September 30, 2001 $145,000,000 December 31, 2001 $150,000,000 March 31, 2002 $155,000,000 June 30, 2002 $160,000,000 September 30, 2002 $165,000,000 December 31, 2002 $170,000,000 March 2003, and the last day of each calendar quarter thereafter $180,000,000
(d) Minimum Consolidated Net Worth. The Borrowers shall not permit Consolidated Net Worth at any Quarterly Date to be less than $120,000,000 plus an amount equal to the sum of 85% of Consolidated Net Income for all periods from the Closing Date through such Quarterly Date (net of all net losses for the Borrowers and their Subsidiaries on a consolidated basis for the same period). (e) Consolidated Capital Expenditures. The Borrowers shall not, and shall not permit their Subsidiaries to, make or incur Consolidated Capital Expenditures, in any four Fiscal Quarter period indicated below, in an aggregate amount in excess of the corresponding amount (the "Maximum Consolidated Capital Expenditures Amount") set forth below opposite such four Fiscal Quarter period; provided that the Maximum Consolidated Capital Expenditures Amount for any four Fiscal Quarters shall be increased by an amount equal to the excess, if any, of the Maximum Consolidated Capital Expenditures Amount for the previous four Fiscal Quarter period over the actual amount of Consolidated Capital Expenditures for such previous four Fiscal Quarter period: -7-
Four Fiscal Quarter Maximum Period Ending with the Consolidated Capital Fiscal Quarter Ending Expenditures Amount --------------------- ------------------- December 31, 1999 $15,000,000 March 31, 2000 $15,000,000 June 30, 2000 $15,000,000 September 30, 2000 $15,000,000 December 31, 2000 $25,000,000 March 31, 2001 $25,000,000 June 30, 2001 $25,000,000 September 30, 2001 $33,000,000 December 31, 2001 $33,000,000 March 31, 2002 $33,000,000 June 30, 2002 $33,000,000 September 30, 2002 $33,000,000 December 31, 2002 $33,000,000 March 31, 2003 $33,000,000 June 30, 2003 $33,000,000 September 30, 2003 $33,000,000 December 31, 2003 $33,000,000 March 31, 2004 $33,000,000 June 30, 2004 $33,000,000 September 30, 2004 $33,000,000
and provided, further, that (i) the aggregate amount of construction costs expended by the Borrowers on the Guggenheim Project shall not exceed $38,000,000, and (ii) the aggregate amount of construction costs expended by the Borrowers on the construction of the Phase I-A Tower, including the expansion of the parking garage referred to in the definition of the term "Phase I-A Tower" (excluding any costs associated with the construction of the HVAC Component and incurred pursuant to any HVAC Services Agreements), shall not exceed $30,000,000, except that upon the execution by all parties thereto of the Lido Bank Credit Agreement, the HVAC Services Agreement (as it relates to the Phase I-A Tower) and the Phase I-A Equipment Loan Agreement and with the consent of Lenders holding in the aggregate at least 66-2/3% of the aggregate principal amount of the Loans then outstanding such $30,000,000 amount shall be increased to $250,000,000." (W) Section 6.10 of the Original Equipment Loan Agreement is hereby amended to read as follows: "6.10 Sale and Leasebacks. The Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, (i) which the Borrowers or any of their Subsidiaries has sold or transferred or is to sell or transfer to any other Person or (ii) which the Borrowers or any of their Subsidiaries intend to use for substantially the same purpose as any other property which has been or is to be sold or transferred by the Borrowers or any of their Subsidiaries to any Person in connection with such lease, except that the Borrowers and their Subsidiaries may enter into sale-leaseback transactions, in no event encumbering or otherwise involving any of the Collateral, in connection with any Non-Recourse Financing permitted under section 6.3(h) or any financing permitted under section 6.3(l) to the extent that the assets subject to such sale-leaseback are acquired contemporaneously with, or within 180 days prior to, such Non-Recourse Financing or such other financings and with the proceeds thereof and neither Borrower nor any of its Subsidiaries theretofore held any interest in such assets and except that (a) VCR may enter into the Phase II Lease with the Phase II Subsidiary and (b) the Borrowers and their Subsidiaries may enter into the Phase I-A Lease, provided that all other applicable terms and conditions with respect to such leases set forth in this Agreement are satisfied. (X) Section 6.16 of the Original Equipment Loan Agreement is hereby amended to read as follows: "6.16 Disposal of Subsidiary Stock. The Borrowers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of VCR or any of the Subsidiaries of the Borrowers, except (a) to qualify directors if required by applicable law, (b) to the extent required by any Nevada Gaming Authority in order to preserve a material Gaming License and (c) in the case of the issuance by VCR to Sheldon G. Adelson or an Affiliate of Sheldon G. Adelson of a -8- preferred membership interest in VCR so long as no dividends payable in cash, property or senior securities may be paid (provided, however, that such dividends may be paid through either (i) accretion or (ii) additional preferred membership interests), and no liquidation preference payments may be made, on such preferred membership interest in VCR while any Indebtedness under this Agreement is outstanding." (Y) Section 6.17 of the Original Equipment Loan Agreement is hereby amended to read as follows: "6.17 Conduct of Business. The Borrowers shall not, and shall not permit any of their Subsidiaries to, engage in any business other than (a) in the case of LVSI, the casino gaming, hotel, retail and entertainment mall and resort business and any activity or business incidental, directly related or similar thereto (including operating the conference center and meeting facilities), or any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, recreation, convention, trade show, meeting, retail sales or other activity or business designated to promote, market, support, develop, construct or enhance the casino gaming, hotel, retail and entertainment mall and resort business operated by the Borrowers and their Subsidiaries, including without limitation participating in the Joint Venture Suppliers and the ownership of the Mall Manager, the Phase II Manager and VCR, (b) in the case of VCR and its Subsidiaries (other than those listed in clause (c) below), (i) the development, construction and operation of the Project, the Phase I-A Project and the Guggenheim Projects, (ii) the casino gaming, hotel, retail and entertainment mall and resort business (including operating a conference center and meeting facilities) at the Project, the Phase I-A Project and the Guggenheim Projects and any activity or business incidental, directly related or similar thereto, or any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, recreation, convention, trade show, meeting, retail sales, or other activity or business designated to promote, market, support, develop, construct or enhance the casino gaming, hotel, retail and entertainment mall and resort business operated at the Project by the Borrowers and their Subsidiaries, including without limitation the creation of the Phase I-A Subsidiary and the Phase I-A Project and participating in the Joint Venture Suppliers, and (iii) the ownership of equity interests in Subsidiaries, including the Intermediate Holding Companies and (c) in the case of the Intermediate Holding Companies, the ownership of equity interests in Mall Direct Holdings and Phase II Direct Holdings and the delivery of guarantees in favor of the lenders under the Bank Credit Agreement and the Mortgage Note Holders and the holders of the Subordinate Notes. The Borrowers shall not permit the Excluded Subsidiaries specified below to engage in any business other than (A) in the case of the Mall Manager and the Phase II Manager, ownership of 1% managing membership interests in the Mall Subsidiary and Mall Direct Holdings and in Phase II Direct Holdings and Phase II Subsidiary, respectively, (B) in the case of the New Mall Subsidiary, ownership of the Mall and other matters reasonably incidental thereto, (C) in the case of Mall Direct Holdings and Phase II Direct Holdings, ownership of equity interests in the Mall Subsidiary and the Phase II Subsidiary, respectively, (D) in the case of the Mall Subsidiary, ownership of equity interests in the New Mall Subsidiary, (E) in the case of the Mall Manager, ownership of equity interests in the New Mall Manager and (F) in the case of the New Mall Manager, ownership of a 1% managing membership interest in the New Mall Subsidiary." (Z) Section 6.18 of the Original Equipment Loan Agreement is hereby amended by adding at the end thereof the following additional subsection: "(f) Consent to Certain Agreements. Notwithstanding the provisions of sections 6.18(a), (b) and (c), on or after September 28, 2001 the Lender Parties hereby consent to the execution, delivery and performance of (i) the HVAC Services Agreements, (ii) the Phase I-A Equipment Loan Agreement in accordance with the terms set forth in the term sheet attached hereto as Exhibit F, (iii) the Phase I-A Lease and (iv) the Phase II Lease, each in form reasonably satisfactory to the Administrative Agent." (AA) Section 6.27 of the Original Equipment Loan Agreement is hereby amended to read in full as follows: "6.27 [Intentionally omitted]." (BB) Section 8.1(y) of the Original Equipment Loan Agreement is hereby amended to read as follows: "(y) Except as may be released as permitted under section 1.11(c) and Section 5 of the Fourth Amendment to this Agreement, any Conforming Adelson L/C shall cease to be in full force and effect at any time prior to twenty-four (24) months from and after the date of its delivery to the Administrative Agent other than following a drawing in full by the Drawing Agent or, if permitted under the definition of Conforming Adelson L/C Draw Event, the replacement of such Conforming Adelson L/C with a cash equity contribution in the Borrowers in the amount of the Conforming Adelson L/C; and". -9- (CC) Section 8.1 of the Original Equipment Loan Agreement is hereby supplemented by adding thereto at the end thereof the following subsections: "(z) A default shall have occurred, and shall have continued unremedied past the expiration of any grace periods applicable thereto, under the Phase II Lease as a result of which such lease shall expire or be terminated or cancelled prior to the stated expiration date therefor." (DD) Section 9.2(a) of the Original Equipment Loan Agreement is hereby amended by adding thereto at the end thereof the following additional sentence: "Each of the Lenders hereby authorizes the Administrative Agent to enter into an amendment of the Conforming Adelson L/C Drawing Agreement, in form satisfactory to the Administrative Agent, pursuant to which the Conforming Adelson Drawing Agent would be required to release any Conforming Adelson L/C held by such Drawing Agent upon the satisfaction of all of the following conditions: (i) no Conforming Adelson Drawing Event (as such term was defined in this Agreement as in effect on September 13, 2001) shall have occurred, (ii) the Borrowers shall at such time be in compliance with each of the covenants set forth in subsections (a), (b), (c) and (d) of section 6.9 of this Agreement and such compliance shall have been had (without giving effect to any such Conforming Adelson L/C) with all of such covenants for the preceding four consecutive Fiscal Quarters, (iii) no Event of Default or Default shall have occurred and (iv) since December 31, 2000, no event or change shall have occurred that caused, in any case or in the aggregate, a Material Adverse Effect, it being understood that for these purposes the application of the covenant values set forth in subsections (a), (b), (c) and (d) of section 6.9 of this Agreement as in effect from and after September 28, 2001 to Fiscal Quarters preceding the Fiscal Quarter ending on September 30, 2001 shall be limited to the determination of whether the condition set forth in clause (ii) of this sentence has been met, except in the case of multiple Fiscal Quarter periods ending on or after September 30, 2001, in which case the covenant values set forth in such subsections (a), (b), (c) and (d) shall be deemed to have been in effect throughout such multiple Fiscal Quarter period." (EE) The last sentence of Section 9.2(d) of the Original Equipment Loan Agreement is hereby amended to read as follows: "Each Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of lending, finance, financial advisory or other business with the Borrowers or any of their Affiliates (including without limitation the Phase I-A Equipment Loan Agreement and the transactions contemplated thereby), the Borrowers and any of their Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from the Borrowers for services in connection with this Agreement and otherwise without having to account for the same to the Lenders." (FF) Section 11.18 of the Original Equipment Loan Agreement is hereby amended by adding thereto at the end thereof the following sentence: "For the avoidance of doubt, the Lenders acknowledge that the notification and application requirements of clauses (i) and (ii) of the first sentence of this section 11.18 shall apply in the event of receipts of payments and reductions of proportions of the aggregate amount of principal, interest, fees and other amounts then due and owing to a Lender which are greater than the Aggregate Amounts Due to such Lender at the time of such receipt or reduction and shall not apply to any such receipt or reduction by or in favor of any Lender of any amounts due and owing to such Lender at the time under section 1.6(b) or (c) or which are, as a result of any amendment heretofore or hereafter made to this Agreement affecting the timing of payments and the rate and amount of interest, fees and other amounts payable, disproportionate in relation to the aggregate amounts owed (but not necessarily then due and payable) to the other Lenders, so long as such receipt or reduction is not disproportionate in relation to the Aggregate Amounts Due at that time to that Lender and the other Lenders." (GG) The Original Equipment Loan Agreement is hereby amended by adding thereto at the end thereof the following additional section 11.22: 11.22 Restriction on Indebtedness to Sheldon G. Adelson. Each of the Borrowers agrees, and agrees to furnish an undertaking of Sheldon G. Adelson whereby he shall also agree for the benefit of the Lender Parties, that the Borrowers shall not, and shall nor permit any of their Subsidiaries to, incur any Indebtedness owed to Sheldon G. Adelson or any Affiliate of his which is not a Borrower or a Subsidiary thereof except upon terms and conditions (including subordination provisions) that are in form and substance satisfactory to the Administrative Agent and Mr. Adelson. The foregoing restriction shall not apply to any Indebtedness of the Borrowers or any of their Subsidiaries (i) existing on September 28, 2001 and held on September 28, 2001 by a person or persons who are not Affiliates of Sheldon G. Adelson, (ii) which was incurred in connection with this Agreement, the Phase I-A Equipment Loan Agreement or the Bank Credit Agreement, or in connection with any financing of the HVAC Component or similar equipment or property, (iii) incurred under the Phase I-A -10- Subsidiary Non-Recourse Loan, (iv) incurred under the Completion Guaranty Loan or (v) incurred under any Employee Repurchase Notes. In the undertaking of Sheldon G. Adelson referred to above, Mr. Adelson shall acknowledge that the execution, delivery and performance of this Agreement (including the Fourth Amendment thereto dated as of September 28, 2001) shall not alter, modify or otherwise affect in any manner the subordination provisions applicable to any Indebtedness in respect of the Completion Guaranty Loan. Nothing in this Section 11.22 shall in any way modify any provision of section 6.8 hereof." (HH) The definition of "Conforming Adelson L/C Draw Event" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: "`Conforming Adelson L/C Draw Event' shall mean, during the time that the Conforming Adelson L/C remains in full force and effect, the occurrence of any of the following (a) an Event of Default (which is continuing and has not been waived) (i) set forth in Section 8.1(a) hereof (failure to make payments when due), (ii) set forth in Section 8.1(d) hereof (default under Other Indebtedness or Contingent Obligations), (iii) set forth in Section 8.1(g) hereof (involuntary bankruptcy; appointment of receiver, etc.) or Section 8.1(h) hereof (voluntary bankruptcy, appointment of receiver, etc.), (iv) set forth in Section 8.1(l) hereof (default under or termination of Operative Documents), and (v) resulting from a breach of any of the covenants set forth in Section 6.9 hereof (financial covenants); (b) a draw on the Conforming Adelson L/C by or on behalf of the Bank Agent; (c) if such Conforming Adelson L/C has a maturity of less than twenty-four (24) months, either (x) Administrative Agent's receipt of notice from the issuer of the Conforming Adelson L/C that such issuer will not renew the Conforming Adelson L/C or (y) the date that is five days prior to the expiration of the Conforming Adelson L/C if the Administrative Agent has not received evidence of the renewal thereof, provided that the Administrative Agent may not draw down on the Conforming Adelson L/C under such circumstances if and only if (1) the failure to obtain the renewal of such Conforming Adelson L/C was not caused by Sheldon G. Adelson or his Affiliates and Sheldon G. Adelson and/or his Affiliates have made reasonable efforts to obtain the renewal thereof, and (2) Sheldon G. Adelson or his Affiliates substitute cash equity in the Borrowers in an amount equal to the face amount of the Conforming Adelson L/C in lieu of the Conforming Adelson L/C on or before the date that is five (5) days prior to the expiration thereof (such equity to be substituted for the withdrawn Conforming Adelson L/C in the calculation of Consolidated Adjusted EBITDA); or (d) the Administrative Agent's receipt of notice from the issuer of the Conforming Adelson L/C that such issuer intends to revoke, terminate or cancel the Conforming Adelson L/C, provided further that the Administrative Agent may not draw down on the Conforming Adelson L/C under such circumstances if and only if Sheldon G. Adelson or his Affiliates (but not a Borrower or any Subsidiary thereof) substitute cash equity investments in the Borrowers, in an amount equal to the face amount of the Conforming Adelson L/C, in lieu of the Conforming Adelson L/C on or before the date that is five (5) days prior to the revocation, termination or cancellation thereof (such equity to be substituted for the withdrawn Conforming Adelson L/C in the calculation of Consolidated Adjusted EBITDA)." (II) The definition of "Conforming Adelson L/C Drawing Agreement set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Conforming Adelson L/C Drawing Agreement' shall mean the Conforming Adelson L/C Drawing Agreement, dated as of September 28, 2001, among the Conforming Adelson L/C Drawing Agent, the Administrative Agent and the Bank Agent, in substantially the form of Exhibit E attached hereto, pursuant to which drawings, if any, on the Conforming Adelson L/Cs shall be made and the proceeds thereof distributed ratably to the Lenders and the Bank Lenders." (JJ) The definition of "Consolidated Adjusted EBITDA" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Consolidated Adjusted EBITDA' shall mean, for any period, the sum of the amounts for such period of (I) Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) provision for taxes based on income to the extent deducted in calculating Consolidated Net Income, (iv) total depreciation expense, (v) total amortization expense, and (vi) other non-cash items reducing Consolidated Net Income (including without limitation any reductions to Consolidated Net Income as a result of minority or preferred equity interests in VCR) less other non-cash items increasing Consolidated Net Income, all of the foregoing in conformity with GAAP. Any cash equity contributions made by Sheldon G. Adelson or any of his Affiliates (other than one of the Borrowers or a Subsidiary of a Borrower) to the Borrowers and/or the face amount of any Conforming Adelson L/C delivered to the Conforming Adelson L/C Drawing Agent for the benefit of the Lenders and the Bank Lenders during any quarter and during a period of fifteen (15) days following the last day of such quarter, in an aggregate amount for such cash equity contributions and face amounts of Conforming Adelson L/Cs not to exceed $15,000,000 per quarter, may at the -11- written election of the Borrowers be included in Consolidated Adjusted EBITDA for such quarter for all purposes hereunder, provided that the Borrowers may not include such cash equity contributions or the face amount of the Conforming Adelson L/C, or any combination thereof, in Consolidated Adjusted EBITDA (a) if any Conforming Adelson L/C Draw Event or any Event of Default or Default has occurred and is continuing at the time such cash contribution is made or such Conforming Adelson L/C is provided to the Conforming Adelson L/C Drawing Agent or (b) in any event, after two consecutive quarters unless, following any exercise of such election to include any such cash equity contributions and/or face amount of any Conforming Adelson L/C in Consolidated Adjusted EBITDA, the Borrowers have thereafter been in compliance with section 6.9(c) on a rolling four quarter basis on any test date occurring after such election (without giving effect to any previous cash contributions or Conforming Adelson L/Cs)." (KK) The definition of "Consolidated Capital Expenditures" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Consolidated Capital Expenditures' shall mean, for any period, the sum of (i) the aggregate of all expenditures (whether paid in cash or other consideration or accrued as a liability and including that portion of Capital Leases which is capitalized on the consolidated balance sheet of the Borrowers) by the Borrowers and their Subsidiaries during that period which expenditures, in conformity with GAAP, are included in "additions to property, plant or equipment" or comparable items reflected in the consolidated statement of cash flows of the Borrowers and (ii) to the extent not covered by clause (i) of this definition, any expenditures by the Borrowers (excluding any Subsidiaries of the Borrowers) during that period to acquire (by purchase or otherwise) the business, property or fixed assets of any Person, or the stock or other evidence of beneficial ownership of any Person that, as a result of such acquisition, becomes a Subsidiary of the Borrowers or either of them, provided, however, that, without limiting the second proviso contained in section 6.9(e), any expenditures related to the construction of the Phase I-A Project or the Guggenheim Projects shall be excluded from such definition." (LL) The definition of "Consolidated Fixed Charges" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Consolidated Fixed Charges' shall mean, for any period, the sum (without duplication) of the amounts for such period of (i) Consolidated Cash Interest Expense, (ii) scheduled repayments of principal on Indebtedness (other than repayment of the `Revolving Loan' on the `Revolving Loan Commitment Termination Date' and the payment of the `Term Loans' on March 31, 2003, as such terms are defined in section 1.1 of the Bank Credit Agreement, (iii) any amounts distributed by the Borrowers for tax payments in accordance with section 6.8(g) with respect to such period and (without duplication) provisions for taxes based on income payable by the Borrowers to any governmental Authority, (iv) Consolidated Rental Payments, and (v) Consolidated Capital Expenditures, all of the foregoing as determined on a consolidated basis for the Borrowers and their Subsidiaries in conformity with GAAP." (MM) The definition of "Consolidated Interest Expense" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Consolidated Interest Expense' shall mean, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of the Borrowers and their Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of the Borrowers, including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Interest Rate Agreements, but excluding, however, (x) any amounts referred to in section 1.8 payable to the Lender Parties on or before the Closing Date, (y) any fees and expenses payable to the Bank Agent and the Arranger (as defined in the Bank Credit Agreement in connection with the 2001 Bank Credit Agreement prior to the date on which the 2001 Bank Credit Agreement is executed and delivered and all conditions to the effectiveness thereof set forth in section 4.1 thereof shall have been satisfied or waived by the Bank Agent and (z) any fees and expenses payable to the Lender Parties in connection with this Agreement prior to September 28, 2001." (NN) The definition of "Consolidated Net Income" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Consolidated Net Income' shall mean, for any period, the net income (or loss) of the Borrowers and their Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP; provided that there shall be excluded (i) the income (or loss) of any Person (other than a Subsidiary of a Borrower) in which any other Person (other than a Borrower or any of its Subsidiaries), has a -12- joint interest, except to the extent of the amount of dividends or other distributions actually paid to the Borrowers or any of their Subsidiaries by such Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it is merged into or consolidated with the Borrowers or that Person's assets are acquired by the Borrowers, (iii) any after-tax gains or losses attributable to Asset Sales or returned surplus assets of any Pension Plan and (iv) (to the extent not included in clauses (i), (ii) and (iii) above) any net extra-ordinary gains or net non-cash extraordinary losses including without limitation any refinancing costs or charges. (OO) The definition of "Consolidated Rental Payments" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Consolidated Rental Payments' shall mean, for any period, the aggregate amount of all rents paid or payable by the Borrowers and their Subsidiaries on a consolidated basis (excluding any Excluded Subsidiaries) during that period under all Capital Leases to which either Borrower or any Subsidiary of a Borrower is a party as lessee. Notwithstanding the foregoing, payments under HVAC Services Agreements and the Phase II Lease shall not be included in Consolidated Rental Payments." (PP) The definition of "Cooperation Agreement" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Cooperation Agreement' shall mean the Amended and Restated Reciprocal Easement, Use and Operating Agreement, dated as of November 14, 1997 and as amended by an agreement dated December 20, 1999, by and between LVSI, VCR, New Mall Subsidiary (successor in interest to the Mall Construction Subsidiary), the Phase II Subsidiary and Interface." (QQ) The definition of "Excluded Subsidiary" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"Excluded Subsidiary' shall mean any Person excluded from the definition of Subsidiary by virtue of the last sentence of such definition set forth in this Annex A (including without limitation the New Mall Subsidiary, the Mall Subsidiary, the Phase II Subsidiary, Mall Direct Holdings, Phase II Direct Holdings, the Mall Manager, the New Mall Manager, the Phase II Manager and any other person designated as an Excluded Subsidiary pursuant to section 6.2(l) hereof)." (RR) The definition of "GAAP" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"GAAP' means generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, which are applicable to the circumstances at the time of determination, provided, however, that from and after September 28, 2001 the term "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect on September 28, 2001 as set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, which are applicable to the circumstances as of September 28, 2001. In the event of any change in any of such principles, opinions, pronouncements or statements after September 28, 2001, all financial statements required by this Agreement thereafter to be presented in accordance with GAAP shall be presented in a comparative manner which identifies, to the reasonable satisfaction of the Administrative Agent, the effects of any such change or changes occurring after September 28, 2001 (it being understood, however, that for all purposes of this Agreement "GAAP" shall be calculated in accordance with the first sentence of this definition)." (SS) The definition of "HVAC Component" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"HVAC Component' shall mean, collectively, (I) the Central Plant and (ii) the Other Facilities, each as defined in the HVAC Services Agreements." (TT) The definition of "HVAC Provider" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended and restated to read as follows: `"HVAC Provider' shall mean Sempra Energy Solutions, a California corporation (successor to Atlantic-Pacific, Las Vegas LLC, a Delaware limited liability company), or its permitted successors under the HVAC Services Agreements." -13- (UU) The definition of "HVAC Services Agreements" set forth in Annex A to the Original Equipment Loan Agreement is hereby deleted and is replaced with the following definition of "HVAC Services Agreements": `"HVAC Services Agreements' shall mean, collectively, (i) the Energy Services Agreement, dated as of November 14, 1997, between VCR and the HVAC Provider, (ii) the HVAC Ground Lease, (iii) the Construction Agency Agreement, (iv) the Energy Services Agreement and (v) all other agreements between the HVAC Provider and the Borrowers or their Subsidiaries (and any amendments of any agreements described in clause (i), (ii), (iii), or (iv) above), as approved by the Administrative Agent in its sole discretion." (VV) The definition of "Indebtedness" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended by adding thereto at the end thereof the following additional sentence: "Obligations under the HVAC Services Agreements, the Phase I-A Lease and the Phase II Lease shall be treated as service contracts or operating leases and not as Indebtedness." (WW) Clauses (xv) and (xix) in the definition of "Permitted Liens" set forth in Annex A to the Original Equipment Loan Agreement are hereby amended and restated to read, respectively, as follows: "(xv) Easements, restrictions, rights of way, encroachments and other minor defects or irregularities in title or Liens created under the HVAC Services Agreements;" and "(xix) [Intentionally omitted]." (XX) The last sentence in the definition of "Subsidiary" set forth in Annex A to the Original Equipment Loan Agreement is hereby amended to read as follows: "Notwithstanding the foregoing, any Subsidiary described in section 6.2(l) that the Borrowers elect to designate as an Excluded Subsidiary, the Mall Subsidiary, the New Mall Subsidiary, the Phase II Subsidiary, the Phase II Manager, Phase II Direct Holdings, the Mall Manager, the New Mall Manager and Mall Direct Holdings and their respective Subsidiaries shall not constitute Subsidiaries under this Agreement or any other Loan Document except for purposes of section 3 (representations and warranties ) (other that section 3.7) and section 6.1 (as specified therein) and for purposes of any definitions as used in section 3 or section 4.1." (YY) Annex A to the Original Equipment Loan Agreement is hereby amended to add each of the following definitions (in each case in the appropriate alphabetical order): "`Guggenheim Projects' shall mean (a) the proposed Guggenheim Las Vegas Exhibit Hall to be constructed adjacent to the Project and (b) the proposed exhibition space to be constructed within the hotel to display artwork from the Guggenheim Museum and the State Hermitage Museum." "`Lido Bank Credit Agreement' shall mean a credit agreement among the Phase II Subsidiary, The Bank of Nova Scotia and the other lenders party thereto from time to time, providing for loans and other extensions of credit comprising the Lido Bank Credit Facility in accordance with the terms specified in the term sheet attached hereto as Exhibit G and in a form reasonably satisfactory to the Administrative Agent." "`Lido Bank Credit Facility' shall mean the credit facilities in an aggregate principal amount of $80,000,000 provided under the Lido Bank Credit Agreement to provide financing or funds for, among other things, (a) construction of a conference center to be built on the Phase II Land and (b) the Phase I-A Subsidiary Non-Recourse Loan, the proceeds of which will be used to prepay rent owed to VCR under the Phase I-A Lease, and thereafter applied by VCR to finance the construction of the Phase I-A Tower." "`Phase I-A Equipment Loan Agreement' shall mean a term loan and security agreement which may be entered into among the Borrowers, the lenders specified therein and General Electric Capital Corporation and GMAC Commercial Mortgage Corporation, as co-agents, providing for loans and other extensions of credit in principal amounts not to exceed in the aggregate $35,000,000 the proceeds of which are to be used to finance the acquisition, or to refinance other Indebtedness previously incurred to finance the acquisition, of furniture, furnishings, fixtures, equipment and other personal property to be used in connection with, inter alia, the Phase I-A Project." "`Phase I-A Lease' shall mean the Lease Agreement to be entered into between VCR and the Phase I-A Subsidiary." "`Phase I-A Project' shall mean the construction of the Phase I-A Tower." -14- "`Phase I-A Subsidiary' shall mean Venetian Phase I-A Tower, LLC, a limited liability company to be organized under the laws of Nevada." "`Phase I-A Subsidiary Non-Recourse Loan' shall mean the non-recourse loan made by Phase II Subsidiary to the Phase I-A Subsidiary with proceeds from the Lido Bank Credit Facility, on terms reasonably satisfactory to the Administrative Agent." "`Phase I-A Tower' shall mean the approximately 1,000 room hotel expansion to be constructed by VCR on the parking garage of the Project, together with an expansion of such parking garage, which expansions shall in all respects be of a first class character and in conformity with a standard of quality at least as high as that of the Project as of September 28, 2001." "`Phase II Lease' shall mean the lease to be entered into between the Phase II Subsidiary, as lessor, and VCR, as lessee, covering the Phase II Land and the conference center to be constructed thereon." (ZZ) Schedule 3.1(d) to the Original Equipment Loan Agreement is hereby amended to read as set forth in Annex A hereto. (AAA) Schedule 3.31 to the Original Equipment Loan Agreement is hereby amended to read as set forth in Annex B hereto. (BBB) The Original Equipment Loan Agreement is hereby supplemented by adding thereto as Schedule 3.34 the schedule attached hereto as Annex C. (CCC) Exhibit E to the Original Equipment Loan Agreement is hereby amended and restated to read in full as set forth in Annex G hereto. (DDD) The Original Equipment Loan Agreement is hereby supplemented by adding thereto as Exhibit F the form of term sheet (relating to, inter alia, the proposed Phase I-A Equipment Loan Agreement) attached hereto as Annex D. (EEE) The Original Equipment Loan Agreement is hereby supplemented by adding thereto as Exhibit G the form of term sheet (relating to, inter alia, the Lido Bank Credit Agreement) attached hereto as Annex E. Section 2. REPRESENTATIONS AND WARRANTIES OF BORROWERS - ------------------------------------------------------ To induce the Lenders to enter into this Agreement, each of VCR and LVSI represents and warrants to each Lender Party that the following statements are true, correct and complete as of the date hereof and will be true, correct and complete as of the date the conditions set forth in section 3 are satisfied: (A) Each of VCR and LVSI has all requisite power and authority to enter into this Agreement, to carry out the transactions contemplated hereby and to perform its obligations hereunder. (B) The execution and delivery of this Agreement by VCR and LVSI and the performance by them of their obligations hereunder have been duly authorized by all necessary limited liability company and corporate action on the part of VCR and LVSI. (C) The execution and delivery by VCR and LVSI of this Agreement and the performance by VCR and LVSI of their obligations hereunder do not and will not (i) violate any provision of law or any governmental rule or regulation applicable to the Project or to VCR or LVSI or any of their Subsidiaries, the organizational documents of VCR or LVSI or any of their Affiliates, or any order, judgment or decree of any court or other agency of government binding on VCR or LVSI or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Material Contract of VCR or LVSI or any of their Affiliates, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of VCR or LVSI or any of their Subsidiaries, or (iv) require any approval of stockholders as such or any approval or consent of any Person under any Material Contract of VCR or LVSI or any of their Subsidiaries. (D) The execution and delivery by VCR and LVSI of this Agreement and the performance by VCR and LVSI of their obligations under this Agreement do not and will not require any registration with, consent or approval of, or notice to, or other action on the part of, any federal, state or other governmental authority or regulatory body. (E) This Agreement has been duly executed and delivered by VCR and LVSI and constitutes the legal, valid and binding obligation of VCR and LVSI, enforceable against VCR and LVSI in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting creditors' rights generally or by equitable principles relating to enforceability. (F) The representations and warranties contained in section 3 of the Equipment Loan Agreement are and will be true, correct and complete in all material respects both on and as of the date hereof and on the date the -15- conditions in section 3 hereof are satisfied, to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. Section 3. CONDITIONS TO EFFECTIVENESS - -------------------------------------- Notwithstanding any of the provisions of this Agreement to the contrary, this Agreement shall become effective only upon satisfaction of each of the following conditions precedent: (A) The Administrative Agent shall have received a fully executed counterpart of the Amended and Restated Credit Agreement, dated as of September 17, 2001 (the "Credit Agreement Amendment"), by and among LVSI, VCR, the financial institutions parties thereto as lenders, The Bank of Nova Scotia as Lead Arranger and as Administrative Agent, and, for the limited purposes specified therein, Sheldon G. Adelson, being entered into contemporaneously herewith to amend and restate the Bank Credit Agreement, such Credit Agreement to be in substantially the form of Annex F hereto; (B) The Borrowers shall have paid to the Lenders the fee described in section 4 below; (C) The Administrative Agent shall have received original signed counterparts of written opinions of Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the Borrowers, and of Lionel Sawyer & Collins, special Nevada counsel to the Borrowers, each dated the date hereof, addressed to each of the Lender Parties and otherwise in form and substance reasonably acceptable to the Administrative Agent, concerning such matters of law as the Lender Parties may reasonably request; (D) The Administrative Agent shall have received a certificate, duly executed by the Secretary or an Assistant Secretary of LVSI setting forth or attaching copies of resolutions duly adopted by the board of directors of LVSI authorizing the execution and delivery of this Agreement by LVSI both in its own right and as Managing Member of VCR and setting forth the names and specimen signatures of the officer or officers of LVSI authorized by such board to execute and deliver on behalf of LVSI both in its own right and as Managing Member of VCR this Agreement and the other documents and instruments to be executed and delivered hereunder, upon which