LIMITED LIABILITY COMPANY AGREEMENT
OF
ALADDIN BAZAAR, LLC
-------------------
THIS LIMITED LIABILITY COMPANY AGREEMENT OF ALADDIN BAZAAR, LLC, is entered
into effective as of September 3, 1997, by and between TH BAZAAR CENTERS INC., a
Delaware corporation ("TRIZECHAHN"), and ALADDIN BAZAAR HOLDINGS, LLC, a Nevada
limited liability company ("HOLDINGS II"). The capitalized terms used herein
shall have the respective meanings assigned to such terms in Article XII.
R E C I T A L S :
A. The Members desire to jointly develop a themed entertainment shopping
center (the "CENTER") on the site (the "MASTER SITE") of the renovated and
expanded Aladdin Hotel and Casino in Las Vegas, Nevada containing approximately
2,600 rooms and a an approximately 100,000 to 125,000 square foot casino,
together with related and physically attached facilities (the "ALADDIN HOTEL AND
CASINO") including an 800 room, themed casino/hotel on the corner of Harmon
Avenue and Audrie Street (the "AUDRIE/HARMON HOTEL"), (collectively, the
"REDEVELOPED ALADDIN") and a structured parking facility with spaces for
approximately 5,000 cars (the "PARKING FACILITIES"). In addition to the Parking
Facilities there will be an additional structured parking beneath the Aladdin
Hotel and Casino for approximately five hundred (500) cars (the "OTHER
PARKING").
B. The Center and the Parking Facilities, are together referred to herein
as the "BAZAAR IMPROVEMENTS." The Redeveloped Aladdin, the Other Parking and
the Bazaar Improvements are together referred to as the "MASTER DEVELOPMENT".
EXHIBIT "A", attached hereto and incorporated herein, contains the site plans
and renderings of the Master Development as envisioned as of the date hereof.
ARTICLE I
FORMATION
1.01 FORMATION
The Members shall form a Delaware limited liability company pursuant
to the provisions of the Delaware Act and this Agreement. In connection
therewith, a duly authorized representative of the Company shall execute a
Certificate of Formation for the Company in accordance with the Delaware Act,
which shall be duly filed with the Secretary of State of the State of Delaware.
Such duly authorized representative also shall execute, acknowledge and/or
verify such other documents and/or instruments as may be necessary and/or
appropriate in order to form the Company under the Delaware Act and/or to
continue its existence in accordance with the provisions of the Delaware Act
and/or to register, qualify to do business and/or operate its
business as a foreign limited liability company in any other state in which the
Company conducts business.
1.02 NAMES AND ADDRESSES
The name of the Company is "Aladdin Bazaar, LLC" The registered
office of the Company in the State of Delaware shall be at 1013 Centre Road,
Wilmington, Delaware 19805-1297. The name and address registered agent for the
Company in the State of Delaware shall be The Prentice-Hall Corporation System,
Inc., 1013 Centre Road, Wilmington, Delaware 19805-1297. The name and address
of the resident agent for the Company in the State of Nevada shall be CSC
Services of Nevada, Inc., 501 E. John Street, Room E, Carson City, Nevada
89706-3078.
The name, address and facsimile number of TrizecHahn are as follows:
TH Bazaar Centers Inc.
4350 La Jolla Village Drive, Suite 400
San Diego, California 92122-1233
Attention: Mr. Wayne Finley and Wendy Godoy
(619) 546-3307
With a copy to:
TH Bazaar Centers Inc.
4350 La Jolla Village Drive, Suite 400
San Diego, California 92122-1233
Attention: General Counsel
The name, address and facsimile number of Holdings II are as follows:
Aladdin Bazaar Holdings, LLC
c/o Mr. Jack Sommer
2810 W. Charleston Boulevard, Suite 58
Las Vegas, Nevada 89102
(702) 870-8733
With a copy to:
Mr. Ronald B. Dictrow
Sigmund Sommer Properties
280 Park Avenue
New York, New York 10017
(212) 661-0844
1.03 NATURE OF BUSINESS
The express, limited and only purposes of the Company are (i) acquire
a ground lease (the "LEASE") for approximately 17.5 acres located within the
Master Site upon which the Bazaar Improvements are to be developed (the
"PROPERTY") and enter into a Reciprocal Easement Agreement with the owners and
certain lessees of the Master Development; (ii) develop and
construct the Bazaar Improvements, consisting of approximately 450,000 square
feet of gross leasable area and the Parking Facilities; (iii) to own, renovate,
rehabilitate, market, operate, lease, manage, hold for investment, finance,
refinance, hypothecate sell and/or otherwise realize the economic benefit from
the Bazaar Improvements; and (iv) to engage in such other activities as are
necessary and/or appropriate to accomplish the foregoing purposes.
1.04 FIDUCIARY DUTIES
(a) During the period commencing as of the date hereof and ending
upon the earlier of (i) five (5) years after the opening of the Bazaar
Improvements to the public ("OPENING"), (ii) the failure to satisfy the
Conditions Precedent and the abandonment of the Bazaar Improvements by the
Members pursuant to Section 3.06, (iii) TrizecHahn's failure to approve a
Satisfaction Notice pursuant to Section 3.06, (iv) the sale by TrizecHahn
of its Interest to a bona fide third party (and not an Affiliate of
TrizecHahn) and not for the purpose of circumventing this Section 1.04(a)
through such sale, or (v) the dissolution of the Company (the
"NON-COMPETITION PERIOD"), TrizecHahn hereby agrees that TrizecHahn and any
Affiliate of TrizecHahn shall not, without the prior written consent of
Holdings II, which consent may be withheld in Holdings II's sole
discretion, directly or indirectly (other than through its ownership
interest in the Company), develop any "Competing Retail Project", as
defined below, which competes with the Bazaar Improvements within the
"Non-Competition Area", as defined below. For purposes of this Section
1.04(a), the term "COMPETING RETAIL PROJECT" shall mean a shopping center
attached to a casino hotel. Any expansions, remodels or acquisitions of
the Fashion Show or interests therein are specifically excluded from the
definition of a "Competing Retail Project" (in the event that a casino
hotel at some later date may attach to the Fashion Show). For purposes of
this Section 1.04(a), the term "NON-COMPETITION AREA" shall mean only that
portion of the Las Vegas strip north of the Aladdin Hotel to Spring
Mountain Road, and south of the Aladdin Hotel to Hacienda Avenue.
Notwithstanding the foregoing, the Members hereby acknowledge and agree
that the prohibitions contained in this Section 1.04(a) shall not apply to
(i) the acquisition (including interests therein) or management of a
Competing Retail Project within the Non-Competition Period and within the
Non-Competition Area, (ii) any other type of retail development which is
not a Competing Retail Project within the Non-Competition Area, (iii) any
activity conducted outside of the Non-Competition Area, or (iv) any
activity conducted after the Non-Competition Period.
(b) In view of the limited purposes of the Company, but subject to
Section 1.04(a) above, no Member shall have any obligations (fiduciary or
otherwise) with respect to the Company or to the other Member insofar as
making other investment opportunities available to the Company or to the
other Member. Each Member may, notwithstanding the existence of this
Agreement, engage in whatever activities such Member may choose, whether
the same are competitive with the Company or otherwise, without having or
incurring any obligation to offer any interest in such activities to the
Company or to the other Member. Neither this Agreement nor any activities
undertaken pursuant hereto shall prevent any Member from engaging in such
activities, and the fiduciary duties of the Members to each other and to
the Company shall be limited solely to those arising from the purposes of
the Company described in Section 1.03 above.
1.05 TERM OF COMPANY
The term of the Agreement shall commence on the date the Articles of
Organization for the Company is filed with the Delaware Secretary of State and
shall continue until December 31, 2099, unless dissolved pursuant to Article IX
or unless extended by the unanimous agreement of the Members.
ARTICLE II
MANAGEMENT OF THE COMPANY
2.01 DEVELOPMENT PLAN
The Members have approved a preliminary development plan (the
"DEVELOPMENT PLAN") for the development and construction of the Bazaar
Improvements, a copy of which is attached hereto as EXHIBIT "B." The
Development Plan includes, without limitation, (i) a pro forma development
budget (the "DEVELOPMENT BUDGET") containing a cost breakdown setting forth the
estimated development and construction costs that will be incurred by the
Members in connection with the development and construction of the Improvements,
together with projected revenues for the applicable period; and (ii) a leasing
plan ("LEASING PLAN"). When approved by the Members, the Development Plan shall
be updated to include (i) a preliminary site plan for the Bazaar Improvements
(the "SITE PLAN") showing the location of all improvements, parking, drives and
points of ingress and egress; (ii) an estimated time schedule for the completion
of the Improvements (the "CONSTRUCTION SCHEDULE"); (iii) an updated Leasing Plan
setting forth in reasonable detail the following items: (A) a description of
the proposed size of, type of tenants for and rent proforma for each tenant
space and tenant improvement allowances; and (B) a statement of projected
operating costs and lease revenues stated for the first calendar year following
the Opening, and (iv) the plans and specifications for the development and
construction of the Improvements (the "PLANS AND SPECIFICATIONS"). Upon the
earlier of (i) approval by the Board of the final Development Plan, or (ii)
commencement of construction, any changes to the Development Plan may only be
proposed by TrizecHahn.
2.02 DAY TO DAY OPERATIONS
TrizecHahn shall be responsible for, and shall make any and all
decisions relating to, the day-to-day operations of the Company. Any and all
agreements, contracts and other documents or instruments affecting or relating
to the day-to-day development and operational business and affairs of the
Company may be executed on the Company's behalf by TrizecHahn alone and without
execution by Holdings II provided that the amount involved for any such
agreement or other document is within the parameters established in the
Development Budget (as the same may be revised in accordance with the provisions
of Section 2.04 below) or in the Operating Budget (as the same may be revised in
accordance with the provisions of Section 2.05 below), or otherwise approved by
Holdings II. TrizecHahn shall use its reasonable efforts to carry out the
day-to-day business and affairs of the Company and shall devote such time to the
Company as is necessary, in the reasonable discretion of TrizecHahn, for the
efficient operation of the day-to-day business and affairs of the Company.
Without limiting TrizecHahn's authority set forth above in this Section 2.02,
but subject to the restrictions on TrizecHahn's authority set forth below in
Section 2.04, TrizecHahn (on behalf and at the expense of the Company) shall
have the right, power, and authority to undertake (or cause to be undertaken)
any and all of the following:
(a) Act as representative of the Company with respect to any
authorization or approval required pursuant to any agreement entered into
by the Company, including, but not limited to, the Development Agreement,
the Management Agreement, the Site Work Agreement, the Development
Agreement between Clark County and Holdings, the Lease, the Reciprocal
Easement Agreement and the Parking Use Agreement unless such approval or
action constitutes a decision exclusively reserved to the Board pursuant to
the provisions of Section 2.04 below. It is understood that TrizecHahn
alone may execute on behalf of the Company any documents, agreements or
approvals pursuant to the Development Agreement or the Management
Agreement, to the extent that such items are within the parameters
established in the Development Budget or Operating Budget, as the case may
be.
(b) Prepare, pursuant to the provisions of Section 2.05 hereof, and
regularly update, the Development Plan and Operating Budget for the Bazaar
Improvements. Upon the earlier of (i) approval by the Board of the final
Development Plan, or (ii) commencement of construction, changes to the
Development Plan may only be proposed by TrizecHahn.
2.03 BOARD OF MANAGERS
Except as otherwise provided in this Agreement, all aspects of the
business and affairs of the Company shall be managed, and all decisions
affecting the business and affairs of the Company shall be made, by a board of
managers (the "BOARD") composed of four (4) representatives in accordance with
the following:
(a) Subject to Section 2.03(o) and Section 3.02, TrizecHahn shall be
entitled to select two (2) representatives of the Board and Holdings II
shall be entitled to select two (2) representatives of the Board.
TrizecHahn hereby designates Wayne Finley and Wendy Godoy as its initial
representatives of the Board; and Holdings II hereby designates Jack Sommer
and Ronald Dictrow as its initial representatives of the Board. Each
Member may, from time to time, change such Member's designated
representative(s) of the Board by giving written notice thereof to the
other Member, provided that either (i) any replacement representative is a
partner, trustee, member, managing member, shareholder, officer or director
of such Member or an Affiliate thereof, or (ii) such replacement
representative is approved by the other Member, which approval shall not be
unreasonably withheld. The Board shall have the authority to make all
decisions affecting the business and affairs of the Company as fully and
completely as if the Members were themselves making such decisions.
(b) The number of representatives of the Board may be increased or
decreased from time to time by the Board so long as an equal number of the
representatives of the Board are appointed by each of TrizecHahn and
Holdings II.
(c) Regular meetings of the Board shall be held at the principal
office of the Company in Nevada (or at such other place(s) as are
designated by the Board) at such times as shall be designated from time to
time by the Board.
(d) Special meetings of the Board may be called by or at the request
of any representative of the Board and shall be held at the principal
office of the Company in Nevada (or at such other place(s) as are
designated by the Board). The person(s) authorized to call any special
meeting of the Board may designate any reasonable time for holding of the
special meeting.
(e) Representatives of the Board may participate in any regularly
scheduled or special meetings of the Board telephonically or through other
similar communications equipment, as long as all of the representatives
participating in the meeting can hear one another. Participation in a
meeting pursuant to the preceding sentence shall constitute presence in
person at such meeting for all purposes of this Agreement.
(f) Except for any regularly scheduled or special meeting of the
representatives of the Board, it is the express intent of the Members that
there shall not be any required (or regularly scheduled) meetings of the
Members.
(g) Notice of any meeting of the Board shall be given no fewer than
ten (10) business days and no more than thirty (30) days prior to the date
of the meeting. The attendance of a representative of the Board at a
meeting of the Board shall constitute a waiver of notice of such meeting,
except where a representative of the Board attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not properly called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
Board need be specified in the notice or waiver of notice of such meeting.
(h) Provided that notice of a meeting has been given or waived in the
manner set forth herein, a majority (in number) of the members of the Board
shall constitute a quorum for the transaction of business at any meeting of
the Board, provided that if less than a majority of such number of
representatives of the Board are present at such meeting, a majority of the
representatives of the Board present may adjourn the meeting at any time
without further notice.
(i) Provided that notice of a meeting has been given or waived in the
manner set forth herein, the act of a majority (in number) of the
representatives of the Board present shall be the act of the Board and
shall constitute a decision of the Board and such decision shall be binding
upon the Company and on each Member.
(j) Any action required or permitted to be taken at a meeting of the
Board may be taken without a meeting if a consent in writing, setting forth
the actions so taken, shall be signed by a majority (in number) of the
representatives of the Board entitled to vote with respect to the subject
matter thereof provided that each Member shall be provided with at least
one (1) business day prior notice of such proposed action.
Provided that such notice is given or waived in writing, any such consent
signed by a majority (in number) of the representatives of the Board shall
have the same effect as an act of a majority (in number) of the
representatives of the Board at a properly called and constituted meeting
of the Board at which all of the representatives of the Board were present
and voting.
(k) Except as otherwise determined by the Board or as approved as
part of the Development Budget or Operating Budget, no representative of
the Board nor any officer of the Company shall be entitled to receive any
salary or remuneration from the Company for services as a representative of
the Board or an officer of the Company.
(l) The Board may, by resolution, designate one (1) or more
individuals as employees or agents of the Company in furtherance of its
business and purposes. No such employee or agent need be a Member of the
Company. Each employee or agent shall have the authority and shall perform
the duties as designated by the Board from time to time. Any employee or
agent so appointed by the Board may be removed by the Board for any reason
or no reason whatsoever, with or without cause.
(m) Except as provided in Section 2.02, or as authorized pursuant to
the Development Agreement or the Management Agreement, all contracts,
agreements and other documents or instruments affecting or relating to the
business and affairs of the Company may be executed on the Company's behalf
only by the Member(s), officer(s) or such other authorized person(s) as are
designated in writing by the Board and without execution by any other
Member.
(n) Except as provided in Section 2.02 or elsewhere in this
Agreement, none of the Members or officers of the Company, without the
prior consent of the Board, shall take any action on behalf of or in the
name of the Company, or enter into any commitment or obligation binding
upon the Company, except for (i) actions expressly authorized by this
Agreement, (ii) actions on or after the date of this Agreement by any
Member (or officer) within the scope of such Member's (or officer's)
authority granted hereunder except as set forth in Schedule 2.14(d) or
otherwise authorized pursuant to Section 3.01, and (iii) actions authorized
by the Board in the manner set forth herein. Each Member hereby
indemnifies, defends, protects and holds harmless the other Member and each
such other Member's Affiliates, shareholders, officers, directors,
partners, members, employees, agents, and representatives (including the
representative(s) to the Board appointed by such Member) from and against
any and all losses, liability, damages, costs and/or expenses (including
attorneys' fees) arising out of the breach of any of the foregoing
provisions by such indemnifying Member, any representative of the Board
selected by such Member or such Member's Affiliates, shareholders,
officers, directors, constituent partners, members, managers, employees,
agents, or representatives.
(o) Notwithstanding the provisions of this Section 2.03 to the
contrary, to the extent that any Member acquires or obtains more than fifty
percent (50%) of the Percentage Interests of the Company (I.E., as a result
of a permitted transfer of a portion of a Member's Interest or, subject to
the sole discretion approval of the Members, the
admission of an additional Member to the Company), then such controlling
Member shall have the right at all times to appoint a majority in number of
the representatives of the Board, and the number of representatives
selected by the minority Members of the Company shall be reduced
proportionately. For example, in the event that a Member acquires more
than fifty percent (50%) of the Percentage Interest of the Company (either
as a result of the permitted transfer of a portion of a Member's Interest
or, subject to the sole discretion approval of the Members, the admission
of an additional Member to the Company), then such controlling Member shall
have the right to appoint three (3) of the representatives to the Board,
and the non-controlling Member shall have the right to appoint one (1)
representative to the Board.
2.04 AUTHORITY OF THE BOARD
Without limiting the generality of Section 2.02, and except as
otherwise provided by this Agreement, the consent of the Board shall be required
for, and the Board shall have the sole and exclusive right, power and authority
to approve the following:
(a) Any financing, refinancing or securitization of all or any
portion of the Bazaar Improvements and the use of any proceeds therefrom,
including, without limitation, interim, construction and permanent
financing, and any other financing or refinancing of the Company's
indebtedness and the execution and delivery of any documents, agreements or
instruments evidencing, securing or relating to any such financing,
refinancing and/or securitization;
(b) Subject to Section 2.02(b), approve any major development
decision, including but not limited to any material change to the
Development Plan, except for change orders which are consistent with the
ordinary course of construction of projects similar in scope and use to the
Bazaar Improvements;
(c) Any lease of space within the Bazaar Improvements in excess
of Twelve Thousand Five Hundred (12,500) square feet;
(d) The making of any expenditure by the Company that is not
specifically included or contemplated under the Development Budget or the
applicable Operating Budget, other than as permitted within any parameters
agreed to by the Members in any such Budget (e.g., application of line item
cost savings, contingency line item amounts, etc., except that TrizecHahn
shall not have the authority to increase the tenant improvement and theming
line items without Board approval); provided, however that TrizecHahn shall
have the authority to make any expenditure necessary to comply with
previously approved obligations of the Company;
(e) The Construction Contract for the development of the Bazaar
Improvements; and
(f) The delivery of a notice of default pursuant to the
Management Agreement or the Development Agreement.
In the event that the Board shall become deadlocked concerning any of the major
decisions listed above, then any Board member shall have the right to institute
arbitration proceedings pursuant to Section 11.13.
2.05 OPERATING BUDGET
THCM or its successors and assigns, as property manager of the Bazaar
Improvements, shall prepare and submit to the Board, for the Board's review and
approval, prior to the issuance of a certificate of occupancy for the Bazaar
Improvements and thereafter at least thirty (30) days prior to the end of each
fiscal year of the Partnership, a budget ("OPERATING BUDGET") for the ensuing
fiscal year or portion thereof. Following the approval of an Operating Budget,
TrizecHahn acting alone shall have the power to authorize THCM to incur any
expenditures authorized to be incurred under such approved Operating Budget for
the period covered by such approved Operating Budget, without the consent of the
Board. If the Board does not approve any proposed Operating Budget for any
fiscal year of the Company, then the last approved Operating Budget (as
previously increased, if applicable, pursuant to the following provisions of
this sentence) shall be deemed to apply with respect to such fiscal year until a
revised Operating Budget is approved for such fiscal year; provided, however,
(i) appropriate adjustments to such last approved Operating Budget shall
automatically be made to reflect actual increases in real property taxes,
insurance premiums, utility charges, and similar items over which the Company
has no control, and (ii) each other item other than any non-recurring items
(e.g., capital expenditures, including tenant improvements in excess of the
applicable amount set forth in the last approved Operating Budget) in such last
approved Operating Budget shall be increased by ten percent (10%) annually until
such time as the Board is able to agree upon a revised Operating Budget. In
addition, TrizecHahn acting alone shall be authorized without the consent of the
Board to incur, or authorize THCM to incur, expenditures on behalf of the
Company in excess of the various line item amounts that TrizecHahn is authorized
to incur in the last approved Operating Budget provided the sum of such
expenditures and the expenses projected to be incurred in the future under such
Operating Budget in the aggregate do not exceed one hundred five percent (105%)
of the aggregate estimated expenditures set forth in, and with respect to the
period covered by, such approved Operating Budget. Following the Opening,
THCM's responsibilities shall be as follows:
(a) THCM shall establish an on-site property management team to
manage, market, operate, lease and maintain the Bazaar Improvements.
(b) The Company shall provide THCM on-site office space (with
respect only for the management and leasing of the Center) at the Center
for a management office without any fee or charge for such space not to
exceed six thousand (6,000) square feet.
(c) THCM shall perform, or cause to be performed, all duties of
the Company as lessor under the leases with tenants leasing space in the
Center.
(d) THCM shall collect all rent and other monies due from
tenants and any sums otherwise due the Company with respect to the Center
in the ordinary course of business.
(e) THCM shall coordinate the leasing of space in the Center
(including the initial leasing of space in the Center, as well as all
subsequent re-leasing of space), and shall procure new leases and lease
renewals for the Company on terms and conditions which are in general
accordance with the approved leasing plan. When appropriate, THCM will
delegate the leasing of space in the Center, or a portion thereof, to
third-party independent leasing agents or brokers; provided, however, that
the total leasing commission shall not exceed the fees set forth pursuant
to Section 2.08. Any leasing commission payable to third-party independent
leasing agents or brokers previously in communication with Holdings II or
representing tenants (and not engaged by THCM on behalf of the Company)
shall not reduce the fees payable to THCM or its affiliates as set forth
pursuant to Section 2.08 under Leasing Fees. It is the understanding of
the parties that third party brokers previously in communication with
Holdings II shall be paid as third party brokers if and when appropriate in
accordance with the provisions of this Agreement.
