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Exhibit 10.16    
    

 

 
 

   
  LOAN AND SECURITY AGREEMENT
  
  by and between
  
  SILICON VALLEY BANK, AS LENDER
  
  and
  
  IKANOS COMMUNICATIONS, AS BORROWER    
    

 

  

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	 
	 	Page

	1.	 	ACCOUNTING AND OTHER TERMS	 	1
	

2.	
 	

LOAN AND TERMS OF PAYMENT	
 	

1
	

 	
 	

2.1	
 	

Promise to Pay	
 	

1
	

 	
 	

2.2	
 	

Termination of Commitment to Lend	
 	

3
	

 	
 	

2.3	
 	

Overadvances	
 	

3
	

 	
 	

2.4	
 	

Interest Rates	
 	

3
	

 	
 	

2.5	
 	

General Provisions	
 	

3
	

 	
 	

2.6	
 	

Fees	
 	

4
	

3.	
 	

Conditions Of Credit Extensions	
 	

4
	

 	
 	

3.1	
 	

Conditions Precedent to Initial Credit Extension	
 	

4
	

 	
 	

3.2	
 	

Conditions Precedent to all Credit Extensions	
 	

4
	

4.	
 	

CREATION OF SECURITY INTEREST	
 	

5
	

 	
 	

4.1	
 	

Grant of Security Interest	
 	

5
	

 	
 	

4.2	
 	

Authorization to File Financing Statements	
 	

5
	

5.	
 	

REPRESENTATIONS AND WARRANTIES	
 	

5
	

 	
 	

5.1	
 	

Due Organization and Authorization	
 	

5
	

 	
 	

5.2	
 	

Collateral	
 	

6
	

 	
 	

5.3	
 	

Litigation	
 	

7
	

 	
 	

5.4	
 	

No Material Deterioration in Financial Statements	
 	

7
	

 	
 	

5.5	
 	

Solvency	
 	

7
	

 	
 	

5.6	
 	

Regulatory Compliance	
 	

7
	

 	
 	

5.7	
 	

Subsidiaries	
 	

7
	

 	
 	

5.8	
 	

Full Disclosure	
 	

7
	

6.	
 	

AFFIRMATIVE COVENANTS	
 	

8
	

 	
 	

6.1	
 	

Government Compliance	
 	

8
	

 	
 	

6.2	
 	

Financial Statements, Reports, Certificates	
 	

8
	

 	
 	

6.3	
 	

Inventory; Returns	
 	

9
	

 	
 	

6.4	
 	

Taxes	
 	

9
	

 	
 	

6.5	
 	

Insurance	
 	

9
	

 	
 	

6.6	
 	

Primary Accounts	
 	

9
	

 	
 	

6.7	
 	

Financial Covenants	
 	

10
	 	 	 	 	 	 	 

i

 

	

 	
 	

6.8	
 	

Protection of Intellectual Property Rights	
 	

10
	

 	
 	

6.9	
 	

Further Assurances	
 	

10
	

7.	
 	

NEGATIVE COVENANTS	
 	

10
	

 	
 	

7.1	
 	

Dispositions	
 	

10
	

 	
 	

7.2	
 	

Changes in Ownership, Management, Business, Locations of Collateral	
 	

10
	

 	
 	

7.3	
 	

Dissolution	
 	

11
	

 	
 	

7.4	
 	

Mergers; Consolidations	
 	

11
	

 	
 	

7.5	
 	

Indebtedness	
 	

11
	

 	
 	

7.6	
 	

Encumbrance	
 	

11
	

 	
 	

7.7	
 	

Distributions; Investments	
 	

11
	

 	
 	

7.8	
 	

Transactions with Affiliates	
 	

11
	

 	
 	

7.9	
 	

Subordinated Debt	
 	

12
	

 	
 	

7.10	
 	

Compliance	
 	

12
	

8.	
 	

EVENTS OF DEFAULT	
 	

12
	

 	
 	

8.1	
 	

Payment Default	
 	

12
	

 	
 	

8.2	
 	

Covenant Default	
 	

12
	

 	
 	

8.3	
 	

Attachment	
 	

12
	

 	
 	

8.4	
 	

Insolvency	
 	

12
	

 	
 	

8.5	
 	

Other Agreements	
 	

13
	

 	
 	

8.6	
 	

Judgments	
 	

13
	

 	
 	

8.7	
 	

Misrepresentations	
 	

13
	

 	
 	

8.8	
 	

Material Adverse Change	
 	

13
	

 	
 	

8.9	
 	

Change of Control	
 	

13
	

9.	
 	

RIGHTS AND REMEDIES	
 	

13
	

 	
 	

9.1	
 	

Rights and Remedies	
 	

13
	

 	
 	

9.2	
 	

Power of Attorney	
 	

14
	

 	
 	

9.3	
 	

Accounts, Notification and Collection	
 	

14
	

 	
 	

9.4	
 	

Bank Expenses	
 	

14
	

 	
 	

9.5	
 	

Bank's Liability for Collateral	
 	

15
	

 	
 	

9.6	
 	

Remedies Cumulative	
 	

15
	

 	
 	

9.7	
 	

Demand Waiver	
 	

15
	

10.	
 	

NOTICES	
 	

15
	

11.	
 	

CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER	
 	

16
	 	 	 	 	 	 	 

ii

 

	

12.	
 	

GENERAL PROVISIONS	
 	

16
	

 	
 	

12.1	
 	

Successors and Assigns	
 	

16
	

 	
 	

12.2	
 	

Indemnification	
 	

16
	

 	
 	

12.3	
 	

Attorneys' Fees, Costs and Expenses	
 	

16
	

 	
 	

12.4	
 	

Right of Set-Off	
 	

16
	

 	
 	

12.5	
 	

Time of Essence	
 	

17
	

 	
 	

12.6	
 	

Severability of Provisions	
 	

17
	

 	
 	

12.7	
 	

Amendments in Writing, Integration	
 	

17
	

 	
 	

12.8	
 	

Counterparts	
 	

17
	

 	
 	

12.9	
 	

Survival	
 	

17
	

 	
 	

12.10	
 	

Confidentiality	
 	

17
	

13.	
 	

DEFINITIONS	
 	

18
	

 	
 	

13.1	
 	

Definitions	
 	

18

iii

  

 
 

LOAN AND SECURITY AGREEMENT    
    

        THIS LOAN AND SECURITY AGREEMENT (as amended, restated, or otherwise modified from time to time, this
"Agreement") dated the Effective Date, between SILICON VALLEY BANK
("Bank") and IKANOS COMMUNICATIONS, a California corporation, whose address is 47669 Fremont
Boulevard, Fremont, California 94538 ("Borrower"), provides the terms on which Bank will lend to Borrower, and Borrower will repay Bank. 

1.    ACCOUNTING AND OTHER TERMS  

        Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. The term "financial
statements" includes the notes and schedules. The terms "including" and "includes" always mean "including (or includes) without limitation," in this or any Loan Document. Capitalized terms in this
Agreement shall have the meanings as set forth in Section 13. All other terms contained in this Agreement, unless otherwise indicated, shall have
the meanings provided by the Code, to the extent such terms are defined therein. 

2.    LOAN AND TERMS OF PAYMENT  

	2.1
	 Promise to Pay.

        Borrower
hereby unconditionally promises to pay Bank the unpaid principal amount of all Credit Extensions hereunder with all interest, fees, and finance charges due thereon as and when
due in accordance with this Agreement. 

	2.1.1
	 Revolving Advances.

         (a)   Subject to the terms and conditions hereof, so long as Borrower meets the Cash Requirement, Bank shall make Advances to Borrower from
time to
time until the Revolving Maturity Date not exceeding the Committed Revolving Line minus the Sublimit Utilization Amount. Subject to the terms and
conditions hereof, if Borrower does not meet the Cash Requirement, Bank shall make Advances to Borrower from time to time until the Revolving Maturity Date not exceeding the lesser of the Committed
Revolving Line or the Borrowing Base minus the Sublimit Utilization Amount. Until the Revolving Maturity Date and subject to the terms hereof and the
applicable terms and conditions precedent in Sections 3.1 and 3.2, Borrower may borrow, repay,
and reborrow under this Section 2.1.1. The proceeds of the Advances shall be used solely for working capital requirements of Borrower. 

         (b)   Pursuant to the terms of Section 2.4(a), interest on each Advance shall be paid in
arrears
on the first day of each month. The outstanding principal amount of and all accrued but unpaid interest on the Advances shall be due and payable on the Revolving Maturity Date. 

        (c)   To obtain an Advance, Borrower must follow the procedures set forth in Section 3.2.

	2.1.2
	 Letters of Credit Sublimit.

        So
long as Borrower meets the Cash Requirement, Bank will issue Letters of Credit for Borrower's account not exceeding the Committed Revolving Line  minus the sum of (a) all amounts for services
utilized under the Cash Management Services Sublimit, (b) the FX Reserve, and (c) the
sum of the outstanding principal balance of the Advances. If Borrower does not meet the Cash Requirement, Bank will issue Letters of Credit for Borrower's account not exceeding the lesser of the
Committed Revolving Line or the Borrower Base minus the sum of (x) all amounts for services utilized under the Cash Management Services Sublimit,
(y) the FX Reserve, and (z) the sum of the outstanding principal balance of the Advances. Each Letter of Credit will have an expiry date of no later than 180 days after the
Revolving Maturity Date, but Borrower's reimbursement obligation will be secured by cash on 

1

 

terms
acceptable to Bank on or before the Revolving Maturity Date if the term of this Agreement is not extended by Bank. Borrower agrees to execute any further documentation in connection with the
Letters of Credit as Bank may reasonably request. 

	2.1.3
	 FX Forward Contracts.

        If
there is availability under the Committed Revolving Line, then Borrower may enter into foreign exchange forward contracts with the Bank under which Borrower commits to purchase from
or sell to Bank a set amount of foreign currency more than one business day after the contract date (the "FX Forward Contract"). Bank will subtract ten
percent (10%) of each outstanding FX Forward Contract from the foreign exchange sublimit (the "FX Reserve"). If Borrower meets the Cash Requirement, the
foreign exchange sublimit shall be the Committed Revolving Line minus the sum of (a) all amounts for services utilized under the Cash Management
Services Sublimit, (b) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and (c) the sum of the outstanding principal balance of the
Advances. If Borrower does not meet the Cash Requirement, the foreign exchange sublimit shall be the lesser of the Committed Revolving Line or the Borrowing Base  minus the sum of (x) all amounts
for services utilized under the Cash Management Services Sublimit, (y) the amount of all outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit), and (z) the sum of the outstanding principal balance of the Advances. The total FX Forward Contracts at any one time may
not exceed ten (10) times the amount of the FX Reserve. 

	2.1.4
	 Cash Management Services.

        If
Borrower meets the Cash Requirement, Borrower may use amounts up to the Committed Revolving Line minus the sum of (a) the amount
of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), (b) the FX Reserve, and (c) the sum of the outstanding principal balance of the Advances (the
"Cash Management Services Sublimit") for Bank's Cash Management Services, which may include merchant services, direct deposit of payroll, business
credit card, and check cashing services identified in various cash management services agreements related to such services (the "Cash Management
Services"). If Borrower does not meet the Cash Requirement, the Cash Management Services Sublimit shall equal the lesser of the Committed Revolving Line or the Borrowing Base  minus the sum of (x) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), (y) the FX
Reserve, and (z) the sum of the outstanding principal balance of the Advances. Such aggregate amounts utilized under the Cash Management Services Sublimit will at all times reduce the amount
otherwise available to be borrowed under the Committed Revolving Line. Any amounts Bank pays on behalf of Borrower or any amounts that are not paid by Borrower for any Cash Management Services will be
treated as Advances under the Committed Revolving Line and will accrue interest at the rate for Advances. 

         2.1.5   Equipment Advances.    Subject to the terms and conditions hereof, through the earlier to occur of (a) the
occurrence and continuance of an Event of Default or if there exists any event, condition, or act which with notice or lapse of time, or both, would constitute an Event of Default or (b) the
Equipment Availability Termination Date, Bank will make advances not exceeding the Committed Equipment Line; provided,  however, that Borrower may receive
only one Equipment Advance each month, and the minimum amount drawn by Borrower for each Equipment Advance shall be
$100,000. If the aggregate amount of the Equipment Advances exceeds the Committed Equipment Line at any time, Borrower must immediately pay Bank the excess. Except as otherwise provided below, the
proceeds of each Equipment Advance may only be used to finance Eligible Equipment purchased on or 90 days after the date of the Equipment Advance and may not exceed one hundred percent (100%)
of the invoice for such Eligible Equipment excluding taxes, shipping, warranty charges, freight discounts and installation expenses unless such taxes, shipping, warranty charges, freight discounts,
and installation expenses constitute Other Equipment. If the initial Equipment 

2

 

Advance
is funded on the Effective Date, the proceeds of such initial Equipment Advance may be used to purchase or finance Eligible Equipment purchased on or after January 1, 2003. Subject to
the terms of Section 2.4(b), Borrower shall repay the aggregate principal amount of each Equipment Advance in thirty-six
(36) equal, consecutive monthly installments of principal and interest on the first day of each month commencing with the first month after such Equipment Advance is made, and ending on the
Equipment Loan Maturity Date for such Equipment Advance. At any time, Borrower may prepay amounts due and owing under the Committed Equipment Line without premium or penalty. Prepayments shall be
applied to scheduled principal repayments in inverse order of their maturity. No payment with respect to an Equipment Advance may be reborrowed. 

	2.2
	 Termination of Commitment to Lend.

        Bank's
obligation to make Advances under the Committed Revolving Line shall terminate on the earlier of (a) the occurrence and continuance of an Event of Default or if there
exists any event, condition, or act which with notice or lapse of time, or both, would constitute an Event of Default or (b) the Revolving Maturity Date. 

	2.3
	 Overadvances.

        If
(a) at any time the Cash Requirement is satisfied and Borrower's aggregate obligations under Sections 2.1.1,  2.1.2, 2.1.3, and 2.1.4, exceed the Committed Revolving
Line, Borrower shall pay Bank the excess within two (2) Business Days of receipt by Borrower of written notice from Bank or (b) at any time the Cash Requirement is not satisfied and
Borrower's aggregate obligations under Sections 2.1.1,  2.1.2, 2.1.3, and 2.1.4, exceed the lesser of the
Committed Revolving Line or the Borrowing Base, Borrower shall immediately pay Bank the excess. 

	2.4
	 Interest Rates.

         (a)   Each Advance shall bear interest on the outstanding principal amount thereof from the date when made until paid in full at a floating
rate  per annum equal to the Prime Rate plus one-half percent (0.50%). 

        (b)   Each Equipment Advance shall bear interest on the outstanding principal amount thereof from the date when made until paid in full at a
fixed rate  per annum equal to the Prime Rate plus one percent (1.00%). 

         (c)   Interest on the Credit Extensions and all fees payable hereunder shall be computed on the basis of a 360-day year and the actual
number of days elapsed in the period during which such interest accrues. In computing interest on any Credit Extension, the date of the making of such Credit Extension shall be included and the date
of payment shall be excluded; provided, however, that if any Credit Extension is repaid on the same day on which it is made, such day shall be included
in computing interest on such Credit Extension. Each change in the interest rate of the Credit Extensions based on changes in the Prime Rate shall be effective on the effective date of such change and
to the extent of such change. 

	2.5
	 General Provisions.

        Bank
may debit any of Borrower's deposit accounts maintained with Bank for principal and interest payments owing or any amounts Borrower owes Bank pursuant to the Loan Documents,
including the Designated Deposit Account. These debits are not a set-off. Payments received after 12:00 noon Pacific time are considered received at the opening of business on the next
Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest accrue. 

3

 

	2.6
	 Fees.

        Borrower
shall pay to Bank:

        (a)   all Bank's Expenses (including payment of one-half of the aggregate amount of reasonable attorneys' fees and expenses (collectively,
"Attorneys' Fees") so long as the aggregate amount of such Attorneys' Fees shall not exceed $9,000, and Bank and Borrower shall mutually agree upon
Borrower's payment of such Attorneys' Fees if the aggregate amount thereof exceeds $9,000) incurred through and after the Effective Date, when due; and 

         (b)   on each anniversary of the Effective Date until and including the Revolving Maturity Date, a fully-earned, non-refundable loan fee
(the "Loan Fee") equal to either of the following amounts to be selected by Borrower: (i) so long as Borrower has met the Investment Requirement
at all times for the preceding year, $10,000, or (ii) $25,000; and 

         (c)   if, after the date hereof, any law or regulation increases Bank's costs or reduces Bank's income for any loan, the increase in cost or
reduction
in income or additional expense immediately upon Borrower's receipt of an invoice therefor from Bank. 

3.    CONDITIONS OF CREDIT EXTENSIONS  

	3.1
	 Conditions Precedent to Initial Credit Extension.

        Bank's
obligation to make the initial Credit Extension is subject to the condition precedent that the following have been satisfied, all in form and substance reasonably satisfactory to
Bank:

         (a)   the parties shall have executed and delivered the Loan Documents; 

        (b)   Borrower shall have delivered one or more executed Control Agreement(s), in form and substance satisfactory to Bank, by and among Borrower,
 Bank,
and any bank or financial institution as is necessary for Bank to perfect its security interest in any Collateral Accounts; 

         (c)   Borrower shall have delivered its Operating Documents and a good standing certificate of Borrower from the Secretary of State of
Borrower's
jurisdiction of organization; 

        (d)   Borrower shall have delivered resolutions of its Board of Directors authorizing the Credit Extensions and transactions contemplated
herein; 

         (e)   Bank shall have received the certificates of insurance described in Section 6.5
hereof; 

         (f)    Bank shall have completed its due diligence with Borrower's investors; 

        (g)   Borrower shall have paid all costs and fees, including Bank Expenses, then due; and 

         (h)   Borrower shall have delivered to Bank, in addition to the documents required in  Section 3.2, all documents, certificates, and other assurances that Bank or its counsel may reasonably request. 

	3.2
	 Conditions Precedent to all Credit Extensions.

        Bank's
obligation to make each Credit Extension, including the initial Credit Extension, is subject to the following:

         (a)   To obtain an Advance or an Equipment Advance, Borrower must notify Bank by facsimile or telephone by 12:00 noon Pacific time on the
Borrower's
desired Funding Date (which shall be a Business Day). If such notification is by telephone, Borrower must promptly confirm the notification by delivering to Bank a completed Payment/Advance Form in
the form attached as Exhibit B. On the Funding Date, Bank shall credit and/or transfer (as applicable to the Designated Deposit Account) an
amount equal to the Advance or 

4

 

Equipment
Advance requested. Bank may make Advances or Equipment Advances under this Agreement based on instructions from a Responsible Officer or his or her designee (or without instructions if a
Credit Extension is necessary to meet Obligations which have become due). Bank may rely on any telephone notice given by a person whom Bank believes is a Responsible Officer or designee. Borrower
shall indemnify Bank for any loss Bank suffers due to such reliance. 

         (b)   The representations and warranties in Section 5 shall be true and correct in all
material
respects, except those representations and warranties expressly referring to another date shall be true and correct in all material respect as of such date on the date of the Payment/Advance Form and
on the Funding Date, and no Event of Default shall have occurred and be continuing, or result from, an Advance, an Equipment Advance, and/or Credit Extension. Borrower's receipt of an Advance and/or
Equipment Advance is Borrower's representation and warranty on that date that the representations and warranties in Section 5 remain true and
correct in all material respects, except those representations and warranties expressly referring to another date shall be true and correct in all material respect as of such date. 

4.    CREATION OF SECURITY INTEREST  

	4.1
	 Grant of Security Interest.

        Borrower
hereby grants Bank to secure the payment and performance in full of all of the Obligations and the performance of each of Borrower's duties under the Loan Documents, a
continuing security interest in the Collateral and all proceeds and products thereof. Except for Permitted Liens, Borrower warrants and represents that the security interest granted herein shall be a
first priority security interest in the Collateral. During the existence of an Event of Default, Bank may place a "hold" on any deposit account pledged as Collateral. 

        Borrower
agrees that any disposition of the Collateral in violation of this Agreement, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the
Code. If the Agreement is terminated, Bank's lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations (other than inchoate indemnity obligations). If,
at any time, Borrower has knowledge that it shall have acquired a commercial tort claim in excess of $750,000, Borrower shall promptly provide written notice thereof to Bank by reference to a specific
case caption or by describing such commercial tort claim in a manner sufficient to satisfy Section 9-108 of the Code and grant to Bank in writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Bank. 

	4.2
	 Authorization to File Financing Statements.

        Borrower
hereby authorizes Bank to file financing statements with all appropriate jurisdictions, to perfect or protect Bank's security interest or rights hereunder. 

5.    REPRESENTATIONS AND WARRANTIES  

        Borrower represents and warrants as follows:

	5.1
	 Due Organization and Authorization.

        Borrower
and each Subsidiary is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. In connection
with this Agreement, Borrower has delivered to Bank a certificate signed by Borrower and entitled "Collateral Information Certificate". Borrower represents and warrants to Bank that:
(a) Borrower's exact legal 

5

 

name
is that indicated on the Collateral Information Certificate and on the signature page hereof; (b) Borrower is an organization of the type, and is organized in the jurisdiction, set forth
in the Collateral Information Certificate; (c) the Collateral Information Certificate accurately sets forth Borrower's organizational identification number or accurately states that Borrower
has none; and (d) the Collateral Information Certificate accurately sets forth Borrower's place of business, or, if more than one, its chief executive office as well as Borrower's mailing
address if different; and (e) all other information set forth on the Collateral Information Certificate pertaining to Borrower is accurate and complete in all material respects. If Borrower
does not now have an organizational identification number, but later obtains one, Borrower shall promptly notify Bank of such organizational identification number. Borrower may modify, supplement, or
amend the Collateral Information Certificate at any time by delivering to Bank an amendment certificate entitled "Amendment to Collateral Information Certificate" signed by Borrower. 

        The
execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's organizational documents, nor constitute an event of default
under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a
Material Adverse Change. 

	5.2
	 Collateral.

        Borrower
has good title to the Collateral, free of Liens except Permitted Liens. Except as set forth in the Collateral Information Certificate, Borrower has no Deposit Accounts or
Securities Accounts other than the Deposit Accounts and Securities Accounts with Bank and Bank's Affiliates. The Accounts are bona fide, existing obligations, and the service or property has been
performed or delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. Except as set forth in the Collateral Information Certificate,
the Collateral is not in the possession of any third party bailee (such as a warehouse). Except as hereafter disclosed to Bank in writing by Borrower, none of the components of the Collateral shall be
maintained at locations other than as provided in the Collateral Information Certificate. All Inventory is in all material respects of good and marketable quality, free from material defects. Borrower
has no notice of any actual or imminent Insolvency Proceeding of any account debtor whose accounts are an Eligible Account or an Eligible Foreign Account in any Borrowing Base Certificate. Borrower is
the licensee or sole owner of its Intellectual Property (or, if commercially available in the marketplace, could license upon
commercially reasonable terms), except for non-exclusive licenses and exclusive licenses limited to a geographic area or field of use granted in the ordinary course of business. 

        Except
as otherwise noted on the Collateral Information Certificate, Borrower is not a party to, nor is bound by, any material license or other material agreement with respect to which
Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower's right or interest in such license, agreement, or any other property. Borrower
shall provide written notice to Bank within ten (10) days of entering or becoming bound by any such license or agreement which is reasonably likely to have a material impact on Borrower's
business or financial condition (other than over-the-counter software that is commercially available to the public). Borrower shall take such steps as Bank reasonably requests
to obtain the consent of, authorization by, or waiver of, any person whose consent, authorization, or waiver is necessary for all such licenses or contract rights to be deemed "Collateral" and for
Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement (such consent or authorization may include a licensor's
agreement to a contingent assignment of the license to Bank if Bank determines that it is necessary in its good faith judgment), whether now existing or entered into in the future. 

6

 

	5.3
	 Litigation.

        Except
as shown in the Collateral Information Certificate, there are no actions or proceedings pending or, to the knowledge of Borrower's Responsible Officers, threatened by or against
Borrower or any Subsidiary in which a decision could reasonably be expected to cause a Material Adverse Change. 

	5.4
	 No Material Deterioration in Financial Statements.

        All
consolidated financial statements for Borrower, including information reported to Bank in connection with the delivery of any Compliance Certificate pursuant to  Section 6.2, and any Subsidiary,
delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and
Borrower's consolidated results of operations. There has not been any material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements
submitted to Bank. 

	5.5
	 Solvency.

        The
fair salable value of Borrower's assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital
after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 

	5.6
	 Regulatory Compliance.

        Borrower
is not an "investment company" or a company "controlled" by an "investment company" under the Investment Company Act. Borrower is not engaged as one of its important activities
in extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower's or any Subsidiary's properties or
assets has been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary have timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all
government authorities that are necessary to continue its business as currently conducted, except where the failure to make such declarations, notices or filings would not reasonably be expected to
cause a Material Adverse Change. 

	5.7
	 Subsidiaries.

        Borrower
does not own any stock, partnership interest or other equity securities except for Permitted Investments. 

	5.8
	 Full Disclosure.

        No
written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written
statements given to Bank) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not
misleading, it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results
during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results. 

7

 

6.    AFFIRMATIVE COVENANTS  

        Borrower shall, and shall cause each of its Subsidiaries to, do all of the following for so long as Bank has an obligation to lend or there are outstanding
Obligations (other than inchoate indemnity obligations):

	6.1
	 Government Compliance.

         (a)   Except as otherwise permitted under this Agreement, maintain its and all its Subsidiaries' legal existence and good standing in their
respective
jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to cause a Material Adverse Change; and 

         (b)   Comply, and have each of its Subsidiaries comply, with all laws, ordinances and regulations to which it is subject, for which
noncompliance would
reasonably be expected to cause a Material Adverse Change. 

	6.2
	 Financial Statements, Reports, Certificates.

        (a)   Deliver to Bank: (i) prior to completion of the IPO, as soon as available, but no later than thirty (30) days after the last day
of
each month, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible
Officer and in a form reasonably acceptable to Bank; provided however, Borrower shall not have to deliver copies of the foregoing financial statements if they are otherwise publicly available through
the Securities and Exchange Commission's EDGAR system; (ii) after completion of the IPO, as soon as available, but no later than forty-five (45) days after the last day of
each quarter, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible Officer and in a form
reasonably acceptable to Bank; provided however, Borrower shall not have to deliver copies of the foregoing financial statements if they are otherwise publicly available through the Securities and
Exchange Commission's EDGAR system; (iii) except as otherwise provided below, as soon as available, but no later than one hundred twenty (120) days after the last day of Borrower's
fiscal year, audited consolidated financial statements prepared under GAAP, consistently applied, together with an opinion on the financial statements from a nationally-recognized, independent,
certified public accounting firm; (iv) a prompt report of any legal actions pending or threatened in writing against Borrower or any Subsidiary that could reasonably be expected to result in
damages or costs to Borrower or any Subsidiary of One Million Dollars ($1,000,000) or more; and (vi) budgets, sales projections, operating plans or other financial information reasonably
requested by Bank. In addition to the foregoing, Bank shall have the right to subscribe to an email notification service selected by Bank for the purpose of receiving email notifications of all
reports on Forms 8-K, 10-K and 10-Q filed by Borrower with the Securities and Exchange Commission. Borrower shall be obligated to reimburse Bank for all costs and
expenses incurred by Bank in connection with such email notification service immediately upon Borrower's receipt of an invoice therefor from Bank. 

         (b)   If an Advance is requested under the Borrowing Base, within thirty (30) days after the last day of each month and one Business Day
prior
to the delivery of a Payment/Advance Form, Borrower will deliver to Bank a Borrowing Base Certificate in the form of Exhibit C, with aged
listings of accounts receivable and accounts payable. 

         (c)   Borrower shall deliver to Bank, together with the monthly or quarterly financial statements set forth in clauses (a)(i) and
(a)(ii) above and the annual financial statements set forth in clause (a)(iii) above, a Compliance Certificate in the form of  Exhibit D signed by a 

8

 

Responsible
Officer. If the financial statements are deemed delivered via internet posting through EDGAR, the Compliance Certificate shall continue to be delivered via paper copies. 

         (d)   Borrower shall, during normal business hours, from time to time upon three (3) days prior notice: (i) provide Bank and any of
its
officers, employees and agents access to its properties, facilities, advisors, officers and employees of Borrower and to the Collateral, (ii) permit Bank, and any of its officers, employees and
agents, to inspect, audit, conduct field examinations, and make extracts from Borrower's books and records, and (iii) permit Bank, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and other Collateral of Borrower. So long as no Default or Event of Default shall have occurred and be continuing, Bank shall
not be entitled to be reimbursed for more than two (2) field examinations in any calendar year. If an Event of Default has occurred and is continuing, Borrower shall provide access to
(x) its properties, facilities, advisors, officers and employees of Borrower and to the Collateral at all times and without
advance notice, and (y) its suppliers and customers upon request from Bank. Borrower shall promptly make available to Bank and its counsel originals or copies of all books and records that Bank
may reasonably request. 

	6.3
	 Inventory; Returns.

        Keep
all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors shall follow Borrower's customary
practices as they exist on the Effective Date. 

	6.4
	 Taxes.

        Make,
and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in
good faith, with adequate reserves maintained in accordance with GAAP) and will deliver to Bank, on demand, appropriate certificates attesting to such payments. 

	6.5
	 Insurance.

        Keep
its business and the Collateral insured for risks and in amounts of the type customarily maintained in its industry. Insurance policies shall be in a form, with companies, and in
amounts of the type customarily maintained in its industry. All property policies shall have a lenders' loss payable endorsement showing Bank as an additional loss payee; all liability policies shall
show Bank as an additional insured; all policies shall provide that the insurer must give Bank at least twenty (20) days notice before canceling its policy. At Bank's request, Borrower shall
deliver certified copies of policies and evidence of all premium payments. During the existence of an Event of Default, proceeds payable under any policy shall, at Bank's option, be payable to Bank on
account of the Obligations, and in all other instances proceeds shall be payable to Borrower. 

	6.6
	 Primary Accounts.    At all times,

         (a)   Maintain Borrower's primary operating accounts with Bank; and 

         (b)   Provide Bank five (5) Business Days advance written notice before establishing any Deposit Account, Securities Account or Commodity
Account (collectively, the "Collateral Accounts") at or with any bank or financial institution (other than Bank). In addition, for each Collateral
Account that Borrower at any time maintains, Borrower shall cause each applicable bank or financial institution (other than Bank) at or with which any Collateral Account is maintained to execute and
deliver a Control Agreement or other appropriate instrument with respect to such Collateral Account to perfect Bank's security interest in such Collateral Account. 

9

  

	6.7
	 Financial Covenants.

         (a)   As of the last calendar day of each month, Borrower shall maintain a Quick Ratio of not less than 1.15:1.00; and 

        (b)   For each date that is a quarter-end, Borrower's losses for the quarter then-ended shall not exceed the amount set forth
in opposite each time period set forth below: 

	Period
 
	 	Maximum Quarterly Losses

	For the quarter ending 6/30/04	 	$	4,000,000
	For the quarter ending 9/30/04	 	$	2,000,000
	For the quarter ending 12/31/04	 	$	1,000,000
	For the quarter ending 3/31/05 and each quarter thereafter	 	$	0

	6.8
	 Protection of Intellectual Property Rights.

        Protect,
defend and maintain the validity and enforceability of the Intellectual Property, except to the extent that the protection, defense, maintenance, validity or enforceability of
such Intellectual Property is no longer in the best interest of Borrower as determined in good faith by Borrower and is not likely to result in a Material Adverse Change; promptly advise Bank in
writing of material infringements of all material Intellectual Property; and not allow any Intellectual Property material to Borrower's business to be abandoned, forfeited or dedicated to the public
unless Borrower, in its good faith, deems it to be in the best interest of Borrower and such abandonment, forfeiture or dedication is not likely to result in a Material Adverse Change. 

	6.9
	 Further Assurances.

        Borrower
shall execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank's security interest in the Collateral or to effect the
purposes of this Agreement. 

7.    NEGATIVE COVENANTS  

        Borrower shall not, and shall not permit any of its Subsidiaries to, do any of the following without Bank's prior written consent, for so long as Bank has an
obligation to lend or there are any outstanding Obligations (other than inchoate indemnity obligations):

	7.1
	 Dispositions.

        Convey,
sell, lease, transfer or otherwise dispose of (collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all or
any part of its business or property, except for (a) Transfers (i) of Inventory in the ordinary course of business, (ii) of non-exclusive licenses, exclusive licenses
limited to a geographic area or field of use, and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business, (iii) of
worn-out, damaged, or obsolete Equipment, (iv) associated with the making or disposition of a Permitted Investment; (b) dispositions of cash or Permitted Investments in a
manner not prohibited by this Agreement; and (c) the transfer by Borrower to its Subsidiaries of Equipment with an aggregate value of not more than $4,000,000. 

	7.2
	 Changes in Ownership, Management, Business, Locations of Collateral.

        Engage
in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto, permit a Change of Control
other than as a result of the sale of Borrower's securities pursuant to the IPO or suffer any change in any Responsible Officer as a result of an act of fraud or other violation of law by such Person
the result of which has caused or is reasonably likely to cause a Material Adverse Change. Borrower shall not, without ten (10) days prior written notice to Bank: (a) relocate its chief
executive office, or add any new offices or business locations, including warehouses (unless such new offices or business locations 

10

 

contain
less than $500,000 in Borrower's assets or property), (b) change its jurisdiction of organization, (c) change its organizational structure or type, (d) change its legal
name, or (e) change any organizational number (if any) assigned by its jurisdiction of organization. Notwithstanding the foregoing, if Borrower changes its legal name and/or its jurisdiction of
organization (such successor corporation, "Ikanos Delaware") from California to Delaware (such transaction, the "Delaware
Reincorporation") in connection with the IPO, in addition to providing ten (10) days' prior written notice thereof to Bank, Borrower shall provide Bank within twenty
(20) Business Days after the Delaware Reincorporation is consummated, (1) the certificate of merger of Borrower certified by the Secretary of State of the State of Delaware,
(2) the agreement of merger of Borrower certified by the Secretary of State of the State of California, (3) resolutions of the Board of Directors of Ikanos Delaware authorizing the
Credit Extensions and transactions contemplated herein, (4) the Operating Documents of Ikanos Delaware and a good standing certificate of Ikanos Delaware from the Secretary of State of the
State of Delaware, (5) any amendment to this Agreement or any other Loan Document Bank deems necessary to reflect that the Obligations hereunder have been assigned to and assumed by Ikanos
Delaware. So long as Borrower complies with this Section 7.2, no provision of this Agreement shall be construed as to prohibit or require Bank's
consent to the Delaware Reincorporation, the IPO, or any stock split of Borrower or Ikanos Delaware in connection therewith. 

	7.3
	 Dissolution.

        Permit
any Subsidiary to dissolve or discontinue operations unless no Material Adverse Change could reasonably result. 

	7.4
	 Mergers; Consolidations.

        Merge
or consolidate with another corporation or entity (except that a Subsidiary may merge or consolidate with or into another Subsidiary or Borrower), or acquire all or substantially
all of the capital stock or property of a Person other than a Subsidiary; provided that Borrower or any of its Subsidiaries may merge or consolidate with another corporation or entity or acquire all
or substantially all of the capital stock or property of a Person other than a Subsidiary, if (a) a Default or Event of Default shall not have occurred and be continuing and would not occur as
a result of such transaction and Borrower survives such transaction, or (b) in connection with any merger effected to change Borrower's legal name and/or jurisdiction of formation, Borrower
complies with Section 7.2. 

	7.5
	 Indebtedness.

        Create,
incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 

	7.6
	 Encumbrance.

        Create,
incur, or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so,
except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein. 

	7.7
	 Distributions; Investments.

        Directly
or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so; or pay any dividends
or make any distribution or payment or redeem, retire or purchase any of Borrower's capital stock except for Permitted Distributions. 

	7.8
	 Transactions with Affiliates.

        Directly
or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for (a) transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms (when viewed in the context of any series of transactions of which it may be a 

11

 

part,
if applicable), and (b) transactions among Borrower and its Subsidiaries and among Borrower's Subsidiaries so long as such transactions are not otherwise prohibited by this Agreement. 

	7.9
	 Subordinated Debt.

        Make
or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without
Bank's prior written consent. 

	7.10
	 Compliance.

        Become
an "investment company" or a company controlled by an "investment company," under the Investment Company Act of 1940 or undertake as one of its important activities extending
credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a
material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 

8.    EVENTS OF DEFAULT  

        Any one of the following is an Event of Default:

	8.1
	 Payment Default.

        If
Borrower fails to pay (a) the principal or interest portion of any Credit Extension when due, or (b) any other monetary Obligations within three (3) days after
written notice to Borrower. During any cure period, the failure to cure the payment default is not an Event of Default (but no Credit Extension will be made during the cure period). 

	8.2
	 Covenant Default.

         (a)   If Borrower fails to perform any obligation under Sections 6.2 or  6.7 or violates any of the covenants contained in Section 7 of this Agreement, or 

        (b)   If Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained
in
this Agreement, in any other Loan Document, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition, covenant or
agreement that can be cured, has failed to cure such default within thirty (30) days after the occurrence thereof. 

	8.3
	 Attachment.

        If
(a) any material portion of Borrower's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not
removed in ten (10) days; (b) the service of process upon Borrower seeking to attach, by trustee or similar process, any funds of Borrower on deposit with Bank, or any entity under the
control of Bank (including a subsidiary); (c) Borrower is enjoined, restrained, or prevented by court order from conducting a material part of its business; (d) a judgment or other claim
becomes a Lien on a material portion of Borrower's assets; or (e) a notice of lien, levy, or assessment is filed against any of Borrower's assets by any government agency and not paid within
ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the
cure period). 

	8.4
	 Insolvency.

        If
(a) Borrower is unable to pay its debts (including trade debts) as they mature; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is
begun against Borrower and not 

12

 

dismissed
or stayed within thirty (30) days (but no Credit Extensions shall be made before any Insolvency Proceeding is dismissed). 

	8.5
	 Other Agreements.

        If
there is a default in any agreement to which Borrower is a party with a third party or parties resulting in the acceleration of the maturity of any Indebtedness in an amount in excess
of Five Hundred Thousand Dollars ($500,000) or that could result in a Material Adverse Change. 

	8.6
	 Judgments.

        If
a judgment or judgments for the payment of money (not covered by insurance) in an amount, individually or in the aggregate, of at least One Million Dollars ($1,000,000) shall be
rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such
judgment). 

	8.7
	 Misrepresentations.

        If
Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement (when read together with Borrower's filings with the Securities and Exchange
Commission) now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document. 

	8.8
	 Material Adverse Change.

        If
a Material Adverse Change occurs. 

	8.9
	 Change of Control.

        If,
other than as a result of the sale of Borrower's securities pursuant to the IPO, a Change of Control occurs. 

9.    RIGHTS AND REMEDIES  

	9.1
	 Rights and Remedies.

        When
an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following:

        (a)   declare all Obligations immediately due and payable (but if an Event of Default described in  Section 8.4 occurs, all Obligations are immediately due and payable without any action by Bank); 

         (b)   stop advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and
Bank; 

         (c)   settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable
and
notify any Person owing Borrower money of Bank's security interest in such funds and verify the amount of such account. Borrower shall collect all payments in trust for Bank and, if requested by Bank,
immediately deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit; 

         (d)   make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower shall
assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral,
and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any
of its premises, without charge, to exercise any of Bank's rights or remedies; 

13

 

         (e)   apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for
the
credit or the account of Borrower; 

        (f)    ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is
hereby granted a
non-exclusive, royalty-free license or other right to use, without charge, Borrower's labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade
names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section, Borrower's rights under all licenses and all franchise agreements inure to Bank; 

        (g)   place a "hold" on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other
directions or
instructions pursuant to any control agreement or similar agreements providing control of any Collateral, and Bank agrees that it will not deliver a notice of exclusive control, any entitlement order,
or other direction of instructions pursuant to any control agreement providing control of any Collateral unless an Event of Default occurs and continues; 

         (h)   require Borrower to provide cash collateral in the face amount of all undrawn Letters of Credit; 

        (i)    terminate any FX Forward Contracts; and 

	(j)
	dispose of the Collateral according to the Code.  

 
	9.2
	 Power of
Attorney.

        Borrower
hereby irrevocably appoints Bank as its lawful attorney-in-fact, to be effective upon the occurrence and during the continuance of an Event of Default,
to: (a) endorse Borrower's name on any checks or other forms of payment or security; (b) sign Borrower's name on any invoice or bill of lading for any Account or drafts against account
debtors, (c) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all
claims under Borrower's insurance policies; and (e) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful
attorney-in-fact to sign Borrower's name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has
occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank's foregoing
appointment as Borrower's attorney in fact, and all of Bank's rights and powers, coupled with an interest, are irrevocable until all Obligations (other than inchoate indemnity obligations) have been
fully repaid and performed and Bank's obligation to provide Credit Extensions terminates. 

	9.3
	 Accounts, Notification and Collection.

        In
the event that an Event of Default occurs and is continuing, Bank may notify any Person owing Borrower money of Bank's security interest in the funds and verify and/or collect the
amount of the Account. After the occurrence and during the continuance of an Event of Default, any amounts received by Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank,
Borrower shall immediately deliver such receipts to Bank in the form received from the account debtor, with proper endorsements for deposit. 

	9.4
	 Bank Expenses.

        Any
amounts paid by Bank as provided herein are Bank Expenses and are immediately due and payable and shall bear interest at the highest applicable default rate and be secured by the
Collateral. 

14

 

No
payments by Bank shall be deemed an agreement to make similar payments in the future or Bank's waiver of any Event of Default. 

	9.5
	 Bank's Liability for Collateral.

        So
long as Bank complies with reasonable banking practices regarding the safekeeping of Collateral, Bank shall not be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other
Person. Borrower bears all risk of loss, damage or destruction of the Collateral. 

	9.6
	 Remedies Cumulative.

        Bank's
rights and remedies under this Agreement, the other Loan Documents, and all other agreements among Borrower and Bank, are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay in enforcing its
rights is not a waiver, election, or acquiescence. No waiver hereunder by Bank shall be effective unless signed by Bank and then is only effective for the specific instance and purpose for which it
was given. 

	9.7
	 Demand Waiver.

        Except
for any notices expressly required herein, Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 

10.    NOTICES  

        Notices or demands by either party about this Agreement must be in writing and personally delivered or sent by an overnight delivery service, or by certified
mail, postage prepaid, return receipt requested, or by facsimile at the addresses and facsimile numbers listed below. A party may change its notice address by written notice to the other party. 

	If to Borrower:	 	Ikanos Communications

47669 Fremont Boulevard

Fremont, California 94538

Attn: Daniel Atler, Vice President

          and Chief Financial Officer

Fax: (510) 979-0500
	

If to Bank:	
 	

Silicon Valley Bank

39141 Civic Center Drive, Suite 220

Fremont, California 94538

Attn: Kevin Zeidan, Vice President

Fax: (510) 608-4787
	

with a copy to:	
 	

Bingham McCutchen LLP

1900 University Circle

East Palo Alto, California 94303

Attn: Pamela J. Martinson, Esq.

Fax: (650) 849-4800

15

 

11.    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER  

        California law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the
State and Federal courts in California, and Borrower accepts jurisdiction of the courts and venue in Santa Clara County, California. NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING
ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE
ENFORCE BANK'S RIGHTS AGAINST BORROWER OR ITS PROPERTY. 

        BORROWER
AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION,
INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL. 

12.    GENERAL PROVISIONS  

	12.1
	 Successors and Assigns.

        This
Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or Obligations under it without
Bank's prior written consent which may be granted or withheld in Bank's sole discretion; provided, however, subject to the terms of Section 7.2,
Borrower may assign this Agreement and the rights and obligations under it to Ikanos Delaware without Bank's consent. Bank has the right, without the consent of or notice to Borrower, to sell,
transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits under this Agreement, the Loan Documents or any other related agreement
to any other bank or financial institution. 

	12.2
	 Indemnification.

        Borrower
hereby indemnifies, defends and holds Bank and its respective officers, employees, and agents harmless against: (a) all obligations, demands, claims, and liabilities
asserted by any other party in connection with the transactions contemplated by the Loan Documents; and (b) all losses, or Bank's Expenses incurred, or paid by Bank from, following, or
consequential to transactions between Bank and Borrower (including reasonable attorneys' fees and expenses), except in the case of clause (a) and clause (b), for losses caused by Bank's
gross negligence or willful misconduct. 

	12.3
	 Attorneys' Fees, Costs and Expenses.

        In
any action or proceeding between Borrower and Bank arising out of the Loan Documents the prevailing party will be entitled to recover its reasonable attorneys' fees and other
reasonable costs and expenses incurred, in addition to any other relief to which it may be entitled. 

	12.4
	 Right of Set-Off.

        Borrower
hereby grants to Bank, a lien, security interest and right of set-off as security for all Obligations to Bank hereunder, whether now existing or hereafter arising
upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank
subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set-off the same or any
part thereof and apply the same to any liability or obligation of Borrower and any guarantor even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY
AND ALL RIGHTS TO REQUIRE BANK TO 

16

 

EXERCISE
ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. 

	12.5
	 Time of Essence.

        Time
is of the essence for the payment and performance of all Obligations in this Agreement. 

	12.6
	 Severability of Provisions.

        Each
provision of this Agreement is severable from every other provision in determining the enforceability of any provision. 

	12.7
	 Amendments in Writing, Integration.

        All
amendments to this Agreement must be in writing signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter, and
supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the
Loan Documents are superceded by this Agreement and the Loan Documents. 

	12.8
	 Counterparts.

        This
Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken
together, constitute one Agreement. 

	12.9
	 Survival.

        All
covenants, representations and warranties made in this Agreement continue in full force while any Obligations (other than inchoate indemnity obligations) remain outstanding. The
obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of
action shall have run. 

	12.10
	 Confidentiality.

        In
handling any confidential information or non-public information concerning the Borrower and its Subsidiaries, Bank will maintain the confidentiality of such information,
but disclosure of information may be made: (a) to Bank's subsidiaries or affiliates in connection with their business with Borrower; (b) to prospective transferees or purchasers of any
interest in the Credit Extensions, provided, they are bound by confidentiality obligations similar to those set forth herein; (c) as required by law, regulation, subpoena, or other order;
(d) as required in connection with Bank's examination or audit, provided that any Person receiving confidential or non-public information is bound by confidentiality obligations
similar to those set forth herein, or similar regulations; and (e) as Bank considers appropriate in exercising remedies under this Agreement, provided that any Person receiving confidential or
non-public information is bound by confidentiality obligations similar to those set forth herein, or similar regulations. Confidential information or non-public information
does not include information that either: (x) is in the public domain or in Bank's possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or
(y) is disclosed to Bank by a third party, if, at the time of disclosure, Bank does not know that the third party is prohibited from disclosing the information. 

