Energy Services Agreement - Atlantic-Pacific Las Vegas LLC and Venetian Casino Resort LLC
E N E R G Y S E R V I C E S A G R E E M E N T
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This Energy Services Agreement ("Agreement") is entered into as of this
first day of May, 1997, by and between Atlantic-Pacific Las Vegas, LLC
("Seller"), a Delaware limited liability company ("Seller"), and Venetian Casino
Resort, LLC, a Delaware limited liability company ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of producing and selling
heating and cooling energy, and providing energy management and operations and
maintenance services; and
WHEREAS, Buyer's affiliate, Las Vegas Sands, Inc. ("Construction
Affiliate") has entered into, and assigned to Buyer, a Construction Management
Agreement (defined herein) in the form of Appendix A attached hereto, providing
for, among other things, the construction of (i) an integrated thermal energy
production facility (the "Central Plant", as defined herein), to be located on
property leased to Seller pursuant to a Ground Lease (as defined herein), and
designed to meet the aggregate Thermal Energy requirements of a hotel and casino
to be developed and owned by Buyer ("Buyer's Thermal Energy Requirements"), a
convention center owned by Interface Group - Nevada, Inc. and a mall complex to
be developed by Buyer and leased by Buyer to Grand Canal Shops Mall
Construction, LLC and (ii) certain energy related and other equipment,
improvements and interconnection facilities to be located at or connected to
Buyer's Facilities (as defined herein) ("Other Facilities") and the facilities
of the Other Customers (as defined herein) (Collectively, the Central Plant and
the Other Facilities shall be referred to as the "Energy Improvements");
WHEREAS, Seller is willing to finance, purchase, own, operate and
maintain the Energy Improvements, provide certain valued added engineering
services during the design and construction of the Energy Improvements, provide,
at Buyer's option, other operation and
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maintenance services in connection with certain electrical, HVAC, distribution
and other equipment owned by Buyer ("Buyer's Equipment") located at Buyer's
Facilities, and provide certain other services for Buyer as more specifically
set forth in this Agreement;
WHEREAS, Buyer, on behalf of itself, its successors, assigns and
tenants, desires to compensate Seller for the various undertakings and services
provided by Seller pursuant to this Agreement;
WHEREAS, Buyer, on behalf of itself, its successors, assigns and
tenants, desires to have, and Seller is willing to provide Buyer, an option to
purchase (i) collectively with the Other Customers, the Central Plant and (ii)
the Other Facilities.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements set forth herein and such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Buyer and Seller, each intending to be legally bound, do hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Except as otherwise expressly provided herein, all capitalized terms
used in this Agreement shall have the respective meanings as set forth below.
Section, Appendix and Schedule references shall mean the applicable Sections of,
and Appendices and Schedules to, this Agreement.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person.
"Architects Agreement" shall mean that certain Agreement between Owner
and Architect, dated and effective as of January 1, 1996, between Venetian
Casino Resort, LLC and a collaboration between the firms of TSA of Nevada, LLP
and WAT&G, Inc. Nevada, providing
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for a fixed price, subject to certain adjustments, for the design of the Project
inclusive of the Energy Improvements and Other Customer's Facilities.
"Billing Cycle" means each calendar month within a Contract Year.
"Buyer Additional Meters" shall have the meaning set forth in Section
5.1.
"Buyer Default" shall mean each of the events described in Section 8.2.
"Buyer's Equipment" means the systems and equipment, as specifically set
forth in Schedule 1.05, as amended from time to time by Seller and Buyer, that
are owned by Buyer, are located in or on Buyer's Facilities, and are, at Buyer's
election pursuant to this Agreement, to be operated and maintained by Seller in
accordance with the terms of this Agreement.
"Buyer's Equipment O&M" means the operations and maintenance services
provided by Seller, at Buyer's election pursuant to this Agreement, in
connection with Buyer's Equipment, as more specifically set forth in Schedule
3.2A.
"Buyer's Facilities" means the hotel and casino being developed and
which will be owned by Buyer in Las Vegas, Nevada, as more particularly
described in the Funding Agents' Disbursement and Administration Agreement as
the "HC/Mall Component", excluding the "Mall" assets as defined therein.
"Buyer's Lender" shall mean "Lender", as defined in the Funding Agents'
Disbursement and Administration Agreement, which is a lender to Buyer.
"Buyer's Maximum Thermal Energy Requirement" shall mean the maximum peak
amount of Thermal Energy Seller is obligated to provide Buyer in any Contract
Year as set forth in Schedule 4.8A.
"Buyer's Thermal Energy Requirement" shall mean the Thermal Energy
requirements of Buyer for the Contract Year as set forth in the O&M Budget for
each Contract Year determined in accordance with Schedule 4.2.
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"Capacity Payment" shall mean the sum of the Central Plant Capacity
Payment and the Other Facilities Capacity Payment, as provided and defined in
Section 4.1.
"Central Plant" means the integrated Thermal Energy production facility,
associated equipment and systems, as more specifically set forth in Schedule
2.2A, to be financed, owned, operated and maintained by Seller pursuant to the
terms of this Agreement.
"Central Plant O&M" means the operations and maintenance services
provided by Seller in connection with the Central Plant, as specifically set
forth in Schedule 3.2A.
"Change in Law" means any of the following events or conditions having,
or which may reasonably be expected to have, an adverse effect on the
performance of either party's respective obligations under this Agreement
(except for payment obligations):
(a) the adoption, promulgation, issuance, modification or
repeal, subsequent to the date of this Agreement, of any Legal
Requirement or the issuance of any modification of any
previously issued written administrative or judicial
interpretation thereof;
(b) the order, judgment, action or determination of any federal,
state or local court, administrative agency, governmental body
or officer, or regulatory commission on or after the date of
this Agreement to the extent such order, judgment, action or
determination is not the result of willful or negligent action
of the party asserting the occurrence of a Change in Law;
provided however, that any good faith actions or inactions to
contest any such order, judgment, action or determination shall
not be considered a willful or negligent action or lack of
reasonable diligence on the part of the party asserting the
Change in Law;
(c) the denial of an application for, delay in the review,
issuance or renewal of, or suspension, termination,
modification, interruption, or imposition of any material
condition in connection with the issuance, renewal or failure of
issuance or renewal on or after the date of this Agreement of
any Governmental Authorization to the extent that such denial,
delay, suspension, termination,
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modification, interruption, imposition, or failure is not the
result of the willful or negligent action or lack of reasonable
diligence on the part of the party asserting the occurrence of
the Change in Law; provided however, that good faith actions or
inactions to contest any such denial, delay, suspension,
termination, modification, interruption, imposition or failure
shall not be considered a willful or negligent action or lack of
reasonable diligence of the party asserting the Change in Law.
"Confidential Information" means any and all information, or any portion
thereof of a proprietary, confidential and/or trade secret nature, disclosed to
or otherwise obtained by the receiving party or its employees, agents or
affiliates (each individually referred to as a "recipient") either directly or
indirectly from the other party, whether oral, written, or in other recorded
form, including but not limited to the know-how, trade secrets, knowledge,
concepts, data, reports, methodology, pricing, business affairs, and any other
information or knowledge owned or developed by either party, except for
information which the recipient can demonstrate:
(a) was at the time of disclosure to such recipient, generally
part of the public domain or thereafter becomes generally part
of the public domain through no act or omission of recipient; or
(b) was lawfully in such recipient's possession as shown in
written records prior to such disclosure and without obligation
of confidentiality; or
(c) was lawfully received by such recipient after disclosure
from a third party without obligation of confidentiality and
without violation by such third party of an obligation of
confidentiality to another; or
(d) was independently developed by such recipient without any use
of or benefit of Confidential Information.
"Consent and Agreement" shall mean that certain Consent and Agreement
(HVAC AGREEMENTS) dated as of November 14, 1997 by Seller for the benefit of The
Bank of Nova Scotia, in its capacity as the Intercreditor Agent, as defined in
the Funding Agents' Disbursement and Administration Agreement, for and on behalf
of The Bank of Nova Scotia, as Bank Agent,
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The Bank of Nova Scotia, as Disbursement Agent, GMAC Commercial Mortgage
Corporation, as the Interim Mall Lender, First Trust National Association, as
the Mortgage Notes Indenture Trustee, and the Other Secured Parties thereunder.
"Construction Agency Agreement" means that certain Construction Agency
Agreement, of even date herewith, between Buyer and Seller.
"Construction Consultant" shall have the meaning set forth in the
Funding Agents' Disbursement and Administration Agreement.
"Construction Management Agreement" means that certain Construction
Management Agreement, dated as of the 15th day of February, 1997, between Lehrer
McGovern Bovis, Inc. and Las Vegas Sands, Inc., providing for a guaranteed,
not-to-exceed maximum price, subject to certain exceptions, for the construction
of the Project, inclusive of the Energy Improvements and Other Customer's
Facilities, which contract has been amended and assigned to Buyer pursuant to
that certain Assignment, Assumption and Amendment dated as of November 14, 1997
by and among Lehrer McGovern Bovis, Inc., Las Vegas Sands, Inc. and Buyer.
"Contract Year" shall mean, commencing on the Service Commencement Date,
each successive twelve (12) calendar month period, or other period mutually
agreed to in writing by Seller, Buyer and the Other Customers, during the Term.
"Contract Year Amount" shall have the meaning set forth in Section 4.3
of this Agreement.
"Contract Year Fixed Costs" shall have the meaning set forth in and be
determined in accordance with Schedule 4.2.
"Contractor" shall mean Lehrer McGovern Bovis, Inc.
"Credit" shall have the meaning set forth in Section 4.3 of this
Agreement.
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"Current Contract Year" shall mean, at any time during the Term, the
Contract Year within which the then current calendar date falls.
"Current O&M Budget" means the Annual O&M Budget applicable in the
Current Contract Year, determined in accordance with of Schedule 4.2.
"Divided Share" means the fixed ratio of Buyer's Maximum Thermal Energy
Requirement to the sum of Buyer's Maximum Thermal Energy Requirement and Initial
Customers Maximum Thermal Energy Requirement of each of the Other Customers, as
more specifically set forth on Schedule 2.2C, and as such schedule may be
amended from time to time based upon the mutual written agreement of Seller,
Buyer and the Other Customers. The sum of Divided Share of Buyer and the Other
Customers shall in no event be less than 100%; provided however, that in the
event Seller terminates its energy services agreements with one or both of the
Other Customers and this Agreement is not otherwise terminated, Buyer's Divided
Share in effect as of the date of such termination shall not be adjusted based
upon such termination(s) absent Buyer's and Seller's written consent.
