DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT is made as of the third day of December, 1997,
between ALADDIN GAMING, LLC, a Nevada limited-liability company ("Aladdin"), and
NORTHWIND ALADDIN, LLC, a Nevada limited-liability company ("Northwind")
(together, the "Parties").
W I T N E S S E T H:
WHEREAS, Aladdin is constructing a casino, hotel, theater, and retail
shopping complex in Las Vegas, Nevada (the "Aladdin Project") and requested bids
to construct, own and operate an energy facility in Las Vegas, Nevada, to supply
hot water, chilled water and electricity to the Aladdin Project; and
WHEREAS, Northwind has been selected by Aladdin to develop and construct
such energy production facility (the "Plant") to serve the energy requirements
of the Aladdin Project and the Parties concurrently are entering into an Energy
Service Agreement pursuant to which Northwind will provide hot water, chilled
water and electricity to the Aladdin Project;
WHEREAS, Aladdin shall be leasing space to Northwind within the Aladdin
Lands (as defined below) in which the Plant shall be installed and operated; and
WHEREAS, Aladdin and Northwind desire to set forth in this Agreement the
terms and conditions of their agreement regarding the construction of the Plant.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. As used herein, the following terms shall have the
meanings specified herein and shall apply equally to single and plural forms:
"Agreement" shall mean this agreement and all Exhibits attached hereto, as
the same may from time to time be amended, restated, modified, or supplemented
and in effect.
"Aladdin Lands" shall mean the lands owned by Aladdin in Clark County,
Nevada upon which the Aladdin Project shall be constructed and which lands shall
be more particularly described on Exhibit A, which exhibit shall be attached
hereto by Aladdin no later than ten (10) days after a Notice to Proceed is
received by Northwind.
"Buildings" shall mean the entire casino, hotel, theater, and shopping
buildings to be developed by Aladdin, the Mall Owner and the Sound Asylum Owner
on the Aladdin Lands, including, without limitation, all retail and commercial
sections, parking facilities and common areas and facilities whether located at,
above or below grade.
"Business Day" shall mean a weekday which is not a statutory legal holiday
in Clark County, Nevada.
"Codes and Standards" shall mean those codes and standards relating to
design, engineering, construction, workmanship, equipment, and components set
forth in or called for by the Plant Scope or, if ambiguous or not so specified
therein, those codes and standards considered, in accordance with generally
accepted construction management practices, to be applicable to the Work and
such design, construction, workmanship, equipment, and components.
"Commencement Date" shall have the meaning ascribed thereto in the Energy
Service Agreement.
"Construction Financing Cost" shall mean all reasonable costs and expenses
to Northwind, including, without limitation, interest, any arrangement fees and
closing fees and all reasonable costs and expenses of counsel for Northwind and
of counsel for the lenders providing such financing, of negotiating, documenting
and closing of financing the construction of the Plant; provided, however, that
to the extent that funds for the construction of the Plant are provided by
Northwind and not borrowed from third parties, for purposes of determining
Construction Financing Cost hereunder it shall be assumed that (a) the portion
of such funds which are provided by Northwind not in excess of forty (40)
percent of the aggregate of all funds borrowed or provided by Northwind to fund
construction of the Plant bear interest at twenty (20) percent per annum, (b)
the portion of such funds which are provided by Northwind in excess of forty
(40) percent of the aggregate of all funds borrowed or provided by Northwind to
fund construction of the Plant bear interest at a rate equal to prime rate as
published in the "Money Rates" section of the WALL STREET JOURNAL from time to
time and (c) a closing fee in respect of the portion of such funds provided by
Northwind referred to in clause (b) preceding equal to one and one-quarter
(1.25) percent was payable.
"Critical Path Activity" shall mean an activity characterized as a
"critical path activity" in the Plant Schedule.
"Defects or Deficiencies" shall mean any designs, engineering, materials,
equipment, supplies, or installations which (i) do not conform to the Plant
Scope, Good Engineering Practices, or Plant Plans and Specifications, or are of
inferior workmanship as determined by
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applicable Codes and Standards or (ii) would materially and adversely affect the
ability of Northwind to achieve the Final Completion Deadline.
"Development Costs" shall have the meaning ascribed thereto in the Energy
Service Agreement.
"Energy Service Agreement" shall have the meaning ascribed thereto in
Section 3(a) below.
"EPC Contract" shall mean the contract described in Section 5(c) hereof, as
the same may be amended, restated, modified, or supplemented, and in effect from
time to time.
"EPC Contractor" shall have the meaning ascribed thereto in Section 5(c)
hereof.
"Final Completion" shall mean completion of the Plant in accordance with
and to the extent set forth in the Plant Scope.
"Final Completion Certificate" shall have the meaning ascribed thereto in
Section 8(b) below.
"Final Completion Deadline" shall mean the date which is one month after
the date of Substantial Completion, as such date may be extended from time to
time pursuant to the express provisions hereof.
"Financial Closing" shall mean the closing of each of (a) the issuance and
sale of ____ Units consisting of (i) ___% Senior Discount Notes due 2009 of
Aladdin Gaming Holdings, LLC, and Aladdin Capital Corp. and (ii) ____ Initial
Warrants and ____ Contingent Warrants to purchase shares of common stock of
Aladdin Enterprise, Inc., yielding gross proceeds of approximately $110,000,000
and (b) closing of the senior secured construction/term loan facilities
consisting of three construction/term loans (i) a $165,000,000 term A loan that
will have a stated maturity of seven (7) years, (ii) a $100,000,000 term B loan
that will have a stated maturity of eight and one half (8.5) years, and (iii) a
$145,000,000 term C loan that will have a stated maturity of ten (10) years.
"Financing Costs" shall mean all reasonable costs of arranging for,
negotiating, documenting and closing of permanent financing for the Northwind
Facilities, including any arrangement fees and closing fees and all reasonable
costs and expenses of counsel for Northwind and of counsel for the lenders
providing such financing, and shall not include Construction Financing Costs.
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"Force Majeure Event" shall have the meaning ascribed thereto in the Energy
Service Agreement.
"GMP" shall mean the guaranteed maximum price of the Plant determined by
Northwind based on the price set forth in the EPC Contract(s) [AND ALL OTHER
CONTRACTS], plus a contingency reflective of potential unknowns at the time that
the EPC bids are received, such contingency to be determined in accordance with
Section 9(b)(i) hereof.
"GMPP" shall mean the guaranteed maximum plant price, which shall consist
of the GMP, Development Costs, Construction Financing Costs, Other Costs, and
Financing Costs, and shall be determined in accordance with Exhibit B, including
the caps for specific elements of the GMPP set forth therein.
"Good Engineering Practices" shall mean those practices, methods,
equipment, specifications, and standards of safety and performance utilizing
good, safe and prudent engineering practices in connection with the design,
construction, operation, maintenance, repair, and use in similar plants.
"Government Approval" shall mean any authorization, consent, approval,
license, ruling, permit, tariff, rate, certification, exemption, filing
variance, order, judgment, decree, publication, notices to, declarations of or
with or registration by or with any Government Authority relating to the
ownership, construction, operation, or maintenance of the Plant or to the
execution, delivery or performance of this Agreement.
"Government Authority" shall mean any Federal, national, state, municipal,
local, territorial, or other governmental department, commission, board, bureau,
agency, regulatory authority, instrumentality, judicial or administrative body,
domestic or foreign.
"Independent Engineer" shall mean an engineering firm mutually agreed to by
the Parties within ninety (90) days after Northwind receives a Notice to
Proceed.
"Law" shall mean, as of any relevant date, (a) any statute, law, rule,
regulation, code, ordinance, judgment, decree, writ, order, concession, grant,
franchise, license, agreement, directive, guideline, policy, requirement or
other governmental restriction or any similar form of decision of or
determination by, or any interpretation or administration of any of the
foregoing by, any Government Authority, whether now or hereafter in effect or
(b) any requirements or conditions on or with respect to the issuance,
maintenance, or renewal of any Government Approval or applications therefore
then in effect.
"Mall" shall mean the parking and retail shopping mall to be built on a
portion of the Aladdin Lands and owned and operated by the Mall Owner.
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"Mall Owner" shall mean Aladdin Bazaar, LLC, a Delaware limited-liability
company.
"Minor Modification" shall mean a minor modification or adjustment to the
Work that (i) does not involve any increase to the Plant Price, (ii) is not
reasonably likely to affect the ability of Northwind to achieve the Substantial
Completion Deadline and/or the Final Completion Deadline, and (iii) results in
the quality of the Work being provided under this Agreement being of the same or
better quality than as described in the Plant Scope and does not constitute a
material change.
"Northwind Lease" shall have the meaning ascribed thereto in Section 3(c)
below.
"Notice to Proceed" shall mean a written notice from Aladdin to Northwind
stating that Northwind shall commence the physical construction of the Plant,
and shall not be issued by Aladdin until Aladdin has achieved Financial Closing,
and in any event not earlier than January 1, 1998.
"Other Costs" shall mean all costs and expenses, incurred after the date of
execution of this Agreement, other than Construction Financing Costs,
Development Costs, Financing Costs, and amounts payable to the EPC Contractor,
incurred by Northwind in construction and completion of the Plant, including,
without limitation, costs of insurance, construction administration costs and
any applicable Tax.
"Performance Tests" shall mean the tests to demonstrate that the Plant can
produce Services in accordance with the Plant Plans and Specifications, as such
tests are agreed upon by Aladdin and Northwind in connection with the
establishment of the Plant Plans and Specifications.
"Plant" shall mean the energy production facility to be constructed, owned
and operated by Northwind primarily located within that portion of the Aladdin
Lands to be leased from Aladdin.
"Plant Plans and Specifications" shall have the meaning ascribed thereto in
Section 5(c) below.
"Plant Price" shall mean an amount as determined in accordance with Exhibit
B hereof, and shall be comprised of: (i) the cost paid by Northwind pursuant to
the EPC Contract; (ii) the Construction Financing Cost; (iii) Other Costs; and
(iv) Development Costs, provided that the total of such Development Costs
attributable to internal Northwind costs (such internal Northwind costs to
include the internal costs of Northwind affiliates), including the
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cost of the Project Manager, does not exceed $375,000 without the prior written
approval of Aladdin.
"Plant Schedule" shall mean the schedule for completion of the Work to be
provided by Northwind to Aladdin as part of the Project Plan.
"Plant Scope" shall mean the description of the Plant set forth in Exhibit
A to the Energy Service Agreement, which description shall be agreed to by
Aladdin and Northwind prior to Northwind's receipt of a Notice to Proceed.
"Progress Report" shall mean the monthly report submitted by Northwind to
Aladdin pursuant to Section 6 hereof.
"Project Manager" shall mean that person or persons appointed and
designated from time to time by Northwind for the purpose of providing
management and daily supervision of all activities relating to the design,
construction and operation of the Plant, as described further in Section 4(a)
below.
"Project Plan" shall have the meaning ascribed thereto in Section 4(b)
below.
"Reciprocal Easement Agreement" shall have the meaning ascribed thereto in
Section 3(b) below.
"Related Agreements" shall mean, collectively, the Energy Service
Agreement, the Reciprocal Easement Agreement and Northwind Lease, as, from time
to time, each may be amended, restated, modified or supplemented and in effect.