17

   13.    DEFINITIONS  

	13.1
	 Definitions.

        In
this Agreement: 

        "Accounts" are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale
or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower
and Borrower's Books relating to any of the foregoing, as such definition may be amended from time to time according to the Code. 

        "Advance" or "Advances" is a loan advance (or advances) under the Committed Revolving
Line. 

        "Affiliate" is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers and members. 

        "Bank Expenses" are all audit fees and expenses, any fees and expenses relating to Bank's initial and semi-annual field
examination of Borrower, and costs or expenses (including reasonable attorneys' fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including
appeals or Insolvency Proceedings). 

        "Borrower's Books" are all Borrower's books and records including ledgers, records regarding Borrower's assets or liabilities, the
Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. 

        "Borrowing Base" is the sum of 80% of (a) the Eligible Domestic Accounts plus
(b) Eligible Foreign Accounts, in each case as determined by Bank from Borrower's most recent Borrowing Base Certificate (provided that Bank may lower the percentage of the Borrowing Base after
auditing Borrower's Collateral). 

        "Borrowing Base Certificate" is a Borrowing Base Certificate signed by a Responsible Officer in substantially the same form of  Exhibit C attached hereto.

        "Business Day" is any day that is not a Saturday, Sunday or a day on which Bank is closed. 

        "Cash Equivalents" are (a) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or
any state maturing within one (1) year from its acquisition, (b) commercial paper maturing no more than one (1) year after its creation and having the highest rating from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., (c) Bank's certificates of deposit issued maturing no more than one (1) year after issue, and
(d) any other investments administered through Bank or its Affiliates. 

        "Cash Requirement" is Borrower's unrestricted cash and Cash Equivalents minus amount of
all principal owing with respect to the Advances (including drawn but unreimbursed Letters of Credit and amounts for services used under the Cash Management Services Sublimit) and Equipment Advances
exceeds $35,000,000. 

        "Change in Control" is a transaction in which any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of greater than 49% of the shares of all classes of stock then outstanding of a Person ordinarily entitled to vote in the election of the directors of such Person. 

        "Code" is the Uniform Commercial Code as adopted in California as amended and in effect from time to time. 

18

 

        "Collateral" is the property described on Exhibit A attached hereto. 

        "Collateral Information Certificate" means the Collateral Information Certificate of Borrower dated October 21, 2004. 

        "Committed Equipment Line" is an aggregate principal amount equal to $2,000,000 which shall be increased an additional $1,000,000 to an
aggregate principal amount equal to $3,000,000 upon Borrower's completion of the IPO. 

        "Committed Revolving Line" is an aggregate principal amount equal to $5,000,000. 

        "Commodity Account" has the meaning ascribed to it in the Code. 

        "Contingent Obligation" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any
indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse
by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from
any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates,
currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or
determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good
faith; but the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement. 

        "Control Agreement" means, collectively, any control agreement entered into among
Borrower, Bank and the depositary bank, securities intermediary, or commodity intermediary at which Borrower maintains a deposit account, securities account, or a commodity account, pursuant to which
Bank obtains control (within the meaning of the applicable provision of the Code) over such deposit account, securities account, or commodity account. 

        "Copyright" means any of the following now owned or hereafter acquired or created (as a work for hire for the
benefit of Borrower) by Borrower or in which Borrower now holds or hereafter acquires or receives any right or interest, in whole or in part: (a) any copyright, whether registered or
unregistered, held pursuant to the laws of the United States or of any other country or foreign jurisdiction, (b) registration, application or recording in the United States Copyright Office or
in any similar office or agency of the United States or any other country or foreign jurisdiction, (c) any continuation, renewal or extension thereof, and (d) any registration to be
issued in any pending application, and shall
include any right or interest in and to work protectable by any of the foregoing which are presently or in the future owned, created or authorized (as a work for hire for the benefit of Borrower) or
acquired by Borrower, in whole or in part. 

        "Credit Extension" is each Advance or any other extension of credit by Bank for Borrower's benefit. 

        "Current Liabilities" are amounts that under GAAP should be included on that date as current liabilities on Borrower's consolidated
balance sheet. 

        "Deposit Accounts" means all present and future "deposit accounts" as defined in the Code in effect on the date
hereof with such additions to such term as may hereafter be made, and includes without limitation all general and special bank accounts, demand accounts, checking accounts, savings accounts and
certificates of deposit, whether maintained with Bank or other institutions. 

        "Designated Deposit Account" means that certain deposit account maintained with Bank in the name of Borrower and identified in the
Collateral Information Certificate. 

19

 

        "Effective Date" means the date that Bank signs this Agreement as indicated on the signature page hereof. 

        "Eligible Domestic Accounts" are Accounts in the ordinary course of Borrower's business that meet all Borrower's representations and
warranties in Section 5 applicable to Accounts, and which contain selling terms and conditions acceptable to Bank; provided, that Bank may change
eligibility standards by giving Borrower notice thereof. Unless Bank agrees otherwise in writing, Eligible Domestic Accounts will not include:

         (a)   Accounts against which Bank does not have a perfected, first priority security interest; 

        (b)   Accounts that the account debtor has not paid within 90 days of invoice date; 

         (c)   Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90 days of invoice date; 

         (d)   Accounts with credit balances over 90 days from invoice date; 

         (e)   Accounts for an account debtor, including Affiliates, whose total obligations to Borrower exceed 25% of all Accounts, except for an
Eligible
Foreign Account Debtor for which the percentage may be 60%, for the amounts that exceed that percentage, unless the Bank approves otherwise in writing; 

         (f)    Accounts for which the account debtor does not have its principal place of business in the United States except for Eligible
Foreign Accounts; 

         (g)   Accounts for which the account debtor is a federal, state or local government entity or any department, agency, or instrumentality and
against
which Bank's security interest has not been perfected under the Assignment of Claims Act; 

        (h)   Accounts for which Borrower owes the account debtor, but only up to the amount owed (sometimes called "contra" accounts, accounts payable,
customer deposits or credit accounts); 

         (i)    Accounts for demonstration or promotional equipment, or in which goods are consigned, sales guaranteed, sale or return, sale on
approval, bill
and hold, or other terms if account debtor's payment may be conditional; 

         (j)    Accounts for which the account debtor is Borrower's Affiliate, officer, employee, or agent; 

        (k)   Accounts in which the account debtor disputes liability or makes any claim and Bank believes there may be a basis for dispute (but only up
to the
disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business; or 

         (l)    Accounts for which Bank determines collection to be doubtful, or the Account holder to be an unacceptable business risk.

        "Eligible Equipment" is general purpose computer equipment, office equipment, test and laboratory equipment, furnishings, and, subject to
the limitations set forth below, Other Equipment that complies
with all of Borrower's representations and warranties to Bank and which is reasonably acceptable to Bank in all material respects. Equipment financed with the proceeds of Equipment Advances may be new
or used. The Bank shall have a valid security interest in all Eligible Equipment. 

        "Eligible Foreign Accounts" are Accounts in the ordinary course of Borrower's business, the account debtors of which do not have their
principal place of business in the United States, but only to the 

20

 

extent
that such foreign Accounts meet all of Borrower's representations and warranties in Section 5 applicable to Accounts, contain selling
terms and conditions acceptable to Bank in its sole discretion, and the account debtor is an Eligible Foreign Account Debtor. 

        Notwithstanding
the foregoing, Bank may change eligibility standards by giving Borrower notice thereof, and the allowance of other Eligible Foreign Accounts shall be approved by Bank in
its sole discretion on a case-by-case basis. 

        "Eligible Foreign Account Debtor" is NEC, Altima, Altima Bell NV, Altima/SEI, Alcatel Bell NV, and Uniquest. 

        "Equipment" is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which Borrower has any interest. 

        "Equipment Advance" or "Equipment Advances" is a loan advance (or advances) under the
Committed Equipment Line. 

        "Equipment Availability Termination Date" is June 30, 2005. 

        "Equipment Maturity Date" means, with respect to each Equipment Advance, the date that is thirty-six (36) months from
the Funding Date of such Equipment Advance. 

        "Funding Date" is the date on which an Advance or an Equipment Advance is made to or on account of Borrower. 

        "GAAP" is generally accepted accounting principles in effect under the laws of the United States of America from time to time. 

        "General Intangibles" means all present and future "general intangibles" as defined in the Code in effect on the date hereof with such
additions to such term as may hereafter be made, in which Borrower has any interest and includes without limitation all Intellectual Property, payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route lists, telephone numbers, domain names, claims, income tax refunds, security and other deposits, options to purchase or sell real
or personal property, rights in all litigation presently or hereafter pending (whether in contract, tort or otherwise), insurance policies (including without limitation key man, property damage, and
business interruption insurance), payments of insurance and rights to payment of any kind. 

        "Indebtedness" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and
other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and
(d) Contingent Obligations. 

        "Insolvency Proceeding" is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or
insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 

        "Intellectual Property" means any intellectual property, in any medium, of any kind or nature whatsoever, now or hereafter owned or
acquired or received by Borrower or in which Borrower now holds or hereafter acquires or receives any right or interest, and shall include, in any event, any Copyright, Trademark, or Patent. 

        "Inventory" is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or
in the custody or possession, actual or constructive, of 

21

 

Borrower,
including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or
disposition of any of the foregoing and any documents of title. 

        "Investment" is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance
or capital contribution to any Person. 

        "Investment Property" means all present and future investment property, securities, stocks, bonds, debentures, debt securities,
partnership interests, limited liability company interests, options, security entitlements, securities accounts, commodity contracts, commodity accounts, and all financial assets held in any
securities account or otherwise, and all options and warrants to purchase any of the foregoing, wherever located, and all other securities of every kind, whether certificated or uncertificated, in
which Borrower has any interest. 

        "Investment Requirement" is the maintenance by Borrower of investment accounts with Bank or a Bank Affiliate with a minimum aggregate
balance of the lesser of $10,000,000 or one hundred percent (100%) of Borrower's total investment amounts. 

        "IPO" is the initial public offering of Borrower's common stock pursuant to an effective registration statement on Form S1 (and any
amendment thereto) filed under the Securities Act of 1933, as amended, in which the net proceeds received by Borrower equal at least $50,000,000. 

        "Lien" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. 

        "Loan Documents" are, collectively, this Agreement, any Control Agreement, any note executed by Borrower, and any other present or future
agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 

        "Mask Works" are all mask works or similar rights available for the protection of semiconductor chips, now owned or later acquired. 

        "Material Adverse Change" is: (a) a material impairment in the perfection or priority of Banks' security interest in the Collateral
or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower on a consolidated basis; or (c) a
material impairment of the prospect of repayment of any portion of the Obligations. 

        "Obligations" are debts, principal, interest, Bank Expenses, and other amounts Borrower owes Bank now or later, including cash management
services, letters of credit and foreign exchange contracts, arising out of or relating to the Loan Documents, if any and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of Borrower assigned to Bank. 

        "Operating Documents" shall mean, for any Person, such Person's formation documents, as currently filed with the Secretary of State of
such Person's state of formation, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company
agreement (or similar agreement), each of the foregoing with all current modifications and amendments thereto. 

        "Other Equipment" is leasehold improvements, intangible property such as computer software and transferable or
non-transferable software licenses, soft costs (including sales tax, freight, and installation expenses, as well as costs associated with the purchase and implementation of Borrower's
business management system, Enterprise Resource Planning), equipment specifically designed or manufactured for Borrower, other intangible property, limited use property and other similar property.
Unless otherwise agreed to by Bank, not more than 60% of the Eligible Equipment financed with the proceeds of each Equipment Advance shall consist of Other Equipment. 

        "Other Property" means (a) the following as defined in the Code in effect on the date hereof with such additions to such term as
may hereafter be made, and all rights relating thereto: all present and 

22

 

future
"commercial tort claims", "documents", "instruments", "promissory notes", "chattel paper", "letters of credit", "letter-of-credit rights", "fixtures", "farm products"
and "money"; and (b) all other goods and personal property of every kind, tangible and intangible, whether or not governed by the Code, but shall not include Intellectual Property. 

        "Patent" means any of the following now hereafter owned or acquired or received by Borrower or in which Borrower now holds or hereafter
acquires or receives any right or interest: (a) letters patent and right corresponding thereto, of the United States or any other country or other foreign jurisdiction, any registration and
recording thereof, and any application for letters patent, and rights corresponding thereto, of the United States or any other country or other foreign jurisdiction, including, without limitation,
registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or other
foreign jurisdiction; (b) any reissue, continuation, continuation-in-part or extension thereof; (c) any petty patent, divisional, and patent of addition; and
(d) any patent to issue in any such application. 

        "Permitted Distributions" means: 

        (a)   purchases
of capital stock from former employees, consultants and directors pursuant to repurchase agreements or other similar agreements in an amount not to exceed
$2,000,000 in the aggregate in any fiscal year so long as no Event of Default has occurred, is continuing, or would exist after giving effect to any repurchase; 

        (b)   distributions
or dividends consisting solely of Borrower's capital stock; 

        (c)   purchases
for value of any rights distributed in connection with any stockholder rights plan; 

        (d)   purchases
of Borrower's capital stock pursuant to a repurchase plan approved by the Borrower's Board of Directors and in effect on the Effective Date not to exceed an
aggregate amount of $2,000,000; 

        (e)   purchases
of capital stock in connection with the exercise of stock options or stock appreciation rights by way of cashless exercise or in connection with the
satisfaction of withholding tax obligations; 

        (f)    the
conversion of any convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange therefor, and payments
in cash for any fractional shares of convertible securities; provided, however, such payments in cash for any fractional shares of convertible securities shall not exceed $250,000 in the aggregate in
any fiscal year if such payments are not made in connection with the IPO; and 

        (g)   purchases
of fractional shares of capital stock arising out of stock dividends, splits or combinations or business combinations. 

        "Permitted Indebtedness" is: 

        (a)   Borrower's
indebtedness to Bank under this Agreement or the other Loan Documents; 

        (b)   Indebtedness
existing on the Effective Date and shown on the Collateral Information Certificate; 

        (c)   Subordinated
Debt; 

        (d)   Indebtedness
to trade creditors incurred in the ordinary course of business; 

        (e)   capitalized
leases and purchase money Indebtedness secured by Permitted Liens not exceeding $500,000; 

23

 

        (f)    Indebtedness
secured by Permitted Liens; 

        (g)   Indebtedness
under any performance, surety, statutory or appeal bonds or similar obligations incurred in the ordinary course of business; 

        (h)   (i) Indebtedness
of Borrower to any of its Subsidiaries to the extent it is Subordinated Debt; (ii) Indebtedness of any Subsidiary of Borrower to another
Subsidiary of Borrower; and (iii) Indebtedness of any Subsidiary to Borrower to the extent permitted under clause (h) of the definition of Permitted Investments; 

        (i)    Indebtedness
consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements or arrangements designed to protect a Person
against fluctuations in interest rates, currency exchange rates, or commodity prices; 

        (j)    guaranties
of Permitted Indebtedness; 

        (k)   Indebtedness
of entities acquired in any permitted merger or acquisition transaction; 

        (l)    other
Indebtedness not otherwise permitted by Section 7.5 not exceeding $500,000 in the aggregate outstanding at
any time; and 

        (m)  extensions,
refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (l) above, provided that the
principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be, except by an amount equal to a
reasonable premium or other reasonable amount paid in connection with such refinancing and by an amount equal to any existing, but unutilized, commitment thereunder. 

        "Permitted Investments" are: 

        (a)   Investments
shown on the Collateral Information Certificate and existing on the Effective Date; and 

        (b)   Cash
Equivalents; 

        (c)   Investments
consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower; 

        (d)   Investments
accepted in connection with Transfers permitted by Section 7.1; 

        (e)   Investments
consisting of extensions of credit to Borrower's or its Subsidiaries' customers in the nature of accounts receivable, prepaid royalties or notes receivable
arising from the sale or lease of goods, provision of services or licensing activities of Borrower; 

        (f)    Investments
consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and
(ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plans or agreements approved by
Borrower's Board of Directors; 

        (g)   Investments
(including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business; 

        (h)   (i) Investments
of Subsidiaries of Borrower in or to Borrower; (ii) Investments of Subsidiaries of Borrower in or to other Subsidiaries of Borrower; and
(iii) Investments of Borrower in or to Subsidiaries of Borrower in an amount not to exceed $500,000 in any fiscal year; provided, however, that for purposes of clause (iii), all expenses
payable by Borrower in or to Subsidiaries for the purpose of funding amounts related to Subsidiary operations, 

24

 

including
without limitation, employee salaries, general and administrative expenses, and taxes, shall be Permitted Investments so long as no Event of Default exists or would result therefrom; 

        (i)    Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary
course of business; provided that this paragraph (i) shall not apply to Investments of Borrower in any Subsidiary; 

        (j)    Investments
received in satisfaction or partial satisfaction of obligations owed by financially troubled obligors; 

        (k)   Investments
acquired as a result of a foreclosure with respect to any secured Investment; 

        (l)    deposits,
prepayment and other credits to suppliers made in the ordinary course of business; 

        (m)  Investments
approved pursuant to an investment policy approved by the Borrower's Board of Directors and delivered to Bank; 

        (n)   subject
to Section 6.6 hereof, Investments consisting of deposit and securities accounts; 

        (o)   Investments
consisting of interest rate, currency, or commodity swap agreements, interest rate cap or collar agreements or arrangements which constitute Permitted
Indebtedness designed to protect a Person against fluctuations in interest rates, currency exchange rates, or commodity prices; 

        (p)   joint
ventures and strategic alliances consisting of the non-exclusive licensing of technology, the development of technology, or the providing of technical
support, provided that any cash investments by Borrower in connection therewith do not exceed $500,000 in the aggregate in any fiscal year; and 

        (q)   Investments
in connection with any transaction that is otherwise permitted by Section 7.4 of this Agreement,
including the creation of any Subsidiary necessary to consummate a transaction that is otherwise permitted by Section 7.4 of this Agreement. 

        "Permitted Liens" are: 

        (a)   Liens
existing on the Effective Date and shown on the Collateral Information Certificate or arising under this Agreement or other Loan Documents; 

        (b)   Liens
for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains
adequate reserves on its Books, if they have no priority over any of Bank's security interests; 

        (c)   purchase
money Liens (i) on Equipment acquired or held by Borrower incurred for financing the acquisition of the Equipment, or (ii) existing on equipment
when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment; 

        (d)   leases
or subleases and non-exclusive licenses or sublicenses granted in the ordinary course of Borrower's business, if the leases, subleases, licenses and
sublicenses permit granting Bank a security interest; 

        (e)   Liens
incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be 

25

 

limited
to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase; 

        (f)    Liens
arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under  Section 8.3 or 8.6; 

        (g)   Liens
in favor of other financial institutions arising in connection with Borrower's deposit accounts and securities accounts held at such institutions, provided that
Bank has a perfected security interest in the amounts held in such accounts; 

        (h)   carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue or which are being
contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the applicable Person; 

        (i)    pledges
or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than
any Lien imposed by ERISA; 

        (j)    deposits
to secure the performance of bids, trade contracts (other than for borrowed money), contracts for the purchase of property, leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like nature, in each case, incurred in the ordinary course of business and not representing an obligation for borrowed money; 

        (k)   easements,
rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; 

        (l)    Liens
on assets acquired in transactions otherwise permitted by Section 7.4 of this Agreement, provided that such
Liens were not created in connection with such transactions; 

        (m)  Liens
on insurance proceeds securing the payment of financed insurance premiums; and 

        (n)   other
Liens not described above arising in the ordinary course of Borrower's business and not having or not reasonably likely to have a material adverse effect on
Borrower's and its Subsidiaries' business or operations taken as a whole or not reasonably likely to result in a Material Adverse Change. 

        "Person" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust,
unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency. 

        "Prime Rate" is Bank's most recently announced "prime rate," even if it is not the lowest rate offered by Bank. 

        "Quick Ratio" means the ratio of (a) the sum of unrestricted cash and Cash Equivalents  plus accounts receivable to (b) Current Liabilities. 

        "Responsible Officer" is any of the Chief Executive Officer, President, Chief Financial Officer, or the Controller of Borrower. 

        "Revolving Maturity Date" is October 21, 2006; provided, however, on each anniversary of the Effective Date, Bank may, in its sole
discretion and subject to the completion of due diligence, the results of which shall be satisfactory to Bank in its sole discretion, decide to extend the then-existing Revolving Maturity
Date an additional 364 days. 

26

 

        "Securities Accounts" means, collectively, all present and future "securities accounts" as defined in the Code in
effect on the date hereof with such additions to such term as may hereafter be made, whether maintained with Bank or other institutions. 

        "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's debt to Bank (pursuant to a subordination agreement entered
into among Bank, Borrower and the subordinated creditor), on terms reasonably acceptable to Bank. 

        "Subsidiary" is any Person, corporation, partnership, limited liability company, joint venture, or any other business entity of which more
than fifty percent (50%) of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. Without further
attribution, "Subsidiary" means a Subsidiary of Borrower. 

        "Sublimit Utilization Amount" means the sum of (a) all amounts for services
utilized under the Cash Management Services Sublimit, (b) the amount of all outstanding Letters of Credit (including drawn but unreimbursed Letters of Credit), and (c) the FX Reserve. 

        "Trademark" means any of the following now or hereafter owned or acquired or received by Borrower or in which Borrower now holds or
hereafter acquires or receives any right or interest: (a) any trademark, trade name, corporate name, business name, trade style, service mark, logo, other source or business identifier, print
or label on which any of the foregoing have appeared or appear, design or other general intangibles of like nature, now existing or hereafter adopted or acquired, all registrations and recordings
thereof, and any applications in connection therewith, including registration, recording and application in the United States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or other foreign jurisdiction and (b) any reissue, extension or renewal of any of the foregoing. 

27

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. 

	BORROWER	 	IKANOS COMMUNICATIONS	 	 
	

 	
 	

By:	

/s/  DAN K ATLER      
	
 	

 
	

 	
 	

Name:	

Daniel Atler
	
 	

 
	

 	
 	

Title:	

CFO
	
 	

 
	
BANK	
 	
SILICON VALLEY BANK	
 	

 
	

 	
 	

By:	

/s/  KEVIN ZEIDAN      
	
 	

 
	

 	
 	

Name:	

Kevin Zeidan
	
 	

 
	

 	
 	

Title:	

Vice President
	
 	

 
	

 	
 	

Effective Date:	

October 21, 2004
	
 	

 

28

 
 

EXHIBIT A    
    

        "Collateral" means of all of Borrower's right, title and interest in and to the following whether owned now or
hereafter acquired or arising, and wherever located: all its Accounts; all its Inventory; all its Equipment; all its Deposit Accounts; all its General Intangibles (not including its Intellectual
Property); all its Investment Property; all its Other Property; and any and all claims, rights and interests in any of the foregoing, and all guaranties and security for any of the foregoing, and all
substitutions and replacements for, additions, accessions, attachments, accessories, and improvements to, and proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims
against third parties) of, all of the foregoing, and Borrower's Books relating to any of the foregoing. 

        Notwithstanding
the foregoing, the Collateral shall include all Accounts, license and royalty fees and other revenues, proceeds, or income arising out of or relating to any of Borrower's
Intellectual Property. To the extent a court of competent jurisdiction holds that a security interest in any Intellectual Property is necessary to have a security interest in any Accounts, license and
royalty fees and other revenues, proceeds, or income arising out of or relating to any of such Intellectual Property, then the Collateral shall, effective as of the Effective Date, include the
Intellectual Property, to the extent necessary to permit perfection of Bank's security interest in such Accounts, license and royalty fees and other revenues, proceeds, or income arising out of or
relating to any of the Intellectual Property. 

        Notwithstanding
the foregoing, the Collateral shall not include (a) to the extent the pledge thereof would result in increased United States income tax liability to Borrower or
any Subsidiary, more than 65% of the issued and outstanding voting capital stock of any Subsidiary of Borrower that is incorporated or organized in a jurisdiction other than the United States or any
state or territory thereof or the District of Columbia, and (b) any cash delivered in the ordinary course of business by Borrower or its Subsidiaries to their landlords in connection with
security deposits required to be paid under lease agreements. 

QuickLinks

Exhibit 10.16

LOAN AND SECURITY AGREEMENT by and between SILICON VALLEY BANK, AS LENDER and IKANOS COMMUNICATIONS, AS BORROWER

TABLE OF CONTENTS

LOAN AND SECURITY AGREEMENT

EXHIBIT AExhibit 4.1

 

Execution
Copy

 

 

CONSTRUCTION LOAN
AGREEMENT

 

 

DATED AS OF SEPTEMBER 30,
2004

 

 

AMONG

 

PHASE II MALL HOLDING,
LLC

and

PHASE II MALL SUBSIDIARY,
LLC,

as the Borrowers,

 

THE LENDERS LISTED
HEREIN,

as the Lenders,

 

THE BANK OF NOVA SCOTIA,

as the Sole Lead Arranger and the Sole Bookrunner, and

 

SUMITOMO MITSUI BANKING
CORPORATION,

as the Syndication Agent.

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
  1.1

  	
  Certain Defined
  Terms

  	
   

  
	
   

  	
  1.2

  	
  Accounting
  Terms; Utilization of GAAP for Purposes of Calculations Under Agreement

  	
   

  
	
   

  	
  1.3

  	
  Other Definitional
  Provisions and Rules of Construction

  	
   

  
	
  2.

  	
  Amounts and Terms
  of Commitments and Loans

  	
   

  
	
   

  	
  2.1

  	
  Commitments;
  Making of Loans; the Register; Notes

  	
   

  
	
   

  	
  2.2

  	
  Interest
  on the Loans

  	
   

  
	
   

  	
  2.3

  	
  Fees

  	
   

  
	
   

  	
  2.4

  	
  Repayments, Prepayments
  and Reductions in Commitments; General Provisions Regarding Payments

  	
   

  
	
   

  	
  2.5

  	
  Use of Proceeds

  	
   

  
	
   

  	
  2.6

  	
  Special
  Provisions Governing Eurodollar Rate Loans

  	
   

  
	
   

  	
  2.7

  	
  Increased
  Costs; Taxes; Capital Adequacy

  	
   

  
	
   

  	
  2.8

  	
  Obligation of Lenders to
  Mitigate

  	
   

  
	
   

  	
  2.9

  	
  Obligations Joint and Several

  	
   

  
	
  3.

  	
  Conditions to Credit Extensions

  	
   

  
	
   

  	
  3.1

  	
  Conditions to the
  Occurrence of the Closing Date

  	
   

  
	
   

  	
  3.2

  	
  Additional Conditions to
  Loans on or after the Closing Date

  	
   

  
	
  4.

  	
  Borrowers’
  Representations and Warranties

  	
   

  
	
   

  	
  4.1

  	
  Organization,
  Powers, Qualification, Good Standing, Business and Subsidiaries

  	
   

  
	
   

  	
  4.2

  	
  Authorization
  of Borrowing, etc

  	
   

  
	
   

  	
  4.3

  	
  Financial
  Condition

  	
   

  
	
   

  	
  4.4

  	
  No
  Material Adverse Change

  	
   

  
	
   

  	
  4.5

  	
  Title
  to Properties; Liens; Real Property

  	
   

  
	
   

  	
  4.6

  	
  Litigation;
  Adverse Facts

  	
   

  
	
   

  	
  4.7

  	
  Payment of
  Taxes

  	
   

  
	
   

  	
  4.8

  	
  Performance of Agreements;
  Materially Adverse Agreements; Material Contracts

  	
   

  
	
   

  	
  4.9

  	
  Governmental Regulation

  	
   

  

 

i

 

	
   

  	
  4.10

  	
  Employee
  Benefit Plans

  	
   

  
	
   

  	
  4.11

  	
  Certain Fees

  	
   

  
	
   

  	
  4.12

  	
  Environmental Protection

  	
   

  
	
   

  	
  4.13

  	
  Employee
  Matters

  	
   

  
	
   

  	
  4.14

  	
  Solvency

  	
   

  
	
   

  	
  4.15

  	
  Matters
  Relating to Collateral

  	
   

  
	
   

  	
  4.16

  	
  Construction Litigation

  	
   

  
	
   

  	
  4.17

  	
  Accuracy of Information

  	
   

  
	
   

  	
  4.18

  	
  Compliance with Laws

  	
   

  
	
  5.

  	
  Borrowers’ Affirmative
  Covenants

  	
   

  
	
   

  	
  5.1

  	
  Financial Statements and
  Other Reports

  	
   

  
	
   

  	
  5.2

  	
  Corporate Existence, etc

  	
   

  
	
   

  	
  5.3

  	
  Payment of Taxes and
  Claims; Tax Consolidation

  	
   

  
	
   

  	
  5.4

  	
  Maintenance of Properties;
  Insurance; Application of Net Loss Proceeds

  	
   

  
	
   

  	
  5.5

  	
  Inspection;
  Lender Meeting

  	
   

  
	
   

  	
  5.6

  	
  Compliance
  with Laws, etc.; Permits

  	
   

  
	
   

  	
  5.7

  	
  Environmental Covenant

  	
   

  
	
   

  	
  5.8

  	
  Compliance
  with Material Contracts

  	
   

  
	
   

  	
  5.9

  	
  Discharge
  of Liens

  	
   

  
	
   

  	
  5.10

  	
  Further
  Assurances

  	
   

  
	
   

  	
  5.11

  	
  Future
  Subsidiaries

  	
   

  
	
   

  	
  5.12

  	
  Interest
  Rate Protection

  	
   

  
	
   

  	
  5.13

  	
  Phase II Mall Recognition
  Agreement

  	
   

  
	
  6.

  	
  Borrowers’
  Negative Covenants.

  	
   

  
	
   

  	
  6.1

  	
  Indebtedness

  	
   

  
	
   

  	
  6.2

  	
  Liens and Related Matters

  	
   

  
	
   

  	
  6.3

  	
  Investments;
  Joint Ventures; Formation of Subsidiaries

  	
   

  
	
   

  	
  6.4

  	
  Contingent Obligations

  	
   

  
	
   

  	
  6.5

  	
  Restricted
  Payments

  	
   

  
	
   

  	
  6.6

  	
  Restriction on
  Fundamental Changes; Asset Sales; Leases and Acquisitions

  	
   

  

 

ii

 

	
   

  	
  6.7

  	
  Sales and
  Lease-Backs

  	
   

  
	
   

  	
  6.8

  	
  Sale
  or Discount of Receivables

  	
   

  
	
   

  	
  6.9

  	
  Transactions
  with Shareholders and Affiliates

  	
   

  
	
   

  	
  6.10

  	
  Disposal of
  Subsidiary Stock

  	
   

  
	
   

  	
  6.11

  	
  Conduct of
  Business

  	
   

  
	
   

  	
  6.12

  	
  Certain Restrictions on
  Changes to Certain Documents

  	
   

  
	
   

  	
  6.13

  	
  Capital Expenditures

  	
   

  
	
   

  	
  6.14

  	
  Fiscal Year

  	
   

  
	
   

  	
  6.15

  	
  Zoning and Contract
  Changes and Compliance

  	
   

  
	
   

  	
  6.16

  	
  No
  Joint Assessment; Separate Lots

  	
   

  
	
   

  	
  6.17

  	
  Application
  of Mall Sales Proceeds

  	
   

  
	
  7.

  	
  Events
  of Default

  	
   

  
	
   

  	
  7.1

  	
  Failure to Make
  Payments When Due

  	
   

  
	
   

  	
  7.2

  	
  Default under Other
  Indebtedness or Contingent Obligations

  	
   

  
	
   

  	
  7.3

  	
  Breach
  of Certain Covenants

  	
   

  
	
   

  	
  7.4

  	
  Breach of
  Warranty.

  	
   

  
	
   

  	
  7.5

  	
  Other
  Defaults Under Loan Documents

  	
   

  
	
   

  	
  7.6

  	
  Involuntary Bankruptcy;
  Appointment of Receiver, etc

  	
   

  
	
   

  	
  7.7

  	
  Voluntary Bankruptcy;
  Appointment of Receiver, etc

  	
   

  
	
   

  	
  7.8

  	
  Judgments
  and Attachments

  	
   

  
	
   

  	
  7.9

  	
  Dissolution

  	
   

  
	
   

  	
  7.10

  	
  Employee Benefit
  Plans

  	
   

  
	
   

  	
  7.11

  	
  Failure of Collateral Document;
  Repudiation of Obligations

  	
   

  
	
   

  	
  7.12

  	
  Default Under or Termination
  of Operative Documents

  	
   

  
	
   

  	
  7.13

  	
  Default
  Under or Termination of Permits

  	
   

  
	
   

  	
  7.14

  	
  Certain
  Investments

  	
   

  
	
  8.

  	
  Agents and
  Arranger

  	
   

  
	
   

  	
  8.1

  	
  Appointment

  	
   

  
	
   

  	
  8.2

  	
  Powers
  and Duties; General Immunity

  	
   

  

 

iii

 

	
   

  	
  8.3

  	
  Representations and Warranties; No
  Responsibility for Appraisal of Credit Worthiness

  	
   

  
	
   

  	
  8.4

  	
  Right to Indemnity

  	
   

  
	
   

  	
  8.5

  	
  Successor Administrative
  Agent

  	
   

  
	
   

  	
  8.6

  	
  Collateral Documents

  	
   

  
	
   

  	
  8.7

  	
  Disbursement Agreement

  	
   

  
	
   

  	
  8.8

  	
  The
  Syndication Agent

  	
   

  
	
  9.

  	
  Miscellaneous

  	
   

  
	
   

  	
  9.1

  	
  Assignments
  and Participations in Loans

  	
   

  
	
   

  	
  9.2

  	
  Expenses

  	
   

  
	
   

  	
  9.3

  	
  Indemnity

  	
   

  
	
   

  	
  9.4

  	
  Set-Off; Security Interest
  in Deposit Accounts

  	
   

  
	
   

  	
  9.5

  	
  Ratable Sharing

  	
   

  
	
   

  	
  9.6

  	
  Amendments
  and Waivers

  	
   

  
	
   

  	
  9.7

  	
  Certain Matters
  Affecting Lenders

  	
   

  
	
   

  	
  9.8

  	
  Independence
  of Covenants

  	
   

  
	
   

  	
  9.9

  	
  Notices

  	
   

  
	
   

  	
  9.10

  	
  Survival of
  Representations, Warranties and Agreements

  	
   

  
	
   

  	
  9.11

  	
  Failure or Indulgence Not
  Waiver; Remedies Cumulative

  	
   

  
	
   

  	
  9.12

  	
  Marshalling;
  Payments Set Aside

  	
   

  
	
   

  	
  9.13

  	
  Severability

  	
   

  
	
   

  	
  9.14

  	
  Obligations
  Several; Independent Nature of Lenders’ Rights

  	
   

  
	
   

  	
  9.15

  	
  Headings

  	
   

  
	
   

  	
  9.16

  	
  Applicable Law

  	
   

  
	
   

  	
  9.17

  	
  Successors
  and Assigns

  	
   

  
	
   

  	
  9.18

  	
  Consent to Jurisdiction
  and Service of Process

  	
   

  
	
   

  	
  9.19

  	
  Waiver
  of Jury Trial

  	
   

  
	
   

  	
  9.20

  	
  Confidentiality

  	
   

  
	
   

  	
  9.21

  	
  Counterparts;
  Effectiveness

  	
   

  
	
   

  	
  9.22

  	
  USA Patriot
  Act

  	
   

  

 

iv

 

	
   

  	
  9.23

  	
  Electronic Execution of
  Assignments

  	
   

  
	
   

  	
  9.24

  	
  Gaming
  Authorities

  	
   

  

 

 

SCHEDULES

	
  2.1

  	
  Lenders’
  Commitments, Percentages, Notice Information

  
	
  3.1G(iv)

  	
  Schedule
  of Security Filings

  
	
  4.1A

  	
  Jurisdiction
  of Organizations

  
	
  4.1C

  	
  Ownership
  of the Borrowers

  
	
  4.1D

  	
  Subsidiaries
  of the Borrowers

  
	
  4.1E

  	
  Options

  
	
  4.2C

  	
  Governmental
  Approvals

  
	
  4.5

  	
  Mortgaged
  Real Property and Material Real Estate

  
	
  4.6

  	
  Litigation

  
	
  4.8

  	
  Material
  Contracts

  
	
  4.12

  	
  Environmental
  Matters

  
	
  4.15B

  	
  Permits

  
	
  6.1

  	
  Indebtedness
  Existing on the Closing Date

  
	
  6.2

  	
  Liens
  Existing on the Closing Date

  
	
  6.3

  	
  Investments
  Existing on the Closing Date

  
	
  6.6

  	
  Leases
  Existing on the Closing Date

  
	
  6.9

  	
  Affiliate
  Transactions Existing on the Closing Date

  

 

v

 

EXHIBITS

 

	
  A

  	
  Form of Note

  
	
  B-1

  	
  Form of Borrowing
  Notice

  
	
  B-2

  	
  Form of
  Conversion/Continuation Notice

  
	
  C-1

  	
  Form of Assignment
  Agreement

  
	
  C-2

  	
  Form of Certificate of
  Non-Bank Status

  
	
  D-1

  	
  Form of Deed of Trust

  
	
  D-2

  	
  Form of Security
  Agreement

  
	
  D-3

  	
  Form of Disbursement
  Agreement

  
	
  D-4

  	
  Form of Collateral
  Account Agreement

  
	
  D-5

  	
  Form of Assignment of
  Phase II Mall Sale Agreement

  
	
  D-6

  	
  Form of Assignment of
  Rate Protection Agreement

  
	
  E

  	
  Form of Financial
  Condition Certificate

  
	
  F-1

  	
  Form of Opinion of
  Paul, Weiss, Rifkind, Wharton & Garrison

  
	
  F-2

  	
  Form of Opinion of
  Lionel Sawyer & Collins

  
	
  G-1

  	
  Form of Subordination,
  Non-Disturbance and Attornment Agreement

  
	
  G-2

  	
  Form of Estoppel
  Certificate

  
	
  H

  	
  Form of Environmental
  Indemnity

  
	
  I

  	
  Form of Consent

  
	
  J

  	
  Form of Intercompany
  Mall Note

  
	
  K

  	
  Phase II Mall and Phase
  II Project Insurance Requirements

  
	
  L

  	
  Phase II Mall Air Space
  Description

  

 

 

PHASE II MALL HOLDING,
LLC

and

PHASE II MALL SUBSIDIARY, LLC

 

CONSTRUCTION LOAN
AGREEMENT

 

This CONSTRUCTION
LOAN AGREEMENT is dated as of September 30, 2004 and entered into by
and among PHASE II MALL HOLDING, LLC
(“Phase II Mall Subsidiary Holding”),
a Nevada limited liability company, and PHASE
II MALL SUBSIDIARY, LLC (“Phase II
Mall Subsidiary”), a Delaware limited liability company, as joint
and several obligors (each of Phase II Mall Subsidiary Holding and Phase II
Mall Subsidiary, a “Borrower” and,
collectively, the “Borrowers”), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF (each individually referred to herein as a “Lender” and collectively as the “Lenders”), THE BANK OF NOVA SCOTIA (“Scotia
Capital”), as Sole Lead Arranger and Sole Bookrunner (in such
capacities, the “Arranger”) and as
the administrative agent for the Lenders (in such capacity, the “Administrative Agent”) and SUMITOMO MITSUI BANKING CORPORATION, as
syndication agent for the Lenders (in such capacity, the “Syndication Agent”).

 

R E C I T A L S

 

WHEREAS, LCR (such capitalized term and other
capitalized terms used in these recitals have the meanings given in subsection
1.1 of this Agreement), an indirect, wholly-owned subsidiary of LVSI and
Venetian, owns (or will own immediately after the execution of this Agreement)
the Site and intends to design, develop, and construct the Phase II Project
and, after the Substantial Completion Date, operate the Phase II Hotel/Casino;

 

WHEREAS, Phase II Mall Subsidiary Holding is an
indirect wholly-owned Subsidiary of LVSI and Venetian and owns 100% of the
Securities of Phase II Mall Subsidiary;

 

WHEREAS, Phase II Mall Subsidiary owns or will
own the Phase II Mall Air Parcel and leases or will lease the portion of the
Phase II Mall Space covered by the Phase II Mall Lease, the Walgreens Lease and
the Master Lease;

 

WHEREAS, on the Phase II Mall Release Date,
Phase II Mall Subsidiary Holding will sell the equity interests of Phase II
Mall Subsidiary to GGP;

 

WHEREAS, the Borrowers desire to enter into this
Agreement to finance certain Phase II Mall Project Costs and to pay fees and
expenses incurred in connection with the establishment of this Agreement, the
consummation of the Phase II Mall Construction Loan and the other transactions
related hereto and thereto;

 

WHEREAS, the Borrowers desire that the Lenders
extend the Phase II Mall Construction Loan on the terms and conditions set
forth herein for the purposes set forth herein; and

 

 

WHEREAS, the Lenders are willing, on the terms
and subject to the conditions hereinafter set forth, to extend the Commitments
and make Loans to the Borrowers.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.             Definitions.

 

1.1           Certain
Defined Terms.

 

The following terms used in this Agreement shall have
the following meanings:

 

“Additional
Contingent Claims” is defined in Section 4.16.

 

“Adelson”
means Sheldon G. Adelson, an individual.

 

“Adjusted Eurodollar
Rate” means, for any Interest Rate Determination Date with respect
to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained
by dividing (a) the arithmetic average (rounded upward to the
nearest 1/100 of one percent) of the offered quotations, if any, to first class
banks in the interbank Eurodollar market for Dollar deposits of amounts in same
day funds comparable to the respective principal amounts of the Eurodollar Rate
Loans of the Administrative Agent for which the Adjusted Eurodollar Rate is
then being determined with maturities comparable to such Interest Period as of
approximately 10:00 A.M. (New York time) on such Interest Rate Determination
Date by (b) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of “Eurocurrency liabilities” as defined in Regulation D (or any successor
category of liabilities under Regulation D).

 

“Administrative
Agent” is defined in the preamble and also means and includes any
successor Administrative Agent appointed pursuant to subsection 8.5.

 

“Advance” has the meaning given in the
Disbursement Agreement.

 

“Advance Request”
has the meaning given in the Disbursement Agreement.

 

“Affected Lender”
is defined in subsection 2.6C.

 

“Affected Loans”
is defined in subsection 2.6C.

 

“Affiliate”
as applied to any Person means any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
that Person (excluding, however, any trustee under, or any committee with
responsibility for administering any Pension Plan).  With respect to any Lender or Approved Fund, a Person shall be
deemed to be “controlled by” another Person if such other Person possesses,
directly or indirectly, power to vote 51% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors,
managing general partners or managers, as the case may be.  With respect to all other Persons, “control”
(including, with correlative meanings, the terms “controlling”, “controlled by”
and “under common control with”), as applied to any such other Person, means

 

2

 

the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
Securities or by contract or otherwise; provided, however, the
beneficial owner of 10% or more of the voting securities of a Person shall be
deemed to have control.

 

“Agent”
means, individually, each of the Administrative Agent, the Syndication Agent,
the Disbursement Agent and the Arranger, and “Agents”
means the Administrative Agent, the Syndication Agent, the Disbursement Agent
and the Arranger, collectively.

 

“Aggregate Amounts
Due” is defined in subsection 9.5.

 

“Agreement”
means, on any date, this Construction Loan Agreement, dated as of the Closing
Date and as thereafter from time to time amended, supplemented, amended and
restated or otherwise modified from time to time and in effect on such date.

 

“Applicable Margin”
means (a) in the case of Loans accruing interest as Base Rate Loans, 0.75% per
annum, and (b) in the case of Loans accruing interest as Eurodollar Rate
Loans, 1.75% per  annum.

 

“Approved Fund”
means, (i) a fund that invests in bank loans, or (ii) relative to any Lender,
any other fund that invests in bank loans and is advised or managed by the same
investment advisor as such Lender or by an Affiliate of such investment
advisor.

 

“Arranger”
is defined in the preamble.

 

“Arranger’s Fee Letter” means the fee
letter, dated as of July 15, 2004, among the Arranger and the Borrowers.

 

“Asset Sale”
means the sale by a Borrower to any Person of (a) any of the stock of any
of such Person’s Subsidiaries (including the equity interests of the Phase II
Mall Subsidiary under the Phase II Mall Sale Agreement), (b) substantially
all of the assets of any division or line of business of a Borrower or any of
its Subsidiaries, or (c) any other assets (whether tangible or intangible)
of a Borrower or any of its Subsidiaries (other than (i) inventory or goods
sold in the ordinary course of business, (ii) any other assets to the extent
that the aggregate fair market value of such assets sold during any Fiscal Year
is less than or equal to $2,000,000 and the sale of such assets does not
constitute a breach under the Phase II Mall Sale Agreement or (iii) any
sales, transfers or dispositions permitted by subsection 6.6).

 

“Assignment
Agreement” means an Assignment Agreement in substantially the form
of Exhibit C-1 annexed hereto.

 

“Assignment
Effective Date” is defined in subsection 9.1B(ii).

 

“Assignment of Phase II Mall Sale Agreement”
means that certain Collateral Assignment of Phase II Mall Sale Agreement, dated
as of the date hereof, between Phase II Mall Subsidiary Holding and the
Administrative Agent, in substantially the form of Exhibit D-5 hereto.

 

3

 

“Assignment of Rate Protection Agreement”
means that certain Assignment of Rate Protection Agreement, dated as of the
date of the Rate Protection Agreements being assigned in accordance with Section
5.12, between Borrowers, the Administrative Agent and the counterparty to
such Rate Protection Agreements, in substantially the form of Exhibit D-6
hereto.

 

“Authorized Officer”
means, relative to either of the Borrowers, those of its officers, general
partners or managing members (as applicable) or those of the officers of the
general partners or managing members (as applicable) whose signatures and
incumbency shall have been certified to the Administrative Agent and the
Lenders pursuant to subsection 3.1A.

 

“Bank Administrative Agent” means the
“Administrative Agent” under the Bank Facilities Agreement.

 

“Bank Facilities” means the loans and other
credit facilities to be made by the Bank Lenders to the Bank Loan Parties
pursuant to the Bank Facilities Agreement.