certificate each of the Lender Parties may rely until it has received a further certificate of the Secretary or an Assistant Secretary of LVSI amending such certificate and setting forth the new names and signatures of the applicable officer or officers; (E) The representations and warranties of the Borrowers contained in section 2 of this Agreement shall be true, correct and complete in all material respects on and as of the date hereof and on the date the conditions set forth in this section 3 are satisfied in full; on and as of both such dates there shall not have occurred and then be continuing any Event of Default or any Default; since January 1, 2001 there shall not have occurred any Material Adverse Effect; and the Administrative Agent shall have received an Officers' Certificate, dated the date on which such conditions are so satisfied, to the foregoing effects; and (F) The Administrative Agent shall have received written confirmation from the Bank Agent to the effect that by reason of the execution and delivery of this Agreement the automatic amendment referred to in section 10.24 of the Bank Credit Agreement has not taken and will not take place. Section 4. FEE - -------------- Prior to the effectiveness of this Agreement, the Borrowers shall jointly pay to each Lender signing a counterpart of this Agreement, for such Lender's own account, a one-time non-refundable fee in the amount of 0.50% of the outstanding principal balance of the Basic Loan of such Lender as of the date hereof. The fee referred to in the preceding sentence shall be due and payable on the date of the execution and delivery of this Agreement. Section 5. CONSENT TO AMENDMENTS OF BANK CREDIT AGREEMENT AND CONFORMING ADELSON L/C DRAWING AGREEMENT - -------------------------------------------------------------------------------- On the terms and conditions set forth herein, each of the Lenders and the Administrative Agent hereby consents to the execution, delivery and performance of the Credit Agreement Amendment. Each of the Lenders hereby consents to and authorizes the execution and delivery by the Administrative Agent of and the performance by it of its obligations under the Conforming Adelson L/C Drawing Agreement, dated as of September 28, 2001, in substantially the form of Annex G hereto to amend and, as amended, restate in full the Conforming Adelson L/C Drawing Agreement, dated as of June 14, 2001, among the same parties, and, upon the execution and delivery of such Conforming Adelson L/C Drawing Agreement, to direct the Drawing Agent thereunder to release the Conforming Adelson L/C presently held by such Drawing Agent thereunder. -16- Section 6. ACKNOWLEDGEMENT REGARDING FEES AND EXPENSES - ------------------------------------------------------ The Borrowers hereby acknowledge that all reasonable costs, fees and expenses incurred by the Lenders and their respective counsel with respect to this Agreement and the documents and transactions contemplated hereby shall be for the account of the Borrowers and hereby agree that all such amounts, and any other amounts due and owing to such parties at that time, shall be promptly paid. Section 7. GOVERNING LAW - ------------------------ THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. Section 8. COUNTERPARTS AND EFFECTIVENESS - ----------------------------------------- This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart, so that all signature pages are physically attached to the same document. This Agreement shall become effective (subject to section 3 hereof) upon the execution of a counterpart hereof by the Requisite Lenders and each of the other parties hereto and the receipt by the Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. Thenceforth, references herein to the "Equipment Loan Agreement" and references in the Original Equipment Loan Agreement to "this Agreement," "hereof," "hereto" and terms of similar import shall in each case be deemed to refer to the Original Equipment Loan Agreement as hereby amended. Except as specifically amended by this Amendment, the Original Equipment Loan Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender under, the Original Equipment Loan Agreement or any of the other Loan Documents. [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] -17- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. LAS VEGAS SANDS, INC. By: /s/David Friedman ----------------------------------- Name: David Friedman Title: Secretary VENETIAN CASINO RESORT, LLC By: Las Vegas Sands, Inc., as Managing Member By: /s/David Friedman ----------------------------------- Name: David Friedman Title: Secretary GMAC COMMERCIAL MORTGAGE CORPORATION, as a Lender By: /s/John Hopkins ----------------------------------- Name: John Hopkins Title: Vice President FLEET CAPITAL CORPORATION, as a Lender and as Co-Agent By: /s/Roberto J. Calvo ----------------------------------- Name: Roberto J. Calvo Title: Assistant Vice President [SIGNATURES CONCLUDED ON THE FOLLOWING PAGE] S-1 GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender and as Administrative Agent By: /s/Ann Nagele ----------------------------------- Name: Ann Nagele Title: Vice President - Risk Manager S-2 ANNEX A Schedule 3.1(d) Equity Rights in the Borrowers [to come] ANNEX B Schedule 3.31 Summary of Construction Litigation [to come] ANNEX C Schedule 3.34 Status of Certain Agreements and Events [to come] ANNEX D Form of Term Sheet Pertaining to Phase I-A Equipment Loan Agreement [to come] ANNEX E Form of Term Sheet Pertaining to Lido Bank Credit Agreement [to come] ANNEX F Form of Amended and Restated Bank Credit Agreement [to come] ANNEX G Form of amended and restated Conforming Adelson L/C Drawing Agreement [to come] EX-10 5 exhibit10-3.txt CREDIT AGREEMENT LIDO CASINO RESORT, LLC CREDIT AGREEMENT This CREDIT AGREEMENT is dated as of October 19, 2001 and entered into by and among LIDO CASINO RESORT, LLC ("Borrower"), THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO (each individually referred to herein as a "Lender" and collectively as "Lenders"), and THE BANK OF NOVA SCOTIA ("ScotiaBank"), as administrative agent for Lenders (in such capacity, "Administrative Agent"). R E C I T A L S WHEREAS, Borrower is an indirect wholly-owned subsidiary of Venetian Casino Resort, LLC ("Venetian") and Las Vegas Sands, Inc. ("LVSI") and the owner of the Land (this and other capitalized terms used herein shall have the meanings given in subsection 1.1 of this Agreement) on which Borrower intends to develop and construct Phase II of the casino resort property being developed by LVSI, Venetian and their Subsidiaries; WHEREAS, Borrower has requested that Lender extend certain senior credit facilities to Borrower on the terms and conditions set forth herein, to be used, among other things, to (i) provide a letter of credit for the account of Borrower and for the benefit of Scotiabank, as agent for the lenders under the LVSI/Venetian Credit Agreement, (ii) pay for certain predevelopment activities (such as planning, design and permitting) in connection with Phase II during the term of the facilities, (iii) pay interest, fees and transaction costs associated with such credit facilities and (iv) pay for other general corporate expenditures, including loans and distributions to Affiliates to the extent permitted hereunder. WHEREAS, subject to the terms and conditions hereof Lenders are willing to extend such senior secured credit facilities to Borrower; and WHEREAS, Borrower is willing to secure all of the Obligations hereunder and under the other Loan Documents by granting to Administrative Agent on behalf of Lenders a First Priority Lien on the Collateral. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, Borrower, Lenders and Administrative Agent agree as follows: Section 1. DEFINITIONS 1.1 Certain Defined Terms. - --- ---------------------- The following terms used in this Agreement shall have the following meanings: "Adelson" means Sheldon G. Adelson, an individual. "Adjusted Eurodollar Rate" means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (i) the arithmetic average (rounded upward to the nearest 1/16 of one percent) of the offered quotations to first class banks in the interbank Eurodollar market by Scotiabank for U.S. dollar deposits of amounts in same day funds comparable to the respective principal amounts of the Eurodollar Rate Loans of Scotiabank for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such Interest Period as of approximately 10:00 A.M. (New York time) on such Interest Rate Determination Date by (ii) a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including any marginal, emergency, supplemental, special or other reserves) applicable on such Interest Rate Determination Date to any member bank of the Federal Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation D (or any successor category of liabilities under Regulation D). "Administrative Agent" has the meaning assigned to that term in the introduction to this Agreement and also means and includes any successor Administrative Agent appointed pursuant to subsection 9.5. "Affected Lender" has the meaning assigned to that term in subsection 2.6C. "Affected Loans" has the meaning assigned to that term in subsection 2.6C. "Affiliate", as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, that Person. For the purposes of this definition, "control" (including, with 1 correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise. "Agreement" means this Credit Agreement dated as of October 19, 2001. "Aggregate Amounts Due" has the meaning assigned to that term in subsection 10.5. "Applied Amount" has the meaning assigned to that term in subsection 2.4B(iv)(b). "Asset Sale" means the sale by a Borrower or any of its Subsidiaries to any Person of (i) any of the stock of any of such Person's Subsidiaries, (ii) substantially all of the assets of any division or line of business of a Borrower or any of its Subsidiaries, or (iii) any other assets (whether tangible or intangible) of a Borrower or any of its Subsidiaries (other than (a) inventory or goods (other than equipment) sold in the ordinary course of business, (b) any other assets to the extent that the aggregate fair market value of such assets sold during any Fiscal Year, is less than or equal to $250,000. "Assignment Agreement" means an Assignment Agreement in substantially the form of Exhibit X annexed hereto. "Bankruptcy Code" means Title 11 of the United States Code entitled "Bankruptcy", as now and hereafter in effect, or any successor statute. "Base Rate" means, at any time, the higher of (x) the Prime Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate. "Base Rate Loans" means Loans bearing interest at rates determined by reference to the Base Rate as provided in subsection 2.2A. "Borrower" has the meaning assigned to that term in the introduction to this Agreement. "Business Day" means (i) for all purposes other than as covered by clause (ii) below, any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or Nevada or is a day on which banking institutions located in either such state are authorized or required by law or other governmental action to close, and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day described in clause (i) above and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Capital Lease", as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Cash" means (i) money, (ii) currency or (iii) a credit balance in a Deposit Account. "Cash Equivalents" means (a) [intentionally deleted], (b)(i) direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) or obligations fully guaranteed by the United States of America, (ii) obligations, debentures, notes or other evidence of indebtedness issued or guaranteed by any other agency or instrumentality of the United States, (iii) interest-bearing demand or time deposits (which may be represented by certificates of deposit) issued by banks having general obligations rated (on the date of acquisition thereof) at least "A" or the equivalent by Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. (together with its successors, "S&P") or Moody's Investors Service, Inc. (together with its successors, "Moody's") (S&P and Moody's together with any other nationally recognized credit rating agency if neither of such corporations is then currently rating the pertinent currently rating the pertinent obligations, a "Rating Agency") or, if not so rated, secured at all times, in the manner and to the extent provided by law, by collateral security in clause (i) or (ii) of this definition, of a market value of no less than the amount of monies so invested, (iv) 2 commercial paper rated (on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency issued by any Person, (v) repurchase obligations for underlying securities of the types described in clause (i) or (ii) above, entered into with any commercial bank or any other financial institution having long-term unsecured debt securities rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency in connection with which such underlying securities are held in trust or by a third-party custodian, (vi) guaranteed investment contracts of any financial institution which has a long-term debt rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency, (vii) obligations (including both taxable and non-taxable municipal securities) issued or guaranteed by, and any other obligations the interest on which is excluded from income for Federal income tax purposes issued by, and any state of the United States of America or District of Columbia or the Commonwealth of Puerto Rico or any political subdivision, agency, authority or instrumentality thereof, which issuer or guarantor has (A) a short-term debt rated (on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency and (B) a long-term debt rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency, (viii) investment contracts of any financial institution either (A) fully secured by (1) direct obligations of the United States, (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States or (3) securities or receipts evidencing ownership interest in obligations or special portions thereof described in clause (1) or (2), in each case guaranteed as full faith and credit obligations of the United States of America, having a market value at least equal to 102% of the amount deposited thereunder, or (B) with long-term debt rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency and short-term debt rated (on the date of acquisition thereof) at least "A-1" or "P-1" or the equivalent by any Rating Agency, (ix) a contract or investment agreement with a provider or guarantor (A) which provider or guarantor is rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency (provided that if a guarantor is a party to the rating, the guaranty must be unconditional and must be confirmed in writing prior to any assignment by the provider to any subsidiary of such guarantor), (B) providing that monies invested shall be payable to Administrative Agent without condition (other than notice) and without brokerage fee or other penalty, upon not more than two Business Days' notice for application when and as required or permitted under the Collateral Documents, and (C) stating that such contract or agreement is unconditional, expressly disclaiming any right of setoff and providing for immediate termination in the event of insolvency of the provider and termination upon demand of Administrative Agent (which demand shall only be made at the direction of the Borrower) after any payment or other covenant default by the provider, or (x) any debt instruments of any Person which instruments are rated (on the date of acquisition thereof) at least "A," "A2", "A-1" or "P-1" or the equivalent by any Rating Agency, provided that in each case of clauses (i) through (x), such investments are denominated in Dollars and maturing not more than 13 months from the date of acquisition thereof; (c) investments in any money market fund which is rated (on the date of acquisition thereof) at least "A" or "A2" or the equivalent by any Rating Agency; (d) investments in mutual funds sponsored by any securities broker-dealer of recognized national standing having an investment policy that requires substantially all the invested assets of such fund to be invested in investments described in any one or more of the foregoing clauses and having a rating of at least "A" or "A2" or the equivalent by any Rating Agency; or (e) investments in both taxable and nontaxable (i) periodic auction reset securities which have final maturities between one and 30 years from the date of issuance and are repriced through a dutch auction or other similar method every 35 days or (ii) auction preferred shares which are senior securities of leveraged closed end municipal bond funds and are repriced pursuant to a variety of rate reset periods, in each case having a rating (on the date of acquisition thereof) of at least "A" or "A2" or the equivalent of any Rating Agency. "Certificate re Non-Bank Status" means a certificate substantially in the form of Exhibit VI annexed hereto delivered by a Lender to Administrative Agent pursuant to subsection 2.7B(iii). "Chase Credit Agreement" means the unsecured bank line of credit of Borrower with The Chase Manhattan Bank, as amended May 31, 2001. 3 "Class" means, as applied to Lenders, each of the following two classes of Lenders: (i) Lenders having Term Loan Exposure and (ii) Lenders having Revolving Loan Exposure. "Closing Date" means the date, on or before October 19, 2001, on which this Agreement is executed and delivered and all conditions for the occurrence thereof set forth in subsection 4.1 shall have been satisfied or waived by Administrative Agent. "Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute. "Collateral" means, collectively, all of the real, personal and mixed property (including capital stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations. "Collateral Documents" means the Company Security Agreement, the Deed of Trust, any Subsidiary Security Agreements and all other instruments or documents delivered by a Loan Party pursuant to this Agreement or any of the other Loan Documents in order to grant to Administrative Agent on behalf of Lenders a Lien on any real, personal or mixed property of that Loan Party as security for the Obligations. "Commercial Letter of Credit" means any letter of credit or similar instrument issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by Borrower in the ordinary course of business of Borrower. "Commitment" means the commitment of a Lender to make Loans as set forth in subsection 2.1A, and "Commitments" means such commitments of all Lenders in the aggregate. "Company Security Agreement" means the Company Security Agreement executed and delivered by Borrower on the date hereof, substantially in the form of Exhibit VII annexed hereto. "Compliance Certificate" means a certificate substantially in the form of Exhibit IV annexed hereto delivered to Lender by Borrower pursuant to subsection 6.1(iv). "Contingent Obligation", as applied to any Person, means any direct or indirect liability, contingent or otherwise, of that Person (i) with respect to any Indebtedness, lease, dividend or other obligation of another if the primary purpose or intent thereof by the Person incurring the Contingent Obligation is to provide assurance to the obligee of such obligation of another that such obligation of another will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected (in whole or in part) against loss in respect thereof, (ii) with respect to any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings, or (iii) under Interest Rate Agreements. Contingent Obligations shall include (a) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another, (b) the obligation to make take-or-pay or similar payments if required regardless of non-performance by any other party or parties to an agreement, and (c) any liability of such Person for the obligation of another through any agreement (contingent or otherwise) (X) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (Y) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is as described in the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guaranteed or otherwise supported or, if less, the amount to which such Contingent Obligation is specifically limited. "Contractual Obligation", as applied to any Person, means any provision of any Security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. 4 "Contractors" means any architects, consultants, designers, contractors, subcontractors, suppliers, laborers or any other Person engaged by Borrower. "Contracts" means, collectively, the contracts entered into, from time to time, between Borrower and any Contractor for performance of services or sale of goods. "Cooperation Agreement" means that certain Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as of November 14, 1997 by and between Venetian, Grand Canal Shops Mall Construction, LLC (replaced by Grand Canal Shops Mall Subsidiary, LLC pursuant to an amendment dated December 20, 1999) and Interface. "Debt Service Reserve Amount" means $1,000,000, provided that if the aggregate amount of Term Loans and Revolving Loan Commitments is increased above $17,500,000, such amount shall be increased by the product of 0.057 times the aggregate amount by which the Term Loans and Revolving Loan Commitments are increased. "Deed of Trust" means that certain Deed of Trust, Assignment of Rents and Leases and Security Agreement in the form of Exhibit VIII annexed hereto, dated effective as of the Closing Date granted by Borrower to Nevada Title Company, for the benefit of Administrative Agent, as agent for the Lenders. "Deposit Account" means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "Dollars" and the sign "$" mean the lawful money of the United States of America. "Eligible Assignee" means (A) (i) a commercial bank organized under the laws of the United States or any state thereof; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; and (iv) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act) which extends credit or buys loans as one of its businesses including insurance companies, mutual funds and lease financing companies; and (B) any Lender and any Affiliate of any Lender; provided that no Affiliate of Borrower shall be an Eligible Assignee; provided further that so long as no Event of Default shall have occurred and be continuing, no (i) Person that owns or operates a casino located in the State of Nevada or the State of New Jersey (or is an Affiliate of such a Person) (provided that a passive investment constituting less than 20% of the common stock of any such casino shall not constitute ownership thereof for the purposes of this definition), (ii) Person that owns or operates a convention, trade show or exhibition facility in Las Vegas, Nevada or Clark County, Nevada (or an Affiliate of such a Person) (provided that a passive investment constituting less than 20% of the common stock of any such convention or trade show facility shall not constitute ownership for the purpose of this definition), or (iii) union pension fund (provided that any intermingled fund or managed account which has as part of its assets under management the assets of a union pension fund shall not be disqualified from being an Eligible Assignee hereunder so long as the manager of such fund is not controlled by a union), shall be an Eligible Assignee, in each case which Person shall not have been denied an approval or a license, or found unsuitable under the Nevada Gaming Laws applicable to Lenders. "Employee Benefit Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA which is or was maintained or contributed to by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates. "Environmental Claim" means any investigation, notice, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any governmental authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law, (ii) in connection with any Hazardous 6 Materials or any actual or alleged Hazardous Materials Activity, or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment. "Environmental Laws" means any and all current or future statutes, ordinances, orders, rules, regulations, judgments, Permits, or any other requirements of governmental authorities relating to (i) environmental matters, including those relating to any Hazardous Materials Activity, (ii) the generation, use, storage, transportation or disposal of Hazardous Materials, or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to Borrower or any of its Subsidiaries or any Facility, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.ss. 1251 et seq.), the Clean Air Act (42 U.S.C.ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.ss. 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.ss.136 et seq.), the Occupational Safety and Health Act (29 U.S.C.ss. 651 et seq.), the Oil Pollution Act (33 U.S.C.ss. 2701 et seq.) and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.ss. 11001 et seq.), each as amended or supplemented, any analogous present or future state or local statutes or laws, and any regulations promulgated pursuant to any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto. "ERISA Affiliate" means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Borrower or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Borrower or such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Borrower or such Subsidiary and with respect to liabilities arising after such period for which Borrower or such Subsidiary could be liable under the Code or ERISA. "ERISA Event" means (i) a "reportable event" within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Code) or the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefor, or the receipt by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to 7 terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Code or pursuant to ERISA with respect to any Pension Plan. "Eurodollar Rate Loans" means Loans bearing interest at rates determined by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A. "Event of Default" means each of the events set forth in Section 8. "Event of Loss" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (A) any loss, destruction or damage of such property or asset; (B) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; or (C) any settlement in lieu of clause (B) above. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "Facilities" means any and all real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Borrower or any of its Subsidiaries or any of their respective predecessors including, without limitation, the Land. "FDIC" means the Federal Deposit Insurance Corporation. "Federal Funds Effective Rate" means, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Administrative Agent from three Federal funds brokers of recognized standing selected by Administrative Agent. "First Priority" means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien (other than Liens permitted pursuant to subsection 7.2) to which such Collateral is subject. "Fiscal Quarter" means a fiscal quarter of any Fiscal Year. "Fiscal Year" means the fiscal year of Borrower ending on December 31 of each calendar year. "Funding and Payment Office" means (i) the office of Lender located at 600 Peachtree Street NE, Suite 2700, Atlanta, Georgia 30308 or (ii) such other office of Administrative Agent as may from time to time hereafter be designated as such in a written notice delivered by Administrative Agent to Borrower and each Lender. "Funding Date" means the date of the funding of a Loan. "GAAP" means, subject to the limitations on the application thereof set forth in subsection 1.2, generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a 8 significant segment of the accounting profession, in each case as the same are applicable to the circumstances as of the Closing Date. "Gaming License" means every license, franchise or other authorization to own, lease, operate or otherwise conduct gaming activities of the Borrower or any of its Subsidiaries, including without limitation, all such licenses granted under the Nevada Gaming Control Act, and the regulations promulgated pursuant thereto, and other applicable federal, state, foreign or local laws. "Governmental Acts" has the meaning assigned to that term in subsection 3.5A. "Governmental Instrumentality" means any national, state or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-governmental, judicial, public or statutory instrumentality, authority, body, agency, bureau or entity, (including the Nevada Gaming Authorities, any zoning authority, the FDIC, the Comptroller of the Currency or the Federal Reserve Board, any central bank or any comparable authority) or any arbitrator with authority to bind a party at law. "Harrah's Shared Roadway Agreement" means an agreement between Venetian and Harrah's Casino Resort, as contemplated by the existing letter of intent between the parties with respect to the sharing of the common road between the parties and certain plans with respect to the improvements to be made thereto. "Hazardous Materials" means (i) any chemical, material or substance at any time defined as or included in the definition of "hazardous substances", "hazardous wastes", "hazardous materials", "extremely hazardous waste", acutely hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste", "infectious waste", "toxic substances", or any other term or expression intended to define, list or classify substances by reason of properties harmful to health, safety or the indoor or outdoor environment (including harmful properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or petroleum derived substance; (iii) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (iv) any flammable substances or explosives; (v) any radioactive materials; (vi) any asbestos-containing materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment which contains any oil or dielectric fluid containing polychlorinated biphenyls; (ix) pesticides; and (x) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment. "Hazardous Materials Activity" means any past, current, proposed or threatened activity, event or occurrence involving any Hazardous Materials, including the use, manufacture, possession, storage, holding, presence, existence, location, Release, threatened Release, discharge, placement, generation, transportation, processing, construction, treatment, abatement, removal, remediation, disposal, disposition or handling of any Hazardous Materials, and any corrective action or response action with respect to any of the foregoing. "Improvements" means any buildings, fixtures and other improvements to be situated on the Land. "Included Taxes" has the meaning assigned to that term in subsection 2.7B(i). "Increasing Lender" has the meaning assigned to that term in subsection 2.1A(iii). "Indebtedness", as applied to any Person, means (i) all indebtedness for borrowed money, (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money, (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding any such obligations incurred under ERISA and trade payables and accruals incurred in 9 the ordinary course of business), and (v) all indebtedness secured by any Lien on any property or asset owned or held and under Contracts by that Person regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person. "Indemnitee" has the meaning assigned to that term in subsection 10.3. "Independent Financial Advisor" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the judgment of Borrower's managing member (i) qualified to perform the task for which it has been engaged and (ii) disinterested and independent with respect to the Borrower and its Subsidiaries, if any, and each Affiliate of LVSI and Adelson. "Intellectual Property" means all patents, trademarks, trade names, copyrights, technology, know-how and processes used in or necessary for the conduct of the business of Borrower as proposed to be conducted pursuant to the Operative Documents that are material to the condition (financial or otherwise), business or operations of the Borrower. "Interest Payment Date" means (i) with respect to any Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on December 31, 2001, and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan, provided that in the case of each Interest Period of longer than three months "Interest Payment Date" shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period. "Interest Period" has the meaning assigned to that term in subsection 2.2B. "Interest Rate Determination Date" means, with respect to any Interest Period, two Business Days prior to the first day of such Interest Period. "Interface" means Interface Group-Nevada, Inc., a Nevada corporation. "Investment" means (i) any direct or indirect purchase or other acquisition by Borrower or any of its Subsidiaries of, or of a beneficial interest in, any Securities of any other Person (including any Subsidiary), (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by Borrower or any of its Subsidiaries from any Person, of any equity Securities of any Subsidiary of Borrower, or (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Borrower or any of its Subsidiaries to any other Person, including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment. "Issuing Lender" means, with respect to any Letter of Credit, the Lender which agrees or is otherwise obligated to issue such Letter of Credit, determined as provided in subsection 3.1B(ii). "Joint Venture" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership, limited liability company or other legal form; provided that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "Land" means the real property owned in fee by Borrower consisting of approximately 15.46 acres as described in more detail on Exhibit XII attached hereto. "Legal Requirements" means all laws, statutes, orders, decrees, injunctions, licenses, permits, approvals, agreements and regulations of any Governmental Instrumentality having jurisdiction over the matter in question. "Lender" and "Lenders" means the persons identified as "Lenders" and listed on the signature pages of this Agreement and any new Lenders, together with their respective successors and permitted assigns pursuant to subsection 10.1; provided that the term 10 "Lenders", when used in the context of a particular Commitment, shall mean Lenders having that Commitment. "Letter of Credit" or "Letters of Credit" means Commercial Letters of Credit and Standby Letters of Credit issued or to be issued by Issuing Lenders for the account of Borrower pursuant to subsection 3.1. "Letter of Credit Usage" means, as at any date of determination, the sum of (i) the maximum aggregate amount which is or at any time thereafter may become available for drawing under all Letters of Credit then outstanding plus (ii) the aggregate amount of all drawings under Letters of Credit honored by Issuing Lenders and not theretofore reimbursed by Borrower (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B). "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC). "Liquidated Damages" means any proceeds or liquidated damages paid pursuant to any obligation, default or breach under the Contracts (net of actual and documented reasonable costs incurred by Borrower in connection with adjustment or settlement thereof, including taxes and any reasonable provisions made in respect of such costs and expenses (including any such taxes paid or payable by an owner of Borrower or any of its Subsidiaries)). For purposes of this definition, so-called "liquidated damages" insurance policies shall be deemed to be Contracts. "Loan" or "Loans" means one or more of the Term Loans or the Revolving Loans or any combination thereof made pursuant to Section 2.1A. "Loan Documents" means this Agreement, the Notes, the Letters of Credit (and any applications for, or reimbursement agreements or other documents or certificates executed by Borrower in favor of an Issuing Lender relating to, the Letters of Credit), any Subsidiary Guaranties, and the Collateral Documents. "Loan Party" means Borrower and any Subsidiary of Borrower which may hereafter become a party to any Loan Document and "Loan Parties" means all such Persons, collectively. "Loss Proceeds" means the proceeds of any insurance policy required to be maintained by the Borrower hereunder. "LVSI" has the meaning set forth in the Recitals hereto. "LVSI/Venetian Credit Agreement" means that certain Amended and Restated Credit Agreement, dated as of September 17, 2001 by and among LVSI and Venetian, as borrowers, certain lenders party thereto from time to time and Scotiabank as administrative agent. "Margin Stock" has the meaning assigned to that term in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Material Adverse Effect" means (i) a material adverse effect upon the business, operations, properties, assets, condition (financial or otherwise) or prospects of LVSI and its Subsidiaries, taken as a whole to the extent such material adverse effect could reasonably be expected to materially impair the ability of Venetian to perform its obligations under the Phase II Lease, (ii) a material adverse effect upon the Collateral, taken as a whole (including without limitation the value thereof) or the financial condition of Borrower and its Subsidiaries, if any, taken as a whole, (iii) the material impairment of the ability of any Loan Party to observe or perform, or of Administrative Agent or Lenders to enforce, the Obligations, provided that any adverse effect of the type described in clauses (i), (ii) or (iii) above occurring prior to the date hereof as a result of the events of September 11, 2001, shall not constitute a Material Adverse Effect hereunder, so long as such adverse effect does not worsen in any material respect following the date hereof. 11 "Material Contract" means (i) the Phase II Lease, and (ii) any other contract or other arrangement to which Borrower, or any of its Subsidiaries are a party (other than the Loan Documents) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect. "Mortgage Policy" has the meaning assigned to that term in Subsection 4.1C of this Agreement. "Mortgaged Property" means the real property described in Schedule 5.5. "Multiemployer Plan" means any Employee Benefit Plan which is a "multiemployer plan" as defined in Section 3(37) of ERISA. "Net Asset Sale Proceeds" means the aggregate cash proceeds received by Borrower or any of its Subsidiaries in respect of any Asset Sale, net of (i) the direct costs relating to such Asset Sale (including, without limitation legal, accounting and investment banking fees and expenses, employee severance and termination costs, any trade payables or similar liabilities related to the assets sold and required to be paid by the seller as a result thereof and sales, finders' or broker's commission), and any relocation expenses incurred as a result thereof and taxes paid or payable as result thereof (including, without limitation, any such taxes paid or payable by an owner of Borrower or any of its Subsidiaries) (after taking into account any available tax credits or deductions and any tax sharing arrangements), (ii) amounts required to be applied to the repayment of Indebtedness secured by a Lien (or amounts permitted by the terms of such Indebtedness to be otherwise reinvested in the Project to the extent so reinvested) which is prior to the Lien under the Collateral Documents on the asset or assets that are the subject of such Asset Sale, (iii) all distributions and other payments required to be made to minority interest holders in a Subsidiary or joint venture as a result of the Asset Sale and (iv) any reasonable reserve for adjustment in respect of the sale price of such asset or assets or any liabilities associated with the asset disposed of in such Asset Sale. "New Lenders" has the meaning assigned to that term under subsection 2.1A(iii). "Net Loss Proceeds" means the aggregate cash proceeds received by Borrower or any of its Subsidiaries in respect of any Event of Loss, including, without limitation, insurance proceeds, condemnation awards or damages awarded by any judgment, net of the direct costs in recovery of such Net Loss Proceeds (including, without limitation, legal, accounting, appraisal and insurance adjuster fees and expenses) and any taxes paid or payable as a result thereof (including, without limitation, any such taxes paid or payable by an owner of Borrower or any of its Subsidiaries) (after taking into account any available tax credits or deductions and any tax sharing arrangements) and amounts required to be applied to the repayment of Indebtedness secured by a Lien (or amounts permitted by the terms of such Indebtedness to be otherwise reinvested in the Project to the extent so reinvested) which is prior to the Liens of Lender under the Collateral Documents on the asset or assets that are the subject of the Event of Loss. Notwithstanding the foregoing, all proceeds of so-called "liquidated damages" insurance policies shall not be Net Loss Proceeds but shall be Liquidated Damages. "Net Proceeds Amount" has the meaning assigned to that term in subsection 2.4B(iii)(d). "Nevada Gaming Authorities" shall mean, collectively, the Nevada Gaming Commission, the Nevada State Gaming Control Board, and the Clark County Liquor and Gaming Licensing Board. "Nevada Gaming Laws" shall mean the Nevada Gaming Control Act, as modified in Chapter 463 of the Nevada Revised Statutes, as amended from time to time, and the regulations of the Nevada Gaming Commission promulgated thereunder, as amended from time to time. "Non-US Lender" has the meaning assigned to that term in subsection 2.7B(iii)(a). "Note" means one or more of the Term Notes or Revolving Notes or any combination thereof. "Notice of Borrowing" means a notice substantially in the form of Exhibit I annexed hereto delivered by Borrower to Administrative Agent pursuant to subsection 2.1B with respect to a proposed borrowing. 