"Easements" shall have the mean those easements granted to Seller
pursuant to the provisions of the Ground Lease and those certain Easement
Agreement, dated as of the same date as this Agreement, entered in to by Seller
and the Other Customers.
"Energy Improvements" means the Central Plant and the Other Facilities.
"Energy Management Services" shall have the meaning set forth in
Section 3.3.
"Engineering Services" means the services provided by Seller to Buyer
pursuant to the terms of this Agreement, as specifically set forth in Schedule
3.1.
"Event of Force Majeure" shall include the following acts, events or
conditions, or any combination thereof, which renders either party wholly or
partially unable to perform its obligations under this Agreement, other than the
payment of money, and which is beyond the
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reasonable control of the party relying thereon as justification for not
performing its obligations or complying with any condition required of such
party under the terms of this Agreement:
(a) an act of God, lightning, earthquake, hurricane, tornado,
acts of a public enemy, war, blockade, insurrection, riot or
other civil disturbance, sabotage or similar occurrence or any
exercise of the power of eminent domain, police power,
condemnation or other taking by or on behalf of any public,
quasi-public or private entity; or
(b) a landslide, fire, accident, strike or labor dispute,
curtailment of fuel supply, explosion, flood or nuclear
radiation, not created by an act or omission of the party
asserting an Event of Force Majeure has occurred; or
(c) a Change in Law; or
(d) the suspension, termination, interruption, denial or failure
of or inability to obtain any renewal or issuance of any permit,
license, right of way, consent, authorization or other approval
which is essential to Seller's performance of its obligations
under this Agreement; provided however, that such suspension,
termination, interruption, denial , failure or inability shall
not be the result of the failure of Seller to comply with Legal
Requirements or the willful, intentional or negligent action or
inaction of Seller, provided however, that the contesting, in
good faith, of any such suspension, termination, interruption,
denial , failure or inability, shall not constitute or be
construed as a willful, intentional or negligent action or
inaction by Seller; or
(e) any surface or subsurface condition not created by Seller and
existing at the Central Plant Site which shall require a redesign
or change in the construction of the Energy Improvements such
that Total Energy Improvement Cost is likely to exceed $70
million; or
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(f) Forced Outage, but only to the extent caused by any of the
acts, events or conditions described in the foregoing clauses
(a) through (e) of this definition of "Event of Force Majeure".
"Fixed Share" shall have the meaning set forth in, and be determined in
accordance with, Schedule 4.2.
"Forced Outage" shall mean any outage caused by mechanical, electric or
equipment failure, not caused by or resulting from the acts or omissions of
Seller (or Seller's employees or agents), that either fully or partially
curtails the operation of the Energy Improvements.
"Fully Burdened Payroll Costs" shall have the meaning set forth in, and
be determined in accordance with, Schedule 4.2.
"Funding Agents' Disbursement and Administration Agreement" shall mean
that certain Funding Agents' Disbursement and Administration Agreement dated as
of November 14, 1997 by and between Buyer The Bank of Nova Scotia, as
Disbursement Agent, The Bank of Nova Scotia, as the Bank Agent, First Trust
National Association, as trustee, GMAC Commercial Mortgage Corporation and
Seller, as amended pursuant to its terms.
"Governmental Approval" means any authorization, consent, approval,
waiver, exception, variance, franchise, permission, permit, filing, publication,
declaration, license or other form of required permission from, of or with any
Governmental Authority, and shall include, without limitation, those siting,
environmental and operating permits and licenses which are required for the
construction, modification, use, operation and maintenance of the Energy
Improvements.
"Governmental Authority" means any agency, department, court or other
administrative or regulatory authority of any federal, state or local
governmental body.
"Ground Lease" means that certain Ground Lease between Seller and
Venetian Casino Resort, LLC dated the same date as this Agreement.
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"HVAC Completion" shall have the meaning set forth in the Funding
Agents' Disbursement and Administration Agreement.
"Initial Customers' Maximum Thermal Energy Requirements" shall mean the
sum of the maximum peak amount of Thermal Energy Seller is obligated to provide
the Other Customers in any Contract Year as set forth in Schedule 2.2C.
"Initial Customers' Thermal Energy Requirements" shall mean the Thermal
Energy requirements of the Other Customers in the Contract Year, as set forth in
the O&M Budget for such Contract Year adopted pursuant to Schedule 4.2.
"Initial Term" shall have the meaning set forth in Section 2.1.
"Legal Requirements" shall mean all laws, statutes, codes, ordinances,
rules, regulations, orders, judgments, decrees, injunctions, directions and
requirements of all federal, state, county, municipal and local government
units, agencies and courts which must be complied with by either party in
performing its obligations pursuant to this Agreement, including but not limited
to, all applicable environmental laws and Governmental Approvals.
"Margin" shall have the meaning set forth in, and be determined in
accordance with, Schedule 4.2
"Metering Equipment" shall have the meaning set forth in Section 5.1.
"Monthly Capacity Payment" shall have the meaning set forth in, and
shall be determined in accordance with Schedule 4.1.
"O&M Budget" means the budget for O&M Services adopted in accordance
with Schedule 4.2.
"O&M Services" means the Central Plant O&M, Other Facilities O&M and, to
the extent applicable, Buyer's Equipment O&M.
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"Other Customers" means, collectively, Interface Group-Nevada, Inc. and
Grand Canal Shops Mall Construction, LLC and their permitted successors and
assigns.
"Other Customers Facilities" means the systems and equipment, as
specifically set forth on Schedule 2.2A, that are located in or on the
facilities of the Other Customers and are to be financed, owned, operated and
maintained by Seller pursuant to agreements with the Other Customers.
"Other Customers Facilities O&M" means the operations and maintenance
services provided by Seller in conjunction with the Other Customers Facilities,
as specifically set forth in Schedule 3.2A.
"Other Facilities" means the systems and equipment, as specifically set
forth in Schedule 2.2A, that are located in or on Buyer's Facilities and are to
be financed, owned, operated and maintained by Seller pursuant to the terms of
this Agreement.
"Other Facilities Capacity Payment" shall have the meaning set forth in
Schedule 4.1B.
"Other Facilities O&M" means the operations and maintenance services
provided by Seller in connection with the Other Facilities, as specifically set
forth in Schedule 3.2A.
"Permitted Liens" shall have the meaning set forth in the Funding
Agents' Disbursement and Administration Agreement.
"Person" means any individual, corporation, business, trust,
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or other entity of whatever nature.
"Prior Contract Year" shall mean, at any time during the Term commencing
on the first anniversary date of the Service Commencement Date, the Contract
Year preceding the Current Contract Year.
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"Project" shall have the meaning given in the Funding Agents'
Disbursement and Administration Agreement.
"Projected Contract Year" means commencing on the Service Commencement
Date and thereafter, at any time during the Term, the Contract Year next
succeeding the Current Contract Year.
"Projected O&M Budget" means the O&M Budget applicable to a Projected
Contract Year, determined in accordance with Schedule 4.2.
"Property" shall have the meaning set forth in the Ground Lease.
"Property Owner" means Venetian Casino Resort, LLC.
"Proportionate Share" shall mean (i) for the first Contract Year, the
fixed percentage set forth in Schedule 2.2B and (ii) for the second Contract
Year and each Contract Year thereafter, the ratio of Buyer's Thermal Energy
Requirements to the sum of Buyer's Thermal Energy Requirements and the Initial
Customers' Thermal Energy Requirements for the immediately preceding Contract
Year; provided however that in the event that Buyer, or both, of the Other
Customers did not actually fully occupy and use 100% of its respective
improvements for any portion of such preceding Contract Year (by reason of (i)
delay in the date such improvements are opened for business, (ii) fire or other
casualty, (iii) the non-occupancy and use of tenant space, or (iv) any other
cause, without limitation), then for purposes of such adjustment under clause
(ii) above, the actual total Thermal Energy received by such entity during the
prior Contract Year shall be increased to equitably reflect stabilized full
occupancy and use of 100% of such improvements for the entire preceding Contract
Year. Until and unless the appropriate amount of such adjustment has been
approved in writing by Seller, Buyer and the Other Customers, which approval
shall not be unreasonably withheld or delayed, the Proportionate Shares of Buyer
and the Other Customers shall not be changed from those then in effect for the
prior immediately preceding Contract Year, but upon such approval, such
Proportionate Share may be adjusted retroactively to the beginning of the
applicable Contract Year; provided however that, except as may be agreed to by
the parties in writing as a result of an agreement entered into
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by Seller with another customer pursuant to Section 4.8 of this Agreement, in no
event shall the sum of Buyer's Proportionate Share and the Initial Customers
Proportionate Shares be less than 100%. Any of Buyer, Seller or any Other
Customers shall have the right, upon written notice to the others, to request
such adjustment be considered for any improvements served by the Central Plant
which it reasonably believes were not fully used and occupied at all times
during the immediately preceding Contract Year; provided that such notice is
given not less than 30 calendar days following the last day of such Contract
Year.
"Prudent Operating Practices" means the practices, methods and acts
commonly used by experienced and prudent operators in the heating and cooling
industry, including that portion of the industry providing thermal energy
services to convention centers, casinos, malls and similar institutions, that at
a particular time, in the exercise of reasonable judgment in light of the facts
known and/or that reasonably should have been known at the time a decision was
made, would have been expected to accomplish the desired result in a manner
consistent with law and/or Governmental Authorizations, reliability, safety,
environmental protection, economy and expedition, including without limitation,
those practices, methods and acts which are required by manufacturers of
machinery and equipment constituting as applicable, the Central Plant, the Other
Facilities, or, if applicable, Buyer's Equipment.
"Purchase Option Payment" shall mean the amount set forth in Schedule
2.5 to be paid by Buyer upon exercising its purchase option under Section
2.5(a).
"Renewal Term" shall have the meaning set forth in Section 2.5(b).
"Seller Default" shall mean each of the events described in Section 8.1.
"Seller's Lender" means any party providing financing or refinancing to
Seller in connection with Seller's payment of the costs of the design,
engineering, procurement, acquisition, construction, start up, testing and/or
operation and maintenance of the Energy Improvements and the Other Customers
Facilities.
