THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the
__ day of April, 2004 by and between each of Grand Canal Shops Mall Subsidiary,
LLC, a Delaware limited liability company ("Mall Subsidiary"), and Grand Canal
Shops Mall MM Subsidiary, Inc., a Nevada corporation, each having an office at
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, as sellers (each, a
"Seller" and collectively, the "Sellers"), and GGP Limited Partnership, a
Delaware limited partnership with an office at 000 Xxxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, as purchaser ("Purchaser").
W I T N E S S E T H:
WHEREAS, Grand Canal Shops II, LLC, a Delaware limited liability
company ("Owner") is the owner in fee simple of The Grand Canal Shoppes, a
retail shopping mall located in Las Vegas, Nevada physically consisting of the
Land, Improvements and Personal Property and also contractually and legally
consisting of the Leases, REA, VCR Showroom Lease, the Gondola Lease, the VCR
Office Lease, the Casino Level Master Lease, the Other Agreements and Intangible
Personal Property (all such physical and contractual items, collectively, the
"Grand Canal Shoppes");
WHEREAS, as of the Closing Date Owner will be the lessee under the
Casino Level Master Lease;
WHEREAS, the Sellers collectively own all of the membership interests
(the "Membership Interests") in Owner, in the percentages set forth on Exhibit A
attached hereto and made a part hereof;
WHEREAS, the Sellers desire to sell the Membership Interests to
Purchaser; and
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WHEREAS, Purchaser desires to purchase the Membership Interests from
the Sellers, subject to and upon all of the terms, covenants and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings in this Agreement, the parties hereto agree as follows:
1. Definitions. Wherever used in this Agreement, the following
terms shall have the meanings set forth in this Article 1 unless the context of
this Agreement clearly requires another interpretation:
"Adjustment Point" - shall have the meaning set forth in Article 6.
"Amended and Restated REA" - shall have the meaning set forth in the
definition of "REA" below.
"ATM Agreement" - shall mean that certain ATM Agreement dated November
20, 2002 between Ultron, Inc. and VCR attached hereto and made a part hereof as
Exhibit Z.
"Bank" - shall have the meaning set forth in Section 3.3
"Basket" - shall have the meaning set forth in Section 8.6.2.
"Buon Giorno Lease" - shall mean that certain Lease by and between
Grand Canal Shops Mall Construction, LLC ("GCSMC"), as landlord, and VCR, as
tenant, dated as of April 1, 1999, the landlord's interest in which was assigned
to Owner pursuant to that certain Sale and Contribution Agreement dated November
14, 1997 by and between VCR and GCSMC, as sellers, and Grand Canal Shops Mall,
LLC, as purchaser, that certain Second Sale And Contribution Agreement dated
December __, 1999 by and between Grand Canal Shops Mall, LLC, as seller, and
Mall Subsidiary, as
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purchaser, and that certain Third Sale and Contribution Agreement dated June 4,
2002 by and between Mall Subsidiary, as seller, and Owner, as purchaser.
"Business Day" - shall mean any day other than a Saturday, a Sunday or
a day on which national banking institutions located in New York City are
authorized or required to close.
"Cap" - shall have the meaning set forth in Section 8.6.2.
"Casino Level Master Lease" - shall mean that certain Casino Level
Restaurant/Retail Master Lease by and between VCR, as landlord, and Owner, as
tenant, covering certain restaurant and retail space described therein.
"Casualty" - shall mean any damage to or destruction of the Property or
any portion thereof caused by fire or other casualty, whether or not insured.
"Closing" - shall mean the closing of the sale of the Membership
Interests by the Sellers to Purchaser provided for in Article 5.
"Closing Date" - shall have the meaning set forth in Section 5.1.
"Deposit" - shall have the meaning set forth in Section 3.1.1.
"Diamond Resort Lease" - shall mean that certain Concession Agreement
by and between Owner and Marriott Ownership Resorts, Inc., dated February 18,
2004.
"Diamond Resort Lease Guaranty" - shall mean that certain Guarantee
Agreement dated as of February 18, 2004 from Marriott International, Inc. to
Owner.
"Environmental Report" - shall mean that certain Phase I Environmental
Site Assessment issued by Converse Consultants as Converse Project No.
00-00000-00, dated January 20, 2004.
"Escrow Agent" - shall have the meaning set forth in Section 3.2.
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"Estoppel Claims" - shall have the meaning set forth in Section 17.3.
"Excluded Liabilities" - shall have the meaning set forth in Section
33.1.
"Exhibits" - shall mean the exhibits attached to this Agreement, each
of which shall be deemed to form part of this Agreement whether or not so stated
in this Agreement.
"GCSMC" - shall have the meaning set forth in the definition of Buon
Giorno Lease.
"Xxxxxxx" - shall have the meaning set forth in Section 15.1.
"Gondola Lease" - shall mean that certain Lease by and between Owner,
as landlord, and VCR, as tenant, dated as of the Closing Date and covering,
among other things, the gondola within the Property.
"Governmental Authorities" - shall mean all agencies, bureaus,
departments and officials of federal, state, county, municipal and local
governments and public authorities having jurisdiction over the Property or any
part thereof.
"Grand Canal Shoppes" shall have the meaning set forth in the first
"Whereas" clause of this Agreement.
"Impositions" - shall mean all real estate and personal property taxes,
general and special assessments, water and sewer charges, road maintenance and
other infrastructure charges, license fees and other fees and charges assessed
or imposed by Governmental Authorities or quasi-Governmental Authorities upon
the Land, Improvements and/or Personal Property.
"Improvements" - shall mean all buildings, facilities, structures and
improvements now located or hereafter erected on the parcel of Land described as
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Parcel 2 on Exhibit B attached hereto and made a part hereof, and all fixtures
constituting a part thereof.
"Income" - shall have the meaning set forth in subsection 3.2.1.
"Indemnified Party" - shall have the meaning set forth in Article 31.
"Intangible Personal Property" - shall mean, with respect to the
Property, all right, title and interest of Owner and the Sellers, if any, in and
to all intangible personal property used in connection with the operation of the
Property and including, without limitation, good will, going concern value,
radius restriction and operating agreements of Tenants, all telephone numbers
listed after the name of the Property, all names (including, without limitation,
the name "The Grand Canal Shoppes"), trade names, designations, logos and
service marks, websites, domain names and the appurtenant good will, used in
connection with operation of the Property (other than the names or variations
thereof of the Managing Agent and Tenants), the right to own, develop, lease and
manage the Property and all similar items of intangible personal property owned
by Owner and utilized solely in connection with the operation of the Property,
but excluding any cash or cash equivalents held by Owner (subject, however, to
the provisions of Article 6).
"Interface" - shall have the meaning set forth in the definition of
REA.
"International News Lease" - shall mean that certain Lease by and
between Grand Canal Shops Mall Subsidiary, LLC, as landlord and VCR, as tenant,
dated July 5, 2001, the landlord's interest in which was assigned to Owner
pursuant to that certain Third Sale And Contribution Agreement dated June 4,
2002 by and between Mall Subsidiary, as seller, and Owner, as purchaser.
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"knowledge" - with respect to the Sellers shall mean, without
independent investigation, the actual knowledge of any of Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxxxxx and Xxxxx Xxxxxxxxxxxx.
"Land" - shall mean, subject to Article 39 hereof, the respective lots,
pieces or parcels of land and/or air space more particularly described in
Exhibit B, together with all appurtenances thereto.
"Leases" - shall mean all leases, licenses, concessions and other forms
of agreement, written or oral, however denominated, wherein Owner (or VCR, with
respect to any such agreements covering any space covered by the Casino Level
Master Lease) (as a party named therein or the successor thereto) grants to any
party or parties, other than the Managing Agent, the right of use or occupancy
of any portion of the Property or the space covered by the Casino Level Master
Lease, and all renewals, modifications, amendments, guaranties, assignments and
other agreements affecting the same, but expressly excluding the REA, the VCR
Showroom Lease, the Gondola Lease, the VCR Office Lease and the Casino Level
Master Lease.
"Leasing Costs" - shall have the meaning set forth in Section 6.2.
"Leasing Cut-Off Date" - shall mean the date hereof.
"Legal Requirements" - shall mean all statutes, laws, ordinances,
rules, regulations, executive orders and requirements of all Governmental
Authorities which are applicable to the Property or any part thereof or the use
or manner of use thereof, or to Owner, Tenants or occupants thereof in
connection with such ownership, occupancy or use.
"Letters of Credit" - shall have the meaning set forth in Section 3.3.
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"Lido" - shall have the meaning set forth in the definition of REA.
"Madame Tussaud Lease" - shall mean that certain Lease dated May 15,
1998, by and between GCSMC, as landlord and Madame Tussaud Las Vegas, Inc., as
tenant, as amended by that certain First Amendment to Lease dated September 22,
1999, by and between GCSMC, as landlord and Madame Tussaud Las Vegas, Inc., as
tenant, as amended by that certain Second Amendment to Lease dated February 1,
2000, by and between Mall Subsidiary, as landlord and Madame Tussaud Las Vegas,
Inc., as tenant, the landlord's interest in which was assigned to Owner pursuant
to that certain Sale and Contribution Agreement dated November 14, 1997 by and
between VCR and GCSMC, as sellers, and Grand Canal Shops Mall, LLC, as
purchaser, that certain Second Sale And Contribution Agreement dated December
__, 1999 by and between Grand Canal Shops Mall, LLC, as seller, and Mall
Subsidiary, as purchaser, and that certain Third Sale And Contribution Agreement
dated June 4, 2002 by and between Mall Subsidiary, as seller, and Owner, as
purchaser.
"Mall Property" - shall mean The Grand Canal Shoppes, excluding all of
Owner's right, title and interest in, to and under the Casino Level Master Lease
and the space covered by the Casino Level Master Lease.
"Mall Subsidiary" - shall have the meaning set forth in the Preamble to
this Agreement.
"Management Agreement" - shall mean the agreement for the management of
the Property dated as of April 23, 1997 between Las Vegas Sands, Inc. and the
Managing Agent (as amended).
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"Managing Agent" - shall mean Forest City Commercial Management, Inc.
"Material Loss" - shall have the meaning set forth in Section 11.1.
"Membership Interests" - shall have the meaning set forth in the third
"Whereas" clause of this Agreement.
"New Lease Notice" - shall have the meaning set forth in Section 13.2.
"Other Agreements" - shall mean all contracts, agreements and documents
pertaining to the Property to which Owner or its predecessor in interest is a
party and by which Owner is bound, other than the REA, the Management Agreement,
the Leases, the VCR Showroom Lease, the Gondola Lease, the VCR Office Lease, the
Casino Level Master Lease and the ATM Agreement and including, without
limitation, all service contracts, construction contracts, leases of personal
property and utility agreements. The Other Agreements are listed in Exhibit C
attached hereto and made a part hereof.
"Owner" - shall have the meaning set forth in the first "Whereas"
clause of this Agreement.
"Permitted Encumbrances" - shall have the meaning set forth in Section
4.1.
"Personal Property" - shall mean all apparatus, machinery, devices,
appurtenances, equipment, furniture, furnishings, promotional and marketing fund
accounts and other items of personal property (other than Intangible Personal
Property) owned by Owner and located at and used in connection with the
ownership, operation or maintenance of the Property, including, without
limitation, (a) computer and peripheral equipment, computer software, and data
contained on hard drives and on diskettes, and
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(b) all records, books of account and papers of Owner relating to the
construction, ownership, management and operations of the Property or Owner,
including without limitation, architect's drawings, blue prints and as-built
plans, maintenance logs, copies of warranties and guaranties, licenses and
permits, instruction books, employee manuals, records and correspondence
relating to insurance claims, financial statements, operating budgets, paper and
electronic media copies of data and other information relating to the Property
available from personal computers, third-party structural, mechanical,
geotechnical or other engineering studies, third-party soil test reports,
third-party environmental reports, third-party underground storage tank reports,
third-party feasibility studies, third-party appraisals, third-party ADA surveys
or reports, third-party OSHA asbestos surveys, third-party marketing studies,
mall documents and compilations, organizational documents, lease summaries and
originals and/or copies of Leases, the REA and the Other Agreements and
correspondence related thereto (but excluding, in all events, all privileged or
confidential information, all proprietary information and all internal
correspondence, memorandum and other communications).
"Preclosing Basket" - shall have the meaning set forth in Section 11.1.
"Property" - shall mean, collectively, the Grand Canal Shoppes; all of
Owner's right, title and interest in, to and under the Casino Level Master
Lease; and, as the context requires, the space covered by the Casino Level
Master Lease.
"Protected Party" - shall have the meaning set forth in Article 31.
"Purchase Price" - shall have the meaning set forth in Section 3.1.
"Purchaser" - shall have the meaning set forth in the Preamble of this
Agreement.
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"REA" - shall mean that certain Amended and Restated Reciprocal
Easement, Use and Operating Agreement dated as of November 14, 1997, among
Interface-Group - Nevada, Inc ("Interface"), Venetian Casino Resort, LLC ("VCR")
and Grand Canal Shops Mall Construction, LLC, as amended by (i) that certain
First Amendment to Amended and Restated Reciprocal Easement, Use and Operating
Agreement dated as of December 20, 1999 among Interface, Grand Canal Shops Mall
Subsidiary, LLC, Lido Casino Resort, LLC ("Lido") and VCR; (ii) that certain
Second Amendment to Amended and Restated Reciprocal Easement, Use and Operating
Agreement dated as of June 4, 2002, among VCR, Lido, Owner and Interface and
(iii) that certain Third Amendment to Amended and Restated Reciprocal Easement,
Use and Operating Agreement dated as of June 28, 2002 among VCR, Lido, Owner and
Interface, and as the same will be amended and restated on the Closing Date
pursuant to that certain Second Amended and Restated Reciprocal Easement, Use
and Operating Agreement among VCR, Lido, Owner and Interface (the "Amended and
Restated REA")
"Remaining Balance" - shall have the meaning set forth in Section
3.1.2.
"Rents" - shall mean all fixed, minimum, additional, percentage,
overage and escalation rents, common area and/or Property maintenance charges,
advertising and promotional charges, insurance charges, rubbish removal charges,
sprinkler charges, shoppers aid charges, water charges, utility charges, HVAC
charges and other amounts payable under the Leases.
"Required Tenants" - shall have the meaning set forth Section 17.2.
"Rules" - shall have the meaning set forth in Section 34.2.
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"Sephora Lease" - shall mean that certain Lease by and between Grand
Canal Shops Mall Construction, LLC, as landlord and DFS Group, L.P., as tenant,
dated November 23, 1998, as amended by that certain First Amendment to Lease by
and between Grand Canal Shops Mall Subsidiary, LLC, as landlord, and Sephora
USA, LLC, as tenant, dated March 30, 2000, as amended by that certain Second
Amendment to Lease by and between Grand Canal Shops Mall Subsidiary, LLC, as
landlord, and Sephora USA, LLC, as tenant, dated April 10, 2000, the landlord's
interest in which was assigned to Owner pursuant to that certain Sale and
Contribution Agreement dated November 14, 1997 by and between VCR and GCSMC, as
sellers, and Grand Canal Shops Mall, LLC, as purchaser, that certain Second Sale
And Contribution Agreement dated December __, 1999 by and between Grand Canal
Shops Mall, LLC, as seller, and Mall Subsidiary, as purchaser, and that certain
Third Sale And Contribution Agreement dated June 4, 2002 by and between Mall
Subsidiary, as seller, and Owner, as purchaser.
"Sellers" - shall have the meaning set forth in the Preamble to this
Agreement.
"Sellers' Copies" - shall mean any executed original counterparts of
the instrument in question in Owner's or the Sellers' possession or, if an
executed original counterpart is not in Owner's, the Sellers' or the Managing
Agent's possession, such conformed or photostatic copies as may be in Owner's,
the Sellers' or the Managing Agent's possession.
"Sellers' Estoppel Letter" - shall have the meaning set forth in
Section 17.2.
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"Seller's Representations" - shall have the meaning set forth in
Section 8.6.1.
"SNDAs" - shall have the meaning set forth in subsection 11.3.
"Taking" - shall mean a taking of all or any portion of the Land and/or
improvements in condemnation or by exercise of the power of eminent domain or by
an agreement in lieu thereof.
"Tao Nightclub Lease" - shall mean that certain Lease by and between
Owner, as landlord and Buddha Entertainment, LLC, as tenant, dated June 3, 2003.
"Tao Restaurant Lease" - shall mean that certain Lease by and between
Owner, as landlord and Asia Las Vegas LLC, as tenant, dated June 3, 2003.
"Tenants" - shall mean the tenants, licensees, concessionaires or other
users or occupants under Leases.
"Title Company" - shall mean Lawyers Title Insurance Corporation.
"VCR" - shall have the meaning set forth in the definition of REA.
"VCR Kiosk Lease" - shall mean that certain Concession Agreement by and
between Grand Canal Shops Mall Subsidiary, LLC, as landlord, and VCR, as tenant,
dated as of March 23, 2000, as amended pursuant to that certain First Amendment
to Concession Agreement by and between Owner, as landlord, and VCR, as tenant,
dated as of February 9, 2004.
"VCR Leases" - shall mean the VCR Showroom Lease, the Gondola Lease,
the VCR Office Lease, the International News Lease, the Buon Giorno Lease, and
the VCR Kiosk Lease
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"VCR Office Lease" - shall mean that certain Lease by and between
Owner, as landlord, and VCR, as tenant, dated as of the Closing Date covering
certain office space described therein.
"VCR Showroom Lease" - shall mean that certain Lease by and between
Owner, as landlord, and VCR, as tenant, dated as of the Closing Date and
covering, among other things, certain theater space in the Property.
"VCR's Representations" shall have the meaning set forth in subsection
8.6.2 hereof.
"Violations" - shall mean, with respect to the Property, violations of
Legal Requirements existing with respect to the Property.
2. Agreement to Sell and Purchase. Upon and subject to the terms
and conditions of this Agreement, the Sellers agree to sell and assign the
Membership Interests to Purchaser and Purchaser agrees to purchase the
Membership Interests from the Sellers, to assume the obligations in respect
thereof accruing from and after the Closing Date and to pay to the Sellers the
Purchase Price. Wherever in this Agreement any monies, including with respect to
the Purchase Price, are to be paid to the Sellers, the Sellers shall jointly
instruct Purchaser as to what portion is to be paid to each Seller; absent any
such instruction, each Seller shall be paid its pro rata share of the applicable
monies in accordance with the percentages set forth on Exhibit A.
3. Purchase Price.
3.1 Purchase Price. The purchase price for the Membership
Interests shall be (a) SEVEN HUNDRED SIXTY SIX MILLION AND NO/100 DOLLARS
($766,000,000.00) (the "Purchase Price"). The Purchase Price for the
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Property shall be increased or decreased, for Purchaser's accounting purposes
only, by any subsequent adjustments as determined under Section 6.1.5. The
Purchase Price shall be payable by Purchaser as follows:
3.1.1 Five percent (5%) of the Purchase Price (the
"Deposit") shall be paid by Purchaser to Escrow Agent simultaneously herewith,
either by wire transfer of immediately available federal funds to an account
designated by Escrow Agent, or in the form of one or more Letters of Credit in
accordance with Section 3.3. Except as expressly provided in this Agreement, the
Deposit shall be non-refundable.