"Scope Change" shall mean any material addition to, deletion from,
suspension of or other modification to the quality, quantity, function or intent
of the Work, including, without limitation, any such addition, deletion,
suspension, or other modification which requires an increase in the Plant Price,
a delay of the Substantial Completion Deadline or the Final Completion Deadline,
and/or a change in the Project Plan or the Plant Plans and Specifications. A
Minor Modification shall not constitute a Scope Change.
"Scope Change Order" shall mean a written order to Northwind issued and
signed by Aladdin authorizing a Scope Change, and an equitable adjustment in one
or more of the Plant Price, the Substantial Completion Deadline, the Final
Completion Deadline, the Project Plan, the Plant Plans and Specifications or any
other amendment to the terms and conditions of this Agreement.
"Services" shall have the meaning ascribed thereto in the Energy Service
Agreement.
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"Sound Asylum Owner" shall mean Aladdin Music, LLC, a Nevada limited-
liability company.
"Sound Asylum Project" shall mean the hotel, casino and entertainment
complex to be built on a portion of the Aladdin Lands and owned by the Sound
Asylum Owner.
"Start-up" shall mean the preparation and execution of all activities
required to place the Plant in operation, including without limitation,
precommissioning, commissioning and performance of functional testing.
"Substantial Completion" shall mean substantial completion of the Plant in
accordance with Section 8(a) hereof.
"Substantial Completion Certificate" shall have the meaning ascribed
thereto in Section 8(a) below.
"Substantial Completion Deadline" shall mean the date which is eighteen
(18) months after the date upon which Northwind receives the Notice to Proceed,
provided that Aladdin is willing and able to include all of Northwind's
structural steel in Aladdin's mill order for structural steel and the steel
fabricator will and does deliver Northwind's steel approximately one month after
shop drawings therefor are provided to the steel fabricator; otherwise,
"Substantial Completion Deadline" shall be determined based upon the committed
delivery schedule for Northwind's structural steel agreed upon with the supplier
thereof, but in any event, shall be not later than twenty (20) months after the
date upon which Northwind receives the Notice to Proceed, as such date may be
extended from time to time pursuant to the express provisions hereof.
"Tax" shall have the meaning ascribed thereto in the Energy Service
Agreement.
"Unicom Guaranty" shall mean the guaranty appended hereto as Exhibit C,
duly executed and delivered by Unicom Corporation.
"Work" shall mean, except as otherwise stated herein, all acts or action
required for the design, procurement, engineering, and construction of the Plant
to Final Completion and for the performance of Northwind's obligations as
further described herein, including, but not limited to, (i) designing the
Plant, (ii) constructing the Plant in conformance with applicable Laws and
Government Approvals, (iii) procuring and handling materials, (iv) Start-up and
testing of the Plant, and (v) all other acts as may be necessary to achieve
Final Completion.
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2. GENERAL TERMS.
(a) TERM. This Agreement shall be effective and binding on the
Parties as of the date hereof and shall remain in effect until the Parties
have completed their obligations in accordance with the terms hereof,
unless earlier terminated in accordance with the terms of this Agreement.
(b) PLANT LOCATION AND PURPOSE. The Plant shall be located on
Aladdin Lands and shall be constructed, owned and operated by Northwind (or
its agents, contractors or employees) in accordance with the terms of this
Agreement in order to provide Services to the Buildings.
(c) PURCHASE OF SERVICES. Services shall be sold by Northwind
pursuant to the terms and conditions of the Energy Service Agreement and/or
as otherwise permitted thereby and by the Lease.
(d) DESIGN AND CONSTRUCTION OF THE PLANT. Except as expressly
provided to the contrary in this Agreement (i) the design and construction
of the Plant will be at the sole cost and expense of Northwind and (ii)
Northwind agrees to perform all Work in accordance with the Agreement as
shall be necessary to assure Substantial Completion on or before the
Substantial Completion Deadline and Final Completion on or before the Final
Completion Deadline.
(e) ALADDIN NOT RESPONSIBLE FOR ACTS OF NORTHWIND. Aladdin will not
be responsible for and will not have control over or charge of construction
means, methods, techniques, sequences, or procedures, or for safety
precautions and programs in connection with the Work, and Aladdin will not
be responsible for Northwind's failure to carry out the Work in accordance
with this Agreement. Aladdin will not be responsible for or have control
or charge over the acts or omissions of Northwind (or its agents,
contractors or employees). No inspection, or failure to inspect, by
Aladdin shall be a waiver of Northwind's obligations, or be construed as
approval or acceptance of the Work or any part thereof.
(f) CLAIMS UPON FAILURE OF WORK. Aladdin assumes no responsibility
for injury or claims resulting from (i) failure of such Work to comply with
applicable Laws or Government Approvals or (ii) Defects or Deficiencies.
Northwind's performance of the Work shall include the provision of all
necessary permanent safety devices for the Plant required by applicable
Government Authorities and applicable Laws or Government Approvals. Work
performed hereunder will comply in every respect with all the requirements
referred to above and the terms of the Agreement.
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(g) ALADDIN'S ACCESS TO WORK. Aladdin shall at all times, consistent
with Northwind's safety requirements, have access to the Work wherever it
is in preparation and progress and Northwind shall provide for such access;
provided, however, that Aladdin shall not interfere with or delay
performance of the Work on account of such access.
(h) RESPONSIBILITIES OF NORTHWIND. Subject to the terms of this
Agreement, Northwind shall:
(i) Prosecute the Work diligently in accordance with the Plant
Schedule, using only qualified and competent personnel, and complete
the Work in a manner that meets Good Engineering Practices and is in
accordance with the provisions of this Agreement;
(ii) Perform or cause to be performed the Work, including
designing, engineering, procuring, constructing, Start-up, and
performance testing of the Plant in accordance with Good Engineering
Practices and standards of professional care, skill, diligence and
competence applicable to engineering, construction and project
management practices for similar facilities, and all Government
Approvals so that (a) the Work is performed in accordance with and the
Plant meets all requirements of applicable Laws and Government
Approvals and Good Engineering Practices, (b) the Plant is safe and in
accordance with the Plant Plans and Specifications, (c) consistent
with a Plant Price estimate of $30 million which has been
preliminarily identified by Northwind and Aladdin, Northwind designs
the Plant to minimize, consistent with Good Engineering Practices, the
amount of operation and maintenance expense, (d) the Plant is free
from Defects and Deficiencies and (e) the Plant is capable of and does
comply with all applicable Laws and Government Approvals, including,
without limitation, environmental Laws and Government Approvals;
(iii) Be responsible for all damages, fines and penalties which
may arise because of Northwind's noncompliance with Laws or Government
Approvals; provided, however, that Northwind shall be permitted to
contest any such damages, fines or penalties provided that (i)
Northwind does so in accordance with acceptable practices therefor and
(ii) doing so does not materially delay or otherwise adversely affect
the performance of the Work;
(iv) Provide all required safeguards, signs, security services,
fire protection, and the like, for the protection of the Work site,
the Work and the
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Plant and of all persons while on the Work site and other property
related thereto;
(v) Provide and pay for, in Northwind's name as an independent
contractor and not as an agent for Aladdin, all construction
materials, equipment, supplies, and facilities, and all contractor and
subcontractor labor and manufacturing and related services;
(vi) Provide or cause to be provided, at Northwind's expense,
all labor and personnel required in connection with the performance of
the Work. All personnel used by Northwind in the performance of the
Work shall be qualified by training, licenses or certifications, and
experience, as required to perform their assigned tasks;
(vii) Replace any of Northwind's personnel performing the Work if
Aladdin and Northwind mutually agree that such personnel are creating
a risk to the timely completion of the Work in accordance with the
Agreement;
(viii) Protect any and all parallel, converging and intersecting
electric lines and poles, telephone lines and poles, highways,
waterways, railroads, sewer lines, natural gas pipelines, drainage
ditches, culverts and any and all property of others, including, but
not limited to, the Buildings, from damage as a result of its
performance of the Work. In the event that any such property is
damaged or destroyed in the course of Northwind's performance of the
Work, Northwind, at its own expense, shall rebuild, restore or replace
such damaged or destroyed property;
(ix) Procure, as required, the appropriate proprietary rights,
licenses, agreements, and permissions for materials, methods,
processes and systems incorporated into the Plant;
(x) Investigate as soon as reasonably practicable the Aladdin
Lands and surrounding locations to familiarize itself with and satisfy
itself with respect to the nature and location of the Work, and the
general and local conditions with respect to environment,
transportation, access, waste disposal, handling and storage of
materials, availability and quality of electric power, availability
and condition of roads, climatic conditions and seasons, physical
conditions at the Work site and the surrounding area as a whole,
topography and ground surface conditions, nature of surface materials
to be encountered, location of underground utilities, and equipment
and facilities needed prior to and during
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performance of all of Northwind's obligations under this Agreement
(collectively the "Work Site Conditions");
(xi) Provided that Aladdin shall have provided to Northwind the
legal description of the portion of the Aladdin Lands upon which the
Plant is to be located and a survey of such portion of the Aladdin
Lands and information describing all underground rights of way
affecting such portion of the Aladdin lands, prior to execution of the
EPC Coontract, acknowledge and accept the Work Site Conditions and
agree that neither the Substantial Completion Deadline nor the Final
Completion Deadline shall be extended as a result of any Work Site
Conditions unless Section 11 provides for such an extension;
(xii) Confirm, by execution of this Agreement, that Northwind
has knowledge of all of the legal requirements and business practices
that must be followed in performing the Work and that the Work will be
in conformance with such requirements and practices and in compliance
with all Laws and applicable Government Approvals. All engineering
services to be provided as part of the Work shall be provided by one
or more engineers qualified to perform such services in the state in
which the Plant is to be constructed;
(xiii) Concurrently with execution of this Agreement, deliver
the Unicom Guaranty, duly executed by Unicom Corporation;
(xiv) Comply with and not contravene the provisions of any Law
applicable to Northwind's execution and performance of this Agreement
and obtain any and all Government Approvals.
(xv) Acknowledge that the Aladdin Project is a union site and
agree not to cause a job action at the site of the Aladdin Project.
(i) REPRESENTATIONS AND WARRANTIES. Each party (the "Representing
Party") represents and warrants to the other:
(i) that it has the requisite limited-liability company capacity
to enter into this Agreement and fulfill its obligations hereunder,
that the execution and delivery by it of this Agreement and the
performance by it of its obligations hereunder have been duly
authorized by all requisite action of its members, and by its board of
directors or other governing body, and that, subject to obtaining any
applicable Government Approvals and compliance with any applicable
Laws, the entering into of this Agreement and the fulfillment of its
obligations hereunder does not contravene any law, statute or
contractual obligation of the Representing Party;
(ii) that no suit, action or arbitration, or legal,
administrative or other proceeding is pending or has been threatened
against the Representing Party that would affect the validity or
enforceability of this Agreement or the ability of the Representing
Party to fulfill its commitments hereunder, or that could
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result in any material adverse change in the business or financial
condition of the Representing Party; and
(iii) the consummation of the transactions contemplated by the
Agreement shall not result in a breach of any of the terms or
conditions of, or constitute a default under, any indenture, mortgage,
deed of trust, or other agreement to which the Representing Party is
now a party, or violate any judgment, order, writ, injunction, or
decree of any Government Authority to which the Representing Party is
a party or by which it or any of its assets is bound.
