GUARANTY
THIS GUARANTY is dated as of December 3, 1997, by UNICOM CORPORATION, an
Illinois corporation (the "Guarantor") to and for the benefit of Aladdin Gaming,
LLC, a Nevada limited-liability company (the "Customer").
RECITALS:
WHEREAS, the Customer is in the process of constructing the Aladdin Hotel
and Casino, the Sound Asylum Hotel & Casino, a performing arts theater, a
conference center, and a Retail Mall and service courts (collectively, the
"Aladdin Complex") in Las Vegas, Nevada, and desires that Northwind Aladdin,
LLC, a Nevada limited-liability company ("Northwind") construct and operate
district heating and cooling and cogeneration facilities for the production and
distribution to the Aladdin Complex of hot water, chilled water and electricity,
and further agree to procure additional electrical energy for the Aladdin
Complex, all on the terms and conditions set forth in a Development Agreement
and an Energy Service Agreement of even date herewith, each, between the
Customer and Northwind;
WHEREAS, it is a condition precedent to the Customer's entering into such
Development Agreement and Energy Service Agreement that the Guarantor agree to
guaranty certain obligations of Northwind to the Customer on the terms of this
Guaranty;
WHEREAS, as of the date hereof the Guarantor is the indirect parent of
Northwind and the Guarantor will derive benefit from the Customer's entering
into the Development Agreement and the Energy Service Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor hereby agrees as
follows:
1. Guaranty. Subject to the limitation set forth in Section 15 below, the
Guarantor hereby unconditionally and irrevocably guaranties to the Customer and
its successors, transferees, and assigns the obligations and duties of Northwind
under the Development Agreement and the Energy Services Agreement to construct
and demonstrate "Final Completion" of the "Plant" (as such terms are defined in
the Development Agreement) (such obligations and duties are hereinafter
collectively referred to as "Northwind's Obligations"). The Guarantor agrees
that the Guaranty described in this Section 1 is a present and continuing
guaranty of payment and performance and that the Customer shall not be required
to prosecute enforcement or
other remedies against Northwind or any other guarantor of Northwind's
Obligations before calling on the Guarantor for performance and observance.
The Guarantor agrees that if for any reason Northwind shall fail or be unable
to punctually and fully perform any of Northwind's Obligations, the Guarantor
shall perform or cause to be performed such obligations promptly upon demand.
The Guarantor agrees that one or more successive actions may be brought
against the Guarantor, as often as the Customer deems advisable, until all of
Northwind's Obligations are performed in full.
2. Representations and Warranties. The Guarantor represents and
warrants to the Customer that the Guarantor has all requisite corporate power
and authority to enter into and perform its obligations under this Guaranty
and that this guaranty has been duly and validly executed and delivered by
the Guarantor and constitutes the valid and binding obligation of the
Guarantor, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally, and except as enforcement
may be limited by general principles of equity.
3. Continuing guaranty. The Guarantor agrees that the obligations of
the Guarantor under this Guaranty shall be primary, absolute and
unconditional irrespective of, and unaffected by:
(a) The existence of any claim, set-off, defense, counterclaim or
other right which the Guarantor may have against the Customer or any other
natural person, governmental entity or any other entity whether acting in an
individual fiduciary or other capacity (each, a "Person");
(b) the occurence or continuance of any event of bankruptcy,
reorganization or insolvency proceeding with respect to Northwind or any other
Person (other than the Customer where such bankruptcy is not voluntary and
such bankruptcy, reorganization or insolvency proceeding remains undismissed
for more than sixty (60) days after the commencement thereof);
(c) any amendment, change, or other modification to the
Development Agreement, the Energy Service Agreement and/or this Guaranty made
pursuant to the terms thereof;
(d) the exercise, non-exercise or delay in exercising by the
Customer of any of its rights or remedies under this Guaranty;
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(e) any permitted assignment or other permitted transfer of this
Guaranty by the Customer or any permitted assignment or other permitted transfer
of the Development Agreement and/or the Energy Service Agreement;
(f) the absence of any notice to, or knowledge by, Guarantor of the
existence or occurrence of any of the matters or events set forth in the
foregoing clauses; or
(g) any other similar circumstance, condition or event that might
constitute or give rise to a defense to performance by Guarantor of its
obligations under this Guaranty.
