-----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, ILQh7BvcDDzwhQh5F4QDGIM5ULBWjMC4NIeFk8QXPC+zx+0IbvXRt3rfTcnuCWnF /syb6yADmYN7OQAA/uOrhw== 0000850994-02-000004.txt : 20020814 0000850994-02-000004.hdr.sgml : 20020814 20020813213747 ACCESSION NUMBER: 0000850994-02-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 24 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020814 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: 02731525 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 lvsi2nd-10q_2002.txt FORM 10-Q 2ND QUARTER 2002 ================================================================================ 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 June 30, 2002 [ ] 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 August 14, 2002 Class Outstanding at August 14, 2002 - -------------------------------------- ----------------------------------- Common Stock, $.10 par value 1,000,000 shares ================================================================================ LAS VEGAS SANDS, INC. Table of Contents Part I FINANCIAL INFORMATION Item 1. Consolidated Balance Sheets At June 30, 2002 (unaudited) and December 31, 2001.............1 Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2002 (unaudited) and June 30, 2001 (unaudited)........2 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2002 (unaudited) and June 30, 2001 (unaudited)........3 Notes to Consolidated Financial Statements.....................4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..............24 Item 3. Quantitative and Qualitative Disclosures About Market Risk....35 Part II OTHER INFORMATION Item 1. Legal Proceedings.............................................38 Item 5. Other Information.............................................38 Item 6. Exhibits and Reports on Form 8-K..............................38 Signatures....................................................42 LAS VEGAS SANDS, INC. Consolidated Balance Sheets (Dollars in thousands)
June 30, December 31, 2002 2001 ----------- ----------- Unaudited ASSETS Current assets: Cash and cash equivalents ............................... $ 51,179 $ 54,936 Restricted cash and investments ......................... 130,358 2,646 Accounts receivable, net ................................ 49,445 57,092 Inventories ............................................. 4,371 4,747 Prepaid expenses ........................................ 3,992 3,862 ----------- ----------- Total current assets ........................................ 239,345 123,283 Property and equipment, net ................................. 1,097,104 1,096,307 Deferred offering costs, net ................................ 41,169 18,989 Restricted cash and investments ............................. 175,231 -- Other assets, net ........................................... 31,304 33,207 ----------- ----------- $ 1,584,153 $ 1,271,786 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable ........................................ $ 16,595 $ 36,353 Construction payables ................................... 13,564 26,115 Construction payables-contested ......................... 7,232 7,232 Accrued interest payable ................................ 9,237 10,008 Other accrued liabilities ............................... 61,635 70,035 Current maturities of long-term debt .................... 112,695 129,113 ----------- ----------- Total current liabilities ................................... 220,958 278,856 Other long-term liabilities ................................. 1,347 3,274 Long-term debt .............................................. 1,217,500 745,746 Long-term subordinated loans payable to Principal Stockholder -- 66,123 ----------- ----------- 1,439,805 1,093,999 ----------- ----------- Redeemable Preferred Interest in Venetian Casino Resort, LLC, a wholly owned subsidiary ............................... 200,105 188,778 ----------- ----------- Commitments and contingencies Stockholders' equity (deficit): Common stock, $.10 par value, 3,000,000 shares authorized, 1,000,000 shares issued and outstanding ............................... 100 92 Capital in excess of par value .......................... 140,760 140,768 Accumulated deficit since June 30, 1996 ................. (196,617) (151,851) ----------- ----------- (55,757) (10,991) ----------- ----------- $ 1,584,153 $ 1,271,786 ----------- ----------- The accompanying notes are an integral part of these consolidated financial statements.
1 LAS VEGAS SANDS, INC. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 2002 2001 2002 2001 -------------------------- -------------------------- Revenues: Casino ........................................... $ 46,820 $ 54,265 $ 97,293 $ 112,741 Rooms ............................................ 52,635 56,428 109,013 116,014 Food and beverage ................................ 17,654 18,528 39,533 37,357 Retail and other ................................. 18,686 17,446 35,447 34,730 -------- -------- -------- --------- 135,795 146,667 281,286 300,842 Less-promotional allowances ......................... (7,630) (9,658) (16,688) (21,944) -------- -------- -------- --------- Net revenues ..................................... 128,165 137,009 264,598 278,898 -------- -------- -------- --------- Operating expenses: Casino ........................................... 25,169 36,158 54,864 76,156 Rooms ............................................ 13,592 13,685 26,626 26,856 Food and beverage ................................ 8,749 8,941 18,720 17,248 Retail and other ................................. 7,862 7,833 14,964 15,031 Provision for doubtful accounts .................. 4,939 5,171 8,274 8,889 General and administrative ....................... 22,925 23,415 44,392 45,426 Corporate expense ................................ 2,914 2,090 4,823 3,978 Rental expense ................................... 1,875 2,022 3,529 4,213 Pre-opening and developmental expense ............ 1,406 - 2,071 - Depreciation and amortization .................... 10,964 10,305 21,949 20,511 -------- -------- -------- --------- 100,395 109,620 200,212 218,308 -------- -------- -------- --------- Operating income 27,770 27,389 64,386 60,590 Other income (expense): Interest income ................................... 469 388 650 806 Interest expense, net of amounts capitalized ...... (27,683) (25,114) (52,065) (51,865) Interest expense on indebtedness to Principal Stockholder ........................... (1,676) (2,249) (4,010) (4,438) Other income (expense) ............................ (307) - 363 - Loss on early retirement of debt .................. (42,763) - (42,763) - -------- -------- -------- --------- Income (loss) before preferred return ............... (44,190) 414 (33,439) 5,093 Preferred return on Redeemable Preferred Interest in Venetian Casino Resort, LLC (2001, as restated) ............................ (5,664) (5,040) (11,327) (10,080) -------- -------- -------- --------- Net loss (2001, as restated) ........................ $(49,854) $ (4,626) $ (44,766) $ (4,987) ======== ======== ========= ======== Basic and diluted loss per share .................... $ (49.85) $ (4.63) $ (44.77) $ (4.99) ======== ======== ========= ======== The accompanying notes are an integral part of these consolidated financial statements.
2 LAS VEGAS SANDS, INC. Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited)
Six Months Ended June 30, 2002 2001 -------- -------- Cash flows from operating activities: Net loss (2001, as restated) ................................. $(44,766) $ (4,987) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization ........................ 21,949 20,511 Amortization of debt offering costs and original issue discount ............................ 5,052 4,080 Non-cash preferred return on Redeemable Preferred Interest in Venetian (2001, as restated) . 11,327 10,080 Loss on early retirement of debt ..................... 42,763 - Loss on disposition of fixed asset ................... 301 - Non-cash interest on completion guaranty loan ........ - 1,940 Provision for doubtful accounts ...................... 8,274 8,889 Changes in operating assets and liabilities: Accounts receivable ................................ (627) (9,484) Inventories ........................................ 376 (544) Prepaid expenses ................................... (130) (494) Other assets ....................................... 1,903 3,060 Accounts payable ................................... (19,758) (4,563) Accrued interest payable ........................... (771) (1,420) Other accrued liabilities .......................... (10,327) (19,304) -------- -------- Net cash provided by (used in) operating activities .......... 15,566 7,764 -------- -------- Cash flows from investing activities: Increase in restricted cash ($185.0 million for Phase IA construction and $116.9 million for debt defeasance on July 5, 2002) ................................ (302,943) (52) Capital expenditures ......................................... (35,598) (21,646) -------- -------- Net cash used in investing activities ........................ (338,541) (21,698) -------- -------- Cash flows from financing activities: Repayments on 121/4 % mortgage notes ......................... (316,558) - Proceeds from 11% mortgage notes ............................. 850,000 - Repayments on senior subordinated notes ...................... (95,690) - Proceeds from secured mall facility .......................... 120,000 - Repayments on mall-tranche A take-out Loan ................... (105,000) - Repayments on mall-tranche B take-out Loan ................... (35,000) - Repayments on completion guaranty loan ....................... (31,124) - Proceeds from senior secured credit facility-term B .......... 250,000 - Repayments on bank credit facility-tranche A term loan ....... - (5,625) Repayments on bank credit facility-tranche B term loan ....... - (250) Proceeds from bank credit facility-tranche C term loan ....... - 5,750 Repayments on bank credit term facility ...................... (151,986) - Repayments on bank credit facility-revolver .................. (61,000) - Proceeds from bank credit facility-revolver .................. 21,000 22,000 Repayments on FF&E credit facility ........................... (53,735) (10,747) Repayments on Phase II Subsidary credit facility ............. (3,933) - Repayments on Phase II Subsidiary unsecured bank loan ........ (1,092) - Proceeds from Phase II Subsidiary unsecured bank loan ........ - 792 Repurchase premiums incurred in connection with refinancing transactions ................................... (26,691) - Payments of deferred offering costs .......................... (39,973) (820) -------- -------- Net cash provided by financing activities .................... 319,218 11,100 -------- -------- Decrease in cash and cash equivalents ........................ (3,757) (2,834) Cash and cash equivalents at beginning of period ............. 54,936 42,606 -------- -------- Cash and cash equivalents at end of period ................... $ 51,179 $ 39,772 ======== ======== Supplemental disclosure of cash flow information: Cash payments for interest ................................. $ 52,563 $ 52,287 ======== ======== The accompanying notes are an integral part of these consolidated financial statements.
3 Notes to Financial Statements Note 1 Organization and Business of Company - ------ ------------------------------------ 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, 2001. 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 2001 financial statements have been reclassified to conform with the 2002 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 in order to construct a planned two-phase hotel-casino resort. The first phase of the hotel-casino resort (the "Casino Resort") includes 3,036 suites, casino space approximating 116,000 square feet, approximately 500,000 square feet of convention space, and approximately 475,000 gross leasable square feet of retail shops and restaurants. The consolidated financial statements include the accounts of LVSI and its subsidiaries (the "Subsidiaries"), including Venetian Casino Resort, LLC ("Venetian"), Mall Intermediate Holding Company, LLC ("Mall Intermediate"), Grand Canal Shops Mall Subsidiary, LLC (the "Mall Subsidiary"), Grand Canal Shops II, LLC (the "Mall II Subsidiary"), Grand Canal Shops Mall MM Subsidiary, Inc., Grand Canal Shops Mall Construction, LLC ("Mall Construction"), Lido Intermediate Holding Company, LLC ("Lido Intermediate"), Lido Casino Resort Holding Company, LLC, Lido Casino Resort, LLC (the "Phase II Subsidiary"), Lido Casino Resort MM, Inc., Venetian Casino Resort Athens, LLC (Venetian Athens"), Venetian Venture Development, LLC ("Venetian Venture"), Venetian Venture Development Intermediate Limited, Venetian Macau Management Limited, Venetian Macau Holdings Limited ("Venetian Macau"), Venetian Marketing, Inc. ("Venetian Marketing"), Venetian Far East Limited and Venetian Operating Company, LLC ("Venetian Operating") (collectively, and including all other direct and indirect subsidiaries of LVSI, 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 principal stockholder (the "Principal Stockholder"). Mall Intermediate, Lido Intermediate and Venetian Venture are intermediate holding companies which are wholly-owned subsidiaries of Venetian. They are guarantors or co-obligors of certain indebtedness related to the Casino Resort. See Note 4 Long-Term Debt. The Mall II Subsidiary is an indirect wholly-owned subsidiary of LVSI and owns and operates the retail mall in the Casino Resort (the "Mall") . The Mall II Subsidiary was formed on May 31, 2002 and became a successor to the Mall Subsidiary in connection with the refinancing of the Mall's indebtedness. See Note 4 Long-Term Debt. 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 Principal Stockholder. Venetian, the Mall II Subsidiary and IGN transact business with each other and are parties to certain agreements. Restatement of Previously Reported Amounts ------------------------------------------ As more fully described above, Interface Holding (an entity controlled by the Principal Stockholder) owns a redeemable preferred interest in LVSI's wholly-owned subsidiary, Venetian. The preferred return on the redeemable preferred interest has not been paid, but it has been accrued by Venetian each year and historically accounted for as a charge against capital (See Note 5). Under guidance by the Emerging Issues Task Force of the Financial Accounting Standards Board, dividends on a subsidiary's preferred stock should be reflected as a minority interest and recognized as a charge against income. 4 Notes to Financial Statements Note 1 Organization and Business of Company (Continued) - ------ ------------------------------------------------ The Company has recognized the preferred return as a charge against income in the accompanying 2002 financial statements, and has restated certain income statement items for the three and six month periods ended June 30, 2001 to include the preferred return, which amounts were $5.0 million and $10.1 million, respectively. The restatement has no impact on the previously reported carrying balances of the redeemable preferred interest or on the previously reported financial position of the Company. In addition, because the preferred return was deducted from income available to common stockholders in calculating earnings per share, the restatement has no impact on previously reported amounts for earnings per share. New Accounting Pronouncement ---------------------------- In April 2002, the Financial Accounting Standards Board issued statement No. 145 ("SFAS 145") "Rescission of FASB Statements Nos. 4, 44 and 64 and Amendment of FASB Statement No. 13." SFAS 145 addresses the presentation for losses on early retirements of debt in the statement of operations. The Company has adopted SFAS 145 and will no longer present losses on early retirements of debt as an extraordinary item. Additionally, prior period extraordinary losses will be reclassified to conform to this new presentation. Adoption of SFAS 145 had no impact on the Company's financial condition or cash flows. Note 2 Stockholders' Equity and Per Share Data - ------ --------------------------------------- The Company established a nonqualified stock option plan, which provides for the granting of stock options pursuant to the applicable provisions of the Internal Revenue Code and regulations. The stock option plan provides that the Principal Stockholder may assume the obligations of the Company under the plan and provides for the granting of up to 75,000 shares of common stock to officers and other key employees of the Company. As of December 31, 2001, no grants under the stock option plan had occurred. In the first quarter of 2002, options to purchase 49,900 shares, which represented approximately 5% of the Company's outstanding common stock, were granted from the Company to certain key employees of the Company. Immediately thereafter, the Principal Stockholder assumed the obligations of the Company under the stock option plan. On the date of grant, the exercise price of the options of $271 per share was higher than the fair market value of the Company's common stock based upon a determination of the fair market value of a per share minority interest in the common stock of LVSI, performed by an independent third-party appraiser. The options granted were fully vested and exercisable upon grant. All of the options were exercised immediately after issuance by the respective employees by delivery of a notice of exercise. There has been no change in outstanding shares of the Company and the notes receivable are not reflected in the accompanying financial statements because the shares issued were from the Principal Stockholder's existing holdings. The exercise price of the options was loaned to the optionees by the Principal Stockholder on a collateralized basis under full recourse notes. During the first quarter of 2002, the Company entered into a stockholders' agreement (the "Stockholders' Agreement") with the respective employees (the "Additional Stockholders") and the Principal Stockholder. The Stockholders' Agreement restricts the ability of the Additional Stockholders and any of their permitted transferees who have agreed to be bound by the terms and conditions of the agreement to sell, assign, pledge, encumber or otherwise dispose of any shares of common stock of LVSI, except in accordance with the provisions of the Stockholders' Agreement. All transfers are subject to certain conditions, including: o compliance with applicable state and foreign securities laws, o receipt of necessary licenses or approvals from the Nevada gaming authorities, and o compliance with all federal laws, rules and regulations relating to subchapter S corporations. If at any time before LVSI completes an initial public offering, the Principal Stockholder wishes to sell 20% or more of his ownership interest in LVSI to any third party transferee, each Additional Stockholder shall have the right to participate in such sale on the same terms as those offered to the Principal Stockholder. The Additional Stockholders also have certain piggyback registration rights. If at any time LVSI completes an initial public offering or proposes to register any shares of common stock, the Additional Stockholders may request registration of their securities. Common stock will be included in the registration statement in the following order of priority: first, all securities of LVSI to be sold for its own account, second, securities of stockholders (other than the Principal Stockholder) who have demand registration rights and 5 Notes to Financial Statements (Continued) Note 2 Stockholders' Equity and Per Share Data (Continued) - ------ --------------------------------------------------- third, such securities requested to be included in such registration statement by the Principal Stockholder and the Additional Stockholders (pro rata based on the number of registrable securities owned by such stockholders). Finally, if at any time prior to the completion by LVSI of an initial public offering LVSI wishes to issue any new securities, the Additional Stockholders will have the right to purchase that number of shares of LVSI common stock, at the proposed purchase price of the new securities, such that the Additional Stockholders' percentage ownership of LVSI would remain the same following such issuance. During the second quarter of 2002, options to purchase an additional 5,500 shares at an exercise price of $271 per share were reserved under the stock option plan. The granting of these options are subject to approval by the Nevada gaming authorities. Basic and diluted income (loss) per share are calculated based upon the weighted average number of shares outstanding. In the first quarter of 2002, the Company completed a stock split whereby the number of shares of common stock outstanding was increased from 925,000 to 1,000,000. At the time of the stock split, the Principal Stockholder maintained 100% ownership of the Company's common stock. All references to share and per share data herein have been adjusted retroactively to give effect to the increase in shares of common stock outstanding to 1,000,000. Note 3 Property and Equipment - ------ ---------------------- Property and equipment consists of the following (in thousands):
June 30, December 31, 2002 2001 ----------- ----------- Land and land improvements $ 113,428 $ 113,309 Building and improvements 885,832 882,395 Equipment, furniture, fixtures and leasehold improvements 139,484 138,978 Construction in progress 86,966 68,542 ----------- ----------- 1,225,710 1,203,224 Less: accumulated depreciation and amortization (128,606) (106,917) ----------- ----------- $ 1,097,104 $ 1,096,307 =========== ===========
During the three month and six month periods ended June 30, 2002 and June 30, 2001, the Company capitalized interest expense of $0.5 million and $0.8 million, and zero and $0.6 million, respectively. As of June 30, 2002, construction in progress represented construction in progress and project design for an approximately 1,000-room hotel tower on top of the Casino Resort's existing parking garage, an approximately 1,000-parking space expansion to the parking garage and approximately 150,000 square feet of additional convention center space on the Phase II Land (collectively, the "Phase IA Addition"), shared facilities costs for the planned second phase of the Casino Resort, to be owned by the Phase II Subsidiary (the "Phase II Resort"), and on-going capital improvement projects at the Casino Resort. 7 Notes to Financial Statements (Continued) Note 4 Long-Term Debt - ------ --------------
Long-term debt consists of the following (in thousands): June 30, December 31, 2002 2001 ---------- ---------- Indebtedness of the Company and its Subsidiaries other than the Mall II Subsidiary, the Mall Subsidiary and the Phase II Subsidiary: - ------------------------------------------------------- 12 1/4% Mortgage Notes, due November 15, 2004 - redeemed July 5, 2002 $ 108,442 $ 425,000 14 1/4% Senior Subordinated Notes, due November 15, 2005 (net of unamortized discount of $57 in 2002 and $3,825 in 2001) - redeemed July 5, 2002 1,753 94,113 Bank Credit Facility-Revolver -- 40,000 Bank Credit Facility- Term Loan -- 151,986 FF&E Credit Facility -- 53,735 11% Mortgage Notes, due June 15, 2010 850,000 -- Senior Secured Credit Facility - Term B 250,000 -- Indebtedness of the Mall II Subsidiary: - --------------------------------------- Secured Mall Facility 120,000 -- Indebtedness of the Mall Subsidiary: - ------------------------------------ Mall Tranche A Take-out Loan -- 105,000 Indebtedness of the Phase II Subsidiary: - --------------------------------------- Phase II Subsidiary Credit Facility -- 3,933 Phase II Unsecured Bank Loan -- 1,092 Less: current maturities, including amounts redeemed on July 5, 2002 (112,695) (129,113) ---------- ---------- Total long-term debt $1,217,500 $ 745,746 ========== ========== Subordinated Owner Indebtedness: - -------------------------------- Completion Guaranty Loan (Indebtedness of Venetian) $ -- $ 31,123 Subordinated Mall Tranche B Take-out Loan from Principal Stockholder (Indebtedness of Mall Subsidiary) -- 35,000 ---------- ---------- Total long-term subordinated loans payable to Principal Stockholder $ -- $ 66,123 ========== ==========
In connection with the construction financing for the Casino Resort, the Company entered into a series of transactions during 1997 to build the Casino Resort. In November 1997, the Company issued $425.0 million in aggregate principal amount of 12 1/4% Mortgage Notes (the "Old Mortgage Notes") and $97.5 million in aggregate principal amount of 14 1/4% Senior Subordinated Notes (the "Old Subordinated Notes" and, together with the Old Mortgage Notes, the "Old Notes") in a private placement. Also 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. In December 1997, the Company entered into an agreement (the "FF&E 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. 8 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 Principal Stockholder's completion guaranty (the "Completion Guaranty Loan"), a junior loan from the Principal Stockholder to the Venetian. On December 20, 1999, certain take-out lenders funded a $105.0 million tranche A take-out loan to the Mall Subsidiary (the "Tranche A Take-out Loan") and an entity wholly-owned by the Principal Stockholder funded a $35.0 million loan to the Mall Subsidiary (the "Tranche B Take-out Loan" and, together with the Tranche A Take-out Loan, the "Mall Take-out Financing"), the proceeds of which were used to repay an existing mall construction loan facility. In February 2001, the Phase II Subsidiary entered into an unsecured bank line of credit (the "Phase II Unsecured Bank Loan") of $1.1 million for Phase II Subsidiary operating costs. On October 19, 2001, the Phase II Subsidiary also entered into a loan agreement providing for a $17.5 million term and revolving loan (the "Phase II Subsidiary Credit Facility") for Phase II Resort pre-development expenses and loans or distributions to the Company for other liquidity needs. On June 4, 2002, the Company completed a series of refinancing transactions (collectively, the "Refinancing Transactions") including (1) the issuance of $850.0 million in aggregate principal amount of 11% mortgage notes due 2010 (the "Mortgage Notes") in a private placement, (2) entering into a new senior secured credit facility (the "Senior Secured Credit Facility") with a syndicate of lenders in an aggregate amount of $375.0 million, and (3) entering into a secured mall facility (the "Secured Mall Facility") in an aggregate amount of $105.0 million, which was subsequently increased to $120.0 million on June 28, 2002. The Company used or will use the proceeds of the Refinancing Transactions to repay, redeem or repurchase all of its outstanding indebtedness (including the Old Notes, the Bank Credit Facility, the FF&E Facility, the Completion Guaranty Loan, the Mall Take-out Financing, the Phase II Unsecured Bank Loan and the Phase II Subsidiary Credit Facility), to finance the construction and development of the Phase IA Addition and to pay all fees and expenses associated with the Refinancing Transactions. In addition, the Principal Stockholder's completion guarantee relating to the construction of the Casino Resort was terminated upon the consummation of the Refinancing Transactions and the remaining cash collateral was returned to the Principal Stockholder. In connection with the Refinancing Transactions, the Company incurred a loss on early retirement of indebtedness of $42.8 million during the three months ended June 30, 2002. As part of the Refinancing Transactions, the Company also commenced a cash tender offer on May 6, 2002 to repurchase the Old Notes. Upon the consummation of the Refinancing Transactions, the Company repurchased $316.6 million of the Old Mortgage Notes and $95.7 million of the Old Subordinates Notes and effected a covenant defeasance with respect to the remaining Mortgage Notes. The Company called all of the remaining Old Notes upon the closing of the Refinancing Transactions and redeemed the balance of the Old Mortgage Notes ($108.4 million) and the Old Subordinated Notes ($1.8 million) on July 5, 2002. On July 5, 2002, the Company incurred a loss of $8.7 million on early retirement of debt related to the redemption of the Old Notes. Mortgages Notes - --------------- The Mortgage Notes bear interest at 11%, payable each June 15th and December 15th, beginning December 15, 2002. The Mortgage Notes are secured by second priority liens on certain assets of the Company (the personal property and the real estate improvements that comprise the hotel, the casino and the convention space, with certain exceptions). The Mortgage Notes are redeemable at the option of LVSI and Venetian at prices ranging from 100% to 105.5% commencing on or after June 15, 2006, as set forth in the Mortgage Notes and the indenture pursuant to which the Mortgage Notes were issued (the "Indenture"). Prior to June 15, 2002, LVSI and Venetian may redeem the Mortgage Notes at their principal amount plus an applicable make-whole premium. Upon a change of control (as defined in the Indenture), each Mortgage Note holder may require LVSI and Venetian to repurchase such Mortgage Notes at 101% of the principal amount thereof plus accrued interest and other amounts which are then due, if any. Upon an event of loss or certain asset sales, the Company may also be required to offer to purchase all or a portion of the Mortgage Notes with the proceeds of such event of loss or sale. The Mortgage Notes are not subject to a sinking fund requirement. The Company is committed under a registration rights agreement to use its commercially reasonable efforts prior to 180 days after the closing date to effect a registered exchange offer for the Mortgage Notes or, subject to certain conditions, to provide a shelf registration for the Mortgage Notes. Should the Company not meet certain requirements of the registration rights agreement, liquidated damages in the amount of 0.25% to 2.00% per annum of the aggregate principal amount of the Mortgage Notes would accrue until such defaults are cured. 9 Notes to Financial Statements (Continued) Note 4 Long-Term Debt (Continued) - ------ -------------------------- Senior Secured Credit Facility - ------------------------------ The Senior Secured Credit Facility provides for a $250.0 million single draw senior secured term loan facility (the "Term B Facility"), a $50.0 million senior secured delayed draw facility (the "Term A Facility") and a $75.0 million senior secured revolving facility (the "Revolving Facility"). Term B Facility proceeds of $185.0 million were deposited into restricted accounts, invested in cash or permitted investments and pledged to a disbursement agent for the Senior Secured Credit Facility lenders. The $185.0 million will be used as required for Phase IA Addition project costs under disbursement terms specified in the Senior Secured Credit Facility. The disbursement account is subject to a security interest in favor of the lenders under the Senior Secured Credit Facility. The Term B Facility matures on June 4, 2008 and is subject to quarterly amortization payments in the amount of $625,000 from September 30, 2002 until September 30, 2007, followed by four equal quarterly amortization payments of $59.4 million until the maturity date. The Term A Facility is available from the closing date of the Senior Secured Credit Facility through the first anniversary of the closing date, subject to certain conditions. The Term A Facility matures on June 4, 2007 and is subject to quarterly amortization payments commencing on December 31, 2003 in the amount of $1,666,667 for three quarters, $2,500,000 for the succeeding four quarters, $3,750,000 for the next four quarters and $5,000,000 for the final four quarters. The Revolving Facility matures on June 4, 2007 and has no interim amortization. No amounts had been drawn under the Term A Facility or the Revolving Facility as of June 30, 2002. All amounts outstanding under the Senior Secured Credit Facility bear interest at the option of the Company at the prime rate plus 2% per annum, or at the reserve adjusted Eurodollar rate plus 3% per annum. After the Phase IA Addition is substantially complete, the applicable margin for amounts outstanding under the Term A Facility and the Revolving Facility will be determined by a grid based upon a leverage ratio. The leverage ratio will be calculated as the ratio of consolidated total debt as of the last day of each fiscal quarter to EBITDA (as defined in the Senior Secured Credit Facility) for the four-fiscal quarter period ending on such date. Commitment fees equal to 0.50% per annum of the daily average unused portion of the commitment under the Revolving Facility and 0.75% per annum of the daily average unused portion of the Term A Facility are payable quarterly in arrears. The Senior Secured Credit Facility is secured by a first priority lien on certain assets of the Company (the personal property and the real estate improvements that comprise the hotel, the casino and the convention space, with certain exceptions). The Senior Secured Credit Facility contains affirmative, negative and financial covenants including limitations on indebtedness, liens, investments, guarantees, restricted junior payments, mergers and acquisitions, sales of assets, leases, transactions with affiliates and scope-changes and modifications to material contracts. Additionally, the Company is required to comply with certain financial ratios and other financial covenants including total debt to EBITDA ratios, EBITDA to interest coverage ratios, minimum net worth covenants and maximum capital expenditure limitations. At June 30, 2002, the Company was in compliance with all required covenants and ratios under the Senior Secured Credit Facility. Secured Mall Facility - --------------------- In June 2002, the Company also entered into an agreement (the "Secured Mall Facility") with certain lenders to provide for a $105.0 million loan (subsequently increased to $120.0 million on June 28, 2002) to the Mall II Subsidiary. The initial $105.0 million of proceeds (net of financing costs) from the Secured Mall Facility, along with the proceeds of a $37.9 million capital contribution in Mall II Subsidiary by Venetian, were used to repay the Mall Take-out Financing and costs previously owed by the Mall Subsidiary. Upon the consummation of the Refinancing Transactions, the assets of the Mall were transferred to the Mall II Subsidiary, the borrower under the Secured Mall Facility. The additional $15.0 million of proceeds (net of financing costs) were distributed to Venetian and used for general corporate purposes. The indebtedness under the Secured Mall Facility is secured by a first priority lien on the assets that comprise the Mall (the "Mall Assets"). 10 Notes to Financial Statements (Continued) Note 4 Long-Term Debt (Continued) - ------ -------------------------- The amounts outstanding under the Secured Mall Facility bear interest at the adjusted one month Eurodollar rate plus 1.875% per annum. Interest is paid monthly and there is no scheduled principal amortization. The Secured Mall Facility is due in full on June 28, 2005 and provides for two one-year extensions at the option of the Company, subject to certain criteria. The Secured Mall Facility contains affirmative, negative and financial covenants including net operating income performance standards. Failure to meet these financial covenants in certain circumstances allows the lenders' agent to control collection of rents, to approve operating budgets and provides for a cash sweep of excess cash flow to reduce amounts outstanding under the Secured Mall Facility. The Company is required to enter into an interest rate cap agreement to limit the impact of increases in interest rates on its floating rate debt derived from the Secured Mall Facility. To meet the requirements of the Secured Mall Facility, the Company entered into a cap agreement during June 2002 (the "Mall Cap Agreement") that resulted in a premium payment to counterparties based upon notional principal amounts for a term equal to the term of the Secured Mall Facility. The provisions of the Mall Cap Agreement entitle the Company to receive from the counterparties the amounts, if any, by which the selected market interest rates exceed the strike rates stated in such agreement. There was no net effect on interest expense as a result of the Mall Cap Agreement for the three months ended June 30, 2002. If the Company had terminated the Mall Cap Agreement as of June 30, 2002, the Company would not have had to pay any amounts based on quoted market values from the various institutions holding the swaps. The notional amount of the Mall Cap Agreement (which expires on June 28, 2005) at June 30, 2002 was $120.0 million. Pursuant to the terms of the Secured Mall Facility, the Mall II Subsidiary is also required to maintain certain funds in escrow for debt service and property taxes. At June 30, 2002, $1.3 million was held by the lenders' agent in escrow for these purposes. The amounts in escrow are classified as restricted cash in the accompanying financial statements. The Company entered into interest rate cap and/or floor agreements related to the Bank Credit Facility (the "Bank Cap Agreement") during 1998 and the Tranche A Take-out Loan during 1999 (the "Mall Cap Agreement" and, together with the Bank Cap Agreement, the "Old Rate Cap Agreements"). The notional amount of the Bank Cap Agreement at June 30, 2002 was $76.2 million. The Bank Cap Agreement expires in June 2003, the maturity date of the Bank Credit Facility, unless terminated earlier by the Company. The notional amount of the Mall Cap Agreement at June 30, 2002 was $42.3 million. The Mall Cap Agreement expires on December 20, 2002, the original maturity date of the Tranche A Take-out Loan, unless terminated earlier by the Company. The net effect of the Old Rate Cap Agreements resulted in an increase of interest expense of $0.5 million for the quarter ended June 30, 2002. Currently, the Old Rate Cap Agreements remain outstanding. If the Company had terminated the Old Rate Cap Agreements as of June 30, 2002, the Company would have had to pay a net amount of $1.6 million based on quoted market values from the various institutions holding the swaps. In accordance with Financial Accounting Standards Board Statement No. 133, Accounting for Derivative Instruments and Hedging Activities, the Company has recorded the fair value of its obligations under the Old Rate Cap Agreements in the accompanying financial statements and will continue to do so while the agreements are in effect. 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 Senior Secured Credit Facility is repaid and cash payments are permitted under the restricted payment covenants of the Indenture, the preferred return on the Series B Preferred Interest will accrue and will not be paid in cash. Commencing June 30, 2011, 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 six month periods ended June 30, 2002 and June 30, 2001, $5.7 million and $11.3 million, and $5.0 million and $10.1 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. 11 Notes to Financial Statements (Continued) Note 6 Commitments and Contingencies - ------ ----------------------------- Construction Litigation ----------------------- The Company is party to litigation matters and claims related to its operations and construction of the Casino Resort that 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 (as defined below). 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 $100.0 million. The Construction Manager subsequently filed motions to dismiss the Company's complaint on various grounds, which the Company opposed. The Construction Manager's motions were either 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 claims 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, the Company believes that the Construction Manager has not provided Venetian with reasonable documentation to support such claims, the Construction Manager has materially breached its agreements with the Company and the Construction Manager's claims are without merit. The Company 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 the 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. 12 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 rights to file liens against the Casino Resort. The Company intends to vigorously defend itself in any lien proceedings. On August 9, 1999, the Company notified the insurance companies providing coverage under its liquidated damages insurance policy (the "LD Policy") that it has a claim under the LD Policy. The LD Policy provides insurance coverage for the failure of the Construction Manager to achieve substantial completion of the portions of the Casino Resort covered by the Construction Management Contract within 30 days of the April 21, 1999 deadline, with a maximum liability under the LD Policy of approximately $24.1 million and with coverage being provided, on a per-day basis, for days 31-120 of the delay in the achievement of substantial completion. Because the Company believes that substantial completion was not achieved until November 12, 1999, the Company's claim under the LD Policy is likely to be for the above-described maximum liability of $24.1 million. The Company expects the LD Policy insurers to assert many of the same claims and defenses that the Construction Manager has asserted 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 Company and the Construction Manager are currently scheduled to commence a trial to litigate certain of their respective claims in August 2002, although there can be no assurance that the trial will commence at such time. Many of the remaining claims between the parties will be proceeding concurrently in independent arbitration hearings. It is not yet possible to determine a range of loss or the ultimate outcome of the pending litigation described above. If any litigation or other lien 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 condition, results of operations or cash flows of the Company to the extent such litigation or lien proceedings are not covered by the Insurance Policy. Macau Joint Venture and Internet Gaming - --------------------------------------- On June 26, 2002, the Company announced that a joint venture comprised of Venetian Macau and a group of Macau and Hong Kong-based investors had entered into a final concession contract with the Government of the Macau Special Administrative Region of the People's Republic of China to operate casinos in Macau. Through June 30, 2002, the Company had incurred developmental expenses of $2.4 million in connection with the proposed Macau project. Venetian Macau continues to negotiate the final terms of a joint venture and management expects that those negotiations will be concluded in the third quarter of 2002. The final terms of a joint venture agreement may include financial obligations to the joint venture and/or to the Government of Macau or Venetian Macau may be obligated to pay for certain costs of developing and constructing the contemplated casinos in Macau. Under the Indenture, the Company is permitted to make investments in the amount of $40.0 million in, and extend guarantees with respect to $90.0 million of indebtedness and/or obligations of, its Macau subsidiaries. The Company may use cash received from the following sources to fund the Macau venture: o borrowings by Venetian under the Revolving Facility; o additional debt or equity financings; and o operating cash flow (subject to certain limitations contained in the Company's debt instruments). 13 Notes to Financial Statements (Continued) Note 6 Commitments and Contingencies (Continued) - ------ ----------------------------------------- Venetian Macau and the Company's other Macau subsidiaries are not guarantors under the Mortgage Notes or the Senior Secured Credit Facility and, subject to certain limited exceptions, are not restricted subsidiaries under the Indenture or the Senior Secured Credit Facility. The Company has also entered into a joint venture agreement to assess the feasibility of and develop an Internet gaming site. The Company has applied for an Internet gaming license in Alderney, but has not yet established any operations. The Company estimates that it is committed to contribute approximately $1.0 million, approximately one-third of the required capital, to the joint venture during the next year. After recovery of each partner's initial capital contribution, the Company will receive 50% to 80% of the net profit of the joint venture, based upon an increasing scale of net profit (if any). The joint venture provides that the agreement will be automatically terminated should the Company fail to obtain any required regulatory approvals from Alderney, the Nevada gaming authorities or any other applicable jurisdiction prior to launching its operations. Note 7 Summarized Financial Information - ------ -------------------------------- LVSI and Venetian are co-obligors of the Mortgage Notes and the indebtedness under the Senior Secured Credit Facility and are jointly and severally liable for such indebtedness. Venetian, Mall Intermediate, Mall Construction, Lido Intermediate, Venetian Venture, Venetian Athens, Venetian Marketing and Venetian Operating (collectively, the "Subsidiary Guarantors") are subsidiaries of LVSI, all of the capital stock of which is owned by LVSI and Venetian. The Subsidiary Guarantors have jointly and severally guaranteed (or are co-obligors of) such debt on a full and unconditional basis. The Mall is owned by the Mall II Subsidiary, a non-guarantor subsidiary which is the borrower under the Secured Mall Facility. 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 June 30, 2002 and December 31, 2001, and for the three and six month periods ended June 30, 2002 and June 30, 2001, is as follows (in thousands): 14 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued) CONDENSED BALANCE SHEETS June 30, 2002
GUARANTOR SUBSIDIARIES ----------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC -------------- ----------- ------------ ------------ ------------ Cash and cash equivalents ............................... $ 30,648 $ 16,494 $ 4 $ 4 $ -- Restricted cash and investments ......................... -- 129,093 -- -- -- Intercompany receivable ................................. 16,741 -- -- -- -- Accounts receivable, net ................................ 28,191 20,572 -- -- -- Inventories ............................................. -- 4,371 -- -- -- Prepaid expenses ........................................ 712 2,596 -- -- -- ----------- ----------- ----------- ----------- ----------- Total current assets .................................. 76,292 173,126 4 4 -- Property and equipment, net ............................. -- 880,920 -- -- -- Investment in Subsidiaries .............................. 1,089,672 106,203 -- -- -- Deferred offering costs, net ............................ -- 38,101 -- -- -- Restricted cash and investments ......................... -- 175,231 -- -- -- Other assets, net ....................................... 3,397 24,326 -- -- -- ----------- ----------- ----------- ----------- ----------- $ 1,169,361 $ 1,397,907 $ 4 $ 4 $ -- =========== =========== =========== =========== =========== Accounts payable ........................................ $ 1,621 $ 14,722 $ -- $ -- $ -- Construction payable .................................... -- 13,564 -- -- -- Construction payable-contested .......................... -- 7,232 -- -- -- Intercompany payables ................................... -- 15,242 -- -- -- Accrued interest payable ................................ -- 9,130 -- -- -- Other accrued liabilities ............................... 13,302 46,955 -- -- -- Current maturities of long-term debt (3) ................ 112,695 112,695 -- -- -- ----------- ----------- ----------- ----------- ----------- Total current liabilities ............................. 127,618 219,540 -- -- -- Other long-term liabilities ............................. -- 1,280 -- -- -- Long-term debt (3) ...................................... 1,097,500 1,097,500 -- -- -- ----------- ----------- ----------- ----------- ----------- 1,225,118 1,318,320 -- -- -- ----------- ----------- ----------- ----------- ----------- Redeemable Preferred Interest in Venetian ............... -- 200,105 -- -- -- ----------- ----------- ----------- ----------- ----------- Stockholders' equity (deficit) .......................... (55,757) (120,518) 4 4 -- ----------- ----------- ----------- ----------- ----------- $ 1,169,361 $ 1,397,907 $ 4 $ 4 $ -- =========== =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no assets and liabilities as of June 30, 2002. (2) Land with a historical cost basis of $29.2 million 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 Principal Stockholder during December 1999. (3) As more fully described in Note 4 Long-Term Debt, LVSI and Venetian are co-obligors of certain of the Company's indebtedness. Accordingly, such indebtedness has been presented as an obligation of both entities in the above balance sheets.
15 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED BALANCE SHEETS, (continued) June 30, 2002 NON-GUARANTOR SUBSIDIARIES ------------------------------ Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries (2) Entries Total -------------- --------------- --------------- -------------- Cash and cash equivalents .................................... $ 3,826 $ 203 $ -- $ 51,179 Restricted cash and investments .............................. 1,265 -- -- 130,358 Intercompany receivable ...................................... -- -- (16,741) -- Accounts receivable, net ..................................... 682 -- -- 49,445 Inventories .................................................. -- -- -- 4,371 Prepaid expenses ............................................. 684 -- -- 3,992 ----------- ----------- ----------- ----------- Total current assets ....................................... 6,457 203 (16,741) 239,345 Property and equipment, net .................................. 133,872 82,312 -- 1,097,104 Investment in Subsidiaries ................................... -- -- (1,195,875) -- Deferred offering costs, net ................................. 3,068 -- -- 41,169 Restricted cash and investments .............................. -- -- -- 175,231 Other assets, net ............................................ 3,581 -- -- 31,304 ----------- ----------- ----------- ----------- $ 146,978 $ 82,515 $(1,212,616) $ 1,584,153 =========== =========== =========== =========== Accounts payable ............................................. $ 252 $ -- $ -- $ 16,595 Construction payable ......................................... -- -- -- 13,564 Construction payable-contested ............................... -- -- -- 7,232 Intercompany payables ........................................ 1,499 -- (16,741) -- Accrued interest payable ..................................... 107 -- -- 9,237 Other accrued liabilities .................................... 1,286 92 -- 61,635 Current maturities of long-term debt (3) ..................... -- -- (112,695) 112,695 ----------- ----------- ----------- ----------- Total current liabilities .................................. 3,144 92 (129,436) 220,958 Other long-term liabilities .................................. 67 -- -- 1,347 Long-term debt (3) ........................................... 120,000 -- (1,097,500) 1,217,500 ----------- ----------- ----------- ----------- 123,211 92 (1,226,936) 1,439,805 ----------- ----------- ----------- ----------- Redeemable Preferred Interest in Venetian .................... -- -- -- 200,105 ----------- ----------- ----------- ----------- Stockholders' equity (deficit) ............................... 23,767 82,423 14,320 (55,757) ----------- ----------- ----------- ----------- $ 146,978 $ 82,515 $(1,212,616) $ 1,584,153 =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no assets and liabilities as of June 30, 2002. (2) Land with a historical cost basis of $29.2 million 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 Principal Stockholder during December 1999. (3) As more fully described in Note 4 Long-Term Debt, LVSI and Venetian are co-obligors of certain of the Company's indebtedness. Accordingly, such indebtedness has been presented as an obligation of both entities in the above balance sheets.
16 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED BALANCE SHEETS December 31, 2001 GUARANTOR SUBSIDIARIES ----------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC -------------- ----------- ------------ ------------ ------------ Cash and cash equivalents ............................... $ 37,367 $ 7,806 $ 4 $ 4 $ -- Restricted cash and investments ......................... -- 1,528 -- -- -- Intercompany receivable ................................. 6,772 -- -- -- -- Accounts receivable, net ................................ 37,416 18,240 -- -- -- Inventories ............................................. -- 4,747 -- -- -- Prepaid expenses ........................................ 546 2,953 -- -- -- ----------- ----------- ----------- ----------- ----------- Total current assets .................................. 82,101 35,274 4 4 -- Property and equipment, net ............................. -- 878,239 -- -- -- Investment in Subsidiaries .............................. 692,100 86,657 -- -- -- Deferred offering costs, net ............................ -- 16,250 -- -- -- Other assets, net ....................................... 3,771 25,691 -- -- -- ----------- ----------- ----------- ----------- ----------- $ 777,972 $1,042,111 $ 4 $ 4 $ -- =========== =========== =========== =========== =========== Accounts payable ........................................ $ 2,880 $ 33,105 $ -- $ -- $ -- Construction payable .................................... -- 22,955 -- -- -- Construction payable-contested .......................... -- 7,232 -- -- -- Intercompany payables ................................... -- 7,345 -- -- -- Accrued interest payable ................................ -- 9,125 -- -- -- Other accrued liabilities ............................... 21,249 47,074 -- -- -- Current maturities of long-term debt (3) ................ 23,021 23,021 -- -- -- ----------- ----------- ----------- ----------- ----------- Total current liabilities ............................. 47,150 149,857 -- -- -- Other long-term liabilities ............................. -- 3,274 -- -- -- Long-term debt (3) ...................................... 741,813 741,813 -- -- -- Long-term subordinated loans payable to Principal Stockholder ....................... -- 31,123 -- -- -- ----------- ----------- ----------- ----------- ----------- 788,963 926,067 -- -- ----------- ----------- ----------- ----------- ----------- Redeemable Preferred Interest in Venetian ............... -- 188,778 -- -- -- ----------- ----------- ----------- ----------- ----------- Stockholders' equity (deficit) .......................... (10,991) (72,734) 4 4 -- ----------- ----------- ----------- ----------- ----------- $ 777,972 $1,042,111 $ 4 $ 4 $ -- =========== =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any assets or liabilities as of December 31, 2001. (2) Land with a historical cost basis of $29.2 million 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 Principal Stockholder during December 1999. (3) As more fully described in Note 4 Long-Term Debt, LVSI and Venetian are co-obligors of certain of the Company's indebtedness. Accordingly, such indebtedness has been presented as an obligation of both entities in the above balance sheets.
17 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED BALANCE SHEETS (continued) December 31, 2001 NON-GUARANTOR SUBSIDIARIES -------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries (2) Entries Total -------------- --------------- --------------- -------------- Cash and cash equivalents ................................... $ 6,650 $ 3,105 $ -- $ 54,936 Restricted cash and investments ............................. 1,118 -- -- 2,646 Intercompany receivable ..................................... -- 1,508 (8,280) -- Accounts receivable, net .................................... 1,436 -- -- 57,092 Inventories ................................................. -- -- -- 4,747 Prepaid expenses ............................................ 363 -- -- 3,862 ----------- ----------- ----------- ----------- Total current assets ...................................... 9,567 4,613 (8,280) 123,283 Property and equipment, net ................................. 136,167 81,901 -- 1,096,307 Investment in Subsidiaries .................................. -- -- (778,757) -- Deferred offering costs, net ................................ 1,903 836 -- 18,989 Other assets, net ........................................... 3,745 -- -- 33,207 ----------- ----------- ----------- ----------- $ 151,382 $ 87,350 $ (787,037) $ 1,271,786 =========== =========== =========== =========== Accounts payable ............................................ $ 368 $ -- $ -- $ 36,353 Construction payable ........................................ -- 3,160 -- 26,115 Construction payable-contested .............................. -- -- -- 7,232 Intercompany payables ....................................... 935 -- (8,280) -- Accrued interest payable .................................... 872 11 -- 10,008 Other accrued liabilities ................................... 1,647 65 -- 70,035 Current maturities of long-term debt (3) .................... 105,000 1,092 (23,021) 129,113 ----------- ----------- ----------- ----------- Total current liabilities ................................. 108,822 4,328 (31,301) 278,856 Other long-term liabilities ................................. -- -- -- 3,274 Long-term debt (3) .......................................... -- 3,933 (741,813) 745,746 Long-term subordinated loans payable to Principal Stockholder ........................... 35,000 -- -- 66,123 ----------- ----------- ----------- ----------- 143,822 8,261 (773,114) 1,093,999 ----------- ----------- ----------- ----------- Redeemable Preferred Interest in Venetian ................... -- -- -- 188,778 ----------- ----------- ----------- ----------- Stockholders' equity (deficit) .............................. 7,560 79,089 (13,923) (10,991) ----------- ----------- ----------- ----------- $ 151,382 $ 87,350 $ (787,037) $ 1,271,786 =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any assets or liabilities as of December 31, 2001. (2) Land with a historical cost basis of $29.2 million 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 Principal Stockholder during December 1999. (3) As more fully described in Note 4 Long-Term Debt, LVSI and Venetian are co-obligors of certain of the Company's indebtedness. Accordingly, such indebtedness has been presented as an obligation of both entities in the above balance sheets.
18 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS For the three months ended June 30, 2002 GUARANTOR SUBSIDIARIES --------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC -------------- ----------- ------------ ------------ ----------- Revenues: Casino ................................................ $ 46,820 $ -- $ -- $ -- $ -- Room .................................................. -- 52,635 -- -- -- Food and beverage ..................................... -- 17,654 -- -- -- Casino rental revenues from LVSI ...................... -- 10,969 -- -- -- Retail and other ...................................... 1,420 8,622 -- -- -- ----------- ----------- ----------- ----------- ----------- Total revenues ........................................ 48,240 89,880 -- -- -- Less promotional allowances ............................. -- (1,015) -- -- -- ----------- ----------- ----------- ----------- ----------- Net revenues .......................................... 48,240 88,865 -- -- -- ----------- ----------- ----------- ----------- ----------- Operating expenses: Casino ................................................ 39,798 -- -- -- -- Rooms ................................................. -- 14,496 -- -- -- Food and beverage ..................................... -- 10,670 -- -- -- Retail and other ...................................... -- 4,715 -- -- -- Provision for doubtful accounts ....................... 2,839 2,100 -- -- -- General and administrative ............................ 673 21,872 -- -- -- Corporate expense ..................................... 1,938 976 -- -- -- Rental expense ........................................ 252 2,350 -- -- -- Pre-opening and developmental expense ................. -- 5 -- -- 1,401 Depreciation and amortization ......................... -- 9,794 -- -- -- ----------- ----------- ----------- ----------- ----------- 45,500 66,978 -- -- 1,401 ----------- ----------- ----------- ----------- ----------- Operating income (loss) ................................. 2,740 21,887 -- -- (1,401) Other income (expense): ----------- ----------- ----------- ----------- ----------- Interest income ..................................... 44 414 -- -- -- Interest expense, net of amounts capitalized ........ (15) (25,759) -- -- -- Interest expense on indebtedness to Principal Stockholder ............................. -- (805) -- -- -- Other income (expense) .............................. -- (307) -- -- -- Loss on early retirement of debt .................... -- (41,236) -- -- -- Income (loss) from equity investment in Grand Canal Shops II............................... (12) (376) -- -- -- Income (loss) from equity investment in VCR and subsidiaries .................................. (52,611) (765) -- -- -- ----------- ----------- ----------- ----------- ----------- Income (loss) before preferred return ................... (49,854) (46,947) -- -- (1,401) Preferred return on Redeemable Preferred Interest in Venetian ................................ -- (5,664) -- -- -- ----------- ----------- ----------- ----------- ----------- Net income (loss) $ (49,854) $ (52,611) $ -- $ -- $ (1,401) =========== =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no revenues or expenses as of June 30, 2002.
19 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS (continued) For the three months ended June 30, 2002 NON-GUARANTOR SUBSIDIARIES -------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries Entries Total -------------- --------------- --------------- -------------- Casino .................................................... $ -- $ -- $ -- $ 46,820 Room ...................................................... -- -- -- 52,635 Food and beverage ......................................... -- -- -- 17,654 Casino rental revenues from LVSI .......................... -- -- (10,969) -- Retail and other .......................................... 9,025 1,333 (1,714) 18,686 -------------- -------------- ------------ ----------- Total revenues ............................................ 9,025 1,333 (12,683) 135,795 Less promotional allowances ................................. -- -- (6,615) (7,630) -------------- -------------- ------------ ----------- Net revenues .............................................. 9,025 1,333 (19,298) 128,165 -------------- -------------- ------------ ----------- Operating expenses: Casino .................................................... -- -- (14,629) 25,169 Rooms ..................................................... -- -- (904) 13,592 Food and beverage ......................................... -- -- (1,921) 8,749 Retail and other .......................................... 3,522 -- (375) 7,862 Provision for doubtful accounts ........................... -- -- -- 4,939 General and administrative ................................ 516 -- (136) 22,925 Corporate expense ......................................... -- -- -- 2,914 Rental expense ............................................ 606 -- (1,333) 1,875 Pre-opening and developmental expense ..................... -- -- -- 1,406 Depreciation and amortization ............................. 1,170 -- -- 10,964 -------------- -------------- ------------ ----------- 5,814 -- (19,298) 100,395 -------------- -------------- ------------ ----------- Operating income (loss) ..................................... 3,211 1,333 -- 27,770 Other income (expense): -------------- -------------- ------------ ----------- Interest income ......................................... 11 -- -- 469 Interest expense, net of amounts capitalized ............ (1,719) (190) -- (27,683) Interest expense on indebtedness to Principal Stockholder ................................. (871) -- -- (1,676) Other income (expense) .................................. -- -- -- (307) Loss on early retirement of debt ........................ (1,020) (507) -- (42,763) Income (loss) from equity investment in Grand Canal Shops II .................................. -- -- 388 -- Income (loss) from equity investment in VCR and subsidiaries ...................................... -- -- 53,376 -- -------------- -------------- ------------ ----------- Income (loss) before preferred return ....................... (388) 636 53,764 (44,190) Preferred return on Redeemable Preferred Interest in Venetian .................................... -- -- -- (5,664) -------------- -------------- ------------ ----------- Net income (loss) ........................................................... $ (388) $ 636 $ 53,764 $ (49,854) ============== ============== ============ =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no revenues or expenses as of June 30, 2002.
20 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS For the three months ended June 30, 2001 GUARANTOR SUBSIDIARIES --------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC -------------- ----------- ------------ ------------ ----------- Revenues: Casino ................................................ $ 54,265 $ -- $ -- $ -- $ -- Room .................................................. -- 56,428 -- -- -- Food and beverage ..................................... -- 18,528 -- -- -- Casino rental revenue from LVSI ....................... -- 11,488 -- -- -- Retail and other ...................................... 152 8,758 -- -- -- ----------- ----------- ----------- ----------- ----------- Total revenues ........................................ 54,417 95,202 -- -- -- Less promotional allowances ............................. -- (1,446) -- -- -- ----------- ----------- ----------- ----------- ----------- Net revenues .......................................... 54,417 93,756 -- -- -- ----------- ----------- ----------- ----------- ----------- Operating expenses: Casino ................................................ 52,500 -- -- -- -- Rooms ................................................. -- 14,775 -- -- -- Food and beverage ..................................... -- 11,019 -- -- -- Retail and other ...................................... -- 4,867 -- -- -- Provision for doubtful accounts ....................... 5,171 -- -- -- -- General and administrative ............................ 391 22,774 -- -- -- Corporate expense ..................................... 1,057 1,033 -- -- -- Rental expense ........................................ 86 1,398 -- -- -- Depreciation and amortization ......................... -- 9,144 -- -- -- ----------- ----------- ----------- ----------- ----------- 59,205 65,010 -- -- ----------- ----------- ----------- ----------- ----------- Operating income (loss) ................................. (4,788) 28,746 -- -- -- Other income (expense): ----------- ----------- ----------- ----------- ----------- Interest income ..................................... 176 178 -- -- -- Interest expense, net of amounts capitalized ........ -- (22,465) -- -- -- Interest expense on indebtedness to Principal Stockholder ............................. -- (1,010) -- -- -- Income (loss) from equity investment in Grand Canal Shops II .............................. (13) (410) -- -- -- Income (loss) from equity investment in VCR and subsidiaries .................................. (1) -- -- -- -- ----------- ----------- ----------- ----------- ----------- Income (loss) before preferred return ................... (4,626) 5,039 -- -- -- Preferred return on Redeemable Preferred Interest in Venetian ................................ -- (5,040) -- -- -- ----------- ----------- ----------- ----------- ----------- Net loss ................................................ $ (4,626) $ (1) $ -- $ -- $ -- =========== =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any revenues or expenses as of June 30, 2001.
21 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS (continued) For the three months ended June 30, 2001 NON-GUARANTOR SUBSIDIARIES -------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries Entries Total -------------- --------------- --------------- -------------- Revenues: Casino .................................................... $ -- $ -- $ -- $ 54,265 Room ...................................................... -- -- -- 56,428 Food and beverage ......................................... -- -- -- 18,528 Casino rental revenue from LVSI ........................... -- -- (11,488) -- Retail and other .......................................... 8,792 -- (256) 17,446 ----------- ----------- ----------- ----------- Total revenues ............................................ 8,792 -- (11,744) 146,667 Less promotional allowances ................................. -- -- (8,212) (9,658) ----------- ----------- ----------- ----------- Net revenues .............................................. 8,792 -- (19,956) 137,009 ----------- ----------- ----------- ----------- Operating expenses: Casino .................................................... -- -- (16,342) 36,158 Rooms ..................................................... -- -- (1,090) 13,685 Food and beverage ......................................... -- -- (2,078) 8,941 Retail and other .......................................... 3,196 -- (230) 7,833 Provision for doubtful accounts ........................... -- -- -- 5,171 General and administrative ................................ 466 -- (216) 23,415 Corporate expense ......................................... -- -- -- 2,090 Rental expense ............................................ 538 -- -- 2,022 Depreciation and amortization ............................. 1,161 -- -- 10,305 ----------- ----------- ----------- ----------- 5,361 -- (19,956) 109,620 ----------- ----------- ----------- ----------- Operating income (loss) ..................................... 3,431 -- -- 27,389 Other income (expense): ----------- ----------- ----------- ----------- Interest income ......................................... 34 -- -- 388 Interest expense, net of amounts capitalized ............ (2,649) -- -- (25,114) Interest expense on indebtedness to Principal Stockholder ................................. (1,239) -- -- (2,249) Income (loss) from equity investment in Grand Canal Shops II .................................. -- -- 423 -- Income (loss) from equity investment in VCR and subsidiaries ....................................... -- -- 1 -- ----------- ----------- ----------- ----------- Income (loss) before preferred return ....................... (423) -- 424 414 Preferred return on Redeemable Preferred Interest in Venetian .................................... -- -- -- (5,040) ----------- ----------- ----------- ----------- Net loss .................................................... $ (423) $ -- $ 424 $ (4,626) =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any revenues or expenses as of June 30, 2001.
22 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS For the six months ended June 30, 2002 GUARANTOR SUBSIDIARIES --------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC -------------- ----------- ------------ ------------ ----------- Revenues: Casino .............................................. $ 97,293 $ -- $ -- $ -- $ -- Room ................................................ -- 109,013 -- -- -- Food and beverage ................................... -- 39,533 -- -- -- Casino rental revenues from LVSI .................... -- 22,531 -- -- -- Retail and other .................................... 1,569 16,971 -- -- -- ----------- ----------- ----------- ----------- ----------- Total revenues ...................................... 98,862 188,048 -- -- -- Less promotional allowances ........................... -- (1,765) -- -- -- ----------- ----------- ----------- ----------- ----------- Net revenues ........................................ 98,862 186,283 -- -- -- ----------- ----------- ----------- ----------- ----------- Operating expenses: Casino .............................................. 86,042 -- -- -- -- Rooms ............................................... -- 28,695 -- -- -- Food and beverage ................................... -- 22,656 -- -- -- Retail and other .................................... -- 9,036 -- -- -- Provision for doubtful accounts ..................... 5,124 3,150 -- -- -- General and administrative .......................... 1,420 42,369 -- -- -- Corporate expense ................................... 2,937 1,886 -- -- -- Rental expense ...................................... 462 5,306 -- -- -- Pre-opening and developmental expense ............... -- 5 -- -- 2,066 Depreciation and amortization ....................... -- 19,604 -- -- -- ----------- ----------- ----------- ----------- ----------- 95,985 132,707 -- -- 2,066 ----------- ----------- ----------- ----------- ----------- Operating income (loss) ............................... 2,877 53,576 -- -- (2,066) ----------- ----------- ----------- ----------- ----------- Other income (expense): Interest income ................................... 160 462 -- -- -- Interest expense, net of amounts capitalized ...... (17) (47,867) -- -- -- Interest expense on indebtedness to Principal Stockholder ......................... -- (1,914) -- -- -- Other income (expense) ............................ -- 363 -- -- -- Loss on early retirement of debt .................. -- (41,236) -- -- -- Income (loss) from equity investment in Grand Canal Shops II ............................. (2) (65) -- -- -- Income (loss) from equity investment in VCR and subsidiaries ................................. (47,784) 224 -- -- -- ----------- ----------- ----------- ----------- ----------- Income (loss) before preferred return ................. (44,766) (36,457) -- -- (2,066) Preferred return on Redeemable Preferred Interest in Venetian .............................. -- (11,327) -- -- -- ----------- ----------- ----------- ----------- ----------- Net income (loss) $ (44,766) $ (47,784) $ -- $ -- $ (2,066) =========== =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no revenues or expenses as of June 30, 2002.
23 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS (continued) For the six months ended June 30, 2002 NON-GUARANTOR SUBSIDIARIES ------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries Entries Total -------------- --------------- --------------- -------------- Revenues: Casino .................................................... $ -- $ -- $ -- $ 97,293 Room ...................................................... -- -- -- 109,013 Food and beverage ......................................... -- -- -- 39,533 Casino rental revenues from LVSI .......................... -- -- (22,531) -- Retail and other .......................................... 17,619 3,333 (4,045) 35,447 ---------- --------- ----------- ----------- Total revenues ............................................ 17,619 3,333 (26,576) 281,286 Less promotional allowances ................................. -- -- (14,923) (16,688) ---------- --------- ----------- ----------- Net revenues .............................................. 17,619 3,333 (41,499) 264,598 ---------- --------- ----------- ----------- Operating expenses: Casino .................................................... -- -- (31,178) 54,864 Rooms ..................................................... -- -- (2,069) 26,626 Food and beverage ......................................... -- -- (3,936) 18,720 Retail and other .......................................... 6,631 -- (703) 14,964 Provision for doubtful accounts ........................... -- -- -- 8,274 General and administrative ................................ 883 -- (280) 44,392 Corporate expense ......................................... -- -- -- 4,823 Rental expense ............................................ 1,094 -- (3,333) 3,529 Pre-opening and developmental expense ..................... -- -- -- 2,071 Depreciation and amortization ............................. 2,345 -- -- 21,949 ---------- --------- ----------- ----------- 10,953 -- (41,499) 200,212 ---------- --------- ----------- ----------- Operating income (loss) ..................................... 6,666 3,333 -- 64,386 Other income (expense): ---------- --------- ----------- ----------- Interest income ......................................... 28 -- -- 650 Interest expense, net of amounts capitalized ............ (3,645) (536) -- (52,065) Interest expense on indebtedness to Principal Stockholder ............................... (2,096) -- -- (4,010) Other income (expense) .................................. -- -- -- 363 Loss on early retirement of debt ........................ (1,020) (507) -- (42,763) Income (loss) from equity investment in Grand Canal Shops II ................................... -- -- 67 -- Income (loss) from equity investment in VCR and subsidiaries ........................................ -- -- 47,560 -- ---------- --------- ----------- ----------- Income (loss) before preferred return ....................... (67) 2,290 47,627 (33,439) Preferred return on Redeemable Preferred Interest in Venetian .................................... -- -- -- (11,327) Net income (loss) ---------- --------- ----------- ----------- $ (67) $ 2,290 $ 47,627 $ (44,766) ========== ========= =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no revenues or expenses as of June 30, 2002.
24 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS For the six months ended June 30, 2001 GUARANTOR SUBSIDIARIES -------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC -------------- ----------- ------------ ------------ ----------- Revenues: Casino ............................................... $ 112,741 $ -- $ -- $ -- $ -- Room ................................................. -- 116,014 -- -- -- Food and beverage .................................... -- 37,357 -- -- -- Casino rental revenue from LVSI ...................... -- 22,847 -- -- -- Retail and other ..................................... 441 18,001 -- -- -- ----------- ----------- ----------- ----------- ----------- Total revenue ........................................ 113,182 194,219 -- -- -- Less promotional allowances ............................ -- (2,708) -- -- -- ----------- ----------- ----------- ----------- ----------- Net revenues ......................................... 113,182 191,511 -- -- -- ----------- ----------- ----------- ----------- ----------- Operating expenses: Casino ............................................... 110,624 -- -- -- -- Rooms ................................................ -- 29,437 -- -- -- Food and beverage .................................... -- 21,803 -- -- -- Retail and other ..................................... -- 9,571 -- -- -- Provision for doubtful accounts ...................... 8,889 -- -- -- -- General and administrative ........................... 1,372 43,752 -- -- -- Corporate expense .................................... 2,082 1,896 -- -- -- Rental expense ....................................... 279 2,850 -- -- -- Depreciation and amortization ........................ -- 18,054 -- -- -- ----------- ----------- ----------- ----------- ----------- 123,246 127,363 -- -- -- ----------- ----------- ----------- ----------- ----------- Operating income (loss) ................................ (10,064) 64,148 -- -- -- Other income (expense): ----------- ----------- ----------- ----------- ----------- Interest income .................................... 387 349 -- -- -- Interest expense, net of amounts capitalized ....... -- (46,247) -- -- -- Interest expense on indebtedness to Principal Stockholder ............................. -- (1,974) -- -- -- Income (loss) from equity investment in Grand Canal Shops II .............................. (45) (1,461) -- -- -- Income (loss) from equity investment in VCR and subsidiaries .................................. 4,735 -- -- -- -- ----------- ----------- ----------- ----------- ----------- Income (loss) before preferred return .................. (4,987) 14,815 -- -- -- Preferred return on Redeemable Preferred Interest in Venetian ............................... -- (10,080) -- -- -- ----------- ----------- ----------- ----------- ----------- Net loss ............................................... $ (4,987) $ 4,735 $ -- $ -- $ -- =========== =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any revenues or expenses as of June 30, 2001.
25 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENT OF OPERATIONS (continued) For the six months ended June 30, 2001 NON-GUARANTOR SUBSIDIARIES ------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries Entries Total -------------- --------------- --------------- -------------- Revenues: Casino .................................................... $ -- $ -- $ -- $ 112,741 Room ...................................................... -- -- -- 116,014 Food and beverage ......................................... -- -- -- 37,357 Casino rental revenue from LVSI ........................... -- -- (22,847) -- Retail and other .......................................... 16,826 -- (538) 34,730 ----------- ----------- ----------- ----------- Total revenue ............................................. 16,826 -- (23,385) 300,842 Less promotional allowances ................................. -- -- (19,236) (21,944) ----------- ----------- ----------- ----------- Net revenues .............................................. 16,826 -- (42,621) 278,898 ----------- ----------- ----------- ----------- Operating expenses: Casino .................................................... -- -- (34,468) 76,156 Rooms ..................................................... -- -- (2,581) 26,856 Food and beverage ......................................... -- -- (4,555) 17,248 Retail and other .......................................... 5,944 -- (484) 15,031 Provision for doubtful accounts ........................... -- -- -- 8,889 General and administrative ................................ 835 -- (533) 45,426 Corporate expense ......................................... -- -- -- 3,978 Rental expense ............................................ 1,084 -- -- 4,213 Depreciation and amortization ............................. 2,457 -- -- 20,511 ----------- ----------- ----------- ----------- 10,320 -- (42,621) 218,308 ----------- ----------- ----------- ----------- Operating income (loss) ..................................... 6,506 -- -- 60,590 Other income (expense): ----------- ----------- ----------- ----------- Interest income ......................................... 70 -- -- 806 Interest expense, net of amounts capitalized ............ (5,618) -- -- (51,865) Interest expense on indebtedness to Principal Stockholder .................................. (2,464) -- -- (4,438) Income (loss) from equity investment in Grand Canal Shops II ................................... -- -- 1,506 -- Income (loss) from equity investment in VCR and subsidiaries ....................................... -- -- (4,735) -- ----------- ----------- ----------- ----------- Income (loss) before preferred return ....................... (1,506) -- (3,229) 5,093 Preferred return on Redeemable Preferred Interest in Venetian .................................... -- -- -- (10,080) ----------- ----------- ----------- ----------- Net loss .................................................... $ (1,506) $ -- $ (3,229) $ (4,987) =========== =========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any revenues or expenses as of June 30, 2001.
26 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2002 GUARANTOR SUBSIDIARIES -------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC ------------------------- ------------ ------------ ----------- Net cash provided by (used in) operating activities ......... $ 3,250 $ 7,552 $ -- $ -- $ (2,066) ----------- ----------- ------------ ----------- ----------- Cash flows from investing activities: Increase in restricted cash ($185.0 million for Phase IA construction and $116.9 million for debt defeasance on July 5, 2002)......................... -- (302,796) -- -- -- Capital expenditures ...................................... -- (31,977) -- -- -- Dividend from Grand Canal Shops II LLC .................... -- 21,590 -- -- -- Capital contributions to subsidiaries ..................... -- (40,974) -- -- -- ----------- ----------- ------------ ----------- ----------- Net cash used in investing activities ....................... -- (354,157) -- -- -- ----------- ----------- ------------ ----------- ----------- Cash flows from financing activities: Dividend to Venetian Casino Resort LLC .................... -- -- -- -- -- Capital contribution from Venetian Casino Resort, LLC ..... -- -- -- -- 2,066 Repayments on 12 1/4% mortgage notes ...................... -- (316,558) -- -- -- Proceeds from 11% mortgage notes .......................... -- 850,000 -- -- -- Repayments on senior subordinated notes ................... -- (95,690) -- -- -- Proceeds from secured mall facility ....................... -- -- -- -- -- Repayments on mall-tranche A take-out loan ................ -- -- -- -- -- Repayments on mall-tranche B take-out loan ................ -- -- -- -- -- Repayments on completion guaranty loan .................... -- (31,124) -- -- -- Proceeds from senior secured credit facility-term B ....... -- 250,000 -- -- -- Repayments on bank credit facility-term ................... -- (151,986) -- -- -- Repayments on bank credit facility-revolver ............... -- (61,000) -- -- -- Proceeds from bank credit facility-revolver ............... -- 21,000 -- -- -- Repayments on FF&E credit facility ........................ -- (53,735) -- -- -- Repayments on Phase II Subidiary credit facility .......... -- -- -- -- -- Repayments on Phase II Subidiary unsecured bank loan ...... -- -- -- -- -- Repurchase premiums incurred in connection with refinancing transctions .................. -- (26,691) -- -- -- Payments of deferred offering costs ....................... -- (36,820) -- -- -- Net increase (decrease) in intercompany accounts .......... (9,969) 7,897 -- -- -- ----------- ----------- ------------ ----------- ----------- Net cash provided by (used in) financing activities ......... (9,969) 355,293 -- -- 2,066 ----------- ----------- ------------ ----------- ----------- Increase (decrease) in cash and cash equivalents ............ (6,719) 8,688 -- -- -- Cash and cash equivalents at beginning of period ............ 37,367 7,806 4 4 -- ----------- ----------- ------------ ----------- ----------- Cash and cash equivalents at end of period .................. $ 30,648 $ 16,494 $ 4 $ 4 $ -- =========== =========== ============ =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no cash flows as of June 30, 2002.
27 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2002 NON-GUARANTOR SUBSIDIARIES ------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries Entries Total -------------- --------------- --------------- ------------- Net cash provided by (used in) operating activities ......... $ 3,682 $ 3,148 $ -- $ 15,566 ------------ ------------ ----------- ----------- Cash flows from investing activities: Increase in restricted cash ($185.0 million for Phase IA construction and $116.9 million for debt defeasance on July 5, 2002)......................... (147) -- -- (302,943) Capital expenditures ...................................... (50) (3,571) -- (35,598) Dividend from Grand Canal Shops II LLC .................... -- -- (21,590) -- Capital contributions to subsidiaries ..................... -- -- 40,974 -- ------------ ------------ ----------- ----------- Net cash used in investing activities ....................... (197) (3,571) 19,384 (338,541) ------------ ------------ ----------- ----------- Cash flows from financing activities: Dividend to Venetian Casino Resort LLC .................... (21,590) -- 21,590 -- Capital contribution from Venetian Casino Resort, LLC ..... 37,864 1,044 (40,974) -- Repayments on 12 1/4% mortgage notes ...................... -- -- -- (316,558) Proceeds from 11% mortgage notes .......................... -- -- -- 850,000 Repayments on senior subordinated notes ................... -- -- -- (95,690) Proceeds from secured mall facility ....................... 120,000 -- -- 120,000 Repayments on mall-tranche A take-out loan ................ (105,000) -- -- (105,000) Repayments on mall-tranche B take-out loan ................ (35,000) -- -- (35,000) Repayments on completion guaranty loan .................... -- -- -- (31,124) Proceeds from senior secured credit facility-term B ....... -- -- -- 250,000 Repayments on bank credit facility-term ................... -- -- -- (151,986) Repayments on bank credit facility-revolver ............... -- -- -- (61,000) Proceeds from bank credit facility-revolver ............... -- -- -- 21,000 Repayments on FF&E credit facility ........................ -- -- -- (53,735) Repayments on Phase II Subidiary credit facility .......... -- (3,933) -- (3,933) Repayments on Phase II Subidiary unsecured bank loan ...... -- (1,092) -- (1,092) Repurchase premiums incurred in connection with refinancing transctions .................. -- -- -- (26,691) Payments of deferred offering costs ....................... (3,147) (6) -- (39,973) Net increase (decrease) in intercompany accounts .......... 564 1,508 -- -- ------------ ------------ ----------- ----------- Net cash provided by (used in) financing activities ......... (6,309) (2,479) (19,384) 319,218 ------------ ------------ ----------- ----------- Increase (decrease) in cash and cash equivalents ............ (2,824) (2,902) -- (3,757) Cash and cash equivalents at beginning of period ............ 6,650 3,105 -- 54,936 ------------ ------------ ----------- ----------- Cash and cash equivalents at end of period .................. $ 3,826 $ 203 $ -- $ 51,179 ============ ============ =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, subsequently transferred to the Mall Subsidiary on December 20, 1999 and, in connection with the Refinancing Transactions, transferred to the Mall II Subsidiary on June 4, 2002. As a result, Mall Construction, Grand Canal Shops Mall, LLC and the Mall Subsidiary had no cash flows as of June 30, 2002.
28 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENTS OF CASH FLOWS For the six months ended June 30, 2001 GUARANTOR SUBSIDIARIES -------------------------------------- Lido Mall Venetian Venetian Intermediate Intermediate Venture Las Vegas Casino Holding Holding Development Sands, Inc. Resort LLC Company LLC Company LLC LLC ------------------------- ------------ ------------ ----------- Net cash provided by (used in) operating activities ......... $ (19,451) $ 26,140 $ -- $ -- $ -- ----------- ----------- ------------ ----------- ----------- Cash flows from investing activities: Increase in restricted cash ............................... -- (26) -- -- -- Capital expenditures ...................................... -- (20,924) -- -- -- ----------- ----------- ------------ ----------- ---------- Net cash used in investing activities ....................... -- (20,950) -- -- -- ----------- ----------- ------------ ----------- ---------- Cash flows from financing activities: Repayments on bank credit facility-tranche A term loan .... -- (5,625) -- -- -- Repayments on bank credit facility-tranche B term loan .... -- (250) -- -- -- Proceeds from bank credit facility-tranche C term loan .... -- 5,750 -- -- -- Proceeds from bank credit facility-revolver ............... -- 22,000 -- -- -- Repayments on FF&E credit facility ........................ -- (10,747) -- -- -- Proceeds from Phase II Subsidiary unsecured bank loan ..... -- -- -- -- -- Payments of deferred offering costs ....................... -- (520) -- -- -- Net increase (decrease) in intercompany accounts .......... 11,898 (11,962) -- -- -- ----------- ----------- ------------ ----------- ---------- Net cash provided by (used in) financing activities ......... 11,898 (1,354) -- -- -- ----------- ----------- ------------ ----------- ---------- Increase (decrease) in cash and cash equivalents ............ (7,553) 3,836 -- -- -- Cash and cash equivalents at beginning of period ............ 35,332 4,260 4 4 -- ----------- ----------- ------------ ----------- ---------- Cash and cash equivalents at end of period .................. $ 27,779 $ 8,096 $ 4 $ 4 $ -- ----------- ----------- ------------ ----------- ---------- - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any cash flows as of June 30, 2001.
29 LAS VEGAS SANDS, INC. Notes to Financial Statements (continued) Note 7 Summarized Financial Information (continued)
CONDENSED STATEMENTS OF CASH FLOWS (continued) For the six months ended June 30, 2001 NON-GUARANTOR SUBSIDIARIES ------------------------------- Grand Canal Other Non- Consolidating/ Shops II Guarantor Eliminating LLC (1) Subsidiaries Entries Total -------------- --------------- --------------- ------------- Net cash used in investing activities ....................... $ 1,084 $ (9) $ -- $ 7,764 ----------- ----------- ----------- ----------- Cash flows from investing activities: Increase in restricted cash ............................... (26) -- -- (52) Capital expenditures ...................................... (294) (428) -- (21,646) ----------- ----------- ----------- ----------- Net cash used in investing activities ....................... (320) (428) -- (21,698) ----------- ----------- ----------- ----------- Cash flows from financing activities: Repayments on bank credit facility-tranche A term loan .... -- -- -- (5,625) Repayments on bank credit facility-tranche B term loan .... -- -- -- (250) Proceeds from bank credit facility-tranche C term loan .... -- -- -- 5,750 Proceeds from bank credit facility-revolver ............... -- -- -- 22,000 Repayments on FF&E credit facility ........................ -- -- -- (10,747) Proceeds from Phase II Subsidiary unsecured bank loan ..... -- 792 -- 792 Payments of deferred offering costs ....................... -- (300) -- (820) Net increase (decrease) in intercompany accounts .......... 64 -- -- -- ----------- ----------- ----------- ----------- Net cash provided by (used in) financing activities ......... 64 492 -- 11,100 ----------- ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents ............ 828 55 -- (2,834) Cash and cash equivalents at beginning of period ............ 2,972 34 -- 42,606 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period .................. $ 3,800 $ 89 $ -- $ 39,772 =========== ========== =========== =========== - ---------------- (1) The Mall II Subsidiary was not formed until May 31, 2002, in preparation for the Refinancing Transactions. The assets and liabilities of Mall Construction, a guarantor subsidiary, were transferred to Grand Canal Shops Mall, LLC, a non- guarantor subsidiary, upon substantial completion of the Casino Resort on November 12, 1999, and subsequently transferred to the Mall Subsidiary on December 20, 1999. As a result, neither Mall Construction nor Grand Canal Shops Mall, LLC had any cash flows as of June 30, 2001.
30 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, 2001. 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 and only all-suites hotel on the Las Vegas Strip (the "Strip") with 3,036 suites; a gaming facility of approximately 116,000 square feet; an enclosed retail, dining and entertainment complex of approximately 475,000 gross leasable square feet; and a meeting and conference facility of approximately 500,000 square feet of convention space. The Company is party to litigation matters and claims related to its operations and construction of the Casino Resort that 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. See "Part II- Item 1 - Legal Proceedings." Over the last year, the Company's operating results have been negatively impacted by a decline in tourism following the terrorist attacks of September 11, 2001, an economic downturn as well as an unusually low table games win percentage. Consolidated net revenues for the three months ended June 30, 2002 were $128.2 million, representing a decrease of $8.8 million of consolidated net revenues from the quarter ended June 30, 2001. Despite these negative factors, several of the Company's financial indicators continue to improve, due in large part to: (1) forward hotel room and meeting space bookings from conventions and trade shows at the Casino Resort; (2) stable room occupancies; (3) a recurring revenue stream from the Mall; and (4) successful cost-cutting initiatives. Although the Company expects to continue to recover, the extent to which these factors will directly or indirectly impact operating results in the future cannot be predicted, nor can the Company predict the extent to which future security alerts and/or additional terrorist attacks may impact operations. During 2001, the Company also began designing, planning, permitting and constructing the Phase IA Addition. Due to the travel disruption to Las Vegas during the fourth quarter of 2001, the Company decided to suspend construction of the Phase IA Addition at that time. The Company continued certain designing, planning and permitting of the Phase IA Addition, however, and on June 4, 2002 upon the completion of the Refinancing Transactions, construction was re-commenced. To date, the Company has completed the design, and has substantially completed the foundation and support systems for, each of the 1,000-room hotel tower on top of the existing parking garage and the additional convention center space. The Company currently anticipates that the Phase IA Addition will be open for business in June 2003 with a remaining cost of approximately $235.0 million. The Phase IA Addition is being funded from the proceeds of the Senior Secured Credit Facility. On June 26, 2002, the Company announced that a joint venture comprised of Venetian Macau and a group of Macau and Hong Kong-based investors had entered into a final concession contract with the Government of the Macau Special Administrative Region of the People's Republic of China to operate casinos in Macau. Venetian Macau continues to negotiate the final terms of a joint venture and management expects that those negotiations will be concluded in the third quarter of 2002. The final terms of a joint venture agreement may include financial obligations to the joint venture and/or to the Government of Macau or Venetian Macau may be obligated to pay for certain costs of developing and constructing the contemplated casinos in Macau. Through June 30, 2002, the Company had incurred developmental expenses of $2.4 million in connection with the proposed Macau project. The Company has also entered into a joint venture agreement to assess the feasibility of and develop an Internet gaming site. The Company has applied for an Internet gaming license in Alderney, but has not yet established any operations. The Company estimates that it is committed to contribute approximately $1.0 million, approximately one-third of the required capital, to the joint venture during the next year. After recovery of each partner's initial capital contribution, the Company will receive 50% to 80% of the net profit of the joint venture, based upon an increasing scale of net profit (if any). The joint venture provides that the agreement will be automatically terminated should the Company fail to obtain any required regulatory approvals from Alderney, the Nevada gaming authorities or any other applicable jurisdiction prior to launching its operations. 31 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Critical Accounting Policies and Estimates - ------------------------------------------ Management has identified the following critical accounting policies that affect the Company's more significant judgments and estimates used in the preparation of the Company's consolidated financial statements. The preparation of the Company's financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company's management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, management evaluates those estimates, including those related to asset impairment, accruals for slot marketing points, self-insurance, compensation and related benefits, revenue recognition, allowance for doubtful accounts, contingencies and litigation. The Company states these accounting policies in the notes to the consolidated financial statements and in relevant sections in this discussion and analysis. These estimates are based on the information that is currently available to the Company and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could vary from those estimates. The Company believes that the following critical accounting policies affect significant judgments and estimates used in the preparation of its consolidated financial statements: o The Company maintains an allowance for doubtful accounts for estimated losses resulting from the failure of its customers to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by continually evaluating individual customer receivables, considering the customer's financial condition, credit history and current economic conditions. If the financial condition of customers were to deteriorate, or if a customer refuses to pay or disputes any such payment, additional allowances may be required. o The Company maintains accruals for health and workers compensation self-insurance, slot club point redemption and group sales commissions, which are classified in other accrued liabilities in the consolidated balance sheets. Management determines the adequacy of these accruals by periodically evaluating the historical experience and projected trends related to these accruals. If such information indicates that the accruals are overstated or understated, the Company will adjust the assumptions utilized in the methodologies and reduce or provide for additional accruals as appropriate. o The Company is subject to various claims and legal actions, including lawsuits with the Construction Manager for the original construction of the Casino Resort. Some of these matters relate to personal injuries to customers and damage to customers' personal assets. Management estimates guest claims expense and accrues for such liabilities based upon historical experience in the other accrued liability category in its consolidated balance sheet. Operating Results - ----------------- Three Months Ended June 30, 2002 compared to Three Months Ended June 30, 2001 -------------------------------------------------------------------- Operating Revenues ------------------ Consolidated net revenues for the second quarter of 2002 were $128.2 million, representing a decrease of $8.8 million when compared with $137.0 million of consolidated net revenues during the second quarter of 2001. The decrease in net revenues was due primarily to a decline of casino, hotel and food and beverage revenues at the Casino Resort, which was partially offset by an increase in retail and other revenues. The Casino Resort's casino revenues were $46.8 million in the second quarter of 2002, a decrease of $7.5 million when compared to $54.3 million during the second quarter of 2001. The decrease was attributable to the continuing impact of the September 11th terrorist attacks and an increased selectivity of high-end casino customers to reduce variable marketing and incentive costs. Table games drop (volume) decreased to $181.3 million in the second quarter of 2002 from $259.8 million during the second quarter of 2001. However, as more fully explained below, casino expenses (primarily variable costs associated with marketing) decreased more than the decline in casino revenues, improving the profitability of the casino department. 32 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) The Casino Resort achieved room revenues of $52.6 million during the second quarter of 2002, compared to $56.4 million during the second quarter of 2001. The decline in hotel revenues was the result of a decline in overall average daily room rates attributable to additional reliance on wholesale room sales because of reduced group room sales during the month of June. The Casino Resort's average daily room rate was $196 in the second quarter of 2002, compared to $213 during the second quarter of 2001. The occupancy of available guestrooms was 97.6% during the second quarter of 2002, compared to 96.5% during the second quarter of 2001. Food and beverage, retail and other revenues were $36.3 million during the second quarter of 2002, compared to $36.0 million during the second quarter of 2001. The increase was attributable to a favorable arbitration award in the amount of $1.5 million for royalties which was offset by a decline in food and beverage revenues related to a decrease in banquet activity during the second quarter of 2002. Operating Expenses ------------------ Consolidated operating expenses were $100.4 million in the second quarter of 2002, compared with $109.6 million during the second quarter of 2001. The decrease was primarily attributable to a reduction in casino marketing and incentive costs and casino payroll costs during the second quarter. The Company renewed its casualty and liability insurance coverage during April 2002 and incurred a substantial increase in premium cost. In addition, effective June 4, 2002, the Company was required by certain lenders in the Refinancing Transactions to obtain terrorism insurance coverage. The additional insurance premium costs are estimated to be $2.7 million per year. Corporate expenses totaled $2.9 million during the second quarter of 2002, compared to $2.1 million during the second quarter 2001. The increase in corporate expenses was the result of the adoption of an executive bonus program. Casino expenses were $25.2 million in the second quarter of 2002, compared to $36.2 million during the second quarter of 2001. The decrease was primarily attributable to a reduction in casino marketing and incentive costs, casino payroll costs and decreases in gaming taxes and promotional allowances due to lower gaming volumes during the second quarter of 2002. The decrease in marketing and incentive costs related to a decrease in table games revenues as further described above. Food and beverage, retail and other expenses during the second quarter of 2002 were $16.6 million as compared to $16.8 million during the second quarter of 2001. The decrease was associated with a decrease in banquet revenue during the second quarter of 2002 as compared to the second quarter of 2001 and reduced group room business in June 2002. Rental expenses, primarily related to the Casino Resort's heating, ventilation and air conditioning plant and rental gaming devices, were $1.9 million for the second quarter of 2002, as compared to $2.0 million in the second quarter of 2001. Interest Income (Expense) ------------------------- Interest expense was $29.4 million in the second quarter of 2002, compared to $27.4 million in the same period of 2001. Of the $29.4 million incurred during the second quarter of 2002, $26.6 million was related to the Casino Resort (excluding the Mall), $2.6 million was related to the Mall and $0.2 million was related to the Phase II Subsidiary. The increase in interest expense was attributable to additional borrowings from the Refinancing Transactions, offset by decreases in the average interest rates of outstanding debt and the capitalization of interest expense in connection with construction of the Phase IA Addition. Interest income for the quarter ended June 30, 2002 was $0.5 million, compared to $0.4 million in the same period of 2001. The Company had other expenses of $0.3 million during the quarter ended June 30, 2002 resulting from a change in the market value of the Old Rate Cap Agreements. 33 Six Months Ended June 30, 2002 compared to Six Months Ended June 30, 2001 -------------------------------------------------------------------- Operating Revenues ------------------ Consolidated net revenues for the six months ended June 30, 2002 were $264.6 million, representing a decrease of $14.3 million when compared with $278.9 million of consolidated net revenues during the six months ended June 30, 2001. The decrease in net revenues was primarily due to a decline of casino and hotel revenue at the Casino Resort, which was partially offset by increases in food and beverage and retail and other revenues. The Casino Resort's casino revenues were $97.3 million for the six months ended June 30, 2002, a decrease of $15.4 million when compared to $112.7 million during the six months ended June 30, 2001. The decrease was attributable to the continuing impact of the September 11th terrorist attacks and increased selectivity of high-end casino customers. Table games drop (volume) decreased to $398.8 million for the six months ended June 30, 2002 from $568.3 million during the six months ended June 30, 2001. The Casino Resort's hotel occupancy percentages were 97.8% during the six months ended June 30, 2002, as compared to 98.1% during the same period 2001. The Casino Resort achieved room revenues during the six months ended June 30, 2002 of $109.0 million, compared to $116.0 million during the six months ended June 30, 2001. The Casino Resort's average daily room rate was $204 for the six months ended June 30, 2002, compared to $216 during the six months ended June 30, 2001. The decrease in room rates was partially the result of the Casino Resort's additional reliance on wholesale rooms during the month of June 2002 over the mid-week, group and convention business, weekend retail business as compared to June 2001 and the decline in tourism following the terrorist attacks on September 11, 2001. Food and beverage, retail and other revenues were $75.0 million during the six months ended June 30, 2002, compared to $72.1 million during the six months ended June 30, 2001. The increase was primarily attributable to a favorable $1.5 million arbitration award for royalties. Operating Expenses ------------------ Consolidated operating expenses were $200.2 million for the six months ended June 30, 2002, compared with $218.3 million during the six months ended June 30, 2001. The decrease in operating expenses was primarily attributable to a reduction in casino marketing and incentive costs, promotional allowances and casino payroll costs associated with lower casino revenue. Corporate expenses totaled $4.8 million during the six months ended June 30, 2002, as compared to $4.0 million during the six months ended June 30, 2001. The increase in corporate expenses was attributable to the adoption of an executive bonus program. Casino expenses were $54.9 million for the six months ended June 30, 2002, compared to $76.2 million during the same period of 2001. The decrease was primarily attributable to a reduction in casino marketing and incentive costs during the six months ended June 30, 2002 as well as decreases in payroll costs and gaming taxes due to lower gaming volumes. The decrease in marketing and incentive costs resulted from heightened selectivity of casino customers to improve casino operating margins. Food and beverage, retail and other expenses during the six months ended June 30, 2002 were $33.7 million as compared to $32.3 million during the second quarter of 2001. The increase was associated with an increase in banquet revenue during the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. Rental expenses primarily related to the Casino Resort's heating, ventilation and air conditioning plant and rental of gaming devices for the six months ended June 30, 2002 were $3.5 million. Rental expenses were $4.2 million for the six months ended June 30, 2001. The decline in rental expenses was primarily attributable to reduced usage of rented or participation gaming devices during 2002. Interest Income (Expense) ------------------------- Interest expense was $56.1 million for the six months ended June 30, 2002, compared to $56.3 million in the same period of 2001. Of the $56.1 million incurred during the six months ended June 30, 2002, $49.9 million was related to the Casino Resort (excluding the Mall), $5.7 million was related to the Mall and $0.5 million was related to the Phase II Subsidiary. The decrease in interest expense was attributable to decreases in the average interest rates of the Company's outstanding debt during the six months ended June 30, 2002 and the capitalization of interest expense in connection with the Phase IA Addition, net of increased interest expense associated with additional borrowings from the Company's Refinancing Transactions. 34 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Interest income for the six months ended June 30, 2002 was $0.7 million as compared to $0.8 million in the same period in 2001. Other Factors Affecting Earnings - -------------------------------- Depreciation expense for the three and six months ended June 30, 2002 was $11.0 million and $21.9 million, respectively, compared to $10.3 million and $20.5 million in the second quarter of 2001, respectively. Each of the increases was attributable to placing various capital improvement projects into service during the fourth quarter of 2001, including the Guggenheim Museum projects. During the three and six month periods ended June 30, 2002 and June 30, 2001, $5.7 million and $11.3 million, and $5.0 million and $10.1 million, respectively, were accrued on the Series B Preferred Interest related to the contributions made. During the three and six month periods ended June 30, 2002, the Company incurred $1.4 million and $2.1 million, respectively, of pre-development expenses for the proposed Macau project. 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. The Company continually evaluates its costs associated with marketing to the various segments of the premium casino customer market and has recently increased selectivity of casino customers to reduce variable marketing and incentive costs. Liquidity and Capital Resources - ------------------------------- Cash Flow and Capital Expenditures ---------------------------------- As of June 30, 2002 and December 31, 2001, the Company held unrestricted cash and cash equivalents of $51.2 million and $54.9 million, respectively. Net cash provided by operating activities for the six months ended June 30, 2002 was $15.6 million, compared to net cash provided by operating activities of $7.8 million for the six months ended June 30, 2001. Net trade receivables were $49.4 million as of June 30, 2002 and $57.1 million as of December 31, 2001. The decrease in net trade receivable is primarily related to reduced casino revenue during the first six months of 2002 as compared to the same period in 2001. Capital expenditures during the six months ended June 30, 2002 were $35.6 million, primarily attributable to construction of the Phase IA Addition. Capital expenditures for the six months ended June 30 2001 were $21.6 million. The Company also held restricted cash balances of $305.6 million as of June 30, 2002. Of this amount, $185.0 million was deposited into restricted accounts and invested in cash or permitted investments by a disbursement agent for the Senior Secured Credit Facility lenders until required for Phase IA Addition project costs under the disbursement terms of the Senior Secured Credit Facility. In addition to the cash in the disbursement account, the Term A Facility provides for a delayed draw term loan of $50.0 million which the Company expects to draw upon in full by June 4, 2003 to pay additional Phase IA Addition project costs. The Company estimates that the cost to complete the Phase IA Addition is $235.0 million and expects substantial completion to occur by June 2003. Through June 30, 2002, the Company had paid approximately $30.3 million to complete the Phase IA Addition. The Company currently anticipates that the funds in the disbursement account and the delayed draw facility will be sufficient to pay for all of the remaining costs of the Phase IA Addition. 35 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Aggregate Indebtedness and Fixed Payment Obligations to the HVAC Provider - ------------------------------------------------------------------------- The Company's total long-term indebtedness and its fixed payment obligations to Atlantic Pacific Las Vegas, LLC, the provider of heating and air conditioning to the Casino Resort and the Expo Center (the "HVAC Provider"), are summarized below for the twelve month periods ended June 30:
2003 2004 2005 2006 Thereafter ---------- ---------- ----------- ---------- ---------- (Dollars in Thousands) Long -Term Indebtedness Mortgage Notes $ -- $ -- $ -- $ -- $ 850,000 Old Mortgage Notes (redeemed July 5, 2002) 108,442 -- -- -- -- Old Subordinated Notes (redeemed July 5, 2002) 1,753 -- -- -- -- Senior Secured Credit Facility 2,500 2,500 2,500 2,500 240,000 Secured Mall Facility -- -- 120,000 -- -- Fixed Payment Obligations To The HVAC Provider HVAC Provider fixed payments 7,657 7,657 7,657 7,657 22,971 ---------- ---------- ----------- ---------- ---------- Total indebtedness and HVAC fixed payment obligations $ 120,352 $ 10,157 $ 130,157 $ 10,157 $1,112,971 ========== ========== =========== ========== ==========
Under the terms of its existing indebtedness and after giving effect to the redemption of the Old Notes on July 5, 2002, the Company has debt service payments due aggregating $2.5 million during the next twelve months, representing principal payments on the Senior Secured Credit Facility. Based on current outstanding indebtedness and current interest rates on the Senior Secured Credit Facility and the Secured Mall Facility, the Company has estimated total interest payments during the next twelve months (excluding noncash amortization of debt offering costs) of approximately $106.0 million for indebtedness secured by the Casino Resort and approximately $4.5 million for indebtedness secured by the Mall. The Company also has fixed payments obligations due during the next twelve months of $7.7 million under its energy service agreements with the HVAC Provider. The total remaining payment obligation under this arrangement is $53.6 million, payable in equal monthly installments during the period of July 1, 2002 through July 1, 2009. Refinancing Transactions ------------------------ On June 4, 2002, the Company issued $850.0 million in aggregate principal amount of Mortgage Notes in a private placement offering and entered into the Senior Secured Credit Facility in an aggregate amount of $375.0 million and the Secured Mall Facility in the aggregate amount of $105.0 million (subsequently increased to $120.0 million on June 28, 2002). The Company used or will use the proceeds of the Refinancing Transactions to repay, redeem or repurchase all of its outstanding indebtedness (including the Old Notes, the Bank Credit Facility, the FF&E Facility, the Completion Guaranty Loan, the Mall Take-out Financing, the Phase II Unsecured Bank Loan and the Phase II Subsidiary Credit Facility), to finance the construction and development of the Phase IA Addition and to pay all fees and expenses associated with the Refinancing Transactions. In addition, the Principal Stockholder's completion guarantee relating to the construction of the Casino Resort was terminated upon the consummation of the Refinancing Transactions and the remaining cash collateral was returned to the Principal Stockholder. In connection with the Refinancing Transactions, the Company incurred a loss on early retirement of indebtedness of $42.8 million during the three months ended June 30, 2002. See "Item 1 - Financial Statements and Supplementary Data - Notes to Financial Statements - Note 4 Long-Term Debt." As part of the Refinancing Transactions, the Company commenced a cash tender offer on May 6, 2002 to repurchase the Old Notes. Upon the consummation of the Refinancing Transactions, the Company repurchased $316.6 million of the Old Mortgage Notes and $95.7 million of the Old Subordinates Notes and effected a covenant defeasance with respect to the remaining Mortgage Notes. The Company called all of the remaining Old Notes upon the closing of the Refinancing Transactions and redeemed the balance of the Old Mortgage Notes ($108.4 million) and the Old Subordinated Notes (1.8 million) on July 5, 2002. As result of the redemptions of the Old Notes on July 5, 2002, the Company will incur a loss of $8.7 million on early retirement of debt in the third quarter of 2002. 36 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) The sources and uses of funds from the Refinancing Transactions were as follows:
(Dollars in Millions) Sources: Mortgage Notes $ 850.0 Senior Secured Credit Facility 250.0 Secured Mall Facility 120.0 --------- $ 1,220.0 ========= Uses: Redemption of Old Mortgage Notes $ 316.6 Restricted cash - Old Mortgage Notes defeasance 116.9 Redemption of Old Subordinated Notes 95.7 Redemption of Old Subordinated Notes (redeemed on July 5, 2002) 2.0 Repayment of Bank Credit Facility 191.6 Repayment of FF&E Facility 48.4 Repayment of Mall Tranche A Take-out Loan 105.0 Repayment of Mall Tranche B Take-out Loan 35.0 Repayment of Phase II Subsidiary Credit Facility 1.4 Repayment of Phase II Unsecured Bank Loan 1.1 Repayment of Completion Guaranty Loan 33.4 Payment of Refinancing Transactions costs and fees 66.7 Restricted cash - Phase IA Addition 185.0 Unrestricted cash 21.2 --------- $1,220.0 =========
For the next twelve months, the Company expects to fund Casino Resort operations, capital expenditures, the Macau joint venture, Internet gaming development activities and debt service requirements from existing cash balances, operating cash flow, borrowings under the Revolving Facility to the extent that funds are available, drawings under the Term A Facility and distributions of excess cash from the Mall II Subsidiary to Venetian to the extent permitted under the terms of the Company's indebtedness. The Company's existing 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 Senior Secured Credit Facility include total debt to EBITDA ratios, EBITDA to interest coverage ratios, minimum net worth covenants and maximum capital expenditure limitations. The financial covenants in the Senior Secured Credit Facility involving EBITDA are applied on a rolling four quarter basis. As of June 2002, the Company was in compliance with all required covenants and ratios under its current debt instruments. See "Item 1 - Financial Statements and Supplementary Data - Notes to Financial Statements - Note 4 Long-Term Debt." Litigation Contingencies and Available Resources ------------------------------------------------ The Company is a party to certain litigation matters and claims related to the 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) borrowings under the Revolving Facility; (vi) additional debt or equity financings; and (vii) operating cash flow. If the Company were required to pay substantial Contested Construction Costs, and if it were unable to raise or obtain the funds from the sources described above, there could be a material adverse effect on the Company's financial position, results of operations or cash flows. 37 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 Indenture and the terms of the Senior Secured Credit Facility or any other debt instruments 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. Phase II Resort --------------- The Company has not yet set a date to begin construction of the Phase II Resort. If the Company determines to construct the Phase II Resort, it will be required to raise substantial debt and/or equity financings. Currently, the Company has no commitments to fund the hard construction costs of the Phase II Resort. In addition, the development of the Phase II Resort may require obtaining additional regulatory approvals. The Company's debt instruments limit its ability to guarantee or otherwise become liable for any indebtedness of the Phase II Subsidiary. These debt instruments also restrict the Company's and its subsidiaries' ability to sell or otherwise dispose of the capital stock of the Phase II Subsidiary, including a sale to the Principal Stockholder or to any of his affiliates. In addition, the Indenture allows the Company to make investments of up to $20.0 million for the development of the Phase II Resort and to incur up to $20.0 million of additional debt to fund such investment. The Phase II Subsidiary is an unrestricted subsidiary that is not subject to the terms of the Indenture or the Senior Secured Credit Facility and is not a guarantor under the Mortgage Notes or the Senior Secured Credit Facility. Macau Joint Venture ------------------- The Company is currently in the process of negotiating agreements to operate casinos in Macau. Through June 30, 2002, the Company had incurred developmental expenses of $2.4 million in connection with the proposed Macau project. Under the contemplated terms of Venetian Macau's agreements with its joint venture partners, Venetian Macau may have financial obligations to the joint venture and/or to the Government of Macau or it may be obligated to pay for certain costs of developing and constructing the contemplated casinos in Macau. Under the Indenture, the Company is permitted to make investments in the amount of $40.0 million in, and extend guarantees with respect to $90.0 million of indebtedness and/or obligations of, its Macau subsidiaries. The Company may use cash received from the following sources to fund the Macau venture: o borrowings by Venetian under the Revolving Facility; o additional debt or equity financings; and o operating cash flow (subject to certain limitations contained in the Company's debt instruments). Venetian Macau and the Company's other Macau subsidiaries are not guarantors under the Mortgage Notes or the Senior Secured Credit Facility and, subject to certain limited exceptions, are not restricted subsidiaries under the Indenture or the Senior Secured Credit Facility. Recent Accounting Pronouncements - -------------------------------- In July 2001, the Financial Accounting Standards Board issued Statement No. 141 ("SFAS 141"), entitled "Business Combination," and Statement No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets". SFAS 141 provides as follows: (a) use of the pooling-of-interests method is prohibited for business combinations initiated after June 30, 2001; and (b) the provisions of SFAS 141 also apply to all business combinations accounted for by the purchase method that are completed after June 30, 2001. There are also transition provisions that apply to business combinations completed before July 1, 2001 that were accounted for by the purchase method. SFAS 142 is effective for fiscal years beginning after December 15, 2001 and applies to all goodwill and other intangible assets recognized in an entity's statement of financial position at that date, regardless of when those assets were initially recognized. In August 2001, the Financial Accounting Standards Board issued Statement No. 143 ("SFAS 143"), "Accounting for Obligations Associated with the Retirement of Long-Lived Assets". The objective of SFAS 143 is to establish accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. SFAS 143 is effective for fiscal years beginning after June 15, 2002. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) In October 2001, the Financial Accounting Standards Board issued Statement No. 144 ("SFAS 144"), "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS 144 is effective for fiscal years beginning after December 15, 2001 and, generally, is to be applied prospectively. In April 2002, the Financial Accounting Standards Board issued SFAS 145. SFAS 145 addresses the presentation for losses on early retirements of debt in the statement of operations. The Company has adopted SFAS 145 and will no longer present losses on early retirements of debt as an extraordinary item. Additionally, prior period extraordinary losses will be reclassified to conform to this new presentation. Adoption of SFAS 145 had no impact on the Company's financial condition, or cash flows. In June 2002, the Financial Accounting Standard Board issued Statement No. 146 ("SFAS 146") "Accounting for Costs Associated with Exit or Disposal Activities." The provisions of SFAS 146 become effective for exit or disposal activities commenced subsequent to December 31, 2002 and the Company does not expect any impact on its financial condition, results of operations or cash flows. The adoptions of SFAS 141, SFAS 142 and SFAS 144 had no impact on the Company's financial position, results of operations or cash flows. The Company does not expect the impact of the adoptions of SFAS 143 or SFAS 146 to be material to its financial condition, results of operations or cash flows. Special Note Regarding Forward-Looking Statements - ------------------------------------------------- Certain statements in this section, in the risk factors see forth in Exhibit 99.1 to this Quarterly Report on Form 10-Q 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, in 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 factors include, among others, the risks associated with entering into new construction and new ventures, including the Phase IA Addition and the Macau joint venture, increased competition and other planned construction in Las Vegas, including the opening of a new casino resort on the site of the former Desert Inn and upcoming increases in meeting and convention space, the completion of infrastructure projects in Las Vegas, government regulation of the casino industry, including gaming license approvals and regulation in foreign jurisdictions, the legalization of gaming in certain jurisdictions, such as Native American reservations in the States of California and New York and regulation of gaming on the Internet, leverage and debt service (including sensitivity to fluctuations in interest rates and other capital markets trends), uncertainty of casino spending and vacationing at casino resorts in Las Vegas, disruptions or reductions in travel to Las Vegas, the September 11th attacks and any future terrorist incidents, fluctuations in 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, insurance risks (including the risk that the Company has not obtained sufficient coverage against acts of terrorism or will only be able to obtain additional coverage at significantly increased rates), 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, consumer spending 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, and by use of interest rate cap and floor agreements. The ability to enter into interest rate cap and floor agreements allows the Company to manage its interest rate risk associated with its variable rate debt. The Company does not hold or issue financial instruments for trading purposes and does not enter into deliverable transactions that would be considered speculative positions. The Company's derivative financial instruments consist exclusively of interest rate cap and floor agreements, which do not quality for hedge accounting. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense. 38 Item 3. Quantitative And Qualitative Disclosures About Market Risk (Continued) To manage exposure to counterparty credit risk in interest rate cap and floor agreements, the Company enters into agreements with highly-rated institutions that can be expected to fully perform under the terms of such agreements. Frequently, these institutions are also members of the bank group providing the Company's credit facility, which management believes further minimizes the risk of nonperformance. The table below provides information about the Company's financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents notional amounts and weighted average interest rates by contractual maturity dates for the twelve month periods ended June 30:
2003 2004 2005 2006 THEREAFTER TOTAL FAIR VALUE(1) --------- ---------- ---------- ---------- ---------- ---------- ---------- (Dollars in Millions) Liabilities - ----------- Short-term debt Variable rate (3) $2.5 -- -- -- -- $2.5 $2.5 Average interest rate (2) 4.8% -- -- -- -- 4.8% 4.8% Long-term debt Fixed rate -- -- -- -- 850.0 850.0 850.0 Average interest rate (2) -- -- -- -- 11.0% 11.0% 11.0% Variable rate -- 2.5 122.5 2.5 240.0 367.5 367.5 Average interest rate (2) -- 4.8% 4.1% 4.8% 4.8% 4.6% 4.6% - ---------------- (1) The fair values are based on the borrowing rates currently available for debt instruments with similar terms and maturities and market quotes of the Company's publicly traded debt. (2) Based upon contractual interest rates for fixed rate indebtedness or current LIBOR rates for variable rate indebtedness. (3) The above amounts exclude $110.2 million of defeasance notes redeemed on July 5, 2002. See " Item 1 - Financial Statements and Supplementary Data - Notes to Financial Statements - Note 4 Long-Term Debt."
Foreign currency translation gains and losses were not material to the Company's results of operations for the quarter ended June 30, 2002. See also "Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" and " Item 1 - Financial Statements and Supplementary Data - Notes to Financial Statements - Note 4 Long-Term Debt." 39 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, 2001 and "Part I, Item 1 - Financial Statements - Notes to Financial Statements Note 6 - Commitments and Contingencies." Items 2 through 4 of Part II are not applicable. Item 5. Other Information The Company is not required to file this Quarterly Report on Form 10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. The filing is required, however, pursuant to the terms of the Indenture. The risk factors set forth in Exhibit 99.1 to this Quarterly Report on Form 10-Q, which are incorporated by reference into this document, describe certain risks of owning the Company's securities. Additional risks and uncertainties not currently known to the Company, or that the Company deems to be immaterial may also materially and adversely affect the Company's business, financial condition or results of operations. Certain statements in Exhibit 99.1 are forward-looking statements. See "Part II, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations--Special Note Regarding Forward-Looking Statements." Item 6. Exhibits and Reports on Form 8-K (a) List of Exhibits
Exhibit No. Description of Document ----------- ----------------------- 3.1 Amended and Restated Articles of Incorporation of Las Vegas Sands, Inc. (1) 3.2 Amended and Restated By-laws of Las Vegas Sands, Inc. (1) 4.1 Indenture, dated as of June 4, 2002, by and among Las Vegas Sands, Inc. and Venetian Casino Resort, LLC, as issuers, Mall Intermediate Holding Company, LLC, Grand Canal Shops Mall Construction, LLC, Lido Intermediate Holding Company, LLC, Venetian Casino Resort Athens, LLC, Venetian Venture Development, LLC, Venetian Operating Company, LLC and Venetian Marketing, Inc. (collectively, the "Subsidiary Guarantors") and U.S. Bank National Association, as trustee. (1) 4.2 Registration Rights Agreement, dated as of June 4, 2002, by and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, the Subsidiary Guarantors named therein, Goldman, Sachs & Co. and Scotia Capital (USA) Inc. (1) 4.3 Security Agreement, dated as of June 4, 2002, by and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, the Subsidiary Guarantors and The Bank of Nova Scotia, as Intercreditor Agent. (1) 4.4 Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of June 4, 2002, made by Venetian Casino Resort, LLC and Las Vegas Sands, Inc., jointly and severally as trustor, to First American Title Insurance Company, as trustee, for the benefit of U.S. Bank National Association in its capacity as Mortgage Note Indenture Trustee, as beneficiary. (1) 4.5 Intercreditor Agreement, dated as of June 4, 2002, by and among The Bank of Nova Scotia, as Bank Agent and Intercreditor Agent, and U.S. Bank National Association, as Mortgage Notes Indenture Trustee. (1) 4.6 Unsecured Indemnity Agreement, dated as of June 4, 2002, by and among Las Vegas Sands, Inc. and Venetian Casino Resort, LLC, to and for the benefit of U.S. Bank National Association, and the Indemnified Parties defined therein. (1) 10.1 Bank Credit Agreement, dated as of June 4, 2002, by and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, the Subsidiary Guarantors, the lenders party thereto, Goldman Sachs Credit Partners, L.P., as joint lead arranger, joint bookrunner and syndication agent, and The Bank of Nova Scotia, as joint lead arranger, joint bookrunner and administrative agent. (2)
40
Exhibit No. Description of Document ----------- ----------------------- 10.2 Deed of Trust, Assignment of Rents and Leases and Security Agreement, dated as of June 4, 2002, made by Venetian Casino Resort, LLC and Las Vegas Sands, Inc., jointly and severally as trustor, to First American Title Insurance Company, as trustee, for the benefit of The Bank of Nova Scotia (as administrative agent), as beneficiary. (1) 10.3 Subsidiary Guaranty, dated as of June 4, 2002, by the Subsidiary Guarantors for the benefit of The Bank of Nova Scotia, as Administrative Agent. (1) 10.4 Disbursement Account Agreement, dated as of June 4, 2002, by and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC and The Bank of Nova Scotia, as secured party and securities intermediary. (1) 10.5 Environmental Indemnity Agreement, dated as of June 4, 2002, by and among Las Vegas Sands, Inc. and Venetian Casino Resort, LLC, to and for the benefit of The Bank of Nova Scotia, as Administrative Agent for itself and for the other lenders under the Bank Agreement. (1) 10.6 Loan Agreement, dated as of June 4, 2002, by and between Archon Financial, L.P., as lender, and Grand Canal Shops II, LLC. (1) 10.7 Amendment No. 1 to Loan Agreement, dated June 28, 2002, by and between Goldman Sachs Mortgage Company (as successor in interest to Archon Financial, L.P.), as lender, and Grand Canal Shops II, LLC, as borrower. (1) 10.8 Indemnity Agreement, dated as of August 25, 2000, by and among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, Grand Canal Shops Mall Subsidiary, LLC, Grand Canal Shops Mall Construction, LLC, Grand Canal Shops Mall, LLC, Interface Group Holding Company, and American Insurance Companies (of which American Home Assurance Company is a member company). (1) 10.9 Second Amendment to Amended and Restated Reciprocal Easement, Use and Operating Agreement, dated as of June 4, 2002, by and among Interface Group-Nevada, Inc., Grand Canal Shops II, LLC, Lido Casino Resort, LLC and Venetian Casino Resort, LLC. (1) 10.10 Amended and Restated Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan (the "Stock Option Plan"). (1) 10.11 First Amendment to the Stock Option Plan, dated June 4, 2002. (1) 10.12 Amended and Restated Employment Agreement, dated as of January 1, 2002, by and between Las Vegas Sands, Inc. and William P. Weidner. (1) 10.13 Amended and Restated Employment Agreement, dated as of January 1, 2002, by and between Las Vegas Sands, Inc. and Bradley H. Stone. (1) 10.14 Amended and Restated Employment Agreement, dated as of January 1, 2002, by and between Las Vegas Sands, Inc. and Robert G. Goldstein. (1) 10.15 Catastrophic Equity Protection Insurance Agreement, dated as of June 28, 2000, by and among American Home Assurance Company, Las Vegas Sands, Inc. and Venetian Casino Resort, LLC. (1) (3) 99.1 Risk Factors (1) - ---------- (1) Filed herewith. (2) Incorporated by reference to the Company's report on Form 8-K, dated as of June 18, 2002. (3) Material has been omitted from this exhibit pursuant to a request for confidential treatment and that material has been filed separately with the Securities and Exchange Commission.
41 (b) Reports on Form 8-K 1. On May 9, 2002, the Company filed a report on Form 8-K announcing its intent to offer approximately $850 million in aggregate principal amount of mortgage notes in a Rule 144A offering, and to enter into new senior secured credit facilities in aggregate amount of approximately $480 million. 2. On May 24, 2002, the Company filed a report on Form 8-K announcing the pricing of approximately $850 million in aggregate principal amount of 11% mortgage notes maturing on June 15, 2010. 3. On June 5, 2002, the Company filed a report on Form 8-K announcing the closing of a Rule 144A offering for $850 million in aggregate principal amount of 11% mortgage notes. 4. On June 18, 2002, the Company filed a report on Form 8-K attaching its new $375 million senior secured credit facility entered into on June 4, 2001. 42 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. August 14, 2002 By: /s/ Sheldon G. Adelson --------------------------------- Sheldon G. Adelson, Chairman of the Board, Chief Executive Officer and Director August 14, 2002 By: /s/ Harry D. Miltenberger --------------------------------- Harry D. Miltenberger, Vice President-Finance (principal financial and accounting officer) 43 EX-3.(I) 3 ex3-1_7032.txt AMENDED AND RESTATED ARTICLES OF INC. Exhibit 3.1 CERTIFICATE OF AMENDED AND RESTATED ARTICLES OF INCORPORATION OF LAS VEGAS SANDS, INC. Pursuant to the provisions of Nevada Revised Statutes, Title 7, Chapter 78, the undersigned officers do hereby certify: FIRST: The name of the corporation is LAS VEGAS SANDS, INC. SECOND: The Board of Directors of the corporation duly adopted the following resolutions on June 3, 2002: RESOLVED, that it is advisable in the judgment of the Board of Directors of the corporation that the entire text of the Articles of Incorporation of the corporation be amended and restated to read as follows: FIRST: The name of the corporation is LAS VEGAS SANDS, INC. SECOND: The location of the principal place of the corporation within the State of Nevada is 3355 Las Vegas Boulevard South, in the City of Las Vegas, County of Clark, State of Nevada, and the Resident Agent in charge thereof is Lionel Sawyer & Collins, located at 1700 Bank of America Plaza, 300 South Fourth Street, Las Vegas, Nevada, 89101. THIRD: The purpose for which the corporation is formed and the nature of business proposed to be transacted and carried on by it shall be limited to the following: (i) to construct, hold, own, manage, market and operate a hotel, casino, resort, meeting, convention, retail and entertainment complex known as the Venetian Casino Page 1 Resort (the "Property"), located at 3355 Las Vegas Boulevard, South Las Vegas, Nevada, (ii) to engage in the casino gaming, hotel, and resort business at the Property and elsewhere and any activity and business incidental, directly related or similar thereto, (iii) to engage in any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, convention, trade show, meeting, recreation, retail sale or other activity or business designed to promote, market, support, develop, construct or enhance the casino gaming, hotel and resort business operated by the corporation and (iv) to engage in any other lawful activity. FOURTH: The authorized capital of the corporation shall be Three Hundred Thousand and 00/100 Dollars ($300,000.00), consisting of Three Million (3,000,000) shares of stock of the par value of Ten Cents ($.10) per share. Each such share, when issued, shall have one (1) vote. The corporation shall not issue any stock or securities except in accordance with the provisions of the Nevada Gaming Control Act and the Regulations thereunder. The issuance of any stock or securities in violation thereof shall be ineffective and such stock or securities shall be deemed not to be issued and outstanding until (1) the corporation shall cease to be subject to the jurisdiction of the Nevada Gaming Commission, or (2) the Nevada Gaming Commission shall by affirmative action, validate said issuance or waive any defect in issuance. No stock or securities issued by the corporation and no interest, claim or charge therein or thereto shall be transferred in any manner whatsoever except in accordance with the provisions of the Nevada Gaming Control Act and the regulations Page 2 thereunder. Any transfer in violation thereof shall be ineffective until (1) the corporation shall cease to be subject to the jurisdiction of the Nevada Gaming Commission, or (2) the Nevada Gaming Commission shall, by affirmative action, validate said transfer or waive any defect in said transfer. If the Commission at any time determines that a holder of stock or other securities of this corporation is unsuitable to hold such securities, then until such securities are owned by persons found by the Commission to be suitable to own them (a) the corporation shall not be required or permitted to pay any dividend or interest with regard to the securities, (b) the holder of such securities shall not be entitled to vote on any matter as the holder of the securities, and such securities shall not for any purposes be included in the securities of the corporation entitled to vote, and (c) the corporation shall not pay any remuneration in any form to the holder of the securities. FIFTH: The members of the governing board of the corporation shall be styled "Directors." Subject to the limitations set forth in this Article Fifth, the number of directors may, at any time or times, be fixed, increased or decreased by a duly adopted amendment to these Articles of Incorporation, or in such manner as shall be provided in the By-Laws of the corporation or by an amendment to the By-Laws of the corporation duly adopted by either the Board of Directors or the stockholders. At all times, at least one director shall be designated by a stockholder resolution or written consent as the "Stockholder Director." Any director serving as the Stockholder Director shall remain the Stockholder Director until he or she ceases to be a director or is removed as Stockholder Director by a stockholder resolution or written consent. If the vacancy Page 3 occurs due to the death, disability or removal of a Stockholder Director, the Board of Directors shall call a special meeting of stockholders at the earliest possible date permitted under applicable law to elect a new Stockholder Director. In accordance with N.R.S. 78.330(3), in all matters over which the Board of Directors shall have voting power, the directors other than the Stockholder Director shall each have one vote and the Stockholder Director shall have a number of votes equal of the total number of votes held by the other directors plus one. Except as specifically set forth in this Article FIFTH, the rights of the stockholders and directors of the corporation under applicable law shall not be limited or otherwise affected. SIXTH: The capital stock of the corporation, after the amount of the subscription price has been paid, shall not be subject to assessment to pay the debts of the corporation, and no stock issued as fully paid shall be assessable or assessed, nor shall the private property of the stockholders, directors or officers of this corporation be subject to the payment of any corporate debts to any extent whatsoever. SEVENTH: The corporation shall have perpetual existence. EIGHTH: Every person who was or is a party, or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability and loss (including Page 4 attorneys' fees, judgments, fines and amounts paid or incurred in connection therewith). Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. Such right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any by-law, agreement, vote of stockholders, provision of law, or otherwise, as well as their rights under this Article. The personal liability of a director or officer of the corporation or its stockholders shall be limited to the full extent provided by Nevada law for damages for breach of fiduciary duty as an officer or director. This provision shall not eliminate the liability of a director or officer for acts or omissions which involve intentional misconduct, fraud, a knowing violation of the law, or the payment of dividends in violation of N.R.S. 78.300. Expenses of directors and officers incurred in defending a civil or criminal action, suit or proceeding must be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of and undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation. This does not affect the rights to advancement of expenses which corporate personnel other than directors or officers may be entitled under any contract or otherwise by law. Without limiting the application of the foregoing, the Board of Directors may adopt by-laws from time to time with respect to indemnification, to provide at all Page 5 times the fullest indemnification permitted by the laws of the State of Nevada, and may cause the corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the corporation would have the power to indemnify such person. NINTH: Unless otherwise determined by the Board of Directors, no holder of stock of the corporation shall be entitled, as a matter of right, to purchase or subscribe for any stock of any class which the corporation may issue or sell, whether or not exchangeable for any stock of the corporation of unissued shares authorized by the Articles of Incorporation of the corporation as originally filed or by any amendment thereof, or out of shares of stock of the corporation acquired by it after the issue thereof, and whether issued for cash, labor performed, personal property, real property, or leases thereof, nor shall such person be entitled to any right of subscription to any thereof; nor, unless otherwise determined by the Board of Directors, shall any holder of any shares be entitled to such, as a matter of right, to purchase or subscribe for any obligation which the corporation may issue or sell that shall be convertible into or exchangeable for any shares of the stock of its capital stock of any class or classes. FURTHER RESOLVED, that a special meeting of stockholders be and it is hereby called and that notice be given in the manner prescribed by the Bylaws of the corporation and by Nevada Revised Statutes, Title 7, Chapter 78, unless such stockholders shall waive the notice of meeting in writing or unless all of said Page 6 stockholders shall dispense with the holding of a meeting and shall take action upon the proposed amended and restated Articles of Incorporation (the "Amended and Restated Articles") by a consent in writing signed by them; and FURTHER RESOLVED, that, in the event that the stockholders shall adopt the Amended and Restated Articles by a vote in favor thereof by at least a majority of the voting power or by a written consent in favor thereof signed by all of them without a meeting, the corporation is hereby authorized to prepare and execute by its President or a Vice President and by its Secretary or an Assistant Secretary a certificate setting forth the Amended and Restated Articles and to cause the same to be filed pursuant to the provisions of Nevada Revised Statutes, Title 7, Chapter 78. THIRD: The total number of outstanding shares having voting power of the corporation is 50,001, and the total number of votes entitled to be cast by the holders of all such outstanding shares is 50,001. FOURTH: The holders of all of the outstanding shares having voting power dispensed with the holding of a meeting of stockholders and adopted the amendments and restatement herein certified by a consent in writing signed by all of them. FURTHER RESOLVED, that the effective date of the Amended and Restated Articles of Incorporation herein shall be June 4, 2002. Page 7 Signed on June 3, 2002. Las Vegas Sands, Inc. By: /s/ William P. Weidner ------------------------------- Name: William P. Weidner Title: President By: /s/ David Friedman ------------------------------- Name: David Friedman Title: Secretary Page 8 EX-3.(II) 4 ex3-2_7032.txt AMENDED AND RESTATED BY-LAWS Exhibit 3.2 AMENDED AND RESTATED BY-LAWS OF LAS VEGAS SANDS, INC. ARTICLE I STOCKHOLDERS SECTION 1. Meetings of stockholders shall be held at the principal office of the corporation or at such other place within or without the State of Nevada as the Directors shall determine. Annual meetings shall be held at 10:00 a.m. in the forenoon on the first Monday in May of each year. If that day is a holiday, the meeting shall be on the next business day. ARTICLE II DIRECTORS SECTION 1. The Board of Directors shall consist of not less than one nor more than 15 Directors. The exact number of Directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by resolution duly adopted by either (a) a vote of a majority of a quorum of the stockholders or (b) a majority of the voting power of the entire Board of Directors then in office, whether or not present at a meeting. Directors need not be stockholders. SECTION 2. A regular meeting of the Board of Directors shall be held without notice immediately following the annual meeting of stockholders and at the same place. The Board of Directors may provide for the holding without notice of additional regular meetings. SECTION 3. Special meetings of the Board of Directors may be called by the President or any director on twenty-four hours notice given personally or by telephone or telegraph or on four days notice by mail. Special meetings shall be held at the place fixed by the Board of Directors for the holding of meetings, or if no such place has been fixed, at the principal business office of the corporation. SECTION 4. The holders of two-thirds of the outstanding shares of stock entitled to vote may at any time peremptorily terminate the term of office of all or any of the directors by vote at a meeting called for such purpose or by a written statement filed with the Secretary, or in his absence, with any other officer. Such removal shall be effective immediately, even if successors are not elected simultaneously and the vacancies on the Board of Directors resulting therefrom shall be filled only by the stockholders. ARTICLE III OFFICERS SECTION 1. The officers of the corporation shall be a Chairman of the Board, President, a Secretary and a Treasurer. The Board of Directors may also choose additional officers, including, but not limited to, vice-presidents and one or more assistant secretaries and assistant treasurers. Two or more offices may be held by the same person. The officers shall be elected annually at the regular meeting of the Board of Directors held after the annual meeting of stockholders and shall hold office only so long as they are satisfactory to the Board of Directors. SECTION 2. The Chairman of the Board shall be the principal executive officer of the corporation to put into effect the decisions of the Board of Directors. Subject to such decisions, he shall supervise and control the business and affairs of the corporation. He shall preside at meetings of the stockholders and directors. SECTION 3. Subject to any specific assignment of duties made by the Board of Directors, the President, Vice-President, the Secretary and Treasurer and their assistants, shall act under the direction of the Chairman of the Board. The President shall perform the duties of the Chairman of the Board when the Chairman of the Board is absent or unable to act. The Vice-President shall perform the duties of the President when the President is absent or unable to act. The Secretary shall prepare and keep minutes of the meeting of the stockholders and the directors and shall have general charge of the stock records of the corporation. The Treasurer shall have custody of the funds of the corporation and keep its financial records. The Chairman of the Board shall have those duties assigned by and act under the direction of the Board of Directors. ARTICLE IV Action of the Board of Directors may be at any time taken without meeting upon the written consent thereto, signed by all of the members of the Board of Directors, pursuant to the provisions of NRS 78.315. ARTICLE V Miscellaneous SECTION 1. The Board of Directors may authorize any officer or agent to enter into any contract or to execute any instrument for the corporation. Such authority may be general or be confined to specific instances. SECTION 2. In the absence of the Chairman of the Board, any officer may enter into 3 any contract or execute any instrument on behalf of the corporation. SECTION 3. All funds of the corporation shall be deposited in such banks as the Board of Directors may select and withdrawn in such manner as the Board of Directors may decide. SECTION 4. Certificates representing shares of the corporation shall be in such form as the Board of Directors shall determine. Transfers of shares shall be made only on the stock transfer books of the corporation. The person in whose name shares are recorded on the books of the corporation shall be considered the owner thereof for all purposes by the corporation. ARTICLE VI AMENDMENTS Section 1. These By-Laws may be amended by vote of a majority of the voting power of the full Board of Directors at any meeting and by a vote of a majority of a quorum of the stockholders provided notice of the amendment is given in the notice of the meeting. 4 CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify: (1) That I am the duly elected and acting Secretary of LAS VEGAS SANDS, INC., a Nevada corporation; and (2) That the foregoing Amended and Restated By-Laws were duly adopted at the meeting of the Board of Directors duly held on the 3rd day of June, 2002 IN WITNESS WHEREOF, I have hereunto subscribed my name this 3rd day of June, 2002. By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary 5 EX-4 5 ex4-1_7032.txt INDENTURE EXECUTION COPY EXHIBIT 4.1 ================================================================================ VENETIAN CASINO RESORT, LLC LAS VEGAS SANDS, INC. AS ISSUERS MALL INTERMEDIATE HOLDING COMPANY, LLC GRAND CANAL SHOPS MALL CONSTRUCTION, LLC LIDO INTERMEDIATE HOLDING COMPANY, LLC VENETIAN VENTURE DEVELOPMENT, LLC, VENETIAN OPERATING COMPANY, LLC, VENETIAN MARKETING, INC., VENETIAN CASINO RESORT ATHENS, LLC, AS NOTE GUARANTORS $850,000,000 11% Mortgage Notes due 2010 ---------- INDENTURE Dated as of June 4, 2002 ---------- ---------- U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE ---------- ================================================================================ TABLE OF CONTENTS
PAGE ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions...............................................................1 Section 1.02. Other Definitions........................................................30 Section 1.03. Incorporation by Reference of Trust Indenture Act........................31 Section 1.04. Rules of Construction....................................................31 ARTICLE 2. THE NOTES Section 2.01. Form and Dating..........................................................32 Section 2.02. Execution and Authentication.............................................33 Section 2.03. Registrar and Paying Agent...............................................34 Section 2.04. Paying Agent to Hold Money in Trust......................................34 Section 2.05. Holder Lists.............................................................35 Section 2.06. Transfer and Exchange....................................................35 Section 2.07. Replacement Notes........................................................47 Section 2.08. Outstanding Notes........................................................48 Section 2.09. Treasury Notes...........................................................48 Section 2.10. Temporary Notes..........................................................48 Section 2.11. Cancellation.............................................................49 Section 2.12. Defaulted Interest.......................................................49 ARTICLE 3. OFFERS TO PURCHASE OR REDEMPTION Section 3.01. Notices to Trustee.......................................................49 Section 3.02. Selection of Notes to Be Purchased or Redeemed...........................50 Section 3.03. Notice of Redemption.....................................................50 Section 3.04. Effect of Notice of Redemption...........................................51 Section 3.05. Deposit of Purchase or Redemption Price..................................51 Section 3.06. Notes Purchased or Redeemed in Part......................................52 Section 3.07. Optional Redemption......................................................52 Section 3.08. Redemption Pursuant to Gaming Law........................................53 Section 3.09. Mandatory Redemption.....................................................54 Section 3.10. Repurchase Offers........................................................54
i ARTICLE 4. COVENANTS Section 4.01. Payment of Notes.........................................................56 Section 4.02. Maintenance of Office or Agency..........................................56 Section 4.03. Reports..................................................................56 Section 4.04. Compliance Certificate...................................................57 Section 4.05. Taxes....................................................................58 Section 4.06. Stay, Extension and Usury Laws...........................................58 Section 4.07. Restricted Payments......................................................58 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries...........62 Section 4.09. Limitations on Incurrence of Indebtedness and Issuance of Disqualified Stock.......................................................63 Section 4.10. Asset Sales..............................................................66 Section 4.11. Event of Loss............................................................68 Section 4.12. Transactions with Affiliates.............................................69 Section 4.13. Liens....................................................................72 Section 4.14. Line of Business.........................................................72 Section 4.15. Corporate Existence......................................................72 Section 4.16. Offer to Repurchase Upon Change of Control...............................72 Section 4.17. Designation of Unrestricted Subsidiary...................................73 Section 4.18. Maintenance of Insurance and Amendment of the Cooperation Agreement................................................................74 Section 4.19. Collateral Documents.....................................................74 Section 4.20. Further Assurances.......................................................74 Section 4.21. Restrictions on Leasing and Dedication of Property.......................74 Section 4.22. Note Guarantees..........................................................76 Section 4.23. Ownership of Unrestricted Subsidiaries...................................76 ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation, or Sale of Assets.................................77 Section 5.02. Successor Corporation Substituted........................................77 ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default........................................................78 Section 6.02. Acceleration.............................................................80 Section 6.03. Other Remedies...........................................................81 Section 6.04. Waiver of Past Defaults..................................................81 Section 6.05. Control by Majority......................................................81 Section 6.06. Limitation on Suits......................................................82 Section 6.07. Rights of Holders of Notes to Receive Payment............................82 Section 6.08. Collection Suit by Trustee...............................................82 Section 6.09. Trustee May File Proofs of Claim.........................................83
ii Section 6.10. Priorities...............................................................83 Section 6.11. Undertaking for Costs....................................................84 Section 6.12. Management of Casinos....................................................84 ARTICLE 7. TRUSTEE Section 7.01. Duties of Trustee........................................................84 Section 7.02. Rights of Trustee........................................................85 Section 7.03. Individual Rights of Trustee.............................................86 Section 7.04. Trustee's Disclaimer.....................................................86 Section 7.05. Notice of Defaults.......................................................87 Section 7.06. Reports by Trustee to Holders of the Notes...............................87 Section 7.07. Compensation and Indemnity...............................................88 Section 7.08. Replacement of Trustee...................................................89 Section 7.09. Successor Trustee by Merger, etc.........................................90 Section 7.10. Eligibility; Disqualification............................................90 Section 7.11. Preferential Collection of Claims Against Company........................90 Section 7.12. Authorization of Trustee to Take Other Actions...........................90 ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.................91 Section 8.02. Legal Defeasance and Discharge...........................................91 Section 8.03. Covenant Defeasance......................................................92 Section 8.04. Conditions to Legal or Covenant Defeasance...............................92 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions...........................................93 Section 8.06. Repayment to the Issuers.................................................94 Section 8.07. Reinstatement............................................................94 Section 8.08. Note Collateral..........................................................95 ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. Without Consent of Holders of Notes......................................95 Section 9.02. With Consent of Holders of Notes.........................................96 Section 9.03. Compliance with Trust Indenture Act......................................97 Section 9.04. Revocation and Effect of Consents........................................98 Section 9.05. Notation on or Exchange of Notes.........................................98 Section 9.06. Trustee to Sign Amendments, etc..........................................98 ARTICLE 10. COLLATERAL AND SECURITY Section 10.01. Security.................................................................98 Section 10.02. Recording and Opinions...................................................99
iii Section 10.03. Release of Collateral...................................................100 Section 10.04. Protection of the Trust Estate..........................................101 Section 10.05. Certificates of the Issuers.............................................102 Section 10.06. Certificates of the Trustee.............................................102 Section 10.07. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents....................................................102 Section 10.08. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents...............................................................103 Section 10.09. Termination of Security Interest........................................103 Section 10.10. Cooperation of Trustee..................................................104 Section 10.11. Collateral Agent........................................................104 ARTICLE 11. NOTE GUARANTEES Section 11.01. Note Guarantees.........................................................104 Section 11.02. Additional Note Guarantees..............................................106 Section 11.03. Limitation of Note Guarantor's Liability................................107 Section 11.04. Note Guarantors May Consolidate, etc., on Certain Terms.................107 Section 11.05. Releases of Note Guarantees.............................................108 Section 11.06. "Trustee" to Include Paying Agent.......................................108 ARTICLE 12. SATISFACTION AND DISCHARGE Section 12.01. Satisfaction and Discharge..............................................109 Section 12.02. Application of Trust Money..............................................110 ARTICLE 13. MISCELLANEOUS Section 13.01. Trust Indenture Act Controls............................................110 Section 13.02. Notices.................................................................110 Section 13.03. Communication by Holders of Notes with Other Holders of Notes...........112 Section 13.04. Certificate and Opinion as to Conditions Precedent......................112 Section 13.05. Statements Required in Certificate or Opinion...........................112 Section 13.06. Rules by Trustee and Agents.............................................112 Section 13.07. No Personal Liability of Directors, Officers, Employees and Stockholders............................................................113 Section 13.08. Governing Law...........................................................113 Section 13.09. No Adverse Interpretation of Other Agreements...........................113 Section 13.10. Successors..............................................................113 Section 13.11. Severability............................................................113 Section 13.12. Counterpart Originals...................................................113 Section 13.13. Table of Contents, Headings, etc........................................114
iv EXHIBITS Exhibit A-1 Form of Note Exhibit A-2 Form of Temporary Regulation S Note Exhibit B Form of Certificate of Transfer Exhibit C Form of Certificate of Exchange Exhibit D Form of Certificate from Acquiring Institutional Accredited Investor Exhibit E Form of Notation of Note Guarantee Exhibit F Form of Supplemental Indenture to be Delivered by Subsequent Note Guarantors Exhibit G Intercreditor Agreement Exhibit H Indenture Deed of Trust Exhibit I Security Agreement Exhibit J Indenture Environmental Indemnity Schedule A Existing Indebtedness Appendix A-1 Subordination Provisions for Principal Stockholder Indebtedness Appendix A-2 Subordination Provisions for Permitted Subordinated Indebtedness
v CROSS-REFERENCE TABLE*
TRUST INDENTURE ACT SECTION INDENTURE SECTION 310(a)(1)......................................................................................7.10 (a)(2)......................................................................................7.10 (a)(3)......................................................................................N.A. (a)(4)......................................................................................N.A. (a)(5)......................................................................................7.10 (b)......................................................................................7.10 (c)......................................................................................N.A. 311(a)......................................................................................7.11 (b)......................................................................................7.11 (c)......................................................................................N.A. 312(a)......................................................................................2.05 (b).....................................................................................13.03 (c).....................................................................................13.03 313(a)......................................................................................7.06 (b)(1).....................................................................................10.03 (b)(2)......................................................................................7.07 (c)...............................................................................7.06, 13.02 (d)......................................................................................7.06 314(a).........................................................................4.03, 4.04, 13.05 (b).....................................................................................10.02 (c)(1).....................................................................................13.04 (c)(2).....................................................................................13.04 (c)(3)......................................................................................N.A. (d).......................................................................10.03, 10.04, 10.05 (e)..............................................................................10.02, 13.05 (f)......................................................................................N.A. 315(a)......................................................................................7.01 (b)...............................................................................7.05, 13.02 (c)......................................................................................7.01 (d)......................................................................................7.01 (e)......................................................................................6.11 316(a)(last sentence)................................................................................2.08, 2.09 (a)(1)(A)......................................................................................6.05 (a)(1)(B)......................................................................................6.04 (a)(2)......................................................................................N.A. (b)......................................................................................6.07 (c)......................................................................................2.12 317(a)(1)......................................................................................6.08 (a)(2)......................................................................................6.09 (b)......................................................................................2.04
vi 318(a).....................................................................................13.01 (b)......................................................................................N.A. (c).....................................................................................13.01
N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. vii INDENTURE dated as of June 4, 2002 among Venetian Casino Resort, LLC, a Nevada limited liability company ("Venetian"), Las Vegas Sands, Inc., a Nevada corporation (the "COMPANY" and, together with Venetian, the "ISSUERS"), Mall Intermediate Holding Company, LLC, a Delaware limited liability company, Grand Canal Shops Mall Construction, LLC, a Delaware limited liability company, Lido Intermediate Holding Company, LLC, a Delaware limited liability company, Venetian Venture Development, LLC, a Nevada limited liability company, Venetian Operating Company, LLC, a Nevada limited liability company, Venetian Marketing, Inc., a Nevada corporation, and Venetian Casino Resort Athens, LLC, a Delaware limited liability company (together with any future Restricted Subsidiary (as defined below) that is required to become a Note Guarantor under Section 11.02 hereof, the "NOTE GUARANTORS") and U.S. Bank National Association, as trustee (the "TRUSTEE"). The Issuers, the Note Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the holders of the 11% Mortgage Notes due 2010 (the "INITIAL NOTES") and the 11% Mortgage Notes due 2010 to be issued in the Exchange Offer pursuant to Section 2.06(f) hereof (the "EXCHANGE NOTES" and, together with the Initial Notes and any Additional Notes as defined below, the "NOTES"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. DEFINITIONS. "144A GLOBAL NOTE" means a global note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A. "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person merged with or into or became a Restricted Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person and (ii) Indebtedness encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "CONTROL" (including, with correlative meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER, that beneficial ownership of 20% or more of the voting securities of a Person shall be deemed to be control. "AGENT" means any Registrar, Paying Agent or co-registrar. "APPLICABLE PROCEDURES" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange. "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 Issuers subject to the highest marginal rate of tax would be subject in the relevant year of determination (as certified to the Trustee by an Officers' Certificate), taking into account only that member's or S corporation shareholder's share of income and deductions attributable to its interest in the Issuers in the relevant year of determination. "APPRAISED VALUE" means the value of any assets, as set forth in an MAI Appraisal from a nationally-recognized appraisal firm not given more than 90 days prior to contribution of such assets. "ASSET SALE" means (1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of assets or rights (including by way of a sale and leaseback) of the Issuers or any Restricted Subsidiary (each referred to in this definition as a "DISPOSITION") or (2) the issuance or sale of Equity Interests of any Restricted Subsidiary other than Venetian (whether in a single transaction or a series of related transactions), in each case, other than: (1) a disposition of inventory or goods in the ordinary course of business or a disposition of obsolete assets; (2) the disposition of all or substantially all of the assets of, or a merger or similar transfer of, either of the Issuers in a manner permitted under Section 5.01 hereof or any disposition that constitutes a Change of Control under this Indenture; (3) any disposition that is a Restricted Payment or that is a dividend or distribution permitted under Section 4.07 hereof or any Investment that is not prohibited thereunder or any disposition of cash or Cash Equivalents; (4) any single disposition, or related series of dispositions, of assets with an aggregate fair market value of less than $1.0 million; (5) any Event of Loss; (6) any Lease Transaction or any grant of easement or Permitted Liens or Hedging Obligations permitted by the Indenture; (7) any dedication permitted pursuant to Section 4.21 hereof; (8) a transfer of assets by the Issuers to a Wholly Owned Restricted Subsidiary of the Issuers or by a Wholly Owned Restricted Subsidiary of the Issuers to another Wholly Owned Restricted Subsidiary of the Issuers or from one Issuer to another Issuer; (9) an issuance of Equity Interests by a Wholly Owned Restricted Subsidiary of the Issuers to the Issuers or another Wholly Owned Restricted Subsidiary of the Issuers or from one Issuer to another Issuer; (10) any sale, conveyance, transfer or other disposition of property that secures Non-Recourse Financing that is to or on behalf of the lender of such Non-Recourse Financing; or (11) any licensing of tradenames or trademarks in the ordinary course of business by any of the Issuers or their Restricted Subsidiaries. "BANK CREDIT FACILITY" means that certain Credit Agreement among the Company and Venetian, as borrowers, the Lenders listed therein, The Bank of Nova Scotia, as administrative agent, joint lead arranger and joint bookrunner, Goldman Sachs Credit Partners L.P., as joint lead arranger, joint bookrunner and syndication agent, together with all related agreements, instruments and documents executed or delivered pursuant thereto at any time (including all notes, mortgages, guarantees, security agreements and all other collateral and security documents), in each case as such agreements, instruments and documents may be amended (including any amendment and 2 restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the aggregate principal amount that may be borrowed thereunder) all or any portion of the Indebtedness and other obligations under such agreement or agreements or any successor or replacement agreement or agreements, and whether by the same or any other agent, lender or group of lenders. "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. "BILLBOARD LEASE" means that certain Lease Agreement by and between Venetian and Mall Subsidiary relating to certain space that is subleased by H&H of Nevada, LLC., as amended from time to time in accordance with the terms thereof. "BOARD OF DIRECTORS" means the Board of Directors of the Company or any authorized committee of the Board of Directors of the Company. "BUSINESS DAY" means any day other than a Legal Holiday. "CANYON RANCH LEASE" means that certain Lease Agreement by and between Venetian and Mall Subsidiary relating to certain space that is subleased by CR Las Vegas, LLC, as amended from time to time in accordance with the terms thereof. "CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on the balance sheet in accordance with GAAP. "CAPITAL STOCK" means with respect to any Person, any and all shares, interests, participations, rights or other equivalents (however designated) of equity of such Person, including if such Person is a partnership or limited liability company, partnership or membership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership or limited liability company. "CASH EQUIVALENTS" means (a) United States dollars, (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" by Standard & Poor's Ratings Group ("S&P") or "A2" by Moody's Investors Service, Inc. ("MOODY'S") (S&P and Moody's together with any other nationally recognized credit rating agency if neither of such entities is then currently rating the pertinent obligations, a "RATING AGENCY") or the equivalent by another Rating Agency, if applicable, 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 3 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-part 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 nontaxable municipal securities) issued or guaranteed by, and any other obligations the interest on which is excluded from income for Federal income tax purposes issued by, any state of the United States of America or the 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 specified 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 of such investment contract) at least "A" or "A2" or the equivalent by any Rating Agency and short-term debt rated (on the date of acquisition of such investment contract) 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 of such contract or investment agreement) at least "A" or "A2" or the equivalent by any Rating Agency (provided that if a guarantor is party to the rating, the guarantee must be unconditional and must be confirmed in writing prior to any assignment by the provider to another subsidiary of such guarantor), (B) providing that monies invested shall be payable 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 (subject to the rights of creditors with prior Liens) the Trustee (which demand shall only be made at the direction of the Company) 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 United States 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 4 (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 by any Rating Agency. "CASINO LEASE" means that certain lease between the Company and Venetian dated as of November 1997 with respect to the operation of the Casino for the Project, as amended, revised or modified from time to time in accordance with the terms thereof. "CHANGE OF CONTROL" means the occurrence of any of the following: (1) the sale, lease or transfer, in one or a series of transactions, of all or substantially all of the assets of the Issuers and their Restricted Subsidiaries, taken as a whole (except in connection with an Event of Loss), other than to the other Issuer, the Principal Stockholder and his Related Parties; (2) either of the Issuers becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor provision), other than the other Issuer, the Principal Stockholder and its Related Parties, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of the total voting power of the Voting Stock of the Issuers; (3) the first day within any two-year period on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or (4) the adoption of a plan relating to liquidation or dissolution of either of the Issuers or any Note Guarantor (except liquidation of (a) Venetian into the Company and (b) any Note Guarantor into the Company, Venetian or another Note Guarantor). For purposes of this definition, any holding company whose only significant asset is the Capital Stock of one or more of the Issuers shall be disregarded and the beneficial ownership of such holding company shall be attributed to the Issuer or Issuers so held and any Person which has entered into an agreement to acquire any Capital Stock of either of the Issuers shall not be deemed to have any beneficial ownership of such Capital Stock until the closing of such acquisition. "CLEARSTREAM" means Clearstream Banking S.A. "CODE" means, the Internal Revenue Code of 1986, as amended (or any successor statute thereto). "COLLATERAL AGENT" means any person appointed by the Trustee as a collateral agent hereunder. "COLLATERAL DOCUMENTS" means, collectively, the Indenture Deed of Trust, the Security Agreement, the Indenture Environmental Indemnity or any other agreements, instruments, financing statements or other documents that evidence, set forth or limit the Lien of the Trustee in the Note Collateral. "COMMON STOCK" means the Common Stock, par value $0.10 per share, of the Company. 5 "COMPANY" means Las Vegas Sands, Inc., a Nevada corporation, or any successor thereto that is permitted under this Indenture. "COMPLETED" or "COMPLETION" has the meaning given to the term "Substantial Completion" under the Bank Credit Facility. "CONGRESS CENTER" means that certain meeting and conference center complex of approximately 500,000 net leasable square which is part of the Casino Resort. "CONSOLIDATED CASH FLOW" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (1) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing Consolidated Net Income), plus (2) provision for taxes based upon net income or net profits of such Person and its Restricted Subsidiaries to the extent such provision for taxes was deducted in computing Consolidated Net Income, plus (3) Consolidated Interest Expense of such Person for such period to the extent such expenses were deducted in computing Consolidated Net Income (not including any gaming revenue tax), plus (4) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such expenses were deducted in computing Consolidated Net Income, minus (5) non-cash items increasing such Consolidated Net Income for such period other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis for such Person and its Restricted Subsidiaries and determined in accordance with GAAP. "CONSOLIDATED DEPRECIATION AND AMORTIZATION EXPENSE" means, with respect to any Person for any period, the total amount of depreciation and amortization expense and other noncash expenses (excluding any noncash expense that represents an accrual or reserve for a cash expenditure for a future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period on a consolidated basis as defined in accordance with GAAP. "CONSOLIDATED INTEREST EXPENSE" means, with respect to any period, the sum of (1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, to the extent such expense was deducted in computing Consolidated Net Income (including original issue discount and deferred financing fees, non-cash interest payments, the interest component of Capital Lease Obligations, and net payments (if any) pursuant to Hedging Obligations, but excluding amortization of debt issuance costs and deferred financing fees), (2) commissions, discounts and other fees and charges paid or accrued with respect to letters of credit and bankers' acceptance financing and (3) to the extent not included above, the maximum amount of interest which would have to be paid by such Person or its Restricted Subsidiaries under a Guarantee of Indebtedness (other than the Permitted Macau Guarantee) of any other Person if such Guarantee were called upon. "CONSOLIDATED NET INCOME" means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; PROVIDED, HOWEVER, that (1) the Net Income for such period of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or 6 distributions paid in cash (or to the extent converted into cash) to the referent Person, an Issuer or a Wholly Owned Subsidiary thereof in respect of such period, (2) the Net Income for such period of any Restricted Subsidiary that is not a Note Guarantor shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived or such restriction is otherwise permitted under Section 4.08 hereof, (3) the cumulative effect of a change in accounting principles shall be excluded, (4) no effect shall be given to any minority or preferred interest in Venetian for purposes of computing Consolidated Net Income and (5) Consolidated Net Income shall be adjusted (to the extent included in calculating such Consolidated Net Income) by excluding without duplication all extraordinary gains and losses and all expenses, amortization and charges associated with the Refinancing Transactions. "CONSOLIDATED TOTAL ASSETS" means, as of the Issuance Date with respect to the Company, $1,390,228,000. "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors who (1) was a member of such Board of Directors on the Issuance Date, (2) was nominated for election or elected to such Board of Directors with, or whose election to such Board of Directors was approved by, the affirmative vote of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or (3) was appointed or elected to such Board of Directors by the Principal Stockholder or a Related Party. "COOPERATION AGREEMENT" means that certain Amended and Restated Reciprocal Easement, Use and Operating Agreement, originally among the Mall Construction Subsidiary, Venetian and Interface, as amended, revised or modified from time to time in accordance with its terms. "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the Trustee specified in Section 13.02 hereof or such other address as to which the Trustee may give notice to the Issuers. "CREDIT AGENT" means The Bank of Nova Scotia, in its capacity as the administrative agent under the Bank Credit Facility and its successors in such capacity. "CREDIT FACILITIES" means, one or more debt facilities (including, without limitation, the Bank Credit Facility) or commercial paper facilities, in each case with banks or other lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, or any debt securities or other form of debt financing (including convertible or exchangeable debt instruments) in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. 7 "DEBT TO CASH FLOW RATIO" means with respect to any Person, as of any date of determination, the ratio of (a) the consolidated Indebtedness of such Person and its Restricted Subsidiaries as of such date to (b) the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for the four most recent full fiscal quarters completed since the Phase IA Completion Date ending immediately prior to such date of determination for which internal financial statements are available, determined on a pro forma basis after giving effect to all acquisitions or dispositions of assets made by such Person and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period. In the event that four full fiscal quarters have not been completed since the Phase IA Completion Date, then as long as one full fiscal quarter has been so completed, the completed full fiscal quarters since the Phase IA Completion Date shall be annualized for purposes of calculating Consolidated Cash Flow. In addition, for purposes of making the computation referred to above, the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the date of determination, shall be excluded. "DEFAULT" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "DEFEASANCE TRUST AGREEMENT" means the Defeasance Trust Agreement, dated the Issuance Date, by and among the Issuers, Mall Intermediate Holdings, Mall Construction Subsidiary, Phase II Intermediate Holdings and the Trustee with respect to the Issuers' 12 1/4% Mortgage Notes due 2004. "DEFINITIVE NOTE" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, in the form of Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "DEPOSITARY" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "DISQUALIFIED STOCK" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is three months after the date on which the Notes mature; PROVIDED, HOWEVER, that any Capital Stock which would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require the Issuers to repurchase or redeem such Capital Stock upon the occurrence of a change of control, and event of loss or an asset sale occurring prior to the final maturity of the Notes shall not constitute Disqualified Stock if the change of control provisions, event of loss provisions, or asset sale provisions, as the case may be, applicable to such Capital Stock specifically provide that the Issuers will not repurchase or redeem 8 any such stock pursuant to such provisions prior to the Company's and Venetian's compliance with the provisions of the Indenture, including Sections 4.10, 4.11 and 4.16 hereof. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "EQUITY OFFERING" means any sale of Equity Interests of the Issuers (or any parent company or managing member of the Issuers if the proceeds are contributed to or used to purchase Equity Interests of the Issuers), excluding sales made to any Restricted Subsidiary and excluding sales of Disqualified Stock, to the public under an effective registration statement under the Securities Act or in a private placement under an exemption from the registration requirements of the Securities Act or any capital contribution in respect of such Equity Interests of the Issuers. "EQUITY OFFERING PROCEEDS" means the gross aggregate proceeds from an Equity Offering. "ESTIMATION PERIOD" means the period for which a shareholder, partner or member, who is an individual is required to estimate for federal income tax purposes his allocation of taxable income from a Subchapter S corporation or any entity that is treated as a partnership for federal income tax purposes in connection with determining his or her estimated federal income tax liability for such period. "EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear system. "EVENT OF LOSS" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (1) any loss, destruction or damage of such property or asset; (2) 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 (3) any settlement in lieu of clause (2) above. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE NOTES" has the meaning assigned to it in the preamble to this Indenture. "EXCHANGE OFFER" has the meaning set forth in any Registration Rights Agreement. "EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in any Registration Rights Agreement. "EXISTING INDEBTEDNESS" means the Indebtedness set forth on Schedule A hereto. "EXPO CENTER" means the Sands Expo and Convention Center. 9 "FIRST LIEN CREDIT FACILITIES" means any Indebtedness that is secured by Permitted Liens as described in clause (13) or clause (19) of the definition thereof and has a first priority Lien, subject to Permitted Liens, on any Note Collateral. "FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, guarantees, redeems, repays or defeases any Indebtedness (other than revolving credit borrowings) or issues, repurchases or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness and the use of proceeds therefrom, or such issuance, repurchase or redemption of Preferred Stock and the use of proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, acquisitions, dispositions and discontinued operations (as determined in accordance with GAAP) that have been made by the Company or any of its Restricted Subsidiaries, including all mergers, consolidations and dispositions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, discontinued operations, mergers, consolidations (and the reduction of any associated fixed charge obligations resulting therefrom) had occurred on the first day of the four-quarter reference period. "FIXED CHARGES" means, with respect to any Person for any period, the sum, without duplication, of (1) Consolidated Interest Expense of such Person for such period and (2) all capitalized interest of such Person and its Restricted Subsidiaries and (3) the product of (a) to the extent such Person is not treated as an S corporation, a partnership or a substantially similarly treated pass-through entity for federal income tax purposes, all dividend payments, whether or not in cash on any series of Preferred Stock of such Person or any of its Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests or dividends paid as an increase in liquidation preference on Preferred Stock, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory income tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP MINUS all one-time charges, expenses and amortization costs relating to Refinancing Transactions paid on the Issuance Date. "GAAP" means generally accepted accounting principles set forth in the 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 have been approved by a significant segment of the accounting profession, which are in effect on the Issuance Date. For the purposes of the Indenture, the term "consolidated" with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries (without giving effect to any minority or preferred interest of Venetian) and shall not include any Unrestricted Subsidiary. 10 "GAMING AUTHORITY" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States or foreign government, any state, province or any city or other political subdivision, whether now or hereafter existing, or any officer or official thereof, including without limitation, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board and any other agency with authority to regulate any gaming operation (or proposed gaming operation) owned, managed or operated by the Issuers or any of their Subsidiaries. "GAMING LICENSE" means every license, franchise or other authorization required to own, lease, operate or otherwise conduct activities of the Issuers or any of their Restricted 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. "GLOBAL NOTE LEGEND" means the legend set forth in Section 2.06(g), which is required to be placed on all Global Notes issued under this Indenture. "GLOBAL NOTES" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, in the form of Exhibits A-1 and A-2 hereto issued in accordance with Section 2.01, 2.06(b)(iv), 2.06(d) or 2.06(f) hereof. "GOVERNMENT 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 any zoning authority, the Federal Deposit Insurance Corporation, 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. "GOVERNMENT SECURITIES" means securities that are (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Security or a specific payment of principal of or interest on any such Government Security held by such custodian for the account of the holder of such depository receipt; PROVIDED, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Security or the specific payment of principal of or interest on the Government Security evidenced by such depository receipt. "GRAND CANAL SHOPS MALL SUBSIDIARY" means Grand Canal Shops Mall Subsidiary, LLC, a Delaware limited liability company. 11 "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof and cash collateral accounts), of all or any part of any Indebtedness. "HARRAH'S ROAD WAY AGREEMENT" means an agreement between Venetian and Harrah's Casino Resort as amended, revised, modified or restated, with respect to the sharing of the common roadway between the parties and certain plans with respect to the improvements to be made thereto. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (1) currency exchange or interest rate swap agreements, currency exchange or interest rate cap agreements and currency exchange or interest rate collar agreements and (2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. "HVAC PROVIDER" means Sempra Energy Solutions, successor to Atlantic-Pacific, Las Vegas, LLC, a Delaware limited liability company. "HVAC SERVICES AGREEMENT" means, collectively (1) that certain Energy Services Agreement between Venetian and the HVAC Provider, (2) that certain Ground Lease between Venetian and the HVAC Provider, (3) that certain Construction Agency Agreement between Venetian and the HVAC Provider and (4) that certain Energy Services Agreement between Mall Subsidiary and the HVAC Provider, in each case, as amended from time to time in accordance with its terms. "HOLDER" means a Person in whose name a Note is registered. "IAI GLOBAL NOTE" means the global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Institutional Accredited Investors. "INDEBTEDNESS" means, with respect to any Person, (1) any indebtedness of such Person, whether or not contingent (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) representing the balance deferred and unpaid of the purchase price of any property (including Capital Lease Obligations), except any such balance that constitutes an accrued expense or trade payable, or (d) representing any Hedging Obligations, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person). 12 For purposes of this definition, the term "Indebtedness" shall not include (a) any amount of the liability in respect of an operating lease that at such time would not be required to be capitalized and reflected as a liability on the balance sheet in accordance with GAAP, (b) any obligation under the HVAC Services Agreement as in effect on the Issuance Date or (c) any surety bonds for claims underlying mechanics liens and any reimbursement obligations with respect thereto so long as such reimbursement obligations are not then due, or are promptly paid when due. The amount of any Indebtedness outstanding as of any date shall be (a) the accreted value thereof, in the case of any Indebtedness with original issue discount, and (b) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. Notwithstanding anything in the Indenture to the contrary, Indebtedness of the Issuers and their Restricted Subsidiaries shall not include any Indebtedness that has been either satisfied and discharged or defeased through covenant defeasance or legal defeasance. "INDENTURE" means this Indenture, as amended or supplemented from time to time, in accordance with its terms. "INDENTURE DEED OF TRUST" means that certain Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing made by the Company and Venetian, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Trustee, as beneficiary, as amended, modified or revised from time to time in accordance with its terms and this Indenture. "INDENTURE ENVIRONMENTAL INDEMNITY" means the Unsecured Indemnity Agreement, dated as of the Issuance Date, by the Company and Venetian to and for the benefit of the Trustee, as amended, modified or revised in accordance with its terms. "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal or investment banking or financial advisory firm of nationally or internationally recognized standing that is not an Affiliate of the Company, the Principal Stockholder or its Related Parties. "INDIRECT PARTICIPANT" means a Person who holds a beneficial interest in a Global Note through a Participant. "INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs. "INTERCREDITOR AGREEMENT" means (1) the Intercreditor Agreement, dated as of the Issuance Date, between The Bank of Nova Scotia, as Credit Agent acting on behalf of the other Lenders pursuant to the Bank Credit Facility, the Trustee, acting on behalf of the Holders of the Notes, and The Bank of Nova Scotia as Intercreditor Agent, as amended, revised, modified or restated from time to time in accordance with its terms and (2) any other intercreditor agreement entered into by the Trustee on behalf of the Holders of the Notes and pursuant to the provisions of this Indenture, as amended, revised, modified or restated from time to time in accordance with its terms. "INTERFACE" means Interface Group-Nevada, Inc., a Nevada corporation. 13 "INTERFACE HOLDING" means Interface Group Holding Company, Inc., a Nevada corporation. "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "INVESTMENT GRADE" means, with respect to any Indebtedness, a credit rating of such Indebtedness of Baa3 or higher by Moody's or BBB- or higher by S&P, provided, that if either Moody's or S&P is not then rating the pertinent Indebtedness, an equivalent or higher rating by a nationally recognized credit rating agency may be substituted. "ISSUANCE DATE" means the closing date for the sale and issuance of the Initial Notes. "ISSUERS" means the Company and Venetian, and any successor to any of them permitted under this Indenture. "LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. "LENDERS" means any of the lenders under the Bank Credit Facility. "LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared by the Issuers and sent to Holders of the Notes for use by such Holders in connection with an Exchange Offer. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement or any lease in the nature thereof). "LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant to a Registration Rights Agreement. "LUTECE LEASE" means that certain Lease Agreement by and between Venetian and Mall Subsidiary relating to certain space that is subleased by Las Vegas Lutece Corp., as amended from time to time in accordance with the terms thereof. "MACAU CASINO" means the proposed casino or casinos to be operated in Macau, China, to be owned and operated by one or more of the Macau Entities. 14 "MACAU ENTITIES" means, with respect to the Issuers, any entity in which the Issuer or any Restricted Subsidiary has a direct or indirect Investment, whose purpose is to manage, develop, construct, maintain or operate one or more hotels, casinos, conference centers and retail and entertainment complexes in Macau or assist in any of the foregoing hotel, casino, retail, meeting and entertainment complex in Macau or any entity which owns any such entity. "MACAU FEES" means management, consulting, marketing, licensing or other fees or payments (other than reimbursements or repayments of loans) from the Macau Casino. "MAI APPRAISAL" means an appraisal conducted by a member of the Appraisal Institute in accordance with the standards of the Appraisal Institute. "MAKE-WHOLE PREMIUM" means, with respect to a Note, an amount equal to the greater of (1) 1% of the outstanding principal amount of such Note and (2) the excess of (a) the present value of the remaining interest, premium and principal payments due on such Note as if such Note were redeemed on June 15, 2006, computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (b) the outstanding principal amount of such Note. "MALL" means that certain enclosed retail, dining and entertainment complex of approximately 446,000 net leasable square feet otherwise known as The Grand Canal Shoppes Mall. "MALL COLLATERAL" means all of the Issuers' and their Restricted Subsidiaries' right, title, and interest in and to (1) the leasehold estate created by the Billboard Lease, the Canyon Ranch Lease and the Lutece Lease; (2) the Mall and any related improvements (including expansions) and equipment thereto; (3) any reserves established by the Issuers or any of their Restricted Subsidiaries relating to the Mall; and (4) any and all rents or other income derived from the Mall pledged under any and all security agreements and an assignments of leases and rents creating a security interest in such rents and other income. "MALL CONSTRUCTION SUBSIDIARY" means Grand Canal Shops Mall Construction, LLC, a Delaware limited liability company. "MALL FINANCING AGREEMENT" means the agreement between Mall Subsidiary and Archon Financial, L.P. dated as of the Issuance Date, together with all related agreements, instruments and documents executed or delivered pursuant thereto at any time (including, without limitation, all mortgages, guarantees, security agreements and all other collateral and security documents), in each case as such agreements, instruments and documents may be amended (including any amendment and restatement thereof), supplemented, refinanced, replaced, extended or otherwise modified from time to time, including any agreement extending the maturity of, replacing or otherwise restructuring (including increasing the aggregate principal amount that may be borrowed either under such agreement or a new debt agreement or security or providing for a debt facility or debt security with a second priority Lien on the Mall Collateral) all or any portion of the Indebtedness and other obligations under such agreement or agreements or debt instrument or security or any successor or replacement agreement or agreements or debt instruments or security, and whether by the same or any other agent, lender or group of lenders or a group of investors. 15 "MALL INTERMEDIATE HOLDINGS" means Mall Intermediate Holding Company, LLC, a Delaware limited liability company, and a wholly owned subsidiary of Venetian. "MALL MANAGEMENT AGREEMENT" means the Mall Management Agreement, dated as of November 14, 1997, between Forest City Enterprises and the Mall Subsidiary, as amended, revised or modified. "MALL MANAGER" means Grand Canal Shops Mall MM Subsidiary, Inc., a Nevada corporation and a wholly owned subsidiary of the Company. "MALL SPACE" means the legal parcel within which the Mall is contained. "MALL SUBSIDIARY" means Grand Canal Shops II, LLC, a Delaware limited liability company. "NET INCOME" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends, excluding, however, (1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with (a) any Asset Sale (including, without limitation, dispositions pursuant to sale and leaseback transactions) or (b) the disposition of any securities or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries, and (2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss) or (3) the effect of non-cash accounting adjustments resulting from a change in the tax status of a flow-through tax entity to a "C-corporation" or other entity taxed similarly. "NET LOSS PROCEEDS" means the aggregate cash proceeds received by an Issuer or any of its Restricted Subsidiaries in respect of any Event of Loss, including, without limitation, insurance proceeds from 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 taxes paid or payable by an owner of the Issuers or any Restricted Subsidiary). "NET PROCEEDS" means the aggregate cash proceeds received by an Issuer or any of its Restricted Subsidiaries in respect of any Asset Sale, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking fees and expenses, consent fees, 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, finder's or broker's commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (including, without limitation, any taxes paid or payable by an owner of the Issuers or any Restricted Subsidiary), amounts required to be applied to the repayment of Indebtedness secured by a Lien (other than the Notes) on the asset or assets that are the subject of such Asset Sale or amounts permitted by the terms of such Indebtedness to be otherwise reinvested in the Project or the Phase IA Project to the extent so reinvested, 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, any reserve for adjustment in respect of the sale price of such asset or 16 assets or any liabilities associated with the asset disposed of in such Asset Sale and the deduction of appropriate amounts provided by the seller as a reserve in accordance with GAAP against any liabilities associated with the assets disposed of in the Asset Sale and retained by an Issuer or any Restricted Subsidiary after that Asset Sale. "NON-RECOURSE FINANCING" means Indebtedness incurred in connection with the construction, purchase or lease of personal or real property or equipment or Specified FF&E (1) as to which the lender upon default may seek recourse or payment against the Company or any Restricted Subsidiary only through the return or foreclosure or sale of the property or equipment or the other Specified FF&E so constructed, purchased or leased and to any proceeds of such property and Indebtedness and the related collateral account in which such proceeds are held and (2) may not otherwise assert a valid claim for payment on such Indebtedness against the Company or any Restricted Subsidiary or any other property of the Company or any Restricted Subsidiary except in each case in the case of fraud and other customary non-recourse exceptions. "NON-RECOURSE INDEBTEDNESS" means Indebtedness or Disqualified Stock, as the case may be, or that portion of Indebtedness or Disqualified Stock, as the case may be, (1) as to which none of the Company, Venetian or any of their Restricted Subsidiaries (a) provides credit support pursuant to any undertaking, agreement or instrument that would constitute Indebtedness or Disqualified Stock, as the case may be, (other than a Permitted Macau Guarantee) or (b) is directly or indirectly liable (other than a Permitted Macau Guarantee), and (2) with respect to Non-Recourse Indebtedness of an Unrestricted Subsidiary, no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary but excluding any default on a Permitted Macau Guarantee by the Issuers or any of their Restricted Subsidiaries) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness (other than Indebtedness under the Bank Credit Facility) or Disqualified Stock, as the case may be, of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or Disqualified Stock, as the case may be, or cause the payment thereof to be accelerated or payable prior to its stated maturity. "NON-U.S. PERSON" means a Person who is not a U.S. Person. "NOTE COLLATERAL" means all assets, now owned or hereafter acquired, of the Company, Venetian or any Note Guarantor defined as Collateral in the Collateral Documents. "NOTE CUSTODIAN" means the Trustee, when serving as custodian for the Depositary with respect to the Notes in global form, or any successor entity thereto. "NOTE GUARANTEE" means the Guarantee by each Note Guarantor of the Issuers' payment obligations under this Indenture and on the Notes, executed pursuant to the provisions of this Indenture. "NOTE GUARANTORS" has the meaning assigned to it in the preamble to this Indenture, and includes any successors thereto permitted under this Indenture. "NOTES" has the meaning assigned to it in the preamble to this Indenture. 17 "OBLIGATIONS" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "OFFERING" means the offering by the Issuers of $850,000,000 in aggregate principal amount of the Initial Notes. "OFFICER" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person. "OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Issuers or a Note Guarantor, as the case may be, by two Officers (or if a limited liability company, two Officers of the managing member of such limited liability company) of the Issuers or a Note Guarantor, as the case may be, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, Venetian (or its managing member) or a Note Guarantor, as the case may be, that meets the requirements set forth in the Indenture. "OPINION OF COUNSEL" means an opinion from legal counsel, that meets the requirements of Section 13.05 hereof. The counsel may be an employee of or counsel to the Issuers, any Subsidiary of the Issuers, any Note Guarantor or the Trustee. "OTHER PHASE II AGREEMENTS" means any agreement entered into by the Issuers or their Subsidiaries with a Person for construction, development and operation of a hotel or casino on the Phase II Land (other than the Phase II Resort and the Phase IA Project). "PARTICIPANT" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to The Depository Trust Company, shall include Euroclear and Clearstream). "PERMITTED INVESTMENTS" means: (1) any Investments in the Issuers, any Note Guarantor or in any Restricted Subsidiary that is not a Note Guarantor if the Investments in such Restricted Subsidiary that is not a Note Guarantor from the Issuers, any Note Guarantor or any of the other Restricted Subsidiaries aggregate less than $2.0 million; (2) any Investments in Cash Equivalents; (3) Investments by the Issuers or any Restricted Subsidiary of the Issuers in a Person, if as a result of such Investment (a) such Person becomes a Note Guarantor or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, one of the Issuers or a Note Guarantor; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof; (5) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of any of the Issuers; (6) receivables owing to the Issuers or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; PROVIDED, HOWEVER, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (7) 18 payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (8) loans or advances to employees, former employees or directors of the Issuers or their Restricted Subsidiaries (a) to fund the exercise price of options granted under the employment agreements or the Issuers' stock option plans or agreements, in each case, as approved by the Company's Board of Directors or (b) for any other purpose not to exceed $2.0 million in the aggregate at any one time outstanding under this clause (b); (9) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Issuers and any Restricted Subsidiary or in satisfaction of judgments; (10) Investments in any Person engaged in the Principal Business which Investment is solely in the form of Equity Interests (other than Disqualified Stock) of the Issuers; (11) any Investments in any of the Macau Entities (including an Investment through an Unrestricted Subsidiary that has an Investment in a Macau Entity) not to exceed (a) $40.0 million in the aggregate for cash and Cash Equivalents and (b) $90.0 million in the aggregate for any Permitted Macau Guarantees; PROVIDED that such Investments will only be permitted pursuant to this clause (11) for so long as any of the Issuers or a Restricted Subsidiary of the Issuers are the only Affiliates of the Issuers that have the contractual right to receive Macau Fees; and PROVIDED FURTHER that such Macau Fees, in the aggregate, shall be reasonably comparable in amount to management fees that an unrelated, third-party manager would receive in similar circumstances, as evidenced by an opinion of an Independent Financial Advisor in the gaming or hospitality field; (12) any Investments, not to exceed $20.0 million in the aggregate under this clause (12), in any Subsidiary of the Issuer; PROVIDED that (1) the proceeds of such Investments are used solely for design, architectural, engineering or permitting or other costs, including operating costs, in connection with the development of the Phase II Resort and (2) such costs are not incurred in connection with actual construction (excluding demolition, site preparation, site excavation and foundation work and excluding the Phase IA Project) on the Phase II Land; and (13) Investments in Supplier Joint Ventures in an amount not to exceed $10.0 million in the aggregate under this clause (13). "PERMITTED LIENS" means (1) Liens in favor of the Issuers and any Wholly Owned Restricted Subsidiary of the Issuers; PROVIDED that if such Liens are on any Note Collateral, that such Liens are either collaterally assigned to the Trustee or a collateral agent for the Trustee or subordinate to the Lien in favor of the Trustee securing the Notes or any Note Guarantee; (2) Liens on property of a Person existing at the time such Person became a Restricted Subsidiary, is merged into or consolidated with or into, or wound up into, one of the Issuers or any Restricted Subsidiary of the Issuers; PROVIDED, that such Liens were in existence prior to the consummation of, and were not entered into in contemplation of, such acquisition, merger or consolidation or winding up and do not extend to any other assets other than those of the Person acquired by, merged into or consolidated with one of the Issuers or such Restricted Subsidiary; (3) Liens on property existing at the time of acquisition thereof by the Issuers or any Restricted Subsidiary of the Issuers; PROVIDED that such Liens were in existence prior to the consummation of, and were not entered into in contemplation of, such acquisition; (4) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business or in the construction of the Project or the Phase IA Project and which obligations are not expressly prohibited by the Indenture; PROVIDED, HOWEVER, that the Issuers have obtained a title insurance endorsement insuring against losses arising therewith or if such Lien arises in the ordinary course of business or in the construction of the Project or the Phase IA Project, the Issuers have bonded within a reasonable time after 19 becoming aware of the existence of such Lien; (5) Liens securing obligations in respect of the Indenture, the Notes, including Additional Notes and Exchange Notes, and any Note Guarantee; (6) leases or Liens, to the extent permitted by Section 4.21 hereof; (7) (a) Liens for taxes, assessments or governmental charges or claims or (b) statutory Liens of landlords, and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other similar Liens arising in the ordinary course of business or in the construction of the Project or the Phase IA Project, in the case of each of (a) and (b), with respect to amounts that either (i) are not yet delinquent or (ii) are being contested in good faith by appropriate proceedings as to which appropriate reserves or other provisions have been made in accordance with GAAP; (8) (a) easements, rights-of-way, avigational servitudes, restrictions, minor defects or irregularities in title and other similar charges or encumbrances which do not interfere in any material respect with the ordinary conduct of business of the Issuers and their Restricted Subsidiaries and (b) any Liens or other exception to title that appear on a policy of title insurance, or a commitment to issue such policy, with respect to the Project Assets and the Phase IA Project Assets, in favor of the Trustee on the Issuance Date; (9) a leasehold mortgage in favor of a party financing the lease of space within the Project and/or the Phase IA Project; PROVIDED that (a) the lease affected by such leasehold mortgage is permitted by Section 4.21 hereof, (b) neither the Issuers nor any Restricted Subsidiary is liable for the payment of any principal of, or interest or premium on, such financing and (c) the affected lease and leasehold mortgage are expressly made subject and subordinate to the Lien of the Indenture Deed of Trust, subject to the provisions of the last paragraph of Section 4.21 hereof; (10) Liens created or contemplated by the Cooperation Agreement and the HVAC Services Agreement; (11) Liens on real property of the Issuers arising pursuant to the Harrah's Road Way Agreement; (12) Liens (a) to secure Indebtedness permitted by clauses (g), (j) or (p) of the second paragraph of Section 4.09 hereof and extending only to the assets or gaming equipment as acquired and any related assets specified in the definition of Specified FF&E and (b) to secure Indebtedness permitted by clause (d) of the second paragraph of Section 4.09 hereof; PROVIDED that such Liens are not materially greater in extent than the Liens securing the Indebtedness so refinanced; (13) Liens securing all Obligations under the Credit Facilities incurred pursuant to clause (a) or (o) of the second paragraph of Section 4.09 hereof, PROVIDED that the Notes will have a second priority Lien, subject to Permitted Liens, on any collateral subject to the Liens permitted by this clause (13) (other than the disbursement account under the Bank Credit Facility and any proceeds held in such account) for so long as such Liens are securing the obligations described above in this clause (13); (14) until Phase IA Completion is achieved, Permitted Liens (as defined in the Bank Credit Facility in effect on the date hereof) on Phase IA Project Assets; (15) Liens incurred in connection with Hedging Obligations incurred pursuant to clause (f) of the second paragraph of Section 4.09 hereof, including first priority Liens on the Note Collateral if the underlying obligations subject to the Hedging Obligations are secured by a first priority Lien on the Note Collateral or if the Hedging Obligations are in respect of currency exchange hedges; (16) licenses of patents, trademarks and other intellectual property rights granted by the Issuers or any Subsidiary of the Issuers in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of such Issuer or such Subsidiary; (17) any judgment attachment or judgment Lien not constituting an Event of Default; (18) 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; (19) Liens securing obligations in respect of any Senior Secured Debt, provided the Issuers' Senior Secured Debt to Cash Flow Ratio at the time of incurrence would be no greater 20 than 2.75 to 1.0 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), if the additional Senior Secured Debt and application of proceeds had occurred at the beginning of the four-quarter period used to determine Senior Secured Debt to Cash Flow Ratio; PROVIDED that to the extent any Liens incurred under this clause (19) are in connection with any of the First Lien Credit Facilities, the Notes will have a second priority Lien, subject to Permitted Liens, on any and all collateral subject to the Liens permitted by this clause (19) for so long as such Liens are securing obligations under such Credit Facility; (20) Liens on the Mall Collateral (a) securing obligations in respect of the Mall Financing Agreement and (b) permitted under the Mall Financing Agreement; PROVIDED that no other assets or collateral of the Issuers or any Restricted Subsidiary may be subject to such Liens; (21) Liens incurred or deposits made in connection with workers' compensation, unemployment insurance and other types of social security, or to secure performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, trade contracts performance and return of money bonds and other obligation of a like nature incurred in the ordinary course; (22) Liens incurred in connection with the construction of a pedestrian bridge or pedestrian tunnel under Las Vegas Boulevard and Sands Avenue provided that such Liens will not (a) materially interfere with, impair or detract from the operation of the business of the Issuers and their Restricted Subsidiaries or the construction or operation of the Project Assets and (b) cause a material decrease in the value of the Note Collateral; (23) Liens arising from filing UCC financing statements relating solely to leases permitted by Section 4.21 hereof or the other provisions of this Indenture; (24) 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; (25) Liens created under the Pre-development Agreement as in effect on the Issuance Date; (26) 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 the construction of the Project and the Phase IA Project; and (27) Liens in favor of the Trustee as trustee with respect to the Issuers' 12 1/4% Mortgage Notes due 2004 on the Defeasance Account under the Defeasance Trust Agreement and any proceeds held in such Defeasance Account for the benefit of the holders of the Issuers' 12 1/4% Mortgage Notes due 2004. "PERMITTED MACAU GUARANTEE" means a guarantee of Indebtedness of, or performance by, any Macau Entities by any Issuer or any Restricted Subsidiary, which Guarantee is permitted by Section 4.09 hereof. "PERMITTED QUARTERLY TAX DISTRIBUTIONS" means quarterly distributions of Tax Amounts determined on the basis of the estimated taxable income of the Company 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), for the related Estimation Period, as in a statement filed with the Trustee; PROVIDED, HOWEVER, that (1) prior to any distributions of Tax Amounts the Issuers shall deliver an Officers' Certificate 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 the Company, the Company 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 (2) at the time of such distributions, the most recent audited financial statements of the Company reflect that the Company was treated as a Subchapter S corporation under the Code or a substantially similarly treated pass-through entity for federal 21 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, (1) if the True-up Amount is due to the members or shareholders, as the case may be, the Permitted Quarterly Tax Distribution payable by the Company or Venetian, as the case may be, for the Estimation Period shall be increased by such True-up Amount, and (2) if the True-up Amount is due to the Company or Venetian, the Permitted Quarterly Tax Distribution payable by the Company 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 the Company or Venetian, as the case may be. "PERMITTED SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Issuers or any of their Restricted Subsidiaries (1) for which no installment of principal matures earlier than three months after the Notes mature and (2) for which the payment of principal and interest is subordinated in right of payment to the Notes or any Note Guarantee at least to the extent set forth in Appendix A-2 hereto. "PERSON" means any individual, corporation, partnership, limited liability company or partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PHASE IA COMPLETION DATE" means the first date that any of the Issuers or any Restricted Subsidiary receives a temporary or permanent certificate of occupancy from Clark County, Nevada for at least 950 hotel rooms in the Phase IA Project. "PHASE IA PROJECT" means the contemplated 1,000 room expansion, 150,000 square foot additional meeting space and 1,000 parking space expansion, all as more particularly described in the Offering Circular, dated May 22, 2002, relating to the Offering, and as may be modified in accordance with the Bank Credit Facility. "PHASE IA PROJECT ASSETS" means, with respect to the Phase IA Project at any time, all of the assets then in use related to the Phase IA Project including any real estate assets, any buildings or improvements thereon, and all equipment, furnishings and fixtures, but excluding: (1) the Phase II Land and any improvements thereon; (2) any obsolete personal property determined by the Company's Board of Directors to be no longer useful or necessary to the operations or support of the Phase IA Project; (3) the equipment owned by the HVAC Provider (unless purchased by Venetian or Note Guarantor after the date hereof); and (4) any equipment or materials leased from a third party in the ordinary course of business or owned or used by a third party in connection with the construction of the Phase IA Project Assets. 22 "PHASE II HOLDINGS" means Lido Casino Resort Holding Company, LLC, a Delaware limited liability company and, at the Issuance Date, an Unrestricted Subsidiary of the Issuers. "PHASE II INTERMEDIATE HOLDINGS" means Lido Intermediate Holding Company, LLC, a Delaware limited liability company. "PHASE II LAND" means the real property consisting of approximately 14 acres adjoining the land containing the Project and which real property is as of the Issuance Date owned by the Phase II Subsidiary. "PHASE II MANAGER" means Lido Casino Resort MM, Inc., a Nevada corporation and, at the Issuance Date, an Unrestricted Subsidiary of the Issuers. "PHASE II RESORT" means a potential development on the Phase II Land which may be physically connected to the Casino Resort and/or the Phase IA Project. "PHASE II SUBSIDIARY" means Lido Casino Resort, LLC, a Nevada limited liability company and, at the Issuance Date, an Unrestricted Subsidiary of the Issuers. "PLANS AND SPECIFICATIONS" means the Phase I-A Project Plans and Specifications as defined in the Bank Credit Facility, as the same may be modified and supplemented from time to time in accordance with the Bank Credit Facility. "PRE-DEVELOPMENT AGREEMENT" means the Sands Resort Hotel & Casino Agreement, dated February 18, 1997, by and between Clark County and the Company, as amended, revised, modified and restated. "PREFERRED STOCK" means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up. "PRINCIPAL BUSINESS" means the casino gaming, hotel, retail and entertainment mall and resort business and any activity or business incidental, directly related or similar thereto (including owning interests in Subsidiaries, operating the conference center and meeting facilities and owning and operating a retail and entertainment mall and acting as a member of Venetian in the case of the Company), 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 designed to promote, market, support, develop, construct or enhance the casino gaming, hotel, retail and entertainment mall and resort business operated by the Company, Venetian and direct and indirect Restricted Subsidiaries (including, without limitation, engaging in transactions with Affiliates and incurring Indebtedness, providing guarantees or providing other credit support, in each case to the extent permitted under the Indenture), owning and operating joint ventures to supply materials or services for the construction or operation of any resorts owned or operated by the Company and its Restricted Subsidiaries and entering into casino leases or management agreements for any casino situated on land owned by the Issuers or any of their Subsidiaries or owned or operated by the Issuers or any Affiliate of the Issuers. For purposes of clarity, "Principal Business" shall also include the business proposed to be entered into by the Macau Entities and the Issuers' interest in 23 such projects, each, as described in the Offering Circular, dated May 22, 2002, relating to the Offering. "PRINCIPAL STOCKHOLDER" means Sheldon G. Adelson. "PRIVATE PLACEMENT LEGEND" means the legend set forth in Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "PROJECT" means the Venetian-themed hotel, casino, retail, meeting and entertainment complex, including the Mall, with related heating, ventilation and air conditioning and power station facilities located at 3355 Las Vegas Boulevard South, Clark County, Nevada. "PROJECT ASSETS" means, with respect to the Project at any time, all of the assets then in use related to the Project including any real estate assets, any buildings or improvements thereon, and all equipment, furnishings and fixtures, but excluding: (1) the Phase II Land and any improvements thereon; (2) any obsolete personal property determined by the Company's Board of Directors to be no longer useful or necessary to the operations or support of the Project; (3) the equipment owned by the HVAC Provider (unless purchased by Venetian or a Note Guarantor after the date hereof); and (4) any equipment leased from a third party in the ordinary course of business. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "QUALIFIED IPO" means an initial public offering of the common equity interests in an Issuer or an entity that controls, directly or indirectly, or is a managing member of, Venetian, such that such common equity interests are thereafter traded on a stock exchange in the United States or the Nasdaq national system. "QUARTERLY PAYMENT PERIOD" means the period commencing on the tenth day and ending on 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 the Issuers, be paid during the last five days of the immediately preceding December). "REFINANCING TRANSACTIONS" means the Refinancing Transactions described in the Offering Circular, dated May 22, 2002, relating to the Offering. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of June 4, 2002, by and among the Issuers, the Initial Purchasers and the other parties named on the signature pages thereof, and any similar future registration rights agreement entered into with respect to any Additional Notes (and any other Notes to the extent necessary so that all outstanding Notes participating may be traded as a single class and series), each, as may be amended, modified or supplemented from time to time. "REGULATION S" means Regulation S promulgated under the Securities Act. 24 "REGULATION S GLOBAL NOTE" means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate. "REGULATION S PERMANENT GLOBAL NOTE" means a permanent global Note in the form of Exhibit A-2 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period. "REGULATION S TEMPORARY GLOBAL NOTE" means a temporary global Note in the form of Exhibit A-2 hereto bearing the Private Placement Legend and the Regulation S Temporary Global Note Legend set forth in Section 2.06(g)(iii) and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S. "RELATED PARTIES" means (1) any spouse and any child, stepchild, sibling or descendant of the Principal Stockholder, (2) any estate of the Principal Stockholder or any person under clause (1), (3) any person who receives a beneficial interest in the Company or Venetian from any estate under clause (2) to the extent of such interest, (4) any executor, personal administrator or trustee who holds such beneficial interest in the Company or Venetian for the benefit of, or as fiduciary for, any person under clauses (1), (2) or (3) to the extent of such interest, (5) any corporation, trust, or similar entity owned or controlled by the Principal Stockholder or any person referred to in clause (1), (2), (3) or (4) or for the benefit of any person referred to in clause (1) and (6) the spouse or issue of one or more of the individuals described in clause (1). "REPURCHASE OFFER" means an offer made by the Issuers to purchase all or any portion of a Holder's Notes pursuant to Sections 4.10, 4.11 or 4.16 hereof, respectively. "RESPONSIBLE OFFICER," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing the Private Placement Legend. "RESTRICTED GLOBAL NOTE" means a Global Note bearing the Private Placement Legend. "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED PERIOD" means the 40-day restricted period as defined in Regulation S. 25 "RESTRICTED SUBSIDIARY" means, at any time, any direct or indirect Subsidiary of the Issuers that is not then an Unrestricted Subsidiary; PROVIDED, HOWEVER, that upon the occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of Restricted Subsidiary. "RULE 144" means Rule 144 promulgated under the Securities Act. "RULE 144A" means Rule l44A promulgated under the Securities Act. "RULE 903" means Rule 903 promulgated under the Securities Act. "RULE 904" means Rule 904 promulgated under the Securities Act. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SECURITY AGREEMENT" means the Security Agreement, dated as of the Issuance Date, by and among the Issuers, the Note Guarantors named therein and The Bank of Nova Scotia as Intercreditor Agent, as amended, modified or revised from time to time in accordance with its terms and this Indenture. "SENIOR INDEBTEDNESS" means Indebtedness that is not subordinated by its terms in right of payment to the payment of principal or interest of other Indebtedness. "SENIOR SECURED DEBT" means, at any time, the Indebtedness of the Issuers or any Restricted Subsidiary otherwise permitted to be incurred by Section 4.09 hereof that is secured by a Lien, on the Note Collateral (other than the Notes and the Note Guarantees) or any other assets of the Issuers or the Restricted Subsidiaries. Senior Secured Debt will include any Indebtedness incurred under any Credit Facility and any Mall Financing Agreement for so long as such Indebtedness is as described in the previous sentence. "SENIOR SECURED DEBT TO CASH FLOW RATIO" means with respect to any Person, as of any date of determination, the ratio of (a) the consolidated Senior Secured Debt of such Person and its Restricted Subsidiaries as of such date to (b) the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for the four most recent full fiscal quarters ending immediately prior to such date for which internal financial statements are available, determined on a pro forma basis after giving effect to all acquisitions or dispositions of assets made by such Person and its Restricted Subsidiaries from the beginning of such four-quarter period through and including such date of determination (including any related financing transactions) as if such acquisitions and dispositions had occurred at the beginning of such four-quarter period. In addition, for purposes of making the computation referred to above, the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the date of determination, shall be excluded. Consolidated Senior Secured Debt shall be calculated without duplication of guarantees and Hedging Obligations to the extent that the principal underlying obligation is included in such calculation. 26 "SERVICES AGREEMENT" means that Amended and Restated Services Agreement by and among the Company, Interface, Interface Holdings and the parties stated on the signature page thereto, as amended from time to time in accordance with its terms. "SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as defined in any Registration Rights Agreement. "SIGNIFICANT SUBSIDIARY" means any Subsidiary which would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issuance Date. "SPECIFIED FF&E" means any furniture, fixtures, equipment and other personal property financed or refinanced with the proceeds from the incurrence of Indebtedness pursuant to clauses (g), (j) or (p) of the second paragraph of Section 4.09 hereof including: (1) each and every item or unit of equipment acquired with proceeds thereof; (2) each and every item or unit of equipment acquired in substitution or replacement thereof; (3) all parts, components and other items pertaining to such collateral; (4) all documents (including without limitation all warehouse receipts, dock receipts, bills of lading and the like); (5) all licenses (other than gaming licenses), warranties, guarantees, service contracts and related rights and interests covering all or any portion of such collateral; (6) to the extent not otherwise included, all proceeds (including insurance proceeds) of any of the foregoing and all accessions to, substitutions and replacements for, and the rents, profits and products of, each of the foregoing (including collateral accounts); and (7) so long as Indebtedness under the First Lien Credit Facilities are outstanding, such other collateral reasonably determined by the lenders under the First Lien Credit Facilities to be collateral for Indebtedness incurred in connection with the purchase of Specified FF&E so long as the Lien securing Indebtedness incurred under any First Lien Credit Facilities does not extend to such collateral. "STATED MATURITY" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest, accreted value, or principal prior to the date originally scheduled for the payment or accretion thereof. "SUBORDINATED INDEBTEDNESS" means any Indebtedness that by its terms is expressly subordinated in right of payment in any respect (either in the payment of principal or interest) to the payment of principal or interest on the Notes. "SUBSIDIARY" means, with respect to any Person, (1) any corporation, association, or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (2) any partnership of which more than 50% of the partnership's capital accounts, distribution rights or general or limited partnership interests are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof. 27 "SUPPLIER JOINT VENTURE" means any Person that supplies or provides equipment, materials or services to the Issuers or any contractor in the Project and/or Phase IA Project or the construction of the Phase II Resort and in which the Issuers or one of their Restricted Subsidiaries have Investments. "TAX AMOUNT" means, with respect to an Estimation Period or a taxable year, as the case may be, an amount equal to (1) the product of (a) the taxable income (including all separately stated items of income) of the Company or Venetian, as the case may be, for such Estimation Period or a taxable year, as the case may be, and (b) the Applicable Tax Percentage reduced by (2) to the extent not previously taken into account, any income tax benefit attributable to the Company or Venetian in the current taxable year, 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 taxable year, or portion thereof, 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 (3) the deductibility of state and local taxes for federal income tax purposes, and (4) any difference in the Applicable Tax Percentage resulting from the nature of taxable income (such a long-term capital gain as opposed to ordinary income). "TAX AMOUNTS CPA" means a nationally recognized certified public accounting firm. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "TREASURY RATE" means the yield to maturity at the time of the computation of the United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15(519), which has become publicly available at least two Business Days prior to the date fixed for prepayment (or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the then remaining average life to June 15, 2006; PROVIDED, HOWEVER, that if the average life of such note is not equal to the constant maturity of the United States Treasury security for which weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the average life of such notes is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "TRUE-UP AMOUNT" means, in respect of a particular taxable year, an amount determined by the Tax Amounts CPA equal to the difference between (1) the aggregate Permitted Quarterly Tax Distributions actually distributed in respect of such taxable year, without taking into account any adjustment 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 (2) the Tax Amount permitted to be distributed in respect of such year as determined by reference to the Company'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 Company or Venetian (including a filing of an 28 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 (1) above over the amount described in clause (2) above shall be referred to as the "True-up Amount due to the Company" or the "True-up Amount due to Venetian," as the case may be, and the excess, if any, of the amount described in clause (2) over the amount described in clause (1) 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 Trustee 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). "TRUSTEE" means the party named as such in the preamble hereto until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "UNRESTRICTED GLOBAL NOTE" means a permanent global Note in the form of Exhibit A-1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. "UNRESTRICTED SUBSIDIARY" means (1) each of Phase II Holdings, Phase II Manager and Phase II Subsidiary; and (2) any entity that would have been a Restricted Subsidiary of the Company but for its designation as an "Unrestricted Subsidiary" in accordance with the provisions of the Indenture and any Subsidiary of such entity, so long as it remains an Unrestricted Subsidiary in accordance with the terms of the Indenture. In addition, as of the Issuance Date, all of the Subsidiaries of Venetian Venture Development, LLC, a Nevada limited liability company, will be Unrestricted Subsidiaries unless otherwise designated as Restricted Subsidiaries by the Issuers pursuant to the terms of this Indenture. "U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the Securities Act. "VENETIAN" means Venetian Casino Resort, LLC, a Nevada limited liability company, or any successor thereto that is permitted under this Indenture. "VOTING STOCK" means, with respect to any Person that is a corporation, any class or series of Capital Stock of such Person that is ordinarily entitled to vote in the election of directors thereof at a meeting of stockholders called for such purpose, without the occurrence of any additional event or contingency and with respect to any other Person that is a limited liability company, membership interests entitled to manage the operations or business of the limited liability company. 29 "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the number of years (calculated to the nearest one-twelfth) obtained by dividing (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal or liquidation preference, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (2) the then outstanding principal amount or liquidation preference, as applicable, of such Indebtedness or Disqualified Stock, as the case may be. "WHOLLY OWNED RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary that is a Restricted Subsidiary. "WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and/or one or more Wholly Owned Subsidiaries of such Person. A Wholly Owned Subsidiary of the Issuers shall include any Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall be owned by one or both Issuers and/or one or more Wholly Owned Subsidiaries of the Issuers. Section 1.02. OTHER DEFINITIONS.
