EXHIBIT 10.23
-------------
THIS JUNIOR NOTE IS SUBJECT AND SUBORDINATE TO
THE SENIOR LOAN DOCUMENTS (AS DEFINED BELOW)
AS MORE PARTICULARLY SET FORTH BELOW
JUNIOR NOTE
$35,000,000
New York, New York
December 20, 1999
FOR VALUE RECEIVED, the undersigned, GRAND CANAL SHOPS MALL
SUBSIDIARY, LLC, a Delaware limited liability company, having its principal
place of business at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(the "Maker" or the "Borrower"), promises to pay, no later than the Maturity
Date, to the order of SGA DEVELOPMENT, INC., a Nevada corporation (together with
any subsequent holder(s) of this Junior Note, the "Holder") at its office
located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, or at such
other address as the Holder may from time to time designate in writing, in
lawful money of the United States of America and in immediately available funds,
the principal sum of Thirty-Five Million and 00/100 Dollars ($35,000,000)(the
"Loan Amount") in accordance with the provisions hereof. The Maker further
agrees to pay interest on the unpaid principal amount hereof from time to time
in accordance with the provisions hereof. Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in that certain Junior
Deed of Trust, dated as of even date herewith, by and among Maker, as Grantor,
Lawyers Title of Nevada, Inc., as Trustee, and SGA Development, Inc., as
Beneficiary (the "Junior Deed of Trust").
1. This Junior Note is secured by the Junior Deed of Trust.
1. The Loan (as defined in Schedule A) shall consist of one advance (the "Loan
Advance"), in a principal amount equal to the Loan Amount, to be made to the
Borrower on the date hereof (the "Closing Date"), and there shall be no advances
of the Loan made after the Closing Date.
1. Proceeds of the Loan shall be used solely to finance a portion of the
purchase price of the Trust Property in accordance with the provisions of the
Second Sale and Contribution Agreement (as defined in Schedule A attached hereto
and made a part hereof).
1. Subject to the provisions of Section 24 hereof, Borrower shall pay to the
Holder interest on the Loan from the Closing Date to but excluding the date upon
which the Loan shall be repaid in full as described in this Section 4. The Loan
shall bear interest for each Interest Accrual Period (as defined in Schedule A)
with respect thereto at a rate of fourteen percent (14%) per annum (the
"Interest Rate"). Interest on the Loan shall accrue on the outstanding principal
amount thereof and compound monthly commencing on the Closing Date. Interest
with respect to the period commencing on the Closing Date and ending on (and
including) the last day of the calendar month in which the Closing occurs (such
period, the "Initial Interest Period") shall be payable on the date hereof and,
commencing with the second calendar month next following the calendar month in
which the Closing Date occurs, interest shall be payable in arrears on the first
(1st) day of each and every calendar month through the calendar month in which
the Maturity Date (as defined in Schedule A) occurs, unless, in any such case,
such day is not a Business Day (as defined in Schedule A), in which event such
interest shall be payable on the first Business Day following such date (such
date for any particular month, the "Payment Date"). The entire Outstanding
Principal Indebtedness (as defined in Schedule A) of the Loan, together with all
accrued but unpaid interest thereon shall be due and payable on the Maturity
Date by the Borrower to the Holder, and Borrower shall also pay, on the Maturity
Date, all other amounts due under the Junior Loan Documents (as hereinafter
defined) on the Maturity Date to the parties entitled thereto under the Junior
Loan Documents. Interest shall be computed on the basis of a 360-day year and
the actual number of days elapsed.
1. At such time as an Event of Default (as hereinafter defined) that is not a
monetary default shall exist, the Borrower shall pay to the Holder interest at
the Default Rate (as defined in Schedule A) on the Outstanding Principal
Indebtedness, and on due but unpaid interest thereon (but not on interest
payable pursuant to this Section 5), and shall pay to the Holder interest at the
Default Rate on any other amount owing to Holder not paid when due, in each
case, from the date that such amount first becomes due until such amount is paid
in full.
1. So long as no Event of Default shall exist, subject to the other terms,
provisions and conditions of this Section 6, the Borrower may prepay this Junior
Note and the Loan in whole or in part on any Business Day, without any
prepayment fee or premium; provided, however, that, any such prepayment shall be
accompanied by (i) all accrued interest on the Loan, and (ii) any other amounts
then due under the Junior Loan Documents.
1. Loan Advances that are repaid may not be reborrowed.
1. All proceeds relating to any repayments of the Loan occurring while an Event
of Default shall exist, shall be applied to pay: first, any reasonable
out-of-pocket costs and expenses of the Holder arising as a result of such
repayment or Event of Default or enforcement of the Loan in connection
therewith, and any other portion or portions of the Indebtedness (as defined in
Schedule A) other than principal and interest; second, any accrued and unpaid
interest then payable with respect to the Loan or the portion thereof being
repaid; and third, the outstanding principal amount of the Loan.