3.1.2 The balance of the Purchase Price, plus or
minus adjustments and credits provided for in Article 6 and any other applicable
provisions of this Agreement (the "Remaining Balance") shall be paid in cash at
the Closing, by wire transfer of immediately available federal funds to an
account or accounts designated by the Sellers.
3.2 Escrow Provisions.
3.2.1 The Title Company (referred to in this
Section and sometimes in other sections hereof as "Escrow Agent") shall hold the
Deposit in escrow in an interest-bearing bank account until the Closing or such
other time as is specified herein, and shall pay over or apply the Deposit in
accordance with the terms of this Section 3.2. The party that receives all
interest and other income earned on the Deposit (the "Income") pursuant to the
provisions of this Agreement shall be responsible for paying any income taxes
thereon. The tax identification numbers of the parties hereto shall be furnished
to Escrow Agent upon request.
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3.2.2 If the Closing occurs, the Deposit shall be
paid to the Sellers and credited against the Purchase Price and the Income shall
be paid to or at the direction of Purchaser. If this Agreement is terminated
pursuant to Section 16.1, the Deposit and the Income shall be paid to the
Sellers as liquidated and agreed upon damages for Purchaser's default. If the
Closing does not occur for any reason other than termination of this Agreement
pursuant to Section 16.1, then, subject to the provisions of Section 16.2, the
Deposit and the Income shall be paid to Purchaser.
3.2.3 Escrow Agent shall not be required to make
any disposition of the Deposit or the Income unless (i) Escrow Agent is directed
to do so in writing by the Sellers and Purchaser or (ii) Escrow Agent is
directed to do so in writing by the party which claims to be entitled to receive
the Deposit and the Income and the other party does not object to such
disposition within ten (10) days after written notice of such direction is given
by Escrow Agent to the other party or (iii) Escrow Agent is directed to do so by
a final order or judgment of a court as hereinafter provided. The notice given
by Escrow Agent pursuant to clause (ii) above shall state in capital letters
that failure of the addressee to object to the disposition of the Deposit and
the Income described in such notice within ten (10) days after the giving
thereof shall constitute a waiver of the addressee's right to contest or object
to such disposition. In the event that any dispute shall arise with respect to
the entitlement of either party to the Deposit or the Income, Escrow Agent shall
continue to hold the Deposit and the Income until otherwise directed by written
instruction from the Sellers and Purchaser or a final order or judgment of a
court of competent jurisdiction entered in an action or proceeding to which
Escrow Agent is a party. In addition, in the event of any such dispute, Escrow
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Agent shall have the right at any time to commence an action in interpleader and
to deposit the Deposit and/or the Income with the clerk of a court of
appropriate jurisdiction in the State of New York. Upon the commencement of such
action and the making of such deposit, Escrow Agent shall be released and
discharged from and of all further obligations and responsibilities hereunder.
For the purposes of this subsection 3.2.3, no dispute shall be deemed to exist
as to entitlement of either party to the Deposit and the Income if the party
receiving notice from Escrow Agent pursuant to clause (ii) of this subsection
3.2.3 objects to the disposition of the Deposit and the Income provided for in
such notice more than ten (10) days after the giving of such notice by Escrow
Agent.
3.2.4 The parties hereto acknowledge that Escrow
Agent is acting solely as a stakeholder at their request and for their
convenience, that with respect to the Deposit and the Income Escrow Agent shall
not be deemed to be the agent of any of the parties hereto and that Escrow Agent
shall not be liable to either of the parties hereto for any act or omission on
its part unless taken or suffered in bad faith, in willful disregard of this
Agreement or involving gross negligence on the part of Escrow Agent. Escrow
Agent may act upon any instrument or other writing and upon signatures believed
by it to be genuine, without any duty of independent verification. Escrow Agent
shall not be bound by any modification of this Agreement unless the same is in
writing and signed by the parties hereto and a counterpart thereof is delivered
to Escrow Agent and, if Escrow Agent's duties, rights or liabilities hereunder
are affected, unless Escrow Agent shall have given its prior consent thereto in
writing. Escrow Agent shall not be required or obligated to determine any
questions of law or fact. The parties
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hereto shall jointly and severally indemnify and hold harmless Escrow Agent from
and against all costs, claims and expenses, including reasonable attorneys' fees
and litigation costs, incurred by Escrow Agent in connection with the
performance of its duties under this Section 3.2 (including, without limitation,
in an interpleader action or other litigation regarding the disposition of the
Deposit and the Income), except with respect to acts or omissions taken or
suffered by Escrow Agent in breach of this Agreement or involving bad faith,
gross negligence or willful misconduct on the part of Escrow Agent.
3.2.5 Escrow Agent shall have no liability for the
selection of any particular account or investment made by the parties hereto,
for fluctuations in the value of said account or investment, for the amount of
interest or other income earned on said account or investment or for any loss
incurred in connection therewith.
3.2.6 Escrow Agent has acknowledged its agreement
to the provisions of this Section 3.2 by signing this Agreement, and Escrow
Agent has executed this Agreement solely for such purpose.
3.2.7 References in succeeding provisions of this
Agreement to the Deposit shall be deemed to be references both to the Deposit
and the Income.
3.3 Letters of Credit. At Purchaser's option, the Deposit
may be paid by Purchaser simultaneously herewith by Purchaser's delivering to
Mall Subsidiary one or more clean, irrevocable stand-by letters of credit (the
"Letters of Credit") in an aggregate amount equal to the Deposit in favor of
Mall Subsidiary, the form of each of which shall comply with the next sentence
and shall otherwise be
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reasonably acceptable to the Sellers and each of which shall be issued by a bank
(the "Bank") with a Issuer Financial Strength Rating from S&P of A or better
(without a negative credit watch if such rating is A) or a Senior Unsecured Debt
Rating or Issuer Rating from Xxxxx'x of A-2 or better (without a negative credit
watch if such rating is A-2). Each of the Letters of Credit shall initially have
an expiration date not earlier than sixty (60) days after the initial Closing
Date provided for in the first sentence of Section 5.1 hereof, and each shall
provide that it can be drawn on by the Mall Subsidiary upon delivery by Mall
Subsidiary to the Bank of a written notice stating that Mall Subsidiary is
entitled to draw upon such Letter of Credit pursuant to the terms of this
Agreement. If one or more Letters of Credit are delivered by Purchaser: (i) if
the Closing occurs, the Letters of Credit shall be returned by Mall Subsidiary
to Purchaser at the Closing and the Remaining Balance shall in such case be
increased by the amount of the Letters of Credit; (ii) if the Closing does not
occur under circumstances in which Purchaser is entitled to a return of the
Deposit, the Letters of Credit shall be promptly returned by Mall Subsidiary to
Purchaser; and (iii) if (A) the Sellers shall at any time be entitled to receive
the proceeds of the Deposit or (B) Mall Subsidiary shall be holding any Letters
of Credit thirty (30) days prior to the expiration date thereof and Purchaser
shall not theretofore have delivered to Mall Subsidiary an endorsement to such
Letters of Credit signed by the issuer thereof extending such expiration date
for a minimum of sixty (60) days or replacement Letters of Credit meeting the
requirements of the first and second sentences of this Section 3.3 and bearing
an expiration date at least sixty (60) days following the expiration date of the
original Letters of Credit, then in either such case Mall Subsidiary shall be
entitled to draw the full amount of such Letters of Credit
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and either retain such amount (in the case of clause (A)) or pay such amount to
Escrow Agent (in the case of clause (B), in which event the provisions of
Section 3.2 shall apply with respect to such amount).
4. Permitted Encumbrances.
4.1 Definitions. It shall be a condition precedent to
Purchaser's obligations hereunder that at the Closing title to the Property
shall be subject only to the following matters ("Permitted Encumbrances"):
4.1.1 the matters set forth in Exhibit D;
4.1.2 liens for Impositions which are not due and
payable as of the Closing Date or which are apportioned in accordance with
Article 6;
4.1.3 liens for Impositions which are paid
directly by Tenants in occupancy on the Closing Date to the entity imposing
same;
4.1.4 the state of facts shown on the survey
described in Exhibit E attached hereto and made a part hereof, and any state of
facts a physical inspection of the Property would show;
4.1.5 zoning, subdivision, environmental, building
and all other Legal Requirements presently existing, or enacted prior to the
Closing, applicable to the ownership, use or development of or the right to
maintain or operate the Property, or have space therein used and occupied by
Tenants;
4.1.6 all Leases in effect on the date of this
Agreement, any extensions or renewals of such Leases pursuant to options
contained therein which do not require the consent of Owner thereunder and any
extensions, renewals or amendments of such Leases or additional or substituted
Leases made
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between the date hereof and the Closing Date in accordance with the provisions
of Article 13;
4.1.7 the VCR Showroom Lease;
4.1.8 the Gondola Lease;
4.1.9 the VCR Office Lease;
4.1.10 mechanics liens, lis pendens and notices of
commencement arising from work or other obligations, the payment for which is
the responsibility of any Tenant in occupancy on the Closing Date under a Lease
then in effect and not Owner (provided that any security posted by such Tenant
with respect to the foregoing remains for the benefit of Owner following Closing
(unless such security expires by its terms prior to Closing));
4.1.11 the REA;
4.1.12 the Other Agreements;
4.1.13 all exceptions to title which, taken
together, would not interfere in any respect (other than to a de minimus extent)
with the current use and operation of the Property; and
4.1.14 all other matters affecting title to the
Property which are hereafter accepted or required to be accepted or are waived
by Purchaser as provided in Article 14.
5. The Closing.
5.1 Closing Date. The closing of the transactions
provided for in this Agreement (the "Closing") shall be held on May 17, 2004
(the "Closing Date") at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
LLP, 1285 Avenue of the
00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000. Time shall be of the essence with
respect to Purchaser's obligation to consummate the Closing on the Closing Date.
The Sellers shall have the right to adjourn the Closing Date one or more times
for a combined aggregate of not more than ninety (90) days to cure exceptions to
title, obtain estoppel certificates or satisfy other closing conditions. Any
such adjournment may be effected by written notice to Purchaser given on or
prior to the then scheduled Closing Date, in which case (a) the adjourned
Closing Date shall be set forth in such notice and shall be a Business Day not
less than five (5) Business Days after the giving of such notice and (b) time
shall be of the essence with respect to Purchaser's obligation to consummate the
Closing no later than three (3) Business Days after the adjourned Closing Date.
5.2 Actions at Closing. At the Closing, the parties shall
deliver and accept the documents and instruments and take all other action
required of them pursuant to this Agreement.
6. Apportionments. At the Closing (except where a later date is
specifically provided for in this Article), the items set forth below shall be
adjusted as of 11:59 P.M. on the day preceding the Closing Date (the "Adjustment
Point") and the net amount thereof shall be paid by Purchaser to the Sellers or
credited by the Sellers to Purchaser, as the case may be, at the Closing. For
the purpose of this Article 6, the term "Owner" shall, with respect to all
matters relating to Leases covering space covered by the Casino Level Master
Lease, refer to Owner and VCR (as landlord under such Leases until the Casino
Level Master Lease is executed and delivered).
6.1 Rents. Rents as and when collected. Any Rents
collected by or on behalf of Owner (which, for purposes of this Section 6.1,
shall include Rents
21
collected by any successor to Owner and by any property manager or other agent
acting for Owner or any such successor) subsequent to the Closing (whether due
and payable prior to or subsequent to the Adjustment Point) shall be adjusted as
of the Adjustment Point, and any portion thereof properly allocable to periods
prior to the Adjustment Point, net of costs of collection properly allocable
thereto, if any, shall be paid by Purchaser or Owner to the Sellers within
fifteen (15) days after the end of the calendar month in which received by or on
behalf of Owner, but subject to the further provisions of this Section 6.1 in
the case of Rents due prior to the Adjustment Point. If prior to the Closing
Owner shall have collected any Rents (which, for the purposes of this Section
6.1, shall include Rents collected by any agent acting for Owner) which are
properly allocable in whole or in part to periods subsequent to the Adjustment
Point, the portion thereof so allocable to periods subsequent to the Adjustment
Point, net of costs of collection properly allocable thereto, if any, shall be
credited to Purchaser by the Sellers at the Closing. As used in this Section 6.1
the term "costs of collection" shall mean and include reasonable attorneys' fees
and other costs incurred in collecting any Rents, but shall not include the
regular fees payable to any property manager of the Property, the payroll costs
of any of the Sellers', Owner's or Purchaser's employees or any other internal
costs or overhead of the Sellers, Owner or Purchaser.
6.1.1 The Sellers shall deliver to Purchaser at
Closing a list of all Tenants that are delinquent in payment of Rents as of the
Adjustment Point (without giving effect to any unexpired grace periods), which
list shall set forth the amount of each such delinquency, the period to which
each such delinquency relates and the nature of the amount due, itemizing
separately fixed monthly rent, tax
22
reimbursements, common area maintenance charges, electric charges, charges for
tenant services, charges for overtime services, percentage rent and other
charges, if any. The first amounts collected by or on behalf of Owner from each
delinquent Tenant, net of costs of collection, if any, shall (a) first be deemed
to be in payment of Rents (or the specific components of Rents) for the month in
which the Closing occurs, (b) next, up to $50,000 in the aggregate for all
Tenants shall be deemed to be in payment of Rents (or the specific component of
rents) which are delinquent (without giving effect to any unexpired grace
periods) as of the last day of the month immediately preceding the month in
which the Closing occurs, as set forth on such list, (c) next be deemed to be in
payment of Rents (or the specific components of Rents) then due on account of
any month after the month in which the Closing occurs and (d) then, to the
extent not already applied pursuant to clause (b) of this sentence, be deemed to
be in payment of Rents (or the specific components of Rents) which are
delinquent (without giving effect to any unexpired grace periods) as of the last
day of the month immediately preceding the month in which the Closing occurs,
all as set forth on such list. Any amounts collected by or on behalf of Owner
from each Tenant which, in accordance with the preceding sentence, are allocable
to the month in which the Closing occurs (as adjusted as of the Adjustment
Point) or any prior month, net of costs of collection properly allocable
thereto, if any, shall be paid promptly by Purchaser to the Sellers.
6.1.2 Purchaser shall cause Owner and any
successors to Owner to exert reasonable efforts for a period of two (2) years
after the Closing to xxxx and collect any delinquencies set forth on the list
delivered by the Sellers pursuant to subsection 6.1.1 and the amount thereof,
as, when and to the extent collected by or on
23
behalf of Owner shall, if due to the Sellers pursuant to the provisions of
subsection 6.1.1, be paid by Owner to the Sellers net of costs of collection, if
any, properly allocable thereto, promptly after the collection thereof by Owner.
In no event shall Purchaser or Owner be obligated to institute any actions or
proceedings or to seek the eviction of any Tenant in order to collect any such
delinquencies.
6.1.3 Following the Closing, Purchaser shall
submit or cause to be submitted to the Sellers, within 30 days after the end of
each calendar quarter up to and including the calendar quarter ending on March
31, 2006 but only so long as any delinquencies that existed as of the Adjustment
Point remain outstanding, a statement which sets forth all collections made by
or on behalf of Owner from the Tenants which owe such delinquencies through the
end of such calendar quarter. The Sellers or their designee shall have the right
from time to time following the Closing until 90 days after receipt by the
Sellers of the last quarterly statement required hereunder, at the Sellers'
expense during business hours and on reasonable prior notice to Purchaser, to
examine and audit so much of the books and records of Purchaser or Owner (or any
successor of Owner) as relate to such delinquencies in order to verify the
collections reported by Purchaser or Owner (or any successor of Owner) in such
quarterly statements.
6.1.4 Nothing contained in this Section 6.1 shall
be deemed to prohibit the Sellers, at their own expense, from instituting any
actions or proceedings in their own name against any Tenant after the Closing in
order to collect the amount of any delinquencies due in whole or in part to the
Owner from such Tenant that are allocable to periods prior to the Adjustment
Point; provided, however, that in no
24
event shall the Sellers be entitled in any such action or proceeding to seek to
evict any Tenant, to recover possession of its space or to terminate its Lease.
If requested by the Sellers, Purchaser shall or shall cause Owner to join in any
such action or proceeding, or permit the same to be bought in Purchaser's or
Owner's name or in the names of the Sellers, Purchaser and Owner, all at the
Sellers' sole cost and expense. Purchaser shall not, and shall not cause Owner
to, waive or settle any delinquency owed in whole or in part to the Sellers
without the prior written consent of the Sellers in each instance.
6.1.5 With respect to that portion of the Rents
which constitute percentage or overage rents, or other amounts payable by
Tenants based upon sales, receipts or income of such entities, the following
shall apply: (i) at the Closing and/or, in the case of percentage or overage
rents which are in arrears or are payable in other than monthly installments,
subsequent to the Closing, percentage or overage rents shall be apportioned as
provided in the other subsections of this Section 6.1 in the case of Rents
generally (the parties agreeing to apportion such rents to a period of time
prior to the Adjustment Point or a period of time subsequent to the Adjustment
Point (or both) as directed by the applicable Tenants or as otherwise made clear
by the circumstances surrounding the payment of such rents); and (ii) following
the end of the fiscal year on account of which such percentage or overage rents
are payable by each Tenant and receipt by Owner of any final payment on account
thereof due from such Tenant, Purchaser shall (1) pay or cause to be paid to the
Sellers net of costs of collection, if any, the amount, if any, by which (a) the
amount of percentage or overage rents paid by such Tenant on account of such
entire fiscal year multiplied by a fraction, the numerator of which is the
number of months (including any fraction of a month expressed as a
25
fraction) of such fiscal year which occurred prior to the Adjustment Point and
the denominator of which is 12 or such lesser number of months (including any
fraction of a month expressed as a fraction) as may have elapsed in such fiscal
year prior to the expiration of the Lease in question, exceeds (b) all amounts
received by Owner prior to the Adjustment Point on account of the percentage or
overage rents in question for such fiscal year (excluding any such amounts
credited to Purchaser pursuant to the provisions of this Article 6) and (2)
retain all portions of any such final payment not payable to the Sellers
pursuant to clause (1) of this sentence. If the amount described in clause 1(b)
of the preceding sentence exceeds the amount described in clause 1(a) of the
preceding sentence, the Sellers shall pay such excess to Purchaser. Upon request
of Purchaser, the Sellers shall advise Purchaser of the amount of percentage or
overage rents collected by Owner from each Tenant prior to the Closing Date. If
after the Closing, Purchaser or Owner collects any payments of percentage or
overage rents that are paid in respect of a fiscal year which ended prior to the
Closing, all such payments, net of costs of collection, if any, shall be
promptly paid to the Sellers. If on the Closing Date, Owner shall be conducting
any audits of payments of percentage or overage rents previously made by Tenants
for fiscal years prior to the ones in effect on the Closing Date, the Sellers
may, in their sole discretion and at their sole cost and expense, continue all
or any such audits, or obligate Purchaser to cause Owner (or any successor of
Owner) to either assign its right to continue all or any such audits to the
Sellers or continue all or any such audits "in-house" until completion thereof
at the Sellers' direction, and the Sellers shall collect and retain any amounts
payable by reason thereof. In addition, the Sellers shall have the right to
initiate, and then conduct (or, at the Sellers' option,
26
obligate Purchaser to cause Owner (or any successor of Owner) to conduct at the
Sellers' direction and sole cost and expense), such (in-house) audits subsequent
to the Closing in respect of any fiscal years prior to the one in effect on the
Closing Date, and either the Sellers or Purchaser shall have the right to
initiate and then conduct (or, at the Sellers' option, obligate Purchaser to
cause Owner (or any successor of Owner) to initiate and then conduct), such
audits subsequent to the Closing in respect of the fiscal year in which the
Closing Date occurs (in which case both the Sellers and Purchaser shall jointly
instruct Owner (or its successor) as to how to conduct such audit and shall
cooperate with each other with respect thereto). Any payments to the Sellers
pursuant to this subsection 6.1.5 shall be considered an adjustment to the
Purchase Price for Purchaser's accounting purposes.
