GOLDMAN SACHS MORTGAGE COMPANY
85 Broad Street
New York, New York 10004
(212) 902-1000
As of November 14, 1997
Grand Canal Shops Mall, LLC
3355 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: David Friedman
Sheldon G. Adelson
c/o Las Vegas Sands, Inc.
3355 Las Vegas Blvd. South
Las Vegas, Nevada 89109
Re: Loan to Grand Canal Shops Mall, LLC secured by, among other things, a
Deed of Trust on the Shopping Mall to be known as "Grand Canal Shops"
and located on the Site of the former Sands Hotel and Casino, Las
Vegas, Nevada
Gentlemen:
When this letter shall be accepted by the undersigned without modification or
amendment, and the First Installment (as defined below) of the Commitment Fee
(as defined below) and the Loan Transaction Costs (as defined below) theretofore
incurred shall be paid, this letter shall constitute (x) the commitment of
Goldman Sachs Mortgage Company (together with its successors and assigns,
hereinafter referred to as "Lender") to make a first mortgage loan (the "Loan")
to Grand Canal Shops Mall, LLC, a Delaware limited liability company (the
"Borrower"), upon the terms, provisions and conditions set forth in the Summary
of Terms attached hereto as Exhibit A and General Conditions to Commitment
attached hereto as Exhibit B (this letter, such Summary of Terms and such
General Conditions to Commitment, collectively, the "Commitment") and (y)
Borrower's and Principal's (as defined below) commitment to satisfy their
respective obligations under the Commitment. Immediately after the Closing (but
on the Closing Date), (aa) ninety-nine percent (99%) of the membership interests
in Borrower will be owned by Grand Canal Shops Mall Holding Company, LLC, a
Delaware limited liability company ("Mall Holdings"), its non-managing member,
and 1% of the membership interests in Borrower will be owned by Grand Canal
Shops Mall MM, Inc., a Nevada corporation ("Managing Member"), its managing
member, (bb) ninety-nine percent (99%) of
the membership interests in Mall Holdings will be owned by Mall Intermediate
Holding Company, LLC, a Delaware limited liability company ("Intermediate
Holdings"), its non-managing member, and one percent (1%) of the membership
interests in Mall Holdings will be owned by Managing Member, its managing
member, (cc) all of the membership interests in Intermediate Holdings will be
owned by Venetian Casino Resort, LLC, a Nevada limited liability company
("Venetian"), (dd) all of the issued and outstanding stock in Managing Member
will be owned by Las Vegas Sands, Inc., a Nevada corporation ("LVSI"), (ee) all
of the membership interests in Venetian will be owned by Interface Group Holding
Company, Inc., Nevada corporation ("Interface Holdings") and LVSI and (ff) all
of the issued and outstanding stock of Interface Holdings will be owned by
Sheldon G. Adelson (or upon the death or legal incapacity of Sheldon G. Adelson,
by the Person or Persons to whom such stock was lawfully transferred directly as
a result of such death or legal incapacity, as applicable) (the "Principal") and
all of the issued and outstanding stock of LVSI will be owned by the Principal
and the Principal will indirectly control each of the foregoing entities.
Notwithstanding the foregoing, transfers of direct or indirect interests in the
Borrower are permitted to the extent the same constitute Permitted Transfers (as
defined in the Form Loan Documents (as defined below)).
This Commitment expires at 12:00 midnight on the Outside Closing Date (as
defined below), by which time the Loan must have closed and funded or this
Commitment (other than the portions thereof that shall, pursuant to the express
terms of this Commitment, survive such expiration) shall be of no further force
and effect. The term "Outside Closing Date" shall mean November 14, 2000.
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If this Commitment is acceptable to you, please sign at the space provided below
in the enclosed duplicate hereof and deliver the same, together with the First
Installment of the Commitment Fee and the Loan Transaction Costs theretofore
incurred (as reflected in invoices furnished by the Lender to the Borrower), to
Lender on the date hereof. If the signed Commitment, the First Installment of
the Commitment Fee and such Loan Transaction Costs are not received by Lender in
New York, New York on the date hereof, this Commitment shall automatically
expire and shall be of no further force and effect.
[NO FURTHER TEXT. SIGNATURES ON FOLLOWING PAGE]
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GOLDMAN SACHS MORTGAGE COMPANY, a
New York limited partnership
By: Goldman Sachs Real Estate Funding
Corp., its general partner
By: /s/ Steven T. Mnuchin
---------------------
Steven T. Mnuchin
President
BORROWER'S AND PRINCIPAL'S ACCEPTANCE
The Borrower and the Principal each hereby agree to this Commitment
and agree to perform their respective obligations under this Commitment in
accordance with its terms, provisions and conditions.
GRAND CANAL SHOPS MALL, LLC,
a Delaware limited liability company
By: Grand Canal Shops Mall Holding
Company, LLC, its Managing Member
By: Mall Intermediate Holding Company,
LLC, its Managing Member
By: Venetian Casino Resort, LLC,
its Sole Member
By: Las Vegas Sands, Inc.,
its Managing Member
By: /s/ William P. Weidner
----------------------
Name: William P. Weidner
Title: President
Date: November 14, 1997
/s/ Sheldon G. Adelson
----------------------------
SHELDON G. ADELSON
Date: November 14, 1997
EXHIBIT A
SUMMARY OF TERMS
1. FIRST MORTGAGE LOAN
Borrower: Grand Canal Shops Mall, LLC, a special purpose Delaware
limited liability company that owns and/or leases, and
shall own and/or lease, no assets other than the
Property and assets relating thereto. At the closing of
the Loan (the "Closing"), the Borrower shall have (i) no
debt other than the Loan, the Subordinate Loan (as
defined below), the Mezzanine Loan (as defined below)
(to the extent permitted under Section 3 of Exhibit B to
this Commitment), trade debt incurred in the ordinary
course of Borrower's business of operating the Property
and Permitted Other Indebtedness (as defined below) and
(ii) no liabilities other than those described in the
foregoing clause (i) and other liabilities incurred in
the normal operations of the Property in accordance with
the Form Loan Documents (as defined below). As used
herein, the term "Permitted Other Indebtedness" shall
mean an unsecured working capital facility extended to
the Borrower in an arms-length transaction, Equipment
Financings (as defined in the Form Loan Documents)
secured by Equipment Liens (as defined in the Form Loan
Documents) and obligations under Equipment Leases (as
defined in the Form Loan Documents), in each case,
entered into in the ordinary course of the Borrower's
business at the Mall Improvements, provided that the sum
of (x) the maximum aggregate principal amount of such
working capital facility plus (y) the maximum aggregate
principal amount of such Equipment Financings plus (z)
the aggregate amount of the payments provided for under
such Equipment Leases (excluding, with respect to
capitalized Equipment Leases, those portions of such
lease payments that would be deemed to constitute
non-default interest payments or transaction costs under
the applicable standards of the Financial Accounting
Standards Board) shall be less than or equal to
$1,000,000.
Loan Purpose and The financing of a portion of the purchase price (the
Certain Defined Terms: Terms: "Purchase Price") of the Real Property Collateral
(as defined below) in accordance with that certain Sale
and Contribution Agreement dated as of the date hereof
among Venetian and Grand Canal Shops Mall Construction,
LLC, a Delaware limited liability company ("Mall
Construction LLC"), as seller, and Borrower, as
purchaser (the "Purchase Agreement"). The remainder of
the Purchase Price shall be funded with the proceeds of,
or assumption of, the Subordinate Loan and/or the
assumption by the Borrower of the Mezzanine Loan. The
proceeds of the Purchase Price will be used by the
seller under the Purchase Agreement to pay off the
Construction Loan (as defined below).
The "Construction Loan" means a loan to be made by GMAC
Commercial Mortgage Corporation ("Construction Lender")
to Venetian, Mall Construction LLC and LVSI in
accordance with the terms of that certain Credit
Agreement dated as of the date hereof among Construction
Lender, LVSI, Venetian and Mall Construction LLC, a copy
of which is attached hereto as Exhibit A-1 (the "GMAC
Credit Agreement"), the proceeds of which will be used,
together with other funds, to construct the Project (as
defined below).
The "Mall Improvements" means the collective reference
to (i) a first-class Venetian-theme shopping mall, and
certain other improvements, to be located in the Mall
Space (as defined below) (the "Mall") and (ii) a
first-class Venetian-theme retail annex to such shopping
mall to be located on the Retail Annex Land (as defined
below) (the "Retail Annex"), all to be constructed in
accordance with the Existing Plans and Specifications
(as defined in the Tri-Party Agreement) (with such Scope
Changes (as defined in the FADAA) to the Plans and
Specifications as are permitted under the Tri-Party
Agreement)(as defined below).
The "Project" means the collective reference to certain
land located in Las Vegas, Nevada more particularly
described
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in Exhibit A-2 hereto (the "Land") and a mixed-use
commercial project comprised of, among other things, a
casino (the "Casino"), a first-class luxury hotel (the
"Hotel"), the Mall Improvements, a conference facility
(the "Conference Facility"), a parking garage (the
"Parking Garage"), a heating ventilation and
air-conditioning plant (the "HVAC Plant") and an
electrical substation, all of which shall be located on
the Land, constructed in accordance with the Existing
Plans and Specifications (with such Scope Changes to the
Existing Plans and Specifications as are permitted under
the Tri-Party Agreement) and which "Project" is more
particularly described in the FADAA as the "Project".
The "FADAA" means that certain Funding Agents'
Disbursement and Administration Agreement among LVSI,
Venetian, Mall Construction LLC, The Bank of Nova
Scotia, as agent, First Trust National Association, as
indenture trustee, Construction Lender, Atlantic/Pacific
JV and The Bank of Nova Scotia, as disbursement agent, a
copy of which is attached hereto as Exhibit A-3 (as such
agreement exists on the date hereof). With respect to
the FADAA, for purposes of this Commitment and the
Tri-Party Agreement, notwithstanding anything to the
contrary contained in the FADAA, in this Commitment or
in the Tri-Party Agreement: (i) the "Construction
Consultant" shall mean Tishman Construction Corporation
of Nevada, a Nevada corporation, and any replacement
thereof selected in accordance with the provisions of
the FADAA, provided that such replacement must be
acceptable to the Lender (which consent will not be
unreasonably withheld) and (ii) the "Project Architect"
shall mean the collective reference to TSA of Nevada,
LLP, and WAT&G, Inc. Nevada, and any replacement thereof
selected in accordance with the provisions of the FADAA,
provided that such replacement must be acceptable to the
Lender (which consent will not be unreasonably
withheld).
The "Real Property Collateral" means the collective
reference to (i) the fee estate
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or, if the Subdivision shall not exist as of the
Closing, the leasehold estate (pursuant to the Mall
Master Lease (as defined below)), as applicable, in the
air rights described on Exhibit A-4 attached hereto (the
"Mall Space"), (ii) the fee estate or, if the
Subdivision shall not exist as of the Closing, the
leasehold estate (pursuant to the Mall Master Lease), as
applicable, in (the portion of the Land described on
Exhibit A-5 attached hereto (the "Retail Annex Land"),
(iii) the fee estate in the Mall Improvements to be
located in the Mall Space and the fee estate in the Mall
Improvements to be located on the Retail Annex Land
(subject, if the Subdivision shall not exist as of the
Closing, to the reversionary interest in the Mall and in
the Retail Annex of the landlord under the Mall Master
Lease pursuant to the Mall Master Lease) and the fee
estate in the Mall Improvements to be located in the
Additional Billboard Premises (subject to the
reversionary interest in the Mall Improvements to be
located in the Billboard Additional Premises of the
landlord under the Billboard Master Lease pursuant to
the Billboard Master Lease), (iv) the leasehold estate
(pursuant to the Billboard Master Lease (as defined
below) in, among other things, the premises described on
Exhibit A-6 attached hereto (the "Billboard Additional
Premises"), (v) all easements and other rights and
interests granted to the owner or lessee of the Mall
Space and the Retail Annex Land in the OEAs (as defined
below), (vi) all warranties relating to the Mall
Improvements that are given pursuant to, or in
connection with, the Project Documents (as defined in
the FADAA) and (vii) all other property, rights and
interests from time to time owned or leased by the
Borrower (including, without limitation, contracts,
Leases, rents and easements). The Mall Space, the Retail
Annex Land, the Mall Improvements and the Billboard
Additional Premises are collectively referred to as the
"Property".
A "Subdivision" shall be deemed to exist if, at the time
in question, all of the following shall be true: (x) the
Mall Space, the Retail Annex Land and the Mall
Improvements shall collectively constitute, in
accordance with applicable Legal Requirements (as
defined in the Form
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Loan Agreement), one or more legal parcel(s) and one or
more tax parcel(s) that shall not include, or comprise a
portion of, any other property, and (y) Borrower shall
own fee title to the Mall Space, the Retail Annex Land
and the Mall Improvements.
Security The Loan will be secured by: (i) a first deed of trust
and security interest on the Real Property Collateral;
(ii) a first priority security interest in the Tax
Escrow Account (as defined below), the Start-Up Cost
Escrow Account (as defined below) and the remainder of
the Bank Account Collateral (as defined in the Form Loan
Documents) and (iii) a first priority security interest
on the Interest Rate Cap (as defined below) (all of the
foregoing, collectively, the "Collateral").
Loan Amount The Loan shall be in a principal amount equal to the
lesser of (x) $105,000,000 or (y) the principal amount
of the Tranche A Loan (as defined in the GMAC Credit
Agreement) portion of the Construction Loan that is
outstanding on the Closing Date plus accrued and unpaid
interest thereon for the final interest accrual period
that is then not yet delinquent (the "Tranche "A"
Amount").
Term: Three (3) years.
Commitment Term The unconditional execution and delivery of all
and Loan Closing: documents and the satisfaction of all other conditions,
requirements and obligations set forth in this
Commitment shall occur no later than 12:00 midnight on
the Outside Closing Date; provided that, without
limiting the foregoing, Borrower -------- shall exercise
diligent and commercially reasonable efforts to cause
all of such conditions, requirements and obligations
(other than the execution of documents by Borrower and
Principal) that are susceptible of performance or
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satisfaction prior to the Closing to be performed or
satisfied, as applicable, at least ten (10) business
days prior to the Outside Closing Date. Unless all
documents shall be unconditionally executed and
delivered, all other conditions, requirements and
conditions shall be performed or satisfied as aforesaid,
and the Loan shall close at such office prior to 12:00
midnight on the Outside Closing Date, this Commitment
shall automatically terminate.