(f) Upon the Company's approval by the Board of the Leasing Plan
or updated Leasing Plan, THCM shall negotiate and execute on behalf of and
as the agent of the Company all new leases, lease renewals and any
assignments, amendments or terminations thereof that are consistent with
the Leasing Plan, provided, however, that leases for space in excess of
12,500 square feet shall be submitted to the Board for approval prior to
execution.
(g) THCM shall prepare all documentation for any lease
transaction at the agreed-upon lease documentation rate.
(h) THCM shall, at the Company's cost and expense and subject to
the approval of the Board, retain the services of a Marketing Director who
shall provide specialized marketing services for the Center.
(i) THCM shall, on behalf of and at the Company's cost and
expense, enforce all lease provisions to be performed by tenants of the
Center.
(j) THCM shall coordinate the security for the Center.
(k) THCM shall, at the Company's cost and expense, operate and
maintain the Center as a first-class regional shopping center and cause the
Company to comply with its Operating Covenant under the REA.
2.06 DEVELOPMENT FEES
As consideration for providing developments services in connection
with the project, THCM shall be paid a development fee ("DEVELOPMENT FEE")
pursuant to the terms of a separate development agreement ("DEVELOPMENT
AGREEMENT"), entered into between the Company and THCM in the form of EXHIBIT
"C" attached hereto. Pursuant to the Development Agreement, the Company shall
pay THCM a Development Fee in an amount equal to four percent (4%) of all costs
and expenses identified as "Construction Contracts", "Building Owner", "Site
Work and Utilities Contribution" costs, and total Parking Facilities costs,
prior to the
reduction for the "Parking Facilities Contribution from Hotel/Casino"
(collectively, "HARD CONSTRUCTION COSTS") identified as such in the Development
Budget for the Bazaar Improvements. Development administration costs shall be
charged directly to the Company. Upon execution of the Development Agreement in
form approved by the Company and THCM, then the provisions of this Section 2.06
shall be of no further force and effect.
2.07 MANAGEMENT FEES
As consideration for providing property management services for the
project, THCM shall be paid a management fee pursuant to the terms of the
management agreement ("MANAGEMENT AGREEMENT"), entered into between the Company
and THCM in the form attached hereto as EXHIBIT "D." The Company shall pay THCM
a fee based on four percent (4%) of rents and miscellaneous (operating) income
paid to the Company, or THCM on behalf of the Company, by tenants or other
individuals or entities associated with the Center (but not by Aladdin Gaming in
connection with the Use Agreement) during each calendar year or any partial
calendar year including, but not limited to, minimum rental, percentage rental,
and additional rental paid by tenants for the right to lease space in the Center
but excluding CAM charges, marketing charges and other "pass-through" charges
paid by tenants. Upon execution of the Management Agreement in form approved by
the Company and THCM, then the provisions of this Section 2.07 and Section 2.08
(below) shall be of no further force and effect.
2.08 LEASING FEES
In connection with leasing of the Center undertaken by THCM or its
affiliates, the Company will pay to THCM a leasing commission equal to five
percent (5%) of minimum annual rental for the first five years of any lease plus
two percent (2%) of minimum annual rental thereafter, with a fifty percent (50%)
discount on renewed space as more fully set forth in the Management Agreement.
In addition, the Company will pay to THCM a leasing commission equal to ten
percent (10%) of the minimum annual rental and percentage rental (if applicable)
for temporary tenants (I.E., a lease/license agreement for less than or equal to
twelve [12] months).
2.09 LIABILITY AND INDEMNITY
No Member, officer of the Company, representative of the Board or
other authorized representative of the Company ("INDEMNIFIED PARTY") shall be
liable or accountable in damages or otherwise to the Company or to the other
Member for any error of judgment or any mistake of fact or law or for anything
that such Indemnified Party may do or refrain from doing hereafter, except in
the case of fraud, willful misconduct or gross negligence in performing or
failing to perform such Indemnified Party's duties hereunder. To the fullest
extent permitted by law, the Company hereby indemnifies, defends, protects and
agrees to hold each Indemnified Party wholly harmless from and against any and
all loss, expense or damage suffered by such Indemnified Party by reason of
anything which such Indemnified Party may do or refrain from doing hereafter for
and on behalf of the Company and in furtherance of its interest; provided,
however, (i) no Indemnified Party shall be indemnified, defended and/or held
harmless from any loss, cost, expense or damage which such Indemnified Party may
suffer as a result of such Indemnified Party's fraud, willful misconduct or
gross negligence in performing or in failing to perform such Indemnified Party's
duties hereunder, and (ii) any such indemnity shall be recoverable only from the
assets of the Company. The provisions of this Agreement, to the
extent that they restrict the duties and liabilities of a Member (and/or an
officer or representative thereof) otherwise existing at law or in equity, are
agreed by the Members to replace such duties and liabilities of such Member
(and/or such officer or representative).
2.10 DESIGNATION OF OFFICERS
The Board may, from time to time, designate officers of the Company
and delegate to such officers such authority and duties as the Board may deem
advisable and may assign titles (including, without limitation, chief executive
officer, president, vice-president, secretary and/or treasurer) to any such
officer. Unless the Board otherwise determines, if the title assigned to an
officer of the Company is one commonly used for officers of a business
corporation formed under the Delaware Corporation Law, then the assignment of
such title shall constitute the delegation to such officer of the authority and
duties that are customarily associated with such office pursuant to the Delaware
Corporation Law. Any number of titles may be held by the same officer. Any
officer to whom a delegation is made pursuant to the foregoing shall serve in
the capacity delegated unless and until such delegation is revoked by the Board
or such officer resigns. The Company shall not have any managers within the
meaning of the Delaware Act.
2.11 COMPENSATION
Except as otherwise expressly provided in this Agreement or as
provided in any applicable Development Budget or Operating Budget, no Member or
any constituent partner, member, shareholder, officer, director, employee,
agent, trustee or representative of a Member, or any Affiliate thereof, shall
incur any obligation or make any expenditures on behalf of the Company, or be
entitled to receive any remuneration for services rendered to the Company or to
be reimbursed for general administrative and overhead expenses.
2.12 TREATMENT OF FEES AND REIMBURSEMENTS
For financial and income tax reporting purposes, any and all fees paid
by the Company to any Member and/or any Affiliate thereof shall be treated as
expenses of the Company and, if paid to any Member, as guaranteed payments
within the meaning of Section 707(c) of the Code. To the extent any accrued
portion of any such fee is not paid in full prior to the liquidation of the
Company, such unpaid portion of such fee shall constitute a debt of the Company
payable upon such liquidation.
2.13 APPROVAL RIGHTS OVER RELATED ALADDIN DEVELOPMENT
TrizecHahn shall have reasonable approval of the quality of
development and planning for the development of the Redeveloped Aladdin. This
approval right shall also be contained in the Reciprocal Easement Agreement. It
is the intention of Holdings II that such development shall be equal to or
better than the general quality of the Mirage, including but not limited to
interior finish, theming and attraction package, and standard hotel room, with a
higher percentage of suites and king parlors. Such standards are intended to
attract as a primary target the upper middle market segment, with an ambiance
equal to or better than Bally's and Mirage. Upon the opening, the Redeveloped
Aladdin is intended to be one of the top five hotels on the Las Vegas strip
taking into consideration for such purposes the hotels existing and/or announced
as of the date hereof in terms of market segment, average daily room rate, and
overall ambiance and market perception. Additionally, it is contemplated that
London Clubs International will market a five-star international premium class
Salle Privee facility, including a restaurant, 15,000 square foot casino and
high-end hotel suites. Attached hereto as EXHIBIT "E" is a preliminary
construction proforma and plans and drawings for the Redeveloped Aladdin. The
preliminary construction pro forma indicates a total project costs of
approximately Seven Hundred Million Dollars ($700,000,000), including a theming
budget of Thirty-Five Million Dollars ($35,000,000), for the Redeveloped Aladdin
(excluding the Audrie/Harmon Hotel). TrizecHahn acknowledges that nothing
contained herein is intended to be a guaranty of the economic performance of the
Redeveloped Aladdin or the Center, and none of the parties hereto shall have any
liability with respect to such economic performance. Such approval by
TrizecHahn shall include, but not be limited to, quality of traffic and
pedestrian circulation, ingress and egress, contractors, plans, drawings and
construction schedule. Aladdin Holdings, LLC and Aladdin Gaming will cause the
Redeveloped Aladdin, containing approximately 2,600 rooms and an approximately
100,000 to 125,000 square foot casino, to be developed on the Master Site
together with related facilities and infrastructure as depicted in EXHIBIT "A"
and shall have the right at a later date to construct the "Optional
Improvements" (as such term is defined in the current draft of the REA).
2.14 HOLDINGS II'S REPRESENTATIONS AND WARRANTIES
Holdings II hereby makes the following representations and warranties
to the Company and to TrizecHahn, with the understanding that each such
representation and warranty is material and is being relied upon by the Company
and by TrizecHahn. Any reference in this Section to "HOLDINGS II'S BEST
KNOWLEDGE" or words to similar effect means the actual knowledge of Jack Sommer,
Mel Lacquement and Ronald Dictrow (collectively, the "HOLDINGS II PRIMARY
INDIVIDUALS"), after the Holdings II Primary Individuals have reviewed their
files and the files maintained by Holdings II with respect to the Property.
(a) DEFINITION OF BEST KNOWLEDGE. The Holdings II Primary
Individuals are officers or employees of Holdings II or a Holdings II
Affiliate, and are the individuals who collectively have primary
responsibility for managing the ownership, operation and development of the
Property and overseeing the business activities of Holdings II, including
but not limited to the supervision, directly or indirectly, of the
employees and agents of Holdings II and Holdings II Affiliates with respect
to the Property. To Holdings II's best knowledge, no other officer or
employee of Holdings II or an Holdings II Affiliate is likely to possess
material information or knowledge with respect to the Property which is not
also possessed or known by one of the Holdings II Primary Individuals.
(b) AUTHORITY AND DUE FORMATION. Holdings II has the requisite
power and authority to own its assets and conduct business as and how the
same are now owned or conducted and as and how the same will be conducted
under the Agreement. Holdings II is duly organized, validly existing and
in good standing under the laws of the State of its formation, and the
execution, delivery and performance of this Agreement, and when delivered,
the other documents contemplated by this Agreement to be executed by
Holdings II, as applicable, have been or will have been, when delivered,
duly and
validly authorized by all necessary action and proceedings, and no further
action or authorization is necessary on the part of Holdings II in order to
consummate the transactions contemplated herein. Neither the execution and
delivery of this Agreement, nor the execution and delivery of the documents
referenced herein or the incurrence of the obligations set forth herein or
therein, nor the consummation of the transactions contemplated herein,
conflict with or result in the material breach of any terms, conditions or
provisions of, or constitute a default under, any loan documents or other
evidence of indebtedness, or any contract, lease, permit, or other
agreements or instruments to which Holdings II is a party or by which the
Property is bound. This Agreement is, and when delivered, the other
documents to be executed by Holdings II in connection herewith, will be,
legal, valid and binding obligations of Holdings II, as applicable,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by the effect of bankruptcy and similar laws
relating to creditors' rights and the availability of equitable remedies.
(c) ENTITLEMENTS, PERMITS AND LICENSES. Attached hereto as
SCHEDULE 2.14(C) is a list of all entitlements, development agreements,
maps, permits, licenses, certificates, franchises, consents, and other
approvals granted as of the date hereof by any Governmental Authority
claiming jurisdiction over the Property or Holdings II, together with any
and all development rights, licenses, easements, rights of way, consents
and other approvals required from private parties to own, develop, market
and operate the Property (collectively, the "EXISTING ENTITLEMENTS").
Except as described on SCHEDULE 2.14(C): (i) the Existing Entitlements are
fully vested, are not subject to challenge, further approval, or
revocation, and are currently in full force and effect; (ii) no fees,
penalties or other payments are due or will be payable in connection with
the Existing Entitlements; (iii) the Existing Entitlements will not expire
other than those which are periodic in nature and renewable upon
satisfaction of ministerial conditions; and (iv) no consent from any
Governmental Authority or private party must be obtained in order for the
Holdings II or its Affiliates to transfer to the Company all right, title
and interest of Holdings II in and to the Existing Entitlements. Other
than the Existing Entitlements, to Holding's best knowledge the only
entitlements, development agreements, maps, permits, licenses,
certificates, franchises, consents and other approvals which must be
obtained from Governmental Authorities claiming jurisdiction over the
Property, together with all development rights, licenses, easements, rights
of way, consents and other approvals required from private parties, in
order to own, develop, market, and operate the Property as contemplated by
the Development Plan are listed on SCHEDULE 2.14(C) attached hereto
(collectively, the "REMAINING ENTITLEMENTS"). As of the projected
commencement of construction of the Project as set forth in the Development
Plan and except as described on SCHEDULE 2.14(C): (w) the Remaining
Entitlements will be fully vested, will not be subject to challenge,
further appeal or revocation, and will be in full force and effect; (x) no
fees, penalties or other payments will be payable in connection with the
Remaining Entitlements; (y) the Remaining Entitlements will not expire
other than those which are periodic in nature and renewable upon
satisfaction of ministerial conditions; and (z) no consent from any
Governmental Authority or private party must be obtained in order for
Holdings II or its Affiliates to transfer to the Company all right, title
and interest of Holdings II or its Affiliates in and to the Remaining
Entitlements.
(d) CONTRACTS. There are no agreements or other obligations to
which Holdings II is party or by which it or the Property is or may be
bound in connection with the ownership, management, maintenance, operation,
development, construction or financing of the Property.
(e) NO CONSENT. Neither the execution and delivery of this
Agreement or the other documents to be executed by Holdings II in
connection herewith, nor performance of any of Holdings II's obligations
hereunder, nor consummation of the transactions contemplated hereby,
including but not limited to the assignment of the Contracts to the
Company: (i) will require any authorization, consent, approval, license,
exemption of, filing with or notice to any Governmental Authority or
private party; (ii) will result in the imposition of a lien on all or any
portion of the Property; or (iii) will conflict with, result in a breach
of, or constitute a default under, the terms and conditions of the
organizational documents pursuant to which Holdings II was organized, or
any indenture, mortgage, deed of trust, agreement, undertaking, instrument
or document to which Holdings II or any Holdings II Affiliate is a party or
is bound, or any order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
Holdings II.
(f) HAZARDOUS MATERIALS. Except as otherwise disclosed in the
environmental reports described on SCHEDULE 2.14(F) attached hereto:
(i) the Property and all existing uses and conditions of
the Property are in compliance with all Environmental Laws, and
neither Holdings II nor, to Holdings II's best knowledge, any previous
owners of any of the Property has received any written notice of
violation issued pursuant to any Environmental Law with respect to the
Property or any portion thereof or any use or condition thereof.
(ii) there are no Hazardous Materials present on, in or
under the Property and no Hazardous Materials are stored on the
Property by Holdings II or, to Holdings II's best knowledge, by any
other previous owner thereof.
(iii) neither Holdings II nor, to Holdings II's best
knowledge, any present or former owner, tenant, occupant or user of
all or any portion of the Property has used, handled, generated,
produced, manufactured, treated, stored, transported, released,
discharged or disposed of any Hazardous Material in on, under or from
the Property.
(iv) there is no Release or threatened Release of any
Hazardous Material existing on, beneath or from or in the surface or
ground water associated with the Property, and, to Holdings II's best
knowledge, no Release or threatened Release of Hazardous Materials on,
beneath or from the Property has occurred at any time in the past.
(v) there exists no writ, injunction, decree, order or
judgment outstanding, nor any lawsuit, claim, proceeding, citation,
directive, summons or
investigation pending or, to Holdings II's best knowledge, threatened
pursuant to any Environmental Law relating to (i) the use, ownership,
management, maintenance, operation or development of the Property,
(ii) any alleged violation of any Environmental Law by Holdings II or,
to Holdings II's best knowledge, any other current or former owner,
tenant, occupant or user of any portion of the Property or (iii) the
suspected presence, Release or threatened Release of any Hazardous
Material on, under, in or from any portion of the Property.
(vi) there are no above-ground or underground tanks
located on the Property used or formerly used for the purpose of
storing any Hazardous Material, and, to Holdings II's knowledge, there
have never been any.
(vii) there are no asbestos-containing building materials
on or in the Property, and no asbestos abatement or remediation work
has been performed on the Property.
(viii) there is no PCB-containing equipment or
PCB-containing material located on or in the Property.
(g) ENVIRONMENTAL AND SOILS REPORTS. Attached hereto as
SCHEDULE 2.14(G) is a complete list of all environmental, soils, seismic
and geologic reports, studies and certificates relating to the Property.
(h) LITIGATION. Attached hereto as SCHEDULE 2.14(H) is a
complete list of all pleadings, filings and other papers filed in
connection with any pending lawsuit affecting the Property or Holdings II.
To Holdings II's best knowledge, no other litigation affecting the Property
or Holdings II is threatened or contemplated. To the fullest extent
permitted by law, Holdings II, Aladdin Holdings and the Sommer Trust, by
their execution hereof hereby, jointly and severally, agree to indemnify,
defend, protect and agree to hold the Company and TrizecHahn wholly
harmless from and against any and all loss, expense or damage suffered by
the Company or by TrizecHahn arising or relating directly or indirectly to
that certain litigation filed in the Supreme Court of the State of New
York, County of New York, Index No. 112618/95 entitled "Joseph Aronow, et
al., vs. Jack Sommer, et al," or any subsequent claims made by the parties
thereto.
(i) TAXES AND CONDEMNATION. Except as otherwise disclosed on
Schedule 2.14(i) attached hereto, there are no presently pending or, to
Holdings II's knowledge, contemplated special taxes or assessments which
will affect the Property. There are no presently pending or, to Holdings
II's knowledge, contemplated proceedings to condemn all or any portion of
the Property.
(j) TITLE MATTERS. Holdings II has not created any, and to
Holdings II's best knowledge there are no, rights of purchase, rights of
first refusal, rights of reverter, ground lease interests or options
relating to all or any portion of the Property or any interest therein
(except as set forth in this Agreement or pursuant to that certain Option
Agreement and Purchase and Sale Agreement between the Sommer Trust and GW
Vegas, L.L.C., a Delaware limited liability company, dated December 2,
1996). To Holdings II's best knowledge, there are no unrecorded or
undisclosed documents or other
matters which affect title to the Property which are not disclosed on the
Preliminary Title Report prepared by Stewart Title, dated March 17, 1997.
(k) BANKRUPTCY. Neither Holdings II nor any Holdings II
Affiliate has (i) made a general assignment for the benefit of creditors;
(ii) filed any voluntary petition in bankruptcy or suffered the filing of
an involuntary petition by its creditors; (iii) suffered the appointment of
a receiver to take possession of all or substantially all of its assets;
(iv) suffered the attachment or other judicial seizure of all or
substantially all of its assets; (v) admitted in writing its inability to
pay its debts as they become due; or (vi) made an offer of settlement,
extension or composition to its creditors generally.
(l) BROKERS. All negotiations relating to this Agreement and
the other documents to be executed in connection herewith and the
transactions contemplated thereby have been conducted without the
involvement of any person or entity acting or purporting to act on behalf
of Holdings II or any Holdings II Affiliate in such manner as to give rise
to any claim for a broker's commission or finder's fee or similar
compensation.
(m) ACCURACY OF INFORMATION. No representation, warranty,
certification or statement of Holdings II in this Agreement or any other
agreement, statement, certificate, exhibit or schedule furnished or to be
furnished by Holdings II in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make not
misleading the statement or facts contained therein.
2.15 TRIZECHAHN'S REPRESENTATIONS AND WARRANTIES
TrizecHahn hereby makes the following representations and warranties
to the Company and to Holdings II, with the understanding that each such
representation and warranty is material and is being relied upon by the Company
and by Holdings II. Any reference in this Section to "TRIZECHAHN'S BEST
KNOWLEDGE" or words to similar effect means the actual knowledge of Lee Wagman,
Wayne Finley, Wendy Godoy, John Bedard and Doug Hageman (collectively, the
"TRIZECHAHN'S PRIMARY INDIVIDUALS"), after the TrizecHahn Primary Individuals
have reviewed their files and the files maintained by TrizecHahn with respect to
the Property.
(a) DEFINITION OF BEST KNOWLEDGE. The TrizecHahn Primary
Individuals are officers or employees of TrizecHahn or an TrizecHahn
Affiliate, and are the individuals who collectively have primary
responsibility for managing the ownership, operation and development of the
Property and overseeing the business activities of TrizecHahn, including
but not limited to the supervision, directly or indirectly, of the
employees and agents of TrizecHahn and TrizecHahn Affiliates with respect
to the Property. To TrizecHahn's best knowledge, no other officer or
employee of TrizecHahn or a TrizecHahn Affiliate is likely to possess
material information or knowledge with respect to the Property which is not
also possessed or known by one of the TrizecHahn Primary Individuals.
(b) AUTHORITY AND DUE FORMATION. TrizecHahn has the requisite
power and authority to own its assets and conduct business as and how the
same are now owned or conducted and as and how the same will be conducted
under the Agreement. TrizecHahn is duly organized, validly existing and in
good standing under the laws of the State of its formation, and the
execution, delivery and performance of this Agreement, and when delivered,
the other documents contemplated by this Agreement to be executed by
TrizecHahn, as applicable, have been or will have been, when delivered,
duly and validly authorized by all necessary action and proceedings, and no
further action or authorization is necessary on the part of TrizecHahn in
order to consummate the transactions contemplated herein. Neither the
execution and delivery of this Agreement, nor the execution and delivery of
the documents referenced herein or the incurrence of the obligations set
forth herein or therein, nor the consummation of the transactions
contemplated herein, conflict with or result in the material breach of any
terms, conditions or provisions of, or constitute a default under, any loan
documents or other evidence of indebtedness, or any contract, lease,
permit, or other agreements or instruments to which TrizecHahn is a party
or by which the Property is bound. This Agreement is, and when delivered,
the other documents to be executed by TrizecHahn in connection herewith,
will be, legal, valid and binding obligations of TrizecHahn, as applicable,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by the effect of bankruptcy and similar laws
relating to creditors' rights and the availability of equitable remedies.
(c) NO CONSENT. Neither the execution and delivery of this
Agreement or the other documents to be executed by TrizecHahn in connection
herewith, nor performance of any of TrizecHahn' obligations hereunder, nor
consummation of the transactions contemplated hereby: (i) will require any
authorization, consent, approval, license, exemption of, filing with or
notice to any Governmental Authority or private party; (ii) will result in
the imposition of a lien on all or any portion of the Property; or (iii)
will conflict with, result in a breach of, or constitute a default under,
the terms and conditions of the organizational documents pursuant to which
TrizecHahn was organized, or any indenture, mortgage, deed of trust,
agreement, undertaking, instrument or document to which TrizecHahn or any
TrizecHahn Affiliate is a party or is bound, or any order or regulation of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over TrizecHahn.
(d) LITIGATION. To TrizecHahn's best knowledge, no litigation
affecting TrizecHahn is pending, threatened or contemplated.