 

“Bank Facilities Agreement” means that
certain Credit Agreement, dated as of August 20, 2004 by and between LVSI and
Venetian, as the borrowers, the Bank Lenders, as the lenders, Goldman Sachs
Credit Partners, L.P., as the syndication agent, the sole lead arranger and the
sole bookrunner, Scotia Capital, as the administrative agent, and Wells Fargo
Foothill, Inc., CIT Group/Equipment Financing, Inc. and Commerzbank AG, as the
documentation agents pursuant to which the Bank Lenders have agreed to provide
certain loans to LVSI and Venetian, in an aggregate amount of $1,010,000,000 as
the same may be amended, supplemented, amended and restated, or otherwise
modified in accordance with its terms.

 

“Bank Facilities Loan Documents” means the
Bank Facilities Agreement together with all related agreements, instruments and
documents executed or delivered pursuant thereto at any time (including all
mortgages, guarantees, security agreements and all other collateral and
security documents), in each case as such agreements, instruments and documents
may be amended, supplemented, amended and restated, or otherwise modified in
accordance with the terms thereof.

 

“Bank Lenders” means the Persons which are
defined as “Lenders” in the Bank Facilities Agreement.

 

“Bank Loan Parties” means the Persons which
are defined as “Loan Parties” in the Bank Facilities Agreement

 

“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy”, as now and
hereafter in effect, or any successor statute.

 

“Base Rate”
means, at any time, the higher of (a) the Prime Rate or (b) the rate
which is 1/2 of 1% in excess of the Federal Funds Effective Rate.

 

“Base Rate Loans”
means Loans bearing interest at rates determined by reference to the Base Rate
as provided in subsection 2.2A.

 

4

 

“Borrowers”
is defined in the preamble and shall mean, as the context requires, either or
both of the Borrowers.

 

“Borrowing”
means Loans of the same type and, in the case of Eurodollar Rate Loans, having
the same Interest Period made by the Lenders on the same Business Day and
pursuant to the same Borrowing Notice in accordance with subsection 2.1B.

 

“Borrowing Notice”
means a notice substantially in the form of Exhibit B-1 annexed
hereto delivered by the Borrowers to the Administrative Agent pursuant to subsection
2.1B with respect to a proposed Borrowing.

 

“Bovis”
means Lehrer McGovern Bovis Inc., a New York corporation.

 

“Business Day”
means (a) for all purposes other than as covered by clause (b) below,
any day excluding Saturday, Sunday and any day which is a legal holiday under
the laws of the State of New York or Nevada or the Province of British Columbia
or is a day on which banking institutions located in either such state or such
province are authorized or required by law or other governmental action to
close, and (b) with respect to all notices, determinations, fundings and
payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate
Loans, any day that is a Business Day described in clause (a) above and
that is also a day for trading by and between banks in Dollar deposits in the
London interbank market.

 

“Capital Expenditures” means the sum of (a)
expenditures (whether paid in cash or other consideration or accrued as a
liability and including that portion of Capital Leases which is capitalized on
the consolidated balance sheet of the Borrowers) by the Borrowers and their
Subsidiaries that, in conformity with GAAP, are included in “additions to
property, plant or equipment” or comparable items reflected in the financial
statements of the Borrowers and their Subsidiaries plus (b) to the
extent not covered by clause (a) of this definition, any expenditures by
the Borrowers or their Subsidiaries to acquire (by purchase or otherwise) the
business, property or fixed assets of any Person, or the stock or other
evidence of beneficial ownership of any Person that, as a result of such
acquisition, becomes a Subsidiary of the Borrowers.

 

“Capital Lease”,
as applied to any Person, means any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that Person.  For purposes of this Agreement and each
other Loan Document, the amount of a Person’s obligation under a Capital Lease
shall be the capitalized amount thereof, determined in accordance with GAAP,
and the stated maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a premium or a
penalty.

 

“Cash”
means money, currency or a credit balance (in each case denominated in Dollars)
in a Deposit Account.

 

“Cash Equivalents”
means (a) Dollars, (b) (i) direct obligations of the United States
(including obligations issued or held in book-entry form on the books of the
Department of the Treasury of the United States) or obligations fully guaranteed
by the United States, (ii) obligations, debentures, notes or other
evidence of indebtedness issued or guaranteed by any

 

5

 

other agency or
instrumentality of the United States, (iii) interest-bearing demand or
time deposits (which may be represented by certificates of deposit) issued by
banks having general obligations rated (on the date of acquisition thereof) at
least “A” or the equivalent by Standard & Poor’s Ratings Group, a division
of McGraw Hill, Inc., or Moody’s Investors Service, Inc. (together with their
respective successors and with any other nationally recognized credit rating
agency if neither of such corporations is then currently rating the pertinent
obligations, a “Rating Agency”)
or, if not so rated, secured at all times, in the manner and to the extent
provided by law, by collateral security in clause (i) or (ii)
of this definition, of a market value of no less than the amount of monies so
invested, (iv) commercial paper rated (on the date of acquisition thereof)
at least “A-1” or “P-1” or the equivalent by any Rating Agency issued by any
Person, (v) repurchase obligations for underlying securities of the types
described in clause (i) or (ii) above, entered into
with any commercial bank or any other financial institution having long-term
unsecured debt securities rated (on the date of acquisition thereof) at least
“A” or “A2” or the equivalent by any Rating Agency in connection with which
such underlying securities are held in trust or by a third-party custodian,
(vi) guaranteed investment contracts of any financial institution which
has a long-term debt rated (on the date of acquisition thereof) at least “A” or
“A2” or the equivalent by any Rating Agency, (vii) obligations (including
both taxable and non-taxable municipal securities) issued or guaranteed by, and
any other obligations the interest on which is excluded from income for Federal
income tax purposes issued by, any state of the United States or District of
Columbia or the Commonwealth of Puerto Rico or any political subdivision,
agency, authority or instrumentality thereof, which issuer or guarantor has
(A) a short-term debt rated (on the date of acquisition thereof) at least
“A-1” or “P-1” or the equivalent by any Rating Agency and (B) a long-term
debt rated (on the date of acquisition thereof) at least “A” or “A2” or the
equivalent by any Rating Agency, (viii) investment contracts of any
financial institution either (A) fully secured by (1) direct
obligations of the United States, (2) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United
States or (3) securities or receipts evidencing ownership interest in
obligations or special portions thereof described in clause (1) or (2),
in each case guaranteed as full faith and credit obligations of the United
States, having a market value at least equal to 102% of the amount deposited
thereunder, or (B) with long-term debt rated (on the date of acquisition
thereof) at least “A” or “A2” or the equivalent by any Rating Agency and
short-term debt rated (on the date of acquisition thereof) at least “A-1” or
“P-1” or the equivalent by any Rating Agency, (ix) a contract or investment
agreement with a provider or guarantor (A) which provider or guarantor is
rated (on the date of acquisition thereof) at least “A” or “A2” or the
equivalent by any Rating Agency (provided that if a guarantor is a party to the
rating, the guaranty must be unconditional and must be confirmed in writing
prior to any assignment by the provider to any subsidiary of such guarantor),
(B) providing that monies invested shall be payable to the Administrative Agent
without condition (other than notice) and without brokerage fee or other
penalty, upon not more than two Business Days’ notice for application when and
as required or permitted under the Collateral Documents, and (C) stating that
such contract or agreement is unconditional, expressly disclaiming any right of
setoff and providing for immediate termination in the event of insolvency of
the provider and termination upon demand of the Administrative Agent (which
demand shall only be made at the direction of the Borrowers) after any payment
or other covenant default by the provider, or (x) any debt instruments of
any Person which instruments are rated (on the date of acquisition thereof) at
least “A,” “A2”, “A-1” or “P-1” or the equivalent by any Rating Agency, provided
that in each case of clauses (i) through (x), such
investments are

 

6

 

denominated in
Dollars and maturing not more than 13 months from the date of acquisition
thereof; (c) investments in any money market fund which is rated (on the
date of acquisition thereof) at least “A” or “A2” or the equivalent by any
Rating Agency; (d) investments in mutual funds sponsored by any securities
broker-dealer of recognized national standing having an investment policy that
requires substantially all the invested assets of such fund to be invested in
investments described in any one or more of the foregoing clauses and having a
rating of at least “A” or “A2” or the equivalent by any Rating Agency; or
(e) investments in both taxable and nontaxable (i) periodic auction
reset securities which have final maturities between one and 30 years from
the date of issuance and are repriced through a Dutch auction or other similar
method every 35 days or (ii) auction preferred shares which are senior
securities of leveraged closed end municipal bond funds and are repriced
pursuant to a variety of rate reset periods, in each case having a rating (on
the date of acquisition thereof) of at least “A” or “A2” or the equivalent of
any Rating Agency.

 

“Central Park West Site” means the
approximately 15 acres of real property owned by LVSI located near the
intersection of Sands Avenue and Koval Lane upon which an apartment complex
commonly known as Central Park West Apartments is currently located.

 

“Central Plant”
means the “Electric Substation” and the “HVAC Space”, as each such term is
defined in the Cooperation Agreement.

 

“Certificate of
Non-Bank Status” means a certificate substantially in the form of Exhibit C-2
annexed hereto delivered by a Lender to the Administrative Agent pursuant to subsection 2.7B(iii).

 

“Change of Control”
means any sale, pledge or other transfer (excluding any transfer of Securities
by Adelson for the purposes of providing estate planning and gifts reasonably
acceptable to the Administrative Agent) of Securities whereby (a) prior to the
occurrence of a public equity offering by LVSI, Adelson and/or his Affiliates
or Related Parties cease to own, directly or indirectly, at least 70% of the
voting Securities of LVSI, (b) after giving effect to the sale of the
Securities of LVSI or Holdco in one or more public equity offerings, (i)
Adelson and/or his Affiliates or Related Parties cease to own, directly or
indirectly, at least 35% of the voting Securities of LVSI, or (ii) any Person
or group of Persons (other than Adelson and/or his Affiliates or Related
Parties) owns, directly or indirectly, a greater percentage of the voting
Securities of LVSI than Adelson and/or his Affiliates or Related Parties, (c)
subject to exceptions approved by the Administrative Agent (in advance of any
relevant sales or transfers by LVSI) for tax planning purposes in connection
with an initial public offering, LVSI ceases to own (either directly or
indirectly through one or more Subsidiary Guarantors) 100% of the common equity
interests of Venetian or while such preferred stock is outstanding, LVSI or a Subsidiary
of LVSI ceases to own 100% of the preferred equity interests of Venetian, (d)
Venetian and LVSI cease to own directly or indirectly 100% of the equity
Securities of each of the Borrowers prior to the Phase II Mall Sale, or (e) a
“Change of Control” (or similar term) as defined in the Mortgage Notes
Indenture, the Bank Facilities Agreement or other instrument evidencing
Indebtedness of Venetian and/or LVSI permitted under the Bank Facilities
Agreement issued after the Closing Date (as defined in the Bank Facilities
Agreement) in excess of $50,000,000 shall occur.  The IPO Restructuring and the sale by Phase II Mall Subsidiary
Holding of equity interests of Phase

 

7

 

II Mall Subsidiary
pursuant to the Phase II Mall Sale shall not be a “change of control” under
this Agreement.

 

“Closing Date”
means the date on which all conditions set forth in subsection 3.1 have
been satisfied and this Agreement becomes effective in accordance with subsection
9.21.

 

“Code”
means the Internal Revenue Code of 1986, as amended to the date hereof and from
time to time hereafter, and any successor statute.

 

“Collateral”
means, collectively, all of the real, personal and mixed property in which
Liens are granted pursuant to the Collateral Documents as security for the
Obligations.

 

“Collateral Account
Agreement” means that certain Disbursement Collateral Account
Agreement, dated as of the date hereof, among the Borrowers, the Disbursement
Agent and the Administrative Agent, in substantially the form of Exhibit D-4
hereto.

 

“Collateral
Documents” means the Security Agreement, the Deed of Trust, the
Collateral Account Agreement, the Assignment of Phase II Mall Sale Agreement,
the Assignment of Rate Protection Agreement and all other instruments or
documents delivered by one or both of the Borrowers or any Subsidiary of a
Borrower which is a party to any of the Loan Documents in order to grant to the
Administrative Agent on behalf of the Secured Parties, a Lien (or to perfect
such Lien) on any Collateral as security for the Obligations.

 

“Commitment”
means the commitment of a Lender to make Loans as set forth in subsection 2.1A,
and “Commitments” means such
commitments of all Lenders in the aggregate.

 

“Commitment Amount” means, on any date,
relative to any Lender, the Commitment of such Lender reduced by the principal
amount of any Loans made by such Lender as of such date.

 

“Commitment Termination Date” means the
earliest of:

 

(i)       the Business Day immediately prior to the
Maturity Date;

 

(ii)      the Phase II Mall Release Date; and

 

(iii)     the date on which any Commitment
Termination Event occurs.

 

Upon the occurrence of
any event described in clauses (i), (ii) or (iii), the
Commitments shall terminate automatically and without further action.

 

“Commitment
Termination Event” means (a) the occurrence of any Event of Default
with respect to either Borrower described in subsection 7.6 or 7.7,
(b) the occurrence and continuance of any other Event of Default and either (i)
the declaration of all or any portion of the Loans to be due and payable, or
(ii) the giving of notice by the Administrative Agent, acting at the direction
of the Requisite Lenders, to the Borrowers that the Commitments have been
terminated.

 

8

 

“Consents”
means the consents to the collateral assignment by the Borrowers of the Project
Documents, as required by the terms of the Loan Documents.

 

“Construction
Consultant” means Tishman Construction Corporation of Nevada, or any
other Person designated from time to time under the Disbursement Agreement by
the Disbursement Agent to serve as the Construction Consultant.

 

“Construction
Litigation” has the meaning assigned to that term in Section 4.16.

 

“Construction
Management Agreement” has the meaning given in the Disbursement
Agreement.

 

“Contingent
Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (a) with respect to any
Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof, (b) with
respect to any letter of credit issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings, or
(c) under Hedging Agreements. 
Contingent Obligations shall include (a) the direct or indirect
guaranty, endorsement (otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or sale with recourse
by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by
any other party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (i) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (ii) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (i)
or (ii) of this sentence, the primary purpose or intent thereof is as
described in the preceding sentence. 
The amount of any Contingent Obligation shall be equal to the amount of
the obligation so guaranteed or otherwise supported or, if less, the amount to
which such Contingent Obligation is specifically limited.  Notwithstanding the foregoing, Contingent
Obligations shall not include any surety bonds for claims underlying mechanics
liens and any reimbursement obligations with respect thereto so long as such
reimbursement obligations are not then due or are promptly paid when due.

 

“Contractors”
means any architects, consultants, designers, contractors, sub-contractors,
suppliers, laborers or any other Person engaged by either or both of the
Borrowers in connection with the design, engineering, installation and
construction of the Phase II Mall or by LCR in connection with the design,
engineering, installation and construction of the Phase II Project.

 

“Contracts”
means, collectively, the contracts entered into, from time to time, between
either of both of the Borrowers or LCR and any Contractor for performance of
services or sale of goods in connection with the design, engineering,
installation or construction of the Phase II Mall.

 

9

 

“Contractual
Obligation” means, as applied to any Person, any provision of any
Security issued by that Person or of any material indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is bound or to which
it or any of its properties is subject.

 

“Conversion/Continuation
Notice” means a notice substantially in the form of Exhibit B-2
annexed hereto delivered to the Administrative Agent pursuant to subsection
2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.

 

“Cooperation
Agreement” means  that
certain Second Amended and Restated Reciprocal Easement, Use and Operating
Agreement, dated as of May 17, 2004, as amended as of July 30, 2004, by and
between Venetian, LCR, Grand Canal and Interface.

 

“COREA”
has the meaning given in the Disbursement Agreement.

 

“Credit Extension”
means the making of a Loan by a Lender.

 

“Debt Service” means all principal
repayments or interest and other amounts (including commitment fees) payable or
accrued from time to time under this Agreement and the other Loan Documents.

 

“Deed of Trust”
means the Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing, dated as of the Closing Date,
granted by the Borrowers to the Title Company, for the benefit of the
Administrative Agent, as agent for the Secured Parties, substantially in the
form of Exhibit D-1 annexed hereto.

 

“Deposit Account”
means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account
evidenced by a negotiable certificate of deposit.

 

“Disbursement
Account” has the meaning given in the Collateral Account Agreement.

 

“Disbursement Agent” has the meaning given in the
Disbursement Agreement.

 

“Disbursement
Agreement” means the Master Disbursement Agreement, dated as of the
Closing Date, by and among the Administrative Agent, the Bank Facilities
Administrative Agent, the Disbursement Agent, the Borrowers and LCR, in
substantially the form of Exhibit D-3 hereto, as the same may be
amended, supplemented, amended and restated, or otherwise modified in
accordance with the terms hereof and thereof.

 

“Dollars”
and the sign “$” mean the lawful
money of the United States.

 

“Eligible Assignee”
means (a) (i) a commercial bank organized under the laws of the United
States or any state thereof; (ii) a savings and loan association or
savings bank organized under the laws of the United States or any state
thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such
bank is acting through a branch or agency located in the United States or
(y) such bank is organized

 

10

 

under the laws of
a country that is a member of the Organization for Economic Cooperation and
Development or a political subdivision of such country; and (iv) any other
Person which is an “accredited investor” (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses
including insurance companies, mutual funds and lease financing companies; (b)
any Approved Fund; and (c) any Lender and any Affiliate of any Lender; provided
that no Borrower, any Affiliate of the Borrowers, Adelson and/or his Affiliates
or Related Parties shall be an Eligible Assignee; provided  further
that so long as no Event of Default shall have occurred and be continuing, no
(i) Person that owns or operates a casino located in Macau, the United Kingdom,
the State of Nevada or the State of New Jersey (or is an Affiliate of such a
Person) (provided that a passive investment constituting less than 20%
of the common stock of any such casino shall not constitute ownership thereof
for the purposes of this definition), (ii) Person that owns or operates a
trade show, convention, exhibition or conference center in Macau, the United
Kingdom, Las Vegas, Nevada or Clark County, Nevada (or an Affiliate of such a
Person) (provided that a passive investment constituting less than 20%
of the common stock of any such trade show, convention, exhibition or
conference center shall not constitute ownership for the purpose of this
definition), or (iii) union pension fund (provided that any intermingled
fund or managed account which has as part of its assets under management the
assets of a union pension fund shall not be disqualified from being an Eligible
Assignee hereunder so long as the manager of such fund is not controlled by a
union), shall be an Eligible Assignee, in each case which Person shall not have
been denied an approval or a license, or found unsuitable under the Nevada
Gaming Laws applicable to Lenders.

 

“Employee Benefit
Plan” means any “employee benefit plan” as defined in Section 3(3)
of ERISA which is or was maintained or contributed to by the Borrowers, any of
their Subsidiaries or any of their respective ERISA Affiliates.

 

“Environmental Claim”
means any investigation, notice, notice of violation, claim, action, suit,
proceeding, demand, abatement order or other order or directive (conditional or
otherwise), by any Governmental Instrumentality or any other Person, arising
(a) pursuant to or in connection with any actual or alleged violation of any
Environmental Law, (b) in connection with any Hazardous Materials or any actual
or alleged Hazardous Materials Activity, or (c) in connection with any actual
or alleged damage, injury, threat or harm to health, safety, natural resources
or the environment.

 

“Environmental
Indemnity” means the Environmental Indemnity in the form of Exhibit
H hereto, dated as of the Closing Date, granted by the Borrowers, LCR,
Venetian and LVSI to the Administrative Agent for the benefit of the Lenders.

 

“Environmental Laws”
means any and all current or future statutes, ordinances, orders, rules,
regulations, guidance documents, judgments, Permits, or any other requirements
of Governmental Instrumentalities relating to (a) environmental matters,
including those relating to any Hazardous Materials Activity, (b) the
generation, use, storage, transportation or disposal of Hazardous Materials, or
(c) occupational safety and health, industrial hygiene, land use or the
protection of human, plant or animal health or welfare, in any manner
applicable to the Borrowers or any of their Subsidiaries or any of their
Facilities, including the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. § 9601 et  seq.), the Hazardous
Materials Transportation Act (49 U.S.C. § 1801 et  seq.), the
Resource Conservation

 

11

 

and Recovery Act
(42 U.S.C. § 6901 et  seq.), the Federal Water Pollution
Control Act (33 U.S.C. § 1251 et  seq.), the Clean Air Act
(42 U.S.C. § 7401 et  seq.), the Toxic Substances Control Act
(15 U.S.C. § 2601 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. §136 et  seq.), the
Occupational Safety and Health Act (29 U.S.C. § 651 et  seq.),
the Oil Pollution Act (33 U.S.C. § 2701 et  seq.), the
Emergency Planning and Community Right-to-Know Act (42 U.S.C. § 11001 et
seq.), the Nevada Hazardous Materials law (NRS Chapter 459), the Nevada
Solid Waste/Disposal of Garbage or Sewage law (NRS 444.440 to 444.650,
inclusive), the Nevada Water Controls/Pollution law (NRS Chapter 445A), the
Nevada Air Pollution law (NRS Chapter 445B), the Nevada Cleanup of Discharged
Petroleum law (NRS 590.700 to 590.920, inclusive), the Nevada Control of
Asbestos law (NRS 618.750 to 618.850), the Nevada Appropriation of Public
Waters law (NRS 533.324 to 533.4385, inclusive), the Nevada Artificial Water
Body Development Permit law (NRS 502.390), the Nevada Protection of Endangered
Species, Endangered Wildlife Permit (NRS 503.585), Endangered Flora Permit law
(NRS 527.270), the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et.
seq.), the Safe Drinking Water Act (42 U.S.C. Sections 300f et. seq.),
the Surface Mining Control and Reclamation Act of 1974 (30 U.S. C. Sections
1201 et. seq.), and the Uranium Mill Tailings Radiation Control
Act of 1978 (42 U.S.C. Section 7901 et. seq.), each as amended or
supplemented, any analogous present or future state or local statutes or laws,
and any regulations promulgated pursuant to any of the foregoing.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any successor thereto.

 

“ERISA Affiliate”
means, as applied to any Person, (a) any corporation which is a member of
a controlled group of corporations within the meaning of Section 414(b) of the
Code of which that Person is a member; (b) any trade or business (whether or
not incorporated) which is a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Code of which that
Person is a member; and (c) any member of an affiliated service group within
the meaning of Section 414(m) or (o) of the Code of which that Person, any
corporation described in clause (a) above or any trade or business
described in clause (b) above is a member.  Any former ERISA Affiliate of the Borrowers or any of their
Subsidiaries shall continue to be considered an ERISA Affiliate of the
Borrowers or such Subsidiary within the meaning of this definition with respect
to the period such entity was an ERISA Affiliate of the Borrowers or such
Subsidiary and with respect to liabilities arising after such period for which
Borrowers or such Subsidiary could be liable under the Code or ERISA.

 

“ERISA Event”
means (a) a “reportable event” within the meaning of Section 4043 of ERISA and
the regulations issued thereunder with respect to any Pension Plan (excluding
those for which the provision for 30-day notice to the PBGC has been waived by
regulation); (b) the failure to meet the minimum funding standard of Section
412 of the Code with respect to any Pension Plan (whether or not waived in
accordance with Section 412(d) of the Code) or the failure to make by its due
date a required installment under Section 412(m) of the Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (c) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (d) the
withdrawal by the Borrowers, any of their Subsidiaries or any of their
respective ERISA Affiliates from any Pension Plan with two or more contributing

 

12

 

sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (e) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (f) the imposition of liability
on Borrowers, any of their Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (g) the withdrawal of the Borrowers,
any of their Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by the Borrowers, any of their Subsidiaries or any of
their respective ERISA Affiliates of notice from any Multiemployer Plan that it
is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA,
or that it intends to terminate or has terminated under Section 4041A or 4042
of ERISA; (h) the occurrence of an act or omission which could give rise to the
imposition on Borrowers, any of their Subsidiaries or any of their respective
ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43
of the Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of ERISA in respect of any Employee Benefit Plan; (i) the assertion of a
material claim (other than routine claims for benefits) against any Employee
Benefit Plan other than a Multiemployer Plan or the assets thereof, or against
Borrowers, any of their Subsidiaries or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (j) receipt from the
PBGC of notice of the failure of any Pension Plan (or any other Employee
Benefit Plan intended to be qualified under Section 401(a) of the Code) to
qualify under Section 401(a) of the Code, or the failure of any trust forming
part of any Pension Plan to qualify for exemption from taxation under Section
501(a) of the Code; or (k) the imposition of a Lien pursuant to Section
401(a)(29) or 412(n) of the Code or pursuant to ERISA with respect to any
Pension Plan.

 

“Eurodollar Rate
Loans” means Loans bearing interest at rates determined by reference
to the Adjusted Eurodollar Rate as provided in subsection 2.2A.

 

“Event of Default”
is defined in Section 7.

 

“Event of Loss”
means, with respect to any property or asset (tangible or intangible, real or
personal), any of the following: 
(a) any loss, destruction or damage of such property or asset;
(b) any actual condemnation, seizure or taking by exercise of the power of
eminent domain or otherwise of such property or asset, or confiscation of such
property or asset or the requisition of the use of such property or asset; or (c) any
settlement in lieu of clause (b) above.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.

 

“Excluded Subsidiaries” has the meaning
given in the Bank Facilities Agreement.

 

“Existing Facility”
means the Venetian Casino Resort, a Venetian-themed hotel, casino, retail,
meeting and entertainment complex located at 3355 Las Vegas Boulevard South,
Clark County, Nevada.

 

“Existing Site”
means the land on which the Existing Facility is constructed.

 

13

 

“Facilities”
means any and all real property (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased,
operated or used by the Borrowers or any of their Subsidiaries, including the
Phase II Mall.

 

“FDIC”
means the Federal Deposit Insurance Corporation.

 

“Federal Funds
Effective Rate” means, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent.

 

“Final Completion”
has the meaning given in the Disbursement Agreement.

 

“Final Completion
Date” means the date on which Final Completion occurs.

 

“First Priority”
means, with respect to any Lien created in any Collateral pursuant to any
Collateral Document, that such Lien is the only Lien (other than Permitted
Liens) to which such Collateral is subject.

 

“Fiscal Quarter”
means a fiscal quarter of any Fiscal Year.

 

“Fiscal Year”
means the fiscal year of the Borrowers ending on December 31 of each calendar
year.

 

“Former Lender”
is defined in subsection 9.7(a).

 

“Funding and Payment
Office” means (a) the office of the Administrative Agent located at
600 Peachtree Street NE, Suite 2700, Atlanta, Georgia 30308 (Attention: Hilda
Gabbidon or Vicki Gibson) or (b) such other office of the Administrative Agent
or of a third party or sub-agent, as appropriate, as may from time to time
hereafter be designated as such in a written notice delivered by the
Administrative Agent to the Borrowers and each Lender.

 

“Funding Date”
means the date of the funding of a Loan.

 

“GAAP”
means, subject to the limitations on the application thereof set forth in subsection
1.2, generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, in each
case, as the same are applicable to the circumstances as of the Closing Date.

 

“Gaming License”  means every license, franchise or other
authorization to own, lease, operate or otherwise conduct gaming activities of
LVSI, VCR or any of their Restricted

 

14

 

Subsidiaries,
including all such licenses granted under the Nevada Gaming Laws, and other
applicable federal, state, foreign or local laws.

 

“GGP” means GGP Limited Partnership, a Delaware limited
partnership, and any successor thereto by merger or by operation of law.

 

“Governmental
Instrumentality” means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity, (including the
Nevada Gaming Authorities, any zoning authority, the FDIC, the Comptroller of
the Currency or the Federal Reserve Board, any central bank or any comparable
authority) or any arbitrator with authority to bind a party at law.

 

“Grand Canal” means Grand Canal Shops II,
LLC.

 

“Harrah’s Shared
Roadway Agreement” means the Agreement, dated as of January 16, 1998,
between Venetian and Harrah’s Casino Resort.

 

“Hazardous Materials”
means (a) any chemical, material or substance at any time defined as or
included in the definition of “hazardous substances”, “hazardous wastes”,
“hazardous materials”, “extremely hazardous waste”, acutely hazardous waste”,
“radioactive waste”, “biohazardous waste”, “pollutant”, “toxic pollutant”,
“contaminant”, “restricted hazardous waste”, “infectious waste”, “toxic
substances”, or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, “TCLP toxicity” or “EP toxicity” or words of similar import under any
applicable Environmental Laws); (b) any oil, petroleum, petroleum fraction
or petroleum derived substance; (c) any drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (d) any flammable
substances or explosives; (e) any radioactive materials; (f) any
asbestos-containing materials; (g) urea formaldehyde foam insulation;
(h) electrical equipment which contains any oil or dielectric fluid
containing polychlorinated biphenyls; (i) pesticides; and (j) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any Governmental Instrumentality or which may or could pose a
hazard to the health and safety of the owners, occupants or any Persons in the
vicinity of any Facility or to the indoor or outdoor environment.

 

“Hazardous Materials
Activity” means any past, current, proposed or threatened activity,
event or occurrence involving any Hazardous Materials, including the use,
manufacture, possession, storage, holding, presence, existence, location,
Release, threatened Release, discharge, placement, generation, transportation,
processing, construction, treatment, abatement, removal, remediation, disposal,
disposition or handling of any Hazardous Materials, and any corrective action
or response action with respect to any of the foregoing.

 

“Hedging Agreements”
means (a) currency exchange or interest rate swap agreements, currency exchange
or interest rate cap agreements and currency exchange or interest rate collar

 

15

 

agreements and (b)
other agreements or arrangements designed to protect against fluctuations in
currency exchange or interest rates.

 

“Holdco” means a corporation formed for the
purpose of selling its capital stock in an initial public offering which will
own 100% of the common stock of LVSI.

 

“HVAC Provider”
means Sempra Energy Solutions, a California corporation (successor to
Atlantic-Pacific, Las Vegas LLC, a Delaware limited liability company) or its
permitted successors under the HVAC Services Agreements.

 

“HVAC Services
Agreements” means all agreements between the HVAC Provider,
Venetian, LVSI, their Restricted Subsidiaries, the Borrowers or their
Subsidiaries for the provision of air conditioning or utility services which
pertain to or affect the Phase II Mall.

 

“Improvement Phasing Agreement” means the
Improvement Phasing Agreement, dated on or about August 11, 2004 between Clark
County, Nevada and LCR.

 

“In Balance” has the meaning given in the Disbursement Agreement.

 

“Included Taxes”
is defined in subsection 2.7B(i).

 

“Indebtedness”,
as applied to any Person, means (a) all indebtedness for borrowed money, (b) that
portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP,
(c) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (d) any
obligation owed for all or any part of the deferred purchase price of property
or services (excluding any such obligations incurred under ERISA and trade
payables and accruals incurred in the ordinary course of business), and
(e) all indebtedness secured by any Lien on any property or asset owned or
held and under contracts by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person.  Obligations
under Hedging Agreements constitute Contingent Obligations and not
Indebtedness.  Obligations under the
HVAC Services Agreements, the Phase II Mall Lease and the Walgreens Lease shall
be treated as service contracts or operating leases and not as
Indebtedness.  Additionally,
Indebtedness shall not include (i) any amount of the liability in respect
of an operating lease that at such time would not be required to be capitalized
and reflected as a liability on the balance sheet in accordance with GAAP,
(ii) any surety bonds for claims underlying mechanics liens and any
reimbursement obligations with respect thereto so long as such reimbursement
obligations are not then due, or are promptly paid when due or (iii) any
indebtedness that has been either satisfied or discharged or defeased through
covenant defeasance or legal defeasance.

 

“Indemnified
Liabilities” is defined in subsection 9.3.

 

“Indemnitees”
is defined in subsection 9.3.

 

“Independent
Financial Advisor” means an accounting, appraisal or investment
banking or financial advisory firm of nationally or internationally recognized
standing that is not an Affiliate of LVSI and Adelson and his Related Parties.

 

16

 

“Intercompany Mall Note” means a promissory
note or notes of the Borrowers, initially in the principal amount of
$25,371,098 (as such amount may be increased pursuant to subsection 6.1 (iv))
payable to Venetian, substantially in the form of Exhibit J hereto
(as such promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the Phase II Mall Contribution, and also means all
other promissory notes accepted from time to time in substitution therefor or
renewal thereof.

 

“Interest Payment
Date” means (a) with respect to any Loan that is a Base Rate Loan,
each Quarterly Payment Date and (b) with respect to any Loan that is a
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan; provided, however, that in the case of each Interest Period
of longer than three months “Interest Payment Date” shall also include each
Quarterly Payment Date.

 

“Interest Period”
is defined in subsection 2.2B.

 

“Interest Rate
Determination Date” means, with respect to any Interest Period, two
Business Days prior to the first day of such Interest Period.

 

“Interface”
means Interface Group-Nevada, Inc., a Nevada corporation.

 

“Investment”
means, relative to any Person, (a) any direct or indirect purchase or
other acquisition by such Person of, or of a beneficial interest in, any
Securities of any other Person (including any Subsidiary), (b) any direct
or indirect purchase or other acquisition for value, by such Person from any
Person, of any equity Securities of any Person, or (c) any direct or indirect
loan, advance (other than advances to employees for moving, entertainment and
travel expenses, drawing accounts and similar expenditures in the ordinary
course of business) or capital contribution by such Person to any other Person,
including all Indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other Person in the
ordinary course of business other than Hedging Agreements required or permitted
hereunder to hedge against fluctuations of interest rates or currency exchange
risk.  The amount of any Investment
shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment less
all returns of principal or equity thereon.

 

“IPO Restructuring”
means, in connection with the formation of Holdco, a restructuring in which (i)
LVSI will form Holdco as a wholly-owned subsidiary which, in turn, will form a
wholly-owned subsidiary (“Merger Co”),
(ii) LVSI will merge with and into Merger Co. with LVSI being the surviving
corporation, and (iii) the stockholders of LVSI immediately prior to the merger
described in clause (ii) will receive shares in Holdco in exchange for
their shares of common stock of LVSI. 
Upon completion of the merger described in clause (ii), Holdco
will own 100% of the common stock of LVSI.

 

“Joint Venture”
means a Supplier Joint Venture or any other joint venture, partnership or other
similar arrangement, whether in corporate, partnership, limited liability
company or other legal form; provided that in no event shall any
Subsidiary of any Person be considered to be a Joint Venture to which such
Person is a party.

 

17

 

“LCR” means Lido Casino Resort, LLC, a
Nevada limited liability company.

 

“Legal Requirements”
means all laws, statutes, orders, decrees, injunctions, licenses, Permits,
approvals, agreements and regulations of any Governmental Instrumentality
having jurisdiction over the matter in question.

 

“Lender”
and “Lenders” is defined in the
preamble, together with their successors and permitted assigns pursuant to subsection
9.1.

 

“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not
filed, recorded or otherwise perfected under applicable law (including any
conditional sale or other title retention agreement or any lease in the nature
thereof).

 

“Lien Protection Account” has the meaning
given in the Disbursement Agreement.

 

“Line Item” means each of the individual
line items set forth in the Project Budget.

 

“Loan” or
“Loans” means the portion of the
Phase II Mall Construction Loan made by the Lenders to the Borrower pursuant to
subsection 2.1(B)(i).

 

“Loan Documents”
means this Agreement, the Notes, each Rate Protection Agreement, the Collateral
Documents, the Disbursement Agreement, and each other agreement that expressly
states by its terms that it is a Loan Document; provided, however
for the purposes of Section 4, subsections 7.1, 7.4, 7.5
and subsection 9.6, Rate Protection Agreements shall not be considered
to be a Loan Document.

 

“Loan Exposure” means, with respect to any Lender
as of the date of determination, the outstanding principal amount of the Loans
made by such Lender.

 

“LVSI”
means Las Vegas Sands, Inc. and its successors.

 

“Macau”
means the Macau Special Administrative Region of the People’s Republic of
China.

 

“MAI Appraisal”
means an appraisal conducted by a member of the Appraisal Institute in
accordance with the standards of the Appraisal Institute.

 

“Margin Stock”
has the meaning given in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.

 

“Master Lease” has the meaning given in the
Disbursement Agreement.

 

“Material Adverse
Effect” means (a) a material adverse effect upon the business,
operations, properties, assets, condition (financial or otherwise) or prospects
of the Borrowers and their Subsidiaries, taken as a whole, or (b) the material
impairment of the ability of the Borrowers to observe or perform, or the
Administrative Agent or the Lenders to enforce, the Obligations.

 

18

 

“Material Contract”
means the Intercompany Mall Note and any Contract or other arrangement to which
either of the Borrowers, LCR or any of the Borrowers’ Subsidiaries are a party
(other than the Loan Documents) for which breach, nonperformance, cancellation
or failure to renew could reasonably be expected to have a Material Adverse
Effect.

 

“Maturity Date”
means, the earlier of (i) March 30, 2008 or (ii) the date on which the equity
interests of Phase II Mall Subsidiary are transferred, sold and assigned to GGP
in accordance with the Phase II Mall Sale Agreement.

 

“Mortgage Notes Indenture” means the
Indenture, dated as of June 4, 2002, as supplemented, among LVSI, Venetian,
U.S. Bank National Association, in its capacity as trustee under the Mortgage
Notes Indenture, and its successors in such capacity, and others.

 

“Mortgage Policy”
is defined in subsection 3.1E(ii).

 

“Mortgaged Property”
means the real property described in Schedule 4.5.

 

“Multiemployer Plan”
means any Employee Benefit Plan which is a “multiemployer plan” as defined in
Section 3(37) of ERISA.

 

“Net Asset Sale
Proceeds” means the aggregate cash proceeds received by either
Borrower or any of its Subsidiaries in respect of any Asset Sale, net of
(a) the direct costs relating to such Asset Sale (including legal,
accounting and investment banking fees and expenses, employee severance and
termination costs, any trade payables or similar liabilities related to the
assets sold and required to be paid by the seller as a result thereof and
sales, finders’ or broker’s commission), any relocation expenses incurred as a
result thereof and taxes paid or payable as result thereof (including any such
taxes paid or payable by an owner of any Borrower or any of its Subsidiaries),
(b) amounts required to be applied to the repayment of Indebtedness
secured by a Lien (or amounts permitted by the terms of such Indebtedness to be
otherwise reinvested in other assets of such Borrower or such Subsidiary to the
extent so reinvested) which is prior to the Lien under the Collateral Documents
on the asset or assets that are the subject of such Asset Sale, (c) all
distributions and other payments required to be made to minority interest
holders in a Subsidiary or joint venture as a result of such Asset Sale and
(d) any reserve for adjustment in respect of the sale price of such asset
or assets or any liabilities associated with the asset disposed of in such
Asset Sale and the deduction of appropriate amounts provided by the seller as a
reserve in accordance with GAAP against any liabilities associated with the
assets disposed of in the Asset Sale and retained by a Borrower or any
Subsidiary.

 

“Net Loss Proceeds”
means the aggregate cash proceeds received by either Borrower or any of its
Subsidiaries in respect of any Event of Loss, including insurance proceeds from
condemnation awards or damages awarded by any judgment, net of the direct costs
in recovery of such Net Loss Proceeds (including legal, accounting, appraisal
and insurance adjuster fees and expenses) and any taxes paid or payable as a
result thereof (including any such taxes paid or payable by an owner of either
Borrower or any of its Subsidiaries) and amounts required to be applied to the
repayment of any Indebtedness secured by a Lien (or amounts permitted by the
terms of such Indebtedness to be otherwise reinvested in other assets of such
Borrower or such

 

19

 

Subsidiary to the
extent so reinvested) which is prior to the Liens of Lenders under the Collateral
Documents on the asset or assets that are the subject of the Event of
Loss.  Notwithstanding the foregoing,
all proceeds of so-called “liquidated damages”, “subguard” and “business
interruption” insurance policies shall not be Net Loss Proceeds.

 

“Net Proceeds”
is defined in subsection 2.4A(iii)(d).

 

“Net Proceeds Amount”
is defined in subsection 2.4A(iii)(e).

 

“Nevada Gaming
Authorities” shall mean, collectively, the Nevada Gaming Commission,
the Nevada State Gaming Control Board, and the Clark County Liquor and Gaming
Licensing Board.

 

“Nevada Gaming Laws”
shall mean the Nevada Gaming Control Act, as modified in Chapter 463 of the
Nevada Revised Statutes, as amended from time to time, and the regulations of
the Nevada Gaming Commission promulgated thereunder, as amended from time to
time.

 

“Non-Recourse
Financing” means Indebtedness incurred in connection with the
construction, installation, purchase or lease of personal or real property or
equipment (a) as to which the lender upon default may seek recourse or
payment against a Borrower or any of its Subsidiaries only through the return
or foreclosure or sale of the property or equipment so constructed, purchased
or leased and to any proceeds of such property and Indebtedness and the related
collateral account in which such proceeds are held and (b) may not otherwise
assert a valid claim for payment on such Indebtedness against a Borrower or any
of its Subsidiaries or any other property of a Borrower or any of its
Subsidiaries, except, in each of the foregoing clauses (a) and (b),
in the case of customary non-recourse exceptions, including fraud and
environmental indemnities.

 

“Non-US Lender”
is defined in subsection 2.7B(iii)(a).

 

“Note”
means a promissory note of the Borrowers payable to any Lender, in the form of Exhibit A
hereto (as such promissory note may be amended, endorsed or otherwise modified
from time to time), evidencing the aggregate Indebtedness of the Borrowers to
such Lender resulting from outstanding Loans, and also means all other promissory
notes accepted from time to time in substitution therefor or renewal thereof.

 

“Obligations”
means all obligations of every nature of each Borrower from time to time owed
to the Administrative Agent and/or the Lenders (or in the case of a Rate Protection
Agreement, an Affiliate of a Lender) under the Loan Documents, whether for
principal, interest, premium, if any, fees, expenses, indemnification or
otherwise including interest accruing on the Loans during the pendency of any
proceeding of the type described in subsections 7.6 or 7.7,
whether or not allowed in such proceeding.

 

“Officers’
Certificate” means, as applied to any corporation, a certificate
executed on behalf of such corporation by its chairman of the board (if an
officer) or its president or one of its vice presidents and by its chief
financial officer or its treasurer (in their capacity as such officer).

 

20

 

“Operating Lease”
means, as applied to any Person, any lease (including leases that may be
terminated by the lessee at any time) of any property (whether real, personal
or mixed) that is not a Capital Lease other than any such lease under which
that Person is the lessor.

 

“Operative Documents”
means the Loan Documents, the Resort Complex Operative Documents and the
Project Documents.

 

“Organizational
Documents” means (a) with respect to any corporation, its
certificate or articles of incorporation and its bylaws, (b) with respect to
any limited partnership, its certificate of limited partnership and its
partnership agreement, (c) with respect to any general partnership, its
partnership agreement, (d) with respect to any limited liability company, its
articles or certificate of organization and its operating agreement and (e)
with respect to any other entity, its equivalent organizational, governing
documents.

 

“Patriot Act”
is defined in subsection 9.22.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Pension Plan”
means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Code or Section 302 of ERISA.

 

“Percentage” means, relative to any Lender,
the applicable percentage relating to Loans, as set forth opposite its
signature hereto or as set forth in an Assignment Agreement under the
applicable column heading, as such percentage may be adjusted from time to time
pursuant to Assignment Agreement(s) executed by such Lender and its Eligible
Assignee Lender(s) and delivered pursuant to subsection 9.1B.

 

“Permits”
means all material authorizations, consents, decrees, permits, waivers,
privileges, approvals from and filings with all Governmental Instrumentalities
necessary for the realization of the Phase II Project in accordance with the
Project Documents and the Resort Complex Operative Documents, the Plans and
Specifications, the Project Budget, and any other material building,
construction, land use, environmental or other material permit, license,
franchise, approval, consent and authorization (including planning board
approvals from applicable Governmental Instrumentalities and approvals required
under the Nevada Gaming Laws) required for or in connection with the
construction, ownership, use, occupation and operation of the Phase II Project
and the transactions provided for in this Agreement and the other Operative
Documents.