Termination of
Commitment and Other
Rights and Remedies of If:
the Lender
(i) the Borrower shall fail to pay, within five (5)
Business Days following the date due in accordance with
the terms of this Commitment, the Second Installment (as
defined below) of the Commitment Fee;
(ii) the Borrower and/or the Principal shall fail to
perform or observe any other term, provision, covenant
or agreement contained in this Commitment on its part to
be observed or performed by it, which failure shall
continue for thirty (30) days after notice from Lender
to Borrower; provided that any default that can be cured
solely by payment of money shall be cured within ten
(10) days after notice; provided further that in no
event shall any cure period afforded Borrower or
Principal pursuant to this Commitment extend beyond the
Outside Closing Date;
(iii) the Borrower and/or the Principal shall fail to
perform or observe any term, provision, covenant or
agreement contained in that certain Tri-Party Agreement
dated as of the date hereof among the Lender,
Construction Lender, Borrower, Venetian, LVSI, Mall
Construction LLC and the Principal on its part to be
observed or performed, as such Tri-Party Agreement may
be amended, supplemented or otherwise modified from time
to time (the "Tri-Party Agreement"), which failure shall
continue for thirty (30) days after notice from Lender
to Borrower; provided that any default that can be cured
solely by
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payment of money shall be cured within ten (10) days
after notice; provided further that in no event shall
any cure period afforded Borrower or Principal pursuant
to this Commitment extend beyond the Outside Closing
Date; and/or
(iv) (A) any written information, representation or
warranty made or furnished by, or on behalf of, the
Borrower and/or the Principal (x) in order to induce the
Lender to make the Loan or to deliver this Commitment or
(y) in, or in connection with, this Commitment, the
Loan, the Tri-Party Agreement, or any document or
certificate executed in connection with any of the
foregoing, in any such case, contained any material
inaccuracy, or was untrue or misleading, in any material
respect, at the time made and (B) the relevant state of
facts as they actually exist (as opposed to as they
would have existed if such written information,
representation or warranty were accurate, true and not
misleading) is likely to cause a Material Adverse Effect
(as defined below); provided that, if such
representation or warranty (A) was made without the
Borrower or the Principal knowing that it was false (in
whole or part) and (B) such breach is susceptible of
cure by the Borrower or the Principal, then such breach
shall not constitute a Termination Event unless Borrower
or Principal shall fail to cure such breach within
thirty (30) days after notice thereof from the Lender to
the Borrower; provided further, that any default that
can be cured solely by payment of money shall be cured
within ten (10) days after notice; provided further that
in no event shall any cure period afforded Borrower or
Principal pursuant to this Commitment extend beyond the
Outside Closing Date (any of the events described in the
foregoing clauses (i) through and including (iv), a
"Termination Event");
then, in any such event, the Lender, at its option, may
(a) terminate this Commitment and its obligations
hereunder by giving written notice to Borrower and the
Principal and (b) retain for its own account, the full
Commitment Fee as
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liquidated damages; provided that nothing contained
herein shall prevent or limit, or be deemed to prevent
or limit, the Lender from enforcing the Borrower's and
the Principal's obligation to pay the entire Commitment
Fee. Such termination shall be effective as of the date
upon which such notice is sent or delivered. The
termination of this Commitment and the retention of the
full Commitment Fee (together with the right to enforce
any obligations of Borrower, Principal, Venetian and/or
LVSI that, pursuant to the express terms of this
Commitment or the Tri-Party Agreement, survive the
termination of this Commitment (including, without
limitation, the section of Exhibit A to this Commitment
entitled "Reimbursement of Expenses", Section 14 of
Exhibit B of this Commitment and Section 27 of the
Tri-Party Agreement) and the right to receive damages
and/or other relief in connection therewith), shall
constitute Lender's sole remedies if a Termination Event
shall occur. When any sums are stated herein as being
retained by the Lender as liquidated damages, such sums
are being retained under circumstances where it would be
difficult to ascertain the sum required to compensate
the Lender for the loss of the opportunity to make the
Loan, the loss of the opportunity to make other loans on
account of time and attention devoted to the Loan and
for the internal expenses incurred by the Lender in
connection with the review, evaluation and processing of
material and information relating to the Loan and such
liquidated damages represent the reasonable, good faith
attempt of the parties hereto to liquidate such damage
in advance.
The term "Material Adverse Effect" means a material
adverse effect upon (i) the business operations of the
Borrower, taken as a whole, the Collateral, taken as a
whole, or the condition (financial or otherwise) of the
Borrower, taken as a whole, (ii) the ability of the
Borrower or the Principal to perform any of its material
obligations under the Commitment or the Loan Documents,
(iii) the enforceability, validity, perfection or
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priority of the lien of any Loan Document or (iv) the
value of the Collateral (or of the Lender's interest
therein) or the operation thereof.
Interest Payments Due monthly in arrears based on an interest rate equal
to the Applicable Margin (as defined below) in excess of
the thirty (30) day LIBO Rate determined by Lender as of
the first business day of each month by reference to
Telerate Page 3750; provided that interest for the
period commencing on the Closing Date and ending on the
last day of the month in which the Closing Date occurs
shall be payable on the Closing Date. Interest will be
calculated on the basis of a 360 day year based on
actual days elapsed. As used herein, the term
"Applicable Margin" shall mean (x) prior to such time,
if any, as the Subdivision shall exist, five percent
(5.00%) and (y) from and after such time, if any, as the
Subdivision shall exist, three and one-half percent
(3.50%).
Payment Date: Initially, the date upon which the Loan closes (the
"Closing Date") and, thereafter, commencing with the
second calendar month next following the calendar month
in which the Closing Date occurs, the first business day
of each month.
Prepayment Provisions: As set forth in the Form Loan Documents
Scheduled Principal None prior to the Maturity Date.
Payments:
Transfer Restrictions: As set forth in the Form Loan Documents
Tax and Insurance At Closing, Lender will establish an account into which
Escrow Accounts: the Borrower shall deposit funds to be used for the
payment of real estate taxes and upon which the Lender
shall hold a first priority security interest (the "Tax
Escrow Account"); provided that, prior to the existence
of a Subdivision, Borrower shall escrow funds for the
payment of real estate taxes in accordance with the
provisions of that certain Amended and Restated
Reciprocal Easement, Use and Operating Agreement dated
as of the date hereof among Venetian, Mall Construction
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and Interface Group - Nevada, Inc. (the "REA"). At all
times, Borrower shall escrow funds in respect of
insurance premiums in accordance with the provisions of
the REA. The Form Loan Documents and the REA contain
other provisions relating to such escrow accounts.
Start-Up Cost a. At Closing Lender will establish an account upon
Escrow Account: which the Lender shall hold a first priority security
interest (the "Start-Up Cost Escrow Account"). The
Start-Up Cost Escrow Account shall have three
subaccounts, the "Operating Expense Subaccount", the
"Brokerage Commission Subaccount" and the "TI Costs
Subaccount" (collectively, the "Subaccounts"). At the
Closing, the Borrower shall deposit into the Start-Up
Cost Escrow Account funds in an amount equal to the sum
of the Brokerage Commission Deposit and the TI Costs
Deposit. A portion of such funds equal to the Brokerage
Commission Deposit shall be held in the Brokerage
Commission Subaccount and a portion of such funds equal
to the TI Costs Deposit shall be held in the TI Costs
Subaccount.
b. Within fifteen (15) days after the Closing Date,
Borrower shall either (i) deposit into the Start-Up Cost
Escrow Account (to be held in the Operating Expense
Subaccount) funds in an amount equal to the Operating
Expense Deposit or (ii) furnish to Lender a Letter of
Credit (as defined below) in an amount that is equal to
the Operating Expense Deposit and with a term of six (6)
months (which Letter of Credit must, at all times prior
to the Operating Expense Revenue Achievement Date, be
replaced, at least thirty (30) days prior to each
expiration date thereof, with either (A) a Letter of
Credit providing for an expiration date that occurs six
(6) months from the expiration date of the Letter of
Credit being replaced or (B) funds in an amount equal to
the Operating Expense Deposit, which funds shall be held
in the Operating Expense Subaccount), together with a
document, in form and substance reasonably satisfactory
to Lender, pursuant to which the account party under the
Letter of Credit (x) covenants and agrees that until
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the Indebtedness (as defined in the Form Loan Documents)
shall have been indefeasibly paid in full, such account
party shall withhold exercise of any claim, right or
remedy, direct or indirect, that such account party
shall then or thereafter have against Borrower or any of
its assets, in each case whether such claim, right or
remedy arises in equity, under contract, by statute,
under common law or otherwise (including, without
limitation, any right of subrogation, reimbursement,
contribution or indemnification) arising in connection
with the Letter of Credit and (y) subordinates all
claims against the Borrower to those of Lender. If an
Event of Default occurs, Lender shall be entitled to
make one or more draws under such Letter of Credit, and
apply the proceeds thereof and/or apply any funds from
time to time on deposit in the Start-Up Cost Escrow
Account to the amounts due under the Form Loan Documents
in such order and manner as Lender shall elect in its
sole discretion.
c. On the Operating Expense Revenue Achievement Date, so
long as no Event of Default shall then exist, the Lender
shall release all funds then on deposit in the Operating
Expense Subaccount to the Borrower for its own account
or shall return the Letter of Credit, as applicable.
Furthermore, notwithstanding anything to the contrary
contained herein, if the Operating Expense Revenue
Achievement Date shall occur on the Closing Date, then
Borrower shall not, at such time or thereafter, be
required to deposit the Operating Expense Deposit into
the Start-Up Cost Escrow Account and shall not, at such
time or thereafter, be required to furnish a Letter of
Credit in lieu thereof.
d. The provisions of the Form Loan Agreement address
disbursements from, and required deposits to, the TI
Costs Subaccount and the Brokerage Commissions
Subaccount after the Closing and prior to the TI Costs
Revenue Achievement Date. On the TI Costs Revenue
Achievement Date (as defined below), so long as no Event
of
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Default shall then exist, the Lender shall release all
funds then on deposit in the TI Costs Subaccount to the
Borrower for its own account.
e. As used in this Commitment, the following terms shall
have the following meanings:
(i) "Brokerage Commission Deposit" shall mean the
amount required, under the terms of the FADAA, to be set
forth in the "mall leasing commissions reserve" Line
Item (as defined in the FADAA) as of the Mall Release
Date (as defined in the FADAA).
(ii) "funds" shall mean immediately available funds.
(iii) "Letter of Credit" shall mean an unconditional,
irrevocable, and transferable demand letter of credit,
in form and substance reasonably satisfactory to the
Lender, issued by and drawn on a bank that is acceptable
to Lender, for the account of the Principal (or an
Affiliate thereof), and the beneficiary of which shall
be the Lender, together with all replacements hereof
satisfying the provisions of this definition.
(iv) "Operating Expense Deposit" shall mean
$5,000,000.
(v) "Operating Expense Revenue Achievement Date" shall
mean the first date upon which the Approval Criteria (as
defined in Section 2 of this Exhibit A) shall be
satisfied (provided that for purposes of this definition
of "Operating Expense Revenue Achievement Date", the
term "Test Date" as used in the definition of "Approval
Criteria" shall mean any date occurring on or after the
Closing Date).
(vi) "TI Costs Deposit" shall mean the amount
required, under the terms of the FADAA, to be set forth
in the "mall tenants improvements reserve" Line Item (as
defined in the FADAA) as of the Mall Release Date.
(vii) "TI Costs Revenue Achievement Date" shall mean
the first date upon which the Approval Criteria (as
defined in Section 2 of this Exhibit A) shall be
satisfied (provided that for purposes of this definition
of "TI Deposit Revenue Achievement Date", (x)
"$28,000,000" shall
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be substituted for "$21,000,000" each time it appears in
the definition of "Approval Criteria" and (y) the term
"Test Date" as used in the definition of "Approval
Criteria" shall mean any date occurring on or after the
Closing Date).
Commitment Fee: The Borrower and the Principal shall be jointly and
severally obligated to pay a commitment fee in an amount
equal to $4,462,500 (the "Commitment Fee"). The
Commitment Fee shall be deemed to have been earned by
Lender upon execution and delivery by Borrower and
Principal of this Commitment, and, except as otherwise
expressly provided below, the Commitment Fee shall be
non-refundable regardless of whether the Loan shall
close or shall not close, unless the Loan shall not
close due solely to Lender's failure to fund the Loan
despite (x) the satisfaction, in accordance with the
terms of the Commitment, of all conditions precedent to
Lender's obligation to fund the Loan and (y) the absence
of a Termination Event (a "Lender Default"). The
Commitment Fee shall be payable in two (2) installments.
The first installment, which shall be in the amount of
$3,150,000 (the "First Installment"), shall be payable
on the date this Commitment is executed and delivered by
the Borrower (the "Delivery Date"). The second
installment, which shall be in the amount of $1,312,500
(the "Second Installment"), shall be payable on the
first (1st) anniversary of the Delivery Date; provided
that, if a Termination Event occurs and Lender elects to
terminate this Commitment, then, at Lender's election,
the entire Commitment Fee shall become immediately due
and payable. Notwithstanding the foregoing, if the
Closing occurs and the Commitment Fee shall exceed four
and one-quarter percent (4.25%) of the Loan Amount,
then, at the Closing of the funding of the Loan, Lender
shall refund to Borrower a portion of the Commitment Fee
equal to the difference between (x) the Commitment Fee
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minus (y) four and one-quarter percent (4.25%) of the
Loan Amount; provided that, at Lender's option, Lender
shall be entitled to credit such refund towards any
amounts then payable by Borrower or Principal under this
Commitment or under the Tri-Party Agreement. The
provisions of this paragraph shall survive the
expiration or termination of this Commitment.
Reimbursement of The Borrower and the Principal will reimburse the Lender
Expenses: for all reasonable out-of-pocket costs and expenses
incurred in connection with the Loan and the
negotiation, execution and delivery of this Commitment
(the "Loan Transaction Costs") regardless of whether the
Loan shall actually close or be funded, unless the Loan
shall not close due solely to a Lender Default. All Loan
Transaction Costs that were not paid by the Borrower or
the Principal at the time they executed and delivered
this Commitment shall be paid by the Borrower and the
Principal at Closing; provided that, if the Closing
shall not occur, then, unless the Loan shall not close
due solely to a Lender Default, the Borrower and the
Principal shall pay such Loan Transaction Costs to the
Lender within ten (10) days of demand therefor. Without
limiting the generality of the foregoing, the term "Loan
Transaction Costs" shall include, without limitation,
the reasonable fees, disbursements and other expenses of
Lender's counsel, appraisal fees, engineering fees,
accountants' fees, other consultant's fees, title
insurance premiums, survey charges, environmental site
assessment fees, credit reports, expenses paid by Lender
and/or due to third party vendors, mortgage and
documentary stamp taxes, if any, note intangible taxes,
if any, recording charges and brokerage fees and
commissions, and costs of tax lien searches and other
customary Loan fees). The Borrower and the Principal
shall be jointly and severally liable to pay all Loan
Transaction Costs. The provisions of this paragraph
shall survive the expiration or termination of this
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Commitment.
Assignment and From and after the Closing, the Lender will have the
Participation: right to sell, assign and/or participate the Loan, in
whole or in part, without the consent of the Borrower,
to (x) if no Event of Default shall then exist, any
Person that is not a Competitor (as defined below) and
(y) if an Event of Default shall then exist, to any
Person. The term "Competitor" means a Person that (i)
owns or operates (or is an Affiliate (as defined in the
Form Loan Documents) of an entity that owns or operates)
a casino located in Nevada or New Jersey, a shopping
center or mall located in Nevada or a Competing Facility
(as defined in the Form Loan Documents) and/or (ii) is a
union pension fund; provided that the Lender shall be
entitled to rely on a written statement from the
proposed assignee or participant that it is not a
Competitor (without making any further inquiry or
investigation) and the Lender shall not be liable to the
Borrower or to any other Person if Lender shall
consummate an sale, assignment or participation with a
Person that shall in fact be a Competitor
notwithstanding the fact that such Person delivered such
a written statement.