"Service Commencement Date" shall have the meaning set forth in Section
2.3.
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"Subcontractor" shall mean any supplier, other than Seller, of work,
materials, equipment or services to Contractor, Buyer or its Construction
Affiliate in connection with the design, construction, start up and testing of
the Energy Improvements and Other Customers Facilities.
"Tenants" or "Tenant" shall have the meaning set forth in Article XII of
this Agreement.
"Term" shall have the meaning set forth in Section 2.2.
"Termination Payment" means the amount, set forth in Schedule 9.3, which
Buyer shall pay Seller in accordance with Sections 2.4, 3.4(c), 9.1 and
9.3.
"Thermal Energy" means steam and chilled water produced at the Central
Plant and delivered by Seller to Buyer pursuant to this Agreement at the
interconnection points set forth in Schedule 3.4.
"Total Energy Improvements Cost" shall mean the total amount of costs
incurred by Seller, pursuant to the terms of this Agreement, the Construction
Agency Agreement and the Funding Agents' Disbursement and Administration
Agreement, in connection with the design, engineering, procurement,
construction, start-up and testing of the Energy Improvements and the Other
Customers Facilities, which amount shall not exceed $70 million, inclusive of
(i) interest on any such cost incurred by Seller during construction and prior
to the Service Commencement Date, at an interest rate equal to the Effective
Interest Rate set forth in Schedule 4.1 (ii) all out-of-pocket costs, expenses
and fees, including fees and expenses of all legal counsel of each such member's
letter of credit bank, incurred by Seller's members in connection with the
obtaining of a letter of credit in accordance with Section 2.4 of the Funding
Agents' Disbursement and Administration Agreement and (iii) that portion of the
cost of Transition Period O&M Services provided by Seller which Buyer, Seller
and the Other Customers mutually agree should be capitalized pursuant to
Schedule 3.2B.
"Transition Period O&M Services" means the operations and maintenance
services provided by Seller prior to the Service Commencement Date, as more
specifically set forth in Schedule 3.2B.
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"Unit Variable Cost" shall have the meaning set forth in, and be
determined in accordance with, Schedule 4.2.
"Unit Variable Share" shall have the meaning set forth in, and be
determined in accordance with, Section 4.2.
ARTICLE II
TERM; CONDITIONS PRECEDENT
2.1 Term. This Agreement shall be in full force and effect, be legally
binding upon the parties and their permitted successors and assigns, and be
enforceable in accordance with its terms, as of the date first set forth above
and shall remain in effect unless terminated earlier pursuant to the provisions
of Section 2.4, Article IX, or Section 10.2, for an initial term of ten (10)
Contract Years ("Initial Term") from the Service Commencement Date, and
thereafter for any Renewal Term, as defined provided in Section 2.5 (the Initial
Term and any Renewal Term being the "Term" of this Agreement).
2.2 Conditions Precedent to Seller's Payment of Total Energy
Improvements Cost. Subject to the provisions of this Agreement, the Construction
Agency Agreement and the Funding Agents' Disbursement and Administration
Agreement, Seller agrees to pay the Total Energy Improvement Costs up to a
maximum amount of $70 million dollars in the aggregate; provided however, that
Seller's obligation to pay, or advance funds for the payment of, such costs
shall be subject to the satisfaction or written waiver by Seller of each of the
following conditions precedent:
(a) Seller shall have executed the Ground Lease and the Easement
Agreement with the Buyer and the Other Customers, respectively and the Ground
Lease and the Easement Agreements, together with any financing statements
required by Section 13.17, shall have been delivered to Lawyers Title Insurance
Company for recording and recorded as soon as possible after such delivery but
in no event later than contemporaneously with the recording of the Deed of
Trust, as defined in the Funding Agents' Disbursement and Administration
Agreement.
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(b) there shall not be a Buyer Default under this Agreement, or
Seller's energy services agreements with the Other Customers, an Event of
Default of Landlord under the Ground Lease, an Event of Default under (and as
defined in the Funding Agents' Disbursement and Administration Agreement and/or
a Construction Agent Event of Default, as defined in and, under the Construction
Agency Agreement;
(c) Buyer and Seller shall have executed a Construction Agency
Agreement, in the form of Appendix B attached hereto and Buyer shall have
executed the Assignment of Construction Documents attached thereto and the
written consent, in the form attached to the Assignment of Construction
Documents, of each of the other parties to the Construction Documents (as
defined in the Construction Agency Agreement)shall have been obtained;
(d) All applicable conditions precedent to such funding as set
forth in, and determined in accordance with, the Funding Agents' Disbursement
and Administration Agreement shall have been satisfied, including but not
limited to the delivery by Buyer to the Disbursement Agent thereunder of the
requisite Advance Request the delivery by the Buyer of the requisite Notice of
Funding Request and the delivery by Buyer to Seller of the requisite
Consultant's Certificate, with each such certificate in the form provided in the
Funding Agents' Disbursement and Administration Agreement, together with such
other certificates as may be required pursuant to the Funding Agents'
Disbursement and Administration Agreement.
2.3 Service Commencement Date. The Service Commencement Date shall be
deemed to occur on the first day of the calendar month immediately following the
date that (i) HVAC Completion has occurred and (ii) the Opening Date, as defined
in the Funding Agents' Disbursement and Administration Agreement has occurred.
Pursuant to the Construction Agency Agreement, Buyer shall cause HVAC Completion
to occur no later than the Outside Completion Deadline (as defined and
determined in accordance with the Funding Agents' Disbursement and
Administration Agreement), which shall in no event be later than November 14,
2000.
2.4 Early Termination. (a) Subject to Section 2.4(b) in the event that
(i) prior to the Service Commencement Date, an Event of Default as defined under
the Funding Agents'
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Disbursement and Administration Agreement occurs for any reason other than a
breach by Seller of its obligations thereunder or (ii) other than due to a
breach by Seller of its obligations under this Agreement, the Service
Commencement does not occur on or before the Outside Completion Deadline, Seller
may, in its sole discretion, terminate this Agreement upon written notice to
Buyer. Upon such termination Seller shall have no further obligation to Buyer
hereunder and Buyer shall, on behalf of itself and the Other Customers, pay
Seller the sum of the Engineering Services Payment, as provided in Section 4.4,
and the Termination Payment, as set forth on Schedule 9.3. Upon such payment by
Buyer, Seller shall execute and deliver to (A) Buyer or its designee a quitclaim
bill of sale transferring to Buyer or such designee all of Seller's right, title
and interest in and to the Central Plant and the Other Facilities located at or
connected to Buyer's Facilities, AS IS WHERE IS, free and clear from any liens
or encumbrances of Seller, its agents (other than Buyer), contractors and/or
Seller's Lender and (B) to each of the Other Customers or their designee, a
quitclaim bill of sale transferring to each of the Other Customers all of
Seller's right, title and interest in and to the Other Customers Facilities
located at or connected to each of such Other Customers, AS IS WHERE IS, free
and clear from any liens or encumbrances of Seller, its agents (other than
Buyer), contractors and/or Seller's Lenders.
(b) In the event that HVAC Completion has occurred and Seller has
commenced providing Thermal Energy to the convention center owned by Interface
Group-Nevada, Inc., pursuant to the terms and conditions of Seller's energy
service agreement with such customer, and Final Completion is not achieved by
the Outside Completion Deadline, as provided in Section 2.3, Seller may
nevertheless terminate this Agreement and have no further obligation to Buyer;
provided however that upon such termination Buyer's Termination Payment to
Seller shall be reduced by an amount equal to Interface Group-Nevada, Inc.'s
Divided Share of the Termination Payment and provided further that upon such
payment Seller shall retain all right, title and interest in and to the Central
Plant and shall only execute and deliver to (1) Buyer or its designee a
quitclaim bill of sale transferring to Buyer or such designee all of Seller's
right, title and interest in and to the Other Customers Facilities located at or
connected to Buyer's Facilities, AS IS WHERE IS, free and clear from any liens
or encumbrances of Seller, its agents (other than Buyer), contractors and/or
Seller's Lender and (2) to Grand Canal Mall Shops
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Construction, LLC or its designee a quitclaim bill of sale transferring all of
Seller's right, title and interest in and to the Other Customers Facilities
located at or connected to such customer's facilities as provided in Seller's
energy service agreement with such customer, AS IS WHERE IS, free and clear from
any liens or encumbrances of Seller, its agents (other than Buyer), contractors
and/or Sellers Lenders. Furthermore, upon such termination Seller shall be
entitled to continue to occupy the Property pursuant to and as defined in the
Ground Lease to enable Seller to continue to provide Thermal Energy to
Interface-Group-Nevada, LLC pursuant to the terms and conditions of Seller's
energy service agreement with such customer.
2.5 Renewal Upon Expiration of Term / Purchase Option
(a) Subject to paragraph (b) of this Section 2.5, upon the
expiration of the Initial Term and the first and second Renewal Term (as
hereinafter defined), Buyer shall have the option of either (i) terminating this
Agreement, or (ii) subject to Section 2.5(b), extending the term of this
Agreement for a Renewal Term (as hereinafter defined), or (iii) purchasing from
Seller its (A) Divided Share of the Central Plant and (B) the Other Facilities,
by paying to Seller the Purchase Option Payment determined in accordance with
and pursuant to Schedule 2.5; provided however that such option by Buyer to
terminate this Agreement or exercise such purchase option may only be elected by
Buyer (A) upon written notice to Seller on or before the date which is one
hundred and eighty (180) days prior to the expiration of the Initial Term or the
applicable Renewal Term, as the case may be, and (B) in the event each of the
Other Customers has elected, by similar written notice to Seller, to likewise
terminate this Agreement or exercise its corresponding purchase option. In the
event such purchase option is elected by Buyer and each of the Other Customers,
upon exercise of such purchase option by Buyer and the Other Customers and the
payment by Buyer of the Purchase Option Payment and payment by the Other
Customers of the purchase option payment amount provided in such Other
Customers' agreements with Seller, Seller shall execute and deliver to Buyer,
the Other Customers or their designee a bill of sale transferring good and
marketable title in and to, in the case of Buyer, the Central Plant and the
Other Facilities, and, in the case of the Other Customers, the Other Customers
Facilities, free and clear of any liens or encumbrances of Seller, its agents,
contractors or Seller's Lenders. Alternatively, upon the exercise of such
termination option by Buyer and
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each of the Other Customers, this Agreement shall terminate, subject to Seller's
continuing right to occupy the Central Plant Site pursuant to the provisions of,
and to the extent provided in, the Ground Lease.