 

“Permitted Liens”
means the following types of Liens (excluding any such Lien imposed pursuant to
Section 401(a)(29) or 412(n) of the Code or by ERISA, any such Lien relating to
or imposed in connection with any Environmental Claim, any such Lien expressly
prohibited by any applicable terms of any of the Collateral Documents and any
such Lien (other than the Liens listed in clauses (i) and (ii) of
this definition) which is a Phase II Mall Title Defect (unless the amount
required in order to obtain the discharge of such Lien which is a Phase II Mall
Title Defect is included in the Project Budget as a Line Item, the Borrowers
are in compliance with Section 5.5 of the Disbursement Agreement and the
Borrowers have demonstrated to the Administrative Agent in its sole
determination that such Lien can and will be removed prior to the anticipated
Phase II Mall Release Date)):

 

21

 

(i)       Liens granted pursuant to the Collateral
Documents;

 

(ii)      Liens securing the Intercompany Mall Note
and the other Phase II Mall Contribution Documents; provided that such
Liens are subordinate to the Liens held by the Administrative Agent for the
benefit of the Lenders;

 

(iii)     Liens existing on the Closing Date and
described in Schedule 6.2 annexed hereto;

 

(iv)     Liens for taxes, assessments or
governmental charges or claims the payment of which is not, at the time,
required by subsection 5.3;

 

(v)      statutory Liens of landlords, statutory
Liens of banks and rights of set-off, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law, in each case incurred in the ordinary course of business or in
connection with the construction of the Phase II Mall (a) for amounts not
yet overdue, (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 5 days) are being contested in
good faith by appropriate proceedings, so long as (1) such reserves
(including through funds on deposit in the Lien Protection Account which, in
the aggregate with all amounts on deposit therein shall not exceed $20,000,000)
or other appropriate provisions, if any, as shall be required by GAAP shall
have been made for any such contested amounts, and (2) in the case of a
Lien with respect to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral on
account of such Lien or (c) with respect to Liens of mechanics, repairmen,
workmen and materialmen, with respect to which the Borrowers have obtained a
title insurance endorsement insuring against losses arising therewith or if
such Lien arises in the ordinary course of business or in the construction of
the Phase II Project, the Borrowers have bonded such Lien within a reasonable
time after becoming aware of the existence thereof;

 

(vi)     Liens incurred or deposits made in the
ordinary course of business in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the payment
of borrowed money), incurred in the ordinary course of business or in
connection with the construction of the Phase II Project (a) for amounts
not yet overdue, (b) for amounts that are overdue and that (in the case of
any such amounts overdue for a period in excess of five days) are being
contested in good faith by appropriate proceedings, so long as (1) such
reserves or other appropriate provisions, if any, as shall be required by GAAP
shall have been made for any such contested amounts, (2) in the case of a Lien
with respect to any portion of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral on
account of such Lien or (c) with respect to Liens of mechanics, repairmen,
workmen and materialmen, with respect to which the Borrowers have obtained a
title insurance endorsement insuring against losses arising therewith or if

 

22

 

such Lien arises
in the ordinary course of business or in the construction of the Phase II
Project, the Borrowers have bonded such Lien within the time required by the
Phase II Mall Sale Agreement or otherwise within a reasonable time after
becoming aware of the existence thereof;

 

(vii)    any attachment or judgment Lien not
constituting an Event of Default under subsection 7.8;

 

(viii)   leases or subleases granted to third parties
in accordance with any applicable terms of this Agreement, the Collateral
Documents and/or the Phase II Mall Sale Agreement;

 

(ix)     (a) easements, rights-of-way, avigational
servitudes, restrictions, encroachments, and other minor defects or
irregularities in title and other similar charges or encumbrances, in each case
which are permitted by the Phase II Mall Sale Agreement and which do not and
will not interfere in any material respect with the ordinary conduct of the
business of a Borrower or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations and
(b) any Liens or other exceptions to title that appear in the Mortgage Policy,
as the same may be updated from time to time in accordance with subsection
3.2C;

 

(x)      leases permitted under subsection
6.6(iv) and any leasehold mortgage in favor of any party financing the
lessee under any such lease, provided that neither of the Borrowers nor
their Subsidiaries is liable for the payment of, or interest, premiums or fees
on, such financing;

 

(xi)     Liens arising from filing UCC financing
statements relating solely to leases permitted by this Agreement;

 

(xii)    Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;

 

(xiii)   any zoning or similar law or right reserved
to or vested in any governmental office or agency to control or regulate the
use of any real property;

 

(xiv)   licenses of patents, trademarks and other
intellectual property rights granted by a Borrower or any of its Subsidiaries
in the ordinary course of business and not interfering in any material respect
with the ordinary conduct of the business of such Borrower or such Subsidiary;

 

(xv)    Liens created under the HVAC Services
Agreements;

 

(xvi)   Liens created under the Predevelopment Agreement
and the Improvement Phasing Agreement (as in effect on the Closing Date);

 

(xvii)  Liens incurred in connection with the Rate
Protection Agreement required by subsection 5.12; provided that
such Liens only extend to the Collateral securing such Indebtedness with the
same priority thereto;

 

23

 

(xviii)      Liens
created or contemplated by the Cooperation Agreement; and

 

(xix)    Liens securing Indebtedness permitted
pursuant to subsection 6.1  (i),(iv) and (ix);

 

provided that other than with respect to Liens of the type set
forth under clauses (i), (ii), (xvii) and (xix),
such Liens do not secure Indebtedness for borrowed money.

 

“Person”
means natural persons, corporations, limited partnerships, general partnerships,
limited liability companies, limited liability partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments (whether federal, state or local, domestic or
foreign, and including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.

 

“Phase II
Hotel/Casino” means an approximately 3,000 suite hotel, a gaming
facility of approximately 100,000 square feet, a multi-story parking structure
and meeting complex on a portion of the Site to be integrated with the Phase II
Mall and the Existing Facility.

 

“Phase II Hotel/Casino Equity
Account” has the
meaning given in the Disbursement Agreement.

 

“Phase II
Hotel/Casino Retail Stores” means certain retail space in the Phase
II Hotel/Casino that are to be leased by LCR to Phase II Mall Subsidiary
pursuant to the Master Lease.

 

“Phase II Mall”
means the Phase II Mall Space (a portion of which shall be initially leased by
Phase II Mall Subsidiary from LCR pursuant to the Phase II Mall Lease and
eventually transferred from LCR to Phase II Mall Subsidiary upon its
designation as one or more separate legal parcels in accordance with the
Disbursement Agreement to become the Phase II Mall Air Parcel, a portion of
which shall be leased by Phase II Mall Subsidiary pursuant to the Walgreens
Lease and a portion of which shall be leased by Phase II Mall Subsidiary
pursuant to the Master Lease) and the Phase II Mall Improvements located
therein, in each case to be integrated with the Phase II Hotel/Casino and the
Existing Facility.

 

“Phase II Mall Air Parcel” means the one or
more separate legal parcels owned or to be owned in fee simple by Phase II Mall
Subsidiary after the Phase II Mall Air Space is subdivided in accordance with
Section 5.11 of the Disbursement Agreement and within which a portion of the
Phase II Mall Improvements is to be constructed.

 

“Phase II Mall Air
Space” is described in Exhibit L.

 

“Phase II Mall
Appraisal” means an appraisal of the Phase II Mall conducted by
Jones Lang LaSalle and prepared in accordance with the standards of the
Appraisal Institute.

 

“Phase II Mall Borrower Taxes” is defined in
subsection 5.3C.

 

24

 

“Phase II Mall
Construction Loan” means the Loans in the aggregate amount of
$250,000,000 to be made by the Lenders to the Borrower in accordance with and
subject to the terms of this Agreement and the other Loan Documents.

 

“Phase II Mall
Contribution” means the intercompany loan from Venetian to Phase II
Mall Subsidiary evidenced and secured by the Phase II Mall Contribution
Documents in the initial amount of $25,371,098 and as such amount may be
increased pursuant to subsection 6.1 (iv).

 

“Phase II Mall
Contribution Documents” means the Intercompany Mall Note, together
with all related agreements, instruments and documents executed or delivered
pursuant thereto at any time (including all mortgages, guarantees, security
agreements and all other collateral and security documents), in each case as
such agreements, instruments and documents may be amended, supplemented,
amended and restated, or otherwise modified in accordance with the terms
hereof.

 

“Phase II Mall Equity Account” has the
meaning given in the Disbursement Agreement.

 

“Phase II Mall
Improvements” means “Mall Improvements” as such term is defined in
the Phase II Mall Sale Agreement.

 

“Phase II Mall Lease”
means that certain Indenture of Lease, dated as of the date hereof, by and
between LCR and the Phase II Mall Subsidiary covering the Phase II Mall Air
Space, as the same may be amended, supplemented, amended and restated, or
otherwise modified in accordance with the terms hereof and thereof.

 

“Phase II Mall Loan
Proceeds Account” has the meaning given in the Disbursement
Agreement.

 

“Phase II Mall
Project Costs” means the Project Costs related to the financing,
design, development and construction of the Phase II Mall (but not to any
corresponding costs related to the Phase II Hotel/Casino) incurred prior to the
Phase II Mall Release Date.

 

“Phase II Mall Recognition Agreement” has
the meaning given in subsection 5.13.

 

“Phase II Mall Release Conditions” has the
meaning given in the Disbursement Agreement.

 

“Phase II Mall Release Date” means the date
on which each of the Phase II Mall Release Conditions have been satisfied.

 

“Phase II Mall SA Assignment
Agreement” means
that certain Assignment and Assumption Agreement and First Amendment to
Agreement, dated as of September 30, 2004, among LCR, as the assignor, Phase II
Mall Subsidiary Holding, as the assignee, and GGP.

 

25

 

“Phase II Mall Sale” means the sale by Phase
II Mall Subsidiary Holding to GGP of the equity interests of Phase II Mall
Subsidiary pursuant to the terms of the Phase II Mall Sale Agreement.

 

“Phase II Mall Sale Reimbursement Agreement”
has the meaning given in the Disbursement Agreement.

 

“Phase II Mall Sale
Agreement” means the Agreement, dated as of April 12, 2004 between
LCR and GGP, as amended by the Phase II Mall SA Assignment Agreement, and as
the same may be further amended, supplemented, amended and restated, or
otherwise modified in accordance with the terms hereof and thereof.

 

“Phase II Mall Sale Reserve Account” means
the reserve account to be established by Phase II Mall Subsidiary Holding
pursuant to the terms of the Phase II Mall Sale Reimbursement Agreement and
pledged to LCR thereunder.

 

“Phase II Mall Space” means, collectively,
the retail space in which the Phase II Hotel/Casino Retail Stores will be
situated (which shall be leased by Phase II Mall Subsidiary pursuant to the
Master Lease), the Phase II Mall Air Space (which shall be initially leased by
Phase II Mall Subsidiary from LCR pursuant to the Phase II Mall Lease and
eventually transferred from LCR to Phase II Mall Subsidiary upon its
designation as one or more separate legal parcels in accordance with the
Disbursement Agreement to become the Phase II Mall Air Parcel), the Phase II
Mall Air Parcel and the Walgreens Air Space.

 

“Phase II Mall Space Easements”
means any easements appurtenant, easements in gross, license agreements or
other rights running for the benefit of Phase II Mall Subsidiary with respect
to the Phase II Mall Space and/or appurtenant to the Phase II Mall Space,
including, without limitation, those certain easements and licenses described
in each Title Policy related to the Phase II Mall Space.

 

“Phase II Mall
Subsidiary” has the meaning given in the preamble.

 

“Phase II Mall
Subsidiary Holding” has the meaning given in the preamble.

 

“Phase II Mall Title Defect” means “Title
Defect” as defined in the Phase II Mall Sale Agreement.

 

“Phase II Project”
means an approximately 3,000 room hotel, casino, retail and meeting complex to
be integrated with the Existing Facility and located on the Site and which will
include the Phase II Mall.

 

“Plans and
Specifications” has the meaning given in the Disbursement Agreement.

 

“Potential Event of
Default” means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default.

 

“Predevelopment
Agreement” means the Sands Resort Hotel Casino Agreement, dated as
of February 18, 1997, as amended, between Clark County, Nevada and LVSI.

 

26

 

“Prime Rate”
means the rate that the Administrative Agent announces from its New York office
from time to time as its Dollar prime lending rate, as in effect from time to
time.  The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
charged to any customer.  The
Administrative Agent or any other Lender may make commercial loans or other
loans at rates of interest at, above or below the Prime Rate.

 

“Proceedings”
is defined in subsection 5.1(vii).

 

“Project Budget”
has the meaning given in the Disbursement Agreement.

 

“Project Costs”
has the meaning given in the Disbursement Agreement.

 

“Project Documents”
means the Phase II Mall Lease, the Phase II Mall Sale Agreement, the Phase II
Mall SA Assignment Agreement, the Construction Management Agreement, the COREA,
the Walgreens Lease, and any document or agreement related to the design,
development, construction or pre-opening of the Phase II Mall and entered into
on, prior to or after the Closing Date, in accordance with
subsection 6.1.2 of the Disbursement Agreement.

 

“Pro Rata Share”
means, with respect to all payments of the Loans of any Lender, the percentage
obtained by dividing (i) the Loan Exposure of that Lender by
(ii) the Loan Exposure of all Lenders.

 

“Quarterly Date”
means March 31, June 30, September 30 and December 31.

 

“Quarterly Payment
Date” means each April 1, July 1, October 1 and January 1.

 

“Rate Protection
Agreement” means, collectively, any Hedging Agreement entered into
by the Borrowers or any of their Subsidiaries pursuant to subsection 5.12
under which the counterparty of such Hedging Agreement is (or at the time such
Hedging Agreement was entered into, was) a Lender or an Affiliate of a Lender.

 

“Rating Agencies”
is defined in the definition of “Cash Equivalents”.

 

“Refinancing” has the meaning given in the
Bank Facilities Agreement.

 

“Refinancing Fees” with respect to any
refinancing of Indebtedness permitted under subsection 6.1(ii), any reasonable
fees, expenses, premiums, make whole payments, and accrued and unpaid interest
refinanced or paid or incurred in connection therewith.

 

“Register”
is defined in subsection 2.1D(i).

 

“Regulation D”
means Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

 

“Related Parties”
means:  (a) Family Members (defined
below); (b) directors of LVSI or Venetian and employees of LVSI or
Venetian who are senior managers or officers of LVSI, Venetian, Interface or
any of their Affiliates; (c) any Person who receives an interest in LVSI
or Venetian from any individual referenced in clauses (a)-(b)
in a gratuitous transfer, whether by

 

27

 

gift, bequest or
otherwise, to the extent of such interest; (d) the estate of any
individual referenced in clauses (a)-(c); (e) a trust
for the benefit of one or more of the individuals referenced in clauses (a)-(c);
and/or (f) an entity owned or controlled, directly or indirectly, by one
or more of the individuals, estates or trusts referenced in clauses (a)-(e).  For the purpose of this paragraph, a “Family
Member” shall include:  (a) Sheldon
G. Adelson; (b) Dr. Miriam Adelson; (c) any sibling of either of
the foregoing; (d) any issue of any one or more of the individuals
referenced in the preceding clauses (a)-(c); and (e) the
spouse or issue of the spouse of one or more of the individuals referenced in
the preceding clauses (a)-(d).

 

“Release”
means any release, spill, emission, leaking, pumping, pouring, injection,
escaping, deposit, disposal, discharge, dispersal, dumping, leaching or
migration of Hazardous Materials into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other closed
receptacles containing any Hazardous Materials), including the movement of any
Hazardous Materials through the air, soil, surface water or groundwater.

 

“Requisite Lenders”
means Lenders having or holding more than 50% of the sum of the aggregate outstanding
principal amount of all Loans and unused amount of the Commitments of all
Lenders.

 

“Resort Complex” means the Existing Facility and the
Phase II Project.

 

“Resort Complex
Operative Documents” means the Cooperation Agreement, the Harrah’s
Shared Roadway Agreement, the HVAC Services Agreements, the Predevelopment
Agreement, the Improvement Phasing Agreement, the Site Easements, the Master
Lease and the Walgreens Lease.

 

“Restricted Payment”
means (a) any dividend or other distribution, direct or indirect, on
account of any shares of any class of equity Securities of either Borrower now
or hereafter outstanding, except a dividend or distribution payable solely in
shares of that class of equity Securities to the holders of that class (or the
accretion of such dividends or distribution), (b) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of equity Securities of
any Borrower now or hereafter outstanding, (c) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of equity Securities of any Borrower now
or hereafter outstanding, and (d) any payment or prepayment of principal
of, premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in-substance or legal defeasance), sinking fund or
similar payment with respect to the Phase II Mall Contribution.

 

“Restricted Subsidiary” has the meaning given
in the Bank Facilities Agreement.

 

“Scotia Capital”
is defined in the preamble.

 

“SECC” means the exposition and meeting
facilities commonly known as the Sands Expo and Convention Center.

 

28

 

“Secured Parties”
means, collectively, the Lenders, the Administrative Agent, each counterparty
to a Rate Protection Agreement that is (or at the time such Rate Protection
Agreement was entered into, was) a Lender or an Affiliate thereof.

 

“Securities”
means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates
of interest, shares or participations in temporary or interim certificates for
the purchase or acquisition of, or any right to subscribe to, purchase or
acquire, any of the foregoing.

 

“Securities Act”
means the Securities Act of 1933, as amended from time to time, and any
successor statute.

 

“Security Agreement”
means the Security Agreement executed and delivered by each Borrower, substantially
in the form of Exhibit D-2 annexed hereto.

 

“Site” means the real property consisting of approximately 14 acres adjoining
the Existing Site and owned by LCR.

 

“Site Easement” means any easement appurtenant, easement in gross,
license agreement and other right running for the benefit of the Borrowers, the
Existing Facility, the Phase II Project or appurtenant to the Site and/or the
Existing Site which benefits or burdens the Resort Complex, including those
certain easements and licenses described in the Title Insurance Policies.

 

“Solvent”
means, with respect to any Person, that as of the date of determination both
(a) (i) the then fair saleable value of the property of such Person
is (A) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (B) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts
as they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such
Person’s capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend
to incur, or believe (nor should it reasonably believe) that it will incur,
debts beyond its ability to pay such debts as they become due; and (b) such
Person is “solvent” within the meaning given that term and similar terms under
applicable laws relating to fraudulent transfers and conveyances.  For purposes of this definition, the amount
of any contingent liability at any time shall be computed as the amount that,
in light of all of the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

“Stop Funding Notice” has the meaning given in the
Disbursement Agreement.

 

“Subsidiary”
means, with respect to any Person, (a) any corporation, partnership, limited
liability company, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to
vote in the election of the Person or Persons (whether

 

29

 

directors,
managers, trustees or other Persons performing similar functions) having the
power to direct or cause the direction of the management and policies thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof
and (b) any partnership or limited liability company of which more than
50% of such entities’ capital accounts, distribution rights, general or limited
partnership interests or membership interests are owned or controlled directly
or indirectly by such Person or one of more other Subsidiaries of that Person
or a combination thereof.

 

“Subsidiary Guarantor” has the meaning given
in the Bank Facilities Agreement.

 

“Substantial Completion”
has the meaning given in the Disbursement Agreement.

 

“Substantial
Completion Date” means the date on which Substantial Completion
occurs.

 

“Substitute Lender”
is defined in subsection 9.7(A).

 

“Supplemental Agent”
is defined in subsection 8.1B.

 

“Supplier Joint
Venture” means any Person that supplies or provides materials or
services to any Borrower or any contractor in the Resort Complex and in which a
Borrower or one of its Subsidiaries have Investments.

 

“Tax” or
“Taxes” means any present or
future tax, levy, impost, duty, charge, fee, deduction or withholding of any
nature and whatever called, by whomsoever, on whomsoever and wherever imposed,
levied, collected, withheld or assessed; provided that “Tax on the overall net income” of a Person shall
be construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person’s principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise) of that Person (and/or,
in the case of a Lender, its lending office).

 

“Termination Date”
means the date on which all payment Obligations then due and payable have been
repaid in full in cash and all Commitments shall have terminated.

 

“Title Company”
means First American Title Insurance Company or an Affiliate thereof and/or one
or more other title insurance companies reasonably satisfactory to the
Administrative Agent.

 

“Title Insurance
Policies” means the Secured Parties’ A.L.T.A. policy of title
insurance issued by the Title Company as of the Closing Date, including all
amendments thereto, endorsements thereof and substitutions or replacements
therefor.

 

“Transactions”
is defined in subsection 3.1K(ii).

 

30

 

“Transaction Costs”
means the fees, costs and expenses payable by the Borrowers on or before the
Closing Date in connection with this Agreement, the other Loan Documents and
the initial Credit Extension hereunder.

 

“type” means, relative to any Loan, the
portion thereof, if any, being maintained as a Base Rate Loan or a Eurodollar
Rate Loan.

 

“UCC”
means the Uniform Commercial Code as in effect from time to time in the State
of New York; provided, that if, with respect to any UCC financing statement
or by reason of any provisions of law, the perfection or the effect of
perfection or non-perfection of the security interests granted to the
Administrative Agent pursuant to the applicable Loan Document is governed by
the Uniform Commercial Code as in effect in a jurisdiction of the United States
other than New York, then “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions of
each Loan Document and any UCC financing statement relating to such perfection
or effect of perfection or non-perfection.

 

“United States”
or “U.S.” means the United States,
its fifty states and the District of Columbia.

 

“Venetian”
means Venetian Casino Resort, LLC and its successors.

 

“Walgreens Lease”
means that certain Commercial Lease dated as of February 2004  between LCR and Cap II—Buccaneer, LLC, a New
Mexico limited liability company, as assigned in accordance with the terms of
this Agreement by LCR to the Phase II Mall Subsidiary.

 

“Walgreens Air Space” means the real
property situated in the County of Clark, State of Nevada described in the
Walgreens Lease and more specifically described in Exhibit B to the Deed of
Trust.

 

“Withdrawal Period”
is defined in subsection 9.7(B).

 

1.2           Accounting
Terms; Utilization of GAAP for Purposes of Calculations Under
Agreement.

 

Except as otherwise expressly provided in this
Agreement (including the last sentence of this subsection 1.2), all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. 
Financial statements and other information required to be delivered by
the Borrowers to Lenders pursuant to clauses (i), (ii) and (iii)
of subsection 5.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation. 
Calculations in connection with the definitions, covenants and other
provisions of this Agreement shall utilize accounting principles and policies
in conformity with those used to prepare the financial statements referred to in
subsection 4.3.

 

1.3           Other
Definitional Provisions and Rules of Construction.

 

(A)          Any of the terms defined herein may,
unless the context otherwise requires, be used in the singular or the plural,
depending on the reference.

 

31

 

(B)           References to “Sections” and
“subsections” shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided.

 

(C)           The use in any of the Loan Documents
of the word “include” or “including”, when following any general statement,
term or matter, shall not be construed to limit such statement, term or matter
to the specific items or matters set forth immediately following such word or
to similar items or matters, whether or not nonlimiting language (such as
“without limitation” or “but not limited to” or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter.

 

(D)          Any reference to any agreement or
instrument shall be deemed to include a reference to such agreement or
instrument as assigned, amended, supplemented or otherwise modified from time
to time, but only to the extent in accordance with subsection 6.12
(to the extent applicable).

 

2.             Amounts and
Terms of Commitments and Loans.

 

2.1           Commitments;
Making of Loans; the Register; Notes.

 

(A)          Commitments.  Subject to the terms and conditions of this
Agreement, from time to time on any Business Day occurring from and after the
Closing Date but on or prior to the Commitment Termination Date, each Lender
that has a Commitment, agrees that it will severally make loans (relative to
such Lender, its “Loans”) to the
Borrowers equal to such Lender’s Percentage of the aggregate amount of each
borrowing of the Loans requested by the Borrowers to be made on such day.  No amounts paid or prepaid with respect to
Loans may be reborrowed.  No Lender
shall be permitted or required to make any Loan if, after giving effect
thereto, the aggregate outstanding principal amount of all Loans of such Lender
would exceed such Lender’s Percentage of the then existing Commitment
Amount.  Each Lender’s Commitment shall
expire on the Commitment Termination Date.

 

(B)           Borrowing  Mechanics.  Loans made
on any Funding Date shall be in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount.

 

(i)       Whenever the Borrowers desire that
Lenders make Loans, the Borrowers shall deliver to the Disbursement Agent the
Advance Request and related documentation required by the terms of Section
2.4.1(a) of the Disbursement Agreement. 
In addition, the Borrowers shall deliver to the Administrative Agent a Borrowing
Notice no later than 1:00 p.m. (New York City time) at least three Business
Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate
Loan) or at least one Business Day in advance of the proposed Funding Date (in
the case of a Base Rate Loan).  The
Borrowing Notice shall specify (i) the proposed Funding Date (which shall
be a Business Day), (ii) the amount and type of Loans requested,
(iii) whether such Loans shall be Base Rate Loans or Eurodollar Rate
Loans, and (iv) in the case of any Loans requested to be made as Eurodollar
Rate Loans, the initial Interest Period requested therefor.  The Borrowers shall notify the
Administrative Agent prior to the funding of any such Loans in the event that
any of the matters to

 

32

 

which the
Borrowers are required to certify in the applicable Borrowing Notice and/or the
applicable Advance Request is no longer true and correct as of the applicable
Funding Date, and the acceptance by the Borrowers of the proceeds of any Loans
shall constitute a recertification by the Borrowers, as of the applicable
Funding Date, as to the matters to which the Borrowers is required to certify
in the applicable Borrowing Notice and the applicable Funding Date.

 

(ii)      Except as otherwise provided in subsections
2.6B, 2.6C and 2.6G, a Borrowing Notice for a Eurodollar Rate
Loan shall be irrevocable on and after the related Interest Rate Determination
Date, and the Borrowers shall be bound to make a Borrowing in accordance
therewith.

 

(iii)     All proceeds of Loans shall be deposited in
the Phase II Mall Loan Proceeds Account and/or the Disbursement Account in
accordance with the Disbursement Agreement.

 

(C)           Lending of Funds.  All Loans under this Agreement shall be made
by the Lenders simultaneously and proportionately to their respective
Percentage, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender’s obligation to make a Loan
requested hereunder nor shall the Commitment of any Lender be increased or decreased
as a result of a default by any other Lender in that other Lender’s obligation
to make a Loan requested hereunder. 
Promptly after receipt by the Administrative Agent of an Advance
Request, the Construction Consultant’s certificate from the Disbursement Agent
and a Borrowing Notice pursuant to subsection 2.1B, the Administrative
Agent shall notify each Lender of the proposed Borrowing.  Each Lender shall (unless the Administrative
Agent shall have subsequently received a Stop Funding Notice) make the amount
of its Loan available to the Administrative Agent not later than 12:00 Noon
(New York City time) on the applicable Funding Date, in same day funds in
Dollars, at the Funding and Payment Office, and, after receipt thereof as
aforesaid the Administrative Agent shall deposit such funds in the Phase II
Mall Loan Proceeds Account and/or the Disbursement Account in accordance with
the Disbursement Agreement no later than 1:00 p.m. (New York City time) on the
applicable Funding Date (and in so doing such Loans shall be deemed made
available to the Borrowers hereunder) and the Disbursement Agent shall then
make the proceeds of such Loans available to the Borrowers in accordance with
and upon fulfillment of the conditions set forth in the Disbursement Agreement.

 

(i)       The Administrative Agent shall notify
each relevant Lender promptly upon receipt of any Stop Funding Notice, but
shall bear no liability if, despite the receipt of such Stop Funding Notice,
any Lender makes available any money to the Administrative Agent in respect of
the requested Loans.  In such event, the
Administrative Agent shall refund the amount received by it as promptly as
possible and in any event by the following Business Day.

 

(ii)      Unless the Administrative Agent shall have
been notified by any Lender prior to the Funding Date for any Loans that such
Lender does not intend to make available to the Administrative Agent the amount
of such Lender’s Loan requested on such Funding Date, the Administrative Agent
may assume that such Lender has made such amount available to the
Administrative Agent on such Funding Date and the

 

33

 

Administrative
Agent may, in its sole discretion, but shall not be obligated to, make
available to the Borrowers a corresponding amount on such Funding Date.  If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from
such Lender together with interest thereon, for each day from such Funding Date
until the date such amount is paid to the Administrative Agent, at the
customary rate set by the Administrative Agent for the correction of errors
among banks for three Business Days and thereafter at the Base Rate.  If such Lender does not pay such
corresponding amount forthwith upon Administrative Agent’s demand therefor, the
Administrative Agent shall promptly notify the Borrowers and the Borrowers shall
immediately pay such corresponding amount to the Administrative Agent together
with interest thereon, for each day from such Funding Date until the date such
amount is paid to the Administrative Agent, at the rate payable under this
Agreement for Base Rate Loans.  Nothing
in this subsection 2.1C shall be deemed to relieve any Lender from its
obligation to fulfill its Commitments hereunder or to prejudice any rights that
the Borrowers may have against any Lender as a result of any default by such
Lender hereunder.

 

(D)          The Register.

 

(i)       The Administrative Agent (or its agent or
sub-agent appointed by it) shall maintain, as agent for the Borrower, at its
address referred to in subsection 9.9, a register for the recordation of
the names and addresses of Lenders and the Commitments and Loans of each Lender
from time to time (the “Register”).  The Register, as in effect at the close of
business on the preceding Business Day, shall be available for inspection by
the Borrowers or any Lender at any reasonable time and from time to time upon
reasonable prior notice.

 

(ii)      The Administrative Agent shall record, or
shall cause to be recorded, in the Register the Commitment and the Loans (in
accordance with the provisions of subsection 9.1) from time to time of
each Lender, and each repayment or prepayment in respect of the principal
amount of the Loans of each Lender.  Any
such recordation shall be conclusive and binding on Borrowers and each Lender,
absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any Lender’s
Commitments or the Obligations of either of the Borrowers in respect of any
applicable Loans.

 

(iii)     Each Lender shall record on its internal
records (including the Notes held by such Lender) the amount of each Loan made
by it and each payment in respect thereof. 
Any such recordation shall be conclusive and binding on Borrowers,
absent manifest error; provided that failure to make any such
recordation, or any error in such recordation, shall not affect any Lender’s
Commitments or the Obligations of either of the Borrowers in respect of any
applicable Loans; and provided, further that in the event of any
inconsistency between the Register and any Lender’s records, the recordations
in the Register shall govern.

 

34

 

(iv)     The Administrative Agent and Lenders shall
deem and treat the Persons listed as Lenders in the Register as the holders and
owners of the corresponding Commitments and Loans listed therein for all
purposes hereof, and no assignment or transfer of any such Commitment or Loan
shall be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by the
Administrative Agent and recorded in the Register as provided in subsection
9.1B(ii).  Prior to such
recordation, all amounts owed with respect to the applicable Commitment or Loan
shall be owed to the Lender listed in the Register as the owner thereof, and
any request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is listed in the Register as a
Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitments or Loans.

 

(E)           Notes.  The Borrowers agree that, upon request to the
Administrative Agent by any Lender, the Borrowers will execute and deliver to
such Lender a Note evidencing the Loans made by, and payable to the order of,
such Lender in a maximum principal amount equal to such Lender’s Percentage of
the Phase II Mall Construction Loan. 
Each Borrower hereby irrevocably authorizes each Lender to make (or
cause to be made) appropriate notations on the grid attached to such Lender’s
Note (or on any continuation of such grid), which notations, if made, shall
evidence, inter  alia, the date of, the outstanding principal
amount of, and the interest rate and Interest Period applicable to the Loans
evidenced thereby.  Such notations
shall, to the extent not inconsistent with notations made by the Administrative
Agent in the Register, be conclusive and binding on each Obligor absent
manifest error; provided, however, that the failure of any Lender
to make any such notations shall not limit or otherwise affect any Obligations
of any Borrower.

 

2.2           Interest
on the Loans.

 

(A)          Rate of Interest.  Subject to the provisions of subsections
2.6 and 2.7, each Loan shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or the Adjusted
Eurodollar Rate.  The applicable basis
for determining the rate of interest with respect to any Loan shall be selected
by the Borrowers initially at the time a Borrowing Notice is given with respect
to such Loan pursuant to subsection 2.1B, and the basis for determining
the interest rate with respect to any Loan may be changed from time to time
pursuant to subsection 2.2D.  If
on any day a Loan is outstanding with respect to which notice has not been
delivered to the Administrative Agent in accordance with the terms of this
Agreement specifying the applicable basis for determining the rate of interest,
then for that day that Loan shall bear interest determined by reference to the
Base Rate.  Subject to the provisions of
subsections 2.2E and 2.7, the Loans shall bear interest at a
rate per annum as follows:

 

(i)       if a Base Rate Loan, then from the date
of funding of such Loan at the sum of the Base Rate plus the Applicable
Margin for such Loans; or

 

(ii)      if a Eurodollar Rate Loan, then from the
date of funding of such Loan at the sum of the Adjusted Eurodollar Rate plus
the Applicable Margin for such Loans.

 

35

 

All Eurodollar Rate Loans
shall bear interest from and including the first day of the applicable Interest
Period to (but not including) the last day of such Interest Period at the
interest rate determined as applicable to such Eurodollar Rate Loan.

 

(B)           Interest Periods.  In connection with each Eurodollar Rate
Loan, the Borrowers may, pursuant to the applicable Borrowing Notice or
Conversion/Continuation Notice, as the case may be, select an interest period
(each an “Interest Period”) to be
applicable to such Loan, which Interest Period shall be, at Borrowers’ option,
either a one, two, three or six month period; provided that:

 

(i)       the initial Interest Period for any
Eurodollar Rate Loan shall commence on the Funding Date in respect of such
Loan, in the case of a Loan initially made as a Eurodollar Rate Loan, or on the
date specified in the applicable Conversion/Continuation Notice, in the case of
a Loan converted to a Eurodollar Rate Loan;

 

(ii)      in the case of immediately successive
Interest Periods applicable to a Eurodollar Rate Loan continued as such
pursuant to a Conversion/Continuation Notice, each successive Interest Period
shall commence on the day on which the next preceding Interest Period expires;

 

(iii)     if an Interest Period would otherwise
expire on a day that is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day; provided that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day;

 

(iv)     any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to subsection 2.2B(v), end on the last Business Day of a
calendar month;

 

(v)      no Interest Period with respect to any
portion of the Loans shall extend beyond the Maturity Date for such Loans;

 

(vi)     no Interest Period shall extend beyond a
date on which Borrowers are required to make a scheduled payment of principal
of the Loans unless the sum of (a) the aggregate principal amount of Loans that
are Base Rate Loans plus (b) the aggregate principal amount of Loans
that are Eurodollar Rate Loans with Interest Periods expiring on or before such
date plus (c) the excess of the Commitments then in effect over the
aggregate principal amount of the Loans then outstanding equals or exceeds the
principal amount required to be paid on the Loans or the permanent reduction of
the Commitments that is scheduled to occur, on such date;

 

(vii)    there shall be no more than nine Interest
Periods outstanding at any time;

 

36

 

(viii)   in the event the Borrowers fail to specify an
Interest Period for any Eurodollar Rate Loan in the applicable Borrowing Notice
or Conversion/Continuation Notice, the Borrowers shall be deemed to have
selected an Interest Period of one month; and

 

(ix)     the Borrowers may not select an Interest
Period of greater than one month until sixty days after the Closing Date
(unless prior thereto the Administrative Agent provides written notice that the
syndication has been completed).

 

(C)           Interest Payments.  Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears (i) on each Interest Payment
Date with respect to such Loan, (ii) upon any prepayment of that Loan, whether
voluntary or mandatory, to the extent accrued on the amount being prepaid and
(iii) at maturity of the Loans, including final maturity of the Loans; provided,
however, with respect to any voluntary prepayment of a Base Rate Loan,
accrued interest shall instead be payable on the applicable Interest Payment
Date.  The Borrowers shall include in
each Advance Request delivered pursuant to Section 2.4.1(a) of the Disbursement
Agreement a request that a portion of the Advance covered by such Advance
Request shall be made to pay Debt Service which is then due and payable (or
will be due and payable prior to 30 days after the Advance Date set forth in
such Advance Request).  If the Borrowers
fail to set forth such information in any Advance Request or fail to deliver
timely any Advance Request therefor, then the Administrative Agent may deliver
such information and a request for payment to the Disbursement Agent, the
Construction Consultant and the Borrowers, upon which request the Borrowers
shall revise the Advance Request to provide for such payment.  The Borrowers acknowledge that failure of any
notice referenced in this subsection 2.2(C) or Section 2.8 of the
Disbursement Agreement to be delivered shall not in any way exonerate or
diminish the Borrowers’ obligation to make all payments under the Loan
Documents as and when due.

 

(D)          Conversion or Continuation.  Subject to the provisions of subsection 2.6,
the Borrowers shall have the option (i) to convert at any time all or any
part of its outstanding Loans equal to $1,000,000 and integral multiples of
$1,000,000 in excess of that amount from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the
expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue
all or any portion of such Loan equal to $1,000,000 and integral multiples of
$1,000,000 in excess of that amount as a Eurodollar Rate Loan; provided,
however, that a Eurodollar Rate Loan may only be converted into a Base
Rate Loan on the expiration date of an Interest Period applicable thereto.

 

Borrowers shall deliver a Conversion/Continuation
Notice to the Administrative Agent no later than 1:00 p.m. (New York City time)
at least one Business Day in advance of the proposed conversion date (in the
case of a conversion to a Base Rate Loan) and at least three Business Days in
advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan).  A Conversion/Continuation Notice shall
specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, the requested Interest Period, and (v) in the
case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no
Potential Event of Default or Event of Default has occurred

 

37

 

and is
continuing.  In lieu of delivering the
above-described Conversion/Continuation Notice, the Borrowers may give the
Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that
such notice shall be promptly confirmed in writing by delivery of a
Conversion/Continuation Notice to the Administrative Agent on or before the
proposed conversion/continuation date. 
Upon receipt of written or telephonic notice of any proposed conversion/continuation
under this subsection 2.2D, the Administrative Agent shall promptly
transmit such notice by telefacsimile or telephone to each Lender.

 

Neither the Administrative Agent nor any Lender shall
incur any liability to the Borrowers in acting upon any telephonic notice
referred to above that the Administrative Agent believes in good faith to have
been given by a duly Authorized Officer or other Person authorized to act on
behalf of the Borrowers or for otherwise acting in good faith under this subsection
2.2D, and upon conversion or continuation of the applicable basis for
determining the interest rate with respect to any Loans in accordance with this
Agreement pursuant to any such telephonic notice Borrowers shall have effected
a conversion or continuation, as the case may be, hereunder.

 

Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Conversion/Continuation Notice for conversion
to, or continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrowers shall be bound to effect a conversion or
continuation in accordance therewith.

 

(E)           Default Rate.  Upon the occurrence and during the
continuation of any Event of Default, the outstanding principal amount of all
overdue amounts and, to the extent permitted by applicable law, any interest
payments thereon not paid when due and any fees and other amounts then due and
payable hereunder, shall thereafter bear interest (including post-petition
interest in any proceeding under the Bankruptcy Code or other applicable
bankruptcy laws) payable upon demand at a rate that is 2% per annum in excess
of the interest rate otherwise payable under this Agreement for Base Rate
Loans.  Payment or acceptance of the
increased rates of interest provided for in this subsection 2.2E is
not a permitted alternative to timely payment and shall not constitute a waiver
of any Event of Default or otherwise prejudice or limit any rights or remedies
of the Administrative Agent or any Lender.

 

(F)           Computation of Interest and
Commitment Fees.  Interest on the
Loans and commitment fees shall be computed on the basis of (i) a 360-day
year, in the case of Eurodollar Rate Loans and (ii) a 365 or 366-day year,
in respect of Base Rate Loans and commitment fees, in each case for the actual
number of days elapsed in the period during which it accrues.  In computing interest on any Loan, (x) the
date of the making of such Loan or the first day of an Interest Period applicable
to such Loan or, the last Interest Payment Date with respect to such Loan or,
with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan,
the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as
the case may be, shall be included, and (y) the date of payment of such Loan or
the expiration date of an Interest Period applicable to such Loan or, with
respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date
of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the

 

38

 

case
may be, shall be excluded; provided that if a Loan is repaid on the same
day on which it is made, one day’s interest shall be paid on that Loan.

 

2.3           Fees.

 

(A)          Commitment Fees.  The Borrowers agree to pay to the
Administrative Agent, for distribution to each Lender in proportion to that
Lender’s Percentage, commitment fees for the period from and including the
Closing Date to and excluding the Commitment Termination Date equal to the
average of the daily aggregate Commitment Amounts multiplied by 0.375% per
annum, in each case such commitment fees to be calculated on the basis of a
360-day year and the actual number of days elapsed and to be payable quarterly
in arrears on each Quarterly Payment Date, commencing on the first such date to
occur after the Closing Date, and on the Commitment Termination Date, as
applicable.

 

(B)           Annual Administrative Fee.  The Borrowers agree to pay to the
Administrative Agent an annual administrative fee in the amount and at the
times set forth in the Arranger’s Fee Letter.

 

(C)           Other Fees.  The Borrowers agree to pay to the Agents
such other fees in the amounts and at the times as may be agreed by them in
writing.

 

2.4           Repayments,
Prepayments and Reductions in Commitments; General Provisions Regarding
Payments.  The Borrowers shall
repay, in full, the unpaid principal amount of the Loans upon the Maturity
Date.  Prior thereto, payments and
prepayments of the Loans shall or may be made as set forth below:

 

(A)          Prepayments and Unscheduled
Reductions in Commitments.

 

(i)       Voluntary Prepayments.  The Borrowers may, upon not less than one
Business Day’s prior written or telephonic notice, in the case of Base Rate
Loans, and three Business Days’ prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case given to the Administrative Agent by
1:00 p.m. (New York City time) on the date required and, if given by telephone,
promptly confirmed in writing to the Administrative Agent (which original
written or telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to time
prepay any Loans on any Business Day in whole or in part in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000 in excess of
that amount; provided, however, that with respect to any
Eurodollar Rate Loan not prepaid on the expiration of the Interest Period
applicable thereto the Borrowers shall pay any amount payable pursuant to subsection
2.6D; provided, further, that no such voluntary partial
prepayments will be permitted prior to Substantial Completion unless the
Borrowers demonstrate in an Officers’ Certificate that the Phase II Project is
In Balance on a pro forma basis for such prepayment.  Notice of prepayment having been given as
aforesaid, the principal amount of the Loans specified in such notice shall
become due and payable on the prepayment date specified therein.  Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iv).

 

39

.

(ii)                  Voluntary
Reductions of Commitments.  After
Substantial Completion, the Borrowers may, upon not less than three Business
Days’ prior written or telephonic notice confirmed in writing to the
Administrative Agent (which original written or telephonic notice
Administrative Agent will promptly transmit by telefacsimile or telephone to
each Lender), at any time and from time to time terminate in whole or
permanently reduce in part, without premium or penalty, the Loan Commitments; provided
that any such partial reduction of such Commitments shall be in an aggregate
minimum amount of $1,000,000 and integral multiples of $500,000 in excess of
that amount; and further  provided that the Borrowers may
terminate in whole the Loan Commitments prior to Substantial Completion upon
payment in full of the Obligations (other than those which survive the
expiration or earlier termination of the Loan Documents).  The Borrowers’ notice to the Administrative
Agent shall designate the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction, and such
termination or reduction of such Commitments shall be effective on the date
specified in Borrowers’ notice and shall reduce such Commitment of each Lender
proportionately to its unfunded Commitment. 
Any such voluntary reduction of the Commitments shall be applied as
specified in subsection 2.4B(iv).

 

(iii)               Mandatory
Prepayments.  The Loans shall be
prepaid in the amounts and under the circumstances set forth below, all such prepayments
to be applied as set forth below or as more specifically provided in subsection 2.4B(iv):

 

(a)                                  Change
of Control.  No later than the fifth
Business Day following any Change of Control.

 

(b)                                 Prepayments
From Net Asset Sale Proceeds.  No
later than the fifth Business Day following the date of receipt by the
Borrowers of any Net Asset Sale Proceeds in respect of any Asset Sale (other
than Net Asset Sale Proceeds in respect of the sale of (i) any obsolete worn
out or surplus assets or assets no longer used or useful in the business of the
Phase II Mall and (ii) construction equipment having a fair market value not in
excess of $4,000,000 prior to the Phase II Mall Release Date, but only in each
case to the extent reinvested in the business of the Borrowers within 180 days
of receipt), the Borrowers shall prepay the Loans in an aggregate amount equal
to such Net Asset Sale Proceeds.

 

(c)                                  Prepayments
from Net Loss Proceeds.  Subject to
the Disbursement Agreement and the Cooperation Agreement (to the extent
applicable to the Phase II Project), no later than the fifth Business Day on
which Net Loss Proceeds are required to be applied to prepayment of Loans
pursuant to the last sentence of this subsection 2.4A(iii)(c), the
Borrowers shall prepay the Loans in an amount equal to such Net Loss Proceeds; provided,
however, so long as no Event of Default has occurred and is continuing,
the Borrowers may use such Net Loss Proceeds to repair, restore and replace the
property or asset with respect to which such Net Loss Proceeds were paid in
order to compensate the Borrowers for the Event of Loss which occurred thereto
so long as such Net Loss Proceeds are used for such purposes within 365 days of
the Borrowers’ receipt of such Net Loss Proceeds or as otherwise required under
the Phase II Mall Sale

 

40

 

Agreement.  To the extent such Net Loss Proceeds are not
so reinvested, the Borrowers will make a prepayment of the Loans within five
Business Days of the end of such 365 day period.

 

(d)                                 Prepayments
Due to Incurrence of Debt.  On the
fifth Business Day following the date of receipt by the Borrowers, of the
proceeds (including Cash, real property or other property) (any such proceeds,
net of underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and expenses,
being “Net Proceeds”) from the
incurrence of any debt of the Borrowers (other than any debt expressly
permitted under subsection 6.1), the Borrowers shall prepay the
Loans in an aggregate amount equal to 100% of such Net Proceeds.

 

(e)                                  Calculations
of Net Proceeds Amounts; Additional Prepayments Based on Subsequent
Calculations.  Concurrently with any
prepayment of the Loans pursuant to subsections 2.4A(iii)(a)-(d), the
Borrowers shall deliver to the Administrative Agent an Officers’ Certificate
demonstrating the calculation of the amount (the “Net Proceeds Amount”) of the applicable Net Asset Sale
Proceeds, Net Loss Proceeds or Net Proceeds, as the case may be, that gave rise
to such prepayment.  In the event that
the Borrowers shall subsequently determine that the actual Net Proceeds Amount
was greater than the amount set forth in such Officers’ Certificate, the
Borrowers shall promptly make an additional prepayment of the Loans in an amount
equal to the amount of such excess, and Borrowers shall concurrently therewith
deliver to the Administrative Agent an Officers’ Certificate demonstrating the
derivation of the additional Net Proceeds Amount resulting in such excess.

 

(iv)              Application
of Prepayments.

 

(a)                                  Application
of Voluntary Prepayments by Type of Loan and Order of Maturity.  Any voluntary prepayments pursuant to subsection 2.4A(i)
shall be applied as specified by the Borrowers in the applicable notice of
prepayment; provided that in the event the Borrowers fail to specify the
Loans to which any such prepayment shall be applied, such prepayment shall be
applied first to repay outstanding Base Rate Loans to the full extent
thereof on a pro  rata basis and second to repay
outstanding Euro dollar Rate Loans on a pro  rata basis in each
case in a manner which minimizes the amount of any payments required to be made
by the Borrowers pursuant to subsection 2.6D.

 

(B)                                General
Provisions Regarding Payments.

 

(i)                     Manner
and Time of Payment.  All payments
by the Borrowers of principal, interest, fees and other Obligations hereunder
and under the Notes shall be made in Dollars in same day funds, without
defense, setoff or counterclaim, free of any restriction or condition, and
delivered to the Administrative Agent not later than 1:00 p.m. (New York
City time) on the date due at the Funding and Payment Office for the account of
Lenders; for purposes of computing interest and fees, funds received by the
Administrative Agent after that time on such due date shall be deemed to have
been paid by the Borrowers on the next succeeding Business Day.  The Borrowers hereby

 

41

 

authorize the
Administrative Agent to charge their accounts with the Administrative Agent in
order to cause timely payment to be made to the Administrative Agent of all
principal, interest, fees and expenses due hereunder (subject to sufficient
funds being available in its accounts for that purpose).

 

(ii)                  Application
of Payments to Principal and Interest. 
All payments in respect of the principal amount of any Loan shall
include payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the payment of interest
before application to principal.

 

(iii)               Apportionment
of Payments.  Aggregate principal
and interest payments in respect of Loans shall be apportioned among all
outstanding Loans proportionately to Lenders’ respective Pro Rata Shares.  The Administrative Agent (or its agent or
sub-agent appointed by it) shall promptly distribute to each Lender, at its
primary address set forth on Schedule 2.1 or at such other address
as such Lender may request, its Pro Rata Share of all such payments and
Percentage of the commitment fees received by the Administrative Agent pursuant
to subsection 2.3. 
Notwithstanding the foregoing provisions of this subsection 2.4B(iii),
if, pursuant to the provisions of subsection 2.6C, any
Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Percentage of any
Eurodollar Rate Loans, the Administrative Agent shall give effect thereto in
apportioning payments received thereafter.

