FIRST AMENDMENT TO THE LIMITED
LIABILITY COMPANY AGREEMENT OF ALADDIN BAZAAR, LLC
THIS FIRST AMENDMENT (the "Amendment") is entered into effective as of
October 16, 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 the Limited Liability Company
Agreement (the "Agreement") of ALADDIN BAZAAR, LLC (the "Company"), dated as of
September 3, 1997, between TrizecHahn and Holdings II.
R E C I T A L S :
A. Pursuant to Section 3.06 of the Agreement, TrizecHahn and Holdings II
agreed to enter into good faith negotiations regarding a number of issues which
were unresolved on the date the Agreement was executed. The parties have since
completed such negotiations and agree to amend the Agreement as follows:
1. AGREEMENT REGARDING COMMITMENT TO FUND AND CONSTRUCT THE CENTER.
Holdings II has requested that TrizecHahn be required to commit as of
the date it is provided with a Satisfaction Notice (as such term is modified
below), irrevocably and subject only to the TrizecHahn Investment Conditions
(defined below) to (a) contribute to the Company the TrizecHahn Investment as
and when required by the terms of the Construction Loan; (b) commence
construction of the Center by May 31, 1998 (or on such later date mutually
agreed by the parties as being appropriate in order to complete construction of
the Center contemporaneously with the completion of the Aladdin Hotel and
Casino, in either case the "Construction Commencement Date"); and (c) together
with the Sommer Trust, execute such guarantees as are necessary (pursuant to the
terms of the Agreement) to obtain construction financing for the Center at
competitive market rate terms and conditions and with no pre-leasing
requirements. The Satisfaction Notice shall include, in addition to the
requirements set forth in Section 3.06 of the Agreement, reasonable supporting
evidence that the additional Conditions Precedent added as Section 12.10(i)
through (k), inclusive, pursuant to Paragraph 3 of this Amendment have been
satisfied, which shall include, but not be limited to, true, correct and
complete copies of all agreements between Aladdin Gaming, LLC ("Gaming") and
Planet Hollywood International, Inc. ("PH"), and each of their Affiliates. In
addition, the Satisfaction Notice may only be validly given if Holdings II has
previously delivered to TrizecHahn a notice ("Pre-Satisfaction Notice") at least
fifteen (15) days prior to the date of the Satisfaction Notice, but not more
than thirty (30) days prior to the date of the Satisfaction Notice. The
Pre-Satisfaction Notice shall state that Holdings II reasonably expects to
deliver to TrizecHahn a Satisfaction Notice within such fifteen (15) day period
(I.E., the period beginning sixteen (16) days after the date of the
Pre-Satisfaction Notice
and ending thirty (30) days after such date). In consideration of the
provisions set forth below, TrizecHahn hereby agrees to either (i) commit to the
obligations set forth in the preceding sentence or (ii) if TrizecHahn does not
elect to commit to such obligations or if TrizecHahn fails to respond within
five (5) business days of being furnished with the Satisfaction Notice (as
provided in the Agreement, and modified by the preceding sentence of this
Amendment), time being of the essence as to such response, then the provisions
of Section 3.06 of the Agreement shall apply (I.E., the Company shall promptly
reimburse TrizecHahn for all of its Predevelopment Costs, the 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 Section 3.06 of the Agreement).
The "TrizecHahn Investment Conditions" are (a) the Company has
obtained and is prepared to immediately close the construction loan identified
in the Satisfaction Notice by Holdings II, with no conditions to draw against
such loan other than TrizecHahn's commitment to contribute the TrizecHahn
Investment; (b) all equity and debt financing necessary to construct the Aladdin
Hotel and Casino, the Other Parking and the cost of the Parking Facility
allocable to Aladdin Hotel and Casino, and to operate the same through the
Opening have closed, no material default is currently pending, and construction
is on schedule and within budget in all material respects; and (c) TrizecHahn
has approved in its reasonable discretion, all material agreements, including
the final forms of the Site Work Agreement, the Development Agreement between
Clark County and Holdings (if such agreement is entered into), the Lease, the
Subordinated Debt (described below), the Reciprocal Easement Agreement, the
Parking Use Agreement and all loan documents.