(b) In the event that Buyer and each of the Other Customers have
not elected to exercise their purchase option or terminate this Agreement
pursuant to Section 2.5 (b), the term of this Agreement shall be automatically
extended for an additional five (5) Contract Years (the period of each such
renewal being a "Renewal Term") upon the same terms and conditions contained
herein with the exception of the Capacity Payment paid by Buyer during any
Renewal Term shall be revised in accordance with the provisions of Schedule
4.1(C); provided further however that unless otherwise agreed to in writing
between Seller, Buyer and the Other Customers, and notwithstanding the
provisions of Section 2.5(a), in no event shall the Term of this Agreement
exceed twenty (20) Contract Years from the Service Commencement Date.
ARTICLE III
SCOPE OF SERVICES
3.1. Services Prior to and During Construction. Prior to the Service
Commencement Date, Seller shall, subject to Section 4.4, provide Buyer with the
engineering, fuel management planning, project management, and other services
set forth in Schedule 3.1 (the "Engineering Services").
3.2 Operations and Maintenance Services.
(a) Commencing on the Service Commencement Date, Seller will
provide, or caused to be provided, operations and maintenance services for the
Central Plant (the "Central Plant O&M"), the Other Facilities ("Other Facilities
O&M") and, to the extent requested by Buyer upon thirty (30) days prior written
notice to Seller, Buyer's Equipment ("Buyer's Equipment O&M") (collectively, the
"O&M Services") in accordance with the specifications, and operations and
maintenance standards and procedures set forth in Schedule 3.2A. In the event
Buyer requests Seller to operate and maintain Buyer's Equipment, the obligation
of Seller to provide such operation and maintenance services shall be subject to
Buyer and Seller first
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amending the O&M Budget adopted pursuant to Schedule 4.2 to reflect the Buyer's
Equipment O&M Payments due Seller in connection with such operation and
maintenance services.
(b) Prior to the Service Commencement Date, Seller will provide,
or cause to be provided, certain preoperational operation and maintenance
services ("Transition Period O&M Services") as set forth in Schedule 3.2B.
3.3 Energy Management Services. Commencing on the Service Commencement
Date or such earlier date mutually agreed to by the parties in writing, Seller
shall act as Buyer's broker with respect to the procurement of such supplies of
electricity, natural gas and alternate fuels as are necessary to serve the
energy requirements of Buyer's Facilities that are in addition to Buyer's
Thermal Energy requirements (such services, the "Energy Management Services").
Seller shall, in the performance of the Energy Management Services, use
reasonable efforts to assist Buyer in procuring and thereafter managing such
supplies of electricity, natural gas and alternate fuels purchased by Buyer.
Buyer and Seller shall implement, and Seller shall administer, an energy
procurement plan designed, to minimize, consistent with Buyer's reliability
requirements and Seller's other obligations under this Agreement, the
as-delivered cost of such electricity, natural gas and alternate fuels. Upon
Seller's written request, Buyer shall execute each procurement agreement that
Seller recommends; provided however, nothing herein shall be deemed to obligate
Buyer to execute such agreements. Seller shall, with Buyers assistance, make
arrangements for the supply of electricity, natural gas or alternate fuels
supplier(s) required to satisfy the energy requirements of Buyer's Facilities
that are in addition to Buyer's Thermal Energy Requirements. Buyer shall be
directly responsible for paying the costs of all such electricity, natural gas
and alternate fuel and Seller shall not be deemed to have, and Buyer shall
defend, indemnify and hold Seller harmless from any liabilities or obligations
of Buyer to the suppliers of such electricity, natural gas or alternative fuels
In the event that an Affiliate of any member of Seller provides such
electricity, natural gas or alternate fuels to Buyer, Seller's compensation for
such Energy Management Services shall be adjusted pursuant to the provisions of
Section 4.3 in such event.
3.4 Central Plant Performance Penalties
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(a) Seller acknowledges the importance to Buyer of the
availability and quality of Thermal Energy from the Central Plant required to
satisfy Buyer's Thermal Energy Requirements. Seller shall establish operation
and maintenance procedures and maintain appropriate monitoring equipment, which
monitoring equipment Buyer and Seller shall mutually agree upon and which Buyer
shall cause the Contractor to install pursuant to the provisions of the
Construction Management Agreement and the Construction Agency Agreement, the
costs of which shall be included in the Central Plant Capital Costs (as defined
in Schedule 4.1), in order to monitor the compliance of the steam and chilled
water produced by the Central Plant with the standards set forth in Schedule 3.4
(the "Steam and Chilled Water Standards").
(b) Commencing on the Service Commencement Date and during the
Term of this Agreement, upon discovery by either party of the unavailability of
the Central Plant or failure of the Central Plant to deliver Thermal Energy
meeting the Steam and Chilled Water Standards, such party shall, regardless of
the cause thereof, immediately notify the other party and thereafter Seller
shall use diligent efforts, subject to reasonable Central Plant operating
restrictions, to remedy such Central Plant unavailability and resume the
production and delivery of Thermal Energy which satisfies the Steam and Chilled
Water Standards. The costs of any corrections or modifications required to
correct such Central Plant unavailability and/or failure of the Thermal Energy
to satisfy the Steam and Chilled Water Standards shall be made at Seller's
expense but only to the extent such unavailability or failure is due to the
breach of Seller of its obligations under this Agreement and not due to an Event
of Force Majeure, or the acts of any Person not acting on behalf of, or under
contract with Seller in connection with the performance of its obligation under
this Agreement, or the acts or omissions of Contractors under the Construction
Documents and Construction Agreements, as each term is defined in the
Construction Agency Agreement, or Buyer, or any of their respective
subcontractors or vendors, and such parties' respective successors and/or
assigns. To the extent the cause of such Central Plant unavailability or failure
of the Thermal Energy to satisfy the Steam and Chilled Water Standards is not
due to the breach by Seller of it's obligations under this Agreement, the cost
of correcting the same shall be included in an amendment to the Current Contract
Year O&M Budget pursuant to Schedule 4.2. Notification pursuant to this Section
3.4(b) shall be made in person or by telephone call and confirmed in writing.
Seller shall not be responsible for compensating Buyer for any form of
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consequential, indirect or special damages or for lost profits or revenues as a
result of unavailability of the Central Plant to satisfy Buyer's Thermal Energy
Requirements or the failure of the Thermal Energy produced thereby to satisfy
the Steam and Chilled Water Standards. Except as set forth in Section 3.4(c),
Seller's payment of the costs to correct such cause of the Central Plant
unavailability or non-conforming Thermal Energy shall be Buyer's sole and
exclusive remedy against Seller due to a breach by Seller of its obligations
under this Agreement which results in the failure of the Central Plant to be
available to satisfy Buyer's Thermal Energy Requirements or to produce and
deliver Thermal Energy to Buyer which satisfies the Steam and Chilled Water
Standards and Buyer shall, subject to Article VII, indemnify, hold harmless and
defend Seller against any claims, liability, damages, costs and expenses,
including attorneys fees, arising from, incurred in connection with or suffered
by Seller from any third party (other than Seller's employees, contractors,
Affiliates and Seller's Lender) related to the unavailability of the Central
Plant to satisfy Buyer's Thermal Energy Requirements and/or the failure of such
Thermal Energy to satisfy the Steam and Chilled Water Standards. Buyer agrees
not to seek contribution or reimbursement from Seller for any claims, liability,
damages, costs or expenses, including attorneys fees, suffered or incurred by
Buyer related to the unavailability of the Central Plant or the failure of such
Thermal Energy to satisfy the Steam and Chilled Water Standard. In the event
that any such failure to deliver Thermal Energy meeting the Steam and Chilled
Water Standards is due to the acts or omissions of Contractor, Seller shall
enforce any warranties and/or guaranties of Contractor which has been assigned
to Seller by Contractor in writing pursuant to the Construction Management
Agreement and relate to such failure.
(c) Subject to Section 3.4(d), in the event that after the
Service Commencement Date due to the breach of Seller's obligations under this
Agreement the Central Plant is unavailable to satisfy Buyer's Thermal Energy
Requirements or satisfy the Steam and Chilled Water Standard for more than 12
hours in any day, or for a total of more than 24 hours in any calendar quarter,
Buyer shall be entitled to (A) terminate this Agreement, effective upon one
day's prior written notice to Seller, and (B) purchase the Central Plant and the
Other Facilities by paying the Seller the Termination Payment applicable at the
effective date of such termination, in level monthly installments, at an
interest rate equal to the Effective Interest Rate, as defined in Schedule 4.1,
over a period equal to the balance of what would otherwise be the remaining Term
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of this Agreement as of the date of such termination. Upon the effective date of
such termination, Buyer shall assume complete responsibility for the operation
and maintenance of the Central Plant and the Other Facilities, consistent with
the standards set forth in this Agreement, and Seller shall have no further
obligation or liability to Buyer under this Agreement and Buyer shall indemnify
and hold Seller harmless from all claims, liabilities, damages, costs and
expenses arising after the termination date which are in any manner related to
the Central Plant and/or the Other Facilities. The exercise of such early
termination and buyout option by Buyer shall be in lieu of all other remedies of
Buyer pursuant to this Agreement or otherwise available at law or in equity.
Those provisions of this Agreement necessary for Seller to enforce its right to
payment of the Termination Payment shall survive termination of this Agreement
and Buyer shall execute all documents reasonably required by Seller in order to
secure Buyer's obligation to pay Seller the Termination Payment, including, but
not limited to, necessary UCC filings granting Seller a first priority security
interest in the Central Plant and the Other Facilities until the Termination
Payment is paid in full.
(d) Buyer's right to terminate this Agreement pursuant to Section
3.4(c) shall be subject to the exercise, by a like written notice to Seller from
the Other Customers of their election to exercise their right, pursuant to such
Other Customers agreements with Seller, to terminate such agreements with Seller
and purchase such Other Customers' (i) Divided Share of the Central Plant and
(ii) Other Facilities, upon notice by Buyer to Seller of Buyer's exercise of its
rights pursuant to Section 3.4 (c). Nothing in this Section 3.4(c) shall be
deemed to give the Buyer the right to terminate this Agreement absent the
contemporaneous notice written by the Other Customers terminating their
respective energy services agreements with Seller and pay to Seller of the
termination amounts due from such other Customers as set forth in such
agreements.
