EX-2.1 2 d867326dex21.htm EX-2.1 EX-2.1

Exhibit 2.1

EXECUTION VERSION

 

 

 

MASTER TRANSACTION AGREEMENT

BY AND AMONG

MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP,

MGM RESORTS INTERNATIONAL

AND

BCORE WINDMILL PARENT LLC,

AND

SOLELY FOR PURPOSES OF THE SPECIFIED SECTIONS,

MGM GROWTH PROPERTIES LLC

AND

BCORE WINDMILL PARENT LLC

DATED AS OF JANUARY 14, 2020

 

 

 


TABLE OF CONTENTS

 

     Page  

ARTICLE     I DEFINITIONS

     3  

Section 1.1

     Definitions      3  

ARTICLE     II THE TRANSACTIONS

     17  

Section 2.1

     Grand PropCo Formation and Contribution      17  

Section 2.2

     Mandalay PropCo Formation and Contribution      18  

Section 2.3

     Pre-Closing Events      18  

Section 2.4

     MGP Share Purchase      19  

Section 2.5

     Interest Purchase Price      20  

Section 2.6

     Issuance and Distribution to MGM      20  

Section 2.7

     Closing      20  

Section 2.8

     Deliveries at the Closing      21  

Section 2.9

     Withholding      23  

ARTICLE     III REPRESENTATIONS AND WARRANTIES OF THE PARTIES

     24  

Section 3.1

     Organization and Qualification      24  

Section 3.2

     Authority      24  

Section 3.3

     Consents and Approvals; No Violations      25  

Section 3.4

     Independent Investigation      25  

ARTICLE     IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF MGP OP

     25  

Section 4.1

     Organization and Qualification      25  

Section 4.2

     Membership Interests      26  

Section 4.3

     Brokers      26  

Section 4.4

     Undisclosed Liabilities      26  

Section 4.5

     No Options      26  

Section 4.6

     No Notices      26  

Section 4.7

     No Default      26  

Section 4.8

     No Legal Actions      27  

Section 4.9

     Compliance      27  

Section 4.10

     ERISA      27  

Section 4.11

     Conflicts Committee Approval      27  

Section 4.12

     Gaming      28  

Section 4.13

     Employees      28  

Section 4.14

     Joint Venture      29  

Section 4.15

     Taxes      29  

Section 4.16

     Mandalay Water Rights      29  

Section 4.17

     No Other Representations and Warranties      29  

 

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TABLE OF CONTENTS

(continued)

 

     Page  

ARTICLE     V ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SPONSOR

     30  

Section 5.1

     Sufficiency of Funds      30  

Section 5.2

     Brokers      30  

Section 5.3

     Compliance      30  

Section 5.4

     Gaming      30  

Section 5.5

     Sponsor Guaranty      31  

Section 5.6

     No Other Representations and Warranties      31  

ARTICLE     VI ADDITIONAL REPRESENTATIONS AND WARRANTIES OF MGM

     32  

Section 6.1

     Organization and Qualification      32  

Section 6.2

     Brokers      32  

Section 6.3

     Undisclosed Liabilities      32  

Section 6.4

     No Options      32  

Section 6.5

     No Notices      32  

Section 6.6

     No Default      32  

Section 6.7

     No Legal Actions      33  

Section 6.8

     Compliance      33  

Section 6.9

     ERISA      33  

Section 6.10

     Gaming      33  

Section 6.11

     Employees      34  

Section 6.12

     Collective Bargaining Agreements      34  

Section 6.13

     Taxes      34  

Section 6.14

     Financial Statements      35  

Section 6.15

     Grand Water Rights      35  

Section 6.16

     Leases      35  

Section 6.17

     No Other Representations and Warranties      35  

ARTICLE     VII COVENANTS

     36  

Section 7.1

     Debt Financing      36  

Section 7.2

     Conduct Prior to the Closing      38  

Section 7.3

     Efforts to Consummate      40  

Section 7.4

     Public Announcements      40  

Section 7.5

     Governmental and Regulatory Approvals and Other Third Party Consents      40  

Section 7.6

     Casualty and Condemnation      41  

Section 7.7

     Costs      42  

Section 7.8

     Prorations      44  

Section 7.9

     Books and Records      44  

Section 7.10

     Basis Information      45  

Section 7.11

     Lock-Up of MGP Class A Shares      45  

Section 7.12

     Certain Interim Covenants of MGP      46  

 

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TABLE OF CONTENTS

(continued)

 

     Page  

ARTICLE     VIII CONDITIONS TO CONSUMMATION OF THE CLOSING

     47  

Section 8.1

     Conditions to Sponsor’s Obligation to Effect the Closing      47  

Section 8.2

     Conditions to MGP OP’s Obligation to Effect the Closing      48  

Section 8.3

     Conditions to MGM’s Obligation to Effect the Closing      49  

Section 8.4

     Conditions to Share Purchaser’s Obligation to Effect the Share Purchase      50  

Section 8.5

     Conditions to MGP’s Obligation to Effect the Share Issuance      51  

ARTICLE     IX TERMINATION RIGHTS

     52  

Section 9.1

     Termination of Agreement      52  

Section 9.2

     Effect of Termination      53  

Section 9.3

     Remedies Upon Termination      54  

ARTICLE     X INDEMNIFICATION

     57  

Section 10.1

     Survival      57  

Section 10.2

     Indemnification by MGP OP      57  

Section 10.3

     Indemnification by MGM      57  

Section 10.4

     Indemnification by Sponsor      58  

Section 10.5

     Limitations on Indemnity      58  

Section 10.6

     Notification of Claims; Third Party Claims      59  

Section 10.7

     Exclusive Remedy      61  

Section 10.8

     Manner of Payment; Tax Treatment of Indemnity Payments      61  

Section 10.9

     Additional Matters      61  

Section 10.10

     Tax Reporting      62  

Section 10.11

     Property Value Allocation      62  

ARTICLE     XI MISCELLANEOUS

     62  

Section 11.1

     Entire Agreement      62  

Section 11.2

     Amendment      62  

Section 11.3

     Assignment      62  

Section 11.4

     Binding Effect      62  

Section 11.5

     Counterparts      63  

Section 11.6

     Governing Law      63  

Section 11.7

     Waiver of Jury Trial      63  

Section 11.8

     Jurisdiction and Venue      63  

Section 11.9

     Construction; Interpretation      63  

Section 11.10

     Notices      64  

Section 11.11

     Severability      66  

Section 11.12

     Third Party Beneficiaries      66  

Section 11.13

     Extension; Waiver      66  

Section 11.14

     Remedies; Specific Performance      67  

Section 11.15

     Further Assurances      67  

Section 11.16

     Confidentiality      67  

Section 11.17

     Non-Recourse      67  

Section 11.18

     As Is, Where Is      68  

Section 11.19

     Lender Matters      69  

 

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Annexes, Exhibits and Schedules:

 

Annex A    Share Purchase Representations and Warranties
Exhibit A-1    Legal Description of the Grand Land
Exhibit A-2    Legal Description of the Mandalay Land
Exhibit B    Form of LLC Agreement
Exhibit C    Form of Master Lease Amendment
Exhibit D    Form of Lease
Exhibit E    Form of Tax Protection Agreement
Exhibit F-1    Form of Grand PropCo Governing Documents
Exhibit F-2    Form of Mandalay PropCo Governing Documents
Exhibit G-1    Form of Grand Deed
Exhibit G-2    Form of Mandalay Deed
Exhibit H    Form of MGM Debt Guaranty
Exhibit I    Form of JV InvestCo and Joint Venture Governing Documents
Exhibit J    Form of Sponsor Guaranty
Exhibit K    Form of Grand Interests Assignment Agreement
Exhibit L    Form of Closing Date Assignment Agreement
Exhibit M-1    Grand Permitted Encumbrances
Exhibit M-2    Mandalay Permitted Encumbrances
Exhibit N    Form of Owner’s Title Affidavit
Exhibit O    Form of FIRPTA Certificate
Exhibit P    Form of Transition Services Agreement
Exhibit Q    Debt Financing Commitment
Exhibit R    Form of Carveout Contribution Agreement
Exhibit S    Form of REIT Opinion
Exhibit T    Title Company
Schedule 1-A    Grand Water Rights
Schedule 1-B    Mandalay Water Rights
Schedule 3.3    Consents and Approvals
Schedule 4.6    No Notices [MGP OP]
Schedule 4.7    No Default [MGP OP]
Schedule 4.8    No Legal Actions [MGP OP]
Schedule 4.13    Liabilities Imposed Under Title IV of ERISA [MGP OP]
Schedule 6.5    No Notices [MGM]
Schedule 6.6    No Default [MGM]
Schedule 6.7    No Legal Actions [MGM]
Schedule 6.11    Liabilities Imposed Under Title IV of ERISA [MGM]
Schedule 6.12    Collective Bargaining Agreements
Schedule 6.14-A    MGM Financial Reports
Schedule 6.14-B    Centralized Assets/Liabilities
Schedule 7.1(b)(h)    Opinions and Certifications
Schedule 7.1(b)(j)    Estoppels, Subordination Agreements, SNDAs and/or Certificates
Schedule 7.2(a)    Conduct Prior to the Closing – Mandalay Real Property
Schedule 7.2(b)    Conduct Prior to the Closing – Grand Real Property
Schedule 7.7    Title Insurance Costs


MASTER TRANSACTION AGREEMENT

This Master Transaction Agreement (as the same may be amended, supplemented or otherwise modified, this “Agreement”), by and among MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP, a Delaware limited partnership (“MGP OP”), MGM RESORTS INTERNATIONAL, a Delaware corporation (“MGM”), and BCORE WINDMILL PARENT LLC, a Delaware limited liability company (“Sponsor”), and, solely for purposes of the Specified Sections (as defined below), MGM Growth Properties LLC, a Delaware limited liability company (“MGP”) and BCORE WINDMILL PARENT LLC (“Share Purchaser”), is dated as of January 14, 2020. MGP OP, MGM and Sponsor are each referred to herein as a “Party” and collectively as the “Parties”; provided that for purposes of the Specified Sections, each of MGP and Share Purchaser shall also be a “Party”.

RECITALS

WHEREAS, as of the date hereof, MGM indirectly owns all of the issued and outstanding limited liability company interests in MGM Grand Hotel, LLC, a Nevada limited liability company (“Grand Owner”), and Grand Owner is the owner of the Grand Real Property;

WHEREAS, prior to the Closing, (i) MGM will cause Grand Owner to form a new Delaware limited liability company, MGM Grand PropCo, LLC (“Grand PropCo”), the sole member of which will be Grand Owner, and (ii) MGM will cause Grand Owner to contribute the Grand Real Property to Grand PropCo (the “Grand Contribution”);

WHEREAS, as of the date hereof, MGP OP owns, directly or indirectly, all of the issued and outstanding limited liability company interests in MGP Lessor, LLC, a Delaware limited liability company (“Mandalay Owner”), and Mandalay Owner is the owner of the Mandalay Real Property;

WHEREAS, prior to the Closing, (i) MGP OP will cause Mandalay Owner to form a new Delaware limited liability company, Mandalay PropCo, LLC (“Mandalay PropCo”), the sole member of which will be Mandalay Owner, and (ii) MGP OP will cause Mandalay Owner to contribute the Mandalay Real Property to Mandalay PropCo (the “Mandalay Contribution”; and together with the Grand Contribution, collectively, the “Initial Property Contribution”);

WHEREAS, prior to the Closing, (i) MGP OP will form a new Delaware limited liability company (“JV InvestCo”), the sole member of which will be MGP OP, and then (ii) MGP OP will cause JV InvestCo to form a new Delaware limited liability company (the “Joint Venture”), the initial sole member of which will be JV InvestCo;

WHEREAS, prior to the Closing, MGP OP will cause Mandalay PropCo to borrow $1,304,625,000 (the “Bridge Loan Amount”) pursuant to a third party bridge loan (the “Bridge Loan”), which Bridge Loan will be secured by the Mandalay Real Property, and MGP OP will cause Mandalay PropCo to distribute the proceeds of the Bridge Loan to MGP OP to repay a portion of certain existing debt of MGP OP, as designated by MGP OP (the “MGP OP Debt Refinancing”);


WHEREAS, following the Initial Property Contribution and the making of the Bridge Loan, and at the Closing, MGM will cause Grand Owner to contribute to MGP OP (the “Grand Transfer”) 100% of the issued and outstanding limited liability company interests in Grand PropCo (the “Grand Membership Interests”), pursuant to an assignment agreement, substantially in the form attached hereto as Exhibit K (the “Grand Interests Assignment Agreement”);

WHEREAS, following the making of the Bridge Loan and at the Closing, MGP OP will (i) contribute the Grand Membership Interests and (ii) cause Mandalay Owner to contribute 100% of the issued and outstanding limited liability company interests in Mandalay PropCo (the “Mandalay Membership Interests”; and the Mandalay Membership Interests together with the Grand Membership Interests, collectively, the “Membership Interests”) to the Joint Venture (or a direct or indirect wholly-owned Subsidiary thereof) pursuant to an assignment agreement, substantially in the form attached hereto as Exhibit L (the “Closing Date Assignment Agreement”);

WHEREAS, at the Closing, Sponsor will contribute cash in the amount of the Interest Purchase Price to the Joint Venture in exchange for the issuance to Sponsor (or Sponsor JV Member) (the “Interests Acquisition”) of 49.9% of the issued and outstanding limited liability company interests in the Joint Venture (such percentage of such interests in the Joint Venture, the “Joint Venture Interests”);

WHEREAS, MGP OP will cause the Joint Venture to disburse Sponsor’s cash contribution of the Interest Purchase Price entirely to repay a portion of the Bridge Loan;

WHEREAS, at the Closing and simultaneously with the consummation of the Interests Acquisition, MGP OP shall cause JV InvestCo to and Sponsor shall (or Sponsor shall cause its wholly-owned subsidiary (“Sponsor JV Member”) to) enter into an amended and restated limited liability company agreement (the “LLC Agreement”) of the Joint Venture, substantially in the form attached hereto as Exhibit B;

WHEREAS, at the Closing, MGP OP and Sponsor shall cause the Joint Venture (or one or more of its wholly-owned Subsidiaries) to obtain the Debt Financing and, in connection therewith, MGM will provide a guaranty in the form of Exhibit H attached hereto (the “MGM Debt Guaranty”);

WHEREAS, at the Closing, MGP OP and Sponsor shall cause the Joint Venture to disburse the Debt Financing Amount as follows: (a) to repay the remaining portion of the Bridge Loan in full, (b) an amount equal to the Debt Financing Distribution Amount shall be distributed to MGP OP (the “Debt Financing Distribution”) and (c) the remaining proceeds shall be used to pay the Joint Venture Costs;

WHEREAS, at the Closing, MGP OP shall distribute a portion of the proceeds received in the Debt Financing Distribution to MGM and issue the MGM Consideration OP Units to MGM (the “OP Unit Issuance”);

 

2


WHEREAS, subject to the terms and conditions set forth in this Agreement, on the Closing Date and immediately following the Interests Acquisition, (i) MGP OP will cause Mandalay Owner and MGM will cause MGM Lessee, LLC (“Master Lease Tenant”) to enter into that certain Sixth Amendment to Master Lease substantially in the form attached hereto as Exhibit C (the “Master Lease Amendment”), (ii) MGP OP and Sponsor will cause the Joint Venture to cause each of Grand PropCo and Mandalay PropCo (individually or collectively, as the context may require, “Landlord”) and MGM will cause MGM Lessee II, LLC, a Delaware limited liability company, its wholly-owned Subsidiary (“Tenant”) to enter into that certain Master Lease, substantially in the form attached hereto as Exhibit D (the “Lease”), pursuant to which, among other things, Grand PropCo, as landlord, will lease the Grand Real Property to Tenant, as tenant, and Mandalay PropCo, as landlord, will lease the Mandalay Real Property to Tenant, as tenant, and MGM will deliver to Landlord a guaranty of the Lease (the “Lease Guaranty”) in the form attached to the Lease as Exhibit E, (iii) MGM will cause Tenant and the Operating Subtenants (as defined in the Lease) to enter into the Operating Subleases (as defined in the Lease), and (iv) MGM will cause each Operating Subtenant to enter into a Guaranty of Master Lease;

WHEREAS, subject to the terms and conditions of this Agreement, on the Closing Date and immediately following the Interests Acquisition, Share Purchaser shall purchase 4,891,395 Class A common shares representing limited liability company interests in MGP (“MGP Class A Shares”) pursuant to a registered offering on the terms more particularly described in Section 2.4;

WHEREAS, concurrently with the execution of this Agreement, as an inducement to MGM and MGP OP entering into this Agreement, BREIT Operating Partnership L.P., a Delaware limited partnership (“Sponsor Guarantor”), has delivered to MGM and MGP OP a Guaranty substantially in the form attached hereto as Exhibit J (the “Sponsor Guaranty”), pursuant to which Sponsor Guarantor is guaranteeing obligations of Sponsor under this Agreement as more particularly set forth therein.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

Affiliate” (including, with a correlative meaning, “affiliated”) means, when used with respect to a specified Person, any other Person that directly or indirectly, through one (1) or more intermediaries, controls, is controlled by or is under common control with such specified Person. For the purpose of this definition, “control” (including with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that, for purposes of this Agreement and the Ancillary Documents, none of MGP or its Subsidiaries shall be deemed to be an Affiliate of MGM or any of its Subsidiaries (except for MGP’s Subsidiaries), and none of MGM or any of its Subsidiaries (except for MGP’s Subsidiaries) shall be deemed to be an Affiliate of MGP or its Subsidiaries.

 

3


Aggregate Debt Financing Costs” shall have the meaning set forth in Section 7.7(h).

Agreement” shall have the meaning set forth in the preamble of this Agreement.

Ancillary Documents” means each other agreement, document, instrument and/or certificate contemplated by this Agreement or necessary or appropriate to effectuate the purposes of this Agreement to be executed and, if applicable, recorded among the appropriate land records, in connection with the Transactions, including, the documents to be delivered pursuant to Article II.

Bad Boy Debt Guaranty” shall have the meaning set forth in the definition of Debt Financing (as set forth in this Section 1.1).

Bankruptcy and Equity Exception” shall mean the extent to which (a) enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and (b) availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding thereof may be brought.

Breaching Party” shall have the meaning set forth in Section 9.3(b).

Bridge Loan” shall have the meaning set forth in the recitals of this Agreement.

Bridge Loan Amount” shall have the meaning set forth in the recitals of this Agreement.

Business Day” means any day, other than a Saturday, Sunday and any day that is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in the State of New York or the State of Nevada are authorized or required by Law or other governmental action to close.

Carveout Contribution Agreement” means an agreement substantially in the form of Exhibit R attached hereto.

Casualty Event” means the damage or destruction of the Real Property of any portion thereof by fire or other casualty.

Chancery Court” shall have the meaning set forth in Section 11.8.

Closing” shall have the meaning set forth in Section 2.7.

Closing Date” shall have the meaning set forth in Section 2.7.

Closing Date Assignment Agreement” shall have the meaning set forth in the recitals of this Agreement.

 

4


Code” means the Internal Revenue Code of 1986, as amended.

Commission” shall have the meaning set forth in Section 1.10 of Annex A.

Condemnation” means the commencement of any condemnation proceeding or other proceeding in eminent domain by a Governmental Entity for the taking of all or any portion of the Real Property.

Data Room” means the virtual data room hosted by Donnelley Financial Solutions Venue with respect to the Transactions to which MGM has provided access to MGP OP and Sponsor.

Debt Financing” means one or more mortgage and/or mezzanine financings incurred at the Closing by the Joint Venture or one or more of its wholly-owned Subsidiaries (including Landlord) on terms substantially consistent with the Debt Financing Commitment and otherwise reasonably acceptable to Sponsor and MGP OP and having the following characteristics:

(i) the principal amount of the Debt Financing must be between sixty percent (60%) and sixty-seven and one-half percent (67.5%) of the Property Value Amount and shall be Nonrecourse Indebtedness (as defined in the Tax Protection Agreement) and shall be fully advanced at the Closing;

(ii) MGM and MGP OP and their respective Affiliates shall have no liability or obligation in any respect for any such financing (other than, with respect to MGM, the MGM Debt Guaranty and, with respect to MGP OP, the Bad Boy Debt Guaranty) and none of the Real Property shall be encumbered by such financing unless and until the Closing occurs;

(iii) MGP OP and Sponsor Guarantor will each deliver a guaranty of non-recourse carve-outs (including actual damages for “bad boy” acts and full recourse for voluntary bankruptcy and collusive involuntary bankruptcy filings affecting any Landlord and other customary “springing recourse” events, to be negotiated with the lender(s) under the Debt Financing) (such guaranty to be delivered by MGP OP and Sponsor Guarantor, the “Bad Boy Debt Guaranty”); and

(iv) the lender or lenders under the Debt Financing shall acknowledge and accept the MGM Debt Guaranty.

Debt Financing Amount” means the principal amount of the Debt Financing, which shall be advanced in full at the Closing.

Debt Financing Commitment” means that certain commitment letter with respect to the Debt Financing attached hereto as Exhibit Q (as such commitment letter may be amended or modified with the reasonable consent of MGP OP and Sponsor).

Debt Financing Costs” shall have the meaning set forth in Section 7.1(b).

Debt Financing Distribution” shall have the meaning set forth in the recitals of this Agreement.

 

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Debt Financing Distribution Amount” means an aggregate amount equal to (a) the Debt Financing Amount minus (b) the Bridge Loan Amount plus (c) the Interest Purchase Price minus (d) the Joint Venture Costs.

Debt Financing Hedging Fee” means the Hedging Fee (as defined in the Debt Financing Commitment) payable to Lender (as defined in the Debt Financing Commitment) pursuant to the Debt Financing Commitment and the Hedging Letter (as defined in the Debt Financing Commitment).

Debt Financing Sources” shall have the meaning set forth in Section 11.19.

Defense Notice” shall have the meaning set forth in Section 10.6(b).

DTC” shall have the meaning set forth in Section 2.4(a).

Employee Benefit Plan” means any “employee benefit plan” as that term is defined in Section 3(3) of ERISA, whether or not subject to ERISA, and any other employment, change-in-control, retention, severance, salary continuation, bonus, incentive, stock option, stock purchase, retirement, pension, welfare, vacation, fringe benefit, profit sharing, deferred compensation, and other employee benefit plan, policy, program, agreement or arrangement of any kind.

Encumbrance” means any claim, hypothecation, deed of trust, deed to secure debt, lien, security interest, equitable interest, mortgage, pledge, easement, encroachment, right of first offer, title defect, adverse claim charge, or refusal or similar encumbrance or restriction of any kind, including any restriction on or transfer or other assignment, as security or otherwise, of or relating to use, quiet enjoyment, voting, transfer, receipt of income or exercise of any other attribute of ownership.

Enforcement Costs” shall have the meaning set forth in Section 9.3(a).

ERISA” shall have the meaning set forth in Section 4.10.

Exchange Act” shall have the meaning set forth in Section 1.3 of Annex A.

Executive Order” shall have the meaning set forth in Section 4.9(a).

Existing Lease” means “Existing Sublease” as such term is defined in the Lease.

Existing Management Agreement” means “Existing Management Agreement” as such term is defined in the Lease.

Express Representations” shall have the meaning set forth in Section 11.18.

Extending Party” shall have the meaning set forth in Section 2.7.

Forward Settlement” shall have the meaning set forth in Section 1.4 of Annex A.

Gaming Authority” means any Governmental Entity that holds regulatory, licensing or Permit authority over gambling, gaming, lotteries, horse racing or casino activities conducted by MGM, MGP OP or Sponsor or any of their respective Affiliates, including, but not limited to, the Nevada Gaming Commission and the Nevada Gaming Control Board.

 

6


Gaming Laws” means all Laws governing or relating to MGM, MGP OP or Sponsor or any of their respective Affiliates and the gambling, gaming, lottery, horse racing or casino activities and operations of MGM, MGP OP or Sponsor or any of their respective Affiliates, in each case, as amended from time to time, including, but not limited to, the Nevada Gaming Control Act and the regulations promulgated thereunder.

Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a corporation are its certificate of incorporation and by-laws, the “Governing Documents” of a limited partnership are its limited partnership agreement and certificate of limited partnership and the “Governing Documents” of a limited liability company are its operating agreement and certificate of formation.

Government Lists” shall have the meaning set forth in Section 4.9(b).

Governmental Entity” means any (a) Gaming Authority, (b) federal, state, local, municipal, foreign or other government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, (c) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (d) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or Taxing authority or power of any nature, including any arbitral tribunal.

Grand Contribution” shall have the meaning set forth in the recitals of this Agreement.

Grand Deed” shall have the meaning set forth in Section 2.1(c)(i).

Grand Excluded Assets” shall have the meaning set forth in the definition of Grand Real Property (as set forth in this Section 1.1).

Grand Fixtures” shall have the meaning set forth in the definition of Grand Real Property (as set forth in this Section 1.1).

Grand Improvements” shall have the meaning set forth in the definition of Grand Real Property (as set forth in this Section 1.1).

Grand Interests Assignment Agreement” shall have the meaning set forth in the recitals of this Agreement.

Grand Land” shall have the meaning set forth in the definition of Grand Real Property (as set forth in this Section 1.1).

Grand Membership Interests” shall have the meaning set forth in the recitals of this Agreement.

 

7


Grand Owner” shall have the meaning set forth in the recitals of this Agreement.

Grand Permitted Encumbrances” means the matters set forth on Exhibit M-1 attached hereto, together with restrictions on any subsequent transfer imposed by state and federal securities laws and/or Gaming Laws.

Grand PropCo” shall have the meaning set forth in the recitals of this Agreement.

Grand PropCo Contribution” shall have the meaning set forth in Section 2.1(b).

Grand PropCo Conveyance Documents” shall have the meaning set forth in Section 2.1(c).

Grand Property Value Amount” shall have the meaning set forth in Section 10.11.

Grand Real Property” means:

(a) the real property or properties described in Exhibit A-1 (collectively, the “Grand Land”);

(b) all buildings, structures, and other improvements of every kind now or hereafter located on the Grand Land or connected thereto, including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site to the extent Grand Owner has obtained any interest in the same), parking areas and roadways appurtenant to such buildings and structures (collectively, the “Grand Improvements”);

(c) all easements, rights and appurtenances, covenants, development rights, mineral, gas and oil rights and other rights appurtenant to the Grand Land and/or the Grand Improvements, all right, title and interest of Grand Owner, if any, in and to any land lying in the bed of any street, road, avenue or alley, open or closed, relating to, in front of or adjoining the Grand Land and the Grand Improvements and to the center line thereof;

(d) all equipment, machinery, fixtures, and other items of property, including all components thereof, that are now or hereafter located in, on or used in connection with and permanently affixed to or otherwise incorporated into the Grand Improvements, together with all replacements, modifications, alterations and additions thereto (collectively, the “Grand Fixtures”); and

(e) the Grand Water Rights; provided, however, that it is agreed by the Parties that no other water rights are included in the “Grand Real Property” or will be conveyed to Grand PropCo.

The Grand Real Property shall not, for any purposes, include those assets described on Schedule 1 of the Lease (collectively, the “Grand Excluded Assets”).

Grand Title Policy” shall mean an ALTA owner’s title insurance policy issued by the Title Company (as co-insurers) insuring Grand PropCo’s title to the Grand Real Property, subject only to the Grand Permitted Encumbrances, in an amount equal to $2,504,795,000.

 

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Grand Transfer” shall have the meaning set forth in the recitals of this Agreement.

Grand Water Rights” shall have the meaning set forth in Schedule 1-A.

Guaranty of Master Lease” shall mean that certain Guaranty of Master Lease Documents (by the Operating Subtenants on a joint and several basis), substantially in the form of the Lease Guaranty.

Indemnification Deductible” shall have the meaning set forth in Section 10.2.

Indemnification Notice” shall have the meaning set forth in Section 10.6(a).

Indemnified Party” shall have the meaning set forth in Section 10.6(a).

Indemnifying Party” shall have the meaning set forth in Section 10.6(a).

Initial Closing Date Extension” shall have the meaning set forth in Section 2.7.

Initial Property Contribution” shall have the meaning set forth in the recitals of this Agreement.

Interest Purchase Price” means an aggregate amount equal to forty-nine and nine-tenths percent (49.9%) of the positive difference of (i)(a) the Property Value Amount plus (b) the Joint Venture Costs less (ii) the Debt Financing Amount.

Interests Acquisition” shall have the meaning set forth in the recitals of this Agreement.

Joint Venture” shall have the meaning set forth in the recitals of this Agreement.

Joint Venture Costs” shall have the meaning set forth in Section 7.7(b).

Joint Venture Interests” shall have the meaning set forth in the recitals of this Agreement.

JV InvestCo” shall have the meaning set forth in the recitals of this Agreement.

Landlord” shall have the meaning set forth in the recitals of this Agreement.

Law” means any statute, law, ordinance, regulation, rule, code, order, injunction, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Entity.

Lease” shall have the meaning set forth in the recitals of this Agreement.

Lease Guaranty” shall have the meaning set forth in the recitals of this Agreement.

 

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Liabilities” means any and all debts, losses, damages, adverse claims, guarantees, liabilities, costs, expenses, Taxes, interest and obligations, whether accrued or fixed, absolute or contingent, liquidated or unliquidated, matured or unmatured, reserved or unreserved, direct or indirect, or determined or determinable, including those arising under any law, claim (including any third Person product liability claim), demand, action, whether asserted or unasserted, or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Entity and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, whether in contract, tort, strict liability or otherwise, in each case, including all costs and expenses relating thereto.

Liability Limitation” shall have the meaning set forth in Section 9.3(a).

LLC Agreement” shall have the meaning set forth in the recitals of this Agreement.

Lock-Up Period” shall have the meaning set forth in Section 7.11(a).

Loss” means any and all damages, liabilities, losses, obligations, claims of any kind, interest and expenses (including reasonable fees and expenses of attorneys).

Mandalay Contribution” shall have the meaning set forth in the recitals of this Agreement.

Mandalay Deed” shall have the meaning set forth in Section 2.2(c)(i).

Mandalay Excluded Assets” shall have the meaning set forth in the definition of Mandalay Real Property (as set forth in this Section 1.1).

Mandalay Fixtures” shall have the meaning set forth in the definition of Mandalay Real Property (as set forth in this Section 1.1).

Mandalay Improvements” shall have the meaning set forth in the definition of Mandalay Real Property (as set forth in this Section 1.1).

Mandalay Land” shall have the meaning set forth in the definition of Mandalay Real Property (as set forth in this Section 1.1).

Mandalay Membership Interests” shall have the meaning set forth in the recitals of this Agreement.

Mandalay Owner” shall have the meaning set forth in the recitals of this Agreement.

Mandalay Permitted Encumbrances” means the matters set forth on Exhibit M-2 attached hereto, together with restrictions on any subsequent transfer imposed by state and federal securities laws and/or Gaming Laws.

Mandalay PropCo” shall have the meaning set forth in the recitals of this Agreement.

Mandalay PropCo Contribution” shall have the meaning set forth in Section 2.2(b).

Mandalay PropCo Conveyance Documents” shall have the meaning set forth in Section 2.2(c).

 

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Mandalay Real Property” means:

(a) the real property or properties described in Exhibit A-2 (collectively, the “Mandalay Land”);

(b) all buildings, structures, and other improvements of every kind now or hereafter located on the Mandalay Land or connected thereto, including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site to the extent Mandalay Owner has obtained any interest in the same), parking areas and roadways appurtenant to such buildings and structures (collectively, the “Mandalay Improvements”);

(c) all easements, rights and appurtenances, covenants, development rights, mineral, gas and oil rights and other rights appurtenant to the Mandalay Land and/or the Mandalay Improvements, all right, title and interest of Mandalay Owner, if any, in and to any land lying in the bed of any street, road, avenue or alley, open or closed, relating to, in front of or adjoining the Mandalay Land and the Mandalay Improvements and to the center line thereof;

(d) all equipment, machinery, fixtures, and other items of property, including all components thereof, that are now or hereafter located in, on or used in connection with and permanently affixed to or otherwise incorporated into the Mandalay Improvements, together with all replacements, modifications, alterations and additions thereto (collectively, the “Mandalay Fixtures”);

(e) the Mandalay Water Rights; provided, however, that it is agreed by the Parties that no other water rights are included in the “Mandalay Real Property” or will be conveyed to Mandalay PropCo.

The Mandalay Real Property shall not, for any purposes, include those assets described on Schedule 1 of the Lease (collectively, the “Mandalay Excluded Assets”).

Mandalay Title Policy” shall mean an ALTA owner’s title insurance policy issued by the Title Company (as co-insurers) insuring Mandalay PropCo’s title to the Mandalay Real Property, subject only to the Mandalay Permitted Encumbrances, in an amount equal to $2,095,205,000.00.

Mandalay Water Rights” shall have the meaning set forth in Schedule 1-B.

Master Lease Amendment” shall have the meaning set forth in the recitals of this Agreement.

Master Lease Tenant” shall have the meaning set forth in the recitals of this Agreement.

Material Casualty Event” shall mean any Casualty Event that causes a damage or loss to the Real Property that is in excess of $500,000,000.

Material Condemnation” shall mean a Condemnation that is reasonably expected to materially and permanently impair the current use of the Real Property or result in a loss of all or a portion of the Real Property having a value in excess of $500,000,000.

 

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Material Debt Financing Obligations” shall have the meaning set forth in Section 7.1(a).

Maximum Amount” shall have the meaning set forth in Section 10.2.

MDFO Breach” shall mean a breach by Sponsor or MGP OP, as applicable, of its Material Debt Financing Obligations.

Membership Interests” shall have the meaning set forth in the recitals of this Agreement.

MGM” shall have the meaning set forth in the preamble of this Agreement.

“MGM Cash Amount” shall mean the positive difference of the Grand Property Value Amount minus the MGM OP Unit Value.

MGM Consideration OP Units” shall mean OP Units in an amount to be calculated by dividing the MGM OP Unit Value by the MGM OP Unit Price.

MGM Debt Guaranty” shall have the meaning set forth in the recitals of this Agreement.

MGM Financial Reports” shall have the meaning set forth in Section 6.14.

MGM Fundamental Representations” means the express representations and warranties of MGM set forth in Section 3.1, Section 3.2, Section 6.1 and Section 6.2.

MGM Indemnitees” shall have the meaning set forth in Section 10.2.

MGM Licensed Parties” shall have the meaning set forth in Section 6.10(a).

MGM Licensing Affiliates” means all of MGM’s Subsidiaries that may reasonably be considered in the process of determining the suitability of MGM for any license, permit, findings of suitability or other authorization by any Gaming Authority.

MGM OP Unit Price” means $30.6661 per unit.

MGM OP Unit Value” means an aggregate amount equal to five percent (5%) of the positive difference of (i)(a) the Property Value Amount plus (b) the Joint Venture Costs less (ii) the Debt Financing Amount.

MGM Related Parties” shall have the meaning set forth in Section 6.10(a).

MGM Related Party Permits” shall have the meaning set forth in Section 6.10(a).

MGP” shall have the meaning set forth in the preamble of this Agreement.

MGP Breach” shall have the meaning set forth in Section 9.3(a).

MGP Class A Shares” shall have the meaning set forth in the recitals of this Agreement.

MGP Class B Shares” shall have the meaning set forth in Section 1.4 of Annex A.

 

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MGP Consideration Shares” shall mean 4,891,395 MGP Class A Shares; provided that if at any time between the date of this Agreement and the issuance of the MGP Consideration Shares any change in the number of issued and outstanding shares of MGP Class A Shares shall occur as a result of a reclassification, recapitalization, share split or subdivision (including a reverse share split), or combination, exchange or readjustment of shares, or any dividend or distribution paid in MGP Class A Shares (including any dividend or distribution of securities convertible into, or exercisable or exchangeable for, MGP Class A Shares) with a record or issuance date during such period (but excluding, for the avoidance of doubt, any change in the number of issued and outstanding shares of MGP Class A Shares occurring as a result of the issuance of any MGP Class A Shares pursuant to the Sales Agreement or the Forward Settlement), the number of MGP Class A Shares to be issued in hereunder shall be equitably adjusted to reflect such change.

MGP Fundamental Representations” means the express representations and warranties of MGP set forth in Sections 1.1, 1.2, 1.11 and 1.12 of Annex A.

MGP Indemnitees” shall have the meaning set forth in Section 10.3.

MGP Licensed Parties” shall have the meaning set forth in Section 4.12(a).

MGP Licensing Affiliates” means all of MGP OP’s controlled Affiliates that may reasonably be considered in the process of determining the suitability of MGP OP for any license, permit, findings of suitability or other authorization by any Gaming Authority.

MGP Material Adverse Effect” means any effect, event, development or change, which, individually or in the aggregate with all other effects, events, developments or changes, is materially adverse to the assets, business, result of operations or condition (financial or otherwise) MGP and its subsidiaries, taken as a whole; provided, however, that none of the following shall constitute or be considered in determining whether there has occurred an MGP Material Adverse Effect: (A) changes in conditions in the U.S. or global economy or capital or financial markets generally, including changes in interest or exchange rates; (B) changes in applicable Law or tax, regulatory, political or business conditions that, in each case, generally affect the business or industry in which MGP and its subsidiaries (taken as a whole) operate; (C) changes in U.S. generally accepted accounting principles (“GAAP”) or interpretation thereof after the date hereof; (D) acts of war (whether declared or undeclared), armed hostilities, sabotage or terrorism, or any escalation or worsening of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of this Agreement; (E) flood, earthquakes, hurricanes, other severe weather or other natural disasters; (F) the negotiation, announcement of the execution or the performance of this Agreement, (G) any change arising from compliance with the terms of this Agreement; or (H) any action taken by MGP or its subsidiaries at the request or with the written consent of the Share Purchaser or its Affiliate; provided, that any effect, event, development or change referenced in clauses (A) through (E) above shall be considered in determining whether there has been or is an MGP Material Adverse Effect if such effect, event, development or change affects MGP and its subsidiaries in a disproportionate manner as compared to other participants in the hospitality industry or REIT industry that operate in the geographic regions affected by such effect, event, development or change. The parties agree that the mere fact of a decrease in the market price of the shares of the

 

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MGP Class A Shares shall not, in and of itself, constitute an MGP Material Adverse Effect, but any effect, event, development or change underlying such decrease not otherwise excluded in clauses (A) through (H) above shall be considered in determining whether there has been or is an MGP Material Adverse Effect.

MGP OP” shall have the meaning set forth in the preamble of this Agreement.

MGP OP Debt Refinancing” shall have the meaning set forth in the recitals of this Agreement.

MGP OP Financial Information” shall have the meaning set forth in Section 7.9(b).

MGP OP Fundamental Representations” means the express representations and warranties of MGP OP set forth in Section 3.1, Section 3.2, Section 4.1, Section 4.2 and Section 4.3.

MGP Related Parties” shall have the meaning set forth in Section 4.12(a).

MGP Related Party Permits” shall have the meaning set forth in Section 4.12(a).

MGP Reports” shall have the meaning set forth in Section 1.5(a) of Annex A.

NDA” shall have the meaning set forth in Section 11.1.

Non-Breaching Party” shall have the meaning set forth in Section 9.3(b).

NYSE” shall have the meaning set forth in Section 7.12(c).

Operating Standard” means “Operating Standard” as such term is defined in the Lease.

OP Unit Issuance” shall have the meaning set forth in the recitals of this Agreement.

OP Units” shall mean the MGP OP limited partnership units.

Order” means any judgment, order, decision, writ, injunction, ruling, award or decree of, or any settlement under the jurisdiction of, any Governmental Entity.

Outside Date” means the earlier of (i) April 17, 2020 and (ii) the expiration date of the Debt Financing Commitment (as such Debt Financing Commitment may be modified and extended upon reasonable approval of Sponsor and MGP OP).

Parties” and “Party” shall have the meanings set forth in the preamble of this Agreement.

PATRIOT Act” shall have the meaning set forth in Section 4.9(a).

Permit” means any permit, license, registration, finding of suitability, license, variance, certificate of occupancy, franchise, approval, authorization and/or consent of or from any Governmental Entity (including all authorizations under Gaming Laws).

 

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Permitted Encumbrances” means, collectively, Grand Permitted Encumbrances and Mandalay Permitted Encumbrances.

Permitted Transferee” shall have the meaning set forth in Section 7.11(a).

Person” means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, Governmental Entity, trust, joint venture, association or other similar entity, whether or not a legal entity.

Pro Rata Share” shall have the meaning set forth in Section 7.7(h).

Property Value Amount” means $4,600,000,000.00.

Prospectus” shall have the meaning set forth in Section 1.10 of Annex A.

Real Property” means, collectively, the Grand Real Property and the Mandalay Real Property.

REIT” shall have the meaning set forth in Section 2.4(c)(ii).

Registration Statement” shall have the meaning set forth in Section 2.4(a).

Sales Agreement” shall have the meaning set forth in Section 1.4 of Annex A.

Securities Act” shall have the meaning set forth in Section 1.3 of Annex A.

Settlement” shall have the meaning set forth in Section 10.6(b).

Share Purchase” means the purchase and sale of the MGP Consideration Shares hereunder.

Share Purchaser” shall have the meaning set forth in the preamble of this Agreement.

Share Purchaser Fundamental Representations” means the express representations and warranties of Share Purchaser set forth in Sections 2.1, 2.2 and 2.5 of Annex A.

Side Letter” means that certain Agreement dated as of the date hereof by and among the Parties.

Specified Sections” means Sections 2.4, 7.3, 7.4, 7.5, 7.7(g)-(i), 7.11, 7.12, 8.4, 8.5 and 9.2; Articles X and XI; and Annex A (and Section 1.1 with respect to any defined term used in any of the foregoing provisions).

Sponsor” shall have the meaning set forth in the preamble of this Agreement.

Sponsor Breach” shall have the meaning set forth in Section 9.3(a).

Sponsor Financial Information” shall have the meaning set forth in Section 7.9(a).

 

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Sponsor Fundamental Representations” means the express representations and warranties of Sponsor and the Share Purchaser set forth in Section 3.1, Section 3.2, and Section 5.2.

Sponsor Guarantor” shall have the meaning set forth in the recitals of this Agreement.

Sponsor Guaranty” shall have the meaning set forth in the recitals of this Agreement.

Sponsor Indemnitees” shall have the meaning set forth in Section 10.2.

Sponsor JV Member” shall have the meaning set forth in the recitals of this Agreement.

Sponsor Licensed Parties” shall have the meaning set forth in Section 5.4(a).

Sponsor Licensing Affiliates” means all of Sponsor’s controlled Affiliates that may reasonably be considered in the process of determining the suitability of Sponsor for any license, permit, findings of suitability or other authorization by any Gaming Authority.

Sponsor Related Parties” shall have the meaning set forth in Section 5.4(a).

Sponsor Related Party Permits” shall have the meaning set forth in Section 5.4(a).

Subsidiary” or “subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities of such Person, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body; provided, that for purposes of this Agreement, it is expressly agreed that MGP OP and its Subsidiaries shall be treated as Subsidiaries of MGP and shall not be treated as Subsidiaries of MGM.

Survival Period Termination Date” shall have the meaning set forth in Section 10.1.

Tax” means (a) all taxes, Transfer Taxes, charges, fees, duties, levies, imposts, or other assessments, imposed by any U.S. federal, state or local or foreign Governmental Entity, including, but not limited to, net income, gross income, gross receipts, excise, real property, personal property, sales, use, service, service use, license, lease, capital stock, transfer, recording, franchise, business organization, occupation, premium, environmental, windfall profits, profits, customs, duties, payroll, wage, withholding, social security, employment, unemployment, insurance, severance, workers compensation, excise, stamp, alternative minimum, estimated, value added, ad valorem, escheat, and other taxes, charges, fees, duties, levies, imposts, or other assessments, (b) any interest, penalties or additions attributable thereto and (c) all liabilities in respect of any items described in clauses (a) or (b) payable by reason of assumption, transferee or successor liability, operation of Law or U.S. Treasury regulation section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law).

 

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Tax Protection Agreement” means an agreement in the form of Exhibit E attached hereto.

Tenant” shall have the meaning set forth in the recitals of this Agreement.

Termination Fee” shall have the meaning set forth in Section 9.3(a).

Third Party Claim” shall have the meaning set forth in Section 10.6(b).

Title Company” means the title companies set forth on Exhibit T attached hereto.

Title Policies” shall mean, collectively, the Grand Title Policy and the Mandalay Title Policy.

Transactions” means all of the transactions and occurrences contemplated to take place pursuant to this Agreement and the other documents referred to in this Agreement; provided that “Transactions” shall not include the Share Purchase except with respect to representations, warranties or obligations made by or of, respectively, MGP or Share Purchaser, as applicable, in a Specified Section.

Transfer” shall have the meaning set forth in Section 7.11(a).

Transfer Taxes” means the taxes imposed pursuant to Chapter 375 of the Nevada Revised Statutes.

Transition Services Agreement” shall mean an agreement in the form of Exhibit P attached hereto.

Water Rights” means, collectively, the Grand Water Rights and the Mandalay Water Rights.

ARTICLE II

THE TRANSACTIONS

Section 2.1 Grand PropCo Formation and Contribution.

(a) Grand PropCo Formation. Prior to the Closing Date, MGM shall cause Grand PropCo to be duly formed in the State of Delaware and qualified to do business in the State of Nevada. MGM shall promptly thereafter provide MGP OP and Sponsor with copies of the filed certificate of formation and foreign registration, as certified by the Secretaries of State of Delaware and Nevada, respectively, and a copy of the executed operating agreement of Grand PropCo. The initial form of Governing Documents of Grand PropCo shall be substantially in the form attached hereto as Exhibit F-1.

(b) Grand PropCo Contribution. On or before the Closing Date, following the formation of Grand PropCo in accordance with Section 2.1(a), MGM shall cause Grand Owner to transfer, convey and assign, as applicable, to Grand PropCo, and Grand PropCo shall acquire and accept from Grand Owner, the Grand Real Property pursuant to the Grand PropCo Conveyance Documents, free and clear of all Encumbrances (other than Grand Permitted Encumbrances) (the “Grand PropCo Contribution”).

 

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(c) Grand PropCo Contribution Closing. At the closing of the Grand PropCo Contribution, MGM shall cause Grand Owner to deliver to Grand PropCo, with copies to MGP OP and Sponsor, all of the following (the “Grand PropCo Conveyance Documents”):

(i) a deed in the form attached hereto as Exhibit G-1 (the “Grand Deed”), duly executed and acknowledged by Grand Owner, conveying the Grand Real Property to Grand PropCo, and expressly reserving unto Grand Owner the Grand Excluded Assets; and

(ii) a completed and signed State of Nevada Declaration of Value in the form required by law, and which shall be duly executed by Grand Owner and Grand PropCo.

Section 2.2 Mandalay PropCo Formation and Contribution.

(a) Mandalay PropCo Formation. Prior to the Closing Date, MGP OP shall cause Mandalay PropCo to be duly formed in the State of Delaware and qualified to do business in the State of Nevada. MGP OP shall promptly thereafter provide MGM and Sponsor with copies of the filed certificate of formation and foreign registration, as certified by the Secretaries of State of Delaware and Nevada, respectively, and a copy of the executed operating agreement of Mandalay PropCo. The initial form of Governing Documents of Mandalay PropCo shall be substantially in the form attached hereto as Exhibit F-2.

(b) Mandalay PropCo Contribution. On or before the Closing Date, following the formation of Mandalay PropCo in accordance with Section 2.2(a), MGP OP shall cause Mandalay Owner to transfer, convey and assign, as applicable, to Mandalay PropCo, and Mandalay PropCo shall acquire and accept from Mandalay Owner, the Mandalay Real Property pursuant to the Mandalay PropCo Conveyance Documents, free and clear of all Encumbrances (other than Mandalay Permitted Encumbrances) (the “Mandalay PropCo Contribution”).

(c) Mandalay PropCo Contribution Closing. At the closing of the Mandalay PropCo Contribution, MGP OP shall cause Mandalay Owner to deliver to Mandalay PropCo, with copies to MGM and Sponsor, all of the following (the “Mandalay PropCo Conveyance Documents”):

(i) a deed in the form attached hereto as Exhibit G-2 (the “Mandalay Deed”), duly executed and acknowledged by Mandalay Owner, conveying the Mandalay Real Property to Mandalay PropCo, and expressly reserving unto Mandalay Owner the Mandalay Excluded Assets; and

(ii) a completed and signed State of Nevada Declaration of Value in the form required by law, and which shall be duly executed by Mandalay Owner and Mandalay PropCo.

Section 2.3 Pre-Closing Events. Prior to the Closing:

(a) (i) MGP OP shall form JV InvestCo, the sole member of which will be MGP OP, and then (ii) MGP OP shall cause JV InvestCo to form the Joint Venture, the sole member of which will be JV InvestCo. MGP OP shall promptly thereafter provide MGM and Sponsor with copies of the filed certificate of formation, as certified by the Secretary of State of Delaware, and a copy of the executed operating agreement of each of JV InvestCo and the Joint Venture, which certificates of formation and operating agreements shall be substantially in the forms attached hereto as Exhibit I.

 

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(b) Following the Initial Property Contribution, MGM shall cause Grand Owner to effectuate the Grand Transfer and enter into, and deliver to MGP OP its duly executed counterpart of, and MGP OP will enter into, and deliver to MGM its duly executed counterpart of, the Grand Interests Assignment Agreement; and MGM will promptly thereafter provide a copy of such fully executed agreement to Sponsor;

(c) MGP OP shall cause Mandalay PropCo to obtain the Bridge Loan and distribute the proceeds of the Bridge Loan to MGP OP to repay a portion of certain existing debt of MGP OP, as designated by MGP OP.

Section 2.4 MGP Share Purchase.

(a) At the Closing, MGP shall issue and sell the MGP Consideration Shares to Share Purchaser (or any of its designated Affiliates who agree to be bound by Section 7.11(a)) pursuant to MGP’s automatic shelf registration statement on Form S-3 filed with the Commission on May 18, 2017 (File No. 333-218090) or a new automatic shelf registration statement filed prior to the Closing Date to replace MGP’s existing shelf registration statement (the “Registration Statement”), in electronic form via book entry transfer to the accounts maintained by such Share Purchaser’s custodian at The Depository Trust Company (“DTC”), with such accompanying documentation as may be required by Computershare Trust Company, N.A. as transfer agent to effectuate the transfer of such MGP Consideration Shares.

(b) As consideration for the Share Purchase, at the Closing the Share Purchaser shall pay (or cause to be paid) to MGP $150,000,000.00 by wire transfer of immediately available funds to an account or account designated in writing by MGP to Share Purchaser at least three (3) Business Days prior to the Closing Date.

(c) At the Closing, MGP shall deliver to Share Purchaser:

(i) a duly executed certificate from an officer of MGP, dated as of the Closing Date, to the effect that each of the conditions set forth in Sections 8.4(b), 8.4(c) and 8.4(d) have been satisfied (or previously waived in writing by Share Purchaser); and

(ii) a written tax opinion of Weil, Gotshal & Manges LLP, counsel to MGP, (or such other nationally recognized REIT counsel as may be reasonably acceptable to MGP and Share Purchaser) dated as of the Closing Date, substantially in the form of Exhibit S, to the effect that commencing with its taxable year ending December 31, 2016, MGP has been organized and operated in conformity with the requirements for qualification and taxation as a real estate investment trust under the Code (a “REIT”) and its current organization and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code, which opinion may be subject to customary exceptions, assumptions and qualifications and based upon factual representations contained in an officer’s certificate executed by MGP or an officer thereof upon which counsel to MGP may rely.

 

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(d) At the Closing, Share Purchaser shall deliver to MGP a duly executed certificate from an officer of Share Purchaser, dated as of the Closing Date, to the effect that each of the conditions set forth in Sections 8.5(b) and 8.5(c) have been satisfied (or previously waived in writing by MGP).

(e) Each of MGP and Share Purchaser agrees to the terms set forth on Annex A hereto.

Section 2.5 Interest Purchase Price. The cash contribution to be made by Sponsor for the Joint Venture Interests shall be an amount equal to the Interest Purchase Price. At the Closing, as consideration for the Joint Venture Interests, Sponsor shall contribute (or shall cause Sponsor JV Member to contribute) the Interest Purchase Price to the Joint Venture and MGP OP and Sponsor shall cause Sponsor’s cash contribution of the Interest Purchase Price to be used entirely to repay a portion of the Bridge Loan. The Parties hereby agree that one or more wire transfers at Closing will clearly reflect the use of Sponsor’s cash contribution of the Interest Purchase Price entirely to repay a portion of the Bridge Loan.

Section 2.6 Issuance and Distribution to MGM. At the Closing, MGP OP shall (a) issue the MGM Consideration OP Units to MGM and (b) distribute to MGM a portion of the proceeds received by MGP OP in the Debt Financing Distribution in the amount of the MGM Cash Amount.