6.1.6 (A) With respect to that portion of Rents
which are payable on an annual, semi-annual or other non-monthly basis or on a
monthly, but estimated, basis (e.g., common area costs and insurance costs) (any
such portion, "Special Rent"), Purchaser shall cause Owner to use reasonable
efforts to xxxx and collect or cause to be billed and collected all such
payments which become due after the Closing (but, subject to the provisions of
subsection 6.1.4 above, shall have no obligation to initiate or prosecute any
litigation with respect to, or evict any Tenant for non-payment of, Special
Rent), which payments, to the extent allocable to periods prior to the
Adjustment Point in accordance with the allocation method described in
subsection 6.1.6(B) below, shall be paid by Owner to the Sellers promptly after
receipt thereof, net of costs of collection, if any, properly allocable thereto.
With respect to the Special Rents which are billed on an estimated basis during
the fiscal or other period for
27
which paid, at the end of such fiscal or other period Purchaser shall determine
whether the items in question have been overbilled or underbilled in accordance
with provisions of the applicable Leases and the method of billing previously
followed by Owner; provided, however, that unless and until, with respect to any
Lease at the Mall Property, the Sellers and the applicable Tenant agree
otherwise or there is a binding non-appealable judgment that requires otherwise,
all such determinations by Purchaser shall (with respect to periods prior to and
after the Adjustment Point) be consistent with the amounts payable by Owner (and
any successor of Owner) pursuant to Schedule II of the Amended and Restated REA.
If Purchaser determines that there has been an overbilling and an overbilled
amount has been received, Purchaser shall cause Owner to reimburse such amount
to the Tenants which paid the excess amount and the Sellers shall pay to Owner
the portion of such reimbursement which is properly allocable (pursuant to
subsection 6.1.6(B) below) to the period prior to the Adjustment Point. If
Purchaser determines that there has been an underbilling, the additional amount
shall be billed or caused to be billed by Owner to the Tenants, as applicable,
and any amount received by Owner, net of costs of collection, if any, to the
extent properly allocable (pursuant to subsection 6.1.6(B) below) to periods
prior to the Adjustment Point shall promptly be paid by Owner to the Sellers.
Purchaser's determination of any amounts underbilled or overbilled shall in each
case be subject to (a) the proviso clause of the second sentence of this
subsection 6.1.6(A) and (b) the approval of the Sellers, which approval shall
not be unreasonably withheld. In connection with any annual true-up of estimated
common area maintenance or other charges paid during the course of any fiscal
year, the Sellers shall have the right to furnish to Purchaser schedules and
other information to be utilized
28
in calculating amounts due in connection with such true-up for the portion of
the fiscal year elapsed prior to the Closing Date (and/or, if applicable, the
prior fiscal year), and Purchaser agrees to calculate amounts due (x) in
accordance with the proviso clause of the second sentence of this subsection
6.1.6(A) and (y) on the basis of the schedules and information furnished by the
Sellers.
(B) Special Rent shall be allocated as
follows:
First, calculate the total applicable Special Rent payments received,
divided by the aggregate applicable expenses paid by Owner during the applicable
period (such quotient, the "Recovery Ratio"). Second, calculate the aggregate
applicable expenses paid by Owner prior to the Adjustment Point, multiplied by
the Recovery Ratio (such product, the "Deemed Recovery Amount"). If the
applicable Special Rent payments received prior to the Adjustment Point exceed
the Deemed Recovery Amount, the Sellers shall promptly pay such excess to
Purchaser; if such Special Rent payments are less than the Deemed Recovery
Amount, Purchaser shall promptly pay such deficiency to the Sellers. All
calculations of expenses paid by Owner pursuant to this subsection 6.1.6(B)
shall (with respect to periods prior to and after the Adjustment Point) be
consistent with the proviso clause of the second sentence of subsection 6.1.6(A)
above.
6.1.7 Notwithstanding anything to the contrary set
forth in this Section 6.1, (i) subject to the last sentence of subsection 6.4.1,
all amounts paid by Tenants on account of Impositions shall (net of costs of
collection, if any, properly allocable thereto) be apportioned between the
Sellers and Purchaser in the same manner as the Impositions to which they relate
are apportioned pursuant to subsection 6.4.1, and (ii) subject to the last
sentence of subsections 6.4.2 and 6.4.3 and
29
the provisions of subsection 6.1.6, all amounts paid by Tenants on account of
utilities shall (net of costs of collection, if any, properly allocable thereto)
be apportioned between the Sellers and Purchaser in the same manner as the
utilities to which they relate.
6.1.8 Any advance rental deposits or payments held
by Owner on the Closing Date and applicable to periods of time subsequent to the
Adjustment Point, and any security deposits held by Owner on the Closing Date,
together with interest thereon, if any, which, under the terms of the applicable
Leases and/or applicable law, is payable to the Tenants thereunder, shall be
retained by Owner at the Closing.
6.2 Leasing Costs. The Sellers shall pay (or cause Owner
to pay prior to the Adjustment Point) and (to the extent not paid prior to the
Adjustment Point) indemnify Purchaser and Owner in respect of all leasing
commissions, costs of tenant alterations and improvements performed or to be
performed for Tenants at the expense of the landlord thereof (or allowances
payable by the landlord in lieu thereof), moving and other allowances, if any,
and fees and disbursements of architects, engineers and attorneys (collectively
"Leasing Costs") in respect of (i) all Leases executed by or on behalf of all
parties thereto on or before the Leasing Cut-Off Date, (ii) any renewal of any
Lease which resulted from the exercise by a Tenant of an option, or from an
agreement executed by or on behalf of all parties thereto, on or before the
Leasing Cut-Off Date and (iii) any increase of the space demised by any Lease
resulting from the exercise of an option by a Tenant, or from an agreement
executed by all of the parties thereto, on or before the Leasing Cut-Off Date.
Purchaser shall cause Owner (and any successors of
30
Owner) to pay, and shall indemnify the Sellers in respect of, all Leasing Costs
not covered by the preceding sentence. If any Leasing Costs not covered by the
first sentence of this Section 6.2 shall be paid by the Sellers and/or Owner
prior to the Closing, Purchaser shall reimburse the Sellers for the documented
amount thereof at the Closing.
6.3 Ancillary Income. Ancillary income received by Owner
(and any successors to Owner) in connection with the furnishing of utilities
from the Property to third parties, the leasing of kiosks, antennae, baby
strollers and other items and the like shall be adjusted as of the Adjustment
Point between the Sellers and Purchaser.
6.4 Additional Items. At the Closing, the following
additional items shall be apportioned between the Sellers and Purchaser as of
the Adjustment Point, with the Sellers to be obligated for or entitled to
amounts apportioned to the period through the Adjustment Point and Purchaser to
be obligated for or entitled to amounts apportioned to the period following the
Adjustment Point:
6.4.1 Impositions payable by Owner in respect of
the Property shall be adjusted on the basis of the fiscal year for which the
same are imposed, whether or not yet due and payable as of the Closing Date. If
an Imposition is not due and payable until after the Closing Date and the
assessed valuation or the tax rate or any other factor upon which the amount of
the Imposition will be based has not been fixed at the Closing Date, then the
parties shall at the Closing apportion such Imposition based on the most
recently available assessed valuation and tax rate, and shall make a final
adjustment of such item within thirty (30) days following the date on which the
actual
31
assessed valuation and tax rate or any other factor applicable to such
Imposition becomes known and, if necessary, upon receipt of actual bills. In the
case of special assessments payable in installments, the installment for the
fiscal year in which the Adjustment Point occurs shall be apportioned by the
Sellers and Purchaser as provided above and Purchaser or Owner shall be
responsible for paying all subsequent installments thereof. If any Tenant in
occupancy at the Closing Date is obligated to pay any Impositions directly to
the applicable taxing authority, such Impositions shall not be apportioned.
6.4.2 Water and sewer charges, if any, payable by
Owner on the basis of the period or periods for which the same are payable. If
there are water meters at the Property, the Sellers shall furnish readings to a
date not more than thirty (30) days prior to the Closing Date, and the unfixed
meter charges and the unfixed sewer charges, if any, based thereon for the
intervening time shall be apportioned on the basis of such last readings. Any
water and sewer charges payable by Tenants in occupancy on the Closing Date
directly to the entity or entities furnishing such services shall not be
apportioned.
6.4.3 Utilities and fuel payable by Owner,
including without limitation electricity and gas. The Sellers shall endeavor to
have the meters for such utilities read the day on which the Adjustment Point
occurs and will pay the bills rendered to it on the basis of such readings. If
the Sellers do not obtain such a meter reading with respect to any such utility,
the adjustment therefor shall be made on the basis of the most recently issued
bills therefor which are based on meter readings not earlier than thirty (30)
days prior to the Adjustment Point. The Sellers will receive a
32
credit in an amount equal to any cash security deposits held by any utility
companies (with interest thereon, if any, in the amount equal to the amount
accrued on such security deposits), and at and after the Closing Owner shall
retain all right, title and interest in and to such security deposits. Purchaser
will make its own arrangements for any surety bonds required by any utility
companies within ten (10) Business Days following the Closing Date, and any
bonds previously furnished may, at the Purchaser's option, be cancelled on or
after the Closing. If fuel oil, propane or other fuel is used at the Property,
the Sellers shall deliver to Purchaser at the Closing statements of the
suppliers of such fuel dated within three days of the Adjustment Point setting
forth the quantity of fuel on hand and the cost paid by Owner therefor, and
Purchaser shall pay to the Sellers at the Closing the cost of such fuel
(including taxes thereon, if any) as shown on such statements. Charges for any
utilities payable by Tenants in occupancy on the Closing Date directly to the
utility companies furnishing the same shall not be apportioned.
6.4.4 Charges payable by Owner under the Other
Agreements.
6.4.5 Contributions payable by Owner to merchants'
and other associations, and to promotional and marketing funds and activities at
the Property, it being understood that the Sellers shall be reimbursed at the
Closing for marketing or promotional expenditures paid for prior to the Closing
to the extent that the advertisements or other items covered by such
expenditures will appear or take place on or after the Closing Date and the
Purchaser shall receive a credit to the Purchase Price in the amount equal to
marketing or promotional expenditures not paid for prior to the
33
Closing to the extent that the advertisements or other items covered by such
expenditures have appeared or taken place prior to the Closing Date.
6.4.6 If on the Closing Date, there are pending
any tax certiorari proceedings and/or protests of real estate tax assessments
relating to the Property in respect of the real estate taxes payable for the
then-current tax fiscal year, then (i) the Sellers shall have the right to
direct the prosecution by Owner or its successor (and Purchaser shall cause
Owner or such successor to follow such directions) of such proceedings or
protests and collect any refunds payable in respect thereof if on the Closing
Date more than half of such fiscal year shall have elapsed, and (ii) Owner (and
Purchaser, as the owner of all of the Membership Interests) shall have the right
to retain control of the prosecution of such proceedings or protests and collect
any refunds payable in respect thereof if on the Closing Date half of such
fiscal year or less shall have elapsed; provided, however, that no settlement of
any such proceedings or protests shall be made without the prior written
approval of the other party hereto, such approval not to be unreasonably
withheld or delayed. The Sellers or their designee shall have the right to take
over the prosecution of any such proceedings or protests in the name of Owner
with respect to any prior periods without the participation or approval of
Purchaser (and Purchaser shall cause Owner to execute all documents reasonably
requested by the Sellers in connection therewith, at the Sellers' expense), and
Purchaser shall have the right to direct the prosecution and settlement by Owner
of any such proceedings or protests for any tax fiscal year which commences on
or after the Closing Date without the participation or approval of the Sellers,
provided that no such settlement by or at the direction of the Sellers or
Purchaser pursuant to this sentence
34
shall, without the written consent of the other, include any agreement or
settlement with respect to real estate tax assessments relating to a tax fiscal
year as to which the other party has, pursuant to this sentence, the right to
direct the prosecution and settlement of proceedings and protests. With respect
to any refund to which the Sellers are entitled pursuant to this subsection
6.4.6, the Sellers are hereby authorized to negotiate any check made payable to
Owner in respect of such refund. Within thirty (30) days after receipt by the
Sellers of a refund for the fiscal year in which the Closing occurs or any prior
period, the Sellers shall submit to Purchaser a schedule showing the amount of
such refund, net of the costs and expenses of obtaining the same, which is
payable to each Tenant then in possession at the Property (or to Owner, to the
extent the same had been paid by Owner), and shall remit to Owner the aggregate
of all amounts so payable. If any such refund shall be received by Owner,
Purchaser shall cause Owner to notify the Sellers of such refund and upon the
Sellers' delivery to Purchaser (which delivery shall occur no later than thirty
(30) days after notice to the Sellers of such refund) of a schedule of the
amount of such refund, net of the costs and expenses of obtaining the same,
which is payable to each Tenant then in possession at the Property, Purchaser
shall cause Owner to immediately remit such refund to the applicable Tenants.
From time to time after the Closing, Purchaser shall cause Owner, upon request,
to advise the Sellers of the names of any Tenants which are in occupancy at the
Closing but cease to be in occupancy thereafter. Purchaser shall cause Owner to
promptly pay any amounts so received from the Sellers to the Tenants in
possession pursuant to and in accordance with the schedule submitted to it by
the Sellers and Purchaser shall indemnify and hold the Sellers harmless from and
against all claims, demands, liabilities and expenses
35
(including, without limitation, reasonable attorneys' fees and disbursements)
asserted against, imposed on or incurred by the Sellers by reason of the failure
by Owner to make any such payment to a Tenant in possession. The Sellers shall
indemnify and hold Purchaser and Owner harmless from and against all claims,
demands, liabilities and expenses (including, without limitation, reasonable
attorneys' fees) asserted against, imposed on or incurred by Purchaser or Owner
by reason of (i) any claim by a Tenant no longer in possession at the Property
that it is entitled to a portion of any such refund, but only with respect to
the period prior to the Adjustment Point and (ii) any claim by a Tenant in
possession at the Property that it is entitled to more than the amount paid to
it by Purchaser in accordance with the schedule furnished by the Sellers to
Purchaser, but only with respect to the period prior to the Adjustment Point.
The amount of any refund obtained by the Sellers or Purchaser (or Owner) in
respect of the fiscal year in which the Closing occurs as a result of any such
proceeding or protest, or the settlement thereof, net of costs and expenses
payable by the Sellers or Purchaser (or Owner) in connection therewith and the
amount of such refund payable to Tenants, shall be apportioned between Purchaser
and the Sellers in the manner that real estate taxes for such year were
apportioned pursuant to subsection 6.4.1, and the portion of such amount
properly allocable to the period prior to the Adjustment Point shall be paid by
Purchaser (or Owner) to the Sellers or the amount properly allocable to the
period subsequent to the Adjustment Point shall be paid by the Sellers to
Purchaser or Owner, as the case may be.
6.4.7 "Gross receipts" taxes payable by Owner with
respect to Rents received shall be adjusted consistent with how the underlying
Rents are adjusted in accordance with this Article 6.
36
6.4.8 Subject to Article 33, any other items of
income or expense relating to the Property, and all liabilities of Owner, which,
in accordance with generally accepted business practices, should be apportioned
between the Sellers and Purchaser.
6.5 Adjustment Statement. The Sellers will deliver to
Purchaser, not later than three (3) Business Days prior to the Closing, a copy
of a proposed adjustment statement showing all adjustments to be made at the
Closing. The parties shall then endeavor to agree upon such statement or any
modification thereof so that it or such modification can be executed by them at
the Closing. To the extent that there is an error or omission in any of the
adjustments made pursuant to such statement and the same is discovered following
the Closing, the parties agree to rectify the same as promptly as possible
following such discovery.
6.6 Gift Certificates. At Closing, the Sellers shall
deliver to Purchaser a schedule showing the estimated amount, if any, of
unredeemed gift certificates issued by Owner or Managing Agent. From and after
the Closing, the Sellers shall reimburse Purchaser on demand for any documented
amount due by reason of the redemption of any gift certificates issued by Owner
or Managing Agent and dated prior to the Closing.
6.7 Survival. The provisions of this Article 6 shall
survive until April 30, 2006.
37
7. Actions to be Taken and Documents to be Delivered at or Prior
to the Closing.
7.1 The Sellers' Deliveries. At or prior to the Closing,
the Sellers will deliver or cause to be delivered to Purchaser each of the
instruments and documents listed in the following provisions of this Section
7.1, executed and acknowledged where appropriate by the Sellers and/or the other
party or parties thereto:
7.1.1 An assignment by each Seller to Purchaser of
the applicable Membership Interest(s) in the form of Exhibit F attached hereto
and made a part hereof, together with the Sellers' Copies of the limited
liability company agreement of Owner and a certified copy of the Certificate of
Formation of Owner.
7.1.2 The Sellers' Copies of each of the Leases
and all guarantees described in the first sentence of subsection 8.3.6.1,
including the Diamond Resort Lease Guaranty.
7.1.3 The Sellers' Copies of each of the Other
Agreements.
7.1.4 An executed copy of an agreement between
Owner and the Managing Agent terminating the Management Agreement as of or prior
to the Closing Date. The Sellers shall use reasonable efforts, but shall be
under no obligation, to have such agreement provide that (a) Owner shall have no
continuing liability for pre-Closing obligations under the Management Agreement
(the parties hereby acknowledging and confirming that the Sellers'
indemnification obligation under Section 33.1 below with respect to such
pre-Closing obligations shall apply whether or
38
not such agreement so provides) and (b) Managing Agent waives any lien rights it
may have with respect to such obligations.