(e) BANKRUPTCY. Neither TrizecHahn nor any TrizecHahn Affiliate
has (i) made a general assignment for the benefit of creditors; (ii) filed
any voluntary petition in bankruptcy or suffered the filing of an
involuntary petition by its creditors; (iii) suffered the appointment of a
receiver to take possession of all or substantially all of its assets; (iv)
suffered the attachment or other judicial seizure of all or substantially
all of its assets; (v) admitted in writing its inability to pay its debts
as they become due; or (vi) made an offer of settlement, extension or
composition to its creditors generally.
(f) BROKERS. All negotiations relating to this Agreement and
the other documents to be executed in connection herewith and the
transactions contemplated thereby have been conducted without the
involvement of any person or entity acting or purporting to act on behalf
of TrizecHahn or any TrizecHahn Affiliate in such manner as to give rise to
any claim for a broker's commission or finder's fee or similar
compensation.
(g) ACCURACY OF INFORMATION. No representation, warranty,
certification or statement of TrizecHahn in this Agreement or any other
agreement, statement, certificate, exhibit or schedule furnished or to be
furnished by TrizecHahn in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make not
misleading the statement or facts contained therein.
ARTICLE III
MEMBERS' CONTRIBUTIONS TO COMPANY
3.01 CAPITAL CONTRIBUTIONS FOR PRE-DEVELOPMENT COSTS
Commencing as of the date hereof, approved Predevelopment Costs for
the Center including, but not limited to, architectural, engineering and design
services (but excluding predevelopment-stage fees to either Holdings II or
TrizecHahn) will be funded by Holdings II and TrizecHahn in accordance with
their Percentage Interests in an amount not to exceed the amount set forth in
the Pre-Development Budget attached hereto as EXHIBIT "F". Commencing as of the
date hereof, Predevelopment Costs for the Parking Facilities will be funded by
Holdings and Holdings II and the Company based on a parking space prorata
allocation; the Company's allocation to be funded by Holdings II and TrizecHahn
in accordance with their respective Percentage Interests. Predevelopment costs
incurred by Aladdin Holdings, LLC or by its affiliates which have accrued prior
to (but not after) March 17, 1997, and which are reasonably allocable to the
Center and the Parking Facilities as reasonably determined by TrizecHahn shall
be credited to the amount Holdings II is required to contribute pursuant to the
Pre-Development Budget following TrizecHahn's receipt and approval of paid
invoices from Aladdin Holdings, LLC; provided, however, in no event shall such
amount exceed Two Hundred Thousand Dollars ($200,000). Accordingly, commencing
as of the date hereof, TrizecHahn shall fund one hundred percent (100%) of
Predevelopment Costs until such time as its funding of such costs shall be equal
to that of Holdings II, and thereafter all such costs shall be funded equally by
TrizecHahn and Holdings II, in accordance with the provisions hereof. If the
Redeveloped Aladdin improvements plan is abandoned by Aladdin Holdings, LLC,
then Holdings II shall promptly reimburse TrizecHahn for its share of the Bazaar
Improvements Predevelopment Costs pursuant to Section 3.06 below. The parties
acknowledge that Predevelopment Costs may also constitute costs included within
the Bazaar Company's Site Work and Utilities Contribution or costs allocable to
the Parking Facilities (as such terms are defined below). As used herein, the
term "PREDEVELOPMENT COSTS" means the types, categories and amounts of
pre-development costs and/or expenses approved in the Development Plan attached
hereto including, without limitation, architectural fees, engineering fees, and
other similar fees and expenses incurred in connection
with the pre-development of the Bazaar Improvements. A preliminary estimate of
the approximate amounts for the items comprising the Pre-Development Costs is
set forth in the Development Plan. Any and all contributions required to be
made by any Member to the capital of the Company for Pre-Development Costs
pursuant to this Section 3.01 or pursuant to Section 3.02, (i) shall be made
within ten (10) business days following the effective date of written notice
delivered to the Members by TrizecHahn requesting such amounts (which notice
shall include, without limitation, reasonably supporting documentation for such
Pre-Development Costs), and (ii) shall be credited to the Capital Account and
Unrecovered Contribution Account of such Member as and when any such
contribution is made.
3.02 ADDITIONAL CAPITAL CONTRIBUTIONS
Once all Conditions Precedent (as defined in the Glossary) required to
begin construction are satisfied and the Company has obtained financing approved
by the Members, (i) TrizecHahn shall contribute, as and when required by the
Bazaar Company, the TrizecHahn Investment, less a credit for predevelopment
expenditures incurred by TrizecHahn and approved by the Company, and (ii) the
Company and Holdings shall execute the Lease in form approved by the Board, and
Holdings II's Capital Account and Unrecovered Contribution Account shall be
credited with the amount of Ten Million Dollars ($10,000,000) reflecting the
arrangement by Holdings II for the Company to obtain the Lease of the Property
with below market rate ground rent. The contribution of the TrizecHahn
Investment shall be guaranteed by TrizecHahn Centers Inc., in the form attached
hereto as EXHIBIT "G." In structuring the economics of this transaction,
TrizecHahn has assumed that the Company will be able to obtain mortgage
indebtedness, at market rates and on market terms based upon market terms and
conditions typically obtained by TrizecHahn, for the balance of the construction
costs. If the mortgage indebtedness together with the original capital
contributions is not sufficient to pay all construction costs, the Company will
first attempt to obtain additional indebtedness if available at reasonable
market rates and market terms as mutually determined by TrizecHahn and Holdings
II before requiring additional capital contributions. To the extent additional
capital ("ADDITIONAL CAPITAL") is required, Holdings II and TrizecHahn shall
each contribute such capital in the ratio of their Percentage Interests pursuant
to Section 3.04. Holdings II and TrizecHahn may elect to bring in a third-party
investor as an additional Member of the Company, subject to the sole discretion
approval of the other Member, to contribute their Additional Capital. If such
third-party investor is admitted as a member, the non-contributing party or
parties shall bear a dilution of its or their Percentage Interest.
Additionally, the two seats each on the Board may be divided between the
non-contributing party and its third-party investor, or if an additional seat is
added for the third-party investor, an additional seat will be added for the
contributing party.
3.03 CONSTRUCTION FINANCING
TrizecHahn and Holdings II will each use reasonable/diligent efforts
to obtain the construction financing for the Bazaar Improvements. It is the
intent of both parties to obtain construction/mini-perm financing from
third-party, institutional sources in an amount equal to at least 70% of the
costs of the development of the Bazaar Improvements. TrizecHahn Centers Inc.
("TrizecHahn Centers"), Aladdin Holdings, LLC, a Delaware limited liability
company ("ALADDIN HOLDINGS") and the Trust Under Article Sixth U/W/O Sigmund
Sommer ("SOMMER
TRUST") shall jointly and severally assume recourse liability and enter into a
completion guarantee in favor of the lender for the construction loan (but
neither party shall be obligated to assume recourse liability with respect to
any permanent or "take-out" financing). During any period of time in which any
such guarantee by TrizecHahn Centers, Aladdin Holdings and/or the Sommer Trust
in favor of the Company's lender is in effect, TrizecHahn Centers shall
guarantee the obligations of TrizecHahn to contribute capital to the Company,
and Aladdin Holdings and the Sommer Trust shall jointly and severally guarantee
the obligations of Holdings II to contribute capital to the Company, each in the
respective form of guaranty attached hereto as EXHIBITS "G" and EXHIBIT "H,"
respectively ("MEMBER CAPITAL OBLIGATION GUARANTEE"). Once nonrecourse
financing is obtained by the Company and the Company's lender fully and
unconditionally releases all guarantors, then in such event, the Member Capital
Obligation Guarantee shall automatically be of no further force and effect.
TrizecHahn and Holdings II anticipate that a commitment for the
construction financing for the Bazaar Improvements will be entered into
substantially concurrently with the financing obtained by Aladdin Holdings, LLC
and its affiliates with respect to the Redeveloped Aladdin. Both parties agree
to exercise reasonable/diligent efforts to coordinate the two financing efforts,
including but not limited to facilitating inter-creditor agreements and the
delivery of attornment and nondisturbance agreements. Any and all amounts
required to be paid by any Member pursuant to any recourse liability to a lender
to the Company shall be deemed to be contributed by such Member to the capital
of the Company and credited to such Member's Capital Account and Unrecovered
Contribution Account as and when any such payment is made.
3.04 CASH FLOW DEFICIT CONTRIBUTION
If TrizecHahn determines that additional funds are necessary for the
Company to meet its current or projected financial requirements, including,
without limitation, any financial requirements attributable to any Construction
Overruns and/or any operating shortfalls, then TrizecHahn may elect any one (1)
or more of the following: (i) to cause any such amounts to be obtained from one
(1) or more third-party lenders on such terms and conditions as are determined
in the reasonable discretion of the Board, (ii) to deliver written notice of
such actual or projected cash deficit to the Members, which notice shall include
a contribution date ("CONTRIBUTION DATE") (which shall not be less than ten (10)
business days following the Effective Date of such notice) upon which the
Members shall be obligated to contribute to the capital of the Company, in cash,
the entire amount of such cash deficit in proportion to their Percentage
Interests. Any and all contributions made to the capital of the Company by any
Member pursuant to this Section 3.04 shall be credited to the Capital Account
and the Unrecovered Contribution Account of such Member as and when any such
contribution is made.
3.05 REMEDY FOR FAILURE TO CONTRIBUTE CAPITAL
If a Member (the "NON-CONTRIBUTING MEMBER") fails to contribute all or
any portion of any additional capital such Member is required to contribute
pursuant to Sections 3.01, 3.02 and/or 3.04 (the "DELINQUENT CONTRIBUTION"),
then the other Member (the "CONTRIBUTING MEMBER") in addition to any and all
other rights and/or remedies the Contributing Member may have at law and/or in
equity, shall have the right to select one (1) or more of the following options
in accordance with the terms and conditions set forth below in this Section
3.05:
(a) The Contributing Member may advance to the Company, in cash,
within thirty (30) days following the Contribution Date, an amount equal to
the Delinquent Contribution, and such advance shall be treated as a
recourse loan ("MEMBER LOAN") by the Contributing Member to the
Non-Contributing Member, bearing interest at a rate equal to the lesser of
(i) fifteen percent (15%) per annum, compounded monthly, or (ii) the
maximum, nonusurious rate then permitted by law for such loans. Each
Member Loan shall be payable upon the first to occur of the written demand
by the Contributing Member or the liquidation of the Company.
As of the Effective Date of any advance of a Member Loan, the
Non-Contributing Member shall be deemed to have contributed an amount equal
to the principal amount of such Member Loan to the capital of the Company,
and the Capital Account and the Unrecovered Contribution Account of the
Non-Contributing Member shall be credited with a like amount.
Notwithstanding the provisions of Articles II, V and IX, until any and all
Member Loans are repaid in full the Non-Contributing Member shall draw no
further distributions from the Company, and all cash or property otherwise
distributable with respect to the Non-Contributing Member's Interest shall
be distributed to the Contributing Member in repayment of the outstanding
balance of the Member Loan, with such funds being applied first to reduce
any and all interest accrued on such Member Loan and then to reduce the
principal amount thereof. Any amounts so applied shall be treated, for all
purposes under this Agreement, as having actually been distributed to the
Non-Contributing Member and applied by the Non-Contributing Member to repay
the outstanding Member Loan.
In order to secure the repayment of any and all Member Loans made
on behalf of the Non-Contributing Member, the Non-Contributing Member
hereby grants a security interest in favor of the Contributing Member in
and to all distributions to which the Non-Contributing Member may be
entitled to receive under this Agreement, and hereby irrevocably appoints
the Contributing Member, and any of the Contributing Member's respective
agents, officers, or employees, as the Non-Contributing Member's
attorney(s)-in-fact, with full power to prepare, execute, acknowledge, and
deliver, as applicable, all documents, instruments, and/or agreements
memorializing and/or securing such Member Loan(s) including, without
limitation, such Uniform Commercial Code financing and continuation
statements, pledge and/or security agreements, mortgages and other security
instruments as may be reasonably appropriate to perfect and continue the
security interest in favor of the Contributing Member.
If, upon any demand for the repayment of a Member Loan, any
principal thereof and/or accrued interest thereon remains outstanding ten
(10) Business Days following such demand, the Contributing Member may elect
any one (1) of the following options: (i) to continue to have such Member
Loan (or portion thereof) be payable upon demand pursuant to the terms and
provisions of this Section 3.05(a); (ii) to contribute all or any portion
of such outstanding principal of and accrued, unpaid interest on such
Member Loan (or portion thereof) to the capital of the Company and dilute
the Percentage Interest of the Non-Contributing Member in accordance with
the provisions of Section 3.05(b); or (iii) to institute legal (or other)
proceedings against the Non-
Contributing Member to collect such loan which may include, without
limitation, foreclosing upon the security interest granted above. The
Contributing Member may elect any of the options set forth in the
immediately preceding sentence by giving written notice of such election to
the Non-Contributing Member at any time after the expiration of the ten
(10) Business Day period set forth above.
(b) The Contributing Member may contribute to the capital of the
Company, in cash, within thirty (30) days following the Contribution Date
and by delivering written notice ("DILUTION NOTICE") thereof to the
Non-Contributing Member, an amount equal to the Delinquent Contribution,
and the Contributing Member's Capital Account and the Unrecovered
Contribution Account each shall be credited with the amount so contributed.
In addition, if a Member Loan is not fully repaid within the ten (10)
Business Day period set forth above, then the Contributing Member may at
any time thereafter deliver a Dilution Notice to the Non-Contributing
Member and thereby contribute to the capital of the Company, in accordance
with the provisions of Section 3.05(a) above, all or any portion of the
outstanding principal of and/or accrued, unpaid interest on such Member
Loan (or portion thereof). In the event of any such contribution, (i) the
amount of such outstanding principal and/or interest so contributed shall
be deemed repaid and satisfied, (ii) the Capital Account and the
Unrecovered Contribution Account of the Non-Contributing Member shall be
decreased, by the amount of such outstanding principal and/or interest so
contributed, (iii) the Capital Account and the Additional Unrecovered
Contribution Account, of the Contributing Member shall be increased by the
amount of such outstanding principal and/or interest so contributed; and
(iv) distributions of Cash Flow shall thereafter be made in accordance with
Sections 5.03 and 5.04.
In the event of the contribution of the Delinquent Contribution
and/or the outstanding balance of a Member Loan by the Contributing Member
pursuant to the foregoing provisions of this Section 3.05(b), the
Percentage Interest of the Non-Contributing Member shall be decreased, as
of the Effective Date of the Dilution Notice, by an amount (expressed in
percentage points) equal to the a fraction, (i) the numerator of which is
the Delinquent Contribution (or the outstanding principal of, and accrued,
unpaid interest on, a Member Loan, as the case may be), and (ii) the
denominator of which is the sum of the Members' Unrecovered Contribution
Accounts and Additional Unrecovered Contribution Accounts; provided,
however, for purposes of this Section 3.05(b) only, Holdings II initial
Unrecovered Contribution Account shall be increased by Twenty Million
Dollars ($20,000,000). The Percentage Interest of the Contributing Partner
shall be correspondingly increased by a like amount of percentage points.
In addition, the Non-Contributing Member shall not be entitled to appoint
any representatives to the Board, and the Contributing Member alone shall
appoint all representatives of the Board.
(c) If the Contributing Member advances any amount to the
Company pursuant to this Section 3.05 but fails to specify which of the
foregoing options such Contributing Member has elected within ten (10) days
after the Effective Date that such Contributing Member makes such advance,
then such Contributing Member shall be deemed to have elected the option
set forth in Section 3.05(a) above with respect to such
advance. Any and all adjustments to the Non-Contributing Member's
Percentage Interest shall be rounded to the nearest one one-hundredth of
one percentage point (.01%) and the Contributing Member shall not succeed
to all or any portion of the Capital Account, Unrecovered Contribution
Account and/or accrued, unpaid Preferred Return of the Non-Contributing
Member as the result of any such adjustment. Notwithstanding any other
term of this Agreement, the Non-Contributing Member shall have no right to
participate in the management or control of the Company and/or any other
decisions relating to the Company from and after the date that such Member
Loan remains outstanding (unless subsequently repaid in full) or such
Member's Percentage Interest is reduced pursuant to Section 3.05(b).
3.06 FAILURE TO SATISFY CONDITIONS PRECEDENT
TrizecHahn and Holdings II acknowledge that at the date of the
execution hereof there remains a substantial question as to whether or not
Aladdin Gaming can, or is prepared to, construct the Audrie/Harmon Hotel, on a
schedule that will permit the Audrie/Harmon Hotel to open prior to or
simultaneously with the Bazaar Improvements. The parties have proposed
alternative plans in connection with the development of the Audrie/Harmon Hotel
which the parties are in the process of reviewing as of the date hereof.
Holdings II or its Affiliates has entered into a non-binding letter of intent
with Planet Hollywood International to enter into a joint development for the
Audrie/Harmon Hotel, which contemplates a music-themed hotel/casino. However,
the letter of intent is subject to mutual due diligence and documentation. It
is further acknowledged that the delay or failure to develop the Audrie/Harmon
Hotel will have an adverse impact on the leasing of the Center. Furthermore,
the parties acknowledge that Aladdin Holdings, LLC and its Affiliates may seek
construction financing with respect to the Redeveloped Aladdin prior to the time
that sufficient progress has been made in the Center's leasing effort to satisfy
TrizecHahn in its sole discretion. It is understood that TrizecHahn is seeking
commitment from tenants evidenced by letters of intent for a minimum of
twenty-five percent (25%) of the leaseable area of the Center and leases for at
least two of the primary "strip-front end-cap" spaces of the Center, which are
in each case approved by TrizecHahn. Accordingly, TrizecHahn and Holdings II
agree to enter into good faith negotiations to resolve the matter. In the event
that the parties have not entered into an amendment to this Agreement with
respect to the Audrie/Harmon Hotel and the pre-leasing requirement which is
satisfactory to each party, in each party's sole discretion, on or before the
earlier of (i) thirty (30) days after the delivery of a Satisfaction Notice as
described below, or (ii) thirty (30) days after either Member delivers notice
that it reasonably believes that the Conditions Precedent have been satisfied,
or (iii) September 30, 1997, then either Member may at any time deliver a notice
to the other Member ("AUDRIE/HARMON TERMINATION NOTICE"), in which event the
Company shall promptly reimburse TrizecHahn for all of its Predevelopment Costs
(whereupon the Company shall own the work product for which such Predevelopment
Costs have been paid), and this Agreement shall automatically become null and
void and the parties and their Affiliates shall have no further rights, duties
or obligations to each other whatsoever (other than the reimbursement provisions
provided in this Section 3.06). The parties expressly acknowledge and agree
that either party shall have no obligation or liability to approve the proposal
made by the other, and that the sole and exclusive remedy for the failure to
approve such proposal shall be to terminate this Agreement.
Holdings II shall deliver to TrizecHahn a notice ("SATISFACTION
NOTICE") at such time as Aladdin Gaming and Holdings II are prepared to proceed
with the Project and that, but for the resolution of the issues relating to the
Audrie/Harmon Hotel and the pre-leasing requirement, the Conditions Precedent
set forth in Section 12.10 are satisfied. The Satisfaction Notice shall include
reasonable supporting evidence that the Conditions Precedent are satisfied. The
Satisfaction Notice shall indicate that (a) Holdings II believes that the
development of the Bazaar Improvements, as contemplated in the Plans and
Specifications, is economically feasible and desirable; (b) Holdings II has
approved the level of pre-leasing existing as of that date; (c) Holdings II has
approved the Site Work Agreement, the Development Agreement, the Lease, the
Reciprocal Easement Agreement and the Parking Use Agreement, and an agreement
has been entered into to construct and operate a central utility plant or to
cause to be constructed and operated a cogeneration facility for the Master
Development; (d) all necessary permits and governmental approvals to begin
construction of the Aladdin Hotel and Casino have been received; (e) subject to
completion of certain leasing requirements and other customary conditions, there
is an irrevocable commitment (which has been fully negotiated, approved by the
lender and ready for signature) to fund at least seventy percent (70%) of the
costs of construction of the Bazaar Improvements upon competitive market rate
terms and conditions which is satisfactory to Holdings II; (f) the construction
contract and architect/engineer contract with respect to the Aladdin Hotel and
Casino is satisfactory to Holdings II; and (g) subject to payment of any
applicable financing fees and other customary conditions, there are irrevocable
commitments to fund (and Holdings II and its underwriters are prepared to
immediately print and distribute to investors offering documents) all equity and
debt financing necessary to construct the Aladdin Hotel and Casino, the Other
Parking and the costs of the Parking Facilities allocable to the Aladdin Hotel
and Casino, and to operate the same through the Opening which is satisfactory to
Holdings II. In such event, TrizecHahn shall notify Holdings II within five (5)
business days thereafter that it approves or disapproves of the satisfaction of
the conditions as provided in the Satisfaction Notice. If TrizecHahn does not
approve or if TrizecHahn shall not respond within said five (5) business days,
time being of the essence, then the Company shall promptly reimburse TrizecHahn
for all of its Predevelopment Costs, and this Agreement shall automatically
become null and void and the parties and their Affiliates shall have no further
rights, duties or obligations to each other whatsoever (other than the
reimbursement provisions provided in this Section 3.06).
In the event that the Conditions Precedent are not satisfied or
construction has not commenced by the third anniversary of the date of this
Agreement, then the Company shall promptly reimburse TrizecHahn for all of its
Predevelopment Costs, unless TrizecHahn elects to extend the deadline for
satisfaction of the Conditions Precedent to the fourth anniversary of the date
of this Agreement. If the project is abandoned by Holdings and the Aladdin
Hotel is to be sold, then the Company shall promptly reimburse TrizecHahn for
all of its Predevelopment Costs, and during the period of one (1) year after
such abandonment, TrizecHahn shall have an exclusive thirty (30) day right of
first negotiation to acquire the fee underlying the Center and/or the entire
Aladdin Hotel, at TrizecHahn's election; provided, however, that such right of
first negotiation shall be subordinate to any similar rights held by equity
investors of Holdings. After the end of said thirty (30) day period,
TrizecHahn's right of first negotiation shall expire. If TrizecHahn abandons
the Project prior to the expiration of the third (3rd) anniversary date of this
Agreement, then the Company shall have no further reimbursement obligation.
Aladdin Holdings, LLC, a Delaware limited liability company
("Holdings"), and the owner of the fee estate underlying the Lease, hereby
guarantees the reimbursement obligation set forth in this Section 3.06 pursuant
to the terms of the guarantee attached hereto as EXHIBIT "I".
3.07 CAPITAL CONTRIBUTIONS IN GENERAL
Except as otherwise expressly provided in this Agreement, (a) no part
of the contributions of any Member to the capital of the Company may be
withdrawn by such Member, (b) no Member shall be entitled to receive interest on
such Member's contributions to the capital of the Company, (c) no Member shall
have the right to demand or receive property other than cash in return for such
Member's contribution to the Company, and (d) no Member shall be required or be
entitled to contribute additional capital to the Company other than as permitted
or required by this Article III.