1. Except as otherwise specifically provided herein, all payments and
prepayments under this Junior Note shall be made to the Holder by 11:00 a.m. New
York City time, on the date such payment or prepayment, as applicable, is due in
lawful money of the United States of America by wire transfer in federal or
other immediately available funds by deposit to an account specified in writing
by Holder to Borrower. Any funds received by the Holder after such time shall,
for all purposes hereof, be deemed to have been paid on the next succeeding
Business Day. All payments made by the Borrower hereunder, or by the Borrower
under the other Junior Loan Documents, shall be made irrespective of, and
without any deduction for, any set-offs or counterclaims.
1. All payments made by the Borrower under this Junior Note or any other Junior
Loan Document shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, assessments, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any governmental authority (other than gross receipts taxes, net income taxes
and franchise taxes (imposed in lieu of net income taxes) imposed on Holder as a
result of a payment under the Junior Loan Documents) (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings being
hereinafter collectively referred to as "Taxes"). If any Taxes are required to
be withheld from any amounts payable to Holder hereunder, under this Junior Note
or under any other Junior Loan Document, the amounts so payable to Holder shall
be increased to the extent necessary to yield to Holder (after payment of all
Taxes) such amounts payable at the rates or in the amounts, as applicable,
specified in this Junior Note or the applicable Junior Loan Document. Whenever
any Taxes are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Holder for its own account a certified copy of an
official receipt showing payment thereof.
1. The principal sum evidenced by this Junior Note, together with accrued
interest and other amounts due hereunder may become immediately due and payable
upon the occurrence of any Event of Default as provided herein.
1. The occurrence of one or more of the following events shall be an "Event of
Default" hereunder:
(a) if the Borrower shall fail to pay, when due in accordance with the terms of
this Junior Note or the other Junior Loan Documents, any accrued and unpaid
interest and such failure shall continue for five (5) Business Days after
notice that ▇▇▇▇▇▇▇▇ has failed to pay the same on the due date therefor;
(b) if the Borrower shall fail to pay all of the then outstanding Indebtedness
(as defined in Schedule A) on the Maturity Date;
(c) if there shall exist at any time an "Event of Default" as defined in the
Senior Loan Documents (as hereinafter defined);
1. With respect to the amounts due pursuant to this Junior Note, to the extent
permitted under applicable law, the Maker waives the following: (1) all rights
of exemption of property from levy or sale under execution or other process for
the collection of debts under the Constitution or laws of the United States or
any state thereof; and (2) demand, presentment, protest, notice of dishonor,
notice of nonpayment, suit against any party, diligence in collection of this
Junior Note, and all other requirements necessary to enforce this Junior Note,
except for notices, if any, required by the express terms included hereunder.
1. In no event shall the amount of interest (and any other sums or amounts that
are deemed to constitute interest under applicable laws) due or payable
hereunder (including, without limitation, interest calculated at the Default
Rate) exceed the maximum amount of interest payable under applicable laws (the
"Maximum Amount"), and in the event such payment is inadvertently paid by the
Maker or inadvertently received by the Holder, then such excess sum shall be
credited as a payment of principal, and if in excess of the then outstanding
principal balance, shall be immediately returned to the Maker upon such
determination. It is the express intent hereof that the Maker not pay and the
Holder not receive, directly or indirectly, interest in excess of the Maximum
Amount.
1. The Holder is hereby authorized to endorse on Schedule B attached hereto (or
on a continuation of Schedule B attached hereto and made a part hereof) an
appropriate notation evidencing each payment of interest or other amounts due
hereunder. Schedule B shall, absent manifest error, constitute prima facie
evidence of the accuracy of the information contained therein. The failure of
the Holder to make a notation on Schedule B as aforesaid shall not affect the
obligations of the Maker hereunder or under any other Junior Loan Document in
any respect.
1. Holder shall not, by any act, delay, omission or otherwise, be deemed to have
modified, amended, waived, extended, discharged or terminated any of its or
their rights or remedies, and no modification, amendment, waiver, extension,
discharge or termination of any kind shall be valid unless in writing and signed
by the Holder. All rights and remedies of the Holder under the terms of this
Junior Note and applicable statutes or rules of law shall be cumulative, and may
be exercised successively or concurrently. The Maker agrees that there are no
defenses, equities or setoffs with respect to the obligations set forth herein,
and to the extent any such defenses, equities, or setoffs may exist, the same
are hereby expressly released, forgiven, waived and forever discharged.
1. Wherever possible, each provision of this Junior Note shall be interpreted in
such manner as to be effective and valid under applicable laws, but if any
provision of this Junior Note shall be prohibited by or invalid under applicable
laws, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Junior Note.
1. This Note was negotiated in New York, and made by the Maker and accepted by
the Holder in the State of New York and the proceeds of this Note were disbursed
from New York, which State the parties agree has a substantial relationship to
the parties and to the underlying transaction embodied hereby, and in all
respects (including, without limitation, matters of construction, validity and
performance).
1. This Junior Note and the obligations arising hereunder shall be governed by,
and construed in accordance with, the laws of the State of New York applicable
to contracts made and performed in such State and any applicable law of the
United States of America.
