UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File No. 1-6697
Mirage Resorts, Incorporated
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(Exact name of Registrant as specified in its charter)
Nevada 88-0058016
- ---------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
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(Address of principal executive offices - Zip Code)
(702) 791-7111
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $0.004 par value, 179,407,537 shares outstanding as
of November 13, 1997.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial information as of
September 30, 1997 and for the three-month and nine-month periods
ended September 30, 1997 and 1996 included in this report was
reviewed by Arthur Andersen LLP, independent public
accountants, in accordance with the professional standards and
procedures established for such reviews by the American
Institute of Certified Public Accountants.
<PAGE>
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------------
To the Directors and Stockholders
of Mirage Resorts, Incorporated
We have reviewed the accompanying condensed consolidated balance
sheet of Mirage Resorts, Incorporated (a Nevada corporation) and
subsidiaries (the "Company") as of September 30, 1997, and the
related condensed consolidated statements of income for the
three-month and nine-month periods ended September 30, 1997 and
1996 and the related condensed consolidated statements of cash
flows for the nine-month periods ended September 30, 1997 and
1996. These condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Mirage
Resorts, Incorporated and subsidiaries as of December 31, 1996,
and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended (not presented
herein), and, in our report dated March 7, 1997, we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet of Mirage Resorts,
Incorporated and subsidiaries as of December 31, 1996, is fairly
stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
November 13, 1997
2
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
BALANCE SHEETS
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At September 30, At December 31,
1997 1996
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(In thousands) (Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 100,863 $ 81,908
Receivables, net of allowance for doubtful accounts
of $48,109 and $38,674 75,477 70,196
Inventories 28,903 27,554
Prepaid expenses and other 52,863 56,625
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Total current assets 258,106 236,283
Property and equipment, net of accumulated depreciation
of $616,938 and $551,955 1,362,895 1,372,484
Construction in progress 863,746 313,205
Other assets, net 416,421 221,518
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$2,901,168 $2,143,490
=============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 126,205 $ 120,294
Accrued expenses 100,836 97,718
Current maturities of long-term debt 143 453
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Total current liabilities 227,184 218,465
Long-term debt, net of current maturities 1,036,340 468,140
Other liabilities, including deferred income taxes of
$165,587 and $155,076 178,498 166,002
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Total liabilities 1,442,022 852,607
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Commitments and contingencies
Stockholders' equity
Common stock: 179,046 and 178,336 shares outstanding 940 940
Additional paid-in capital 732,426 725,240
Retained earnings 1,014,479 856,215
Treasury stock, at cost: 56,102 and 56,812 shares (288,699) (291,512)
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Total stockholders' equity 1,459,146 1,290,883
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$2,901,168 $2,143,490
=============================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
STATEMENTS OF INCOME (UNAUDITED)
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Three Months Nine Months
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For the periods ended September 30 1997 1996 1997 1996
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(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross revenues $400,631 $370,825 $1,168,787 $1,122,676
Less - promotional allowances (31,478) (32,273) (93,234) (97,264)
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369,153 338,552 1,075,553 1,025,412
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Costs and expenses
Casino-hotel operations 207,935 193,454 609,700 589,254
General and administrative 42,507 39,036 120,879 114,510
Depreciation and amortization 22,216 22,141 65,590 66,507
Corporate expense 9,042 7,946 24,357 21,724
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281,700 262,577 820,526 791,995
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Operating income 87,453 75,975 255,027 233,417
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Other income (expense)
Interest cost (18,709) (7,408) (45,912) (20,629)
Interest capitalized 15,114 6,312 36,613 16,241
Other, including interest income 1,215 106 2,723 11,524
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(2,380) (990) (6,576) 7,136
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Income before income taxes and
extraordinary item 85,073 74,985 248,451 240,553
Provision for income taxes 30,174 26,249 87,962 86,631
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Income before extraordinary item 54,899 48,736 160,489 153,922
Extraordinary item - loss on early
retirement of debt, net of applicable
income tax benefit - - (2,225) -
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Net income $ 54,899 $ 48,736 $ 158,264 $ 153,922
===============================================================================================
Income per share of common stock
Income before extraordinary item $ 0.29 $ 0.25 $ 0.84 $ 0.79
Extraordinary item - loss on early
retirement of debt, net of applicable
income tax benefit - - (0.01) -
- -----------------------------------------------------------------------------------------------
Net income per share of common stock $ 0.29 $ 0.25 $ 0.83 $ 0.79
===============================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
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Nine months ended September 30 1997 1996
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(In thousands)
<S> <C> <C>
Cash flows from operating activities
Net income $ 158,264 $ 153,922
Adjustments to reconcile net income to net cash provided
by operating activities
Provision for losses on receivables 12,441 14,399
Depreciation and amortization of property and equipment,
including amounts reported as corporate expense 72,282 71,076
Equity in undistributed earnings of Monte Carlo (22,792) (2,057)
Gain on sale of investment in Casino Iguazu - (8,006)
Amortization of debt discount and issuance costs 10,974 10,725
Loss on early retirement of debt 3,422 -
Deferred income taxes 6,564 14,051
Changes in working capital pertaining to operating activities
Increase in receivables and other current assets (11,362) (8,384)
Decrease in trade accounts payable and accrued expenses (20,977) (26,415)
Other (876) (4,569)
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Net cash provided by operating activities 207,940 214,742
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Cash flows from investing activities
Capital expenditures (620,569) (215,272)
Increase in construction payables 30,006 15,990
Joint venture and other investments (51,235) (23,747)
Proceeds from sale of investment in Casino Iguazu - 12,500
Proceeds from sale of other equity investments - 18,127
Acquisition of fine art inventory (85,948) -
Other (24,026) (17,858)
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Net cash used for investing activities (751,772) (210,260)
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Cash flows from financing activities
Net bank credit facility and commercial paper borrowings 259,584 71,118
Issuance of notes and debentures 296,052 -
Repurchases of common stock (1,091) (64,131)
Exercise of common stock options, including related income
tax benefit 8,795 14,477
Other (553) (293)
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Net cash provided by financing activities 562,787 21,171
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Cash and cash equivalents
Increase for the period 18,955 25,653
Balance, beginning of period 81,908 48,026
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Balance, end of period $ 100,863 $ 73,679
=================================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1 - COMPANY DESCRIPTION AND BASIS OF PRESENTATION
Mirage Resorts, Incorporated (the "Company"), through wholly
owned subsidiaries, owns and operates some of the most success-
ful casino-based entertainment resorts in the world. These
resorts include The Mirage and Treasure Island on the Las Vegas
Strip, the Golden Nugget in downtown Las Vegas and the Golden
Nugget-Laughlin in Laughlin, Nevada. The Company is also a 50%
partner in a joint venture that owns and operates the Monte
Carlo Resort & Casino ("Monte Carlo"), which opened June 21,
1996 on the Las Vegas Strip.
The Company is currently constructing two additional wholly owned
hotel-casino resorts. Bellagio, an elegant 3,005-guest room
luxury resort, is being constructed on approximately 118 acres
adjacent to Monte Carlo on the Las Vegas Strip. Beau Rivage, a
luxurious 1,780-guest room beachfront resort, is being
constructed on approximately 21 acres in Biloxi, Mississippi.
Both resorts are scheduled to be completed in 1998 - Bellagio in
mid-October and Beau Rivage in mid-December.