12 "Notice of Conversion/Continuation" means a notice substantially in the form of Exhibit II annexed hereto delivered to Administrative Agent pursuant to subsection 2.2D with respect to a proposed conversion or continuation of the applicable basis for determining the interest rate with respect to the Loans specified therein. "Notice of Issuance of Letter of Credit" means a notice substantially in the form of Exhibit IX annexed hereto delivered by Borrower to Administrative Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a Letter of Credit. "Obligations" means all obligations of every nature of each Loan Party from time to time owed to Administrative Agent, Lenders, or any of them under the Loan Documents, whether for principal, interest, reimbursement of amounts drawn under Letters of Credit, fees, expenses, indemnification or otherwise. "Officers' Certificate" means, as applied to any corporation, a certificate executed on behalf of such corporation by its chairman of the board (if an officer) or its president or one of its vice presidents and by its chief financial officer or its treasurer (in their capacity as such officer); provided that every Officers' Certificate with respect to the compliance with a condition precedent to the making of any Loans hereunder shall include (i) a statement that the officer or officers making or giving such Officers' Certificate have read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signers, they have made or have caused to be made such examination or investigation as is reasonably necessary to enable them to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signers, such condition has been complied with in all material respects. "Operating Lease" means, as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) that is not a Capital Lease other than any such lease under which that Person is the lessor. "Operative Documents" means the Loan Documents and the Project Documents. "Organizational Documents" means (i) with respect to any corporation, its certificate or articles of incorporation and its bylaws, (ii) with respect to any limited partnership, its certificate of limited partnership and its partnership agreement, (iii) with respect to any general partnership, its partnership agreement, (iv) with respect to any limited liability company, its articles or certificate of organization and its operating agreement and (v) with respect to any other entity, its equivalent organizational, governing documents. "PBGC" means the Pension Benefit Guaranty Corporation or any successor thereto. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Code or Section 302 of ERISA. "Permits" means all authorizations, consents, decrees, permits, waivers, privileges, approvals from and filings with all Governmental Instrumentalities including, without limitation, the Nevada Gaming Authorities necessary for the conduct of the business of Borrower and its Subsidiaries, including development of Phase II. "Permitted Liens" means the following types of Liens (excluding any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Code or by ERISA, any such Lien relating to or imposed in connection with any Environmental Claim, and any such Lien expressly prohibited by any applicable terms of any of the Collateral Documents provided in each case that such Liens do not secure Indebtedness for borrowed money): (i) Liens for taxes, assessments or governmental charges or claims the payment of which is not, at the time, required by subsection 6.3; (ii) statutory Liens of landlords, statutory Liens of banks and rights of set-off, statutory Liens of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law, in each case incurred in the ordinary course of 13 business (a) for amounts not yet overdue or (b) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of 5 days) are being contested in good faith by appropriate proceedings, so long as (1) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts, and (2) in the case of a Lien with respect to any portion of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral on account of such Lien; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money), incurred in the ordinary course of business (a) for amounts not yet overdue or (b) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of 5 days) are being contested in good faith by appropriate proceedings, so long as (1) such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts and (2) in the case of a Lien with respect to any portion of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral on account of such Lien; (iv) any attachment or judgment Lien not constituting an Event of Default under subsection 8.8; (v) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of a Borrower or any of its Subsidiaries or result in a material diminution in the value of any Collateral as security for the Obligations; (vi) the Phase II Lease and any leasehold mortgage in favor of any party financing the lessee under such lease provided that (a) neither Borrower nor any of its Subsidiaries is liable for the payment of any principal of, or interest, premiums or fees on, such financing and (b) the affected lease and leasehold mortgage are expressly made subject and subordinate to the Lien of the Deed of Trust; (vii) leases listed on Schedule 5.5 as in effect on the date hereof so long as each such lease is terminable on not more than 30 days notice. (viii) Liens arising from filing UCC financing statements relating solely to leases permitted by this Agreement; (ix) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (x) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property; (xi) Liens created or contemplated by the Cooperation Agreement (as in effect on the date hereof); (xii) Liens on real property of Borrower arising pursuant to that certain Harrah's Shared Roadway Agreement (as in effect on November 14, 1997); (xiii) Liens incurred in connection with the construction of a pedestrian bridge or a pedestrian tunnel under Las Vegas Boulevard and Sands Avenue provided that such Liens will not (i) materially interfere with, impair or detract from the operation of the business of Borrower and its Subsidiaries and (ii) cause a material decrease in the value of the Collateral; (xiv) licenses of patents, trademarks and other intellectual property rights granted by Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of Borrower or such Subsidiary; (xv) Liens created under the Predevelopment Agreement (as in effect on November 14, 1997); 14 (xvi) easements, restrictions, rights of way, encroachments and other minor defects or irregularities in title incurred in connection with the traffic study relating to increased traffic on Las Vegas Boulevard as a result of completion of the hotel/casino project developed by LVSI and its Subsidiaries; and (xvii) Liens listed on Schedule 7.2. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments (whether federal, state or local, domestic or foreign, and including political subdivisions thereof) and agencies or other administrative or regulatory bodies thereof. "Phase I LOC" means the letter of credit required to be maintained under the terms of Section 7.21 of the LVSI/Venetian Credit Agreement. "Phase II" means a hotel, casino and mall complex proposed to be developed on the Land. "Phase II Lease" means that certain lease between Borrower as lessor and Venetian as lessee for the portion of the Land identified therein and dated as of the date hereof. "Potential Event of Default" means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default. "Predevelopment Agreement" means the Sands Resort Hotel Casino Agreement dated February 18, 1997 by and between Clark County and LVSI. "Prime Rate" means the rate that Scotiabank announces from its New York office from time to time as its Dollar prime lending rate, as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Scotiabank or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "Proceedings" has the meaning assigned to that term in subsection 6.1(x). "Project Documents" means the Cooperation Agreement, the Phase II Lease, the Predevelopment Agreement, the Harrah's Shared Roadway Agreement, the Chase Credit Agreement, the operating agreements for each of Borrower and Borrower's managing member and any other document or agreement entered into on, prior to or after Closing Date, in accordance with Section 7.13 relating to the development, construction, maintenance or operation of any Improvements to be constructed on the Land. "Pro Rata Share" means (i) with respect to all payments, computations and other matters relating to the Term Loan Commitment or the Term Loan of any Lender, the percentage obtained by dividing (x) the Term Loan Exposure of that Lender by (y) the aggregate Term Loan Exposure of all Lenders, (ii) with respect to all payments, computations and other matters relating to the Revolving Loan Commitment or the Revolving Loans of any Lender or any Letters of Credit issued or participations therein purchased by any Lender, the percentage obtained by dividing (x) the Revolving Loan Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all Lenders, and (iii) for all other purposes with respect to each Lender, the percentage obtained by dividing (x) the sum of the Term Loan Exposure of that Lender plus the Revolving Loan Exposure of that Lender by (y) the sum of the aggregate Term Loan Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share of each Lender for purposes of each of clauses (i), (ii) and (iii) of the preceding sentence is set forth opposite the name of that Lender in Schedule 2.1 annexed hereto. "Quarterly Date" means the last day of each Fiscal Quarter. "Register" has the meaning assigned to that term in subsection 2.1D. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. 15 "Reimbursement Date" has the meaning assigned to that term in subsection 3.3B. "Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), including the movement of any Hazardous Materials through the air, soil, surface water or groundwater. "Required LOC Amount" means the face amount of the Phase I LOC required to be maintained under the terms of the LVSI/Venetian Credit Agreement, as such face amount may be reduced from time to time in accordance with the terms of the LVSI/Venetian Credit Agreement. "Requisite Class Lenders" means, at any time of determination (i) for the Class of Lenders having Term Loan Exposure, Lenders having or holding more than 50% of the sum of the aggregate Term Loan Exposure of all Lenders and (ii) for the Class of Lenders having Revolving Loan Exposure, Lenders having or holding more than 50% of the aggregate Revolving Loan Exposure of all Lenders. "Requisite Lenders" means Lenders having or holding more than 50% of the sum of the aggregate Term Loan Exposure and Revolving Loan Exposure. "Restricted Junior Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock or membership interests of Borrower now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock or membership interests of Borrower now or hereafter outstanding and (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock or membership interests of Borrower now or hereafter outstanding. "Revolving Loan Commitment" means the commitment of a Lender to make Revolving Loans to Borrower pursuant to subsection 2.1A(ii), and "Revolving Loan Commitments" means such commitments of all Lenders in the aggregate. "Revolving Loan Commitment Termination Date" means June 30, 2003. "Revolving Loan Exposure" means, with respect to any Lender as of any date of determination (i) prior to the termination of the Revolving Loan Commitments, that Lender's Revolving Loan Commitment and (ii) after the termination of the Revolving Loan Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender plus (b) in the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (in each case net of any participations purchased by other Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus (c) the aggregate amount of all participations purchased by that Lender in any outstanding Letters of Credit or any unreimbursed drawings under any Letters of Credit. "Revolving Loans" means the Loans made by Lenders to Borrower pursuant to subsection 2.1A(ii). "Revolving Notes" means (i) the promissory notes of Borrower issued pursuant to subsection 2.1E on the Closing Date and (ii) any promissory notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in connection with assignments of the Revolving Loan Commitments and Revolving Loans of any Lenders, in each case substantially in the form of Exhibit III-B annexed hereto, as they may be amended, supplemented or otherwise modified from time to time. "Scotiabank" has the meaning assigned to that term in the introduction to this Agreement. "Securities" means any stock, shares, partnership interests, member interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing. 16 "Securities Act" means the Securities Act of 1933, as amended from time to time, and any successor statute. "Solvent" means, with respect to any Person, that as of the date of determination both (A) (i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Standby Letter of Credit" means the Phase I LOC and any standby letter of credit or similar instrument issued for the purpose of supporting (i) Indebtedness of Borrower in respect of industrial revenue or development bonds or financings, (ii) workers' compensation liabilities of Borrower, (iii) the obligations of third party insurers of Borrower arising by virtue of the laws of any jurisdiction requiring third party insurers, (iv) obligations with respect to Capital Leases or Operating Leases of Borrower or with respect to the Harrah's Shared Roadway Agreement, and (v) performance, payment, deposit or surety obligations of Borrower, in any case if required by law or governmental rule or regulation (including, without limitation, if required by any Governmental Instrumentality or otherwise necessary in order to obtain any Permit related to the Project) or in accordance with custom and practice in the industry; provided that Standby Letters of Credit may not be issued for the purpose of supporting (a) trade payables or (b) any Indebtedness constituting "antecedent debt" (as that term is used in Section 547 of Bankruptcy Code). "Subsidiary" means, with respect to any Person, any corporation, partnership , limited liability company, association , joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Subsidiary Guarantor" means any Subsidiary of Borrower that executes and delivers a counterpart of the Subsidiary Guaranty from time to time pursuant to Subsection 6.10. "Subsidiary Guaranty" means any Subsidiary Guaranty, each such Subsidiary Guaranty to be in form and substance reasonably satisfactory to Administrative Agent, executed and delivered by any Subsidiary of Borrower from time to time in accordance with subsection 6.10. "Subsidiary Security Agreement" means each Subsidiary Security Agreement executed and delivered by any Subsidiary Guarantor from time to time in accordance with subsection 6.10, each such Subsidiary Security Agreement to be in form and substance reasonably satisfactory to Administrative Agent. "Supplemental Agent" or "Supplemental Agents" means has the meaning assigned to that term in subsection 9.1B. "Supplier Joint Venture" means any Person that supplies or provides materials or services to any Borrower or any contractor in the Phase II project or Phase II predevelopment and in which a Borrower or one of its Subsidiaries have Investments. "Tax" or "Taxes" means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided that "Tax on the overall net income" of a Person shall be construed as 17 a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person's principal office (and/or, in the case of Lender, its lending office) is located or in which that Person (and/or, in the case of Lender, its lending office) is deemed to be doing business on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of Lender, its lending office). "Term Loan Commitment" means the commitment of a Lender to make a Term Loan to Borrower pursuant to subsection 2.1A(i), and "Term Loan Commitments" means such commitments of all Lenders in the aggregate. "Term Loan Exposure" means, with respect to any Lender as of any date of determination (i) prior to the funding of the Term Loans, that Lender's Term Loan Commitment and (ii) after the funding of the Term Loans, the outstanding principal amount of the Term Loan of that Lender. "Term Loans" means the Loans made by Lenders to Borrower pursuant to subsection 2.1A(i). "Term Loan Funding Date" means the Funding Date on which the Term Loans are funded in accordance with subsection 2.1A(iii) and subsection 4.2 hereof. "Term Notes" means (i) the promissory notes of Borrower issued pursuant to subsection 2.1E(i) on the Term Loan Funding Date and (ii) any promissory notes issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in connection with assignments of the Term Loan Commitments or Term Loans of any Lenders, in each case substantially in the form of Exhibit III-A annexed hereto. "Title Company" means, Chicago Title Insurance Company and First American Title Insurance Company or an Affiliate thereof and/or one or more other title insurance companies reasonably satisfactory to Administrative Agent. "Total Utilization of Revolving Loan Commitments" means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of reimbursing the applicable Issuing Lender for any amount drawn under any Letter of Credit but not yet so applied) plus (ii) the Letter of Credit Usage. "UCC" means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction. "Venetian" has the meaning set forth in the Recitals hereto. 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations - --- ------------------------------------------------------------------ Under Agreement. ---------------- Except as otherwise expressly provided in this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Borrower to Lenders pursuant to clauses (i), (ii) or (iii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the time of such preparation. Calculations in connection with the definitions, covenants and other provisions of this Agreement shall utilize accounting principles and policies in conformity with those used to prepare the financial statements referred to in subsection 5.3. 1.3 Other Definitional Provisions and Rules of Construction. - --- -------------------------------------------------------- A. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. B. References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. C. The use in any of the Loan Documents of the word "include" or "including", when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or 18 matters, whether or not nonlimiting language (such as "without limitation" or "but not limited to" or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. D. Any reference to any agreement or instrument shall be deemed to include a reference to such agreement or instrument as assigned, amended, supplemented or otherwise modified from time to time in accordance with subsection 7.13. Section 2. AMOUNTS AND TERMS OF COMMITMENT AND LOANS 2.1 Commitments; Making of Loans; the Register; Notes. - --- -------------------------------------------------- A. Commitments. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrower herein set forth, each Lender hereby severally agrees to make the Loans described in this subsection 2.1A. (i) Term Loans. Each Lender with a Term Loan Commitment severally agrees to lend to the Borrower on the Term Loan Funding Date, which shall be not later than June 30, 2003, an aggregate amount not exceeding its Pro Rata Share of the aggregate amount of the Term Loan Commitments to be used for the purposes identified in subsection 2.5A. The amount of each Lender's Term Loan Commitment as of the date hereof is zero; provided that the Term Loan Commitments of Lenders shall be adjusted to give effect to (a) any Term Loan increases pursuant to subsection 2.1A(iii) and (b) any assignments of the Term Loan Commitments pursuant to subsection 10.1B; and provided, further that the amount of the Term Loan Commitments shall be reduced from time to time by the amount of any reductions thereto made pursuant to subsections 2.4B(ii) and 2.4B(iii). Each Lender's Term Loan Commitments shall expire immediately and without further action on June 30, 2003 and no Term Loans shall be made after such date. Amounts borrowed under this subsection 2.1A and subsequently repaid or prepaid may not be reborrowed. (ii) Revolving Loans. Each Lender severally agrees, subject to the limitations set forth below with respect to the maximum amount of Revolving Loans permitted to be outstanding from time to time, to lend to Borrower from time to time during the period from the Closing Date to but excluding the Revolving Loan Commitment Termination Date an aggregate amount not exceeding its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments to be used for the purposes identified in subsection 2.5A. The original amount of each Lender's Revolving Loan Commitment is set forth opposite its name on Schedule 2.1 annexed hereto and the aggregate original amount of the Revolving Loan Commitments is $17,500,000, provided that the Revolving Loan Commitments of Lenders shall be adjusted to give effect to (a) any Revolving Loan Commitment increases pursuant to subsection 2.1A(iii) and (b) any assignments of the Revolving Loan Commitments pursuant to subsection 10.1B; provided further, that the amount of the Revolving Loan Commitments shall be reduced from time to time by the amount of any reductions thereto made pursuant to subsection 2.4B(ii) and 2.4B(iii). Lenders' Revolving Loan Commitments shall expire on the Revolving Loan Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Loan Commitments shall be paid in full no later than that date. Amounts borrowed under this subsection 2.1A may be repaid and reborrowed to but excluding the Revolving Loan Commitment Termination Date. Anything contained in this Agreement to the contrary notwithstanding, (i) a portion of the Revolving Loan Commitments equal to the Required LOC Amount, as in effect from time to time, may only be used for issuance and maintenance of the Phase I LOC, (ii) in no event shall the Total Utilization of Revolving Loan Commitments exceed an amount equal to the aggregate Revolving Loan Commitments then in effect less the Debt Service Reserve Amount except for Revolving Loans the proceeds of which are used to pay obligations hereunder and(iii) in no event shall the Total Utilization of Revolving Loan Commitments at any time exceed the Revolving Loan Commitments then in effect. (iii) Increases of the Term Loans or Revolving Loan Commitments. At the mutual discretion of Borrower and Administrative Agent, Borrower may request in writing at any time during the period from the date hereof to and including the day preceding the Revolving Loan Commitment Termination Date that (x) the then effective aggregate principal amount of Term Loans be increased, and/or (y) the then effective aggregate principal amount of Revolving Loan Commitments be increased; provided that (1) the aggregate principal amount of the increases in Term Loans and/or 19 Revolving Loan Commitments pursuant to this subsection 2.1A(iii) shall not exceed $12,500,000, (2) Borrower may not make more than one request for such increase in Term Loans and/or Revolving Loan Commitments, (3) no Event of Default or Potential Event of Default shall have occurred and be continuing or shall occur as a result of such increases in Term Loans and/or Revolving Loan Commitments, (4) Borrower shall, and shall cause its Subsidiaries to, execute and deliver such documents and instruments and take such other actions (including, without limitation, obtaining appropriate endorsements to title insurance policies) as may be reasonably requested by Administrative Agent in connection with such increases. Any request under this subsection 2.1A(iii) shall be submitted by Borrower to Administrative Agent (which shall forward copies to Lenders), specify the proposed effective date and amount of such increase and be accompanied by an Officer's Certificate stating that no Event of Default or Potential Event of Default exists or will occur as a result of such increase. No Lender shall have any obligation, express or implied, to offer to increase the aggregate principal amount of its Term Loan or Revolving Loan Commitment, as the case may be. Only the consent of any Lender agreeing to increase its Term Loans or Revolving Loan Commitments, as the case may be (each an "Increasing Lender") shall be required for an increase in the aggregate principal amount of Term Loans or Revolving Loan Commitments, as the case may be, pursuant to this subsection 2.1A(iii). No Lender which elects not to increase the principal amount of its Term Loan or Revolving Loan Commitment, as the case may be, may be replaced in respect of its existing Term Loan or Revolving Loan Commitment, as the case may be, as a result thereof without such Lender's consent. Each Increasing Lender shall as soon as practicable specify the amount of the proposed increase which it is willing to assume. Borrower may accept some or all of the offered amounts or designate new lenders who qualify as Eligible Assignees and which are reasonably acceptable to Administrative Agent as additional Lenders hereunder in accordance with this subsection 2.1A(iii) (each such new lender being a "New Lender"), which New Lender may assume all or a portion of the increase in the aggregate principal amount of the Term Loans or Revolving Loan Commitments, as the case may be provided that any addition of a New Lender with a Revolving Loan Commitment shall be subject to the prior approval of Administrative Agent and each Issuing Lender (which approval may be given or withheld in their sole discretion). Borrower and Administrative Agent shall have discretion jointly to adjust the allocation of the increased aggregate principal amount of Term Loans or Revolving Loan Commitments, as the case may be, among Increasing Lenders and New Lenders. Goldman Sachs, Dresdner Bank, Regiment Capital and Union Bank of Switzerland shall be deemed to be acceptable to Administrative Agent for purposes of this section, provided that Regiment Capital shall be deemed acceptable only as a Term Lender. Each New Lender designated by Borrower and acceptable to Administrative Agent shall become an additional party hereto as a New Lender concurrently with the effectiveness of the proposed increase in the aggregate principal amount of the Term Loans or Revolving Loan Commitments, as the case may be, upon its execution of an Agreement of Joinder in the form of Exhibit XIII. Subject to the foregoing, any increase requested by Borrower shall be effective as of the date proposed by Borrower and shall be in the principal amount equal to (i) the principal amount which Increasing Lenders are willing to assume as increases to the principal amount of their Term Loans or Revolving Loan Commitments, as the case may be, plus (ii) the principal amount offered by New Lenders with respect to Term Loans or Revolving Loan Commitments, as the case may be, in either case as adjusted by Borrower and Administrative Agent pursuant to this subsection 2.1A(iii). All new Term Loans to be made under this subsection 2.1A(iii) shall be made to Borrower on the same day as such increase in Term Loans under this subsection 2.1A(iii) becomes effective (the "Term Loan Funding Date") and proceeds of such Term Loans shall be applied first to reduce any Revolving Loans then outstanding. In addition, if any New Lenders and/or Increasing Lender increase their Revolving Loan Commitments or assume new Revolving Loan Commitments and any Revolving Loans are then outstanding (after giving effect to any prepayment to occur on such date in accordance with the immediately preceding sentence), borrowings shall be made by Borrower on the date such lenders become New Lenders or Increasing Lenders and applied to prepay outstanding Revolving Loans of Lenders holding Revolving Loan Commitments prior to such increase (in accordance with their Pro Rata Shares in effect 20 before giving effect to such increase) to the extent necessary so that after giving effect to such borrowings and prepayments, the outstanding Revolving Loans of each Lender with a Revolving Loan Commitment shall be in accordance with such Lender's Pro Rata Share. Such New Lenders and/or Increasing Lenders shall be deemed to have, and each such Lender agrees to, purchase a participation in all outstanding Letters of Credit and any drawings honored thereunder equal to such New Lender's and/or Increasing Lender's Pro Rata Share from each of the other Lenders with Revolving Loan Commitments. Upon effectiveness of any such increase, the Pro Rata Share of each Lender will be adjusted to give effect to the increase in Term Loans or Revolving Loan Commitments, as the case may be, Administrative Agent shall distribute to Lenders a revised Schedule 2.1 reflecting the Term Loan, Revolving Loan Commitment and Pro Rata Share of each Lender after giving effect to such increase. To the extent that the adjustment of Pro Rata Shares results in loss or expenses to any Lender as a result of the prepayment of any Adjusted Eurodollar Rate Loan on a date other than the scheduled last day of the applicable Interest Period, Borrower shall be responsible for such loss or expense pursuant to subsection 2.6D. Notwithstanding anything in Sections 2.2 , 2.3, 3.2 and 3.3D(ii) to the contrary, to the extent the Revolving Loan Commitments are added after the Closing Date, any portion of commitment fees or interest accrued in respect of Revolving Loans or Revolving Loan Commitments prior to the date of such increase in Revolving Loan Commitments shall not be payable in respect of such added Revolving Loan Commitments but shall be payable only to Lenders holding Revolving Loan Commitments prior to such increase in accordance with their respective Pro Rata Shares as in effect prior to such increase in the Revolving Loan Commitments. B. Borrowing Mechanics. Term Loans or Revolving Loans made on any Funding Date other than Revolving Loans made pursuant to subsection 3.3B for the purpose of reimbursing any Issuing Lender for the amount of a drawing under a Letter of Credit issued by it), shall be in an aggregate minimum amount of (x) $500,000 and integral multiples of $100,000 in excess of that amount in the case of Term Loans and (y) $500,000 and integral multiples of $100,000 in the case of Revolving Loans. Whenever Borrower desires that Lenders make Loans it shall deliver to Administrative Agent a Notice of Borrowing no later than 10:00 A.M. (New York City time) at least three Business Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate Loan) or at least one Business Day in advance of the proposed Funding Date (in the case of a Base Rate Loan). The Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the amount and type of Loans requested, (iii) whether such Loans shall be Base Rate Loans or Eurodollar Rate Loans, and (iv) in the case of any Loans requested to be made as Eurodollar Rate Loans, the initial Interest Period requested therefore. Borrower shall notify Administrative Agent prior to the funding of any Loans in the event that any of the matters to which Borrower is required to certify in the applicable Notice of Borrowing is no longer true and correct as of the applicable Funding Date, and the acceptance by Borrower of the proceeds of any Loans shall constitute a re-certification by Borrower, as of the applicable Funding Date, as to the matters to which Borrower is required to certify in the applicable Notice of Borrowing. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Borrower shall be bound to make a borrowing in accordance therewith. C. Disbursement of Funds. All Loans of a particular type under this Agreement shall be made by Lenders holding Commitments for loans of that type simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligation to make a Loan requested hereunder nor shall the Commitment of any Lender to make the particular type of Loan requested be increased or decreased as a result of a default by any other Lender in that other Lender's obligation to make a Loan requested hereunder. Promptly after receipt by Administrative Agent of a Notice of Borrowing pursuant to subsection 2.1B, Administrative Agent shall notify each Lender of the proposed borrowing. Each Lender shall make the amount of its Loan available to Administrative Agent not later than 12:00 Noon (New York City time) on the applicable Funding Date, in same day funds in Dollars, at the Funding and Payment Office. Except as provided in subsection 3.3B with respect to Revolving Loans used to reimburse any Issuing Lender for the amount of a drawing under a Letter of Credit issued by it, upon satisfaction or waiver of the conditions precedent specified in subsection 4.2, Administrative Agent shall make the aggregate amount of the Loans received by Administrative Agent from Lenders available by crediting the account of Borrower at the Funding and Payment Office in the amount of such Loans provided that if Scotiabank is the only Lender hereunder, Scotiabank agrees to fund such Loans directly to such account of Borrower as Borrower shall designate in a written notice to Scotiabank. Unless Administrative Agent shall have been notified by any 21 Lender prior to the Funding Date for any Loans that such Lender does not intend to make available to Administrative Agent the amount of such Lender's Loan requested on such Funding Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Funding Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on such Funding Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Administrative Agent shall promptly notify Borrower and Borrower shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Funding Date until the date such amount is paid to Administrative Agent, at the rate payable under this Agreement for Base Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve any Lender from its obligation to fulfill its Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder. D. The Register. (i) Administrative Agent shall maintain a register for the recordation of the names and address of Lenders and the Commitments and Loans of each Lender from time to time (the "Register"). The Register shall be available for inspection by Borrower at any reasonable time and from time to time upon reasonable prior notice. (ii) Administrative Agent shall record in the Register the Commitment and the Loans from time to time of each Lender, and each repayment or prepayment in respect of the principal amount of the Loans of each Lender. Any such recordation shall be conclusive and binding on Borrower and each Lender absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lender's Commitments or Borrower's Obligations in respect of any applicable Loans. (iii) Each Lender shall record on its internal records (including the Notes held by such Lender) the amount of each Loan made by it and each payment in respect thereof. Any such recordation shall be conclusive and binding on Borrower, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lender's Commitments or Borrower's Obligations in respect of any applicable Loans; provided further that in the event of any inconsistency between the Register and any Lender's records, the recordations in the Register shall govern. (iv) Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii). Prior to such recordation, all amounts owed with respect to the applicable Commitment or Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans. E. Note. Borrower shall execute and deliver (i) on the Term Loan Funding Date to each Lender with a Term Loan Commitment (or to Administrative Agent for that Lender) a Term Note substantially in the form of Exhibit III-A annexed hereto to evidence that Lender's Term Loans, in the principal amount of that Lender's Term Loan Commitment and (ii) on the Closing Date to each Lender with a Revolving Loan Commitment (or to Administrative Agent for that Lender) a Revolving Note substantially in the form of Exhibit III-B annexed hereto to evidence that Lender's Revolving Loans, in the principal amount of that Lender's Revolving Loan Commitment and with other appropriate insertions on the Closing Date to each Lender with a Revolving Commitment (or to Administrative Agent for that Lender). Administrative Agent may deem and treat the payee of any Note as 22 the owner thereof for all purposes hereof unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by Administrative Agent as provided in subsection 10.1B(ii). Any request, authority or consent of any person or entity who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, assignee or transferee of that Note or of any Note or Notes issued in exchange therefor. 