(j) INSURANCE. The respective insurance requirements for Aladdin and
Northwind are set forth in Exhibit D attached hereto, and shall be
maintained throughout the term of this Agreement. The liability of each
party under this Agreement to the other party shall not be diminished by
the insurance limitation set forth in said Exhibit D. All insurance
policies required by this section shall provide that such policies may not
be cancelled or terminated without 30 days prior written notice to both
Aladdin and Northwind. Each party hereby releases and waives, to the
extent legally possible for it to do so without invalidating its insurance
coverages for itself and on behalf of its insurer, the other party hereto
and its respective officers, directors, agents, members, partners, servants
and employees from liability for any loss or damage to any or all property
located on the Aladdin Lands which loss or damage is of the type and within
the limits covered by the "all-risk" property damage insurance and other
property / casualty insurance which the parties have agreed to obtain and
maintain in effect pursuant to this Section 2(j) irrespective of any
negligence on the part of the released party and its respective officers,
directors, agents, members, partners, servants, or employees, which may
have contributed to or caused such loss or damage. Each party covenants
that it will, if available, obtain for the benefit of the other party and
its officers, directors, agents, members, partners, servants and employees,
a waiver of any right of subrogation which the insurer of such party may
acquire against such party by virtue of the payment of any such loss
covered by insurance. In the event a party is by law, statute or
governmental regulation unable to obtain a waiver of the right of
subrogation for the benefit of the other party (and its respective
officers, directors, agents, members, partners, servants, or employees) or
its insurance carriers will not give such a waiver or its property /
casualty insurance will be invalidated by the waiver and release set forth
in the fourth sentence of this Section 2(j), then during any period of time
when such waiver is unobtainable, said party shall not have been deemed to
have released any subrogated claim of its insurance carrier against such
other party (or its respective officers, directors, agents, members,
partners, servants, or employees), and during the same period of time, such
other party shall not have been deemed to have released the party which has
been unable to obtain such waiver (or such party's respective officers,
directors, agents,
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members, partners, servants, or employees) from any claims it or its
insurance carrier may assert which otherwise would have been released
pursuant to this Section 2(j). All policies of insurance provided for in
Exhibit D shall name Mall Owner and its designated lender(s) as additional
insureds.
(k) CONDEMNATION. In the event of a condemnation or eminent domain
taking of all or part of the site upon which the Plant is to be located (a
"Taking"), Northwind shall, as soon as practicable, determine whether it is
commercially reasonable and technically feasible in the circumstances for
Northwind to proceed with construction of the Plant hereunder. In the
event that Northwind determines that it is commercially reasonable and
technically feasible, Northwind will so inform Aladdin and promptly will
recommence the activities on its part contemplated hereby and this
Agreement shall remain in force and, to the extent set forth in Section 8.2
of the Northwind Lease, Northwind shall be entitled to the award or awards
from such Taking and the Contract Capacity Charges payable under the Energy
Service Agreement thereafter may be adjusted. In such event, if necessary,
equitable adjustments in the Substantial Completion Deadline, the Final
Completion Deadline, the times for achievement of Critical Path Activities
and all other time frames applicable to the obligations of the Parties
hereunder shall be made. In the event that Northwind determines that it is
not commercially reasonable or technically feasible in the circumstances to
proceed with construction of the Plant hereunder, then Northwind shall so
notify Aladdin and such notice shall also constitute termination of this
Agreement, effective upon the date when such Taking becomes effective, and,
to the extent set forth in Section 8.1 of the Northwind Lease, Northwind
shall be entitled to the award or awards from such Taking. Notwithstanding
the foregoing, in the event Northwind and Aladdin disagree as to whether it
is commercially reasonably and technically feasible in the circumstances
for Northwind to proceed with construction of the Plant hereunder, then
Northwind and Aladdin shall promptly meet and use their best efforts to
resolve such dispute. If the Parties are unable to resolve such dispute
within ten (10) days, then the Parties shall refer such dispute to the
Independent Engineer. The Independent Engineer's conclusion as to whether
it is commercially reasonable and technically feasible in the circumstances
for Northwind to proceed with construction of the Plant hereunder shall be
accepted by and binding upon the Parties.
(l) NO PRESUMPTION. Wherever in this Agreement it is provided that
an activity or obligation is at Northwind's sole cost and expense, such
provision shall not imply or be construed to imply or mean any limitation
on any right which Northwind may have under the Energy Service Agreement to
include such cost or expense (or some portion thereof) in charges payable
to Northwind thereunder.
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3. ADDITIONAL AGREEMENTS AND DOCUMENTS.
(a) Aladdin and Northwind agree that the following agreements are
being or will be executed and delivered: (i) an Energy Service Agreement
(as executed and as it may be amended, restated, modified, or supplemented
and in effect from time to time, the "Energy Service Agreement") between
Aladdin and Northwind pursuant to which Northwind shall provide to the
Aladdin Project Services produced by the Plant and (ii) a Lease (as
executed and as it may be amended, restated, modified, or supplemented and
in effect from time to time, the "Northwind Lease") between Aladdin and
Northwind for the lease to Northwind of the portion of the Aladdin Lands on
which the Plant shall be constructed and operated.
(b) Aladdin and Northwind acknowledge that they intend to be parties,
along with the Mall Owner and the Sound Asylum Owner, to a Reciprocal
Easement Agreement, pursuant to which all such entities shall grant to each
other easements with respect to their respective interests in the Aladdin
Lands (such agreement, as executed and as it may be amended, restated,
modified, or supplemented and in effect from time to time, being herein
referred to as the "Reciprocal Easement Agreement"). Each of Northwind and
Aladdin agrees that they shall use their best efforts to cause such
agreement to be finalized, executed and delivered within one hundred (100)
days following the date of execution of this Agreement.
4. PROJECT MANAGEMENT.
(a) PROJECT MANAGER. Northwind shall establish a project
construction management office in Clark County and shall appoint a project
manager no later than forty-five (45) days after Northwind receives from
Aladdin a Notice to Proceed.
(i) The Project Manager shall report directly to Northwind and
shall be responsible for daily supervision of all activities relating
to the design and construction of the Plant. The Project Manager will
have full authority to act for Northwind concerning performance of the
Work, act as a single point of contact with Aladdin in all matters on
behalf of Northwind concerning performance of the Work and furnish
information to Aladdin; provided that no amendment or modification to
this Agreement shall be effected except by an Amendment in accordance
with Section 14(f) hereof.
(ii) The Project Manager shall conduct biweekly meetings, at a
time and day mutually acceptable to Northwind and Aladdin, at which
meetings the Project Manager will (i) provide an update with respect
to the Work and (ii)
14
answer any questions and address any comments Aladdin may have with
respect to the Work. The Project Manager shall consider in good faith
any and all comments made by Aladdin at such biweekly meetings.
Comment or failure by Aladdin to comment at such biweekly meetings
shall not in any way affect or reduce Northwind's obligations to
complete the Work in accordance with the terms of this Agreement.
(iii) The Project Manager (and any replacement Project Manager)
must be reasonably satisfactory to Aladdin. If Aladdin believes a
Project Manager appointed by Northwind to be unsatisfactory, the
reasons for such belief must be stated in writing to Northwind within
five (5) Business Days after Aladdin is notified of the name of such
Project Manager (or any such replacement Project Manager). Failure by
Aladdin to object to any such appointment within said five (5)
Business Day period shall be deemed to be acceptance thereof.
Northwind shall not voluntarily change the Project Manager, unless
such change is for cause, without the prior written consent of
Aladdin, which consent shall not be unreasonably withheld or delayed.
In the event Northwind does change the Project Manager for cause,
Northwind shall notify Aladdin of such change as soon as reasonably
practicable.
(b) PROJECT EXECUTION PLAN.
(i) Northwind shall develop a project execution plan (the
"Project Plan") that shall be comprised of a Plant Schedule and
estimated Plant testing and Start-up dates. The Project Plan, which
shall be based on the Plant Scope, shall include a definition of the
construction work, major milestones, Critical Path Activities, and
scheduled date of completion and shall state that the Plant is
scheduled to commence operation no later than the Final Completion
Deadline.
(a) The Plant Schedule shall identify as Critical Path
Activities those key milestones to be achieved in order to
achieve Substantial Completion on or before the Substantial
Completion Deadline. The Plant Schedule also shall indicate the
proposed dates of starting and completion of the Work, including
dates for fabrication, assembly, installation, testing and
completion of the Critical Path Activities and other major
components of the Work. In preparing the Plant Schedule and in
order to complete the Work within the time required by this
Agreement, Northwind will take into consideration and make
allowance for customary delays and hindrances incident to such
Work in accordance
15
with generally accepted construction management practices,
whether growing out of delays of common carriers, delays in
securing materials or workmen, delays in Northwind securing
necessary approvals, Northwind delays or otherwise (excluding
delays for which an extension of time is allowable under Section
11). Northwind, in consultation with Aladdin, shall update the
Plant Schedule to reflect changes necessitated by Sections 9
and/or 11 hereof.
(ii) An initial draft of the Project Plan shall be delivered
by Northwind to Aladdin for Aladdin's review no later than thirty (30)
days after receipt by Northwind from Aladdin of a Notice to Proceed.
Aladdin agrees to provide any comments regarding the Project Plan to
Northwind within ten (10) days of receipt thereof. Aladdin's failure
to comment in writing within such period shall be deemed to constitute
Aladdin's acceptance of the Project Plan. Review, comment or
acceptance (or the lack thereof) by Aladdin shall not in any way
affect or reduce Northwind's obligations to complete the Work in
accordance with the terms of this Agreement. Northwind agrees to
consider in good faith any and all comments made by Aladdin. Within
ten (10) days of receipt of comments from Aladdin, Northwind and
Aladdin shall meet at a mutually acceptable time and place to discuss
Aladdin's comments. If Northwind has determined that revisions
suggested by Aladdin are necessary in accordance with Good Engineering
Practices, Northwind shall so inform Aladdin at the meeting and shall
amend the Project Plan accordingly. If Northwind determines that
revisions are not necessary, Northwind shall so inform Aladdin at the
meeting, and orally shall explain the reasons why it proposes
rejecting the revisions. Within fifteen (15) Business Days after the
meeting, Northwind shall provide to Aladdin written minutes of the
meeting, including a clear statement as to why any revisions suggested
by Aladdin were not made. Northwind shall confirm the final Project
Plan within ten (10) days after execution of the EPC Contract(s).
(iii) Northwind may make Minor Modifications to the Project
Plan; PROVIDED, HOWEVER, that Northwind shall notify Aladdin thereof
in writing prior to, or if not reasonably practicable, as soon as
reasonably practicable subsequent to, Northwind's effecting any such
Northwind-initiated Minor Modification. All other revisions shall be
subject to compliance with Section 9 hereof.
(iv) In the event Northwind fails to achieve one or more
Critical Path Activities in accordance with the Plant Schedule and
Aladdin reasonably
16
and in good faith concludes that Northwind's failure to achieve such
Critical Path Activity(ies) when and as set forth in the Plant
Schedule is reasonably likely to prevent Northwind's ability to
achieve Substantial Completion on or before the Substantial Completion
Deadline and/or Final Completion on or before the Final Completion
Deadline, Aladdin may, but shall not be obligated to, give Northwind
notice of such conclusion and the basis for such conclusion. Within
five (5) days of receipt of such notice, Northwind shall submit to
Aladdin Northwind's proposal to improve performance of the Work to
assure Northwind's ability to achieve Substantial Completion on or
before the Substantial Completion Deadline and/or Final Completion on
or before the Final Completion Deadline for approval by Aladdin. If
within a reasonable period of time, as reasonably determined by
Aladdin, Northwind does not improve performance to meet the Critical
Path Activities, Aladdin may require an increase in Northwind's labor
force, the number of shifts, overtime operations, additional days of
work per week, and/or an increase in the amount of construction
equipment, all costs of which shall be borne solely by Northwind.