7.1.5 Counterparts of (i) the VCR Showroom Lease,
the Gondola Lease and the VCR Office Lease, each substantially in the form of
Exhibits V, W and X attached hereto and made a part hereof, respectively,
executed by VCR, (ii) the Casino Level Master Lease substantially in the form of
Exhibit Y attached hereto, with such changes thereto requested by Owner's
proposed new mortgage lender that do not increase (other than to a de minimis
extent) VCR's obligations thereunder or decrease (other than to a de minimis
extent) VCR's benefits thereunder, executed by VCR and (iii) the Amended and
Restated REA, substantially in the form of Exhibit T attached hereto and made a
part hereof, with such changes thereto requested by the "SECC's" proposed new
mortgage lender and/or Owner's proposed new mortgage lender that do not increase
(other than to a de minimis extent) VCR's obligations thereunder or decrease
(other than to a de minimis extent) VCR's benefits or Owner's rights and
obligations thereunder.
7.1.6 The certificate of the Sellers provided for
in subsection 8.6.3.
7.1.7 The estoppel letters provided for in Article
17.
7.1.8 Any consents required under the Other
Agreements for the sale of the Membership Interests by the Sellers to Purchaser;
provided, however, that it shall not be a condition to Purchaser's obligations
under this Agreement that any such consent shall be obtained, but the Sellers
shall be obligated to pay and indemnify Purchaser from and against any damages,
penalties or other sums that
39
may be payable to the other party to such Other Agreement by reason of the
Sellers' failure to obtain such consent, which obligations shall survive the
Closing.
7.1.9 A certificate that each Seller is not a
"foreign person" within the meaning of Section 1445 of the Internal Revenue Code
of 1986, as amended.
7.1.10 Counterparts of an adjustment statement
summarizing all adjustments in respect of the Purchase Price made at the Closing
pursuant to Article 6.
7.1.11 All sales tax, transfer tax and other tax
returns, if any, which the Sellers are required by law to execute and deliver,
either individually or together with Purchaser, to any Governmental Authority as
a result of the sale of the Membership Interests.
7.1.12 The Schedule provided for in Section 6.1.1.
7.1.13 Resolutions or other evidence that each
Seller has duly authorized (i) the transactions contemplated by this Agreement
and (ii) the execution by each Seller of this Agreement and the documents,
instruments and agreements to be executed and delivered by the Sellers pursuant
hereto, together with an incumbency certificate as to the authority of the
person(s) executing and delivering this Agreement and such documents,
instruments and agreements on behalf of the Sellers.
7.1.14 Resolutions or other evidence that VCR has
duly authorized the execution and delivery of the Casino Level Master Lease,
together with an incumbency certificate as to the authority of the person(s)
executing and delivering the Casino Level Master Lease on behalf of VCR.
40
7.1.15 Good standing certificates for Owner and the
Sellers issued by the applicable governmental authority, dated no earlier than
thirty (30) days prior to Closing.
7.1.16 All records and files which are in the
possession of the Sellers, VCR, Owner or the Managing Agent relating to the
current operation and maintenance of the Property, including without limitation,
to the extent in the possession of such parties, current tax bills, current
water, sewer, utility and fuel bills, payroll records, billing records for
Tenants, Tenant files, repair and maintenance records and the like which affect
or relate to the Property, plans, drawings, blue prints and specifications for
the Property, all warranties and guaranties of manufacturers, suppliers and
contractors in effect on the Closing Date, certificates of occupancy and other
licenses and permits and keys to the Property. Delivery of such materials, as
well as the documents referred to in subsections 7.1.2 and 7.1.3, shall be
effectuated pursuant to arrangements made by the Managing Agent, Owner, VCR and
the property manager retained by Purchaser to operate the Property.
7.1.17 If applicable, a written direction to Escrow
Agent to deliver the Deposit (but not the Income) to the Sellers.
7.1.18 If applicable, the Letters of Credit.
7.1.19 If and to the extent required under the REA,
one or more notices of the Closing.
7.1.20 Reasonable and customary affidavits and
other documentation and information reasonably required by the Title Company in
order to issue the Owner's Policy to Owner and/or a mortgagee policy to
Purchaser's lender,
41
including, without limitation, such documentation as is reasonably requested by
the Title Company to cause the issuance of a non-imputation endorsement to the
Owner's Policy.
7.1.21 A letter of resignation from the
"Independent Director" of Owner (or a legally effective termination of such
director from the Sellers).
7.1.22 If applicable, counterparts of the lease
described in Article 39 below, executed by VCR.
7.1.23 Counterparts of a memorandum of the Casino
Level Master Lease, in proper recordable form.
7.1.24 An executed amendment to the Best Production
contract in existence as of the date hereof which amendment shall amend said
contract such that it does not cover the "gondoliers," provided that if such
amendment is not delivered by the Sellers at the Closing (the Sellers hereby
agreeing to use commercially reasonable efforts to cause such amendment to be
executed and delivered as of the Closing), Purchaser shall nevertheless be
obligated to close and the Sellers and Purchaser agree (a) to use commercially
reasonable efforts to cause such amendment to be executed and delivered after
the Closing and (b) to cause VCR and Owner to enter into documents reasonably
satisfactory to each to cause VCR to enjoy the benefits and to be liable for the
obligations under such contract with respect to the "gondoliers," and Owner to
enjoy the benefits and be liable for the obligations under such contract with
respect to all other matters covered thereunder. Clauses (a) and (b) of the
preceding sentence shall survive the Closing.
7.1.25 A letter or agreement executed and delivered
by all "Owners" and countersigned or approved by the "Mortgage Notes Indenture
Trustee"
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(as such terms are defined in the REA) confirming, or other evidence reasonably
satisfactory to Purchaser demonstrating, that (a) the REA does not prohibit any
Owner from maintaining insurance that is in excess or in addition to the
insurance required to be maintained under the REA and (b) if any such additional
or excess insurance is maintained by any Owner and such Owner pays all the
premiums with respect thereto, such Owner shall be entitled to receive all of
the proceeds payable thereunder and apply such proceeds as it elects (or shall
be entitled to first priority with respect to such proceeds if any such
insurance covers other portions of the "Venetian" and/or "SECC" (as such terms
are defined in the REA) in addition to the Property).
7.1.26 Rent direction letters from the Managing
Agent and/or Owner's existing mortgage lender, as reasonably requested by
Purchaser, each in form and substance reasonably satisfactory to Purchaser.
7.1.27 All other instruments and documents, if any,
to be executed, acknowledged and/or delivered by the Sellers pursuant to any of
the other provisions of this Agreement.
7.2 Purchaser's Deliveries. At or prior to the Closing,
Purchaser shall deliver or cause to be delivered to the Sellers or the other
parties indicated below each of the payments, documents and instruments listed
in this Section 7.2, such instruments and documents to be executed and
acknowledged where appropriate:
7.2.1 The Remaining Balance, as set forth in
Section 3.1.2.
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7.2.2 All sales tax, transfer tax and other tax
returns, if any, certificates of value and similar documents which Purchaser is
required by law to execute and deliver, either individually or together with the
Sellers (including, without limitation, those required under Section 7.1.11), to
any Governmental Authority as a result of the sale.
7.2.3 Counterparts of each of the instruments and
documents listed in subsection 7.1.1 (executed by Purchaser in order to evidence
Purchaser's assumption of the Membership Interests) and in subsections 7.1.5,
7.1.10, 7.1.17, 7.1.19 and 7.1.23 (executed by Purchaser, as managing member and
on behalf of Owner).
7.2.4 Proof reasonably satisfactory to the Sellers
as to the due authorization on the part of Purchaser of (i) the transaction
contemplated by this Agreement, and (ii) the execution and delivery of this
Agreement and the documents, instruments and agreements to be executed and
delivered by Purchaser pursuant hereto, together with an incumbency certificate
as to the authority of the person(s) executing and delivering this Agreement and
such documents, instruments and agreements on behalf of Purchaser.
7.2.5 A good standing certificate from the
Secretary of State of Delaware for Purchaser, dated within fifteen (15) days of
the Closing Date.
7.2.6 If applicable, a written instruction to
Escrow Agent, executed by Purchaser, to pay the Deposit to the Sellers and to
pay the Income as Purchaser directs.
44
7.2.7 The update certificate required pursuant to
Section 9.2.
7.2.8 If applicable, counterparts of the lease
described in subsection 7.1.22, executed by Purchaser, as managing member and on
behalf of Owner.
7.2.9 All other payments, instruments and
documents, if any, to be executed, acknowledged and/or delivered by Purchaser
pursuant to any of the other provisions of this Agreement.
7.3 Access to Records. Purchaser agrees that for a period
of three (3) years following the Closing it shall, and shall cause Owner to,
retain and make available to the Sellers, any designee thereof or any
Governmental Authority having jurisdiction over the Sellers for inspection and
copying, at the Sellers' expense, on reasonable advance notice at reasonable
times at the place in the continental United States where Purchaser or Owner
then maintains its records in respect of the Property, all documents and records
concerning the Property or Owner delivered by the Sellers or the Managing Agent
in connection with the Closing. If Purchaser shall desire to destroy any such
records prior to the expiration of such three (3) year period, Purchaser shall
first notify the Sellers and permit the Sellers to take delivery of the records
in question; and if the Sellers fail to do so with in ninety (90) days after
such notice from Purchaser, Purchaser shall then be free to destroy the same.
The provisions of this Section 7.3 shall survive the Closing.
45
7.4 Due Diligence.
7.4.1 From the date of this Agreement until the
Closing Date or any termination of this Agreement, the Sellers shall, after
reasonable advance notice from Purchaser, cause Owner (and VCR with respect to
the space covered by the Casino Level Master Lease) to afford Purchaser and its
authorized agents and representatives access to the Property subject to (i) the
Sellers' and VCR's reasonable regulations relating to the security of the
Property and the Property's business, and (ii) the further provisions of this
Section 7.4. In addition, any inspection of the Property pursuant to the
foregoing (which inspection may include examination of structural components and
utility systems and the conducting of appropriate tests thereof) shall be
subject to the following limitations: (i) a representative of the Sellers shall
have the right to be present when Purchaser conducts any such inspection; (ii)
any such inspection shall be conducted so as to cause the least interference
with the operation of the Property and the business of the Tenants or other
occupants thereat as is reasonably possible; and (iii) no so-called "Phase II"
environmental inspection of the Property, and no tests that physically alter any
component of the Property or the land thereunder, shall be performed without the
prior written consent of the Sellers (and/or VCR, as applicable), which consent
shall not be unreasonably withheld or delayed. In all events, the foregoing
rights of Purchaser are subject to the terms and provisions of all rights of
Tenants and all Legal Requirements. Prior to obtaining access to the Property,
Purchaser shall cause its agents and representatives to (i) obtain comprehensive
general liability insurance on an occurrence basis naming Owner and VCR as
additional insureds with a combined single limit not less than $5,000,000 and
otherwise on terms
46
reasonably satisfactory to the Sellers covering any accident arising in
connection with the activities or presence of Purchaser or its agents or
contractors on the Property and (ii) deliver a certificate of insurance
verifying such coverage to the Sellers. Purchaser shall promptly, at it sole
cost and expense, repair any damage to the Property caused by examination or
tests made pursuant to the foregoing. Purchaser shall promptly furnish the
Sellers with copies of all written reports, summaries, analyses and the like
obtained or prepared by third-parties for Purchaser in connection with all
inspections, examinations and tests made or conducted pursuant to the foregoing.
7.4.2 Purchaser agrees to defend, indemnify and
hold the Sellers and VCR harmless from and against any and all Losses arising
out of or in connection with the exercise by Purchaser of its rights under
subsection 7.4.1 or any violation by Purchaser of subsection 7.4.1 (but not with
respect to any pre-existing condition at the Property discovered by such
inspections, examinations or tests to the extent not exacerbated by such
inspections, examinations or tests).
7.4.3 Subject to the limitations set forth in this
Agreement, the Sellers shall cause Owner and VCR to cooperate with Purchaser's
examination of the Property and shall provide Purchaser with whatever
information or documents pertaining to the Property which Purchaser may
reasonably request and which is possessed or reasonably obtainable by the
Sellers.
7.4.4 The provisions of subsection 7.4.2 shall
survive the Closing, and the last two sentences of subsection 7.4.1 and the
provisions of subsection 7.4.2 shall survive any termination of this Agreement.
8. As Is; Representations and Warranties of the Sellers.
47
8.1 No Implied Representations. Purchaser acknowledges
that except as expressly set forth in this Agreement and in the documents and
instruments delivered by the Sellers at the Closing, neither the Sellers nor any
affiliate, agent or representative or purported agent or representative of the
Sellers has made, and the Sellers and such other persons and entities are not
liable for or bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements, representations or information
(including, without limitation, any information set forth in that certain
Confidential Information Memorandum prepared by Xxxxxxx and any supplements
thereto or changes therein, the Environmental Report, or any other offering
materials heretofore furnished to Purchaser) pertaining to (a) the Membership
Interests; (b) Owner or the assets and liabilities (including contingent
liabilities) thereof; or (c) the Property, the physical condition thereof,
environmental matters, the income, expenses or operation thereof or the Personal
Property or Intangible Personal Property, the uses which can be lawfully made of
the Property under applicable zoning or other laws or any other matter or thing
with respect to the Property, including, without limitation, any existing or
prospective Leases, the REA or Other Agreements. Without limiting the foregoing,
Purchaser acknowledges and agrees that, except as expressly set forth in this
Agreement and in the documents and instruments delivered by the Sellers at the
Closing, the Sellers are not liable for or bound by (and Purchaser has not
relied upon) any verbal or written statements, representations, real estate
brokers' "set-ups" or offering materials or any other information respecting the
Membership Interests, Owner or the Property furnished by the Sellers or any
broker, employee, agent, consultant or other person representing or purportedly
representing the Sellers. If the Sellers or its agents have
48
delivered or hereafter deliver to Purchaser or its agents any information,
report, survey, analysis or similar documentation prepared by a third party
unrelated to the Sellers, the Sellers neither expressly nor impliedly warrant or
represent to Purchaser the truth, accuracy or completeness thereof and expressly
disclaim any liability whatsoever with respect thereto or any obligation
independently to investigate the matters contained therein; and Purchaser hereby
acknowledges that the Sellers have or are providing such information, reports,
surveys, analysis or other third-party documents to Purchaser as an
accommodation only and that Purchaser shall be responsible for the verification
and review thereof. Nothing contained in this Section 8.1 shall be deemed to
impair, limit or otherwise affect Purchaser's rights under this Agreement in
respect of the express representations and warranties of the Sellers set forth
in this Agreement and the other provisions hereof binding upon the Sellers. The
provisions of this Section 8.1 shall survive the Closing or any termination of
this Agreement.
8.2 "As-Is" Purchase. Purchaser represents that it has
inspected the Property, the physical and environmental condition and the uses
thereof and the fixtures, equipment and Personal Property to its satisfaction,
that it has independently investigated, analyzed and appraised the value and
profitability of the Membership Interests and the Property, the creditworthiness
of Tenants, and the presence of hazardous materials, if any, in, on or under the
Property, that it has reviewed the Leases listed on Exhibit G attached hereto
and made a part hereof, the Diamond Resorts Lease Guaranty, the REA, the VCR
Showroom Lease, the Gondola Lease, the VCR Office Lease, the Casino Level Master
Lease, the Other Agreements and all other documents referred to herein, that it
is thoroughly acquainted with all of the foregoing and that Purchaser, in
49
purchasing the Membership Interests, is relying upon its own investigations,
analyses, studies and appraisals and not upon any information provided to
Purchaser by or on behalf of the Sellers with respect thereto (except to the
extent covered by any warranties or representations of the Sellers set forth in
this Agreement, in any Sellers' Estoppel Letter or in any other document or
instrument delivered by the Sellers in connection with the Closing). Purchaser
agrees, in purchasing the Membership Interests, to accept the Property "as is"
and in its condition as of the date hereof, reasonable wear and tear between the
date hereof and the Closing Date excepted, and Purchaser shall assume the risk
that adverse matters, including but not limited to, construction defects and
adverse physical and environmental conditions, may not have been revealed by
Purchaser's investigations; and Purchaser, upon closing, shall be deemed to have
waived, relinquished and released the Sellers from and against any and all
claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including, attorneys' fees and court costs) of any and every kind or
character, known or unknown, which Purchaser might have asserted or alleged
against the Sellers by reason of or arising out of any latent or patent
construction defects or physical conditions, violations of applicable laws
(including, without limitation, environmental laws) and any and all other acts,
omissions, events, circumstances or matters with respect to the Property,
subject, however, to the provisions of Article 33 hereof and to Purchaser's
rights and remedies provided for in this Agreement in the event of the breach of
any of the Sellers' warranties, representations and covenants contained herein,
in any Sellers' Estoppel Letter or in any other document or instrument delivered
by the Sellers in connection with the Closing. The provisions of this Section
8.2 shall survive the Closing.
50
8.3 Representations and Warranties of the Sellers. The
Sellers hereby jointly and severally represent and warrant to Purchaser as
follows:
8.3.1 Each Seller and Owner is duly formed and
validly existing and in good standing under the laws of its state of formation.
Each Seller and Owner is duly qualified to do business in the state in which the
Property is located, to the extent required by Legal Requirements in the case of
the Sellers. Each Seller has full power and authority to enter into this
Agreement and to perform its obligations hereunder in accordance with the terms
hereof. The execution, delivery and performance by each Seller of this Agreement
and the documents to be executed by each Seller pursuant hereto have been duly
and validly authorized by all necessary action on the part of each Seller. This
Agreement constitutes the legal, valid and binding obligation of the Sellers,
enforceable against the Sellers in accordance with its terms, subject as to
enforceability to the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent conveyance or other similar
laws affecting the rights of creditors generally and to general principles of
equity.
8.3.2 None of the Sellers is a "foreign person" as
defined in Section 1445 of the Internal Revenue Code of 1986, as amended. Owner
is treated as a partnership for federal income tax purposes.
8.3.3 Execution by each Seller of this Agreement
and all documents provided for herein to be executed by such Seller, and
performance by each Seller of the provisions hereof and thereof, will not
violate or result in any breach of, or constitute a default under, any law,
regulation, rule, order or judgment of any governmental authority to which such
Seller or Owner is subject, or any agreement,
51
indenture, Lease, mortgage, deed of trust, bank loan, credit agreement or other
agreement or instrument to which such Seller or Owner is a party or by which
such Seller or Owner is bound, where such breach or default might (i) adversely
affect Owner or the Property or (ii) materially adversely affect such Seller's
ability to perform its obligations hereunder or under such other documents. No
Seller is presently in default under any note, evidence of indebtedness, lease,
contract, license, undertaking or other agreement where the liability thereunder
might (i) adversely affect Owner or the Property or (ii) materially adversely
affect such Seller's ability to perform its obligations under this Agreement or
any document executed by such Seller pursuant hereto.
8.3.4 With respect to the Membership Interests:
8.3.4.1 The Membership Interests constitute
all of the membership and management interests in Owner.
8.3.4.2 The Sellers have heretofore made
available, and at Closing shall deliver, to Purchaser a true, correct and
complete copy of the limited liability company agreement and certificate of
formation of Owner, as amended. Such limited liability company agreement, as
amended, is in full force and effect on the date hereof.