Defined in Term Section ---- ------- "Additional Notes"............................................2.01(a) "Affiliate Transaction"..........................................4.12 "Asset Sale Offer"...............................................4.10 "Authentication Order"...........................................2.02 "Benefited Party"...............................................11.01 "Change of Control Offer"........................................4.16 "Change of Control Payment"......................................4.16 "Change of Control Payment Date".................................4.16 "Covenant Defeasance"............................................8.03 "Custodian"......................................................6.01 "DTC"............................................................2.03 "Employee Stock Buybacks"........................................4.07 "Event of Default"...............................................6.01 "Event of Loss Offer"............................................4.11 "Excess Loss Proceeds"...........................................4.11 "Excess Proceeds"................................................4.10 "incur"..........................................................4.09 "Lease Transaction"..............................................4.21 "Legal Defeasance"...............................................8.02 "Offer Amount"...................................................3.10 "Offer Period"...................................................3.10 "Paying Agent"...................................................2.03 "Payment Blockage Notice"....................................11.07(c)
30 "Payment Default".............................................6.01(f) "Permitted Junior Securities"................................11.07(e) "Permitted Stockholder Indebtedness".....................Appendix A-2 "Purchase Date"..................................................3.10 "Refinancing Fee Amounts".....................................4.09(d) "Refinancing Indebtedness".......................................4.09 "Registrar"......................................................2.03 "Repurchase Offer"...............................................3.10 "Restricted Payments"............................................4.07
Section 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "INDENTURE SECURITIES" means the Notes and the Note Guarantees; "INDENTURE SECURITY HOLDER" means a Holder of a Note; "INDENTURE TO BE QUALIFIED" means this Indenture; "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee: "OBLIGOR" on the Notes means each of the Issuers, the Note Guarantors, if any, and any successor obligor upon the Notes or any Note Guarantee, as the case may be. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; 31 (6) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time; (7) the term "redeem" and the correlative terms "redemption" and "redeemed" shall not include any Repurchase Offer; and (8) the term "consolidated" when used in the context of the Issuers and their Restricted Subsidiaries shall exclude all assets, liabilities, revenue, or expenses of Unrestricted Subsidiaries; PROVIDED, HOWEVER, that if Venetian ceases to be a Subsidiary of Las Vegas Sands, Inc., the term the "Company" shall mean Venetian and Las Vegas Sands, Inc. on a combined basis. : ARTICLE 2. THE NOTES Section 2.01. FORM AND DATING. (a) GENERAL. Upon the execution and delivery of this Indenture, or from time to time thereafter, Notes in an aggregate principal amount not in excess of $850,000,000 may be executed and delivered by the Issuers to the Trustee for authentication, accompanied by an Officers' Certificate of the Issuers directing such authentication, and the Trustee shall thereupon authenticate and deliver said Notes to or upon the written order of the Issuers (as set forth in such Officers' Certificate). Subject to compliance with Section 4.09 hereof and delivery of the Officers' Certificate described above, the Issuers may from time to time, without the consent of Holders of Notes, create and issue additional notes having the same terms and conditions as the Notes in all respects, except for issue date, issue price and first interest payment date thereon in an aggregate principal amount permitted to be incurred pursuant to Section 4.09 hereof (the "ADDITIONAL NOTES"). The Notes and Additional Notes, if any will be treated as a single class for purposes of this Indenture, including waivers, amendments, redemptions and offers to purchase. Unless the context otherwise requires, for all purposes of this Indenture, references to the "Notes" include any Additional Notes actually issued and outstanding. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 or A-2 attached hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuers, the Note Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) GLOBAL NOTES. Notes issued in global form shall be substantially in the form of Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the 32 Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Note Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. (c) TEMPORARY GLOBAL NOTES. Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Issuers. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (d) EUROCLEAR AND CLEARSTREAM PROCEDURES APPLICABLE. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream" and "Customer Handbook" of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Notes that are held by Participants through Euroclear or Clearstream. Section 2.02. EXECUTION AND AUTHENTICATION. One Officer of each Issuer shall sign the Notes for the Issuers by manual or facsimile signature. Each Issuer's seal shall be reproduced on the Notes and may be in facsimile form. 33 If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Issuers signed by an Officer of each Issuer (an "AUTHENTICATION ORDER"), authenticate Notes for original issue up to the aggregate principal amount stated in paragraph 4 of the Notes. The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuers. Section 2.03. REGISTRAR AND PAYING AGENT. The Issuers shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("REGISTRAR") and an office or agency where Notes may be presented for payment ("PAYING AGENT"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuers or any of their Subsidiaries may act as Paying Agent or Registrar. The Issuers initially appoint The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Note Custodian with respect to the Global Notes. Section 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest on the Notes, and will notify the Trustee of any default by the Issuers in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuers or a Subsidiary) shall have no further liability for the money. If the Issuers or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy 34 or reorganization proceedings relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes. Section 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Issuers shall otherwise comply with TIA Section 312(a). Section 2.06. TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Issuers for Definitive Notes if (i) the Issuers deliver to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuers within 120 days after the date of such notice from the Depositary or (ii) the Issuers in their sole discretion determine that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and deliver a written notice to such effect to the Trustee; PROVIDED that in no event shall the Regulation S Temporary Global Note be exchanged by the Issuers for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a). However, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof. (b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: 35 (i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; PROVIDED, HOWEVER, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Temporary Regulation S Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i). (ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN GLOBAL NOTES. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant's account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; PROVIDED that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Issuers in accordance with Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. (iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED GLOBAL NOTE. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following: 36 (A) if the transferee will take delivery in the form of a beneficial interest in the l44A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transferee will take delivery in the form of a beneficial interest in the IAI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications and certificates and Opinion of Counsel required by item (3) thereof, if applicable. (iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with any Registration Rights Agreement and the Holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Issuers; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with any Registration Rights Agreement; (C) such transfer is effected by a participating broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with any Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest 37 in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR DEFINITIVE NOTES. (i) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO RESTRICTED DEFINITIVE NOTES. If any Holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance 38 with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable: (F) if such beneficial interest is being transferred to the Issuers or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. (ii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES TO UNRESTRICTED DEFINITIVE NOTES. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with any Registration Rights Agreement and the 39 holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Issuers; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with any Registration Rights Agreement; (C) such transfer is effected by a participating broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with any Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1 )(b) thereof; or (2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES TO UNRESTRICTED DEFINITIVE NOTES. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from 40 the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement Legend. (d) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR BENEFICIAL INTERESTS. (i) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such Restricted Definitive Note is being transferred to the Issuers or any of their Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, 41 the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the IAI Global Note. (ii) RESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with any Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Issuers; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with any Registration Rights Agreement; (C) such transfer is effected by a participating broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with any Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. 42 Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) UNRESTRICTED DEFINITIVE NOTES TO BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL NOTES. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR DEFINITIVE NOTES. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e). (i) RESTRICTED DEFINITIVE NOTES TO RESTRICTED DEFINITIVE NOTES. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and (C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable. 43 (ii) RESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE NOTES. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with any Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Issuers; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with any Registration Rights Agreement; (C) any such transfer is effected by a participating broker-dealer pursuant to the Exchange Offer Registration Statement in accordance with any Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) UNRESTRICTED DEFINITIVE NOTES TO UNRESTRICTED DEFINITIVE NOTES. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in accordance with any Registration Rights Agreement, the Issuers shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or 44 more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Issuers, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Definitive Notes so accepted Definitive Notes in the appropriate principal amount. (g) LEGENDS. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) PRIVATE PLACEMENT LEGEND. (A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (INCLUDING RULE 144 THEREUNDER (IF AVAILABLE)), (4) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS." (B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. 45 (ii) GLOBAL NOTE LEGEND. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUERS." (iii) REGULATION S TEMPORARY GLOBAL NOTE LEGEND. The Regulation S Temporary Global Note shall bear a legend in substantially the following form: "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON." (h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or cancelled in whole and not in part, each such Global Note shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. 46 (i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Issuers' order or at the Registrar's request. (ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.11, 4.16 and 9.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Issuers shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall 47 issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuers may charge for their expenses in, replacing a Note. Every replacement Note is an additional obligation of the Issuers and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for (i) those cancelled by it, (ii) those delivered to it for cancellation, (iii) those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and (iv) those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note; HOWEVER, Notes held by the Issuers or a Subsidiary of the Issuers shall not be deemed to be outstanding for purposes of Section 3.07(b) hereof. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Issuers, a Subsidiary or an Affiliate of any of the foregoing) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent. Notes owned by the Issuers, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuers, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned shall be so disregarded. Section 2.10. TEMPORARY NOTES. Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Issuers consider appropriate for temporary Notes and as shall be reasonably 48 acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. CANCELLATION. The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all cancelled Notes shall be delivered to the Issuers. The Issuers may not issue new Notes to replace Notes that they have paid or that have been delivered to the Trustee for cancellation. Section 2.12. DEFAULTED INTEREST. If the Issuers default in a payment of interest on the Notes, they shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuers shall fix or cause to be fixed each such special record date and payment date; PROVIDED that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. OFFERS TO PURCHASE OR REDEMPTION Section 3.01. NOTICES TO TRUSTEE. If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, they shall furnish to the Trustee, at least 45 days (or such shorter period as may be acceptable to the Trustee) but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. If the Issuers are required to make an offer to purchase Notes pursuant to the provisions of Section 4.10, 4.11 or 4.16 they shall furnish to the Trustee, at least 45 days (or such shorter period as may be acceptable to the Trustee) but not more than 60 days before the scheduled purchase date, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the offer to purchase shall occur, (ii) the offer's terms, (iii) the purchase price, 49 (iv) the principal amount of the Notes to be purchased, and (v) further setting forth a statement to the effect that (a) one of the Issuers or one of their Restricted Subsidiaries has made an Asset Sale and there are Excess Proceeds aggregating more than $10.0 million, (b) the Issuers or one of their Restricted Subsidiaries has suffered an Event of Loss and there are Excess Loss Proceeds aggregating more than $10.0 million or (c) a Change of Control has occurred, as applicable. Section 3.02. SELECTION OF NOTES TO BE PURCHASED OR REDEEMED. If less than all of the Notes are to be purchased in an Asset Sale Offer or Event of Loss Offer, or redeemed at any time, the Trustee shall select the Notes to be purchased or redeemed among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a PRO RATA basis, by lot or in accordance with any other method the Trustee considers fair and appropriate (and in such manner as complies with applicable law; PROVIDED that no Notes of $1,000 or less shall be purchased or redeemed in part). In the event of partial purchase or partial redemption in the manner provided above, the particular Notes to be purchased or redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the purchase or redemption date by the Trustee from the outstanding Notes not previously purchased or called for redemption. In the event that less than all of the Notes properly tendered in an Asset Sale Offer or Event of Loss Offer are to be purchased, the particular Notes to be purchased shall be selected promptly upon the expiration of such Asset Sale Offer or Event of Loss Offer. The Trustee shall promptly notify the Issuers in writing of the Notes selected for purchase or redemption and, in the case of any Note selected for partial purchase or redemption, the principal amount thereof to be purchased or redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be purchased or redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be purchased or redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes purchased or called for redemption also apply to portions of Notes purchased or called for redemption. In the event the Issuers are required to make an Asset Sale Offer or an Event of Loss Offer pursuant to Section 4.10 or 4.11 hereof, respectively, and the amount of Excess Proceeds or Excess Loss Proceeds, as the case may be, to be applied to such purchase would result in the purchase of a principal amount of Notes which is not evenly divisible by $1,000, the Trustee shall promptly refund to the Issuers the amount of Excess Proceeds or Excess Loss Proceeds, as the case may be, that is not necessary to purchase the immediately lesser principal amount of Notes that is so divisible. Section 3.03. NOTICE OF REDEMPTION. Subject to the provisions of Section 3.10 hereof, at least 30 days but not more than 60 days before a purchase or redemption date, the Issuers shall mail or cause to be mailed, by first class mail, postage prepaid, a notice of a purchase or redemption to each Holder whose Notes are to be redeemed at its registered address. 50 The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Issuers defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Issuers' request, the Trustee shall give the notice of redemption in the Issuers' name and at its expense; PROVIDED, HOWEVER, that the Issuers shall have delivered to the Trustee, at least 45 days (or such shorter period as may be acceptable to the Trustee) but no more than 60 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Section 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE. On or prior to any purchase date with respect to an offer to purchase the Notes required hereunder or any redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the purchase or redemption price of, and accrued and unpaid interest and Liquidated Damages, if any, on all Notes to be purchased or redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the purchase or redemption price of, and accrued and unpaid interest and Liquidated Damages, if any, on, all Notes to be purchased or redeemed. 51 If the Issuers comply with the provisions of the preceding paragraph, on and after the purchase or redemption date, interest shall cease to accrue on the Notes or the portions of Notes purchased or called for redemption. If a Note is purchased or redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest and Liquidated Damages shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note tendered for purchase or called for redemption shall not be so paid upon surrender for such tender or redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the purchase or redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06. NOTES PURCHASED OR REDEEMED IN PART. Upon surrender of a Note that is purchased or redeemed in part, the Issuers shall issue and, upon the Issuers' written request, the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unpurchased or unredeemed portion of the Note surrendered. Section 3.07. OPTIONAL REDEMPTION. (a) On or after June 15, 2006, the Notes shall be redeemable at the option of the Issuers, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on June 1 of the years indicated below:
PERCENTAGE OF PRINCIPAL YEAR AMOUNT ---- ------------ 2006........................................105.500% 2007........................................103.667% 2008........................................101.833% 2009 and thereafter.........................100.000%
(b) On or prior to June 15, 2005, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes (which include Additional Notes, if any) originally issued at a redemption price of 111.000% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the redemption date, with the proceeds from one or more Equity Offerings; PROVIDED that at least 65% of the aggregate principal amount of Notes (which include Additional Notes, if any) originally issued remain outstanding immediately after the occurrence of such redemption; and PROVIDED, FURTHER, that (i) such redemption shall occur within 60 days of the date of such Equity Offering and (ii) Notes held by the Issuers and not cancelled will not be deemed to be outstanding for purposes of calculating the aggregate principal amount of Notes outstanding after the occurrence of such redemption. 52 (c) At any time prior to June 15, 2006, the Issuers may, at their option, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the applicable Make-Whole Premium, plus, to the extent not included in the Make-Whole Premium, accrued and unpaid interest and Liquidated Damages, if any, to the date of redemption. (d) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08. REDEMPTION PURSUANT TO GAMING LAW. (a) Notwithstanding any other provision of this Article 3, if any Gaming Authority requires that a Holder or beneficial owner of the Notes must be licensed, qualified or found suitable under any applicable gaming laws in order to maintain any gaming license or franchise of the Issuers or any Restricted Subsidiary under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by the Gaming Authority (or such lesser period that may be required by such Gaming Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Issuers shall have the right, at their option, (1) to require such Holder or beneficial owner to dispose of such Holder's or beneficial owner's Notes within 30 days of receipt of such finding by the applicable Gaming Authority (or such earlier date as may be required by the applicable Gaming Authority) or (2) to call for redemption of the Notes of such Holder or beneficial owner at a redemption price equal to (i) the lesser of (a) 100% of the principal amount thereof, (b) the price at which such Holder or beneficial owner acquired the Notes or (c) the fair market value of the Notes as determined in good faith by the Board of Directors of the Company, together with, in each case, accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the date of redemption or such earlier date as may be required by the Gaming Authority or, the date of the finding of unsuitability by such Gaming Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Authority or (ii) such other price as may be ordered by the Gaming Authority. In connection with any such redemption, and except as may be required by a Gaming Authority, the Issuers shall comply with the procedures contained in the Notes for redemption of the Notes. Immediately upon a determination that a Holder or beneficial owner will not be licensed, qualified or found suitable, the Holder or beneficial owner will have no further rights (a) to exercise any right conferred by the Notes, directly or indirectly, through any trustee, nominee or any other Person or (b) to receive any interest or other distribution or payment with respect to the Notes except the redemption price of the Notes described above. (b) In connection with any redemption pursuant to this Section 3.08, and except as may be required by a Gaming Authority, the Issuers shall be required to comply with Sections 3.01 through 3.06 hereof. (c) The Issuers shall not be required to pay or reimburse any Holder or beneficial owner of Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses shall be the obligation of such Holder or beneficial owner. 53 Section 3.09. MANDATORY REDEMPTION. The Issuers shall not be required to make mandatory redemption or sinking fund payments prior to maturity with respect to the Notes. Section 3.10. REPURCHASE OFFERS. In the event that, pursuant to Section 4.10, 4.11 or 4.16 hereof, the Issuers shall be required to commence an offer to all Holders to purchase Notes (a "REPURCHASE OFFER"), it shall follow the procedures specified below. The Repurchase Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "OFFER PERIOD"). No later than five Business Days after the termination of the Offer Period (the "PURCHASE DATE"), the Issuers shall purchase at the Purchase Price (as determined in accordance with Section 4.10, 4.11 or 4.16 hereof, as the case may be) the principal amount of Notes required to be purchased pursuant to Section 4.10, 4.11 or 4.16 hereof, as the case may be (the "OFFER AMOUNT"), or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Repurchase Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest and Liquidated Damages, if any, shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Repurchase Offer. Upon the commencement of a Repurchase Offer, the Issuers shall send, by first class mail, a notice to the Trustee and each of the Holders. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Repurchase Offer. The Repurchase Offer shall be made to all Holders. The notice, which shall govern the terms of the Repurchase Offer, shall state: (a) that the Repurchase Offer is being made pursuant to this Section 3.10 and Section 4.10, 4.11 or 4.16 hereof, as the case may be, and the length of time the Repurchase Offer shall remain open and that all Notes properly tendered pursuant to such Repurchase Offer will be accepted for payment; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not tendered or accepted for payment shall remain outstanding and continue to accrue interest and Liquidated Damages, if any; (d) that, unless the Issuers default in making such payment, any Note accepted for payment pursuant to the Repurchase Offer shall cease to accrue interest and Liquidated Damages, if any, after the Purchase Date; 54 (e) that Holders electing to have a Note purchased pursuant to any Repurchase Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Issuers, a depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice prior to the close of business on the third Business Day before the Purchase Date; (f) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase the Notes if the Issuers, the depositary (if appointed by the Issuers) or the Paying Agent, as the case may be, receives, not later than the close of business on the last day of the Offer Period, an electronic or facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his tendered Notes and his election to have such Notes purchased; and (g) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Notes shall be selected for purchase pursuant to the terms of Section 3.02 hereof, and that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion will be equal to $1,000 in principal amount or an integral multiple thereof. On or before the Purchase Date, the Issuers shall, to the extent lawful, accept for payment, pursuant to the terms of Section 3.02 hereof, the Offer Amount of Notes or portions thereof tendered pursuant to the Repurchase Offer, or if less than the Offer Amount has been tendered, all Notes tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Issuers in accordance with the terms of this Section 3.10. The Issuers, the Depository or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note, and the Trustee, upon written request from the Issuers shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered; PROVIDED that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers shall publicly announce the results of the Repurchase Offer on the Purchase Date. The Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Repurchase Offer. Other than as specifically provided in this Section 3.10, any purchase pursuant to this Section 3.10 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof to the extent applicable. 55 ARTICLE 4. COVENANTS Section 4.01. PAYMENT OF NOTES. The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof, holds as of 12:00 noon Eastern Time on the due date, money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Issuers shall pay all Liquidated Damages, if any, in the same manner on the dates and in the amounts set forth in the Registration Rights Agreement. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; they shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuers shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers or the Note Guarantors in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Issuers of their obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with Section 2.03. Section 4.03. REPORTS. The Company shall file with the Trustee and provide Holders of Notes, within 15 days after it files them with the SEC, copies of its annual report and of the information, 56 documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rule or regulation prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Company shall continue to file with the SEC and provide the Trustee, without cost to each Holder, (a) within 90 days after the end of each fiscal year, annual reports on Form 10-K (or any successor form) containing the information required to be contained therein (or required in such successor form); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor form); and (c) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K (or any successor form) containing the information required to be contained therein (or required in any successor form); PROVIDED, HOWEVER, that the Company shall not be so obligated to file such reports with the SEC if the SEC does not permit such filings. If the parent company of the Company guarantees the Notes and such parent company is a reporting company under section 13 or 15(d) of the Exchange Act, the Company need not comply with the reporting obligations above if the parent company makes such filings or provides such information and any required financial information concerning the Company under Regulation S-X is included in the parent company's Exchange Act reports. Upon request, the Company will in all cases, without cost to each recipient, provide copies of such information to the Holders of the Notes and, if it is not permitted to file such reports with the Commission, shall make available such information to prospective purchasers and to securities analysts and broker-dealers upon their request. In addition, the Company has agreed that, for so long as any Notes remain outstanding, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 4.04. COMPLIANCE CERTIFICATE. (a) The Issuers shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Issuers and their Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers of the Issuers with a view to determining whether the Issuers and each obligor on the Notes and this Indenture is in compliance with this Indenture and each Collateral Document and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Issuers and each such obligor is in compliance with each and every covenant contained in this Indenture and each Collateral Document and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture or any Collateral Document (or, if a Default or Event of Default shall exist, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuers or such obligor, as the case may be, is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred that remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event exists, a description of the event and what action the Issuers or such obligor, as the case may be, is taking or proposes to take with respect thereto. 57 (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03 above shall be accompanied by a written statement of the Issuers' independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Issuers are in violation of any provisions of Article 4 or Article 5 hereof or, if any such violation exists, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Issuers shall, so long as any of the Notes are outstanding, deliver to the Trustee, within ten Business Days upon any Officer becoming aware of any Default or Event of Default or any event of default under any document, instrument or agreement representing Indebtedness of the Issuers, an Officers' Certificate specifying such Default, Event of Default or event of default and what action the Issuers are taking or propose to take with respect thereto. (d) Immediately upon Completion, the Issuers shall deliver promptly to the Trustee an Officers' Certificate which shall state that (i) Completion has been achieved and (ii) the date on which Completion was achieved. Section 4.05. TAXES. The Issuers shall pay, and shall cause each of their Restricted Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment would not have any material adverse effect on the Holders of the Notes. Section 4.06. STAY, EXTENSION AND USURY LAWS. Each of the Issuers and the Note Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Issuers and the Note Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. RESTRICTED PAYMENTS. The Issuers will not, and will not permit any of their Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any distribution on account of either of the Issuers' or any of their Restricted Subsidiaries' Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving either of the Issuers) or to the direct or indirect holders of either of the Issuers' Equity Interests in their capacity as such (other than (a) dividends or distributions by the Issuers payable in Equity Interests (other than Disqualified Stock) of the Issuers (or accretions thereon), (b) dividends or 58 distributions paid to the Issuers or a Wholly Owned Restricted Subsidiary of the Issuers or (c) pro rata dividends or distributions pro rata to all holders of Capital Stock of a Subsidiary of either of the Issuers, PROVIDED such holders will not include the Principal Stockholder and any Affiliate of the Principal Stockholder other than the Issuers or any Restricted Subsidiary); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving either of the Issuers) any Equity Interests of the Issuers or any Equity Interests of any of the Restricted Subsidiaries (other than Venetian) held by an Affiliate of the Issuers (other than any such Equity Interests owned by the Issuers or any Wholly Owned Restricted Subsidiary of the Issuers); (3) purchase, redeem, defease or otherwise acquire or retire for value any Subordinated Indebtedness of the Issuers or any of their Restricted Subsidiaries (other than, in each case, scheduled principal payments with respect to any such Subordinated Indebtedness); or (4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; (b) the Issuers would, after giving pro forma effect to such Restricted Payment as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of Section 4.09 hereof; and (c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuers and their Restricted Subsidiaries after the Issuance Date (excluding Restricted Payments permitted by clauses (2), (3), (5), (7), (8), (9), (11), (12) and (13) of the next succeeding paragraph and including the other Restricted Payments permitted by the next paragraph), is less than the sum of (i) 50% of (A) the Consolidated Net Income of the Company for the period (taken as one accounting period) from the Issuance Date to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit) LESS (B) the amount paid or to be paid in respect of such period pursuant to clause (5) of the next following paragraph to shareholders or members other than the Issuers, PLUS (ii) without duplication, 100% of the aggregate net cash proceeds received by the Issuers since the Issuance Date from capital contributions or the issue or sale of Equity Interests (other than Disqualified Stock) or debt securities of the Issuers that have been converted into or exchanged for such Equity Interests of the Issuers (other than Equity Interests or such debt securities of the Issuers sold to a Restricted Subsidiary of the Issuers and other than Disqualified Stock or debt securities that have been converted into or exchanged for Disqualified Stock), PLUS (iii) the Appraised Value of the Expo Center or the Phase II Land and any improvements thereon if contributed, distributed or transferred without consideration (other than the assumption of liability taken into consideration in calculating the amount under this clause (c)(iii)) to the Issuers or any Note Guarantor, minus the amount of any liability assumed in connection with the contribution, distribution or transfer of such assets (which contribution, distribution or transfer may be in the form of all of the Capital Stock of an entity whose only material assets consist of the Expo Center or the Phase II Land and any improvements thereon) PLUS (iv) to the extent not otherwise included in the Company's Consolidated Net Income, 100% of the cash dividends or distributions or the amount of the cash 59 principal and interest payments received since the Issuance Date by the Issuers or any Restricted Subsidiary from any Unrestricted Subsidiary or in respect of any Restricted Investment (other than dividends or distributions to pay obligations of or with respect to such Unrestricted Subsidiary such as income taxes) until the entire amount of the Investment in such Unrestricted Subsidiary has been received or the entire amount of such Restricted Investment has been returned, as the case may be, and 50% of such amounts thereafter. In the event that the Issuers convert an Unrestricted Subsidiary to a Restricted Subsidiary, the Issuers may add back to this clause (c) the aggregate amount of any Investment in such Subsidiary that was a Restricted Payment at the time of such Investment other than the conversion of the Phase II Subsidiary to a Restricted Subsidiary in which case the amount added back to this clause (c) shall be the amount calculated under clause (c)(iii) as if such Phase II Subsidiary were contributed to the Issuers under clause (c)(iii). The foregoing provisions will not prohibit (1) the payment of any dividend within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the Indenture; (2) any Restricted Payment in exchange for, or out of the proceeds of, the substantially concurrent sale or issuance (other than to a Restricted Subsidiary of the Issuers) of Equity Interests of the Issuers (other than any Disqualified Stock); PROVIDED that the amount of any net cash proceeds from the sale of such Equity Interests shall be excluded from clause (c)(ii) of the preceding paragraph; (3) the defeasance, redemption, repurchase, retirement or other acquisition of any Subordinated Indebtedness of the Issuers or any Restricted Subsidiary in exchange for, or out of the proceeds of, the substantially concurrent sale or issuance (other than to a Restricted Subsidiary of the Issuers) of Subordinated Indebtedness of the Issuers or such Restricted Subsidiary or Equity Interests of the Issuers (other than Disqualified Stock); PROVIDED, HOWEVER, that the net cash proceeds from the sale of any Equity Interests issued pursuant to this clause (3) shall be excluded from clause (c)(ii) of the preceding paragraph; (4) any redemption or purchase by the Issuers or any Restricted Subsidiary of Equity Interests or Subordinated Indebtedness of either of the Issuers or a Restricted Subsidiary required by a Gaming Authority in order to preserve a material Gaming License; PROVIDED, that so long as such efforts do not jeopardize any material Gaming License, the Issuers or such Restricted Subsidiary shall have diligently tried to find a third-party purchaser for such Equity Interests or Subordinated Indebtedness and no third-party purchaser acceptable to the applicable Gaming Authority was willing to purchase such Equity Interests or Subordinated Indebtedness within a time period acceptable to such Gaming Authority; (5)(a) for so long as the Company 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, in each case, for federal income tax purposes (as evidenced by an opinion of counsel at least annually), the Issuers and their Restricted Subsidiaries may each make cash distributions to their shareholders or members, during each Quarterly Payment 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 and (b) distributions by a non-Wholly Owned Subsidiary of either of the Issuers or any Restricted Subsidiary of the Issuers but only to the extent required to pay any tax liability in respect of the income of such non-Wholly Owned Subsidiary; (6) the repurchase of shares of, or options to purchase, common stock of either of the Issuers from employees, former employees, directors or former directors of either of the Issuers 60 (or permitted transferees of such individuals), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) upon the death, disability or termination of employment of such employee, in each case, as such agreements or plans are in effect on the Issuance Date (the "EMPLOYEE STOCK BUYBACKS"); (7) repurchases of Capital Stock of either of the Issuers deemed to occur upon exercise of stock options if such Capital Stock represents a portion of the exercise price of such options; provided that the amount of Capital Stock deemed issued and so repurchased shall be excluded from (c)(ii) of the preceding paragraph; (8) contributions of cash, real property or other property to Unrestricted Subsidiaries by the Principal Stockholder or any of his Affiliates through a contribution or purchase of Equity Interests (that does not constitute Disqualified Stock) to either of the Issuers and any related Investment in such Unrestricted Subsidiary by either of the Issuers or any Restricted Subsidiary; PROVIDED that the amount of such contributions shall be excluded from clause (c)(ii) of the preceding paragraph; (9) payments of intercompany subordinated debt, the incurrence of which was permitted under clause (e) of the second paragraph of Section 4.09 hereof; (10) payments under the change of control, asset sale and event of loss covenants of the agreements governing any Subordinated Indebtedness permitted to be incurred under the Indenture; PROVIDED that such payments are made after compliance with Sections 4.10, 4.11 and 4.16 hereof; (11) the repurchase, defeasance or redemption or other retirement of the Issuers' 14 1/4% Senior Subordinated Notes due 2005; (12) the repayment of all outstanding Indebtedness and all other amounts owing with respect to such Indebtedness made on the Closing Date pursuant to the Refinancing Transactions described in the Offering Circular, dated May 22, 2002, relating to the Offering under the section entitled "Use of Proceeds" and any Investments made by any of the Issuers or their Restricted Subsidiaries in any Unrestricted Subsidiary in connection therewith; (13) a transfer or other issuance of Equity Interests representing not more than 1% of the total Equity Interests of the Phase II Subsidiary or Phase II Holdings or any Subsidiary thereof to Phase II Manager or any Unrestricted Subsidiary of the Issuers; (14) payments of cash in lieu of fractional shares not to exceed $100,000 in connection with any transaction or series of related transactions; (15) prior to a Qualified IPO, cash distributions or advances by the Company to, or repurchases by the Company of capital stock from, key management personnel (excluding the Principal Stockholder) with respect to their Capital Stock holdings in the Company, in an aggregate amount not to exceed $2.0 million per year; and (16) additional Restricted Payments in an aggregate amount not to exceed $5.0 million under this clause (16). For purposes of determining compliance with this covenant, in the event that a proposed Restricted Payment meets the criteria of more than one of the categories of Restricted Payments described in clauses (1) through (16) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuers shall, in their sole discretion, classify such item of Restricted Payment on the date of its payment. For purposes of determining the amount of Restricted Investments outstanding at any time, all Restricted Investments will be valued at their fair market value at the time made (as determined in good faith by the Company's Board of Directors), and no adjustments will be made for subsequent changes in fair market value. Not later than the date of filing any annual report, the Company shall deliver to the Trustee an Officers' Certificate stating that each Restricted Payment made in the prior four fiscal quarters was permitted and setting forth the basis upon which the calculations required by 61 this Section 4.07 were computed, which calculations may be based upon the Company's latest available financial statements at the time of such Restricted Payment. Section 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES. The Issuers shall not, and shall not permit any of their Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary (other than Venetian) to (a)(i) pay dividends or make any other distributions to the Issuers or any of their Restricted Subsidiaries (A) on their Capital Stock or (B) with respect to any other interest or participation in, or measured by, its profits, or (ii) pay any Indebtedness owed to the Issuers or any of their Restricted Subsidiaries (other than in respect of the subordination of such Indebtedness to the Notes, the Note Guarantees or any other Indebtedness incurred pursuant to the terms of the Indenture, as the case may be), (b) make loans or advances to the Issuers or any of their Restricted Subsidiaries or (c) sell, lease, or transfer any of its properties or assets to the Issuers or any of their Restricted Subsidiaries, except (in each case) for such encumbrances or restrictions existing under or by reason of (1) contractual encumbrances or restrictions in effect on the Issuance Date, (2) the Bank Credit Facility (and any related security agreements), the Indenture, the Notes, any Note Guarantees, Indebtedness incurred pursuant to clause (g), (j), (o) or (p) of the second paragraph of Section 4.09 hereof and the Collateral Documents, (3) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any Restricted Subsidiary as in effect at the time of such acquisition (except to the extent such Indebtedness was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, (4) by reason of customary non-assignment provisions in leases entered into in the ordinary course of business and consistent with past practices and any leases permitted by Section 4.21 hereof, (5) purchase money obligations for property or Capital Lease Obligations for Specified FF&E acquired or leased in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired, (6) applicable law or any applicable rule or order of any Gaming Authority, (7) Permitted Liens, (8) customary restrictions imposed by asset sale or stock purchase agreements relating to the sale of assets or Equity Interests by the Issuers or any Restricted Subsidiary, (9) restrictions contained in the Mall Financing Agreement as in effect on the Issuance Date, (10) any instrument governing Indebtedness or Capital Stock of any Person that is an Unrestricted Subsidiary as in effect on the day that such Person becomes a Restricted Subsidiary, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person and its Restricted Subsidiaries or the property or assets of the Person and its Restricted Subsidiaries, (11) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements relating to the assets or property of such joint ventures or covered by such joint venture agreements, (12) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business, or (13) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, extensions, refundings, replacements or refinancings in whole or in part of the contracts, instruments or obligations referred to in clauses (1) through (13) above, PROVIDED, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company's Board of Directors, no more restrictive with respect to such dividend and other payment restrictions than those 62 contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, extension, refunding, replacement or refinancing. Section 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK. The Issuers shall not, and shall not permit any of their Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to (collectively, "INCUR" and correlatively, an "INCURRENCE" of) any Indebtedness (including Acquired Indebtedness) or any shares of Disqualified Stock; PROVIDED, HOWEVER, that the Issuers and their Restricted Subsidiaries may incur Indebtedness or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such incurrence would have been at least 2.0 to 1.0 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock had been issued, as the case may be, and application of proceeds had occurred at the beginning of such four-quarter period. The foregoing limitations will not apply to: (a) the incurrence by the Issuers or any of their Restricted Subsidiaries of Indebtedness under the Credit Facilities, pursuant to this clause (a), in an aggregate principal amount not to exceed at any one time $375.0 million under this clause (a), less permanent reductions resulting from the application of Asset Sale or Event of Loss proceeds; (b) the incurrence by the Issuers or any of their Restricted Subsidiaries of any Existing Indebtedness, including the Issuers' 14 1/4% Senior Subordinated Notes due 2005 and 12 1/4% Mortgage Notes due 2004; (c) the incurrence by the Issuers or any of their Restricted Subsidiaries of Indebtedness, in an aggregate principal amount not to exceed at any one time $850.0 million under this clause (c) represented by the Notes, the Note Guarantees, including Indebtedness represented by the Exchange Notes and related Note Guarantees to be issued as required by the Registration Rights Agreement, and obligations arising under the Collateral Documents to the extent that such obligations would constitute Indebtedness; (d) the incurrence by the Issuers or any of their Restricted Subsidiaries of Indebtedness (the "REFINANCING INDEBTEDNESS") issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, substitute or refund Indebtedness referred to in the first paragraph of this covenant or in clauses (b) (other than the Issuers' 14 1/4% Senior Subordinated Notes due 2005 and 12 1/4% Mortgage Notes due 2004), (c), this clause (d), (g), (j), (l), (m), (o), (p) and (s)(1); PROVIDED, HOWEVER, that (1) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of Indebtedness (or, in the case of Indebtedness with original issue discount, the accreted value of such Indebtedness) so extended, refinanced, renewed, replaced, substituted or refunded (plus the amount of reasonable expenses incurred and any premium paid in connection therewith and accrued and unpaid interest thereon, collectively, the "REFINANCING FEE AMOUNTS"), (2) if the Indebtedness being extended, refinanced, renewed, replaced, substituted or 63 refunded is subordinate in right of payment to the Notes, such Refinancing Indebtedness shall be subordinate in right and priority of payment to the Notes and any Note Guarantee on terms at least as favorable to the Holders of Notes and the Note Guarantees as those contained in the documentation governing any subordinated Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded, and (3) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded; (e) intercompany Indebtedness between or among the Issuers, any Note Guarantor and any Wholly Owned Restricted Subsidiary of the Issuers; PROVIDED, HOWEVER, the obligations of any Issuer or Note Guarantor to pay principal, interest or other amounts under such intercompany Indebtedness is subordinated to the payment in full of the Notes and any Note Guarantees; (f) Hedging Obligations that are incurred (1) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of the Indenture to be outstanding or (2) for the purpose of fixing or hedging currency exchange rate risk with respect to any currency exchanges; (g) the incurrence by the Issuers or any of their Restricted Subsidiaries of Non-Recourse Financing used to finance the construction, purchase or lease of personal or real property (including the Specified FF&E) used in the business of the Issuers or such Restricted Subsidiary; PROVIDED, that the Indebtedness incurred pursuant to this clause (g) (including any refinancings thereof pursuant to clause (d) above) shall not exceed $50.0 million (plus any Refinancing Fee Amounts) outstanding at any time; (h) to the extent that such incurrence does not result in the incurrence by the Issuers or any of their Restricted Subsidiaries of any obligation for the payment of borrowed money of others, Indebtedness incurred solely in respect of performance bonds, completion guarantees, standby letters of credit or bankers' acceptances, letters of credit in order to provide security for workers' compensation claims, payment obligations in connection with self insurance or similar requirements, surety and similar bonds, statutory claims of lessors, licensees, contractors, franchisees or customers, in each case, in the ordinary course of business; PROVIDED, that such Indebtedness was incurred in the ordinary course of business of the Issuers or any of their Restricted Subsidiaries and in an aggregate principal amount outstanding under this clause (h) at any one time of less than $15.0 million; (i) the incurrence by the Issuers of unsecured Indebtedness issued in connection with the Employee Stock Buybacks permitted under clause (6) of the second paragraph of Section 4.07 hereof; (j) the incurrence by the Issuers of Indebtedness incurred to finance the Issuers' obligations under the HVAC Services Agreement or to expand, add to or extend the Issuers' or any Restricted Subsidiary's heating, ventilation, air conditioning or energy systems (including the Specified FF&E), in an aggregate amount at any time outstanding (including any refinancings thereof pursuant to clause (d) above) not to exceed $15.0 million (plus any Refinancing Fee Amounts); 64 (k) the Guarantee, including acting as co-obligor of any Indebtedness, by the Issuers or any Restricted Subsidiary of Indebtedness of the Issuers or a Restricted Subsidiary that was permitted to be incurred by another provision of this covenant; (l) the incurrence by the Issuers or any Restricted Subsidiary of Indebtedness in aggregate amount at any time outstanding (including any refinancings thereof pursuant to clause (d) above) not to exceed $20.0 million (plus any Refinancing Fee Amounts); PROVIDED that the proceeds of such Indebtedness are used for design, architectural, engineering, permitting and other costs, including operating costs during such period, in connection with the development of the Phase II Resort so long as such costs are not incurred in connection with actual construction (excluding demolition, site preparation, excavation and foundation work and excluding the Phase IA Project) on the Phase II Land; (m) the incurrence by the Issuers or any Restricted Subsidiary of either Permitted Subordinated Indebtedness or Additional Notes; PROVIDED that (1) at the time of incurrence, the Issuers' Debt to Cash Flow Ratio is no greater than 4.5 to 1 on a pro forma basis after giving effect to the incurrence of such Indebtedness and the use of proceeds from such Indebtedness and (2) the Phase IA Completion Date has occurred and, PROVIDED FURTHER that the aggregate amount of Additional Notes issued under this clause (m) at any time outstanding shall not exceed $100.0 million; (n) the incurrence by the Issuers or any Restricted Subsidiary of Indebtedness in an aggregate amount at any time outstanding not to exceed $105.0 million under a Mall Financing Agreement plus any additional Indebtedness under a Mall Financing Agreement in excess of $105.0 million, PROVIDED that either (1) such additional Indebtedness is rated Investment Grade by two Rating Agencies or (2) that the total amount of Indebtedness permitted to be incurred hereunder shall not exceed 65% of the Appraised Value of the Mall Collateral; (o) the incurrence by the Issuers or any Restricted Subsidiary of additional Indebtedness in an aggregate amount at any time outstanding (including any refinancings thereof pursuant to clause (d) above) not to exceed $15.0 million under this clause (o); (p) the incurrence by either Issuer or any Restricted Subsidiary of Indebtedness (which may include Capital Lease Obligations, mortgage financings or purchase money obligations), in each case incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the Principal Business or the construction, purchase or lease of real or personal property or equipment (including the Specified FF&E), in an aggregate principal amount (including any refinancings thereof pursuant to clause (d) above) not to exceed $15.0 million at any time outstanding (plus any Refinancing Fee Amounts); (q) Indebtedness arising from any agreement entered into by either of the Issuers or any of their Restricted Subsidiaries providing for indemnification, purchase price adjustment or similar obligations, in each case, incurred or assumed in connection with an Asset Sale; 65 (r) Subordinated Indebtedness to the Principal Stockholder and its Affiliates or Related Parties that has a maturity date that matures after the date of maturity of the Notes, that is unsecured, does not pay any cash interest and that is subordinated in right of payment to the payment in full of the Notes and the Note Guarantees at least to the extent set forth in Appendix A-1 to the Indenture; and (s) (1) Indebtedness incurred to fund investments in Macau Entities in an aggregate principal amount (including any refinancings thereof pursuant to clause (d) above) not to exceed $40.0 million under this clause (s)(1) at any time outstanding (plus any Refinancing Fee Amounts) and (2) Guarantees of Indebtedness or obligations of any of the Macau Entities such that the maximum principal amount of Indebtedness, or the maximum amount of obligations, so Guaranteed does not exceed $90.0 million at any one time outstanding under this clause (s)(2). The Issuers shall not permit any of their Unrestricted Subsidiaries to incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock, other than Non-Recourse Indebtedness; PROVIDED, HOWEVER, that if any such Unrestricted Subsidiary ceases to remain an Unrestricted Subsidiary, such event shall be deemed to constitute the incurrence of the Indebtedness in such Subsidiary by a Restricted Subsidiary. For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness permitted in clauses (a) through (s) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuers shall, in their sole discretion, classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only such clause or clauses or pursuant to the first paragraph hereof. Accrual of interest, the accretion of accreted value or principal and the payment of interest in the form of additional Indebtedness or the payment of dividends in the form of additional Disqualified Stock will not be deemed to be an incurrence of Indebtedness for purposes of this Section 4.09. Section 4.10. ASSET SALES. The Issuers shall not, and shall not permit any of their Restricted Subsidiaries to consummate an Asset Sale, unless (1) no Default or Event of Default exists or is continuing immediately prior to or after giving effect to such Asset Sale, (2) the Issuers or their Restricted Subsidiaries, as the case may be, receive consideration at the time of such Asset Sale at least equal to the fair market value (as determined by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee) of the assets sold or otherwise disposed of and (3) at least 75% of the consideration therefor received by either of the Issuers or any Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; PROVIDED, HOWEVER, that the amount of (A) any liabilities (as shown on such Issuer's or such Restricted Subsidiary's, as the case may be, most recent balance sheet or in the Notes thereto) of the Issuers or any Restricted Subsidiary, as the case may be (other than liabilities that are by their terms expressly subordinated to the Notes or any Note Guarantee, which may be assumed only if such liabilities are deemed to be Restricted Payments in the case of the Issuer or any Restricted Subsidiary and such Restricted Payment may then be made), that are assumed by the transferee of any such assets and (B) any notes, securities 66 or other obligations received by the Issuers or any Restricted Subsidiary, as the case may be, from such transferee that are converted by the Issuers or such Restricted Subsidiary, as the case may be, into cash (to the extent of the cash received) within 20 Business Days following the closing of such Asset Sale, shall be deemed to be cash only for purposes of satisfying clause (3) of this paragraph and for no other purpose. Within 360 days after any Issuer's or any Restricted Subsidiary's receipt of the Net Proceeds of any Asset Sale, such Issuer or such Restricted Subsidiary may apply the Net Proceeds from such Asset Sale: (1) to permanently reduce Indebtedness under the Bank Credit Facility or other Indebtedness that is not Subordinated Indebtedness, (2) in an Investment in any one or more business, capital expenditure or other tangible asset of the Issuers or any Restricted Subsidiary, in each case, engaged, used or useful in the Principal Business and/or (3) for working capital purposes in an aggregate amount not to exceed $20.0 million, in each case, with no concurrent obligation to make an offer to purchase any Notes. Pending the final application of any such Net Proceeds, such Issuer or such Restricted Subsidiary may temporarily reduce Senior Indebtedness or otherwise invest such Net Proceeds in Cash Equivalents which shall be pledged to the Trustee or an agent thereof (including an agent under a Credit Facility) as security for the Holders of Notes with the same relative priority with respect to the other secured creditors as the priority of the Liens securing the asset that is the subject of the Asset Sale except that (i) if such Cash Equivalents are to be used to complete the Phase IA Project, then such Cash Equivalents may be pledged to the Credit Agent as security for the lenders under the Bank Credit Facility prior to the final completion of the Phase IA Project and (ii) such Cash Equivalents need not be pledged to the Trustee or an agent thereof (including an agent under a Credit Facility) to the extent that the assets subject to such Asset Sale were not subject to Liens securing the Note Collateral prior to such Asset Sale. Any Net Proceeds from the Asset Sale that are not invested or used to repay Indebtedness or as working capital within 365 days of receipt as provided in the first sentence of this paragraph will be deemed to constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Issuers shall, subject to any repayment obligations owed to the lenders under any Indebtedness that is secured by Permitted Liens on such assets, including the lenders under the Credit Facilities, make an offer to all Holders of Notes (an "ASSET SALE OFFER") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds. The offer price for the Notes in such Asset Sale Offer will be in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in Article 3 hereof. The Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within 30 days after the date that Excess Proceeds exceed $10.0 million by mailing the notice required pursuant to the terms of Section 3.10 hereof. To the extent that the aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than the applicable Excess Proceeds, the Issuers may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in the manner described in Section 3.02 hereof. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be deemed reset at zero. The Issuers may commence an Asset Sale Offer at any time without having to wait for the expiration of the 365-day period. The Issuers or such Restricted Subsidiary shall also grant, subject to Permitted Liens (1) to the lenders under the First Lien Credit Facilities a first priority Lien and (2) to the Trustee, on behalf of the Holders of the Notes, a second priority Lien, in each case, on any properties or assets acquired with the Net Proceeds of any such Asset Sale to the extent that the 67 assets subject to such Asset Sale were subject to Liens securing the Note Collateral prior to such Asset Sale. Section 4.11. EVENT OF LOSS. Upon the occurrence of any Event of Loss with respect to Note Collateral with a fair market value (or replacement cost, if greater) in excess of $25.0 million, the Issuers or the affected Restricted Subsidiary, as the case may be, may apply the Net Loss Proceeds from such Event of Loss to (1) the rebuilding, repair, replacement or construction of improvements to the Project and the Phase IA Project, with no concurrent obligation to make any purchase of any Notes; PROVIDED that (a) if such Event of Loss occurs with respect to the Phase IA Project prior to Completion of Phase IA, the Issuers' ability to apply such Net Loss Proceeds to rebuild, repair, replace or construct improvements to the Phase IA Project will be subject to the terms of the Bank Credit Facility and (b) if such Event of Loss occurs with respect to the Phase IA Project on or after Completion of Phase IA or with respect to the Project after the Issuance Date, the Issuers deliver to the Trustee within 90 days of such Event of Loss (i) a written opinion from a reputable architect or an Independent Expert (as defined in the Cooperation Agreement) that the Phase IA Project or the Project, as the case may be, can be rebuilt, repaired, replaced, or constructed and Completed within one year of delivery of such opinion substantially in the condition prior to such Event of Loss and (ii) an Officers' Certificate certifying that the Issuers have available from Net Loss Proceeds, cash on hand or available borrowings under Indebtedness permitted to be incurred pursuant to Section 4.09 hereof to complete such rebuilding, repair, replacement or construction, (2) permanently reduce Indebtedness or commitments under the Bank Credit Facility or other Indebtedness that is not Subordinated Indebtedness, and/or (3) for working capital purposes in an aggregate amount not to exceed $1.0 million and only to the extent that there are Net Loss Proceeds in excess of the amount necessary to rebuild, reconstruct or repair the asset or assets subject to the Event of Loss, in each case, with no concurrent obligation to make an offer to purchase Notes. Pending the final application of any such Net Loss Proceeds, the Issuer or the applicable Restricted Subsidiary, as the case may be, may temporarily reduce Senior Indebtedness or otherwise invest such Net Loss Proceeds in Cash Equivalents which shall be pledged to the Trustee or an agent thereof (including the agent under a Credit Facility) as security for the Holders of Notes with the same relative priority with respect to the other secured creditors as the priority of the Liens securing the asset that is the subject of the Event of Loss, except (i) if such Cash Equivalents are to be used to complete the Phase IA Project, then such Cash Equivalents shall be pledged to the Credit Agent as security for the lenders under the Bank Credit Facility prior to final completion of the Phase IA Project and (ii) such Cash Equivalents need not be pledged to the Trustee or an agent thereof (including the agent under a Credit Facility) to the extent that the assets subject to such Event of Loss were not subject to Liens securing the Note Collateral prior to such Event of Loss. Any Net Loss Proceeds from an Event of Loss that are not reinvested or used to repay Indebtedness or as working capital as provided in the first sentence of this paragraph will be deemed to constitute "EXCESS LOSS PROCEEDS". When the aggregate amount of Excess Loss Proceeds exceeds $10.0 million, the Issuers shall, subject to any repayment obligations owed to the lenders under any Indebtedness that is secured by Permitted Liens on such assets, including the lenders under the Credit Facilities make an offer to all Holders of Notes (an "EVENT OF LOSS OFFER") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be 68 purchased out of the Excess Loss Proceeds. The offer price for the Notes in such Asset Sale Offer shall be in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in Article 3 hereof. The Issuers will commence an Event of Loss Offer with respect to Excess Loss Proceeds within 30 days after the date that Event of Loss Proceeds exceed $10.0 million by mailing the notice required pursuant to Section 3.10 hereof. To the extent that the aggregate amount of Notes tendered pursuant to an Event of Loss Offer is less than the applicable Excess Loss Proceeds, the Issuers may use any remaining Excess Loss Proceeds for general corporate purposes. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Loss Proceeds, the Trustee shall select the Notes to be purchased in the manner described under Section 3.02 hereof. Upon completion of any such Event of Loss Offer, the amount of Excess Loss Proceeds shall be reset at zero. The Issuers or such Restricted Subsidiary shall also grant, subject to Permitted Liens, (1) to the lenders under the First Lien Credit Facilities a first priority Lien and (2) to the Trustee, on behalf of the Holders of the Notes, a second priority Lien, in each case, on any properties or assets rebuilt, repaired or constructed with such Net Loss Proceeds, to the extent that the assets subject to the Event of Loss were subject to Liens securing the Note Collateral prior to such Event of Loss. In addition, the Issuers or the applicable Restricted Subsidiary will be obligated to comply with any applicable terms of the Cooperation Agreement in case of any Event of Loss. Section 4.12. TRANSACTIONS WITH AFFILIATES. The Issuers shall not, and shall not permit any of their Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of any of their properties or assets to, or purchase any property or assets from, or enter into any contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless (1) such Affiliate Transaction is on terms that are no less favorable to the Issuers or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuers or such Restricted Subsidiary with an unrelated Person and (2) the Issuers deliver to the Trustee (a) with respect to any Affiliate Transaction involving aggregate payments in excess of (i) $500,000, an Officers' Certificate certifying that such Affiliate Transaction complies with clause (1) above, or (ii) $2.0 million, a resolution adopted by a majority of the disinterested non-employee directors of the Board of Directors approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (1) above and (b) with respect to any Affiliate Transaction that is a loan transaction involving a principal amount in excess of $15.0 million or any other type of Affiliate Transaction involving aggregate payments in excess of $15.0 million, an opinion as to the fairness of the financial terms of such Affiliate Transaction to the Company or such Restricted Subsidiary from a financial point of view issued by an Independent Financial Advisor. The foregoing provisions shall not apply to the following: (1) the Billboard Lease, the Canyon Ranch Lease and the Lutece Lease, each, as in effect on the date of the Indenture; 69 (2) the agreements in effect on the Issuance Date that are described in the Offering Circular, dated May 22, 2002, relating to the Offering under the section entitled "Certain Relationships and Related Party Transactions"; (3) the Other Phase II Agreements on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained with an unrelated Person; (4) purchases of materials or services from a Supplier Joint Venture by the Issuers or any of their Restricted Subsidiaries in the ordinary course of business on arm's length terms; (5) any employment, compensation, indemnification, noncompetition or confidentiality agreement entered into by either of the Issuers or any of their Restricted Subsidiaries with their executive officers or directors in the ordinary course of business (other than an employment or compensation agreement with the Principal Stockholder); (6) loans or advances to employees of the Issuers or their Restricted Subsidiaries (a) to fund the exercise price of options granted under employment agreements or the Issuers' stock option plans or agreements in each case, as approved by the Company's Board of Directors or (b) for any other purpose not to exceed $2.0 million in the aggregate outstanding at any one time under this subclause (b); (7) the payment of reasonable fees to directors of the Issuers and their Restricted Subsidiaries who are not employees of the Issuers or their Restricted Subsidiaries; (8) the grant of restricted stock, stock options or similar rights to employees and directors of either of the Issuers pursuant to agreements or plans approved by the Board of Directors of the Company or the managing member of Venetian and any repurchases of stock or stock options of the Issuers from such employees to the extent provided for in such plans or agreements or permitted under Section 4.07 hereof; (9) transactions between or among the Issuers and/or any of their Restricted Subsidiaries; (10) with respect to the Issuers and any Restricted Subsidiary, Restricted Payments or Permitted Investments permitted by Section 4.07 hereof; (11) issuances of Equity Interests of the Issuers (other than Disqualified Stock); (12) the transactions contemplated by or permitted under the Cooperation Agreement and the HVAC Services Agreement, in each case, as in effect on the date of this Indenture; (13) the use of the Congress Center or the meeting space in the Phase IA Project by the owner of the Expo Center; PROVIDED that Venetian receives fair market value for the use of such property, as determined in the reasonable discretion of the Board of Directors of the Company; 70 (14) the transactions contemplated in the Offering Circular, dated May 22, 2002, relating to the Offering under the captions "Certain Relationships and Related Party Transactions-Temporary Lease" and "-Administrative Services Agreement"; (15) the lease agreement between Venetian and the Phase II Subsidiary relating to the air space above the Phase II Land within which a portion of the Phase IA Project is to be constructed; (16) the Company or Venetian may enter into and perform their obligations under a gaming operations lease or management agreement with Phase II Subsidiary or any Subsidiary thereof relating to the casino to be operated in the casino resort owned by the Phase II Subsidiary or any Subsidiary thereof on terms substantially similar to those of the Casino Lease except that (a) the quarterly rent payable to the Phase II Subsidiary or any Subsidiary thereof under such lease shall be equal to all quarterly revenue derived from such casino (whether such revenue is positive or negative) minus the sum of (1) the operating costs related to such casino for such period (including an allocated portion (based on gaming revenue) of the Company's or Venetian's, as the case may be, 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 generally accepted accounting principles); provided that if such sum is negative, then the Phase II Subsidiary shall pay such negative amount to Venetian or its Restricted Subsidiaries, (b) the Company or Venetian, as the case may be, may agree that they shall operate the casino in the resort owned by the Phase II Subsidiary and the Casino in the Project in substantially similar manners and (c) the Company or Venetian, as the case may be, may agree to have common gaming and surveillance operations in such casinos (based on equal allocations of revenues and operating costs); (17) the preferred reservation system agreement, one or more meeting services agreements, one or more agreements for the use of any space in the Expo Center, and one or more management or operating agreements with respect to the Expo Center, each as may be amended from time to time, and entered into with or required to be entered into with Interface in accordance with that certain Loan Agreement, dated as of June 28, 2001, by and between Bear, Stearns Funding, Inc. and Interface; (18) (i) license agreements with a Macau Entity and (ii) any other agreements with a Macau Entity, provided the terms such other agreement under clause (ii) or any amendment to such agreement are no less favorable to the Issuers or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Issuers or such Restricted Subsidiary with an unrelated Person; (19) the Stockholders' Agreement among the Company and the stockholders of the Company, dated January 2, 2002, and as amended from time to time; (20) Subordinated Indebtedness to the Principal Stockholder, his Affiliates and/or its Related Parties that has a maturity date that matures after the date of maturity of the Notes, that does not pay any cash interest and that is subordinated in right of payment to the payment in full of the Notes and the Note Guarantees at least to the extent specified in Exhibit A-2 hereof; 71 (21) any registration rights agreement to provide for the registration under the Securities Act of the Capital Stock interests held by Affiliates or that were not previously so registered in an entity whose common equity will be or was the subject of a Qualified IPO, containing such demand rights, piggyback rights and S-3 rights, terms and conditions, indemnifications, expense reimbursements and other terms that are usual and customary for agreements of this type as determined by the Board of Directors of the Company; and (22) any agreement by the owner of the Macau Casino to pay Macau Fees to the Issuers or a Restricted Subsidiary directly or indirectly. Section 4.13. LIENS. The Issuers shall not, and shall not permit any of their Restricted Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien on any asset owned as of the Issuance Date or thereafter acquired by the Issuers or any such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, except, in each case, Permitted Liens. Section 4.14. LINE OF BUSINESS. For so long as any Notes are outstanding, the Issuers shall not, and shall not permit any of their Restricted Subsidiaries to, engage in any business or activity other than the Principal Business, except to such extent as would not be material to the Issuers and their Subsidiaries taken as a whole. Section 4.15. CORPORATE EXISTENCE. Subject to Article 5 and Article 11 hereof, as the case may be, each of the Issuers and each of the Note Guarantors shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its corporate or limited liability company existence, and the corporate, limited liability company, partnership or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Issuers, any such Note Guarantor or any such Restricted Subsidiary and (ii) the material rights (charter and statutory), licenses and franchises of the Issuers, the Note Guarantors and their respective Restricted Subsidiaries; PROVIDED, HOWEVER, that the Issuers and the Note Guarantors shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of the Note Guarantors or any of their respective Restricted Subsidiaries, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuers, the Note Guarantors and their Restricted Subsidiaries, taken as a whole, and that the loss thereof would not have a material adverse effect on the Holders of the Notes. Section 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. Upon the occurrence of a Change of Control, the Issuers shall make an offer (the "CHANGE OF CONTROL OFFER") to each Holder of Notes to purchase all or any part (equal to $1,000 or an integral multiple thereof) of the Notes at a price in cash (the "CHANGE OF CONTROL PAYMENT") equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest and 72 Liquidated Damages, if any, to the date of purchase. Such Change of Control Offer shall be made in accordance with the procedures set forth in Article 3 hereof. The Issuers shall commence such Change of Control Offer by mailing the notice set forth in Section 3.10 hereof to Holders of Notes no later than 30 days following any Change of Control. Section 4.17. DESIGNATION OF UNRESTRICTED SUBSIDIARY. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary after the Issuance Date; PROVIDED, that: (1) at the time of designation, the Investment by either of the Issuers and any of their Restricted Subsidiaries in such Subsidiary (other than Permitted Investments) shall be deemed a Restricted Investment (to the extent not previously included as a Restricted Investment) made on the date of such designation in the amount of the fair market value of such Investment as determined in good faith by the Company's Board of Directors and, in the case of Investments in excess of $20.0 million, supported by a fairness opinion issued by an accounting, appraisal or investment banking firm of national standing; (2) since the Issuance Date, such Unrestricted Subsidiary has not acquired any assets from either of the Issuers or any Restricted Subsidiary other than as permitted by the provisions of this Indenture, including Sections 4.07 and 4.10 hereof; (3) at the time of designation, no Default or Event of Default has occurred and is continuing or results immediately after such designation or as a result of any Restricted Investment made in such Subsidiary at the time of such designation; (4) at the time of designation, such Subsidiary has no Indebtedness other than Non-Recourse Indebtedness of such Subsidiary; (5) such Subsidiary does not own any Equity Interests in a Restricted Subsidiary; and (6) such Subsidiary does not own or operate or possess any material license, franchise or right used in connection with the ownership or operation of any part of the Project Assets of the Project or any material portion of the Project Assets of the Project (other than ownership of real estate, or interests in real estate leased to the Issuers or any Restricted Subsidiary). A Subsidiary shall cease to be an Unrestricted Subsidiary and shall become a Restricted Subsidiary if either (i) at any time while it is a Subsidiary of the Company (a) such Subsidiary acquires any assets from the Company or any Restricted Subsidiary other than as permitted by this Indenture, including Sections 4.07 and 4.10 hereof; (b) such Subsidiary has any Indebtedness other than Non-Recourse Indebtedness of such Subsidiary; (c) such Subsidiary owns any Equity Interests in a Restricted Subsidiary of the Company; or (d) such Subsidiary owns or operates or possesses any material license, franchise or right used in connection with the ownership or operation of any part of the Project Assets of the Project (other than ownership of real estate or interests in real estate leased to the Issuer or any Restricted Subsidiary); or (ii) the Board of Directors of the Company designates such Unrestricted Subsidiary to be a Restricted Subsidiary and no Default or Event of Default occurs or is continuing immediately after such designation. As of the Issuance Date, Phase II Subsidiary, Phase II Holdings, Phase II Manager and all of the Macau Entities (other than any such entities that are designated as Restricted Subsidiaries by the Issuers) will be Unrestricted Subsidiaries. Any future designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolutions of the 73 Board of Directors of the Company giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. The Phase II Land may not be sold, leased or transferred to an Affiliate of the Issuers, other than an Issuer, any Restricted Subsidiary or any Unrestricted Subsidiary, in which the Principal Stockholder does not own any Equity Interests, directly or indirectly. Section 4.18. MAINTENANCE OF INSURANCE AND AMENDMENT OF THE COOPERATION AGREEMENT. The Issuers shall, and shall cause their Restricted Subsidiaries to, maintain the specified levels of insurance set forth in the Cooperation Agreement (whether or not the Cooperation Agreement is then in force). The Issuers shall not amend, waive or modify Articles X and XI of the Cooperation Agreement. Section 4.19. COLLATERAL DOCUMENTS. None of the Issuers or any of their Restricted Subsidiaries shall amend, waive or modify, or take or refrain from taking any action that has the effect of amending, waiving or modifying, any provision of the Collateral Documents to the extent that such amendment, waiver, modification or action could have an adverse effect on the rights of the Trustee or the Holders of the Notes; PROVIDED, that: (i) the Note Collateral may be released or modified as expressly provided in this Indenture and in the Collateral Documents and the Intercreditor Agreement; (ii) any Note Guarantee may be released as expressly provided in this Indenture and in the Collateral Documents; and (iii) this Indenture and any of the Collateral Documents may be otherwise amended, waived or modified as set forth under Article 9 hereof. Section 4.20. FURTHER ASSURANCES. The Issuers shall (and shall cause each of their Restricted Subsidiaries to) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel certificates, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as may be reasonably required from time to time in order (i) to carry out more effectively the express purposes of the Collateral Documents, (ii) to subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests required to be encumbered thereby and contemplated thereby, (iii) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby and contemplated thereby, and (iv) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Trustee any of the rights granted or now or hereafter intended by the parties thereto to be granted to the Trustee or under any other instrument executed in connection therewith or granted to the Issuers under the Collateral Documents or under any other instrument executed in connection therewith. Section 4.21. RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY. The Issuers shall not, and shall not permit any of their Restricted Subsidiaries to, lease, sublease, or grant a license, concession or other agreement to occupy, manage or use, as 74 lessor or sublessor, any real or personal Project Assets owned or leased by the Issuers or any Restricted Subsidiary (each, a "LEASE TRANSACTION"), other than the following Lease Transactions: (a) the Issuers or any Restricted Subsidiary may enter into a Lease Transaction with respect to any space on or within the Project or Phase IA Project with any Person (other than an Unrestricted Subsidiary), PROVIDED that, in the reasonable opinion of the Issuers, (a) such Lease Transaction will not materially interfere with, impair or detract from the operations of any of the Project Assets, and will in the reasonable judgment of the Issuers enhance the value and operations of the Project and (b) such Lease Transaction is at a fair market rent (in light of other similar or comparable prevailing commercial transactions) and contains such other terms such that the Lease Transaction, taken as a whole, is commercially reasonable and fair to the Issuers or such Restricted Subsidiary in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues comparable to the Project; (b) the Issuers or any Restricted Subsidiary may enter into a Lease Transaction with any Unrestricted Subsidiary with respect to any part of the Phase II Land; (c) the Issuers and any Wholly-Owned Restricted Subsidiary of the Issuers may enter into Lease Transactions among themselves or with any Issuer or Wholly Owned Restricted Subsidiary of the Issuers, including the Casino Lease by the Company from Venetian, the Billboard Lease, the Canyon Ranch Lease and the Lutece Lease; (d) the Mall Management Agreement and any Lease Transaction where the interest created is a Permitted Lien; (e) to the extent permitted under Section 4.12 hereof, any use or lease agreement between Interface and Venetian relating to the Congress Center; (f) the HVAC Services Agreement; (g) the transactions and agreements described in the Offering Circular, dated May 22, 2002, relating to the Offering under the section entitled "Certain Relationships and Related Party Transactions", to the extent such transactions or agreements constitute Lease Transactions, each as in effect on the Issuance Date; and (h) the Issuers or any Restricted Subsidiary may enter into a management or operating agreement with respect to any Project Asset, including any hotel (so long as such agreement does not cover any casino or gaming operations) with any Person (other than an Unrestricted Subsidiary or Affiliate of the Principal Stockholder); PROVIDED that the manager or operator has experience in managing or operating similar operations or assets and (ii) such management or operating agreement is on commercially reasonable and fair terms to the Issuers or such Restricted Subsidiary (in either case, in the reasonable judgment of the Issuers). Notwithstanding the foregoing, the Indenture shall provide that the Issuers shall not be permitted to enter into any Lease Transaction: (1) except in the case of clauses (a), (f) and (h) above, if at the time of such proposed Lease Transaction, a Default or Event of Default has occurred and is continuing or would occur immediately after entering into such Lease Transaction 75 (or immediately after any extension or renewal of such Lease Transaction made at the option of the Issuers or any Restricted Subsidiary); (2) no gaming or casino operations may be conducted on any Project Asset that is the subject of such Lease Transaction other than by the Issuers or a Restricted Subsidiary; and (3) no Lease Transaction may provide that the Issuers or any Restricted Subsidiary may subordinate its fee or leasehold interest to any lessee or any party providing financing to any lessee. The Trustee shall at the request of the Issuers or any Restricted Subsidiary enter into a commercially customary leasehold non-disturbance and attornment agreement with the lessee under any Lease Transaction permitted under the covenant described above. Such agreement, among other things, shall provide that if the interests of the Issuers (or in the case of a Lease Transaction being entered by a Restricted Subsidiary, the interests of the Restricted Subsidiary) in the Project Assets subject to the Lease Transaction are acquired by the Trustee (on behalf of the Holders of the Notes), whether by purchase and sale, foreclosure, or deed in lieu of foreclosure or in any other way, or by a successor to the Trustee, including without limitation a purchaser at a foreclosure sale, then (1) the interests of the lessee in the Project Assets subject to the Lease Transaction shall continue in full force and effect and shall not be terminated or disturbed, except in accordance with the lease documentation applicable to the Lease Transaction, and (2) the lessee in the Lease Transaction shall attorn to and be bound to the Trustee (on behalf of the Holders), its successors and assigns under all terms, covenants and conditions of the lease documentation applicable to the Lease Transaction. Such agreement shall also contain such other provisions that are commercially customary and that will not materially and adversely affect the Lien granted by the Indenture Deed of Trust (other than pursuant to the terms of the applicable non-disturbance agreement) as certified to the Trustee by an Officer of the Company. Section 4.22. NOTE GUARANTEES. The Issuers shall, and shall cause each of their Restricted Subsidiaries, to comply with Section 11.02 hereof. Section 4.23. OWNERSHIP OF UNRESTRICTED SUBSIDIARIES. If after the Issuance Date the Company or Venetian has made Investments of at least $25.0 million in the Phase II Subsidiary, then until all of the Capital Stock of the Phase II Subsidiary is sold or otherwise disposed of to any Person other than an Affiliate of the Issuers, one of the Issuers will directly or indirectly own at least a majority of the issued and outstanding Capital Stock of Phase II Subsidiary (which is an Unrestricted Subsidiary); PROVIDED that the Principal Stockholder or any of his Affiliates (other than the Issuers or any of their Wholly-Owned Restricted Subsidiaries) will not purchase or otherwise acquire, directly or indirectly, any of the Capital Stock of the Phase II Subsidiary or any of its Subsidiaries. ARTICLE 5. SUCCESSORS 76 Section 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS. Neither of the Issuers shall consolidate or merge with or into or wind up into (whether or not such entity is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless (1) the Company or Venetian, as the case may be, is the surviving Person or the Person formed by or surviving any such consolidation or merger (if other than the Company or Venetian) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a Person organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof; (2) the Person formed by or surviving any such consolidation or merger (if other than the Company or Venetian) or the Person to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made assumes all the obligations of the Company or Venetian, as the case may be, under the Indenture and the Collateral Documents pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee under the Notes and the Indenture; (3) immediately after such transaction no Default or Event of Default exists; (4) such transaction will not result in the loss or suspension or material impairment of any material Gaming License of the Issuers or their Restricted Subsidiaries; (5) the Company, Venetian or any Person formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described under the first paragraph of Section 4.09 hereof; and (6) such transactions would not require any Holder of Notes (other than any Person acquiring the Company or Venetian or their assets and any Affiliate thereof) to obtain a gaming license or be qualified under the law of any applicable gaming jurisdiction; PROVIDED that such Holder would not have been required to obtain a gaming license or be qualified under the laws of any applicable gaming jurisdiction in the absence of such transactions. Notwithstanding anything to the contrary, either Issuer may consolidate or merge with or wind up into or sell, assign, transfer or otherwise dispose of all or substantially all of its assets to each other or a Note Guarantor without meeting the requirements set forth in clause (5) above. In addition, without complying with clause (5) above, either Issuer may merge with or into an Affiliate provided that such Affiliate has no material assets or liabilities and after such merger there is no material change in the ownership of such Issuer. Section 5.02. SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Issuers in accordance with Section 5.01 hereof, the successor Person formed by such consolidation or into or with which one of the Issuers is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" or "Venetian", as the case may be, shall refer instead to the successor corporation and not to the Company or Venetian, as the case may be), and may exercise every right and power of an Issuer under this Indenture with the same 77 effect as if such successor Person had been named as an Issuer herein; PROVIDED, HOWEVER, that the surviving entity or acquiring corporation shall (i) assume all of the obligations of the acquired Person incurred under this Indenture, the Notes, and, if applicable, the Collateral Documents, (ii) have been issued, or have a consolidated Subsidiary which has been issued, Gaming Licenses to operate the acquired casino operations and entities substantially in the manner and scope operated prior to such transaction, which Gaming Licenses are in full force and effect, (iii) be in compliance fully with Section 5.01 hereof and (iv) the Issuers have delivered to the Trustee an Officers' Certificate and Opinion of Counsel, subject to customary assumptions and exclusions, stating that the proposed transaction complies with this Indenture; PROVIDED FURTHER, HOWEVER, that the predecessor Person shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale of all or substantially all of one of the Issuers' assets that meets the requirements of Section 5.01 hereof. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" occurs if: (a) the Issuers or any Note Guarantor defaults in payment when due and payable, upon redemption or otherwise, of principal or premium, if any, on the Notes or under any Note Guarantee; (b) the Issuers or any Note Guarantor defaults for 30 days or more in the payment when due of interest on, or Liquidated Damages, if any, with respect to the Notes or under any Note Guarantee; (c) failure by the Issuers or any Note Guarantor to offer to purchase or to purchase the Notes, in each case, when required under an offer made pursuant Section 3.10 hereof; (d) failure by the Issuers or any Note Guarantor for 30 days after receipt of written notice from the Trustee to comply with Sections 4.07 or 4.09 hereof; (e) failure by the Issuers or any Note Guarantor for 60 days after receipt of written notice from the Trustee to comply with any of its other agreements under this Indenture, the Collateral Documents, the Notes or the Note Guarantees; PROVIDED, HOWEVER, that any such failure with respect to any Collateral Documents will not be deemed to have occurred for purposes of the foregoing, and notice thereof shall not be deemed to have been delivered, until the delivery of notice and the expiration of all available grace periods provided for in the applicable Collateral Documents; (f) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuers or any of their Restricted Subsidiaries or default on any Guarantee by the Issuers or any of their Restricted Subsidiaries of Indebtedness of a third party, whether such Indebtedness or Guarantee now exists or is created after the Issuance Date, which default (a) is caused by a failure 78 to pay when due at final maturity (giving effect to any grace period or waiver related thereto) the principal of such Indebtedness (a "PAYMENT DEFAULT") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which a Payment Default then exists or with respect to which the maturity thereof has been so accelerated or which has not been paid at maturity, aggregates $15.0 million or more; (g) failure by the Issuers or any of their Restricted Subsidiaries to pay final judgments aggregating in excess of $15.0 million, which final judgments remain unpaid, undischarged or unstayed for a period of more than 60 days; (h) (a) except as permitted by the Indenture, any Note Guarantee or any Collateral Document or any security interest granted thereby shall be held in any judicial proceeding to be unenforceable or invalid, or shall cease for any reason to be in full force and effect and such default continues for 10 days after written notice or (b) any Issuer or Note Guarantor, or any Person acting on behalf of an Issuer or Note Guarantor, shall deny or disaffirm its obligations under any Note Guarantee or Collateral Document, in each of clauses (a) and (b), which would materially and adversely impair the benefits to the Trustee or the Holders of the Notes thereunder; (i) any of the Issuers or any Note Guarantor that is a Significant Subsidiary of the Issuers or any group of Note Guarantors that together would constitute a Significant Subsidiary of the Issuers pursuant to or within the meaning of the Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a Custodian of it or for all or substantially all of its property, (iv) makes a general assignment for the benefit of its creditors, or (v) generally is not paying, or shall admit in writing its inability to pay, its debts as they become due and, in each case, a period of 30 days shall have elapsed; or (j) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against any of the Issuers or a Note Guarantor that is a Significant Subsidiary or any group of Note Guarantors that would together constitute a Significant Subsidiary of any Issuer in an involuntary case; (ii) appoints a Custodian of any of the Issuers or a Note Guarantor that is a Significant Subsidiary or any group of Note Guarantors that would together constitute a Significant Subsidiary of the Issuers or for all or substantially all of the 79 property of any of the Issuers or a Note Guarantor that is a Significant Subsidiary or any group of Note Guarantors that would together constitute a Significant Subsidiary of any Issuer; or (iii) orders the liquidation of any Issuer or a Note Guarantor that is a Significant Subsidiary of any Issuers or any group of Note Guarantors that would together constitute a Significant Subsidiary of any Issuer; and the order or decree remains unstayed and in effect for 60 consecutive days; (k) revocation, termination, suspension or other cessation of effectiveness of any Gaming License, which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Project; or (l) failure by Interface for 30 days after written notice to comply with its obligations under the Cooperation Agreement with respect to a change of control of Interface or a sale, transfer or other disposition by Interface of its interest in the Expo Center or the incurrence by Interface of Indebtedness. The term "CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Section 6.02. ACCELERATION. (a) Subject to the provisions of clause (b) of this Section 6.02, if any Event of Default (other than an Event of Default specified in clause (i) or (j) of Section 6.01 hereof with respect to the Issuers or any Note Guarantor that is a Significant Subsidiary or any group of Note Guarantors that would together constitute a Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium and Liquidated Damages, if any, interest and any other monetary obligations on all of the Notes to be due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (i) or (j) of Section 6.01 hereof occurs with respect to the Issuers or any Note Guarantor that is a Significant Subsidiary or any group of Guarantors that would together constitute a Significant Subsidiary of the Issuers, the principal, premium and Liquidated Damages, if any, interest and any other monetary obligations on all of the outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind and cancel an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium or Liquidated Damages that has become due solely because of the acceleration) have been cured or waived. Notwithstanding the foregoing, the Trustee shall have no obligation to accelerate the Notes if in the best judgment of the Trustee acceleration is not in the best interest of the Holders of the Notes. If an Event of Default occurs by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Issuers with the intention and for the purpose of avoiding 80 payment of the premium that the Issuers would have had to pay if the Issuers then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. (b) The provisions of the TIA shall govern this Indenture whether or not this Indenture is qualified under the TIA. Subject to the mandatory provisions of the TIA, the rights of the Trustee and the Holders to accelerate obligations under the Notes, rescind such acceleration, or to exercise rights and remedies under the Collateral Documents or to enforce the terms of this Indenture shall be limited as provided in the terms of the Intercreditor Agreement. To the extent permissible under the TIA, the terms of the Intercreditor Agreement shall not be interpreted as impairing or affecting, in violation of Section 316(b) of the TIA, the right of any Holder to receive payment of principal of and interest on the Notes on or after the respective due dates expressed in the Notes or to institute suit for the enforcement of any such payment on or after such respective dates. Section 6.03. OTHER REMEDIES. Subject to the terms of the Intercreditor Agreement, if an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium and Liquidated Damages, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on, the Notes (including in connection with an offer to purchase) (PROVIDED, HOWEVER, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. Section 6.05. CONTROL BY MAJORITY. Subject to the terms of the Intercreditor Agreement, Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any 81 trust or power conferred on it, including the exercise of any remedy under the Collateral Documents or the Intercreditor Agreement. However, the Trustee may refuse to follow any direction that conflicts with law, this Indenture or the Intercreditor Agreement that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes (except as provided in Section 6.07) only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default or the Trustee receives such notice from the Issuers; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request; PROVIDED, HOWEVER, that such provision does not effect the right of a Holder to sue for enforcement of any overdue payment thereon. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note or to take any action in violation of the provisions of the Intercreditor Agreement. Section 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, but subject to the provisions of the Intercreditor Agreement the right of any Holder of a Note to receive payment of principal, premium and Liquidated Damages, if any, and interest on the Note, on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder, except the right of any Holder to institute suit for the enforcement of any such payment is hereby limited or denied if and to the extent that the institution or prosecution thereof or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the lien in favor of the Trustee securing the Note Collateral. Section 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, subject to the terms of the Intercreditor Agreement, the Trustee is authorized to recover judgment 82 in its own name and as trustee of an express trust against the Issuers or any Note Guarantor for the whole amount of principal of, premium and Liquidated Damages, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. Section 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. Subject to Section 6.02(b) hereof and the terms of the Intercreditor Agreement, the Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuers (or any other obligor upon the Notes, including the Note Guarantors), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article, it shall, subject to the terms of the Intercreditor Agreement, pay out the money in the following order: FIRST: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; SECOND: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium and Liquidated Damages, if any, and interest ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium and Liquidated Damages, if any, and interest, respectively; and 83 THIRD: to the Issuers or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. Section 6.12. MANAGEMENT OF CASINOS. Notwithstanding any provision of this Article 6 to the contrary, following an Event of Default which permits the taking of possession of the Project by the Trustee or the appointment of a receiver of either the Note Collateral or any part thereof pursuant to the Indenture Deed of Trust or after such taking of possession of such appointment, the Trustee or any such receiver shall be authorized, in addition to the rights and powers of the Trustee and such receiver set forth elsewhere in this Indenture and the Collateral Documents, to retain one or more experienced operators of casinos to manage the casino located at the Project on behalf of the Holders of Notes; PROVIDED, HOWEVER, that any such operator shall have all necessary legal qualifications, including all Gaming Licenses to manage the casino located at the Project. ARTICLE 7. TRUSTEE Section 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and the Collateral Documents, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture, the Collateral Documents and the Intercreditor Agreement and the Trustee need perform only those duties that are specifically set forth in this Indenture, the Collateral Documents and the Intercreditor Agreement and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and 84 (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming in all material respects to the requirements of this Indenture, the Collateral Documents and the Intercreditor Agreement. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform in all material respects to the requirements of this Indenture and the Collateral Documents. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph (c) does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture before or following the occurrence of any Event of Default at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuers or the Note Guarantors. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in 85 respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuers or any Note Guarantor shall be sufficient if signed by an Officer of the Issuers or such Note Guarantor. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have requested such action in accordance with this Indenture and have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) Except with respect to Section 4.01 hereof, the Trustee shall have no duty to inquire as to the performance of the Issuers' covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Section 6.01(a) or 6.01(b) or (ii) any Default of Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. Section 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers and the Note Guarantors with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Collateral Documents, the Intercreditor Agreement, the Notes or any Note Guarantee, it shall not be accountable for the Issuers' use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers' direction under any provision of this Indenture or the Collateral Documents, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. 86 Section 7.05. NOTICE OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium and Liquidated Damages, if any, or interest on any Note, the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. Within 60 days of each May 15th beginning with the May 15th following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 3l3(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Issuers and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Issuers shall promptly notify the Trustee when the Notes are listed on any stock exchange. At the expense of the Issuers, the Trustee or, if the Trustee is not the Registrar, the Registrar, shall report the names of record Holders of the Notes to any Gaming Authority when requested to do so by the Issuers. At the express direction of the Issuers and at the Issuers' expense, the Trustee will provide any Gaming Authority with: (i) copies of all notices, reports and other written communications which the Trustee gives to Holders; (ii) a list of all of the Holders promptly after the original issuance of the Notes and periodically thereafter if the Issuers so direct; (iii) notice of any Default under this Indenture, any acceleration of the Indebtedness evidenced hereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of a Default or Event of Default hereunder; (iv) notice of the removal or resignation of the Trustee within five Business Days of the effectiveness thereof; (v) notice of any transfer or assignment of rights under this Indenture or the Note Guarantees known to the Trustee within five Business Days thereof; and 87 (vi) a copy of any amendment to the Notes or this Indenture within five Business Days of the effectiveness thereof. To the extent requested by the Issuers and at the Issuers' expense, the Trustee shall cooperate with any Gaming Authority in order to provide such Gaming Authority with the information and documentation requested and as otherwise required by applicable law. Section 7.07. COMPENSATION AND INDEMNITY. The Issuers and the Note Guarantors shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder in accordance with a written schedule provided by the Trustee to the Issuers. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers and the Note Guarantors shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Issuers and the Note Guarantors shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Issuers (including this Section 7.07) and defending itself against any claim (whether asserted by the Issuers or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, willful misconduct or bad faith. The Trustee shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers or any Note Guarantor of its obligations hereunder. The Issuers shall defend the claim and the Trustee shall cooperate in the defense. To the extent there exists a conflict or potential conflict of interest, the Trustee may have separate counsel and the Issuers and the Note Guarantors shall pay the reasonable fees and expenses of such counsel. Neither the Issuers nor any Note Guarantor need pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Issuers and the Note Guarantors under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses and the compensation for the services (including the reasonable fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. 88 Section 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment and taking of office as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuers. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. For up to one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may by written action appoint a successor Trustee to replace the successor Trustee appointed by the Issuers. If any Gaming Authority requires a Trustee to be approved, licensed or qualified and the Trustee fails or declines to do so, such approval, license or qualification shall be obtained upon the request of, and at the expense of, the Issuers unless the Trustee declines to do so, or, if the Trustee's relationship with either the Issuers or the Note Guarantors may, in the Issuers' discretion, jeopardize any material gaming license or franchise or right or approval granted thereto, the Trustee shall resign, and, in addition, the Trustee may at its option resign if the Trustee in its sole discretion determines not to be so approved, licensed or qualified. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, any Note Guarantor or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to 89 Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, PROVIDED all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuers' and the Note Guarantors' obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. Section 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee; PROVIDED such corporation shall be otherwise eligible and qualified under this Article. Section 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). Section 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. Section 7.12. AUTHORIZATION OF TRUSTEE TO TAKE OTHER ACTIONS. (a) The Trustee is hereby authorized to enter into and take any actions or deliver such consents required by or requested under each of the Collateral Documents, the Intercreditor Agreement and such other documents as directed by the Holders of a majority of outstanding aggregate principal amount of the Notes. If at any time any action by or the consent of the Trustee is required under any of the Collateral Documents, the Intercreditor Agreement or any other document entered into by the Trustee at the direction of a majority of the Holders of outstanding aggregate principal amount of the Notes, such action or consent shall be taken or given by the Trustee upon the consent to such action by the Holders of a majority of outstanding aggregate principal amount of the Notes. The foregoing shall not limit the powers of the Issuers, the Note Guarantors and the Trustee to effectuate certain amendments, waivers, or consents under this Indenture, the Note, the Note Guarantees, the Intercreditor Agreement or the Collateral Documents pursuant to Article 9 hereof without the consent of any Holder of a Note. (b) Upon any refinancing or replacement of the First Lien Credit Facilities or any portion thereof, or upon entering into any First Lien Credit Facility with a lender, lenders or their agent that is not then a party to the Intercreditor Agreement, such new lender shall become 90 a party to the Intercreditor Agreement if it is then in effect or, if the Intercreditor Agreement is not then in effect or if the lender, lenders or their agent does not become a party to such Intercreditor Agreement, the Trustee, without further action on behalf of Holders of Notes, shall enter into an intercreditor agreement with such new lender, lenders or their agent with terms that are no less favorable to the Trustee or the Holders of Notes than those contained in the Intercreditor Agreement. The Trustee, without further action on behalf of Holders of Notes, shall also enter into such amendments or supplements to the Intercreditor Agreement or the Collateral Documents to provide for additional parties to be bound by and subject to the benefits of the terms thereof. (c) If an Default or Event of Default under Article 6 has occurred or is continuing, then the Trustee shall (1) upon the request of Holders of not less than 25% in principal amount of the then outstanding Notes, deliver a Payment Blockage Notice (as defined in Appendix A-2 hereto) to the trustee or designated agent for any Permitted Subordinated Indebtedness and/or (2) take such other remedies or actions as directed by the subordination provisions of such Permitted Subordinated Indebtedness. ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Section 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Issuers may, at the option of the Board of Directors of the Company evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8. Section 8.02. LEGAL DEFEASANCE AND DISCHARGE. Upon the Issuers' exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Issuers and the Note Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their respective obligations with respect to all outstanding Notes and any Note Guarantees on the date the conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that the Issuers shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes and the Note Guarantees and cured all existing Events of Default, which Notes and Note Guarantees shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes, the Collateral Documents and this Indenture (and the Trustee, on demand of and at the expense of the Issuers, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive solely from the trust fund described in Section 8.04 hereof, and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Issuers' and the Note Guarantors' obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder 91 and the Issuers' and the Note Guarantors' obligations in connection therewith and (d) this Article 8. Subject to compliance with this Article 8, the Issuers may exercise their option under this Section 8.02 notwithstanding the prior exercise of their option under Section 8.03 hereof. Section 8.03. COVENANT DEFEASANCE. Upon the Issuers' exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Issuers and the Note Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.03, 4.05, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.21, 4.22 and 4.23 and Articles 5, 10 and 11 hereof with respect to the outstanding Notes and Note Guarantees on and after the date the conditions set forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Issuers and the Note Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Issuers' exercise under Section 8.01 hereof of the option applicable to this Section 8.03 hereof, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(h) and 6.01(k) and 6.01 (l) hereof shall not constitute Events of Default. Section 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Issuers must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient to pay the principal of, premium and Liquidated Damages, if any, and interest due on the outstanding Notes on the stated maturity date or on an applicable redemption date, as the case may be, of such principal of, premium and Liquidated Damages, if any, or interest on the outstanding Notes; (b) in the case of an election under Section 8.02 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, (A) the 92 Issuers have received from the United States Internal Revenue Service a ruling (a copy of which shall accompany such Opinion of Counsel) or (B) since the Issuance Date, there has been a change in the applicable U.S. federal income tax law such that a ruling is no longer required, in either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Issuers shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing pursuant to Section 6.01(a), 6.01(b), 6.01(c), 6.01(i) or 6.01(j) hereof on the date of such deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Issuers or any of their Restricted Subsidiaries is a party or by which the Issuers or any of their Restricted Subsidiaries is bound; (f) the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable United States or state law; (g) the Issuers shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Issuers with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuers or other; and (h) the Issuers shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel in the United States (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in 93 respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuers acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and Liquidated Damages, if any, and interest but such money need not be segregated from other funds except to the extent required by law. The Issuers and the Note Guarantors shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuers from time to time upon the request of the Issuers any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 8.06. REPAYMENT TO THE ISSUERS. Any money deposited with the Trustee or any Paying Agent, or then held by the Issuers, in trust for the payment of the principal of, premium and Liquidated Damages, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium and Liquidated Damages, if any, or interest has become due and payable shall be paid to the Issuers on its request or (if then held by the Issuers) shall be discharged from such trust; and the Holder of such Note shall thereafter, as a secured creditor, look only to the Issuers for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuers as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuers cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuers. Section 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuers' and the Note Guarantors' obligations under this Indenture and the Notes and Note Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; PROVIDED, HOWEVER, that, if the Issuers and the Note Guarantors make any payment of principal of, premium and Liquidated Damages, if any, or interest on any Note following the reinstatement of its obligations, the Issuers and the Note 94 Guarantors shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. Section 8.08. NOTE COLLATERAL. Upon the Issuers' exercise under Section 8.01 hereof of the option applicable to either Section 8.02 or 8.03, the Note Collateral, except the funds in the trust fund described in Section 8.04 hereof, shall be released pursuant to Section 10.03 hereof. ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER Section 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Issuers, the Note Guarantors and the Trustee may amend or supplement this Indenture, the Notes, the Note Guarantees, the Intercreditor Agreement or the Collateral Documents without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to comply with Article 5 or Article 11 hereof; (c) to provide for uncertificated Notes in addition to or in place of certificated Notes; (d) to provide for the assumption of the Issuers' or the Note Guarantors' obligations to the Holders of the Notes in the case of a merger or consolidation pursuant to Articles 5 or 11 hereof, as the case may be; (e) to make any change that would provide any additional rights or benefits to the Holders of the Notes (including providing for additional Note Guarantees or Note Collateral pursuant to Section 11.02 hereof or otherwise) or that does not adversely affect the legal rights hereunder, under the Collateral Documents or the Intercreditor Agreement of any Holder of a Note; (f) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (g) to enter into additional or supplemental Collateral Documents. In addition, notwithstanding Section 9.02 hereof, any amendment, waiver or consent (other than the release of Note Collateral) agreed to by the Credit Agent under any provision of the security documents granting the first-priority lien on any Note Collateral to secure the obligations under the Bank Credit Facility will automatically apply to the comparable provisions of the comparable Collateral Documents entered into in connection with the Notes, without the consent of any Holder of a Note, so long as the Holders of the Notes are treated equally with and in the same manner as the lenders under the Bank Credit Facility. 95 Upon the request of the Issuers accompanied by a resolution of the Board of Directors of the Issuers and the Note Guarantors (or their managing members) authorizing the execution of any such amended or supplemental Indenture, Notes, Note Guarantees or Collateral Documents, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Issuers and the Note Guarantors in the execution of any amended or supplemental Indenture, Notes, Note Guarantees or Collateral Documents authorized or permitted by the terms of this Indenture, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture, Notes, Note Guarantees or Collateral Documents that affects its own rights, duties or immunities under this Indenture or otherwise. Section 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02 or elsewhere in this Indenture, the Issuers and the Trustee may amend or supplement this Indenture, the Notes, the Note Guarantees, the Collateral Documents or the Intercreditor Agreement with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium and Liquidated Damages, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes, the Note Guarantees, the Collateral Documents or the Intercreditor Agreement may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes). Upon the request of the Issuers accompanied by a resolution of the Board of Directors of the Company and the Note Guarantors authorizing the execution of any such amended or supplemental Indenture, Notes, Note Guarantees, Collateral Documents or the Intercreditor Agreement, and upon the filing with the Trustee of evidence reasonably satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Issuers and the Note Guarantors in the execution of such amended or supplemental Indenture, Notes, Note Guarantees, Collateral Documents or Intercreditor Agreement, unless such amended or supplemental Indenture, Notes, Note Guarantees, Collateral Documents or Intercreditor Agreement affects the Trustee's own rights, duties or immunities under this Indenture, the Notes, the Note Guarantees, the Collateral Documents, the Intercreditor Agreement or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture, Notes, Note Guarantees, Collateral Documents or Intercreditor Agreement. It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Issuers shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuers to mail such notice, or any defect 96 therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture, Notes, Note Guarantees, Collateral Documents or Intercreditor Agreement or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance with any provision of this Indenture, the Notes, the Note Guarantees, the Collateral Documents or the Intercreditor Agreement. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes (PROVIDED, HOWEVER, that the term "redemption" does not apply to any provision with respect to any Repurchase Offer); (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium and Liquidated Damages, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium and Liquidated Damages, if any, or interest on the Notes; (g) release all or substantially all of the Note Collateral from the Lien of this Indenture or the Collateral Documents (other than in accordance with the Indenture and the Collateral Documents); or (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. Section 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture, the Notes, the Note Guarantees and the Collateral Documents shall be set forth in a amended or supplemental Indenture or Collateral Document that complies with the TIA as then in effect, if applicable. This Indenture shall be construed to comply in every respect with the TIA. 97 Section 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. Once an amendment, supplement or waiver becomes effective in accordance with this Indenture, such amendment, supplement or waiver shall thereafter bind every Holder of a Note. Section 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall authenticate new Notes (accompanied by a notation of the Note Guarantees duly endorsed by the Note Guarantors) that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental indenture, Note, Note Guarantee or Collateral Document, if necessary, authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuers or any Note Guarantor may not sign an amendment or supplemental Indenture, Note, Note Guarantee or Collateral Document until the Board of Directors approves it. In executing any amended or supplemental indenture, Note, Note Guarantee or Collateral Document, if necessary, the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel, which Opinion of Counsel may be subject to customary assumptions and exclusions, stating that the execution of such amended or supplemental indenture, Note, Note Guarantee or Collateral Document is authorized or permitted by this Indenture. ARTICLE 10. COLLATERAL AND SECURITY Section 10.01. SECURITY. The due and punctual payment of the principal of, premium and Liquidated Damages, if any, and interest on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium and Liquidated Damages, if any, and interest on the Notes and performance of all other obligations of the Issuers and the Note Guarantors to the Holders of Notes or the Trustee under this Indenture, the Notes and the Note Guarantees, according to the terms hereunder or thereunder, shall be secured by the Note Collateral, as provided in the Collateral Documents which the Issuers and the Note Guarantors 98 have entered into simultaneously with the execution of this Indenture for the benefit of the Holders of Notes. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Collateral Documents and the Intercreditor Agreement (including, without limitation, the provisions providing for foreclosure and release of Note Collateral as well as any additional intercreditor arrangements entered into by the Trustee pursuant to Section 7.12 hereof) as the same may be in effect or may be amended from time to time in accordance with its terms and authorizes and directs the Trustee to enter into the Collateral Documents and the Intercreditor Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith. The Issuers and the Note Guarantors shall deliver to the Trustee copies of all documents executed pursuant to this Indenture, the Collateral Documents and the Intercreditor Agreement and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Collateral Documents and/or the Intercreditor Agreement to assure and confirm to the Trustee the security interest in the Note Collateral contemplated hereby, by the Collateral Documents and the Intercreditor Agreement or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes and the Note Guarantees secured hereby, according to the intent and purposes herein and therein expressed. The Issuers shall take, or shall cause its Restricted Subsidiaries to take, upon request of the Trustee, any and all actions reasonably required to cause the Collateral Documents and/or the Intercreditor Agreement to create and maintain, as security for the obligations of the Issuers hereunder, a valid and enforceable perfected Lien on the Note Collateral, subject to Permitted Liens. Section 10.02. RECORDING AND OPINIONS. The Issuers and the Note Guarantors will cause the applicable Collateral Documents, including the Indenture Deed of Trust and any financing statements, all amendments or supplements to each of the foregoing and any other similar security documents as necessary, to be registered, recorded and filed and/or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law or reasonably requested by the Trustee in order fully to preserve and protect the Lien securing the obligations under the Notes and the Note Guarantees pursuant to the Collateral Documents and the Intercreditor Agreement. The Issuers, the Note Guarantors and any other obligor shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture, and promptly after the execution and delivery of any other instrument of further assurance or amendment, an Opinion of Counsel in the United States either (i) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, this Indenture, the Indenture Deed of Trust and other applicable Collateral Documents and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the Lien intended to be created by such Collateral Documents and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given or (ii) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, no such action is necessary to make any other Lien created under any of the Collateral Documents effective as intended by such Collateral Documents; and 99 (b) within 30 days after January 1, in each year beginning with the year 2003, an Opinion of Counsel, dated as of such date, either (i) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re-registering and re-filing of this Indenture and all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of this Indenture and the Collateral Documents until the next Opinion of Counsel is required to be rendered pursuant to this paragraph and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given or (ii) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, no such action is necessary to maintain such Lien, until the next Opinion of Counsel is required to be rendered pursuant to this paragraph. (c) The Issuers shall furnish to the Trustee the, certificates or opinions, as the case may be, required by TIA Section 314(d). Such certificates or opinions will be subject to the terms of TIA Section 314(e). Section 10.03. RELEASE OF COLLATERAL. (a) Subject to subsections (b), (c) and (d) of this Section 10.03, Note Collateral may be released from the Lien and security interest created by this Indenture and the Collateral Documents at any time or from time to time upon the request of the Issuers pursuant to an Officers' Certificate certifying that all terms for release and conditions precedent hereunder and under any applicable Collateral Document have been met and specifying (i) the identity of the Note Collateral to be released and (ii) the provision of this Indenture which authorizes such release. The Trustee shall release (at the sole cost and expense of the Issuers) (i) all Note Collateral that is contributed, sold, leased, conveyed, transferred or otherwise disposed of (including, without limitation, any Note Collateral that does not constitute Project Assets) and all Note Collateral that is contributed, sold, leased, conveyed, transferred or otherwise disposed of to an Unrestricted Subsidiary, but excluding any such contribution, sale, lease, conveyance, transfer or other distribution to the Company or a Restricted Subsidiary); PROVIDED, such contribution, sale, lease, conveyance, transfer or other distribution is or will be in accordance with the provisions of this Indenture, including, without limitation, if applicable, the requirement that the net proceeds from such contribution, sale, lease, conveyance, transfer or other distribution are or will be applied (subject to the provisions of the Intercreditor Agreement) in accordance with this Indenture and that no Default or Event of Default has occurred and is continuing or would occur immediately following such release; (ii) Note Collateral that is condemned, seized or taken by the power of eminent domain or otherwise confiscated pursuant to an Event of Loss; PROVIDED that the Net Loss Proceeds, if any, from such Event of Loss are or will be applied in accordance with Section 4.11 hereof; (iii) all Note Collateral which may be released with the consent of Holders pursuant to Article 9 hereof; (iv) all Note Collateral (except as provided in Article 8 or 12 hereof and, in particular, the funds in the trust fund described in Section 8.04 or Section 12.01 hereof) upon discharge or defeasance of this Indenture in accordance with Article 8 or 12 hereof; (v) all Note Collateral upon the payment in full of all obligations of the Issuers with respect to the Notes and the Note Guarantors with respect to the Note Guarantees; (vi) Note Collateral of a Guarantor whose Note Guarantee is released pursuant to Section 11.05(a) hereof; (vii) Note Collateral that is expressly required to be released by any Collateral Document or the Intercreditor Agreement; (viii) assets included in the Note Collateral 100 with a fair market value as determined in good faith by the Board of Directors of the Company of up to $1.0 million in any calendar year, subject to cumulative carryover for any amount not used in any prior calendar year; and (ix) assets if all other Liens on such assets securing any Credit Facility or any other Indebtedness then secured by such assets (including all commitments thereunder) are released, including any such release pursuant to release of Note Guarantees as described in Section 11.05(b); PROVIDED that after giving effect to such releases, the aggregate book value of all of the assets released under this clause (ix) does not exceed 10% of the Consolidated Total Assets of the Company as of the Issuance Date. Upon receipt of such Officers' Certificate, the Trustee shall execute, deliver or acknowledge any necessary or proper instruments of termination, satisfaction or release to evidence the release of any Note Collateral permitted to be released pursuant to this Indenture or the Collateral Documents. The Trustee is hereby authorized and shall, from time to time upon request of the Issuers, execute and deliver UCC-3 termination statements and such other agreements or documents evidencing release of (1) Note Collateral available for release pursuant to clauses (i) through (ix) above, and (2) any Specified FF&E or deposits or advances used for the purpose of acquiring Specified FF&E; PROVIDED that except in the case of each of clauses (iii), (iv) and (v), such request by the Issuers is accompanied by an Officers' Certificate of the Issuers certifying that any assets being so released are not subject to Liens in favor of the Lenders under the Bank Credit Facility. (b) Except pursuant to Section 10.03(a), no Note Collateral shall be released from the Lien and security interest created by the Collateral Documents pursuant to the provisions of the Collateral Documents unless there shall have been delivered to the Trustee the certificate required by this Section 10.03. (c) The Trustee may release Note Collateral from the Lien and security interest created by this Indenture and the Collateral Documents upon the sale or disposition of Note Collateral pursuant to the Trustee's powers, rights and duties with respect to remedies provided under any of the Collateral Documents. (d) The release of any Note Collateral from the terms of this Indenture and the Collateral Documents shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Note Collateral is released pursuant to the terms hereof. To the extent applicable, the Issuers shall cause TIA Section 313(b), relating to reports, and TIA Section 314(d), relating to the release of property or securities from the Lien and security interest of the Collateral Documents and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Collateral Documents to be complied with. Any certificate or opinion required by TIA Section 314(d) may be made by an Officer of the Issuers except in cases where TIA Section 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert. Section 10.04. PROTECTION OF THE TRUST ESTATE. Subject to the terms of the Intercreditor Agreement and the Collateral Documents, upon prior written notice to the Issuers and the Note Guarantors, the Trustee shall have the power (i) to institute and maintain such suits and proceedings as it may deem expedient, to prevent any impairment of the Note Collateral under any of the Collateral Documents and in the 101 profits, rents, revenues and other income arising therefrom, including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair any Note Collateral or be prejudicial to the interests of the Holders of Notes or the Trustee, to the extent permitted thereunder; and (ii) to enforce the obligations of the Issuers, the Note Guarantors or any Restricted Subsidiary under this Indenture or the Collateral Documents. Upon receipt of notice that a Restricted Subsidiary or a Guarantor is not in compliance with any of the requirements of the Indenture Deed of Trust, the Trustee may, but shall have no obligation to purchase, at the Issuers' expense, such insurance coverage necessary to comply with the appropriate section of the mortgage. Section 10.05. CERTIFICATES OF THE ISSUERS. The Issuers shall furnish to the Trustee, prior to each proposed release of Note Collateral pursuant to the Collateral Documents (i) all documents required by TIA Section 314(d) and (ii) an Opinion of Counsel in the United States, which may be rendered by internal counsel to the Issuers, to the effect that, subject to customary assumptions and exclusions, such accompanying documents constitute all documents required by TIA Section 314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and such Opinion of Counsel. Section 10.06. CERTIFICATES OF THE TRUSTEE. In the event that the Issuers wish to release Note Collateral in accordance with the Collateral Documents and have delivered the certificates and documents required by the Collateral Documents and Sections 10.03 and 10.04 hereof, the Trustee shall determine whether it has received all documentation required by TIA Section 314(d) in connection with such release and, based on such determination and the Opinion of Counsel delivered pursuant to Section 10.05(ii), shall deliver a certificate to the Issuers setting forth such determination. Section 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE COLLATERAL DOCUMENTS. Subject to the provisions of Section 7.01, 7.02 and 7.12 hereof and the Intercreditor Agreement, the Trustee may, in its sole discretion and without the consent of the Holders of Notes, on behalf of the Holders of Notes, take all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Collateral Documents and/or the Intercreditor Agreement and (b) collect and receive any and all amounts payable in respect of the Obligations of the Issuers hereunder, including but not limited to the appointment and approval of collateral agents, any actions of consents required to be taken under the Intercreditor Agreement and the appointment and approval of an insurance trustee. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Note Collateral by any acts that may be unlawful or in violation of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Note 102 Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). Section 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE COLLATERAL DOCUMENTS. Upon an Event of Default and so long as such Event of Default continues, the Trustee may, subject to the terms of the Intercreditor Agreement, exercise in respect of the Note Collateral, in addition to the other rights and remedies provided for herein, in the Collateral Documents or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable law, and the Trustee may also upon obtaining possession of the Note Collateral as set forth herein, without notice to the Issuers, except as specified below, sell the Note Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Trustee's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Trustee may deem commercially reasonable. The Issuers acknowledge and agree that any such private sale may result in prices and other terms less favorable to the seller than if such a sale were a public sale. The Issuers agree that, to the extent notice of sale shall be required by law, at least 10 days' notice to the Issuers of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Trustee shall not be obligated to make any sale regardless of notice of sale having been given. The Trustee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Any cash that is Note Collateral held by the Trustee and all cash proceeds received by the Trustee in respect of any sale of, collection from, or other realization upon all or any part of the Note Collateral shall be applied (unless otherwise provided for in the Collateral Documents and after payment of any and all amounts payable to the Trustee pursuant to the Indenture), as the Trustee shall determine or as the Holders of the Notes shall direct pursuant to Section 6.05 hereof, (i) against the obligations for the ratable benefit of the Holders of the Notes, (ii) to maintain, repair or otherwise protect the Note Collateral or (iii) to take such other action to protect the other rights of the Holders of the Notes or to take any other appropriate action or remedy for the benefit of the Holders of the Notes. Any surplus of such cash or cash proceeds held by the Trustee and remaining after payment in full of all the obligations shall be paid over to the Issuers or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct. Section 10.09. TERMINATION OF SECURITY INTEREST. Upon the payment in full of all principal of, premium and Liquidated Damages, if any, and interest and other Obligations of the Issuers under this Indenture and the Notes then due and payable, the Trustee shall (at the request of the Issuers accompanied by (i) an Officers' Certificate of the Issuers to the Trustee stating that such Obligations have been paid in full, and 103 (ii) instructions from the Issuers to the Trustee to release the Liens pursuant to this Indenture and the Collateral Documents) release the Liens securing the Note Collateral and shall execute, deliver or acknowledge any necessary or proper instruments of termination, satisfaction or release to evidence the release of any Note Collateral permitted to be released pursuant to this Indenture or the Collateral Documents. Section 10.10. COOPERATION OF TRUSTEE. In the event the Issuers or any Note Guarantor pledge or grant a security interest in additional Note Collateral, the Trustee shall cooperate with the Issuers or such Note Guarantor in reasonably and promptly agreeing to the form of, and executing as required, any instruments or documents necessary to make effective the security interest in the Note Collateral to be so substituted or pledged. To the extent practicable, the terms of any security agreement or other instrument or document necessitated by any such substitution or pledge shall be comparable to the provisions of the existing Collateral Documents. Subject to, and in accordance with the requirements of this Article 10 and the terms of the Collateral Documents, in the event that the Issuers or any Note Guarantor engages in any transaction pursuant to Section 10.03, the Trustee shall cooperate with the Issuers or such Note Guarantor in order to facilitate such transaction in accordance with any reasonable time schedule proposed by the Issuers, including by delivering and releasing the Note Collateral in a prompt and reasonable manner. Section 10.11. COLLATERAL AGENT. The Trustee may, from time to time, appoint one or more Collateral Agents hereunder. Each of such Collateral Agents may be delegated any one or more of the duties or rights of the Trustee hereunder or under the Collateral Documents or Intercreditor Agreement or which are specified in any Collateral Documents or Intercreditor Agreement, including without limitation, the right to hold any Note Collateral in the name of, registered to, or in the physical possession of, such Collateral Agent, for the ratable benefit of the Holders of the Notes. Each such Collateral Agent shall have such rights and duties as may be specified in an agreement between the Trustee and such Collateral Agent. The Trustee and any Collateral Agent shall be authorized hereunder to give any acknowledgment reasonably requested by any party under the Intercreditor Agreement to confirm the rights and obligations of the parties under the Intercreditor Agreement. ARTICLE 11. NOTE GUARANTEES Section 11.01. NOTE GUARANTEES. Subject to Permitted Liens, the Notes are hereby unconditionally guaranteed on a senior, second-lien secured basis by each of the Note Guarantors. The Note Guarantors hereby guarantee to each Holder of a Note authenticated and delivered by the Trustee irrespective of the validity or enforceability of this Indenture, the Notes or the obligations of the Issuers under this Indenture, the Notes or the Collateral Documents, that: (i) the principal of, premium and Liquidated Damages, if any, and interest on the Notes will be paid in full when due, whether at the maturity or interest payment or mandatory redemption date, by acceleration, call for 104 redemption or otherwise, and interest on the overdue principal and interest, if any, of the Notes and all other obligations of the Issuers to the Holders or the Trustee under this Indenture or the Notes will be promptly paid in full or performed, all in accordance with the terms of this Indenture and the Notes; and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, they will be paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, prepayment, declaration, demand or otherwise. Failing payment when due of any amount so guaranteed for whatever reason, each Note Guarantor will be obligated to pay the same whether or not such failure to pay has become an Event of Default which could cause acceleration pursuant to Section 6.02 hereof. Each Note Guarantor agrees that this is a guarantee of payment not a guarantee of collection. Each Note Guarantor hereby agrees that its obligations with regard to this Note Guarantee shall be joint and several, unconditional, irrespective of the validity or enforceability of the Notes or the obligations of the Issuers under this Indenture, the absence of any action to enforce the same, the recovery of any judgment against the Issuers or any other obligor with respect to this Indenture, the Notes or the Obligations of the Issuers under this Indenture or the Notes, any action to enforce the same or any other circumstances (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a Note Guarantor. Each Note Guarantor further, to the extent permitted by law, waives and relinquishes all claims, rights and remedies accorded by applicable law to guarantors and agrees not to assert or take advantage of any such claims, rights or remedies, including but not limited to: (a) any right to require any of the Trustee, the Holders or the Issuers (each a "BENEFITED PARTY"), as a condition of payment or performance by such Note Guarantor, to (i) proceed against the Issuers, any other guarantor (including any other Note Guarantor) of the Obligations under the Note Guarantees or any other Person, (ii) proceed against or exhaust any security held from the Issuers, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of any Benefited Party in favor of the Issuers or any other Person, or (iv) pursue any other remedy in the power of any Benefited Party whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of the Issuers including any defense based on or arising out of the lack of validity or the unenforceability of the Obligations under the Note Guarantees or any agreement or instrument relating thereto or by reason of the cessation of the liability of the Issuers from any cause other than payment in full of the Obligations under the Note Guarantees; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Benefited Party's errors or omissions in the administration of the Obligations under the Note Guarantees, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of the Note Guarantees and any legal or equitable discharge of such Note Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting such Note Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Benefited Party protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of the Note Guarantees, notices of default under the Notes or any agreement or instrument related thereto, notices of any 105 renewal, extension or modification of the Obligations under the Note Guarantees or any agreement related thereto, and notices of any extension of credit to the Issuers and any right to consent to any thereof; (g) to the extent permitted under Section 40.495 of the Nevada Revised Statutes, the benefits of the "One Action" rule under Section 40.430 of the Nevada Revised Statutes and (h) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of the Note Guarantees. Each Note Guarantor hereby covenants that its Note Guarantee will not be discharged except by complete performance of the obligations contained in its Note Guarantee and this Indenture. If any Holder or the Trustee is required by any court or otherwise to return to either the Issuers or any Note Guarantor, or any custodian, trustee, or similar official acting in relation to either the Issuers or such Note Guarantor, any amount paid by the Issuers or such Note Guarantor to the Trustee or such Holder, the applicable Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Note Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Note Guarantor further agrees that, as between such Note Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the obligations guaranteed hereby may be accelerated as provided in Section 6.02 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration as to the Issuers or any other obligor on the Notes of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of those obligations as provided in Section 6.02 hereof, those obligations (whether or not due and payable) will forthwith become due and payable by such Note Guarantor for the purpose of this Note Guarantee. Section 11.02. ADDITIONAL NOTE GUARANTEES. If any Restricted Subsidiary incorporated, formed or otherwise organized in the United States or any political subdivision thereof that is not a Note Guarantor becomes a guarantor under the First Lien Credit Facilities, the Issuers shall cause such Restricted Subsidiary to (i) execute and deliver to the Trustee a supplemental indenture and supplemental Collateral Documents in form reasonably satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall unconditionally guarantee, on a senior, second lien secured basis, all of the Issuers' obligations under the Notes, this Indenture and the Collateral Documents on the terms set forth in this Indenture and (ii) deliver to the Trustee an Opinion of Counsel that, subject to customary assumptions and exclusions, such supplemental indenture and supplemental Collateral Documents have been duly executed and delivered by such Restricted Subsidiary. Any Note Guarantee executed and delivered in accordance with this Section 11.02 shall be secured by a second Lien or charge on all Note Collateral of such Note Guarantor, subject to Section 4.13 hereof. Any such Note Guarantee shall be released if the Issuers or its Restricted Subsidiaries cease to own any Equity Interests in such Restricted Subsidiary or if such Restricted Subsidiary becomes an Unrestricted Subsidiary in accordance with the terms of this Indenture. 106 Section 11.03. LIMITATION OF NOTE GUARANTOR'S LIABILITY. Each Note Guarantor and by its acceptance hereof, each beneficiary hereof, hereby confirm that it is its intention that the Note Guarantee by such Note Guarantor not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantees. To effectuate the foregoing intention, each such person hereby irrevocably agrees that the obligation of such Note Guarantor under its Note Guarantee under this Article 11 shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other (contingent or otherwise) liabilities of such Note Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Note Guarantor in respect of the obligations of such other Note Guarantor under this Article 11, result in the obligations of such Note Guarantor in respect of such maximum amount not constituting a fraudulent conveyance. Each beneficiary under the Note Guarantees, by accepting the benefits hereof, confirms its intention that, in the event of a bankruptcy, reorganization or other similar proceeding of the Issuers or any Note Guarantor in which concurrent claims are made upon such Note Guarantor hereunder, to the extent such claims will not be fully satisfied, each such claimant with a valid claim against the Issuers shall be entitled to a ratable share of all payments by such Note Guarantor in respect of such concurrent claims. Section 11.04. NOTE GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. (a) Except in the event of a disposition of all or substantially all of the assets of a Note Guarantor by way of merger or consolidation or other merger or consolidation permitted by this Indenture in which the Note Guarantor ceases to be a Restricted Subsidiary, no Note Guarantor shall consolidate with or merge with or into (whether or not such Note Guarantor is the surviving Person), another Person whether or not affiliated with such Note Guarantor unless (i) subject to the provisions of the following paragraph and Section 11.05, the Person formed by or surviving any such consolidation or merger (if other than such Note Guarantor) assumes all the obligations of such Note Guarantor pursuant to a supplemental indenture and supplemental Collateral Documents in a form reasonably satisfactory to the Trustee pursuant to which such Person shall unconditionally guarantee all of such Note Guarantor's obligations under such Note Guarantee, this Indenture and the Collateral Documents on the terms set forth in this Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) such transaction will not result in the loss or suspension or material impairment of any material Gaming License of the Issuers or any of their Restricted Subsidiaries. In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and reasonably satisfactory in form to the Trustee, of the Note Guarantee in this Indenture and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed by the Note Guarantor, such successor Person shall succeed to and be substituted for the Note Guarantor with the same effect as if it had been named herein as a Note Guarantor. (b) Notwithstanding the foregoing, (A) a Note Guarantor may consolidate with or merge with or into, or sell or otherwise dispose of all or substantially all of its assets to, 107 the Issuers, PROVIDED, that the surviving corporation (if other than the Issuers) shall expressly assume by supplemental indenture complying with the requirements of this Indenture, the due and punctual payment of the principal of, premium and Liquidated Damages, if any, and interest on all of the Notes, and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be performed by the Issuers and (B) a Note Guarantor may consolidate with or merge with or into, or sell or otherwise dispose of all or substantially all of its assets to, any other Note Guarantor. Section 11.05. RELEASES OF NOTE GUARANTEES. (a) Upon (i) a sale or other disposition of all or substantially all of the assets of any Note Guarantor, by way of merger, consolidation or otherwise, (ii) a Note Guarantor becoming an Unrestricted Subsidiary pursuant to the terms of this Indenture, (iii) a sale or other disposition of all of the Capital Stock of any Note Guarantor that is a Subsidiary or (iv) a sale of Capital Stock or other transaction which results in such Note Guarantor ceasing to be a Restricted Subsidiary, then, without any action required on the part of the Trustee or any Holder of the Notes, such Note Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all or a portion of the Capital Stock of such Note Guarantor or the Note Guarantor becoming an Unrestricted Subsidiary pursuant to the terms of this Indenture) or the person acquiring the property (in the event of a sale or other disposition of all or substantially all of the assets of such Note Guarantor) shall be released and relieved of any obligations under its Note Guarantee without any action required on the part of the Trustee or any Holder of the Notes; PROVIDED that (i) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and (ii) if applicable, the Net Proceeds of such sale or other disposition are applied in accordance with Section 4.10 hereof and the Collateral Documents. (b) If any Note Guarantor is released from its Guarantee to the lenders under any First Lien Credit Facility, such Note Guarantor shall be released from its obligations under the Note Guarantee without any action required on the part of the Trustee or any Holder of Notes. A Note Guarantor may also be released from its obligations under its Note Guarantee pursuant to the Articles 8, 9 or 12 hereof. Section 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any Paying Agent other than the Trustee shall have been appointed by the Issuers and be then acting hereunder, the term "Trustee" as used in this Article 11 shall in such case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 11 in place of the Trustee. ARTICLE 12. SATISFACTION AND DISCHARGE 108 Section 12.01. SATISFACTION AND DISCHARGE. The Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder and all Liens securing the Notes and obligations under the Indenture including the Note Guarantees will be released, when: (1) either: (a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuers, have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation have (1) become due and payable by reason of the mailing of a notice of redemption or otherwise, (2) will become due and payable within one year or (3) are to be called for redemption within 12 months under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the reasonable expense of the Issuers, and the Issuers or any Note Guarantor have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued but unpaid interest to the date of maturity or redemption; (2) no Default of Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit and the deposit will not result in a breach or violation of, or constitute a default under, any other material instrument to which the Issuers or any Note Guarantor is a party or by which the Issuers or any Note Guarantor are bound; (3) the Issuers or any Note Guarantor have paid or caused to be paid all sums payable by them under the Indenture; and (4) the Issuers have delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. In addition, the Issuers must deliver an Officer's Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. 109 Section 12.02. APPLICATION OF TRUST MONEY. Subject to the provisions of Section 8.06, all money deposited with the Trustee pursuant to Section 12.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuers acting as their own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 12.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers' and any Note Guarantor's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 12.01; PROVIDED that if the Issuers have made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 13. MISCELLANEOUS Section 13.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control. Section 13.02. NOTICES. Any notice or communication by the Issuers, any Note Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Issuers or the Note Guarantors: 3335 Las Vegas Boulevard South Las Vegas, Nevada 89109 Telecopier No.: (702) 733-5499 Attention: General Counsel 110 With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Telecopier No.: (212) 757-3990 Attention: John C. Kennedy, Esq. If to the Trustee: U.S. Bank National Association 180 East 5th Street St. Paul, Minnesota 55101 Telecopier No.: (651) 244-0711 Attention: Corporate Trust Department If to the Trustee for purposes of Section 4.02 hereof: U.S. Bank National Association Suite 2000 100 Wall Street New York, NY 10005 Attention: Corporate Trust Department The Issuers, the Note Guarantors or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given, at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Issuers or a Note Guarantor mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. 111 Section 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuers, the Note Guarantors, the Trustee and the Registrar shall have the protection of TIA Section 312(c). Section 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Issuers or the Note Guarantors to the Trustee to take any action under this Indenture, the Issuers or the Note Guarantors shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 13.05 hereof) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 13.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. 112 Section 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. No director, officer, employee, incorporator, member, partner or stockholder of the Issuers or the Note Guarantors, as such, shall have any liability for any obligations of the Issuers or the Note Guarantors under the Notes, any Note Guarantee, this Indenture, the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Note Guarantees. Section 13.08. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY PROVISIONS OF NEVADA LAW, INCLUDING THE GAMING CONTROL ACT AND THE REGULATIONS PROMULGATED THEREUNDER. Section 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuers or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 13.10. SUCCESSORS. All agreements of the Issuers and the Note Guarantors in this Indenture, the Notes and the Note Guarantees, as applicable, shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 13.11. SEVERABILITY. In case any provision in this Indenture, in the Notes or in the Note Guarantees shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 13.12. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 113 Section 13.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 114 SIGNATURES Dated as of June 4, 2002 LAS VEGAS SANDS, INC. By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board VENETIAN CASINO RESORT, LLC By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board MALL INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board GRAND CANAL SHOPS MALL CONSTRUCTION, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board LIDO INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board VENETIAN VENTURE DEVELOPMENT, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board VENETIAN OPERATING COMPANY, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board VENETIAN MARKETING INC. By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: VENETIAN CASINO RESORT ATHENS, LLC By: Las Vegas Sands, Inc., its managing member By: /s/ Sheldon G. Adelson ------------------------------ Name: Sheldon G. Adelson Title: Chairman of the Board Dated as of June 4, 2002 U.S. BANK NATIONAL ASSOCIATION as Trustee By: /s/ Richard S. Prokosch ------------------------------ Name: Richard S. Prokosch Title: Vice President EX-4 6 ex4-2_7032.txt REGISTRATION RIGHTS AGREEMENT Exhibit 4.2 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT Dated as of June 4, 2002 by and among Venetian Casino Resort, LLC Las Vegas Sands, Inc. AS ISSUERS Mall Intermediate Holding Company, LLC Venetian Venture Development, LLC Venetian Operating Company, LLC Venetian Marketing, Inc. Grand Canal Shops Mall Construction, LLC Lido Intermediate Holding Company, LLC Venetian Casino Resort Athens, LLC AS GUARANTORS and Goldman, Sachs & Co. Scotia Capital (USA) Inc. AS INITIAL PURCHASERS Exhibit 4.2 This Registration Rights Agreement (this "AGREEMENT") is made and entered into as of June 4, 2002, by and among Las Vegas Sands, Inc., a Nevada corporation (the "COMPANY"), Venetian Casino Resort, LLC, a Nevada limited liability company ("VENETIAN" and together with the Company, the "ISSUERS"), Mall Intermediate Holding Company, LLC, a Delaware limited liability company, Venetian Venture Development, LLC, a Nevada limited liability company, Venetian Operating Company, LLC, a Nevada limited liability company, Venetian Marketing, Inc., a Nevada corporation, Grand Canal Shops Mall Construction, LLC, a Delaware limited liability company, Lido Intermediate Holding Company, LLC, a Delaware limited liability company and Venetian Casino Resort Athens, LLC, a Delaware limited liability company (each a "GUARANTOR" and collectively, the "GUARANTORS") and Goldman, Sachs & Co. and Scotia Capital (USA) Inc. (each an "INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS"), each of whom has agreed to purchase the Issuers' 11.00% Mortgage Notes due 2010 (the "NOTES") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated May 22, 2002, (the "PURCHASE AGREEMENT"), by and among the Issuers, the Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Notes, the Issuers and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 7(k) of the Purchase Agreement. Capitalized terms used herein and not otherwise defined are used as defined in the Purchase Agreement. The parties hereby agree as follows: 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: "ACT": The Securities Act of 1933, as amended. "BUSINESS DAY": Any day except a Saturday, Sunday or other day in the City of New York, or in the city of the Corporate Trust Office of the Trustee (as defined in the Indenture), on which banks are authorized to close. "BROKER-DEALER": Any broker or dealer registered under the Exchange Act. "BROKER-DEALER TRANSFER RESTRICTED SECURITIES": Exchange Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Notes acquired directly from the Issuers or any of their affiliates). "BUSINESS DAY": As defined in the Indenture. "CLOSING DATE": The date hereof. "COMMISSION": The Securities and Exchange Commission. "CONSUMMATE": An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Exchange Offer, (b) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (c) the delivery by the Issuers to the Registrar under the Indenture of Exchange Notes in the same aggregate principal amount as the aggregate principal amount of Notes validly tendered by Holders thereof pursuant to the Exchange Offer. "EFFECTIVENESS TARGET DATE": As defined in Section 5. "DAMAGES PAYMENT DATE": With respect to the Notes, each Interest Payment Date. "DEFINITIVE NOTES": As defined in the Indenture. "EXCHANGE ACT": The Securities Exchange Act of 1934, as amended. "EXCHANGE NOTES": The Issuers' 11.00% Mortgage Notes due 2010 to be issued pursuant to the Indenture in the Exchange Offer. "EXCHANGE OFFER": The registration by the Issuers under the Act of any Exchange Notes pursuant to an Exchange Offer Registration Statement pursuant to which the Issuers shall offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities for Exchange Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities validly tendered in such Exchange Offer by such Holders. "EXCHANGE OFFER REGISTRATION STATEMENT": The Registration Statement relating to an Exchange Offer, including the related Prospectus. "EXEMPT RESALES": The transactions in which the Initial Purchasers propose to sell the Notes (i) to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act or (ii) in an offshore transaction complying with Rule 903 or 904 of Regulation S under the Act. "GAMING AUTHORITY": As defined in the Indenture. "GLOBAL NOTES": As defined in the Indenture. "GUARANTORS": The Guarantors defined in the preamble hereto and any Person which becomes a guarantor after the date hereof pursuant to the terms of the Indenture. "HOLDERS": As defined in Section 2(b) hereof. "INDENTURE": The indenture, dated the Closing Date, among the Issuers, the Guarantors and U.S. Bank National Association, as trustee (the "TRUSTEE"), pursuant to which the Notes are to be issued, as such indenture is amended or supplemented from time to time in accordance with the terms thereof. 2 "INTEREST PAYMENT DATE": June 15 and December 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day. "NASD": National Association of Securities Dealers, Inc. "PERSON": An individual, partnership, limited liability company, corporation, trust, unincorporated organization, or a government or agency or political subdivision thereof. "PROSPECTUS": The prospectus included in a Registration Statement, in each case at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. "RECORD HOLDER": With respect to any Damages Payment Date, each Person who is a Holder of Securities on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. "REGISTRATION DEFAULT": As defined in Section 5 hereof. "REGISTRATION DEFAULT PERIOD": As defined in Section 5 hereof. "REGISTRATION STATEMENT": Any registration statement of the Issuers and the Guarantors relating to (a) an offering of any Exchange Notes (including guarantees thereof by the Guarantors) pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, in each case, (i) which is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. "RESTRICTED BROKER-DEALER": Any Broker-Dealer which holds Broker-Dealer Transfer Restricted Securities. "SECURITIES": The Notes and the Exchange Notes (including guarantees thereof by the Guarantors). "SHELF REGISTRATION STATEMENT": As defined in Section 4 hereof. "TIA": The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. "TRANSFER RESTRICTED SECURITIES": Each Note until (a) the date on which such Note is exchanged by a person other than a Broker-Dealer for an Exchange Note in the Exchange Offer, (b) following the exchange by a Broker-Dealer in the Exchange Offer of a Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the Prospectus contained in the Exchange Offer Registration Statement, (c) the date on which such Note has been effectively registered under the Act and disposed of in accordance with the Shelf Registration Statement or (d) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act. 3 "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING": A registration in which securities of the Issuers are sold to an underwriter for reoffering to the public. 2. SECURITIES SUBJECT TO THIS AGREEMENT (a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities. (b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such Person owns Transfer Restricted Securities. 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a) below have been complied with), the Issuers and the Guarantors shall (i) cause to be filed with the Commission as soon as practicable after the Closing Date, but in no event later than 90 days after the Closing Date, the Exchange Offer Registration Statement, (ii) use their commercially reasonable efforts to cause such Exchange Offer Registration Statement to be declared effective by the Commission at the earliest possible time, but in no event later than 180 days after the Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the Exchange Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Notes to be offered in exchange for the Notes that are Transfer Restricted Securities and to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as contemplated by Section 3(c) below. The 90 and 180 day periods referred to in (i) and (ii) of this Section 3(a) shall not include any period in which the Issuers are pursuing a Commission decision pursuant to 6(a)(i) below. (b) Unless the Exchange Offer would not be permitted by applicable law, including all applicable gaming laws or Commission policy, the Issuers and the Guarantors shall use their commercially reasonable efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open, in each case, for a period of not less than the minimum period required under applicable federal securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Issuers shall cause the Exchange Offer to comply in all material respects with all applicable federal and state securities laws. No securities other than the Securities shall be included in the Exchange Offer Registration Statement. The Issuers shall use their respective commercially reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no 4 event later than 30 Business Days, or longer if required by federal securities law, after the date on which the Exchange Offer Registration Statement was declared effective by the Commission. (c) The Issuers and the Guarantors shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Restricted Broker-Dealer who holds Notes that are Transfer Restricted Securities and that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities, may exchange such Notes (other than Transfer Restricted Securities acquired directly from the Issuers or any affiliate of the Issuers) pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with its initial sale of each Exchange Note received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Securities held by any such Broker-Dealer, except to the extent required by the Commission as a result of a change in policy after the date of this Agreement. The Issuers and the Guarantors shall use their respective commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that such Registration Statement conforms in all material respects with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 180 days from the date on which the Exchange Offer Registration Statement is declared effective. The Issuers shall promptly provide sufficient copies of the latest version of such Prospectus to such Restricted Broker-Dealers promptly upon request, at any time during such 180 days period in order to facilitate such sales. 4. SHELF REGISTRATION (a) SHELF REGISTRATION. If (i) the Issuers and the Guarantors are not permitted to file an Exchange Offer Registration Statement or permitted to Consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law, including all applicable gaming laws or Commission policy (after the procedures set forth in Section 6(a) below have been complied with) or (ii) if any Holder of Transfer Restricted Securities shall notify the Issuers prior to the 20th day following the Consummation of the Exchange Offer that (A) such Holder was prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the Exchange Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and owns Notes acquired directly from the Issuers or one of their affiliates, then 5 the Issuers and the Guarantors shall (x) use their respective commercially reasonable efforts to cause to be filed on or prior to 30 days after the date on which the Issuers and the Guarantors determine that they are not permitted to file the Exchange Offer Registration Statement pursuant to clause (i) above or the date on which the Issuers receive the notice specified in clause (ii) above, or longer if required by federal securities laws after such filing obligation arises (or, if later, 90 days after the Closing Date), a shelf registration statement pursuant to Rule 415 under the Act (which may be an amendment to the Exchange Offer Registration Statement) (in either event, the "SHELF REGISTRATION STATEMENT"), relating to all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof, and (y) use their respective commercially reasonable efforts to cause such Shelf Registration Statement to become effective on or prior to 90 days after the date on which the Issuers and Guarantors become obligated to file such Shelf Registration Statement (or if later, 180 days after the Closing Date). The Issuers and the Guarantors shall use their respective commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by and subject to the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefits as provided under this Section 4(a), and to ensure that it conforms in all material respects with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the Closing Date or such shorter period that will terminate when all Transfer Restricted Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. (b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Issuers in writing, within 20 days after receipt of a request therefor, such information specified in Item 507 of Regulation S-K under the Act and such other information as the Issuers or any Guarantor may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to liquidated damages pursuant to Section 5 hereof unless and until such Holder shall have used its best efforts to provide all such information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Issuers and Guarantors all information required to be disclosed in order to make the information previously furnished to the Issuers by such Holder not materially misleading. 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "EFFECTIVENESS TARGET DATE"), (iii) the Exchange Offer has not been Consummated within 30 Business Days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) subject to the provisions of Section 6(c)(i) below, any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its 6 intended purpose without being succeeded within two Business Days by a post effective amendment to such Registration Statement that cures such failure and that is itself declared effective immediately (each such event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT" and each period during which a Registration Default has occurred and is continuing, a "REGISTRATION DEFAULT PERIOD"), then the Issuers and the Guarantors hereby jointly and severally agree to pay liquidated damages to each Holder of Transfer Restricted Securities which, in addition to the base interest that would otherwise accrue on the aggregate principal amount of Notes constituting Transfer Restricted Securities, shall accrue at a rate of 0.25% per annum for the first 90 days of the Registration Default Period, and will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of 2.00% for the remaining Registration Default Period. All accrued liquidated damages shall be paid by the Issuers on each Damages Payment Date to Record Holders of the Transfer Restricted Securities held as Global Notes by wire transfer of immediately available funds or by federal funds check and to Record Holders of Transfer Restricted Securities held as Definitive Notes by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified, as provided in the Indenture. Following the cure of all Registration Defaults, relating to any particular Transfer Restricted Securities, the accrual of liquidated damages with respect to such Transfer Restricted Securities will cease. All obligations of the Issuers and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. 6. REGISTRATION PROCEDURES (a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the Exchange Offer, the Issuers and the Guarantors shall comply with all applicable provisions of Section 6(c) below, shall use their respective commercially reasonable efforts to effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions: (i) If, following the date hereof there has been published a change in Commission policy with respect to exchange offers such as the Exchange Offer, such that in the reasonable opinion of counsel to the Issuers there is a substantial question as to whether the Exchange Offer is permitted by applicable federal law, the Issuers and the Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Issuers and the Guarantors to Consummate an Exchange Offer for such Notes. The Issuers and the Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level, but shall not be required to take commercially unreasonable actions to effect a change of Commission policy. In connection with the foregoing, the Issuers and the Guarantors hereby agree to take all such other actions as are requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation (A) participating in telephonic conferences with the Commission, (B) delivering to the 7 Commission staff an analysis prepared by counsel to the Issuers setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursuing a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Issuers or any Guarantor, prior to the Consummation of the Exchange Offer, a written representation to the Issuers and the Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of either of the Issuers, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary course of business. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in MORGAN STANLEY AND CO. INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Notes obtained by such Holder in exchange for Notes acquired by such Holder directly from the Issuers or an affiliate thereof. (iii) Prior to effectiveness of the Exchange Offer Registration Statement, the Issuers and the Guarantors shall provide a supplemental letter to the Commission (A) stating that the Issuers and the Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO. INC. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that no Issuer or Guarantor has entered into any arrangement or understanding with any Person to distribute the Exchange Notes to be received in the Exchange Offer and that, to the best of the Issuers' information and belief, each Holder participating in the Exchange Offer is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the Exchange Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above. (b) SHELF REGISTRATION STATEMENT. In connection with the Shelf Registration Statement, the Issuers and the Guarantors shall comply with all the provisions of Section 6(c) below and shall use their respective commercially reasonable efforts to effect such registration to 8 permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Issuers pursuant to Section 4(b) hereto), and pursuant thereto, the Issuers and the Guarantors will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof. (c) GENERAL PROVISIONS. In connection with any Registration Statement and any related Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Exchange Offer Registration Statement and the related Prospectus, to the extent that the same are required to be available to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the Issuers and the Guarantors (where applicable) shall: (i) use their respective commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuers shall file promptly an appropriate amendment to such Registration Statement, (1) in the case of clause (A), correcting any such misstatement or omission, and (2) in the case of clauses (A) and (B), use their respective commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter; (ii) prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply in all material respects with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof as provided above and as set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, confirming such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and with respect to any Registration Statement or any post-effective amendment thereto, when the 9 same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, including, without limitation, under circumstances described in Section 6(c)(i) above. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, under state securities or Blue Sky laws, the Issuers and the Guarantors shall use their respective commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) in the case of a Shelf Registration Statement, furnish to each selling Holder named in any Registration Statement or Prospectus and each of the underwriter(s) in connection with such sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and the Issuers will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which the selling Holders of the Transfer Restricted Securities covered by such Registration Statement or the underwriter(s) in connection with such sale, if any, shall reasonably object within five Business Days after the receipt thereof. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission or fails to comply in all material respects with the applicable requirements of the Act; (v) in the case of a Shelf Registration Statement, promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s) in connection with such sale, if any, make the Issuers' representatives (and representatives of the Guarantors) available for discussion of such document and other 10 customary due diligence matters, subject to the execution and delivery of customary confidentiality agreements, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) in the case of a Shelf Registration Statement, subject to the execution and delivery of customary confidentiality agreements, make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such selling Holders or any of such underwriter(s), all financial and other records, pertinent corporate documents and properties of the Issuers and the Guarantors and cause the Issuers' and the Guarantors' officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness; (vii) in the case of a Shelf Registration Statement, if requested by any selling Holders or the underwriter(s) in connection with such sale, if any, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities, being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities, to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Issuers are notified of the matters to be included in such Prospectus supplement or post-effective amendment; (viii) in the case of a Shelf Registration Statement, furnish to each selling Holder and each of the underwriter(s) in connection with such sale, if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (ix) in the case of a Shelf Registration Statement, deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Issuers and the Guarantors hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto; (x) in the case of a Shelf Registration Statement, enter into such agreements (including an underwriting agreement) and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement 11 contemplated by this Agreement as may be reasonably requested by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Issuers and the Guarantors shall: (A) furnish to each selling Holder and each underwriter, if any, upon the effectiveness of the Shelf Registration Statement: (1) a certificate dated the date of effectiveness of the Shelf Registration Statement signed on behalf of the Issuers by (x) the President or any Vice President and (y) a principal financial or accounting officer of each of the Issuers and the Guarantors, confirming, as of the date thereof, the matters set forth in paragraphs (i) of Section 7 of the Purchase Agreement and such other similar matters as the Holders, underwriter(s) may reasonably request; (2) an opinion dated the date of effectiveness of the Shelf Registration Statement, of counsel for the Issuers and the Guarantors covering matters similar to those set forth in paragraphs (b) and (c) of Section 7 of the Purchase Agreement and such other matter as the Holders, and/or underwriters may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuers and representatives of the independent public accountants for the Issuers in connection with the preparation of such Registration Statement and the related Prospectus, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing (relying as to materiality to a certain extent upon facts provided to such counsel by officers and other representatives of the Issuers and without independent check or verification), no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, has not independently verified and expresses no opinion with respect to the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in or omitted from any Registration Statement contemplated by this Agreement or the related Prospectus or to that part of such Registration Statement that constitutes 12 the Statement of Eligibility (Form T-1) under the Trust Indenture Act of 1939, as amended; and (3) to the extent permitted under applicable accounting standards, a customary comfort letter, dated as of the date of effectiveness of the Shelf Registration Statement from the Issuers' independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with primary underwritten offerings; (B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by the selling Holders, the underwriter(s), if any, and Restricted Broker-Dealers, if any, to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuers pursuant to this clause (x). The above shall be done at each closing under such underwriting or similar agreement, as and to the extent required thereunder, and if at any time the representations and warranties of the Issuers and the Guarantors contemplated in (A)(1) above cease to be true and correct, the Issuers or the Guarantors shall so advise the underwriter(s), if any, the selling Holders and each Restricted Broker-Dealer promptly and if requested by such Persons, shall confirm such advice in writing; (xi) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that no Issuer or Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; (xii) issue, upon the request of any Holder of Notes covered by any Shelf Registration Statement contemplated by this Agreement, Exchange Notes having an aggregate principal amount equal to the aggregate principal amount of Notes surrendered to the Issuers by such Holder in exchange therefor or being sold by such Holder; such Exchange Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Notes held by such Holder shall be surrendered to the Issuers for cancellation; 13 (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use their respective commercially reasonable efforts to cause the disposition of the Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities, including, without limitation, the Gaming Authority as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, subject to the proviso contained in clause (xi) above; (xv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities, as applicable, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xvi) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company; (xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD, and use their respective commercially reasonable efforts to cause such Registration Statement to become effective and approved by such governmental agencies or authorities as may be necessary to enable the Holders selling Transfer Restricted Securities to consummate the disposition of such Transfer Restricted Securities; PROVIDED, HOWEVER, that no Issuer or Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; 14 (xviii) otherwise use their respective commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in paragraph (c) of Rule 158 under the Act); (xix) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA; and execute and use its commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable the Indenture to be so qualified in a timely manner; (xx) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act; and (xxi) cause the Transfer Restricted Securities covered by the Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriters, if any. (d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of the notice referred to in Section 6(c)(i) or any notice from the Issuers of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in writing by the Issuers (the "ADVICE") that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Issuers, each Holder will deliver to the Issuers (at the Issuers' expense) all copies, other than permanent file copies then in such Holder's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of either such notice. In the event the Issuers shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the Advice. 7. REGISTRATION EXPENSES 15 All expenses incident to the Issuers' and the Guarantors' performance of or compliance with this Agreement will be borne by the Issuers and the Guarantors, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the NASD (and, if applicable, the reasonable fees and expenses of any "qualified independent underwriter" and its counsel) that may be required by the rules and regulations of the NASD); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the Exchange Notes to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Issuers and the Guarantors; (v) all application and filing fees in connection with listing the Securities on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Issuers and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). The Issuers will bear their own internal expenses and the internal expenses of the Guarantors (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by either of the Issuers. 8. INDEMNIFICATION (a) In connection with a Shelf Registration Statement or the delivery of a Prospectus contained in an Exchange Offer Registration Statement by any participating Broker-Dealer or Initial Purchaser who seeks to sell Exchange Notes, the Issuers and the Guarantors will, jointly and severally, indemnify and hold harmless each Holder against any losses, claims, damages or liabilities, joint or several, to which it may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary Prospectus or Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, and will reimburse each Holder for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that none of the Issuers or the Guarantors shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission contained in any Registration Statement, preliminary Prospectus or Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished to the Issuers or the Guarantors by or on behalf of any of the Holders or such Broker-Dealer or Initial Purchaser expressly for inclusion therein; and provided further, however, that the Issuers and the Guarantors shall not be liable to any such Holder (other than the Initial Purchasers) with respect to any Registration Statement, preliminary Prospectus or Prospectus to the extent that any such loss, claim, damage or liability of such person results from the fact that such Holder participated in a sale of Securities to a person as to whom it shall be established that there was not sent or given, at or at a reasonable time prior to the written confirmation of such sale, a copy of the final Prospectus or any 16 amendment or supplement thereto if the Issuers and the Guarantors have previously furnished copies thereof in sufficient quantity to such Holder and sufficiently in advance of the time of delivery of such Securities to allow for distribution by such time of delivery and the loss, claim, damage or liability of such Holder results from an untrue statement or omission of a material fact contained in or omitted from the Registration Statement, the preliminary Prospectus or Prospectus which was identified in writing at such time to such Holder (other than the Initial Purchasers) and corrected in the final Prospectus or amendment or supplement thereto and such correction would have cured the defect giving rise to such loss, claim, damage or liability. (b) Each Holder will, severally and not jointly, indemnify and hold harmless the Issuers and the Guarantors against any losses, claims, damages or liabilities to which either of the Issuers or the Guarantors may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of material fact contained in any Registration Statement, preliminary Prospectus or Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement, preliminary Prospectus or Prospectus, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Issuers or the Guarantors by or on behalf of such Holder or such Broker-Dealer or Initial Purchaser expressly for use therein; and will reimburse the Issuers and the Guarantors for any legal or other expenses reasonably incurred by the Issuers and the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party under this Section 8, except to the extent that it has been materially prejudiced by such failure. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (in addition to local counsel) for the indemnified parties subject to such claim. No indemnifying party shall, without the written consent of the indemnified party (which consent shall not be unreasonably withheld), effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution 17 may be sought (whether or not the indemnified party is an actual or potential party to such action or claim) thereunder unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party. No indemnifying party shall be liable for any settlement or compromise of, or consent to the entry of any judgment with respect to any such action or claim effected without its consent (which consent shall not be unreasonably withheld). Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested the Issuers or the Guarantors to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, the Issuers and the Guarantors agree that they shall be liable for any settlement of any proceeding effected without the Issuers' written consent if (i) such settlement is entered into more than thirty (30) business days after receipt by the Issuers or the Guarantors of the aforesaid request and (ii) none of the Issuers or the Guarantors shall have reimbursed the indemnified party in accordance with such request or contested the reasonableness of such fees and expenses prior to the date of such settlement. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Issuers and the Guarantors from their sale of the Notes, on the one hand, and any Holder, on the other, from such Holder's sale of Transfer Restricted Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuers and the Guarantors, on the one hand, and of such Holder, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Issuers and the Guarantors, on the one hand, and any Holder, on the other, shall be deemed to be in the same proportion as the total net proceeds from the sale of the Notes (before deducting expenses) received by the Issuers bear to the total proceeds received by such Holder upon its sale of Notes. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuers and the Guarantors, on the one hand, or the Holders, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Issuers, the Guarantors and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or 18 defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Holder shall be required to contribute any amount in excess of the amount by which the total price received by such Holder with respect to the sale of its Notes pursuant to a Registration Statement exceeds the sum of (a) the amount paid by such Holder for such Notes plus (b) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Holders' obligations in this subsection (d) to contribute are several in proportion to the respective principal amount of Securities held by each of the Holders hereunder and not joint. (e) The obligations of the Issuers and the Guarantors under this Section 8 shall be in addition to any liability which the Issuers and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of such Holder, if any, and to each person, if any, who controls any Holder within the meaning of the Act and the obligations of Holders under this Section 8 shall be in addition to any liability which the respective Holders may otherwise have, and shall extend, upon the same terms and conditions, to each officer and director of the Issuers and the Guarantors and to each person, if any, who controls the Issuers or the Guarantors within the meaning of the Act. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to indemnification from any person who was not guilty of such fraudulent misrepresentation. 9. RULE 144A The Issuers hereby agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. 10. UNDERWRITTEN REGISTRATIONS No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in customary underwriting arrangements entered into in connection therewith and (b) completes and executes all reasonable questionnaires, powers of attorney, lock-up letters and other documents required under the terms of such underwriting arrangements. 11. SELECTION OF UNDERWRITERS For any Underwritten Offering, the investment banker or investment bankers and manager or managers for any Underwritten Offering that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; PROVIDED, that such investment bankers or managers must be reasonably acceptable to the Company; PROVIDED, FURTHER, that each of Goldman Sachs & Co. and Scotia Capital (USA) Inc. are hereby agreed to be reasonably acceptable to the Company. Such investment bankers and managers are referred to herein as the "UNDERWRITERS." 12. MISCELLANEOUS 19 (a) REMEDIES. Each Holder, in addition to being entitled to exercise all rights provided herein, in the Indenture, the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Issuers and the Guarantors agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by them of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) NO INCONSISTENT AGREEMENTS. None of the Issuers or the Guarantors will, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. None of the Issuers or the Guarantors has previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuers' securities under any agreement in effect on the date hereof. (c) ADJUSTMENTS AFFECTING THE SECURITIES. Neither of the Issuers will take any action, or voluntarily permit any change to occur, with respect to the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer unless such action or change is required by law or regulation. (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of this Section l2(d)(i), the Issuers have obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Issuers have obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (e) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and (ii) if to the Issuers or the Guarantors: Las Vegas Sands, Inc. Venetian Casino Resort, LLC 3355 Las Vegas Blvd. South 20 Las Vegas, NV 89109 Telecopier No.: (702) 733-5110 Attention: David Friedman, Esq. With a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Telecopier No.: (212) 757-3990 Attention: John C. Kennedy, Esq. All such notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder. (g) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) HEADING. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF, SUBJECT TO REQUIREMENTS OF ALL APPLICABLE GAMING LAWS. (j) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are 21 no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter. [signature page follows] 22 Exhibit 4.2 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement 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., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary MALL INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary Venetian Casino Resort, LLC Las Vegas Sands, Inc. Registration Rights Agreement June 4, 2002 VENETIAN VENTURE DEVELOPMENT, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary VENETIAN OPERATING COMPANY, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary VENETIAN MARKETING, INC. By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary Venetian Casino Resort, LLC Las Vegas Sands, Inc. Registration Rights Agreement June 4, 2002 GRAND CANAL SHOPS MALL CONSTRUCTION, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary LIDO INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its member By: Las Vegas Sands, Inc., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary VENETIAN CASINO RESORT ATHENS, LLC By: Las Vegas Sands, Inc., its managing member By: /s/ David Friedman ---------------------------------------- Name: David Friedman Title: Secretary Venetian Casino Resort, LLC Las Vegas Sands, Inc. Registration Rights Agreement June 4, 2002 GOLDMAN, SACHS & CO. SCOTIA CAPITAL (USA) Inc. By: GOLDMAN, SACHS & CO. /s/ Goldman, Sachs & Co. - ------------------------------ (Goldman, Sachs & Co.) Venetian Casino Resort, LLC Las Vegas Sands, Inc. Registration Rights Agreement June 4, 2002 EX-4 7 ex4-3_7032.txt SECURITY AGREEMENT Exhibit 4.3 SECURITY AGREEMENT This SECURITY AGREEMENT (this "AGREEMENT"), dated as of June 4, 2002, is entered into by and between LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI"), VENETIAN CASINO RESORT, LLC, a Nevada limited liability company ("VCR"), and each Subsidiary Guarantor (as defined below) from time to time a party to this Agreement (individually each a "DEBTOR" and collectively, the "DEBTORS"), and THE BANK OF NOVA SCOTIA, a Canadian chartered bank ("SCOTIABANK"), in its capacity as Intercreditor Agent under the Intercreditor Agreement (as defined below) (in such capacity, "INTERCREDITOR AGENT") for and on behalf of (i) each Bank Secured Party (as defined below), (ii) U.S. Bank National Association, a national banking association, as the trustee (the "MORTGAGE NOTES INDENTURE TRUSTEE") for and on behalf of the Mortgage Note Holders (individually, each a "MORTGAGE NOTE SECURED PARTY" and together, the "MORTGAGE NOTE SECURED PARTIES") under the Mortgage Notes Indenture (as defined below) and (iii) the Intercreditor Agent. RECITALS A. THE PROJECT. VCR and LVSI own and operate the Venetian Casino Resort (the "CASINO RESORT"), a Venetian-themed hotel, casino, retail, meeting and entertainment complex, with related heating, ventilation and air conditioning and power station facilities located at 3355 Las Vegas Boulevard South, Clark County, Nevada and the to be constructed and developed approximately 1,000 room hotel tower being constructed by VCR on the currently existing parking garage of the Casino Resort, approximately 1,000-parking space expansion to the Casino Resort's existing parking garage and approximately 150,000 additional square feet of additional meeting and conference center space in the Casino Resort (collectively, with the Casino Resort, the "PROJECT"). B. CREDIT AGREEMENT. Concurrently herewith, LVSI, VCR, Scotiabank, as administrative agent, joint lead arranger and joint bookrunner, Goldman Sachs Credit Partners L.P., as syndication agent, joint lead arranger and joint bookrunner and the financial institutions party thereto (the "BANK LENDERS") have entered into the Credit Agreement (as amended, amended and restated, supplemented, modified, extended, refinanced, refunded, renewed, replaced or substituted from time to time, the "CREDIT AGREEMENT") pursuant to which the Bank Lenders have agreed, subject to the terms thereof and hereof, to make Credit Extensions to LVSI and VCR. C. MORTGAGE NOTES INDENTURE. Concurrently herewith, LVSI, VCR, certain guarantors named therein and the Mortgage Notes Indenture Trustee have entered into the Mortgage Notes Indenture pursuant to which LVSI and VCR will issue the Mortgage Notes. D. INTERCREDITOR AGREEMENT. Concurrently herewith, the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee have entered into an Intercreditor Agreement, dated as of the date hereof (such agreement as it may be modified, amended or supplemented from time to time, the "INTERCREDITOR AGREEMENT"), which sets forth certain agreements among such lenders with respect to the priority of the liens created hereunder, the enforcement of remedies and the allocation of the proceeds of any realization upon the collateral. The Intercreditor Agent is entering into this Agreement and shall perform its obligations as set forth herein and in the manner provided, pursuant to the provisions of the Intercreditor Agreement and shall take directions from time to time from one or more of the Credit Parties as defined and provided for therein. E. CONDITION PRECEDENT. It is a condition precedent to entering into the Mortgage Notes Indenture and the Credit Agreement and consummating the transactions contemplated therein (including the extension of credit thereunder) that the Debtors enter into this Agreement. AGREEMENT In consideration of the promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Debtors hereby agree as follows: 1. DEFINITIONS. 1.1 "ASSIGNED AGREEMENTS" means all of the agreements and documents, as amended, supplemented or otherwise modified from time to time described in clauses (A) through (H) of Section 2.1.1. 1.2 "BANK EVENT OF DEFAULT" shall mean any Event of Default under and as defined in the Credit Agreement. 1.3 "BANK SECURED OBLIGATIONS" is defined in Section 3.1. 1.4 "BANK SECURED PARTIES" means the Secured Parties, as defined in the Credit Agreement. 1.5 "EVENT OF DEFAULT" shall mean a Bank Event of Default or a Mortgage Note Event of Default. 1.6 "FINANCING AGREEMENTS" is defined in the Intercreditor Agreement as in effect on the date hereof. 1.7 "FUTURE FIRST LIEN CREDIT FACILITY" is defined in the Intercreditor Agreement as in effect on the date hereof. 1.8 "MORTGAGE NOTE EVENT OF DEFAULT" shall mean any Event of Default under and as defined in the Mortgage Notes Indenture. 1.9 "MORTGAGE NOTES SECURED OBLIGATIONS" is defined in Section 3.2. 1.10 "OBLIGATIONS" shall mean collectively the Bank Secured Obligations and the Mortgage Notes Secured Obligations. 2 1.11 "PERMITTED COUNTERPARTY" is defined in the Intercreditor Agreement as in effect on the date hereof. 1.12 "RECEIVABLES" shall mean all of the Debtor's accounts and accounts receivable, including, without limitation, all rights to payment for goods sold or leased or secured or for services rendered which are not evidenced by an instrument or chattel paper, all other present or future rights for money due or to become due, all of the accounts, chattel paper, instruments, promissory notes, contract rights, documents, other obligations and general intangibles for money due or to become due of any kind, in each case whether now existing or hereafter arising and wherever arising and whether or not earned by performance. 1.13 "SECURED PARTIES" shall mean individually and collectively, Intercreditor Agent, the Bank Secured Parties, the Mortgage Note Secured Parties and the holders of any Indebtedness that is a Future First Lien Credit Facility. 1.14 "UCC" shall mean the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York; PROVIDED, HOWEVER, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. 1.15 Unless otherwise defined herein, all capitalized terms used herein which are defined in the Credit Agreement shall have their respective meanings as used in the Credit Agreement as in effect on the date hereof. The rules of interpretation contained in the Credit Agreement as in effect on the date hereof shall apply to this Agreement. 1.16 Unless otherwise defined herein or in the Credit Agreement or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Agreement (whether or not capitalized herein), including its preamble and recitals, with such meanings. 2. ASSIGNMENT, PLEDGE AND GRANT OF SECURITY INTERESTS. 2.1 SENIOR GRANT IN FAVOR OF BANK SECURED PARTIES AND INTERCREDITOR AGENT IN ASSIGNED AGREEMENTS. To secure the timely payment and performance of the Bank Secured Obligations, subject to compliance with applicable Nevada Gaming Laws, each Debtor does hereby assign, grant and pledge to, and subject to a security interest on a first priority basis in favor of, the Intercreditor Agent, on behalf and for the benefit of the Bank Secured Parties and the Intercreditor Agent, all the estate, right, title and interest of such Debtor, whether now owned or hereafter acquired or arising and wheresoever located, whether or not of a type which may be subject to a security interest under the UCC, in, to and under the following (the "SHARED INTANGIBLE COLLATERAL"): 3 2.1.1 the following agreements and documents, as amended, supplemented or otherwise modified from time to time and all of such Debtor's rights thereunder: (A) Architect's Agreement; (B) HVAC Service Agreement; (C) HVAC Ground Lease; (D) Beers Construction Contract; (E) Schuff Steel Contract; (F) Cooperation Agreement; (G) Service Contract between the Venetian and SECC; (H) Services Agreement; (I) to the extent assignable, all other documents and agreements entered into on, prior to or after the date hereof, relating to the development, construction or operation of the Project (other than the Financing Agreements) as the same may be amended from time to time in accordance with the terms and conditions of the Credit Agreement and the Mortgage Notes Indenture and to the extent assignable any other agreements to which such Debtor is or becomes a party; (J) to the extent assignable, the insurance policies now or hereafter maintained by such Debtor or any other Person under the Cooperation Agreement, the Credit Agreement, the Mortgage Notes Indenture or any other Project Document (except as specifically provided above), including any such policies insuring against loss of revenues by reason of interruption of the operation of the Project and all loss proceeds and other amounts payable to such Debtor thereunder, and all eminent domain proceeds; (K) to the extent assignable, all other agreements, now existing or hereafter entered into, including vendor warranties, indemnities, and guarantees running to such Debtor or assigned to such Debtor, including all such agreements relating to the construction, maintenance, improvement, operation or acquisition of the Project or any part thereof, or the transport of material, equipment and other parts of the Project or any part thereof; (L) to the extent assignable, any other lease or sublease agreements or easement agreements, now existing or hereafter entered into, including all such agreements relating to the Project (other than the Mall) or any part thereof or any ancillary facilities to which such Debtor is or becomes a party; 4 (M) to the extent assignable, all amendments, supplements, substitutions and renewals to any of the aforesaid agreements; (N) all rights of such Debtor to receive (i) monies due or to become due under or pursuant to the aforesaid agreements and (ii) proceeds of any insurance, indemnity, warranty or guaranty with respect to the aforesaid agreements; (O) all claims of such Debtor for damages arising out of breach or default under any of the aforesaid agreements; (P) the rights of such Debtor to terminate, amend, supplement, or modify any of the aforesaid agreements, to perform thereunder and to compel performance and otherwise exercise all remedies thereunder; and (Q) to the extent assignable, all Permits, including those described on Annex 5 hereto, necessary for or relating to the construction of the Project. 2.1.2 the proceeds of all of the foregoing, including (a) all rights of such Debtor to receive proceeds, rents, profits and moneys due and to become due under or pursuant to the Assigned Agreements; (b) all rights of such Debtor to receive the return of any premiums for, or proceeds of, any insurance, indemnity, warranty or guaranty with respect to the Assigned Agreements or to receive any condemnation proceeds; (c) all claims of such Debtor for damages arising out of, or for breach of or default under, any Assigned Agreement; and (d) to the extent not included in the foregoing, all proceeds receivable or received when any and all of the Assigned Agreements or proceeds thereof are sold, collected, exchanged or otherwise disposed of, whether voluntarily or involuntarily. Notwithstanding anything to the contrary contained herein, the term "Shared Intangible Collateral" for purposes of this Section 2.1 shall not include (i) any capital stock, common stock, preferred stock, membership interest, partnership interest or any other equity interest of LVSI, VCR, any of their Subsidiaries or any other Person held by LVSI, VCR or any of their Subsidiaries, (ii) the HVAC Component, (iii) any assets which if pledged, hypothecated or given as collateral security would require any Debtor to seek approval of any Nevada Gaming Authority of the pledge, hypothecation or collateralization, or require the Intercreditor Agent or any Secured Party to be licensed, qualified or found suitable by an applicable Nevada Gaming Authority (other than any approval required for the pledge, hypothecation or collateralization of assets in connection with the Exchange Offer (as defined in the Mortgage Notes Indenture)), (iv) any contracts, contract rights, permits or general intangibles, which by their terms or the operation of law prohibit or do not allow assignment or require any consent for assignment which has not been obtained or which would be breached by virtue of a security interest being granted therein, (v) all right, title and interest of the Borrowers' in the account under the Defeasance Trust Agreement, dated as of June 4, 2002, among LVSI, Venetian, certain of their subsidiaries and U.S. Bank National Association, as trustee, and all securities, cash and proceeds in such account and (vi) any property or 5 assets subject to a Lien permitted under clauses (ii), (iv), (xxv)(b), (xxvi) and (xxvii) of the definition of Permitted Liens contained in the Credit Agreement and clauses (2), (3) and (12)(a) of the definition of Permitted Liens contained in the Mortgage Notes Indenture (collectively, the "EXCLUDED COLLATERAL"). 2.2 SENIOR GRANT TO BANK SECURED PARTIES AND INTERCREDITOR AGENT IN OTHER COLLATERAL. To secure the timely payment and performance of the Bank Secured Obligations, subject to compliance with applicable Nevada Gaming Laws, each Debtor does hereby assign, grant and pledge to, and subject to a security interest on a first priority basis in favor of, the Intercreditor Agent, on behalf and for the benefit of the Bank Secured Parties and the Intercreditor Agent, all the estate, right, title and interest of such Debtor, whether now owned or hereafter acquired or arising and wheresoever located, whether or not of a type which may be subject to a security interest under the UCC, in, to and under the following: 6 (A) all Permits, but excluding any of the Permits which by their terms or by operation of law prohibit or do not allow assignment or which would become void solely by virtue of a security interest being granted therein; (B) to the extent assignable, all rents, profits, income, royalties, revenues, accounts, contracts, contract rights, chattel paper, documents, instruments, general intangibles (including tax refunds and all payment intangibles) and other rights of any kind and all rights in, to and under all security agreements, leases and other contracts securing or otherwise relating to any such rents, profits, income, royalties, revenues, accounts, contracts, contract rights, chattel paper, instruments, documents, general intangibles or other rights and claims to the payment or receipt of money or other forms of consideration (including any intercompany notes held by any of the Debtors); (C) all equipment in all of its forms and all parts thereof and accessions thereto (except to the extent such Debtor's interest therein may not be assigned or a security interest therein may not be granted), including all plant, machinery, tools, engines, and equipment of any type, including control equipment, gaming equipment and general equipment and devices, all computer equipment, calculators, adding machines, slot gaming tables, video game and slot machines and any other electronic equipment of every nature, appliances, mechanical and electrical systems, elevators, lighting, alarm systems, fire control systems, furnishings, furniture, service equipment, motor vehicles, building or maintenance equipment, building or maintenance materials, pipes and pipelines, spare parts, maps, plans, specifications, architectural, engineering, construction or shop drawings, manuals or similar documents and any replacements, renewals or substitutions for any of the foregoing; (D) all plant fixtures, business fixtures and other fixtures and storage and office facilities and accessions thereto and replacements thereof and products thereof; (E) all inventory in all of its forms, including (i) all goods held by such Debtor for sale or lease or to be furnished under contracts of service or so leased or furnished, (ii) all supplies, raw materials, work in process, finished goods, and materials used or consumed in such Debtor's business, (iii) all goods covered by any warehouse receipts, bills of lading or other such documents or in which such Debtor has an interest in mass or a joint or other interest or right of any kind and (iv) all goods which are returned to or repossessed by such Debtor and all accessions thereto and products thereof; (F) all trademarks and service marks now owned or hereafter acquired by any Debtor which are registered in the United States Patent and Trademark Office or in any similar office or agency of the United States or any state thereof or any political subdivision thereof and any application for such trademarks and service marks, as well as any unregistered marks used and owned by such Debtor in the United States and trade dress, including logos, designs, trade names, 7 business names, fictitious business names and other business identifiers in connection with which any of these registered or unregistered marks are used and owned by such Debtor in the United States (collectively, the "MARKS") including the Marks listed on ANNEX 2, together with the registration and right to renewals thereof, and the goodwill of the business of such Debtor symbolized by the Marks and all licenses associated therewith, it being understood that the rights and interests included herein shall include all rights and interests pursuant to licensing or other contracts in favor of such Debtor pertaining to the Marks presently or in the future owned or used by third parties but, in the case of third parties which are not Affiliates of such Debtor, only to the extent permitted by such licensing or other contracts and, if not so permitted, except with respect to the rights of such Debtor to receive payments thereunder, only with the consent of such third parties; (G) all United States copyrights which such Debtor now or hereafter owns or has registered with the United States Copyright Office, as well as any application for a United States copyright registration now or hereafter made with the United States Copyright Office by such Debtor (collectively, the "COPYRIGHTS") including, the Copyrights listed on ANNEX 3, and all United States patents to which such Debtor now or hereafter has title and any divisions or continuations thereof, as well as any application for a United States patent now or hereafter made by such Debtor (collectively, the "PATENTS"), including all Patents listed on ANNEX 4, and all reissues, renewals or extensions of each of them, it being understood that the rights and interests included herein shall include all rights and interests pursuant to licensing or other contracts in favor of such Debtor pertaining to the Copyrights and Patents presently or in the future owned or used by third parties but, in the case of third parties which are not Affiliates of such Debtor, except with respect to the rights of such Debtor to receive payments thereunder, only to the extent permitted by such licensing or other contracts and, if not so permitted, only with the consent of such third parties; (H) all computer programs and software owned by such Debtor and all intellectual property rights therein and all other proprietary information of such Debtor, including trade secrets, it being understood that the rights and interests included herein shall include all rights and interests pursuant to licensing or other contracts in favor of such Debtor pertaining to computer programs and software presently or in the future owned or used by third parties but, in the case of third parties which are not Affiliates of such Debtor, only to the extent permitted by such licensing or other contracts and, if not so permitted, except with respect to the rights of such Debtor to receive payments thereunder, only with the consent of such third parties; (I) to the extent not covered by any other clause of this subsection 2.2 but subject to the exclusions specified above, all other trademarks, tradenames, tradesecrets, goodwill, business names, patents, patent applications, licenses and copyrights, registrations, and franchise rights owned by such Debtor; 8 (J) to the extent not covered by any other clause of this subsection 2.2 but subject to the exclusions specified above, all other general intangibles (including tax refunds, rights to payment or performance, chooses in action and judgments taken on any rights or claims included in the Collateral); (K) contract rights in respect of agreements entered into with regard to the purchase of any furniture, fixtures and equipment for use in the hotel/casino component of the Project and any deposits paid in respect thereof; (L) all deposit accounts, securities accounts, securities entitlements, investment property and financial assets (including the Disbursement Account); (M) all letter of credit rights; (N) all commercial tort claims in which such Debtor has rights as set forth on ITEM 6 of ANNEX 1 or any supplement thereto; (O) all books, records, writings, data bases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this subsection; and (P) the proceeds of all of the foregoing (all of the collateral described in 2.2.(A) through and including 2.2.(P) being herein collectively referred to as the "OTHER COLLATERAL" and together with the Shared Intangible Collateral, the "COLLATERAL"), including (a) all rights of such Debtor to receive proceeds, rents, profits and moneys due and to become due under or pursuant to the Other Collateral; (b) all rights of such Debtor to receive the return of any premiums for, or proceeds of, any insurance, indemnity, warranty or guaranty with respect to the Other Collateral or to receive any condemnation proceeds with respect thereto; (c) all claims of such Debtor for damages arising out of, or for breach of or default under, any Other Collateral; and (d) to the extent not included in the foregoing, all proceeds receivable or received when any and all of the foregoing Other Collateral or proceeds thereof is sold, collected, exchanged or otherwise disposed of, whether voluntarily or involuntarily. Notwithstanding anything to the contrary contained herein, the term "Other Collateral" for purposes of this Section 2.2 shall not include (i) any Excluded Collateral and (ii) the Shared Intangible Collateral. 2.3 JUNIOR GRANT IN FAVOR OF MORTGAGE NOTE SECURED PARTIES. To secure the timely payment and performance of the Mortgage Notes Secured Obligations, subject to compliance with applicable Nevada Gaming Laws, each Debtor does hereby assign, grant and pledge to, and subject to a security interest on a second priority basis, in favor of, the Intercreditor Agent, on behalf of and for the benefit of the Mortgage Note Secured Parties and the Intercreditor Agent, all the estate, right, title and interest of each Debtor, whether now owned or hereafter acquired or arising and wheresoever located, whether or not of a type which may be subject to a security interest under the UCC, in, to and under the Collateral (other than the Collateral (as defined in the Disbursement Account Agreement)). 9 Notwithstanding anything to the contrary contained herein, the term "Collateral" for purposes of this Section 2.3 shall not include any Excluded Collateral. 2.4 DELIVERY OF ASSIGNED AGREEMENTS. Each Debtor has heretofore delivered, or concurrently with the delivery hereof, is delivering to the Intercreditor Agent an executed counterpart or certified copy of each of the Assigned Agreements executed on or prior to the Closing Date. Each Debtor will likewise deliver to the Intercreditor Agent an executed copy of each Assigned Agreement not yet delivered and each Material Contract entered into by Debtors and amendments and supplements to the foregoing, as they are entered into by Debtor promptly upon the execution thereof. Each Debtor will, at the reasonable request of the Intercreditor Agent, further: (1) mark conspicuously each item of chattel paper and each of its records pertaining to the Collateral, with a legend, in form and substance reasonably satisfactory to the Intercreditor Agent, indicating that such Collateral is subject to the security interest granted hereby, (ii) at the reasonable request of the Intercreditor Agent, deliver and pledge to the Intercreditor Agent hereunder all promissory notes and other instruments and all original counterparts of chattel paper constituting Collateral, duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Intercreditor Agent. Notwithstanding anything to the contrary contained herein, no such future lease, construction agreement, operation agreement or other material agreement may be entered into by Debtor except as permitted under both the Credit Agreement and the Mortgage Notes Indenture. 2.5 DEBTORS TO REMAIN LIABLE. Notwithstanding anything to the contrary contained herein, Debtors shall remain liable under each of the Assigned Agreements to perform all of the obligations undertaken by them thereunder, all in accordance with and pursuant to the terms and provisions thereof and take such action to such end as requested by the Intercreditor Agent, and the Secured Parties shall have no obligation or liability under any of such Assigned Agreements by reason of or arising out of this Agreement, nor shall the Intercreditor Agent or any other Secured Party be required or obligated in any manner to perform or fulfill any obligations of Debtors thereunder or to make any payment or inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim or take any action to collect or enforce the payment of any amounts which may have been assigned to the Secured Parties or to which such Secured Party may be entitled at any time. 2.6 ACTION BY INTERCREDITOR AGENT AND SECURED PARTIES TO CURE CERTAIN DEFAULTS. If any default by a Debtor under any of the Assigned Agreements shall occur and be continuing that constitutes an Event of Default, then subject to the terms of the Intercreditor Agreement any of the Intercreditor Agent and the Secured Parties shall be permitted (but shall not be obligated) to remedy any such default by giving written notice of such intent to Debtors and to the parties to the Assigned Agreement or Assigned Agreements for which such of the Intercreditor Agent and the Secured Parties intends to remedy the default. After giving such notice of its intent to cure such default and upon the commencement thereof, the Intercreditor Agent or the Secured Parties, as applicable, will proceed diligently to cure such default. Any cure by the Intercreditor Agent or any of the Secured Parties of Debtor's default under any of the Assigned Agreements shall not be construed as an assumption by the Intercreditor Agent or any of the other Secured Parties of any obligations, covenants or agreements of Debtors under such Assigned Agreement, and neither the Intercreditor Agent nor any of the Secured Parties shall be liable to any Debtor or any 10 other Person as a result of any actions undertaken by the Intercreditor Agent or any of the Secured Parties pursuant hereto or pursuant to any Consent or in curing or attempting to cure any such default. This Agreement shall not be deemed to release or to affect in any way the obligations of Debtors under the Assigned Agreements or the rights of Intercreditor Agent hereunder with respect to the exercise of remedies. 2.7 RESTRICTIONS ON MODIFICATION OF ASSIGNED AGREEMENTS. Debtor shall not without the consent of the Intercreditor Agent: 2.7.1 cancel or terminate any of the Assigned Agreements or consent to or accept any cancellation or termination thereof; 2.7.2 amend or otherwise modify the Assigned Agreements or give any consent, waiver or approval thereunder; 2.7.3 waive any default under or breach of the Assigned Agreements; 2.7.4 consent to or permit or accept any prepayment of amounts to become due under or in connection with the Assigned Agreements, except as expressly provided therein; or 2.7.5 take any other action in connection with the Assigned Agreements that would impair the value of the interest or rights of Debtor thereunder or that would impair the interest or rights of the Secured Parties. Notwithstanding the foregoing, Debtors may take any actions otherwise prohibited under this subsection 2.7 to the extent permitted by both the Mortgage Notes Indenture and the Credit Agreement. Further, Debtors shall not sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral except as permitted by both the Mortgage Notes Indenture and the Credit Agreement so long as any such agreement by its terms restricts the sale, assignment or other disposition of Collateral. 3. OBLIGATIONS SECURED. 3.1 BANK SECURED OBLIGATIONS. This Agreement secures, and all of the Collateral is collateral security for (i) the Obligations (as defined in the Credit Agreement), (ii) any and all sums advanced by any of the Bank Secured Parties in order to preserve the Collateral or preserve Bank Secured Parties' security interest in the Collateral (or the priority thereof), (iii) the expenses of any Bank Secured Parties of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of Debtors referred to above, or of any exercise by the Bank Secured Parties of their rights hereunder, together with reasonable attorneys' fees and disbursements and court costs, (iv) any and all obligations of Debtors to the Intercreditor Agent and any other agents in respect of costs, fees, indemnification or otherwise under this Agreement and/or any other Financing Agreement whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated and whether or not jointly owed with others and (v) any of the foregoing obligations that are paid to the extent all or any portion of such payment is avoided or recovered directly or indirectly from any Bank Secured 11 Party as a preference, fraudulent transfer or otherwise (collectively, the "BANK SECURED OBLIGATIONS"). 3.2 MORTGAGE NOTE SECURED OBLIGATIONS. This Agreement secures, and all of the Collateral is collateral security for (i) the prompt payment and performance by each Debtor when due whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and liabilities of every nature of Debtors now or hereafter existing under or arising out of or in connection with the Mortgage Notes, the Mortgage Notes Indenture, this Agreement, and the Mortgage Notes Indenture Security Documents and all extensions and renewals thereof, whether for principal, interest (including, interest that, but for the filing of a petition in bankruptcy with respect to such Debtor, would accrue on such obligations at the contract rate whether or not a claim for such interest is allowed in any such proceeding), payments for early termination, fees, expenses, increased costs, indemnification, or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated and whether or not jointly owed with others, (ii) any and all sums advanced by any of the Mortgage Note Secured Parties in order to preserve the Collateral or preserve the Mortgage Note Secured Parties' security interest in the Collateral (or the priority thereof), (iii) the expenses of the Intercreditor Agent or the Mortgage Notes Indenture Trustee of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of Debtors referred to above, or of any exercise by the Mortgage Notes Indenture Trustee of its rights hereunder, together with reasonable attorneys' fees and disbursements and court costs, (iv) any and all obligations of Debtors to the Intercreditor Agent in respect of costs, fees, indemnification or otherwise under this Agreement, and/or any other Financing Agreement whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated and whether or not jointly owed with others and (v) any of the foregoing obligations that are paid, to the extent all or a portion of such payment is avoided or recovered directly or indirectly from any Mortgage Note Secured Party as a preference, fraudulent transfer or otherwise (collectively, the "MORTGAGE NOTES SECURED OBLIGATIONS"). 4. REPRESENTATIONS AND WARRANTIES OF DEBTOR. Each Debtor represents and warrants as of the date hereof as follows: 4.1 Such Debtor has not assigned any of its rights under the Assigned Agreements except as expressly permitted under each of the Credit Agreement and the Mortgage Notes Indenture. 4.2 Except as otherwise permitted by the Credit Agreement and the Mortgage Notes Indenture such Debtor has not executed and is not aware of any effective financing statement, security agreement or other instrument similar in effect covering all or any part of the Collateral, except such as may have been filed in accordance with the terms of this Agreement and the other Financing Agreements in favor of the Secured Parties. 12 4.3 Except as otherwise permitted by the Credit Agreement and the Mortgage Notes Indenture and as provided in Section 4.5 and 4.6 hereof, such Debtor is lawfully possessed of ownership of the Collateral and has full right, title and interest in and to all rights purported to be granted to it under the Assigned Agreements, not subject to any Liens except Permitted Liens. Such Debtor has full power and lawful authority to grant and assign the Collateral hereunder and all consents of third parties required in connection therewith have been obtained. 4.4 Such Debtor does not do business, and for the previous five years has not done business, under any fictitious business names or trade names. 4.5 To the knowledge of such Debtor, such Debtor is the true, lawful and exclusive owner of the Marks listed in ANNEX 2 in connection with Debtor's present business, except those listed as being held under a non-exclusive license, and said listed Marks include all of such Debtor's United States federal registrations or applications registered in the United States Patent and Trademark office. To the knowledge of such Debtor, such Debtor owns or is licensed to use all Marks in connection with its present business that are material to its business. Such Debtor is aware of no material third party claim that any aspect of such Debtor's present or contemplated business operations infringes or will infringe on any such third party's rights to such Marks. Such Debtor is the owner of record of all United States registrations and applications listed in ANNEX 2 hereto and that, to the knowledge of such Debtor, said registrations are valid, subsisting, have not been canceled and that such Debtor is not aware of any material third-party claim that any of said registrations is invalid or unenforceable. 4.6 To the knowledge of such Debtor, such Debtor is the true, lawful and exclusive owner of all rights in the Patents listed in ANNEX 3 hereto and in the Copyrights listed in ANNEX 4 hereto. Said listed Patents include all the United States patents and applications for United States patents that such Debtor owns and said listed Copyrights constitute all the United States copyrights registered in the United States Copyright Office and applications for United States copyrights that it now uses or practices under that are material to its business. Such Debtor is aware of no material third party claim that any aspect of such Debtor's present or contemplated business operations infringes or will infringe on any such third party's rights to any patent or any copyright. 4.7 All notes and other instruments (excluding checks) comprising any and all items of Collateral have been delivered to the Intercreditor Agent duly endorsed and accompanied by duly executed instruments of transfer or assignment in blank. 4.8 The jurisdiction in which each Debtor is located for purposes of Sections 9-301 and 9-307 of the UCC is set forth in ITEM A of ANNEX 1 hereto. Set forth in ITEM B of ANNEX 1 is each location a secured party would have filed a UCC financing statement prior to July 1, 2001 to perfect a security interest in equipment, inventory and general intangibles owned by each Debtor. No Debtor has any trade names other than those set forth in ITEM C of ANNEX 1 hereto. During the four months preceding the date hereof, no Debtor has been known by any legal name different from the one set forth on the signature page hereto, nor has such Debtor been the subject of any merger or other corporate reorganization, except as set forth in ITEM D of ANNEX 1 hereto. The name set forth on the signature page is the true and correct name of such Debtor. Each Debtor's federal taxpayer identification number is (and, during the four months preceding 13 the date hereof, such Debtor has not had a federal taxpayer identification number different from that) set forth in ITEM E of ANNEX 1 hereto. If the Collateral of any Debtor includes any inventory located in the State of California, such Debtor is not a "retail merchant" within the meaning of Section 9102 of the California UCC. No Debtor is a party to any federal, state or local government contract except as set forth in ITEM F of ANNEX 1 hereto. 4.9 This Agreement creates a valid security interest in the Collateral securing the payment of the Secured Obligations; provided that with respect to Marks, Copyrights and Patents and any other intellectual property included as Collateral herein, this representation shall only extend to such Marks, Copyrights and Patents that are the subject of United States federal registrations or applications. Each Debtor has filed or caused to be filed all financing statements in the appropriate offices therefor (or has authenticated and delivered to the Intercreditor Agent financing statements suitable for filing in such offices) and has taken all of the actions necessary to create perfected and (subject to Permitted Liens) first-priority security interests in the Collateral other than, (a) all deposit accounts, securities accounts and investment accounts (and related investment property and financial assets), except to the extent an agreement relating to such accounts referred to in Section 5.13 has been obtained by the Debtors, (b) letter of credit rights except to the extent the issuer of such letter of credit has consented to an assignment of the proceeds of such letter of credit and (c) until 185 days after the Closing Date, any deposit accounts, securities accounts, investment accounts (and related investment property and financial assets) or like accounts located outside the United States. 5. COVENANTS OF DEBTORS. Each Debtor covenants as follows: 5.1 Any action or proceeding to enforce this Agreement after an Event of Default has occurred and is continuing under any Assigned Agreement may be taken by the Intercreditor Agent either in such Debtor's name or in the Intercreditor Agent's name, as the Intercreditor Agent may deem necessary. 5.2 Such Debtor will, so long as any Obligations shall be outstanding, warrant and defend its title to the Collateral and the interests of the Intercreditor Agent and the Secured Parties in the Collateral against any claim or demand of any persons (other than Permitted Liens) which could reasonably be expected to materially and adversely affect such Debtor's title to, or the Secured Parties right or interest in, such Collateral. 5.3 Such Debtor will at all times keep accurate and complete records of the Collateral. Such Debtor shall, at its own expense, permit representatives of the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee upon reasonable prior notice, and in accordance with the Credit Agreement and the Mortgage Notes Indenture, at any time during normal business hours of such Debtor to inspect and make abstracts from such Debtor's books and records pertaining to the Collateral subject to a confidentiality undertaking in form and substance reasonably satisfactory to Debtors. Upon the occurrence and during the continuation of any Event of Default, at the Intercreditor Agent's request, Debtors shall promptly deliver copies of any and all such records to the Intercreditor Agent. 14 5.4 Unless waived in writing by the Intercreditor Agent, such Debtor shall give the Intercreditor Agent at least forty-five days' notice before it changes its name, identity, corporate structure, location of its principal place of business or location of its chief executive office and shall at the expense of such Debtor execute and deliver such instruments and documents as may reasonably be required by the Intercreditor Agent to maintain a prior perfected security interest in the Collateral. 5.5 Such Debtor will keep and maintain the Collateral in good condition, working order and repair and from time to time will make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or desirable toward such end. Such Debtor will not misuse the Collateral, or allow it to deteriorate except for the ordinary wear and tear of its normal and expected use in such Debtor's business in accordance with such Debtor's policies as then in effect (PROVIDED that no changes are made to such Debtor's policies as in effect on the date hereof that would be materially adverse to the interests of the Secured Parties), and will comply in all material respects with all laws, statutes and regulations pertaining to the use or ownership of the Collateral. Such Debtor will promptly notify the Intercreditor Agent, Administrative Agent and the Mortgage Notes Indenture Trustee regarding any material loss or damage to any material Collateral or portion thereof; PROVIDED, HOWEVER, that the foregoing provisions exclude normal wear and tear to the Collateral, items that such Debtor reasonably believes are no longer necessary to the successful operation of its business and the disposition of obsolete items. Such Debtor will not use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement or any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral. Nothing contained in this Section 5.5 shall prohibit such Debtor from taking any action or refraining from taking any action permitted by the Credit Agreement and the Mortgage Note Indenture. 5.6 Upon the reasonable request of the Intercreditor Agent, Administrative Agent or the Mortgage Notes Indenture Trustee, such Debtor will promptly deliver to such Person records and schedules that show the status, condition and location of the Collateral, including accounts receivable aging reports and other reports reasonably requested by such Person, all in reasonable detail; and will promptly notify the Intercreditor Agent, Administrative Agent and the Mortgage Notes Indenture Trustee in writing of any event, or change of law, regulation, business practice, or business condition that may materially adversely affect the value of the Collateral. The Intercreditor Agent, Administrative Agent and the Mortgage Notes Indenture Trustee shall have the right to review and verify such records, schedules, financial information and notices, and such Debtor will reimburse each such Person for all costs incurred thereby. Such review and verification shall include the right of the Intercreditor Agent, Administrative Agent and the Mortgage Notes Indenture Trustee to contact account debtors to confirm balances owing on and the terms of Receivables, PROVIDED that an Event of Default has occurred and is continuing. 5.7 Except as otherwise provided in this SECTION 5.7, such Debtor shall continue to collect at its own expense, all amounts due or to be become due such Debtor under the Receivables. In connection with such collections, such Debtor may take (and, at the Intercreditor Agent's direction when an Event of Default has occurred and is continuing, shall take) such action as such Debtor or the Intercreditor Agent after consultation with such Debtor reasonably deem necessary or advisable to enforce collection of the Receivables; PROVIDED, HOWEVER, that such Debtor shall not adjust, settle or compromise the amount or payment of any Receivable, or 15 release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon, other than adjustments, settlements, or discounts that are in accordance with such Debtor's policies as then in effect; PROVIDED that no changes are made to such Debtor's policies as in effect on the date hereof that would be materially adverse to the interests of the Secured Parties. The Intercreditor Agent shall have the right at any time after the occurrence and during the continuation of an Event of Default to notify the account debtors or obligors under any of the Receivables of the assignment of such Receivables to the Secured Parties and to direct such account debtors or obligors to make payment of all amounts due or to become due to such Debtor thereunder directly to the Intercreditor Agent or to such Secured Parties as Intercreditor Agent may direct in accordance with the Intercreditor Agreement and, upon such notification and at the expense of such Debtor, to enforce collection of any such Receivables, and to adjust, settle or compromise the amount or payment thereof, as the Intercreditor Agent may deem appropriate in its sole discretion. After the occurrence and during the continuation of an Event of Default (i) all amounts and proceeds (including instruments) received by such Debtor in respect of the Receivables shall be received in trust for the benefit of the Secured Parties hereunder and, upon notice from the Intercreditor Agent, shall be segregated from other funds of such Debtor and shall be forthwith paid over to the Intercreditor Agent or to such Secured Parties as Intercreditor Agent may direct in accordance with the Intercreditor Agreement in the same form as so received (with all necessary or appropriate endorsements) to be held as cash collateral and applied as provided by SECTION 8, and (ii) such Debtor shall not adjust, settle or compromise the amount or payment of any Receivable, or release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon. 5.8 Such Debtor shall pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Collateral, except to the extent the validity thereof is being contested in good faith; PROVIDED that such Debtor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against such Debtor or any of the Collateral as a result of the failure to make such payment. 5.9 Each Debtor hereby agrees to give notice to the Intercreditor Agent by delivering a supplement to ITEM 6 of ANNEX 1, upon acquiring any commercial tort claim it reasonably believes to be in excess of $1,000,000 and agrees to take any actions reasonably requested by Intercreditor Agent to perfect a security interest therein. 5.10 Each Debtor agrees to use commercially reasonable efforts to get each issuer of a letter of credit in an amount in excess of $500,000 under which such Debtor has letter of credit rights to consent to an assignment of the proceeds of such letter of credit to the Intercreditor Agent. 5.11 MARKS. (A) Each such Debtor hereby agrees not to sell, assign (by operation of law or otherwise) or otherwise dispose of any right under any material Mark that such Debtor is required to maintain under SECTION 5.9.B hereof except as permitted by the Credit Agreement and the Mortgage Notes Indenture, absent prior written approval of the Intercreditor Agent, such approval not to be 16 unreasonably withheld or delayed. Each such Debtor agrees to use such Marks in interstate commerce in a manner that is sufficient to preserve such Marks as trademarks or service marks registered under the laws of the United States. (B) Each such Debtor shall, at its own expense, diligently prosecute all applications for Marks listed in ANNEX 2 hereto and further, for all of its material registered Marks, shall diligently process all documents required by the Trademark Act of 1946, 15 U.S.C. Sections 1051 ET SEQ. to maintain trademark registration, including affidavits of use and applications for renewals of registration in the United States Patent and Trademark Office pursuant to 15 U.S.C. Sections 1058(a), 1059 and 1065, and shall pay all fees and disbursements in connection therewith and shall not abandon any such filing or affidavit of use or any such application of renewal prior to the exhaustion of all administrative and judicial remedies without the prior written consent of the Intercreditor Agent, such consent not to be unreasonably withheld or delayed; PROVIDED that such Debtor shall not be obligated to maintain any Mark in the event that such Debtor determines, in its reasonable business judgment, that the maintenance of such Mark is no longer necessary or desirable in the conduct of its business. Each Debtor agrees to notify the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee three months prior to the date on which the affidavits of use or the applications for renewal registration are due with respect to any material registered Mark. (C) If any material Mark registration certificate is issued hereafter to a Debtor as a result of any application now or hereafter pending before the United States Patent and Trademark Office, within thirty days of receipt of such certificate confirming such registration such Debtor shall deliver a copy of such certificate, and a grant of security in such Mark on behalf of the Secured Parties to the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee, confirming the grant thereof hereunder together with all cover sheets or other documents or instruments required to be filed with the United States Patent and Trademark Office in order to create or perfect a lien in respect of such Mark. (D) Each Debtor agrees, promptly upon learning thereof, to notify the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee in writing of the name and address of, and to furnish such pertinent information that may be available with respect to, any party who such Debtor believes is infringing or otherwise violating any of such Debtor's rights to any material Mark, or with respect to any party claiming that such Debtor's use of any such Mark violates in any material respect any property right of that party. Such Debtor further agrees, unless otherwise agreed by the Intercreditor Agent, diligently to prosecute any Person infringing any material Mark. 17 5.12 PATENTS AND COPYRIGHTS. Each Debtor hereby agrees not to sell, assign (by operation of law or otherwise), or otherwise dispose of any right under any material Patent or Copyright except as permitted by the Credit Agreement and the Mortgage Notes Indenture, absent prior written approval of the Intercreditor Agent, such approval not to be unreasonably withheld or delayed. (A) Each Debtor shall, at its own expense, diligently prosecute all applications for material Patents and material Copyrights listed in ANNEX 3 and ANNEX 4 hereto, respectively, and shall not abandon any such application prior to exhaustion of all reasonable administrative and judicial remedies, absent written consent of the Intercreditor Agent, such consent not to be unreasonably withheld or delayed. Each Debtor shall do all acts and things reasonably necessary to maintain the Patents and Copyrights listed in ANNEX 3 and ANNEX 4, respectively, and all Patents and Copyrights hereafter obtained or acquired by such Debtor, including, without limitation, making timely payment of all post-issuance fees required pursuant to 35 U.S.C. Section 41 to maintain in force rights under each Patent. (B) Within thirty days of acquisition of a Patent or Copyright, or of filing of an application for a Patent or Copyright by a Debtor, such Debtor shall deliver to the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee a copy of said Patent or Copyright or such application, as the case may be, with a grant of security as to such Patent or Copyright, as the case may be, confirming the grant thereof hereunder together with all cover sheets or other documents or instruments required to be filed with the United States Patent and Trademark Office in order to create or perfect a lien in respect of such Patent or Copyright. (C) Each Debtor agrees, promptly upon learning thereof, to notify the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee in writing of the name and address of, and to furnish such pertinent information available to such Debtor with respect to any party who Debtor believes is infringing or otherwise violating any of such Debtor's rights in any material Patent or material Copyright, or with respect to any party claiming that Debtor's practice of any Patent or use of any Copyright violates any property right of that third party. Each Debtor further agrees, unless otherwise agreed by the Intercreditor Agent, diligently to prosecute any Person infringing any material Patent or material Copyright. 5.13 ACCOUNTS. With respect to any deposit accounts, securities accounts, investment accounts or like accounts (other than the accounts of Debtors located outside the United States), Debtors shall use commercially reasonable efforts to obtain from the financial institutions with whom such accounts are maintained, agreements with the Intercreditor Agent and the Debtors in form and substance reasonably satisfactory to Intercreditor Agent and Debtors pursuant to which control over such account is granted to the Intercreditor Agent and pursuant to which such financial institution confirms and acknowledges the security interest of Secured Parties in such account and waives its right of set-off with respect to amounts held therein. From and after 60 days from the Closing Date, Debtors will provide a list of such accounts to the Intercreditor 18 Agent and use commercially reasonable efforts to take such further actions and execute such further documents in connection therewith as Intercreditor Agent may reasonably request in order to perfect, or maintain the perfection of the security interest of Secured Parties in such accounts. To the extent that Debtors are unable to cause the Intercreditor Agent to have control over any such account after 60 days from the Closing Date, the security interest in such account shall be deemed to be released by the Intercreditor Agent for purposes of Section 10.03(a)(ix) of the Mortgage Notes Indenture. The Debtors shall, within 6 months of the Closing Date, take such action as may be necessary to provide the Intercreditor Agent to have perfected security interests in all such accounts maintained outside the United States. 5.14 FUTURE MATERIAL CONTRACTS. If any Debtor enters into any Material Contract related to the construction of the Phase I-A Project after the date hereof, such Debtor shall (i) deliver the Intercreditor Agent, the Administrative Agent and the Mortgage Notes Indenture Trustee an executed counterpart or certified copy of such Material Contract and (ii) shall cause the counterparty to such additional Material Contract to enter into a consent to such assignment, such consent to be in substantially the form of EXHIBIT O to the Credit Agreement (subject to any changes thereto requested by such party and reasonably satisfactory to the Intercreditor Agent). 6. REMEDIES UPON EVENT OF DEFAULT. 6.1 Subject to compliance with applicable Nevada Gaming Laws, if any Event of Default shall have occurred and be continuing, the Intercreditor Agent may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral), and also may (a) require Debtors to, and Debtors hereby agree that they will at their expense and upon request of the Intercreditor Agent forthwith, assemble all or part of the Collateral as directed by the Intercreditor Agent and make it available to the Intercreditor Agent at a place to be designated by the Intercreditor Agent that is reasonably convenient to both parties, (b) enter onto the property where any Collateral is located and take possession thereof with or without judicial process, (c) prior to the disposition of the Collateral, store, process, repair or recondition the Collateral or otherwise prepare the Collateral for disposition in any manner to the extent the Intercreditor Agent deems appropriate, (d) take possession of Debtors' premises or place custodians in exclusive control thereof, remain on such premises and use the same and any of Debtors' equipment for the purpose of completing any work in process, taking any actions described in the preceding clause (c) and collecting any Obligation, and (e) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Intercreditor Agent's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Intercreditor Agent may deem commercially reasonable. The Intercreditor Agent or any of the Secured Parties may be the purchaser of any or all of the Collateral at any such sale and the Intercreditor Agent as agent for and representative of the Secured Parties shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any Collateral payable by the Intercreditor Agent at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Debtors, and Debtors hereby waive (to the extent permitted by applicable law) all rights of redemption, stay and/or appraisal 19 which they now have or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Debtors agree that, to the extent notice of sale shall be required by law, at least ten days' notice to Debtors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Intercreditor Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Intercreditor Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Debtors hereby waive any claims against the Intercreditor Agent arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale was less than the price which might have been obtained at a public sale, even if the Intercreditor Agent accepts the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Obligations, Debtors shall be liable for the deficiency and the reasonable fees of any attorneys employed by the Intercreditor Agent to collect such deficiency. Upon written demand from the Intercreditor Agent, each Debtor shall execute and deliver to the Intercreditor Agent an assignment or assignments of the Patents, Copyrights, and Marks and such other documents as are necessary or appropriate to carry out the intent and purposes of this Agreement. Each Debtor agrees that such an assignment and/or recording shall be applied to reduce the Obligations outstanding only to the extent that the Intercreditor Agent receives cash proceeds in respect of the sale of, or other realization upon, the Collateral. 7. REMEDIES CUMULATIVE; DELAY NOT WAIVER. 7.1 No right, power or remedy herein conferred upon or reserved to the Intercreditor Agent is intended to be exclusive of any other right, power or remedy and every such right, power and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right, power and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder or otherwise shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all security now or hereafter held by the Intercreditor Agent may be taken concurrently or successively and in one or several consolidated or independent judicial actions or lawfully taken nonjudicial proceedings, or both. 7.2 No delay or omission of the Intercreditor Agent to exercise any right or power accruing upon the occurrence and during the continuance of any Event of Default as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein; and every power and remedy given by this Agreement may be exercised from time to time, and as often as shall be deemed expedient, by the Intercreditor Agent. 8. APPLICATION OF PROCEEDS. All proceeds received by the Intercreditor Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied to repay the Secured Obligations as provided in the Intercreditor Agreement. 9. ATTORNEY-IN-FACT. 20 Subject to compliance with applicable Nevada Gaming Laws, each Debtor hereby irrevocably appoints the Intercreditor Agent as Debtors' attorney-in-fact, with full authority in the place and stead of Debtor and in the name of such Debtor, the Intercreditor Agent or otherwise, from time to time upon and following the occurrence and continuation of an Event of Default, Default (as defined in the Mortgage Notes Indenture) or Potential Event of Default in the Intercreditor Agent's discretion to take any action and to execute any instrument that the Intercreditor Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including: 9.1 to obtain and adjust insurance required to be maintained by Debtors or paid to the Intercreditor Agent pursuant to this Agreement; 9.2 to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral; 9.3 to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clauses (a) and (b) above; 9.4 to file any claims or take any action or institute any proceedings that the Intercreditor Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Intercreditor Agent with respect to any of the Collateral; 9.5 to pay or discharge taxes or Liens (other than Permitted Liens) levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Intercreditor Agent in its sole discretion, any such payments made by the Intercreditor Agent to become obligations of Debtor to the Intercreditor Agent, due and payable immediately without demand; 9.6 to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection with accounts and other documents relating to the Collateral; and 9.7 upon the occurrence and during the continuation of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Intercreditor Agent were the absolute owner thereof for all purposes, and to do, at the Intercreditor Agent's option and Debtors' expense, at any time or from time to time, all acts and things that the Intercreditor Agent deems necessary to protect, preserve or realize upon the Collateral and the Intercreditor Agent's security interest therein in order to effect the intent of this Agreement, all as fully and effectively as Debtor might do. 10. THE INTERCREDITOR AGENT MAY PERFORM. Upon the occurrence and during the continuance of an Event of Default, if Debtor fails to perform any agreement contained herein, the Intercreditor Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of the Intercreditor Agent incurred in connection therewith shall be part of the Obligations of the relevant Secured Parties. 21 11. PERFECTION; FURTHER ASSURANCES. 11.1 Each Debtor agrees that from time to time, at the expense of such Debtor, such Debtor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary, or that the Intercreditor Agent may reasonably request, in order to perfect and protect the assignment and security interest granted, purported or intended to be granted hereby in favor of the Secured Parties or to enable the Intercreditor Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, each Debtor shall (i) if any Collateral shall be evidenced by a promissory note or other instrument in excess of $5,000, deliver and pledge to the Intercreditor Agent for the benefit of the Secured Parties granted a security interest in such Collateral such note duly endorsed without recourse, and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to Intercreditor Agent, (ii) execute and deliver to the Intercreditor Agent such financing or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be reasonably necessary or desirable or as such Secured Parties may reasonably request, in order to perfect and preserve the assignments and security interests granted, purported or intended to be granted hereby in favor of the relevant Secured Parties and (iii) at the Intercreditor Agent's reasonable request, appear in and defend any action or proceeding that may affect Debtor's title to or the Intercreditor Agent's or any of the Secured Parties security interest in all or any part of the Collateral. 11.2 Each Debtor hereby authorizes the Administrative Agent, the Mortgage Notes Indenture Trustee and the Intercreditor Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral in which such Secured Party has been granted a security interest. 11.3 Each Debtor shall pay all filing, registration and recording fees and all refiling, re-registration and re-recording fees, and all reasonable expenses incident to the execution and acknowledgment of this Agreement, any assurance, and all federal, state, county and municipal stamp taxes and other taxes (other than income taxes), duties, imports, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, any agreement supplemental hereto, any financing statements, and any instruments of further assurance. 11.4 Each Debtor shall, promptly upon request, provide to the Intercreditor Agent, all information and evidence it may reasonably request concerning the Collateral to enable the Intercreditor Agent to enforce the provisions of this Agreement. 12. PLACE OF BUSINESS; LOCATION OF RECORDS. Unless the Intercreditor Agent is otherwise notified under SECTION 5.4, the place of business and chief executive office of each Debtor is, and all records of such Debtor concerning the Collateral are and will be, located at the address of such Debtor set forth on the signature pages to this Agreement. 22 13. CONTINUING ASSIGNMENT AND SECURITY INTEREST; TRANSFER OF DEBT. This Agreement shall create a continuing assignment of, and security interest in, the Collateral and shall (a) remain in full force and effect until payment in full of all Obligations, (b) be binding upon each Debtor, its successors and assigns; PROVIDED, HOWEVER, that the obligations of each Debtor, its successors and assigns hereunder may not be assigned without the prior written consent of the Intercreditor Agent, and (c) inure, together with the rights and remedies of the Intercreditor Agent hereunder, to the benefit of the Intercreditor Agent, its successors, transferees and assigns, the other Secured Parties and their respective successors, transfers and assigns (whether as a result of a refinancing or otherwise). Without limiting the generality of the foregoing but subject to the terms of the Financing Agreements evidencing the Obligations owed to particular Secured Parties, such Secured Parties may assign or otherwise transfer all or any part of or interest in such Financing Agreements or other evidence of indebtedness held by them to any other Person to the extent permitted by such Financing Agreements, and such other Person shall thereupon become vested with all or an appropriate part of the benefits in respect thereof granted to the Secured Parties herein or otherwise. The release of the security interest in any or all of the Collateral, the taking or acceptance of additional security, or the resort by any Secured Party or the Intercreditor Agent to any security it may have in any order it may deem appropriate, shall not affect the liability of any person on the Obligations secured hereby. If this Agreement shall be terminated or revoked by operation of law, each Debtor will indemnify and save the Secured Parties harmless from any loss which may be suffered or incurred by the Secured Parties in acting hereunder prior to the receipt by the Intercreditor Agent, its successors, transfers, or assigns of notice of such termination or revocation. Each Debtor acknowledges and agrees that, pursuant to and in accordance with the terms of the Intercreditor Agreement, one or more additional or successor Intercreditor Agents, or other agents or representatives of the Intercreditor Agent or other secured Parties may be appointed, by written notice to each Debtor, and such person or persons shall be entitled to exercise or perform all or a portion of the duties or obligations of the Intercreditor Agent hereunder in accordance with the terms of such appointment. 14. TERMINATION AND RELEASE OF SECURITY INTEREST. 14.1 On the Termination Date, the security interest granted under Subsection 2.1 and 2.2 in favor of the Intercreditor Agent on behalf of the Bank Secured Parties shall terminate; PROVIDED that such termination shall not affect the rights of the other Secured Parties hereunder. Upon any such termination, the Intercreditor Agent will, at the Debtors' expense, execute and deliver to the Debtors such documents (including, without limitation, UCC-3 termination statements) as the Debtors shall reasonably request to evidence such termination. Following any such termination any references to the Administrative Agent and the Credit Agreement shall be deemed to be deleted. 14.2 Upon the payment in full of the Mortgage Note Secured Obligations, the security interest granted under Subsection 2.3 in favor of the Mortgage Notes Indenture Trustee shall terminate; PROVIDED that such termination shall not affect the rights of the other Secured Parties hereunder. Upon any such termination, the Intercreditor Agent will, at the Debtors' expense, execute and deliver to the Debtors such documents (including, without limitation, UCC-3 termination statements) as the Debtors shall reasonably request to evidence such termination. 23 Following any such termination any references to the Mortgage Note Secured Parties, the Mortgage Notes Indenture Trustee and the Mortgage Note Indenture shall be deemed to be deleted. 14.3 To the extent any property (including Specified FF&E) is financed by any lender pursuant to an FF&E Facility rather than Bank Secured Parties, the Intercreditor Agent shall release the Liens in favor of the Secured Parties on such property and in connection therewith at the Debtor's expense, execute and deliver to the Debtors such documents (including, without limitation UCC-3 termination statements) as the Debtors may reasonably request to evidence such termination. 14.4 Upon the termination of the security interests of the Bank Secured Parties in accordance with Section 14.1 above, the appointment of Intercreditor Agent shall terminate and all duties, rights and remedies vested in Intercreditor Agent shall thereupon be vested in the Mortgage Notes Indenture Trustee. 14.5 In the event that any part of the Collateral is sold, transferred or otherwise disposed of in accordance with the Credit Agreement and the Mortgage Notes Indenture or is otherwise released in accordance with the Credit Agreement and the Mortgage Notes Indenture or with the consent of the Requisite Lenders and, if required, the Mortgage Notes Secured Parties, such Collateral will be sold, transferred or otherwise disposed of, and released free and clear of the Liens created by this Agreement and the Intercreditor Agent, at the request and expense of the relevant Debtor, will duly and promptly assign, transfer, deliver and release to the applicable Debtor or its designee (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so sold, transferred or otherwise disposed of or released. Furthermore, upon the release of any Subsidiary Guarantor from the Subsidiary Guaranty and the Guaranty (as defined in the Mortgage Notes Indenture) in each case, in accordance with the provisions of the Credit Agreement and the Mortgage Notes Indenture, such Debtor (and the Collateral at such time assigned by such Debtor pursuant hereto) shall be released from this Agreement. In connection with any disposition or release pursuant to this Section 14.5, the Intercreditor Agent shall, at the Debtors' expense, execute and deliver to Debtors such documents (including UCC-3 termination statements) as Debtors may reasonably request. 15. INDEMNITY AND EXPENSES. To the extent not covered by the Credit Agreement or the Mortgage Notes Indenture, the Debtors agree, jointly and severally, to indemnify the Intercreditor Agent and each other Secured Party from and against any and all claims, losses and liabilities growing out of or resulting from this Agreement (including enforcement of this Agreement), except claims, losses or liabilities resulting from such Secured Party's gross negligence or willful misconduct as finally determined by a court of competent jurisdiction. 16. ATTORNEYS' FEES. In the event any legal action or proceeding (including any of the remedies provided for herein or at law) is commenced to enforce or interpret this Agreement or any provision thereof, 24 the Debtors shall indemnify each of the Secured Parties and the Intercreditor Agent for their reasonable attorneys' fees and other costs and expenses incurred therein, and if a judgment or award is entered in any such action or proceeding, such reasonable attorneys' fees and other costs and expenses may be made a part of such judgment or award. 17. AMENDMENTS; WAIVERS; CONSENTS. No amendment, modification, termination or waiver of any provision of this Agreement, or consent to any departure by the Debtors therefrom, shall in any event be effective without the written concurrence of the Intercreditor Agent (as set forth in the Credit Agreement) and the Debtors subject to the terms of the Intercreditor Agreement. The parties hereto acknowledge that to the extent provided in the second paragraph of Section 9.01 of the Mortgage Notes Indenture, this Agreement may be amended, modified, terminated or waived at the direction of the Bank Secured Parties (with the consent of the Debtors but without the consent of the Mortgage Notes Indenture Trustee or any other Mortgage Notes Secured Party) and the Intercreditor Agent shall concur in such amendment, modification, termination or waiver so long as the Mortgage Notes Secured Parties are treated equally with and in the same manner as the Bank Secured Parties with respect to such amendment, modification, termination or waiver. 18. NOTICES. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by reputable overnight delivery service, (c) in the event overnight delivery services are not readily available, if mailed by first class mail, postage prepaid, registered or certified with return receipt requested or (d) if sent by prepaid telex, or by telecopy with correct answer back received. Notice so given shall be effective upon receipt by the addressee, except that communication or notice so transmitted by telecopy or other direct written electronic means shall be deemed to have been validly and effectively given on the day (if a Business Day and, if not, on the next following Business Day) on which it is validly transmitted if transmitted before 4 p.m., recipient's time, and if transmitted after that time, on the next following Business Day; PROVIDED, HOWEVER, that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. The addresses of the parties for purposes hereof shall be as set forth on the signature pages hereof unless and until notice changing such address is given in accordance with this Section 18 (and any notice sent to a Subsidiary Guarantor may be sent to it at the address of either Borrower). Any party shall have the right to change its address for notice hereunder to any other location by giving of no less than twenty (20) days' notice to the other parties in the manner set forth hereinabove. 19. GOVERNING LAW. Subject to the application of Nevada Gaming Laws, this Agreement, including all matters of construction, validity, performance and the creation, validity, enforcement or priority of the lien of, and security interests created by, this Agreement in or upon the Collateral shall be governed by the laws of the state of New York, without reference to conflicts of law (other than Section 5-1401 of the New York General Obligations Law), except as required by mandatory provisions of law and except to the extent that the validity or perfection of the lien and security 25 interest hereunder, or remedies hereunder, in respect of any particular Collateral are governed by the laws of a jurisdiction other than the state of New York. 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST DEBTORS ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER 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, EACH DEBTOR, FOR ITSELF AND IN CONNECTION WITH ITS 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 DEBTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 18; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER DEBTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT INTERCREDITOR AGENT RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST EACH DEBTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SECTION 20 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. 21. REINSTATEMENT. This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by any Secured Party in respect of the Obligations is rescinded or must otherwise be restored or returned by such Secured Party upon the insolvency, bankruptcy, reorganization or liquidation of a Debtor or upon the dissolution of, or appointment of any intervenor or conservator of, or trustee or similar official for, a Debtor or any substantial part of a Debtor's assets, or otherwise, all as though such payments had not been made. 22. SEVERABILITY. 26 The provisions of this Agreement are severable, and if any clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction. 23. SURVIVAL OF PROVISIONS. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the other Financing Agreements and extensions of credit thereunder. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements, representations and warranties of Debtors set forth herein shall terminate only upon full repayment of the Obligations. 24. HEADINGS DESCRIPTIVE. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 25. ENTIRE AGREEMENT. This Agreement, together with any other agreement executed in connection herewith, is intended by the parties as a final expression of their agreement and is intended as a complete and exclusive statement of the terms and conditions thereof. 26. TIME. Time is of the essence of this Agreement. 27. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute one and the same agreement. 28. WAIVER OF JURY TRIAL. EACH DEBTOR AND THE INTERCREDITOR AGENT HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP AMONG THEM THAT IS BEING ESTABLISHED. EACH DEBTOR AND THE INTERCREDITOR AGENT ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT IT HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT IT WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH SUCH PERSON FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT 27 KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 29. RESPONSIBILITIES OF THE INTERCREDITOR AGENT. The powers conferred on the Intercreditor Agent hereunder are solely to protect its interest in the Collateral granted for the benefit of the Secured Parties and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Intercreditor Agent shall have no duty as to any Collateral, it being understood that the Intercreditor Agent shall have no responsibility for (a) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Collateral) to preserve rights against any parties with respect to any Collateral or (b) taking any necessary steps to collect or realize upon the Obligations or any guarantee therefor, or any part thereof, or any of the Collateral. The Intercreditor Agent shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which such Person accords its own property of like kind. 30. ADDITIONAL DEBTORS. Upon the execution and delivery by any other Person of a supplement in the form of EXHIBIT A hereto, such Person shall become a "Debtor" hereunder with the same force and effect as if it were originally a party to this Agreement and named as a "Debtor" hereunder. The execution and delivery of such supplement shall not require the consent of any other Debtor hereunder, and the rights and obligations of each Debtor hereunder shall remain in full force and effect notwithstanding the addition of any new Debtor as a party to this Agreement. 31. JOINT AND SEVERAL OBLIGATIONS. The provisions of Section 2.9 of the Credit Agreement are incorporated herein by reference and each Debtor agrees that the provisions of the aforesaid sections shall apply with respect to each Debtor hereunder. 32. AMENDMENT FOR NEW CREDIT PARTIES. Upon any refinancing, refunding, replacement or restructuring, in whole or in part, of the Credit Agreement or, the Indebtedness under the Mortgage Notes Indenture or any Future First Lien Credit Facility, or the entering into of a Future First Lien Credit Facility or agreements relating to Hedging Obligations (as defined in the Intercreditor Agreement) with Permitted Counterparties (subject to the rights of the existing Secured Parties under their respective Financing Agreements with respect to any such refinancing or other Indebtedness or such Hedging Obligations), the applicable lender or Permitted Counterparty and the Intercreditor Agent shall execute and deliver a joinder, amendment or supplement to this Agreement to provide that the new lender(s) (or the agent or trustee for the new lender(s)) shall be a "Secured Party" hereunder. Upon the execution and delivery by such lender(s) or Permitted Counterparties and the other parties thereto of such joinder, amendment or supplement, such lender(s) or Permitted Counterparties shall become a "Secured Party" hereunder with the same force and effect as if it were originally a party to this Agreement and named as a "Secured Party" herein. The execution and delivery of such joinder, 28 amendment or supplement shall not require the consent of any other Secured Party hereunder, and the rights and obligations of each Secured Party hereunder shall remain in full force and effect notwithstanding the addition of any new Secured Party as a party to this Agreement. 29 Exhibit 4.3 IN WITNESS WHEREOF, each of the undersigned has caused this Company Security Agreement to be duly executed and delivered as of the day and year first written above. DEBTORS: LAS VEGAS SANDS, INC., a Nevada Corporation By: /s/ David Friedman --------------------------------- Name: David Friedman ---------------------------- Title: Secretary --------------------------- VENETIAN CASINO RESORT, LLC, a Nevada limited liability company By: LAS VEGAS SANDS, INC., a Nevada corporation, its managing member By: /s/ David Friedman ---------------------------- Name: David Friedman ----------------------- Title: Secretary ---------------------- MALL INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary GRAND CANAL SHOPS MALL CONSTRUCTION, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary LIDO INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary VENETIAN VENTURE DEVELOPMENT, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary VENETIAN OPERATING COMPANY, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary VENETIAN MARKETING, INC. By: /s/ David Friedman --------------------------------- Name: David Friedman Title: Secretary VENETIAN CASINO RESORT ATHENS, LLC By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman ---------------------------- Name: David Friedman Title: Secretary Notice Address for Debtors: 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Attention: General Counsel Telefax: (702) 733-5499 INTERCREDITOR AGENT: THE BANK OF NOVA SCOTIA, a Canadian chartered bank, as Intercreditor Agent By: /s/ Alan Pendergast -------------------------------- Name: Alan Pendergast --------------------------- Title: Managing Director -------------------------- Notice Address: The Bank of Nova Scotia 580 California Street Suite 2100 San Francisco, CA 94104 Attention: Alan Pendergast Relationship Manager Facsimile Number: (415) 397-0791 with a copy to: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, GA 30308 Attention: Robert Ivy Facsimile Number: (404) 888-8998 EX-4 8 ex4-4_7032.txt DEED OF TRUST, LEASEHOLD DEED OF TRUST, ... Exhibit 4.4 APN 162-16-310-003 Tax Mailing Address: Venetian Casino Resort, LLC c/o Finance Department 201 East Sands Avenue Las Vegas, Nevada 89109-2017 Recording Requested By and Recorded Counterparts Should be Returned to: Sony Ben-Moshe, Esq. Latham & Watkins 701 "B" Street, Suite 2100 San Diego, California 92101 DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING MADE BY VENETIAN CASINO RESORT, LLC, A NEVADA LIMITED LIABILITY COMPANY AND LAS VEGAS SANDS, INC., A NEVADA CORPORATION JOINTLY AND SEVERALLY AS TRUSTOR, TO FIRST AMERICAN TITLE INSURANCE COMPANY, A CALIFORNIA CORPORATION, AS TRUSTEE, FOR THE BENEFIT OF U.S. BANK NATIONAL ASSOCIATION, IN ITS CAPACITY AS THE MORTGAGE NOTES INDENTURE TRUSTEE, AS BENEFICIARY ******************************************************************************** THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS AND IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS OF CLARK COUNTY, Exhibit 4.4 NEVADA UNDER THE NAMES OF VENETIAN CASINO RESORT, LLC AND LAS VEGAS SANDS, INC. AS "DEBTOR" AND U.S. BANK NATIONAL ASSOCIATION AS "SECURED PARTY." Exhibit 4.4 TABLE OF CONTENTS ARTICLE 1 COVENANTS OF TRUSTOR.....................................................................16 1.1 Performance of Financing Agreements.......................................................16 1.2 General Representations, Covenants and Warranties.........................................16 1.3 Leasehold Estates.........................................................................17 1.4 Payment of Subject Leases Expenses........................................................17 1.5 Trustor's Covenants with Respect to Subject Leases........................................18 1.6 Compliance with Legal Requirements........................................................21 1.7 Impositions...............................................................................21 1.8 Insurance.................................................................................22 1.9 Condemnation..............................................................................22 1.10 Care of Trust Estate......................................................................23 1.11 Leases....................................................................................23 1.12 Further Encumbrance.......................................................................24 1.13 Further Assurances........................................................................25 1.14 Security Agreement and Financing Statements...............................................26 1.15 Assignment of Leases and Rents............................................................29 1.16 Rejection of Subject Leases...............................................................29 1.17 Expenses..................................................................................29 1.18 Beneficiary's Cure of Trustor's Default...................................................30 1.19 Use of Land and Leased Premises...........................................................31 1.20 Compliance with Permitted Lien Agreements.................................................31 1.21 Defense of Actions........................................................................31 1.22 Affiliates and Subsidiaries...............................................................31 1.23 Merger....................................................................................31 ARTICLE 2 CORPORATE LOAN PROVISIONS................................................................32 2.1 Interaction with Mortgage Notes Indenture.................................................32 2.2 Other Collateral..........................................................................32 2.3 Subordination to Bank Fee Deed of Trust...................................................32 ARTICLE 3 DEFAULTS.................................................................................33 3.1 Event of Default..........................................................................33 ARTICLE 4 REMEDIES.................................................................................33 4.1 Acceleration of Maturity..................................................................33 4.2 Protective Advances.......................................................................33 4.3 Institution of Equity Proceedings.........................................................33 4.4 Beneficiary's Power of Enforcement........................................................33 4.5 Beneficiary's Right to Enter and Take Possession, Operate and Apply Income................35 4.6 Leases....................................................................................36 4.7 Purchase by Beneficiary...................................................................36 4.8 Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws....................37 4.9 Receiver..................................................................................37
i Exhibit 4.4 4.10 Suits to Protect the Trust Estate.........................................................37 4.11 Proofs of Claim...........................................................................38 4.12 Trustor to Pay the Notes on Any Default in Payment; Application of Monies by Beneficiary..38 4.13 Delay or Omission; No Waiver..............................................................38 4.14 No Waiver of One Default to Affect Another................................................38 4.15 Discontinuance of Proceedings; Position of Parties Restored...............................39 4.16 Remedies Cumulative.......................................................................39 4.17 Interest After Event of Default...........................................................40 4.18 Foreclosure; Expenses of Litigation.......................................................40 4.19 Deficiency Judgments......................................................................40 4.20 Waiver of Jury Trial......................................................................41 4.21 Exculpation of Beneficiary................................................................41 ARTICLE 5 RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE.............41 5.1 Exercise of Remedies by Trustee...........................................................41 5.2 Rights and Privileges of Trustee..........................................................42 5.3 Resignation or Replacement of Trustee.....................................................42 5.4 Authority of Beneficiary..................................................................42 5.5 Effect of Appointment of Successor Trustee................................................42 5.6 Confirmation of Transfer and Succession...................................................43 5.7 Exculpation...............................................................................43 5.8 Endorsement and Execution of Documents....................................................43 5.9 Multiple Trustees.........................................................................43 5.10 Terms of Trustee's Acceptance.............................................................43 ARTICLE 6 MISCELLANEOUS PROVISIONS.................................................................44 6.1 Heirs, Successors and Assigns Included in Parties.........................................44 6.2 Addresses for Notices, Etc................................................................44 6.3 Change of Notice Address..................................................................45 6.4 Headings..................................................................................45 6.5 Invalid Provisions to Affect No Others....................................................45 6.6 Changes and Priority Over Intervening Liens...............................................45 6.7 Estoppel Certificates.....................................................................45 6.8 Waiver of Setoff and Counterclaim.........................................................46 6.9 Governing Law.............................................................................46 6.10 Required Notices..........................................................................46 6.11 Reconveyance..............................................................................47 6.12 Attorneys' Fees...........................................................................47 6.13 Late Charges..............................................................................47 6.14 Cost of Accounting........................................................................47 6.15 Right of Entry............................................................................47 6.16 Corrections...............................................................................47 6.17 Statute of Limitations....................................................................48 6.18 Subrogation...............................................................................48 6.19 Joint and Several Liability...............................................................48 6.20 Homestead.................................................................................48 6.21 Context...................................................................................48
ii Exhibit 4.4 6.22 Time......................................................................................48 6.23 Interpretation............................................................................48 6.24 Effect of NRS Section 107.030.............................................................49 6.25 Amendments................................................................................49 6.26 No Conflicts..............................................................................49 ARTICLE 7 POWER OF ATTORNEY........................................................................49 7.1 Grant of Power............................................................................49
SCHEDULES SCHEDULE A DESCRIPTION OF LAND SCHEDULE B DESCRIPTION OF CASINO LEASED PREMISES SCHEDULE C DESCRIPTION OF PHASE I-A LEASED PREMISES SCHEDULE D CONTEMPLATED CONDEMNATION SCHEDULE E FORM OF DATE-DOWN ENDORSEMENT FOR PHASE I-A AIRSPACE iii Exhibit 4.4 DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING (hereinafter called "DEED OF TRUST") is made and effective as of June 4, 2002, by VENETIAN CASINO RESORT, LLC, a Nevada limited liability company ("VCR"), and LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI," and jointly and severally with VCR together with all successors and assigns of the Trust Estate (as hereinafter defined), "TRUSTOR"), whose address is 3355 Las Vegas Blvd. South, Room 1C, Las Vegas, Nevada 89109, Attention: General Counsel, to FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, whose address is 180 Cassia Way, Suite 502, Henderson, Nevada 89014, Attention: Julie Skinner, as Trustee ("TRUSTEE"), for the benefit of U.S. BANK NATIONAL ASSOCIATION ("BENEFICIARY"), in its capacity as the Mortgage Notes Indenture Trustee under that certain Indenture, dated as of even date herewith, among Trustor, Beneficiary and the other parties signatory thereto (as the same may be amended, supplemented, amended and restated, increased or otherwise modified from time to time, the "MORTGAGE NOTES INDENTURE") and pertaining to the 11.00% Mortgage Notes due 2010 issued by Trustor in the aggregate principal amount of $850,000,000. DEFINITIONS - As used in this Deed of Trust, the following terms have the meanings hereinafter set forth: "ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section 9-102 (NRS 104.9102) of the UCC for the term "account." "ADDITIONAL BILLBOARD SPACE" has the meaning given to such term in the Cooperation Agreement. "APPURTENANT RIGHTS" means all and singular tenements, hereditaments, rights, reversions, remainders, development rights, privileges, benefits, Easements, rights-of-way, gores or strips of land, streets, ways, alleys, passages, sewer rights, water courses, water rights and powers, and all appurtenances whatsoever and claims or demands of Trustor at law or in equity in any way belonging, benefiting, relating or appertaining to the Land or the Leased Premises, the airspace over the Site, the Project and the Improvements or any of the Trust Estate encumbered by this Deed of Trust, or which hereinafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Trustor, whether or not the same are of record. "BANK CREDIT AGREEMENT" means that certain Credit Agreement dated as of even date herewith by and among LVSI, VCR, The Bank of Nova Scotia, a Canadian chartered bank ("SCOTIABANK"), as administrative agent, joint lead arranger and joint bookrunner, Goldman Sachs Credit Partners L.P., as syndication agent, joint lead arranger and joint bookrunner, and the lenders party thereto, together with all related agreements, instruments and documents executed or delivered pursuant thereto at any time (including, without limitation, all notes, mortgages, guarantees, security agreements and all other collateral and security documents), in each case as such agreements, instruments and documents may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including, without 1 Exhibit 4.4 limitation, any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the aggregate principal amount that may be borrowed thereunder but only to the extent permitted by the terms of the Mortgage Notes Indenture) all or any portion of the Indebtedness and other obligations under such agreement or agreements or any successor or replacement agreement or agreements, and whether by the same or any other agent, lender or group of lenders. "BANKRUPTCY" means, with respect to any Person, that: (i) a court having jurisdiction in the Trust Estate shall have entered a decree or order for relief in respect of such Person 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 has not been stayed; or any other similar relief shall have been granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against such Person, 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 Trust Estate for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over such Person, 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 such Person, 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 such Person, and any such event described in this clause (ii) shall continue for 60 days without being dismissed, bonded or discharged; or (iii) such Person shall have an order for relief entered with respect to it or shall 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 such Person shall make any assignment for the benefit of creditors, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due and payable and a period of 30 days shall have elapsed; or (iv) such Person shall, or the Board of Directors of such Person (or any committee thereof) or the managing member of such Person shall, adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (iii) above. "BANKRUPTCY CODE" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute thereto. "BILLBOARD MASTER LEASE" means the Lease Agreement, dated as of November 14, 1997 between VCR and the predecessors-in-interest to Grand Canal Shops II, LLC, a Delaware limited liability company ("NEW MALL SUBSIDIARY") pursuant to which the New Mall Subsidiary is leasing the Additional Billboard Space from VCR. "BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on which banking institutions in the State of Nevada or the City of New York are not required to be open. "CANYON RANCH MASTER LEASE" means the Master Lease, dated as of June 1, 1998, between VCR and New Mall Subsidiary's predecessors-in-interest relating to certain space that is 2 Exhibit 4.4 subleased by CR Las Vegas, LLC pursuant to the Canyon Ranch Operating Lease (as defined in the Cooperation Agreement). "CASINO LEASE" means the Casino Lease between VCR, as lessor, and LVSI, as lessee, dated as of November 14, 1997, for the Casino Leased Premises. "CASINO LEASED PREMISES" means the casino and gaming areas of the Phase I Hotel and Casino Project situated in the County of Clark, State of Nevada described in the Casino Lease and more specifically described in SCHEDULE B attached hereto and incorporated herein. "CASINO RESORT" means the Venetian Casino Resort, a Venetian-themed hotel, casino, retail, meeting and entertainment complex, with related heating, ventilation and air conditioning and power station facilities located at 3355 Las Vegas Boulevard South, Clark County, Nevada, excluding the mall component thereof. "DEED OF TRUST" means this Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing as it may be amended, supplemented, amended and restated, increased or otherwise modified from time to time. "EASEMENT" means any easement appurtenant, easement in gross, license agreement or other right running for the benefit of Trustor, the Site, the Project, the Phase II Resort (to the extent benefiting the Phase I-A Lease and Premises) or the HVAC Component, or appurtenant thereto which benefits the Site, the Project or the Improvements, including those easements and licenses which benefit any of the foregoing and are described in the Cooperation Agreement or each title insurance policy issued by the Title Insurer with regard to the Site. "ENVIRONMENTAL LAWS" means any and all current or future statutes, ordinances, orders, rules, regulations, guidance documents, judgments, permits, or any other requirements of governmental authorities relating to (a) environmental matters, including those relating to any Hazardous Materials Activity, (b) the generation, use, storage, transportation or disposal of Hazardous Materials, or (c) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to the Borrowers or any of their Subsidiaries or any of their facilities, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.), the Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act (15 U.S.C. Section 2601 ET SEQ.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. Section 136 ET SEQ.), the Occupational Safety and Health Act (29 U.S.C. Section 651 ET SEQ.), the Oil Pollution Act (33 U.S.C. Section 2701 ET SEQ.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 ET SEQ.), the Nevada Hazardous Materials law (NRS Chapter 459), the Nevada Solid Waste/Disposal of Garbage or Sewage law (NRS 444.440 to 444.650, inclusive), the Nevada Water Controls/Pollution law (NRS Chapter 445A), the Nevada Air Pollution law (NRS Chapter 445B), the Nevada Cleanup of Discharged Petroleum law (NRS 590.700 to 590.920, inclusive), the Nevada Control of Asbestos law (NRS 618.750 to 618.850), the Nevada Appropriation of Public Waters law (NRS 533.324 to 533.4385, inclusive), the Nevada Artificial Water Body Development Permit law (NRS 502.390), the Nevada Protection of Endangered Species, Endangered Wildlife 3 Exhibit 4.4 Permit (NRS 503.585) and Endangered Flora Permit law (NRS 527.270), 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. "EVENT OF DEFAULT" has the meaning set forth in SECTION 3.1 hereof. "FF&E" means all furniture, fixtures, equipment, appurtenances and personal property now or in the future contained in, used in connection with, attached to, or otherwise useful or convenient to the use, operation, or occupancy of, or placed on, but unattached to, any part of the Site, the Project or the Improvements whether or not the same constitutes real property or fixtures in the State of Nevada, including all removable window and floor coverings, all furniture and furnishings, heating, lighting, plumbing, ventilating, air conditioning, refrigerating, incinerating, cleaning equipment, all elevators, escalators and elevator and escalator plants, cooking facilities, vacuum cleaning systems, public address and communications systems, switchboards, security and surveillance equipment and devices, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, appliances, equipment, fittings, fixtures, and building materials, all exercise equipment, all gaming and financial equipment, computer equipment, calculators, adding machines, gaming tables, video game and slot machines, and any other electronic equipment of every nature used or located on any part of the Site, the Project or the Improvements, together with all venetian blinds, shades, draperies, drapery and curtain rods, brackets, bulbs, cleaning apparatus, mirrors, lamps, ornaments, cooking apparatus and equipment, china, flatware, dishes, utensils, glassware, ranges and ovens, garbage disposals, dishwashers, mantels, and any and all such property which is at any time installed in, affixed to or placed upon the Site, the Project or the Improvements. "FF&E FACILITY" means any credit facility, vendor financing, mortgage financing, purchase money obligation, capital lease or similar arrangement incurred to finance or refinance construction, purchase or lease of furniture, fixtures (including Specified FF&E) or other real or personal property acquired after the Issuance Date pursuant to subsections 7.1(vii), (x), (xiv) or (xviii) of the Bank Credit Agreement and subsections 4.09(g), (j) and (p) of the Mortgage Notes Indenture. "GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau, commission, department, office, public entity or instrumentality of any nature whatsoever of the United States federal or foreign government, any state, province or any city or other political subdivision or otherwise, whether now or hereafter in existence, or any officer or official thereof, including, without limitation, any Gaming Authority. "HAZARDOUS MATERIALS" means: (a) any chemical, material or substance at any time defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," acutely hazardous waste," "radioactive waste," "biohazardous waste," "pollutant," "toxic pollutant," "contaminant," "restricted hazardous waste," "infectious waste," "toxic substances," or any other term or expression intended to define, list or classify substances by reason of properties harmful to health, safety or the indoor or outdoor environment (including harmful properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or 4 Exhibit 4.4 words of similar import under any applicable Environmental Laws); (b) any oil, petroleum, petroleum fraction or petroleum derived substance; (c) any drilling fluids, produced waters and other wastes associated with the exploration, development or production of crude oil, natural gas or geothermal resources; (d) any flammable substances or explosives; (e) any radioactive materials; (f) any asbestos-containing materials; (g) urea formaldehyde foam insulation; (h) electrical equipment which contains any oil or dielectric fluid containing polychlorinated biphenyls; (i) pesticides; and (j) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Trustor 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 COMPONENT" means, collectively (a) the Central Plant and (b) the "Other Facilities," as defined in the HVAC Services Agreement. "HVAC GROUND LEASE" means the Ground Lease made effective as of November 14, 1997, between VCR and the HVAC Provider. "HVAC PROVIDER" means Sempra Energy Solutions, a California corporation (successor to Atlantic-Pacific, Las Vegas LLC, a Delaware limited liability company) or its permitted successors under the HVAC Services Agreement. "IMPOSITION" means any taxes, assessments, water rates, sewer rates, maintenance charges, other impositions by any Governmental Authority and other charges now or hereafter levied or assessed or imposed against the Trust Estate or any part thereof, and any amount payable with respect thereto under the Cooperation Agreement. "IMPROVEMENTS" means (1) all the buildings, structures, facilities and improvements of every nature whatsoever now or hereafter situated on the Site or the Project and (2) all fixtures, machinery, appliances, goods, building or other materials, equipment, including, without limitation, all gaming equipment and devices, and all machinery, equipment, engines, appliances and fixtures for generating or distributing air, water, heat, electricity, light, fuel or refrigeration, or for ventilating or sanitary purposes, or for the exclusion of vermin or insects, or for the removal of dust, refuse or garbage; all wall-beds, wall-safes, built-in furniture and installations, shelving, lockers, partitions, doorstops, vaults, motors, elevators, dumb-waiters, awnings, window shades, venetian blinds, light fixtures, fire hoses and brackets and boxes for the same, fire sprinklers, alarm, surveillance and security systems, computers, drapes, drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets and carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water closets, laundry equipment, washers, dryers, ice-boxes and heating units; all kitchen 5 Exhibit 4.4 and restaurant equipment, including, but not limited to, silverware, dishes, menus, cooking utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals, water heaters, incinerators, furniture, fixtures and furnishings, communication systems and equipment; all cocktail lounge supplies, including, but not limited to, bars, glassware, bottles and tables used in connection with the Site, the Project or the Improvements; all chaise lounges, hot tubs, swimming pool heaters and equipment and all other recreational equipment (computerized and otherwise), beauty and barber equipment, and maintenance supplies used in connection with the Site, the Project or the Improvements; all amusement rides and attractions attached to the Site, the Project or the Improvements, all specifically designed installations and furnishings, and all furniture, furnishings and personal property of every nature whatsoever now or hereafter owned or leased by Trustor or in which Trustor has any rights or interest and located in or on, or attached to, or used or intended to be used or which are now or may hereafter be appropriated for use on or in connection with the operation of the Site, the Project or the Improvements or any personal property encumbered hereby or in connection with any construction being conducted or which may be conducted thereon, and all extensions, additions, accessions, improvements, betterments, renewals, substitutions and replacements to any of the foregoing, and all of the right, title and interest of Trustor in and to any such property, which, to the fullest extent permitted by Legal Requirements, shall be conclusively deemed fixtures and improvements and a part of the Trust Estate hereby encumbered. "INCOME" means all Rents, security or similar deposits, revenues, issues, royalties, earnings, products or Proceeds, profits, income, including, without limitation, all rights to payment for hotel room occupancy by hotel guests, which includes any payment or monies received or to be received in whole or in part, whether actual or deemed to be, for the sale of services or products in connection with such occupancy, advance registration fees by hotel guests, tour or junket proceeds and deposits, deposits for convention and/or party reservations, and other benefits from the Trust Estate. "INSOLVENT" means with respect to any Person, that such Person shall be deemed to be insolvent if such Person shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due and payable and a period of thirty (30) days shall have elapsed. "INTANGIBLE COLLATERAL" means: (a) the rights to use all names and all derivations thereof now or hereafter used by Trustor in connection with the Site, the Project or the Improvements, including, without limitation, the names "Venetian" and "Sands," including any variations thereon, together with the goodwill associated therewith, and all names, logos, and designs used by Trustor, or in connection with the Site, the Project or the Improvements or in which Trustor has rights, with the exclusive right to use such names, logos and designs wherever they are now or hereafter used in connection with the Site, the Project or the Improvements (or in connection with the marketing thereof together with the "SECC Land" (as defined in the Cooperation Agreement) in accordance with the terms of the Cooperation Agreement), and any and all other trade names, trademarks or service marks, whether or not registered, now or hereafter used in the operation of the Site, the Project or the Improvements, including, without limitation, any interest as a lessee, licensee or franchisee, and, in each case, together with the goodwill associated therewith; (b) subject to the absolute assignment contained herein, the Rents; (c) any and all books, records, customer lists, concession agreements, supply or service contracts, licenses, permits, approvals by Governmental Authorities (to the extent Legal Requirements permit or do 6 Exhibit 4.4 not expressly prohibit the pledge of such contracts, licenses, permits or approvals), signs, goodwill, casino and hotel credit and charge records, supplier lists, checking accounts, safe deposit boxes (excluding the contents of such deposit boxes owned by Persons other than Trustor), cash, instruments, chattel papers, including inter-company notes and pledges, documents, unearned premiums, deposits, refunds, including, but not limited to, income tax refunds, prepaid expenses, rebates, tax and insurance escrow and impound accounts, if any, actions and rights in action, and all other claims, including, without limitation, condemnation awards and insurance proceeds, and all other contract rights and general intangibles resulting from or used in connection with the operation and occupancy of the Trust Estate and the Project and in which Trustor now or hereafter has rights; and (d) general intangibles, vacation license resort agreements or other time share license or right to use agreements, including, without limitation, all rents, issues, profits, income and maintenance fees resulting therefrom, whether any of the foregoing is now owned or hereafter acquired. "INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement, dated as of even date herewith, by and among Scotiabank, as the administrative agent acting on behalf of itself and the lenders party to the Bank Credit Agreement, Beneficiary, and Scotiabank, as intercreditor agent thereunder and under the Related Collateral Agreements (as such term is defined in the Intercreditor Agreement). "LAND" means the real property situated in the County of Clark, State of Nevada, more specifically described in SCHEDULE A attached hereto and incorporated herein by reference, including any after acquired title thereto. "LEASED PREMISES" means, as the context may require, the Casino Leased Premises and/or the Phase I-A Leased Premises. "LEGAL REQUIREMENTS" means all applicable restrictive covenants, applicable zoning and subdivision ordinances and building codes, all applicable health and Environmental Laws and regulations, all applicable gaming laws and regulations, and all other applicable laws, ordinances, rules, regulations, judicial decisions, administrative orders, and other requirements of any Governmental Authority having jurisdiction over Trustor, the Trust Estate and/or any Affiliate of Trustor, in effect either at the time of execution of this Deed of Trust or at any time during the term hereof, including, without limitation, all Nevada Gaming Laws. "LUTECE MASTER LEASE" means the Master Lease for Additional Lutece Space, dated as of May 20, 1999, between VCR and the New Mall Subsidiary or its predecessor-in-interest relating to certain space that is subleased by Las Vegas Lutece Corp. "NRS" means the Nevada Revised Statutes as in effect from time to time. "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. 7 Exhibit 4.4 "NOTES" means, collectively, those certain 11.00% Mortgage Note(s) due 2010 issued pursuant to the Mortgage Notes Indenture, as the same may be amended or replaced from time to time in accordance with its terms. "OBLIGATIONS" means the payment and performance of each covenant and agreement of Trustor contained in the Notes, the Mortgage Notes Indenture, this Deed of Trust and the other Mortgage Notes Indenture Security Documents. "PERSON" means any individual, corporation, partnership, limited liability company or partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PERSONAL PROPERTY" has the meaning set forth in SECTION 1.14 hereof. "PHASE I-A AIRSPACE" means the airspace leased from Lido Casino Resort, LLC, a Nevada limited liability company ("LIDO CASINO RESORT") by VCR pursuant to the Phase I-A Lease. "PHASE I-A LEASE" means that certain Phase I-A Lease between Lido Casino Resort, as lessor, and VCR, as lessee, dated as of even date herewith, for the Phase I-A Leased Premises. "PHASE I-A LEASED PREMISES" means the real property situated in the County of Clark, State of Nevada described in the Phase I-A Lease and more specifically described in SCHEDULE C attached hereto and incorporated herein by reference. "PHASE I-A PROJECT" means the construction of an expansion of the Casino Resort consisting of an approximately 1,000 room hotel tower on top of the Casino Resort's existing parking garage, an approximately 1,000 parking space expansion to the existing parking garage and approximately 150,000 square feet of additional meeting and conference space. "PHASE I-A PROJECT PLANS AND SPECIFICATIONS" means all plans, specifications, design documents, schematic drawings and related items for the design, architecture and construction of the Phase I-A Project which have been approved (if and when required) by the applicable Governmental Authority as the same may be (a) finalized in a manner that reflects a natural evolution of their status on the Issuance Date and in a manner consistent with the standards set forth on EXHIBIT I to the Bank Credit Agreement and (b) amended in accordance with Legal Requirements and with the reasonable consent of Tishman Construction Corporation of Nevada, or any other person designated from time to time by Scotiabank, acting in its capacity as the Administrative Agent under the Bank Credit Agreement, to serve as the Construction Consultant, PROVIDED that no consent shall be required for any amendment consistent with the standards set forth on EXHIBIT I to the Bank Credit Agreement. "PHASE I HOTEL AND CASINO PROJECT" means the Venetian Casino Resort consisting of 3,036 suit hotel and a gaming facility of approximately 116,000 square feet with related heating, ventilation and air conditioning and power station facilities located at 3355 Las Vegas Boulevard South, Clark County, Nevada, but excluding the mall component thereof. 8 Exhibit 4.4 "PROCEEDS" has the meaning assigned to it under the UCC and, in any event, shall include, but not be limited to: (i) any and all proceeds of any insurance (including, without limitation, property casualty and title insurance), indemnity, warranty or guaranty payable from time to time with respect to all or any portion of the Trust Estate; (ii) any and all proceeds in the form of accounts, security deposits, tax escrows (if any), down payments (to the extent Legal Requirements permit the same to be pledged), collections, contract rights, documents, instruments, chattel paper, Liens and security instruments, guarantees or general intangibles relating in whole or in part to the Site, the Project or the Improvements and all rights and remedies of whatever kind or nature Trustor or any Restricted Subsidiaries may hold or acquire for the purpose of securing or enforcing any obligation due Trustor or any Restricted Subsidiaries thereunder; (iii) any and all payments in any form whatsoever made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Trust Estate by any Governmental Authority; (iv) subject to the absolute assignment contained herein, the Rents or other benefits arising out of, in connection with or pursuant to the Casino Lease or any Space Lease of the Trust Estate; and (v) any and all other amounts from time to time paid or payable in connection with any of the Trust Estate; PROVIDED, HOWEVER, that neither the Trustor nor any Restricted Subsidiaries are authorized to sell, transfer, convey, mortgage, pledge, grant rights in or otherwise dispose of any of the Trust Estate unless such disposition is permitted under the Mortgage Notes Indenture. "PROJECT" means the Phase I Hotel and Casino Project and the Phase I-A Project. "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. "RENTS" means all rents, room revenues, Income, receipts, issues, profits, revenues and maintenance fees, room, food and beverage revenues, license and concession fees, Proceeds and other benefits to which Trustor may now or hereafter be entitled from the Site, the Project or the Improvements therein or thereon, as applicable, or any property encumbered hereby or any business or other activity conducted by Trustor or any Restricted Subsidiaries at the Site, the Project or the Improvements. "SITE" means the Land, the Phase I-A Airspace, the Easements and, if the context so requires, the Casino Leased Premises. "SPACE LEASES" means any and all leases (excluding the Subject Leases), subleases, lettings, licenses, concessions, operating agreements, management agreements, and all other agreements affecting all or any portion of the Trust Estate that Trustor or any Restricted Subsidiaries has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by, now or in the future, that give any Person the right to conduct its business on, or otherwise use, operate or occupy, all or any portion of the Site, the Project or the Improvements, including, without limitation, the right to use or occupy space for kiosk(s) or vendor cart(s), and all rights (if any) of Trustor or any Restricted Subsidiaries thereto or therefrom, and any leases, 9 Exhibit 4.4 agreements or arrangements permitting anyone to enter upon or use all or any portion of the Trust Estate to extract or remove natural resources of any kind, together with all amendments, extensions, and renewals of the foregoing entered into in compliance with the Mortgage Notes Indenture, together with all rental, occupancy, service, maintenance or any other similar agreements pertaining to use or occupation of, or the rendering of services at the Site, the Project, or the Improvements or (in each case) any part thereof. "SPACE LESSEE(S)" means any and all tenants, licensees, or other grantees of the Space Leases and any and all guarantors, sureties, endorsers or others having primary or secondary liability with respect to such Space Leases. "SUBJECT LEASES" means the Casino Lease and the Phase I-A Lease. "TANGIBLE COLLATERAL" means all personal property, goods, equipment, supplies, building and other materials of every nature whatsoever and all other tangible personal property constituting a part or portion of the Project and/or used in the operation of the hotel, casino, restaurants, stores, parking facilities, observation tower and all other Improvements on the Site or the Project, including, but not limited to, communication systems, visual and electronic surveillance systems and transportation systems and not constituting a part of the real property subject to the Lien of this Deed of Trust and including all property and materials stored therein in which Trustor or any Restricted Subsidiaries has an interest and all tools, utensils, food and beverages, liquor, uniforms, linens, housekeeping and maintenance supplies, vehicles, fuel, advertising and promotional material, blueprints, surveys, plans and other documents relating to the Site, the Project or the Improvements, and all construction materials and all furnishings, fixtures and equipment, including, but not limited to, all FF&E and all equipment and devices which are or are to be installed and used in connection with the operation of the Site, the Project or the Improvements, those items of furniture, fixtures and equipment which are to be purchased or leased by Trustor or any Restricted Subsidiaries, machinery and any other items of personal property in which Trustor or any Restricted Subsidiaries now or hereafter own or acquire an interest or right, and which are used or useful in the construction, operation, use and occupancy of the Site, the Project or the Improvements and all present and future right and interest of Trustor or any Restricted Subsidiaries in and to any casino operator's agreement (to the extent the same may be pledged under Nevada Gaming Laws), license agreement or sublease agreement used in connection with the Site, the Project or the Improvements. "TITLE INSURER" means First American Title Insurance Company, a California corporation. "TRUST ESTATE" means all of the property described in Granting Clauses (A) through (P) below, inclusive, and each item of property therein described; PROVIDED, HOWEVER, that such term shall not include the property described in Granting Clause (Q) below. "UCC" means the Uniform Commercial Code in effect in the State of Nevada from time to time, NRS chapters 104 and 104A. The following terms shall have the meaning assigned to such terms in the Mortgage Notes Indenture: 10 Exhibit 4.4 AFFILIATE ASSET SALE BANKRUPTCY LAW BUSINESS DAY COOPERATION AGREEMENT GAMING AUTHORITY GAMING LICENSE HVAC SERVICES AGREEMENT ISSUANCE DATE LEASE TRANSACTION LIEN NET LOSS PROCEEDS NOTE GUARANTOR PERMITTED LIENS PERSON PHASE II RESORT RESTRICTED SUBSIDIARY SPECIFIED FF&E SUBSIDIARY The following terms shall have the meaning assigned to such terms in the Intercreditor Agreement: BANK DEED OF TRUST FINANCING AGREEMENTS INDEBTEDNESS MORTGAGE NOTE HOLDER(S) MORTGAGE NOTES INDENTURE SECURITY DOCUMENTS SECURITY AGREEMENT SECURITY DOCUMENTS In addition, any capitalized terms used in this Deed of Trust which are not otherwise defined herein shall have the meaning ascribed to such terms in the Mortgage Notes Indenture. W I T N E S E T H: IN CONSIDERATION OF TEN DOLLARS AND OTHER GOOD AND VALUABLE CONSIDERATION; THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, AND FOR THE PURPOSE OF SECURING in favor of Beneficiary (1) the due and punctual payment of the indebtedness evidenced by the Notes, (2) the performance of the Obligations and of each covenant and agreement of Trustor and the Restricted Subsidiaries contained in the Mortgage Notes Indenture, herein and in the other Mortgage Notes Indenture Security Documents, (3) the payment of such additional loans or advances as hereafter may be made to either Trustor (individually or jointly and severally with any other Person), its successors or assigns, or any Restricted Subsidiaries when evidenced by a promissory note or notes 11 Exhibit 4.4 reciting that they are secured by this Deed of Trust; PROVIDED, HOWEVER, that any and all future advances by Beneficiary or the Mortgage Note Holders to either Trustor or any Restricted Subsidiaries made for the improvement, protection or preservation of the Trust Estate, together with interest at the rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture, shall be automatically secured hereby unless such a note or instrument evidencing such advances specifically recites that it is not intended to be secured hereby and (4) the payment of all sums expended or advanced by Beneficiary under or pursuant to the terms hereof or to protect the security hereof (including Protective Advances as such term is defined in SECTION 4.2 hereof), together with interest thereon as herein provided, Trustor, in consideration of the premises, and for the purposes aforesaid, does hereby ASSIGN, BARGAIN, CONVEY, PLEDGE, RELEASE, HYPOTHECATE, WARRANT, AND TRANSFER WITH POWER OF SALE UNTO TRUSTEE IN TRUST FOR THE BENEFIT OF BENEFICIARY, AND THE MORTGAGE NOTE HOLDER(S) each of the following: (A) Trustor's interest in the Site and the leasehold estates created pursuant to the Casino Lease (to the extent permitting by, or not prohibited by, Nevada Gaming Laws and other Legal Requirements) and the Phase I-A Lease; (B) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to the Project and the Improvements; (C) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to all Appurtenant Rights; (D) TOGETHER WITH all the estate, right, title and interests of Trustor of, in and to the Tangible Collateral to the extent permitted by, or not prohibited by, Nevada Gaming Laws and other applicable Legal Requirements; (E) TOGETHER WITH all the estate, right, title and interests of Trustor of, in and to the Intangible Collateral to the extent permitted by, or not prohibited by, Nevada Gaming Laws and other applicable law; (F) TOGETHER WITH (i) all the estate, right, title and interest of Trustor of, in and to all judgments and decrees, insurance proceeds, awards of damages and settlements hereafter made resulting from condemnation proceedings or the taking of any of the property described in Granting Clauses (A), (B), (C), (D), (E), (J), (K) and (L) hereof or any part thereof under the power of eminent domain, or for any damage (whether caused by such taking or otherwise) to the property described in Granting Clauses (A), (B), (C), (D), (E), (J), (K) and (L) hereof or any part thereof, or to any Appurtenant Rights thereto, and Beneficiary is hereby authorized to collect and receive said awards and proceeds and to give proper receipts and acquittances therefor, and (subject to the terms of the Mortgage Notes Indenture) to apply the same to the extent constituting Net Loss Proceeds toward the payment of the Obligations and other sums secured hereby, notwithstanding the fact that the amount owing thereon may not then be due and payable, (ii) all proceeds of any sales or other dispositions of the property or rights described in Granting Clauses (A), (B), (C), (D), (E), (J), (K) and (L) hereof or any part thereof whether voluntary or involuntary, PROVIDED, HOWEVER, that the foregoing shall not be deemed to permit any Asset Sale except as specifically permitted in the Mortgage Notes Indenture and (iii) whether arising from any 12 Exhibit 4.4 voluntary or involuntary disposition of the property described in Granting Clauses (A), (B), (C), (D), (E), (J), (K) and (L), all Proceeds, products, replacements, additions, substitutions, renewals and accessions, remainders, reversions and after-acquired interest in, of and to such property; (G) TOGETHER WITH the absolute assignment of any Space Leases or any part thereof that Trustor has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by, now or in the future, together with all of the following (including all "Cash Collateral" within the meaning of the Bankruptcy Law) arising from the Space Leases: (a) Rents and Income (subject, however, to the aforesaid absolute assignment to Trustee for the benefit of Beneficiary and the revocable license hereinbelow granted to Trustor to collect the Rents), (b) all guarantees, letters of credit, security deposits, collateral, cash deposits, and other credit enhancement documents, arrangements and other measures with respect to the Space Leases and (c) all of Trustor's right, title, and interest under the Space Leases, including the following: (i) the right to receive and collect the Rents from the lessee, sublessee or licensee, or their successor(s), under any Space Lease(s) and (ii) the right to enforce against any tenants thereunder and otherwise any and all remedies under the Space Leases, including Trustor's right to evict from possession any tenant thereunder or to retain, apply, use, draw upon, pursue, enforce or realize upon any guaranty of any Space Lease; to terminate, modify or amend the Space Leases; to obtain possession of, use, or occupy, any of the real or personal property subject to the Space Leases; and to enforce or exercise, whether at law or in equity or by any other means, all provisions of the Space Leases and all obligations of the tenants thereunder based upon (A) any breach by such tenant under the applicable Space Lease (including any claim that Trustor may have by reason of a termination, rejection or disaffirmance of such Space Lease pursuant to any Bankruptcy Law) and (B) the use and occupancy of the premises demised, whether or not pursuant to the applicable Space Lease (including any claim for use and occupancy arising under landlord-tenant law of the State of Nevada or any Bankruptcy Law). A revocable license is hereby granted to Trustor, so long as no Event of Default has occurred and is continuing hereunder, to collect and use the Rents, as they become due and payable, but not more than one (1) month in advance thereof. Upon the occurrence of an Event of Default, the permission hereby granted to Trustor to collect the Rents shall automatically be revoked without notice until such time as such Event of Default is cured; PROVIDED, HOWEVER, to the extent the holders of a majority in aggregate principal amount of the then outstanding Notes rescind and annul an acceleration of the Obligations in accordance with and as permitted by Section 6.02 of the Mortgage Notes Indenture. such revocable license shall be reinstated. Beneficiary shall have the right, at any time and from time to time, to notify any Space Lessee of the rights of Beneficiary as provided by this section; Notwithstanding anything to the contrary contained herein, the foregoing provisions of this Granting Clause (G) shall not constitute an assignment for purposes of security but shall (to the extent permitted by, or not prohibited by, the Nevada Gaming Laws and other applicable Legal Requirements) constitute an absolute and present assignment of the Rents to Beneficiary, subject, however, to the conditional license given to Trustor to collect and use the Rents as hereinabove provided; and the existence or exercise of such right of Trustor shall not operate to subordinate this assignment to any subsequent assignment, in whole or in part, by Trustor; (H) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to any and all Phase I-A Project Plans and Specifications and all maps, plans, specifications, 13 Exhibit 4.4 surveys, studies, tests, reports, data and drawings relating to the development of the Site, the Project or the Improvements, including, without limitation, all marketing plans, feasibility studies, soils tests, design contracts and all contracts and agreements of Trustor relating thereto, including, without limitation, architectural, structural, mechanical and engineering plans and specifications, studies, data and drawings prepared for or relating to the development of the Site, the Project or the Improvements or the construction, renovation or restoration of any of the Improvements or the extraction of minerals, sand, gravel or other valuable substances from the Site, the Project or the Improvements and purchase contracts or any agreement granting Trustor a right to acquire any land situated within Clark County, Nevada; (I) TOGETHER WITH, to the extent permitted by, or not permitted by, Nevada Gaming Laws and other applicable Legal Requirements, all the estate, right, title and interest of Trustor of, in and to any and all licenses, permits, variances, special permits, franchises, certificates, rulings, certifications, validations, exemptions, filings, registrations, authorizations, consents, approvals, waivers, orders, rights and agreements (including, without limitation, options, option rights, contract rights now or hereafter obtained by Trustor from any Governmental Authority having or claiming jurisdiction over the Site, the Project, the Improvements or any other element of the Trust Estate or providing access thereto, or the operation of any business on, at, or from the Site, the Project or the Improvements, including, without limitation, any liquor or Gaming Licenses (except for any registrations, licenses, findings of suitability or approvals issued by the Gaming Authorities or any other liquor or gaming licenses which are non-assignable); PROVIDED that upon an Event of Default hereunder or under the Mortgage Notes Indenture, if Beneficiary is not qualified under the Nevada Gaming Laws to hold such Gaming Licenses, then Beneficiary may designate an appropriately qualified third party to which an assignment of such Gaming Licenses can be made in compliance with the Nevada Gaming Laws; (J) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to all water stock, water permits and other water rights relating to the Site, the Project or the Improvements; (K) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to all oil and gas and other mineral rights, if any, in or pertaining to the Site, the Project or the Improvements and all royalty, leasehold and other rights of Trustor pertaining thereto; (L) TOGETHER WITH any and all monies and other property, real or personal, which may from time to time be subjected to the Lien hereof by Trustor or by anyone on its behalf or with its consent, or which may come into the possession or be subject to the control of Trustee or Beneficiary pursuant to this Deed of Trust or any other Mortgage Notes Indenture Security Document, including, without limitation, any Protective Advances (as defined in SECTION 4.2 hereof) under this Deed of Trust; and all of Trustor's right, title and interest in and to all extensions, improvements, betterments, renewals, substitutes for and replacements of, and all additions, accessions and appurtenances to, any of the foregoing that Trustor may subsequently acquire or obtain by any means, or construct, assemble or otherwise place on any of the Trust Estate, and all conversions of any of the foregoing; it being the intention of Trustor that all property hereafter acquired by Trustor and required by any this Deed of Trust or any other Mortgage Notes Indenture Security Document to be subject to the Lien of this Deed of Trust or 14 Exhibit 4.4 intended so to be shall forthwith upon the acquisition thereof by Trustor be subject to the Lien of this Deed of Trust as if such property were now owned by Trustor and were specifically described in this Deed of Trust and granted hereby or pursuant hereto, and Trustee and Beneficiary are hereby authorized, subject to Nevada Gaming Laws and other applicable Legal Requirements, to receive any and all such property as and for additional security for the obligations secured or intended to be secured hereby. Trustor agrees to take any action as may reasonably be necessary to evidence and perfect such Liens or security interests, including, without limitation, the execution of any documents necessary to evidence and perfect such Liens or security interests; (M) TOGETHER WITH, to the extent permitted by applicable Legal Requirements, any and all Accounts Receivable and all royalties, earnings, Income, proceeds, products, Rents, revenues, reversions, remainders, issues, profits, avails, production payments, and other benefits directly or indirectly derived or otherwise arising from any of the foregoing, all of which are hereby assigned to Beneficiary, who, except as otherwise expressly provided in this Deed of Trust (including the provisions of SECTION 1.15 hereof), is authorized to collect and receive the same, to give receipts and acquittances therefor and to apply the same to the Obligations secured hereunder, whether or not then due and payable; (N) TOGETHER WITH Proceeds of the foregoing property described in Granting Clauses (A) through (M); (O) TOGETHER WITH Trustor's rights further to assign, sell, lease, encumber or otherwise transfer or dispose of the property described in Granting Clauses (A) through (N) inclusive, above, for debt or otherwise; (P) TOGETHER WITH any right of Trustor to elect to terminate the Subject Leases or remain in possession of the Leased Premises pursuant to 11 U.S.C. section 365(h)(1) or any similar provision of applicable law and any possessory rights of Trustor in the Leased Premises pursuant to 11 U.S.C. section 365(h)(2) or any other similar provision of applicable law; and (Q) EXPRESSLY EXCLUDING, HOWEVER, (i) the HVAC Component, (ii) any assets which if pledged, hypothecated or given as collateral security would require Trustor to seek approval of any Gaming Authority of the pledge, hypothecation or collateralization, or require Beneficiary or any Person to be licensed, qualified or found suitable by an applicable Gaming Authority, (iii) any contracts, contract rights, permits or general intangibles, which by their terms or the operation of law prohibit or do not allow assignment or require any consent for assignment which has not been obtained or which would be breached by virtue of a security interest being granted therein and (iv) any property or assets subject to a Lien permitted under clauses (2), (3) or (12)(a) of the definition of Permitted Liens contained in the Mortgage Notes Indenture. Trustor, for itself and its successors and assigns, covenants and agrees to and with Trustee that, at the time or times of the execution of and delivery of these presents or any instrument of further assurance with respect thereto, Trustor has good right, full power and lawful authority to assign, grant, convey, warrant, transfer, bargain or sell its interests in the Trust Estate in the manner and form as aforesaid, and that the Trust Estate is free and clear of all Liens 15 Exhibit 4.4 whatsoever, except Permitted Liens, and Trustor shall warrant and forever defend the Trust Estate in the quiet and peaceable possession of Trustee and its successors and assigns against all and every Person lawfully or otherwise claiming or to claim the whole or any part thereof, subject to Permitted Liens. Trustor agrees that any greater title to the Trust Estate hereafter acquired by Trustor during the term hereof shall be automatically subject hereto. ARTICLE 1 COVENANTS OF TRUSTOR The Mortgage Note Holder(s) have been induced to purchase the Notes on the basis of the following material covenants, all agreed to by Trustor: 1.1 PERFORMANCE OF FINANCING AGREEMENTS. Trustor shall perform, observe and comply and shall cause each Note Guarantor to perform, observe and comply with each and every provision hereof and of the other Mortgage Notes Indenture Security Documents and shall promptly pay, when payment shall become due, the principal on the Notes with interest thereon, the other Obligations and all other sums required to be paid by Trustor hereunder and thereunder, as the case may be. 1.2 GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES. Trustor represents, covenants and warrants that: (a) Trustor has good and marketable title to an indefeasible fee estate in the Site (other than the Leased Premises) and a valid leasehold interest in the Leased Premises, free and clear of all Liens except Permitted Liens, and that it has the right to hold, occupy and enjoy its interest in the Trust Estate, and has good right, full power and lawful authority to subject the Trust Estate to the Lien of this Deed of Trust and pledge the same as provided herein and Beneficiary may at all times peaceably and quietly enter upon, hold, occupy and enjoy the entire Trust Estate in accordance with the terms hereof; (b) neither Trustor nor any of its Subsidiaries is Insolvent and no bankruptcy or insolvency proceedings are pending or contemplated by or, to the best of Trustor's knowledge, threatened against Trustor or any of its Subsidiaries; (c) all costs arising from construction of any Improvements, the performance of any labor and the purchase of all Tangible Collateral and the Improvements have been or shall be paid when due (subject to the provisions of the Mortgage Notes Indenture and this Deed of Trust); (d) the Site and the Leased Premises (other than the Phase I-A Airspace) each have frontage on, and direct access for ingress and egress to dedicated street(s); (e) Trustor shall at all times conduct and operate the Trust Estate in a manner so as not to lose, or permit any Restricted Subsidiary to lose, the right to conduct gaming activities at the Project; (f) no material part of the Trust Estate has been damaged, destroyed, condemned or abandoned, other than those portions of the Trust Estate that have been the subject of condemnation proceedings that have resulted in the conveyance of such portion of the Trust Estate to the Trustor; (g) no part of the Trust Estate is the subject of condemnation proceedings, and Trustor has no knowledge of any contemplated or pending condemnation proceeding with respect to any portion of the Trust Estate other than those proceedings set forth in SCHEDULE D attached hereto; and (h) Trustor acknowledges and agrees that it presently uses, and has in the past used, certain trade or fictitious names in connection with the operation of the business at the Trust Estate, including the names "Venetian" and "Sands" (all of the foregoing, collectively, the "ENUMERATED NAMES"). For all purposes of 16 Exhibit 4.4 this Deed of Trust it shall be deemed that the term "Trustor" includes, in addition to "Venetian Casino Resort, LLC" and "Las Vegas Sands, Inc." all trade or fictitious names that VCR, LVSI or any successor or assign thereof now or hereafter uses, or has in the past used with respect to the Site, the Project or the Improvements, including, without limitation, the Enumerated Names, with the same force and effect as if this Deed of Trust had been executed in all such names (in addition to "Venetian Casino Resort, LLC" and "Las Vegas Sands, Inc."). 1.3 LEASEHOLD ESTATES. Trustor represents, covenants and warrants: (a) that the Subject Leases are in full force and effect and unmodified; (b) Trustor will defend the leasehold estate under each Subject Lease for the entire remainder of the term set forth in each of the said Subject Leases against all and every Person or Persons lawfully claiming, or who may claim the same or any part thereof, subject to the payment of the rents in the Subject Leases reserved and subject to the performance and observance of all of the terms, covenants, conditions and warranties thereof; and (c) that there is no uncured default under any Subject Lease or in the performance of any of the terms, covenants, conditions or warranties thereof on the part of the lessor or the lessee to be observed and performed and that no state of facts exist under a Subject Lease which, with the lapse of time or giving of notice or both would constitute a default thereunder. 1.4 PAYMENT OF SUBJECT LEASES EXPENSES. The Trustor shall pay or cause to be paid on or prior to the date due all rents, additional rents and other charges and Impositions payable by the lessor or the lessee under the Subject Leases for which provision has not been made hereinbefore, when and as often as the same shall become due and payable and the pro rata share, if any, of all amounts payable under the Cooperation Agreement allocable to the Site, the Project and the Improvements. Trustor will in every case deliver, or cause to be delivered, proper receipts for any such item so paid and will within ten (10) days after the time when such payment shall be due and payable deliver to Beneficiary, a copy of the receipts for any such payments. 17 Exhibit 4.4 1.5 TRUSTOR'S COVENANTS WITH RESPECT TO SUBJECT LEASES. (a) Trustor shall at all times promptly and faithfully keep and perform, or cause to be kept and performed, all the covenants and conditions contained in the Subject Leases to be kept and performed by the lessor or the lessee under the Subject Leases and in all respects conform to and comply with the terms and conditions of the Subject Leases. Trustor shall, within ten days after written demand from Beneficiary, deliver to Beneficiary proof of payment of all items that are required to be paid by Trustor under the Subject Leases, including, without limitation, rent, taxes, operating expenses and other charges. Trustor shall promptly deliver to Beneficiary copies of all notices given with respect to or which affect the Subject Leases including pleadings or notices of default given under the Subject Leases. Trustor further covenants that it shall not do or permit anything to occur or fail to occur which will impair or tend to impair the security of this Deed of Trust or will be grounds for declaring a forfeiture or termination of either Subject Lease, and upon any such failure as aforesaid, Trustor shall be subject to all of the rights and remedies granted Beneficiary in this Deed of Trust. (b) Except as otherwise permitted in the Mortgage Notes Indenture, Trustor shall not modify, extend or in any way alter the terms of the Subject Leases or cancel or surrender said Subject Leases or reject the Subject Leases in a case pending under the Bankruptcy Code, or waive, execute, condone or in anyway release or discharge the lessor thereunder of or from the obligations, covenants, conditions and agreements by said lessor to be done and performed; and Trustor does expressly release, relinquish and surrender unto Beneficiary all of its rights, power and authority to cancel, surrender, amend, modify or alter in any way the terms and provisions of the Subject Leases and any attempt on the part of Trustor to exercise any such right without the written approval and consent of Beneficiary thereto being first had and obtained shall constitute an Event of Default under the terms hereof and the other Mortgage Notes Indenture Security Documents and all Obligations and other sums secured hereby shall, at the option of Beneficiary, become due and payable forthwith. If Trustor becomes a debtor under the Bankruptcy Code, Trustor shall assume and assign the Subject Leases to Beneficiary, and it further agrees that it shall not object to any request by Beneficiary that the Subject Leases not be rejected, or that Beneficiary be authorized to assume Trustor's rights under the Lease. (c) The Notes and all other Obligations of Trustor to Beneficiary under the Mortgage Notes Indenture Security Documents shall immediately become due and payable at the option of Beneficiary, if Trustor fails to give Beneficiary immediate notice of any default under the Subject Leases or of the receipt by it of any notice of default from the lessor thereunder, or if Trustor fails to furnish to Beneficiary immediately any and all information which it may request concerning the performance by Trustor of the covenants of the Subject Leases, or if Trustor fails to permit Beneficiary or its representatives at all reasonable times to make investigation or examination concerning the performance by Trustor of the covenants of the Subject Leases, or if Trustor fails to permit Beneficiary or its representatives at all reasonable time to make investigation or examination concerning such performance. Trustor shall deliver to Beneficiary an original executed copy of each Subject Lease, an estoppel certificate from the Lessor within ten (10) days of request by Beneficiary and in such form and content as shall be 18 Exhibit 4.4 satisfactory to Beneficiary, as well as any and all documentary evidence received by it showing compliance by Trustor with the provisions of the Subject Leases. (d) Trustor does hereby authorize and irrevocably appoint and constitute Beneficiary as its true and lawful attorney-in-fact, which appointment is coupled with an interest, in its name, place and stead, to take any and all actions deemed necessary or desirable by Beneficiary to perform and comply with all the obligations of Trustor under the Subject Leases, and to do and take upon the occurrence and during continuation of an Event of Default, but without any obligation so to do or take, any action which Beneficiary deems reasonably necessary to prevent or cure any default by Trustor under the Subject Leases, to enter into and upon the Site, the Project or the Improvements or any part thereof as provided in the Mortgage Notes Indenture Security Documents in order to prevent or cure any default of Trustor pursuant thereto, to the end that the rights of Trustor in and to the leasehold estate created by the Subject Leases shall be kept free from default. (e) In the event of any failure by Trustor to perform or cause the performance of any covenant on the part of lessor or lessee to be observed and performed under the Subject Leases, the performance by Beneficiary on behalf of Trustor of the applicable Subject Lease covenant shall not remove or waive, as between Trustor and Beneficiary, the corresponding Event of Default under the terms hereof and any amount so advanced by Beneficiary or any costs incurred in connection therewith, with interest thereon at the interest rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture, shall constitute additional Obligations secured hereby and be immediately due and payable. (f) To the extent permitted by law, the price payable by Trustor, or by any other party so entitled, in the exercise of the right of redemption, if any, shall include all rents paid and other sums advanced by Beneficiary, on behalf of Trustor, as lessee under the Subject Leases. (g) Trustor shall use all reasonable efforts to enforce the obligations of the lessor under the Subject Leases in a commercially reasonable manner. (h) No release or forbearance of any of Trustor's obligations under the Subject Leases by the lessor thereunder, shall release Trustor from any of its obligations under this Deed of Trust. (i) The lien of this Deed of Trust shall attach to all of Trustor's rights and remedies at any time arising under or pursuant to section 365(h) of the Bankruptcy Law, including, without limitation, all of Trustor's rights to remain in possession of the Leased Premises. Trustor shall not elect to treat the Subject Leases as terminated under section 365(h)(1) of the Bankruptcy Law, and any such election shall be void. (i) If pursuant to section 365(h)(2) of the Bankruptcy Law, Trustor shall seek to offset against the rent reserved in the Subject Leases the amount of any damages caused by the nonperformance by the lessor or any other party of any of their respective obligations thereunder after the rejection by the lessor or such other party of the Subject Leases under the Bankruptcy Law, then Trustor shall, prior to effecting such offset, notify Beneficiary of 19 Exhibit 4.4 its intent to do so, setting forth the amount proposed to be so offset and the basis therefor. Beneficiary shall have the right to object to all or any part of such offset that, in the reasonable judgment of Beneficiary, would constitute a breach of the Subject Leases, and in the event of such objection, Trustor shall not effect any offset of the amounts found objectionable by Beneficiary. Neither Beneficiary's failure to object as aforesaid nor any objection relating to such offset shall constitute an approval of any such offset by Beneficiary. (ii) If any action, proceeding, motion or notice shall be commenced or filed in respect of the lessor under the Subject Leases or any other party or in respect of the Subject Leases in connection with any case under the Bankruptcy Law, then Beneficiary shall have the option to intervene in any such litigation with counsel of Beneficiary's choice. Beneficiary may proceed in its own name in connection with any such litigation, and Trustor agrees to execute any and all powers, authorizations, consents or other documents required by Beneficiary in connection therewith. (iii) Trustor shall, after obtaining knowledge thereof, promptly notify Beneficiary of any filing by or against the lessor or any other party with an interest in the Leased Premises of a petition under the Bankruptcy Law. Trustor shall promptly deliver to Beneficiary, following receipt, copies of any and all notices, summonses, pleadings, applications and other documents received by Trustor in connection with any such petition and any proceedings relating thereto. (iv) If there shall be filed by or against Trustor a petition under the Bankruptcy Law, and Trustor, as lessee under the Subject Leases, shall determine to reject the Subject Leases pursuant to section 365(a) of the Bankruptcy Law, then Trustor shall give Beneficiary a notice of the date on which Trustor shall apply to the bankruptcy court for authority to reject the Subject Leases (such notice to be no later than twenty (20) days prior to such date). Beneficiary shall have the right, but not the obligation, to serve upon Trustor at any time prior to the date on which Trustor shall so apply to the bankruptcy court a notice stating that Beneficiary demands that Trustor assume and assign the Subject Leases to Beneficiary pursuant to section 365 of the Bankruptcy Law. If Beneficiary shall serve upon Trustor the notice described in the preceding sentence, to the extent permitted by law Trustor shall not seek to reject the Subject Leases and shall comply with the demand provided for in the preceding sentence. In addition, effective upon the entry of an order for relief with respect to Trustor under the Bankruptcy Law, Trustor hereby assigns and transfers to Beneficiary a non-exclusive right to apply to the bankruptcy court under section 365(d)(4) of the Bankruptcy Law for an order extending the period during which the Subject Leases may be rejected or assumed; and shall (a) promptly notify Beneficiary of any default by Trustor in the performance or observance of any of the terms, covenants or conditions on the part of Trustor to be performed or observed under the Subject Leases and of the giving of any written notice by the lessor thereunder to Trustor of any such default, and (b) promptly cause a copy of each written notice given to Trustor by the lessor under the Subject Leases to be delivered to Beneficiary. Beneficiary may rely on any notice received by it from any such lessor of any default by Trustor under the Subject Leases and may take such action as may be permitted by law to cure such default even though the existence of such default or the nature thereof shall be questioned or denied by Trustor or by any Person on its behalf. 20 Exhibit 4.4 (j) VCR shall not terminate, and shall not permit the termination of, the Phase I-A Lease until such time as (A) a separate legal parcel is created for the Phase I-A Airspace and (B) the Title Insurer can deliver to Beneficiary a date-down endorsement in the form of SCHEDULE E attached hereto with respect to the Phase I-A Airspace. (k) Beneficiary shall have the right upon notice to Trustor to participate in the adjustment and settlement of any insurance proceeds and in the determination of any condemnation award under the Subject Leases to the extent and in the manner provided in the Subject Leases. 1.6 COMPLIANCE WITH LEGAL REQUIREMENTS. Trustor shall promptly, fully, and faithfully comply in all material respects with all Legal Requirements and shall cause all portions of the Trust Estate and its use and occupancy to fully comply in all material respects with Legal Requirements at all times, whether or not such compliance requires work or remedial measures that are ordinary or extraordinary, foreseen or unforeseen, structural or nonstructural, or that interfere with the use or enjoyment of the Trust Estate. 1.7 IMPOSITIONS. Except as otherwise permitted by Section 4.05 of the Mortgage Notes Indenture, (a) Trustor shall pay all Impositions as they become due and payable and shall deliver to Beneficiary promptly upon Beneficiary's request, evidence satisfactory to Beneficiary that the Impositions have been paid or are not delinquent, (b) Trustor shall not suffer to exist, permit or initiate the joint assessment of the real and personal property, or any other procedure whereby the Lien of Impositions and the Lien of the personal property taxes shall be assessed, levied or charged to the Site (other than the Phase I-A Airspace), the Project and the Improvements as a single Lien, except as may be required by Legal Requirements, and (c) in the event of the passage of any law deducting from the value of real property for the purposes of taxation any Lien thereon, or changing in any way the taxation of deeds of trust or obligations secured thereby for state or local purposes, or the manner of collecting such Impositions or taxes and imposing an Imposition or tax, either directly or indirectly, on this Deed of Trust or the Notes, Trustor shall pay all such Impositions and taxes and all payments required with respect to Impositions and taxes pursuant to the terms of the Cooperation Agreement (including, without limitation, Article VI thereof). 21 Exhibit 4.4 1.8 INSURANCE. (a) INSURANCE REQUIREMENTS AND PROCEEDS. (1) INSURANCE. Trustor shall at its sole expense obtain for, deliver to, assign and maintain for the benefit of Beneficiary, during the term of this Deed of Trust, insurance policies insuring the Trust Estate and liability insurance policies, all in accordance with the requirements of Section 4.18 of the Mortgage Notes Indenture and Article X of the Cooperation Agreement. Trustor shall pay promptly when due any premiums on such insurance policies and on any renewals thereof and all payments required with respect to the procurement of insurance pursuant to the terms of the Cooperation Agreement (including, without limitation, Article VI thereof). In the event of the foreclosure of this Deed of Trust or any other transfer of title to the Trust Estate in partial or complete extinguishment of the Obligations and other sums secured hereby, all right, title and interest of Beneficiary in and to all insurance policies and renewals thereof then in force shall pass to the purchaser or grantee. (2) HANDLING OF PROCEEDS. All Proceeds from any insurance policies shall be collected, held, handled and disbursed in accordance with the provisions of Articles X and XI of the Cooperation Agreement. Beneficiary shall have the right to apply against payment of the Obligations any insurance Proceeds which are not required to be applied toward restoration of the improvements on the Site, the Project or the Improvements pursuant to the terms of the Cooperation Agreement. All proceeds of insurance allocable to Trustor, as owner of the Site, the Project and the Improvements, and attributable to business interruption insurance shall be collected, held, handled and disbursed in accordance with the provisions of the Cooperation Agreement. (b) COMPLIANCE WITH INSURANCE POLICIES. Trustor shall not violate or permit to be violated any of the conditions or provisions of any policy of insurance required by the Mortgage Notes Indenture, the Cooperation Agreement or this Deed of Trust and Trustor shall so perform and satisfy the requirements of the companies writing such policies that, at all times, companies of good standing shall be willing to write and/or continue such insurance. Trustor further covenants to promptly send to Beneficiary all notices relating to any violation of such policies or otherwise affecting Trustor's insurance coverage or ability to obtain and maintain such insurance coverage. 1.9 CONDEMNATION. Subject to Article XII of the Cooperation Agreement, Beneficiary is hereby authorized, at its option, to commence, appear in and prosecute in its own or Trustor's name any action or proceeding relating to any condemnation and to settle or compromise any claim in connection therewith, and Trustor hereby appoints Beneficiary as its attorney-in-fact to take any action in Trustor's name pursuant to Beneficiary's rights hereunder. Immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Trust Estate or any portion thereof, Trustor shall notify Trustee and Beneficiary of the pendency of such proceedings. Trustor from time to time shall execute and deliver to Beneficiary all instruments requested by it to permit such participation; provided, however, that such instruments shall be deemed as supplemental to the foregoing grant of permission to Trustee and Beneficiary, and unless otherwise required, the foregoing permission 22 Exhibit 4.4 shall, without more, be deemed sufficient to permit Trustee and/or Beneficiary to participate in such proceedings on behalf of Trustor. All such compensation awards, damages, claims, rights of action and Proceeds, and any other payments or relief, and the right thereto, are, whether paid to Beneficiary or Trustor or a third party trustee, included in the Trust Estate. Beneficiary, after deducting therefrom all its expenses, including, without limitation, reasonable attorneys fees, shall apply all Proceeds paid directly to it in accordance with the provisions of Section 4.11 of the Mortgage Notes Indenture. All Proceeds paid directly to the Trustor shall be applied in accordance with Article XII of the Cooperation Agreement. To the extent that any condemnation proceeds are not required to be applied towards restoration of the Improvements upon the Land or the Leased Premises, then Beneficiary shall have the right to apply said condemnation proceeds towards repayment of the Obligations. Trustor hereby waives any rights it may have under NRS 37.115, as amended or recodified from time to time. 1.10 CARE OF TRUST ESTATE. (a) Trustor shall preserve and maintain the Trust Estate in good condition and repair. Trustor shall not permit, commit or suffer to exist any waste, impairment or deterioration of the Trust Estate or of any part thereof that in any manner materially impairs Beneficiary's security hereunder and shall not take any action which will materially increase the risk of fire or other hazard to the Trust Estate or to any part thereof. (b) Except to the extent otherwise permitted under the Mortgage Notes Indenture, no part of the Improvements or Tangible Collateral that are part of the Trust Estate shall be removed, demolished or materially altered, without the prior written consent of Beneficiary, which consent shall not be unreasonably withheld or delayed. Trustor shall have the right, without such consent, to remove and dispose of free from the lien of this Deed of Trust any part of the Improvements or Tangible Collateral that are part of the Trust Estate as from time to time may become worn out or obsolete or otherwise not useful in connection with the operation of the Trust Estate, PROVIDED that either (i) such removal or disposition does not materially affect the value of the Trust Estate or (ii) prior to or promptly following such removal, any such property shall be replaced with other property of substantially equal utility and of a value at least substantially equal to that of the replaced property when first acquired and free from any security interest of any other person (subject only to Permitted Liens), and by such removal and replacement Trustor shall be deemed to have subjected such replacement property to the lien of this Deed of Trust. (c) Notwithstanding the foregoing provisions of this SECTION 1.10, the Trustor may develop the Phase I-A Project in the manner contemplated by the Phase I-A Project Plans and Specifications and in accordance with the terms of the Bank Credit Agreement and the Cooperation Agreement. 1.11 LEASES. (a) Trustor represents and warrants that: 23 Exhibit 4.4 (i) Trustor has delivered to Beneficiary true, correct and complete copies of all Space Leases, including all amendments and modifications, written or oral existing as of the Issuance Date; (ii) Trustor has not executed or entered into any modifications or amendments of the Space Leases, either orally or in writing, other than written amendments that have been delivered or disclosed to Beneficiary in writing; (iii) to Trustor's knowledge, no default now exists under any Space Lease on the part of Trustor or any tenant thereunder; (iv) to Trustor's knowledge, no event has occurred that, with the giving of notice or the passage of time or both, would constitute such a default or would entitle Trustor or any other party under such Space Lease to cancel the same or otherwise avoid its obligations; (v) Trustor has not accepted prepayments of installments of Rent under any Space Leases, except for installment payments not in excess of one month's Rent and security deposits; (vi) except for Permitted Liens, Trustor has not executed any assignment or pledge of any of the Space Leases, the Rents, or of Trustor's right, title and interest in the same; and (vii) this Deed of Trust does not constitute a violation or default under any Space Lease, and is and shall at all times constitute a valid Lien on Trustor's interests in the Space Leases. (b) Trustor shall not enter into any Lease Transaction unless such Lease Transaction complies with the requirements of Section 4.21 of the Mortgage Notes Indenture. (c) After an Event of Default, Trustor shall deliver to Beneficiary the executed originals of all Space Leases. 1.12 FURTHER ENCUMBRANCE. (a) Trustor covenants that at all times prior to the discharge of the Mortgage Notes Indenture and the Notes, except for Permitted Liens and except for dispositions permitted by the Mortgage Notes Indenture, Trustor shall neither make nor suffer to exist, nor enter into any agreement for, any sale, assignment, exchange, mortgage, transfer, Lien, hypothecation or encumbrance of all or any part of the Trust Estate, including, without limitation, the Rents. As used herein, "transfer" includes the actual transfer or other disposition, whether voluntary or involuntary, by law, or otherwise, except those transfers specifically permitted herein; PROVIDED, HOWEVER, that "transfer" shall not include the granting of utility or other beneficial easements with respect to the Trust Estate which have been or are granted by 24 Exhibit 4.4 Trustor and are reasonably necessary to the construction, maintenance or operation of the Site, the Project or the Improvements. (b) Trustor shall not permit any deed of trust which is subordinate to the Lien this Deed of Trust or the other Mortgage Notes Indenture Security Documents (a "SUBORDINATE DEED OF TRUST") to be placed on the Site, the Project or the Improvements, other than a deed of trust which is permitted by the terms of the Mortgage Notes Indenture. To the extent that a Subordinate Deed of Trust shall be permitted under the Mortgage Notes Indenture, Trustor shall deliver to Beneficiary, not less than 30 days prior to the date Trustor intends to execute and deliver such Subordinate Deed of Trust, a copy thereof which shall contain express covenants in form and substance satisfactory to Beneficiary to the effect that: (i) the Subordinate Deed of Trust is in all respects subject and subordinate to this Deed of Trust; (ii) if any action or proceeding shall be brought to foreclose the Subordinate Deed of Trust (regardless of whether the same is a judicial proceeding or pursuant to a power of sale contained therein), no tenant of any portion of the Trust Estate shall be named as a party defendant nor shall any action be taken with respect to the Trust Estate which would terminate any occupancy or tenancy of the Trust Estate, or any portion thereof, without the consent of Beneficiary; (iii) any Rents, if collected through a receiver or by the holder of the Subordinate Deed of Trust, shall be applied first to the obligations secured by this Deed of Trust, including principal and interest due and owing on or to become due and owing on the Notes, and then to the payment of maintenance expenses, operating charges, taxes, assessments and disbursements incurred in connection with the ownership, operation and maintenance of the Trust Estate; and (iv) if any action or proceeding shall be brought to foreclose the Subordinate Deed of Trust, prompt notice of the commencement thereof shall be given to Beneficiary. (c) Trustor agrees that in the event the ownership of the Trust Estate or any part thereof becomes vested in a person other than Trustor, Beneficiary may, without notice to Trustor, deal in any way with such successor or successors in interest with reference to this Deed of Trust, the Notes and the other Obligations hereby secured without in any way vitiating or discharging Trustor's or any guarantor's, surety's or endorser's liability hereunder or upon the Obligations hereby secured. No sale of the Trust Estate and no forbearance to any person with respect to this Deed of Trust and no extension to any person of the time for payment of the Notes, and other sums hereby secured given by Beneficiary shall operate to release, discharge, modify, change or affect the original liability of Trustor, or such guarantor, surety or endorser either in whole or in part. 1.13 FURTHER ASSURANCES. (a) At its sole cost and without expense to Trustee or Beneficiary, and subject in all events to compliance with the Nevada Gaming Laws and other applicable Legal Requirements, Trustor shall do, execute, acknowledge and deliver any and all such further acts, deeds, conveyances, notices, requests for notices, financing statements, continuation statements, certificates, assignments, notices of assignments, agreements, instruments and further assurances, and shall mark any chattel paper, deliver any chattel paper or instruments to Beneficiary and take any other actions that are necessary, prudent or reasonably requested by Beneficiary or Trustee to perfect or continue the perfection and first priority of Beneficiary's security interest in the 25 Exhibit 4.4 Trust Estate, to protect the Trust Estate against the rights, claims or interests of third persons other than holders of Permitted Liens or to effect the purposes of this Deed of Trust, including, without limitation, the security agreement and the absolute assignment of Rents contained herein, or for the filing, registering or recording thereof. (b) Trustor shall forthwith upon the execution and delivery of this Deed of Trust, and thereafter from time to time, cause this Deed of Trust and each instrument of further assurance to be filed, indexed, registered, recorded, given or delivered in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect the lien hereof upon, and the title of Trustee and/or Beneficiary to, the Trust Estate. (c) Upon any modification of the boundaries of the Leased Premises (or any portion thereof) pursuant to the Cooperation Agreement, Trustor, at Trustor's expense, shall notify Beneficiary and amend this Deed of Trust to reflect an accurate description of the Leased Premises (or such portion thereof). In connection therewith, Trustor shall provide Beneficiary with such title insurance endorsements to Beneficiary's ALTA extended coverage Lender's Policy(ies) of Title Insurance as Beneficiary may reasonably request. (d) Trustor agrees to use its diligent efforts to obtain subordination, non-disturbance and attornment agreements, substantially in the form delivered to The Bank of Nova Scotia, as adminsitrative agent under the Bank Credit Facility, from each Space Lessee who entered into such Space Lease prior to June 4, 2002 and to make each such subordination, non-disturbance and attornment agreement run in favor of or otherwise be for the benefit of Beneficiary. 