1. Any legal suit, action or proceeding against the Holder or the Maker arising
out of or relating to this Junior Note may be instituted in any federal or state
court in New York, New York. The Maker hereby (i) irrevocably waives, to the
fullest extent permitted by applicable law, any objection which it may now or
hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum, and (ii) irrevocably submits to
the non-exclusive jurisdiction of any such court in any such suit, action or
proceeding. The Maker does hereby designate and appoint ▇▇▇▇▇▇▇▇-▇▇▇▇
Corporation System, Inc. as its authorized agent to accept and acknowledge on
its behalf service of any and all process which may be served in any such suit,
action or proceeding in any federal or state court in New York, New York, and
agrees that service of process upon said agent with a copy to the Maker at its
principal executive offices, (a) hand delivered or (b) sent by (i) certified or
registered United States mail, postage prepaid, or (ii) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery to the Maker, shall be deemed in every respect effective
service of process upon the Maker, in any such suit, action or proceeding in the
State of New York. The Maker (i) may at any time and from time to time designate
a substitute authorized agent with an office in New York, New York (which office
shall be designated as the address for service of process), and (ii) shall
promptly designate such a substitute if its authorized agent ceases to have an
office in New York, New York or is dissolved without leaving a successor. 2.
Notwithstanding anything to the contrary contained herein, this Junior Note (and
all the terms and provisions hereof) is made subject to the following terms and
conditions:
a) As used herein, the following terms shall have the following meanings:
(1) "Junior Deed of Trust" means the Junior Deed of Trust, as the same may
hereafter be amended, modified, extended, restated, replaced, renewed or
supplemented from time to time in each case, in accordance with the provisions
of this Section 21;
(1) "Junior Indebtedness" means the collective reference to (i) the principal
indebtedness evidenced by this Junior Note, (ii) interest (including
post-petition interest, if any, and interest at the Default Rate) on the
principal indebtedness evidenced by this Junior Note and (iii) all premiums, if
any, and all other amounts, indebtedness, obligations and liabilities of Maker,
whether now existing or hereafter incurred or created, payable, owing or due to
Junior Lender under or with respect to the Junior Loan Documents.
(1) "Junior Lender" means SGA Development, Inc. and its permitted successors and
assigns;
(1) "Junior Loan Documents" means this Junior Note, the Junior Deed of Trust,
and all other documents, instruments and agreements evidencing, securing,
guaranteeing, relating to or otherwise delivered in connection with the Junior
Indebtedness;
(1) "Junior Note" means this Junior Note, as the same may hereafter be amended,
modified, extended, restated, replaced, renewed or supplemented from time to
time, in accordance with the provisions of this Section 21;
(1) "Senior Assignment of Rents" means that certain Assignment of Leases and
Rents dated as of the date hereof, by Grantor in favor of The Bank of Nova
Scotia, as collateral agent for the lenders from time to time parties to the
Senior Loan Agreement (in such capacity, the "Senior Loan Collateral Agent")
affecting the Trust Property, as the same may have been and as the same may
hereafter be amended, modified, extended, restated, replaced, renewed or
supplemented from time to time;
(1) "Senior Deed of Trust" means that certain Fee and Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as
of the date hereof, from Grantor to Lawyers Title Of Nevada, Inc., a Nevada
corporation, as trustee, for the use and benefit of the Senior Collateral Agent,
which was recorded in the Office of the ▇▇▇▇▇ County Recorder on ____________ in
Book ________, as Instrument No. _________ and encumbers the Trust Property, as
the same may have been and as the same may hereafter be amended, modified,
extended, restated, replaced, renewed or supplemented from time to time;
(1) "Senior Indebtedness" means the collective reference to (A) the principal
indebtedness evidenced by the Senior Note, (B) interest (including post-petition
interest, if any, and interest at the Default Rate) on the principal
indebtedness evidenced by the Senior Note and (C) all premiums, if any, and all
other amounts, indebtedness, obligations and liabilities of Grantor, whether now
existing or hereafter incurred or created, payable, owing or due to any Senior
Loan Agent or a Senior Lender under or with respect to the Senior Loan
Documents.
(1) "Senior Lenders" means the Lenders from time to time parties to the Senior
Loan Agreement;
(1) "Senior Loan Agents" means the "Agents" as such term is defined in the
Senior Loan Agreement.
(1) "Senior Loan Agreement" means that certain Loan Agreement dated as of the
date hereof among the Senior Lenders from time to time parties thereto, ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Company, as the Syndication Agent, the Bank of Nova Scotia as the
Collateral Agent, The Bank of Nova Scotia, as the Administrative Agent and
Grantor, as the same may have been and as the same may hereafter be amended,
modified, extended, restated, replaced, renewed or supplemented from time to
time;
(1) "Senior Loan Documents" means the Senior Loan Agreement, the Senior Note,
the Senior Deed of Trust, the Senior Assignment of Leases and all other
documents, instruments and agreements evidencing, securing, guaranteeing,
relating to or otherwise delivered in connection with the Senior Indebtedness,
as the same may have been and as the same may hereafter be amended, modified,
extended, restated, replaced, renewed or supplemented from time to time;
(1) "Senior Loan Required Lenders" means the "Required Lenders" as such term is
defined in the Senior Loan Agreement.