8.3.4.3 The Membership Interests are owned
by the Sellers, free and clear of all liens, security interests, options and
encumbrances and have not been pledged or hypothecated as of the date hereof to
any third party (except for any pledge or hypothecation that will be released at
or prior to Closing). Neither Owner nor any Seller has granted, issued or
entered into, and neither Owner nor any Seller is bound by, any options, rights,
commitments, agreements, arrangements or undertakings
52
of any kind (other than this Agreement) which obligate or could obligate either
of the Sellers to transfer its Membership Interest or any part thereof or
interest therein or which grant to any other person (other than the "Independent
Director") or entity any voting, management or other right in respect of the
Membership Interests.
8.3.5 VCR had and has (or will have as of the
Closing Date) the full power and authority to enter into the VCR Leases and the
Casino Level Master Lease and to perform its obligations thereunder in
accordance with the terms thereof. Prior to the Closing, VCR and Owner shall
execute and deliver the Casino Level Master Lease. As of the Closing Date, the
execution, delivery and performance by VCR of the VCR Showroom Lease, the
Gondola Lease, the VCR Office Lease and the Casino Level Master Lease shall have
been duly and validly authorized by all necessary action on the part of VCR. On
the Closing Date, the VCR Leases and the Casino Level Master Lease will
constitute the legal, valid and binding obligations of VCR, enforceable against
VCR in accordance with their terms, subject as to enforceability to the effect
of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or other similar laws affecting the rights of creditors
generally and to general principles of equity.
8.3.6 With respect to the Leases:
8.3.6.1 Exhibit G annexed hereto is a true,
correct and complete list of all of the Leases and guarantees thereof (including
the Diamond Resorts Lease Guaranty) in effect on the date hereof, true, correct
and complete copies of which have heretofore been made available and/or
delivered to Purchaser for review. As of the date hereof, none of the Leases
have been modified, amended or supplemented
53
(whether orally or in writing) except as set forth in Exhibit G. No Tenant has
the option to purchase the Property (or a portion thereof) or a right of first
refusal, first offer or first negotiation in respect of the sale of the
Membership Interests to a third party or in respect of the Casino Level Master
Lease.
8.3.6.2 Exhibit H attached hereto and made
a part hereof is a true, correct and complete list of Tenants that are
delinquent in the payment of Rents as of the date of such list, which schedule
sets forth the information specified in the first sentence of subsection 6.1.1.
8.3.6.3 Except as set forth in Exhibit G,
to the Sellers' knowledge each of the Leases and guarantees listed in Exhibit G
is in full force and effect as of the date hereof. Except as set forth in
Exhibit G, to the Sellers' knowledge Owner (and VCR, as applicable) has not
received written notice which is still outstanding from any Tenant under a Lease
listed in Exhibit G (i) that Owner (and/or VCR, as applicable) has defaulted in
performing any of its material obligations under such Lease or (ii) that such
Tenant is entitled to any reduction in, refund of or counterclaim or offset
against, or is otherwise disputing, any Rents paid, payable or to become payable
by such Tenant thereunder or is entitled to cancel or terminate such Lease or to
be released of any of its material obligations thereunder. With the exception of
delinquencies in the payment of Rents, to the Sellers' knowledge no material
default exists under any Lease by the Tenant thereunder except as set forth in
Exhibit G.
8.3.6.4 Except as set forth in Exhibit G,
all leasing commissions in respect of the current terms of Leases which were
entered into on
54
or before the Leasing Cut-Off Date have been, or by the Closing Date will have
been, paid in full by Owner (and/or VCR, as applicable).
8.3.6.5 On or prior to the Closing Date,
all tenant alterations which Owner (and/or VCR, as applicable) is obligated to
perform at Owner's (and/or VCR's, as applicable) expense pursuant to its
obligations under the Leases (excluding Leases signed after the date hereof in
accordance with Section 13.1) will have been performed.
8.3.7 With respect to the REA:
8.3.7.1 The REA is in full force and effect
as of the date hereof. As of the date hereof, the Owner has not received written
notice from any party to the REA that Owner has defaulted in performing any of
its material obligations under the REA. To the Sellers' knowledge, as of the
date hereof, no material default exists under the REA on the part of any of the
parties thereto.
8.3.7.2 There are no due but unpaid
obligations of Owner under or in respect of the REA.
8.3.8 With respect to the Other Agreements:
8.3.8.1 Exhibit C annexed hereto is a true,
correct and complete list of all Other Agreements affecting the Property
(excluding Other Agreements that will be terminated as of the Closing Date).
True, correct and complete copies of all of the Other Agreements, and all
amendments and supplements thereto, listed on Exhibit C have heretofore been
made available and/or delivered to Purchaser for review. Except as set forth in
Exhibit C, all Other Agreements can be terminated by Owner (or VCR, as
applicable) on not more than sixty (60) days' notice without penalty.
55
8.3.8.2 To the Sellers' knowledge, each of
the Other Agreements is in full force and effect on the date hereof, and Owner
and VCR have not received written notice from any party to any Other Agreement
which is still outstanding that Owner or VCR has defaulted in performing any of
its material obligations under such Other Agreement. None of the Other
Agreements listed on Exhibit C has heretofore been amended or supplemented
(whether orally or in writing) except as set forth on Exhibit C.
8.3.9 To the Sellers' knowledge, as of the date
hereof and except as set forth in Exhibit I attached hereto and made a part
hereof, Owner and VCR have not received (i) any written notice of any material
Violation with respect to the Property from any Governmental Authority which has
not heretofore been complied with or (ii) any written notice from any
Governmental Authority which is still outstanding of any failure by Owner or VCR
to obtain any material certificate, permit, license or approval with respect to
the Property, or any intended revocation, modification or cancellation of any of
the same.
8.3.10 Except as set forth in Exhibit J attached
hereto and made a part hereof, no condemnation, eminent domain or similar
proceeding in which Owner or VCR have been served with process or of which Owner
or VCR have otherwise received written notice is pending with respect to all or
any material part of the Property, and no Seller has any knowledge that any such
proceeding is threatened or contemplated.
8.3.11 To the Sellers' knowledge, as of the date
hereof Owner and VCR have not received any written notice which is still
outstanding of any
56
violation of any restriction, condition, covenant or agreement contained in any
easement, restrictive covenant or any similar instrument or agreement which
constitutes a Permitted Encumbrance.
8.3.12 There is no pending material litigation
against the Owner or VCR affecting the Property or otherwise, in respect of
which Owner or VCR have been served with process or otherwise received written
notice except for (i) claims for personal injury, property damage or worker's
compensation for which the insurance carrier has not disclaimed liability and in
which the amounts claimed do not exceed the applicable insurance policy limits,
and (ii) other litigation shown on Exhibit K attached hereto and made a part
hereof. No Seller has knowledge of any threatened material litigation affecting
Owner, VCR or the Property except litigation of the nature described in clause
(i) above and as described on Exhibit K.
8.3.13 All material fixtures, equipment and
articles of personal property attached or appurtenant to or used in connection
with the Property and located thereat, except those belonging to Tenants,
subtenants of Tenants and independent contractors or utility companies, and
items which are leased by Owner, are owned by Owner, and are or will at Closing
be free from all liens and encumbrances. A schedule of the material items of
personal property owned by Owner, which in any event includes all items of
personal property having a cost of $5,000 or more, is attached hereto as Exhibit
L and made a part hereof, which Exhibit separately identifies any leased
personal property, the leases for which are listed on Exhibit L. Owner owns all
Intangible Personal Property free from all liens and encumbrances.
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8.3.14 Neither Owner nor the Sellers have any
employees or agreements with any employees who will continue performing services
after the Closing in connection with the operation of the Property.
8.3.15 Exhibit M attached hereto and made a part
hereof lists all environmental reports relating to Hazardous Materials at the
Property which the Sellers caused to be prepared and heretofore delivered to
Purchaser in connection with this transaction. As used herein, the term
"Hazardous Materials" means (i) toxic wastes, hazardous materials, hazardous
substances or other substances which are prohibited or regulated by any federal,
state or local law or regulation addressing environmental protection or
pollution control matters, (ii) hazardous levels of asbestos, (iii)
polychlorinated biphenyls (PCBs) and (iv) oil, petroleum and their by-products.
Except as disclosed or as may be disclosed in the reports listed on Exhibit M,
and except with respect to cleaning fluids and similar substances which may be
used in the routine operation or maintenance of the Property, to the Sellers'
knowledge, no Hazardous Materials are present in, on or under the Property in
quantities or amounts which would be in violation of Legal Requirements
applicable thereto. Owner and VCR have not received any written notice from any
Governmental Authority or other person or entity that any condition exists at
the Property which constitutes or has resulted in a violation of any Legal
Requirement relating to Hazardous Materials or that any claim is being asserted
against Owner or VCR by reason of any such violation.
8.4 No Independent Investigation. All representations and
warranties made herein by the Sellers which are based on the Sellers' knowledge
are made, and are hereby acknowledged by Purchaser to be made, without
independent
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investigation regarding the facts contained therein and are otherwise limited as
provided in the definition of "knowledge."
8.5 Effect of Estoppels. If prior to, on or after the
Closing Date, a Tenant has provided an estoppel letter to Purchaser which sets
forth information consistent with any item as to which the Sellers have made a
representation or warranty, then, from and after the delivery of such estoppel
letter, the Sellers' representation and warranty in respect of such information
shall thereafter be null and void and of no further force or effect, such
representation and warranty shall not be deemed to have been remade as of the
Closing Date pursuant to subsection 8.6.3 hereof, and Purchaser shall rely
solely on the information set forth in such estoppel letter; provided, however,
that the foregoing shall not effect in any way Purchaser's rights pursuant to
Sections 8.6 and 11.1 hereof in the event that any such estoppel is inconsistent
with the Sellers' representations and warranties hereunder. The provisions of
this Section 8.5 shall survive the Closing.
8.6 Survival of Warranties, etc.
8.6.1 All of the Sellers' representations and
warranties contained in Section 8.3 (other than those contained in subsections
8.3.1, 8.3.2, 8.3.3, 8.3.4 and 8.3.5, all of which shall survive the Closing
without limitation as to time), and all certifications, representations and
warranties made by the Sellers in the Sellers' certificate delivered to
Purchaser pursuant to subsection 8.6.3 and in any Sellers' Estoppel Letter,
shall survive until one (1) year after the date of the Closing; provided,
however, that the Sellers' liability for any breach of such warranties,
representations and certifications shall not expire as to any breach or alleged
breach thereof if notice of such breach or alleged breach (which notice must,
with reasonable specificity, describe the
59
facts causing or leading to such breach or alleged breach) is given by Purchaser
to the Sellers prior to one (1) year after the date of the Closing and, if such
notice is given, legal proceedings are instituted in respect of such breach or
alleged breach within six (6) months after such notice is given. All
representations, warranties and certificates of the Sellers covered by the
preceding sentence (including the first parenthetical clause thereof) are
collectively referred to herein as "Sellers' Representations."
8.6.2 Notwithstanding anything to the contrary set
forth in this Article 8, but subject to the last sentence of this subsection
8.6.2, (i) the Sellers shall have no liability to Purchaser for breach of any
Sellers' Representation unless, and only to the extent that, (x) Sellers'
liability for such breach shall not have expired pursuant to subsection 8.6.1
above and (y) the damages suffered by Purchaser by reason of all such breaches,
together with the damages suffered by Purchaser by reason of all breaches of
representations and warranties made by VCR in Section 17.1 of the Casino Level
Master Lease ("VCR's Representations"), exceed $2,500,000 in the aggregate (the
"Basket") (inclusive of damages in respect of breaches discovered prior to the
Closing (other than any such damages in excess of the Preclosing Basket but less
than the Basket), which breaches are discussed in more detail in Section 11.1),
(ii) in no event shall the Sellers be liable to Purchaser for consequential,
indirect or punitive damages in respect of any such breach and (iii) in no event
shall the Sellers' and VCR's aggregate liability to Purchaser for all such
breaches (inclusive of damages in respect of breaches discovered prior to the
Closing, subject to subsections 11.1.1 and 11.1.3), and breaches of VCR
Representations, exceed $8,000,000 (the "Cap"). Notwithstanding anything to the
contrary set forth herein, the limitations of the Basket and the Cap shall
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not apply to a breach of a representation or warranty contained in subsections
8.3.1, 8.3.2, 8.3.3, 8.3.4 and 8.3.5.
8.6.3 All of the Sellers' representations and
warranties set forth in Section 8.3 shall be deemed to have been remade on and
as of the Closing Date and the Sellers shall deliver to Purchaser at the Closing
a certificate to that effect in the form of Exhibit N attached hereto and made a
part hereof, which certificate shall be subject to all limitations on liability
and survival, limitations on the Sellers' knowledge and other matters set forth
elsewhere in this Agreement (to the same effect as if the statements made in
such certificate were included in Section 8.3). Notwithstanding the foregoing,
if any matter or event shall have occurred between the date hereof and the date
of the Closing which makes any such warranty or representation untrue in any
material respect, the Sellers shall have the right to disclose such matter or
event in the certificate above provided for, and if the Sellers shall do so, the
provisions of Section 11.1 shall apply.
8.6.4 Notwithstanding anything to the contrary set
forth in this Article 8 or elsewhere in the Agreement, if prior to the Closing
Purchaser has or obtains knowledge that any of the Sellers' Representations is
untrue in any respect, and Purchaser nevertheless proceeds with the Closing
without notifying the Sellers in writing of such fact, then (a) the provisions
of Section 11.1 shall not apply with respect thereto and (b) the breach by the
Sellers of the Sellers' Representations as to which Purchaser shall have such
knowledge shall be waived by Purchaser and the Sellers shall have no liability
to Purchaser or its successors or assigns in respect thereof. For the purposes
of this subsection 8.6.4, Purchaser shall be deemed to have or to have
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obtained knowledge of any such matter or thing if such matter or thing (i) was
set forth in any notice, written study, report, memorandum, letter or other
document furnished to Purchaser on or prior to the Closing Date by or on behalf
of the Sellers (including, without limitation, by the Sellers' attorneys, the
Managing Agent or Xxxxxxx), by any affiliates, agents or representatives of
Purchaser, by third-party consultants retained by Purchaser or by Purchaser's
accountants or attorneys (including in-house accountants or attorneys), (ii) was
set forth in any Tenant estoppel letter, (iii) was set forth in the
Environmental Report, (vi) was set forth in any of the recorded documents
evidencing the Permitted Encumbrances or (v) was otherwise known to any of Xxxx
Xxxxx and Xxx Xxxxx.
8.6.5 The provisions of this Section 8.6, subject
to the limitation set forth in subsection 8.6.1, shall survive the Closing.
9. Representations and Warranties of Purchaser.
9.1 Purchaser's Warranties. Purchaser warrants and
represents to the Sellers as follows:
9.1.1 Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
9.1.2 Purchaser has full power and authority to
enter into this Agreement and perform its obligations hereunder in accordance
with the terms hereof. The execution, delivery and performance of this Agreement
by Purchaser and the documents to be executed by Purchaser pursuant hereto have
been duly and validly authorized by all necessary action on the part of
Purchaser. This Agreement constitutes the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in
62
accordance with its terms, subject as to enforceability to the effect of
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting the rights of creditors generally and to
general principles of equity. No bankruptcy, insolvency, reorganization,
arrangement or moratorium proceeding, or allegation of fraudulent conveyance, is
now pending or threatened against Purchaser.
9.1.3 Execution by Purchaser of this Agreement and
all documents provided for herein to be executed by Purchaser, and performance
by Purchaser of the provisions hereof and thereof, will not violate or result in
any breach of, or constitute a default under, any law, regulation, order or
judgment of any Governmental Authority to which Purchaser is subject, or any
agreement, indenture, mortgage, deed of trust, bank loan, credit agreement or
any other instrument to which Purchaser is a party or by which Purchaser is
bound, where such breach or default might adversely affect Purchaser's ability
to perform its obligations hereunder or under such other documents. Purchaser is
not in default under any note, evidence of indebtedness, lease, contract,
license, undertaking or other agreement where the liability thereunder might
adversely affect Purchaser's ability to perform its obligations under this
Agreement or such other documents.
9.2 Remaking of Warranties; Survival. All of Purchaser's
representations and warranties set forth in this Article 9 shall be deemed to
have been remade on and as of the Closing Date. Such representations and
warranties, as remade, shall survive the Closing without limitation as to time.
10. Conditions to the Obligation of the Sellers to Close. The
obligation of the Sellers to close under this Agreement is expressly conditioned
upon the
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fulfillment by and as of the Closing Date of each of the conditions listed
below, provided, that the Sellers, at their election, may waive all or any of
such conditions, which election shall be conclusively evidenced by the Sellers
proceeding with and completing the closing of the transaction provided for
herein:
10.1 Purchase Price. Purchaser shall have paid to the
Sellers the Purchase Price as provided in Article 3 hereof and all other amounts
due to the Sellers as of the Closing Date hereunder.
10.2 Representations and Warranties. All representations
and warranties of Purchaser set forth in Article 9 shall be true and correct in
all material respects on and as of the Closing Date as if made on and as of such
date.
10.3 Performance of Obligations. Purchaser shall have
executed and/or delivered or caused to be delivered at the Closing all documents
and executed counterparts of documents and instruments required by this
Agreement to be executed and/or delivered by Purchaser at or prior to the
Closing and shall have taken all other actions and fulfilled all other covenants
and conditions required of Purchaser at or prior to the Closing under this
Agreement.
10.4 No Injunctions. There shall be no binding injunction,
order or judgment of any court having proper jurisdiction prohibiting the
Sellers from consummating the Closing.
10.5 SNDA's. The Sellers shall have received SNDAs from
Owner's new mortgage lender (if any as of the Closing Date) covering the VCR
Showroom Lease, VCR Office Lease and Gondola Lease, each to be in form
substantially similar to the SNDAs described in Section 11.3 or in any other
form reasonably
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satisfactory to Sellers. Purchaser hereby agrees to use diligent efforts to
cause such SNDAs to be executed and delivered at the Closing.
10.6 Other Conditions. Any other condition to the
obligation of the Sellers to consummate the Closing which is set forth in any
other provision of this Agreement shall have been satisfied in all material
respects.
If any of the foregoing conditions is not satisfied
and, as a result, the Closing does not occur, the Deposit shall be returned to
Purchaser, this Agreement shall terminate and neither party shall have any
further rights or obligations under this Agreement except as otherwise
specifically provided herein; provided, however, that if any such condition is
not satisfied due to Purchaser's default, the Sellers shall have the rights
provided for in Section 16.1.