(e) In the event that Seller is not in default of its obligations
to Buyer pursuant to Section 3.4(b), but Seller has, nevertheless, defaulted in
such performance obligations pursuant to its energy service agreements with one
or both of the Other Customers and each of such Other Customers have elected to
terminate their energy services agreement with Seller, in accordance with the
provisions thereof, Buyer shall be entitled, subject to Section 3.4(d), to
terminate this Agreement contemporaneous with such termination by each of the
Other Customers and payment of the Termination Payment, as provided in Section
3.4(c).
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ARTICLE IV
SERVICE FEES
4.1 Capacity Payments. Subject to Section 4.5 (b), commencing on the
Service Commencement Date and for the balance of the Term, Buyer shall pay
Seller during each Contract Year, in accordance with the billing and payment
provisions of Section 4.5, the sum of (a) Buyer's Divided Share of the Central
Plant Capacity Payment, as defined and determined in accordance with Schedule
4.1(A) and (B) the Other Facilities Capacity Payment, as defined and determined
in accordance with Schedule 4.1(B); provided however that in the event that the
Term of this Agreement is extended pursuant to Section 2.5, the Central Plant
Capacity Payment and the Other Facilities Capacity Payment applicable during
each such Renewal Term shall be determined in accordance with Schedule 4.1(C).
4.2 Operations and Maintenance Services Payments.
(a) Commencing on the Service Commencement Date, and for the
balance of the Term, Buyer shall pay to Seller, in accordance with the billing
and payment provisions of Section 4.5, Buyer's share of the Current Contract
Year O&M Budget, as determined in accordance with Schedule 4.2.
4.3 Energy Management Services Payment. Commencing on the Service
Commencement Date or such earlier date mutually agreed to by the parties in
writing and for the balance of the Term of this Agreement, Buyer shall pay
Seller during, in the event such Energy Management Services are provided prior
to the Service Commencement Date from the date such services are provided until
the Service Commencement Date and thereafter each Contract Year, in accordance
with the billing and payment provisions of Section 4.5, of the costs of the
Energy Management Services provided by Seller pursuant to this Agreement (such
payment, the "Energy Management Services Payment"). Buyer's Energy Management
Services Payment in each Contract Year of this Agreement, shall be equal to
Contract Year Amount less the Credit, if any, (defined below). For purposes of
this Section 4.3, "Contract Year Amount" shall mean the
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product of Buyer's Proportionate Share and $75,000, and in each subsequent
Contract Year, the Contract Year Amount established for the immediately
preceding Contract Year, multiplied by the rate of the Consumer Price Index for
the Western United States Region, or such other area mutually agreed to by the
parties ("CPI Index") for the June of the Preceding Contract Year by CPI Index
for June, 1997, as updated. For purposes of this Section 4.3, the "Credit" shall
be equal to (A) the amount of profit realized by any Affiliate of Seller, or
either of the members of Seller, under any supply agreement entered into between
Seller and such Affiliate in connection with the Energy Management Services
provided by Seller during such period; provided however that (1) the Credit, if
any, shall in no event reduce Buyer's payment obligation pursuant to this
Section 4.3 in any Contract Year to less than zero, and (2) no Credit shall be
applied on account of any agreement between Seller and any Affiliate in
connection with any assistance provided by such Affiliate to Seller in
connection with Seller's preparation of the O&M Budget pursuant to Schedule 4.2.
In the event Buyer elects to have Seller provide such Energy Management Services
prior to the Service Commencement Date, Seller's obligation to provide such
services shall be subject to the prior written agreement between the parties
concerning the amount and method of Buyer's payment for such services; provided
however that in no event shall the costs of such services prior to the Service
Commencement Date exceed a monthly amount equal to Buyer's Proportionate Share
of the Contract Year Amount for the first Contract Year or the daily prorata
equivalent thereof for the period in which such services are provided.
4.4 Engineering Services Costs. Seller shall not be required to incur
more than $50,000 in costs (including, but not limited to internal costs)
associated with the provision the Engineering Services. The cost of such
Engineering Services, in an amount not to exceed $50,000, shall not be included
in the Central Plant Capital Cost, as defined in Schedule 4.1 or any of the
Services Fee charged by Seller pursuant to Article IV; provided however that in
the event that this Agreement is terminated pursuant to Section 2.4, Buyer shall
reimburse Seller for Buyer's share of Seller's reasonably incurred and
documented costs incurred in providing Engineering Services pursuant to Section
3.1. Buyer's share of such Engineering Services costs shall be equal to the
product of (x) Seller's documented time charges, in hours, devoted to the
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Engineering Services, (y) $80, and (z) Buyer's Divided Share; provided however,
that, except as otherwise agreed by the parties, the product of (x) and (y)
shall not exceed $50,000.
4.5 Billings and Payments.
(a) Subject to Section 4.5 (b), commencing on the Service
Commencement Date and for the balance of the Term, Seller shall invoice Buyer
and Buyer shall pay Seller for the services rendered pursuant to this Agreement
on a Billing Cycle basis. For each Billing Cycle, Seller shall invoice Buyer
within fifteen (15) days after the end of each Billing Cycle, such invoice
showing the separate charges for:
(i) One-twelfth of Buyer's Current Contract Year Capacity
Payment, determined in accordance with Schedule 4.1;
(ii) One-twelfth of Buyer's share of the Current Contract Year
O&M Budget, determined in accordance with Schedule 4.2;
(iii) the product of (x) the Unit Variable Costs applicable in
the Current Contract Year, determined in accordance with Schedule 4.2
and (y) Buyer's actual, metered consumption of Thermal Energy during the
Billing Cycle, taking into account the applicable conversion factors
mutually agreed to between the parties in the context of the preparation
of the Current Contract Year O&M Budget pursuant to Schedule 4.2;
(iv) one-twelfth of Buyer's share of the Energy Management
Payment for the Current Contract Year, determined pursuant to Section
3.3;
(v) if applicable, any amounts due in connection with Buyer
Additional Meters as provided in Section 5.1;
(vi) if applicable, any amounts due pursuant to the provisions
of Section 4.7 or Section (c) of Article XII; and
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(vii) any and all taxes and/or assessments, including, but not
limited to any sales or use taxes, imposed on Buyer's consumption, or
Seller's production or delivery to Buyer, of Thermal Energy during the
Billing Cycle, or on Seller's provision of any other services to Buyer
pursuant to this Agreement, which taxes and/or assessments are not
otherwise included in the changes set forth in (i) through (vii) of this
Section 4.5.
(b) In the event the Service Commencement Date has not occurred
on or before April 21, 1999, commencing on May 1, 1999 and on the first day of
each following month through the period ending on earlier of the Service
Commencement Date or the date this Agreement is terminated pursuant to Section
2.4, Buyer shall pay Seller the Capacity Reservation Charge, as defined and
determined in accordance with Schedule 4.1 (D).
(c) Prior to the Service Commencement Date, Buyer shall pay
Seller, on a monthly basis and within thirty (30) days of the date of Seller's
invoice (i) Buyer's Divided Share of the cost of the Transition Period O&M
Services incurred by Seller during the preceding month and not otherwise
capitalized pursuant to Schedule 3.2B plus (ii) the cost of any Thermal Energy
provided to Buyer during the preceding calendar month in an amount equal to the
product of the Unit Variable Costs and Buyer's actual, metered consumption of
Thermal Energy during such period.
4.6 Delinquent Payments. Any invoice tendered for service by Seller
pursuant to this Agreement shall be due and payable upon receipt by Buyer, and
shall be deemed delinquent if not paid by Buyer within thirty (30) days of the
postmark date. All delinquent invoices shall accrue interest from the postmark
date of such invoices at the prime rate then in effect for Chase Manhattan Bank,
N.A., as published in New York, New York, plus two percent (2%) per annum of the
outstanding balance until paid.
4.7 No Liability for Other Customers. Except as provided in Section 2.4
in the event of the early termination of this Agreement, Buyer shall have no
liability for the obligations of the Other Customers or, except as provided in
Article XII, any other customer of Seller.
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4.8 Additional Customers. Except as provided in Article XII of this
Agreement, Buyer's and Buyer's Lender's prior written consent, which consent
shall not be unreasonably withheld or delayed, shall be required prior to Seller
entering into an agreement with any other person or entity, other than the Other
Customers, to supply Thermal Energy from the Central Plant. Subject to the prior
written consent of Buyer and Buyer's Lenders as provided herein, in the event
that Seller enters into such agreement(s), such additional customers shall be
charged an appropriate proportion of the cost of production of such thermal
energy. The revenues Seller anticipates receiving in connection with any
contractual commitments pertaining to such excess Thermal Energy sales,
regardless of whether such revenues are actually received, shall be taken into
account by Seller in determining the appropriate revisions, if any, to Buyer's
Capacity Payments and O&M Services payment obligations to Seller pursuant to
Sections 4.1 and 4.2, respectively, of this Agreement to reflect the contractual
contribution, if any, of such anticipated third party revenues in reducing the
capital, operation and maintenance costs of the Energy Improvements which Buyer
is charged by Seller pursuant to this Agreement; provided however, that under no
circumstances shall the costs paid by Buyer pursuant to this Agreement be
increased as a result of Seller's agreement(s) with such additional customers.
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ARTICLE V
METERING
5.1 Metering Equipment. As part of the O&M Services, commencing on the
Service Commencement Date and for the Term of this Agreement, Seller will
maintain all required meters, instruments, recording devices, and other related
data logging equipment required to measure and record Buyer's consumption of
Thermal Energy from the Central Plant (collectively, the "Metering Equipment").
In addition, to the extent that Buyer may be permitted and elects to own and
maintain utility meters ("Buyer Additional Meters") located at Buyer's
Facilities under the terms of a utility tariff or service agreement with a
utility or other energy supplier, Buyer may elect to have Seller finance,
install and maintain at the cost of the Buyer Additional Meters, whereupon Buyer
shall agree to reimburse Seller, upon mutually agreeable terms, for Seller's
cost to finance and maintain such meters.