Property Manager a. At all times during the term of the Loan, (i) the
and Leasing Broker: Property shall be operated as a first-class shopping
center managed by an Acceptable Property Manager (as
defined below) and (ii) an Acceptable Leasing Broker (as
defined below) shall be engaged to procure tenants for
the Mall Improvements.
b. As used herein, the following terms shall have the
following meanings:
(i) "Acceptable Property Manager" means (A) Forest
City Commercial Management, Inc., (B) another
professional management company that then manages
first-class regional shopping centers containing, in the
aggregate, at least 10 million net rentable square feet
in the United States (exclusive of the Mall
Improvements), (C) an Affiliate of Borrower reasonably
acceptable to Lender based upon such
-15-
Affiliate's employees' property management experience
and employment history with one or more professional
property management companies that, at the time of each
such employee's employment with the applicable
compan(ies), managed first-class regional shopping
centers, or (D) another Person acceptable to Lender in
its sole discretion.
(ii) "Acceptable Leasing Broker" means (A) a leasing
brokerage company that is then the exclusive leasing
broker for first-class regional shopping centers
containing, in the aggregate, at least 10 million net
rentable square feet in the United States (exclusive of
the Mall Improvements), (iii) an Affiliate of Borrower
reasonably acceptable to the Lender based upon such
Affiliate's employees' leasing brokerage experience and
employment history with one or more professional leasing
brokerage companies that were, at the time of each such
employee's employment with the applicable compan(ies),
the exclusive leasing brokers for first-class regional
shopping centers, or (iv) another Person acceptable to
Lender in its sole discretion.
Property Management The Lender will have the right to substitute a new
and Leasing Brokerage: property manager for the Property for the Property
Manager that is then engaged with respect to the
Property if an Event of Default occurs under the Loan
Documents. The Lender will have the right to substitute
a new leasing broker for the Property for the leasing
broker that is then engaged with respect to the Property
if an Event of Default occurs under the Loan Documents.
Special Purpose Entity: Each of the Borrower and the Managing Member must be a
special purpose entity. The Borrower shall own no asset
other than the Collateral and the Managing Member shall
own no assets other than a 1% membership interest in the
Borrower and in Mall Holdings. The Managing Member
shall, at all times, have at least one independent
director that (i) is not an employee, officer,
shareholder, or paid consultant of, or otherwise
affiliated with, the Borrower and (ii) is not an
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employee, officer, shareholder, director or paid
consultant of any Affiliate of the Borrower. A
Non-consolidation opinion, in form and substance
acceptable to Lender and Lender's counsel (a
"Substantive Non-Consolidation Opinion") will be
required (x) on the date upon which this Commitment is
issued and (y) on the Closing Date.
Remedies of Borrower If the Borrower shall seek the approval by or the
consent of the Lender under this Commitment, under the
Tri-Party Agreement or under any of the Form Loan
Documents and the Lender shall fail or refuse to give
such consent or approval then Borrower shall not be
entitled to any damages for any withholding or delay of
such approval or consent by the Lender, it being
intended that Borrower's sole remedy shall be to bring
an action for an injunction or specific performance,
which remedy or injunction or specific performance shall
be available only in those cases where the Lender has
expressly agreed under this Commitment, under the
Tri-Party Agreement or under the Form Loan Documents not
to unreasonably withhold or delay its consent or
approval.
In no event shall Borrower seek, receive or recover
punitive damages against the Lender in connection with
any suit, action, claim or proceeding against the
Lender.
Guaranty by the The Loan shall be fully recourse to Borrower and to the
Principal Collateral but, subject to certain carve-outs contained
in the Loan Documents, shall be non-recourse to the
members in Borrower and to Borrower's and such members'
officers, directors, agents, representatives, employees,
and direct and indirect owners. If the Lender funds the
Loan, then, immediately prior to such funding, Lender
shall be entitled to release the Escrowed Guaranty (as
defined below) from escrow, or, at Lender's option,
Principal will unconditionally execute and deliver a
Replacement Guaranty (as defined below). If this
Commitment shall terminate or expire, then Lender shall
return the Escrowed Guaranty to Principal; provided that
the foregoing shall in no event
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affect the provisions of Paragraph 26(c) of the
Tri-Party Agreement.
Interest Rate Cap: Within 5 days after the Closing Date, the Borrower shall
purchase from an institution reasonably satisfactory to
the Lender and shall deliver to the Lender a LIBOR based
interest rate cap agreement, in form and substance
reasonably satisfactory to Lender, providing for a
strike rate of eight and one-half (8.50%) percent, a
term that is coterminous with the term of the Loan, a
notional amount equal to the Loan Amount; provided that
if the premium in respect of the interest rate cap in
question shall exceed the product of (x) 25 basis points
multiplied by (y) the Loan Amount (the "Maximum
Premium"), and Lender shall not arrange for an interest
rate cap to be provided by a provider (which may be an
Affiliate of Lender) that is reasonably satisfactory to
Borrower who will provide the required interest rate cap
for a premium that does not exceed the Maximum Premium
(Borrower hereby acknowledging that Lender shall not be
obligated to arrange, or to attempt to arrange, for such
a cap or such a provider), then the notional amount of
the interest rate cap that Borrower shall be required to
obtain shall be reduced to the extent necessary for the
premium to equal the Maximum Premium. The Lender shall
have a first priority security interest upon any such
interest rate cap agreement. The cap provider shall
consent to the granting of the aforesaid security
interest pursuant to an instrument in form and substance
reasonably satisfactory to the Lender.
2. RELATIONSHIP BETWEEN MALL I AND MALL II
a. Subject to the other provisions of this Section 2,
Lender shall permit Mall II Sub (as defined below) to
construct Mall Phase II and to connect the same to Mall
Phase I (as defined below).
b. Prior to commencement of construction of Mall Phase
II, there must be in place a construction, operation and
reciprocal easement agreement ("COREA") between Borrower
and Mall II Sub with respect to
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Mall Phase I and Mall Phase II. Negotiations regarding
the COREA will begin as soon as practicable following
the date hereof. The COREA will, among other things, (i)
be an agreement that a Commercially Reasonable Owner (as
defined in the Form Loan Documents) of Mall Phase I
would execute, (ii) contain guidelines relating to the
design of Mall Phase II (including, without limitation,
the connection(s) between Mall Phase I and Mall Phase
II), and relating to alterations and maintenance of Mall
Phase I and Mall Phase II, so that, among other things,
the malls are architecturally harmonious and constructed
and maintained in a first-class manner, (iii) provide
for the joint maintenance, leasing, marketing,
management and operation, by one third-party property
manager and one third-party leasing agent, of Mall Phase
I and Mall Phase II, (iv) require each mall owner to pay
(A) all operating and other expenses that are directly
allocable to its mall and (B) an equitable portion of
all operating and other expenses that are not directly
allocable to either mall but otherwise relate to the
"integrated mall" ("Shared Expenses"), (v) provide for
approval of a leasing plan and, with respect to all
operating expenses that should appropriately be Shared
Expenses, an operating budget prior to commencement of
operation of Mall Phase II and each year thereafter,
(vi) provide that each of Borrower and Mall II Sub is
entitled to receive and retain, for its own account, all
revenue generated by Mall Phase I or Mall Phase II, as
applicable, (vii) allow each mall owner to sell and
finance its mall, and, in connection therewith, to
assign or mortgage its interest in the COREA, (viii)
provide for the granting of appropriate easements across
each mall owner's property, (ix) contain provisions
relating to restoration of the malls after casualty and
condemnation and (x) contain a mechanism to resolve
disputes under the COREA. Additionally, the execution
and performance of the COREA must not be likely to cause
a Material Adverse Effect (as defined in Form Loan
Documents), provided that, if the Approval Criteria are
satisfied, Lender shall not assert
-19-
that execution and performance of the COREA is likely to
cause a Material Adverse Effect as a result of the fact
that, notwithstanding Mall Sub I and Mall Sub II's
compliance with the terms of the COREA, (1) tenants in
Mall Phase II and tenants in Mall Phase I may compete
for the same customers and/or (2) prospective tenants
may elect to lease space in Mall Phase II rather than in
Mall Phase I (the provisions of this paragraph "b", the
"COREA Guidelines").
c. The approval of Lender will be required with respect
to the COREA. Lender will not unreasonably withhold its
approval of the COREA if it satisfies the COREA
Guidelines and, as of the date upon which the parties
execute the COREA (the "Test Date") either (a)(i) Mall
Phase I shall have been open for business and operating
for a period of at least twelve calendar months and (ii)
Borrower shall have actually received from tenants under
COREA Qualified Leases (as defined below), in the
aggregate, Actual Rent (as defined below), with respect
to the then immediately preceding twelve (12) calendar
months that shall equal or exceed $21,000,000, (b)(i)
Mall Phase I shall have been open for business and
operating for a period of less than twelve calendar
months (the period during which Mall Phase I shall have
been open for business and operating, the "Test Period")
and (ii) the sum of (A) the Actual Rent that Borrower
shall have actually received from tenants under COREA
Qualified Leases with respect to the Test Period plus
(B) the aggregate amount of Projected Rent (as defined
below) that tenants under COREA Qualified Leases and
COREA Qualified Lease Commitments shall be required to
pay with respect to the portion of the 12-month period
that follows the date upon which Mall Phase I shall have
first been open for business and operating which
excludes the Test Period shall equal or exceed
$21,000,000 or (c)(i) Mall Phase I shall not be open for
business or operating as of the Test Date and (ii) the
aggregate amount of Projected Rent that tenants under
COREA Qualified Leases and COREA Qualified Lease
Commitments shall be
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required to pay with respect to the initial period of
twelve (12) calendar months following the opening of
Phase I Mall for business shall equal or exceed
$21,000,000 (the "Approval Criteria"). If the Approval
Criteria are not satisfied but the COREA satisfies the
COREA Guidelines, then (x) Lender will be entitled to
grant or withhold its approval, in its sole discretion,
to any portions or provisions of the COREA relating to
the management or leasing of Phase I Mall and Phase II
Mall, (y) without limiting the foregoing, the COREA
shall provide that at any time that an Event of Default
(as defined in the Form Loan Documents) shall exist,
Lender shall have sole discretion over the appointment
of the property manager for the entire integrated mall
and over leasing plans for the entire integrated mall
(the provisions of the COREA described in clauses (x)
and (y), collectively, the "Lender Determination
Provision") and (z) Lender will not unreasonably
withhold its approval of the remainder of the COREA;
provided that, if the Approval Criteria shall be
satisfied as of any given date that occurs after the
Test Date, then, at such time, at Borrower's election,
the Lender Determination Provision of the COREA shall be
replaced with other provisions regarding management and
leasing of the Phase I Mall and the Phase II Mall that a
Commercially Reasonable Owner would deem acceptable and
that are not likely to result in a Material Adverse
Effect (as defined in the Form Loan Documents). If the
Approval Criteria shall be satisfied as of the Test Date
or thereafter, and the parties thereto shall have
executed and delivered a COREA that satisfies the COREA
Guidelines and is approved by Lender in accordance with
the provisions of this Section 2, then, thereafter,
Borrower shall be entitled to make such changes to the
COREA that a Commercially Reasonable Owner would make so
long as such changes are not likely to result in a
Material Adverse Effect (as defined in the Form Loan
Documents). Borrower shall furnish to Lender, promptly
upon request therefor by Lender, and as a condition
precedent to Lender's
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obligations under this Paragraph 2, all rent
information, Leases and information regarding the
creditworthiness of tenants that Lender shall reasonably
request to determine whether the Approval Criteria are
satisfied.
d. It will also be a condition precedent to the
commencement of construction of Mall Phase II that
Lender receives a substantive non-consolidation opinion,
in form and substance, and from counsel, reasonably
satisfactory to Lender and its counsel, with respect to
Mall Sub I, its Affiliates and Mall Sub II.
e. Promptly upon request therefor by Lender, Borrower
shall furnish to Lender such materials as Lender shall
reasonably require to determine whether the requirements
regarding design of the Phase I Mall and the Phase II
Mall set forth in the COREA that was approved by Lender
will be satisfied. If such materials disclose that such
design requirements will not be satisfied, then Borrower
shall cause such changes to be made as are necessary so
that the design of the Phase I Mall and the Phase II
Mall will satisfy such requirements. The Lender's review
of such materials shall create no responsibility or
liability on behalf of the Lender for their
completeness, design, sufficiency or their compliance
with Legal Requirements or Insurance Requirements.
f. As used herein, the following terms shall have the
following meanings:
(i) "Actual Rent" shall mean, for any period of time,
with respect to any COREA Qualified Lease, all minimum
(i.e., exclusive of percentage or additional) and
percentage rent (but excluding any prepaid rent other
than minimum rent for the first full calendar month
and/or last calendar month of the term of the applicable
lease that was prepaid upon lease execution) that was
actually paid by the tenant thereunder with respect to
such period.
(ii) "COREA Qualified Lease" shall mean, as of any
date of determination, a Lease (i)(a) that substantially
conforms
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to the applicable (e.g., retail or restaurant) standard
lease form approved by the Lender (with such changes
thereto as both (x) a Commercially Reasonable Owner
would agree to and (y) are not likely to result in a
Material Adverse Effect), provided that in no event
shall such changes include a right of the tenant to
terminate the Lease (except for rights to terminate, due
to a Casualty or Taking (as such capitalized terms are
defined in the Form Loan Documents), that both a
Commercially Reasonable Owner would agree to and that
are not likely to result in a Material Adverse Effect)),
(b) which, in the case of a Lease that was theretofore
entered into, is in full force and effect and under
which there is no monetary default or material
non-monetary default and (c) that complies with the
provisions of Exhibit A-7 attached hereto (as such
provisions may be changed from time to time with the
prior consent of the Lender (which consent shall not be
unreasonably withheld or delayed)) or (ii) is otherwise
approved by the Lender (which approval shall not be
unreasonably withheld or delayed); provided that,
notwithstanding the foregoing, each Lease described on
Schedule G-2 to the Form Loan Agreement shall be deemed
to be a "COREA Qualified Lease" so long as, at the time
in question, such Lease is in full force and effect and
there is no monetary default or material non-monetary
default under such Lease.
(iii) "COREA Qualified Lease Commitment" shall mean a
binding commitment (other than a Lease) from a tenant to
lease space in the Mall Improvements, which commitment
is acceptable to Lender in its sole discretion.
(iv) "COREA Rent" means, with respect to any
determination as to whether the Approval Criteria are
satisfied, the collective reference to all Actual Rent
and Projected Rent that is relevant to such
determination.
(iv) "Madame Tussaud LOI/Lease" shall mean a COREA
Qualified Lease or a COREA
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Qualified Lease Commitment with The Tussaud Group Ltd.,
as tenant.
(v) "Mall Phase I" shall mean the Property.
(vi) "Mall Phase II" shall mean a first-class shopping
mall (A) that is physically connected to the Property at
one or more locations and (B) the architecture of which,
and the theme with respect to which, is harmonious with
that of Mall Phase I.
(vii) "Mall II Sub" shall mean an Affiliate of the
Principal that, at the time in question, (A) owns or
leases the space in which and/or the land upon which, as
applicable, Mall Phase II will be or was, as applicable,
constructed and (B) owns (or if construction of Mall
Phase II shall not have therefore been commenced, will,
upon commencement of construction of Mall Phase II, own)
Mall Phase II.