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES
4.01 NET LOSSES FROM OPERATIONS PRIOR TO DILUTION
Net Losses resulting from the operations of the Company (as
distinguished from an Extraordinary Event) prior to any dilution pursuant to
Section 3.05(b) for each fiscal year (or part thereof) shall be allocated to the
Members at the end of such fiscal year (or part thereof) in the following order
of priority:
(a) First, to the Members to the extent of, and in proportion
to, the amount by which the cumulative Net Profits allocated to each such
Member pursuant to Section 4.03(d) exceeds the cumulative Net Losses
allocated to each such Member pursuant to this Section 4.01(a);
(b) Second, to the Members to the extent of, and in proportion
to, the amount by which the cumulative Net Profits allocated to each such
Member pursuant to Section 4.03(c) exceeds the cumulative Net Losses
allocated to each such Member pursuant to this Section 4.01(b);
(c) Third, to the Members to the extent of, and in proportion
to, their respective positive Capital Account balances, if any; and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.02 NET LOSSES FROM EXTRAORDINARY EVENTS PRIOR TO DILUTION
Net Losses of the Company resulting from an Extraordinary Event prior
to any dilution pursuant to Section 3.05(b) shall be allocated to the Members:
(i) after adjusting the Capital Accounts of the Members for all previous
allocations of Net Profits and Net Losses resulting from the operations of the
Company and all previous distributions of Ordinary Cash
Flow for the fiscal year of such Extraordinary Event, but prior to the
distribution of the proceeds derived from such Extraordinary Event, or (ii) at
the end of the fiscal year in which such event occurred but following the
adjustments to the Members' respective Capital Accounts referenced in clause (i)
above of this Section, whichever occurs earlier:
(a) First, to the Members in proportion to, and to the extent
of, the amount necessary to cause each Member's positive Capital Account
balance, if any, to equal the sum, if any, of such Member's positive
Unrecovered Contribution Account balance and such Member's accrued and
unpaid Preferred Return;
(b) Second, to the Members in proportion to, and to the extent
of, the amount necessary to cause each Member's positive Capital Account
balance, if any, to equal such Member's accrued and unpaid Preferred
Return;
(c) Third, to the Members to the extent of, and in proportion
to, their respective positive Capital Account balances, if any; and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.03 NET PROFITS FROM OPERATIONS PRIOR TO DILUTION
Net Profits resulting from the operations of the Company (as
distinguished from an Extraordinary Event) prior to any dilution pursuant to
Section 3.05(b) for each fiscal year (or part thereof) shall be allocated to the
Members at the end of such fiscal year (or part thereof) in the following order
of priority:
(a) First, to the Members to the extent of, and in proportion
to, the amount by which the cumulative Net Losses allocated to each such
Member pursuant to Section 4.01(d) exceeds the cumulative Net Profits
allocated to each such Member pursuant to this Section 4.03(a);
(b) Second, to the Members to the extent of, and in proportion
to, the amount by which the cumulative Net Losses allocated to each such
Member pursuant to Section 4.01(c) exceeds the cumulative Net Profits
allocated to each such Member pursuant to this Section 4.03(b);
(c) Third, to the Members to the extent of, and in proportion
to, the amount by which the cumulative accrued Preferred Return, if any, of
each such Member exceeds the amount, if any, by which (i) the cumulative
Net Profits previously allocated to each such Member pursuant to this
Section 4.03(c), exceeds (ii) the cumulative Net Losses allocated to each
such Member pursuant to Section 4.01(b); and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.04 NET PROFITS FROM EXTRAORDINARY EVENTS PRIOR TO DILUTION
Net Profits of the Company resulting from an Extraordinary Event prior
to any dilution pursuant to Section 3.05(b) shall be allocated to the Members:
(i) after adjusting the Capital Accounts of the Members for all previous
allocations of Net Profits and Net Losses resulting from the operations of the
Company and all previous distributions of Ordinary Cash Flow for the fiscal year
of such Extraordinary Event, but prior to the distribution of the proceeds
derived from such Extraordinary Event, or (ii) at the end of the fiscal year in
which such event occurred but following the adjustments to the Members'
respective Capital Accounts referenced in clause (i) above of this Section,
whichever occurs earlier:
(a) First, to the Members to the extent of, and in proportion
to, their respective negative Capital Account balances, if any;
(b) Second, if the Capital Account balance of any Member is less
than such Member's accrued and unpaid Preferred Return, then to each such
Member to the extent of, and in proportion to, such variances;
(c) Third, if the Capital Account balance of any Member is less
than the sum, if any, of such Member's accrued and unpaid Preferred Return
and such Member's positive Unrecovered Contribution Account balance, then
to each such Member to the extent of, and in proportion to, such variances;
and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.05 NET LOSSES FROM OPERATIONS FOLLOWING DILUTION
Net Losses resulting from the operations of the Company (as
distinguished from an Extraordinary Event) following any dilution pursuant to
Section 3.05(b) for each fiscal year (or part thereof) shall be allocated to the
Members at the end of such fiscal year (or part thereof) in the following order
of priority:
(a) First, to the Members to the extent of, and in proportion
to, the amount by which the cumulative Net Profits allocated to each such
Member pursuant to Sections 4.03(d) and 4.07(f) exceeds the cumulative Net
Losses allocated to each such Member pursuant to Section 4.01(a) and this
Section 4.05(a);
(b) Second, to the Non-Contributing Member to the extent of the
amount by which the cumulative Net Profits allocated to such Member
pursuant to Sections 4.03(c) and 4.07(e) exceeds the cumulative Net Losses
allocated to such Member pursuant to Section 4.01(b) and this Section
4.05(b);
(c) Third, to the Non-Contributing Member to the extent of such
Member's positive Capital Account balance, if any;
(d) Fourth, to the Contributing Member to the extent of the
amount by which the cumulative Net Profits allocated to such Member
pursuant to Sections 4.03(c)
and 4.07(c) exceeds the cumulative Net Losses allocated to such Member
pursuant to Section 4.01(b) and this Section 4.05(c);
(e) Fifth, to the Contributing Members to the extent of such
Member's positive Capital Account balances, if any; and
(f) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.06 NET LOSSES FROM EXTRAORDINARY EVENTS FOLLOWING DILUTION
Net Losses of the Company resulting from an Extraordinary Event
following any dilution pursuant to Section 3.05(b) shall be allocated to the
Members: (i) after adjusting the Capital Accounts of the Members for all
previous allocations of Net Profits and Net Losses resulting from the operations
of the Company and all previous distributions of Ordinary Cash Flow for the
fiscal year of such Extraordinary Event, but prior to the distribution of the
proceeds derived from such Extraordinary Event, or (ii) at the end of the fiscal
year in which such event occurred but following the adjustments to the Members'
respective Capital Accounts referenced in clause (i) above of this Section,
whichever occurs earlier:
(a) First, to the Members in proportion to, and to the extent
of, (i) in the case of the Contributing Member, the amount necessary to
cause such Member's positive Capital Account balance, if any, to equal the
sum of such Member's positive Additional Unrecovered Contribution Account
balance, Unrecovered Contribution Account balance, and accrued and unpaid
Preferred Return, and (ii) in the case of the Non-Contributing Member, the
amount necessary to cause such Member's positive Capital Account balance,
if any, to equal the sum, if any, of such Member's positive Unrecovered
Contribution Account balance and such Member's accrued and unpaid Preferred
Return;
(b) Second, to the Non-Contributing Member to the extent of such
Member's positive Capital Account balance, if any;
(c) Third, to the Contributing Member to the extent of such
Member's positive Capital Account balance, if any; and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.07 NET PROFITS FROM OPERATIONS FOLLOWING DILUTION
Net Profits resulting from the operations of the Company (as
distinguished from an Extraordinary Event) following any dilution pursuant to
Section 3.05(b) for each fiscal year (or part thereof) shall be allocated to the
Members at the end of such fiscal year (or part thereof) in the following order
of priority:
(a) First, to the Members to the extent of, and in proportion
to, the amount by which the cumulative Net Losses allocated to each such
Member pursuant to
Sections 4.01(d) and 4.05(f) exceeds the cumulative Net Profits allocated
to each such Member pursuant to Section 4.03(a) and this Section 4.07(a);
(b) Second, to the Contributing Member to the extent of the
amount by which the cumulative Net Losses allocated to such Member pursuant
to Sections 4.01(c) and 4.05(e) exceeds the cumulative Net Profits
allocated to such Member pursuant to Section 4.03(b) and this Section
4.07(b);
(c) Third, to the Contributing Member to the extent of the
amount by which the cumulative accrued Preferred Return, if any, of such
Member exceeds the amount, if any, by which (i) the cumulative Net Profits
previously allocated to such Member pursuant to Section 4.03(c) and this
Section 4.07(c), exceeds (ii) the cumulative Net Losses allocated to such
Member pursuant to Sections 4.01(b) and 4.05(d);
(d) Fourth, to the Non-Contributing Member to the extent of the
amount by which the cumulative Net Losses allocated to such Member pursuant
to Sections 4.01(c) and 4.05(c) exceeds the cumulative Net Profits
allocated to such Member pursuant to Section 4.03(b) and this Section
4.07(d);
(e) Fifth, to the Non-Contributing Member to the extent of the
amount by which the cumulative accrued Preferred Return, if any, of such
Member exceeds the amount, if any, by which (i) the cumulative Net Profits
previously allocated to such Member pursuant to Section 4.03(c) and this
Section 4.07(e), exceeds (ii) the cumulative Net Losses allocated to such
Member pursuant to Sections 4.01(b) and 4.05(b); and
(f) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.08 NET PROFITS FROM EXTRAORDINARY EVENTS FOLLOWING DILUTION
Net Profits of the Company resulting from an Extraordinary Event
following any dilution pursuant to Section 3.05(b) shall be allocated to the
Members: (i) after adjusting the Capital Accounts of the Members for all
previous allocations of Net Profits and Net Losses resulting from the operations
of the Company and all previous distributions of Ordinary Cash Flow for the
fiscal year of such Extraordinary Event, but prior to the distribution of the
proceeds derived from such Extraordinary Event, or (ii) at the end of the fiscal
year in which such event occurred but following the adjustments to the Members'
respective Capital Accounts referenced in clause (i) above of this Section,
whichever occurs earlier:
(a) First, to the Members to the extent of, and in proportion
to, their respective negative Capital Account balances, if any;
(b) Second, if the Capital Account balance of the Contributing
Member is less than the sum, if any, of (i) such Member's accrued and
unpaid Preferred Return, (ii) such Member's positive Additional Unrecovered
Contribution Account balance, and (iii) such Member's positive Unrecovered
Contribution Account balance, then to such Member to the extent of such
variance;
(c) Third, if the Capital Account balance of the
Non-Contributing Member is less than the sum, if any, of (i) such Member's
accrued and unpaid Preferred Return, and (ii) such Member's positive
Unrecovered Contribution Account balance, then to such Member to the extent
of such variance; and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
4.09 SPECIAL ALLOCATIONS
Notwithstanding any other provision of this Agreement, no allocation
of Net Losses shall be made to any Member to the extent such an allocation would
cause or increase a deficit balance standing in such Member's Capital Account
(in excess of such Member's allocable share of minimum gain and after taking
into account any adjustments set forth in Treasury Regulation Section
1.704(b)-1(b)(2)(ii)(D)) and any such Net Losses instead shall be allocated one
hundred percent (100%) to the other Member. If any such allocation of Net
Losses would cause or increase a deficit balance standing in both Members'
respective Capital Accounts (in excess of such Members' respective allocable
shares of minimum gain and after taking into account any adjustments set forth
in Treasury Regulation Section 1.704(b)-1(b)(2)(ii)(D)), then such Net Losses
shall be allocated to the Members in proportion to their respective Percentage
Interests. In addition, items of income and gain shall be specially allocated
to the Members in accordance with the qualified income offset provisions set
forth in Treasury Regulation Section 1.704-1(b)(2)(ii)(D). Notwithstanding any
other provision in this Article IV, (i) any and all "partnership nonrecourse
deductions" (as defined in Treasury Regulation Section 1.704-2(b)(1)) of the
Company for any fiscal year or other period shall be allocated to the Members in
proportion to their respective Percentage Interests; (ii) any and all "partner
nonrecourse deductions" (as such term is defined in Treasury Regulation Sections
1.704-2(i)(2)) attributable to any "partner nonrecourse debt" (as such term is
defined in Treasury Regulation Section 1.70-2(b)(4)) shall be allocated to the
Member that bears the "economic risk of loss" (as determined under Treasury
Regulation Section 1.752-2) for such "partner nonrecourse debt" in accordance
with Treasury Regulation Section 1.704-2(i)(l); (iii) each Member shall be
specially allocated items of Company income and gain in accordance with the
partnership minimum gain chargeback requirements set forth in Treasury
Regulation Sections 1.704-2(f) and 1.704-2(g); and (iv) each Member with a share
of the minimum gain attributable to any "partner nonrecourse debt" (as defined
above in this Section 4.09) shall be specially allocated items of Company income
and gain in accordance with the partner minimum chargeback requirements of
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(i)(5). For purposes of
determining the Members' respective shares of Company nonrecourse liabilities
pursuant to Section 752 of the Code and the Treasury Regulations promulgated
thereunder, (i) a Member's interest in Company profits shall be deemed to
include the allocable share of minimum gain (as determined under Treasury
Regulation Section 1.704-2(g)), Code Section 704(c) gain and any Net Profits
allocable to such Member pursuant to this Article IV, and (ii) such Company
profits shall be deemed allocable to the Members in the following order of
priority: (a) first, to the Members to the extent of, and in proportion to,
their respective allocable shares of minimum gain, (b) second, to the Members to
the extent of, and in proportion to, their respective shares of Code Section
704(c) gain, (c) third, to the Members to the extent of, and in proportion to,
their respective negative Capital Account
balances, if any; and (d) thereafter, to the Members in proportion to their
respective Percentage Interests.
4.10 CURATIVE ALLOCATIONS
The effect of the limitation on the amount of Net Losses and the
qualified income offset provision set forth in the first two (2) sentences of
Section 4.09 above shall be taken into account in calculating subsequent
allocations of Net Profits and Net Losses pursuant to this Article IV, so that
the net amount of any items so allocated and the Net Profits, Net Losses and all
other items allocated to each Member pursuant to this Article IV shall, to the
extent possible, be equal to the net amount that would have been allocated to
each such Member pursuant to the provisions of this Article IV if such special
allocations had not occurred.
4.11 DIFFERING TAX BASIS; TAX ALLOCATION
The Members shall cause depreciation and/or cost recovery deductions
and gain or loss with respect to each item of property treated as contributed to
the capital of the Company to be allocated between the Members for federal
income tax purposes in accordance with the principles of Section 704(c) of the
Code and the Treasury Regulations promulgated thereunder, and for state income
tax purposes in accordance with comparable provisions of applicable state law,
so as to take into account the variation, if any, between the adjusted tax basis
of such property and its book value (as determined for purposes of the
maintenance of Capital Accounts in accordance with this Agreement and Treasury
Regulation Section 1.704-1(b)(2)(iv)(g)). In the event that any property of the
Company is revalued pursuant to Treasury Regulation 1.704-1(b)(2)(iv)(f),
subsequent allocations of income, gain, loss and deduction with respect to such
property shall take into account any variation between the adjusted basis of
such property for federal income tax purposes and its book value in the same
manner as under Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder.
ARTICLE V
DISTRIBUTIONS
5.01 DISTRIBUTION OF ORDINARY CASH FLOW
Subject to Section 5.03, Ordinary Cash Flow shall be determined and
distributed monthly in the following order of priority:
(a) First, to the Members to the extent of, and in proportion
to, each such Member's accrued and unpaid Preferred Return; and
(b) Thereafter, to the Members in proportion to their respective
Percentage Interests.
5.02 DISTRIBUTION OF EXTRAORDINARY CASH FLOW
Subject to Sections 5.04 and 9.02, Extraordinary Cash Flow shall be
distributed to the Members as soon as practicable following the Company's
receipt thereof in the following order of priority:
(a) First to the Members to the extent of, and in proportion to,
each such Member's accrued and unpaid Preferred Return, if any;
(b) Second, to the Members to the extent of, and in proportion
to, the positive balance standing in each such Member's Unrecovered
Contribution Account, if any; and
(c) Thereafter, to the Members in proportion to their respective
Percentage Interests.
5.03 DISTRIBUTION OF ORDINARY CASH FLOW FOLLOWING DILUTION
Notwithstanding Section 5.01 above, in the event that a Contributing
Member makes a Delinquent Contribution on behalf of a Non-Contributing Member
and elects to dilute the Percentage Interest of the Non-Contributing Member
pursuant to Section 3.05(b) above, then Ordinary Cash Flow shall be determined
and distributed monthly, in the following order of priority:
(a) First, to the Contributing Member to the extent of the
Contributing Member's accrued and unpaid Preferred Return;
(b) Second, to the Contributing Member to the extent of the
Contributing Member's Additional Unrecovered Contribution Account;
(c) Third, to the Non-Contributing Member to the extent of the
Non-Contributing Member's accrued and unpaid Preferred Return; and
(d) Thereafter, to the Members in proportion to their respective
Percentage Interests.
5.04 DISTRIBUTION OF EXTRAORDINARY CASH FLOW FOLLOWING DILUTION
Notwithstanding Section 5.02 above, in the event that a Contributing
Member makes a Delinquent contribution on behalf of a Non-Contributing Member
and elects to dilute the Percentage Interest of the Non-Contributing Member
pursuant to Section 3.05(b) above, then, subject to Section 9.02, Extraordinary
Cash Flow shall be distributed to the Members as soon as practicable following
the Company's receipt thereof in the following order of priority:
(a) First, to the Contributing Member to the extent of the
Contributing Member's accrued and unpaid and Preferred Return;
(b) Second, to the Contributing Member to the extent of the
positive balance standing in the Contributing Member's Additional
Unrecovered Contribution Account, if any;
(c) Third, to the Contributing Member to the extent of the
positive balance standing in the Contributing Member's Unrecovered
Contribution Account, if any;
(d) Fourth, to the Non-Contributing Member to the extent of the
Non-Contributing Member's accrued and unpaid Preferred Return;
(e) Fifth, to the Non-Contributing Member to the extent of the
positive balance standing in the Non-Contributing Member's Unrecovered
Contribution Account, if any; and
(f) Thereafter, to the Members in proportion to their respective
Percentage Interests.
5.05 LIMITATIONS ON DISTRIBUTIONS
Notwithstanding any other provision contained in this Agreement, the
Company shall not make a distribution of Cash Flow (or other proceeds) to any
Member if such distribution would violate Section 18-607 of the Delaware Act or
other applicable law.
5.06 IN-KIND DISTRIBUTION
Assets of the Company (other than cash) shall not be distributed in
kind to the Members without the prior written approval of both Members. If any
assets of the Company are distributed to the Members in kind, then for purposes
of this Agreement, such assets shall be valued on the basis of the agreed upon
fair market value thereof (taking into account Section 7701(g) of the Code) on
the date of distribution, and any Member entitled to any interest in such assets
shall receive such interest as a tenant-in-common with the other Members(s) so
entitled with an undivided interest in such assets in proportion to their
respective Capital Accounts (after taking into account all Capital Account
adjustments, including any book-up or book-down caused by such distribution) or
as such Members may otherwise unanimously agree. Upon such distribution, the
Capital Accounts of the Members shall be adjusted to reflect the amount of gain
or loss that would have been allocated to the Members pursuant to the
appropriate provisions of this Agreement had the Company sold the assets being
distributed for their agreed upon fair market value (taking into account Section
7701(g) of the Code) immediately prior to their distribution.
ARTICLE VI
RESTRICTIONS ON TRANSFERS OF INTERESTS
6.01 LIMITATIONS ON TRANSFER
Except as otherwise expressly permitted pursuant to this Article VI,
Article VII and/or Article VIII, no Member shall be entitled to sell, exchange,
assign, transfer, or otherwise dispose of, pledge, hypothecate, encumber or
otherwise grant a security interest in, directly or indirectly, all or any part
of such Member's Interest, without the prior written consent of the other
Member, which consent may be withheld in such other Member's sole discretion.
Any transfer or encumbrance by any constituent owner of any Member of all or any
portion of such owner's ownership interest in such Member shall constitute a
transfer or encumbrance by such Member of its Interest for purposes of this
Article VI. Any attempted transfer, encumbrance or withdrawal in violation of
the restrictions set forth in this Article VI shall be null and void AB INITIO
and of no force or effect.
6.02 PERMITTED TRANSFERS
Any Member may transfer all or any portion of such Member's Interest
to any of the following (collectively, "PERMITTED TRANSFEREES") without
complying with the provisions of Section 6.01:
(a) Any Affiliate of such Member;
(b) Any other Member of the Company, subject to any applicable
rights of first offer and/or refusal in accordance with the provisions of
Section 6.03;
(c) At any time on or after the Opening, any person or entity
other than a Prohibited Transferee, subject to any applicable rights of
first offer and/or refusal in accordance with the provisions of Section
6.03;
(d) To an institutional lender as a pledge or security for any
loan; and the Members agree to execute any separate consent to assignment
reasonably required by such institutional lender; or
(e) Any transferee approved in the sole discretion of the other
Member, provided that it is not a Prohibited Transferee.
In addition, any Member may transfer ownership interests in such
Member (which transfers would otherwise be a prohibited indirect transfer
pursuant to Section 6.01 above), without complying with the provisions of
Section 6.01, provided that all of the following conditions are satisfied:
(1) The transfer of interests in such Member is made solely for
the purposes of raising capital to be contributed by the Member to the
Company pursuant to a Contribution Notice, and such transfer is made within
the three hundred sixty (360) day period beginning one hundred eighty (180)
days before a Contribution Notice and ending one hundred eighty (180) days
after a Contribution Notice;
(2) The owners of the Member transfer an interest in such Member
continue to control the management interests of such Member following the
transfers, with the result that the Board representatives appointed by such
Member transferring indirect interests shall remain unchanged following
such transfers;
(3) The transfer is not to a Prohibited Transferee;
(4) The Non-Transferring Member reasonably approves of such
transfer, unless such transferee is an Institutional Investor; and
(5) The Transferring Member gives the Non-Transferring Member
advance notice of such intended transfer, and for a period of thirty (30)
days the Non-Transferring Member shall have an exclusive right of first
negotiation with respect to such transfer. After the end of said thirty
(30) day period, the Non-Transferring Member's right of first negotiation
shall expire.