5.2 Testing. Commencing on the Service Commencement Date and during the
balance of the Term of this Agreement, all Metering Equipment will be tested and
calibrated by Seller in accordance with good industry practice. Test and
calibration records will be provided to the Buyer. Buyer may request additional
meter tests at any time in connection with the Metered Equipment; however, if a
meter is subsequently found to have a variance for accuracy of less than three
percent (3%) from the usage previously billed to Buyer, Buyer will bear the
reasonable cost of such testing. Buyer Additional Meters, if any, shall be
tested and calibrated by Seller to the extent permitted and provided pursuant to
utility tariff or service agreement with the utility or other energy supplier.
5.3 Meter Interruptions. If a meter record related to any of the
Metering Equipment is temporarily interrupted, Seller shall estimate the
quantities of Thermal Energy taken by Buyer during the period of interruption
based on Buyer's past or future usage patterns during a similar period and
whatever other data or methodology is available for estimating Buyer's usage
during the period of interruption.
ARTICLE VI
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REPRESENTATIONS AND WARRANTIES
6.1 Seller Representations. Seller hereby represents and warrants
that:
(a) It is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of its formation and
has all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby;
(b) The execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly authorized by all
necessary corporate action;
(c) This Agreement is a legal, valid and binding obligation of
Seller enforceable against Seller in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
is subject to (i) bankruptcy and other similar laws of general application
affecting rights and remedies of creditors and (ii) the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law);
(d) To the best knowledge of Seller, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or disclosed, in writing, to Buyer) is required in
connection with the due authorization, execution and delivery of this Agreement
by Seller or the performance by Seller's of its obligations hereunder which
Seller has reason to believe that it will be unable to obtain in due course on
or before the date required for Seller to perform such obligations; and
(e) Neither the execution and delivery of this Agreement by
Seller nor compliance by Seller with any of the terms and provisions hereof (i)
conflicts with, breaches or contravenes the provisions of the corporate charter
or by-laws of the Seller or any contractual obligation of the Seller or (ii) to
the best knowledge of Seller, results in a condition or event that constitutes
(or that, upon notice or lapse of time or both, would constitute) an event of
default under any contractual obligation of the Seller.
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6.2 Buyer Representations. Buyer hereby represents and warrants
that:
(a) It is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of its formation and
has all requisite corporate power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby;
(b) Subject to the provisions of the Funding Agents'
Disbursement Administration Agreement, Buyer has the exclusive right to develop
the hotel and casino portion of the Project, as defined in the Funding Agents'
Disbursement and Administration Agreement, and upon payment of the costs of
construction thereof, Buyer will have title thereto (excluding the Energy
Improvements) subject only to such liens and encumbrances permitted by Buyer's
Lender.
(c) The execution and delivery of this Agreement and the
performance of its obligations hereunder have been duly authorized by all
necessary corporate action;
(d) This Agreement is a legal, valid and binding obligation of
Buyer enforceable against Buyer in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
is subject to (i) bankruptcy and other similar laws of general application
affecting rights and remedies of creditors and (ii) the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law);
(e) To the best knowledge of Buyer, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or disclosed, in writing, to Seller) is required
in connection with the due authorization, execution and delivery of this
Agreement by Buyer or the performance by Buyer's of its obligations hereunder
which Buyer has reason to believe that it will be unable to obtain in due
course;
(f) Neither the execution and delivery of this Agreement by
Buyer nor compliance by Buyer with any of the terms and provisions hereof (i)
conflicts with, breaches or
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contravenes the provisions of the corporate charter or by-laws, or any corporate
governance document of the Buyer, or any contractual obligation of the Buyer, or
(ii) to the best knowledge of Buyer, results in a condition or event that
constitutes (or that, upon notice or lapse of time or both, would constitute) an
event of default under any contractual obligation of the Buyer; and
(g) all Governmental Approvals and consents of any third party
required to construct the Energy Improvements have or will be obtained on or
before the date required, and all such Governmental Approvals and third party
consents will, as of the date obtained and through the Service Commencement
Date, be maintained in full force and effect and complied with in all material
respects; and
(h) Buyer has not entered into any contracts or agreements with
any other person regarding the provision of the services contemplated to be
provided by Seller hereunder.
(i) the Construction Management Agreement and Architects
Agreement are the only contracts which Buyer or any of its Affiliates has
executed with respect to the design, engineering, construction, start-up and
testing of the Energy Improvements and the Other Customers Facilities.
6.3 Covenant of Buyer. Buyer covenants that during the Term of this
Agreement Seller shall be the exclusive supplier of Thermal Energy to Buyer;
provided however that this restriction shall not be deemed to apply to the
purchase by Buyer of Thermal Energy which is in excess of Buyer's Maximum
Thermal Energy Requirements ("Excess Thermal Energy"); provided however that
Buyer shall not enter into an agreement with any Person (other than Seller) with
respect to the supply of such Excess Thermal Energy without first providing
Seller with written notice and the opportunity to provide Buyer with such Excess
Thermal Energy pursuant to a mutually agreed upon amendment to this Agreement or
other written agreement between the parties. Nothing in this Agreement shall be
deemed to obligate either party to enter into such amendment or agreement. In
the event that the parties fail to enter into a written agreement or amendment
within six (6) months, or such lessor period reasonably consistent with the
circumstances, of the date such written notice by Buyer, as such period may be
extended by
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mutual written agreement of the parties, Buyer shall be free to enter into an
agreement with a third party for the provision of such Excess Thermal Energy.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
7.1 Indemnification.
(a) Except as otherwise explicitly provided for in this
Agreement, each party shall be solely responsible for its own negligence,
willful or reckless acts, or omissions, as well as the negligence, willful or
reckless acts, or omissions of its members and their respective officers,
directors, employees, agents, contractors, subcontractors, successors or
assignees and each party agrees to indemnify, defend and hold harmless the
non-indemnifying party, its officers, employees, directors, agents, contractors,
subcontractors and assigns against any and all claims, actions, costs, expenses,
damages and liabilities, including reasonably attorneys' fees, arising out of or
in connection with the negligent, willful or reckless acts or omissions of the
indemnifying party, its officers, directors, employees, agents, contractors,
subcontractors or assignees.
(b) In addition to the provisions of Section 7.1(a) and except as
otherwise specifically provided in this Agreement, Buyer shall indemnify, defend
and hold harmless Seller from and against:
(i) any and all claims by, or liability to, Buyer, its members
and their respective, officers, directors, employees,
agents, contractors, subcontractors, assignees or any
third party with respect to any assertion by Buyer, its
members or a third party to any right, title or interest
in the Energy Improvements, other than liabilities or
claims based upon the acts or omissions of Seller;
(ii) except to the extent of Permitted Liens, any and all
claims and/or liabilities resulting from or related to
encumbrances, liens or claims placed on the
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Energy Improvements, the Central Plant Site or the
Easements as a result of the acts or omissions of Buyer,
its members and their respective officers, directors,
employees, agents, contractors, subcontractors or
assignees;
(iii) any and all claims of any nature or liability of any
nature arising from environmental, health safety or land
use violations(s), hazard(s) or condition(s) on, affecting
or related to the Central Plant Site and the Easements:
(A) existing prior to the date Seller takes possession
of the Central Plant Site and the Easements under
the Ground Lease;
(B) arising after Seller takes possession of the
Central Plant Site or Easements, provided such
violation(s), hazard(s) or condition(s) shall not
result from or be caused by any acts or omissions
of Seller, its members and their respective
officers, directors, employees, agents,
contractors, subcontractors or assignees;
(iv) any claim or liabilities resulting from a breach of Buyer's
covenants, representations and warranties in this
Agreement; and/or
(v) any claims or liabilities arising from Buyer's and/or
Construction Affiliate's failure to pay Contractor or any
Subcontractor, or Contractor's failure to pay any
Subcontractor, pursuant to the Construction Management
Agreement and/or any other contractual arrangement or
understanding.
(c) In addition to the provisions of Section 7.1(a), Seller shall
indemnify, defend and hold harmless Buyer from and against:
(i) any and all claims by, and liability to, Seller, its
members and their respective officers, directors,
employees, agents, contractors,
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subcontractors or assignees for (A) payment of amounts owed
by Seller or for injuries, or property damage, sustained on
the Central Plant Site, the Easements, or on Buyer's
premises, except claims or liabilities resulting from or
caused by the act(s) or omission(s) of Buyer, its members
and their respective officers, directors, employees,
agents, contractors, subcontractors or assignees or any
third party not employed by or under contract with Seller
in connection with the services provided by Seller pursuant
to this Agreement.
(ii) except to the extent expressly permitted, any and all
claims and liability resulting from encumbrances, liens or
claims placed on Buyer's premises, the Central Plant Site
and/or the Easements by Seller's Lender, Seller or by
Seller or its members and their respective officers,
directors, employees, agents, contractors, subcontractors
or assigns, except such claims or liabilities resulting
from or caused by the act(s) or omission(s) of Buyer, its
members, and their respective officers, directors,
employees, agents, contractors, subcontractors or
assignees;
(iii) any and all claims of any nature and liability of any
nature arising from environmental, health, safety or land
use violations or hazards on, affecting or related to the
Central Plant Site and the Easements after the date Seller
takes possession of the Central Plant Site under the Ground
Lease and the Easements under the Easement Agreement,
except to the extent such violations, hazards or conditions
existed prior to the date Seller takes possession of the
Central Plant Site and the Easements and/or such
violations, hazards or conditions are due to the acts or
omissions of Buyer, its members, and their respective
officers, directors, employees, agents, contractors,
subcontractors, or assignees or any third party not
employed by or under contract with Seller in connection
with Seller's performance of its obligations pursuant to
this Agreement; and/or
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(iv) any claim or liabilities resulting from a breach of
Seller's covenants, representations, and warranties in
this Agreement.
(d) The duty of a party to defend, indemnify and hold harmless
the other party shall also apply at the time of notification of any potentially
responsible party designation under applicable federal, state or local
environmental, health, safety or land use laws. The duty to indemnify, defend
and hold harmless hereunder will continue in full force and effect,
notwithstanding the expiration or early termination of this Agreement.
(e) The provisions of this Section 7.1 shall survive termination
of this Agreement.
7.2 Seller's Insurance. Commencing on the date set forth on Schedule 7.2
with respect to each policy coverage and for the balance of the Term of this
Agreement, Seller shall maintain at the policies and amounts of insurance as set
forth in Schedule 7.2 with an insurance company or companies reasonably
satisfactory to Buyer and qualified to do business in the State of Nevada and
having a Best's rating not less than A-VII. Seller's costs of insurance shall be
included in the computation of Buyer's payment obligation pursuant to Section
4.2 of this Agreement.