1.14 SECURITY AGREEMENT AND FINANCING STATEMENTS. Trustor (as debtor) hereby grants to Beneficiary (as creditor and secured party) a present and future security interest in all Tangible Collateral, Intangible Collateral, FF&E (subject to the provisions of Section 4.09 of the Mortgage Notes Indenture which permits the granting of security interests in Specified FF&E to the providers of Indebtedness which may be incurred under said section to the extent that such Indebtedness is permitted to be secured pursuant to Section 4.11 of the Mortgage Notes Indenture pursuant to clause (2), (3) or (12) of the definition of Permitted Liens), the Improvements, all other personal property now or hereafter owned or leased by Trustor or in which Trustor has or will have any interest, to the extent that such property constitutes a part of the Trust Estate (whether or not such items are stored on the Site, the Project, the Improvements or elsewhere), Proceeds of the foregoing comprising a portion of the Trust Estate and all proceeds of insurance policies and consideration awards arising therefrom and all proceeds, products, substitutions and accessions therefor and thereto, subject to Beneficiary's rights to treat such property as real property as herein provided (collectively, the "PERSONAL PROPERTY"). Trustor shall execute any and all documents and writings, including, without limitation, financing statements pursuant to the UCC, as may be necessary or prudent to preserve and maintain the priority of the security interest granted hereby on property which may be deemed subject to the foregoing security agreement or as Beneficiary may reasonably request, and shall pay to Beneficiary on demand any reasonable expenses incurred by Beneficiary in connection with the preparation, execution and filing of any such documents. Trustor hereby authorizes and 26 Exhibit 4.4 empowers Beneficiary to execute and file, on Trustor's behalf, all financing statements and refilings and continuations thereof as advisable to create, preserve and protect said security interest. This Deed of Trust constitutes both a real property deed of trust and a "security agreement," within the meaning of the UCC, and the Trust Estate includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Trustor in the Trust Estate. Trustor by executing and delivering this Deed of Trust has granted to Beneficiary, as security of the Obligations, a security interest in the Trust Estate. (a) FIXTURE FILING. Without in any way limiting the generality of the immediately preceding paragraph or of the definition of the Trust Estate, this Deed of Trust constitutes a fixture filing under Sections 9-313 and 9-502 of the UCC (NRS 104.9313 and 104.9502(3). For such purposes, (i) the "debtor" is each Trustor and their respective addresses are the addresses given for each such Person in the initial paragraph of this Deed of Trust; (ii) the "secured party" is Beneficiary, and its address for the purpose of obtaining information is the address given for it in the initial paragraph of this Deed of Trust; (iii) the real estate to which the fixtures are or are to become attached is Trustor's interest in the Site, the Project and the Improvements; and (iv) the record owner of such real estate or interests therein is VCR (with respect to the Land, as the lessor under the Casino Lease and as the lessee under the Phase I-A Lease) and LVSI (with respect to the leasehold estate created by the Casino Lease). (b) REMEDIES. This Deed of Trust shall be deemed a security agreement as defined in the UCC and the remedies for any violation of the covenants, terms and conditions of the agreements herein contained shall include any or all of (i) those prescribed herein, (ii) those available under applicable Legal Requirements and (iii) those available under the UCC, all at Beneficiary's sole election. In addition, a photographic or other reproduction of this Deed of Trust shall be sufficient as a financing statement for filing wherever filing may be necessary to perfect or continue the security interest granted herein. (c) DEROGATION OF REAL PROPERTY. It is the intention of the parties that the filing of a financing statement in the records normally having to do with personal property shall never be construed as in anyway derogating from or impairing the express declaration and intention of the parties hereto as hereinabove stated that everything used in connection with the production of Income from the Trust Estate and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable, shall be regarded as part of the real property encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. It is the intention of the parties that the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, (2) any award in eminent domain proceedings for a taking or for loss of value or (3) Trustor's interest as lessor in any present or future Space Lease or rights to Rents, shall never be construed as in anyway altering any of the rights of Beneficiary as determined by this Deed of Trust or impugning the priority of Beneficiary's real property Lien granted hereby or by any other recorded document, but such mention in the financing statement is declared to be for the 27 Exhibit 4.4 protection of Beneficiary in the event any court or judge shall at any time hold with respect to the matters set forth in the foregoing clauses (1), (2) and (3) that notice of Beneficiary's priority of interest to be effective against a particular class of Persons, including, but not limited to, the federal government and any subdivisions or entity of the federal government, must be filed in the UCC records. (d) PRIORITY; PERMITTED FINANCING OF TANGIBLE COLLATERAL. All Personal Property of any nature whatsoever which is subject to the provisions of this security agreement shall be purchased or obtained by Trustor in its name and free and clear of any Lien or encumbrance, except for Permitted Liens, for use only in connection with the business and operation of the Project, and shall be and at all times remain free and clear of any lease or similar arrangement, chattel financing, installment sale agreement, security agreement and any encumbrance of like kind, so that Beneficiary's security interest shall attach to and vest in Trustor for the benefit of Beneficiary, with the priority herein specified, immediately upon the installation or use of the Personal Property at the Site, the Project or the Improvements and Trustor warrants and represents that Beneficiary's security interest in the Personal Property is a validly attached and binding security interest, properly perfected and prior to all other security interests therein except as otherwise permitted in this Deed of Trust, subject to Permitted Liens. (e) PRESERVATION OF CONTRACTUAL RIGHTS OF COLLATERAL. Trustor shall, prior to delinquency, default or forfeiture, perform all obligations and satisfy all material conditions required on its part to be satisfied to preserve its rights and privileges under any contract, lease, license, permit or other authorization (i) under which it holds any Tangible Collateral or (ii) which constitutes part of the Intangible Collateral, except where Trustor is contesting such obligations in good faith. (f) REMOVAL OF COLLATERAL. Except as permitted by the Mortgage Notes Indenture, and except for damaged or obsolete Tangible Collateral which is either no longer usable or which is removed temporarily for repair or improvement or removed for replacement on the Trust Estate with Tangible Collateral of similar function or as otherwise permitted herein, none of the Tangible Collateral shall be removed from the Trust Estate without Beneficiary's prior written consent. (g) CHANGE OF NAME. Trustor shall not change its corporate or business name, or do business within the State of Nevada under any name other than such name, or any trade name(s) other than those as to which Trustor gives prior written notice to Beneficiary of its intent to use such trade names, or any other business names (if any) specified in the financing statements delivered to Beneficiary for filing in connection with the execution hereof, without providing Beneficiary with the additional financing statement(s) and any other similar documents deemed reasonably necessary by Beneficiary to assure that its security interest remains perfected and of undiminished priority in all such Personal Property notwithstanding such name change. (h) RELEASE OF LIENS. To the extent any property (including Specified FF&E) is financed by any other lender pursuant to an FF&E Facility, Trustee shall release the Liens in favor of Beneficiary on such property and in connection therewith at Trustor's expense, 28 Exhibit 4.4 execute and deliver to Trustor such documents (including, without limitation UCC-3 termination statements) as Trustor may reasonably request to evidence such termination. 1.15 ASSIGNMENT OF LEASES AND RENTS. Subject to Nevada Gaming Laws and other applicable Legal Requirements, the assignment of Leases and Rents set out above in Granting Clause (G) shall constitute an absolute and present assignment to Beneficiary, subject to the license herein granted therein to Trustor to collect the Rents, and shall be fully operative without any further action on the part of any party, and specifically upon the occurrence of an Event of Default such license shall be automatically revoked and Beneficiary shall be entitled upon the occurrence of an Event of Default to all Rents and to enter upon the Site, the Project and the Improvements to collect such Rents until such time as such Event of Default is cured; PROVIDED, HOWEVER, that Beneficiary shall not be obligated to take possession of the Trust Estate, or any portion thereof. The absolute assignment contained in Granting Clause (G) shall not be deemed to impose upon Beneficiary any of the obligations or duties of Trustor provided in any such Space Lease, including, without limitation, any liability under the covenant of quiet enjoyment contained in any Space Lease in the event that any lessee shall have been joined as a party defendant in any action to foreclose this Deed of Trust and shall have been barred and foreclosed thereby of all right, title and interest and equity of redemption in the Trust Estate or any part thereof. 1.16 REJECTION OF SUBJECT LEASES. To the extent applicable, if the lessor under the Subject Leases rejects or disaffirms the Subject Leases or purports or seeks to disaffirm the Subject Leases pursuant to any Bankruptcy Law, then: (a) To the extent permitted by law, Trustor shall remain in possession of the Leased Premises demised under the Subject Leases and shall perform all acts reasonably necessary for Trustor to remain in such possession for the unexpired term of such Subject Leases (including all renewals), whether the then existing terms and provisions of such Subject Leases require such acts or otherwise; and (b) All the terms and provisions of this Deed of Trust and the Lien created by this Deed of Trust shall remain in full force and effect and shall extend automatically to all of Trustor's rights and remedies arising at any time under, or pursuant to, Section 365(h) of the Bankruptcy Code, including all of Trustor's rights to remain in possession of the Leased Premises. 1.17 EXPENSES. (a) Trustor shall pay when due and payable all costs, including, without limitation, those reasonable appraisal fees, recording fees, taxes, abstract fees, title policy fees, escrow fees, attorneys' and paralegal fees, travel expenses, fees for inspecting architect(s) and engineer(s) and all other reasonable costs and expenses of every character which may hereafter be incurred by Beneficiary or any assignee of Beneficiary in connection with the preparation and execution of amendments to the Mortgage Notes Indenture and the Mortgage Notes Indenture Security Documents or instruments, agreements or documents of further 29 Exhibit 4.4 assurance, the funding of the indebtedness secured hereby, and the enforcement of any Mortgage Notes Indenture Security Document; (b) Trustor shall, upon demand by Beneficiary, reimburse Beneficiary or any assignee of Beneficiary for all such reasonable expenses which have been incurred or which shall be incurred by it; and (c) Trustor shall indemnify Beneficiary with respect to any transaction or matter in any way connected with any portion of the Trust Estate, this Deed of Trust, including any occurrence at, in, on, upon or about the Trust Estate (including, without limitation, any personal injury, loss of life or property damage), or Trustor's use, occupancy or operation of the Trust Estate, or the filing or enforcement of any mechanic's lien, or otherwise caused in whole or in part by any act, omission or negligence occurring on or at the Trust Estate, including, without limitation, failure to comply with any Legal Requirement or with any requirement of this Deed of Trust that applies to Trustor, except to the extent resulting from the gross negligence, fraud or willful misconduct of Trustee or Beneficiary. If Beneficiary is a party to any litigation as to which either Trustor is required to indemnify Beneficiary (or is made a defendant in any action of any kind against Trustor or relating directly or indirectly to any portion of the Trust Estate) then, at Beneficiary's option, Trustor shall undertake Beneficiary's defense, using counsel reasonably satisfactory to Beneficiary (and any settlement shall be subject to Beneficiary's consent, which consent shall not be unreasonably withheld), and in any case shall indemnify Beneficiary against such litigation. Trustor shall pay all reasonable costs and expenses, including, without limitation, reasonable legal costs, that Beneficiary pays or incurs in connection with any such litigation. Any amount payable under any indemnity in this Deed of Trust shall be a demand obligation, shall be added to, and become a part of, the secured obligations under this Deed of Trust, shall be secured by this Deed of Trust, and shall bear interest at the interest rate specified in the Mortgage Notes Indenture. Such indemnity shall survive any release of this Deed of Trust and any foreclosure. 1.18 BENEFICIARY'S CURE OF TRUSTOR'S DEFAULT. If Trustor defaults hereunder in the payment of any tax, assessment, Lien, encumbrance or other Imposition, in its obligation to furnish insurance hereunder, or in the performance or observance of any other covenant, condition or term of this Deed of Trust or any other Financing Agreement or the Cooperation Agreement, Beneficiary may, but is not obligated to, to preserve its interest in the Trust Estate, perform or observe the same, and all payments made (whether such payments are regular or accelerated payments) and reasonable costs and expenses incurred or paid by Beneficiary in connection therewith shall become due and payable immediately. The amounts so incurred or paid by Beneficiary, together with interest thereon at the interest rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture, from the date incurred until paid by Trustor, shall be added to the Obligations and secured by the Lien of this Deed of Trust. Beneficiary, is hereby empowered to enter and to authorize others to enter upon the Site, the Project or the Improvements or (in each case) any part thereof for the purpose of performing or observing any such defaulted covenant, condition or term, without thereby becoming liable to Trustor or any Person in possession holding under Trustor. No exercise of any rights under this SECTION 1.18 by Beneficiary shall cure or waive any Event of Default or notice of default 30 Exhibit 4.4 hereunder or invalidate any act done pursuant hereto or to any such notice, but shall be cumulative of all other rights and remedies. 1.19 USE OF LAND AND LEASED PREMISES. Trustor covenants that the Trust Estate shall be (i) used and operated in a manner reasonably consistent with the description of the Project in the Cooperation Agreement and (ii) open during such days and hours as are customarily observed by casino-hotels located in Las Vegas, Nevada, reasonably consistent with the provisions of the Cooperation Agreement (including those provisions thereof that permit the Phase I-A Project not to be opened). 1.20 COMPLIANCE WITH PERMITTED LIEN AGREEMENTS. Trustor or any Affiliate of Trustor shall comply with each and every material obligation contained in any agreement pertaining to a material Permitted Lien, including, without limitation, any obligations set forth in the Cooperation Agreement and the HVAC Ground Lease, to the extent applying to the owner of all or any part of the Trust Estate. 1.21 DEFENSE OF ACTIONS. Trustor shall appear in and defend any action or proceeding affecting or purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and shall pay all costs and expenses, including, without limitation, the cost of title search and insurance or other evidence of title, preparation of survey and reasonable attorneys' fees in any such action or proceeding in which Beneficiary or Trustee may appear or may be joined as a party and in any suit brought by Beneficiary based upon or in connection with this Deed of Trust or any other Mortgage Notes Indenture Security Document. Nothing contained in this section shall, however, limit the right of Beneficiary to appear in such action or proceeding with counsel of its own choice, either on its own behalf or on behalf of Trustor. 1.22 AFFILIATES AND SUBSIDIARIES. (a) SUBJECT TO TRUST DEED. Subject to compliance with the requirements of applicable Nevada Gaming Laws, Trustor shall cause all of its Affiliates in any way involved with the operation of all or a portion of the Trust Estate to observe the covenants and conditions of this Deed of Trust to the extent necessary to give the full intended effect to such covenants and conditions and to protect and preserve the security of Beneficiary hereunder. Trustor shall, at Beneficiary's request, cause any such Affiliate or Subsidiary to execute and deliver to Beneficiary or Trustee such further instruments or documents as Beneficiary may reasonably deem necessary to effectuate the terms of this SECTION 1.22(a). (b) RESTRICTION ON USE OF SUBSIDIARY OR AFFILIATE. Except as permitted under the Notes, the Mortgage Notes Indenture or any other Mortgage Notes Indenture Security Documents, Trustor shall not use any Affiliate or Subsidiary in the operation of the Trust Estate, the Project, the Leased Premises or the Easements if such use would in any way impair the security for the Notes and the Mortgage Notes Indenture or cause a breach of any covenant of this Deed of Trust or of any other Mortgage Notes Indenture Security Document. 1.23 MERGER. So long as any of the Obligations have not been paid or performed, unless Beneficiary shall otherwise in writing consent, the fee title and the leasehold estate under the Casino Lease and the Phase I-A Lease shall not merge but shall always be kept 31 Exhibit 4.4 separate and distinct, notwithstanding the union of said estates either in the lessor or in the lessee, or in a third party, by purchase or otherwise; and each of LVSI and VCR covenant and agree that, if it shall acquire the fee title, or any other estate, title or interest in the Casino Leased Premises covered by said Casino Lease or the Phase I-A Leased Premises covered by said Phase I-A Lease, as the case may be, this Deed of Trust shall be considered as mortgaged, assigned or conveyed to Beneficiary and the lien hereof shall be spread to cover such estate with the same force and effect as though specifically herein mortgaged, assigned or conveyed and spread. The provisions of this paragraph shall not apply if Beneficiary shall so elect and, upon such election, LVSI or VCR, as the case may be, shall execute a deed of trust substantially in the form hereof granting Beneficiary a deed of trust lien on Casino Leased Premises or the Phase I-A Leased Premises. ARTICLE 2 CORPORATE LOAN PROVISIONS 2.1 INTERACTION WITH MORTGAGE NOTES INDENTURE. (a) INCORPORATION BY REFERENCE. All terms, covenants, conditions, provisions and requirements of the Mortgage Notes Indenture are incorporated by reference into this Deed of Trust. (b) CONFLICTS. In the event of any conflict or inconsistency between the provisions of this Deed of Trust and those of the Mortgage Notes Indenture, the provisions of the Mortgage Notes Indenture shall govern. 2.2 OTHER COLLATERAL. This Deed of Trust is one of a number of security agreements to secure the debt delivered by or on behalf of Trustor pursuant to the Mortgage Notes Indenture and the other Mortgage Notes Indenture Security Documents and securing the Obligations secured hereunder. All potential junior Lien claimants are placed on notice that, under any of the Mortgage Notes Indenture Security Documents or otherwise (such as by separate future unrecorded agreement between Trustor and Beneficiary), other collateral for the Obligations secured hereunder (I.E., collateral other than the Trust Estate) may, under certain circumstances, be released without a corresponding reduction in the total principal amount secured by this Deed of Trust. Such a release would decrease the amount of collateral securing the same indebtedness, thereby increasing the burden on the remaining Trust Estate created and continued by this Deed of Trust. No such release shall impair the priority of the lien of this Deed of Trust. By accepting its interest in the Trust Estate, each and every junior Lien claimant shall be deemed to have acknowledged the possibility of, and consented to, any such release. Nothing in this paragraph shall impose any obligation upon Beneficiary. 2.3 SUBORDINATION TO BANK FEE DEED OF TRUST. Notwithstanding any other provision hereof, this Deed of Trust, including, without limitation, the security interest granted herein, the rights, powers and remedies of Trustee and Beneficiary and the obligations of Trustor set forth herein, shall, to the extent provided in the Intercreditor Agreement, be subject and subordinate to the Bank Deed of Trust. 32 Exhibit 4.4 ARTICLE 3 DEFAULTS 3.1 EVENT OF DEFAULT. The term "Event of Default," wherever used in this Deed of Trust, shall mean any of one or more of the events of default listed in Section 6.01 of the Mortgage Notes Indenture (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body). ARTICLE 4 REMEDIES 4.1 ACCELERATION OF MATURITY. If an Event of Default occurs, Beneficiary may (except that such acceleration shall be automatic if the Event of Default is caused by reason of an Event of Default under Section 6.01(i) or (j) of the Mortgage Notes Indenture), in accordance with Section 6.02 of the Mortgage Notes Indenture, declare the Notes and all Obligations or other sums secured hereby, to be due and payable immediately, and upon such declaration such principal and interest and other sums shall immediately become due and payable without demand, presentment, notice or other requirements of any kind (all of which Trustor waives) notwithstanding anything in this Deed of Trust or any other Mortgage Notes Indenture Security Document or applicable law to the contrary. 4.2 PROTECTIVE ADVANCES. If Trustor fails to make any payment or perform any other obligation under the Notes or any other Financing Agreement, then without thereby limiting Beneficiary's other rights or remedies, waiving or releasing any of Trustor's obligations, or imposing any obligation on Beneficiary, Beneficiary may either advance any amount owing or perform any or all actions that Beneficiary considers necessary or appropriate to cure such default. All such advances shall constitute "PROTECTIVE ADVANCES." No sums advanced or performance rendered by Beneficiary shall cure, or be deemed a waiver of any Event of Default. 4.3 INSTITUTION OF EQUITY PROCEEDINGS. If an Event of Default occurs, Beneficiary may institute an action, suit or proceeding in equity for specific performance of the Notes, this Deed of Trust or any other Mortgage Notes Indenture Security Document, all of which shall be specifically enforceable by injunction or other equitable remedy. Trustor waives any defense based on laches or any applicable statute of limitations. 4.4 BENEFICIARY'S POWER OF ENFORCEMENT. (a) If an Event of Default occurs, Beneficiary shall be entitled, at its option and in its sole and absolute discretion, to prepare and record on its own behalf, or to deliver to Trustee for recording, if appropriate, written declaration of default and demand for sale and written Notice of Default and Election to Sell (NRS 107.080(3)) (or other statutory notice) to cause the Trust Estate to be sold to satisfy the obligations hereof, and in the case of delivery to Trustee, Trustee shall cause said notice to be filed for record. 33 Exhibit 4.4 (b) After the lapse of such time as may then be required by law following the recordation of said Notice of Default and Election to Sell, and notice of sale having been given as then required by law, including compliance with all applicable Nevada Gaming Laws, Trustee without demand on Trustor, shall sell the Trust Estate or any portion thereof at the time and place fixed by it in said notice, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder, for cash in lawful money of the United States payable at the time of sale. Trustee may, for any cause it deems expedient, postpone the sale of all or any portion of said property until it shall be completed and, in every case, notice of postponement shall be given by public announcement thereof at the time and place last appointed for the sale and from time to time thereafter Trustee may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall execute and deliver to the purchaser its deed, bill of sale or other instrument conveying said property so sold, but without any covenant or warranty, express or implied. The recitals in such instrument of conveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. Any Person, including Beneficiary, may bid at the sale. (c) After deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including, without limitation, costs of evidence of title and reasonable attorneys' fees and other legal expenses of Trustee or Beneficiary in connection with a sale, Trustee shall apply the proceeds of such sale to payment of all sums expended under the terms hereof not then repaid, with accrued interest at the rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture to the payment of all other sums then secured hereby and the remainder, if any, to the Person or Persons legally entitled thereto as provided in NRS 40.462. (d) Subject to compliance with applicable Nevada Gaming Laws, if any Event of Default occurs, Beneficiary may, either with or without entry or taking possession of the Trust Estate, and without regard to whether or not the Obligaitons and other sums secured hereby shall be due and without prejudice to the right of Beneficiary thereafter to bring an action or proceeding to foreclose or any other action for any default existing at the time such earlier action was commenced, proceed by any appropriate action or proceeding: (1) to enforce payment of the Notes, to the extent permitted by law, or the performance of any term hereof or any other right; (2) to foreclose this Deed of Trust in any manner provided by law for the foreclosure of mortgages or deeds of trust on real property and to sell, as an entirety or in separate lots or parcels, the Trust Estate or any portion thereof pursuant to applicable Legal Requirements or under the judgment or decree of a court or courts of competent jurisdiction, and Beneficiary shall be entitled to recover in any such proceeding all costs and expenses incident thereto, including, without limitation, reasonable attorneys' fees in such amount as shall be awarded by the court; (3) to exercise any or all of the rights and remedies available to it under the Mortgage Notes Indenture and the other Mortgage Notes Indenture Security Documents; and (4) to pursue any other remedy available to it. Beneficiary shall take action either by such proceedings or by the exercise of its powers with respect to entry or taking possession, or both, as Beneficiary may determine. (e) The remedies described in this SECTION 4.4 may be exercised with respect to all or any portion of the Personal Property, either simultaneously with the sale of any real property encumbered hereby or independent thereof. Beneficiary shall at any time be 34 Exhibit 4.4 permitted to proceed with respect to all or any portion of the Personal Property in any manner permitted by the UCC. Trustor agrees that Beneficiary's inclusion of all or any portion of the Personal Property (and all personal property that is subject to a security interest in favor, or for the benefit, of Beneficiary) in a sale or other remedy exercised with respect to the real property encumbered hereby, as permitted by the UCC, is a commercially reasonable disposition of such property. 4.5 BENEFICIARY'S RIGHT TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY INCOME. (a) Subject to compliance with applicable Nevada Gaming Laws, if an Event of Default occurs (i) Trustor, upon demand of Beneficiary, shall forthwith surrender to Beneficiary the actual possession and, if and to the extent permitted by law, Beneficiary itself, or by such officers or agents as it may appoint, may enter and take possession of all of the Trust Estate (including the Personal Property), without liability for trespass, damages or otherwise, and may exclude Trustor and its agents and employees wholly therefrom and may have joint access with Trustor to the books, papers and accounts of Trustor and (ii) Trustor shall pay monthly in advance to Beneficiary on Beneficiary's entry into possession, or to any receiver appointed to collect the Rents, all Rents then due and payable. (b) If Trustor shall for any reason fail to surrender or deliver the Trust Estate, the Personal Property or any part thereof after Beneficiary's demand, Beneficiary may obtain a judgment or decree conferring on Beneficiary or Trustee the right to immediate possession or requiring Trustor to deliver immediate possession of all or part of such property to Beneficiary or Trustee and Trustor hereby specifically consents to the entry of such judgment or decree. Trustor shall pay to Beneficiary or Trustee, upon demand, all reasonable costs and expenses of obtaining such judgment or decree and reasonable compensation to Beneficiary or Trustee, their attorneys and agents, and all such costs, expenses and compensation shall, until paid, be secured by the Lien of this Deed of Trust. (c) Subject to compliance with applicable Nevada Gaming Laws, upon every such entering upon or taking of possession, Beneficiary or Trustee may hold, store, use, operate, manage and control the Trust Estate and conduct the business thereof, and, from time to time in its sole and absolute discretion and without being under any duty to so act: (1) make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements thereto and thereon and purchase or otherwise acquire additional fixtures, personalty and other property; (2) insure or keep the Trust Estate insured; (3) manage and operate the Trust Estate and exercise all the rights and powers of Trustor in their name or otherwise with respect to the same; 35 Exhibit 4.4 (4) enter into agreements with others to exercise the powers herein granted Beneficiary or Trustee, all as Beneficiary or Trustee from time to time may determine; and, subject to the absolute assignment of the Rents to Beneficiary, Beneficiary or Trustee may collect and receive all the Rents, including, without limitation, those past due as well as those accruing thereafter; and shall apply the monies so received by Beneficiary or Trustee in such priority as Beneficiary may determine to (1) the payment of interest and principal due and payable on the Notes, (2) the deposits for taxes and assessments and insurance premiums due, (3) the cost of insurance, taxes, assessments and other proper charges upon the Trust Estate or any part thereof, (4) the compensation, expenses and disbursements of the agents, attorneys and other representatives of Beneficiary or Trustee and (5) any other charges or costs required to be paid by Trustor under the terms hereof; and (5) rent or sublet the Trust Estate or any portion thereof for any purpose permitted by this Deed of Trust. Beneficiary or Trustee shall surrender possession of the Trust Estate and the Personal Property to Trustor only when all that is due upon such interest and principal, tax and insurance deposits, and all amounts under any of the terms of the Mortgage Notes Indenture or this Deed of Trust, shall have been paid and all other Obligations performed. The same right of taking possession, however, shall exist if any subsequent Event of Default shall occur and be continuing. 4.6 LEASES. Beneficiary is authorized to foreclose this Deed of Trust subject to the rights of any tenants of the Trust Estate, and the failure to make any such tenants parties defendant to any such foreclosure proceedings and to foreclose their rights shall not be, nor be asserted by Trustor to be, a defense to any proceedings instituted by Beneficiary to collect the sums secured hereby or to collect any deficiency remaining unpaid after the foreclosure sale of the Trust Estate, or any portion thereof. Unless otherwise agreed to by Beneficiary in writing, all Space Leases executed subsequent to the date hereof, or any part thereof, shall be subordinate and inferior to the Lien of this Deed of Trust; PROVIDED, HOWEVER that (i) in accordance with the terms of Section 4.21 of the Mortgage Notes Indenture, Beneficiary may be required to execute a non-disturbance and attornment agreement in connection with certain Lease Transactions; and (ii) from time to time Beneficiary may execute and record among the land records of the jurisdiction where this Deed of Trust is recorded, subordination statements with respect to such of said Space Leases as Beneficiary may designate in its sole discretion, whereby the Space Leases so designated by Beneficiary shall be made superior to the Lien of this Deed of Trust for the term set forth in such subordination statement. From and after the recordation of such subordination statements, and for the respective periods as may be set forth therein, the Space Leases therein referred to shall be superior to the Lien of this Deed of Trust and shall not be affected by any foreclosure hereof. All such Space Leases shall contain a provision to the effect that the Trustor and Space Lessee recognize the right of Beneficiary to elect and to effect such subordination of this Deed of Trust and consents thereto. 4.7 PURCHASE BY BENEFICIARY. Upon any foreclosure sale (whether judicial or non-judicial), Beneficiary may bid for and purchase the property subject to such sale and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in its own absolute right without further accountability. 36 Exhibit 4.4 4.8 WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND REDEMPTION LAWS. Trustor agrees to the full extent permitted by Legal Requirements that if an Event of Default occurs, neither Trustor nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Deed of Trust or the absolute sale of the Trust Estate or any portion thereof or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and Trustor for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may lawfully so do, the benefit of all such Legal Requirements, and any and all right to have the assets comprising the Trust Estate marshaled upon any foreclosure of the Lien hereof and agrees that Trustee or any court having jurisdiction to foreclose such Lien may sell the Trust Estate in part or as an entirety. 4.9 RECEIVER. If an Event of Default occurs, Beneficiary, to the extent permitted by law and subject to compliance with all applicable Nevada Gaming Laws, and without regard to the value, adequacy or occupancy of the security for the Obligations and other sums secured hereby, shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Trust Estate and to collect all Rents and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction upon application by Beneficiary. Beneficiary may have a receiver appointed without notice to Trustor or any third party, and Beneficiary may waive any requirement that the receiver post a bond. Beneficiary shall have the power to designate and select the Person who shall serve as the receiver and to negotiate all terms and conditions under which such receiver shall serve. Any receiver appointed on Beneficiary's behalf may be an Affiliate of Beneficiary. The expenses, including receiver's fees, attorneys' fees, costs and agent's compensation, incurred pursuant to the powers herein contained shall be secured by this Deed of Trust. The right to enter and take possession of and to manage and operate the Trust Estate and to collect all Rents, whether by a receiver or otherwise, shall be cumulative to any other right or remedy available to Beneficiary under this Deed of Trust, the Mortgage Notes Indenture or otherwise available to Beneficiary and may be exercised concurrently therewith or independently thereof. Beneficiary shall be liable to account only for such Rents (including, without limitation, security deposits) actually received by Beneficiary, whether received pursuant to this section or any other provision hereof. Notwithstanding the appointment of any receiver or other custodian, Beneficiary shall be entitled as pledgee to the possession and control of any cash, deposits or instruments at the time held by, or payable or deliverable under the terms of this Deed of Trust to, Beneficiary. 4.10 SUITS TO PROTECT THE TRUST ESTATE. Beneficiary shall have the power and authority to institute and maintain any suits and proceedings as Beneficiary, in its sole and absolute discretion, may deem advisable (a) to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Deed of Trust, (b) to preserve or protect its interest in the Trust Estate or (c) to restrain the enforcement of or compliance with any Legal Requirement that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order might impair the security hereunder or be prejudicial to Beneficiary's interest. 37 Exhibit 4.4 4.11 PROOFS OF CLAIM. In the case of any receivership, Insolvency, Bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings affecting Trustor, or, to the extent the same would result in an Event of Default hereunder, any Subsidiary, or any guarantor, co-maker or endorser of any of Trustor's obligations, its creditors or its property, Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim or other documents as it may deem to be necessary or advisable in order to have its claims allowed in such proceedings for the entire amount due and payable by Trustor under the Notes, any other Mortgage Notes Indenture Security Document, at the date of the institution of such proceedings, and for any additional amounts which may become due and payable by Trustor after such date. 4.12 TRUSTOR TO PAY THE NOTES ON ANY DEFAULT IN PAYMENT; APPLICATION OF MONIES BY BENEFICIARY. (a) In case of a foreclosure sale of all or any part of the Trust Estate and of the application of the proceeds of sale to the payment of the sums secured hereby, Beneficiary shall be entitled to enforce payment from Trustor of any additional amounts then remaining due and unpaid and to recover judgment against Trustor for any portion thereof remaining unpaid, with interest at the rate applicable to overdue principal as set forth in Section 4.01 of the Mortgage Notes Indenture. (b) Trustor hereby agrees to the extent permitted by law, that no recovery of any such judgment by Beneficiary or other action by Beneficiary and no attachment or levy of any execution upon any of the Trust Estate or any other property shall in any way affect the Lien and security interest of this Deed of Trust upon the Trust Estate or any part thereof or any Lien, rights, powers or remedies of Beneficiary hereunder, but such Lien, rights, powers and remedies shall continue unimpaired as before. (c) Any monies collected or received by Beneficiary under this SECTION 4.12 shall be applied as contemplated by the Mortgage Notes Indenture. (d) The provisions of this section shall not be deemed to limit or otherwise modify the provisions of any guaranty of the indebtedness evidenced by the Notes. 4.13 DELAY OR OMISSION; NO WAIVER. No delay or omission of Beneficiary or any Mortgage Note Holder to exercise any right, power or remedy upon any Event of Default shall exhaust or impair any such right, power or remedy or shall be construed to waive any such Event of Default or to constitute acquiescence therein. Every right, power and remedy given to Beneficiary whether contained herein or in the Mortgage Notes Indenture or otherwise available to Beneficiary may be exercised from time to time and as often as may be deemed expedient by Beneficiary. 4.14 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver of any Event of Default hereunder shall extend to or affect any subsequent or any other Event of Default then existing, or impair any rights, powers or remedies consequent thereon. If Beneficiary or, to the extent applicable under the Mortgage Notes Indenture, the holders of the portion of the principal amount of the then outstanding Notes required to approve such action thereunder: (a) grants 38 Exhibit 4.4 forbearance or an extension of time for the payment of any sums secured hereby; (b) takes other or additional security for the payment thereof; (c) waives or does not exercise any right granted in the Notes, the Mortgage Notes Indenture, this Deed of Trust or any other Mortgage Notes Indenture Security Document; (d) releases any part of the Trust Estate from the Lien or security interest of this Deed of Trust or any other instrument securing the Notes; (e) consents to the filing of any map, plat or replat of the Site (to the extent such consent is required); (f) consents to the granting of any easement on the Land or the Leased Premises (to the extent such consent is required); or (g) makes or consents to any agreement changing the terms of this Deed of Trust or any other Mortgage Notes Indenture Security Document subordinating the Lien or any charge hereof, no such act or omission shall release, discharge, modify, change or affect the original liability of Trustor under the Notes, this Deed of Trust or any other Mortgage Notes Indenture Security Document or otherwise, or any subsequent purchaser of the Trust Estate or any part thereof or any maker, co-signer, surety or guarantor. No such act or omission shall preclude Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in case of any Event of Default then existing or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by Beneficiary, shall the Lien or security interest of this Deed of Trust be altered thereby, except to the extent expressly provided in any releases, maps, easements or subordinations described in clause (d), (e), (f) or (g) above of this SECTION 4.14. In the event of the sale or transfer by operation of law or otherwise of all or any part of the Trust Estate, Beneficiary, without notice to any Person is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Trust Estate or the Obligations secured hereby, or with reference to any of the terms or conditions hereof, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any of the liabilities or undertakings hereunder, or waiving its right to declare such sale or transfer an Event of Default as provided herein. Notwithstanding anything to the contrary contained in this Deed of Trust or any other Mortgage Notes Indenture Security Document, (i) in the case of any non-monetary Event of Default, Beneficiary may continue to accept payments due hereunder without thereby waiving the existence of such or any other Event of Default and (ii) in the case of any monetary Event of Default, Beneficiary may accept partial payments of any sums due hereunder without thereby waiving the existence of such Event of Default if the partial payment is not sufficient to completely cure such Event of Default. 4.15 DISCONTINUANCE OF PROCEEDINGS; POSITION OF PARTIES RESTORED. If Beneficiary shall have proceeded to enforce any right or remedy under this Deed of Trust by foreclosure, entry of judgment or otherwise and such proceedings shall have been discontinued or abandoned for any reason, or such proceedings shall have resulted in a final determination adverse to Beneficiary, then and in every such case Trustor and Beneficiary shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Beneficiary shall continue as if no such proceedings had occurred or had been taken. 4.16 REMEDIES CUMULATIVE. No right, power or remedy, including, without limitation, remedies with respect to any security for the Notes, conferred upon or reserved to Beneficiary by this Deed of Trust or any other Mortgage Notes Indenture Security Document is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy 39 Exhibit 4.4 given hereunder or under any other Mortgage Notes Indenture Security Document, now or hereafter existing at law, in equity or by statute, and Beneficiary shall be entitled to resort to such rights, powers, remedies or security as Beneficiary shall in its sole and absolute discretion deem advisable. 4.17 INTEREST AFTER EVENT OF DEFAULT. If an Event of Default shall have occurred and is continuing, all outstanding and unpaid Obligations under the Notes and this Deed of Trust shall, at Beneficiary's option, bear interest at the rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture until such Event of Default has been cured. Trustor's obligation to pay such interest shall be secured by this Deed of Trust and the other Mortgage Notes Indenture Security Documents. 4.18 FORECLOSURE; EXPENSES OF LITIGATION. If Trustee forecloses, reasonable attorneys' fees for services in the supervision of said foreclosure proceeding shall be allowed to the Trustee and Beneficiary as part of the foreclosure costs. In the event of foreclosure of the Lien hereof, there shall be allowed and included as additional Obligations all reasonable expenditures and expenses which may be paid or incurred by or on behalf of Beneficiary for attorneys' fees, appraiser's fees, outlays for documentary and expert evidence, stenographers' charges, publication costs, and costs (which may be estimated as to items to be expended after foreclosure sale or entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies and guarantees, and similar data and assurances with respect to title as Beneficiary may deem reasonably advisable either to prosecute such suit or to evidence to a bidder at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Trust Estate or any portion thereof. All expenditures and expenses of the nature in this section mentioned, and such expenses and fees as may be incurred in the protection of the Trust Estate and the maintenance of the Lien and security interest of this Deed of Trust, including the fees of any attorney employed by Beneficiary in any litigation or proceeding affecting this Deed of Trust or any Mortgage Notes Indenture Security Document, the Trust Estate or any portion thereof, including, without limitation, civil, probate, appellate and bankruptcy proceedings, or in preparation for the commencement or defense of any proceeding or threatened suit or proceeding, shall be immediately due and payable by Trustor, with interest thereon at the rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture, and shall be secured by this Deed of Trust and the other Mortgage Notes Indenture Security Documents. Trustee waives its right to any statutory fee in connection with any judicial or non-judicial foreclosure of the Lien hereof and agrees to accept a reasonable fee for such services. 4.19 DEFICIENCY JUDGMENTS. If after foreclosure of this Deed of Trust or Trustee's sale hereunder, there shall remain any deficiency with respect to any amounts payable under the Notes or hereunder or any amounts secured hereby, and Beneficiary shall institute any proceedings to recover such deficiency or deficiencies, all such amounts shall continue to bear interest at the rate applicable to overdue principal set forth in Section 4.01 of the Mortgage Notes Indenture. Trustor waives any defense to Beneficiary's recovery against Trustor of any deficiency after any foreclosure sale of the Trust Estate. Trustor expressly waives any defense or benefits that may be derived from any statute granting Trustor any defense to any such recovery by Beneficiary. In addition, Beneficiary and Trustee shall be entitled to recovery of all of their 40 Exhibit 4.4 reasonable costs and expenditures (including, without limitation, any court imposed costs) in connection with such proceedings, including their reasonable attorneys' fees, appraisal fees and the other costs, fees and expenditures referred to in SECTION 4.18 above. This provision shall survive any foreclosure or sale of the Trust Estate, any portion thereof and/or the extinguishment of the Lien hereof. 4.20 WAIVER OF JURY TRIAL. Beneficiary and Trustor each waive any right to have a jury participate in resolving any dispute whether sounding in contract, tort or otherwise arising out of, connected with, related to or incidental to the relationship established between them in connection with the Notes, this Deed of Trust or any other Mortgage Notes Indenture Security Document. Any such disputes shall be resolved in a bench trial without a jury. 4.21 EXCULPATION OF BENEFICIARY. The acceptance by Beneficiary of the assignment contained herein with all of the rights, powers, privileges and authority created hereby shall not, prior to entry upon and taking possession of the Trust Estate by Beneficiary, be deemed or construed to make Beneficiary a "mortgagee in possession"; nor thereafter or at any time or in any event obligate Beneficiary to appear in or defend any action or proceeding relating to the Space Leases, the Rents or the Trust Estate, or to take any action hereunder or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under any Space Lease or to assume any obligation or responsibility for any security deposits or other deposits except to the extent such deposits are actually received by Beneficiary, nor shall Beneficiary, prior to such entry and taking, be liable in any way for any injury or damage to person or property sustained by any Person in or about the Trust Estate. ARTICLE 5 RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE Notwithstanding anything to the contrary in this Deed of Trust, Trustor and Beneficiary agree as follows. 5.1 EXERCISE OF REMEDIES BY TRUSTEE. To the extent that this Deed of Trust or applicable law, including all applicable Nevada Gaming Laws, authorizes or empowers, or does not require approval for, Beneficiary to exercise any remedies set forth in Article Four hereof or otherwise, or to perform any acts in connection therewith, Trustee (but not to the exclusion of Beneficiary unless so required under the law of the State of Nevada) shall have the power to exercise any or all such remedies, and to perform any acts provided for in this Deed of Trust in connection therewith, all for the benefit of Beneficiary and on Beneficiary's behalf in accordance with applicable law of the State of Nevada. In connection therewith, Trustee: (a) shall not exercise, or waive the exercise of, any of Beneficiary's remedies (other than any rights of Trustee to any indemnity or reimbursement), except at Beneficiary's request; and (b) shall exercise, or waive the exercise of, any or all of Beneficiary's remedies at Beneficiary's request, and in accordance with Beneficiary's directions as to the manner of such exercise or waiver. Trustee may, however, decline to follow Beneficiary's request or direction if Trustee shall be advised by counsel that the action or proceeding, or manner thereof, so directed may not lawfully be taken or waived. 41 Exhibit 4.4 5.2 RIGHTS AND PRIVILEGES OF TRUSTEE. To the extent that this Deed of Trust requires Trustor to indemnify Beneficiary or reimburse Beneficiary for any expenditures Beneficiary may incur, Trustee shall be entitled to the same indemnity and the same rights to reimbursement of expenses as Beneficiary, subject to such limitations and conditions as would apply in the case of Beneficiary. To the extent that this Deed of Trust negates or limits Beneficiary's liability as to any matter, Trustee shall be entitled to the same negation or limitation of liability. To the extent that Trustor, pursuant to this Deed of Trust, appoints Beneficiary as Trustor's attorney-in-fact for any purpose, Beneficiary or (when so instructed by Beneficiary) Trustee shall be entitled to act on Trustor's behalf without joinder or confirmation by the other. 5.3 RESIGNATION OR REPLACEMENT OF TRUSTEE. Trustee may resign by an instrument in writing addressed to Beneficiary, and Trustee may be removed at any time with or without cause (I.E., in Beneficiary's sole and absolute discretion) by an instrument in writing executed by Beneficiary. In case of the death, resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute, successor or replacement Trustee to act instead of Trustee originally named (or in place of any substitute, successor or replacement Trustee), then Beneficiary shall have the right and is hereby authorized and empowered to appoint a successor, substitute or replacement Trustee, without any formality other than appointment and designation in writing executed by Beneficiary, which instrument shall be recorded if required by the law of the State of Nevada. The law of the State of Nevada (including, without limitation, the Nevada Gaming Laws) shall govern the qualifications of any Trustee. The authority conferred upon Trustee by this Deed of Trust shall automatically extend to any and all other successor, substitute and replacement Trustee(s) successively until the obligations secured hereunder have been paid in full or the Trust Estate has been sold hereunder or released in accordance with the provisions of the Mortgage Notes Indenture Security Documents. Beneficiary's written appointment and designation of any Trustee shall be full evidence of Beneficiary's right and authority to make the same and of all facts therein recited. No confirmation, authorization, approval or other action by Trustor shall be required in connection with any resignation or other replacement of Trustee. 5.4 AUTHORITY OF BENEFICIARY. If Beneficiary is a banking corporation, state banking corporation or a national banking association and the instrument of appointment of any successor or replacement Trustee is executed on Beneficiary's behalf by an officer of such corporation, state banking corporation or national banking association, then such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the board of directors or any superior officer of Beneficiary. 5.5 EFFECT OF APPOINTMENT OF SUCCESSOR TRUSTEE. Upon the appointment and designation of any successor, substitute or replacement Trustee, and subject to compliance with applicable Nevada Gaming Laws and other applicable Legal Requirements, Trustee's entire estate and title in the Trust Estate shall vest in the designated successor, substitute or replacement Trustee. Such successor, substitute or replacement Trustee shall thereupon succeed to and shall hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon Trustee. All references herein to Trustee shall be deemed to refer to Trustee 42 Exhibit 4.4 (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder. 5.6 CONFIRMATION OF TRANSFER AND SUCCESSION. Upon the written request of Beneficiary or of any successor, substitute or replacement Trustee, any former Trustee ceasing to act shall execute and deliver an instrument transferring to such successor, substitute or replacement Trustee all of the right, title, estate and interest in the Trust Estate of Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon Trustee, and shall duly assign, transfer and deliver all properties and moneys held by said Trustee hereunder to said successor, substitute or replacement Trustee. 5.7 EXCULPATION. Trustee shall not be liable for any error of judgment or act done by Trustee in good faith, or otherwise be responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence, willful misconduct or knowing violation of any Legal Requirements. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it in good faith to be genuine. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law). Trustee shall be under no liability for interest on any moneys received by it hereunder. 5.8 ENDORSEMENT AND EXECUTION OF DOCUMENTS. Upon Beneficiary's written request, Trustee shall, without liability or notice to Trustor, execute, consent to, or join in any instrument or agreement in connection with or necessary to effectuate the purposes of the Mortgage Notes Indenture Security Documents. Trustor hereby irrevocably designates Trustee as its attorney-in-fact to execute, acknowledge and deliver, on Trustor's behalf and in Trustor's name, all instruments or agreements necessary to implement any provision(s) of this Deed of Trust or to further perfect the Lien created by this Deed of Trust on the Trust Estate. This power of attorney shall be deemed to be coupled with an interest and shall survive any disability of Trustor. 5.9 MULTIPLE TRUSTEES. If Beneficiary appoints multiple trustees, then any Trustee, individually, may exercise all powers granted to Trustee under this instrument, without the need for action by any other Trustee(s). 5.10 TERMS OF TRUSTEE'S ACCEPTANCE. Trustee accepts the trust created by this Deed of Trust upon the following terms and conditions: (a) DELEGATION. Trustee may exercise any of its powers through appointment of attorney(s) in fact or agents. (b) COUNSEL. Trustee may select and employ legal counsel (including any law firm representing Beneficiary). Trustor shall reimburse all reasonable legal fees and expenses that Trustee may thereby incur. 43 Exhibit 4.4 (c) SECURITY. Trustee shall be under no obligation to take any action upon any Event of Default unless furnished security or indemnity, in form satisfactory to Trustee, against costs, expenses and liabilities that Trustee may incur. (d) COSTS AND EXPENSES. Trustor shall reimburse Trustee, as part of the Obligations secured hereunder, for all reasonable disbursements and expenses (including reasonable legal fees and expenses) incurred by reason of and as provided for in this Deed of Trust, including any of the foregoing incurred in Trustee's administering and executing the trust created by this Deed of Trust, in complying with all applicable Nevada Gaming Laws and performing Trustee's duties and exercising Trustee's powers under this Deed of Trust. (e) RELEASE. Upon payment and performance of the Obligations secured hereunder, Beneficiary shall request that Trustee release this Deed of Trust. Upon receipt of such request Trustee shall release this Deed of Trust to Trustor. Trustor shall pay all costs of recordation, if any, and all of Trustee's and Beneficiary's costs and expenses in connection with such reconveyance, including, without limitation, reasonable attorneys' fees. ARTICLE 6 MISCELLANEOUS PROVISIONS 6.1 HEIRS, SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever one of the parties hereto is named or referred to herein, the successors and assigns of such party shall be included, and, subject to the limitations set forth herein and in the Mortgage Notes Indenture, all covenants and agreements contained in this Deed of Trust, by or on behalf of Trustor or Beneficiary shall bind and inure to the benefit of its heirs, successors and assigns, whether so expressed or not. 6.2 ADDRESSES FOR NOTICES, ETC. Any notice, report, demand or other instrument authorized or required to be given or furnished under this Deed of Trust to Trustor or Beneficiary shall be deemed given or furnished (i) when addressed to the party intended to receive the same, at the address of such party set forth below, and delivered by hand at such address or (ii) three (3) days after the same is deposited in the United States mail as first class certified mail, return receipt requested, postage paid, whether or not the same is actually received by such party: Beneficiary: U.S. Bank National Association 180 East 5th Street St. Paul, Minnesota 55101 Attn.: Corporate Trust Department Trustor: Venetian Casino Resort, LLC 3355 Las Vegas Blvd. South, Room 1C Las Vegas, Nevada 89109 Attn.: General Counsel 44 Exhibit 4.4 With a copy to: Las Vegas Sands, Inc. 3355 Las Vegas Boulevard, South Las Vegas, Nevada 89109 Attn.: General Counsel Trustee: First American Title Insurance Company 180 Cassia Way, Suite 502 Henderson, Nevada 89014 6.3 CHANGE OF NOTICE ADDRESS. Any Person may change the address to which any such notice, report, demand or other instrument is to be delivered or mailed to that person, by furnishing written notice of such change to the other parties, but no such notice of change shall be effective unless and until received by such other parties. 6.4 HEADINGS. The headings of the articles, sections, paragraphs and subdivisions of this Deed of Trust are for convenience of reference only, are not to be considered a part hereof, and shall not limit or expand or otherwise affect any of the terms hereof. 6.5 INVALID PROVISIONS TO AFFECT NO OTHERS. In the event that any of the covenants, agreements, terms or provisions contained herein or in the Notes, the Mortgage Notes Indenture or any other Mortgage Notes Indenture Security Document shall be invalid, illegal or unenforceable in any respect, the validity of the lien hereof and the remaining covenants, agreements, terms or provisions contained herein or in the Notes, the Mortgage Notes Indenture or any other Mortgage Notes Indenture Security Document shall be in no way affected, prejudiced or disturbed thereby. To the extent permitted by law, Trustor waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect. 6.6 CHANGES AND PRIORITY OVER INTERVENING LIENS. Neither this Deed of Trust nor any term hereof may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement hereafter made by Trustor and Beneficiary relating to this Deed of Trust shall be superior to the rights of the holder of any intervening Lien or encumbrance. 6.7 ESTOPPEL CERTIFICATES. Within ten (10) Business Days after Beneficiary's written request, Trustor shall from time to time execute a certificate, in recordable form (an "ESTOPPEL CERTIFICATE"), stating, except to the extent it would be inaccurate to so state: (a) the current amount of the Obligations secured hereunder and all elements thereof, including principal and interest and all other elements; (b) that Trustor has no defense, offset, claim, counterclaim, right of recoupment, deduction or reduction against any of the Obligations secured hereunder; (c) that none of the Mortgage Notes Indenture Security Documents have been amended, whether orally or in writing; (d) that Trustor has no claims against Beneficiary of any kind; (e) that any power of attorney granted to Beneficiary is in full force and effect; and (f) such other matters relating to this Deed of Trust or any other Mortgage Notes Indenture Security Document and the relationship of Trustor and Beneficiary as Beneficiary shall request. In 45 Exhibit 4.4 addition, the Estoppel Certificate shall set forth the reasons why it would be inaccurate to make any of the foregoing assurances ("a" through "f"). 6.8 WAIVER OF SETOFF AND COUNTERCLAIM. All amounts due under the Notes, this Deed of Trust or any other Mortgage Notes Indenture Security Document shall be payable without setoff, counterclaim or any deduction whatsoever. Trustor hereby waives the right to assert a counterclaim (other than a compulsory counterclaim) in any action or proceeding brought against it by Beneficiary and/or any Mortgage Note Holder(s) under the Mortgage Notes Indenture, or arising out of or in any way connected with this Deed of Trust, the other Mortgage Notes Indenture Security Documents or the Obligations. 6.9 GOVERNING LAW. The Mortgage Notes Indenture and the Notes provide that they are governed by, and construed and enforced in accordance with, the laws of the State of New York. This Deed of Trust shall also be construed under and governed by the laws of the State of New York without giving effect to the conflicts of law rules and principles of the State of New York; PROVIDED, HOWEVER, that (i) the terms and provisions of this Deed of Trust pertaining to the priority, perfection, enforcement or realization by Beneficiary of its respective rights and remedies under this Deed of Trust with respect to the Trust Estate shall be governed and construed and enforced in accordance with the internal laws of the State of Nevada (the "STATE") without giving effect to the conflicts-of-law rules and principles of the State, (ii) Trustor agrees that to the extent deficiency judgments are available under the laws of the State after a foreclosure (judicial or non-judicial) of the Trust Estate, or any portion thereof, or any other realization thereon by Beneficiary or any Mortgage Note Holder(s) under the Mortgage Notes Indenture, Beneficiary or such Mortgage Note Holder(s), as the case may be, shall have the right to seek such a deficiency judgment against Trustor in the State and (iii) Trustor agrees that if Beneficiary or any Mortgage Note Holder(s) under the Mortgage Notes Indenture obtains a deficiency judgment in another state against Trustor, then Beneficiary or such Mortgage Note Holder(s), as the case may be, shall have the right to enforce such judgment in the State to the extent permitted under the laws of the State, as well as in other states. Nothing contained in this SECTION 6.9 shall be deemed to expand the limitations set forth in Section 13.08 of the Mortgage Notes Indenture. 6.10 REQUIRED NOTICES. Trustor shall notify Beneficiary promptly of the occurrence of any of the following and shall immediately provide Beneficiary a copy of the notice or documents referred to: (i) receipt of notice from any Governmental Authority relating to all or any material part of the Trust Estate if such notice relates to a default or act, omission or circumstance which would result in a default after notice or passage of time or both; (ii) receipt of any notice from any tenant leasing all or any material portion of the Trust Estate if such notice relates to a default or act, omission or circumstance which would result in a default after notice or passage of time or both; (iii) receipt of notice from the holder of any Permitted Lien relating to a default or act, omission or circumstance which would result in a default after notice or passage of time or both; (iv) the commencement of any proceedings or the entry of any judgment, decree or order materially affecting all or any portion of the Trust Estate or which involve the potential liability of Trustor or its Affiliates in an amount in excess of $25,000,000 (other than for personal injury actions and related property damage suits which are covered by such insurance); or (v) commencement of any judicial or administrative proceedings or the entry of any judgment, 46 Exhibit 4.4 decree or order by or against or otherwise affecting Trustor or any Affiliate of Trustor, a material portion of the Trust Estate, or a material portion of the Personal Property, or any other action by any creditor or lessor thereof as a result of any default under the terms of any lease. 6.11 RECONVEYANCE. In the event that (i) the Obligations are indefeasibly repaid in full, (ii) any part of the Trust Estate is sold, transferred or otherwise disposed of by Trustor in accordance with the Mortgage Notes Indenture or (iii) any part of the Trust Estate is otherwise released in accordance with the Mortgage Notes Indenture or with the consent of the Mortgage Notes Indenture Trustee, the Trust Estate (in the case of clause (i) of this Section) or portion thereof (in the case of clauses (ii) or (iii) of this Section) will be sold, transferred or otherwise disposed of, and released free and clear of the Liens created by this Deed of Trust and the Beneficiary, at the request and expense of the Trustor, will duly and promptly assign, transfer, deliver and release to the Trustor or its designee (without recourse and without any representation or warranty) such of the Trust Estate as is then being (or has been) so sold, transferred or otherwise disposed of or released. In connection with any disposition or release pursuant to this SECTION 6.11, Beneficiary shall, at Trustor's expense, cause Trustee to reconvey, without warranty the Trust Estate or portion thereof being disposed or released, as the case may be, and to execute and deliver to Trustor such documents (including UCC-3 termination statements) as Trustor may reasonably request. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 6.12 ATTORNEYS' FEES. Without limiting any other provision contained herein, Trustor agrees to pay all costs of Beneficiary or Trustee incurred in connection with the enforcement of this Deed of Trust or of the Notes, including, without limitation, all reasonable attorneys' fees whether or not suit is commenced, and including, without limitation, fees incurred in connection with any probate, appellate, bankruptcy, deficiency or any other litigation proceedings, all of which sums shall be secured hereby. 6.13 LATE CHARGES. By accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right to collect any late charge thereon or interest thereon at the interest rate on the Notes, if so provided, on any amounts not then paid or its right either to require prompt payment when due of all other sums so secured or to declare default for failure to pay any amounts not so paid. 6.14 COST OF ACCOUNTING. Trustor shall pay to Beneficiary, for and on account of the preparation and rendition of any accounting, which Trustor may be entitled to require under any law or statute now or hereafter providing therefor, the reasonable costs thereof. 6.15 RIGHT OF ENTRY. Subject to compliance with applicable Nevada Gaming Laws and the terms of the Space Leases, Beneficiary may at any reasonable time or times and on reasonable prior written notice to Trustor make or cause to be made entry upon and inspections of the Trust Estate or any part thereof in person or by agent. 6.16 CORRECTIONS. Trustor shall, upon request of Beneficiary or Trustee, promptly correct any defect, error or omission which may be discovered in the contents of this Deed of Trust (including, but not limited to, in the exhibits and schedules attached hereto) or in 47 Exhibit 4.4 the execution or acknowledgement hereof, and shall execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or as may be reasonably requested by Trustee to carry out more effectively the purposes of this Deed of Trust, to subject to the Lien and security interest hereby created any of Trustor's properties, rights or interests covered or intended to be covered hereby, and to perfect and maintain such Lien and security interest. 6.17 STATUTE OF LIMITATIONS. To the fullest extent allowed by the law, the right to plead, use or assert any statute of limitations as a plea or defense or bar of any kind, or for any purpose, to any debt, demand or obligation secured or to be secured hereby, or to any complaint or other pleading or proceeding filed, instituted or maintained for the purpose of enforcing this Deed of Trust or any rights hereunder, is hereby waived by Trustor. 6.18 SUBROGATION. Should the proceeds of any loan or advance made by Beneficiary or any Mortgage Note Holder(s) under the Mortgage Notes Indenture to Trustor, repayment of which is hereby secured, or any part thereof, or any amount paid out or advanced by Beneficiary or any Mortgage Note Holder(s) under the Mortgage Notes Indenture, be used directly or indirectly to pay off, discharge or satisfy, in whole or in part, any prior or superior Lien or encumbrance upon the Trust Estate, or any part thereof, then, as additional security hereunder, Trustee, on behalf of Beneficiary, shall be subrogated to any and all rights, superior titles, Liens and equities owned or claimed by any owner or holder of said outstanding Liens, charges and indebtedness, however remote, regardless of whether said Liens, charges and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment. 6.19 JOINT AND SEVERAL LIABILITY. All obligations of Trustor hereunder, if more than one, are joint and several. Recourse for deficiency after sale hereunder may be had against the property of Trustor, without, however, creating a present or other Lien or charge thereon. 6.20 HOMESTEAD. Trustor hereby waives and renounces all homestead and exemption rights provided by the constitution and the laws of the United States and of any state, in and to the Trust Estate as against the collection of the Obligations, or any part hereof. 6.21 CONTEXT. In this Deed of Trust, whenever the context so requires, the neuter includes the masculine and feminine, and the singular includes the plural, and vice versa. 6.22 TIME. Time is of the essence of each and every term, covenant and condition hereof. Unless otherwise specified herein, any reference to "days" in this Deed of Trust shall be deemed to mean "calendar days." 6.23 INTERPRETATION. As used in this Deed of Trust unless the context clearly requires otherwise: the terms "herein" or "hereunder" and similar terms without reference to a particular section shall refer to the entire Deed of Trust and not just to the section in which such terms appear; the term "lien" shall also mean a security interest; and the term "security interest" shall also mean a lien. 48 Exhibit 4.4 6.24 EFFECT OF NRS SECTION 107.030. To the extent not inconsistent herewith, the provisions of NRS Section 107.030 are included herein by reference. 6.25 AMENDMENTS. This Deed of Trust cannot be waived, changed discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought and only as permitted by the provisions of the Mortgage Notes Indenture. Beneficiary agrees to enter into any amendment of this Deed of Trust to the extent required by the second paragraph of Section 9.01 of the Mortgage Notes Indenture. 6.26 NO CONFLICTS. In the event that any of the provisions contained here conflict with the Security Agreement, the provisions contained in the Security Agreement shall prevail. ARTICLE 7 POWER OF ATTORNEY 7.1 GRANT OF POWER. Subject to compliance with applicable Nevada Gaming Laws, Trustor irrevocably appoints Beneficiary and any successor thereto as its attorney-in-fact, with full power and authority, including the power of substitution, exercisable only during the continuance of an Event of Default to act for Trustor in its name, place and stead as hereinafter provided: (a) POSSESSION AND COMPLETION. To take possession of the Site, the Project and/or the Improvements, remove all employees, contractors and agents of Trustor therefrom, complete or attempt to complete the work of construction, and market, sell or lease the Site, the Project and/or Improvements. (b) PLANS. To make such additions, changes and corrections in the current Phase I-A Project Plans and Specifications as may be necessary or desirable, in Beneficiary's reasonable discretion, or as it deems proper to complete the Phase I-A Project. (c) EMPLOYMENT OF OTHERS. To employ such contractors, subcontractors, suppliers, architects, inspectors, consultants, property managers and other agents as Beneficiary, in its discretion, deems proper for the completion of the Phase I-A Project, for the protection or clearance of title to the Site, the Project or the Improvements, or for the protection of Beneficiary's interests with respect thereto. (d) SECURITY GUARDS. To employ watchmen to protect the Site, the Project and/or the Improvements from injury. (e) COMPROMISE CLAIMS. To pay, settle or compromise all bills and claims then existing or thereafter arising against Trustor, which Beneficiary, in its discretion, deems proper for the protection or clearance of title to the Site, the Project, the Improvements or the Personal Property, or for the protection of Beneficiary's interests with respect thereto. 49 Exhibit 4.4 (f) LEGAL PROCEEDINGS. To prosecute and defend all actions and proceedings in connection with the Site, the Project or the Improvements. (g) OTHER ACTS. To execute, acknowledge and deliver all other instruments and documents in the name of Trustor that are necessary or desirable, to exercise Trustor's rights under all contracts concerning the Site, the Project, or the Improvements, including, without limitation, under any Space Leases, and to do all other acts with respect to the Site, the Project or the Improvements that Trustor might do on its own behalf, as Beneficiary, in its reasonable discretion, deems proper. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 50 Exhibit 4.4 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing as of the day and year first above written. TRUSTOR: VENETIAN CASINO RESORT, LLC, a Nevada limited liability company, By: LAS VEGAS SANDS, INC., a Nevada corporation, its managing member By: /s/ David Friedman ------------------------------- Name: David Friedman ------------------------------- Title: Secretary ------------------------------- LAS VEGAS SANDS, INC., a Nevada corporation By: /s/ Harry Miltengerger ----------------------------------- Name: Harry Miltengerger ----------------------------------- Title: Vice President Finance ----------------------------------- S-1 Exhibit 4.4 STATE OF NEW YORK ) )ss: COUNTY OF NEW YORK ) On the 4th day of June in the year 2002 before me, the undersigned, personally appeared Harry Miltengerger, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. Carolyne Carlsen ------------------------------------------ (Signature and office of individual taking acknowledgment) Notary Public, State of NY No. 01CA6019371 Qualified in Suffolk County Commission expires Feb. 8, 2002 Notarial Seal N-1 Exhibit 4.4 STATE OF NEW YORK ) )ss: COUNTY OF NEW YORK ) On the 4th day of June in the year 2002 before me, the undersigned, personally appeared Harry Miltengerger, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. Carolyne Carlsen ------------------------------------------ (Signature and office of individual taking acknowledgment) Notary Public, State of NY No. 01CA6019371 Qualified in Suffolk County Commission expires Feb. 8, 2002 Notarial Seal N-2 EX-4 9 ex4-5_7032.txt INTERCREDITOR AGREEMENT Exhibit 4.5 INTERCREDITOR AGREEMENT THE BANK OF NOVA SCOTIA as Bank Agent U.S. BANK NATIONAL ASSOCIATION as Mortgage Notes Indenture Trustee and THE BANK OF NOVA SCOTIA as Intercreditor Agent JUNE 4, 2002 TABLE OF CONTENTS 1. Definitions and General Provisions...........................................2 1.1 Definitions............................................................2 1.2 Other Defined Terms...................................................12 1.3 Interpretation........................................................13 2. Collateral, Priority of Liens and Subordination.............................13 2.1 Liens and Security Interests..........................................13 2.1.1 Collateral for Senior Lender Secured Obligations...............13 2.1.2 Collateral for Mortgage Notes Secured Obligations..............13 2.2 No Other Collateral...................................................13 2.3 Confirmation of Liens.................................................14 2.4 Effect................................................................14 3. Permitted Facility Amendments; Releases; Protective Advances................14 3.1 Bank Credit Facility Amendments.......................................15 3.2 Future First Lien Credit Facility Amendments..........................15 3.3 Amendments to Security Agreements.....................................16 3.4 Releases..............................................................16 3.5 Waivers...............................................................16 3.6 Protective Advances...................................................16 3.7 No Other Facility Amendments..........................................16 4. Events of Default; Remedies; Certain Actions by the Intercreditor Agent.....16 4.1 Declaration of Event of Default.......................................16 4.2 Shared Collateral.....................................................16 4.3 Requirements Regarding Exercise of Remedies...........................17 4.4 Exercise of Rights Under Security Agreements..........................18 4.4.1 Related Collateral Agreements by the Intercreditor Agent.......18 4.4.2 Separate Realization...........................................18 4.4.3 Foreclosure of Deeds of Trust..................................20 4.5 Other Duties of and Actions by the Intercreditor Agent................20 5. Representations and Warranties..............................................20 5.1 Organization..........................................................21 5.2 Authorization.........................................................21 5.3 Binding Agreement.....................................................21 5.4 No Consent Required...................................................21 5.5 No Conflict...........................................................21
i 6. Appointment of the Intercreditor Agent......................................21 6.1 Appointment...........................................................21 6.2 Authority.............................................................22 6.3 Amendment of Agreements...............................................22 6.4 Responsibility........................................................22 6.5 Liability.............................................................22 6.6 Capacity..............................................................23 6.7 Resignation; Appointment of Additional Intercreditor Agents...........23 7. Miscellaneous Provisions....................................................24 7.1 Notices; Addresses....................................................24 7.2 Further Assurances....................................................26 7.3 Delay and Waiver......................................................26 7.4 Entire Agreement......................................................26 7.5 Governing Law.........................................................26 7.6 Severability..........................................................26 7.7 Headings..............................................................27 7.8 Limitations On Liability..............................................27 7.9 Consent to Jurisdiction...............................................27 7.10 Successors and Assigns................................................27 7.11 Counterparts..........................................................27 7.12 No Third Party Beneficiaries..........................................27 7.13 Additional Secured Credit Parties.....................................28 7.14 Trust Indenture Act...................................................28
EXHIBIT Exhibit A Schedule of Consents ii INTERCREDITOR AGREEMENT THIS INTERCREDITOR AGREEMENT (as amended, supplemented amended and restated or otherwise modified, the "AGREEMENT"), dated as of June 4, 2002 (the "EFFECTIVE DATE"), is entered into by and among THE BANK OF NOVA SCOTIA, a Canadian chartered bank ("SCOTIABANK"), as the Administrative Agent acting on behalf of itself and the Bank Lenders pursuant to the Bank Credit Agreement (in such capacity, the "BANK AGENT"), U.S. BANK NATIONAL ASSOCIATION, a national banking association in its capacity as Trustee under the Mortgage Notes Indenture (in such capacity, the "MORTGAGE NOTES INDENTURE TRUSTEE"), and SCOTIABANK, as Intercreditor Agent hereunder and under the Related Collateral Agreements (in such capacity, the "INTERCREDITOR AGENT"). RECITALS A. THE CASINO RESORT. Las Vegas Sands, Inc., a Nevada corporation ("LVSI"), and Venetian Casino Resort, LLC, a Nevada limited liability company ("VENETIAN," and together with LVSI, the "COMPANY") own and operate the Venetian Casino Resort (the "CASINO RESORT"), a Venetian-themed hotel, casino, retail, meeting and entertainment complex, with related heating, ventilation and air conditioning and power station facilities located at 3355 Las Vegas Boulevard South, Clark County, Nevada. B. THE BANK CREDIT FACILITY. Concurrently herewith, LVSI, Venetian, the Bank Agent, as administrative agent, joint lead arranger and joint bookrunner, Goldman Sachs Credit Partners L.P., as syndication agent, joint lead arranger and joint bookrunner, and the Bank Lenders have entered into the Bank Credit Agreement pursuant to which the Bank Lenders have agreed, subject to the terms thereof and hereof, to provide the Bank Credit Facility to LVSI and Venetian. C. THE MORTGAGE NOTES INDENTURE. Concurrently herewith LVSI, Venetian, certain guarantors named therein and the Mortgage Notes Indenture Trustee have entered into the Mortgage Notes Indenture pursuant to which LVSI and Venetian will issue the Mortgage Notes. D. RE-FINANCING OF CERTAIN DEBT; CONSTRUCTION OF PHASE 1A ADDITION. The Company intends to use a portion of the proceeds of the Bank Credit Facility, the Mortgage Notes Proceeds and a new loan facility secured by the Mall and certain related assets to (i) repay all amounts outstanding under the Company's existing bank credit facility and all amounts outstanding under certain debt instruments of the Company and certain Subsidiaries of the Company, (ii) repurchase, defease and/or redeem all of the Company's outstanding 12 1/4% mortgage notes due 2004 and 14 1/4% senior subordinated notes due 2005, (iii) finance the construction of an expansion of the Casino Resort consisting of an approximately 1,000 room hotel tower on top of the Casino Resort's existing parking garage, an approximately 1,000 parking space expansion to the existing parking garage and approximately 150,000 square feet of additional meeting and conference space (collectively, the "PHASE 1A ADDITION") and (iv) pay all fees and expenses associated with the foregoing transactions. As more particularly described in Section 2 hereof, the Bank Credit Facility is secured by a first priority Lien on the Collateral and the Mortgage Notes are secured by a second priority Lien on the Collateral. 1 E. SECURITY AGREEMENT. In connection with the matters provided for herein, LVSI, Venetian and certain of their subsidiaries, as debtors thereunder, and Scotiabank, as the Intercreditor Agent thereunder, have entered into that certain Security Agreement as of even date herewith (as amended, supplemented, amended and restated or otherwise modified, the "SECURITY AGREEMENT"), to provide for, among other things, the creation of security interests in the Collateral described therein granted to the Intercreditor Agent to secure the Bank Secured Obligations, with first Lien priority, and to secure the Mortgage Notes Secured Obligations, with second Lien priority. F. INTERCREDITOR AGREEMENT. The Secured Credit Parties desire to enter into this Agreement in order to appoint Scotiabank as the Intercreditor Agent hereunder and under the Related Collateral Agreements, and to set forth certain provisions relating to their respective rights in the Collateral, the exercise of remedies in the event of default, the application of proceeds of enforcement and certain other matters. NOW, THEREFORE, with reference to the foregoing recitals and in reliance thereon, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Secured Credit Parties agree as follows: 1. DEFINITIONS AND GENERAL PROVISIONS. 1.1 DEFINITIONS. Except as otherwise expressed and provided herein, all capitalized terms used in this Agreement and its Exhibits shall have the meanings provided for in this SECTION 1.1. "ACCELERATION EVENT" means the acceleration of the maturity of all Obligations under a Facility Agreement in accordance with the terms and conditions of such Facility Agreement. "ADDITIONAL BANK PROCEEDS" means the proceeds advanced by the Bank Lenders pursuant to any Facility Amendment which increases the maximum amount of the existing commitments under the Bank Credit Facility, subject to the limitations on the amount thereof provided for in SECTION 3.1.1 hereof; PROVIDED, HOWEVER, that Additional Bank Proceeds shall NOT include any amounts advanced or re-advanced by the Bank Lenders under the Revolving Bank Loan Commitment under the Bank Credit Facility (but any Facility Amendment of the Bank Credit Facility to increase the $75,000,000 maximum amount of the Revolving Bank Loan Commitment shall be subject to the provisions of SECTION 3.1.1 below). "ADELSON" means Sheldon G. Adelson, an individual. "ADELSON RELATIVE" means (i) any spouse, child, grandchild or sibling of Adelson, (ii) any other natural Person having a relationship by blood, marriage or adoption not more remote than second cousin with Adelson or any Person referenced in clause (i) of this definition or (iii) any other Person directly or indirectly controlled by Adelson or any other Person referenced in clause (i) or clause (ii) of this definition. For purposes of this definition, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of 2 the management or policies of any other Person, whether through the ownership of voting securities, by agreement or otherwise. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER, that beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "BANK AGENT" means Scotiabank or its successor or assignee in its capacity as Administrative Agent under the Bank Credit Agreement. "BANK CREDIT AGREEMENT" means that certain Credit Agreement dated as of the Effective Date by and among LVSI, Venetian, the Bank Agent, as administrative agent, joint lead arranger and joint bookrunner, Goldman Sachs Credit Partners L.P., as syndication agent, joint lead arranger and joint bookrunner, and the Bank Lenders, as such agreement may be amended (including, without limitation, any amendment and restatement thereof), supplemented or otherwise modified from time to time pursuant to a Permitted Facility Amendment, including, without limitation, any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including, without limitation, increasing the aggregate principal amount that may be borrowed thereunder but only to the extent permitted hereunder and by the terms of the Mortgage Notes Indenture) all or any portion of the Indebtedness and other obligations under such agreement or any successor or replacement agreement, and whether by the same or any other agent, lender or group of lenders. "BANK CREDIT FACILITY" means, collectively, the term loans, revolving facility and letter of credit facility described and made available to LVSI and Venetian by the Bank Lenders pursuant to the Bank Credit Agreement. "BANK DEED OF TRUST" means, collectively, (1) that certain Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated as of even date herewith, made by Venetian and LVSI, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Bank Agent, as beneficiary, and (2) if and when entered into, that certain Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing to be entered into by Venetian, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Bank Agent, as beneficiary, which deed of trust may be entered into at the request of the Bank Agent after such time as (A) a separate legal parcel has been created for the property leased by Lido Casino Resort, LLC, a Nevada limited liability company ("LIDO CASINO RESORT"), to Venetian pursuant to that certain Phase 1A Lease, dated as of even date herewith (the "PHASE 1A LEASE"), by and between Lido Casino Resort, as lessor, and Venetian, as lessee, and (B) such property has been conveyed by Lido Casino Resort to Venetian, all in accordance with the terms of the Phase 1A Lease, as each may be amended (including, without limitation, any amendment and restatement thereof), supplemented or otherwise modified from time to time. 3 "BANK ENVIRONMENTAL INDEMNITY" means that certain Environmental Indemnity Agreement dated as of the Effective Date by and among LVSI, Venetian and the Bank Agent, as amended (including any amendment and restatement) supplemented or modified from time to time. "BANK LENDERS" means the lenders party to the Bank Credit Agreement and the counterparties to Rate Protection Agreements (as defined in the Bank Credit Agreement) or their successors or assignees in such capacity as lenders or counterparties, as the case may be, under the Bank Credit Agreement. "BANK SECURED OBLIGATIONS" means all Obligations under the Bank Credit Facility, the Bank Security Documents and the other Loan Documents (as defined in the Bank Credit Agreement) including, to the extent permitted under the Mortgage Notes Indenture, Obligations in respect of Rate Protection Agreements (as defined in the Bank Credit Agreement). "BANK SECURITY DOCUMENTS" means the Bank Deed of Trust, the Bank Environmental Indemnity, the Security Agreement and any other guaranties, deeds of trust, security agreements or collateral account agreements executed from time to time by LVSI or Venetian or direct or indirect Subsidiaries of LVSI or Venetian in favor of the Intercreditor Agent, the Bank Agent or the Bank Lenders to secure or guaranty the Obligations under the Bank Credit Facility. "BANKRUPTCY CODE" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute. "BASE RATE LOAN" shall have the meaning ascribed thereto in the Bank Credit Agreement. "CAPITAL STOCK" means with respect to any Person, any and all shares, interests, participations, rights or other equivalents (however designated) of capital stock of such Person, including, without limitation, if such Person is a partnership or limited liability company, partnership or membership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership or limited liability company. "COLLATERAL" means all real and personal property encumbered to secure the Senior Lender Hedging Obligations, the Bank Secured Obligations under the Bank Security Documents, the Mortgage Notes Secured Obligations under the Mortgage Notes Indenture Security Documents, or obligations under any Future First Lien Credit Facility, including, without limitation, the Shared Collateral. "COMMITMENT" means, with respect to the Bank Credit Facility or any Future First Lien Credit Facility, the aggregate principal amount of all loans or credit extensions to the Company which may be made under such Facility. "COMPANY GROUP" means the Company and any Subsidiary of the Company, and references herein to "any of the Company Group" or words to that effect mean any of the entities comprising the Company or any Subsidiary of any of them. 4 "CONSENTS" means the consents described on EXHIBIT A attached hereto and incorporated herein by reference. "CONTROLLING PARTY" means one or more Secured Credit Parties with the right to direct the Intercreditor Agent with respect to any decisions or actions made or taken or to be made or taken with respect to Collateral pursuant to any of the Related Collateral Agreements (including, without limitation, the matters provided for in SECTION 4.4.1 and SECTION 4.5), determined in accordance with the following: (1) except with respect to Specified Actions, the Controlling Party with respect to any Collateral shall be the Secured Credit Party or Parties which, at the time any direction or consent is required or may be given, has the most senior Liens on or security interests in such Collateral as established pursuant to SECTION 2.1; PROVIDED that, in the event two or more Secured Credit Parties have PARI PASSU senior Liens on or security interest in Collateral, then, as between such Secured Parties, Controlling Party shall refer to the Secured Party that holds the largest amount of Obligations that are secured by such PARI PASSU Lien. (2) with respect to Specified Actions, the Controlling Party shall mean all of the Secured Credit Parties; PROVIDED, HOWEVER, that in the event Adelson or any Adelson Relative directly or indirectly owns an interest (other than a participation) in excess of fifteen percent (15%) of the aggregate Indebtedness under any Facility (the percentage of the total Indebtedness attributable to Adelson or any Adelson Relative shall be determined in accordance with the procedure demonstrated by the following example: a direct or indirect 50% interest in a $70 million portion of a $140 million Indebtedness would equal a 25% interest in such Indebtedness), then the Secured Credit Party with respect to such Indebtedness (an "INELIGIBLE CREDIT PARTY") shall not have the right to act as a Controlling Party in accordance with the foregoing, and the Controlling Party shall be the Secured Credit Party or Parties determined in accordance with such provisions among the Secured Credit Parties other than the Ineligible Credit Party (the foregoing provisions shall not, however, limit or restrict the other rights of a Secured Credit Party under this Agreement, including, without limitation, exercise of the rights provided for in SECTION 4.3 and in SECTION 4.4.2, whether or not such Secured Credit Party is an Ineligible Credit Party in accordance with the foregoing). "DEEDS OF TRUST" means, collectively, the Bank Deed of Trust and the Mortgage Notes Indenture Deed of Trust. "DISBURSEMENT ACCOUNT COLLATERAL" has the meaning given to the term "Collateral" under the Disbursement Account Agreement (as such term is defined in the Credit Agreement). "EVENT OF DEFAULT" means, as the context requires, the occurrence and continuance of an "Event of Default" by or with respect to the Company or any Guarantor under the applicable Financing Agreement; PROVIDED, HOWEVER, that, notwithstanding the provisions of 5 SECTION 1.3 of this Agreement, any matter which would have constituted an "Event of Default" under a Facility Agreement but for the waiver thereof by the Secured Credit Party to such Facility Agreement, or but for the termination of such Facility Agreement, shall NOT constitute an Event of Default for purposes of this Agreement. "EXERCISE REMEDIES" or the "EXERCISE OF REMEDIES" means the recording of a Notice of Default under any of the Deeds of Trust, the commencement of an action for judicial foreclosure, the appointment of a receiver, the enforcement of personal property foreclosure proceedings (whether judicial or non-judicial), the filing of a complaint or other action to enforce any Obligations, realization on Collateral or the enforcement of other remedies under any Related Collateral Agreement or any Facility Agreement, or the exercise of set off, or any combination of the foregoing, by or for the benefit of any Secured Credit Party hereto; PROVIDED, HOWEVER, that "Exercise Remedies" or the "Exercise of Remedies" shall EXCLUDE, without limitation, the following: (i) the giving of notices of default (as distinguished from RECORDING a Notice of Default); (ii) any declaration of an Acceleration Event; and (iii) actions taken by any Secured Credit Party or the Intercreditor Agent to perfect, or to extend or confirm the perfection or effectiveness of, any Lien provided for herein or in the applicable Facility Agreements. "FACILITY" or "FACILITIES" means, as the context requires, the Bank Credit Facility, the Mortgage Notes Indenture or any Future First Lien Credit Facility or any of them. "FACILITY AGREEMENTS" means, collectively, the Bank Credit Agreement, the Mortgage Notes Indenture and the principal agreement governing any Future First Lien Credit Facility. "FACILITY AMENDMENT" means any amendment, modification, extension or renewal of any Facility or Facility Agreement. "FINANCING AGREEMENTS" means, collectively, the Bank Credit Agreement, the Mortgage Notes Indenture, the Security Documents, the notes or instruments delivered to the Bank Lenders, the Mortgage Notes, and the principal document governing any other First Lien Credit Facility (as defined in the Mortgage Notes Indenture) entered into on, prior to or after the date hereof and the security documents notes or instruments delivered to the providers of such other First Lien Credit Facility, as the same may be amended, supplemented, amended and restated or otherwise modified from time to time in accordance with the terms and conditions thereof. "FUTURE FIRST LIEN CREDIT FACILITY" shall mean any First Lien Credit Facility (as defined in the Mortgage Notes Indenture) that is designated by the Borrower as a "First Lien Credit Facility" for purposes of the Mortgage Notes Indenture (other than the Bank Credit Agreement) but only to the extent that the providers of such Future First Lien Credit Facility become a party to this Agreement and agree to be bound by and comply with all of the terms and provisions of this Agreement, PROVIDED that, either such First Lien Credit Facility is expressly permitted as such under the Bank Credit Agreement or the required lenders under such Bank Credit Agreement have consented to the designation. 6 "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, without limitation, 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. "GUARANTOR" shall mean any "Subsidiary Guarantor" under the Bank Credit Agreement and any "Note Guarantor" under the Mortgage Notes Indenture. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (a) interest rate or currency swap agreements, interest rate or currency cap agreements, interest rate or currency collar agreements and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates and/or currency exchange rates, in each case, to the extent permitted to be entered into and secured with a first priority Lien pursuant to the Mortgage Notes Indenture and the Bank Credit Agreement; provided, however that Hedging Obligations shall not include obligations of the Company or its Subsidiaries in respect of Rate Protection Agreements. "HVAC PROVIDER" means Sempra Energy Solutions, a California corporation (as successor to Atlantic-Pacific Las Vegas, LLC, a Delaware limited liability company). "HVAC SERVICES AGREEMENT" means, collectively, (1) that certain Energy Services Agreement dated as of November 14, 1997 between Venetian and the HVAC Provider and (2) that certain Ground Lease between Venetian and the HVAC Provider, in each case as the same has been or may be amended. "INDEBTEDNESS," means, with respect to any Person, (1) any indebtedness of such Person, whether or not contingent (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) representing the balance deferred and unpaid of the purchase price of any property (including Capital Lease Obligations (as defined in the Mortgage Notes Indenture)), except any such balance that constitutes an accrued expense or trade payable, or (d) representing any Hedging Obligations, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP (as defined in the Mortgage Notes Indenture), (2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person). For purposes of this definition, the term "Indebtedness" shall not include (a) any amount of the liability in respect of an operating lease that at such time would not be required to be capitalized and reflected as a liability on the balance sheet in accordance with GAAP (as defined in the Mortgage Notes Indenture), (b) any obligation under the HVAC Services Agreement as in effect on the Issuance Date (as defined in the Mortgage Notes Indenture) or (c) any surety bonds for claims underlying mechanics liens and any reimbursement obligations with respect thereto so 7 long as such reimbursement obligations are not then due, or are promptly paid when due. The amount of any Indebtedness outstanding as of any date shall be (a) the accreted value thereof, in the case of any Indebtedness with original issue discount, and (b) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. Notwithstanding anything herein to the contrary, Indebtedness of the Company and its Restricted Subsidiaries (as defined in the Mortgage Notes Indenture) shall not include any Indebtedness that has been either satisfied and discharged or defeased through covenant defeasance or legal defeasance. "INTERCREDITOR AGENT" means Scotiabank as the Intercreditor Agent pursuant to SECTION 6 of this Agreement, its permitted successor or assignee in such capacity, and any Additional Intercreditor Agent appointed pursuant to said SECTION 6. "LENDER" means any of the Bank Lenders, any lender under a Future First Lien Credit Facility, any Permitted Counterparty or any of the Mortgage Note Holders. "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, without limitation, any conditional sale or other title retention agreement or any lease in the nature thereof. "MALL" means that certain enclosed retail, dining and entertainment complex of approximately 446,000 net leaseable square feet otherwise known as the Grand Canal Shoppes Mall. "MORTGAGE NOTE(S)" means the 11.00% Mortgage Note(s) due 2010 and any Additional Notes (as defined in the Mortgage Notes Indenture), in each case issued by LVSI and Venetian pursuant to the Mortgage Notes Indenture. "MORTGAGE NOTE HOLDER(S)" means the holder(s) of the Mortgage Note(s). "MORTGAGE NOTES INDENTURE" means that certain Mortgage Notes Indenture dated as of the Effective Date by and among LVSI, Venetian, the guarantors signatory thereto and the Mortgage Notes Indenture Trustee, as amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time. "MORTGAGE NOTES INDENTURE DEED OF TRUST" means, collectively, (1) that certain Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated as of even date herewith, made by Venetian and LVSI, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Mortgage Notes Indenture Trustee, as beneficiary, and (2) if and when entered into, that certain Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing to be entered into by Venetian, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Mortgage Notes Indenture Trustee, as beneficiary, which deed of trust may be entered into at the request of the Mortgage Notes Trustee after such time as (A) a separate legal parcel has been created for the property leased by Lido Casino Resort to Venetian pursuant to that certain Phase 1A Lease and (B) such property has been conveyed by Lido Casino Resort to Venetian, all in accordance with the terms of the Phase 1A Lease, as each may be amended (including, 8 without limitation, any amendment and restatement thereof), supplemented or otherwise modified from time to time. "MORTGAGE NOTES INDENTURE ENVIRONMENTAL INDEMNITY" means that certain Environmental Indemnity Agreement dated as of the Effective Date by and among LVSI, Venetian and the Mortgage Notes Indenture Trustee, as amended (including, without limitation, any amendment and restatement thereof), supplemented or otherwise modified from time to time. "MORTGAGE NOTES INDENTURE SECURITY DOCUMENTS" means, collectively, the Mortgage Notes Indenture Deed of Trust, the Mortgage Notes Indenture Environmental Indemnity, the Security Agreement and any guaranties, deeds of trust, security agreements or collateral account agreements executed from time to time by LVSI or Venetian or direct or indirect Subsidiaries of LVSI or Venetian in favor of the Intercreditor Agent, the Mortgage Notes Indenture Trustee or the Mortgage Note Holders to secure or guaranty the Obligations under the Mortgage Notes and the Mortgage Notes Indenture. "MORTGAGE NOTES INDENTURE TRUSTEE" means U.S. Bank National Association or its successor or assignee in its capacity as Trustee under the Mortgage Notes Indenture. "MORTGAGE NOTES PROCEEDS" means the proceeds from the issuance of the Mortgage Notes (net of any underwriter's discount and expenses). "MORTGAGE NOTES SECURED OBLIGATIONS" means all Obligations under the Mortgage Notes, the Mortgage Notes Indenture Security Documents and the other Collateral Documents (as defined in the Mortgage Notes Indenture). "NEVADA GAMING AUTHORITIES" means, collectively, the Nevada Gaming Commission, the Nevada State Gaming Control Board and the Clark County Liquor and Gaming Licensing Board. "NOTICE OF DEFAULT" means a notice of default which must be recorded in the official real property records of Clark County, Nevada, in order to commence non-judicial foreclosure of a Deed of Trust in accordance with applicable Nevada law. "OBLIGATIONS" means (a) all loans, advances, debts, liabilities and obligations (including reimbursement obligations in respect of letters of credit), howsoever arising, owed by the Company and its direct and indirect Subsidiaries under the Bank Credit Agreement, the Mortgage Notes Indenture or otherwise to any Lender of every kind and description (whether or not evidenced by any note or instrument and whether or not for the payment of money), direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, pursuant to the terms of the Financing Agreements, including, without limitation, all interest (including post-petition interest even if the claim for such amounts is not permitted by applicable law), fees, charges, expenses, attorneys' fees and accountants fees chargeable to the Company or any Guarantor in connection with its dealings with the Lenders and payable by the Company or any Guarantor hereunder or thereunder, (b) Hedging Obligations of the Company Group to any Secured Party, (c) any and all sums advanced by the Intercreditor Agent or any other Secured Party in order to preserve the Collateral or preserve any Secured Party's security interest in the Collateral, including, without limitation, all Protective Advances and (d) in the event of any 9 proceeding for the collection or enforcement of the Obligations after an Event of Default shall have occurred and be continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by any Secured Party of its rights under the Security Documents, together with reasonable attorneys' fees and court costs. "PERMITTED COUNTERPARTY" means the counterparties to any Hedging Obligations entered into by the Company or its Subsidiaries which are permitted by the Bank Credit Agreement; PROVIDED, HOWEVER, such counterparties become parties to this Agreement and agree to be bound by and comply with all of the terms and provisions of this Agreement. "PERMITTED FACILITY AMENDMENT" means a Facility Amendment of the Bank Credit Facility or a Future First Lien Credit Facility which is expressly permitted pursuant to SECTION 3 of this Agreement. "PERSON" means any natural person, corporation, partnership, firm, limited liability company, association, Governmental Instrumentality or any other entity whether acting in an individual, fiduciary or other capacity. "PHASE 1A COMPLETION" means the receipt by LVSI, Venetian or any Restricted Subsidiary (as such term is defined in the Mortgage Notes Indenture) of a temporary or permanent certificate of occupancy from Clark County, Nevada for at least 950 hotel rooms in the hotel tower to be constructed as part of the Phase 1A Addition. "POTENTIAL EVENT OF DEFAULT" means any event, which with the passage of time and/or the giving of notice would become an Event of Default. "PROTECTIVE ADVANCES" means any advances with respect to (i) the payment of any delinquent taxes or insurance premiums owed by any of the Company Group with respect to the Casino Resort or the Phase 1A Addition, (ii) the removal of any Lien or encumbrance on the Casino Resort or the Phase 1A Addition (other than Liens that are junior to the Deeds of Trust) or the defense of the Company's title thereto or of the validity, enforceability, perfection or priority of the Liens and security interests granted pursuant to the Security Documents or (iii) the repair, maintenance, protection or preservation of the value of the Casino Resort or the Phase 1A Addition or (in each case) any portion thereof, including, without limitation, for payment of (A) heating, gas, electric and other utility bills (including, without limitation, any payments due under the HVAC Services Agreement) or (B) amounts reasonably necessary to prevent the provider of any financing provided pursuant to clauses (g), (j) or (p) of the second paragraph of Section 4.09 of the Mortgage Notes Indenture from (x) terminating its agreement to advance funds thereunder or (y) exercising rights under the documentation applicable to its financing commitment so as to deprive the Phase 1A Addition of the property or equipment procured with advances made pursuant to such financing commitment. "REA" means that certain Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as of November 14, 1997 by and among Venetian, LVSI, Grand Canal Shops Mall Subsidiary, LLC, and Interface Group-Nevada, Inc., as amended by that certain First Amendment to Amended and Restated Reciprocal Easement, Use and Operating 10 Agreement dated as of December 20, 1999 and that certain Second Amendment to Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as of even date herewith, and as further amended, restated or supplemented in accordance with the terms thereof from time to time. "RELATED COLLATERAL AGREEMENTS" means the Security Agreement and the Consents. "REVOLVING BANK LOAN COMMITMENT" shall have the meaning ascribed to the term "Revolving Loan Commitment" in the Bank Credit Agreement. "SECURED CREDIT PARTIES" means the Bank Agent, the Mortgage Notes Indenture Trustee, each Permitted Counterparty and the agent, trustee or other representative of the Senior Lenders under a Future First Lien Credit Facility. "SECURED LENDERS" means the Bank Agent and the Bank Lenders, each Permitted Counterparty, the Mortgage Notes Indenture Trustee and the Mortgage Note Holders, and the Senior Lenders under a Future First Lien Credit Facility and their agent, trustee or other representative. "SECURED OBLIGATIONS" means the Senior Lender Secured Obligations, the Senior Lender Hedging Obligations, or the Mortgage Notes Secured Obligations, as the context requires. "SECURED PARTIES" means the Intercreditor Agent, the Bank Agent, the Mortgage Notes Indenture Trustee, the Lenders and the Permitted Counterparties. "SECURITY AGREEMENT" means the Security Agreement together with any supplement thereto hereafter entered into by any Subsidiary of the Company for the benefit of one or more of the Secured Lenders. "SECURITY DOCUMENTS" means, collectively and without duplication, the Bank Security Documents, the Mortgage Notes Indenture Security Documents, the Consents, and any other deeds of trust, security agreements or collateral account agreements entered into by LVSI or Venetian or direct or indirect Subsidiaries of LVSI or Venetian for the benefit of any Secured Credit Party in accordance with the terms of the Financing Agreements or this Agreement. "SENIOR LENDER DOCUMENTS" shall mean the Bank Credit Agreement, each of the Bank Security Documents, each document or instrument evidencing a Senior Lender Hedging Obligation, all documents and instruments evidencing any obligation under any Future First Lien Credit Facility and any other related document executed or delivered pursuant to any Senior Lender Document at any time or otherwise evidencing any Senior Lender Secured Obligation, as any such document or instrument may from time to time be amended, renewed, restated, supplemented or otherwise modified from time to time pursuant to a Permitted Facility Amendment. 11 "SENIOR LENDER HEDGING OBLIGATIONS" means Obligations constituting Hedging Obligations of the Company or any of its Subsidiaries to the extent owed to a Permitted Counterparty. "SENIOR LENDERS" shall mean the Persons holding Senior Lender Secured Obligations, including, without limitation, the Bank Agent and the Bank Lenders. "SENIOR LENDER SECURED OBLIGATIONS" shall mean Senior Lender Hedging Obligations, the Bank Secured Obligations and all Obligations outstanding under any Future First Lien Credit Facility. "SHARED COLLATERAL" means the agreements, insurance proceeds and other intangible property of Venetian or LVSI or, if applicable, any Guarantor, described as "Shared Intangible Collateral" in the Security Agreement. "SHARED COLLATERAL PROCEEDS" means the portion of the Shared Collateral constituting income, rent, products or proceeds received or held by the Intercreditor Agent, any Secured Credit Party or any Secured Lender. "SPECIFIED ACTIONS" means any of the following except to the extent contemplated by SECTION 3.4 below or as otherwise required or permitted under this Agreement or the Related Collateral Agreements or as otherwise required by law: (i) the release of any Collateral; (ii) the release of any Lien under the Related Collateral Agreements; or (iii) any change in the priority of such Liens. "STANDSTILL PERIOD" means a period of forty-five (45) days commencing upon the occurrence of a specified default, which period may be extended for an additional fifteen (15) days upon written notice given to the other Secured Credit Parties within such 45-day period by the Bank Agent. "SUBSIDIARY" means, with respect to any Person, (i) any corporation, association, limited liability company or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (ii) any partnership of which more than 50% of the partnership's capital accounts, distribution rights or general or limited partnership interests are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof. 1.2 OTHER DEFINED TERMS. The following terms shall have the meanings given such terms in the Sections set forth below: Term Section ---- ------- Additional Intercreditor Agent Section 6.7.2 Agreement Preamble 12 Casino Resort Recital A Company Recital A Effective Date Preamble First Lien Agent Section 2.2.2 LVSI Recital A Phase 1A Addition Recital D Realization Section 4.4.2 Scotiabank Preamble Security Agreement Recital E Separate Unified Realization Section 4.4.2 Venetian Recital A 1.3 INTERPRETATION. To the extent that reference is made in this Agreement to any term defined in, or to any other provision of, any other agreement, such term or provision shall continue to have the original meaning thereof notwithstanding any termination, expiration or amendment of such other agreement; PROVIDED, HOWEVER, that upon any formal written amendment of any agreement to which all of the Secured Credit Parties are parties, to the extent such amendment modifies terms defined therein or other provisions thereof which are referred to in this Agreement, then such references herein shall be to such terms or provisions as so amended. 2. COLLATERAL, PRIORITY OF LIENS AND SUBORDINATION. 2.1 LIENS AND SECURITY INTERESTS. The Secured Credit Parties agree that each Secured Lender shall have the benefit of the following Liens on and security interests in the Collateral: 2.1.1 COLLATERAL FOR SENIOR LENDER SECURED OBLIGATIONS. The Senior Lender Secured Obligations shall be secured by first priority Liens on and security interests in the Collateral. 2.1.2 COLLATERAL FOR MORTGAGE NOTES SECURED OBLIGATIONS. The Mortgage Notes Secured Obligations shall be secured by second priority Liens on and security interests in the Collateral (other than the Disbursement Account Collateral), which second priority Liens and security interests shall be subject and subordinate to the Liens and security interests in the Collateral securing the Senior Lender Secured Obligations. Under the Related Collateral Agreements, the Liens and security interests in the Collateral described therein have been granted to the Intercreditor Agent on behalf of the Secured Credit Parties, with the Lien priorities provided for in this SECTION 2.1. 2.2 NO OTHER COLLATERAL. Except as provided in SECTION 2.1 and in this SECTION 2.2, no Secured Credit Party in its capacity as such shall be entitled to receive and hold, directly or indirectly, any Liens on or security interests in (i) any property or assets owned directly or indirectly by any of the Company Group or (ii) any Capital Stock in the Company or in any Affiliate of the Company. Except for the Disbursement Account Collateral, no Senior Secured Lender in its capacity as such may hold a Lien in any Collateral that is not also pledged 13 to the Mortgage Notes Indenture Trustee. In connection with any Permitted Facility Amendment, the Bank Agent or any other agent or representative of the Senior Lenders under a Future First Lien Credit Facility (the "FIRST LIEN AGENT") may receive and hold Liens on and security interests for the benefit of the Bank Lenders, or such other Senior Lenders, as the case may be, in any other assets or property owned directly or indirectly by any of the Company Group OTHER than any Capital Stock in the Company or any Affiliate of the Company, in each case, so long as such additional collateral is also pledged for the benefit of the Mortgage Notes Indenture Trustee. 2.3 CONFIRMATION OF LIENS. Each Secured Credit Party hereto hereby confirms and agrees that the Liens and security interests held by or for the benefit of each Secured Lender in the Collateral, as provided for in the preceding provisions of this SECTION 2 shall secure all Obligations of the Company Group or any of them now or hereafter owing to each Secured Lender in connection with the applicable Facility or Senior Lender Hedging Obligation throughout the term of this Agreement, in each case with the priority specified in SECTION 2.1, notwithstanding (i) the availability of any other collateral to any Secured Lender, (ii) the actual date and time of execution, delivery, recording, filing and perfection of any of the Security Documents or (iii) the fact that any Lien or security interest created by any of the Security Documents, or any claim with respect thereto, is or may be subordinated, avoided or disallowed in whole or in part under the Bankruptcy Code or other applicable federal or state law. Notwithstanding any other provision in this Agreement to the contrary, any Indebtedness owed to a Secured Credit Party which are secured by property that does not also secure the Mortgage Notes Secured Obligations (other than the Disbursement Account Collateral) shall NOT be secured by the Collateral. In the event of a proceeding, whether voluntary or involuntary, for insolvency, liquidation, reorganization, dissolution, bankruptcy or other similar proceedings pursuant to the Bankruptcy Code or other applicable federal or state law, each Secured Credit Party further confirms and agrees that the Obligations due and outstanding under and with respect to each Facility shall include all principal, additional advances permitted hereunder, Protective Advances made by such Secured Credit Party to the extent provided in Section 3.6, interest, default interest, LIBOR breakage and swap breakage, post petition interest and all other amounts due thereunder, for periods before and for periods after the commencement of any such proceedings, even if the claim for such amounts is disallowed pursuant to applicable law, and all proceeds from the sale or other disposition of the Collateral shall be paid to the Secured Lenders in the order and priority provided for in this SECTION 2 notwithstanding the disallowance of any such claim or the invalidity or subordination of any Lien on or security interest in the Collateral under applicable law. 2.4 EFFECT. All provisions of this Agreement, including but not limited to, all matters relating to the creation, validity, perfection, priority, subordination and release of the Liens and security interests intended to be created by the Security Documents and all provisions regarding the allocation and priority of payments with respect to any Facility, shall survive the filing of a proceeding under the Bankruptcy Code and be fully enforceable by and against each Secured Credit Party hereto during any such proceeding. 3. PERMITTED FACILITY AMENDMENTS; RELEASES; PROTECTIVE ADVANCES. 14 3.1 BANK CREDIT FACILITY AMENDMENTS. The Bank Agent and the Bank Lenders shall have the right, at any time and without the consent of the other Secured Credit Parties, and without affecting the validity and priority of the Liens on and security interests in the Collateral created by the Bank Security Documents, to enter into a Facility Amendment with respect to the Bank Credit Facility or the Obligations evidenced thereby, PROVIDED that, after giving effect to such Facility Amendment, the following conditions are satisfied: 3.1.1 in the event that the maximum amount of the Commitment under the Bank Credit Facility is increased pursuant to such Facility Amendment, then the amount of Additional Bank Proceeds advanced and outstanding pursuant to such Facility Amendment shall not exceed, together with all other Indebtedness of the Company, the amount permitted to be incurred by the Company and secured by a first priority Lien pursuant to the Mortgage Notes Indenture; and 3.1.2 such Facility Amendment shall not result in the creation of a Lien or security interest on additional collateral except in accordance with the provisions of SECTION 2.2.2 above. Any Facility Amendment of the Bank Credit Facility in conformity with the foregoing shall constitute a Permitted Facility Amendment under this Agreement. The provisions of SECTION 2 hereof with respect to the validity, priority, perfection and subordination of all Liens on and security interests in the Collateral to secure the Bank Secured Obligations shall continue to apply to the Bank Credit Facility as so amended, modified or refinanced. 3.2 FUTURE FIRST LIEN CREDIT FACILITY AMENDMENTS. A First Lien Agent and the Senior Lenders under a Future First Lien Credit Facility shall have the right, at any time and without the consent of the other Secured Credit Parties, and without affecting the validity and priority of the Liens on and security interests in the Collateral created by the collateral documents relating to such Future First Lien Credit Facility, to enter into a Facility Amendment with respect to such Future First Lien Credit Facility or the Obligations evidenced thereby, PROVIDED that, after giving effect to such Facility Amendment, the following conditions are satisfied: 3.2.1 in the event that the maximum amount of the Commitment under the Future First Lien Credit Facility is increased pursuant to such Facility Amendment, then the amount of additional proceeds advanced and outstanding pursuant to such Facility Amendment shall not exceed, together with all other Indebtedness of the Company, the amount permitted to be incurred by the Company and secured by a first priority Lien pursuant to the Bank Credit Agreement or Mortgage Notes Indenture; and 3.2.2 such Facility Amendment shall not result in the creation of a Lien or security interest on additional collateral except in accordance with the provisions of SECTION 2.2.2 above. Any Facility Amendment of a Future First Lien Credit Facility in conformity with the foregoing shall constitute a Permitted Facility Amendment under this Agreement. The 15 provisions of SECTION 2 hereof with respect to the validity, priority, perfection and subordination of all Liens on and security interests in the Collateral to secure the Obligations under such Future First Lien Credit Facility shall continue to apply to the Future First Lien Credit Facility as so amended, modified or refinanced. 3.3 AMENDMENTS TO SECURITY AGREEMENTS. The Mortgage Notes Trustee agrees to any amendments, waivers or consents in respect of any Security Documents to the extent required under the second paragraph of Section 9.1 of the Mortgage Notes Indenture. 3.4 RELEASES. The Mortgage Notes Indenture Trustee agrees to release its Lien on portions of the Collateral as and when required pursuant to Section 10.03 of the Mortgage Notes Indenture. 3.5 WAIVERS. Any Secured Credit Party may, without the consent of the other Secured Credit Parties, defer any payments due under its Facility or agreement relating to Senior Lender Hedging Obligations to which it is a party or waive any provisions thereof. 3.6 PROTECTIVE ADVANCES. Prior to Phase 1A Completion, in the event that an Event of Default or a Potential Event of Default occurs, thereafter any Secured Credit Party may, without the consent of the other Secured Credit Parties and without affecting the validity or priority of any Liens on or security interests in the Collateral created by the Security Documents, make Protective Advances, PROVIDED that the Secured Credit Party making any such Protective Advance shall have the right to specify the costs to be paid from the proceeds of such Protective Advance. 3.7 NO OTHER FACILITY AMENDMENTS. Any Facility Amendment of the Bank Credit Facility or Future First Lien Credit Facility that does not comply with the provisions set forth in this SECTION 3 shall not be effective unless the prior written consent of the other Secured Credit Parties shall have been obtained, in which event such Facility Amendment shall constitute a Permitted Facility Amendment. 4. EVENTS OF DEFAULT; REMEDIES; CERTAIN ACTIONS BY THE INTERCREDITOR AGENT. 4.1 DECLARATION OF EVENT OF DEFAULT. Each Secured Credit Party may declare an Event of Default under its Facility Agreement and accelerate all Obligations due thereunder, to the extent and on the terms and conditions provided for in such Facility Agreement; PROVIDED, HOWEVER, that (a) no Secured Credit Party shall be entitled to Exercise Remedies against any of the Company Group or with respect to the Collateral except as set forth in SECTION 4.3 and (b) prior to Phase 1A Completion, each Secured Credit Party agrees to reinstate its Facility and to recommence funding thereunder if the conditions provided for in SECTION 4.3.4 are satisfied. 4.2 SHARED COLLATERAL. Any Shared Collateral Proceeds received by the Intercreditor Agent shall, except to the extent otherwise required pursuant to the REA, be retained by the Intercreditor Agent in an account maintained by the Intercreditor Agent for the benefit of the Secured Parties and (i) shall be used to complete the Phase 1A Addition pursuant to funding mechanics reasonably acceptable to the Bank Agent or (ii), if received after Phase 1A Completion, shall be applied to repayment of the Obligations of the Secured Lenders in the order of priority of their respective Liens on the Collateral in accordance with SECTION 2.1 16 hereof, subject to their respective Facilities. Notwithstanding the foregoing, all rents and other proceeds received by the Intercreditor Agent prior to Phase 1A Completion in respect of Space Leases (as defined in the Bank Deed of Trust) shall be applied (i) first to make Protective Advances, (ii) second, to pay interest due and payable under the Bank Credit Agreement and (iii) third, to complete the Phase 1A Addition pursuant to funding mechanics reasonably acceptable the Bank Agent. 4.3 REQUIREMENTS REGARDING EXERCISE OF REMEDIES. Each Secured Credit Party shall be entitled to declare an Acceleration Event and Exercise Remedies against any of the Company Group or with respect to the Collateral in accordance with the terms of its Facility Agreement subject to compliance with each of the following conditions: 4.3.1 such Secured Credit Party shall give written notice to the other Secured Credit Parties of the matter which constitutes a default by or with respect to any of the Company Group which would, but for the provisions of this Agreement, permit such Secured Credit Party to declare an Acceleration Event or Exercise Remedies. 4.3.2 each Secured Credit Party shall be subject to the Standstill Period commencing upon the date such notice is given, and until such Standstill Period shall have expired, no Secured Credit Party shall Exercise Remedies against any of the Company Group or with respect to the Collateral, except that if such Acceleration Event is declared prior to Phase 1A Completion, the Controlling Party may direct the Intercreditor Agent with respect to the enforcement of rights against the Shared Collateral, and the taking of protective action with respect to the Company Group or the Collateral; 4.3.3 no Secured Credit Party shall be entitled to initiate or join as a petitioning creditor in an involuntary proceeding against the Company or any Affiliate of the Company until ten (10) days after the expiration of the Standstill Period; 4.3.4 notwithstanding the expiration of the applicable Standstill Period and the entitlement of each Secured Credit Party to Exercise Remedies against any of the Company Group or with respect to the Collateral securing the Facility of such Secured Credit Party, each Secured Credit Party agrees to reinstate its Facility and to recommence funding thereunder if, prior to the completion of the first foreclosure permitted hereunder, (a) all Events of Default either (i) are cured in accordance with the terms of the applicable governing document within 30 days after the declaration thereof or (ii) are waived pursuant to SECTION 3.3 hereof (b) do not involve an Event of Default pursuant to SECTION 8.6 OR 8.7 of the Bank Credit Agreement in respect of the Company and (c) the Indebtedness under the relevant Facility has not been accelerated. With respect to the Bank Credit Facility, the foregoing obligation to reinstate its lending commitment shall apply to the Term A Loan Commitment (as defined in the Bank Credit Agreement) and not to the Revolving Loan Commitment (as defined in the Bank Credit Agreement). 4.3.5 upon expiration of the Standstill Period, each Secured Credit Party shall be entitled to Exercise Remedies against any of the Company Group or with respect to the Collateral, PROVIDED that: (a) if any Senior Lender(s) shall accelerate the Indebtedness under the corresponding Facility of such Senior Lender(s), then concurrently therewith or thereafter the 17 agent under the corresponding Facility of such Senior Lender(s) shall provide the Mortgage Notes Indenture Trustee with (i) notice of such acceleration and (ii) at least ten (10) days notice of the intent of such Senior Lenders to file any Notice of Default; and (b) concurrently with any foreclosure by the Mortgage Notes Indenture Trustee under the Mortgage Notes Indenture Deed of Trust, all Obligations under the Facilities of the Senior Lenders must be paid in full. 4.3.6 if a Secured Credit Party has the right to Exercise Remedies in accordance with the foregoing provisions of this SECTION 4.3, such exercise of remedies under the Related Collateral Agreements shall only be made in accordance with SECTION 4.4.1 below. 4.4 EXERCISE OF RIGHTS UNDER SECURITY AGREEMENTS. 4.4.1 RELATED COLLATERAL AGREEMENTS BY THE INTERCREDITOR AGENT. Notwithstanding any other provision of this Agreement to the contrary, except as provided for in SECTION 4.4.2 below, only the Intercreditor Agent shall cause the Exercise of Remedies or otherwise act with respect to the Collateral encumbered under the Related Collateral Agreements. The Intercreditor Agent shall be entitled to exercise, and it shall exercise, rights and remedies and take such action as permitted to be taken by the Intercreditor Agent under each Related Collateral Agreement as it may be directed from time to time by the applicable Controlling Party pursuant to the terms of this Agreement; PROVIDED that, such Controlling Party shall have the right to Exercise Remedies only in accordance with the applicable provisions of SECTION 4.3 above. Without limiting the generality of the foregoing, the Intercreditor Agent shall act in accordance with any written instructions delivered to the Intercreditor Agent from the applicable Controlling Party hereunder, and shall refrain from exercising any right, remedy or powers available to it or conferred on it hereunder or in the applicable Related Collateral Agreement as set forth in such written instructions; PROVIDED, HOWEVER, that nothing shall impair the right of the Intercreditor Agent, in its reasonable discretion, to take or omit to take any action deemed proper by the Intercreditor Agent and permitted hereunder and under the applicable Related Collateral Agreement which action or omission is not inconsistent with any written direction of the Controlling Party. 4.4.2 SEPARATE REALIZATION. With respect to foreclosure against or other realization upon the Collateral ("REALIZATION"), unless the Secured Credit Parties agree upon a single or coordinated Realization on all of the Collateral for the benefit of all of the Secured Lenders (and no Secured Credit Party shall be required to so agree), then notwithstanding the foregoing provisions of SECTION 4.4.1 limiting enforcement of the Related Collateral Agreements to the Intercreditor Agent (acting on the direction of the Controlling Party), any Secured Credit Party holding subordinate Liens on any personal property Collateral encumbered under the Security Agreements, so that such Secured Credit Party is not a Controlling Party with respect to such personal property Collateral, shall have the right to effect a unified sale of such personal property Collateral together with its real property Collateral, I.E., simultaneous Realization under the applicable Deeds of Trust and the applicable Security Agreements (a "SEPARATE UNIFIED REALIZATION") in accordance with the following terms and conditions of this SECTION 4.4.2: 4.4.2.1 Realization by such Secured Credit Party must be permitted in accordance with the terms and conditions of SECTION 4.3 above. 18 4.4.2.2 The date of such Separate Unified Realization shall be not earlier than thirty (30) days following the date such Secured Credit Party has given the other Secured Parties notice of its election to pursue Separate Unified Realization. 4.4.2.3 With respect to the personal property Collateral to be sold at such Separate Unified Realization, the electing Secured Credit Party or an agent on its behalf (other than the Intercreditor Agent) shall have the right to schedule such sale, the right to give any required notices of such sale, the right to conduct such sale in conjunction with the foreclosure or other realization under such Secured Credit Party's Deed of Trust, and the right to take any other actions necessary for a secured party to so foreclose such security interests in accordance with applicable law, but such Secured Credit Party shall take no other action with respect to such personal property Collateral, including, without limitation, giving any other notices or directions to the debtor, the Intercreditor Agent, the account party on any assigned account or the contract obligor on any assigned contract; freezing or otherwise taking action against any account of the Company; seeking the appointment of a receiver; bringing any action against the Company; or taking any action to Realize on such Collateral other than at the Separate Unified Realization in accordance with this SECTION 4.4.2. 4.4.2.4 The rights of an electing Secured Credit Party under SECTION 4.4.2.3 may be exercised by such Secured Credit Party or by an agent or attorney on behalf of such Secured Credit Party; such rights shall not be exercised by the Intercreditor Agent. 4.4.2.5 The Intercreditor Agent and the other Secured Credit Parties shall permit an electing Secured Credit Party to conduct such Separate Unified Realization; PROVIDED, HOWEVER, that the Intercreditor Agent shall not be required to conduct or participate in such Separate Unified Realization. Subject to the obligation to permit the electing Secured Credit Party to conduct such Separate Unified Realization, the Controlling Party with respect to such Collateral shall continue to have the sole right to direct the Intercreditor Agent in accordance with this Agreement, and in connection therewith, may, without limitation, cause the Intercreditor Agent to schedule and conduct Realization on such Collateral at any time and cause the Intercreditor Agent to take such other actions as may be permitted under the terms of any of the Related Collateral Agreements. 4.4.2.6 Except for the extinguishment of junior Liens and security interests by operation of law upon any Separate Unified Realization, no Separate Unified Realization shall operate to terminate any Security Agreement creating the security interest then realized upon, or to terminate any other Related Collateral Agreement, and all security interests, Liens and other interests of the Intercreditor Agent and the other Secured Lenders under each Security Agreement shall (except to the extent extinguished by operation of law, as aforesaid) survive such Separate Unified Realization and shall remain enforceable by the Intercreditor Agent and the other Secured Lenders. The purchaser at such Separate Unified Realization, whether the Secured Credit Party conducting same or any other Person, shall acquire title to any Collateral sold at such sale subject to the continuing encumbrances, Liens and security interests in favor of the other Secured Lenders (except to the extent extinguished by operation of law, as aforesaid). 19 4.4.2.7 The Secured Credit Party conducting any Separate Unified Realization shall, subject to SECTION 4.3.5(b) above, be entitled to receive the proceeds, if any, from the sale of the Collateral thereunder in accordance with applicable law (including, without limitation, payment of excess proceeds to secured parties with junior Liens). 4.4.3 FORECLOSURE OF DEEDS OF TRUST. The provisions of the preceding SECTION 4.4.1 and SECTION 4.4.2 shall not restrict the right of a Secured Credit Party to Exercise Remedies against, and to complete a foreclosure against or other realization upon any Collateral which constitutes an interest in real property encumbered by a Deed of Trust granted for the benefit of such Secured Credit Party, PROVIDED that such Exercise of Remedies, foreclosure or other realization is permitted in accordance with the applicable provisions of SECTION 4.3. 4.5 OTHER DUTIES OF AND ACTIONS BY THE INTERCREDITOR AGENT. To the extent not otherwise provided for by this Agreement, with respect to the Related Collateral Agreements, the Intercreditor Agent may take and shall take, or refrain from taking, action in its capacity as the Intercreditor Agent thereunder, in accordance with the following provisions. 4.5.1 the Intercreditor Agent shall take such actions as it may be specifically required to take under the express terms of the Related Collateral Agreements and as otherwise may be required by law; 4.5.2 the Intercreditor Agent may take such action or refrain from taking such action as it may reasonably deem necessary for the normal conduct of its business as Intercreditor Agent hereunder and under the Related Collateral Agreements, or to the extent deemed necessary by the Intercreditor Agent, for purposes of preservation of the Collateral or the rights or interests of the Secured Credit Parties thereunder; PROVIDED that, unless instructed in writing by the Controlling Party to the contrary, the Intercreditor Agent shall have no obligation or liability as a result of its taking or failing to take actions pursuant to this SUBSECTION 4.5.2; 4.5.3 with respect to any other action or omission relating to all or any portion of the Collateral, the Intercreditor Agent shall take such actions or refrain from taking such action as the Controlling Party with respect to such Collateral may direct in writing; 4.5.4 with respect to any other matter relating to the Related Collateral Agreements, the Intercreditor Agent shall act or refrain from acting in accordance with the written instructions of the Controlling Party, until the Senior Lender Secured Obligations are repaid in full, and thereafter the Mortgage Notes Indenture Trustee; and 4.5.5 beyond its duties set forth herein and in the Related Collateral Agreements and as may be required by law, the Intercreditor Agent shall not have any duty to any of the Company Group, to the Secured Credit Parties or to the Secured Lenders as to the Collateral in its possession or control under the Related Collateral Agreements or in the possession or control of any agent or nominee of it or as to the preservation of rights against prior parties or any other rights pertaining thereto except as required by applicable law. 5. REPRESENTATIONS AND WARRANTIES. Each Secured Credit Party represents and warrants to each other Secured Credit Party as follows: 20 5.1 ORGANIZATION. It is duly organized and is validly existing under the laws of the jurisdiction under which it was organized with full power to execute, deliver and perform this Agreement and consummate the transactions contemplated hereby. 5.2 AUTHORIZATION. All actions necessary to authorize the execution, delivery and performance of this Agreement on behalf of such party have been duly taken, and all such actions continue in full force and effect as of the date hereof. 5.3 BINDING AGREEMENT. It has duly executed and delivered this Agreement and this Agreement constitutes the legal, valid and binding agreement of such party enforceable in accordance with its terms subject to (i) applicable bankruptcy, reorganization, insolvency and moratorium laws, and (ii) principles of equity, which may apply regardless of whether a proceeding is brought in law or in equity. 5.4 NO CONSENT REQUIRED. To the best of its knowledge, no consent of any other party and no consent, license, approval or authorization of, or exemption by, or registration or declaration or filing with, any governmental authority, bureau or agency is required in connection with the execution, delivery or performance by such party of this Agreement or consummation by such party of the transactions contemplated by this Agreement. 5.5 NO CONFLICT. None of the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated by this Agreement will (i) violate or conflict with any provision of the organizational or governing documents, if any, of such party, (ii) to the best of its knowledge, violate, conflict with, or result in the breach or termination of, or otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time, or both, would constitute) a default under the terms of any contract, mortgage, lease, bond, indenture, agreement or other instrument to which such party is a party or to which any of its properties are subject, (iii) to the best of its knowledge, result in the creation of any Lien, charge, encumbrance, mortgage, lease, claim, security interest or other right or interest upon the properties or assets of such party pursuant to the terms of any such contract, mortgage, lease, bond, indenture, agreement, franchise or other instrument, (iv) violate any judgment, order, injunction, decree or award of any court, arbitrator, administrative agency or governmental or regulatory body of which it has knowledge against, or binding upon such party or upon any of the securities, properties, assets or business of such party or (v) to the best of its knowledge, constitute a violation by such party of any statute, law or regulation that is applicable to such party. 6. APPOINTMENT OF THE INTERCREDITOR AGENT. 6.1 APPOINTMENT. Scotiabank is hereby appointed the Intercreditor Agent hereunder and under the Related Collateral Agreements and each Secured Credit Party hereby authorizes the Intercreditor Agent to enter into the applicable Related Collateral Agreements which secure Obligations to such Secured Credit Party and to act as its agent in accordance with the terms of this Agreement and such Related Collateral Agreement. The Intercreditor Agent agrees to act upon the express conditions contained in this Agreement and the Related Collateral Agreements, as applicable. The provisions of this SECTION 6 are solely for the benefit of the Intercreditor Agent and the Secured Credit Parties, and none of the Company, any Affiliate of 21 the Company, Adelson or any Adelson Relative shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, the Intercreditor Agent shall act solely as an agent of the Secured Credit Parties and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Company, any Affiliate of the Company, Adelson or any Adelson Relative. 6.2 AUTHORITY. Each Secured Credit Party irrevocably authorizes the Intercreditor Agent to take such actions on such Secured Credit Party's behalf and to exercise such powers, rights and remedies under the Related Collateral Agreements as are specifically delegated or granted to the Intercreditor Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. The Intercreditor Agent shall have only those duties and responsibilities that are expressly specified in this Agreement and the applicable Related Collateral Agreement. The Intercreditor Agent agrees to act in accordance with instructions of the Controlling Party pursuant to SECTION 4.4.1. The Intercreditor Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. The Intercreditor Agent shall not have, by reason of this Agreement or the Related Collateral Agreements, a fiduciary relationship in respect of any Secured Credit Party or any other Person, and nothing in this Agreement or the Related Collateral Agreements, expressed or implied, is intended to or shall be so construed as to impose upon the Intercreditor Agent any obligations in respect of this Agreement or the Related Collateral Agreements except as expressly set forth herein or therein. 6.3 AMENDMENT OF AGREEMENTS. Subject to SECTION 3.3 hereof, without the prior written consent of the Secured Credit Parties, the Intercreditor Agent shall not amend any of the Related Collateral Agreements to which it is a party. Subject to Section 3.3 hereof, upon approval by the Secured Credit Parties of any proposed amendment to the Related Collateral Agreements, the Intercreditor Agent shall execute and deliver such amendment, in each case in its capacity as Intercreditor Agent hereunder. 6.4 RESPONSIBILITY. The Intercreditor Agent shall not be responsible to any Secured Credit Party for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement, any Related Collateral Agreement or any Collateral 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 to the Secured Credit Parties in connection with the Collateral and the transactions contemplated hereby or thereby or any default under any agreement included in the Collateral or for the financial condition or business affairs of the Company or any other Person liable for the payment of any Obligations, nor shall the Intercreditor 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 this Agreement or any other Financing Agreement or any Collateral or as to the existence or possible existence of any Event of Default, Potential Event of Default or any default under any agreement included in the Collateral. 6.5 LIABILITY. Neither the Intercreditor Agent nor any of its officers, directors, employees or agents shall be liable to any Secured Credit Party or any other Person for any 22 action taken or omitted by the Intercreditor Agent under or in connection with this Agreement, the Related Collateral Agreements or the Collateral except to the extent caused by the Intercreditor Agent's gross negligence, bad faith or willful misconduct. The Intercreditor 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, the Related Collateral Agreements or the Collateral or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until the Intercreditor Agent shall have received instructions in respect thereof in accordance with this Agreement, and upon such instruction, the Intercreditor 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) the Intercreditor Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and shall be entitled to rely, and shall be protected in relying, on opinions and judgments of attorneys (who may be attorneys for the Company and the Affiliates of the Company), accountants, experts and other professional advisors selected by it and (ii) no Secured Credit Party shall have any right of action whatsoever against the Intercreditor Agent as a result of the Intercreditor Agent acting or (where so instructed) refraining from acting under this Agreement or any Related Collateral Agreement in its capacity as Intercreditor Agent to the extent authorized, permitted, required or instructed in accordance with the terms of this Agreement. Each Secured Lender shall, from time to time on demand by the Intercreditor Agent, indemnify the Intercreditor Agent, in proportion to its pro rata share of the aggregate amount of the Secured Obligations outstanding at such time, against any and all claims, costs, losses, expenses (including legal fees) and liabilities (collectively, "LOSSES"), which the Intercreditor Agent may incur, other than by reason of its own gross negligence or willful misconduct, in acting in its capacity as Intercreditor Agent hereunder. Notwithstanding the foregoing, if any Losses are incurred by the Intercreditor Agent in taking actions pursuant to instructions issued by a Controlling Party, and the issuance of such instructions constitutes gross negligence or willful misconduct, such Controlling Party shall bear the full amount of the indemnity provided herein. 6.6 CAPACITY. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, the Intercreditor Agent in its individual capacity as the Bank Agent, a Bank Lender or a Secured Credit Party hereunder. The Intercreditor Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with the Company or any Affiliate of the Company as if it were not performing the duties specified herein, and may accept fees and other consideration from any of the Company Group for services in connection with this Agreement and otherwise without having to account for the same to other Secured Credit Parties. 6.7 RESIGNATION; APPOINTMENT OF ADDITIONAL INTERCREDITOR AGENTS. 6.7.1 The Intercreditor Agent may resign at any time by giving thirty (30) days' prior written notice thereof to the Secured Credit Parties, and the Intercreditor Agent may be removed at any time, with or without cause, by an instrument in writing signed by the Bank Agent, delivered to the Mortgage Notes Indenture Trustee and to the Intercreditor Agent. Upon any such notice of resignation or any such removal, the Senior Lenders shall have the 23 right, upon seven days' notice to the Mortgage Notes Indenture Trustee to appoint a successor Intercreditor Agent. Any resignation shall take effect upon the earlier of acceptance of such appointment by a successor Intercreditor Agent and expiration of the 30-day period described above. Upon the acceptance of any appointment as Intercreditor Agent hereunder by a successor Intercreditor Agent, that successor Intercreditor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Intercreditor Agent. The retiring or removed Intercreditor Agent shall reasonably cooperate with the successor Intercreditor Agent upon such appointment, to assist with such transition. Upon the date of such removal or the effective date of such resignation (but not later than the date of such succession) the retiring or removed Intercreditor Agent shall be discharged from its duties and obligations under this Agreement; PROVIDED, HOWEVER, that commencing upon the date the Intercreditor Agent sends its notice of resignation, the Intercreditor Agent shall not be required to take any action hereunder until and unless the Secured Credit Party or Parties requesting that such action be taken agree to reimburse all costs of the Intercreditor Agent in connection therewith, and agree to indemnify, defend and hold the Intercreditor Agent harmless from all claims, liabilities, costs or expenses (including, without limitation, attorneys' fees) in connection with or arising out of such actions taken by the Intercreditor Agent. 6.7.2 Any Controlling Party may elect to appoint one or more additional Intercreditor Agents with respect to its interests in the Collateral (each an "ADDITIONAL INTERCREDITOR AGENT") and the Intercreditor Agent shall, upon receipt of written instructions of such Controlling Party, execute and deliver all instruments and agreements necessary or proper to appoint the other person or persons selected by the Controlling Party to act as an Additional Intercreditor Agent with respect to such Collateral. Upon the written acceptance of the terms of such appointment and written notice thereof to the Secured Credit Parties and each member of the Company Group party to the Related Collateral Agreements, each such additional or successor Additional Intercreditor Agent shall (i) thereupon succeed to and become vested with all the rights, powers, privileges and duties of the Intercreditor Agent with respect to such Collateral and replace the prior Intercreditor Agent with respect to matters pertaining to such Collateral, (ii) be subject to the terms and provisions of this Agreement and the other Related Collateral Agreements as they apply to the Intercreditor Agent and such Collateral and (iii) not have any other rights or duties hereunder or under the Related Collateral Agreements with respect to any other Collateral or any other matter. 6.7.3 After any retiring, removed or replaced Intercreditor Agent's resignation, removal or replacement hereunder as Intercreditor Agent, the provisions of this SECTION 6.7 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Intercreditor Agent under this Agreement. 7. MISCELLANEOUS PROVISIONS. 7.1 NOTICES; ADDRESSES. Any communications between the Secured Credit Parties hereto or notices herein to be given may be given to the following addressees: If to the Bank Agent: The Bank of Nova Scotia 580 California Street, 21st Floor San Francisco, California 94104 24 Attn.: Alan Pendergast Phone:(415) 986-1100 Fax: (415) 397-0791 with a copy to: The Bank of Nova Scotia Loan Administration 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn.: Robert Ivy Phone: (404) 877-1595 Fax: (404) 888-8998 If to the Mortgage Notes U.S. Bank National Association Indenture Trustee: 180 East Fifth Street St. Paul, Minnesota 55164-0111 Attn.: Corporate Trust Department Phone: (651) 244-0721 Fax: (651) 244-0711 If to the Intercreditor Agent: The Bank of Nova Scotia 580 California Street, 21st Floor San Francisco, California 94104 Attn.: Alan Pendergast Phone: (415) 986-1100 Fax: (415) 397-0791 with a copy to: The Bank of Nova Scotia Loan Administration 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn.: Robert Ivy Phone: (404) 877-1595 Fax: (404) 888-8998 All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by reputable overnight delivery service, (c) in the event overnight delivery services are not readily available, if mailed by first class mail, postage prepaid, registered or certified with return receipt requested or (d) if sent by prepaid telex, or by telecopy with correct answer back received. Notice so given shall be effective upon receipt by the addressee, except that any communication or notice so transmitted by telecopy or other direct written electronic means shall be deemed to have been validly and effectively given on the day (if a Banking Day and, if not, on the next following Banking Day) on which it is validly transmitted if transmitted before 4 p.m., recipient's time, and if transmitted after that time, on the next following Banking Day; PROVIDED, HOWEVER, that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. Any party shall have 25 the right to change its address for notice hereunder to any other location by giving no less than twenty (20) days' notice to the other parties in the manner set forth hereinabove. 7.2 FURTHER ASSURANCES. Each Secured Credit Party (i) shall deliver to each other Secured Credit Party and to the Intercreditor Agent such instruments, agreements, certificates and documents as any such Person may reasonably request to confirm the validity and priority of the Liens on and security interests in the Collateral granted pursuant to the Security Documents as affected hereby, (ii) shall fully cooperate with each other and with the Intercreditor Agent and (iii) shall perform all additional acts reasonably requested by any such Person to effect the purposes of this Agreement. 7.3 DELAY AND WAIVER. No delay or omission to exercise any right, power or remedy accruing upon the occurrence of any Event of Default or Potential Event of Default or any other breach or default of the Company Group or any of them under any Facility Agreement or any Related Collateral Agreement shall impair any such right, power or remedy of the Secured Credit Parties or the Intercreditor Agent, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or in any similar breach or default thereafter occurring, nor shall any waiver of any single Event of Default or Potential Event of Default or other breach or default be deemed a waiver of any other Event of Default or Potential Event of Default or other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any of the Secured Credit Parties or the Intercreditor Agent of any Event of Default or Potential Event of Default or other breach or default under this Agreement, any Related Collateral Agreement or any other Financing Agreement, or any waiver on the part of any of the Secured Credit Parties or the Intercreditor Agent, of any provision or condition of this Agreement or any other operative document, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, under any Related Collateral Agreement or any other Financing Agreement or by law or otherwise afforded to any of the Secured Credit Parties or the Intercreditor Agent shall be cumulative and not alternative (subject to any limitations on the exercise of such remedies imposed under this Agreement). 7.4 ENTIRE AGREEMENT. This Agreement and any agreement, document or instrument attached hereto or referred to herein integrate all the terms and conditions mentioned herein or incidental hereto and supersede all oral negotiations and prior writings in respect to the subject matter hereof, all of which negotiations and writings are deemed void and of no force and effect. As among the Secured Credit Parties, in the event of any conflict between the terms of this Agreement and the terms of the Related Collateral Agreements, the terms of this Agreement shall control. 7.5 GOVERNING LAW. This Agreement shall be governed by the laws of State of New York of the United States of America and shall for all purposes be governed by and construed in accordance with the laws of such state without regard to the conflict of law rules thereof other than Section 5-1401 of the New York General Obligations Law. 7.6 SEVERABILITY. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, 26 and the parties hereto shall enter into good faith negotiations to replace the invalid, illegal or unenforceable provision. 7.7 HEADINGS. Section headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement. 7.8 LIMITATIONS ON LIABILITY. No claim shall be made by any Secured Credit Party or any of its Affiliates against any other Secured Credit Party, the Intercreditor Agent or any of their respective Affiliates, directors, employees, attorneys or agents for any special, indirect, consequential or punitive damages (whether or not the claim therefor is based on contract, tort or duty imposed by law), in connection with, arising out of or in any way related to the transactions contemplated by this Agreement or any act or omission or event occurring in connection therewith; and each Secured Credit Party hereby waives, releases and agrees not to sue upon any such claim for any such special, indirect, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in its favor. 7.9 CONSENT TO JURISDICTION. Any legal action or proceeding arising out of this Agreement may be brought in or removed to the courts of the State of New York, in and for the County of New York, or of the United States of America for the Southern District of New York. By execution and delivery of this Agreement, each Secured Credit Party, accepts, for its and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts for legal proceedings arising out of or in connection with this Agreement and irrevocably consents to the appointment of the Prentice-Hall Corporation System Inc. as its agent to receive service of process in New York, New York. Nothing herein shall affect the right to serve process in any other manner including, without limitation, judicial or non-judicial foreclosure of real property interests which are part of the Collateral. Each Secured Credit Party hereby waives any right to stay or dismiss any action or proceeding under or in connection with any or all of the Casino Resort, the Phase 1A Addition, this Agreement or any other operative document brought before the foregoing courts on the basis of forum non-conveniens. 7.10 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; PROVIDED, HOWEVER, this Agreement shall terminate upon the date of payment in cash in full of all Obligations then due and payable under all Facilities of the Senior Lenders and agreements evidencing Senior Lender Hedging Obligations. 7.11 COUNTERPARTS. This Agreement may be executed in one or more duplicate counterparts and when signed by all of the Secured Credit Parties listed below shall constitute a single binding agreement. 7.12 NO THIRD PARTY BENEFICIARIES. Except for the Bank Lenders, the Mortgage Note Holders, the Permitted Counterparties and any lenders with respect to any Future First Lien Credit Facility, the Secured Credit Parties do not intend the benefits of this Agreement to inure to the benefit of nor shall it be enforceable by any third party (including, without limitation, the Company, any of its Affiliates, Adelson or any Adelson Relative) nor shall this Agreement be construed to make or render any Secured Credit Party liable to any third party 27 (including, without limitation, the Company, any of its Affiliates, Adelson or any Adelson Relative) for the performance or failure to perform any obligations hereunder. 7.13 ADDITIONAL SECURED CREDIT PARTIES. Upon any refinancing, replacement or restructuring, in whole or in part, of any Facility, or entering into a Future First Lien Credit Facility or agreements relating to Hedging Obligations with Permitted Counterparties (subject to the rights of the existing Secured Credit Parties under their respective Financing Agreements with respect to any such refinancing, replacement or restructuring of a Facility or the entering into of such Future First Lien Credit Facility or Hedging Obligations), the applicable lender or Permitted Counterparty shall execute a joinder or supplement to this Agreement in form and substance reasonably satisfactory to the then existing Secured Credit Parties. Upon the execution and delivery by such lender(s) of such joinder or supplement, such lender(s) shall become a "Secured Credit Party" hereunder with the same force and effect as if it were originally a party to this Agreement and named as a "Secured Credit Party" herein. The execution and delivery of such joinder or supplement shall not require the consent of any other Secured Credit Party hereunder, and the rights and obligations of each Secured Credit Party hereunder shall remain in full force and effect notwithstanding the addition of any new Secured Credit Party as a party to this Agreement. 7.14 TRUST INDENTURE ACT. The parties do not intend that the provisions of this Agreement violate the requirements of the Trust Indenture Act of 1939, as amended. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 28 IN WITNESS WHEREOF, the Secured Credit Parties hereto have caused this Agreement to be executed by their respective officers or agents thereunto duly authorized as of the day and year first above written. Bank Agent: THE BANK OF NOVA SCOTIA, a Canadian chartered bank By: /s/ Alan Pendergast -------------------------------- Name: Alan Pendergast Title: Managing Director Mortgage Notes Indenture Trustee: U.S. BANK NATIONAL ASSOCIATION, a national banking association By: /s/ Richard H. Prokosch -------------------------------- Name: Richard H. Prokosch Title: Vice President Intercreditor Agent: THE BANK OF NOVA SCOTIA, a Canadian chartered bank By: /s/ Alan Pendergast -------------------------------- Name: Alan Pendergast Title: Managing Director S-1 EX-4 10 ex4-6_7032.txt UNSECURED INDEMNITY AGREEMENT Exhibit 4.6 UNSECURED INDEMNITY AGREEMENT THIS UNSECURED INDEMNITY AGREEMENT (the "INDEMNITY") is entered into as of the 4th day of June, 2002, by LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI"), and VENETIAN CASINO RESORT, LLC, a Nevada limited liability company ("VCR" and jointly and severally with LVSI, the "COMPANY"), to and for the benefit of U.S. Bank National Association (the "MORTGAGE NOTES INDENTURE TRUSTEE"), and, to the extent not otherwise referenced, the Indemnified Parties (as hereinafter defined). W I T N E S S E T H: A. Pursuant to that certain Indenture, dated as of even date herewith, by and between the Company, certain subsidiaries of the Company and the Mortgage Notes Indenture Trustee (the "INDENTURE"). VCR and LVSI have issued those certain 11.00% Mortgage Note(s) due 2010 (the "MORTGAGE NOTES"). Capitalized terms used herein, but not otherwise defined herein, shall have the meaning assigned to such terms in the Indenture. B. The Mortgage Notes arc secured by, among other things, the Deed of Trust (as hereinafter defined), which Deed of Trust encumbers the real property described therein (the "REAL PROPERTY"), and the improvements now or hereafter constructed thereon (which improvements, together with the Real Property, shall hereinafter be referred to as the "PROPERTY"). The Indenture, the Deed of Trust and all other documents executed in connection with the Mortgage Notes arc collectively referred to as the "INDENTURE DOCUMENTS." C. It is a condition of the Mortgage Notes Indenture Trustee's entering into the Indenture Documents and the purchasing of the Mortgage Notes by the Mortgage Note Holders (as hereinafter defined) that this Indemnity be executed and delivered by the Company, and the Mortgage Notes Indenture Trustee is entering into the Indenture Documents and the Mortgage Note Holders are purchasing the Mortgage Notes in reliance on this Indemnity. D. The obligations of the Company hereunder are unsecured obligations of the Company. NOW, THEREFORE, in consideration of the foregoing and other valuable consideration, the receipt and sufficiency of which arc hereby acknowledged, the Company covenants and agrees to and for the benefit of the Mortgage Notes Indenture Trustee and the Mortgage Note Holders as follows: 1. DEFINITIONS. (a) "CLAIMS" means any and all actual out-of-pocket costs incurred by an Indemnified Party (as defined below) (including, without limitation, reasonable attorneys' fees and expenses, which fees and expenses shall include, without limitation, fees and expenses of both outside and staff counsel), expenses, losses, damages, liabilities, fines, penalties, charges, injury to person, property, or natural resources, administrative and judicial proceedings and orders, injunctive relief, judgments, remedial action requirements and enforcement actions of any kind, arising directly or indirectly, in whole or in part, out of or attributable to (i) any breach or default by the Company in the performance of any of its obligations under paragraphs 3(a)-(d) hereof; or (ii) any Release (as defined below) or threatened Release, whether foreseeable or unforeseeable, arising prior to any release, reconveyance or foreclosure of the Deed of Trust (or following any such release, conveyance or foreclosure to the extent attributable to pre-existing conditions), or conveyance in lieu of foreclosure; and in each instance, regardless of when such Release, inaccuracy or breach is discovered and regardless of whether or not caused by or in the control of the Company, any employees, agents, contractors or subcontractors of the Company or any third persons. Without limiting the generality of the foregoing and for purposes of clarification only, Claims also include: (i) actual out-of-pocket costs reasonably incurred by an Indemnified Party in connection with (x) determining whether the Property is in compliance with all applicable Hazardous Substances Laws (as hereinafter defined), (y) taking any necessary precautions to protect against any Release or threatened Release, or (z) any removal, remediation of any kind and disposal of any Hazardous Substances (as hereinafter defined), and (ii) any repair of any damage to the Property or any other property caused by any such precautions, removal, remediation or disposal. The rights of the Indemnified Parties hereunder shall not be limited by any investigation or the scope of any investigation undertaken by or on behalf of the Mortgage Notes Indenture Trustee in connection with the Property prior to the date hereof. Notwithstanding the foregoing, Claims shall exclude any Release caused by or resulting from the negligence or misconduct of any of the indemnified Parties. (b) "DEED OF TRUST" means, collectively, (1) that certain Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated as of even date herewith, made by LVSI and VCR, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Mortgage Notes Indenture Trustee, as beneficiary, and (2) if and when entered into, that certain Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing to be entered into by VCR, as trustor, to First American Title Insurance Company, as trustee, for the benefit of the Mortgage Notes Indenture Trustee, as beneficiary, which deed of trust shall be entered into promptly after such time as (A) a separate legal parcel has been created for the property leased by Lido Casino Resort, LLC, a Nevada limited liability company ("LIDO CASINO RESORT"), to VCR pursuant to that certain Phase 1A Lease, dated as of even date herewith (the "PHASE 1A LEASE"), by and between Lido Casino Resort, as lessor, and VCR, as lessee, and (B) such property has been conveyed by Lido Casino Resort to VCR, all in accordance with the terms of the Phase 1A Lease. (c) "HAZARDOUS SUBSTANCES" means and includes any flammable explosives, radioactive materials or hazardous, toxic or dangerous wastes, substances or related materials or any other chemicals, materials or substances, exposure to which is prohibited, 2 limited or regulated by any federal, state, county, regional or local authority or which, even if not so regulated, may or could pose a hazard to the health and safety of the occupants of the Property or of property adjacent to the Property, including, but not limited to, asbestos, PCBs, petroleum products and by-products (including, but not limited to, crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), substances defined or listed as "hazardous substances," "hazardous materials," "hazardous wastes" or "toxic substances" or similarly identified in, pursuant to, or for purposes of, any of the Hazardous Substances Laws, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as now or hereafter amended (42 U.S.C. Section 9601, ET SEQ); the Hazardous Materials Transportation Act, as now or hereafter amended (49 U.S.C. Section 1801, ET SEQ); the Resource Conservation and Recovery Act, as now or hereafter amended (42 U.S.C. Section 6901, ET SEQ); any so-called "Superfund" or "Superlien" law; or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material; or any substances or mixture regulated under the Toxic Substance Control Act of 1976, as now or hereafter amended (15 U.S.C. Section 2601 ET SEQ); and any "pollutant" under the Clean Water Act, as now or hereafter amended (33 U.S.C. Section 1251 ET SEQ); and any hazardous air pollutant under the Clean Air Act (42 U.S.C. Section 7901 ET SEQ); in each case as now or hereafter amended. (d) "HAZARDOUS SUBSTANCES LAWS" means all federal, state and local environmental, health or safety laws, ordinances, regulations, rules of common law or policies regulating Hazardous Substances, including, without limitation, those governing the generation, use, refinement, handling, treatment, removal, storage, production, manufacture, transportation or disposal of Hazardous Substances, as such laws, ordinances, regulations, rules and policies may be in effect from time to time and be applicable to the Property. (e) "INDEMNIFIED PARTIES" means the Mortgage Notes Indenture Trustee in its individual capacity and as trustee acting for and on behalf of the Mortgage Note Holders, and the directors, officers, shareholders, agents, employees, participants, successors and assigns of the Mortgage Notes Indenture Trustee, and shall also include any purchasers of all or any portion of the Property at any foreclosure sale and the initial purchaser following the consummation of any deed in lieu of foreclosure, but not including any other purchasers of the Property. (f) "MORTGAGE NOTE HOLDERS" means the holder(s) of the Mortgage Notes. (g) "PROCEEDINGS" means the institution of, or threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting the Company or any of its Restricted Subsidiaries (as defined in the Indenture) or any property of the Company or any of its Restricted Subsidiaries. (h) "RELEASE" means any presence, use, generating, storing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous Substances into the environment, or about, on, from, under, 3 within or affecting the Property, or transported to or from the Property, including continuing migration of Hazardous Substances into or through soil, surface water or groundwater. 2. ENVIRONMENTAL INDEMNIFICATION BY THE COMPANY. (a) The Company hereby agrees to defend (with counsel reasonably approved by the Mortgage Notes Indenture Trustee), indemnify and hold the Indemnified Parties harmless from and against, and shall reimburse the Indemnified Parties for, any and all Claims. (b) The Mortgage Notes Indenture Trustee shall have the right to employ independent counsel reasonably satisfactory to the Company to represent it in any action or proceeding to which this Indemnity is applicable if find to the extent that the Mortgage Notes Indenture Trustee determines in good faith that its rights and interests may be compromised or not fully and adequately represented by legal counsel acting for the Company, whether on account of any potential defenses that the Company may have to its obligations under this Indemnity or otherwise, and in such event the reasonable fees and expenses of the Mortgage Notes Indenture Trustee's independent counsel shall be paid by the Company. (c) Subject to the last sentence of Section l(a) above, the Company's obligations hereunder shall not be diminished or affected in any respect as a result of any notice or disclosure, if any, to, or other knowledge, if any, by, any Indemnified Party of any Release or threatened Release, or as a result of any other matter related to the Company's obligations hereunder, nor shall any Indemnified Party be deemed to have permitted or acquiesced in any Release or any breach of the Company's other obligations hereunder, solely because any Indemnified Party had notice, disclosure or knowledge thereof, whether at the time this Indemnity is delivered or at any time thereafter. (d) This Indemnity shall not be limited by any representation, warranty or indemnity of the Company made herein or in connection with any indebtedness secured by the Deed of Trust, irrespective of whether the Company has knowledge as of the date of the Deed of Trust, or during the term of the Deed of Trust, of the matters to which such representation, warranty or indemnity relates. 3 ENVIRONMENTAL COVENANTS (a) The Company shall not, and shall use commercially reasonable efforts to not permit any tenants or other occupants of the Property to, at any time in the future, cause or permit a Release, except in compliance with applicable Hazardous Substances Laws. (b) The Company shall give prompt written notice to the Mortgage Notes Indenture Trustee of any pending Claims, or of any Proceedings. (c) The Company shall give prompt written notice to the Mortgage Notes Indenture Trustee of the Company's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the 4 Property under any Hazardous Substances Laws including, without limitation, the Company's discovery of any occurrence or condition on the Property or on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as a hazardous waste property or border-zone property, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Substances Laws. (d) In the event that any investigation, site monitoring, containment, cleanup, removal, restoration, precautionary actions or other remedial work of any kind or nature (hereinafter, "REMEDIAL WORK") is required under any applicable Hazardous Substances Law as a result of, or in connection with, any Release, suspected Release, or threatened Release, the Company shall within thirty (30) days after receipt of information that such Remedial Work is or may be required (or such shorter period of time as may be required under applicable law, regulation, order or agreement), commence the performance of, or cause to be commenced, and thereafter diligently prosecute to completion, the performance of all such Remedial Work in compliance with all applicable Hazardous Substances Laws. All Remedial Work shall be performed by one or more contractors, approved in advance in writing by the Mortgage Notes Indenture Trustee, and under the supervision of a consulting engineer approved in advance in writing by the Mortgage Notes Indenture Trustee, which consent shall not be unreasonably withheld. All costs and expenses of such Remedial Work shall be paid by the Company, including, without limitation, the charges of such contractor(s) and/or the consulting engineer, and the Indemnified Parties' reasonable attorneys' fees and costs, including, without limitation, fees and costs of both outside and staff counsel incurred in connection with monitoring or review of such Remedial Work. In the event the Company shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, the performance of such Remedial Work, the Mortgage Notes Indenture Trustee or any other Indemnified Party may, but shall not be required to, cause such Remedial Work to be performed and all costs and expenses thereof, or incurred in connection therewith, shall be deemed Claims hereunder. 4. LIABILITY. (a) Notwithstanding any other provisions of this Indemnity or any of the Indenture Documents, any liability of the Company hereunder shall be its personal liability (but such personal liability shall not be deemed to incorporate personal liability of its directors, officers, employees or agents), and may be asserted against its interest in the Property as well as against any and all of its other assets. (b) Without limiting the foregoing, the obligations of the Company hereunder shall survive the following events, to the maximum extent permitted by law: (i) repayment of the Mortgage Notes and any judicial or nonjudicial foreclosure under the Deed of Trust or conveyance in lieu of such foreclosure, notwithstanding that all or any portion of any obligations secured by the Deed of Trust shall have been discharged thereby, (ii) any election by any Indemnified Party to purchase all or any portion of the Property at a foreclosure sale by crediting all or any portion of the obligations secured by the Deed of Trust against the purchase price therefor (except to the extent and only to the extent that such Indemnified Party has specifically elected in writing in its sole discretion to credit against the purchase price any 5 Claims hereunder which were liquidated in amount at the time of such foreclosure sale, it being presumed for these purposes that the obligations secured by the Deed of Trust shall be discharged by any such crediting in the order set forth in Section 4.12 of the Deed of Trust), (iii) any release or reconveyance of the Deed of Trust, any waiver of the lien of the Deed of Trust, or any release or waiver of any other security for the Mortgage Notes, and (iv) any termination, cancellation or modification of the Indenture, the Mortgage Notes, the Deed of Trust or any other agreement relating to the Mortgage Notes. Upon and following the occurrence of any of the foregoing, the obligations of the Company hereunder shall remain unsecured obligations, and shall be enforceable against the Company to the fullest extent permitted by applicable law. (c) The obligations of the Company hereunder are not intended to be the obligations of a surety or guarantor. The liability of the Company under this Indemnity shall in no way be limited or impaired by (i) any extensions of time for performance required by the Indenture Documents; (ii) the accuracy or inaccuracy of any representations and warranties made by the Company in any of the Indenture Documents; or (iii) the release of any person or entity from performance or observance of any of the agreements, covenants, terms, or conditions contained in any of the Indenture Documents by operation of law or otherwise. (d) The rights and remedies of the Indemnified Parties under this Indemnity (i) shall be in addition to any other rights and remedies of such Indemnified Parties under any Indenture Document or at law or in equity, and (ii) may be enforced by any of the Indemnified Parties, to the maximum extent permitted by law, without regard to or affecting any rights and remedies that such Indemnified Party may have under any Indenture Document or at law or in equity, and without regard to any limitations on such Indemnified Party's recourse for recovery of the indebtedness represented by the Mortgage Notes as may be provided in any Indenture Document. 5. SITE VISITS, OBSERVATION AND TESTING. The Mortgage Notes Indenture Trustee and any of the other Indemnified Parties and their respective agents and representatives shall have the right at any reasonable time, and upon reasonable prior notice, but subject to the rights of tenants under their leases, to enter and visit the Property to make such inspections and inquiries as they shall deem appropriate, including inspections for violations of any of the terms of this Indemnity and for determining the existence, nature and magnitude of any past or present Release or threatened Release, and they shall also have the right, following any Event Default (as defined in the Indenture), or where the Mortgage Notes Indenture Trustee has a reasonable basis upon which to believe that the Property may be harmed, unsafe or contaminated, and upon reasonable prior notice, to enter and visit the Property to make such tests (including, without limitation, taking and removing soil or groundwater samples) as they shall deem appropriate. Neither the Mortgage Notes Indenture Trustee nor any of the other Indemnified Parties have any duty, however, to visit or observe the Property or to conduct tests, and no site visit, observation or testing by the Mortgage Notes Indenture Trustee or any other Indemnified Party shall impose any liability on the Mortgage Notes Indenture Trustee or such other Indemnified Party. In no event shall any site visit, observation or testing by the Mortgage Notes Indenture Trustee or any other Indemnified Party be a representation that Hazardous Substances are or are not present in, on or under the Property, or that there has been or shall be compliance with any Hazardous 6 Substances Laws or any other applicable governmental law. Neither the Company nor any other party is entitled to rely on any site visit, observation or testing by the Mortgage Notes Indenture Trustee or any other Indemnified Party. Neither the Mortgage Notes Indenture Trustee nor any of the other Indemnified Parties owe any duly of care to protect the Company or any other party against, or to inform the Company or any other party of, any Hazardous Substances or any other adverse condition affecting the Property. The Mortgage Notes Indenture Trustee and any other Indemnified Party shall give the Company reasonable notice before entering the Property, and shall make reasonable efforts to avoid interfering with the Company's use of the Property in exercising any rights provided in this paragraph 5. 6. INTEREST ACCRUED. Any amount owed hereunder to an Indemnified Party not paid within thirty (30) days after written demand from such Indemnified Party with an explanation of the amounts claimed shall bear interest at a rate per annum equal to the maximum interest rate applicable to overdue principal set forth in Section 4.01 of the Indenture. 7. SUBROGATION OF INDEMNITY RIGHTS. If the Company fails to fully perform its obligations hereunder, any Indemnified Party shall be entitled to pursue any rights or claims that the Company may have against any present, future or former owners, tenants or other occupants or users of the Property, any portion thereof or any adjacent or proximate properties, relating to any Claim or the performance of Remedial Work, and the Company hereby assigns all of such rights and claims to the Indemnified Parties under such circumstances and shall take all actions required by the Indemnified Parties to cooperate with such Indemnified Parties in enforcing such rights and claims under such circumstances. 8. RELIANCE. The Company acknowledges that it is making and giving the indemnities and representations and covenants contained in this Indemnity with the knowledge that the Mortgage Notes Indenture Trustee and the Mortgage Note Holders are relying on such indemnities and representations and covenants in entering into the Indenture Documents and purchasing the Mortgage Notes, as the case may be. 9. SUCCESSORS AND ASSIGNS. This Indemnity shall inure to the benefit of each Indemnified Party's successors and assigns, and shall be binding upon the heirs, successors, and assigns of the Company. The Company shall not assign any rights or obligations under this Indemnity without first obtaining the written consent of the Mortgage Notes Indenture Trustee, which may be given or withheld in the sole discretion of the Mortgage Notes Indenture Trustee. Notwithstanding any other provision of this Indemnity to the contrary, the Company shall not be released from its obligations hereunder without obtaining the written consent of the Mortgage Notes Indenture Trustee, which consent may be given or withheld in the sole discretion of the Mortgage Notes Indenture Trustee. Nothing herein shall be deemed to be a consent to the transfer of the Property which transfer would be otherwise prohibited by any Indenture Document. 10. MISCELLANEOUS. This Indemnity shall be governed by and construed in accordance with the laws of the State of Nevada. If this Indemnity is executed by more than one person or entity, the liability of the undersigned hereunder shall be joint and several. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any 7 time and from time to time. No action hereunder shall preclude any subsequent action, and the Company hereby waives and covenants not to assert any defense in the nature of splitting of causes of action or merger of judgments. In no event shall any provision of this Indemnity be deemed to be a waiver of or to be in lieu of any right or claim, including, without limitation, any right of contribution or other right of recovery, that any party to this Indemnity might otherwise have against any other party to this Indemnity under any Hazardous Substances Laws. If any term of this Indemnity or any application thereof shall be invalid, illegal or unenforceable, the remainder of this Indemnity and any other application of such term shall not be affected thereby, No delay or omission in exercising any right hereunder shall operate as a waiver of such right or any other right. 11. NOTICES. All notices expressly provided hereunder to be given by the Company to the Mortgage Notes Indenture Trustee and all notices and demands of any kind or nature whatsoever which the Company may be required or may desire to give to or serve on the Mortgage Notes Indenture Trustee shall be in writing and shall be served by certified mail, return receipt requested, or by a reputable commercial overnight carrier that provides a receipt, such as Federal Express. Notice shall be addressed as follows: Mortgage Notes Indenture Trustee: U.S. Bank National Association 180 East 5th Street St. Paul, Minnesota 55101 Attn.: Corporate Trust Department Telecopy No.: (651) 244-0711 Telephone No.: (651) 244-0721 with a copy to: Latham & Watkins 701 "B" Street, Suite 2100 San Diego, California 92101 Attn.: Sony Ben-Moshe, Esq. Telecopy No.: (619) 696-7419 Telephone No.: (619) 236-1234 The Company: Las Vegas Sands, Inc. 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Attn.: General Counsel Telecopy No.: (702) 733-5499 Telephone No.: (702) 733-5502 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019-6064 Attn.: John Kennedy, Esq. Telecopy No.: (212) 757-3990 Telephone No.: (212) 373-3000 8 12. ATTORNEYS' FEES AND EXPENSES. If the Mortgage Notes Indenture Trustee or any Mortgage Note Holder refers this Indemnity or any of the other Indenture Documents to an attorney to enforce, construe or defend the same, as a consequence of any Event of Default, with or without the filing of any legal action or proceeding, the Company shall pay to the Mortgage Notes Indenture Trustee, immediately upon demand, the amount of all attorneys' fees and costs incurred by the Mortgage Notes Indenture Trustee in connection therewith, together with interest thereon from the date of award at the maximum interest rate applicable to overdue principal set forth in Section 4.01 of the Indenture. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 9 IN WITNESS WHEREOF, this Indemnity is executed as of the day and year first above written. THE COMPANY: LAS VEGAS SANDS, INC., a Nevada corporation By: /s/ David Friedman ------------------------ Name: David Friedman ------------------------ Title: Secretary ------------------------ VENETIAN CASINO RESORT, LLC, a Nevada limited liability company By: LAS VEGAS SANDS, INC., a Nevada corporation, its managing member By: /s/ David Friedman -------------------------- Name: David Friedman -------------------------- Title: Secretary -------------------------- 10 EX-10 11 ex10-2_7032.txt DEED OF TRUST EXHIBIT 10.2 APN 162-16-310-003 Tax Mailing Address: Venetian Casino Resort, LLC c/o Finance Department 201 East Sands Avenue Las Vegas, Nevada 89109-2617 Recording at the request of and when recorded mail to: Douglas L. Wisner, Esq. Mayer, Brown, Rowe & Maw 1675 Broadway New York, New York 10019 DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING made by VENETIAN CASINO RESORT, LLC, a Nevada limited liability company and LAS VEGAS SANDS, INC., a Nevada corporation, jointly and severally as Trustor, to FIRST AMERICAN TITLE INSURANCE COMPANY a California corporation, as Trustee, for the benefit of THE BANK OF NOVA SCOTIA, in its capacity as Administrative Agent, as Beneficiary THIS INSTRUMENT IS TO BE FILED AND INDEXED IN THE REAL ESTATE RECORDS AND IS ALSO TO BE INDEXED IN THE INDEX OF FINANCING STATEMENTS OF CLARK COUNTY, NEVADA UNDER THE NAMES OF VENETIAN CASINO RESORT, LLC AND LAS VEGAS SANDS, INC. AS "DEBTOR" AND THE BANK OF NOVA SCOTIA, AS ADMINISTRATIVE AGENT, AS SECURED PARTY. THIS INSTRUMENT IS A "CONSTRUCTION MORTGAGE" AS THAT TERM IS DEFINED IN SECTION 104.9334(8) OF THE NEVADA REVISED STATUTES AND SECURES AN OBLIGATION INCURRED FOR THE CONSTRUCTION OF AN IMPROVEMENT UPON LAND. THIS INSTRUMENT IS GOVERNED BY NRS 106.300-400 AND SECURES FUTURE ADVANCES OF UP TO $375,000,000 WHICH MAY INCREASE OR DECREASE FROM TIME TO TIME.