Section 2.7 Closing. Unless otherwise mutually agreed upon by the Parties, the Parties agree that the consummation of the Transactions (the “Closing”) shall take place at 3:00 P.M., New York City time, on February 19, 2020 (as such date may be extended in accordance with this Section 2.7, the “Closing Date”), at the offices of Weil, Gotshal & Manges LLP in New York, New York, or at such other time or on such other date or at such other place as the Parties may mutually agree upon in writing. Notwithstanding the foregoing, each of Sponsor and MGP OP shall have the right to extend the Closing Date (the “Initial Closing Date Extension”) to any date that is a Business Day occurring on or prior to March 18, 2020 by providing written notice of such date to each of the other Parties not less than five (5) Business Days prior to the then-scheduled Closing Date. If, but only if, all approvals required from the applicable Gaming Authorities have not been obtained by the then-scheduled Closing Date, the Closing Date will be extended further until the date that is five (5) Business Days after all such required approvals have been obtained, but not beyond the Outside Date. In the event that Sponsor or MGP OP (the “Extending Party”) exercises the Initial Closing Date Extension, unless the Initial Closing Date Extension was necessary to satisfy lender(s) requirements under the Debt Financing Commitment, the Extending Party shall bear one hundred percent (100%) of the incremental loan fees and incremental Debt Financing Hedging Fees payable under the Debt Financing that are incurred as a result of effectuating the Initial Closing Date Extension.

 

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Section 2.8 Deliveries at the Closing.

On the Closing Date:

(a) MGP OP shall:

(i) enter into, and cause Mandalay Owner and the Joint Venture to enter into, the Closing Date Assignment Agreement, and provide a copy of such fully executed agreement to MGM and Sponsor at the Closing;

(ii) cause JV InvestCo to enter into, and deliver to Sponsor its duly executed counterpart of, the LLC Agreement; and MGP OP shall provide a copy of such executed counterpart to MGM at the Closing;

(iii) cause MGP Guarantor (as defined in the LLC Agreement), JV InvestCo and the Joint Venture to enter into, and deliver to Sponsor their duly executed counterparts of, the Carveout Contribution Agreement; and MGP OP shall provide a copy of such executed counterparts to MGM at the Closing;

(iv) deliver to Sponsor and MGM a duly executed certificate from an officer of MGP OP, dated as of the Closing Date, to the effect that each of the conditions set forth in Sections 8.1(a)(i), 8.1(b)(i) and 8.1(c)(i) and Sections 8.3(a)(ii), 8.3(b)(ii) and 8.3(d)(ii) have been satisfied (or waived by Sponsor and MGM);

(v) distribute all of the proceeds received in the Debt Financing Distribution to MGM and issue the OP Units to MGM;

(vi) enter into, and deliver to the Joint Venture and MGM (with a copy to Sponsor) its duly executed counterpart of, the Tax Protection Agreement;

(vii) cause Mandalay Owner to enter into, and deliver to MGM and the Joint Venture (with a copy to Sponsor) a duly executed counterpart of, the Master Lease Amendment;

(viii) deliver (or cause to be delivered) to the Title Company (with a copy to Sponsor and the Joint Venture) an owner’s title affidavit and non-imputation affidavit with respect to the Mandalay Real Property substantially in the form attached hereto as Exhibit N;

(ix) deliver (or cause to be delivered) to Sponsor an IRS Form W-9 executed by MGP OP and an affidavit that MGP OP is not a “foreign person” within the meaning of Section 1445 of the Code, in substantially the form of Exhibit O attached hereto; and

(x) deliver (or cause to be delivered) to the Parties, as applicable, duly executed counterparts of each of the other applicable Ancillary Documents to which MGP OP or any of its Subsidiaries (other than the Joint Venture) is a party.

 

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(b) Sponsor shall:

(i) enter into (or cause Sponsor JV Member to enter into), and deliver to JV InvestCo its duly executed counterpart of, the LLC Agreement; and Sponsor shall provide a copy of such executed counterpart to MGM at the Closing;

(ii) enter into (or cause Sponsor JV Member to enter into) and cause Sponsor Guarantor (as defined in the LLC Agreement) to enter into, and deliver to JV InvestCo their duly executed counterparts of, the Carveout Contribution Agreement; and Sponsor shall provide a copy of such executed counterparts to MGM at the Closing;

(iii) deliver to MGP OP and MGM a duly executed certificate from an officer of Sponsor, dated as of the Closing Date, to the effect that each of the conditions set forth in Sections 8.2(a)(i), 8.2(b)(i) and 8.2(d)(i) and Sections 8.3(a)(i), 8.3(b)(i) and 8.3(d)(i) have been satisfied (or waived by MGP OP and MGM);

(iv) deliver (or cause to be delivered) to the Parties, as applicable, duly executed counterparts of each of the other applicable Ancillary Documents to which Sponsor or any of its Affiliates is a party.

(c) MGM shall:

(i) deliver to Sponsor and MGP OP a duly executed certificate from an officer of MGM, dated as of the Closing Date, to the effect that each of the conditions set forth in Sections 8.1(a)(ii), 8.1(b)(ii) and 8.1(c)(ii) and Sections 8.2(a)(ii), 8.2(b)(ii) and 8.2(d)(ii) have been satisfied (or waived by Sponsor and MGP OP);

(ii) cause Master Lease Tenant to enter into, and deliver to MGP OP a duly executed counterpart of, the Master Lease Amendment;

(iii) cause Tenant to enter into, and deliver to Landlord (with a copy to Sponsor) its duly executed counterpart of, the Lease and the Transition Services Agreement;

(iv) cause Tenant to pay to Landlord the Rent and Additional Charges (each as defined in the Lease) due under Article III of the Lease for the pro-rated portion of the month in which Closing occurs;

(v) enter into, and deliver to the Joint Venture and MGP OP (with a copy to Sponsor) its duly executed counterpart of, the Tax Protection Agreement;

(vi) deliver to Landlord (with a copy to Sponsor) the Lease Guaranty, duly executed by MGM;

(vii) enter into, and cause the other MGM Parties (as defined in the Transition Services Agreement) to enter into, and deliver to Landlord (with a copy to Sponsor) duly executed counterparts of, the Transition Services Agreement;

 

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(viii) deliver to the lender(s) under the Debt Financing the MGM Debt Guaranty; and MGM shall provide a copy of such MGM Debt Guaranty to MGP OP and Sponsor at the Closing;

(ix) deliver to the Title Company (with a copy to Sponsor and the Joint Venture) an owner’s title affidavit and non-imputation affidavit with respect to the Grand Real Property substantially in the form attached hereto as Exhibit N;

(x) if required by the lender(s) under the Debt Financing, cause Tenant to deliver to Landlord (with a copy to Sponsor) a duly executed tenant estoppel, in such form as is reasonably required by such lender(s);

(xi) cause each Operating Subtenant to deliver to Landlord (with a copy to Sponsor) a duly executed attornment agreement, in such form as is reasonably approved by Landlord and Tenant;

(xii) cause Tenant and each Operating Subtenant, as applicable, to deliver to Landlord (with a copy to Sponsor) duly executed counterparts of the Operating Subleases;

(xiii) cause each Operating Subtenant to deliver to Landlord (with a copy to Sponsor) a duly executed counterpart of the Guaranty of Master Lease; and

(xiv) deliver to the Parties, as applicable, duly executed counterparts of each of the other applicable Ancillary Documents to which MGM or any of its Subsidiaries is a party.

(d) MGP OP and Sponsor shall jointly cause the Joint Venture (or cause one or more of the Joint Venture’s wholly-owned Subsidiaries) to:

(i) obtain the Debt Financing and cause proceeds of the Debt Financing to be used to repay the remaining portion of the Bridge Loan in full; and deliver copies of all documents evidencing and/or securing the Debt Financing to MGM;

(ii) cause the Debt Financing Distribution to be distributed to MGP OP;

(iii) enter into, and deliver to MGM and MGP OP its duly executed counterpart of, the Tax Protection Agreement (and provide a copy to Sponsor);

(iv) cause Landlord to enter into, and deliver to Tenant its duly executed counterpart of, the Lease and the Transition Services Agreement; and

(v) deliver to MGM, as applicable, duly executed counterparts of each of the other applicable Ancillary Documents to which the Joint Venture or any of its Subsidiaries is a party.

Section 2.9 Withholding. If MGP OP provides Sponsor with duly executed and valid affidavits or forms as prescribed by Section 2.8(a)(ix), no withholding shall be required hereunder, except to the extent there has been an amendment to the Code or any state or local Tax law enacted after the date hereof. If Sponsor becomes aware of any potential required

 

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withholding (other than withholding as a result of MGP OP’s failure to provide the affidavits or forms as prescribed by Section 2.8(a)(ix)), Sponsor shall provide MGP OP reasonable notice of such withholding obligation and Sponsor shall be entitled to deduct and withhold any amounts from the consideration payable to MGP OP pursuant to this Agreement that are required to be withheld with respect to the making of any such payment under the Code, or any provision of state, local or foreign applicable Law. To the extent that such amounts are so withheld and paid over to the proper Governmental Entity, such withheld and deducted amounts will be treated for all purposes of this Agreement as having been paid to the person in respect of which such deduction and withholding was made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

Each Party hereby represents and warrants to the other Parties, as of the date of this Agreement and as of the Closing Date, as follows:

Section 3.1 Organization and Qualification.

(a) Such Party is a corporation, limited liability company or limited partnership, as applicable, duly organized and validly existing and in good standing under the laws of the state of its incorporation or formation, as applicable, and has all requisite power and authority to carry on its businesses as presently conducted.

(b) Such Party is duly qualified or licensed to transact business and is in good standing in each jurisdiction in which the property and assets owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not prevent or materially delay the consummation of the Transactions.

Section 3.2 Authority. Such Party has the requisite corporate or other organizational power and authority to execute and deliver this Agreement and the Ancillary Documents to which such Party is a party and to consummate the Transactions. The execution and delivery of this Agreement and the Ancillary Documents to which such Party is a party and the consummation of the Transactions have been (and such Ancillary Documents to which such Party is a party will be) duly authorized by all necessary corporate or other organizational action on the part of such Party, and no other proceeding (including by its equityholders) on the part of such Party is necessary to authorize this Agreement and the Ancillary Documents to which such Party is a party or to consummate the Transactions. This Agreement has been (and the execution and delivery of each of the Ancillary Documents to which such Party is a party will be) duly and validly executed and delivered by such Party and constitute a valid, legal and binding agreement of such Party (assuming this Agreement has been and the Ancillary Documents to which such Party is a party will be duly and validly authorized, executed and delivered by the other Parties hereto and thereto), enforceable against such Party in accordance with their terms, subject to the Bankruptcy and Equity Exception.

 

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Section 3.3 Consents and Approvals; No Violations. Except as have already been obtained or that will be obtained prior to the Closing, and except as set forth on Schedule 3.3 attached hereto, no material notices to, filings with, or authorizations, consents or approvals of any Person or Governmental Entity are necessary for the execution, delivery or performance by such Party of this Agreement or the Ancillary Documents to which such Party is a party or the consummation by such Party of the Transactions, except for those the failure of which to obtain or make would not prevent or materially delay the Closing (and in no event beyond the Outside Date) or reasonably be expected to have a material adverse effect on Grand PropCo, Mandalay PropCo or the Real Property. Except as set forth on Schedule 3.3 attached hereto, neither the execution, delivery and performance by such Party of this Agreement or the Ancillary Documents to which such Party is a party nor the consummation by such Party of the Transactions will (a) conflict with or result in any breach of any provision of such Party’s Governing Documents, (b) result in a violation or breach of, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement to which such Party is a party, in each case, which would have a material adverse effect on such Party, or (c) violate any Order of any Governmental Entity having jurisdiction over such Party, which in the case of any of clauses (b) through (c) above, would prevent or materially delay the Closing (and in no event beyond the Outside Date) or reasonably be expected to have a material adverse effect on Grand PropCo, Mandalay PropCo or the Real Property.

Section 3.4 Independent Investigation. Such Party has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) of Grand Owner, Mandalay Owner, the Joint Venture, the Real Property and the Membership Interests, and such Party acknowledges that such Party has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the other Parties for such purpose. Such Party acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the Transactions, such Party has relied solely upon its own investigation and the express representations and warranties set forth in this Agreement and in the Ancillary Documents; (b) no one has made any representations to such Party except as specifically set forth in this Agreement and in the Ancillary Documents; and (c) such Party is not relying upon any advice from any other Party.

ARTICLE IV

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF MGP OP

MGP OP hereby represents and warrants to the other Parties, as of the date of this Agreement and as of the Closing Date, as follows:

Section 4.1 Organization and Qualification.

(a) Mandalay Owner is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, in good standing under the Laws of the State of Nevada and has all necessary company power and authority to own the properties and assets then owned by it and to carry on its business as it is then conducted. Mandalay PropCo will be, at Closing and all times prior to Closing, a disregarded entity for U.S. federal income tax purposes.

 

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(b) Grand PropCo will be, from and after the Grand Transfer and as of the Closing Date, a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, in good standing under the Laws of the State of Nevada and will have, from and after the Grand Transfer and as of the Closing Date, all necessary company power and authority to own the properties and assets then owned by it and to carry on its business as it is then conducted. Grand PropCo will be, at the Closing and from and after the Grand Transfer, a disregarded entity for U.S. federal income tax purposes.

Section 4.2 Membership Interests. At the Closing, (i) upon the completion by MGM of the transactions described in Sections 2.1 and 2.3(b), the Joint Venture (or a direct or indirect wholly-owned Subsidiary thereof) will own all of the issued and outstanding limited liability company membership interests of Grand PropCo and Mandalay PropCo free and clear of any Encumbrances (other than Permitted Encumbrances), and (ii) there will be no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the limited liability company interests of Grand PropCo or Mandalay PropCo or obligating Grand PropCo or Mandalay PropCo to issue or sell any of its limited liability company interests.

Section 4.3 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of MGP OP, except for Evercore Group L.L.C., Morgan Stanley & Co. LLC and Rockefeller Financial LLC, which will be paid solely by MGP OP.

Section 4.4 Undisclosed Liabilities. At the Closing, (i) Mandalay Owner will have no Liabilities with respect to the Mandalay Real Property other than Liabilities incurred in the ordinary course of ownership of the Mandalay Real Property and for which MGM or Tenant will be responsible for pursuant to Section 7.8 of this Agreement and (ii) Mandalay PropCo will have no Liabilities with respect to the Mandalay Real Property other than Liabilities (a) to be borne by Tenant under the Lease or (b) incurred in the ordinary course of ownership of the Mandalay Real Property and for which MGM or Tenant will be responsible for pursuant to Section 7.8 of this Agreement. At Closing, Grand PropCo and Mandalay PropCo will have no Liabilities for Taxes (other than Taxes which are payable by Tenant under the Lease).

Section 4.5 No Options. Neither MGP OP nor its Affiliates has granted any options to any Person to purchase or otherwise acquire (including any right of first offer or right of first refusal to purchase or otherwise acquire) the Real Property.

Section 4.6 No Notices. Except as set forth on Schedule 4.6 attached hereto, neither MGP OP nor any of its Affiliates has received written notice from any Governmental Entity that there are any Condemnation proceedings pending or threatened against the Mandalay Real Property or any portion thereof.

Section 4.7 No Default. Except as set forth on Schedule 4.7 attached hereto, neither MGP OP nor any of its Affiliates has received any written notice of default under any covenant, easement, restriction or other recorded agreement affecting or encumbering the Mandalay Real Property or any portion thereof that remains outstanding and uncured beyond any applicable cure period, in each case, that would have a material adverse effect on the Mandalay Real Property.

 

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Section 4.8 No Legal Actions. Except as set forth on Schedule 4.8 attached hereto, there is no pending legal action, complaint, suit or other litigation (whether at law or in equity, whether civil or criminal), or any pending or ongoing inquiry, proceeding or investigation by or before a Governmental Entity, which would be reasonably likely to have a material adverse effect on (i) the ability of MGP OP to perform its obligations hereunder or (ii) the ownership or operation of the Mandalay Real Property.

Section 4.9 Compliance.

(a) Neither MGP OP nor any of its Subsidiaries, nor, to its knowledge, any of its officers, directors, employees or agents, in their capacity as such, is in violation of any applicable Laws relating to anti-corruption, anti-bribery, terrorism, money laundering or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Action of 2001, Public Law 107-56, as amended (the “PATRIOT Act”), and Executive Order No. 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) (the “Executive Order”).

(b) Neither MGP OP nor any of its Subsidiaries, nor, to its knowledge, any of its officers, directors, employees or agents, in their capacity as such, is acting, directly or, to MGP OP’s knowledge, indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those Persons or entities that appear on the Annex to the Executive Order, or on behalf of any individual or entity included on any list maintained by any agency or department of the United States Government of Persons, organizations or entities subject to comprehensive international trade, export, import or transactions restrictions, controls or prohibitions, including, without limitation, (i) the Denied Persons List and the Entities List maintained by the United States Department of Commerce, (ii) the Specially Designated Nationals and Blocked Persons List, the Sectoral Sanctions Identifications List, and the Foreign Sanctions Evaders List maintained by OFAC and (iii) the Foreign Terrorist Organizations List and Debarred Parties List maintained by the United States Department of State (“Government Lists”).

(c) Neither MGP OP nor any of its Subsidiaries that owns any direct or indirect interest in the Mandalay Real Property is named on a Government List, or is acting for or on behalf of any country or territory which is the target of comprehensive economic sanctions (as of the date hereof, Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine).

Section 4.10 ERISA. MGP OP is not, and no portion of the Mandalay Real Property constitutes the assets of, a “benefit plan investor” within the meaning of Section 3(42) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the regulations thereunder.

Section 4.11 Conflicts Committee Approval. Prior to the date hereof, the conflicts committee of the board of directors of MGP, by unanimous approval of the members of such conflicts committee, has approved, and recommended to the board of directors of MGP that it approve and authorize the execution and delivery of, this Agreement and the Ancillary Documents to which MGP and/or any of its Subsidiaries is a party and the consummation of the Transactions, such approval constituting “Special Approval” as defined in that certain Amended and Restated Limited Liability Company Agreement of MGP, dated as of April 18, 2016 (as amended, supplemented or otherwise modified from time to time).

 

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Section 4.12 Gaming.

(a) MGP OP and each MGP Licensing Affiliate which is licensed or holds any permit or authorization pursuant to applicable Gaming Laws (the “MGP Licensed Parties”) and each of (i) their respective directors, managers, officers, key employees and Persons performing management functions similar to directors, managers, officers or key employees and (ii) their equity holders who may have been required to be licensed and found suitable under applicable Gaming Laws (collectively, the Persons described in clauses (i) and (ii), the “MGP Related Parties”), hold all material licenses, permits, findings of suitability and other authorizations necessary to comply with all applicable Gaming Laws in the jurisdictions in which the MGP Licensed Parties currently own and lease real estate to a casino operator (the “MGP Related Party Permits”) and are in material compliance with the terms of the MGP Related Party Permits.

(b) None of MGP OP, any MGP Licensed Party or, to MGP OP’s knowledge, any other MGP Related Party, has received any written claim, demand, notice, complaint, court order or administrative order from any Gaming Authority or relating to any violation or possible violation of any Gaming Laws that did or would be reasonably likely to result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions, except where such negative outcome would not reasonably be expected to prevent or delay the ability of MGP OP to consummate the Transactions. None of MGP OP, any MGP Licensed Party or, to MGP OP’s knowledge, any other MGP Related Party has received notice of any proceeding or review by any Governmental Entity under any Gaming Law with respect to MGP OP, any MGP Licensed Party or, to MGP OP’s knowledge, any other MGP Related Party that would reasonably be expected to result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions. To MGP OP’s knowledge, with respect to MGP OP and the MGP Related Parties only, there are no facts, which if known to the Gaming Authorities, will or would reasonably be expected to (i) result in the denial, revocation, limitation or suspension of any license currently held under the Gaming Laws, or (ii) result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions, except, in the case of clauses (i) and (ii), where such denial, revocation, limitation or suspension or negative outcome would not reasonably be expected to prevent or delay beyond the Outside Date the ability of MGP OP to consummate the Transactions. Neither MGP OP nor any MGP Related Party has suffered a suspension or revocation of any license held under the Gaming Laws necessary to conduct the business and operations of the MGP Licensed Parties in each of the jurisdictions in which the MGP Licensed Parties own or operate gaming facilities.

Section 4.13 Employees. Each of Grand PropCo (from and after the Grand Transfer only) and Mandalay PropCo (a) has never employed or engaged any individuals at any time, (b) does not sponsor, maintain, contribute to (or have any obligation to contribute to), or have any Liabilities (or, in the case of any Employee Benefit Plan subject to Title IV of ERISA, current liabilities) with respect to, any Employee Benefit Plan, and (c) except as set forth on Schedule 4.13, is not subject to any Liabilities imposed under Title IV of ERISA to which the Joint Venture may be subject following the Closing.

 

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Section 4.14 Joint Venture. At the Closing, the capitalization of the Joint Venture will be as set forth in the LLC Agreement and the members of the Joint Venture will hold all of the issued and outstanding limited liability company membership interests of the Joint Venture, as set forth in the LLC Agreement. At the Closing, there will be no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the limited liability company interests of, or any other interest in, the Joint Venture or obligating the Joint Venture to issue or sell any limited liability company interests of the Joint Venture, except to the extent set forth in the LLC Agreement and except as may have been created by Sponsor or any of its Affiliates.

Section 4.15 Taxes. There are no outstanding or pending contests or disputes with respect to the amount or payment of any Taxes with respect to the Mandalay Real Property, Mandalay PropCo or the Joint Venture. Except as disclosed in the Title Policies, there have been and are no supplemental or special Tax assessments levied, MGP OP has not received any written notice of any supplemental or special Tax or Tax assessment to be levied (and MGP OP does not have any knowledge that a supplemental or special Tax or assessment is contemplated), in each case with respect to the Mandalay Real Property. For U.S. federal income tax purposes JV InvestCo and the Joint Venture will each be, at Closing and all times prior to Closing, a disregarded entity wholly owned, directly or indirectly, by MGP OP.

Section 4.16 Mandalay Water Rights. To MGP OP’s knowledge, the Mandalay Water Rights are the only such rights for the beneficial use of water (excluding, for the purposes of clarity, water delivered to the Mandalay Real Property by the Las Vegas Valley Water District) needed to operate and maintain the uses on the Mandalay Real Property for which the Mandalay Water Rights have been permitted and/or certificated, in accordance with the Operating Standard. To MGP OP’s knowledge, no other water rights, including the Mandalay Reserved Water Rights (as defined on Schedule 1-B) (but, excluding, for the purposes of clarity, water delivered to the Mandalay Real Property by the Las Vegas Valley Water District) are reasonably necessary for any future planned operations of the Mandalay Real Property.

Section 4.17 No Other Representations and Warranties. Except for the representations and warranties contained in Article III, this Article IV and in the Ancillary Documents, MGP OP has not made and does not make, and no other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of MGP OP in connection with the Transactions, including any representation or warranty as to the accuracy or completeness of any information regarding the Real Property (or any portion thereof) furnished or made available to the other Parties or as to the future revenue, profitability or success of the Real Property (or any portion thereof).

 

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ARTICLE V

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF SPONSOR

Sponsor hereby represents and warrants to the other Parties, as of the date of this Agreement and as of the Closing Date, as follows:

Section 5.1 Sufficiency of Funds. Sponsor will have at the Closing all funds necessary to pay the Interest Purchase Price and all other necessary fees, expenses and other amounts payable by Sponsor in connection with the consummation of the Transactions. Sponsor acknowledges and agrees that its obligations under this Agreement and any Ancillary Documents, including its obligations to consummate the Closing, are not contingent upon its receipt of any financing of any kind.

Section 5.2 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Sponsor, except for Citigroup Global Markets Inc., which will be paid solely by Sponsor.

Section 5.3 Compliance.

(a) Neither Sponsor, Sponsor Guarantor nor any of Sponsor’s or Sponsor Guarantor’s Subsidiaries, nor, to Sponsor’s knowledge, any of their respective officers, directors, employees or agents, in their capacity as such, is in violation of any applicable Laws relating to anti-corruption, anti-bribery, terrorism, money laundering, the PATRIOT Act or the Executive Order.

(b) Neither Sponsor, Sponsor Guarantor nor any of Sponsor’s or Sponsor Guarantor’s Subsidiaries, nor, to Sponsor’s knowledge, any of their respective officers, directors, employees or agents, in their capacity as such, is acting, directly or, to Sponsor’s knowledge, indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those persons or entities that appear on the Annex to the Executive Order, or on behalf of any individual or entity included on any list maintained by any agency or department of the United States Government of persons, organizations or entities subject to comprehensive international trade, export, import or transactions restrictions, controls or prohibitions, including, without limitation, the Government Lists.

(c) Neither Sponsor, Sponsor Guarantor nor any of Sponsor’s or Sponsor Guarantor’s Affiliates that owns any direct or indirect interest in Sponsor or Sponsor Guarantor is named on a Government List, or is acting for or on behalf of any country or territory which is the target of comprehensive economic sanctions (as of the date hereof, Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine).

Section 5.4 Gaming.

(a) Sponsor and each Sponsor Licensing Affiliate which is licensed or holds any permit or authorization pursuant to applicable Gaming Laws (the “Sponsor Licensed Parties”) and each of (i) their respective directors, managers, officers, key employees and Persons performing management functions similar to directors, managers, officers or key employees and (ii) their equity holders who may have been required to be licensed and found suitable under

 

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applicable Gaming Laws (collectively, the Persons described in clauses (i) and (ii), the “Sponsor Related Parties”), hold all material licenses, permits, findings of suitability and other authorizations necessary to comply with all applicable Gaming Laws in the jurisdictions in which the Sponsor Licensed Parties currently own and lease real estate to a casino operator (the “Sponsor Related Party Permits”) and are in material compliance with the terms of the Sponsor Related Party Permits.

(b) None of Sponsor, any Sponsor Licensed Party or, to Sponsor’s knowledge, any other Sponsor Related Party, has received any written claim, demand, notice, complaint, court order or administrative order from any Gaming Authority or relating to any violation or possible violation of any Gaming Laws that did or would be reasonably likely to result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions, except where such negative outcome would not reasonably be expected to prevent or delay the ability of Sponsor to consummate the Transactions. None of Sponsor, any Sponsor Licensed Party or, to Sponsor’s knowledge, any other Sponsor Related Party has received notice of any proceeding or review by any Governmental Entity under any Gaming Law with respect to Sponsor, any Sponsor Licensed Party or, to Sponsor’s knowledge, any other Sponsor Related Party that would reasonably be expected to result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions. To Sponsor’s knowledge, with respect to Sponsor and the Sponsor Related Parties only, there are no facts, which if known to the Gaming Authorities, will or would reasonably be expected to (i) result in the denial, revocation, limitation or suspension of any license currently held under the Gaming Laws, or (ii) result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions, except, in the case of clauses (i) and (ii), where such denial, revocation, limitation or suspension or negative outcome would not reasonably be expected to prevent or delay beyond the Outside Date the ability of Sponsor to consummate the Transactions. Neither Sponsor nor any Sponsor Related Party has suffered a suspension or revocation of any license held under the Gaming Laws necessary to conduct the business and operations of the Sponsor Licensed Parties in each of the jurisdictions in which the Sponsor Licensed Parties own or operate gaming facilities.

Section 5.5 Sponsor Guaranty. Concurrently with the execution of this Agreement, Sponsor has delivered to MGM and MGP OP the Sponsor Guaranty, dated as of the date of this Agreement. The Sponsor Guaranty is in full force and effect and, subject to the Bankruptcy and Equity Exception, is a valid and binding obligation of Sponsor Guarantor and enforceable against Sponsor Guarantor in accordance with its terms. No event has occurred which, with or without notice, lapse of time or both, could constitute a default on the part of Sponsor Guarantor under the Sponsor Guaranty.

Section 5.6 No Other Representations and Warranties. Except for the representations and warranties contained in Article III, this Article V and in the Ancillary Documents, Sponsor has not made and does not make, and no other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Sponsor in connection with the Transactions.

 

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ARTICLE VI

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF MGM

MGM hereby represents and warrants to the other Parties, as of the date of this Agreement and as of the Closing Date, as follows:

Section 6.1 Organization and Qualification. Grand Owner is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Nevada, and will have, as of the Closing Date, all necessary company power and authority to own the properties and assets then owned by it and to carry on its business as it is then conducted. Grand PropCo is and will be, as of the Closing Date and prior to the Grand Transfer, a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware, in good standing under the Laws of the State of Nevada and will have, as of the Closing Date and prior to the Grand Transfer, all necessary company power and authority to own the properties and assets then owned by it and to carry on its business as it is then conducted. Grand PropCo will be, at Closing and all times prior to the Grand Transfer, a disregarded entity for U.S. federal income tax purposes.

Section 6.2 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of MGM, except for PJT Partners and J.P. Morgan, which will be paid solely by MGM.

Section 6.3 Undisclosed Liabilities. At the Closing, (i) Grand Owner will have no Liabilities incurred with respect to the Grand Real Property other than Liabilities (a) to be borne by Tenant under the Lease or (b) incurred in the ordinary course of operation of the Grand Real Property and (ii) Grand PropCo will have no Liabilities incurred with respect to the Grand Real Property other than Liabilities (a) to be borne by Tenant under the Lease or (b) incurred in the ordinary course of ownership of the Grand Real Property and for which MGM or Tenant will be responsible for pursuant to Section 7.8 of this Agreement.

Section 6.4 No Options. Neither MGM nor its Affiliates has granted any options to any Person to purchase or otherwise acquire (including any right of first offer or right of first refusal to purchase or otherwise acquire) the Grand Real Property.

Section 6.5 No Notices. Except as set forth on Schedule 6.5 attached hereto, neither MGM nor any of its Affiliates has received written notice from any Governmental Entity that there are any Condemnation proceedings pending or threatened against the Grand Real Property or any portion thereof.

Section 6.6 No Default. Except as set forth on Schedule 6.6 attached hereto, neither MGM nor any of its Affiliates has received any written notice of default under any covenant, easement, restriction or other recorded agreement affecting or encumbering the Grand Real Property or any portion thereof that remains outstanding and uncured beyond any applicable cure period, in each case, that would have a material adverse effect on the Grand Real Property.

 

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Section 6.7 No Legal Actions. Except as set forth on Schedule 6.7 attached hereto, there is no pending legal action, complaint, suit or other litigation (whether at law or in equity, whether civil or criminal), or any pending inquiry, proceeding or investigation by or before a Governmental Entity, which would be reasonably likely to have a material adverse effect on (i) the ability of MGM to perform its obligations hereunder or (ii) the ownership or operation of the Grand Real Property.

Section 6.8 Compliance.

(a) Neither MGM nor any of its Subsidiaries, nor, to its knowledge, any of its officers, directors, employees or agents, in their capacity as such, is in violation of any applicable Laws relating to anti-corruption, anti-bribery, terrorism, money laundering, the PATRIOT Act or the Executive Order.

(b) Neither MGM nor any of its Subsidiaries, nor, to its knowledge, any of its officers, directors, employees or agents, in their capacity as such, is acting, directly or, to MGM’s knowledge, indirectly, on behalf of terrorists, terrorist organizations or narcotics traffickers, including those Persons or entities that appear on the Annex to the Executive Order, or on behalf of any individual or entity included on any list maintained by any agency or department of the United States Government of Persons, organizations or entities subject to comprehensive international trade, export, import or transactions restrictions, controls or prohibitions, including, without limitation, the Government Lists.

(c) Neither MGM nor any of its Subsidiaries that owns any direct or indirect interest in the Grand Real Property is named on a Government List, or is acting for or on behalf of any country or territory which is the target of comprehensive economic sanctions (as of the date hereof, Cuba, Iran, North Korea, Syria and the Crimea region of Ukraine).

Section 6.9 ERISA. MGM is not, and no portion of the Grand Real Property constitutes the assets of, a “benefit plan investor” within the meaning of Section 3(42) of ERISA, and the regulations thereunder.

Section 6.10 Gaming.

(a) MGM and each MGM Licensing Affiliate which is licensed or holds any permit or authorization pursuant to applicable Gaming Laws (the “MGM Licensed Parties”) and each of (i) their respective directors, managers, officers, key employees and Persons performing management functions similar to directors, managers, officers or key employees and (ii) their equity holders who may have been required to be licensed and found suitable under applicable Gaming Laws (collectively, the Persons described in clauses (i) and (ii), the “MGM Related Parties”), hold all material licenses, permits, findings of suitability and other authorizations necessary to comply with all applicable Gaming Laws in the jurisdictions in which the MGM Licensed Parties currently own and lease real estate to a casino operator (the “MGM Related Party Permits”) and are in material compliance with the terms of the MGM Related Party Permits.

 

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(b) None of MGM, any MGM Licensed Party or, to MGM’s knowledge, any other MGM Related Party, has received any written claim, demand, notice, complaint, court order or administrative order from any Gaming Authority or relating to any violation or possible violation of any Gaming Laws that did or would be reasonably likely to result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions, except where such negative outcome would not reasonably be expected to prevent or delay the ability of MGM to consummate the Transactions. None of MGM, any MGM Licensed Party or, to MGM’s knowledge, any other MGM Related Party has received notice of any proceeding or review by any Governmental Entity under any Gaming Law with respect to MGM, any MGM Licensed Party or, to MGM’s knowledge, any other MGM Related Party that would reasonably be expected to result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions. To MGM’s knowledge, with respect to MGM and the MGM Related Parties only, there are no facts, which if known to the Gaming Authorities, will or would reasonably be expected to (i) result in the denial, revocation, limitation or suspension of any license currently held under the Gaming Laws, or (ii) result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability, licensing, permits, orders, authorizations or proceedings necessary for the consummation of the Transactions, except, in the case of clauses (i) and (ii), where such denial, revocation, limitation or suspension or negative outcome would not reasonably be expected to prevent or delay beyond the Outside Date the ability of MGM to consummate the Transactions. Neither MGM nor any MGM Related Party has suffered a suspension or revocation of any license held under the Gaming Laws necessary to conduct the business and operations of the MGM Licensed Parties in each of the jurisdictions in which the MGM Licensed Parties own or operate gaming facilities.

Section 6.11 Employees. Prior to the Grand Transfer only, Grand PropCo (a) has never employed or engaged any individuals at any time, (b) does not sponsor, maintain, contribute to (or have any obligation to contribute to), or have any Liabilities (or, in the case of any Employee Benefit Plan subject to Title IV of ERISA, current liabilities) with respect to, any Employee Benefit Plan, and (c) except as set forth on Schedule 6.11, is not subject to any Liabilities imposed under Title IV of ERISA to which the Joint Venture may be subject following the Closing.

Section 6.12 Collective Bargaining Agreements. Except as set forth on Schedule 6.12 attached hereto, there are no collective bargaining agreements or other labor union contracts relating to the Real Property that will be binding on the Joint Venture or its Subsidiaries following the Closing.

Section 6.13 Taxes. There are no outstanding or pending contests or disputes with respect to the amount or payment of any Taxes with respect to the Grand Real Property or Grand PropCo. Except as disclosed in the Title Policies, there have been and are no supplemental or special Tax assessments levied, MGM has not received any written notice of any supplemental or special Tax or Tax assessment to be levied (and MGM does not have any knowledge that a supplemental or special Tax or assessment is contemplated), in each case with respect to the Grand Real Property.

 

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Section 6.14 Financial Statements. MGM has furnished Sponsor and MGP OP with true and correct copies of the financial reports listed in Schedule 6.14-A attached hereto (collectively, the “MGM Financial Reports”). Except for certain assets and liabilities relating to such assets and liabilities and stock compensation expense accounted for on a centralized basis by an Affiliate of MGM set forth on Schedule 6.14-B, the MGM Financial Reports are true, correct and complete in all material respects, have been prepared in accordance with the United States generally accepted accounting principles, where applicable, applied consistently with past practices and fairly present the results of operations shown thereon for the period covered thereby in all material respects (subject, in the case of unaudited financial reports, to the absence of, statements of cash flows, statements of equity, footnotes and normal adjustments and to any other adjustments described therein, so long as such adjustments are not material, individually or in the aggregate). MGM has provided to Sponsor and MGP OP in the Data Room a correct and complete copy of the MGM Financial Reports.

Section 6.15 Grand Water Rights. To MGM’s knowledge, the Grand Water Rights are the only such rights for the beneficial use of water (excluding, for the purposes of clarity, water delivered to the Grand Real Property by the Las Vegas Valley Water District) needed to operate and maintain the uses on the Grand Real Property for which the Grand Water Rights have been permitted and/or certificated, in accordance with the Operating Standard. To MGM’s knowledge, no other water rights (but, excluding, for the purposes of clarity, water delivered to the Grand Real Property by the Las Vegas Valley Water District) (x) have been used in connection with the Grand Real Property in the past five (5) years or (y) are reasonably necessary for any future planned operations of the Grand Real Property.

Section 6.16 Leases. There are no leases of space in the Real Property or other agreements to manage all or any portion of the Real Property that will be in force from and after the Closing Date other than the Existing Leases and the Existing Management Agreements, except for any leases or other occupancy agreements with a term of less than one year (including renewal terms) and/or demising less than 1,000 square feet of space at the Real Property. To MGM’s knowledge, there are no leases of space in the Real Property demising less than 1,000 square feet of space, except as set forth on Schedule 10 to the Lease. To MGM’s knowledge, true, correct and complete (other than in de minimis respects) copies of all Existing Leases and Existing Management Agreements were provided to Sponsor and are listed on Schedule 10 to the Lease and Schedule 11 to the Lease, respectively, except for any leases or other occupancy agreements with a term of less than one year (including renewal terms) and/or demising less than 1,000 square feet of space at the Real Property. MGM has not entered into a non-disturbance agreement with respect to any Existing Lease or Existing Management Agreement that would be binding upon Landlord upon the expiration or earlier termination of the Lease, except as set forth on Schedule 10 to the Lease or Schedule 11 to the Lease.

Section 6.17 No Other Representations and Warranties. Except for the representations and warranties contained in Article III, this Article VI and in the Ancillary Documents, MGM has not made and does not make, and no other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of MGM in connection with the Transactions, including any representation or warranty as to the accuracy or completeness of any information regarding the Real Property (or any portion thereof) furnished or made available to the other Parties or as to the future revenue, profitability or success of the Real Property (or any portion thereof).

 

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ARTICLE VII

COVENANTS

Section 7.1 Debt Financing.

(a) MGP OP and Sponsor shall be jointly responsible for pursuing and obtaining the Debt Financing on behalf of the Joint Venture and pursuing the satisfaction of the conditions precedent set forth in the Debt Financing Commitment; provided that, Sponsor shall have the authority to manage the day to day pursuit of the Debt Financing and negotiation of the definitive documentation, subject to MGP OP’s cooperation (as further set forth in Section 7.1(b)) and reasonable approval of the definitive documentation of the Debt Financing as contemplated by the Debt Financing Commitment. MGM shall have no obligation with respect to the Debt Financing, except with respect to (i) the delivery of the MGM Debt Guaranty and (ii) MGM’s required cooperation as set forth in Section 7.1(b). MGP OP and Sponsor agree that they will each (w) fund or contribute (or will cause to be funded or contributed) equity and/or property into the Joint Venture in accordance with the terms of LLC Agreement for the purpose of paying all fees, costs and expenses incurred by the Joint Venture in connection with obtaining the Debt Financing, (x) deliver the organizational documents and “know your customer” requirements with respect to it and its Subsidiaries which are contemplated by the Debt Financing Commitment and reasonably required by the lender(s), (y) review and negotiate in good faith and within reasonable timeframes the definitive loan documents contemplated by the Debt Financing Commitment, and (z) execute and deliver such loan documents which have been reasonably approved by Sponsor and MGP OP (collectively, the “Material Debt Financing Obligations”).

(b) MGP OP and MGM agree to provide, and shall use their commercially reasonable efforts to cause their respective officers, employees and advisors to provide, reasonable cooperation that is customary and proper in connection with the efforts to arrange the Debt Financing, as may be reasonably requested by them upon reasonable advance notice from Sponsor (provided that such requested cooperation (i) is consistent with applicable Law, (ii) does not substantially and unreasonably interfere with the ongoing operations of MGP OP or MGM or their Affiliates, and (iii) solely with respect to MGM, does not require any out-of-pocket cost not reimbursable by MGP OP and Sponsor under this Agreement), including (a) furnishing the Joint Venture’s financing sources with pertinent and customary financial information regarding the Real Property and the operations thereof by MGM or MGP OP as may be reasonably requested by the Joint Venture’s financing sources; provided that, solely with respect to MGM, MGM shall only be obligated to deliver such financial information to the extent (A) it may be reasonably derived or obtained from the books and records of MGM without undue effort and at no out-of-pocket expense to MGM and (B) that Sponsor has received a reasonable request for such financial information from the lender(s) in connection with the Debt Financing; (b) making appropriate officers of MGP OP and MGM available for a reasonable number of due diligence meetings and for participation in a reasonable number of meetings, presentations, road shows and sessions with rating agencies and prospective sources of financing all at times to be mutually agreed by the Parties; (c) reasonably assisting the Joint Venture’s financing sources with the preparation of materials for rating agency presentations, offering documents, private placement memoranda, bank information memoranda, prospectuses and similar documents required in connection with the Debt Financing; provided that, solely with respect to MGM, MGM shall have no personal or direct liability with respect to the foregoing; (d) reasonably cooperating with

 

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the marketing efforts of the Joint Venture’s financing sources in connection with the Debt Financing; (e) providing timely and reasonable access during normal business hours to diligence materials, appropriate personnel and properties to allow sources of financing and their representatives to complete all customary due diligence; (f) providing reasonable assistance with respect to the review and granting of mortgages and security interests as collateral for the Debt Financing; (g) furnishing the Joint Venture’s financing sources with documents or other information reasonably required by bank regulatory authorities with respect to the Debt Financing under applicable “know your customer” and anti-money laundering rules and regulations; and (h) furnishing customary CMBS legal opinions (including delivering certifications required by the law firms providing such legal opinions) solely with respect to MGP OP and MGM, as may be reasonably required by the Joint Venture’s financing sources, provided that such opinions and certifications of MGP OP and MGM shall be limited to those set forth on Schedule 7.1(b)(h); (i) customary evidence of authority, customary officer’s certificates, customary lien searches with respect to MGM, MGP OP and their Subsidiaries; and (j) requesting and using commercially reasonable efforts to pursue those certain estoppels, subordination agreements, subordination and non-disturbance agreements and/or certificates from the applicable counterparties, in form and substance reasonably satisfactory to the Joint Venture’s financing sources, as described on Schedule 7.1(b)(j) (it being understood that the obtaining of any estoppels, subordination agreements, subordination and non-disturbance agreements and/or certificates shall not be a condition precedent to Sponsor or MGP OP consummating the Closing and in no event shall MGM or MGP OP have any liability or responsibility whatsoever if any of the foregoing cannot be obtained); provided that, notwithstanding the foregoing, solely with respect to MGM, MGM will not be required, in connection with the Debt Financing or otherwise, to: (i) pay or incur any commitment, other fee, obligation or liability prior to, at or after the Closing; (ii) except as otherwise expressly provided in this Agreement, incur any out-of-pocket cost or expense unless such cost or expense is reimbursed by MGP OP and Sponsor in proportion to their respective ownership percentages in the Joint Venture; (iii) be personally or directly liable for or assume any obligation with respect to the Debt Financing (other than under the MGM Debt Guaranty); (iv) provide, or cause to be provided, any information or take any action that would result in a violation of applicable Law or loss of any legal privilege or disclose any information that MGM deems to be confidential or privileged; or (v) cause any representation or warranty of MGM hereunder to be breached or any closing condition to fail to be satisfied, unless irrevocably waived by each of MGP OP and Sponsor; provided, further, that, notwithstanding the foregoing or anything to the contrary contained in this Agreement, except as provided in Section 7.7(h), prior to Closing, Sponsor (or its Affiliates) shall be solely responsible and liable for any commitment, other fees, obligations or liabilities required to be incurred in connection with the Debt Financing, including, without limitation, the legal fees and expenses of MGP OP, Sponsor and the Joint Venture incurred with respect to the Debt Financing (collectively, the “Debt Financing Costs”) and MGP OP will not be required to pay or otherwise incur any Debt Financing Costs, all of which shall be reimbursed to Sponsor by the Joint Venture at Closing.

(c) Each of MGP OP and Sponsor shall jointly and severally indemnify, defend, and hold harmless MGM and the MGM Indemnitees from and against any and all Losses suffered or incurred by them in connection with (A) any action taken by them at the request of MGP OP or Sponsor in connection with the arrangement of the Debt Financing or (B) any information utilized in connection therewith (other than information prepared and provided by MGM in

 

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writing specifically for use in connection with the Debt Financing). Nothing contained in this Agreement or otherwise shall require MGM to be an issuer, guarantor or other obligor with respect to the Debt Financing (except for the MGM Debt Guaranty). Each of MGP OP and Sponsor acknowledges and agrees that its obligation to effect the Closing is not in any way conditioned upon the availability or closing of the Debt Financing (or any alternative financing arrangement).

(d) Notwithstanding anything to the contrary contained in this Agreement, the obligations of each Party under this Section 7.1 shall be deemed satisfied unless such Party has materially breached its obligations under this Section 7.1 and such breach is the direct and proximate cause of the Joint Venture’s failure to obtain the Debt Financing in accordance with the terms of this Agreement.

Section 7.2 Conduct Prior to the Closing. From the date of this Agreement until the earlier of the Closing or the termination of this Agreement pursuant to Section 9.1:

(a) Except as otherwise expressly provided in this Agreement, required by Law or as consented to in writing by MGM and Sponsor, MGP OP shall cause Mandalay Owner and its Subsidiaries to, (i) other than as set forth on Schedule 7.2(a), not take any action with respect to the Mandalay Real Property that would require Landlord’s consent under the Lease if such Lease were in effect and (ii) conduct its business in the ordinary course of business except as is reasonably necessary for MGP to maintain its qualification as a REIT under the Code; provided that before Mandalay Owner and its Subsidiaries may take any action outside the ordinary course of business reasonably necessary for MGP to maintain its qualification as a REIT, MGP shall consult with MGM and Sponsor as to the actions to be taken. To the extent Landlord, under the Lease, will be bound to be reasonable in granting any such consent following the Closing to any such action, MGM and Sponsor shall not unreasonably withhold, condition or delay such consent.

(b) Except as otherwise expressly provided in this Agreement, required by Law, or as consented to in writing by MGP OP and Sponsor, MGM shall cause Grand Owner and its Subsidiaries to, (i) other than as set forth on Schedule 7.2(b), not take any action with respect to the Grand Real Property that would require Landlord’s consent under the Lease if such Lease were in effect and (ii) conduct its business in the ordinary course of business. To the extent Landlord, under the Lease, will be bound to be reasonable in granting any such consent following the Closing to any such action, MGP OP and Sponsor shall not unreasonably withhold, condition or delay such consent.

(c) Except as otherwise expressly provided in this Agreement, required by Law, or as consented to in writing by MGM and Sponsor (which consent shall not be unreasonably withheld, conditioned or delayed), MGP OP shall cause the Joint Venture to (i) not take any action that would require Sponsor’s or Sponsor JV Member’s consent under the LLC Agreement if the LLC Agreement were in effect and (ii) conduct no business other than pursuit of the Closing.

 

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(d) Except as otherwise expressly provided in this Agreement, required by Law, or as consented to in writing by Sponsor, MGP OP shall continue to pay or cause to be paid all Taxes with respect to the Joint Venture and Mandalay PropCo before the same become delinquent (except for tax contests which would be permitted under the Lease if the Lease were in effect). MGP OP shall not take any action (or fail to take any action) if such action (or failure to take action) could cause Grand PropCo, Mandalay PropCo or the Joint Venture (prior to the Closing) to not be treated as a disregarded entity for federal income tax purposes.

(e) Except as otherwise expressly provided in this Agreement, required by Law, or as consented to in writing by Sponsor and MGP OP, MGM shall continue to pay or cause to be paid all Taxes with respect to the ownership and operation of the Real Property and with respect to Grand PropCo before the same become delinquent (except for tax contests which would be permitted under the Lease if the Lease were in effect). MGM shall not take any action (or fail to take any action) if such action (or failure to take action) could cause Grand PropCo to not be treated as a disregarded entity for federal income tax purposes.

(f) Except as otherwise expressly provided in this Agreement, required by Law, or as consented to in writing by Sponsor or MGP OP, MGM shall not take any action which would be in violation of Tenant’s obligations under the Lease if the Lease were in effect.

(g) Neither MGM nor MGP OP nor any agent, partner, employee, director or subsidiary or Affiliate of MGM or MGP OP shall accept or entertain offers, negotiate, solicit interest or otherwise enter into discussions involving the sale, joint venture, recapitalization, restructuring, disposition or other similar transaction involving all or any material part of the Real Property (whether directly or indirectly); provided, that nothing in this Section 7.2(g) shall prohibit any discussions among MGM and MGP OP, and their respective agents, partners, employees, directors or Affiliates with respect to the Transactions.

(h) Except as otherwise required by Law, prior to the Grand Transfer, MGM shall cause Grand PropCo to (i) not employ or engage any individuals, (ii) not establish, enter into, or otherwise incur any Liabilities with respect to any Employee Benefit Plan, and (iii) not become party to a collective bargaining agreement or similar union contract.

(i) Except as otherwise required by Law, MGM shall cause Grand PropCo (but only with respect to Grand PropCo for the period prior to the Grand Transfer) and MGP OP shall cause each of Grand PropCo (but only from and after the Grand Transfer) and Mandalay PropCo to (i) not employ or engage any individuals, (ii) not establish, enter into, or otherwise incur any Liabilities with respect to any Employee Benefit Plan, and (iii) not become party to a collective bargaining agreement or similar union contract.

(j) Notwithstanding anything to the contrary set forth in this Agreement, the Parties agree that Sponsor shall take the lead role in procuring the initial PLL (as defined in the Lease) policy required to be in effect as of the Closing Date under the terms of the Lease, with the cost of such initial PLL policy to be paid by Tenant as provided in the Lease; provided that, if Sponsor is unable to procure such PLL policy at least three (3) Business Days prior to Closing, the Parties will cooperate to discuss and agree upon reasonable modifications to the requirements in the Lease with respect to the PLL policy in order reflect the terms of the PLL policy that can be procured as of Closing.

 

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Section 7.3 Efforts to Consummate. Subject to the terms and conditions set forth in this Agreement, the Parties shall use commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective the Transactions.

Section 7.4 Public Announcements. Each Party shall consult with one another and seek each other’s prior written consent prior to issuing any press release, or otherwise making any public statements, with respect to the Transactions and shall not issue any such press release or make any such public statement prior to such consultation and prior written consent; provided that, each Party may make such announcement which such Party believes in good faith, based on advice of counsel, is necessary in connection with any requirement of law or requirements of the Commission or any securities exchange, it being understood and agreed that each Party shall provide the other Parties with copies of any such announcement in advance of such issuance if timing reasonably permits such Party to do so (and, if such announcement is not provided in advance by a Party because the required timing does not permit such Party to do so, then such Party shall provide such announcement promptly thereafter). Notwithstanding the foregoing, nothing herein shall limit the right of a Party or any of their respective Affiliates to publicly disclose the Transactions or otherwise make public statements regarding the Transactions that are consistent with prior disclosures and/or statements by such Party regarding similar transactions.

Section 7.5 Governmental and Regulatory Approvals and Other Third Party Consents.

(a) Each Party shall use its reasonable best efforts to obtain, or cause to be obtained as promptly as reasonably practicable after the date hereof, all consents, authorizations, orders and approvals from all third parties, including Governmental Entities, that are necessary or advisable to be obtained to consummate the Transactions, including with respect to Gaming Laws, including, for the avoidance of doubt, providing information with respect to the execution and filing of any submissions in respect thereof and participating in meetings with the applicable Gaming Authorities or other applicable Governmental Entities. Each Party shall cooperate with each other Party and each other Party’s Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals (including supplying each other Party with any information which may be required in order to obtain such consents, authorizations, orders and approvals, and responding as promptly as practicable and advisable to any inquiry or request received from any Governmental Entity for additional information or documentation) and, once obtained, shall comply with the terms and conditions of such consents, authorizations, orders and approvals.

(b) Each Party agrees (i) to make (or cause its ultimate parent entities to make), to the extent applicable, an appropriate filing pursuant to each applicable Gaming Law within two (2) Business Days following the date of this Agreement and (ii) to respond as promptly as possible to any request for information from any Gaming Authority or other applicable Governmental Entities.