7.3 Buyer's Insurance. Commencing on the date set forth on Schedule 7.3
with respect to each policy coverage and for the balance of the Term of this
Agreement, Buyer shall maintain at its sole cost and expense, the policies and
amounts of insurance as set forth in Schedule 7.3 with an insurance company or
companies reasonably satisfactory to Seller and qualified to do business in the
State of Nevada and having a Best's rating not less than A-VIII.
7.4 Additional Insureds and Waiver of Subrogation. Seller and Buyer
shall each name the other and their Affiliates as additional insureds on their
commercial general liability, automobile liability and umbrella liability
policies proceed in satisfaction of Section 7.2 of this Agreement. Further,
Seller and Buyer waive their rights of recovery against each other at the extent
of property and time element (business interruption/extra expense) insurance
maintained or required to be maintained against each other. Further, Seller and
Buyer will have their
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insurers providing the property and time element insurance under this Agreement
endorse their policies to waive their rights of subrogation against each other,
Affiliates of the Buyer and Seller and their respective lenders, and against
Contractor and all contractors and subcontractors engaged in the Project.
7.5 Evidence of Insurance. Within five (5) days of the date of this
Agreement or no later than the date such insurance is required pursuant to
Schedule 7.2, in the case of Seller, or 7.3, in the case of Buyer, Seller and
Buyer shall each furnish to the other one or more certificates of insurance
evidencing the existence of the coverages set forth in Sections 7.2 and 7.3,
respectively. Each certificate shall state that the insurance carrier will give
Seller and Buyer at least sixty (60) days written notice of any cancellation or
material change in the terms and conditions of such policy during the periods of
coverage.
ARTICLE VIII
DEFAULT
8.1 Seller Default. Any of the following events shall constitute a
Seller Default:
(a) In connection with itself or its assets, Seller shall (i) consent to
the appointment of a receiver or liquidator, (ii) make a general assignment for
the benefit of creditors, (iii) file a petition for relief under the Federal
Bankruptcy Code, or (iv) take similar action to commence a proceeding for relief
under any other law relating to the bankruptcy, insolvency, reorganization, or
winding up of itself or the composition or adjustment of its debts;
(b) An action shall commence in any court of competent jurisdiction for
(i) the liquidation, reorganization, dissolution, or winding up of Seller or the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Seller or substantially all of its assets,
or (iii) any similar relief under any law relating to Seller's bankruptcy or
insolvency, provided such proceeding shall continue undismissed for ninety (90)
days;
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(c) Any representation or warranty made by Seller shall prove to have
been incorrect in any material respect when made;
(d) Seller shall fail to perform any of its obligations under this
Agreement, and/or the Construction Agency Agreement and/or the Ground Lease and
fail to either (i), within thirty (30) days of written notice from Buyer of such
failure to perform, cure such failure, or (ii) in the event such failure is not
curable within such thirty day period, immediately initiate the actions
necessary to cure such failure, diligently prosecute such actions until cure is
effectuated and effectuate such cure within ninety (90) days of such Buyer's
notice; provided however that the failure of Seller to produce and deliver
Thermal Energy satisfying the Steam and Chilled Water Standards (as defined in
Section 3.4) shall not be deemed a Seller Default provided Seller has corrected
such failure and is otherwise in compliance with its obligations pursuant to
Section 3.4.
8.2 Buyer Default. The following events shall constitute a Buyer
Default:
(a) In connection with itself or its assets, Buyer shall (i) consent to
the appointment of a receiver or liquidator, (ii) make a general assignment for
the benefit of creditors, (iii) file a petition for relief under the Federal
Bankruptcy Code, or (iv) take similar action to commence a proceeding for relief
under any other law relating to the bankruptcy, insolvency, reorganization, or
winding up of itself or the composition or adjustment of its debts;
(b) An action shall commence in any court of competent jurisdiction for
(i) the liquidation, reorganization, dissolution, or winding up of Buyer or the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Buyer or substantially all of its assets,
or (iii) any similar relief under any law relating to Buyer's bankruptcy or
insolvency, provided such proceeding shall continue undismissed for ninety (90)
days;
(c) Any representation or warranty made by Buyer shall prove to have
been incorrect in any material respect when made;
(d) Buyer shall fail to perform any of its obligations under this
Agreement (other than the obligations described in and governed by Section
8.2(e) below), and/or the Construction
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Agency Agreement and/or the Ground Lease and fail to (i) , within thirty (30)
days of written notice from Seller of such failure to perform, cure such failure
or (ii) in the event such failure is not curable within such thirty (30) day
period, immediately initiate the actions necessary to cure such failure,
diligently prosecute such actions until cure is effectuated and effectuate such
cure within a ninety (90) days of such Seller notice; or
(e) Buyer shall fail or refuse to pay any invoice rendered under this
Agreement within thirty (30) days of Buyer's receipt of such invoice; provided,
that, in the event that Buyer disputes in good faith any such invoice, Buyer
shall pay that portion of the bill not in dispute when due and payable, and the
disputed portion shall be submitted to arbitration under Section 13.1 of this
Agreement, and pending resolution of the dispute, Buyer shall not be deemed in
default of this Agreement for such disputed portion of the bill while pending
resolution.
ARTICLE IX
REMEDIES
9.1 Seller's Remedies. Except as otherwise provided in Section 13.1 with
respect to the resolution of certain disputes between Buyer and Seller, upon a
Buyer Default, Seller may declare the Buyer to be in breach of this Agreement,
subject to the provisions of the Consent and Agreement and the Funding Agents'
Disbursement and Administration Agreement and (i) suspend service until Buyer
either cures such default or, in the case of nonpayment, provides Seller with
such written assurances and such security as Seller may reasonably request, (ii)
terminate this Agreement and provide written notice to Buyer declaring the
Termination Payment immediately due and payable or (iii) seek such other relief
to which Seller may be entitled at law or equity; provided however that payment
of the Termination Payment by Buyer shall be Seller's exclusive remedy against
Buyer for damages related to the Service Fees which Buyer is obligated to pay
Seller pursuant to Article IV of this Agreement and upon payment of such
Termination Payment Buyer shall have no further obligation or liability to
Seller under this Agreement except to the extent arising under Article VII of
this Agreement; and provided further that upon payment of such Termination
Payment, Seller shall be entitled to continue to occupy the Central Plant Site
pursuant to the provisions of the Ground Lease in order for Seller to continue
to provide service
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to the Other Customers and such other entities which Seller may, from time to
time and consistent with Section 4.8 of this Agreement, have agreements for the
provision of Thermal Energy from the Central Plant.
9.2 Buyer's Remedies. Except as otherwise provided in Sections 3.4(c)
and 13.1, with respect to Seller's termination rights in connection with
Seller's failure to deliver Thermal Energy satisfying the Steam and Chilled
Water Standard and the resolution of certain disputes between Buyer and Seller,
respectively, upon a Seller Default, Buyer may (i) terminate this Agreement by
written notice to Seller, and (ii) seek such other relief to which Buyer may be
entitled at law or equity.
9.3 Termination Payment. A schedule of the applicable Termination
Payment which Seller shall be entitled in the event Seller elects to terminate
this Agreement due to a Buyer Default or Buyer elects to terminate this
Agreement pursuant to Section 3.4(c) or (e) is set forth in Schedule 9.3. The
parties intend that the Termination Payment shall constitute liquidated damages
and not a penalty. The parties agree that the injury to Seller or Buyer, as the
case may be, as a result of termination of this Agreement is difficult to
precisely estimate and that the Termination Payment is a reasonable estimate of
the probable damage to such party as a result of such termination of this
Agreement. Such Termination Payment shall be in lieu of all other liabilities
and remedies of the parties as a result of termination of this Agreement, other
than liabilities and obligations pursuant to Article VII.
9.4 Survival. The provisions of this Article IX shall survive to the
extent necessary after termination of this Agreement in order for either party
to enforce it's rights and the obligations of the other party as of the date of
termination.
ARTICLE X
FORCE MAJEURE
10.1 Suspension of Performance. Neither Buyer nor Seller shall be in
default in respect of any obligation under the Agreement if the party is unable
to perform its obligation by reason of an Event of Force Majeure; provided
however that the suspension of performance shall
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be commensurate with the nature and duration of the Event of Force Majeure and
the nonperforming party is using diligent efforts to restore its ability to
perform; and provided further, that neither party shall be required to settle
any strike, walkout, lockout or other labor dispute on terms which, in the sole
judgment of the party involved in the dispute, are contrary to its interest. The
party claiming nonperformance by an Event of Force Majeure shall provide prompt
written notice to the other party, setting forth the particulars thereof.
ARTICLE XI
LIMITATION ON LIABILITY
Neither Buyer nor Seller shall be responsible to the other in contract
or in tort for any special, incidental or consequential loss or damage,
including lost profits and opportunity costs, arising out of this Agreement.
ARTICLE XII
DELEGATION OF BUYER'S PAYMENT OBLIGATIONS
Seller hereby acknowledges and agrees that Buyer may, subject to the
receipt of all necessary Governmental Authorizations, if any, which Governmental
Authorization shall not impose any unreasonable burden or cost on Seller and/or
Buyer, as determined in each party's sole reasonable discretion, delegate all or
a portion of Buyer's payment obligations pursuant to Sections 4.1 through 4.3 of
this Agreement to tenants of Buyer's Facilities (hereinafter, "Tenants"). Seller
hereby consents to Buyer's delegation of Buyer's above stated payment obligation
to Tenants, subject to the following terms and conditions:
(a) Seller, Buyer and the Tenant mutually agree in writing on
that portion of the payments for which Buyer is obligated to pay Seller pursuant
to Section 4.5(i) through (vii) that Tenant will pay to Seller;
(b) Buyer or Tenant shall have agreed to reimburse Seller for the
installation of Metering Equipment for Tenant's location, to the extent
necessary; and
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(c) Seller shall bill directly to any Tenant in lieu of Buyer,
and Tenant agrees to pay to Seller pursuant to an executed services agreement,
such Tenant's share of Buyer's payment obligation, as provided under paragraph
(a) of this Article XII; provided however, that in the event that Tenant is
delinquent in its payment to Seller, as determined pursuant to the services
agreement with Tenant, Buyer shall be liable to Seller for such delinquent
Tenant payment.