2.2 Interest on the Loans. - --- ---------------------- A. Rate of Interest. Subject to the provisions of subsections 2.6 and 2.7, each Loan shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the Adjusted Eurodollar Rate. The applicable basis for determining the rate of interest with respect to any Loan shall be selected by Borrower initially at the time a Notice of Borrowing is given with respect to such Loan pursuant to subsection 2.1B, and the basis for determining the interest rate with respect to any Loan may be changed from time to time pursuant to subsection 2.2D. If on any day a Loan is outstanding with respect to which notice has not been delivered to Administrative Agent in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest, then for that day that Loan shall bear interest determined by reference to the Base Rate. (i) Revolving Loans. Subject to the provisions of subsections 2.2E and 2.7, the Revolving Loans shall bear interest through maturity as follows: (a) if a Base Rate Loan, at the sum of the Base Rate plus 3%; or (b) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate plus 4%. (ii) Term Loans. Subject to the provisions of subsections 2.2E and 2.7, the Revolving Loans shall bear interest through maturity as follows: (a) if a Base Rate Loan, at the sum of the Base Rate plus 3%; or (b) if a Eurodollar Rate Loan, then at the sum of the Adjusted Eurodollar Rate plus 4%. B. Interest Periods. In connection with each Eurodollar Rate Loan, Borrower may, pursuant to the applicable Notice of Borrowing or Notice of Conversion/Continuation, as the case may be, select an interest period (each an "Interest Period") to be applicable to such Loan, which Interest Period shall be, at Borrower's option, either a one, two, three or six month period; provided that: (i) the initial Interest Period for any Eurodollar Rate Loan shall commence on the Funding Date in respect of such Loan, in the case of a Loan initially made as a Eurodollar Rate Loan, or on the date specified in the applicable Notice of Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate Loan; (ii) in the case of immediately successive Interest Periods applicable to a Eurodollar Rate Loan continued as such pursuant to a Notice of Conversion/Continuation, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires; (iii) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iv) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (v) of this subsection 2.2B, end on the last Business Day of a calendar month; (v) no Interest Period with respect to any portion of the Loans shall extend beyond June 30, 2003; (vi) no Interest Period shall extend beyond a date on which Borrowers are required to make a scheduled payment of principal of the Loans or a permanent reduction of the Revolving Loan Commitments is scheduled to occur unless the sum of (a) the aggregate principal amount of Loans that are Base Rate Loans plus (b) the aggregate principal amount of Loans that are Eurodollar Rate Loans with Interest Periods expiring on or before such date plus (c) the excess of the Commitments then in effect over the 23 aggregate principal amount of the Loans then outstanding equals or exceeds the principal amount required to be paid on the Loans, or the permanent reduction of the Commitments that is scheduled to occur, on such date; (vii) there shall be no more than 6 Interest Periods outstanding at any time provided that if, in accordance with the terms of this Agreement, the amount of Loans outstanding exceeds $15,000,000, then during the period in which the Loans exceed that amount, the maximum number of Interest Periods shall be increased to 8; and (viii) in the event Borrower fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of Conversion/Continuation, Borrower shall be deemed to have selected an Interest Period of one month. C. Interest Payments. Subject to the provisions of subsection 2.2E, interest on each Loan shall be payable in arrears on and to each Interest Payment Date applicable to that Loan, upon any prepayment of that Loan (to the extent accrued on the amount being prepaid) and at maturity (including final maturity). D. Conversion or Continuation. Subject to the provisions of subsection 2.6, Borrower shall have the option (i) to convert at any time all or any part of its outstanding Loans equal to $500,000 and integral multiples of $100,000 in excess of that amount from Loans bearing interest at a rate determined by reference to one basis to Loans bearing interest at a rate determined by reference to an alternative basis or (ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $500,000 and integral multiples of $100,000 in excess of that amount as a Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be converted into a Base Rate Loan on the expiration date of an Interest Period applicable thereto. Borrower shall deliver a Notice of Conversion/Continuation to Administrative Agent no later than 10:00 A.M. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify (i) the proposed conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan to be converted/continued, (iii) the nature of the proposed conversion/continuation, (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has occurred and is continuing. In lieu of delivering the above-described Notice of Conversion/Continuation, Borrower may give Administrative Agent telephonic notice by the required time of any proposed conversion/continuation under this subsection 2.2D; provided that such notice shall be promptly confirmed in writing by delivery of a Notice of Conversion/Continuation to Administrative Agent on or before the proposed conversion/continuation date. Upon receipt of written or telephonic notice of any proposed conversion/continuation under this subsection 2.2D, Administrative Agent shall promptly transmit such notice by telefacsimile or telephone to each Lender. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to act on behalf of Borrower or for otherwise acting in good faith under this subsection 2.2D, and upon conversion or continuation of the applicable basis for determining the interest rate with respect to any Loans in accordance with this Agreement pursuant to any such telephonic notice Borrower shall have effected a conversion or continuation, as the case may be, hereunder. Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Borrower shall be bound to effect a conversion or continuation in accordance therewith. E. Default Rate. Upon the occurrence and during the continuation of any Event of Default, the outstanding principal amount of all Loans and, to the extent permitted by applicable law, any interest payments thereon not paid when due and any fees and other amounts then due and payable hereunder, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable upon demand at a rate that is 2% per annum in excess of the interest rate otherwise payable under this Agreement with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in the interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate 24 Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this subsection 2.2E is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. F. Computation of Interest. Interest on the Loans shall be computed on the basis of (i) a 360-day year, in the case of Eurodollar Rate Loans and (ii) a 365-day year, in respect of Base Rate Loans, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. 2.3 Commitment Fees. - --- ---------------- A. Commitment Fees. Borrower agrees to pay to Administrative Agent, for distribution to each Lender with a Revolving Loan Commitment in proportion to that Lender's Pro Rata Share, commitment fees for the period from and including the Closing Date to and excluding the Revolving Loan Commitment Termination Date equal to the average of the daily excess of Revolving Loan Commitments over the sum of (i) the aggregate principal amount of outstanding Revolving Loans but not the Letter of Credit Usage, plus (ii) the Letter of Credit Usage multiplied by half of 1% per annum, such commitment fees to be calculated on the basis of a 360-day year and the actual number of days elapsed and to be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date, and on the Commitment Termination Date. B. Annual Administrative Fee. Borrower agrees to pay Administrative Agent an annual administrative fee in the amount and at the times separately agreed to by Administrative Agent and Borrower. 2.4 Repayments, Prepayments and Reductions in Commitment; General - --- ------------------------------------------------------------- Provisions Regarding Payments. ------------------------------ A. Payment at Maturity. Borrower shall repay all Loans outstanding hereunder on June 30, 2003, or any earlier acceleration of the maturity thereof pursuant to Section 8 hereof, together with all accrued and unpaid interest thereon, and all other Obligations then outstanding hereunder. B. Prepayments and Unscheduled Reductions in Commitments. (i) Voluntary Prepayments. Borrower may, upon not less than one Business Day's prior written or telephonic notice, in the case of Base Rate Loans, and three Business Days' prior written or telephonic notice, in the case of Eurodollar Rate Loans, in each case given to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender) by 12:00 Noon (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent at any time and from time to time prepay any Loans on any Business Day in whole or in part in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount; provided, however, that with respect to any Eurodollar Rate Loan not prepaid on the expiration of the Interest Period applicable thereto Borrower shall pay any amount payable pursuant to subsection 2.6D. Notice of prepayment having been given as aforesaid, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in subsection 2.4B(iv). (ii) Voluntary Reductions of Revolving Loan Commitments. Borrower may, upon not less than three Business Days' prior written or telephonic notice confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each Lender) at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Loan Commitments in an amount up to the amount by which the Revolving Loan Commitments exceed the Total Utilization of Revolving Loan Commitments at the time of such proposed 25 termination or reduction; provided that any such partial reduction of the Revolving Loan Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in excess of that amount. Borrower's notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Loan Commitments shall be effective on the date specified in Borrower's notice and shall reduce the Revolving Loan Commitment of each Lender proportionately to its Pro Rata Share. Any such voluntary reduction of the Revolving Loan Commitments shall be applied as specified in subsection 2.4B(iv). (iii) Mandatory Prepayments and Mandatory Reductions of Commitments. The Loans shall be prepaid and/or the Commitments shall be permanently reduced in the amounts and under the circumstances set forth below, all such prepayments and reductions to be applied as set forth below or more specifically provided in subsection 2.4B(iv): (a) Prepayments and Reductions From Net Asset Sale Proceeds. No later than the first Business Day following the date of receipt by Borrower or any of its Subsidiaries of any Net Asset Sale Proceeds in respect of any Asset Sale (other than Net Asset Sale Proceeds in respect of the sale of any obsolete, worn out or surplus assets or assets no longer used or useful in the business of the Phase II project disposed of in accordance with Section 7.7(ii)), Borrower shall prepay the Loans and/or the Revolving Loan Commitments shall be permanently reduced in an aggregate amount equal to such Net Asset Sale Proceeds. (b) Prepayments and Reductions from Net Loss Proceeds and Liquidated Damages. Except as provided in subsection 6.4, no later than the second Business Day following receipt by Borrower or any of its Subsidiaries of any Loss Proceeds or Liquidated Damages, Borrower shall prepay the Loans and/or the Revolving Loan Commitments shall be permanently reduced in an amount equal to the Loss Proceeds or Liquidated Damages, as applicable. (c) Prepayments and Reductions Due to Default or Termination Payments Under the Phase II Lease. On the first Business Day following receipt by Borrower or any of its Subsidiaries of any payment from Venetian under the Phase II Lease resulting from a default by Venetian under the Phase II Lease or from the termination thereof, whether such payment shall be characterized as damages, accelerated rent or otherwise, Borrower shall prepay the Loans and/or the Revolving Loan Commitments shall be permanently reduced in an aggregate amount equal to such payment. (d) Calculations of Net Proceeds Amounts; Additional Prepayments and Reductions Based on Subsequent Calculations. Concurrently with any prepayment of the Loans and/or the reduction of Revolving Loan Commitments pursuant to subsections 2.4B(iii)(a)-(c), Borrower shall deliver to Administrative Agent an Officers' Certificate demonstrating the calculation of the amount (the "Net Proceeds Amount") of the applicable Net Asset Sale Proceeds, Loss Proceeds, Liquidated Damages or other amounts, as the case may be, that gave rise to such prepayment and/or reduction. In the event that Borrower shall subsequently determine that the actual Net Proceeds Amount was greater than the amount set forth in such Officers' Certificate, Borrower shall promptly make an additional prepayment of the Loans (and/or, if applicable, the Revolving Loan Commitments shall be permanently reduced) in an amount equal to the amount of such excess, and Borrower shall concurrently therewith deliver to Administrative Agent an Officers' Certificate demonstrating the derivation of the additional Net Proceeds Amount resulting in such excess. (e) Prepayments Due to Reductions or Restrictions of Revolving Loan Commitments. Borrower shall from time to time prepay the Revolving Loans to the extent necessary (1) so that the Total Utilization of Revolving Loan Commitments shall not at any time exceed the Revolving Loan Commitment then in effect and (2) to give effect to the limitations set forth in the second paragraph of Section 2.1A(ii). (iv) Application of Prepayments and Unscheduled Reductions of Revolving Loan Commitments. (a) Application of Voluntary Prepayments by Type of Loan. Any voluntary prepayments pursuant to subsection 2.4B(i) shall be applied as specified by Borrower in the applicable notice of prepayment; provided that in the event Borrower fails to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied first to repay outstanding Revolving 26 Loans to the full extent thereof on a pro rata basis, and second to repay outstanding Term Loans on a pro rata basis. (b) Application of Mandatory Prepayments by Type of Loans. Any amount (the "Applied Amount") required to be applied as a mandatory prepayment of the Loans and/or a reduction of the Revolving Loan Commitments pursuant to subsections 2.4B(iii)(a)-(d) shall be applied to first prepay the Term Loans and Revolving Loans then outstanding on a pro rata basis to the full extent thereof (and to further permanently reduce the Revolving Loan Commitments by the amount of such prepayment of Revolving Loans), and second, to the extent of any remaining portion of the Applied Amount, to further permanently reduce the Revolving Loan Commitments to the full extent thereof. (c) Application of Prepayments to Base Rate Loans and Eurodollar Rate Loans. Considering Loans being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Borrower pursuant to subsection 2.6D. C. General Provisions Regarding Payments. (i) Manner and Time of Payment. All payments by Borrower of principal, interest, fees and other Obligations hereunder and under the Notes shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 Noon (New York City time) on the date due at the Funding and Payment Office for the account of Lenders; funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrower on the next succeeding Business Day. Borrower hereby authorizes Administrative Agent to charge its accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose). (ii) Application of Payments to Principal and Interest. All payments in respect of the principal amount of any Loan shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments shall be applied to the payment of interest before application to principal. (iii) Apportionment of Payments. Aggregate principal and interest payments in respect of Term Loans and Revolving Loans shall be apportioned among all outstanding Loans to which such payments relate proportionately to Lenders' respective Pro Rata Shares. Administrative Agent shall promptly distribute to each Lender, at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request, its Pro Rata Share of all such payments received by Administrative Agent and the commitment fees of such Lender when received by Administrative Agent pursuant to subsection 2.3. Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if, pursuant to the provisions of subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter. (iv) Payments on Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder or of the commitment fees hereunder, as the case may be. (v) Notation of Payment. Lender agrees that before disposing of any Note held by it, or any part thereof (other than by granting participations therein), Lender will make a notation thereon of all Loans evidenced by that Note and all principal payments previously made thereon and of the date 27 to which interest thereon has been paid; provided that the failure to make (or any error in the making of) a notation of any Loan made under such Note shall not limit or otherwise affect the obligations of Borrower hereunder or under such Note with respect to any Loan or any payments of principal or interest on such Note. 2.5 Use of Proceeds. - --- ---------------- A. Loans. The proceeds of the Loans shall be applied by Borrower for (i) predevelopment of the Land for Phase II, interest, fees and other obligations hereunder (ii) transaction costs related to the transactions contemplated hereby and (iii) other general corporate purposes, including loans and distributions to Affiliates permitted under Section 7.3 or 7.5 hereof. B. Margin Regulations. No portion of the proceeds of any borrowing under this Agreement shall be used by Borrower or any of its Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. 2.6 Special Provisions Governing Eurodollar Rate Loans. - --- --------------------------------------------------- Notwithstanding any other provision of this Agreement to the contrary, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: A. Determination of Applicable Interest Rate. As soon as practicable after 10:00 A.M. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower and each Lender. B. Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the interbank Eurodollar market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Borrower and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrower and Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by Borrower with respect to the Loans in respect of which such determination was made shall be deemed to be made with respect to Base Rate Loans. C. Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Borrower and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order not in effect on the date such Person became a Lender (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) would cause Lender material financial hardship as a result of contingencies occurring after the date of this Agreement which materially and adversely affect the interbank Eurodollar market or the position of such Lender in that market, then, and in any such event, such Lender shall be an "Affected Lender" and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Borrower and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (a) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender (which such Affected Lender shall do at the earliest practicable date), (b) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the "Affected Loans") shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (d) the Affected Loans shall automatically convert into 28 Base Rate Loans on the date of such termination. Except as provided in the immediately preceding sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement. D. Compensation For Breakage or Non-Commencement of Interest Periods. Borrower shall compensate each Lender, upon written request by that Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including any interest paid by that Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any reason (other than a default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Borrowing or a telephonic request for borrowing, as applicable, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of Conversion/Continuation or a telephonic request for conversion or continuation, (ii) if any prepayment (including any prepayment pursuant to subsection 2.4) or other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Borrower, or (iv) as a consequence of any other default by Borrower in the repayment of its Eurodollar Rate Loans when required by the terms of this Agreement. E. Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of that Lender. F. Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A shall be made as though that Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this subsection 2.6 and under subsection 2.7A. G. Eurodollar Rate Loans After Default. After the occurrence of and during the continuation of a Potential Event of Default or an Event of Default, (i) Borrower may not elect to have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest Period then in effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing or Notice of Conversion/Continuation given by Borrower with respect to a requested borrowing or conversion/continuation that has not yet occurred shall be deemed made with respect to Base Rate Loans. 2.7 Increased Costs; Taxes; Capital Adequacy. - --- ----------------------------------------- A. Compensation for Increased Costs and Taxes. Subject to the provisions of subsection 2.7B (which shall be controlling with respect to the matters covered thereby), in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of its obligations hereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or 29 (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the interbank Eurodollar market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this subsection 2.7A, which statement shall be conclusive and binding upon all parties hereto absent manifest error. B. Withholding of Taxes. (i) Payments to Be Free and Clear. All sums payable by Borrower under this Agreement and the other Loan Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of Borrower or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment, all such non-excluded Taxes being hereinafter collectively referred to as "Included Taxes". (ii) Grossing-up of Payments. If Borrower or any other Person is required by law to make any deduction or withholding on account of any such Included Tax from any sum paid or payable by Borrower to Administrative Agent or any Lender under any of the Loan Documents: (a) Borrower shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Borrower becomes aware of it; (b) Borrower shall pay any such Included Tax before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on Borrower) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (c) the sum payable by Borrower in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (d) within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of payment of any Included Tax which it is required by clause (b) above to pay, Borrower shall deliver to Administrative Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided that no such additional amount shall be required to be paid to any Lender under clause (c) above except to the extent that any change after the date hereof (in the case of each Lender listed on the signature pages hereof) or after the date of the Assignment Agreement or joinder agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the date of this Agreement or at the date of such Assignment Agreement or joinder agreement, as the case may be, in respect of payments to such Lender. (iii) Evidence of Exemption from U.S. Withholding Tax. (a) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof (for purposes of this subsection 2.7B(iii), a "Non-US Lender") shall deliver to Administrative 30 Agent for transmission to Borrower, on or prior to the Closing Date (in the case of a Lender listed on the signature pages hereof) or on or prior to the date of the Assignment Agreement or joinder agreement pursuant to which it becomes a Lender (in the case of each other Lender) and at such other times as may be necessary in the determination of Borrower or Administrative Agent (each in the reasonable exercise of its discretion), (1) two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents or (2) if such Lender is not a "bank" or other Person described in Section 881(c)(3) of the Code and cannot deliver either Internal Revenue Service Form 1001 or 4224 pursuant to clause (1) above, a Certificate re: Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor form), properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Loan Documents. (b) Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, that Lender shall promptly (1) deliver to Administrative Agent for transmission to Borrower two new original copies of Internal Revenue Service Form 1001 or 4224, or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN or W-8ECI, as the case may be, properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required in order to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents or (2) notify Administrative Agent and Borrower of its inability to deliver any such forms, certificates or other evidence. (c) Borrower shall not be required to pay any additional amount to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such Lender shall have failed to satisfy the requirements of clause (a) or (b)(1) of this subsection 2.7B(iii); provided that if such Lender shall have satisfied the requirements of subsection 2.7B(iii)(a) on the Closing Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement or joinder agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection 2.7B(iii)(c) shall relieve Borrower of its obligation to pay any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in subsection 2.7B(iii)(a). C. Capital Adequacy Adjustment. If any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof after the date hereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Commitments or Letters of Credit or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Borrower from such Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver 31 to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis of the calculation of such additional amounts, which statement shall be conclusive and binding upon all parties hereto absent manifest error. 2.8 Obligation of Lenders to Mitigate. - --- ---------------------------------- Each Lender and Issuing Lender agrees that, as promptly as practicable after the officer of such Lender or Issuing Lender responsible for administering the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender or Issuing Lender to become an Affected Lender or that would entitle such Lender or Issuing Lender to receive payments under subsection 2.7 or subsection 3.6 it will, to the extent not inconsistent with the internal policies of such Lender or Issuing Lender and any applicable legal or regulatory restrictions, use reasonable efforts (i) to make, issue, fund or maintain the Commitments of such Lender or Issuing Lender or the affected Loans or Letters of Credit of such Lender or Issuing Lender through another lending office of such Lender or Issuing Lender or (ii) take such other measures as such Lender or Issuing Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender or Issuing Lender to become an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to Lender pursuant to subsection 2.7 would be materially reduced and if, as determined by such Lender or Issuing Lender in its sole discretion, the making, issuing, funding or maintaining of such Commitments or Loans or Letters of Credit through such other lending office or in accordance with such other measures, as the case may be, would not otherwise materially adversely affect such Commitments or Loans or Letters of Credit or the interests of such Lender or Issuing Lender; provided that such Lender or Issuing Lender will not be obligated to utilize such other lending office pursuant to this subsection 2.8 if such Lender or Issuing Lender would incur incremental expenses as a result of utilizing such other lending office as described in clause (i) above. A certificate as to the amount of any such expenses payable by Borrower pursuant to this subsection 2.8 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender or Issuing Lender to Borrower shall (with a copy to Administrative Agent) be conclusive absent manifest error. Each Lender and Issuing Lender agrees that it will not request compensation under subsection 2.7 unless such Lender or Issuing Lender requests compensation from borrowers under other lending arrangements with such Lender or Issuing Lender who are similarly situated. Section 3. LETTERS OF CREDIT 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations - --- --------------------------------------------------------------------- Therein. -------- A. Letters of Credit. In addition to Borrower requesting that Lenders make Revolving Loans pursuant to subsection 2.1A(ii), Borrower may request, in accordance with the provisions of this subsection 3.1, from time to time during the period from the Closing Date to the date ninety days prior to the Revolving Loan Commitment Termination Date, that one or more Lenders with a Revolving Loan Commitment issue Letters of Credit for the account of Borrower for the purposes specified in the definitions of Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrower herein set forth, any one or more Lender with a Revolving Loan Commitment may, but (except as provided in subsection 3.1B(ii)) shall not be obligated to, issue such Letters of Credit in accordance with the provisions of this subsection 3.1; provided that Borrower shall not request that any Lender issue (and no Lender shall issue): (i) any Letter of Credit if, after giving effect to such issuance, the Total Utilization of Revolving Loan Commitment would exceed the Revolving Loan Commitments then in effect; (ii) any Letter of Credit if, after giving effect to such issuance, the Letter of Credit Usage would exceed $16,500,000; (iii) any Standby Letter of Credit having an expiration date later than the earlier of (a) the Revolving Loan Commitment Termination Date and (b) the date which is one year from the date of issuance of such Standby Letter of Credit; provided that the immediately preceding clause (b) shall not prevent (x) the Issuing Lender for the Phase I LOC from issuing such Letter of Credit with an expiration date of October 31, 2002 or (y) any Issuing Lender from agreeing that a Standby Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each unless such Issuing Lender elects not to extend for any such additional period; and provided, further that such Issuing Lender shall elect not to extend such Standby Letter of Credit if it has knowledge that an Event of Default has 32 occurred and is continuing (and has not been waived in accordance subsection 10.6) at the time such Issuing Lender must elect whether or not to allow such extension; (iv) any Commercial Letter of Credit having an expiration date (a) later than the earlier of (X) the date which is 30 days prior to the Revolving Loan Commitment Termination Date and (Y) the date which is 180 days from the date of issuance of such Commercial Letter of Credit or (b) that is otherwise unacceptable to the applicable Issuing Lender in its reasonable discretion; or (v) any Letter of Credit denominated in a currency other than Dollars. B. Mechanics of Issuance. (i) Notice of Issuance. Whenever Borrower desires the issuance of a Letter of Credit, it shall deliver to Administrative Agent a Notice of Issuance of Letter of Credit substantially in the form of Exhibit IX annexed hereto no later than 12:00 Noon (New York City time) at least three Business Days (in the case of Standby Letters of Credit) or five Business Days (in the case of Commercial Letters of Credit), or in each case such shorter period as may be agreed to by the Issuing Lender in any particular instance, in advance of the proposed date of issuance. The Notice of Issuance of Letter of Credit shall specify (a) the proposed date of issuance (which shall be a Business Day), (b) whether the Letter of Credit is to be a Standby Letter of Credit or a Commercial Letter of Credit, (c) the face amount of the Letter of Credit, (d) the expiration date of the Letter of Credit, (e) the name and address of the beneficiary, and (f) either the verbatim text of the proposed Letter of Credit or the proposed terms and conditions thereof, including a precise description of any documents to be presented by the beneficiary which, if presented by the beneficiary prior to the expiration date of the Letter of Credit, would require the Issuing Lender to make payment under the Letter of Credit; provided that the Issuing Lender, in its reasonable discretion, may require changes in the text of the proposed Letter of Credit or any such documents; and provided, further that no Letter of Credit shall require payment against a conforming draft to be made thereunder on the same business day (under the laws of the jurisdiction in which the office of the Issuing Lender to which such draft is required to be presented is located) that such draft is presented if such presentation is made after 10:00 A.M. (in the time zone of such office of the Issuing Lender) on such business day. Borrower shall notify the applicable Issuing Lender (and Administrative Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance of any Letter of Credit in the event that any of the matters to which Borrower is required to certify in the applicable Notice of Issuance of Letter of Credit is no longer true and correct as of the proposed date of issuance of such Letter of Credit, and upon the issuance of any Letter of Credit Borrower shall be deemed to have re-certified, as of the date of such issuance, as to the matters to which Borrower is required to certify in the applicable Notice of Issuance of Letter of Credit. (ii) Determination of Issuing Lender. Upon receipt by Administrative Agent of a Notice of Issuance of Letter of Credit pursuant to subsection 3.1B(i) requesting the issuance of a Letter of Credit, in the event Administrative Agent elects to issue such Letter of Credit, Administrative Agent shall promptly so notify Borrower, and Administrative Agent shall be the Issuing Lender with respect thereto. In the event that Administrative Agent, in its sole discretion, elects not to issue such Letter of Credit, Administrative Agent shall promptly so notify Borrower, whereupon Borrower may request any other Lender with a Revolving Loan Commitment to issue such Letter of Credit by delivering to such Lender a copy of the applicable Notice of Issuance of Letter of Credit. Any Lender so requested to issue such Letter of Credit shall promptly notify Borrower and Administrative Agent whether or not, in its sole discretion, it has elected to issue such Letter of Credit, and any such Lender which so elects to issue such Letter of Credit shall be the Issuing Lender with respect thereto. In the event that all other Lenders with Revolving Loan Commitments shall have declined to issue such Letter of Credit, notwithstanding the prior election of Administrative Agent not to issue such Letter of Credit, so long as all other conditions set forth in this Agreement for issuance of such Letter of Credit are satisfied, Administrative Agent shall be obligated to issue such Letter of Credit and shall be the Issuing Lender with respect thereto, notwithstanding the fact that the Letter of Credit Usage with respect to such Letter of Credit and with respect to all other Letters of Credit issued by Administrative Agent, when 33 aggregated with Administrative Agent's outstanding Revolving Loans, may exceed Administrative Agent's Revolving Loan Commitment then in effect. (iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance with subsection 10.6) of the conditions set forth in subsection 4.3, the Issuing Lender shall issue the requested Letter of Credit in accordance with the Issuing Lender's standard operating procedures. (iv) Notification to Lenders. Upon the issuance of any Letter of Credit the applicable Issuing Lender shall promptly notify Administrative Agent and each other Lender with a Revolving Loan Commitment of such issuance, which notice shall be accompanied by a copy of such Letter of Credit. Promptly after receipt of such notice (or, if Administrative Agent is the Issuing Lender, together with such notice), Administrative Agent shall notify each Lender with a Revolving Loan Commitment of the amount of such Lender's respective participation in such Letter of Credit, determined in accordance with subsection 3.1C. (v) Reports to Lenders. Within 15 days after the end of each calendar quarter ending after the Closing Date, so long as any Letter of Credit shall have been outstanding during such calendar quarter, each Issuing Lender shall deliver to each other Lender with a Revolving Loan Commitment a report setting forth for such calendar quarter the daily aggregate amount available to be drawn under the Letters of Credit issued by such Issuing Lender that were outstanding during such calendar quarter. C. Lenders' Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Lender with a Revolving Loan Commitment shall be deemed to, and hereby agrees to, have irrevocably purchased from the Issuing Lender a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender's Pro Rata Share of the maximum amount which is or at any time may become available to be drawn thereunder. 3.2 Letter of Credit Fees. - --- ---------------------- Borrower agrees to pay the following amounts with respect to Letters of Credit issued hereunder: (i) with respect to each Standby Letter of Credit, (a) a fronting fee payable directly to the applicable Issuing Lender for its own account, equal to the greater of (X) $5,000 and (Y) 0.25% per annum of the daily amount available to be drawn under such Standby Letter of Credit and (b) a letter of credit fee, payable to Administrative Agent for the account of Lenders with Revolving Loan Commitments equal to the product of (y) 4.00% times, (z) the daily maximum amount available to be drawn under such Standby Letter of Credit, each such fronting fee or letter of credit fee to be payable in arrears on and to (but excluding) each March 31, June 30, September 30 and December 31 of each year and computed on the basis of a 360-day year for the actual number of days elapsed; (ii) with respect to each Commercial Letter of Credit, (a) a fronting fee payable directly to the applicable Issuing Lender for its own account, equal to 0.25% per annum of the daily amount available to be drawn under such Commercial Letter of Credit and (b) a letter of credit fee payable to Administrative Agent for the account of Lenders with Revolving Loan Commitments, equal to the product of (y) 4.00% times, (z) the daily maximum amount available to be drawn under such Commercial Letter of Credit, each such fronting fee or letter of credit fee to be payable in arrears on and to (but excluding) each March 31, June 30, September 30 and December 31 of each year and computed on the basis of a 360-day year for the actual number of days elapsed; and (iii) with respect to the issuance, amendment or transfer of each Letter of Credit and each payment of a drawing made thereunder (without duplication of the fees payable under clauses (i) and (ii) above), documentary and processing charges payable directly to the applicable Issuing Lender for its own account in accordance with such Issuing Lender's standard schedule for such charges in effect at the time of such issuance, amendment, transfer or payment, as the case may be. For purposes of calculating any fees payable under clauses (i) and (ii) of this subsection 3.2, the daily amount available to be drawn under any Letter of Credit shall be determined as of the close of business on any date of determination. Promptly upon receipt by Administrative Agent of any amount 34 described in clause (i)(b) or (ii)(b) of this subsection 3.2, Administrative Agent shall distribute to each Lender with a Revolving Loan Commitment its Pro Rata Share of such amount. 