The accompanying condensed consolidated financial statements have
been prepared in accordance with the accounting policies
described in the Company's 1996 Annual Report on Form 10-K (the
"1996 Annual Report") and should be read in conjunction with
the Notes to Consolidated Financial Statements which appear in
that report. The Condensed Consolidated Balance Sheet at
December 31, 1996 contained herein was derived from audited
financial statements, but does not include all disclosures
included in the 1996 Annual Report and applicable under generally
accepted accounting principles.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the results for the interim periods have been included. The
results for the 1997 interim periods are not necessarily
indicative of expected results for the full year.
Certain amounts in the 1996 condensed consolidated financial
statements have been reclassified to conform with the 1997
presentation. These reclassifications had no effect on the
Company's net income.
NOTE 2 - BANK CREDIT FACILITY AMENDMENT
On March 7, 1997, the Company's $1 billion revolving bank credit
facility was amended to increase the total availability to $1.75
billion and extend the maturity date from May 1999 to March 2002.
Under certain circumstances, the facility can be further
increased to $2 billion. The amendment also reduced the
Company's borrowing cost and eliminated or relaxed many of the
bank facility's financial covenants.
6
<PAGE>
In many respects, the amended bank facility is tantamount to a
new facility. As a result, the Company wrote off the unamortized
up-front costs and fees associated with the original $1 billion
facility, resulting in an extraordinary charge of $2.2 million,
net of applicable income tax benefit of $1.2 million.
NOTE 3 - ISSUANCE OF LONG-TERM DEBT
On August 5, 1997, the Company issued $200 million principal
amount of 6 3/4% unsecured notes due August 1, 2007 and $100
million principal amount of 7 1/4% unsecured debentures due
August 1, 2017. The net proceeds from the offering of approx-
imately $296.1 million were used to repay a portion of the
Company's outstanding bank credit facility and commercial paper
borrowings.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED
SEPTEMBER 30, 1997 AND 1996
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three months ended September 30 1997 1996
- ----------------------------------------------------------------------------------
(Dollars in thousands, except per share and room rate amounts)
<S> <C> <C>
Gross revenues
The Mirage $230,444 $193,573
Treasure Island 99,475 104,275
Golden Nugget 50,176 52,078
Golden Nugget-Laughlin 13,904 13,674
- ----------------------------------------------------------------------------------
393,999 363,600
Equity in earnings of Monte Carlo 6,632 7,225
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$400,631 $370,825
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Net revenues
The Mirage $213,241 $175,412
Treasure Island 91,919 96,485
Golden Nugget 45,093 47,262
Golden Nugget-Laughlin 12,268 12,168
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362,521 331,327
Equity in earnings of Monte Carlo 6,632 7,225
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$369,153 $338,552
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Operating profit
The Mirage $ 64,802 $ 45,164
Treasure Island 18,947 22,985
Golden Nugget 5,828 8,371
Golden Nugget-Laughlin 286 176
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89,863 76,696
Equity in earnings of Monte Carlo 6,632 7,225
Corporate expense (9,042) (7,946)
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$ 87,453 $ 75,975
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Operating margin (operating profit/net revenues)
The Mirage 30.4% 25.7%
Treasure Island 20.6% 23.8%
Golden Nugget 12.9% 17.7%
Golden Nugget-Laughlin 2.3% 1.4%
Company-wide (before Monte Carlo and corporate expense) 24.8% 23.1%
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Net income $ 54,899 $ 48,736
Net income per share $ 0.29 $ 0.25
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Other information (excluding Monte Carlo)
Company-wide table games win percentage 25.5% 19.2%
Company-wide occupancy of standard guest rooms 98.7% 99.2%
Average standard guest room rate (a) $ 86 $ 88
- ----------------------------------------------------------------------------------
(a) Cash rate (i.e., excluding complimentary accommodations) at the Company's
Las Vegas hotels.
</TABLE>
8
<PAGE>
The 1997 third quarter was the best third quarter in the
Company's history. Net income per share of $0.29 represents a
16% increase over the $0.25 per share reported in the third
quarter of 1996. The Company has now reported year-over-year
increases in earnings per share in 14 of the past 15 quarters.
The Company-wide table games win percentage was a higher-than-
historical average 25.5%, versus 19.2% in the prior-year period.
The Company's table games win percentage has averaged 20.1% over
the past 12 quarters. Company-wide standard guest room occupancy
remained high at 98.7%, versus 99.2% in the 1996 third quarter.
Substantially all of the earnings growth was attributable to the
Company's flagship resort, The Mirage, which had the best quarter
in its history. The Mirage's net revenues and operating income
increased by 22% and 43%, respectively, over the third quarter
of 1996. These results reflect increases in table games and slot
play, as well as an increase in the table games win percentage.
Table games revenues increased by $33.8 million, or 51%, and slot
revenues grew by $3.8 million, or 13%. Largely due to a reduction
in the number of performances by Siegfried & Roy, net non-casino
revenues were down slightly (2%). Standard room occupancy at The
Mirage continued strong at 99.4%, versus 99.9% in the 1996 third
quarter, with a small increase in the average standard room rate.
The strong results at The Mirage were achieved despite $2.7
million of abandonment charges related to the construction of
a new gourmet restaurant (Melange) that opened August 30, and a
new employee parking garage expected to be completed in March
1998.
The increase in operating results at The Mirage more than offset
a net decrease in operating results at the Company's other
resorts. Treasure Island was adversely affected during the
quarter by construction disruptions and additional competition
from new resorts on the Las Vegas Strip. Treasure Island's
luxurious new hotel lobby was completed in early August and a new
retail outlet opened in September. A new Italian restaurant and
additional casino space are currently under construction and
scheduled for completion later this year. The construction
temporarily resulted in approximately 12% fewer slot machines
at Treasure Island versus the third quarter of 1996. This,
together with the competitive market conditions, resulted in a
decrease in slot revenues, which primarily accounted for the
decrease in revenues and operating income. Treasure Island's
standard room occupancy remained strong during the 1997 third
quarter at 99.6%, versus 99.5% in the prior-year period.
The Golden Nugget in downtown Las Vegas continued to be adversely
affected by market conditions, particularly additional
competition from the new resorts on the Las Vegas Strip. The
Golden Nugget's casino revenues were relatively flat. However,
with visitor counts lagging behind the increase in City-wide
guest room inventory, the average standard room rate and
occupancy were down slightly, resulting in an 11% decrease in net
non-casino revenues.
9
<PAGE>
During the 1997 third quarter, Monte Carlo produced net revenues
of $60.6 million and operating income of $15.8 million. During
the 1996 third quarter, its first full quarter of operation,
Monte Carlo produced net revenues and operating income of $67.4
million and $18.6 million, respectively. Management believes
that initial trial visitation in the 1996 quarter, together with
the interim increases in competition, contributed to the decrease
in Monte Carlo's operating results. Partially offsetting this,
the unconsolidated joint venture had $2.6 million of interest
expense during the 1997 quarter, versus $4.3 million in the
prior-year period, reflecting the utilization of operating cash
flow to substantially reduce debt over the past year. After
deducting net interest expense, this 50%-owned resort contributed
$6.6 million to the Company's 1997 third quarter pretax income,
versus $7.2 million in the 1996 quarter.
Results at the Company's small Golden Nugget-Laughlin property
were up slightly over the prior-year period.