ARTICLE ONE COVENANTS OF TRUSTOR 1.1 Performance of Deed of Trust................................................................12 1.2 General Representations, Covenants and Warranties...........................................12 1.3 Leasehold Estates...........................................................................13 1.4 Payment of Subject Leases Expenses..........................................................13 1.5 Trustor's Covenants with Respect to Subject Leases..........................................13 1.6 Compliance with Legal Requirements..........................................................16 1.7 Impositions.................................................................................16 1.8 Insurance...................................................................................16 1.9 Condemnation................................................................................17 1.10 Leases......................................................................................18 1.11 Authorization by Trustor....................................................................18 1.12 Security Agreement and Financing Statements.................................................19 1.13 Assignment of Rents and Leases..............................................................21 1.14 Rejection of Subject Leases.................................................................21 1.15 Beneficiary's Cure of Trustor's Default.....................................................22 1.16 Use of Land and Leased Premises.............................................................22 1.17 Affiliates and Restricted Subsidiaries......................................................22 1.18 Merger......................................................................................22 ARTICLE TWO CORPORATE LOAN PROVISIONS 2.1 Interaction with Credit Agreement...........................................................23 2.2 Other Collateral............................................................................23 ARTICLE THREE DEFAULTS 3.1 Event of Default............................................................................23 ARTICLE FOUR REMEDIES 4.1 Acceleration of Maturity....................................................................23 4.2 Protective Advances.........................................................................24 4.3 Institution of Equity Proceedings...........................................................24
i 4.4 Beneficiary's Power of Enforcement..........................................................24 4.5 Beneficiary's Right to Enter and Take Possession, Operate and Apply Income..................25 4.6 Leases......................................................................................27 4.7 Purchase by Beneficiary.....................................................................27 4.8 Waiver of Appraisement, Valuation, Stay, Extension and Redemption Laws......................27 4.9 Receiver....................................................................................27 4.10 Suits to Protect the Trust Estate...........................................................28 4.11 Proofs of Claim.............................................................................28 4.12 Trustor to Pay the Notes on Any Default in Payment; Application of Monies by Beneficiary....28 4.13 Delay or Omission; No Waiver................................................................29 4.14 No Waiver of One Default to Affect Another..................................................29 4.15 Discontinuance of Proceedings; Position of Parties Restored.................................29 4.16 Remedies Cumulative.........................................................................30 4.17 Interest After Event of Default.............................................................30 4.18 Foreclosure; Expenses of Litigation.........................................................30 4.19 Deficiency Judgments........................................................................30 4.20 Waiver of July Trial........................................................................31 4.21 Exculpation of Beneficiary..................................................................31 ARTICLE FIVE RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE 5.1 Exercise of Remedies by Trustee.............................................................31 5.2 Rights and Privileges of Trustee............................................................32 5.3 Resignation or Replacement of Trustee.......................................................32 5.4 Authority of Beneficiary....................................................................32 5.5 Effect of Appointment of Successor Trustee..................................................32 5.6 Confirmation of Transfer and Succession.....................................................33 5.7 Exculpation.................................................................................33 5.8 Endorsement and Execution of Documents......................................................33 5.9 Multiple Trustees...........................................................................33 5.10 Terms of Trustee's Acceptance...............................................................33
ii
ARTICLE SIX MISCELLANEOUS PROVISIONS 6.1 Heirs, Successors and Assigns Included in Parties...........................................34 6.2 Addresses for Notices, Etc..................................................................34 6.3 Change of Notice Address....................................................................35 6.4 Headings....................................................................................35 6.5 Invalid Provisions to Affect No Others......................................................35 6.6 Changes and Priority Over Intervening Liens.................................................35 6.7 Estoppel Certificates.......................................................................35 6.8 Waiver of Setoff and Counterclaim...........................................................36 6.9 Governing Law...............................................................................36 6.10 Reconveyance................................................................................36 6.11 Attorneys' Fees.............................................................................37 6.12 Late Charges................................................................................37 6.13 Cost of Accounting..........................................................................37 6.14 Right of Entry..............................................................................37 6.15 Corrections.................................................................................37 6.16 Statute of Limitations......................................................................37 6.17 Subrogation.................................................................................38 6.18 Joint and Several Liability.................................................................38 6.19 Homestead...................................................................................38 6.20 Context.....................................................................................38 6.21 Time........................................................................................38 6.22 Interpretation..............................................................................38 [6.23 Effect of NRS Section 107.030...............................................................38 6.24 Amendments..................................................................................38 6.25 No Conflicts................................................................................38 ARTICLE SEVEN POWER OF ATTORNEY 7.1 Grant of Power..............................................................................39
iii EXHIBIT A LAND DESCRIPTION EXHIBIT B CASINO LEASED PREMISES EXHIBIT C PHASE I-A LEASED PREMISES 1 DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST, LEASEHOLD DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND FIXTURE FILING (hereinafter called "DEED OF TRUST") is made and effective as of June 4, 2002, by VENETIAN CASINO RESORT, LLC ("VENETIAN"), a Nevada limited liability company, and LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI" and jointly and severally with Venetian together with all successors and assigns of the Trust Estate (as hereinafter defined), "Trustor") whose address is 3355 Las Vegas Boulevard South, Room 1C, Las Vegas, Nevada 89109, Attention: General Counsel, to FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, whose address is 180 Cassia Way, Suite 502, Henderson, Nevada 89104, Attention: _____, as Trustee ("TRUSTEE"), for the benefit of THE BANK OF NOVA SCOTIA ("BENEFICIARY"), a Canadian chartered bank whose address is: 580 California Street, 21st Floor, San Francisco, California 94104, Attention: Mr. Alan Pendergast, in its capacity as Administrative Agent under that certain Credit Agreement dated as of June 4, 2002, among Trustor, Beneficiary, Goldman Sachs Credit Partners L.P., as syndication agent, and the lenders (the "LENDERS") from time to time parties thereto (as the same may be amended, supplemented, amended and restated, increased or otherwise modified from time to time, the "CREDIT AGREEMENT"). THE OBLIGATIONS SECURED HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS WHICH PERMIT BORROWING, REPAYMENT AND REBORROWING. INTEREST ON OBLIGATIONS SECURED HEREBY ACCRUES AT A RATE WHICH MAY FLUCTUATE FROM TIME TO TIME. DEFINITIONS - As used in this Deed of Trust, the following terms have the meanings hereinafter set forth: "ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section 9-102 (NRS 104.9102) of the UCC for the term "account." "APPURTENANT RIGHTS" means all and singular tenements, hereditaments, rights, reversions, remainders, development rights, privileges, benefits, Easements, rights-of-way, gores or strips of land, streets, ways, alleys, passages, sewer rights, water courses, water rights and powers, and all appurtenances whatsoever and claims or demands of Trustor at law or in equity in any way belonging, benefiting, relating or appertaining to the Site, the airspace over the Site, the Project and the Improvements or any of the Trust Estate encumbered by this Deed of Trust, or which hereinafter shall in any way belong, relate or be appurtenant thereto, whether now owned or hereafter acquired by Trustor, whether or not the same are of record. "BANKRUPTCY" means, with respect to any Person that: (i) a court having jurisdiction in the Trust Estate shall have entered a decree or order for relief in respect of such Person 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 has not been stayed; or any other similar relief shall have been granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against such Person, 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 Trust Estate for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over such Person, 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 such Person, 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 such Person, and any such event described in this clause (ii) shall continue for 60 days without being dismissed, bonded or discharged; or (iii) such Person shall have an order for relief entered with respect to it or shall 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 such Person shall make any assignment for the benefit of creditors or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due and payable and a period of thirty (30) days shall have elapsed; or (iv) such Person shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due and a period of 30 days shall have elapsed; or the Board of Directors of such Person (or any committee thereof) or the managing member of such Person shall, adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (iii) above or this clause (iv). "CASINO LEASED PREMISES" means the casino and gaming areas of the Phase I Project situated in the County of Clark, State of Nevada described in the Casino Lease and more specifically described in EXHIBIT B attached hereto and incorporated herein. "DEED OF TRUST" means this Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing as it may be amended, supplemented, amended and restated, increased or otherwise modified from time to time. "DEFAULT RATE" means the interest rate that shall be due upon an Event of Default pursuant to Section 2.2E of the Credit Agreement. "EASEMENT" means any easement appurtenant, easement in gross, license agreement or other right running for the benefit of Trustor, the Site, the Project, the Phase II Project (to the extent benefiting the Phase I-A Leased Premises), the HVAC Component or appurtenant thereto which benefits the Site, the Project or the Improvements, including those easements and licenses which benefit any of the foregoing and are described in the Cooperation Agreement or each title insurance policy issued by the Title Insurer with regard to the Site. "EVENT OF DEFAULT" has the meaning set forth in SECTION 3.1 hereof. "FF&E" means all furniture, fixtures, equipment, appurtenances and personal property now or in the future contained in, used in connection with, attached to, or otherwise useful or convenient to the use, operation, or occupancy of, or placed on, but unattached to, any part of the Site, the Project or the Improvements whether or not the same constitutes real property or fixtures in the State, including all removable window and floor coverings, all furniture and 2 furnishings, heating, lighting, plumbing, ventilating, air conditioning, refrigerating, incinerating, cleaning equipment, all elevators, escalators and elevator and escalator plants, cooking facilities, vacuum cleaning systems, public address and communications systems, switchboards, security and surveillance equipment and devices, sprinkler systems and other fire prevention and extinguishing apparatus and materials, motors, machinery, pipes, appliances, equipment, fittings, fixtures, and building materials, all exercise equipment, all gaming and financial equipment, computer equipment, calculators, adding machines, gaming tables, video game and slot machines, and any other electronic equipment of every nature used or located on any part of the Site, the Project or the Improvements, together with all venetian blinds, shades, draperies, drapery and curtain rods, brackets, bulbs, cleaning apparatus, mirrors, lamps, ornaments, cooking apparatus and equipment, china, flatware, dishes, utensils, glassware, ranges and ovens, garbage disposals, dishwashers, mantels, and any and all such property which is at any time installed in, affixed to or placed upon the Site, the Project or the Improvements. "IMPOSITION" means any taxes, assessments, water rates, sewer rates, maintenance charges, other impositions by any Governmental Instrumentality and other charges now or hereafter levied or assessed or imposed against the Trust Estate or any part thereof, and any amount payable with respect thereto under the Cooperation Agreement or any other Resort Complex Operative Document. "IMPROVEMENTS" means (1) all the buildings, structures, facilities and improvements of every nature whatsoever now or hereafter situated on the Site or the Project, and (2) all fixtures, machinery, appliances, goods, building or other materials, equipment, including without limitation all gaming equipment and devices, and all machinery, equipment, engines, appliances and fixtures for generating or distributing air, water, heat, electricity, light, fuel or refrigeration, or for ventilating or sanitary purposes, or for the exclusion of vermin or insects, or for the removal of dust, refuse or garbage; all wall-beds, wall-safes, built-in furniture and installations, shelving, lockers, partitions, doorstops, vaults, motors, elevators, dumb-waiters, awnings, window shades, venetian blinds, light fixtures, fire hoses and brackets and boxes for the same, fire sprinklers, alarm, surveillance and security systems, computers, drapes, drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets and carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water closets, laundry equipment, washers, dryers, ice-boxes and heating units; all kitchen and restaurant equipment, including but not limited to silverware, dishes, menus, cooking utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals, water heaters, incinerators, furniture, fixtures and furnishings, communication systems, and equipment; all cocktail lounge supplies, including but not limited to bars, glassware, bottles and tables used in connection with the Site, the Project and the Improvements; all chaise lounges, hot tubs, swimming pool heaters and equipment and all other recreational equipment (computerized and otherwise), beauty and barber equipment, and maintenance supplies used in connection with the Site, the Project and Improvements; all amusement rides and attractions attached to the Site, the Project and the Improvements, all specifically designed installations and furnishings, and all furniture, furnishings and personal property of every nature whatsoever now or hereafter owned or leased by Trustor or in which Trustor has any rights or interest and located in or on, or attached to, or used or intended to be used or which are now or may hereafter be appropriated for use on or in connection with the operation of the Site, the Project or the Improvements or any personal property encumbered hereby or any other Improvements, or in connection with any construction being conducted or which may be conducted thereon, and all extensions, additions, 3 accessions, improvements, betterments, renewals, substitutions, and replacements to any of the foregoing, and all of the right, title and interest of Trustor in and to any such property, which, to the fullest extent permitted by Legal Requirements, shall be conclusively deemed fixtures and improvements and a part of the Trust Estate hereby encumbered. "INCOME" means all Rents, security or similar deposits, revenues, issues, royalties, earnings, products or Proceeds, profits, income, including, without limitation, all rights to payment for hotel room occupancy by hotel guests, which includes any payment or monies received or to be received in whole or in part, whether actual or deemed to be, for the sale of services or products in connection with such occupancy, advance registration fees by hotel guests, tour or junket proceeds and deposits, deposits for convention and/or party reservations, and other benefits from the Trust Estate. "INSOLVENT" means with respect to any Person, that such Person shall be deemed to be insolvent if such Person shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due and payable and a period of thirty (30) days shall have elapsed. "INTANGIBLE COLLATERAL" means (a) the rights to use all names and all derivations thereof now or hereafter used by Trustor in connection with the Site, the Project or the Improvements, including, without limitation, the names "Venetian" and "Sands," including any variations thereon, together with the goodwill associated therewith, and all names, logos, and designs used by Trustor, or in connection with the Site, the Project or the Improvements or in which Trustor has rights, with the exclusive right to use such names, logos and designs wherever they are now or hereafter used in connection with the Site, the Project or the Improvements (or in connection with the marketing of the thereof together with the "SECC Land" (as defined in the Cooperation Agreement) in accordance with the terms of the Cooperation Agreement), and any and all other trade names, trademarks or service marks, whether or not registered, now or hereafter used in the operation of the Site, the Project or the Improvements, including, without limitation, any interest as a lessee, licensee or franchisee, and, in each case, together with the goodwill associated therewith; (b) subject to the absolute assignment contained herein, the Rents; (c) any and all books, records, customer lists, concession agreements, supply or service contracts, licenses, permits, approvals by Governmental Instrumentalities (to the extent Legal Requirements permit or do not expressly prohibit the pledge of such licenses, permits and approvals), signs, goodwill, casino and hotel credit and charge records, supplier lists, checking accounts, safe deposit boxes (excluding the contents of such deposit boxes owned by Persons other than Trustor), cash, instruments, chattel papers, including inter-company notes and pledges, documents, unearned premiums, deposits, refunds, including but not limited to income tax refunds, prepaid expenses, rebates, tax and insurance escrow and impound accounts, if any, actions and rights in action, and all other claims, including without limitation condemnation awards and insurance proceeds, and all other contract rights and general intangibles resulting from or used in connection with the operation and occupancy of the Trust Estate and the Project and in which Trustor now or hereafter has rights; and (d) general intangibles, vacation license resort agreements or other time share license or right to use agreements, including without limitation all rents, issues, profits, income and maintenance fees resulting therefrom, whether any of the foregoing is now owned or hereafter acquired. 4 "LAND" means the real property situated in the County of Clark, State of Nevada, more specifically described in EXHIBIT A attached hereto and incorporated herein by reference, including any after acquired title thereto. "LEASED PREMISES" means, as the context may require the Casino Leased Premises and/or the Phase I-A Leased Premises. "NRS" means the Nevada Revised Statutes as in effect from time to time. "PERSONAL PROPERTY" has the meaning set forth in SECTION 1.12. "PHASE I-A LEASED PREMISES" means the real property situated in the County of Clark, State of Nevada described in the Phase I-A Lease and more specifically described in EXHIBIT C attached hereto and incorporated herein by reference. "PROCEEDS" has the meaning assigned to it under the UCC and, in any event, shall include but not be limited to (i) any and all proceeds of any insurance (including without limitation property casualty and title insurance), indemnity, warranty or guaranty payable from time to time with respect to all or a portion of the Trust Estate; (ii) any and all proceeds in the form of accounts, security deposits, tax escrows (if any), down payments (to the extent Legal Requirements permit the same may to be pledged), collections, contract rights, documents, instruments, chattel paper, Liens and security instruments, guarantees or general intangibles relating in whole or in part to the Site, the Project or the Improvements and all rights and remedies of whatever kind or nature Trustor or its Restricted Subsidiaries may hold or acquire for the purpose of securing or enforcing any obligation due Trustor or then Restricted Subsidiaries thereunder; (iii) any and all payments in any form whatsoever made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Trust Estate by any Governmental Instrumentality; (iv) subject to the absolute assignment contained herein, the Rents or other benefits arising out of, in connection with or pursuant to the Casino Lease or any Space Lease of the Trust Estate; and (v) any and all other amounts from time to time paid or payable in connection with any of the Trust Estate; provided, however, that neither the Trustor nor its Restricted Subsidiaries is authorized to sell, transfer, convey, mortgage, pledge, grant rights in or otherwise dispose of any of the Trust Estate unless permitted under the Credit Agreement. "PHASE I HOTEL AND CASINO PROJECT" means the Venetian Casino Resort consisting of a 3,036 suite hotel and a gaming facility of approximately 116,000 square feet with related heating, ventilation and air conditioning and power station facilities located at 3355 Las Vegas Boulevard South, Clark County, Nevada, but excluding the mall component thereof. "PROJECT" means the Phase I Hotel and Casino Project and the Phase I-A Project. "RENTS" means all rents, room revenues, Income, receipts, issues, profits, revenues and maintenance fees, room, food and beverage revenues, license and concession fees, Proceeds and other benefits to which Trustor or its Restricted Subsidiaries may now or hereafter be entitled from the Site, the Project or the Improvements therein or thereon, as applicable, or any property encumbered hereby or any business or other activity conducted by Trustor or any of its Restricted Subsidiaries at the Site, the Project or the Improvements. 5 "SITE" means the Land, the Phase I-A Airspace, the Easements and, if the context so requires, the Casino Leased Premises. "SPACE LEASES" means any and all leases (excluding the Subject Leases), subleases, lettings, licenses, concessions, operating agreements, management agreements, and all other agreements affecting all or a portion of the Trust Estate, that Trustor or any of its Restricted Subsidiaries has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by, now or in the future, that give any Person the right to conduct its business on, or otherwise use, operate or occupy, all or any portion of the Site, the Project or the Improvements including, without limitation, the right to use or occupy space for kiosk(s) or vendor cart(s), and all rights of Trustor or any Restricted Subsidiary (if any) thereto or therefrom and any leases, agreements or arrangements permitting anyone to enter upon or use all or any portion of the Trust Estate to extract or remove natural resources of any kind, together with all amendments, extensions, and renewals of the foregoing entered into in compliance with the Credit Agreement, together with all rental, occupancy, service, maintenance or any other similar agreements pertaining to use or occupation of, or the rendering of services at the Site, the Project, the Improvements or any part thereof. "SPACE LESSEE(S)" means any and all tenants, licensees, or other grantees of the Space Leases and any and all guarantors, sureties, endorsers or others having primary or secondary liability with respect to such Space Leases. "STATE" means the State of Nevada. "SUBJECT LEASES" means the Casino Lease and the Phase I-A Lease. "TANGIBLE COLLATERAL" means all personal property, goods, equipment, supplies, building and other materials of every nature whatsoever and all other tangible personal property constituting a part or portion of the Project and/or used in the operation of the hotel, casino, restaurants, stores, parking facilities, observation tower and all other Improvements on the Site or the Project including but not limited to communication systems, visual and electronic surveillance systems and transportation system and not constituting a part of the real property subject to the Lien of this Deed of Trust and including all property and materials stored therein in which Trustor or any Restricted Subsidiary has an interest and all tools, utensils, food and beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, vehicles, fuel, advertising and promotional material, blueprints, surveys, plans and other documents relating to the Site, the Project or the Improvements, and all construction materials and all furnishings, fixtures and equipment, including, but not limited to, all FF&E and all equipment and devices which are or are to be installed and used in connection with the operation of the Site, the Project or the Improvements those items of furniture, fixtures and equipment which are to be purchased or leased by Trustor or its Restricted Subsidiaries, machinery and any other items of personal property in which Trustor or its Restricted Subsidiaries now or hereafter own or acquire an interest or right and which are used or useful in the construction, operation, use and occupancy of the Site, the Project or the Improvements and all present and future right and interest of Trustor or its Restricted Subsidiaries in and to any casino operator's agreement (to the extent same may be pledged under Nevada Gaming Laws), license agreement or sublease agreement used in connection with the Site, the Project or the Improvements. 6 "TITLE INSURER" means First American Title Insurance Company, a Nevada corporation or an Affiliate thereof. "TRUST ESTATE" means all of the property described in Granting Clauses (A) through (O) below, inclusive, and each item of property therein described, PROVIDED, HOWEVER, that such term shall not include the property described in Granting Clause (P) below. "UCC" means the Uniform Commercial Code in effect in the State from time to time, NRS chapters 104 and 104A. The following terms shall have the meaning assigned to such terms in the Credit Agreement: Affiliate Asset Sale Bankruptcy Code Business Day Casino Lease Closing Date Collateral Collateral Documents Cooperation Agreement FF&E Facility Gaming License Governmental Instrumentality HVAC Component Legal Requirements Lenders Lien Loan Documents Net Loss Proceeds Nevada Gaming Authorities Nevada Gaming Laws Notes Obligations Operative Documents Permitted Liens Person Phase I-A Airspace Phase I-A Lease Phase I-A Project Phase I-A Project Plans and Specifications Phase II Project Project Requisite Lenders Restricted Subsidiary Resort Complex 7 Resort Complex Operative Document Specified FF&E Subsidiary Subsidiary Guarantor Title Insurance Policy In addition, any capitalized terms used in this Deed of Trust which are not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement. W I T N E S S E T H: IN CONSIDERATION OF TEN DOLLARS AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, AND FOR THE PURPOSE OF SECURING in favor of Beneficiary (1) the due and punctual payment of the portion of the Obligations evidenced by the Notes in the principal amount of THREE HUNDRED SEVENTY-FIVE MILLION AND 00/100 DOLLARS or so much thereof as may be advanced from time to time; (2) the performance of the Obligations and each covenant and agreement of Trustor and the Restricted Subsidiaries contained in the Credit Agreement, herein or in the other Loan Documents; (3) the payment of such additional loans or advances as hereafter may be made to either Trustor (individually or jointly and severally with any other Person), its successors or assigns or any Restricted Subsidiary, when evidenced by a promissory note or notes reciting that they are secured by this Deed of Trust; PROVIDED, HOWEVER, that any and all future advances by Beneficiary or Lenders to either Trustor or any of its Restricted Subsidiaries made for the improvement, protection or preservation of the Trust Estate, together with interest at the interest rate provided in the Credit Agreement, shall be automatically secured hereby unless such a note or instrument evidencing such advances specifically recites that it is not intended to be secured hereby and (4) the payment of all sums expended or advanced by Beneficiary or Lenders under or pursuant to the terms hereof or to protect the security hereof (including Protective Advances as such term is defined in SECTION 4.2 hereof), together with interest thereon as herein provided, Trustor, in consideration of the premises, and for the purposes aforesaid, does hereby ASSIGN, BARGAIN, CONVEY, PLEDGE, RELEASE, HYPOTHECATE, WARRANT, AND TRANSFER WITH POWER OF SALE UNTO TRUSTEE IN TRUST FOR THE BENEFIT OF BENEFICIARY AND THE LENDERS each of the following: (A) Trustor's interest in the Site and the leasehold estates created pursuant to the Casino Lease (to the extent permitted by, or not prohibited by, the Nevada Gaming Laws and other applicable law) and the Phase I-A Lease; (B) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to the Project and the Improvements; (C) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to all Appurtenant Rights; 8 (D) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to the Tangible Collateral to the extent permitted by, or not prohibited by, the Nevada Gaming Laws and other applicable Legal Requirements; (E) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to the Intangible Collateral to the extent permitted by, or not prohibited by, Nevada Gaming Laws and other applicable law; (F) TOGETHER WITH (i) all the estate, right, title and interest of Trustor of, in and to all judgments and decrees, insurance proceeds, awards of damages and settlements hereafter made resulting from condemnation proceedings or the taking of any of the property described in Granting Clauses (A), (B), (C), (D), (E), (J), (K), and (L) hereof or any part thereof under the power of eminent domain, or for any damage (whether caused by such taking or otherwise) to the property described in Granting Clauses (A), (B), (C), (D), (E), (J), (K), and (L) hereof or any part thereof, or to any Appurtenant Rights thereto, and Beneficiary is hereby authorized to collect and receive said awards and proceeds and to give proper receipts and acquittance therefor, and (subject to the terms of the Credit Agreement) to apply the same to the extent constituting Net Loss Proceeds toward the payment of the Obligations and other sums secured hereby, notwithstanding the fact that the amount owing thereon may not then be due and payable; (ii) all proceeds of any sales or other dispositions of the property or rights described in Granting Clauses (A), (B), (C), (D), (E), (J), (K), and (L) hereof or any part thereof whether voluntary or involuntary, PROVIDED, HOWEVER, that the foregoing shall not be deemed to permit Asset Sales except as specifically permitted in the Credit Agreement; and (iii) whether arising from any voluntary or involuntary disposition of the Collateral described in Granting Clauses (A), (B), (C), (D), (E), (J), (K), and (L), all Proceeds, products, replacements, additions, substitutions, renewals and accessions, remainders, reversions and after-acquired interest in, of and to such Collateral; (G) TOGETHER WITH, the absolute assignment of any Space Leases or any part thereof that Trustor has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by, now or in the future, together with all of the following (including all "Cash Collateral" within the meaning of the Bankruptcy Code) arising from the Space Leases: (a) Rents and Income (subject, however, to the aforesaid absolute assignment to Trustee for the benefit of Beneficiary and the revocable license hereinbelow granted to Trustor to collect the Rents), (b) all guarantees, letters of credit, security deposits, collateral, cash deposits, and other credit enhancement documents, arrangements and other measures with respect to the Space Leases, (c) all of Trustor's right, title, and interest under the Space Leases, including the following: (i) the right to receive and collect the Rents from the lessee, sublessee or licensee, or their successor(s), under any Space Lease(s) and (ii) the right to enforce against any tenants thereunder and otherwise any and all remedies under the Space Leases, including Trustor's right to evict from possession any tenant thereunder or to retain, apply, use, draw upon, pursue, enforce or realize upon any guaranty of any Space Lease; to terminate, modify, or amend the Space Leases; to obtain possession of, use, or occupy, any of the real or personal property subject to the Space Leases; and to enforce or exercise, whether at law or in equity or by any other means, all provisions of the Space Leases and all obligations of the tenants thereunder based upon (A) any breach by such tenant under the applicable Space Lease (including any claim that Trustor may have by reason of a termination, rejection, or disaffirmance of such Space Lease pursuant to the Bankruptcy Code) and (B) the use and occupancy of the premises demised, 9 whether or not pursuant to the applicable Space Lease (including any claim for use and occupancy arising under landlord-tenant law of the State or the Bankruptcy Code). A revocable license is hereby granted to Trustor, so long as no Event of Default has occurred and is continuing hereunder, to collect and use the Rents, as they become due and payable, but not more than one (1) month in advance thereof. Upon the occurrence of an Event of Default, the permission hereby granted to Trustor to collect the Rents shall automatically be revoked without notice until such time as such Event of Default is cured and such cure is accepted by the Beneficiary; PROVIDED, HOWEVER, to the extent that the Required Lenders rescind and annul an acceleration of the Loans in accordance with the provisions of the second paragraph of subsection 8.19 of the Credit Agreement, such revocable license shall be reinstated. Beneficiary shall have the right, at any time and from time to time, to notify any Space Lessee of the rights of Beneficiary as provided by this section; Notwithstanding anything to the contrary contained herein, the foregoing provisions of this Granting Clause (G) shall not constitute an assignment for purposes of security but shall to the extent permitted by, or not prohibited by, the Nevada Gaming Laws and other applicable law constitute an absolute and present assignment of the Rents to Beneficiary, subject, however, to the conditional license given to Trustor to collect and use the Rents as hereinabove provided; and the existence or exercise of such right of Trustor shall not operate to subordinate this assignment to any subsequent assignment, in whole or in part, by Trustor; (H) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to any and all Phase I-A Project Plans and Specifications and all maps, plans, specifications, surveys, studies, tests, reports, data and drawings relating to the development of the Site, the Project or the Improvements including, without limitation, all marketing plans, feasibility studies, soils tests, design contracts and all contracts and agreements of Trustor relating thereto including, without limitation, architectural, structural, mechanical and engineering plans and specifications, studies, data and drawings prepared for or relating to the development of the Site, the Project or the Improvements or the construction, renovation or restoration of any of the Improvements or the extraction of minerals, sand, gravel or other valuable substances from the Site, the Project or the Improvements and purchase contracts or any agreement granting Trustor a right to acquire any land situated within Clark County, Nevada; (I) TOGETHER WITH, to the extent permitted by, or not prohibited by, the Nevada Gaming Laws and other applicable Legal Requirements, all the estate, right, title and interest of Trustor of, in and to any and all licenses, permits, variances, special permits, franchises, certificates, rulings, certifications, validations, exemptions, filings, registrations, authorizations, consents, approvals, waivers, orders, rights and agreements (including, without limitation, options, option rights, contract rights now or hereafter obtained by Trustor from any Governmental Instrumentality having or claiming jurisdiction over the Site, the Project, the Improvements or any other element of the Trust Estate or providing access thereto, or the operation of any business on, at or from the Site, the Project or the Improvements including, without limitation, any liquor or Gaming Licenses, (except for any registrations, licenses, findings of suitability or approvals issued by the Nevada Gaming Authorities or any other liquor or gaming licenses which are non-assignable); PROVIDED, that upon an Event of Default hereunder or under the Credit Agreement, if Beneficiary is not qualified under the Nevada Gaming Laws to hold such Gaming Licenses, then Beneficiary may designate an appropriately qualified third 10 party to which an assignment of such Gaming Licenses can be made in compliance with the Nevada Gaming Laws; (J) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to all water stock, water permits and other water rights relating to the Site, the Project or the Improvements; (K) TOGETHER WITH all the estate, right, title and interest of Trustor of, in and to all oil and gas and other mineral rights, if any, in or pertaining to the Site, the Project or the Improvements and all royalty, leasehold and other rights of Trustor pertaining thereto; (L) TOGETHER WITH any and all monies and other property, real or personal, which may from time to time be subjected to the Lien hereof by Trustor or by anyone on its behalf or with its consent, or which may come into the possession or be subject to the control of Trustee or Beneficiary pursuant to this Deed of Trust or any Loan Document granting a security interest to the Beneficiary, including, without limitation, any Protective Advances under this Deed of Trust; and all of Trustor's right, title, and interest in and to all extensions, improvements, betterments, renewals, substitutes for and replacements of, and all additions, accessions, and appurtenances to, any of the foregoing that Trustor may subsequently acquire or obtain by any means, or construct, assemble, or otherwise place on any of the Trust Estate, and all conversions of any of the foregoing; it being the intention of Trustor that all property hereafter acquired by Trustor and required by this Deed of Trust or any Loan Document granting a security interest to the Beneficiary to be subject to the Lien of this Deed of Trust or intended so to be shall forthwith upon the acquisition thereof by Trustor be subject to the Lien of this Deed of Trust as if such property were now owned by Trustor and were specifically described in this Deed of Trust and granted hereby or pursuant hereto, and Trustee and Beneficiary are hereby authorized, subject to Nevada Gaming Laws and other applicable Legal Requirements, to receive any and all such property as and for additional security for the obligations secured or intended to be secured hereby. Trustor agrees to take any action as may reasonably be necessary to evidence and perfect such Liens or security interests, including, without limitation, the execution of any documents necessary to evidence and perfect such Liens or security interests; (M) TOGETHER WITH, to the extent permitted by applicable Legal Requirements, any and all Accounts Receivable and all royalties, earnings, Income, proceeds, products, Rents, revenues, reversions, remainders, issues, profits, avails, production payments, and other benefits directly or indirectly derived or otherwise arising from any of the foregoing, all of which are hereby assigned to Beneficiary, who, except as otherwise expressly provided in this Deed of Trust (including the provisions of SECTION 1.13 hereof), is authorized to collect and receive the same, to give receipts and acquittances therefor and to apply the same to the Obligations secured hereunder, whether or not then due and payable; (N) TOGETHER WITH Proceeds of the foregoing property described in Granting Clauses (A) through (M); (O) TOGETHER WITH Trustor's rights further to assign, sell, lease, encumber or otherwise transfer or dispose of the property described in Granting Clauses (A) through (N) inclusive, above, for debt or otherwise; and 11 (P) EXPRESSLY EXCLUDING, HOWEVER, (i) Specified FF&E, (ii) the HVAC Component, (iii) any assets which if pledged, hypothecated or given as collateral security would require Trustor to seek approval of any Nevada Gaming Authority of the pledge, hypothecation or collateralization, or require the Beneficiary or any Person to be licensed, qualified or found suitable by an applicable Nevada Gaming Authority, (iv) any contracts, contract rights, permits or general intangibles, which by their terms or the operation of law prohibit or do not allow assignment or require any consent for assignment which has not been obtained or which would be breached by virtue of a security interest being granted therein, (v) any property or assets subject to a Lien permitted under clauses (ii), (iv), (xxv)(b), (xxvi) and (xxvii) of the definition of Permitted Liens contained in the Credit Agreement. Trustor, for itself and its successors and assigns, covenants and agrees to and with Trustee that, at the time or times of the execution of and delivery of these presents or any instrument of further assurance with respect thereto, Trustor has good right, full power and lawful authority to assign, grant, convey, warrant, transfer, bargain or sell its interests in the Trust Estate in the manner and form as aforesaid, and that the Trust Estate is free and clear of all Liens whatsoever, except the Permitted Liens, and Trustor shall warrant and forever defend the Trust Estate in the quiet and peaceable possession of Trustee and its successors and assigns against all and every Person lawfully or otherwise claiming or to claim the whole or any part thereof, subject to Permitted Liens. Trustor agrees that any greater title to the Trust Estate hereafter acquired by Trustor during the term hereof shall be automatically subject hereto. ARTICLE ONE COVENANTS OF TRUSTOR The Beneficiary and Lenders have been induced to enter into the Credit Agreement and the other Loan Documents and to make the Loans to Trustor on the basis of the following material covenants, all agreed to by Trustor: 1.1 PERFORMANCE OF DEED OF TRUST. Trustor shall perform, observe and comply and shall cause each Subsidiary Guarantor to perform, observe and comply with each and every provision hereof and of the other Loan Documents and shall promptly pay, when payment shall become due, the principal with interest thereon, the other Obligations and all other sums required to be paid by Trustor hereunder and thereunder, as the case may be. 1.2 GENERAL REPRESENTATIONS, COVENANTS AND WARRANTIES. Trustor represents, covenants and warrants that: (a) Trustor has good and marketable title to an indefeasible fee estate in the Site (other than the Leased Premises) and a valid leasehold interest in the Leased Premises, free and clear of all Liens except Permitted Liens, and that it has the right to hold, occupy and enjoy its interest in the Trust Estate, and has good right, full power and lawful authority to subject the Trust Estate to the Lien of this Deed of Trust and pledge the same as provided herein and Beneficiary may at all times peaceably and quietly enter upon, hold, occupy and enjoy the entire Trust Estate in accordance with the terms hereof; (b) neither Trustor nor any of its Subsidiaries is Insolvent and no bankruptcy or insolvency proceedings are pending or contemplated by or, to the best of Trustor's knowledge, threatened against Trustor nor any of its Subsidiaries; (c) all costs arising from construction of any Improvements, the performance of any labor and the purchase 12 of all Tangible Collateral and the Improvements have been or shall be paid when due (subject to the provisions of the Credit Agreement and this Deed of Trust); (d) the Site and the Leased Premises (other than the Phase I-A Airspace) have frontage on, and direct access for ingress and egress to dedicated street(s); (e) Trustor shall at all times conduct and operate the Trust Estate in a manner so as not to lose, or permit any Restricted Subsidiary to lose the right to conduct gaming activities at the Project; (f) no material part of the Trust Estate has been damaged, destroyed, condemned or abandoned, other than those portions of the Trust Estate that have been the subject of condemnation proceedings that have resulted in the conveyance of such portion of the Trust Estate to the Trustor; (g) no part of the Trust Estate is the subject of condemnation proceedings and Trustor has no knowledge of any contemplated or pending condemnation proceeding with respect to any portion of the Trust Estate other than condemnation proceedings set forth in EXHIBIT D; and (h) Trustor acknowledges and agrees that it presently uses, and has in the past used, certain trade or fictitious names in connection with the operation of the business at the Trust Estate, including the names "Venetian," and "Sands" (all of the foregoing, collectively, the "ENUMERATED NAMES"). For all purposes of this Deed of Trust it shall be deemed that the term "Trustor" includes, in addition to "Venetian Casino Resort, LLC" and "Las Vegas Sands, Inc." all trade or fictitious, names that Venetian, LVSI (or any successor or assign thereof) now or hereafter uses, or has in the past used with respect to the Site, the Project or the Improvements without limitation, with the same force and effect as if this Deed of Trust had been executed in all such names (in addition to "Venetian Casino Resort, LLC" and "Las Vegas Sands, Inc."). 1.3 LEASEHOLD ESTATES. Trustor represents, covenants and warrants: (a) that the Subject Leases are in full force and effect and unmodified; (b) Trustor will defend the leasehold estate under each Subject Lease for the entire remainder of the term set forth in each of the said Subject Leases against all and every Person or Persons lawfully claiming, or who may claim the same or any part thereof, subject to the payment of the rents in the Subject Leases reserved and subject to the performance and observance of all of the terms, covenants, conditions and warranties thereof; (c) that there is no uncured default under any Subject Lease or in the performance of any of the terms, covenants, conditions or warranties thereof on the part of the lessor or the lessee to be observed and performed and that no state of facts exist under a Subject Lease which, with the lapse of time or giving of notice or both would constitute a default thereunder. 1.4 PAYMENT OF SUBJECT LEASES EXPENSES. The Trustor shall pay or cause to be paid on or prior to the date due all rents, additional rents and other Impositions payable by the lessor or the lessee under the Subject Leases for which provision has not been made hereinbefore, when and as often as the same shall become due and payable and the pro rata share, if any, of all amounts payable under the Cooperation Agreement allocable to the Site, the Project and the Improvements. Trustor will in every case deliver, or cause to be delivered, proper receipts for any such item so paid and will within ten (10) days after the time when such payment shall be due and payable deliver to the Beneficiary, a copy of the receipts for any such payments. 1.5 TRUSTOR'S COVENANTS WITH RESPECT TO SUBJECT LEASES. (a) The Trustor shall at all times promptly and faithfully keep and perform, or cause to be kept and performed, all the covenants and conditions contained in the Subject Leases to be kept and performed by the lessor or the lessee under the Subject Leases and in all respects conform to and comply with the terms and conditions of the Subject Leases. The Trustor further 13 covenants that it shall not do or permit anything to occur or omit to occur which will impair or tend to impair the security of this Deed of Trust or will be grounds for declaring a forfeiture of either Subject Leases, and upon any such failure as aforesaid, Trustor shall be subject to all of the rights and remedies granted Beneficiary in this Deed of Trust. (b) Except as otherwise permitted in the Credit Agreement, Trustor shall not modify, extend or in any way alter the terms of the Subject Leases or cancel or surrender said Subject Leases, or waive, execute, condone or in anyway release or discharge the lessor thereunder of or from the obligations, covenants, conditions and agreements by said lessor to be done and performed; and Trustor does expressly release, relinquish and surrender unto Beneficiary all of its rights, power and authority to cancel, surrender, amend, modify or alter in any way the terms and provisions of the Subject Leases and any attempt on the part of Trustor to exercise any such right without the written approval and consent of Beneficiary thereto being first had and obtained shall constitute an Event of Default under the terms hereof and the Loan Documents and all Obligations and other sums secured hereby shall, at the option of Beneficiary, become due and payable forthwith. (c) The Notes and all other Obligations of Trustor to Beneficiary under the Loan Documents shall immediately become due and payable at the option of Beneficiary, if Trustor fails to give Beneficiary immediate notice of any default under the Subject Leases or of the receipt by it of any notice of default from the Lessor thereunder, or if Trustor fails to furnish to Beneficiary immediately any and all information which it may request concerning the performance by Trustor of the covenants of the Subject Leases, or if Trustor fails to permit Beneficiary or its representative at all reasonable times to make investigation or examination concerning the performance by Trustor of the covenants of the Subject Leases, or if Trustor fails to permit Lender or its representative at all reasonable time to make investigation or examination concerning such performance. Trustor shall deliver to Beneficiary an original executed copy of each Subject Lease, an estoppel certificate from the Lessor within ten (10) days of request by Beneficiary and in such form and content as shall be satisfactory to Beneficiary, as well as any and all documentary evidence received by it showing compliance by Trustor with the provisions of the Subject Leases. (d) In the event of any failure by Trustor to perform or cause the performance of any covenant on the part of lessor or lessee to be observed and performed under the Subject Leases, the performance by Beneficiary on behalf of Trustor of the applicable Subject Lease covenant shall not remove or waive, as between Trustor and Beneficiary, the corresponding Event of Default under the terms hereof and any amount so advanced by Beneficiary or any costs incurred in connection therewith, with interest thereon at the Default Rate shall constitute additional Obligations secured hereby and be immediately due and payable. (e) To the extent permitted by law, the price payable by Trustor, or by any other party so entitled, in the exercise of the right of redemption, if any, shall include all rents paid and other sums advanced by Beneficiary, on behalf of Trustor, as lessee under the Subject Leases. (f) The fee title and the leasehold estate in the property demised by the Phase I-A Lease shall not merge and shall always be kept separate and distinct until the Phase I-A Airspace terminates. If Trustor acquires the fee title or any other estate, title or interest in the Phase I-A 14 Airspace, or any property covered by the Phase I-A Lease, the lien of this Deed of Trust shall attach to, cover and be a lien upon such acquired estate, title or interest and same shall thereupon be and become a part of the Trust Estate with the same force and effect as if specifically encumbered herein. Trustor covenants and agrees to ratify, confirm and further evidence Beneficiary's lien on the acquired estate, title or interest as reasonably requested by Beneficiary. (g) Beneficiary shall have the right upon notice to Trustor to participate in the adjustment and settlement of any insurance proceeds and in the determination of any condemnation award under the Subject Leases to the extent and in the manner provided in the Subject Leases. (h) The Lien of this Deed of Trust shall attach to all of Trustor's rights and remedies at any time arising under or pursuant to section 365(h) of the Bankruptcy Code, including, without limitation, all of Trustor's rights to remain in possession of the Site, the Project, the Improvements and the Leased Premises. Trustor shall not elect to treat the Subject Leases as terminated under section 365(h)(1) of the Bankruptcy Code, and any such election shall be void. (i) If pursuant to section 365(h)(2) of the Bankruptcy Code, Trustor shall seek to offset against the rent reserved in the Subject Leases the amount of any damages caused by the nonperformance by the lessor or any other Person of any of their respective obligations thereunder after the rejection by the lessor or such other Person of the Subject Leases under the Bankruptcy Code, then Trustor shall, prior to effecting such offset, notify Beneficiary of its intent to do so, setting forth the amount proposed to be so offset and the basis therefor. Beneficiary shall have the right to object to all or any part of such offset that, in the reasonable judgment of Beneficiary, would constitute a breach of the Subject Leases, and in the event of such objection, Trustor shall not effect any offset of the amounts found objectionable by Beneficiary. Neither Beneficiary's failure to object as aforesaid nor any objection relating to such offset shall constitute an approval of any such offset by Beneficiary. (ii) If any action, proceeding, motion or notice shall be commenced or filed in respect of the lessor under the Subject Leases or any other party or in respect of the Subject Leases in connection with any case under the Bankruptcy Code, then Beneficiary shall have the option to intervene in any such litigation with counsel of Beneficiary's choice. Beneficiary may proceed in its own name in connection with any such litigation, and Trustor agrees to execute any and all powers, authorizations, consents or other documents required by Beneficiary in connection therewith. (iii) Trustor shall, after obtaining knowledge thereof, promptly notify Beneficiary of any filing by or against the lessor or other party with an interest in the Leased Premises of a petition under the Bankruptcy Code. Trustor shall promptly deliver to Beneficiary, following receipt, copies of any and all notices, summonses, pleadings, applications and other documents received by Trustor in connection with any such petition and any proceedings relating thereto. (iv) If there shall be filed by or against Trustor a petition under the Bankruptcy Code, and Trustor, as lessee under the Subject Leases, shall determine to reject the Subject 15 Leases pursuant to section 365(a) of the Bankruptcy Code, then Trustor shall give Beneficiary a notice of the date on which Trustor shall apply to the bankruptcy court for authority to reject the Subject Leases (such notice to be no later than twenty (20) days prior to such date). Beneficiary shall have the right, but not the obligation, to serve upon Trustor at any time prior to the date on which Trustor shall so apply to the bankruptcy court a notice stating that Beneficiary demands that Trustor assume and assign the Subject Leases to Beneficiary pursuant to section 365 of the Bankruptcy Code. If Beneficiary shall serve upon Trustor the notice described in the preceding sentence, to the extent permitted by law Trustor shall not seek to reject the Subject Leases and shall comply with the demand provided for in the preceding sentence. In addition, effective upon the entry of an order for relief with respect to Trustor under the Bankruptcy Code, Trustor hereby assigns and transfers to Beneficiary a non-exclusive right to apply to the bankruptcy court under section 365(d)(4) of the Bankruptcy Code for an order extending the period during which the Subject Leases may be rejected or assumed; and shall (a) promptly notify Beneficiary of any default by Trustor in the performance or observance of any of the terms, covenants or conditions on the part of Trustor to be performed or observed under the Subject Leases and of the giving of any written notice by the lessor thereunder to Trustor of any such default, and (b) promptly cause a copy of each written notice given to Trustor by the lessor under the Subject Leases to be delivered to Beneficiary. Beneficiary may rely on any notice received by it from any such lessor of any default by Trustor under the Subject Leases and may take such action as may be permitted by law to cure such default even though the existence of such default or the nature thereof shall be questioned or denied by Trustor or by any Person on its behalf. 1.6 COMPLIANCE WITH LEGAL REQUIREMENTS. Trustor shall promptly, fully, and faithfully comply in all material respects with all Legal Requirements and shall cause all portions of the Trust Estate and its use and occupancy to fully comply in all material respects with Legal Requirements at all times, whether or not such compliance requires work or remedial measures that are ordinary or extraordinary, foreseen or unforeseen, structural or nonstructural, or that interfere with the use or enjoyment of the Trust Estate. 1.7 IMPOSITIONS. Except as otherwise permitted by Section 6.3 of the Credit Agreement, (a) Trustor shall pay all Impositions as they become due and payable and shall deliver to Beneficiary promptly upon Beneficiary's request, evidence satisfactory to Beneficiary that the Impositions have been paid or are not delinquent; (b) Trustor shall not suffer to exist, permit or initiate the joint assessment of the real and personal property, or any other procedure whereby the Lien of Impositions and the Lien of the personal property taxes shall be assessed, levied or charged to the Site (other than the Phase I-A Airspace), the Project and the Improvements as a single Lien, except as may be required by Legal Requirements; and (c) in the event of the passage of any law deducting from the value of real property for the purposes of taxation any Lien thereon, or changing in any way the taxation of deeds of trust or obligations secured thereby for state or local purposes, or the manner of collecting such Impositions or taxes and imposing an Imposition or tax, either directly or indirectly, on this Deed of Trust or the Notes, Trustor shall pay all such Impositions and taxes and all payments required with respect to Impositions and taxes pursuant to the terms of the Cooperation Agreement (including, without limitation, Article VI thereof). 16 1.8 INSURANCE. (a) INSURANCE REQUIREMENTS AND PROCEEDS. (i) HAZARD INSURANCE. Trustor shall at its sole expense obtain for, deliver to, assign and maintain for the benefit of Beneficiary, during the term of this Deed of Trust, insurance policies insuring the Trust Estate and liability insurance policies, all in accordance with the requirements of Section 6.4 of the Credit Agreement, if applicable, and Article X of the Cooperation Agreement. Trustor shall promptly pay when due any premiums on such insurance policies and on any renewals thereof and all payments required with respect to the procurement of insurance pursuant to the terms of the Cooperation Agreement (including, without limitation, Article VI thereof). In the event of the foreclosure of this Deed of Trust or any other transfer of title to the Trust Estate in extinguishment of the Obligations and other sums secured hereby, all right, title and interest of Beneficiary in and to all insurance policies and renewals thereof then in force shall pass to the purchaser or grantee. (ii) HANDLING OF PROCEEDS. All Proceeds from any insurance policies shall be disbursed in accordance with the provisions of Section 6.4 of the Credit Agreement, if applicable, or otherwise in accordance with Articles X and XI of the Cooperation Agreement. All Proceeds of insurance allocable to Trustor, as owner of the Site, the Project and the Improvements and attributable to business interruption insurance shall be collected, held, handled and disbursed in accordance with Section 6.4 of the Credit Agreement, if applicable, or otherwise in accordance with Articles X and XI of the Cooperation Agreement. All Net Loss Proceeds shall be applied by Trustor in accordance with subsection 2.4B(iii)(b) of the Credit Agreement. (b) COMPLIANCE WITH INSURANCE POLICIES. Trustor shall not violate or permit to be violated any of the conditions or provisions of any policy of insurance required by the Credit Agreement, the Cooperation Agreement or this Deed of Trust and Trustor shall so perform and satisfy the requirements of the companies writing such policies that, at all times, companies of good standing shall be willing to write and/or continue such insurance. Trustor further covenants to promptly send to Beneficiary all notices relating to any violation of such policies or otherwise affecting Trustor's insurance coverage or ability to obtain and maintain such insurance coverage. 1.9 CONDEMNATION. Beneficiary is hereby authorized, at its option, to commence, appear in and prosecute in its own or Trustor's name any action or proceeding relating to any condemnation and, subject to Article XII of the Cooperation Agreement, to settle or compromise any claim in connection therewith, and Trustor hereby appoints Beneficiary as its attorney-in-fact to take any action in Trustor's name pursuant to Beneficiary's rights hereunder. Immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Trust Estate, or any portion thereof, Trustor shall notify the Trustee and Beneficiary of the pendency of such proceedings. Trustor from time to time shall execute and deliver to Beneficiary all instruments requested by it to permit such participation; PROVIDED, HOWEVER, that such instruments shall be deemed as supplemental to the foregoing grant of permission to Trustee and Beneficiary, and unless otherwise required, the foregoing permission shall, without more, be deemed sufficient to permit Trustee and/or Beneficiary to participate in 17 such proceedings on behalf of Trustor. All such compensation awards, damages, claims, rights of action and Proceeds, and any other payments or relief, and the right thereto, whether paid to Beneficiary or Trustor, are included in the Trust Estate. Beneficiary, after deducting therefrom all its expenses, including reasonable attorneys fees, shall apply all Proceeds paid directly to it in accordance with the provisions of Section 6.4(C) of the Credit Agreement. All such Proceeds paid directly to the Trustor shall be applied by Trustor in accordance with Article XII of the Cooperation Agreement and subsection 2.4B(iii)(b) of the Credit Agreement. Trustor hereby waives any rights it may have under NRS 37.115, as amended or recodified from time to time. 1.10 LEASES. (a) Trustor represents and warrants that: (i) Trustor has delivered to Beneficiary true, correct and complete copies of all Space Leases, including all amendments and modifications, written or oral existing as of the Closing Date; (ii) Trustor has not executed or entered into any modifications or amendments of the Space Leases, either orally or in writing, other than written amendments that have been delivered or disclosed to Beneficiary in writing; (iii) to Trustor's knowledge, no default now exists under any Space Lease on the part of Trustor or the tenant thereunder; (iv) to Trustor's knowledge, no event has occurred that, with the giving of notice or the passage of time or both, would constitute such a default or would entitle Trustor or any other party under such Space Lease to cancel the same or otherwise avoid its obligations; (v) Trustor has not accepted prepayments of installments of Rent under any Space Leases, except for installment payments not in excess of one month's Rent and security deposits; (vi) except for Permitted Liens, Trustor has not executed any assignment or pledge of any of Space Leases, the Rents, or of Trustor's right, title and interest in the same; and (vii) this Deed of Trust does not constitute a violation or default under any Space Lease, and is and shall at all times constitute a valid Lien on Trustor's interests in the Space Leases. (b) After an Event of Default, Trustor shall deliver to Beneficiary the executed originals of all Space Leases. 1.11 AUTHORIZATION BY TRUSTOR. Trustor agrees that in the event the ownership of the Trust Estate or any part thereof becomes vested in a person other than Trustor, Beneficiary may, without notice to Trustor, deal 18 in any way with such successor or successors in interest with reference to this Deed of Trust, the Notes and other Obligations hereby secured without in any way vitiating or discharging Trustor's or any guarantor's, surety's or endorser's liability hereunder or upon the obligations hereby secured. No sale of the Trust Estate and no forbearance to any person with respect to this Deed of Trust and no extension to any person of the time for payment of the Notes, and other sums hereby secured given by Beneficiary shall operate to release, discharge, modify, change or affect the original liability of Trustor, or such guarantor, surety or endorser either in whole or in part. 1.12 SECURITY AGREEMENT AND FINANCING STATEMENTS. Trustor (as debtor) hereby grants to Beneficiary (as creditor and secured party) a present and future security interest in all Tangible Collateral, Intangible Collateral, FF&E (subject to the provisions of subsection 7.1 of the Credit Agreement which permit the granting of certain security interests in Specified FF&E to the providers of Indebtedness which may be incurred under said subsection), the Improvements, all other personal property now or hereafter owned or leased by Trustor or in which Trustor has or will have any interest, to the extent that such property constitutes a part of the Trust Estate (whether or not such items are stored on the Site, the Project, the Improvements or elsewhere), Proceeds of the foregoing comprising a portion of the Trust Estate and all proceeds of insurance policies and consideration awards arising therefrom and all proceeds, products, substitutions, and accessions therefor and thereto, subject to Beneficiary's rights to treat such property as real property as herein provided (collectively, the "PERSONAL PROPERTY"). Trustor shall execute any and all documents and writings, including without limitation financing statements pursuant to the UCC, as may be necessary or prudent to preserve and maintain the priority of the security interest granted hereby on property which may be deemed subject to the foregoing security agreement or as Beneficiary may reasonably request, and shall pay to Beneficiary on demand any reasonable expenses incurred by Beneficiary in connection with the preparation, execution and filing of any such documents. Trustor hereby authorizes and empowers Beneficiary to execute and file, on Trustor's behalf, all financing statements and refilings and continuations thereof as advisable to create, preserve and protect said security interest. This Deed of Trust constitutes both a real property deed of trust and a "security agreement," within the meaning of the UCC, and the Trust Estate includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Trustor in the Trust Estate. Trustor by executing and delivering this Deed of Trust has granted to Beneficiary, as security of the Obligations, a security interest in the Trust Estate. (a) FIXTURE FILING. Without in any way limiting the generality of the immediately preceding paragraph or of the definition of the Trust Estate, this Deed of Trust constitutes a fixture filing under Sections 9-313 and 9-502 of the UCC (NRS 104.9502(3)). For such purposes, (i) the "debtor" is each Trustor and their respective addresses are the addresses given for each such Person in the initial paragraph of this Deed of Trust; (ii) the "secured party' is Beneficiary, and its address for the purpose of obtaining information is the address given for it in the initial paragraph of this Deed of Trust; (iii) the real estate to which the fixtures are or are to become attached is Trustor's interest in the Site, the Project and the Improvements; and (iv) the record owner of such real estate or interests therein is Venetian (with respect to the Land, as the lessor under the Casino Lease and as the lessee under the Phase I-A Lease) and LVSI (with respect to the leasehold estate created by the Casino Lease). 19 (b) REMEDIES. This Deed of Trust shall be deemed a security agreement as defined in the UCC and the remedies for any violation of the covenants, terms and conditions of the agreements herein contained shall include any or all of (i) those prescribed herein, and (ii) those available under applicable Legal Requirements, and (iii) those available under the UCC, all at Beneficiary's sole election. In addition, a photographic or other reproduction of this Deed of Trust shall be sufficient as a financing statement for filing wherever filing may be necessary to perfect or continue the security interest granted herein. (c) DEROGATION OF REAL PROPERTY. It is the intention of the parties that the filing of a financing statement in the records normally having to do with personal property shall never be construed as in anyway derogating from or impairing the express declaration and intention of the parties hereto as hereinabove stated that everything used in connection with the production of Income from the Trust Estate and/or adapted for use therein and/or which is described or reflected in this Deed of Trust is, and at all times and for all purposes and in all proceedings both legal or equitable, shall be regarded as part of the real property encumbered by this Deed of Trust irrespective of whether (i) any such item is physically attached to the Improvements, (ii) serial numbers are used for the better identification of certain equipment items capable of being thus identified in a recital contained herein or in any list filed with Beneficiary, or (iii) any such item is referred to or reflected in any such financing statement so filed at any time. It is the intention of the parties that the mention in any such financing statement of (1) rights in or to the proceeds of any fire and/or hazard insurance policy, or (2) any award in eminent domain proceedings for a taking or for loss of value, or (3) Trustor's interest as lessors in any present or future Space Lease or rights to Rents, shall never be construed as in anyway altering any of the rights of Beneficiary as determined by this Deed of Trust or impugning the priority of Beneficiary's real property Lien granted hereby or by any other recorded document, but such mention in the financing statement is declared to be for the protection of Beneficiary in the event any court or judge shall at any time hold with respect to the matters set forth in the foregoing clauses (1), (2) and (3) that notice of Beneficiary's priority of interest to be effective against a particular class of Persons, including but not limited to, the federal government and any subdivisions or entity of the federal government, must be filed in the UCC records. (d) PRIORITY; PERMITTED FINANCING OF TANGIBLE COLLATERAL. All Personal Property of any nature whatsoever which is subject to the provisions of this security agreement shall be purchased or obtained by Trustor in its name and free and clear of any Lien or encumbrance, except for Permitted Liens, for use only in connection with the business and operation of the Project, and shall be and at all times remain free and clear of any lease or similar arrangement, chattel financing, installment sale agreement, security agreement and any encumbrance of like kind, so that Beneficiary's security interest shall attach to and vest in Trustor for the benefit of Beneficiary, with the priority herein specified, immediately upon the installation or use of the Personal Property at the Site, the Project or the Improvements and Trustor warrants and represents that Beneficiary's security interest in the Personal Property is a validly attached and binding security interest, properly perfected and prior to all other security interests therein subject to Permitted Liens. (e) PRESERVATION OF CONTRACTUAL RIGHTS OF COLLATERAL. Trustor shall, prior to delinquency, default, or forfeiture, perform all obligations and satisfy all material conditions required on its part to be satisfied to preserve its rights and privileges under any contract, lease, license, permit, 20 or other authorization (i) under which it holds any Tangible Collateral or (ii) which constitutes part of the Intangible Collateral, except where Trustor is contesting such obligations in accordance with the Credit Agreement. (f) REMOVAL OF COLLATERAL. Except as permitted in the Credit Agreement for damaged or obsolete Tangible Collateral which is either no longer usable or which is removed temporarily for repair or improvement or removed for replacement on the Trust Estate with Tangible Collateral of similar function or as otherwise permitted herein, none of the Tangible Collateral shall be removed from the Trust Estate without Beneficiary's prior written consent. (g) CHANGE OF NAME. Trustor shall not change its corporate or business name, or do business within the State under any name other than such name, or any trade name(s) other than those as to which Trustor gives prior written notice to Beneficiary of its intent to use such trade names, or any other business names (if any) specified in the financing statements delivered to Beneficiary for filing in connection with the execution hereof, without providing Beneficiary with the additional financing statement(s) and any other similar documents deemed reasonably necessary by Beneficiary to assure that its security interest remains perfected and of undiminished priority in all such Personal Property notwithstanding such name change. (h) RELEASE OF LIENS. To the extent any property (including Specified FF&E) is financed by any lender pursuant to an FF&E Facility, the Trustee shall release the Liens in favor of the Beneficiary on such Specified FF&E and in connection therewith at the Trustor's expense, execute and deliver to the Trustor such documents (including, without limitation UCC-3 termination statements) as the Trustor may reasonably request to evidence such termination. 1.13 ASSIGNMENT OF RENTS AND LEASES. The assignment of Rents and Leases set out above in Granting Clause (G) shall constitute an absolute and present assignment to Beneficiary, subject to the revocable license granted therein to Trustor to collect the Rents, and shall be fully operative without any further action on the part of any party, and specifically upon the occurrence of an Event of Default such license shall be automatically revoked and Beneficiary shall be entitled upon the occurrence of an Event of Default hereunder to all Rents and to enter into the Site, the Project and the Improvements to collect all such Rents until such time as such Event of Default is cured and such cure is accepted by the Beneficiary; PROVIDED, HOWEVER, that Beneficiary shall not be obligated to take possession of the Trust Estate, or any portion thereof. The absolute assignment contained in Granting Clause (G) shall not be deemed to impose upon Beneficiary any of the obligations or duties of Trustor provided in any such Space Lease (including, without limitation, any liability under the covenant of quiet enjoyment contained in any Space Lease in the event that any lessee shall have been joined as a party defendant in any action to foreclose this Deed of Trust and shall have been barred and foreclosed thereby of all right, title and interest and equity of redemption in the Trust Estate or any part thereof). 1.14 REJECTION OF SUBJECT LEASES. To the extent applicable, if the lessor under the Subject Leases rejects or disaffirms the Subject Leases or purports or seeks to disaffirm the Subject Leases pursuant to any Bankruptcy Law, then: (a) To the extent permitted by law, Trustor shall remain in possession of the Leased Premises demised under the Subject Leases and shall perform all acts reasonably necessary for 21 Trustor to remain in such possession for the unexpired term of such Subject Leases (including all renewals), whether the then existing terms and provisions of such Subject Leases require such acts or otherwise; and (b) All the terms and provisions of this Deed of Trust and the Lien created by this Deed of Trust shall remain in full force and effect and shall extend automatically to all of Trustor's rights and remedies arising at any time under, or pursuant to, Section 365(h) of the Bankruptcy Code, including all of Trustor's rights to remain in possession of the Leased Premises. 1.15 BENEFICIARY'S CURE OF TRUSTOR'S DEFAULT. If Trustor defaults hereunder in the payment of any tax, assessment, Lien, encumbrance or other Imposition, in its obligation to furnish insurance hereunder, or in the performance or observance of any other covenant, condition or term of this Deed of Trust or the Cooperation Agreement, Beneficiary may, but is not obligated to, to preserve its interest in the Trust Estate, perform or observe the same, but only upon not less than five Business Days notice to Trustor and all payments made (whether such payments are regular or accelerated payments) and reasonable costs and expenses incurred or paid by Beneficiary in connection therewith shall become due and payable immediately. The amounts so incurred or paid by Beneficiary, together with interest thereon at the Default Rate from the date incurred until paid by Trustor, shall be added to the Obligations and secured by the Lien of this Deed of Trust. Beneficiary is hereby empowered to enter and to authorize others to enter upon the Site, the Project or the Improvements or any part thereof for the purpose of performing or observing any such defaulted covenant, condition or term, without thereby becoming liable to Trustor or any Person in possession holding under Trustor. No exercise of any rights under this SECTION 1.14 by Beneficiary shall cure or waive any Event of Default or notice of default hereunder or invalidate any act done pursuant hereto or to any such notice, but shall be cumulative of all other rights and remedies. 1.16 USE OF LAND AND LEASED PREMISES. Trustor covenants that the Trust Estate shall be (i) used and operated in a manner reasonably consistent with the description of the Project in the Cooperation Agreement and (ii) the last sentence of Section 6.4 of the Credit Agreement. 1.17 AFFILIATES AND RESTRICTED SUBSIDIARIES. (a) SUBJECT TO TRUST DEED. Subject to compliance with requirements of applicable Nevada Gaming Laws, Trustor shall cause all of its Affiliates and Subsidiaries in any way involved with the operation of all or a portion of the Trust Estate to observe the covenants and conditions of this Deed of Trust to the extent necessary to give the full intended effect to such covenants and conditions and to protect and preserve the security of Beneficiary hereunder. Trustor shall, at Beneficiary's request, cause any such Affiliate or Restricted Subsidiary to execute and deliver to Beneficiary or Trustee such further instruments or documents as Beneficiary may reasonably deem necessary to effectuate the terms of this SECTION 1.17(a). (b) RESTRICTION ON USE OF SUBSIDIARY OR AFFILIATE. Except as permitted under the Credit Agreement or the Loan Documents, Trustor shall not use any Affiliate or Subsidiary in the operation of the Trust Estate, the Project, the Leased Premises or the Easements if such use would in any way impair the security for the Notes and the Credit Agreement or cause a breach of any covenant of this Deed of Trust, the Credit Agreement or any other Loan Documents. 22 1.18 MERGER. So long as any of the Obligations have not been paid or performed, unless Beneficiary shall otherwise in writing consent, the fee title and the leasehold estate under the Casino Lease shall not merge but shall always be kept separate and distinct, notwithstanding the union of said estates either in the lessor or in the lessee, or in a third party, by purchase or otherwise; and LVSI covenants and agrees that, if it shall acquire the fee title, or any other estate, title or interest in the Casino Leased Premises covered by said Casino Lease, this Deed of Trust shall be considered as mortgaged, assigned or conveyed to the Beneficiary and the Lien hereof spread to cover such estate with the same force and effect as though specifically herein mortgaged, assigned or conveyed and spread. The provisions of this paragraph shall not apply if Beneficiary shall so elect. ARTICLE TWO CORPORATE LOAN PROVISIONS 2.1 INTERACTION WITH CREDIT AGREEMENT. (a) INCORPORATION BY REFERENCE. All terms, covenants, conditions, provisions and requirements of the Credit Agreement are incorporated by reference in this Deed of Trust. (b) CONFLICTS. In the event of any conflict or inconsistency between the provisions of this Deed of Trust and those of the Credit Agreement, the provisions of the Credit Agreement shall govern. 2.2 OTHER COLLATERAL. This Deed of Trust is one of a number of Collateral Documents to secure the Obligations delivered by or on behalf of Trustor pursuant to the Credit Agreement and the other Loan Documents and securing the Obligations secured hereunder. All potential junior Lien claimants are placed on notice that, under any of the Loan Documents and any other documents granting a security interest to the Beneficiary or otherwise (such as by separate future unrecorded agreement between Trustor and Beneficiary), other collateral for the Obligations secured hereunder (I.E., collateral other than the Trust Estate) may, under certain circumstances, be released without a corresponding reduction in the total principal amount secured by this Deed of Trust. Such a release would decrease the amount of collateral securing the Obligations, thereby increasing the burden on the remaining Trust Estate created and continued by this Deed of Trust. No such release shall impair the priority of the Lien of this Deed of Trust. By accepting its interest in the Trust Estate, each and every junior Lien claimant shall be deemed to have acknowledged the possibility of, and consented to, any such release. Nothing in this paragraph shall impose any obligation upon Beneficiary. ARTICLE THREE DEFAULTS 3.1 EVENT OF DEFAULT. The term "EVENT OF DEFAULT," wherever used in this Deed of Trust, shall mean any one or more of the events of default listed in Section 8 of the Credit Agreement (whether any such event shall be voluntary or involuntary or come about or be effected by 23 operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body). ARTICLE FOUR REMEDIES 4.1 ACCELERATION OF MATURITY. If an Event of Default occurs, Beneficiary may (except that such acceleration shall be automatic if the Event of Default is caused by a Trustor's Bankruptcy, in accordance with subsections 8.6 and 8.7 of the Credit Agreement) declare the Notes and all Obligations or sums secured hereby, to be due and payable immediately, and upon such declaration such principal and interest and other sums shall immediately become due and payable without demand, presentment, notice or other requirements of any kind (all of which Trustor waives) notwithstanding anything in this Deed of Trust or any Loan Document or applicable law to the contrary. 4.2 PROTECTIVE ADVANCES. If Trustor fails to make any payment or perform any other obligation under the Notes, the other Operative Documents or the Resort Complex Operative Documents, then without thereby limiting Beneficiary's other rights or remedies, waiving or releasing any of Trustor's obligations, or imposing any obligation on Beneficiary, Beneficiary may either advance any amount owing or perform any or all actions that Beneficiary considers necessary or appropriate to cure such default. All such advances shall constitute "PROTECTIVE ADVANCES." No sums advanced or performance rendered by Beneficiary shall cure, or be deemed a waiver of any Event of Default. 4.3 INSTITUTION OF EQUITY PROCEEDINGS. If an Event of Default occurs, Beneficiary may institute an action, suit or proceeding in equity for specific performance of this Deed of Trust or the Loan Documents, all of which shall be specifically enforceable by injunction or other equitable remedy. Trustor waives any defense based on laches or any applicable statute of limitations. 4.4 BENEFICIARY'S POWER OF ENFORCEMENT. (a) If an Event of Default occurs, Beneficiary shall be entitled, at its option and in its sole and absolute discretion, to prepare and record on its own behalf, or to deliver to Trustee for recording, if appropriate, written declaration of default and demand for sale and written Notice of Default and Election to Sell (NRS 107.080(3)) (or other statutory notice) to cause the Trust Estate to be sold to satisfy the obligations hereof, and in the case of delivery to Trustee, Trustee shall cause said notice to be filed for record. (b) After the lapse of such time as may then be required by law following the recordation of said Notice of Breach and Election to Sell, and notice of sale having been given as then required by law, including compliance with all applicable Nevada Gaming Laws, Trustee without demand on Trustor, shall sell the Trust Estate or any portion thereof at the time and place fixed by it in said notice, either as a whole or in separate parcels, and in such order as it may determine, at public auction to the highest bidder, of cash in lawful money of the United States payable at the time of sale. Trustee may, for any cause it deems expedient, postpone the sale of 24 all or any portion of said property until it shall be completed and, in every case, notice of postponement shall be given by public announcement thereof at the time and place last appointed for the sale and from time to time thereafter Trustee may postpone such sale by public announcement at the time fixed by the preceding postponement. Trustee shall execute and deliver to the purchaser its Deed, Bill of Sale, or other instrument conveying said property so sold, but without any covenant or warranty, express or implied. The recitals in such instrument of conveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. Any Person, including Beneficiary, may bid at the sale. (c) After deducting all costs, fees and expenses of Trustee and of this Deed of Trust, including, without limitation, costs of evidence of title and reasonable attorneys' fees of Trustee or Beneficiary in connection with a sale, Trustee shall apply the proceeds of such sale to payment of all sums expended under the terms hereof not then repaid, with accrued interest at the Default Rate to the payment of all other sums then secured hereby and the remainder, if any, to the Person or Persons legally entitled thereto as provided in NRS 40.462. (d) Subject to compliance with applicable Nevada Gaming Laws, if any Event of Default occurs, Beneficiary may, either with or without entry or taking possession of the Trust Estate, and without regard to whether or not the Obligations and other sums secured hereby shall be due and without prejudice to the right of Beneficiary thereafter to bring an action or proceeding to foreclose or any other action for any default existing at the time such earlier action was commenced, proceed by any appropriate action or proceeding: (1) to enforce payment of the Notes, to the extent permitted by law, or the performance of any term hereof or any other right; (2) to foreclose this Deed of Trust in any manner provided by law for the foreclosure of mortgages or deeds of trust on real property and to sell, as an entirety or in separate lots or parcels, the Trust Estate or any portion thereof pursuant to applicable Legal Requirements or under the judgment or decree of a court or courts of competent jurisdiction, and Beneficiary shall be entitled to recover in any such proceeding all costs and expenses incident thereto, including reasonable attorneys' fees in such amount as shall be awarded by the court; (3) to exercise any or all of the rights and remedies available to it under the Credit Agreement and the other Loan Documents; and (4) to pursue any other remedy available to it. Beneficiary shall take action either by such proceedings or by the exercise of its powers with respect to entry or taking possession, or both, as Beneficiary may determine. (e) The remedies described in this SECTION 4.4 may be exercised with respect to all or any portion of the Personal Property, either simultaneously with the sale of any real property encumbered hereby or independent thereof. Beneficiary shall at any time be permitted to proceed with respect to all or any portion of the Personal Property in any manner permitted by the UCC. Trustor agrees that Beneficiary's inclusion of all or any portion of the Personal Property (and all personal property that is subject to a security interest in favor, or for the benefit, of Beneficiary) in a sale or other remedy exercised with respect to the real property encumbered hereby, as permitted by the UCC, is a commercially reasonable disposition of such property. 4.5 BENEFICIARY'S RIGHT TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY INCOME. (a) Subject to compliance with applicable Nevada Gaming Laws, if an Event of Default occurs, (i) Trustor, upon demand of Beneficiary, shall forthwith surrender to Beneficiary the 25 actual possession and, if and to the extent permitted by law, Beneficiary itself, or by such officers or agents as it may appoint, may enter and take possession of all the Trust Estate including the Personal Property, without liability for trespass, damages or otherwise, and may exclude Trustor and its agents and employees wholly therefrom and may have joint access with Trustor to the books, papers and accounts of Trustor; and (ii) Trustor shall pay monthly in advance to Beneficiary on Beneficiary's entry into possession, or to any receiver appointed to collect the Rents, all Rents then due and payable. (b) If Trustor shall for any reason fail to surrender or deliver the Trust Estate, the Personal Property or any part thereof after Beneficiary's demand, Beneficiary may obtain a judgment or decree conferring on Beneficiary or Trustee the right to immediate possession or requiring Trustor to deliver immediate possession of all or part of such property to Beneficiary or Trustee and Trustor hereby specifically consents to the entry of such judgment or decree. Trustor shall pay to Beneficiary or Trustee, upon demand, all reasonable costs and expenses of obtaining such judgment or decree and reasonable compensation to Beneficiary or Trustee, their attorneys and agents, and all such costs, expenses and compensation shall, until paid, be secured by the Lien of this Deed of Trust. (c) Subject to compliance with applicable Nevada Gaming Laws, upon every such entering upon or taking of possession, Beneficiary or Trustee may hold, store, use, operate, manage and control the Trust Estate and conduct the business thereof, and, from time to time in its sole and absolute discretion and without being under any duty to so act: (i) make all necessary and proper maintenance, repairs, renewals, replacements, additions, betterments and improvements thereto and thereon and purchase or otherwise acquire additional fixtures, personalty and other property; (ii) insure or keep the Trust Estate insured; (iii) manage and operate the Trust Estate and exercise all the rights and powers of Trustor in their name or otherwise with respect to the same; (iv) enter into agreements with others to exercise the powers herein granted Beneficiary or Trustee, all as Beneficiary or Trustee from time to time may determine; and, subject to the absolute assignment of the Rents and Leases to Beneficiary, Beneficiary or Trustee may collect and receive all the Rents, including those past due as well as those accruing thereafter; and shall apply the monies so received by Beneficiary or Trustee in such priority as Beneficiary may determine to (1) the payment of interest and principal due and payable on the Notes, (2) the deposits for Impositions and insurance premiums due, (3) the cost of insurance, Impositions and other proper charges upon the Trust Estate or any part thereof; (4) the compensation, expenses and disbursements of the agents, attorneys and other representatives of Beneficiary or Trustee; and (5) any other charges or costs required to be paid by Trustor under the terms hereof; and (v) rent or sublet the Trust Estate or any portion thereof for any purpose permitted by this Deed of Trust. 26 Beneficiary or Trustee shall surrender possession of the Trust Estate and the Personal Property to Trustor only when all that is due upon such interest and principal, Imposition and insurance deposits, and all amounts under any of the terms of the Credit Agreement or this Deed of Trust, shall have been paid and other Obligations performed. The same right of taking possession, however, shall exist if any subsequent Event of Default shall occur and be continuing. 4.6 LEASES. Beneficiary is authorized to foreclose this Deed of Trust subject to the rights of any tenants of the Trust Estate, and the failure to make any such tenants parties defendant to any such foreclosure proceedings and to foreclose their rights shall not be, nor be asserted by Trustor to be, a defense to any proceedings instituted by Beneficiary to collect the sums secured hereby or to collect any deficiency remaining unpaid after the foreclosure sale of the Trust Estate, or any portion thereof. Unless otherwise agreed by Beneficiary in writing, all Space Leases executed subsequent to the date hereof, or any part thereof, shall be subordinate and inferior to the Lien of this Deed of Trust; PROVIDED, HOWEVER, from time to time Beneficiary may execute and record among the land records of the jurisdiction where this Deed of Trust is recorded, subordination statements with respect to such of said Space Leases as Beneficiary may designate in its sole discretion, whereby the Space Leases so designated by Beneficiary shall be made superior to the Lien of this Deed of Trust for the term set forth in such subordination statement. From and after the recordation of such subordination statements, and for the respective periods as may be set forth therein, the Space Leases therein referred to shall be superior to the Lien of this Deed of Trust and shall not be affected by any foreclosure hereof. All such Space Leases shall contain a provision to the effect that the Trustor and Space Lessee recognize the right of Beneficiary to elect and to effect such subordination of this Deed of Trust and consents thereto. 4.7 PURCHASE BY BENEFICIARY. Upon any foreclosure sale (whether judicial or nonjudicial), Beneficiary may bid for and purchase the property subject to such sale and, upon compliance with the terms of sale, may hold, retain and possess and dispose of such property in its own absolute right without further accountability. 4.8 WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND REDEMPTION LAWS. Trustor agrees to the full extent permitted by Legal Requirements that if an Event of Default occurs, neither Trustor nor anyone claiming through or under it shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Deed of Trust or the absolute sale of the Trust Estate or any portion thereof or the final and absolute putting into possession thereof, immediately after such sale, of the purchasers thereof, and Trustor for itself and all who may at any time claim through or under it, hereby waives, to the full extent that it may lawfully so do, the benefit of all such Legal Requirements, and any and all right to have the assets comprising the Trust Estate marshalled upon any foreclosure of the Lien hereof and agrees that Trustee or any court having jurisdiction to foreclose such Lien may sell the Trust Estate in part or as an entirety. 4.9 RECEIVER. If an Event of Default occurs, Beneficiary, to the extent permitted by law and subject to compliance with all applicable Nevada Gaming Laws, and without regard to the value, adequacy or occupancy of the security for the Obligations and other sums secured hereby, 27 shall be entitled as a matter of right if it so elects to the appointment of a receiver to enter upon and take possession of the Trust Estate and to collect all Rents and apply the same as the court may direct, and such receiver may be appointed by any court of competent jurisdiction upon application by Beneficiary. Beneficiary may have a receiver appointed without notice to Trustor or any third party, and Beneficiary may waive any requirement that the receiver post a bond. Beneficiary shall have the power to designate and select the Person who shall serve as the receiver and to negotiate all terms and conditions under which such receiver shall serve. Any receiver appointed on Beneficiary's behalf may be an Affiliate of Beneficiary. The expenses, including receiver's fees, attorneys' fees, costs and agent's compensation, incurred pursuant to the powers herein contained shall be secured by this Deed of Trust. The right to enter and take possession of and to manage and operate the Trust Estate and to collect all Rents, whether by a receiver or otherwise, shall be cumulative to any other right or remedy available to Beneficiary under this Deed of Trust, the Credit Agreement or otherwise available to Beneficiary and may be exercised concurrently therewith or independently thereof. Beneficiary shall be liable to account only for such Rents (including, without limitation, security deposits) actually received by Beneficiary, whether received pursuant to this section or any other provision hereof. Notwithstanding the appointment of any receiver or other custodian, Beneficiary shall be entitled as pledgee to the possession and control of any cash, deposits, or instruments at the time held by, or payable or deliverable under the terms of this Deed of Trust to, Beneficiary. 4.10 SUITS TO PROTECT THE TRUST ESTATE. Beneficiary shall have the power and authority to institute and maintain any suits and proceedings as Beneficiary, in its sole and absolute discretion, may deem advisable (a) to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of this Deed of Trust, (b) to preserve or protect its interest in the Trust Estate, or (c) to restrain the enforcement of or compliance with any Legal Requirement that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order might impair the security hereunder or be prejudicial to Beneficiary's interest. 4.11 PROOFS OF CLAIM. In the case of any receivership, Insolvency, Bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceedings affecting Trustor, or, to the extent the same would result in an Event of Default hereunder, any Subsidiary, or any guarantor, co-maker or endorser of any of Trustor's obligations, its creditors or its property, Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim or other documents as it may deem to be necessary or advisable in order to have its claims allowed in such proceedings for the entire amount of the Obligations, at the date of the institution of such proceedings, and for any additional amounts which may become due and payable by Trustor after such date. 4.12 TRUSTOR TO PAY THE NOTES ON ANY DEFAULT IN PAYMENT; APPLICATION OF MONIES BY BENEFICIARY. (a) In case of a foreclosure sale of all or any part of the Trust Estate and of the application of the proceeds of sale to the payment of the sums secured hereby, Beneficiary shall be entitled to enforce payment from Trustor of any additional amounts then remaining due and unpaid and to recover judgment against Trustor for any portion thereof remaining unpaid, with interest at the Default Rate in accordance with SECTION 4.19 hereof. 28 (b) Trustor hereby agrees to the extent permitted by law, that no recovery of any such judgment by Beneficiary or other action by Beneficiary and no attachment or levy of any execution upon any of the Trust Estate or any other property shall in any way affect the Lien and security interest of this Deed of Trust upon the Trust Estate or any part thereof or any Lien, rights, powers or remedies of Beneficiary hereunder, but such Lien, rights, powers and remedies shall continue unimpaired as before. 4.13 DELAY OR OMISSION; NO WAIVER. No delay or omission of Beneficiary to exercise any right, power or remedy upon any Event of Default shall exhaust or impair any such right, power or remedy or shall be construed to waive any such Event of Default or to constitute acquiescence therein. Every right, power and remedy given to Beneficiary whether contained herein or in the Credit Agreement or otherwise available to Beneficiary may be exercised from time to time and as often as may be deemed expedient by Beneficiary. 4.14 NO WAIVER OF ONE DEFAULT TO AFFECT ANOTHER. No waiver of any Event of Default hereunder shall extend to or affect any subsequent or any other Event of Default then existing, or impair any rights, powers or remedies consequent thereon. If Beneficiary (a) grants forbearance or an extension of time for the payment of any sums secured hereby; (b) takes other or additional security for the payment thereof; (c) waives or does not exercise any right granted in the Notes, the Credit Agreement, this Deed of Trust or any other Loan Document; (d) releases any part of the Trust Estate from the Lien or security interest of this Deed of Trust or any other instrument securing the Notes; (e) consents to the filing of any map, plat or replat of the Site (to the extent such consent is required); (f) consents to the granting of any easement on the Site, the Project or the Improvements (to the extent such consent is required); or (g) makes or consents to any agreement changing the terms of this Deed of Trust or any other Loan Document for the benefit of Beneficiary subordinating the Lien or any charge hereof, no such act or omission shall release, discharge, modify, change or affect the original liability under the Notes, this Deed of Trust or any other Loan Document for the benefit of Beneficiary or otherwise of Trustor, or any subsequent purchaser of the Trust Estate or any part thereof or any maker, co-signer, surety or guarantor. No such act or omission shall preclude Beneficiary from exercising any right, power or privilege herein granted or intended to be granted in case of any Event of Default then existing or of any subsequent Event of Default, nor, except as otherwise expressly provided in an instrument or instruments executed by Beneficiary, shall the Lien or security interest of this Deed of Trust be altered thereby, except to the extent expressly provided in any releases, maps, easements or subordinations described in CLAUSE (d), (e), (f) or (g) above of this SECTION 4.14. In the event of the sale or transfer by operation of law or otherwise of all or any part of the Trust Estate, Beneficiary, without notice to any Person is hereby authorized and empowered to deal with any such vendee or transferee with reference to the Trust Estate or the Obligations secured hereby, or with reference to any of the terms or conditions hereof, as fully and to the same extent as it might deal with the original parties hereto and without in any way releasing or discharging any of the liabilities or undertakings hereunder, or waiving its right to declare such sale or transfer an Event of Default as provided herein. Notwithstanding anything to the contrary contained in this Deed of Trust or the other Loan Documents, (i) in the case of any non-monetary Event of Default, Beneficiary may continue to accept payments due hereunder without thereby waiving the existence of such or any other Event of Default and (ii) in the case of any monetary Event of Default, Beneficiary may accept partial payments of any sums due hereunder without 29 thereby waiving the existence of such Event of Default if the partial payment is not sufficient to completely cure such Event of Default. 4.15 DISCONTINUANCE OF PROCEEDINGS; POSITION OF PARTIES RESTORED. If Beneficiary shall have proceeded to enforce any right or remedy under this Deed of Trust by foreclosure, entry of judgment or otherwise and such proceedings shall have been discontinued or abandoned for any reason, or such proceedings shall have resulted in a final determination adverse to Beneficiary, then and in every such case Trustor and Beneficiary shall be restored to their former positions and rights hereunder, and all rights, powers and remedies of Beneficiary shall continue as if no such proceedings had occurred or had been taken. 4.16 REMEDIES CUMULATIVE. No right, power or remedy, including without limitation remedies with respect to any security for the Notes, conferred upon or reserved to Beneficiary by this Deed of Trust or any other Loan Document is exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and shall be in addition to any other right, power and remedy given hereunder or under any Loan Document, now or hereafter existing at law, in equity or by statute, and Beneficiary shall be entitled to resort to such rights, powers, remedies or security as Beneficiary shall in its sole and absolute discretion deem advisable. 4.17 INTEREST AFTER EVENT OF DEFAULT. If an Event of Default shall have occurred and is continuing, outstanding and unpaid Obligations under the Loan Documents shall, at Beneficiary's option, bear interest at the Default Rate until such Event of Default has been cured. Trustor's obligation to pay such interest shall be secured by this Deed of Trust and the other Collateral Documents. 4.18 FORECLOSURE; EXPENSES OF LITIGATION. If Trustee forecloses, reasonable attorneys' fees for services in the supervision of said foreclosure proceeding shall be allowed to the Trustee and Beneficiary as part of the foreclosure costs. In the event of foreclosure of the Lien hereof, there shall be allowed and included as additional Obligations all reasonable expenditures and expenses which may be paid or incurred by or on behalf of Beneficiary for attorneys' fees, appraiser's fees, outlays for documentary and expert evidence, stenographers' charges, publication costs, and costs (which may be estimated as to items to be expended after foreclosure sale or entry of the decree) of procuring all such abstracts of title, title searches and examinations, title insurance policies and guarantees, and similar data and assurances with respect to title as Beneficiary may deem reasonably advisable either to prosecute such suit or to evidence to a bidder at any sale which may be had pursuant to such decree the true condition of the title to or the value of the Trust Estate or any portion thereof. All expenditures and expenses of the nature in this section mentioned, and such expenses and fees as may be incurred if the protection of the Trust Estate and the maintenance of the Lien and security interest of this Deed of Trust, including the fees of any attorney employed by Beneficiary in any litigation or proceeding affecting this Deed of Trust or any Loan Document, the Trust Estate or any portion thereof, including, without limitation, civil, probate, appellate and bankruptcy proceedings, or in preparation for the commencement or defense of any proceeding or threatened suit or proceeding, shall be immediately due and payable by Trustor, with interest thereon at the Default Rate, and shall be secured by this Deed of Trust and the other Collateral Documents. Trustee 30 waives its right to any statutory fee in connection with any judicial or nonjudicial foreclosure of the Lien hereof and agrees to accept a reasonable fee for such services. 4.19 DEFICIENCY JUDGMENTS. If after foreclosure of this Deed of Trust or Trustee's sale hereunder, there shall remain any deficiency with respect to any amounts payable under the Notes or hereunder or any amounts secured hereby, and Beneficiary shall institute any proceedings to recover such deficiency or deficiencies, all such amounts shall continue to bear interest at the Default Rate. Trustor waives any defense to Beneficiary's recovery against Trustor of any deficiency after any foreclosure sale of the Trust Estate. Trustor expressly waives any defense or benefits that may be derived from any statute granting Trustor any defense to any such recovery by Beneficiary. In addition, Beneficiary and Trustee shall be entitled to recovery of all of their reasonable costs and expenditures (including without limitation any court imposed costs) in connection with such proceedings, including their reasonable attorneys' fees, appraisal fees and the other costs, fees and expenditures referred to in SECTION 4.18 above. This provision shall survive any foreclosure or sale of the Trust Estate, any portion thereof and/or the extinguishment of the Lien hereof. 4.20 WAIVER OF JULY TRIAL. Beneficiary and Trustor each waive any right to have a jury participate in resolving any dispute whether sounding in contract, tort or otherwise arising out of, connected with, related to or incidental to the relationship established between them in connection with the Notes, this Deed of Trust or any other Loan Document. Any such disputes shall be resolved in a bench trial without a jury. 4.21 EXCULPATION OF BENEFICIARY. The acceptance by Beneficiary of the assignment contained herein with all of the rights, powers, privileges and authority created hereby shall not, prior to entry upon and taking possession of the Trust Estate by Beneficiary, be deemed or construed to make Beneficiary a "mortgagee in possession"; nor thereafter or at any time or in any event obligate Beneficiary to appear in or defend any action or proceeding relating to the Space Leases, the Rents or the Trust Estate, or to take any action hereunder or to expend any money or incur any expenses or perform or discharge any obligation, duty or liability under any Space Lease or to assume any obligation or responsibility for any security deposits or other deposits except to the extent such deposits are actually received by Beneficiary, nor shall Beneficiary, prior to such entry and taking, be liable in any way for any injury or damage to person or property sustained by any Person in or about the Trust Estate. ARTICLE FIVE RIGHTS AND RESPONSIBILITIES OF TRUSTEE; OTHER PROVISIONS RELATING TO TRUSTEE Notwithstanding anything to the contrary in this Deed of Trust, Trustor and Beneficiary agree as follows. 5.1 EXERCISE OF REMEDIES BY TRUSTEE. To the extent that this Deed of Trust or applicable law, including all applicable Nevada Gaming Laws, authorizes or empowers, or does not require approval for, Beneficiary to exercise any remedies set forth in ARTICLE 4 hereof or otherwise, or perform any acts in connection therewith, Trustee (but not to the exclusion of Beneficiary unless 31 so required under the law of the State) shall have the power to exercise any or all such remedies, and to perform any acts provided for in this Deed of Trust in connection therewith, all for the benefit of Beneficiary and on Beneficiary's behalf in accordance with applicable law of the State. In connection therewith, Trustee: (a) shall not exercise, or waive the exercise of, any Beneficiary's remedies (other than any rights of Trustee to any indemnity or reimbursement), except at Beneficiary's request, and (b) shall exercise, or waive the exercise of, any or all of Beneficiary's remedies at Beneficiary's request, and in accordance with Beneficiary's directions as to the manner of such exercise or waiver. Trustee may, however, decline to follow Beneficiary's request or direction if Trustee shall be advised by counsel that the action or proceeding, or manner thereof, so directed may not lawfully be taken or waived. 5.2 RIGHTS AND PRIVILEGES OF TRUSTEE. To the extent that this Deed of Trust requires Trustor to indemnify Beneficiary or reimburse Beneficiary for any expenditures Beneficiary may incur, Trustee shall be entitled to the same indemnity and the same rights to reimbursement of expenses as Beneficiary, subject to such limitations and conditions as would apply in the case of Beneficiary. To the extent that this Deed of Trust negates or limits Beneficiary's liability as to any matter, Trustee shall be entitled to the same negation or limitation of liability. To the extent that Trustor, pursuant to this Deed of Trust, appoints Beneficiary as Trustor's attorney in fact for any purpose, Beneficiary or (when so instructed by Beneficiary) Trustee shall be entitled to act on Trustor's behalf without joinder or confirmation by the other. 5.3 RESIGNATION OR REPLACEMENT OF TRUSTEE. Trustee may resign by an instrument in writing addressed to Beneficiary, and Trustee may be removed at any time with or without cause (i.e., in Beneficiary's sole and absolute discretion) by an instrument in writing executed by Beneficiary. In case of the death, resignation, removal or disqualification of Trustee or if for any reason Beneficiary shall deem it desirable to appoint a substitute, successor or replacement Trustee to act instead of Trustee originally named (or in place of any substitute, successor or replacement Trustee), then Beneficiary shall have the right and is hereby authorized and empowered to appoint a successor, substitute or replacement Trustee, without any formality other than appointment and designation in writing executed by Beneficiary, which instrument shall be recorded if required by the law of the State. The laws of the State (including, without limitation, the Nevada Gaming Laws) shall govern the qualification of any Trustee. The authority conferred upon Trustee by this Deed of Trust shall automatically extend to any and all other successor, substitute and replacement Trustee(s) successively until the obligations secured hereunder have been paid in full or the Trust Estate has been sold hereunder or released in accordance with the provisions of the Loan Documents to which the Beneficiary is a party or which grants a security for the benefit of the Beneficiary. Beneficiary's written appointment and designation of any Trustee shall be full evidence of Beneficiary's right and authority to make the same and of all facts therein recited. No confirmation, authorization, approval or other action by Trustor shall be required in connection with any resignation or other replacement of Trustee. 5.4 AUTHORITY OF BENEFICIARY. If Beneficiary is a banking corporation, state banking corporation or a national banking association and the instrument of appointment of any successor or replacement Trustee is executed on Beneficiary's behalf by an officer of such corporation, state banking corporation or national banking association, then such appointment shall be conclusively presumed to be executed with authority and shall be valid and sufficient without proof of any action by the board of directors or any superior officer of Beneficiary. 32 5.5 EFFECT OF APPOINTMENT OF SUCCESSOR TRUSTEE. Upon the appointment and designation of any successor, substitute or replacement Trustee, and subject to compliance with applicable Nevada Gaming Laws and other applicable Legal Requirements, Trustee's entire estate and title in the Trust Estate shall vest in the designated successor, substitute or replacement Trustee. Such successor, substitute or replacement Trustee shall thereupon succeed to and shall hold, possess and execute all the rights, powers, privileges, immunities and duties herein conferred upon Trustee. All references herein to Trustee shall be deemed to refer to Trustee (including any successor or substitute appointed and designated as herein provided) from time to time acting hereunder. 5.6 CONFIRMATION OF TRANSFER AND SUCCESSION. Upon the written request of Beneficiary or of any successor, substitute or replacement Trustee, any former Trustee ceasing to act shall execute and deliver an instrument transferring to such successor, substitute or replacement Trustee all of the right, title, estate and interest in the Trust Estate of Trustee so ceasing to act, together with all the rights, powers, privileges, immunities and duties herein conferred upon Trustee, and shall duly assign, transfer and deliver all properties and moneys held by said Trustee hereunder to said successor, substitute or replacement Trustee. 5.7 EXCULPATION. Trustee shall not be liable for any error of judgment or act done by Trustee in good faith, or otherwise be responsible or accountable under any circumstances whatsoever, except for Trustee's gross negligence, willful misconduct or knowing violation of any Legal Requirement. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it in good faith to be genuine. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law). Trustee shall be under no liability for interest on any moneys received by it hereunder. 5.8 ENDORSEMENT AND EXECUTION OF DOCUMENTS. Upon Beneficiary's written request, Trustee shall, without liability or notice to Trustor, execute, consent to, or join in any instrument or agreement in connection with or necessary to effectuate the purposes of the Loan Documents to which the Beneficiary is a party or which grants a security interest for the benefit of the Beneficiary. Trustor hereby irrevocably designates Trustee as its attorney in fact to execute, acknowledge and deliver, on Trustor's behalf and in Trustor's name, all instruments or agreements necessary to implement any provision(s) of this Deed of Trust or to further perfect the Lien created by this Deed of Trust on the Trust Estate. This power of attorney shall be deemed to be coupled with an interest and shall survive any disability of Trustor. 5.9 MULTIPLE TRUSTEES. If Beneficiary appoints multiple trustees, then any Trustee, individually, may exercise all powers granted to Trustee under this instrument, without the need for action by any other Trustee(s). 5.10 TERMS OF TRUSTEE'S ACCEPTANCE. Trustee accepts the trust created by this Deed of Trust upon the following terms and conditions: (a) DELEGATION. Trustee may exercise any of its powers through appointment of attorney(s) in fact or agents. 33 (b) COUNSEL. Trustee may select and employ legal counsel (including any law firm representing Beneficiary). Trustor shall reimburse all reasonable legal fees and expenses that Trustee may thereby incur. (c) SECURITY. Trustee shall be under no obligation to take any action upon any Event of Default unless furnished security or indemnity, in form satisfactory to Trustee, against costs, expenses, and liabilities that Trustee may incur. (d) COSTS AND EXPENSES. Trustor shall reimburse Trustee, as part of the Obligations secured hereunder, for all reasonable disbursements and expenses (including reasonable legal fees and expenses and any expenses incurred by Trustee in complying with the Nevada Gaming Laws and Gaming Licenses) incurred by reason of and as provided for in this Deed of Trust, including any of the foregoing incurred in Trustee's administering and executing the trust created by this Deed of Trust and performing Trustee's duties and exercising Trustee's powers under this Deed of Trust. (e) RELEASE. Upon satisfaction of the conditions for reconveyance contained in SECTION 6.10 hereof, Beneficiary shall request that Trustee release this Deed of Trust and Trustee shall release this Deed of Trust and reconvey to the Trust Estate in accordance with SECTION 6.10 hereof, PROVIDED, HOWEVER, that Trustor shall pay all costs of recordation, if any, and all of Trustee's and Beneficiary's costs and expenses in connection with such release, including, but not limited to, reasonable attorneys' fees. ARTICLE SIX MISCELLANEOUS PROVISIONS 6.1 HEIRS, SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever one of the parties hereto is named or referred to herein, successors and assigns of such party shall be included, and subject to the limitations set forth herein and in the Credit Agreement, all covenants and agreements contained in this Deed of Trust, by or on behalf of Trustor or Beneficiary shall bind and inure to the benefit of its heirs, successors and assigns, whether so expressed or not. 6.2 ADDRESSES FOR NOTICES, ETC. Any notice, report, demand or other instrument authorized or required to be given or furnished under this Deed of Trust to Trustor or Beneficiary shall be deemed given or furnished (i) when addressed to the party intended to receive the same, at the address of such party set forth below, and delivered by hand at such address or (ii) three (3) days after the same is deposited in the United States mail as first class certified mail, return receipt requested, postage paid, whether or not the same is actually received by such party: Beneficiary: The Bank of Nova Scotia 580 California Street, 21st Floor San Francisco, California 94104 Attention: Mr. Alan Pendergast Telefax: (415) 397-0791 With a copy to: The Bank of Nova Scotia Loan Administration 34 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attention: Robert Ivy Telefax: (404) 888-8998 With a copy to: Mayer, Brown, Rowe & Maw 1675 Broadway New York, New York 10019 Attention: Douglas L. Wisner, Esq. Trustor: Venetian Casino Resort, LLC 3355 Las Vegas Boulevard South, Room 1C Las Vegas, Nevada 89109 Attention: General Counsel Telefax: (702) 733-5499 Las Vegas Sands, Inc. 3355 Las Vegas Boulevard South, Room 1A Las Vegas, Nevada 89109 Telefax: (702) 733-5499 Trustee: First American Title Insurance Company 180 Cassia Way, Suite 502 Henderson, Nevada 89104 6.3 CHANGE OF NOTICE ADDRESS. Any Person may change the address to which any such notice, report, demand or other instrument is to be delivered or mailed to that person, by furnishing written notice of such change to the other parties, but no such notice of change shall be effective unless and until received by such other parties. 6.4 HEADINGS. The headings of the articles, sections, paragraphs and subdivisions of this Deed of Trust are for convenience of reference only, are not to be considered a part hereof, and shall not limit or expand or otherwise affect any of the terms hereof. 6.5 INVALID PROVISIONS TO AFFECT NO OTHERS. In the event that any of the covenants, agreements, terms or provisions contained herein or in the Notes, the Credit Agreement or any other Loan Document shall be invalid, illegal or unenforceable in any respect, the validity of the Lien hereof and the remaining covenants, agreements, terms or provisions contained herein or in the Notes, the Credit Agreement or any other Loan Document shall be in no way affected, prejudiced or disturbed thereby. To the extent permitted by law, Trustor waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect. 6.6 CHANGES AND PRIORITY OVER INTERVENING LIENS. Neither this Deed of Trust nor any term hereof may be changed, waived, discharged or terminated orally, or by any action or inaction, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement hereafter made by 35 Trustor and Beneficiary relating to this Deed of Trust shall be superior to the rights of the holder of any intervening Lien or encumbrance. 6.7 ESTOPPEL CERTIFICATES. Within ten (10) Business Days after Beneficiary's written request, Trustor shall from time to time execute a certificate, in recordable form (an "ESTOPPEL CERTIFICATE"), stating, except to the extent it would be inaccurate to so state: (a) the current amount of the Obligations secured hereunder and all elements thereof, including principal, interest, and all other elements; (b) that Trustor has no defense, offset, claim, counterclaim, right of recoupment, deduction, or reduction against any of the Obligations secured hereunder; (c) that none of the Loan Documents to which the Beneficiary is a party or which grants a security interest for the benefit of the Beneficiary have been amended, whether orally or in writing; (d) that Trustor has no claims against Beneficiary of any kind; (e) that any Power of Attorney granted to Beneficiary is in full force and effect; and (f) such other matters relating to this Deed of Trust, any Loan Document to which the Beneficiary is a party or which grants a security interest for the benefit of the Beneficiary and the relationship of Trustor and Beneficiary as Beneficiary shall request. In addition, the Estoppel Certificate shall set forth the reasons why it would be inaccurate to make any of the foregoing assurances ("a" through "f"). 6.8 WAIVER OF SETOFF AND COUNTERCLAIM. All amounts due under this Deed of Trust, the Notes or any other Loan Document to which the Beneficiary is a party or which grants a security interest for the benefit of the Beneficiary shall be payable without setoff, counterclaim or any deduction whatsoever. Trustor hereby waives the right to assert a counterclaim (other than a compulsory counterclaim) in any action or proceeding brought against it by Beneficiary and/or any Lender under the Credit Agreement, or arising out of or in any way connected with this Deed of Trust, or the other Loan Documents, to which the Beneficiary is a party or which grants a security interest for the benefit of the Beneficiary or the Obligations. 6.9 GOVERNING LAW. The Credit Agreement and the Notes provide that they are governed by, and construed and enforced in accordance with, the laws of the State of New York. This Deed of Trust shall also be construed under and governed by the laws of the State of New York without giving effect to the conflicts of law rules and principles of New York; provided, however, that (i) the terms and provisions of this Deed of Trust pertaining to the priority, perfection, enforcement or realization by Beneficiary of its respective rights and remedies under this Deed of Trust with respect to the Trust Estate shall be governed and construed and enforced in accordance with the internal laws of the State without giving effect to the conflicts-of-law rules and principles of the State; (ii) Trustor agrees that to the extent deficiency judgments are available under the laws of the State after a foreclosure (judicial or nonjudicial) of the Trust Estate, or any portion thereof, or any other realization thereon by Beneficiary or any Lender under the Credit Agreement, Beneficiary or such Lender, as the case may be, shall have the right to seek such a deficiency judgment against Trustor in the State; and (iii) Trustor agrees that if Beneficiary or any Lender under the Credit Agreement obtains a deficiency judgment in another state against Trustor, then Beneficiary or such Lender, as the case may be, shall have the right to enforce such judgment in the State to the extent permitted under the laws of the State, as well as in other states. Nothing contained in this Section 6.9 shall be deemed to expand the limitations set forth in Section 10.16 of the Credit Agreement. 36 6.10 RECONVEYANCE. In the event that (i) the Obligations are indefeasibly repaid in full, (ii) any part of the Trust Estate is sold, transferred or otherwise disposed of by Trustor in accordance with the Credit Agreement or (ii) any part of the Trust Estate is otherwise released in accordance with the Credit Agreement or with the consent of the Requisite Lenders, the Trust Estate (in the case of clause (i) of this Section) or portion thereof (in the case of clauses (ii) or (iii) of this Section) will be sold, transferred or otherwise disposed of, and released free and clear of the Liens created by this Deed of Trust and the Beneficiary, at the request and expense of the Trustor, will duly and promptly assign, transfer, deliver and release to the Trustor or its designee (without recourse and without any representation or warranty) such of the Trust Estate as is then being (or has been) so sold, transferred or otherwise disposed of or released. In connection with any disposition or release pursuant to this Section 6.10, Beneficiary shall, at Trustor's expense, cause Trustee to reconvey, without warranty the Trust Estate or portion thereof being disposed or released, as the case may be, and to execute and deliver to Trustor such documents (including UCC-3 termination statements) as Trustor may reasonably request. The recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. The grantee in such reconveyance may be described as "the person or persons legally entitled thereto." 6.11 ATTORNEYS' FEES. Without limiting any other provision contained herein, Trustor agrees to pay all costs of Beneficiary or Trustee incurred in connection with the enforcement of this Deed of Trust of the Notes, including without limitation all reasonable attorneys' fees whether or not suit is commenced, and including, without limitation, fees incurred in connection with any probate, appellate, bankruptcy, deficiency or any other litigation proceedings, all of which sums shall be secured hereby. 6.12 LATE CHARGES. By accepting payment of any sum secured hereby after its due date, Beneficiary does not waive its right to collect any late charge thereon or interest thereon at the interest rate on the Notes, if so provided, not then paid or its right either to require prompt payment when due of all other sums so secured or to declare default for failure to pay any amounts not so paid. 6.13 COST OF ACCOUNTING. Trustor shall pay to Beneficiary, for and on account of the preparation and rendition of any accounting, which Trustor may be entitled to require under any law or statute now or hereafter providing therefor, the reasonable costs thereof. 6.14 RIGHT OF ENTRY. Subject to compliance with applicable Nevada Gaming Laws and the terms of the Space Leases, Beneficiary may at any reasonable time or times and on reasonable prior written notice to Trustor make or cause to be made entry upon and inspections of the Trust Estate or any part thereof in person or by agent. 6.15 CORRECTIONS. Trustor shall, upon request of Beneficiary or Trustee, promptly correct any defect, error or omission which may be discovered in the contents of this Deed of Trust (including, but not limited to, in the exhibits and schedules attached hereto) or in the execution or acknowledgement hereof, and shall execute, acknowledge and deliver such further instruments and do such further acts as may be necessary or as may be reasonably requested by Trustee to carry out more effectively the purposes of this Deed of Trust, to subject to the Lien and security 37 interest hereby created any of Trustor's properties, rights or interest covered or intended to be covered hereby, and to perfect and maintain such Lien and security interest. 6.16 STATUTE OF LIMITATIONS. To the fullest extent allowed by the law, the right to plead, use or assert any statute of limitations as a plea or defense or bar of any kind, or for any purpose, to any debt, demand or obligation secured or to be secured hereby, or to any complaint or other pleading or proceeding filed, instituted or maintained for the purpose of enforcing this Deed of Trust or any rights hereunder, is hereby waived by Trustor. 6.17 SUBROGATION. Should the proceeds of any Loan or advance made by Beneficiary to Trustor, repayment of which is hereby secured, or any part thereof, or any amount paid out or advanced by Beneficiary, be used directly or indirectly to pay off, discharge, or satisfy, in whole or in part, any prior or superior Lien or encumbrance upon the Trust Estate, or any part thereof, then, as additional security hereunder, Trustee, on behalf of Beneficiary, shall be subrogated to any and all rights, superior titles, Liens, and equities owned or claimed by any owner or holder of said outstanding Liens, charges, and indebtedness, however remote, regardless of whether said Liens, charges, and indebtedness are acquired by assignment or have been released of record by the holder thereof upon payment. 6.18 JOINT AND SEVERAL LIABILITY. All obligations of Trustor hereunder, if more than one, are joint and several. Recourse for deficiency after sale hereunder may be had against the property of Trustor, without, however, creating a present or other Lien or charge thereon. 6.19 HOMESTEAD. Trustor hereby waives and renounces all homestead and exemption rights provided by the constitution and the laws of the United States and of any state, in and to the Trust Estate as against the collection of the Obligations, or any part hereof. 6.20 CONTEXT. In this Deed of Trust, whenever the context so requires, the neuter includes the masculine and feminine, and the singular including the plural, and vice versa. 6.21 TIME. Time is of the essence of each and every term, covenant and condition hereof. Unless otherwise specified herein, any reference to "days" in this Deed of Trust shall be deemed to mean "calendar days." 6.22 INTERPRETATION. As used in this Deed of Trust unless the context clearly requires otherwise: The terms "herein" or "hereunder" and similar terms without reference to a particular section shall refer to the entire Deed of Trust and not just to the section in which such terms appear. [6.23 EFFECT OF NRS SECTION 107.030. To the extent not inconsistent herewith, the provisions of NRS Section 107.030 are included herein by reference.](1) 6.24 AMENDMENTS. This Deed of Trust cannot be waived, changed, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, discharge or termination is sought and only as permitted by the provisions of the Credit Agreement. - ---------- (1) Confirm statutory reference. 38 6.25 NO CONFLICTS. In the event that any of the provisions contained herein conflict with the Security Agreement, then the provisions contained in the Security Agreement shall prevail. ARTICLE SEVEN POWER OF ATTORNEY 7.1 GRANT OF POWER. Subject to compliance with applicable Nevada Gaming Laws, Trustor irrevocably appoints Beneficiary and any successor thereto as its attorney-in-fact, with full power and authority, including the power of substitution, exercisable only during the continuance of an Event of Default to act for Trustor in its name, place and stead as hereinafter provided: 7.1.1 POSSESSION AND COMPLETION. To take possession of the Site, the Project and the Improvements, remove all employees, contractors and agents of Trustor therefrom, complete or attempt to complete the work of construction, and market, sell or lease the Site, the Project and the Improvements. 7.1.2 PLANS. To make such additions, changes and corrections in the current Phase I-A Project Plans and Specifications as may be necessary or desirable, in Beneficiary's reasonable discretion, or as it deems proper to complete the Phase I-A Project. 7.1.3 EMPLOYMENT OF OTHERS. To employ such contractors, subcontractors, suppliers, architects, inspectors, consultants, property managers and other agents as Beneficiary, in its discretion, deems proper for the completion of the Phase I-A Project, for the protection or clearance of title to the Site, the Project or the Improvements, or for the protection of Beneficiary's interests with respect thereto. 7.1.4 SECURITY GUARDS. To employ watchmen to protect the Site, the Project and the Improvements from injury. 7.1.5 COMPROMISE CLAIMS. To pay, settle or compromise all bills and claims then existing or thereafter arising against Trustor, which Beneficiary, in its discretion, deems proper for the protection or clearance of title to the Site, the Project, the Improvements or Personal Property, or for the protection of Beneficiary's interests with respect thereto. 7.1.6 LEGAL PROCEEDINGS. To prosecute and defend all actions and proceedings in connection with the Site, the Project or the Improvements. 7.1.7 OTHER ACTS. To execute, acknowledge and deliver all other instruments and documents in the name of Trustor that are necessary or desirable, to exercise Trustor's rights under all contracts concerning the Site, the Project or the Improvements, including, without limitation, under any Space Leases, and to do all other acts with respect to the Site, the Project or the Improvements that Trustor might do on its own behalf, as Beneficiary, in its reasonable discretion, deems proper. [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.] 39 IN WITNESS WHEREOF, Trustor has executed this Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing to be effective as of the day and year first above written. VENETIAN CASINO RESORT, LLC, a Nevada limited liability company, as Trustor By: Las Vegas Sands, Inc., its managing member By: /s/ Harry Miltenberger ------------------------------------------ Name: Harry Miltenberger Title: Vice President Finance S-1 LAS VEGAS SANDS, INC. a Nevada corporation By: /s/ Harry Miltenberger ------------------------------------------ Name: Harry Miltenberger Title: Vice President Finance S-2 State of New York ) County of __________ ) ss.: On the 3rd day of June in the year 2002 before me, the undersigned, personally appeared Harry Miltenberger, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ Dawn Schoenig --------------------------------------- (Signature and office of individual taking acknowledgment) Notarial Seal N-1 State of New York ) County of __________ ) ss.: On the 3rd day of June in the year 2002 before me, the undersigned, personally appeared Harry Miltenberger, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument. /s/ Dawn Schoenig --------------------------------------- (Signature and office of individual taking acknowledgment) Notarial Seal N-2 EX-10 12 ex10-3_7032.txt SUBSIDIARY GUARANTY Exhibit 10.3 SUBSIDIARY GUARANTY This SUBSIDIARY GUARANTY (as amended, supplemented, amended and restated or otherwise modified from time to time, this "GUARANTY"), dated as of June 4, 2002, is made by each Subsidiary of Las Vegas Sands, Inc., a Nevada corporation ("LVSI"), required from time to time to become party hereto (each individually, a "GUARANTOR" and, collectively, the "GUARANTORS"), in favor of and for the benefit of THE BANK OF NOVA SCOTIA, as administrative agent (together with its successor(s) thereto in such capacity, the "ADMINISTRATIVE AGENT") for each of the Secured Parties. RECITALS A. LVSI and Venetian Casino Resort, LLC., a Nevada limited liability company (each a "BORROWER" and collectively the "BORROWERS"), have entered into the Credit Agreement, dated as of June 4, 2002, among the Lenders, the Administrative Agent, Goldman Sachs Credit Partners L.P., as Syndication Agent and Scotia Capital and Goldman as joint lead arrangers and joint Bookrunners (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"). B. It is a condition precedent to the making of the Credit Extensions under the Credit Agreement that the Borrowers' Obligations thereunder be guarantied by the Guarantors. C. The Guarantors are willing irrevocably and unconditionally to guaranty such Obligations. NOW, THEREFORE, based upon the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Secured Parties to make Credit Extensions and to enter into Rate Protection Agreements, the Guarantors hereby agree as follows. SECTION 1. DEFINITIONS 1.1 CERTAIN DEFINED TERMS. As used in this Guaranty, the following terms shall have the following meanings unless the context otherwise requires: "GUARANTIED OBLIGATIONS" is defined in subsection 2.1. "GUARANTY" is defined in the preamble. "PAYMENT IN FULL", "PAID IN FULL" or any similar term means payment in full of the Guarantied Obligations, including all principal, interest, costs, fees and expenses (including reasonable legal fees and expenses) of Secured Parties as required under the Loan Documents and the Rate Protection Agreements. 1.2 INTERPRETATION. (a) References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Guaranty unless otherwise specifically provided. (b) In the event of any conflict or inconsistency between the terms, conditions and provisions of this Guaranty and the terms, conditions and provisions of the Credit Agreement, the terms, conditions and provisions of this Guaranty shall prevail. (c) Unless otherwise defined herein or the context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have the meanings provided in the Credit Agreement. (d) The rules of construction set forth in subsection 1.3 of the Credit Agreement shall be applicable to this Guaranty MUTATIS MUTANDIS. SECTION 2. THE GUARANTY 2.1 GUARANTY OF THE GUARANTIED OBLIGATIONS. Subject to the provisions of subsection 2.2(a), the Guarantors jointly and severally hereby irrevocably and unconditionally guaranty the due and punctual payment in full of all Guarantied Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)). The term "GUARANTIED OBLIGATIONS" is used herein in its most comprehensive sense and includes: (a) any and all Obligations of the Borrowers, in each case now or hereafter made, incurred or created, whether absolute or contingent, liquidated or unliquidated, whether due or not due, and however arising under or in connection with any Loan Documents, including those arising under successive borrowing transactions under the Credit Agreement which shall either continue the Obligations of the Borrowers or from time to time renew them after they have been satisfied and including interest which, but for the filing of a petition in bankruptcy with respect to the Borrowers, would have accrued on any Guarantied Obligations, whether or not a claim is allowed against the Borrowers for such interest in the related bankruptcy proceeding; and (b) those expenses set forth in subsection 2.8 hereof. 2.2 LIMITATION ON AMOUNT GUARANTIED; CONTRIBUTION BY GUARANTORS. (a) Anything contained in this Guaranty to the contrary notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is determined by a court of competent jurisdiction to be applicable to the obligations of any Guarantor under this Guaranty, such 2 obligations of such Guarantor hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any applicable provisions of comparable state law (collectively, the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor (x) in respect of intercompany indebtedness to the Borrowers or other affiliates of the Borrowers to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder and (y) under any guaranty of Other Indebtedness which guaranty contains a limitation as to maximum amount similar to that set forth in this subsection 2.2(a), pursuant to which the liability of such Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount) and after giving effect as assets to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Guarantor pursuant to applicable law or pursuant to the terms of any agreement (including any such right of contribution under subsection 2.2(b)). (b) Guarantors under this Guaranty together desire to allocate among themselves, in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by any Guarantor under this Guaranty (a "FUNDING GUARANTOR") that exceeds its Fair Share (as defined below) as of such date, that Funding Guarantor shall be entitled to a contribution from each of the other Guarantors in the amount of such other Guarantor's Fair Share Shortfall (as defined below) as of such date, with the result that all such contributions will cause each Guarantor's Aggregate Payments (as defined below) to equal its Fair Share as of such date. "FAIR SHARE" means, with respect to a Guarantor as of any date of determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to such Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with respect to all Guarantors MULTIPLIED BY (ii) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations guarantied. "FAIR SHARE SHORTFALL" means, with respect to a Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Guarantor over the Aggregate Payments of such Guarantor. "ADJUSTED MAXIMUM AMOUNT" means, with respect to a Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Guarantor under this Guaranty, determined as of such date, in accordance with subsection 2.2(a); PROVIDED that, solely for purposes of calculating the "Adjusted Maximum Amount" with respect to any Guarantor for purposes of this subsection 2.2(b), any assets or liabilities of such Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Guarantor. "AGGREGATE PAYMENTS" means, with respect to a Guarantor as of any date of determination, an amount equal to (i) the aggregate amount of all payments and distributions made on or before such date by such Guarantor in respect of this Guaranty (including in respect of this subsection 2.2(b)) MINUS (ii) the aggregate amount of all payments received on or before such date by such Guarantor from the other Guarantors as contributions under this subsection 2.2(b). The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Guarantors of their obligations as set forth in this subsection 2.2(b) shall not be construed in any way to limit the liability of any Guarantor 3 hereunder. Any other Subsidiary Guarantor is a third party beneficiary to the contribution agreement set forth in this subsection 2.2(b) shall not be construed in any way to limit the liability of any Guarantor hereunder. 2.3 PAYMENT BY GUARANTORS; APPLICATION OF PAYMENTS. Subject to the provisions of subsection 2.2(a), Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Secured Party may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrowers to pay any of the Guarantied Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), Guarantors will upon demand pay, or cause to be paid, in cash, to the Administrative Agent for the ratable benefit of Secured Parties, an amount equal to the sum of the unpaid principal amount of all Guarantied Obligations then due as aforesaid, accrued and unpaid interest on such Guarantied Obligations (including interest which, but for the filing of a petition in bankruptcy with respect to Borrowers, would have accrued on such Guarantied Obligations, whether or not a claim is allowed against Borrowers for such interest in the related bankruptcy proceeding) and all other Guarantied Obligations then owed to Secured Parties as aforesaid. All such payments shall be applied promptly from time to time by the Administrative Agent in the following order of priority: (a) to the payment of the costs and expenses of any collection or other realization under this Guaranty, including the reasonable costs, fees and expenses of (i) the Administrative Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith, all in accordance with the terms of this Guaranty and (ii) the Administrative Agent, in accordance with term of the Credit Agreement (b) thereafter, to the extent of any excess such payments, to the payment of all other Guarantied Obligations for the ratable benefit of the holders thereof; and (c) thereafter, to the extent of any excess such payments, to the payment to the applicable Guarantor or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. 2.4 LIABILITY OF GUARANTORS ABSOLUTE. Each Guarantor agrees that its obligations hereunder are 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 payment in full of the Guarantied Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows: (a) This Guaranty is a guaranty of payment when due and not of collectibility. (b) The Administrative Agent may enforce this Guaranty upon the occurrence and continuance of an Event of Default notwithstanding the existence of any dispute between Borrowers and any Secured Party with respect to the existence of such Event of Default. 4 (c) The obligations of each Guarantor hereunder are independent of the obligations of Borrowers under the Loan Documents and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrowers under the Loan Documents, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Borrowers or any of such other guarantors and whether or not Borrowers is joined in any such action or actions. (d) Payment by any Guarantor of a portion, but not all, of the Guarantied Obligations shall in no way limit, affect, modify or abridge any Guarantor's liability for any portion of the Guarantied Obligations which has not been paid. Without limiting the generality of the foregoing, if the Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor's covenant to pay a portion of the Guarantied Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guarantied Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor's liability hereunder in respect of the Guarantied Obligations. (e) Any Secured Party, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor's liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guarantied Obligations, (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guarantied Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guarantied Obligations and take and hold security for the payment of this Guaranty or the Guarantied Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guarantied Obligations, any other guaranties of the Guarantied Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guarantied Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Secured Party in respect of this Guaranty or the Guarantied Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Secured Party may have against any such security, in each case as such Secured Party in its discretion may determine consistent with the Credit Agreement or the applicable Rate Protection Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrowers or any security for the Guarantied Obligations; and (vi) exercise any other rights available to it under the Loan Documents or the Rate Protection Agreements. (f) This Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or 5 termination for any reason (other than payment in full of the Guarantied Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan Documents, at law, in equity or otherwise) with respect to the Guarantied Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guarantied Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) of any of the Loan Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guarantied Obligations, in each case whether or not in accordance with the terms of such Loan Document or any agreement relating to such other guaranty or security; (iii) the Guarantied Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Loan Documents or from the proceeds of any security for the Guarantied Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guarantied Obligations) to the payment of indebtedness other than the Guarantied Obligations, even though any Secured Party might have elected to apply such payment to any part or all of the Guarantied Obligations; (v) any Secured Party's consent to the change, reorganization or termination of the corporate structure or existence of Borrowers or any of their Subsidiaries and to any corresponding restructuring of the Guarantied Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guarantied Obligations; (vii) any defenses, set-offs or counterclaims which Borrowers may allege or assert against any Secured Party in respect of the Guarantied Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guarantied Obligations. 2.5 WAIVERS BY GUARANTORS. Each Guarantor hereby waives, for the benefit of Secured Parties: (a) any right to require any Secured Party, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrowers, any other guarantor (including any other Guarantor) of the Guarantied Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrowers, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any deposit account or credit on the books of any Secured Party in favor of Borrowers or any other Person, or (iv) pursue any other remedy in the power of any Secured Party whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrowers including any defense based on or arising out of 6 the lack of validity or the unenforceability of the Guarantied Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrowers from any cause other than payment in full of the Guarantied Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Secured Party's errors or omissions in the administration of the Guarantied Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of such Guarantor's obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor's liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Secured Party protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default under the Credit Agreement, the Rate Protection Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guarantied Obligations or any agreement related thereto, notices of any extension of credit to Borrowers and notices of any of the matters referred to in subsection 2.4 and any right to consent to any thereof; (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms of this Guaranty; and (h) to the extent permitted under section 40.495 of the Nevada Revised Statutes, the benefits of the "One Action" rule under 40.430 of the Nevada Revised Statutes. 2.6 GUARANTORS' RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. Each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrowers or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrowers, (b) any right to enforce, or to participate in, any claim, right or remedy that any Secured Party now has or may hereafter have against Borrowers, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Secured Party. In addition, until the Termination Date, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guarantied Obligations (including any such 7 right of contribution under subsection 2.2(b)). Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrowers or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Secured Party may have against Borrowers, to all right, title and interest any Secured Party may have in any such collateral or security, and to any right any Secured Party may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guarantied Obligations shall not have been paid in full, such amount shall be held in trust for the Administrative Agent on behalf of Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of Secured Parties to be credited and applied against the Guarantied Obligations, whether matured or unmatured, in accordance with the terms hereof. 2.7 SUBORDINATION OF OTHER OBLIGATIONS. Any Indebtedness of Borrowers or any Guarantor now or hereafter held by any Guarantor (the "OBLIGEE GUARANTOR") is hereby subordinated in right of payment to the Guarantied Obligations, and any such Indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for the Administrative Agent on behalf of Secured Parties and shall forthwith be paid over to the Administrative Agent for the benefit of Secured Parties to be credited and applied against the Guarantied Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision of this Guaranty. 2.8 EXPENSES. Guarantors jointly and severally agree to pay, or cause to be paid, on demand, and to save Secured Parties harmless against liability for, any and all reasonable costs and expenses (including reasonable fees and disbursements of counsel and reasonable allocated costs of internal counsel) incurred or expended by any Secured Party in connection with the enforcement of or preservation of any rights under this Guaranty. 2.9 CONTINUING GUARANTY. This Guaranty is a continuing guaranty and shall remain in effect until the Termination Date. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guarantied Obligations. 2.10 AUTHORITY OF GUARANTORS OR BORROWERS. It is not necessary for any Secured Party to inquire into the capacity or powers of any Guarantor or Borrowers or the officers, directors or any agents acting or purporting to act on behalf of any of them. 2.11 FINANCIAL CONDITION OF BORROWERS. Any Loans or other extensions of credit may be granted to Borrowers or continued from time to time, and any Rate Protection Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrowers at the time of any such grant or continuation or at the time such Rate Protection Agreement is entered into, as the case may be. No Secured Party shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor's assessment, of the financial 8 condition of Borrowers. Each Guarantor has adequate means to obtain information from Borrowers on a continuing basis concerning the financial condition of Borrowers and its ability to perform its obligations under the Loan Documents, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrowers and of all circumstances bearing upon the risk of nonpayment of the Guarantied Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Secured Party to disclose any matter, fact or thing relating to the business, operations or conditions of Borrowers now known or hereafter known by any Secured Party. 2.12 RIGHTS CUMULATIVE. The rights, powers and remedies given to Secured Parties by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Secured Parties by virtue of any statute or rule of law or in any of the other Loan Documents, or any agreement between any Guarantor and any Secured Party or Secured Parties or between Borrowers and any Secured Party or Secured Parties. Any forbearance or failure to exercise, and any delay by any Secured Party in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy. 2.13 BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF GUARANTY. (a) So long as any Guarantied Obligations remain outstanding, no Guarantor shall, without the prior written consent of the Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency proceedings of or against Borrowers. The obligations of Guarantors under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrowers or by any defense which Borrowers may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guarantied Obligations which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Guarantied Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Guarantied Obligations if said proceedings had not been commenced) shall be included in the Guarantied Obligations because it is the intention of Guarantors and Secured Parties that the Guarantied Obligations which are guarantied by Guarantors pursuant to this Guaranty should be determined without regard to any rule of law or order which may relieve Borrowers of any portion of such Guarantied Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay the Administrative Agent, or allow the claim of the Administrative Agent in respect of, any such interest accruing after the date on which such proceeding is commenced. (c) In the event that all or any portion of the Guarantied Obligations are paid by Borrowers, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Secured Party as a preference, fraudulent 9 transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guarantied Obligations for all purposes under this Guaranty. 2.14 NOTICE OF EVENTS. Promptly upon any Guarantor obtaining knowledge thereof, such Guarantor shall give the Administrative Agent written notice of any condition or event which has resulted in (a) a material adverse change in the financial condition of any Guarantor or Borrowers or (b) a breach of or noncompliance with any term, condition or covenant contained herein or in the Credit Agreement, any other Loan Document, any Rate Protection Agreement or any other document delivered pursuant hereto or thereto. 2.15 SET OFF. In addition to any other rights any Secured Party may have under law or in equity, if any amount shall at any time be due and owing by any Guarantor to any Secured Party under this Guaranty, such Secured Party is authorized at any time or from time to time, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (general or special, including indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness of such Secured Party owing to such Guarantor and any other property of such Guarantor held by any Secured Party to or for the credit or the account of such Guarantor against and on account of the Guarantied Obligations and liabilities of such Guarantor to any Secured Party under this Guaranty. 2.16 DISCHARGE OF GUARANTY UPON SALE OF GUARANTOR. If (i) all of the stock of any Guarantor or any of its successors in interest under this Guaranty shall be sold or otherwise disposed of (including by merger or consolidation) in an Asset Sale consented to by Requisite Lenders, or (ii) any Guarantor shall otherwise be released from this Guaranty in accordance with any Loan Document or with the consent of the Requisite Lenders, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Secured Party or any other Person effective as of the time of such Asset Sale. 2.17 GENERAL SUBORDINATION OF OBLIGATIONS. No Guarantor shall create any Indebtedness or Contingent Obligation without the prior written consent of the Administrative Agent except as may be permitted or contemplated pursuant to this Guaranty and the Credit Agreement. 2.18 REPRESENTATIONS AND WARRANTIES. The representations and warranties contained in Section 5 of the Credit Agreement, insofar as the representations and warranties contained therein are applicable to any Guarantor and its properties, are true and correct in all material respects, each such representation and warranty set forth in such Article (insofar as applicable as aforesaid) and all other terms of the Credit Agreement to which reference is made therein, together with all related definitions and ancillary provisions, being hereby incorporated into this Guaranty by this reference as though specifically set forth in this Section. 2.19 COVENANTS. Each Guarantor covenants and agrees that, at all times prior to the Termination Date, it will perform, comply with and be bound by all of the agreements, covenants and obligations contained in Sections 6 and 7 of the Credit Agreement which are applicable to such Guarantor, each such agreement, covenant and obligation contained in Sections 6 and 7 of 10 the Credit Agreement, together with all related definitions and ancillary provisions, being hereby incorporated into this Guaranty by this reference as though specifically set forth in this Article. SECTION 3. MISCELLANEOUS 3.1 SURVIVAL OF WARRANTIES. All agreements, representations and warranties made herein shall survive the execution and delivery of this Guaranty and the other Loan Documents and any increase in the Commitments under the Credit Agreement. 3.2 NOTICES. Any communications between the Administrative Agent and any Guarantor and any notices or requests provided herein to be given may be given by mailing the same, postage prepaid, or by telex, facsimile transmission or cable to each such party at its address set forth in the Credit Agreement, on the signature pages hereof or to such other addresses as each such party may in writing hereafter indicate. Any notice, request or demand to or upon the Administrative Agent or any Guarantor shall not be effective until received. 3.3 SEVERABILITY. In case any provision in or obligation under this Guaranty 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. 3.4 AMENDMENTS AND WAIVERS. No amendment, modification, termination or waiver of any provision of this Guaranty, and no consent to any departure by any Guarantor therefrom, shall in any event be effective without the written concurrence of the Administrative Agent and, in the case of any such amendment or modification, each Guarantor against whom enforcement of such amendment or modification is sought. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. 3.5 HEADINGS. Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. 3.6 APPLICABLE LAW; RULES OF CONSTRUCTION. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTORS AND SECURED 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. 3.7 SUCCESSORS AND ASSIGNS. This Guaranty is a continuing guaranty and shall be binding upon each Guarantor and its respective successors and assigns. This Guaranty shall inure to the benefit of Secured Parties and their respective successors and assigns. No Guarantor shall assign this Guaranty or any of the rights or obligations of such Guarantor hereunder without the prior written consent of all Lenders. Any Secured Party may, without notice or consent, assign its interest in this Guaranty in whole or in part, PROVIDED that any assignee shall be a Secured Party under this Guaranty. The terms and provisions of this Guaranty shall inure to the benefit of any transferee or assignee of any Commitments or Loan, and in the event of such 11 transfer or assignment the rights and privileges herein conferred upon such Secured Party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. 3.8 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY GUARANTOR ARISING OUT OF OR RELATING TO THIS GUARANTY, OR ANY OBLIGATIONS HEREUNDER, 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, EACH GUARANTOR, FOR ITSELF AND IN CONNECTION WITH ITS 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 SUCH GUARANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 3.2; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH GUARANTOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTIES RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST SUCH GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 3.8 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. 3.9 WAIVER OF TRIAL BY JURY. EACH GUARANTOR AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, EACH SECURED PARTY EACH 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 GUARANTY. 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 Guarantor and, by its acceptance of the benefits hereof, each Secured Party, each (i) acknowledges that this waiver is a material inducement for such Guarantor and 12 Secured Parties to enter into a business relationship, that such Guarantor and Secured Parties have already relied on this waiver in entering into this Guaranty or accepting the benefits thereof, as the case may be, and that each will continue to rely on this waiver in their related future dealings and (ii) further warrants and represents that each has reviewed this waiver with its legal counsel, and that each 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 3.9 AND EXECUTED BY THE ADMINISTRATIVE AGENT AND EACH GUARANTOR), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court. 3.10 NO OTHER WRITING. This writing is intended by Guarantors and Secured Parties as the final expression of this Guaranty and is also intended as a complete and exclusive statement of the terms of their agreement with respect to the matters covered hereby. No course of dealing, course of performance or trade usage, and no parol evidence of any nature, shall be used to supplement or modify any terms of this Guaranty. There are no conditions to the full effectiveness of this Guaranty. 3.11 FURTHER ASSURANCES. At any time or from time to time, upon the request of the Administrative Agent, Guarantors shall execute and deliver such further documents and do such other acts and things as the Administrative Agent may reasonably request in order to effect fully the purposes of this Guaranty. 3.12 ADDITIONAL GUARANTORS. The initial Guarantors hereunder shall be such of the Restricted Subsidiaries of Borrowers as are signatories hereto on the date hereof. From time to time subsequent to the date hereof, additional Subsidiaries of Borrowers may become parties hereto, as additional Guarantors (each an "ADDITIONAL GUARANTOR"), by executing a counterpart of this Guaranty. Upon delivery of any such counterpart to the Administrative Agent, notice of which is hereby waived by Guarantors, each such Additional Guarantor shall be a Guarantor and shall be as fully a party hereto as if such Additional Guarantor were an original signatory hereof. Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder, nor by any election of the Administrative Agent not to cause any Subsidiary of Borrowers to become an Additional Guarantor hereunder. This Guaranty shall be fully effective as to any Guarantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Guarantor hereunder. 3.13 COUNTERPARTS; EFFECTIVENESS. This Guaranty may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original for all purposes; but all such counterparts together shall constitute but one and the same instrument. This Guaranty shall become effective as to each Guarantor upon the execution of a counterpart hereof by such Guarantor (whether or not a counterpart hereof shall have been executed by any other Guarantor) 13 and receipt by the Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof. 3.14 ADMINISTRATIVE AGENT AS AGENT. (a) The Administrative Agent has been appointed to act as Administrative Agent hereunder by the Secured Parties. The Administrative Agent shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action, solely in accordance with this Guaranty and the Credit Agreement; PROVIDED that Administrative Agent shall exercise, or refrain from exercising, any remedies hereunder in accordance with the instructions of (i) Requisite Lenders or (ii) after payment in full of all Obligations then due and payable under the Credit Agreement and the other Loan Documents, the holders of a majority of the aggregate notional amount (or, with respect to any Rate Protection Agreement that has been terminated in accordance with its terms, the amount then due and payable (exclusive of expenses and similar payments but including any early termination payments then due) under such Rate Protection Agreement) under all Rate Protection Agreements (Requisite Lenders or, if applicable, such holders being referred to herein as "REQUISITE OBLIGEES"). In furtherance of the foregoing provisions of this subsection 3.14, each Interest Rate Exchanger, by its acceptance of the benefits hereof, agrees that it shall have no right individually to enforce this Guaranty, it being understood and agreed by such Interest Rate Exchanger that all rights and remedies hereunder may be exercised solely by the Administrative Agent for the benefit of Secured Parties in accordance with the terms of this subsection 3.14. (b) Administrative Agent shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by the Administrative Agent pursuant to subsection 10.5 of the Credit Agreement shall also constitute notice of resignation as Administrative Agent under this Guaranty; removal of the Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute removal as Administrative Agent under this Guaranty; and appointment of a successor Administrative Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute appointment of a successor Administrative Agent under this Guaranty. Upon the acceptance of any appointment as Administrative Agent under subsection 9.5 of the Credit Agreement by a successor 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 under this Guaranty, and the retiring or removed Administrative Agent under this Guaranty shall promptly (i) transfer to such successor Administrative Agent all sums held hereunder, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under this Guaranty, and (ii) take such other actions as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the rights created hereunder, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations under this Guaranty. After any retiring or removed Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Guaranty shall inure to its benefit as to any actions taken or omitted to be taken by it under this Guaranty while it was Administrative Agent hereunder. 14 Exhibit 10.3 IN WITNESS WHEREOF, each of the undersigned Guarantors has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first written above. MALL INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary GRAND CANAL SHOPS MALL CONSTRUCTION, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary LIDO INTERMEDIATE HOLDING COMPANY, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary VENETIAN VENTURE DEVELOPMENT, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary VENETIAN OPERATING COMPANY, LLC By: Venetian Casino Resort, LLC, its Managing Member By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary VENETIAN MARKETING, INC. By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary VENETIAN CASINO RESORT ATHENS, LLC By: Las Vegas Sands, Inc., its Managing Member By: /s/ David Friedman -------------------------- Name: David Friedman Title: Secretary Notice Address for Debtors: 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Attention: General Counsel Telefax: (702) 733-5499 EX-10 13 ex10-4_7032.txt DISBURSEMENT ACCOUNT AGREEMENTS Exhibit 10.4 DISBURSEMENT ACCOUNT AGREEMENT This DISBURSEMENT ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of June 4, 2002, and entered into by and among LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI"), VENETIAN CASINO RESORT, LLC, a Nevada limited liability company ("VCR", and jointly and severally with LVSI, "PLEDGOR"), THE BANK OF NOVA SCOTIA, a Canadian chartered bank, as Administrative Agent (in such capacity herein called "SECURED PARTY"), and THE BANK OF NOVA SCOTIA, as custodian and securities intermediary for the Pledgor and Secured Party (in such capacity, "SECURITIES INTERMEDIARY"). PRELIMINARY STATEMENTS A. THE PHASE I-A PROJECT. LVSI and VCR, propose to develop, construct and operate the Phase I-A Project at the Venetian Casino Resort. B. CREDIT AGREEMENT. Concurrently herewith, LVSI, VCR, the Administrative Agent, the Syndication Agent and the Lenders have entered into a Credit Agreement pursuant to which the Lenders have agreed, subject to the terms thereof, to provide Credit Extensions to LVSI and VCR, jointly and severally, in an aggregate amount and for purposes specified therein. C. CAPACITY AND OBLIGATIONS OF SECURED PARTY. The Secured Party has entered into this Agreement pursuant to the Credit Agreement and is obligated to exercise its rights and perform its duties hereunder in accordance with the Credit Agreement. D. CONDITION. It is a condition precedent to the making of Loans and other extensions of credit under the Credit Agreement by the Lenders that Pledgor shall establish the Disbursement Account, grant control of the Disbursement Account to the Secured Party, and undertake the obligations contemplated by this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to enter into the Credit Agreement and make loans and other extensions of credit thereunder and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as follows: SECTION 1. CERTAIN DEFINITIONS. (a) SPECIFIC DEFINITIONS. The following terms used in this Agreement shall have the following meanings: "BROKER-DEALER" means a person registered as a broker or dealer under the Securities Exchange Act of 1934, as amended. "COLLATERAL" means (i) the Disbursement Account, (ii) all amounts held from time to time in the Disbursement Account, (iii) all Investments, including all Financial Assets, security entitlements, securities (whether certificated or uncertificated), instruments, accounts, general intangibles and deposits representing or evidencing any Investments, (iv) all interest, dividends, cash, instruments, securities and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Collateral, and (v) to the extent not covered by clauses (i) through (iv) above, all proceeds of any or all of the foregoing Collateral. "DISBURSEMENT ACCOUNT" is defined in Section 2(a). "DISBURSEMENT SECURED PARTIES" shall have the same meaning as "Secured Parties" under the Credit Agreement. "ENTITLEMENT ORDER" shall have the meaning set forth in Section 8-102(a)(8) of the UCC or any successor section. "FINANCIAL ASSET" shall have the meaning set forth in Section 8-102(a)(9)(iii) of the UCC or any successor section. "INVESTMENTS" means any Financial Assets credited to the Disbursement Account, and any other property acquired by Securities Intermediary as securities intermediary hereunder in exchange for, with proceeds from or distributions on, or otherwise in respect of any Investments. "OVERNIGHT INVESTMENTS" means an interest bearing overnight deposit account with a Canadian branch of The Bank of Nova Scotia. "PERMITTED INVESTMENTS" means Cash and Cash Equivalents. "SECURED OBLIGATIONS" means the Obligations. "SECURITIES INTERMEDIARY" is defined in the preamble. "SUSPENSION PERIOD" means each period beginning on the occurrence of a Potential Event of Default or Event of Default and continuing so long as any Potential Event of Default or Event of Default shall continue. (b) GENERAL PROVISIONS. Capitalized terms used but not defined herein shall have the meaning given to such terms in the Credit Agreement. Unless otherwise defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of the UCC are used herein as therein defined. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. When a reference is made in this Agreement to an Appendix, Exhibit, Introduction, Recital, Section or Schedule, such reference shall be to an Appendix, an Exhibit, the Introduction, a Recital or a Section of, or a Schedule to, this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or -2- interpretation of this Agreement. Whenever the words "include, "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." SECTION 2. ESTABLISHMENT AND OPERATION OF THE DISBURSEMENT ACCOUNT. (a) ESTABLISHMENT OF DISBURSEMENT ACCOUNT. Pledgor and Secured Party hereby authorize and direct Securities Intermediary to establish and maintain at its office at One Liberty Plaza, New York, New York 10006, as an account in the name of Secured Party, and under the sole dominion and control of Secured Party, a Securities Account designated as "Account number 02849-12, The Bank of Nova Scotia, as Administrative Agent under the Credit Agreement, dated as of June 4, 2002, Disbursement Account". The Secured Party and the Pledgor agree that this account shall be the "DISBURSEMENT ACCOUNT." (b) OPERATIONS OF THE DISBURSEMENT ACCOUNT. The Disbursement Account shall be operated, and all Investments shall be acquired and registered or held (as applicable), in accordance with the terms of this Agreement and the directions of Secured Party. (c) ACCOUNT STATEMENTS. Securities Intermediary shall send Secured Party and Pledgor written account statements with respect to the Disbursement Account not less frequently than monthly. Reports or confirmation of the execution of orders and statements of account shall be conclusive if not objected to in writing within 30 days after delivery pursuant to Section 21. SECTION 3. MECHANICS OF DEPOSITS OF FUNDS IN THE DISBURSEMENT ACCOUNT. (a) ACKNOWLEDGEMENT OF DEPOSIT. Securities Intermediary and Secured Party acknowledge the deposit of $185,000,000 in the Disbursement Account on the date hereof. (b) TRANSFERS TO THE DISBURSEMENT ACCOUNT. All transfers of funds to the Disbursement Account shall be made by wire transfer (or, if applicable, intra-bank transfer from another account of Pledgor with Securities Intermediary) of immediately available funds, in each case addressed as follows: The Bank of Nova Scotia - New York Agency ABA #0260-0253-2 for credit to account #02849-12 i/n/o The Bank of Nova Scotia as collateral agent for Las Vegas Sands / Venetian Casino Resort Disbursement Account Attention: Robert Ivy SECTION 4. PERMITTED INVESTMENTS AND TRANSFERS OF AMOUNTS IN THE DISBURSEMENT ACCOUNT. (a) STRICT COMPLIANCE. Except in connection with any Disbursement, cash held by Securities Intermediary in the Disbursement Account shall not be (i) invested or reinvested, (ii) sold or redeemed, or (iii) transferred from the Disbursement Account, except as provided in this Section 4. -3- (b) PLEDGOR'S RIGHT TO DIRECT INVESTMENT. Except during any Suspension Period, Securities Intermediary shall, in accordance with Pledgor's written Entitlement Orders given to Securities Intermediary from time to time, sell or redeem Investments, and apply amounts transferred to, or held for the credit of, the Disbursement Account to make Investments, in Securities Intermediary's name and as custodian under this Agreement, in Permitted Investments. During any Suspension Period, (i) Pledgor's right to direct such Investments under this Section 4(b) shall be suspended, and Securities Intermediary shall not accept Entitlement Orders with respect to the Disbursement Account from any person other than Secured Party; and (ii) any credit balances shall be invested and reinvested only as provided in Section 4(c). (c) OVERNIGHT INVESTMENTS. To the extent that there are credit balances expected in the Disbursement Account as of the end of the day, or as of 12:00 noon, New York time on any Business Day after settlement of all pending transactions, unless otherwise instructed by Secured Party or Pledgor pursuant to Section 4(b), Securities Intermediary shall apply the expected credit balances to acquire Overnight Investments. Any Overnight Investments shall be held for the credit of the Disbursement Account. Pledgor hereby acknowledges that, as foreign deposit accounts, "Overnight Investments" may not benefit from any protections afforded to domestic depositors by state or Federal law, may have a lesser preference in a liquidation than a domestic deposit, and are subject to cross-border risks. No U.S. licensed office of The Bank of Nova Scotia separately guarantees or promises the repayment of any Overnight Investment. (d) ACTIONS OF SECURITIES INTERMEDIARY ON PURCHASE OF INVESTMENTS. Promptly upon the purchase, acquisition or transfer for credit of the Disbursement Account of any Investment, Securities Intermediary shall take all steps that it customarily takes in the ordinary course of its business to ensure that such Investment is credited on its books to the Disbursement Account for which the Investment was acquired. Without limiting the generality of the foregoing, Securities Intermediary shall promptly (i) send to Pledgor and Secured Party a written confirmation of the acquisition of such Investment, and (ii) indicate by book entry in its records that such Investment has been credited to, and is held for the credit of, the Disbursement Account. Securities Intermediary agrees with Pledgor and Secured Party that any cash, Investments or property credited to, or held for the credit of, the Disbursement Account shall be treated as Financial Assets. (e) INTEREST ON DISBURSEMENT ACCOUNT. Amounts held on deposit or as credit balances in the Disbursement Account shall not bear interest, although to the extent invested in Investments (including Overnight Investments), deposit or credit balances may realize interest income. (f) CONTROL AGREEMENT. Securities Intermediary shall, if and as directed in writing by Secured Party, without the consent of Pledgor, (i) comply with Entitlement Orders originated by Secured Party with respect to the Disbursement Account and any Security Entitlements therein, (ii) transfer, sell or redeem any of the Collateral, (iii) transfer any or all of the Collateral to any account or accounts designated by Secured Party, including an account established in Secured Party's name (whether at Secured Party or Securities Intermediary or otherwise), (iv) register title to any Collateral in any name specified by Secured Party, including the name of Secured Party or any of its nominees or agents, without reference to any interest of Pledgor, or (v) otherwise deal with the Collateral as directed by Secured Party; provided that Secured Party -4- agrees not to take any such action unless an Event of Default has occurred and is continuing. Securities Intermediary shall act on any instruction of Secured Party notwithstanding assertions or proof that (1) Secured Party has no right under Sections 14 or 15 to originate the instruction or take the underlying action; (2) such instruction or action constitutes a breach of this Agreement or any other agreement; or (3) this Agreement has terminated, unless notified in writing by Secured Party that this Agreement has terminated and such notice has not been withdrawn. Nothing contained in this paragraph shall constitute a waiver of by Pledgor of any rights or remedies it may have against Secured Party under this Agreement or any other agreement. (g) DEPOSIT OF PROCEEDS. Any interest earned on the Disbursement Account in accordance with Section 4(e), any interest, cash dividends or other cash distributions received in respect of any Investments and the net proceeds of any sale or payment of any Investments shall be promptly credited to, and held for the credit of, the Disbursement Account. Any distribution of property, other than cash in respect of any Investment shall be credited to and held for the credit of the Disbursement Account; PROVIDED THAT, unless otherwise instructed in writing by Secured Party, Securities Intermediary shall, for credit to the Disbursement Account, promptly sell, redeem or otherwise liquidate any such property that, as of the date of receipt, is not a Permitted Investment. (h) DISBURSEMENTS. Securities Intermediary shall make Disbursements upon the instruction of Secured Party in accordance with subsection 4.4 of the Credit Agreement. SECTION 5. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Pledgor hereby pledges and assigns to Secured Party, and hereby grants to Secured Party a security interest in, all of Pledgor's right, title and interest in and to the Collateral as collateral security for the prompt payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. 362(a)), of all Secured Obligations. SECTION 6. ACKNOWLEDGEMENT OF SECURITY INTEREST IN FAVOR OF SECURED PARTY; COVENANT AGAINST CREATION OF OTHER INTERESTS. (a) ACKNOWLEDGEMENT OF SECURITY INTEREST. Securities Intermediary acknowledges the security interest granted by Pledgor in favor of Secured Party in the Collateral. (b) ACKNOWLEDGEMENT OF SECURITIES INTERMEDIARY'S ROLE. Securities Intermediary hereby further acknowledges that it holds the Disbursement Account, and all Security Entitlements therein, as custodian for, for the benefit of, and subject to the control of, Secured Party. Securities Intermediary shall, by book entry or otherwise, indicate that the Disbursement Account, and all Security Entitlements registered to or held therein, are subject to the control of Secured Party as provided in Section 4(f). (c) SECURITIES INTERMEDIARY HAS NO NOTICE OF ADVERSE CLAIMS. Securities Intermediary represents and warrants that (i) it has no notice of any adverse claim against any of the Collateral other than the claim of Secured Party under this Agreement; and (ii) it is not, in its capacity as securities intermediary, party to any agreement other than this Agreement that -5- governs its rights or duties, or limits or conflicts with the rights of Secured Party, including the exclusive right of Secured Party to control as provided in Section 4(f), with respect to the Disbursement Account. (d) SECURITIES INTERMEDIARY SHALL NOT ACKNOWLEDGE OTHER CLAIMS. Securities Intermediary agrees that, except as expressly provided in this Agreement or with the written consent of Secured Party, it shall not agree to or acknowledge (i) any right by any Person other than Secured Party to originate Entitlement Orders or control with respect to the Disbursement Account; or (ii) any limitation on the right of Secured Party to originate Entitlement Orders with respect to or direct the transfer of any Investments or cash credited to the Disbursement Account. SECTION 7. SECURITIES INTERMEDIARY MAINTENANCE OF THE DISBURSEMENT ACCOUNT. (a) TRANSACTIONS SHALL COMPLY WITH RULES. The parties acknowledge that all transactions in Financial Assets under this Agreement shall be in accordance with the rules and customs of the exchange, market or clearing organization, if any, in which the transactions are executed or settled and in conformity with applicable law and regulations of governmental authorities and future amendments or supplements thereto. (b) FEES AND CHARGES OF SECURITIES INTERMEDIARY. Pledgor shall pay to Securities Intermediary, in accordance with Securities Intermediary's usual schedule of charges or any written agreement between Securities Intermediary and Pledgor, any fees or charges reasonably imposed by Securities Intermediary with respect to the establishment, maintenance and transactions in or affecting the Disbursement Account. (c) SECURITIES INTERMEDIARY SHALL NOT PERMIT LEVERAGE OF INVESTMENTS. Securities Intermediary shall not execute any transaction to acquire a Financial Asset under Section 4(b) unless there are sufficient funds in the Disbursement Account or reasonably expected with respect to pending transactions in the Disbursement Account to settle such transaction for the account of the Disbursement Account. Notwithstanding the foregoing sentence, in the event that Securities Intermediary executes a transaction without adequate funds to settle the transaction, Pledgor shall be liable to Securities Intermediary for any deficiency and shall promptly reimburse Securities Intermediary for any loss or expense incurred thereby, including losses sustained by reason of Securities Intermediary's inability to borrow any securities or other property sold for the Disbursement Account. Pledgor agrees to pay interest charges which may be imposed by Securities Intermediary in accordance with its usual custom, with respect to late payments for Financial Assets purchased for the Disbursement Account and prepayments to any Disbursement Account (i.e., the crediting of the proceeds of sale before the settlement date or receipt by Securities Intermediary of the items sold in good deliverable form). Pledgor agrees to pay promptly any amount which may become due in order to satisfy demands for additional margin or marks to market with respect to any security purchased or sold on instruction from Pledgor. (d) RISK OF INVESTMENTS AND TRANSACTIONS. It is not the intention of the parties that Securities Intermediary should bear any investment risk associated with Permitted Investments or Overnight Investments acquired for the credit of the Disbursement Account in accordance -6- with Section 4. Any losses or gains realized on such Investments shall be charged or credited to the Disbursement Account. On committing to a transaction for the credit of the Disbursement Account pursuant to an instruction permitted in accordance with Section 4, Securities Intermediary may, (i) pending settlement, block (A) the Investments to be sold or (B) credit balances sufficient to settle any acquisition and, (ii) at the time of settlement, deliver such Investments or funds in accordance with the rules, custom or practice of the particular market. (e) USE OF INTERMEDIARIES AND NOMINEES. Securities Intermediary is authorized, subject to Secured Party's written instructions, to register any Financial Assets acquired by Securities Intermediary pursuant to this Agreement in the name of Securities Intermediary or in the name of its nominee, or to cause such securities to be registered in the name of a Federal reserve bank, a recognized securities intermediary or clearing corporation, or a nominee of any of them. Securities Intermediary may at any time and from time to time appoint, and may at any time remove, any bank, trust company, clearing corporation, or Broker-Dealer as its agent to carry out such of the provisions of this Agreement. The appointment or use of any intermediary, or the appointment of any such agent, shall not relieve Securities Intermediary of any responsibility or liability under this Agreement. (f) CORPORATE ACTIONS. Except as otherwise set forth herein, the parties agree that neither Secured Party nor Securities Intermediary shall have any responsibility for ascertaining or acting upon any calls, conversions, exchange offers, tenders, interest rate changes or similar matters relating to any Financial Assets credited to or held for the credit of the Restricted Securities Account (except based on written instructions originated by Pledgor or Secured Party), or for informing Pledgor or Secured Party with respect thereto, whether or not Securities Intermediary or Secured Party has, or is deemed to have, knowledge of any of the aforesaid. Securities Intermediary is authorized to withdraw securities sold or otherwise disposed of, and to credit the Disbursement Account with the proceeds thereof or make such other disposition thereof as may be directed in accordance with this Agreement. Securities Intermediary is further authorized to collect all income and other payments which may become due on Financial Assets credited to the Disbursement Account, to surrender for payment maturing obligations and those called for redemption and to exchange certificates in temporary form for like certificates in definitive form, or, if the par value of any shares is changed, to effect the exchange for new certificates. It is understood and agreed by Pledgor and Secured Party that, although Securities Intermediary will use reasonable efforts to effect the transactions set forth in the preceding sentence, Securities Intermediary shall incur no liability for its failure to effect the same unless its failure is the result of willful misconduct (g) DISCLOSURE OF ACCOUNT RELATIONSHIPS. Pledgor and Secured Party acknowledge that Securities Intermediary may be required to disclose to securities issuers the name, address and securities positions with respect to Financial Assets credited to the Disbursement Account, and hereby consent to such disclosures. (h) FORWARDING OF DOCUMENTS. Securities Intermediary shall forward to Pledgor and Secured Party, or notify Pledgor and Secured Party by telephone of, all communications received by Securities Intermediary as owner of any Financial Assets credited to the Disbursement Account and which are intended to be transmitted to the beneficial owner thereof. -7- (i) DIRECTION OF SECURED PARTY CONTROLS IN DISPUTES. Pledgor, Securities Intermediary and Secured Party hereby agree that in the event any dispute arises with respect to the payment, ownership or right to possession of the Disbursement Account or any other Collateral credited to or held therein, Securities Intermediary shall take such actions and shall refrain from taking such actions with respect thereto as may be directed by Secured Party. (j) NO SETOFF, ETC. Securities Intermediary shall not exercise on its own behalf any claim, right of set-off, banker's lien, clearing lien, counterclaim or similar right against any of the Collateral; PROVIDED THAT Securities Intermediary may deduct, from any credit balances, any usual and ordinary transaction and administration fees payable in connection with the administration and operation of the Disbursement Account. Except for claims for deductions permitted in the preceding sentence, Securities Intermediary agrees that any security interest it may have in the Disbursement Account or any security entitlement carried therein shall be subordinate and junior to the interest of Secured Party. (k) CARE OF FINANCIAL ASSETS. Securities Intermediary shall maintain possession or control of all Financial Assets credited to the Disbursement Account by segregating such Financial Assets from its proprietary assets and keeping them free of any lien, charge or claim of any third party granted or created by Securities Intermediary. Securities Intermediary shall take such other steps to ensure that Financial Assets credited to the Disbursement Account are identified as being held for customers of Securities Intermediary as may required under applicable law, including 17 CFR Part 450, or in accordance with custom and practice in the industry. SECTION 8. TRANSACTIONS IN DISBURSEMENT ACCOUNT. (a) POWER OF SECURED PARTY TO SELL OR TRANSFER. Pledgor agrees that Secured Party may sell or cause the sale or redemption of any Investment and instruct Securities Intermediary to transfer the proceeds of such sale or any other credit or balance in the Disbursement Account to any third party or account, in either case as provided in Section 14. (i) DRAWINGS PERMITTED FROM DISBURSEMENT ACCOUNT. Pledgor has no right to draw Checks against the Disbursement Account during a Suspension Period. Secured Party may periodically deliver to Pledgor preauthorized "Checks" (as defined in Section 3-103(2)(b) of the UCC) drawn against the Disbursement Account in specific amounts to the order of specific vendors or other third party payees of Pledgor and appropriately executed by or for Secured Party. On delivery of Checks to Pledgor, Secured Party shall cause funds in the Disbursement Account to be blocked to the extent necessary to pay such items, and shall not otherwise disburse or apply such related funds (including to make Investments pursuant to Section 4(b)) unless it has withdrawn the authorization to deliver such items to the payees in advance of delivery to the payee as set forth in the following sentence. If any Event of Default has occurred and is continuing, Secured Party may notify Pledgor that it has withdrawn Pledgor's right to deliver specified Checks or similar items, or unblocked the related funds, by written notice. Unless so notified by Secured Party in advance of delivery to the payee, Pledgor is authorized to deliver such Checks to the appropriate payees. If so notified by Secured -8- Party in advance of delivery of any Check to the payee thereof, Pledgor shall promptly return the Check or similar items to Secured Party. SECTION 9. REPRESENTATIONS AND WARRANTIES BY SECURITIES INTERMEDIARY. Securities Intermediary hereby represents and warrants to Pledgor and Secured Party as follows: (a) CORPORATE POWER. Securities Intermediary has all necessary corporate power and authority to enter into and perform this Agreement. (b) EXECUTION AUTHORIZED. The execution, delivery and performance of this Agreement by Securities Intermediary have been duly authorized by all necessary corporate action on the part of Securities Intermediary. (c) SECURITIES INTERMEDIARY. Securities Intermediary maintains securities accounts for others in the ordinary course of its business, will maintain the disbursement account in such fashion and therefore is a "securities intermediary" (as that term is defined in Section 8-102(a)(14) of the UCC) and is acting in such capacity with respect to the Disbursement Account. Securities Intermediary is not a "clearing corporation" (as that term is defined in Section 8-102(a)(5) of the UCC). (d) SECURITIES ACCOUNT. The disbursement account is a "securities account" as defined in Section 8-501 of the UCC. SECTION 10. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants as follows: (a) OWNERSHIP OF COLLATERAL; SECURITY INTEREST; PERFECTION AND PRIORITY. Pledgor is (or at the time of transfer thereof to Securities Intermediary will be) the legal and beneficial owner of the Collateral from time to time transferred by Pledgor to Securities Intermediary, as agent for Secured Party, free and clear of any Lien except for the security interest created by this Agreement. The pledge and assignment of the Collateral pursuant to this Agreement creates a valid security interest in the Collateral securing the payment of the Secured Obligations. Assuming compliance by Securities Intermediary with this Agreement, Secured Party will have a perfected security interest in the Collateral senior in priority to any other security interest created by Pledgor. (b) GOVERNMENTAL AUTHORIZATIONS. Except as may be required under Nevada gaming laws, no authorization, approval or other, action by, and no notice to or filing with, any Governmental Instrumentality is required for either (i) the grant by Pledgor of the security interest granted hereby, (ii) the execution, delivery or performance of this Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured Party or Securities Intermediary of its rights and remedies hereunder (except as may have been taken by or at the direction of Pledgor). (c) OTHER INFORMATION. All information heretofore, herein or hereafter supplied to Secured Party or Securities Intermediary by or on behalf of Pledgor with respect to the Collateral and the establishment of the Disbursement Account is accurate and complete in all material respects. -9- SECTION 11. FURTHER ASSURANCES. (a) PLEDGOR. Pledgor agrees that from time to time, at the expense of Pledgor, Pledgor shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or reasonably desirable, or that Secured Party, may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party or Securities Intermediary to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, Pledgor shall execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or reasonably desirable, or as Secured Party may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) SECURITIES INTERMEDIARY. Securities Intermediary shall take such further actions as Secured Party shall reasonably request as being necessary or desirable to maintain or achieve perfection or priority of Secured Party's security interest with respect to the Collateral and to permit Secured Party to exercise its rights with respect to the Collateral. SECTION 12. TRANSFERS AND OTHER LIENS. Pledgor agrees that, except for Disbursements, as permitted in Section 4(b) and for the security interest created by this Agreement, it shall not (a) sell, assign (by operation of law or otherwise), redeem or otherwise dispose of any of the Collateral or (b) create or suffer to exist any Lien upon or with respect to any of the Collateral. SECTION 13. SECURED PARTY APPOINTED ATTORNEY-IN-FACT; SECURED PARTY PERFORMANCE. (a) SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor, Secured Party or otherwise, from time to time in Secured Party's discretion to take any action and to execute any instrument that Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement, including (a) to file one or more financing or continuation statements, or amendments thereto, relative to all or any part of the Collateral without the signature of Pledgor and (b) to receive, endorse and collect any instruments or other Investments made payable to Pledgor representing any dividend, principal or interest payment or other distribution in respect of the Collateral or any part thereof and to give full discharge for the same. (b) PERFORMANCE BY SECURED PARTY. If Pledgor fails to perform any agreement contained herein, Secured Party may itself perform, or cause performance of, such agreement, and the expenses of Secured Party incurred in connection therewith shall be payable by Pledgor under Section 16. SECTION 14. REMEDIES. (a) TRANSFER OR SEQUESTRATION OF COLLATERAL AFTER EVENT OF DEFAULT. If any Event of Default shall have occurred and be continuing, Secured Party may instruct Securities Intermediary to (i) sell or redeem any Investments, (ii) transfer any or all of the Collateral to any -10- account designated by Secured Party, including account or accounts established in Secured Party's name (whether at Secured Party or Securities Intermediary or otherwise), (iii) register title to any Collateral in any name specified by Secured Party, including the name of Secured Party or any of its nominees or agents, without reference to any interest of Pledgor, or (iv) otherwise deal with the Collateral as directed by Secured Party. (b) RIGHTS OF SECURED PARTY AFTER EVENT OF DEFAULT. If any Event of Default shall have occurred and be continuing, Secured Party may exercise in respect of the Collateral, in addition to all other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral), and Secured Party may also in its sole discretion sell the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange or broker's board or at any of Secured Party's offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as Secured Party may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Collateral. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of Pledgor, and Pledgor hereby waives (to the extent permitted by applicable law) all rights of redemption, stay or appraisal which it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Secured Party shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. (c) AGREEMENT AS TO MANNER OF SALE. Pledgor hereby agrees that the Collateral is of a type customarily sold on recognized markets and, accordingly, that no notice to any Person is required before any sale of any of the Collateral pursuant to the terms of this Agreement; PROVIDED THAT, without prejudice to the foregoing, Pledgor agrees that, to the extent notice of any such sale shall be required by law, at least ten days' notice to Pledgor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. (d) DEFICIENCY. If the proceeds of any sale or other disposition of the Collateral are insufficient to pay all the Secured Obligations, Pledgor shall be liable for the deficiency and the fees of any attorneys employed by Secured Party to collect such deficiency. SECTION 15. APPLICATION OF PROCEEDS. If any Event of Default shall have occurred and be continuing, all cash included as Collateral and all proceeds received by Secured Party in respect of any sale or redemption of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of Secured Party, be held by or for Secured Party as Collateral for, or then, or at any other time thereafter, applied in full or in part by Secured Party against, the Secured Obligations in the following order of priority: FIRST: To the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to Secured Party and its agents and counsel, and all other expenses, liabilities and advances made or reasonably incurred by Secured Party in connection therewith, and all amounts for which Secured Party is -11- entitled to indemnification hereunder and all advances made by Secured Party hereunder for the account of Pledgor, and to the payment of all costs and expenses paid or incurred by Secured Party in connection with the exercise of any right or remedy hereunder, all in accordance with Section 16; SECOND: To the payment of all other Secured Obligations in accordance with the Credit Agreement; and THIRD: To the payment to or upon the order of Pledgor, or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct, of any surplus then remaining from such proceeds. SECTION 16. LIMITATIONS ON DUTIES; EXCULPATION; INDEMNITY; EXPENSES. (a) SECURITIES INTERMEDIARY. (i) LIMITATION ON DUTIES. Securities Intermediary's duties hereunder are only those specifically provided herein, and Securities Intermediary shall incur no liability whatsoever for any actions or omissions hereunder except for any such liability arising out of or in connection with Securities Intermediary's gross negligence or willful misconduct. Securities Intermediary has no obligation to inquire into, or to ensure, the sufficiency of this Agreement or the arrangements described hereunder to satisfy any objectives of Secured Party or Pledgor. Securities Intermediary shall have no duty to supervise or to provide investment counseling or advice to Pledgor or Secured Party with respect to the purchase, sale, retention or other disposition of any Financial Assets held hereunder. Except as specifically otherwise provided in this Agreement, Securities Intermediary shall not be responsible for enforcing compliance by the other parties to this Agreement with their respective duties and obligations to each other under this or any other Agreement. (ii) CONSULTATION WITH COUNSEL. Securities Intermediary may consult with, and obtain advice from, legal counsel as to the construction of any of the provisions of this Agreement, and shall incur no liability in acting in good faith in accordance with the reasonable advice and opinion of such counsel. (iii) INDEMNIFICATION. Pledgor agrees to indemnify Securities Intermediary from and against any and all claims, losses, liabilities and expenses (including reasonable attorneys' fees and expenses) in any way relating to, growing out of or resulting from this Agreement or the performance of its obligations hereunder, except to the extent arising out of or in connection with Securities Intermediary's gross negligence or wilful misconduct. (iv) REASONABLE RELIANCE. Securities Intermediary shall be fully protected and shall suffer no liability in acting in accordance with any written instructions reasonably believed by it to have been given (A) by Secured Party with respect to any aspect of the operation of the Disbursement Account (including any such instructions relating to any investment or transfer of any amounts held therein or (B) by Pledgor, to the extent provided in Section 4(b), with respect to the Disbursement Account. -12- (b) SECURED PARTY. (i) EXCULPATION. The powers conferred on Secured Party hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Secured Party shall have no duty as to any Collateral, it being understood that Secured Party shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, (b) taking any necessary steps (other than steps taken in accordance with the standard of care set forth above to maintain possession of the Collateral) to preserve rights against any parties with respect to any Collateral, (c) taking any necessary steps to collect or realize upon the Secured Obligations or any guarantee therefor, or any part thereof, or any of the Collateral, (d) initiating any action to protect the Collateral against the possibility of a decline in market value, (e) any loss resulting from Investments made, held or sold pursuant to Section 4, except for a loss resulting from Secured Party's gross negligence or wilful misconduct in complying with Section 4, or (f) determining (i) the correctness of any statement or calculation made by Pledgor in any written or telex (tested or otherwise) instructions or (ii) whether any transfer to the Disbursement Account is proper. Secured Party shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Secured Party accords its own property of like kind. In addition to the foregoing and without limiting the generality thereof, Secured Party shall not be responsible for any actions or omissions of Securities Intermediary. (ii) INDEMNIFICATION. Pledgor agrees to indemnify Secured Party and each Lender from and against any and all claims, losses and liabilities in any way relating to, growing out of or resulting from this Agreement and the transactions contemplated hereby (including enforcement of this Agreement), except to the extent such claims, losses or liabilities result solely from Secured Party's gross negligence or wilful misconduct as finally determined by a court of competent jurisdiction. (iii) REASONABLE RELIANCE. Secured Party shall be fully protected and shall suffer no liability in acting in accordance with any written instructions reasonably believed by it to have been given by Pledgor, to the extent provided in Section 4(b), with respect to any Investments of any amounts held for the credit of the Disbursement Account. (iv) EXPENSES. Pledgor shall pay to Secured Party upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Secured Party may reasonably incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to perform or observe any of the provisions hereof. -13- SECTION 17. RESIGNATION AND REMOVAL OF SECURITIES INTERMEDIARY. (a) REMOVAL. Securities Intermediary may be removed at any time by written notice given by Secured Party to Securities Intermediary and Pledgor, but such removal shall not become effective until a successor Securities Intermediary shall have been appointed by Secured Party and shall have accepted such appointment in writing. (b) RESIGNATION. Securities Intermediary may resign at any time by giving not less than thirty days' written notice to Secured Party and Pledgor, but such removal shall not become effective until a successor Securities Intermediary shall have been appointed by Secured Party and shall have accepted such appointment in writing. If an instrument of acceptance by a successor Securities Intermediary shall not have been delivered to the resigning Securities Intermediary within thirty days after the giving of any such notice of resignation, the resigning Securities Intermediary may, at the expense of Pledgor, petition any court of competent jurisdiction for the appointment of a successor Securities Intermediary. (c) SUCCESSOR SECURITIES INTERMEDIARY. Any successor Securities Intermediary shall be (i) Goldman, Sachs & Co., (ii) The Bank of Nova Scotia Trust Company of New York, or (iii) a corporation qualified to, and located in, New York, which (A) is subject to supervision or examination by the applicable Governmental Authority, (B) has a combined capital and surplus of at least Five Hundred Million Dollars (US$500,000,000), (C) has a long-term credit rating of not less than "A-" or "A3", respectively, by any Rating Agency; and PROVIDED, THAT any such bank with a long-term credit rating of "A-" or "A3"' shall not cease to be eligible to act as Securities Intermediary upon a downward change in either such rating of no more than one category or grade of such minimum rating, as the case may be. If any successor Securities Intermediary does not accept deposits for non-fiduciary customers it may establish, in its name as custodian under this agreement, appropriate deposit accounts ("SUBSTITUTE DEPOSIT ACCOUNTS") to hold any cash balances which would otherwise have been held for the credit of the Pledgor. The Substitute Deposit Accounts may be established with any depository institution, including a depository institution affiliated with the successor Securities Intermediary, that (1) has one of the three highest deposit ratings available from any Rating Agency or, if the institution is not rated, is a subsidiary of a holding company that has one of the three highest long term credit ratings available from any Rating Agency, (2) is a member of the Federal Deposit Insurance Corporation, and (3) has Tier 1 capital (as defined in such regulations of its primary Federal banking regulator) of not less than $500,000,000. In such circumstances, the successor Securities Intermediary shall credit the Substitute Deposit Account to the Disbursement Account. (d) PROCESS OF SUCCESSION. Upon the appointment of a successor Securities Intermediary and its acceptance of such appointment, the resigning or removed Securities Intermediary shall transfer all items of Collateral held by it to such successor (which items of Collateral shall be transferred to an appropriate new Disbursement Account established and maintained by such successor). Following such appointment all references herein to Securities Intermediary shall be deemed a reference to such successor; PROVIDED THAT the provisions of Section 16(a) hereof shall continue to inure to the benefit of the resigning or removed Securities Intermediary with respect to any actions taken or omitted to be taken by it under this Agreement while it was Securities Intermediary hereunder. -14- SECTION 18. CONTINUING SECURITY INTEREST; TERMINATION OF OBLIGATIONS OF SECURITIES INTERMEDIARY. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Termination Date, (b) be binding upon Pledgor, its successors and assigns, and (c) inure, together with the rights and remedies of Secured Party hereunder, to the benefit of Secured Party), and Lenders and their respective successors, transferees and assigns. On the Termination Date, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to Pledgor. Upon any such termination Secured Party shall, at Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination and Pledgor shall be entitled to the return, upon its request and at its expense, against receipt and without recourse to Secured Party, of such of the Collateral as shall not have been sold or otherwise applied pursuant to the terms hereof. Securities Intermediary shall not be released from its obligations hereunder, and shall continue to maintain any Collateral in accordance with this Agreement, until notified in writing by Secured Party that this Agreement has terminated and so long as Secured Party has not withdrawn such notification. (a) In the event that any part of the Collateral is withdrawn in accordance with the Credit Agreement, such Collateral will be transferred or otherwise disposed of, and released free and clear of the Liens created by this Agreement and the Administrative Agent, at the reasonable request and expense of the Pledgor, will duly and promptly assign, transfer, deliver and release to the Pledgor or its designee (without recourse and without any representation or warranty) such of the Collateral as is then being (or has been) so transferred or otherwise disposed of or released. In connection with any disposition or release pursuant to this Section 18, the Administrative Agent shall, at the Pledgor's expense, execute and deliver to the Pledgor such documents (including UCC-3 termination statements) as the Pledgor may reasonably request. SECTION 19. SECURED PARTY AS DISBURSEMENT BANK. (a) AGENCY. Secured Party has been appointed to act as Secured Party hereunder by Lenders pursuant to the Credit Agreement. Secured Party shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or refrain from exercising any rights, and to take or refrain from taking any action (including, without limitation, the release or substitution of Collateral), solely in accordance with this Agreement and the Credit Agreement. (b) IDENTITY OF AGENT. Secured Party shall at all times be the same Person that is Administrative Agent under the Credit Agreement. Written notice of resignation by Administrative Agent pursuant to the Credit Agreement shall also constitute notice of resignation as Secured Party under this Agreement; removal of Administrative Agent pursuant to the Credit Agreement shall also constitute removal as Secured Party under this Agreement; and substitution of a successor Administrative Agent pursuant to the Credit Agreement shall also constitute substitution of a successor Secured Party under this Agreement. Upon the acceptance of any appointment as Administrative Agent under the Credit Agreement 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 Secured Party under this Agreement, and the retiring or removed Secured Party under this Agreement shall promptly (i) transfer to such successor Secured Party all items of Collateral held by Secured Party (which as appropriate shall be credited to, and held for the credit of, any new Disbursement Account -15- established and maintained by such successor Secured Party), together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Secured Party under this Agreement, and (ii) execute and deliver to such successor Secured Party such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Secured Party of the security interests created hereunder, whereupon such retiring or removed Secured Party shall be discharged from its duties and obligations under this Agreement. After any retiring or removed Administrative Agent's resignation or removal hereunder as Secured Party, the provisions of this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement while it was Secured Party hereunder. SECTION 20. AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement, or consent to any departure by any party herefrom, shall in any event be effective unless the same shall be in writing and signed by the other parties, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. SECTION 21. NOTICES. Any communications between the parties hereto or notices provided herein to be given may be given to the address of the party as set forth under such party's name on the signature pages hereof. All notices or other communications required or permitted to be given hereunder shall be in writing and shall be considered as properly given (a) if delivered in person, (b) if sent by reputable overnight delivery service, (c) in the event overnight delivery services are not readily available, if mailed by first class mail, postage prepaid, registered or certified with return receipt requested or (d) if sent by prepaid telex, or by telecopy with correct answer back received. Notice so given shall be effective upon receipt by the addressee, except that communication or notice so transmitted by telecopy or other direct written electronic means shall be deemed to have been validly and effectively given on the day (if a Banking Day and, if not, on the next following Banking Day) on which it is validly transmitted if transmitted before 4 p.m., recipient's time, and if transmitted after that time, on the next following Banking Day; PROVIDED, HOWEVER, that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. Any party shall have the right to change its address for notice hereunder to any other location by giving of no less than twenty (20) days' notice to the other parties in the manner set forth hereinabove. SECTION 22. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of Secured Party in the exercise of any power, right or privilege hereunder 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 any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. SECTION 23. SEVERABILITY. In case any provision in or obligation under this Agreement 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. -16- SECTION 24. 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. SECTION 25. 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. FOR PURPOSES OF ARTICLE 8 OF THE UCC SECURITIES INTERMEDIARY'S JURISDICTION SHALL BE NEW YORK. SECTION 26. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Pledgor hereby 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 Pledgor at its address provided in Section 21, such service being hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in any action against Pledgor in any such court and to be otherwise effective and binding service in every respect. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of Secured Party to bring proceedings against Pledgor in the courts of any other jurisdiction. SECTION 27. WAIVER OF JURY TRIAL. PLEDGOR, SECURITIES INTERMEDIARY AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. 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. Pledgor and Secured Party each acknowledge that this waiver is a material inducement for Pledgor and Secured Party to enter into a business relationship, that Pledgor and Secured Party have 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. Pledgor and Secured Party further warrant and represent that each has reviewed this waiver with its legal counsel, and that each 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, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. -17- SECTION 28. COUNTERPARTS. This Agreement may be executed in one or more 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. [Remainder of page intentionally left blank] -18- Exhibit 10.4 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first set forth above. PLEDGOR: LAS VEGAS SANDS, INC., a Nevada corporation By: /s/ Harry Miltenberger --------------------------------------- Name: Harry Miltenberger Title: Vice President Finance Notice Address: 3355 Las Vegas Blvd South Room 1A Las Vegas, Nevada 89109 Facsimile Number: (702) 733-5499 VENETIAN CASINO RESORT, LLC, a Nevada limited liability company By: LAS VEGAS SANDS INC., its managing member By: /s/ Harry Miltenberger ---------------------------------- Name: Harry Miltenberger Title: Vice President Finance Notice Address: 3355 Las Vegas Blvd South Room 1A Las Vegas, Nevada 89109 Facsimile Number: (702) 733-5499 SECURITIES INTERMEDIARY: THE BANK OF NOVA SCOTIA, a Canadian chartered bank By: /s/ Alan W. Pendergast ----------------------------------------- Name: Alan W. Pendergast Title: Managing Director Notice Address: The Bank of Nova Scotia 580 California Street San Francisco, CA 94104 Attention: Alan Pendergast Relationship Manager Facsimile Number: (415) 397-0791 with a copy to: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, GA 30308 Attention: Robert Ivy Facsimile Number: (404) 877-1595 SECURED PARTY: THE BANK OF NOVA SCOTIA, a Canadian chartered bank, as Disbursement Bank under the Credit Agreement By: /s/ Alan W. Pendergast ----------------------------------------- Name: Alan W. Pendergast Title: Managing Director Notice Address: The Bank of Nova Scotia 580 California Street San Francisco, CA 94104 Attention: Alan Pendergast Relationship Manager Facsimile Number: (415) 397-0791 with a copy to: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, GA 30308 Attention: Robert Ivy Facsimile Number: (404) 888-8998 -2- EX-10 14 ex10-5_7032.txt ENVIROMENTAL INDEMNITY AGREEMENT EXHIBIT 10.5 ENVIRONMENTAL INDEMNITY THIS ENVIRONMENTAL INDEMNITY AGREEMENT (this "Indemnity") is entered into as of the 4th day of June, 2002, by LAS VEGAS SANDS, INC., a Nevada corporation ("LVSI"), VENETIAN CASINO RESORT, LLC, a Nevada limited liability company ("VCR", jointly and severally with LVSI, the "Company"), to and for the benefit of THE BANK OF NOVA SCOTIA, as administrative agent ("Administrative Agent") for itself and the other agents and lenders under the Credit Agreement referred to below. W I T N E S S E T H: A. Pursuant to the Credit Agreement dated as of even date herewith (as modified, amended or supplemented from time to time, (the "Credit Agreement") by and between the Administrative Agent, Goldman Sachs Credit Partners L.P., ("GSCP") as syndication agent (the Administrative Agent, GSCP and any other agent appointed under the Credit Agreement, each an "Agent" and together the "Agents") the financial institutions from time-to-time party thereto (the "Lenders"), and the Company, Lenders have agreed to make loans (the "Loans") to the Company, which Loans are to be secured by, among other things, (i) that certain Deed of Trust of even date herewith executed by the Company, as trustor, to First American Title Insurance Company as trustee, in favor of the Administrative Agent on behalf of the Lenders, as beneficiary (the "Deed of Trust") and (ii) such other deeds of trust that may be entered into by the Company for the benefit of Administrative Agent on behalf of the Lenders, (together with the Deed of Trust, the "Deeds of Trust") which Deeds of Trust encumber the real property described on Exhibit A attached hereto (the "Real Property"), and the improvements now or hereafter constructed thereon (which improvements, together with the Real Property, shall hereinafter be referred to as the "Property"). B. The Lenders have made it a condition of the Lenders making the Loans that this Indemnity be executed and delivered by the Company. C. The obligations of the Company hereunder are unsecured obligations of the Company. NOW, THEREFORE, in consideration of the foregoing and other valuable consideration, the receipt of which is hereby acknowledged, the Company covenants and agrees to and for the benefit of the Agents and the Lenders as follows: 1. DEFINITIONS. (a) "CLAIMS" means any and all actual out-of-pocket costs incurred by an Indemnified Party (as defined below) (including, without limitation, reasonable attorneys' fees and expenses, which fees and expenses shall include, without limitation, fees and expenses of both outside and staff counsel), expenses, losses, damages, liabilities, fines, penalties, charges, injury to person, property, or natural resources, administrative and judicial proceedings and orders, injunctive relief, judgments, remedial action requirements and enforcement actions of any kind, arising directly or indirectly, in whole or in part, out of or attributable to (i) any breach or default by the Company in the performance of any of its obligations under paragraphs 3(a)-(d) hereof, or (ii) any Release (as defined below) or threatened Release, whether foreseeable or unforeseeable, arising prior to any release, reconveyance or foreclosure of any Deed of Trust (or following any such release, conveyance or foreclosure to the extent attributable to pre-existing conditions), or conveyance in lieu of foreclosure; and in each instance, regardless of when such Release, inaccuracy or breach is discovered and regardless of whether or not caused by or in the control of the Company, any employees, agents, contractors or subcontractors of the Company or any third persons. Without limiting the generality of the foregoing and for purposes of clarification only, Claims also include: (i) actual out-of-pocket costs reasonably incurred by an Indemnified Party in connection with (x) determining whether the Property is in compliance with all applicable Hazardous Substances Laws (as hereinafter defined), (y) taking any necessary precautions to protect against any Release or threatened Release, or (z) any removal, remediation of any kind and disposal of any Hazardous Substances (as hereinafter defined), and (ii) any repair of any damage to the Property or any other property caused by any such precautions, removal, remediation or disposal. The rights of the Indemnified Parties hereunder shall not be limited by any investigation or the scope of any investigation undertaken by or on behalf of the Agents or Lenders in connection with the Property prior to the date hereof. Notwithstanding the foregoing, Claims shall exclude any Release caused by or resulting from the negligence or misconduct of any of the Indemnified Parties. (b) "HAZARDOUS SUBSTANCES" means and includes any flammable explosives, radioactive materials or hazardous, toxic or dangerous wastes, substances or related materials or any other chemicals, materials or substances, exposure to which is prohibited, limited or regulated by any federal, state, county, regional or local authority or which, even if not so regulated, may or could pose a hazard to the health and safety of the occupants of the Property or of property adjacent to the Property, including, but not limited to, asbestos, PCBs, petroleum products and byproducts (including, but not limited to, crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), substances defined or listed as "hazardous substances," "hazardous materials," "hazardous wastes" or "toxic substances" or similarly identified in, pursuant to, or for purposes of, any of the Hazardous Substances Laws, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, as now or hereafter amended (42 U.S.C. Section 9601, ET SEQ); the Hazardous Materials Transportation Act, as now or hereafter amended (49 U.S.C. Section 1801, ET SEQ); the Resource Conservation and Recovery Act, as now or hereafter amended (42 U.S.C. Section 6901, ET SEQ); any so-called "Superfund" or "Superlien" law; or any other federal, state or local statute, law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material; or any substances or mixture regulated under the Toxic Substance Control Act of 1976, as now or hereafter amended (15 U.S.C. Section 2601 ET SEQ); and any "pollutant" under the Clean Water Act, as now or hereafter amended (33 U.S.C. Section 1251 ET SEQ); and any hazardous air pollutant under the Clean Air Act (42 U.S.C. Section 7901 ET SEQ), in each case as now or hereafter amended. 2 (c) "HAZARDOUS SUBSTANCES LAWS" means all federal, state and local environmental, health or safety laws, ordinances, regulations, rules of common law or policies regulating Hazardous Substances, including, without limitation, those governing the generation, use, refinement, handling, treatment, removal, storage, production, manufacture, transportation or disposal of Hazardous Substances, as such laws, ordinances, regulations, rules and policies may be in effect from time to time and be applicable to the Property. (d) "INDEMNIFIED PARTIES" means each Agent and Lender and each of their respective directors, officers, shareholders, agents, employees, participants, successors and assigns and shall also include any purchasers of all or any portion of the Property at any foreclosure sale and the initial purchaser following the consummation of any deed in lieu of foreclosure, but not including any other purchasers of the Property. (e) "RELEASE" means any presence, use, generating, storing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of Hazardous Substances into the environment, or about, on, from, under, within or affecting the Property, or transported to or from the Property, including continuing migration of Hazardous Substances into or through soil, surface water or groundwater. 2. ENVIRONMENTAL INDEMNIFICATION BY THE COMPANY. (a) The Company hereby agrees to defend (with counsel reasonably approved by the Administrative Agent), indemnify and hold the Indemnified Parties harmless from and against, and shall reimburse the Indemnified Parties for, any and all Claims. (b) Indemnified Parties shall have the right to employ independent counsel reasonably satisfactory to the Company to represent it in any action or proceeding to which this Indemnity is applicable if and to the extent that the Indemnified Parties determine in good faith that their rights and interests may be compromised or not fully and adequately represented by legal counsel acting for the Company, whether on account of any potential defenses that the Company may have to its obligations under this Indemnity or otherwise, and in such event the reasonable fees and expenses of the Indemnified Party's independent counsel shall be paid by the Company. (c) Subject to the last sentence of Section 1(a) above, the Company's obligations hereunder shall not be diminished or affected in any respect as a result of any notice or disclosure, if any, to, or other knowledge, if any, by, any Indemnified Party of any Release or threatened Release, or as a result of any other matter related to the Company's obligations hereunder, nor shall any Indemnified Party be deemed to have permitted or acquiesced in any Release or any breach of the Company's other obligations hereunder, solely because any Indemnified Party had notice, disclosure or knowledge thereof, whether at the time this Indemnity is delivered or at any time thereafter. (d) This Indemnity shall not be limited by any representation, warranty or indemnity of the Company made herein or in connection with any indebtedness secured by the Deeds of Trust, irrespective of whether the Company has knowledge as of the date of each Deed of Trust, or during the term of each Deed 3 of Trust, of the matters to which such representation, warranty or indemnity relates. 3. ENVIRONMENTAL COVENANTS. (a) The Company shall not, and shall use commercially reasonable efforts to not permit any tenants or other occupants of the Property to, at any time in the future, cause or permit a Release, except in compliance with applicable Hazardous Substances Laws and good and customary practices. (b) The Company shall give prompt written notice to the Administrative Agent of any pending Claims, or of any Proceedings (as such term is defined in the Credit Agreement). (c) The Company shall give prompt written notice to the Administrative Agent of the Company's discovery of any occurrence or condition on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Substances Laws including, without limitation, the Company's discovery of any occurrence or condition on the Property or on any real property adjoining or in the vicinity of the Property that could cause the Property or any part thereof to be classified as a hazardous waste property or border-zone property, or to be otherwise subject to any restrictions on the ownership, occupancy, transferability or use of the Property under any Hazardous Substances Laws. (d) In the event that any investigation, site monitoring, containment, cleanup, removal, restoration, precautionary actions or other remedial work of any kind or nature (hereinafter, "REMEDIAL WORK") is required under any applicable Hazardous Substances Law as a result of, or in connection with, any Release, suspected Release, or threatened Release, the Company shall within thirty (30) days after receipt of information that such Remedial Work is or may be required (or such shorter period of time as may be required under applicable law, regulation, order or agreement), commence the performance of, or cause to be commenced, and thereafter diligently prosecute to completion, the performance of all such Remedial Work in compliance with all applicable Hazardous Substances Laws. All Remedial Work shall be performed by one or more contractors, approved in advance in writing by the Administrative Agent, and under the supervision of a consulting engineer approved in advance in writing by the Administrative Agent, which consent shall not be unreasonably withheld. All costs and expenses of such Remedial Work shall be paid by the Company, including, without limitation, the charges of such contractor(s) and/or the consulting engineer, and the Indemnified Parties' reasonable attorneys' fees and costs, including, without limitation, fees and costs of both outside and staff counsel incurred in connection with monitoring or review of such Remedial Work. In the event the Company shall fail to timely commence, or cause to be commenced, or fail to diligently prosecute to completion, the performance of such Remedial Work, the Administrative Agent or any other Indemnified Party may, but shall not be required to, cause such Remedial Work to be performed and all costs and expenses thereof, or incurred in connection therewith, shall be deemed Claims hereunder. 4 4. LIABILITY. (a) Notwithstanding any other provisions of this Indemnity or any of the Loan Documents (as such term is defined in the Credit Agreement), any liability of the Company hereunder shall be its personal liability (but such personal liability shall not be deemed to incorporate personal liability of its directors, officers, employees or agents), and may be asserted against its interest in the Property as well as against any and all of its other assets. (b) Without limiting the foregoing, the obligations of the Company hereunder shall survive the following events, to the maximum extent permitted by law: (i) repayment of the Obligations (as such term is defined in the Credit Agreement) and any judicial or nonjudicial foreclosure under any Deed of Trust or conveyance in lieu of such foreclosure, notwithstanding that all or any portion of any other obligations secured by the such Deed of Trust shall have been discharged thereby, (ii) any election by any Indemnified Party to purchase all or any portion of the Property at a foreclosure sale by crediting all or any portion of the obligations secured by any Deed of Trust against the purchase price therefor (except to the extent and only to the extent that such Indemnified Party has specifically elected in writing in its sole discretion to credit against the purchase price any Claims hereunder which were liquidated in amount at the time of such foreclosure sale, it being presumed for these purposes that the obligations secured by such Deed of Trust shall be discharged by any such crediting in the order set forth in such Deed of Trust), (iii) any release or reconveyance of either Deed of Trust, any waiver of the lien of either Deed of Trust, or any release or waiver of any other security for the Obligations, and (iv) any termination, cancellation or modification of any Loan Document. Upon and following the occurrence of any of the foregoing, the obligations of the Company hereunder shall be unsecured obligations, and shall be enforceable against the Company to the fullest extent permitted by applicable law. (c) The obligations of the Company hereunder are not intended to be the obligations of a surety or guarantor. The liability of the Company under this Indemnity shall in no way be limited or impaired by (i) any extensions of time for performance required by the any Loan Document; (ii) the accuracy or inaccuracy of any representations and warranties made by the Company in any of any Loan Documents; or (iii) the release of any person or entity from performance or observance of any of the agreements, covenants, terms, or conditions contained in any of the Loan Documents by operation of law or otherwise. (d) The rights and remedies of the Indemnified Parties under this Indemnity (i) shall be in addition to any other rights and remedies of such Indemnified Parties under any Loan Documents or at law or in equity, and (ii) may be enforced by any of the Indemnified Parties, to the maximum extent permitted by law, without regard to or affecting any rights and remedies that such Indemnified Party may have under any Loan Documents or at law or in equity, and without regard to any limitations on such Indemnified Party's recourse for recovery of the Obligations as may be provided in any Loan Documents. 5. SITE VISITS, OBSERVATION AND TESTING. The Administrative Agent and any of the other Indemnified Parties and their respective agents and representatives shall have the right at any reasonable time, and upon reasonable prior notice, but subject to the rights of tenants under their leases, to enter and visit the Property to make such inspections and inquiries as they 5 shall deem appropriate, including inspections for violations of any of the terms of this Indemnity and for determining the existence, nature and magnitude of any past or present Release or threatened Release, and they shall also have the right, following any Event of Default (as defined in the Credit Agreement), or where the Administrative Agent has a reasonable basis upon which to believe that the Property may be harmed, unsafe or contaminated, and upon reasonable prior notice, to enter and visit the Property to make such tests (including, without limitation, taking and removing soil or groundwater samples) as they shall deem appropriate. Neither the Administrative Agent nor any of the other Indemnified Parties have any duty, however, to visit or observe the Property or to conduct tests, and no site visit, observation or testing by the Administrative Agent or any other Indemnified Party shall impose any liability on the Administrative Agent or such other Indemnified Party. In no event shall any site visit, observation or testing by the Administrative Agent or any other Indemnified Party be a representation that Hazardous Substances are or are not present in, on or under the Property, or that there has been or shall be compliance with any Hazardous Substances Laws or any other applicable governmental law. Neither the Company nor any other party is entitled to rely on any site visit, observation or testing by the Administrative Agent or any other Indemnified Party. Neither the Administrative Agent nor any of the other Indemnified Parties owe any duty of care to protect the Company or any other party against, or to inform the Company or any other party of, any Hazardous Substances or any other adverse condition affecting the Property. The Administrative Agent and any other Indemnified Party shall give the Company reasonable notice before entering the Property, and shall make reasonable efforts to avoid interfering with the Company's use of the Property in exercising any rights provided in this paragraph 5. The Administrative Agent's rights under this Indemnity are for the purpose of protecting and preserving the value of its collateral, and neither the Administrative Agent or any Indemnified Party shall be considered an operator of the Property by virtue of exercising its rights hereunder. 6. INTEREST ACCRUED. Any amount owed hereunder to an Indemnified Party not paid within thirty (30) days after written demand from such Indemnified Party with an explanation of the amounts claimed shall bear interest at a rate per annum equal to the maximum interest rate applicable to overdue principal set forth in the Credit Agreement. 7. SUBROGATION OF INDEMNITY RIGHTS. If the Company fails to fully perform its obligations hereunder, any Indemnified Party shall be entitled to pursue any rights or claims that the Company may have against any present, future or former owners, tenants or other occupants or users of the Property, any portion thereof or any adjacent or proximate properties, relating to any Claim or the performance of Remedial Work, and the Company hereby assigns all of such rights and claims to the Indemnified Parties under such circumstances and shall take all actions required by the Indemnified Parties to cooperate with such Indemnified Parties in enforcing such rights and claims under such circumstances. 8. RELIANCE. The Company acknowledges that it is making and giving the indemnities and representations and covenants contained in this Indemnity with the knowledge that the Agent and Lenders are relying on such indemnities and representations and covenants in making the Obligations to the Company. 9. SUCCESSORS AND ASSIGNS. This Indemnity shall inure to the benefit of each Indemnified Party's successors and assigns, and shall be binding upon the heirs, successors, and 6 assigns of the Company. The Company shall not assign any rights or obligations under this Indemnity without first obtaining the written consent of the Administrative Agent, which may be given or withheld in the sole discretion of the Administrative Agent. Notwithstanding any other provision of this Indemnity to the contrary, the Company shall not be released from its obligations hereunder without obtaining the written consent of the Administrative Agent, which consent may be given or withheld in the sole discretion of the Administrative Agent. Nothing herein shall be deemed to be a consent to the transfer of the Property which transfer would be otherwise prohibited by any Document. 10. MISCELLANEOUS. This Indemnity shall be governed by and construed in accordance with the laws of the State of Nevada. If this Indemnity is executed by more than one person or entity, the liability of the undersigned hereunder shall be joint and several. Separate and successive actions may be brought hereunder to enforce any of the provisions hereof at any time and from time to time. No action hereunder shall preclude any subsequent action, and the Company hereby waives and covenants not to assert any defense in the nature of splitting of causes of action or merger of judgments. In no event shall any provision of this Indemnity be deemed to be a waiver of or to be in lieu of any right or claim, including, without limitation, any right of contribution or other right of recovery, that any party to this Indemnity might otherwise have against any other party to this Indemnity under any Hazardous Substances Laws. If any term of this Indemnity or any application thereof shall be invalid, illegal or unenforceable, the remainder of this Indemnity and any other application of such term shall not be affected thereby. No delay or omission in exercising any right hereunder shall operate as a waiver of such right or any other right. 11. NOTICES. All notices expressly provided hereunder to be given by Administrative Agent to the Company and all notices and demands of any kind or nature whatsoever which the Company may be required or may desire to give to or serve on the Administrative Agent shall be in writing and shall be served by certified mail, return receipt requested, or by a reputable commercial overnight carrier that provides a receipt, such as Federal Express. Notice shall be addressed as follows: The Company: Las Vegas Sands, Inc. 3355 Las Vegas Boulevard, South Las Vegas, Nevada 89109 Attn: General Counsel Telecopy No: (702) 733-5499 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas, 24th Floor New York, New York, 10019-6064 Attn: John Kennedy, Esq. Telecopy No: (212) 757-3990 7 Administrative Agent: The Bank of Nova Scotia 580 California Street, Suite 2100 San Francisco, California 94104 Attn: Allan Pendergast Telecopy No.: (415) 397-0791 with a copy to: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn: Robert Ivy Telecopy No.: (404)888-8998 12. ATTORNEYS' FEES AND EXPENSES. If any Agent or Lender refers this Indemnity or any of the other Loan Documents to an attorney to enforce, construe or defend the same, as a consequence of any Event of Default (as such term is defined in the Credit Agreement), with or without the filing of any legal action or proceeding, the Company shall pay to the Administrative Agent, immediately upon demand, the amount of all attorneys' fees and costs incurred by the Administrative Agent in connection therewith, together with interest thereon from the date of award at the maximum interest rate applicable to overdue principal set forth in the Credit Agreement [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 8 IN WITNESS WHEREOF, this Indemnity is executed as of the day and year first above written. THE COMPANY: LAS VEGAS SANDS, INC., a Nevada corporation By: /s/ Harry Miltenberger ----------------------------------------- Name: Harry Miltenberger ------------------------------------ Title: Vice President Finance ----------------------------------- VENETIAN CASINO RESORT, LLC, a Nevada limited liability company BY: LAS VEGAS SANDS, INC., a Nevada corporation, its managing member By: /s/ Harry Miltenberger ----------------------------------- Name: Harry Miltenberger ------------------------------ Title: Vice President Finance ----------------------------- EX-10 15 ex10-6_7032.txt LOAN AGREEMENT EXHIBIT 10.6 LOAN AGREEMENT Dated as of June 4, 2002 between GRAND CANAL SHOPS II, LLC, as Borrower, and ARCHON FINANCIAL, L.P., as Lender TABLE OF CONTENTS
Page ---- DEFINITIONS....................................................................................1 ARTICLE I GENERAL TERMS Section 1.1. The Loan.........................................................................25 Section 1.2. The Term.........................................................................25 Section 1.3. Interest and Principal...........................................................25 Section 1.4. Interest Rate Cap Agreements.....................................................27 Section 1.5. Method and Place of Payment......................................................27 Section 1.6. Regulatory Change................................................................27 Section 1.7. Taxes............................................................................28 Section 1.8. Release..........................................................................29 ARTICLE II VOLUNTARY PREPAYMENT Section 2.1. Voluntary Prepayment.............................................................29 ARTICLE III ACCOUNTS Section 3.1. Cash Management Account..........................................................30 Section 3.2. Distributions from Cash Management Account.......................................31 Section 3.3. Cash Trap Account................................................................32 Section 3.4. Tax and Insurance Escrow Account.................................................33 Section 3.5. TI/LC Reserve Account............................................................34 Section 3.6. Capital Reserve Account..........................................................35 Section 3.7. [Reserved].......................................................................36 Section 3.8. Loss Proceeds Account............................................................36 Section 3.9. [Reserved].......................................................................36 Section 3.10. Account Collateral.............................................................37 Section 3.11. Permitted Investments..........................................................37 Section 3.12. Bankruptcy.....................................................................38 ARTICLE IV REPRESENTATIONS Section 4.1. Organization.....................................................................38 Section 4.2. Authorization....................................................................38 Section 4.3. No Conflicts.....................................................................39 Section 4.4. Consents.........................................................................39 Section 4.5. Enforceable Obligations..........................................................39 Section 4.6. No Default.......................................................................39
i Section 4.7. Payment of Taxes.................................................................39 Section 4.8. Compliance with Law..............................................................39 Section 4.9. ERISA............................................................................40 Section 4.10. Government Regulation..........................................................40 Section 4.11. No Bankruptcy Filing...........................................................40 Section 4.12. Other Debt.....................................................................40 Section 4.13. Litigation.....................................................................40 Section 4.14. Leases; Material Agreements....................................................40 Section 4.15. [Reserved].....................................................................41 Section 4.16. Financial Condition............................................................41 Section 4.17. Single-Purpose Requirements....................................................41 Section 4.18. Location of Chief Executive Offices............................................42 Section 4.19. Not Foreign Person.............................................................42 Section 4.20. Labor Matters..................................................................42 Section 4.21. Title..........................................................................42 Section 4.22. No Encroachments...............................................................42 Section 4.23. Physical Condition.............................................................42 Section 4.24. Fraudulent Conveyance..........................................................43 Section 4.25. Management.....................................................................43 Section 4.26. Condemnation...................................................................43 Section 4.27. Utilities and Public Access....................................................43 Section 4.28. Environmental Matters..........................................................44 Section 4.29. Assessments....................................................................44 Section 4.30. No Joint Assessment............................................................45 Section 4.31. Separate Lots..................................................................45 Section 4.32. Permits; Certificate of Occupancy..............................................45 Section 4.33. Flood Zone.....................................................................45 Section 4.34. Security Deposits..............................................................45 Section 4.35. Certain Agreements.............................................................45 Section 4.36. Insurance......................................................................45 Section 4.37. Master Leases..................................................................45 Section 4.38. Survival.......................................................................47 Section 4.39. Affiliate Transactions.........................................................47 ARTICLE V AFFIRMATIVE COVENANTS Section 5.1. Existence........................................................................47 Section 5.2. Maintenance of Property; Compliance with Legal Requirements......................47 Section 5.3. Impositions and Other Claims.....................................................48 Section 5.4. Access to Property...............................................................48 Section 5.5. Notice of Default................................................................48 Section 5.6. Litigation.......................................................................48 Section 5.7. Cooperate in Legal Proceedings...................................................48 Section 5.8. Leases...........................................................................49 Section 5.9. Plan Assets, etc.................................................................51 Section 5.10. Further Assurances.............................................................51
ii Section 5.11. Management of Collateral.......................................................52 Section 5.12. Annual Financial Statements....................................................52 Section 5.13. Quarterly Financial Statements.................................................53 Section 5.14. Monthly Financial Statements...................................................53 Section 5.15. Insurance......................................................................54 Section 5.16. Casualty and Condemnation......................................................58 Section 5.17. Annual Budget..................................................................60 Section 5.18. General Indemnity..............................................................60 Section 5.19. Covenants with respect to the REA and the ESA..................................60 ARTICLE VI NEGATIVE COVENANTS Section 6.1. Liens on the Property............................................................61 Section 6.2. Ownership........................................................................61 Section 6.3. Transfer.........................................................................61 Section 6.4. Debt.............................................................................61 Section 6.5. Dissolution; Merger or Consolidation.............................................61 Section 6.6. Change In Business...............................................................61 Section 6.7. Debt Cancellation................................................................62 Section 6.8. Affiliate Transactions...........................................................62 Section 6.9. Misapplication of Funds..........................................................62 Section 6.10. Place of Business..............................................................62 Section 6.11. Modifications and Waivers......................................................62 Section 6.12. ERISA..........................................................................62 Section 6.13. Alterations and Expansions.....................................................63 Section 6.14. Advances and Investments.......................................................63 Section 6.15. Single-Purpose Entity..........................................................63 Section 6.16. Zoning and Uses................................................................63 Section 6.17. Waste..........................................................................64 ARTICLE VII DEFAULTS Section 7.1. Event of Default.................................................................64 Section 7.2. Remedies.........................................................................66 Section 7.3. No Waiver........................................................................67 Section 7.4. Application of Payments During Continuance of an Event of Default................68 ARTICLE VIII CONDITIONS PRECEDENT Section 8.1. Conditions Precedent to Closing..................................................68 ARTICLE IX MISCELLANEOUS Section 9.1. Successors.......................................................................71 Section 9.2. GOVERNING LAW....................................................................71 Section 9.3. Modification, Waiver in Writing..................................................71
iii Section 9.4. Notices..........................................................................71 Section 9.5. TRIAL BY JURY....................................................................73 Section 9.6. Headings.........................................................................73 Section 9.7. Assignment and Participation.....................................................73 Section 9.8. Severability.....................................................................75 Section 9.9. Preferences......................................................................75 Section 9.10. Remedies of Borrower...........................................................75 Section 9.11. Offsets, Counterclaims and Defenses............................................75 Section 9.12. No Joint Venture...............................................................75 Section 9.13. Conflict; Construction of Documents............................................76 Section 9.14. Brokers and Financial Advisors.................................................76 Section 9.15. Counterparts...................................................................76 Section 9.16. Estoppel Certificates..........................................................76 Section 9.17. Payment of Expenses; Mortgage Recording Taxes..................................76 Section 9.18. No Third-Party Beneficiaries...................................................77 Section 9.19. Recourse.......................................................................77 Section 9.20. Right of Set-Off...............................................................79 Section 9.21. Exculpation of Lender..........................................................79 Section 9.22. Servicer.......................................................................80 Section 9.23. Prior Agreements...............................................................80
iv EXHIBITS A Form of Tenant Notice B Form of Cash Management Agreement C-1 Form of New York Opinion C-2 Form of Local Counsel Opinion C-3 Form of Nonconsolidation Opinion D Standard Lease Forms E Form of SNDA SCHEDULES A Property B Exception Report C [Reserved] D [Reserved] E Rent Roll F Material Agreements G Cap Agreement Requirements H-1 Permitted Expansion Space H-2 Permitted Expansion Financing Conditions I Master Leases J Prohibited Transferees K Tenants under Material Leases in Effect as of the Closing Date v LOAN AGREEMENT This Loan Agreement (this "AGREEMENT") is dated June 4, 2002 and is between ARCHON FINANCIAL, L.P., a Delaware limited partnership, as a lender (together with its successors and permitted assigns as holder of the Loan, "LENDER"), and GRAND CANAL SHOPS II, LLC, a Delaware limited liability company, as borrower (together with its permitted successors and assigns, "BORROWER"). RECITALS Borrower desires to obtain from Lender the Loan (as hereinafter defined) in connection with the refinancing of the property known as The Grand Canal Shoppes, Las Vegas, Nevada. Lender is willing to make the Loan on the terms and conditions set forth in this Agreement if Borrower joins in the execution and delivery of this Agreement, issues the Note and executes and delivers the other Loan Documents. Lender and Borrower therefore agree as follows: DEFINITIONS (a) When used in this Agreement, the following capitalized terms have the following meanings: "ACCEPTABLE COUNTERPARTY" means any counterparty to an Interest Rate Cap Agreement that has and maintains either a long-term unsecured debt rating of AAA by S&P or a short-term unsecured debt rating of not less than A-1+ by S&P and a long-term unsecured debt rating of not less than Aa3 by Moody's, or any other counterparty to an Interest Rate Cap Agreement with respect to which Rating Confirmation is received. "ACCOUNT COLLATERAL" means, collectively, the Collateral Accounts and all sums at any time held, deposited or invested therein, together with any interest or other earnings thereon, and all proceeds thereof (including proceeds of sales and other dispositions), whether accounts, general intangibles, chattel paper, deposit accounts, instruments, documents or securities, but excluding Excess Cash Flow. "ACTUAL NOI" means, as of any date of determination, annualized Net Operating Income for the Property for the most recently ended Test Period (determined by multiplying Net Operating Income for such Test Period by two). "AFFILIATE" of any specified Person means any other Person controlling, controlled by or under common control with such specified Person. For the purposes of this definition, "CONTROL" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities or other beneficial interests (determined in a manner analogous to the method for determining beneficial ownership under Rule 13d-3 under the Securities Exchange Act of 1934, as amended), by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AGREEMENT" means this Loan Agreement, as the same may from time to time hereafter be modified or replaced. "ALTA" means the American Land Title Association, or any successor thereto. "ALTERATION" means any demolition, alteration, installation, improvement or expansion of or to the Property or any portion thereof, other than Tenant Improvements required under Leases. "ANNUAL BUDGET" means a capital and operating expenditure budget for the Property prepared by Borrower and specifying amounts sufficient to operate and maintain the Property at a standard at least equal to that maintained on the Closing Date. "APPRAISAL" means an as-is appraisal of the Property that is prepared by a member of the Appraisal Institute selected by the Borrower (and reasonably approved by Lender), meets the minimum appraisal standards for national banks promulgated by the Comptroller of the Currency pursuant to Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (FIRREA) and complies with the Uniform Standards of Professional Appraisal Practice (USPAP). "APPROVED ANNUAL BUDGET" has the meaning set forth in SECTION 5.17. "APPROVED MANAGEMENT AGREEMENT" means the Property Management Agreement, dated as of July 24, 1997, between Borrower and Forest City Commercial Management, Inc., as such agreement may be modified or replaced in accordance herewith, and any other management agreement with respect to which Lender receives Rating Confirmation and which provides that it may be terminated by Borrower without fee or penalty on not less than 30 days' prior written notice; PROVIDED that if Borrower or any Affiliate of Borrower manages the Property, then no separate written management agreement shall be required hereunder (PROVIDED further that any such management arrangements shall be in accordance with SECTION 6.8) "APPROVED PROPERTY MANAGER" means (i) Forest City Commercial Management, Inc., (ii) Borrower or any Affiliate of Borrower, or (iii) any other management company with respect to which Lender receives Rating Confirmation, in each case unless and until Lender requests the termination of such management company during the continuance of an Event of Default pursuant to SECTION 5.11(d). "ASSIGNMENT" has the meaning set forth in SECTION 9.7(b). "ASSIGNMENT OF INTEREST RATE CAP AGREEMENT" means each collateral assignment of an interest rate cap agreement executed by Borrower in accordance herewith, each of which must be in the form executed by Borrower on the Closing Date, as the same may from time to time be modified or replaced in accordance herewith. 2 "ASSIGNMENT OF RENTS AND LEASES" means the assignment of rents and leases executed by Borrower on the Closing Date, as the same may from time to time be modified or replaced in accordance herewith. "BANKRUPTCY CODE" has the meaning set forth in SECTION 7.1(d). "BORROWER" has the meaning set forth in the first paragraph of this agreement. "BORROWER MANAGING MEMBER" means Grand Canal Shops Mall MM Subsidiary, Inc., a Nevada corporation. "BUDGETED ANNUAL CAPITAL EXPENDITURE AMOUNT" means, with respect to any Fiscal Year, (i) the aggregate anticipated cost of Capital Expenditures for such Fiscal Year as set forth in the Approved Annual Budget, or (ii) such greater amount as shall equal the actual cost of Borrower's Capital Expenditures for such Fiscal Year; PROVIDED that such greater amount may in no event exceed 105% of the amount specified in clause (i), with no individual budget line item exceeding 110% of the amount set forth in the Approved Annual Budget with respect to such line item, in each case without the prior written consent of Lender, not to be unreasonably withheld or delayed, PROVIDED, HOWEVER, that no such limitation shall apply, nor shall Lender's consent be required, in respect of any Non-Discretionary Items. "BUDGETED ANNUAL OPERATING EXPENSE AMOUNT" means, with respect to any Fiscal Year, (i) the aggregate anticipated cost of Operating Expenses for such Fiscal Year as set forth in the Approved Annual Budget, or (ii) such greater amount as shall equal the actual cost of Borrower's Operating Expenses for such Fiscal Year; PROVIDED that such greater amount may in no event exceed 105% of the amount specified in clause (i), with no individual budget line item exceeding 110% of the amount set forth in the Approved Annual Budget with respect to such line item, in each case without the prior written consent of Lender, not to be unreasonably withheld or delayed, PROVIDED, HOWEVER, that no such limitation shall apply, nor shall Lender's consent be required, in respect of any Non-Discretionary Items. "BUSINESS DAY" means any day other than (i) a Saturday and a Sunday and (ii) a day on which federally insured depository institutions in the State of New York or the state in which the offices of Lender, its trustee, its Servicer or its Servicer's collection account are located are authorized or obligated by law, governmental decree or executive order to be closed (Lender agrees to provide reasonably prompt notice to Borrower of any change in the determination of a Business Day based on the criteria set forth in clause (ii) above). When used with respect to an Interest Determination Date, "BUSINESS DAY" shall mean a day on which banks are open for dealing in foreign currency and exchange in London. "CAPITAL EXPENDITURE" means hard and soft costs incurred by Borrower with respect to replacements and capital repairs made to the Property (including repairs to, and replacements of, structural components, roofs, building systems, parking garages and parking lots), in each case to the extent capitalized in accordance with GAAP. "CAPITAL RESERVE ACCOUNT" has the meaning set forth in SECTION 3.6. "CASH MANAGEMENT ACCOUNT" has the meaning set forth in SECTION 3.1(a). 3 "CASH MANAGEMENT AGREEMENT" means a cash management agreement in substantially the form of EXHIBIT B, as the same may from time to time be modified or replaced in accordance herewith. "CASH MANAGEMENT BANK" means Wells Fargo Bank, N.A., or any other depository institution selected by Borrower (and reasonably satisfactory to Lender) or Lender from time to time in which Eligible Accounts may be maintained. "CASH TRAP PERIOD" means any period (i) during the continuance of an Event of Default, (ii) from (a) the conclusion of any Test Period for which Actual NOI is less than 75% of Closing Date NOI, to (b) the conclusion of any two consecutive Fiscal Quarters thereafter for which Actual NOI is equal to or greater than 75% of Closing Date NOI and (iii) from and after the occurrence of a Terrorism Event until the first to occur of (a) the Payment Date following the one-year anniversary of such event and (b) the conclusion of any Test Period following such event as to which Actual NOI is equal to or greater than Closing Date NOI. "CASH TRAP ACCOUNT" has the meaning set forth in SECTION 3.3(a). "CASUALTY" means a fire, explosion, flood, collapse, earthquake or other casualty affecting all or any portion of the Property. "CERTIFICATES" means, collectively, any senior and/or subordinate notes, debentures or pass-through certificates, or other evidence of indebtedness, or debt or equity securities, or any combination of the foregoing, representing a direct or beneficial interest, in whole or in part, in the Loan. "CHANGE OF CONTROL" means (i) Borrower's ceasing to be Controlled by one or more Qualified Equityholders (individually or collectively), or (ii) a pledge of any direct or indirect equity interest in Borrower, the foreclosure on which would result in a Change of Control under clause (i). "CLOSING DATE" means the date of this Agreement. "CLOSING DATE DSCR" means 1.98x. "CLOSING DATE NOI" means $19,236,331. "CODE" means the Internal Revenue Code of 1986, as amended, and as it may be further amended from time to time, any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form. "COLLATERAL" means all assets owned from time to time by Borrower including the Property, the Revenues and all other tangible and intangible property in respect of which Lender is granted a Lien under the Loan Documents, and all proceeds thereof. "COLLATERAL ACCOUNTS" means, collectively, the Cash Management Account, the Cash Trap Account, the Tax and Insurance Escrow Account, the TI/LC Reserve Account, the Loss Proceeds Account and the Capital Reserve Account. 4 "COMMERCIALLY REASONABLE" means, with respect to the terms and conditions of any proposed Lease (other than rent and other amounts payable thereunder), commercially reasonable when compared with terms and conditions of Leases in similarly situated malls in similar contexts at the time in question, taking into account, INTER ALIA, the size, creditworthiness and bargaining power of a prospective Tenant, the location and size of the space covered by such proposed Lease and the rent and other amounts payable thereunder. "COMPONENT BALANCE" has the meaning set forth in SECTION 1.3(c). "COMPONENT SPREAD" has the meaning set forth in SECTION 1.3(c). "COMPONENTIZATION NOTICE" has the meaning set forth in SECTION 1.3(c). "CONDEMNATION" means a taking or voluntary conveyance of all or part of the Property or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of, any condemnation or other eminent domain proceeding by any Governmental Authority. "CONTINGENT OBLIGATION" means any obligation of Borrower directly or indirectly guaranteeing any Debt of any other Person in any manner. "CONTROL" of any entity means the ownership, directly or indirectly, of at least 51% of the equity interests in, and the right to at least 51% of the distributions from, such entity and the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such entity, whether through the ability to exercise voting power, by contract or otherwise ("CONTROLLED" has the meaning correlative thereto). "CONVENTION CENTER" means the Sands Exposition and Convention Center located in Las Vegas, Nevada. "COOPERATION AGREEMENT" means the Mortgage Loan Cooperation Agreement, dated as of the Closing Date, among Borrower, Lender and Sponsor, as the same may from time to time be modified or replaced in accordance herewith. "DAMAGES" to a party means any and all liabilities, obligations, losses, damages, penalties, assessments, actions, judgments, suits, claims, costs, expenses (including reasonable attorneys' fees whether or not suit is brought), settlement costs and disbursements imposed on, incurred by or asserted against such party, other than consequential or indirect losses or damages. "DEBT" means, with respect to any Person, without duplication: (i) all indebtedness of such Person to any other party (regardless of whether such indebtedness is evidenced by a written instrument such as a note, bond or debenture) for borrowed money or for the deferred purchase price of property or services; (ii) all letters of credit issued for the account of such Person and all unreimbursed amounts drawn thereunder; 5 (iii) all indebtedness secured by a Lien on any property owned by such Person (whether or not such indebtedness has been assumed) except obligations for impositions which are not yet due and payable; (iv) all Contingent Obligations of such Person; (v) all payment obligations of such Person under any interest rate protection agreement (including any interest rate swaps, floors, collars or similar agreements) and similar agreements; (vi) all contractual indemnity obligations of such Person; and (vii) any material actual or contingent liability to any Person or Governmental Authority with respect to any employee benefit plan (within the meaning of Section 3(3) of ERISA) subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code. "DEED OF TRUST" means the deed of trust of the Property executed by Borrower on the Closing Date, as the same may from time to time be modified or replaced in accordance herewith. "DEEMED CASH TRAP PERIOD" means, in connection with the termination of any Lease and as of any date of determination, a Cash Trap Period that would have occurred as of the most recently ended Test Period after giving pro-forma effect to (x) the termination of such Lease, (y) the portion of any Termination Fee amortized over such period in accordance with the terms hereof, and (z) any replacement Lease(s) executed at or prior to such date of determination. In determining whether a Deemed Cash Trap Period has terminated, at any time Borrower may deliver to Lender any replacement Lease(s) and such other information as Lender may reasonably request, and upon receipt of such materials, Lender shall reasonably promptly thereafter recalculate Actual NOI (giving pro-forma effect to such replacement Leases(s) as if they had been in effect during the most recently-ended Test Period) as of the most recently ended Test Period to determine if such Deemed Cash Trap Period has terminated. "DEFAULT" means the occurrence of any event which, but for the giving of notice or the passage of time, or both, would be an Event of Default. "DEFAULT RATE" means, with respect to any Note or Note Components, the greater of (x) 4% per annum in excess of the interest rate otherwise applicable to such Note or Note Component hereunder and (y) 1% per annum in excess of the Prime Rate from time to time. "DSCR TEST" means a test that will be satisfied in connection with a Permitted Expansion Financing if the quotient of (i) Actual NOI for the Property and the Expansion Space for the most recently-ended Test Period divided by (ii) the product of (x) the aggregate outstanding principal balance of the Loan and such Permitted Expansion Financing as of the last day of such Test Period TIMES (y) 9.25%, is no less than Closing Date DSCR. "EASEMENT AREAS" has the meaning set forth in SECTION 4.27. 6 "ELIGIBLE ACCOUNT" means (i) a segregated account maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution, or (ii) a segregated trust account or accounts maintained with the corporate trust department of a federal depository institution or state-chartered depository institution which has an investment-grade rating and is subject to regulations regarding fiduciary funds on deposit under, or similar to, Title 12 of the Code of Federal Regulations Section 9.10(b) which, in either case, has corporate trust powers, acting in its fiduciary capacity. "ELIGIBLE INSTITUTION" means an institution (i) whose commercial paper, short-term debt obligations or other short-term deposits are rated at least A-1, Prime-1 or F-1, as applicable, by each of the Rating Agencies (or, in the case of The Bank of Nova Scotia, maintain at least its ratings as in effect on the date hereof) and whose long-term senior unsecured debt obligations are rated at least AA- or Aa2, as applicable, by each of the Rating Agencies (or, in the case of The Bank of Nova Scotia, maintain at least its ratings as in effect on the date hereof), and whose deposits are insured by the FDIC or (ii) with respect to which Lender shall have received Rating Confirmation. "ENGINEERING REPORT" means a structural and engineering report or reports with respect to the Property prepared by an independent engineer reasonably approved by Lender and delivered to Lender in connection with the Loan, and any amendments or supplements thereto delivered to Lender. "ENVIRONMENTAL CLAIM" means any written notice, claim, proceeding, investigation or demand by any Person or Governmental Authority alleging or asserting liability with respect to Borrower or the Property arising out of, based on or resulting from (i) the alleged presence, Use or Release of any Hazardous Substance, (ii) any alleged violation of any Environmental Law, or (iii) any alleged injury or threat of injury to property, health or safety or to the environment caused by Hazardous Substances. "ENVIRONMENTAL INDEMNITY" the environmental indemnity agreement executed by Borrower and the Sponsor on the Closing Date, as the same may from time to time be modified or replaced in accordance herewith. "ENVIRONMENTAL LAWS" means any and all present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, any binding judicial or administrative orders, decrees or judgments thereunder, and any permits, approvals, licenses, registrations, filings and authorizations, in each case as now or hereafter in effect, relating to the pollution, protection or cleanup of the environment, relating to the impact of Hazardous Substances on property, health or safety, or the Use or Release of Hazardous Substances, or relating to the liability for or costs of other actual or threatened danger to health or the environment. The term "ENVIRONMENTAL LAW" includes, but is not limited to, the following statutes, as amended, any successors thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Clean Water Act; the Clean Air Act; the 7 Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. The term "ENVIRONMENTAL LAW" also includes, but is not limited to, any present and future federal state and local laws, statutes ordinances, rules, regulations and the like, as well as common law, conditioning transfer of property upon a negative declaration or other approval of a Governmental Authority of the environmental condition of a property; or requiring notification or disclosure of Releases of Hazardous Substances or other environmental conditions of a property to any Governmental Authority or other Person, whether or not in connection with transfer of title to or interest in property. "ENVIRONMENTAL REPORTS" means a "Phase I Environmental Site Assessment" as referred to in the ASTM Standards on Environmental Site Assessments for Commercial Real Estate, E 1527-94 (and, if necessary, a "Phase II Environmental Site Assessment"), prepared by an independent environmental auditor reasonably approved by Lender and any amendments or supplements thereto, and shall also include any other environmental reports delivered to Lender pursuant to this Agreement and the Environmental Indemnity. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder. "ERISA AFFILIATE," at any time, means each trade or business (whether or not incorporated) that would, at the time, be treated together with Borrower as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code. "ESA" means that certain Energy Services Agreement dated as of November 14, 1997 between Borrower and Atlantic-Pacific Las Vegas, LLC, as amended by that certain Energy Services Agreement Amendment No. 1 dated as of July 1, 1999, as the same may be further amended from time to time. "EVENT OF DEFAULT" has the meaning set forth in SECTION 7.1. "EVENT OF DEFAULT YIELD MAINTENANCE PREMIUM" shall mean, with respect to any payment of principal (or any portion thereof) occurring after an acceleration of the Loan (unless such acceleration shall have theretofore been waived in writing by Lender in its sole discretion), the greater of (x) 2% of the amount prepaid and (y) the product of: (A) a fraction whose numerator is the amount so paid and whose denominator is the outstanding principal balance of the Loan before giving effect to such payment, TIMES (B) the excess of (1) the sum of the respective present values, computed as of the date of such prepayment, of the remaining scheduled payments of principal and interest with respect to the Loan (assuming a constant LIBOR rate equal to the LIBOR Strike Rate and assuming no prepayments or acceleration of the Loan), determined by discounting such payments to the date on which such payments are made at the Treasury Constant Yield, over (2) the outstanding principal balance of the Loan on such date immediately prior to such payment. 8 The calculation of the Event of Default Yield Maintenance Premium shall be made by Lender and shall, absent manifest error, be final, conclusive and binding upon all parties. "EXCEPTION REPORT" means the report prepared by Borrower and attached hereto as SCHEDULE B, setting forth any exceptions to the representations set forth in ARTICLE IV. "EXCESS CASH FLOW" has the meaning set forth in SECTION 3.2(b). "EXTENSION INTEREST RATE CAP AGREEMENT " means an interest rate cap agreement (together with the confirmation and schedules relating thereto) between the applicable Acceptable Counterparty and Borrower, relating to the applicable Extension Term, satisfying the requirements set forth in SCHEDULE G. "EXTENSION TERM" has the meaning set forth in SECTION 1.2(b). "FISCAL QUARTER" means the three-month period ending on March 31, June 30, September 30 and December 31 of each year, or such other fiscal quarter of Borrower as Borrower may select from time to time with the prior consent of Lender, such consent not to be unreasonably withheld. "FISCAL YEAR" means the 12-month period ending on December 31 of each year, or such other fiscal year of Borrower as Borrower may select from time to time with the prior consent of Lender, not to be unreasonably withheld. "FITCH" means Fitch, Inc. and its successors. "FORM W-8BEN" means Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) of the Department of Treasury of the United States of America, and any successor form. "FORM W-8ECI" means Form W-8ECI (Certificate of Foreign Person's Claim for Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States) of the Department of the Treasury of the United States of America, and any successor form. "GAAP" means generally accepted accounting principles in the United States of America, consistently applied. "GOVERNMENTAL AUTHORITY" means any federal, state, county, regional, local or municipal government, any bureau, department, agency or political subdivision thereof and any Person with jurisdiction exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any court). "GSMC" means Goldman Sachs Mortgage Company. "HAZARDOUS SUBSTANCES" means any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous 9 substances, hazardous materials, extremely hazardous wastes, toxic substances, toxic pollutants, contaminants, pollutants or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment or the presence of which on, in or under the Property is prohibited under Environmental Law, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead and radon, and compounds containing them (including gasoline, diesel fuel, oil and lead-based paint), and radioactive materials, flammables and explosives and compounds containing them. "HOTEL/CASINO" means the Venetian Hotel & Casino located in Las Vegas, Nevada. "INCREASED COSTS" has the meaning set forth in SECTION 1.6. "INDEBTEDNESS" means the Principal Indebtedness, together with interest and all other obligations and liabilities of Borrower to Lender under the Loan Documents, including all Transaction Costs, any Event of Default Yield Maintenance Premium, any Make-Whole Payment and other amounts due or to become due to Lender pursuant hereto, under the Note or in accordance with any of the other Loan Documents, and all other amounts, sums and expenses reimbursable by Borrower to Lender hereunder or pursuant to the Note or any of the other Loan Documents. "INDEMNIFIED LIABILITIES" has the meaning set forth in SECTION 9.19(b). "INDEMNIFIED PARTIES" has the meaning set forth in SECTION 5.18. "INDEPENDENT DIRECTOR" of a limited liability company or a corporation means an individual who is duly appointed as a member of the board of managers or directors, as the case may be, of such limited liability company or corporation, as the case may be, and who is not, and has never been, and will not while serving as Independent Director, be any of the following: (i) a member, partner, equityholder, manager, director, officer or employee of Borrower or its equityholders or Affiliates (other than as an independent director or manager of an Affiliate of Borrower that is required by a creditor to be a single purpose bankruptcy remote entity); (ii) a creditor, supplier or service provider (including provider of professional services) to Borrower or any of its equityholders or Affiliates (other than a company that provides professional independent managers or directors and which also provides lien search and other similar services to Borrower or any of its equityholders or Affiliates in the ordinary course of business); (iii) a family member of any such member, partner, equityholder, manager, director, officer, employee, creditor, supplier or service provider; or (iv) a Person that controls (whether directly, indirectly or otherwise) any of (i), (ii) or (iii) above. 10 "INITIAL INTEREST RATE CAP AGREEMENT" means an interest rate cap agreement (together with the confirmation and schedules relating thereto) between the applicable Acceptable Counterparty and Borrower, relating to the initial term of the Loan, satisfying the requirements set forth in SCHEDULE G. "INITIAL PAYMENT DATE" means the Payment Date in July, 2002. "INSURANCE REQUIREMENTS" means, collectively, (i) all material terms of any insurance policy required pursuant to this Agreement and (ii) all material regulations and then-current standards applicable to or affecting the Property or any portion thereof or any use or condition thereof, which may, at any time, be recommended by the board of fire underwriters, if any, having jurisdiction over the Property, or any other body exercising similar functions. "INTEREST ACCRUAL PERIOD" means, with respect to any specified Payment Date, the period from and including the 15th day of the calendar month preceding such Payment Date to but excluding the 15th day of the calendar month containing such specified Payment Date (or, if either such 15th day is not a Business Day, the Interest Accrual Period shall be based upon the immediately succeeding Business Day). Notwithstanding the foregoing, the first Interest Accrual Period shall commence on the Closing Date and end on June 16, 2002. "INTEREST DETERMINATION DATE" means, in connection with the calculation of interest accrued for any Interest Accrual Period, the second Business Day preceding the first day of such Interest Accrual Period. "INTEREST RATE CAP AGREEMENTS" means collectively, the Initial Interest Rate Cap Agreement and the Extension Interest Rate Cap Agreements. "LEASE" means any lease, license, letting, concession, occupancy agreement, sublease to which Borrower is a party or has a consent right, or other agreement (whether written or oral and whether now or hereafter in effect) under which Borrower is a lessor, existing as of the Closing Date or hereafter entered into by Borrower, in each case pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of any space in the Property, and every modification or amendment thereof, and every guarantee of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto. "LEASING COMMISSIONS " means leasing commissions required to be paid by Borrower in connection with the leasing of space to Tenants at the Property pursuant to Leases entered into by Borrower in accordance herewith and payable in accordance with third-party/arm's-length brokerage agreements or agreements with an Affiliate of Borrower, PROVIDED that, in the case of any agreement with an Affiliate of Borrower, the commissions payable pursuant thereto are commercially reasonable based upon the then current brokerage market for property of a similar type and quality to the Property in the geographic market in which the Property is located. "LEGAL REQUIREMENTS" means: 11 (i) all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities (including Environmental Laws) affecting either Borrower or the Property or any portion thereof or the construction, ownership, use, alteration or operation thereof, or any portion thereof (whether now or hereafter enacted and in force); (ii) all permits, licenses and authorizations and regulations relating thereto; and (iii) all covenants, conditions and restrictions contained in any instruments at any time in force (whether or not involving Governmental Authorities) affecting the Property or any portion thereof which, in the case of this clause (iii), require repairs, modifications or alterations in or to the Property or any portion thereof, or in any material way limit or restrict the existing use and enjoyment thereof. "LENDER" has the meaning set forth in the first paragraph of this Agreement and in SECTION 9.7. "LIBOR" means the rate per annum calculated as set forth below: (i) On each Interest Determination Date, LIBOR for the applicable period will be the rate for deposits in United States dollars for a one-month period which appears as the London interbank offered rate on the display designated as "PAGE 3750" on the Moneyline Telerate Service (or such other page as may replace that page on that service, or such page or replacement therefor on any successor service) as the London inter-bank offered rate as of 11:00 a.m., London time, on such date. (ii) With respect to an Interest Determination Date on which no such rate appears as the London interbank offered rate on "PAGE 3750" on the Moneyline Telerate Service (or such other page as may replace that page on that service, or such page or replacement therefor on any successor service) as described above, LIBOR for the applicable period will be determined on the basis of the rates at which deposits in United States dollars are offered by the Reference Banks at approximately 11:00 a.m., London time, on such date to prime banks in the London interbank market for a one-month period (each a "REFERENCE BANK RATE"). Lender shall request the principal London office of each of the Reference Banks to provide a quotation of its Reference Bank Rate. If at least two such quotations are provided, LIBOR for such period will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such period will be the arithmetic mean of the rates quoted by major banks in New York City, selected by Lender, at approximately 11:00 a.m., New York City time, on such date for loans in United States dollars to leading European banks for a one-month period. (iii) If, on any Interest Determination Date, Lender is required but unable to determine LIBOR in the manner provided in paragraphs (i) and (ii) above, LIBOR for the applicable period shall be LIBOR as determined on the previous Interest Determination Date. 12 All percentages resulting from any calculations or determinations referred to in this definition will be rounded upwards to the nearest multiple of 1/100 of 1% and all U.S. dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one-half cent or more being rounding upwards). "LIBOR STRIKE RATE" means 7.50%. "LIEN" means any mortgage, lien (statutory or other), pledge, hypothecation, assignment, preference, priority, security interest, or any other encumbrance or charge on or affecting any Collateral or any portion thereof, or any interest therein (including any conditional sale or other title retention agreement, any sale-leaseback, any financing lease or similar transaction having substantially the same economic effect as any of the foregoing, the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any other jurisdiction, domestic or foreign, and mechanics', materialmen's and other similar liens and encumbrances, as well as any option to purchase, right of first refusal, right of first offer or other right to acquire the Property). "LOAN" has the meaning set forth in SECTION 1.1. "LOAN AMOUNT" means $105,000,000. "LOAN DOCUMENTS" means this Agreement, the Note(s), the Deed of Trust (and related financing statements), the Assignment of Rents and Leases, the Assignment of Interest Rate Cap Agreement, the Environmental Indemnity, the Subordination of Property Management Agreement, the Cash Management Agreement, the Cooperation Agreement, the Trademark Security Agreement and all other agreements, instruments, certificates and documents delivered by Borrower to Lender to effectuate the granting to Lender of first-priority Liens on the Collateral or otherwise in satisfaction of the requirements of this Agreement or the other documents listed above, as all of the aforesaid may be modified or replaced from time to time in accordance herewith. "LOCKOUT PERIOD" has the meaning set forth in SECTION 2.1(a). "LOCKOUT REDUCTION FEE" means, (i) if Borrower exercises its option to reduce the Lockout Period a single time in accordance with SECTION 2.1(a), with respect to each six-month reduction by Borrower of the Lockout Period, an amount equal to the product of 0.25% multiplied by the Loan Amount, and (ii) if Borrower exercises its option to reduce the Lockout Period a second time in accordance with SECTION 2.1(a), with respect to the six-month reduction by Borrower of the Lockout Period, an additional amount equal to the product of 0.75% multiplied by the Loan Amount. "LOSS PROCEEDS" means amounts, awards or payments payable to Borrower or Lender in respect of all or any portion of the Property in connection with a Casualty or Condemnation thereof (after the deduction therefrom and payment to Borrower and Lender, respectively, of any and all reasonable expenses incurred by Borrower and Lender in the recovery thereof, including all attorneys' fees and disbursements, the fees of insurance experts 13 and adjusters and the costs incurred in any litigation or arbitration with respect to such Casualty or Condemnation). "LOSS PROCEEDS ACCOUNT" has the meaning set forth in SECTION 3.8. "MAJOR LEASE" means (i) any new lease which when aggregated with all other leases at the Property with the same Tenant, and assuming the exercise of all expansion rights contained in such lease, is expected to cover more than 10,000 rentable square feet or to contribute more than 2.5% of the contractual rental revenue (i.e., the sum of base rent and recoveries) of the Property during any 12-month period, (ii) Leases in effect as of the Closing Date with the Tenants set forth on SCHEDULE K hereto, (iii) any lease which contains an option or preferential right to purchase all or any portion of the Property, (iii) any lease which is with an Affiliate of Borrower as Tenant, or (iv) any lease which is entered into during the continuance of an Event of Default. "MAKE-WHOLE PAYMENT" means, in connection the application of Loss Proceeds to prepay the Loan during the Lockout Period in accordance with SECTION 5.16(d) hereof, the amount of interest that would have been paid on the principal balance of the Loan so prepaid at an interest rate equal to the Spread had such principal amount been outstanding through the end of the Lockout Period. "MASTER LEASES" each of the leases described on SCHEDULE I hereto. "MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i) the ability of Borrower to perform, or of Lender to enforce, any material provision of any Loan Document, or (ii) the value, net operating income or use of the Property or the operation thereof. "MATERIAL AGREEMENTS" means (i) the REA, (ii) the ESA, and (iii) each other contract and agreement (other than Leases) relating to the ownership, management, development, use, operation, leasing, maintenance, repair or improvement of the Property, or otherwise imposing obligations on Borrower, under which Borrower would have the obligation to pay more than $100,000 per annum or which cannot be terminated by Borrower without cause upon 60 days' notice or less without payment of a termination fee. "MATERIAL ALTERATION" means any Alteration to be performed by or on behalf of Borrower at the Property which (a) is reasonably likely to have a Material Adverse Effect, (b) is reasonably expected to cost in excess of $3,500,000, as determined by an independent architect, or (c) is reasonably expected to permit (or is reasonably likely to induce) Tenants to terminate Leases or abate rent with respect to 10,000 rentable square feet at the Property or more, in the aggregate (PROVIDED that (i) Alterations with respect to which Tenants have delivered to Borrower written waivers of their right to terminate their Leases or abate rent in connection with such Alteration (copies of which have been delivered to Lender) shall be excluded from CLAUSE (c) and (ii) Alterations to be performed in connection with Major Leases which have been approved (or are deemed approved) by Lender in accordance with the terms of SECTION 5.8(b), shall be excluded from CLAUSES (a), (b) and (c). "MATURITY DATE" means the maturity date of the Loan as set forth in SECTION 1.2. 14 "MONTHLY CAPITAL RESERVE AMOUNT" means $1,837. "MONTHLY TI/LC AMOUNT" means $20,246. "MOODY'S" means Moody's Investors Service, Inc. and its successors. "NET OPERATING INCOME" means the excess of Operating Income over Operating Expenses. "NONCONSOLIDATION OPINION" means the opinion letter, dated the Closing Date, delivered by Borrower's counsel to Lender and addressing issues relating to substantive consolidation in bankruptcy. "NON-DISCRETIONARY ITEMS" means Taxes, insurance premiums, costs of utilities, costs associated with ameliorating unsafe or illegal conditions or arising out of an emergency (in respect of which Borrower shall deliver to Lender a reasonably detailed description in writing) and costs of complying with existing contracts and agreements and Legal Requirements. "NOTE" means the note, dated the Closing Date, made by Borrower to the order of Lender to evidence the indebtedness owed by Borrower to Lender in respect of the Loan, as such note may be modified, amended, supplemented or extended and/or replaced by multiple Notes or divided into Note Components in accordance with this Agreement and the other Loan Documents. "NOTE COMPONENT" has the meaning set forth in SECTION 1.3(c). "OFFICER'S CERTIFICATE" means a certificate delivered to Lender which is signed by an authorized officer of Borrower or its managing member and certifies the information therein to the best of such officer's knowledge. "OPERATING EXPENSES" means, for any period, all operating, renting, administrative, management, legal and other ordinary expenses of Borrower during such period, determined on an accrual basis in accordance with GAAP; PROVIDED, HOWEVER, that such expenses shall not include (i) depreciation, amortization or other noncash items (other than expenses that are due and payable but not yet paid), (ii) interest, principal or any other sums due and owing with respect to the Loan, (iii) income taxes or other taxes in the nature of income taxes or franchise taxes, (iv) Capital Expenditures, (v) equity distributions, (vi) reserves deposited in any Collateral Account or (viii) extraordinary and non-recurring expenses. "OPERATING INCOME" means, for any period, all Revenues of Borrower from the Property during such period, determined on an accrual basis in accordance with GAAP (but without straight-lining of rents), other than (i) Loss Proceeds (but Operating Income will include (a) rental loss or business interruption insurance proceeds to the extent allocable to such period and (b) proceeds from a temporary taking to the extent (1) allocable to such period and (2) attributable to the abatement of rent by one or more Tenants), (ii) any revenue attributable to a Lease to the extent it is paid more than 30 days prior to the due date, (iii) any interest income from any source, (iv) any repayments received from any third party of principal loaned or advanced to such third party by Borrower, (v) any proceeds resulting from the Transfer of all or 15 any portion of the Property, (vi) sales, use and occupancy or other taxes on receipts required to be accounted for by Borrower to any government or governmental agency, (vii) Termination Fees, and (viii) any other extraordinary or non-recurring items; PROVIDED that with respect to Termination Fees, during each month following any Lease termination with respect to which Borrower receives a Termination Fee which is deposited into the TI/LC Reserve Account in accordance with SECTION 3.5(d) or (e), for so long as the applicable space generates no rental income, Borrower shall be deemed to have received Operating Income in an amount equal to (x) the amount of such Termination Fee divided by (y) the number of whole and partial months which would have been contained in the remainder of the term of such Lease, had it not been terminated, from the effective date of its termination through the date on which its term was scheduled to expire (excluding any unexercised extension periods); PROVIDED FURTHER that if Lender disburses all or any portion of a Termination Fee to Borrower in accordance with CLAUSE (iii) of SECTION 3.5(e), the amounts included in Operating Income in accordance with the foregoing proviso shall be proportionately reduced by the amount of funds so disbursed to Borrower. "PARTICIPATION" has the meaning set forth in SECTION 9.7(b). "PAYMENT DATE" means the Initial Payment Date and, thereafter, the tenth day of each month (or, if such tenth day is not a Business Day, the first preceding Business Day). "PEG BALANCE" at any time means, so long as no Cash Trap Period is continuing, the aggregate amount of payments required to be made under SECTIONS 3.2(b)(i) and (ii) on the next Payment Date, as specified in the most recent notice from the Lender to the Cash Management Bank pursuant to the Cash Management Agreement. "PERMITS" means all licenses, permits, variances and certificates used in connection with the ownership, operation, use or occupancy of the Property (including certificates of occupancy, business licenses, state health department licenses, licenses to conduct business and all such other permits, licenses and rights, obtained from any Governmental Authority or private Person concerning ownership, operation, use or occupancy of the Property), but excluding any of the foregoing required to be obtained solely by a Tenant in accordance with its Lease and/or applicable Legal Requirements. "PERMITTED DEBT" means: (i) the Indebtedness; (ii) Trade Payables not represented by a note, customarily paid by Borrower within 60 days of incurrence and in fact not more than 60 days past due, and equipment financing, in each case, incurred in the ordinary course of Borrower's ownership and operation of the Property, in amounts reasonable and customary for similar properties and not exceeding 1.5% of the Loan Amount in the aggregate; (iii) written indemnities (x) under Leases or (y) entered into in the ordinary course of business and on customary or commercially reasonable terms and conditions; and 16 (iv) a Permitted Expansion Financing. "PERMITTED EXPANSION FINANCING" means Debt incurred by the Borrower not to exceed $15,000,000 and secured by both the Property and a portion of the real property described on Schedule H-1 hereto and related improvements (the "EXPANSION SPACE"), which Debt is incurred in connection with the development of the Expansion Space and otherwise satisfies the conditions set forth in SCHEDULE H-2. "PERMITTED ENCUMBRANCES" means: (i) the Liens created by the Loan Documents; (ii) all Liens and other matters specifically disclosed on Schedule B of the Qualified Title Insurance Policy; (iii) Liens, if any, for Taxes not yet delinquent; (iv) mechanics', materialmen's or similar Liens, if any, and Liens for delinquent taxes or impositions, in each case only if being contested in good faith and by appropriate proceedings, PROVIDED that no such Lien is in imminent danger of foreclosure and PROVIDED FURTHER that either (a) each such Lien is released or discharged of record or fully insured over by the title insurance company issuing the Qualified Title Insurance Policy within 30 days of Borrower receiving notice thereof or otherwise becoming aware of its existence, or (b) Borrower deposits with Lender, by the expiration of such 30-day period, an amount equal to 125% of the dollar amount of such Lien or a bond in the aforementioned amount from such surety, and upon such terms and conditions, as is reasonably satisfactory to Lender, as security for the payment or release of such Lien, or other security reasonably satisfactory to Lender; (v) rights of existing and future Tenants as tenants only pursuant to written Leases entered into in conformity with the provisions of this Agreement; and (vi) (a) zoning restrictions, building codes, land use laws and other Legal Requirements regulating the use or occupancy of the Property and (b) easements, rights-of-way, covenants, conditions, restrictions on use of real property and other similar matters affecting the Property which do not have a Material Adverse Effect. "PERMITTED INVESTMENTS" means the following, subject to the qualifications hereinafter set forth: (i) obligations of, or obligations guaranteed as to principal and interest by, the U.S. government or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the United States of America; (ii) federal funds, unsecured certificates of deposit, time deposits, banker's acceptances, and repurchase agreements having maturities of not more than 365 days of any bank, the short-term debt obligations of which are rated A-1+ (or the equivalent) by each of the Rating Agencies and, if it has a term in excess of three months, the long-term 17 debt obligations of which are rated AAA (or the equivalent) by each of the Rating Agencies; (iii) deposits that are fully insured by the Federal Deposit Insurance Corp. (FDIC); (iv) debt obligations that are rated AAA or higher (or the equivalent) by each of the Rating Agencies; (v) commercial paper rated A-1+ (or the equivalent) by each of the Rating Agencies; (vi) investment in money market funds rated AAAm or AAAm-G (or the equivalent) by each of the Rating Agencies; and (vii) such other investments as to which Lender shall have received Rating Confirmation. Notwithstanding the foregoing, "Permitted Investments" (i) shall exclude any security with the Standard & Poor's "r" symbol (or any other Rating Agency's corresponding symbol) attached to the rating (indicating high volatility or dramatic fluctuations in their expected returns because of market risk), as well as any mortgage-backed securities and any security of the type commonly known as "strips"; (ii) shall not have maturities in excess of one year; (iii) shall be limited to those instruments that have a predetermined fixed dollar of principal due at maturity that cannot vary or change; and (iv) shall exclude any investment where the right to receive principal and interest derived from the underlying investment provides a yield to maturity in excess of 120% of the yield to maturity at par of such underlying investment. Interest may either be fixed or variable, and any variable interest must be tied to a single interest rate index plus a single fixed spread (if any), and move proportionately with that index. No investment shall be made which requires a payment above par for an obligation if the obligation may be prepaid at the option of the issuer thereof prior to its maturity. All investments shall mature or be redeemable upon the option of the holder thereof on or prior to the earlier of (x) three months from the date of their purchase or (y) the Business Day preceding the day before the date such amounts are required to be applied hereunder. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, estate, trust, unincorporated association or Governmental Authority and any fiduciary acting in such capacity on behalf of any of the foregoing. "PLAN ASSETS" means assets of any (i) employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code, or (iii) governmental plan (as defined in Section 3(32) of ERISA) subject to federal, state or local laws, rules or regulations substantially similar to Title I of ERISA or Section 4975 of the Code. "POLICIES" has the meaning set forth in SECTION 5.15(b). "PREPAYMENT NOTICE" has the meaning set forth in SECTION 2.1(c). 18 "PRIME RATE" means the "prime rate" published in the "Money Rates" section of THE WALL STREET JOURNAL. If THE WALL STREET JOURNAL ceases to publish the "prime rate," then Lender shall select an equivalent publication that publishes such "prime rate," and if such "prime rate" is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then Lender shall reasonably select a comparable interest rate index. "PRINCIPAL INDEBTEDNESS" means the principal balance of the Loan outstanding from time to time. "PROHIBITED TRANSFEREE" means any of the Persons listed on SCHEDULE J. "PROPERTY" means the real property described on SCHEDULE A, together with all buildings and other improvements thereon. "QUALIFIED EQUITYHOLDER" means (i) Sponsor, (ii) Sheldon G. Adelson, (iii) a corporation which is an Affiliate of the Sponsor formed for the purpose of selling its capital stock in an initial public offering, (iv) any trust whole sole beneficiaries are the immediate family members of Sheldon G. Adelson, provided the trustee of such trust has substantial commercial real estate experience, or (v) a bank, saving and loan association, investment bank, insurance company, trust company, commercial credit corporation, pension plan, pension fund or pension advisory firm, mutual fund, government entity or plan, real estate company, investment fund or an institution substantially similar to any of the foregoing, provided in each case under clause (iii), (iv) and (v) that (x) such Person has total assets (in name or under management) in excess of $2 billion and (except with respect to a pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder's equity in excess of $1 billion, and (y) Rating Confirmation is received with respect thereto. "QUALIFIED SURVEY" means current title surveys of the Property, certified to Borrower, the title company issuing the Qualified Title Insurance Policy and Lender and their respective successors and assigns, in form and substance reasonably satisfactory to Lender. "QUALIFIED TITLE INSURANCE POLICY" means an ALTA extended coverage mortgagee's title insurance policy (1970 unmodified form, where issuable) in form and substance reasonably satisfactory to Lender. "RATING AGENCY" means (i) until a Securitization, S&P, Moody's and Fitch, and (ii) from and after a Securitization, those of S&P, Moody's and Fitch that rate the Certificates issued in the Securitization. "RATING CONFIRMATION" means, with respect to any proposed action, confirmation in writing from each of the Rating Agencies that such action shall not result, in and of itself, in a downgrade, withdrawal or qualification of any rating then assigned to any outstanding Certificates; except that if a Securitization taking the form of a transaction rated by the Rating Agencies has not occurred or is no longer in place, then "Rating Confirmation" shall instead mean that the matter in question is subject to the prior written approval of Lender in its reasonable discretion (it being agreed that it shall be reasonable for Lender to withhold such 19 approval if the proposed action is not in compliance with reasonably prudent lending practices or, except if a Securitization that had occurred is no longer in place, the then-applicable guidelines of the Rating Agencies). No Rating Confirmation shall be regarded as having been received unless and until any conditions imposed on its effectiveness by any Rating Agency shall have been satisfied. "REA" means that certain Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as of November 14, 1997 between Interface Group-Nevada, Inc., Grand Canal Shops Mall Construction LLC (predecessor to Borrower) and Venetian Casino Resort, LLC, as amended by that certain First Amendment to Amended and Restated Reciprocal Easement, Use and Operating Agreement dated as of December 20, 1999 among Interface Group-Nevada, Inc., Borrower, Lido Casino Resort, LLC and Venetian Casino Resort, LLC, as further amended by that certain Second Amendment to Amended and Restated Reciprocal Easement Agreement dated as of the date hereof by and among Interface Group-Nevada, Inc., Borrower, Lido Casino Resort, LLC and Venetian Casino Resort, LLC, as the same may be further amended, restated, supplemented or otherwise modified from time to time. "REA INSURANCE ESCROW ACCOUNT" has the meaning set forth in SECTION 3.4(e). "REFERENCE BANKS" means four major banks in the London interbank market selected by Lender. "REGULATORY CHANGE" means any change after the Closing Date in federal, state or foreign laws or regulations or the adoption or the making, after such date, of any interpretations, directives or requests applying to a class of banks or companies controlling banks, including Lender, of or under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof; provided that such change affects similarly situated banks, companies controlling banks or other financial institutions and is not applicable to a Lender primarily by reason of such Lender's particular conduct or financial condition. For purposes of the foregoing proviso, "similarly situated", when used with reference to banks, companies controlling banks and other financial institutions, shall not include entities that are similarly situated by reason of having a materially negative or adverse financial or credit condition. "RELEASE" with respect to any Hazardous Substance means any release, deposit, discharge, emission, leaking, leaching, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances into the indoor or outdoor environment (including the movement of Hazardous Substances through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata). "RENT ROLL" has the meaning set forth in SECTION 4.14(a). "REVENUES" means all rents, rent equivalents, moneys payable as damages pursuant to a Lease or in lieu of rent or rent equivalents, royalties (including all oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits (including security, utility and other deposits), accounts, cash, issues, profits, charges for services rendered, and other consideration of whatever form or nature received by or paid to or for the account of or 20 benefit of Borrower from any and all sources including any obligations now existing or hereafter arising or created out of the sale, lease, sublease, license, concession or other grant of the right of the use and occupancy of property or rendering of services by Borrower and proceeds, if any, from business interruption or other loss of income insurance. "S&P" means Standard & Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc., and its successors. "SECURITIZATION" means a transaction in which all or any portion of the Loan is deposited into one or more trusts which issue Certificates to investors, or a similar transaction. "SECURITIZATION ISSUER" means the issuer of Certificates in a Securitization. "SERVICE" means the Internal Revenue Service or any successor agency thereto. "SERVICER" means the entity or entities appointed by Lender pursuant to and in accordance with SECTION 9.22 hereof from time to time to serve as servicer and/or special servicer of the Loan. If at any time no entity is so appointed, the term "Servicer" shall be deemed to refer to Lender. "SINGLE-PURPOSE ENTITY" means a Person which (a) is or was formed solely for the purpose of acquiring or holding the Property or a direct or indirect equity interest in Borrower, (b) does not engage in any business unrelated to the Property or the ownership of such equity interest, (c) does not have any assets other than those related to its interest in the Property or such equity interest, or any Debt other than Permitted Debt, (d) maintains books, records, accounts, financial statements, stationery, invoices and checks which are separate and apart from those of any other Person (except that such Person's financial position, assets, results of operations and cash flows may be included in the consolidated financial statements of an Affiliate of such Person in accordance with GAAP, PROVIDED that any such consolidated financial statements shall contain a note indicating that such Person and its Affiliates are separate legal entities and maintain records, books of account and bank accounts separate and apart from any other Person), (e) is subject to and complies with all of the limitations on powers and separateness requirements set forth in its organizational documentation as of the Closing Date, (f) holds itself out as being a Person separate and apart from each other Person and not as a division or part of another Person, conducts its business in its own name (except for services rendered under a management agreement with an Affiliate, so long as the manager, or equivalent thereof, under such management agreement holds itself out as an agent of Borrower), and exercises reasonable efforts to correct any known misunderstanding actually known to it regarding its separate identity, and maintains an arm's-length relationship with its Affiliates, (g) pays its own liabilities out of its own funds (including the salaries of its own employees) and reasonably allocates any overhead that is shared with an Affiliate, including, but not limited to, paying for shared office space and services performed by any officer or employee of an Affiliate, (h) maintains a sufficient number of employees in light of its contemplated business operations, (i) conducts its business so that the assumptions made with respect to it in the Nonconsolidation Opinion shall at all times be true and correct in all material respects, (j) observes all applicable limited partnership, limited liability company or corporate formalities, as the case may be, in all material respects, (k) does not commingle its assets with those of any other Person and holds such assets 21 in its own name, (l) does not assume, guarantee or become obligated for the debts of any other Person or hold out its credit as being available to satisfy the obligations or securities of others, (m) does not acquire obligations or securities of its partners, members or shareholders, as the case may be, (n) does not pledge its assets for the benefit of any other Person (except in connection with the Loan and any Permitted Debt) or make any loans or advances to any Person, (o) maintains adequate capital in light of its contemplated business operations, (p) in the case of a corporation, is a Single-Purpose Entity with two Independent Directors on its Board of Directors, (q) in the case of a partnership, has a corporate general partner which is a Single-Purpose Entity (or has a partnership or a limited liability company as general partner which, in turn, has a corporate general partner or member, as applicable, which is a Single-Purpose Entity), (r) in the case of a limited liability company, has a board of directors with two Independent Directors (or a direct or indirect member which is a corporate Single-Purpose Entity or a limited liability company having a board of directors with two Independent Directors), and (s) has a partnership agreement, operating agreement or certificate of incorporation, as the case may be, which provides that for so long as the Loan or any portion thereof is outstanding, it shall not take or consent to any of the following actions except to the extent expressly permitted in this Agreement and the other Loan Documents: (i) the dissolution, liquidation, consolidation, merger or sale of all or substantially all of its or any of its subsidiaries' assets; (ii) the engagement by it in any business other than the acquisition, development, management, leasing, ownership, maintenance and operation of the Property and activities incidental thereto or the ownership of a direct or indirect equity interest in the Borrower; (iii) the filing, or consent to the filing, of a bankruptcy or insolvency petition, any general assignment for the benefit of creditors or the institution of any other insolvency proceeding, as debtor, or the seeking or consenting to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official, in each case in respect of it or any of its subsidiaries, without the affirmative vote of both of the Independent Directors; and (iv) any amendment or modification of any provision of its organizational documents relating to qualification as a "Single-Purpose Entity". "SPONSOR" means Las Vegas Sands, Inc., and its successors. "SPREAD" means (i) initially, 1.75%; and (ii) following the bifurcation of the Note into multiple Note Components pursuant to SECTION 1.3(c), the weighted average of the Component Spreads at the time of determination, weighted on the basis of the corresponding Component Balances. "SUBORDINATION OF PROPERTY MANAGEMENT AGREEMENT" means the consent and agreement of manager and subordination of management agreement executed by Borrower and 22 the Approved Property Manager on the Closing Date, as the same may from time to time be modified or replaced in accordance herewith. "TAX AND INSURANCE ESCROW ACCOUNT" has the meaning set forth in SECTION 3.4(a). "TAXES" means all real estate and personal property taxes, assessments, fees, taxes on rents or rentals, water rates or sewer rents, facilities and other governmental, municipal and utility district charges or other similar taxes or assessments now or hereafter levied or assessed or imposed against the Property or Borrower with respect to the Property or rents therefrom or which may become Liens upon the Property, without deduction for any amounts reimbursable to Borrower by third parties. "TENANT" means any Person liable by contract or otherwise to pay monies (including a percentage of gross income, revenue or profits) pursuant to a Lease. "TENANT IMPROVEMENTS" means, collectively, (i) tenant improvements to be undertaken for any Tenant which are required to be completed by or on behalf of Borrower pursuant to the terms of such Tenant's Lease, and (ii) tenant improvements paid or reimbursed through allowances to a Tenant pursuant to such Tenant's Lease. "TENANT NOTICE" has the meaning set forth in SECTION 3.1(b). "TERMINATION FEE" has the meaning set forth in SECTION 3.5(d). "TERRORISM EVENT" means a terrorist act affecting the Property, the Hotel/Casino and/or the Convention Center that the Lender determines might result in a Material Adverse Effect, but only if, at the time of such event, Borrower does not have in effect insurance coverage for acts of terrorism providing for rental loss and/or business interruption insurance covering the Property for a period (subject to either a 30-day waiting period or a 30-day deductible) of not less than 12 months from the date of Casualty. "TEST PERIOD" means each six-month period ending on the last day of a Fiscal Quarter commencing with the six-month period ending September 30, 2002. "TI/LC RESERVE ACCOUNT" has the meaning set forth in SECTION 3.5. "TRADEMARK SECURITY AGREEMENT" means the trademark security agreement executed by Borrower on the Closing Date, as the same may from time to time be modified or replaced in accordance herewith. "TRADE PAYABLES" means unsecured amounts payable by or on behalf of Borrower for or in respect of the operation of the Property in the ordinary course and which would under GAAP be regarded as ordinary expenses, including amounts payable to suppliers, vendors, contractors, mechanics, materialmen or other Persons providing property or services to the Property or Borrower. "TRANSACTION" means the transaction contemplated by the Loan Documents. 23 "TRANSACTION COSTS" means the costs and expenses described in SECTION 9.17. "TRANSFER" means the sale or other whole or partial conveyance of all or any portion of the Property or any direct or indirect interest therein to a third party, including granting of any purchase options, rights of first refusal, rights of first offer or similar rights in respect of any portion of the Property or the subjecting of any portion of the Property to restrictions on transfer; except that the conveyance of a space lease at the Property in accordance herewith shall not constitute a Transfer. "TREASURY CONSTANT YIELD" means the arithmetic mean of the rates published as "Treasury Constant Maturities" as of 5:00 p.m., New York time, for the five Business Days preceding the date on which acceleration has been declared, as shown on the USD screen of the Moneyline Telerate Service (or such other page as may replace that page on that service, or such other page or replacement therefor on any successor service), or if such service is not available, the Bloomberg Service (or any successor service), or if neither the Moneyline Telerate Service nor the Bloomberg Service is available, under Section 504 in the weekly statistical release designated H.15(519) (or any successor publication) published by the Board of Governors of the Federal Reserve System, for "On the Run" U.S. Treasury obligations corresponding to the scheduled Maturity Date. If no such maturity shall so exactly correspond, yields for the two most closely corresponding published maturities shall be calculated pursuant to the foregoing sentence and the Treasury Constant Yield shall be interpolated or extrapolated (as applicable) from such yields on a straight-line basis (rounding, in the case of relevant periods, to the nearest month). "USE" means, with respect to any Hazardous Substance, the generation, manufacture, processing, distribution, handling, use, treatment, recycling or storage of such Hazardous Substance or transportation of such Hazardous Substance. "U.S. PERSON" means a United States person within the meaning of Section 7701(a)(30) of the Code. "U.S. TAX" means any present or future tax, assessment or other charge or levy imposed by or on behalf of the United States of America or any taxing authority thereof. "WASTE" means any material abuse or destructive use (whether by action or inaction) of the Property. (b) RULES OF CONSTRUCTION. All references to sections, schedules and exhibits are to sections, schedules and exhibits in or to this Agreement unless otherwise specified. Unless otherwise specified: (i) all meanings attributed to defined terms in this Agreement shall be equally applicable to both the singular and plural forms of the terms so defined, (ii) "including" means "including, but not limited to", and (iii) "mortgage" means a mortgage, deed of trust, deed to secure debt or similar instrument, as applicable, and "mortgagee" means the secured party under a mortgage, deed of trust, deed to secure debt or similar instrument. All accounting terms not specifically defined in this Agreement shall be construed in accordance with GAAP, as same may be modified in this Agreement. 24 ARTICLE I GENERAL TERMS 1.1. THE LOAN. On the Closing Date, subject to the terms and conditions of this Agreement, Lender shall make a loan to Borrower (the "LOAN") in an initial principal amount equal to the Loan Amount. The Loan shall be evidenced by the Note and shall be secured by the Collateral. 1.2. THE TERM. (a) The Maturity Date of the Loan shall initially be the Payment Date in June 2005, or such earlier date as may result from acceleration. (b) Borrower shall have two successive options to extend the scheduled Maturity Date of the Loan to the Payment Date in the month containing the one-year anniversary of the Maturity Date as theretofore in effect (the period of each such extension, an "EXTENSION TERM"), PROVIDED (i) Borrower shall deliver to Lender written notice of such extension at least 60 days prior to the Maturity Date as theretofore in effect; (ii) no Event of Default or Cash Trap Period shall be continuing on either the date of such notice or the Maturity Date as theretofore in effect; (iii) Borrower shall have obtained an Extension Interest Rate Cap Agreement for the applicable Extension Term and collaterally assigned such Extension Interest Rate Cap Agreement to Lender pursuant to an Assignment of Interest Rate Cap Agreement; and (iv) Borrower shall have paid all reasonable out-of-pocket expenses incurred by Lender in connection with such extension. If Borrower fails to exercise any extension option in accordance with the provisions of this Agreement, such extension option, and any subsequent extension option hereunder, will automatically cease and terminate. 1.3. INTEREST AND PRINCIPAL. (a) Commencing with the Initial Payment Date and on each and every Payment Date thereafter, Borrower shall pay interest on the Principal Indebtedness for the Interest Accrual Period in which such Payment Date falls at a rate per annum equal to the sum of LIBOR, determined as of the Interest Determination Date immediately preceding such Interest Accrual Period, PLUS the Spread (except that interest shall be payable on the Indebtedness, including due and unpaid interest, at the Default Rate with respect to any portion of such Interest Accrual Period falling during the continuance of an Event of Default). Interest accruing for the first Interest Accrual Period shall be prepaid on the Closing Date from the Loan proceeds otherwise to be disbursed to Borrower at Closing. Interest payable hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed. All payments made by Borrower hereunder or under the other Loan Documents shall be made irrespective of, and without any deduction for, any setoffs or counterclaims. (b) No prepayments of the Loan shall be permitted except as provided in SECTIONS 2.1 and 5.16(d). The entire outstanding Principal Indebtedness, together with all interest thereon through the end of the Interest Accrual Period in which the Maturity Date falls (calculated as if such Principal Indebtedness were outstanding for the entire Interest Accrual 25 Period) and all other amounts then due under the Loan Documents shall be due and payable by Borrower to Lender on the Maturity Date. (c) Upon written notice from Lender to Borrower (the "COMPONENTIZATION NOTICE"), the Note will be deemed to have been subdivided (retroactively as of the Closing) into multiple components ("NOTE COMPONENTS"). Each Note Component shall have such notional balance (a "COMPONENT BALANCE") as Lender shall specify in the Componentization Notice and an interest rate equal to the sum of LIBOR plus such amount as Lender shall specify in the Componentization Notice (each such amount, a "COMPONENT SPREAD"); PROVIDED that (i) the sum of the Component Balances of all Note Components shall equal the then-outstanding Principal Indebtedness, and (ii) the initial weighted average of the Component Spreads, weighted on the basis of their respective Component Balances, shall equal the percentage set forth in clause (i) of the definition of "Spread". If requested by Lender, each Note Component shall be represented by a separate physical Note. Borrower shall execute and return to Lender each such Note within two Business Days after Borrower's receipt of an execution copy thereof. (d) Any payments of interest not paid when due hereunder shall bear interest at the applicable Default Rate and, when paid, shall be accompanied by a late fee in an amount equal to 3% times the amount of such late payment. Borrower acknowledges that (i) a delinquent payment will cause damage to Lender; (ii) the late fee is intended to compensate Lender for the loss of use of the delinquent payment and the expense incurred and time and effort associated with recovering the delinquent payment; (iii) it will be extremely difficult and impractical to ascertain the extent of Lender's damages caused by the delinquency; and (iv) the late fee represents Lender's and Borrower's reasonable estimate of Lender's damages from the delinquency and is not a penalty. (e) If all or any portion of the Loan is repaid following acceleration of the Loan resulting from an Event of Default that occurs prior to the end of the Lockout Period, Borrower shall pay to Lender an amount equal to the Event of Default Yield Maintenance Premium. Amounts received in respect of the Indebtedness following the acceleration of the Loan shall be applied toward the components of the Indebtedness in such sequence as Lender shall elect in its sole discretion or, at Lender's sole discretion, toward the payment of Taxes, Operating Expenses and Capital Expenditures, with the result that Event of Default Yield Maintenance Premiums shall accrue until the Principal Indebtedness is repaid after acceleration of the Loan but no amount received from Borrower shall constitute payment of an Event of Default Yield Maintenance Premium until Lender in its sole discretion so determines. Borrower acknowledges that (i) a prepayment will cause damage to Lender; (ii) the Event of Default Yield Maintenance Premium is intended to compensate Lender for the loss of their investment and the expense incurred and time and effort associated with making the Loan, which will not be fully repaid if the Loan is prepaid; (iii) it will be extremely difficult and impractical to ascertain the extent of the Lender's damages caused by a prepayment after an acceleration or any other prepayment not permitted by the Loan Documents; and (iv) the Event of Default Yield Maintenance Premium represents the Lender's and Borrower's reasonable estimate of Lender's damages for the prepayment and is not a penalty. 26 1.4. INTEREST RATE CAP AGREEMENTS. (a) On or prior to the Closing Date, Borrower shall obtain, and thereafter maintain in effect until the Initial Maturity Date, the Initial Interest Rate Cap Agreement, which shall be coterminous with the initial term of the Loan and have a notional amount equal to the Loan Amount. The Initial Interest Rate Cap Agreement shall have a LIBOR strike rate equal to or less than the LIBOR Strike Rate. (b) If Borrower exercises any of its options to extend the term of the Loan pursuant to SECTION 1.2(b), then on or prior to the commencement of the applicable Extension Term Borrower shall obtain an Extension Interest Rate Cap Agreement having (x) a term coterminous with such Extension Term, (y) a notional amount at least equal to the Principal Indebtedness as of the first day of such Extension Term, and (z) a LIBOR strike rate equal to or less than the LIBOR Strike Rate. (c) Borrower shall collaterally assign to Lender pursuant to an Assignment of Interest Rate Cap Agreement all of its right, title and interest in any and all payments under each Interest Rate Cap Agreement and shall deliver to Lender an executed counterpart of such Interest Rate Cap Agreement and obtain the consent of the Acceptable Counterparty to such collateral assignment (as evidenced by the Acceptable Counterparty's execution of such Collateral Assignment of Interest Rate Cap Agreement). (d) Borrower shall comply with all of its obligations under the terms and provisions of each Interest Rate Cap Agreement. All amounts paid under an Interest Rate Cap Agreement shall be deposited directly into the Cash Management Account. Borrower shall take all actions reasonably requested by Lender to enforce Lender's rights under the Interest Rate Cap Agreement in the event of a default by the counterparty thereunder and shall not waive, amend or otherwise modify any of its rights thereunder. 1.5. METHOD AND PLACE OF PAYMENT. Except as otherwise specifically provided in this Agreement, all payments and prepayments under this Agreement (including any deposit into the Cash Management Account pursuant to SECTION 3.2(b)) shall be made to Lender not later than 1:00 p.m., New York City time, on the date when due and shall be made in lawful money of the United States of America by wire transfer in federal or other immediately available funds to the account specified from time to time by Lender. Any funds received by Lender after such time shall be deemed to have been paid on the next succeeding Business Day. Lender shall notify Borrower in writing of any changes in the account to which payments are to be made. If the amount received from Borrower (or from the Cash Management Account pursuant to SECTION 3.2(b)) is less than the sum of all amounts then due and payable hereunder, such amount shall be applied toward the components of the Indebtedness (E.G., interest, principal and other amounts payable hereunder), the Loan and the Note Components in such sequence as Lender shall elect in its sole discretion. 1.6. REGULATORY CHANGE. If, as a result of any Regulatory Change, any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any deposits with, any Lender is imposed, modified or deemed applicable and the result is to increase the cost to such Lender of making LIBOR-based loans, or to reduce the amount 27 receivable by Lender hereunder in respect of any portion of the Loan with respect to LIBOR-based loans by an amount deemed by such Lender to be material (such increases in cost and reductions in amounts receivable, "INCREASED COSTS"), then Borrower agrees that it will pay to Lender upon Lender's request such additional amount or amounts (based upon a reasonable allocation thereof by such Lender to the LIBOR-based loans made by such Lender) as will compensate such Lender for such Increased Costs to the extent that such Increased Costs are reasonably allocable to the Loan. Lender will notify Borrower in writing of any event occurring after the Closing Date which will entitle Lender to compensation pursuant to this SECTION 1.6 as promptly as practicable after it obtains knowledge thereof and determines to request such compensation and will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. If such Lender shall fail to notify Borrower of any such event within 90 days following the end of the month during which such event occurred, then Borrower's liability for any amounts described in this Section incurred by such Lender as a result of such event shall be limited to those attributable to the period occurring subsequent to the 90th day prior to the date upon which such Lender actually notified Borrower of the occurrence of such event. Notwithstanding the foregoing, in no event shall Borrower be required to compensate any Lender for any portion of the income or franchise taxes of Lender, whether or not attributable to payments made by Borrower. If a Lender requests compensation under this SECTION 1.6, Borrower may, by notice to such Lender, require that such Lender furnish to Borrower a statement setting forth in reasonable detail the basis for requesting such compensation and the method for determining the amount thereof. 1.7. TAXES. (a) Borrower agrees to indemnify Lender against any present or future stamp, documentary or other similar or related taxes or other similar or related charges now or hereafter imposed, levied, collected, withheld or assessed by any United States Governmental Authority by reason of the execution and delivery of the Loan Documents and any consents, waivers, amendments and enforcement of rights under the Loan Documents (excluding income taxes, taxes on receipts and franchise taxes). (b) If Borrower is required by law to withhold or deduct any amount from any payment hereunder in respect of any U.S. Tax, Borrower shall withhold or deduct the appropriate amount, remit such amount to the appropriate Governmental Authority and pay to each Person to whom there has been an Assignment or Participation of the Loan and who is not a U.S. Person such additional amounts as are necessary in order that the net payment of any amount due to such non-U.S. Person hereunder after deduction for or withholding in respect of any U.S. Tax imposed with respect to such payment (or in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be less than the amount stated in this Agreement to be then due and payable; except that the foregoing obligation to pay such additional amounts shall not apply (i) to any assignee that has not complied with the obligations contained in SECTION 9.7(c), (ii) to any U.S. Taxes imposed solely by reason of the failure by such Person (or, if such Person is not the beneficial owner of the relevant Loan, such beneficial owner) to comply with applicable certification, information, documentation or other reporting requirements concerning the nationality, residence, identity or connections with the United States of America of such Person (or beneficial owner, as the case may be) if such compliance is required by statute or regulation 28 of the United States of America as a precondition to relief or exemption from such U.S. Taxes; or (iii) with respect to any Person who is a fiduciary or partnership or other than the sole beneficial owner of such payment, to any U.S. Tax imposed with respect to payments made under any Note to a fiduciary or partnership to the extent that the beneficial owner or member of the partnership would not have been entitled to the additional amounts if such beneficial owner or member of the partnership had been the holder of the Note. (c) Within 30 days after paying any amount from which it is required by law to make any deduction or withholding, and within 30 days after it is required by law to remit such deduction or withholding to any relevant taxing or other authority, Borrower shall deliver to such non-U.S. Person satisfactory evidence of such deduction, withholding or payment (as the case may be). 1.8. RELEASE. Upon payment of the Indebtedness in full, Lender shall execute instruments prepared by Borrower and reasonably satisfactory to Lender releasing and discharging all Liens on all Collateral securing payment of the Indebtedness (subject to Borrower's obligation to pay any associated fees and expenses), including all balances in the Collateral Accounts. ARTICLE II VOLUNTARY PREPAYMENT 2.1. VOLUNTARY PREPAYMENT. (a) Borrower shall be prohibited from prepaying the Loan, in whole or in part, until the first Payment Date following the second anniversary of the Closing Date; PROVIDED, HOWEVER, that Borrower shall have the option (which, at Borrower's election, may be exercised once or twice) to reduce the Lockout Period to not less than the period from the Closing Date until the first Payment Date following the first anniversary of the Closing Date (in each case, the period ending on and including the applicable Payment Date, the "LOCKOUT PERIOD") upon payment to Lender with respect to each six-month reduction of the Lockout Period of the applicable Lockout Reduction Fee. (b) After the expiration of the Lockout Period, provided no Event of Default is continuing, Borrower may voluntarily prepay the Loan in whole or in part on any Business Day without penalty, except that no prepayments shall be permitted on the last two Business Days in any Interest Accrual Period. Each such prepayment shall be accompanied by the amount of interest theretofore accrued but unpaid in respect of the principal amount so prepaid, plus the amount of interest which would have accrued on the principal amount so prepaid had it remained outstanding through the end of the Interest Accrual Period in which such prepayment is made. If the Loan has been bifurcated into Note Components pursuant to SECTION 1.3(c), all prepayments of the Loan made by Borrower in accordance with this SECTION 2.1 shall be applied to the Note Components in ascending order of interest rate (I.E., first to the Note Component with the lowest Component Spread until its outstanding principal balance has been reduced to zero, then to the Note Component with the second lowest Component Spread until its outstanding principal balance has been reduced to zero, and so on). Following any such prepayment, Borrower may 29 release or transfer, free and clear of the Lien of the Loan Documents, a portion of the notional amount of the Interest Rate Cap Agreement equal to the amount of such prepayment. (c) As a condition to any voluntary prepayment, Borrower shall give Lender written notice (a "PREPAYMENT NOTICE") of its intent to prepay, which notice must be given not later than the Payment Date prior to the commencement of the Interest Accrual Period in which such prepayment is to be made and must specify the Business Day on which such prepayment is to be made and the amount of such prepayment. If any such notice is given, the amount specified in such notice will be due and payable on the date specified therein. Notwithstanding the foregoing, if no Event of Default is then continuing beyond the applicable cure period, such Prepayment Notice may be rescinded by Borrower upon delivery of written notice to Lender not later than the Payment Date occurring in the Interest Accrual Period in which such prepayment was to be made (PROVIDED that Borrower shall compensate Lender for any and all reasonable out-of-pocket expenses incurred by Lender and/or its agents resulting from such rescission). ARTICLE III ACCOUNTS 3.1. CASH MANAGEMENT ACCOUNT. (a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with the Cash Management Bank an account for the collection of income from the Property (the "CASH MANAGEMENT ACCOUNT"). As a condition precedent to the closing of the Loan, Borrower shall cause the Cash Management Bank to execute and deliver a Cash Management Agreement which provides, INTER ALIA, that no party other than Lender shall have the right to withdraw funds from the Cash Management Account. The fees and expenses of the Cash Management Bank shall be paid by Borrower. (b) Within five Business Days following the Closing Date, Borrower shall deliver to each Tenant in the Property a written notice (a "TENANT NOTICE") in the form of EXHIBIT A instructing that (i) all payments under the Leases shall thereafter be transmitted by them directly to, and deposited directly into, the Cash Management Account and (ii) such instruction may not be rescinded unless and until such Tenant receives from Borrower or Lender a copy of Lender's written consent to such rescission. Borrower shall send a copy of each such written notice to Lender and shall redeliver such notices to each Tenant until such time as such Tenant complies therewith. Borrower covenants to cause all cash Revenues relating to the Property and all other money received by Borrower with respect to the Property (other than tenant security deposits required to be held in escrow accounts) to be deposited in the Cash Management Account by the end of the first Business Day following Borrower's or the Approved Property Manager's receipt thereof; and Borrower shall be permitted to deposit in the Cash Management Account such additional amounts as Borrower may elect. (c) Lender shall have the right to replace the Cash Management Bank with any other financial institution reasonably satisfactory to Borrower in which Eligible Accounts may be maintained which will promptly execute and deliver to Lender a Cash Management Agreement (and Borrower shall cooperate with Lender in connection with such transfer) in the 30 event that (i) at any time the Cash Management Bank ceases to be an Eligible Institution (unless the Collateral Accounts are maintained as segregated trust accounts in accordance with clause (ii) of the definition of Eligible Accounts), or (ii) the Cash Management Bank fails to comply with the Cash Management Agreement. 3.2. DISTRIBUTIONS FROM CASH MANAGEMENT ACCOUNT. (a) The Cash Management Agreement shall provide that the Cash Management Bank shall remit to an account specified by Borrower, at the end of each Business Day, the amount, if any, by which amounts then contained in the Cash Management Account exceed the Peg Balance; PROVIDED, HOWEVER, that Lender may terminate such remittances during the continuance of an Event of Default or Cash Trap Period upon notice to the Cash Management Bank. Lender may notify the Cash Management Bank at any time of any change in the Peg Balance. (b) On each Payment Date, provided no Event of Default has occurred and is continuing, Lender shall transfer amounts from the Cash Management Account, to the extent available therein, to make the following payments in the following order of priority: (i) to the Tax and Insurance Reserve Account, the amounts then required to be deposited therein pursuant to SECTION 3.4; (ii) to Lender, the amount of all scheduled or delinquent interest on the Loan and all other amounts then due and payable under the Loan Documents; (iii) during the continuance of a Cash Trap Period, to Borrower, the amount payable by Borrower during the following 30-day period in respect of Operating Expenses included in the Approved Annual Budget, to the extent amounts previously distributed to Borrower under this clause (iii) and not previously applied toward Operating Expenses are insufficient to make such payments (as notified by Borrower to Lender in writing at least five Business Days prior to such Payment Date), PROVIDED that the aggregate amount remitted to Borrower under this clause (iii) in any Fiscal Year shall not exceed the Budgeted Annual Operating Expense Amount, and PROVIDED FURTHER that the amounts disbursed to Borrower pursuant to this clause (iii) shall be used by Borrower solely to pay Operating Expenses included in the Approved Annual Budget; (iv) during the continuance of a Cash Trap Period, to the Capital Reserve Account, the amounts required to be deposited therein pursuant to SECTION 3.6(b), plus any additional amount payable by Borrower during the following 30-day period in respect of Capital Expenditures included in the Approved Annual Budget, to the extent amounts available in the Capital Reserve Account are insufficient to make such payments (as notified by Borrower to Lender in writing at least five Business Days prior to such Payment Date), PROVIDED that the aggregate amount remitted to the Capital Reserve Account under this clause (iv) in any Fiscal Year shall not exceed the Budgeted Annual Capital Expenditure Amount, and PROVIDED FURTHER that the amounts disbursed to the Capital Reserve Account pursuant to this clause (iv) shall be used by Borrower solely to pay Capital Expenditures included in the Approved Annual Budget; 31 (v) during the continuance of a Cash Trap Period, to the TI/LC Reserve Account, any amount required to be deposited therein pursuant to SECTION 3.5; (vi) during the continuance of a Cash Trap Period, all remaining amounts to the Cash Trap Account; and (vii) if no Cash Trap Period is continuing, all remaining amounts ("EXCESS CASH FLOW") to such accounts as Borrower may direct. (c) If on any Payment Date the amount in the Cash Management Account shall be insufficient to make all of the transfers required by SECTION 3.2(b)(i) through (v), as applicable, Borrower shall deposit into the Cash Management Account on such Payment Date the amount of such deficiency. If Borrower shall fail to make such deposit, the same shall constitute an Event of Default and, in addition to all other rights and remedies provided for under the Loan Documents, Lender may disburse and apply the amounts in the Cash Management Account toward the components of the Indebtedness (E.G., interest, principal and other amounts payable hereunder), the Loan and the Note Components in such sequence as Lender shall elect in its sole discretion. If on any Payment Date the amount in the Cash Management Account shall be sufficient at 1:00 p.m., New York City time, to make all of the transfers required by SECTION 3.2(b)(i) through (v), as applicable, the Borrower shall be deemed to have paid such amounts on such Payment Date unless the Lender is legally constrained from transferring such amount or causing such amount to be transferred in accordance with SECTION 3.2(b) by reason of any insolvency related to the Borrower or any other event. 3.3 CASH TRAP ACCOUNT. (a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with the Cash Management Bank an account for the deposit of amounts required to be deposited therein in accordance with SECTION 3.2(b)(vi) (the "CASH TRAP ACCOUNT"), which may be a subaccount of the Cash Management Account. (b) In the event that on any Payment Date during the continuance of a Cash Trap Period, (i) Actual NOI for the most recently ended Test Period shall be less than 65% of Closing Date NOI or (ii) following a Terrorism Event, Lender may, as it elects in its sole discretion, apply any and all amounts then on deposit in the Cash Trap Account to prepay the Loan, without prepayment premium or penalty, which prepayment shall be applied in accordance with SECTION 2.1(b). (c) Lender shall release to the Cash Management Account all amounts then contained in the Cash Trap Account on the first Payment Date after Borrower delivers to Lender evidence reasonably satisfactory to Lender establishing that no Cash Trap Period is then continuing. Such a release shall not preclude the subsequent commencement of a Cash Trap Period and the deposit of amounts into the Cash Trap Account as set forth in SECTION 3.2(b)(vi). 3.4. TAX AND INSURANCE ESCROW ACCOUNT. (a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with the Cash Management Bank an account for the purpose of reserving amounts 32 payable by Borrower in respect of Taxes and insurance premiums (the "TAX AND INSURANCE ESCROW ACCOUNT"), which may be a subaccount of the Cash Management Account. (b) On the Closing Date, the Borrower shall deposit into the Tax and Insurance Escrow Account an amount equal to the sum of (i) an amount sufficient to pay all Taxes by the 30th day prior to the date they come due, assuming subsequent monthly fundings on Payment Dates of 1/12 of projected annual Taxes, PLUS (ii) an amount sufficient to pay all insurance premiums by the 30th day prior to the date they come due, assuming subsequent monthly fundings on Payment Dates of 1/12 of projected insurance premiums. (c) On each subsequent Payment Date, an additional deposit shall be made therein in an amount equal to the sum of: (A) 1/12 of the Taxes that Lender reasonably estimates, based on information provided by Borrower, will be payable during the next ensuing 12 months, PLUS (B) 1/12 of the insurance premiums that Lender reasonably estimates, based on information provided by Borrower, will be payable during the next ensuing 12 months; PROVIDED, HOWEVER, that if at any time Lender reasonably determines that the amount in the Tax and Insurance Escrow Account will not be sufficient to accumulate (upon payment of subsequent monthly amounts in accordance with the provisions of this Agreement) the full amount of all installments of Taxes and insurance premiums by the date on which such amounts come due, then Lender shall notify Borrower of such determination and Borrower shall increase its monthly payments to the Tax and Insurance Escrow Account by the amount that Lender reasonably estimates is sufficient to achieve such accumulation. (d) Borrower shall provide Lender with copies of all tax and insurance bills relating to the Property promptly after Borrower's receipt thereof. Lender will apply amounts in the Tax and Insurance Escrow Account toward the purposes for which such amounts are deposited therein. In connection with the making of any payment from the Tax and Insurance Escrow Account, Lender may cause such payment to be made according to any bill, statement or estimate procured from the appropriate public office or insurance carrier, without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof unless given written advance notice by Borrower of such inaccuracy, invalidity or other contest. (e) Notwithstanding the terms and provisions of this SECTION 3.4, in the event that and for so long as Borrower has provided, upon request of Lender, evidence reasonably satisfactory to Lender that (i) the insurance escrow account described in Section 1(d) of Article VI of the REA (the "REA INSURANCE ESCROW ACCOUNT") is being maintained and (ii) Borrower and each of the other parties to the REA required to make deposits into the REA Insurance Escrow Account are doing so in accordance therewith, in lieu of the reserve for insurance premiums provided in this SECTION 3.4, Borrower shall instead make the deposits to the REA Insurance Escrow Account in accordance with the applicable provisions of the REA, PROVIDED that (v) Borrower shall cause the trustee maintaining the REA Insurance Escrow Account to 33 select an Eligible Account to serve such purpose, (w) Borrower shall have granted to the trustee of the REA Insurance Escrow Account for the benefit of Lender a first priority security interest in the REA Insurance Escrow Account, (x) any documents or agreements relating to the establishment and administration of the REA Insurance Escrow Account shall provide that such account is held by the trustee for the benefit of Lender, (y) Borrower shall do all things reasonably necessary in order to perfect the trustee's first priority security interest, for the benefit of Lender, in such account, and (z) Borrower shall have complied with the requirements set forth in the last sentence of SECTION 5.15(c). In the event Borrower shall fail to deliver reasonably satisfactory evidence of the maintenance of the REA Insurance Escrow Account to Lender in accordance with the foregoing sentence or the REA Insurance Escrow Account shall no longer be maintained, the provisions of this SECTION 3.4(e) shall be of no further force and effect until such evidence is delivered or such account is once again maintained. 3.5. TI/LC RESERVE ACCOUNT. (a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with the Cash Management Bank an account for the purpose of reserving amounts in respect of Tenant Improvements and Leasing Commissions during the continuance of a Cash Trap Period (the "TI/LC RESERVE ACCOUNT"), which may be a subaccount of the Cash Management Account. (b) On each Payment Date during the continuance of a Cash Trap Period, there shall be deposited into the TI/LC Reserve Account an amount equal to the Monthly TI/LC Amount. (c) Upon the request of Borrower at any time that no Event of Default is continuing (but not more often than once per calendar month), Lender shall cause disbursements to Borrower from the TI/LC Reserve Account to reimburse Borrower for Leasing Commissions and Tenant Improvement costs incurred by Borrower in connection with a Lease (or Lease extension) entered into in accordance herewith, PROVIDED that: (i) Borrower shall deliver to Lender invoices evidencing that the costs for which such disbursements are requested are due and payable or will be due and payable within 30 days thereafter; (ii) Borrower shall deliver to Lender an Officer's Certificate confirming that all such costs have been previously paid by Borrower or will be paid from the proceeds of the requested disbursement; and (iii) Lender may condition the making of a requested disbursement on (1) reasonable evidence establishing that Borrower has applied any amounts previously received by it in accordance with this Section for the expenses to which specific draws made hereunder relate, (2) a reasonably satisfactory site inspection, and (3) receipt of reasonably requested lien releases and waivers from any contractors, subcontractors and others with respect to such amounts. 34 (d) During the continuance of a Cash Trap Period or Deemed Cash Trap Period, whenever a Lease is terminated, whether by buy-out, cancellation, default or otherwise, and Borrower receives any payment (including retention of any security deposit or portion thereof, and all interest thereon), fee or penalty in respect of such termination (a "TERMINATION FEE"), Borrower shall promptly cause such Termination Fee to be deposited into the TI/LC Reserve Account. Provided no Event of Default has occurred and is continuing, Lender shall disburse such Termination Fee to Borrower at the written request of Borrower in respect of Leasing Commissions and Tenant Improvement costs incurred by Borrower in connection with a replacement Lease entered into in accordance with the terms of this Agreement in respect of the space covered by such terminated Lease and the remainder of such Termination Fee, if any, shall be remitted to the Cash Management Account after the space covered by such terminated Lease has been relet and the replacement Tenant is in occupancy and has commenced paying rent under the replacement Lease. (e) Provided no Cash Trap Period or Deemed Cash Trap Period is then continuing, Borrower may, at its option, deposit Termination Fees into the TI/LC Reserve Account. Provided no Event of Default has occurred and is continuing, Lender shall disburse to Borrower (i) on each Payment Date, the amortized portion of such Termination Fee for the calendar month in which such Payment Date falls, (ii) upon written request of Borrower, amounts in respect of Tenant Improvement costs or Leasing Commissions incurred by Borrower in connection with a Lease, and/or (iii) upon written request of Borrower, all or any portion of such Termination Fee then on deposit in the TI/LC Account. (f) Upon the termination of a Cash Trap Period or Deemed Cash Trap Period (giving pro-forma effect to any replacement lease(s) executed at or prior to the applicable date of determination), and provided no Event of Default is then continuing, Lender shall remit to Borrower the amount then contained in the TI/LC Reserve Account. 3.6. CAPITAL RESERVE ACCOUNT. (a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with the Cash Management Bank an account for the purpose of reserving amounts in respect of Capital Expenditures during the continuance of a Cash Trap Period (the "CAPITAL RESERVE ACCOUNT"), which may be a subaccount of the Cash Management Account. (b) On each Payment Date during the continuance of a Cash Trap Period, there shall be deposited into the Capital Reserve Account an amount equal to the Monthly Capital Reserve Amount. (c) Upon the request of Borrower at any time that no Event of Default is continuing (but not more often that once per calendar month, except in respect of emergency Capital Expenditures for which Borrower has delivered to Lender a written request accompanied by a reasonably detailed description of the emergency), Lender will cause disbursements to Borrower from the Capital Reserve Account to reimburse Borrower for Capital Expenditures; PROVIDED that: 35 (i) Borrower shall deliver to Lender invoices evidencing that the costs for which such disbursements are requested are due and payable or will be due and payable within 30 days thereafter; (ii) Borrower shall deliver to Lender an Officer's Certificate confirming that all such costs have been previously paid by Borrower or will be paid from the proceeds of the requested disbursement; and (iii) Lender may condition the making of a requested disbursement on (1) reasonable evidence establishing that Borrower has applied any amounts previously received by it in accordance with this Section for the expenses to which specific draws made hereunder relate, (2) a reasonably satisfactory site inspection, and (3) receipt of reasonably requested lien releases and waivers from any contractors, subcontractors and others with respect to such amounts. (d) Upon the termination of a Cash Trap Period, provided no Event of Default is then continuing, Lender shall remit to Borrower the amount then contained in the Capital Reserve Account. 3.7. [Reserved]. 3.8. LOSS PROCEEDS ACCOUNT. (a) On or prior to the Closing Date, Borrower shall establish and thereafter maintain with the Cash Management Bank an account for the purpose of depositing any Loss Proceeds (the "LOSS PROCEEDS ACCOUNT "), which may be a subaccount of the Cash Management Account. (b) Provided no Event of Default is continuing, funds in the Loss Proceeds account shall be applied in accordance with SECTION 5.16. 3.9. [Reserved]. 36 3.10. ACCOUNT COLLATERAL. (a) Borrower hereby grants a perfected first-priority security interest in favor of Lender in and to the Account Collateral as security for the Indebtedness, together with all rights of a secured party with respect thereto. Each Collateral Account shall be an Eligible Account under the sole dominion and control of Lender and shall be in the name of Borrower, as pledgor, and Lender, as pledgee. Borrower shall have no right to make withdrawals from any of the Collateral Accounts. Funds in the Collateral Accounts shall not be commingled with any other monies at any time. Borrower shall execute any additional documents that Lender in its reasonable discretion may require and shall provide all other evidence reasonably requested by Lender to evidence or perfect its first-priority security interest in the Account Collateral. (b) The insufficiency of amounts contained in the Collateral Accounts shall not relieve Borrower from its obligation to fulfill all covenants contained in the Loan Documents. (c) During the continuance of an Event of Default, Lender may, in its sole discretion, apply funds in the Collateral Accounts, and funds resulting from the liquidation of Permitted Investments contained in the Collateral Accounts, either toward the components of the Indebtedness (e.g., interest, principal and other amounts payable hereunder), the Loan and the Note Components in such sequence as Lender shall elect in its sole discretion, and/or toward the payment of Taxes, Operating Expenses and Capital Expenditures. 