(viii) "Projected Rent" shall mean, for any period of
time, with respect to (A) any COREA Qualified Lease or
any COREA Qualified Lease Commitment that provides for
the use of the leased premises in question as a
restaurant (but excluding any such leased premises that
are located within a "food court"), the greater, of (1)
the aggregate minimum (i.e. exclusive of percentage or
additional) rent that is required to be paid by the
tenant thereunder with respect to such period or (2) the
sum of (a)(i) the product of $50 (or, with respect to
any net rentable square foot of the leased premises that
is or will be located on the first level of the Mall
Improvements over which there will not be constructed,
prior to the time that the Borrower delivers such leased
premises to such tenant, a second level of Mall
Improvements, $75) pro rated for the period in question
based upon the ratio that the number of calendar months
(or portions thereof) in such period bears to twelve
(12) multiplied by (ii) the aggregate net rentable
square footage of the leased premises that is or will be
located on the first level of the Mall Improvements plus
(b) the product of (i)
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$25 (pro rated as aforesaid) multiplied by (ii) the
aggregate net rentable square footage of the leased
premises that is or will be located on the second level
of the Mall Improvements, (B) the Billboard Operating
Lease, $945,000, pro rated as aforesaid, (C) the Madame
Tussaud LOI/Lease, $960,000 pro rated as aforesaid and
(D) with respect to any other COREA Qualified Lease or
COREA Qualified Lease Commitment, minimum (i.e.
exclusive of percentage or additional) rent that is
required to be paid by the tenant thereunder with
respect to such period;
(ix) "second level" means, (A) with respect to the
Mall, the mezzanine level of the Mall and (B) with
respect to the Retail Annex, the second level of the
Retail Annex.
3. CASH MANAGEMENT ACCOUNT
a. Within fifteen (15) days after the Property shall
first have been open for business for six (6)
consecutive full calendar months (but in no event prior
to the Closing Date), and, thereafter, within fifteen
(15) days after request therefor by Lender (which
request shall be made not more than once during any
calendar month) (each such fifteenth (15th) day, a
"Delivery Date"), or at any time as Borrower shall
desire to do so (but in no event more than once per
calendar month) Borrower shall furnish to Lender (for
its reasonable approval) a calculation of the DSCR with
respect to the period of six full calendar months
immediately preceding such Delivery Date (each such
six-month period, a "Preceding Period"), together with
all relevant financial and other information and
materials relating to such calculation (collectively,
"DSCR Materials"). If the DSCR for any such Preceding
Period shall be less than 1.25 or Borrower shall fail to
furnish such DSCR Materials to Lender within fifteen
days after Lender's request (except in the case of the
initial delivery of DSCR Materials required hereunder,
which Borrower shall be required to deliver to
-25-
Lender as aforesaid without notice from Lender) as
aforesaid (either of the foregoing, a "DSCR Event"),
then, during the period commencing on the applicable
Delivery Date and ending at such future time as the DSCR
for the Property for six consecutive full calendar
months shall equal or exceed 1.25 (each, a "DSCR
Period"), and for each DSCR Period thereafter occurring,
the provisions of paragraph 3.b. below shall be
applicable.
b. If, at any time, a DSCR Event shall occur, then
Borrower shall promptly thereafter establish an
interest-bearing depository account at a nationally
recognized commercial bank reasonably acceptable to
Lender, for the benefit of Lender ("Cash Management
Account"). Borrower will cause all revenues with respect
to the Property to be deposited directly into the Cash
Management Account on a daily basis. If on the last
banking day prior to the date of the Loan interest
payment that is then next due, the funds in the Cash
Management Account are less than the amount of the Loan
interest payment then due, Borrower shall deposit the
shortfall into the Cash Management Account. Lender shall
have control over, and a first priority security
interest in, the Cash Management Account and all funds
from time to time on deposit therein. At any time that
no Event of Default (as defined in the Form Loan
Documents) shall exist, Borrower shall have the right to
make withdrawals from the Cash Management Account solely
for the purpose of paying amounts payable to Lender in
respect of the Loan, any bona fide operating expenses or
capital expenditures relating to the Property that are
certified as such by Borrower pursuant to an Officer's
Certificate (as defined in the Form Loan Documents), Tax
Distributions (as defined below) and any other
expenditures that are approved by Lender. At any time
that an Event of Default shall exist, Lender will have
the right to withdraw 100% of the revenues that are from
time to time deposited into the Cash Management Account
and apply such funds to any amounts that are payable
under the Form Loan Documents in such order and manner
as Lender shall
-26-
determine in its sole discretion. Lender shall have the
right to debit the Cash Management Account in payment
for each monthly interest payment and any other amounts
owed to Lender under the Form Loan Documents. All
interest earned under the Cash Management Account shall
be credited to Borrower. Borrower shall execute and
deliver to Lender all documents, instruments and
financing statements that Lender shall reasonably
require in order for Lender to obtain a perfected first
priority security interest in the Cash Management
Account and all funds and securities from time to time
on deposit therein or held in connection therewith. If,
at any time after a DSCR Event shall occur, the DSCR for
the Property for six consecutive full calendar months
shall equal or exceed 1.25, then, provided no Event of
Default shall then exist, Lender shall release the funds
then on deposit in the Cash Management Account to
Borrower.
c. As used herein, the following terms shall have the
following meanings:
(i) "Applicable Tax Percentage" means the highest
aggregate effective marginal rate of federal, state and
local income tax or, when applicable, alternative
minimum tax (after giving effect to deductibility of
state and local taxes and the tax rate applicable to
ordinary income and to capital gains, as the case may
be) to which any direct or indirect member or S
corporation shareholder of Borrower or the Junior Lender
(if an Affiliate of Borrower), as applicable, subject to
the highest marginal rate of tax would be subject in the
relevant year of determination (as certified to the
Syndication Agent by a nationally recognized tax
accounting firm), taking into account only that member's
or S corporation shareholder's share of income and
deductions attributable to its interest in Borrower or
such Junior Lender, as applicable.
(ii) "Debt Service" shall mean, for any period of six
calendar months, the aggregate amount of interest that
was payable in respect of the Loan with
-27-
respect to such period.
(iii) "DSCR" shall mean, for any period of six calendar
months, an amount equal to the quotient of (A) NOI with
respect to such period divided by (B) Debt Service with
respect to such period.
(iv) "NOI" shall mean, for any period of six calendar
months, the excess of (A) Revenues for such period over
(B) Operating Expenses for such period.
(v) "Operating Expenses" shall mean, for any period of
six calendar months, as determined in accordance with
sound accounting principles consistently applied, the
sum of (A) all operating expenses actually expended by
Borrower in respect of the Property (or required to be
expended by Borrower in order to maintain and operate
the Property as required under the Form Loan Documents)
during such period plus (B) $700,000.
(vi) "Revenues" shall mean, for any period of six
calendar months, as determined in accordance with sound
accounting principles consistently applied, all revenues
generated by the Property and actually received by
Borrower during such period.
(vii) "Tax Distributions" shall mean tax distributions
to members of Borrower to the extent necessary to cover
income taxes (x) on such members' distributive share of
limited liability company income and gains (which
distributive share must be included in such members'
taxable income notwithstanding the fact that the
partnership made no actual distribution as a result of
the provisions of this Section 3) or (y) on accrued and
unpaid interest in respect of the Subordinate Loan, in
each case, assuming that the applicable marginal income
tax rate is the Applicable Tax Percentage (such tax
distributions described in clause (y), "Interest Tax
Distributions").
-28-
4. SUBORDINATION NON-DISTURBANCE AND ATTORNMENT AGREEMENTS
a. With respect to (i) any SNDA Qualified Lease (as
defined below) or (ii) any other Lease (as defined in
Exhibit B to this Commitment) with respect to which
Lender gives its prior written approval (which approval
Lender shall not unreasonably withhold), upon Borrower's
request thereof, Lender shall execute and deliver a SNDA
(as defined in Exhibit B to this Commitment).
b. If Borrower shall desire for Lender to execute an
SNDA with respect to a given Lease that shall not
constitute an SNDA Qualified Lease, then Borrower may
furnish to Lender a term sheet that (i) describes, in
form and detail reasonably satisfactory to Lender, the
proposed Lease and (ii) which term sheet, or the
transmittal letter sent with such term sheet, is
legended (in bold, capitalized letters) as follows:
"This is a Lease Term Sheet referred to in that certain
Loan Commitment Letter dated as of November 14, 1997
among Grand Canal Shops Mall, LLC, Sheldon G. Adelson
and Goldman Sachs Mortgage Company. If you do not
approve or disapprove, in writing, this Lease Term Sheet
within ten (10) Business Days after the date upon which
you actually receive this Lease Term Sheet, then you
shall be deemed to have approved this Lease Term Sheet."
If Borrower shall furnish such a term sheet (a "Lease
Term Sheet") to Lender, then Lender shall approve or
disapprove, in writing, such Lease Term Sheet within ten
(10) Business Days (as defined in the Form Loan
Documents) after the date upon which Lender shall
actually receive such Lease Term Sheet. Borrower hereby
agrees that Lender shall be deemed to have disapproved a
given Lease Term Sheet if Lender shall have deposited
written notice of such disapproval in the United States
mail, or shall have delivered such notice to an
overnight courier, within the applicable ten (10)
Business Day period (regardless of when, or if, Borrower
shall
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have received such notice). If Lender shall fail so to
approve or disapprove any Lease Term Sheet, then Lender
shall be deemed to have approved such Lease Term Sheet.
c. If Borrower shall desire for Lender to execute an
SNDA with respect to a given Lease that shall not
constitute an SNDA Qualified Lease, then, regardless of
whether Borrower shall have furnished a Lease Term Sheet
with respect to such proposed Lease to Lender, Borrower
shall furnish to Lender (A) execution copies of all
documents relating to such proposed Lease to Lender,
together with a blackline of the same against the
relevant lease form approved by Lender (collectively,
the "Proposed Lease Documents") and (B) all other
information and materials pertaining to the applicable
tenant or proposed tenant and/or the proposed Lease as
Lender shall reasonably request. Lender shall not be
entitled to disapprove any given proposed Lease solely
on the basis of any provision in the applicable Proposed
Lease Documents that was accurately reflected in the
applicable Lease Term Sheet, if any, approved (or deemed
approved) by Lender.
d. As used herein, the term "SNDA Qualified Lease"
means, as of any date of determination, a Lease (i)(a)
that substantially conforms to the applicable (e.g.,
retail or restaurant) standard lease form approved by
Lender (with such changes thereto as both (x) a
Commercially Reasonable Owner would agree to and (y) are
not likely to result in a Material Adverse Effect),
provided that in no event shall such changes include a
right of the tenant to terminate the Lease (except for
rights to terminate, due to a Casualty or Taking, that
both a Commercially Reasonable Owner would agree to and
that are not likely to result in a Material Adverse
Effect)), (b) with respect to which, in the case of a
Lease that was theretofore entered into, such Lease is
in full force and effect and there is no monetary
default or material non-monetary default and (c) that
complies with the provisions of Exhibit A-8 attached
hereto (as such provisions may be changed from
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time to time with the prior consent of the Syndication
Agent (which consent shall not be unreasonably withheld
or delayed) (any such Lease, and any Lease described on
Schedule H-2 to the Form Loan Agreement, shall each be
referred to as an "Automatically Qualified SNDA Lease")
or (ii) is otherwise approved by the Lender (which
approval shall not be unreasonably withheld or delayed);
provided that, notwithstanding the foregoing, each Lease
described on Schedule H-2 to the Form Loan Agreement
shall be deemed to be a "SNDA Qualified Lease" so long
as, at the time in question, such Lease is in full force
and effect and there is no monetary default or material
non-monetary default under such Lease.
e. All documents and materials to be furnished to Lender
under this Section 4 shall be sent or delivered to the
address for Lender set forth above, attention: Steven
Mnuchin.
5. SECURITIZATION
After the closing of the Loan, the Lender (in the
Lender's sole and absolute discretion) may negotiate and
consummate an offering of certificates or other
securities representing direct or indirect interests in
the Loan, the Loan Documents (as defined below) or any
portion thereof (a "Securitization"). In connection with
any Securitization or proposed Securitization, Borrower
shall pay all costs that Borrower incurs in connection
therewith, including, without limitation, the costs of
its own counsel and of preparing information and
materials required to be furnished by Borrower but not
any other costs including, without limitation, the costs
of Lender's counsel or the out-of-pocket costs incurred
by Lender in connection with a Securitization.
Cooperation The Loan Documents will obligate the Borrower to
cooperate with the Lender in the Securitization process,
including amending the Loan Documents and executing such
additional documents as may be required by the rating
agencies, except
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that no such amendment will (x) change the term,
principal amount or interest rate of the Loan (other
than to effect a hyperamortization structure for the
Loan) or require amortization of the principal amount of
the Loan prior to the maturity thereof not otherwise
expressly contemplated by this Commitment or (y)
otherwise (except to a de minimis extent) increase
Borrower's or Principal's costs (except as otherwise
specified herein), liabilities or obligations, or
decrease Borrower's, or increase Lender's, rights, under
the Loan Documents. Without limiting the generality of
the foregoing, the cooperation covenant will
specifically include the obligation of the Borrower and
the Principal to:
(i) if requested by Lender, to modify the debt
instrument evidencing the Loan to create multiple pari
passu notes;
(ii) provide such information as may be reasonably
requested in connection with the preparation of an
offering document by the Lender and its counsel used to
distribute the securities issued in the Securitization
in a manner which does not conflict with federal or
state securities laws;
(iii) cause to be rendered such customary opinion
letters as may be reasonably requested by the rating
agencies (including, but not limited to, a substantive
nonconsolidation opinion that is substantively
equivalent to the Substantive Nonconsolidation Opinion);
(iv) update the representations, warranties and
covenants with respect to the Borrower, the Principal
and the Property that are contained in the Loan
Documents if the same is reasonably requested by the
rating agencies (which representations, warranties and
covenants will survive the closing of the
Securitization);
(v) provide such updated third party reports and
financial information regarding the Property and the
Borrower (but not the Principal) and expanded
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ongoing administration and reporting by any real estate
mortgage investment conduit ("REMIC") formed in
connection with the Securitization as may be reasonably
requested by the rating agencies or otherwise required
in connection with an election of REMIC status;
(vi) obtain the insurance policies outlined in the
General Conditions to Commitment or as otherwise
reasonably required by the rating agencies in connection
with the Securitization;
(vii) amend the Borrower's and/or the Borrower's
managing member's organizational documents or make such
other changes to the Borrower's structure as reasonably
required by the rating agencies to conform to customary
requirements for single purpose entities in similar
transactions, provided that Borrower shall not be
required to make any amendments that would violate any
agreements between Borrower (or any Affiliate of
Borrower) and any Person that is not an Affiliate of
Borrower (or of any Affiliate thereof); and
(viii) obtain a comfort letter from a nationally
recognized accounting firm with customary exceptions in
connection with the financial information relating to
the Borrower, and the Property and which is presented in
the offering document used in the Securitization.
Notwithstanding any of the foregoing, in no event shall
the foregoing "Cooperation" covenant be deemed to
obligate the Borrower to cause the Principal to deliver,
or to cause to be delivered, any financial statements
(audited or otherwise), certificates or documents
relating to the personal net worth or financial
condition of the Principal.