Corporate expense rose by 14%, principally due to expenses
associated with successfully concluded litigation. Interest cost
more than doubled compared to the 1996 third quarter. Most of
this increase was capitalized, reflecting the Company's
increasing investment in the Bellagio and Beau Rivage projects.
10
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE NINE-MONTH PERIODS ENDED
SEPTEMBER 30, 1997 AND 1996
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Nine months ended September 30 1997 1996
- -------------------------------------------------------------------------------------
(Dollars in thousands, except per share and room rate amounts)
<S> <C> <C>
Gross revenues
The Mirage $ 649,605 $ 599,192
Treasure Island 298,679 309,663
Golden Nugget 152,754 166,387
Golden Nugget-Laughlin 44,957 45,377
- -------------------------------------------------------------------------------------
1,145,995 1,120,619
Equity in earnings of Monte Carlo 22,792 2,057
- -------------------------------------------------------------------------------------
$1,168,787 $1,122,676
- -------------------------------------------------------------------------------------
Net revenues
The Mirage $ 597,665 $ 544,094
Treasure Island 276,938 286,646
Golden Nugget 138,213 151,908
Golden Nugget-Laughlin 39,945 40,707
- -------------------------------------------------------------------------------------
1,052,761 1,023,355
Equity in earnings of Monte Carlo 22,792 2,057
- -------------------------------------------------------------------------------------
$1,075,553 $1,025,412
- -------------------------------------------------------------------------------------
Operating profit
The Mirage $ 171,054 $ 143,418
Treasure Island 61,146 71,379
Golden Nugget 20,642 33,932
Golden Nugget-Laughlin 3,750 4,355
- -------------------------------------------------------------------------------------
256,592 253,084
Equity in earnings of Monte Carlo 22,792 2,057
Corporate expense (24,357) (21,724)
- -------------------------------------------------------------------------------------
$ 255,027 $ 233,417
- -------------------------------------------------------------------------------------
Operating margin (operating profit/net revenues)
The Mirage 28.6% 26.4%
Treasure Island 22.1% 24.9%
Golden Nugget 14.9% 22.3%
Golden Nugget-Laughlin 9.4% 10.7%
Company-wide (before Monte Carlo and corporate expense) 24.4% 24.7%
- -------------------------------------------------------------------------------------
Income before extraordinary item $ 160,489 $ 153,922
Net income $ 158,264 $ 153,922
- -------------------------------------------------------------------------------------
Income per share before extraordinary item $ 0.84 $ 0.79
Net income per share $ 0.83 $ 0.79
- -------------------------------------------------------------------------------------
Other information (excluding Monte Carlo)
Company-wide table games win percentage 21.8% 19.1%
Company-wide occupancy of standard guest rooms 99.0% 99.4%
Average standard guest room rate (a) $ 91 $ 91
- -------------------------------------------------------------------------------------
(a) Cash rate (i.e., excluding complimentary accommodations) at the Company's
Las Vegas hotels.
</TABLE>
11
<PAGE>
The Company's operating results for the 1997 nine-month period
represent the highest ever achieved in any comparable nine-month
period in the Company's history. Revenues, operating income and
income before non-recurring items each surpassed previous records
set in the 1996 nine-month period. Income per share before
extraordinary item of $0.84 represents a 6% increase over the
$0.79 per share reported in the 1996 nine-month period. After
deducting an extraordinary charge of $2.2 million, or $0.01 per
share, associated with amending and increasing the Company's bank
credit facility, net income per share in the 1997 period was
$0.83. Earnings in the 1996 period included a non-recurring gain
of $8.0 million ($5.2 million, or $0.03 per share, after tax)
related to the sale of the Company's interest in a small casino
located near Iguazu Falls, Argentina.
The Company-wide table games win percentage was 21.8%, versus
19.1% in the 1996 nine-month period. Despite an increase in
competition, the Company's standard guest room occupancy
continued high at 99.0%, versus 99.4%, and the average standard
room rate held steady at $91.
Monte Carlo opened on June 21, 1996. During the 1997 nine-month
period, Monte Carlo generated net revenues of $187.2 million
and operating income of $53.6 million. After deducting net
interest expense and the joint venture partner's 50% share, Monte
Carlo contributed $22.8 million to the Company's pretax income
during the 1997 period. After deducting a one-time charge of
$11.2 million for preopening costs, Monte Carlo reported net
income of $4.1 million during 102 days of operation in the 1996
period. The Company's 50% share of such amount contributed $2.1
million to pretax earnings during the 1996 nine-month period.
The Mirage achieved solid earnings improvement during the 1997
nine-month period. Net revenues grew by $53.6 million, or 10%,
and operating income was up $27.6 million, or 19%. Total casino
revenues increased by $46.8 million, or 15%, reflecting an
increase in the table games win percentage and increases in
activity at both table games and slots. Occupancy of The Mirage's
standard guest rooms was above 99% during both nine-month
periods, with the 1997 period posting a 2% increase in the
average standard room rate.
The construction disruptions and competitive pressures discussed
previously impacted operations at Treasure Island and the Golden
Nugget during the 1997 nine-month period. The decrease in
revenues and operating income at Treasure Island principally
reflects an 11% decline in slot revenues. Treasure Island's net
non-casino revenues increased slightly over the prior-year
period, reflecting the continued success of the highly acclaimed
Mystere production by Cirque du Soleil. Treasure Island's
standard guest room occupancy was also in excess of 99% during
both nine-month periods at a substantially equal average daily
rate.
12
<PAGE>
In addition to the increased competition, the Golden Nugget was
also impacted by the refurbishment of its south tower guest
rooms, which resulted in approximately 6% fewer available room
nights in the 1997 nine-month period. Room revenues were down
$3.8 million, contributing to a 10% decrease in net non-casino
revenues. A reduction in table games and slot play, together
with a lower table games win percentage, principally accounts for
an $8.1 million, or 8%, decrease in the Golden Nugget's casino
revenues.
The Laughlin market has been impacted in recent years by
additional competition from new casinos on Arizona and California
Indian reservations, as well as new resorts in Las Vegas.
Operating comparisons at the Golden Nugget-Laughlin, however,
have improved in the most recent six months. As a result,
operating results during the nine-month period were down only
moderately versus the 1996 period.
The factors discussed previously in comparing the three-month
periods had a similar effect on the Company's net interest
expense when comparing the nine-month periods.
CAPITAL SPENDING, CAPITAL RESOURCES AND LIQUIDITY
The Company's capital spending has increased significantly with
the ongoing construction of Bellagio and Beau Rivage. Capital
expenditures during the 1997 nine-month period totaled $620.6
million, versus $215.3 million during the 1996 period. Including
land, capitalized interest and preopening costs, Bellagio is
expected to cost approximately $1.6 billion and Beau Rivage is
expected to cost approximately $600 million. Of such amounts,
the Company had incurred approximately $744 million associated
with Bellagio and approximately $186 million associated with Beau
Rivage at September 30, 1997. These spectacular new resorts are
now scheduled to open in mid-October and mid-December 1998,
respectively. During the 1997 nine-month period, the Company also
acquired $85.9 million of additional fine art for display and
resale at Bellagio.