Neither such notice by Aladdin nor Aladdin's failure to issue such
notice shall relieve Northwind of its obligation to achieve
Substantial Completion on or before the Substantial Completion
Deadline and/or Final Completion on or before the Final Completion
Deadline. In the event Northwind fails to comply with Aladdin's
instructions and Aladdin continues to believe, reasonably and in good
faith, that because of such failure Northwind will not be able to
achieve Substantial Completion on or before the Substantial Completion
Deadline or Final Completion on or before the Final Completion
Deadline, then Northwind shall be considered in default of this
Agreement in accordance with Section 10(a) hereof and Aladdin may
exercise its rights as set forth in Section 10(b) hereof.
5. PLANT DESIGN.
(a) PLANT OVERSIGHT. Subject to the terms of this Agreement,
Northwind shall oversee, administer and approve the design, construction
and operation of the Plant.
(b) SCOPE. Northwind and Aladdin will jointly develop and agree upon
the Plant Scope. The Plant Scope will include a detailed description of
the major components of the Plant (including energy transfer stations and
the communications systems), respectively, and the details of the specific
energy requirements of Aladdin and, together with the performance standards
set forth in Exhibit A to the Energy
17
Service Agreement, prescribe the agreed upon performance and operating
characteristics of the Plant.
(c) PLANT PLANS AND SPECIFICATIONS.
(i) In consultation with Aladdin, Northwind shall prepare a
request for proposals ("RFP") from engineering, procurement and
construction ("EPC") contractors to design and build the Plant. As
part of such RFP preparation process, Aladdin shall, with the aid of a
qualified engineering company, provide to Northwind within forty-five
(45) days of execution of this Agreement all site interfaces,
including an overall site plan, information on site soil conditions,
overall Aladdin Complex arrangement drawings, underground rights of
way, electrical connection requirements, hot and chilled water
connection locations and all architectural requirements for the
exterior of the Plant and maintenance buildings. Aladdin shall also
provide, within forty-five (45) days of execution of this Agreement,
specifications and related documentation for the energy transfer
stations ("ETSs") to be included as part of the Plant, which
specifications shall be reasonably acceptable to Northwind in its
reasonable business judgment (taking into account the Substantial
Completion Deadline). Once the RFP is complete (and provided that
Aladdin has provided to Northwind the specifications and related
documentation for the ETSs within forty-five (45) days of execution of
this Agreement), Northwind shall solicit bids from at least three (3)
qualified EPC contractors (except as to structural steel, which
Northwind may purchase from Aladdin's supplier) and provided, however,
that if in good faith and after consultation with its engineers and
suppliers, Northwind determines that achievement of the Substantial
Completion Deadline cannot be met unless a sole source contractor
(including a sole source provider of structural steel other than
Aladdin's supplier) is promptly engaged to construct the Plant, then
Northwind shall so notify Aladdin and, unless Aladdin agrees to an
equitable extension of the Substantial Completion Deadline, Northwind
may dispense with submitting the RFP to multiple bidders and may
proceed to negotiate and enter into an EPC Contract with a contractor
of its choosing which contractor and EPC Contract shall be acceptable
to Aladdin (such acceptance not to be unreasonably withheld).
Northwind shall consider in good faith any EPC contractor suggested by
Aladdin. From such bids as may be received and are acceptable to
Aladdin and Northwind, Northwind shall retain a qualified EPC
contractor (the "EPC Contractor") to design and build the Plant and
shall enter into a contract with the EPC Contractor (the "EPC
Contract") pursuant to which the EPC Contractor shall design and build
the Plant in accordance with this Agreement. If based on bids
received from the EPC contractors it appears that the Plant Price is
likely to exceed $40 million, then Northwind shall have the right to
terminate this Agreement without liability unless within ninety (90)
days after receipt of bids from the prospective EPC contractors either
(i) Aladdin and Northwind, using good faith efforts, are able to
effect changes to the Project Scope or otherwise to effect
18
changes which result in a projected Plant Price of less than $40
million or (ii) Aladdin agrees to pay, in cash, the amount of the
Plant Price in excess of $40 million, such payment to be made prior to
the execution of the EPC Contract, provided that any amount so paid by
Aladdin shall not be included in Total Project Investment for purposes
of and as defined in the Energy Service Agreement. If this Agreement
is terminated as provided in this Section, Aladdin shall pay to
Northwind those costs and expenses described in the final sentence of
Section 10(e) hereof; if this Agreement is not terminated, delays
occasioned by clause (i) above shall extend the Substantial Completion
Deadline and the Final Completion Deadline as appropriate. The EPC
Contractor, together with Northwind, shall prepare design development
plans and specifications for the Plant (the "Plant Plans and
Specifications") consistent with the Plant Scope and mindful of the
preliminary Plant Price estimate of $ 30 million. Copies of the Plant
Plans and Specifications shall be delivered to Aladdin for Aladdin's
review no later than one hundred and twenty (120) days after Northwind
receives from Aladdin a Notice to Proceed. Aladdin agrees to provide
any comments regarding the Plant Plans and Specifications within ten
(10) days of receipt thereof. Aladdin's failure to comment in writing
within such period shall be deemed to constitute Aladdin's acceptance
of the Plant Plans and Specifications. Review, comment or acceptance
(or the lack thereof) by Aladdin shall not in any way affect or reduce
Northwind's obligations to complete the Work in accordance with the
terms of this Agreement. Northwind agrees to consider in good faith
any and all comments made by Aladdin. Within ten (10) days of receipt
of comments from Aladdin, Northwind and Aladdin shall meet at a
mutually acceptable time and place to discuss Aladdin's comments. If
Northwind has determined that revisions suggested by Aladdin are
necessary in accordance with Good Engineering Practices, Northwind
shall so inform Aladdin at the meeting and shall amend the Plant Plans
and Specifications accordingly. If Northwind determines that
revisions are not necessary, Northwind shall so inform Aladdin at the
meeting, and orally shall explain the reasons why it proposes
rejecting the revisions. Within fifteen (15) Business Days after the
meeting, Northwind shall provide to Aladdin written minutes of the
meeting, including a clear statement as to why any revisions suggested
by Aladdin were not made.
(ii) Sixty (60) days following Northwind's finalizing the
Plant Plans and Specifications pursuant to clause (c)(i) above,
Northwind shall have detailed design drawings prepared, five (5)
copies of which shall be provided to Aladdin for Aladdin's review.
Aladdin agrees to provide any comments regarding the detailed design
drawings within ten (10) days of receipt thereof.
19
Aladdin's failure to comment in writing within such period shall be
deemed to constitute Aladdin's acceptance of the detailed design
drawings. Review, comment or acceptance (or the lack thereof) by
Aladdin shall not in any way affect or reduce Northwind's obligations
to complete the Work in accordance with the terms of this Agreement.
Northwind agrees to consider in good faith any and all comments made
by Aladdin. Within ten (10) days of receipt of comments from Aladdin,
Northwind and Aladdin shall meet at a mutually acceptable time and
place to discuss Aladdin's comments. If Northwind has determined that
revisions suggested by Aladdin are necessary in accordance with Good
Engineering Practices, Northwind shall so inform Aladdin at the
meeting and shall amend the detailed design drawings and accordingly.
If Northwind determines that revisions are not necessary, Northwind
shall so inform Aladdin at the meeting, and orally shall explain the
reasons why it proposes rejecting the revisions. Within fifteen (15)
Business Days after the meeting, Northwind shall provide to Aladdin
written minutes of the meeting, including a clear statement as to why
any revisions suggested by Aladdin were not made.
(iii) Two hundred and forty (240) days following Northwind's
finalizing the Plant Plans and Specifications pursuant to clause
(c)(i) above, Northwind shall have detailed operation manuals
prepared, five (5) copies of which shall be provided to Aladdin for
Aladdin's review. Aladdin agrees to provide any comments regarding
the detailed operation manuals within ten (10) days of receipt
thereof. Aladdin's failure to comment in writing within such period
shall be deemed to constitute Aladdin's acceptance of the detailed
operation manuals. Review, comment or acceptance (or the lack
thereof) by Aladdin shall not in any way affect or reduce Northwind's
obligations to complete the Work in accordance with the terms of this
Agreement. Northwind agrees to consider in good faith any and all
comments made by Aladdin. Within ten (10) days of receipt of comments
from Aladdin, Northwind and Aladdin shall meet at a mutually
acceptable time and place to discuss Aladdin's comments. If Northwind
has determined that revisions suggested by Aladdin are necessary in
accordance with Good Engineering Practices, Northwind shall so inform
Aladdin at the meeting and shall amend the detailed operation manuals
accordingly. If Northwind determines that revisions are not
necessary, Northwind shall so inform Aladdin at the meeting, and
orally shall explain the reasons why it proposes rejecting the
revisions. Within fifteen (15) Business Days after the meeting,
Northwind shall provide to Aladdin written minutes of the meeting,
including a clear statement as to why any revisions suggested by
Aladdin were not made.
20
(iv) Northwind may make Minor Modifications to the Plant
Plans and Specifications; PROVIDED, HOWEVER, that Northwind shall
notify Aladdin thereof in writing prior to or, if not reasonably
practicable, as soon as reasonably practicable after Northwind's
effecting any such Northwind-initiated Minor Modification. All other
revisions shall be subject to Section 9 hereof.
(v) The review and approval by Aladdin of the Plant Plans and
Specifications shall not relieve Northwind of any of its duties,
liabilities or obligations under this Agreement or any Related
Agreement.
6. PLANT CONSTRUCTION; CONSTRUCTION REPORTS AND MEETINGS.
The EPC Contractor retained by Northwind shall construct the Plant in
accordance with the Plant Plans and Specifications. Northwind shall
provide monthly construction progress reports to Aladdin, in a form
reasonably satisfactory to Aladdin (which reports shall be provided on the
fifth (5th) day of each calendar month and shall include, with respect to
the prior month, a work progress statement and a schedule report showing
project milestones and critical path activity and shall also include a
schedule report showing future project milestones and critical path
activity and the future construction schedule). A representative of
Aladdin may attend (but not actively participate in) construction meetings
between the EPC Contractor and Northwind (or the Project Manager). If
Aladdin believes that the Plant is not being constructed in a manner
consistent with the Plant Plans and Specifications (as the same may be
modified from time to time in accordance with the terms of Section 5
above), or has any additional comments with respect to the construction of
the Plant, Aladdin shall inform Northwind (or the Project Manager) of such
belief or additional comments at the biweekly meetings conducted by the
Project Manager pursuant to Section 4(a) hereof. Northwind shall consider
promptly and in good faith any and all comments made by Aladdin. Northwind
shall determine whether corrective measures are necessary in response to
Aladdin's comments using a reasonable standard applicable to construction
practices for energy producing facilities similar to the Plant, taking into
account Codes and Standards, Good Engineering Practices and the Plant Plans
and Specifications. If Northwind agrees with Aladdin, Northwind shall so
inform Aladdin at the earliest possible biweekly meeting, and shall take
(or cause to be taken) appropriate corrective measures. If Northwind,
after consultation with the EPC Contractor, does not agree with Aladdin,
Northwind shall so inform Aladdin at the earliest possible biweekly meeting
and shall provide a clear written statement explaining Northwind's
disagreement in the next monthly construction progress report to be
provided by Northwind to Aladdin pursuant to Section 6 hereof. Comments by
Aladdin (or the absence thereof) with respect to the construction of the
Plant shall not in any way affect or reduce
21
Northwind's obligations to complete the Work in accordance with the
provisions of this Agreement.