(1) "Senior Loan Syndication Agent" means the "Syndication Agent" as defined in
the Senior Loan Agreement.
(1) "Senior Loan Collateral Agent" means the "Collateral Agent" as defined in
the Senior Loan Agreement.
(1) "Senior Notes" means the collective reference to those certain Notes, each
of which is dated as of even date herewith, made by Grantor to the order of a
Senior Lender and which notes are in the aggregate original principal amount of
$105,000,000, as any or all of the same may have been and as any or all of the
same may hereafter be amended, modified, extended, restated, replaced, renewed
or supplemented from time to time.
a) The Junior Loan Documents, all liens and security interests created
thereunder, all of the Junior Lender's rights and remedies under the Junior Loan
Documents (including, without limitation, ▇▇▇▇▇▇ ▇▇▇▇▇▇'s right to receive
payment of the Junior Indebtedness), any additional advance of funds thereunder
and any supplemental or additional mortgage or other document or instrument
evidencing, securing in whole or in part, or otherwise relating to, the Junior
Indebtedness or any modification, renewal or extension thereof (regardless of
the time of recording of any such mortgage or other document) are, and at all
times shall be, subject and subordinate to the Senior Loan Documents, all liens
and security interests created thereunder, all of the Senior Loan Collateral
Agent's, the other Senior Loan Agents' and the Senior Lenders' rights and
remedies under the Senior Loan Documents (including, without limitation, the
Senior Loan Agents' and the Senior Lenders' right to receive payment of the
Senior Indebtedness), and any additional advances made by any Senior Loan Agent
or any Senior Lender under the Senior Loan Documents, any supplemental or
additional mortgage or other document or instrument evidencing, securing in
whole or in part or otherwise relating to the Senior Indebtedness or any
modification, renewal or extension thereof, regardless of the time of recording
of any such mortgage or other document or instrument.
a) The subordination provided for herein automatically, and without any notice
to, consent of, or action by Junior Lender or any other party whatsoever, shall
extend to all modifications, renewals, refinancings, replacements and extensions
whatsoever of any of the Senior Loan Documents. No release or waiver by any
Senior Loan Agent or any Senior Lender of any of its rights against any person
or entity under the Senior Loan Documents shall require notice to or consent of
Junior Lender or any other party, nor shall any such release or waiver operate
as a defense to or release of any of the obligations of Junior Lender or the
rights of any Senior Loan Agent or the Senior Lender under the Senior Loan
Documents. Without limiting the generality of any of the foregoing, Junior
Lender hereby consents to any increases of the Senior Indebtedness.
a) Without the prior written consent of the Senior Loan Required Lenders, Junior
Lender shall not take any Enforcement Action (as defined below) under the Junior
Loan Documents unless all Senior Indebtedness shall have been indefeasibly
satisfied in full for a period of ninety (90) days. "Enforcement Action" means
the commencement of a foreclosure proceeding, the exercise of a statutory power
of sale, the collection of any Rents (as defined in the Senior Loan Agreement),
the taking of a deed or assignment in lieu of foreclosure, the obtaining of a
receiver or the taking of any other enforcement action against, the taking of
possession or control of, the Trust Property (or any portion thereof) or any
other collateral securing the Junior Indebtedness or the exercise of any of the
other rights (at the time that there shall exist a default under the Junior Loan
Documents) or remedies available to Junior Lender under the Junior Loan
Documents or otherwise available to Junior Lender at law or in equity.
a) Junior Lender shall not assert any default under any Junior Loan Document as
a result of Maker's compliance with the terms of any of the Senior Loan
Documents.
a) So long as any Senior Loan Document shall be in effect or any Senior
Indebtedness shall not have been indefeasibly satisfied in full, notwithstanding
anything contained herein to the contrary, Junior Lender shall (A) not be
entitled to receive any award or proceeds (or any portion thereof) in connection
with any Taking (as defined in the Senior Loan Agreement) affecting the Trust
Property or any portion thereof or any insurance proceeds with respect to the
Trust Property, the Maker or any portion thereof, and Junior Lender agrees that
all such awards and proceeds shall be applied as the Senior Loan Required
Lenders shall direct, including, without limitation, to the payment of all or
any of the Senior Indebtedness and/or to the restoration of the Trust Property
(or any portion thereof, as the Senior Loan Required Lenders shall elect in
their sole discretion), (B) execute such non-disturbance agreements with
licensees, sublicensees, tenants and other users and occupants (collectively,
"Tenants") of the Trust Property (or any portion thereof) as the Senior Loan
Syndication Agent shall require, (C) execute such partial releases of deed of
trust and other appropriate releases, without consideration, as the Senior Loan
Syndication Agent shall direct upon the conveyance of any portion of the Trust
Property, and (D) if applicable, execute such subordination agreements as the
Senior Loan Syndication Agent shall direct upon (i) the filing of any
declaration of condominium approved by the Senior Loan Syndication Agent in
respect to the Trust Property (or any portion thereof) and (ii) the recording of
any easement, right-of-way or other encumbrance approved by the Senior Loan
Syndication Agent in respect to the Trust Property (or any portion thereof).