As used herein the term "PROHIBITED TRANSFEREE" means any of the
following: (i) any owner, operator or manager of any "resort hotel" (as defined
in Clark County Code Section 8.04.010) located in Clark County, Nevada, (ii) any
shopping center owner, manager and/or developer if TrizecHahn will continue to
be a Member of the Company following the transfer, (iii) any "non-profit" or
"not-for-profit" corporation, association, trust, fund, foundation or other
similar entity organized and operated exclusively for charitable purposes that
qualifies as a tax-exempt entity under applicable federal and state tax law,
(iv) any federal, state or local governmental agency, instrumentality or other
similar entity, (v) any person or entity primarily engaged in the business of
owning or operating a casino or other similar type of gambling facility, (vi)
any person or entity that has been convicted of a felony, (vii) any person or
entity regularly engaged in or affiliated with the production or distribution of
alcoholic beverages, (viii) any person who has been found unsuitable or has
withdrawn an application to be found suitable by the gaming authorities of the
State of Nevada, or (ix) FOCUS 2000, Inc., a Nevada corporation, or the then
current owner or lessee (unless such owner or lessee is an Affiliate of a
Member) of the real property located at the northeast corner of Las Vegas
Boulevard and Harmon Avenue, in the City of Las Vegas, County of Clark, State of
Nevada, or (x) to any person or entity if the consummation of such transfer
would result in a breach of or violation in any transfer restrictions contained
in any loan documentation (and/or guaranty) relative to any indebtedness
encumbering all or any portion of the Bazaar Improvements, and such transfer
restrictions are not waived by the non-transferring Member and the applicable
lender.
Any Permitted Transferee shall receive and hold such Interest or
portion thereof subject to the terms of this Agreement and to the obligations
hereunder of the transferor and there shall be no further transfer of such
Interest or portion thereof except to a person or entity to whom such Permitted
Transferee could have transferred Interest, ownership interest or portion
thereof in accordance with this Section 6.02 had such Permitted Transferee
originally been a Member or otherwise in accordance with the terms of this
Agreement.
6.03 RIGHT OF FIRST OFFER/RIGHT OF FIRST REFUSAL
(a) If any Member (the "TRANSFERRING MEMBER") desires to
transfer all or any portion of such Member's Interest (the "OFFERED
INTEREST") to any person or entity other than a Prohibited Transferee at
any time on or after the date of the Opening, then the Transferring Member
shall give written notice (the "FIRST OFFERING NOTICE") thereof to the
other Member (the "NON-TRANSFERRING MEMBER"). The First Offering Notice
shall specify the Offered Interest to be transferred, the purchase price
and the other terms upon which the Transferring Member intends to so
transfer. For a period of thirty (30) days following the effective date of
the First Offering Notice, the Non-Transferring Member shall have the
right, but not the obligation, to elect to purchase all, but not less than
all, of the Offered Interest for the purchase price (and on the other
terms) specified in
the First Offering Notice by delivering written notice of such election to
the Transferring Member.
(b) If the Non-Transferring Member fails to timely and validly
elect to purchase the Offered Interest in accordance with the terms of the
First Offering Notice (or rejects the opportunity to purchase), time being
of the essence, then, notwithstanding the failure of the Transferring
Member to obtain the consent required for the transfer of the Offered
Interest pursuant to Section 6.01, the Transferring Member may offer the
Offered Interest for sale on the open market for a period of one (1) year
following the effective date of the First Offering Notice. If, during such
one (1) year period, an offer is received from an independent third party
that is not directly or indirectly affiliated with either Member and is not
a Prohibited Transferee ("THIRD PARTY") and if the net effective purchase
price offered by such Third Party is equal to or greater than the price
previously offered to the Transferring Member and the Third Party is a
Pre-Approved Transferee, then the Transferring Member shall be permitted to
transfer the Offered Interest to such Pre-Approved Transferee without any
further consent or rights of first offer and/or refusal in favor of the
Non-Transferring Member. If the net effective purchase price offered by
such Third Party is less than the purchase price previously offered to the
Non-Transferring Member or if the purchase price is equal to or greater
than the purchase price previously offered to the Non-Transferring Member
and the Third Party is not a Pre-Approved Transferee, then the Transferring
Member shall deliver written notice (the "SECOND OFFERING NOTICE") thereof
to the Non-Transferring Member. The Second Offering Notice shall specify
the identity of the Third Party, the purchase price made in the offer by
such Third Party and the other terms of purchase. For a period of thirty
(30) days following the effective date of the Second Offering Notice, the
Non-Transferring Member shall have the right, but not the obligation, to
elect to purchase all, but not less than all, of the Offered Interest for
the purchase price (and on the other terms) specified in the Second
Offering Notice by delivering written notice of such election to the
Transferring Member.
(c) If the Non-Transferring Member fails to timely and validly
elect to purchase the Offered Interest in accordance with the terms of the
Second Offering Notice (or rejects the opportunity to purchase), then the
Transferring Member may transfer the Offered Interest to the Third Party
identified in the Second Offering Notice at the same price and on the same
terms as are specified in the Second Offering Notice for a period of one
(1) year following the date of the Second Offering Notice without any
further consent or rights of first offer and/or refusal in favor of the
Non-Transferring Member.
(d) If the Non-Transferring Member timely and validly elects to
purchase the Offered Interest in accordance with the provisions of Section
6.03(a) or 6.03(b) above, then the closing for such purchase shall be held
at the principal office of the Company in Nevada within sixty (60) days
following the effective date of the First Offering Notice or the Second
Offering Notice, as the case may be.
(e) If the Non-Transferring Member timely and validly elects to
acquire the Offered Interest in accordance with the foregoing provisions of
this Section 6.03, but fails to consummate such purchase, then the Offered
Interest shall
thereafter be freely transferable by the Non-Transferring Member to any
Third Party without any further consent or rights of first offer and/or
refusal in favor of the Non-Transferring Member.
(f) The Members acknowledge and agree that either Member may
assign such Member's rights of first offer and/or rights of first refusal
set forth above in this Section 6.02 to any Affiliate of such Member (which
shall include, without limitation, Aladdin Gaming, in the case of Holdings
II) without the consent of the other Member so as to enable any such
Affiliate to acquire the Offered Interest.
(g) This Section 6.03 shall not apply to a transfer described in
Article VII or Article VIII below.
The term "PRE-APPROVED TRANSFEREE" means any publicly-traded real
estate investment trust, any financial institution or pension fund, any mutual
fund or other institutional investor, any investment bank, and any
publicly-traded real estate ownership or operating company with experience in
the ownership of shopping centers, in each case with assets in excess of One
Hundred Million Dollars ($100,000,000), and any corporation, partnership,
limited liability company, trust or private fund in which any of the foregoing
is an investor or advisor, provided that such entity also has assets in excess
of One Hundred Million Dollars ($100,000,000.00) or is guaranteed by any one of
the foregoing entities having assets in excess of One Hundred Million Dollars
($100,000,000.00).
6.04 REGULATORY AND LENDER PROHIBITIONS
Notwithstanding any other provision of this Agreement, no Member may
transfer all or any portion of such Member's Interest if (i) such transfer would
result in a breach of or violation of the Nevada gaming laws or in the
regulatory requirements of the Nevada gaming authorities, or (ii) such transfer
would result in a breach of or violation in any loan documentation (and/or
guaranty) relative to any indebtedness governing all or any portion of the
Bazaar Improvements (and such restrictions are not waived by the applicable
lender).
6.05 ADMISSION OF SUBSTITUTED MEMBERS
If any Member transfers such Member's Interest to a transferee in
accordance with Sections 6.01, 6.02, 6.03 and/or Article VII, then such
transferee shall only be entitled to be admitted into the Company as a
substituted member if (a) this Agreement is amended to reflect such admission in
accordance with the provisions of the Nevada Act, (b) the non-transferring
Member reasonably approves the form and content of the instrument of transfer;
(c) the transferor and transferee named therein execute and acknowledge such
other instruments as the non-transferring Member may deem reasonably necessary
to effectuate such admission; (d) the transferee in writing accepts and adopts
all of the terms and conditions of this Agreement, as the same may have been
amended; and (e) the transferor pays, as the non-transferring Member may
reasonably determine, all reasonable expenses incurred in connection with such
admission, including, without limitation, legal fees and costs. To the fullest
extent permitted by law, any transferee of an Interest who does not become a
substituted member shall have no right to require any information or account of
the Company's transactions, to inspect the Company books, or to vote on any of
the matters as to which a Member would be entitled to vote under this Agreement.
Any such transferee shall only be entitled to share in such Net Profits and Net
Losses, to receive such distributions, and to receive such allocations of
income, gain, loss, deduction or credit or similar items to which the transferor
was entitled, to the extent assigned. A Member that transfers its Interest
shall not cease to be a member of the Company until the admission of the
transferee as a substituted member of the Company and, except as provided in the
preceding sentence, shall continue to be entitled to exercise, and shall
continue to be subject to, all of the rights, duties and obligations of such
Member under this Agreement.
6.06 ELECTION; ALLOCATIONS BETWEEN TRANSFEROR AND TRANSFEREE
In the event of the transfer of the Interest of any Member or the
distribution of any property of the Company to a Member, the Company may file,
in the reasonable discretion of the Board, an election in accordance with
applicable Treasury Regulations, to cause the basis of the Company property to
be adjusted for federal income tax purposes as provided by Sections 734 and 743
of the Code. Upon the transfer of all or any part of the Interest of a Member
as hereinabove provided, Net Profits and Net Losses shall be allocated between
the transferor and transferee on the basis of the computation method which in
the reasonable discretion of TrizecHahn, is in the best interests of the
Company, provided such method is in conformity with the methods prescribed by
Section 706 of the Code and Treasury Regulation Section 1.706-1(c)(2)(ii).
6.07 PARTITION
No Member shall have the right to partition any assets of the Company
or any interest therein, nor shall a Member make application or proceeding for a
partition thereto and, upon any breach of the provisions of this Section 6.07 by
any Member, the other Member (in addition to all rights and remedies afforded by
law or equity) shall be entitled to a decree or order restraining or enjoining
such application, action or proceeding.
6.08 WAIVER OF WITHDRAWAL AND PURCHASE RIGHTS
Except in connection with any transfer permitted pursuant to Sections
6.01, 6.02, 6.03 and/or Article VII, no Member may voluntarily withdraw, resign
or retire from the Company without the prior written consent of the other
Member, which consent may be withheld in such other Member's sole discretion.
Each Member hereby waives any and all rights such Member may have to withdraw
and/or resign from the Company pursuant to Section 18-603 of the Delaware Act
and hereby waives any and all rights such Member may have to receive the fair
value of such Member's Interest in the Company upon such withdrawal, resignation
and/or retirement pursuant to Section 18-604 of the Delaware Act.
ARTICLE VII
MARKETING AND SALE OF THE BAZAAR IMPROVEMENTS
7.01 RIGHT TO MARKET DURING YEARS FIVE THROUGH TEN
(a) At any time during the period commencing on the fifth (5th)
anniversary of the Opening and expiring on the last day prior to the tenth
(10th)
anniversary of the Opening (the "INITIAL SALE PERIOD"), any Member holding
fifty percent (50%) or more of the Interests (the "SELLING MEMBER") shall
have the right to cause the Company to offer all, but not less than all, of
the Bazaar Improvements for sale on the open market by delivering written
notice thereof to the other Member (the "NON-SELLING MEMBER").
(b) If any offer is received by the Company and/or the Selling
Member for the Bazaar Improvements and the Selling Member desires to sell
on such terms, but the Non-Selling Member does not, then the Selling Member
shall deliver written notice thereof (the "FIRST SALE NOTICE") to the
Non-Selling Member. The First Sale Notice shall specify the identity of
the Third Party, the purchase price made in the offer by such Third Party
and the other terms of purchase. For a period of thirty (30) days
following the effective date of the First Sale Notice, the Non-Selling
Member shall have the right, but not the obligation, to elect to purchase
the entire Interest of the Selling Member (which right may be assigned to
an Affiliate) on the terms and conditions set forth in the First Sale
Notice for a purchase price (the "SELLING MEMBER'S PURCHASE PRICE") equal
to the amount that would be distributed to the Selling Member pursuant to
Section 9.02(b) if the Bazaar Improvements had been sold to the Third Party
for cash at the price set forth in the First Sale Notice, net of the Sales
Costs, and the Company was liquidated. As used herein, the term "SALES
COSTS" means any and all third-party costs and/or expenses reasonably
expected to be incurred in connection with the sale of the Bazaar
Improvements, including, without limitation, brokerage and/or sales
commissions, escrow fees, title, documentary and other transfer taxes and
the like. If the Non-Selling Member fails to timely and validly elect to
purchase the Interest of the Selling Member or rejects the opportunity to
purchase, then the Selling Member shall have the right, but not the
obligation, to elect to purchase from the Non-Selling Member a one percent
(1%) residual ownership interest in the Net Profits, Net Losses and Cash
Flow of the Company (the "CONTROL INTEREST") for a purchase price equal to
the Control Premium. The Members acknowledge and agree that the Control
Interest shall not include any portion of the Capital Account, the
Unrecovered Contribution Account and/or the accrued, unpaid Preferred
Return of the Non-Selling Member. As used herein, the term "CONTROL
PREMIUM" means an amount equal to the product of (i) five percent (5%)
multiplied by (ii) the purchase price offered by the Third Party for the
Bazaar Improvements, net of any indebtedness encumbering the Bazaar
Improvements and the Sales Costs. If the Selling Member timely and validly
elects to purchase the Control Interest, then the closing of the purchase
and sale shall be held at the principal office of the Company in Nevada
concurrently with the close of the Selling Member's Interest in the Company
to the Third Party identified in the First Sale Notice. If the Non-Selling
Member fails to timely and validly elect to purchase the Interest of the
Selling Member, then for a period of one hundred eighty (180) days
following the expiration of the thirty (30) day period following the First
Sale Notice, the Selling Member shall thereafter have the right, but not
the obligation, to sell such Member's entire Interest in the Company
(including, without limitation, the Control Interest) to the Third Party
identified in the First Sale Notice for a purchase price equal to the
Selling Member's Purchase Price, plus the Control Premium without any
further consent or rights of first offer and/or refusal in favor of the
Non-Selling Member. From and after the date of the acquisition of the
Control Premium, (i) the Third Party identified in the First Sale Notice
shall have the right, but not the
obligation, to appoint one (1) additional voting representative to the
Board and (ii) the Non-Selling Member shall have no right to appoint any
representatives to the Board, and the voting rights of the Non-Selling
Member under the Agreement shall be limited solely to those expressly
mandated by the Delaware Act.
7.02 RIGHT TO REQUIRE SALE AFTER YEAR TEN
(a) At any time after the expiration of the Initial Sale Period,
either Member shall have the right to cause the Company to offer all, but
not less than all, of the Bazaar Improvements for sale on the open market
by delivering written notice thereof to the other Member.
(b) If any offer is received by the Company and/or the Selling
Member for the Bazaar Improvements and the Selling Member desires to sell
on such terms but the Non-Selling member does not, then the Selling Member
shall deliver written notice thereof (the "PROJECT SALE NOTICE") to the
Non-Selling Member. The Project Sale Notice shall specify the identity of
the Third Party, the purchase price made in the offer by such Third Party
and the other terms of purchase. For a period of thirty (30) days
following the effective date of the Project Sale Notice, the Non-Selling
Member shall have the right, but not the obligation, to elect to purchase
the entire Interest of the Selling Member on the terms and conditions set
forth in the Project Sale Notice for a purchase price equal to the amount
that would be distributed to the Selling Member pursuant to Section 9.02(b)
if the Bazaar Improvements had been sold to the Third Party for cash at the
price set forth in the Project Sale Notice, net of the Sales Costs, and the
Company was liquidated. If the Non-Selling Member fails to timely and
validly elect to purchase the Selling Member's Interest (or rejects the
opportunity to purchase), then the Selling Member shall have the right, but
not the obligation, to cause the Company to sell the Bazaar Improvements to
the Third Party specified in the Project Sale Notice at the same price and
on the same terms specified in the Project Sale Notice without any further
consent or rights of first offer and/or refusal in favor of the Non-Selling
Member.
7.03 GENERAL SALES PROCEDURES
(a) If the Non-Selling Member timely and validly elects to
purchase the Interest of the Selling Member in accordance with the
provisions of Section 7.01 or 7.02 above, then the closing for such
purchase shall be held at the principal office of the Company in Nevada
within sixty (60) days following the effective date of the First Sale
Notice or the Project Sale Notice, as the case may be.
(b) If the Non-Selling Member timely and validly elects to
acquire the Interest of the Selling Member in accordance with the
provisions of Section 7.01 or 7.02 above, but fails to consummate such
purchase, then the Selling Member shall thereafter be entitled to cause the
sale of the Bazaar Improvements and/or the Selling Member's Interest to any
Third Party without any further consent or rights of first offer and/or
refusal in favor of the Non-Selling Member.
(c) The Members acknowledge and agree that the Non-Selling
Member may assign such Member's rights of first refusal set forth above in
this
Article VII to any Affiliate of such Member without the consent of the
other Member so as to enable any such Affiliate to acquire the Interest of
the Selling Member.
ARTICLE VIII
DEFAULT BUY/SELL AGREEMENT
8.01 BUY/SELL EVENTS
For purposes of this Article VIII, the following shall constitute
"BUY/SELL EVENTS":
(a) PROHIBITED WITHDRAWAL OR RETIREMENT. The withdrawal,
retirement, or other cessation to serve as a member of the Company by any
Member in violation of the terms of this Agreement;
(b) PROHIBITED TRANSFER OR ENCUMBRANCE. Any transfer or
encumbrance or attempted transfer or encumbrance by any Member of such
Member's Interest contrary to the provisions of Article VI or Article VII,
which has not been cured or withdrawn within ten (10) business days after
receipt of the Default Notice;
(c) BANKRUPTCY OR INSOLVENCY. The rendering, by a court with
appropriate jurisdiction, of a decree or order (i) adjudging a Member
bankrupt or insolvent; or (ii) approving as properly filed a petition
seeking reorganization, readjustment, arrangement, composition, or similar
relief for a Member under the federal bankruptcy laws or any other similar
applicable law or practice, and if such decree or order referred to in this
Section 8.01(c) shall have continued undischarged and unstayed for a period
of sixty (60) days;
(d) APPOINTMENT OF RECEIVER. The rendering, by a court with
appropriate jurisdiction, of a decree or order (i) for the appointment of a
receiver, a liquidator, or a trustee or assignee in bankruptcy or
insolvency of a Member, or for the winding up and liquidation of a Member's
affairs, provided that such decree or order shall have remained in force
undischarged and unstayed for a period of sixty (60) days; or (ii) for the
sequestration or attachment of any property of a Member without its return
to the possession of such Member or its release from such sequestration or
attachment within sixty (60) days thereafter; or
(e) BANKRUPTCY PROCEEDINGS. A Member (i) institutes proceedings
to be adjudicated a voluntary bankrupt or an insolvent; (ii) consents to
the filing of a bankruptcy proceeding against such Member; (iii) files a
petition or answer or consent seeking reorganization, readjustment,
arrangement, composition, or similar relief for such Member under the
federal bankruptcy laws or any other similar applicable law or practice;
(iv) consents to the filing of any such petition, or to the appointment of
a receiver, a liquidator, or a trustee or assignee in bankruptcy or
insolvency for such Member or a substantial part of such Member's property;
(v) makes an assignment for the benefit of such Member's creditors; (vi) is
unable to or admits in writing such Member's
inability to pay such Member's debts generally as they become due; or (vii)
takes any action in furtherance of any of the aforesaid purposes.
For the purposes of implementing the provisions contained in this
Article VIII, the "DEFAULTING MEMBER" shall be (i) in the case of the occurrence
of the event referenced in Section 8.01(a), the Member that has withdrawn,
retired or ceased to serve as a Member of the Company in violation of the terms
of this Agreement; (ii) in the case of the occurrence of the event referenced in
Section 8.01(b), the Member that has transferred such Member's rights or
interests contrary to the provisions of Article VI or Article VII; and (iii) in
the case of any of the events referenced in Section 8.01(c), (d), or (e), the
Member who is the subject of such court decree or order or has instituted such
proceedings or filed such petitions or who is insolvent, etc. The
"NON-DEFAULTING MEMBER" is the Member that is not the Defaulting Member.
8.02 RIGHTS ARISING FROM A BUY/SELL EVENT
At any time following one (1) year after the date that the
Non-Defaulting Members obtain actual knowledge of the occurrence of a Buy/Sell
Event, the Non-Defaulting Member shall have the right, but not the obligation,
to implement the buy/sell procedures set forth in this Article VIII by
delivering written notice ("DEFAULT NOTICE") thereof to the Defaulting Member.
For a period of ten (10) days following the Effective Date of the Default
Notice, the Members shall attempt to agree upon a purchase price for the
Defaulting Member's Interest (the "PURCHASE PRICE"). If the Members are unable
to agree, then the Purchase Price shall be determined in accordance with the
provisions of Section 8.03.
8.03 DETERMINATION OF PURCHASE PRICE
Within thirty (30) days after the determination of the Appraised Value
of the assets of the Company, the Members shall for a period of ten (10) days
attempt to jointly determine the amount of cash which would be distributed to
each Member pursuant to Section 5.04, if applicable, or Section 5.02 (if no
dilution event has occurred) if (i) the assets of the Company were sold for the
Appraised Value thereof as of the Effective Date of the Default Notice; (ii) the
liabilities of the Company were liquidated in accordance with Section 9.02,
(iii) reasonable reserves for any contingent, conditional or unmatured
liabilities of the Company were established by the Non-Defaulting Member; and
(iv) the Company made its required distributions to the Members pursuant to
Section 5.04, if applicable, or Section 5.02 (if no dilution event has
occurred). If the Members are unable to agree upon such determination within
the applicable ten (10) day period, then the accountants regularly employed by
the Company shall make such determination and shall give each Member written
notice ("PRICE DETERMINATION NOTICE") thereof. The determination by the
accountants of such amounts, including all components thereof, shall be deemed
conclusive absent any material computational error. Ninety percent (90%) of the
amount that would be distributed to the Defaulting Member pursuant to clause
(iv) above shall be deemed to be the Purchase Price for purposes of this Article
VIII.
(a) DETERMINATION OF APPRAISED VALUE. For purposes of this
Article VIII, the appraised value ("APPRAISED VALUE") of the assets of the
Company shall be determined by real estate appraiser(s) all of whom shall
be independent qualified M.A.I. appraisers. The Non-Defaulting Member
shall select one (1) appraiser. The Defaulting
Member shall either agree to the appraiser selected by the Non-Defaulting
Member or select a second appraiser within fifteen (15) days of the
Effective Date of the Default Notice and give written notice to the
Non-Defaulting Member of the person so selected. In the event of the
failure of the Defaulting Member to appoint such an appraiser within the
times specified and after expiration of five (5) days following the
Effective Date of written demand that an appraiser be appointed, the
appraiser duly appointed by the Non-Defaulting Member shall proceed to make
the appraisal as herein set forth and the determination thereof shall be
conclusive on all the Members.