 

(iv)              Payments
on Business Days.  Whenever any
payment to be made hereunder shall be stated to be due on a day that is not a
Business Day, such payment shall be made on the next succeeding Business Day
and, such extension of time shall be included in the computation of the payment
of interest hereunder or of the commitment fees hereunder, as the case may be.

 

(v)                 Notation
of Payment.  Each Lender agrees that
before disposing of any Note held by it, or any part thereof (other than by
granting participations therein), that Lender will make a notation thereon of
all Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any Loan
made under such Note shall not limit or otherwise affect the obligations of the
Borrowers hereunder or under such Note with respect to any Loan or any payments
of principal or interest on such Note.

 

2.5                                 Use of Proceeds.

 

(A)                              Phase
II Mall Project Costs.  The proceeds
of Borrowings shall be used to pay for the financing, design, development and
construction costs of the Phase II Mall as set forth therefor in the Project
Budget (including interest and fees relating to the Loans) and to reimburse the
Borrowers for design, development and construction costs for the Phase II Mall
for which payments have been made and which such payments exceed the initial
Phase II Mall Contribution of $25,371,098 but only so long as (i) such payments
were made by the Borrowers prior to the subdivision of the Phase II Land into
one or more separate legal parcels for the Phase

 

42

 

II
Mall Air Parcel, (ii) the initial Phase II Mall Contribution in the amount of
$25,371,098 has been fully funded and applied in accordance with the Phase II
Mall Construction Loan Documents and (iii) such reimbursement is for such
payments which exceed the initial Phase II Mall Contribution of
$25,371,098.  In no event shall any
proceeds of Borrowings be used to pay for any damages, liquidated or otherwise,
or other amounts payable by LCR or the Borrowers pursuant to the Phase II Mall
Sale Agreement and/or the Phase II Mall SA Assignment Agreement or for
operating costs of the Phase II Mall (unless, in each case, such item is set
forth in the Project Budget as a separate Line Item) or for operating costs of
the Phase II Hotel/Casino.

 

(B)                                Margin
Regulations.  No portion of the
proceeds of any Borrowing under this Agreement shall be used by the Borrowers
or any of their Subsidiaries in any manner that might cause the Borrowing or
the application of such proceeds to violate Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board or to violate the Exchange Act, in each case as
in effect on the date or dates of such Borrowing and such use of proceeds.

 

2.6                                 Special Provisions Governing
Eurodollar Rate Loans.

 

Notwithstanding any other provision of this Agreement
to the contrary, the following provisions shall govern with respect to
Eurodollar Rate Loans as to the matters covered:

 

(A)                              Determination
of Applicable Interest Rate.  As
soon as practicable after 10:00 A.M. (New York City time) on each Interest
Rate Determination Date, the Administrative Agent shall determine (which
determination shall, absent manifest error, be final, conclusive and binding
upon all parties) the interest rate that shall apply to the Eurodollar Rate
Loans for which an interest rate is then being determined for the applicable
Interest Period and shall promptly give notice thereof (in writing or by
telephone confirmed in writing) to the Borrowers and each Lender.

 

(B)                                Inability
to Determine Applicable Interest Rate. 
In the event that the Administrative Agent shall have determined (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans, that by reason of circumstances affecting the interbank Eurodollar
market adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of
Adjusted Eurodollar Rate, the Administrative Agent shall on such date give
notice (by telefacsimile or by telephone confirmed in writing) to the Borrowers
and each Lender of such determination, whereupon (i) no Loans may be made
as, or converted to, Eurodollar Rate Loans until such time as Administrative
Agent notifies the Borrowers and Lenders that the circumstances giving rise to
such notice no longer exist and (ii) any Borrowing Notice or
Conversion/Continuation Notice given by the Borrowers with respect to the Loans
in respect of which such determination was made shall be deemed to be made with
respect to Base Rate Loans.

 

(C)                                Illegality
or Impracticability of Eurodollar Rate Loans.  In the event that on any date any Lender shall have determined
(which determination shall be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with Borrowers and the
Administrative Agent) that the making, maintaining or continuation of its
Eurodollar Rate Loans

 

43

 

(i) has
become unlawful as a result of compliance by such Lender in good faith with any
law, treaty, governmental rule, regulation, guideline or order not in effect on
the date such Person became a Lender (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful), or
(ii) would cause such Lender material financial hardship as a result of
contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an “Affected Lender” and it shall on that day
give notice (by telefacsimile or by telephone confirmed in writing) to the
Borrowers and the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each other Lender).  Thereafter (a) the obligation of the
Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans
shall be suspended until such notice shall be withdrawn by the Affected Lender
(which such Affected Lender shall do at the earliest practicable date),
(b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by the Borrowers pursuant to a
Borrowing Notice or a Conversion/Continuation Notice, the Affected Lender shall
make such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (c) the Affected Lender’s obligation to maintain its outstanding
Eurodollar Rate Loans (the “Affected Loans”)
shall be terminated at the earlier to occur of the expiration of the Interest
Period then in effect with respect to the Affected Loans or when required by
law, and (d) the Affected Loans shall automatically convert into Base Rate
Loans on the date of such termination. 
Except as provided in the immediately preceding sentence, nothing in
this subsection 2.6C shall affect the obligation of any Lender other
than an Affected Lender to make or maintain Loans as, or to convert Loans to,
Eurodollar Rate Loans in accordance with the terms of this Agreement.

 

(D)                               Compensation
For Breakage or Non-Commencement of Interest Periods.  The Borrowers shall compensate each Lender,
upon written request by that Lender (which request shall set forth the basis
for requesting such amounts), for all reasonable losses, expenses and
liabilities (including any interest paid by that Lender to lenders of funds
borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the liquidation or
re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Borrowing Notice or a
telephonic request for borrowing, as applicable, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date specified
therefor in a Conversion/Continuation Notice or a telephonic request for
conversion or continuation, (ii) if any prepayment (including any
prepayment pursuant to subsection 2.4A(i)) or other principal payment or
any conversion of any of its Eurodollar Rate Loans occurs on a date prior to
the last day of an Interest Period applicable to that Loan, (iii) if any
prepayment of any of its Eurodollar Rate Loans is not made on any date
specified in a notice of prepayment given by the Borrowers, or (iv) as a
consequence of any other default by the Borrowers in the repayment of its
Eurodollar Rate Loans when required by the terms of this Agreement.

 

(E)                                 Booking
of Eurodollar Rate Loans.  Any
Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the
account of any of its branch offices or the office of an Affiliate of that
Lender.

 

44

 

(F)                                 Assumptions
Concerning Funding of Eurodollar Rate Loans.  Calculation of all amounts payable to a Lender under this subsection
2.6 and under subsection 2.7A shall be made as though that Lender
had actually funded each of its relevant Eurodollar Rate Loans through the
purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant
to clause (a) of the definition of Adjusted Eurodollar Rate in an amount
equal to the amount of such Eurodollar Rate Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
Eurodollar deposit from an offshore office of that Lender to a domestic office of
that Lender in the United States; provided, however, that each
Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes of
calculating amounts payable under this subsection 2.6 and under subsection
2.7A.

 

(G)                                Eurodollar
Rate Loans After Default.  After the
occurrence of and during the continuation of a Potential Event of Default or an
Event of Default, (i) Borrowers may not elect to have a Loan be made or
maintained as, or converted to, a Eurodollar Rate Loan after the expiration of
any Interest Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Borrowing Notice or
Conversion/Continuation Notice given by the Borrowers with respect to a
requested borrowing or conversion/continuation that has not yet occurred shall
be deemed made with respect to Base Rate Loans.

 

2.7                                 Increased Costs; Taxes; Capital Adequacy.

 

(A)                              Compensation
for Increased Costs and Taxes. 
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Lender shall determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any law, treaty
or governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or Governmental Instrumentality, in each case
that becomes effective after the date hereof, or compliance by such Lender with
any guideline, request or directive issued or made after the date hereof by any
central bank or other Governmental Instrumentality or quasi-Governmental
Instrumentality (whether or not having the force of law):

 

(i)                     subjects
such Lender (or its applicable lending office) to any additional Tax (other
than any Tax on the overall net income of such Lender) with respect to this
Agreement or any of its obligations hereunder or any payments to such Lender
(or its applicable lending office) of principal, interest, fees or any other
amount payable hereunder;

 

(ii)                  imposes,
modifies or holds applicable any reserve (including any marginal, emergency,
supplemental, special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or other
liabilities in or for the account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of such Lender
(other than any such reserve or other requirements with respect to Eurodollar
Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate);
or

 

45

 

(iii)               imposes
any other condition (other than with respect to a Tax matter) on or affecting
such Lender (or its applicable lending office) or its obligations hereunder or
the interbank Eurodollar market;

 

and the result of any of
the foregoing is to increase the cost to such Lender of agreeing to make,
making or maintaining Loans hereunder or to reduce any amount received or
receivable by such Lender (or its applicable lending office) with respect
thereto; then, in any such case, the Borrowers shall promptly pay to
such Lender, upon receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder.  Such Lender shall deliver to
the Borrowers (with a copy to the Administrative Agent) a written statement,
setting forth in reasonable detail the basis for calculating the additional
amounts owed to such Lender under this subsection 2.7A, which statement
shall be conclusive and binding upon all parties hereto absent manifest error.

 

(B)                                Withholding
of Taxes.

 

(i)                     Payments
to Be Free and Clear.  All sums
payable by the Borrowers under this Agreement and the other Loan Documents
shall (except to the extent required by law) be paid free and clear of, and
without any deduction or withholding on account of, any Tax (other than a Tax
on the overall net income of any Lender) imposed, levied, collected, withheld
or assessed by or within the United States or any political subdivision in or
of the United States or any other jurisdiction from or to which a payment is
made by or on behalf of the Borrowers or by any federation or organization of
which the United States or any such jurisdiction is a member at the time of
payment, all such non-excluded Taxes being hereinafter collectively referred to
as “Included Taxes”.

 

(ii)                  Grossing-up
of Payments.  If the Borrowers or
any other Person is required by law to make any deduction or withholding on
account of any such Included Tax from any sum paid or payable by the Borrowers
to the Administrative Agent or any Lender under any of the Loan Documents:

 

(a)                                  the
Borrowers shall notify the Administrative Agent of any such requirement or any
change in any such requirement as soon as the Borrowers become aware of it;

 

(b)                                 the
Borrowers shall pay any such Included Tax before the date on which penalties
attach thereto, such payment to be made (if the liability to pay is imposed on
the Borrowers) for its own account or (if that liability is imposed on the
Administrative Agent or such Lender, as the case may be) on behalf of and in
the name of the Administrative Agent or such Lender;

 

(c)                                  the
sum payable by the Borrowers in respect of which the relevant deduction,
withholding or payment is required shall be increased to the extent necessary

 

46

 

to ensure that,
after the making of that deduction, withholding or payment, the Administrative
Agent or such Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction, withholding or
payment been required or made; and

 

(d)                                 within
30 days after paying any sum from which it is required by law to make any
deduction or withholding, and within 30 days after the due date of payment of
any Included Tax which it is required by clause (b) above to pay, the
Borrowers shall deliver to the Administrative Agent evidence satisfactory to
the other affected parties of such deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other authority;

 

provided
that no such additional amount shall be required to be paid to any Lender under
clause (c) above except to the extent that any change after the date
hereof (in the case of each Lender listed on the signature pages hereof) or
after the date of the Assignment Agreement pursuant to which such Lender became
a Lender (in the case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in
effect at the date of this Agreement or at the date of such Assignment
Agreement, as the case may be, in respect of payments to such Lender; provided,
however, that in the case of an assignment, if the assignor was entitled to
additional amounts pursuant to this Section 2.7B, then such assignee
shall be entitled to such additional amounts.

 

(iii)               Evidence
of Exemption from U.S. Withholding Tax.

 

(a)                                  Each
Lender that is organized under the laws of any jurisdiction other than the
United States or any state or other political subdivision thereof (a “Non-US Lender”) shall deliver to the
Administrative Agent for transmission to the Borrowers, on or prior to the
Closing Date (in the case of each Lender listed on the signature pages hereof)
or on or prior to the date of the Assignment Agreement pursuant to which it becomes
a Lender (in the case of each other Lender), and at such other times as may be
necessary in the determination of the Borrowers or the Administrative Agent
(each in the reasonable exercise of its discretion), (1) two original
copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor
forms), properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the Code or the
regulations issued thereunder to establish that such Lender is not subject to
deduction or withholding of United States federal income tax with respect to
any payments to such Lender of principal, interest, fees or other amounts
payable under any of the Loan Documents or (2) if such Lender is not a “bank”
or other Person described in Section 881(c)(3) of the Code, a Certificate
of Non-Bank Status together with two original copies of Internal Revenue
Service Form W-8BEN or W-8ECI (or any successor form), properly completed and
duly executed by such Lender, together with any other certificate or statement
of exemption required under the Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding of United
States federal income tax with respect to any payments to such Lender of
interest payable under any of the Loan Documents.  Notwithstanding the foregoing, no Lender

 

47

 

shall be obligated
to provide any documentation pursuant to this subsection 2.7B(iii)(a) if
such Lender is not legally able to do so.

 

(b)                                 Each
Lender required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to subsection 2.7B(iii)(a)
hereby agrees, from time to time after the initial delivery by such Lender of
such forms, certificates or other evidence, whenever a lapse in time or change
in circumstances renders such forms, certificates or other evidence obsolete or
inaccurate in any material respect, that such Lender shall promptly
(1) deliver to the Administrative Agent for transmission to the Borrowers
a Certificate of Non-Bank Status and two original copies of Internal Revenue
Service Form W-8BEN or W-8ECI, as the case may be, properly completed and duly
executed by such Lender, together with any other certificate or statement of
exemption required in order to confirm or establish that such Lender is not
subject to deduction or withholding of United States federal income tax with
respect to payments to such Lender under the Loan Documents or (2) notify
Administrative Agent and Borrowers of its inability to deliver any such forms,
certificates or other evidence.

 

(c)                                  Borrowers
shall not be required to pay any additional amount to any Non-US Lender under subsection 2.7B(ii)(c)
if such Lender shall have failed to satisfy the requirements of clause (a)
or (b)(1) of this subsection 2.7B(iii); provided
that if such Lender shall have satisfied the requirements of subsection 2.7B(iii)(a)
on the Closing Date (in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement pursuant to which it became
a Lender (in the case of each other Lender), nothing in this subsection
2.7B(iii)(c) shall relieve Borrowers of their obligation to pay any
additional amounts pursuant to clause (c) of subsection 2.7B(ii)
in the event that, as a result of any change in any applicable law, treaty or
governmental rule, regulation or order, or any change in the interpretation,
administration or application thereof, such Lender is no longer properly entitled
to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as
described in subsection 2.7B(iii)(a).

 

(C)                                Capital
Adequacy Adjustment.  If any Lender
shall have determined that the adoption, effectiveness, phase-in or
applicability after the date hereof of any law, rule or regulation (or any
provision thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof after the date hereof by any
Governmental Instrumentality, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender (or
its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
Governmental Instrumentality, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender’s Loans or Commitments or participations therein or other
obligations hereunder with respect to the Loans to a level below that which
such Lender or such controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or compliance (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business Days
after receipt by the

 

48

 

Borrowers
from such Lender of the statement referred to in the next sentence, the
Borrowers shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such controlling corporation on an after-tax basis
for such reduction.  Such Lender shall
deliver to the Borrowers (with a copy to the Administrative Agent) a written
statement, setting forth in reasonable detail the basis of the calculation of
such additional amounts, which statement shall be conclusive and binding upon
all parties hereto absent manifest error.

 

2.8                                 Obligation of Lenders to Mitigate.

 

Each Lender agrees that, as promptly as practicable
after the officer of such Lender responsible for administering the Loans of
such Lender becomes aware of the occurrence of an event or the existence of a
condition that would cause such Lender to become an Affected Lender or that
would entitle such Lender to receive payments under subsection 2.7 it
will, to the extent not inconsistent with the internal policies of such Lender
and any applicable legal or regulatory restrictions, use reasonable efforts
(i) to make, issue, fund or maintain the Commitments of such Lender or the
affected Loans of such Lender through another lending office of such Lender or
(ii) take such other measures as such Lender may deem reasonable, if as a
result thereof the circumstances which would cause such Lender to be an
Affected Lender would cease to exist or the additional amounts which would
otherwise be required to be paid to such Lender pursuant to subsection 2.7
would be materially reduced and if, as determined by such Lender in its sole
discretion, the making, issuing, funding or maintaining of such Commitments or
Loans through such other lending office or in accordance with such other
measures, as the case may be, would not otherwise materially adversely affect
such Commitments or Loans or the interests of such Lender; provided that
such Lender will not be obligated to utilize such other lending office pursuant
to this subsection 2.8 if such Lender would incur incremental expenses
as a result of utilizing such other lending office as described in clause
(i) above.  A certificate as to the
amount of any such expenses payable by the Borrowers pursuant to this subsection
2.8 (setting forth in reasonable detail the basis for requesting such
amount) submitted by such Lender to the Borrowers (with a copy to the
Administrative Agent) shall be conclusive absent manifest error.  Each Lender agrees that it will not request
compensation under subsection 2.7 unless such Lender requests
compensation from borrowers under other lending arrangements with such Lender
who are similarly situated.

 

2.9                                 Obligations Joint and Several.

 

Anything herein to the contrary notwithstanding, each
Borrower hereby agrees and acknowledges that the obligation of each Borrower
for payment of the Obligations shall be joint and several with the obligations
of the other Borrower hereunder regardless of which Borrower actually receives
the proceeds or benefits of any borrowing hereunder.  Each Borrower hereby agrees and acknowledges that it will receive
substantial benefits from the Loans made available under this Agreement.

 

Each Borrower agrees that its joint and several
obligation to pay all Obligations hereunder is irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance
which constitutes a legal or equitable discharge of a guarantor or surety other
than the indefeasible payment in full of the Obligations, and the liability of
each Borrower with respect to the Obligations shall not be affected, reduced or
impaired by (i) consideration of the

 

49

 

amount of proceeds
of the Loans received by any Borrower relative to the aggregate amount of the
Loans, (ii) the dissolution or termination of or any increase, decrease or
change in personnel of, any Borrower, (iii) the insolvency or business failure
of, or any assignment for the benefit of creditors by, or the commencement of
any bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceedings by or against the other Borrower or (iv) the appointment of a
receiver for, or the attachment, restraint of or making or levying of any order
of court or legal process affecting, the property of the other Borrower.  Each Borrower agrees that a separate action
or actions may be brought and prosecuted against such Borrower whether or not
action is brought against the other Borrower and whether or not the other
Borrower is joined in any such action or actions.  Either Borrower’s payment of a portion, but not all, of the
Obligations shall in no way limit, affect, modify or abridge such Borrower’s
liability for that portion of the Obligations which is not paid.

 

Each Borrower hereby waives any right to require the
Administrative Agent or any Lender, as a condition of payment or performance of
the Obligations by such Borrower, to proceed against the other Borrower or any
other Person, to exhaust any security held from any Borrower, or pursue any
other remedy in the power of the Administrative Agent or any Lender.  Each Borrower hereby waives any defense
arising by reason of incapacity, lack of authority or any disability or other
defense that may be available to the other Borrower and any defenses or
benefits that may be derived or afforded by law which would limit the liability
of or exonerate any guarantor or surety with respect to the Obligations, or
which may conflict with the terms and provisions of this Agreement, other than
the indefeasible payment in full of the Obligations.

 

Any indebtedness of a Borrower now or hereafter held
by the other Borrower is hereby subordinated in right of payment to the
Obligations, and any such indebtedness of a Borrower to the other Borrower
collected or received by such other Borrower after an Event of Default has
occurred and is continuing shall be held in trust for the Administrative Agent
on behalf of the Lenders and shall forthwith be paid over to the Administrative
Agent for the benefit of the Lenders to be credited and applied against the
Obligations but without affecting, impairing or limiting in any manner the
liability of such other Borrower under any other provision of this Agreement.

 

3.                                       Conditions to Credit Extensions.

 

The obligations of Lenders to make Credit Extensions
hereunder are subject to the satisfaction (or waiver) of the following
conditions.

 

3.1                                 Conditions to the Occurrence of the
Closing Date.

 

The conditions to the occurrence of the Closing Date
are:

 

(A)                              Organization
and Authorization Documents.  The
Borrowers shall have delivered to the Administrative Agent the following with
respect to each of the Borrowers, Venetian, LVSI and LCR, each, unless
otherwise noted, dated the Closing Date:

 

(i)                     copies
of the Organizational Documents of such Person, certified by the Secretary of
State of its jurisdiction of organization if such certification is generally

 

50

 

available dated a
recent date prior to the Closing Date and in each other case, by such Person’s
secretary or assistant secretary;

 

(ii)                  to
the extent generally available, a good standing certificate from the Secretary
of State of its jurisdiction of organization and a certificate or other
evidence of good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of such jurisdiction, each dated a
recent date prior to the Closing Date;

 

(iii)               resolutions
of the Board of Directors of such Person approving and authorizing the
execution, delivery and performance of the Loan Documents and the Phase II Mall
Contribution Documents (in the case of the Borrowers) to which such Person is a
party and the Environmental Indemnity (in the case of LCR, Venetian and LVSI)
being executed on the Closing Date, certified as of the Closing Date by the
corporate secretary or an assistant secretary of such Person as being in full
force and effect without modification or amendment;

 

(iv)              signature
and incumbency certificates of the officers of such Person executing the Loan
Documents being executed on the Closing Date to which it is a party; and

 

(v)                 such
other documents as Administrative Agent may reasonably request, all of which
shall be reasonably satisfactory to the Administrative Agent.

 

(B)                                Notes.  The Administrative Agent shall have received
all Notes requested by Lenders prior to the Closing Date executed by the
Borrowers.

 

(C)                                No
Material Adverse Change.  Since
December 31, 2003 there shall not have been any adverse change, or any
development involving a prospective adverse change, in or affecting the general
affairs, management, financial position, liabilities (contingent or otherwise),
shareholders’ equity or results of operations of LVSI and its Subsidiaries,
taken as a whole, or the Borrowers and their respective Subsidiaries, taken as
a whole, which the Administrative Agent, in its reasonable judgment, deems
material.

 

(D)                               Financial
Statements.  The Lenders shall have
received the consolidated and consolidating audited financial statements for
LVSI for the period ended December 31, 2003 and the consolidated unaudited
financial statements for the most recently available monthly and quarterly
period for LVSI and for the Borrowers (in form and substance reasonably
satisfactory to the Administrative Agent).

 

(E)                                 Deed
of Trust; Mortgage Policies; Etc. 
The Administrative Agent shall have received from the Borrowers:

 

(i)                     Deed
of Trust.  Fully executed and
notarized Deed of Trust, duly recorded in the appropriate filing or recording
office in the jurisdiction in which each parcel of Mortgaged Property is
located or evidence that such Deed of Trust has been irrevocably delivered to
the Title Company for such recordation;

 

51

 

(ii)                  Title
Insurance.  (a) A 1970 (amended
October 17, 1970) ALTA mortgagee title insurance policy or policies
(collectively, the “Mortgage Policy”)
issued by the Title Company with respect to the Mortgaged Property in an amount
not less than the maximum aggregate amount of the Commitments, in each case,
insuring for the benefit of the Administrative Agent on behalf of the Secured
Parties that the Deed of Trust creates a valid and enforceable First Priority
deed of trust Lien on the Mortgaged Property, subject only to Permitted Liens,
which Mortgage Policy (1) shall include an endorsement for mechanics’
liens, for future advances under this Agreement and for any other matters
reasonably requested by the Administrative Agent and available in the state in
which the Mortgaged Property is located and (2) shall provide for
affirmative insurance and such reinsurance as the Administrative Agent may
reasonably request, all of the foregoing in form and substance satisfactory to
the Administrative Agent; and (b) evidence reasonably satisfactory to the
Administrative Agent that the Borrowers have or have caused to be
(i) delivered to the Title Company all certificates and affidavits required
by the Title Company in connection with the issuance of the Mortgage Policy,
(ii) paid to the Title Company or to the appropriate Governmental
Instrumentalities all expenses and premiums of the Title Company in connection
with the issuance of the Mortgage Policy and (iii) paid to the Title
Company or the appropriate Governmental Instrumentalities all recording and
stamp taxes (including mortgage recording and intangible taxes) payable in
connection with recording the Deed of Trust in the appropriate real estate
records;

 

(iii)               A.L.T.A.
Surveys.  The Administrative Agent
shall have received an A.L.T.A. survey of the Site, the Phase II Mall Air
Space, the portion of the Phase II Mall Air Space covered by the Walgreens
Lease and the portion of the Phase II Mall Space subject to the Phase II Mall
Lease, the Site Easements and the Phase II Mall Space Easements, satisfactory
in form and substance to the Title Insurer and the Administrative Agent,
reasonably current and certified to each such Person by a licensed surveyor
satisfactory to each such Person, showing (a) as to the Site, the Phase II
Mall Air Space, the Phase II Mall Air Parcel, the portion of the Phase II Mall
Space covered by the Walgreens Lease, the exact location and dimensions
thereof, including the location of all means of access thereto and all
easements relating thereto and showing the perimeter within which all
foundations are or are to be located; (b) as to the Site Easements and the
Phase II Mall Space Easements, the exact location and dimensions thereof (to
the extent such easements are described as covering specific portions of the
Site and/or the Phase II Mall Space, as the case may be), including the
location of all means of access thereto, and all improvements or other
encroachments in or on the Site Easements and/or the Phase II Mall Space
Easements, as the case may be; (c) the existing utility facilities
servicing the Site and the Central Park West Site (including water,
electricity, gas, telephone, sanitary sewer and storm water distribution and
detention facilities); (d) unless covered by appropriate endorsements
under the Title Insurance Policies, that there are no gaps, gores, projections,
protrusions or other survey defects other than the Permitted Liens;
(e) whether the Site, the Phase II Mall Space and the Central Park West
Site or any portion thereof is located in a flood hazard zone; and
(f) that there are no other matters that could reasonably be expected to
be disclosed by a survey constituting a defect in title other than the
Permitted Liens.

 

52

 

(iv)              Zoning.  The Administrative Agent shall have received
(a) an opinion from counsel satisfactory to the Administrative Agent that the
Phase II Project is zoned in a classification which will permit the
construction and use thereof for all purposes intended, or (b) in lieu of item
(a), (i) a certificate from the applicable Governmental Instrumentality with
respect to the zoning of the Site that the Phase II Project is zoned in a
classification which will permit the construction and use thereof for all
purposes intended, (ii) the building permits and excavation permits issued
prior to the Closing Date by such Governmental Instrumentality based upon the
Plans and Specifications approved by it, and (iii) evidence reasonably satisfactory
to the Administrative Agent that the Phase II Project, upon completion thereof
in accordance with the Plans and Specifications approved by such Governmental
Instrumentality, will comply with all applicable zoning, subdivision,
condominium and building statutes, codes, ordinances, regulations, variances
and special regulations.

 

(v)                 Subordination,
Non-Disturbance and Attornment Agreements. 
The Administrative Agent shall have received a Subordination,
Non-Disturbance and Attornment Agreement, substantially in the form of Exhibit
G-1, from all Persons holding a monetary Lien encumbering the real property
covered by the Walgreens Lease and each tenant party to a lease set forth on Schedule
6.6; provided, however, the form of Subordination,
Non-Disturbance and Attornment Agreement to be delivered by such tenant party
may be in a different form if such form is otherwise reasonably acceptable to
the Administrative Agent, or the Administrative Agent shall be satisfied that
each such lease contains reasonably comparable (or better) terms as to
subordination, attornment and non-disturbance with respect to its tenant as
would be obtained were an agreement in the form of Exhibit G-1.

 

(vi)              Leasehold
Mortgagee Protection.  The
Administrative Agent shall have received an Estoppel Certificate, substantially
in the form of Exhibit G-2 or otherwise acceptable to the Administrative Agent
from each landlord (other than a Borrower) party to a lease set forth on Schedule
6.6 and the landlord under the Walgreens Lease, together with copies of
notices which have been delivered to each landlord advising same of the
existence of a leasehold mortgage on the leased premises subject to each such
lease, satisfying the notice requirements of such lease, and in form and
substance satisfactory to the Administrative Agent.  To the extent that any such lease does not include mortgagee
protection provisions reasonably acceptable to the Administrative Agent, such
Estoppel Certificate shall include such mortgagee protection provisions reasonably
required by the Administrative Agent.

 

(vii)           Environmental
Indemnity.  The Administrative Agent
shall have received the Environmental Indemnity, dated as of the Closing Date,
duly executed and delivered by an Authorized Officer of each Borrower, LCR, Venetian
and LVSI.

 

(viii)        Correction
of Environmental Conditions.  The
Administrative Agent shall have received (i) a letter from Converse Consultants
in form and substance reasonably satisfactory to the Administrative Agent,
confirming that LVSI and Venetian have installed (and/or have caused Existing
Facility tenants to install, as the case may be) appropriate secondary
containment devices at each hazardous materials

 

53

 

storage area
located in the Existing Facilities, and (ii) from Converse Consultants, final
versions of the two matrices provided in draft form to the Administrative Agent
on June 7, 2004, in form and substance reasonably satisfactory to the
Administrative Agent evidencing that (x) all previously identified issues of
concern or recognized environmental conditions relating to hazardous materials
storage have been corrected and (y) the matrices remain true, correct and
complete to Converse Consultant’s knowledge without any further changes from
the June 7, 2004 version.

 

(F)                                 Security
Agreement.  The Administrative Agent
shall have received, with counterparts for each Lender, the Security Agreement,
each dated as of the Closing Date, duly executed and delivered by an Authorized
Officer of each of the Borrowers.

 

(G)                                Security
Interests in Personal and Mixed Property. 
The Administrative Agent shall have received evidence reasonably
satisfactory to it that the Borrowers shall have taken or caused to be taken
all such actions, executed and delivered or caused to be executed and delivered
all such agreements, documents and instruments, and made or caused to be made
all such filings and recordings (other than the filing or recording of items
described in clauses (iii) and (iv) below) that may be
necessary or, in the reasonable opinion of the Administrative Agent, desirable
in order to create in favor of the Administrative Agent, for the benefit of the
Secured Parties, a valid and (upon such filing and recording) perfected First
Priority security interest in the Collateral. 
Such actions shall include the following:

 

(i)                     Schedules
to Collateral Documents.  Delivery
to the Administrative Agent of accurate and complete schedules to all of the
applicable Collateral Documents;

 

(ii)                  Instruments.  Delivery to the Administrative Agent of all
promissory notes or other instruments (duly endorsed, where appropriate, in a
manner satisfactory to the Administrative Agent) evidencing any Collateral;

 

(iii)               Lien
Searches and UCC Termination Statements. 
Delivery to the Administrative Agent of (a) the results of a recent
search, by a Person reasonably satisfactory to the Administrative Agent, of all
effective UCC financing statements and fixture filings and all judgment and tax
lien filings which may have been made with respect to any personal or mixed
property of either of the Borrowers, together with copies of all such filings
disclosed by such search, and (b) UCC termination statements duly executed
by all applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements or fixture
filings disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding pursuant to
the terms of this Agreement); and

 

(iv)              UCC
Financing Statements and Fixture Filings. 
Delivery to the Administrative Agent of UCC financing statements and,
where appropriate, fixture filings and United States Patent and Trademark
Office filings, duly executed by each of the Borrowers with respect to all
personal and mixed property Collateral of such Person, for filing in all
jurisdictions as may be necessary or, in the reasonable opinion

 

54

 

of the
Administrative Agent, desirable to perfect the security interests created in
such Collateral pursuant to the Collateral Documents, including those listed on
Schedule 3.1G(iv).

 

(H)                               Assignment
of Phase II Mall Sale Agreement. 
The Administrative Agent shall have received the Assignment of Phase II
Mall Sale Agreement, dated as of the Closing Date, duly executed and delivered
by an Authorized Officer of Phase II Mall Subsidiary Holding.

 

(I)                                    Solvency
Assurances.  On the Closing Date,
the Lenders shall have received a Financial Condition Certificate from the
Borrowers dated the Closing Date, substantially in the form of Exhibit E
hereto and with appropriate attachments and otherwise reasonably satisfactory
to the Administrative Agent, in each case demonstrating that, after giving
effect to the transactions contemplated by this Agreement including the
Borrowing of the full amount of Commitments as contemplated hereunder and the
borrowing of the Phase II Mall Contribution, the Borrowers will be Solvent.

 

(J)                                   Opinions
of Counsel to the Borrowers.  The
Lenders and their respective counsel shall have received (i) originally
executed copies of one or more favorable written opinions of Paul, Weiss,
Rifkind, Wharton & Garrison, counsel for the Borrowers, and
(ii) originally executed copies of one or more favorable written opinions
of Lionel Sawyer & Collins, Nevada counsel for the Borrowers, each in form
and substance reasonably satisfactory to the Administrative Agent and its
counsel, dated as of the Closing Date and setting forth substantially the
matters in the opinions designated in Exhibits F-1 and F-2
hereto, respectively, and as to such other matters as the Administrative Agent
may reasonably request.  The Borrowers
hereby acknowledge and confirm that they have requested such counsel to deliver
such opinions to the Lenders.

 

(K)                               Consummation
of Transactions.

 

(i)                     The
Administrative Agent shall have received evidence satisfactory to it that all
actions necessary to consummate the transactions contemplated hereby shall have
been taken in accordance with all Legal Requirements.

 

(ii)                  The
Borrowers shall have entered into the Phase II Mall Contribution Documents and
Venetian shall have deposited the Phase II Mall Contribution into the Phase II
Mall Equity Account (collectively, the “Transactions”)
and the terms and documentation of the foregoing Transactions shall be
reasonably satisfactory in all respects to the Arranger, the Administrative
Agent and their respective counsel.

 

(L)                                 Fees.  The Borrowers shall have paid to Arranger,
for distribution (as appropriate) to Agents and Lenders, the fees payable on
the Closing Date referred to in subsection 2.3 and the expenses
payable on the Closing Date referred to in subsection 9.2.

 

(M)                            Completion
of Proceedings.  All corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
reasonably acceptable by the Arranger and the Administrative Agent, acting on
behalf of Lenders, and their respective counsel shall be reasonably
satisfactory in form and substance to the Arranger and the Administrative Agent
and such counsel, and the

 

55

 

Administrative
Agent and its counsel shall have received all such counterpart originals or
certified copies of such documents as Administrative Agent may reasonably
request.

 

(N)                               Service
of Process.  The Administrative
Agent shall have received a letter from Corporation Service Company, presently
located at 80 State Street, Albany, New York 12207 or any other Person
reasonably satisfactory to the Arranger consenting to its appointment by each
Borrower in each case in form and substance acceptable to the Arranger, as each
such Person’s agent to receive service of process in New York, New York.

 

(O)                               Litigation.  There shall be no actions, suits,
proceedings, arbitrations or governmental investigations (whether or not purportedly
on behalf of LVSI, Venetian, the Borrowers or any of their Subsidiaries) at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign (including any Environmental Claims) that are pending or,
to the knowledge of the Borrowers, threatened against or affecting LVSI,
Venetian or any of their Restricted Subsidiaries or the Borrowers or any
property of the Borrowers that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

 

(P)                                 Real
Estate Appraisal.  The
Administrative Agent shall have received a FIRREA-compliant MAI Appraisal of
all real property comprising Collateral from an independent real estate
appraiser in form, scope, substance and amount reasonably satisfactory to the
Administrative Agent and satisfying the requirements of any applicable laws and
regulations, which such appraisal shall state a completion value of such real
property Collateral of $525.0 million or more.

 

(Q)                               Insurance.  The Borrowers shall have insurance complying
with the requirement of subsection 5.4B in place and in full force and
effect, and the Administrative Agent shall have received (i) a certificate from
the Borrowers’ insurance broker reasonably satisfactory to the Administrative
Agent stating that such insurance is in place and in full force and effect and
(ii) certified copies of all policies evidencing such insurance (or a binder,
commitment or certificates signed by the insurer or a broker authorized to bind
the insurer along with a commitment to issue the policies within 45 days after
the Closing Date) naming the Administrative Agent on behalf of the Lenders as
an additional insured or loss payee, as its interests may appear, and otherwise
in form and substance reasonably satisfactory to the Administrative Agent.

 

(R)                                Phase
II Mall Contribution Documents.  The
Phase II Mall Contribution Documents shall have terms, including without
limitation, maturity, interest rates, covenants and events of default in form
and substance reasonably satisfactory to the Administrative Agent.  All such documentation shall be in full
force and effect.

 

(S)                                 Phase
II Mall SA Assignment Agreement. 
The Phase II Mall Sale Agreement shall be assigned by LCR to Phase II
Mall Subsidiary Holding (subject to certain defense rights which are to be
shared by LCR and Phase II Mall Subsidiary Holding) in accordance with the
Phase II Mall SA Assignment Agreement. 
The Phase II Mall SA Assignment Agreement shall be in full force and
effect.

 

56

 

(T)                                Disbursement
Agreement.  The Administrative Agent
and all other Persons party thereto shall have executed and delivered the
Disbursement Agreement, and each of the conditions precedent to the Effective
Date set forth in the Disbursement Agreement shall have been satisfied (or
waived by the Administrative Agent and the Bank Administrative Agent).

 

Each Lender by execution and delivery of a signature
page hereto on the Closing Date confirms that it is satisfied that each of the
conditions set forth above in this subsection 3.1 has been satisfied
provided that neither such confirmation nor any extension of credit hereunder
shall preclude any Lender or the Administrative Agent from later asserting that
(and enforcing any rights or remedies it may have if), any representation,
warranty or certification made or deemed made by the Borrowers or any of their
Affiliates in connection therewith was not true and accurate in all material
respects when made.

 

3.2                                 Additional Conditions to Loans on or
after the Closing Date.

 

The obligations of Lenders to make Loans on or after
the Closing Date on any Funding Date are subject to the following further
conditions precedent:

 

(A)                              Borrowing
Request.  The Administrative Agent
shall have received before that Funding Date, in accordance with the provisions
of subsection 2.1B, an originally executed Borrowing Notice and, in
accordance with the provisions of subsection 3.5.4 of the Disbursement
Agreement, an originally executed Advance Request together with all
attachments, exhibits and certificates required thereby, in each case signed by
the chief executive officer, the chief financial officer or the treasurer of
each Borrower or of the managing member of such Borrower or by any executive
officer of such Borrower or managing member designated by any of the
above-described officers on behalf of the Borrowers in a writing delivered to
the Administrative Agent.  Each
Borrowing Notice shall set forth whether the Loans being advanced pursuant
thereto shall be Base Rate Loans or Eurodollar Rate Loans (and, if applicable,
the initial Interest Period requested therefor).

 

(B)                                Representations
and Warranties.  As of such Funding
Date:

 

(i)                     The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such earlier
date;

 

(ii)                  No
event shall have occurred and be continuing or would result from the consummation
of the Borrowing contemplated by such Borrowing Notice that would constitute an
Event of Default or a Potential Event of Default;

 

(iii)               The
Borrowers shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement and the Disbursement Agreement
provides shall be performed or satisfied by it on or before that Funding Date;

 

57

 

(iv)              No
order, judgment or decree of any court, arbitrator or Governmental
Instrumentality shall purport to enjoin or restrain any Lender from making the
Loans to be made by it on that Funding Date;

 

(v)                 The
making of the Loans requested on such Funding Date shall not violate any law
including, Regulation T, Regulation U or Regulation X of the Board of Governors
of the Federal Reserve System; and

 

(vi)              There
shall not be pending or, to the knowledge of the Borrowers, threatened, any
action, suit, proceeding, governmental investigation or arbitration against or
affecting the Borrowers, any of their Subsidiaries or any property of the
Borrowers or their Subsidiaries that is required to be disclosed under, and has
not been disclosed by the Borrowers in writing pursuant to, subsection 4.6
or 5.1(v) prior to the making of the last preceding Loans, and there
shall have occurred no development not so disclosed in any such action, suit,
proceeding, governmental investigation or arbitration so disclosed, that, in
either event, in the reasonable opinion of the Administrative Agent, would have
a Material Adverse Effect.

 

(C)                                Title
Policy Endorsement.  The
Administrative Agent shall have received an endorsement to the Title Policies
in the form of a 122 CLTA Endorsement insuring the continuing First Priority of
the Lien of the Deed of Trust (subject to Permitted Liens) as security for the
requested Loans on the date such Loans are made and insuring that (i) as of the
date of the initial Credit Extension or, if applicable, since the previous
Credit Extension (if a subsequent Credit Extension), there has been no change
in the condition of title unless permitted by the Loan Documents, and (ii)
there are no intervening Liens or encumbrances (including inchoate mechanic’s
liens) which may then or thereafter take priority over the Lien of the Deed of
Trust (subject to Permitted Liens and such intervening liens or encumbrances
securing amounts the payment of which are being disputed in good faith, so long
as the Title Company has delivered to the Administrative Agent an endorsement
or affirmative coverage to the Mortgage Policy reasonably satisfactory to the
Administrative Agent assuring against loss to the Secured Parties due to the
priority of such lien or encumbrance).

 

(D)                               Subdivision
of the Site.  Until such time as
Phase II Mall Air Parcel has been created and the Phase II Mall Lease has been
terminated, the conditions in subsection 5.11(b) of the Disbursement Agreement
shall be satisfied with respect to any separate parcels which have been
subdivided since the last Borrowing.

 

(E)                                 Phase
II Mall Recognition Agreement.  The
Administrative Agent shall have received executed counterparts from GGP, LCR
and the Borrowers of a recognition agreement with respect to the Phase II Mall
Sale Agreement in form, scope and substance satisfactory to the Requisite
Lenders (as the same may be amended, supplemented, amended and restated, or
otherwise modified in accordance with the terms hereof, the “Phase II
Mall Recognition Agreement”) and any supplements or amendments
thereto, all of which shall have been duly authorized, executed and delivered
by the parties thereto, and shall be certified by an Authorized Officer of each
of the Borrowers and LCR as being true, complete and correct and in full force
and effect.

 

58

 

4.                                       Borrowers’ Representations and Warranties.

 

In order to induce Lenders to enter into this Agreement
and to make Credit Extensions, the Borrowers represent and warrant to each
Lender that, on the Closing Date and on each Funding Date, each of the
following statements and the representations and warranties set forth in the
Disbursement Agreement are true, correct and complete.

 

4.1                                 Organization, Powers, Qualification, Good
Standing, Business and Subsidiaries.

 

(A)                              Organization
and Powers.  Each of the Borrowers
is a limited liability company duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization as specified in Schedule
4.1A annexed hereto.  Each of the
Borrowers has all requisite limited liability company power and authority to
own and operate its properties, to carry on its business as now conducted and
as proposed to be conducted, to enter into the Loan Documents and the other
Operative Documents to which it is a party and to carry out the transactions
contemplated thereby.

 

(B)                                Qualification
and Good Standing.  Each of the
Borrowers is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and would not reasonably be expected
to have a Material Adverse Effect.

 

(C)                                Ownership
of the Borrowers.  The equity
interests in each of the Borrowers are duly authorized, validly issued and (if
applicable) fully paid and nonassessable and, as of the Closing Date, none of
such equity interests constitute Margin Stock. 
Schedule 4.1C, as it may be supplemented from time to time,
correctly sets forth the ownership of each Borrower.

 

(D)                               Subsidiaries.  Phase II Mall Subsidiary is a wholly owned
Subsidiary of Phase II Mall Subsidiary Holding.  The equity interests of Phase II Mall Subsidiary are duly
authorized, validly issued and (if applicable), fully paid and nonassessable
and none of such equity interests constitutes Margin Stock.  Phase II Mall Subsidiary has no Subsidiaries.

 

(E)                                 Rights
to Acquire Equity.  There are no
options, warrants, convertible securities or other rights to acquire any equity
interests in any Borrower or any of their Subsidiaries except for the rights of
GGP under the Phase II Mall Sale Agreement and as otherwise set forth as Schedule 4.1E.

 

(F)                                 Conduct
of Business.  The Borrowers and
their Subsidiaries are engaged only in the businesses permitted to be engaged
in pursuant to subsection 6.11.

 

4.2                                 Authorization of Borrowing, etc.

 

(A)                              Authorization
of Documents.  The execution,
delivery and performance of the Loan Documents and the Project Documents have
been duly authorized by all necessary corporate action on the part of each of
the Borrowers that is a party thereto.

 

59

 

(B)                                No
Conflict.  The execution, delivery
and performance by the Borrowers of the Loan Documents, the Project Documents
and the Resort Complex Operative Documents to which they are parties and the
consummation of the transactions contemplated by the Loan Documents, the
Project Documents and the Resort Complex Operative Documents do not and will
not (i) violate any provision of (a) any Legal Requirement applicable to
the Borrowers or any of their Subsidiaries, (b) the operating agreements of the
Borrowers or any of their Subsidiaries or (c) any order, judgment or decree of
any Governmental Instrumentality binding on the Borrowers or any of their
Subsidiaries, (ii) conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any Contractual
Obligation of the Borrowers or any of their Subsidiaries, (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of the Borrowers or any of their Subsidiaries (other than any Liens
created under any of the Loan Documents in favor of the Administrative Agent on
behalf of Lenders or which otherwise are Permitted Liens), or (iv) require
any approval of any Person under any Contractual Obligation of the Borrowers or
any of their Subsidiaries except for such approvals or consents which will be
obtained on or before the Closing Date and disclosed in writing to Lenders and
except for such violations, conflicts, approvals and consents the failure of
which to obtain would not reasonably be expected to have a Material Adverse
Effect.

 

(C)                                Governmental
Consents.  Other than as set forth
on Schedule 4.2C, the execution, delivery and performance by the
Borrowers of the Loan Documents to which they are parties and the consummation
of the transactions contemplated by the Loan Documents do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any Governmental Instrumentality.

 

(D)                               Binding
Obligation.  Each of the Loan
Documents, the Project Documents and the Resort Complex Operative Documents to
which either or both of the Borrowers are a party has been duly executed and
delivered by the Borrowers and are the legally valid and binding obligation of
the Borrowers, enforceable against them in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability, whether brought in a
proceeding in equity or at law.