7. QUALITY CONTROL AND INSPECTION.
(a) IN GENERAL. Northwind shall perform all quality control and
inspection activities related to the Work as required by Northwind's
Quality Control and Inspection Program (as defined below), this Agreement
and Good Engineering Practices. Northwind shall inspect and test the Work
on a continuing basis. Northwind shall correct all Defaults or
Deficiencies in a reasonable time. All Defects or Deficiencies identified
by such inspection or testing shall be the subject of a monthly report to
Aladdin. The report shall describe in detail (i) all Defects or
Deficiencies identified which are reasonably likely to have an adverse
impact on the Plant Schedule, (ii) all corrections, all Work that was
re-performed and related services rendered during the immediately preceding
month and (iii) all Defects not then corrected or re-performed.
(b) QUALITY CONTROL AND INSPECTION PROGRAM. Within one hundred (100)
days of receipt by Northwind of the Notice to Proceed, Northwind shall
prepare and deliver to Aladdin a formal program for inspecting and testing
the Work ("Quality Control and Inspection Program"). The person responsible
for implementing the Quality Control and Inspection Program shall be
identified by Northwind to Aladdin. The Quality Control and Inspection
Program must be adequate to meet all the quality control and inspection
needs of the Work. Aladdin agrees to provide its comments within thirty
(30) days of receipt of such program. Aladdin's failure to comment within
such period shall be deemed to constitute Aladdin's approval. Review,
comment or acceptance (or the lack thereof) by Aladdin shall not in any way
affect or reduce Northwind's obligations to complete the Work in accordance
with the terms of this Agreement. Northwind agrees to consider in good
faith any and all comments made by Aladdin. Within ten (10) days of
receipt of comments from Aladdin, Northwind and Aladdin shall meet at a
mutually acceptable time and place to discuss Aladdin's comments. If
Northwind has determined that revisions suggested by Aladdin are necessary
in accordance with Good Engineering Practices, Northwind shall so inform
Aladdin orally at the meeting and shall amend the Quality Control and
Inspection Program accordingly. If Northwind determines that revisions are
not necessary, Northwind shall so inform Aladdin orally at the meeting, and
shall orally explain the reasons why it proposes rejecting the revisions.
Within fifteen (15) Business Days after the meeting, Northwind shall
provide to Aladdin written minutes of the meeting, including a clear
statement as to why any revisions suggested by Aladdin were not made.
22
(c) INSPECTION RIGHTS. Aladdin shall have the right to inspect all
Work performed and witness all tests hereunder, and Northwind shall arrange
such inspection, upon reasonable notice from Aladdin; provided, however,
that Aladdin's inspection shall not interfere with or delay performance of
the Work. Aladdin shall have the right to comment to Northwind, in
writing, at any time, regarding any portion of the Work, including, without
limitation, any design, engineering, materials, equipment, installation,
tools, or supplies, which in Aladdin's reasonable judgment does not conform
to this Agreement, the Work or the Plant Plans and Specifications, or which
contains Defects or Deficiencies. Aladdin shall inform Northwind (or the
Project Manager) of such belief or additional comments at the biweekly
meetings conducted by the Project Manager pursuant to Section 4(a) hereof.
Northwind shall consider promptly and in good faith any and all comments
made by Aladdin. Northwind shall determine whether corrective measures are
necessary in response to Aladdin's comments using a reasonable standard
applicable to construction practices for energy producing facilities
similar to the Plant, taking into account Codes and Standards, Good
Engineering Practices and the Plant Plans and Specifications. If Northwind
agrees with Aladdin, Northwind shall so inform Aladdin at the earliest
possible biweekly meeting, and shall take (or cause to be taken)
appropriate corrective measures. If Northwind, after consultation with the
Design and Specifications Engineer, does not agree with Aladdin, Northwind
shall so inform Aladdin at the earliest possible biweekly meeting and shall
provide a clear written statement explaining Northwind's disagreement in
the next monthly construction progress report to be provided by Northwind
to Aladdin pursuant to Section 6 hereof. Comments by Aladdin (or the
absence thereof) with respect to the construction of the Plant shall not in
any way affect or reduce Northwind's obligations to complete the Work in
accordance with the provisions of this Agreement.
(d) EFFECT OF WAIVER OF INSPECTION RIGHTS. If Aladdin shall waive or
fail to exercise its right to inspect and witness any test as herein
provided, Northwind in no way shall be relieved of liability for the
quality, character, proper operation, and performance of the Work, nor
shall the rights of Aladdin set forth in this Agreement be prejudiced or
affected. Nor shall any witness of any test or inspection by Aladdin or
any failure to witness any test or inspection be construed as an approval
or acceptance of the Work.
8. COMPLETION.
(a) SUBSTANTIAL COMPLETION. Upon a determination by Northwind that
the Plant has been substantially completed in accordance with the Plant
Plans and Specifications, which shall only be when (i) the Plant has
demonstrated performance in
23
accordance with the design requirements, all applicable Laws and Government
Approvals, the Quality Control and Inspection Program, and the Performance
Tests, and Northwind has so certified to Aladdin, (ii) Northwind has
further certified to Aladdin that the Plant has been designed and
constructed and is operating in accordance with the Work and this Agreement
and (iii) Northwind has performed all obligations under this Agreement to
be then performed by Northwind, Northwind shall deliver to Aladdin a
certificate of substantial completion (the "Substantial Completion
Certificate"), which shall be in the form agreed to, initialed by the
Parties and attached hereto as Exhibit E by not later than thirty (30) days
after Notice to Proceed is received by Northwind. If Aladdin believes, at
the time of such certification by Northwind, that the Plant has not reached
Substantial Completion, then, within ten (10) Business Days after Aladdin
receives the Substantial Completion Certificate, Aladdin shall provide
Northwind with written notice clearly setting forth the basis for Aladdin's
belief. Any portions of the Plant to which timely objection is not made by
Aladdin shall be considered substantially complete. Failure by Aladdin to
deliver any notice within said ten (10) Business Day period shall be deemed
to be acceptance of the Plant as substantially complete. If Aladdin
delivers a notice as aforesaid, Northwind shall determine whether it agrees
with such notice, and if Northwind does so agree, Northwind shall complete
the Plant in the manner required by the terms of this Agreement diligently
and in good faith. If Northwind does not agree with Aladdin's notice,
Northwind shall so inform Aladdin and Northwind and Aladdin promptly shall
confer and exert their best efforts in good faith to reach a reasonable and
equitable resolution of the issue. If Northwind and Aladdin are unable to
resolve the issue within five (5) Business Days, then the matter shall be
referred to the Independent Engineer, and the Parties agree to accept the
Independent Engineer's determination as binding, and act accordingly.
(b) FINAL COMPLETION. In order to achieve Final Completion,
Northwind must have: (i) achieved Substantial Completion, (ii) corrected
all conditions constituting Defects and Deficiencies identified in writing
by Aladdin to Northwind, (iii) performed all other obligations of Northwind
under this Agreement to be then performed, in a manner reasonably
satisfactory to Aladdin, and (iv) delivered to Aladdin a certificate of
final completion (the "Final Completion Certificate"), which shall be in
the form agreed to by the Parties, initialed by the Parties and attached
hereto as Exhibit F by not later than thirty (30) days after Notice to
Proceed is received by Northwind. If Aladdin believes, at the time of such
certification by Northwind, that the Plant has not reached Final
Completion, then within ten (10) Business Days of Aladdin's receipt of the
Final Completion Certificate, Aladdin shall provide Northwind with written
notice clearly setting forth the basis for Aladdin's belief. Any portions
of the Plant to which timely objection is not made by Aladdin shall be
24
considered to have reached Final Completion. Failure by Aladdin to deliver
any notice within such ten (10) Business Day period shall be deemed
acknowledgment by Aladdin that Final Completion has occurred. If Aladdin
delivers a notice to Northwind as aforesaid, Northwind shall determine
whether it agrees with Aladdin's notice. If Northwind agrees with
Aladdin's notice, Northwind shall take the actions necessary to bring the
Plant to Final Completion. In the event Northwind contests Aladdin's
notification that Final Completion has not been achieved, Aladdin and
Northwind shall promptly confer and exert their best efforts in good faith
to reach a reasonable and equitable resolution of the issue. If Aladdin
and Northwind are unable to resolve the issue within five (5) Business
Days, the matter shall be referred to the Independent Engineer. The
Parties agree to accept the determination made by the Independent Engineer
with respect to whether Final Completion has been achieved and to act
accordingly.
(c) TIMELY COMPLETION OF THE PLANT. TIME IS OF THE ESSENCE WITH
RESPECT TO NORTHWIND'S PERFORMANCE OF THE WORK. In accordance with and
subject to the terms of this Agreement, Northwind guarantees that
Substantial Completion shall occur not later than the Substantial
Completion Deadline, as it may be extended time to time pursuant to this
Agreement, and further guarantees that Final Completion shall not occur
later than the Final Completion Deadline, as it may be extended from time
to time pursuant to this Agreement. Northwind will design the Plant,
specify and procure equipment and schedule its activities taking into
account good and generally accepted construction management practices and
take all reasonably necessary measures to complete the Plant on or before
the Substantial Completion Deadline.
(d) CONTINGENCY PLAN. Northwind shall have a contingency plan that
conforms with Codes and Standards and Good Engineering Practices which
provides for the rental by Northwind of transportable boiler and chiller
plants to ensure delivery of hot and chilled water in accordance with the
Energy Service Agreement if completion of the Plant is delayed for any
reason and (i) such delay is expected to prevent Northwind from commencing
the delivery of the Chilled Water Services and/or the Hot Water Services in
accordance with the terms of the Energy Service Agreement, and (ii) Aladdin
would otherwise be capable of receiving and using the Services if the Plant
had been completed. In the event of such a delay, the contingency plan
shall be instituted by Northwind at Northwind's sole cost, except that (1)
implementation of the Contingency Plan in order to provide Initial Services
(as defined in the Energy Service Agreement) to the Customer during the
period from the Initial Services Date through but not including the
Substantial Completion Deadline shall be at Aladdin's sole cost and
expense, and (2) if such delay is caused by an
25
event described in Section 11 hereof or by the acts or omissions of
Aladdin, the Mall Owner or the Sound Asylum Owner, then the Contingency
Plan will be implemented at Aladdin's sole cost. Northwind shall implement
the contingency plan to ensure that there is no delay and/or lapse in the
delivery of hot and chilled water. If Aladdin determines, in its sole
discretion, that Northwind is failing to implement the contingency plan in
a timely manner, and Northwind's failure to implement the contingency plan
is not caused by a breach by Aladdin of its obligations under this
Agreement or the acts of the Mall Owner or the Sound Asylum Owner, Aladdin
may implement the contingency plan, and Northwind agrees that it will pay
all the costs thereof except as otherwise set forth above in this Section
8(d).