a) Junior Lender waives any claim or right of subrogation which it may have to
any lien, estate, right or other interest in the Trust Property (or any portion
thereof) that is, or may be, equal to or prior in right to the Senior Deed of
Trust or any other Senior Loan Document.
a) Junior Lender shall not increase, renew, extend, restate, replace,
supplement, amend or modify any Junior Loan Document or the Junior Indebtedness
(and the total indebtedness secured or evidenced by the Junior Loan Documents
cannot be increased) (other than capitalization of interest or the making of
"protective" advances, in each case, in accordance with the express provisions
of the Junior Loan Documents and of the Senior Loan Documents)) without, in each
case, the prior written consent of the Senior Loan Administrative Agent;
provided that the Senior Loan Administrative Agent shall not unreasonably
withhold or delay its consent to any amendment of or modification to any Junior
Loan Document that does not (i) effect an increase in the Junior Indebtedness or
the interest rate(s) applicable thereto, (ii) change the provisions of this
Section 21 or (iii) accelerate the maturity date applicable to the Junior
Indebtedness or the date upon which any of the Junior Indebtedness shall be
payable.
a) To further evidence the subordinations and provisions referred to in clauses
(b) through (h) above, ▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees that, within ten (10) days after
request by the Senior Loan Syndication Agent, it will do, execute, acknowledge
and deliver all and every such further acts, deeds, conveyances, documents,
estoppels and instruments as the Senior Loan Syndication Agent may reasonably
request for the better assuring and evidencing of the foregoing subordination
and provisions.
a) Unless and until a Trigger Event (as defined below) shall occur, payments may
be made under or in respect of the Junior Indebtedness or under the Junior Loan
Documents only if and to the extent that all Senior Indebtedness then presently
due and payable and all other payments required to be made under the Senior Loan
Documents have been paid in full in cash and there shall not then exist a
Default (as defined in the Senior Loan Agreement) or Event of Default (as
defined in the Senior Loan Agreement) (a "Senior Event of Default").
a) If (i) any of the following shall occur: (a) any insolvency, bankruptcy,
receivership, custodianship, assignment for the benefit of creditors,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to Maker or its property, whether under any bankruptcy,
reorganization or insolvency law or laws, federal or state, or any law, federal
or state, relating to relief of debtors, readjustment of indebtedness,
reorganization, composition or extension or otherwise, (b) any proceeding for
any partial or total liquidation, liquidating distribution, dissolution or other
winding-up of Maker, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings, or (c) any other marshaling of the assets
of Maker (any of the foregoing events, a "Proceeding"), (ii) a Senior Event of
Default shall occur and not be waived in writing by the Senior Loan Required
Lenders, or (iii) the maturity of any Senior Indebtedness shall be accelerated,
then and in any such event (any of such events, a "Trigger Event"), the Senior
Indebtedness shall be indefeasibly paid in full in cash before any payment or
distribution, whether in cash, securities, or other property or right, shall be
made under or in respect of the Junior Indebtedness or any Junior Loan Document
(a "Subordinated Payment"), whether it is due or not due, and ▇▇▇▇▇▇ ▇▇▇▇▇▇
agrees that any payment or distribution of any kind or character, whether in
cash, securities, or other property or right, which would otherwise (but for
these subordination provisions) be payable or deliverable under or in respect of
the Junior Indebtedness or the Junior Loan Documents shall be paid or delivered
directly to the Senior Loan Administrative Agent for application in payment of
the Senior Indebtedness until all Senior Indebtedness shall have been paid in
full in cash.
a) ▇▇▇▇▇▇ ▇▇▇▇▇▇ hereby undertakes and agrees, upon the request of the Senior
Loan Syndication Agent, to execute, verify, deliver and file in a timely manner
any proofs of claim, consents, assignments or other action necessary or
appropriate to enforce the obligations of Maker to Senior Lender in respect of
the Subordinated Payments, all in order to preserve and maintain all claims
against Maker for Subordinated Payments so that the Senior Loan Agents and the
Senior Lenders will have the benefit of such claims as provided herein. Upon
failure of Junior Lender to do so (or upon the Senior Loan Syndication Agent's
determination, in its sole discretion, that the Junior Lender is likely to fail
to do so), the Senior Loan Collateral Agent shall be deemed to be irrevocably
appointed the agent and attorney-in-fact of Junior Lender to execute, verify,
deliver and file any such proofs of claim, consents, assignments or other
instrument, and to receive and collect any and all dividends, payments, or other
disbursements made thereon in whatever form the same may be paid or issued and
to apply the same on account of the Senior Indebtedness. Junior Lender hereby
declares that the foregoing power is coupled with an interest and such power is
and shall be irrevocable by Junior Lender.
a) If any payment or distribution of any character, by setoff or otherwise, or
any security, whether in cash, securities or other property, shall be received
by ▇▇▇▇▇▇ ▇▇▇▇▇▇ in contravention of any of the terms hereof, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be promptly paid over or delivered and transferred to the Senior Loan
Administrative Agent for application to the payment of the Senior Indebtedness
to the extent necessary to pay the Senior Indebtedness in full. No such payment
or distribution so paid over or delivered and transferred to the Senior Loan
Administrative Agent shall be deemed a payment in respect of the Junior
Indebtedness. In the event of the failure of Junior Lender to endorse or assign
any such payment, distribution or security, the Senior Loan Administrative Agent
is hereby irrevocably authorized to endorse or assign the same to itself.
a) Upon the occurrence of any Proceeding, the provisions of this Section 21
shall remain in full force and effect, and the Junior Lender hereby consents to
the authority of the court having jurisdiction over the Proceeding to preserve
such priority and subordination in approving any such plan of reorganization,
arrangement or liquidation.