ARTICLE XIII
MISCELLANEOUS
13.1 Resolution of Certain Disputes. In the event of a budget dispute,
as set forth in Schedule 4.2, and/or a billing dispute between the parties,
authorized representatives of Seller and Buyer shall meet and use good faith
efforts to mutually resolve such dispute by negotiation. In the event that the
parties are unable to resolve such dispute by negotiation, then such dispute
shall be resolved by arbitration pursuant to the provisions of Appendix C of
this Agreement. Neither party shall suspend or otherwise fail to perform its
obligations under this Agreement pending the outcome of such dispute resolution
process.
13.2 Assignment. Without limiting Buyer's delegation rights pursuant to
Article XII of this Agreement and except as provided in Sections 13.2(a) and
(b), below, neither party shall assign its rights nor delegate its obligations
under this Agreement without first having obtained the written consent of the
other party, which consent shall not be unreasonably withheld or delayed,
provided that Buyer may assign its rights and delegate its obligations under
this Agreement to a purchaser of the hotel/casino portion of the Project, so
long as such purchaser agrees to assume Buyer's obligations under this Agreement
from and after the date of such assignment in a document reasonably satisfactory
to Seller and so long as all payments by Buyer hereunder are current as of the
date of such assignment; provided however that no such assignment shall be
deemed to release Buyer of its obligations under this Agreement through the date
of such assignment.
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(a) Seller may, without the consent of Buyer, collaterally assign
its rights under this Agreement to Seller's Lender, provided that Buyer's rights
and remedies, as provided in this Agreement, and Buyer's Lenders rights pursuant
to the Consent and Agreement , are not diminished or materially adversely
affected thereby; provided, however that in the event Seller's Lender exercises
its rights pursuant to such assignment to assume Seller's obligations pursuant
to this Agreement, Seller will require, as a condition to the exercise of such
rights by Seller Lender, that Seller's Lender cause the Energy Improvements to
be operated and maintained by an experienced and reputable operator of heating
and cooling facilities reasonably satisfactory to Buyer and Buyer's Lender.
(b) Seller acknowledges and consents to Buyer's assignment of its
rights and obligations under this Agreement to Buyer's Lender pursuant to that
certain Consent and Agreement.
13.3 Governing Law. This Agreement shall be construed in accordance with
and shall be enforceable under the laws of the State of Nevada, without giving
effect to principles related to conflicts of law.
13.4 Venue; Jurisdiction. Any action at law, suit in equity or other
proceeding against any party with respect to any term or provision of this
Agreement, including enforcement of the decisions in arbitration pursuant to
Section 13.1 (but excluding such terms or provisions under dispute that the
parties have agreed to submit in the first instance to arbitration for
resolution pursuant to Section 13.1) shall be brought and maintained in the
Supreme Court of the State of Nevada, or such lower court of the State of Nevada
having jurisdiction over the subject matter, or in a United States District
Court in Nevada. Each of the parties hereby (i) submits, to the fullest extent
permitted by applicable law, to the exclusive jurisdiction of such courts for
the purposes any action, suit or proceeding set forth above, and (ii) agrees, to
the fullest extent permitted by applicable law, that service of all writs,
processes and summonses in any such action, suit or proceeding brought in the
State of Nevada, may be made upon such person in the manner provided for notices
under this Agreement. The foregoing provisions of this Section shall not be
construed to limit the right of either party to serve any such writ, process or
summons in any
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manner permitted by applicable law. Each party further agrees that a final
judgment or order in any such action, suit or proceeding may be enforced against
such party in any other jurisdiction by suit on such judgment or order or in
such other manner as may be permitted by applicable law. Each party hereby
waives, to the fullest extent permitted by applicable law, any objection which
such party now has or hereafter may have to the lying of venue of any such
action, suit or proceeding brought or maintained in the Supreme Court of the
State of Nevada, or such lower court of the State of Nevada having jurisdiction
over the subject matter, or a United States District Court in Nevada. The
provisions of this Section shall survive any termination or expiration of this
Agreement, ad shall be binding on each party's successors and assigns.
13.5 Notice. All notices hereunder shall be sufficient if sent by
registered or certified mail postage prepaid, addressed:
If to Seller: Atlantic-Pacific Las Vegas, LLC
5100 Harding Highway
Mays Landing, New Jersey 08330
Attention: President
Telefax (609) 625-3866
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If to Buyer: Venetian Casino Resort, LLC
3355 Las Vegas Boulevard South
Room 1C
Las Vegas, Nevada 89109
Attention: General Counsel
Telefax: (702) 733-5499
provided, that either Seller or Buyer may by like notice designate any further
or different address or addresses or person to which notices shall be sent.
13.6 Confidentiality. Each Party, on its behalf and behalf of its
Affiliates, and the directors, officers, employees, advisors, agents and
representatives of each, hereby covenants to the other Parties that:
(a) it will not disclose in any manner the Confidential
Information of another Party to any person that is not a
director, officer, employ, advisor, agent or
representative of it or its Affiliate, without the other
Party's prior written consent;
(b) it will, at all times, safeguard the Confidential
Information of another Party with no less than the same
standard of care with which it safeguards its own
Confidential Information; and
(c) it will not use the Confidential Information received by
it except for the purposes of this Agreement.
The Confidential Information of each Party shall at all times
remain the absolute property of it. None of the Parties, nor each of its
Affiliates, including the directors, officers, employees, advisors, agents and
representative of each, shall be liable to another Party with respect to the
disclosure of any Confidential Information that (i) enters the public domain
through no fault of it, (ii) is required, or is reasonably believed to be
required by the disclosing Party, to be disclosed pursuant to law, provided,
that the disclosing Party shall notify the Party to whom the Confidential
Information belongs in writing prior to such disclosure and shall, afford the
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Party to whom the Confidential Information belongs reasonable opportunity to
seek a protective decree or order with respect to the Confidential Information,
(iii) the disclosing Party can demonstrate was in its prior possession through
no malfeasance or misconduct, or was independently developed, without benefit of
having received such Confidential Information from the Party to whom such
Confidential Information belongs, and (iv) it discloses with the prior, written
consent of the Party to whom such Confidential Information belongs.
Without otherwise limiting the foregoing, Buyer and Seller each
hereby grants their respective consents, upon written notice received by the
other, to the disclosure of their respective Confidential Information to Buyer's
Lender of either Buyer or Seller, provided, upon request of either Party, that
any such Buyer's Lender enter into a confidentiality agreement with respect to
such Confidential Information.
13.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
13.8 Entire Agreement. The Agreement constitutes the entire agreement
between the Parties with respect to the matters contained herein and all prior
agreements with respect thereto are superseded hereby. No amendment or
modification hereof shall be binding unless duly executed by both Parties.
Waiver of any provision of this Agreement by a Party shall not be deemed to have
been given by such Party unless given in writing.
13.9 Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction and to the
fullest extent permitted by applicable law, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and without affecting the validity or enforceability of any provision in
any other jurisdiction.
13.10 Third Party Beneficiaries. Seller and Buyer acknowledge that,
except as set forth in Article XIII, the provisions of this Agreement are
intended for the sole benefit of Seller and Buyer. Except as provided in Article
XIII of this Agreement in connection with assignments
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undertaken by either party in conformance with the provisions of this Agreement,
there are no third party beneficiaries, express or implied, to this Agreement.
13.11 Section Headings. The section headings used in this Agreement are
for convenience only and shall not affect the construction of any terms of this
Agreement.
13.12 Incorporation of Exhibits. The Exhibits attached hereto and
referred to herein are a part of this Agreement for all purposes.
13.13 Non-Waiver. None of the provisions of this Agreement shall be
considered waived by either party except when such waiver is given in writing.
The failure of either party to insist in any instance on strict performance of
any of the provisions of this Agreement shall not be construed as a waiver of
any such provision or the relinquishment of any present or future rights
hereunder.
13.14 Independent Parties. Nothing contained in this Agreement shall be
deemed or construed for any purpose to establish, between the parties, a
partnership or joint venture, a principal-agent relationship, or any
relationship other than customer and supplier.
13.15 Binding Agreement. This Agreement shall be binding upon and, to
the extent permitted in this Agreement, shall inure to the benefit of the
parties and their respective permitted successors and assigns.
13.16 Estoppel Certificates. Upon the reasonable prior request by Seller
or Buyer (the "Requesting Party"), the other party (whichever party shall have
received such request, the "Certifying Party") shall furnish to the Requesting
Party a certificate signed by an individual having the office of vice president
or higher in the Certifying Party certifying that this Agreement is in full
force and effect to the best knowledge of the signer of such certificate,
whether or not the Requesting Party is, to the best knowledge of the Certifying
Party, in default under any of its obligations hereunder (and, if so, the nature
of such alleged default); and such other matters under this Agreement as the
Requesting Party may reasonably request. Any such certificate so furnished may
be relied upon by the Requesting Party, and any existing or prospective
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mortgagee, purchaser or lender, and any accountant or auditor, of, from or to
the Requesting Party.
13.17 Ownership of the Energy Improvements. Anything to the contrary in
this Agreement or any document or instrument executed in connection with the
transactions contemplated hereby notwithstanding (collectively, the "Operative
Documents"), the parties hereto intend and agree that, with respect to the
nature of the transactions evidenced by this Agreement in the context of the
exercise of remedies under the Operative Documents relating to and arising out
of any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute of the
United States of America or any state or commonwealth thereof affecting Buyer,
Seller or any Buyer's Lenders or Seller's Lenders or any enforcement or
collection actions, solely to protect the Seller in the event the transactions
evidenced by this Agreement are recharacterized as loans, the Buyer hereby
grants a security interest or lien, as the case may be, to Seller in the Energy
Improvements and the other items and types of collateral described herein
[Remainder of this page left blank]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date and day first above written.
ATLANTIC-PACIFIC LAS VEGAS, LLC
("Seller")
By: /s/ Carl H. Fogler
----------------------------------------
Name: Carl H. Fogler
Title: Vice President
VENETIAN CASINO RESORT, LLC
By: Las Vegas Sands, Inc., as managing member
("Buyer")
By: /s/ William P. Weidner
----------------------------------------
Name: William P. Weidner
Title: President