9. SCOPE CHANGES.
(a) FURTHER REFINEMENT, CORRECTIONS AND DETAILING NOT SCOPE CHANGES.
It is understood and agreed that the Work shall be subject to further
refinement, correction and detailing by the Parties from time to time, and
that Northwind shall receive no additional compensation for such
refinement, correction or detailing that does not constitute Scope Changes.
(b) SCOPE CHANGES.
(i) From time to time prior to completion of the Work,
Northwind shall have the right, without obtaining the prior approval
of Aladdin, to effect Scope Changes (each, a "Northwind Allowed Scope
Change" and collectively, "Northwind Allowed Scope Changes"), on and
subject to the following conditions and limitations, and the cost of
all such Northwind Allowed Scope Changes shall be included in the
Plant Price:
(a) Each Northwind Allowed Scope Change shall be expected by
Northwind, in good faith and in accordance with Good Engineering
Practices, to enhance the reliability, efficiency or longevity of
the Plant or to have a beneficial effect on the operation or
maintenance of the Plant;
(b) It cannot reasonably be expected by Northwind that such
Northwind Allowed Scope Change will delay Substantial Completion
beyond the Substantial Completion Deadline or Final Completion
beyond the Final Completion Deadline;
26
(c) The Northwind Allowed Scope Change shall be compatible with
the Plant Scope;
(d) Northwind shall notify Aladdin in detail of the Northwind
Allowed Scope Change as soon as reasonably practicable, and in
any event, prior to performance of the work contemplated thereby;
and
(e) The additional cost of the Work attributable to (i) any
single Northwind Allowed Scope Change shall not exceed fifty (50)
percent of the Available Pool (as hereinafter defined) and (ii)
all Northwind Allowed Scope Changes in the aggregate shall not
exceed one hundred (100) percent of the Available Pool.
For purposes of this Section 9(b), the term "Available Pool" shall
mean, as of any date of determination, the excess of (i) the GMP and
Other Costs plus a reasonable contingency amount for discretionary
changes by Aladdin (which amount shall be established by Northwind and
provided to Aladdin within thirty (30) days after execution of the EPC
Contract(s)), such contingency amount to be reasonably acceptable to
Aladdin, as increased by the Cost of Scope Changes theretofore
approved by Aladdin over (ii) the estimated total cost of the Work as
reflected in Northwind's forecast therefor prepared not more than
thirty (30) days preceding the date of authorization of such Northwind
Approved Scope Change, which forecast shall reflect all costs
theretofore incurred, the cost of then unperformed portions of the
Work for which contracts exist and a good faith estimate, in
accordance with applicable Codes and Standards, of the costs of all
portions of the Work, if any, for which Northwind has not made
contractual arrangements.
(ii) Aladdin may order Scope Changes to the Work, in which event
one or more of the Plant Price, the Substantial Completion Deadline,
the Final Completion Deadline, the Project Plan, the Plant Plans and
Specifications and other terms and conditions of the Agreement shall
be adjusted accordingly, if and to the extent necessary. All Scope
Changes (but not Northwind Allowed Scope Changes) shall be authorized
by a Scope Change Order.
(c) PROCEDURE FOR SCOPE CHANGES.
(i) In addition to the right of Northwind to effect Northwind
Allowed Scope Changes, as soon as Northwind becomes aware of any
circumstance which Northwind has reason to believe may necessitate a
Scope
27
Change, Northwind shall issue to Aladdin a written notice thereof (a
"Scope Change Order Notice"). All Scope Change Order Notices shall
include documentation sufficient to enable Aladdin to determine: (i)
the factors necessitating the possibility of a Scope Change; (ii) the
impact which the Scope Change is likely to have on the Plant Price;
(iii) the impact which the Scope Change is likely to have on
scheduling and the Substantial and Final Completion Deadlines; and
(iv) such other information which Aladdin may reasonably request in
connection with evaluating such Scope Change.
(ii) If Aladdin desires to make a Scope Change (other than
pursuant to a Scope Change Order Notice), Aladdin shall submit a
written proposal requesting a Scope Change (a "Scope Change Order
Request") to Northwind.
(a) Northwind shall promptly review the Scope Change Order
Request and notify Aladdin in writing of its preliminary good
faith view of the options for implementing the proposed Scope
Change and of Northwind's good faith estimate of the effect, if
any, each option would have on the Plant Price, the Substantial
and Final Completion Deadlines, the Project Plan, and the Plant
Plans and Specifications.
(b) After receipt of Northwind's preliminary estimates,
Aladdin shall inform Northwind, within five (5) Business Days,
whether Northwind shall provide cost, schedule and performance
level guarantee impacts to Aladdin for the Scope Changes proposed
by Aladdin. Northwind's costs for preparing such guarantee
impacts shall not exceed a price mutually agreed upon by the
Parties prior to Northwind's undertaking such analysis. Aladdin
may, but shall not be obligated to, issue a Scope Change Order
covering such proposed Scope Change, in which event the contents
of Northwind's notice of impacts described in this Section
9(c)(ii)(b) shall be binding on Northwind, and Northwind's
reasonable costs in preparing such notice of impacts, subject to
the maximum price agreed to by the Parties, shall be included in
any Plant Price change.
(c) In the event Aladdin disagrees with Northwind's
statement of the cost, schedule and performance level guarantee
impacts of such proposed Scope Change, and Northwind has
estimated that the proposed Scope Change would increase the Plant
Price by $100,000 or more, Aladdin and Northwind shall promptly
confer and exert their best efforts in good faith to agree upon
the cost, schedule and performance
28
level guarantee impacts of the proposed Scope Change. If Aladdin
and Northwind are unable to agree on the cost, schedule or
performance level guarantee impacts of the proposed Scope Change,
and if the difference is (1) a difference in the Parties'
estimates of the costs of the proposed Scope Change and such
difference is greater than $10,000 or (2) a difference in the
Parties' estimate of the effect on the schedule or the
performance level guarantee impacts of the proposed Scope Change,
then the Parties shall refer the issue to the Independent
Engineer. The Independent Engineer's estimate of the cost,
schedule or performance level impacts of the proposed Scope
Change (as applicable) shall be accepted by the Parties. In the
event Aladdin disagrees with Northwind's statement of the cost of
such proposed Scope Change, and Northwind has estimated that the
proposed Scope Change would increase the Plant Price by less than
$100,000 in the specific instance or by less than $250,000 when
aggregated with all other Scope Changes under this Section 9(c),
Aladdin may proceed with issuance of the Scope Change Order and
the dispute shall be resolved as provided in this Agreement.
(d) In the event Aladdin declines to issue the Scope Change
Order, Northwind's reasonable costs in preparing the cost,
schedule and performance level guarantee impacts, subject to the
maximum price therefor agreed to by the Parties pursuant to
Section 9(c)(ii)(b), shall be added to the Plant Price.
(e) The cost of Scope Changes initiated by Aladdin, the
costs of which shall be included in the Plant Price, shall not
exceed five (5) percent of the GMP established pursuant to
Exhibit B.
(f) Any reasonable delays in Substantial Completion or
Final Completion of the Plant arising by reason of investigation
of any Scope Change proposed by Aladdin that are reasonably
consistent with Northwind's preliminary good faith view, as set
forth in Section 9(c)(ii)(a)hereof, shall extend the Substantial
Completion Deadline or the Final Completion Deadline accordingly.
(d) SCOPE CHANGES DUE TO NORTHWIND ERROR. Notwithstanding anything
in this section to the contrary, no Scope Change Order shall be issued and
no adjustment of the Plant Price, the Substantial and Final Completion
Deadlines, the Project Plan, or the Plant Plans and Specifications shall be
made in connection with any correction
29
of errors, omission, deficiencies or improper or defective work on the part
of Northwind or any of its subcontractors in the performance of the Work.
(e) SCOPE CHANGES DUE TO FORCE MAJEURE AND CHANGE IN LAW. Any change
in the Plant Plans and Specifications or the Work which is necessitated by
a change in applicable Law that became effective after the date of this
Agreement or a Force Majeure Event and is not a Minor Modification shall be
treated as a Scope Change under Section 9(b) hereof which Aladdin shall not
have the right to approve and Northwind shall implement without obtaining
Aladdin's approval, provided that (i) Northwind shall notify Aladdin in
detail thereof as soon as reasonably practicable and in any event prior to
performance of the work contemplated thereby, (ii) Northwind otherwise
complies with the requirements of Section 9(b)(i)(c) hereof with respect to
such Scope Change, (iii) Northwind's determination that such change in the
Plant Plans or Specifications or the Work is necessary and Northwind's
implementation of such change both shall be made in good faith and in
accordance with Good Engineering Practices; provided, however, that this
Section 9(e) shall not apply to any change in any applicable Law resulting
directly or indirectly from the negligent acts, errors or omissions of
Northwind.
10. DEFAULT; TERMINATION.
(a) NORTHWIND EVENTS OF DEFAULT. Northwind shall be in default of
its obligations pursuant to this Agreement should any of the following
events or conditions arise or exist and Northwind shall fail to remedy the
same within ten (10) days, or, if such remedy cannot reasonably be
completed within ten (10) days, Northwind shall fail promptly to provide
Aladdin with evidence reasonably satisfactory to Aladdin that such default
can be cured by Northwind in a time period reasonably satisfactory to
Aladdin and promptly to commence and diligently pursue and conclude
remedial action within such agreed period:
(i) Admitted abandonment of the Plant by Northwind or failure
to prosecute the Plant with reasonable diligence after notice from
Aladdin stating that it believes that Northwind has abandoned the
Plant;
(ii) Northwind assigns or transfers this Agreement or its
right or interest herein, except as expressly permitted under Section
14(e) of this Agreement;
(iii) Northwind fails, neglects, refuses, or, other than
because of a Force Majeure Event, is unable at any time during the
course of the performance of the Work, to provide sufficient material,
equipment, services, or labor to perform the Work in accordance with
this Agreement;
30
(iv) Any representation or warranty made by Northwind was
materially incorrect when made and as a result thereof it reasonably
is expected that Northwind will be unable to observe and perform its
material obligations hereunder and such inability will not be cured
within a reasonable period of time;
(v) Northwind defaults, in any material respect, in its
observance of or performance under any material provision of this
Agreement (provided that such failure does not arise when Northwind
has refused to proceed with a proposed Scope Change when Northwind is
not obligated at that time to proceed with such proposed Scope
Change);
(vi) Unicom Corporation repudiates or disavows its obligations
under the Unicom Guaranty;
(vii) Northwind fails to comply with any Law or Government
Approval applicable to the Work or to Northwind's performance of its
obligations under this Agreement;
(viii) Unless otherwise permitted pursuant to this Agreement, a
material change or deviation in the Project Plan or Plant Plans and
Specifications shall be made or authorized by Northwind without the
prior approval of Aladdin; or
(ix) The failure by Northwind to provide the Project Plan or
Plant Plans and Specifications to Aladdin in accordance with this
Agreement.