If two (2) appraisers are selected, then such selected appraisers
shall thereafter appoint a third (3rd) appraiser. If the two (2) selected
appraisers fail to appoint a third (3rd) appraiser within ten (10) days
following the Effective Date of written notice from the Defaulting Member
notifying the Non-Defaulting Member of the selection of the second (2nd)
appraiser, then any Member may petition a court of competent jurisdiction
to appoint a third (3rd) appraiser in the same manner as provided for the
appointment of an arbitrator pursuant to Section 11.14.
The appraiser or three appraisers, as the case may be, shall
promptly fix a time for the completion of the appraisal which shall not be
later than thirty (30) days from the date of appointment of the last
appraiser.
The appraiser(s) shall determine the Appraised Value by
determining the fair market value of the assets of the Company, such fair
market value being the fairest price estimated in terms of money which the
Company could obtain if such assets were sold in the open market, allowing
a reasonable time to find a purchaser who purchases with knowledge of the
uses which such assets in their then condition are adapted and for which
such assets are capable of being used as of the Effective Date of the
Default Notice.
Upon submission of the appraisals setting forth the opinions as
to the appraised value of the assets of the Company, (A) if only one (1)
appraiser is selected, then such appraisal shall constitute the Appraised
Value of the assets of the Company, or (B) if three (3) appraisers are
selected, then the two (2) such appraisals which are nearest in amount
shall be retained, and the third appraisal shall be discarded. The average
of the two (2) retained appraisals shall constitute the Appraised Value of
the assets of the Company, unless one (1) appraisal is the mean of the
other two (2) appraisals in which case such appraisal shall constitute the
Appraised Value.
(b) PAYMENT OF COSTS. The Defaulting Member shall pay for the
services of the accountant and the services of all appraisers appointed
pursuant to this Section 8.03 (the "APPRAISAL COSTS"), or at the
Non-Defaulting Member's election, the Non-Defaulting Member may pay such
costs and reduce the Purchase Price by such amount.
8.04 NON-DEFAULTING MEMBER'S OPTION
For a period of thirty (30) days following the Effective Date of the
Price Determination Notice, the Non-Defaulting Member shall have the right, but
not the obligation, to
elect to purchase the entire Defaulting Member's Interest for the Purchase Price
thereof (as adjusted pursuant to Section 8.08), and on the terms and conditions
set forth in this Article VIII by giving written notice thereof to the
Defaulting Member within such thirty (30)-day period.
8.05 CLOSING OF PURCHASE AND SALE
The closing of a purchase pursuant to this Article VIII shall be held
at the principal office of the Company in Nevada on or before the ninetieth
(90th) day after the expiration of the thirty (30)-day period set forth in
Section 8.04, or such longer period if reasonably necessary in order to obtain
any required bankruptcy court approval. The Defaulting Member shall transfer to
the Non-Defaulting Member (or such Member's nominee(s)) the entire Interest of
the Defaulting Member free and clear of all liens, security interests, and
competing claims and shall deliver to the Non-Defaulting Member (or such
Member's nominee(s)) such instruments of transfer and such evidence of due
authorization, execution, and delivery, and of the absence of any such liens,
security interests, or competing claims as such Non-Defaulting Member (or such
Member's nominee(s)) shall reasonably request.
8.06 PAYMENT OF PURCHASE PRICE
The Purchase Price (as adjusted pursuant to Section 8.08) shall be
paid by the Non-Defaulting Member (or such Member's nominee(s)) at the closing,
in cash or one (1) or more certified or bank cashier's checks drawn and made
payable to the order of the Defaulting Member for an amount equal to twenty
percent (20%) (or more at the election of the Non-Defaulting Member) of the
Purchase Price and a nonrecourse promissory note in an amount equal to the
balance of such Purchase Price executed by the Non-Defaulting Member (or such
Member's nominee(s)).
Any promissory note shall bear simple (non-compounded) interest at the
then current prime rate as most recently reported by the Western Edition of the
Wall Street Journal (or, if less, the maximum non-usurious rate then permitted
by law for such loans), and shall be repayable only from such funds as may
thereafter be received by the Non-Defaulting Member on account of the
Non-Defaulting Member's purchase of the Interest of the Defaulting Member
hereunder, which funds would otherwise have been received by the Defaulting
Member from the Company but for such purchase. Except for the Non-Defaulting
Member's proportionate share of such funds, the Defaulting Member shall have no
recourse whatsoever against any other property or assets of the Non-Defaulting
Member for the repayment of such promissory note. Until such time as all
principal and accrued interest under such promissory note has been paid in full,
payments thereunder shall be made quarterly, commencing with the first calendar
quarter from the date of closing. Each such quarterly payment shall be equal to
the Non-Defaulting Member's proportionate share of the aggregate amount of such
funds received and collected by the Non-Defaulting Member (if any) that would
have otherwise been received by the Defaulting Member but for such purchase
during the calendar quarter period immediately preceding the date of such
payment. All payments under such promissory note shall first be credited
against accrued interest and thereafter against principal. Notwithstanding
anything contained hereinabove to the contrary, if any such promissory note has
not been paid in full (together with all accrued interest thereon) on or before
the expiration of five (5) years from the date of closing, such promissory
note shall be deemed canceled in full, and the Defaulting Member shall be
entitled to no further payments of principal or interest thereunder.
8.07 RELEASE
On or before the closing of a purchase held pursuant to this Article
VIII, the Non-Defaulting Member shall use such Member's reasonable efforts
(without the obligation to incur additional costs or liabilities) to obtain
written releases of the Defaulting Member (and/or such Member's Affiliates) from
all liabilities of the Company and from all guarantees of such liabilities of
the Company previously executed by the Defaulting Member (and/or its
Affiliates).
8.08 REPAYMENT OF MEMBER LOANS
The Purchase Price to be paid by the Non-Defaulting Member for the
Interest of the Defaulting Member shall be offset at the closing of such
purchase by the then outstanding principal balance of any and all Member Loan(s)
(together with all accrued, unpaid interest thereon) made by the Non-Defaulting
Member to the Defaulting Member. Such Member Loan(s) (together with all
accrued, unpaid interest thereon) shall be deemed paid to the extent of such
offset, with such deemed payment to be applied first to the accrued interest
thereon and thereafter to the payment of the outstanding principal amount
thereof. If the Purchase Price for the Defaulting Member's Interest is
insufficient to fully offset the then unpaid principal balance of any and all
Default Loans (together with all accrued, unpaid interest thereon) made by the
Non-Defaulting Member to the Defaulting Member, then the portion of any such
Member Loan(s) (and accrued, unpaid interest thereon) that remains outstanding
following such offset shall be due and payable in full at the closing of the
purchase of the Defaulting Member's Interest pursuant to this Article VIII. Any
Member Loans offset against the Purchase Price to be paid by the Non-Defaulting
Member shall be applied first to reduce the portion of the Purchase Price, if
any, to be paid with cash or by certified or bank cashier's check and thereafter
to reduce the portion of the Purchase Price, if any, to be paid by the delivery
of a promissory note.
8.09 VOTING RIGHTS FOLLOWING BUY/SELL EVENT
From and after the occurrence of a Buy/Sell Event, (i) the Defaulting
Member shall not be entitled to participate in the management of the Company or
appoint a representative to the Board, or otherwise vote upon, any matter
affecting the business and affairs of, the Company or any matter that such
Member is entitled to vote upon under this Agreement, and (ii) the rights of the
Defaulting Member shall be limited solely to those of an assignee as set forth
in Section 6.05.
ARTICLE IX
DISSOLUTION AND WINDING UP OF THE COMPANY
9.01 EVENTS CAUSING DISSOLUTION OF THE COMPANY
If any Member retires, resigns or otherwise ceases to serve in
compliance with the terms of this Agreement, then the Company shall be dissolved
and its affairs wound up, unless the remaining Member(s) (or their
successor(s)-in-interest), within ninety (90) days after such
retirement, reorganization or other event of non-compliance with this Agreement,
unanimously elect to continue the business of the Company. In addition, the
Company shall be dissolved upon the first to occur of: (a) the expiration of
the term of the Company unless such term has been extended by the unanimous
agreement of the Members; (b) the sale, transfer or other disposition by the
Company of all or substantially all of its assets and the collection by the
Company of any and all Cash Flow derived therefrom; (c) the failure to satisfy
the Conditions Precedent and the reimbursement of TrizecHahn of its
Predevelopment Costs (if applicable) pursuant to Section 3.06; or (d) the
affirmative election of all of the Members to dissolve the Company. Except as
permitted above in this Section 9.01, no Member shall have the right to, and
each Member hereby agrees that it shall not, seek to dissolve or cause the
dissolution of the Company or to seek to cause a partial or whole distribution
or sale of Company assets whether by court action or otherwise, it being agreed
that any actual or attempted dissolution, distribution or sale would cause a
substantial hardship to the Company and the remaining Member(s) and shall
constitute a breach and contravention of this Agreement. The admission of any
new Member into the Company shall not dissolve the Company, but the business of
the Company shall continue without interruption and without any break in
continuity.
9.02 WINDING UP OF THE COMPANY
Upon the Liquidation of the Company caused by other than the
termination of the Company under Section 708(b)(1)(B) of the Code (in which
latter case the Company shall remain in existence in accordance with the
provisions of such Section of the Code), TrizecHahn shall proceed to the winding
up of the affairs of the Company. During such winding up process, the Net
Profits, Net Losses and Cash Flow distributions shall continue to be shared by
the Members in accordance with this Agreement. The assets shall be liquidated as
promptly as consistent with obtaining a fair value therefor, and the proceeds
therefrom, to the extent available, shall be applied and distributed by the
Company on or before the end of the taxable year of such Liquidation or, if
later, within ninety (90) days after such Liquidation, in the following order:
(a) first, to creditors of the Company (including Members who are creditors), in
the order of priority as provided by law, including, without limitation, to the
setting up of any reasonable reserves which TrizecHahn deems reasonably
necessary for any contingent, conditional or unmatured liabilities or
obligations of the Company (which shall be distributed as soon as reasonably
practicable to the Members in the order of priority set forth in Section 5.04,
if applicable, or Section 5.02 if no dilution event has occurred), and (b)
thereafter, after giving effect to all contributions, distributions and
allocations for all periods to the Members in accordance with their relative
positive Capital Account balances.
9.03 NEGATIVE CAPITAL ACCOUNT RESTORATION
No Member shall have any obligation whatsoever upon the Liquidation of
such Member's Interest, the Liquidation of the Company or in any other event, to
contribute all or any portion of any negative balance standing in such Member's
Capital Account to the Company, to any other Member or to any other person or
entity.
ARTICLE X
BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS
10.01 COMPANY BOOKS
TrizecHahn shall cause to be kept, at the principal place of business
of TrizecHahn, or at such other location as TrizecHahn shall reasonably deem
appropriate, full and proper ledgers, other books of account, and records of all
receipts and disbursements, other financial activities, and the internal affairs
of the Company for at least the current and past four fiscal years.
10.02 DELIVERY OF RECORDS; INSPECTION
Upon the reasonable written request of any Member for any purpose
reasonably related to such Member's Interest, TrizecHahn shall deliver to such
requesting Member (or, to the extent so directed, to its agent or attorney) a
copy of the following information, to the extent such is requested in writing:
(a) true and full information regarding the status of the
business and financial condition of the Company (including, without
limitation, the annual financial reports and all reasonable supporting
calculations and information for such reports);
(b) promptly after becoming available, a copy of the Company's
federal, state and local income or information tax returns for the year;
(c) a current list of the name and last known-business,
residence or mailing address of each Member;
(d) a copy of this Agreement, as amended, and Certificates,
together with executed copies of any written powers of attorney pursuant to
which this Agreement, as amended, and any Certificate have been executed;
and
(e) true and full information regarding the amount of cash and a
description and statement of the agreed value of any other property or
services contributed by each Member and which each Member has agreed to
contribute in the future, and the date on which each became a Member.
Any Member (personally or through an authorized representative) may,
for any purpose reasonably related to such Member's Interest, inspect and copy
(at their own cost and expense) the books and records of the Company at all
reasonable business hours.
10.03 REPORTS AND TAX INFORMATION
TrizecHahn shall cause to be prepared, at the expense of the Company,
and delivered to each Member at such times as are determined by the Board (or
otherwise in accordance with the terms of this Agreement), the Development Plan,
the Development Budget, the Operating Budgets, any and all construction reports
and budgets, monthly operating reports, and any and all other financial
statements and/or reports requested from time to time by the Board. In
addition, TrizecHahn shall cause to be prepared, at the expense of the Company,
and delivered to each Member, within ninety (90) days after the end of each tax
year, the information
necessary for such Member to complete its federal, state and local income tax or
information returns.
10.04 COMPANY TAX ELECTIONS; TAX CONTROVERSIES
TrizecHahn shall have the right to make elections for the Company
provided for in the Code, including, but not limited to, the elections provided
for in Section 754 of the Code. TrizecHahn is hereby designated as the "TAX
MATTERS MEMBER" pursuant to the requirements of Section 6231(a)(7) of the Code
and the Treasury Regulations promulgated thereunder. In its capacity as Tax
Matters Member, TrizecHahn shall represent the Company in any disputes,
controversies or proceedings with the Internal Revenue Service.
10.05 ACCOUNTING AND FISCAL YEAR
Subject to Section 448 of the Code, the books of the Company shall be
kept on such method of accounting for tax purposes as determined by the Board,
and for financial reporting purposes in accordance with generally accepted
accounting principles. The fiscal year of the Company shall be the calendar
year.
10.06 CONFIDENTIALITY OF INFORMATION
Each party hereto agrees that the provisions of this Agreement, all
understandings, agreements and other arrangements between and among the parties,
and all other non-public information received from or otherwise relating to, the
Company shall be confidential, and shall not be disclosed or otherwise released
to any other person or entity (other than another party hereto), without the
written consent of the Board. Accordingly, each party hereto shall, and shall
cause its agents and attorneys to, hold in confidence all such information.
ARTICLE XI
MISCELLANEOUS
11.01 INVESTMENT INTEREST; NATURE OF INVESTMENT
Each Member hereby represents and warrants to the Company and to each
other Member that such Member is acquiring its Interest in the Company for its
own account and not with a view to, or for resale in connection with, any
distribution thereof in violation of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or any applicable state securities laws. Such Member also
understands that its Membership Interest may not be transferred absent
compliance with the registration requirements of the Securities Act and
applicable state securities laws or pursuant to an exemption therefrom and
otherwise in compliance with the terms of this Agreement. Each Member
understands the meaning and consequences of the representations, warranties and
covenants made by such Member set forth herein and that the Company has relied
upon such representations, warranties and covenants. Each Member hereby
indemnifies, defends, protects and holds wholly free and harmless the Company
from and against any and all losses, damages, expenses or liabilities arising
out of the breach and/or inaccuracy of any such representation, warranty and/or
covenant. All representations, warranties and covenants
contained herein shall survive the execution of this Agreement, the formation of
the Company, and the liquidation of the Company.
11.02 AMENDMENT
Except as otherwise provided by this Agreement, the written consent of
each Member shall be required to amend or waive any provision of this Agreement,
which consent may be given, withheld or made subject to such conditions as are
determined by each such Member in such Member's sole and absolute discretion.
11.03 NO ASSIGNMENTS; BINDING EFFECT
This Agreement shall not be assigned or otherwise transferred (by
operation of law or otherwise) by any Member except as is otherwise permitted in
Articles VI, VII and VIII. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and assigns permitted in accordance with this
Agreement and the Nevada Act.
11.04 FURTHER ASSURANCES
Each of the parties hereby does hereby covenant and agree on behalf of
itself, its successors, and its assigns, without further consideration, to
prepare, execute, acknowledge, verify file, record, publish and deliver such
other instruments, documents and statements, and to take such other action as
may be required by law or reasonably necessary to effectively carry out the
purposes of this Agreement.
11.05 NOTICES
Any notice, approval, consent, payment, demand or communication
required or permitted to be given to any Member under this Agreement shall be in
writing and delivered at the address specified in Section 1.02, and shall be
deemed to have been duly given or made as of the date (the "EFFECTIVE DATE") set
forth below: (i) if delivered personally by courier or otherwise, then as of
the date delivered or if delivery is refused, then as of the date presented;
(ii) if sent or mailed by Federal Express, Express Mail or other overnight mail
service to the Company at its principal office and to each Member at its address
appearing in the current records of the Company, then as of the first Business
Day after the date so mailed; (ii) if sent or mailed by certified U.S. Mail,
return receipt requested, to the Company at its principal office in California
and to each Member at its address appearing in the current records of the
Company, then as of the third Business Day after the date so mailed; or (iv) if
sent by facsimile to the Company at its facsimile telephone number or to any
Member at its facsimile telephone number appearing in the current records of the
Company, then either (x) as of the date on which the appropriate electronic
confirmation of receipt is received by the sending party at or before 5:00 p.m.
(receiver's time) on any Business Day or (y) as of the next Business Day if the
time of the appropriate electronic confirmation of receipt is received by the
sending party after 5:00 p.m. (receiver's time).
11.06 WAIVERS
No waiver by any Member of any default with respect to any provision,
condition or requirement hereof shall be deemed to be a waiver of any other
provision, condition or requirement hereof; nor shall any delay or omission of
any Member to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it hereafter.
11.07 PRESERVATION OF INTENT
If any provision of this Agreement is determined by an arbitrator or
any court having jurisdiction to be illegal or in conflict with any laws of any
state or jurisdiction, then the Members agree that such provision shall be
modified to the extent legally possible so that the intent of this Agreement may
be legally carried out. If any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect or for any reason, then the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired or affected, it being
intended that all of the Members' rights and privileges shall be enforceable to
the fullest extent permitted by law.
11.08 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto pertaining to the subject matter hereto and fully supersedes any and all
prior or contemporaneous agreements or understandings between the parties
thereto pertaining to the subject matter hereof, except for any written (but not
oral) agreements executed by the parties contemporaneously herewith.
11.09 CERTAIN RULES OF CONSTRUCTION
Any ambiguities shall be resolved without reference to which party may
have drafted this Agreement. All Article or Section titles or other captions in
this Agreement are for convenience only, and they shall not be deemed part of
this Agreement and in no way defined, limit, extend or describe the scope or
intent of any provisions hereof. Unless the context otherwise requires: (i) a
term has the meaning assigned to it; (ii) an accounting term not otherwise
defined has the meaning assigned to it in accordance with generally accepted
accounting principles; (iii) "or" is not exclusive; (iv) words in the singular
include the plural, and words in the plural include the singular; (v) provisions
apply to successive events and transactions; (vi) "herein", "hereof" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision; (vii) all references to
"clauses", "Sections" or "Articles" refer to clauses, Sections or Articles of
this Agreement; and (viii) any pronoun used in this Agreement shall include the
corresponding masculine, feminine or neuter forms.
11.10 COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which, taken together, shall
constitute one and the same instrument.
11.11 CERTAIN OTHER MATTERS
Time is of the essence of this Agreement. The provisions of this
Agreement shall be construed and enforced in accordance with the laws of the
State of Nevada, and all rights, duties, obligations and remedies shall be
governed by the laws of the State of Nevada without regard to principles of
conflict of laws (except to the extent the dispute requires the interpretation
or operation of this Agreement under the Delaware Act, the substantive laws of
the State of Delaware). If any proceeding is brought by any Member against any
other Member that arises out of, or is connected with, this Agreement, then such
action shall be brought in Clark County, Nevada and the prevailing Member in
such proceeding shall be entitled to recover reasonable attorneys' fees and
costs. Any agreement to pay any amount and any assumption of liability herein
contained, express or implied, shall be only for the benefit of the Members and
their respective successors and assigns, and such agreements and assumptions
shall not inure to the benefit of the obligees of any indebtedness or any other
party, whomsoever, deemed to be a third-party beneficiary of this Agreement.
11.12 COMPANY INTENDED SOLELY FOR TAX PURPOSES.
The Members have formed the Company as a Delaware limited liability
company under the Delaware Act, and do not intend to form a corporation or a
general or limited partnership under Delaware or any other state law. The
Members do not intend to be shareholders and/or partners to one another. The
Members intend the Company to be classified and treated as a partnership solely
for federal and state income taxation purposes. Each Member agrees to act
consistently with the foregoing provisions of this Section 11.12 for all
purposes, including, without limitation, for purposes of reporting the
transactions contemplated herein to the Internal Revenue Service and all state
and local taxing authorities.
11.13 ARBITRATION OF DISPUTES
Any controversy or claim arising out of or relating to this Agreement,
or the claimed breach or interpretation thereof, including, but not limited to,
any impasse reached by the Board pursuant to Section 2.04, shall be resolved by
binding arbitration, subject to the following additional provisions:
(a) The Member seeking arbitration ("DEMANDING MEMBER") shall
deliver a written notice of demand to resolve dispute (the "DEMAND") to the
other Member ("NON-DEMANDING MEMBER"). The demand shall include a brief
statement of the Demanding Member's claim or controversy, the amount
thereof, and the name of the proposed arbitrator to decide the dispute
("ARBITRATOR"). Within ten (10) days after receipt of the demand, the
Non-Demanding Member against whom a demand is made shall deliver a written
response to the Demanding Member. Such response shall include a short and
plain statement of the Non-Demanding Member's defenses to the claim and
shall also state whether such Member agrees to the arbitrator chosen by the
Demanding Member. If the Non-Demanding Member fails to agree to the
arbitrator chosen by the Demanding Member, then such Non-Demanding Member
shall state in its response the name of the proposed arbitrator chosen by
such Non-Demanding Member as the proposed arbitrator. If the Non-Demanding
Member fails to deliver its written response to the
Demanding Member within ten (10) days after receipt of the demand, or if
the Non-Demanding Member fails to select in its written response a proposed
arbitrator, then the arbitrator selected by the Demanding Member shall
serve as the arbitrator. An arbitrator shall not be employed by any Member
or its Affiliate, directly, indirectly or as an agent, except in connection
with the arbitration proceeding. Any person appointed as an arbitrator
shall be knowledgeable and experienced in the matters sought to be
arbitrated. As examples, if the arbitrable dispute deals with construction
issues, the arbitrator so appointed shall be experienced and knowledgeable
as to construction practice of shopping centers.
(b) The locale of the arbitration shall be in Las Vegas, Nevada.
(c) If the Non-Demanding Member selects a proposed arbitrator
different than the arbitrator selected by the Demanding Member, and such
selection is indicated by the Non-Demanding Member in its written response
to the Demanding Member made within ten (10) days after receipt of the
demand, then the parties shall, for ten (10) days after the Demanding
Member's receipt of the Non-Demanding Member's written response to the
demand, attempt to agree upon an arbitrator. If the parties cannot agree
upon an arbitrator within said ten (10) day period, then a single neutral
arbitrator shall be appointed by the then Presiding Judge of the Eighth
Judicial District Court of the State of Nevada, acting in his individual
and nonofficial capacity on the application of the Demanding Member.