11. Conditions to the Obligation of Purchaser to Close. The
obligation of Purchaser to close under this Agreement is expressly conditioned
upon the fulfillment by and as of the Closing Date of each of the conditions
listed below, provided that Purchaser, at its election, may waive all or any of
such conditions, which election shall be conclusively evidenced by Purchaser's
proceeding with and completing the closing of the transaction provided for
herein:
11.1 Representations and Warranties. Subject to the
further provisions of this Section 11.1, all representations and warranties of
the Sellers set forth in Section 8.3 and all of VCR's Representations, shall be
true and correct on and as of the Closing Date as if made on and as of such date
(without reference to any modifications thereof contained in the certificate
delivered by the Sellers to Purchaser pursuant to subsection 8.6.3), except for
breaches thereof which do not in the aggregate result in a
65
Material Loss. As used in this Section 11.1, "Material Loss" means an aggregate
diminution in value of the Property as a result of the applicable breaches in
excess of One Million and No/100 Dollars ($1,000,000.00) (such amount, the
"Preclosing Basket"). With respect to all breaches of said representation and
warranties, the Sellers and Purchaser hereby agree that notwithstanding the
foregoing or any other provision of this Agreement to the contrary, Purchaser
shall not be entitled to terminate this Agreement, obtain a reduction in the
Purchase Price or have any other remedy, claim or relief, if between the date of
this Agreement and the Closing Date, (a) one or more Tenants go into default
under its or their Leases, increase the period in respect of which it or they
are delinquent in the payment of Rents or any component thereof, vacate in whole
or in part any space it or they occupy in the Property, become the subject of
any bankruptcy or insolvency proceeding (whether voluntary or involuntary) or
otherwise suffer any material adverse change, Purchaser hereby acknowledging
that it has assessed the quality and strength of the Tenants under the Leases
listed on Exhibit G and has assumed the risk that any of the foregoing described
events may occur with respect to any Tenants between the date hereof and the
Closing Date; (b) any litigation not listed on Exhibit K or otherwise known to
Purchaser as of the date hereof is commenced and such litigation is either of
the nature described in clause (i) of the first sentence of Section 8.3.12 or
will not have a material adverse effect on the value of the Property or its
continuing operations or the Sellers' ability to perform its obligations under
this Agreement (provided, however, that such litigation shall be included within
the Excluded Liabilities set forth in Section 33.1 and Purchaser shall have the
indemnification rights with respect to such litigation set forth in said Section
33.1); or (c) there is any other
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change in facts or circumstances between the date hereof and the Closing Date
that causes any of the Sellers' representations and warranties set forth in
Section 8.3 to not be true and correct on and as of the Closing Date as if made
on and as of such date, but such change does not represent, and was not caused
by, a violation of Article 13.
11.1.1 If the parties agree on or prior to the
Closing Date that there has been a Material Loss and agree on the amount
thereof, and if such amount is not more than Twenty Million Dollars
($20,000,000.00), the condition precedent to Closing described in this Section
11.1 shall nevertheless be deemed satisfied if the Sellers, at their sole
option, at the Closing either (without giving effect to clause (iii) of
subsection 8.6.2, except with respect to post-Closing claims by the Purchaser
with respect to other breaches) pay to Purchaser the amount by which the
Material Loss exceeds the Preclosing Basket or give a credit to Purchaser
against the Purchase Price for such excess amount (which payment or credit shall
be in full satisfaction of all of Purchaser's claims in connection with the
applicable breaches).
11.1.2 If, prior to the Closing, the parties do not
agree on whether there is a Material Loss or the amount thereof, then at or
prior to the Closing, Purchaser shall provide a written notice to the Sellers
stating Purchaser's good faith estimate of the aggregate diminution in value of
the Property, together with a description of Purchaser's methodology and basis
for determining such amount. Within five (5) Business Days of the Sellers'
receipt of such written notice, the Sellers shall have the right to elect to
proceed to an arbitration proceeding, conducted in accordance with Article 34,
by delivering to Purchaser a written notice stating the Sellers' good faith
estimate of the aggregate diminution in value of the Property, together with a
67
description of the Sellers' methodology and basis for determining such amount.
In any ensuing arbitration proceeding, each party shall be bound by their
respective written estimates and the arbitrator shall choose either (i) the
Sellers' good faith estimate of the amount in dispute or (ii) Purchaser's good
faith estimate of the amount in dispute.
11.1.3 If the Sellers elect to initiate an
arbitration proceeding under Section 11.1.2 hereof, then at the Sellers' option,
either (i) the Closing shall be adjourned, pending the outcome of the
arbitration (and in such event, the Closing shall occur ten (10) business days
following the outcome of the arbitration) or (ii) the parties shall proceed to
Closing and (x) the Sellers shall, at Closing, pay or allow Purchaser a credit
against the Purchase Price equal to the excess, if any, of the Sellers' good
faith estimate of the amount in dispute over the Preclosing Basket, and (y) the
Sellers shall, at Closing, pursuant to documents reasonably satisfactory to
Purchaser, either deposit in escrow with Escrow Agent, in cash, the amount by
which Purchaser's good faith estimate of the amount in dispute exceeds the
Sellers' good-faith estimate of such amount, or deliver to Escrow Agent an
irrevocable, standby letter of credit (in form and substance, and from a bank,
reasonably satisfactory to Purchaser) in such amount; provided however, that if
Purchaser's good faith estimate of the Material Loss is in excess of Twenty
Million Dollars ($20,000,000.00), clause (i) of this sentence shall in all
events apply. If the arbitrator decides, or it is settled by the parties, that
the aggregate diminution in value of the Property (above the amount of the
Preclosing Basket) exceeded the Sellers' good faith estimate of the amount in
dispute over the Preclosing Basket, then (x) if such decision or settlement is
made prior to the Closing, the provisions of subsection 11.1.1 shall apply and
(y) if such decision or settlement is
68
made after the Closing, Purchaser's claims shall be satisfied pursuant to the
escrow arrangements described above (without giving effect to clause (iii) of
subsection 8.6.2, except with respect to post-Closing claims by the Purchaser
with respect to other breaches). The terms of this subsection 11.1.3 shall
survive the Closing.
11.2 Performance of Obligations. The Sellers shall have
executed and/or delivered or caused to be delivered at Closing all of the
documents and instruments required by this Agreement to be executed and/or
delivered by the Sellers at or prior to the Closing and shall have taken all
other actions and fulfilled all other covenants and conditions required of the
Sellers at or prior to the Closing under this Agreement in all material
respects.
11.3 Casino Level SNDA. Purchaser shall have received from
the mortgage lenders for the hotel/casino (or the trustee(s) or agent(s)
thereof) one or more executed subordination, non-disturbance and attornment
agreements ("SNDAs"), in substantially the form attached hereto as Exhibit AA or
any other form reasonably acceptable to Purchaser, with respect to the Casino
Level Master Lease. The Sellers hereby agree to use diligent efforts to obtain
such SNDAs from such lenders.
11.4 All Sellers to Close. The Sellers shall
simultaneously close the transactions contemplated by this Agreement with
Purchaser, it being understood and agreed that Purchaser shall have no
obligation to close the transactions contemplated hereby with only one of the
Sellers.
11.5 No Injunctions. There shall be no binding injunction,
order or judgment of any court having proper jurisdiction prohibiting Purchaser
from consummating the Closing.
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11.6 Title. The Title Company, or any other reputable
title company, shall be willing to issue an owner's policy of title insurance in
the amount of the Purchase Price, subject to the standard printed exclusions
from coverage contained in the ALTA Owner's title policy and the payment of
premiums, insuring (a) fee title to the Property, other than the space which is
the subject of the Casino Level Master Lease, (b) leasehold title to the space
which is the subject of the Casino Level Master Lease, and (c) all of Owner's
easement rights under the REA, in each case free of encumbrances other than
Permitted Encumbrances, which policy shall include a non-imputation endorsement
in such title company's standard form or any other form reasonably acceptable to
Purchaser.
11.7 Other Conditions. Any other condition to the
obligation of Purchaser to consummate the Closing which is set forth in any
other provisions of this Agreement shall have been satisfied in all material
respects.
If any of the foregoing conditions is not satisfied
and, as a result, the Closing does not occur, the Deposit shall be returned to
Purchaser, this Agreement shall terminate and neither party shall have any
further rights or obligations under this Agreement except as otherwise
specifically provided herein; provided, however, that if any such condition is
not satisfied due to the Sellers' default, Purchaser shall have the rights
provided for in Section 16.2.
12. Risk of Loss Upon Casualty or Taking. If prior to the Closing
the Property shall suffer any damage by fire or other casualty, the cost to
repair (excluding repairs which are Tenants' obligation to make) which is
reasonably expected to exceed 15% of the Purchase Price, or if any proceeding
shall be instituted for the taking in
70
condemnation or by eminent domain of any material portion of the Property,
Purchaser shall have the right to terminate this Agreement by giving written
notice to the Sellers within ten (10) Business Days (but in no event later than
the Closing Date) after the Purchaser first becomes aware of such damage or
taking. The Sellers agree to give Purchaser prompt written notice of the
occurrence of any such damage or taking. If this Agreement is so terminated, the
Escrow Agent shall return the Deposit to Purchaser (and the Sellers and
Purchaser shall execute a written instruction to Escrow Agent to do so) and
neither party shall have any further obligations or liabilities hereunder, or
otherwise with respect to the subject matter hereof, except as otherwise
expressly provided herein. If Purchaser does not properly elect such option to
terminate, or if the damage or taking shall not be of sufficient magnitude to
entitle Purchaser to terminate this Agreement pursuant to this Article 12, this
Agreement and the obligations of the Sellers and Purchaser hereunder shall
remain in full force and effect, and Purchaser shall acquire the Membership
Interests notwithstanding such damage to or taking of the Property and shall pay
the full Purchase Price therefor, except that (a) at the Closing the Sellers
shall pay (and/or cause VCR to pay, as applicable) over to Purchaser or Owner
(or Owner shall retain) Owner's share (pursuant to the REA) of the amount of
insurance proceeds or taking award, if any, received by Owner (and/or VCR, as
applicable) prior to the date of the Closing, (b) Purchaser shall receive a
credit against the Purchase Price for the amount of any deductible and (c) prior
to the Closing the Sellers shall not permit Owner or VCR to settle or compromise
any claim for such proceeds or award without the prior consent of Purchaser,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, the Sellers (and/or VCR, as applicable) shall be entitled
71
to receive or retain (i) out of such casualty insurance proceeds or award, any
amounts expended by Owner or VCR prior to the Closing to restore or protect the
Property (provided that any such restoration or protection by the Owner or VCR
shall be subject to Purchaser's approval, not to be unreasonably withheld) and
(ii) rental or business interruption proceeds allocable to periods prior to the
Adjustment Point, which entitlement shall survive the Closing.
13. Operation of the Property Until Closing; Tax Returns.
13.1 Standard of Operation. From the date hereof until the
Closing, the Sellers shall (a) cause Owner and VCR to maintain the Property
(other than the portions thereof which are Tenants' responsibility to maintain
under Leases) in the same manner and condition that exists on the date hereof,
as such condition shall be altered by reason of Casualty, Taking and/or normal
wear and tear (provided, that in all events the Sellers shall not be obligated
to cause Owner or VCR to make any capital improvements, repairs or replacements
to the Property); (b) cause Owner to pay its debts (or in good faith contest the
same) as they become due; (c) without the express written consent of Purchaser,
not permit Owner or VCR to (i) materially modify any Lease, (ii) enter into any
new Lease or extend or renew an existing Lease, except for new Leases or Leases
renewals or extensions set forth in the list of pending lease transactions
contained in Exhibit O attached hereto and made a part hereof (it being
understood and agreed that the terms of any such new Lease or Lease renewal or
extension shall be deemed to comply with said Exhibit O if the fixed rent
provided for in the new Lease or Lease renewal or extension is not less than the
fixed rent provided therefor in Exhibit O and all other material terms of such
new Lease or Lease renewal or extension are
72
substantially as provided for, or more favorable to Owner than, those set forth
in Exhibit O) (other than renewals or extensions resulting from the exercise by
a Tenant of a currently existing renewal or extension option), (iii) cancel or
terminate any Lease or take any action to enforce any Lease which would have the
effect of canceling or terminating the same, or waive payment of any
post-Closing rent or performance by any Tenant of any post-Closing material
covenant in its Lease, (iv) amend or modify, consent to the assignment of or
waive any material right under the REA, (v) with the exception of Tenant
alterations, make any material alterations to the Property or enter into any new
contracts, or extend or renew or cancel any Other Agreement, relating to
material capital expenditures, (vi) enter into any other new contracts or
extend, renew or cancel any of the Other Agreements, except for contracts
executed in the ordinary and usual course and business and in accordance with
past practices and policies which can be terminated without penalty or payment
upon not more than sixty (60) days prior notice, (vii) enter into any material
agreement the effect of which is to cause the Sellers to be unable to assign the
Membership Interests to Purchaser, or (viii) materially amend any of the
organizational documents of Owner; and (d) cause Owner and VCR to otherwise
operate the Property in the ordinary course of business and consistent with
current practice.
13.2 Tax Returns. Subsequent to the Closing the Sellers
shall prepare timely and file, or cause to be prepared and timely filed, all
federal, state and local income tax returns for Owner for the period ending on
the Closing Date and pay all amounts due as shown on said returns, which
obligations shall survive the Closing.
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14. Title to the Membership Interests and the Property.
14.1 Title to the Membership Interests. On the Closing
Date, the Membership Interests shall be assigned and transferred by the Sellers
to Purchaser free and clear of all liens and encumbrances.
14.2 Title Defects. If on the Closing Date the Sellers
shall be unable to cause title to the Property to be free and clear of all
exceptions to title other than Permitted Encumbrances, then the Sellers shall be
entitled, but shall not be obligated, to adjourn the Closing for one or more
periods not to exceed ninety (90) days in the aggregate for the purpose of
causing title to be placed in the condition called for by this Agreement. If on
the Closing Date, as the same may be adjourned as above provided, title to the
Property is not free and clear of all exceptions to title other than Permitted
Encumbrances, Purchaser may terminate this Agreement by notice to the Sellers
delivered on or prior to the Closing Date, as the same may have been extended,
in which event this Agreement shall be terminated and of no further force or
effect, and neither party shall have any obligations of any nature to the other
hereunder or by reason hereof, except as to those obligations hereunder that are
specifically stated to survive such termination, and the Deposit shall be
distributed by Escrow Agent in accordance with Section 3.2.2 (and the Sellers
shall join with Purchaser in executing a written instruction to Escrow Agent to
do so); provided, however, that in the event that title to the Property is not
free and clear of all exceptions to title other than Permitted Encumbrances due
to a breach of the proviso clause of the next sentence, Purchaser shall have the
rights set forth in Section 16.2. Neither the Sellers nor Owner shall be under
any obligation to take any steps or to institute or prosecute any action or
proceedings, or
74
expend any sums of money, to remove from title to the Property any defect,
encumbrance or objection to title; provided, however, that the Sellers shall be
responsible for discharging (and at or prior to the Closing shall discharge) any
liens, encumbrances or other title defects which do not constitute Permitted
Encumbrances, which can be discharged solely by the payment of a sum of money
and which arise solely on account of actions or failures to act by Owner or VCR.
The Sellers may use any part of the Purchase Price to discharge the same,
provided that the Sellers shall deliver to Purchaser at the Closing instruments
in recordable form sufficient to discharge such liens and encumbrances of
record. Except for the Sellers' failure to discharge such monetary liens or
encumbrances as aforesaid, the Sellers shall not be deemed in default of this
Agreement, and Purchaser shall not be entitled to damages of any kind, if the
Sellers shall fail or be unable to cause title to the Property to be in the
condition called for by this Agreement, nor shall Purchaser, in such
circumstances, be entitled to specific performance of this Agreement (unless the
same is due to a default by the Sellers under this Agreement). In no event shall
the Sellers or Owner be obligated to discharge any mechanic's or similar lien
created by a Tenant in occupancy at the Closing whose Lease is in full force and
effect, but the Sellers shall cause Owner (or VCR, as applicable) to use
reasonable efforts to cause such Tenant to do so. For purposes of this Section
14.2, the Sellers shall be deemed to have cured or removed any title exception
if the Title Company or any other reputable title insurance company shall be
prepared to issue to Owner an owner's policy of title insurance for the Property
(at standard rates or with the Sellers paying any additional premium in
connection with such exception) dated as of the
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Closing Date insuring over such exception, or providing affirmative coverage or
an endorsement with respect thereto that is reasonably satisfactory to
Purchaser.
14.3 Waiver by Purchaser. Purchaser, at its election, may
at the Closing accept the Membership Interests notwithstanding the fact that the
then-existing state of title to the Membership Interests and/or Property may be
subject to one or more title exceptions or defects not provided for in this
Agreement, without reduction of the Purchase Price or any credit or allowance on
account thereof or any claim against the Sellers by reason thereof.
14.4 Full Performance; Survival. The acceptance of the
assignment of Membership Interests and other closing documents by Purchaser from
the Sellers shall be deemed full performance on the part of the Sellers of all
of their obligations under this Agreement, except as to any such obligation
which is specifically stated in this Agreement to survive the Closing or is
expressly contained in documents delivered at Closing. Except where otherwise
expressly provided in this Agreement, none of the provisions of this Agreement
shall survive the Closing.
15. Brokers, etc.
15.1 Purchaser's Representation. Purchaser represents and
warrants to the Sellers that neither Purchaser, nor any affiliate thereof, has
dealt with any broker, finder or like agent who might claim a commission or fee
in connection with the transaction contemplated in this Agreement or on account
of introducing the parties, the preparation or submission of brochures, the
negotiation or execution of this Agreement or the closing of the transaction
contemplated herein, other than Xxxxxxx Xxxxx & Co. ("Goldman"). Purchaser
agrees to indemnify and hold harmless the Sellers and their
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successors and assigns and affiliates from and against any and all claims,
losses, liabilities and expenses, including without limitation reasonable
attorneys' fees, disbursements and charges, arising out of any claim or demand
for commissions or other compensation for bringing about this transaction by any
broker, finder or similar agent or party other than Goldman who claims to have
dealt with Purchaser or any affiliate thereof in connection with this
transaction.
15.2 The Sellers' Representation. The Sellers represent
and warrant to Purchaser that the fees of Goldman shall be paid by the Sellers
pursuant to a separate agreement. The Sellers agree to indemnify and hold
harmless Purchaser and its successors and assigns from and against any and all
claims, losses, liabilities and expenses, including without limitation
reasonable attorneys' fees, disbursements and charges, arising out of any claim
or demand for commissions or other compensation for bringing about this
transaction by any broker, finder or similar agent or party, including, without
limitation, Goldman, who claims to have dealt with any Seller or any affiliate
thereof but not with Purchaser in connection with this transaction.
15.3 Survival. The provisions of this Article 15 shall
survive the Closing or the termination of this Agreement.
16. Default; Remedies.
16.1 Purchaser's Default. If at the Closing Date the
conditions to the obligation of the Sellers to close title as set forth in
Article 10 have not been fulfilled on account of the default of Purchaser in
performing any of its obligations hereunder, and the Closing does not occur as a
result thereof, then the Sellers shall be entitled as their sole and exclusive
remedy to terminate this Agreement and receive the
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Deposit from the Escrow Agent (and/or draw on any Letters of Credit) as
liquidated damages for Purchaser's default (and in such circumstances Purchaser
shall, if applicable, join with the Sellers in a written instruction to Escrow
Agent to pay the Deposit to the Sellers). The Sellers and Purchaser agree that
it would be impractical or impossible to fix actual damages in the case of a
default by Purchaser and that the Deposit (whether in the form of cash held by
Escrow Agent and/or any Letters of Credit) is a reasonable estimate of the
Sellers' damages in such event.