(c) Subject to applicable Laws relating to the exchange of information, prior to making any application or material written communication to, or filing with, any Governmental Entity with respect to the Transactions, each Party shall provide each other Party with drafts thereof, afford each other Party a reasonable opportunity to comment on such drafts and

 

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incorporate each other Party’s reasonable comments. To the extent relating to the Transactions, each of the Parties shall, and shall cause their respective Affiliates to, (i) each use its respective reasonable best efforts to schedule and attend any hearings or meetings with Governmental Entities, including Gaming Authorities, (ii) permit, to the extent permitted, each other Party to participate in any meetings or conference calls with any Governmental Entity and (iii) promptly notify each other Party following (x) receipt of any comments, requests or other material communications (whether written or oral) from any Governmental Entity (and provide to each other Party copies of any written communications so received) and (y) receipt of any threatened action, suit, arbitration, investigation or other proceeding. Notwithstanding anything in this Agreement to the contrary, MGM shall determine the strategy to be pursued for obtaining and lead the effort to obtain all necessary actions or non-actions from Governmental Entities in connection with the Transactions, including all matters related to timing, and MGP OP and Sponsor shall take all reasonable actions to support MGM in connection therewith, provided that, MGM shall take no action in pursuit of the foregoing with respect to any Sponsor Licensed Party which will be binding upon such Sponsor Licensed Party or an Affiliate of Sponsor.

(d) Notwithstanding anything to the contrary herein, nothing in this Section 7.5 or elsewhere in this Agreement shall require Sponsor or Share Purchaser to take or agree to take any action with respect to any of their Affiliates, including selling, divesting or otherwise disposing of, conveying, licensing, holding separate, or otherwise restricting or limiting its freedom of action with respect to, any assets, business, products, rights, licenses, investments, or assets, or interests therein, other than with respect to the Joint Venture.

Section 7.6 Casualty and Condemnation.

(a) If at any time prior to the Closing, (i) the Real Property or any portion thereof is damaged or destroyed as a result of any Casualty Event or (ii) any Condemnation occurs, MGM, in the case of the Grand Real Property, or MGP OP, in the case of the Mandalay Real Property, shall promptly give the other Parties written notice thereof (which notice shall describe the Casualty Event or Condemnation, as applicable, and which portions of the Real Property will be affected thereby) if such Casualty Event or Condemnation is reasonably expected to require an expenditure of greater than $5,000,000.00 to repair or replace the applicable portion of the Real Property. To the extent that MGM or MGP OP or their respective Subsidiaries receive insurance proceeds from their respective insurance policies and/or condemnation proceeds in respect of the Casualty Event or Condemnation, MGM or MGP OP, as the case may be, shall use such proceeds to repair such damage or destruction, or replace such taken property, as applicable, to the extent practicable prior to Closing. If as of the Closing, MGM or MGP OP, as the case may be, has not used all of such proceeds to repair such damage or destruction, or replace such taken property, as applicable, the Parties shall nevertheless be required to close the Transactions in accordance with this Agreement and the provisions of the Lease will apply with respect to the use and continued custody of such proceeds as if the Lease had been in effect as of the date of the Casualty Event or Condemnation. If as of the Closing, MGM or MGP OP, as the case may be, has not received all or any portion of such insurance or condemnation proceeds, the Parties shall nevertheless be required to close the Transactions in accordance with this Agreement without any credit for such insurance or condemnation proceeds and the provisions of the Lease shall apply to such proceeds when received as if the Lease had been in effect as of the date of the Casualty Event or Condemnation.

 

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(b) If, on or before the Closing Date, the Real Property or any portion thereof shall be (i) damaged or destroyed by a Material Casualty Event or (ii) taken as a result of a Material Condemnation, Sponsor and MGP OP shall each have the right, exercised by notice to the other Parties no more than ten (10) Business Days after delivery of written notice from MGM or MGP OP, as the case may be, of such Material Casualty Event or Material Condemnation pursuant to Section 7.6(a), to terminate this Agreement. For the avoidance of doubt, in the event that a Casualty Event or Condemnation shall have occurred after the date hereof and prior to Closing and the Closing nevertheless occurs in accordance with this Agreement, the terms of the Lease shall remain unmodified and neither Landlord nor Tenant will be entitled to any offset or credit under the Lease.

Section 7.7 Costs.

(a) At Closing, MGM shall pay the respective premiums for the Title Policies (excluding the cost of any premiums for endorsements or any extended coverage) with such maximum aggregate premium amount not to exceed the amount set forth on Schedule 7.7 hereto, except as otherwise provided in Schedule 7.7, and any Transfer Taxes or recording fees incurred in connection with the recordation of the Grand Deed. At Closing, MGP OP shall pay any Transfer Taxes or recording fees incurred in connection with (x) the recordation of the Mandalay Deed and (y) the Interests Acquisition.

(b) Except as otherwise expressly provided in this Agreement, MGP OP and Sponsor shall cause the Joint Venture to pay all costs and expenses incurred in connection with acquiring the Real Property (collectively, the “Joint Venture Costs”), including: (i) all third-party out-of-pocket costs associated with the due diligence of MGP OP and Sponsor, including the cost of appraisals, architectural, engineering, credit and environmental reports, (ii) the cost of any premiums for endorsements and extended coverage under the Title Policies, together with the cost of any premiums for any lender’s title insurance policy, endorsements and extended coverage, with the benefit of any “simultaneous issuance” being applied to the lender title insurance policy, with the aggregate amount of all such premiums not to exceed the amount set forth in Schedule 7.7, except as otherwise provided in Schedule 7.7, (iii) all third-party out-of-pocket costs in updating any survey of the Real Property (or any portion thereof), (iv) all Debt Financing Costs, and (v) all taxes and fees incurred in connection with the recordation of the deed of trust and other security instruments given or made in connection with the Debt Financing. Any Joint Venture Costs (other than any Debt Financing Costs) to be paid (or otherwise incurred) prior to the Closing shall be paid (or incurred) by MGP OP and Sponsor in proportion to their respective ownership percentages in the Joint Venture and any such Joint Venture Costs paid by MGP OP and Sponsor prior to the Closing shall be included as initial capital contributions by MGP OP and Sponsor, respectively, to the Joint Venture or otherwise reimbursed to MGP OP and Sponsor by the Joint Venture at the Closing. Subject to Section 7.7(h), any Debt Financing Costs to be paid (or otherwise incurred) prior to the Closing shall be paid (or incurred) solely by Sponsor (or its Affiliates) and shall be reimbursed to Sponsor by the Joint Venture at Closing.

(c) At Closing, MGP OP and Sponsor shall cause the Joint Venture to reimburse MGM for all reasonable third-party out-of-pocket costs and expenses incurred by MGM in its cooperation with respect to the arrangement of the Debt Financing as provided in Section 7.1.

 

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(d) MGP OP shall pay (i) all fees, costs and expenses payable to third parties in connection with completing the Mandalay Contribution, the Mandalay PropCo Contribution, and the MGP OP Debt Refinancing, (ii) any Transfer Taxes payable in connection with the Mandalay Contribution and the Mandalay PropCo Contribution, and (iii) any all fees, costs and expenses payable to third parties (or to MGP OP’s legal advisors) in connection with the incurrence and repayment of the Bridge Loan.

(e) MGM shall pay (i) all fees, costs and expenses payable to third parties in connection with completing the Grand Contribution, Grand PropCo Contribution and the Grand Transfer, (ii) any Transfer Taxes payable in connection with the Grand Contribution, the Grand PropCo Contribution and the Grand Transfer, and (iii) the cost of any owner’s title insurance policy insuring Tenant which Tenant elects to purchase, subject to the provisions of Schedule 7.7.

(f) Sponsor and the Joint Venture shall not be responsible for any of the costs and expenses associated with the Master Lease Amendment and the OP Unit Issuance and such costs and expenses shall be borne by MGP OP and MGM as agreed by them.

(g) Each of the Parties shall pay the fees, commissions and expenses of any broker, investment banker, financial advisor or other Person retained by such Party or any of its Affiliates.

(h) Except as otherwise provided in this Agreement, all costs and expenses incurred in connection with this Agreement, the Ancillary Documents and the Transactions shall be paid by the Party incurring such costs and expenses, whether or not the Closing shall have occurred, including the costs and expenses of the Parties’ respective retained consultants, attorneys, lenders, potential financing sources, investors, representatives, employees, partners, agents and advisors. Without limiting the generality of the foregoing, all fees, costs and expenses of legal advisors incurred in connection with the preparation, negotiation, execution and delivery of the Transaction Documents or the Transactions shall be paid by the Party retaining such legal advisor and shall not be a Joint Venture Cost, except to the extent explicitly included in Debt Financing Costs. Notwithstanding anything in this Agreement to the contrary, if the Closing does not occur (other than as a result of a Sponsor Breach), Sponsor and MGP OP shall be responsible for, and shall share the cost of, any Debt Financing Costs actually incurred by Sponsor (or its Affiliates) and/or MGP OP (and its Affiliates) (collectively, the “Aggregate Debt Financing Costs”) as follows: (x) if no Parties are in default under this Agreement, Sponsor (or its Affiliates) shall be responsible for paying 49.9% of all Aggregate Debt Financing Costs and MGP OP shall be responsible for paying 50.1% of all Aggregate Debt Financing Costs (with respect to each such Party, its “Pro Rata Share”), and the Party paying less than its Pro Rata Share of such Aggregate Debt Financing Costs shall promptly pay an amount to the other Party equal to any such underpayment, or (y) if MGM is in default under this Agreement, then, in addition to paying its Pro Rata Share of all Aggregate Debt Financing Costs, MGP OP shall be also be obligated to reimburse Sponsor in the amount of MGP OP’s Pro Rata Share of any Aggregate Debt Financing Costs actually paid by Sponsor which are not actually reimbursed by MGM pursuant to Section 9.3(b).

(i) The provisions of this Section 7.7 shall survive the Closing indefinitely.

 

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Section 7.8 Prorations. As the Tenant under the Lease will be responsible for all real property taxes, insurance premiums and operating expenses with respect to the Real Property after the Closing, there will be no prorations of such costs or expenses at the Closing. For the avoidance of doubt, MGM shall be responsible for all real property taxes, insurance premiums and operating expenses with respect to the Real Property prior to the Closing. The provisions of this Section 7.8 shall survive the Closing indefinitely.

Section 7.9 Books and Records.

(a) Sponsor has advised MGM and MGP OP that, following the Closing, Sponsor (or a direct or indirect owner of Sponsor or Affiliate thereof) may be required to file, in compliance with certain laws and regulations (including, without limitation, Regulation S-X of the Securities and Exchange Commission), pro forma financial statements and other financial information related to MGM and MGP OP, Grand PropCo, Mandalay PropCo, the Joint Venture or the Real Property for one (1) fiscal year prior to the Closing and any interim period during the fiscal year in which the Closing occurs (the “Sponsor Financial Information”). Following the Closing, if Sponsor (or a direct or indirect owner of Sponsor or Affiliate thereof) is required to file, in compliance with such laws and regulations, the Sponsor Financial Information, then MGM and MGP OP agree to, at no cost to MGM or MGP OP, use commercially reasonable efforts to cooperate with Sponsor (and/or its Affiliates) and its representatives and agents in preparing the Sponsor Financial Information, including, if requested by Sponsor, using commercially reasonable efforts to (i) maintain and allow Sponsor (and/or its Affiliates) (upon not less than five (5) Business Days’ prior written notice), reasonable access to, during normal business hours, such books and records of MGM and MGP OP reasonably related to the Real Property until (but not after) December 31, 2020 and (ii) make employees with knowledge of the Real Property available for interview by Sponsor (and/or its Affiliates) (it being understood that MGM and MGP OP shall not be required to deliver pro forma financial statements or provide pro forma adjustments to the Sponsor Financial Information to reflect the transactions contemplated herein including any financing related thereto).

(b) MGP OP has advised MGM and Sponsor that, following the Closing, MGP OP (or a direct or indirect owner of MGP OP or Affiliate thereof) may be required to file, in compliance with certain laws and regulations (including, without limitation, Regulation S-X of the Securities and Exchange Commission), pro forma financial statements and other financial information related to MGM and Sponsor, Grand PropCo, Mandalay PropCo, the Joint Venture or the Real Property for one (1) fiscal year prior to the Closing and any interim period during the fiscal year in which the Closing occurs (the “MGP OP Financial Information”). Following the Closing, if MGP OP (or a direct or indirect owner of MGP OP or Affiliate thereof) is required to file, in compliance with such laws and regulations, the MGP OP Financial Information, then MGM and Sponsor agree to, at no cost to MGM or Sponsor, use commercially reasonable efforts to cooperate with MGP OP (and/or its Affiliates) and its representatives and agents in preparing the MGP OP Financial Information, including, if requested by MGP OP, using commercially reasonable efforts to (i) maintain and allow MGP OP (and/or its Affiliates) (upon not less than five (5) Business Days’ prior written notice), reasonable access to, during normal business hours, such books and records of MGM and Sponsor reasonably related to the Real Property until (but not after) December 31, 2020 and (ii) make employees with knowledge of the Real Property available for interview by MGP OP (and/or its Affiliates) (it being understood that MGM and Sponsor shall not be required to deliver pro forma financial statements or provide pro forma adjustments to the MGP OP Financial Information to reflect the transactions contemplated herein including any financing related thereto).

 

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Section 7.10 Basis Information. Prior to the Closing, MGM shall provide to the Joint Venture an estimate of the adjusted basis of the Grand Real Property and the Mandalay Real Property as of the Closing Date. On or before July 1, 2020, MGM shall provide to the Joint Venture its final computation of the adjusted basis of the Grand Real Property and the Mandalay Real Property along with the additional documentation supporting such final computation.

Section 7.11 Lock-Up of MGP Class A Shares.

(a) In consideration of MGP’s issuance of the MGP Consideration Shares, Share Purchaser (or its designated Affiliate receiving the MGP Consideration Shares pursuant to Section 2.4(a)) covenants and agrees that, for the period beginning on the Closing Date and ending on the date that is two (2) years following the Closing Date (the “Lock-Up Period”), it will not, without MGP’s prior written consent, directly or indirectly, (i) sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of any of the MGP Consideration Shares (each of the foregoing, a “Transfer”), or publicly announce the intention to make any such Transfer, or (ii) enter into any swap or any other agreement or any transaction that transfer, in whole or in part, directly or indirectly, the economic consequence of ownership of the MGP Consideration Shares, whether any such swap is to be settled by delivery of the MGP Consideration Shares or other securities, in case, or otherwise, in each of clauses (i) and (ii), other than to any of its Affiliates or to any investment fund or other entity controlled or managed by the Share Purchaser or its Affiliates who agrees to MGP in writing (in form reasonably satisfactory to MGP) at least one (1) Business Day prior to any such Transfer to be bound by this Section 7.11(a) (a “Permitted Transferee”); provided that no Transfer shall be deemed to be made solely as a result of direct or indirect transfers of equity interest in Blackstone Real Estate Income Trust, Inc. or any of its Affiliates and the foregoing shall not prohibit (x) any Transfer or any pledge, hypothecation or grant security interests in of the MGP Consideration Shares in connection with the Share Purchaser’s or its Permitted Transferee’s entry into a margin loan in respect of the MGP Consideration Shares or any Transfers by the applicable lender upon the exercise of any related foreclosure right or remedy or (y) any Transfer pursuant to an order of a court or regulatory agency (provided further that, in the case of this clause (y), Share Purchaser (or its designated Affiliate receiving the MGP Consideration Shares pursuant to Section 2.4(a)) or such other person who has previously acquired MGP Consideration Shares in accordance with this Section 7.11 shall provide notice of such Transfer to MGP as soon as reasonably practicable to the extent not prohibited by law).

(b) Upon the request of the Share Purchaser or any of its Permitted Transferees with respect to a contemplated pledge, hypothecation or grant security interests in any or all of the shares of MGP Consideration Shares held by it including to banks or financial institutions as collateral or security for loans, advances or extensions of credit, MGP agrees to cooperate with the Share Purchaser and its Permitted Transferees in taking any action reasonably necessary to consummate any such pledge, hypothecation or grant, including delivery of letter agreements to lenders in form and substance reasonably satisfactory to such lenders (which may include agreements by MGP in respect of the exercise of remedies by such lenders), instructing the transfer agent to transfer any such MGP Consideration Shares subject to the pledge, hypothecation or grant into the facilities of The Depository Trust Company without restricted legends.

 

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(c) For so long as Share Purchaser and its Permitted Transferees beneficially own MGP Consideration Shares that represent more than 1% of the issued and outstanding MGP Class A Shares, MGP shall not repurchase MGP Class A Shares or engage in a recapitalization or other transaction that results in the MGP Consideration Shares then beneficially owned by Share Purchaser and its Permitted Transferees representing more than 9.8% of the issued and outstanding MGP Class A Shares immediately following the consummation of such repurchase, recapitalization or other transaction unless, prior to engaging in any such transaction, MGP registers the resale of such MGP Consideration Shares by Share Purchaser (and the Permitted Transferees who then hold MGP Consideration Shares) on a shelf registration statement pursuant to a customary registration rights agreement between Share Purchaser (and the Permitted Transferees who then hold MGP Consideration Shares) and MGP.

Section 7.12 Certain Interim Covenants of MGP.

(a) Interim Operations. MGP covenants and agrees that, after the date hereof and through the Closing Date (unless the Share Purchaser shall otherwise approve in writing (such approval not to be unreasonably withheld, conditioned or delayed)), and except for any transactions made in connection with or as otherwise expressly contemplated by this Agreement or as required by applicable Law, the business of MGP and its subsidiaries shall be conducted in all material respects in the ordinary course consistent with past practice; it being agreed and understood that the pursuit and consummation of real estate acquisitions (including, if applicable, via a taxable REIT subsidiary), including the entry into definitive agreements with respect thereto, is in the ordinary course of MGP’s business.

(b) Dividends. MGP covenants and agrees that, after the date hereof and through the Closing Date, MGP shall not declare or make any dividend or distribution other than regular quarterly cash dividends with respect to its MGP Class A Shares, not in excess of $1.90 per share on an annualized basis, with usual declaration record and payment dates and in accordance with MGP’s past dividend policy.

(c) NYSE Listing. MGP shall cause the MGP Consideration Shares to be approved for listing on the New York Stock Exchange (the “NYSE”) prior to the Closing Date, subject to official notice of issuance.

 

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ARTICLE VIII

CONDITIONS TO CONSUMMATION OF THE CLOSING

Section 8.1 Conditions to Sponsors Obligation to Effect the Closing. The obligation of Sponsor to consummate the Transactions is subject to the satisfaction (or, if permitted by applicable law, waiver by Sponsor) of the following conditions:

(a) (i) The MGP OP Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) the MGM Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date);

(b) (i) All representations and warranties of MGP OP set forth in Article III and Article IV other than the MGP OP Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) all representations and warranties of MGM set forth in Article III and Article VI other than the MGM Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), in each of clauses (i) and (ii) above, except where the failure of such representations and warranties described in this Section 8.1(b) to be true and correct would not have a material adverse effect on the Real Property or Landlords;

(c) (i) MGP OP shall have performed and complied with its covenants and agreements under this Agreement in all material respects and (ii) MGM shall have performed and complied with its covenants and agreements under this Agreement in all material respects;

(d) Each delivery contemplated by Article II to be delivered to Sponsor shall have been delivered;

(e) The applicable Gaming Authorities shall have approved the Transactions to the extent any such approvals are required to close the Transactions;

(f) No Governmental Entity having jurisdiction over Sponsor shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether preliminary, temporary or permanent) which has the effect of making illegal, materially restricting or preventing or prohibiting the consummation of the Transactions;

 

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(g) Title to the Real Property shall be vested in the applicable Landlord, subject only to the applicable Permitted Encumbrances, MGM or MGP OP shall have released (or caused to be released) all mortgages encumbering the Real Property arising by, through or under it or its Affiliates (excluding, for the avoidance of doubt, any mortgage made in connection with the Debt Financing); and

(h) Tenant shall have obtained the insurance coverage required by Article XIII of the Lease and provide reasonable evidence thereof to Landlord.

Section 8.2 Conditions to MGP OPs Obligation to Effect the Closing. The obligation of MGP OP to consummate the Transactions is subject to the satisfaction (or, if permitted by applicable law, waiver by MGP OP) of the following conditions:

(a) (i) The Sponsor Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) the MGM Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date);

(b) (i) All representations and warranties of Sponsor set forth in Article III and Article V other than the Sponsor Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) all representations and warranties of MGM set forth in Article III and Article VI other than the MGM Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), in each of clauses (i) and (ii) above, except where the failure of such representations and warranties described in this Section 8.2(b) to be true and correct would not have a material adverse effect on the Real Property or Landlords;

(c) Sponsor shall have paid the Interest Purchase Price in accordance with Article II;

(d) (i) Sponsor shall have performed and complied with its covenants and agreements under this Agreement in all material respects and (ii) MGM shall have performed and complied with its covenants and agreements under this Agreement in all material respects;

(e) Each delivery contemplated by Article II to be delivered to MGP OP shall have been delivered;

 

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(f) The applicable Gaming Authorities shall have approved the Transactions to the extent any such approvals are required to close the Transactions;

(g) No Governmental Entity having jurisdiction over MGP OP or its Subsidiaries shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether preliminary, temporary or permanent) which has the effect of making illegal, materially restricting or preventing or prohibiting the consummation of the Transactions;

(h) Title to the Grand Real Property shall be vested in the applicable Landlord, subject only to the applicable Permitted Encumbrances, MGM shall have released (or caused to be released) all mortgages encumbering the Grand Real Property arising by, through or under it or its Affiliates (excluding, for the avoidance of doubt, any mortgage made in connection with the Debt Financing);

(i) Tenant shall have obtained the insurance coverage required by Article XIII of the Lease and provide reasonable evidence thereof to Landlord; and

(j) The concurrent consummation of the Share Purchase; provided that if the inability of the Share Purchase to be concurrently consummated is primarily due to MGM’s or MGP OP’s breach of, or failure to perform, any of their respective representations, warranties, covenants or agreements set forth in this Agreement, then this Section 8.2(j) shall be deemed to be waived by MGP OP and shall not be a condition to MGP OP’s obligation to consummate the Transactions.

Section 8.3 Conditions to MGMs Obligation to Effect the Closing. The obligation of MGM to consummate the Transactions is subject to the satisfaction (or, if permitted by applicable law, waiver by MGM) of the following conditions:

(a) (i) The Sponsor Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) the MGP OP Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date);

(b) (i) All representations and warranties of Sponsor set forth in Article III and Article V other than the Sponsor Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) all representations and warranties of MGP OP set forth in Article III and Article IV other than the MGP OP Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the date hereof and

 

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the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), in each of clauses (i) and (ii) above, except where the failure of such representations and warranties described in this Section 8.3(b) to be true and correct would not have a material adverse effect on the Real Property or Landlords;

(c) Sponsor shall have paid the Interest Purchase Price in accordance with Article II;

(d) (i) Sponsor shall have performed and complied with its covenants and agreements under this Agreement in all material respects and (ii) MGP OP shall have performed and complied with its covenants and agreements under this Agreement in all material respects;

(e) Each delivery contemplated by Article II to be delivered to MGM shall have been delivered;

(f) The applicable Gaming Authorities shall have approved the Transactions to the extent any such approvals are required to close the Transactions;

(g) No Governmental Entity having jurisdiction over MGM or its Subsidiaries shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether preliminary, temporary or permanent) which has the effect of making illegal, materially restricting or preventing or prohibiting the consummation of the Transactions;

(h) The Joint Venture shall have obtained the Debt Financing (including an acknowledgment and acceptance of the MGM Debt Guaranty); provided that, notwithstanding anything to the contrary contained herein, MGM shall not have the right to waive the condition set forth in this clause (h) without the prior written consent of all other Parties; and

(i) The concurrent consummation of the Share Purchase; provided that if the inability of the Share Purchase to be concurrently consummated is primarily due to MGM’s or MGP OP’s breach of, or failure to perform, any of their respective representations, warranties, covenants or agreements set forth in this Agreement, then this Section 8.3(i) shall be deemed to be waived by MGM and shall not be a condition to MGM’s obligation to consummate the Transactions.

Section 8.4 Conditions to Share Purchasers Obligation to Effect the Share Purchase. The obligation of the Share Purchaser to consummate the Share Purchase is subject to the satisfaction (or, if permitted by applicable law, waiver by the Share Purchaser) of the following conditions:

(a) The concurrent consummation of the Transactions;

(b) (i) The MGP Fundamental Representations and the representations and warranties of MGP set forth in Section 1.10 of Annex A (without giving effect to any limitation as to “materiality” or MGP Material Adverse Effect set forth therein) shall be true and correct in all respects as of the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) each of the other representations and warranties of MGP set forth in Article I of Annex A (without giving

 

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effect to any limitation as to “materiality” or MGP Material Adverse Effect set forth therein) shall be true and correct in all respects as of the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), except in the case of clause (ii) where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have an MGP Material Adverse Effect;

(c) Since the date of this Agreement, there shall not have been any effect, event, development or change that, individually or in the aggregate with all other effects, events, developments or changes, has had or would reasonably be expected to have an MGP Material Adverse Effect;

(d) MGP shall have performed and complied with its covenants and agreements under this Agreement in all material respects;

(e) Each delivery contemplated by Section 2.4 to be delivered to the Share Purchaser shall have been delivered;

(f) No Governmental Entity having jurisdiction over the Share Purchaser shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether preliminary, temporary or permanent) which has the effect of making illegal, materially restricting or preventing or prohibiting the consummation of the Share Purchase; and

(g) The MGP Consideration Shares shall have been authorized for listing on the NYSE, subject to official notice of issuance.

Section 8.5 Conditions to MGPs Obligation to Effect the Share Issuance. The obligation of MGP to consummate the Share Purchase is subject to the satisfaction (or, if permitted by applicable law, waiver by MGP) of the following conditions:

(a) The concurrent consummation of the Transactions;

(b) (i) The Share Purchaser Fundamental Representations (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all respects as of the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date), and (ii) each of the other representations and warranties of Share Purchaser set forth in Article II of Annex A (without giving effect to any limitation as to “materiality” set forth therein) shall be true and correct in all material respects as of the Closing Date as if made on the Closing Date (except to the extent any such representation or warranty is expressly made as of another date, in which case such representation or warranty shall be true and correct as of such other date);

(c) Share Purchaser shall have performed and complied with its covenants and agreements under this Agreement in all material respects;

 

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(d) Each delivery contemplated by Section 2.4 to be delivered by the Share Purchaser shall have been delivered; and

(e) No Governmental Entity having jurisdiction over MGP shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether preliminary, temporary or permanent) which has the effect of making illegal, materially restricting or preventing or prohibiting the consummation of the Share Purchase.

ARTICLE IX

TERMINATION RIGHTS

Section 9.1 Termination of Agreement. This Agreement may be terminated, and the Transactions may be abandoned, at any time prior to the Closing as follows:

(a) by mutual written consent of each of MGP OP, MGM and Sponsor;

(b) by any of MGP OP, MGM or Sponsor if any Governmental Entity shall have issued an Order or taken any other action permanently enjoining, restraining or otherwise prohibiting the Transactions and such Order or other action shall have become final and non-appealable; provided that, the Party seeking to terminate this Agreement pursuant to this Section 9.1(b) shall have complied with all of, and shall not have breached any of, its obligations set forth in Section 7.5;

(c) by Sponsor by written notice to the other Parties if any other Party has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (or if MGP has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Specified Sections), which breach or failure to perform would result in the failure of the conditions set forth in Section 8.1 to be satisfied and such breach or failure to perform is incapable of being cured or, if capable of being cured, is not cured by the earlier of (x) the date that is three (3) Business Days prior to the Outside Date and (y) thirty (30) days following receipt by the other Parties (or MGP, if applicable) of written notice of such breach or failure from Sponsor; provided that, the right to terminate this Agreement pursuant to this Section 9.1(c) shall not be available if Sponsor (or Share Purchaser, if applicable) is itself in breach of or has failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform would result in the failure of the conditions set forth in Section 8.2 and/or Section 8.3 to be satisfied;

(d) by MGP OP by written notice to the other Parties if any other Party has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (or if Share Purchaser has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Specified Sections), which breach or failure to perform would result in the failure of the conditions set forth in Section 8.2 to be satisfied and such breach or failure to perform is incapable of being cured or, if capable of being cured, is not cured by the earlier of (x) the date that is three (3) Business Days prior to the Outside Date and (y) thirty (30) days following receipt by the other Parties (or Share Purchaser, if applicable) of written notice of such breach or failure from MGP OP; provided that, the right to terminate this Agreement pursuant to this Section 9.1(d) shall not be available if MGP OP (or MGP, if applicable) is itself in breach of or has failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform would result in the failure of the conditions set forth in Section 8.1 and/or Section 8.3 to be satisfied;

 

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(e) by MGM by written notice to the other Parties if any other Party has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (or if Share Purchaser has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Specified Sections), which breach or failure to perform would result in the failure of the conditions set forth in Section 8.3 to be satisfied and such breach or failure to perform is incapable of being cured or, if capable of being cured, is not cured by the earlier of (x) the date that is three (3) Business Days prior to the Outside Date and (y) thirty (30) days following receipt by the other Parties (or Share Purchaser, if applicable) of written notice of such breach or failure from MGM; provided that, the right to terminate this Agreement pursuant to this Section 9.1(e) shall not be available if MGM is itself in breach of or has failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform would result in the failure of the conditions set forth in Section 8.1 and/or Section 8.2 to be satisfied;

(f) by MGM, if the Joint Venture shall have failed to obtain the Debt Financing (including the MGM Debt Guaranty) on terms reasonably acceptable to Sponsor and MGP OP as of the Closing Date; provided that MGM shall not have a right to terminate this Agreement pursuant to this Section 9.1(f) if (i) MGM breaches its obligations under Section 7.1, (ii) such breach is the direct and proximate cause of the Joint Venture’s failure to obtain the Debt Financing in accordance with the terms of this Agreement, and (iii) such breach or failure to perform is incapable of being cured or, if capable of being cured, is not cured by the earlier of (x) the date that is three (3) Business Days prior to the Outside Date and (y) thirty (30) days following receipt by MGM of written notice of such breach or failure from any of the other Parties;

(g) by any of MGP OP, MGM or Sponsor by written notice to each other Party if the Closing does not occur by the Outside Date; provided that, the right to terminate this Agreement under this Section 9.1(g) shall not be available to any such Party if such failure of the Closing to occur is primarily due to the failure of such Party to perform any of its obligations under this Agreement; or

(h) by any of MGP OP, MGM or Sponsor by written notice to each other Party if all approvals required from applicable Gaming Authorities have not been obtained by the Outside Date.

Any termination of this Agreement pursuant to this Section 9.1 shall not, in and of itself, be considered a breach or violation of the obligations of the terminating Party under this Agreement.

Section 9.2 Effect of Termination. In the event that this Agreement is validly terminated by any Party as provided in Section 9.1, each Party will be relieved of its duties and obligations arising under this Agreement after the date of such termination and such termination will be without Liability to any Party; provided that, the agreements and obligations of the Parties set forth in this Agreement which are expressly provided to survive termination of this Agreement shall survive such termination and remain in full force and effect.

 

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Section 9.3 Remedies Upon Termination.

(a) Notwithstanding anything to the contrary contained in this Agreement, if this Agreement is terminated by MGM (i) pursuant to Section 9.1(e) due to Sponsor’s (or Share Purchaser’s) breach or failure to perform its obligations under this Agreement other than a MDFO Breach by Sponsor (a “Sponsor Breach”) or due to MGP OP’s breach or failure to perform its obligations under this Agreement other than a MDFO Breach by MGP OP (an “MGP Breach”) or (ii) pursuant to Section 9.1(f), then:

(1) in the event this Agreement is terminated as set forth in clause (i) above as a result of a Sponsor Breach, Sponsor shall (x) pay, or cause to be paid, to MGM a termination fee in cash equal to $250,000,000.00 and (y) pay to MGP OP all documented out-of-pocket costs and expenses incurred by MGP and its Subsidiaries in connection with the transactions contemplated hereunder up to a maximum amount not to exceed $10,000,000.00 in the aggregate;

(2) in the event this Agreement is terminated as set forth in clause (i) above as a result of an MGP Breach, MGP OP shall (x) pay, or cause to be paid, to MGM a termination fee in cash equal to $250,000,000.00 and (y) pay to Sponsor all documented out-of-pocket costs and expenses incurred by Sponsor and its Affiliates in connection with the Transactions, which shall not exceed in the aggregate, an amount equal to the sum of (1) $10,000,000.00 plus (2) the Debt Financing Hedging Fees;

(3) in the event this Agreement is terminated as set forth in clause (i) above as a result of both a Sponsor Breach and an MGP Breach, then each of Sponsor and MGP OP shall pay, or cause to be paid, to MGM a termination fee in cash equal to $125,000,000.00; and

(4) in the event this Agreement is terminated as set forth in clause (ii) above:

(A) if the Joint Venture’s failure to obtain the Debt Financing in accordance with the terms of this Agreement was primarily due to a material MDFO Breach by MGP OP after reasonable notice to MGP OP from Sponsor and an opportunity to cure such breach, MGP OP shall pay, or cause to be paid, to (x) MGM a termination fee in cash equal to $250,000,000.00 and (y) Sponsor all documented out-of-pocket costs and expenses incurred by Sponsor and its Affiliates in connection with the Transactions, which shall not exceed in the aggregate, an amount equal to the sum of (1) $10,000,000.00 plus (2) the Debt Financing Hedging Fees;

(B) if the Joint Venture’s failure to obtain the Debt Financing in accordance with the terms of this Agreement was primarily due to a material MDFO Breach by Sponsor, Sponsor (x) shall pay, or cause to be paid, to MGM a termination fee in cash equal to $250,000,000.00 and (y) shall pay to MGP OP all documented out-of-pocket costs and expenses incurred by MGP and its Subsidiaries in connection with the transactions contemplated hereunder up to a maximum amount not to exceed $10,000,000.00 in the aggregate;

 

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(C) if the Joint Venture’s failure to obtain the Debt Financing in accordance with the terms of this Agreement was due to a material MDFO Breach by both Sponsor and MGP OP (and, with respect to MGP OP, after reasonable notice to MGP OP from Sponsor and an opportunity to cure such breach) or was not due to a material MDFO Breach by either Sponsor or MGP OP, in each case, as set forth in clauses (A) and (B) above, then Sponsor shall pay, or cause to be paid, to MGM a termination fee in cash equal to $125,000,000.00 and MGP OP shall pay, or cause to be paid, to MGM a termination fee in cash equal to $125,000,000.00 (any amount payable to MGM pursuant to subparagraph (1), (2), (3) or (4) of this Section 9.3(a), a “Termination Fee”).

It is understood by the Parties that in no event shall Sponsor or MGP OP be required to pay a Termination Fee on more than one occasion nor shall MGM be entitled to an aggregate Termination Fee in excess of $250,000,000 under any circumstance. In the event that MGM is entitled to terminate this Agreement pursuant to Section 9.3(a)(2) or Section 9.3(a)(4)(A), nothing contained herein and no exercise of remedies by MGM shall limit or impair the right of Sponsor to exercise as its sole and exclusive remedy against MGP OP to (i) pursue specific performance pursuant to Section 9.3(b)(ii), (ii) terminate this Agreement and seek payment from MGP OP pursuant to Section 9.3(b)(i) for Sponsor’s (and Sponsor’s Affiliates’) documented out-of-pocket costs and expenses in connection with the Transactions which shall not exceed in the aggregate an amount equal to the sum of (x) $10,000,000.00 plus (y) the Debt Financing Hedging Fees, or (iii) waive the default pursuant to Section 9.3(b)(iii). The payment of any Termination Fee shall be made by wire transfer of immediately available funds to an account designated by MGM. In the event Sponsor or MGP OP fails to pay a Termination Fee when due by such Party in accordance with this Section 9.3(a), MGM commences an action to enforce its rights under this Section 9.3(a), and MGM prevails in such an action, such Party that failed to pay a Termination Fee when due shall also pay on demand all reasonable and documented third party and out-of-pocket costs and expenses (including reasonable fees of counsel) actually incurred by MGM, as applicable, in respect of any such action (collectively, “Enforcement Costs”). The maximum aggregate liability of each of Sponsor and MGP OP, respectively, for money damages in respect of any losses, damages, costs or expenses of MGM and its Affiliates relating to the failure of the Transactions to be consummated or a breach of this Agreement by Sponsor or MGP OP, as applicable, in the absence of a Closing shall be limited to an amount equal to (i) the amount of the Termination Fee plus (ii) Enforcement Costs (collectively, the “Liability Limitation”), and, under such circumstances, in no event shall MGM or any of its Affiliates seek any amount in excess of the Liability Limitation in connection with Sponsor’s or MGP OP’s, as applicable, failure to close this Agreement or the Transactions. Recourse against Sponsor under this Agreement and Sponsor Guarantor under the Sponsor Guaranty shall be the sole and exclusive remedy of MGM and its Affiliates against Sponsor and Sponsor Guarantor in connection with any termination of this Agreement. Recourse against MGP OP under this Agreement shall be the sole and exclusive remedy of MGM and its Affiliates against MGP OP or the Debt Financing Sources (as defined below) in connection with any termination of this Agreement.

(b) If (x) either MGM, MGP or MGP OP has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement (such Party in such event, a “Breaching Party”) such that Sponsor or MGP OP (each, a “Non-Breaching Party”) is entitled to terminate this Agreement pursuant to Section 9.1(c) or (d), as applicable, or

 

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(y) MGM has failed to satisfy the condition precedent to Sponsor’s obligation to effect the Closing in Section 8.1(h) or MGP OP’s obligation to effect the Closing in Section 8.2(i), then each Non-Breaching Party (other than the Breaching Party), as its sole and exclusive remedy against the Breaching Party, may elect one of the following remedies: (i) terminate this Agreement by notifying the other Parties, in which event no Party shall have any rights or obligations hereunder other than the obligations and rights set forth herein that are expressly provided to survive termination of this Agreement and in such case the Breaching Party shall pay to each Non-Breaching Party within five (5) Business Days following the date of such termination an amount equal to all documented out-of-pocket costs and expenses incurred by each such Non-Breaching Party and its Affiliates in connection with the transactions contemplated hereunder (including, without limitation, costs incurred in connection with obtaining the Debt Financing) which amount shall not exceed in the aggregate with respect to any individual Non-Breaching Party, an amount equal to the sum of (x) $10,000,000.00 plus (y) the Debt Financing Hedging Fees; (ii) sue for specific performance of the obligations of the Breaching Party hereunder; provided, however, if (1) this Agreement is otherwise terminated pursuant to clause (i) above or (2) such Non-Breaching Party fails to file suit for specific performance within sixty (60) days after the scheduled Closing Date and to diligently pursue such suit, then, in each case, this Agreement shall terminate, in which event no Party shall have any rights or obligations hereunder other than the obligations and rights set forth herein that are expressly provided to survive termination of this Agreement; or (iii) waive the alleged default and proceed to the Closing under this Agreement without adjustment of the Interest Purchase Price, subject to the rights of the other Parties set forth in clauses (i) and (ii) above, as applicable. Notwithstanding anything to the contrary contained herein, in the event that MGM is the Breaching Party and each of Sponsor and MGP OP has the right to terminate this Agreement, then MGP OP and Sponsor acknowledge and agree that, Sponsor shall have the sole authority on behalf of all Non-Breaching Parties (other than with respect to any damage claim exclusive to MGP OP which MGP OP shall have the right to pursue on its own behalf provided that the pursuit thereof does not materially impair Sponsor’s pursuit of remedies hereunder) to elect which remedy is pursued and to pursue such remedy in the immediately preceding sentence.

(c) The Parties hereto acknowledge and agree that the agreements contained in this Section 9.3 are an integral part of this Agreement and the Transactions and that, without these agreements, none of the Parties would enter into this Agreement, and that any Termination Fee is not a penalty but rather is liquidated damages in a reasonable amount that will compensate MGM in circumstances in which any Termination Fee is paid for the efforts and resources expended and opportunities foregone while negotiating and seeking to consummate the Transactions, and which amount would otherwise be impossible to calculate with precision.

(d) If this Agreement is terminated pursuant to Section 9.1 for any reason other than as specified in Section 9.3(a) or Section 9.3(b), then, in each such case, no Party shall have any rights or obligations hereunder other than the obligations and rights set forth herein that are expressly provided to survive termination of this Agreement.

(e) The provisions of this Section 9.3 shall survive the termination of this Agreement.

 

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ARTICLE X

INDEMNIFICATION

Section 10.1 Survival. The representations and warranties made in this Agreement shall survive the Closing Date for a period of six (6) months after the Closing Date (the “Survival Period Termination Date”); provided that, the MGM Fundamental Representations, the MGP OP Fundamental Representations, the MGP Fundamental Representations, the Sponsor Fundamental Representations and the Share Purchaser Fundamental Representations shall survive the Closing indefinitely. All covenants and agreements of the Parties contained in this Agreement shall survive the Closing in accordance with their respective terms, but not to exceed the applicable statute of limitations plus three (3) months in the event of a breach of such covenant. Notwithstanding the foregoing, no representation, warranty, covenant or agreement made in this Agreement shall survive any termination of this Agreement except as otherwise specifically set forth in the Agreement.

Section 10.2 Indemnification by MGP OP. From and after the Closing (but subject to the limitations and other provisions of this Article X), MGP OP shall defend, indemnify and hold harmless (i) the Share Purchaser, Sponsor and their Affiliates and their respective officers, directors, employees, agents, successors and assigns (collectively, the “Sponsor Indemnitees”) and (ii) MGM and its Affiliates and their respective officers, directors, employees, agents, successors and assigns (collectively, the “MGM Indemnitees”), in each case, from and against, and pay or reimburse the Sponsor Indemnitees and/or the MGM Indemnitees, as applicable, for any and all Losses suffered or incurred by any of the Sponsor Indemnitees and/or the MGM Indemnitees resulting from (a) any breach of any representation or warranty made by MGP or MGP OP in this Agreement; and/or (b) any breach by MGP or MGP OP of any of its covenants or agreements contained in this Agreement; and/or (c) any Liabilities of Mandalay PropCo (x) arising prior to Closing (including, for the avoidance of doubt, arising out of the Bridge Loan), (y) relating to any act, occurrence or omission of Mandalay PropCo or MGP OP prior to Closing, or (z) arising at or prior to Closing under Title IV of ERISA, in each case, other than any Liabilities disclosed in Section 4.4. No claims by Sponsor Indemnitees or MGM Indemnitees shall be asserted under this Section 10.2 unless and until the aggregate amount of Losses that would otherwise be payable under this Agreement to Sponsor Indemnitees and/or MGM Indemnitees, as applicable, exceeds on a cumulative basis an amount equal to $5,000,000.00 (the “Indemnification Deductible”), and then only to the extent such Losses exceed the Indemnification Deductible. The cumulative indemnification obligation of MGP OP under this Section 10.2 shall in no event exceed an amount equal to one percent (1.0%) of the Property Value Amount (the “Maximum Amount”), provided that any Losses or indemnification obligations arising out of (i) the breach of any MGP Fundamental Representations or MGP OP Fundamental Representations, (ii) Section 7.7, (iii) Section 7.8 and (iv) Section 10.2(ii)(c) shall not be subject to the Indemnification Deductible and Maximum Amount.

Section 10.3 Indemnification by MGM. From and after the Closing (but subject to the limitations and other provisions of this Article X), MGM shall defend, indemnify and hold harmless (i) the Sponsor Indemnitees and (ii) MGP and its Affiliates and their respective officers, directors, employees, agents, successors and assigns (collectively, the “MGP Indemnitees”), in each case, from and against, and pay or reimburse the Sponsor Indemnitees and/or the MGP Indemnitees, as applicable, for any and all Losses suffered or incurred by any of

 

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the Sponsor Indemnitees and/or the MGP Indemnitees resulting from (a) any breach of any representation or warranty made by MGM in this Agreement; and/or (b) any breach by MGM of any of its covenants or agreements contained in this Agreement; and/or (c) any Liabilities of Grand PropCo (x) arising prior to the Closing (y) relating to any act, occurrence or omission of MGM or Tenant or (z) arising at or prior to Closing under Title IV of ERISA, in each case, other than any Liabilities disclosed in Section 4.4. No claims by Sponsor Indemnitees or MGP Indemnitees shall be asserted under this Section 10.3 unless and until the aggregate amount of Losses that would otherwise be payable under this Agreement to Sponsor Indemnitees and/or MGP Indemnitees, as applicable, exceeds on a cumulative basis an amount equal to the Indemnification Deductible, and then only to the extent such Losses exceed the Indemnification Deductible. The cumulative indemnification obligation of MGM under this Section 10.3 shall in no event exceed the Maximum Amount, provided that any Losses or indemnification obligations arising out of (i) the breach of any MGM Fundamental Representations, (ii) Section 7.7, (iii) Section 7.8 and (iv) Section 10.3(ii)(c) shall not be subject to the Indemnification Deductible and Maximum Amount.

Section 10.4 Indemnification by Sponsor. From and after the Closing (but subject to the limitations and other provisions of this Article X), Sponsor shall defend, indemnify and hold harmless (i) the MGM Indemnitees and (ii) the MGP Indemnitees, in each case, from and against, and pay or reimburse the MGM Indemnitees and/or the MGP Indemnitees, as applicable, for any and all Losses suffered or incurred by any of the MGM Indemnitees and/or the MGP Indemnitees resulting from (a) any breach of any representation or warranty made by Sponsor or Share Purchaser in this Agreement and/or (b) any breach by Sponsor or Share Purchaser of any of its covenants or agreements contained in this Agreement. No claims by MGM Indemnitees or MGP Indemnitees shall be asserted under this Section 10.4 unless and until the aggregate amount of Losses that would otherwise be payable under this Agreement to MGM Indemnitees and/or MGP Indemnitees, as applicable, exceeds on a cumulative basis an amount equal to the Indemnification Deductible, and then only to the extent such Losses exceed the Indemnification Deductible. The cumulative indemnification obligation of Sponsor under this Section 10.4 shall in no event exceed the Maximum Amount, provided that any Losses or indemnification obligations arising out of the breach of any Sponsor Fundamental Representations shall not be subject to the Indemnification Deductible and Maximum Amount.

Section 10.5 Limitations on Indemnity. The Parties agree, for themselves and on behalf of Sponsor Indemnitees, MGM Indemnitees and MGP Indemnitees:

(a) The amount of any and all Losses indemnifiable pursuant to Section 10.2, Section 10.3 or Section 10.4 shall be determined net of any amounts actually recovered by an Indemnified Party under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses. In any case where an Indemnified Party actually recovers under insurance policies or from other collateral sources any amount in respect of a matter for which such Indemnified Party was previously indemnified pursuant to Section 10.2, Section 10.3 or Section 10.4, in each case to the extent not already taken into account pursuant to this Section 10.5(a), such Indemnified Party shall promptly pay over to the Indemnifying Party, as applicable, the amount so recovered (after deducting therefrom the amount of the reasonable out-of-pocket and documented expenses incurred by such Indemnified Party in procuring such recovery), but not in excess of the sum of (x) any amount previously so paid to or on behalf of such Indemnified Party by the Indemnifying Party in respect of such matter and (y) any reasonable out-of-pocket and documented expenses expended by the Indemnifying Party in pursuing or defending any claim arising out of such matter.

 

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(b) If an Indemnifying Party makes an indemnification payment to an Indemnified Party with respect to any Loss, then such Indemnifying Party will be subrogated, to the extent of such payment, to all related rights and remedies of such Indemnified Party under any insurance policy or otherwise against or with respect to such Loss, except with respect to amounts relating to such Loss that have not yet been recovered by such Indemnified Party (or any other such Person entitled to indemnification hereunder). If any portion of any Loss to be reimbursed by an Indemnifying Party may be covered, in whole or in part, by third party insurance coverage, then the Indemnified Party shall promptly give notice thereof to such Indemnifying Party. Promptly following such Indemnifying Party’s request, such Indemnified Party will take all commercially reasonable actions (including the execution and delivery of any document reasonably requested) to accomplish the foregoing. An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto.

Section 10.6 Notification of Claims; Third Party Claims.

(a) A Person that may be entitled to be indemnified under this Agreement (each, an “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (each, an “Indemnifying Party”) in writing (an “Indemnification Notice”) of any claim in respect of which indemnity may be sought under this Article X, describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim; provided that the failure to provide such Indemnification Notice shall not release the Indemnifying Party from any of its obligations under this Article X except to the extent the Indemnifying Party is actually and materially prejudiced by such failure. The Parties agree that (i) in this Article X they intend to shorten (in the case of the limited survival periods specified in Section 10.1) the applicable statute of limitations period with respect to certain claims, (ii) Indemnification Notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 10.1 for such representation, warranty, covenant or agreement, and (iii) any claims for indemnification for which an Indemnification Notice is not timely delivered in accordance with this Section 10.6(a) shall be expressly barred and are hereby waived.

(b) Upon receipt of an Indemnification Notice of a claim for indemnity from an Indemnified Party pursuant to this Section 10.6 in respect of a pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or would reasonably be expected to give rise to a right of indemnification under this Agreement (such claim or demand being a “Third Party Claim” and including without limitation a pending or threatened claim or demand asserted by a third party against the Indemnified Party), the Indemnifying Party may, by notice (the “Defense Notice”) to the Indemnified Party delivered within twenty (20) Business Days of the receipt of an Indemnification Notice of such Third Party Claim, assume the defense and control of such Third Party Claim, with its own counsel and at its own expense; provided further, that such Defense Notice to the Indemnified Party includes an

 

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acknowledgment that the Indemnifying Party is obligated to indemnify, defend and hold harmless the Indemnified Party under the terms of its indemnification obligations hereunder in connection with such Third Party Claim, and the Indemnified Party shall, at its sole cost and expense, cooperate with the Indemnifying Party in connection therewith; provided further that the Indemnifying Party shall allow the Indemnified Party a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel and at its own expense. Each Indemnified Party is hereby authorized, prior to the Indemnifying Party’s delivery of a written Defense Notice, to file any motion, answer or other pleading that it shall reasonably deem necessary or advisable to protect its interests or those of the Indemnifying Party. Notwithstanding anything to the contrary herein, the Indemnifying Party shall not be permitted to assume the defense of a Third Party Claim (and shall lose any right to continue to control or assume any such defense if it has previously assumed such defense) if (i) the Indemnifying Party is also a party to such proceeding or matter and the legal counsel of Indemnified Party reasonably determines in good faith that joint representation would result in a conflict of interest or potential conflict of interest between the Indemnified Party and the Indemnifying Party, (ii) the claim is in respect of any matter involving criminal Liability or (iii) the claim (A) seeks injunctive or other equitable relief against the Indemnified Party or (B) is otherwise beyond the scope of the indemnification obligations of the Indemnifying Party. An Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim (collectively, as “Settlement”) without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed); provided that the Indemnifying Party may effect a Settlement without such consent if, with respect to such Settlement (1) the claimant and such Indemnifying Party provide to such Indemnified Party an unqualified release from all Liability in respect of the Third Party Claim and (2) such Settlement does not impose any Liabilities or restrictions on the Indemnified Party. So long as the Indemnifying Party is reasonably contesting any such Third Party Claim in good faith, the Indemnified Party shall not effect a Settlement of any such Third Party Claim. If the Indemnifying Party elects to conduct the defense and settlement of a Third Party Claim, then the Indemnified Party shall have the right to effect a Settlement of such Third Party Claim; provided that in such event it shall waive any right to indemnity by the Indemnifying Party for all Losses related to such Third Party Claim unless the Indemnifying Party shall have consented to such Settlement (such consent not to be unreasonably withheld or delayed). If the Indemnifying Party does not notify the Indemnified Party within twenty (20) Business Days after the receipt of the Indemnified Party’s Indemnification Notice that it elects to undertake the defense thereof, the Indemnified Party shall have the right to contest, settle or compromise the claim but shall not thereby waive any right to indemnity therefor pursuant to this Agreement. The Indemnifying Party shall not, except with the consent of the Indemnified Party (which shall not be unreasonably withheld or delayed), enter into any Settlement that does not include as a term thereof the giving by the Person(s) asserting such claim to all Indemnified Parties of a release from all Liability with respect to such claim.

(c) The Parties shall cooperate in the defense or prosecution of any Third Party Claim in respect of which indemnity may be sought hereunder and each of the Parties (or a duly authorized representative of such Party) shall furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals, as may be reasonably requested in connection therewith; provided that, the Indemnifying Party shall pay for the reasonable attorneys’ fees and costs of the Indemnified Party associated with such cooperation.