The Company's capital spending will remain high after the opening
of Bellagio and Beau Rivage if it proceeds with its planned
casino-based destination resort in Atlantic City, New Jersey and
proposed hotel-casino in Detroit, Michigan. The Company and the
City of Atlantic City have entered into an agreement (the
"Redevelopment Agreement") providing for the City to convey a
total of 181 acres (125 acres of which are developable) located
in the Marina area of Atlantic City to the Company in exchange
for the Company agreeing to develop a hotel-casino (tentatively
named "Le Jardin") on the site and undertaking certain other
obligations. Closing under the Redevelopment Agreement and
construction of the planned resort require the satisfaction of a
number of conditions.
The Company has entered into an agreement (the "Road Development
Agreement") with the New Jersey Department of Transportation (the
"State") and South Jersey Transportation Authority ("SJTA") with
13
<PAGE>
respect to the construction and joint funding of certain major
road improvements designed to improve access to the Marina area.
Pursuant to the Road Development Agreement, the Company has
agreed to fund $110 million of the estimated $330 million cost
of the road improvement project, with the balance to be funded by
the State ($95 million) and SJTA ($125 million). The Company's
and SJTA's portion of the funding has been deposited in an
escrow account and is restricted for the road improvement
project. Of the Company's funding obligation, $55 million will
be satisfied by the Company purchasing SJTA special revenue bonds
which are repayable, together with interest, solely from certain
future tax revenues generated by the Company's planned hotel-
casino and any other hotel-casinos which may be constructed on
the Marina site. The road improvement project is being undertaken
pursuant to a fixed-price design/build contract. The contractor
commenced the design phase of the project on October 13, 1997.
The various governmental permits required for the Company's
hotel-casino and the road improvement project have not yet been
received. Additionally, an existing Atlantic City hotel-casino
operator and others have filed various lawsuits which seek to
prevent construction of the road improvements and closing under
the Redevelopment Agreement, thereby delaying or preventing the
Company from developing its Marina hotel-casino. The hotel-
casino project is in the early design stage and a project budget
has not yet been developed. As a result of the foregoing
factors, there can be no assurance as to the timing or cost of
construction by the Company in Atlantic City.
On November 7, 1997, the Company was one of four proposers chosen
to proceed to the final phase of the competitive selection
process to develop, own and operate one of three hotel-casinos
in Detroit. The voter-approved initiative permitting casino
gaming in Detroit provides that two of the other three remaining
proposers hold a "preference" because they supported the passage
of the initiative. The City has indicated that the selection of
the final three proposers will be announced by November 24, 1997.
Such proposers will then attempt to negotiate development
agreements with the City. The Company's proposed project has an
estimated total development cost of approximately $800 million.
In addition to operating cash flow, the Company is funding its
capital expenditure requirements utilizing bank credit facility
and commercial paper borrowings. When conditions are favorable,
the Company seeks to refinance a portion of such borrowings with
longer-term debt. On March 7, 1997, the availability under the
Company's $1 billion bank credit facility was increased to $1.75
billion and the maturity date was extended from May 1999 to
March 2002. At September 30, 1997, outstanding bank credit
facility and commercial paper borrowings totaled $259.6 million,
leaving approximately $1.5 billion available.
On August 5, 1997, in response to declines in interest rates, as
well as to manage the mix of its fixed and variable rate debt
instruments and lengthen the term of its debt structure, the
14
<PAGE>
Company issued $200 million principal amount of 6 3/4% unsecured
notes due August 1, 2007 and $100 million principal amount of
7 1/4% unsecured debentures due August 1, 2017. These securities
represent the lowest cost fixed-rate debt ever issued by the
Company. The net proceeds from the offering of approximately
$296.1 million were used to repay a portion of the Company's
outstanding bank credit facility and commercial paper borrowings.
On October 30, 1997, the Company filed a "shelf" registration
statement with the Securities and Exchange Commission (the "SEC")
that was declared effective by the SEC on November 3, 1997. The
registration statement allows the Company to issue up to $750
million of debt or equity securities or any combination thereof.
The registration statement is similar to a previous shelf
registration statement utilized by the Company to issue the notes
and debentures mentioned above.
Management believes that existing cash balances, operating cash
flow and available borrowing capacity will provide the Company
with sufficient resources to meet its existing debt obligations
and foreseeable capital expenditure requirements.
RECENTLY ISSUED ACCOUNTING STATEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 - Earnings
Per Share ("SFAS 128"). SFAS 128 is effective for periods
ending after December 15, 1997 and replaces currently reported
earnings per share with "basic," or undiluted, earnings per
share and "diluted" earnings per share. Undiluted earnings
per share is computed by dividing reported earnings by the
weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflects the additional
dilution for all potentially dilutive securities such as stock
options. Diluted earnings per share is similar to earnings per
share currently reported by the Company, but includes the
potential dilution for stock options that become exercisable more
than five years from the date of the financial statements.
The Company will adopt the provisions of SFAS 128 in its 1997
annual financial statements and all previously reported earnings
per share amounts will be restated. The following table
discloses the Company's pro forma earnings per share for the
three- and nine-month periods ended September 30, 1997 and 1996
as determined in accordance with SFAS 128.
15
<PAGE>
<TABLE>
<CAPTION>
Three Months Nine Months
--------------- ---------------
For the periods ended September 30 1997 1996 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income per share before extraordinary item
As reported $0.29 $0.25 $0.84 $0.79
Pro forma
Undiluted 0.31 0.27 0.90 0.84
Diluted 0.28 0.25 0.83 0.78
- -------------------------------------------------------------------------------------
Net income per share
As reported $0.29 $0.25 $0.83 $0.79
Pro forma
Undiluted 0.31 0.27 0.89 0.84
Diluted 0.28 0.25 0.82 0.78
- -------------------------------------------------------------------------------------
</TABLE>
CERTAIN FORWARD-LOOKING STATEMENTS
Certain information included in this Form 10-Q and other
materials filed or to be filed by the Company with the SEC (as
well as information included in oral statements or other written
statements made or to be made by the Company) contains forward-
looking statements, within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements
include information relating to plans for future expansion and
other business development activities as well as other capital
spending, financing sources and the effects of regulation
(including gaming and tax regulation) and competition. Such
forward-looking information involves important risks and un-
certainties that could significantly affect anticipated results
in the future and, accordingly, such results may differ from
those expressed in any forward-looking statements made by or on
behalf of the Company. These risks and uncertainties include,
but are not limited to, those relating to development and
construction activities, dependence on existing management,
leverage and debt service (including sensitivity to fluctuations
in interest rates), domestic or global economic conditions,
pending litigation, changes in federal or state tax laws or the
administration of such laws and changes in gaming laws or
regulations (including the legalization of gaming in certain
jurisdictions).
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 Issuing and Paying Agency Agreement, dated July 24,
1997, between the Registrant and First Trust of New
York, National Association (without exhibit).
10.2 Form of Series A Commercial Paper Note of the Regis-
trant.
10.3 Commercial Paper Dealer Agreement, dated July 24,
1997, between the Registrant and BancAmerica Securi-
ties, Inc. (without exhibits).
10.4 Commercial Paper Dealer Agreement, dated July 24,
1997, between the Registrant and Credit Suisse First
Boston Corporation (without exhibits).
10.5 Commercial Paper Dealer Agreement, dated July 24,
1997, between the Registrant and Morgan Stanley & Co.
Incorporated (without exhibits).
10.6 Commercial Paper Dealer Agreement, dated July 24,
1997, between the Registrant and Goldman, Sachs & Co.
(without exhibits).