4. Waiver. The Guarantor:
(a) waives, and agrees it shall not at any time insist upon, plead,
claim or take the benefit or advantage of, any appraisal, valuation, stay,
extension, marshaling of assets or redemption laws, or exemption, whether now or
at any time hereafter in force, which may delay, prevent or otherwise affect the
performance by the Guarantor of its obligations under, or the enforcement by the
Customer of, this Guaranty;
(b) waives, and agrees that it shall not at any time claim or take
the benefit or advantage of Section 365(e)(2) of the Title 11, United States
Code or any other state or federal insolvency, reorganization, moratorium or
similar law for the relief of debtors; provided, however, that, except as
provided in this paragraph 4(b), this waiver shall not apply with respect to any
bankruptcy by or against the Customer or any of its affiliates, it being the
express intent of the parties that, in the event of a bankruptcy by or against
the Customer, this Guaranty may not be enforced by the Customer (or any
affiliate of the Customer) as a debtor-in-possession, or by any trustee
appointed with respect to the Customer or any affiliate of the Customer or any
of their respective assets unless the party seeking enforcement has elected to
affirm and assume all obligations of the Customer under the Development
Agreement, the Energy Service Agreement and that certain Lease between the
Customer and Northwind dated of even date with the Development Agreement and has
complied with all applicable conditions to affirming and assuming such
agreements under all applicable laws, regulations and bankruptcy rules,
including, without limitation, curing of any defaults thereunder and providing
adequate assurances of performance thereunder;
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(c) waives all notices, diligence, presentment and demand (whether
for non-payment or protest or of acceptance, maturity, extension of time, change
in nature or form of Northwind's Obligations, acceptance of security, release of
security, composition or agreement arrived at as to the amount of, or the terms
of, Northwind's Obligations, notice of adverse change in Northwind's financial
condition or any other fact which might materially increase the risk to the
Guarantor hereunder) with respect to any of Northwind's Obligations, other than
any notices or demands required to be given to Northwind under the Energy
Service Agreement or the Development Agreement, and all other demands whatsoever
and waives the benefit of all provisions of law which are or might be in
conflict with the terms of this Guaranty;
(d) agrees that its obligations under this Guaranty shall be
unaffected by the existence of any claim, set-off, defense, counterclaim or
other right which the Guarantor may have against the Customer or any other
natural person, governmental authority or any other entity whether acting in an
individual fiduciary or other capacity (each, a "Person");
(e) irrevocably waives until Northwind's Obligations have been
satisfied (i) any rights which it may have acquired against Northwind by way of
subrogation under this Guaranty or otherwise, (ii) any rights to seek any
reimbursement from Northwind in respect of payments made by the Guarantor
hereunder, and (iii) any claim, counterclaim or set-off which it may have
against Northwind and the right to exercise any rights or remedies or commence
any proceedings with respect thereto;
(f) irrevocably waives any right to require the Customer to proceed
against Northwind or any other guarantor at any time, to proceed against or
exhaust any security held by the Customer at any time, and except to the extent
that Northwind has or would have had any such a right under the Development
Agreement and/or the Energy Service Agreement, the right to require the Customer
to mitigate damages or to pursue any other remedy whatsoever at any time; and
(g) irrevocably waives any defense based upon an election of
remedies by the Customer, including any election to proceed by judicial or
nonjudicial foreclosure of any security, whether real property or personal
property security, or by deed in lieu thereof, and whether or not every aspect
of any foreclosure sale is commercially reasonable, or any election of remedies,
including but not limited to remedies relating to real property or personal
property security, that
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destroys or otherwise impairs the right of the Guarantor against Northwind for
reimbursement.
5. Term of Guaranty. This Guaranty is a continuing guaranty and shall
remain in full force and effect until the date on which all Northwind's
Obligations have been performed and paid in full; provided that the Guarantor
has obtained the prior written consent of the Customer to such termination, such
consent not to be unreasonably withheld. Each and every default in the payment
or performance of Northwind's Obligations shall give rise to a separate cause of
action hereunder and separate causes of action may be brought hereunder as each
such cause of action arises.
6. Reinstatement. The obligations of the Guarantor pursuant to this
Guaranty shall continue to be effective or automatically be reinstated, as the
case may be, if at any time satisfaction of any of Northwind's Obligations or
the Guarantor's obligations under this Guaranty is rescinded or otherwise must
be restored or returned by the Customer upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Guarantor or otherwise, all as
though such satisfaction had not been made.
7. Bankruptcy No Discharge; Repayments; Reinstatement.
(a) Bankruptcy Proceedings. The Guarantor shall not commence or join
with any other party in commencing any bankruptcy, reorganization, or insolvency
proceedings of or against Northwind. The Guarantor understands and acknowledges
that by virtue of this Guaranty, the Guarantor has specifically assumed any and
all risks of a bankruptcy or reorganization case or similar proceeding with
respect to Northwind. As an example and not in any way a limitation, a
subsequent modification of Northwind's Obligations or any rejection or
disaffirmance thereof by any trustee, receiver or liquidating agency of
Northwind or of any of its properties, or any settlement or compromise of any
claim made in any such case, in any reorganization case concerning Northwind
shall not affect the obligation of the Guarantor to pay and perform Northwind's
Obligations in accordance with their original terms.
(b) Repayment and Reinstatement. If any claim is made upon the
Customer or any Person claiming through the Customer for repayment or
disgorgement of any amount or amounts received by the Customer in payment of
Northwind's Obligations and the Customer or such Person, as the case may be, is
compelled by law to repay or disgorge all or any part of said amount, then,
notwith-
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standing any revocation or termination of this Guaranty, the Guarantor shall be
and remain liable to the Customer or such Person, as the case may be, for the
amount so repaid, to the same extent as if such amount had never originally been
received by the Customer or such Person, as the case may be.
8. Successors and Assigns. This Guaranty shall inure to the benefit of the
Customer and its successors and assigns and not to any third party, nor shall
any third party have recourse to the Guarantor in connection with this Guaranty.