If TrizecHahn elects to commit to the obligations set forth in the
first sentence of Paragraph 1 above, then notwithstanding anything in Article V
to the contrary all, distributions of (i) Ordinary Cash Flow and/or (ii)
Extraordinary Cash Flow shall be made first in the following of priority:
(a) First, to TrizecHahn to the extent of TrizecHahn's accrued and
unpaid Priority Preferred Return (defined below);
(b) Second, to TrizecHahn to the extent of TrizecHahn's Priority
Unrecovered Contribution Account (defined below); and
(c) Thereafter, to the Members in accordance with Article V of the
Agreement.
The term "Priority Preferred Return" means, with respect to TrizecHahn
only, an amount calculated like interest and accrued on the sum of the balance
standing from time to time in TrizecHahn's Priority Unrecovered Contribution
Account (defined below), if any, at a rate equal to twenty percent (20%) per
annum, compounded monthly, and determined on a cumulative basis. For financial
and income tax reporting purposes, neither accrual nor payment of the Priority
Preferred Return shall be treated as an expense of the Company or as a
guaranteed payment under Section 707(c) of the Code.
The term "Priority Unrecovered Contribution Account" means with
respect to TrizecHahn only, the difference between (x) the amount of capital
contributions made by TrizecHahn to the Company (whether otherwise attributable
to TrizecHahn's Unrecovered Contribution Account or Additional Unrecovered
Contribution Account under the Agreement), and (y) Holdings II's Unrecovered
Contribution Account in the amount of Ten Million Dollars ($10,000,000.00). For
example, TrizecHahn's Priority Unrecovered Contribution Account would equal
Twenty Million Dollars ($20,000,000.00) upon contribution in full of the
TrizecHahn Investment. In addition, if and only if the Audrie/Harmon Hotel is
not completed and open for business on the date which is nine (9) months
following the date of the Opening, time being of the essence, then TrizecHahn's
Priority Unrecovered Contribution Account shall be increased to equal the
remaining unpaid balance of TrizecHahn's total capital contributions to the
Company (and shall not be reduced by the Ten Million Dollars ($10,000,000.00)
attributable to Holdings II's Unrecovered Contribution Account). For example,
TrizecHahn's Priority Unrecovered Contribution Account would equal Thirty
Million Dollars ($30,000,000.00) upon contribution in full of the TrizecHahn
Investment (and assuming no prior distributions attributable to the Priority
Unrecovered Contribution Account) if the Audrie/Harmon Hotel was not constructed
and open for business on the date which is nine (9) months following the date of
the Opening. TrizecHahn's Priority Unrecovered Contribution Account shall be
decreased by the amount of Cash Flow distributed to TrizecHahn pursuant to
sub-paragraph (b) above and attributable to TrizecHahn's Priority Unrecovered
Contribution Account. Article IV of the Agreement shall be revised to treat the
payment of TrizecHahn's Priority Preferred Return like a distribution of
Preferred Return for purposes of allocating Net Income and Net Loss. To avoid
duplication, amounts credited to TrizecHahn's Priority Unrecovered Contribution
Account shall not also be credited to TrizecHahn's Unrecovered Contribution
Account or Additional Unrecovered Contribution Account. If the Audrie/Harmon
Hotel is not constructed and open for business on the date which is nine (9)
months following the Opening, time being of the essence, then TrizecHahn's
Unrecovered Contribution Account shall be debited, and TrizecHahn's Priority
Unrecovered Contribution shall be credited, by the balance of TrizecHahn's
Unrecovered Contribution Account as of such date (E.G., Ten Million Dollars
($10,000,000.00).
2. FEE PAYABLE TO HOLDINGS II.
Upon the initial draw of the Company's construction loan ("Draw
Date"), through the date of Opening, Holdings II shall be entitled to receive a
development fee (the "Holdings II Development Fee") in an amount equal to One
Hundred Thousand Dollars ($100,000.00) per month, payable on the first day of
the month following the Draw Date. In no event shall the Holdings II
Development Fee exceed One Million Eight Hundred Thousand Dollars
($1,800,000.00). Following the date which is five (5) years after the Opening
Date, Holdings II shall be obligated to pay to TrizecHahn an amount equal to
one-half (1/2) of the Holdings II Development Fee, payable on the first day of
the month following the fifth (5th) anniversary of the Opening and on the first
day of each following month in an equal monthly amount of Fifty Thousand Dollars
($50,000.00) per month, until such amount is paid in full, without interest. In
addition to all other rights and/or remedies TrizecHahn may have at law and/or
in equity to enforce such payment obligation, TrizecHahn shall be entitled to
withhold distributions of Cash Flow otherwise payable to Holdings II in
satisfaction of Holdings II's obligation to pay any accrued but unpaid monthly
payments of Fifty Thousand Dollars ($50,000.00) per month over this period.