10.7 First Amendment to Road Development Agreement, dated
as of July 31, 1997, among the State, SJTA and Atlan-
dia Design and Furnishings, Inc. ("ADF").
10.8 Letter agreement, dated September 16, 1997, between
the Registrant and Frank Visconti.
10.9 Amendment No.1 to Amended and Restated Loan Agreement,
dated as of September 19, 1997, among the Registrant,
the Banks, Co-Arrangers, Co-Agents and Documentation
Agent referred to therein, and Bank of America Nation-
al Trust and Savings Association, as Administrative
Agent.
10.10 Second Amendment to Road Development Agreement, dated
as of October 10, 1997, among the State, SJTA and ADF
(without schedules or exhibits).
10.11 First Amendment to Program Management Agreement, dated
as of October 10, 1997, among ADF, Parsons Brincker-
hoff-FG, Inc., the State and SJTA (without exhibit).
10.12 Aircraft Purchase Agreement, dated as of October 10,
1997, between Ivanhoe Capital Aviation L.L.C. and
Golden Nugget Aviation Corp. ("GNAC") (without exhib-
its).
17
<PAGE>
10.13 Design/Build Contract, dated September 8, 1997, be-
tween ADF and Yonkers Contracting Company, Inc./Gran-
ite Construction Company, a Joint Venture (with ap-
pendices).
10.14 Escrow Fund Agreement, dated as of October 10, 1997,
among CoreStates Bank, N.A., as Escrow Agent, ADF, the
State and SJTA (without schedules).
10.15 Bond Purchase Agreement, dated October 10, 1997, be-
tween the Registrant and SJTA (without exhibit).
10.16 Donation Agreement, dated as of October 10, 1997, be-
tween the Casino Reinvestment Development Authority
and MAC, CORP. (without exhibits).
10.17 Aircraft Purchase Agreement, dated as of October 1,
1997, between Rifton Enterprises, Inc. and GNAC (with-
out exhibits).
11 Mirage Resorts, Incorporated - Computation of Net
Income Per Share of Common Stock for the three-month
and nine-month periods ended September 30, 1997 and
1996.
15 Letter from independent public accountants acknowledg-
ing awareness of the use of their report dated
November 13, 1997 in the Registrant's registration
statements.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
On August 4, 1997, the Registrant filed a Current
Report on Form 8-K dated August 1, 1997. Under Item 7,
the Registrant filed as exhibits the form of Under-
writing Agreement with respect to the sale of its
6 3/4% notes and 7 1/4% debentures issued August 5,
1997 and the form of Supplemental Indenture governing
such notes and debentures.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Mirage Resorts, Incorporated
November 13, 1997 by: DANIEL R. LEE
- ----------------- --------------------------------
Date Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
19
ISSUING AND PAYING AGENCY AGREEMENT
July 24, 1997
First Trust of New York, National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attn: Corporate Trust Administration
Re: Mirage Resorts, Incorporated
Commercial Paper Program. Series A
----------------------------------
Ladies and Gentlemen:
This letter (the "Agreement") sets forth the
understanding between you and Mirage Resorts, Incorporated (the
"Company") whereby you have agreed to act (a) as depositary for
the safekeeping of certain Series A commercial paper notes of the
Company which may be issued and sold in the United States
commercial paper market (the "CP Notes"; such CP Notes when
issued in book-entry form being hereinafter referred to as Book-
Entry CP Notes" and when issued in the form of certificated
promissory notes being hereinafter referred to as the
"Certificated CP Notes"), (b) as issuing agent on behalf of the
Company in connection with the issuance of the CP Notes, (c) as
paying agent to undertake certain obligations to make payments in
respect of the CP Notes and (d) as depositary to receive certain
funds on behalf of the Company, as set forth herein. The
aggregate principal amount of CP Notes outstanding at any time
during the term of this Agreement shall not exceed $500,000,000.
Hereafter, at the written request of the Company if it so elects,
you will execute a Letter of Representations (the "Letter of
Representations," which term shall include the Procedures
referred to therein) with the Company and The Depository Trust
Company ("DTC") and a Certificate Agreement (the "Certificate
Agreement") with DTC which establish or will establish, among
other things, the procedures to be followed by you in connection
with the issuance and custody of Book-Entry CP Notes. This
Agreement shall remain in effect from its date of execution until
termination for all other CP Notes issued from this day forward.
This Agreement will govern your rights, powers and
duties as such depositary, issuing agent and paying agent for the
CP Notes and no implied covenants and obligations shall be read
into this Agreement or any other agreement against you.
EXHIBIT 10.1
<PAGE>
1. Appointment of Agent.
--------------------
The Company hereby appoints you and you hereby agree
to act, on the terms and conditions specified herein and in
the Letter of Representations and Certificate Agreement, as
depositary issuing and paying agent for the CP Notes. The
CP Notes will be sold through such commercial paper dealers
and/or placement agents as the Company shall have notified
you in writing from time to time (collectively, the "Dealers").
The Dealers currently are Morgan Stanley & Co. Incorporated,
Credit Suisse First Boston, BancAmerica Securities, Inc. and
Goldman, Sachs & Co. The Company shall notify you of the names
and addresses of any additional Dealers and shall notify you of
the elimination of any Dealers.
2. Supply of CP Notes.
------------------
(a) The Company will from time to time furnish to your
department that handles commercial paper (the "Commercial Paper
Department") located at 100 Wall Street, Suite 1600, New York,
New York, an adequate supply of CP Notes, which shall be Book-
Entry CP Notes and/or Certificated CP Notes, as the Company in
its sole and absolute discretion considers appropriate.
Certificated CP Notes shall be in substantially the form attached
as Exhibit "A" to this Agreement, shall be serially numbered and
shall have been executed by manual or facsimile signature of an
Authorized Representative (as hereafter defined), but shall
otherwise be uncompleted. Book-Entry CP Notes shall be
substantially in the forms attached to the Letter of
Representations and shall be represented by one or more master
notes ("Master Note" or "Master Notes") which shall be executed
by manual or facsimile signature by an Authorized Representative
in accordance with the Letter of Representations .
(b) Each Certificated CP Note or Master Note delivered
to you shall be accompanied by a letter from the Company
identifying the Certificated CP Note or Master Note(s), as the
case may be, transmitted therewith, and you shall acknowledge
receipt of such Certificated CP Note(s) or Master Note(s) on the
copy of such letter or pursuant to some other form of written
receipt deemed appropriate by you at the time of delivery to you
of such Certificated CP Note(s) or Master Note(s). Pending the
issuance of Certificated CP Notes as provided in Section 4
hereof, all Certificated CP Notes and Master Note(s) delivered to
you shall be held by your Commercial Paper Department for the
account of the Company or DTC, as the case may be, for
safekeeping in accordance with your customary practice and the
requirements of the Certificate Agreement.