This Guaranty shall be binding on the Guarantor and shall not be assigned
without the prior written consent of the Guarantor, such consent not to be
unreasonably withheld. Notwithstanding anything to the contrary contained
herein, Guarantor's consent shall not be required for an assignment of this
Guaranty to one or more of the Customer's lenders and Customer's Affiliates (as
defined in the Energy Service Agreement) (and one or more of the Affiliates'
lenders) provided that any such assignee(s) (including any of such lenders)
shall (i) have a fee interest or a leasehold interest of not less than twenty
(20) years in and to a substantial portion of the Aladdin Lands (as such term is
defined in the Development Agreement), (ii) be diligently pursuing to completion
its respective portion of the Aladdin Complex (i.e., the Aladdin Hotel and
Casino, the Mall and/or the Sound Asylum Project (the "Mall" and the "Sound
Asylum Project" as defined in the Development Agreement)), and (iii) be required
to assume the Customer's obligations under the Development Agreement and the
Energy Service Agreement prior to and at the time of enforcing Guarantor's
obligations under this Guaranty.
9. Amendments; Waivers, etc. Neither this instrument nor any term hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Customer and the Guarantor. No delay or
failure by the Customer to exercise any remedy against Northwind or the
Guarantor will be construed as a waiver of that right or remedy. No failure on
the part of the Customer to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by any applicable governmental rule.
10. Joinder. The Guarantor agrees that any action to enforce this Guaranty
may be brought against the Guarantor without any reimbursement or joinder of
Northwind or any other guarantor of Northwind's Obligations in such action.
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11. Severability. In the event that any provision of this Guaranty is
deemed to be invalid by reason of the operation of law, or by reason of the
interpretation placed thereon by any administrative agency or any court, the
Guarantor and the Customer shall negotiate an equitable adjustment in the
provisions of the same in order to effect, to the maximum extent permitted by
law, the purpose of this Guaranty and the validity and enforceability of the
remaining provisions, or portions or applications thereof, shall not be affected
thereby and shall remain in full force and effect.
12. Applicable Law. This Guaranty shall be governed as to validity,
interpretation, effect and in all other respects by the laws and decisions of
the State of Illinois.
13. Waiver of Jury Trial. The Guarantor and the Customer irrevocably waive
all right of trial by jury in any action, proceeding or counterclaim arising out
of or in connection with this Guaranty or any matter arising hereunder.
14. Notice. All notices, communications and waivers under this Guaranty
shall be in writing and shall be (i) delivered in person or (ii) mailed, postage
prepaid, either by registered or certified mail, return receipt requested, or
(iii) by overnight express carrier, addressed in each case as follows:
If to the Customer, to:
Aladdin Gaming, LLC
c/o Aladdin Management Corporation
280 Park Avenue, 38th Floor
New York, New York 10017
Attention: Ronald Dictrow
Fax: (212) 661-0844
If to the Guarantor, to:
Unicom Corporation
P.O. Box 767
One First National Plaza, Suite 3700
Chicago, Illinois 60690
Attention: Treasurer
Fax: (312) 394-3110
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or to any other address as to any of the parties hereto, as such party shall
designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section 14 shall be deemed received (i) if
personally delivered, then on the date of delivery, (ii) if sent by overnight,
express carrier, then on the next business day immediately following the day
sent, or (iii) if sent by registered or certified mail, then on the earlier of
the third business day following the day sent or when actually received.
15. Limitation of Liability. Notwithstanding anything hereinabove set
forth to the contrary the aggregate liability of the Guarantor under this
Guaranty shall be limited to an amount equal to (a) the lesser of (i) Thirty
Million Dollars ($30,000,000) or (ii) the GMP, as finally determined and agreed
upon pursuant to the Development Agreement, plus interim operating costs up to
the Substantial Completion Date, minus (b) the aggregate dollar amount of any
"Substitute Performance Assurances" (as defined below) which are hereafter
provided in favor of the Customer with respect to Northwind's Obligations and
are in effect from time to time.
For purposes hereof, "Substitute Performance Assurances" means: (i) a
guaranty of Northwind's Obligations in favor of the Customer in form and
substance satisfactory to the Customer in its sole discretion and provided by a
general contractor for the Project, a manufacturer of major components for the
Project, or by an entity having a direct or indirect ownership interest in
Northwind and, in either case, also having a commercial paper rating comparable
to the commercial paper rating of the Guarantor at the time such guaranty is
issued; and/or (ii) a letter of credit issued in favor of the Customer by a
financial institution reasonably satisfactory to the Customer providing that the
Customer may draw thereunder in the event that Northwind shall default in
performance of Northwind's Obligations and otherwise in form and substance
reasonably satisfactory to the Customer.
Upon Substantial Completion, the Guarantor's liability under this Guaranty
shall decrease by the amount of debt and equity contributed by Northwind towards
completion of the Plant, minus ten percent (10%) which shall be retained by the
Customer pending Final Completion.
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the
date first above written.
UNICOM CORPORATION
By: /s/ Donald A. Petkus
-----------------------------
Name: Donald A. Petkus
Title: Senior Vice President
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