Indemnification in The Loan Documents shall require the Borrower to provide
Connection with an satisfactory to the Lender, pursuant to which the
Securitization: Borrower indemnification agreement, in form and
substance reasonably will:
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(i) certify that it has carefully examined the
Securitization offering document and that such document
insofar as it relates to the Borrower, the Principal,
any affiliates thereof, the Property and the Project,
does not (subject to the last sentence of clause (ii)
below) contain any untrue statement of a material fact
or omit to state a material fact necessary in order to
make the statements made, in light of the circumstances
under which they were made, not misleading;
(ii) indemnify the Lender and its affiliates for any
losses, claims, damages and liabilities (including,
without limitation, reasonable attorneys' fees and
expenses) (the "Liabilities") to which such parties may
become subject or which they may incur to the extent
that the Liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of any
material fact relating to the Borrower, the Principal,
any affiliate thereof, the Property or the Project
contained in such sections or arise out of or are based
upon the omission or alleged omission to state therein a
material fact relating to Borrower, the Principal, any
affiliate thereof, the Property or the Project necessary
in order to make the statements therein in light of the
circumstances under which they were made, not
misleading. Notwithstanding the foregoing, the Borrower
shall not have liability under such indemnity to the
extent the Liabilities arise out of a statement that (i)
was contained in a document not furnished to Borrower
prior to its release to the investor in question or (ii)
the Lender failed to correct notwithstanding the fact
that the Borrower notified the Lender that such
statement was untrue or misleading; provided that such
notification from Borrower to Lender (x) was in writing,
(y) instructed the Lender how to correct the statement
in question and (z) was received by the Lender
sufficiently prior to the date upon which the
Securitization offering document was first distributed
so that the Lender had sufficient time to correct such
statement; and
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(iii) agree to reimburse the Lender and its affiliates
for any reasonable attorneys' fees and expenses and
other expenses reasonably incurred by such parties in
connection with investigation or defending the
Liabilities.
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[EXHIBIT A-1 GMAC Credit Agreement]
[EXHIBIT A-2 Land
[EXHIBIT A-3 Copy of FADAA]
[EXHIBIT A-4 Mall Space]
[EXHIBIT A-5 Retail Annex]
[EXHIBIT A-6 Billboard Additional Premises]
[EXHIBIT A-7 COREA Leasing Guidelines]
[EXHIBIT A-8 SNDA Leasing Guidelines]
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Exhibit A-7
COREA LEASING GUIDELINES
(a) the creditworthiness of the tenant, and of the guarantor, if any, of
the tenant's Lease obligations, shall be subject to the Lender's approval (which
approval the Lender shall not unreasonably withhold provided that at the time
such approval is sought, such tenant (or guarantor) shall not have made a
general assignment for the benefit of creditors, and there shall not have been
filed by or against such tenant (or guarantor) a petition which has not been
dismissed under any Legal Requirement pertaining to bankruptcy, arrangement,
insolvency or reorganization or under any similar Legal Requirement or for the
appointment of a receiver, liquidator, or trustee, and no action, case or
proceeding which has not been dismissed shall have been commenced under any such
Legal Requirement with respect to such tenant (or guarantor) or for the
composition, extension, arrangement or adjustment of such tenant's (or such
guarantor's) obligations;
(b) the minimum term of such Lease must be such so that, when all Leases
that are relevant to the calculation of COREA Rent are taken together
(collectively, "COREA Leases"), COREA Leases under which, collectively, at least
60% of such COREA Rent has been paid (in the case of Actual Rent) or is payable
or, for percentage rent, projected to be payable (in the case of Projected
Rent), as applicable, shall provide for a minimum term of ten years or more,
COREA Leases under which, collectively, no more than 30% of such COREA Rent has
been paid (in the case of Actual Rent) or is payable or, for percentage rent,
projected to be payable (in the case of Projected Rent), as applicable, shall
provide for a minimum term of between five years and ten years and COREA Leases
under which, collectively, no more than 10% of such COREA Rent has been paid (in
the case of Actual Rent) or is payable or, for percentage rent, projected to be
payable (in the case of Projected Rent), as applicable, shall provide for a
minimum term of between one year and five years;
(c) with respect to the portion of the leased premises, if any, that is
located on the first level of the Mall, such tenant shall be obligated to pay an
average annual fixed rent per net rentable square foot, over the term of the
applicable Lease, that is at least equal to the annual fixed rental rate per net
rentable square foot set forth on Exhibit 1 with respect to the first floor of
the Mall;
(d) with respect to the portion of the leased premises, if any, that is
located on the second level of the Mall, such tenant shall be obligated to pay
an average annual fixed rent per net rentable square foot over the term of the
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applicable Lease that is at least equal to the annual fixed rental rate per
net rentable square foot set forth on Exhibit 1 with respect to the second level
of the Mall;
(e) with respect to the portion of the leased premises, if any, that is
located in the Retail Annex, such tenant shall be obligated to pay an average
annual fixed rent per net rentable square foot over the term of the applicable
Lease that is at least equal to the annual fixed rental rate per net rentable
square foot set forth on Exhibit 1 with respect to the Retail Annex;
(f) for each lease year, for each level of gross revenue of the tenant set
forth on Exhibit 1, such tenant shall be obligated to pay, as percentage rent,
the relevant percentage (as set forth on Exhibit 1) of such tenant's gross
revenues for each lease year minus the minimum rent paid by the tenant for such
lease year; and
(g) in no event shall the annual fixed rent that is payable with respect
to any lease year be less than 100% of the annual fixed rent that was payable
with respect to the immediately preceding lease year.
-39-
Exhibit A-8
SNDA LEASING GUIDELINES
(a) the creditworthiness of the tenant, and of the guarantor, if any, of
the tenant's Lease obligations, shall be subject to the Lender's approval (which
approval the Lender shall not unreasonably withhold provided that, at the time
such approval is sought, such tenant (or guarantor) shall not have made a
general assignment for the benefit of creditors, and there shall not have been
filed by or against such tenant (or guarantor) a petition which has not been
dismissed under any Legal Requirement pertaining to bankruptcy, arrangement,
insolvency or reorganization or under any similar Legal Requirement or for the
appointment of a receiver, liquidator, or trustee, and no action, case or
proceeding which has not been dismissed shall have been commenced under any such
Legal Requirement with respect to such tenant (or guarantor) or for the
composition, extension, arrangement or adjustment of such tenant's (or such
guarantor's) obligations);
(b) the minimum term of such Lease must be such so that, when all Leases
(other than Subordinate Leases (as defined in the Form Loan Agreement))
(including the Lease in question)(collectively, the "Approval Required Leases")
are taken together, Approval Required Leases that collectively demise at least
60% of the net rentable square footage of the first level of the Mall
Improvements demised by all Approval Required Leases shall provide for a minimum
term of ten years or more, Approval Required Leases that collectively demise no
more than 30% of the net rentable square footage of the first level of the Mall
Improvements demised by all Approval Required Leases shall provide for a minimum
term of between five years and ten years and Approval Required Leases that
collectively demise no more than 10% of the net rentable square footage of the
of the first level of the Mall Improvements demised by all Approval Required
Leases shall provide for a minimum term of between one year and five years;
(c) with respect to the portion of the leased premises, if any, that is
located on the first level of the Mall, such tenant shall be obligated to pay an
average annual fixed rent per net rentable square foot, over the term of the
applicable Lease, that is at least equal to the annual fixed rental rate per net
rentable square foot set forth on Exhibit 1 with respect to the first floor of
the Mall;
(d) with respect to the portion of the leased premises, if any, that is
located on the second level of the Mall, such tenant shall be obligated to pay
an average annual fixed rent per net rentable square foot over the term of the
applicable Lease that is at least equal to the annual fixed rental rate per net
-40-
rentable square foot set forth on Exhibit 1 with respect to the second level of
the Mall;
(e) with respect to the portion of the leased premises, if any, that is
located in the Retail Annex, such tenant shall be obligated to pay an average
annual fixed rent per net rentable square foot over the term of the applicable
Lease that is at least equal to the annual fixed rental rate per net rentable
square foot set forth on Exhibit 1 with respect to the Retail Annex;
(f) for each lease year, for each level of gross revenue of the tenant set
forth on Exhibit 1, such tenant shall be obligated to pay, as percentage rent,
the relevant percentage (as set forth on Exhibit 1) of such tenant's gross
revenues for each lease year minus the minimum rent paid by the tenant for such
lease year; and
(g) in no event shall the annual fixed rent that is payable with respect
to any lease year be less than 100% of the annual fixed rent that was payable
with respect to the immediately preceding lease year..
[EXHIBIT A-8 SNDA Qualified Leases]
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EXHIBIT B
GENERAL CONDITIONS TO COMMITMENT
1. Expenses. The Borrower shall have paid all Loan Transaction
Costs.
2. Approval. All matters, if any, relating to the Loan and the
closing that are not specifically covered by this Commitment or by the Tri-Party
Agreement must be in form and substance reasonably satisfactory to the Lender.
3. Conditions to Closing. Except as otherwise set forth below or
described above, Lender shall have received or Borrower or Principal shall have
satisfied, as applicable, all of the following on or prior to or simultaneously
with the Closing; provided that, without limiting the provisions of the
foregoing clause, Borrower shall exercise diligent and commercially reasonable
efforts to cause all of the conditions, requirements and obligations (other than
the execution of documents by Borrower and Principal (other than the Escrowed
Guaranty, which Principal shall execute and deliver into escrow on the date
hereof) that are susceptible of performance or satisfaction prior to the Closing
to be satisfied at least ten (10) business days prior to the Closing.
A. Payment of Purchase Price and Payoff of Construction
Loan. The Purchase Price shall have been paid in full. The proceeds of the Loan
and other funds of Borrower (which may consist of the proceeds of the
Subordinate Loan, if the Subordinate Loan is made on the Closing Date in
accordance with the terms hereof) shall have been used to pay, in full, the cash
portion of the Purchase Price; the non-cash portion of the Purchase Price, if
any, shall be "paid" through the assumption of the Subordinate Loan (if made
prior to the Closing Date) and/or of the Mezzanine Loan, in each case, to the
extent made in accordance with the terms hereof. Additionally, the proceeds of
the Purchase Price shall have been used by the seller under the Purchase
Agreement to pay, in full, the principal amount of the Construction Loan (other
than the Mezzanine Loan, if made in accordance with the terms hereof), all
accrued and unpaid interest thereon and all other amounts payable in connection
with the Construction Loan, in each case, as of the Closing Date (collectively,
the "Construction Loan Payoff Amount").
B. Escrow Accounts. The Borrower shall have deposited into
(x)(1) if the Assessment Date (as defined in the REA) shall have occurred on or
prior to the Closing, the Tax Escrow Account (as defined in the Form Loan
Agreement), the Taxes and Other Charges (as defined in the Form Loan Agreement)
that the Lender, in good faith, shall estimate will be payable during the three
(3) calendar month-period following the Closing Date (but in no event less than
the amount that the Lender, in good
faith, determines shall be necessary in order to accumulate in such Tax Escrow
Account sufficient funds to pay all Taxes and Other Charges at least fifteen
(15) Business Days prior to their respective delinquency dates) or (2) if the
Assessment Date shall not have occurred on or prior to the Closing Date, the Tax
Escrow Account (as defined in the REA)("REA Tax Account") in respect of Taxes
(as defined in the REA), the amount then required, under the REA, to be
deposited by Borrower in respect of Taxes into such account, (y) into the
Insurance Escrow Account (as defined in the REA)(the "REA Insurance Premium
Account") in respect of insurance premiums, the amount then required, under the
REA, to be deposited by Borrower in respect of insurance premiums into such
account and (z) shall have made the deposits into the TI Brokerage Commission
Subaccount and the TI Costs Subaccount required under the paragraph of Exhibit A
to this Commitment entitled "Start-Up Cost Escrow Account". Venetian shall have
deposited (x) into the REA Tax Account in respect of Taxes (if the Assessment
Date shall not have occurred on or prior to the Closing Date), the amount then
required, under the REA, to be deposited by Venetian into such account and (y)
into the REA Insurance Account in respect of insurance premiums, the amount then
required, under the REA, to be deposited by Venetian into such account. Each
such deposit must be in the relevant account at the time of Closing.
C. Completion of the Project. (i) All of the Mall Release
Conditions (as defined in the FADAA) shall have been satisfied, (ii) the Real
Property Collateral shall be free and clear of all Liens, other than the
Permitted Encumbrances (as defined in the Form Loan Agreement); provided that,
notwithstanding the foregoing, there shall be not be any materialmens',
mechanics' or other similar Liens (collectively, "Mechanics' Liens") affecting
the Real Property Collateral (or any portion thereof) on the Closing Date unless
the same shall be deleted from the title insurance policy delivered to the
Lender in order to satisfy a condition precedent to the funding of the Loan (or
the issuer of such title insurance policy shall "insure over" such Lien through
affirmative insurance reasonably acceptable to the Lender), (iii) at the time of
Closing, funds in an amount equal to the Mall Retainage Punchlist Amount (as
defined below) shall be on deposit in the Mall Retainage/ Punchlist Account (as
defined in the FADAA), upon which funds and account Lender shall have a
perfected first priority security interest securing the payment and performance
of all indebtedness and other obligations of Borrower under the Loan Documents),
(iv) there shall be Available Funds (as defined in the FADAA) in an amount that
is greater than or equal to 100% of all Remaining Project Costs (as defined in
the FADAA), (iv) Lender shall have received from Lehrer McGovern Bovis, Inc., as
construction manager for the Project, a certification to Lender that Substantial
Completion (as defined in the Construction Management Agreement (as defined in
the FADAA)) of the Work (as defined in the Construction Management Agreement)
has occurred and (v)
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Lender shall have received (A) all certificates and other materials referenced
in the definition of "Mall Release Conditions" contained in the FADAA (or any
definitions referenced in such definition of "Mall Release Conditions"), (B) a
certificate from Construction Lender as to (i) the Tranche "A" Amount (and the
breakdown thereof) and (ii) as to the FADAA, substantially in the form of
Exhibit B-7 hereto. The term "Mall Retainage Punchlist Amount" means the
aggregate amount required to be funded, on the Mall Release Date, into the Mall
Retainage/Punchlist Account under Section 2.10(d) of the FADAA.
D. Easement, HVAC and Other Agreements. Lender shall have
received and approved a true, correct and complete copy of each Enumerated OEA
(as defined below) and each other Property Agreement (as defined below)
(collectively, the "OEAs"). Notwithstanding the foregoing, with respect to each
OEA (other than the Enumerated OEAs), Borrower may enter into the same, without
Lender's approval, if both (x) a Commercially Reasonable Owner (as defined in
the Form Loan Documents) would do so and (y) the execution and performance of
such OEA is not likely to cause a Material Adverse Effect. With respect to each
of the OEAs: (i) such OEA shall be in full force and effect, (ii) there shall be
no monetary and no material non-monetary default thereunder on the part of
Borrower or on the part of any other party thereto (unless, in the case of a
default by any party other than Borrower, such default is a default that (x) a
Commercially Reasonable Owner would waive and (y) is not reasonably likely to
result in a Material Adverse Effect) and each party thereto shall have fully
complied, in all material respects, with all of its obligations under such OEA
required to be satisfied by it by the Closing Date (other than, with respect to
obligations of any party other than the Borrower, obligations (x) the
performance of which a Commercially Reasonable Owner would waive and (y) the
nonperformance of which is not reasonably likely to result in a Material Adverse
Effect), (iii) no party to such OEA shall have given or received any written
notice or claim of default under such OEA which has not been cured (other than
notices of claims of default given and addressed to a party other than Borrower
relating to defaults that (x) a Commercially Reasonable Owner would waive and
(y) are not reasonably likely to result in a Material Adverse Effect), (iv) no
condition shall exist that would permit any party to such OEA to cancel or
terminate such OEA (or any portion thereof), to be released from liability under
such OEA or reduce its obligations under such OEA, (v) each party to such OEA
(if such OEA shall be an Enumerated OEA or another material OEA (as reasonably
determined by the Lender) that is not a Service Contract (as defined in the Form
Loan Agreement) shall have unconditionally executed and delivered to the Lender
an estoppel certificate substantially in the form attached hereto as Exhibit
B-1, the contents of which estoppel certificate shall be reasonably acceptable
to the Lender and (vi) the holder of any mortgage or deed of trust on any
property owned or leased by any party to such OEA shall have subordinated the
lien of such
-3-
mortgage or deed of trust to such OEA. The term "Enumerated OEAs" shall mean the
collective reference to (aa) the REA, (bb) that certain Energy Services
Agreement dated as of May 1, 1997 between Atlantic-Pacific, Las Vegas, LLC (the
"HVAC Provider") and Mall Construction and that certain Easement Agreement dated
as of May 1, 1997 between Mall Construction and the HVAC Provider (collectively,
the "HVAC Agreement"), (cc) Ground Lease dated as of the date hereof between
Venetian, as landlord, and HVAC Provider, as tenant (the "HVAC Ground Lease")
and (dd) the Purchase Agreement. The term "Property Agreement" means the
collective reference to all property management, brokerage, operating, easement,
maintenance, servicing agreements and all other agreements and contracts to
which Borrower is a party or that affect the Mall Improvements and/or any other
of the Property (other than Leases or other related agreements) (all of the
foregoing, collectively, "Property Agreements"). All Property Agreements shall
be collaterally assigned to Lender.