 

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Section 10.7 Exclusive Remedy. Notwithstanding anything to the contrary in this Agreement, the Parties hereby agree that following the Closing, the sole and exclusive remedy of a Party for any breach or inaccuracy of any representation, warranty, covenant or agreement contained in this Agreement (which for purposes of this Section 10.7 shall exclude the Lease and the Lease Guaranty from and after the Closing) shall be the applicable rights set forth in this Article X, to the extent applicable.

Section 10.8 Manner of Payment; Tax Treatment of Indemnity Payments.

(a) Any indemnification payments required to be made pursuant to this Article X shall be paid within five (5) Business Days of the final determination of the amount of an indemnification claim in accordance with this Section 10.8(a) as follows: (i) if such payment is due from MGP OP or MGM, on the one hand, to Sponsor or Share Purchaser, on the other hand, by wire transfer of immediately available funds from MGP OP or MGM, as applicable, to Sponsor or Share Purchaser, as applicable; (ii) if such payment is due from MGP OP or Sponsor to MGM, by wire transfer of immediately available funds from MGP OP or Sponsor, as applicable, to MGM; and (iii) if such payment is due from MGM or Sponsor to MGP or MGP OP, by wire transfer of immediately available funds from MGM or Sponsor, as applicable, to MGP or MGP OP.

(b) To the extent permitted under applicable Tax Law, the Parties agree to treat any payment made under this Article X as an adjustment to the Interest Purchase Price for all federal, state, local and foreign Tax purposes, and the Parties agree to, and shall cause their respective Affiliates to, file their tax returns accordingly.

Section 10.9 Additional Matters.

(a) Any claim for indemnification under this Agreement which does not result from a Third Party Claim shall be asserted by written notice given by the Indemnified Party to the applicable Indemnifying Party.

(b) If payment is made by or on behalf of any Indemnifying Party to any Indemnified Party in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnified Party as to any events or circumstances in respect of which such Indemnified Party may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnified Party shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(c) None of the Parties nor their respective Affiliates shall be liable to any other Party for any special, indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the Transactions (provided, that any such Liability with respect to a Third Party Claim shall be considered direct damages).

 

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Section 10.10 Tax Reporting. MGP, MGM, and each of their respective Affiliates, including the Joint Venture, shall treat, solely for U.S. federal income tax purposes (and applicable state and local income tax purposes), absent (i) a determination to the contrary pursuant to Code Section 1313, or (ii) any change in law that applies prior to the reporting of the Transactions, (1) pursuant to Revenue Ruling 99-5, 1999-1 C.B. 434, Situation 2, the contribution by Sponsor (or Sponsor JV Member, if applicable) of cash to the Joint Venture and the contribution by JV InvestCo of the Membership Interests as a transaction described in Code Section 721, (2) the Debt Financing as a recourse liability (within the meaning of Regulations Section 1.707-5(a)(2) and 1.752-1(a)(1)) to the extent that, and in the amount with respect to which, MGM enters into and maintains the MGM Debt Guaranty and the distribution of the Debt Financing Distribution by the Joint Venture to MGP OP as a “debt-financed transfer” of liabilities pursuant to Treasury Regulations Section 1.707-5(b), but not in excess of the amount of the Debt Financing with respect to which MGM enters into and maintains the MGM Debt Guaranty, and (3) the assumption of the Bridge Loan by the Joint Venture upon the contribution of Mandalay PropCo to the Joint Venture as an assumption of “qualified liabilities” within the meaning of Section 1.707-5(a)(6) of the Treasury Regulations. All references to Sponsor (or Sponsor JV Member, if applicable) or JV InvestCo in this Section 10.10 shall be interpreted to reference such entity’s regarded parent for U.S. federal income tax purposes (and applicable state and local income tax purposes) if such entity is treated as a disregarded entity for U.S. federal income tax purposes (and applicable state and local income tax purposes).

Section 10.11 Property Value Allocation. The Property Value Amount shall be allocated to the Real Property as follows: $2,504,795,000.00 (the “Grand Property Value Amount”) shall be allocated to the Grand Real Property and $2,095,205,000.00 shall be allocated to the Mandalay Real Property.

ARTICLE XI

MISCELLANEOUS

Section 11.1 Entire Agreement. This Agreement, together with that certain confidentiality agreement dated May 9, 2019 by and between Blackstone Real Estate Services L.L.C. and MGM Resorts International Operations, Inc. (the “NDA”), that certain Access Agreement made effective as of December 31, 2019 by and between Blackstone Real Estate Services L.L.C. and MGM, and the Side Letter, constitutes the entire agreement of the Parties in respect of the subject matter hereof, and supersedes all prior agreements or understandings between the Parties in respect of the subject matter hereof.

Section 11.2 Amendment. Any modification, waiver, amendment or termination of this Agreement or any provision hereof, shall be effective only if in writing and signed by the Parties.

Section 11.3 Assignment. This Agreement and the rights and obligations hereunder shall not be assigned, delegated, or otherwise transferred by any Party (whether by operation of law, by contract, or otherwise) without the prior written consent of the other Parties.

Section 11.4 Binding Effect. Except as otherwise expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

 

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Section 11.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

Section 11.6 Governing Law. Except to the extent that the laws of the State of Nevada must apply, this Agreement, and all claims or causes of action (whether in contract, tort or statute) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by, and enforced in accordance with, the internal laws of the State of Delaware, without giving effect to any laws, rules or provisions of the State of Delaware that would cause the application of the laws, rules or provisions of any jurisdiction other than the State of Delaware.

Section 11.7 Waiver of Jury Trial. Each Party hereby waives, to the fullest extent permitted by law, any right to trial by jury of any claim, demand, action, or cause of action (a) arising under this Agreement or (b) in any way connected with or related or incidental to the dealings of the Parties in respect of this Agreement or the Transactions, in each case, whether now existing or hereafter arising, and whether in contract, tort, equity, or otherwise. Each Party hereby further agrees and consents that any such claim, demand, action or cause of action shall be decided by court trial without a jury and that the Parties may file a copy of this Agreement with any court as written evidence of the consent of the Parties to the waiver of their right to trial by jury.

Section 11.8 Jurisdiction and Venue. Each Party (a) submits to the exclusive general jurisdiction of the Court of Chancery for the State of Delaware (the “Chancery Court”) and any state appellate court therefrom located within the State of Delaware (or, only if the Chancery Court declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware) in any proceeding arising out of or relating to this Agreement, (b) agrees that all claims in respect of such proceeding may be heard and determined in any such court and (c) agrees not to bring any proceeding arising out of or relating to this Agreement in any other court. Each Party waives any defense of inconvenient forum to the maintenance of any proceeding so brought and waives any bond, surety or other security that might be required of any other Party with respect thereto. Each Party agrees that service of summons and complaint or any other process that might be served in any proceeding may be made on such Party by sending or delivering a copy of the process to the Party to be served at the address of the Party and in the manner provided for the giving of notices in Section 11.10. Nothing in this Section 11.8, however, shall affect the right of any Party to serve legal process in any other manner permitted by law. Each Party agrees that a final, non-appealable judgment in any proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by Law.

Section 11.9 Construction; Interpretation. The term “this Agreement” means this Master Transaction Agreement together with the Schedules and Exhibits hereto, as the same may from time to time be amended, modified, supplemented or restated in accordance with the terms hereof. The headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. No Party, nor its

 

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respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions hereof, and all provisions of this Agreement shall be construed according to their fair meaning and not strictly for or against any Party. Unless otherwise indicated to the contrary herein by the context or use thereof: (a) the words, “herein,” “hereto,” “hereof” and words of similar import refer to this Agreement as a whole, including the Schedules and Exhibits, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement; (b) masculine gender shall also include the feminine and neutral genders, and vice versa; (c) words importing the singular shall also include the plural, and vice versa; (d) the words “include,” “includes” or “including” shall be deemed to be followed by the words “but not limited to”; and (e) except as otherwise set forth in this Agreement, any accounting terms shall be given the definition thereof under the United States generally accepted accounting principles.

Section 11.10 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) (a) by delivery in person, (b) by e-mail (followed by overnight courier), (c) by delivery by a nationally recognized overnight courier or (d) by registered or certified mail (postage prepaid, return receipt requested) to the other Parties as follows:

If to Sponsor or Share Purchaser, to:

c/o Blackstone Real Estate Advisors L.P.

345 Park Avenue

New York, New York 10154

Attention: Head, U.S. Asset Management

Email: realestatenotices@blackstone.com

and

c/o Blackstone Real Estate Advisors L.P.

345 Park Avenue

New York, New York 10154

Attention: General Counsel

Email: realestatenotices@blackstone.com

 

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With a copy (which shall not constitute notice to Sponsor or Share Purchaser) to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Attention: Gregory Ressa and Erik Quarfordt

Email:       gressa@stblaw.com and equarfordt@stblaw.com

If to MGP or MGP OP, to:

MGM Growth Properties LLC

1980 Festival Plaza Drive, Suite 750

Las Vegas, Nevada 89135

Attention: James C. Stewart

Email:   JStewart@mgpreit.com

and

Conflicts Committee of the Board of Directors of MGM Growth Properties LLC

1980 Festival Plaza Drive, Suite 750

Las Vegas, Nevada 89135

Attention: Thomas A. Roberts, Michael Rietbrock, and Robert Smith

Email:       TAR@thomasaroberts.com, mike.rietbrock@gmail.com and bob.winston.smith@gmail.com

With a copy (which shall not constitute notice to MGP or MGP OP) to:

Hogan Lovells US LLP

1999 Avenue of the Stars #1400

Los Angeles, CA 90067

Attention: Barry Dastin

Email: barry.dastin@hoganlovells.com

and

Hogan Lovells US LLP

555 Thirteenth Street, NW

Washington, DC 20004

Attention: Matt Thomson

Email: matt.thomson@hoganlovells.com

and

 

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Potter Anderson & Corroon LLP

1313 North Market Street, 6th Floor

P.O. Box 951

Wilmington, Delaware 19801

Attention: Mark A. Morton and Thomas A. Mullen

Email: mmorton@potteranderson.com and tmullen@potteranderson.com

If to MGM, to:

c/o MGM Resorts International

6385 South Rainbow Boulevard, Suite 500

Las Vegas, NV 89118

Attention: Corporate Legal

With a copy (which shall not constitute notice to MGM) to:

Email:       legalnotices@mgmresorts.com

With copies (which shall not constitute notice to MGM) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Michael J. Aiello, W. Michael Bond and Sachin Kohli

E-mail:       michael.aiello@weil.com, michael.bond@weil.com and sachin.kohli@weil.com

Section 11.11 Severability. If any provision of this Agreement or the application of such provision to any Person or circumstance shall be held (by a court of jurisdiction) to be invalid, illegal, or unenforceable under the applicable law of any jurisdiction, (a) the remainder of this Agreement or the application of such provision to other Persons or circumstances or in other jurisdictions shall not be affected thereby, and (b) such invalid, illegal, or unenforceable provision shall not affect the validity or enforceability of any other provision of this Agreement.

Section 11.12 Third Party Beneficiaries. Except as expressly provided in this Agreement (including, without limitation, with respect to the indemnification obligations set forth in Article X and Section 7.1), nothing in this Agreement is intended or shall be construed to confer upon or give any Person other than the Parties and their respective permitted assigns, any rights or remedies under this Agreement.

Section 11.13 Extension; Waiver. At any time prior to the Closing Date, each Party may (a) extend the time for the performance of any of the obligations or other acts by any other Party, or (b) waive compliance by any other Party with any of the agreements or conditions contained herein. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach by any Party.

 

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Section 11.14 Remedies; Specific Performance. Except as otherwise expressly provided in this Agreement or in any Ancillary Document, any and all remedies provided herein or therein will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by any Party of any one remedy will not preclude the exercise of any other remedy. The Parties agree and acknowledge that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the Parties do not perform their respective obligations under the provisions of this Agreement or any Ancillary Document (including failing to take such actions as are required of them hereunder or thereunder to consummate the Transactions) in accordance with their specific terms or otherwise breach such provisions. It is accordingly agreed that, prior to the valid termination of this Agreement pursuant to Section 9.1, the Parties shall be entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of this Agreement or any Ancillary Document and to enforce specifically the terms and provisions herein and therein, in each case without posting a bond or undertaking, this being in addition to any other remedy to which they are entitled at law or in equity. Each Party agrees that it will not oppose the granting of an injunction, specific performance and other equitable relief when expressly available pursuant to the terms of this Agreement on the basis that the other Parties have an adequate remedy at law or an award of specific performance is not an appropriate remedy for any reason at law or equity. Notwithstanding the foregoing, this Section 11.14 shall be subject to Section 9.3 in all respects and the Parties acknowledge and agree that in no event shall MGM, MGP or MGP OP be entitled to specific performance to cause Sponsor to consummate the transactions contemplated hereby and effect the Closing and that the sole and exclusive remedy in respect of a breach by Sponsor of its obligations to consummate the Closing shall be as set forth in Section 9.3.

Section 11.15 Further Assurances. Each Party agrees (a) to furnish, upon request of any other Party, such further information, (b) to execute and deliver to such other Party additional documents, and (c) to do such other acts and things, all as such other Party may reasonably request for the purpose of carrying out the intent of this Agreement and the Transactions; provided that, the provisions of this Section 11.15 shall not increase the obligations or decrease the rights of any Party as otherwise set forth in this Agreement or in any Ancillary Document, except to a de minimis extent.

Section 11.16 Confidentiality. Subject to Section 7.4, the Parties acknowledge and agree that they are bound by the NDA and that the Parties will continue to be bound by the NDA until the Closing occurs, or, if the Closing fails to occur, in accordance with the terms of the NDA.

Section 11.17 Non-Recourse.

(a) Notwithstanding anything to the contrary contained herein, MGP OP’s direct and indirect shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of MGP OP and the direct and indirect partners and/or members of MGP OP (other than MGM to the extent expressly provided herein and in the Ancillary Documents and subject to the limitations contained herein and therein) assume no personal or direct liability for any obligations entered into on behalf of MGP OP and their individual assets and shall not be subject to any claims of any Person relating to such obligations. The foregoing shall govern any direct and indirect obligations of MGP OP under this Agreement. The provisions of this Section 11.17(a) shall survive the Closing or any termination of this Agreement.

 

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(b) Notwithstanding anything to the contrary contained herein, MGM’s direct and indirect shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of MGM and the direct and indirect partners and/or members of MGM assume no personal or direct liability for any obligations entered into on behalf of MGM and their individual assets and shall not be subject to any claims of any Person relating to such obligations. The foregoing shall govern any direct and indirect obligations of MGM under this Agreement. The provisions of this Section 11.17(b) shall survive the Closing or any termination of this Agreement.

(c) Notwithstanding anything to the contrary contained herein, Sponsor’s direct and indirect shareholders, partners, members, the partners or members of such partners or members, the shareholders of such partners or members, and the trustees, officers, directors, employees, agents and security holders of Sponsor and the direct and indirect partners and/or members of Sponsor (other than Sponsor Guarantor to the extent provided in the Sponsor Guaranty and subject to the limitations contained herein and therein) assume no personal or direct liability for any obligations entered into on behalf of Sponsor in connection with the Transactions and their individual assets shall not be subject to any claims of any Person relating to such obligations. The foregoing shall govern any direct and indirect obligations of Sponsor under this Agreement. The provisions of this Section 11.17(c) shall survive the Closing or any termination of this Agreement.

Section 11.18 As Is, Where Is. EACH PARTY ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE PARTIES SET FORTH IN ARTICLE III, ARTICLE IV, ARTICLE V AND ARTICLE VI AND IN THE ANCILLARY DOCUMENTS (COLLECTIVELY, THE “EXPRESS REPRESENTATIONS”), THE PARTIES HAVE NOT MADE, DO NOT MAKE AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS AND/OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS, TO, CONCERNING OR WITH RESPECT TO: (I) GRAND PROPCO, MANDALAY PROPCO, THE JOINT VENTURE, THE MEMBERSHIP INTERESTS AND/OR THE REAL PROPERTY; (II) THE MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE REAL PROPERTY; (III) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE REAL PROPERTY; (IV) THE NATURE, QUALITY OR CONDITION OF THE REAL PROPERTY; (V) THE COMPLIANCE OF OR BY THE REAL PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDERS, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL ENTITY, INCLUDING APPLICABLE ENVIRONMENTAL LAWS; (VI) THE CONTENT, COMPLETENESS OR ACCURACY OF THE INFORMATION PROVIDED IN THE DATA ROOM OR ANY DOCUMENTS CONTAINED THEREIN; (VII) THE CONFORMITY OF THE REAL PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (VIII) THE FACT THAT ALL

 

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OR A PORTION OF THE REAL PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (IX) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE REAL PROPERTY; OR (X) ANY OTHER MATTER. EACH PARTY FURTHER ACKNOWLEDGES AND AGREES THAT, SUBJECT TO THE EXPRESS REPRESENTATIONS, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE, INDIRECTLY, OF THE REAL PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN “AS IS” CONDITION AND BASIS WITH ALL FAULTS AND DEFECTS.

Section 11.19 Lender Matters. Notwithstanding anything herein to the contrary, the Parties hereby agree that (a) none of the providers or arrangers of the Debt Financing (the “Debt Financing Sources”) shall have any liability (whether in contract or in tort, in Law or in equity) for any claims, causes of action, obligations or Losses arising under, out of, in connection with or related in any manner to this Agreement or based on, in respect of or by reason of this Agreement or its negotiation, execution, performance or breach (provided that nothing in this Section 11.19 shall limit the liability or obligations of the Debt Financing Sources under the Debt Financing Commitment), (b) any action of any kind or description (whether at Law, in equity, in contract, in tort or otherwise) involving any Debt Financing Sources arising out of or relating to the transactions contemplated pursuant to this Agreement, the Debt Financing, the Debt Financing Commitment or the performance of services thereunder shall be subject to the exclusive jurisdiction of a state or federal court sitting in the City of New York, (c) any interpretation of the Debt Financing Commitment will be governed by, and construed and interpreted in accordance with, the laws of the State of New York, (d) no Party will bring, permit any of their respective Affiliates to bring, or support anyone else in bringing, any such claim, suit, action or proceeding in any other court, (e) the waiver of rights to trial by jury set forth in Section 11.7 applies to any such action, (f) only the parties to the Debt Financing Commitment shall be permitted to bring any claim against any Debt Financing Sources for failing to satisfy any obligation to fund the Debt Financing pursuant to the terms of the Debt Financing Commitment, (g) no amendment or waiver of this Section 11.19 shall be effective without the prior written consent of the Debt Financing Sources and (h) the Debt Financing Sources are express and intended third party beneficiaries of this Section 11.19, as provided for by Section 11.12. This Section 11.19 shall, with respect to the matters referenced herein, supersede any provision of this Agreement to the contrary.

[signature page follows]

 

 

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IN WITNESS WHEREOF, this Agreement has been executed by the Parties as of the date first written above.

 

MGM GROWTH PROPERTIES OPERATING PARTNERSHIP LP
By:  

/s/ James C. Stewart

Name: James C. Stewart
Title: Chief Executive Officer
MGM RESORTS INTERNATIONAL
By:  

/s/ Corey Sanders

Name: Corey Sanders
Title: Chief Financial Officer and Treasurer

[ADDITIONAL SIGNATURE PAGES TO FOLLOW]

 

[SIGNATURE PAGE TO MASTER TRANSACTION AGREEMENT]


BCORE WINDMILL PARENT LLC
By:  

/s/ Qahir Madhany

Name: Qahir Madhany
Title: Managing Director and Vice President

[ADDITIONAL SIGNATURE PAGES TO FOLLOW]

 

[SIGNATURE PAGE TO MASTER TRANSACTION AGREEMENT]


EXECUTED BY THE UNDERSIGNED AS OF THE DATE FIRST WRITTEN ABOVE SOLELY FOR PURPOSES OF THE SPECIFIED SECTIONS:
MGM GROWTH PROPERTIES LLC
By:  

/s/ James C. Stewart

Name: James C. Stewart
Title: Chief Executive Officer

[ADDITIONAL SIGNATURE PAGES TO FOLLOW]

 

[SIGNATURE PAGE TO MASTER TRANSACTION AGREEMENT]


EXECUTED BY THE UNDERSIGNED AS OF THE DATE FIRST WRITTEN ABOVE SOLELY FOR PURPOSES OF THE SPECIFIED SECTIONS:

 

BCORE WINDMILL PARENT LLC
By:  

/s/ Qahir Madhany

Name:   Qahir Madhany
Title:   Managing Director and Vice President

 

[SIGNATURE PAGE TO MASTER TRANSACTION AGREEMENT]


Annex A

Share Purchase Representations and Warranties

ARTICLE I

REPRESENTATIONS AND WARRANTIES OF MGP

MGP hereby represents and warrants to Share Purchaser as of the date of this Agreement and as of the Closing Date, as follows:

Section 1.1 Organization and Qualification.

(a) MGP is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Delaware and has the limited liability power and authority to carry on its businesses as presently conducted.

(b) MGP is duly qualified to transact business and is in good standing in each jurisdiction in which the property and assets owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or in good standing would not reasonably be expected to have an MGP Material Adverse Effect.

Section 1.2 Authority. MGP has the requisite limited liability company power and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party and to consummate the Share Purchase. The execution and delivery of this Agreement and the Ancillary Documents to which it is a party and the consummation of the Share Purchase have been (and such Ancillary Documents to which it is a party will be) duly authorized by all necessary limited liability company action on the part of MGP, and no other proceeding (including by its equityholders) on the part of MGP is necessary to authorize this Agreement and the Ancillary Documents to which MGP is a party or to consummate the Share Purchase. This Agreement has been (and the execution and delivery of each of the Ancillary Documents to which MGP is a party will be) duly and validly executed and delivered by MGP and constitute a valid, legal and binding agreement of MGP (assuming this Agreement has been and the Ancillary Documents to which MGP is a party will be duly and validly authorized, executed and delivered by the other Parties hereto and thereto), enforceable against MGP in accordance with their terms, subject to the Bankruptcy and Equity Exception.

Section 1.3 Consents and Approvals; No Violations. Except as have already been obtained or that will be obtained prior to the Closing, or as may be required under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), the rule of the NYSE or state securities Laws, no material notices to, filings with, or authorizations, consents or approvals of any Person or Governmental Entity are necessary for the execution, delivery or performance by MGP of the Share Purchase pursuant to this Agreement or the Ancillary Documents to which MGP is a party or the consummation by it of the Share Purchase, except for those the failure of which to obtain or make would not reasonably be expected to have an MGP Material Adverse Effect. Neither the execution, delivery and performance by MGP of this Agreement or the

 

Annex A-1


Ancillary Documents to which it is a party nor the consummation by MGP of the Share Purchase will (a) conflict with or result in any breach of any provision of MGP’s or any of its subsidiaries’ Governing Documents, (b) result in a violation or breach of, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement to which MGP or any of its subsidiaries is a party or (c) violate any Order of any Governmental Entity having jurisdiction over MGP or any of its subsidiaries, which in the case of any of clauses (b) through (c) above, would, individually or in the aggregate, reasonably be expected to have an MGP Material Adverse Effect.

Section 1.4 Capitalization. As of the date hereof, the authorized capital stock of MGP consists of 1,000,000,000 MGP Class A Shares, and 1 Class B common shares representing limited liability company interests in MGP (“MGP Class B Shares”). As of the date hereof, 113,806,820 MGP Class A Shares and 1 MGP Class B Shares are issued and outstanding, all of which were validly issued, fully paid and non-assessable and were issued free of preemptive rights, 0.25% of MGP’s authorized Class A shares are issued or issuable pursuant to stock option and employee benefit plans, and MGP has entered into forward confirmations under the forward sale agreements, dated November 19, 2019, by and among MGP and the respective forward purchasers named therein, pursuant to which it will issue no more than an additional 12,632,862 Class A shares in the future (the “Forward Settlement”). Except as set forth in the immediately preceding sentence or in respect of 199,702,543.34 units of MGP OP issued and outstanding, and except for any issues of MGP Class A Shares pursuant to the sales agreement, dated April 30, 2019, by and among MGP and the sales agents and forward purchasers named therein (the “Sales Agreement”) relating to MGP’s existing at-the-market equity offering program, as of the date hereof, there are no outstanding or authorized (A) capital stock, equity securities or voting securities of MGP, (B) securities of MGP or any subsidiary convertible into or exchangeable for capital stock, equity securities or voting securities of MGP or (C) options or other rights to acquire from MGP, and other than the MGP Consideration Shares and MGP Class A Shares to be issued pursuant to MGP’s employee benefit plans, no obligation of MGP to issue, any capital stock or equity securities, voting securities or securities convertible or exchangeable for such shares of capital stock or other equity interests or voting securities of MGP or any of its subsidiaries. Except as disclosed in the Registration Statement and the Prospectus, or as has otherwise been waived, there are no persons with registration rights or other similar rights to have any securities registered for sale pursuant to the Registration Statement or otherwise registered for sale or sold by MGP under the Securities Act pursuant to this Agreement. The issuance and sale of the MGP Consideration Shares will not obligate MGP to issue securities to any person (other than the Share Purchaser) and will not result in an adjustment to (or provide any Person the right to adjust) the exercise, conversion, exchange or reset price under any securities issued by MGP (or in any agreement providing rights to security holders of MGP).

Section 1.5 MGP Reports; Financial Statements.

(a) MGP has filed or furnished, as applicable, on a timely basis, all forms, schedules, statements, certifications, reports and others documents required to be filed or furnished by it with the Commission pursuant to the Securities Act or the Exchange Act, since January 1, 2018 (the forms, statements, certifications, reports and documents filed or furnished since January 1, 2018 and those filed or furnished subsequent to the date hereof through and including the

 

Annex A-2


Closing Date, including any amendments thereto, the “MGP Reports”). Each of the MGP Reports, at the time of its filing or being furnished, complied or, if not yet filed or furnished, will comply, in all material respects with the applicable requirements of the Securities Act and the Exchange Act. As of their respective dates (or, if amended or supplemented prior to the date hereof, as of the date of such amendment or supplement), the MGP Reports did not, and any the MGP Reports filed with or furnished to the Commission on or prior to the Closing Date will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. As of the date of this Agreement, there are no material outstanding or unresolved comments received from the Commission staff with respect to the MGP Reports.

(b) Each of the consolidated balance sheets included in or incorporated by reference into the MGP Reports (including the related notes and schedules) fairly presents in all material respects, or, in the case of the MGP Reports filed after the date hereof, will fairly present in all material respects, the consolidated financial position of MGP and its consolidated subsidiaries as of its date and each of the statements of operations, comprehensive income, cash flows and partners’ capital included in or incorporated by reference into the MGP Reports (including any related notes and schedules) fairly presents in all material respects, or in the case of the MGP Reports filed after the date hereof, will fairly present in all material respects the results of operations, comprehensive income, cash flows and partners’ capital, as the case may be, of MGP and its consolidated subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to notes and year-end adjustments), in each case in accordance with GAAP applied on a consistent basis throughout the periods indicated, except as may be noted therein and in compliance with, in all material respects, applicable accounting requirements and the rules and regulations of the Commission.

(c) Neither MGP nor any of its subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) other than liabilities and obligations (A) set forth in MGP’s consolidated balance sheet as of September 30, 2019 included in its Form 10-Q for the quarter ended September 30, 2019 or in the notes thereto, (B) incurred in the ordinary course of business consistent with past practice since September 30, 2019, (C) incurred in connection with this Agreement or the Transactions contemplated thereby or (D) which would not, individually or in the aggregate, reasonably be expected to have an MGP Material Adverse Effect.

(d) MGP maintains a system of effective internal control over financial reporting (as defined under Rule 13-a15 and 15d-15 under the 1934 Act Regulations), and MGP maintains a system of internal accounting controls sufficient to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorizations; (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (C) access to assets is permitted only in accordance with management’s general or specific authorization; (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (E) the interactive data in eXtensible Business Reporting Language incorporated by reference in the Registration Statement and the Prospectus fairly presents the information called for in all material respects and is

 

Annex A-3


prepared in accordance with the Commission’s rules and guidelines applicable thereto in all material respects. MGP has not received any notification of any “material weaknesses” in MGP’s internal controls and no change in the MGP’s internal control over financial reporting has materially affected, or is reasonably likely to materially affect, MGP’s internal control over financial reporting. For purposes of this Agreement, the term “material weakness” shall have the meaning assigned to it in Release 2004-001 of the Public Company Accounting Oversight Board, as in effect on the date of this Agreement.

(e) As of the date of this Agreement, there is and has been no failure on the part of MGP or any of its directors or officers, in their capacities as such, to comply in all material respects with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith, including Section 402 related to loans and Sections 302 and 906 related to certifications.

Section 1.6 Litigation. There are no litigations, actions, suits, arbitrations, orders, decrees, claims, writs, injunctions, government investigations, proceedings now pending or, to MGP’s knowledge, threatened in writing against MGP or any of its subsidiaries which, if determined adversely to such entity, would, individually or in the aggregate, materially and adversely affect the ability of MGP to perform its obligations hereunder or reasonably be expected to have an MGP Material Adverse Effect. Neither MGP nor any of its subsidiaries is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any Governmental Entity which, individually or in the aggregate, would adversely affect the ability of MGP to perform its obligations hereunder or would reasonably be expected to have an MGP Material Adverse Effect.

Section 1.7 REIT Status. Commencing with its taxable year ending December 31, 2016, MGP has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and its current organization and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code.

Section 1.8 Compliance with Laws. The business of each of MGP and its subsidiaries have not been since December 31, 2018, and are not being, conducted in violation of any applicable Law, and none of MGP or its subsidiaries is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by MGP or any of its subsidiaries under), nor has MGP or its subsidiaries received written notice of a claim that it is in default under or that it is in violation of, any agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), in each case except for defaults or violations that would not, individually or in the aggregate, reasonably be expected to result in an MGP Material Adverse Effect.

Section 1.9 Absence of Certain Changes. Except as disclosed in the MGP Reports filed prior to the date hereof, since the respective dates as of which information is given in the MGP Reports, the Registration Statement or the Prospectus and through the date of this Agreement, (i) except for matters relating to the Transactions contemplated by this Agreement, MGP and its subsidiaries have conducted their respective businesses in the ordinary and usual

 

Annex A-4


course of such businesses consistent with past practice (it being agreed and understood that the pursuit and consummation of real estate acquisitions (including, if applicable, via a taxable REIT subsidiary), including the entry into definitive agreements with respect thereto, is in the ordinary and usual course of business for MGP and its subsidiaries), (ii) there has not been an effect, event, development or change that, individually or in the aggregate with all other effects, events, developments and changes, has had or would reasonably be expected to have an MGP Material Adverse Effect, (iii) MGP has not altered its method of accounting in any material respect or the identity of its auditors, and (iv) MGP has not declared or made any dividend or distribution (other than regular quarterly cash dividends with respect to the MGP Class A Shares in amounts per share that are consistent with the description in the MGP Reports filed prior to the date hereof in accordance with MGP’s past dividend policy), or purchased, redeemed or made any agreements to purchase or redeem any MGP Class A Shares except for repurchases of MGP Class A Shares held by employees upon the termination of employment or in satisfaction of tax withholdings.

Section 1.10 Securities Law Matters.

(a) MGP meets the requirements for use of Form S-3 under the Securities Act, the Registration Statement is an “automatic shelf registration statement” (as defined in Rule 405 under the Securities Act) and the MGP Class A Shares have been and remain eligible for registration by MGP on such automatic shelf registration statement. Each of the Registration Statement and any post-effective amendment thereto has become effective under the Securities Act, and no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto has been issued under the Securities Act, no order preventing or suspending the use of the Prospectus or any prospectus has been issued and no proceedings for any of those purposes have been instituted or are pending or, to MGP’s knowledge, contemplated. MGP has complied with each request (if any) from the Securities and Exchange Commission (the “Commission”) for additional information.

(b) Each of the Registration Statement and any post-effective amendment thereto, at the time of its effectiveness and at each deemed effective date with respect to MGP pursuant to Rule 430B(f)(2) under the Securities Act, complied in all material respects with the requirements of the Securities Act.

(c) The MGP Consideration Shares have been duly registered under the Securities Act pursuant to the Registration Statement and that the fees required by the Commission relating to the MGP Consideration Shares have been paid within the time required by the Commission.

(d) MGP is not an “ineligible issuer,” as defined in Rule 405 under the Securities Act, without taking account of any determination by the Commission pursuant to Rule 405 under the Securities Act that it is not necessary that MGP be considered an ineligible issuer;

(e) The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act.

 

Annex A-5


(f) Prior to the Closing, MGP will have delivered to the Share Purchaser (or its designated Affiliate acquiring the MGP Consideration Shares) a prospectus, forming a part of the Registration Statement, relating to the offering of MGP Consideration Shares (but which shall not, for the avoidance of doubt, include pro forma financial statements with respect to MGP or any other person in connection with the Transactions) (including any applicable supplements, the “Prospectus”) and such Prospectus will not include an untrue statement of a material fact or omit a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

Section 1.11 MGP Consideration Shares. The MGP Consideration Shares have been duly authorized and, when issued pursuant to this Agreement at the Closing, will be validly issued, fully paid and non-assessable, free and clear of any Encumbrances and other restrictions (other than restrictions imposed by securities laws and Section 7.11), and will not have been issued in violation of any preemptive rights, rights of first refusal or offer, or registration rights. In accordance with the limited liability company agreement of MGP, the holders of the MGP Consideration Shares and will have no obligation to make any further payments for the purchase of the MGP Consideration Shares or contributions to MGP solely by reason of their ownership of MGP Consideration Shares.

Section 1.12 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Share Purchase based upon arrangements made by or on behalf of MGP.

Section 1.13 No Other Representations and Warranties. Except for the representations and warranties contained in this Article I of Annex A and in the Ancillary Documents, MGP has not made and does not make, and no other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of MGP in connection with the Transactions, including any representation or warranty as to the accuracy or completeness of any information regarding the MGP Consideration Shares furnished or made available to the other Parties.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SHARE PURCHASER

The Share Purchaser hereby represents and warrants to MGP, as of the date of this Agreement and as of the Closing Date, as follows:

Section 2.1 Organization and Qualification.

(a) Share Purchaser is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to carry on its businesses as presently conducted.

(b) Share Purchaser is duly qualified or licensed to transact business and is in good standing in each jurisdiction in which the property and assets owned, leased or operated by it, or the nature of the business conducted by it, makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing would not prevent or delay the consummation of the Share Purchase.

 

Annex A-6


Section 2.2 Authority. Share Purchaser has the requisite limited liability company power and authority to execute and deliver this Agreement and the Ancillary Documents to which it is a party and to consummate the Share Purchase. The execution and delivery of this Agreement and the Ancillary Documents to which it is a party and the consummation of the Share Purchase have been (and such Ancillary Documents to which it is a party will be) duly authorized by all necessary limited liability company action on the part of Share Purchaser, and no other proceeding (including by its equityholders) on the part of Share Purchaser is necessary to authorize this Agreement and the Ancillary Documents to which Share Purchaser is a party or to consummate the Share Purchase. This Agreement has been (and the execution and delivery of each of the Ancillary Documents to which Share Purchaser is a party will be) duly and validly executed and delivered by Share Purchaser and constitute a valid, legal and binding agreement of Share Purchaser (assuming this Agreement has been and the Ancillary Documents to which Share Purchaser is a party will be duly and validly authorized, executed and delivered by the other Parties hereto and thereto), enforceable against Share Purchaser in accordance with their terms, subject to the Bankruptcy and Equity Exception.

Section 2.3 Consents and Approvals; No Violations. Except as have already been obtained or that will be obtained prior to the Closing, and except as set forth on Schedule A-2.3 attached hereto, no material notices to, filings with, or authorizations, consents or approvals of any Person or Governmental Entity are necessary for the execution, delivery or performance by Share Purchaser of this Agreement or the Ancillary Documents to which Share Purchaser is a party or the consummation by it of the Share Purchase, except for those the failure of which to obtain or make would not prevent or delay the Share Purchase from occurring on the Closing Date. Except as set forth on Schedule A-2.3 attached hereto, neither the execution, delivery and performance by Share Purchaser of this Agreement or the Ancillary Documents to which it is a party nor the consummation by Share Purchaser of the Share Purchase will (a) conflict with or result in any breach of any provision of Share Purchaser’s Governing Documents, (b) result in a violation or breach of, or cause acceleration, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any agreement to which Share Purchaser is a party, or (c) violate any Order of any Governmental Entity having jurisdiction over Share Purchaser, which in the case of any of clauses (b) through (c) above, would prevent or materially delay the Share Purchase from occurring on the Closing Date.

Section 2.4 No Distribution. Share Purchaser is purchasing the MGP Consideration Shares without a view to any resale or distribution thereof; provided, that the Share Purchaser reserves the right to sell or otherwise dispose of all or any portion of the MGP Consideration Shares pursuant to a registration statement or exemption under the Securities Act, subject to the terms of the Agreement, including Section 7.11 thereto.

Section 2.5 Not a Broker. Share Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act, or otherwise.

Section 2.6 No Other Representations and Warranties. Except for the representations and warranties contained in this Article II of Annex A and in the Ancillary Documents, Share Purchaser has not made and does not make, and no other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Share Purchaser in connection with the Share Purchase.

 

Annex A-7


AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

MGP BREIT VENTURE 1 LLC

a Delaware limited liability company

Dated as of [_________], 2020

THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION AS PROVIDED IN THOSE STATUTES. THE SALE, ASSIGNMENT, TRANSFER, EXCHANGE, MORTGAGE, PLEDGE OR OTHER DISPOSITION OF ANY LIMITED LIABILITY COMPANY INTEREST IS RESTRICTED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, AND THE EFFECTIVENESS OF ANY SUCH SALE OR OTHER DISPOSITION MAY BE CONDITIONED UPON, AMONG OTHER THINGS, RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE OR OTHER DISPOSITION CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS. BY ACQUIRING THE LIMITED LIABILITY COMPANY INTERESTS REPRESENTED BY THIS AGREEMENT, EACH MEMBER REPRESENTS THAT IT WILL NOT SELL OR OTHERWISE DISPOSE OF ITS LIMITED LIABILITY COMPANY INTERESTS WITHOUT REGISTRATION OR OTHER COMPLIANCE WITH THE AFORESAID STATUTES AND RULES AND REGULATIONS THEREUNDER AND THE TERMS AND PROVISIONS OF THIS AGREEMENT.

 


TABLE OF CONTENTS

 

 

         Page  

ARTICLE 1 ORGANIZATIONAL MATTERS

     1  

1.1

  Formation and Continuation; Filings      1  

1.2

  Name      2  

1.3

  Principal Place of Business; Other Places of Business      2  

1.4

  Business Purpose      3  

1.5

  Powers      3  

1.6

  Designated Agent for Service of Process      3  

1.7

  Term      3  

1.8

  Foreign Qualification      3  

ARTICLE 2 DEFINITIONS

     4  

2.1

  Definitions      4  

ARTICLE 3 CAPITAL; CAPITAL ACCOUNTS AND MEMBERS

     20  

3.1

  Generally; Initial Capital Contributions      20  

3.2

  Additional Contributions      21  

3.3

  Optional Loans and Dilutive Contributions      22  

3.4

  Capital Accounts      24  

3.5

  Return of Capital      24  

3.6

  Liability of Members      24  

3.7

  Member Loans      24  

3.8

  Credit Arrangements      24  

ARTICLE 4 DISTRIBUTIONS

     27  

4.1

  Distributions of Cash Available for Distribution      27  

4.2

  Distributions Upon Liquidation      27  

4.3

  Withholding      27  

4.4

  Distributions in Kind      28  

4.5

  Limitations on Distributions      28  

4.6

  Carveout Contribution Agreement      28  

ARTICLE 5 ALLOCATIONS OF NET PROFITS AND NET LOSSES

     28  

5.1

  General Allocations of Net Profits and Losses      28  

5.2

  Regulatory Allocations      29  

 

(i)


         Page  

5.3

  Allocations in Connection with Liquidations      30  

5.4

  Tax Allocations      30  

5.5

  Other Provisions      31  

ARTICLE 6 OPERATIONS

     31  

6.1

  Management      31  

6.2

  Enforcement of the Lease      33  

6.3

  Limitations on Authority of the Managing Member      34  

6.4

  Removal of Managing Member      38  

6.5

  Reimbursement and Remuneration Generally      39  

6.6

  Reliance by Third Parties      39  

6.7

  Records and Reports      40  

6.8

  Indemnification and Liability      41  

6.9

  Duties and Conflicts      43  

6.10

  REOC Management Rights      44  

6.11

  REIT Compliance      44  

6.12

  Sale of Properties      44  

ARTICLE 7 INTERESTS AND TRANSFERS OF INTERESTS

     48  

7.1

  Transfers      48  

7.2

  Further Restrictions      52  

7.3

  Rights of Assignees      53  

7.4

  Admissions, Withdrawals and Removals      53  

7.5

  Admission of Assignees as Substitute Members      53  

7.6

  Withdrawal of Members      54  

7.7

  Conversion of Membership Interest      54  

ARTICLE 8 DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY

     54  

8.1

  Limitations      54  

8.2

  Exclusive Causes      54  

8.3

  Effect of Dissolution      55  

8.4

  No Capital Contribution Upon Dissolution      55  

8.5

  Liquidation      55  

ARTICLE 9 MISCELLANEOUS

     56  

9.1

  Amendments      56  

9.2

  Member Representations and Warranties; Indemnification      57  

9.3

  Entire Agreement      61  

9.4

  Further Assurances      61  

9.5

  Notices      61  

9.6

  Tax Matters      61  

9.7

  Governing Law      66  

 

(ii)


        

Page

 

9.8

  Construction      66  

9.9

  Captions - Pronouns      66  

9.10

  Binding Effect      66  

9.11

  Severability      66  

9.12

  Confidentiality      66  

9.13

  Interpretation      67  

9.14

  No Third Party Beneficiaries      67  

9.15

  No Right of Setoff      68  

9.16

  Counterparts      68  

9.17

  Submission to Jurisdiction      68  

9.18

  Attorney’s Fees      68  

9.19

  Injunctive Relief and Enforcement      68  

9.20

  Intentionally Omitted      69  

9.21

  Force Majeure      69  

9.22

  Limitation on Creditors’ Interests      69  

Exhibit A

  Members, Initial Capital Contributions and Percentage Interests

 

Exhibit B

  REOC Letter

 

Exhibit C

  Interest ROFO Sale Documents

 

Exhibit D

  Anti-Corruption Representation

 

Schedule 1

  Initial Financing; Permitted Carveout Guaranty

 

Schedule 2

  MGP      Competitor  

 

 

(iii)


AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

MGP BREIT VENTURE 1 LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of MGP BREIT Venture 1 LLC, a Delaware limited liability company (the “Company”) is made and entered into as of [•] (the “Effective Date”), by and between MGP JV Investco 1 LLC, a Delaware limited liability company (the “MGP Entity”), and BCORE Windmill Parent LLC, a Delaware limited liability company (the “Sponsor Entity”). Capitalized terms used herein are defined in Article II hereof or as elsewhere provided herein.

RECITALS

A. The Company has been formed by the MGP Entity as a limited liability company under the Act for purposes of acquiring, owning, financing, leasing, maintaining, operating and otherwise dealing with the Properties (which may be through Subsidiaries of the Company, if elected by the Managing Member (subject to Section 1.2 below)). The Company was formed by filing the Certificate with the Secretary of State of the State of Delaware under and pursuant to the provisions of the Act and is currently operated in accordance with that certain Limited Liability Company Agreement dated as of [•] (the “Existing Operating Agreement”).

B. The MGP Entity desires to admit the Sponsor Entity as a Member of the Company, and the Members desire to enter into this Agreement to amend and restate the Existing Operating Agreement in its entirety for purposes of setting forth their respective rights and obligations with respect to the Company and each other.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree to amend and restate the Existing Operating Agreement in its entirety to read as follows:

ARTICLE 1

ORGANIZATIONAL MATTERS

1.1 Formation and Continuation; Filings.

1.1.1 The Company was formed under and pursuant to the provisions of the Delaware Limited Liability Company Act, 6 Del.C. § 18-101, et seq. (as amended from time to time, the “Act”) and on the terms and conditions set forth in the Certificate as filed with the Secretary of State of the State of Delaware. The rights and liabilities of the Members of the

 


Company shall be as provided in the Act, the Certificate and this Agreement. In the event of any inconsistency between any terms and conditions contained in this Agreement, the Certificate and any non-mandatory provisions of the Act, the terms and conditions contained in this Agreement shall govern and override the provisions of the Certificate and the Act. Each of the Members is admitted to the Company as a member of the Company upon its execution of this Agreement.

1.1.2 The fact that the Certificate is on file in the office of the Secretary of State shall constitute notice that the Company is a limited liability company pursuant to Section 18-207 of the Act.

1.1.3 The Certificate may be amended or restated by the Managing Member as provided in the Act as deemed necessary or desirable by the Managing Member; provided that, the Certificate may not be amended or restated without the written consent of any other Member that would be materially adversely affected thereby.

1.1.4 [•], as an “authorized person” within the meaning of the Act, executed, delivered and filed the Certificate of the Company with the Secretary of State of the State of Delaware, which filing is hereby approved and ratified. Effective as of the Effective Date, her powers as an “authorized person” shall cease, and the Managing Member shall become (and thereafter shall continue as) the designated “authorized person” within the meaning of the Act. To the extent not inconsistent with this Agreement, the Managing Member may execute on behalf of the Company, and file and record (or cause to be filed and recorded) and publish, if required by applicable laws, such other and further certificates, statements or other instruments as may be necessary or desirable under the laws of the State of Delaware or the state in which any of the Company Assets are located in connection with the formation and continuation of the Company and the commencement and carrying on of its business. Subject to the terms and conditions of this Agreement, the Managing Member may also cause to be made, on behalf of the Company, such additional filings and recordings as the Managing Member reasonably shall deem necessary, customary, convenient or advisable.

1.2 Name. The name of the Company shall be MGP BREIT Venture 1 LLC. The Company may also conduct business through Subsidiaries of the Company or at the same time under one or more fictitious names if the Managing Member determines that such is necessary or advisable. The Managing Member may change the name of the Company, from time to time, in accordance with applicable law.

1.3 Principal Place of Business; Other Places of Business. The principal place of business of the Company is located at 1980 Festival Plaza Drive, Suite 750, Las Vegas, Nevada, 89135, or such other place within or outside the State of Delaware as the Managing Member may from time to time designate. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Managing Member deems necessary or advisable. The Managing Member shall provide written notice to the other Members of any change of the principal place of business of the Company.

 

-2-


1.4 Business Purpose. The purpose and business of the Company is to directly, or indirectly through Subsidiaries, acquire, invest in, own, manage, operate, maintain, repair, redevelop, renovate, construct, improve, assign, transfer, lease, finance, mortgage, pledge, sell, dispose and otherwise deal with the Properties or any portion thereof, related property and any other Company Assets acquired by the Company in accordance with the terms hereof, and to own the interests in all of the Subsidiaries of the Company, and to provide any services related thereto and to perform all other activities necessary, customary, convenient or incidental to the furtherance of the foregoing (collectively, the “Business”).

1.5 Powers. In furtherance of its Business, but subject to all of the provisions of this Agreement, the Company shall, have and may exercise, all of the powers and rights that can be conferred upon limited liability companies formed pursuant to the Act, and may also engage in such other lawful business purposes or activity in which a limited liability company may be engaged under applicable law (including, without limitation, the Act) and enter into any agreement or other undertaking, in each case, which the Managing Member deems reasonably necessary, customary, convenient or advisable in connection with or incidental to the furtherance of the Business.

1.6 Designated Agent for Service of Process. So long as required by the Act, the Company shall continuously maintain a registered office and a registered agent for service of process on the Company in the State of Delaware. As of the Effective Date, the address of the registered office and the registered agent for service of process of the Company in the State of Delaware shall be as specified in the Certificate or as otherwise designated by the Managing Member. The Company may also from time to time maintain a registered office and a registered agent for service of process on the Company in any other state or jurisdiction as the Managing Member determines necessary or advisable.

1.7 Term. The term of the Company commenced on the filing of the Certificate with the Secretary of State of the State of Delaware, and shall continue until the Company is dissolved in accordance with the terms of this Agreement. Notwithstanding the dissolution of the Company, the existence of the Company shall continue as a separate legal entity until termination pursuant to this Agreement.

1.8 Foreign Qualification. The Company shall be qualified or registered under foreign limited liability company statutes, or assumed or fictitious name statutes or similar laws, in any jurisdiction in which the Company owns property or transacts business to the extent, in the judgment of the Managing Member, such qualification or registration is necessary or advisable in order to protect the limited liability of the Members or to permit the Company lawfully to own property or transact business. Each Person designated by the Managing Member as an authorized person within the meaning of Section 18-204(a) of the Act shall have the power and authority to execute, file and publish any certificates, notices, statements or other documents (and any amendments and/or restatements thereof) necessary to permit the Company to conduct business as a limited liability company in each jurisdiction where the Company elects to do business. At the request of the Managing Member, each Member shall execute and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, register, continue and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may reasonably be expected to conduct business; provided that no Member shall be required to file any general consent to service of process or to qualify as a foreign corporation, limited liability company, partnership or other entity in any jurisdiction in which it is not already so qualified.

 

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ARTICLE 2

DEFINITIONS

2.1 Definitions. Capitalized words and phrases used and not otherwise defined in this Agreement shall have the following meanings:

Acquiring Member” is defined in Section 7.2(a).

Act” is defined in the Section 1.1.1.

Additional Capital Contributions” means Capital Contributions other than the Initial Capital Contributions.

Adjusted Capital Account” means, with respect to any Member, the balance, if any, in such Member’s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:

(a) Add to such Capital Account the following items:

(i) The amount, if any, that such Member is obligated to contribute to the Company within ninety (90) days after liquidation of such Member’s Interest; and

(ii) The amount that such Member is obligated to restore or is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) Subtract from such Capital Account such Member’s share of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of Adjusted Capital Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Adjusted Capital Account.

Affiliate” (including the correlative meaning of the term “Affiliated”) means, with reference to a specified Person, any Person which, directly or indirectly (including through one or more intermediaries), Controls or is Controlled by or is under common Control with any other Person, including any Subsidiary of a Person, provided however, that in no event shall the Company or any of its Subsidiaries be considered an Affiliate of any Member and that in no event shall any Member or its Controlled Affiliates be considered an Affiliate of the Company or any of its Subsidiaries.

Aggregate Sale” is defined in Section 6.12.1.

Agreement” is defined in the Preamble.

 

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Asset Disposition” is defined in Section 6.12.1.

“Asset Disposition CC Allocation” is defined in Section 6.12.

“Asset Disposition PP Adjustments” is defined in Section 6.12.

Asset Potential Purchasers” is defined in Section 6.12.1.

Asset Responding Member” is defined in Section 6.12.1.

Asset ROFO” is defined in Section 6.12.1.

Asset ROFO Closing” is defined in Section 6.12.3.

Asset ROFO Closing Date” is defined in Section 6.12.3.

Asset ROFO Down Payment” is defined in Section 6.12.2.

Asset ROFO Election Notice” is defined in Section 6.12.1.

Asset ROFO Escrow Agent” is defined in Section 6.12.2.

Asset ROFO Gross Valuation” is defined in Section 6.12.1.

Asset ROFO Notice” is defined in Section 6.12.1.

Asset ROFO Offer Period” is defined in Section 6.12.1.

Asset ROFO Purchase Agreement” is defined in Section 6.12.4.

Asset ROFO Purchase Price” means the amount the Triggering Member would have received if (x) the Offered Assets had been sold at the Asset ROFO Gross Valuation, (y) all of the liabilities of the Company and its Subsidiaries related thereto (including, without limitation, all Credit Arrangements) had been paid, and (z) the remaining net proceeds had been distributed to the Members in accordance with this Agreement, including the repayment of any Optional Loans in accordance with the terms of this Agreement. If the applicable Asset ROFO Notice included a determination that the Credit Arrangement secured by the Offered Assets would be repaid by the Company in connection with the sale of the Offered Assets, then the liabilities of the Company and its Subsidiaries shall be deemed to include any prepayment, defeasance or other similar costs that would have been incurred in connection with such repayment but if the applicable Asset ROFO Notice included a determination that the Credit Arrangement secured by the Offered Assets would be assumed by the purchaser, any such prepayment, defeasance or other similar costs, shall be excluded from the calculation of the liabilities of the Company and its Subsidiaries.

Asset ROFO Rejection Notice” is defined in Section 6.12.1.

 

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Assignee” means any Person: (a) to whom a Member (or Assignee thereof) Transfers all or part of its direct Interest in accordance with the terms of this Agreement, and (b) that has not been admitted to the Company as a Substitute Member pursuant to Section 7.5.

Bad Act” is defined in Section 6.8.1.