3. Authorized Representatives.
--------------------------
(a) With the delivery of this Agreement, the Company
is furnishing to you, and from time to time thereafter may
furnish to you, and shall furnish to you upon your written
request, certificates ("Incumbency Certificates") of a
responsible officer of the Company certifying the incumbency and
specimen signatures of officers or agents of the Company
authorized to execute CP Notes on behalf of the Company by manual
-2-
<PAGE>
or facsimile signature and/or to take other action hereunder on
behalf of the Company (each an "Authorized Representative"); such
certificate shall also specify the names of employees of Dealers,
if any, who are authorized to give notices and/or issue
instructions to you as provided herein (a "Dealer
Representative"). Until you receive a subsequent incumbency
certificate of the Company, you are entitled to rely on the last
such certificate delivered to you for purposes of determining the
Authorized Representatives and Dealer Representatives. You shall
not have any responsibility to the Company to determine by whom
or by what means a facsimile signature may have been affixed on
the CP Notes, or to determine whether any facsimile or manual
signature resembles the specimen signature(s) filed with you by a
duly authorized officer of the Company. Any CP Note bearing the
manual or facsimile signature of a person who is an Authorized
Representative on the date such signature is affixed shall be
binding on the Company after the authentication thereof by you
notwithstanding that such person shall have died or shall have
otherwise ceased to hold his office on the date such CP Note is
countersigned or delivered to you.
(b) Upon your receipt of this Agreement, and from time
to time thereafter as you choose, you shall deliver a certificate
(a "Certificate of Designation") certifying the incumbency and
specimen signatures of your designated signers ("Designated
Officers") who are authorized to receipt for and authenticate CP
Notes, and deliver CP Notes. Until the Company shall receive a
subsequent Certificate of Designation, or unless an Authorized
Representative shall have received written notice from you of the
lack of authority of any individual, the Company may rely on the
last such Certificate of Designation delivered to it.
4. Completion; Authentication and Delivery of CP Notes.
---------------------------------------------------
(a) From time to time during the term of this
Agreement and subject to the terms and conditions hereof, upon
your receipt of written, telecopy or telex instructions or notice
transmitted directly to your computers or in such manner as you
then employ as your normal business practice, not later than
12:30 p.m., New York City time, on the date of issuance of
Certificated CP Notes, which shall be a day on which you are open
for business (a "Business Day"), from an Authorized
Representative or a Dealer Representative (in the case of
instructions from an Authorized Representative, a copy of such
instructions shall be sent to the Dealer Representative by said
Authorized Representative) you shall withdraw the respective
Certificated CP Notes from safekeeping and in accordance with the
instructions so received, take the following actions in
accordance with such instructions with respect to each such
Certificated CP Note:
-3-
<PAGE>
(i) date each such Certificated CP Note the date
of issuance thereof (which shall be a Business Day) and
insert the maturity date thereof (provided that the
Authorized Representative or Dealer Representative
shall ensure that such date is a Business Day and that
it shall not be more than 270 days from the date of
issue) and the face amount (provided that the
Authorized Representative or the Dealer Representative
shall ensure that such face amount is $250,000 or
integral multiples of $1,000 in excess thereof) thereof
in figures;
(ii) authenticate (by countersigning) each such
Certificated CP Note in the appropriate space provided
thereon; and
(iii) deliver in the Borough of Manhattan
south of Chambers Street each such Certified CP Note to
the Dealer, or the consignee, if any, designated by
such Authorized Representative or Dealer Representative
for the account of the Dealer against payment in
immediately available funds of the principal amount of
such CP Note.
(b) In the case of Book-Entry CP Notes, from time to
time during the term of this Agreement and subject to the terms
and conditions hereof, upon your receipt of written, telecopy or
telex instructions or notice transmitted directly to your
computers or in such a manner as you then employ as your normal
business practices, not later than 1:00 p.m., New York City time
on the date of issuance of Book-Entry CP Notes, which shall be a
Business Day, from an Authorized Representative or a Dealer
Representative (in the case of instructions from an Authorized
Representative, a copy of such instructions shall be sent to the
Dealer Representative by said Authorized Representative) you
shall give issuance instructions for the issuance of Book-Entry
CP Notes to DTC in a manner set forth in, and take other actions
as are required by, the Letter of Representations and the
Certificate Agreement. Instructions for the issuance of Book-
Entry CP Notes shall include the following information (given in
accordance with the instruction of the Authorized Representative
or Dealer Representative, as the case may be) with respect to
each Book-Entry CP Note:
(i) the date of issuance of such Book-Entry CP
Note (which shall be a Business Day);
(ii) the maturity date of such Book-Entry CP Note
(provided that the Authorized Representative or Dealer
Representative shall ensure that such date is a
Business Day and that it shall not be more than 270
days from the date of issue); and
-4-
<PAGE>
(iii) the face amount (provided that the
Authorized Representative or the Dealer Representative
shall ensure that such face amount is $250,000 or
integral multiples of $1,000 in excess thereof) in
figures.
(c) You shall send a report (by telecopy or other
means permitted hereunder) to the Company on a monthly basis of
your issuance of CP Notes under this Section 4, including the
maturity date and face amount of each CP Note issued.
(d) The Company understands that although you have
been instructed to deliver CP Notes against payment, delivery of
CP Notes will, in accordance with the custom prevailing in the
commercial paper market, be made before receipt of payment in
immediately available funds. Therefore, once you have delivered a
CP Note to a Dealer or its agent as provided herein, the Company
shall bear the risk that a Dealer or its agent fails to remit
payment for the CP Note to you. You shall have no liability to
the Company for any failure or inability on the part of the
Dealer to make payment for CP Notes. Nothing in this Agreement
shall require you to purchase any CP Note or expend your own
funds for the purchase price of a CP Note or CP Notes.
(e) Except as may otherwise be provided in the Letter
of Representations, if at any time the Company instructs you to
cease issuing Certificated CP Notes and to issue only Book-Entry
CP Notes, you agree that all CP Notes will be issued as Book-
Entry CP Notes and that no Certificated CP Notes shall be
exchanged for Book-Entry CP Notes unless and until you have
received written instructions from an Authorized Representative
(any such instructions from a Dealer Representative shall not be
sufficient for this purpose) to the contrary.
(f) It is understood that you are not under any
obligation to assess or review the financial condition or
creditworthiness of any person to or for whose account you
deliver a CP Note pursuant to instructions from an Authorized
Representative or Dealer Representative or to advise the Company
as to the results of any such appraisal or investigation you may
have conducted on your own or of any adverse information
concerning any such person that may in any way have come to your
attention.
(g) It is understood that DTC may request the delivery
of Certificated CP Notes in exchange for Book-Entry CP Notes upon
the termination of DTC's services pursuant to the DTC Letter of
Representations. Accordingly, upon such termination, you are
authorized to complete and deliver Certificated CP Notes in
partial or complete substitution for Book-Entry CP Notes of the
same face amount and maturity as requested by DTC. Upon the
completion or delivery of any such Certificated CP Note, you
shall annotate your records regarding the Master Note with
-5-
<PAGE>
respect to such Book-Entry CP Notes to reflect a corresponding
reduction in the face amount of the outstanding Book-Entry CP
Notes. Your authority to so complete and deliver such
Certificated CP Notes shall be irrevocable at all times from the
time a Book-Entry CP Note is purchased until the indebtedness
evidenced thereby is paid in full.
(h) If you shall receive written, telecopy or telex
instructions (confirmed in writing in accordance with this
Agreement) from the Company not to issue or deliver CP Notes,
until revoked in writing or superseded by further written
instructions from the Company, you shall not issue or deliver CP
Notes; provided, however, that, notwithstanding contrary
instructions from the Company. you shall be required to deliver
CP Notes in respect of agreements for the sale of CP Notes
concluded by an Authorized Representative or Dealer
Representative prior to receipt by the Authorized Representative
or Dealer Representative of notice of such instructions from the
Company, which the Authorized Representative or Dealer
Representative shall be required to confirm to you in writing
prior to your delivery of the CP Notes. For purposes of the
preceding provision, you may rely on written notice given or
delivered to you by an Authorized Representative or Dealer
Representative as to whether any particular CP Notes are to be
issued in respect of such agreements concluded by such Authorized
Representative or Dealer Representative, and you shall have no
obligation to make any other or further investigation.