 

4.3                                 Financial Condition.

 

The Borrowers have heretofore delivered to Lenders, at
Lenders’ request, the following financial statements and information:  (i) the audited consolidated and
consolidating balance sheets of LVSI and its Subsidiaries as at each of
December 31, 2001, December 31, 2002, and December 31, 2003, and the related
consolidated and consolidating statements of income, stockholders’ equity and
cash flows of LVSI, Venetian and their Subsidiaries for the Fiscal Year then
ended, (ii) the unaudited consolidated and consolidating balance sheets of LVSI
and its Subsidiaries as at March 31, 2004 and June 30, 2004, and the related
unaudited consolidated and consolidating statements of income, stockholders’
equity and cash flows of LVSI and its Subsidiaries for each such three-month
period then ended, (iii) the unaudited consolidated and consolidating balance
sheets of LVSI and its Subsidiaries (other than Excluded Subsidiaries) as at
June 30, 2004, and the related unaudited consolidated and consolidating
statements of income, stockholders’ equity and cash flows of LVSI and its
Subsidiaries (other than Excluded Subsidiaries) for the twelve months then
ended, giving pro forma effect to the Refinancing, the

 

60

 

Transactions and
the initial credit extensions (under the Bank Facilities Agreement) on the
Closing Date (under and as defined in the Bank Facilities Agreement) and (iv)
the unaudited consolidated and consolidating balance sheets of Phase II Mall
Subsidiary Holding and Phase II Mall Subsidiary as at June 30, 2004, and the
related unaudited consolidated and consolidating statements of income,
stockholders’ equity and cash flows of Phase II Mall Subsidiary Holding and
Phase II Mall Subsidiary.  All such
statements (other than pro forma statements) were prepared in conformity
with GAAP and fairly present, in all material respects, the financial position
(on a consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end
adjustments.  As of the date hereof,
except for obligations under the Operative Documents and the Phase II Mall
Contribution Documents, the Borrowers do not (and will not following the
funding of the initial Loans) have any Contingent Obligation, contingent
liability or liability for taxes, long-term lease or forward or long-term
commitment that is not reflected in the foregoing financial statements or the
notes thereto and which in any such case is material in relation to the
business, operations, properties, assets, financial condition or prospects of
the Borrowers and their Subsidiaries taken as a whole.

 

4.4                                 No Material Adverse Change.

 

Since December 31, 2003, no event or change has
occurred that has caused or evidences, either in any case or in the aggregate,
a Material Adverse Effect.

 

4.5                                 Title to Properties; Liens; Real Property.

 

(A)                              Title
to Properties; Liens.  The Borrowers
and their Subsidiaries have (i) good marketable and insurable fee simple
title to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property)
and (iii) good title to (in the case of all other personal property), all
of their respective material properties and assets reflected in the financial
statements referred to in subsection 4.3 or in the most recent financial
statements delivered pursuant to subsection 5.1, in each case except for
assets disposed of since the date of such financial statements in the ordinary
course of business or as otherwise permitted under subsection 6.6.  Except as permitted by this Agreement, all
such properties and assets are held free and clear of Liens.

 

(B)                                Real
Property.  As of the Closing Date, Schedule 4.5
annexed hereto contains a true, accurate and complete list of (i) all
material real property owned by the Borrowers or any of their Subsidiaries and
(ii) all material leases, subleases or assignments of leases (together
with all amendments, modifications, supplements, renewals or extensions of any
thereof) affecting real estate properties owned by the Borrowers or any of
their Subsidiaries regardless of whether a Borrower or such Subsidiary is the
landlord, tenant or subtenant (whether directly or as an assignee or successor
in interest) under such lease, sublease or assignment.  As of the Closing Date, each agreement
listed in clause (ii) of the immediately preceding sentence is in full force
and effect and Borrowers do not have knowledge of any material default that has
occurred and is continuing thereunder, and each such agreement constitutes the
legally valid and binding

 

61

 

obligation
of each applicable Borrower, enforceable against such Borrower in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles except to the extent that the
failure of such agreement to be in full force and effect could not reasonably
be expected to have a Material Adverse Effect.

 

4.6                                 Litigation; Adverse Facts.

 

Except as set forth in Schedule 4.6, there
are no actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of the Borrowers or any of their
Subsidiaries) at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign (including any Environmental Claims)
that are pending or, to the knowledge of the Borrowers, threatened against or
affecting Borrowers or any of their Subsidiaries or any property of the
Borrowers or any of their Subsidiaries and that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  Neither the Borrowers nor any
of their Subsidiaries (i) is in violation of any applicable laws
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

4.7                                 Payment of Taxes.

 

Except to the extent permitted by subsection 5.3,
all tax returns and reports of the Borrowers required to be filed by them have
been timely filed, and all taxes shown on such tax returns to be due and
payable and all material assessments, fees and other governmental charges upon
the Borrowers and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and
payable.  The Borrowers know of no
proposed tax assessment against the Borrowers or any of their Subsidiaries which
is not being actively contested by the Borrowers or such Subsidiary in good
faith and by appropriate proceedings; provided that such reserves or
other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.

 

4.8                                 Performance of Agreements;
Materially Adverse Agreements; Material Contracts.

 

(A)                              Neither
the Borrowers nor any of their Subsidiaries is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any of its Contractual Obligations, and no condition exists that,
with the giving of notice or the lapse of time or both, would constitute such a
default, except where the consequences of such default or defaults, if any,
would not reasonably be expected to have a Material Adverse Effect.

 

(B)                                Schedule
4.8 contains a true, correct and complete list of all the Material
Contracts in effect on the Closing Date. 
As of the Closing Date, all such Material Contracts are,

 

62

 

to
the knowledge of the Borrowers, in full force and effect and no material
defaults currently exist thereunder.

 

4.9                                 Governmental Regulation.

 

Neither the Borrowers nor any of their Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, or the Interstate Commerce Act or registration under the
Investment Company Act of 1940 or under any other federal or state statute or
regulation which may limit its ability to incur Indebtedness other than the
Nevada Gaming Laws or which may otherwise render all or any portion of the
Obligations unenforceable.  Incurrence
of the Obligations under the Loan Documents complies with all applicable
provisions of the Nevada Gaming Laws.

 

(A)                              Securities
Activities.  Neither the Borrowers
nor any of their Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock.

 

4.10                           Employee Benefit Plans.

 

(A)                              The
Borrowers, each of their Subsidiaries and each of their respective ERISA
Affiliates are in material compliance with all applicable provisions and
requirements of ERISA and the regulations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations under each
Employee Benefit Plan.  Each Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Code is
so qualified.

 

(B)                                No
ERISA Event has occurred or is reasonably expected to occur which has resulted
or would be reasonably likely to result in a liability in the aggregate amount
of $1,000,000 or more.

 

(C)                                Except
to the extent required under Section 4980B of the Code, no Employee Benefit
Plan provides health or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employee of the Borrowers, any of their
Subsidiaries or any of their respective ERISA Affiliates.

 

(D)                               As
of the most recent valuation date for any Pension Plan, the amount of unfunded
benefit liabilities (as defined in Section 4001(a)(18) of ERISA), individually
or in the aggregate for all Pension Plans (excluding for purposes of such
computation any Pension Plans with respect to which assets exceed benefit
liabilities), does not exceed $1,000,000.

 

(E)                                 As
of the most recent valuation date for each Multiemployer Plan for which the
actuarial report is available, the potential liability of the Borrowers, their
Subsidiaries and their respective ERISA Affiliates for a complete withdrawal
from such Multiemployer Plan (within the meaning of Section 4203 of ERISA),
when aggregated with such potential liability for a complete withdrawal from
all Multiemployer Plans, based on information available pursuant to Section
4221(e) of ERISA, does not exceed $5,000,000.

 

63

 

4.11                           Certain Fees.

 

No broker’s or finder’s fee or commission will be
payable with respect to this Agreement or any of the transactions contemplated
hereby (other than fees payable to Agents and Lenders under subsection 2.3),
and each Borrower hereby indemnifies the Lenders against, and agrees that it
will hold the Lenders harmless from, any claim, demand or liability for any
such broker’s or finder’s fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable fees, expenses and
disbursements of counsel) arising in connection with any such claim, demand or
liability.

 

4.12                           Environmental Protection.

 

Except as set forth in Schedule 4.12
annexed hereto or as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:

 

(i)                     neither
the Borrowers nor any of their Subsidiaries nor any of their respective
Facilities or operations relating to the Phase II Project, the Site or the
Resort Complex are subject to any outstanding written order, consent decree or
settlement agreement with any Person relating to (a) any Environmental
Law, (b) any Environmental Claim, or (c) any Hazardous Materials Activity;

 

(ii)                  neither
the Borrowers nor any of their Subsidiaries has received any letter or
request for information under Section 104 of the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604)
or any comparable state law;

 

(iii)               there
are, and to the Borrowers’ knowledge, have been, no conditions, occurrences, or
Hazardous Materials Activities on any of the Facilities which could reasonably
be expected to form the basis of an Environmental Claim against the Borrowers
or any of their Subsidiaries;

 

(iv)              neither
the Borrowers nor any of their Subsidiaries nor, to the Borrowers’ knowledge,
any predecessor of the Borrowers or any of their Subsidiaries has filed any
notice under any Environmental Law indicating past or present treatment of
Hazardous Materials at any Facility, and none of the Borrowers’ or any of their
Subsidiaries’ operations involves the generation, transportation, treatment,
storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts
260-270 or any state equivalent; and

 

(v)                 compliance
with all current or reasonably foreseeable future requirements pursuant to or
under Environmental Laws will not, individually or in the aggregate, have a
reasonable possibility of giving rise to a Material Adverse Effect.

 

Notwithstanding anything in this subsection 4.12
to the contrary, no event or condition has occurred or is occurring with
respect to the Borrowers or any of their Subsidiaries relating to any
Environmental Law, any Release of Hazardous Materials, or any Hazardous
Materials Activity, including any matter disclosed on Schedule 4.12
annexed hereto, which individually or in the aggregate has had or could
reasonably be expected to have a Material Adverse Effect.

 

64

 

4.13                           Employee Matters.

 

There is no strike or work stoppage in existence or
threatened involving the Borrowers or their Subsidiaries that could reasonably
be expected to have a Material Adverse Effect.

 

4.14                           Solvency.

 

Each of the Borrowers is and, upon the incurrence of
the Phase II Mall Contribution and the Obligations by such Borrower on any date
on which this representation is made, will be, Solvent.

 

4.15                           Matters Relating to Collateral.

 

(A)                              Creation,
Perfection and Priority of Liens. 
The execution and delivery of the Collateral Documents by the Borrowers,
together with the actions taken on or prior to the Closing Date pursuant to subsection
3.1 are effective to create in favor of the Administrative Agent for the
benefit of the Secured Parties, as security for the Obligations, subject to the
exceptions contained in the Security Agreement, a valid and perfected First
Priority Lien on all of the Collateral, and all filings and other actions
necessary to perfect and maintain the perfection and priority status of such
Liens have been duly made or taken and remain full force and effect, other than
the filing of any UCC financing statements delivered to the Administrative
Agent for filing (but not yet filed), the recording of the Deed of Trust
delivered to the Title Company for recording (but not yet recorded, and in
connection with which a title commitment has been issued by the Title Company
on the Closing Date) and the periodic filing of UCC continuation statements in
respect of UCC financing statements filed by or on behalf of the Administrative
Agent.  As of the Closing Date, no
filing, recordation, re-filing or re-recording other than those listed on
Schedule 4.2C is necessary to perfect and maintain the perfection of the
interest, title or Liens of the Collateral Documents.

 

(B)                                Permits.  No authorization, approval or other action
by, and no notice to or filing with, any Governmental Instrumentality is
required for either (i) the pledge or grant by the Borrowers of the Liens
purported to be created in favor of the Administrative Agent pursuant to any of
the Collateral Documents or (ii) the exercise by the Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 4.15A or as set forth in Schedule 4.15B.

 

(C)                                Absence
of Third-Party Filings.  Except such
as may have been filed in favor of the Administrative Agent as contemplated by subsection 4.15A
or filed to perfect a Permitted Lien, no effective UCC financing statement,
fixture filing or other instrument similar in effect covering all or any part
of the Collateral is on file in any filing or recording office.

 

(D)                               Information
Regarding Collateral.  All
information supplied to the Administrative Agent and/or the Disbursement Agent
by or on behalf of the Borrowers with respect to any of the Collateral (in each
case taken as a whole with respect to any particular Collateral) is accurate
and complete in all material respects.

 

4.16                           Construction Litigation.  The litigation arising out of the lawsuit
filed by LVSI and Venetian against Bovis in the United States District Court
for the District of Nevada and the countersuit filed by Bovis against LVSI and
Venetian and any other outstanding lawsuit, action,

 

65

 

claim
or Lien arising out of or relating to the construction of the Existing Facility
(the “Construction Litigation”), including any claim made or Lien filed
by Bovis or any contractor or subcontractor or to the bonding company insuring
over any Lien relating to or binding upon the Existing Facility or to Venetian,
LVSI, or any of their Affiliates in connection therewith, and any judgment or
settlement amount owed by the Borrowers to Bovis or any contractor or
subcontractor or to the bonding company insuring over any such Lien as a result
of the Construction Litigation (such amount, the “Additional Contingent Claims”) cannot reasonably be expected
to have, when taken in the aggregate, a Material Adverse Effect.

 

4.17                           Accuracy of Information.

 

None of the factual information (other than
projections and pro  forma financial information as to which no
representation is made under this subsection), taken as a whole, furnished by
or on behalf of the Borrowers or any of the Bank Loan Parties in writing to the
Arranger, the Administrative Agent or any Lender for inclusion in the
confidential information memorandum delivered to the Lenders contains any
untrue statement of a material fact or omitted to state any material fact
necessary to make such information, taken as a whole, not misleading.

 

4.18                           Compliance with Laws.  The Borrowers and all other Persons on or
occupying any Facilities are in compliance with the requirements of all
applicable laws, rules, regulations and orders of any Governmental
Instrumentality (including all Environmental Laws), other than such laws,
rules, regulations and orders, the noncompliance with which could not
reasonably be expected to cause, individually or in the aggregate, a Material
Adverse Effect.

 

5.                                       Borrowers’ Affirmative Covenants.

 

The Borrowers covenant and agree with each Lender and
each Agent that, until the Termination Date, the Borrowers shall perform all
covenants set forth in this Section 5.

 

5.1                                 Financial Statements and Other
Reports.

 

The Borrowers will maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP.  The Borrowers will deliver to the
Administrative Agent (which will promptly deliver to the Lenders):

 

(i)                     Monthly
Financials:  as soon as available
and in any event within 30 days after the end of each month, (A) the
consolidated and consolidating balance sheets of LVSI and its Subsidiaries as
at the end of such month and the related consolidated and consolidating
statements of income, stockholders’ equity and cash flows of LVSI and its
Subsidiaries for such month and for the period from the beginning of the then
current Fiscal Year to the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of the
previous Fiscal Year, to the extent prepared on a monthly basis, all in
reasonable detail and certified by the chief financial officer of LVSI, on
behalf of LVSI, that they fairly present, in all material respects, the
financial condition of LVSI and its Subsidiaries as at the dates indicated and
the results of their operations and their cash

 

66

 

flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments and (B) the consolidated and consolidating balance sheets of Phase II
Mall Subsidiary Holding and Phase II Mall Subsidiary as at the end of such
month and the related consolidated and consolidating statements of income,
stockholders’ equity and cash flows of Phase II Mall Subsidiary Holding and
Phase II Mall Subsidiary for such month and for the period from the beginning
of the then current Fiscal Year to the end of such month, setting forth in each
case in comparative form the corresponding figures for the corresponding
periods of the previous Fiscal Year, to the extent prepared on a monthly basis,
all in reasonable detail and certified by the chief financial officer of LVSI,
on behalf of LVSI, Phase II Mall Subsidiary Holding and Phase II Mall
Subsidiary, as applicable, that they fairly present, in all material respects, the
financial condition of LVSI and its Subsidiaries and Phase II Mall Subsidiary
Holdings and Phase II Mall Subsidiary, as applicable, as at the dates indicated
and the results of their operations and their cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustments

 

(ii)                  Quarterly
Financials:  as soon as available
and in any event within 45 days after the end of each Fiscal Quarter,

 

(a)                                  the
consolidated and consolidating balance sheets of LVSI and its Subsidiaries as
at the end of such Fiscal Quarter and the related consolidated and
consolidating statements of income, stockholders’ equity and cash flows of LVSI
and its Subsidiaries for such Fiscal Quarter and for the period from the
beginning of the then current Fiscal Year to the end of such Fiscal Quarter),
setting forth in each case in comparative form the corresponding figures for
the corresponding periods of the previous Fiscal Year, all in reasonable detail
and certified by the chief financial officer of LVSI, on behalf of LVSI, that
they fairly present, in all material respects, the financial condition of LVSI
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments;

 

(b)                                 the
consolidated balance sheets of LVSI and its Restricted Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated statements of income,
stockholders’ equity and cash flows of LVSI and its Restricted Subsidiaries for
such Fiscal Quarter and for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in
comparative form the corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the Financial Plan for
the current Fiscal Year, all in reasonable detail and certified by the chief
financial officer of LVSI, on behalf of LVSI, that they fairly present, in all
material respects, the financial condition of LVSI and its Restricted
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments; and

 

(c)                                  the
consolidated and consolidating balance sheets of Phase II Mall Subsidiary
Holding and Phase II Mall Subsidiary as at the end of such Fiscal Quarter and
the related consolidated and consolidating statements of income, stockholders’
equity and

 

67

 

cash flows of
Phase II Mall Subsidiary Holding and Phase II Mall Subsidiary for such Fiscal
Quarter and for the period from the beginning of the then current Fiscal Year
to the end of such Fiscal Quarter), setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the previous
Fiscal Year (if applicable), all in reasonable detail and certified by the
chief financial officer of LVSI, on behalf of Phase II Mall Subsidiary Holding
and Phase II Mall Subsidiary that they fairly present, in all material
respects, the financial condition of Phase II Mall Subsidiary Holding and Phase
II Mall Subsidiary as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments.

 

(iii)               Year-End
Financials:  as soon as available
and in any event within 90 days after the end of each Fiscal Year,

 

(a)                                  the
consolidated and consolidating balance sheets of LVSI and its Subsidiaries as
at the end of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders’ equity and cash flows of LVSI and its
Subsidiaries for such Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal Year, all in reasonable
detail and certified by the chief financial officer of LVSI, on behalf of LVSI,
that they fairly present, in all material respects, the financial condition of
LVSI and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated;

 

(b)                                 the
consolidated balance sheets of LVSI and its Restricted Subsidiaries as at the
end of such Fiscal Year and the related consolidated and consolidating
statements of income, stockholders’ equity and cash flows of LVSI and its
Restricted Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and the
corresponding figures from the Financial Plan for the Fiscal Year covered by
such financial statements, all in reasonable detail and certified by the chief
financial officer of LVSI, on behalf of LVSI, that they fairly present, in all
material respects, the financial condition of LVSI and its Restricted
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated;

 

(c)                                  the
consolidated and consolidating balance sheets of Phase II Mall Subsidiary
Holding and Phase II Mall Subsidiary as at the end of such Fiscal Year and the
related consolidated and consolidating statements of income, stockholders’
equity and cash flows of Phase II Mall Subsidiary Holding and Phase II Mall
Subsidiary for such Fiscal Year, setting forth in each case in comparative form
the corresponding figures for the previous Fiscal Year, all in reasonable
detail and certified by the chief financial officer of LVSI, on behalf of Phase
II Mall Subsidiary Holding and Phase II Mall Subsidiary that they fairly
present, in all material respects, the financial condition of Phase II Mall
Subsidiary Holding and Phase II Mall Subsidiary as at the dates indicated and
the results of their operations and their cash flows for the periods indicated;
and

 

(d)                                 in
the case of such consolidated financial statements specified in clause (a)
above, a report thereon of PriceWaterhouseCoopers or other independent
certified public

 

68

 

accountants of
recognized national standing selected by LVSI and the Borrowers and reasonably
satisfactory to the Administrative Agent, which report shall be unqualified as
to scope of audit, shall express no doubts about the ability of the Persons
covered thereby to continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the consolidated
financial position of LVSI and its Subsidiaries as at the dates indicated and
the results of their operations and their cash flows for the periods indicated
in conformity with GAAP applied on a basis consistent with prior years (except
as otherwise disclosed in such financial statements) and that the examination
by such accountants in connection with such consolidated financial statements
has been made in accordance with generally accepted auditing standards;

 

(iv)              Officers’
Certificates:  as soon as available
and in any event within 45 days after the end of each Fiscal Quarter, an
Officers’ Certificate of each of the Borrowers stating that the signers, on
behalf of the Borrowers, have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of the Borrowers and its Subsidiaries
during the previous Fiscal Quarter and that such review has not disclosed the
existence during or at the end of such Fiscal Quarter, and that the signers do
not have knowledge of the existence as at the date of such Officers’
Certificate, of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Borrower has taken, is taking and proposes to take with respect thereto;

 

(v)                 SEC
Filings, Press Releases and Other Financial Reports:  promptly upon their becoming available,
copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by LVSI, Venetian or any of their
Subsidiaries to their security holders, (b) all regular and periodic
reports and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by LVSI, Venetian or any of their
Subsidiaries with any securities exchange or with the Securities and Exchange
Commission or any Governmental Instrumentality, (c) all press releases and
other statements made available generally by LVSI, Venetian and any of their
Restricted Subsidiaries to the public concerning material developments in the
business of LVSI, Venetian and their Subsidiaries and (d) to the extent
prepared, any financial statements and reports concerning any Subsidiaries of
LVSI and Venetian not delivered pursuant to clauses (i), (ii) or (iii)
above;

 

(vi)              Events
of Default, etc.:  promptly upon any
officer of the Borrowers obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given any notice (other than to the Administrative
Agent) or taken any other action with respect to a claimed Event of Default or
Potential Event of Default, (b) that any Person has given any notice to
the Borrowers or taken any other action with respect to a claimed default or
event or condition of the type referred to in subsection 7.2, (c) of any
condition or event that would be required to be disclosed in a current report
filed with the Securities and Exchange Commission on Form 8-K (Items 1, 2,
4, 5 and 6 of such Form as in

 

69

 

effect on the
Closing Date) if the Borrowers were required to file such reports under the
Exchange Act, or (d) of the occurrence of any event or change that has caused
or evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officers’ Certificate specifying the nature and period of existence
of such condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action Borrowers
have taken, are taking and propose to take with respect thereto;

 

(vii)           Litigation
or Other Proceedings:  (a) promptly
upon any officer of the Borrowers obtaining knowledge of (X) the non-frivolous
institution of, or threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting the Borrowers and their Subsidiaries, or any
property of the Borrowers and their Subsidiaries (collectively, “Proceedings”) not previously disclosed in
writing by the Borrowers to Lenders or (Y) any material development in any
Proceeding that, in any case:

 

(1)                                  has
a reasonable possibility of giving rise to a Material Adverse Effect; or

 

(2)                                  seeks
to enjoin or otherwise prevent the consummation of, or to recover any damages
or obtain relief as a result of, the transactions contemplated hereby;

 

written notice thereof
together with such other information as may be reasonably available to the
Borrowers to enable Lenders and their counsel to evaluate such matters; and
(b) within twenty days after the end of each Fiscal Quarter, a schedule of
all Proceedings involving an alleged liability of, or claims against or
affecting, the Borrowers or any of their Subsidiaries equal to or greater than
$5,000,000, and promptly after request by the Administrative Agent such other
information as may be reasonably requested by the Administrative Agent to
enable Administrative Agent and its counsel to evaluate any of such
Proceedings;

 

(viii)        ERISA
Events:  promptly upon becoming
aware of the occurrence of or forthcoming occurrence of any ERISA Event, a
written notice specifying the nature thereof, what action Borrowers or any of
their respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto;

 

(ix)                ERISA
Notices:  with reasonable
promptness, copies of (a) each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by the Borrowers, any of their Subsidiaries or
any of their respective ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (b) all notices received by the Borrowers or any
of their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) copies of such other

 

70

 

documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;

 

(x)                   Insurance:  as soon as practicable and in any event by
the last day of each Fiscal Year, a report in form and substance reasonably
satisfactory to the Administrative Agent outlining all material insurance
coverage maintained as of the date of such report by the Borrowers and all
material insurance coverage planned to be maintained by the Borrowers in the
immediately succeeding Fiscal Year;

 

(xi)                Board
of Directors:  with reasonable
promptness, written notice of any change in the members of the Board of
Directors of the Borrower;

 

(xii)             New
Subsidiaries:  promptly upon any
Person becoming a Subsidiary of either of the Borrowers, a written notice
setting forth with respect to such Person (a) the date on which such Person
became a Subsidiary of either of the Borrowers and (b) all of the data required
to be set forth in Schedule 4.1D with respect to all Subsidiaries of
either of the Borrowers;

 

(xiii)          Material
Contracts:  promptly, and in any
event within ten Business Days after any Material Contract of the Borrowers or
any of their Subsidiaries is terminated or amended in a manner that is
materially adverse to the Borrowers or any of their Subsidiaries or any new
Material Contract is entered into, or upon becoming aware of any material
default by any party under a Material Contract, a written statement describing
such event with copies of such material amendments or new contracts, and an
explanation of any actions being taken with respect thereto;

 

(xiv)         UCC
Search Report:  As promptly as
practicable after the date of delivery to the Administrative Agent of any UCC
financing statement delivered by any future Subsidiary pursuant to subsection 5.11,
copies of completed UCC searches evidencing the proper filing, recording and
indexing of all such UCC financing statements and listing all other effective
financing statements that name such Subsidiary as debtor, together with copies
of all such other financing statements not previously delivered to the
Administrative Agent by or on behalf of such Subsidiary;

 

(xv)            Exception
Reports:  promptly upon receipt,
copies of all exception reports provided to LVSI and/or Venetian by the Nevada
Gaming Authorities and the equivalent authorities in Macau or any other
relevant jurisdiction; and

 

(xvi)         Other
Information:  with reasonable
promptness, such other information and data with respect to the Borrowers or
any of their Subsidiaries as from time to time may otherwise be reasonably
requested by the Administrative Agent or any Lender.

 

5.2                                 Corporate
Existence, etc.

 

The Borrowers will, and will cause each of their
Subsidiaries to, at all times preserve and keep in full force and effect their
corporate or limited liability company existence and all rights and franchises
material to its business; provided, however, that the Borrowers
and their Subsidiaries may merge or consolidate as permitted pursuant to subsection
6.6 of this Agreement

 

71

 

and provided,
further, that no Borrower nor any such Subsidiary shall be required to
preserve any such right or franchise if the Board of Directors of the
applicable Borrower or Subsidiary (or the managing member thereof, if
applicable) shall determine (and shall so notify the Administrative Agent),
that the preservation thereof is no longer desirable in the conduct of the
business of such Borrower or Subsidiary, as the case may be, and that the loss
thereof is not disadvantageous in any material respect to the Borrowers and
their Subsidiaries or the Lenders.

 

5.3                                 Payment of Taxes and Claims; Tax
Consolidation.

 

(A)                              The
Borrowers will, and will cause each of their Subsidiaries to, pay all material
Taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all material claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets, prior to the time when any penalty or fine shall
be incurred with respect thereto; provided that no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (1) (a) the amount
required in order to pay such charge or claim is included in the Project Budget
as a Line Item and (b) the Borrowers are in compliance with Section 5.5 of the
Disbursement Agreement and (2) in the case of a charge or claim which has or
may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such charge or claim and the Borrowers have demonstrated to the
Administrative Agent in its sole determination that such Lien can and will be removed
prior to the anticipated Phase II Mall Release Date.

 

(B)                                The
Borrowers will not, nor will they permit any of their Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any Person
(other than LVSI, Venetian or any of their Subsidiaries) unless the Borrowers
and their Subsidiaries shall have entered into, a tax sharing agreement with
such Person, in form and substance satisfactory to the Administrative Agent.

 

(C)                                If
and to the extent that LVSI, Venetian or any Restricted Subsidiary makes a
payment or distribution to any direct or indirect shareholder or member other
than LVSI, Venetian or any Restricted Subsidiary with respect to Taxes that are
attributable to the income of either of the Borrowers or any of their Subsidiaries
(including in connection with the Phase II Mall Sale) (“Phase II Mall Borrower Taxes”), then the
Borrowers shall be entitled to reimburse LVSI, Venetian or such Restricted
Subsidiary for such Phase II Mall Borrower Taxes.

 

5.4                                 Maintenance of Properties; Insurance;
Application of Net Loss Proceeds.

 

(A)                              Maintenance
of Properties.  The Borrowers will,
and will cause each of their Subsidiaries to, maintain or cause to be
maintained in good repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business of the
Borrowers and their Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof except to the
extent that the Borrowers determine in good faith not to maintain, repair,
renew or replace such property if such property is no longer desirable in the
conduct of their business and the failure to do so is not

 

72

 

disadvantageous
in any material respect to the Borrowers and their Subsidiaries or the
Lenders.  Upon Substantial Completion,
the Borrowers will operate the Phase II Mall at standards of operation at least
equivalent to the standards of operation of the shopping mall in the Existing
Facility on the Closing Date.

 

(B)                                Insurance.  The Borrowers will maintain or cause to be
maintained, with financially sound and reputable insurers, such public
liability insurance, third party property damage insurance, business
interruption insurance and casualty insurance with respect to liabilities,
losses or damage in respect of the assets, properties and businesses of the
Borrowers and their Subsidiaries as may from time to time customarily be
carried or maintained under similar circumstances by entities of established
reputation engaged in similar businesses, in each case in such amounts (giving
effect to self-insurance), with such deductibles, covering such risks and
otherwise on such terms and conditions as shall be customary for entities
similarly situated in the industry; provided, however, that the
insurance coverage (including the types, terms, conditions, amounts and
deductibles) described in Exhibit K (or the Cooperation Agreement after
the amendment thereof contemplated by Section 3.4.3 of the Disbursement
Agreement) shall be deemed satisfactory to fulfill the requirements of this
sentence; and further provided, however, the Borrowers may be
insured under policies obtained by LCR for the Phase II Project.  The Borrowers will maintain or cause to be
maintained (or insured under policies obtained by LCR for the Phase II Project)
with regard to the Phase II Mall prior to the amendment to the Cooperation
Agreement contemplated by Section 3.4.3 of the Disbursement Agreement, the
insurance coverages set forth on Exhibit K and, after such amendment to
the Cooperation Agreement, the insurance coverage required to be maintained
under the Cooperation Agreement, such insurance coverage to be provided by such
insurance provider, in such amounts with such deductibles and covering such
risks as are at all times required under the Cooperation Agreement and to
include, if the Mortgaged Property is located in an area designated by the
Federal Emergency Management Agency as having special flood or mud slide
hazards, flood insurance in compliance with any applicable regulations of the
Board of Governors of the Federal Reserve System; provided that,
notwithstanding the provisions of the Cooperation Agreement, the Borrowers will
use commercially reasonable efforts to acquire and maintain or cause to be maintained
(or to be insured under policies obtained by LCR for the Phase II Project), to
the extent available at commercially reasonable rates, after the amendment to
the Cooperation Agreement, excess liability insurance that specifically does
not exclude terrorism for losses that exceed $45,000,000 per event at the Phase
II Project (it being understood that neither the Borrowers nor LCR have, and
are not required to have, such insurance on the Closing Date).  Notwithstanding anything to the contrary
contained herein, the parties agree that the insurance requirements with
respect to each of the Existing Facility and the Phase II Project in the
aforementioned amendment to the Cooperation Agreement will be substantially
similar to those set forth for the Existing Facility in the Cooperation
Agreement as of the date hereof.

 

(C)                                Application
of Net Loss Proceeds.  The Borrowers
shall (i) subject to the terms of the Disbursement Agreement, apply Net Loss
Proceeds to restore, replace or rebuild the Phase II Mall in accordance with
the Cooperation Agreement and (ii) apply any Net Loss Proceeds not applied as
provided in clause (i) to prepay the Loans in accordance with subsection
2.4A(iii) hereof.  The
Administrative Agent shall, and Borrowers hereby authorize Administrative Agent
to, apply such Net Loss Proceeds to prepay the Loans as provided in subsection
2.4A(iii).

 

73

 

5.5                                 Inspection; Lender Meeting.

 

(A)                              Inspection
Rights.  The Borrowers shall, and
shall cause each of their Subsidiaries to, permit any authorized representative
designated by any Lender to visit and inspect any of the properties of the
Borrowers and their Subsidiaries, to inspect, copy and take extracts from its
and their financial and accounting records, and to discuss its and their
affairs, finances and accounts with its and their officers and independent
public accountants, if requested by the Administrative Agent (provided that any
designated representatives of the Borrowers may, if they so choose, be present
at or participate in any such discussion), all upon reasonable notice and at
such reasonable times during normal business hours and as often as may
reasonably be requested.

 

(B)                                Lender
Meeting.  The Borrowers will, upon
the request of the Administrative Agent or Requisite Lenders, participate in a
meeting of the Administrative Agent and the Lenders once during each Fiscal
Year to be held at Borrowers’ corporate offices (or at such other location as
may be agreed to by the Borrowers and the Administrative Agent) at such time as
may be agreed to by the Borrowers and the Administrative Agent.

 

5.6                                 Compliance with Laws, etc.; Permits.

 

(A)                              The
Borrowers shall and shall cause each of their Subsidiaries and all other
Persons on or occupying any Facilities to, comply with the requirements of all
applicable laws, rules, regulations and orders of any Governmental
Instrumentality (including all Environmental Laws), noncompliance with which
could reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect.

 

(B)                                The
Borrowers shall, and shall cause each of their Subsidiaries to, from time to
time obtain, maintain, retain, observe, keep in full force and effect and
comply in all material respects with the terms, conditions and provisions of
all Permits as shall now or hereafter be necessary under applicable laws except
any thereof the noncompliance with which could not reasonably be expected to
have a Material Adverse Effect.

 

(C)                                If
required under applicable securities laws, the Borrowers will promptly, and, if
so required, in any event within 20 days following the Closing Date, file this
Agreement with the Securities and Exchange Commission in accordance with
applicable securities laws and the Borrowers will file all amendments hereto
and waivers hereof with the Borrowers’ periodic securities filings.

 

5.7                                 Environmental Covenant.

 

(A)                              Environmental
Review and Investigation.  The
Borrowers agree that the Administrative Agent may, from time to time and in its
reasonable discretion, (i) retain, at Borrowers’ expense, an independent
professional consultant to review any environmental audits, investigations,
analyses and reports relating to Hazardous Materials in respect of the Site and
the Phase II Project prepared by or for Borrowers and (ii) conduct their
own investigation of any Facility; provided that, in the case of any
Facility no longer owned, leased, operated or used by the Borrowers or any of
their Subsidiaries, the Borrowers shall only be obligated to use their best
efforts to obtain permission for the Administrative Agent’s professional
consultant to conduct an investigation of such Facility.  For purposes of conducting such a review
and/or investigation,

 

74

 

the
Borrowers hereby grant to the Administrative Agent and their respective agents,
employees, consultants and contractors the right to enter into or onto any
Facilities currently owned, leased, operated or used by the Borrowers or any of
their Subsidiaries and to perform such tests on such property (including taking
samples of soil, groundwater and suspected asbestos-containing materials) as
are reasonably necessary in connection therewith.  Any such investigation of any Facility shall be conducted, unless
otherwise agreed to by the Borrowers or the Administrative Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause
any damage or loss to any property at such Facility.  The Borrowers and the Administrative Agent hereby acknowledge and
agree that any report of any investigation conducted at the request of the
Administrative Agent pursuant to this subsection 5.7A will be obtained
and shall be used by the Administrative Agent and Lenders for the purposes of
Lenders’ internal credit decisions, to monitor and police the Loans and to
protect Lenders’ security interests created by the Loan Documents.  The Administrative Agent agrees to deliver a
copy of any such report to the Borrowers with the understanding that the
Borrowers acknowledge and agree that (x) they will indemnify and hold harmless
the Administrative Agent and each Lender from any costs, losses or liabilities
relating to the Borrowers’ use of or reliance on such report, (y) neither
the Administrative Agent nor any Lender makes any representation or warranty
with respect to such report, and (z) by delivering such report to the
Borrowers, neither the Administrative Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.

 

(B)                                Environmental
Disclosure.  The Borrowers will
deliver to the Administrative Agent and Lenders:

 

(i)                     Environmental
Audits and Reports.  As soon as
practicable following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether prepared
by personnel of the Borrowers or any of their Subsidiaries or by independent
consultants, Governmental Instrumentalities or any other Persons, with respect
to significant environmental matters at any Facility or with respect to any
Environmental Claims;

 

(ii)                  Notice
of Certain Releases, Remedial Actions, Etc.  Promptly upon the occurrence thereof, written notice describing
in reasonable detail (a) any Release required to be reported to any federal,
state or local governmental or regulatory agency under any applicable
Environmental Laws, (b) any remedial action taken by the Borrowers or any
other Person in response to (1) any Hazardous Materials Activities the
existence of which has a reasonable possibility of resulting in one or more
Environmental Claims having, individually or in the aggregate, a Material
Adverse Effect or (2) any Environmental Claims that, individually or in
the aggregate, have a reasonable possibility of resulting in a Material Adverse
Effect.

 

(iii)               Written
Communications Regarding Environmental Claims, Releases, Etc.  As soon as practicable following the sending
or receipt thereof by the Borrowers or any of their Subsidiaries, a copy of any
and all written communications with respect to (a) any Environmental Claims
that, individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release

 

75

 

required to be
reported to any federal, state or local governmental or regulatory agency, and
(c) any request for information from any governmental agency that suggests
such agency is investigating whether Borrowers or any of their Subsidiaries may
be potentially responsible for any Hazardous Materials Activity.

 

(iv)              Notice
of Certain Proposed Actions Having Environmental Impact.  Prompt written notice describing in
reasonable detail (a) any proposed acquisition of stock, assets, or
property by the Borrowers or any of their Subsidiaries that could reasonably be
expected to (1) expose Borrowers or any of their Subsidiaries to, or result in,
Environmental Claims that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect or (2) affect the ability of the
Borrowers or any of their Subsidiaries to maintain full force and effect all
material Permits required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by the Borrowers or any
of their Subsidiaries to modify current operations in a manner that could reasonably
be expected to subject the Borrowers or any of their Subsidiaries to any
material additional obligations or requirements under any Environmental Laws
that could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

 

(v)                 Other
Information.  With reasonable
promptness, such other documents and information as from time to time may be
reasonably requested by the Administrative Agent in relation to any matters
disclosed pursuant to this subsection 5.7.

 

(C)                                Borrowers’
Actions Regarding Environmental Laws.

 

(i)                     Remedial
Actions Relating to Hazardous Materials Activities.  The Borrowers shall promptly undertake, and
shall cause each of their Subsidiaries promptly to undertake, any and all
investigations, studies, sampling, testing, abatement, cleanup, removal,
remediation or other response actions necessary to remove, remediate, clean up
or abate any Hazardous Materials Activity on, under or about any Facility that
is in violation of any Environmental Laws or that presents a material risk of
giving rise to an Environmental Claim. 
In the event the Borrowers or any of their Subsidiaries undertake any
such action with respect to any Hazardous Materials, the Borrowers or such
Subsidiary shall conduct and complete such action in compliance with all
applicable Environmental Laws and in accordance with the policies, orders and
directives of all Governmental Instrumentalities except when, and only to the
extent that, the Borrowers’ or such Subsidiary’s liability with respect to such
Hazardous Materials Activity is being contested in good faith by the Borrowers
or such Subsidiary.

 

(ii)                  Actions
with Respect to Environmental Claims and Violations of Environmental Laws.  The Borrowers shall promptly take, and shall
cause each of their Subsidiaries promptly to take, any and all actions
necessary to (a) cure any material violation of applicable Environmental Laws
by the Borrowers or their Subsidiaries and (b) make an appropriate response to
any Environmental Claim against Borrowers or

 

76

 

any of their
Subsidiaries and discharge any obligations it may have to any Person
thereunder.

 

5.8                                 Compliance with Material Contracts.

 

The Borrowers shall, and shall cause each of their
Subsidiaries to, comply, duly and promptly, in all material respects with its
and their respective obligations and enforce all of its and their respective
rights under all Material Contracts and all Operative Documents except where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect.

 

5.9                                 Discharge of Liens.

 

(A)                              Removal
by the Borrowers.  In the event
that, notwithstanding the covenants contained in subsection 6.2, a Lien
which is not a Permitted Lien (other than a Phase II Mall Title Defect) may
encumber any Collateral or any portion thereof, the Borrowers shall promptly
discharge or cause to be discharged by payment to the lienor or Lien claimant
or promptly secure removal by bonding or deposit with the county clerk or
otherwise or, at the Administrative Agent’s option, and if obtainable promptly
obtain title insurance against, any such Lien or mechanics’ or materialmen’s
claims of Lien filed or otherwise asserted against such Collateral or any
portion thereof within 60 days after the date of notice thereof; provided
that, compliance with the provisions of this subsection 5.9 shall
not be deemed to constitute a waiver of the provisions of subsection 6.2.  The Borrowers shall exhibit to the
Administrative Agent upon request all receipts or other satisfactory evidence
of payment, bonding, deposit of taxes, assessments, Liens or any other item
which may cause any such Lien to be filed against any Collateral.  Each Borrower and each of its Subsidiaries
shall fully preserve the Lien and the priority of each Collateral Document
without cost or expense to the Administrative Agent or the Lenders.

 

(B)                                Removal
by the Agent.  If any Borrower or
any of its Subsidiaries fails to promptly discharge, remove or bond off any
such Lien or mechanics’ or materialmen’s claim of Lien as described above, which
is not being contested by either Borrower or any of its Subsidiaries in good
faith by appropriate proceedings promptly instituted and diligently conducted,
within 30 days after the receipt of notice thereof, then the
Administrative Agent may, but shall not be required to, procure the release and
discharge of such Lien, mechanics’ or materialmen’s claim of Lien and any
judgment or decree thereon, and in furtherance thereof may, in its sole
discretion, effect any settlement or compromise with the lienor or Lien
claimant or post any bond or furnish any security or indemnity as the
Administrative Agent, in its sole discretion, may elect.  In settling, compromising or arranging for
the discharge of any Liens under this subsection, the Administrative Agent shall
not be required to establish or confirm the validity or amount of the
Lien.  The Borrowers agree that all
costs and expenses expended or otherwise incurred pursuant to this subsection 5.9
(including reasonable attorneys’ fees and disbursements) by the Administrative
Agent shall be paid by the Borrowers in accordance with the terms hereof.

 

77

 

5.10                           Further Assurances.

 

(A)                              Assurances.  Without expense or cost to the
Administrative Agent or the Lenders, each Borrower shall from time to time
hereafter, execute, acknowledge, file, record, do and deliver all and any
further acts, deeds, conveyances, mortgages, deeds of trust, deeds to secure
debt, security agreements, hypothecations, pledges, charges, assignments,
financing statements and continuations thereof, notices of assignment,
transfers, certificates, assurances and other instruments as the Administrative
Agent may from time to time reasonably require in order to carry out more
effectively the purposes of this Agreement or the other Loan Documents, including
to subject any items of Collateral, intended to now or hereafter be covered, to
the Liens created by the Collateral Documents, to perfect and maintain such
Liens, and to assure, convey, assign, transfer and confirm unto the
Administrative Agent the property and rights hereby conveyed and assigned or
intended to now or hereafter be conveyed or assigned or which either of the
Borrowers may be or may hereafter become bound to convey or to assign to the
Administrative Agent for carrying out the intention of or facilitating the
performance of the terms of this Agreement, or any other Loan Documents or for
filing, registering or recording this Agreement or any other Loan
Documents.  Promptly upon a reasonable
request each Borrower shall execute and deliver, and hereby authorizes the
Administrative Agent to execute and file in the name of such Borrower, to the
extent the Administrative Agent may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments to evidence
more effectively the Liens of the Collateral Documents upon the Collateral.

 

(B)                                Filing
and Recording Obligations.  The
Borrowers shall pay or cause to be paid all filing, registration and recording
fees and all expenses incident to the execution and acknowledgment of the Deeds
of Trust or any other Loan Document, including any instrument of further
assurance described in subsection 5.10A, and shall pay or cause to be
paid all mortgage recording taxes, transfer taxes, general intangibles taxes
and governmental stamp and other taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution, delivery, filing,
recording or registration of any Collateral Document or any other Loan
Document, the COREA, the Cooperation Agreement (or any amendments thereto) or
any leases or subleases entered into in connection with the Phase II Project
(except to the extent already recorded) or memoranda thereof, including any
instrument of further assurance described in subsection 5.10A, or by reason
of its interest in, or measured by amounts payable under, the Notes, any
Collateral Document or any other Loan Document, including any instrument of
further assurance described in subsection 5.10A, and shall pay all stamp
taxes and other taxes required to be paid on the Notes or any other Loan
Document, but excluding in the case of each Lender and the Administrative
Agent, Taxes imposed on its income by a jurisdiction under the laws of which it
is organized or in which its principal executive office is located or in which
its applicable lender office for funding or booking its Loans hereunder is
located.  If either Borrower fails to
make or cause to be made any of the payments described in the preceding sentence
within 15 days after notice thereof from the Administrative Agent (or such
shorter period as is necessary to protect the loss of or diminution in value of
any Collateral by reason of tax foreclosure or otherwise, as determined by the
Administrative Agent, in its sole discretion) accompanied by documentation
verifying the nature and amount of such payments, the Administrative Agent may
(but shall not be obligated to) pay the amount due and the Borrowers shall
reimburse all amounts in accordance with the terms hereof.

 

(C)                                Costs
of Defending and Upholding the Lien. 
The Administrative Agent may, upon at least five days’ prior notice to
the Borrowers, (i) appear in and defend any action or

 

78

 

proceeding,
in the name and on behalf of the Administrative Agent or the Lenders in which
the Administrative Agent or any Lender is named or which the Administrative
Agent in its sole discretion determines is reasonably likely to materially
adversely affect the Mortgaged Property, any other Collateral, any Collateral
Document, the Lien thereof or any other Loan Document and (ii) institute
any action or proceeding which the Administrative Agent reasonably determines
should be instituted to protect the interest or rights of the Administrative
Agent and the Lenders in the Mortgaged Property or other Collateral or under
any Loan Document.  The Borrowers agree
that all reasonable costs and expenses expended or otherwise incurred pursuant
to this subsection (including reasonable attorneys’ fees and
disbursements) by the Administrative Agent shall be paid by the Borrowers or
reimbursed to the Administrative Agent, as the case may be, promptly after
demand.