Bankruptcy” means, with respect to a Person, the occurrence of: (1) an assignment by the Person for the benefit of creditors; (2) the filing by the Person of a voluntary petition in bankruptcy; (3) the entry of a judgment by any court that the Person is bankrupt or insolvent, or the entry against the Person of an order for relief in any bankruptcy or insolvency proceeding; (4) the filing of a petition or answer by the Person seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (5) the filing by the Person of an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding for reorganization or of a similar nature; (6) the consent or acquiescence of the Person to the appointment of a trustee, receiver or liquidator of the Person or of all or any substantial part of its properties; or (7) any other event that would cause, if not for the provisions of this Agreement, the Person to cease to be a member of a limited liability company under the Act.

BBA Share” is defined in Section 9.6.1(d).

BREIT” means Blackstone Real Estate Income Trust, Inc. and its successors and assigns.

BREIT OP” means BREIT Operating Partnership L.P. and its successors and assigns.

Business” is defined in Section 1.4.

Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday, which is not a day on which national banks in the City of New York, New York are authorized or obligated, by law or executive order, to close.

Capital Account” means the Capital Account maintained for each Member on the Company’s books and records, as adjusted in accordance with the following provisions:

(a) To each Member’s Capital Account there shall be added (i) such Member’s Capital Contributions, (ii) such Member’s allocable share of Net Profits and any items in the nature of income or gain that are specially allocated to such Member pursuant to Article 5 or other provisions of this Agreement, and (iii) the amount of any Company liabilities assumed by such Member or which are secured by any property distributed to such Member.

(b) From each Member’s Capital Account there shall be subtracted (i) the amount of (A) cash and (B) the Gross Asset Value of any Company Assets (other than cash) distributed to such Member (other than any payment of principal and/or interest to such Member pursuant to the terms of a loan made by the Member to the Company or any fees paid to a Member) pursuant to any provision of this Agreement, (ii) such Member’s allocable

 

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share of Net Losses and any other items in the nature of expenses or losses that are specially allocated to such Member pursuant to Article 5 or other provisions of this Agreement, and (iii) liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company.

(c) In the event any Interest is Transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the Interest so Transferred.

(d) In determining the amount of any liability for purposes of subparagraphs (a) and (b) above, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

(e) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Regulations. In the event that the Managing Member shall determine that it is prudent to modify the manner in which the Capital Accounts, or any additions or subtractions thereto, are computed in order to comply with such Regulations, the Managing Member may make such modification, provided that it is not likely to have a material adverse effect on any Member pursuant to any provision of this Agreement. The Managing Member shall also make (i) any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Sections 1.704-1(b) and 1.704-2.

Capital Call Notice” is defined in Section 3.2.2.

Capital Contributions” means with respect to any Member at any time, the aggregate amount of money and the initial Gross Asset Value of any property (other than money) contributed, or deemed contributed, by such Member to the Company as of such time (net of any liabilities secured by such property or to which such property is otherwise subject), including any Initial Capital Contribution and Additional Capital Contributions.

Capital Event” means any sale, exchange, condemnation, insurance recovery, or other disposition of Company Assets, or a loan or a refinancing of a loan to the extent the proceeds of such loan are made available to the Company, but excludes incidental sales of non-material personal property occurring in the ordinary course of business. For the avoidance of doubt, the receipt and distribution of the proceeds of the Debt Financing (as defined in the MTA) are not Capital Events for purposes of this Agreement.

Capital Proceeds” means cash or other consideration received by the Company and its Subsidiaries as a result of any Capital Event less any such cash which is applied to (i) the payment of transaction costs for such Capital Event or other Company Expenses related to such Capital Event, (ii) the repayment of debt of the Company or its Subsidiaries which is required under the terms of the indebtedness or is otherwise authorized by the Managing Member, or (iii) payments of capital expenditures, and (iv) any other amounts set aside for the restoration, increase or creation of Reserves.

 

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Carveout Contribution Agreement” means that certain Contribution Agreement dated the Effective Date by and among, the Company, the Members, and the Carveout Guarantors.

Carveout Guarantors” means, collectively, the MGP Guarantor and the Sponsor Guarantor.

Cash Available for Distribution” means, at the date of determination, all Company cash receipts (excluding the proceeds from Capital Contributions or Optional Loans by any Member), after deducting payments for Company Expenses, payments required to repay any debts or other obligations of the Company, capital expenditures, and any other amounts set aside for the restoration, increase or creation of Reserves.

Certificate” means the Certificate of Formation for the Company filed with the Secretary of State of the State of Delaware on [•], pursuant to Section 18-201 of the Act, as the same has been or may hereafter be amended and restated.

Code” means the Internal Revenue Code of 1986, as amended.

Company” is defined in the Preamble.

Company Assets” means all direct and indirect assets and property, whether tangible or intangible (including monies) and whether real, personal, or mixed, from time to time owned by or held for the benefit of the Company, including all direct or indirect interests in the Properties.

Company Expenses” means, with respect to any fiscal period, the amount of any expenses accrued or paid by or on behalf of the Company during the period, including without limitation, all cash expenses, such as insurance premiums, legal, accounting, and bookkeeping. Company Expenses shall include the actual cost of goods, materials, and administrative services used for or by the Company, whether incurred by the Managing Member, any Affiliate thereof, or any non-Affiliate in performing functions set forth in this Agreement reasonably requiring the use of such goods, materials, or administrative services, provided, that any expenses incurred by Affiliates of the Managing Member and reimbursable by the Company shall be on terms no less favorable than those that would be incurred in an arm’s-length market rate transaction with a Third Party unaffiliated with the Company and/or the Managing Member.

Company Minimum Gain” has the meaning set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase “partnership minimum gain.”

Competitor Restriction Termination Date” has the meaning set forth in the Lease.

 

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Control” (including the correlative meanings of the terms “Controlled by” and “under common Control with”), as used with respect to any Person, means the possession, directly or indirectly (including through one or more intermediaries), of the power to direct or cause the direction of the management and policies of such Person, through the ownership or control of voting securities, partnership interests or other equity interests, by contract or otherwise.

Credit Arrangements” is defined in Section 3.8.

Depreciation” means, for each fiscal year or other period, an amount equal to the federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method chosen by the Managing Member.

Dilutive Contribution” as defined in Section 3.3.7.

Due Date” is defined in Section 3.2.3.

Economic Interest” means a Person’s right to share in the Net Profits, Net Losses, or similar items of, and to receive distributions from, the Company, but does not include any other rights of a Member including, without limitation, the right to vote or to participate in the management of the Company, or, except as specifically provided in this Agreement or required under the Act, any right to information concerning the business and affairs of the Company.

Effective Date” is defined in the Preamble.

Emergency Expenses” means costs that arise from an emergency situation which would, or could reasonably be expected to, (i) cause imminent material loss to the Company, (ii) pose an imminent threat of bodily injury to persons at the Properties, (iii) cause a material liability to the Company or any Subsidiary resulting from a failure to comply with any laws, orders, rules, regulations and other requirements enacted, imposed or enforced by any governmental authority or (iv) result in the imminent suspension of any material services necessary to the continued operation of any portion of the Properties.

ERISA is defined in Section 9.2.2.

Existing Operating Agreement” is defined in the Recitals.

Failed Contribution” is defined in Section 3.3.1.

 

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For Cause Removal Event” means the occurrence of any of the following: (i) the written admission by MGP Member or the final non-appealable finding by a court of competent jurisdiction that MGP Member or any of its Affiliates (it being expressly agreed that for the purposes of this clause, none of MGM or any of its Subsidiaries (which are not also MGP’s Subsidiaries) shall be deemed to be an Affiliate of MGP Member) committed an act of fraud with respect to the Company or any Company Assets, (ii) the final non-appealable finding by a court of competent jurisdiction that MGP Member (or an Officer appointed by the MGP Member in its capacity as Managing Member) or any of its Affiliates (it being expressly agreed that for the purposes of this clause, none of MGM or any of its Subsidiaries (which are not also MGP’s Subsidiaries) shall be deemed to be an Affiliate of MGP Member) took or implemented (or caused the Company or any of its Subsidiaries to take or implement) any action that constitutes a Major Decision without the consent of Sponsor Member in violation of Section 6.3.1, or (iii) a Bankruptcy by or with respect to the MGP Member, the MGP Guarantor or MGP.

Gaming Authority” means any Government Entity that holds regulatory, licensing or permit authority over gambling, gaming, lotteries, horse racing or casino activities conducted by MGM, the MGP Entity or the Sponsor Entity or any of their respective Affiliates, including, but not limited to, the Nevada Gaming Commission and the Nevada Gaming Control Board.

Gaming Laws” means all laws governing or relating to MGM, the MGP Entity or the Sponsor Entity or any of their respective Affiliates and the gambling, gaming, lottery, horse racing or casino activities and operations of MGM, the MGP Entity or the Sponsor Entity or any of their respective Affiliates, in each case, as amended from time to time, including, but not limited to, the Nevada Gaming Control Act and the regulations promulgated thereunder.

Government Entity” means any (a) Gaming Authority, (b) federal, state, local, municipal, foreign or other government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, (c) governmental or quasi-governmental entity of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal) or (d) body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature, including any arbitral tribunal.

Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as reasonably determined by the Managing Member;

(b) The Gross Asset Values of all Company Assets immediately prior to the occurrence of any event described in subparagraph (i), subparagraph (ii), subparagraph (iii) or subparagraph (iv) below, shall be adjusted to equal their respective gross fair market values (taking Code Section 7701(g) into account), as reasonably determined by the Managing Member using such method of valuation as it may adopt, as of the following times:

 

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(i) the acquisition of an additional Interest (other than in connection with the execution of this Agreement) by a new or existing Member in exchange for more than a de minimis Capital Contribution, if the Managing Member reasonably determines that such adjustment is necessary or appropriate to reflect the relative interests of the Members in the Company;

(ii) the distribution by the Company to a Member of more than a de minimis amount of Company Assets as consideration for an Interest, if the Managing Member reasonably determines that such adjustment is necessary or appropriate to reflect the relative interests of the Members in the Company;

(iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and

(iv) at such other times as the Managing Member shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.

(c) The Gross Asset Value of any Company Asset distributed to a Member shall be the gross fair market value (taking Code Section 7701(g) into account) of such asset on the date of distribution as reasonably determined by the Managing Member, provided such determination shall be consistent with the fair market value of the Company Assets as determined for purposes of Section 4.4.

(d) The Gross Asset Values of Company Assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that an adjustment pursuant to subparagraph (b) above is made in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

(e) If the Gross Asset Value of a Company Asset has been determined or adjusted pursuant to subparagraph (a), subparagraph (b) or subparagraph (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such Company Asset for purposes of computing Net Profits and Net Losses.

Guaranty Payment” is defined in Section 3.8.4.

Imputed Underpayment” means an imputed underpayment calculated in accordance with Section 6225(b) of the Code.

Incapacity” (including the correlative meaning of the term “Incapacitated”) means, (a) as to any Member who is an individual, the death, total physical disability or entry by a court of competent jurisdiction adjudicating such Member incompetent to manage his or her person or his or her estate; (b) as to any Member that is a corporation, limited liability company

 

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or limited partnership, the bankruptcy (as defined in the Delaware Act) or the filing of a certificate of dissolution, or its equivalent, of such corporation or limited liability company or limited partnership; (c) as to any Member that is a partnership (other than a limited partnership), the the bankruptcy (as defined in the Delaware Act) or the dissolution and commencement of winding up of such partnership; (d) as to any Member that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Company; or (e) as to any trustee of a trust that is a Member, the termination of the trust (but not the substitution of a new trustee).

Indemnitee” is defined in Section 6.8.1.

Individual Sale” is defined in Section 6.12.1.

Initial Capital Contributions” is defined in Section 3.1.3.

Initial Financing” is defined in Section 3.8.2.

Interest Purchase Agreement” is defined in Section 7.1.4(d).

Interest Responding Member” is defined in Section 7.1.4(a).

Interest ROFO” is defined in Section 7.1.4(a).

“Interest ROFO CC Allocation” is defined in Section 7.1.4 (a)

Interest ROFO Closing” is defined in Section 7.1.4(c).

Interest ROFO Closing Date” is defined in Section 7.1.4(c).

Interest ROFO Down Payment” is defined in Section 7.1.4(b).

Interest ROFO Election Notice” is defined in Section 7.1.4(a).

Interest ROFO Escrow Agent” is defined in Section 7.1.4(b).

Interest ROFO Notice” is defined in Section 7.1.4(a).

Interest ROFO Offer Period” is defined in Section 7.1.4(a).

“Interest ROFO PP Adjustments” is defined in Section 7.1.4 (a)

Interest ROFO Purchase Price” is defined in Section 7.1.4(a).

Interest ROFO Rejection Notice” is defined in Section 7.1.4(a).

Interest ROFO Sale Documents” is defined in Section 7.1.4(c).

Interested Member” is defined in Section 9.6.4(a).

 

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Item Subject to Deemed Consent” has the meaning given to the term “Item Subject to Deemed Consent” in the Lease.

Lease” means that certain Master Lease, dated as of [●], 2020, by and among the Property Owners and Tenant, as amended, supplemented and/or modified from time to time.

Lease Document Major Decision” is defined in Section 6.3.1(l).

Lease Documents” means the Lease, the Lease Guaranty, the Transition Services Agreement, each Operating Subtenant Attornment Agreement and the Operating Subtenant Guaranty.

Lease Guaranty” means that certain Guaranty of Lease Documents, dated as of [•], 2020, made by MGM in favor of the Property Owners, as amended, supplemented and/or modified from time to time.

Lender” is defined in Section 3.8.1.

Lending Eligible Member” is defined in Section 3.3.1.

Lending Member” is defined in Section 3.3.1.

Liabilities” is defined in Section 6.8.1.

Liquidator” is defined in Section 8.5.1.

Lockout Date” means the date which is the earliest of (x) the 25th anniversary of the Effective Date, (y) the termination of the Lease arising out of an Event of Default (as defined in the Lease), and (z) if MGP Member is removed as Managing Member as a result of a For Cause Removal Event, the later of (i) the expiration of the Tax Protection Period and (ii) the date on which MGP Member is so removed as Managing Member as a result of a For Cause Removal Event.

LTV” means with respect to any proposed Credit Arrangement, on the date such Credit Arrangement is to be entered into, the ratio, expressed as a percentage, of (x) the maximum principal amount of such Credit Arrangement together with the outstanding principal amount of any other Credit Arrangements which will remain outstanding after such proposed Credit Arrangement is entered into and is secured by the same Company Assets as the proposed Credit Arrangement to (y) the fair market value of the Company Assets securing such Credit Arrangement, as reasonably determined by the Member proposing such Credit Arrangement in good faith.

Major Decision” is defined in Section 6.3.1.

Managing Member” means the MGP Member, any Substitute Member thereof or any New Managing Member.

 

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Mandalay Bay Property means the real property commonly known as the Mandalay Bay Resort and Casino located in Las Vegas, Nevada, acquired by the Mandalay Bay Property Owner pursuant to the MTA.

Mandalay Bay Property Owner” means Mandalay Propco, LLC a Delaware limited liability company, which is the owner of the Mandalay Bay Property.

Member Minimum Gain” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i) with respect to “partner minimum gain.”

Member Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.”

Member Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(i) for the phrase “partner nonrecourse deductions.”

Members” means the Persons admitted as members of the Company in accordance herewith and any Substitute Members, with each Member being referred to, individually, as a “Member”; the initial Members shall be the MGP Member and the Sponsor Member.

Membership Interest” or “Interest” means the entire ownership interest of a Member in the Company at any particular time, including without limitation, the Member’s Economic Interest and any proceeds thereof, any and all rights to vote and otherwise participate in the Company’s affairs, and the rights to any and all benefits to which a Member may be entitled as provided in this Agreement, together with the obligations of such Member to comply with all of the terms and provisions of this Agreement.

MGM” means MGM Resorts International, a Delaware corporation, and its successors and assigns.

MGM Grand Property means the real property commonly known as the MGM Grand Las Vegas Hotel and Casino located in Las Vegas, Nevada, acquired by the MGM Grand Property Owner pursuant to the MTA.

MGM Grand Property Owner” means MGM Grand Propco, LLC, a Delaware limited liability company, which is the owner of the MGM Grand Property.

MGM Guaranty” means that certain guaranty delivered on the Effective Date by MGM with respect to the Initial Financing.

MGP means MGM Growth Properties Operating Partnership LP, a Delaware limited partnership, and its successors and assigns.

MGP Competitor” means any Person set forth on Schedule 2.

 

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MGP Entity is defined in the Preamble.

MGP Guarantor” means any Affiliate of the MGP Member (including MGP) that executes a Permitted Carveout Guaranty.

MGP Member” means MGP Entity, together with its permitted successors and assigns admitted as a Substitute Member, including any Substitute Member acquiring the Interests formerly held by an MGP Member.

MGP REIT means MGM Growth Properties LLC, a Delaware limited liability company.

Monthly Payment Date” means the 15th day following the end of a calendar month.

MTA” means that certain Master Transaction Agreement, dated as of January [], 2020 and executed by MGP, MGM, the Sponsor Member and certain other parties, as the same may be amended, supplemented and otherwise modified from time to time.

Net Profits” or “Net Losses” means, for each fiscal year or other period, an amount equal to the Company’s taxable income or loss for such year or period determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition of Net Profits and Net Losses shall be added to such taxable income or loss;

(b) Any expenditure of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits or Net Losses pursuant to this definition of Net Profits and Net Losses, shall be subtracted from such taxable income or loss;

(c) Gain or loss resulting from any disposition of Company Assets where such gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the Company Assets disposed of, notwithstanding that the adjusted tax basis of such Company Assets differs from its Gross Asset Value;

(d) In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year;

(e) To the extent an adjustment to the adjusted tax basis of any asset included in Company Assets pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member’s

 

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Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for the purposes of computing Net Profits and Net Losses;

(f) If the Gross Asset Value of any Company Asset is adjusted in accordance with subparagraph (b) or subparagraph (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account in the taxable year of such adjustment as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses; and

(g) Notwithstanding any other provision of this definition of Net Profits and Net Losses, any items that are specially allocated pursuant to Section 5.2 or Section 5.4.2 hereof shall not be taken into account in computing Net Profits or Net Losses. The amounts of the items of Company income, gain, loss or deduction available to be specially allocated pursuant to Sections 5.2 and 5.4.2 shall be determined by applying rules analogous to those set forth in this definition of Net Profits and Net Losses.

New Lease Major Decision” is defined in Section 6.3.1.

New Managing Member” is defined in Section 6.4.1.

Non-Contributing Member” is defined in Section 3.3.1.

Non-Discretionary Capital means capital required by the Company (i) to cover Emergency Expenses or to pay debt service payable under any Credit Arrangement, only to the extent that ordinary cash flows of the Company are not available to satisfy the same or (ii) to pay Required Principal Paydowns.

Nonrecourse Deductions” has the meaning set forth in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).

Nonrecourse Liability” has the meaning set forth in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).

OFAC” is defined in Section 9.2.1(h).

Offered Assets” is defined in Section 6.12.1.

Officers” is defined in Section 6.1.3.

Operating Subtenant” has the meaning set forth in the Lease.

Operating Subtenant Attornment Agreement” has the meaning set forth in the Lease.

Operating Subtenant Guaranty” has the meaning set forth in the Lease.

Optional Contribution Notice” is defined in Section 3.3.1.

 

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Optional Loan” is defined in Section 3.3.1.

Optional Loan Rate” means ten percent (10%) per annum; provided, however, that the Optional Loan Rate for Optional Loans made for the purposes of funding Required Principals Paydowns shall be fourteen percent (14%) per annum; provided, further, that in no event shall the Optional Loan Rate exceed the highest lawful rate of interest allowable under applicable law.

Other MGM/MGP Arrangements” is defined in Section 6.9.2.

Outside Contribution Date” is defined in Section 3.3.1.

Partnership Representative” is defined in Section 9.6.1.

Patriot Act” is defined in Section 9.2.1(h).

PCAOB” means, the Public Company Accounting Oversight Board or any successor thereto as may be directed by or implemented pursuant to SOX.

Percentage Interest” means, with respect to each Member, initially the percentage set forth opposite such Member’s name on Exhibit A attached hereto, as the same may be amended or otherwise modified from time to time.

Permitted Carveout Guaranty” means, with respect to any Person that is the guarantor, the collective reference to a guaranty of indebtedness or indemnity that provides for personal recourse to such Person for fraud, misrepresentation, misapplication of cash, waste, environmental claims and liabilities, prohibited transfers, violations of single purpose entity covenants, and other circumstances customarily excluded by institutional lenders from exculpation provisions or included in a separate guaranty or indemnification agreement in non-recourse financing of real property.

Person” means and includes an individual, a corporation, a partnership, a limited liability company, a limited partnership, a trust, an unincorporated organization, a government or any department or agency thereof, or any entity similar to any of the foregoing.

Property” and “Properties” means, individually or collectively, the Mandalay Bay Property and the MGM Grand Property.

Property Disposition” means the (i) sale of all or substantially all of any Property, (ii) sale of any direct ownership interests in any Property Owner or any Subsidiary of the Company that directly or indirectly owns a Property to a Person other than the Company or a direct or indirect wholly-owned Subsidiary of the Company, or (iii) merger, consolidation, conversion or other combination of the Company, or any Subsidiary of the Company that directly or indirectly owns a Property, with or into any other Person (other than the Company or a direct or indirect wholly-owned Subsidiary of the Company).

Property Owner” and Property Owners means, individually or collectively, the Mandalay Bay Property Owner and the MGM Grand Property Owner.

 

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Public Vehicle” means a Person whose securities are listed and traded on the New York Stock Exchange, AMEX, NASDAQ, or another nationally recognized securities exchange, and shall include any operating partnership through which such Person conducts all or substantially all of its business (including, without limitation, MGP and BREIT OP).

Regulation D” is defined in Section 9.2.1(k).

Regulations” means temporary and final Treasury Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding Treasury Regulations).

Regulatory Allocations” is defined in Section 5.2.8.

REIT” is defined in Section 6.11.

REIT Requirements” is defined in Section 6.11.

Removal Event” means (i) if an Event of Default (as defined in the Lease) has occurred and is continuing, (ii) the occurrence of a For Cause Removal Event, or (iii) the occurrence of a Transfer or dilution in accordance with Section 3.3.7 which results in MGP, directly or indirectly, owning less than thirty-five percent (35%) of the Membership Interests in the Company.

Required Principal Paydowns” means the payment of all or a portion of the principal amount of any Credit Arrangement or other indebtedness for borrowed money of the Company or any Subsidiary (including all associated transaction costs) on or about the maturity of such Credit Arrangement or other indebtedness in circumstances where the Company does not obtain replacement financing in an amount at least equal to such maturing Credit Arrangement or other indebtedness.

Required Tax Elections” means: (i) an election to adopt the accrual method of accounting in accordance with Regulations Section 1.446-1(e)(1); (ii) an election to adopt the recurring item exception of Code Section 461(h)(3) pursuant to Regulations Section 1.461-5(a) for all types of items for all trades or businesses of the Company; (iii) an election pursuant to Code Section 461(c) to ratably accrue real property taxes; (iv) an election under Code Section 168(g)(7) to use the alternative depreciation system with respect to all applicable assets of the Company acquired after the Effective Date; (v) an election pursuant to Regulations Section 1.168(k)-1(e)(1) not to apply Code Section 168(k) with respect to any asset of the Company; (vi) a de minimis safe harbor election under Regulations Section 1.263(a)-1(f) for all eligible amounts paid or incurred during the taxable year; (vii) an election pursuant to Regulations Section 1.709-1(b)(2) to capitalize the Company’s organizational expenses for the taxable year in which the Company begins business; and (viii) one or more elections under Code Section 163(j)(7)(B) and Proposed Regulations 1.163(j)-9 to be an electing real property trade(s) or business(es).

Reserves” means funds set aside or amounts allocated to reserves that shall be maintained in amounts deemed sufficient by the Managing Member, in its reasonable discretion, for working capital, and to pay capital expenditures, taxes, insurance, debt service, debt repayment and other liabilities (including any liabilities arising under the Tax Protection Agreement), costs or expenses incident to the existence of the Company or its Subsidiaries or the conduct of business by the Company or its Subsidiaries as contemplated hereunder.

 

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Retained Guarantee Liabilities” is defined in Section 7.1.4(c).

Reviewed Year” is defined in Section 6225(d)(1) of the Code.

Right to Compete” is defined in Section 6.9.2.

ROFO Offered Interest” is defined in Section 7.1.4(a).

Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Selling Member” is defined in Section 7.1.4(a).

Similar Law” is defined in Section 9.2.2.

SOX” means the Sarbanes-Oxley Act of 2002, as amended, supplemented, restated or replaced from time to time, or any similar or related requirements pursuant to applicable law from time to time.

Sponsor Entity” is defined in the Preamble.

Sponsor Guarantor” means any Affiliate of Sponsor Member (including BREIT OP) that executes a Permitted Carveout Guaranty.

Sponsor Member” means Sponsor Entity, together with its permitted successors and assigns that are admitted as Substitute Members, including any Substitute Member acquiring the Interests formerly held by a Sponsor Member.

Subsidiary” means, with respect to any Person, any Affiliate of such Person which is directly or indirectly, through one or more intermediaries, Controlled by such Person.

Substitute Member” means any Person: (a) to whom a Member (or Assignee thereof) Transfers all or any part of its direct Interest in accordance with the terms of this Agreement, and (b) which has been admitted to the Company as a Substitute Member pursuant to Section 7.5.

Targeted Financing” means any proposed Credit Arrangement that is in an amount equal to the greater of (i) an amount sufficient to repay in full any existing Credit Arrangement secured by the Company Assets which will be collateral for such proposed new Credit Arrangement, including any related prepayment, defeasance or similar costs incurred as a result of such repayment and (ii) an amount which results in an LTV of (A) not less than 60% and (B) not greater than 75%.

Tax Advances” is defined in Section 4.3.

 

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Tax Protection Agreement” means that certain tax protection agreement dated as of the date hereof by and between MGM and the Company, as amended, supplemented and/or modified from time to time.

Tax Protection Period” means “Protected Period” as defined in the Tax Protection Agreement.

Tenant” has the meaning given to the term “Tenant” in the Lease.

Tenant Party” means any of Tenant, any Operating Subtenant, MGM and any MGM Party (as defined in the Transition Services Agreement), in each case, in its capacity as a party to a Lease Document, as applicable.

Tenant Competitor” has the meaning given to the term “Tenant Competitor” in the Lease.

Third Party” means with respect to any Person, any other Person that is not an Affiliate of such Person.

Transfer” means any sale, exchange, assignment, pledge, transfer, gift, hypothecation, mortgage, encumbrance or other form of disposition, directly or indirectly, by operation of law or otherwise. The term “Transferred” shall have a correlative meaning.

Transfer Affiliate” means (i) with respect to the Sponsor Member, any Person that is ninety-five percent (95%) or more owned and Controlled, directly or indirectly, by BREIT OP and (ii) with respect to the MGP Member, any Person that is ninety-five percent (95%) or more owned and Controlled, directly or indirectly, by MGM and/or MGP.

Transition Services Agreement” means that certain Transition Services Agreement, dated as of [•], 2020 by and among Property Owners, Tenant and MGM Parties (as defined therein), as amended, supplemented and/or modified from time to time.

TRS” is defined in Section 6.11.

Voteco Entity” shall be a formed Delaware limited liability company that would (i) control Sponsor Member and (ii) be owned and controlled by one or more senior management officers at BREIT.

ARTICLE 3

CAPITAL; CAPITAL ACCOUNTS AND MEMBERS

3.1 Generally; Initial Capital Contributions.

3.1.1 Effective as of the Effective Date, the MGP Member and the Sponsor Member have been admitted to the Company as members of the Company.

 

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3.1.2 The names, addresses, Capital Contributions (including Additional Capital Contributions), Capital Account balances and Percentage Interests of the Members shall at all times be set forth in the books and records of the Company, which shall be supplemented from time to time by the Managing Member to reflect the admission of Substitute Members pursuant to this Agreement, as well as to reflect any changes in the Members’ respective Capital Contributions, Capital Account balances and Percentage Interests pursuant to the terms of this Agreement.

3.1.3 On the Effective Date, each of the Members shall be deemed to have contributed as its initial Capital Contribution the amount set forth on Exhibit A (collectively, the “Initial Capital Contributions”).

3.2 Additional Contributions.

3.2.1 Except as set forth in this Section 3.2, or as otherwise required by law, no Member or Assignee shall be required or permitted to make any Additional Capital Contributions to the Company.

3.2.2 The Managing Member may require the Members to make Additional Capital Contributions in accordance with this Section 3.2. If the Company requires Additional Capital Contributions to fund Non-Discretionary Capital, the Managing Member shall give written notice (a “Capital Call Notice”) to each Member indicating the purpose for such Additional Capital Contribution and each Member’s proportionate share thereof. If the Managing Member fails to send a Capital Call Notice to fund Non-Discretionary Capital, and the Sponsor Member reasonably determines that Non-Discretionary Capital is required by the Company, the Sponsor Member (i) may deliver a written notice to the Managing Member advising the Managing Member of such failure, and (ii) if such Managing Member continues for five (5) Business Days following such delivery to fail to call for Additional Capital Contributions to fund such Non-Discretionary Capital, the Sponsor Member shall have the right to deliver a Capital Call Notice to the Members; provided, in the event of a Bankruptcy of the Managing Member, the Sponsor Member shall be permitted to deliver a Capital Call Notice to the Members immediately upon reasonably determining that Non-Discretionary Capital is required by the Company and without satisfying the requirements of clause (i) or (ii) of the foregoing. The Members shall make, on or prior to the Due Date, all Additional Capital Contributions pursuant to this Section 3.2.2 and Section 3.2.3 in proportion to their then respective Percentage Interests. No Member shall have any liability for failing to fund any Additional Capital Contributions (including to fund any Non-Discretionary Capital) other than the remedies provided in Section 3.3 and any such Member which fails to fund Additional Capital Contributions shall not be in default of its obligations under this Agreement.

3.2.3 Any Capital Call Notice shall contain a due date, which shall not be fewer than ten (10) Business Days after the date such notice is delivered (the “Due Date”), and each Member shall contribute to the Company its Additional Capital Contributions in immediately available funds (United States dollars) by such Due Date. The Managing Member shall cause the Company’s books and records to be updated to reflect such Additional Capital Contributions and any corresponding changes to the Members’ Capital Account balances as a result thereof.

 

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3.3 Optional Loans and Dilutive Contributions.

3.3.1 If a Member (in such capacity, a “Non-Contributing Member”) does not advance in immediately available funds (United States dollars) to the Company all or any portion of any Additional Capital Contributions required by it pursuant to Section 3.2 (a “Failed Contribution”) by 5:00 p.m. local time in New York, New York, on the Due Date therefor, a funding Member may (in such capacity, a “Lending Eligible Member”), deliver, at any time within thirty (30) days after the Due Date, a notice to the Non-Contributing Member (an “Optional Contribution Notice”) that it may elect to fund such Failed Contribution. At any time: (a) after the fifth Business Day following the date on which an Optional Contribution Notice is delivered (such fifth Business Day, an “Outside Contribution Date”), and (b) prior to such Non-Contributing Member making such Failed Contribution, a Lending Eligible Member may, but shall not be obligated to, advance to the Company an amount equal to the Failed Contribution and to treat such advance as a loan (an “Optional Loan”) to the Non-Contributing Member, which Optional Loan shall be recourse only to the Non-Contributing Member’s Interest. The Lending Eligible Member that makes the Optional Loan is referred to herein as the “Lending Member.” Any Lending Member shall be entitled to structure such Optional Loan in a manner it reasonably deems necessary to satisfy all applicable REIT requirements (including, without limitation, all REIT income and asset requirements), including (1) by electing to provide such capital in the form of preferred equity of the Company rather than debt, (2) subject to compliance with all Credit Arrangements, by making the Optional Loan (or preferred equity investment) directly to (or in) the Company or one or more Subsidiaries (including the Property Owners), (3) having the Optional Loan secured by the Non-Contributing Member’s interest in the Company, or (4) by having an Affiliate of such Lending Member provide the Optional Loan (or preferred equity investment); provided that the economic terms and substantive rights of such Lending Member, the Non-Contributing Member, the Company and any Subsidiary pursuant to any such alternative structure shall be the same in all material respects as if such Lending Member had made an Optional Loan pursuant to the express provisions of this Section 3.3.1.

3.3.2 If an Optional Loan(s) shall be made in accordance with this Section 3.3, the Lending Member shall notify the Non-Contributing Member and the Company of the amount and date of the Optional Loan(s), and the Capital Account balance of the Non-Contributing Member shall be credited to reflect the payment of the proceeds of the Optional Loan to the Company. Each Optional Loan that is treated as a loan to the Non-Contributing Member after taking into account the REIT considerations described in Section 3.3.1 above shall be deemed to be made to the Non-Contributing Member, with the proceeds of each Optional Loan delivered by the Lending Member to the Company in immediately available funds (United States dollars) on such Non-Contributing Member’s behalf and the full amount of such Optional Loan shall be deemed a Capital Contribution by the Non-Contributing Member for all purposes of this Agreement. An Optional Loan shall be deemed to have been advanced on the date actually advanced by the Lending Member to the Company. Optional Loans shall earn interest on the outstanding principal amount thereof at a rate equal to the Optional Loan Rate from the date actually advanced by the Lending Member to the Company until the date the same is repaid in full, compounding quarterly.

 

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3.3.3 Optional Loans shall only be repayable by and collectible from the Non-Contributing Member as set forth in this Section 3.3. An Optional Loan (together with any accrued and unpaid interest thereon) may be repaid by a Non-Contributing Member at any time. If an Optional Loan is made, the Non-Contributing Member shall not receive any distributions pursuant to Articles 4 and 8 while the Optional Loan remains unpaid. Instead, the Non-Contributing Member’s share of all such distributions or such other proceeds shall (until all Optional Loans made to such Non-Contributing Member plus all accrued and unpaid interest thereon, if any, shall have been paid in full) first be paid to the Lending Member. Such payments shall be applied first to the payment of any accrued and unpaid interest on such Optional Loans and then to the repayment of the principal amounts thereof, but shall be considered, for all other purposes of this Agreement, to have been distributed to the Non-Contributing Member. Such Non-Contributing Member’s right to receive distributions shall be immediately reinstated prospectively upon the full repayment of an Optional Loan, including all accrued and unpaid interest thereon to the Lending Member.

3.3.4 Intentionally Omitted.

3.3.5 Intentionally Omitted.

3.3.6 If (a) a Lending Eligible Member provides an Optional Contribution Notice to the Non-Contributing Member as provided in Section 3.3.1 above, (b) the Non-Contributing Member does not make the Additional Capital Contribution on or before the Outside Contribution Date, and (c) no other Lending Eligible Member elects to make an Optional Loan on or before the Outside Contribution Date, then each Lending Eligible Member may elect, in lieu of making an Optional Loan, at any time within thirty (30) days after the Outside Contribution Date, by notice to the Company and the Non-Contributing Member, to have the Company return the Additional Capital Contribution advanced by such Lending Eligible Member and, promptly following the Company’s receipt of such notice, the Company shall return such corresponding Additional Capital Contribution to the Lending Eligible Member (with a corresponding debit to such Lending Eligible Member’s Capital Account and Capital Contribution balances).

3.3.7 A Lending Eligible Member may fund a Failed Contribution as an Additional Capital Contribution from such Lending Eligible Member to the Company (a “Dilutive Contribution”) in lieu of making an Optional Loan, in which case:

(a) the Percentage Interest of such Lending Eligible Member shall be adjusted and shall be amended in order to reflect an increase in such Member’s Percentage Interest by adding thereto a percentage amount equal to the product of (A) 1.5 times (B) the quotient (expressed as a percentage) of (I) the amount of the applicable Dilutive Contribution made by such Lending Eligible Member divided by (II) the sum of the total Capital Contributions made by all of the Members (including the applicable Dilutive Contribution and all other Dilutive Contributions) through and including the date that the Lending Eligible Member made the Dilutive Contribution; and

(b) the Percentage Interest of the Non-Contributing Member shall be reduced by the percentage amount added to the Percentage Interest of the Lending Eligible Member pursuant to clause (a) above.

 

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Notwithstanding the foregoing, in no event shall the Percentage Interest of any Member be greater than 100% or reduced by more than 10 percentage points in total as a result of the foregoing dilution (whether as a result of one or more Dilutive Contributions).

3.4 Capital Accounts. A Capital Account shall be established and maintained for each Member in accordance with Regulations Sections 1.704-1(b)(2)(iv) and 1.704-2 and the terms of this Agreement to the extent such terms are consistent with the applicable Regulations.

3.5 Return of Capital. Except as otherwise provided in this Agreement: (a) no Member shall demand or be entitled to receive a return of or interest on its Capital Contributions or Capital Account balance, (b) no Member shall withdraw any portion of its Capital Contributions or receive any distributions from the Company as a return of capital on account of such Capital Contributions, (c) the Company shall not redeem or repurchase the Interest of any Member, and (d) no Member shall be personally liable for the return of all or any part of any Capital Contribution of the other Members.

3.6 Liability of Members. Except as otherwise required by any non-waivable provision of the Act or other applicable law: (a) no Member shall be personally liable in any manner whatsoever for any debt, liability or other obligation of the Company (including all Credit Arrangements), whether such debt, liability or other obligation arises in contract, tort, or otherwise; (b) no Member shall in any event have any personal liability whatsoever in excess of the amount of any wrongful distribution to such Member, except if, and only to the extent, such Member has actual knowledge (at the time of the distribution) that such distribution is made in violation of the Act; and (c) no Member shall have any liability for failing to fund any Capital Contributions other than the remedies provided in Section 3.3.

3.7 Member Loans.

3.7.1 No Member shall be required to make any loans or otherwise lend any funds to the Company or its Subsidiaries.

3.7.2 No loans made by any Member to the Company shall have any effect on such Member’s Capital Account balance, Capital Contributions or Percentage Interest, such loans representing a debt of the Company payable or collectible solely from the assets of the Company in accordance with the terms and conditions upon which such loans were made.

3.8 Credit Arrangements.

3.8.1 The Members acknowledge that, as of the Effective Date, the Company and its Subsidiaries have entered into the financings described on Schedule 1 attached hereto (the “Initial Financing”) and MGP Guarantor and Sponsor Guarantor have each delivered the Permitted Carveout Guaranty described in Schedule 1 attached hereto and MGM has delivered the MGM Guaranty in accordance with the terms of the MTA.

 

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3.8.2 Subject to the terms of this Section 3.8, the Managing Member may, from time to time, cause the Company or any Subsidiary of the Company to borrow funds or enter into any financing or refinancing arrangements (collectively, “Credit Arrangements”) with one or more lenders (a “Lender”) for any purpose consistent with the purpose of the Company, and to pledge, enter into a negative pledge or otherwise secure Credit Arrangements with or with respect to any Company Assets; provided, (i) except as expressly provided in Section 3.8.4, no Member or its Subsidiaries or Affiliates shall be required to incur any personal liability in connection with any Credit Arrangement, and (ii) no such Credit Arrangements shall restrict any Transfer in or by any Member which is otherwise permitted by the terms of this Agreement without the consent of such Member, provided that each Member acknowledges that Credit Arrangements may require that certain specified Transfers comply with customary ministerial, administrative and prohibited person requirements (e.g., completed KYC forms, the delivery of required notices, etc.).

3.8.3 MGP Member and Sponsor Member shall be jointly responsible for pursuing, approving and obtaining Credit Arrangements; provided that, Sponsor Member shall have the authority to manage the day to day pursuit of the Credit Arrangement (subject to the last sentence in this Section). The Sponsor Member agrees to begin to diligently pursue a refinancing of each Credit Arrangement no earlier than twelve (12) months and no later than six (6) months prior to the maturity of such Credit Arrangement. With respect to each refinancing of a Credit Arrangement, the Sponsor Member shall pursue a refinancing that is a Targeted Financing. The Sponsor Member shall consult with the MGP Member and keep the MGP Member reasonably informed on a current basis and in reasonable detail of the status of its efforts to arrange each refinancing of a Credit Arrangement. Except as provided in the last sentence in this Section, so long as the Sponsor Member is diligently pursuing each such refinancing, the MGP Member shall refrain from simultaneously pursuing a refinancing of a Credit Arrangement. In the event the Sponsor Member is successful in arranging a proposed Credit Arrangement that is a Targeted Financing that can be obtained by the Company within the six (6) month period prior to the maturity of the existing Credit Arrangement it is intended to refinance (subject to the last sentence in this Section), each of MGP Member and Sponsor Member agree to be reasonable and cooperate in causing the Company to complete such Credit Arrangement; provided, that the definitive terms of any such Credit Agreement shall be subject to the prior approval of the MGP Member, not to be unreasonably withheld, conditioned or delayed. In the event that the Sponsor Member (i) has not finalized arranging a proposed Credit Arrangement that is a Targeted Financing at least three (3) months prior to the maturity of the Credit Arrangement it is intended to refinance or (ii) has arranged for but has failed to close a proposed Credit Arrangement that is a Targeted Financing at least two (2) months prior to the maturity of the Credit Arrangement it is intended to refinance, then upon notice from the MGP Member, the Sponsor Member shall cease pursuing such refinancing and the MGP Member shall diligently pursue such refinancing of such Credit Arrangement with a Targeted Financing in order to refinance such Credit Arrangement.

3.8.4 Further, each of the Members agrees, at the expense of and subject to reimbursement from the Company, to provide and to use their commercially reasonable efforts to cause their respective officers, employees and advisors to provide reasonable cooperation as reasonably required for the completion of any such Credit Arrangement that has been arranged in accordance with Section 3.8.2 and Section 3.8.3, including (i) executing and delivering (or causing to be delivered) such organizational documents, opinions, certificates and similar documents as are reasonably requested in connection with any such Credit Arrangement, (ii) making available financial information regarding the Properties, the Company and the Carveout Guarantors in the same manner as what was provided in connection with the Initial Financing, and (iii) using reasonable efforts to obtain estoppel certificates and nondisturbance agreements from tenants and subtenants of the Properties and the counterparties under other material agreements affecting the Properties.

 

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3.8.5 In connection with any Credit Arrangements, if a Lender requires a (i) an MGP Guarantor to enter into a Permitted Carveout Guaranty in connection with such Credit Arrangement, the MGP Member shall cause the MGP Guarantor to execute and deliver such Permitted Carveout Guaranty, upon such terms as shall be reasonably approved by the MGP Member and (ii) a Sponsor Guarantor to enter into a Permitted Carveout Guaranty in connection with such Credit Arrangement, the Sponsor Member shall cause the Sponsor Guarantor to execute and deliver such Permitted Carveout Guaranty, upon such terms as shall be reasonably approved by the Sponsor Member. In connection with the execution and delivery of the Permitted Carveout Guaranties with respect to the Initial Financing, the Members and the Carevout Guarantors have executed and delivered the Carveout Contribution Agreement. In the event one or more Permitted Carveout Guaranties are executed and delivered with respect to any other Credit Arrangements, the Members and the Carevout Guarantors, (and, in the event there is not a Sponsor Guarantor under any such Credit Agreement, BREIT OP or such other Affiliate of the Sponsor Member reasonably acceptable to MGP Member) shall execute and deliver a contribution agreement on substantially the same terms as the Carveout Contribution Agreement with respect to such Permitted Carveout Guaranties.

3.8.6 To the extent that any amounts are actually paid under any Permitted Carveout Guaranty (a “Guaranty Payment”), then (i) the applicable Member which is Affiliated with the guarantor which made such Guaranty Payment shall be deemed to have made an Additional Capital Contribution equal to its Percentage Interest of such Guaranty Payment and (ii) the Managing Member shall send an Additional Capital Contribution notice as required by Section 3.2.2 hereof, to the Member who is not Affiliated with such guarantor to make an Additional Capital Contribution in the amount of its Percentage Interests of such Guaranty Payment; provided, however, that any Guaranty Payment shall not be deemed to be an Additional Capital Contribution if the obligation to make such payment was due to any Bad Act committed by the Member Affiliated with such guarantor and the amount paid pursuant to such Guaranty Payment did not fully reduce the principal amount of debt outstanding. To the extent that such non-Affiliated Member makes such contribution, the Company shall distribute it to the Member which is Affiliated with the guarantor which made such Guaranty Payment. To the extent that such non-Affiliated Member fails to make such contribution, the Affiliated Member shall be deemed a Lending Eligible Member under Section 3.3 which funded such amount, at its option, as either an Optional Loan or a Dilutive Contribution.

3.8.7 At any time the Company or any of its Subsidiaries enters into a Credit Arrangement (other than the Initial Financing), the Member which completed such Credit Arrangement on behalf of the Company pursuant to Section 3.8.3 shall provide prompt written notice to the other Member and copies of the final loan documents entered into in connection with such Credit Arrangement.

 

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ARTICLE 4

DISTRIBUTIONS

4.1 Distributions of Cash Available for Distribution.

4.1.1 Generally. Except as expressly provided in this Article 4 and Article 8, no Member shall be entitled to receive distributions from the Company.

4.1.2 Timing of Distributions. The Managing Member shall cause the Company to distribute (a) all Capital Proceeds within twenty (20) Business Days of a Capital Event and (b) all other Cash Available for Distribution for each calendar month no later than the Monthly Payment Date for the relevant month, in each case excluding distributions in conjunction with the final liquidation of the Company which shall be governed by Section 4.2 and Article 8.

4.1.3 Debt Financing Distribution. The Managing Member shall cause the Company to distribute the Debt Financing Distribution (as defined in the MTA) solely to MGP Member.

4.1.4 Distributions of Cash Available for Distribution. Cash Available for Distribution (if any) (excluding distributions in conjunction with the final liquidation of the Company which shall be governed by Section 4.2 and Article 8) shall be apportioned between the Members, pari passu in proportion to their respective Percentage Interests at the time of such Distribution.

4.2 Distributions Upon Liquidation. Distributions made in conjunction with the final liquidation of the Company (including as a result of the Capital Events described in Section 8.2(b)) shall be applied or distributed as provided in Article 8.

4.3 Withholding. The amount of any federal, state, local or foreign taxes paid by or withheld from receipts of the Company (or any entity in which the Company invests) pursuant to any applicable rule, regulation or law that the Managing Member reasonably determines is distributable or allocable to a Member pursuant to this Agreement, including pursuant to Code Section 6225 (“Tax Advances”) shall be treated as having been distributed to such Member as an advance against the next distributions that would otherwise be made to such Member, and such amount shall be satisfied by setoff from such next distributions. Each Member will furnish the Managing Member with such information as may reasonably be requested by the Managing Member from time to time to determine whether withholding is required, and each Member will promptly notify the Managing Member if such Member determines at any time that it is subject to withholding. Each Member hereby agrees to indemnify and hold harmless the Company and the Managing Member and any partner or officer of the Managing Member and the Members from and against any liability, claim or expense with respect to Tax Advances made or required to be made on behalf of or with respect to such Member. In the event the Company is liquidated and a liability or claim is asserted against, or expense borne by, the Managing Member or any partner or officer of the Managing Member for Tax Advances made or required to be made, the Managing Member shall have the right to be reimbursed from the Member on whose behalf such Tax Advance was made or required to be made. The obligations of a Member set forth in this Section 4.3 shall survive the withdrawal of any Member from the Company or any transfer of a Membership Interest.

 

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4.4 Distributions in Kind. No right is given to any Member to demand or receive property other than cash as provided in this Agreement. The Managing Member may make a distribution-in-kind of Company Assets to the Members. In the event of such a distribution-in-kind, such Company Assets shall be distributed in such a fashion as to ensure that the fair market value thereof is distributed and allocated in accordance with this Article 4, Article 5 and Article 8 hereof; provided, however, that except upon a dissolution and winding up of the Company (i) no Member shall be compelled to accept a distribution consisting, in whole or in part, of any Company Assets in kind unless the ratio that the fair market value of such distribution-in-kind bears to such Member’s total distribution does not exceed the ratio that the fair market value of similar distributions-in-kind bears to the total distributions of other Members receiving distributions concurrently therewith (if any), and (ii) any such distribution-in-kind to the Members shall be of the same type and character (i.e., if the distribution to one Member is made in specific securities, then any distribution made to the other Members shall be made in the same securities), and no Member shall be required to accept any distribution-in-kind that is not the same type and character as the distribution-in-kind being offered to the other Members.

4.5 Limitations on Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Company nor the Managing Member, on behalf of the Company, shall make a distribution to any Person in violation of the Act or other applicable law.

4.6 Carveout Contribution Agreement. The Members acknowledge and agree that pursuant to the terms of Section 1(d) of the Carveout Contribution Agreement, certain distributions which are payable to a Member under this Agreement may instead be paid pursuant to and in accordance with the terms of Section 1(d) of the Carveout Contribution Agreement.ARTICLE 5

ALLOCATIONS OF NET PROFITS AND NET LOSSES

5.1 General Allocations of Net Profits and Losses. After giving effect to the special allocations set forth in Section 5.2, Net Profits and Net Losses of the Company, including each item of income, gain, loss credit and deduction, for each fiscal year or other applicable period, shall be allocated among the Members in a manner such that the Capital Account of each Member immediately after giving effect to such allocation is, as nearly as possible, equal (proportionately) to the amount of the distributions that would have been made to such Member during such fiscal year or other applicable period if: (i) the Company were dissolved and terminated; (ii) its affairs were wound up and each Company Asset was sold for cash equal to its Gross Asset Value; (iii) all Company liabilities were satisfied (limited with respect to each nonrecourse liability to the Gross Asset Value of the assets securing such liability); and (iv) the net assets of the Company were distributed in accordance with Section 4.1 to such Members immediately after giving effect to such allocation, minus such Member’s share of Company Minimum Gain and Member Minimum Gain, each computed immediately prior to the hypothetical sale of the Company’s Assets. Notwithstanding the foregoing, the Managing Member may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the Managing Member deems reasonably necessary for this purpose.

 

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5.2 Regulatory Allocations. The following special allocations shall be made in the following order of priority:

5.2.1 If there is a net decrease in Company Minimum Gain during a Company taxable year, then each Member shall be allocated items of Company income and gain for such taxable year (and, if necessary, for subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section 1.704-2(g)(2). This Section 5.2.1 is intended to comply with the minimum gain chargeback requirement of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.

5.2.2 If there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company taxable year, each Member who has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such taxable year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in a manner consistent with the provisions of Regulations Section 1.704-2(g)(2). This Section 5.2.2 is intended to comply with the partner nonrecourse debt minimum gain chargeback requirement of Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

5.2.3 If any Member unexpectedly receives an adjustment, allocation, or distribution of the type contemplated by Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of income and gain shall be allocated to all such Members (in proportion to the amounts of their respective Adjusted Capital Account Deficits) in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit of such Member as quickly as possible. It is intended that this Section 5.2.3 qualify and be construed as a “qualified income offset” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d).

5.2.4 If the allocation of income, gain, loss or deduction (or an item thereof) to a Member as provided in Section 5.1 would create or increase an Adjusted Capital Account Deficit, there shall be allocated to such Member only that amount of income, gain, loss or deduction (or an item thereof) as will not create or increase an Adjusted Capital Account Deficit. The allocated item that would, absent the application of the preceding sentence, otherwise be allocated to such Member shall be allocated to the other Members in accordance with their relative Percentage Interests, subject to the limitations of this Section 5.2.4.

5.2.5 To the extent that an adjustment to the adjusted tax basis of any Company Asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Members to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

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5.2.6 The Nonrecourse Deductions for each taxable year of the Company shall be allocated among the Members in proportion to their relative Percentage Interests or in any other way determined by the Managing Member to be consistent with the applicable Regulations.

5.2.7 The Member Nonrecourse Deductions for each taxable year of the Company shall be allocated in a manner consistent with applicable law, as reasonably determined by Managing Member.

5.2.8 The allocations set forth in Sections 5.2.1, 5.2.2, 5.2.3, 5.2.4, 5.2.5, 5.2.6 and 5.2.7 (the “Regulatory Allocations”) are intended to comply with certain requirements of Regulations Sections 1.704-1(b) and 1.704-2(i). Notwithstanding the provisions of Section 5.1, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to each such Member if the Regulatory Allocations had not occurred.

5.3 Allocations in Connection with Liquidations. Notwithstanding the allocation provisions set forth in Section 5.1, but subject to Section 5.2, all Net Profits or Net Losses realized in connection with the dissolution of the Company in accordance with Article 8 shall be allocated to the Members in a manner so that the distributions to each Member pursuant to Section 4.2 and Article 8 shall, to the greatest extent possible, be equal to that amount that each such Member would receive under Section 4.1 if the amounts to be distributed by the Company in connection with such dissolution were instead distributed under such Section 4.1.

5.4 Tax Allocations.

5.4.1 Except as provided in Section 5.4.2, for income tax purposes under the Code and the Regulations, each Company item of income, gain, loss and deduction shall be allocated between the Members as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to this Article 5.