5. Proceeds of Sale of the CP Notes.
-------------------------------------------------
Contemporaneously with the execution and delivery of this
Agreement, and for the purposes of this Agreement, you will
establish an account designated as the Mirage Resorts,
Incorporated Note Account in the Company's name (the "Note
Account"). On each day on which a Dealer or its agent receives CP
Notes (whether through the facilities of DTC in the manner set
forth in the Letter of Representations or by delivery in
accordance with the provisions of this Agreement), all proceeds
received by you in connection with such sale shall be credited in
immediately available funds to the Note Account. From time to
time, upon written instructions received by you from an
Authorized Representative, you agree to transfer immediately
available funds from the Note Account to any bank or trust
company in the United States for the Company's account.
6. Payment of Matured CP Notes.
---------------------------
(a) By 1:00 p.m., New York City time, on the date that
any CP Notes are scheduled to mature, there shall have been
transferred to you for deposit (or otherwise be) in the Note
Account immediately available funds at least equal to the
amount of CP Notes maturing on such date. When any matured CP
Note is presented to you for payment by the holder thereof
(which may, in the case of Book-Entry CP Notes held by you
pursuant to the Certificate Agreement, be DTC or a nominee of
DTC), payment shall be made from and charged to the Note
Account to the extent of funds available in said account.
-6-
<PAGE>
(b) Each CP Note presented to you for payment at or
prior to 3:00 p.m., New York City time, on any Business Day at or
after the maturity date of such CP Note shall be paid by you on
the same day as such presentation (or if presented after 3:00
p.m., New York City time, on any such Business Day, then on
the next succeeding Business Day) to the extent of funds
available in the Note Account.
7. Representations and Warranties of the Company.
---------------------------------------------
The Company hereby warrants and represents to you, and
each request to issue CP Notes shall constitute the Company's
continuing warranty and representation, as follows:
(a) This Agreement is, and all CP Notes delivered to
you pursuant to this Agreement will be, duly authorized, executed
and delivered by the Company.
(b) The issuance and delivery of the CP Notes will not
violate any state or federal law and the CP Notes do not require
registration under the Securities Act of 1933, as amended.
(c) This Agreement constitutes and the CP Notes, when
completed, countersigned, and delivered pursuant hereto, will
constitute, the Company's legal, valid and binding obligation,
enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general
principles of equity.
(d) The Company is a corporation validly existing
under the laws of Nevada and no liquidation, dissolution,
bankruptcy, windup or similar proceedings have been instituted
with respect to the Company.
(e) The Company has, and at all relevant times has
had, all necessary corporate power and authority to execute,
deliver and perform this Agreement and to issue the CP Notes.
(f) All actions on the part of the Company which are
required for the authorization of the issuance of the CP Notes
and for the authorization, execution, delivery and performance
of this Agreement do not require the approval or consent of
any holder or trustee of any indebtedness or obligations
of the Company.
(g) The issuance of CP Notes by the Company (i) does
not and will not contravene any provision of any governmental
law, regulation or rule applicable to the Company, and (ii) does
not and will not conflict with, breach or contravene the
provisions of any contract or other instrument binding upon the
Company.
-7-
<PAGE>
8. Reliance on Instructions.
------------------------
Except as otherwise set forth herein, you shall incur
no liability to the Company in acting hereunder upon tele-
phonic or other instructions contemplated hereby which you
reasonably believed in good faith to have been given by an
Authorized Representative or a Dealer Representative, as the
case may be. In the event a discrepancy exists with respect
to such instructions, the telephonic instructions as recorded
by you will be deemed the controlling and proper instructions,
unless such instructions are required by this Agreement to be in
writing or have not been recorded by you as contemplated by the
next sentence. It is understood that all telephonic instruc-
tions shall be recorded by you, and the Company hereby consents
to such recording.
9. Cancellation of CP Notes.
------------------------
You will in due course cancel Certificated CP Note(s)
presented for payment and from time to time return such canceled
Certificated CP Notes to the Company. After payment of any
matured Book-Entry CP Note, you shall annotate your records to
reflect the face amount of Book-Entry CP Notes outstanding in
accordance with the Letter of Representations. Promptly upon
the written request of the Company, you agree to cancel and
return to the Company all unissued Certificated CP Notes in your
possession at the time of such request.
10. Notices; Addresses.
------------------
(a) All communications by or on behalf of the Company
or a Dealer, by telephone or otherwise, relating to the
completion, delivery or payment of the CP Note(s) are to be
directed to your Commercial Paper Department.
(b) Notices and other communications hereunder shall
(except to the extent otherwise expressly provided) be in writing
(which may be by facsimile) and shall be addressed as follows, or
to such other address as the party receiving such notice shall
have previously specified to the party sending such notice:
if to the Company, at:
concerning the daily issuance of CP Notes:
Mirage Resorts, Incorporated
South Industrial Road
Las Vegas, Nevada 89109
Attention: William T. Estes, Director of
Investor and Lender Relations
Facsimile No.: (702) 792-4796
Telephone No.: (702)792-4844
-8-
<PAGE>
concerning all other matters:
Mirage Resorts, Incorporated
Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
Facsimile No.: (702) 791-5787
Telephone No.: (702) 791-7129
if to you at:
concerning the daily issuance of CP Notes:
First Trust of New York, National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust Administration
Facsimile No.: (212)809-5459
Telephone No.: (212) 361-2458
concerning all other matters:
First Trust of New York, National Association
l00 Wall Street, Suite 1600
New York, New York 10005
Attention: Steven E. Haas
Facsimile No.: (212)809-5459
Telephone No.: (212) 361-2458
(c) In any case where it is provided in this
Agreement that a copy of any instruction, demand or other notice
is to be delivered to a Dealer, such copy shall be delivered to
the Dealer at the address set forth below by the same means as
the original thereof shall have been given, provided that the
failure of such copy to be given to any Dealer shall not
invalidate or adversely affect the original thereof:
Dealers:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Attention: Janice Murray
Facsimile No.: (212) 761-0780
Telephone No.: (212) 761-1123
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Attention: Helena M. Willner
Facsimile No.: (212) 325-8183
Telephone No.: (212) 325-7198
-9-
<PAGE>
BancAmerica Securities, Inc.
555 California Street, 12th Floor
San Francisco, California 94104
Attention: Christopher Piron
Facsimile No.: (415) 622-3429
Telephone No.: (415) 622-5298
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: David S. Keller
Facsimile No.: (212) 902-0683
Telephone No.: (212)902-3693
Notices shall be deemed delivered when received at the address
specified above. For purposes of this Section 10, "when received"
shall mean actual receipt (i) of an electronic communication by a
telex machine, telecopier or issuance system specified in or
pursuant to this Agreement; or (ii) of an oral communication by
the person specified in or pursuant to this Agreement; or (iii)
of a written communication hand-delivered at the office specified
in or pursuant to this Agreement.