For so long as any Senior Loan Document shall be
in effect or any Senior Indebtedness shall not have been indefeasibly satisfied
in full, the Junior Lender shall not, without the Administrative Agent's
consent, which may be granted or withheld in its sole and absolute discretion,
modify or amend the "single purpose entity" provisions set forth in paragraphs
THIRD, TENTH, ELEVENTH, TWELFTH and THIRTEENTH of Amended and Restated Articles
of Incorporation of the Borrower (which Borrower covenants and agrees to file
with the Nevada Secretary of State by December 31, 1999) and shall comply with
such provisions in all material respects.
The Senior Lenders and the Senior Loan Agents are
intended third party beneficiaries of the provisions of this Section 21.
Anything contained herein, or in any other Junior
Loan Documents to the contrary notwithstanding, no recourse shall be had for
the payment of the principal or interest on this Junior Note or for any
other Indebtedness hereunder or under any other Junior Loan Document against
any direct or indirect shareholder, director, officer, member, partner or
incorporator of the Borrower for any deficiency or other sum owing with respect
to this Junior Note or any other Indebtedness arising under this Junior Note
or any Junior Loan Document; provided, however, that the foregoing
provisions of this paragraph shall not (x) affect or prejudice, or be deemed to
affect or prejudice, the rights of any Lender to (1) (A) proceed against
Borrower or against the Borrower's assets (including, without limitation,
the Collateral) or (B) proceed against any other Person that may be a party to a
Junior Loan Document (to the extent provided therein) or against any such
other Person's assets (to the extent of its liability under the applicable
Junior Loan Document to which it is a party) and/or (2) recover damages
against any individual for his or her own fraud or intentional
misrepresentation; and/or (y) constitute a waiver, release or discharge of any
indebtedness or obligation evidenced by this Junior Note or secured by, or
otherwise relating to, the Junior Loan Documents, and the same shall continue
until paid or discharged in full.
Maker shall have the right, upon prior written
notice to Holder, without the payment of any fee or compensation, to extend the
initial Maturity Date under this Junior Note from December 16, 2004 by three (3)
years, to December 16, 2007.
Notwithstanding anything to the contrary contained
herein or in any of the other Junior Loan Documents, Maker shall not be entitled
or permitted to make any payments in respect of this Junior Note or under the
Junior Loan Documents except as expressly provided in this Section 24. Maker
shall be entitled and permitted to make current payments under this Junior Note
and the other Junior Loan Documents but, in the case of each such current
payment, only to the extent that there was Excess Cash Flow (as defined in
Schedule A) during the Interest Accrual Period immediately preceding the
Interest Accrual Period in which the payment in question is being made; provided
that at any time that a Senior Event of Default shall exist, no payments shall
be permitted under the Junior Loan Documents. Notwithstanding the foregoing,
interest under the Junior Loan Documents shall, in all events, be permitted to
accrue and compound in accordance with the provisions hereof (including, without
limitation, the third sentence of Section 4 hereof). If any payment (or part
thereof) under this Junior Note or any of the other Junior Loan Documents is not
made pursuant to the second sentence of this Section 24, the obligation to pay
the same shall be deferred until and to the extent that both (a) no Senior Event
of Default exists and (b) Excess Cash Flow is sufficient to pay the same. The
Senior Lenders and the Senior Loan Agents are intended third party beneficiaries
of the provisions of this Section 24.
1. Notwithstanding anything to the contrary contained herein or in any of the
other Junior Loan Documents, if the Holder shall desire to assign or participate
out the Loan or the Junior Loan Documents or any interest therein, it shall,
except in the case of an assignment to an Affiliate (as defined in Schedule
A)(which shall be permitted without the provisions of this Section 25 (other
than the second to last sentence of this Section 25) applying), afford the
Senior Lenders the right to purchase the same by providing the Senior Loan
Collateral Agent with written notice of its intent to so assign or participate
out, which written notice shall set forth the material terms and conditions of
such desired assignment or participation (the "Offer Notice"). If the Senior
Loan Collateral Agent, within thirty (30) days after receipt of such notice,
notifies the Holder in writing that all the Senior Lenders (or, if the Senior
Lenders otherwise agree in writing, one or more of the Senior Lenders) wish to
consummate the transaction described in the Offer Notice, then the Holder and
such Senior Lender(s) shall be obligated to so consummate such transaction. If
the Senior Loan Collateral Agent does not send such written notice within such
thirty (30) day period, then the Holder may consummate the applicable
transaction on substantially the terms contained in the applicable Offer Notice
no later than one hundred eighty (180) days after the expiration of such thirty
(30) day period. If the Holder does not so consummate such transaction within
such one hundred eighty (180) day period, then the provisions of this Section 25
shall once again be applicable. Notwithstanding the foregoing, (i) in no event
shall the Loan or the Junior Loan Documents or any portion thereof be assigned
or participated out to any Person that is not an Acceptable Holder (as defined
in Schedule A) or an Alternate Lender (as defined in Schedule A) approved by the
Senior Loan Collateral Agent (which approval shall not be unreasonably withheld,
conditioned or delayed), and (ii) in no event shall all or any portion of the
Loan or the Junior Loan Documents be assigned or participated by or to an
Affiliate of Maker at any time that a Senior Event of Default shall exist. The
Senior Lenders and the Senior Loan Agents are intended third party beneficiaries
of the provisions of this Section 25.