5.4.2 Tax items with respect to the Properties with a Gross Asset Value that varies from their basis in the hands of the MGP Member immediately preceding the date of such contribution, shall be allocated between the Members for income tax purposes in accordance with Section 9.6.5(d). Allocations pursuant to this Section 5.4.2 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Net Profits, Net Losses and any other items or distributions pursuant to any provision of this Agreement.

 

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5.5 Other Provisions.

5.5.1 For any fiscal year or other period during which any part of a Membership Interest or Economic Interest is Transferred between the Members or to another Person, the portion of the Net Profits, Net Losses and other items of income, gain, loss, deduction and credit that are allocable with respect to such part of a Membership Interest or Economic Interest shall be apportioned between the transferor and the transferee under the “interim closing of the books” method pursuant to Code Section 706 and the applicable Regulations.

5.5.2 In the event that the Code or any Regulations require allocations of items of income, gain, loss, deduction or credit different from those set forth in this Article 5, the Managing Member is hereby authorized to make new allocations in reliance on the Code and such Regulations, and no such new allocation shall give rise to any claim or cause of action by any Member; provided that the Managing Member shall, to the extent possible and consistent with applicable law, make such new allocations in a manner consistent with the provisions of this Agreement as if such new allocation was not required.

5.5.3 The Members acknowledge and are aware of the income tax consequences of the allocations made by this Article 5 and hereby agree to be bound by the provisions of this Article 5 in reporting their shares of Net Profits, Net Losses and other items of income, gain, loss, deduction and credit for federal, state and local income tax purposes.

ARTICLE 6

OPERATIONS

6.1 Management.

6.1.1 Except as otherwise expressly provided in this Agreement, the Managing Member shall have sole and complete charge and management of all the affairs and business of the Company and its Subsidiaries, in all respects and in all matters and shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company and its Subsidiaries, to make all decisions affecting the business and affairs of the Company and its Subsidiaries and to take all such actions as it deems necessary or appropriate to accomplish the purposes and direct the affairs of the Company and its Subsidiaries.

6.1.2 Except as otherwise provided in this Agreement, the Managing Member shall have the sole power and authority to bind the Company, except and to the extent that such power is expressly delegated in writing to any other Person by the Managing Member (including, without limitation, through the appointment of officers of the Company).

6.1.3 The Managing Member may appoint one or more individuals to manage the day-to-day business affairs of the Company (the “Officers”). The Officers shall serve at the pleasure of the Managing Member. To the extent delegated by the Managing Member, the Officers shall have the authority to act on behalf of, and bind, execute and deliver documents in the name and on behalf of, the Company. Unless otherwise specified by the Managing Member, such Officers shall have such authority and responsibility in respect of the Company as is generally attributable to the holders of such offices in corporations incorporated under the laws of Delaware. In addition, the Managing Member may designate such other Persons to act as agents of the Company’s business as the Managing Member shall determine in its sole and absolute discretion, and the actions of such other Persons taken in such capacity and

 

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in accordance with this Agreement shall bind the Company to the same extent the Managing Member is authorized to bind the Company. Notwithstanding the foregoing provisions of this Section 6.1.3, in no event shall the Managing Member be permitted to delegate any authority to an Officer or otherwise, unless the Managing Member has first obtained any required approval for the actions underlying such delegation in accordance with the provisions of this Agreement. Any delegation by the Managing Member to an Officer or otherwise shall not relieve the Managing Member of its duties or obligations under this Agreement.

6.1.4 Except as otherwise expressly provided in this Agreement or as the Managing Member may delegate, the other Members shall not participate in the management of the Company, and shall have no right, power or authority to act for or on behalf of, or otherwise bind, the Company. Except as expressly provided in this Agreement or required by any non-waivable provisions of applicable law, Members shall have no right to vote on or consent to any other matter, act, decision, or document involving the Company or its business. No Member shall take any action in the name of or on behalf of the Company, including, without limitation, assuming any obligation or responsibility on behalf of the Company, unless such action, and the taking thereof by such Member, shall have been expressly authorized by the Managing Member or shall be expressly and specifically authorized by this Agreement.

6.1.5 Without limiting the generality of the foregoing provisions of this Section 6.1, but subject to the other express limitations and provisions of this Agreement requiring the consent of the Sponsor Member, or, if MGP Member has been removed as Managing Member, MGP Member, including Section 6.3, in furtherance of the Company’s purpose as set forth in Section 1.4, the Managing Member (on behalf of the Company) shall have full and complete power and authority, without the approval of any Member:

(a) to take all actions necessary to fulfill the Company’s purpose set forth in Section 1.4;

(b) to negotiate, enter into, perform, modify, extend, terminate, amend, waive, renegotiate, and/or carry out any contracts and agreements of any kind and nature, including, without limitation, contracts and agreements with any Person, including any Member or Assignee, or any Affiliate thereof, or any other agent of the Company, as the Managing Member deems necessary or advisable;

(c) to, from time to time, employ, engage, hire, or otherwise secure the services of such Persons, including any Member or Assignee, or any Affiliate thereof, as the Managing Member may deem necessary or advisable for the administration of the business of the Company and its Subsidiaries;

(d) to exercise or waive any and all rights on behalf of the Company or its Subsidiaries;

(e) to acquire, hold, sell, lease, maintain, operate, exchange and otherwise deal with the Company Assets, including the assets of any of its Subsidiaries;

(f) to make distributions of Cash Available for Distribution and Capital Proceeds, in accordance with the terms of Articles 4 and 8;

 

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(g) to borrow or lend money on behalf of the Company or any of its Subsidiaries for any general purpose of the Company or its Subsidiaries in accordance with the terms of Sections 3.8; and

(h) to control all other aspects of the business and operations of the Company that the Managing Member elects to so control.

6.1.6 The Managing Member is authorized to retain an Affiliate of the Managing Member, to provide corporate services, tax advisory, accounting and related back-office functions to the Company and its Subsidiaries; provided, that such services are on terms no less favorable than that which could be obtained in an arm’s-length, market-rate transaction with a Third Party unaffiliated with Managing Member.

6.1.7 The Managing Member shall cause the Company to make each of the Required Tax Elections.

6.2 Enforcement of the Lease.

6.2.1 Managing Member shall cause the Company to cause each of its Subsidiaries that is party to a Lease Document to enforce the obligations of each Tenant Party under each Lease Document in all material respects, provided if exercising or refraining from exercising any such Subsidiaries’ rights would constitute a Major Decision, MGP Member shall first obtain the consent of the Sponsor Member in accordance with Section 6.3 to such action.

6.2.2 If (i) any Tenant Party commits a breach or default in the performance of any of its material obligations under a Lease Document, (ii) such breach or default continues beyond the expiration of any applicable notice and cure period provided therein (provided that, subject to obtaining any consent of the Sponsor Member required in accordance with Section 6.3, the Managing Member shall be obligated to promptly provide any required notice to the applicable Tenant Party under such Lease Document with respect to such breach or default as and when required under such Lease Document, and promptly deliver a copy of any such notice to the Sponsor Member) and (iii) subject to obtaining any consent of the Sponsor Member required in accordance with Section 6.3, the Managing Member shall fail to cause the Company or its Subsidiaries to take commercially reasonable steps to enforce against the applicable Tenant Party the terms of such Lease Document, then the Sponsor Member may notify the Managing Member of such failure. If such failure shall continue for ten (10) Business Days after the date on which such notice is delivered, or if the Company or applicable Subsidiary that is party to such Lease Document shall otherwise become entitled to terminate such Lease Document pursuant to the terms thereof, then the Sponsor Member shall thereafter have the right (but not the obligation) to exercise, on behalf of the Company or the applicable Subsidiary, all rights of the Company or the applicable Subsidiary, as the case may be, as a party to such Lease Document, including the right to terminate such Lease Document (if and to the extent such Lease Document provides for such termination as a remedy under such circumstances) and/or to institute litigation against such Tenant Party, in each case, upon and subject to the applicable provisions of the applicable Lease Document (including, without limitation, any notice requirements and cure periods provided for therein to the extent such cure periods shall not theretofore have expired).

 

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6.2.3 In the event of a Bankruptcy of any Tenant or MGM, Sponsor Member shall have the authority on behalf of the Company and the Property Owners to exercise any rights or remedies in respect of such Bankruptcy available to the Company and the Property Owners and the Managing Member shall not take any such actions without the prior consent of Sponsor Member.

6.3 Limitations on Authority of the Managing Member.

6.3.1 Notwithstanding any contrary provision of this Agreement (other than Section 6.11), the Managing Member shall not (nor permit the Company or any of its Subsidiaries to) take any of the following actions (each, a “Major Decision”) without the consent of the Sponsor Member, or if replaced as Managing Member, subject to Section 6.4.4, MGP Member, in each instance:

(a) cause a Property Disposition prior to the Lockout Date;

(b) cause a Property Disposition on or after the Lockout Date without complying with Section 6.12, to the extent required;

(c) acquire any real property or material tangible personal property;

(d) elect to dissolve, liquidate and/or terminate the Company under Section 8.2(a);

(e) institute or consent to a Bankruptcy of the Company or any Subsidiary of the Company;

(f) enter into any Credit Arrangements other than the Initial Financing, amend, supplement otherwise modify the terms of any Credit Arrangements, or make or give any material notices, or elections to the lender under any Credit Arrangement (excluding ordinary course reporting communications and any required deliverables thereunder; provided, Managing Member shall provide written notice to the other Member of any such required deliverables unless such Member receives such deliverables directly as a notice party);

(g) admit any Member to the Company other than in accordance with Section 7.5 hereof;

(h) effect a change in any tax or accounting policies adopted, followed or otherwise applied by the Company or its Subsidiaries except as required by law or a change in GAAP, respectively;

(i) (i) take any action that causes a Breach (as defined in the Tax Protection Agreement) under the Tax Protection Agreement or a breach of Section 5(a) of the Tax Protection Agreement, (ii) settle or compromise any claim for damages against the Company under the Tax Protection Agreement, (iii) take any action under Section 3(d) or Section 3(e) of the Tax Protection Agreement or (iv) settle or compromise any Company Tax Audit (as defined in the Tax Protection Agreement) in a manner that would give rise to a claim for damages against the Company under the Tax Protection Agreement;

 

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(j) make any tax election with respect to the Company or its Subsidiaries for federal, state or local tax purposes other than a Required Tax Election;

(k) except as provided in the first sentence of Section 9.6.1, appoint any Person as the Partnership Representative other than an Affiliate of the Managing Member or an officer of such Person;

(l) (i) grant any consent, approval or waiver or make any election under any Lease Document, (ii) enter into any amendment, supplement or modification to, any Lease Document or (iii) declare an Event of Default (as defined in the Lease) or elect to terminate any Lease Document (a “Lease Document Major Decision”), provided that, with respect to any Lease Document Major Decision, Sponsor Member, or if removed as Managing Member pursuant to Section 6.4, MGP Member, shall exercise such consent or approval right with the same standard (e.g., “reasonable,” “sole discretion,” etc.), if any, provided for the Landlord to approve such matter in the Lease;

(m) cause the Company to enter into, or grant any consent or approval of, any transaction with an Affiliate of the Managing Member, (or if the Managing Member is a Third Party appointed by Sponsor Member, Sponsor Member) other than any such Affiliate transactions which are (i) contemplated by this Agreement (including Section 6.16), the MTA or the documents related to the Initial Financing or other approved Credit Arrangements, or (ii) on terms no less favorable than that which could be obtained in an arm’s length, market-rate transaction with a Third Party unaffiliated with Managing Member; provided, Managing Member shall provide prompt written notice to the other Member of any agreement, consent, approval or transaction granted or entered into, as applicable, pursuant to this clause (ii);

(n) approve or consent to any change in management of a Property at any time after the Lease is terminated;

(o) take any other matter or action subject to consent of the Sponsor Member (or, if replaced as the Managing Member, the MGP Member) as expressly set forth in this Agreement;

(p) extend credit, making loans (other than expense advances to Company directors or officers in the ordinary course of business) or making, executing or delivering on behalf of the Company any material indemnity bond or material surety bond, or obligating the Company as a surety, guarantor, lender or accommodation party to any obligation on behalf of a Person (other than a Subsidiary);

(q) establish a Reserve in excess of $10,000,000;

(r) make any distributions in kind of Company Assets;

(s) intentionally omitted;

 

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(t) change the purpose of the Company or entering into a new line of business;

(u) institute any litigation, arbitration, claim or demand affecting the Company or any of the assets of the Company involving a claim in excess of $10,000,000 or adjust, settle or compromise any such litigation, arbitration, claim or demand or any debt or judgement against the Company if the settlement amount exceeds $10,000,000 or involves the admission of wrongdoing;

(v) enter into or approve settlement on behalf of the Company of any claim for payment of insurance in excess of $10,000,000 or for payments of awards or damages arising out of the exercise of eminent domain by any public or governmental authority;

(w) alter the existing insurance program for the Company and/or the Properties in any material respect (except to the extent necessary in order to comply with the terms of any Credit Arrangement);

(x) (A) execute or file (1) any material application for zoning, rezoning or zoning variance, (2) any subdivision plans or applications, (3) any request for annexation or any similar filing affecting the use of the Properties, or (4) any development agreement or land use agreement; (B) consent to any material zoning changes; (C) consent to or requesting any material building law variances or waivers; or (D) have any property of the Company partitioned, unless any such actions in this clause (x) are required to be taken by landlord under the terms of the Lease;

(y) make any decision to restore a Property or any portion of a Property following a casualty or condemnation where the cost to restore exceeds $50,000,000, excluding any restoration of the Property that is required under the terms of the Lease;

(z) enter into, or modify any instrument or agreement that would encumber title to any Property other than utility, telecommunication or similar immaterial easements or agreements in the ordinary course of operating such Property that would not reasonably be expected to adversely affect the use, value or operation of the Property (other than to a de minimis extent), unless any such actions in this clause (z) are required to be taken by landlord under the terms of the Lease;

(aa) select the auditors for the Company, except, with respect auditors, if one of the “Big Four” audit firms is chosen;

(bb) (i) hire any employees of the Company or its Subsidiaries, (ii) enter into any collective bargaining agreements or other labor union contracts or (iii) adopt any Employee Benefit Plan (as defined in the MTA);

(cc) enter into any lease for all or a portion of the Properties (a “New Lease Major Decision”);

(dd) (i) acquire (including by merger, consolidation or acquisition of stock or assets) any interest in any Person (or equity interests thereof), (ii) make an investment in any other Person (other than a wholly-owned Subsidiary) or (iii) form any additional Subsidiaries of the Company that are not wholly-owned by the Company;

 

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(ee) settle any tax assessment contest with respect to the Properties;

(ff) make or commit to any single expenditure or related series of expenditures in excess of $5,000,000 per annum exclusive of any Emergency Expenses or Required Principal Paydowns; and

(gg) take any action with respect to a Subsidiary that would be considered a Major Decision if conducted by the Company.

Notwithstanding the foregoing, with respect to any request for consent to or approval of any Lease Document Major Decision which is also an Item Subject to Deemed Consent under the Lease, Managing Member shall not be required to submit its request for such approval through a written notice in accordance with this Agreement to the extent Sponsor Member otherwise receives a copy of all such requests from the Tenant (including all required follow-up requests) in accordance with the delivery requirements set forth in the Lease. If Sponsor Member does not notify Managing Member of any objection to any such notices delivered by the Tenant under the Lease prior to such Item Subject to Deemed Consent being deemed approved by the “Landlord” under the Lease in accordance with the terms of the Lease, then Managing Member shall no longer be required to obtain the approval or consent of Sponsor Member to approve, consent to or waive such action and Sponsor Member shall be deemed to have approved the applicable Lease Document Major Decision as of such time.

In the event Sponsor Member believes MGP Member, as Managing Member has taken or caused the Company to take or implement any action considered a Major Decision without the prior written consent of Sponsor Member, Sponsor Member shall provide notice to MGP Member detailing what action was taken and what Major Decision it relates to, and in the event (i) such action was taken by MGP Member without knowingly and willfully breaching Section 6.3.1, and (ii) can be reversed or rescinded at no cost or liability to the Company, then the MGP Member shall then have thirty (30) days after receipt of such notice from Sponsor Member to cure any such action taken by reversing or rescinding such action at no liability to the Company, provided that if such action cannot reasonably be cured within such thirty (30) day period and MGP Member shall have commenced to cure such action within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for up to an additional sixty (60) day period. In the event MGP Member timely cures a breach of Section 6.3.1 in accordance with the immediately preceding sentence, such breach shall not be the basis for a For Cause Removal Event under clause (ii) of the definition thereof. Nothing in this paragraph shall limit the Sponsor Member from challenging any Major Decision taken without the prior written consent of Sponsor Member as being unauthorized and void ab initio.

6.3.2 Notwithstanding any contrary provision of this Agreement, the Managing Member shall have no authority to: (a) do any act in contravention of this Agreement; or (b) knowingly perform any act that would subject any Member or any of its Affiliates to liability for the debts, liabilities or obligations of the Company or another Member (provided, the foregoing shall in no way restrict the execution of a Permitted Carveout Guarantee in accordance with Section 3.8.5).

 

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6.3.3 Notwithstanding any contrary provision of this Agreement, in the event that the applicable Property Owner is required to sell a Property subject to the Lease in accordance with Section 8.2(b) of the Lease, the MGP Member and the Sponsor Member shall jointly approve the terms of any such sale.

6.3.4 The Company and the Members acknowledge and agree that MGP REIT is the indirect parent of MGP Member and BREIT is the indirect parent of the Sponsor Member, and each of MGP REIT, BREIT and Sponsor Member has elected to be treated as a real estate investment trust for U.S. federal income tax purposes and is therefore subject to the requirements set forth in Code Sections 856 through 859. Notwithstanding anything herein to the contrary, each Member acknowledges and agrees that, for so long as MGP REIT, BREIT or Sponsor Member directly or indirectly owns interests in the Company, the Company shall use commercially reasonable efforts to operate, and the Managing Member is hereby authorized and directed to cause the Company to be operated, in a manner (and, in accordance therewith, make timely distributions of Cash Available for Distribution to the Members in accordance with the terms of Article 4) so that MGP REIT, BREIT and/or Sponsor Member can continue to so qualify and avoid federal income and excise tax liability to the extent permitted under the Code.

6.4 Removal of Managing Member.

6.4.1 Upon a Removal Event (other than a Removal Event arising out of a Bankruptcy of MGP Member), Sponsor Member may elect (in its sole discretion) to immediately remove MGP Member as Managing Member, in which event Sponsor Member may appoint a new Managing Member (in its sole discretion) which may be Sponsor Member, an Affiliate of Sponsor Member or a Third Party (the “New Managing Member”) and thereafter, MGP Member shall immediately cease to have any rights as Managing Member and New Managing Member shall succeed to all the rights and obligations of the former Managing Member (in its capacity as Managing Member) hereunder.    In the event of a Removal Event arising out of a Bankruptcy of MGP Member, MGP Member shall automatically, and without the need for notice or action by any Member, cease to have any rights as Managing Member and Sponsor Member shall automatically, and without the need for notice or action by any Member, become the New Managing Member and succeed to all the rights and obligations of the former Managing Member (in its capacity as Managing Member) hereunder.

6.4.2 In the event of the removal of the Managing Member pursuant to Section 6.4.1, nothing contained in this Agreement shall prohibit or otherwise prevent the Sponsor Member on behalf of itself, or on behalf of the Company or any Subsidiary, from exercising any other right of Company or any Subsidiary, against the MGP Member or any Affiliate thereof, whether at law or in equity; provided, however, that following the removal of the Managing Member pursuant to Section 6.4.1, the MGP Member shall continue to be entitled to indemnification hereunder pursuant to Section 6.8 in its capacity as Managing Member with respect to the time period prior to such removal, and the MGP Member shall still have all of its rights as a Member and as the MGP Member (as opposed to in its capacity as the Managing Member), including (i) its right to receive distributions, (ii) its approval rights as modified by Section 6.4.4, and (iii) its rights to indemnification hereunder pursuant to Section 6.8.

 

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6.4.3 In the event MGP Member is removed as Managing Member, MGP Member shall promptly (i) deliver all books of account records, files and bank statements of the Company to New Managing Member, (ii) execute, acknowledge and/or deliver such other instruments as may be reasonably requested in order to effectuate an orderly transition to New Managing Member, and (iii) otherwise cooperate with the reasonable requests of Sponsor Member in order to effectuate an orderly transition to New Managing Member. In the event that the consent of a lender under a Credit Arrangement is necessary to remove the Managing Member, to appoint New Managing Member, or both, then MGP Member shall, as requested by New Managing Member, cooperate and take all action and execute all documents reasonably necessary or appropriate to obtain such consent or to satisfy such condition.

6.4.4 In the event MGP Member is removed as Managing Member as a result of an occurrence described under clauses (i) or (iii) of the definition of “Removal Event”, the New Managing Member shall not (nor permit the Company or any of its Subsidiaries to) take any action which would constitute a Major Decision without the consent of MGP Member, other than a Lease Document Major Decision or New Lease Major Decision which New Managing Member shall be permitted to take (or cause the Company or its Subsidiaries to take) such actions without the consent or approval of MGP Member so long as such action is taken in good faith, does not adversely affect MGP Member in a manner disproportionate to the other Members (and without regard to any affiliation between the MGP Member and MGM or the Other MGM/MGP Arrangements) and is not a transaction with an Affiliate of the New Managing Member. In the event MGP Member is removed as Managing Member as a result of a For Cause Removal Event, New Managing Member is expressly permitted to take (or permit the Company or any of its Subsidiaries to take) any action which would constitute Major Decisions, other than the actions set forth in Sections 6.3.1(a), 6.3.1(b), 6.3.1(c), 6.3.1(d), 6.3.1(e), 6.3.1(g), 6.3.1(h), 6.3.1(i), 6.3.1(j) 6.3.1(m), 6.3.1(o) (assuming it stated “MGP Member” as opposed to “Sponsor Member” therein), 6.3.1(r), 6.3.1(t), and 6.3.1(gg) (solely to the extent that MGP Member otherwise has the right to approve the applicable Major Decision in accordance with this Section 6.4.4) which shall require the approval of MGP Member.

6.5 Reimbursement and Remuneration Generally. The Managing Member shall not be compensated for acting in such capacity, but shall be entitled to reimbursement for actual and commercially reasonable Third Party out-of-pocket expenses incurred in furtherance of the business or management of the Company. Distributions received by the Members pursuant to Articles 4 and 8 are not, and shall not be deemed to be, remuneration within the meaning of this Section 6.5.

6.6 Reliance by Third Parties. Any Person dealing with the Company or the Managing Member may rely upon a certificate signed by the Managing Member (or any one or more of its agents designated by the Managing Member for such purpose or given such authority) as to:

6.6.1 The identity of the Managing Member, any Member of the Company or any Officer;

 

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6.6.2 The existence or non-existence of any facts which constitute a condition precedent to acts by the Managing Member or in any other manner germane to the affairs of the Company;

6.6.3 The Persons who are authorized to execute and deliver any instrument or document for or on behalf of the Company; or

6.6.4 Any act or failure to act by the Company or as to any other matter whatsoever involving the Company or any Member.

6.7 Records and Reports.

6.7.1 The Managing Member shall cause to be kept (and made available to each Member), at the principal place of business of the Company, or at such other location as the Managing Member shall reasonably deem appropriate, full and proper ledgers, other books of account, and records of all receipts and disbursements, other financial activities, and the internal affairs of the Company for at least the current and past seven (7) fiscal years; provided, however, that the Managing Member shall further retain all of the foregoing for any given fiscal year for so long as any applicable federal and/or applicable state income tax statute of limitations remains open with respect to such year.

6.7.2 The Members agree that the books of the Company shall be kept for accounting purposes in accordance with U.S. generally accepted accounting principles, consistently applied, and shall be kept for tax reporting purposes in accordance with applicable provisions of the Code. The fiscal year of the Company shall end on December 31 of each year.

6.7.3 The Managing Member shall:

(a) prepare or cause to be prepared and delivered to each Member: (i) within forty-five (45) days following the end of each fiscal quarter of the Company, a draft report setting forth in sufficient detail all such information and data with respect to business transactions affecting or involving the Company during such fiscal quarter and shall enable such Member to prepare its state, federal and local income tax returns in accordance with the laws, rules and regulations then prevailing, (ii) within five (5) business days following the last day of each calendar month, preliminary income statement information required for net asset value reporting, including net revenue and interest expense, (iii) within fifteen (15) days following the last day of each calendar month, unaudited monthly statements of operation and balance sheet of the Company, (iv) within the later of (i) seventy-five (75) days following the last day of the calendar year of the Company or (ii) fifteen (15) days prior to the filing date required by the SEC or other requesting party, unaudited annual financial statements of the Company, only to the extent requested or if required by either Member, (v) promptly provide copies of all financial statements and/or other material financial information related to the Company, its Subsidiaries or any of the Properties delivered to any Lender in accordance with the terms of any Credit Arrangements, and (vi) promptly provide copies of all notices, reports, statements, certificates and other information or deliverables provided to the Company under the Lease. Upon the request of a Member (or its permitted transferee), the Company shall provide such Member (or its permitted transferee), as applicable, with information necessary to

 

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determine that the Company’s income and assets satisfy the requirements of Sections 856(c)(2) through (4) of the Code (including responding to questionnaires identifying and describing services provided to tenants of the Properties) within twenty-five (25) days following the end of each calendar quarter, and shall use commercially reasonable efforts to provide, as soon as reasonably practicable, any other information requested by such Member and reasonably necessary for such Member (or any of its direct or indirect owners) to determine its compliance with the REIT requirements under Sections 856 and 857 of the Code. In furtherance of the foregoing, the Managing Member shall, on request of a Member, provide quarterly taxable income projections to the Members within forty-five (45) days after the end of each fiscal quarter; and

(b) within one hundred eighty days (180) days after the end of each fiscal year, the Company shall deliver to each Member a copy of the Company’s federal, state and local income tax or information returns for such fiscal year or portion thereof, such Member’s Schedule K-1, and such other information, if any, with respect to the Company as may be necessary for the preparation of such Member’s U.S. federal income tax returns, including a statement showing such Member’s share of the Company’s income, gain or loss, expense and credit for such fiscal year for federal income tax purposes.

6.7.4 Each of the Members (personally or through an authorized representative) may, for purposes reasonably related to their Interests, examine and copy (at their own cost and expense) the books and records of the Company at all reasonable business hours. At the request of the Sponsor Member, the Managing Member shall make available to Sponsor Member at the Company’s principal place of business during regular business hours the books and records of the Company.

6.7.5 Each Member shall have the right to cause the books and records, including annual financial statements, of the Company to be audited annually (using current PCAOB guidelines, if required by either Member, or otherwise using current AICPA guidelines) by an independent accounting firm of recognized regional or national standing as may be selected by the Managing Member and such audited annual financial statements shall be delivered at the later of (i) seventy-five (75) days following the last day of the calendar year of the Company or (ii) fifteen (15) days prior to the filing date of such financial statements required by the SEC or other requesting party. The cost of any such audit shall be a Company Expense.

6.8 Indemnification and Liability.

6.8.1 The Company shall indemnify and hold harmless the Managing Member, each of the Members and all officers, directors, partners, members and agents of such parties (each an “Indemnitee”) to the full extent permitted by law from and against any and all losses, claims, demands, costs, damages, liabilities, expenses of any nature (including reasonable attorneys’ fees and disbursements and other costs of litigation, whether pending or threatened), judgments, fines, settlements and other amounts, of any nature whatsoever, known or unknown, liquid or illiquid (collectively, “Liabilities”) arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, in which the Indemnitee may be involved, or threatened to be involved as a party or otherwise, arising out of or incident to the business of the Company, if (a) the Indemnitee acted in good faith in a manner

 

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such Person believed to be within the scope of such Indemnitee’s authority and in, or not contrary to, the best interests of the Company, and (b) the Indemnitee’s conduct did not constitute fraud, bad faith, willful misconduct, gross negligence or a material breach of this Agreement (each a “Bad Act”). Notwithstanding anything to the contrary herein, the foregoing indemnity shall not extend to any Liabilities of a Member to another Member for such Member’s breach of any of its representations, warranties, covenants, agreements or acknowledgements in this Agreement.

6.8.2 Expenses incurred by an Indemnitee in defending any claim, demand, action, suit or proceeding subject to this Section 6.8 shall be advanced from time to time by the Company in order to pay such expenses when due prior to the final disposition of such claim, demand, action, suit or proceeding upon receipt by the Company of a satisfactory written commitment by or on behalf of the Indemnitee to repay such amount if it shall be determined that such Indemnitee is not entitled to be indemnified as authorized in this Section 6.8.

6.8.3 The indemnification provided by this Section 6.8 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, as a matter of law or equity or otherwise, and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.

6.8.4 Any indemnification by the Company provided hereunder shall be satisfied solely out of the Company Assets. No Member shall be subject to personal liability by reason of these indemnification provisions.

6.8.5 No Indemnitee shall be denied indemnification in whole or in part under this Section 6.8 by reason of the fact that the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

6.8.6 Except as set forth in Section 6.8.3, the provisions of this Section 6.8 are for the benefit of the Indemnitees only and shall not be deemed to create any rights for the benefit of any other Person.

6.8.7 None of the officers, directors, members or partners of the Company, of the Managing Member or of any Member shall be liable to the Company or to any other Member for any Liabilities sustained or incurred as a result of any act or omission of such Person if (a) such Person acted in good faith in a manner such Person believed to be within the scope of such Person’s authority and in, or not contrary to, the best interests of the Company, and (b) such Person’s conduct did not constitute a Bad Act.

6.8.8 The Managing Member is hereby authorized on behalf of the Company to cause the Company to indemnify, hold harmless and release any agents and/or advisors of the Company, the Managing Member and the Company’s Affiliates, to the same extent provided with respect to the Indemnitees in this Section 6.8.

 

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6.8.9 Notwithstanding anything to the contrary in this Section 6.8, in the event that Indemnitee suffers any losses from a Bad Act of a Member and/or the Managing Member (as applicable), such Indemnitee shall be entitled to bring a suit against such party to recover damages and to seek all other remedies available to Indemnitee in law and equity. No payments made pursuant to this Section 6.8.9 shall be treated as a Capital Contribution hereunder.

6.9 Duties and Conflicts.

6.9.1 The Members, in connection with their respective duties, responsibilities, rights and obligations hereunder, shall at all times have a duty to act in good faith, but recognizing that each Member may act in its own economic self-interest and in accordance with such tax and business objectives as it deems appropriate or desirable for such Member and shall not have any fiduciary duties to the Company, any other Member or any other Person bound by this Agreement. So long as a Member acts in good faith and with the express provisions of this Agreement, such Member shall not be in breach of any duties (including any fiduciary duties that may otherwise be imposed by law) or have any Liabilities to the Company, any other Member or any other Person bound by this Agreement, whether at law or in equity. The provisions of this Agreement, to the extent that they expand, restrict or eliminate the duties and Liabilities of a Member otherwise existing at law or in equity, are agreed by the Members to replace fully and completely such other duties and Liabilities of each Member. Subject to the foregoing, but notwithstanding anything else in this Agreement to the contrary or otherwise applicable law, whenever a Member or the Members are required or permitted to make a decision, take or approve an action, or omit to do any of the foregoing: (a) “in its discretion,” under a similar grant of authority or latitude, or without an express standard of behavior (including, without limitation, standards such as “reasonable”), then each Member shall be entitled to consider only such interests and factors, including its own, as it desires, and shall, to the fullest extent permitted by law, have no duty or obligation to consider any other interests or factors whatsoever (other than the duty to act in good faith), or (b) with an express standard of behavior (including, without limitation, standards such as “reasonable”), then each Member shall comply with such express standard but shall not be subject to any other, different or additional standard (other than the standard of good faith). Notwithstanding anything to the contrary contained herein, there are no restrictions on any acts or omissions by MGP related to MGM which are unrelated to this Agreement, the Company or the Properties.

6.9.2 Notwithstanding the provisions of Section 6.8.1, each Member and its Affiliates may engage or invest in, and devote its and their time to, any other business venture or activity of any nature and description, whether or not such activities are considered competitive with the Company, its Subsidiaries or the businesses of any of them (the “Right to Compete”), and neither the Company nor any other Member shall have any right by virtue of this Agreement or the relationship created hereby in or to such other venture or activity of any Member (or to the income or proceeds derived therefrom), and the pursuit of such other venture or activity shall not be deemed wrongful or improper. The Right to Compete of each Member and its Affiliates does not require notice to, approval from, or other sharing with, any of the other Members or the Company. The legal doctrines of “corporate opportunity,” “business opportunity” and similar doctrines shall not be applied to any such competitive venture or activity of a Member or its Affiliates. No Member or its Affiliates shall have any obligation to the Company or its other Members with respect to any opportunity. Sponsor Member acknowledges that MGP and/or its Affiliates have entered into, or may in the future enter into,

 

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transactions or arrangements with MGM and/or its Affiliates related to the ownership, leasing and operating of real estate other than the Properties and to which the Company and its Subsidiaries are not a party (the “Other MGM/MGP Arrangements”), and Sponsor Member agrees that this Agreement shall in no way restrict MGP and/or its Affiliates with respect to the Other MGM/MGP Arrangements or require MGP and/or its Affiliates to take any action, or omit to take an action, with respect to the Other MGM/MGP Arrangements.

6.10 REOC Management Rights. At any time upon request to the Company, any Property Owner shall enter into a letter agreement substantially in the form of Exhibit B with Sponsor Member or any of its Affiliates that is intended to qualify as a “real estate operating company” for purposes of the United States Department of Labor Regulation published at 29 C.F.R. Section 2510.3-101(d)(3).

6.11 REIT Compliance. Notwithstanding any provision of this Agreement to the contrary (including Section 6.3.1), but subject to the other provisions of this Section 6.11, the Company, the Members and the Managing Member agree to use reasonable best efforts to (i) exercise their rights and perform their obligations under this Agreement and (ii) manage the business and affairs of the Company in a manner that if the Company were a real estate investment trust for purposes of Section 856 of the Code (a “REIT”), it would satisfy the requirements of Sections 856(c)(2), 856(c)(3) and 856(c)(4) of the Code (the “REIT Requirements”), assuming for this purpose that the Company is not a corporation for purposes of applying Sections 856(d)(2)(B) and 856(d)(5) of the Code. In furtherance of the foregoing, the Company may form one or more subsidiaries which may jointly elect with any Member (or any of its direct or indirect owners) to be “taxable REIT subsidiaries” within the meaning of Section 856(l) of the Code (each, a “TRS”), and may engage in transactions with such TRSs (or any other TRS of any Member (or any of its direct or indirect owners)) consistent with satisfying the requirements of this Section 6.11; provided, further, the Company shall provide the Members with reasonable notice and opportunity to effect such joint election.

6.12 Sale of Properties.

6.12.1 Notwithstanding any provision herein to the contrary (other than Section 6.11), from and after the Lockout Date, MGP Member and the Sponsor Member each shall have the right to cause the Company or the applicable Subsidiary, to sell, exchange or transfer one or both of the Properties for all cash consideration in an arms-length transaction with a Third Party (an “Asset Disposition”) subject to first providing a right of first offer pursuant to this Section 6.12 (“Asset ROFO”); provided, however, if the Lease is still in full force and effect, any Asset Disposition must include all the Properties then demised under the Lease. If either MGP Member or Sponsor Member desires to cause an Asset Disposition (in such capacity, the “Triggering Member”), the Triggering Member shall be required to give written notice (the “Asset ROFO Notice”) to the other Member (in such capacity, the “Asset Responding Member”) of such desire to sell such Property or Properties (the “Offered Assets”). The Asset ROFO Notice shall set forth (i) the Triggering Member’s determination of the gross fair market value of the Offered Assets (the “Asset ROFO Gross Valuation”), (ii) a list of no more than ten (10) potential purchasers of the Offered Assets (the “Asset Potential Purchasers”) selected in the Triggering Member’s sole discretion, (iii) an initial determination of whether any Credit Arrangement secured by the Offered Assets will be repaid by the Company or assumed by the

 

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purchaser, and (iv) the methodology pursuant to which Triggering Member expects all prorations, credits, deductions and adjustments to the sale price (the “Asset Disposition PP Adjustments”) and the allocation of closing costs, transfer and similar taxes and title premiums between the seller and purchaser (the “Asset Disposition CC Allocation”). The Asset ROFO Notice shall be deemed a binding irrevocable offer from the Triggering Member to the Asset Responding Member whereby the Asset Responding Member (or an Affiliate it designates) shall have the right to elect to purchase prior to the expiration of the Asset ROFO Offer Period (1) if the Offered Assets include all of the Properties then owned by the Company (an “Aggregate Sale”), the entire Triggering Member’s Interest in the Company (which shall include any Optional Loans made by the Triggering Member) for the Asset ROFO Purchase Price, and (2) if the Offered Assets do not include all of the Properties then owned by the Company (an “Individual Sale”), the Offered Assets for the Asset ROFO Gross Valuation, in each case, on the terms and conditions specified in the Asset ROFO Notice. At any time within the sixty (60) day period (the “Asset ROFO Offer Period”) commencing on the day the Triggering Member delivers the Asset ROFO Notice to the Asset Responding Member, the Asset Responding Member shall either (A) deliver to the Triggering Member written notice electing to purchase the Offered Assets (the “Asset ROFO Election Notice”) or (B) deliver to Triggering Member written notice rejecting the offer contained in the Asset ROFO Offer (an “Asset ROFO Rejection Notice”). If the Asset Responding Member fails to deliver an Asset ROFO Election Notice or Asset ROFO Rejection Notice within the Asset ROFO Offer Period, the Asset Responding Member shall be deemed to have delivered an Asset ROFO Rejection Notice and shall be deemed to have waived its right to purchase the Offered Assets.

6.12.2 If the Asset Responding Member delivers an Asset ROFO Election Notice, then within ten (10) days after the date thereof (or, if such date is not a Business Day, the immediately following Business Day), the Asset Responding Member shall deposit in escrow with a reputable title insurance company authorized to do business in the State of New York (the “Asset ROFO Escrow Agent”) pursuant to escrow instructions consistent with this Section 6.12, a non-refundable cash down payment in immediately available funds in an aggregate amount equal to 10% of the Asset ROFO Gross Valuation (in the event of an Individual Sale) or 5% of the Asset ROFO Gross Valuation (in the event of an Aggregate Sale) (as applicable, the “Asset ROFO Down Payment”). If the Asset Responding Member fails to timely deliver the Asset ROFO Down Payment, the Asset Responding Member shall be deemed to have failed to deliver an Asset ROFO Election Notice and Asset ROFO Rejection Notice and the terms of the last sentence of Section 6.12.1 above shall apply.

6.12.3 If the Asset Responding Member timely delivers the Asset ROFO Down Payment, then the Asset Responding Member, as purchaser, and the applicable Property Owner (in the event of an Individual Sale) or the Triggering Member (in the event of an Aggregate Sale), as seller, shall proceed to close the sale of the applicable Property or interests in the applicable Subsidiary for the Asset ROFO Gross Valuation (in the event of an Individual Sale) or the entire Triggering Member’s Interests in the Company at the Asset ROFO Purchase Price (in the event of an Aggregate Sale) (as applicable, the “Asset ROFO Closing”) on a mutually acceptable closing date (the “Asset ROFO Closing Date”), but in any event not later than sixty (60) days after the Asset Responding Member delivered the Asset ROFO Down Payment to the Asset ROFO Escrow Agent, through a mutually satisfactory escrow arrangement with the Asset ROFO Escrow Agent. On the Asset ROFO Closing Date, (x) (1) in the event of

 

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an Individual Sale, the applicable Property Owner shall sell to Asset Responding Member the applicable Property pursuant to a customary deed, subject to all liens, claims, encumbrances of record other than any lien securing a Credit Arrangement which shall be discharged by the applicable Property Owner at the Asset ROFO Closing (unless the applicable Asset ROFO Notice included a determination that such Credit Arrangement would be assumed by the purchaser), or (2) in the event of an Aggregate Sale, the Triggering Member shall sell to the Asset Responding Member the entire Triggering Member’s Interests in the Company, in each case, free and clear of all liens, claims, encumbrances, options and rights of any kind by execution and delivery of documents substantially in the form of the Interest ROFO Sale Documents, (y) the Asset ROFO Escrow Agent shall deliver the Asset ROFO Down Payment in immediately available funds to the Property Owner (in the event of an Individual Sale) or Triggering Member (in the event of an Aggregate Sale) and (z) the Asset Responding Member shall pay to the Company or Property Owner, as applicable, the Asset ROFO Gross Valuation (in the event of an Individual Sale) or to Triggering Member (in the event of an Aggregate Sale) the Asset ROFO Purchase Price (in each case, less a credit for the Asset ROFO Down Payment) in immediately available funds, as adjusted by Asset Disposition PP Adjustments. None of the Triggering Member, the Company or any Subsidiary shall be required to make any representations or warranties with respect to the Triggering Member, the Company, any Subsidiary or the Property in connection with such sale (but shall make customary warranties regarding the Company’s or Triggering Member’s, as applicable, due authority, execution and delivery and lien-free title to the Triggering Member’s Interests in the case of an Aggregate Sale). Each party shall pay its own closing costs in connection with such sale, provided that any costs specified in the Asset Disposition CC Allocation shall be paid in accordance with such allocation. If the Asset ROFO Closing fails to occur by reason of a default of the Asset Responding Member, the Asset Responding Member’s Asset ROFO rights under this Section 6.12 (including the right to be the Triggering Member) shall be deemed forever extinguished and shall thereafter be null and void and of no further force and effect, the Company or Property Owner or the Triggering Member, as applicable, shall be entitled to retain the Asset ROFO Down Payment as liquidated damages and the Triggering Member shall thereafter be free, at any time and from time to time, to cause a sale of the Offered Assets in an arms-length transaction with a third-party unaffiliated with the Triggering Member at such price as the Triggering Member determines in its sole discretion. If the Asset ROFO Closing hereunder fails to occur by reason of default of the Triggering Member, the Asset Responding Member shall have the right, as its sole and exclusive remedy (other than as specifically provided below), to either (A) demand that the Asset ROFO Down Payment be returned to the Asset Responding Member (and the Triggering Member shall reimburse the Asset Responding Member’s reasonable and actual third party costs incurred in connection with the failed Asset ROFO Closing), or (B) seek specific performance within forty-five (45) days of such failure to close, and Triggering Member shall be prohibited from initiating the Asset ROFO for a period of two (2) years from the date on which the Asset ROFO Down Payment is returned to the Asset Responding Member in accordance with the foregoing.

6.12.4 If the Asset Responding Member delivers an Asset ROFO Rejection Notice (or is deemed to have delivered an Asset ROFO Rejection Notice), then the Triggering Member shall a period of 270 days from expiration of the Asset ROFO Offer Period to cause the Company or any applicable Subsidiary (or Subsidiaries) to enter into a contract of sale with a third party unaffiliated with the Triggering Member (the “Asset ROFO Purchase

 

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Agreement”) to complete the sale of the Offered Assets for a purchase price of not less than 95% of the Asset ROFO Gross Valuation (without regard to customary prorations) and to a purchaser who must be among the Asset Potential Purchasers or their respective Affiliates. The Asset ROFO Purchase Agreement must provide for a closing thereunder on a date not later than 365 days after expiration of the Asset ROFO Offer Period. If (i) the Asset ROFO Purchase Agreement is not executed within 270 days from expiration of the Asset ROFO Offer Period, (ii) the closing thereunder does not occur within 365 days of the expiration of the Asset ROFO Offer Period, or (iii) the Triggering Member desires to sell the Offered Asset either (x) to a Person other than an Asset Potential Purchaser or its Affiliates or (y) for less than 95% of the Asset ROFO Gross Valuation (without regard to customary prorations), the Triggering Member must again comply with the ROFO procedures in this Section 6.12 prior to causing a sale of the Offered Assets and the other Member shall have all the rights available to it under this Section 6.12 in connection with any such sale. If any Member has triggered the Asset ROFO pursuant to this Section 6.12 or the Interest ROFO pursuant to Section 7.1.4, then the Asset Responding Member shall not be entitled to commence the Asset ROFO process set forth in this Section 6.12, until such Asset ROFO process commenced under this Section 6.12 or Interest ROFO process under Section 7.1.4 has expired.

6.12.5 Notwithstanding anything in this Agreement to the contrary, for purposes of this Section 6.12, in the event that Sponsor Member is the Triggering Member and MGP Member has elected to purchase the Interests in the Company of the Sponsor Member, at the discretion of Sponsor Member, rather than convey the direct Interests in the Company, the ownership interests in Sponsor Member (or in the direct or indirect owner of Sponsor Member that owns no assets other than 100% of the direct or indirect ownership interests in Sponsor Member) shall be conveyed to the Asset Responding Member at the Asset ROFO Closing and the Asset ROFO Sale Documents shall be modified accordingly; provided, that any sale of direct or indirect interest in Sponsor Member shall be conditioned on Sponsor Member or its credit worthy Affiliate indemnifying MGP Member in a manner reasonably satisfactory to MGP Member for all liabilities of Sponsor Member (and any direct or indirect owner of Sponsor Member being acquired by MGP Member as part of such sale, if any) relating to or resulting from the period prior to the consummation of the Asset ROFO Closing.

6.13 Gaming Laws and Authorities. The Sponsor Entity and the MGP Entity hereby acknowledges that each of the MGP Entity, the Company and the Sponsor Entity are subject to Gaming Laws and are under the jurisdiction of Gaming Authorities. In this regard, the Sponsor Entity and the MGP Entity agree to provide information to Gaming Authorities, as required by Gaming Laws, and to respond promptly to any request for information from any Gaming Authority.

 

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ARTICLE 7

INTERESTS AND TRANSFERS OF INTERESTS

7.1 Transfers.

7.1.1 Generally.

(a) Except as permitted in this Article 7, no Member shall Transfer all or any part of its Interest without the prior written consent of the other Member(s), which may be granted or withheld in each Member’s sole discretion, and any Transfer or other disposition of any direct or indirect interest in the stock, partnership, limited liability company or other beneficial interest in any Member shall be prohibited unless permitted by the terms of Section 7.1.2. The approval by any Member to Transfer in any one or more instances shall not limit or waive the requirement to obtain approval in any other or future instance. Any Transfer of an Interest in contravention of this Article 7 shall be a breach of this Agreement and be null and void, and the other Members shall have all the rights and remedies available under this Agreement and applicable law or in equity.

(b) Except as otherwise expressly provided in this Article 7, the recipient of any direct Interest Transferred in accordance with this Article 7 shall be an Assignee only, with only the rights provided in Section 7.4, unless and until admitted as a Substitute Member pursuant to Section 7.5.

7.1.2 Permitted Transfers. Notwithstanding anything in this Agreement to the contrary, but subject to the satisfaction of the conditions set forth in this Article 7, if applicable, the following Transfers shall be permitted without consent of any other Member:

(a) Each Member shall be permitted to Transfer all (but not less than all) of its direct Interest or all (or any part) of its indirect Interest to a Transfer Affiliate;

(b) Each Member shall be permitted to Transfer all or any portion of its direct or indirect Interest to any other Member;

(c) Each Member shall have the right to Transfer up to 49% of its indirect Interests in the Company that it has on the date hereof to any Person; provided, (i) if after giving effect to such Transfer together with all prior Transfers made by such Member in reliance on this clause, such Member would no longer meet the definition of a “Transfer Affiliate”, such Transfer shall be subject to compliance with the terms of Section 7.1.4, (ii) prior to the Competitor Restriction Termination Date, the Sponsor Member may not Transfer any such Interests to a Tenant Competitor and (iii) prior to the expiration of the Tax Protection Period, the Sponsor Member may not Transfer any such Interests to an MGP Competitor;

(d) At any time after the expiration of the Tax Protection Period, each Member shall have the right to directly (but not less than all) or indirectly Transfer all or any portion of its Interests to any Person; provided, (i) if after giving effect to such Transfer together with all prior Transfer made by such Member in reliance on this clause, such Member would no longer meet the definition of a “Transfer Affiliate”, such Transfer shall be subject to compliance with the terms of Section 7.1.4, and (ii) prior to the Competitor Restriction Termination Date, the Sponsor Member may not Transfer any such Interests to a Tenant Competitor;

(e) Transfers of interests in any Public Vehicle that directly or indirectly is the owner of Interests shall be permitted without restriction;

 

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(f) Transfers, at any time, to a Person pursuant to and in accordance with Section 8.2(b) of the Lease; and

(g) In the event that any Gaming Authority requires that the Sponsor Member or its direct or indirect owner apply for a gaming license in connection with its ownership of the Property, Sponsor Member shall be permitted to implement a “voteco” structure which would result in (x) 100% of the voting membership interests in Sponsor Member (or a direct or indirect owner of Sponsor Member) being owned by a Voteco Entity, (y) Voteco Entity thereafter controlling Sponsor Member, and (z) no less than 95% of the direct or indirect economic interests in Sponsor Member continuing to be owned by BREIT OP.

7.1.3 Intentionally Omitted.

7.1.4 Interest Transfers Subject to ROFO.

(a) In connection with a Transfer of Interests pursuant to Section 7.1.2(c) or (d) by either Member, each such Transfer shall be subject to the right of first offer given to the other Member pursuant to this Section 7.1.4(a) (“Interest ROFO”). The Member desiring to sell its Interests (“Selling Member”) shall be required to give written notice (the “Interest ROFO Notice”) to the other Member (the “Interest Responding Member”) of the Selling Member’s desire to sell all or a portion its Interests (collectively, the “ROFO Offered Interest”). The Interest ROFO Notice shall set forth (i) a description of the ROFO Offered Interest (i.e. all of the Selling Member’s Interests in the Company or a specified percentage), (ii) the cash price (“Interest ROFO Purchase Price”) that the Selling Member is willing to accept for a sale of the ROFO Offered Interests, (ii) a list of no more than ten (10) potential purchasers of the ROFO Offered Interest selected in Selling Member’s sole discretion (the “Interest Potential Purchasers”), and (iii) the methodology pursuant to which Selling Member expects all prorations, credits, deductions and adjustments to the sale price (the “Interest ROFO PP Adjustments”) and the allocation of closing costs, transfer and similar taxes and title premiums between the seller and purchaser (the “Interest ROFO CC Allocation”). The Interest ROFO Notice shall be deemed a binding irrevocable offer from the Selling Member to the Interest Responding Member whereby the Interest Responding Member (or an Affiliate it designates) shall have the right to elect to purchase prior to the expiration of the Interest ROFO Offer Period the entire ROFO Offered Interest (which shall include the pro rata share (based on the ROFO Offered Interest over the total Membership Interest of the Selling Member) of any Optional Loans made by the Selling Member) for the Interest ROFO Purchase Price, subject to the Interest ROFO PP Adjustments and ROFO CC Allocation specified in the Interest ROFO Notice. At any time within the sixty (60) day period (the “Interest ROFO Offer Period”) commencing on the day the Selling Member sends the Interest ROFO Notice to the Interest Responding Member, the Interest Responding Member shall either (A) deliver to the Selling Member a written notice electing to purchase the ROFO Offered Interests for the Interest ROFO Purchase Price (an “Interest ROFO Election Notice”) or (B) deliver to Selling Member a written notice rejecting the offer contained in the Interest ROFO Notice (an “Interest ROFO Rejection Notice”). If the Interest Responding Member fails to deliver an Interest ROFO Election Notice or Interest ROFO Rejection Notice within the Interest ROFO Offer Period, the Interest Responding Member shall be deemed to have delivered an Interest ROFO Rejection Notice rejecting the offer contained in the Interest ROFO Notice and shall be deemed to have

 

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waived its right to purchase the ROFO Offered Interest. During the Interest ROFO Offer Period, the Selling Member shall not sell or offer for sale its ROFO Offered Interest unless the Interest Responding Member delivers an Interest ROFO Rejection Notice. In the case of any Transfer of Interests pursuant to Section 7.1.2(c) or (d) which consists of direct or indirect interests in the Selling Member, the ROFO Offered Interest that the Interest Responding Member shall have the right to purchase pursuant to the rights described in this Section 7.1.4 shall consist of the applicable corresponding portion of the direct Interest of the Selling Member.

(b) If the Interest Responding Member delivers an Interest ROFO Election Notice, then within ten (10) days after the date thereof (or, if such date is not a Business Day, the immediately following Business Day), the Interest Responding Member shall deposit in escrow with a reputable title insurance company authorized to do business in the State of New York (the “Interest ROFO Escrow Agent”) pursuant to escrow instructions consistent with this Section 7.1.4(b), a non-refundable cash down payment in immediately available funds in an aggregate amount equal to 10% of the Interest ROFO Purchase Price (the “Interest ROFO Down Payment”). If the Interest Responding Member fails to timely deliver the Interest ROFO Down Payment, the Interest Responding Member shall be deemed to have failed to deliver an Interest ROFO Election Notice and the terms of the third from last sentence of clause (a) above shall apply.