3. AGREEMENT REGARDING THE AUDRIE/HARMON HOTEL.
As set forth in the Agreement, Gaming and PH have entered into a
non-binding Memorandum of Understanding and Letter of Intent dated September 2,
1997 (the "MOU") to develop a music entertainment themed hotel casino on the
Audrie/Harmon Hotel site. A copy of the MOU is attached hereto for reference.
The MOU envisions that Aladdin Gaming and PH will enter into a formal agreement
by October 15, 1997, to develop the Audrie/Harmon Hotel and will immediately
move forward to obtain the financing required to develop and construct the
Audrie/Harmon Hotel. TrizecHahn has reviewed the development concept and is
supportive of the plans and intentions of Aladdin Gaming and PH with regard to
the Audrie/Harmon Hotel. Notwithstanding the forgoing, however, TrizecHahn
believes it is critical to ensure that a credible development plan for the
Audrie/Harmon Hotel is firmly in place as a Condition Precedent to the
construction of (or TrizecHahn's irrevocable commitment to fund and construct,
subject only to the TrizecHahn Investment Conditions) the Center. Accordingly,
Section 12.10 of the Agreement is hereby amended to add the following Conditions
Precedent:
"(i) Aladdin Gaming and PH have entered into a definitive joint
venture agreement (the "Venture") to develop the Audrie/Harmon Hotel
as set forth in the Memorandum of Understanding and Letter of Intent
between Gaming and PH dated September 2, 1997 attached hereto as
Exhibit J;
(j) Gaming and PH have made a public announcement of their intention
to develop the Audrie/Harmon Hotel; and
(k) evidence reasonably satisfactory to TrizecHahn and Holdings II
that (I) Aladdin Gaming or its Affiliates have received funds or
irrevocable commitments from debt and equity sources (which has been
fully negotiated, approved by the lenders and equity investors and
ready for signature) in an amount sufficient to fund Gaming's share of
the equity to be contributed to the Venture, (II) PH has irrevocably
committed to contribute PH's share of the equity to the Venture
(subject only to the closing of the construction financing set forth
in clause III below), and (III) the Venture has a fully negotiated
term sheet or
expression of interest from one or more lenders for the construction
of the Audrie/Harmon Hotel as set forth in the Memorandum of
Understanding and Letter of Intent between Gaming and PH referenced
above, and PH and Gaming have agreed in writing that the terms of the
proposed construction financing are acceptable to each of them;"
Notwithstanding Gaming's expectation that it will be able to
successfully enter into the PH Agreement with PH, TrizecHahn and Holdings II
agree that there can be no assurance that Gaming will be successful. However,
Gaming and Holdings II shall continue to use commercially reasonable efforts to
assure that the Audrie/Harmon Hotel is constructed and opened as soon as
possible following the Opening.
4. CONVEYANCE OF PROPERTY AND TERMINATION OF LEASE.
Aladdin Holdings agrees that it shall on or before the Opening, cause
the Property to be subdivided into a separate parcel or parcels from the Master
Site, in accordance with Nevada Revised Statutes ("NRS") 278.320 through NRS
278.469, inclusive, or into a separate condominium unit or units from the Master
Site, in accordance with Chapter 116 of the NRS, whichever the parties hereto
mutually determine to be more appropriate in the context of the entire site.