E. Conveyance of Real Property Collateral to Borrower. The
Real Property Collateral shall have been conveyed and transferred to Borrower,
in accordance with the terms of the Purchase Agreement, free and clear of all
liens and encumbrances (other than the Permitted Encumbrances (as defined in the
Form Loan Agreement)).
F. Billboard Master Lease and Mall Master Lease. The Lender
shall have received and approved a true, correct and complete copy of the
Billboard Master Lease (including all amendments, supplements, assignments and
modifications) and, if the Subdivision shall not exist as of the Closing, the
lease between the owner of fee title to the Mall Space and the Retail Annex
Land, as lessor, and the Borrower, as tenant, with respect to the Mall Space and
the Retail Annex Land (the "Mall Master Lease"; the Billboard Master Lease and
the Mall Master Lease, collectively, the "Ground Leases") (including all
amendments, supplements, assignments and modifications). Additionally, (i) the
Borrower shall hold the leasehold estate created by each of the Ground Leases,
(ii) each of the Ground Leases shall be in full force and effect, (iii) the term
of each of the Ground Leases shall have commenced and the Borrower, as tenant
thereunder, shall have commenced the payment of rent in accordance with the
terms thereof; (iv) there shall be no monetary or material non-monetary default
under either of the Ground Leases by any party thereto and each party to each of
the Ground Leases shall have complied, in all material respects, with all of its
obligations under such Ground Lease, (v) no party to either Ground Lease shall
have given or received any written notice or claim of default under such Ground
Lease that remains uncured; (vi) the Borrower shall not have transferred,
assigned, hypothecated, mortgaged or pledged its interest under either Ground
Lease or sublet all or any portion of the premises demised by such Ground Lease
(except (x) in the case of a mortgage, to Lender, to the Junior Lender (if the
Junior Loan shall exist on
-4-
the Closing Date in accordance with the provisions of this Commitment) and to
the Mezzanine Lender (if the Mezzanine Loan shall exist on the Closing Date in
accordance with the provisions of this Commitment), and (y) in the case of a
subletting, pursuant to a Lease approved by the Lender or that does not require
Lender's approval under this Commitment), (vi) no condition shall exist that
would permit any party to either Ground Lease to cancel or terminate either
Ground Lease (or any portion thereof), to be released from liability under such
Ground Lease or reduce its obligations under such Ground Lease, (vii) a
memorandum of each Ground Lease, in form and substance satisfactory to the
Lender, shall have been recorded in the applicable real estate records, (viii)
the landlord under the Billboard Master Lease (the "Billboard Master Landlord")
and the landlord under the Mall Master Lease each shall have unconditionally
executed and delivered to the Lender an estoppel certificate substantially in
the form attached hereto as Exhibit B-2, (ix) the Billboard Operating Lease, and
all rights of the tenant thereunder, shall have been irrevocably subordinated to
the Billboard Master Lease and all rights and interests of the Borrower
thereunder pursuant to an instrument acceptable to the Lender and (ix) there
shall be no underlying leases and no mortgages, deeds of trust or other
encumbrances affecting all or any portion of either landlord's fee estate in the
premises demised by its Ground Lease except for deeds of trust that are
irrevocably subordinated to such Ground Lease and all rights and interests of
the Borrower thereunder pursuant to an instrument acceptable to the Lender;
provided that (x) the foregoing provisions of this sentence with respect to the
Mall Master Lease shall only be applicable if the Subdivision shall not exist as
of the Closing and (y) the foregoing provisions of this sentence with respect to
the Billboard Master Lease shall only be applicable if the Billboard Operating
Lease shall not have been terminated prior to the Closing. As used herein, (x)
the term "Billboard Master Lease" means a lease between the fee owner of the
Billboard Additional Premises, as lessor, and the Borrower, as lessee, with
respect to, among other things, the Billboard Additional Premises and (y) the
term "Billboard Operating Lease" means that certain restaurant lease dated as of
June 26, 1997 between Venetian, as landlord, and B.L. of Nevada, Inc.
(inadvertently referred to as "B.L. of Las Vegas, Inc." in such lease), as
tenant.
G. Appraisal. The Lender shall have received an update of
the appraisal of the Property delivered to, and accepted by, the Lender on or
prior to the date hereof in connection with the issuance of this Commitment (or
if the Lender so elects, a new appraisal of the Property) prepared by an
independent appraiser holding an M.A.I. designation who shall be designated by
Lender and licensed in the State of Nevada. Such update or new appraisal, as
applicable, shall (i) be addressed to Lender and to such other parties as Lender
shall require, (ii) provide that it may be distributed to, and relied upon by,
such
-5-
persons and entities as the Lender shall reasonably require and (iii) be
prepared in compliance with all applicable legal requirements, including,
without limitation, FIRREA and all other then current federal regulatory
requirements. The fee for said update or new appraisal, as applicable, shall be
paid by Borrower (as shall the fee for the appraisal of the Property delivered
to, and accepted by, the Lender in connection with the issuance of this
Commitment).
H. Title Policy. The Lender shall have received a title
insurance policy or policies issued by one or more title insurance companies
(with co-insurance and/or re-insurance with direct access agreements as Lender
may reasonably require) in such forms, amounts and by such title insurance
companies as shall be reasonably satisfactory to Lender and its counsel, with a
liability limit of not less than the Loan Amount insuring to the Lender that the
deed of trust securing the Loan is a first priority lien on the good and
marketable fee simple absolute title to the Property (other than the Billboard
Additional Premises and, if the Subdivision shall not exist as of the Closing,
the Mall Space and the Retail Annex Land) and on the good and marketable
leasehold estate in the Billboard Additional Premises pursuant to the Billboard
Master Lease and, if the Subdivision shall not exist as of the Closing, the
leasehold estate in the Mall Space and the Retail Annex Land pursuant to the
Mall Master Lease. The title insurance policy (i) shall be in the standard 1992,
1987 or 1970 ALTA form policy, (ii) shall have deleted therefrom any creditors'
rights or similar exception, (iii) shall not contain any exceptions (other than
Permitted Encumbrances (as defined in the Form Loan Agreement) to which the
Lender objects and (iv) shall contain such endorsements (in addition to any
endorsements relating to creditors' rights and similar exceptions) as may be
reasonably required by Lender's counsel, including, without limitation, (x) if
the Subdivision shall exist as of the Closing, an endorsement that the Mall
Space, the Mall, the Retail Annex and the Retail Annex Land shall collectively
constitute, under applicable Legal Requirements, one or more lawfully created
parcel(s) and one or more tax parcel(s) that shall not include, or comprise a
portion of, any other property.
I. Survey. The Lender shall have received a current, as
built, title survey of the Property and the remainder of the Project. The survey
shall be prepared by a licensed or registered land surveyor reasonably
acceptable to Lender, certified to Lender and the title insurance compan(ies)
referred to above and containing the current ALTA/ACSM certification. The survey
shall (i) be prepared pursuant to the 1992 ALTA/ACSM Minimum Standard Detail
Requirements for Land Surveys (with any modifications or replacements to such
requirements occurring after the date hereof and reasonably acceptable to the
Lender), (ii) meet the requirements of a Urban Survey, and (iii) show a state of
facts in form, scope and substance acceptable to Lender
-6-
(including, without limitation, an adequate and accurate legal description,
interior lot lines, if any, the location of all adjoining streets and roads, the
distance to and names of the nearest intersecting streets, the location of all
recorded and all physical boundary lines, all strips, gores and overlaps with
adjacent properties, the location of all improvements on the Property and the
remainder of the Project, locations of utilities, elevations, high water marks,
easements and rights-of-way, whether of record or apparent, ingress and egress
to and from the Property and the remainder of the Project and natural and
constructed objects affecting the Property or the remainder of the Project and
showing any encroachments and/or discrepancies with any recorded instruments or
existing boundary markers), provided that any easement that shall constitute a
Permitted Encumbrance (as defined in the Form Loan Agreement) may be shown on
the survey.
J. Opinion of Counsel. The Lender shall have received:
(i) opinions of counsel in form, scope and substance
reasonably satisfactory to Lender and Lender's counsel. Said opinions
shall include, but not be limited to the following: that Borrower is a
Delaware limited liability company, and each of Borrower, each member of
Borrower, the landlord under the Mall Master Lease (if the Subdivision
shall not exist as of the Closing) and the Billboard Master Landlord is
duly organized, validly existing and in good standing under the laws of
the State of its formation or incorporation and qualified to do business
in the State where the Property is located; that the execution and
delivery of the documents to be executed and delivered as evidence of,
security for or otherwise in connection with the Loan (the "Loan
Documents"), the Billboard Master Lease, the OEAs and, if the Subdivision
shall not exist as of the Closing, the Mall Master Lease, have been duly
authorized; that the Loan Documents are not usurious and that the Loan
Documents, the Billboard Master Lease, the OEAs and, if the Subdivision
shall not exist as of the Closing, the Mall Master Lease, have been duly
executed and delivered by all parties thereto (other than the HVAC
Provider and Lender) and are valid, binding and enforceable in accordance
with their terms (subject to bankruptcy, insolvency and other limitations
on creditors' rights generally and to equitable principles) and do not
violate or contravene any statute or, to such counsel's knowledge,
contractual restriction binding on Borrower, any member of Borrower, the
Billboard Master Landlord, the landlord under the Mall Master Lease (if
the Subdivision shall not exist as of the Closing), the Principal or any
other party to any of the OEAs (other than the HVAC provider) (each such
party, a "Related Document Party"); and
-7-
(ii) a Substantive Non-Consolidation Opinion, together
with a memorandum in the form of Exhibit D attached to the Tri-Party
Agreement.
K. Organizational Documents. For Borrower, for each member
of Borrower, and for each Related Document Party that shall be a limited
liability company, the Lender shall have received a certificate of formation (or
articles of organization, as applicable) and all amendments thereto certified by
the Secretary of State of State of its formation or organization, a copy of the
limited liability company agreement with all amendments thereto certified by a
managing member of such limited liability company and any other such evidence of
limited liability company authority and good standing as Lender's counsel may
require shall be submitted to the Lender. For each member of Borrower, and for
each Related Document Party, that shall be a corporation, the Lender shall have
received a certificate of incorporation (or articles of incorporation, if
applicable) and all amendments thereto certified by the Secretary of State of
its state of incorporation, a Certificate of Good Standing issued by the
Secretaries of State of the state of its incorporation and the State where the
Property is located, a copy of the by-laws and all amendments thereto certified
by an authorized officer of the corporation and a copy of the corporate
resolution authorizing the transactions in question, and an incumbency
certificate, certified by an authorized officer of the corporation, in the case
of each of the foregoing, in form and substance reasonably satisfactory to
Lender and its counsel. For each member of Borrower, and for each Related
Document Party, that shall be a partnership, the Lender shall have received a
copy of the partnership agreement with all amendments thereto certified by
general partner of such entity, a filed partnership certificate (with all
amendments thereto) certified by the Secretary of State of such partnership's
state of formation, and any other such evidence of partnership authority,
existence and good standing as Lender's counsel may require shall be submitted
to Lender. For each member of Borrower, and for each Related Document Party,
that is a legal entity other than a corporation, a partnership or a limited
liability company, the Lender shall have received all organizational, authority,
incumbency and good standing documentation of such entity as Lender's counsel
shall reasonably require. The Lender shall also have received (x) any consents
or approvals required under any of the foregoing documents, materials or
certificates and (y) copies of organizational, authority, incumbency and good
standing documentation with respect to any entity that owns any direct or
indirect interest in any of Borrower, or any Related Document Party. All of the
documents, materials and certificates required to be furnished to the Lender
under this paragraph K shall be subject to the reasonable approval of the
Lender. As a condition precedent to Lender executing and delivering this
Commitment and the Tri-Party Agreement, Lender shall receive such organizational
and related documents, materials and certificates as Lender shall
-8-
require in connection with the execution, delivery and performance of this
Commitment and the Tri-Party Agreement by all parties thereto (other than
Lender).
L. [Intentionally omitted]
M. Leases. The Lender shall have received a true and
complete copy of each lease, sublease, license or other occupancy agreement
affecting the Property or any portion thereof (including all amendments,
supplements and modifications)(collectively, "Leases") and each Lease shall be a
Permitted Lease (as defined in the Form Loan Documents). Without limiting the
provisions of the preceding sentence, Lender may condition its approval of any
Lease requiring its approval as aforesaid upon the unconditional execution and
delivery by (x) the tenant or other occupant under such Lease of an estoppel
certificate in the form attached hereto as Exhibit B-3, the contents of which
estoppel certificate shall be reasonably acceptable to the Lender and/or (y)
such tenant and Borrower of a subordination non-disturbance and attornment
agreement substantially in the form of Exhibit B-4 hereto (an "SNDA").
N. [Intentionally omitted]
O. Financial and Operating Statements; Tax Returns. Lender
shall have received pro forma financial statements for the Borrower for such
periods as the Lender shall reasonably require as prepared by Borrower in good
faith.
P. Insurance. The obligations set forth in the Form Loan
Documents relating to insurance shall have been satisfied.
Q. Rent Roll. The Lender shall have received a current rent
roll listing each and every Lease, identifying the leased property, names of all
tenants, square footage or other identification of space leased, monthly rental
and all other charges payable under the Lease, date to which paid, term of
Lease, date of occupancy, date of expiration, renewal options (including rental
base), rent arrears, rent escalations, amounts taken in settlement of
outstanding arrears, collections of rent for more than one (1) month in advance,
real estate taxes paid by tenants, common charges paid by tenants, tenant
pass-throughs, and such other information as is reasonably requested by Lender.
Borrower shall sign, date, and certify the rent roll as true, complete and
accurate as of the Closing Date.
R. U.C.C. and Lien Searches. The Lender shall have received
U.C.C. and lien searches against such parties as Lender may require, the results
of which searches shall not disclose any Liens (as defined in the Form Loan
Agreement) other than (x) Mechanics' Liens that are permitted under this
-9-
Commitment and (y) other Permitted Encumbrances (as defined in the Form Loan
Agreement)(other than Mechanics' Liens).