(c) If the Interest Responding Member timely delivers the Interest ROFO Down Payment, the Selling Member, as seller, and the Interest Responding Member, as purchaser, shall proceed to close the sale of the ROFO Offered Interest at the Interest ROFO Purchase Price (the “Interest ROFO Closing”) on a mutually acceptable closing date (the “Interest ROFO Closing Date”), but in any event not later than sixty (60) days after the Interest Responding Member delivered the Interest ROFO Down Payment to the Interest ROFO Escrow Agent, through a mutually satisfactory escrow arrangement with the Interest ROFO Escrow Agent. On the Interest ROFO Closing Date, (x) the Selling Member shall sell to the Interest Responding Member the ROFO Offered Interest free and clear of all liens, claims, encumbrances, options and rights of any kind by execution and delivery of the documents attached hereto as Exhibit C (the “Interest ROFO Sale Documents”), (y) the Interest ROFO Escrow Agent shall deliver the Interest ROFO Down Payment in immediately available funds to the Selling Member and (z) the Interest Responding Member shall pay to the Selling Member the Interest ROFO Purchase Price (less a credit for the Interest ROFO Down Payment) in immediately available funds, as adjusted by the Interest ROFO PP Adjustments. None of the Selling Member, the Company or any Subsidiary shall be required to make any representations or warranties with respect to the Company or the Properties in connection with such sale (but shall make customary warranties regarding the Selling Member’s due authority, execution and delivery and lien-free title to the ROFO Offered Interest). Each party shall pay its own closing costs in connection with such sale; provided that any costs specified in the Interest ROFO CC Allocation shall be paid in accordance with such allocation. If the Interest ROFO Closing fails to occur by reason of a default of the Interest Responding Member, the Interest Responding Member’s Interest ROFO rights under this Section 7.1.4(c) shall be deemed forever extinguished and shall thereafter be null and void and of no further force and effect, the Selling Member shall be entitled to retain the Interest ROFO Down Payment as liquidated damages and the Selling Member shall thereafter be free, at any time and from time to time, to cause a sale of the ROFO Offered Interest at such price as the Selling Member determines in its sole discretion. If the

 

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Interest ROFO Closing hereunder fails to occur by reason of default of the Selling Member, the Interest Responding Member shall have the right, as its sole and exclusive remedy, to either (A) demand that the Interest ROFO Down Payment be returned to the Interest Responding Member (and the Selling Member shall reimburse the Interest Responding Member’s reasonable and actual Third Party costs in connection with such failed Interest ROFO Closing), or (B) seek specific performance within forty-five (45) days of such failure to close, and the Selling Member shall be prohibited from initiating the Interest ROFO for a period of two (2) years from the date on which the Interest ROFO Down Payment is returned to the Interest Responding Member in accordance with the foregoing.

(d) If the Interest Responding Member delivers an Interest ROFO Rejection Notice (or is deemed to have delivered an Interest ROFO Rejection Notice), then the Selling Member shall have a period of 270 days from expiration of the Interest ROFO Offer Period to enter into a contract of sale with a third party unaffiliated with Selling Member (the “Interest Purchase Agreement”) for the sale of the ROFO Offered Interest at a purchase price of not less than 95% of the Interest ROFO Purchase Price (without regard to adjustments or prorations) and to a purchaser who must be among the Interest Potential Purchasers or their respective Affiliates. The Selling Member shall deliver a copy of the Interest Purchase Agreement (together with all schedules and exhibits thereto) to the Interest Responding Member promptly following execution. The Interest Purchase Agreement must provide for a closing thereunder on a date not later than 365 days after expiration of the Interest ROFO Offer Period. If (i) the Interest Purchase Agreement is not executed within 270 days from expiration of the Interest ROFO Offer Period, (ii) the closing thereunder does not occur within 365 days of the expiration of the Interest ROFO Offer Period, or (iii) Selling Member desires to sell the ROFO Offered Interest either (x) to a Person other than an Interest Potential Purchaser or its Affiliates or (y) for less than 95% of the Interest ROFO Purchase Price (without regard to adjustments or prorations), Selling Member must again comply with the ROFO procedures in this Section 7.1.4(d) prior to any sale of its Interests and the other Member shall have all the rights available to it under this Section 7.1.4 in connection with any such sale. If any Member has triggered the Asset ROFO pursuant to Section 6.12 or the Interest ROFO pursuant to this Section 7.1.4, then the Interest Responding Member shall not be entitled to commence the Interest ROFO process set forth in this Section 7.1.4, until such Asset ROFO process commenced under Section 6.12 or Interest ROFO process commenced under this Section 7.1.4 has expired.

(e) In the event that Interest Responding Member has elected to purchase all of Selling Member’s Interests in the Company pursuant to the exercise of the Interest ROFO under this Section 7.1.4, the Interest Responding Member shall be obligated at the Interest ROFO Closing to either (i) cause any Credit Arrangement secured by any Permitted Carveout Guaranty to be refinanced or otherwise repaid in full, or (ii) cause any Permitted Carveout Guaranty that has been delivered by the Carveout Guarantor Affiliated with the Selling Member to be terminated and/or replaced, and such Carveout Guarantor released from liability with respect thereto in connection with any such replacement, as of the date of such Interest ROFO Closing, except for any liability under any such Permitted Carveout Guaranty arising from any actions that occurred, or circumstances that existed, prior to the Interest ROFO Closing (collectively, the “Retained Guarantee Liabilities”); provided, with respect to the Retained Guarantee Liabilities, the Company shall indemnify the applicable Carveout Guarantor other than those Retained Guarantee Liabilities which arose out of Bad Acts of the Selling Member or any Affiliate thereof.

 

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(f) Notwithstanding anything in this Agreement to the contrary, for purposes of this Section 7.1.4, in the event that Sponsor Member is the Selling Member, at the discretion of Sponsor Member, the ROFO Offered Interest may be the ownership interests in Sponsor Member (or in the direct or indirect owner of Sponsor Member that owns no assets other than 100% of the direct or indirect ownership interests in Sponsor Member) and the Interest ROFO Sale Documents shall be modified accordingly.

7.2 Further Restrictions. Notwithstanding any contrary provision in this Agreement, any otherwise permitted Transfer of an Interest to any Person shall be null and void if the Managing Member determines that:

(a) after consultation with a nationally recognized accounting firm selected in good faith by the Managing Member, such Transfer may cause the Company to cease to be classified as a partnership for U.S. federal or state income tax purposes; provided, however, that if, as a result of such Transfer, one Member (for purposes of this Section 7.2(a), the “Acquiring Member”) would own one hundred percent (100%) of the outstanding Interests, and following such Transfer the Company would constitute a disregarded entity for U.S. federal income tax purposes with respect to the Acquiring Member, such Transfer shall be a permitted Transfer;

(b) after consultation with a nationally recognized accounting firm selected in good faith by the Managing Member, such Transfer would cause a material risk that MGP REIT, BREIT or any other direct or indirect Member of the Company will fail to be treated as a REIT for U.S. federal income tax purposes;

(c) such Transfer may require the registration of such Transferred Interest pursuant to any applicable federal or state securities laws;

(d) after consultation with a nationally recognized accounting firm selected in good faith by the Managing Member, such Transfer may cause the Company to become a “Publicly Traded Partnership,” as such term is defined in Code Sections 469(k)(2) or 7704(b) that is taxable as a corporation for U.S. federal income tax purposes;

(e) such Transfer may subject the Company, the Members or their Affiliates, partners, stockholders or members, as applicable, to regulation under the Investment Company Act of 1940, the Investment Advisers Act of 1940 or the Employee Retirement Income Security Act of 1974, each as amended;

(f) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Interest;

(g) with respect to the Transfer of a direct Interest in the Company only, the Company does not receive written instruments (including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as an Assignee) that are in a form reasonably satisfactory to the Members other than the Member effecting such Transfer; or

 

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(h) such Transfer would result in a documentary transfer tax liability to the Company or any Subsidiary, unless the transferring Member agrees to bear the entire amount of such documentary transfer tax liability without any right to reimbursement by the Company or any Member.

7.3 Rights of Assignees. Until such time, if any, as the transferee of a direct interest in the Company in any permitted Transfer pursuant to this Article 7 is admitted to the Company as a Substitute Member pursuant to Section 7.5: (a) such transferee shall be an Assignee only, and only shall receive, to the extent Transferred, the distributions and allocations of income, gain, loss, deduction, credit, or similar items to which the Member that Transferred its Interest would be entitled, and (b) such Assignee shall not be entitled or enabled to exercise any other rights or powers of a Member, such other rights remaining with the transferring Member. In such a case, the transferring Member shall remain a Member, and shall remain liable for the satisfaction of all obligations contained herein as a Member, even if such transferring Member has Transferred its entire Economic Interest to one or more Assignees (subject to Section 7.5). In the event any Assignee desires to make a further assignment of any Economic Interest, such Assignee shall be subject to all of the provisions of this Agreement relating to restrictions on Transfer to the same extent as any Member desiring to make such an assignment.

7.4 Admissions, Withdrawals and Removals. No Person shall be admitted to the Company as a Member except in accordance with Section 7.5 (in the case of transferees of a permitted Transfer of an Interest from another Person). No Member shall be entitled to retire or withdraw from being a Member of the Company except (a) in accordance with Section 7.7, or (b) with the consent of each other Member, which consent may be given or withheld in each such Member’s sole and absolute discretion. Subject to Section 6.4, no Member shall be subject to removal. No admission, withdrawal or removal of a Member shall cause the dissolution of the Company. Any purported admission, withdrawal or removal which is not in accordance with this Agreement shall be null and void.

7.5 Admission of Assignees as Substitute Members.

7.5.1 An Assignee shall become a Substitute Member only if and when each of the following conditions are satisfied:

(a) The assignor of the Interests transferred sends written notice to the Managing Member requesting the admission of the Assignee as a Substitute Member and setting forth the name and address of the Assignee, the Capital Account transferred, the Percentage Interests transferred, and the effective date of the Transfer;

(b) Intentionally omitted; and

(c) The Managing Member receives from the Assignee (i) such information concerning the Assignee’s financial capacity and investment experience as the Managing Member may reasonably request, and (ii) written instruments (including, without limitation, copies of any instruments of Transfer and such Assignee’s consent to be bound by this Agreement as a Substitute Member) that are in a form satisfactory to the Managing Member (as determined in the Managing Member’s reasonable discretion).

 

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Notwithstanding the foregoing, upon the Transfer by any Member of all (but not less than all) of its Interest in accordance with Section 7.1.2, the transferee shall automatically become a Substitute Member without having to comply with Section 7.5.1(c)(i).

7.5.2 Upon the admission of any Substitute Member, the books and records of the Company shall be amended by the Managing Member to reflect the name, address, Capital Contributions, Capital Account balance and Percentage Interest of such Substitute Member and to eliminate or adjust, if necessary, the name, address, Capital Contributions, Capital Account balance and Percentage Interest of the predecessor of such Substitute Member. In the event Sponsor Entity or MGP Entity transfers, in accordance with Section 7.1.2, all of its Interests to a Person which is not a Transfer Affiliate, the Members (including any Substitute Member) shall enter into such amendments to this Agreement as are reasonably necessary to update the definition of Sponsor Member or MGP Member, as applicable, and Transfer Affiliate and to otherwise reflect the ultimate ownership of such Substitute Member.

7.6 Withdrawal of Members. If a Member has transferred all of its Interests to one or more Assignees, then such Member shall withdraw from the Company if and when all such Assignees have been admitted as Substitute Members in accordance with this Agreement.

7.7 Conversion of Membership Interest. Upon the Incapacity of a Member or the rejection by a Member of this Agreement in a Bankruptcy of such Member, such Member’s Membership Interest shall automatically be converted to an Economic Interest only, and such Member (or its executor, administrator, trustee, or receiver, as applicable) shall thereafter be deemed an Assignee for all purposes hereunder, with the same Economic Interest as was held by such Member prior to its Incapacity or its rejection of this Agreement, but without any other rights of a Member unless the holder of such Economic Interest is admitted as a Substitute Member pursuant to Section 7.5 above.

ARTICLE 8

DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY

8.1 Limitations. The Company may be dissolved, liquidated and terminated only pursuant to the provisions of this Article 8, and the parties hereto do hereby irrevocably waive any and all other rights they may have to cause a dissolution of the Company or a sale or partition of any or all of the Company Assets.

8.2 Exclusive Causes. Notwithstanding the Act, the following and only the following events shall cause the Company to be dissolved, liquidated, and terminated:

(a) the joint election by the MGP Member and the Sponsor Member;

(b) The Transfer of all or substantially all of the Company Assets and the receipt of all consideration therefor, except that if non-monetary consideration is received upon such disposition the Company shall not be dissolved pursuant to this clause until such consideration is converted into money or money equivalent;

 

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(c) Judicial dissolution; or

(d) At any time that there are no Members, unless the business of the Company is continued in accordance with the Act.

To the fullest extent permitted by law, any dissolution of the Company other than as provided in this Section 8.2 shall be a dissolution in contravention of this Agreement.

8.3 Effect of Dissolution. The dissolution of the Company shall be effective on the day on which the event occurs giving rise to the dissolution, but the Company shall not terminate until it has been wound up and its assets have been distributed as provided in Section 8.5 of this Agreement and the Certificate has been cancelled by the filing of a certificate of cancellation with the office of the Delaware Secretary of State. Notwithstanding the dissolution of the Company, prior to the termination of the Company, the business of the Company and the affairs of the Members, as such, shall continue to be governed by this Agreement.

8.4 No Capital Contribution Upon Dissolution. Each Member shall look solely to the assets of the Company for all distributions with respect to the Company, its Capital Contributions thereto, its Capital Account, and its share of Net Profits or Net Losses, and shall have no recourse therefor (upon dissolution or otherwise) against any other Member. Accordingly, if any Member has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which the liquidation occurs), then such Member shall have no obligation to make any Capital Contribution with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever.

8.5 Liquidation.

8.5.1 Upon dissolution of the Company, the Company shall thereafter engage in no further business other than that which is necessary to wind up the business, and the Managing Member (or such other Person as the Managing Member may determine) shall act as the “Liquidator” of the Company. A reasonable time shall be allowed for the winding up of the affairs of the Company in order to minimize any losses attendant upon such a winding up. In the event the Liquidator reasonably believes that it is prudent to do so, cash or other assets held in reserve may be placed in a liquidating trust or other escrow immediately prior to the termination of the Company in order to ensure that any and all obligations of the Company are satisfied. After allocating (pursuant to Article 5 of this Agreement) all income, gain, loss, deductions and credit resulting from the liquidation of the Company Assets, the Liquidator shall apply and distribute the cash proceeds thereof as follows (it being understood that any amounts to be paid to a Lending Member pursuant to Section 3.3 shall be paid to such Lending Member out of the following distributions that would otherwise be made to the Non-Contributing Member, but that such amounts shall be deemed to have been distributed to the Non-Contributing Member and immediately repaid by the Non-Contributing Member to the Lending Member):

 

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(a) First, to the payment of (i) the debts and liabilities of the Company (including any outstanding amounts due under any Credit Arrangements encumbering the Company Assets (or any part thereof) and, to the extent permitted by law, to Members who are creditors) and (ii) the expenses of liquidation; then

(b) Second, to the establishment of any Reserves which the Liquidator shall determine in its commercially reasonable judgment to be reasonably necessary for contingent, unliquidated or unforeseen Liabilities or obligations of the Company or its Subsidiaries or the Members arising out of or in connection with the Company or its Subsidiaries. Such Reserves may, in the commercially reasonable discretion of the Liquidator, be paid over to a national bank or national trust company selected by the Liquidator and authorized to conduct business as an escrowee to be held by such bank or trust company as escrowee for the purposes of disbursing such Reserves to satisfy the Liabilities and obligations described above, and at the expiration of such period distributing any remaining balance as provided hereinafter in this Section 8.5.1; then

(c) Third, to the Members in accordance with the terms of Section 4.1.4.

8.5.2 Notwithstanding Section 8.5.1, in the event that the Liquidator determines that an immediate sale of all or any portion of the Company Assets would cause undue loss to the Members, the Liquidator, in order to avoid such loss to the extent not then prohibited by the Act, may either defer liquidation of and withhold from distribution for a reasonable time any Company Assets except those necessary to satisfy, including the provision of reasonable Reserves for, the Company’s debts and obligations, or distribute the Company Assets to the Members in kind in a manner otherwise in accordance with the distribution procedure of Section 8.5.1.

ARTICLE 9

MISCELLANEOUS

9.1 Amendments.

9.1.1 Each Substitute Member shall become a signatory hereto by signing a counterpart signature page to this Agreement, and such other instruments, in such manner, as the Managing Member shall determine. By so signing, each Substitute Member shall be deemed to have adopted and to have agreed to be bound by all of the provisions of this Agreement.

9.1.2 This Agreement shall not be amended or modified without the prior written consent of the Members; provided, however, amendments may be made to this Agreement from time to time by the Managing Member, without the consent of any other Member: (a) to take such actions as may be necessary (if any) to insure that the Company will be treated as a partnership for U.S. federal income tax purposes (provided that any such amendment may not materially adversely affect any Member without such Member’s consent); (b) to reflect the admission of any Substitute Member pursuant to Section 7.5; and in each case, Managing Member shall provide reasonable advance notice of any such amendment to the other Members and promptly provide an executed copy after the execution thereof; and (c) to amend Exhibit A hereto to reflect adjustments to the Percentage Interests of the Members that are made in accordance with the terms of this Agreement;

 

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9.1.3 In making any amendments, there shall be prepared and filed by, or for, the Managing Member such documents and certificates as may be required under the Act and under the laws of any other jurisdiction applicable to the Company.

9.2 Member Representations and Warranties; Indemnification.

9.2.1 Representations and Warranties. Each Member (solely on behalf of itself and not with respect to the other Member(s)) hereby represents and warrants, as of the date of its admission as a Member (or a Substitute Member, as applicable), as follows to the Company and the other Member(s):

(a) Such Member is duly incorporated, organized or formed (in the event such Member is not a corporation), validly existing and in good standing under the laws of its state of incorporation, organization or formation (as the case may be). Such Member has the requisite power and authority to own its property and to carry on its business as now conducted, to the extent material to its rights and obligations under this Agreement.

(b) Such Member has all requisite power and authority to enter into this Agreement, to consummate the transactions contemplated hereby and to perform its obligations hereunder in accordance with the terms and provisions hereof.

(c) All acts and other proceedings required to be taken by such Member to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and properly taken.

(d) This Agreement has been duly executed and delivered by such Member and constitutes the valid and binding obligation of such Member, enforceable against it in accordance with its terms, except as enforceability may be affected by: (i) the effect of Bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights of creditors; (ii) the effect of general principles of equity and the limitation of certain remedies by certain equitable principles of general applicability; and (iii) the fact that the rights to indemnification hereunder may be limited by applicable laws, including federal or state securities laws.

(e) The execution, delivery and performance by such Member of this Agreement and the transactions contemplated hereby will not constitute a material breach of any term or provision of, or a material default under (i) any outstanding indenture, mortgage, loan agreement or other material contract or agreement to which such Member or any of its Affiliates is a party or by which it or any of its Affiliates or its or their property is bound; (ii) its certificate or articles of incorporation or bylaws or other governing documents; (iii) any material applicable law; or (iv) any material order, writ, judgment or decree having applicability to it.

 

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(f) Such Member has obtained all approvals and consents required to be obtained by it in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby from all Persons having approval or consent rights, and has made all material filings and registrations, required from or by any governmental body, authority, bureau or agency in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

(g) No Member has incurred any obligation to a broker or finder for payment of any commission or fee in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including its admission as a Member, for which the Company or any other Member may become liable.

(h) To the extent applicable to such Member, to such Member’s actual knowledge, such Member has complied in all material respects with the International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, which comprises Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot Act”) and the regulations promulgated thereunder, and the rules and regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). Neither such Member nor any of its Affiliates is included on the List of Specially Designated Nationals and Blocked Persons maintained by OFAC, or a resident in, or organized or chartered under the laws of, or otherwise acting for or on behalf of a person ordinarily resident in (A) a jurisdiction that has been designated by the U.S. Secretary of the Treasury under Sections 311 or 312 of the Patriot Act as warranting special measures due to money laundering concerns or (B) any foreign country that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization, such as the Financial Action Task Force on Money Laundering, of which the United States is a member and with which designation the United States representative to the group or organization continues to concur.

(i) Such Member is acquiring its Interest for its own account and not for the account of any other Person. Such Member is acquiring its Interest solely for investment and not with a view to, or for resale in connection with, the distribution or other disposition thereof either currently or after the passage of a fixed or determinable period of time or upon the occurrence or non-occurrence of any predetermined event or circumstance in violation of the Securities Act. Such Member understands that the sale and issuance of the Interests has not been registered under the Securities Act, applicable state securities laws or the securities or similar law of any other jurisdiction whatsoever, and, therefore, the Interests cannot be Transferred or otherwise disposed of unless they are registered under the securities laws of each applicable jurisdiction, or exemptions from such registration requirements are available. Such Member understands that Transfers and dispositions of its Interest can be made only (i) as explicitly permitted or contemplated under the terms of this Agreement and (ii) in compliance with the Securities Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder and all applicable state securities and “blue sky” laws; and such Member understands that the Company is under no obligation to register the offer or sale of any Interests in any jurisdiction whatsoever or to assist such Member in complying with any exemption from registration under the securities laws of any jurisdiction whatsoever.

 

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(j) Such Member understands and is able to bear the economic risk of an investment in the Company and can afford to sustain a total loss on such investment. Such Member further acknowledges that there are substantial risks in the investment (including loss of the entire amount of such investment), that such Member is capable of evaluating the merits and risks of the investment in the Company and such Member has evaluated such risks and determined that the Interest is a suitable investment for such Member. Such Member has such knowledge and experience in business, financial and tax matters, including experience in investing in non-listed and non-registered securities, and is a sophisticated investor capable of utilizing the information made available to it in connection with its investment in the Interest to evaluate the merits and risks of its investment in the Company, to make an informed investment decision with respect thereto and to protect its interests in connection with such investment.

(k) Such Member, or each beneficial owner (within the meaning of Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”)) of such Member, (i) is an “accredited investor” as such term is defined in Rule 501 of Regulation D and (ii) has not been formed for the specific purpose of acquiring the Interest unless each beneficial owner of such entity is qualified as an accredited investor within the meaning of Rule 501 of Regulation D.

(l) Such Member and its legal, tax, accounting and financial advisers have been provided an opportunity to ask questions of and receive information from a Person or Persons acting on behalf of the Company concerning the investment in the Company, the Company Assets, the Company, and such other matters as such Member and any of its advisors have deemed necessary or desirable. All such questions have been answered to the full satisfaction of such Member and any such advisors, and such Member has received all such information requested, but such Member has in all events relied upon its own due diligence in evaluating this Agreement, the Interests, the Properties and the other Company Assets.

(m) Such Member has consulted and been advised by its own legal counsel and tax advisor in connection with, and acknowledges that no representations as to potential profit, tax consequences of any sort (including the tax consequences resulting from forming or operating the Company, conducting the business of the Company, executing this Agreement, consummating the transactions provided for herein, making a Capital Contribution, being admitted to the Company, receiving or not receiving distributions from the Company, or being allocated Net Profits and Net Losses), cash flows or funds from operations or yield, if any, in respect of the Company have been made by the Company, any Member or any Affiliate of any Member or any employee or representative thereof, and that projections and any other financial information and documentation that may have been in any manner submitted to such Member from any source shall not constitute any representation or warranty of any kind or nature, express or implied and such Member is not relying on any representations or warranties of any other Person in connection therewith, including the Company or any other Member.

(n) On the date hereof, each Member is deemed to have made to the other Member the Anti-Corruption Representations set forth on Exhibit D hereto.

 

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9.2.2 Additional Representations and Warranties.

(a) The Sponsor Member hereby represents and warrants to the Company and the MGP Member, that as of the Effective Date, the Sponsor Member is a Transfer Affiliate of BREIT OP.

(b) The MGP Member hereby represents and warrants to the Company and the Sponsor Member, that as of the Effective Date:

(i) The MGP Member is, directly or indirectly, majority-owned and Controlled by MGP.

(ii) The Company is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all necessary company power and authority to carry on its business as set forth in this Agreement.

(iii) There are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the limited liability company interests of the Company or obligating the Company to issue or sell any limited liability company interests of the Company, except as expressly set forth in this Agreement or as may have been created by the Sponsor Member. Interests in the Company issued to the Sponsor Member are free and clear of any and all liens, claims, encumbrances, options and rights of any kind, except as expressly set forth in this Agreement or as may have been created by the Sponsor Member.

(iv) Other than as contemplated by the MTA, the Company has not conducted any business prior to the Effective Date.

(c) Each Member hereby represents and warrants to the Company and each other Member that no portion of the assets used by such Member to acquire or hold the Membership Interests constitutes the assets: of (i) an “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) which is subject to Title I of ERISA, (ii) a plan, individual retirement account or other arrangement which is subject to Section 4975 of the Code or any Similar Law (as defined below) or (iii) an entity which is deemed to hold the assets of any of the described in clauses (i) and (ii), pursuant to ERISA or applicable Similar Law. “Similar Law” means any federal, state, local, non-U.S. or other law or regulation that would cause the underlying assets of the Company to be treated as assets of the Member by virtue of its interest in the Company and thereby subject the Company (and/or other persons responsible for the investment and operation of the Company’s assets) to laws or regulations that are similar to the fiduciary responsibility or prohibited transaction provisions contained in Title I of ERISA or Section 4975 of the Code.

9.2.3 Member Indemnity. Each Member agrees to indemnify, defend and hold harmless the Company, the other Member, each officer, director, agent and Affiliate of the Company and the other Member from and against any and all Liabilities arising out of or based upon any false representation or warranty made by such Member herein.

 

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9.3 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and fully supersedes any and all prior or contemporaneous agreements or understandings between the parties hereto pertaining to the subject matter hereof and thereof.

9.4 Further Assurances. Each of the parties hereto does hereby covenant and agree on behalf of itself, its successors, and its assigns, without further consideration, to prepare, execute, acknowledge, file, record, publish, and deliver such other instruments, documents and statements, and to take such other action as may be required by law or reasonably necessary to effectively carry out the purposes of this Agreement.

9.5 Notices. Any notice, consent, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be (a) delivered personally to the Person or to an officer of the Person to whom the same is directed, or (b) sent by electronic mail or registered or certified mail, return receipt requested, postage prepaid, addressed as follows: if to the Company, to the Company at the address set forth in Section 1.3 hereof, or to such other address as the Company may from time to time specify by notice to the Members; if to a Member, to such Member at the address set forth in Exhibit A, or to such other address as such Member may from time to time specify by notice to the Company. Any such notice shall be deemed to be delivered, given and received for all purposes as of: (i) the date so delivered, if delivered personally, (ii) upon receipt, if sent by electronic email, or (iii) on the date of receipt or refusal indicated on the return receipt, if sent by registered or certified mail, return receipt requested, postage and charges prepaid and properly addressed.

9.6 Tax Matters.

9.6.1 Partnership Representative.

(a) The MGP Member may act as or designate the initial “partnership representative” (within the meaning of Section 6223 of the Code as amended by the Bipartisan Budget Act of 2015) to oversee or handle matters relating to the taxation of the Company (the “Partnership Representative”). The Partnership Representative shall perform his, her, or its duties under the direction and guidance of the Managing Member and shall be authorized and required to represent the Company (at the Company’s expense), subject to the restrictions set forth in this Section 9.6.1, in connection with all examinations of the Company’s affairs by tax authorities, including any resulting administrative and judicial proceedings, and to expend Company funds for professional services reasonably incurred in connection therewith. Subject to Section 6.3.1(k), the Managing Member shall have the authority to remove and designate a replacement Partnership Representative. Each Member and former Member that held an Interest during the Reviewed Year (each, an “Interested Member”) agrees to reasonably cooperate with the Company and to do or refrain from doing any or all things reasonably requested by the Company with respect to the conduct of such proceedings. The Partnership Representative shall keep the Interested Members reasonably informed of the initiation and progress of any examinations, audits or other proceedings. Subject to the approval of the Managing Member, the Partnership Representative shall (i) determine whether any partnership adjustment to each Interested Member shall be made through the application of the procedures established pursuant to Code Section 6225(c) or through an election and the furnishing of

 

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statements pursuant to Code Section 6226; (ii) determine whether to make the election “out” of subchapter C, chapter 63 of the Code under Section 6221(b) of the Code if such an election is available; and (iii) determine whether to make any other elections available under subchapter C, chapter 63 of the Code. The Partnership Representative shall timely designate an individual to serve as the sole individual through whom the Partnership Representative will act as required by Regulations Section 301.6223-1. The designated individual must agree in writing to be bound by the same obligations and restrictions imposed on the Partnership Representative under this Section 9.6.1 prior to and as condition of such designation. References herein to the Partnership Representative are deemed to include the designated individual.

(b) The Company shall indemnify and reimburse the Partnership Representative for all losses suffered and all reasonable expenses (including reasonable legal and accounting fees) incurred by it in the performance of its duties and responsibilities as the Partnership Representative.

(c) Tax audits, controversies and litigations shall be conducted under the direction of the Partnership Representative, provided that the Partnership Representative shall regularly meet and confer with the Managing Member, the MGP Member and the Sponsor Member concerning the prosecution and status of such tax audits, controversies and litigations. The Partnership Representative shall submit to the Managing Member, the MGP Member and the Sponsor Member, for their review and approval (such approval not to be unreasonably withheld, conditioned or delayed), any settlement or compromise offer with respect to any disputed item of income, gain, loss, deduction or credit of the Company and shall not enter into any such settlement or compromise offer until such approval (such approval not to be unreasonably withheld, conditioned or delayed) is received from the Managing Member, the MGP Member and the Sponsor Member. The Company may permit the Interested Members to participate in one of the procedures set forth in Section 6225(c)(2) of the Code. If so permitted, any number of Interested Members may participate, and no Interested Member shall be obligated to participate. Any economic benefit or burden associated with participating in such procedure will inure to the benefit of or be borne by each Interested Member participating in the procedure to the extent attributable to such Interested Member. For the avoidance of doubt, the Company shall not have the right to require any Interested Member to amend a tax return or participate in any alternative procedure pursuant to Section 6225(c)(2) of the Code nor prevent any Interested Member from doing so.

(d) If a governmental authority makes a final determination (or the Company agrees to accept a non-final determination by the Internal Revenue Service) that adjusts the income, gain, loss, deduction, or credit of the Company (or any Interested Member’s distributive share thereof) and to the extent the “push out” election under Section 6226 of the Code is not available or made or one of the procedures set forth in Section 6225(c)(2) of the Code are not undertaken, the Interested Members shall bear the economic benefits and burdens of the adjustment (including any interest and penalties), and the cost of contesting any such adjustment, in the same manner (to the maximum extent possible) in which the economic benefits and burdens of the adjustment would have been borne had the Company elected “out” under Section 6221(b) of the Code for the Reviewed Year (whether or not the Company is eligible to elect out under Section 6221(b) of the Code). In determining the extent to which and the manner in which any Interested Member bears the economic benefits and burdens of an

 

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adjustment, the Managing Member shall consult with all Interested Members and thereafter use its reasonable efforts to modify the financial burden of any Company adjustment to each Interested Member holding an Interest during the Reviewed Year, by taking into account the Interested Member’s actions and status (including those described in Section 6225(c) of the Code). After consultation with the Interested Members, the Company shall divide any adjustment and/or Imputed Underpayment into such categories and shall determine the amounts in each category attributable to each Interested Member in the manner the Company reasonably determines best gives effect to the principles of this Section 9.6.1(d) (the amount of an Imputed Underpayment in any category attributable to an Interested Member, the Interested Member’s “BBA Share”).

(e) The Managing Member may (1) require an Interested Member who is liable under Section 9.6.1(d) to pay its BBA Share to the Company within ten (10) days after the date on which the Company notifies the Interested Member (and in the manner required by the notice) and/or (2) reduce the Interested Member’s Capital Account or future distributions to the Interested Member under Article IV, such that the cumulative amount under clauses (1) and (2) equals the Interested Member’s BBA Share (plus the amount of any interest determined pursuant to the next sentence). Any amounts under clause (1) that are not paid within the time set forth in clause (1), and any amounts under clause (2), shall be increased to reflect interest calculated at a rate equal to 3% per annum, compounded as of the last day of each year (but not in excess of the highest rate per annum permitted by applicable law). The Company may make appropriate adjustments to an Interested Member’s Capital Account and may treat any payment described in clause (1) in any manner reasonably determined by the Managing Member, including as a Capital Contribution or distribution. Without duplication of amounts otherwise paid or reimbursed by it, each Interested Member shall, at the Company’s request, indemnify and hold harmless the Company for any liabilities of the Company for such Interested Member’s BBA Share.

(f) The Partnership Representative shall receive no compensation for its services. All third-party costs and expenses reasonably incurred by the Partnership Representative in performing its duties as such (including legal and accounting fees) shall be paid by the Company. Nothing herein shall be construed to restrict the Company from engaging an accounting firm and a law firm to assist the Partnership Representative in discharging its duties hereunder, so long as the compensation paid by the Company for such services is reasonable. The provisions of this Section 9.6.1 shall survive (i) the termination of the Company, this Agreement, and the termination of any Interested Member’s Interest in the Company, and (ii) the transfer of all or a part of a Interested Member’s Interest in the Company. Each Interested Member agrees that as a condition to any transfer of an Interest as permitted under this Agreement, the transferor Interested Member continues to be bound by all of the provisions of this Section 9.6.1.

(g) Each Interested Member agrees that such Interested Member shall not treat any Company item inconsistently on such Interested Member’s federal, state, foreign, or other income tax return with the treatment of the item on the Company’s return. Each Interested Member further agrees to cooperate in taking such actions as may be required to cause any election made by the Company to be effective and to provide the Partnership Representative with documentation of its compliance with the provisions of this Section 9.6.1.

 

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(h) The Interested Members waive any fiduciary duty of the Partnership Representative to any of them. For the avoidance of doubt, the foregoing waiver shall not limit any duties to the Company.

9.6.2 Tax Elections. Except as otherwise provided in Section 9.6.3, subject to Section 6.3.1(j), the Partnership Representative may make all elections for federal income and all other tax purposes in accordance with this Agreement.

9.6.3 Tax Elections. Prior to making any tax election other than a Required Tax Election or an election under subchapter C, chapter 63 of the Code (which shall be governed by Section 9.6.1) with respect to the Company or its Subsidiaries for federal, state or local tax purposes, the Partnership Representative and the Company shall permit the MGP Member and the Sponsor Member to review, provide comments on and discuss in advance, and shall consider in good faith any comments made by such Members in relation to, such election.

9.6.4 Intentionally Omitted.

9.6.5 Operating Tax Covenants. The Managing Member, the MGP Member, the Sponsor Member and the Company covenant the following:

(a) For purposes of Regulations Section 1.752-2, 1.752-3 and 1.707-5(a)(2), the Company shall allocate liabilities of the Company amongst the properties of the Company and among the members of the Company in a manner consistent with applicable law as reasonably determined by the Managing Member; provided that the “excess nonrecourse liabilities” (as defined in Regulations Section 1.752-3(a)(3)) of the Company, if any, shall be allocated (i) first to the MGP Member in accordance with the “additional method” (as defined in Regulations Section 1.752-3(a)(3)) up to the maximum amount permitted by such method under applicable law but not in excess of the sum of the amount of built-in gain that is allocable to the MGP Member on Code Section 704(c) property (as defined under Regulations Section 1.704-3(a)(3)(ii)) or property with respect to which reverse Section 704(c) allocations are applicable (as described in Regulations Section 1.704-3(a)(6)(i)) and (ii) thereafter in accordance with Regulations Section 1.752-3(a)(3), based on allocations of projected taxable income of the Company . In the event of a change in law or interpretation thereof, the Parties shall use reasonable efforts to apply such changed law or interpretation thereof in accordance with applicable law in the manner that minimizes the recognition of income or gain by the MGP Member as reasonably determined by the Managing Member, but, notwithstanding the foregoing, in no event shall the Company be required to modify the economic arrangements of the Members and the Company shall have no obligation or liability to the MGP Member to the extent that the Company’s inability to comply with the provisions of this Section 9.6.5(a) are attributable to such change in the tax laws or interpretation thereof. The Managing Member shall consult with MGM, the MGP Member and the Sponsor Member when conducting any computations and allocations pursuant to this Section 9.6.5(a) and shall consider in good faith all reasonable comments of MGM, the MGP Member and the Sponsor Member.

 

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(b) If the Company has in effect a Code Section 754 election and recognizes any Code Section 734(b) adjustment to the tax basis of any of the Properties (including all subsequent replacements pursuant to Section 1031, Section 1033, or any other nonrecognition provision of the Code) in any taxable year, the Company shall not file any income tax return reporting such Code Section 734(b) adjustment as giving rise to additional gain recognized under Code Section 731 to a Member in the same taxable year (i.e., because of a reduction in the liabilities allocated to the Member pursuant to Regulations Section 1.752-3); provided that, if the Sponsor Member is the Managing Member, the obligations of the Members and the Company under this Section 9.6.5(b) shall be conditioned on the Company’s receipt of written advice level from tax advisors reasonably satisfactory to the Sponsor Member with a conclusion at least at a “more likely than not” level that such position is consistent with applicable law.

(c) The Company shall not make a Code Section 754 election; provided, however, such election may be made in the tax year in which a Member (including any of its Affiliates that hold an Interest, if applicable) has Transferred an Interest constituting at least 10% of the total Economic Interests in the Company in a taxable disposition to a Third Party.

(d) For purposes of making Code Section 704(c) allocations with respect to a Property, the Company shall apply the “traditional method” pursuant to Regulations Section 1.704-3(b).

(e) If the Company transfers any interest in a Property to a Subsidiary in a transaction treated as a Code Section 721 exchange, the transferee partnership shall make Code Section 704(c) allocations with respect to such interest in such Property in the same manner as the Company.

9.6.6 Tax Returns. Preparation of the tax returns and statements, if any, of the Company shall be the responsibility of the Managing Member. If the Managing Member engages a certified public accountant for the preparation and or review of any or all of the income tax returns, the expense shall be a Company Expense.

9.6.7 Member Information. In the event any Member makes any tax election that requires the Company to furnish information to such Member to enable such Member to compute its own tax liability, or requires the Company to file any tax return or report with any tax authority, in either case that would not be required in the absence of such election made by such Member, the Managing Member may, as a condition to furnishing such information or filing such return or report, require such Member to pay to the Company any incremental expenses incurred in connection therewith; provided no Member shall be required to pay to the Company for any incremental expenses incurred in connection with any information the Managing Member is required to provide to any Member under Section 6.7.3. Promptly upon request, each Member shall provide the Company with any information related to such Member necessary (A) to allow the Company to comply with any tax reporting, tax withholding or tax payment obligations of the Company or (B) to establish the Company’s legal entitlement to an exemption from, or reduction of, withholding or other taxes or similar payments, including U.S. federal withholding tax under Sections 1471 and 1472 of the Code.

 

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9.6.8 Tax Protection Claims. If the Company receives (i) any claim that damages are due as a result of a Breach (as defined in the Tax Protection Agreement) or (ii) any notice of an actual, threatened or impending Company Tax Audit (as defined in the Tax Protection Agreement), the Managing Member shall promptly notify the Members of such claim or audit and provide the Members with such additional information as the Members reasonably request. The Managing Member shall keep the MGP Member and the Sponsor Member reasonably informed of the progress of any such claim or audit.

9.7 Governing Law. This Agreement, including its existence, validity, construction, and operating effect, and the rights of each of the parties hereto, shall be governed by and construed in accordance with the laws of the State of Delaware without regard to otherwise governing principles of choice of law or conflicts of law. Notwithstanding the foregoing, the parties acknowledge and agree that this Agreement, the Company and the Members are also subject to the Nevada Gaming Control Act and the regulations promulgated thereunder.

9.8 Construction. The Members intend that this Agreement shall be construed as if all parties prepared this Agreement.

9.9 Captions - Pronouns. Any titles or captions contained in this Agreement are for convenience only and shall not be deemed part of the text of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as appropriate.

9.10 Binding Effect. Except as otherwise expressly provided herein, this Agreement shall be binding on and inure to the benefit of the Members, their respective heirs, executors, administrators, successors and all other Persons hereafter holding, having or receiving a Membership Interest or Economic Interest, whether as Assignees, Substitute Members or otherwise.

9.11 Severability. In the event that any provision of this Agreement as applied to any party or to any circumstance, shall be adjudged by a court to be void, unenforceable or inoperative as a matter of law, then the same shall in no way affect any other provision in this Agreement, the application of such provision in any other circumstance or with respect to any other party, or the validity or enforceability of the Agreement as a whole.

9.12 Confidentiality.

9.12.1 Each Member agrees that the provisions of this Agreement, all understandings, agreements and other arrangements herein between and among the parties, and all other nonpublic information received from or otherwise relating to, the Company and the Company Assets shall be confidential, and shall not be disclosed or otherwise released to any other Person (other than another party hereto), without the written consent of the other Members. The obligations of the parties hereunder shall not apply: (a) so long as such Persons agree to maintain the confidential nature thereof, to the MGP Member’s, or the Sponsor Member’s, as applicable, actual or prospective (i) financing sources, (ii) purchasers or assignees, (iii) partners and (iv) investors; (b) to legal counsel, accountants and other professional advisors to the MGP Member or the Sponsor Member, as applicable, so long as such Persons agree to maintain the confidential nature thereof; (c) to any disclosure pursuant to the order of any court or

 

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administrative agency or in any pending legal or administrative proceeding, to the extent necessary in support of motions, filings, or other proceedings in court as required to be undertaken pursuant to this Agreement, or otherwise as required by applicable law; provided that any party is given a reasonable opportunity to obtain a protective order in connection with such disclosure; (d) in connection with reporting requirements in filings with the Securities and Exchange Commission by the MGP Member and its Affiliates, or the Sponsor Member and its Affiliates, as applicable, which filings may include publication of the MGP Member’s or its Affiliates’, or the Sponsor Member’s or its Affiliates’, as applicable, audited financial statements; and (e) to disclosures in compliance with any filing requirements, regulations or other requirements of, or upon the request or demand of, any stock exchange (or other similar entity) on which the MGP Member’s, or the Sponsor Member’s (or their direct or indirect Affiliates’) shares (or other equity interests) are listed, or of any other governmental authority having jurisdiction over the MGP Member or the Sponsor Member. Notwithstanding anything to the contrary in this Agreement, the provisions of this Section 9.12.1 shall survive: (x) a Member’s ceasing to be a member of the Company for any reason; and (y) the dissolution and/or termination of the Company.

9.13 Interpretation. All references herein to Articles, Sections, subparagraphs, Exhibits and addenda shall be deemed to be references to Articles, Sections and subparagraphs of, and Exhibits and addenda to, this Agreement unless the context shall otherwise require. All Exhibits and addenda attached hereto shall be deemed incorporated herein as if set forth in full herein. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The term “or” is not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” The words “date hereof” shall refer to the Effective Date. All accounting terms not defined in this Agreement shall have the meanings determined by United States generally accepted accounting principles as in effect from time to time. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.

9.14 No Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or be enforceable by any creditor of the Company or by any creditor of any Member except as expressly provided in Section 3.3 with respect to an Affiliate of a Member that is a Lending Member. This Agreement is not intended to confer any rights or remedies hereunder upon, and shall not be enforceable by, any Person other than the parties hereto and (a) with respect to Section 6.8 or Section 9.2, each Indemnitee and each other indemnified Person addressed therein, and (b) with respect to Section 3.3, any Affiliate of a Member that is a Lending Member.

 

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9.15 No Right of Setoff. No Member will assert (or will permit its Affiliates to assert) any right of setoff against any other Member or such other Member’s Affiliates for any normal trade activity except to the extent otherwise specifically permitted herein.

9.16 Counterparts. This Agreement may be executed in any number of multiple counterparts, each of which shall be deemed to be an original copy and all of which shall constitute one agreement, binding on all parties hereto. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or other electronic means (including in “PDF” format) shall be effective as delivery of a manually executed counterpart of this Agreement.

9.17 Submission to Jurisdiction. Each Member hereby irrevocably submits to the exclusive jurisdiction of the Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the State of Delaware) or, in the case of claims to which the federal courts have jurisdiction, the United States District Court for the District of Delaware for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each Member further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each Member hereby irrevocably and unconditionally waives trial by jury and irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in Delaware Chancery Court (or, if the Delaware Chancery Court shall be unavailable, any other court of the State of Delaware or, in the case of claims to which the federal courts have jurisdiction, the United States District Court for the District of Delaware), and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party’s obligation under this Section 9.17 will survive the termination of this Agreement.

9.18 Attorneys Fees. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement or to resolve any dispute under this Agreement, the losing party shall pay the attorney’s fees, costs and necessary disbursements of the prevailing party in addition to any other relief to which such prevailing party may be entitled.

9.19 Injunctive Relief and Enforcement. In the event of a breach by a Member of the terms of this Agreement, the Company or the other Members shall be entitled to institute, in accordance with this Section 9.19, legal proceedings to obtain damages for any such breach, or to enforce the specific performance of this Agreement by such Member and to enjoin such Member from any further violation of this Agreement and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law. Each Member acknowledges that money damages for any breach by such Member of the provisions of this Agreement would not be a sufficient remedy for any breach of this Agreement by such Member and that in addition to all other remedies the Company and the non-breaching Members shall be entitled to seek specific performance and injunctive or other equitable relief for any such breach.

 

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9.20 Intentionally Omitted.

9.21 Force Majeure. The parties to this Agreement shall be excused from performance of their obligations (other than any obligation to pay money under this Agreement) where they are prevented from so performing by revolutions, terrorism or similar disorders, wars, acts of enemies, strikes, fires, floods, acts of God, or, without limiting the foregoing, by any cause not within the control of the party whose performance is interfered with, and which, by the exercise of reasonable diligence, the party is unable to prevent. All parties shall perform such parts or aspects of their obligations as are not interfered with by these causes.

9.22 Limitation on Creditors Interests. No creditor who makes a non-recourse loan to the Company shall have or acquire at any time, as a result of making such loan, any direct or indirect interest in the profits, capital, or property of the Company, other than as a secured creditor.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of Effective Date set forth above.

 

MGP ENTITY:
[]
By:  

 

Name:
Title:
SPONSOR ENTITY:
[]
By:  

 

Name:
Title:

 

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Schedule 1

INITIAL FINANCING & PERMITTED CARVEOUT GUARANTY

 

Schedule 1

-1-


Schedule 2

[Intentionally Omitted]

 

Schedule 2

-1-


EXHIBIT A

MEMBERS, INITIAL CAPITAL CONTRIBUTIONS

AND PERCENTAGE INTERESTS

 

Name and Address of Members

   Initial Capital
Contributions
    Date of Initial Capital
Contributions
     Percentage
Interest
 

[MGP MEMBER]

   $ [                         Effective Date        50.10

[SPONSOR MEMBER]

   $ [                         Effective Date        49.90

 

EXHIBIT A

-1-


EXHIBIT B

REOC LETTER

The party listed on Schedule A hereto

(“Property Owner”)

[●]

BREIT Operating Partnership L.P.

345 Park Avenue

New York, New York 10154

Ladies and Gentlemen:

On the date hereof, BREIT Operating Partnership L.P. (the “Company”) has acquired an indirect interest in that certain property listed opposite the Property Owner’s name on Schedule B hereto (the “Property”) through the Company’s direct and indirect subsidiaries, including the Property Owner. As of the date hereof, the Property Owner holds, as its only asset (other than assets necessary or incidental to ownership and operation of the Property), the Property. In connection with such acquisition, the Property Owner hereby agrees that in addition to, and without prejudice to, or limitation on, any of the rights of the Company with respect to its direct or indirect interest in the Property Owner or the Property, as the case may be, for so long as the Company continues to hold an interest in the Property Owner or the Property, the Company shall have the right to:

 

  (i)

be routinely provided with the information set forth in, and consult with the Property Owner with respect to, those matters described in the property management agreement in place in relation to the Property, if any;

 

  (ii)

receive copies of all reports relating to the management and/or development of the Property, including management and development services provided by Property Owner, any property manager or other third party retained by, or on behalf of, any Property Owner;

 

  (iii)

periodically inspect the Property and make recommendations to Property Owner, and to any property manager, if any, relating to the management or development activities with respect to the Property, or any one of them;

 

  (iv)

participate in any decisions with respect to the retention or the termination of the services of any property manager with respect to the Property, if any;

 

  (v)

consult with appropriate officers of the Property Owner in advance with respect to any significant management and development matters including, without limitation, the management, participatory and development rights retained by Property Owner under any property management agreement, if any, relating to the Property, or any one of them, and the exercise of any significant rights by Property Owner under any lease relating to any Property; and


  (vi)

such other consultation and participation rights with respect to the Property as may be reasonably determined by the Company to be necessary for the Company to qualify as a “real estate operating company” for purposes of the United States Department of Labor Regulation published at 29 C.F.R. Section 2510.3-101(d)(3)(aREOC”).

Property Owner agrees to consider, in good faith, the recommendations of the Company in connection with the matters on which it is consulted as described above.

In the event the Company transfers all or any portion of its direct or indirect investment in Property Owner to an affiliated entity (or to a direct or indirect wholly-owned subsidiary of any such affiliated entity) that is intended to qualify as a REOC, such affiliated entity shall be afforded the same rights with respect to the Property, or any one of them, as is afforded to the Company hereunder and shall be treated, for such purposes, as a third party beneficiary hereunder.

This letter agreement and the rights and the duties of the parties hereto shall be governed by, and construed in accordance with, the laws of the State of New York and may be executed in counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument.

[Signature pages to follow]


Very Truly Yours,
[●]
By:  

 

  Name:
  Title:


Acknowledged and Agreed:
BREIT OPERATING PARTNERSHIP L.P.
By:  

 

Name:
Title:


EXHIBIT C

INTEREST ROFO SALE DOCUMENTS

THIS ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS (this “Assignment”) is made this ___ day of ____________, [____], whereby [_________________], a [_________________], (“Transferor”), for good and valuable consideration, hereby CONVEYS, TRANSFERS, SETS OVER, DELIVERS AND ASSIGNS, absolutely, to [_________________], a [_________________] (“Transferee”), [_________________] percent (___%) interest (“Transferred Interest”) in [•], a Delaware limited liability company (“Company”), which represents [the entirety / a portion] of Transferor’s Company Interests in the Company.

Capitalized terms not defined herein shall have the meaning set forth for such capitalized terms in the Amended and Restated Limited Liability Company Agreement of the Company, dated as of [_________________], 2020, by and between the Transferor and Transferee (as may be amended from time to time, the “Joint Venture Agreement”) as defined therein by reference to other instruments.

The Transferor hereby represents, warrants and covenants that it has good and merchantable legal and beneficial title to the Transferred Interest, that the Transferred Interest is free and clear of any mortgages, pledges, liens, encumbrances, security interests, charges subparticipations or any other restrictions, and that it has the full right, power, capacity and authority, and the unrestricted right to sell, convey, transfer and assign the Transferor Interest pursuant hereto.

The transfer made hereby is the consummation of the transfer of the Transferor’s Company Interest under the Joint Venture Agreement, and the consideration for the transfer made hereby is as determined in accordance with the Joint Venture Agreement.

Transferee shall not assume any obligations or liabilities with respect to the Transferred Interests first arising prior to the date hereof.

This Assignment is binding upon and shall inure to the benefit of each party hereto and such party’s respective successors and assigns.

This Assignment shall be governed by, interpreted under, and construed and enforced in accordance with, the laws of the State of Delaware.

This Assignment may be signed in counterparts, with less than all parties signing a counterpart, but separate counterparts with collectively the signatures of both the Transferor and the Transferee shall constitute an original Instrument of Transfer, and each counterpart or collective counterparts shall each constitute an original Instrument of Transfer.

 

EXHIBIT C

-1-


IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the day and year first above written.

 

TRANSFEROR

 

a  

 

By:  

 

Name:
Title:
TRANSFEREE

 

a  

 

By:  

 

Name:
Title:


EXHIBIT D

ANTI-CORRUPTION REPRESENTATION

A. Blackstone’s Global Anti-Corruption Compliance Policy: [                ], a Delaware limited liability company (the “Member”) acknowledges and agrees that it is the written and established policy of The Blackstone Group LP and affiliates (“Blackstone”) to comply fully with all applicable laws and regulations of the United States and all jurisdictions in which it does business. The Member warrants and represents that it will not take any action that would constitute a violation, or implicate Blackstone in a violation, of any law of any jurisdiction in which it performs business, or of the United States, or of the United Kingdom, including without limitation, the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), the UK Bribery Act 2010, and where applicable, legislation enacted by member States and signatories implementing the OECD Convention Combating Bribery of Foreign Officials (collectively, “Anti-Corruption Laws”).