 

(D)                               Costs
of Enforcement.  The Borrowers agree
to bear and shall pay or reimburse the Administrative Agent and the Lenders in
accordance with the terms of subsection 9.2 for all reasonable
sums, costs and expenses incurred by the Administrative Agent and the Lenders
(including reasonable attorneys’ fees and the expenses and fees of any receiver
or similar official) of or incidental to the collection of any of the Obligations,
any foreclosure (or transfer in lieu of foreclosure) of this Agreement, any
Collateral Document or any other Loan Document or any sale of all or any
portion of the Mortgaged Property or all or any portion of the other
Collateral.

 

5.11                           Future Subsidiaries.

 

(A)                              Execution
of Collateral Documents.  In the
event that any Person becomes a Subsidiary on or after the Closing Date, the
Borrowers will promptly notify Administrative Agent of that fact and cause such
Subsidiary to execute and deliver to the Administrative Agent a supplement to
the Security Agreement and to take all such further actions and execute all
such further documents and instruments as may be necessary or, in the
reasonable opinion of the Administrative Agent, desirable to create in favor of
the Administrative Agent, for the benefit of the Secured Parties, a valid and
perfected First Priority Lien on all of the personal and mixed property assets
of such Subsidiary which constitute Collateral.  The Borrowers shall deliver to the Administrative Agent together
with such Loan Documents all such further documents and instruments and take
such further action necessary to create in favor of the Administrative Agent,
for the benefit of the Secured Parties, a valid and perfected First Priority security
interest on any real property assets of such Subsidiary which constitute
Collateral, as the Administrative Agent may reasonably request from time to
time.

 

(B)                                Subsidiary
Charter Documents, Legal Opinions, Etc. 
The Borrowers shall deliver to the Administrative Agent, together with
such Loan Documents, (i) certified copies of such Subsidiary’s Certificate
or Articles of Incorporation or equivalent limited liability company documents,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of
any applicable franchise or similar taxes from the appropriate taxing authority
of each of such jurisdictions, each to be dated a recent date prior to their
delivery to the Administrative Agent, (ii) a copy of such Subsidiary’s
Bylaws, certified by its corporate secretary or an assistant secretary (or
their equivalent) as of a recent date prior to

 

79

 

their
delivery to the Administrative Agent, (iii) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to (a) the fact
that the attached resolutions of the Board of Directors or managing member of
such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the
officers of such Subsidiary executing such Loan Documents, and (iv) a
favorable opinion of counsel to such Subsidiary, in form and substance
reasonably satisfactory to the Administrative Agent and its counsel, as to (a) the
due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Loan
Documents, (c) the enforceability of such Loan Documents against such
Subsidiary, (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Administrative Agent may reasonably request, all of the foregoing
to be reasonably satisfactory in form and substance to the Administrative Agent
and its counsel.

 

5.12                           Interest Rate Protection.  No later than 90 days following the Closing
Date the Borrowers shall enter into one or more Rate Protection Agreements for
the remaining life to maturity of the Loans, and otherwise in form and
substance reasonably satisfactory to the Administrative Agent, with respect to
the notional amount of the Loans such that not less than 50% of the Loans
outstanding at any time are subject to such interest rate protection
agreements.  On the date that the Rate
Protection Agreements are entered into, an Authorized Officer of the Borrowers
shall deliver duly executed counterparts of the Assignment of Rate Protection
Agreement.

 

5.13                           Phase II Mall Recognition Agreement.  On or prior to January 29, 2005 (time being
of the essence), the Administrative Agent shall have received executed
counterparts from GGP, LCR and the Borrowers of the Phase II Mall Recognition
Agreement and any supplements or amendments thereto, all of which shall have
been duly authorized, executed and delivered by the parties thereto, and shall
be certified by an Authorized Officer of each of the Borrowers and LCR as being
true, complete and correct and in full force and effect.

 

6.                                       Borrowers’ Negative Covenants.

 

The Borrowers covenant and agree with each Lender and
each Agent that until the Termination Date, the Borrowers shall perform all of
the covenants set forth in this Section 6.

 

6.1                                 Indebtedness.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:

 

(i)                     Indebtedness
in respect of the Obligations;

 

(ii)                  Indebtedness
existing on the Closing Date and set forth on Schedule 6.1; provided
that interest on such Indebtedness shall accrue until the maturity date
thereof, the scheduled maturity of such Indebtedness shall not be prior to six
(6) months after the Maturity Date and the terms of subordination of such
Indebtedness shall be reasonably acceptable to the Administrative Agent;

 

80

 

(iii)               the
Borrowers and their Subsidiaries may become and remain liable with respect to
Contingent Obligations permitted by subsection 6.4 and upon any matured
obligations actually arising pursuant thereto, the Indebtedness corresponding
to the Contingent Obligations so extinguished;

 

(iv)              the
Borrowers may become and remain liable with respect to the Phase II Mall
Contribution in the initial amount of $25,371,098 and as such amount may be
increased from time to time in order for the Borrowers to perform their
obligation under Section 5.5 of the Disbursement Agreement to keep the Phase II
Project In Balance; provided that interest, if any, on such Indebtedness
shall accrue (or be payable in kind) until the maturity date thereof, the
scheduled maturity of such Indebtedness shall not be prior to six (6) months
after the Maturity Date and the terms of subordination of such Indebtedness
shall be reasonably acceptable to the Administrative Agent;

 

(v)                 so
long as no Event of Default or Potential Event of Default has occurred and is
continuing or would result therefrom (other than a Potential Event of Default
which will be cured by the payment of proceeds from the Indebtedness permitted
under this clause (v)), Phase II Mall Subsidiary Holding may become and
remain liable with respect to subordinated unsecured loans in an aggregate
amount outstanding at any time not to exceed $1,000,000 and such additional
amounts approved by the Administrative Agent in its sole discretion; provided
that interest on such Indebtedness shall accrue (or be payable in kind) until
the maturity date thereof, the scheduled maturity of such Indebtedness shall
not be prior to six (6) months after the Maturity Date and the terms of subordination
of such Indebtedness shall be reasonably acceptable to the Administrative
Agent;

 

(vi)              the
Borrowers and their Subsidiaries may become and remain liable with respect to
indebtedness incurred with respect to Investments permitted under subsection
6.3 (other than subsections (iv), (x) or (xi));

 

(vii)           to
the extent that such incurrence does not result in the incurrence by the
Borrowers or any of their Subsidiaries of any obligation for the payment of
borrowed money of others, Indebtedness of the Borrowers or a Subsidiary
incurred solely in respect of performance bonds, completion guarantees, standby
letters of credit or bankers’ acceptances, letters of credit in order to
provide security for workers’ compensation claims, payment obligations in connection
with self insurance or similar requirements, surety and similar bonds and
statutory claims of lessors, licensees, contractors, franchisees or customers; provided,
that such Indebtedness was incurred in the ordinary course of business of the
Borrowers or any of their Subsidiaries or in connection with the construction
of the Phase II Mall and in an aggregate principal amount outstanding under
this clause at any one time of less than $15,000,000 and that the payment of
such Indebtedness is included in one or more Line Items in the Project Budget;

 

(viii)        Indebtedness
arising from any agreement entered into by either of the Borrowers or any of
their Subsidiaries providing for indemnification, purchase price

 

81

 

adjustment or
similar obligations, in each case, incurred or assumed in connection with an
Asset Sale;

 

(ix)                to
the extent it constitutes Indebtedness, obligations under Hedging Agreements
that are incurred in accordance with subsection 5.12 this Agreement; and

 

(x)                   the
Borrowers and their Subsidiaries may become and remain liable with respect to
Indebtedness under the Phase II Mall Sale Reimbursement Agreement; provided
that the Phase II Mall Sale Reserve Account is not established or funded prior
to the Phase II Mall Release Date and the repayment of any other Indebtedness
thereunder shall not be due and payable and the exercise of rights and remedies
thereunder are not able to be exercised until the Loans and all other
Obligations have been indefeasibly paid and performed.

 

6.2                                 Liens and Related Matters.

 

(A)                              Prohibition on Liens.  The
Borrowers shall not, and shall not permit any of their Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist any Lien on or
with respect to any property or asset of any kind (including any document or
instrument in respect of goods or accounts receivable) of such Borrower or
Subsidiary, whether now owned or hereafter acquired, or any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any
such property, asset, income or profits under the Uniform Commercial Code of
any state or under any similar recording or notice statute, except Permitted
Liens.

 

(B)                                Equitable
Lien in Favor of Lenders.  If
Borrowers or any of their Subsidiaries shall create or assume any Lien upon any
of their respective properties or assets, whether now owned or hereafter
acquired, other than Permitted Liens, they shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness secured thereby as long
as any such Indebtedness shall be so secured; provided that,
notwithstanding the foregoing, this covenant shall not be construed as a
consent by Requisite Lenders to the creation or assumption of any such Lien
which is not a Permitted Lien.

 

(C)                                No
Further Negative Pledges.  Neither
the Borrowers nor any of their Subsidiaries, shall enter into any agreement
prohibiting the creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired other than as provided
herein, in the other Loan Documents, in the Phase II Mall Contribution
Documents, in the Phase II Mall Sale Agreement or in the documents evidencing
Indebtedness which is permitted under subsection 6.1(v) or as required
by applicable law or any applicable rule or order of any Nevada Gaming
Authority.

 

(D)                               No
Restrictions on Subsidiary Distributions to the Borrowers.  The Borrowers will not, and will not permit
any of their Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any of their Subsidiaries  to (i) pay dividends or make any other
distributions on any of such Subsidiary’s capital stock owned by the Borrowers
or any other Subsidiary of the Borrowers,

 

82

 

(ii) repay
or prepay any Indebtedness owed by any such Subsidiaries to the Borrowers,
(iii) make loans or advances to the Borrowers, or (iv) transfer any
of its property or assets to the Borrowers other than (a) as provided herein,
in the other Loan Documents, in the Phase II Mall Contribution Documents or the
documents evidencing Indebtedness which is permitted under subsection 6.1(v),
(b) as otherwise reasonably approved by the Administrative Agent, (c) by reason
of customary non-assignment provisions in leases entered into the ordinary
course of business and consistent with past practices and any leases permitted
hereunder, (d) with respect to clause (iv), the Phase II Mall Sale Agreement or
(e) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements and other similar agreements relating to
the assets or property of Supplier Joint Ventures permitted by subsection
6.3(iv).

 

6.3                                 Investments; Joint Ventures; Formation of
Subsidiaries.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, including any Joint Venture or otherwise form or create any Subsidiary,
except:

 

(i)                     the
Borrowers and their Subsidiaries may make and own Investments in the Phase II
Mall provided that such Investments are otherwise in accordance with
this Agreement, the other Loan Documents and the Phase II Mall Sale Agreement
(unless the Borrowers have demonstrated to the Administrative Agent in its sole
determination that the Borrowers will not own any such Investment which is not
in accordance with the Phase II Mall Sale Agreement on the anticipated Phase II
Mall Release Date);

 

(ii)                  Investments
existing on the Closing Date and described in Schedule 6.3;

 

(iii)               any
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with this Agreement;

 

(iv)              so
long as no Event of Default or Potential Event of Default shall have occurred
and be continuing or would result therefrom, the Borrowers or any of their
Subsidiaries may form and make Investments in new or existing Supplier Joint
Ventures; provided that (a) each such Investment shall appear in
the Project Budget as a separate Line Item, (b) the amount of each such
Investment shall not at any time exceed the amount of such Line Item,
(c) no Supplier Joint Venture shall own or operate or possess any material
license, franchise or right used in connection with the ownership or operation
of the Resort Complex or any material Phase II Project assets, (d) the
Borrowers shall have delivered an Officers’ Certificate which certifies that in
the reasonable judgment of such officer the Investment in such Supplier Joint
Venture will result in an economic benefit to the Borrowers (taking into
account such Investment) as a result of a reduction in the cost of the goods or
services being acquired from the Supplier Joint Venture over the life of the
Investment and (e) neither of the Borrowers nor any of their Subsidiaries shall
incur any liabilities or Contingent Obligations in respect of the obligations
of such Supplier Joint Venture;

 

(v)                 receivables
owing to the Borrowers or any Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance

 

83

 

with customary
trade terms; provided, that such trade terms may include such
concessionary trade terms as the Borrowers or any such Subsidiary deems
reasonable under the circumstances;

 

(vi)              payroll,
travel and similar advances to cover matters that are expected at the time of
such advances ultimately to be treated as expenses for accounting purposes and
that are made in the ordinary course of business;

 

(vii)           the
Borrowers and their Subsidiaries may hold investments consisting of securities
or other obligations received in settlement of debt created in the ordinary course
of business and owing to the Borrowers or any Subsidiary or in satisfaction of
judgments;

 

(viii)        the
Borrowers and their Restricted Subsidiaries may incur any Contingent Obligation
permitted under subsection 6.4 to the extent such Contingent Obligation
constitutes an Investment permitted thereunder;

 

(ix)                the
Borrowers and their Subsidiaries may make and own Investments in Cash
Equivalents;

 

(x)                   the
Borrowers or any of their Subsidiaries may make loans or advances to their
employees or directors or former employees or directors in an amount not to
exceed $2,000,000 in the aggregate outstanding at any time; provided
that (a) each such loan shall appear in the Project Budget as a separate
Line Item and (b) the amount of each such loan shall not at any time exceed the
amount of such Line Item; and

 

(xi)                the
Borrowers and their Subsidiaries may make and own other Investments in an
aggregate amount not to exceed at any time $1,000,000; provided that
(a) each such Investment shall appear in the Project Budget as a separate
Line Item and (b) the amount of each such Investment shall not at any time
exceed the amount of such Line Item.

 

6.4                                 Contingent Obligations.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, create or become or remain
liable with respect to any Contingent Obligation, except:

 

(i)                     the
Borrowers and their Subsidiaries may become and remain liable with respect to
Contingent Obligations under Rate Protection Agreements or other Hedging
Agreements entered into in accordance with subsection 5.12 of this
Agreement;

 

(ii)                  the
Borrowers and their Subsidiaries may become and remain liable with respect to
the Contingent Obligations for Indebtedness permitted under subsection 6.1
to the extent such Borrower or such Subsidiary is permitted to incur such
Indebtedness under subsection 6.1;

 

84

 

(iii)               Investments
permitted under subsection 6.3 to the extent they constitute Contingent
Liabilities;

 

(iv)              the
Borrowers may become and remain liable for customary indemnities under the
Project Documents and Resort Complex Operative Documents to which they are a
party; and

 

(v)                 Phase
II Mall Subsidiary Holding may become and remain liable with respect to
Contingent Obligations under the Phase II Mall Sale Reimbursement Agreement
which are to be paid or performed on and after the Phase II Mall Release Date.

 

6.5                                 Restricted Payments.

 

Borrowers shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Payment, except:

 

(i)                                     the
Borrowers and their Subsidiaries may redeem or purchase any equity interests in
the Borrowers or their Subsidiaries or any Indebtedness of the Borrowers or
their Subsidiaries to the extent required by any Nevada Gaming Authority or any
other applicable gaming authority in order to preserve a material Gaming
License;

 

(ii)                                  the
Borrowers and their Subsidiaries may make payments or distributions of Phase II
Mall Borrower Taxes in accordance with Section 5.3(C); and

 

(iii)                               the
Borrowers may make other Restricted Payments to each other in an amount not to
exceed $1,000,000.

 

6.6                                 Restriction on Fundamental Changes;
Asset Sales; Leases and Acquisitions.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, alter the corporate, capital or legal structure (except
with respect to changes in capital structure to the extent a Change of Control
does not occur as a result thereof) of any Borrower, or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired (other than inventory in the ordinary course of
business), or acquire by purchase or otherwise all or substantially all the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business of any Person,
except:

 

(i)                     as
permitted under the terms of this Agreement or any other Loan Document;

 

(ii)                  the
Borrowers and their Subsidiaries may dispose of obsolete, worn out or surplus
assets or assets no longer used or useful in the business of the Borrowers and
their Subsidiaries in each case to the extent in the ordinary course of
business,

 

85

 

provided that
either (i) such disposal does not materially adversely affect the value of the
Collateral and is not prohibited by the Phase II Mall Sale Agreement (unless
the Borrowers have demonstrated to the Administrative Agent in its sole
determination that such disposition will not delay the anticipated Phase II
Mall Release Date) or (ii) prior to or promptly following such disposal any
such property shall be replaced with other property of substantially equal
utility and a value at least substantially equal to that of the replaced
property when first acquired and free from any Liens other than Permitted Liens
and by such removal and replacement the Borrowers and their Subsidiaries shall
be deemed to have subjected such replacement property to the Lien of the
Collateral Documents in favor of Lenders, as applicable;

 

(iii)               the
Borrowers and their Subsidiaries may have an Event of Loss;

 

(iv)              (a)
Phase II Mall Subsidiary may enter into leases of space in the Phase II Mall
which conform to the requirements of the Phase II Mall Sale Agreement, using a
form of lease which has been approved by Phase II Mall Subsidiary and GGP and
reasonably approved by the Administrative Agent, (b) the Borrowers and their
Subsidiaries may be a party to any lease in effect on the Closing Date, each of
which is set forth on Schedule 6.6 hereto (as such lease may be amended,
modified or supplemented in accordance with the terms of this Agreement) or (c)
enter into any other lease in connection with the business of the Borrowers and
their Subsidiaries as may be permitted under subsection 6.11 so long as
each such lease is permitted under the Phase II Mall Sale Agreement;

 

(v)                 after
Substantial Completion either Borrower may be merged with the other Borrower;

 

(vi)              either
Borrower may sell, lease or otherwise transfer assets to the other Borrower so
long as such sale, lease or transfer is permitted by the Phase II Mall Sale
Agreement or otherwise approved by GGP;

 

(vii)           the
Borrowers may sell receivables for fair market value in the ordinary course of
business;

 

(viii)        the
Borrowers and their Subsidiaries may incur Liens permitted under subsection
6.2;

 

(ix)                the
consummation of the Transactions on the Closing Date and any other transactions
contemplated thereby; and

 

(x)                   on
the Phase II Mall Release Date, Phase II Mall Subsidiary Holding may sell,
transfer and convey the equity interests of Phase II Mall Subsidiary to GGP in
accordance with the Phase II Mall Sale Agreement.

 

Notwithstanding the foregoing, the provisions of this subsection
6.6, clauses (iv)(b) and (c) shall be subject to the
additional provisos that:  (a) no Event
of Default or Potential Event of Default shall exist and be continuing at the
time of such transaction or lease or would occur after as a result of entering
into such transaction or lease (or immediately after any renewal or

 

86

 

extension thereof
at the option of the Borrowers or their Subsidiaries), (b) such transaction or
lease will not materially interfere with, impair or detract from the operation
of the business of the Borrowers and their Subsidiaries, (c) such transaction
or lease is at a fair market rent or value (in light of other similar or
comparable prevailing commercial transactions) and contains such other terms
such that the lease, taken as a whole, is commercially reasonable and fair to
the Borrowers and their Subsidiaries in light of prevailing or comparable
transactions in other shopping venues or other applicable venues, (d) no gaming
or casino operations may be conducted on any space that is subject to such
transaction or lease other than by the LVSI, Venetian and LCR, (e) no lease may
provide that the Borrowers or any of their Subsidiaries may subordinate its
fee, or leasehold interest to any lessee or any party financing any lessee, and
(f) the tenant under such lease shall provide Administrative Agent on behalf of
the Lenders with a Subordination, Non-Disturbance and Attornment Agreement
substantially in the form of Exhibit G-1; provided, however,
the form of Subordination, Non-Disturbance and Attornment Agreement to be
delivered by such tenant party may be in a different form if such form is
otherwise reasonably acceptable to the Administrative Agent unless the
Administrative Agent is satisfied that such lease contains reasonably
comparable (or better) terms as to subordination, attornment and
non-disturbance with respect to its tenant as would be obtained were an
agreement in the form of Exhibit G-1 executed and delivered in which
case no Subordination, Non-Disturbance and Attornment Agreement shall be
required.

 

6.7                                 Sales and Lease-Backs.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, become or remain liable as
lessee or as a guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (i) which Borrowers or
any of their Subsidiaries has sold or transferred or is to sell or transfer to
any other Person or (ii) which Borrowers or any of their Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by the Borrowers or any of their
Subsidiaries to any Person in connection with such lease.

 

6.8                                 Sale or Discount of Receivables.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, sell with recourse, or discount
or otherwise sell for less than the face value thereof, any of its notes or
accounts receivable other than an assignment for purposes of collection in the
ordinary course of business.

 

6.9                                 Transactions with Shareholders and
Affiliates.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly, enter into or permit to exist
any transaction (including the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Borrower or with any
Affiliate of a Borrower, except, that the Borrowers and their Subsidiaries may
enter into and permit to exist:

 

87

 

(i)                     transactions
that are on terms that are not less favorable to the Borrowers or their
Subsidiaries, as the case may be, than those that might be obtained at the time
from Persons who are not such an Affiliate if the Borrowers have delivered to
the Administrative Agent (a) with respect to any transaction involving an
amount in excess of $1,000,000, an Officers Certificate certifying that such
transaction complies with this clause (i), (b) with respect to any
transaction involving an amount in excess of $2,000,000, a resolution adopted
by a majority of the disinterested non-employee directors of the managing
member of the Borrowers or their Subsidiary, as the case may be, approving such
transaction and an Officers Certificate certifying that such transaction
complies with this clause (i) and (c) with respect to any such
transactions that involves aggregate payments in excess of $15,000,000 or that
involve Indebtedness in excess of $15,000,000, an opinion as to the fairness to
such Borrower from a financial point of view issued by an Independent Financial
Advisor at the time such transaction is entered into;

 

(ii)                  purchases
of materials or services from a Supplier Joint Venture by the Borrowers or any
of their Subsidiaries in the ordinary course of business on arm’s length terms;

 

(iii)               any
employment, compensation, indemnification, noncompetition or confidentiality
agreement or arrangement entered into by the Borrowers or any of their
Subsidiaries with their employees or directors in the ordinary course of
business;

 

(iv)              the
payment of reasonable fees to directors of the Borrowers and their Subsidiaries
who are not employees of the Borrowers or their Subsidiaries;

 

(v)                 transactions
between or among Borrowers and any of their wholly-owned Subsidiaries that are
not otherwise prohibited hereby;

 

(vi)              the
transactions contemplated by the Disbursement Agreement and each Project
Document;

 

(vii)           the
transactions contemplated by the Cooperation Agreement;

 

(viii)        the
Master Lease, Phase II Mall Lease, the Phase II Mall Sale Reimbursement
Agreement, the Intercompany Mall Note, the Disbursement Agreement and the
transactions contemplated thereunder, the assignment of the Walgreens Lease by
LCR to Phase II Mall Subsidiary, the assignment of the Phase II Mall Sale
Agreement by LCR to Phase II Mall Subsidiary Holding pursuant to the Phase II
Mall SA Assignment Agreement and the transactions contemplated thereby and the
contemplated transfer of the Phase II Air Parcel to Phase II Mall Subsidiary;

 

(ix)                Investments
permitted by subsection 6.3 and Restricted Payments permitted by subsection
6.5;

 

(x)                   transactions
consummated on the Closing Date in connection with the Transactions;

 

88

 

(xi)                transactions
and agreements permitted by subsection 6.1;

 

(xii)             transactions
permitted by subsection 6.6 (other than clause (iv) thereof
unless approved by the Administrative Agent, which approval will not be
unreasonably withheld if such transaction is on terms that are not less
favorable to the Borrowers or their Subsidiaries, as the case may be, than
those that might be obtained at the time from Persons who are not an Affiliate
of the Borrowers);

 

(xiii)          payments
and other transactions contemplated by the tax sharing agreement contemplated
by subsection 5.3(B); and

 

(xiv)         transactions
and agreements set forth on Schedule 6.9.

 

6.10                           Disposal of Subsidiary Stock.

 

The Borrowers shall not, and shall not permit any of
their Subsidiaries to, directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity Securities
of the Borrowers or any of their Subsidiaries except (i) in connection with the
sale by Phase II Mall Subsidiary Holding of the equity interests of Phase II
Mall Subsidiary to GGP in accordance with the Phase II Mall Sale Agreement,
(ii) to qualify directors if required by applicable law, (iii) to the extent
required by any Nevada Gaming Authority or any other gaming authority in order
to preserve a material Gaming License and (iv) as permitted by Section 6.6
(v).

 

6.11                           Conduct of Business.

 

The Borrowers shall not and shall not permit any of
their Subsidiaries to engage in any business other than (1) owning, holding,
designing, developing, constructing, managing, marketing and operating the
Phase II Mall, (ii) any activity and business incidental, related or similar
thereto, and (iii) engaging in any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto including any
retail, restaurant and entertainment business, retail sales or other activity
or business designed to promote, market, support, develop, construct or enhance
the retail, restaurant and entertainment mall business, retail sales or such
other activity of the Phase II Mall (including, owning and operating joint
ventures to supply materials or services for the construction or operation of
the Phase II Mall so long as proceeds of the Loans are not used in connection
therewith).

 

6.12                           Certain Restrictions on Changes to
Certain Documents.

 

(A)                              Modifications
of Certain Operative Documents and Permits; New Material Contracts or Permits.  Except as permitted under the Disbursement
Agreement and the Cooperation Agreement (to the extent applicable to the Phase
II Project), as applicable, the Borrowers shall not, and shall not permit any
of their Subsidiaries to, agree to any material amendment to, or waive any of
its material rights under, any Permit or Material Contract or enter into new
Material Contracts (other than Project Documents permitted by, and in
accordance with the terms of, the Disbursement Agreement and the Cooperation
Agreement (to the extent applicable to the Phase II Project) or Permits (it
being understood that any Material Contracts which are covered by clause B
or C below shall also be subject to the restrictions set forth

 

89

 

therein)
without in each case obtaining the prior written consent of the Administrative
Agent if, in any such case, such amendment or waiver or new Material Contract
or Permit could reasonably be expected to have a Material Adverse Effect or
otherwise adversely affect Lenders in any material respect.

 

(B)                                Amendments
of Documents Relating to Phase II Mall Contribution.  The Borrowers shall not, and shall not
permit any of their Subsidiaries to, amend or otherwise change the terms of any
documents governing the Phase II Mall Contribution (other than in accordance
with the terms thereof or as contemplated by Section 6.1(iv)), or make
any payment consistent with an amendment thereof or change thereto, if (a) the
effect of such amendment or change is to increase the interest rate or fees on
such Indebtedness, change (to earlier dates) any dates upon which payments of principal
or interest are due thereon, change any event of default or condition to an
event of default with respect thereto (other than to eliminate any such event
of default or increase any grace period related thereto or otherwise change
such event of default in a manner more favorable to such Borrower or such
Subsidiary than the existing event of default), increase the initial principal
amount thereof unless such increase is required to perform the Borrowers’
obligations under Section 5.5 of the Disbursement Agreement, change the
redemption provisions thereof (in a manner less favorable to such Borrower or
such Subsidiary), change the subordination provisions thereof (or of any
guaranty thereof), or change any collateral therefor (other than to release such
collateral).

 

(C)                                Certain
Other Restrictions on Amendments. 
The Borrowers shall not, and shall not permit any of their Subsidiaries
to, agree to any material amendment to, or waive any of its material rights
under the Resort Complex Operative Documents which would require the consent of
the Administrative Agent, without first obtaining the prior written consent of
the Administrative Agent, which consent shall not be unreasonably withheld or
delayed.

 

(D)                               Consent
to Certain Agreements. 
Notwithstanding the foregoing provisions of this subsection 6.12,
on or after the Closing Date, the Borrowers may enter into (1) a separate
agreement or an amendment to the HVAC Services Agreement (to provide for the
provision of heating, ventilation and air conditioning to the Phase II Mall),
(2) amendments to the Cooperation Agreement (to the extent applicable to the
Phase II Project)(to cover the relationship between the Existing Facility and
the Phase II Project and/or the relationship between the Phase II Project and the
Phase II Mall, and to otherwise reflect the fact that the integrated complex
includes, or will include, the Existing Facility and the Phase II Project and
to replace the reference to “one (1) year” in the second sentence of Section 13
of Article X with a reference to “three (3) years”) and (3) the COREA, in each
case, pursuant to the terms of subsection 6.1 of the Disbursement Agreement,
and in each case in form and substance reasonably satisfactory to the
Administrative Agent.

 

6.13                           Capital Expenditures.

 

Prior to Substantial Completion the Borrowers shall
not, and shall not permit their Subsidiaries to, make or incur Capital
Expenditures other than with respect to Phase II Mall Project Costs and
Investments permitted under subsection 6.3(i).

 

90

 

6.14                           Fiscal Year.

 

Neither Borrower shall change its Fiscal Year-end from
December 31.

 

6.15                           Zoning and Contract Changes and
Compliance.

 

Without the prior written approval of the
Administrative Agent, the Borrowers shall not, and shall not permit any of
their Subsidiaries to, initiate or consent to any zoning downgrade of the
Mortgaged Property or use or permit the use of the Mortgaged Property in any
manner that could result in such use becoming a non-conforming use (other than
a non-conforming use permissible under automatic grandfathering provisions)
under any zoning ordinance or any other applicable land use law, rule or
regulation.  The Borrowers shall not,
and shall not permit any of their Subsidiaries to, initiate or consent to any
change in any laws, requirements of Governmental Instrumentalities or
obligations created by private contracts which now or hereafter could
reasonably be likely to materially and adversely affect the ownership,
occupancy, use or operation of the Mortgaged Property without the prior written
consent of the Administrative Agent.

 

6.16                           No Joint Assessment; Separate Lots.

 

Without the prior written approval of the
Administrative Agent, which approval may be granted, withheld, conditioned or
delayed in its sole discretion, the Borrowers shall not suffer, permit or
initiate, and shall not permit any of their Subsidiaries to, suffer, permit or
initiate, the joint assessment of the Mortgaged Property (i) with any
other real property constituting a separate tax lot (other than, prior to
creation of the Phase II Mall Air Parcel, the Site and the Phase II Mall Air
Space, and after such creation, the parcels comprising the Phase II Mall
Parcel) and (ii) with any portion of the Mortgaged Property which may be
deemed to constitute personal property, or any other procedure whereby the Lien
of any Taxes which may be levied against any such personal property shall be
assessed or levied or charged to the Mortgaged Property as a single Lien.

 

6.17                           Application of Mall Sales Proceeds.  The Borrowers shall apply any proceeds
received pursuant to the Phase II Mall Sale Agreement to repay in full all
amounts outstanding under this Agreement within five days of the receipt
thereof before applying to any other obligation or for any other purpose.

 

7.                                       Events of Default.

 

If any of the following conditions or events set forth
in this Section shall occur (any such conditions or events collectively “Events of Default”):

 

7.1                                 Failure to Make Payments When Due.

 

Failure by the Borrowers to pay any installment of
principal on any Loan when due, whether at stated maturity, by acceleration, by
notice of voluntary prepayment, by mandatory prepayment or otherwise; or
failure by the Borrowers to pay any interest on any Loan or any fee or any
other amount due under this Agreement within five days after the date due; or

 

91

 

7.2                                 Default under Other Indebtedness or
Contingent Obligations.

 

(i)  Failure of any Borrower or
any of its Subsidiaries or LVSI or Venetian (or any of their Restricted
Subsidiaries) to pay when due any principal of or interest on or any other
amount payable in respect of one or more items of Indebtedness (other than
Indebtedness of the Borrowers referred to in subsection 7.1) or
Contingent Obligations in an individual principal amount of (x) as to the
Borrowers and their Subsidiaries, $10,000,000 or more or with an aggregate
principal amount of $25,000,000 or more and (y) as to LVSI or Venetian (or any
of their Restricted Subsidiaries), $25,000,000 or more with an aggregate
principal amount of $50,000,000 or more, or in respect of the Intercompany Mall
Note, in each case beyond the end of any grace period provided therefor; or
(ii) breach or default by any Borrower or any of its Subsidiaries or LVSI or
Venetian (or any of their Restricted Subsidiaries) with respect to any other
material term of (a) one or more items of Indebtedness or Contingent
Obligations in the individual or aggregate principal amounts referred to in clause
(i) above (b) the Intercompany Note or (c) any loan agreement,
mortgage, indenture or other agreement relating to such item(s) of Indebtedness
or Contingent Obligation(s), if the effect of such breach or default is to
cause, or to permit the holder or holders of that Indebtedness or Contingent
Obligation(s) (or a trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared due and
payable prior to its stated maturity or the stated maturity of any underlying
obligation, as the case may be (upon the giving or receiving of notice, lapse
of time, both, or otherwise); or

 

7.3                                 Breach of Certain Covenants.

 

Failure of the Borrowers to perform or comply with any
term or condition contained in subsection 2.5, 5.2, 5.13
or Section 6 of this Agreement; or

 

7.4                                 Breach of Warranty.

 

Any representation, warranty, certification or other
statement made by the Borrowers or any of their Subsidiaries in any Loan
Document (other than the Disbursement Agreement) or in any statement or
certificate at any time given by the Borrowers or any of their Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or

 

7.5                                 Other Defaults Under Loan Documents.

 

(i)  Either of
the Borrowers shall default in the performance of or compliance with any term
contained in this Agreement or any of the other Loan Documents (other than the
Disbursement Agreement), other than any such term referred to in any other
subsection of this Section 7, and such default shall not have been
remedied or waived within 30 days after the earlier of (x) an officer of the
Borrowers becoming aware of such default or (y) receipt by the Borrowers of notice
from Administrative Agent or any Lender of such default; or (ii) an Event of
Default shall have occurred and be continuing under the Disbursement Agreement;
or

 

7.6                                 Involuntary Bankruptcy; Appointment of
Receiver, etc.

 

(i) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of a Borrower or any of its
Subsidiaries or LVSI, Venetian or any of their Restricted Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable

 

92

 

bankruptcy,
insolvency or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief shall be granted under any applicable
federal or state law; or (ii) an involuntary case shall be commenced against a
Borrower or any of its Subsidiaries or LVSI, Venetian or any of their
Restricted Subsidiaries, under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or
a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over such Person, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of a Borrower or any of its Subsidiaries or LVSI, Venetian or any of
their Restricted Subsidiaries, for all or a substantial part of its property;
or a warrant of attachment, execution or similar process shall have been issued
against any substantial part of the property of a Borrower or any of its
Subsidiaries or LVSI, Venetian or any of their Restricted Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days
unless dismissed, bonded or discharged; or

 

7.7                                 Voluntary Bankruptcy; Appointment of
Receiver, etc.

 

(i) A Borrower or any of its Subsidiaries or
LVSI, Venetian or any of their Restricted Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or a Borrower or any of its Subsidiaries or
LVSI, Venetian or any of their Restricted Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) a Borrower or any of its
Subsidiaries or LVSI, Venetian or any of their Restricted Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due and in each case a period of 30 days
shall have elapsed; or the Board of Directors of a Borrower or any of its
Subsidiaries or LVSI, Venetian or any of their Restricted Subsidiaries (or any
committee thereof) or of its managing member shall adopt any resolution or
otherwise authorize any action to approve any of the actions referred to in clause
(i) above or this clause (ii); or

 

7.8                                 Judgments and Attachments.

 

Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in excess
of $2,500,000 or (ii) in the aggregate at any time an amount in excess of
$7,500,000 (in either case not adequately covered by insurance as to which a
solvent and unaffiliated insurance company has acknowledged coverage) shall be
entered or filed against a Borrower or any of its Subsidiaries or any of their
respective assets and shall remain unpaid and undischarged, unvacated, unbonded
or unstayed for a period of 60 days (or in any event later than five days prior
to the date of any proposed sale thereunder); or

 

93

 

7.9                                 Dissolution.

 

Any order, judgment or decree shall be entered against
a Borrower or any of its Subsidiaries decreeing the dissolution or split up of
such Person and such order shall remain undischarged or unstayed for a period
in excess of 30 days; or

 

7.10                           Employee Benefit Plans.

 

There shall occur one or more ERISA Events which
individually or in the aggregate results in or might reasonably be expected to
result in liability of a Borrower, or any of its Subsidiaries or any of their
respective ERISA Affiliates in excess of $5,000,000 during the term of this
Agreement; or there shall exist an amount of unfunded benefit liabilities (as
defined in Section 4001(a)(18) of ERISA), individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation any Pension Plans
with respect to which assets exceed benefit liabilities), which exceeds
$10,000,000; or

 

7.11                           Failure of Collateral Document;
Repudiation of Obligations.

 

(i) Any Collateral Document shall cease to be in full
force and effect (other than by reason of a release of Collateral thereunder in
accordance with the terms hereof or thereof, the satisfaction in full of the
Obligations or any other termination of such Collateral Document in accordance
with the terms hereof or thereof) or shall be declared null and void by a
Governmental Instrumentality of competent jurisdiction, or the Administrative
Agent shall not have or shall cease to have a valid and perfected First
Priority Lien in the Collateral for any reason other than the failure of the
Administrative Agent or any Lender to take any action within its control,
except as otherwise contemplated in any Loan Document or (ii) either Borrower
shall contest the validity or enforceability of any Loan Document in writing or
deny in writing that it has any further liability prior to the Termination
Date; or

 

7.12                           Default Under or Termination of
Operative Documents.

 

Any of the Operative Documents (other than the Loan
Documents) shall terminate or be terminated or canceled, prior to its stated
expiration date or either Borrower shall be in default (after the giving of any
applicable notice and the expiration of any applicable grace period) or any
Affiliate of the Borrowers, LVSI or Venetian shall be in default (after the
giving of any applicable notice and the expiration of any applicable grace
period) under any such Operative Documents; provided that a default or
termination under any Operative Document (other than the Phase II Mall Sale
Agreement) shall constitute an Event of Default hereunder only if such default
or termination would reasonably be expected to cause a Material Adverse Effect;
and further  provided that the wrongful termination by GGP of the
Phase II Mall Sale Agreement shall constitute an Event of Default hereunder
only if Phase II Mall Subsidiary Holding fails, within sixty (90) days of such
termination, either (i) to obtain from a lender which has been reasonably
approved by the Administrative Agent a commitment in the amount required to pay
in full the Obligations (other than those which survive the expiration or
earlier termination of the Loan Documents) and having terms and conditions
(including the closing date thereunder) reasonably acceptable to the
Administrative Agent or (ii) to obtain a commitment to purchase the Phase II
Mall from a purchaser which has been reasonably approved by the Administrative
Agent on terms which are no less beneficial to the Borrowers and the Lenders in
any material respect than the Phase II Mall Sale Agreement for an amount which
will pay in full all

 

94

 

Obligations (other
than those which survive the expiration or earlier termination of the Loan
Documents) and all other amounts required to be paid on the date that the Phase
II Mall is to be conveyed in accordance with such agreement and otherwise
reasonably satisfactory to the Administrative Agent and within a reasonable
period of time thereafter to enter into an agreement with such purchaser to
purchase the Phase II Mall and sell the Phase II Mall to such purchaser in
accordance with such agreement.

 

7.13                           Default Under or Termination of Permits.

 

A Borrower or any of its Subsidiaries shall fail to
observe, satisfy or perform, or there shall be a violation or breach of, any of
the material terms, provisions, agreements, covenants or conditions attaching
to or under the issuance to such Person of any material Permit, including the
Gaming License held by LVSI or any such Permit or any material provision
thereof shall be terminated or fail to be in full force and effect or any
Governmental Instrumentality shall challenge or seek to revoke any such Permit
if such failure to perform, breach or termination could reasonably be expected
to have a Material Adverse Effect; or

 

7.14                           Certain Investments.

 

Adelson or any of his Affiliates (other than the
Borrowers and their Subsidiaries) that is not a Subsidiary of LVSI shall
directly acquire or hold any Investment in any Subsidiary of Phase II Mall
Subsidiary Holding other than through Phase II Mall Subsidiary Holding;

 

THEN
(i) upon the occurrence of any Event of Default described in subsection
7.6 or 7.7, each of (a) the unpaid principal amount of and
accrued interest on the Loans and (b) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Borrowers, and the obligation of each Lender to make any Loan
hereunder shall thereupon terminate, and (ii) upon the occurrence and
during the continuation of any other Event of Default, the Administrative Agent
shall, upon the written request or with the written consent of Requisite
Lenders, by written notice to the Borrowers, declare all or any portion of the
amounts described in clauses (a) and (b) above to be, and the
same shall forthwith become, immediately due and payable, and the obligation of
each Lender to make any Loan hereunder shall thereupon terminate.

 

Notwithstanding anything contained in the preceding
paragraph, if at any time within 60 days after an acceleration of the Loans
pursuant to clause (ii) of such paragraph the Borrowers shall pay all
arrears of interest and all payments on account of principal which shall have
become due otherwise than as a result of such acceleration (with interest on
principal and, to the extent permitted by law, on overdue interest, at the
rates specified in this Agreement) and all Events of Default and Potential
Events of Default (other than non-payment of the principal of and accrued
interest on the Loans, in each case which is due and payable solely by virtue
of acceleration) shall be remedied or waived pursuant to subsection 9.6,
then Requisite Lenders, by written notice to the Borrowers, may at their option
rescind and annul such acceleration and its consequences; but such action shall
not affect any subsequent Event of Default or Potential Event of Default or
impair any right consequent thereon. 
The provisions of this paragraph are intended merely to bind Lenders to
a decision which may be made at the election of Requisite Lenders and are not

 

95

 

intended, directly
or indirectly, to benefit the Borrowers, and such provisions shall not at any
time be construed so as to grant the Borrowers the right to require Lenders to
rescind or annul any acceleration hereunder or to preclude Administrative Agent
or Lenders from exercising any of the rights or remedies available to them
under any of the Loan Documents, even if the conditions set forth in this
paragraph are met.

 

8.                                       Agents and Arranger.

 

8.1                                 Appointment.

 

(A)                              Appointment
of the Administrative Agent.  Scotia
Capital is hereby appointed Administrative Agent hereunder and under the other
Loan Documents and each Lender hereby authorizes the Administrative Agent to
act as its agent in accordance with the terms of this Agreement and the other
Loan Documents.  The Administrative
Agent agrees to act upon the express conditions contained in this Agreement and
the other Loan Documents, as applicable. 
The provisions of this Section 8 (other than the second proviso
to the first sentence of subsection 8.6) are solely for the benefit of
the Administrative Agent and the Lenders; the Borrowers shall have no rights as
a third party beneficiary of any of the provisions thereof.  In performing its functions and duties under
this Agreement, the Administrative Agent shall act solely as an agent of the
Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for the Borrowers
or any of their Subsidiaries.

 

(B)                                Appointment
of Supplemental Agents.  It is the
purpose of this Agreement and the other Loan Documents that there shall be no
violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as agent or trustee
in such jurisdiction.  It is recognized
that in case of litigation under this Agreement or any of the other Loan
Documents, and in particular in case of the enforcement of any of the Loan
Documents, or in case the Administrative Agent deems that by reason of any
present or future law of any jurisdiction it may not exercise any of the
rights, powers or remedies granted herein or in any of the other Loan Documents
or take any other action which may be desirable or necessary in connection
therewith, it may be necessary that the Administrative Agent appoint an
additional individual or institution as a separate collateral agent or
collateral co-agent (any such additional individual or institution being
referred to here individually as a “Supplemental
Agent” and collectively as “Supplemental
Agents”).

 

In the event that the Administrative Agent appoints a
Supplemental Agent with respect to any Collateral, (i) each and every
right, power, privilege or duty expressed or intended by this Agreement or any
of the other Loan Documents to be exercised by or vested in or conveyed to the
Administrative Agent with respect to such Collateral shall be exercisable by
and vest in such Supplemental Agent to the extent, and only to the extent,
necessary to enable such Supplemental Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in the
Loan Documents and necessary to the exercise or performance thereof by such
Supplemental Agent shall run to and be enforceable by either the Administrative
Agent or such Supplemental Agent, and (ii) the provisions of this Section 8
and of subsections 9.2 and 9.3 that refer to the
Administrative Agent shall inure to the benefit of such Supplemental Agent and
all

 

96

 

references therein
to the Administrative Agent shall be deemed to be references to the
Administrative Agent and/or such Supplemental Agent, as the context may
require.

 

Should any instrument in writing from the Borrowers be
required by any Supplemental Agent so appointed for more fully and certainly
vesting in and confirming to it such rights, powers, privileges and duties, the
Borrowers shall execute, acknowledge and deliver any and all such instruments
promptly upon request by such Supplemental Agent or the Administrative
Agent.  In case any Supplemental Agent,
or a successor thereto, shall resign or be removed, all the rights, powers,
privileges and duties of such Supplemental Agent, to the extent permitted by
law, shall vest in and be exercised by the Administrative Agent until the
appointment of a new Supplemental Agent.

 

8.2                                 Powers and Duties; General Immunity.

 

(A)                              Powers;
Duties Specified.  Each Lender
irrevocably authorizes Administrative Agent to take such action on such
Lender’s behalf and to exercise such powers, rights and remedies hereunder and
under the other Loan Documents as are specifically delegated or granted to the
Administrative Agent by the terms hereof and thereof, together with such
powers, rights and remedies as are reasonably incidental thereto.  The Administrative Agent shall have only
those duties and responsibilities that are expressly specified in this
Agreement and the other Loan Documents. 
The Administrative Agent may exercise such powers, rights and remedies
and perform such duties by or through its agents or employees.  The Administrative Agent shall not have, by
reason of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this Agreement or any of
the other Loan Documents, expressed or implied, is intended to or shall be so
construed as to impose upon Administrative Agent any obligations in respect of
this Agreement or any of the other Loan Documents except as expressly set forth
herein or therein.

 

(B)                                No
Responsibility for Certain Matters. 
The Administrative Agent shall not be responsible to any Lender for the
execution, effectiveness, genuineness, validity, enforceability, collectibility
or sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statements or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made
by the Administrative Agent to Lenders or by or on behalf of the Borrowers or
any Lender and the transactions contemplated thereby or for the financial
condition or business affairs of the Borrowers or any other Person liable for
the payment of any Obligations, nor shall Administrative Agent be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or as to the existence
or possible existence of any Event of Default or Potential Event of
Default.  Anything contained in this
Agreement to the contrary notwithstanding, the Administrative Agent shall not
have any liability arising from confirmations of the amount of outstanding
Loans or the component amounts thereof.

 

(C)                                Exculpatory
Provisions.  Neither Administrative
Agent nor any of its officers, directors, employees or agents shall be liable
to Lenders for any action taken or omitted by the Administrative Agent under or
in connection with any of the Loan Documents except to the

 

97

 

extent
caused by the Administrative Agent’s gross negligence or willful
misconduct.  The Administrative Agent
shall be entitled to refrain from any act or the taking of any action
(including the failure to take an action) in connection with this Agreement or
any of the other Loan Documents or from the exercise of any power, discretion
or authority vested in it hereunder or thereunder unless and until
Administrative Agent shall have received instructions in respect thereof from
Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 9.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may
be), the Administrative Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. 
Without prejudice to the generality of the foregoing, (i) Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper Person or Persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for the Borrowers and their
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against
Administrative Agent as a result of the Administrative Agent acting or (where
so instructed) refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of Requisite Lenders (or
such other Lenders as may be required to give such instructions under subsection
9.6).