Upon such subdivision or creation of a separate condominium unit, the Property
shall be conveyed by Aladdin Holdings to the Company (without any additional
credit to the Capital Account or Unrecovered Contribution Account of Holdings
II), and the Lease shall be terminated. The Company shall pay a nominal amount
of rent ($10.00 per year) pursuant to the Lease. Upon the later of (i) the
Opening, or (ii) the transfer of the Property as a separate legal parcel or a
separate condominium unit, in either case unencumbered by any monetary lien or
encumbrance and subject only to title exceptions reasonably approved by the
parties, the Company shall issue a subordinated debenture (the "Subordinated
Debt"), payable to Holdings II out of available Cash Flow of the Company upon
the terms and conditions described below. The Subordinated Debt shall be junior
to all other debt or operating obligations of the Company. The Subordinated
Debt shall be unsecured and shall have no right to declare any event of default
or exercise any remedies during any period that any debt or operating
obligations of the Company remain outstanding. In the event that during any
period there are insufficient distributions of Cash Flow to return to TrizecHahn
a twelve percent (12%) preferred return on the sum of TrizecHahn's (i) Priority
Unrecovered Contribution Account, and (ii) Unrecovered Contribution Account
("TrizecHahn 12% Minimum Return"), then payments of the Subordinated Debt shall
be made PARI PASSU with the TrizecHahn 12% Minimum Return. Subject to the
foregoing, the Subordinated Debt shall be senior to distributions of Ordinary
Cash Flow and Extraordinary Cash Flow to the Members pursuant to Article V of
the Agreement. The amount of the Subordinated Debt shall be Sixteen Million Six
Hundred Sixty-Six Thousand Six Hundred Sixty-Seven Dollars ($16,666,667.00). To
the extent of available Cash Flow, the Subordinated Debt shall be payable in
equal monthly installments aggregating Two Million Dollars ($2,000,000.00) per
annum, payable to the extent of
available Cash Flow within ten (10) business days of the first (1st) day of each
month during the term of the Subordinated Debt. The Subordinated Debt shall be
fully amortized over a term of sixty-nine (69) years. Any accrued but unpaid
payments shall not accrue additional interest.
5. SOMMER TRUST FINANCIAL STATEMENTS.
On or before October 31, 1997, Holdings II shall deliver certain
financial information of the Sommer Trust to TrizecHahn sufficient to give
comfort to TrizecHahn in its sole discretion on the ability of the Sommer Trust
to perform its obligations under the Agreement. TrizecHahn agrees to keep the
financial information confidential, except for any disclosure required to comply
with court order or law.
6. FINANCING FEE.
The Company shall pay to TrizecHahn a financing fee upon closing of
the construction loan for the Bazaar Improvements in an amount equal to one
percent (1%) of the total amount of the loan, and a fee in an amount equal to
one quarter of one percent (.25%) to Westwood Capital LLC. Holdings II shall
pay a fee in an amount equal to (or greater than) one quarter of one percent
(.25%) to Westwood Capital LLC concurrent with payment by the Company. Holdings
II represents that no fee will be due and owing to CS First Boston in connection
with the loan.
7. SOMMER RETAIL SPACE.
Aladdin Holdings or its Affiliates or principals shall have the right
to lease, in connection with the initial lease-up of the Center, up to two
thousand five hundred (2,500) rentable square feet of tenant space (or such
lesser amount as Aladdin Holdings shall indicate in a notice to TrizecHahn no
later than _____________, 1997), at a location in the Center reasonably mutually
acceptable to both parties, for a term of ten (10) years, at a rental rate equal
to fifty percent (50%) of the market rental being paid by tenants of comparable
space for comparable terms in comparable locations in the Center, for a use
which is consistent with the first-class quality of the Center and which does
not conflict with the rights of any other tenants of the Center, and otherwise
on terms and conditions reasonably mutually acceptable to both parties (based on
the standard form of lease for the Center). TrizecHahn shall notify Aladdin
Holdings of the proposed location, size and rental rate for such space no later
than _________________, 1997.
8. CB COMMERCIAL.
Holdings II shall be solely responsible to pay any alleged "finders
fee" payable to CB Commercial in excess of Fifty Thousand Dollars ($50,000.00)
(although the parties do not believe that such fee is properly payable).
Except as expressly modified hereby, all of the terms and provisions of the
Agreement shall remain in full force and effect, are incorporated herein by this
reference (including, but not limited to, Article XI of the Agreement), and
shall govern the conduct of the
parties hereto; provided, however, to the extent of any inconsistency between
the provisions of the Agreement and the provisions of this Amendment, the
provisions of this Amendment shall control.
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: /s/ Wendy M. Godoy
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Wendy M. Godoy, Senior Vice President
By: /s/ Wayne J. Finley
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Wayne J. Finley, Senior Vice President
"Holdings II" ALADDIN BAZAAR HOLDINGS, LLC,
a Nevada limited liability company
By: ALADDIN MANAGEMENT
CORPORATION, its Manager
By: /s/ Ronald B. Dictrow
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Ronald B. Dictrow, Treasurer
By: /s/ Jack Sommer
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Jack Sommer, Vice President