(b) TERMINATION OPTION AND OTHER REMEDIES FOR NORTHWIND DEFAULT. If
a Northwind Event of Default has occurred, Aladdin may terminate this
Agreement by written notice to Northwind of the termination hereof. Upon
such termination, Aladdin shall demand performance of the Unicom Guaranty
and, unless within three (3) Business Days of such demand Unicom
Corporation, the Guarantor, informs Aladdin in writing that Unicom
Corporation shall perform the obligations of Northwind as set forth in this
Agreement, Aladdin may cause the obligations of Northwind pursuant to this
Agreement to be performed at the sole expense of Unicom Corporation in
accordance with the terms of the Unicom Guaranty. In the event Unicom
Corporation elects to perform the obligations of Northwind, Unicom
Corporation shall perform the Work and shall meet the Substantial
Completion Deadline and the Final Completion Deadline in accordance with
the terms of this Agreement, and shall have the right to perform
Northwind's obligations under the Related Agreements
31
pursuant to the terms thereof. In the event Aladdin shall cause the
obligations of Northwind pursuant to this Agreement to be performed at
Unicom Corporation's sole expense, Northwind promptly shall withdraw from
the Work site and transfer its rights, title and interest in the Plant and
the Plant Plans and Specifications to Aladdin. In addition, Northwind
promptly shall assign to Aladdin such of its contracts, including but not
limited to warranties and guarantees, related to the Plant and the Work as
Aladdin may request, and promptly remove such materials, equipment, tools,
and instruments used by, and any debris or waste materials generated by,
Northwind in the performance of the Work as Aladdin may direct, and Aladdin
may take possession of any and all designs, materials, equipment, tools,
and facilities of Northwind which are on the Work site. If Aladdin
exercises such option, (i) Aladdin shall assume the obligations of
Northwind under any contracts assigned to Aladdin pursuant to this section
which are not in default by Northwind, (ii) upon completion of the Plant,
Aladdin shall pay to Northwind an amount equal to the Plant Price less the
cost to Aladdin to complete the Plant, provided that such amount does not
exceed an amount equal to (x) the amount actually spent to date by
Northwind in accordance with the terms of this Agreement plus (y) all
amounts which Northwind is then contractually obligated to pay in respect
of equipment and materials previously delivered to the Plant Site and labor
and services previously performed in connection with the construction of
the Plant, or which Aladdin subsequently elects, in its sole discretion, to
accept from Northwind's suppliers pursuant to Northwind's purchase
commitments therefor, and provided further that the payment amount shall
not provide for any return on Northwind's investment in the Plant and (iii)
the Energy Service Agreement and the Northwind Lease shall concurrently
terminate. Aladdin shall have the right to have the Work finished without
incurring any liability to Northwind or assuming any liabilities incurred
by Northwind.
(c) ALADDIN EVENTS OF DEFAULT. Aladdin shall be in default of its
obligations pursuant to this Agreement should any of the following events
or conditions arise or exist and Aladdin shall fail to remedy the same
within ten (10) days, or Aladdin shall fail promptly to provide Northwind
with evidence reasonably satisfactory to Northwind that such default can be
cured by Aladdin in a time period reasonably satisfactory to Northwind and
promptly to commence and diligently pursue and conclude remedial action
within such agreed period:
(i) The Notice to Proceed shall not have been received by
Northwind by May 1, 1998;
(ii) Abandonment of the Aladdin Project by Aladdin after May
1, 1998;
32
(iii) Aladdin assigns or transfers this Agreement or its right
or interest herein, except as expressly permitted by Section 14(e)
hereof; or
(iv) Any representation or warranty made by Aladdin in Section
2(i) hereof was materially incorrect when made and as a result thereof
it is reasonably expected that Aladdin will be unable to perform its
material obligations hereunder, and such inability will not be cured
within a reasonable period of time.
(d) TERMINATION OPTION AND OTHER REMEDIES FOR ALADDIN DEFAULT. If an
Aladdin Event of Default has occurred pursuant to Section 10(c) of this
Agreement, Northwind may terminate this Agreement by written notice to
Aladdin of such termination. If Northwind terminates this Agreement
because an Aladdin Event of Default has occurred pursuant to Section 10(c)
of this Agreement, Aladdin shall be liable for and shall pay to Northwind
all costs and expenses reasonably incurred by Northwind in connection with
Northwind's obligations under this Agreement for the time period from and
including the date hereof to the effective date of such termination and all
third party engineering and consulting costs and expenses incurred prior to
the date hereof through the effective date of termination. If Northwind
terminates this Agreement because an Aladdin Event of Default has occurred
pursuant to Section 10(c)(ii), (iii) or (iv) of this Agreement, Aladdin
shall also pay to Northwind a twenty (20) percent return on the unfinanced
portion of such costs and expenses, such portion not to exceed forty (40)
percent of the total of such costs and expenses.
(e) Northwind shall be permitted to terminate this Agreement at any
time after March 1, 1998 if Aladdin shall not have acquired fee title to
the Aladdin Lands by such date or if the Financial Closing shall not have
occurred by such date. Either Party hereto may terminate this Agreement at
any time after January 31, 1998 if the Energy Service Agreement, in
substantially the form attached hereto as Exhibit G (with such changes as
the Parties may agree upon) has not been executed by such date, provided
that such Party has acted in good faith to execute the Energy Service
Agreement by such date. Any termination of this Agreement pursuant to this
Section 10(e) shall be in writing and shall be effective when given (unless
such termination expressly provides for effectiveness at a later date, in
which case such termination shall be effective on the stated date). If
this Agreement is so terminated, Aladdin shall be liable for and shall pay
to Northwind all costs and expenses reasonably incurred by Northwind in
connection with Northwind's obligations under this Agreement for the time
period from and including the date hereof to the effective date of such
termination and all third party engineering and consulting costs and
expenses incurred prior to the date hereof through the effective date of
such termination.
33
(f) CONSEQUENTIAL DAMAGES DISCLAIMER. Notwithstanding anything to
the contrary contained in this Agreement, neither Party shall be liable to
the other Party, whether in contract, tort, negligence, indemnity, strict
liability, or otherwise, for any special, indirect, incidental, or
consequential damages in connection with or arising out of the Work, or the
performance, non-performance or breach of this Agreement.
11. FORCE MAJEURE EVENT. If either Aladdin or Northwind shall be actually
delayed in or is prevented from performing any of its obligations hereunder due
to a Force Majeure Event, including an "Unforeseen Site Condition" as defined
below, and to the extent such delay in or prevention of performance could not be
avoided or mitigated by any reasonable method, the party claiming such delay or
prevention shall be excused from performing its obligations hereunder for the
period of delay or interruption caused by such Force Majeure Event.
(i) Within 72 hours after a party becomes aware or should, with due
diligence, have become aware of the occurrence of a Force Majeure Event,
such party shall deliver to the other a notice of such event stating the
nature thereof. Within seven (7) days of such notice, the party claiming
the occurrence of a Force Majeure Event shall deliver to the other party a
notice describing the anticipated impact of such delay on the performance
or the party's obligations hereunder, and within ten (10) days following
the end of such Force Majeure Event shall provide a written notice of
extension of performance of such party's obligations. Such notice shall
describe in detail the event causing the delay, the precise effect thereof
on the performance of such party's obligations, the length of delay, and
the measures taken or to be taken to minimize such delay. In the event
that a Party receiving a notice of delay caused by a Force Majeure Event
disagrees with such notice, the Parties shall promptly meet and attempt to
resolve such dispute. If the Parties are not able to resolve such dispute
within five (5) Business Days, then the dispute shall be resolved pursuant
to Section 13 hereof.
(ii) If after a Force Majeure Event has caused Northwind to suspend
or delay performance of the Work, Northwind has failed to take such action
as Aladdin could and would lawfully and reasonably initiate to remove or
relieve either the cause thereof or its direct or indirect effects, Aladdin
may, in its sole discretion and, after notice to Northwind, initiate, at
Aladdin's sole expense, such reasonable measures as will be designed to
remove or relieve such Force Majeure Event or its direct or indirect
effects and thereafter require Northwind to resume full or partial
performance of the Work.
34
For purposes of this Section 11, "Unforeseen Site Conditions" shall mean
conditions, not caused by Northwind (including, but not limited to, Northwind's
agents, subcontractors or any other contractor affiliated with Northwind),
existing as of the date upon which Northwind receives the Notice to Proceed, or
thereafter caused by Aladdin or third parties unrelated to Northwind, which,
notwithstanding Northwind's investigation of the Site (and provided that
Northwind's investigation of the Site is in accordance with Good Engineering
Practices), was not disclosed or discovered prior to the execution of the EPC
Contract(s).
12. CONFIDENTIAL INFORMATION. Northwind and Aladdin each agree to treat
in confidence all information regarding this Agreement and the performance by
the parties of their obligations hereunder and all information which either
Northwind or Aladdin will have obtained from the other party in contemplation of
entering into, or in the performance of, this Agreement and not make any use of
any of such information for any purpose other than complying with its
obligations under this Agreement and the Related Agreements. Such information
will not be communicated to any person other than Northwind or Aladdin and their
respective affiliates, officers, directors, employees, agents, attorneys, and
professional consultants, except to the extent disclosure of such information:
1. is required by law or governmental authority;
2. is made by a Party pursuant to litigation in which such Party is
a party; or
3. is made to any lender or prospective lender to such party
(PROVIDED such lender or prospective lender agrees in writing to
keep such information confidential on the terms set forth in this
Section 12).
If either party is required to disclose confidential information
pursuant to clause (a) above, such party will take reasonable steps to limit the
extent of the disclosure and to make such disclosure confidential under the
circumstances and will, to the extent it reasonably can do so in the
circumstances, afford the other party hereto notice of such request for
disclosure so as to permit such other party to seek an appropriate protective
order or other means by which such information may be maintained in confidence
pursuant to such disclosure. Information provided by a party hereunder will
remain the sole property of the party providing such information. The
obligation of each party to treat in confidence, and not to use, information
which it will have obtained from the other party will not apply to any
information which (x) is or becomes available to such party from a source not
otherwise under obligations of confidentiality with respect thereto, other than
the party providing such information, or (y) is or becomes available to the
public other than as a result of disclosure by such party or its agents in
breach of this Section 12.
35
13. DISPUTE RESOLUTION. If a dispute between the parties arises
concerning the design or construction of the Plant, the parties may jointly
request that such dispute be resolved by arbitration in accordance with the
provisions of the Commercial Arbitration Rules of the American Arbitration
Association, as in effect at the time. If the parties do not agree to submit
such dispute to arbitration and are not otherwise able to resolve such dispute,
either party may bring such dispute to any court of competent jurisdiction for
resolution. Notwithstanding the foregoing, neither party hereto shall seek
resolution of a dispute in a manner that delays or hinders the orderly and
continuous construction of the Plant. Notwithstanding any litigation or any
dispute or controversy, and regardless of the basis thereof or grounds therefor,
Northwind agrees that it will, for so long as the Agreement has not been
terminated, diligently prosecute the Work to Final Completion, all in accordance
with the terms of this Agreement.
14. GENERAL.
(a) NO PARTNERSHIP. Northwind is an independent contractor and this
Agreement shall not be construed to create a partnership, agency, joint
venture, lease, license, or any other relationship between Aladdin and
Northwind save as expressly contemplated herein and solely for the limited
purposes noted.
(b) REMEDIES AND LIMITATIONS. Remedies of the parties outlined or
referred herein are not intended to be exclusive and shall be in addition
to any other remedies at law or in equity which may be available to an
aggrieved party, except as limited by this Agreement.
(c) NOTICES. Notices shall be delivered under this Agreement in the
same manner as set forth in Section 10.1 of the Energy Service Agreement.