 

(D)                               Administrative
Agent Entitled to Act as Lender. 
The agency hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations upon, the Administrative
Agent in its individual capacity as a Lender hereunder.  With respect to its participation in the
Loans, the Administrative Agent shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not performing
the duties and functions delegated to it hereunder, and the term “Lender” or
“Lenders” or any similar term shall, unless the context clearly otherwise
indicates, include Administrative Agent in its individual capacity.  The Administrative Agent and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with the Borrowers or any
of its Affiliates as if it were not performing the duties specified herein, and
may accept fees and other consideration from the Borrowers for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.

 

(E)                                 Administrative
Agent Determinations.  To the extent the Administrative
Agent is entitled or required to make any determinations under any
intercreditor agreement, the Administrative Agent shall make such
determinations upon the advice of Requisite Lenders.

 

(F)                                 Delegation
of Duties. The Administrative Agent may perform any and all of its duties
and exercise its rights and powers under this Agreement or under any other Loan
Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates. The exculpatory, indemnification and other
provisions of this subsection 8.2 and of subsection 8.4 shall
apply to any Affiliates of the Administrative Agent and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as the Administrative
Agent. All of the rights, benefits, and privileges (including the exculpatory

 

98

 

and
indemnification provisions) of this subsection 8.2 and of subsection
8.4 shall apply to any such sub-agent and to the Affiliates of any such
sub-agent, and shall apply to their respective activities as sub-agent as if
such sub-agent and Affiliates were named herein.  Notwithstanding anything herein to the contrary, with respect to
each sub-agent appointed by the Administrative Agent, (i) such sub-agent shall
be a third party beneficiary under this Agreement with respect to all such
rights, benefits and privileges (including exculpatory rights and rights to
indemnification) and shall have all of the rights and benefits of a third party
beneficiary, including an independent right of action to enforce such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) directly, without the consent or joinder of any other Person,
against either or both of the Borrowers and the Lenders, (ii) such rights,
benefits and privileges (including exculpatory rights and rights to
indemnification) shall not be modified or amended without the consent of such
sub-agent, and (iii) such sub-agent shall only have obligations to the
Administrative Agent and not to either of the Borrowers, any Lender or any other
Person and neither of the Borrowers nor any Lender or any other Person shall
have any rights, directly or indirectly, as a third party beneficiary or
otherwise, against such sub-agent.

 

8.3                                 Representations and Warranties; No
Responsibility for Appraisal of Credit Worthiness.  Each Lender represents and warrants that it
has made its own independent investigation of the financial condition and
affairs of the Borrowers and their Subsidiaries in connection with the making
of the Loans and that it has made and shall continue to make its own appraisal
of the creditworthiness of the Borrowers and their Subsidiaries.  The Administrative Agent shall not have any
duty or responsibility, either initially or on a continuing basis, to make any
such investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter, and the Administrative Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Lenders.

 

8.4                                 Right to Indemnity.  Each Lender, in proportion to its Percentage, severally agrees to
indemnify Administrative Agent, to the extent that Administrative Agent shall
not have been reimbursed by the Borrowers, for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Administrative Agent in exercising its powers, rights and
remedies or performing its duties hereunder or under the other Loan Documents
or otherwise in its capacity as Administrative Agent in any way relating to or
arising out of this Agreement or the other Loan Documents; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Administrative Agent’s gross negligence or willful
misconduct.  If any indemnity furnished
to the Administrative Agent for any purpose shall, in the opinion of the Administrative
Agent, be insufficient or become impaired, the Administrative Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.

 

8.5                                 Successor Administrative Agent.  The Administrative Agent may resign at any
time by giving 30 days’ prior written notice thereof to Lenders and the
Borrowers, and the Administrative Agent may be removed at any time with or
without cause by an instrument or

 

99

 

concurrent
instruments in writing delivered to the Borrowers and the Administrative Agent
and signed by Requisite Lenders.  Upon
any such notice of resignation or any such removal, Requisite Lenders shall
have the right, upon five Business Days’ notice to the Borrowers, to appoint a
successor Administrative Agent (provided that such successor is or
simultaneously therewith becomes a Lender). 
Upon the acceptance of any appointment as Administrative Agent hereunder
by a successor Administrative Agent, that successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall be discharged from its duties and obligations
under this Agreement.  After any
retiring or removed Administrative Agent’s resignation or removal hereunder as
Administrative Agent, the provisions of this Section 8 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Administrative Agent under this Agreement.

 

8.6                                 Collateral Documents.  Each Lender hereby further authorizes the
Administrative Agent, on behalf of and for the benefit of Lenders, to enter
into each Collateral Document as secured party or beneficiary (as applicable),
and each Lender agrees to be bound by the terms of each Collateral Document; provided
that the Administrative Agent shall not (i) enter into or consent to any
material amendment, modification, termination or waiver of any provision contained
in any Collateral Document, or (ii) release any Collateral (except as otherwise
expressly permitted or required pursuant to the terms of this Agreement or the
applicable Collateral Document), in each case without the prior consent of
Requisite Lenders (or, if required pursuant to subsection 9.6, all
Lenders); provided  further, however, that, without further
written consent or authorization from Lenders, the Administrative Agent may
execute any documents or instruments necessary to release any Lien encumbering
any item of Collateral that is the subject of a sale or other disposition of
assets permitted by this Agreement or in connection with any Indebtedness
secured by a Permitted Lien or to which the Lenders have otherwise consented in
accordance with subsection 9.6. 
In connection with any disposition or release of any Collateral pursuant
to the terms of any Loan Document, at the Borrowers’ request and expense, the
Administrative Agent shall (without recourse and without any representation or
warranty) execute and deliver to the Borrowers such documents (including UCC-3
termination statements) as the Borrowers’ may reasonably request to evidence or
effect such disposition or release. Anything contained in any of the Loan
Documents to the contrary notwithstanding, the Borrowers, the Administrative
Agent and each Lender hereby agree that (X) no Lender shall have any right
individually to realize upon any of the Collateral under any Collateral
Document, it being understood and agreed that all powers, rights and remedies
under the Collateral Documents may be exercised solely by the Administrative
Agent for the benefit of Lenders in accordance with the terms thereof, and
(Y) in the event of a foreclosure by the Administrative Agent on any of
the Collateral pursuant to a public or private sale, the Administrative Agent
or any Lender may be the purchaser of any or all of such Collateral at any such
sale and the Administrative Agent, as agent for and representative of Lenders
(but not any Lender or Lenders in its or their respective individual capacities
unless Requisite Lenders shall otherwise agree in writing) shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Obligations as a credit on account of the purchase
price for any collateral payable by the Administrative Agent at such sale.

 

100

 

 

8.7                                 Disbursement Agreement.  Each Lender hereby further authorizes the
Administrative Agent, on behalf of and for the benefit of Lenders, to enter
into the Disbursement Agreement and each Lender agrees to be bound thereby; provided
that the Administrative Agent in its capacity as such hereunder shall not enter
into or consent to any amendment, modification, termination or waiver of any
provision contained in the Disbursement Agreement without the prior consent of
the Requisite Lenders (or, if such amendment, modification, termination or
waiver would result in a change that under subsection 9.6 would require
the consent of all Lenders, then the prior consent of all Lenders); and further
provided that, the Administrative Agent may waive the conditions set
forth in subsections 3.5.1 (solely with respect to any Project Document other
than the Cooperation Agreement), 3.5.2, 3.5.4 (other than as to any
certification regarding the satisfaction of a condition precedent set forth in
section 3.5 of the Disbursement Agreement, the waiver of which requires consent
of the Requisite Lenders), 3.5.5 (other than as to any certification regarding
the satisfaction of a condition precedent set forth in section 3.5 of the
Disbursement Agreement, the waiver of which requires consent of the Requisite
Lenders), 3.5.6, 3.5.8, 3.5.9, 3.5.10 or 3.5.13 of the Disbursement Agreement,
in each case, without obtaining the prior consent of the Requisite Lenders, so
long as (a) the waiver of such condition could not reasonably be expected, in
the reasonable judgment of the Administrative Agent, to have a materially
adverse effect on the Lenders, and (b) substantially concurrently with the
waiver of any such condition, the Administrative Agent shall deliver a notice
to each Lender advising of such waiver and setting forth the specific condition
being waived.

 

8.8                                 The Syndication Agent.  Sumitomo
Mitsui Banking Corporation, in its capacity as the Syndication Agent
hereunder (for so long as it is the Syndication Agent) and Scotia Capital, in
its capacity as the Arranger, shall not have any right, power, obligation,
liability, responsibility or duty under this Agreement (or any other Loan
Document) other than those applicable to it in its capacity as a Lender (to the
extent that it is a Lender hereunder). 
Without limiting the foregoing, Sumitomo Mitsui Banking Corporation, in
its capacity as the Syndication Agent and Scotia Capital, in its capacity as
the Arranger, does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency and trust with the Lenders or for
the Borrowers or any of their Subsidiaries.

 

9.                                       Miscellaneous.

 

9.1                                 Assignments and Participations in Loans.

 

(A)                              General.  Subject to subsection 9.1B, each
Lender shall have the right at any time to (i) sell, assign or transfer to
any Eligible Assignee, or (ii) sell participations to any Eligible
Assignee or any other Person (and in the case of any other Person, with the
approval of the Borrowers) in all or any part of its Commitments or any Loan or
Loans made by it or participations therein or any other interest herein or in
any other Obligations owed to it; provided that no such sale,
assignment, transfer or participation shall, without the consent of the
Borrowers, require the Borrowers to file a registration statement with the Securities
and Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further
that no such sale, assignment or transfer described in clause (i) above
shall be effective unless and until an Assignment Agreement effecting such
sale, assignment or transfer shall have been accepted by the Administrative
Agent and recorded in the Register as provided in subsection 9.1B(ii)
and provided, further that no such

 

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sale,
assignment, transfer or any participation therein may be made separately from a
sale, assignment, transfer or participation of a corresponding interest in the
Commitment and the Loans of the Lender effecting such sale, assignment,
transfer or participation.  Except as
otherwise provided in this subsection 9.1, no Lender shall, as between
the Borrowers and such Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment or transfer of, or any granting of
participations in, all or any part of its Commitments or the Loans or the other
Obligations owed to such Lender.

 

(B)                                Assignments.

 

(i)                     Amounts
and Terms of Assignments.  Each
Commitment, Loan or participation therein, or other Obligation may in whole or
in part (a) be assigned, in any amount to another Lender, or to an
Affiliate of the assigning Lender or another Lender or an Approved Fund, or may
be pledged by a Lender in support of its obligations to such pledgee (without
releasing the pledging Lender from any of its obligations hereunder), or
(b) be assigned in an aggregate amount of not less than $1,000,000 (or
such lesser amount (i) if contemporaneous assignments approved by
Administrative Agent in its sole discretion aggregating not less than
$1,000,000 are being made by one or more Eligible Assignees which are
Affiliates or (ii) as shall constitute the aggregate amount of the Commitments,
Loans and participations therein, and other obligations of the assigning
Lender) to any Eligible Assignee, in each case, with the giving of notice to
the Borrowers and the Administrative Agent; provided that the assignee
shall represent that it has the financial resources to fulfill its commitments
hereunder and such assignment is consented to by the Administrative Agent (in
its sole discretion, not to be unreasonably withheld or delayed), and at any
time other than when an Event of Default has occurred and is continuing, such
assignee shall be acceptable to the Borrowers, such consent not to be unreasonably
withheld or delayed.  To the extent of
any such assignment in accordance with either clause (a) or (b)
above, the assigning Lender shall be relieved of its obligations with respect
to its Commitments, Loans or participations therein, or other Obligations or
the portion thereof so assigned.  The
assignor or assignee to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of $3,500
in respect of each assignment; provided, that only one fee shall be
payable for simultaneous multiple assignments made by a Lender to or from its
Affiliates, and in each case such forms, certificates or other evidence, if
any, with respect to United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be required to deliver to the
Administrative Agent pursuant to subsection 2.7B(iii)(a).  Upon such execution, delivery, acceptance
and recordation, from and after the Assignment Effective Date, (y) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
Agreement, shall have the rights and obligations of a Lender hereunder and
(z) the assigning Lender thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
Agreement, relinquish its rights (other than any rights which survive the termination
of this Agreement under subsection 9.10B) and be released from its
obligations under this Agreement (and, in the case of an Assignment Agreement
covering all or the

 

102

 

remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). 
The Commitments hereunder shall be modified to reflect the Commitment of
such assignee and any remaining Commitment of such assigning Lender and, if any
such assignment occurs after the issuance of Notes hereunder, the assigning
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its applicable Notes to the Administrative
Agent for cancellation, and thereupon new Notes shall be issued to the assignee
and to the assigning Lender, with appropriate insertions, to reflect the new
Commitments and/or outstanding Loans, as the case may be, of the assignee and
the assigning Lender.

 

(ii)                  Acceptance
by the Administrative Agent; Recordation in Register.  Upon its receipt of an Assignment Agreement
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with the processing and recordation fee referred to
in subsection 9.1B(i) and any forms, certificates or other evidence with
respect to United States federal income tax withholding matters that such
assignee may be required to deliver to the Administrative Agent pursuant to subsection
2.7B(iii)(a), the Administrative Agent shall, if Administrative Agent has
consented to the assignment evidenced thereby (to the extent such consent is
required pursuant to subsection 9.1B(i)), (a) accept such
Assignment Agreement by executing a counterpart thereof as provided therein
(which acceptance shall evidence any required consent of the Administrative
Agent to such assignment), (b) record the information contained therein in
the Register (on the same Business Day as it is received if received by 12:00
noon and on the following Business Day if received after such time) and
(c) give prompt notice thereof to the Borrowers.  The Administrative Agent shall maintain a copy of each Assignment
Agreement delivered to and accepted by it as provided in this subsection 9.1B(ii).  The date of such execution of a counterpart
or recordation of a transfer shall be referred to herein as the “Assignment Effective Date.”

 

(C)                                Participations.  The holder of any participation, other than
an Affiliate or an Approved Fund of the Lender granting such participation,
shall not be entitled to require such Lender to take or omit to take any action
hereunder except action directly affecting (i) the extension of the
scheduled final maturity date of any Loan allocated to such participation,
(ii) a reduction of the principal amount of or the rate of interest
payable on any Loan allocated to such participation, or (iii) releasing
all or substantially all of the Collateral, and all amounts payable by the
Borrowers hereunder (including amounts payable to such Lender pursuant to subsections
2.6D and 2.7) shall be determined as if such Lender had not sold
such participation.  The Borrowers and
each Lender hereby acknowledge and agree that, solely for purposes of subsections
9.4 and 9.5, (a) any participation will give rise to a direct
obligation of the Borrowers to the participant and (b) the participant
shall be considered to be a “Lender”.

 

(D)                               Assignments
to Federal Reserve Banks and Trustees. 
In addition to the assignments and participations permitted under the
foregoing provisions of this subsection 9.1, (i) any Lender may
assign and pledge all or any portion of its Loans, the other Obligations owed
to such Lender, and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any operating

 

103

 

circular
issued by such Federal Reserve Bank or (ii) upon notice to the
Administrative Agent any Lender may pledge all or any portion of its Loans,
Commitments, the other Obligations owed to such Lender, and its Notes, to its
creditors or to its trustee in support of its obligations to such creditor or
trustee; provided that (i) no Lender shall, as between the
Borrowers and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such
Federal Reserve Bank or such creditor or trustee be considered to be a “Lender”
or be entitled to require the assigning Lender to take or omit to take any
action hereunder.

 

(E)                                 Information.  Each Lender may furnish any information
concerning the Borrowers and their Subsidiaries in the possession of that
Lender from time to time to assignees and participants (including prospective
assignees and participants), subject to subsection 9.20.

 

(F)                                 Representations
of Lenders.  Each Lender listed on
the signature pages hereof succeeding to an interest in the Commitments and
Loans, as the case may be, hereby represents and warrants as of the Closing
Date or as of the applicable Assignment Effective Date that (i) it is an
Eligible Assignee described in clause (A) of the definition thereof;
(ii) it has experience and expertise in the making of loans such as the Loans;
and (iii) it will make its Loans for its own account in the ordinary course of
its business and without a view to distribution of such Loans within the
meaning of the Securities Act or the Exchange Act or other federal or state
securities laws (it being understood that, subject to the provisions of this
subsection 9.1, the disposition of such Loans or any interests therein
shall at all times remain within its exclusive control).  Each Lender that becomes a party hereto
pursuant to an Assignment Agreement shall be deemed to agree that the representations
and warranties of such Lender contained in Section 2(c) of such Assignment
Agreement are incorporated herein by this reference.

 

(G)                                Approval
Required By Nevada Gaming Laws. 
Notwithstanding anything to the contrary in this Section 9.1, the
rights of the Lenders to make assignments of, and grant participations in, any
or all of its Commitments or any interest therein, herein or in any other
Obligations owed to any such Lender, shall be subject to the approval of the
Nevada Gaming Authorities, to the extent required by the Nevada Gaming Laws.

 

9.2                                 Expenses. 
Whether or not the transactions contemplated hereby shall be
consummated, the Borrowers agree to pay promptly (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and any
consents, amendments, waivers or other modifications thereto; (ii) all the
costs of furnishing all opinions by counsel for the Borrowers (including any
opinions requested by Lenders as to any legal matters arising hereunder) and of
the Borrowers’ performance of and compliance with all agreements and conditions
on its part to be performed or complied with under this Agreement and the other
Loan Documents including with respect to confirming compliance with
environmental, insurance and solvency requirements; (iii) the reasonable
fees, expenses and disbursements of counsel to the Administrative Agent in
connection with the negotiation, preparation, execution and administration of
the Loan Documents and the reasonable fees, expenses and disbursements of
counsel to the Administrative Agent in connection with any consents,
amendments, waivers or other modifications to any Loan Documents (whether or
not effective or executed) and any other documents or matters requested by the
Borrowers; (iv) all the actual costs and reasonable expenses of creating
and perfecting Liens in favor of the Administrative Agent on behalf of

 

104

 

Lenders
pursuant to any Collateral Document, including filing and recording fees,
expenses and taxes, stamp or documentary taxes, search fees, title insurance
premiums, and reasonable fees, expenses and disbursements of counsel to the
Administrative Agent and of counsel providing any opinions that Administrative
Agent or Requisite Lenders may request in respect of the Collateral Documents
or the Liens created pursuant thereto; (v) all the actual costs and
reasonable expenses (including the reasonable fees, expenses and disbursements
of any auditors, accountants or appraisers and any environmental or other
consultants, advisors and agents employed or retained by the Administrative
Agent or its counsel) of obtaining and reviewing any appraisals provided for
under any Loan Documents, any environmental audits or reports provided for under
subsection 5.7B; (vi) the custody or preservation of any of the
Collateral; (vii) all other actual and reasonable costs and expenses
incurred by the Arranger in connection with the syndication of the Commitments
and the negotiation, preparation and execution of the Loan Documents and any
consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; (viii) all sums, costs and expenses under subsection
5.10D and (ix)after the occurrence of an Event of Default, all costs and
expenses, including reasonable attorneys’ fees (including allocated costs of
internal counsel) and costs of settlement, incurred by the Administrative Agent
and Lenders in enforcing any Obligations of or in collecting any payments due
from any Borrower hereunder or under the other Loan Documents by reason of such
Event of Default (including in connection with the sale of, collection from, or
other realization upon any of the Collateral or the enforcement of any Loan
Document) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings.

 

9.3                                 Indemnity.  In
addition to the payment of expenses pursuant to subsection 9.2, whether
or not the transactions contemplated hereby shall be consummated, the Borrowers
agree to defend (subject to the Borrowers’ selection of counsel with the
consent of the Indemnitee, which shall not be unreasonably withheld),
indemnify, pay and hold harmless the Administrative Agent, the Syndication
Agent, the Arranger and Lenders, and the officers, directors, employees,
agents, sub-agents and affiliates of the Administrative Agent, the Syndication
Agent, the Arranger and Lenders (collectively called the “Indemnitees”), from and against any and all
Indemnified Liabilities; provided that the Borrowers shall not have any
obligation to any Indemnitee hereunder with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise solely from the
gross negligence or willful misconduct of that Indemnitee as determined by a
final judgment of a court of competent jurisdiction.

 

As used herein, “Indemnified
Liabilities” means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
actions, judgments, suits, claims (including Environmental Claims), costs
(including the costs of any investigation, study, sampling, testing, abatement,
cleanup, removal, remediation or other response action necessary to remove,
remediate, clean up or abate any Hazardous Materials Activity), expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened by any Person,
whether or not any such Indemnitee shall be designated as a party or a
potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including

 

105

 

securities and
commercial laws, statutes, rules or regulations and Environmental Laws), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of (i) any Operative Documents or the transactions
contemplated hereby or thereby (including Lenders’ agreement to make the Loans
hereunder or the use or intended use of the proceeds thereof or the use or
intended use of any thereof, or any enforcement of any of the Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral), (ii) the statements contained in the commitment letter delivered
by any Lender to the Borrowers with respect thereto, or (iii) any Environmental
Claim or any Hazardous Materials Activity relating to or arising from, directly
or indirectly, any past or present activity, operation, land ownership, or
practice of the Borrowers or any of their Subsidiaries.

 

To the extent that the undertakings to defend,
indemnify, pay and hold harmless set forth in this subsection 9.3 may be
unenforceable in whole or in part because they are violative of any law or
public policy, the Borrowers shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.

 

9.4                                 Set-Off; Security Interest in Deposit
Accounts.  In addition to any rights
now or hereafter granted under applicable law and not by way of limitation of
any such rights, upon the occurrence and during the continuance of any Event of
Default each Lender is hereby authorized by the Borrowers at any time or from
time to time, without notice to the Borrowers or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, including Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time held or owing
by that Lender to or for the credit or the account of the Borrowers against and
on account of the obligations and liabilities of the Borrowers to that Lender
under this Agreement and participations therein and the other Loan Documents, including
all claims of any nature or description arising out of or connected with this
Agreement and participations therein or any other Loan Document, irrespective
of whether or not (i) that Lender shall have made any demand hereunder or (ii)
the principal of or the interest on the Loans or any other amounts due
hereunder shall have become due and payable pursuant to Section 7
and although said obligations and liabilities, or any of them, may be
contingent or unmatured. The Borrowers hereby further grant to the
Administrative Agent and each Lender a security interest in all deposits and
accounts maintained with the Administrative Agent or such Lender as security
for the Obligations.

 

9.5                                 Ratable Sharing.  The Lenders hereby agree among themselves that if any of them
shall, whether by voluntary payment (other than a voluntary prepayment of Loans
made and applied in accordance with the terms of this Agreement), by
realization upon security, through the exercise of any right of set-off or
banker’s Lien, by counterclaim or cross action or by the enforcement of any
right under the Loan Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive payment
or reduction of a proportion of the aggregate amount of principal, interest,
amounts payable in respect of fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the “Aggregate Amounts Due” to such Lender)
which is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other

 

106

 

Lender,
then the Lender receiving such proportionately greater payment shall
(i) notify Administrative Agent and each other Lender of the receipt of
such payment and (ii) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of
a participation simultaneously upon the receipt by such seller of its portion
of such payment) in the Aggregate Amounts Due to the other Lenders so that all
such recoveries of Aggregate Amounts Due shall be shared by all Lenders in
proportion to the Aggregate Amounts Due to them; provided that if all or
part of such proportionately greater payment received by such purchasing Lender
is thereafter recovered from such Lender upon the bankruptcy or reorganization
of the Borrowers or otherwise, those purchases shall be rescinded and the
purchase prices paid for such participations shall be returned to such
purchasing Lender ratably to the extent of such recovery, but without
interest.  The Borrowers expressly
consent to the foregoing arrangement and agree that any holder of a
participation so purchased may exercise any and all rights of banker’s Lien,
set-off or counterclaim with respect to any and all monies owing by the
Borrowers to that holder with respect thereto as fully as if that holder were
owed the amount of the participation held by that holder.

 

9.6                                 Amendments and Waivers.

 

(A)                              No
amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes or other Loan Documents, and no consent to any
departure by the Borrowers therefrom, shall in any event be effective without
the written concurrence of Requisite Lenders (or the Syndication Agent or the
Administrative Agent only if this Agreement or such Loan Document expressly so
provides); provided that no amendment, modification, termination, waiver
or consent shall, unless approved in writing and signed by the Borrowers and
all the Lenders, do any of the following: 
reduce the principal of, or interest on, the Loans or any fees hereunder
(other than any waiver of any increase in the interest rate applicable to any
of the Loans pursuant to subsection 2.2E); unless expressly permitted by
any Loan Document, permit any Borrower to assign or delegate any of its rights
or Obligations under the Loan Documents; change in any manner the definition of
“Percentage”, “Pro Rata Share” or the definition of “Requisite Lenders” (it
being understood that, with the consent of Requisite Lenders, additional
extensions of credit pursuant to this Agreement may be included in
“Percentage”, “Pro Rata Share” and “Requisite Lenders” on substantially the
same terms as the Commitments and the Loans); change in any manner any
provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of all Lenders; postpone any date fixed for the payment
in respect of principal of, or interest on, the Loans or any fees hereunder;
release any Lien granted in favor of the Administrative Agent with respect to
25% or more in aggregate fair market value of the Collateral other than in
accordance with the terms of the Loan Documents (it being understood that the
granting of additional Liens on Collateral is not a release of a Lien on such
Collateral); change in any manner the provisions contained in subsections 7.1,
8.5 or 8.6; provided, further that (i) any such
amendment, modification, termination, waiver or consent which increases the
amount of the Commitment for any Lender shall be effective only if evidenced by
a writing signed by or on behalf of such Lender and (ii) any release of Liens
on Collateral granted to the Administrative Agent with respect to less than 25%
in aggregate fair market value of the Collateral shall only require the consent
of the Requisite Lenders and the Administrative Agent.

 

107

 

(B)                                In
addition, (i) any amendment, modification, termination or waiver of any of
the provisions contained in Section 3 shall be effective only if
evidenced by a writing signed by or on behalf of the Administrative Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver
of any provision of any Note shall be effective without the written concurrence
of the Lender which is the holder of that Note except that to the extent such
amendment, modification, termination or waiver would not otherwise require the
consent of all Lenders, only the holder of such Note or Notes up to the amount
constituting Requisite Lenders shall be required hereunder and (iii) no
amendment, modification, termination or waiver of any provision of Section 7
or of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of the Administrative Agent shall be effective
without the written concurrence of the Administrative Agent.

 

(C)                                Administrative
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that
Lender.  Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.  No notice to or demand on
the Borrowers in any case shall entitle the Borrowers to any other or further
notice or demand in similar or other circumstances.  Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 9.6 shall be binding upon
each Lender at the time outstanding, each future Lender and, if signed by the
Borrowers, on the Borrowers.

 

(D)                               Notwithstanding
the foregoing, if any Lender does not agree to any amendment hereunder, then
the Borrowers may, at their sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in subsection 9.1, including as a condition precedent to such
assignment, (i) Administrative Agent’s consent to the assignee unless not
otherwise required by subsection 9.1 and (ii) payment by the Borrowers
of the registration fee set forth in subsection 9.1B(i), if applicable,
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) such Lender shall
have received irrevocable payment in full in cash of an amount equal to the
outstanding principal of its Loans, accrued interest thereon, and accrued fees
and all other Obligations and other amounts payable to it hereunder (including
amounts payable pursuant to subsection 2.6D) from the assignee or the
Borrowers and (ii) such assignment (together with any other assignments
pursuant to this Section 9.6D or otherwise) will result in such amendment being
approved.

 

9.7                                 Certain Matters Affecting Lenders.

 

(A)                              If
(i) the Nevada Gaming Authority shall determine that any Lender does not meet
suitability standards prescribed under the Nevada Gaming Regulations or
(ii) any other gaming authority with jurisdiction over the gaming business
of LVSI and/or Venetian shall determine that any Lender does not meet its
suitability standards (in any such case, a “Former
Lender”), the Administrative Agent or the Borrowers shall have the
right (but not the duty) to designate bank(s) or other financial institution(s)
(in each case, a “Substitute Lender”)
which may be any Lender or Lenders that agree to become a Substitute Lender and
to assume the rights and obligations of the Former Lender, subject to receipt
by the Administrative Agent of evidence that

 

108

 

such
Substitute Lender is an Eligible Assignee. 
The Substitute Lender shall assume the rights and obligations of the
Former Lender under this Agreement.  The
Borrowers shall bear the costs and expenses of any Lender required by the
Nevada Gaming Authority, or any other gaming authority with jurisdiction over
the gaming business of LVSI and/or Venetian, to file an application for a
finding of suitability in connection with the investigation of an application
by LVSI and/or Venetian for a license to operate a gaming establishment, in
connection with such application for a finding of suitability.

 

(B)                                Notwithstanding
the provisions of subsection 9.7(A), if any Lender becomes a Former
Lender, and if the Administrative Agent or the Borrowers fail to find a
Substitute Lender pursuant to subsection 9.7(A) within any time
period specified by the appropriate gaming authority for the withdrawal of a
Former Lender (the “Withdrawal Period”),
the Borrowers shall immediately prepay in full the outstanding principal amount
of Loans made by such Former Lender, together with accrued interest thereon to
the earlier of (x) the date of payment or (y) the last day of any
Withdrawal Period.

 

9.8                                 Independence of Covenants.

 

All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or
would otherwise be within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or Potential Event of Default if such
action is taken or condition exists.

 

9.9                                 Notices.

 

Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served or sent by telefacsimile or United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail
with postage prepaid and properly addressed; provided that notices to
the Administrative Agent shall not be effective until received; provided
further, any such notice or other communication shall at the request of
the Administrative Agent be provided to any sub-agent appointed pursuant to subsection
8.2F hereto as designated by the Administrative Agent from time to
time.  For the purposes hereof, the
address of each party hereto shall be (i) as to the Borrowers and the
Administrative Agent, set forth under such party’s name on the signature pages
hereof or such other address as shall be designated by such Person in a written
notice delivered to the other parties hereto and (ii) as to each other
Lender, such other address as set forth on Schedule 2.1 or as shall be
designated by such party in a written notice delivered to the Administrative
Agent.

 

9.10                           Survival of Representations,
Warranties and Agreements.

 

(A)                              All
representations, warranties and agreements made herein shall survive the
execution and delivery of this Agreement and the making of the Loans hereunder.

 

(B)                                Notwithstanding
anything in this Agreement or implied by law to the contrary, the agreements of
the Borrowers (other than Phase II Mall Subsidiary after the Phase II Mall
Release

 

109

 

Date)
set forth in subsections 2.6D, 2.7, 5.10D, 9.2, 9.3
and 9.4 and the agreements of Lenders set forth in subsections 8.2C,
8.4, and 9.5 (other than as to Phase II Mall Subsidiary after the
Phase II Mall Release Date) and 9.20 shall survive the payment of the Loans and
the reimbursement of any amounts drawn thereunder, and the termination of this
Agreement.

 

9.11                           Failure or Indulgence Not Waiver;
Remedies Cumulative.

 

No failure or delay on the part of the Administrative
Agent or any Lender in the exercise of any power, right or privilege hereunder
or under any other Loan Document shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other power, right or privilege.  All rights and remedies existing under this
Agreement and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

 

9.12                           Marshalling; Payments Set Aside.

 

Neither Administrative Agent nor any Lender shall be
under any obligation to marshal any assets in favor of the Borrowers or any
other party or against or in payment of any or all of the Obligations.  To the extent that the Borrowers make a
payment or payments to the Administrative Agent or Lenders (or to the
Administrative Agent for the benefit of Lenders), or Administrative Agent or
Lenders enforce any security interests or exercise their rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law,
common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor or related thereto, shall be revived and continued
in full force and effect as if such payment or payments had not been made or
such enforcement or setoff had not occurred.

 

9.13                           Severability.

 

In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

9.14                           Obligations Several; Independent Nature
of Lenders’ Rights.

 

The obligations of Lenders hereunder are several and
no Lender shall be responsible for the obligations or Commitments or
representations of any other Lender hereunder. 
Nothing contained herein or in any other Loan Document, and no action
taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or any other kind of
entity.  The amounts payable at any time
hereunder to each Lender shall be a separate and independent debt, and each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement, subject to the second sentence of subsection 8.6 and it shall
not be necessary for any Lender to be joined as an additional party in any
proceeding for such purpose.

 

110

 

9.15                           Headings.

 

Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose or be given any substantive
effect.

 

9.16                           Applicable Law.

 

THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE
OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

 

9.17                           Successors and Assigns.

 

This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and the successors and assigns of Lenders (it
being understood that Lenders’ rights of assignment are subject to subsection
9.1).  Neither Borrowers’ rights or
obligations hereunder nor any interest therein may be assigned or delegated by
the Borrowers without the prior written consent of all Lenders.

 

9.18                           Consent to Jurisdiction and Service
of Process.

 

ALL JUDICIAL PROCEEDINGS BROUGHT
AGAINST BORROWERS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK.  BY EXECUTING AND DELIVERING THIS
AGREEMENT, BORROWERS, FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES,
IRREVOCABLY

 

(I)                                    ACCEPT GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

 

(II)                                WAIVE ANY DEFENSE OF FORUM NON CONVENIENS;

 

(III)                            AGREE THAT SERVICE OF ALL PROCESS
IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE BORROWERS AT THEIR ADDRESS PROVIDED IN
ACCORDANCE WITH SUBSECTION 9.9;

 

(IV)                           AGREE THAT SERVICE AS
PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER BORROWERS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;

 

111

 

(V)                               AGREE THAT LENDERS RETAIN
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING
PROCEEDINGS AGAINST BORROWERS IN THE COURTS OF ANY OTHER JURISDICTION; AND

 

(VI)                           AGREE THAT THE PROVISIONS OF
THIS SUBSECTION 9.18 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING
AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL
OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.

 

9.19                           Waiver of Jury Trial.

 

EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.  The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims.  Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Agreement, and that each will continue to rely on this waiver in their related
future dealings.  Each party hereto
further warrants and represents that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. 
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 9.19 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER.  In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.

 

9.20                           Confidentiality.

 

Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement in accordance with such
Lender’s customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking or investment practices,
it being understood and agreed by the Borrowers that in any event a Lender may
make disclosures to Affiliates of such Lender or disclosures reasonably required
by any bona  fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein (provided that such assignee, transferee or
participant agrees to also be bound by this subsection 9.20), or
disclosures required or requested by any governmental agency or representative
thereof or pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, each Lender shall

 

112

 

notify the
Borrowers of any request by any Governmental Instrumentality or representative
thereof (other than any such request in connection with any examination of the
financial condition of such Lender by such governmental agency) for disclosure
of any such non-public information; and provided, further that in
no event shall any Lender be obligated or required to return any materials
furnished by the Borrowers or any of their Subsidiaries.  For purposes of this paragraph, “non-public
information” shall not include information that is not acquired from the
Borrowers or any of their Subsidiaries or Affiliates (or Persons acting on
behalf of or retained by the Borrowers or any of their Subsidiaries or
Affiliates), Persons retained by or acting on behalf of the Arranger, the
Administrative Agent, the Syndication Agent and/or the Lenders in connection
with this Agreement and the transactions contemplated hereby or Persons known
by such Lender to be under an obligation of confidentiality to the Borrowers
(it being understood that the Arranger, the Administrative Agent, the
Syndication Agent, the Lenders and their respective Affiliates shall be under
an obligation of confidentiality).

 

9.21                           Counterparts; Effectiveness.

 

This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically attached
to the same document.  This Agreement
shall become effective as of the date hereof.

 

9.22                           USA Patriot Act.

 

Each Lender hereby notifies the Borrowers that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Patriot Act”),
it is required to obtain, verify and record information that identifies the
Borrowers, which information includes the names and addresses of the Borrowers
and other information that will allow such Lender to identify the Borrowers in
accordance with the Patriot Act.

 

9.23                           Electronic Execution of Assignments.

 

The words “execution,” “signed,” “signature,” and words of like import
in any Assignment Agreement shall be deemed to include electronic signatures or
the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or
the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

 

9.24                           Gaming Authorities.

 

The Administrative Agent and each Lender agree to
cooperate with the Nevada Gaming Authorities or any other applicable gaming
authority in connection with the administration of their regulatory
jurisdiction over the Borrowers and their Subsidiaries, including to the extent
not

 

113

 

inconsistent with
the internal policies of such Lender and any applicable legal or regulatory
restrictions the provision of such documents or other information as may be
requested by any such Nevada Gaming Authority or any other applicable gaming
authority relating to the Administrative Agent or any of the Lenders, or the
Borrowers or any of their Subsidiaries, or to the Loan Documents.  Notwithstanding any other provision of the
Agreement, the Borrowers expressly authorize the Administrative Agent and each
Lender to cooperate with the Nevada Gaming Authorities and such other gaming
authorities as described above.

 

114

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

 

	
  BORROWER:

  	
   

  	
  PHASE II MALL
  HOLDING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Lido Casino Resort Holding
  Company, LLC,

  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Lido Intermediate Holding
  Company,

  LLC, its managing member

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Venetian Casino Resort, LLC,
  its

  sole member

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Las Vegas Sands, Inc., its

  managing member

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Harry Miltenberger

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Harry Miltenberger

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  VP Finance, Secretary &
  Chief Accounting Officer

  

 

 

	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  3355 Las Vegas Boulevard South

  
	
   

  	
  Las Vegas, Nevada 89109

  
	
   

  	
  Facsimile:   (702) 414-4421

  
	
   

  	
  Attention:   General Counsel

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Paul, Weiss,
  Rifkind, Wharton & Garrison LLP

  
	
   

  	
  1285 Avenue
  of the Americas

  
	
   

  	
  New York,
  New York 10019

  
	
   

  	
  Facsimile:  (212) 492-0064

  
	
   

  	
  Attention:  Harris B. Freidus, Esq.

  

 

S-1

 

	
  BORROWER:

  	
   

  	
  PHASE II MALL SUBSIDIARY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Phase II Mall Holding, LLC, its
  sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Lido Casino Resort Holding
  Company,

  LLC, its Manager

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Lido Intermediate Holding

  Company, LLC, its managing

  member

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Venetian Casino Resort, LLC,

  its sole member

  
	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Las Vegas Sands, Inc., its

  managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Harry Miltenberger

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Harry Miltenberger

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  VP Finance, Secretary &
  Chief Accounting Officer

  

 

	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  3355 Las Vegas Boulevard South

  
	
   

  	
  Las Vegas, Nevada 89109

  
	
   

  	
  Facsimile:  (702) 414-4421

  
	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  Paul, Weiss,
  Rifkind, Wharton & Garrison LLP

  
	
   

  	
  1285 Avenue
  of the Americas

  
	
   

  	
  New York,
  New York 10019

  
	
   

  	
  Facsimile:  (212) 492-0064

  
	
   

  	
  Attention:  Harris B. Freidus, Esq.

  

 

S-2

 

	 
	
  ADMINISTRATIVE AGENT

  AND LENDER:

  	
  THE BANK OF NOVA SCOTIA

  
	 
	
   

  	
   

  
	 
	
   

  	
  By:

  	
  /s/ Alan Pendergast

  	
   

  
	 
	
   

  	
   

  	
   

  	
  Name:

  	
  Alan Pendergast

  
	 
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	 
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
  The Bank of Nova Scotia

  	
   

  
	
   

  	
  580 California Street, 21st Floor

  
	
   

  	
  San Francisco, California 94104

  
	
   

  	
  Facsimile:   (415) 397-0791

  	
   

  
	
   

  	
  Attention:   Alan Pendergast

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  The Bank of Nova Scotia

  	
   

  
	
   

  	
  Loan Administration

  	
   

  
	
   

  	
  600 Peachtree Street, N.E.

  	
   

  
	
   

  	
  Atlanta, Georgia 30308

  	
   

  
	
   

  	
  Facsimile:   (404) 888-8998

  	
   

  
	
   

  	
  Attention:   Hilda Gabbidon

  	
   

  
	
   

  	
   

  	
  Vicki Gibson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Mayer, Brown, Rowe & Maw LLP

  
	
   

  	
  1675 Broadway

  	
   

  
	
   

  	
  New York, New York 10019

  	
   

  
	
   

  	
  Facsimile:   (212) 849-5565

  	
   

  
	
   

  	
  Attention:   Douglas L.
  Wisner, Esq.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $64,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  25.70%

  	
   

  
											

 

S-3

 

	
  SYNDICATION AGENT AND

  LENDER:

  	
  SUMITOMO MITSUI BANKING

  CORPORATION, NEW YORK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William M. Ginn

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  William M. Ginn

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  	 

	
   

  	
   

  	 

	
   

  	
  277 Park Avenue

  	 

	
   

  	
  New York, New York 10172

  	 

	
   

  	
  Facsimile:   (212) 224-4391

  	 

	
   

  	
  Attention:   Charles J.
  Sullivan

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  Lender’s Commitment:

  	
  $64,250,000

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  Lender’s Percentage:

  	
  25.70%

  	
   

  	 

										

 

S-4

 

	
  LENDER:

  	
  CHANG HWA COMMERCIAL BANK, LTD.,

  LOS ANGELES BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim Chen

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jim Chen

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and General
  Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  333 South Grand Avenue, Suite 600

  
	
   

  	
  Los Angeles, California 90071

  
	
   

  	
  Facsimile:   (213) 620-7227

  
	
   

  	
  Attention:   Cecilia Huynh

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  8.00%

  	
   

  
								

 

S-5

 

	
  LENDER:

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casey Ostrander

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Casey Ostrander

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  	 

	
   

  	
   

  	 

	
   

  	
  500 Woodward Avenue, 7th Floor

  	 

	
   

  	
  MC: 3256

  	 

	
   

  	
  Detroit, Michigan 48226

  	 

	
   

  	
  Facsimile:   (313) 222-9295

  	 

	
   

  	
  Attention:   Casey Ostrander

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  Lender’s Commitment:

  	
  $20,000,000

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  Lender’s Percentage:

  	
  8.00%

  	
   

  	 

									

 

S-6

 

	 
	
  LENDER:

  	
  HUA NAN COMMERCIAL BANK, LTD.

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  By:

  	
  /s/ David Cheng

  	
   

  
	 
	
   

  	
   

  	
   

  	
  Name:

  	
  David Cheng

  
	 
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and General Manager

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  Hua Nan Commercial Bank, Ltd.

  
	
   

  	
  Los Angeles Branch

  
	
   

  	
  707 Wilshire Boulevard, #3100

  
	
   

  	
  Los Angeles, California 91006

  
	
   

  	
  Facsimile:   (213) 362-6617

  
	
   

  	
  Attention:   Howard Hung

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $4,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  1.60%

  	
   

  
									

 

S-7

 

	
  LENDER:

  	
  NEVADA STATE BANK

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Derek
  Braybrooks

  	
   

  	 

	
   

  	
   

  	
   

  	
  Name:

  	
  Derek Braybrooks

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  750 East Warm Springs Road, Suite 400

  
	
   

  	
  Las Vegas, Nevada 89119

  
	
   

  	
  Facsimile:   (702) 914-4537

  
	
   

  	
  Attention:   Derek Braybrooks

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  8.00%

  	
   

  
									

 

S-8

 

	
  LENDER:

  	
  OAK BROOK BANK

  	 

	
   

  	
   

  	 

	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/ Henry Wessel

  	
   

  	 

	
   

  	
   

  	
   

  	
  Name:

  	
  Henry Wessel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  1400 16th Street

  
	
   

  	
  Oak Brook, Illinois 60523

  
	
   

  	
  Facsimile:   (630) 571-0256

  
	
   

  	
  Attention:   Henry Wessel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $7,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  3.00%

  	
   

  
										

 

S-9

 

	
  LENDER:

  	
  STATE BANK OF INDIA, LOS ANGELES

  AGENCY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Soundara
  Kumar 

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Soundara Kumar 

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  707 Wilshire Boulevard

  
	
   

  	
  Los Angeles, California 90017-3587

  
	
   

  	
  Facsimile:   (213) 622-2069

  
	
   

  	
  Attention:   Soundara Kumar

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  4.00%

  	
   

  
								

 

S-10

 

	
  LENDER:

  	
  TAIPEIBANK, LOS ANGELES BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Herbert Y.H.
  Lai

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Herbert Y.H. Lai

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and General Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  700 South Flower Street, Suite 3300

  
	
   

  	
  Los Angeles, California 90017

  
	
   

  	
  Facsimile:   (213) 236-9155

  
	
   

  	
  Attention:   Pinkie Chen

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  4.00%

  	
   

  
									

 

S-11

 

	
  LENDER:

  	
  THE BANK OF EAST ASIA, LIMITED,

  NEW YORK BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stanley H.
  Kung

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Stanley H. Kung

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President and 

  
	
   

  	
   

  	
   

  	
   

  	
  Chief Lending Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  202 Canal Street

  
	
   

  	
  New York, New York 10013

  
	
   

  	
  Facsimile:   (212) 219-3211

  
	
   

  	
  Attention:   Stanley H. Kung

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $5,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  2.00%

  	
   

  
									

 

S-12

 

	
  LENDER:

  	
  THE FARMERS BANK OF CHINA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Po-Chang Ho

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Po-Chang Ho

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President and General Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  601 Figueroa Street, 35th Floor

  
	
   

  	
  Los Angeles, California 90017

  
	
   

  	
  Facsimile:   (213) 489-5195

  
	
   

  	
  Attention:   Nancy Chung

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $10,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  4.00%

  	
   

  
									

 

S-13

 

	 
	
  LENDER:

  	
  THE INTERNATIONAL COMMERCIAL BANK OF CHINA, NEW YORK AGENCY

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	 
	
   

  	
  By:

  	
  /s/ Nae-Yee Lung

  	
   

  
	 
	
   

  	
   

  	
   

  	
  Name:

  	
  Nae-Yee Lung

  
	 
	
   

  	
   

  	
   

  	
  Title:

  	
  SVP & General Manager

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  
	
   

  	
  65 Liberty Street

  
	
   

  	
  New York, New York 10005

  
	
   

  	
  Facsimile:   (212) 766-5006

  
	
   

  	
  Attention:   M.S. Wu

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Lender’s Commitment:

  	
  $15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lender’s Percentage:

  	
  6.00%

  	
   

  
										

 

S-14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]