(d) The arbitrator's powers shall be limited as follows: the
arbitrator shall follow the substantive laws of the State of Nevada (or, to
the extent the dispute requires the interpretation or operation of this
Agreement under the Delaware Act, the substantive laws of the State of
Delaware), and the Rules of Evidence of Nevada, and his/her decision shall
be subject to review thereon as would the decision of the Presiding Judge
of the Eighth Judicial District Court of the State of Nevada sitting
without a jury.
(e) The costs of the resolution (including all reporter costs)
shall be split between the Members prorata in accordance with their
Percentage Interests, provided, however, that such costs, along with all
other costs and expenses, including attorneys' fees, shall be subject to
award, in full or in part, by the arbitrator, in his/her discretion, to the
prevailing party. Unless the arbitrator so awards attorneys' fees, each
Member shall be responsible for its own attorneys' fees.
(f) To the extent possible, the arbitration hearings shall be
conducted on consecutive days, excluding Saturdays, Sundays and holidays,
until the completion of the hearings.
(g) In connection with any arbitration proceedings commenced
hereunder, either Member shall have the right to join any third parties in
such proceedings in order to resolve any other disputes, the facts of which
are related to the matters submitted for arbitration hereunder.
(h) The arbitrator shall render her/his decision(s) concerning
the substantive issue(s) in dispute in writing. The written decision shall
be sent to the parties no later than thirty (30) days following the last
hearing date.
(i) All hearings shall be concluded within ninety (90) days from
the day the arbitrator is selected or appointed, unless the arbitrator
determines that this deadline is impractical.
(j) Notwithstanding the foregoing, in the event the dispute
concerns a deadlock by the Board to deliver a notice of default under the
Management Agreement or Development Agreement pursuant to Section 2.04(f)
above, then all hearings shall be concluded and the arbitrator shall render
his/her decision within thirty (30) days of the date of the Demand, unless
the arbitrator determines that this deadline is impractical.
(k) If any of the provisions relating to arbitration are not
adhered to or complied with either party may petition the Presiding Judge
of the Eighth Judicial District Court of the State of Nevada, for
appropriate relief.
(l) The award of the arbitrator may be entered as a judgment in
a court of competent jurisdiction. All arbitration conducted under this
Section 11.13 shall be in accordance with the rules of the American
Arbitration Association to the extent such rules do not conflict with the
procedures herein set forth. To the extent permitted by law, compliance
with this Section 11.13 is a condition precedent to the commencement by any
Member of a judicial proceeding arising out of any dispute relating
directly or indirectly to this Agreement.
ARTICLE XII
DEFINITIONS
12.01 ADDITIONAL UNRECOVERED CONTRIBUTION ACCOUNT
The term "ADDITIONAL UNRECOVERED CONTRIBUTION ACCOUNT" means with
respect to each Member, the amount of money contributed by such Member to the
capital of the Company pursuant to Section 3.05 (both on its own account and on
behalf of a Non-Contributing Member), and DECREASED by the amount of money
distributed (or deemed distributed) by the Company to such Member pursuant to
Section 5.03(b) and 5.04(b).
12.02 AFFILIATE
The term "AFFILIATE" means any person or entity which, directly or
indirectly through one (1) or more intermediaries, controls or is controlled by
or is under common control with another person or entity. The term "control" as
used herein (including the terms "controlling," "controlled by," and "under
common control with") means the possession, direct or indirect, of the power to
(i) vote fifty-one percent (51%) or more of the outstanding voting securities of
such person or entity, or (ii) otherwise direct management policies of such
person by
contract or otherwise. With respect to Holdings II, the term "Affiliate" also
means any member of the family of Viola Sommer or any trust for the exclusive
benefit of any of them.
12.03 AGREEMENT
The term "AGREEMENT" means this Limited Liability Company Agreement of
Aladdin Bazaar, LLC.
12.04 BUSINESS DAY
The term "BUSINESS DAY" means any weekday excluding any legal holiday
observed pursuant to United States federal law or Nevada state law or
regulation.
12.05 CAPITAL ACCOUNT
The term "CAPITAL ACCOUNT" means with respect to each Member the
amount of money contributed by such Member to the capital of the Company,
INCREASED by the aggregate fair market value at the time of contribution (as
determined by the Board) of all property contributed by such Member to the
capital of the Company (net of liabilities secured by such contributed property
that the Company is considered to assume or take subject to under Section 752 of
the Code), the aggregate amount of all Net Profits allocated to such Member, and
any and all items of gross income or gain specially allocated to such Member
pursuant to Section 4.04, and DECREASED by the amount of money distributed to
such Member by the Company (exclusive of any guaranteed payment within the
meaning of Section 707(c) of the Code paid to such Member), the aggregate fair
market value at the time of distribution (as determined by the Board) of all
property distributed to such Member by the Company (net of liabilities secured
by such distributed property that such Member is considered to assume or take
subject to under Section 752 of the Code), the amount of any Net Losses charged
to such Member, and any and all partnership and/or partner "nonrecourse
deductions" specially allocated to such Member pursuant to Section 4.04. For
purposes of Section 4.04 only, each Member's Capital Account shall be further
adjusted in the manner set forth in the second and third sentences of Treasury
Regulation Section 1.704-1(b)(2)(ii)(D) and shall be INCREASED for (i) such
member's allocable share of minimum gain (as determined pursuant to Treasury
Regulation Section 1.704-2(g)) that is attributable to the Capital Account and
(ii) the amount such Member is unconditionally obligated to contribute to the
capital of the Company pursuant to this Agreement. Each member's Capital
Account shall be further adjusted in accordance with, and upon the occurrence of
an event described in, Treasury Regulation Section 1.704-1(b)(2)(iv)(f) to
reflect a revaluation of the Company's property on the Company's books. Such
adjustments to the Members' Capital Accounts shall be made in accordance with
Treasury Regulation Section 1.704-1(b)(2)(iv)(g) for allocations of
depreciation, depletion, amortization and gain or loss with respect to such
revalued property.
12.06 CAPITAL CONTRIBUTION
The term "CAPITAL CONTRIBUTION" means with respect to each Member the
aggregate amount of any and all amounts credited to such Member's Unrecovered
Contribution Account in accordance with the terms of this Agreement.
12.07 CASH FLOW
The term "CASH FLOW" means the sum of any and all Ordinary Cash Flow
and Extraordinary Cash Flow.
12.08 CODE
The term "CODE" means the Internal Revenue Code of 1986, as heretofore
and hereafter amended from time to time (and/or any corresponding provision of
any superseding revenue law).
12.09 COMPANY
The term "COMPANY" means the limited liability company created
pursuant to this Agreement and the filing of a Certificate of Formation with the
Delaware Secretary of State in accordance with the provisions of the Delaware
Act.
12.10 CONDITIONS PRECEDENT
The term "CONDITIONS PRECEDENT" means: (a) the approval by TrizecHahn
and Holdings II, in each party's reasonable discretion, not to be unreasonably
delayed, that the development of the Bazaar Improvements is economically
feasible and desirable (including each party's judgment as to the progress of
the leasing effort and pro forma rents achievable as of the date such judgment
is made); (b) the parties have entered into an amendment pursuant to Section
3.06 above, which amendment is approved by the parties in each party's sole
discretion; (c) the approval by the TrizecHahn and Holdings II, in each party's
reasonable discretion, not to be unreasonably delayed, of the terms and
conditions of the Site Work Agreement, the Development Agreement between Clark
County and Holdings, the Lease, the Reciprocal Easement Agreement and the
Parking Use Agreement; (d) the receipt of all necessary permits and governmental
approvals to begin construction of the initial planned floor area; (e) the
achievement of space leases or letters of intent to enter into space leases for
a gross leasable area of the Bazaar Improvements sufficient to induce a
construction lender (offering competitive market rate terms and conditions based
upon market rate terms and conditions typically obtained by TrizecHahn or its
Affiliates) to enter into a construction loan necessary to build the Bazaar
Improvements, which construction loan shall cover at least seventy percent (70%)
of the costs of the Bazaar Improvements; (f) the execution by each of Aladdin
Gaming and the Company of separate contracts with the project contractor and the
project architect/engineer, each reasonably satisfactory to the other party,
which approval shall not be unreasonably withheld or delayed, upon economic
terms in conformance with the proforma Development Budget attached hereto as
EXHIBIT "F"; (g) the closing of a construction loan covering at least seventy
percent (70%) of the costs of the Bazaar Improvements; and (h) evidence
reasonably satisfactory to TrizecHahn and Holdings II that Aladdin Gaming or its
Affiliates have received funds or irrevocable commitments from debt and equity
sources in sufficient amounts to fund the construction of the initial planned
floor area of the Redevelopment Aladdin and to operate same through the Opening
Date.
12.11 DELAWARE ACT
The term "DELAWARE ACT" means the Delaware Limited Liability Company
Act (6 Del. C. Section 18-101, ET SEQ.), as hereafter amended from time to time.
12.12 EXTRAORDINARY CASH FLOW
The term "EXTRAORDINARY CASH FLOW" means the cash proceeds (including,
without limitation, any insurance proceeds, recoveries, damages and awards)
realized by the Company, directly or indirectly, as a result of the occurrence
of an Extraordinary Event, plus cash interest payments received with respect to
such proceeds, DECREASED by the sum of (i) the amount of such proceeds applied
by the Company to pay debts and liabilities of the Company which are then due
and payable (inclusive of any guaranteed payment within the meaning of Section
707(c) of the Code paid to any Member); (ii) the amount of such proceeds used,
set aside or committed by the Company or required to be used by any secured
lender for the Bazaar Improvements for restoration and repair of any property in
the event of damage or destruction to such property; (iii) any incidental or
ancillary expenses, costs or liabilities incurred by the Company in effecting or
obtaining any such Extraordinary Event, or the proceeds thereof (including,
without limitation, attorneys' fees, expert witness' fees, accountants' fees,
court costs, recording fees, transfer taxes and fees, appraisal costs and the
like) all of which expenses, costs and liabilities shall be paid from the gross
amount of such cash proceeds to the extent thereof; (iv) the payment of such
other Company debts and liabilities as are determined in the reasonable
discretion of TrizecHahn; and (v) a reserve, established in the reasonable
discretion of TrizecHahn, for anticipated cash disbursements that will have to
be made before additional cash receipts from third parties will provide funds
therefor.
12.13 EXTRAORDINARY EVENT
The term "EXTRAORDINARY EVENT" means the sale, financing, refinancing
or other disposition, condemnation or acquisition by an entity with the power of
eminent domain in lieu of formal condemnation proceedings, damage or
destruction, of all or any portion of the Bazaar Improvements, but excluding any
incidental sales or exchanges of tangible personal property and fixtures.
12.14 INSTITUTIONAL INVESTOR
The term "INSTITUTIONAL INVESTOR" means any financial institution,
pension fund, mutual fund, investment bank, or banking institution, which is a
non-operating company with a net worth in excess of One Hundred Million Dollars
($100,000,000.00).
12.15 INTEREST
The term "INTEREST" means in respect to any Member, all of such
Member's right, title and interest in and to the Net Profits, Net Losses, Cash
Flow, distributions and capital of the Company, and any and all other interests
therein in accordance with the provision of this Agreement and the Delaware Act.
12.16 LIQUIDATION
The term "LIQUIDATION" means, (i) in respect to the Company the
earlier of the date upon which the Company is terminated under Section 708(b)(1)
of the Code or the date upon which the Company ceases to be a going concern
(even though it may continue in existence for the purpose of winding up its
affairs, paying its debts and distributing any remaining balance to its
Members), and (ii) in respect to a Member wherein the Company is not in
Liquidation, means the liquidation of a Member's interest in the Company under
Treasury Regulation Section 1.761-1(d).
12.17 MEMBER(S)
The term "MEMBERS" means TrizecHahn and Holdings II; collectively; the
term "MEMBER" means any one (1) of the Members.
12.18 NET PROFITS AND NET LOSSES
The terms "NET PROFITS" and "NET LOSSES" mean, for each fiscal year or
other period, an amount equal to the Company's taxable income or loss, as the
case may be, for such year or period, determined in accordance with Section
703(a) of the Code (for this purpose, all items of income, gain, loss and
deduction required to be stated separately pursuant to Section 703(a)(1) of the
Code shall be included in taxable income or loss); provided, however, for
purposes of computing such taxable income or loss, (i) such taxable income or
loss shall be adjusted by any and all adjustments required to be made in order
to maintain Capital Account balances in compliance with Treasury Regulation
Sections 1.704-1(b) and (ii) any and all items of gross income or gain and
partnership and/or partner "nonrecourse deductions" specially allocated to any
Member pursuant to Section 4.04 shall not be taken into account in calculating
such taxable income or loss.
12.19 ORDINARY CASH FLOW
The term "ORDINARY CASH FLOW" means the amount, if any, of all cash
receipts of the Company (exclusive of the proceeds of an Extraordinary Event;
inclusive, however, of the proceeds from any rent or business interruption
insurance) as of any applicable determination date in excess of the sum of (i)
all cash disbursements (inclusive of any guaranteed payment within the meaning
of Code Section 707(c) paid to any Member but exclusive of disbursements made
from the proceeds of an Extraordinary Event and/or disbursements made to the
Members in their capacities as such) of the Company prior to that date; and (ii)
a reserve, established in the reasonable discretion of TrizecHahn for
anticipated cash disbursements that will have to be made before additional cash
receipts from third parties that are attributable to such Bazaar Improvements
will provide the funds therefor.
12.20 PERCENTAGE INTEREST
The term "PERCENTAGE INTEREST" means in respect to TrizecHahn, fifty
percent (50%), and in respect to Holdings II, fifty percent (50%); subject to
adjustment as provided in this Agreement.
12.21 PREFERRED RETURN
The term "PREFERRED RETURN" means, with respect to each Member, an
amount calculated like interest and accrued on the sum of the balances standing
from time to time in such Member's Unrecovered Contribution Account and
Additional Unrecovered Contribution Account, if any, at a rate equal to twelve
percent (12%) per annum, compounded monthly, and determined on a cumulative
basis. For financial and income tax reporting purposes, neither accrual nor
payment of the Preferred Return shall be treated as an expense of the Company or
as a guaranteed payment under Section 707(c) of the Code.
12.22 TREASURY REGULATION
The term "TREASURY REGULATION" means any proposed, temporary, and/or
final federal income tax regulation promulgated by the United States Department
of the Treasury as heretofore and hereafter amended from time to time (and/or
any corresponding provisions of any superseding revenue law and/or regulation).
12.23 TRIZECHAHN INVESTMENT
The term "TRIZECHAHN INVESTMENT" means the sum of Thirty Million
Dollars ($30,000,000), as reduced by the amount of all capital contributions
made from time to time by TrizecHahn to the Company. Once the TrizecHahn
Investment has been contributed to the Company (or such lesser amount in the
event that the full TrizecHahn Investment is not needed to complete construction
of the Bazaar Improvements), then the TrizecHahn Investment shall be reduced to
zero (0) with the intent that TrizecHahn's obligation to contribute the
TrizecHahn Investment shall not be a revolving obligation.
12.24 UNRECOVERED CONTRIBUTION ACCOUNT
The term "UNRECOVERED CONTRIBUTION ACCOUNT" means with respect to each
Member, the amount of money and/or the agreed upon fair market value (as
mutually determined by the Members) of any property contributed (or deemed
contributed) by such Member to the capital of the Company (net of liabilities
secured by such contributed property that the Company is considered to assume or
take subject to pursuant to Section 752 of the Code), and DECREASED by the
amount of money distributed (or deemed distributed) by the Company to such
Member pursuant to Section 5.02(b) and Section 5.04(c) and the agreed upon fair
market value (as mutually determined by the Members) of any property distributed
to such Member by the Company (net of liabilities secured by such distributed
property that such Member is considered to assume or take subject to under
Section 752 of the Code) pursuant to Section 5.02(b) and Section 5.04(c).
Notwithstanding the foregoing, in no event shall property be contributed by the
Members to the Company (other than the Ground lease) or distributed by the
Company to the Members without the prior written consent of all Members.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
"TrizecHahn" TH BAZAAR CENTERS INC., a Delaware
corporation
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
"Holdings II" ALADDIN BAZAAR HOLDINGS, LLC, a Nevada
limited liability company
By: ALADDIN MANAGEMENT CORPORATION,
its Manager
By:
-----------------------------
Viola Sommer
President
By:
-----------------------------
Jack Sommer
Vice President
By their execution hereof, Aladdin Holdings and the Sommer Trust consent and
agree to be bound by the obligations contained in Section 2.14(h) and Section
3.06 (as to Aladdin Holdings only and not the Sommer Trust) of this Agreement.
ALADDIN HOLDINGS, LLC, a Delaware
limited liability company
By: ALADDIN MANAGEMENT
CORPORATION, its Manager
By: /s/ Viola Sommer
-----------------------------
Viola Sommer
President
By: /s/ Jack Sommer
-----------------------------
Jack Sommer
Vice President
TRUST UNDER ARTICLE SIXTH U/W/O SIGMUND
SOMMER
By: /s/ Viola Sommer
----------------------------------
Viola Sommer, as Trustee
and not an individual
By: /s/ Eugene Landsberg
----------------------------------
Eugene Landsberg, as Trustee
and not an individual
By: /s/ Jack Sommer
----------------------------------
Jack Sommer, as Trustee
and not an individual
EXHIBIT "A"
MASTER DEVELOPMENT SITE PLANS AND RENDERINGS
EXHIBIT "B"
DEVELOPMENT PLAN
EXHIBIT "C"
DEVELOPMENT AGREEMENT
EXHIBIT "D"
MANAGEMENT AGREEMENT
EXHIBIT "E"
PRELIMINARY CONSTRUCTION PROFORMA
AND PLANS AND DRAWINGS FOR THE REDEVELOPED ALADDIN
[To Be Attached]
EXHIBIT "F"
PRE-DEVELOPMENT BUDGET
[To Be Attached]
EXHIBIT "G"
GUARANTY OF TRIZECHAHN CENTERS INC.
-----------------------------------
1. GUARANTY. In consideration of the covenants, terms and
conditions of the Limited Liability Company Agreement ("AGREEMENT") of Aladdin
Bazaar, LLC, a Delaware limited liability company ("COMPANY") to which this
Guaranty is attached, and as a material inducement to Aladdin Holdings, LLC, a
Delaware limited liability company ("HOLDINGS"), to enter into the Agreement,
TrizecHahn Centers Inc., a California corporation ("GUARANTOR"), hereby
absolutely, presently, continually, unconditionally, irrevocably and jointly and
severally guarantees to and for the benefit of Holdings and the Company that TH
Bazaar Centers Inc., a Delaware corporation ("TRIZECHAHN") shall perform its
obligation to contribute capital to the Company pursuant to the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Agreement.
2. STANDARD PROVISIONS. A separate action may be brought or
prosecuted against Guarantor whether or not the action is brought or prosecuted
against TrizecHahn. If TrizecHahn defaults under the Agreement, Holdings or the
Company may proceed immediately against Guarantor or TrizecHahn, or both, or
Holdings or the Company may enforce against Guarantor or TrizecHahn, or both,
any rights that it has under the Agreement or against Guarantor pursuant to this
Guaranty. If the Agreement terminates Holdings may enforce any remaining rights
thereunder against Guarantor without giving previous notice to TrizecHahn or
Guarantor, and without making any demand on either of them. This Guaranty shall
not be affected by Holdings' failure or delay to enforce any of its rights
hereunder or under the Agreement. TrizecHahn hereby waives notice of or the
giving of its consent to any amendments which may hereafter be made to the terms
of the Agreement, and this Guaranty shall guarantee the performance of the
Agreement as amended, or as the same may be assigned from time to time.
Guarantor waives the right to require Holdings or the Company to (i) proceed
against TrizecHahn; (ii) proceed against or exhaust any security that Holdings
or the Company holds from TrizecHahn; or (iii) pursue any remedy in Holdings' or
the Company's power. Guarantor waives any defense by reason of any disability
of TrizecHahn, the statute of limitations and any other defense based on the
termination of TrizecHahn's liability from any cause. Until all of TrizecHahn's
obligations to the Company and Holdings have been discharged in full, Guarantor
shall have no right of subrogation against TrizecHahn. Guarantor waives its
right to enforce any remedies that Holdings or the Company now has, or later may
have, against TrizecHahn. Guarantor waives any right to participate in any
security now or later held by Holdings or the Company. Guarantor waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor, and notices of acceptance of this
Guaranty, and waives all notices of existence, creation, or incurring of new or
additional obligations from TrizecHahn to the Company. If Holdings disposes of
its interest in the Agreement, "Holdings," as used in this Guaranty, shall mean
Holdings' successors in interest and assigns. If Holdings is required to
enforce Guarantor's obligations by legal proceedings, Guarantor shall pay to
Holdings all costs incurred, including, without limitation, Holdings' reasonable
attorneys' fees and all costs and other expenses incurred in any collection or
attempted
collection or in any negotiations relative to the obligations hereby guaranteed,
or in enforcing this Guaranty against the undersigned, individually and jointly.
This Guaranty will continue unchanged by any bankruptcy, reorganization or
insolvency of the TrizecHahn or any successor or assignee thereof or by any
disaffirmance or abandonment by a trustee of TrizecHahn. Guarantor's
obligations under this Guaranty may not be assigned and shall be binding upon
Guarantor's heirs and successors. This Guaranty shall be governed by the laws
of, and may be enforced in the courts of, the State of Nevada.
3. TERMINATION OF GUARANTY. This Guaranty shall automatically
terminate, and shall be of no further force or effect, upon the date that the
Company first obtains financing for the Bazaar Improvements which does not
require a guarantee by either The Trust under Article Sixth u/w/o Sigmund Sommer
or Guarantor, and the Company's lender fully and unconditionally releases all
guarantors thereunder.
4. NOTICES. Any notice to Guarantor or to the Holdings given under
this Guaranty shall be delivered in the manner specified in the Agreement for
the delivery of notices to the Holdings, and if to Guarantor, as follows:
Guarantor: Douglas L. Hageman, Esq.
Sr. Vice President, General Counsel
TrizecHahn Centers
4350 La Jolla Village Drive, Suite 400
San Diego, California 92122
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of this
_____ day of ____________, 1997.
"Guarantor" TRIZECHAHN CENTERS INC., a Delaware
corporation
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
EXHIBIT "H"
GUARANTY OF TRUST UNDER ARTICLE SIXTH
U/W/O SIGMUND SOMMER
--------------------
1. GUARANTY. In consideration of the covenants, terms and
conditions of the Limited Liability Company Agreement ("AGREEMENT") of Aladdin
Bazaar, LLC, a Delaware limited liability company ("COMPANY") to which this
Guaranty is attached, and as a material inducement to TH Bazaar Centers Inc., a
Delaware corporation ("TRIZECHAHN"), to enter into the Agreement, The Trust
under Article Sixth u/w/o Sigmund Sommer ("GUARANTOR"), hereby absolutely,
presently, continually, unconditionally, irrevocably and jointly and severally
guarantees to and for the benefit of TrizecHahn and the Company that Aladdin
Bazaar Holdings, LLC, a Nevada limited liability company ("HOLDINGS") shall
perform its obligation to contribute capital to the Company pursuant to the
Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Agreement.