3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit. - --- ------------------------------------------------------------------- A. Responsibility of Issuing Lender With Respect to Drawings. In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, Issuing Lender shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. B. Reimbursement by Borrower of Amounts Paid Under Letters of Credit. In the event an Issuing Lender has determined to honor a drawing under a Letter of Credit issued by it, such Issuing Lender shall immediately notify Borrower and Administrative Agent, and Borrower shall reimburse such Issuing Lender on or before the Business Day immediately following the date on which such drawing is honored (the "Reimbursement Date") in an amount in Dollars and in same day funds equal to the amount of such honored drawing; provided that, anything contained in this Agreement to the contrary notwithstanding, unless Borrower shall have notified Administrative Agent and such Issuing Lender prior to 10:00 A.M. (New York City time) on the date such drawing is honored that Borrower intends to reimburse such Issuing Lender for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, Borrower shall be deemed to have given a timely Notice of Borrowing to Administrative Agent requesting Lenders to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing and Lenders with Revolving Loan Commitments shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse such Issuing Lender for the amount of such honored drawing; and provided, further that if for any reason proceeds of Revolving Loans are not received by such Issuing Lender on the Reimbursement Date in an amount equal to the amount of such honored drawing, Borrower shall reimburse such Issuing Lender, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this subsection 3.3B shall be deemed to relieve any Lender from its obligation to make Revolving Loans on the terms and conditions set forth in this Agreement, and Borrower shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this subsection 3.3B. C. Payment by Lenders of Unreimbursed Amounts Paid Under Letters of Credit. (i) Payment by Lenders. In the event that Borrower shall fail for any reason to reimburse any Issuing Lender as provided in subsection 3.3B in an amount equal to the amount of any drawing honored by such Issuing Lender under a Letter of Credit issued by it, such Issuing Lender shall promptly notify each other Lender with a Revolving Loan Commitment of the unreimbursed amount of such honored drawing and of such other Lender's respective participation therein based on such Lender's Pro Rata Share. Each Lender with a Revolving Loan Commitment shall make available to such Issuing Lender an amount equal to its respective participation, in Dollars and in same day funds, at the office of such Issuing Lender specified in such notice, not later than 12:00 Noon (New York City time) on the first business day (under the laws of the jurisdiction in which such office of such Issuing Lender is located) after the date notified by such Issuing Lender. In the event that any Lender with a Revolving Loan Commitment fails to make available to such Issuing Lender on such business day the amount of such Lender's participation in such Letter of Credit as provided in this subsection 3.3C, such Issuing Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon at the rate customarily used by such Issuing Lender for the correction of errors among banks for three Business Days and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be deemed to prejudice the right of any Lender with a Revolving Loan Commitment to recover from any Issuing Lender any amounts made available by such Lender to such Issuing Lender pursuant to this subsection 3.3C in the event that it is determined by the final judgment of a court of competent jurisdiction that the payment with respect to a Letter of Credit by such Issuing Lender in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of such Issuing Lender. (ii) Distribution to Lenders of Reimbursements Received From Borrowers. In the event any Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of any drawing honored by such Issuing Lender 35 under a Letter of Credit issued by it, such Issuing Lender shall distribute to each other Lender with a Revolving Loan Commitment which has paid all amounts payable by it under subsection 3.3C(i) with respect to such honored drawing such other Lender's Pro Rata Share of all payments subsequently received by such Issuing Lender from Borrower in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. D. Interest on Amounts Paid Under Letters of Credit. (i) Borrower agrees to pay to each Issuing Lender, with respect to drawings honored under any Letters of Credit issued by it, interest on the amount paid by such Issuing Lender in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by Borrower (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B) at a rate equal to (a) for the period from the date such drawing is honored to but excluding the Reimbursement Date, the rate then in effect under this Agreement with respect to Revolving Loans that are Base Rate Loans and (b) thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise payable under this Agreement with respect to Revolving Loans that are Base Rate Loans. Interest payable pursuant to this subsection 3.3D(i) shall be computed on the basis of a 365-day year for the actual number of days elapsed in the period during which it accrues and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. (ii) Distribution of Interest Payments by Issuing Lender. Promptly upon receipt by any Issuing Lender of any payment of interest pursuant to subsection 3.3D(i) with respect to a drawing honored under a Letter of Credit issued by it, (a) such Issuing Lender shall distribute to each other Lender with a Revolving Loan Commitment, out of the interest received by such Issuing Lender in respect of the period from the date such drawing is honored to but excluding the date on which such Issuing Lender is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of Revolving Loans pursuant to subsection 3.3B), the amount that such other Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period pursuant to subsection 3.2 if no drawing had been honored under such Letter of Credit, and (b) in the event such Issuing Lender shall have been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any portion of such honored drawing, such Issuing Lender shall distribute to each other Lender which has paid all amounts payable by it under subsection 3.3C(i) with respect to such honored drawing such other Lender's Pro Rata Share of any interest received by such Issuing Lender in respect of that portion of such honored drawing so reimbursed by other Lenders for the period from the date on which such Issuing Lender was so reimbursed by other Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by Borrowers. Any such distribution shall be made to a Lender at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request. 3.4 Obligations Absolute. - --- --------------------- The obligation of Borrower to reimburse each Issuing Lender for drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to subsection 3.3B and the obligations of Lenders under subsection 3.3C(i) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), any Issuing Lender or other Lender or any other Person or in the case of a Lender, against Borrower, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrower or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); 36 (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by the applicable Issuing Lender under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower; (vi) any breach of this Agreement or any other Loan Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Potential Event of Default shall have occurred and be continuing; provided, in each case, that payment by the applicable Issuing Lender under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of such Issuing Lender under the circumstances in question (as determined by a final judgment of a court of competent jurisdiction). 3.5 Indemnification; Nature of Issuing Lenders' Duties. - --- --------------------------------------------------- A. Indemnification. In addition to amounts payable as provided in subsection 3.6, Borrower hereby agrees to protect, indemnify, pay and save harmless each Issuing Lender from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which such Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing Lender, other than as a result of (a) the gross negligence or willful misconduct of such Issuing Lender as determined by a final judgment of a court of competent jurisdiction or (b) subject to the following clause (ii), the wrongful dishonor by such Issuing Lender of a proper demand for payment made under any Letter of Credit issued by it or (ii) the failure of such Issuing Lender to honor a drawing under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called "Governmental Acts"). B. Nature of Issuing Lenders' Duties. As between Borrower and any Issuing Lender, Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by such Issuing Lender by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, such Issuing Lender shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Lender, including without limitation any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Lender's rights or powers hereunder. In furtherance and extension and not in limitation of the specific provisions set forth in the first paragraph of this subsection 3.5B, any action taken or omitted by any Issuing Lender under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put any Issuing Lender under any resulting liability to Borrower. Notwithstanding anything to the contrary contained in this subsection 3.5, Borrower shall retain any and all rights it may have against any Issuing Lender for any liability arising solely out of the gross negligence or willful misconduct of such Issuing Lender, as determined by a final judgment of a court of competent jurisdiction. 37 3.6 Increased Costs and Taxes Relating to Letters of Credit. - --- -------------------------------------------------------- Subject to the provisions of subsection 2.7B (which shall be controlling with respect to the matters covered thereby), in the event that any Issuing Lender or Lender with a Revolving Loan Commitment shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by any Issuing Lender or Lender with a Revolving Loan Commitment with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Issuing Lender or Lender (or its applicable lending or letter of credit office) to any additional Tax (other than any Tax on the overall net income of such Issuing Lender or Lender) with respect to the issuing or maintaining of any Letters of Credit or the purchasing or maintaining of any participations therein or any other obligations under this Section 3, whether directly or by such being imposed on or suffered by any particular Issuing Lender or Lender; (ii) imposes, modifies or holds applicable any reserve (including without limitation any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement in respect of any Letters of Credit issued by any Issuing Lender or participations therein purchased by any Lender; or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Issuing Lender or Lender (or its applicable lending or letter of credit office) regarding this Section 3 or any Letter of Credit or any participation therein; and the result of any of the foregoing is to increase the cost to such Issuing Lender or Lender of agreeing to issue, issuing or maintaining any Letter of Credit or agreeing to purchase, purchasing or maintaining any participation therein or to reduce any amount received or receivable by such Issuing Lender or Lender (or its applicable lending or letter of credit office) with respect thereto; then, in any case, Borrower shall promptly pay to such Issuing Lender or Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts as may be necessary to compensate such Issuing Lender or Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Issuing Lender or Lender shall deliver to Borrower a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Issuing Lender or Lender under this subsection 3.6, which statement shall be conclusive and binding upon all parties hereto absent manifest error. Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT The obligations of Lenders to make Loans and issue Letters of Credit hereunder are subject to the satisfaction (or waiver by Lenders in their sole discretion) of the following conditions. 4.1 Conditions to the Occurrence of the Closing Date. - --- ------------------------------------------------- The conditions to the occurrence of the Closing Date are: A. Borrower's Documents. Borrower shall have delivered to Lenders (or to Administrative Agent for Lenders with sufficient executed copies, where appropriate, for each Lender and its counsel) the following with respect to Borrower, each, unless otherwise noted, dated the Closing Date: (i) Copies of its Organizational Documents, certified by the Secretary of State of its jurisdiction of organization if such certification is generally available dated a recent date prior to the Closing Date and in each other case, by its secretary or assistant secretary; (ii) To the extent generally available, a good standing certificate from the Secretary of State of its jurisdiction of organization and a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of such jurisdiction, each dated a recent date prior to the Closing Date; 38 (iii) Resolutions of LVSI's Board of Directors acting as ultimate managing member of Borrower approving and authorizing the execution, delivery and performance by Borrower of the Loan Documents being executed on the Closing Date to which it is a party, certified as of the Closing Date by LVSI's secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) Signature and incumbency certificates of the officers of LVSI executing the Loan Documents being executed on behalf of Borrower on the Closing Date; (v) Executed originals of the Loan Documents to which it is a party; and (vi) Such other documents as Administrative Agent may reasonably request. B. No Material Adverse Effect. Since December 31, 2000, no event or circumstance shall have occurred which has had or in the judgment of Administrative Agent could reasonably be expected to have a Material Adverse Effect. C. Deed of Trust and Title Insurance. Administrative Agent shall have received from Borrower (i) a fully executed and notarized Deed of Trust, in form and substance reasonably satisfactory to Administrative Agent duly recorded in the appropriate filing or recording office in the jurisdiction in which the Mortgaged Property is located, or evidence that such Deed of Trust has been irrevocably delivered to the Title Company for such recordation, and (ii) (a) a 1970 (amended October 17, 1970) ALTA mortgagee title insurance policy or policies or unconditional commitment therefore (the "Mortgage Policy") issued by the Title Company with respect to the Mortgaged Property in an amount not less than the maximum aggregate amount of the Commitment, in each case, insuring for the benefit of Administrative Agent that the Deed of Trust creates a valid and enforceable First Priority deed of trust Lien on the Mortgaged Property, subject only to Permitted Liens, which Mortgage Policy (1) shall include an endorsement for mechanics' liens, for future advances under this Agreement and for any other matters reasonably requested by Administrative Agent, (2) shall provide for affirmative insurance and such reinsurance as Administrative Agent may reasonably request, all of the foregoing in form and substance satisfactory to Administrative Agent and (3) shall not have a creditor's rights exception; and (b) evidence reasonably satisfactory to Administrative Agent that Borrower has or has caused to be (x) delivered to the Title Company all certificates and affidavits required by the Title Company in connection with the issuance of the Mortgage Policy and (y) paid to the Title Company or to the appropriate governmental authorities all expenses and premiums of the Title Company in connection with the issuance of the Mortgage Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Deed of Trust in the appropriate real estate records. D. A.L.T.A. Survey. Administrative Agent shall have received an A.L.T.A. survey of the Land satisfactory in form and substance to the Title Company and the Administrative Agent reasonably current and certified to Administrative Agent by a licensed surveyor satisfactory to Administrative Agent, showing (a) as to the Land, the exact location and dimensions thereof, including the location of all means of access thereto and all easements relating thereto and showing the perimeter within which all foundations are or are to be located; (b) that there are no gaps, gores, projections, protrusions or other survey defects other than Permitted Liens; (c) whether the Land or any portion thereof is located in a special earthquake or flood hazard zone; and (d) that there are no other matters that could reasonably be expected to be disclosed by a survey constituting a defect in title other than Permitted Liens. E. Security Interests in Personal and Mixed Property. Administrative Agent shall have received evidence reasonably satisfactory to it that Borrower shall have taken or caused to be taken all actions, executed and delivered or caused to be executed and delivered all such agreements, documents and instruments, and made or caused to be made all such filings and recordings that may be necessary or in the reasonable opinion of Administrative Agent, desirable in order to create in favor of Administrative Agent, for the benefit of Lenders, a valid and perfected security interest in the Collateral securing all of the Obligations. Without limiting the generality of the foregoing Borrower shall have (i) delivered to Administrative Agent (a) the results of a recent search, by a Person satisfactory to Administrative Agent to all effective UCC financing statements and fixture filings and all judgment and tax lien filings which may have been made with respect to any personal or mixed property of any Loan Party, together with copies of all such filings disclosed by such search, and (b) UCC termination statements duly executed by all applicable Persons for filing in all applicable jurisdictions as may be necessary to terminate any effective UCC financing statements or fixture filings disclosed in such search (other than any such financing statements or fixture filings in respect of Liens permitted to remain outstanding pursuant to the terms of this Agreement and (ii) delivered to Administrative Agent UCC financing statements and, where appropriate, fixture filings, duly executed by each applicable Loan Party with respect to all personal and mixed property Collateral of such Loan Party, for filing in all jurisdictions as may be necessary or, in the opinion of 39 Administrative Agent, desirable to perfect the security interests created in such Collateral pursuant to the Collateral Documents. F. Opinions of Counsel to Borrower. Lenders and their respective counsel shall have received (i) originally executed copies of one or more favorable written opinions of Paul, Weiss, Rifkind, Wharton & Garrison, counsel for Borrower, and (ii) originally executed copies of one or more favorable written opinions of Lionel Sawyer & Collins, Nevada counsel for Borrower, each in form and substance reasonably satisfactory to Administrative Agent and its counsel, dated as of the Closing Date and setting forth substantially the matters in the opinions designated in Exhibits V-A and V-B annexed hereto, respectively, and as to such other matters as Administrative Agent acting on behalf of Lenders may reasonably request. Borrower hereby acknowledges and confirms that it has requested such counsel to deliver such opinions to Lenders. G. Fees. Borrower shall have paid to Administrative Agent the fees payable on the Closing Date referred to in subsection 2.3 and all transaction costs payable under Section 10.2 due at that time. H. Matters Relating to Flood Hazards. (a) Administrative Agent shall have received evidence, which may be in the form of a letter from an insurance broker or a municipal engineer, as to whether the Mortgaged Property is located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards and if so, whether the community in which the Mortgaged Property is located participates in the National Flood Insurance Program, (b) if the Mortgaged Property is located in an area designated by the Federal Emergency management Agency as having special flood or mud slide hazards, written acknowledgment from Borrower of receipt of written notification from Administrative Agent (1) that the Mortgaged Property is located in a special flood hazard area and (2) as to whether the community in which the Mortgaged Property is located is participating in the National Flood Insurance Program, and (c) in the event the Mortgaged Property is located in a community that participates in the National Flood Insurance Program, evidence that Borrower have obtained flood insurance in respect of the Mortgaged Property to the extent required under the applicable regulations of the Board of Governors of the Federal Reserve System. I. Real Estate Appraisals. Administrative Agent shall have received an appraisal from an independent real estate appraiser satisfactory to the Administrative Agent in form, scope and substance satisfactory to the Administrative Agent and satisfying the requirements of any applicable laws and regulations of the Land showing a minimum value of $100,000,000 for the Land. J. Environmental Reports. Administrative Agent shall have received reports and other information, in form, scope and substance satisfactory to Administrative Agent, regarding environmental matters relating to the Borrower and the Land, which reports shall include a Phase I environmental assessment for the Land and the improvements thereon (the "Phase I Report") which (a) conforms to the ASTM Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E 1527 and (b) was conducted no more than six months prior to the Closing Date by EMG or another environmental consulting firm or firms reasonably satisfactory to the Administrative Agent. K. Environmental Indemnity. If requested by Administrative Agent, an environmental indemnity agreement, reasonably satisfactory in form and substance to Administrative Agent and its counsel, with respect to the indemnification of Administrative Agent and Lenders for any liabilities that may be imposed on or incurred by any of them as a result of any Hazardous Materials Activity. L. Financial Statements. Delivery to Administrative Agent of the audited consolidated and consolidating financial statements for LVSI and its Subsidiaries (including Borrower) for the period ended December 31, 2000 and the unaudited consolidated and consolidating financial statements for LVSI and its Subsidiaries for June 30, 2001. M. Solvency Assurances. On the Closing Date, Administrative Agent shall have received a Financial Condition Certificate from the Borrower dated the Closing Date, substantially in the form of Exhibit XI annexed hereto and with appropriate attachments, in each case demonstrating that, after giving effect to the transactions contemplated by this Agreement, the other Loan Documents and the other Operative Documents, Borrower will be Solvent. N. Phase II Lease. Borrower and Venetian shall have entered into the Phase II Lease, which Phase II Lease shall be in form and substance satisfactory to Administrative Agent. O. Evidence of Insurance. Administrative Agent shall have received a certificate from Company's insurance broker or other evidence satisfactory to it that all insurance required to be maintained pursuant to subsection 6.4 is in full force an effect and that Administrative Agent on behalf of Lenders has been named as additional insured and/or loss payee thereunder to the extent required under subsection 6.4. 40 P. Representations and Warranties; Performance Agreements. Company shall have delivered to Administrative Agent an Officers' Certificate, in form and substance satisfactory to Administrative Agent, to the effect that (i) the representations and warranties in Section 5 hereof are true, correct and compete in all material respects on and as of the Closing Date to the same extent as though made on and as of that date (or, to the extent such representations and warranties specifically relate to an earlier date, that such representations and warranties were true, correct and complete in all material respects on and as of such earlier date) (ii) Borrower shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before the Closing Date except as otherwise disclosed to and agreed to in writing by Administrative Agent and (iii) no Event of Default or Potential Event of Default shall then exist and be continuing or would result form the consummation of the transaction contemplated hereby. Q. Update Regarding Bovis Litigation. An update from counsel to LVSI and its Subsidiaries regarding the status of the construction litigation with Bovis, in form and substance reasonably satisfactory to the Administrative Agent. R. Completion of Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto not previously found reasonably acceptable by Administrative Agent and its counsel shall be reasonably satisfactory in form and substance to Administrative Agent and such counsel, and Administrative Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request. 4.2 Conditions to all Loans on or after the Closing Date. - --- ----------------------------------------------------- The obligations of Lenders to make Loans on or after the Closing Date on any Funding Date are subject to the following further conditions precedent: A. Administrative Agent shall have received before that Funding Date, in accordance with the provisions of subsection 2.1B, an originally executed Notice of Borrowing, in each case signed by the chief executive officer, the chief financial officer or the treasurer of Borrower or of the managing member of Borrower or by any executive officer of Borrower or managing member designated by any of the above-described officers on behalf of Borrower in a writing delivered to Administrative Agent. B. As of that Funding Date: (i) The representations and warranties contained herein and in the other Loan Documents shall be true, correct and complete in all material respects on and as of that Funding Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all material respects on and as of such earlier date; (ii) No event shall have occurred and be continuing or would result from the consummation of the borrowing contemplated by such Notice of Borrowing that would constitute an Event of Default or a Potential Event of Default; (iii) Each Loan Party shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before that Funding Date; (iv) No order, judgment or decree of any court, arbitrator or governmental authority shall purport to enjoin or restrain Lender from making the Loans to be made by it on that Funding Date; (v) The making of the Loans requested on such Funding Date shall not violate any law including, Regulation T, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System; and (vi) There shall not be pending or, to the knowledge of Borrower, threatened, any action, suit, proceeding, governmental investigation or arbitration against or affecting Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries that is required to be disclosed under, and has not been disclosed by Borrower in writing pursuant to, subsection 5.6 or 6.1(x) prior to the making of the last preceding Loans (or, in the case of the initial Loans, prior to the execution of this Agreement), and there shall have occurred no development not so 41 disclosed in any such action, suit, proceeding, governmental investigation or arbitration so disclosed, that, in either event, in the reasonable opinion of Administrative Agent or Requisite Lenders, would have a Material Adverse Effect. 4.3 Conditions to Letters of Credit. - --- -------------------------------- The issuance of any Letter of Credit hereunder (whether or not the applicable Issuing Lender is obligated to issue such Letter of Credit) on or after the Closing Date is subject to the following conditions precedent: A. On or before the date of issuance of such Letter of Credit, Administrative Agent shall have received, in accordance with the provisions of subsection 3.1B(i), an originally executed Notice of Issuance of Letter of Credit, in each case signed by the chief executive officer, the chief financial officer or the treasurer of Borrower or the managing member of Borrower or by any executive officer of Borrower or managing member designated by any of the above-described officers on behalf of Borrower in a writing delivered to Administrative Agent, together with all other information specified in subsection 3.1B(i) and such other documents or information as the applicable Issuing Lender may reasonably require in connection with the issuance of such Letter of Credit. B. On the date of issuance of such Letter of Credit, all conditions precedent described in subsection 4.2B shall be satisfied to the same extent as if the issuance of such Letter of Credit were the making of a Loan and the date of issuance of such Letter of Credit were a Funding Date. Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Agreement and to make or continue the Loans, as applicable, and to induce Issuing Lenders to issue or continue Letters of Credit, as applicable, Borrower represents and warrants to each Lender that, on the Closing Date, on each Funding Date for Loans and on the date of issuance of each Letter of Credit, the following statements are true, correct and complete: 5.1 Organization, Powers, Qualification, Good Standing, Business and - --- ---------------------------------------------------------------- Subsidiaries. ------------- A. Organization and Powers. Each Loan Party is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization as specified in Schedule 5.1A annexed hereto. Each Loan Party has all requisite corporate or limited liability company power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents and Project Documents to which it is a party and to carry out the transactions contemplated thereby. B. Qualification and Good Standing. Each Loan Party is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had and will not have a Material Adverse Effect. C. Ownership of Borrower. The equity interests in Borrower are duly authorized, validly issued and (if applicable) fully paid and nonassessable and, as of the Closing Date, none of such equity interests constitute Margin Stock. Schedule 5.1C, as it may be supplemented from time to time, correctly sets forth the ownership of Borrower. D. Subsidiaries. As of the Closing Date, Borrower has no Subsidiaries. E. Rights to Acquire Equity. There are no options, warrants, convertible securities or other rights to acquire any equity interests in Borrower or any of its Subsidiaries except as set forth as Schedule 5.1E. F. Conduct of Business. Borrower and its Subsidiaries are engaged only in the businesses permitted to be engaged in pursuant to subsection 7.12. 5.2 Authorization of Borrowing, etc. - --- -------------------------------- A. Authorization of Borrowing. The execution, delivery and performance of the Loan Documents and the Project Documents have been duly authorized by all necessary corporate action on the part of each Loan Party that is a party thereto. B. No Conflict. The execution, delivery and performance by Loan Parties of the Loan Documents and Project Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents and such Project Documents do not and will not (i) violate any provision of (a) any law or any governmental rule or regulation applicable to Borrower or any of its Subsidiaries, (b) the Organizational Documents of Borrower or any of its 42 Subsidiaries or (c) any order, judgment or decree of any court or other agency of government binding on Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrower or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrower or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Borrower or any of its Subsidiaries except for such approvals or consents which will be obtained on or before the Closing Date and disclosed in writing to Lenders and except for such violations, conflicts, approvals and consents the failure of which to obtain could reasonably be expected to have a Material Adverse Effect. C. Governmental Consents. The execution, delivery and performance by Loan Parties of the Loan Documents to which they are parties and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. D. Binding Obligation. Each of the Loan Documents and Project Documents has been duly executed and delivered by Loan Parties that are parties hereto or thereto, as applicable, and is the legally valid and binding obligation of Loan Parties, enforceable against such Loan Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability, whether brought in a proceeding in equity or at law. 5.3 Financial Condition. - --- -------------------- Borrower has heretofore delivered to Lenders, at Lenders' request, the following financial statements and information: (i) the audited consolidated and consolidating balance sheets of LVSI and its Subsidiaries as at December 31, 2000 and the related consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its Subsidiaries for the Fiscal Year then ended and (ii) the unaudited consolidated and consolidating balance sheets of LVSI and its Subsidiaries as at June 30, 2001 and the related unaudited consolidated and consolidating statements of income, stockholders' equity and cash flows of LVSI and its Subsidiaries for the six months then ended. All such statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position (on a consolidated and, where applicable, consolidating basis) of the entities described in such financial statements as at the respective dates thereof and the results of operations and cash flows (on a consolidated and, where applicable, consolidating basis) of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments. Except for obligations under the Operative Documents, Borrower does not (and will not following the funding of the initial Loans) have any Contingent Obligation, contingent liability or liability for taxes, long-term lease or forward or long-term commitment that is not reflected in the foregoing financial statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, financial condition or prospects of Borrower and its Subsidiaries taken as a whole. 5.4 No Material Adverse Change; No Restricted Junior Payments. - --- ---------------------------------------------------------- Since December 31, 2000, no event or change has occurred that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect. Except as set forth on Schedule 5.4, neither Borrower nor any of its Subsidiaries have directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Junior Payment or agreed to do so except as permitted by subsection 7.5. 5.5 Title to Properties; Liens; Real Property. - --- ------------------------------------------ A. Title to Properties; Liens. Borrower and its Subsidiaries have (i) good marketable and insurable fee simple title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal property), all of their respective material properties and assets reflected in the financial statements referred to in subsection 5.3 or in the most recent financial statements delivered pursuant to subsection 6.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under subsection 7.7. Except as permitted by this Agreement, all such properties and assets are held free and clear of Liens. 43 B. Real Property. As of the Closing Date, Schedule 5.5 annexed hereto contains a true, accurate and complete list of (i) all material properties owned by Borrower or any of its Subsidiaries and (ii) all material leases, subleases or assignments of leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting real estate of properties owned by Borrower or any of its Subsidiaries regardless of whether a Borrower or such Subsidiary is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment. Except as specified in Schedule 5.5 annexed hereto, each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and Borrower does not have knowledge of any default that has occurred and is continuing thereunder, and each such agreement constitutes the legally valid and binding obligation of each applicable Borrower, enforceable against such Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles except to the extent that the failure of such agreement to be in full force and effect could not reasonably be expected to have a Material Adverse Effect. 5.6 Litigation; Adverse Facts. - --- -------------------------- Except as set forth in Schedule 5.6 annexed hereto, there are no actions, suits, proceedings, arbitrations or governmental investigations (whether or not purportedly on behalf of Borrower or any of its Subsidiaries) at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign (including any Environmental Claims) that are pending or, to the knowledge of Borrower, threatened against or affecting Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries and that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries (i) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or (ii) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. 5.7 Payment of Taxes. - --- ----------------- Except to the extent permitted by subsection 6.3, all tax returns and reports of Borrower required to be filed by them have been timely filed, and all taxes shown on such tax returns to be due and payable and all material assessments, fees and other governmental charges upon Borrower and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Borrower knows of no proposed tax assessment against Borrower or any of its Subsidiaries which is not being actively contested by Borrower or such Subsidiary in good faith and by appropriate proceedings; provided that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor. 5.8 Performance of Agreements; Materially Adverse Agreements; Material - --- ------------------------------------------------------------------ Contracts. ---------- A. Neither Borrower nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except where the consequences of such default or defaults, if any, would not have a Material Adverse Effect. B. Schedule 5.8 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date. Except as described on Schedule 5.8, all such Material Contracts are, to the knowledge of Borrower, in full force and effect and no material defaults currently exist thereunder. 5.9 Governmental Regulation. - --- ------------------------ Neither Borrower nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or the Interstate Commerce Act or registration under the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness other than the Nevada Gaming Laws or which may otherwise render all or any portion of the Obligations unenforceable. Incurrence of the Obligations under the Loan Documents complies with all applicable provisions of the Nevada Gaming Laws. 44 5.10 Securities Activities. - ---- ---------------------- A. Neither Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. B. Following application of the proceeds of each Loan, not more than 25% of the value of the assets (either of Borrower only or of Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or subject to any restriction contained in any agreement or instrument, between Borrower and any Lender or any Affiliate of any Lender, relating to Indebtedness and within the scope of subsection 8.2, will be Margin Stock. 5.11 Employee Benefit Plans. - ---- ----------------------- A. Borrower, each of its Subsidiaries and each of their respective ERISA Affiliates are in material compliance with all applicable provisions and requirements of ERISA and the regulations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Code is so qualified. B. No ERISA Event has occurred or is reasonably expected to occur which has resulted or would be reasonably likely to result in a liability in the aggregate amount of $1,000,000 or more. C. Except to the extent required under Section 4980B of the Code or except as set forth in Schedule 5.11 annexed hereto, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates. D. As of the most recent valuation date for any Pension Plan, the amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), does not exceed $1,000,000. E. As of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Borrower, its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA, does not exceed $1,000,000. 5.12 Certain Fees. - ---- ------------- No broker's or finder's fee or commission will be payable with respect to this Agreement or any of the transactions contemplated hereby (other than fees payable to Lenders under subsection 2.3), and Borrower hereby indemnifies Lenders against, and agrees that it will hold Lenders harmless from, any claim, demand or liability for any such broker's or finder's fees alleged to have been incurred in connection herewith or therewith and any expenses (including reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim, demand or liability. 5.13 Environmental Protection. - ---- ------------------------- Except as set forth in Schedule 5.13 annexed hereto: (i) neither Borrower nor any of its Subsidiaries nor any of their respective Facilities, including the Land, or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to (a) any Environmental Law, (b) any Environmental Claim, or (c) any Hazardous Materials Activity; (ii) neither Borrower nor any of its Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss. 9604) or any comparable state law; (iii) there are and, to Borrower's knowledge, have been no conditions, occurrences, or Hazardous Materials Activities on the Land or any other Facility which could reasonably be expected to form the basis of an Environmental Claim against Borrower or any of its Subsidiaries; (iv) neither Borrower nor any of its Subsidiaries nor, to 45 Borrower's knowledge, any predecessor of Borrower or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Facility, and none of Borrower's or any of its Subsidiaries' operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent; (v) compliance with all current or reasonably foreseeable future requirements pursuant to or under Environmental Laws will not, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect. Notwithstanding anything in this subsection 5.13 to the contrary, no event or condition has occurred or is occurring with respect to Borrower or any of its Subsidiaries relating to any Environmental Law, any Release of Hazardous Materials, or any Hazardous Materials Activity, including any matter disclosed on Schedule 5.13 annexed hereto, which individually or in the aggregate has had or could reasonably be expected to have a Material Adverse Effect. 