1. Subject to the provisions of Section 21(h), Holder may, at its option,
require Maker to enter into a loan agreement and other loan documents
substantially in the form of, and containing similar covenants and provisions
as, the Senior Loan Agreement and the other Senior Loan Documents.
EACH OF THE HOLDER AND THE MAKER, TO THE FULLEST EXTENT THAT
IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS JUNIOR NOTE AND BY ▇▇▇▇▇▇'S ACCEPTANCE OF THIS JUNIOR NOTE,
HOLDER SHALL BE DEEMED TO HAVE AGREED TO THE FOREGOING WAIVER.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Maker has caused this Junior Note to
be properly executed on the date of the notarial acknowledgment below, and has
authorized this Junior Note to be dated as of the day and year first above
written.
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC
By: Grand Canal Shops Mall, LLC, as managing member
By: Grand Canal Shops Mall Holding Company, LLC, as managing member
By:Mall Intermediate Holding Company, LLC, as managing member
By: Venetian Casino Resort, LLC, as sole Member
By: Las Vegas Sands, Inc., as managing Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant to the
Chairman of the Board
and Secretary
State of New York )
: ss.:
County of New York )
The foregoing instrument was acknowledged before me on
December 17, 1999, by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as Assistant to the Chairman of the Board
and Secretary of Las Vegas Sands, Inc., a corporation which is the managing
member of Venetian Casino Resort, LLC, a limited liability company which is the
sole member of Mall Intermediate Holding Company, LLC, a limited liability
company which is the managing member of Grand Canal Shops Mall Holding Company,
LLC, a limited liability company which is the managing member of Grand Canal
Shops Mall, LLC, a limited liability company which is the managing member of
Grand Canal Shops Mall Subsidiary, LLC, a limited liability company which is the
party to this document.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Notary Public
Schedule A
Certain Definitions
Note: All capitalized terms used and not defined in this Schedule A shall have
the respective meaning assigned thereto in the Junior Note to which this
Schedule A is attached.
"Acceptable Holder" shall mean any of the following: (i) a savings bank, savings
and loan association, commercial bank, pension fund, trust company (whether
acting individually or in a fiduciary capacity) or insurance company (whether
acting individually or in a fiduciary capacity) that has a combined capital and
surplus of $500,000,000 or more (each of the entities described in this clause
(i), an "Institutional Lender"), or (ii) a real estate investment trust existing
in compliance with Sections 856 through 860 of the Internal Revenue Code of
1986, as amended from time to time, or a regional or national shopping center
development company, in either case, whose shares are publicly traded on a
national securities exchange and that has an equity market capitalization of
$250,000 or more.
"Accounts" shall mean collectively, the "REA Insurance Premium Account", the
"Tax Escrow Account", the "Retainage Escrow Account", the "Brokerage Commission
Account", the "Management Fees Escrow Account, the "Operating Expense Account"
and the SNDA Deposit Escrow Account", as each such term is defined in the Senior
Loan Agreement.
"Affiliate" of any specified Person means any other Person controlling,
controlled by or under common control with such specified Person. For purposes
of this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Alternate Lender" shall mean any Person that shall not be, and shall not have
been, a party (or an Affiliate of a party): (i) with whom any Senior Lender or
Agent (or any Affiliate thereof) or any other third-party lender shall have had
a dispute based either on (a) alleged bad faith dealings or fraudulent conduct
or (b) an alleged intentional breach with respect to an agreement between any
Senior Lender of Agent (or any Affiliate thereof) or any other third-party
lender and the party in question (or any Affiliate thereof) or (ii) the subject
of any action, proceeding, hearing or investigation (a) alleging or relating to
criminal activity or (b) to revoke any material license or permit.
"Business Day" means any day other than a day which is (i) a Saturday or a
Sunday or (ii) a day on which federally-insured depository institutions are
authorized or obligated by law, governmental decree or executive order to be
closed; provided that when used with respect to an Interest Accrual Period,
"Business Day" shall mean a day on which banks in London, England and New York
City, New York are open for dealing in foreign currency and exchange.
"Capital Expenditures" means costs of capital expenditures (determined in
accordance with GAAP) incurred by the Borrower in connection with replacements
and capital improvements and repairs made to the Real Property.