16.2 The Sellers' Default. If at the Closing Date the
conditions to the obligation of Purchaser to close title as set forth in Article
11 have not been fulfilled on account of the default of the Sellers hereunder,
and the Closing shall not occur as a result thereof, then Purchaser shall be
entitled to pursue, at its election, either of the following as its sole and
exclusive remedy: (i) terminate this Agreement and have the Deposit returned to
it by the Escrow Agent, or (ii) seek specific performance of the Sellers'
obligations under this Agreement. Purchaser hereby waives any right to xxx the
Sellers for damages (including consequential and punitive damages) for any
default by the Sellers hereunder but if the Closing occurs such waiver shall not
apply to damages to which Purchaser may be entitled hereunder by reason of any
breach by the Sellers of any of their indemnities, warranties or representations
hereunder which survive the Closing; provided, however, that in the event the
remedy of specific performance is unavailable to Purchaser, Purchaser may seek
damages (but not consequential, indirect or punitive damages) from the Sellers.
16.3 Survival. The provisions of this Article 16 shall
survive the termination of this Agreement.
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17. Estoppels.
17.1 Required Estoppels. At or before the Closing, and as
a condition to Purchaser's obligation to close, the Sellers shall cause Owner
(and/or VCR, as applicable) to deliver to Purchaser the following estoppel
letters:
17.1.1 estoppel letters from each of the parties
(other than Owner) to the REA, such estoppel letters to be in substantially the
form of Exhibit P attached hereto and made a part hereof and dated as of the
Closing Date; and
17.1.2 estoppel letters from Tenants at the
Property which occupy in excess of seventy percent (70%) of the then-occupied
gross leasable area of the Property in the aggregate and in all events including
the Tenant under each of the VCR Leases, the Tao Restaurant Lease, the Tao
Nightclub Lease and the Diamond Resort Lease (such tenants, the "Required
Tenants"), such estoppel letters to be in substantially the form of Exhibit Q
attached hereto and made a part hereof and dated not more than thirty (30) days
prior to the Closing Date; provided, however, that if any Lease provides for the
form or content of an estoppel letter, Purchaser shall accept an estoppel letter
as called for therein if any Tenant refuses to execute one in the form annexed
hereto as Exhibit Q after being requested to do so by Owner (or VCR, as
applicable). For purposes of this subsection 17.1.2 and Section 17.2, (a) the
VCR Showroom Lease, the Gondola Lease and the VCR Office Lease shall be deemed
to be Leases, (b) VCR shall be deemed to be in occupancy on the Closing Date of
the space covered by the VCR Showroom Lease, the Gondola Lease and the VCR
Office Lease, (c) the space covered by the Gondola Lease shall be deemed to only
be the space covered by the Emporio d'Gondola store and (d) the execution and
delivery by VCR on
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the Closing Date of the VCR Showroom Lease, the Gondola Lease and the VCR Office
Lease shall be deemed to be execution and delivery by VCR of satisfactory tenant
estoppel letters with respect to such Leases.
17.2 The Sellers' Estoppels. If Owner and VCR shall be
unable to obtain all of the estoppel letters required by Section 17.1, then the
Sellers shall have the right (but not the obligation) to provide to Purchaser,
and Purchaser shall accept in lieu of the missing estoppel letter(s), one or
more estoppel letters signed by the Sellers in the form of Exhibit R attached
hereto and made a part hereof (a "Sellers' Estoppel Letter"), with respect to
any Tenants (other than the Required Tenants, for which no Sellers' Estoppel
Letter may be delivered by the Sellers in lieu of the Required Tenants' estoppel
letters) selected by the Sellers, to the extent necessary to achieve the seventy
percent (70%) requirement set forth in Section 17.1.2. Furthermore, it shall be
a condition precedent to Purchaser's obligation to consummate the Closing that
the Sellers deliver to Purchaser a Seller's Estoppel Letter for the Madame
Tussaud Lease and for the Sephora Lease, if the Tenant under the applicable
Lease does not deliver an estoppel letter. Notwithstanding the foregoing, in no
event shall Purchaser be required to proceed to Closing if the Sellers are
unable to deliver estoppel letters signed by Tenants who aggregate at least
fifty percent (50%) of the then-occupied gross leasable area of the Property.
Statements made by the Sellers in a Sellers' Estoppel Letter shall constitute
warranties and representations by the Sellers which shall survive the Closing
for the period, and shall otherwise be subject to all of the limitations, set
forth in Section 8.6 and any other applicable provisions of this Agreement. If
the Sellers deliver any Sellers' Estoppel Letters and, subsequent to the
Closing, the Sellers receive an estoppel letter, the
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Sellers shall deliver such estoppel letter to Purchaser and in such case, (1) to
the extent such estoppel letter conforms with a Sellers' Estoppel Letter for the
Tenant in question, such Sellers' Estoppel Letter shall be and become of no
further force or effect or (2) if no Sellers' Estoppel Letter was delivered for
the Tenant in question, the Sellers shall designate one or more of Sellers'
Estoppel Letters delivered pursuant to this Section 17.2 which, in the
aggregate, comprise not more than the same percentage of the gross leasable area
of the Property as the Tenant in question, and such Sellers' Estoppel Letter(s)
shall be of no further force or effect.
17.3 Variance between Estoppels and Forms Annexed as
Exhibits. The Sellers shall not be in breach or default under this Agreement,
and, subject to the further provisions of this sentence, Purchaser shall not
have the right to elect to not consummate the Closing, if one or more estoppel
letters signed by any Tenants set forth allegations or facts at variance with
statements in the forms of estoppel letters annexed hereto as exhibits or
information set forth in other exhibits to this Agreement or otherwise set forth
claims, defenses, or other adverse matters (collectively, "Estoppel Claims"),
but it shall be a condition to Purchaser's obligation to close the transactions
provided for herein that such Estoppel Claims (excluding Estoppel Claims which,
under the terms of this Agreement, any instrument or document delivered pursuant
hereto or any other agreement of the Sellers executed and delivered on or prior
to the Closing Date, it is the Sellers' obligation to pay or rectify), taken as
a whole, do not reveal facts of which Purchaser had no knowledge (including any
deemed knowledge pursuant to clauses (i), (iii), (iv) and (v) of the last
sentence of subsection 8.6.4) on or before the date of this Agreement and which
result in a Material Loss.
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17.4 All Estoppels to be Delivered. The Sellers agree that
notwithstanding the fact that estoppel letters are not required from all of the
Tenants, as specified in Section 17.1, the Sellers shall request all Tenants to
execute estoppel letters in the forms annexed hereto as Exhibit Q and the
Sellers shall use commercially reasonable efforts to obtain all such estoppel
letters.
18. Notices. Except as otherwise provided in this Agreement, all
notices, demands, requests, consents, approvals or other communications which
are required or permitted to be given under this Agreement or which either party
desires to give with respect to this Agreement shall be in writing and shall be
delivered by hand or sent by telecopy (with the original sent by hand,
first-class mail, postage prepaid), or sent postage prepaid, by registered or
certified mail, return receipt requested, or by reputable overnight courier
service addressed to the party to be notified as follows (or to such other
address as such party shall have specified at least three (3) Business Days
prior thereto by like notice) and shall be deemed given when so delivered by
hand or telecopied, and if mailed, three (3) Business Days after mailing (one
(1) Business Day in case of overnight courier service), as follows:
if to the Sellers, to:
Grand Canal Shops Mall MM Subsidiary, Inc.
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxxx
Tel: (000) 000-0000
Fax (000) 000-0000
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With copies at the same time to:
Grand Canal Shops Mall Subsidiary, LLC.
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
and:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
if to Purchaser, to:
GGP Limited Partnership
c/o General Growth Properties, Inc.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxx
with copies at the same time to:
Xxxx, Gerber & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxx, Esq. & Xxxxxxx X. Xxxxx, Esq.
if to Guarantor, to:
Venetian Casino Resort, LLC
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxxx
Tel: (000) 000-0000
Fax (000) 000-0000
and:
00
Xxxx, Xxxxx, Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
19. Further Assurances. Each of the Sellers and Purchaser agrees,
at any time and from time to time after the Closing, to execute, acknowledge,
where appropriate, and deliver such further instruments and documents and to
take such other action as the other party may reasonably request in order to
carry out the intents and purposes of this Agreement, provided that such request
is made by notice given within one (1) year after the Closing Date. If required
by the other party, the party making the request will bear the reasonable cost
involved. Neither party shall be required to execute any instrument or document
pursuant to this Article 19 which would increase the liability or obligations of
such party over that provided for in this Agreement and the instruments and
documents executed by such party pursuant hereto. Without limiting the
foregoing, the Sellers shall, upon the request of Purchaser from time to time,
provide signed "representation letters" with respect to revenues and expenses of
Owner for the period prior to Closing to enable Purchaser's accountants to
render an opinion on Purchaser's or any of its affiliates' financial statements
(including financial statements with respect to the Property), provided that (a)
the same shall be at no third party (out of pocket) cost to the Sellers and
Purchaser shall reimburse the Sellers for all reasonable cost and expenses
incurred by the Sellers in connection therewith within fifteen (15) days written
notice and (b) the Sellers shall have no liability with respect to any
inaccuracies or mistakes in said letters. The provisions of this Article 19
shall survive the Closing.
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20. Captions. The article and section titles or captions in this
Agreement and the Table of Contents and the Schedule of Exhibits prefixed hereto
are for convenience only and shall not be deemed to be part of this Agreement.
21. Governing Law; Construction. This Agreement shall be
construed, interpreted and enforced in accordance with the laws of the State of
New York applicable to contracts negotiated, executed and to be performed wholly
within such State. Each party hereto acknowledges that it was represented by
counsel in connection with this Agreement and the transactions contemplated
herein, that it and its counsel reviewed and participated in the preparation and
negotiation of this Agreement and the documents and instruments to be delivered
hereunder, and that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or the documents and instruments to be
delivered hereunder.
22. Entire Agreement; No Third Party Beneficiary, etc. This
Agreement, including all Exhibits, contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
understandings, if any, with respect thereto. The parties have made no
representations with respect to the subject matter of this Agreement and have
given no warranties with respect to the subject matter hereof except as
expressly provided herein and/or expressly provided in the documents delivered
at Closing. This Agreement may not be modified, changed, supplemented or
terminated, nor may any obligations hereunder be waived, except by written
instrument signed by the party to be charged or by its agent duly authorized in
writing or as otherwise expressly permitted herein. The parties do not intend to
confer any benefit
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hereunder on any person, firm, corporation or other entity other than the
parties hereto, except that VCR shall be a third-party beneficiary of the
provisions of subsections 7.4.1 and 7.4.2 hereof. The provisions of this Article
22 shall survive the Closing or termination of this Agreement.
23. Waivers; Extensions. No waiver of any breach of any agreement
or provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof or of any other agreement or provision herein
contained. No extension of time for performance of any obligations or acts shall
be deemed an extension of the time for performance of any other obligations or
acts. Whenever in this Agreement it is provided that a document must be dated
within a specified number of days prior to the Closing Date, the reference to
the Closing Date in each such provision shall be deemed to be the scheduled
Closing Date set forth in the first sentence of Section 5.1 and not any date to
which such Closing Date may be adjourned pursuant to the provisions hereof. The
provisions of this Article 23 shall survive the Closing or termination of this
Agreement.
24. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the parties may require.
25. Transaction Expenses; Fees and Disbursements of Counsel, etc.
25.1 Transaction Expenses. The Sellers shall pay recording
fees and charges for documents required to remove exceptions to title which do
not constitute Permitted Encumbrances and/or the cost of causing the Title
Company to omit or insure over any such exceptions, the fees of Goldman and
one-half (1/2) of the cost of any
86
escrow fee charged by Escrow Agent in connection with this transaction.
Purchaser shall pay recording charges (except as provided in the preceding
sentence) and one-half (1/2) of the cost of any escrow fee charged by Escrow
Agent in connection with this transaction. The Sellers shall pay any documentary
stamp taxes and surtaxes, transfer taxes and similar charges payable in
connection with the transfer of the Membership Interests by the Sellers to
Purchaser. Purchaser shall pay the cost of updating the survey and the premiums
for the owner's (and any lender's) policies of title insurance and all
endorsements thereto issued to Purchaser or Owner (or any lenders) at Closing.
25.2 Other Expenses. Subject to Section 25.1, each party
shall pay its own expenses in connection with the transaction contemplated in
this Agreement, including the fees, disbursements and charges of its own
counsel, accountants, consultants, experts and other advisors in connection with
the negotiation and preparation of this Agreement and the Closing.
25.3 Survival. The provisions of this Article 25 shall
survive the Closing or the termination of this Agreement.
26. Assignment.
26.1 General Prohibition. Subject to the further
provisions of this Article 26, Purchaser shall not, without the prior written
consent of the Sellers, assign this Agreement or its rights hereunder, in whole
or in part, to any other person or entity. Any transfer of fifty percent (50%)
or more of the direct or indirect equity, beneficial or voting interests in
Purchaser at any level or tier of ownership, whether in one transaction or a
series of transactions, shall constitute an assignment for purposes of this
Article 26.
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26.2 Affiliates. Notwithstanding anything to the contrary
contained in this Article 26, Purchaser may assign its rights hereunder to any
Affiliate (as hereinafter defined) of Purchaser. For purposes of this Article
26, (x) "Affiliate" means any entity controlled by Purchaser, an entity in which
Purchaser directly or indirectly owns fifty percent (50%) or more of the voting
rights and/or beneficial interests, or an entity that is under common control
with Purchaser and (y) "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
the entity in question, whether through the ownership of voting stock, by
contract or otherwise.
26.3 Assignor Remains Liable. In connection with any
assignment permitted or consented to hereunder, such assignee shall assume in
writing all of the assignor's obligations under the Agreement pursuant to an
assumption agreement in form and substance reasonably satisfactory to the
Sellers, provided that the Purchaser originally named herein shall not be
relieved from its obligations under this Agreement. Any other purported or
attempted assignment or delegation without obtaining the Sellers' prior written
consent or not otherwise permitted hereunder shall be void and of no force and
effect. No consent given by the Sellers to any transfer or assignment of
Purchaser's rights or obligations hereunder shall be construed as a consent to
any other transfer or assignment of Purchaser's rights or obligations hereunder.
27. Counterparts. This Agreement may be executed in counterparts,
each of which (or any combination of which, signed by all of the parties) shall
be deemed an original, but all of which, taken together, shall constitute one
and the same instrument.
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28. No Recording. The parties agree that neither this Agreement
nor any memorandum or notice hereof shall be recorded or filed in any public
records except as required by law (and except for filings with any court (but
not in any real estate, county or state recording office) pursuant to any
litigation). If Purchaser violates the terms of this Article, the Sellers, in
addition to any other rights or remedies it may have, may immediately terminate
this Agreement by giving notice to Purchaser of its election so to do and
receive and retain the Deposit as liquidated damages in accordance with Section
16.1. The provisions of this Article shall survive the Closing or any
termination of this Agreement.
29. Confidentiality. The parties hereto agree that, except as
required by law (including securities laws, rules and regulations), each will
treat as confidential the terms of this Agreement and the transaction
contemplated herein and that prior to Closing neither will issue a press
release, advertisement or other public communication with respect to this
Agreement or relating to the transaction contemplated herein without the prior
approval of the other party. In addition, Purchaser agrees that, prior to
Closing, it will treat as confidential all non-public information relating to
the Property furnished to Purchaser by or on behalf of the Sellers and that it
will not disclose any such information to other persons or entities except for
its attorneys, accountants and consultants, if any, its lenders, the Title
Company, its insurance companies and insurance brokers, its partners or
investors, if any, or as may be compelled or required by law (including
securities laws, rules and regulations). If this Agreement is terminated or the
Closing does not otherwise occur, Purchaser shall redeliver to the Sellers all
materials with respect to the Property furnished to it by or at the behest of
the Sellers and shall destroy all copies thereof and
89
notes relating thereto and certify to the Sellers in writing that it has done
so. The preceding provisions of this Article 29 shall survive any termination of
this Agreement. On the Closing Date, the parties shall either issue a joint
press release reasonably satisfactory to each or, if each issues its own press
release, each such release must be reasonably satisfactory to the other.
30. Prevailing Party's Attorneys' Fees. In connection with any
litigation, including appellate proceedings, initiated by a party hereto against
the other party hereto and arising out of this Agreement or any instrument or
document executed pursuant hereto, the party adjudicated to be the substantially
prevailing party shall be entitled to recover reasonable attorneys' fees and
disbursements from the other party. The provisions of this Article shall survive
the Closing or the termination of this Agreement.
31. Indemnification. Any party entitled to indemnification by the
other party pursuant to any provision of this Agreement or under any instrument
or document executed and delivered pursuant hereto (the "Protected Party") shall
give prompt notice to the other party (the "Indemnifying Party") of any claim,
demand or action asserted, made or instituted against the Protected Party which
is covered by such indemnification; provided, however, that the Protected
Party's failure to do so shall not relieve the Indemnifying Party of its
indemnification obligations except to the extent that the Indemnifying Party has
been materially prejudiced by such failure. The Indemnifying Party shall have
the right, by notice to the Protected Party, to assume the defense of any claim,
demand or action with respect to which the Protected Party is entitled to
indemnification hereunder, but only if, in such notice, the Indemnifying Party
90
acknowledges that such claim, demand or action is covered by the indemnity in
question. If the Indemnifying Party gives such notice, (i) such defense shall be
conducted by counsel selected by the Indemnifying Party and approved by the
Protected Party, such approval not to be unreasonably withheld or delayed
(provided, however, that the Protected Party's approval shall not be required
with respect to counsel designated by the Indemnifying Party's insurer), (ii) so
long as the Indemnifying Party is conducting such defense with reasonable
diligence, the Indemnifying Party shall have the right to control said defense
and shall not be required to pay the fees or disbursements of any counsel
engaged by the Protected Party for services rendered after the Indemnifying
Party has given the notice provided for above to the Protected Party or prior to
the time that the Protected Party has given to the Indemnifying Party the notice
required by the first sentence of this Article 31, and (iii) the Indemnifying
Party shall have the right, without the consent of the Protected Party, to
settle such claim, demand or action, but only provided that the Indemnifying
Party pays all amounts due in connection with or by reason of such settlement
and, as part thereof, the Protected Party is unconditionally released from all
liability in respect of such claim, demand or action. The Protected Party shall
have the right to participate in the defense of any claim, demand or action
being defended by the Indemnifying Party at the expense of the Protected Party,
but the Indemnifying Party shall have the right to control such defense. In no
event shall the Protected Party (a) settle any such claim, demand or action
without the consent of the Indemnifying Party or (b) if any such claim, demand
or action is covered by the Indemnifying Party's liability insurance, take or
omit to take any action which would cause the insurer not to defend such claim,
demand or action or to disclaim liability in
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respect thereof. The provisions of this Article 31 shall survive the Closing or
any termination of this Agreement.