2. STANDARD PROVISIONS. A separate action may be brought or
prosecuted against Guarantor whether or not the action is brought or prosecuted
against Holdings. If Holdings defaults under the Agreement, TrizecHahn or the
Company may proceed immediately against Guarantor or Holdings, or both, or
TrizecHahn or the Company may enforce against Guarantor or Holdings, or both,
any rights that it has under the Agreement or against Guarantor pursuant to this
Guaranty. If the Agreement terminates TrizecHahn may enforce any remaining
rights thereunder against Guarantor without giving previous notice to Holdings
or Guarantor, and without making any demand on either of them. This Guaranty
shall not be affected by TrizecHahn's failure or delay to enforce any of its
rights hereunder or under the Agreement. Guarantor hereby waives notice of or
the giving of its consent to any amendments which may hereafter be made to the
terms of the Agreement, and this Guaranty shall guarantee the performance of the
Agreement as amended, or as the same may be assigned from time to time.
Guarantor waives the right to require TrizecHahn or the Company to (i) proceed
against Holdings; (ii) proceed against or exhaust any security that TrizecHahn
or the Company holds from Holdings; or (iii) pursue any remedy in TrizecHahn's
or the Company's power. Guarantor waives any defense by reason of any
disability of Holdings, the statute of limitations and any other defense based
on the termination of Holdings' liability from any cause. Until all of
Holdings' obligations to the Company and TrizecHahn have been discharged in
full, Guarantor shall have no right of subrogation against Holdings. Guarantor
waives its right to enforce any remedies that TrizecHahn or the Company now has,
or later may have, against Holdings. Guarantor waives any right to participate
in any security now or later held by TrizecHahn or the Company. Guarantor
waives all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, and notices of acceptance of
this Guaranty, and waives all notices of existence, creation, or incurring of
new or additional obligations from Holdings to the Company. If TrizecHahn
disposes of its interest in the Agreement, "TrizecHahn," as used in this
Guaranty, shall mean TrizecHahn's successors in interest and assigns. If
TrizecHahn is required to enforce Guarantor's obligations by legal proceedings,
Guarantor shall pay to TrizecHahn all costs incurred, including, without
limitation,
TrizecHahn's reasonable attorneys' fees and all costs and other expenses
incurred in any collection or attempted collection or in any negotiations
relative to the obligations hereby guaranteed, or in enforcing this Guaranty
against the undersigned, individually and jointly. This Guaranty will continue
unchanged by any bankruptcy, reorganization or insolvency of Holdings or any
successor or assignee thereof or by any disaffirmance or abandonment by a
trustee of Holdings. Guarantor's obligations under this Guaranty may not be
assigned and shall be binding upon Guarantor's heirs and successors. This
Guaranty shall be governed by the laws of, and may be enforced in the courts of,
the State of Nevada.
3. TERMINATION OF GUARANTY. This Guaranty shall automatically
terminate, and shall be of no further force or effect, upon the date that the
Company first obtains financing for the Bazaar Improvements which does not
require a guarantee by either TrizecHahn Centers Inc., a California corporation,
or Guarantor, and the Company's lender fully and unconditionally releases all
guarantors thereunder.
4. NOTICES. Any notice to Guarantor or to the TrizecHahn given
under this Guaranty shall, in the case of TrizecHahn, be delivered in the manner
specified in the Agreement for the delivery of notices to the TrizecHahn, and if
to Guarantor, as follows:
Guarantor: Mr. Ronald B. Dictrow
c/o Sigmund Sommer Properties
280 Park Avenue
New York, NY 10017
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of this
_____ day of ____________, 1997.
"Guarantor" TRUST UNDER ARTICLE SIXTH U/W/O
SIGMUND SOMMER
By:
----------------------------------
Viola Sommer, as Trustee
and not an individual
By:
----------------------------------
Eugene Landsberg, as Trustee
and not an individual
By:
----------------------------------
Jack Sommer, as Trustee
and not an individual
EXHIBIT "I"
GUARANTY OF ALADDIN HOLDINGS LLC
1. GUARANTY. In consideration of the covenants, terms and
conditions of the Limited Liability Company Agreement ("AGREEMENT") of Aladdin
Bazaar, LLC, a Delaware limited liability company ("COMPANY") to which this
Guaranty is attached, and as a material inducement to TH Bazaar Centers Inc., a
Delaware corporation ("TRIZECHAHN"), to enter into the Agreement, Aladdin
Holdings, LLC, a Delaware limited liability company ("GUARANTOR"), hereby
absolutely, presently, continually, unconditionally, irrevocably and jointly and
severally guarantees to and for the benefit of TrizecHahn and the Company that
Aladdin Bazaar Holdings, LLC, a Nevada limited liability company ("HOLDINGS")
shall perform its obligation to reimburse TrizecHahn its share of Predevelopment
Costs pursuant to Section 3.06 of the Agreement. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Agreement.
2. STANDARD PROVISIONS. A separate action may be brought or
prosecuted against Guarantor whether or not the action is brought or prosecuted
against Holdings. If Holdings defaults under the Agreement, TrizecHahn or the
Company may proceed immediately against Guarantor or Holdings, or both, or
TrizecHahn or the Company may enforce against Guarantor or Holdings, or both,
any rights that it has under the Agreement or against Guarantor pursuant to this
Guaranty. If the Agreement terminates TrizecHahn may enforce any remaining
rights thereunder against Guarantor without giving previous notice to Holdings
or Guarantor, and without making any demand on either of them. This Guaranty
shall not be affected by TrizecHahn's failure or delay to enforce any of its
rights hereunder or under the Agreement. Guarantor hereby waives notice of or
the giving of its consent to any amendments which may hereafter be made to the
terms of the Agreement, and this Guaranty shall guarantee the performance of the
Agreement as amended, or as the same may be assigned from time to time.
Guarantor waives the right to require TrizecHahn or the Company to (i) proceed
against Holdings; (ii) proceed against or exhaust any security that TrizecHahn
or the Company holds from Holdings; or (iii) pursue any remedy in TrizecHahn's
or the Company's power. Guarantor waives any defense by reason of any
disability of Holdings, the statute of limitations and any other defense based
on the termination of Holdings' liability from any cause. Until all of
Holdings' obligations to the Company and TrizecHahn have been discharged in
full, Guarantor shall have no right of subrogation against Holdings. Guarantor
waives its right to enforce any remedies that TrizecHahn or the Company now has,
or later may have, against Holdings. Guarantor waives any right to participate
in any security now or later held by TrizecHahn or the Company. Guarantor
waives all presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, and notices of acceptance of
this Guaranty, and waives all notices of existence, creation, or incurring of
new or additional obligations from Holdings to the Company. If TrizecHahn
disposes of its interest in the Agreement, "TrizecHahn," as used in this
Guaranty, shall mean TrizecHahn's successors in interest and assigns. If
TrizecHahn is required to enforce Guarantor's obligations by legal proceedings,
Guarantor shall pay to TrizecHahn all costs incurred, including, without
limitation, TrizecHahn's reasonable attorneys' fees and all costs and other
expenses incurred in any
collection or attempted collection or in any negotiations relative to the
obligations hereby guaranteed, or in enforcing this Guaranty against the
undersigned, individually and jointly. This Guaranty will continue unchanged by
any bankruptcy, reorganization or insolvency of Holdings or any successor or
assignee thereof or by any disaffirmance or abandonment by a trustee of
Holdings. Guarantor's obligations under this Guaranty may not be assigned and
shall be binding upon Guarantor's heirs and successors. This Guaranty shall be
governed by the laws of, and may be enforced in the courts of, the State of
Nevada.
3. TERMINATION OF GUARANTY. This Guaranty shall automatically
terminate, and shall be of no further force or effect, upon the date that the
Company first obtains financing for the Bazaar Improvements which does not
require a guarantee by either TrizecHahn Centers Inc., a California corporation,
or Guarantor, and the Company's lender fully and unconditionally releases all
guarantors thereunder.
4. NOTICES. Any notice to Guarantor or to the TrizecHahn given
under this Guaranty shall, in the case of TrizecHahn, be delivered in the manner
specified in the Agreement for the delivery of notices to the TrizecHahn, and if
to Guarantor, as follows:
Guarantor: Aladdin Holdings LLC
c/o Mr. Jack Sommer
2810 W. Charleston Boulevard, Suite 58
Las Vegas, Nevada 89102
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of this
_____ day of ____________, 1997.
"Guarantor" ALADDIN HOLDINGS, LLC, a Delaware
limited liability company
By: ALADDIN MANAGEMENT
CORPORATION, its Manager
By:
-----------------------------
Viola Sommer
President
By:
-----------------------------
Jack Sommer
Vice President
LIMITED LIABILITY COMPANY AGREEMENT
OF
ALADDIN BAZAAR, LLC
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, 15 U.S.C. Section 15b ET SEQ., AS
AMENDED (THE "FEDERAL ACT"), IN RELIANCE UPON ONE (1) OR MORE EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE FEDERAL ACT. IN ADDITION, THE ISSUANCE OF
THIS SECURITY HAS NOT BEEN QUALIFIED UNDER THE DELAWARE SECURITIES ACT, THE
CALIFORNIA CORPORATE SECURITIES LAW OF 1968 OR ANY OTHER STATE SECURITIES LAWS
(COLLECTIVELY, THE "STATE ACTS"), IN RELIANCE UPON ONE (1) OR MORE EXEMPTIONS
FROM THE REGISTRATION PROVISIONS OF THE STATE ACTS. IT IS UNLAWFUL TO
CONSUMMATE A SALE OR OTHER TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN TO,
OR TO RECEIVE ANY CONSIDERATION THEREFOR FROM, ANY PERSON OR ENTITY WITHOUT THE
OPINION OF COUNSEL FOR THE COMPANY THAT THE PROPOSED SALE OR OTHER TRANSFER OF
THIS SECURITY DOES NOT AFFECT THE AVAILABILITY TO THE COMPANY OF SUCH EXEMPTIONS
FROM REGISTRATION AND QUALIFICATION, AND THAT SUCH PROPOSED SALE OR OTHER
TRANSFER IS IN COMPLIANCE WITH ALL APPLICABLE STATE AND FEDERAL SECURITIES LAWS.
THE TRANSFER OF THIS SECURITY IS FURTHER RESTRICTED UNDER THE TERMS OF THE
LIMITED LIABILITY COMPANY AGREEMENT GOVERNING THE COMPANY, A COPY OF WHICH IS ON
FILE WITH THE COMPANY.
LIMITED LIABILITY COMPANY AGREEMENT
OF
ALADDIN BAZAAR, LLC
TABLE OF CONTENTS
Page
ARTICLE I FORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.01 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.02 Names and Addresses. . . . . . . . . . . . . . . . . . . . . . . .2
1.03 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . .3
1.04 Fiduciary Duties . . . . . . . . . . . . . . . . . . . . . . . . .3
1.05 Term of Company. . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE II MANAGEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . .4
2.01 Development Plan . . . . . . . . . . . . . . . . . . . . . . . . .4
2.02 Day to Day Operations. . . . . . . . . . . . . . . . . . . . . . .4
2.03 Board of Managers. . . . . . . . . . . . . . . . . . . . . . . . .5
2.04 Authority of the Board . . . . . . . . . . . . . . . . . . . . . .8
2.05 Operating Budget . . . . . . . . . . . . . . . . . . . . . . . . .9
2.06 Development Fees . . . . . . . . . . . . . . . . . . . . . . . . 11
2.07 Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . 11
2.08 Leasing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.09 Liability and Indemnity. . . . . . . . . . . . . . . . . . . . . 12
2.10 Designation of Officers. . . . . . . . . . . . . . . . . . . . . 12
2.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.12 Treatment of Fees and Reimbursements . . . . . . . . . . . . . . 13
2.13 Approval Rights Over Related Aladdin Development . . . . . . . . 13
2.14 Holdings II's Representations and Warranties . . . . . . . . . . 13
2.15 TrizecHahn's Representations and Warranties. . . . . . . . . . . 18
ARTICLE III MEMBERS' CONTRIBUTIONS TO COMPANY. . . . . . . . . . . . . . . 19
3.01 Capital Contributions for Pre-Development Costs. . . . . . . . . 19
3.02 Additional Capital Contributions . . . . . . . . . . . . . . . . 20
3.03 Construction Financing . . . . . . . . . . . . . . . . . . . . . 21
3.04 Cash Flow Deficit Contribution . . . . . . . . . . . . . . . . . 22
3.05 Remedy For Failure to Contribute Capital . . . . . . . . . . . . 22
3.06 Failure to Satisfy Conditions Precedent. . . . . . . . . . . . . 24
3.07 Capital Contributions in General . . . . . . . . . . . . . . . . 26
ARTICLE IV ALLOCATION OF PROFITS AND LOSSES . . . . . . . . . . . . . . . 27
4.01 Net Losses from Operations Prior to Dilution . . . . . . . . . . 27
4.02 Net Losses from Extraordinary Events Prior to Dilution . . . . . 27
4.03 Net Profits from Operations Prior to Dilution. . . . . . . . . . 28
4.04 Net Profits From Extraordinary Events Prior to Dilution. . . . . 28
4.05 Net Losses from Operations Following Dilution. . . . . . . . . . 29
4.06 Net Losses from Extraordinary Events Following Dilution. . . . . 29
4.07 Net Profits from Operations Following Dilution . . . . . . . . . 30
4.08 Net Profits From Extraordinary Events Following Dilution . . . . 31
4.09 Special Allocations. . . . . . . . . . . . . . . . . . . . . . . 31
4.10 Curative Allocations . . . . . . . . . . . . . . . . . . . . . . 32
4.11 Differing Tax Basis; Tax Allocation. . . . . . . . . . . . . . . 33
ARTICLE V DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 33
5.01 Distribution of Ordinary Cash Flow . . . . . . . . . . . . . . . 33
5.02 Distribution of Extraordinary Cash Flow. . . . . . . . . . . . . 33
5.03 Distribution of Ordinary Cash Flow Following Dilution. . . . . . 34
5.04 Distribution of Extraordinary Cash Flow Following Dilution . . . 34
5.05 Limitations on Distributions . . . . . . . . . . . . . . . . . . 35
5.06 In-Kind Distribution . . . . . . . . . . . . . . . . . . . . . . 35
6.01 Limitations on Transfer. . . . . . . . . . . . . . . . . . . . . 35
6.02 Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . 35
6.03 Right of First Offer/Right of First Refusal. . . . . . . . . . . 37
6.04 Regulatory and Lender Prohibitions . . . . . . . . . . . . . . . 39
6.05 Admission of Substituted Members . . . . . . . . . . . . . . . . 39
6.06 Election; Allocations Between Transferor and Transferee. . . . . 40
6.07 Partition. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.08 Waiver of Withdrawal and Purchase Rights . . . . . . . . . . . . 40
ARTICLE VII MARKETING AND SALE OF THE BAZAAR IMPROVEMENTS. . . . . . . . . 40
7.01 Right to Market During Years Five Through Ten. . . . . . . . . . 40
7.02 Right to Require Sale After Year Ten . . . . . . . . . . . . . . 42
7.03 General Sales Procedures . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII DEFAULT BUY/SELL AGREEMENT . . . . . . . . . . . . . . . . . . 43
8.01 Buy/Sell Events. . . . . . . . . . . . . . . . . . . . . . . . . 43
8.02 Rights Arising From a Buy/Sell Event . . . . . . . . . . . . . . 44
8.03 Determination of Purchase Price. . . . . . . . . . . . . . . . . 44
8.04 Non-Defaulting Member's Option . . . . . . . . . . . . . . . . . 45
8.05 Closing of Purchase and Sale . . . . . . . . . . . . . . . . . . 46
8.06 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . 46
8.07 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.08 Repayment of Member Loans. . . . . . . . . . . . . . . . . . . . 47
8.09 Voting Rights Following Buy/Sell Event . . . . . . . . . . . . . 47
ARTICLE IX DISSOLUTION AND WINDING UP OF THE COMPANY. . . . . . . . . . . 47
9.01 Events Causing Dissolution of the Company. . . . . . . . . . . . 47
9.02 Winding Up of the Company. . . . . . . . . . . . . . . . . . . . 48
9.03 Negative Capital Account Restoration . . . . . . . . . . . . . . 48
ARTICLE X BOOKS AND RECORDS; ACCOUNTING; TAX ELECTIONS . . . . . . . . . 49
10.01 Company Books. . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.02 Delivery of Records; Inspection. . . . . . . . . . . . . . . . . 49
10.03 Reports and Tax Information. . . . . . . . . . . . . . . . . . . 49
10.04 Company Tax Elections; Tax Controversies . . . . . . . . . . . . 50
10.05 Accounting and Fiscal Year . . . . . . . . . . . . . . . . . . . 50
10.06 Confidentiality of Information . . . . . . . . . . . . . . . . . 50
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 50
11.01 Investment Interest; Nature of Investment. . . . . . . . . . . . 50
11.02 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.03 No Assignments; Binding Effect . . . . . . . . . . . . . . . . . 51
11.04 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 51
11.05 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.06 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.07 Preservation of Intent . . . . . . . . . . . . . . . . . . . . . 52
11.08 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 52
11.09 Certain Rules of Construction. . . . . . . . . . . . . . . . . . 52
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.11 Certain Other Matters. . . . . . . . . . . . . . . . . . . . . . 53
11.12 Company Intended Solely for Tax Purposes.. . . . . . . . . . . . 53
11.13 Arbitration of Disputes. . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XII DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 55
12.01 Additional Unrecovered Contribution Account. . . . . . . . . . . 55
12.02 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
12.03 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.04 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.05 Capital Account. . . . . . . . . . . . . . . . . . . . . . . . . 56
12.06 Capital Contribution . . . . . . . . . . . . . . . . . . . . . . 57
12.07 Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
12.08 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
12.09 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
12.10 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 57
12.11 Delaware Act . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.12 Extraordinary Cash Flow. . . . . . . . . . . . . . . . . . . . . 58
12.13 Extraordinary Event. . . . . . . . . . . . . . . . . . . . . . . 58
12.14 Institutional Investor . . . . . . . . . . . . . . . . . . . . . 58
12.15 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.16 Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.17 Member(s). . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.18 Net Profits and Net Losses . . . . . . . . . . . . . . . . . . . 59
12.19 Ordinary Cash Flow . . . . . . . . . . . . . . . . . . . . . . . 59
12.20 Percentage Interest. . . . . . . . . . . . . . . . . . . . . . . 60
12.21 Preferred Return . . . . . . . . . . . . . . . . . . . . . . . . 60
12.22 Treasury Regulation. . . . . . . . . . . . . . . . . . . . . . . 60
12.23 TrizecHahn Investment. . . . . . . . . . . . . . . . . . . . . . 60
12.24 Unrecovered Contribution Account . . . . . . . . . . . . . . . . 60
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
EXHIBITS:
- ---------
EXHIBIT "A" MASTER DEVELOPMENT SITE PLANS AND RENDERINGS
EXHIBIT "B" DEVELOPMENT PLAN
EXHIBIT "C" DEVELOPMENT AGREEMENT
EXHIBIT "D" MANAGEMENT AGREEMENT
EXHIBIT "E" PRELIMINARY CONSTRUCTION PROFORMA AND PLANS AND DRAWINGS FOR THE
REDEVELOPED ALADDIN
EXHIBIT "F" PRE-DEVELOPMENT BUDGET
EXHIBIT "G" GUARANTY OF TRIZECHAHN CENTERS INC.
EXHIBIT "H" GUARANTY OF TRUST UNDER ARTICLE SIXTH U/W/O SIGMUND SOMMER
EXHIBIT "I" GUARANTY OF ALADDIN HOLDINGS, LLC
GLOSSARY OF TERMS
Page
Additional Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Additional Unrecovered Contribution Account . . . . . . . . . . . . . . 55
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Aladdin Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Aladdin Hotel and Casino. . . . . . . . . . . . . . . . . . . . . . . . .1
Appraisal Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Arbitrator. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Audrie/Harmon Hotel . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Audrie/Harmon Termination Notice. . . . . . . . . . . . . . . . . . . . 25
Bazaar Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Buy/Sell Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Capital Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Capital Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . 57
Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Center. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Competing Retail Project. . . . . . . . . . . . . . . . . . . . . . . . .3
Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . 57
Construction Schedule . . . . . . . . . . . . . . . . . . . . . . . . . .4
Contributing Member . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Contribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Control Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Control Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Default Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Defaulting Member . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Delaware Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Delinquent Contribution . . . . . . . . . . . . . . . . . . . . . . . . 22
Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Demanding Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Development Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 11
Development Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Development Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Development Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Dilution Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Existing Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . 14
Extraordinary Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . 58
Extraordinary Event . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Federal Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
First Offering Notice . . . . . . . . . . . . . . . . . . . . . . . . . 37
First Sale Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Hard Construction Costs . . . . . . . . . . . . . . . . . . . . . . . . 11
Holdings II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Holdings II Primary Individuals . . . . . . . . . . . . . . . . . . . . 14
Holdings II's best knowledge. . . . . . . . . . . . . . . . . . . . . . 13
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Initial Sale Period . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Institutional Investor. . . . . . . . . . . . . . . . . . . . . . . . . 58
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Leasing Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Management Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Master Development. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Master Site . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Member Capital Obligation Guarantee . . . . . . . . . . . . . . . . . . 21
Member Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Net Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Net Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Non-Competition Area. . . . . . . . . . . . . . . . . . . . . . . . . . .3
Non-Competition Period. . . . . . . . . . . . . . . . . . . . . . . . . .3
Non-Contributing Member . . . . . . . . . . . . . . . . . . . . . . . . 22
Non-Defaulting Member . . . . . . . . . . . . . . . . . . . . . . . . . 44
Non-Demanding Member. . . . . . . . . . . . . . . . . . . . . . . . . . 53
Non-Selling Member. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Non-Transferring Member . . . . . . . . . . . . . . . . . . . . . . . . 37
Offered Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Operating Budget. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Ordinary Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Other Parking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Parking Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Permitted Transferees . . . . . . . . . . . . . . . . . . . . . . . . . 35
Plans and Specifications. . . . . . . . . . . . . . . . . . . . . . . . .4
Pre-Approved Transferee . . . . . . . . . . . . . . . . . . . . . . . . 39
Predevelopment Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Preferred Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Price Determination Notice. . . . . . . . . . . . . . . . . . . . . . . 44
Prohibited Transferee. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Project Sale Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Redeveloped Aladdin. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Remaining Entitlements . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Sales Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Satisfaction Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Second Offering Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Selling Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Selling Member's Purchase Price. . . . . . . . . . . . . . . . . . . . . . . 41
Site Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Sommer Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
State Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Tax Matters Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Transferring Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Treasury Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
TrizecHahn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
TrizecHahn Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
TrizecHahn's best knowledge. . . . . . . . . . . . . . . . . . . . . . . . . 18
TrizecHahn's Primary Individuals . . . . . . . . . . . . . . . . . . . . . . 18
Unrecovered Contribution Account . . . . . . . . . . . . . . . . . . . . . . 60