"Default" means the occurrence of any event which, but for the giving of notice
or the passage of time, or both, would be an Event of Default.
"Default Rate" means the per annum interest rate equal to the lesser of (i) the
Interest Rate plus 4.00% per annum or (ii) the maximum interest rate which the
Borrower may by law pay or Holder may charge and collect under applicable law.
"Equipment Lease" shall have the meaning set forth in the Senior Loan Agreement.
"Excess Cash Flow" means, for any period of time, the excess of (i) Operating
Income for such period over (ii) the sum of (A) Operating Expenses for such
period plus (B) amounts paid by the Borrower during such period in respect of
the Senior Indebtedness and the Junior Indebtedness plus (C) Capital
Expenditures paid by the Borrower during such period (except to the extent paid
using funds in any of the Accounts in accordance with the terms, provisions and
conditions of the Senior Loan Documents) plus (D) amounts deposited by Borrower
during such period, in accordance with the terms of the Senior Loan Agreement,
into the Accounts.
"Indebtedness" means, at any time, the then Outstanding Principal Indebtedness,
together with all other obligations and liabilities due or to become due to
Holder pursuant hereto, under this Junior Note or under or in accordance with
any of the other Junior Loan Documents, and all other amounts, sums and expenses
then or thereafter payable to Holder hereunder or pursuant to this Junior Note
or any of the other Junior Loan Documents.
"Interest Accrual Period" means, in connection with the calculation of interest
accrued with respect to any specified Payment Date, (i) initially, the Initial
Interest Period and (ii) thereafter, the period from and including the preceding
Payment Date to but excluding such specified Payment Date, provided, however,
that no Interest Accrual Period shall extend beyond the Maturity Date. Solely
for purposes of this definition, the day next following the last day of the
Initial Interest Period shall be deemed to be a "Payment Date".
"Insurance Premiums" has the meaning provided in Section 5.1(X)(ii) of the
Senior Loan Agreement.
"Loan" means the loan in the principal amount of $35,000,000 to be made, subject
to the terms and conditions contained herein and in the Junior Loan Documents,
by the Holder to the Borrower on the Closing Date.
"Maturity Date" means the later to occur of (i) December 16, 2004 or (ii) in the
event the Borrower elects to extend the term of the Loan by three (3) years,
December 16, 2007.
"Operating Expenses" means, with respect to any period of time, and subject to
the next sentence, expenses that were actually paid by the Borrower during such
period in connection with the operation or maintenance of the Collateral (or any
portion thereof), or the operation of Borrower's business at the Trust Property,
including: (i) all rent and other amounts payable under any ground lease or
underlying lease (including the Billboard Master Lease, Lutece Master Lease and
the Canyon Ranch Master Lease), (ii) Impositions, (iii) Insurance Premiums (to
the extent payable by Borrower under the REA), (iv) wages, salaries, and fringe
benefits of employees engaged in the operation or management of the Real
Property Collateral (as defined in the Junior Deed of Trust) (or any portion
thereof) or the Borrower's business, (v) fees and other amounts paid in respect
of utilities serving the Trust Property (as defined in the Junior Deed of
Trust), (vi) fees, costs and expenses for cleaning, janitorial and security
services with respect to the Trust Property (or any portion thereof), (vii)
professional fees incurred in connection with the operation or management of the
Trust Property (or any portion thereof), (viii) repair and maintenance costs
with respect to the Trust Property (or any portion thereof), (ix) advertising,
marketing and other promotional expenses incurred in connection with the Trust
Property (or any portion thereof) or the Borrower's business, (x) travel and
entertainment costs incurred in connection with the Trust Property or the
Borrower's business, (xi) amounts payable under Equipment Leases, (xiii) amounts
payable by the Borrower under the Property Agreements (including Common Charges)
and (xiv) amounts payable by the Borrower to the Interest Rate Cap Agreement
counterparty. "Operating Expenses" shall not include (a) depreciation or
amortization or other noncash items (other than expenses that are or were, as
applicable, due but not yet paid or are described in the parenthetical contained
in clause (c) below), (b) income or franchise taxes payable by the Borrower, (c)
Capital Expenditures (except to the extent includable, under GAAP, in Borrower's
operating expenses for the period of time in question), (d) any amounts that are
payable under the Senior Loan Documents or the Junior Loan Documents and (e) all
amounts covered by the preceding sentence to the extent paid using funds in any
of the Accounts in accordance with the terms, provisions and conditions of the
Senior Loan Documents.
"Operating Income" means, for any period of time, all Rents that are actually
received by, or for the benefit of, Borrower during such period.
"Outstanding Principal Indebtedness" means, at any time of determination, the
aggregate principal amount of the Loan that is then outstanding. "Person" means
any individual, corporation, limited liability company, partnership, joint
venture, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.
"Second Sale and Contribution Agreement" means that certain Second Sale and
Contribution Agreement between Grand Canal Shops Mall, LLC, as seller, and Grand
Canal Shops Mall Subsidiary, LLC, as purchaser, dated as of the date hereof.