(d) APPROVALS AND OBJECTIONS. In cases where either party in any
part of this Agreement is given the right or option to review, approve or
object to any matter, provide a notice or attend a meeting, the exercise of
(or failure to exercise) such right or option shall not relieve Aladdin or
Northwind from their respective obligations and duties under this Agreement
or any Related Agreement.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Parties and their respective successors
and assigns. Neither Party shall assign its interest or delegate its
duties under this Agreement without the prior written consent of the other
party (which consent shall not be unreasonably withheld) except that either
Party may assign its interest hereunder in connection with a concurrent
assignment of its interest in the Energy Service Agreement
36
made in accordance with the provisions of such agreement, provided that
such assignment hereunder is being made to the same entity to which
assignment is being made under the Energy Service Agreement. In the event
of such assignment, the assignee shall have the same notice, cure and
assumption rights under this Agreement as is provided to such assignee
under Section 10.2(a)(ii) of the Energy Service Agreement.
(f) ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Exhibits
referred to herein and the Related Agreements and the documents delivered
pursuant hereto and thereto contain the entire understanding of the parties
hereto with regard to the subject matter contained herein or therein, and
supersede all prior agreements or understandings between or among any of
the parties hereto. This Agreement will not be amended, restated,
modified, or supplemented except by a written instrument signed by an
authorized representative of each of the parties hereto.
(g) INTERPRETATION. Article titles and headings to sections herein
are inserted for convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
(h) WAIVERS. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver will be validly and
sufficiently authorized for the purposes of this Agreement if, as to any
party, it is authorized in writing by an authorized representative of such
party. The failure of any party hereto to enforce at any time any
provision of this Agreement will not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement will be held to
constitute a waiver of any other or subsequent breach.
(i) EXPENSES. Each party hereto will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and, except
as set forth herein, to its performance and compliance with all agreements
and conditions contained herein on its part to be performed or complied
with, including the fees, expenses and disbursements of its counsel and
accountants.
37
(j) PARTIAL INVALIDITY. Wherever possible, each provision hereof
will be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained
herein will, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such provision will be ineffective to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability without invalidating the remainder of such invalid,
illegal or unenforceable provision or provisions or any other provisions
hereof, unless such a construction would be unreasonable. Upon any such
determination that any term or other provision hereof is invalid, illegal
or unenforceable, the parties hereto shall negotiate in good faith to
modify this Agreement so as to affect the original intent of the parties as
closely as possible in an acceptable manner, to the end that the
transactions contemplated hereby are fulfilled to the extent possible in
the circumstances.
(k) OPERATION OF THIS AGREEMENT. Aladdin and Northwind desire that
this Agreement operate between them fairly and reasonably, and agree to
cooperate and to communicate with each other concerning the terms hereof
and concerning matters relating to the Plant during the term of this
Agreement.
(l) EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which will be considered an original
instrument, but all of which will be considered one and the same agreement,
and will become binding when one or more counterparts have been signed by
each of the parties hereto and delivered to Aladdin and Northwind.
(m) GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the internal laws and decisions of the State of Nevada.
(n) TIME. Time is of the essence hereof.
[Balance of page intentionally left blank; signature page follows.]
38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
NORTHWIND ALADDIN, LLC ALADDIN GAMING, LLC
By: UTT Las Vegas, Inc., its manager
By: /s/ Donald Petkus By: /s/ Ronald Dictrow
---------------------- -----------------------------
Name: Donald Petkus Name: Ronald Dictrow
Title: President Title: Exec. Vice President
39
Aladdin Holdings, LLC, a Nevada limited liability company ("AH")
hereby (i) executes the Development Agreement to which this signature page is
attached for the purpose of confirming that it is jointly and severally liable
with Aladdin until the earlier of (i) Financial Closing or (ii) the acquisition
of fee title to the Aladdin Lands by Aladdin, to Northwind for payment due to
Northwind under Sections 5(c)(i), 10(d) and 10(e) of such Development Agreement
on account of an Aladdin Event of Default under Section 10(c) of such
Development Agreement or under Section 5(c)(i) or Section 10(e) pursuant to the
terms thereof and (ii) represents and warrants to Northwind, as an inducement to
Northwind to execute such Development Agreement, that as of the date hereof, AH
is the sole and exclusive owner of fee title to the Aladdin Lands (as defined in
the Northwind Lease) and all improvements thereto free and clear of all liens,
claims, encumbrances, and rights of others, other than (i) a deed of trust (a
copy of which is attached hereto) securing the note (a copy of which is attached
hereto) in the initial amount of $65 million and (ii) matters attached hereto in
Attachment A.
Dated: December 3, 1997
ALADDIN HOLDINGS, LLC
By: Aladdin Management Corporation
By: /s/ Ronald Dictrow
------------------------
Ronald Dictrow
Title: Treasurer
EXHIBIT A
DESCRIPTION OF ALADDIN LANDS
EXHIBIT B
PLANT PRICE AND GMPP
EXHIBIT C
UNICOM GUARANTY
EXHIBIT D
INSURANCE
1. Northwind will maintain:
(i) Workers' compensation insurance, with limits of liability at least
equal to the statutory requirements therefor;
(ii) Employer's liability insurance of not less than $1,000,000;
(iii) Comprehensive general liability insurance against liability for
injury to or death of any person or damage to property in
connection with the use, operation or condition of the Plant of not
less that $2,000,000 combined single limit per occurrence and
annual aggregate;
(iv) "All-risk" property insurance covering the Plant to the extent of
the full replacement cost thereof and, during construction of the
Plant, "all-risk builder's risk" insurance covering the Plant to
the extent of the full replacement thereof;
(v) During any and all periods of construction of the Plant, Northwind
shall cause its general contractors (including all contractors who
contract directly with Northwind) to obtain (i) commercial general
liability insurance with a minimum limit of liability of $5,000,000
combined single limit for bodily injury, personal injury and
property damage and include Aladdin and Aladdin's lenders as
additional insureds and (ii) workers' compensation insurance, with
limits of liability at least equal to the statutory requirements
therefor and employer's liability insurance of not less than
$1,000,000; and
(vi ) Excess liability umbrella coverage of at least $50,000,000.
2. Aladdin shall maintain:
(i) Workers' compensation insurance, with limits of liability at least
equal to the statutory requirements therefor;
(ii) Employer's liability insurance of not less than $1,000,000;
(iii) Comprehensive general liability (including public liability and
property damage) insurance coverage covering occurrences, accidents
and incidents on the Aladdin Lands that (1) occur from and after
the date hereof (regardless of when the claim is filed) and (2)
result in bodily injury, personal injury or death to any person or
entity and/or damage or destruction of property. Said insurance
shall have a combined single limit of liability per occurrence of
not less than $1,000,000 on a primary basis and not less than
$50,000,000 on an excess/umbrella basis, or such greater amounts as
are typical for similar casino-hotel projects in Las Vegas; and
(iv) "All-risk" property insurance covering the Aladdin Lands and
improvements thereon to the extent of the full replacement cost
thereof.
Each party hereto agrees that the insurance described above to be provided by
the other party may be provided by and through blanket coverages which may be
provided in whole or in part through a policy or policies covering other
liabilities and locations of the party obligated to provide such insurance and
its affiliates.
EXHIBIT E
SUBSTANTIAL COMPLETION CERTIFICATE FORM
EXHIBIT F
FINAL COMPLETION CERTIFICATE FORM
EXHIBIT G
ENERGY SERVICE AGREEMENT
TABLE OF CONTENTS
PAGE
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. General Terms. . . . . . . . . . . . . . . . . . . . . . . . . . .8
(a) Term . . . . . . . . . . . . . . . . . . . . . . . . . . .8
(b) Plant Location and Purpose . . . . . . . . . . . . . . . .8
(c) Purchase of Services . . . . . . . . . . . . . . . . . . .8
(d) Design and Construction of the Plant . . . . . . . . . . .8
(e) Aladdin Not Responsible for Acts of Northwind. . . . . . .8
(f) Claims Upon Failure of Work. . . . . . . . . . . . . . . .9
(g) Aladdin's Access to Work . . . . . . . . . . . . . . . . .9
(h) Responsibilities of Northwind. . . . . . . . . . . . . . .9
(i) Representations and Warranties . . . . . . . . . . . . . 11
(j) Insurance. . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Condemnation . . . . . . . . . . . . . . . . . . . . . . 13
3. Additional Agreements and Documents. . . . . . . . . . . . . . . 14
4. Project Management . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Project Manager. . . . . . . . . . . . . . . . . . . . . 14
(b) Project Execution Plan . . . . . . . . . . . . . . . . . 15
5. Plant Design . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Plant Oversight. . . . . . . . . . . . . . . . . . . . . 18
(b) Scope. . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Plant Plans and Specifications . . . . . . . . . . . . . 18
6. Plant Construction; Construction Reports and Meetings. . . . . . 21
7. Quality Control and Inspection . . . . . . . . . . . . . . . . . 22
(a) In General . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Quality Control and Inspection Program . . . . . . . . . 22
(c) Inspection Rights. . . . . . . . . . . . . . . . . . . . 23
(d) Effect of Waiver of Inspection Rights. . . . . . . . . . 24
8. Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Substantial Completion . . . . . . . . . . . . . . . . . 24
(b) Final Completion . . . . . . . . . . . . . . . . . . . . 25
(c) Timely Completion of the Plant . . . . . . . . . . . . . 25
(d) Contingency Plan . . . . . . . . . . . . . . . . . . . . 26
9. Scope Changes. . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Further Refinement, Corrections and Detailing Not Scope
Changes. . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Scope Changes. . . . . . . . . . . . . . . . . . . . . . 26
(c) Procedure for Scope Changes. . . . . . . . . . . . . . . 28
(d) Scope Changes Due to Northwind Error . . . . . . . . . . 30
(e) Scope Changes Due to Change in Law . . . . . . . . . . . 30
10. Default; Termination . . . . . . . . . . . . . . . . . . . . . . 30
(a) Northwind Events of Default. . . . . . . . . . . . . . . 30
(b) Termination Option and Other Remedies for Northwind
Default. . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Aladdin Events of Default. . . . . . . . . . . . . . . . 33
(d) Termination Option and Other Remedies for Aladdin
Default. . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Consequential Damages Disclaimer . . . . . . . . . . . . 34
11. Force Majeure Event. . . . . . . . . . . . . . . . . . . . . . . 34
12. Confidential Information . . . . . . . . . . . . . . . . . . . . 35
13. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . 36
14. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) No Partnership . . . . . . . . . . . . . . . . . . . . . 36
(b) Remedies and Limitations . . . . . . . . . . . . . . . . 37
(c) Notices. . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Approvals and Objections . . . . . . . . . . . . . . . . 37
(e) Successors and Assigns . . . . . . . . . . . . . . . . . 37
(f) Entire Agreement; Amendments . . . . . . . . . . . . . . 37
(g) Interpretation . . . . . . . . . . . . . . . . . . . . . 38
(h) Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 38
(i) Expenses . . . . . . . . . . . . . . . . . . . . . . . . 38
(j) Partial Invalidity . . . . . . . . . . . . . . . . . . . 38
(k) Operation of this Agreement. . . . . . . . . . . . . . . 38
(l) Execution in Counterparts. . . . . . . . . . . . . . . . 39
(m) Governing Law. . . . . . . . . . . . . . . . . . . . . . 39
(n) Time . . . . . . . . . . . . . . . . . . . . . . . . . . 39