B. The Member represents, warrants, and agrees that:

(i) the Member is neither a Government Entity nor an instrumentality of a government. If the Member becomes a Government Entity or instrumentality of a government during the term covered by the document, the Member shall notify Blackstone immediately so Blackstone may, and hereby reserves the right to, take whatever precautions and actions may be appropriate to assure compliance with applicable Anti-Corruption Laws;

(ii) None of the Member’s principals, owners, officers, or directors is currently a Government Official.1 If any of the Member’s principals, owners, officers, or directors becomes a Government Official during the term covered by this document, the Member shall notify Blackstone immediately so Blackstone may, and hereby reserves the right to, take whatever precautions and actions may be appropriate to assure compliance with applicable Anti-Corruption Laws;

(iii) No Government Official is associated with, or owns an interest, whether direct or indirect, in the Member, or has any legal or beneficial interest in the proposed agreement/relationship contemplated herein between the Member and Blackstone, or any payments to be made by Blackstone to the Member under such agreement. If a Government Official obtains such an interest, the Member shall notify Blackstone immediately so Blackstone may, and hereby reserves the right to, take whatever precautions and actions may be appropriate to assure compliance with applicable Anti-Corruption Laws;

 

1 

The term “Government Official” includes, without limitation, all officers or employees of a government department, agency or instrumentality; permitting agencies; custom officials; political party officials; candidates for political office; officials of public international organizations (e.g., the Red Cross); employees or affiliates of an enterprise that is owned, sponsored, or controlled by any government—such as a healthcare facility, bank, utility, oil company, university or research institute; and any other position as defined by applicable Anti-Corruption Laws.


(iv) Neither the Member nor any of its principals, owners, officers, or directors has made, promised to make, will promise to make, or will cause to be made, in connection with the proposed agreement contemplated herein, any Payments2: (i) to or for the use or benefit of any Government Official in violation of any Anti-Corruption Laws; (ii) to any other person either for an advance or reimbursement, if it knows or has reason to know that any part of such Payment will be directly or indirectly given or paid by such other person, or will reimburse such other person for Payments previously made, to any Government Official in violation of any Anti-Corruption Laws; or (iii) to any other person or entity, to obtain or keep business or to secure some other improper advantage, the payment of which would violate applicable Anti-Corruption Laws. The Member shall immediately notify Blackstone of any violation of Anti-Corruption Laws and shall be responsible for any damages to Blackstone from the Member’s violation of Anti-Corruption Laws;

(v) Any compensation provided by Blackstone is for the Member’s sole benefit and will not be transferred or assigned to any other party other than Affiliates of Member; and

(vi) The Member has effective controls that are sufficient to provide reasonable assurances that violations of applicable Anti-Corruption Laws will be prevented, detected and deterred.

C. Compliance with Economic Sanctions Laws. Neither the Member, nor any of its principals, owners, officers or directors is the subject of any sanction administered by the Office of Foreign Assets Control of the United States Treasury Department (“U.S. Economic Sanctions”) and, except as permitted by applicable United States law, does not and will not make any sales to or engage in business activities with or for the benefit of, and will not use any amounts payable under the proposed agreement/relationship for the purposes of financing the activities of, any persons that are the subject of U.S. Economic Sanctions, including any “Specially Designated Nationals and Blocked Persons”; nor, except as permitted by applicable law, shall the Member or any of its principals, owners, officers or directors make any sales to or engage in business activities with or for the benefit of, or use any amounts payable under the proposed agreement/relationship for the purposes of financing the activities of any country that is the target of territory-wide sanctions (which countries currently are Cuba, Iran, Syria, North Korea, and the Crimea Region of Ukraine).

D. Compliance with Money Laundering Laws. The operations of the Member have been conducted at all times, and will continue to be conducted, in compliance with applicable financial recordkeeping and reporting requirements of the U.S. Currency and Foreign Transaction Reporting Act of 1970, as amended, the U.S. Money Laundering Control Act of 1986, as amended, the U.S. Patriot Act, as amended, and all money laundering-related laws of other jurisdictions where the Member conducts business or owns assets (collectively, the “Money Laundering Laws”). No proceeding by or before any Government Authority involving the Member with respect to the Money Laundering Laws is pending or, to the knowledge of the Member, is threatened.

 

2 

The term “Payments” refers to anything of value, including cash, gifts, travel expenses, entertainment, offers of employment, provision of free services, and business meals. It may also include event sponsorships, consultant contracts, fellowship support, job offers, and charitable contributions made at the request of, or for the benefit of, an individual, his or her family, or other relations, even if made to a legitimate charity.

[remainder of page intentionally left blank]


I confirm that I am suitably qualified and authorized by the Member to give the representations, warranties and agreements contained in this document and that the same has been authorized by all and any necessary corporate action.

 

Signature:  

 

Name and Title:  
Dated:                                                      


MASTER LEASE

 


ARTICLE I

  LEASED PROPERTY      1  

1.1

  Leased Property      1  

1.2

  Single, Indivisible Lease      4  

1.3

  Term      5  

1.4

  Renewal Terms      5  

1.5

  Separation of Leases      5  

ARTICLE II

  DEFINITIONS      8  

2.1

  Definitions      8  

ARTICLE III

  RENT      41  

3.1

  Rent      41  

3.2

  Late Payment of Rent      42  

3.3

  Method of Payment of Rent      42  

3.4

  Net Lease      42  

3.5

  Fair Market Rent      43  

ARTICLE IV

  IMPOSITIONS      43  

4.1

  Impositions      43  

4.2

  Utilities and other Matters      45  

4.3

  Compliance Certificate      45  

4.4

  Impound Account      45  

ARTICLE V

  NO ABATEMENT      45  

5.1

  No Termination, Abatement, etc.      45  

ARTICLE VI

  OWNERSHIP OF LEASED PROPERTY      46  

6.1

  Ownership of the Leased Property      46  

6.2

  Tenant’s Property      47  

6.3

  Tenant’s Intellectual Property      48  

6.4

  Landlord’s Security Interest in Tenant’s Pledged Property      48  

ARTICLE VII

  CONDITION AND USE OF LEASED PROPERTY      50  

7.1

  Condition of the Leased Property      50  

7.2

  Use of the Leased Property      51  

7.3

  Additional Facilities      53  

ARTICLE VIII

  REPRESENTATIONS AND WARRANTIES; COMPLIANCE WITH LAW      53  

8.1

  Representations and Warranties      53  

8.2

  Compliance with Legal and Insurance Requirements, etc.      54  

8.3

  Zoning and Uses      55  

8.4

  Intentionally Omitted      55  

8.5

  Third-Party Reports      55  

ARTICLE IX

  MAINTENANCE AND REPAIR      56  

9.1

  Maintenance and Repair      56  

9.2

  Encroachments, Restrictions, Mineral Leases, etc.      60  

 

i


ARTICLE X

  CAPITAL IMPROVEMENTS      61  

10.1

  Construction of Capital Improvements to the Leased Property      61  

10.2

  Construction Requirements for Capital Improvements      63  

10.3

  Intentionally Omitted      64  

10.4

  Ownership of Tenant Capital Improvements      64  

10.5

  Funding of Tenant Capital Improvements      64  

10.6

  Self Help      64  

ARTICLE XI

  NO LIENS      65  

11.1

  Liens      65  

11.2

  Landlord Encumbrance Obligations      68  

ARTICLE XII

  PERMITTED CONTESTS      68  

12.1

  Permitted Contests      68  

ARTICLE XIII

  INSURANCE      69  

13.1

  Property Insurance Requirements      69  

13.2

  Workers’ Compensation      73  

13.3

  Waiver of Subrogation      73  

13.4

  Policy Requirements      73  

13.5

  Increase in Limits      74  

13.6

  Blanket Policy      74  

13.7

  No Separate Insurance      74  

13.8

  Captive Insurance Company Requirements      75  

ARTICLE XIV

  CASUALTY      75  

14.1

  Property Insurance Proceeds      75  

14.2

  Tenant’s Obligations Following Casualty      75  

14.3

  No Abatement of Rent      77  

14.4

  Waiver      77  

14.5

  Insurance Proceeds Paid to Fee Mortgagee      77  

14.6

  Termination of Lease; Abatement of Rent      77  

14.7

  Multiple Fee Mortgagees      77  

ARTICLE XV

  CONDEMNATION      78  

15.1

  Condemnation      78  

15.2

  Award Distribution      79  

15.3

  Temporary Taking      79  

15.4

  No Abatement of Rent      79  

15.5

  Waiver      79  

15.6

  Award Paid to Fee Mortgagee      79  

ARTICLE XVI

  DEFAULT; REMEDIES      80  

16.1

  Events of Default      80  

16.2

  Certain Remedies      82  

16.3

  Damages      83  

16.4

  Receiver      84  

 

ii


16.5

  Waiver      85  

16.6

  Application of Funds      85  

16.7

  Landlord’s Right to Cure Tenant’s Default      85  

16.8

  Miscellaneous      85  

ARTICLE XVII

  TENANT’S FINANCING      86  

17.1

  Permitted Leasehold Mortgagees      86  

17.2

  Landlord’s Right to Cure Tenant’s Default      94  

17.3

  Tenant’s Debt Agreements      94  

17.4

  Landlord Cooperation      94  

ARTICLE XVIII

  SALE OF LEASED PROPERTY      95  

18.1

  Sale of the Leased Property      95  

ARTICLE XIX

  HOLDING OVER      95  

19.1

  Holding Over      95  

ARTICLE XX

  RISK OF LOSS      96  

20.1

  Risk of Loss      96  

ARTICLE XXI

  INDEMNIFICATION      96  

21.1

  General Indemnification      96  

ARTICLE XXII

  SUBLETTING AND ASSIGNMENT      97  

22.1

  Subletting and Assignment      97  

22.2

  Permitted Assignments      97  

22.3

  Permitted Sublease Agreements      98  

22.4

  Required Assignment and Subletting Provisions      100  

22.5

  Costs      101  

22.6

  No Release of Tenant’s Obligations      101  

22.7

  Intentionally Omitted      102  

22.8

  Management Agreements      102  

22.9

  Bookings      103  

22.10

  Termination of Affiliate Agreements      103  

ARTICLE XXIII

  REPORTING; CONFIDENTIALITY      104  

23.1

  Estoppel Certificates and Financial Statements      104  

23.2

  Confidentiality; Public Offering Information      109  

23.3

  Financial Covenants      111  

23.4

  Landlord Obligations      112  

ARTICLE XXIV

  LANDLORD’S RIGHT TO INSPECT      113  

24.1

  Landlord’s Right to Inspect      113  

ARTICLE XXV

  NO WAIVER      114  

25.1

  No Waiver      114  

 

iii


ARTICLE XXVI

  REMEDIES CUMULATIVE      114  

26.1

  Remedies Cumulative      114  

ARTICLE XXVII

  ACCEPTANCE OF SURRENDER      114  

27.1

  Acceptance of Surrender      114  

ARTICLE XXVIII

  NO MERGER      114  

28.1

  No Merger      114  

ARTICLE XXIX

  CONVEYANCE BY LANDLORD      115  

29.1

  Conveyance by Landlord      115  

ARTICLE XXX

  QUIET ENJOYMENT      115  

30.1

  Quiet Enjoyment      115  

ARTICLE XXXI

  LANDLORD’S FINANCING      115  

31.1

  Landlord’s Financing      115  

31.2

  Attornment      116  

31.3

  Compliance with Fee Mortgage Documents      117  

ARTICLE XXXII 

  HAZARDOUS SUBSTANCES      117  

32.1

  Hazardous Substances      117  

32.2

  Notices      117  

32.3

  Remediation      118  

32.4

  Indemnity      118  

32.5

  Environmental Inspections      119  

ARTICLE XXXIII

  MEMORANDUM OF LEASE      119  

33.1

  Memorandum of Lease      119  

ARTICLE XXXIV

  APPOINTING EXPERTS      120  

34.1

  Expert Dispute Resolution Process      120  

ARTICLE XXXV

  NOTICES      122  

35.1

  Notices      122  

35.2

  Deemed Approval Period with respect to certain Items Requiring Consent      124  

35.3

  Unavoidable Delays      125  

ARTICLE XXXVI 

  TRANSITION UPON EXPIRATION OR TERMINATION      125  

36.1

  Transfer of Tenant’s Property at the Facilities      125  

36.2

  Transition Services      126  

36.3

  Replacement of Certain Excluded Assets      126  

ARTICLE XXXVII

  ATTORNEY’S FEES      126  

37.1

  Attorneys’ Fees      126  

ARTICLE XXXVIII

  BROKERS      127  

38.1

  Brokers      127  

 

iv


ARTICLE XXXIX

  OFAC      127  

39.1

  Anti-Terrorism Representations      127  

ARTICLE XL

 

REIT REQUIREMENTS

     128  

40.1

  REIT Protection      128  

ARTICLE XLI

 

MISCELLANEOUS

     128  

41.1

  Survival      128  

41.2

  Severability      128  

41.3

  Non-Recourse      129  

41.4

  Successors and Assigns      129  

41.5

  Governing Law      129  

41.6

  Waiver of Trial by Jury      129  

41.7

  Entire Agreement      130  

41.8

  Headings; Consent      130  

41.9

  Counterparts      130  

41.10

  Interpretation      130  

41.11

  Time of Essence      130  

41.12

  Further Assurances      131  

41.13

  Gaming Regulations      131  

41.14

  Certain Provisions of Nevada Law      131  

41.15

  Savings Clause      131  

41.16

  Agency Relationship with respect to Water Rights      132  

41.17

  Operating Subleases      133  

 

v


EXHIBITS AND SCHEDULES

EXHIBIT A – DESCRIPTION OF THE FACILITIES

EXHIBIT B – LEGAL DESCRIPTIONS

EXHIBIT C – INTENTIONALLY OMITTED

EXHIBIT D – GAMING LICENSES

EXHIBIT E – FORM OF GUARANTY

EXHIBIT F-1 – FORM OF NONDISTURBANCE AND ATTORNMENT AGREEMENT (SUBLEASE)

EXHIBIT F-2 – FORM OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

EXHIBIT G – FORM OF MEMORANDUM OF LEASE

EXHIBIT H – FORM OF NEVADA WAIVER

EXHIBIT I – WATER PERMITS

EXHIBIT J – FINANCIAL COVENANT COMPLIANCE REPORT

EXHIBIT K – EXAMPLE REQUIRED CAPEX REPORT

EXHIBIT L – EBITDA CALCULATION

EXHIBIT M – QUARTERLY REPORTING PACKAGE

EXHIBIT N – CAPTIVE INSURANCE COMPANY REQUIREMENTS

SCHEDULE 1 – EXCLUDED ASSETS

SCHEDULE 2 – INITIAL OPERATING SUBTENANTS

SCHEDULE 3-A – GRAND PROPERTY SPECIFIC IP

SCHEDULE 3-B – MB PROPERTY SPECIFIC IP

SCHEDULE 4 – EXISTING ACCOUNTING GUIDELINES

SCHEDULE 5 – INTENTIONALLY OMITTED

SCHEDULE 6 – INITIAL FEE MORTGAGEE REQUIRED REPAIRS

SCHEDULE 7 – CORPORATE ALLOCATION SCHEDULE

SCHEDULE 8 – PERMITTED CAPITAL IMPROVEMENTS

SCHEDULE 9 – RESERVE DISBURSEMENT REQUIREMENTS

SCHEDULE 10 – EXISTING SUBLEASES

SCHEDULE 11 – EXISTING MANAGEMENT AGREEMENTS

SCHEDULE 12 – ESCALATED BASE RENT

SCHEDULE 13 – LAND USE MATTERS

 

vi


MASTER LEASE

This MASTER LEASE (the “Lease”) is entered into as of [], by and among Mandalay PropCo, LLC, a Delaware limited liability company, (together with its permitted successors and assigns, “MB Landlord”), MGM Grand PropCo, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “Grand Landlord” and, individually or together with the MB Landlord, as the context may require, “Landlord”), and MGM Lessee II, LLC, a Delaware limited liability company (together with its permitted successors and assigns, “Tenant”).

RECITALS

A. Capitalized terms used in this Lease and not otherwise defined herein are defined in Article II hereof.

B. Pursuant to that certain Master Transaction Agreement, dated as of January [], 2020 among MGM Growth Properties Operating Partnership LP, MGM Resorts International, and BCORE Windmill Parent LLC and certain other parties (the “Master Transaction Agreement”), (a) MB Landlord desires to lease the MB Leased Property to Tenant and Tenant desires to lease the MB Leased Property from MB Landlord, and (b) Grand Landlord desires to lease the Grand Leased Property to Tenant and Tenant desires to lease the Grand Leased Property from Grand Landlord, in each case, upon the terms set forth in this Lease.

C. The two (2) facilities covered by this Lease as of the date hereof are described on Exhibit A attached hereto (each a “Facility,” and collectively, the “Facilities”). Each of the Facilities (and if determined by Tenant, a portion of either Facility) may be subleased by Tenant to Operating Subtenants pursuant to certain subleases (the “Operating Subleases”) between Tenant and each Operating Subtenant.

D. Tenant and Landlord intend this Lease to constitute one indivisible lease of the Facilities and not separate leases governed by similar terms. The Facilities constitute one economic unit, and the Rent and all other provisions of this Lease have been negotiated and agreed to based on a demise of the Facilities to the respective Tenants as a single, composite, inseparable transaction and would have been substantially different had separate leases or a divisible lease been intended.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

LEASED PROPERTY

1.1 Leased Property. (a) Upon and subject to the terms and conditions hereinafter set forth, MB Landlord leases to Tenant and Tenant accepts and leases from MB Landlord all of MB Landlord’s rights and interests in and to the following with respect to the MB Facility (collectively, the “MB Leased Property”):

 

1


(i) the real property or properties described in Part I of Exhibit B attached hereto (collectively, the “MB Land”);

(ii) all buildings, structures, and other improvements of every kind now or hereafter located on the MB Land or connected thereto including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site to the extent MB Landlord has obtained any interest in the same), parking areas and roadways appurtenant to such buildings and structures of the MB Facility (collectively, the “MB Leased Improvements”); provided, however, that the foregoing shall not affect or contradict the provisions of this Lease which specify that Tenant shall be entitled to certain benefits of and rights with respect to the Tenant Capital Improvements;

(iii) all easements, rights and appurtenances, covenants, development rights, mineral, gas and oil rights, conveyed pursuant to the Master Transaction Agreement and other rights appurtenant to the MB Land and the MB Leased Improvements, all right, title and interest of MB Landlord, if any, in and to any land lying in the bed of any street, road, avenue or alley, open or closed, relating to, in front of or adjoining the MB Land and the MB Leased Improvements and to the center line thereof;

(iv) all equipment, machinery, fixtures, and other items of property, including all components thereof, that are now or hereafter located in, on or used in connection with and permanently affixed to or otherwise incorporated into the MB Leased Improvements, together with all replacements, modifications, alterations and additions thereto (collectively, the “MB Fixtures”); provided, however, that the foregoing shall not affect Tenant’s rights with respect to Tenant Capital Improvements pursuant to Section 11.1(b);

(v) all other properties or rights, real, personal or otherwise, conveyed to MB Landlord or MB Landlord’s Subsidiaries pursuant to the Master Transaction Agreement; and

(vi) all rights in and related to the beneficial use of the water rights (collectively, the “MB Water Rights”) pursuant to the permits issued by the Nevada State Engineer described on Exhibit I attached hereto and incorporated herein by this reference (collectively, the “MB Water Permits”), which consist of approximately 5.3 acre-feet annually of underground water, together with all existing water related infrastructure, facilities, equipment and fixtures, including, without limitation, pumps, pump stations, pipes, reservoirs and vaults used to extract the water rights from their permitted points of diversion and to place the Water Rights appropriated under the Water Permits to beneficial use at their permitted places of use (collectively, the “MB Water Infrastructure”).

The MB Leased Property shall not, for any purposes under this Lease, include those assets described on Schedule 1 attached hereto (collectively, “MB Excluded Assets”).

 

2


(b) Upon and subject to the terms and conditions hereinafter set forth, Grand Landlord leases to Tenant and Tenant accepts and leases from Grand Landlord all of Grand Landlord’s rights and interests in and to the following with respect to the Grand Facility (collectively, the “Grand Leased Property” and, together with the MB Leased Property, collectively, the “Leased Property”):

(i) the real property or properties described in Part II of Exhibit B attached hereto (collectively, the “Grand Land” and, together with the MB Land, collectively, the “Land”);

(ii) all buildings, structures, and other improvements of every kind now or hereafter located on the Grand Land or connected thereto including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site to the extent Grand Landlord has obtained any interest in the same), parking areas and roadways appurtenant to such buildings and structures of the Grand Facility (collectively, the “Grand Leased Improvements” and, together with the MB Leased Improvements, collectively, the “Leased Improvements”); provided, however, that the foregoing shall not affect or contradict the provisions of this Lease which specify that Tenant shall be entitled to certain benefits of and rights with respect to the Tenant Capital Improvements;

(iii) all easements, rights and appurtenances, covenants, development rights, mineral, gas and oil rights, conveyed pursuant to the Master Transaction Agreement and other rights appurtenant to the Grand Land and the Grand Leased Improvements, all right, title and interest of Grand Landlord, if any, in and to any land lying in the bed of any street, road, avenue or alley, open or closed, relating to, in front of or adjoining the Grand Land and the Grand Leased Improvements and to the center line thereof;

(iv) all equipment, machinery, fixtures, and other items of property, including all components thereof, that are now or hereafter located in, on or used in connection with and permanently affixed to or otherwise incorporated into the Grand Leased Improvements, together with all replacements, modifications, alterations and additions thereto (collectively, the “Grand Fixtures” and, together with the MB Fixtures, collectively, the “Fixtures”); provided, however, that the foregoing shall not affect Tenant’s rights with respect to Tenant Capital Improvements pursuant to Section 11.1(b);

(v) all other properties or rights, real, personal or otherwise, conveyed to Grand Landlord or Grand Landlord’s Subsidiaries pursuant to the Master Transaction Agreement; and

(vi) all rights in and related to the beneficial use of the water rights (collectively, the “Grand Water Rights” and, together with the MB Water Rights, the “Water Rights”) pursuant to the permits issued by the Nevada State Engineer described on Exhibit I attached hereto and incorporated herein by this reference (collectively, the “Grand Water Permits” and, together with the MB Water Permits, the “Water Permits”), which consist of approximately 366.10 acre-feet annually of underground water, together with all existing water related infrastructure, facilities, equipment and fixtures, including, without limitation, pumps, pump stations, pipes, reservoirs and vaults used to extract the water rights from their permitted points of diversion and to place the Water Rights appropriated under the Water Permits to beneficial use at their permitted places of use (collectively, the “Grand Water Infrastructure” and, together with the MB Water Infrastructure, the “Water Infrastructure”).

 

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The Grand Leased Property shall not, for any purposes under this Lease, include those assets described on Schedule 1 attached hereto (collectively, “Grand Excluded Assets” and, together with the MB Excluded Assets, collectively, the “Excluded Assets”).

The Leased Property is leased subject to all covenants, conditions, restrictions, easements and other matters affecting the Leased Property as of the Commencement Date and such subsequent covenants, conditions, restrictions, easements and other matters permitted by this Lease or as may be agreed to by Landlord or Tenant in accordance with the terms of this Lease, whether or not of record, including any matters which would be disclosed by an inspection or accurate survey of the Leased Property.

Notwithstanding the foregoing, following (a) the removal of any Facility from this Lease pursuant to Section 1.5, (b) the termination of this Lease with respect to any Facility pursuant to Section 14.2, or (c) the termination of this Lease with respect to any Facility pursuant to Section 15.1, such Facility shall no longer constitute Leased Property hereunder, and the Lease shall otherwise remain in full force and effect.

1.2 Single, Indivisible Lease. (a) This Lease constitutes one indivisible lease of the Leased Property and not separate leases governed by similar terms. The Leased Property constitutes one economic unit, and the Rent and all other provisions have been negotiated and agreed to based on a demise of all of the Leased Property to the respective Tenants as a single, composite, inseparable transaction and would have been substantially different had separate leases or a divisible lease been intended. Except as expressly provided in this Lease for specific, isolated purposes (and then only to the extent expressly otherwise stated), all provisions of this Lease apply equally and uniformly to all components of the Leased Property collectively as one unit. The parties intend that the provisions of this Lease shall at all times be construed, interpreted and applied so as to carry out their mutual objective to create an indivisible lease of all of the Leased Property and, in particular but without limitation, that, for purposes of any assumption, rejection or assignment of this Lease under 11 U.S.C. Section 365, or any successor or replacement thereof or any analogous state law, this is one indivisible and non-severable lease and executory contract dealing with one legal and economic unit and that this Lease must be assumed, rejected or assigned as a whole with respect to all (and only as to all) of the Leased Property. The parties may elect to amend this Lease from time to time to modify the boundaries of the Land and/or to exclude one or more components or portions thereof, and/or to include one or more additional components as part of the Leased Property, and any such future addition to the Leased Property shall not in any way change the indivisible and nonseverable nature of this Lease and all of the foregoing provisions shall continue to apply in full force. For the avoidance of doubt, the parties acknowledge and agree that this Section 1.2 is not intended to and shall not be deemed to limit, vitiate or supersede anything contained in Section 41.15 hereof.

(b) Without limiting the generality of the foregoing, Landlord and Tenant acknowledge and agree that (x) neither (1) Tenant’s or Landlord’s ability to terminate this Lease with respect to an affected Facility following certain Casualty Events pursuant to Section 14.2 nor (2) Tenant’s or Landlord’s ability to terminate this Lease with respect to an affected Facility following certain Condemnation events pursuant to Section 15.1 shall in any way change the indivisible and nonseverable nature of this Lease (as set forth in this Section 1.2) and (y) following any such removal, assignment or termination, this Lease shall continue as a single indivisible lease with respect to the remaining Leased Property.

 

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1.3 Term. The “Term” of this Lease is the Initial Term plus all Renewal Terms, to the extent exercised. The initial term of this Lease (the “Initial Term”) shall commence on the date of execution of this Lease (the “Commencement Date”) and end on the last day of the calendar month in which the thirtieth (30th) anniversary of the Commencement Date occurs, subject to renewal as set forth in Section 1.4 below.

1.4 Renewal Terms. (a) The term of this Lease may be extended for two (2) separate terms (each a “Renewal Term”) of ten (10) years each if: (i) at least thirty six (36) months prior to the end of the then current Term, Tenant delivers to Landlord an irrevocable written notice that Tenant is exercising its right to extend this Lease for one (1) Renewal Term (a “Renewal Notice”); and (ii) no Event of Default shall have occurred and be continuing on the date Landlord receives the Renewal Notice (the “Exercise Date”) or on the last day of the then current Term; provided, however, that if Tenant fails to deliver to Landlord a Renewal Notice prior to the date that is thirty six (36) months prior to the then current expiration date of the Term that Tenant does not intend to renew in accordance with this Section 1.4, then it shall automatically and without further action be deemed for all purposes that Tenant has delivered the Renewal Notice required by this Section 1.4(a)(i). During any such Renewal Term, except as otherwise specifically provided for herein, all of the terms and conditions of this Lease shall remain in full force and effect. After the last Renewal Term, Tenant shall have no further right to renew or extend the Term.

(b) Tenant may exercise such options to renew with respect to all (and in no event fewer than all) of the Facilities which are subject to this Lease as of such Exercise Date.

(c) During each Renewal Term, Base Rent shall continue to be determined pursuant to the definition of such term set forth in this Lease.

1.5 Separation of Leases. (a) From time to time, at the election of Landlord, but only (i) in connection with the sale of a Facility that is permitted under this Lease or (ii) as required by one or more Fee Mortgagees (either in a single or separate financing), Landlord may remove such Facility (a “Removal Facility”) from this Lease and place such Removal Facility in a separate lease on terms and conditions substantially similar to, and in any case no less favorable to the applicable Tenant than, those set forth in this Lease and as otherwise provided in this Section 1.5 (a “Separate Lease”) to facilitate the sale of such Removal Facility.

(b) If Landlord elects to remove a Removal Facility, Landlord shall give Tenant not less than thirty (30) days’ Notice thereof (a “Removal Notice”), and the applicable Tenant shall thereafter, within said thirty (30) day period (or such other period of time as Landlord may reasonably require; it being understood that Landlord may delay removal or cancel the Removal Notice in the event that the underlying sale of a Removal Facility is delayed or cancelled for any reason), execute, acknowledge and deliver to the new owner of the Removal Facility (“Separate Lease Landlord”), as designated by Landlord, at no cost or expense to

 

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Tenant, a Separate Lease with respect to the Removal Facility effective as of the date the Separate Lease is fully executed and delivered by the parties thereto (“Removal Date”) for the remaining Term and on substantially the same terms and conditions as, and in any case no less favorable to the applicable Tenant than the terms and conditions of, this Lease, except for appropriate adjustments (including to Exhibits and Schedules), including as follows:

(i) Rent. The initial Base Rent for the Removal Facility shall be equal to the Base Rent amount in respect of such Removal Facility at the time of the Removal Date and thereafter shall be adjusted on the same basis as provided in this Lease; it being understood that the specification in this Section 1.5(b)(i) of the methodology for determining the initial Base Rent for a Removal Facility shall not in any way change the indivisible and nonseverable nature of this Lease (as set forth in Section 1.2).

(ii) Liabilities and Obligations. The Separate Lease shall provide that the applicable Landlord and Tenant shall be responsible for the payment, performance and satisfaction of all of the duties, obligations and liabilities of such Landlord and Tenant, respectively, arising under this Lease, with respect to the Removal Facility, that were not paid, performed and satisfied in full prior to the commencement date of the Separate Lease, and shall further provide that (x) landlord and tenant under the Separate Lease shall not be responsible for the payment, performance or satisfaction of any duties, obligations or liabilities of the applicable Landlord or Tenant under this Lease first arising after the Removal Date and (y) none of the applicable Landlord, Tenant or Guarantor shall be responsible for the payment, performance or satisfaction of any duties, obligations or liabilities of the landlord or tenant under the Separate Lease, except to the extent it is a party to or as set forth in such Separate Lease. Except as provided in clause (iv) below, the applicable Landlord and Tenant’s obligations under this Lease with respect to the remaining Facility shall remain unaffected and shall continue in accordance with the terms of this Lease.

(iii) Deletion of REIT Provisions. At the election of Landlord or any Separate Lease Landlord, any one or more of the provisions of the Separate Lease pertaining to the REIT status of any member of Landlord (or any Affiliate of any member of Landlord) shall be deleted.

(iv) Amendment to this Lease. Upon execution of a Separate Lease, and effective as of the effective date of such Separate Lease, this Lease shall be deemed to be amended as follows: (i) the Removal Facility shall be excluded from the Leased Property hereunder and (ii) Base Rent hereunder shall be reduced by the Base Rent amount in respect of such Removal Facility at the time of the Removal Date. Such amendment shall occur automatically and without the necessity of any further action by Landlord or Tenant, but, at Landlord’s or Tenant’s election, the same shall be reflected in a formal amendment to this Lease, which amendment shall be promptly executed by Landlord and Tenant.

(v) Other Undertakings. Landlord and Tenant shall each take such actions and execute and deliver such documents, including, without limitation, a Separate Lease and a new or amended memorandum of lease and, if requested by the other, an amendment to this Lease, as are reasonably necessary and appropriate to effectuate fully the provisions and intent of this Section 1.5, and as otherwise are appropriate or as Landlord, Tenant or any title insurer may reasonably request to evidence such removal and new leasing of the Removal Facility, including a memorandum of lease with respect to such Separate Lease and an amendment of the existing memorandum of lease with respect to this Lease and an amendment of this Lease.

 

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(c) Cross Default. If this Lease is severed in accordance with this Lease, no default under a Separate Lease shall be a default under this Lease and no default or Event of Default under this Lease shall be a default under a Separate Lease; provided however, if this Lease is severed in accordance with one or more Fee Mortgages pursuant to Section 1.5(a)(ii), for as long as the Landlord and the Separate Lease Landlord are Affiliates of each other, a default under such Separate Lease shall be a default under this Lease and an Event of Default under this Lease shall be a default under such Separate Lease. In all cases, so long as any Facility Mortgage shall apply to the Removal Facility or Separate Lease, the Removal Facility and/or Separate Lease shall continue to be subject either to any existing subordination, nondisturbance and attornment agreement with respect to this Lease, or subject to a new subordination, nondisturbance and attornment agreement to be delivered by Facility Mortgagee, any Separate Lease Landlord and the applicable Tenant on substantially the same terms and conditions as the existing subordination, nondisturbance and attornment agreement (having regard for the terms and conditions of the Separate Lease).

(d) Guaranty. Upon execution of a Separate Lease, Guarantor shall execute and deliver to Separate Lease Landlord a new guaranty of Tenant’s obligations with respect to the Removal Facility, which guaranty shall be in the form of guaranty attached as Exhibit E hereto (the “Separate Lease Guaranty”). Upon execution and delivery of the Separate Lease Guaranty, the Guaranty delivered to Landlord in connection with the execution of this Lease shall be of no further force or effect with respect to any future obligations of Guarantor related to the Removal Facility; provided that the Guaranty shall remain in full force and effect with respect to any existing or pending obligations of Guarantor related to the Removal Facility arising or accruing prior to the execution and delivery of the Separate Lease.

(e) Costs and Expenses. All costs and expenses relating to a Separate Lease (including reasonable attorneys’ fees and other reasonable, documented out-of-pocket costs incurred by Tenant or Guarantor for outside counsel, if any) shall be borne by Landlord and not Tenant.

(f) Cooperation. Landlord and Tenant shall cooperate with Gaming Authorities in all reasonable respects to facilitate all necessary regulatory reviews, approvals and/or authorization of the Separate Lease in accordance with applicable Gaming Regulations.

(g) Calculation of Required CapEx. If this Lease is severed in accordance with one or more Fee Mortgages pursuant to Section 1.5(a)(ii), for as long as the Landlord and the Separate Lease Landlord are Affiliates of each other, the calculation of Required CapEx shall be computed on an aggregate basis for both of the Facilities combined.

 

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ARTICLE II

DEFINITIONS

2.1 Definitions. For all purposes of this Lease, except as otherwise expressly provided or unless the context otherwise requires, (i) the terms defined in this Article II have the meanings assigned to them in this Article and include the plural as well as the singular; all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (ii) all references in this Lease to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Lease; (iii) the word “including” shall have the same meaning as the phrase “including, without limitation,” and other similar phrases; (iv) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Lease as a whole and not to any particular Article, Section or other subdivision; (v) for the calculation of any financial ratios or tests referenced in this Lease (including the EBITDAR to Rent Ratio), this Lease, regardless of its treatment under GAAP, shall be deemed to be an operating lease and the Rent and Additional Charges payable hereunder shall be treated as Operating Expenses; (vi) all uses of the term “EBITDA” herein shall have the meaning of the definition of “EBITDA” in this Lease; (vii) all references herein to items to be prepared or determined “in accordance with GAAP” are intended to mean “in accordance with GAAP and the Existing Accounting Guidelines”; and (viii) all Exhibits, Schedules and other attachments annexed to the body of this Lease are hereby deemed to be incorporated into and made an integral part of this Lease.

Accounts”: All accounts, including deposit accounts, all rents, profits, income, revenues or rights to payment or reimbursement derived from the use of any space within the Leased Property and/or from goods sold or leased or services rendered from the Leased Property (including, without limitation, from goods sold or leased or services rendered from the Leased Property by any subtenant) and all accounts receivable, in each case whether or not evidenced by a contract, document, instrument or chattel paper and whether or not earned by performance, including without limitation, the right to payment of management fees and all proceeds of the foregoing.

Additional Charges”: All Impositions and all other amounts, liabilities and obligations which Tenant assumes or agrees to pay under this Lease and, in the event of any failure on the part of Tenant to pay any of those items (except (i) where such failure is due to the wrongful or negligent acts or omissions of Landlord and (ii) where Tenant shall have furnished Landlord with no less than ten (10) days’ notice of such act or omission of which Tenant is aware), every fine, penalty, interest and cost which may be added for non-payment or late payment of such items pursuant to the terms hereof, applicable law or otherwise.

Affiliate”: When used with respect to any corporation, limited liability company, partnership or any other Person, the term “Affiliate” shall mean any Person which, directly or indirectly, controls or is controlled by or is under common control with such other Person. For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, partnership interests or other Equity Interests.

 

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Affiliate Agreements”: Any contract between Affiliates of Tenant’s Parent with respect to any Facility.

Ancillary Space”: Those portions of a Facility that are not Primary Space.

ANI”: As defined in Section 13.1(j).

Annual Certificate”: A certificate of Tenant, signed by an authorized officer of Tenant, certifying to Tenant’s knowledge in all material respects as to the matters described in Sections 8.5 and 22.3(d) to be included in such certificate.

Applicable Coverage Ratio”: As defined in Section 23.3.

Applicable CPI Adjustment Factor”: For any Lease Year beginning with the sixteenth Lease Year, the quotient of (A) the CPI as of the date which is thirty (30) days prior to the commencement of such Lease Year divided by (B) the CPI as of the date which is one year prior to the date described in the preceding clause (A).

Appraiser”: As defined in Section 3.5.

Approved Accounting Firm”: (1) Any “big four” accounting firm designated by Tenant or (2) one of the other largest independent public accounting firms in the United States selected by Tenant’s Parent or Tenant and reasonably approved by Landlord.

Architect”: As defined in Section 10.1(b)(iii).

Award”: All compensation, sums or anything of value awarded, paid or received with respect to a total or partial Condemnation.

Bank Secrecy Act”: As defined in Section 8.2(c).

Base Rent”: An annual amount equal to Two Hundred Ninety-Two Million Dollars ($292,000,000) allocated between the Grand Leased Property and the MB Leased Property as follows: $159,000,000 shall be allocated to the Grand Leased Property (the “Initial Grand Base Rent”) and $133,000,000 shall be allocated to the MB Leased Property (the “Initial MB Base Rent”); provided, however, that commencing on the first day of the calendar month immediately following the first anniversary of the Commencement Date and continuing at the beginning of each Lease Year thereafter during the Term, the Base Rent shall increase to an annual amount equal to the sum of (i) the Base Rent for the immediately preceding Lease Year, and (ii) the Escalation. The Base Rent shall continue to be allocated to each Facility, as illustrated on Schedule 12 hereto.

 

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At the commencement of each Renewal Term, Base Rent of each Facility shall be reset to be equal to the greater of (i) the amount determined pursuant to the immediately preceding paragraph, and (ii) the Fair Market Rent of each Facility as determined pursuant to Section 3.5 hereof. The Base Rent determined in accordance with the preceding sentence shall be payable throughout the remainder of the Renewal Term except that the Base Rent shall increase on the first day of each Lease Year to an amount equal to the sum of (x) the Base Rent for the immediately preceding Lease Year, and (y) the Escalation.

Blackstone REIT”: BREIT and any Subsidiary of BREIT that is a “real estate investment trust” (within the meaning of Section 856(a) of the Code) through which BREIT holds an interest in Landlord.

Bookings”: Reservations, bookings, exhibitions or other short-term arrangements with conventions, conferences, hotel guests, tours, vendors and other groups or individuals (it being understood that whether or not such arrangements or agreements are short-term or temporary shall be determined without regard to how long in advance such arrangements or agreements are entered into).

BREIT”: Blackstone Real Estate Income Trust Inc., a Delaware corporation.

BREIT OP”: BREIT Operating Partnership L.P., a Delaware limited partnership.

Business Day”: Each Monday, Tuesday, Wednesday, Thursday and Friday which, in each case, is not a day on which national banks in the City of New York, New York are authorized, or obligated, by law or executive order, to close.

CapEx Certification Date”: As defined in Section 9.1(e)(i).

CapEx Disbursement Request”: As defined in Section 9.1(e)(v).

CapEx Grace Period”: As defined in Section 9.1(e)(iii).

CapEx Reserve”: As defined in Section 9.1(e)(iv).

CapEx Reserve Funds”: As defined in Section 9.1(e)(iv).

CapEx Testing Period”: Each five (5) year period (on a rolling basis) through the Term, with the first period commencing on January 1, 2020 and expiring on December 31, 2024 and the second period commencing on January 1, 2021 and expiring on December 31, 2025.

CapEx Testing Period Certificate”: As defined in Section 9.1(e)(i).

CapEx Testing Period Net Revenues”: As defined in Section 9.1(e)(i).

Capital Improvement Notice”: As defined in Section 10.5(a).

Capital Improvements”: With respect to any Facility, any improvements or alterations or modifications of the Leased Improvements, including without limitation capital improvements and structural alterations, modifications or improvements, or one or more additional structures annexed to any portion of any of the Leased Improvements of such Facility

 

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or the expansion of existing improvements, which are constructed on any parcel or portion of the Land of such Facility, during the Term, including construction of a new wing or new story, in each case which are permanently affixed to the Leased Property such that they constitute real property under applicable Legal Requirements.

Capital Improvements Threshold”: As defined in Section 10.1(b)(vi).

Cash”: Cash and cash equivalents and all instruments evidencing the same or any right thereto and all proceeds thereof.

Casualty Event”: Any loss of title or any loss of or damage to or destruction of, or any Condemnation or other taking (including by any governmental authority) of, any portion of the Leased Property. “Casualty Event” shall include, but not be limited to, any taking of all or any portion of the Leased Property, in or by Condemnation or other eminent domain proceedings pursuant to any applicable law, or by reason of the temporary requisition of the use or occupancy of all or any part of any real property of or any part thereof by any governmental authority, civil or military.

Code”: The Internal Revenue Code of 1986 as amended from time to time.

Commencement Date”: As defined in Section 1.3.

Competitor Restriction Open Date”: As defined in Section 18.1.

Competitor Restriction Termination Date”: The earlier to occur of (x) the Competitor Restriction Open Date and (y) an Event of Default.

Condemnation”: A taking by the exercise of any governmental power, whether by legal proceedings or otherwise, by a Condemnor or a voluntary sale or transfer by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending.

Condemnor”: Any public or quasi-public authority, or private corporation or individual, having the power of Condemnation.

Confidential Information”: Any and all financial, technical, proprietary, confidential, and other information, including data, reports, interpretations, forecasts, analyses, compilations, studies, summaries, extracts, records, know-how, statements (written or oral) or other documents of any kind, that contain information concerning the business and affairs of Landlord or Tenant or their respective Related Persons, whether furnished before or after the date of this Lease, and regardless of the manner in which it was furnished, and any material prepared by either Landlord or Tenant or their respective Related Persons, in whatever form maintained, containing, reflecting or based upon, in whole or in part, any such information; provided, however, that “Confidential Information” shall not include information which: (i) was or becomes generally available to the public other than as a result of a disclosure by either Landlord or Tenant or their respective Related Persons in breach of this Lease; (ii) was or becomes available to either Landlord or Tenant or their respective Related Persons on a non-confidential basis prior to its disclosure hereunder as evidenced by the written records of

 

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Landlord or Tenant or their Related Persons, provided, that the source of the information is not bound by a confidentiality agreement with respect to such information or otherwise prohibited from transmitting such information by a contractual, legal or fiduciary duty; or (iii) was independently developed by the other without the use of any Confidential Information, as evidenced by its written records.

Construction Security”: (A) cash, (B) cash equivalents, (C) a Letter of Credit or (D) an alternative security reasonably acceptable to Landlord (or a combination thereof), in an amount equal to (x) in the case of Capital Improvements, the cost by which the budgeted cost of such Capital Improvements exceeds the Capital Improvements Threshold, and (y) in the case of a Restoration Deficiency, the amount of such deficiency.

Construction Security Escrow Account”: As defined in Section 10.1(c).

Control”: The ability, directly or indirectly, whether through the ownership of voting securities or other Equity Interests, by contract, or otherwise (including by being the managing member or general partner of the Person in question), to direct or cause the direction of the management and policies of a Person.

Covenant Failure Period”: The period beginning upon the failure of the Financial Covenant or the Listing Covenant and ending upon a Covenant Security Coverage Cure with respect to such failure.

Covenant Security Coverage Cure”: (1) Following the failure of the Financial Covenant, (A) (i) as of the last day of the most recent Test Period and the last day of the Test Period immediately preceding the most recent Test Period, the EBITDAR to Rent Ratio shall have been equal to or greater than the Applicable Coverage Ratio or (ii) Tenant’s Parent’s Market Capitalization, on the last day of the most recent Test Period and the last day of the Test Period immediately preceding the most recent Test Period, shall exceed $6,000,000,000; and (B) Tenant’s satisfaction of the Listing Covenant; or (2) following the failure of the Listing Covenant, as of the last day of the most recent Test Period and the last day of the Test Period immediately preceding the most recent Test Period, the EBITDAR to Rent Ratio shall have been greater than 2:1.

Covenant Security Escrow Account”: An escrow account established by Tenant with a reputable, nationally recognized title insurance company selected by Tenant and approved by Landlord (such approval not to be unreasonably withheld, conditioned or delayed) with an office located in Las Vegas, Nevada. Fidelity Title Insurance Company is hereby preapproved by Landlord and Tenant.

Covenant Security Escrow Instructions”: Whenever Tenant has deposited sums as required hereunder into a Covenant Security Escrow Account, irrevocable escrow instructions (reasonably satisfactory to Tenant and Landlord) to the title company holding the Covenant Security Escrow Account to hold such funds in escrow, and to release them directly to Landlord promptly upon written demand by Landlord certifying that an Event of Default exists hereunder, without any further instructions, action or approval from Tenant, or to release them to Tenant upon the joint written instructions of Tenant and Landlord (which, upon Tenant’s request, Landlord shall execute and deliver when a Covenant Security Coverage Cure shall have occurred or following the expiration of this Lease).

 

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CPI”: The United States Department of Labor, Bureau of Labor Statistics Revised Consumer Price Index for All Urban Consumers (1982-84=100), U.S. City Average, All Items, or, if that index is not available at the time in question, the index designated by such Department as the successor to such index, and if there is no index so designated, an index for an area in the United States that most closely corresponds to the entire United States, published by such Department, or if none, by any other instrumentality of the United States, all as reasonably determined by Landlord and Tenant.

Customary Hotel Art”: All art, artwork, paintings, sculptures or other artistic installments or displays which are (x) generally affixed to the walls of guest rooms, hallways, convention rooms, casino areas and ancillary spaces which are consistent with the Operating Standard or (y) otherwise located at any Facility, and, in each case, not costing in excess of $10,000 for any individual item.

Data”: As defined in the definition of Intellectual Property.

Date of Taking”: The date the Condemnor has the right to possession of the property being condemned.

Debt Agreement”: If designated by Tenant to Landlord in writing to be included in the definition of “Debt Agreement,” one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other indebtedness, in each case, with the same or different borrowers or issuers and, in each case, (i) entered into from time to time by Tenant and/or its Subsidiaries, (ii) as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time, (iii) which are secured by assets of Tenant and/or its Subsidiaries, including, but not limited to, their Cash, Accounts, Tenant’s Property, real property and leasehold estates in real property (including this Lease) and (iv) which shall provide Landlord, (x), the right to receive copies of notices of Specified Debt Agreement Defaults thereunder in accordance with Section 17.3 hereof and (y) the right to cure such defaults in accordance with Section 17.2 hereof.

Debt Facilities”: One or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments or bank guarantees or bankers’ acceptances), or (C) instruments or agreements evidencing any other indebtedness, in each case, with the same or different borrowers or issuers.

 

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Delano Agreement”: License Agreement dated August 8, 2012 by and between Morgans Hotel Group Management LLC and Mandalay Corp. d/b/a Mandalay Bay Resort and Casino, as modified or amended as of the date hereof or from time to time in accordance with this Agreement.

Designated Tenant’s Property”: As defined in Section 36.1.

Disclosure Documents”: Collectively, any written materials used or provided to any prospective investors and/or the rating agencies in connection with any public offering or private placement in connection with a securitization (including, without limitation, a prospectus, prospectus supplement, private placement memorandum, offering memorandum, offering circular, term sheet, road show presentation materials or other offering documents, marketing materials or information provided to prospective investors), in each case in preliminary or final form and including any amendments, supplements, exhibits, annexes and other attachments thereto.

Dispute Notice”: As defined in Section 16.1(b).

Dollars” and “$”: The lawful money of the United States.

EBITDA”: For any Test Period and with respect to any Person or Facility (as applicable), the sum of (a) Net Income of such Person or Facility for that period, plus or minus the following (without duplication in each case) to the extent reflected in Net Income for that period, plus (b) any extraordinary loss, and, without duplication, any loss associated with the early retirement of Indebtedness and with any disposition not in the ordinary course of business, minus (c) any extraordinary gain, and, without duplication, any gains associated with the early retirement of Indebtedness and with any disposition not in the ordinary course of business, plus (d) interest charges of such Person or Facility for that period, less (e) interest income of such Person or Facility for that period, plus (f) the aggregate amount of expense for federal, foreign, state and local taxes on or measured by income of such Person or Facility for that period excluding Gaming taxes (whether or not payable during that period), minus (g) the aggregate amount of benefit for federal, foreign, state and local taxes on or measured by income of such Person or Facility for that period excluding Gaming taxes (whether or not receivable during that period), plus (h) depreciation, amortization, plus (i) all non-recurring and/or other non-cash expenses which shall be limited to third party expenses in connection with an acquisition or disposition of an asset, plus (j) loss on sale or disposal of an asset, and write downs and impairments of an asset, minus (k) all non-recurring and/or other non-cash income in connection with an acquisition or disposition, and gain on sale of an asset, plus (l) expenses classified as “pre-opening and start-up expenses” on the applicable financial statements of that Person or Facility for that fiscal period which shall be limited to costs related directly to such Facility’s Primary Intended Use, minus (m) non-cash reversal of an accrual or reserve not recorded in the ordinary course, plus or minus (n) the impact of any foreign currency gains or losses and related swaps, plus (o) all long-term non-cash expenses realized in connection with or resulting from equity or equity-linked compensation plans, employee benefit plans or agreements or post-employment benefit plans or agreements, stock appreciation or similar rights, stock options, restricted stock, preferred stock, stock appreciation or other similar rights, plus or minus (p) any equity income from the earnings of an equity method investee and plus (q) any equity loss from the earnings of an equity method investee, in each case as determined in accordance with GAAP, consistently applied using the Existing Accounting Guidelines.

 

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EBITDAR”: For any Test Period, with respect to any Person or Facility, EBITDA plus, without duplication, any rent associated with this Lease (as may be amended from time to time) reflected in Net Income, and, without duplication, in each case as determined in accordance with GAAP, consistently applied using the Existing Accounting Guidelines.

EBITDAR to Rent Ratio”: For any date, the ratio of (i) EBITDAR derived from the Facilities by Tenant or its Affiliates (without duplication) for the Test Period most recently ended prior to such date to (ii) Rent for the Test Period most recently ended prior to such date. For purposes of the calculation of Rent in clause (ii) above for the first year following the Commencement Date, Rent shall be $292,000,000.

EIL”: As defined in Section 13.1(j).

Eligible Account”: A separate and identifiable account from all other funds held by the holding institution that is either (a) an account or accounts maintained with a federal or state-chartered depository institution or trust company which complies with the definition of Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or state chartered depository institution or trust company acting in its fiduciary capacity that has a Moody’s rating of at least “Baa2” and which, in the case of a state chartered depository institution or trust company, is subject to regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus of at least Fifty Million and No/100 Dollars ($50,000,000.00) and subject to supervision or examination by federal and state authority. An Eligible Account will not be evidenced by a certificate of deposit, passbook or other instrument.

Eligible Institution”: Either (a) a depository institution or trust company insured by the Federal Deposit Insurance Corporation, the short-term unsecured debt obligations or commercial paper of which are rated at least “A-1+” by S&P and “P-1” by Moody’s in the case of accounts in which funds are held for thirty (30) days or less (or, in the case of letters of credit and accounts in which funds are held for more than thirty (30) days, the long-term unsecured debt obligations of which are rated at least “A+” by S&P and “Aa3” by Moody’s), or (b) Wells Fargo Bank, National Association, JPMorgan Chase Bank, N.A. or Bank of America, N.A. or any of their affiliates or successors provided that the rating by S&P and Moody’s for the short term unsecured debt obligations or commercial paper and long term unsecured debt obligations of the same does not decrease below the ratings set forth in clause (a) hereof.

Encumbrance”: Any mortgage, deed of trust, lien, encumbrance or other matter affecting title to the Leased Property, or any portion thereof or interest therein.

End of Term Asset Transfer Notice”: As defined in Section 36.1.

Environmental Costs”: As defined in Section 32.4.

 

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Environmenta