3.11. PERMITTED INVESTMENTS. (a) So long as no Event of Default shall be continuing, Borrower shall be permitted to direct the investment of the funds from time to time held in the Collateral Accounts in Permitted Investments and to sell or liquidate such Permitted Investments and reinvest proceeds from such sale or liquidation in other Permitted Investments (but Lender shall have no liability whatsoever in respect of any failure by the Cash Management Bank to do so), with all such proceeds and reinvestments to be held in the applicable Collateral Account; PROVIDED, HOWEVER, that the maturity of an adequate portion of the Permitted Investments on deposit in the Collateral Accounts shall be no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn therefrom pursuant to this Agreement. No Permitted Investment shall be liquidated at a loss at the direction of Borrower except to the extent necessary to make a required payment to Lender on a Payment Date. (b) All income and gains from the investment of funds in the Collateral Accounts shall be retained in the Collateral Accounts from which they were derived. As between Borrower and Lender, Borrower shall treat all income, gains and losses from the investment of amounts in the Collateral Accounts as its income or loss for federal, state and local income tax purposes. (c) After the Loan and all other Indebtedness have been paid in full, the Collateral Accounts shall be closed and the balances therein, if any, shall be paid to Borrower. 37 3.12. BANKRUPTCY. Borrower and Lender acknowledge and agree that upon the filing of a bankruptcy petition by or against Borrower under the Bankruptcy Code, the Account Collateral and the Revenues (whether then already in the Collateral Accounts, or then due or becoming due thereafter) shall be deemed not to be property of Borrower's bankruptcy estate within the meaning of Section 541 of the Bankruptcy Code. However, if a court of competent jurisdiction determines that, notwithstanding the foregoing characterization of the Account Collateral and the Revenues by Borrower and Lender, the Account Collateral and/or the Revenues do constitute property of Borrower's bankruptcy estate, then Borrower and Lender hereby further acknowledge and agree that all such Revenues, whether due and payable before or after the filing of the petition, are and shall be cash collateral of Lender. Borrower acknowledges that Lender does not consent to Borrower's use of such cash collateral and that, in the event Lender elects (in its sole discretion) to give such consent, such consent shall only be effective if given in writing signed by Lender. Except as provided in the immediately preceding sentence, Borrower shall not have the right to use or apply or require the use or application of such cash collateral (i) unless Borrower shall have received a court order authorizing the use of the same, and (ii) Borrower shall have provided such adequate protection to Lender as shall be required by the bankruptcy court in accordance with the Bankruptcy Code. ARTICLE IV REPRESENTATIONS Borrower represents to Lender that, as of the Closing Date, except as set forth in the Exception Report: 4.1. ORGANIZATION. (a) Borrower is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware, and is in good standing as a foreign limited liability company in each other jurisdiction where ownership of its properties or the conduct of its business requires it to be so, and Borrower has all power and authority under such laws and its organizational documents and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (b) Borrower Managing Member is a Nevada corporation, validly existing and in good standing under the laws of the State of Nevada, and Borrower Managing Member has all corporate power and authority under such laws and its organizational documents and all material governmental licenses, authorizations, consents and approvals required to carry on its business as now conducted. (c) Borrower has no subsidiaries and does not own any equity interest in any other Person. 4.2. AUTHORIZATION. Borrower has the power and authority to enter into this Agreement and the other Loan Documents, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated by the Loan Documents and has by proper action duly authorized the execution and delivery of the Loan Documents. 38 4.3. NO CONFLICTS. Neither the execution and delivery of the Loan Documents, nor the consummation of the transactions contemplated therein, nor performance of and compliance with the terms and provisions thereof will (i) violate or conflict with any provision of its operating agreement, certificate of formation or other governance document, (ii) violate any law, regulation (including Regulation U, Regulation X or Regulation T), order, writ, judgment, injunction, decree or permit applicable to it, (iii) violate or conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, contract or other Material Agreement to which Borrower or Sponsor is a party or by which Borrower or Sponsor may be bound, or (iv) result in or require the creation of any Lien upon or with respect to the Collateral in favor of any party other than Lender. 4.4. CONSENTS. No consent, approval, authorization or order of, or qualification with, any court or Governmental Authority is required in connection with the execution, delivery or performance by Borrower of this Agreement or the other Loan Documents, except for any of the foregoing which have already been obtained. 4.5. ENFORCEABLE OBLIGATIONS. This Agreement and the other Loan Documents have been duly executed and delivered by Borrower and constitute Borrower's legal, valid and binding obligations, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. The Loan Documents are not subject to any right of rescission, set-off, counterclaim or defense by Borrower, including the defense of usury. 4.6. NO DEFAULT. No Default or Event of Default will exist immediately following the making of the Loan. 4.7. PAYMENT OF TAXES. Borrower has filed, or caused to be filed, all tax returns (federal, state, local and foreign) required to be filed and paid all amounts of taxes due (including interest and penalties) except for taxes which are not yet delinquent, or are being contested in good faith and by appropriate proceedings with respect to which no Lien is in imminent danger of foreclosure, and has paid all other taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangible taxes) owing by it necessary to preserve the Liens in favor of Lender. 4.8. COMPLIANCE WITH LAW. Borrower, the Property and the use thereof comply in all material respects with all applicable Insurance Requirements and Legal Requirements, including building and zoning ordinances and codes. The Property conforms to current zoning requirements and is neither an illegal nor a legal nonconforming use. Borrower is not in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority the violation of which could adversely affect the Property or the condition (financial or otherwise) or business of Borrower. There has not been committed by or on behalf of Borrower or, to the best of Borrower's knowledge, any other person in occupancy of or involved with the operation or use of the Property, any act or omission affording the federal Governmental Authority or any state or local Governmental Authority the right of forfeiture as against the Property or any portion thereof or any monies paid in performance of its obligations under any of the Loan Documents. Neither Borrower nor Sponsor has purchased any portion of the Property with proceeds of any illegal activity. 39 4.9. ERISA. Neither Borrower nor any ERISA Affiliate of Borrower has incurred or could be subjected to any liability under Title IV or Section 302 of ERISA or Section 412 of the Code or maintains or contributes to, or is or has been required to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code. The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or substantially similar provisions under federal, state or local laws, rules or regulations. 4.10. GOVERNMENT REGULATION. Borrower is not an "investment company", or a company "controlled" by an "investment company", registered or required to be registered under the Investment Company Act of 1940, as amended. Borrower is not a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" or either a "holding company" or a "subsidiary company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 4.11. NO BANKRUPTCY FILING. Borrower is not contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property. Borrower does not have knowledge of any Person contemplating the filing of any such petition against it. 4.12. OTHER DEBT. Borrower does not have outstanding any Debt other than Permitted Debt. 4.13. LITIGATION. There are no actions, suits, proceedings, arbitrations or governmental investigations by or before any Governmental Authority or other agency now pending, and to the best of Borrower's knowledge there are no such actions, suits, proceedings, arbitrations or governmental investigations threatened against or affecting Borrower or the Property, which alone or in the aggregate are reasonably likely to result in a Material Adverse Effect (and all such actions, suits, proceedings, arbitrations and governmental investigations, regardless of materiality, are listed in the Exception Report; however, none of such items alone or in the aggregate are reasonably likely to result in a Material Adverse Effect). 4.14. LEASES; MATERIAL AGREEMENTS. (a) Borrower has delivered to Lender true and complete copies of all Leases. No person has any possessory interest in the Property or right to occupy the same except under and pursuant to the provisions of the Leases. The rent roll attached to this Agreement as SCHEDULE E (the "RENT ROLL") is true and correct in all material respects as of the date thereof. Except as indicated on the Rent Roll, no security deposits are being held by Borrower, no Tenant has any extension, renewal or termination options, no Tenant or other party has any option, right of first refusal or similar preferential right to purchase or lease all or any portion of the Property, no fixed rent has been paid more than 30 days in advance of its due date and no payments of rent are more than 30 days delinquent. (b) Except as indicated in SCHEDULE D, all work to be performed by the landlord under the Leases has been substantially performed, all contributions to be made by the 40 landlord to the Tenants thereunder have been made, all other conditions to each Tenant's obligations thereunder required to be satisfied to the date hereof have been satisfied, no Tenant has the right to require Borrower to perform or finance Tenant Improvements or Material Alterations and no material Leasing Commissions are owed or would be owed upon the exercise of any Tenant's existing renewal or expansion options. (c) There are no Material Agreements except as described in SCHEDULE F. Borrower has made available to Lender true and complete copies of all Material Agreements. Each Material Agreement has been entered into at arm's length in the ordinary course of business by or on behalf of Borrower. (d) The Leases and the Material Agreements are in full force and effect and there are no defaults thereunder by Borrower or, to Borrower's best knowledge, any other party thereto. Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by which it or the Property is bound. 4.15. [Reserved. 4.16. FINANCIAL CONDITION. All financial data concerning Borrower and the Property heretofore provided to Lender fairly presents in accordance with GAAP the financial position of Borrower in all material respects, as of the date on which it was made, and does not omit to state any fact necessary to make statements contained herein or therein not misleading. Since the delivery of such data, except as otherwise disclosed in writing to Lender, there have occurred no changes or circumstances in the Property's or Borrower's financial condition or position which have had or are reasonably likely to result in a Material Adverse Effect. 4.17. SINGLE-PURPOSE REQUIREMENTS. Each of Borrower and Borrower Managing Member is now, and has always been since its formation, a Single-Purpose Entity. 4.18. LOCATION OF CHIEF EXECUTIVE OFFICES. The location of Borrower's principal place of business and chief executive office is the address listed in SECTION 9.4. 4.19. NOT FOREIGN PERSON. Borrower is not a "FOREIGN PERSON" within the meaning of Section 1445(f)(3) of the Code. 4.20. LABOR MATTERS. Borrower is not a party to any collective bargaining agreements. 4.21. TITLE. Borrower owns good, marketable and insurable fee and leasehold title, as applicable, in and to the Property and good and marketable title to the related personal property, to the Collateral Accounts and to any other Collateral, in each case free and clear of all Liens whatsoever except the Permitted Encumbrances. The Deed of Trust, when properly recorded in the appropriate records, together with the Assignment of Rents and Leases and any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (i) a valid, perfected first priority Lien on the Property and the rents therefrom, enforceable as such against creditors of and purchasers from Borrower and subject only to 41 Permitted Encumbrances, and (ii) perfected Liens (pursuant to the Uniform Commercial Code of the State of Delaware) in and to all personalty, all in accordance with the terms thereof, in each case subject only to any applicable Permitted Encumbrances. The Permitted Encumbrances do not and will not materially and adversely affect or interfere with the value, or current use or operation, of the Property, or the security intended to be provided by the Deed of Trust or Borrower's ability to repay the Indebtedness in accordance with the terms of the Loan Documents. Except as insured by a Qualified Title Insurance Policy, there are no claims for payment for work, labor or materials affecting the Property which are or may become a Lien prior to, or of equal priority with, the Liens created by the Loan Documents. No creditor of Borrower other than Lender has in its possession any goods that constitute or evidence the Collateral. 4.22. NO ENCROACHMENTS. Except as shown on the Qualified Survey or as permitted pursuant to the REA, (i) all of the improvements on the Property lie wholly within the boundaries and building restriction lines of the Property, (ii) no improvements on adjoining property encroach upon the Property, and (iii) no easements or other encumbrances upon the Property encroach upon any of the improvements, so as, in the case of each of clauses (i), (ii) and (iii), to materially adversely affect the value or marketability of the Property, except those which are insured against by a Qualified Title Insurance Policy. 4.23. PHYSICAL CONDITION. (a) Except for matters set forth in the Engineering Reports, the Property (including sidewalks, storm drainage system, roof, plumbing system, HVAC system, fire protection system, electrical system, equipment, elevators, exterior sidings and doors, irrigation system and all structural components) is in good condition, order and repair in all respects material to its use, operation or value. (b) Borrower is not aware of any material structural or other material defect or damages in the Property, whether latent or otherwise. (c) Borrower has not received and is not aware of any other party's receipt of notice from any insurance company or bonding company of any defects or inadequacies in the Property which would, alone or in the aggregate, adversely affect in any material respect the insurability of the same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond. 4.24. FRAUDULENT CONVEYANCE. Borrower has not entered into the Transaction or any of the Loan Documents with the actual intent to hinder, delay or defraud any creditor. Borrower has received reasonably equivalent value in exchange for its obligations under the Loan Documents. On the Closing Date, the fair salable value of Borrower's aggregate assets is and will, immediately following the making of the Loan and the use and disbursement of the proceeds thereof, be greater than Borrower's probable aggregate liabilities (including subordinated, unliquidated, disputed and Contingent Obligations). Borrower's aggregate assets do not and, immediately following the making of the Loan and the use and disbursement of the proceeds thereof will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. Borrower does not intend to, and does not believe 42 that it will, incur debts and liabilities (including Contingent Obligations and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of Borrower). 4.25. MANAGEMENT. Except for any Approved Management Agreement, no property management agreements are in effect with respect to the Property. 4.26. CONDEMNATION. No Condemnation has been commenced or, to Borrower's actual knowledge, is contemplated with respect to all or any material portion of the Property or for the relocation of roadways providing access to the Property. 4.27. UTILITIES AND PUBLIC ACCESS. The following statements are accurate in all material respects: (i) The Property has adequate rights of access to dedicated public ways (and makes no material use of any means of access or egress that is not pursuant to such dedicated public ways or recorded, irrevocable rights-of-way or easements) and is adequately served pursuant to the ESA and/or by all public utilities necessary to the continued use and enjoyment of the Property as presently used and enjoyed. (ii) All public utilities necessary to the continued use and enjoyment of the Property as presently used and enjoyed are located in the public right-of-way abutting the premises or in areas ("EASEMENT AREAS") that are the subject of recorded irrevocable easement agreements which benefit the Property and which are listed in Schedule A of the Qualified Title Insurance Policy so as to be included in the coverage thereof. (iii) All such utilities are connected so as to serve the Property without passing over other property other than Easement Areas. (iv) All roads necessary for the full utilization of the Property for its current purpose have been completed and are either part of the Property (by way of deed, easement or ground lease) or dedicated to public use and accepted by all Governmental Authorities. 4.28. ENVIRONMENTAL MATTERS. Except as disclosed in the Environmental Reports: (i) The Property is in compliance in all material respects with all Environmental Laws applicable to the Property (which compliance includes, but is not limited to, the possession of, and compliance with, in all material respects, all environmental, health and safety permits, approvals, licenses, registrations and other governmental authorizations required in connection with the ownership and operation of the Property under all Environmental Laws). (ii) No Environmental Claim is pending with respect to the Property, nor, to Borrower's knowledge, is any threatened, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or 43 judicial requirements outstanding under any Environmental Law with respect to Borrower or the Property. (iii) Without limiting the generality of the foregoing, to the Borrower's knowledge there is not present at, on, in or under the Property, any Hazardous Substances, PCB-containing equipment, asbestos or asbestos containing materials, underground storage tanks or surface impoundments for any Hazardous Substance, lead in drinking water (except in concentrations that comply with all Environmental Laws), or lead-based paint. (iv) To Borrower's knowledge, there have not been and are no past, present or threatened Releases of any Hazardous Substance from or at the Property that are reasonably likely to form the basis of any Environmental Claim, and, to Borrower's knowledge, there is no threat of any Release of any Hazardous Substance migrating to the Property. (v) No Liens are presently recorded with the appropriate land records under or pursuant to any Environmental Law with respect to the Property and, to Borrower's best knowledge, no Governmental Authority has been taking any action to subject the Property to Liens under any Environmental Law. (vi) There have been no material environmental investigations, studies, audits, reviews or other analyses conducted by or that are in the possession of Borrower in relation to the Property which have not been made available to Lender. 4.29. ASSESSMENTS. There are no pending or, to Borrower's knowledge, proposed special or other assessments for public improvements or otherwise affecting the Property, nor are there any contemplated improvements to the Property that may result in such special or other assessments. No extension of time for assessment or payment by Borrower of any federal, state or local tax is in effect. 4.30. NO JOINT ASSESSMENT. Borrower has not suffered, permitted or initiated the joint assessment of the Property (i) with any other real property constituting a separate tax lot, or (ii) with any personal property, or any other procedure whereby the Lien of any Taxes which may be levied against such other real property or personal property shall be assessed or levied or charged to the Property as a single Lien. 4.31. SEPARATE LOTS. No portion of the Property is part of a tax lot that also includes any real property that is not Collateral. 4.32. PERMITS; CERTIFICATE OF OCCUPANCY. Borrower has obtained all material Permits necessary for the present and contemplated use and operation of the Property. The uses being made of the Property are in conformity in all material respects with the certificate of occupancy and/or Permits for the Property and any other restrictions, covenants or conditions affecting the Property. 4.33. FLOOD ZONE. None of the Improvements on the Property is located in an area identified by the Federal Emergency Management Agency or the Federal Insurance 44 Administration as having special flood hazards (Zone A), and, to the extent that any portion of the Property is located in an area identified by the Federal Emergency Management Agency as a "100 YEAR FLOOD PLAIN," the Property is covered by flood insurance meeting the requirements set forth in SECTION 5.15(a)(ii). 4.34. SECURITY DEPOSITS. Borrower is in compliance in all material respects with all Legal Requirements relating to security deposits. 4.35. CERTAIN AGREEMENTS. Neither the Borrower nor, to the Borrower's knowledge, any other party thereto, is in default under the REA, the ESA or any Master Lease. 4.36. INSURANCE. Borrower has obtained insurance policies reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. All premiums on such insurance policies required to be paid as of the Closing Date have been paid for the current policy period. No Person, including Borrower, has done, by act or omission, anything which would impair the coverage of any such policy. 4.37. MASTER LEASES. With respect to each Master Lease, each of the following is true or has been waived by Lender in writing following Lender's receipt of Rating Confirmation with respect thereto: (i) a true and complete copy of such Master Lease has been delivered to Lender, and such Master Lease or a memorandum thereof has been duly recorded; (ii) such Master Lease permits the interest of the lessee thereunder to be encumbered by the Deed of Trust and does not restrict the use of the Property by such lessee, its successors or assigns in a manner that would cause a Material Adverse Effect; (iii) such Master Lease may not be amended, modified, cancelled or terminated without the prior written consent of Lender, and any such action without such consent is void; (iv) such Master Lease has an original term which expires one day after the termination of the underlying Lease; (v) the base rental payable to lessor under such Master Lease is subject to increase and is based on a percentage of percentage rent or a percentage of base and percentage rent in each case payable by the Tenant under the underlying Lease; (vi) such Master Lease is not subject to any liens or encumbrances superior to, or of equal priority with, the Deed of Trust (other than the related lessor's fee interest); (vii) such Master Lease shall remain prior to any Lien upon the related fee interest now existing or that may hereafter be granted; (viii) such Master Lease is assignable by a holder of a mortgage encumbering the lessee's interest therein upon a foreclosure of such mortgage without the consent of the lessor thereunder; 45 (ix) such Master Lease is in full force and effect and no default has occurred thereunder nor, to Borrower's knowledge, is there any existing condition which, but for the passage of time or the giving of notice or both, would result in a default under the terms of such Master Lease; (x) such Master Lease requires the lessor thereunder to give notice of any default by the lessee to a holder of a mortgage encumbering the lessee's interest therein; and such Master Lease further provides that no notice given thereunder is effective against such holder, unless a copy has been given to such holder in the manner described in such Master Lease; (xi) such Master Lease contains no restrictions on the identity of a leasehold mortgagee; (xii) a holder of a mortgage encumbering the lessee's interest therein is permitted at least 30 days in addition to Borrower's applicable cure period to cure any default under such Master Lease which is curable after the receipt of notice of any such default before the lessor thereunder may terminate such Master Lease (and, where necessary, is permitted the opportunity to gain possession of the interest of the lessee under such Master Lease through legal proceedings or to take other action so long as such holder is proceeding diligently); (xiii) in the case of any default which is not curable by a holder of a deed of trust or mortgage encumbering the lessee's interest therein, or in the event of the bankruptcy or insolvency of the lessee under such Master Lease, such holder has the right, following termination of the existing Master Lease or rejection thereof by a bankruptcy trustee or similar party, to enter into a new lease with the lessor on the same terms as the existing Master Lease, and all rights of the lessee under such Master Lease may be exercised by or on behalf of such holder; and (xiv) such Master Lease does not impose any restrictions on subletting. 4.38. SURVIVAL. Borrower agrees that all of the representations of Borrower set forth in this Agreement and in the other Loan Documents shall survive for so long as any portion of the Indebtedness is outstanding. All representations, covenants and agreements made by Borrower in this Agreement or in the other Loan Documents shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or hereafter made by Lender or on its behalf. On the date of any Securitization, on not less than five Business Days' prior written notice, Borrower shall deliver to Lender a certification (x) confirming that all of the representations contained in this Agreement are true and correct in all material respects as of the date of such Securitization, or (y) otherwise specifying any changes in or qualifications to such representations as of such date as may be necessary to make such representations consistent with the facts as they exist on such date. 4.39. AFFILIATE TRANSACTIONS. Other than the REA (and the transactions and arrangements required thereunder) and the Master Leases, Borrower is not a party to any transaction with any Affiliate of Borrower, except on terms which are no less favorable to 46 Borrower than would be obtained in a comparable arm's length transaction with an unrelated third party. ARTICLE V AFFIRMATIVE COVENANTS 5.1. EXISTENCE. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence as a limited liability company and all rights, licenses, Permits, franchises and other agreements necessary for the continued use and operation of its business. Borrower shall deliver to Lender a copy of each amendment or other modification to any of its organizational documents promptly after the execution thereof. 5.2. MAINTENANCE OF PROPERTY; COMPLIANCE WITH LEGAL REQUIREMENTS. Borrower will keep the Property in good working order and repair, reasonable wear and tear excepted. Subject to SECTION 6.13, Borrower shall from time to time make, or cause to be made, all reasonably necessary and desirable repairs, renewals, replacements, betterments and improvements thereto. Borrower shall comply with, and shall cause the Property to comply with and be operated, maintained, repaired and improved in compliance in all material respects with, all Legal Requirements and Insurance Requirements. 5.3. IMPOSITIONS AND OTHER CLAIMS. Borrower shall pay and discharge all taxes, assessments and governmental charges levied upon it, its income and its assets as and when such taxes, assessments and charges are due and payable, as well as all lawful claims for labor, materials and supplies or otherwise, subject to any rights to contest contained in the definition of Permitted Encumbrances (whether or not there is an applicable Lien). Borrower shall file all federal, state and local tax returns and other reports that it is required by law to file. If any law or regulation applicable to Lender, any Note, the Property or the Deed of Trust is enacted that deducts from the value of property for the purpose of taxation any Lien thereon or imposes upon Lender the payment of the whole or any portion of the taxes or assessments or charges or Liens required in this Agreement to be paid by Borrower or changes in any way the laws or regulations relating to the taxation of mortgages or security agreements or debts secured by mortgages or security agreements or the interest of the mortgagee or secured party in the property covered thereby, or the manner of collection of such taxes, so as to affect the Deed of Trust, the Indebtedness or Lender, then Borrower, upon demand by Lender, shall pay such taxes, assessments, charges or Liens, or reimburse Lender for any amounts paid by Lender. If in the opinion of Lender's counsel it might be unlawful to require Borrower to make such payment or the making of such payment might result in the imposition of interest beyond the maximum amount permitted by applicable Law, Lender may elect to declare all of the Indebtedness to be due and payable (without any premium or penalty) 90 days from the giving of written notice by Lender to Borrower. 5.4. ACCESS TO PROPERTY. Borrower shall permit agents, representatives and employees of Lender and the Servicer to inspect the Property or any portion thereof, and/or the books and records of Borrower, at such reasonable times as may be requested by Lender upon 47 reasonable advance notice so long as such access does not materially interfere with any Tenant at the Property and is in compliance with applicable Leases. 5.5. NOTICE OF DEFAULT. Borrower shall promptly advise Lender of the occurrence to the best of Borrower's knowledge of any Default or Event of Default. 5.6. LITIGATION. Borrower shall give prompt written notice to Lender of any litigation or governmental proceedings pending or threatened in writing against Borrower which is reasonably likely to have a Material Adverse Effect. 5.7. COOPERATE IN LEGAL PROCEEDINGS. Except with respect to any claim by Borrower against Lender, Borrower shall cooperate fully with Lender with respect to any proceedings before any Governmental Authority which may in any way affect the rights of Lender hereunder or under any of the Loan Documents and, in connection therewith, Lender may, at its election, participate or designate a representative to participate in any such proceedings. 5.8. LEASES. (a) Borrower shall furnish Lender with executed copies of all Leases. A new Lease which is not a Major Lease, a renewal and extension or amendment of a Lease which is not a Major Lease, shall not require Lender's approval, PROVIDED (i) the rent and other amounts payable thereunder, based upon the location of the demised premises, the type of property, and the tenant improvements, allowances or concessions to be made or provided by the landlord thereunder (taken as a whole) are "market" rate as determined by Borrower in good faith, and (ii) the other proposed terms thereof (taken as a whole) are Commercially Reasonable as determined by Borrower in good faith. Lender hereby agrees that the terms and provisions of Borrower's standard forms of Lease attached hereto as EXHIBIT D (collectively, the "STANDARD LEASE FORM") without material deviation (defined for these purposes as a deviation that would likely be objectionable to a prudent institutional lender) are Commercially Reasonable. Subject to the provisions of the next sentence, all new Leases must provide that they are subject and subordinate to any current or future mortgage financing on the Property and that the Tenant agrees to attorn to any foreclosing mortgagee at such mortgagee's request. Lender agrees to execute subordination, non-disturbance and attornment agreements on the form attached hereto as EXHIBIT E (with such changes as reasonably approved by Lender), or, if required under the applicable Lease, any other form reasonably satisfactory to Lender, with respect to any Lease as to which a subordination, non-disturbance and attornment agreement is required to be delivered by Lender, either as an obligation of Borrower under such Lease or in order to effect the subordination of such Lease and the agreement to attorn by the related Tenant. (b) All new Leases which are Major Leases or are Leases that do not comply with the second sentence of SECTION 5.8(a), all terminations (other than terminations arising from an event of default by tenant under the terms of the applicable Lease), extensions, renewals and material amendments of Major Leases, any surrender of rights under any Major Lease and any material amendment to the Standard Lease Form shall be subject to the prior written consent of Lender, which consent shall not be unreasonably withheld, conditioned or delayed (and all other new Leases or terminations, extensions, renewals and amendments of Leases shall not require 48 Lender's prior written consent), it being agreed by Lender that Lender's approval shall not be withheld with respect to a proposed Major Lease unless (i) the rent and other amounts payable under such proposed Major Lease, based upon the location of the demised premises, the type of property, the tenant improvements, allowances and concessions to be made or provided by the landlord under such proposed Major Lease (taken as a whole), is not at "market" rates, or (ii) the proposed terms of such proposed Major Lease (taken as a whole and in context with the items described in clause (i) of this sentence) are not Commercially Reasonable. In addition, Lender's approval of any extension or renewal of a Major Lease (whether such extension or renewal is by way of a modification of a Tenant's existing Lease or by way of a new Lease with such Tenant) shall not be required if such extension or renewal is at a "market" rent or the rent otherwise required pursuant to the terms of such Tenant's existing Lease and the other terms of such extended or renewed Lease are the same or better in all material respects than those contained in such Tenant's existing Lease. (c) Each request for approval of a Lease shall be submitted to Lender and shall prominently include a statement in capital letters "URGENT - LENDER'S ATTENTION REQUIRED WITHIN 10 BUSINESS DAYS", together with (i) a copy of the proposed Lease, (ii) a summary of the economic terms thereof and any termination options contained therein, and (iii) copies of all written materials obtained by Borrower in connection with its evaluation of the creditworthiness of the proposed Tenant, or, with respect to a proposed termination, a description of the reason therefor (the foregoing items (i) through (iii) being collectively, the "LEASE APPROVAL MATERIALS"), and shall be deemed approved if Lender shall not have notified the Borrower in writing of its disapproval thereof and the reasons for such disapproval within 10 Business Days after its receipt of the Lease Approval Materials. Borrower may also request, pursuant to the procedure described in the preceding sentence, Lender's approval of the rent and other amounts payable by the proposed Tenant and Borrower, including tenant allowances and rent concessions, under a proposed Lease and the identity of the proposed Tenant (and any guarantor) and any other material terms of such Lease (collectively, the "PROPOSED LEASE TERMS") even if the form of the proposed Lease is not yet available for Lender's review, provided that the approval or deemed approval of the Proposed Lease Terms shall not constitute Lender's approval of such Lease (except with respect to the Proposed Lease Terms), and when the proposed Lease becomes available Borrower shall be required to submit it for Lender's approval in accordance with the procedure described in the preceding sentence, except that Lender's approval shall not be required if Borrower delivers to Lender an Officer's Certificate certifying that the final proposed Lease is consistent, in all material respects, with the Standard Lease Form, and the Proposed Lease terms previously approved (or deemed approved) by Lender. If Lender shall have previously consented or been deemed to have consented to the Proposed Lease Terms under such proposed Lease, Lender's approval of such proposed Lease shall not be withheld unless the other terms of such proposed Lease, taken as a whole (and in the context of the already approved Proposed Lease Terms), are not Commercially Reasonable. (d) Borrower shall (i) deliver to each new Tenant a Tenant Notice upon execution of such Tenant's Lease, and promptly thereafter deliver to Lender a copy thereof and evidence of such Tenant's receipt thereof; (ii) observe and perform all the material obligations imposed upon the lessor under the Leases; (iii) enforce in a commercially reasonable manner as determined by Borrower in good faith all of the material terms, covenants and conditions contained in the Leases on the part of the lessee thereunder to be observed or performed, short of 49 termination thereof, except that Borrower may terminate any Lease following a material default thereunder by the respective Tenant; (iv) not collect any of the rents thereunder more than one month in advance; (v) not execute any assignment of lessor's interest in the Leases or associated rents other than the Assignment of Rents and Leases; and (vi) not cancel or terminate any guarantee of any of the Major Leases without the prior written consent of Lender not to be unreasonably withheld. (e) Security deposits of Tenants under all Leases, whether held in cash or any other form, shall not be commingled with any other funds of Borrower and, if cash, shall be deposited by Borrower at such commercial or savings bank or banks as may be reasonably satisfactory to Lender and (to the extent of Borrower's rights thereto) pledged to Lender. Any bond or other instrument which Borrower is permitted to hold in lieu of cash security deposits under any applicable Legal Requirements shall be maintained in full force and effect unless replaced by cash deposits as described above, shall be issued by an institution reasonably satisfactory to Lender, shall (if not prohibited by any Legal Requirements) name Lender as payee or mortgagee thereunder (or at Lender's option, be fully assignable to Lender) or may name Borrower as payee thereunder so long as such bond or other instrument is (to the extent of Borrower's rights thereto) pledged to Lender as security for the Indebtedness and shall, in all respects, comply with any applicable Legal Requirements and otherwise be reasonably satisfactory to Lender. Borrower shall, upon Lender's request, provide Lender with evidence reasonably satisfactory to Lender of Borrower's compliance with the foregoing. During the continuance of any Event of Default, Borrower shall, upon Lender's request, deposit with Lender in an Eligible Account pledged to Lender an amount equal to the aggregate security deposits of the Tenants (and any interest theretofore earned on such security deposits and actually received by Borrower) which Borrower has not theretofore returned to the applicable Tenants or applied in accordance with the terms of the applicable Lease, and Lender shall hold such security deposits in a segregated account in accordance with the applicable Lease. (f) Each of Borrower and Sponsor covenant and agree not to take any action in respect of leasing efforts for adjacent retail properties owned by Affiliates of the Borrower or Sponsor, or contemplated to be developed by Affiliates of the Borrower or Sponsor, that would diminish or adversely affect the leasing efforts at the Property. 5.9. PLAN ASSETS, ETC. Borrower will do, or cause to be done, all things necessary to ensure that it will not be deemed to hold Plan Assets at any time. 5.10. FURTHER ASSURANCES. Borrower shall, at Borrower's sole cost and expense, from time to time as reasonably requested by Lender, execute, acknowledge, record, register, file and/or deliver to Lender such other instruments, agreements, certificates and documents (including Uniform Commercial Code financing statements and amended or replacement mortgages) as Lender may reasonably request to evidence, confirm, perfect and maintain the Liens securing or intended to secure the obligations of Borrower under the Loan Documents or to facilitate a replacement of the Cash Management Bank pursuant to SECTION 3.1(c) or a bifurcation of the Note pursuant to SECTIONS 1.3(c) and/or 9.7(a), in each case if reasonably requested by Lender, and do and execute all such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of this Agreement and the other Loan Documents as Lender shall reasonably request 50 from time to time. Borrower hereby authorizes and appoints Lender as its attorney-in-fact to execute, acknowledge, record, register and/or file such instruments, agreements, certificates and documents, and to do and execute such acts, conveyances and assurances, should Borrower fail to do so itself in violation of this Agreement following written request from Lender, in each case without the signature of Borrower. The foregoing grant of authority is a power of attorney coupled with an interest and such appointment shall be irrevocable for the term of this Agreement. Borrower hereby ratifies all actions that such attorney shall lawfully take or cause to be taken in accordance with this SECTION 5.10. 5.11. MANAGEMENT OF COLLATERAL. (a) The Property shall be managed at all times by an Approved Property Manager pursuant to an Approved Management Agreement. Pursuant to the Subordination of Property Management Agreement or Agreements, each Approved Property Manager shall agree that its Approved Management Agreement, and all fees thereunder (including any incentive fees), are subject and subordinate to the Indebtedness. Borrower may from time to time appoint a successor manager, which successor manager shall be an Approved Property Manager, to manage the Property pursuant to an Approved Management Agreement, and such successor manager shall execute for Lender's benefit a Subordination of Property Management Agreement in form and substance reasonably satisfactory to Lender. The fees of the Approved Property Manager (including any incentive fees) shall not exceed market rates generally paid by owners of similar properties in the applicable geographic market in which the Property is located. (b) Borrower shall cause each Approved Property Manager (including any successor Approved Property Manager) to maintain worker's compensation insurance as required by Governmental Authorities. (c) Borrower shall notify Lender in writing of any default of Borrower or the Approved Property Manager under the Approved Management Agreement, after the expiration of any applicable cure periods, of which Borrower has actual knowledge. Lender shall have the right, after reasonable notice to Borrower and in accordance with the Subordination of Management Agreement, to cure defaults of Borrower under the Approved Management Agreement. Any reasonable out-of-pocket expenses incurred by Lender to cure any such default shall constitute a part of the Indebtedness and shall be due from Borrower upon demand by Lender. (d) Upon the occurrence and during the continuance of an Event of Default, Lender may, in its sole discretion, require, Borrower to terminate the Approved Management Agreement and engage an Approved Property Manager selected by Lender to serve as replacement Approved Property Manager pursuant to an Approved Management Agreement. Following a default by the Approved Property Manager under the Approved Management Agreement that is reasonably likely to result in a Material Adverse Effect and after the expiration of any applicable cure period, Lender may, in its reasonable discretion, require Borrower to terminate the Approved Management Agreement and engage an Approved Property Manager selected by Lender that is not one of the entities listed on Schedule J hereto (or, at Borrower's option, selected by Borrower and reasonably approved by Lender) to serve as replacement Approved Property Manager pursuant to an Approved Management Agreement. 51 5.12. ANNUAL FINANCIAL STATEMENTS. As soon as available, and in any event within 120 days after the close of each Fiscal Year, Borrower shall furnish to Lender, in hard copy and, if available, electronic format, a balance sheet of Borrower as of the end of such year, together with related statements of income and members' capital for such Fiscal Year, audited by a nationally-recognized, independent certified public accounting firm reasonably satisfactory to Lender (Lender hereby confirming that the firm of PriceWaterhouseCoopers is satisfactory to Lender ) whose opinion shall be to the effect that such financial statements have been prepared in accordance with GAAP applied on a consistent basis and shall not be qualified as to the scope of the audit or as to the status of Borrower as a going concern. Together with Borrower's annual financial statements, Borrower shall furnish to Lender, in hard copy and, if available, electronic format: (i) a statement of cash flows; (ii) then current rent roll and occupancy reports; (iii) an annual report for the most recently completed fiscal year, describing Capital Expenditures (stated separately with respect to any project costing in excess of $100,000), Tenant Improvements and Leasing Commissions; and (iv) such other information as Lender shall reasonably request. 5.13. QUARTERLY FINANCIAL STATEMENTS. As soon as available, and in any event within 45 days after the end of each Fiscal Quarter, Borrower shall furnish to Lender, in hard copy and, if available, electronic format, quarterly and year-to-date unaudited financial statements prepared for such fiscal quarter with respect to Borrower, including a balance sheet and operating statement as of the end of such Fiscal Quarter, together with related statements of income, members' capital and cash flows for such Fiscal Quarter and for the portion of the Fiscal Year ending with such Fiscal Quarter, which statements shall be accompanied by an Officer's Certificate certifying that the same are true and correct and were prepared in accordance with GAAP applied on a consistent basis, subject to changes resulting from audit and normal year-end audit adjustments. Each such quarterly report shall be accompanied by the following, in hard copy and, if available, electronic format: (i) a statement in reasonable detail which calculates Net Operating Income for the Test Period ending at the end of such Fiscal Quarter; (ii) a summary of Leases signed during such quarter, which summary shall include the Tenant's name, lease term, base rent, Tenant Improvements, leasing commissions paid, free rent and other material tenant concessions; (iii) then current rent roll and occupancy reports; (iv) notice of any change in Borrower's condition, financial or otherwise, which is reasonably likely to have a Material Adverse Effect; 52 (v) evidence reasonably satisfactory to Lender that any installments of insurance premiums payable during such Fiscal Quarter in accordance with SECTION 5.15(c) have been paid; and (vi) such other information as Lender shall reasonably request. 5.14. MONTHLY FINANCIAL STATEMENTS. Until the occurrence of the Securitization, Borrower shall furnish within 45 days after the end of each calendar month, in hard copy and, if available, electronic format, monthly and year-to-date unaudited financial statements prepared for such month with respect to Borrower, including a balance sheet and operating statement as of the end of such month, together with related statements of income, members' capital and cash flows for such month and for the portion of the Fiscal Year ending with such month, which statements shall be accompanied by an Officer's Certificate certifying that the same are true and correct and were prepared in accordance with GAAP applied on a consistent basis, subject to changes resulting from audit and normal year-end audit adjustments. Each such monthly report shall be accompanied by the following: (i) a summary of Leases signed during such month, which summary shall include the Tenant's name, lease term, base rent, escalations, Tenant Improvements, leasing commissions paid, free rent and other concessions; (ii) then current rent roll and occupancy reports; and (iii) such other information as Lender shall reasonably request. 5.15. INSURANCE. (a) Borrower shall obtain and maintain with respect to the Property, for the mutual benefit of Borrower and Lender at all times, the following policies of insurance: (i) insurance against loss or damage by standard perils then included within the classification "All Risks Special Form Cause of Loss" (including coverage for damage caused by windstorm and hail). Such insurance shall (A) be in an aggregate amount equal to the full replacement cost of the Property and fixtures (without deduction for physical depreciation); (B) have deductibles acceptable to Lender (but in any event not in excess of $250,000); (C) contain a "Replacement Cost Endorsement" and an "Agreed Upon Amount Endorsement" with a waiver of depreciation; (D) include an ordinance or law coverage endorsement containing Coverage A: "Loss Due to Operation of Law" (with a minimum liability equal to $10,000,000 for property damage and $10,000,000 for business loss), Coverage B: "Demolition Cost" and Coverage C: "Increased Cost of Construction" coverages; and (E) contain coverage for additions and alterations; (ii) flood insurance if any portion of the Property is located in an area identified by the Federal Emergency Management Agency as a "100 year flood plain" or special hazard area (including Zones B, X, C and Shaded X areas), (A) in an amount equal to the maximum limit of coverage available under the National Flood Insurance 53 Program (or in a greater amount if required by the Lender), and (B) having deductibles not in excess $25,000; (iii) commercial general liability insurance, including broad form coverage of property damage, blanket contractual liability and personal injuries (including death resulting therefrom) and containing minimum limits per occurrence of not less than $1,000,000 with not less than a $2,000,000 general aggregate for any policy year. In addition, at least $100,000,000 excess and/or umbrella liability insurance shall be obtained and maintained for any and all claims, including all legal liability imposed upon Borrower and all related court costs and attorneys' fees and disbursements; (iv) rental loss and/or business interruption insurance in an amount equal to not less than 18 months of the estimated annual gross revenues from the Property, such insurance to cover losses for a period not less than 18 months after any Casualty. The amount of such insurance shall be increased from time to time as and when the gross revenues from the Property increase; (v) insurance against loss or damage from (A) leakage of sprinkler systems and (B) explosion of steam boilers, air conditioning equipment, high pressure piping, machinery and equipment, pressure vessels or similar apparatus now or hereafter installed in any of the Improvements (without exclusion for explosions) and insurance against loss of occupancy or use arising from any breakdown, in such amounts as are generally available at reasonable premiums and are generally required by institutional lenders for properties comparable to the Property; (vi) worker's compensation insurance with respect to all employees of Borrower as and to the extent required by any Governmental Authority or Legal Requirement and employer's liability coverage of at least $1,000,000; provided that Borrower may self-insure with respect to the foregoing so long as (i) such self insurance is administered in accordance with the law of the State of Nevada and (ii) such self-insurance shall provide for a retention by Borrower of no greater than $250,000 per occurrence; (vii) during any period of a Material Alteration, "All Risk" insurance or "Course of Construction" insurance in non-reporting form, (A) covering any improvements under construction, being renovated or otherwise being altered, and (B) in an amount equal to not less than the full insurable value of the Property against such risks (including fire and extended coverage and collapse of the Improvements to agreed limits) as Lender may request, in form and substance reasonably acceptable to Lender; (viii) if required by Lender, earthquake coverage shall be included in the Policy obtained in accordance with Section 5.15(a)(i), with a deductible of not more than $500,000; and (ix) such other insurance as may from time to time be reasonably requested by Lender; PROVIDED that Borrower shall not be required to obtain such insurance as is required by any of CLAUSES (i) through (viii) of this SECTION 5.15(a) if such insurance is 54 both (a) not being required by prudent institutional lenders with respect to retail properties similar to the Property located in or around the region in which the Property is located and (b) not available at commercially reasonable rates; PROVIDED FURTHER that the foregoing proviso shall in no event apply to the insurance coverage required under SECTION 5.15(b)(xi) below. (b) All policies of insurance (the "POLICIES") required pursuant to this SECTION 5.15: (i) shall be issued by one or more primary insurers having a claims-paying ability of at least "AA-" or its equivalent by each of the Rating Agencies, or by a syndicate of insurers through which at least 75% of the coverage (if there are 4 or fewer members of the syndicate) or at least 60% of the coverage (if there are 5 or more members of the syndicate) is with carriers having such claims-paying ability ratings (provided that all such carriers shall have claims-paying ability ratings of not less than "A-" or the equivalent); (ii) shall be maintained throughout the term of the Loan without cost to Lender; (iii) with respect to casualty policies, shall contain a standard noncontributory mortgagee clause naming Lender and its successors and assigns as additional insureds and, subject to the REA, first mortgagee and loss payee; (iv) with respect to liability policies, shall name Lender and its successors and assigns as additional insureds; (v) with respect to rental or business interruption insurance policies, shall, name Lender and its successors and/or assigns as additional insureds, and, subject to the REA, loss payee; (vi) shall contain an endorsement providing that neither Borrower nor Lender nor any other party shall be a co-insurer under said Policies and that Lender shall receive at least 30 days' (10 days in the case of non-payment of premiums) prior written notice of any modification, reduction or cancellation thereof; (vii) shall contain an endorsement providing that no act or negligence of Borrower or of a Tenant or other occupant shall affect the validity or enforceability of the insurance insofar as a mortgagee is concerned; (viii) shall contain a waiver of subrogation against Lender; (ix) shall contain deductibles no larger than $250,000; (x) may be in the form of a blanket policy (which blanket policy may also cover, INTER ALIA, the Hotel/Casino and/or the SECC, except that the separate terrorism policy delivered pursuant to CLAUSE (xi) below may only cover the Property, the Hotel/Casino, SECC and/or the contemplated "Phase II Resort" to be developed on the 55 real property described on EXHIBIT H-1 hereto), PROVIDED that Borrower shall provide evidence satisfactory to Lender that overall insurance limits will under no circumstance limit the amount that will be paid in respect of the Property to less than the amounts required under SECTION 5.15(a), and such blanket policy shall provide that, unless otherwise agreed to by Lender, the limit of such policy shall be a "true blanket limit" and not limited by a schedule of values for the properties covered thereby (unless the scheduled value for the Property complies with SECTION 5.15(a)(i) above); and (xi) shall include coverage for terrorism (either as part of the Policies required to be obtained pursuant SECTION 5.15(a) above or as a separate Policy) in an amount no less than the Loan Amount, subject to a deductible of no more than $2,000,000 (or with respect to business income loss, either a 30-day waiting period or a 30-day deductible) or such higher deductible satisfactory to Lender in its sole and absolute discretion, and in form and substance reasonably satisfactory to Lender, which coverage will be maintained for so long as such coverage (A) is being obtained by prudent owners of real estate in the United States of a similar type and quality and a similar location to the Property or (B) is otherwise available for an annual premium that is less than or equal to $1,000,000 (the "PREMIUM THRESHOLD"); PROVIDED that if neither clause (A) nor clause (B) of this SECTION 5.15(b)(xi) is satisfied, then Borrower shall obtain terrorism coverage (at a cost not to exceed to Premium Threshold) from such providers and with such coverage as shall be acceptable to Lender in its reasonable discretion. Terrorism coverage obtained by Borrower pursuant to this SECTION 5.15(b)(xi) may be in the form of a blanket policy covering the Property, the Hotel/Casino and the Convention Center, provided that (w) the loss payee for the Policy shall be either Lender or a trustee for the benefit of Lender (and the owners of the Hotel/Casino and the Convention Center and their respective mortgagees), (x) the trustee shall be a party reasonably satisfactory to Lender and the Rating Agencies (PROVIDED that The Bank of Nova Scotia, so long as it maintains the ratings in effect on the date hereof, shall be deemed reasonably satisfactory to Lender and the Rating Agencies), (y) the Policy shall contain, if available, a "priority of payment" endorsement providing that any Loss Proceeds payable thereunder will be applied first, in accordance with the Loan Agreement (including setting aside amounts to pay business interruption losses of Borrower up to the policy limit prior to applying such Loss Proceeds to restoration of either the Hotel/Casino and/or the Convention Center) and (z) the REA shall be amended to provide that the trustee shall deposit any and all Loss Proceeds received under such Policy into the Loss Proceeds Account for application in accordance with this Agreement, except if and to the extent such Loss Proceeds exceed the cost of restoration of the Property, as reasonably determined by Lender. Any policies of insurance maintained by Borrower but not required hereunder shall comply with clauses (iii), (iv), (v), (vi) and (viii) above. Lender hereby confirms that the Policies delivered to Lender on the Closing Date in accordance with the requirements set forth in SECTION 5.15(b)(xi) satisfy such requirements. (c) Promptly after the Closing Date and promptly after the date of renewal or replacement of any Policy (but, in each case, not more than 60 days after such date), Borrower shall deliver to Lender copies, certified as true and correct by Borrower, of the Policies required to be maintained pursuant to the provisions of this Agreement. In addition, not later than 30 days 56 prior to the expiration date of any Policy, Borrower shall deliver to Lender certificates of insurance (on ACCORD Form 27 where available) and binders evidencing the renewal or replacement of such Policy. Borrower shall pay the annual premiums for all Policies in full on or prior to the date of renewal or issuance thereof; PROVIDED that, notwithstanding the foregoing, Borrower shall be permitted to pay the annual premiums for the Policies in installments if (i) Borrower shall deliver, or cause to be delivered, not less than 15 Business Days prior to the expiration date of such Policies, evidence reasonably satisfactory to Lender that all amounts necessary to pay such annual premiums, as determined in accordance with the REA, have been deposited in the REA Insurance Escrow Account by Borrower and the other parties to the REA required to make such deposits in accordance with Section 1(d) of Article VI of the REA. 5.16. CASUALTY AND CONDEMNATION. (a) Borrower shall give prompt notice to Lender of any Casualty or Condemnation. Subject to applicable provisions of the REA, Lender may (x) jointly with Borrower settle and adjust any claims, (y) during the continuance of an Event of Default, settle and adjust any claims without the consent or cooperation of Borrower, or (z) allow Borrower to settle and adjust any claims; except that if no Event of Default has occurred and is continuing, Borrower may settle and adjust claims aggregating (with respect to the portion thereof attributable to the Property) not in excess of $1,500,000 if such settlement or adjustment is carried out in a competent and timely manner, but subject to the provisions of the REA, Lender shall be entitled to collect and receive any and all Loss Proceeds. The reasonable expenses incurred by Lender in the adjustment and collection of Loss Proceeds shall become part of the Indebtedness and shall be reimbursed by Borrower to Lender upon demand therefor. (b) Subject to the provisions of the REA, all Loss Proceeds from any Casualty or Condemnation shall be immediately deposited into the Loss Proceeds Account (monthly rental loss/business interruption proceeds to be initially deposited into the Loss Proceeds Account and subsequently deposited into the Cash Management Account in installments as and when the lost rental income covered by such proceeds would have been payable). If either (x) any Condemnation or Casualty occurs as to which, in the reasonable judgment of Lender: (i) in the case of a Casualty, the cost of restoration would not exceed 30% of the Loan Amount and the Casualty does not render untenantable, or result in the cancellation of Leases covering, more than 30% of the gross rentable area of the Property; (ii) in the case of a Condemnation, the Condemnation does not render untenantable, or result in the cancellation of Leases covering, more than 15% of the gross rentable area of the Property; (iii) restoration of the Property is reasonably expected to be completed prior to the expiration of rental interruption insurance and at least six months prior to the Maturity Date; 57 (iv) after such restoration, the fair market value of the Property is reasonably expected to equal at least the fair market value of the Property immediately prior to such Condemnation or Casualty (assuming the affected portion of the Property is relet); and (v) in the case of a Casualty related to a terrorist act affecting the Property, the Hotel/Casino and/or the Convention Center, Lender determines that such Casualty will not result in a Material Adverse Effect; or (y) if restoration of the Property is required by the REA, or if Lender otherwise elects to allow Borrower to restore the Property, then the Loss Proceeds shall be held and disposed of pursuant to, and under the conditions set forth in, Section 12 of Article X of the REA. To the extent not inconsistent with Section 12 of Article X of the REA the following provisions (i.e., all of the remaining provisions of this SECTION 5.15(b)) shall apply: the Loss Proceeds after receipt thereof by Lender and reimbursement of any reasonable expenses incurred by Lender in connection therewith shall be applied to the cost of restoring, repairing, replacing or rebuilding the Property or part thereof subject to the Casualty or Condemnation, in the manner set forth below (and Borrower shall commence as promptly and diligently as practicable to prosecute such restoring, repairing, replacing or rebuilding of the Property in a workmanlike fashion and in accordance with applicable law to a status at least equivalent to the quality and character of the Property immediately prior to the Condemnation or Casualty to the extent practicable). Provided that no Event of Default shall have occurred and be then continuing, Lender shall disburse Loss Proceeds to Borrower upon Lender's being furnished with (i) evidence reasonably satisfactory to it of the estimated cost of completion of the restoration, (ii) funds, or assurances reasonably satisfactory to Lender that such funds are available and sufficient in addition to any remaining Loss Proceeds, to complete the proposed restoration, and (iii) such architect's certificates, waivers of lien, contractor's sworn statements, title insurance endorsements, bonds, plats of survey and such other evidences of cost, payment and performance as Lender may reasonably request; and Lender may, in any event, require that all plans and specifications for restoration reasonably estimated by Lender to exceed $1,500,000 be submitted to and approved by Lender prior to commencement of work (which approval shall not be unreasonably withheld). If Lender reasonably estimates that the cost to restore will exceed $1,500,000, Lender may retain a local construction consultant to inspect such work and review Borrower's request for payments and Borrower shall, on demand by Lender, reimburse Lender for the reasonable fees and disbursements of such consultant (which fees and expenses shall constitute Indebtedness). No payment shall exceed 90% of the value of the work performed from time to time until such time as 50% of the restoration (calculated based on the anticipated aggregate cost of the work) has been completed, and amounts retained prior to completion of 50% of the restoration shall not be paid prior to the final completion of the restoration. Funds other than Loss Proceeds shall be disbursed prior to disbursement of such Loss Proceeds, and at all times the undisbursed balance of such proceeds remaining in the Loss Proceeds Account, together with any additional funds irrevocably and unconditionally deposited therein or irrevocably and unconditionally committed for that purpose, shall be at least sufficient in the reasonable judgment of Lender to pay for the cost of completion of the restoration free and clear of all Liens or claims for Lien. (c) Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Loss Proceeds lawfully or equitably payable to Lender in connection with the Property. Lender shall be reimbursed for any expenses reasonably incurred in connection therewith 58 (including reasonable attorneys' fees and disbursements, and, if reasonably necessary to collect such proceeds, the expense of an Appraisal on behalf of Lender) out of such Loss Proceeds or, if insufficient for such purpose, by Borrower. (d) If Borrower is not entitled to apply Loss Proceeds toward the restoration of the Property pursuant to SECTION 5.16(b) and Lender elects not to permit such Loss Proceeds to be so applied, such Loss Proceeds shall be applied on the first Payment Date following such election to the prepayment of the Loan and shall be accompanied by (i) interest through the end of the applicable Interest Accrual Period (calculated as if the amount prepaid were outstanding for the entire Interest Accrual Period) and (ii) the applicable Make-Whole Payment, if any. 5.17. ANNUAL BUDGET. Borrower has previously delivered to Lender the Annual Budget for the Property for the 2002 Fiscal Year. At least 45 days prior to the commencement of each subsequent Fiscal Year during the term of the Loan, Borrower shall deliver to Lender for informational purposes only an Annual Budget for the Property for the ensuing Fiscal Year and, promptly after preparation thereof, any subsequent revisions to the Annual Budget. During the continuance of any Cash Trap Period or Event of Default, such Annual Budget and any such revisions shall be subject to Lender's approval, except with respect to Non-Discretionary Items (the Annual Budget, as so approved, the "APPROVED ANNUAL BUDGET"); PROVIDED, HOWEVER, that (1) Borrower shall not amend any Annual Budget more than once in any 60-day period, and (2) so long as no Event of Default is continuing, the consent of Lender to any such Annual Budget and any such revisions shall not be unreasonably withheld or delayed. 5.18. GENERAL INDEMNITY. Borrower shall indemnify, reimburse, defend and hold harmless Lender and its officers, directors, employees and agents (collectively, the "INDEMNIFIED PARTIES") for, from and against any and all Damages of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Indemnified Parties, in any way relating to or arising out of the making or holding or enforcement of the Loan by Lender or the administration of the Transaction to the extent resulting, directly or indirectly, from any claim (including any Environmental Claim) made (whether or not in connection with any legal action, suit, or proceeding) by or on behalf of any Person; PROVIDED, HOWEVER, that no Indemnified Party shall have the right to be indemnified hereunder for its own (or any other Indemnified Party's) fraud, bad faith, gross negligence or willful misconduct. The provisions of and undertakings and indemnification set forth in this SECTION 5.18 shall survive the satisfaction and payment in full of the Indebtedness and termination of this Agreement. 5.19. COVENANTS WITH RESPECT TO REA AND ESA. (a) Borrower covenants and agrees to: (i) comply with all material terms, conditions and covenants of the REA and the ESA; (ii) promptly deliver to Lender a true and complete copy of each and every notice of default received by such Borrower with respect to any obligation of Borrower under the provisions of the REA or the ESA; 59 (iv) deliver to Lender copies of any written notices of default or event of default relating to the REA or the ESA served by Borrower; (v) in addition to any rights granted Lender under the REA and/or the ESA, after the occurrence of an Event of Default, so long as the Loan is outstanding, the Borrower shall not grant or withhold any consent, approval or waiver under the REA or the ESA without the prior written consent of Lender (which consent shall not be unreasonably withheld or delayed). (b) Borrower shall pay all fees, assessments, charges or other amounts assessed pursuant to the REA and the ESA when the same become due and payable. Upon request of Lender, Borrower shall deliver to Lender evidence reasonably satisfactory to Lender that such fees, assessments, charges and other amounts which are then due and payable, have been paid by Borrower, which evidence shall include, without limitation, a true and correct photocopy of Borrower's cancelled check(s) evidencing such payment(s). (c) In the event Loss Proceeds are required to be deposited into an account maintained by the trustee under the REA pursuant to Article X of the REA, Borrower shall cause such trustee to select an Eligible Account to serve such purpose. ARTICLE VI NEGATIVE COVENANTS 6.1. LIENS ON THE PROPERTY. Borrower shall not permit or suffer the existence of any Lien on any of its assets, other than Permitted Encumbrances. 6.2. OWNERSHIP. Borrower shall not own any assets other than the Property and related personal property and fixtures located therein or used in connection therewith. 6.3. TRANSFER. Borrower shall not Transfer any Collateral other than the replacement or other disposition of obsolete or non-useful personal property and fixtures in the ordinary course of business, and Borrower shall not hereafter file a declaration of condominium with respect to the Property. 6.4. DEBT. Borrower shall not have any Debt, other than Permitted Debt. 6.5. DISSOLUTION; MERGER OR CONSOLIDATION. Borrower shall not dissolve, terminate, liquidate, merge with or consolidate into another Person. 6.6. CHANGE IN BUSINESS. Borrower shall not make any material change in the scope or nature of its business objectives, purposes or operations or undertake or participate in activities other than the continuance of its present business. 6.7. DEBT CANCELLATION. Borrower shall not cancel or otherwise forgive or release any material claim or Debt owed to it by any Person, except for adequate consideration or in the ordinary course of its business. 60 6.8. AFFILIATE TRANSACTIONS. Other than the REA (and the transactions and arrangements required thereunder) or the Master Leases, Borrower shall not enter into, or be a party to, any transaction with any Affiliate of Borrower, except on terms which are no less favorable to Borrower than would be obtained in a comparable arm's length transaction with an unrelated third party. 6.9. MISAPPLICATION OF FUNDS. Borrower shall not distribute any Revenue or Loss Proceeds in violation of the provisions of this Agreement, fail to remit amounts to the Cash Management Account as required by SECTION 3.1(b), or misappropriate any security deposit or portion thereof. 6.10. PLACE OF BUSINESS. Borrower shall not change its chief executive office or its principal place of business without giving Lender at least 30 days' prior written notice thereof and promptly providing Lender such information and replacement Uniform Commercial Code financing statements as Lender may reasonably request in connection therewith. 6.11. MODIFICATIONS AND WAIVERS. Unless otherwise consented to in writing by Lender: (i) Borrower shall not amend, modify, terminate, renew, or surrender any rights or remedies under any Lease, or enter into any Lease, except in compliance with SECTION 5.8; (ii) Borrower shall not terminate, amend or modify (a) the operating agreement or certificate of formation of Borrower or the certificate of incorporation or by-laws of Borrower Managing Member (provided that Lender's consent to any amendment or modification of the foregoing which does not affect the status of Borrower or Borrower Managing Member as a Single-Purpose Entity shall not be unreasonably withheld), or (b) the Approved Management Agreement, the REA, the ESA or any Master Lease (provided that (1) so long as no Event of Default is then continuing, Lender's consent shall not be unreasonably withheld, and (2) de minimis amendments or modifications that do not adversely affect the Lender shall be permitted without Lender's consent); and (iii) Borrower shall not amend, modify, surrender or waive any material rights or remedies under, or enter into or terminate, any Material Agreement (other than the Material Agreements covered under CLAUSE (ii) above) unless such action is performed in the ordinary course of business and is commercially reasonable. 6.12. ERISA. (a) Borrower shall not maintain or contribute to, or agree to maintain or contribute to, or permit any ERISA Affiliate of Borrower to maintain or contribute to or agree to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code. (b) Borrower shall not engage in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or substantially similar provisions under 61 federal, state or local laws, rules or regulations or in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by Lender of any of its rights under the Note, this Agreement, the Deed of Trust or any other Loan Document) to be a nonexempt prohibited transaction under such provisions. 6.13. ALTERATIONS AND EXPANSIONS. During the continuance of a Cash Trap Period or Event of Default, Borrower shall not perform or contract to perform any Capital Expenditures that are not consistent with the Approved Capital Budget (as the same may be amended in accordance with the provisions hereof). Borrower shall not perform or contract to perform any Material Alteration without the prior written consent of Lender, which consent (in the absence of an Event of Default) shall not be unreasonably withheld, and which consent shall be deemed given by Lender if (A) Lender shall not have notified the Borrower in writing of its refusal to grant such consent within the Material Alteration Approval Period (as hereinafter defined) after its receipt of a written request for such consent from Borrower and (B) the written request described in clause (A) shall prominently include a statement in capital letters "URGENT - LENDER'S ATTENTION REQUIRED WITHIN 10 BUSINESS DAYS". If Lender's consent is requested hereunder with respect to a Material Alteration, Lender may retain a construction consultant to review such request and, if such request is granted, Lender may retain a construction consultant to inspect the work from time to time. Borrower shall, on demand by Lender, reimburse Lender for the reasonable fees and disbursements of such consultant. As used herein, "MATERIAL ALTERATION APPROVAL PERIODS" shall mean the 10 Business Day period following the Lender's receipt of Borrower's written request; PROVIDED, HOWEVER, that Lender may by written notice given to the Borrower within the initial 10 Business Day period extend the initial Material Alteration Approval Period for a reasonable time (not to exceed 30 days, subject to reasonable extension by Lender if Lender is diligently pursuing its evaluation of the proposed Material Alteration). 6.14. ADVANCES AND INVESTMENTS. Borrower shall not lend money or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any Person, except for Permitted Investments. 6.15. SINGLE-PURPOSE ENTITY. Neither Borrower nor Borrower Managing Member shall cease to be a Single-Purpose Entity. 6.16. ZONING AND USES. Borrower shall not do any of the following: (i) initiate or support any limiting change in the permitted uses of the Property (or to the extent applicable, zoning reclassification of the Property) or any portion thereof, seek any variance under existing land use restrictions, laws, rules or regulations (or, to the extent applicable, zoning ordinances) applicable to the Property, or use or permit the use of the Property in a manner that would result in the use of the Property becoming a nonconforming use under applicable land-use restrictions or zoning ordinances or that would violate the terms of any Major Lease, Material Agreement, Legal Requirement or Permitted Encumbrance; (ii) consent to any modification, amendment or supplement to any of the terms of any Permitted Encumbrance in a manner adverse to the interests of Lender; 62 (iii) impose or consent to the imposition of any restrictive covenants, easements or encumbrances upon the Property in any manner that adversely affects in any material respect its value, utility or transferability, except in connection with an amendment of the REA otherwise permitted hereunder; (iv) execute or file any subdivision plat affecting the Property, or institute, or permit the institution of, proceedings to alter any tax lot comprising the Property; or (v) permit or consent to any Property being used by the public or any Person in such manner as might make possible a claim of adverse usage or possession or of any implied dedication or easement. 6.17. WASTE. Borrower shall not commit or permit any Waste on the Property, nor take any actions that might invalidate any insurance required to be carried on the Property under this Agreement. ARTICLE VII DEFAULTS 7.1. EVENT OF DEFAULT. The occurrence of any one or more of the following events shall be, and shall constitute the commencement of, an "EVENT OF DEFAULT" hereunder (any Event of Default which has occurred shall continue unless and until waived by Lender in its sole discretion): (a) PAYMENT. (i) Borrower shall default in the payment when due of any principal or interest owing hereunder or under the Note (including any mandatory prepayment required hereunder); or (ii) Borrower shall default, and such default shall continue for at least five Business Days after notice to Borrower that such amounts are owing, in the payment when due of fees, expenses or other amounts owing hereunder, under the Note or under any of the other Loan Documents (other than principal and interest owing hereunder or under the Note). (b) REPRESENTATIONS. Any representation made by Borrower in any of the Loan Documents, or in any report, certificate, financial statement or other instrument, agreement or document furnished to Lender hereunder or under any other Loan Documents that was required to be furnished shall have been false or misleading in any material respect as of the date such representation was made and such default is not cured within 30 days after written notice from Lender. (c) OTHER LOAN DOCUMENTS. Any Loan Document shall fail to be in full force and effect or to convey the material Liens, rights, powers and privileges purported to be created thereby; or a default shall occur under any of the other Loan Documents beyond the expiration of 63 any applicable cure period (and if no cure period is specified in such Loan Document, the analogous cure period specified in Section 7.1(a), (b) or (i), as applicable, shall apply). (d) BANKRUPTCY, ETC. (i) Borrower or Borrower Managing Member shall commence a voluntary case concerning itself under Title 11 of the United States Code (as amended, modified, succeeded or replaced, from time to time, the "BANKRUPTCY CODE"); (ii) Borrower or Borrower Managing Member shall commence any other proceeding under any reorganization, arrangement, adjustment of debt, relief of creditors, dissolution, insolvency or similar law of any jurisdiction whether now or hereafter in effect relating to Borrower or Borrower Managing Member; (iii) there is commenced against Borrower or Borrower Managing Member an involuntary case under the Bankruptcy Code, or any such other proceeding, which remains undismissed for a period of 90 days after commencement; (iv) Borrower or Borrower Managing Member is adjudicated insolvent or bankrupt; (v) Borrower or Borrower Managing Member suffers appointment of any custodian or the like for it or for any substantial portion of its property and such appointment continues unchanged or unstayed for a period of 90 days after commencement of such appointment; (vi) Borrower or Borrower Managing Member makes a general assignment for the benefit of creditors; or (vii) any action is taken by Borrower or Borrower Managing Member for the purpose of effecting any of the foregoing. (e) CHANGE OF CONTROL. (i) A Change of Control shall occur; or (ii) any party other than Borrower's current direct majority equityholder shall obtain 49% or more of the direct equity interests in Borrower (even if not constituting a Change of Control) and Borrower shall fail to deliver to Lender with respect to such new equityholder a new non-consolidation opinion satisfactory to (A) prior to any Securitization, Lender (Lender's approval of any such non-consolidation opinion which is in substantially the form of the Nonconsolidation Opinion shall not be unreasonably withheld) or (B) after any Securitization, each of the Rating Agencies. (f) EQUITY PLEDGE; PREFERRED EQUITY. Any direct or indirect equity interest in or right to distributions from Borrower shall be subject to a Lien in favor of any Person, or Borrower or any holder of a direct or indirect interest in Borrower shall issue preferred equity (or debt granting the holder thereof rights substantially similar to those generally associated with 64 preferred equity), in each case unless Rating Confirmation is received with respect thereto, except that pledges of direct and indirect equity interests in and rights to distributions from a Qualified Equityholder (including Sponsor), and the issuance of preferred equity interests (or debt granting the holder thereof rights substantially similar to those generally associated with preferred equity) in a Qualified Equityholder (including Sponsor), shall be permitted. (g) INSURANCE. Borrower shall fail to maintain in full force and effect all Policies required hereunder. (h) ERISA; NEGATIVE COVENANTS. A default shall occur in the due performance or observance by Borrower of any term, covenant or agreement contained in SECTION 5.9 or in ARTICLE VI. (i) OTHER COVENANTS. A default shall occur in the due performance or observance by Borrower of any term, covenant or agreement (other than those referred to in SUBSECTIONS (a) through (h) and (j) through (k), inclusive, of this SECTION 7.1) contained in this Agreement or in any of the other Loan Documents, except that if such default referred to in this SUBSECTION (i) is susceptible of being cured, such default shall not constitute an Event of Default unless and until it shall remain uncured for 10 days after Borrower receives written notice thereof, for a default which can be cured by the payment of money, or for 30 days after Borrower receives written notice thereof, for a default which cannot be cured by the payment of money; and if a default cannot be cured by the payment of money but is susceptible of being cured and cannot reasonably be cured within such 30-day period, and Borrower commences to cure such default within such 30-day period and thereafter diligently and expeditiously proceeds to cure the same, Borrower shall have such additional time as is reasonably necessary to effect such cure, but in no event in excess of 120 days from the original notice. (j) MASTER LEASES. Any of the Master Leases shall terminate, or be terminated prior to its stated expiration date (unless the underlying Tenant Lease has been or is simultaneously being terminated in accordance with the terms of this Agreement), or be surrendered by Borrower without the prior written consent of Lender, or if the Borrower or the lessor under any Master Lease shall be in default thereof, beyond any applicable cure period. (k) REA; ESA. The REA or the ESA shall terminate or be terminated or cancelled, prior to its stated expiration date, or if Borrower shall be in default of the REA or the ESA beyond any applicable cure period; PROVIDED that with respect to a termination or cancellation of the ESA, such termination or cancellation shall have been reasonably determined by Lender to be reasonably likely to result in a Material Adverse Effect. 7.2. REMEDIES. (a) During the continuance of an Event of Default, Lender may, by written notice to Borrower, in addition to any other rights or remedies available pursuant to this Agreement, the Note, the Deed of Trust and the other Loan Documents, at law or in equity, declare by written notice to Borrower all or any portion of the Indebtedness to be immediately due and payable, whereupon all or such portion of the Indebtedness shall so become due and payable, and Lender may enforce or avail itself of any or all rights or remedies provided in the 65 Loan Documents against Borrower and the Property (including all rights or remedies available at law or in equity); PROVIDED, HOWEVER, that, notwithstanding the foregoing, if an Event of Default specified in paragraph 7.1(d) shall occur, then the Indebtedness shall immediately become due and payable without the giving of any notice or other action by Lender. Any actions taken by Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of Lender permitted by law, equity or contract or as set forth in this Agreement or in the other Loan Documents. (b) If Lender forecloses on the Property, Lender shall apply all net proceeds of such foreclosure to repay the Indebtedness, the Indebtedness shall be reduced to the extent of such net proceeds and the remaining portion of the Indebtedness shall remain outstanding and secured by the Property and the other Loan Documents, it being understood and agreed by Borrower that Borrower is liable for the repayment of all the Indebtedness; PROVIDED, HOWEVER, that at the election of Lender, the Note shall be deemed to have been accelerated only to the extent of the net proceeds actually received by Lender with respect to the Property and applied in reduction of the Indebtedness. (c) During the continuance of any Event of Default, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, take any action to cure such Event of Default. Lender may enter upon any or all of the Property upon reasonable notice to Borrower for such purposes or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to foreclose the Deed of Trust or collect the Indebtedness. The reasonable costs and expenses incurred by Lender in exercising rights under this paragraph (including reasonable attorneys' fees), with interest at the Default Rate for the period after notice from Lender that such costs or expenses were incurred to the date of payment to Lender, shall constitute a portion of the Indebtedness, shall be secured by the Deed of Trust and other Loan Documents and shall be due and payable to Lender upon demand therefor. (d) Interest shall accrue on any judgment obtained by Lender in connection with its enforcement of the Loan at a rate of interest equal to the Default Rate. 7.3. NO WAIVER. No delay or omission to exercise any remedy, right or power accruing during an Event of Default shall impair any such remedy, right or power or shall be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed by Lender to be expedient. A waiver of any Default or Event of Default shall not be construed to be a waiver of any subsequent Default or Event of Default or to impair any remedy, right or power consequent thereon. 7.4. APPLICATION OF PAYMENTS DURING CONTINUANCE OF AN EVENT OF DEFAULT. Notwithstanding anything to the contrary contained herein, during the continuance of an Event of Default, all amounts received by Lender in respect of the Loan shall be applied toward the components of the Indebtedness (E.G., Lender's expenses in enforcing the Loan, interest, principal and other amounts payable hereunder), the Loan and the Note Components in such sequence as Lender shall elect in its sole discretion. 66 ARTICLE VIII CONDITIONS PRECEDENT 8.1. CONDITIONS PRECEDENT TO CLOSING. This Agreement shall become effective on the date that all of the following conditions shall have been satisfied (or waived in accordance with SECTION 9.3): (a) LOAN DOCUMENTS. Lender shall have received a duly executed copy of each Loan Document. Each Loan Document which is to be recorded in the public records shall be in form suitable for recording. (b) ORIGINATION FEE. Borrower shall have paid to Lender the origination fee (or provided for the direct payment thereof from the proceeds of the Loan) set forth in the term sheet dated May 10, 2002 between Borrower and GSMC. (c) COLLATERAL ACCOUNTS. Each of the Collateral Accounts shall have been established with the Cash Management Bank and funded to the extent required under ARTICLE III. (d) OPINIONS OF COUNSEL. Lender shall have received (i) a New York legal opinion in substantially the form of EXHIBIT C-1 or otherwise satisfactory to Lender, (ii) a legal opinion with respect to the laws of the state in which the Property is located, in substantially the form of EXHIBIT C-2 or otherwise satisfactory to Lender, and (iii) a bankruptcy nonconsolidation opinion in substantially the form of EXHIBIT C-3 or otherwise satisfactory to Lender with respect to each Person owning at least a 49% direct equity interest in Borrower and any affiliated property manager. (e) ORGANIZATIONAL DOCUMENTS. Lender shall have received all documents reasonably requested by Lender relating to the existence of Borrower and Borrower Managing Member, the validity of the Loan Documents and other matters relating thereto, in form and substance satisfactory to Lender, including, but not limited to: (i) AUTHORIZING RESOLUTIONS. A certified copy of the resolutions of its board of directors of Borrower Managing Member approving and adopting the Loan Documents to be executed by Borrower and authorizing the execution and delivery thereof. (ii) ORGANIZATIONAL DOCUMENTS. Certified copies of the certificate of formation and the operating agreement of Borrower and the certificate of incorporation and by-laws of Borrower Managing Member, in each case together with all amendments thereto. (iii) CERTIFICATES OF GOOD STANDING OR EXISTENCE. Certificates of good standing or existence for Borrower and Borrower Managing Member issued as of a recent date by its state of organization and by the state in which the Property is located. (f) LEASE; MATERIAL AGREEMENTS. Lender shall have received true and complete copies of all Leases and all Material Agreements. 67 (g) LIEN SEARCH REPORTS. Lender shall have received satisfactory reports of Uniform Commercial Code, tax lien and judgment searches conducted by a search firm acceptable to Lender with respect to the Property and Borrower, such searches to be conducted in such locations as Lender shall have requested. (h) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default shall have occurred and be continuing on the Closing Date. (i) NO INJUNCTION. No Legal Requirement shall exist, and no litigation shall be pending or threatened, which in the good faith judgment of Lender would enjoin, prohibit or restrain, or impose or result in the imposition of any material adverse condition upon, the making or repayment of the Loan or the consummation of the Transaction. (j) REPRESENTATIONS. The representations in this Agreement and in the other Loan Documents shall be true and correct in all respects on and as of the Closing Date with the same effect as if made on such date. (k) ESTOPPEL LETTERS. Lender shall have received (i) estoppel letters in form and substance satisfactory to Lender from Tenants occupying not less than 85% of the aggregate occupied rentable square feet in the Property, which estoppel letters shall include estoppel letters from the Tenants under each Major Lease; (ii) estoppel letters in form and substance satisfactory to Lender from each of the parties (other than Borrower) to the REA, the ESA and the Master Leases. (l) NO MATERIAL ADVERSE EFFECT. No event or series of events shall have occurred which Lender reasonably -believes has had or is reasonably likely to have a Material Adverse Effect. (m) TRANSACTION COSTS. Borrower shall have paid all Transaction Costs (or provided for the direct payment of such Transaction Costs by Lender from the proceeds of the Loan). (k) INSURANCE. Lender shall have received certificates of insurance (on ACCORD Form 27 where available) and binders, demonstrating insurance coverage in respect of the Property of types, in amounts, with insurers and otherwise in compliance with the terms, provisions and conditions set forth in this Agreement. Such certificates shall indicate that Lender is named as additional insured on each liability Policy, and that each casualty Policy and rental interruption Policy contains a loss payee endorsement in favor of Lender. (l) TITLE. Lender shall have received a marked, signed commitment to issue, or a pro-forma version of, a Qualified Title Insurance Policy in respect of the Property, listing only such exceptions as are reasonably satisfactory to Lender. (m) ZONING. Lender shall have received evidence reasonably satisfactory to Lender that the Property is in compliance with all applicable zoning requirements (including a zoning report, a zoning endorsement if obtainable and a letter from the applicable municipality if obtainable). 68 (n) PERMITS; CERTIFICATE OF OCCUPANCY. Lender shall have received a copy of all Permits necessary for the use and operation of the Property and the certificate(s) of occupancy, if required, for the Property, all of which shall be in form and substance reasonably satisfactory to Lender. (o) ENGINEERING REPORT. Lender shall have received a current Engineering Report with respect to the Property, which report shall be in form and substance reasonably satisfactory to Lender. (p) ENVIRONMENTAL REPORT. Lender shall have received an Environmental Report (not more than six months old) with respect to the Property which discloses no material environmental contingencies with respect to the Property. (q) QUALIFIED SURVEY. Lender shall have received a Qualified Survey with respect to the Property in form and substance reasonably satisfactory to Lender. (r) APPRAISAL. Lender shall have obtained an Appraisal of the Property satisfactory to Lender. (s) CONSENTS, LICENSES, APPROVALS, ETC. Lender shall have received copies of all consents, licenses and approvals, if any, required in connection with the execution, delivery and performance by Borrower, and the validity and enforceability, of the Loan Documents, and such consents, licenses and approvals shall be in full force and effect. (t) FINANCIAL INFORMATION. Lender shall have received (i) audited financial statements for the Sponsor and audited operating statements for the Property, in each case for the prior three years, certified by a nationally-recognized, independent certified public accounting firm satisfactory to Lender, (ii) current results from operations certified by the Chief Financial Officer of the Sponsor, and (iii) such other financial information as Lender shall reasonably request, which information shall be in form and substance satisfactory to Lender. (u) ANNUAL BUDGET. Lender shall have received the 2002 Annual Budget with respect to the Property. (v) ADDITIONAL MATTERS. Lender shall have received such other certificates, opinions, documents and instruments relating to the Loan as may have been reasonably requested by Lender. All corporate and other proceedings, all other documents (including all documents referred to in this Agreement and not appearing as exhibits to this Agreement) and all legal matters in connection with the Loan shall be reasonably satisfactory in form and substance to Lender. ARTICLE IX MISCELLANEOUS 9.1. SUCCESSORS. Except as otherwise provided in this Agreement, whenever in this Agreement any of the parties to this Agreement is referred to, such reference shall be deemed to include the successors and permitted assigns of such party. All covenants, promises 69 and agreements in this Agreement contained, by or on behalf of Borrower, shall inure to the benefit of Lender and its successors and assigns. 9.2. GOVERNING LAW. (A) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. (B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER OR THE SPONSOR ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS (OTHER THAN ANY ACTION IN RESPECT OF THE CREATION, PERFECTION OR ENFORCEMENT OF A LIEN OR SECURITY INTEREST CREATED PURSUANT TO ANY LOAN DOCUMENTS NOT GOVERNED BY THE LAWS OF THE STATE OF NEW YORK) MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK. BORROWER AND THE SPONSOR HEREBY (i) IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND (ii) IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. 9.3. MODIFICATION, WAIVER IN WRITING. Neither this Agreement nor any other Loan Document may be amended, changed, waived, discharged or terminated, nor shall any consent or approval of Lender be granted hereunder, unless such amendment, change, waiver, discharge, termination, consent or approval is in writing signed by Lender. 9.4. NOTICES. All notices, consents, approvals and requests required or permitted hereunder or under any other Loan Document shall be given in writing by expedited prepaid delivery service, either commercial or United States Postal Service, with proof of delivery or attempted delivery, addressed as follows (or at such other address and person as shall be designated from time to time by any party to this Agreement, as the case may be, in a written notice to the other parties to this Agreement in the manner provided for in this Section). A notice shall be deemed to have been given when delivered or upon refusal to accept delivery. If to Lender: Archon Financial, L.P. 600 East Las Colinas Boulevard Suite 800 Irving, Texas 75039 Attention: Michael Forbes with copies to: 70 Goldman Sachs Mortgage Company 85 Broad Street, 11th Floor New York, New York 10004 Attention: Mark Buono and Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, New York 10006 Attention: Michael Weinberger, Esq. If to Borrower: Grand Canal Shops II, LLC 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Attention: David Friedman with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019 Attention: Harris Freidus, Esq. If to Sponsor: Las Vegas Sands, Inc. 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Attention: David Friedman with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, New York 10019 Attention: Harris Freidus, Esq. 9.5. TRIAL BY JURY. BORROWER AND THE SPONSOR, TO THE FULLEST EXTENT THAT THEY MAY LAWFULLY DO SO, HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY 71 AND VOLUNTARILY BY BORROWER AND THE SPONSOR AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER AND THE SPONSOR. 9.6. HEADINGS. The Article and Section headings in this Agreement are included in this Agreement for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 9.7. ASSIGNMENT AND PARTICIPATION. (a) Borrower may not sell, assign or transfer any interest in the Loan Documents or any portion thereof (including Borrower's rights, title, interests, remedies, powers and duties hereunder and thereunder). (b) Subject to the provisions of this Section 9.7, Lender and each assignee of all or a portion of the Loan shall have the right from time to time in its discretion to sell one or more of the Notes or any interest therein (an "ASSIGNMENT ") and/or sell a participation interest in one or more of the Notes (a "PARTICIPATION"). Borrower agrees reasonably to cooperate with Lender, at Lender's request and expense (except to the extent set forth to the contrary in the Cooperation Agreement), in order to effectuate any such Assignment or Participation. In the case of an Assignment, (i) each assignee shall have, to the extent of such Assignment, the rights, benefits and obligations of the assigning Lender as a "Lender" hereunder and under the other Loan Documents, (ii) the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to an Assignment, relinquish its rights and be released from its obligations under this Agreement and (iii) one Lender shall serve as agent for all Lenders and shall be the sole Lender to whom notices, requests and other communications shall be addressed and the sole party authorized to grant or withhold consents hereunder on behalf of the Lenders (subject, in each case, to appointment of a Servicer, pursuant to SECTION 9.22, to receive such notices, requests and other communications and/or to grant or withhold consents, as the case may be) and to be the sole Lender to designate the account to which payments shall be made by Borrower to the Lenders hereunder. Goldman Sachs Mortgage Company shall maintain, or cause to be maintained, as agent for Borrower, a register at 85 Broad Street, New York, New York or such other address as it shall notify Borrower in writing, on which it shall enter the name or names of the registered owner or owners from time to time of the Notes. Borrower agrees that upon effectiveness of any Assignment of any Note in part, Borrower will promptly provide to the assignor and the assignee separate promissory notes in the amount of their respective interests (but, if applicable, with a notation thereon that it is given in substitution for and replacement of an original Note or any replacement thereof), and otherwise in the form of such Note, upon return of the Note then being replaced. Each potential assignee and potential participant (until it becomes clear that such potential assignee or potential participant is not to become an actual assignee or participant), and each actual assignee and participant, and each Rating Agency or potential investor in connection with a Securitization, shall be entitled to receive all information received by Lender under this Agreement. After the effectiveness of any Assignment, the party conveying the Assignment shall provide notice to 72 Borrower and each Lender of the identity and address of the assignee. Notwithstanding anything in this Agreement to the contrary, after an Assignment, the assigning Lender (in addition to the assignee) shall continue to have the benefits of any indemnifications contained in this Agreement which such assigning Lender had prior to such assignment with respect to matters occurring prior to the date of such assignment. (c) If, pursuant to this SECTION 9.7, any interest in this Agreement or any Note is transferred to any transferee that is not a U.S. Person, the transferor Lender shall cause such transferee, concurrently with the effectiveness of such transfer, (i) to furnish to the transferor Lender and Borrower two original copies of either Form W-8BEN or Form W-8ECI or any other form in order to establish an exemption from, or reduction in the rate of, U.S. withholding tax on all interest payments hereunder, and (ii) to agree (for the benefit of Lender and Borrower) to provide the transferor Lender a new Form W-8BEN or Form W-8ECI or any forms reasonably requested in order to establish an exemption from, or reduction in the rate of, U.S. withholding tax upon the expiration or obsolescence of any previously delivered form and comparable statements in accordance with applicable U.S. laws and regulations and amendments duly executed and completed by such transferee, and to comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption. If any such transferee is not a "bank" or other Person described in Section 881(c)(3) of the Code and cannot deliver either Internal Revenue Service Form W8-ECI or Form W-8BEN pursuant to clause (i) above, the transferor Lender shall cause each such transferee, concurrently with the effectiveness of such transfer, to deliver a Certificate of Non-Bank Status, together with two original copies of Internal Review Service Form W8 (or any successor form), all properly completed and duly executed by such Lender, together with any other certificate or statement of exemption required under the Code to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payment to such Lender of interest payable under any of the Loan Documents. (d) Unless an Event of Default shall have occurred and be continuing, neither Lender nor any assignee of all or a portion of the Loan shall consummate an Assignment or Participation to a Prohibited Transferee; PROVIDED that Lender and each such assignee shall be entitled to rely, at Lender's or such assignee's sole election, on a written statement from the proposed assignee or participant that it is not a Prohibited Transferee (without making any further inquiry or investigation) and neither Lender nor any such assignee shall be liable to Borrower or to any other Person if Lender or such assignee shall consummate an Assignment or Participation with a Person that shall in fact be a Prohibited Transferee notwithstanding the fact such Person delivered such a written statement. The foregoing provisions shall not apply to an Assignment or Participation of the Loan in connection with a Securitization or to the marketing and sale of the related securities. 9.8. SEVERABILITY. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 73 9.9. PREFERENCES. Lender shall have no 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 of Borrower pursuant to this Agreement, the Note or any other Loan Document. Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of Borrower hereunder and under the Loan Documents. To the extent Borrower makes a payment or payments to Lender, which payment or proceeds or any portion thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the obligations hereunder or portion thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by Lender. 9.10. REMEDIES OF BORROWER. If a claim is made that Lender or its agents have unreasonably delayed acting or acted unreasonably in any case where by law or under this Agreement, the Note, the Deed of Trust or the other Loan Documents, any of such Persons has an obligation to act promptly or reasonably, Borrower agrees that no such Person shall be liable for any monetary damages, and Borrower's sole remedy shall be limited to commencing an action seeking specific performance, injunctive relief and/or declaratory judgment, except in any instance in which it has been finally determined that Lender's action, delay or inaction has constituted willful misconduct or an illegal act. 9.11. OFFSETS, COUNTERCLAIMS AND DEFENSES. All payments made by Borrower hereunder or under the other Loan Documents shall be made irrespective of, and without any deduction for, any setoffs or counterclaims. Borrower waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with the Note, this Agreement, the other Loan Documents or the Indebtedness. Any assignee of Lender's interest in the Loan shall take the same free and clear of all offsets, counterclaims or defenses which are unrelated to the Loan. 9.12. NO JOINT VENTURE. Nothing in this Agreement is intended to create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between Borrower and Lender, nor to grant Lender any interest in the Property other than that of mortgagee or lender. 9.13. CONFLICT; CONSTRUCTION OF DOCUMENTS. In the event of any conflict between the provisions of this Agreement and the provisions of the Note, the Deed of Trust or any of the other Loan Documents, the provisions of this Agreement shall prevail. 9.14. BROKERS AND FINANCIAL ADVISORS. Borrower and Sponsor each represent that they have dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the transactions contemplated by this Agreement. Borrower and Sponsor each agree, jointly and severally, to indemnify and hold Lender harmless from and against any and all claims, liabilities, costs and expenses of any kind in any way relating to or arising from a claim by any Person that such Person acted on behalf of Borrower in connection with the transactions contemplated in this Agreement. The provisions of this SECTION 9.14 shall survive the expiration and termination of this Agreement and the repayment of the Indebtedness. 74 9.15. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 9.16. ESTOPPEL CERTIFICATES. Borrower agrees at any time and from time to time, to execute, acknowledge and deliver to Lender, within five Business Days after receipt of Lender's written request therefor, a statement in writing setting forth (A) the unpaid principal amount of the Note, (B) the date on which installments of interest and/or principal were last paid, (C) any offsets or defenses to the payment of the Indebtedness, (D) that the Note, this Agreement, the Deed of Trust and the other Loan Documents are valid, legal and binding obligations and have not been modified or if modified, giving particulars of such modification, and (E) such other matters as Lender may reasonably request. Any prospective purchaser of any interest in a Loan shall be permitted to rely on such certificate. 9.17. PAYMENT OF EXPENSES; MORTGAGE RECORDING TAXES. Borrower shall reimburse Lender upon receipt of written notice from Lender for (i) all reasonable out-of-pocket costs and expenses incurred by Lender (or any of its affiliates) in connection with the origination of the Loan, including legal fees and disbursements, accounting fees and the costs of the Appraisal, the Engineering Report, the Qualified Title Insurance Policy, the Qualified Survey, the Environmental Report and any other third-party diligence materials, (ii) reasonable out-of-pocket costs and expenses incurred by Lender (or any of its affiliates) in connection with (A) the administration of the Loan, including confirming compliance with environmental and insurance requirements; (B) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents and any other documents or matters requested by Borrower or by Lender; (C) filing and recording fees and expenses and other similar expenses incurred in creating and perfecting the Liens in favor of Lender pursuant to this Agreement and the other Loan Documents; (D) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation, in each case against, under or affecting Borrower, this Agreement, the other Loan Documents or any Collateral; (E) obtaining any Rating Confirmation required or requested by Borrower hereunder; and (F) enforcing any obligations of or collecting any payments due from Borrower under this Agreement, the other Loan Documents or with respect to the Property or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "workout" or of any insolvency or bankruptcy proceedings. 9.18. NO THIRD-PARTY BENEFICIARIES. This Agreement and the other Loan Documents are solely for the benefit of Lender and Borrower, and nothing contained in this Agreement or the other Loan Documents shall be deemed to confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. All conditions to the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the benefit of Lender, and no other Person shall have standing to require satisfaction of such conditions in accordance with their terms or be entitled to assume that Lender will refuse to make the Loan in the absence of strict compliance with any or all thereof, and no other Person shall under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may be freely waived in 75 whole or in part by Lender if, in Lender's sole discretion, Lender deems it advisable or desirable to do so. 9.19. RECOURSE. (a) Except as set forth in SECTION 9.19(b) (with respect to Borrower and Sponsor), in the Environmental Indemnity, in the Cooperation Agreement, in SECTION 5.18 (with respect to Borrower) and in SECTION 9.14 (with respect to Borrower and Sponsor), no recourse shall be had for the Indebtedness against any Affiliate of Borrower or any officer, director, employer, agent or direct or indirect partner or member of Borrower or any such Affiliate and recourse to Borrower shall be limited to the Liens of Lender on the Property and the other Collateral. (b) Borrower and the Sponsor (as evidenced by the Sponsor's signature below) agree to jointly and severally indemnify Lender and hold Lender harmless from and against any and all Damages to Lender (including the legal and other expenses of enforcing the obligations of the Borrower and the Sponsor under this SECTION 9.19(b)) resulting from or arising out of any of the following (the "INDEMNIFIED LIABILITIES"): (i) any intentional physical Waste with respect to the Property committed or permitted by Borrower, the Sponsor or any of their respective Affiliates; (ii) any fraud or intentional misrepresentation committed by Borrower, the Sponsor or any of their respective Affiliates; (iii) the misappropriation or misapplication (in violation of the provisions hereof or applicable Legal Requirements) by Borrower, the Sponsor or any of their respective Affiliates of any funds (including misappropriation or misapplication of Revenues, security deposits and/or Loss Proceeds and the violation of the last sentence of SECTION 5.8(d)); (iv) any Transfer of Collateral or Change of Control which is prohibited hereunder; and (v) any breach by Borrower or the Sponsor of any representation set forth in SECTION 4.28 of this Agreement or of any covenants set forth in the Environmental Indemnity Agreement. In addition, upon the occurrence of any filing by Borrower under the Bankruptcy Code or any joining or colluding by Borrower or any of its Affiliates (including Sponsor) in the filing of an involuntary case in respect of Borrower under the Bankruptcy Code, the entire Indebtedness shall become fully recourse to Borrower and shall be recourse to Sponsor in an amount equal to 10% of the Loan Amount. (c) The liability of the Sponsor and the Borrower under SECTION 9.19(b) shall be direct and immediate and not conditional or contingent upon the pursuit of any remedies against Borrower or any other Person, nor against the Collateral, and shall not be impaired or 76 limited by any event, including, without limitation, the following events, in each case whether occurring with or without notice to the Sponsor or with or without consideration: (i) any extensions of time for performance required by any of the Loan Documents or any extension or renewal of the Note; (ii) any sale, assignment or foreclosure of the Note, the Deed of Trust or any of the other Loan Documents or any sale or transfer of any or all of the Property; (iii) any change in the composition of Borrower including the withdrawal or removal of the Sponsor from any current or future position of ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of the representations made by Borrower in any of the Loan Documents; (v) the release of Borrower or of any other Person from performance or observance of any of the agreements, covenants, terms or conditions contained in any of the Loan Documents by operation of law, Lender's voluntary act or otherwise; or (vi) the modification of the terms of any one or more of the Loan Documents. The Sponsor acknowledges that Lender would not make the Loan but for the personal liability undertaken by the Sponsor in this Agreement. The Sponsor agrees that it shall not demand or accept any payment from Borrower in respect of any amounts owing or paid by the Sponsor hereunder until one year and one day after such time as the Indebtedness shall have been paid in full. (d) The foregoing limitations on personal liability shall in no way impair or constitute a waiver of the validity of the Note, the Indebtedness secured by the Collateral, or the Liens on the Collateral, or the right of Lender, as mortgagee or secured party, to foreclose and/or enforce its rights with respect to the Collateral after an Event of Default. Nothing in this Agreement shall be deemed to be a waiver of any right which Lender may have under the United States Bankruptcy Code to file a claim for the full amount of the debt owing to Lender by Borrower or to require that all Collateral shall continue to secure all of the Indebtedness owing to Lender in accordance with the Loan Documents. Lender may seek a judgment on the Note (and, if necessary, name Borrower in such suit) as part of judicial proceedings to foreclose under the Deed of Trust or to foreclose pursuant to any other Collateral Documents, or as a prerequisite to any such foreclosure or to confirm any foreclosure or sale pursuant to power of sale thereunder, and in the event any suit is brought on the Note, or with respect to any Indebtedness or any judgment rendered in such judicial proceedings, such judgment shall constitute a Lien on and will be and can be enforced on and against the Collateral and the rents, profits, issues, products and proceeds thereof. Nothing in this Agreement shall impair the right of the Lender to accelerate the maturity of the Note upon the occurrence of an Event of Default, nor shall anything in this Agreement impair or be construed to impair the right of Lender to seek personal judgments, and to enforce all rights and remedies under applicable law, jointly and severally, against any guarantors to the extent allowed by any applicable guarantees. The provisions set 77 forth in this SECTION 9.19 are not intended as a release or discharge of the obligations due under the Note or under any Collateral Documents, but are intended as a limitation, to the extent provided in this Section, on Lender's right to sue for a deficiency or seek a personal judgment against Borrower or Sponsor. 9.20. RIGHT OF SET-OFF. In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, Lender may from time to time, without presentment, demand, protest or other notice of any kind (all of such rights being hereby expressly waived), set-off and appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by Lender (including branches, agencies or affiliates of Lender wherever located) to or for the credit or the account of Borrower against the obligations and liabilities of Borrower to Lender hereunder, under the Note, the other Loan Documents or otherwise, irrespective of whether Lender shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of Lender subsequent thereto. 9.21. EXCULPATION OF LENDER. Lender neither undertakes nor assumes any responsibility or duty to Borrower or any other party to select, review, inspect, examine, supervise, pass judgment upon or inform Borrower or any third party of (a) the existence, quality, adequacy or suitability of Appraisals of the Property or other Collateral, (b) any environmental report, or (c) any other matters or items, including, but not limited to, engineering, soils and seismic reports which are contemplated in the Loan Documents. Any such selection, review, inspection, examination and the like, and any other due diligence conducted by Lender, is solely for the purpose of protecting Lender's rights under the Loan Documents, and shall not render Lender liable to Borrower or any third party for the existence, sufficiency, accuracy, completeness or legality thereof. 9.22. SERVICER. Lender may delegate any and all rights and obligations of Lender hereunder and under the other Loan Documents to the Servicer upon written notice by Lender to Borrower, whereupon any notice or consent from the Servicer to Borrower, and any action by Servicer on Lender's behalf, shall have the same force and effect as if Servicer were Lender. Provided no Event of Default has occurred and is continuing, Lender agrees that it will not appoint a Prohibited Transferee to act a Servicer of the Loan; PROVIDED that Lender shall be entitled to rely, at Lender's sole election, on a written statement from a proposed servicer that it is not a Prohibited Transferee (without making any further inquiry or investigation) and Lender shall not be liable to Borrower or to any other Person if Lender shall appoint such Person as Servicer and such Person that shall in fact be a Prohibited Transferee notwithstanding the fact such Person delivered such a written statement. 9.23 PRIOR AGREEMENTS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND THERETO IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY, AND ALL PRIOR AGREEMENTS AMONG OR BETWEEN SUCH PARTIES, WHETHER ORAL OR WRITTEN, INCLUDING ANY TERM SHEETS AND 78 COMMITMENT LETTERS, ARE SUPERSEDED BY THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 79 IN WITNESS WHEREOF, Lender and Borrower are executing this Agreement as of the date first above written. LENDER: ARCHON FINANCIAL, L.P., a Delaware limited partnership By: Archon Financial, L.L.C., its general partner By: /s/ Mark Buono --------------------------------- Name: Mark Buono Title: Director BORROWER: GRAND CANAL SHOPS II, LLC, a Delaware limited liability company By: Grand Canal Shops Mall MM Subsidiary, Inc., its managing member By: /s/ David Friedman ----------------------------------- Name: David Friedman Title: Secretary ACKNOWLEDGED AND AGREED BY SPONSOR SOLELY TO THE EXTENT OF THE EXPRESS OBLIGATIONS AND AGREEMENTS OF SPONSOR HEREIN: LAS VEGAS SANDS, INC. By: /s/ David Friedman ------------------------------------ Name: David Friedman Title: Secretary EX-10 16 ex10-7_7032.txt AMENDMENT NO. 1 TO LOAN AGREEMENT Exhibit 10.7 AMENDMENT NO.1 TO LOAN AGREEMENT THIS AMENDMENT NO.1 TO LOAN AGREEMENT (this "AMENDMENT") is entered into as of June 28,2002 by and between GOLDMAN SACHS MORTAGE COMPANY, a New York limited partnership (as successor in interest to Archon Financial, L.P. the "LENDER") and GRAND CANAL SHOPS II, LLC (the "BORROWER") and amends that certain Loan Agreement dated as of June 4, 2002 (as amended by this Amendment and as the same may be further amended, restated supplemented or otherwise modified and in effect from time to time the "LOAN AGREEMENT"). Capitalized terms used herein and not otherwise defined shall have the meanings given such terms in the Loan agreement. For good and valuables consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. (a) The following definitions in the Loan Agreement are hereby amended by substituting in their entirety the following definitions for the definitions of such terms: "INDEBTNESS" means the Principal Indebtness, together with interest and all other obligations and liabilities of Borrower to Lender under the Loan Documents, including all Transaction Costs, any Event of default Yield Maintenance Premium, any Make-Whole Payment, any Prepayment Fees and other amounts due or to become due to Lender pursuant hereto, under the Note or in accordance with any of the Loan Documents, and all other amounts, sums and expenses reimbursable by Borrower to Lender hereunder or pursuant to the Note or any of the other Loan Documents. "LOAN AMOUNT" means $120,000,000. "MAKE-WHOLE PAYMENT" means, in connection with the application of Loss Proceeds to prepay the Loan during the Lockout period in accordance with SECTION 5.16(d) hereof, the amount of interest rate equal to the Spread (which, with respect to a prepayment in accordance with SECTION 5.16 (d) during the Interest Accrual Period in which the Initial Payment Date falls, will be deemed to be 1.8259%) had such principal amount been outstanding through the end of the Lockout Period. "SPREAD" means (i) Initially, 1.875% ; and (ii) Following the bifurcation of the Note into multiple Note Components pursuant to SECTION 1.3(c), the weighted average of the Component Spreads at the time determination, weighted on the basis of corresponding Component Balances. (b) The following definitions are hereby added to the Loan Agreement: "PREPAYMENT FEE" means, with respect to any prepayment of the Principal Indebtedness permitted pursuant to Section 2.1 herein, (i) on any date on which prepayment is permitted pursuant to SECTION 2.1 prior to the Payment Date in January 2004, 1.00% of the amount prepaid; and (ii) at any time thereafter, zero. (c) The definition of "Lockout Reduction Fee" is hereby deleted in its entirety from the Loan Agreement. 2. INTEREST AND PRINCIPAL. SECTION 1.3(a) of the Loan Agreement is hereby deleted in its entirety and replaced by the following: "(a) Commencing with the Initial Payment Date and on each and every Payment Date thereafter, Borrower shall pay interest on the Principal Indebtedness for the Interest Accrual Period in which such Payment Date falls at a rate per annum equal to the sum of LIBOR, determined as of the Interest Determination Date immediately preceding such Interest Accrual Period, PLUS the Spread (except that interest shall be payable on the Indebtedness, including due and unpaid interest, at the Default Rate with respect to any portion of such Interest Accrual Period falling during the continuance of an Event of Default), except that with respect to the Interest Accrual Period in which the Initial Payment Date Falls, (i) in lieu of the interest on the Principal Indebtedness calculated as provided in this SECTION 1.3(a), Borrower shall pay interest on the Principal Indebtedness in the amount of $325,695.83 on the Initial Payment Date, and (ii) for purposes of calculating the Default Rate, to the extent applicable, the interest rate otherwise applicable to such Note shall be deemed to be 2.3571%. Interest accruing for the first Interest Accrual Period was paid in full on the Closing Date from the Loan proceeds disbursed to Borrower at Closing. Interest payable hereunder shall be computed on the basis of a 360-day year and the actual number of days elapsed. All payments made by Borrower hereunder or under the other Loan Documents shall be made irrespective of, and without any deduction for, any setoffs or counterclaims." 3. Voluntary Prepayment. SECTIONS 2.1 (a) AND (b) of the Loan Agreement are hereby deleted in their entirety and replaced by the following: (a) Borrower shall be prohibited from prepaying the Loan, in whole or in part, until the first Payment Date following the first anniversary of the Closing Date (the "LOCKOUT PERIOD"). (b) After the expiration of the Lockout Period, provided no Event of Default is continuing, Borrower may voluntarily prepay the Loan in whole or in part on any Business Day, except that no prepayments shall be permitted on the last two Business Days in any Interest Accrual Period. Each such prepayment shall be accompanied by (i) the amount of interest theretofore accrued but unpaid in respect of the principal amount so prepaid, plus (ii) the amount of interest which would have accrued on the principal amount so prepaid had it remained outstanding through the end of the Interest Accrual Period in which such prepayment is made, plus (iii) the applicable Prepayment Fee, if any. If the Loan has been bifurcated into Note Components pursuant to SECTION 1.3(c), 2 all prepayments of the Loan made by Borrower in accordance with this SECTION 2.1 shall be applied to the Note Components in ascending order of interest rate (I.E.. first to the Note Component with the lowest Component Spread until its outstanding principal balance has been reduced to zero, then to the Note Component with the second lowest Component Spread until its outstanding principal balance has been reduced to zero, and so on). Following any such prepayment, Borrower may release or transfer, free and clear of the Lien of the Loan Documents, a portion of the notional amount of the Interest Rate Cap Agreement equal to the amount of such prepayment. 4. CONTINUED FORCE AND EFFECT. All of the terms and conditions of the Loan Agreement and the other Loan Documents and the collateral security provided thereby, including those terms and conditions modified by this Amendment, are hereby ratified and confirmed in all respects and shall remain in full force and effect in accordance with their terms. This Amendment is not intended to, and shall not be construed to, effect a novation. In the event of any conflict between the terms of this Amendment and the terms of any of the Loan Documents, the terms of this Amendment shall control. 5. REFERENCES TO LOAN AGREEMENT. All references to the Loan Agreement in any Loan Document shall, from and after the execution and delivery of this Amendment, be deemed a reference to the Loan Agreement as amended hereby and as hereafter amended, modified or extended from time to time. 6. GOVERNING LAW. This Amendment shall be governed by and construed and interpreted in accordance with the laws of the State of New York, without reference to conflicts of law principles. 7. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. 8. SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon the Borrower and its successors and assign, and shall be binding upon and inure to the benefit of the Lender and its successors and assigns, including any subsequent holder of all or any portion of the Note. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered in their names as of the date first above written. LENDER: GOLDMAN SACHS MORTGAGE COMPANY By: Goldman Sachs Real Estate Funding Corp., its general partner By: /s/ Daniel Sparks ----------------------------- Name: DANIEL SPARKS Title: VICE PRESIDENT BORROWER: GRAND CANAL SHOPS II, LLC, a Delaware limited liability company By: Grand Canal Shops Mall MM Subsidiary, Inc., its managing member By: /s/ Harry Miltenberger --------------------------------------- Name: Harry Miltenberger Title: Chief Financial Officer EX-10 17 ex10-8_7032.txt INDEMNITY AGREEMENT EXHIBIT 10.8 AMERICAN INTERNATIONAL COMPANIES PRINCIPAL BOND OFFICE 175 WATER STREET NEW YORK, NY 10038 AIU INSURANCE COMPANY AMERICAN INTERNATIONAL PACIFIC INSURANCE COMPANY AMERICAN HOME ASSURANCE COMPANY COMMERCE & INDUSTRY INSURANCE COMPANY GRANITE STATE INSURANCE COMPANY ILLINOIS NATIONAL INSURANCE COMPANY THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA NEW HAMPSHIRE INSURANCE COMPANY AGREEMENT OF INDEMNITY THIS AGREEMENT of indemnity, made and entered into this 25th day of August, 2000, by LAS VEGAS SANDS, INC. AND/OR ANY OF ITS PRESENT OR FUTURE SUBSIDIARIES OR AFFILIATES, INCLUDING, BUT NOT LIMITED TO, ANY LIMITED LIABILITY COMPANY (LLC), WHETHER ALONE OR IN JOINT VENTURE WITH OTHERS NOT NAMED HEREIN, AND ANY CORPORATION, PARTNERSHIP, OR PERSON UPON ITS WRITTEN REQUEST; VENETIAN CASINO RESORT, LLC; GRAND CANAL SHOPS MALL, LLC; GRAND CANAL SHOPS MALL SUBSIDIARY, LLC; LIDO CASINO RESORT, LLC; MALL INTERMEDIATE HOLDING COMPANY, LLC; GRAND CANAL SHOPS MALL CONSTRUCTION, LLC; LIDO INTERMEDIATE HOLDING COMPANY, LLC; 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.; LIDO CASINO RESORT MM, INC.; INTERFACE GROUP HOLDING COMPANY, INC. hereinafter called the Principal) and LAS VEGAS SANDS, INC. AND/OR ANY OF ITS PRESENT OR FUTURE SUBSIDIARIES OR AFFILIATES, INCLUDING, BUT NOT LIMITED TO, ANY LIMITED LIABILITY COMPANY (LLC), WHETHER ALONE OR IN JOINT VENTURE WITH OTHERS NOT NAMED HEREIN, AND ANY CORPORATION, PARTNERSHIP, OR PERSON UPON ITS WRITTEN REQUEST; VENETIAN CASINO RESORT, LLC; GRAND CANAL SHOPS MALL, LLC; GRAND CANAL SHOPS MALL SUBSIDIARY, LLC; LIDO CASINO RESORT, LLC; MALL INTERMEDIATE HOLDING COMPANY, LLC; GRAND CANAL SHOPS MALL CONSTRUCTION, LLC; LIDO INTERMEDIATE HOLDING COMPANY, LLC; 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.; LIDO CASINO RESORT MM, INC.; INTERFACE GROUP HOLDING COMPANY, INC. (hereinafter called the Indemnitors) and the member companies of the AMERICAN INTERNATIONAL COMPANIES (AIU Insurance Company, American International Pacific Insurance Company, American Home Assurance Company, Commerce & Industry Insurance Company, Granite State Insurance Company, Illinois National Insurance Company, The Insurance Company of the State of Pennsylvania, National Union Fire Insurance Company of Pittsburgh, Pa., New Hampshire Insurance Company), hereinafter individually and collectively referred to as "SURETY". WITNESSETH: WHEREAS, the Principal, in the performance of contracts and the fulfillment of obligations generally, whether in its own name solely or as co-adventurer with others, may desire or be required to give or procure certain surety bonds, undertakings or instruments of guarantee, and to renew, or continue or substitute from time to time the same, or new bonds, undertakings or instruments of guarantee with the same or different penalties, and/or conditions, any one or more of which are hereinafter called Bonds; or the Principal or Indemnitors may request the Surety to refrain from canceling said Bonds; and WHEREAS, at the request of the Principal and the Indemnitors and upon the express understanding that this Agreement of Indemnity be given, the Surety has executed or procured to be executed, and may from time to time hereafter execute or procure to be executed, said Bonds on behalf of the Principal; and WHEREAS, the Indemnitors have a substantial, material and beneficial interest in the obtaining of the Bonds or in the Surety's refraining from canceling said Bonds. NOW, THEREFORE, in consideration of the premises the Principal and Indemnitors for themselves, their heirs, executors, administrators, successors and assigns, jointly and severally, hereby covenant and agree with the Surety, as follows: PREMIUMS FIRST: The Principal and Indemnitors will pay to the Surety in such manner as may be agreed upon all premiums and charges of the Surety for Bonds in accordance with its rate filings, its manual of rates, or as otherwise agreed upon, until the Principal or Indemnitors shall serve evidence satisfactory to the Surety of its discharge or release from the Bonds and all liability by reason thereof. INDEMNITY SECOND: The Principal and Indemnitors shall exonerate, indemnify, and keep indemnified the Surety from and against any and all liability for losses and/or expenses of whatsoever kind or nature (including, but not limited to, interest, court costs and counsel fees) and from and against any and all such losses and/or expenses which the Surety may sustain and incur: (1) By reason of having executed or procured the execution of the Bonds; (2) By reason of the failure of the Principal or Indemnitors to perform or comply with the covenants and conditions of this Agreement; or (3) In enforcing any of the covenants and conditions of this Agreement. Payment by reason of the aforesaid causes shall be made to the Surety by the Principal and Indemnitors as soon as liability exists or is asserted against the Surety, whether or not the Surety shall have made any payment therefor. Such payment shall be equal to the amount of the reserve set by the Surety. In the event of any payment by the Surety the Principal and Indemnitors further agree that in any accounting between the Surety and the Principal, or between the surety and the Indemnitors, or either or both of them, the Surety shall be entitled to charge for any and all disbursements made by it in good faith in and about the matters herein contemplated by this Agreement under the belief that it is or was liable for the sums and amounts so disbursed, or that it was necessary or expedient to make such disbursements, whether or not such liability, necessity or expediency existed; and that the vouchers or other evidence of any such payments made by the Surety shall be prima facie evidence of the fact and amount of the liability to the Surety. ASSIGNMENT THIRD: The principal, the Indemnitors hereby consenting, will assign, transfer and set over, and does hereby assign, transfer and set over to the Surety, as collateral, to secure the obligations in any and all of the paragraphs of this Agreement and any other indebtedness and liabilities of the Principal to the Surety, whether heretofore or hereafter, incurred, the assignment in the case of each contract to become effective as of the date of the bond covering such contract, but only in the event of (1) any abandonment, forfeiture or breach of any contracts referred to in the Bonds of any breach of any said Bonds; or (2) of any breach of the provisions of any of the paragraphs of this Agreement; or (3) of a default in discharging such other indebtedness or liabilities when due; or (4) of any assignment by the Principal for the benefit of creditors, or of the appointment, or of any application for the appointment, of a receiver or trustee for the Principal whether insolvent or not; or (5) of any proceeding which deprives the Principal of the use of any of the machinery, equipment, plant, tools, or material referred to in section (b) of this paragraph; or (6) of the Principal's dying, absconding, disappearing, incompetency, being convicted of a felony, or imprisoned if the Principal be an individual: (a) All the rights of the Principal in, and growing in any manner out of, all contracts referred to in the Bonds, or in, or growing in any manner out of the Bonds; (b) All the rights, title and interest of the Principal in and to all machinery, equipment, plant, tools and materials which are now, or may hereafter be, about or upon the site or sites of any and all of the contractual work referred to in the Bonds or elsewhere, including materials purchased for or chargeable to any and all contracts referred to in the bonds, materials which may be in process of construction, in storage elsewhere, or in transportation to any and all of said sites; (c) All the rights, title and interest of the Principal in and to all subcontracts let or to be let in connection with any and all contracts referred to in the Bonds, and in and to all surety bonds supporting such subcontracts; (d) All actions, causes of actions, claims and demands whatsoever which the Principal may have or acquire against any subcontractor, laborer or materialman, or any person furnishing or agreeing to furnish or supply labor, material, supplies, machinery, tools or other equipment in connection with or on account of any and all contracts referred to in the Bonds; and against any surety or sureties of any subcontractor, laborer, or materialman; (e) Any and all percentages retained and any and all sums that may be due or hereafter become due on account of any and all contracts referred to in the Bonds and all other contracts whether bonded or not in which the Principal has an interest. TRUST FUND FOURTH: If any of the Bonds are executed in connection with a contract which by its terms or by law prohibits the assignment of the contract price, or any part thereof, the Principal and Indemnitors covenant and agree that all payments received for or on account of said contract shall be held as a trust fund in which the Surety has an interest, for the payment of obligations incurred in the performance of the contract and for labor, materials, and services furnished in the prosecution of the work provided in said contract or any authorized extension or modification thereof; and, further, it is expressly understood and declared that all monies due and to become due under any contract or contracts covered by the Bonds are trust funds, whether in the possession of the Principal or Indemnitors or otherwise, for the benefit of and for payment of all such obligations in connection with any such contract or contracts for which the Surety would be liable under any of said Bonds, which said trust also inures to the benefit of the Surety for any liability or loss it may have or sustain under any said Bonds, and this Agreement and declaration shall also constitute notice of such trust. UNIFORM COMMERCIAL CODE FIFTH: That this Agreement shall constitute a Security Agreement to the Surety and also a Financing Statement, both in accordance with the provisions of the Uniform Commercial Code of every jurisdiction wherein such Code is in effect and may be so used by the Surety without in any way abrogating, restricting or limiting the rights of the Surety under this Agreement or under law, or in equity. TAKEOVER SIXTH: In the event of any breach or default asserted by the obligee in any said Bonds, or the Principal has abandoned the work on or forfeited any contract or contracts covered by any said Bonds, or has failed to pay obligations incurred in connection therewith, or in the event of the death, disappearance, Principal's conviction for a felony, imprisonment, incompetency, insolvency, or bankruptcy of the Principal, or the appointment of a receiver or trustee for the Principal, or the property of the Principal, or in the event of an assignment for the benefit of creditors of the Principal, or if any action is taken by or against the Principal under or by virtue of the National Bankruptcy Act, or should reorganization or arrangement proceedings be filed by or against the Principal under said Act, or if any action is taken by or against the Principal under the insolvency laws of any state, possession, or territory of the United States the Surety shall have the right, at its option and in its sole discretion and is hereby authorized, with or without exercising any other right or option conferred upon it by law or in the terms of this Agreement, to take possession of any part or all of the work under any contract or contracts covered by any said Bonds, and at the expense of the Principal and Indemnitors to complete or arrange for the completion of the same, and the Principal and Indemnitors shall promptly upon demand pay to the Surety all losses, and expenses so incurred. CHANGES SEVENTH: The Surety is authorized and empowered, without notice to or knowledge of the Indemnitors to assent to any change whatsoever in the Bonds, and/or any contracts referred to in the Bonds, and/or in the general conditions, plans and/or specifications accompanying said contracts, including, but not limited to, any change in the time for the completion of said contracts and to payments or advances thereunder before the same may be due, and to assent to or take any assignment or assignments, to execute or consent to the execution of any continuations, extensions or renewals of the Bonds and to execute any substitute or substitutes therefor, with the same or different conditions, provisions and obligees and with the same or larger or smaller penalties, it being expressly understood and agreed that the Indemnitors shall remain bound under the terms of this Agreement even though any such assent by the Surety does or might substantially increase the liability of said Indemnitors. ADVANCES EIGHTH: The Surety is authorized and empowered to guarantee loans, to advance or lend to the Principal any money, which the Surety may see fit, for the purpose of any contracts referred to in, guaranteed by the Bonds; and all money expended in the completion of any such contracts by the Surety, or lent or advanced from time to time to the Principal, or guaranteed by the Surety for the purposes of any such contracts, and all costs, and expenses incurred by the Surety in relation thereto, unless repaid with legal interest by the Principal to the Surety when due, shall be presumed to be a loss by the Surety for which the Principal and the Indemnitors shall be responsible, notwithstanding that said money or any part thereof should not be so used by the Principal. BOOKS AND RECORDS NINTH: At any time, and until such time as the liability of the Surety under any and all said Bonds is terminated, the Surety shall have the right to reasonable access to the books, records, and accounts of the Principal and Indemnitors; and any bank depository, materialman, supply house or other person, firm, or corporation when requested by the Surety is hereby authorized to furnish the Surety any information requested including, but not limited to, the status of the work under contracts being performed by the Principal, the condition of the performance of such contracts and payments of accounts. DECLINE EXECUTION TENTH: Unless otherwise specifically agreed in writing, the Surety may decline to execute any Bond and the Principal and Indemnitors agree to make no claim to the contrary in consideration of the Surety's receiving this Agreement; and if the Surety shall execute a Bid or Proposal Bond, it shall have the right to decline to execute any and all of the bonds that may be required in connection with any award that may be made under the proposal for which the Bid or Proposal Bond is given and such declination shall not diminish or alter the liability that may arise by reason of having executed the Bid or Proposal Bond. NOTICE OF EXECUTION ELEVENTH: The Indemnitors hereby waive notice of the execution of said Bonds and of the acceptance of this Agreement, and the Principal and the Indemnitors hereby waive all notice of any default, or any other act or acts giving rise to any claim under said Bonds, as well as notice of any and all liability of the Surety under said Bonds, and any and all liability on their part hereunder, to the end and effect that, the Principal and the Indemnitors shall be and continue liable hereunder, notwithstanding any notice of any kind to which they might have been or be entitled, and notwithstanding any defenses they might have been entitled to make. HOMESTEAD TWELFTH: The Principal and the Indemnitors hereby waive, so far as their respective obligations under this Agreement are concerned, all rights to claim any of their property, including their respective homesteads, as exempt from levy, execution, sale or other legal process under the laws of any State, Territory, or Possession. SETTLEMENTS THIRTEENTH: The Surety shall have the right to adjust, settle or compromise any claim, demand, suit or judgment upon the Bonds, unless the Principal and the Indemnitors shall request the Surety to litigate such claim or demand, or to defend such suit, or to appeal from such judgment, and shall deposit with the Surety, at the time of such request, cash or collateral satisfactory to the Surety in kind and amount, to be used in paying any judgment or judgments rendered or that may be rendered, with interest, costs, expenses and attorney's fees, including those of the Surety. SURETIES FOURTEENTH: In the event the Surety procures the execution of the Bonds by other sureties, or executes the Bond with co-sureties, or reinsures any portion of said Bonds with reinsuring sureties, then all the terms and conditions of this Agreement shall inure to the benefit of such other sureties, co-sureties and reinsuring sureties, as their interest may appear. SUITS FIFTEENTH: Separate suits may be brought hereunder as causes of action accrue, and the bringing of suit or the recovery of judgment upon any cause of action shall not prejudice or bar the bringing of other suits, upon other causes of action, whether therefore or thereafter arising. OTHER INDEMNITY SIXTEENTH: That the Principal and the Indemnitors shall continue to remain bond under the terms of this Agreement even though the Surety may have from time to time heretofore or hereafter, with or without notice to or knowledge of the Principal and the Indemnitors, accepted or released other agreements of indemnity or collateral in connection with the execution or procurement of said Bonds, from the Principal or Indemnitors or others, it being expressly understood and agreed by the Principal and the Indemnitors that any and all other rights which the Surety may have or acquire against the Principal and the Indemnitors and/or others under any such other or additional agreements of indemnity or collateral shall be in addition to, and not in lieu of, the rights afforded the Surety under this Agreement. INVALIDITY SEVENTEENTH: In case any of the parties mentioned in this Agreement fail to execute the same, or in case the execution hereof by any of the parties be defective or invalid for any reason, such failure, defect or invalidity shall not in any manner affect the validity of this Agreement or the liability hereunder of any of the parties executing the same, but each and every party so executing shall be and remain fully bound and liable hereunder to the same extent as if such failure, defect or invalidity had not existed. It is understood and agreed by the Principal and Indemnitors that the rights, powers, and remedies given the Surety under this Agreement shall be and are in addition to, and not in lieu of, any and all other rights, powers, and remedies which the Surety may have or acquire against the Principal and Indemnitors or others whether by the terms of any other agreement or by operation of law or otherwise. ATTORNEY IN FACT EIGHTEENTH: The Principal and Indemnitors hereby irrevocably nominate, constitute, appoint and designate the Surety as their attorney-in-fact with the right, but not the obligation, to exercise all of the rights of the Principal and Indemnitors assigned, transferred and set over to the Surety in this Agreement, and in the name of the Principal and Indemnitors to make, execute, and deliver any and all additional or other assignments, documents or papers deemed necessary and proper by the Surety in order to give full effect not only to the intent and meaning of the within assignments, but also to the full protection intended to be herein given to the Surety under all other provisions of this Agreement. The Principal and Indemnitors hereby ratify and confirm all acts and actions taken and done by the Surety and such attorney-in-fact. TERMINATION NINETEENTH: This Agreement may be terminated by the Principal or Indemnitors upon twenty days's written notice sent by registered mail to the Surety at its principal bond office at 175 Water Street, 6th Floor, New York, New York, 10038, but any such notice of termination shall not operate to modify, bar, or discharge the Principal or the Indemnitors as to the Bonds that may have been theretofore executed. TWENTIETH: This Agreement may not be changed or modified orally. No change or modification shall be effective unless made by written endorsement executed to form a part hereof. TWENTY-FIRST: Regardless of the date this Agreement is signed, it is hereby understood and agreed that the effective date of this Agreement shall be August 25, 2000. IN WITNESS WHEREOF, we have hereunto set our hands and seals the day and year first above written. ATTEST OR WITNESS: LAS VEGAS SANDS, INC. (SEAL) *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Vice President of Finance Assistant to the Chairman of the Board and Secretary VENETIAN CASINO RESORT, LLC *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Chief Financial Officer Assistant to the Chairman of the Board and Secretary GRAND CANAL SHOPS MALL, LLC *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Vice President of Finance Assistant to the Chairman of the Board and Secretary GRAND CANAL SHOPS MALL SUBSIDIARY, LLC *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Vice President of Finance Assistant to the Chairman of the Board and Secretary LIDO CASINO RESORT, LLC *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Vice President of Finance Assistant to the Chairman of the Board and Secretary GRAND CANAL SHOPS MALL CONSTRUCTION, LLC *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Vice President of Finance Secretary INTERFACE GROUP HOLDING COMPANY, INC. *By: /s/ Harry Miltenberger *By: /s/ David Friedman ------------------------------ ------------------------------------ Harry Miltenberger David Friedman Assistant Treasurer Secretary * Subject to Rider RIDER AMERICAN INTERNATIONAL COMPANIES AGREEMENT OF INDEMNITY The undersigned parties' agreement to this Agreement of Indemnity is subject to and based upon Surety's agreement that this Agreement of Indemnity does not in any way: (i) alter or amend the insurance policy (Policy #BE701 86 09) issued by American Home Assurance Company in favor of the Venetian Casino Resort, LLC ("Venetian") and Las Vegas Sands, Inc. ("LVSI") (the "Policy") or any other agreement; (ii) require the granting of any security by LVSI or Venetian for its general indemnity; or (iii) permit AIG to settle any claims against a bond delivered thereunder in a manner inconsistent with the Policy. Attest: /s/ Bradley H. Stone By: /s/ David Friedman ----------------------- -------------------------------- Bradley H. Stone David Friedman Executive Vice President Assistant to the Chairman of the Las Vegas Sands, Inc. Board and/or Secretary On behalf of: LAS VEGAS SANDS, INC. VENETIAN CASINO RESORT, LLC GRAND CANAL SHOPS MALL, LLC GRAND CANAL SHOPS MALL SUBSIDIARY, LLC LIDO CASINO RESORT, LLC GRAND CANAL SHOPS MALL CONSTRUCTION, LLC INTERFACE GROUP HOLDING COMPANY, INC. Attest: /s/ Bradley H. Stone By: /s/ Harry Miltenberger ----------------------- -------------------------------- Bradley H. Stone Harry Miltenberger Executive Vice President Chief Financial Officer and/or Vice Las Vegas Sands, Inc. President of Finance and/or Assistant Treasurer On behalf of: LAS VEGAS SANDS, INC. VENETIAN CASINO RESORT, LLC GRAND CANAL SHOPS MALL, LLC GRAND CANAL SHOPS MALL SUBSIDIARY, LLC LIDO CASINO RESORT, LLC GRAND CANAL SHOPS MALL CONSTRUCTION, LLC INTERFACE GROUP HOLDING COMPANY, INC. ACKNOWLEDGEMENTS State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ ACKNOWLEDGEMENTS State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ State of Nevada County of Clark On 11/22/00 before me, Verise Vashti Campbell (here insert name) Notary Public, personally appeared David Friedman, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me all that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC - STATE OF NEVADA] Signature /s/ Verise Vashti Campbell (Seal) ------------------------------ EX-10 18 ex10-9_7032.txt SECOND AMENDMENT TO AMENDED AND RESTATED... Exhibit 10.9 SECOND AMENDMENT TO AMENDED AND RESTATED RECIPROCAL EASEMENT, USE AND OPERATING AGREEMENT This SECOND AMENDMENT TO AMENDED AND RESTATED RECIPROCAL EASEMENT, USE AND OPERATING AGREEMENT (this "AMENDMENT") is dated as of this 4th day of June, 2002, by and among VENETIAN CASINO RESORT, LLC, a Nevada limited liability company having an address at 3355 Las Vegas Boulevard South, room 1C, Las Vegas, Nevada 89109 ("PHASE I LLC," in its capacity as "H/C I Owner" (as hereinafter defined)), as successor-in-interest to Las Vegas Sands, Inc. ("LVSI"); LIDO CASINO RESORT, LLC, a Nevada limited liability company having an address at 3355 Las Vegas Boulevard South, room 1C, Las Vegas, Nevada 89109 ("PHASE II LLC", in its capacity as "H/C II Owner" (as hereinafter defined)), as successor-in-interest to Phase I LLC in its capacity as the Owner of the Phase II Land; GRAND CANAL SHOPS II, LLC, a Delaware liability company having an address at 3355 Las Vegas Boulevard South, room 1G, Las Vegas, Nevada 89109 ("MALL SUBSIDIARY LLC," in its capacity as "Mall I Owner" (as hereinafter defined)), as successor-in-interest to Grand Canal Shops Mall Subsidiary, LLC, as successor-in-interest to Grand Canal Shops Mall, LLC, as successor-in-interest to Grand Canal Shops Mall Construction, LLC; and INTERFACE GROUP - NEVADA, INC., a Nevada corporation having an address at 3355 Las Vegas Boulevard South, room 1B, Las Vegas, Nevada 89109 ("INTERFACE," in its capacity as "SECC Owner" (as hereinafter defined)). R E C I T A L S A. WHEREAS, Phase I LLC, Grand Canal Shops Mall Construction, LLC, and Interface previously entered into that certain Amended and Restated Reciprocal 2 Easement, Use and Operating Agreement, dated as of November 14, 1997 (the "ORIGINAL REA") which was recorded on November 21, 1997 as Document Number 00731 in Book 971121 in the official records, Clark County, Nevada ("CLARK COUNTY"); and B. WHEREAS, Phase I LLC, Phase II LLC, Grand Canal Shops Mall Subsidiary, LLC, predecessor-in-interest to Mall Subsidiary LLC, and Interface previously entered into that certain First Amendment to Amended and Restated Reciprocal Easement, Use and Operating Agreement, dated as of December 20, 1999 (the "FIRST REA AMENDMENT"), which was recorded on December 23, 1999 as Document Number 01043 in Book 991223 in the official records, Clark County (the Original REA, as amended by the First REA Amendment, hereinafter, collectively, the "REA") (capitalized terms used but not defined herein shall have the respective meanings assigned thereto in the REA); and C. WHEREAS, in accordance with the FADAA, LVSI, Phase I LLC and Interim Mall LLC effected the Subdivision; and D. WHEREAS, in accordance with the provisions of the Mall I Airspace/Ground Lease, Phase I LLC granted fee title in and to the Mall I Airspace and the Retail Annex Land to Grand Canal Shops Mall Construction, LLC; and E. WHEREAS, in accordance with the provisions of the Sale and Contribution Agreement, Grand Canal Shops Mall Construction, LLC conveyed all its right, title and interest in and to the Phase I Mall to Grand Canal Shops Mall, LLC; and F. WHEREAS, Grand Canal Shops Mall, LLC conveyed all its right, title and interest in and to the Phase I Mall to Grand Canal Shops Mall Subsidiary, LLC; and 3 G. WHEREAS, in accordance with the terms of that certain Third Sale and Contribution Agreement, dated as of the date hereof between Grand Canal Shops Mall Subsidiary, LLC and Mall Subsidiary LLC, Grand Canal Shops Mall Subsidiary, LLC has conveyed all its right, title and interests in and to the Phase I Mall to Mall Subsidiary LLC; and H. WHEREAS, pursuant to a lease (the "PHASE IA LEASE"), dated as of the date hereof, a memorandum of which will be recorded, Phase II LLC, as landlord, has leased to Phase I LLC, as tenant, a portion of the airspace above the Phase II Land, as more particularly described in Exhibit F (the "PHASE IA AIRSPACE"), for a term of 99 years (or, if sooner, until the date on or about which the Phase IA Subdivision (as hereinafter defined) has been effected, at which time the Phase IA Lease provides, among other things, that fee title in and to the airspace demised thereunder shall be granted by Phase II LLC to Phase I LLC); and I. WHEREAS, as of the date hereof (i) Phase I LLC is the owner in fee simple of the Phase I Land (excluding the Mall I Airspace and the Retail Annex Land) which is located in Clark County and described on EXHIBIT A annexed hereto (ii) Phase I LLC is the holder of a leasehold estate in the Phase IA Airspace described on EXHIBIT B annexed hereto; (iii) Phase II LLC is the owner in fee simple of the Phase II Land, which is located in Clark County and described on EXHIBIT C annexed hereto; (iv) Interface is the owner in fee simple of the SECC Land, which is located in Clark County and described on EXHIBIT D annexed hereto; (v) Mall Subsidiary LLC is the owner in fee simple of the Retail Annex Land, which is located in Clark County and described on EXHIBIT E annexed hereto; (vi) Mall Subsidiary LLC is the owner in fee simple of the 4 Mall I Airspace, which is located in Clark County and described in EXHIBIT F annexed hereto; (vi) Mall Subsidiary LLC is the holder of leasehold estates in the premises leased under the Billboard Master Lease, the Canyon Ranch Master Lease and the Lutece Master Lease described in EXHIBIT G annexed hereto; J. WHEREAS, Phase I LLC (in its capacity as Owner of the Phase I Land (excluding the Mall I Airspace and the Retail Annex Land) and in its capacity as lessee of the Phase IA Airspace), Phase II LLC (in its capacity as Owner of the Phase II Land), Interface (in its capacity as Owner of the SECC Land), and Mall Subsidiary (in its capacity as Mall I Owner) desire to amend the REA upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants contained herein and in the REA, and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto, for themselves, their legal representatives, successors and assigns, hereby agree as follows: 1. RECITALS. (a) WHEREAS clause F of the Original REA is modified and amended by deleting the parenthetical phrase "(the "BANK CREDIT AGREEMENT")" therefrom. (b) WHEREAS clause H of the Original REA is modified and amended by deleting the parenthetical phrase "(the "MORTGAGE NOTES")" therefrom. (c) WHEREAS clause L of the Original REA is amended and restated to read in its entirety as follows: "L. WHEREAS, the Phase I Hotel/Casino will adjoin the SECC (the Phase I Land and the airspace above it, less and except the Mall I Space, 5 but including the Phase IA Airspace, sometimes collectively being referred to herein as the "H/C I SPACE"; PROVIDED that after the consummation of the H/C I/ Mall I Lot Line Modifications in accordance with the terms of this Agreement, the term "H/C I SPACE" shall refer to the Revised H/C I Space and any area covered by any Permanent Buffer Zone Encroachment Easements granted to the H/C I Owner; and PROVIDED further that after the consummation of modifications of the legal description of the Phase IA Airspace in accordance with Article I, Section 8 of this Agreement, the term "H/C I/SPACE" shall refer to the Revised H/C I/Space, if applicable pursuant to the preceding proviso clause, and the Revised Phase IA Airspace); and". (d) WHEREAS clause V of the Original REA is amended and restated to read in its entirety as follows: V. WHEREAS, subject to any limitation set forth in the FADAA and to any rights of any Mortgagee under its loan documents, Phase I LLC may transfer the Phase II Land to an affiliate ("Phase II LLC") for the construction and operation of a complex (such complex shall include, without limitation, the hotel, casino and retail facility to be located on the Phase II Land and the Phase II Automobile Parking Area, but shall exclude the Phase IA Airspace, the Phase IA Conference Center and any other buildings and improvements located within the Phase IA Airspace, collectively, the "Lido"); and". (e) WHEREAS clause X of the Original REA is amended and restated to read in its entirety as follows: "X. WHEREAS, for purposes of this Agreement, the "H/C II SPACE" shall mean the Phase II Land and any buildings and other improvements located thereon, less and except the Phase IA Airspace, and the Phase IA Conference Center and any other improvements located within the Phase IA Airspace; and". (f) WHEREAS clause Y of the Original REA is amended and restated in its entirety as follows: "Y. WHEREAS, for purposes of this Agreement (a) the term "SECC OWNER" shall mean, at any given time, the Person who then holds fee title to the SECC Land, (b) the term "H/C I OWNER" shall mean, at any given time, the Person who then holds fee title to the H/C I Space, and at any given time, the person who then holds the right, title and interest in and to the leasehold interest under the Phase IA Lease, or if the Phase IA 6 Subdivision has been effected and fee title transferred, fee title in and to the Phase IA Airspace, (c) the term "H/C II OWNER" shall mean, at any given time, the Person who then holds fee title to the H/C II Space, and (d) the term "MALL II OWNER" shall mean, at any given time, the Person who then holds fee title to the Mall II Space; and". 2. CONSTRUCTION. (a) Article I, Sections 2(a), (b) and (c) are hereby amended and restated in their entirety to read as follows: "(a) Intentionally Omitted. (b) Intentionally Omitted. (c) Intentionally Omitted.". (b) Article I, Sections 2(d) and 2(f) are hereby modified and amended by deleting each reference to the words "the Venetian" found therein and inserting the words "Phase IA" in lieu thereof. (c) Article I, Section 2(e) is hereby amended and restated in its entirety as follows: "(e) The obligations of the Parties set forth in this Section 2 shall expire upon Final Completion.". (d) The heading to Article I, Section 5 is hereby modified and amended by deleting the words "; Recoveries on Adelson Completion Guaranty" therefrom. (e) Article I, Section 5(b) is hereby amended and restated in its entirety as follows: "(b) Liquidated Damages shall be collected by Trustee, who shall apply such amounts as follows: (i) First, to pay the costs of repair, restoration or upgrade, as the case may be, of the affected portion of the Phase I Hotel/Casino and/or the Phase I Mall and/or Phase IA, as 7 the case may be, which gave rise to the Liquidated Damages, to the extent not previously paid. Any payments pursuant to this clause (i) shall be subject to satisfaction of conditions substantially equivalent to those applicable to disbursements of insurance proceeds collected after Final Completion, as set forth in Section 12 Article X; and (ii) Thereafter, such funds shall be apportioned between the Owners in an equitable manner." If H/C I Owner and Mall I Owner shall be unable to agree on the equitable apportionment of such Liquidated Damages, then the Owners shall engage an Independent Expert to determine such apportionment pursuant to the provisions of Section 15 of Article XIV.". (f) Article I, Sections 5(c), (d) and (e) are hereby deleted in their entirety. (g) The following new sections are hereby added to the end of Article I: "6. PHASE IA EASEMENTS. H/C I Owner and H/C II Owner acknowledge that in implementing the construction of the Phase IA Conference Center as contemplated by the Credit Agreement and the improvements on the Phase II Land of which the Phase IA Conference Center constitutes the second floor as contemplated by the Credit Agreement, such improvements may encroach to some extent into a portion of the H/C II Space and the H/C I Space outside of the Phase IA Airspace (the "PHASE IA ENCROACHMENTS"). H/C I Owner and H/C II Owner agree and consent to the Phase IA Encroachments and grant to each other perpetual, irrevocable easements (the "PHASE IA ENCROACHMENT EASEMENTS") over those portions of the H/C I Space and the H/C II Space within the Phase IA Encroachment for purposes of the same. So long as the Phase IA Encroachments exists, the following provisions shall apply: (a) H/C I Owner and H/C II Owner hereby grant to each other perpetual, irrevocable easements to enter on or into those portions of the H/C I Space and the H/C II Space burdened by the Phase IA Encroachment Easement in each instance to the extent reasonably necessary to gain access to the H/C I Space, the H/C II Space, the improvements located therein and any and all fixtures, fittings, equipment and building systems from time to time located therein for 8 the operation, use, enjoyment, maintenance, repair or restoration of or to the same, but for no other reason or purpose. H/C I Owner and H/C II Owner, in exercising their rights under this Section 6(a), shall use commercially reasonable efforts to minimize interference with the maintenance, use and operation of the H/C I Space, the H/C II Space and each Owner's business at the same. Before either of such Owners undertakes any maintenance, repairs or restoration in connection with its property that requires entry upon any material portion of the property of the other, such Owner shall give reasonable prior notice to the other, except in any case where the giving of reasonable prior notice is not practicable under the circumstances (but notice shall nevertheless be given as soon as practicable); PROVIDED that failure to give any such notice shall not constitute a default hereunder. (b) H/C I Owner and H/C II Owner may relocate any easement under subsection 6(a) above on its parcel at its sole cost and expense provided that such relocation: (1) does not cause any interruption in the utilization of the easement by the Owner of the dominant tenement for the affected easement (except DE MINIMIS interruptions, as to degree or time, which shall be scheduled by agreement with the Owner of the dominant tenement for the affected easement); (2) does not diminish the capacity or efficiency of such easement (excepting DE MINIMIS effects); and (3) will not interfere (except to a DE MINIMIS extent) with the maintenance, use or operation of the dominant tenement or the conduct of its Owner's business thereat." 7. SHARED PHASE II FACILITIES. The Phase IA Conference Center will share with H/C II Owner certain facilities in the improvements of which the Phase IA Conference Center constitutes the second floor (the "SHARED PHASE II FACILITIES"). So long as the Shared Phase II Facilities exist, the following provisions shall apply: (a) H/C II Owner hereby grants to H/C I Owner perpetual, irrevocable easements to enter on or into such portion of the H/C II Space to gain access to the Phase IA Conference Center and the Shared Phase II Facilities, the improvements located therein and any and all fixtures, fittings, equipment and building systems located therein 9 and any and all fixtures, fittings, equipment and building systems from time to time located therein for the operation, use, enjoyment, maintenance, repair or restoration of or to the same (but for no other reason or purpose). H/C I Owner, in exercising its rights under this subsection 7(a), shall use commercially reasonable efforts to minimize interference with the maintenance, use and operation of the H/C II Space and H/C II Owner's business at the same. (b) H/C II Owner may relocate any easements under subsection 7(a) on its parcel at its sole cost and expense provided that such relocation: (1) does not cause any interruption in the utilization of the easement by the Owner of the dominant tenement for the affected easement (except DE MINIMIS interruptions, as to degree or time, which shall be scheduled by agreement with the Owner of the dominant tenement for the affected easement); (2) does not diminish the capacity or efficiency of such easement (excepting DE MINIMIS effects); and (3) will not interfere (except to a DE MINIMIS extent) with the maintenance, use or operation of the dominant tenement or the conduct of its Owner's business thereat." (c) H/C I Owner and H/C II Owner hereby grant to each other non-exclusive easements in the Phase IA Airspace and the H/C II Space substantially equivalent to the easements granted by H/C I Owner and Mall I Owner for (i) Utility Activity as set forth in subsections C2 and C3 of Article II, (ii) ingress, egress and access through any shared pass-throughs or common areas as set forth in subsections D1 and D2 of Article II, (iii) maintenance and repair as set forth in subsection D3 of Article II; (iv) emergency access as set forth in Section D5 of Article V; and (v) vertical and lateral support as set forth in Section D6 of Article V. 8. MODIFICATION OF LEGAL DESCRIPTION. The Parties shall use the means that are reasonably expedient under the circumstances to modify (to the extent necessary) the description of the Phase IA Airspace, so that, after giving effect to such modifications the boundaries of the Phase IA Airspace shall include all of the Phase IA 10 Conference Center, and the boundaries of the H/C II Space shall exclude all of the Phase IA Conference Center (the "REVISED PHASE IA AIRSPACE"). So long as the Phase IA Airspace is held in leasehold rather than in fee, H/C I Owner and H/C II Owner shall enter into lease amendments as are reasonably necessary to implement the provisions of this Section 8.". 3. LIMITATION ON SECC SECURED DEBT. Article III, Section 3(c) is hereby modified and amended by (i) deleting all references to "and the Senior Subordinated Notes" found therein and (ii) deleting subclause (ii) therefrom and inserting the words "(ii) $140,000,000 plus any additional amounts permitted to be advanced under the Senior Loan Agreement and the Junior Loan Agreement for equipment leases or equipment financing" in lieu thereof. 4. SECC TRANSFERS. Subclause (i) of Article III, Section 3(d) is hereby amended and restated in its entirety as follows: "(i) any Transfer, so long as the SECC Owner is controlled (as defined in the Bank Credit Agreement) by Adelson (as defined in the Bank Credit Agreement), Affiliates (as defined in the Bank Credit Agreement) of Adelson and/or Related Parties (as defined in the Bank Credit Agreement),". 5. TRUSTEE. The following new sentence is hereby added to the end of Article VI, Section 1(f): "Notwithstanding anything to the contrary contained herein, in the event that The Bank of Nova Scotia shall cease to maintain its (i) commercial paper, short-term debt obligations or other short-term deposits credit ratings from each of S&P, Moody's and Fitch at the same or higher level than is in effect on June 4, 2002 and (ii) long-term senior unsecured debt obligations credit ratings from each of S&P, Moody's and Fitch at the same or higher level than is in effect on June 4, 2002, then a replacement 11 Trustee shall be selected in accordance with the foregoing provisions of this subsection (f), unless (x) each Mortgagee consents to The Bank of Nova Scotia's remaining as the Trustee hereunder or (y) The Bank of Nova Scotia has an investment-grade rating, is subject to regulations regarding fiduciary funds on deposit under, or similar to, Title 12 of the Code of Federal Regulations, Section 9.10(b), and maintains the Insurance Escrow Account as a segregated trust account.". 6. THE VENETIAN AND THE LIDO. (a) The opening paragraph of Article VIII, Section A is hereby modified and amended by (i) deleting in its entirety the first sentence thereof and (ii) deleting the word "further" from the second sentence thereof. (b) Article VIII, Section A(4) is hereby deleted in its entirety. (c) ArticleVIII, Section B2(a) is hereby amended and restated in its entirety to read as follows: "2. (1) Prior to commencement of construction of the Lido, H/C I Owner, Mall I Owner, H/C II Owner and Mall II Owner shall agree in good faith, and upon commercially reasonable terms, on the following aspects of the Phase I Hotel/Casino, the Phase I Mall (to the extent applicable), the Phase II Hotel/Casino and the Phase II Mall (to the extent applicable) operations: (i) appropriate mutual operating covenants, (ii) joint marketing and advertising, (iii) certain shared casino operations, (iv) the sharing of customer information, (v) the joint purchasing of insurance, (vi) shared security operations, (vii) easements, encroachments and other similar rights necessary or desirable for the operation of the Phase I Hotel/Casino, the Phase I Mall, the Phase II Hotel/Casino and the Phase II Mall and (viii) any other matters that would be of mutual benefit in owning and operating the Phase I Hotel/Casino, the Phase I Mall, the Phase II Hotel/Casino and the Phase II Mall (collectively, "SHARED OPERATIONS"). H/CI Owner, Mall I Owner, H/C II Owner, and Mall II Owner, as applicable, shall enter into documents memorializing the terms of the Shared Operations to the extent the applicable parties deem such documents to be necessary or desirable.". 12 7. RESTRICTIVE COVENANT. Article IX, Sections (a), (b), (c) and (d) are hereby modified and amended by adding the words ", except in accordance with the provisions of Section 5.2.12 (No Competing Facilities) of the New SECC Loan Agreement" before the period at the end of the first sentence of each of such Sections (a), (b), (c) and (d). 8. INSURANCE. The following new section is hereby added to Article X: "14. TERRORISM INSURANCE PROCEEDS. (a) Notwithstanding anything to the contrary contained herein, any insurance proceeds (including proceeds in connection with "business interruption" or similar coverage) payable in connection with a Casualty that is the result of a terrorist act affecting all or any portion of the Phase I Mall, the Phase I Hotel/Casino or the SECC shall be allocated equitably across each of such properties in accordance with the damages suffered by each of the Phase I Mall, the Phase I Hotel/Casino and the SECC; provided, however, that, Trustee shall distribute such proceeds (a) first, to the Mortgagee of Mall I Owner, in an amount equal to the lesser of (i) $105,000,000, (ii) the sum of (x) the cost of restoring the Phase I Mall and (y) rental income lost by Mall I Owner as a result of such Casualty, to the extent such lost income is covered by the applicable insurance policy or policies and (iii) the total amount of such insurance proceeds, and (b) second, to the Mortgagee of SECC Owner, in an amount at least equal to the lesser of (i) $141,000,000, (ii) the sum of (x) the cost of restoring the SECC and (y) income lost by SECC Owner as a result of such casualty, to the extent such lost income is covered by the applicable insurance policy or policies and (iii) the total amount of such proceeds. (b) The obligation of the Mortgagees of each of Mall I Owner, H/C I Owner and SECC Owner to restore after a Casualty shall be governed by Section 13 of this Article X and by Article XI.". 9. SCHEDULE I - DEFINITIONS. (a) Item 4 of Schedule I is hereby deleted in its entirety. (b) Item 15 of Schedule I is hereby amended and restated in its entirety to read as follows: 13 "15. "BANK CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated as of June 4, 2002 by and among Phase I LLC and LVSI, as borrowers, and the lenders from time to time parties thereto, The Bank of Nova Scotia, as Administrative Agent and Goldman Sachs Credit Partners L.P., as Syndication Agent.". (c) Item 59 of Schedule I is hereby amended and restated in its entirety to read as follows: "59. FINAL COMPLETION" shall have the meaning set forth in the Bank Credit Agreement.". (d) Item 137 of Schedule I is hereby amended and restated in its entirety to read as follows: "MORTGAGE NOTES" shall mean those certain mortgage notes in an aggregate principal amount equal to $850,000,000 issued pursuant to that certain Indenture, dated as of June 4, 2002 among LVSI, Phase I LLC, certain guarantors named therein and U.S. Bank National Association, as trustee.". (e) Item 139 of Schedule I is hereby modified and amended by deleting all references to "First Trust National Association" and inserting the words "U.S. Bank National Association" in lieu thereof. (f) Item 149 of Schedule I is hereby amended and restated in its entirety to read as follows: "149. "OWNER" means H/C I Owner, Mall I Owner, SECC Owner, H/C II Owner and Mall II Owner and their respective successors and assigns. (g) Item 222 of Schedule I is hereby amended and restated in its entirety to read as follows: "THIRD PARTY WARRANTIES" means all warranties, guaranties and other claims arising out of breaches of contracts pertaining to the construction of the Venetian and Phase IA; provided, however, that, the term Third Party Warranties shall not mean claims arising out of claims under the Direct Construction Guaranty and the Indirect Construction Guaranty (as such terms are defined in the Bank Credit Agreement, dated as of 14 November 14, 1997, by and among LVSI, Phase I LLC, the Bank Agent (as defined in the FADAA), Goldman Sachs Credit Partners L.P. and the Bank Lenders (as defined in the FADAA)).". (h) Effective as of the date hereof, the following new definitions are added to Schedule I: "CLARK COUNTY" shall mean Clark County, Nevada. "FIRST REA AMENDMENT" shall have the meaning set forth in WHEREAS clause B of this Amendment. "LUTECE OPERATING LEASE" shall mean the Lease, dated as of __________, ____ between Grand Canal Shops Mall Construction, LLC, as landlord and Las Vegas Lutece Corp., as tenant, as the same may be further amended from time to time. "NEW SECC LOAN AGREEMENT" shall mean that certain Loan Agreement, dated as of June 28, 2001 between Interface, as borrower, and Bear, Stearns Funding, Inc. "ORIGINAL REA" shall have the meaning set forth in WHEREAS clause A of this Amendment. "PHASE IA" means an approximately 1,000 room hotel tower on top of the roof to the Phase I Automobile Parking Area, an approximately 1,000-parking space expansion of the Phase I Automobile Parking Area and the Phase 1A Conference Center. "PHASE IA AIRSPACE" shall have the meaning set forth in WHEREAS clause H of this Amendment. "PHASE IA CONFERENCE CENTER" shall mean the approximately 150,000 square feet of additional meeting and conference space to be located in the Phase IA Airspace. "PHASE IA ENCROACHMENTS" shall have the meaning set forth in Article I, Section 6. "PHASE IA ENCROACHMENT EASEMENT" shall have the meaning set forth in Article I, Section 6. "PHASE IA LEASE" shall have the meaning set forth in WHEREAS clause H of this Amendment. "PHASE IA SUBDIVISION" shall mean the creation of a separate legal parcel by means of a commercial subdivision of the Phase II Land in order to 15 cause a portion of the Phase II Land consisting of the Phase IA Airspace to become a legal parcel which is separate and distinct from the remainder of the Phase II Land and capable of being conveyed in fee simple. "REA" shall have the meaning set forth in WHEREAS clause B of this Amendment. "REVISED PHASE IA AIRSPACE" shall have the meaning set forth in Article 1, Section 8. 10. RATIFICATION. Except as modified by this Amendment, the REA and all covenants, agreements, terms and conditions thereof shall remain in full force and effect and are hereby in all respects ratified and confirmed. [signature pages follow] 16 IN WITNESS WHEREOF, the Parties hereto have set their hands the day and year first above written. VENETIAN CASINO RESORT, LLC By: Las Vegas Sands, Inc., as managing member By: /s/ David Friedman -------------------------------------- Name: David Friedman Title: Secretary INTERFACE GROUP-NEVADA, INC. By: /s/ David Friedman -------------------------------------- Name: David Friedman Title: Secretary LIDO CASINO RESORT, LLC By: Lido Casino Resort Holding Company, LLC By: Lido Intermediate Holding Company, LLC By: Venetian Casino Resort, LLC By: Las Vegas Sands, Inc. By: /s/ David Friedman ------------------------- Name: David Friedman Title: Secretary 17 GRAND CANAL SHOPS II, LLC By: Grand Canal Shops Mall MM Subsidiary, Inc. By: /s/ David Friedman --------------------------------------- Name: David Friedman Title: Secretary 18 State of New York) : ss.: County of New York) This instrument was acknowledged before me on June 4, 2002 by David Friedman as Secretary of INTERFACE GROUP-NEVADA, INC. Marybeth Carroll --------------------------- Notary Public 19 State of New York) : ss.: County of New York) This instrument was acknowledged before me on June 4, 2002 by David Friedman, Secretary of Las Vegas Sands, Inc., the managing member of VENETIAN CASINO RESORT, LLC. Marybeth Carroll --------------------------- Notary Public 20 State of New York) : ss.: County of New York) This instrument was acknowledged before me on June 4, 2002, by David Friedman, as Secretary of Las Vegas Sands, Inc., a corporation which is the managing member of Venetian Casino Resort, LLC, a limited liability company which is the managing member of Lido Intermediate Holding Company, LLC, a limited liability company which is the managing member of Lido Casino Resort Holding Company, LLC, a limited liability company which is the managing member of Lido Casino Resort, LLC, a limited liability company which is the party to this document. Marybeth Carroll --------------------------- Notary Public 21 State of New York) : ss.: County of New York) This instrument was acknowledged before me on June 4, 2002, by David Friedman, as Secretary of Grand Canal Shops Mall MM Subsidiary, Inc., a corporation which is the managing member of Grand Canal Shops II, LLC, a limited liability company which is the party to this document. Marybeth Carroll --------------------------- Notary Public EX-10 19 ex10-10_7032.txt AMENDED AND RESTATED 1997 FIXED STOCK OPTION PLAN Exhibit 10.10 AMENDED AND RESTATED LAS VEGAS SANDS, INC. 1997 FIXED STOCK OPTION PLAN SECTION 1. PURPOSE. The purpose of this Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan is to promote the interests of Las Vegas Sands, Inc. (the "Company") and its shareholders by (i) attracting and retaining exceptional officers and other key employees and consultants to the Company and its Subsidiaries and (ii) enabling such individuals to participate in the long-term growth and financial success of the Company. SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below: "Acceleration Event" shall mean (i) the merger of the Company with another entity pursuant to which the shareholders of the Company immediately prior to such merger do not own a majority of the stock of the surviving corporation immediately after the merger; (ii) the sale of all or a substantially all of its assets or a majority of its capital stock (other than a restructuring or reorganization as a result of the Development Project or any public offering) (either (i) or (ii) being a "Change in Control Acceleration Event"), or (iii) an initial public offering of the stock of the Company as the same shall be referenced in a request for acceleration or other document filed by the Company with the SEC (a "Public Offering Acceleration Event"). "Adelson" shall mean Sheldon G. Adelson, the principal shareholder of the Company. "Affiliate" shall mean (i) any entity that would be deemed to be under common control with the Company under Section 414 of the Code and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Board. "Award Agreement" shall mean any written agreement, contract, or other instrument or document evidencing any Option, which may, but need not, be executed or acknowledged by a Participant. "Board" shall mean the Board of Directors of the Company. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Company" shall mean Las Vegas Sands, Inc., together with any successor thereto. "Development Project" shall mean the Company's construction and development of the hotel/casino resort, shopping mall and Congress Center (Hall D) and 1 the further development of the adjacent parcels on the property owned by the Company or its Affiliates on the "Strip" in Las Vegas, Nevada, and the construction of new improvements thereon. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Fair Market Value" of a Share shall be determined as follows: (i) If there is no public market for the Shares, the fair market value agreed to by the Company and the Participant or in the absence of such agreement, the fair market value determined and agreed to by two national investment banking firms (the "Appraisers"), one chosen by the Company and one chosen by the Participant. In the absence of agreement of the Appraisers, Fair Market Value shall be determined by a third independent appraiser mutually chosen by the Appraisers. Such determination shall be final and binding on all parties. The costs and expenses of the appraisers shall be shared equally by the Company and the Participant. (ii) If there is a public market for the Shares, then the mean between the high and low sales price of the Shares as reported on the composite tape for securities traded on the New York Stock Exchange for such date (or if not then trading on the New York Stock Exchange the mean between the high and low sales price of the Shares on the stock exchange or over-the-counter market on which the Shares are principally trading on such date), or, if there were no sales on such date, on the closest preceding date on which there were sales of Shares. "Incentive Stock Option" shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto. "Nevada Gaming Laws" means the statutes of the State of Nevada, the regulations of the Nevada Gaming Commission, the rules, directives and decisions of the Nevada Gaming Commission and State Gaming Control Board, the ordinances of Clark County, Nevada, and the regulations of the Clark County Liquor and Gaming Licensing Board. "Non-Qualified Stock Option" shall mean a right to purchase Shares from the Company that is granted under Section 6 of the Plan and that is not intended to be an Incentive Stock Option. "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option. "Participant" shall mean any officer or other key employee of or consultant to the Company or its Subsidiaries eligible for an Option under Section 5 of the Plan and selected by the Board to receive an Option under the Plan. "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity. 2 "Plan" shall mean this Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan. "SEC" shall mean the Securities and Exchange Commission or any successor thereto and shall include the Staff thereof. "Shares" shall mean the common shares of the Company, $.10 par value, or such other securities of the Company (i) into which such common shares shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (ii) as may be determined by the Board pursuant to Section 4(b). "Subsidiary" shall mean (i) any entity that, directly or indirectly, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Board. "Substitute Options" shall have the meaning specified in Section 4(c). SECTION 3. ADMINISTRATION. (a) The Plan shall be administered by the Board. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Board by the Plan, the Board shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Options to be granted to a Participant; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Options; (iv) determine the terms and conditions of any Option; (v) determine whether, to what extent, by what method and under what circumstances Options may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Options, other property, and other amounts payable with respect to an Option shall be deferred either automatically or at the election of the holder thereof or of the Board; (vii) interpret, administer reconcile any inconsistency, correct any default and/or supply any omission in the Plan and any instrument or agreement relating to, or Option made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Board deems necessary or desirable for the administration of the Plan. (b) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Option shall be within the sole discretion of the Board, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Option, and any shareholder. 3 (c) No member of the Board shall be liable for any action or determination made in good faith with respect to the Plan or any Option hereunder. SECTION 4. SHARES AVAILABLE FOR OPTIONS. (a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b), the aggregate number of Shares with respect to which Options may be granted under the Plan shall be 75,000. If, after the effective date of the Plan, any Shares covered by an Option granted under the Plan, or to which such an Option relates, are forfeited, or if an Option has expired, terminated or been canceled for any reason whatsoever (other than by reason of exercise or cancellation for consideration), then the Shares covered by such Option shall again be, or shall become, Shares with respect to which Options may be granted hereunder. (b) ADJUSTMENTS. In the event that the Board determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, infusion of capital, including, without limitation, any infusion of capital by Adelson, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Board in its discretion to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Board shall, in such manner as it may deem equitable, adjust any or all of (i) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Options may be granted, (ii) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Options, and (iii) the exercise price with respect to any Option or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Option in consideration for the cancellation of such Option in an amount equal to the excess, if any, of the Fair Market Value of the Shares subject to the Options over the aggregate exercise price of such Option. (c) SUBSTITUTE OPTIONS. Options may, in the discretion of the Board, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or its Affiliates or a company acquired by the Company or with which the Company combines ("Substitute Options"). The number of Shares underlying any Substitute Options shall be counted against the aggregate number of Shares available for Options under the Plan. (d) SOURCES OF SHARES DELIVERABLE UNDER OPTIONS. Any Shares delivered pursuant to an Option may consist, in whole or in part, of authorized and unissued Shares, of treasury Shares or of shares purchased from a shareholder of the Company. 4 SECTION 5. ELIGIBILITY. Any officer or other key employee of or consultant to the Company or any of its Affiliates or Subsidiaries (including any prospective officer or key employee or consultant) shall be eligible to be designated a Participant. SECTION 6. STOCK OPTIONS. (a) GRANT. Subject to the provisions of the Plan, the Board shall have sole and complete authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the exercise price therefor and the conditions and limitations applicable to the exercise of the Option. The Board shall have the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of Options. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. All Options when granted under the Plan are intended to be Non-Qualified Stock Options, unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Non-Qualified Stock Option appropriately granted under the Plan; provided that such Option (or portion thereof) otherwise complies with the Plan's requirements relating to Non-Qualified Stock Options. No person or Participant has any right, title or interest in the Plan or any interest in an Option to acquire an interest in the Plan or the Shares of the Company until such time as the Plan and any rights granted thereunder, including any Options, are approved by the Nevada Gaming Authorities. (b) EXERCISE PRICE. The Board shall establish the exercise price at the time each Option is granted, which exercise price shall be set forth in the applicable Award Agreement. (c) EXERCISE. Subject to Section 8 hereof, each Option shall be exercisable at such times and subject to such terms and conditions as the Board may, in its sole discretion, specify in the applicable Award Agreement or thereafter; PROVIDED that no Option shall remain exercisable for a period greater than ten (10) years from the date of the applicable Award Agreement. The Board may impose such conditions with respect to the exercise of Options, including without limitation, any relating to the application of federal or state securities and gaming laws, as it may deem necessary or advisable. No Participant that holds an Option under this Plan may exercise such option until such time as he or she obtains a license or other approvals from the Nevada Gaming Commission and the Clark County Liquor and Gaming Licensing Board (the "Nevada Gaming Authorities") to hold the stock in the Company. In the event that the Participant is denied such license or approval or fails to obtain such license or approval while an employee of the Company or within one year thereafter, then such options will thereby expire. 5 (d) PAYMENT. (i) No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate exercise price therefor is received by the Company. Such payment may be made in cash, or its equivalent, or (A) by exchanging Shares owned by the optionee (which are not the subject of any pledge or other security interest and which have been owned by such optionee for at least 6 months), (B) if there shall be a public market for the Shares, subject to such rules as may be established by the Board, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate exercise price, or (C) to the extent permitted in an Award Agreement, by the promissory note and agreement of a Participant providing for the payment with interest on the unpaid balance accruing at a market rate determined as provided in the applicable Award Agreement and upon such terms and conditions (including the security, if any therefor) as the Board may determine, or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate exercise price; PROVIDED, FURTHER, that if (X) the Participant's employment with the Company is terminated for any reason, (Y) the Participant continues to own the Shares and (Z) the promissory note remains outstanding, then the interest rate of the promissory note shall increase immediately upon such termination to the Company's weighted average cost of capital, as reasonably determined by the Board. (ii) Wherever in this Plan or any Award Agreement a Participant is permitted to pay the exercise price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Board, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option. (iii) Shares issued to a Participant upon the exercise of an Option under the terms of this Plan may be pledged to a financial institution to secure a loan, the proceeds of which are used to pay to the Company the exercise price of the Option or the taxes payable by the Participant in connection with his or her acquisition of the Shares PROVIDED, HOWEVER, that the financial institution agrees that their security interest in such Shares shall be subordinate to any right of redemption the Company may have with respect to such Shares pursuant to an agreement between the Company and the Participant. SECTION 7. AMENDMENT AND TERMINATION. (a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval if such approval is necessary to comply with any tax 6 or regulatory requirement applicable to the Plan, and PROVIDED that any such amendment, alteration, suspension, discontinuance or termination that would impair the rights of any Participant or any holder or beneficiary of any Option theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary. (b) AMENDMENTS TO OPTIONS. The Board may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Option theretofore granted, prospectively or retroactively; PROVIDED that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would impair the rights of any Participant or any holder or beneficiary of any Option theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary. (c) ADJUSTMENT OF OPTIONS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING EVENTS. The Board is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Options in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. SECTION 8. ACCELERATION EVENT. In the event of an Acceleration Event, any outstanding Options then held by Participants which are unexercisable or otherwise unvested, shall automatically become 100% vested and shall be exercisable pursuant to the terms of the applicable Award Agreement. SECTION 9. GENERAL PROVISIONS. (a) NONTRANSFERABILITY. (i) Each Option shall be exercisable only by the Participant during the Participant's lifetime, or, if permissible under applicable law, by the Participant's legal guardian or representative. Except as set forth in Section 6(d)(iii) and subject to compliance with applicable Nevada Gaming Laws, no Option may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. (ii) Notwithstanding the foregoing, the Board may in the applicable Award Agreement evidencing an Option granted under the Plan or at any time thereafter in an amendment to an Award Agreement provide that Options granted hereunder which are not intended to qualify as Incentive Stock Options may be 7 transferred by the Participant to whom such Option was granted (the "Grantee") without consideration, subject to such rules as the Board may adopt to preserve the purposes of the Plan, any applicable restrictions in the Company's articles of incorporation, by-laws or other relevant corporate documents, and provided that such transfer will not cause the Company to cease to be an S Corporation, to: (A) the Grantee's spouse, children or grandchildren (including adopted and stepchildren and grandchildren) (collectively, the "Immediate Family"); (B) a trust solely for the benefit of the Grantee and his or her Immediate Family; or (C) a partnership or limited liability company whose only partners or shareholders are the Grantee and his or her Immediate Family members; (each transferee described in clauses (A), (B) and (C) above is hereinafter referred to as a "Permitted Transferee"); PROVIDED that the Grantee gives the Board advance written notice describing the terms and conditions of the proposed transfer and provides proof that the Grantee and all Transferees have obtained all necessary licenses and approvals from the Nevada Gaming Authorities and the Board notifies the grantee in writing that such a transfer would comply with the requirements of the Plan and any applicable Award Agreement evidencing the option. The terms of any option transferred in accordance with the immediately preceding sentence shall apply to the Permitted Transferee and any reference in the Plan or in an Award Agreement to an optionee, Grantee or Participant shall be deemed to refer to the Permitted Transferee, except that (a) Permitted Transferees shall not be entitled to transfer any Options, other than by will or the laws of descent and distribution, and only after obtaining all necessary licenses and approvals from the Nevada Gaming Authorities; (b) Permitted Transferees shall not be entitled to exercise any transferred Options unless there shall be in effect a registration statement on an appropriate form covering the shares to be acquired pursuant to the exercise of such Option if the Board determines that such a registration statement is necessary or appropriate, (c) the Permitted Transferee has obtained all necessary licenses and approvals from the Nevada Gaming Authorities; (d) the Board or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not such notice is or would otherwise have been required to be given to the Grantee under the Plan or otherwise and (e) the consequences of termination of the Grantee's employment by, or services to, the Company under the terms of the Plan and the applicable Award Agreement shall continue to be applied with respect to the Grantee, following which the Options shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement. (b) ASSUMPTION BY ADELSON. Adelson may, at any time, assume the Plan or certain obligations under the Plan in which case Adelson will be the 8 Administrator of the Plan, the issuer of the Options and will have all the rights, powers and responsibilities granted to the Company or the Board under the Plan with respect to such assumed obligations, including any redemption rights granted to the Company under any Employment Agreement or contract or otherwise. (c) NO RIGHTS TO OPTIONS. (i) No Participant or other Person shall have any claim to be granted any Option, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Options. The terms and conditions of Options and the Board's determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated). (ii) No Participant may acquire any interest in an Option under this Plan until such time as the Nevada Gaming Authorities approves the granting of such Option. In the event that any Nevada Gaming Authority denies the granting of the Option, the Participant shall not be entitled to receive the Option or any other compensation or remuneration under this Agreement in lieu of such Option. (iii) This Plan is not effective and no Participant has any rights hereunder until such time as the Plan is approved by the Nevada Gaming Authorities. (d) SHARE CERTIFICATES. (i) All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Option or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, any applicable Federal or state laws, or the Company's Articles of Incorporation or Bylaws and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (ii) All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Option or the exercise thereof shall be subject to Nevada Gaming Laws and all local gaming laws and the Board may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (e) WITHHOLDING. (i) A Participant may be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Option, from any payment due or transfer made under any Option or under the Plan or from any compensation or other amount owing to a Participant, the amount (in cash, Shares, other securities, other Option or other property) 9 of any applicable withholding taxes in respect of an Option, its exercise, or any payment or transfer under an Option or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. (ii) Without limiting the generality of clause (i) above, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of Shares owned by the Participant (which are not subject to any pledge or other security interest and which have been owned by the Participant for at least 6 months) with a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise of the option a number of Shares with a Fair Market Value equal to such withholding liability. (iii) Notwithstanding any provision of this Plan to the contrary, in connection with the transfer of an Option to a Permitted Transferee pursuant to Section 9(a) of the Plan, the Grantee shall remain liable for any withholding taxes required to be withheld upon the exercise of such Option by the Permitted Transferee. (f) AWARD AGREEMENTS. Each Option hereunder shall be evidenced by an Award Agreement, which shall be delivered to the Participant and shall specify the terms and conditions of the Option and any rules applicable thereto, including but not limited to the effect on such Option of the death, disability or termination of employment or service of a Participant, and the effect, if any, of such other events as may be determined by the Board. (g) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options (subject to shareholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases. (h) NO RIGHT TO EMPLOYMENT. The grant of an Option shall not be construed as giving a Participant the right to be retained in the employ of, or in any consulting relationship to, the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. (i) NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the applicable Option, no Participant or holder or beneficiary of any Option shall have any rights as a shareholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. (j) GOVERNING LAW. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Nevada and the Nevada Gaming Laws. 10 (k) SEVERABILITY. If any provision of the Plan or any Option is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Option, or would disqualify the Plan or any Option under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Board, materially altering the intent of the Plan or the Option, such provision shall be stricken as to such jurisdiction, Person or Option and the remainder of the Plan and any such Option shall remain in full force and effect. (l) OTHER LAWS. The Board may refuse to issue or transfer any Shares or other consideration under an Option if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Option shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality of the foregoing, no Option granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Board in its sole discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. federal and any other applicable securities laws and all approvals of the Nevada Gaming Laws. (m) NO TRUST OR FUND CREATED. Neither the Plan nor any Option shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Option, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. (n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered pursuant to the Plan or any Option, and the Board shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated. (o) HEADINGS. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. SECTION 10. TERM OF THE PLAN. (a) EFFECTIVE DATE. The Plan shall be effective as of the date of its approval by the Board of Directors of the Company. (b) EXPIRATION DATE. No Option shall be granted under the Plan after November 6, 2007. Unless otherwise expressly provided in the Plan or in an 11 applicable Award Agreement, any Option granted hereunder may, and the authority of the Board to amend, alter, adjust, suspend, discontinue, or terminate any such Option or to waive any conditions or rights under any such Option shall, continue after November 6, 2007. ********************************** EX-10 20 ex10-11_7032.txt FIRST AMENDMENT STOCK OPTION PLAN Exhibit 10.11 FIRST AMENDMENT TO THE AMENDED AND RESTATED LAS VEGAS SANDS, INC. 1997 FIXED STOCK OPTION PLAN First Amendment (this "AMENDMENT") to the Amended and Restated Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan, dated as of June 4, 2002 (the "PLAN"). WHEREAS, in accordance with Section 7(a) of the Plan, the Board desires to amend the terms of the Plan as set forth below. NOW THEREFORE, the Board hereby amends the Plan as follows: 1. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan. 2. The following definitions are hereby added to Section 2 of the Plan in alphabetical order: "Cause" shall mean: (i) conviction of a felony, misappropriation of any material funds or property of the Company, commission of fraud or embezzlement with respect to the Company, or any material act or acts of dishonesty relating to the Participant's employment by the Company resulting or intended to result in direct or indirect personal gain or enrichment at the expense of the Company; (ii) use of alcohol or drugs that renders the Participant materially unable to perform the functions of his or her job or carry out his or her duties to the Company; (iii) materially failing to fulfill his duties and responsibilities; (iv) committing any act or acts of serious and willful misconduct (including disclosure of confidential information) that is likely to cause a material adverse effect on the business of the Company or to subject the Company to possible disciplinary action by the Nevada Gaming Authorities; or (v) loss or failure to obtain a license, work card, or other approval from the Nevada Gaming Authorities that is necessary or for which the 2 Company deems advisable relating to the Participant's employment by the Company or the holding or exercise of an Option. "Disability" shall mean that the Participant is unable to perform the duties of his employment for a continuous period of three months due to severe illness or accident or other grave mental or physical incapacity. 3. New section 6(e) shall be added to the Plan to read in its entirety as follows: "(e) REDEMPTION RIGHTS. The Board may, in its sole discretion, elect in any Award Agreement to include the following redemption provision: "Some or all of the Shares issued pursuant to the exercise of the Option and held by the Participant for a period of at least six months following exercise of the Option, shall, at the written request of the Participant (or his personal representative), be redeemed by the Company as follows: (i) in the case of a (A) termination of the Participant's employment with the Company due to death or Disability; (B) voluntary termination by the Participant; (C) termination of the Participant's employment by the Company other than for Cause; or (D) redemption request made by the Participant while still employed by the Company, the Company shall pay to the Participant an amount equal to the Fair Market Value on the date of redemption of the Shares being redeemed, such redemption price (or portion thereof) shall be payable by the Company, with interest on the unpaid balance accruing at a fair market rate as of the date of redemption, which the parties understand shall mean the "Applicable Federal Rate" as such term is used in the Internal Revenue Code (the "CODE") section 7872 unless, based upon the financial position and credit worthiness of the Company, a higher rate is appropriate, in thirty-six (36) equal consecutive monthly installments, commencing ninety (90) days following the date on which the Fair Market Value is established; and (ii) in the case of a termination for Cause or a termination as a result of the failure of the Nevada Gaming Authorities to grant the Participant a casino key employee and equity holder license, Participant shall be deemed to have elected redemption as of his termination of employment or six months after share exercise was 3 completed, whichever is later, and the Company shall pay to the Participant an amount equal to the lesser of the exercise price for such Shares or the Fair Market Value on the date of redemption, such redemption price shall be payable, with interest on the unpaid balance accruing at a fair market rate as of the date of redemption, which the parties understand shall mean the "Applicable Federal Rate" as such term is used in the Code section 7872 unless, based upon the financial position and credit worthiness of the Company, a higher rate is appropriate, in thirty-six (36) equal consecutive monthly installments commencing ninety (90) days following the date on which Fair Market Value is established."" 4. Except as specifically set forth in this Amendment, the Plan shall remain unmodified and in full force and effect. LAS VEGAS SANDS, INC. By: /s/ David Friedman --------------------------------------- Name: David Friedman Title: Secretary ACKNOWLEDGED AND AGREED TO: /s/ Sheldon G. Adelson - --------------------------- Sheldon G. Adelson EX-10 21 ex10-12_7032.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - WPW Exhibit 10.12 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT ("Agreement") is made as of January 1, 2002 between LAS VEGAS SANDS, INC., a Nevada corporation having its principal place of business at 3355 Las Vegas Boulevard South, Las Vegas, Nevada, d/b/a Venetian Hotel Resort Casino ("LVSI") and WILLIAM P. WEIDNER, an individual residing at 9136 Golden Eagle Drive, Las Vegas, Nevada ("Weidner"). WHEREAS: LVSI is engaged in the business of owning and operating The Venetian Resort Hotel Casino on property owned by LVSI on the "Strip" in Las Vegas, Nevada (the "Venetian Property"); LVSI desires to further develop the Venetian Property and to construct additional improvements thereon (the "Phase II Development"); In furtherance of its business and development plans, LVSI has need of qualified, experienced, management personnel; On November 1, 1995, Weidner and LVSI entered into an Employment Agreement (the "Original Employment Agreement") pursuant to which Weidner has served, and continues to serve, as President of LVSI; The Original Employment Agreement, which would have expired on December 31, 1998, was extended by LVSI pursuant to its terms and expired on December 31, 2000; and LVSI and Weidner now wish to further extend Weidner's employment by LVSI, and to modify and amend the Original Employment Agreement and restate the terms, provisions and conditions thereof, as set forth herein; NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, and intending to be legally bound thereby, LVSI and Weidner agree as follows: 1. EMPLOYMENT. LVSI shall employ Weidner, during the term and subject to the conditions set forth in this Agreement, to serve as President and Chief Operating Officer of LVSI or in such other managerial or executive capacity as the Board of Directors of LVSI (sometimes hereinafter referred to as the Board) may from time to time determine. 2. DUTIES. Weidner shall have such powers, duties and responsibilities as are generally associated with his office, as the same may be modified and/or assigned to Weidner from 1 time to time by the Chairman of the Board, and subject to the supervision, direction and control of the Chairman and the Board, including but not limited to: (a) participation and involvement in the proposed development activities of LVSI, including the planning, financing, construction and implementation stages, as shall be requested by the Chairman of the Board; (b) the efficient operation and maintenance of the hotel and casino properties of LVSI; (c) the promotion, marketing and sale of the goods and services offered by LVSI; (d) the preparation of budgets and allocation of funds; (e) the establishment or continuation of adequate management reporting and control systems; (f) the recruitment, selection, training, delegation of duties and responsibilities, and supervision, of subordinates; and (g) the direction, review and oversight of all programs, systems, departments and functions related to the management and administration of LVSI. 3. PERFORMANCE. Weidner hereby unconditionally accepts the employment described herein under the terms and conditions set forth in this Agreement. Weidner covenants and agrees faithfully and diligently to perform all of the duties of his employment, devoting his full business and professional time, attention, energy and ability to promote the business interests of LVSI. Weidner further agrees that during the period of his employment with LVSI, he will not engage in any other business or professional pursuit whatsoever unless LVSI shall consent thereto in writing. 4. TERM. The term of Weidner's employment hereunder commenced on December 1, 1995 (the "Effective Date"). The initial term of this Amended and Restated Agreement (the "Initial Term") shall expire on December 31, 2005, unless sooner terminated as provided herein. The Initial Term shall be automatically extended for successive one-year periods thereafter (each, a "Renewal Term") unless, no later than one hundred twenty (120) days prior to the expiration of the Initial Term or any Renewal Term, one party shall give written notice to the other of his or its intention not to extend, in which event this Agreement shall terminate at the end of the then current Initial or Renewal Term. 5. LICENSING REQUIREMENT. Weidner is presently licensed as a casino key employee ("the License") by the Nevada Gaming Commission upon the recommendation of the state Gaming Control Board (collectively, the "Nevada Gaming Authorities"), pursuant to the provisions of 2 applicable Nevada laws and regulations. Weidner agrees to cooperate with the Nevada Gaming Authorities to maintain the License in full force and effect and in good standing. If the Nevada Gaming Authorities shall, at any time, suspend or revoke the License, then this Agreement shall terminate and neither LVSI nor Weidner shall have any further obligation hereunder. 6. COMPENSATION. For all of the services to be rendered by Weidner to LVSI hereunder, LVSI shall pay Weidner the following: (a) SALARY. After the execution hereof and during the remainder of the Initial Term, Weidner shall receive a monthly salary at the rate of One Million One Hundred Forty-Four Thousand Dollars ($1,144,000) per year, payable in accordance with the usual payroll practices of LVSI. At the start of each calendar year of the Initial Term, beginning with 2003, and each Renewal Term, if any, Weidner's salary shall be increased over the salary in effect immediately prior to the start of such calendar year or Renewal Term by four percent (4%). (b) BONUS. With respect to each calendar year during the Initial Term and any Renewal Term hereof, beginning with the 2002 calendar year, Weidner shall receive additional compensation on account of such year (the "Annual Bonus") calculated as follows: For the year 2002, the "Budgeted EBITDAR" shall be $190 Million and the "Bonus Threshold" shall be $160 Million., the difference between the Budgeted EBITDAR and the Bonus Threshold being called the "Budget/Bonus Spread." For each $1 Million of EBITDAR earned by LVSI in excess of the Bonus Threshold, Weidner shall receive an Annual Bonus of 1.666% (the "Budget Increment Percentage") of the salary set forth in Section 6(a) above, up to a maximum Annual Bonus of 50% of salary when the EBITDAR earned by LVSI shall equal the Budgeted EBITDAR. In subsequent years, Budgeted EBITDAR shall be established based upon the budget presented by LVSI management and approved by the Board, the Bonus Threshold shall be 84.21% of Budgeted EBITDAR rounded to the nearest $1 Million, the Budget/Bonus Spread (expressed in $Millions) shall be divided by 50 to determine the Budget Increment Percentage, and the Annual Bonus paid to Weidner shall be the Budget Increment Percentage multiplied by Weidner's salary in effect for that year multiplied by the number of Millions of dollars of EBITDAR earned by LVSI in excess of the Bonus Threshold. The Annual Bonus shall be payable within 30 days after the accountants regularly employed by LVSI have determined the EBITDAR for the year. (c) EMPLOYEE BENEFIT PLANS. LVSI shall include Weidner in any group health, medical, dental, hospitalization, life or accident insurance plans, and any qualified pension, profit sharing or retirement plans, which may be placed in effect or maintained by LVSI during the Term hereof for the benefit of its employees generally, subject to all restrictions and limitations contained in such plans or established by governmental regulation. (d) EXPENSE REIMBURSEMENT. Weidner is authorized to incur such reasonable expenses as may be necessary for the performance of his duties hereunder in accordance with the policies of LVSI established and in effect from time to time and, except as may be otherwise agreed, 3 LVSI will reimburse Weidner for all such authorized expenses upon submission of an itemized accounting and substantiation of such expenditures adequate to secure for LVSI a tax deduction for the same in accordance with applicable Internal Revenue Service guidelines. (e) VACATIONS AND HOLIDAYS. Weidner shall be entitled to vacations and holidays as provided in LVSI's Flex Day Plan as in effect from time to time, but no less than the following: four weeks of paid vacation leave per year at such times as may be requested by Weidner and approved by LVSI. No more than three weeks of vacation shall be taken consecutively. Up to two weeks of vacation may be carried over to the following year (but not to the next). In addition, Weidner may take the following paid holidays or, at LVSI's option, an equivalent number of paid days off: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. (f) LICENSING EXPENSES. LVSI shall pay all fees and expenses incurred by Weidner in securing and maintaining such licenses and permits as may be required by the Nevada Gaming Authorities in order to perform his duties under this Agreement. (g) CLUB EXPENSES. LVSI shall reimburse Weidner for the membership initiation fees (up to a maximum of $20,000.00) and annual dues and assessment related to one club membership at a country or social club selected by Weidner in the Las Vegas area. If the initiation fee shall be in the form of a refundable bond or equity, Weidner shall repay such sum to LVSI within 90 days of the termination of his employment hereunder. 7. STOCK OPTIONS. In addition to all other sums payable hereunder, LVSI or its principal shareholder, G. Adelson ("Adelson"), (LVSI and Adelson being hereinafter sometimes referred to, collectively or individually, as "Grantor") has granted to Weidner options to acquire shares of the common capital stock of LVSI in accordance with the terms of a Stock Option Agreement between LVSI and Weidner under LVSI's 1997 Fixed Stock Option Plan. Weidner acknowledges and agrees that the stock option grant made in the Stock Option Agreement represents all of the stock options to be issued to Weidner under this Employment Agreement and shall, in all respects, be subject to the approval of the Nevada Gaming Authorities. 8. CONFIDENTIALITY. Weidner agrees that he will hold in strictest confidence and, without the prior express written approval of LVSI, will not disclose to any person, firm, corporation or other entity, any confidential information which he has acquired or may hereafter acquire during his employment by LVSI pertaining to the business or affairs of LVSI, including but not limited to (i) proprietary information or other documents concerning LVSI's policies, prices, systems, methods of operation, contractual arrangements, customers or suppliers; (ii) LVSI's marketing methods, credit and collection techniques and files; and (iii) LVSI's trade secrets and other "know how" or information concerning its business and affairs not of a public nature. The covenant and agreement set forth in this Section shall apply during Weidner's employment by LVSI and shall survive 4 termination of this Agreement by any means and shall remain binding upon Weidner without regard to the passage of time or other events. 9. RESTRICTIVE COVENANT. Weidner shall not, either during the term of this Agreement or until December 31, 2005 (the "Restrictive Covenant Expiration Date") if the Agreement terminates prior to the end of the Initial Term by reason of a Cause Termination, Weidner Breach Termination, Voluntary Termination, or Licensing Termination (all as defined in Section 11 (a)), or by reason of an LVSI Breach Termination, Constructive Termination, or Involuntary Termination if and only if LVSI is paying to Weidner the amount set forth in Section 11 (d) (iv), directly or indirectly, either as principal, agent, employee, consultant, partner, officer, director, shareholder, or in any other individual or representative capacity, own, manage, finance, operate, control or otherwise engage or participate in any manner or fashion in, any hotel or casino in the City of Las Vegas or Clark County, Nevada. In the event that this Agreement shall be extended beyond the Initial Term, the Restrictive Covenant Expiration Date shall be extended to the second anniversary of the date of any Termination Event. Weidner acknowledges and agrees that the restrictive covenant contained in this Section is reasonable as to duration, terms, and geographical scope and that the covenant protects the legitimate interests of LVSI and imposes no undue hardship on Weidner and is not injurious to the public. 10. DISABILITY. If, during his employment by LVSI, Weidner shall, in the opinion of an independent physician selected by agreement between the Board and Weidner, become suddenly and immediately unable to perform the duties of his employment due to severe illness or accident or other grave mental or physical incapacity, or if Weidner shall be unable to perform the duties of his employment for a continuous period of three months, then LVSI shall have the right to suspend in whole or in part the future payments of compensation hereunder or to terminate Weidner's employment hereunder in accordance with the provisions of Section 11. 11. TERMINATION. (a) Notwithstanding the provisions of Section 4 of this Agreement, Weidner's employment hereunder shall terminate upon the occurrence of any of the following events (each, a "Termination Event"): (i) Weidner's death (a "Death Termination"); (ii) the giving of written notice of termination by LVSI based upon Weidner's disability, as defined in Section 10 hereof (a "Disability Termination"); (iii) the giving of written notice to Weidner by LVSI that he is discharged for Cause (as hereinafter defined) (a "Cause Termination"); (iv) the giving of written notice by LVSI to Weidner of a material 5 breach of this Agreement by Weidner, which breach remains uncured for a period of ten (10) days after receipt of such notice by Weidner (a "Weidner Breach Termination"); (v) the giving of written notice by Weidner to LVSI of a material breach of this Agreement by LVSI, which breach remains uncured for a period of ten (10) days following receipt of such notice by LVSI (an "LVSI Breach Termination"); (vi) the giving of written notice by Weidner to LVSI that a Constructive Termination (as hereinafter defined) has occurred and that he has elected to resign, in which event termination shall occur thirty (30) days after delivery of such notice unless such Constructive Termination has been cured (a "Constructive Termination"); (vii) the giving of sixty (60) days written notice to Weidner by LVSI that LVSI has chosen to terminate his employment without Cause (an "Involuntary Termination"); (viii) the giving of written notice by Weidner that he has chosen to terminate his employment with LVSI, no breach or Constructive Termination by LVSI having occurred, in which case his employment shall terminate sixty (60) days after receipt of such notice by LVSI (a "Voluntary Termination"); (ix) the revocation or suspension of the License by the Nevada Gaming Authorities for a period longer than thirty (30) days (a "Licensing Termination"); or (x) if a notice of intention not to extend the term is sent by LVSI pursuant to Section 4 hereof, upon the discharge of Weidner at the end of the then current Initial or Renewal Term (a "Non-Renewal Termination") or at any time thereafter (a "Post-Contract Termination"). (b) "Cause," as used in Subsection (a)(iii) above, shall mean: (i) conviction of a felony, misappropriation of any material funds or property of LVSI, commission of fraud or embezzlement with respect to LVSI, or any material act or acts of dishonesty relating to Weidner's employment by LVSI resulting or intended to result in direct or indirect personal gain or enrichment at the expense of LVSI; (ii) use of alcohol or drugs that renders Weidner materially unable to perform the functions of his job or carry out his duties to LVSI; 6 (iii) materially failing to fulfill the duties set forth in Section 2 hereof; or (iv) committing any act or acts of serious and willful misconduct (including disclosure of confidential information) that is likely to cause a material adverse effect on the business of LVSI; provided that, with respect to (iii) or (iv) above, LVSI shall have first provided Weidner with written notice stating with specificity the acts, duties or directives Weidner has committed or failed to observe or perform, and Weidner shall not have corrected the acts or omissions complained of within thirty (30) days of receipt of such notice. Any dispute between the parties as to whether a "cause" has occurred shall be resolved by binding Arbitration in Las Vegas, Nevada before a single arbitrator jointly selected by the parties or, if the parties cannot agree, by the American Arbitration Association, such arbitration to be conducted in accordance with the rules of the American Arbitration Association. (c) "Constructive Termination," as used in Subsection (a)(vi) above, shall mean: (i) the failure of LVSI to re-elect Weidner as a named officer of LVSI; (ii) a material change in the duties and responsibilities of office that would cause Weidner's position to have less dignity, importance or scope than intended at the Effective Date and as set forth herein; (iii) liquidation, dissolution or bankruptcy of LVSI; or (d) Termination pursuant to this Section shall have the following consequences: (i) in the case of a Death Termination, salary shall be paid through the date of death; (ii) in the case of a Disability Termination, salary, less any applicable disability insurance payments, shall be continued for a period of six months following the date of termination; (iii) in the case of a Cause Termination, Weidner Breach Termination, Voluntary Termination, or Licensing Termination, salary and benefits payable to Weidner shall immediately cease, subject to any requirements of law; 7 (iv) in the case of an LVSI Breach Termination, Constructive Termination, or Involuntary Termination, LVSI shall continue to pay to Weidner the salary set forth in Section 6(a) hereof for the Term of this Agreement unless and until Weidner shall become employed elsewhere in which event LVSI shall pay only the difference, if any, between the income earned in such employment, including salary and bonus compensation, and the salary set forth in Section 6(a) hereof; (v) in the case of a Non-Renewal Termination, or a Post Contract Termination, salary shall be paid only through the date of discharge. 12. ASSIGNMENT AND ASSUMPTION. LVSI and Weidner acknowledge and agree that the Phase II Development or any subsequent public offering of securities may lead to a restructuring or other reorganization of LVSI or its assets. In such event, this Agreement may be assigned to, and assumed by, any new or different corporation, limited liability company or other entity that shall own the hotel/casinos constructed on the Venetian Property and Weidner's employment shall continue pursuant to the terms hereof as if such assignee, rather than LVSI, had been an original party to this Agreement. Upon such assignment, all rights and obligations of LVSI hereunder shall inure to the benefit of and be binding upon the designated assignee. No such assignment shall relieve LVSI of its obligations hereunder to the extent that those obligations are not satisfied or discharged by the assignee. 13. APPROVAL OF AGREEMENT. Weidner and LVSI acknowledge that the terms of this Agreement are subject to the approval of the Nevada Gaming Authorities and each agrees to make reasonable modifications in this Agreement, if necessary, to secure such approval. If this Agreement shall be disapproved by the Nevada Gaming Authorities and reasonable modifications shall be insufficient to obtain such approval, then this Agreement shall terminate and neither party shall have any further responsibility to the other hereunder. 14. MISCELLANEOUS PROVISIONS. (a) [Notices] All notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if sent via a national overnight courier service or by certified mail, return receipt requested, postage prepaid, addressed to the parties as follows: If to Weidner, to: William P. Weidner 9136 Golden Eagle Drive Las Vegas, Nevada 89134 If to LVSI, to: 8 Las Vegas Sands, Inc. 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Att: Sheldon G. Adelson, Chairman With a copy to: Paul G. Roberts Vice President and General Counsel The Interface Group 300 First Avenue Needham, Massachusetts 02194 or to such other address as any party shall request of the others by giving notice in accordance with this Section. (b) [Approval or Consent] Whenever under any provision of this Agreement the approval or consent of either party is required, said approval or consent shall be given or denied in a prompt manner. (c) [Integration] This Agreement is the result of substantial negotiations between the parties, represents the complete agreement of the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings. (d) [Severability] If any provision of this Agreement shall be declared void or unenforceable by any judicial or administrative authority, the validity of any other provision and of the entire Agreement shall not be affected thereby. (e) [Waiver of Provisions] The failure of either party to insist upon a strict performance of any of the terms or provisions of this Agreement or to exercise any option, right, or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right, or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. (f) [Fees and Expenses] Each of the parties hereto shall bear its own attorneys fees, consultants fees and other costs, fees, and expenses incurred in connection with the negotiation, 9 preparation and consummation of this Agreement and the transactions contemplated hereby. (g) [Amendments] This Agreement may not be amended, changed or modified except by a written document signed by each of the parties hereto. (h) [Successors and Assigns] All provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the parties hereto, and their respective heirs, personal representatives, successors and permitted assigns. (i) [Governing Law] This Agreement shall be governed by, construed under, and interpreted in accordance with the laws of the State of Nevada, and enforced (except as otherwise provided herein) only in its state and federal courts. (j) [Headings] Section and Subsection headings in this Agreement are included for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. (k) [Counterparts] This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (l) [Survival] The representations, warranties, and covenants contained in this Agreement shall survive its termination for any reason. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement at Las Vegas, Nevada as a contract under seal on May 1, 2002. LAS VEGAS SANDS, INC. By /s/ Sheldon G. Adelson ---------------------------- Sheldon G. Adelson Chairman of the Board 10 /s/ William P. Weidner - ------------------------------ WILLIAM P. WEIDNER 11 TERMINOLOGY USED IN THIS AGREEMENT
TERM DEFINED AT ---- ---------- Adelson Section 7 Agreement Recitals Annual Bonus Section 6(b) Board Section 1 Budget/Bonus Spread Section 6(b) Budgeted EBITDAR Section 6(b) Budget Increment Percentage Section 6(b) Budget Threshold Section 6(b) Cause Section 11(b) Cause Termination Section 11(a)(iii) Constructive Termination Section 11 (c) Death Termination Section 11(a)(i) Disability Termination Section 11(a)(ii) Effective Date Section 4 Grantor Section 7 Initial Term Section 4 Involuntary Termination Section 11(a)(vii) License Section 5 Licensing Termination Section 11(a)(ix) LVSI Recitals LVSI Breach Termination Section 11(a)(v) Nevada Gaming Authorities Section 5 Non-Renewal Termination Section 11(a)(x) Options Section 7 (a) Phase II Development Section 12 Post-Contract Termination Section 11(a)(x) Renewal Term Section 4 Restrictive Covenant Expiration Date Section 9 Termination Event Section 11 (a) Venetian Property First Whereas, paragraph Voluntary Termination Section 11(a)(viii) Weidner Recitals Weidner Breach Termination Section 11(a)(iv)
12 EX-10 22 ex10-13_7032.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - BHS Exhibit 10.13 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT ("Agreement") is made as of January 1, 2002 between LAS VEGAS SANDS, INC., a Nevada corporation having its principal place of business at 3355 Las Vegas Boulevard South, Las Vegas, Nevada, d/b/a Venetian Hotel Resort Casino ("LVSI") and BRADLEY H. STONE, an individual residing at 9113 Eagle Hill Drive, Las Vegas, Nevada ("Stone"). WHEREAS: LVSI is engaged in the business of owning and operating The Venetian Resort Hotel Casino on property owned by LVSI on the "Strip" in Las Vegas, Nevada (the "Venetian Property"); LVSI desires to further develop the Venetian Property and to construct additional improvements thereon (the "Phase II Development"); In furtherance of its business and development plans, LVSI has need of qualified, experienced, management personnel; On November 1, 1995 Stone and LVSI entered into an Employment Agreement (the "Original Employment Agreement") pursuant to which Stone has served, and continues to serve, as Executive Vice President of LVSI; The Original Employment Agreement, which would have expired on December 31, 1998, was extended by LVSI pursuant to its terms and expired on December 31, 2000; and LVSI and Stone now wish to further extend Stone's employment by LVSI, and to modify and amend the Original Employment Agreement and restate the terms, provisions and conditions thereof, as set forth herein NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, and intending to be legally bound thereby, LVSI and Stone agree as follows: 1. EMPLOYMENT. LVSI shall employ Stone, during the term and subject to the conditions set forth in this Agreement, to serve as Executive Vice President of LVSI or in such other managerial or executive capacity as the Board of Directors of LVSI (sometimes hereinafter referred to as "the Board") may from time to time determine. 1 2. DUTIES. Stone shall have such powers, duties and responsibilities as are generally associated with his office, as the same may be modified and/or assigned to Stone from time to time by the Chairman of the Board or President, and subject to the supervision, direction and control of the Chairman and the Board and President, including but not limited to: (a) participation and involvement in the proposed development activities of LVSI, including the planning, financing, construction and implementation stages, as shall be requested by the Chairman of the Board; (b) the efficient operation and maintenance of the hotel and casino properties of LVSI; (c) the promotion, marketing and sale of the goods and services offered by LVSI; (d) the preparation of budgets and allocation of funds; (e) the establishment or continuation of adequate management reporting and control systems; (f) the recruitment, selection, training, delegation of duties and responsibilities, and supervision, of subordinates; and (g) the direction, review and oversight of all programs, systems, departments and functions related to the management and administration of LVSI. 3. PERFORMANCE. Stone hereby unconditionally accepts the employment described herein under the terms and conditions set forth in this Agreement. Stone covenants and agrees faithfully and diligently to perform all of the duties of his employment, devoting his full business and professional time, attention, energy and ability to promote the business interests of LVSI. Stone further agrees that during the period of his employment with LVSI, he will not engage in any other business or professional pursuit whatsoever unless LVSI shall consent thereto in writing. 4. TERM. The term of Stone's employment hereunder commenced on December 1, 1995 (the "Effective Date"). The initial term of this Amended and Restated Agreement (the "Initial Term") shall expire on December 31, 2005, unless sooner terminated as provided herein. The Initial Term shall be automatically extended for successive one-year periods thereafter (each, a "Renewal Term") unless, no later than 120 days prior to the expiration of the Initial Term or any Renewal Term, one party shall give written notice to the other of his or its intention not to extend, in which event this Agreement shall terminate at the end of the then current Initial or Renewal Term. 2 5. LICENSING REQUIREMENT. Stone is presently licensed as a casino key employee ("the License") issued by the Nevada Gaming Commission upon the recommendation of the state Gaming Control Board (collectively, the "Nevada Gaming Authorities"), pursuant to the provisions of applicable Nevada laws and regulations. Stone agrees to cooperate with the Nevada Gaming Authorities to maintain the License in full force and effect and in good standing. If the Nevada Gaming Authorities shall refuse to grant the License to Stone, then this Agreement shall, at any time, suspend or revoke the License, then this Agreement shall terminate and neither LVSI nor Stone shall have any further obligation hereunder. 6. COMPENSATION. For all of the services to be rendered by Stone to LVSI hereunder, LVSI shall pay Stone the following: (a) SALARY. After the execution hereof and during the remainder of the Initial Term, Stone shall receive a monthly salary at the rate of Nine Hundred Fifteen Thousand Two Hundred Dollars ($915,200) per year, payable in accordance with the usual payroll practices of LVSI. At the start of each calendar year of the Initial Term, beginning with 2003, and each Renewal Term, if any, Stone's salary shall be increased over the salary in effect immediately prior to the start of such calendar year or Renewal Term by four percent (4%). (b) BONUS. With respect to each calendar year during the Initial Term and any Renewal Term hereof, beginning with the 2002 calendar year, Stone shall receive additional compensation on account of such year (the "Annual Bonus") calculated as follows: For the year 2002, the "Budgeted EBITDAR" shall be $190 Million and the "Bonus Threshold" shall be $160 Million., the difference between the Budgeted EBITDAR and the Bonus Threshold being called the "Budget/Bonus Spread." For each $1 Million of EBITDAR earned by LVSI in excess of the Bonus Threshold, Stone shall receive an Annual Bonus of 1.666% (the "Budget Increment Percentage") of the salary set forth in Section 6(a) above, up to a maximum Annual Bonus of 50% of salary when the EBITDAR earned by LVSI shall equal the Budgeted EBITDAR. In subsequent years, Budgeted EBITDAR shall be established based upon the budget presented by LVSI management and approved by the Board, the Bonus Threshold shall be 84.21% of Budgeted EBITDAR rounded to the nearest $1 Million, the Budget/Bonus Spread (expressed in $Millions) shall be divided by 50 to determine the Budget Increment Percentage, and the Annual Bonus paid to Stone shall be the Budget Increment Percentage multiplied by Stone's salary in effect for that year multiplied by the number of Millions of dollars of EBITDAR earned by LVSI in excess of the Bonus Threshold. The Annual Bonus shall be payable within 30 days after the accountants regularly employed by LVSI have determined the EBITDAR for the year. (c) EMPLOYEE BENEFIT PLANS. LVSI shall include Stone in any group health, medical, dental, hospitalization, life or accident insurance plans, and any qualified pension, profit sharing or retirement plans, which may be placed in effect or maintained by LVSI during the Term hereof for the benefit of its employees generally, subject to all restrictions and limitations contained 3 in such plans or established by governmental regulation. (d) EXPENSE REIMBURSEMENT. Stone is authorized to incur such reasonable expenses as may be necessary for the performance of his duties hereunder in accordance with the policies of LVSI established and in effect from time to time and, except as may be otherwise agreed, LVSI will reimburse Stone for all such authorized expenses upon submission of an itemized accounting and substantiation of such expenditures adequate to secure for LVSI a tax deduction for the same in accordance with applicable Internal Revenue Service guidelines. (e) VACATIONS AND HOLIDAYS. Stone shall be entitled to vacations and holidays as provided in LVSI's Flex Day Plan as in effect from time to time, but no less than the following: four weeks of paid vacation leave per year at such times as may be requested by Stone and approved by LVSI. No more than three weeks of vacation shall be taken consecutively. Up to two weeks of vacation may be carried over to the following year (but not to the next). In addition, Stone may take the following paid holidays or, at LVSI's option, an equivalent number of paid days off: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. (f) LICENSING EXPENSES. LVSI shall pay all fees and expenses incurred by Stone in securing and maintaining such licenses and permits as may be required by the Nevada Gaming Authorities in order to perform his duties under this Agreement. 7. STOCK OPTIONS. In addition to all other sums payable hereunder, LVSI or its principal shareholder, Sheldon G. Adelson ("Adelson"), (LVSI and Adelson being hereinafter sometimes referred to, collectively or individually, as "Grantor") has granted to Stone the option to acquire certain shares of the common capital stock of LVSI in accordance with the terms of a Stock Option Agreement between LVSI and Stone under LVSI's 1997 Fixed Stock Option Plan. Stone acknowledges and agrees that the stock option grant made in the Stock Option Agreement represents all of the stock to be issued to Stone under this Employment Agreement and shall, in all respects, be subject to the approval of the Nevada Gaming Authorities. 8. CONFIDENTIALITY. Stone agrees that he will hold in strictest confidence and, without the prior express written approval of LVSI, will not disclose to any person, firm, corporation or other entity, any confidential information which he has acquired or may hereafter acquire during his employment by LVSI pertaining to the business or affairs of LVSI, including but not limited to (i) 4 proprietary information or other documents concerning LVSI's policies, prices, systems, methods of operation, contractual arrangements, customers or suppliers; (ii) LVSI's marketing methods, credit and collection techniques and files; and (iii) LVSI's trade secrets and other "know how" or information concerning its business and affairs not of a public nature. The covenant and agreement set forth in this Section shall apply during Stone's employment by LVSI and shall survive termination of this Agreement by any means and shall remain binding upon Stone without regard to the passage of time or other events. 9. RESTRICTIVE COVENANT. Stone shall not, either during the term of this Agreement or until December 31, 2005 (the "Restrictive Covenant Expiration Date") if the Agreement terminates prior to the end of the Initial Term by reason of a Cause Termination, Stone Breach Termination, Voluntary Termination, or Licensing Termination (all as defined in Section 11 (a)), or by reason of an LVSI Breach Termination, Constructive Termination, or Involuntary Termination if and only if LVSI is paying to Stone the amount set forth in Section 11 (d) (iv), directly or indirectly, either as principal, agent, employee, consultant, partner, officer, director, shareholder, or in any other individual or representative capacity, own, manage, finance, operate, control or otherwise engage or participate in any manner or fashion in, any hotel or casino in the City of Las Vegas or Clark County, Nevada. In the event that this Agreement shall be extended beyond the Initial Term, the Restrictive Covenant Expiration Date shall be extended to the second anniversary of the date of any Termination Event. Stone acknowledges and agrees that the restrictive covenant contained in this Section is reasonable as to duration, terms, and geographical scope and that the covenant protects the legitimate interests of LVSI and imposes no undue hardship on Stone and is not injurious to the public. 10. DISABILITY. If, during his employment by LVSI, Stone shall, in the opinion of an independent physician selected by agreement between the Board and Stone, become suddenly and immediately unable to perform the duties of his employment due to severe illness or accident or other grave mental or physical incapacity, or if Stone shall be unable to perform the duties of his employment for a continuous period of three months, then LVSI shall have the right to suspend in whole or in part the future payments of compensation hereunder or to terminate Stone's employment hereunder in accordance with the provisions of Section 11. 11. TERMINATION. (a) Notwithstanding the provisions of Section 4 of this Agreement, Stone's employment hereunder shall terminate upon the occurrence of any of the following events (each, a "Termination Event"): (i) Stone's death (a "Death Termination"); 5 (ii) the giving of written notice of termination by LVSI based upon Stone's disability, as defined in Section 10 hereof (a "Disability Termination"); (iii) the giving of written notice to Stone by LVSI that he is discharged for Cause (as hereinafter defined) (a "Cause Termination"); (iv) the giving of written notice by LVSI to Stone of a material breach of this Agreement by Stone, which breach remains uncured for a period of ten (10) days after receipt of such notice by Stone (a "Stone Breach Termination"); (v) the giving of written notice by Stone to LVSI of a material breach of this Agreement by LVSI, which breach remains uncured for a period of ten (10) days following receipt of such notice by LVSI (an "LVSI Breach Termination"); (vi) the giving of written notice by Stone to LVSI that a Constructive Termination (as hereinafter defined) has occurred and that he has elected to resign, in which event termination shall occur thirty (30) days after delivery of such notice unless such Constructive Termination has been cured (a "Constructive Termination"); (vii) the giving of sixty (60) days written notice to Stone by LVSI that LVSI has chosen to terminate his employment without Cause (an "Involuntary Termination"); (viii) the giving of written notice by Stone that he has chosen to terminate his employment with LVSI, no breach or Constructive Termination by LVSI having occurred, in which case his employment shall terminate sixty (60) days after receipt of such notice by LVSI (a "Voluntary Termination"); (ix) the revocation or suspension of the License by the Nevada Gaming Authorities for a period longer than thirty (30) days (a "Licensing Termination"); or (x) if a notice of intention not to extend the Term is sent by LVSI pursuant to Section 4 hereof, upon the discharge of Stone at the end of the then current Initial or Renewal Term (a "Non-Renewal Termination") or at any time thereafter (a "Post-Contract Termination"). (b) "Cause," as used in Subsection (a)(iii) above, shall mean: 6 (i) conviction of a felony, misappropriation of any material funds or property of LVSI, commission of fraud or embezzlement with respect to LVSI, or any material act or acts of dishonesty relating to Stone's employment by LVSI resulting or intended to result in direct or indirect personal gain or enrichment at the expense of LVSI; (ii) use of alcohol or drugs that renders Stone materially unable to perform the functions of his job or carry out his duties to LVSI; (iii) materially failing to fulfill the duties set forth in Section 2 hereof; or (iv) committing any act or acts of serious and willful misconduct (including disclosure of confidential information) that is likely to cause a material adverse effect on the business of LVSI; provided that, with respect to (iii) or (iv) above, LVSI shall have first provided Stone with written notice stating with specificity the acts, duties or directives Stone has committed or failed to observe or perform, and Stone shall not have corrected the acts or omissions complained of within thirty (30) days of receipt of such notice. Any dispute between the parties as to whether a "cause" has occurred shall be resolved by binding Arbitration in Las Vegas, Nevada before a single arbitrator jointly selected by the parties or, if the parties cannot agree, by the American Arbitration Association, such arbitration to be conducted in accordance with the rules of the American Arbitration Association. (c) "Constructive Termination," as used in Subsection (a)(vi) above, shall mean: (i) the failure of LVSI to re-elect Stone as a named officer of LVSI; (ii) a material change in the duties and responsibilities of office that would cause Stone's position to have less dignity, importance or scope than intended at the Effective Date and as set forth herein; (iii) liquidation, dissolution or bankruptcy of LVSI; or (d) Termination pursuant to this Section shall have the following consequences: (i) in the case of a Death Termination, salary shall be paid through the date of death; (ii) in the case of a Disability Termination, salary, less any applicable 7 disability insurance payments, shall be continued for a period of six months following the date of termination; (iii) in the case of a Cause Termination, Stone Breach Termination, Voluntary Termination, or Licensing Termination, salary and benefits payable to Stone shall immediately cease, subject to any requirements of law; (iv) in the case of an LVSI Breach Termination, Constructive Termination, or Involuntary Termination, LVSI shall continue to pay to Stone the salary set forth in Section 6(a) hereof for the Term of this Agreement unless and until Stone shall become employed elsewhere in which event LVSI shall pay only the difference, if any, between the income earned in such employment, including salary and bonus compensation, and the salary set forth in Section 6(a) hereof; and (v) in the case of a Non-Renewal Termination or a Post-Contract Termination, salary shall be paid only through the date of discharge. 12. ASSIGNMENT AND ASSUMPTION. LVSI and Stone acknowledge and agree that the Phase II Development or any subsequent public offering of securities may lead to a restructuring or other reorganization of LVSI or its assets. In such event, this Agreement may be assigned to, and assumed by, any new or different corporation, limited liability company or other entity that shall own the hotel/casinos constructed on the Venetian Property and Stone's employment shall continue pursuant to the terms hereof as if such assignee, rather than LVSI, had been an original party to this Agreement. Upon such assignment, all rights and obligations of LVSI hereunder shall inure to the benefit of and be binding upon the designated assignee. No such assignment shall relieve LVSI of its obligations hereunder to the extent that those obligations are not satisfied or discharged by the assignee. 13. APPROVAL OF AGREEMENT. Stone and LVSI acknowledge that the terms of this Agreement are subject to the approval of the Nevada Gaming Authorities and each agrees to make reasonable modifications in this Agreement, if necessary, to secure such approval. If this Agreement shall be disapproved by the Nevada Gaming Authorities and reasonable modifications shall be insufficient to obtain such approval, then this Agreement shall terminate and neither party shall have any further responsibility to the other hereunder. 14. MISCELLANEOUS PROVISIONS. (a) [Notices] All notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if sent via a national overnight courier service or by certified mail, return receipt requested, postage prepaid, addressed to 8 the parties as follows: If to Stone, to: Bradley H. Stone 9113 Eagle Hill Drive Las Vegas, Nevada 89134 If to LVSI, to: Las Vegas Sands, Inc. 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Att: Sheldon G. Adelson, Chairman With a copy to: Paul G. Roberts Vice President and General Counsel The Interface Group 300 First Avenue Needham, Massachusetts 02194 or to such other address as any party shall request of the others by giving notice in accordance with this Section. (b) [Approval or Consent] Whenever under any provision of this Agreement the approval or consent of either party is required, said approval or consent shall be given or denied in a prompt manner. (c) [Integration] This Agreement is the result of substantial negotiations between the parties, represents the complete agreement of the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings. (d) [Severability] If any provision of this Agreement shall be declared void or unenforceable by any judicial or administrative authority, the validity of any other provision and of the entire Agreement shall not be affected thereby. (e) [Waiver of Provisions] The failure of either party to insist upon a strict performance of any of the terms or provisions of this Agreement or to exercise any option, right, or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right, or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been 9 made unless expressed in writing and signed by such party. (f) [Fees and Expenses] Each of the parties hereto shall bear its own attorneys fees, consultants fees and other costs, fees, and expenses incurred in connection with the negotiation, preparation and consummation of this Agreement and the transactions contemplated hereby. (g) [Amendments] This Agreement may not be amended, changed or modified except by a written document signed by each of the parties hereto. (h) [Successors and Assigns] All provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the parties hereto, and their respective heirs, personal representatives, successors and permitted assigns. (i) [Governing Law] This Agreement shall be governed by, construed under, and interpreted in accordance with the laws of the State of Nevada, and enforced (except as otherwise provided) only in its state and federal courts. (j) [Headings] Section and Subsection headings in this Agreement are included for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. (k) [Counterparts] This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (l) [Survival] The representations, warranties, and covenants contained in this Agreement shall survive its termination for any reason. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement at Las Vegas, Nevada as a contract under seal on May 1, 2002. LAS VEGAS SANDS, INC. By /s/ Sheldon G. Adelson ---------------------------- Sheldon G. Adelson Chairman of the Board 10 /s/ Bradley H. Stone - ------------------------------ BRADLEY H. STONE 11 TERMINOLOGY USED IN THIS AGREEMENT
TERM DEFINED AT ---- ---------- Adelson Section 7 Agreement Recitals Annual Bonus Section 6(b) Board Section 1 Budget/Bonus Spread Section 6(b) Budgeted EBITDAR Section 6(b) Budget Increment Percentage Section 6(b) Budget Threshold Section 6(b) Cause Section 11(b) Cause Termination Section 11(a)(iii) Constructive Termination Section 11(c) Death Termination Section 11(a)(i) Disability Termination Section 11(a)(ii) Effective Date Section 4 Grantor Section 7 Initial Term Section 4 Involuntary Termination Section 11(a)(vii) License Section 5 Licensing Termination Section 11(a)(ix) LVSI Recitals LVSI Breach Termination Section 11(a)(v) Nevada Gaming Authorities Section 5 Non-Renewal Termination Section 11(a)(x) Options Section 7 (a) Phase II Development Section 12 Post-Contract Termination Section 11(a)(x) Renewal Term Section 4 Restrictive Covenant Expiration Date Section 9 Stone Recitals Stone Breach Termination Section 11 (a)(iv) Termination Event Section 11 (a) Venetian Property Recitals Voluntary Termination Section 11(a)(viii)
12 EX-10 23 ex10-14_7032.txt AMENDED AND RESTATED EMPLOYMENT AGREEMENT - RGG Exhibit 10.14 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AGREEMENT ("Agreement") is made as of January 1, 2002 between LAS VEGAS SANDS, INC., a Nevada corporation having its principal place of business at 3355 Las Vegas Boulevard South, Las Vegas, Nevada, d/b/a Venetian Hotel Resort Casino ("LVSI") and ROBERT G. GOLDSTEIN, an individual residing at 1924 Glen View Drive, Las Vegas, Nevada ("Goldstein"). WHEREAS: LVSI is engaged in the business of owning and operating The Venetian Resort Hotel Casino on property owned by LVSI on the "Strip" in Las Vegas, Nevada (the "Venetian Property"); LVSI desires to further develop the Venetian Property and to construct additional improvements thereon (the "Phase II Development"); In furtherance of its business and development plans, LVSI has need of qualified, experienced, management personnel; On November 1, 1995 Goldstein and LVSI entered into an Employment Agreement (the "Original Employment Agreement") pursuant to which Goldstein has served, and continues to serve, as Senior Vice President of LVSI and as President of the Venetian Hotel; The Original Employment Agreement, which would have expired on December 31, 1998, was extended by LVSI pursuant to its terms and expired on December 31, 2000; and LVSI and Goldstein now wish to further extend Goldstein's employment by LVSI, and to modify and amend the Original Employment Agreement and restate the terms, provisions and conditions thereof, as set forth herein NOW, THEREFORE, in consideration of the premises and of the mutual covenants, understandings, representations, warranties, undertakings and promises hereinafter set forth, and intending to be legally bound thereby, LVSI and Goldstein agree as follows: 1. EMPLOYMENT. LVSI shall employ Goldstein, during the term and subject to the conditions set forth in this Agreement, to serve as Senior Vice President of LVSI and President of The Venetian Hotel, or in such other managerial or executive capacity as the Board of Directors of LVSI (sometimes hereinafter referred to as "the Board") may from time to time determine. 2. DUTIES. Goldstein shall have such powers, duties and responsibilities as are generally associated with his office, as the same may be modified and/or assigned to Goldstein from time to time by the Chairman of the Board, and subject to the supervision, direction and control of the Chairman and the Board, including but not limited to: 1 (a) participation and involvement in the proposed development activities of LVSI, including the planning, financing, construction and implementation stages, as shall be requested by the Chairman of the Board; (b) the efficient operation and maintenance of the hotel and casino properties of LVSI; (c) the promotion, marketing and sale of the goods and services offered by LVSI; (d) the preparation of budgets and allocation of funds; (e) the establishment or continuation of adequate management reporting and control systems; (f) the recruitment, selection, training, delegation of duties and responsibilities, and supervision, of subordinates; and (g) the direction, review and oversight of all programs, systems, departments and functions related to the management and administration of LVSI. 3. PERFORMANCE. Goldstein hereby unconditionally accepts the employment described herein under the terms and conditions set forth in this Agreement. Goldstein covenants and agrees faithfully and diligently to perform all of the duties of his employment, devoting his full business and professional time, attention, energy and ability to promote the business interests of LVSI. Goldstein further agrees that during the period of his employment with LVSI, he will not engage in any other business or professional pursuit whatsoever unless LVSI shall consent thereto in writing. 4. TERM. The term of Goldstein's employment hereunder commenced on December 1, 1995 (the "Effective Date"). The initial term of this Amended and Restated Agreement (the "Initial Term") shall expire on December 31, 2005, unless sooner terminated as provided herein. The Initial Term shall be automatically extended for successive one-year periods thereafter (each, a "Renewal Term") unless, no later than 120 days prior to the expiration of the Initial Term. Or any Renewal Term, one party shall give written notice to the other of his or its intention no to extend, in which event this Agreement shall terminate at the end of the then current Initial or Renewal Term. 5. LICENSING REQUIREMENT. Goldstein is presently licensed as a casino key employee ("the License") issued by the Nevada Gaming Commission upon the recommendation of the state Gaming Control Board (collectively, the "Nevada Gaming Authorities"), pursuant to the provisions of applicable Nevada laws and regulations. Goldstein agrees to cooperate with the Nevada Gaming Authorities to maintain the License in full force and effect and in good standing. If the Nevada Gaming Authorities shall, at any time, suspend or revoke the License, then this Agreement shall 2 terminate and neither LVSI nor Goldstein shall have any further obligation hereunder. 6. COMPENSATION. For all of the services to be rendered by Goldstein to LVSI hereunder, LVSI shall pay Goldstein the following: (a) SALARY. After the execution hereof and during the remainder of the Initial Term, Goldstein shall receive a monthly salary at the rate of Eight Hundred Fifty-Eight Thousand (858,000) per year, payable in accordance with the usual payroll practices of LVSI. At the start of each calendar year of the Initial Term, beginning with 2003, and each Renewal Term, if any, Goldstein's salary shall be increased over the salary in effect immediately prior to the start of such calendar year or Renewal Term by four percent (4%). (b) BONUS. With respect to each calendar year during the Initial Term and any Renewal Term hereof, beginning with the 2002 calendar year, Goldstein shall receive additional compensation on account of such year (the "Annual Bonus") calculated as follows: For the year 2002, the "Budgeted EBITDAR" shall be $190 Million and the "Bonus Threshold" shall be $160 Million., the difference between the Budgeted EBITDAR and the Bonus Threshold being called the "Budget/Bonus Spread." For each $1 Million of EBITDAR earned by LVSI in excess of the Bonus Threshold, Goldstein shall receive an Annual Bonus of 1.666% (the "Budget Increment Percentage") of the salary set forth in Section 6(a) above, up to a maximum Annual Bonus of 50% of salary when the EBITDAR earned by LVSI shall equal the Budgeted EBITDAR. In subsequent years, Budgeted EBITDAR shall be established based upon the budget presented by LVSI management and approved by the Board, the Bonus Threshold shall be 84.21% of Budgeted EBITDAR rounded to the nearest $1 Million, the Budget/Bonus Spread (expressed in $Millions) shall be divided by 50 to determine the Budget Increment Percentage, and the Annual Bonus paid to Goldstein shall be the Budget Increment Percentage multiplied by Goldstein's salary in effect for that year multiplied by the number of Millions of dollars of EBITDAR earned by LVSI in excess of the Bonus Threshold. The Annual Bonus shall be payable within 30 days after the accountants regularly employed by LVSI have determined the EBITDAR for the year. (c) EMPLOYEE BENEFIT PLANS. LVSI shall include Goldstein in any group health, medical, dental, hospitalization, life or accident insurance plans, and any qualified pension, profit sharing or retirement plans, which may be placed in effect or maintained by LVSI during the Term hereof for the benefit of its employees generally, subject to all restrictions and limitations contained in such plans or established by governmental regulation. (d) EXPENSE REIMBURSEMENT. Goldstein is authorized to incur such reasonable expenses as may be necessary for the performance of his duties hereunder in accordance with the policies of LVSI established and in effect from time to time and, except as may be otherwise agreed, LVSI will reimburse Goldstein for all such authorized expenses upon submission of an itemized 3 accounting and substantiation of such expenditures adequate to secure for LVSI a tax deduction for the same in accordance with applicable Internal Revenue Service guidelines. (e) VACATIONS AND HOLIDAYS. Goldstein shall be entitled to vacations and holidays as provided in LVSI's Flex Day Plan as in effect from time to time, but no less than the following: four weeks of paid vacation leave per year at such times as may be requested by Goldstein and approved by LVSI. No more than three weeks of vacation shall be taken consecutively. Up to two weeks of vacation may be carried over to the following year (but not to the next). In addition, Goldstein may take the following paid holidays or, at LVSI's option, an equivalent number of paid days off: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. (f) LICENSING EXPENSES. LVSI shall pay all fees and expenses incurred by Goldstein in securing and maintaining such licenses and permits as may be required by the Nevada Gaming Authorities in order to perform his duties under this Agreement. 7. STOCK OPTIONS. In addition to all other sums payable hereunder, LVSI or its principal shareholder, Sheldon G. Adelson (Adelson"), (LVSI and Adelson being hereinafter sometimes referred to, collectively or individually, as "Grantor") has granted to Goldstein the option to acquire certain shares of the common capital stock of LVSI in accordance with the terms of a Stock Option Agreement between LVSI and Goldstein under LVSI's 1997 Fixed Stock Option Plan. Goldstein acknowledges and agrees that the stock option grant made in the Stock Option Agreement represents all of the stock to be issued to Goldstein under this Employment Agreement and shall, in all respects, be subject to the approval of the Nevada Gaming Authorities. 8. CONFIDENTIALITY. Goldstein agrees that he will hold in strictest confidence and, without the prior express written approval of LVSI, will not disclose to any person, firm, corporation or other entity, any confidential information which he has acquired or may hereafter acquire during his employment by LVSI pertaining to the business or affairs of LVSI, including but not limited to (i) proprietary information or other documents concerning LVSI's policies, prices, systems, methods of operation, contractual arrangements, customers or suppliers; (ii) LVSI's marketing methods, credit and collection techniques and files; and (iii) LVSI's trade secrets and other "know how" or information concerning its business and affairs not of a public nature. The covenant and agreement set forth in this Section shall apply during Goldstein's employment by LVSI and shall survive termination of this Agreement by any means and shall remain binding upon Goldstein without regard to the passage of time or other events. 9. RESTRICTIVE COVENANT. Goldstein shall not, either during the term of this Agreement or until December 31, 2005 (the "Restrictive Covenant Expiration Date") if the Agreement terminates prior to the end of the Initial Term by reason of a Cause Termination, 4 Goldstein Breach Termination, Voluntary Termination, or Licensing Termination (all as defined in Section 11 (a)), or by reason of an LVSI Breach Termination, Constructive Termination, or Involuntary Termination if and only if LVSI is paying to Goldstein the amount set forth in Section 11 (d) (iv), directly or indirectly, either as principal, agent, employee, consultant, partner, officer, director, shareholder, or in any other individual or representative capacity, own, manage, finance, operate, control or otherwise engage or participate in any manner or fashion in, any hotel or casino in the City of Las Vegas or Clark County, Nevada. In the event that this Agreement shall be extended beyond the Initial Term, the Restrictive Covenant Expiration Date shall be extended to the second anniversary of the date of any Termination Event. Goldstein acknowledges and agrees that the restrictive covenant contained in this Section is reasonable as to duration, terms, and geographical scope and that the covenant protects the legitimate interests of LVSI and imposes no undue hardship on Goldstein and is not injurious to the public. 10. DISABILITY. If, during his employment by LVSI, Goldstein shall, in the opinion of an independent physician selected by agreement between the Board and Goldstein, become suddenly and immediately unable to perform the duties of his employment due to severe illness or accident or other grave mental or physical incapacity, or if Goldstein shall be unable to perform the duties of his employment for a continuous period of three months, then LVSI shall have the right to suspend in whole or in part the future payments of compensation hereunder or to terminate Goldstein's employment hereunder in accordance with the provisions of Section 11. 11. TERMINATION. (a) Notwithstanding the provisions of Section 4 of this Agreement, Goldstein's employment hereunder shall terminate upon the occurrence of any of the following events (each, a "Termination Event"): (i) Goldstein's death (a "Death Termination"); (ii) the giving of written notice of termination by LVSI based upon Goldstein's disability, as defined in Section 10 hereof (a "Disability Termination"); (iii) the giving of written notice to Goldstein by LVSI that he is discharged for Cause (as hereinafter defined) (a "Cause Termination"); (iv) the giving of written notice by LVSI to Goldstein of a material breach of this Agreement by Goldstein, which breach remains uncured for a period of ten (10) days after receipt of such notice by Goldstein (a "Goldstein Breach Termination"); (v) the giving of written notice by Goldstein to LVSI of a material breach of this Agreement by LVSI, which breach remains uncured for a period of ten (10) days following receipt of such notice by LVSI (an "LVSI Breach Termination"); 5 (vi) the giving of written notice by Goldstein to LVSI that a Constructive Termination (as hereinafter defined) has occurred and that he has elected to resign, in which event termination shall occur thirty (30) days after delivery of such notice unless such Constructive Termination has been cured (a "Constructive Termination"); (vii) the giving of sixty (60) days written notice to Goldstein by LVSI that LVSI has chosen to terminate his employment without Cause (an "Involuntary Termination"); (viii) the giving of written notice by Goldstein that he has chosen to terminate his employment with LVSI, no breach or Constructive Termination by LVSI having occurred, in which case his employment shall terminate sixty (60) days after receipt of such notice by LVSI (a "Voluntary Termination"); (ix) the revocation or suspension of the License by the Nevada Gaming Authorities for a period longer than thirty (30) days (a "Licensing Termination"); or (x) if a notice of intention not to extend the Term is sent by LVSI pursuant to Section 4 hereof, upon the discharge of Goldstein at the end of the then current Initial or Renewal Term (a "Non-Renewal Termination") or at any time thereafter (a "Post-Contract Termination"). (b) "Cause," as used in Subsection (a) (iii) above, shall mean: (i) conviction of a felony, misappropriation of any material funds or property of LVSI, commission of fraud or embezzlement with respect to LVSI, or any material act or acts of dishonesty relating to Goldstein's employment by LVSI resulting or intended to result in direct or indirect personal gain or enrichment at the expense of LVSI; (ii) use of alcohol or drugs that renders Goldstein materially unable to perform the functions of his job or carry out his duties to LVSI; (iii) materially failing to fulfill the duties set forth in Section 2 hereof; or (iv) committing any act or acts of serious and willful misconduct (including disclosure of confidential information) that is likely to cause a material adverse effect on the business of LVSI; 6 provided that, with respect to (iii) or (iv) above, LVSI shall have first provided Goldstein with written notice stating with specificity the acts, duties or directives Goldstein has committed or failed to observe or perform, and Goldstein shall not have corrected the acts or omissions complained of within thirty (30) days of receipt of such notice. Any dispute between the parties as to whether a "cause" has occurred shall be resolved by binding Arbitration in Las Vegas, Nevada before a single arbitrator jointly selected by the parties or, if the parties cannot agree, by the American Arbitration Association, such arbitration to be conducted in accordance with the rules of the American Arbitration Association. (c) "Constructive Termination," as used in Subsection (a) (vi) above, shall mean: (i) the failure of LVSI to re-elect Goldstein as a named officer of LVSI; (ii) a material change in the duties and responsibilities of office that would cause Goldstein's position to have less dignity, importance or scope than intended at the Effective Date and as set forth herein; (iii) liquidation, dissolution or bankruptcy of LVSI; or (d) Termination pursuant to this Section shall have the following consequences: (i) in the case of a Death Termination, salary shall be paid through the date of death; (ii) in the case of a Disability Termination, salary, less any applicable disability insurance payments, shall be continued for a period of six months following the date of termination; (iii) in the case of a Cause Termination, Goldstein Breach Termination, Voluntary Termination, or Licensing Termination, salary and benefits payable to Goldstein shall immediately cease, subject to any requirements of law; (iv) in the case of an LVSI Breach Termination, Constructive Termination, or Involuntary Termination, LVSI shall continue to pay to Goldstein the salary set forth in Section 6(a) hereof for the Term of this Agreement unless and until Goldstein shall become employed elsewhere in which event LVSI shall pay only the difference, if any, between the income earned in such employment, including salary and bonus compensation, and the salary set forth in Section 6(a) hereof; and (v) in the case of a Non-Renewal Termination or a Post-Contract Termination, salary shall be paid only through the date of discharge. 12. ASSIGNMENT AND ASSUMPTION. LVSI and Goldstein acknowledge and agree that 7 the Phase II Development or any subsequent public offering of securities may lead to a restructuring or other reorganization of LVSI or its assets. In such event, this Agreement may be assigned to, and assumed by, any new or different corporation, limited liability company or other entity that shall own the hotel/casinos constructed on the Venetian Property and Goldstein's employment shall continue pursuant to the terms hereof as if such assignee, rather than LVSI, had been an original party to this Agreement. Upon such assignment, all rights and obligations of LVSI hereunder shall inure to the benefit of and be binding upon the designated assignee. No such assignment shall relieve LVSI of its obligations hereunder to the extent that those obligations are not satisfied or discharged by the assignee. 13. APPROVAL OF AGREEMENT. Goldstein and LVSI acknowledge that the terms of this Agreement are subject to the approval of the Nevada Gaming Authorities and each agrees to make reasonable modifications in this Agreement, if necessary, to secure such approval. If this Agreement shall be disapproved by the Nevada Gaming Authorities and reasonable modifications shall be insufficient to obtain such approval, then this Agreement shall terminate and neither party shall have any further responsibility to the other hereunder. 14. MISCELLANEOUS PROVISIONS. (a) [Notices] All notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if sent via a national overnight courier service or by certified mail, return receipt requested, postage prepaid, addressed to the parties as follows: If to Goldstein, to: Robert G. Goldstein 1924 Glen View Drive Las Vegas, NV 89134 If to LVSI, to: Las Vegas Sands, Inc. 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Att: Sheldon G. Adelson, Chairman With a copy to: Paul G. Roberts Vice President and General Counsel The Interface Group 8 300 First Avenue Needham, Massachusetts 02194 or to such other address as any party shall request of the others by giving notice in accordance with this Section. (b) [Approval or Consent] Whenever under any provision of this Agreement the approval or consent of either party is required, said approval or consent shall be given or denied in a prompt manner. (c) [Integration] This Agreement is the result of substantial negotiations between the parties, represents the complete agreement of the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings. (d) [Severability] If any provision of this Agreement shall be declared void or unenforceable by any judicial or administrative authority, the validity of any other provision and of the entire Agreement shall not be affected thereby. (e) [Waiver of Provisions] The failure of either party to insist upon a strict performance of any of the terms or provisions of this Agreement or to exercise any option, right, or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right, or remedy, but the same shall continue and remain in full force and effect. No waiver by either party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party. (f) [Fees and Expenses] Each of the parties hereto shall bear its own attorneys fees, consultants fees and other costs, fees, and expenses incurred in connection with the negotiation, preparation and consummation of this Agreement and the transactions contemplated hereby. (g) [Amendments] This Agreement may not be amended, changed or modified except by a written document signed by each of the parties hereto. (h) [Successors and Assigns] All provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the parties hereto, and their respective heirs, personal representatives, successors and permitted assigns. (i) [Governing Law] This Agreement shall be governed by, construed under, and 9 interpreted in accordance with the laws of the State of Nevada, and enforced (except as otherwise provided herein) only in its state and federal courts. (j) [Headings] Section and Subsection headings in this Agreement are included for convenience of reference only and are not intended to define, limit or describe the scope or intent of any provision of this Agreement. (k) [Counterparts] This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (l) [Survival] The representations, warranties, and covenants contained in this Agreement shall survive its termination for any reason. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement at Las Vegas, Nevada as a contract under seal. LAS VEGAS SANDS, INC. By /s/ Sheldon G. Adelson ---------------------------- Sheldon G. Adelson Chairman of the Board /s/ Robert G. Goldstein - ------------------------------ ROBERT G. GOLDSTEIN 10 TERMINOLOGY USED IN THIS AGREEMENT
TERM DEFINED AT ---- ---------- Adelson Section 7 Agreement Recitals Annual Bonus Section 6(b) Budget/Bonus Spread Section 6(b) Budgeted EBITDAR Section 6(b) Budget Incremental Percentage Section 6(b) Budget Threshold Section 6(b) Board Section 1 Cause Section 11(b) Cause Termination Section 11(a)(iii) Constructive Termination Section 11 (c) Death Termination Section 11(a)(i) Disability Termination Section 11(a)(ii) Effective Date Section 4 Goldstein Recitals Goldstein Breach Termination Section 11(a)(iv) Grantor Section 7 Initial Term Section 4 Involuntary Termination Section 11(a)(vii) License Section 5 Licensing Termination Section 11(a)(ix) LVSI Recitals LVSI Breach Termination Section 11(a)(v) Mortgage Deficit Section 6(f)(viii) Nevada Gaming Authorities Section 5 Non-Renewal Termination Section 11(a)(x) Options Section 7 (a) Phase II Development Recitals Post-Contract Termination Section 11(a)(x) Renewal Term Section 4 Restrictive Covenant Expiration Date Section 9 Termination Event Section 11 (a) Venetian Property Recitals Voluntary Termination Section 11(a)(viii)
11 EX-10 24 ex10-15_7032.txt CATASTROPHIC EQUITY PROTECTION INSURANCE... EXHIBIT 10.15 POLICY NUMBER: BE 701 86 09 [AMERICAN INTERNATIONAL COMPANIES LOGO] CATASTROPHIC EQUITY PROTECTION INSURANCE AGREEMENT / / AIU Insurance Company / / Illinois National Insurance Company / / American Global Insurance Company / / National Union Fire Insurance Company of Pittsburgh. Pa. / / Granite State Insurance Company / / National Union Fire Insurance Company of Louisiana / / New Hampshire Insurance Company / / Birmingham Fire Insurance Company of Pennsylvania /X/ American Home Assurance Company
(each of the above being a capital stock company) - -------------------------------------------------------------------------------- DECLARATIONS ITEM 1. NAMED INSURED: Las Vegas Sands Inc. and Venetian Casino Resort LLC, the successor in interest and permitted assignee of Las Vegas Sands, Inc. MAILING ADDRESS: The Venetian Casino Resort 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 ITEM 2. POLICY PERIOD: From: June 28, 2000 (12:01 A.M. at the address stated in Item 1.) To: SETTLEMENT or FINAL ADJUDICATION of all ACTIONS ITEM 3. RETENTION: See Clause #8. Retention ITEM 4. LIMIT OF LIABILITY $80,000,000 ITEM 5. PREMIUM:* ITEM 6. NAME AND ADDRESS OF INSURER ("Insurer"): (This Insurance Agreement is issued only by the insurance company indicated below.) American Home Assurance Company 175 Water Street, 20th Floor New York, New York 10038 IN WITNESS WHEREOF, the Insurer has caused this Insurance Agreement to be signed on the Declarations Page, by a duly authorized representative of the Insurer. /s/ Susan Rivera -------------------------------- AUTHORIZED REPRESENTATIVE * This information has been omitted pursuant to a request for confidential treatment and has been filed separately with the Securities and Exchange Commission. CATASTROPHIC EQUITY PROTECTION INSURANCE AGREEMENT (THE "INSURANCE AGREEMENT") Words and phrases that appear in bold print have special meaning. See Clause #2, Definitions. This Catastrophic Equity Protection Insurance Agreement is made and entered into as of the 28th day of June, 2000 by the NAMED INSURED and the Insurer. WHEREAS, the NAMED INSURED wishes to limit the liability of the INSURED in connection with the ACTIONS; and, NOW, THEREFORE, in consideration of the payment of premium as hereinafter stated in Clause #4, Premium, the INSURED and the Insurer agree as follows: 1. INSURING AGREEMENT The Insurer shall pay on behalf of the INSURED all LOSS in excess of the Retention as set forth in Item 3 of the Declarations, arising out of or in connection with the ACTIONS. 2. DEFINITIONS A. "ACTIONS" shall mean all state actions, foreign actions, federal actions, administrative proceedings, or arbitration proceedings, including any counterclaims, cross claims and third party claims alleged therein, and all appeals and remands thereof arising out of or in connection with, the PROJECT or the LIDO LETTER, pending against, or pursued by, the INSURED including but not limited to VENETIAN CASINO RESORT, LLC v. LEHRER McGOVERN BOVIS, INC. ET AL., in the United States District Court of Nevada (Case No. CV-S-99-0963-JBR-LRL) and IN RE VENETIAN LIEN LITIGATION AND ALL RELATED ACTIONS. in the District Court of Clark County, Nevada (Case No. A397391_ COMPLEX CASE LITIGATION: Dept. No. VII [LEAD CASE IN CONSOLIDATION PROCEEDINGS] Consolidated with Case Nos. A402342, A405878, A406126, A406590 and A407117). B. "ADVERTISEMENT" shall mean a paid broadcast, publication or telecast to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters. 1 C. "ADVERTISING LIABILITY" shall mean injury, other than BODILY INJURY or PERSONAL INJURY, arising solely out of your ADVERTISEMENT as a result of one or more of the following offenses: 1. slander or libel of a person or organization, or disparagement of a person's or organization's goods, products or services in your ADVERTISEMENT; 2. violation of a person's right of privacy in your ADVERTISEMENT; 3. misappropriation of another's advertising idea in your ADVERTISEMENT; or 4. infringement upon another's copyright, trademark or slogan in your ADVERTISEMENT. D. "BODILY INJURY" shall mean bodily injury, sickness, disability, or disease, including death resulting from any of these at any time. BODILY INJURY will also mean mental injury, mental anguish, humiliation or shock if directly resulting from bodily injury, sickness, disability or disease. E. "CLAIMS" shall mean all claims that could be asserted by or that have been made by or on behalf of the INSURED relative to the ACTIONS, including but not limited to affirmative actions made on behalf of the INSURED, against parties who may be liable or responsible for a LOSS. F. "DEFENSE COSTS" shall mean legal fees and expenses of counsel consented to by the Insurer, court costs (including premiums for any appeal bond, attachment bond or similar bond), expert witness fees and costs, and related costs which result from the investigation, adjustment, prosecution, defense and appeal of the ACTIONS, provided, however, "DEFENSE COSTS" shall not include the foregoing items actually incurred (whether or not billed) prior to the effective date of this INSURANCE AGREEMENT, salaries and other compensation and the expenses of any current, former or future directors, officers or employees of the INSURED. G. "FINAL ADJUDICATION" shall mean a judgment or binding arbitration award not or no longer subject to appeal. H. "GUARANTOR" shall mean Bovis, Inc. and Peninsular and Oriental Steam Navigation Company. I. "INSURED" shall mean the NAMED INSURED, its subsidiaries and affiliates and those of its current, former or future directors, officers and employees that have been or may be named as parties in one or more of the ACTIONS, and the successors by operation of law or otherwise of the foregoing parties. J. "LIDO LETTER" shall mean the letter of August 18, 1998, from Lido Casino Resort, LLC to Lehrer McGovern Bovis Inc. (hereinafter "LMB"), authorizing the reimbursement of up to $8,497,274 in costs related to Phase II construction. K. "LOSS" shall mean: 2 1. all sums owed by the INSURED to LMB for the performance of the work on the PROJECT, including costs for labor, lost profits, equipment, materials, supplies, services, overhead, general conditions and sums paid or to be paid by LMB to its trade contractors, subcontractors, vendors and/or suppliers for performance of the work on the PROJECT; 2. all sums owed by the INSURED to LMB, its trade contractors, subcontractors, vendors and/or suppliers as a result of delays in the completion of the PROJECT or for costs proven to be incurred by LMB, its trade contractors, subcontractors, vendors and/or suppliers for disruptions to work on the PROJECT; inefficiencies in the performance of work on the PROJECT; lack of productivity in the utilization of labor resulting in unauthorized overtime and equipment on the PROJECT; or acceleration to the work on the PROJECT as represented by change orders agreed to or issued by the INSURED after the effective date of this INSURANCE AGREEMENT resulting from alleged schedule impact; 3. all DEFENSE COSTS and expenses incurred in connection with the ACTIONS; 4. all pre and post judgment interest, paid or due in connection with the ACTIONS, PROVIDED, further, that pre and post judgment interest shall be included in LOSS, without regard to the effective date of this INSURANCE AGREEMENT; 5. all sums owed by the INSURED to LMB for any LIENS satisfied, settled or dismissed as a result of payments made by LMB to its trade contractors, subcontractors, vendors and/or suppliers; 6. all sums owed by the INSURED to LMB for any LIENS assigned to LMB from its trade contractors, subcontractors, vendors and/or suppliers; 7. for purposes of calculating the Retention set forth in Item 3 of the Declarations only, LOSS shall include: a. all sums, other than delay and inefficiency damages and lost profits as described in Paragraphs 1 and 2 above, up to $36,500,000 owed by the INSURED for any LIENS in the ACTIONS other than those LIENS described in Paragraphs 5 and 6 above; b. all sums up to $8,497,274 owed by the INSURED to LMB arising out of or related to liability created by the LIDO LETTER; and 8. all other sums owed by the INSURED to LMB, its trade contractors, subcontractors, vendors and/or suppliers for performance of the work on the PROJECT, except as excluded in this INSURANCE AGREEMENT (either by way of Definition, Exclusion or other clause of this INSURANCE AGREEMENT). L. "NAMED INSURED" shall mean the entity listed in Item 1 of the Declarations Page. M. "PERSONAL INJURY" shall mean injury arising out of your business, other than BODILY INJURY or ADVERTISING INJURY, caused by one or more of the following offenses: 1. false arrest, detention or imprisonment; 2. malicious prosecution; 3 3. the wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor; 4. oral, written or electronic publication of material that slanders or libels a person or organization, or disparages a person's or organization's goods, products or services; 5. oral, written or electronic publication of material that violates a person's right of privacy; or 6. discrimination or humiliation that results in injury to the feelings or reputation of a natural person, but only if such discrimination or humiliation is: a. not done intentionally by or at the direction of any INSURED; and b. not directly or indirectly related to the employment, prospective employment or termination of employment of any person or persons by any INSURED. N. "PROPERTY DAMAGE" shall mean physical injury to tangible property, including all resulting loss of use of that property other than loss of profits. All such loss of use shall be deemed to occur at the time of the physical injury that caused it. O. "PROJECT" shall mean construction of the first phase of the Venetian Hotel/Casino in Las Vegas, Neveda. P. "SETTLEMENT" shall mean the stipulated or agreed dismissal with prejudice of the ACTIONS. 3. DEFENSE, SETTLEMENTS, JUDGMENTS The Insurer has the right and duty to defend the ACTIONS, and to assert CLAIMS as of the effective date of this INSURANCE AGREEMENT. The Insurer possesses the sole right and authority to select counsel and to direct, control and resolve all ACTIONS and CLAIMS. The Insurer will notify the NAMED INSURED in advance of any change in designated lead counsel. Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC. Prior to settling or discontinuing any ACTION or CLAIM, including those on appeal, the Insurer must first obtain the consent of the NAMED INSURED, whose consent will not be unreasonably withheld. The Insurer shall pay on behalf of the INSURED all LOSS in excess of the Retention set forth in Item 3 of the Declarations, arising out of or in connection with the ACTIONS, in accordance with the payment terms set forth in any applicable settlement agreement or by court order. The Insurer will provide regular updates, not less than quarterly, to the NAMED INSURED regarding the status of the ACTIONS and CLAIMS, including but not limited to updates regarding material issues, significant or substantive filings, strategies or deadlines associated with defense of ACTIONS or prosecution of CLAIMS. The Insurer will provide the NAMED INSURED with copies of all pleadings not previously forwarded. The Insurer shall use its best efforts to vigorously pursue ACTIONS or CLAIMS by the INSURED to maximize the amount of damages to which the INSURED is entitled, including but not limited to, as appropriate: 4 1. filing appeals; 2. pursuing the GUARANTORS in Nevada or other jurisdictions; 3. pursuing LOSS covered by the Retention; 4. pursuing CLAIMS; and 5. pursuing recovery for punitive, exemplary damages, fines, penalties and treble damages to which the INSURED is or may be entitled to in connection with the Actions. The INSURED and the Insurer shall maintain the confidentiality of the issuance and provisions of this insurance to the extent permitted by law and except to the extent disclosure hereof is necessary to enforce the provisions hereof. The INSURED and the Insurer shall not, and shall cause counsel not to, issue any press release or make any statements relating to the ACTIONS without the prior written consent of either party (provided that this clause shall not prohibit the INSURED and the Insurer from disclosing information about any or all the ACTIONS or the insurance if legally required to do so, including under applicable Federal or state securities laws). 4. PREMIUM This INSURANCE AGREEMENT is a binding agreement of the parties effective upon the payment of the premium set forth in this Clause #4. The premium is fully earned upon the effective date of this INSURANCE AGREEMENT but shall be subject to final adjustment as set forth below in Clause #5, Good Experience Credit. This INSURANCE AGREEMENT shall be non-cancelable by the INSURED or the Insurer except for nonpayment of the premium. 5. GOOD EXPERIENCE CREDIT Upon SETTLEMENT or FINAL ADJUDICATION of the ACTIONS and CLAIMS, the INSURED shall be entitled to a "GOOD EXPERIENCE CREDIT". Such GOOD EXPERIENCE CREDIT shall be calculated upon the NET RECOVERY (as herein defined) to the INSURED in accordance with the following schedule:
Net Recovery to Insured Good Experience Credit ----------------------- ---------------------- $1 to $5,000,000 70% of Premium $5,000,001 to $10,000,000 60% of Premium $10,000,001 to $ 15,000,000 50% of Premium $15,000,001 to $20,000,000 40% of Premium Greater than $20,000,000 No credit applied
Any and all monies paid to the INSURED in connection with the ACTIONS or CLAIMS, including 5 but not limited to monies placed in the joint escrow account pursuant to Clause #11, Escrow Account, shall be considered a recovery by the INSURED. Moreover, any monies paid to the INSURED as a result of CLAIMS shall be considered a recovery by the INSURED. Upon SETTLEMENT or FINAL ADJUDICATION of all ACTIONS and CLAIMS, including the exhaustion of any and all rights of appeal, such recovery by the INSURED shall be first paid to the Insurer for reimbursement of any LOSS incurred by the Insurer in connection with the ACTIONS or CLAIMS. To the extent that any recovery by the INSURED shall exceed the sum of the LOSS incurred by the Insurer, the INSURED shall be entitled to be paid the difference. Such difference is considered the "NET RECOVERY" to the INSURED for purposes of calculating the GOOD EXPERIENCE CREDIT hereunder. The NAMED INSURED, with the written consent of the Insurer, whose consent shall not be unreasonably withheld, may commute this INSURANCE AGREEMENT pursuant to a full release of the Insurer's liabilities with respect to this INSURANCE AGREEMENT. In the event of a commutation, the GOOD EXPERIENCE CREDIT and any NET RECOVERY held in escrow pursuant to Clause #11, Escrow Account, shall be paid to the NAMED INSURED. In the event of commutation, the provisions of Clauses #4, Premium, and #5, Good Experience Credit, shall remain in force. For purposes of the INSURED, such GOOD EXPERIENCE CREDIT shall be considered return premium. For purposes of the Insurer, such GOOD EXPERIENCE CREDIT shall be considered part of LOSS; however, such classification of the GOOD EXPERIENCE CREDIT as a part of LOSS shall have no bearing on the calculation of the Retention, Limit of Liability, NET RECOVERY or GOOD EXPERIENCE CREDIT. Any payments owed to the NAMED INSURED pursuant to this Clause #5, shall be paid to the NAMED INSURED within 45 days of commutation as provided herein. 6. LIMIT OF LIABILITY (FOR ALL LOSS - INCLUDING DEFENSE COSTS) The Limit of Liability stated in Item 4 of the Declarations is the limit of the Insurer's liability for all LOSS arising out of the ACTIONS. DEFENSE COSTS are not payable by the Insurer in addition to the limit of Liability. DEFENSE COSTS are part of LOSS and as such are subject to the Limit of Liability for LOSS. 7. EXCLUSIONS A. For other than the purpose of satisfying the Retention as set forth in Item 3 of the Declarations, this INSURANCE AGREEMENT shall not cover any sums determined to be owed by LMB or the INSURED or the INSURED's Lien Bond Surety(ies) to trade contractors, subcontractors, vendors and/or suppliers to the extent that such sums are 6 within the scope of a notice of lien filed pursuant to the Nevada Mechanic's Lien Statute, NRSA 108.221 - 108.246 (herein referred to as the "LIENS") in the ACTIONS. However, this exclusion does not apply to sums awarded for lost profits as described in Paragraph 1 of the definition of Loss, sums awarded for delay and inefficiency damages as described in Paragraph 2 of the definition of LOSS, or to any LIENS satisfied, settled or dismissed as a result of payments made by LMB to its trade contractors, subcontractors, vendors and/or suppliers, or to LIENS assigned to LMB from its trade contractors, subcontractors, vendors and/or suppliers. B. This INSURANCE AGREEMENT shall not cover any sums owned or paid by the INSURED to trade contractors, subcontractors, vendors and/or suppliers; other than LMB, its trade contractors, subcontractors, vendors and/or suppliers, for work performed or to be performed on, or material and equipment supplied or to be supplied to, the PROJECT. C. This INSURANCE AGREEMENT shall not cover: 1. any LOSS paid by the INSURED prior to the effective date of this INSURANCE AGREEMENT. 2. any LOSS (whether paid prior to the effective date of this INSURANCE AGREEMENT or requiring future payment) arising out of any agreements, arrangements or the like made by the INSURED to settle, compromise or dispose of any ACTION or CLAIM prior to the effective date of this INSURANCE AGREEMENT. D. For other than the purpose of satisfying the Retention as set forth in Item 3 of the Declarations, this INSURANCE AGREEMENT shall not cover any sums arising out of or related to liability created by the LIDO LETTER. E. This INSURANCE AGREEMENT shall not cover BODILY INJURY, PROPERTY DAMAGE, ADVERTISING LIABILITY AND PERSONAL INJURY, including LOSS assumed by contract for any of the foregoing. F. This INSURANCE AGREEMENT shall not cover punitive or exemplary damages, fines, penalties and or treble damages. 8. RETENTION This INSURANCE AGREEMENT shall not apply to: (i) any LOSS paid by the INSURED prior to the effective date of this INSURANCE AGREEMENT; (ii) any LOSS (whether paid prior to the effective date of this INSURANCE AGREEMENT or 7 requiring future payment) arising out of any agreements, arrangements or the like made by the INSURED to settle, compromise or dispose of any ACTION or CLAIM prior to the effective date of this INSURANCE AGREEMENT; (iii) the first $45,000,000 of LOSS. Such Retention shall be borne by the INSURED and remain uninsured. For purposes of calculating the Retention as set forth in Item 3 of the Declarations only, LOSS shall include: a. all sums, other than delay and inefficiency damages and lost profits as described in Paragraphs 1 and 2 of the definition of LOSS, up to $36,500,000 owed by the INSURED for any Liens in the ACTIONS other than those described in Paragraphs 5 and 6 of the definition of LOSS; b. all sums up to $8,497,274 owed by the INSURED to LMB arising out of or related to liability created by the LIDO LETTER. For purposes of calculating the Retention as set forth in Item 3 of the Declarations, all DEFENSE COSTS incurred by the Insurer in connection with the ACTIONS shall not be included in LOSS. 9. PRIORITY OF PAYMENT IN DETERMINATION OF FULFILLMENT OF THE RETENTION Regardless of the actual order in which payments are made by the INSURED or the Insurer, the Insurer will apply such payments in the following order to determine satisfaction of the Retention as set forth in Item 3 of the Declarations: 1. LOSS as described in Paragraph 7 of the definition of LOSS ("PARAGRAPH 7 LOSS"); and then, 2. all other LOSS. Every time a LOSS payment is made, by either the INSURED or the Insurer, the Insurer shall recalculate the satisfaction of the Retention hereunder and the amount of LOSS payable hereunder in excess of the Retention in accordance with the above. If the INSURED becomes obligated to pay PARAGRAPH 7 LOSS after the INSURED has paid LOSS equal to $45,000,000, then the Insurer shall recalculate the satisfaction of the Retention hereunder, treating such PARAGRAPH 7 LOSS as paid by the INSURED, and any amount of LOSS payable hereunder in excess of the Retention will be paid on behalf of the INSURED in accordance with the payment terms set forth in any applicable settlement agreement or by court order. 8 Alternatively, if the INSURED pays PARAGRAPH 7 LOSS after the INSURED has paid LOSS equal to $45,000,000, then the Insurer shall recalculate the satisfaction of the Retention hereunder, and any amount then considered to be LOSS payable hereunder in excess of the Retention will be paid to the NAMED INSURED within 45 days of the PARAGRAPH 7 LOSS that triggered the recalculation. 10. SUBROGATION In the event of any payment of LOSS under this Insurance Agreement, the INSURED shall, and shall cause the defendants in the ACTIONS to: (i) assign to the Insurer all of their respective rights of recovery against any other person or entity for LOSS incurred by the defendants arising out of the ACTIONS, and (ii) execute all papers required and do everything that may be necessary to secure such rights, including but not limited to the execution of such documents necessary to enable the Insurer to effectively bring suit in the name of such defendants. Notwithstanding anything in this Insurance Agreement to the contrary, the Insurer shall not be entitled to any rights of recovery against any or all of the INSURED or any of its respective directors, officers, partners, employees or affiliates, directly or indirectly. 11. ESCROW ACCOUNT Any monies which are paid to the INSURED, arising out of or in connection with the ACTIONS or CLAIMS, shall be placed in an escrow account in a bank which is a member of the Federal Reserve System which has total assets of at least $500 million and short-term deposit rating of at least P-1 (Moody's) or A-1 (Standard & Poor's) jointly held by the INSURED and Insurer until SETTLEMENT or FINAL ADJUDICATION of all ACTIONS and CLAIMS. The INSURED and the Insurer shall have no vested interest in the monies until the conclusion of all ACTIONS and CLAIMS, and the funds shall not be subject to attachment by creditors of the INSURED and the Insurer. Such funds held in escrow in accordance with this clause shall be disbursed upon SETTLEMENT or FINAL ADJUDICATION of all ACTIONS and CLAIMS pursuant to Clause #5, Good Experience Credit, of this INSURANCE AGREEMENT. Earnings on the funds held in escrow shall be paid to the INSURED. This clause shall be subject to a mutually agreeable escrow agreement between the NAMED INSURED and the Insurer. 12. ASSIGNMENT Neither this INSURANCE AGREEMENT nor any of the rights or obligations hereunder are assignable by either party hereto without the prior written consent of the other party hereto, which consent shall not be unreasonably withheld. In the event that the Insurer does not respond to the request for assignment within 10 business days, the Insurer will be deemed to have consented to the assignment. The rights hereunder shall inure only to the benefit of the 9 NAMED INSURED and the Insurer, and no other person or entity shall be deemed a beneficiary thereof. 13. BANKRUPTCY OR INSOLVENCY The INSURED'S bankruptcy, insolvency or inability to pay, will not relieve the Insurer from payment of any LOSS covered by this INSURANCE AGREEMENT. But under no circumstances will such bankruptcy, insolvency or inability to pay require the Insurer to drop down and replace the Retention as set forth in Item #3 of the Declarations or assume any obligation within the Retention as set forth in Item #3 of the Declarations. 14. OTHER INSURANCE If other valid and collectable insurance applies to a LOSS that is also covered by this INSURANCE AGREEMENT, then this INSURANCE AGREEMENT will apply excess of the other insurance. However, this provision will not apply if the other insurance is specifically written to be excess of this INSURANCE AGREEMENT. 15. COOPERATION The INSURED must: (a) immediately send the Insurer copies of any demands, notices, summonses or legal papers received in connection with the ACTIONS or CLAIMS; (b) authorize the Insurer to obtain records and other information; (c) cooperate with the Insurer in the investigation, settlement or defense of the ACTIONS or CLAIMS; and, (d) assist the Insurer, upon its request, in the enforcement of any right against any person or organization which may be liable to the INSURED for LOSS to which this INSURANCE AGREEMENT may also apply. No INSURED will, except at its own cost, voluntarily make a payment, assume any obligation, or incur any expense, related to the ACTIONS, without the Insurer's consent. 16. MISCELLANEOUS The descriptions in the headings of this INSURANCE AGREEMENT are solely for convenience, and form no part of the terms and conditions of coverage. This INSURANCE AGREEMENT is the entire agreement between the parties with respect to its subject matter, and supersedes any prior oral or written communications between the parties, including without limitation any term sheet or binder agreement. This INSURANCE AGREEMENT may only be amended in writing 10 signed by both parties. 17. NOTICES All notices under this INSURANCE AGREEMENT shall be in writing and delivered by hand, sent by overnight courier or sent by telecopier to the following persons: FOR THE INSURER: Chuck Stauber AIG Technical Services, Inc. 175 Water Street 22th Floor New York, NY 10038 Tel: (212) 458-5762 Fax: (212) 458-5776 FOR THE NAMED INSURED: David Friedman Assistant to the Chairman of the Board Venetian Casino Resort LLC Corporate Offices 3355 Las Vegas Boulevard South Las Vegas, Nevada 89109 Tel: (702) 733-5395 Fax: (702) 733-5758 IN WITNESS WHEREOF, the INSURED and the Insurer have caused this INSURANCE AGREEMENT to be signed by, in the case of the INSURED, its President and, in the case of the Insurer, its President. Las Vegas Sands Inc. and Venetian Casino Resort LLC By /s/ David Friedman ---------------------------------------- Assistant to the Chairman of the Board American Home Assurance Company By /s/ Susan Rivera ---------------------------------------- President /s/ [ILLEGIBLE] AON Risk Services Inc of NV 2300 W. Sahara #560 Las Vegas NV 89102 11 EX-99 25 ex99-1.txt RISK FACTORS EXHIBIT 99.1 Risk Factors You should carefully consider the risk factors set forth below as well as the other information contained in this Quarterly Report on Form 10-Q. The risks described below are not the only risks of owning the Company's securities. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition or results of operations. In such case, a holder of the Company's securities may lose all or part of his original investment. References in "Risk Factors" to "we," "us" and "our" refer to the Company, as defined in the Quarterly Report on Form 10-Q (the "10-Q"). All other terms used and not defined herein shall have the meanings given to them in the 10-Q. Certain statements in "Risk Factors" are forward-looking statements. See "Part II, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Special Note Regarding Forward-Looking Statements" of the 10-Q. Risks Relating to Our Indebtedness - ---------------------------------- Our substantial debt could impair our financial condition and prevent us from fulfilling our obligations under our indebtedness. We are highly leveraged and have substantial debt service obligations. As of June 30, 2002, on a pro forma basis after giving effect to the Refinancing Transactions, we had approximately $1.220 billion of indebtedness outstanding. In addition, we had approximately $75.0 million available for borrowing by Venetian under the Revolving Facility. Our substantial indebtedness could have important consequences to the holders of our securities. For example, it could: o make it more difficult for us to satisfy our obligations with respect to our indebtedness; o increase our vulnerability to general adverse economic and industry conditions; o impair our ability to obtain additional financing in the future for working capital needs, capital expenditures, acquisitions or general corporate purposes; o require us to dedicate a significant portion of our cash flow from operations to the payment of principal and interest on our debt, which would reduce the funds available to us for our operations; o limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; o place us at a competitive disadvantage compared to our competitors that have less debt; and o subject us to higher interest expense in the event of increases in interest rates to the extent a portion of our debt is and will continue to be at variable rates of interest. Despite current indebtedness levels, we and our subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial leverage. We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of our existing indebtedness do not fully prohibit us or our subsidiaries from doing so. If new debt is added to our or our subsidiaries' current debt levels, the related risks that we and they now face could intensify. The terms of our Senior Secured Credit Facility and the Indenture may restrict our current and future operations, particularly our ability to respond to changes or to take some actions. The Senior Secured Credit Facility contains, and any future refinancing of this facility likely would contain, a number of restrictive covenants that impose significant operating and financial restrictions on us. The Senior Secured Credit Facility includes covenants restricting, among other things, our ability to: o incur additional debt, including guarantees; o incur liens; o dispose of assets; o make certain acquisitions; o pay dividends and make other restricted payments; 1 o enter into sale and leaseback transactions; o engage in any new businesses; o issue preferred stock; and o enter into transactions with our shareholders and our affiliates. The Indenture also contains numerous covenants including, among other things, restrictions on our ability and that of our restricted subsidiaries to: o incur additional debt, including guarantees; o use assets as security in other transactions; o create liens or other encumbrances; o make certain payments and investments; o sell or otherwise dispose of assets; o engage in transactions with our affiliates; o enter into certain leases; o merge or consolidate with another entity; and o transfer all or substantially all assets. The Senior Secured Credit Facility also includes financial covenants, including requirements that we satisfy: o a minimum net worth test; o a maximum capital expenditure test; o a minimum interest coverage ratio; and o a maximum leverage ratio. In addition, our other debt and future debt or other contracts could contain financial or other covenants more restrictive than those applicable to our existing indebtedness. Our failure to comply with the covenants contained in the Senior Secured Credit Facility or the Indenture, including our failure as a result of events beyond our control, could result in an event of default which could materially and adversely affect our operating results and our financial condition. If there were an event of default under one of our debt instruments, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments, either upon maturity or if accelerated upon an event of default or that we would be able to refinance or restructure the payments on those debt securities. Further, if we are unable to repay, refinance or restructure our indebtedness under the Senior Secured Credit Facility, the lenders under that facility could proceed against the collateral securing that indebtedness. In that event, any proceeds received upon a realization of the collateral would be applied first to amounts due under the Senior Secured Credit Facility before any proceeds would be available to make payments on the Mortgage Notes. See "-- The collateral securing the Mortgage Notes is subject to control by creditors with first-priority liens that rank ahead of the liens securing the Mortgage Notes. If there is a default, the value of the collateral may not be sufficient to repay both the first-priority creditors and the holders of the Mortgage Notes." In addition, any event of default or declaration of acceleration under one debt instrument could result in an event of default under one or more of our other debt instruments, including the Mortgage Notes. We may not be able to generate sufficient cash flow to meet our debt service obligations because our ability to generate cash depends on many factors beyond our control. Our ability to make scheduled payments due on our debt obligations and to fund planned capital expenditures and development efforts will depend on our ability to generate cash in the future. To a certain extent, this is subject to a range of economic, financial, competitive, legislative, regulatory, business and other factors, many of which are outside of our control. If we do not generate sufficient cash flow from operations to satisfy our debt obligations we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales or the amount of proceeds realized from those sales, or that additional financing could be obtained on acceptable terms, if at all, or would be permitted under the terms of our various debt instruments then in effect. Our failure to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business, financial condition and results of operations. 2 We may not be able to fulfill our repurchase obligations in the event of a change of control. If we experience certain specific change of control events, we will be required to offer to repurchase all outstanding Mortgage Notes at 101% of the principal amount of the Mortgage Notes plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase. Any change of control would also constitute a default under the Senior Secured Credit Facility. Therefore, upon the occurrence of a change of control, the lenders under the Senior Secured Credit Facility would have the right to accelerate their loans and we would be required to prepay all of our outstanding obligations under the Senior Secured Credit Facility. We cannot assure you that we will have available funds sufficient to pay the change of control purchase price for any or all of the Mortgage Notes that might be delivered by holders of the Mortgage Notes seeking to accept the change of control offer. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a "change of control" under the Indenture. In addition, the Senior Secured Credit Facility contains, and any future credit agreement likely will contain, restrictions or prohibitions on our ability to repurchase the Mortgage Notes. In the event that these change of control events occur at a time when we are prohibited from repurchasing the Mortgage Notes, we could seek the consent of our lenders to purchase the Mortgage Notes or could attempt to refinance the borrowings that contain these prohibitions or restrictions. If we do not obtain our lenders' consent or refinance these borrowings, we will remain prohibited or restricted from repurchasing the Mortgage Notes. Accordingly, the holders of the Mortgage Notes may not receive the change of control purchase price for their Mortgage Notes in the event of a sale or other change of control. Our failure to make or consummate the change of control offer or pay the change of control purchase price when due will give the trustee and the holders of the Mortgage Notes the right to declare an event of default and accelerate the repayment of the Mortgage Notes. This event of default under the Indenture would in turn constitute an event of default under the Senior Secured Credit Facility. Risks Relating Specifically to the Mortgage Notes - ------------------------------------------------- The collateral securing the Mortgage Notes is subject to control by creditors with first-priority liens that rank ahead of the liens securing the Mortgage Notes. If there is a default, the value of the collateral may not be sufficient to repay both the first-priority creditors and the holders of the Mortgage Notes. The Mortgage Notes are secured on a second-priority basis, subject to permitted liens, by a lien on substantially all assets now owned or hereafter acquired by LVSI, Venetian and our subsidiaries that guarantee the Mortgage Notes. Because the Mall is owned by the Mall II Subsidiary, which is not a guarantor of the Mortgage Notes, the assets consisting of the Mall will not be included in the collateral. The first-priority liens, subject to permitted liens, on the collateral secure or will secure our obligations under the Senior Secured Credit Facility, certain other future indebtedness permitted to be incurred by us or certain of our subsidiaries that guarantee the Mortgage Notes and that is designated by us, at the time of such incurrence, as first-priority lien secured indebtedness and certain hedging obligations. Although the holders of obligations secured by first-priority liens on the collateral and the holders of the Mortgage Notes will share in the proceeds of this collateral, the holders of obligations secured by the first-priority liens on the collateral will be effectively entitled to receive proceeds from any realization of the collateral to repay their obligations in full before the holders of the Mortgage Notes and the other obligations secured by second-priority liens receive any portion of those proceeds. The value of the collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. Further, in any foreclosure sale of the collateral, the purchaser or operator of the facility would be subject to certain obligations under our existing cooperation agreement (including an obligation to pay shared expenses and maintain certain common areas) which may affect the liquidation value of the collateral securing the Mortgage Notes. We cannot assure you that the proceeds from the sale or sales of all of such collateral would be sufficient to satisfy the amounts outstanding under the Mortgage Notes and other obligations secured by the second-priority liens, if any, after payment in full of all obligations secured by the first-priority liens on the collateral. If these proceeds were not sufficient to repay amounts outstanding under the Mortgage Notes, then holders of the Mortgage Notes, to the extent not repaid from the proceeds of the 3 sale of the collateral, would only have an unsecured claim against our remaining assets. As of June 30, 2002, on a pro forma basis after giving effect to the Refinancing Transactions, we had approximately $250.0 ___ million of indebtedness outstanding under the Senior Secured Credit Facility and approximately $75.0 million of borrowing availability under the Revolving Facility. Under the Indenture, we are permitted to incur up to $15.0 million of additional indebtedness that is secured by first liens on the note collateral and additional debt secured by first liens on the note collateral if certain financial conditions are met. In addition, we are permitted to issue additional notes if we meet certain financial tests. Our intercreditor agreement also permits the lenders under our Senior Secured Credit Facility to make certain "protective advances" in order to protect, preserve, repair and maintain their collateral. Any amounts so advanced will be included in the amounts secured by the first-priority liens in favor of the lenders under our Senior Secured Credit Facility. Such advances therefore could increase the aggregate first-priority senior secured claims on the collateral, even beyond the maximum commitments of such lender, thereby potentially disadvantaging the holders of the Mortgage Notes. The rights of the holders of the Mortgage Notes with respect to the collateral securing the Mortgage Notes will be limited pursuant to the terms of the intercreditor agreement. Under the intercreditor agreement, subject to certain standstill periods, the holders of the Mortgage Notes may foreclose on the collateral prior to the lenders under our Senior Secured Credit Facility, provided that the purchaser at the foreclosure sale (including the holders of the Mortgage Notes, if applicable) is required to concurrently pay all obligations under the Senior Secured Credit Facility in full. There can be no assurance that funds will be available to the holders of the Mortgage Notes at such time to pay the amounts due under the Senior Secured Credit Facility. Also, any release of the first priority liens upon any collateral approved by the holders of the first priority liens shall also release the second priority liens securing the Mortgage Notes on the same collateral; provided, that after giving effect to such release, the aggregate book value of all of the assets released does not exceed 10% of the total consolidated assets of LVSI as of June 4, 2002. Additional releases of collateral from the second-priority lien securing the Mortgage Notes are permitted under some circumstances. Finally, amendments to, or waivers of the first-priority lien collateral documents approved by the holders of the first-priority liens shall also be effective as to the second-priority lien collateral documents for the Mortgage Notes. The Mortgage Notes are effectively subordinated to the indebtedness of our subsidiaries that do not guarantee the Mortgage Notes. The Mortgage Notes will also be effectively subordinated to any of our indebtedness secured by assets other than the collateral securing the Mortgage Notes (to the extent of these assets) and to indebtedness of any of our subsidiaries that is not a guarantor of the Mortgage Notes. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, holders of their indebtedness and their trade creditors will generally be entitled to payment of their claims from the assets of those subsidiaries before any assets are made available for distribution to us. Certain of our subsidiaries including the Mall II Subsidiary, the Phase II Subsidiary and our Macau subsidiaries, do not guarantee the Mortgage Notes. The Indenture also permits these subsidiaries to incur debt provided certain conditions are met. The Phase II Subsidiary plans to build the Phase II Resort, and plans to incur substantial indebtedness. In addition, we currently anticipate that we will need to incur substantial additional indebtedness to finance our Macau project. In addition, under the Indenture, we are allowed to make investments in the amount of $40.0 million in, and extend guarantees with respect to $90.0 million of indebtedness or other obligations of, our Macau subsidiaries for the development of our Macau project. We are also allowed to make investments of up to $20.0 million in the Phase II Subsidiary for the development of the Phase II Resort. As of June 30, 2002, after giving effect to the Refinancing Transactions, the non-guarantor subsidiaries had approximately $121.7 million of debt and other liabilities (including trade payables but excluding intercompany payables) outstanding. Our non-guarantor subsidiaries generated 7.9% of our consolidated net revenues in the six month period ended June 30, 2002 and held 14.5% of our consolidated total assets as of June 30, 2002. Bankruptcy laws may significantly impair the Mortgage Note holders' right to repossess and dispose of the collateral for the Mortgage Notes. The right of the trustee for the Mortgage Notes to repossess and dispose of the collateral securing the Mortgage Notes upon the occurrence of an event of default under the Indenture is likely to be significantly impaired by applicable bankruptcy law in the case of a bankruptcy case prior to such repossession and disposition. A bankruptcy case may be commenced by us, a holder of Mortgage Notes (subject to the provisions of the intercreditor agreement), the lenders under our Senior Secured Credit Facility or any other creditor, including a junior creditor. 4 Under applicable bankruptcy law, secured creditors, such as the holders of the Mortgage Notes and the lenders under our Senior Secured Credit Facility, are prohibited from repossessing their security from a debtor in a bankruptcy case, or from disposing of collateral in their possession, without bankruptcy court approval. Moreover, applicable bankruptcy law permits the debtor to continue to retain and use the collateral even though the debtor is in default if the secured creditor is given "adequate protection." The meaning of the term "adequate protection" may vary according to circumstances, but it is intended in general to protect the value of the secured creditor's interest in the collateral from diminution as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. It may include cash payments or the granting of additional security at such time and in such amount as the court may determine. In view of the lack of a precise definition of the term "adequate protection," the broad discretionary powers of a bankruptcy court and the possible complexity of valuation issues, it is impossible to predict how long payments under the Mortgage Notes could be delayed following commencement of a bankruptcy case, whether or when the trustee for the Mortgage Notes could repossess or dispose of the collateral or whether or to what extent, through the requirement of "adequate protection," the holders of the Mortgage Notes would be compensated for any delay in payment or loss of value of the collateral. Some of the factors that might affect the recovery of the Mortgage Note holders in these circumstances, include: o a debtor in a bankruptcy case does not have the ability to compel performance of a "financial accommodation," including the funding of various undrawn loans contemplated to fund construction of the Phase IA Addition; o lenders with liens senior to the liens securing the Mortgage Notes may seek and perhaps receive relief from the automatic stay to foreclose their respective liens; and o the cost and delay of developing a confirmed Chapter 11 plan could adversely affect the present value of revenues. The rights of the Mortgage Note holders to the collateral securing the Mortgage Notes could be impaired as a result of bankruptcy proceedings against other persons. In addition, in the event that a bankruptcy court orders our substantive consolidation with certain affiliated parties, payments on the Mortgage Notes could be delayed or reduced. Contract rights under certain of our agreements serve as some of the collateral for the Mortgage Notes. For example, some of our agreements with Interface Group-Nevada, Inc., the owner of the Expo Center, such as the cooperation agreement, serve as collateral for the Mortgage Notes. In the event a bankruptcy case were to be commenced by or against Interface Group-Nevada, Inc., it is possible that all or part of the cooperation agreement could be rejected by Interface Group-Nevada, Inc. or a trustee appointed in a bankruptcy case pursuant to section 365 or section 1123 of the United States Bankruptcy Code and thus not be specifically enforceable. In addition, to the extent any rejected agreement constitutes a lease of real property, the resulting claim of the lessor for damages resulting from termination may be capped pursuant to section 502(b)(6) of the Bankruptcy Code. The Mortgage Notes represent our obligations only and do not represent obligations of, and are not be guaranteed by, Interface Group-Nevada, Inc., the Principal Stockholder or any of their affiliates other than LVSI, Venetian and certain of their subsidiaries. Although we believe that we have observed and will observe certain formalities and operating procedures that are generally recognized requirements for maintaining our separate existence and that our assets and liabilities can be readily identified as distinct from those of Interface Group-Nevada, Inc., the Principal Stockholder or the other affiliates referred to in the previous sentence, we cannot assure holders of the Mortgage Notes that a bankruptcy court would agree, in the event that either Interface Group-Nevada, Inc., the Principal Stockholder or such other affiliates referred to in the previous sentence becomes a debtor under the Bankruptcy Code. Instead, if a bankruptcy court concludes that substantive consolidation of LVSI and Venetian with any affiliated party referred to in the first sentence of this paragraph is warranted, payments on the Mortgage Notes could be delayed or reduced. There are particular risks associated with gaming foreclosures. In the event of any foreclosure sale of the Casino Resort, the purchaser or the operator of the facility would need to be licensed in order to operate the casino under the Nevada Gaming Control Act. If the trustee for the Mortgage Notes or the lenders under the Senior Secured Credit Facility purchase the Casino Resort at a foreclosure sale and are unable or choose not to sell the casino, the trustee or the lenders, unless licensed themselves, would be required to retain a licensed entity under the Nevada Gaming Control Act in order to conduct gaming operations in the casino. The holders of the Mortgage Notes may have to be licensed or found suitable in any event. Because potential bidders who wish to operate the casino must satisfy these requirements, the number of potential bidders in a foreclosure sale could be less than in foreclosure sales of other types of facilities, and such requirement may delay the sale of, and may adversely affect the sales price for, the collateral. 5 Releases of the guarantees of the Mortgage Notes or additional guarantees may be controlled, under some circumstances, by the collateral agent under the Senior Secured Credit Facility. The Mortgage Notes are guaranteed by certain of our domestic restricted subsidiaries that guarantee our obligations under the Senior Secured Credit Facility. If we create or acquire a domestic restricted subsidiary in the future and the collateral agent under the Senior Secured Credit Facility does not require that subsidiary to guarantee the obligations under the Senior Secured Credit Facility, then the subsidiary will not be required to guarantee the Mortgage Notes. In addition, under the Indenture, a guarantee of the Mortgage Notes made by a guarantor will be released without any action on the part of the trustee or any holder of Mortgage Notes if the collateral agent under the Senior Secured Credit Facility releases the guaranty of the obligations under the Senior Secured Credit Facility made by that guarantor. Additional releases of the guarantees of the Mortgage Notes are permitted under some circumstances. Federal and state statutes allow courts, under specific circumstances, to void the guarantees and the liens securing the guarantees of the Mortgage Notes and require holders of the Mortgage Notes to return payments received from us or the guarantors. Our creditors or the creditors of our guarantors could challenge the guarantees and the liens in connection with the Mortgage Notes as fraudulent conveyances or on other grounds. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, the delivery of the guarantees and the grant of the second-priority liens securing the guarantees could be found to be a fraudulent transfer and declared void if a court determined that the guarantor of the Mortgage Notes, at the time it incurred the indebtedness evidenced by its guarantee and lien: o delivered the guarantee and granted the lien with the intent to hinder, delay or defraud its existing or future creditors; or o received less than reasonably equivalent value or did not receive fair consideration for the delivery of the guarantee and the incurrence of the lien and any of the three following conditions apply: o was insolvent or rendered insolvent at the time it delivered the guarantee and granted the lien; o was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or o intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. If a court declares either the guarantees or the liens to be void, or if the guarantees must be limited or voided in accordance with their terms, any claim that the holders of the Mortgage Notes may make against us for amounts payable on the Mortgage Notes would be unsecured and, with respect to amounts claimed against the guarantors, subordinated to the debt of our guarantors, including trade payables. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if: o the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all of its assets; o if the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or o it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor, after giving effect to its guarantee of the Mortgage Notes, is not insolvent, does not have unreasonably small capital for the business in which it is engaged and does not incur debts beyond its ability to pay such debts as they mature. We cannot assure a holder of the Mortgage Notes, however, as to what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard. Risks Relating to Our Business - ------------------------------ Our business is subject to significant contingencies beyond our control, including the aftermath of terrorist acts, which may significantly and adversely affect our financial condition, results of operations or cash flows. 6 Our operations are subject to significant business, economic and regulatory uncertainties and contingencies, many of which are beyond our control. On September 11, 2001, acts of terrorism occurred in New York City, Pennsylvania and Washington D.C. As a result of these terrorist acts, domestic and international travel was severely disrupted. As approximately [48]% of our customers use air travel to come to Las Vegas, these terrorist acts and travel disruptions decreased customer visitation to the Casino Resort. While air travel levels have rebounded, we cannot predict the extent to which the events of September 11th may continue to affect us, directly or indirectly, in the future. Any further terrorist act, outbreak of hostilities or escalation of war could have a material adverse effect on the economy in general and on the hotel/casino business in particular or could further disrupt air travel, which would adversely affect our financial condition, results of operations or cash flows. We cannot assure you that we will continue to manage the Casino Resort on a profitable basis or that we will be able to attract a sufficient number of guests, gaming customers and other visitors to the Casino Resort to make its various operations profitable independently or as a whole. We face significant competition which could materially adversely affect our financial condition, results of operations or cash flows. The hotel, resort and casino businesses are highly competitive. The Casino Resort competes with a large number of major hotel-casinos and a number of smaller casinos located on and near the Strip and in and near Las Vegas, including other upscale destinations such as The Bellagio, Mandalay Bay and Paris. We expect competition to increase with the announced construction of Le Reve, an approximately 2,500-room resort to be built on the site of the former Desert Inn, one block north of the Casino Resort, on the corner of Las Vegas Boulevard and Sands Avenue (anticipated to open in late 2004), and the announced construction of an approximately 1.8 million square foot convention center at Mandalay Bay. We also compete, to some extent, with other hotel-casino facilities in Nevada and in Atlantic City, as well as hotel-casinos and other resort facilities and vacation destinations elsewhere in the United States and around the world. Many of our competitors are subsidiaries or divisions of large public companies and may have greater financial and other resources than we have. We also compete with legalized gaming from casinos located on Native American tribal lands. In March 2000, California voters approved an amendment to the California Constitution permitting Native American tribes in California to operate a limited number of slot and video poker machines and house-banked card games. The governor of California has entered into compacts with numerous tribes in California. The federal government has approved approximately 60 such compacts, and casino-style gaming is now legal on those tribal lands. While the competitive impact on our operations in Las Vegas from the continued growth of Native American gaming establishments in California remains uncertain, the proliferation of gaming in California and other areas located near the Casino Resort could have an adverse effect on our results of operations. In addition, certain states have legalized, and others may legalize, casino gaming in specific areas, including metropolitan areas from which we traditionally attract customers, such as New York, Los Angeles, San Francisco and Boston. In October 2001, the New York legislature approved a bill for expanded casino gaming on Native American reservations in the State of New York. Such proliferation of gaming venues, by luring customers close to home and away from Las Vegas, could significantly and adversely affect our financial condition, results of operations or cash flows. Competition will be increasing for the Congress Center and the Expo Center as a result of certain planned additional convention and meeting facilities as well as the enhancement or expansion of existing convention and meeting facilities in Las Vegas, which could have a negative impact on our business. With the expansion of its facilities, the Las Vegas Convention Center, a 3.2 million square foot convention and exhibition space facility, will continue to be a major competitor of the Expo Center and will be able to solely host many large trade shows which had previously split space between the Las Vegas Convention Center and the Expo Center. In addition, we anticipate increased competition from the MGM Grand Hotel and Casino, the Mirage and Mandalay Bay, which are all adding conference and meeting facilities. To the extent that these competitors are able to capture a substantially larger portion of the trade show and convention business in Las Vegas, there could be a material adverse impact on the Congress Center and on the Expo Center and in turn, our financial position, results of operations and cash flows, given the Casino Resort's link to the Expo Center. Other cities such as Boston, Orlando and Pittsburgh are also in the process of developing, or have announced plans to develop, convention centers and other meeting, trade and exhibition facilities that could in the long term materially adversely affect us. We are involved in a lawsuit with the Construction Manager for the original construction of the Casino Resort, which could adversely affect our financial condition, results of operations or cash flows. 7 The original construction of the principal components of the Casino Resort was undertaken by the Construction Manager under the Construction Management Contract. The Construction Management Contract established the Final GMP of $645.0 million, subject to various exceptions, and required a substantial completion date for the Casino Resort of April 21, 1999. In July 1999, we filed a lawsuit in federal court against the Construction Manager, Bovis and various other parties for breach of contract and breach of guaranty, including failure to pay trade contractors and vendors and failure to meet the April 21, 1999 substantial completion date for the Casino Resort. We are seeking total damages in excess of $100.0 million. In response, the Construction Manager has filed a complaint against us for breach of contract and quantum meruit and also alleging that we defrauded the Construction Manager in connection with the construction of the Casino Resort. The Construction Manager is seeking damages, attorney's fees, costs and punitive damages and claims that it is owed approximately $90.0 million from us. In connection with these disputes, the Construction Manager and its subcontractors filed mechanics liens against the Casino Resort for approximately $145.6 million and $182.2 million. We then purchased surety bonds for 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 the Construction Manager and its subcontractors. However, we 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. It is not yet possible to determine the ultimate outcome of this litigation, including the likelihood of loss or a range of loss amounts. Although we have purchased the Insurance Policy for loss coverage for a portion of certain specified potential losses, if this litigation or other proceedings concerning the claims of the Construction Manager or its subcontractors were decided adversely to us and were not covered by the Insurance Policy, this litigation or other proceedings could have a material adverse effect on our financial position, results of operations or cash flows. There are significant risks associated with our planned construction projects, which could adversely affect our financial condition, results of operations or cash flows. Our on-going and future construction projects, such as the Phase IA Addition, entail significant risks. Construction activity requires us to obtain qualified subcontractors, the availability of which may be uncertain. Contractual projects are subject to overrun and delays not within our control or our subcontractors' control such as shortages of materials or skilled labor, unforeseen engineering, environmental and/or geological problems, work stoppages, weather interference, unanticipated cost increases and unavailability of construction equipment. Construction, equipment or staffing problems or difficulties in obtaining any of the requisite licenses, permits, allocations and authorizations from governmental or regulatory authorities could increase the total cost, delay, jeopardize or prevent the construction or opening of such projects or otherwise affect the design and features of the Phase IA Addition or other projects or our ability to preempt our competition. The anticipated costs and completion date for the Phase IA Addition are based on budgets, conceptual design documents and schedule estimates that we have prepared with the assistance of architects and are subject to change as the design documents are finalized and more actual construction work is performed. To date, we have completed the design and plans for the expansion of the parking garage, the addition of the 1000-room hotel tower to be built on top of the parking garage and the approximately 150,000 square foot conference center, and have substantially completed the foundation and support systems for the hotel tower and the additional conference center space. [We have hired a general contractor for the parking garage work and have finalized contracts with the majority of the trade contractors for the hotel work, but we have not yet selected or finalized agreements with a general contractor for the meeting and conference center and/or all of the trade contractors for the hotel work and the meeting and conference center. We have also not yet hired trade contractors for various aspects of the Phase IA Addition.] We cannot assure you that we will agree with general or trade contractors on financial and other terms that will meet our forecasted cost budget and timeline. In addition, we cannot assure you that we will avoid cost overruns that will not be covered by a general contractor, trade contractors or insurance or that we will be able to complete construction on schedule. If we incur significant cost overruns that are not covered by the general contractor, trade contractors or insurance, we may not be able to arrange for additional financing to pay for such costs. A failure to complete the Phase IA Addition on budget and on schedule may adversely affect our financial condition, results of operations or cash flows. In addition, the construction of the Phase IA Addition is intended to be funded by the lenders under the Senior Secured Credit Facility. Pursuant to the Senior Secured Credit Facility, we may obtain loan proceeds only upon satisfaction of certain conditions precedent, some of which are subject to the discretion of the lenders. We cannot assure you that we will be able to satisfy such conditions precedent to the satisfaction of such lenders or that, even if we do satisfy such conditions, such lenders will perform their obligations under the Senior Secured Credit Facility and fund the loans. If we are unable to obtain loan proceeds under the Senior Secured Credit Facility, we cannot assure you that we will have access to other funds as may be required to complete the Phase IA Addition. Our failure to obtain the loan proceeds or such other funds to complete the Phase IA Addition could materially and adversely affect our financial condition, results of operation and cash flows. Mechanic's liens, under Nevada law, on the Mortgage Note collateral will have priority over the liens securing the Mortgage Notes. 8 Nevada law provides contractors, subcontractors and materials suppliers with a lien on the real property being improved by their services or supplies in order to secure their right to be paid. Such parties may foreclose on their liens if they are not paid in full. The priority of all mechanics' liens arising out of a particular construction project relates back to the date on which construction of the project first commenced. Because construction of the Phase IA Addition had already begun, all mechanics' liens arising out of the Phase IA Addition, regardless of when filed, will have priority over the lien on the real property assets of the Casino Resort securing the Mortgage Notes, issued by us in June 2002. We have obtained, for the benefit of the holders of the Mortgage Notes, title insurance that provides coverage for any and all mechanics liens that may be filed in connection with the Phase IA Addition. The loss of our gaming license or our failure to comply with the extensive regulations that govern our operations could have a material adverse effect on our financial condition, results of operations or cash flows. Our gaming operations and the ownership of our securities are subject to extensive regulation by the Nevada Gaming Commission, the Nevada State Gaming Control Board and the Clark County Liquor and Gaming Licensing Board. These gaming authorities have broad authority with respect to licensing and registration of our business entities and individuals involved with us, including the holders of the Mortgage Notes. Although we currently hold a gaming license issued by the Nevada gaming authorities, these authorities may, among other things, revoke the gaming license of any corporate entity or the registration of a registered corporation or any entity registered as a holding company of a corporate licensee for violations of gaming regulations. In addition, the Nevada gaming authorities may, under certain conditions, revoke the license or finding of suitability of any officer, director, controlling person, shareholder, noteholder or key employee of a licensed or registered entity. If our gaming licenses were revoked for any reason, the Nevada gaming authorities could require the closing of the casino, which would have a material adverse effect on our business. From time to time, the Nevada State Gaming Control Board investigates or reviews the records of gaming companies for compliance with gaming regulations as part of its regular oversight functions. We have been and are being investigated and a number of violations have been alleged, which may result in a penalty or penalties. A majority of these incidents occurred in the first year of our operations. We do not believe that these violations will result in a material adverse effect on our business or operations. We may be required to disclose the identities of the holders of the Mortgage Notes to the Nevada gaming authorities upon request. The Nevada Gaming Commission may in its discretion require the holders of the Mortgage Notes to file an application, be investigated and be found suitable to hold the Mortgage Notes. In addition, the Nevada Gaming Commission may, in its discretion, require the holder of any debt security of a company registered by the Nevada Gaming Commission as a publicly traded corporation to file an application, be investigated and be found suitable to own such debt security. If a record or beneficial holder of a Mortgage Note is required by the Nevada Gaming Commission to be found suitable, such owner will be required to apply for a finding of suitability within 30 days after request of such gaming authority or within such earlier time prescribed by such gaming authority. The applicant for a finding of suitability must pay all costs of the investigation for such finding of suitability. If the Nevada Gaming Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Gaming Control Act, we can be sanctioned, including the loss of our approvals, if, without the prior approval of the Nevada Gaming Commission, we: o pay to the unsuitable person any dividend, interest, or any distribution whatsoever; o recognize any voting right of the unsuitable person with respect to such securities; o pay the unsuitable person remuneration in any form; or o make any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction. We are currently registered by the Nevada Gaming Commission as a publicly traded corporation. Each holder of the Mortgage Notes will be deemed to have agreed, to the extent permitted by law, that if the Nevada gaming authorities determine that a holder or beneficial owner of the Mortgage Notes must be found suitable (whether as a result of a foreclosure of the casino or for any other reason), and if that holder or beneficial owner either refuses to file an application or is found unsuitable, that holder shall, upon our request, dispose of its Mortgage Notes within 30 days after receipt of our request, or earlier as may be ordered by the Nevada gaming authorities. We will also have the right to call for the redemption of Mortgage Notes of any holder at any time to prevent the loss or material impairment of a gaming license or an application for a gaming license at a redemption price equal to: 9 o the lesser of (1) the cost paid by the holder, (2) 100% of the aggregate principal amount of the Mortgage Notes or (3) the fair market value of the Mortgage Notes, in each case, plus accrued and unpaid interest and liquidated damages, if any, to the earlier of the date of redemption, or earlier as may be required by the Nevada gaming authorities or the finding of unsuitability by the Nevada gaming authorities; or o such other price as may be ordered by the Nevada gaming authorities. In addition, our exchange offer for the Mortgage Notes, including the hypothecation of our assets, and any future public offering of debt or equity securities by us, requires the prior approval of the Nevada Gaming Commission if we intend to use the securities or the proceeds from the sale thereof to pay for construction of, or to acquire an interest in, any gaming facilities in Nevada, to finance the gaming operations of an affiliated company or to retire or extend obligations incurred for any such purpose. Certain Nevada gaming laws apply to our planned gaming activities and associations in Macau. Certain Nevada gaming laws also apply to our gaming activities and associations in jurisdictions outside the state of Nevada. We are required to comply with certain reporting requirements concerning our proposed gaming activities and associations occurring outside the state of Nevada, including Macau. We are also subject to disciplinary action by the Nevada Gaming Commission if we: o knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation; o fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations; o engage in any activity or enter into any association that is unsuitable for us because it poses an unreasonable threat to the control of gaming in Nevada, reflects or tends to reflect discredit or disrepute upon the State of Nevada or gaming in Nevada, or is contrary to the gaming policies of Nevada; o engage in any activity or enter into any association that interferes with the ability of the State of Nevada to collect gaming taxes and fees; or o employ, contract with or associate with any person in the foreign gaming operation who has been denied a license or a finding of suitability in Nevada on the ground of personal unsuitability, or who has been found guilty of cheating at gambling. In addition, if the Nevada State Gaming Control Board determines that one of our actual or intended activities or associations in a foreign gaming operation may violate one or more of the foregoing, we can be required by it to file an application with the Nevada Gaming Commission for a finding of suitability of such activity or association. If the Nevada Gaming Commission finds that the activity or association in the foreign gaming operation is unsuitable or prohibited, we will either be required to terminate the activity or association, or we will be prohibited from undertaking the activity or association. Consequently, should the Nevada Gaming Commission find that our gaming activities or associations in Macau are unsuitable, we may be prohibited from undertaking our planned gaming activities or associations in Macau. We depend on the continued services of key managers and employees. If we do not retain our key personnel and attract and retain other highly skilled employees, our business will suffer. Our ability to maintain our competitive position is dependent to a large degree on the services of our senior management team, including Sheldon G. Adelson, the Principal Stockholder. Only William Weidner, Bradley Stone and Robert Goldstein have employment agreements. The employment agreements do not require them to stay with us. We cannot assure you that any of these individuals will remain with us. We currently do not have a life insurance policy on any of the members of our senior management team. The death or loss of the services of any of our senior managers or the inability to attract and retain additional senior management personnel could have a material adverse effect on our business. Our business, policies, affairs and all major corporate decisions are controlled by the Principal Stockholder, whose interest may not be fully aligned with the holders of our securities. Mr. Adelson beneficially owns approximately 95% of LVSI's outstanding common stock. Our board of directors is comprised of two persons, one of whom is Mr. Adelson. Mr. Adelson has two votes for all matters before the board of directors, whereas the other board member has only one vote. As a result, Mr. Adelson controls our business, policies and affairs, including the election of directors and all major corporate transactions and could prevent a change of control. His interests may not be fully aligned with, and could conflict with the interests of, the holders of our securities. 10 The Indenture does not contain any prohibition on the ability of Mr. Adelson or any of his affiliates to purchase, refinance, replace or otherwise acquire our indebtedness secured by liens prior to the liens in favor of the holders of the Mortgage Notes, including indebtedness under the Senior Secured Credit Facility. To the extent Mr. Adelson acquires interests in such indebtedness, we cannot assure you that he would not be in a position to exercise rights or remedies under state or bankruptcy laws or otherwise that could materially adversely affect the interests of the holders of the Mortgage Notes. Mr. Adelson owns Interface Group-Nevada, Inc., the owner of the Expo Center, which may result in potential conflicts of interest. The Expo Center, on the one hand, and the Congress Center and the meeting and conference space that is a part of the Phase IA Addition, on the other hand, are potential competitors in the business conference and meetings business. Under a cooperation agreement with the Expo Center, we have agreed that, with respect to the Phase IA Addition, except under certain circumstances, we will not conduct, or permit to be conducted at the Casino Resort, trade shows or expositions of the type generally held at the Expo Center. Furthermore, marketing practices that are intended to benefit the Expo Center may have a detrimental effect on the Casino Resort. The construction of the Phase II Resort and Phase IA Addition could have an adverse effect on the Casino Resort. We are currently in the process of constructing the Phase IA Addition on top of the Casino Resort's existing parking garage and on land adjacent to it. In addition, through the Phase II Subsidiary, we are planning to construct the Phase II Resort, which would consist of a hotel, casino, restaurant, dining and entertainment complex, and meeting and conference center space on a 15-acre site adjacent to the Casino Resort. Although we intend to construct the Phase IA Addition and the Phase II Resort with minimal impact on the Casino Resort, we cannot assure you that the construction will not disrupt the operations of the Casino Resort or that it will be implemented as planned. Therefore, the construction of the Phase IA Addition and the Phase II Resort may adversely impact the businesses, operations and revenues of the Casino Resort. The common ownership and management of the Casino Resort and the Phase II Resort could have an adverse effect on the Casino Resort. The common ownership of the Casino Resort and the Phase II Resort may result in potential conflicts of interest because the Phase II Resort will be a potential competitor to the Casino Resort. For example, we may offer discounts and other incentives for visitors to stay at the Phase II Resort, which might result in a competitive advantage of the Phase II Resort over the Casino Resort. In addition, we may also choose to allocate certain business opportunities, such as potential restaurant, dining and entertainment tenants or requests for room reservations, to the Phase II Resort instead of the Casino Resort. Although common ownership of both the Casino Resort and the Phase II Resort may result in economies of scale, efficiencies and joint business opportunities for the two resorts, the Casino Resort may, in certain circumstances, bear the greater burden of the expenses that are shared by both resorts. In addition, we expect to lease and operate the casino for the Phase II Resort, so that management's time may be split between overseeing the operation of each resort. In certain circumstances, management may devote more time to the ownership and operations responsibilities of the Phase II Resort than those of the Casino Resort. We may be adversely affected by union activities in Las Vegas. Although our employees are not covered by collective bargaining agreements, most major casino resorts situated on the Strip have collective bargaining agreements with unions such as the Local 226 of the Hotel Employees and Restaurant Employees International Union. Although we do not expect such a strike to impact our work force or operations directly, no assurance can be given that a major strike would not adversely affect Las Vegas business and visitation levels generally by generating negative publicity. As a result, our business may be adversely affected if such a major strike were to occur. Entering into new ventures involves business and financial risks, including litigation risks and the risk of loss of our Nevada gaming licenses. We are assessing the possibility of developing and operating an Internet gaming site and are currently exploring other business opportunities for expansion, including Native American gaming and the possibility of operating casino resorts in certain foreign jurisdictions. It is unclear how long it would take, or if it would be feasible or attractive, for us to develop, operate, obtain the necessary regulatory approvals for, acquire land in connection with or take any of the other necessary business risks and measures to complete any of these ventures. If we are successful in launching any such ventures, if at all, we cannot assure you that any of these projects would be successful, or that they would not have a material adverse effect on our financial position, results of operations or cash flows. 11 We are currently in the process of negotiating agreements to develop and operate one or more hotel, casino and convention centers in Macau. Our Macau joint venture is subject to significant political, economic and social risks inherent in doing business in an emerging market such as China. Although our Macau joint venture has been granted a concession to operate casinos in Macau, we cannot assure you that the joint venture will be successful, that we will be able to acquire permanent and temporary operating sites on acceptable terms or at all, or that our concession licenses will not be revoked. In particular, some of the risks involved in the joint venture and licensing process include: o diversion of management's attention away from the other business concerns; o risks associated with a new and developing regulatory process which could result in the revocation of our concession or other required licenses in Macau; o the possible taking of property without agreement on fair compensation; o restrictions on foreign partnerships and alliances, foreign ownership and/or possible discrimination against foreign owned business; o delayed implementation regarding effective controls regarding criminal organizations; o potential conflicts between local and national governments; o the risk that we will not be able to reach final agreement with our joint venture partners, which would result in the concession being revoked; o the risk that we will not be able to acquire rights to build on suitable sites; and o risks associated with obtaining project financing. We believe that future regulatory developments in China will not unduly limit our planned investment. However, we cannot assure you at this time that all our planned activities in Macau will be permitted or economically feasible. Therefore, our planned investments in China could be jeopardized. Furthermore, in October 2001 before agreeing to join Galaxy Casino Company Limited, our subsidiary, Venetian Venture, entered into a non-binding letter of intent with Asian American Entertainment Corporation, Limited ("AAEC"), a Macau corporation whose largest shareholder is China Development Industrial Bank, a Taiwanese bank, to enter into a joint venture to obtain a casino license in Macau. In February 2002, we elected to exercise our right to terminate this letter of intent and to create a venture with other parties to seek a Macau casino license. AAEC has threatened, in a press release, to sue us in connection with our termination of the letter of intent and the potential awarding of a casino license to our new joint venture Galaxy Casino Company Limited. We believe that AAEC's claims lack merit and, if sued by AAEC, we intend to defend ourselves vigorously. Our insurance coverage may not be adequate to cover all possible losses that the Casino Resort could suffer. In addition, our insurance costs may increase and we may not be able to obtain the same insurance coverage in the future. We are dependent on the operations of the Venetian Hotel Casino, which occupies a single site. The September 11th terrorist attacks have substantially affected the availability of insurance coverage for certain types of damages or occurrences. In addition, insurance premiums have increased on available coverage. We renewed our property and casualty insurance policies in April 2002. We were not able to purchase new insurance policies or renew our existing policies on terms as favorable as the terms of our prior policies. The costs of our new insurance policies are higher as a result of the general increase in premium levels. Our new insurance policies exclude from coverage certain losses and damages that were covered under our prior insurance policies. In particular, we have substantially reduced insurance coverage with respect to occurrences of terrorist acts and any losses that could result from these acts. On May 16, 2002, Interface Group-Nevada Inc., the owner of the Expo Center, received a letter from the lender under the Expo Center mortgage facility stating that it believes that insurance coverage is required for acts of terrorism under the Expo Center mortgage facility and requesting that Interface Group-Nevada, Inc. obtain such coverage. Interface Group-Nevada, Inc. has informed us that it believes that, notwithstanding such lender's request, it is not required under the mortgage facility to obtain any terrorism coverage. Nevertheless, Interface Group-Nevada, Inc. has obtained terrorism coverage that it believes fully complies with its lender's request. If it is determined that terrorism coverage is required under the Expo Center mortgage facility and that the existing Interface Group-Nevada, Inc. insurance coverage does not comply with the applicable requirements, Interface Group-Nevada, Inc. has informed us that it will seek to either comply with the requirements or refinance and/or repay the Expo Center mortgage facility. If there is an act of terrorism that affects the Casino Resort, the Mall and/or the Expo Center, there may not be sufficient insurance proceeds to cover the costs of restoring the collateral. Therefore, we could be exposed to heavy losses in the event that any damages occur, directly or indirectly, as a result of terrorist acts. 12 In addition to the damage caused to our property by a casualty loss (such as fire, natural disasters, acts of war or terrorism), we may suffer disruption of our business in such event or be subject to claims by third parties injured or harmed. While we carry business interruption insurance and general liability insurance, such insurance may not be adequate to cover all losses in such event. Our new insurance policies terminate in April 2003. The cost of coverage may become so high that we may need to reduce our policy limits or agree to certain exclusions from our coverage. 13 -----END PRIVACY-ENHANCED MESSAGE-----