S. Environmental Site Assessment. The Lender shall have
received written reports prepared by EMG with respect to the environmental
condition at the Project in form and substance reasonably satisfactory to Lender
and in accordance with the following provisions (collectively, the
"Environmental Reports"). The environmental professionals at EMG, their
qualifications, the scope and methodology of their investigations, the
Environmental Report and the recommendations set forth therein and the form,
scope and substance of their certifications to Lender shall be reasonably
acceptable to Lender in all respects. The Environmental Reports shall include
the following which shall be prepared by EMG: (i) a Final Phase I environmental
site assessment assessing the presence of environmental contaminants, PCBs or
storage tanks at the Project conducted in accordance with ASTM Standard E
1527-94, or any successor thereto published by ASTM; (ii) a Phase II
environmental site assessment at Borrower's cost in the event that EMG
determines that the Phase I environmental site assessment is unsatisfactory or
suggests that a Phase II environmental site assessment is recommended or
warranted; and (iii) such further site assessments as EMG may recommend due to
the results obtained in (i) or (ii) above or due to any other information
available to EMG regarding environmental conditions at the Project. All fees and
expenses in connection with the Environmental Report shall be paid by Borrower.
Borrower shall obtain permission for such environmental professional
to enter upon the Project for purposes of conducting such environmental
assessment. The Environmental Report shall be accompanied by a certification
from EMG stating that the Environmental Report meet Lender's scope of work and
that Lender and its successors and assigns are entitled to rely on such
Environmental Report.
Borrower and Principal acknowledge and agree that, without limiting
the generality of any other term, provision or condition of this Commitment,
based on any information contained in, or furnished or communicated in
connection with, such Environmental Reports or other environmental
documentation, a copy of which has been provided to Borrower, or any
uncertainties raised thereby, in the event that a reasonably likely source of
material liability is identified, the nature and/or extent of which was not
identified in the Existing Environmental Reports, as defined in Tri-Party
Agreement, Lender reserves the absolute right, in its sole and exclusive
discretion, to decline to make the Loan or to impose additional conditions that
must be satisfied prior to or after the Closing of the Loan (including, without
limitation, requiring additional investigation into environmental conditions in
connection with the Project, testing and sampling of soil, water, air, building
materials, or other
-10-
substances or materials). All fees and expenses in connection with the
Environmental Report shall be paid by Borrower.
T. [Intentionally omitted]
U. [Intentionally omitted]
V. Indebtedness; Subordinate Loan. (i) Borrower shall have
(x) no debts other than the Loan, the Subordinate Loan, the Mezzanine Loan (to
the extent permitted under subparagraph (ii) below), trade debt incurred in the
ordinary course of Borrower's business of operating the Property and Permitted
Other Indebtedness, and (y) no liabilities other than those described in the
foregoing clause (x) and other liabilities incurred in the normal operations of
the Property in accordance with the terms of the Form Loan Documents or
otherwise permitted under the Form Loan Documents.
(ii) Either (x) a Subsidiary (as defined below) or (y) a
Person that is not a Subsidiary but which is an Acceptable Holder (as defined
below), and which, in the case of (x) or (y)(unless such Acceptable Holder is an
Institutional Lender), is a "special-purpose entity" (the "Junior Lender") shall
have made a loan to Borrower , or Borrower shall have assumed a loan, in an
amount equal to the lesser of (1) $35,000,000 or (2) the greater of (aa) the
outstanding principal balance of the Substitute Tranche B Loan (as defined in
the GMAC Credit Agreement) that is outstanding on the Closing Date plus accrued
and unpaid interest thereon for the final interest accrual period that is then
not yet delinquent or (bb) the principal amount of the Tranche B Component (as
defined in the GMAC Credit Agreement) of the Construction Loan that is
outstanding on the Closing Date plus accrued and unpaid interest thereon for the
final interest accrual period that is then not yet delinquent (the "Subordinate
Loan"). All of the proceeds of the Subordinate Loan shall be used to pay a
portion of the Purchase Price which shall, in turn, be used to payoff the
Construction Loan. The Subordinate Loan shall be secured by a second priority
(or, if the Mezzanine Loan shall be outstanding on and after the Closing Date in
accordance with the provisions of clause (iii) below, a third priority) deed of
trust and security interest on the Real Property Collateral and shall be fully
subordinated to the Loan pursuant to the terms of the Junior Loan Documents. The
Junior Loan Documents shall provide, among other things, that (A) the term of
the Subordinate Loan is five (5) years (and the Borrower shall have the right to
extend such term for an additional three (3) years without the payment of any
fee or other compensation), (B) current payments under the Subordinate Loan will
be made (subject to the other provisions of this paragraph "V") only from
revenue generated by the Property after payment of all debt service and other
payments under the Loan that are then due and payable, payment of all operating
expenses and capital expenditures relating to the Property and funding of all
reserves required by Lender pursuant
-11-
to the Form Loan Documents (the "Required Reserves") ("Excess Cash Flow")(and,
if the Mezzanine Loan shall be outstanding as provided below, the making of any
payments required under the Mezzanine Loan Documents), provided that (1) at any
time that an Event of Default shall exist under the Loan Documents, no payments
shall be permitted under the Junior Loan Documents (but interest under the
Junior Loan Documents shall, in all events, be permitted to accrue and compound
and the obligation to pay the same shall be deferred until both (x) no Event of
Default exists and (y) Excess Cash Flow (net, if the Mezzanine Loan shall be
outstanding as provided below, of amounts that are payable under the Mezzanine
Loan Documents) is sufficient to pay the same); provided further that if the
Mezzanine Loan shall be outstanding on and after the Closing Date, until such
time (such time, the "Amortization Achievement Event") as (aa) the aggregate
outstanding principal balance of the Loan, the Mezzanine Loan and the
Subordinate Loan shall equal (bb) the sum of the original principal amount of
the Loan and the original principal amount of the Subordinate Loan (i.e. without
giving effect to any capitalization of accrued interest), (i) no payments shall
be permitted under the Junior Loan Documents (but interest under the Junior Loan
Documents shall, in all events, be permitted to accrue and compound and the
obligation to pay the same shall be deferred until both the Amortization
Achievement Event shall occur and Excess Cash Flow (net, if the Mezzanine Loan
shall be outstanding as provided below, of amounts that are payable under the
Mezzanine Loan Documents) shall be sufficient to pay the same) and (ii) Borrower
shall use all Excess Cash Flow (net of Tax Distributions and after the funding
of reserves (without duplication of the Required Reserves) in an aggregate
amount not to exceed $1,000,000) to prepay the principal amount of the Loan, (C)
the Junior Loan Documents and all of the Junior Lender's rights and remedies
under the Junior Loan Documents at all times shall be subject and subordinate to
the Loan Documents and all of the Lender's rights and remedies under the Loan
Documents, (D) without the prior written consent of the Lender, the Junior
Lender shall not foreclose or take any other enforcement action under the Junior
Loan Documents unless all Indebtedness (as defined in the Form Loan Documents)
shall have been indefeasibly satisfied in full for a period of at least ninety
(90) days, (E) the Junior Lender shall not increase, renew, extend, restate,
replace, supplement, amend or modify any Junior Loan Document or the
indebtedness with respect thereto (and the total indebtedness secured or
evidenced by the Junior Loan Documents shall not be increased (other than the
capitalization of interest or the making of "protective" advances, in each case,
in accordance with the express provisions of the Junior Loan Documents and of
the Form Loan Documents) without, in each case, the prior written consent of the
Lender; provided that the Lender shall not unreasonably withhold or delay its
consent to any amendment of or modification to any Junior Loan Document that
does not (x) change the Junior Loan Subordination Provisions, (y) effect an
increase in the indebtedness evidenced or secured by any Junior Loan
-12-
Document (the "Junior Indebtedness") or the interest rate(s) applicable thereto
or (z) accelerate the maturity date applicable to the Junior Indebtedness or the
date upon which any of the Junior Indebtedness shall be payable and (F) if the
Junior Lender shall desire to assign or participate out the Subordinate Loan or
the Junior Loan Documents or any interest therein, it shall afford the Lender
the right of first refusal to purchase the same on the terms upon which the
Junior Lender will, unless the Lender exercises such right, sell the Subordinate
Loan, Junior Loan Documents or interest, as applicable. As used herein, the term
"Junior Loan Documents" shall have the meaning given thereto in the Form Loan
Agreement. As used herein, the term "Acceptable Holder" shall mean any of the
following: (i) a savings bank, savings and loan association, commercial bank,
pension fund, trust company (whether acting individually or in a fiduciary
capacity) or insurance company (whether acting individually or in a fiduciary
capacity) that has a combined capital and surplus of $500,000,000 or more (each
of the entities described in this clause (i), an "Institutional Lender"), (ii) a
real estate investment trust existing in compliance with Sections 856 through
860 of the Internal Revenue Code of 1986, as amended from time to time, or a
regional or national shopping center development company, in either case, whose
shares are publicly traded on a national securities exchange and that has an
equity market capitalization of $250,000,000 or more or (iii) an Alternate
Lender (as defined below) approved by the Lender (which approval shall not be
unreasonably withheld). Notwithstanding the foregoing, in no event shall the
Subordinate Loan be assigned or participated by or to an Affiliate of Borrower
at any time that an Event of Default shall exist under the Form Loan Documents.
The term "Subsidiary" shall mean entity (i) that is controlled (as defined in
the definition of Affiliate) by the Principal (or, in the case of the death or
legal incapacity of the Principal, the applicable Person or Persons referenced
in clause (ii) or (iii), as applicable, of the definition of "Permitted
Transfer" contained in the Form Loan Documents) and (ii) all of the ownership
interests of, and voting rights with respect to, are owned by the Persons that
are, under the express terms of the Loan Documents, permitted to own ownership
interests in, and voting rights with respect to, the Borrower. The term
"Alternate Lender" shall mean any Person that shall not be, and shall not have
been, a party (or an Affiliate of a party): (i) with whom Lender (or any
Affiliate thereof) or any other third-party lender shall have had a dispute
based either on (a) alleged bad faith dealings or fraudulent conduct or (b) an
alleged intentional breach with respect to an agreement between Lender (or any
Affiliate thereof) or any other third-party lender and the party in question (or
any Affiliate thereof) or (ii) the subject of any action, proceeding, hearing or
investigation (a) alleging or relating to criminal activity or (b) to revoke any
material license or permit.
-13-
(iii) If Construction Lender shall increase, in accordance with the
provisions of Section 3.4 and/or Section 3.5 of the Intercreditor Agreement (as
defined below), the principal amount of the Construction Loan, then, subject to
the terms hereof, a portion of the Construction Loan in the amount equal to the
lesser of (x) the aggregate amount of such increase or (y) $30,000,000 (such
portion, the "Mezzanine Loan") may remain outstanding on and after the Closing
Date. If the Mezzanine Loan shall be outstanding on and after the Closing Date,
the Mezzanine Loan shall be secured by a second priority deed of trust and
security interest on the Real Property Collateral and shall be fully
subordinated to the Loan pursuant to the terms of the loan documents relating to
the Mezzanine Loan (the "Mezzanine Loan Documents"). The Mezzanine Loan
Documents shall provide, among other things (A) for the interest rate provided
in the Intercreditor Agreement, (B) that the Mezzanine Loan may not be assigned
and/or participated out to any Person (other than an Institutional Lender)
without the prior written consent of Lender, (C) that the term of the Mezzanine
Loan shall be five (5) years (and the Borrower shall have the right to extend
such term for an additional three (3) years without the payment of any fee or
other compensation), (D) current payments under the Mezzanine Loan will be made
only from Excess Cash Flow, provided that (1) at any time that an Event of
Default shall exist under the Loan Documents, no payments shall be permitted
under the Mezzanine Loan Documents (but interest under the Mezzanine Loan
Documents shall, in all events, be permitted to accrue and compound and the
obligation to pay the same shall be deferred until both (x) no Event of Default
exists and (y) Excess Cash Flow is sufficient to pay the same; provided further
that until the Amortization Achievement Event, (i) no payments shall be
permitted under the Mezzanine Loan Documents (but interest under the Mezzanine
Loan Documents shall, in all events, be permitted to accrue and compound and the
obligation to pay such interest shall be deferred until both the Amortization
Achievement Event shall occur and Excess Cash Flow shall be sufficient to pay
such interest) and (ii) Borrower shall use all Excess Cash Flow (net of Tax
Distributions and after the funding of reserves (without duplication of the
Required Reserves) in an aggregate amount not to exceed $1,000,000 at any one
time) to prepay the principal amount of the Loan, (E) the Mezzanine Loan
Documents and all of the Mezzanine Lender's rights and remedies under the
Mezzanine Loan Documents at all times shall be subject and subordinate to the
Loan Documents and all of the Lender's rights and remedies under the Loan
Documents, (F) the Mezzanine Loan Documents shall contain the provisions set
forth on Exhibit B-5 attached hereto (the "Mezzanine Loan Subordination
Provisions") and no terms or provisions that are inconsistent therewith and
Construction Lender shall not take any action, or refrain from taking any
action, inconsistent with the Mezzanine Loan Subordination Provisions, (G)(1)
without the prior written consent of the Lender, the Mezzanine Lender shall not
foreclose or take any other enforcement action under the Mezzanine Loan
Documents
-14-
unless all Indebtedness shall have been indefeasibly satisfied in full and (2)
in the event that Lender is required, pursuant to Section 544, 547 or 548 of the
U.S. Bankruptcy Code, to disgorge any amounts paid by the Borrower under the
Loan Documents, then Mezzanine Lender shall, within ten days of demand therefor
by Lender, pay over to Lender funds in an amount equal to the lesser of (aa) the
amount that Lender is required so to disgorge or (bb) the aggregate amount
received by Mezzanine Lender in respect of the Mezzanine Indebtedness after
Mezzanine Lender foreclosed or took any other enforcement action, (H) the
Mezzanine Lender shall not increase, renew, extend, restate, replace,
supplement, amend or modify any Mezzanine Loan Document or the indebtedness with
respect thereto (the "Mezzanine Indebtedness") (and the total indebtedness
secured or evidenced by the Mezzanine Loan Documents shall not be increased
(other than the capitalization of interest or the making of "protective"
advances, in each case, in accordance with the express provisions of the
Mezzanine Loan Documents and of the Form Loan Documents) without, in each case,
the prior written consent of the Lender; provided that the Lender shall not
unreasonably withhold or delay its consent to any amendment of or modification
to any Mezzanine Loan Document that does not (x) change the Mezzanine Loan
Subordination Provisions, (y) accelerate an increase in the indebtedness
evidenced or secured by any Mezzanine Loan Document (the "Mezzanine
Indebtedness") or the interest rate(s) applicable thereto or (z) change the
maturity date applicable to the Mezzanine Indebtedness or the date upon which
any of the Mezzanine Indebtedness shall be payable and (I) if the Mezzanine
Lender shall desire to assign or participate out the Mezzanine Loan or the
Mezzanine Loan Documents or any interest therein, it shall afford the Lender the
right of first refusal to purchase the same on the terms upon which the
Mezzanine Lender will, unless the Lender exercises such right, sell the
Mezzanine Loan, Mezzanine Loan Documents or interest, as applicable. Without
limiting the foregoing, the form and substance of the Mezzanine Loan Documents
shall be subject to the Lender's approval (which approval, other than with
respect to the Mezzanine Subordination Provisions, shall not be unreasonably
withheld).