5.14 Employee Matters. - ---- ----------------- There is no strike or work stoppage in existence or threatened involving Borrower that could reasonably be expected to have a Material Adverse Effect. 5.15 Solvency. - ---- --------- Borrower is, and, upon the incurrence of any Obligations by Borrower on any date on which this representation is made, will be, Solvent. 5.16 Matters Relating to Collateral. - ---- ------------------------------- A. Creation, Perfection and Priority of Liens. The execution and delivery of the Collateral Documents by Borrower and its Subsidiaries, together with the actions taken on or prior to the Closing Date pursuant to subsection 4.1 are effective to create in favor of Administrative Agent for the benefit of Lenders as security for the Secured Obligations (as defined in the applicable Collateral Document in respect of any Collateral), a valid and perfected Lien on all of the Collateral, and all filings and other actions necessary to perfect and maintain the perfection and priority status of such Liens have been duly made or taken and remain in full force and effect, other than the filing of any UCC financing statements delivered to Administrative Agent or the Title Company for filing (but not yet filed) and the periodic filing of UCC continuation statements in respect of UCC financing statements filed by or on behalf of Administrative Agent. B. Permits. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the pledge or grant by Borrower and its Subsidiaries of the Liens purported to be created in favor of Administrative Agent for the benefit of the Lenders pursuant to any of the Collateral Documents or (ii) the exercise by Administrative Agent of any rights or remedies in respect of any Collateral (whether specifically granted or created pursuant to any of the Collateral Documents or created or provided for by applicable law), except for filings or recordings contemplated by subsection 5.16A. C. Absence of Third-Party Filings. Except such as may have been filed in favor of Administrative Agent as contemplated by subsection 5.16A or filed to perfect a Lien permitted under subsection 7.2, no effective UCC financing statement, fixture filing or other instrument similar in effect covering all or any part of the Collateral is on file in any filing or recording office. D. Information Regarding Collateral. All information supplied to Administrative Agent by or on behalf of Borrower with respect to any of the Collateral (in each case taken as a whole with respect to any particular Collateral) is accurate and complete in all material respects. 5.17 Proper Subdivision . - ---- -------------------- For all purposes the Land is, and may be mortgaged, conveyed and otherwise dealt with, as a separate legal lot or parcel. Section 6. BORROWER'S AFFIRMATIVE COVENANTS Borrower covenants and agrees that, so long as any of the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all 46 Letters of Credit, unless Requisite Lenders shall otherwise give prior written consent, Borrower shall perform, and shall cause each of its Subsidiaries to perform, all covenants set forth in this Section 6. 6.1 Financial Statements and Other Reports. - --- --------------------------------------- Borrower shall, and shall cause its Subsidiaries to, maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. Borrower will deliver to Administrative Agent and Lenders: (i) promptly and in any event within 3 days of receipt thereof, copies of all financial statements, reports and certifications delivered to Borrower under the Phase II Lease; (ii) as soon as available and in any event within 45 days after the end of each Fiscal Quarter, (a) the consolidated balance sheets of Borrower and its subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income, stockholders' equity and cash flows of Borrower and its subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of Borrower, that they fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments; and (b) a narrative report describing the operations of Borrower and its Subsidiaries in the form prepared for presentation to senior management for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter. (iii) as soon as available and in any event within 90 days after the end of each Fiscal Year, (a) the consolidated balance sheets of Borrower and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, stockholders' equity and cash flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year, all in reasonable detail and certified by the chief financial officer of LVSI, on behalf of Borrower, that they fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated; (b) a narrative report describing the operations of Borrower and its Subsidiaries in the form prepared for presentation to senior management for such Fiscal Year; and (c) a report thereon of Price Waterhouse LLP or other independent certified public accountants of recognized national standing selected by Borrower and reasonably satisfactory to Administrative Agent, which report shall be unqualified as to scope of audit, shall express no doubts about the ability of the Persons covered thereby to continue as a going concern, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Borrower and its Subsidiaries, respectively as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; (iv) Officers' and Compliance Certificates: together with each delivery of financial statements pursuant to subdivisions (i), (ii) and (iii) above, (a) an Officers' Certificate of Borrower stating that the signer, on behalf of Borrower, has reviewed the terms of this Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and condition of Borrower and its Subsidiaries during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signers do not have knowledge of the existence as at the date of such Officers' Certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action Borrower has taken, is taking and proposes to take with respect thereto; and (b) a Compliance Certificate demonstrating in reasonable detail 47 compliance during and at the end of the applicable accounting periods with the restrictions contained in Section 7; (v) Reconciliation Statements: if, as a result of any change in accounting principles and policies from those used in the preparation of the audited financial statements last delivered pursuant to this Agreement, the consolidated financial statements of Borrower and its Subsidiaries delivered pursuant to subdivisions (ii) or (iii) of this Section 6.1 will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then together with the first delivery of financial statements pursuant to subdivision (ii) or (iii) of this Section 6.1 following such change, consolidated financial statements of Borrower and its Subsidiaries for (y) the current Fiscal Year to the effective date of such change and (z) the two full Fiscal Years immediately preceding the Fiscal Year in which such change is made, in each case prepared on a pro forma basis as if such change had been in effect during such periods. (vi) Accountants' Certification: together with each delivery of any consolidated financial statements pursuant to subdivision (iii) above, a written statement by the independent certified public accountants giving the report thereon (a) stating that their audit examination has included a review of the terms of this Agreement and the other Loan Documents as they relate to accounting matters, (b) stating whether, in connection with their audit examination, any condition or event that constitutes an Event of Default or Potential Event of Default has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof; provided that such accountants shall not be liable by reason of any failure to obtain knowledge of any such Event of Default or Potential Event of Default that would not be disclosed in the course of their audit examination, and (c) stating that based on their audit examination nothing has come to their attention that causes them to believe either or both that the information contained in the certificates delivered therewith pursuant to subdivision (iii) above is not correct; (vii) Accountants' Reports: promptly upon receipt thereof (unless restricted by applicable professional standards), copies of all reports submitted to Borrower or any of its Subsidiaries by independent certified public accountants in connection with each annual, interim or special audit of the financial statements of Borrower and its Subsidiaries made by such accountants, including any comment letter submitted by such accountants to management in connection with their annual audit; (viii) Press Releases and Other Reports: promptly upon their becoming available, copies of all press releases and other statements made available generally by Borrower and any of its Subsidiaries to the public concerning material developments in the business of Borrower and its Subsidiaries; (ix) Events of Default, etc.: promptly upon any officer of Borrower obtaining knowledge (a) of any condition or event that constitutes an Event of Default or Potential Event of Default, or becoming aware that any Lender has given any notice (other than to Administrative Agent) or taken any other action with respect to a claimed Event of Default or Potential Event of Default, (b) that any Person has given any notice to Borrower or any of its Subsidiaries or taken any other action with respect to a claimed default or event or condition of the type referred to in subsection 8.2, (c) of any condition or event that would be required to be disclosed in a current report filed by Borrower with the Securities and Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in effect on the Closing Date) if Borrower were required to file such reports under the Exchange Act, or (d) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, an Officers' Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given or action taken by any such Person and the nature of such claimed Event of Default, Potential Event of Default, default, event or condition, and what action Borrower has taken, is taking and proposes to take with respect thereto; (x) Litigation or Other Proceedings: (a) promptly upon any officer of Borrower obtaining knowledge of (X) the non-frivolous institution of, or threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting Borrower or any of its Subsidiaries, or any property of Borrower or any of its 48 Subsidiaries (collectively, "Proceedings") not previously disclosed in writing by Borrower to Lenders or (Y) any material development in any Proceeding that, in any case: (1) if adversely determined, has a reasonable possibility of giving rise to a Material Adverse Effect; or (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby; written notice thereof together with such other information as may be reasonably available to Borrower to enable Lenders and their counsel to evaluate such matters; and (b) within twenty days after the end of each Fiscal Quarter, a schedule of all Proceedings involving an alleged liability of, or claims against or affecting, Borrower or any of its Subsidiaries equal to or greater than $250,000, and promptly after request by Administrative Agent such other information as may be reasonably requested by Administrative Agent to enable Administrative Agent and its counsel to evaluate any of such Proceedings; (xi) ERISA Events: promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Borrower or any of its respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; (xii) ERISA Notices: with reasonable promptness, copies of (a) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (b) all notices received by Borrower or any of its respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (c) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; (xiii) Insurance: as soon as practicable and in any event by the last day of each Fiscal Year, a report in form and substance reasonably satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such report by Borrower and its Subsidiaries and all material insurance coverage planned to be maintained by Borrower and its Subsidiaries in the immediately succeeding Fiscal Year; (xiv) New Subsidiaries: promptly upon any Person becoming a Subsidiary of Borrower, a written notice setting forth with respect to such Person (a) the date on which such Person became a Subsidiary of Borrower and (b) all of the data required to be set forth in Schedule 5.1 annexed hereto with respect to all Subsidiaries of Borrower (it being understood that such written notice shall be deemed to supplement Schedule 5.1 annexed hereto for all purposes of this Agreement); (xv) Material Contracts: promptly, and in any event within ten Business Days after any Material Contract of Borrower or any of its Subsidiaries is terminated or amended in a manner that is materially adverse to Borrower or any of its Subsidiaries or any new Material Contract is entered into, or upon becoming aware of any material default by any Party under a Material Contract, a written statement describing such event with copies of such material amendments or new contracts, and an explanation of any actions being taken with respect thereto; (xvi) UCC Search Report: As promptly as practicable after the date of delivery to Lender of any UCC financing statement executed by any Loan Party pursuant to subsection 6.9 or 6.10, copies of completed UCC searches evidencing the proper filing, recording and indexing of all such UCC financing statement and listing all other effective financing statements that name such Loan Party as debtor, together with copies of all such other financing statements not previously delivered to Administrative Agent by or on behalf of such Loan Party; (xvii) Notices under Operative Documents: promptly upon receipt, copies of all notices provided to the Borrower or its Affiliates pursuant to any Operative Documents relating to material defaults or material delays and promptly upon execution and delivery thereof, copies of all amendments to any of the Operative Documents; and 49 (xviii) Other Information: with reasonable promptness, such other information and data with respect to Borrower or any of its Subsidiaries as from time to time may be reasonably requested by any Lender. 6.2 Corporate Existence, etc. - --- ------------------------- Borrower will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect their corporate or limited liability company existence and all rights and franchises material to its business provided that any Subsidiary of Borrower may be merged into Borrower or another wholly-owned Subsidiary of Borrower and provided further that no Subsidiary of Borrower shall be required to preserve any such right or franchise if the Board of Directors (or managing member thereof, if applicable) shall determine (and shall notify Administrative Agent), that the preservation thereof is no longer desirable in the conduct of the business of such Subsidiary and the loss thereof is not disadvantageous in any material respect to Borrower and its Subsidiaries or any Lender. 6.3 Payment of Taxes and Claims; Tax Consolidation. - --- ----------------------------------------------- A. Borrower will, and will cause each of its Subsidiaries to, pay all material taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty accrues thereon, and all material claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such charge or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (1) such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor and (2) in the case of a charge or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such charge or claim. B. Borrower will not, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than LVSI or any of its Subsidiaries) unless Borrower and its Subsidiaries shall have entered into, a tax sharing agreement with such Person, in form and substance satisfactory to Administrative Agent. 6.4 Maintenance of Properties; Insurance; Application of Net Loss - --- ------------------------------------------------------------- Proceeds. --------- A. Maintenance of Properties. Borrower will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Borrower and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof except to the extent that the Borrower determines in good faith not to maintain, repair, renew or replace such property if such property is no longer desirable in the conduct of their business and the failure to do so is not disadvantageous in any material respect to the Borrower and its Subsidiaries or the Lenders. B. Insurance. Borrower will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Borrower, and its Subsidiaries as may customarily be carried or maintained under similar circumstances by corporations of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for corporations similarly situated in the industry. Without limiting the generality of the foregoing, Borrower will maintain or cause to be maintained (i) flood insurance with respect to the Mortgaged Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (ii) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times satisfactory to Administrative Agent in its commercially reasonable judgment, it being understood, however, that Borrower shall not be required to maintain any such casualty insurance if neither Borrower nor any of its Subsidiaries has insurable assets of any material value. Each such policy of insurance shall (a) name Administrative Agent as an additional insured thereunder as its interests may appear and (b) in the case of each business interruption and casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in 50 form and substance to Administrative Agent, that names Administrative Agent as the loss payee thereunder for any covered loss in excess of $250,000 and provides for at least 30 days prior written notice to Administrative Agent of any modification or cancellation of such policy. C. Application of Net Loss Proceeds and Liquidated Damages. (i) Upon receiving Loss Proceeds or Liquidated Damages Borrower shall (a) so long as no Event of Default or Potential Event of Default shall have occurred and be continuing and the amount of Loss Proceeds and Liquidated Damages received by Borrower is less than $250,000, promptly and diligently apply the Loss Proceeds or Liquidated Damages to pay or reimburse the costs of repairing, restoring or replacing the assets in respect of which such Loss Proceeds or Liquidated Damages were received or, to the extent not so applied, to repay the Loans as provided in subsection 2.4B(iii)(b), (b) if an Event of Default or Potential Event of Default shall have occurred and be continuing, Borrower shall apply an amount equal to such Loss Proceeds or Liquidated Damages to repay the Loans as provided in Subsection 2.4B(iii)(b), and (c) if the amount of Loss Proceeds or Liquidated Damages received by Borrower equals or exceeds $250,000 and no Event of Default or Potential Event of Default shall have occurred, Borrower shall within two (2) Business Days of the receipt thereof deposit such funds with Administrative Agent and, so long as Borrower proceeds diligently to repair, restore or replace the assets of Borrower in respect of which such Loss Proceeds or Liquidated Damages were received, Administrative Agent shall from time to time disburse to Borrower from such account, to the extent of any such Loss Proceeds or Liquidated Damages remaining therein in respect of the applicable covered loss, amounts necessary to pay the cost of such repair, restoration or replacement after the receipt by Administrative Agent or invoices or other documentation reasonably satisfactory to Lender relating to the amount of costs so incurred and the work performed (including, if required by Administrative Agent , lien releases and architects' certificates); provided, however, that if at any time Administrative Agent reasonably determines (A) that Borrower is not proceeding diligently with such repair, restoration or replacement or (B) that such repair, restoration or replacement cannot be completed with the Loss Proceeds or Liquidated Damages then held by Administrative Agent for such purposes, together with funds otherwise available to Borrower for such purpose, or that such repair, restoration or replacement cannot be completed within 180 days after the receipt by Administrative Agent of such Loss Proceeds or Liquidated Damages, Administrative Agent shall, and Borrower hereby authorizes Administrative Agent to, apply such Loss Proceeds or Liquidated Damages to repay the Loans as provided in subsection 2.4B(iii)(b). (ii) Upon receipt by Administrative Agent of any Loss Proceeds as loss payee, or Liquidated Damages in respect of any covered loss (a) and if and to the extent Borrower would have been required to apply such Loss Proceeds or Liquidated Damages (if it had received them directly) to repay the Loans, Administrative Agent shall, and Borrower hereby authorizes Administrative Agent to, apply such Loss Proceeds to Liquidated Damages to repay the Loans as provided in subsection 2.4B(iii)(b), and (b) to the extent the foregoing clause (a) does not apply and (1) the aggregate amount of such Loss Proceeds or Liquidated Damages received (and reasonably expected to be received) by Administrative Agent in respect of any covered loss does not exceed $250,000, Lender shall deliver such Loss Proceeds or Liquidated Damages to Borrower, and Borrower shall promptly apply such Loss Proceeds or Liquidated Damages to the cost of repairing, restoring, or replacing the assets in respect of which such Loss Proceeds or Liquidated Damages were received, and (2) if the aggregate amount of Loss Proceeds or Liquidated Damages received (and reasonably expected to be received) by Administrative Agent in respect of any covered loss equals or exceeds $250,000 Lender shall hold such Loss Proceeds or Liquidated Damages and, so long as Borrower proceeds diligently to repair, restore or replace the assets of Borrower in respect of which such Loss Proceeds or Liquidated Damages were received, Lender shall from time to time disburse to Borrower, to the extent of any such Loss Proceeds or Liquidated Damages remaining therein in respect of the applicable covered loss, amounts necessary to pay the cost of such repair, restoration or replacement after the receipt by Administrative Agent of invoices or other documentation reasonably satisfactory to Administrative Agent relating to the amount of costs so incurred and the work performed (including, if required by Administrative Agent, lien releases and architects' certificates); provided, however, that if at any time Administrative Agent reasonably determines (A) that Borrower is not proceeding diligently with such repair, restoration or replacement or (B) that such repair, restoration or replacement 51 cannot be completed with the Loss Proceeds or Liquidated Damages then held by Administrative Agent for such purposes, together with funds otherwise available to Borrower for such purpose, or that such repair, restoration or replacement cannot be completed within 180 days after the receipt by Administrative Agent of such Loss Proceeds or Liquidated Damages, Administrative Agent shall, and Borrower hereby authorizes Administrative Agent to, apply such Loss Proceeds or Liquidated Damages to repay the Loan as provided in subsection 2.4B(iii)(b). 6.5 Inspection; Lender Meeting. - --- --------------------------- A. Inspection Rights. Borrower shall, and shall cause each of its Subsidiaries to, permit any authorized representatives designated by Administrative Agent or any Lender to visit and inspect any of the properties of Borrower and its Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, if requested by Administrative Agent (provided that Borrower may, if it so chooses, be present at or participate in any such discussion), all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested. B. Lender Meeting. Borrower will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Borrower's corporate offices (or at such other location as may be agreed to by Borrower and Administrative Agent) at such time as may be agreed to by Borrower and Administrative Agent. 6.6 Compliance with Laws, etc.; Permits. A. Borrower shall, shall cause each of its Subsidiaries to, and shall use commercially reasonable efforts to cause all other Persons on or occupying any Facilities to, comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority (including all Environmental Laws), noncompliance with which could reasonably be expected to cause, individually or in the aggregate, a Material Adverse Effect. B. Borrower shall, and shall cause each of its Subsidiaries to, from time to time obtain, maintain, retain, observe, keep in full force and effect and comply in all material respects with the terms, conditions and provisions of all Permits as shall now or hereafter be necessary under applicable laws except any thereof the noncompliance with which could not reasonably be expected to have a Material Adverse Effect. 6.7 Environmental Review and Investigation, Disclosure, Etc.; Borrower's - --- -------------------------------------------------------------------- Actions Regarding Hazardous Materials Activities, Environmental Claims ---------------------------------------------------------------------- and Violations of Environmental Laws. ------------------------------------- A. Environmental Review and Investigation. Borrower agrees that Administrative Agent may, from time to time and in its reasonable discretion, (i) retain, at Borrower's expense, an independent professional consultant to review any environmental audits, investigations, analyses and reports relating to Hazardous Materials in respect of the Land, the Land or the Project prepared by or for Borrower and (ii) conduct their own investigation of any Facility; provided that, in the case of any Facility no longer owned, leased, operated or used by Borrower or any of its Subsidiaries or Affiliates, Borrower shall only be obligated to use its best efforts to obtain permission for Administrative Agent's professional consultant to conduct an investigation of such Facility. For purposes of conducting such a review and/or investigation, Borrower hereby grants to Administrative Agent and its agents, employees, consultants and contractors the right to enter into or onto the Land and any other Facilities currently owned, leased, operated or used by Borrower or any of its Subsidiaries and to perform such tests on such property (including taking samples of soil, groundwater and suspected asbestos-containing materials) as are reasonably necessary in connection therewith. Any such investigation of any Facility shall be conducted, unless otherwise agreed to by Borrower and Administrative Agent, during normal business hours and, to the extent reasonably practicable, shall be conducted so as not to interfere with the ongoing operations at such Facility or to cause any damage or loss to any property at such Facility. Borrower and Administrative Agent hereby acknowledge and agree that any report of any investigation conducted at the request of Administrative Agent pursuant to this subsection 6.7A will be obtained and shall be used by Administrative Agent and Lenders for the purposes of Lenders' internal credit decisions, to monitor and police the Loans and to protect Lenders' security interests, if any, created by the Loan Documents. Administrative Agent agrees to deliver a copy of any such report to Borrower with the understanding that Borrower acknowledges and agree that (x) it will indemnify and hold harmless Administrative Agent and each Lender from any costs, losses or liabilities relating to Borrower's use of or reliance on such report, (y) neither Administrative Agent nor any Lender makes any representation or warranty with respect to such report, and (z) by 52 delivering such report to Borrower, neither Administrative Agent nor any Lender requiring or recommending the implementation of any suggestions or recommendations contained in such report. B. Environmental Disclosure. Borrower will deliver to Administrative Agent and Lenders: (i) Environmental Audits and Reports. As soon as practicable following receipt thereof, copies of all environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Borrower or any of its Subsidiaries or Affiliates or by independent consultants, governmental authorities or any other Persons, with respect to significant environmental matters at any Facility or with respect to any Environmental Claims; (ii) Notice of Certain Releases, Remedial Actions, Etc. Promptly upon the occurrence thereof, written notice describing in reasonable detail (a) any Release required to be reported to any federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (b) any remedial action taken by Borrower or any other Person in response to (1) any Hazardous Materials Activities the existence of which has a reasonable possibility of resulting in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect, or (2) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of resulting in a Material Adverse Effect. (iii) Written Communications Regarding Environmental Claims, Releases, Etc. As soon as practicable following the sending or receipt thereof by Borrower or any of its Subsidiaries or Affiliates, a copy of any and all written communications with respect to (a) any Environmental Claims that, individually or in the aggregate, have a reasonable possibility of giving rise to a Material Adverse Effect, (b) any Release required to be reported to any federal, state or local governmental or regulatory agency, and (c) any request for information from any governmental agency that suggests such agency is investigating whether Borrower or any of its Subsidiaries may be potentially responsible for any Hazardous Materials Activity. (iv) Notice of Certain Proposed Actions Having Environmental Impact. Prompt written notice describing in reasonable detail (a) any proposed acquisition of stock, assets, or property by Borrower or any of its Subsidiaries that could reasonably be expected to (1) expose Borrower or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (2) affect the ability of Borrower or any of its Subsidiaries to maintain in full force and effect all material Permits required under any Environmental Laws for their respective operations and (b) any proposed action to be taken by Borrower or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Borrower or any of its Subsidiaries to any material additional obligations or requirements under any Environmental Laws that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (v) Other Information. With reasonable promptness, such other documents and information as from time to time may be reasonably requested by Administrative Agent in relation to any matters disclosed pursuant to this subsection 6.7. C. Borrower's Actions Regarding Hazardous Materials Activities, Environmental Claims and Violations of Environmental Laws. (i) Remedial Actions Relating to Hazardous Materials Activities. Borrower shall promptly undertake, and shall cause each of its Subsidiaries promptly to undertake, any and all investigations, studies, sampling, testing, abatement, cleanup, removal, remediation or other response actions necessary to remove, remediate, clean up or abate any Hazardous Materials Activity on, under or about any Facility that is in violation of any Environmental Laws or that presents a material risk of giving rise to an Environmental Claim. In the event Borrower or any of its Subsidiaries undertake any such action with respect to any Hazardous Materials, Borrower or such Subsidiary shall conduct and complete such action in compliance in all material respects with all applicable Environmental Laws and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, Borrower's or such Subsidiary's liability with respect to such Hazardous Materials Activity is being contested in good faith by Borrower or such Subsidiary. 53 (ii) Actions with Respect to Environmental Claims and Violations of Environmental Laws. Borrower shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any material violation of applicable Environmental Laws by Borrower or its Subsidiaries and (ii) make an appropriate response to any Environmental Claim against Borrower or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder. 6.8 Compliance with Material Contracts. - --- ----------------------------------- A. Borrower shall, and shall cause each of its Subsidiaries to, comply, duly and promptly, in all material respects with its respective obligations and enforce all of its respective rights under all Material Contracts, including all Operative Documents, except where the failure to comply could not reasonably be expected to have a Material Adverse Effect. B. Notwithstanding anything in Section 6.8A to the contrary, Borrower shall diligently enforce its rights under the Phase II Lease and shall use diligent efforts to cause Venetian to perform its obligations thereunder. 6.9 Further Assurances. - --- ------------------- A. Assurances. Without expense or cost to the Administrative Agent or the Lenders, Borrower shall, and shall cause each of its Subsidiaries to, from time to time hereafter, execute, acknowledge, file, record, do and deliver all and any further acts, deeds, conveyances, mortgages, deeds of trust, deeds to secure debt, security agreements, hypothecations, pledges, charges, assignments, financing statements and continuations thereof, notices of assignment, transfers, certificates, assurances and other instruments as the Administrative Agent may from time to time reasonably require in order to carry out more effectively the purposes of this Agreement or the other Loan Documents, including to subject any items of Collateral, intended to now or hereafter be covered, to the Liens created by the Collateral Documents, to perfect and maintain such Liens, and to assure, convey, assign, transfer and confirm unto the Administrative Agent the property and rights hereby conveyed and assigned or intended to now or hereafter be conveyed or assigned or which Borrower or any such Subsidiary may be or may hereafter become bound to convey or to assign to the Administrative Agent or for carrying out the intention of or facilitating the performance of the terms of this Agreement, or any other Loan Documents or for filing, registering or recording this Agreement or any other Loan Documents. Promptly, upon a reasonable request, Borrower shall, and shall cause each of its Subsidiaries to, execute and deliver, and hereby authorizes the Administrative Agent to execute and file in the name of Borrower or such Subsidiary, to the extent the Administrative Agent may lawfully do so, one or more financing statements, chattel mortgages or comparable security instruments to evidence more effectively the Liens of the Collateral Documents upon the Collateral. B. Filing and Recording Obligations. Borrower shall pay or cause to be paid all filing, registration and recording fees and all expenses incident to the execution and acknowledgment of the Deed of Trust or any other Loan Document, including any instrument of further assurance described in subsection 6.9A, and shall pay or cause to be paid all mortgage recording taxes, transfer taxes, general intangibles taxes and governmental stamp and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution, delivery, filing, recording or registration of any Collateral Document or any other Loan Document, the Phase II Lease or memoranda thereof, including any instrument of further assurance described in subsection 6.9A, or by reason of its interest in, or measured by amounts payable under, the Notes, any Collateral Document or any other Loan Document, including any instrument of further assurance described in subsection 6.9A, and shall pay all stamp taxes and other taxes required to be paid on the Notes or any other Loan Document, but excluding in the case of each Lender and the Administrative Agent, Taxes imposed on its income by a jurisdiction under the laws of which it is organized or in which its principal executive office is located or in which its applicable lender office for funding or booking its Loans hereunder is located. If Borrower fails to make or cause to be made any of the payments described in the preceding sentence within 15 days after notice thereof from the Administrative Agent (or such shorter period as is necessary to protect the loss of or diminution in value of any Collateral by reason of tax foreclosure or otherwise, as determined by the Administrative Agent, in its sole discretion) accompanied by documentation verifying the nature and amount of such payments, the Administrative Agent may (but shall not be obligated to) pay the amount due and Borrower shall reimburse all amounts in accordance with the terms hereof. C. Costs of Defending and Upholding the Lien. Administrative Agent may, upon at least five days' prior notice to the Borrower, (i) appear in and defend any action or proceeding, in the name and on behalf of Administrative Agent or Lenders in which Administrative Agent or any Lender is named or which the Administrative Agent in its sole discretion determines is reasonably likely to materially adversely affect the Mortgaged Property, any other Collateral, any Collateral Document, the Lien thereof or any other Loan Document and (ii) institute any action or proceeding which the Administrative Agent reasonably determines should be instituted to protect the interest or rights of 54 Administrative Agent and Lenders in the Mortgaged Property or other Collateral or under this Agreement or any other Loan Document. The Borrower agrees that all reasonable costs and expenses expended or otherwise incurred pursuant to this subsection (including reasonable attorneys' fees and disbursements) by the Administrative Agent shall be paid by the Borrower or reimbursed to the Lender, as the case may be, promptly after demand. D. Costs of Enforcement. The Borrower agrees to bear and shall pay or reimburse the Administrative Agent and Lenders in accordance with the terms of subsection 10.2 for all reasonable sums, costs and expenses incurred by the Administrative Agent and Lenders (including reasonable attorneys' fees and the expenses and fees of any receiver or similar official) of or incidental to the collection of any of the Obligations, any foreclosure (or transfer in lieu of foreclosure) of this Agreement, any Collateral Document or any other Loan Document or any sale of all or any portion of the Mortgaged Property or all or any portion of the other Collateral. 