32. Waiver of Jury Trial. THE PARTIES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT EITHER PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER OR IN CONNECTION WITH, THE PROPERTY, THE MEMBERSHIP INTERESTS, THE
ASSIGNMENT INSTRUMENT OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH, OR
IN RESPECT OF ANY COURSE OF CONDUCT, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTIONS OF EITHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR EACH OF THE
PARTIES TO ENTER INTO THIS TRANSACTION AND SHALL SURVIVE THE CLOSING OR THE
TERMINATION OF THIS AGREEMENT.
33. Partnership Liabilities. It is the intention of the Sellers
and Purchaser that, notwithstanding the fact that Purchaser is purchasing the
Membership Interests, Purchaser shall not be obligated to pay or discharge any
liabilities or other obligations which Purchaser would not assume or be liable
for if Purchaser were purchasing the fee interest in the Property instead of the
Membership Interests.
33.1 The Sellers' Indemnification. In order to implement
the foregoing, but subject to the provisions of Section 33.2, the Sellers hereby
defend, indemnify and agree to hold harmless Purchaser and any affiliate of
Purchaser which receives an assignment of any of the Membership Interests from
the Sellers at Closing (Purchaser and any such affiliates shall, for purpose of
this Article 33, be referred to
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collectively as "Purchaser") from and against all liabilities, obligations,
debts, claims, causes of action, judgments and damages which may be asserted
against, imposed on or incurred by Owner after the Closing by reason of any of
the following: (i) any obligations of Owner for borrowed money which was
incurred prior to the Closing; (ii) any claims against the Owner under Leases
for overpaid Rents or other charges, for failure of the landlord thereof to
perform any of its obligations thereunder or for misapplication of security
deposits, in each case with respect to any period prior to the Closing; (iii)
any claims made by any party (other than Owner) to any of the Other Agreements
with respect to any period prior to the Closing; (iv) all obligations and
payments due from Owner to creditors with respect to any period prior to the
Closing; (v) any amounts due and payable by Owner to the Managing Agent
(including, without limitation, those arising out of the termination of the
Management Agreement); (vi) all obligations with respect to existing litigation
against Owner, or any litigation in connection with the actions or omissions of
Owner, instituted against Owner after the date hereof or on or after the Closing
Date to the extent based on any event occurring prior to the Adjustment Point;
(vii) any income, excise, franchise or other taxes payable by Owner in respect
of any period prior to the Adjustment Point; (viii) any other liabilities,
obligations, debts, claims, causes of action, judgments or damages which may be
imposed upon, incurred by or asserted against Owner in connection with the
actions or omissions of Owner and which are based on any event occurring prior
to the Closing (including, but not limited to, Owner's obligations under the ATM
Agreement and under that certain Release and Termination of Leasehold Agreement
by and between WB Stage 16 and Owner, dated January 3, 2003); (ix) any
liabilities or obligations relating to any
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property of Owner (other than the Property or related property) or any
activities of Owner (other than the ownership and operation of the Property and
related property); and (x) any fine, penalty or the like that is imposed or
assessed by a governmental authority for the period prior to the Closing,
whether or not imposed or assessed before or after the Closing (the foregoing,
collectively, the "Excluded Liabilities").
33.2 Exclusions to the Sellers' Indemnification. The
indemnity of the Sellers set forth in this Article 33 shall not apply to (and
the term Excluded Liabilities shall be deemed not to include) any of the
following or to any liability, obligation, debt, claim, cause of action,
judgment or damage based on any of the following: (a) any matter accruing after
the Adjustment Point except to the extent the Sellers are expressly obligated in
respect thereof under other provisions of this Agreement; (b) any matter
expressly assumed by Purchaser or Owner or as to which the Sellers are expressly
relieved of any obligations or responsibilities under the terms of this
Agreement; (c) any obligation, liability, debt, claim, cause of action, judgment
or damage that would have been incurred, suffered or assumed by Purchaser if
Purchaser had acquired the Property by deed (or assignment of lease in the case
of the Casino Level Master Lease) and assumed all liabilities and obligations of
Owner accruing post-Closing under or in respect of the Leases, the REA, the
Other Agreements, the VCR Showroom Lease, the Gondola Lease, the VCR Office
Lease and the Casino Level Master Lease; (d) any matter or item to the extent an
apportionment has been made or is provided for with respect thereto in this
Agreement; (e) any matter relating to title to the Property; (f) any matter
relating to the physical condition of the Property (including any Personal
Property) including, without limitation, the need for any required repairs or
replacements
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or any condition at the Property which violates applicable building, zoning,
use, occupancy, fire, safety, health, environmental, disability or other laws,
ordinances or codes; (g) any claim with respect to personal injury, death or
property damage which occurs on or after the Closing Date; (h) any matter to the
extent covered by any insurance policy maintained by Owner (or by VCR pursuant
to the REA if such policy covers Owner and the Property) after the Closing; (i)
any matter relating to the Property's non-compliance with any applicable laws,
ordinances, orders or regulations (including, without limitation, any cost
associated with environmental compliance); and (j) any Estoppel Claims. Without
limiting the generality of clauses (f) and (i) above, but in amplification
thereof, if any Tenant or other party claims that Owner is in default because it
failed to make any required repairs, replacements or improvements, or if any
governmental authority or other party asserts that the Property is in violation
of any applicable laws, ordinances or codes, unless otherwise expressly provided
elsewhere in this Agreement the Sellers shall have no liability, responsibility
or obligation to make any such repairs, replacements or improvements, or to
comply with any such laws, ordinances or codes or to remedy any violation
thereof, or to pay the cost thereof, even if the condition which gives rise to
the need therefore occurred prior to the Closing, it being understood and agreed
that except as otherwise expressly provided elsewhere in this Agreement
Purchaser has agreed to acquire the Membership Interests on the basis that the
Property will be in "as is" condition and that the Sellers shall not be
obligated to make any repairs, replacements or improvements thereto or remedy
any conditions therein which are in violation of any applicable laws, ordinances
or codes.
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34. Arbitration.
34.1 Final and Binding. In any circumstance for which
arbitration is specifically provided for herein, the party desiring such
arbitration shall give notice to JAMS/Endispute (or its successor) and to the
other party to this Agreement. Such arbitration shall be a final and binding
arbitration upon the parties.
34.2 Rules. The arbitration will be conducted by a sole
arbitrator in accordance with the provisions of JAMS/Endispute's Streamlined
Arbitration Rules and Procedures (the "Rules") in effect on the date of
commencement of the arbitration. The arbitrator shall be selected by agreement
of the parties from JAMS/Endispute's panel of neutrals in accordance with those
Rules, unless the parties agree otherwise. The arbitrator shall (unless not
possible given JAMS/Endispute's panel of neutrals) have professional experience
in the commercial real estate business.
34.3 Arbitration Governing Law. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Section 1-16, to the
exclusion of state laws inconsistent therewith or that would produce a different
result. The place of arbitration shall be New York, New York.
34.4 Written Opinion. The arbitrator shall not be required
to render a written, reasoned opinion with respect to the award unless either
party requests otherwise, provided that the requesting party pays all fees and
expenses of the arbitrator in connection with such opinion. Non-appealable,
final judgment upon the arbitrator's decision may be entered by any court having
jurisdiction thereof, and the parties consent to jurisdiction in the federal and
state courts located in the County of Xxxxx, State of
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Nevada for this purpose. The provisions of this Article 34 may be enforced by
any court of competent jurisdiction.
34.5 Arbitration Fees. The prevailing party in any
arbitration shall be entitled to recover from the non-prevailing party all
costs, fees and expenses in connection with such arbitration, including
attorneys' fees and the fees and expenses of the arbitrator, and such recovery
shall be part of the arbitrator's award.
35. REA. Purchaser hereby acknowledges and confirms that
affiliates of the Sellers own properties adjoining, above, below and connected
to the Property and which, together with the Property, are encumbered by the
REA. Purchaser acknowledges that compliance by Owner after the Closing with the
provisions of the REA (including Sections IV(B)(2) and XIV(3)(d) of the Amended
and Restated REA) is a critical component of the transaction contemplated by
this Agreement and that the Sellers would not be entering into this Agreement
without Owner remaining bound by and obligated under the REA after the Closing.
The provisions of this Article 35 shall survive the Closing.
36. Joint and Several Liability. Notwithstanding any other
provision hereof, any liability or obligation of the Sellers or either Seller
under any provision of this Agreement, whether for any post-Closing adjustment
pursuant to Article 6, breach of a representation or warranty, breach of a
covenant, indemnification or otherwise, is a joint and several liability or
obligation of the Sellers.
37. Guaranty. By executing this Agreement, VCR hereby agrees to be
liable for all of the Sellers' post-Closing liabilities and obligations
contained in this Agreement and in the other documents executed and delivered by
Seller in connection
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with this Agreement and the Closing, it being expressly understood that VCR is
signing this Agreement solely in its capacity as guarantor as stated in this
Article 37.
38. ATM Agreement. Notwithstanding anything contained in this
Agreement to the contrary, during the term of the ATM Agreement, VCR shall
retain all of its rights and obligations under such agreement including, but not
limited to, the right to receive a portion of the revenues generated by the
automatic teller machines located on the Property. Neither Purchaser nor Owner
shall do anything which shall cause VCR and/or Ultron, Inc. to be in breach of
the ATM Agreement. The provisions of this Article 38 shall survive the Closing.
39. Canyon Ranch Spa Space. Sellers and Purchaser acknowledge and
confirm although it is their intent that the Property not include any space
currently occupied by Canyon Ranch for use as a spa (as opposed to the
separately demised Canyon Ranch retail store) or the lease covering such spa
space, as of the date hereof the Land includes certain such space. Sellers are
attempting to cause such space to be subdivided from the rest of the Land prior
to the Closing, and if that occurs, the Property conveyed at the Closing shall
not include such space or such lease. If, however, as of the Closing Date such
space is part of one of the legal parcels in which Grand Canal Shoppes is
situated, then (a) at the Closing the Sellers shall cause VCR to execute, and
Purchaser shall execute as the managing member and on behalf of Owner, a lease
of such space, which lease shall (i) provide that Owner shall lease such space
to VCR for a term of ninety-nine years and for a base rent of $1 per year; (ii)
provide that each of VCR and Owner shall use diligent efforts (at VCR's sole
cost and expense) to cause such subdivision to be effectuated, and that
immediately upon such subdivision, such space
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shall be conveyed by Owner to VCR for $1, (iii) provide for the structuring of
such conveyance in such a way so as to avoid real property transfer tax (e.g.
transfer of membership interests), (iv) provide for substantially the same
rights and obligations between the parties with respect to such space that would
apply if such space were part of the "Phase I Hotel/Casino" (as such term is
defined in the REA); (iv) not permit Owner to terminate such lease for any
reason; (v) contain "leasehold mortgagee protection provisions" substantially
similar to such provisions in the Casino Level Master Lease, and (vi) in all
other respects be reasonably satisfactory to the Sellers and Purchaser. The
provisions of this Article 39 shall survive the Closing.
40. Additional Sellers' Post-Closing Obligation. The Sellers shall
be liable and responsible for all allowances payable to Tenants in lieu of
tenant alterations which were payable prior to the Closing. The provisions of
this Article 40 shall survive the Closing.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
SELLERS:
GRAND CANAL SHOPS MALL
SUBSIDIARY, LLC.
By: Mall Intermediate Holding Company, LLC,
its managing member
By: Venetian Casino Resort, LLC,
its managing member
By: Las Vegas Sands, Inc.,
its managing member
By:____________________________
Name:
Title:
GRAND CANAL SHOPS
MALL MM SUBSIDIARY, INC.
By:__________________________
Name:
Title:
PURCHASER:
GGP LIMITED PARTNERSHIP
By:_____________________________
Name:
Title:
The undersigned has executed this Agreement solely for the purpose of
agreeing to be bound by the provisions of Article 37:
VENETIAN CASINO RESORT, LLC
By: Las Vegas Sands, Inc., as managing member
By: ________________________________
Name:
Title:
The undersigned has executed this Agreement solely for the purpose of
agreeing to be bound by the provisions of Section 3.2 and the last parenthetical
clause of the last sentence of Section 3.3:
LAWYERS TITLE INSURANCE CORPORATION
By: ________________________________
Name:
Title:
PWRW&G LLP DRAFT 4/10/04
GRAND CANAL SHOPS MALL MM SUBSIDIARY, INC.
and
GRAND CANAL SHOPS MALL SUBSIDIARY, LLC
Sellers,
and
GGP LIMITED PARTNERSHIP
Purchaser.
PURCHASE AND SALE AGREEMENT
April ____, 2004
Property
The Grand Canal Shoppes, Las Vegas, Nevada
TABLE OF CONTENTS
Page
----
1. Definitions ............................................................ 2
2. Agreement to Sell and Purchase ......................................... 13
3. Purchase Price ......................................................... 13
3.1 Purchase Price ................................................. 13
3.2 Escrow Provisions .............................................. 14
3.3 Letters of Credit .............................................. 17
4. Permitted Encumbrances. ................................................ 19
4.1 Definitions .................................................... 19
5. The Closing ............................................................ 20
5.1 Closing Date ................................................... 20
5.2 Actions at Closing ............................................. 21
6. Apportionments ......................................................... 21
6.1 Rents .......................................................... 21
6.2 Leasing Costs .................................................. 30
6.3 Ancillary Income ............................................... 31
6.4 Additional Items ............................................... 31
6.5 Adjustment Statement ........................................... 37
6.6 Gift Certificates .............................................. 37
6.7 Survival ....................................................... 37
7. Actions to be Taken and Documents to be Delivered at or Prior
to the Closing ......................................................... 38
7.1 The Sellers' Deliveries ........................................ 38
7.2 Purchaser's Deliveries ......................................... 43
7.3 Access to Records .............................................. 45
7.4 Due Diligence .................................................. 46
8. As Is; Representations and Warranties of the Sellers ................... 47
8.1 No Implied Representations ..................................... 48
8.2 "As-Is" Purchase ............................................... 49
8.3 Representations and Warranties of the Sellers .................. 51
8.4 No Independent Investigation ................................... 58
8.5 Effect of Estoppels ............................................ 59
8.6 Survival of Warranties, etc. ................................... 59
9. Representations and Warranties of Purchaser. ........................... 62
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Page
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9.1 Purchaser's Warranties ..................................... 62
9.2 Remaking of Warranties; Survival ........................... 63
10. Conditions to the Obligation of the Sellers to Close .................. 63
10.1 Purchase Price ............................................. 64
10.2 Representations and Warranties ............................. 64
10.3 Performance of Obligations ................................. 64
10.4 No Injunctions ............................................. 64
10.5 SNDA's ..................................................... 64
10.6 Other Conditions ........................................... 65
11. Conditions to the Obligation of Purchaser to Close .................... 65
11.1 Representations and Warranties ............................. 65
11.2 Performance of Obligations ................................. 69
11.3 Casino Level SNDA .......................................... 69
11.4 All Sellers to Close ....................................... 69
11.5 No Injunctions ............................................. 69
11.6 Title ...................................................... 70
11.7 Other Conditions ........................................... 70
12. Risk of Loss Upon Casualty or Taking .................................. 70
13. Operation of the Property Until Closing; Tax Returns .................. 72
13.1 Standard of Operation ...................................... 72
13.2 Tax Returns ................................................ 73
14. Title to the Membership Interests and the Property. ................... 74
14.1 Title to the Membership Interests .......................... 74
14.2 Title Defects .............................................. 74
14.3 Waiver by Purchaser ........................................ 76
14.4 Full Performance; Survival ................................. 76
15. Brokers, etc .......................................................... 76
15.1 Purchaser's Representation ................................. 76
15.2 The Sellers' Representation ................................ 77
15.3 Survival ................................................... 77
16. Default; Remedies. .................................................... 77
16.1 Purchaser's Default ........................................ 77
16.2 The Sellers' Default ....................................... 78
16.3 Survival ................................................... 78
17. Estoppels ............................................................. 79
17.1 Required Estoppels ......................................... 79
17.2 The Sellers' Estoppels ..................................... 80
17.3 Variance between Estoppels and Forms Annexed as Exhibits ... 81
17.4 All Estoppels to be Delivered .............................. 82
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Page
----
18. Notices ............................................................... 82
19. Further Assurances .................................................... 84
20. Captions .............................................................. 85
21. Governing Law; Construction ........................................... 85
22. Entire Agreement; No Third Party Beneficiary, etc. .................... 85
23. Waivers; Extensions ................................................... 86
24. Pronouns .............................................................. 86
25. Transaction Expenses; Fees and Disbursements of Counsel, etc. ......... 86
25.1 Transaction Expenses ............................................. 86
25.2 Other Expenses ................................................... 87
25.3 Survival ......................................................... 87
26. Assignment ............................................................ 87
26.1 General Prohibition .............................................. 87
26.2 Affiliates ....................................................... 88
26.3 Assignor Remains Liable .......................................... 88
27. Counterparts .......................................................... 88
28. No Recording .......................................................... 89
29. Confidentiality ....................................................... 89
30. Prevailing Party's Attorneys' Fees .................................... 90
31. Indemnification ....................................................... 90
32. Waiver of Jury Trial .................................................. 92
33. Partnership Liabilities ............................................... 92
33.1 The Sellers' Indemnification ..................................... 92
33.2 Exclusions to the Sellers' Indemnification ....................... 94
34. Arbitration ........................................................... 96
34.1 Final and Binding ................................................ 96
34.2 Rules ............................................................ 96
34.3 Arbitration Governing Law ........................................ 96
34.4 Written Opinion .................................................. 96
34.5 Arbitration Fees ................................................. 97
35. REA ................................................................... 97
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Page
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36. Joint and Several Liability ........................................... 97
37. Guaranty .............................................................. 97
38. ATM Agreement ......................................................... 98
39. Canyon Ranch Spa Space. ............................................... 98
40. Additional Sellers' Post-Closing Obligation. .......................... 99
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Schedule of Exhibits
Exhibit A Membership Interests
Exhibit B Description of Land
Exhibit C List of Documents Constituting the Other Agreements
Exhibit D Permitted Encumbrances
Exhibit E Survey
Exhibit F Form of Assignment of Membership Interests
Exhibit G Schedule of Leases
Exhibit H Schedule of Delinquencies
Exhibit I Schedule of Violations
Exhibit J Pending Condemnations
Exhibit K Schedule of Pending Litigation
Exhibit L Schedule of Material Personal Property
Exhibit M Environmental Reports
Exhibit N Sellers' Representation Certificate
Exhibit O Pending Lease Transactions
Exhibit P Form of REA Estoppel
Exhibit Q Form of Tenant Estoppel
Exhibit R Form of Sellers' Estoppel Letter
Exhibit S [Reserved]
Exhibit T Amended and Restated REA
Exhibit U Reserved
Exhibit V VCR Showroom Lease
Exhibit W Gondola Lease
Exhibit X VCR Office Lease
Exhibit Y Casino Level Master Lease
Exhibit Z ATM Agreement
Exhibit AA Form of SNDA
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