W. [Intentionally omitted].
X. Bankruptcy. Neither Borrower nor any member in Borrower
nor the Principal nor the landlord under the Billboard Additional Premises Lease
nor, if the Subdivision shall not exist as of the Closing, the landlord under
the Mall Master Lease (each of the foregoing, an "Enumerated Party") shall have
made a general assignment for the benefit of creditors, and there shall not have
been filed by or against any Enumerated Party a petition which has not been
dismissed prior to the Closing Date under any Legal Requirement pertaining to
bankruptcy, arrangement, insolvency or reorganization or under any similar Legal
Requirement or for the appointment of a receiver, and no action, case or
proceeding which has not been dismissed prior to
-15-
the Closing Date shall have been commenced under any such Legal Requirement with
respect to any Enumerated Party or for the composition, extension, arrangement
or adjustment of any Enumerated Party's obligations, and there shall not have
been a suspension of any Enumerated Party's primary business and there shall not
have occurred the issuance of any warrant or attachment against any substantial
part of the property of any Enumerated Party or the taking of possession of or
assumption of control of all or any substantial part of the property of any
Enumerated Party's business by any governmental authority. If any of the
foregoing shall occur at any time prior to the funding of the Loan, then this
Commitment shall automatically and immediately terminate without further notice
and without further action on the part of Lender.
Y. No Default. There shall not exist any monetary or any
material non-monetary default on the part of the Borrower or the Principal under
this Agreement, under the Tri-Party Agreement or under any documents, instrument
or certificate delivered in connection herewith or therewith.
Z. Subdivision. Borrower shall use its best efforts to
consummate the Subdivision as soon as practicable; provided that it shall not be
a condition precedent to Lender's obligation to fund the Loan that the
Subdivision exist on the Closing Date.
AA. No Condemnation, Litigation or Casualty. No portion of
the Property (other than a de minimis portion thereof) and no material portion
of the remainder of the Project shall have been taken in condemnation, eminent
domain or a similar proceeding (or conveyed in lieu thereof) and no such
proceeding shall be pending (except to the extent that any such taking shall
constitute a Permitted Transfer (as defined in the Form Loan Agreement)). No
action, suit or proceeding shall be pending against or affecting the Borrower,
the Principal or the Collateral (and no judgment(s) or decree(s) shall have been
entered against any such entity or person) which is reasonably likely to have a
material adverse effect on the value of the Collateral or on the financial
condition of the Borrower. No portion of the Property or of the remainder of the
Project shall have been damaged or destroyed by fire or other casualty, and no
other loss with respect thereto shall have occurred, that (x)(1) in the case of
the Property, resulted in a loss of $500,000 or more (a "Material Mall Loss") or
(2) in the case of the remainder of the Project, is material (a "Material
Project Loss") and (y) in any such case, shall not have been repaired to the
extent required for the Project to be in the condition required on the Mall
Release Date (as defined in the FADAA); provided that with respect to any
damage, destruction or loss with respect to the Property or the remainder of the
Project that shall not constitute a Material Mall Loss or a Material Project
Loss, sufficient insurance proceeds must be available to the Borrower,
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to the Trustee under the REA or to the owner of the remainder of the Project, as
applicable, to restore the Property to the condition required on the Mall
Release Date and the relevant part(ies) shall be diligently effecting such
restoration.
4. Loan Documents. The Borrower, Principal, Manager and other
parties thereto shall unconditionally execute and deliver loan documents and
related documents substantially in the forms attached hereto as Exhibit B-6,
together with the Additional Loan Documents (as defined below) (all of the
foregoing, collectively, the "Form Loan Documents") with such changes thereto as
the Lender shall reasonably require, as well as all other documents,
instruments, certificates and financing statements as the Lender shall
reasonably require; provided that, such changes and such other documents,
instruments, certificates and financing statements shall (a) be required by the
Lender as the result of a legal requirement that is enacted, promulgated or
changed after the date hereof and/or by any title company and (b) not conflict
with any of the terms or provisions of this Commitment. The Guaranty by the
Principal, substantially in the form of Exhibit B-6A hereto (the "Form Payment
Guaranty") shall be executed and delivered by the Principal on the date hereof
and held by the Lender in escrow (the "Escrowed Guaranty"). Automatically, at
such time, if any, as the Lender shall fund the Loan, without the execution of
any further document, instrument or other writing by any Person or the taking of
any further action by any Person, the Escrowed Guaranty shall (x) be deemed to
be dated as of the date of the funding of the Loan and (y) be released from
escrow and shall, for all purposes, be in full force and effect; provided that,
without limiting the generality of the foregoing, (aa) Lender shall be entitled,
on or after the Closing Date, to date the Escrowed Guaranty as of the same date
as the other Loan Documents and (bb) at the Closing, as a condition to Lender's
obligation to fund the Loan, if the Lender shall so request, the Principal shall
execute and deliver a new guaranty, in the form of the Form Payment Guaranty, to
replace the Escrowed Guaranty (a "Replacement Guaranty"). If Lender shall
require a Replacement Guaranty, then, promptly after the Principal shall
unconditionally execute and deliver the Replacement Guaranty to Lender, Lender
shall return the Escrowed Guaranty to the Principal. The "Additional Loan
Documents" means the collective reference to (i) a pledge and security agreement
in form and substance reasonably satisfactory to Lender, which creates in favor
of the Lender a perfected first priority security interest on the Retainage
Escrow Account (as defined in the Form Loan Agreement) and the Retainage Escrow
Collateral (as defined in the Form Loan Agreement) and (ii) a pledge and
security agreement in form and substance reasonably satisfactory to Lender,
which creates in favor of the Lender a perfected first priority security
interest on the Management Fees Escrow Account (as described in, and as the same
will be defined in, the Form Loan Agreement) and the Management Fees Collateral
(as described in, and as the same will be defined in, the Form Loan Agreement),
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together with any UCC financing statements reasonably required by Lender in
connection therewith.
5. Secondary Market. In addition to Lender's rights under Exhibit
A to this Commitment set forth under the heading "Assignment and Participation",
Lender may, at any time, transfer any or all servicing rights with respect to
the Loan or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in or secured by the Loan in a rated or unrated
public offering or private placement (the "Securities"), and may forward to each
purchaser, transferee, assignee, servicer, participant or investor, or any
nationally recognized statistical rating organization that has been requested to
assign a rating to Securities (collectively, the "Investor") or prospective
Investor all documents and information Lender has with respect to the Loan as
Lender deems necessary or desirable. Borrower shall furnish and Borrower
consents to Lender furnishing to such Investor or such prospective Investor all
information concerning the Project, the Leases and the financial condition of
Borrower and the Project in such form, substance and detail as Lender or such
Investor or prospective Investor may reasonably request. In connection with any
such sale, transfer, assignment or participation (or any proposed sale,
transfer, assignment or participation) the Borrower and the Principal shall
provide an estoppel certificate to the Investor or prospective Investor in form
and content reasonably satisfactory to the Lender and such Investor or
prospective Investor. Lender shall not sell Securities in a private placement to
a Competitor; provided that the Lender shall be entitled to rely on a written
statement from the proposed purchaser that it is not a Competitor (without
making any further inquiry or investigation) and the Lender shall not be liable
to the Borrower or to any other Person if Lender shall consummate such private
placement with a Person that shall in fact be a Competitor notwithstanding the
fact that such Person delivered such a written statement.
6. Other Documentation. Borrower and the Principal shall provide
Lender with such other evidence, documents, information and materials as Lender
or its counsel may reasonably require.
7. No Oral Change. This Commitment may not be modified, amended,
waiver, extended, changed, discharged or terminated orally, or by any act or
failure to act on the part of Lender, Borrower or the Principal, but only by an
agreement in writing signed by the party against whom the enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
8. Waiver/Survival. The provisions of this Commitment cannot be
waived or modified unless such waiver or modification is in writing and signed
by Borrower, the Principal and Lender (including, without limitation, the
Tri-Party
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Agreement). Except as otherwise set forth in the Tri-Party Agreement this
Commitment is for the benefit only of the parties hereto and no third party
(other than any Investor) shall have any interest therein or in the proceeds of
the Loan. This Commitment, together with the Tri-Party Agreement, sets forth the
entire agreement among Borrower, the Principal and Lender, and all other
agreements shall be deemed to have merged herewith. Each of Borrower and the
Principal acknowledges that Lender has made no representations or warranties to
Borrower or the Principal (except as expressly set forth in the Tri-Party
Agreement).
9. Non-Assignability. Except as otherwise expressly provided in
the Tri-Party Agreement, this Commitment and the proceeds of the Loan are not
assignable, and the duties and obligations of the Borrower and the Principal
under this Commitment are not delegatable, by Borrower or the Principal to any
other person or entity without Lender's prior written consent.
10. Publicity. In the event the Loan contemplated herein is made,
Lender shall have the right, at its sole cost and in compliance with applicable
law, to issue press releases, advertisements and other promotional materials
describing in general terms or in detail, Lender's participation in such
transaction, subject to approval of Borrower, such approval not to be
unreasonably withheld or delayed.
11. Confidentiality. This Commitment (and financial materials
furnished by the Borrower to Lender in connection herewith) is being furnished
on a confidential basis and the contents hereof may not be disclosed by
Borrower, the Principal or Lender to third parties, except that each party
hereto may disclose such information (a) in connection with any litigation
between Lender, as one party, and Borrower and/or Principal, as another party,
(b) upon the order, request or demand of any governmental authority or if
otherwise required by applicable law, (c) in the case of Lender, in connection
with the exercise of any right or remedy hereunder or under any Loan Document
after the occurrence of an event of default or default, (d) to those of its
employees, accountants, attorneys, agents and other advisors, directors,
officers, shareholders, partners, members and other principals who are working
on, or are consulted in connection with, the transactions contemplated hereby or
by the Loan Documents, (e) to other Lenders (as defined in the FADAA) and to
their respective employees, accountants, attorneys, agents and other advisors,
directors, officers, shareholders, partners, members and other principals who
are working on, or are consulted in connection with, the transactions
contemplated by the FADAA, (f) thereof in the case of Lender, to any actual or
potential participant, assignee, agent, investor or servicer that agrees to be
bound by the provisions of this Section (or the comparable provision in the Loan
Documents), (g) if such information is or
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becomes generally available to the public, other than as a result of the
disclosure by such party in breach of this provision, (h) any rating agency that
may or will rate any class of securities in connection with a Securitization or
(i) that is or becomes available to any such party from any source other than
any party hereto or its Affiliate unless the party supplying such information
shall have advised the applicable party hereto that such source is subject to a
confidentiality agreement that covers the information in question. In the event
that any party hereto (the "Requested Party") is required or demanded by legal
process (e.g., depositions, interrogatories, requests for information or
documents, subpoena, civil investigation demand or similar process) to disclose
any of the contents of this Commitment, such party shall give prompt written
notice to the other parties hereto of such request or demand so that any party
hereto (other than the Requested Party) may, should it elect to do so, within
five (5) Business Days of receipt of such notice, seek a protective order or
other appropriate remedy to challenge or contest such request (and give the
Requested Party notice thereof), and during the pendency of any such action the
Requested Party shall not, to the extent permitted by applicable law, disclose
such contents of this Commitment.
12. Closing Funds. All funds required to be paid by Borrower or
the Principal to Lender under this Commitment must be in the form of certified
funds or made by wire transfer of immediately available federal funds.
13. Assignment of Commitment. Lender may, at any time prior to
Closing, (x) without Borrower's or Principal's consent, to any Affiliate of
Lender and (y) with Borrower's consent (which shall not be unreasonably withheld
or delayed (unless the proposed assignee shall be a Competitor)), to any other
Person that is not a Competitor, transfer and assign this Commitment, and
delegate its duties and obligations under this Commitment, to another lender
which assumes the obligation to originate the Loan pursuant to the terms of this
Commitment; provided, however, that Lender shall not be released from liability
under the terms of this Commitment. Lender shall be entitled to rely on a
written statement from the proposed assignee that it is not a Competitor
(without making any further inquiry or investigation) and the Lender shall not
be liable to the Borrower or to any other Person if Lender shall consummate such
assignment to a Person that shall in fact be a Competitor notwithstanding the
fact that such Person delivered such a written statement.
14. Broker Indemnification. (a) The Borrower and the Principal
hereby represent and warrant to the Lender that neither the Borrower nor the
Principal has dealt with any broker, finder or similar person or entity in
connection with this Commitment or the transactions contemplated hereby (other
than Affiliates of Lender, with respect to whom no brokerage, finder's or
similar fee is payable by Borrower). The Borrower and the Principal
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hereby agree to indemnify, save harmless and defend the Lender from and against
(i) any and all claims asserted by any broker, finder or similar person or
entity (other than Affiliates of Lender) for any broker's, finder's or similar
fee or commission arising from, through or under the Borrower, the Principal or
any Affiliate thereof in connection with the negotiation, execution, or
performance of this Commitment and (ii) all losses, costs and expenses
(including, without limitation, reasonable attorneys' fees, disbursements and
expenses) suffered or incurred by the Lender in connection therewith. The
provisions of this paragraph shall survive the expiration or termination of this
Commitment.
(b) The Lender hereby represents and warrants to the Borrower and
to the Principal that the Lender has not dealt with any broker, finder or
similar person or entity in connection with this Commitment or the transactions
contemplated hereby (other than Affiliates of Lender, to whom no brokerage,
finder's or similar fee is payable by Borrower). The Lender hereby agrees to
indemnify, save harmless and defend the Borrower and the Principal from and
against (i) any and all claims asserted by any broker, finder or similar person
or entity for any broker's, finder's or similar fee or commission arising from,
through or under the Lender or any Affiliate thereof in connection with the
negotiation, execution, or performance of this Commitment and (ii) all losses,
costs and expenses (including, without limitation, reasonable attorneys' fees,
disbursements and expenses) suffered or incurred by the Borrower or the
Principal in connection therewith. The provisions of this paragraph shall
survive the expiration or termination of this Commitment.
15. No Material Misstatement. Borrower represents and warrants
that, as of the date hereof, no written statement of fact made by or on behalf
of the Borrower or the Principal in or in connection with this Commitment or in
any certificate, document, exhibit or schedule furnished by the Borrower or the
Principal to the Lender pursuant hereto or thereto contains any untrue statement
of a material fact or omits to state any material fact relating specifically to
the Loan, the Collateral, the Project, the Borrower, the Principal or the
business to be operated at the Property, that is known to Borrower, Principal or
any Affiliate thereof and is necessary to make statements contained herein or
therein not misleading. There is no event or circumstance relating specifically
to the Loan, the Project, the Borrower, Principal and/or the business to be
operated at the Property presently known to the Borrower or the Principal which
has not been disclosed to the Lender which might reasonably be expected to cause
a Material Adverse Effect. Borrower acknowledges that if the Loan shall be made,
Lender will have relied on this representation and warranty in making the Loan.
16. No Approval by the Lender. Except to the extent expressly
provided herein or in the Tri-Party Agreement, the execution of this Commitment
by Lender shall not imply the
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approval by Lender of any document or information previously furnished to
Lender, it being acknowledged by all parties hereto that, except to the extent
expressly provided herein or in the Tri-Party Agreement no other approvals have
been given by Lender with respect to the Loan.
17. Principal's Obligations under Commitment. The Lender
acknowledges that the only obligations that the Principal shall be required to
perform under this Commitment shall be those obligations that are specifically
stated in this Commitment to be the obligations of the Principal.
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[EXHIBIT B-1 Forms of OEA Estoppel Certificates]
[EXHIBIT B-2 Forms of Landlord Estoppel Certificates]
[EXHIBIT B-3 Form of Tenant Estoppel Certificate]
[EXHIBIT B-4 Form of SNDA]
[EXHIBIT B-5 Mezzanine Loan Subordination Provisions]
[EXHIBIT B-6 Form Loan Documents]
[EXHIBIT B-7 Form of Construction Lender's Certificate]
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