6.10 Execution of Subsidiary Guaranty and Personal Property Collateral - ---- ----------------------------------------------------------------- Documents by Future Subsidiaries. --------------------------------- A. Execution of Subsidiary Guaranty and Personal Property Collateral Documents. In the event that any Person becomes a Subsidiary on or after the Closing Date, Borrower will promptly notify Administrative Agent of that fact and cause such Subsidiary to execute and deliver to Administrative Agent a Subsidiary Guaranty and a Subsidiary Security Agreement and to take all such further actions and execute all such further documents and instruments as may be necessary or, in the reasonable opinion of Administrative Agent, desirable to create in favor of Administrative Agent for the benefit of Lenders, a valid and perfected First Priority Lien on all of the personal and mixed property assets of such Subsidiary. B. Subsidiary Charter Documents, Legal Opinions, Etc. Borrower shall deliver to Administrative Agent, together with such Loan Documents, (i) certified copies of such Subsidiary's Organizational Documents, together with a good standing certificate from the Secretary of State of the jurisdiction of its organization and each other state in which such Person is qualified as a foreign corporation to do business and, to the extent generally available, a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each of such jurisdictions, each to be dated a recent date prior to their delivery to Administrative Agent, (ii) a certificate executed by the secretary or an assistant secretary of such Subsidiary as to (a) the fact that the attached resolutions of the Board of Directors or managing member of such Subsidiary approving and authorizing the execution, delivery and performance of such Loan Documents are in full force and effect and have not been modified or amended and (b) the incumbency and signatures of the officers of such Subsidiary executing such Loan Documents, and (iii) a favorable opinion of counsel to such Subsidiary, in form and substance reasonably satisfactory to Administrative Agent and its counsel, as to (a) the due organization and good standing of such Subsidiary, (b) the due authorization, execution and delivery by such Subsidiary of such Loan Documents, (c) the enforceability of such Loan Documents against such Subsidiary, (d) such other matters (including matters relating to the creation and perfection of Liens in any Collateral pursuant to such Loan Documents) as Administrative Agent may reasonably request, all of the foregoing to be reasonably satisfactory in form and substance to Administrative Agent and its counsel. C. Real Estate Collateral Documents. Borrower shall deliver to Administrative Agent together with such Loan Documents all such further documents and instruments and take such further action necessary to create in favor of Administrative Agent for the benefit of Lenders a valid and perfected first priority security interest on any real property assets of such Subsidiary, as Administrative Agent may reasonably request from time to time. Section 7. BORROWER'S NEGATIVE COVENANTS Borrower covenants and agrees that, so long as any of the Commitments hereunder shall remain in effect and until payment in full of all of the Loans and other Obligations and the cancellation or expiration of all Letters of Credit, unless Requisite Lenders shall otherwise give prior written consent, Borrower shall perform, and shall cause each of its Subsidiaries to perform, all of the covenants set forth in this Section 7. 7.1 Indebtedness. - --- ------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (i) Borrower and its Subsidiaries may become and remain liable with respect to the Obligations; 55 (ii) Borrower and its Subsidiaries may become and remain liable with respect to Contingent Obligations permitted by subsection 7.4 and (other than with respect to clauses (ii), (iii) and (iv) of subsection 7.4) upon any matured obligations actually arising pursuant thereto, the Indebtedness corresponding to the Contingent Obligations so extinguished; (iii) Borrower may remain liable with respect to unsecured Indebtedness under the Chase Credit Agreement in an aggregate principal amount not to exceed $1,100,000 at any time; (iv) Borrower and its Subsidiaries may become and remain liable in respect of unsecured Indebtedness to Adelson or any of his Affiliates to the extent permitted under Section 7.18; and (v) Borrower and its Subsidiaries may become and remain liable with respect to other unsecured Indebtedness in an aggregate principal amount not to exceed $12,500,000 at any time outstanding reduced by (i) the aggregate amount of any increases in Term Loans and/or Revolving Loan Commitments under subsection 2.1A(iii) and (ii) the aggregate amount of any Contingent Obligations incurred pursuant to Subsection 7.4(ii) and 7.4(iv); . 7.2 Liens and Related Matters. - --- -------------------------- A. Prohibition on Liens. Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of such Borrower or Subsidiary, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the Uniform Commercial Code of any State or under any similar recording or notice statute, except: (i) Permitted Liens; and (ii) Liens granted pursuant to the Collateral Documents. B. Equitable Lien in Favor of Lenders. If Borrower or any of its Subsidiaries shall create or assume any Lien upon any of its properties or assets, whether now owned or hereafter acquired, other than Liens excepted by the provisions of subsection 7.2A, it shall make or cause to be made effective provision whereby the Obligations will be secured by such Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such Indebtedness shall be so secured; provided that, notwithstanding the foregoing, this covenant shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such Lien not permitted by the provisions of subsection 7.2A. C. No Further Negative Pledges. Neither Borrower nor any of its Subsidiaries, shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired other than (x) as provided herein or in the other Loan Documents, or (y) as required by applicable law or any applicable rule or order of any Gaming Authority. D. No Restrictions on Subsidiary Distributions to Borrower or Other Subsidiaries. Except as provided herein, Borrower will not, and will not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any of its Subsidiaries to (i) pay dividends or make any other distributions on any of such Subsidiary's capital stock owned by Borrower or any other Subsidiary of Borrower, (ii) repay or prepay any Indebtedness owed by any such Subsidiaries to Borrower, (iii) make loans or advances to Borrower, or (iv) transfer any of its property or assets to Borrower other than (x) as provided herein or in the other Loan Documents, or (y) as required by applicable law or any applicable rule or order of any Gaming Authority. 7.3 Investments; Joint Ventures; Formation of Subsidiaries. - --- ------------------------------------------------------- Borrower shall not, and shall not permit any of its Subsidiaries, to, directly or indirectly, make or own any Investment in any Person, including any Joint Venture or otherwise form or create any Subsidiary, except: (i) Borrower and its Subsidiaries may make and own Investments in Cash Equivalents; (ii) Borrower may make expenditures, for predevelopment of Phase II to the extent permitted by subsection 7.14; (iii) Borrower may make Investments in Venetian or a newly formed 56 Restricted Subsidiary (as defined in the Indentures (as defined in the LVSI/Venetian Credit Agreement)) the proceeds of which are used for the Phase I-A Project (as defined in the LVSI/Venetian Credit Agreement), provided that such Investment must be made no later than December 31, 2002; and (iv) Borrower may make and own other Investments in an aggregate amount not to exceed at any time $1,000,000. 7.4 Contingent Obligations. - --- ----------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, create or become or remain liable with respect to any Contingent Obligation, except: (i) Borrower and its Subsidiaries may become and remain liable with respect to Contingent Obligations under the Loan Documents; (ii) to the extent such incurrence does not result in the incurrence by Borrower or any of its Subsidiaries of any obligation for the payment of borrowed money, Borrower may become and remain liable with respect to Contingent Obligations incurred solely in respect of performance bonds, completion guaranties and standby letters of credit or bankers' acceptances, provided that such Contingent Obligations are incurred in the ordinary course of business and do not at any time exceed $2,000,000 in the aggregate; (iii) Borrower and its Subsidiaries may become and remain liable for customary indemnities under Project Documents as in effect on the Closing Date; and (iv) Borrower and its Subsidiaries may become liable for other Contingent Obligations in an aggregate amount not to exceed $1,000,000 at any time. 7.5 Restricted Junior Payments. - --- --------------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Junior Payment, except: (i) Borrower may make distributions of cash through its parent and other Subsidiaries of LVSI to LVSI, provided that such distributions must be made no later than December 31, 2002; (ii) Borrower and its Subsidiaries may redeem or purchase any equity interests in Borrower or its Subsidiaries or any Indebtedness to the extent required by any Nevada Gaming Authority in order to preserve a material Gaming License, provided that so long as such efforts do not jeopardize any material Gaming License, Borrower shall have diligently tried to find a third-party purchaser for such equity interests or Indebtedness and no third-party purchasers acceptable to the Nevada Gaming Authority is willing to purchase such equity interests or Indebtedness within a time period acceptable to the Nevada Gaming Authority; and (iii) Any Subsidiary of Borrower may make distributions to any other wholly-owned Subsidiary of Borrower or to Borrower. 7.6 [Intentionally Omitted.]. - --- ------------------------- 7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions. - --- ----------------------------------------------------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, alter the corporate, capital or legal structure of Borrower or any of its Subsidiaries, or enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, property or assets, whether now owned or hereafter acquired, or acquire by purchase or otherwise all or substantially all the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business of any Person, except: (i) Borrower may make expenditures for predevelopment of Phase II on the Land to the extent permitted under subsection 7.14; (ii) Borrower and its Subsidiaries may dispose of obsolete, worn out or surplus assets or assets no longer used or useful in the 57 business of Borrower and its Subsidiaries in each case to the extent made in the ordinary course of business, provided that either (i) such disposal does not materially affect the Mortgaged Property or the Phase II or (ii) prior to or promptly following such disposal any such property shall be replaced with other property of substantially equal utility and a value at least substantially equal to that of the replaced property when first acquired and free from any Liens of any other Person subject only to Permitted Liens and by such removal and replacement Borrower and its Subsidiaries shall be deemed to have subjected such replacement property to the lien of the Collateral Documents in favor of Administrative Agent for the benefit of the Lenders, as applicable; (iii) Borrower and its Subsidiaries may sell or otherwise dispose of assets in transactions that do not constitute Asset Sales, provided that the aggregate value of any assets disposed of pursuant to this clause (iii) may not exceed $1,000,000 in any fiscal year and provided further that consideration received for such assets shall be in an amount at least equal to the fair market value thereof ; (iv) Borrower may lease the Land to the Venetian pursuant to the Phase II Lease, subject to terms of this Agreement and may maintain the leases in existence on the date hereof and listed on Schedule 5.5; (v) Borrower and its Subsidiaries may incur Liens permitted under Section 7.2, provided that any leases (whether or not constituting Permitted Liens) shall be permitted only to the extent provided in clause (iv) above; (vi) Borrower may make cash contributions to any wholly-owned Subsidiary of Borrower to the extent permitted by subsection 7.3 and any Subsidiary of Borrower may sell, lease or transfer assets to Borrower or another wholly-owned Subsidiary of Borrower; (vii) Borrower may dedicate space for the purpose of constructing (i) a mass transit system, (ii) a pedestrian bridge over or a pedestrian tunnel under Las Vegas Boulevard and Sands Avenue or similar structures to facilitate pedestrians or traffic and (iii) a right turn lane or other roadway dedication at or near the project developed by LVSI and Venetian; provided in each case that such dedication does not materially impair the value of the Land; and (viii) Borrowers may license trademarks and trade names in the ordinary course of business. 7.8 Sales and Lease-Backs. - --- ---------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, (i) which Borrower or any of its Subsidiaries has sold or transferred or is to sell or transfer to any other Person or (ii) which Borrower or any of its Subsidiaries intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by Borrower or any of its Subsidiaries to any Person in connection with such lease. 7.9 Sale or Discount of Receivables. - --- -------------------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, sell with recourse, or discount or otherwise sell for less than the face value thereof, any of its notes or accounts receivable other than an assignment for purposes of collection in the ordinary course of business. 7.10 Transactions with Shareholders and Affiliates. - ---- ---------------------------------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder of 5% or more of any class of equity Securities of LVSI or with any Affiliate of Borrower or of any such holder, except, that Borrower may enter into and permit to exist: (i) transactions that are on terms that are not less favorable to that Borrower or that Subsidiary, as the case may be, than those that might be obtained at the time from Persons who are not such a holder or Affiliate, if (a) Borrower has delivered to 58 Administrative Agent (1) with respect to any transaction involving an amount in excess of $500,000, an Officers Certificate certifying that such transaction complies with this subsection 7.10, (2) with respect to any transaction involving an amount in excess of $1,000,000, a resolution adopted by a majority of the disinterested non-employee directors of the applicable Borrower or Subsidiary approving such transaction and an Officers Certificate certifying that such transaction complies with this subsection 7.10, at the time such transaction is entered into and (c) with respect to any such transaction that involves aggregate payments in excess of $10,000,000 or that is a loan transaction involving a principal amount in excess of $10,000,000, an opinion as to the fairness to the applicable Borrower or Subsidiary from a financial point of view issued by an Independent Financial Advisor at the time such transaction is entered into, (ii) any employment, indemnification, noncompetition or confidentiality agreement entered into by Borrower or any of its Subsidiaries with their employees or directors in the ordinary course of business; (iii) the payment of reasonable fees to directors of Borrower and its Subsidiaries who are not employees of Borrower or their Subsidiaries; (iv) the transactions contemplated by the Cooperation Agreement; and (v) the Phase II Lease; (vi) purchases of materials or services from a Supplier Joint Venture by the Borrower or any of its Subsidiaries in the ordinary course of business on arm's length terms; (vii) transactions between or among Borrower and any of its wholly-owned Subsidiaries; and (viii) unsecured borrowings from Adelson or any of his Affiliates to the extent permitted by Sections 7.1 and 7.18 hereof. 7.11 Disposal of Subsidiary Stock. - ---- ----------------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any shares of capital stock or other equity Securities of its Subsidiaries, except (i) to qualify directors if required by applicable law and (ii) to the extent required by any Nevada Gaming Authority in order to preserve a material Gaming License. 7.12 Conduct of Business. - ---- -------------------- Borrower shall not, and shall not permit any of its Subsidiaries to, engage in any business other than (i) in the case of Borrower owning the Land and acting as lessor under the Phase II Lease; (ii) ownership of equity interests in Subsidiaries; (iii) performing pre-development activities in connection with Phase II including, but not limited to, structuring, planning, design, and permitting; and (iv) posting the Phase I LOC under the LVSI/Venetian Credit Agreement and making distributions and Investments permitted under the terms of this Agreement. 7.13 Certain Restrictions on Changes to Operative Documents, Permits. - ---- ---------------------------------------------------------------- A. Modifications of Certain Operative Documents and Permits; New Material Contracts or Permits. Borrower shall not, and shall not permit any of its Subsidiaries to, agree to any material amendment to, or waive any of its material rights under, any Permit or Material Contract or enter into new Material Contract or Permits (it being understood that any Material Contracts which are covered by clause B below shall also be subject to the restrictions set forth therein) without in each case obtaining the prior written consent of Requisite Lenders if in any such case, such amendment or waiver or new Material Contract or Permit could reasonably be expected to have a Material Adverse Effect or otherwise adversely affect Lenders in any material respect. B. Certain Other Restrictions on Amendments. Borrower shall not directly or indirectly enter into, amend, modify, terminate (except in accordance with its terms), supplement or waive a right or permit or consent to the amendment, modification, termination (except in accordance with its terms), supplement or waiver of any of the provisions of, or give any consent under (i) the Cooperation Agreement without obtaining Administrative Agent's prior written consent not to be reasonably withheld or delayed, provided that the Borrower and its Subsidiaries may amend, modify, terminate, supplement or waive any provision under (or provide a consent under) the Cooperation Agreement if such amendment, 59 modification, termination, supplement, waiver or consent has no material adverse effect on any Lender or (ii) the Phase II Lease, without obtaining Administrative Agent's prior written consent. 7.14 Borrower Expenditures. - ---- ---------------------- Borrower shall not, and shall not permit its Subsidiaries to, make or incur or commit to make or incur any expenditures, except that Borrower and its Subsidiaries may make or incur, or commit to incur (i) expenditures in connection with the pre-development of Phase II and for general corporate purposes in an aggregate amount not to exceed $30,000,000, following the date of this Agreement and (ii) expenditures of interest, fees, costs and expenses under the Loan Documents and Indebtedness permitted under Section 7.1. 7.15 Fiscal Year. - ---- ------------ Borrower shall not change its Fiscal Year-end from December 31. 7.16 Zoning and Contract Changes and Compliance. - ---- ------------------------------------------- Without the prior written approval of Administrative Agent, Borrower shall not, and shall not permit any of its Subsidiaries to, initiate or consent to any zoning downgrade of the Mortgaged Property or seek any material variance under any existing zoning ordinance or use or permit the use of the Mortgaged Property in any manner that could result in such use becoming a non-conforming use (other than a non-conforming use permissible under automatic grandfathering provisions) under any zoning ordinance or any other applicable land use law, rule or regulation. Borrower shall not, and shall not permit any of its Subsidiaries to, initiate or consent to any change in any laws, requirements of Governmental Authorities or obligations created by private contracts which now or hereafter could reasonably be likely to materially and adversely affect the ownership, occupancy, use or operation of the Mortgaged Property without the prior written consent of the Administrative Agent. 7.17 No Joint Assessment; Separate Lots. - ---- ----------------------------------- Without the prior written approval of Administrative Agent, which approval may be granted, withheld, conditioned or delayed in its sole discretion, Borrower shall not suffer, permit or initiate, and shall not permit any of its Subsidiaries to, suffer, permit or initiate, the joint assessment of the Mortgaged Property (i) with any other real property constituting a separate tax lot and (ii) with any portion of the Mortgaged Property which may be deemed to constitute personal property, or any other procedure whereby the lien of any Taxes which may be levied against any such personal property shall be assessed or levied or charged to the Mortgaged Property as a single lien. The Mortgaged Property is comprised of one parcel, which, to the knowledge of the Borrower, constitutes a separate tax lot and does not constitute a portion of any other tax lot. 7.18 Restriction on Adelson Indebtedness. - ---- ------------------------------------ Borrower agrees that the Borrower and its Subsidiaries shall not incur any Indebtedness owed to Adelson or any of his Affiliates (other than with respect to the Affiliates of Adelson, the Borrower and its Subsidiaries), except upon terms and conditions (including subordination provisions) that are in form and substance satisfactory to the Administrative Agent and Adelson. Nothing in this subsection 7.18 shall in any way modify or limit the provisions of Subsections 7.1 or 7.5. Section 8. EVENTS OF DEFAULT If any of the following conditions or events set forth in subsections 8.1 through 8.16 inclusive below shall occur (any such conditions or events collectively "Events of Default"): 8.1 Failure to Make Payments When Due. - --- ---------------------------------- Failure by Borrower to pay any installment of principal on any Loan when due, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; failure by Borrower to pay when due any amount payable to an Issuing Lender in reimbursement of any drawings under any Letter of Credit; or failure by Borrower to pay any interest on any Loan or any fee or any other amount due under this Agreement within five days after the date due; or 8.2 Default under Other Indebtedness or Contingent Obligations. - --- ----------------------------------------------------------- (i) Failure of any Borrower or any of its Subsidiaries, to pay when due any principal of or interest on or any other amount payable in respect 60 of one or more items of Indebtedness (other than Indebtedness referred to in subsection 8.1) or Contingent Obligations in an individual principal amount of $1,000,000 or more or with an aggregate principal amount of $2,500,000 or more, in each case beyond the end of any grace period provided therefor; (ii) breach or default by any Borrower or any of its Subsidiaries with respect to any other material term of (a) one or more items of Indebtedness or Contingent Obligations in the individual or aggregate principal amounts referred to in clause (i) above or (b) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness or Contingent Obligation(s), if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or be declared due and payable prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be (upon the giving or receiving of notice, lapse of time, both, or otherwise); or (iii) any Event of Default (as defined under the LVSI/Venetian Credit Agreement) shall occur under the LVSI/Venetian Credit Agreement, whether or not the default or event of default under the LVSI/Venetian Credit Agreement giving rise to the Event of Default hereunder shall be waived by the holders of the applicable Indebtedness or Contingent Obligation or any agent or trustee thereof. 8.3 Breach of Certain Covenants. - --- ---------------------------- Failure of Loan Parties to perform or comply with any term or condition contained in subsection 2.5, 6.2, 6.8B or Section 7 of this Agreement; or 8.4 Breach of Warranty. - --- ------------------- Any representation, warranty, certification or other statement made by Borrower or any of its Subsidiaries in any Loan Document or in any statement or certificate at any time given by Borrower or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect on the date as of which made; or 8.5 Other Defaults Under Loan Documents. - --- ------------------------------------ Any Loan Party shall default in the performance of or compliance with any term contained in this Agreement or any of the other Loan Documents, other than any such term referred to in any other subsection of this Section 8, and such default shall not have been remedied or waived within 30 days after the earlier of (i) an officer of Borrower or such Loan Party becoming aware of such default or (ii) receipt by Borrower and such Loan Party of notice from Administrative Agent or any Lender of such default provided; or 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. - --- ----------------------------------------------------- (i) A court having jurisdiction in the premises shall enter a decree or order for relief in respect of LVSI, Venetian, Borrower or any of their Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against LVSI, Venetian, Borrower or any of their Subsidiaries, under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over LVSI, Venetian, Borrower or any of their Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of LVSI, Venetian, Borrower or any of their Subsidiaries, for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of LVSI, Venetian Borrower or any of their Subsidiaries, and any such event described in this clause (ii) shall continue for 60 days unless dismissed, bonded or discharged; or 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. - --- --------------------------------------------------- (i) LVSI, Venetian, Borrower or any of their Subsidiaries shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or LVSI, Venetian, Borrower or any of their Subsidiaries shall make any assignment for the benefit of creditors; or (ii) LVSI, Venetian, Borrower or any of their Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to 61 pay its debts as such debts become due and in each case a period of 30 days shall have elapsed; or the Board of Directors of LVSI, Venetian, Borrower or any of their Subsidiaries (or any committee thereof) or of its managing member shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (i) above or this clause (ii); or 8.8 Judgments and Attachments. - --- -------------------------- Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $1,000,000 or (ii) in the aggregate at any time an amount in excess of $2,500,000 (in either case not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Borrower or any of its Subsidiaries or any of their respective assets and shall remain unpaid and undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any event later than five days prior to the date of any proposed sale thereunder); or 8.9 Dissolution. - --- ------------ Any order, judgment or decree shall be entered against LVSI, Venetian, Borrower or any of their Subsidiaries decreeing the dissolution or split up of such Person and such order shall remain undischarged or unstayed for a period in excess of 30 days; or 8.10 Employee Benefit Plans. - ---- ----------------------- There shall occur one or more ERISA Events which individually or in the aggregate results in or might reasonably be expected to result in liability of Borrower or any of its Subsidiaries or any of their respective ERISA Affiliates in excess of $2,500,000 during the term of this Agreement; or there shall exist an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for all Pension Plans (excluding for purposes of such computation any Pension Plans with respect to which assets exceed benefit liabilities), which exceeds $5,000,000; or 8.11 Change in Control. - ---- ------------------ There shall occur a breach of subsection 8.11 of the LVSI/Venetian Credit Agreement as in effect on the date hereof; or 8.12 Failure of Guaranty; Repudiation of Obligations. - ---- ------------------------------------------------ At any time after the execution and delivery thereof, (i) any Subsidiary Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force or effect (other than in accordance with its terms), or shall be declared null and void by a Governmental Instrumentality of competent jurisdiction, (ii) any Collateral Document shall cease to be in full force and effect (other than by reason of a release of Collateral thereunder in accordance with the terms hereof or thereof, the satisfaction in full of the Obligations or any other termination of such Collateral Document in accordance with the terms hereof or thereof) or shall be declared null and void by a Governmental Instrumentality of competent jurisdiction, or Administrative Agent shall not have or shall cease to have a valid and perfected Lien in the Collateral for any reason other than the failure of Administrative Agent or any Lender to take any action within its control, or (iii) any Loan Party shall contest the validity or enforceability of any Loan Document in writing or deny in writing that it has any further liability prior to the indefeasible payment in full of all Obligations, the cancellation of all outstanding Letters of Credit and the termination of all Commitments, including with respect to future advances by Lenders, under any Loan Document to which it is a party; or 8.13 Default Under or Termination of Operative Documents. - ---- ---------------------------------------------------- Any of the Operative Documents shall terminate or be terminated or canceled, prior to its stated expiration date or Borrower shall be in default (after the giving of any applicable notice and the expiration of any applicable grace period) or any Affiliate of the Borrower shall be in default (after the giving of any applicable notice and the expiration of any applicable grace period) under any of the Operative Documents; provided that a default or termination under any Project Document (other than the Phase II Lease) shall constitute an Event of Default hereunder only if such default or termination may reasonably be expected to cause a Material Adverse Effect; or 8.14 Default Under or Termination of Permits. - ---- ---------------------------------------- Borrower or any of its Subsidiaries shall fail to observe, satisfy or perform, or there shall be a violation or breach of, any of the 62 material terms, provisions, agreements, covenants or conditions attaching to or under the issuance to such Person of any material Permit, or any such Permit or any material provision thereof shall be terminated or fail to be in full force and effect or any Governmental Instrumentality shall challenge or seek to revoke any such Permit if such failure to perform, breach or termination could reasonably be expected to have a Material Adverse Effect; or 8.15 Default Under or Termination of the Phase II Lease. -------------------------------------------------- The Phase II Lease shall terminate (other than in accordance with its terms) or shall be terminated (other than in accordance with its terms) or cancelled prior to its stated expiration date or Venetian or Borrower shall be in default thereunder (after the giving of any applicable notice and the expiration of any applicable grace period) or any material amendment or modification to the Phase II Lease shall be made without the prior written consent of Requisite Lenders. THEN (i) upon the occurrence of any Event of Default described in subsection 8.6 or 8.7, each of (a) the unpaid principal amount of and accrued interest on the Loans, (b) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (whether or not any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letter of Credit), and (c) all other Obligations shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by Borrower, and the obligation of each Lender to make any Loan and, the obligation of Administrative Agent to issue any Letter of Credit and the right of any Lender to issue any Letter of Credit hereunder shall thereupon terminate, and (ii) upon the occurrence and during the continuation of any other Event of Default, Administrative Agent shall upon the written request or with the written consent of Requisite Lenders, by written notice to Borrower, declare all or any portion of the amounts described in clauses (a) and (b) above to be, and the same shall forthwith become, immediately due and payable, and the obligation of each Lender to make any Loan, the obligation of Administrative Agent to issue any Letter of Credit and the right of any Lender to issue any Letter of Credit hereunder shall thereupon terminate provided that the foregoing shall not affect in any way the obligations of Lenders under subsection 3.3C(i). Any amounts described in clause (b) above, when received by Administrative Agent, shall be held by Administrative Agent pursuant to a cash collateral arrangement reasonably satisfactory to Administrative Agent. Section 9. ADMINISTRATIVE AGENT 9.1 Appointment. - --- ------------ A. Appointment of Administrative Agent. Scotiabank is hereby appointed Administrative Agent hereunder and under the other Loan Documents and each Lender hereby authorizes Administrative Agent to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. Administrative Agent agrees to act upon the express conditions contained in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Administrative Agent and Lenders; Borrower shall have no rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, Administrative Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrower or any of its Subsidiaries. B. Appointment of Supplemental Agents. It is the purpose of this Agreement and the other Loan Documents that there shall be no violation of any law of any jurisdiction denying or restricting the right of banking corporations or associations to transact business as agent or trustee in such jurisdiction. It is recognized that in case of litigation under this Agreement or any of the other Loan Documents, and in particular in case of the enforcement of any of the Loan Documents, or in case Administrative Agent deems that by reason of any present or future law of any jurisdiction it may not exercise any of the rights, powers or remedies granted herein or in any of the other Loan Documents or take any other action which may be desirable or necessary in connection therewith, it may be necessary that Administrative Agent appoint an additional individual or institution as a separate trustee, co-trustee, collateral agent or collateral co-agent (any such additional individual or institution being referred to herein individually as a "Supplemental Agent" and collectively as "Supplemental Agents"). In the event that Administrative Agent appoints a Supplemental Agent with respect to any Collateral, (i) each and every right, power, privilege or duty expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or vested in or conveyed to Administrative Agent with respect to such Collateral shall be exercisable by and vest in such Supplemental Agent to the extent, and only to the extent, necessary to enable such Supplemental Agent to exercise such rights, powers and privileges with respect to such Collateral and to perform such duties with respect to such Collateral, and every covenant and obligation contained in the Loan Documents 63 and necessary to the exercise or performance thereof by such Supplemental Agent shall run to and be enforceable by either Administrative Agent or such Supplemental Agent, and (ii) the provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to Administrative Agent shall inure to the benefit of such Supplemental Agent and all references therein to Administrative Agent shall be deemed to be references to Administrative Agent and/or such Supplemental Agent, as the context may require. Should any instrument in writing from Borrower or any other Loan Party be required by any Supplemental Agent so appointed for more fully and certainly vesting in and confirming to him or it such rights, powers, privileges and duties, Borrower shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by the Administrative Agent. In case any Supplemental Agent, or a successor thereto, shall die, become incapable of acting, resign or be removed, all the rights, powers, privileges and duties of such Supplemental Agent, to the extent permitted by law, shall vest in and be exercised by Administrative Agent until the appointment of a new Supplemental Agent. 9.2 Powers and Duties; General Immunity. - --- ------------------------------------ A. Powers; Duties Specified. Each Lender irrevocably authorizes Administrative Agent to take such action on such Lender's behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to Administrative Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Administrative Agent shall have only those duties and responsibilities that are expressly specified in this Agreement and the other Loan Documents. Administrative Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. Administrative Agent shall not have, by reason of this Agreement or any of the other Loan Documents, a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon Administrative Agent any obligations in respect of this Agreement or any of the other Loan Documents except as expressly set forth herein or therein. B. No Responsibility for Certain Matters. Administrative Agent shall not be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any other Loan Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by Administrative Agent to Lenders or by or on behalf of Borrower to Administrative Agent or any Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of Borrowers or any other Person liable for the payment of any Obligations, nor shall Administrative Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or the use of the Letters of Credit or as to the existence or possible existence of any Event of Default or Potential Event of Default. Anything contained in this Agreement to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof. C. Exculpatory Provisions. Neither Administrative Agent nor any of its officers, directors, employees or agents shall be liable to Lenders for any action taken or omitted by Administrative Agent under or in connection with any of the Loan Documents except to the extent caused by Administrative Agent's gross negligence or willful misconduct. Administrative Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection with this Agreement or any of the other Loan Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until Administrative Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), Administrative Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Borrower and their Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against Administrative Agent as a result of Administrative Agent acting or (where so instructed) refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under subsection 10.6). 64 D. Administrative Agent Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, Administrative Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, Administrative Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless the context clearly otherwise indicates, include Administrative Agent in its individual capacity. Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with Borrower or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection with this Agreement and otherwise without having to account for the same to Lenders. 9.3 Representations and Warranties; No Responsibility For Appraisal of - --- ------------------------------------------------------------------ Credit Worthiness. ------------------ Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Borrower and its Subsidiaries in connection with the making of the Loans and the issuance of the Letters of Credit hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrower and its Subsidiaries. Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and Administrative Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders. 9.4 Right to Indemnity. - --- ------------------- Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify Administrative Agent, to the extent that Administrative Agent shall not have been reimbursed by Borrower, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against Administrative Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Loan Documents or otherwise in its capacity as Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Administrative Agent's gross negligence or willful misconduct. If any indemnity furnished to Administrative Agent for any purpose shall, in the opinion of Administrative Agent, be insufficient or become impaired, Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. 9.5 Successor Administrative Agent. - --- ------------------------------- Administrative Agent may resign at any time by giving 30 days' prior written notice thereof to Lenders and Borrower, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Borrower and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days' notice to Borrower, to appoint a successor Administrative Agent (provided that such successor is or simultaneously therewith becomes a Lender). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 9.6 Collateral Documents and Subsidiary Guaranties. - --- ----------------------------------------------- Each Lender hereby further authorizes Administrative Agent, on behalf of and for the benefit of Lenders, to enter into each Collateral Document and Subsidiary Guaranty as secured party or beneficiary (as applicable), and each Lender agrees to be bound by the terms of each Collateral Document and Subsidiary Guaranty; provided that Administrative Agent shall not (i) enter into or consent to any material amendment, modification, termination or waiver of any 65 provision contained in any Collateral Document or Subsidiary Guaranty, or (ii) release any Collateral (except as otherwise expressly permitted or required pursuant to the terms of this Agreement or the applicable Collateral Document), in each case without the prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6, all Lenders); provided further, however, that, without further written consent or authorization from Lenders, Administrative Agent may execute any documents or instruments necessary to (i) release any Subsidiary from the Subsidiary Guaranty to the extent the stock of such Subsidiary is sold in a transaction permitted under this Agreement or otherwise consented to by Requisite Lenders in accordance with subsection 10.6 or (ii) release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted by this Agreement or to which Requisite Lenders have otherwise consented in accordance with subsection 10.6. And anything contained in any of the Loan Documents to the contrary notwithstanding, Borrower, Administrative Agent and each Lender hereby agree that (X) no Lender shall have any right individually to realize upon any of the Collateral under any Collateral Document, it being understood and agreed that all powers, rights and remedies under the Collateral Documents and each Subsidiary Guaranty may be exercised solely by Administrative Agent for the benefit of Lenders in accordance with the terms thereof, and (Y) in the event of a foreclosure by Administrative Agent on any of the Collateral pursuant to a public or private sale, Administrative Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Administrative Agent, as agent for and representative of Lenders (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Administrative Agent at such sale. Section 10. MISCELLANEOUS 10.1 Assignments and Participations in Loans. - ---- ---------------------------------------- A. General. Subject to subsection 10.1B, each Lender shall have the right at any time to (i) sell, assign or transfer to any Eligible Assignee, or (ii) sell participations to any Eligible Assignee or any other Person with the approval of Borrower in, all or any part of its Commitments or any Loan or Loans made by it or its Letters of Credit or participations therein or any other interest herein or in any other Obligations owed to it; provided that no such sale, assignment, transfer or participation shall, without the consent of Borrower, require Borrower to file a registration statement with the Securities and Exchange Commission or apply to qualify such sale, assignment, transfer or participation under the securities laws of any state; provided, further that no such sale, assignment or transfer described in clause (i) above shall be effective unless and until an Assignment Agreement effecting such sale, assignment or transfer shall have been accepted by Administrative Agent and recorded in the Register as provided in subsection 10.1B(ii) and provided, further that no such sale, assignment, transfer or participation of any Letter of Credit or any participation therein may be made separately from a sale, assignment, transfer or participation of a corresponding interest in the Commitment and the Loans of the Lender effecting such sale, assignment, transfer or participation. Except as otherwise provided in this subsection 10.1, no Lender shall, as between Borrower and such Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment or transfer of, or any granting of participations in, all or any part of its Commitments or the Loans, the Letters of Credit or participations therein, or the other Obligations owed to such Lender. B. Assignments. (i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of Credit or participation therein, or other Obligation may in whole or in part (a) be assigned, in any amount to another Lender, or to an Affiliate of the assigning Lender or another Lender, or may be pledged to an Eligible Assignee in support of its obligations to such assignee (without releasing the pledging Lender from any of its obligations hereunder), with the giving of notice to Borrower and Administrative Agent; provided that if such assignment relates to Revolving Loans or Revolving Loan Commitments, the assignee shall represent that it has the financial resources to fulfill its commitments hereunder and such assignment is consented to by Administrative Agent and Issuing Lender (such consent not to be unreasonably withheld or delayed) or (b) be assigned in an aggregate amount of not less than $1,000,000 (or such lesser amount as shall constitute the aggregate amount of the Commitments, Loans, Letters of Credit and participations therein, and other Obligations of the assigning Lender) to any other Eligible Assignee with the consent of Borrower and Administrative Agent (which consent shall not be unreasonably withheld or delayed); provided that any such assignment in accordance with either clause (a) or (b) above shall effect a pro rata assignment (based on the respective principal amounts thereof then outstanding or in effect) of both 66 the Term Loan Commitment and the Term Loans of the assigning Lender, on the one hand, and the Revolving Loan Commitment and the Revolving Loans of the assigning Lender, on the other hand, except where such Lender does not hold both Revolving Loan Commitments or Revolving Loans and Term Loan Commitments or Term Loans and provided further that if such assignment relates to Revolving Loans or Revolving Loan Commitments, the assignee shall represent that it has the financial resources to fulfill its commitments hereunder and such assignment is consented to by Administrative Agent and Issuing Lender (which consent maybe given or withheld in their sole discretion). To the extent of any such assignment in accordance with either clause (a) or (b) above, the assigning Lender shall be relieved of its obligations with respect to its Commitments, Loans, Letters of Credit or participations therein, or other Obligations or the portion thereof so assigned. The assignor or assignee to each such assignment shall execute and deliver to Administrative Agent, for its acceptance and recording in the Register, an Assignment Agreement, together with a processing and recordation fee of $3,500 in respect of assignments, and such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery, acceptance and recordation, from and after the effective date specified in such Assignment Agreement, (y) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (z) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive the termination of this Agreement under subsection 10.9B) and be released from its obligations under this Agreement (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto; provided that, anything contained in any of the Loan Documents to the contrary notwithstanding, if such Lender is the Issuing Lender with respect to any outstanding Letters of Credit such Lender shall continue to have all rights and obligations of an Issuing Lender with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder). The Commitments hereunder shall be modified to reflect the Commitment of such assignee and any remaining Commitment of such assigning Lender and, if any such assignment occurs after the issuance of Notes hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon new Notes shall be issued to the assignee and to the assigning Lender, substantially in the form of Exhibits III-A and III-B annexed hereto, as applicable, with appropriate insertions, to reflect the new Commitments and/or outstanding Loans, as the case may be, of the assignee and the assigning Lender. (ii) Acceptance by Administrative Agent; Recordation in Register. Upon its receipt of an Assignment Agreement executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with the processing and recordation fee referred to in subsection 10.1B(i) and any forms, certificates or other evidence with respect to United States federal income tax withholding matters that such assignee may be required to deliver to Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative Agent shall, if Administrative Agent has consented to the assignment evidenced thereby (to the extent such consent is required pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement by executing a counterpart thereof as provided therein (which acceptance shall evidence any required consent of Administrative Agent to such assignment), (b) record the information contained therein in the Register, and (c) give prompt notice thereof to Borrower. Administrative Agent shall maintain a copy of each Assignment Agreement delivered to and accepted by it as provided in this subsection 10.1B(ii). C. Participations. The holder of any participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except action directly affecting (i) the extension of the scheduled final maturity date of any Loan allocated to such participation, (ii) a reduction of the principal amount of or the rate of interest payable on any Loan allocated to such participation, or (iii) releasing all or substantially all of the Collateral, and all amounts payable by Borrower hereunder (including amounts payable to such Lender pursuant 67 to subsections 2.6D and 2.7) shall be determined as if such Lender had not sold such participation. Borrower and each Lender hereby acknowledge and agree that, solely for purposes of subsections 10.4 and 10.5, (a) any participation will give rise to a direct obligation of Borrower to the participant and (b) the participant shall be considered to be a "Lender". D. Assignments to Federal Reserve Banks. In addition to the assignments and participations permitted under the foregoing provisions of this subsection 10.1, any Lender may assign and pledge all or any portion of its Loans, the other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided that (i) no Lender shall, as between Borrower and such Lender, be relieved of any of its obligations hereunder as a result of any such assignment and pledge and (ii) in no event shall such Federal Reserve Bank be considered to be a "Lender" or be entitled to require the assigning Lender to take or omit to take any action hereunder. E. Information. Each Lender may furnish any information concerning Borrowers and their Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants), subject to subsection 10.19. F. Representations of Lenders. Each Lender listed on the signature pages hereof hereby represents and warrants that it is an Eligible Assignee described in clause (A) of the definition thereof. Each Lender that becomes a party hereto pursuant to an Assignment Agreement shall be deemed to agree that the representations and warranties of such Lender contained in Section 2(c) of such Assignment Agreement are incorporated herein by this reference. 10.2 Expenses. - ---- --------- Whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to pay promptly (i) all the actual and reasonable costs and expenses of preparation of the Loan Documents and any consents, amendments, waivers or other modifications thereto; (ii) all the costs of furnishing all opinions by counsel for Borrower (including any opinions requested by Lenders as to any legal matters arising hereunder) and of Borrower's performance of and compliance with all agreements and conditions on its part to be performed or complied with under this Agreement and the other Loan Documents including with respect to confirming compliance with environmental, insurance and solvency requirements; (iii) the reasonable fees, expenses and disbursements of counsel to Administrative Agent in connection with the negotiation, preparation, execution and administration of the Loan Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Borrower; (iv) all the actual costs and reasonable expenses of creating and perfecting Liens in favor of Administrative Agent on behalf of Lenders pursuant to any Collateral Document, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums, and reasonable fees, expenses and disbursements of counsel to Administrative Agent and of counsel providing any opinions that Administrative Agent or Requisite Lenders may request in respect of the Collateral Documents or the Liens created pursuant thereto; (v) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any auditors, accountants or appraisers and any environmental or other consultants, advisors and agents employed or retained by Administrative Agent or its counsel) of obtaining and reviewing any appraisals provided for under any Loan Documents, any environmental audits or reports provided for under subsection 6.8B or in connection with the custody or preservation of any of the Collateral; (vi) all other actual and reasonable costs and expenses incurred by Administrative Agent in connection with the syndication of the Commitments and the negotiation, preparation and execution of the Loan Documents and any consents, amendments, waivers or other modifications thereto and the transactions contemplated thereby; and (vii) after the occurrence of an Event of Default, all costs and expenses, including reasonable attorneys' fees (including allocated costs of internal counsel) and costs of settlement, incurred by Administrative Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents by reason of such Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of any Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. 10.3 Indemnity. - ---- ---------- In addition to the payment of expenses pursuant to subsection 10.2, whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to defend (subject to Borrower's selection of counsel with the consent of the Indemnitee, which shall not be unreasonably withheld), indemnify, pay and hold harmless Administrative Agent, and Lenders and the officers, directors, employees, agents and affiliates of Administrative Agent, and Lenders (collectively called the "Indemnitees"), from and against any and all 68 Indemnified Liabilities (as hereinafter defined); provided that Borrower shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise solely from the gross negligence or willful misconduct of that Indemnitee as determined by a final judgment of a court of competent jurisdiction. As used herein, "Indemnified Liabilities" means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, actions, judgments, suits, claims (including Environmental Claims), costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Loan Documents or the Project Documents or the transactions contemplated hereby or thereby (including Lenders' agreement to make the Loans hereunder or the use or intended use of the proceeds thereof or the use or intended use of any thereof, or any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of any Guaranty), (ii) the statements contained in any commitment letter or term sheet delivered by Lender to Borrower with respect thereto, or (iii) any Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, or practice of Borrower or any of its Subsidiaries. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this subsection 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them. 10.4 Set-Off; Security Interest in Deposit Accounts. - ---- ----------------------------------------------- In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is hereby authorized by Borrower at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by that Lender to or for the credit or the account of Borrower against and on account of the obligations and liabilities of Borrower to that Lender under this Agreement, the Letters of Credit and participations therein and the other Loan Documents, including all claims of any nature or description arising out of or connected with this Agreement, the Letters of Credit and participations therein or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any demand hereunder or (ii) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 8 and although said obligations and liabilities, or any of them, may be contingent or unmatured. Borrower hereby further grants to Administrative Agent and each Lender a security interest in all deposits and accounts maintained with Administrative Agent or such Lender as security for the Obligations. 10.5 Ratable Sharing. - ---- ---------------- Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms of this Agreement), by realization upon security, through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to that Lender hereunder or under the other Loan Documents (collectively, the "Aggregate Amounts Due" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify Administrative Agent and each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously 69 upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrowers or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrower expressly consent to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. 10.6 Amendments and Waivers. - ---- ----------------------- A. No amendment, modification, termination or waiver of any provision of this Agreement or of the Notes, and no consent to any departure by Borrower therefrom, shall in any event be effective without the written concurrence of Requisite Lenders; provided that no amendment, modification, termination, waiver or consent shall, unless approved in writing and signed by Borrower and all the Lenders, do any of the following: reduce the principal of, or interest on, the Loans or any fees hereunder (other than any waiver of any increase in the interest rate applicable to any of the Loans pursuant to subsection 2.2E); change in any manner the definition of "Pro Rata Share" or the definition of "Requisite Lenders" (it being understood that, with the consent of Requisite Lenders, additional extensions of credit pursuant to this Agreement may be included in "Pro Rata Share" and "Requisite Lenders" on substantially the same terms as the Term Loan Commitments and the Term Loans and the Revolving Loan Commitments and the Revolving Loans); change in any manner any provision of this Agreement which, by its terms, expressly requires the approval or concurrence of all Lenders; postpone any date fixed for the payment in respect of principal of, or interest on, the Loans or any fees hereunder; reduce the amount of; postpone the due date of any amount payable in respect of; extend the expiration date of any Letter of Credit or change the obligations of Lenders relating to the purchase of participations in Letters of Credit; release any Lien granted in favor of Administrative Agent with respect to 25% or more in aggregate fair market value of the Collateral; releases any Subsidiary Guarantor from its obligations under its Guaranty, other than in accordance with the terms of the Loan Documents; or change in any manner the provisions contained in subsection 9.1 or this subsection 10.6; provided further that any such amendment, modification, termination, waiver or consent which increases the amount of the Commitment for any Lender shall be effective only if evidenced by a writing signed by or on behalf of such Lender. B. In addition, (i) any amendment, modification, termination or waiver of any of the provisions contained in Section 4 shall be effective only if evidenced by a writing signed by or on behalf of Administrative Agent and Requisite Lenders, (ii) no amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the Lender which is the holder of that Note except that to the extent such amendment, modification, termination or waiver would not otherwise require the consent of all Lenders, only the holder of such Note or Notes up to the amount constituting Requisite Lenders shall be required hereunder, (iii) no amendment, modification, termination or waiver of any portion of any Letter of Credit shall be effective without the consent of the Issuing Lender of such Letter of Credit and no amendment, modification, termination or waiver of Section 3 that changes in any manner the rights and obligations of any Issuing Lender in respect of any Letter of Credit shall be effective without the consent of that Issuing Lender, and (iv) no amendment, modification, termination or waiver of any provision of Section 9 or of any other provision of this Agreement which, by its terms, expressly requires the approval or concurrence of Administrative Agent shall be effective without the written concurrence of Administrative Agent. C. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on Borrower in any case shall entitle Borrower to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this subsection 10.6 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by Borrower, on Borrower. D. Notwithstanding the foregoing, if any Lender does not agree to any amendment hereunder requiring the consent of all Lenders and consented to by the Requisite Lenders, then the Borrower may, at their sole expense and effort, upon notice to such Lender and Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in subsection 10.1, including, without limitation, as a condition precedent to such assignment, (i) Administrative Agent's consent to the assignee unless not otherwise required by subsection 10.1 and (ii) payment of the registration fee set forth in subsection 10.1B(i)), all its interests, 70 rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) such Lender shall have received irrevocable payment in full in cash of an amount equal to the outstanding principal of its Loans, accrued interest thereon, and accrued fees and all other Obligations and other amounts payable to it hereunder from the assignee or the Borrower and (ii) such assignment will result in such amendment being approved. 10.7 Independence of Covenants. - ---- -------------------------- All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Event of Default if such action is taken or condition exists. 10.8 Notices. - ---- -------- Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices to Administrative Agent shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or (i) as to Borrower and Administrative Agent such other address as shall be designated by such Person in a written notice delivered to the other party hereto and (ii) as to each other party, such other address as shall be designated by such party in a written notice delivered to Administrative Agent. 10.9 Survival of Representations, Warranties and Agreements. - ---- ------------------------------------------------------- A. All representations, warranties and agreements made herein shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit hereunder. B. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of Borrower set forth in subsections 2.6D, 2.7, 3.5, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsection 10.19 shall survive the payment of the Loans and the reimbursement of any amounts drawn thereunder, and the termination of this Agreement. 10.10 Failure or Indulgence Not Waiver; Remedies Cumulative. - ----- ------------------------------------------------------ No failure or delay on the part of Administrative Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. 10.11 Marshalling; Payments Set Aside. - ----- -------------------------------- Neither Administrative Agent nor any Lender shall be under any obligation to marshal any assets in favor of Borrower or any other party or against or in payment of any or all of the Obligations. To the extent that Borrower makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent for the benefit of Lenders) or Administrative Agent or Lenders or enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred. 10.12 Severability. - ----- ------------- In case any provision in or obligation under this Agreement or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or 71 obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 10.13 Obligations Several; Independent Nature of Lenders' Rights. - ----- ----------------------------------------------------------- The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitments of any other Lender hereunder. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. 10.14 Headings. - ----- --------- Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 10.15 Applicable Law. - ----- --------------- THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 10.16 Successors and Assigns. - ----- ----------------------- This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders (it being understood that Lenders' rights of assignment are subject to subsection 10.1). Neither Borrower's rights or obligations hereunder nor any interest therein may be assigned or delegated by Borrower without the prior written consent of all Lenders. 10.17 Consent to Jurisdiction and Service of Process. - ----- ----------------------------------------------- ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, BORROWER, FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO BORROWER AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.8; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER BORROWER IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT LENDER RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE. 10.18 Waiver of Jury Trial. - ----- --------------------- EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL 72 INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION 10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 10.19 Confidentiality. - ----- ---------------- Each Lender shall hold all non-public information obtained pursuant to the requirements of this Agreement in accordance with such Lender's customary procedures for handling confidential information of this nature and in accordance with safe and sound banking or investment practices, it being understood and agreed by Borrower that in any event such Lender may make disclosures to Affiliates of such Lender or disclosures reasonably required by any bona fide assignee, transferee or participant in connection with the contemplated assignment or transfer by such Lender of any Loans or any participations therein (provided that such assignee, transferee or participant agrees to also be bound by this subsection 10.19), or disclosures required or requested by any governmental agency or representative thereof or pursuant to legal process; provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify Borrower of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information; and provided, further that in no event shall any Lender be obligated or required to return any materials furnished by Borrower or any of its Subsidiaries. 10.20 Counterparts; Effectiveness. - ----- ---------------------------- This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective as of the date hereof. 10.21 Gaming Authorities. - ----- ------------------- The Administrative Agent and each Lender agree to cooperate with the Nevada Gaming Authorities in connection with the administration of their regulatory jurisdiction over the Borrower and its Subsidiaries, including, without limitation, to the extent not inconsistent with the internal policies of such Lender or Issuing Lender and any applicable legal or regulatory restrictions the provision of such documents or other information as may be requested by any such Nevada Gaming Authority relating to the Administrative Agent or any of the Lenders, or Borrower or any of its Subsidiaries, or to the Loan Documents. Notwithstanding any other provision of the Agreement, Borrower expressly authorizes Administrative Agent to cooperate with the Nevada Gaming Authorities as described above. 10.22 No Recourse or Guaranty. - ----- ------------------------ Lenders hereby acknowledges and agrees that the Loans to be made hereunder shall constitute Indebtedness of the Borrower only and that no recourse shall be had to LVSI, Venetian, Adelson or any of their Affiliates or Subsidiaries (excluding the Borrower), or to any assets owned or held by any of them, including, without limitation, the Venetian Casino Resort, for any and all payments due hereunder, including, without limitation, for payments of principal, interest, fees, indemnities, liabilities, costs and expenses. Lender acknowledges further that Adelson, LVSI, Venetian, and any of their Affiliates or Subsidiaries (excluding the Borrower) are not providing any guaranties, collateral, security interests, or other credit enhancement or support in connection with the Loans and the Commitments hereunder. Nothing set forth herein shall limit any obligations of Venetian under the Phase II Lease. [Remainder of page intentionally left blank] 73 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BORROWER: LIDO CASINO RESORT, LLC By: Lido Casino Resort Holding Company, LLC, as managing member By: Lido Intermediate Holding Company, LLC, as managing member By: Venetian Casino Resort, LLC, as sole member By: Las Vegas Sands Inc., as managing member By: /s/David Friedman ---------------------------------------------- Name: David Friedman Title: Secretary Notice Address: 3355 Las Vegas Boulevard South Room 1A Las Vegas, Nevada 89109 Attention: General Counsel Telefax: (702) 733-5499 S-1 AGENT AND LENDERS: THE BANK OF NOVA SCOTIA, individually and as Administrative Agent By: /s/Alan W. Pendergast ----------------------------------- Name: Alan W. Pendergast Title: Managing Director Notice Address: The Bank of Nova Scotia 580 California Street, Suite 2100 San Francisco, California 94104 Attention: Alan Pendergast Telefax: (415) 397-0791 With copy to: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attention: Craig Subryan Telefax: (404) 888-8998 S-2 CREDIT AGREEMENT DATED AS OF OCTOBER 19, 2001 BETWEEN LIDO CASINO RESORT, LLC as Borrower, and THE BANK OF NOVA SCOTIA as Administrative Agent and LENDERS party thereto TABLE OF CONTENTS Page ---- Section 1. DEFINITIONS.....................................................1 1.1 Certain Defined Terms...........................................1 1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement ..................................18 1.3 Other Definitional Provisions and Rules of Construction........18 Section 2. AMOUNTS AND TERMS OF COMMITMENT AND LOANS......................19 2.1 Commitments; Making of Loans; the Register; Notes..............19 2.2 Interest on the Loans..........................................23 2.3 Commitment Fees................................................25 2.4 Repayments, Prepayments and Reductions in Commitment; General Provisions Regarding Payments .........................25 2.5 Use of Proceeds................................................28 2.6 Special Provisions Governing Eurodollar Rate Loans.............28 2.7 Increased Costs; Taxes; Capital Adequacy.......................29 2.8 Obligation of Lenders to Mitigate..............................33 Section 3. LETTERS OF CREDIT..............................................33 3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations Therein ........................................33 3.2 Letter of Credit Fees..........................................35 3.3 Drawings and Reimbursement of Amounts Paid Under Letters of Credit .............................................36 3.4 Obligations Absolute...........................................37 3.5 Indemnification; Nature of Issuing Lenders' Duties.............38 3.6 Increased Costs and Taxes Relating to Letters of Credit........39 Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT......................39 4.1 Conditions to the Occurrence of the Closing Date...............39 4.2 Conditions to all Loans on or after the Closing Date...........42 4.3 Conditions to Letters of Credit................................43 Section 5. BORROWER'S REPRESENTATIONS AND WARRANTIES......................43 5.1 Organization, Powers, Qualification, Good Standing, Business and Subsidiaries .....................................43 5.2 Authorization of Borrowing, etc................................43 5.3 Financial Condition............................................44 5.4 No Material Adverse Change; No Restricted Junior Payments ......................................................44 5.5 Title to Properties; Liens; Real Property......................44 5.6 Litigation; Adverse Facts......................................44 5.7 Payment of Taxes...............................................45 5.8 Performance of Agreements; Materially Adverse Agreements; Material Contracts ................................45 5.9 Governmental Regulation........................................45 1 5.10 Securities Activities..........................................46 5.11 Employee Benefit Plans.........................................46 5.12 Certain Fees...................................................46 5.13 Environmental Protection.......................................46 5.14 Employee Matters...............................................47 5.15 Solvency.......................................................47 5.16 Matters Relating to Collateral.................................47 5.17 Proper Subdivision.............................................47 Section 6. BORROWER'S AFFIRMATIVE COVENANTS...............................48 6.1 Financial Statements and Other Reports.........................48 6.2 Corporate Existence, etc.......................................51 6.3 Payment of Taxes and Claims; Tax Consolidation.................51 6.4 Maintenance of Properties; Insurance; Application of Net Loss Proceeds .............................................51 6.5 Inspection; Lender Meeting.....................................53 6.6 Compliance with Laws, etc.; Permits............................53 6.7 Environmental Review and Investigation, Disclosure, Etc.; Borrower's Actions Regarding Hazardous Materials Activities, Environmental Claims and Violations of Environmental Laws ............................................53 6.8 Compliance with Material Contracts.............................55 6.9 Further Assurances.............................................55 6.10 Execution of Subsidiary Guaranty and Personal Property Collateral Documents by Future Subsidiaries ...................56 Section 7. BORROWER'S NEGATIVE COVENANTS..................................56 7.1 Indebtedness...................................................56 7.2 Liens and Related Matters......................................57 7.3 Investments; Joint Ventures; Formation of Subsidiaries.........57 7.4 Contingent Obligations.........................................58 7.5 Restricted Junior Payments.....................................58 7.6 [Intentionally Omitted.].......................................58 7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions ..................................................58 7.8 Sales and Lease-Backs..........................................59 7.9 Sale or Discount of Receivables................................59 7.10 Transactions with Shareholders and Affiliates..................59 7.11 Disposal of Subsidiary Stock...................................60 7.12 Conduct of Business............................................60 7.13 Certain Restrictions on Changes to Operative Documents, Permits .......................................................60 7.14 Borrower Expenditures..........................................60 7.15 Fiscal Year....................................................61 7.16 Zoning and Contract Changes and Compliance.....................61 7.17 No Joint Assessment; Separate Lots.............................61 7.18 Restriction on Adelson Indebtedness............................61 Section 8. EVENTS OF DEFAULT..............................................61 2 8.1 Failure to Make Payments When Due..............................61 8.2 Default under Other Indebtedness or Contingent Obligations ...................................................61 8.3 Breach of Certain Covenants....................................62 8.4 Breach of Warranty.............................................62 8.5 Other Defaults Under Loan Documents............................62 8.6 Involuntary Bankruptcy; Appointment of Receiver, etc...........62 8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.............62 8.8 Judgments and Attachments......................................63 8.9 Dissolution....................................................63 8.10 Employee Benefit Plans.........................................63 8.11 Change in Control..............................................63 8.12 Failure of Guaranty; Repudiation of Obligations................63 8.13 Default Under or Termination of Operative Documents............63 8.14 Default Under or Termination of Permits........................63 8.15 Default Under or Termination of the Phase II Lease.............64 Section 9. ADMINISTRATIVE AGENT...........................................64 9.1 Appointment....................................................64 9.2 Powers and Duties; General Immunity............................65 9.3 Representations and Warranties; No Responsibility For Appraisal of Credit Worthiness ................................66 9.4 Right to Indemnity.............................................66 9.5 Successor Administrative Agent.................................66 9.6 Collateral Documents and Subsidiary Guaranties.................66 Section 10. MISCELLANEOUS..................................................67 10.1 Assignments and Participations in Loans........................67 10.2 Expenses ......................................................69 10.3 Indemnity .....................................................69 10.4 Set-Off; Security Interest in Deposit Accounts ................70 10.5 Ratable Sharing ...............................................70 10.6 Amendments and Waivers ........................................71 10.7 Independence of Covenants .....................................72 10.8 Notices .......................................................72 10.9 Survival of Representations, Warranties and Agreements ........72 10.10 Failure or Indulgence Not Waiver; Remedies Cumulative .........72 10.11 Marshalling; Payments Set Aside ...............................72 10.12 Severability ..................................................72 10.13 Obligations Several; Independent Nature of Lenders' Rights ........................................................73 10.14 Headings ......................................................73 10.15 Applicable Law ................................................73 10.16 Successors and Assigns ........................................73 10.17 Consent to Jurisdiction and Service of Process ................73 10.18 Waiver of Jury Trial ..........................................73 3 10.19 Confidentiality ...............................................74 10.20 Counterparts; Effectiveness ...................................74 10.21 Gaming Authorities ............................................74 10.22 No Recourse or Guaranty .......................................74 Signature pages .............................................................S-1 4 SCHEDULES 2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES 5.1A JURISDICTION OF ORGANIZATIONS 5.1C OWNERSHIP OF BORROWER 5.1E OPTIONS 5.4 RESTRICTED JUNIOR PAYMENTS 5.5 REAL PROPERTY 5.6 LITIGATION 5.8 MATERIAL CONTRACTS 5.11 CERTAIN EMPLOYEE BENEFIT PLANS 5.13 ENVIRONMENTAL MATTERS 7.2 CERTAIN EXISTING LIENS 5 EXHIBITS I FORM OF NOTICE OF BORROWING FOR LOANS II FORM OF NOTICE OF CONVERSION/CONTINUATION III-A FORM OF TERM NOTE III-B FORM OF REVOLVING NOTE IV FORM OF COMPLIANCE CERTIFICATE V-A FORM OF OPINION OF PAUL, WEISS, RIFKIND, WHARTON & GARRISON V-B FORM OF OPINION OF LIONEL SAWYER & COLLINS VI FORM OF CERTIFICATE RE NON-BANK STATUS VII FORM OF COMPANY SECURITY AGREEMENT VIII FORM OF DEED OF TRUST IX FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT X FORM OF ASSIGNMENT AGREEMENT XI FORM OF FINANCIAL CONDITION CERTIFICATE XII DESCRIPTION OF LAND XIII FORM OF AGREEMENT OF JOINDER 6 -----END PRIVACY-ENHANCED MESSAGE-----