11. Liability.
---------
Neither you nor your officers, employees or agents
shall be liable for any act or omission hereunder, except in
the case of gross negligence or willful misconduct as described
in Section 12 herein. Your duties and obligations and those of
your officers and employees shall be determined by the express
provisions of this Agreement, the Letter of Representations
and the Certificate Agreement (including the documents referred
to therein), and you and your officers, employees and agents
shall be responsible for the performance of only such duties
and obligations as are specifically set forth herein and
therein, and no implied covenants shall be read into any such
document against you or your officers, employees or agents.
Neither you nor your officers, employees or agents shall be
required to ascertain whether any issuance or sale of CP Note(s)
(or any amendment or termination of this Agreement) has been duly
authorized or is in compliance with any other agreement to which
the Company is a party (whether or not you are a party to such
other agreement).
12. Indemnity.
---------
The Company hereby agrees to indemnify and hold you,
your employees and any of your of officers and agents harmless
from and against, and you shall not be liable for, any and all
losses, liabilities (including liabilities for penalties),
actions, suits, judgments, demands, damages, costs and expenses
of any nature (including, without limitation, interest and
reasonable attorneys' fees, expenses, and the allocable costs
of in-house legal services) arising out of or resulting from
the exercise of your rights and/or the performance of your duties
(or those of your agents and employees) hereunder; provided,
however, that the Company shall not be liable to indemnify
-10-
<PAGE>
or pay you with respect to any loss, liability, action, suit,
judgment, demand, damage, cost or expense that results from or is
attributable to your gross negligence or willful misconduct or
that of your officers or employees. The foregoing indemnity
includes, but is not limited to, any action taken or omitted to
be taken by you upon telex, telephonic or other electronically
transmitted instructions (authorized herein) received by you
from, or believed by you in good faith to have been given by, the
proper person or persons. The provisions of this Section 12 shall
survive (i) your resignation or removal hereunder and (ii) the
termination of this Agreement.
13. Termination.
-----------
(a) This Agreement may be terminated at any time by
either you or the Company by 30 days' prior written notice to the
other, provided that you agree to continue acting as issuing and
paying agent hereunder until such time as your successor has been
selected and has entered into an agreement with the Company to
that effect. Such termination shall not affect the respective
liabilities of the parties hereunder arising prior to such
termination. The Issuing and Paying Agency Agreement between the
Company, THE MIRAGE CASINO-HOTEL, Treasure Island Corp..
Bellagio, GNLV, CORP. and MH, INC., as issuers, on the one hand,
and you, as successor issuing and paying agent, on the other
hand, dated November 13. 1995 (the "Prior Agreement"), shall
terminate upon the payment of all CP Notes (as defined in the
Prior Agreement) outstanding upon execution of this Agreement by
the Company and you, except that the provisions of Section 12 of
the Prior Agreement shall survive such termination. Following
execution of this Agreement by the Company and you, no CP Notes
(as defined in the Prior Agreement) shall be issued under the
Prior Agreement.
(b) If no successor has been appointed within 30 days,
you shall have the right to petition a court of competent
jurisdiction for the appointment of a successor issuing and
paying agent. You shall be reimbursed for any and all reasonable
expenses in connection with any such petition and appointment.
(c) Subject to the terms of Section 9, on the Business
Day following the date of termination of this Agreement, you
shall destroy all Certificated CP Notes in your possession and
shall transfer to the Company all funds, if any, then on deposit
in the Note Account. You shall promptly notify the Company of all
Certificated CP Notes so destroyed.
14. Amendments and Modifications.
----------------------------
No amendment, modification or waiver of any provision
of this Agreement, nor any consent to any departure by either
party from any provision hereof binding upon such party, shall
be effective unless the same shall be in writing and signed by
the other party hereto.
-11-
<PAGE>
15. Binding Effect; Assignment.
--------------------------
This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective successors,
including successors by merger, and assigns; provided, however,
that no party hereto may assign any of its rights or obligations
hereunder, except with the prior written consent of the other
party hereto.
16. GOVERNING LAW.
-------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK.
(b) Each party irrevocably and unconditionally submits
to the exclusive jurisdiction of the United States Federal courts
located in the Borough of Manhattan and the courts of the State
of New York located in the Borough of Manhattan.
17. Execution in Counterparts.
-------------------------
This Agreement may be executed in any number of
counterparts; each counterpart, when so executed and delivered,
shall be deemed to be an original; and all of which counterparts,
taken together, shall constitute one and the same agreement.
18. Headings.
--------
Section headings used in this Agreement are for con-
venience of reference only and shall not affect the construction
or interpretation of this Agreement.
19. Compensation and Expenses.
-------------------------
The Company shall pay you from time to time following
the execution of this Agreement compensation for all services
rendered by you hereunder as agreed upon by the Company. To the
extent not inconsistent with such agreement, the Company shall
reimburse you upon your request for all reasonable expenses,
disbursements and advances incurred or made by you in accordance
with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of your agents,
counsel and allocated costs of in-house counsel) except any
expense or disbursement attributable to your gross negligence or
willful misconduct.
20. Miscellaneous.
-------------
(a) No provision of this Agreement shall require you
to risk your own funds or otherwise incur any financial liability
in the performance of any of your duties hereunder or in the
exercise of any of your rights and powers hereunder.
-12-
<PAGE>
(b) You may consult with legal counsel, and any advice
or written opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted to be taken by you, in the absence of bad
faith, gross negligence or willful misconduct on your part, in
reliance on such advice or opinion.
(c) You make no representation as to, and shall have
no responsibility for, the correctness of any statement made by
or on behalf of the Company contained in, or the validity or
sufficiency of, this Agreement or any documents or instruments
referred to in this Agreement (with respect to the Company) or as
to or for the validity or collectibility of any obligation of the
Company contemplated by this Agreement. You shall not be
accountable for the use or application by any person of
disbursements properly made by you in conformity with the
provisions of this Agreement.
(d) You may rely and shall be protected in acting upon
any document or writing presented to you hereunder and reasonably
believed by you to be genuine and to have been signed and
presented by an authorized person or persons.
If the foregoing is acceptable to you, please indicate
your agreement therewith by signing one or more counterparts of
this Agreement in the space provided below, and returning such
signed counterpart(s) to the Company, whereupon this letter, when
signed by you and the Company, will become a binding agreement
between us.
MIRAGE RESORTS, INCORPORATED
By: DANIEL R. LEE
-----------------------
Daniel R. Lee
Chief Financial Officer
Agreed to and Accepted this 24th day of July, 1997.
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
as Issuing and Paying Agent
By: STEVEN E. HAAS
-----------------------
Name: Steven E. Haas
Title: Trust Officer
-13-
THIS CP NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THE INITIAL SALE OF
THIS CP NOTE MAY BE MADE ONLY TO AN INSTITUTIONAL "ACCREDITED
INVESTOR," AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR"), OR A "QUALIFIED INSTITU-
TIONAL BUYER," AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT (A "QIB"). BY ITS ACCEPTANCE OF THIS CP NOTE. THE PURCHASER
HEREOF REPRESENTS THAT IT IS (i) AN INSTITUTIONAL ACCREDITED
INVESTOR OR A "BANK," AS DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT, OR A SAVINGS AND LOAN ASSOCIATION OR OTHER
INSTITUTION OF THE TYPE REFERRED TO IN SECTION 3(a)(5)(A) OF
THE SECURITIES ACT, THAT IS ACTING AS A FIDUCIARY ON BEHALF
OF AN INSTITUTIONAL ACCREDITED INVESTOR AND THAT THIS CP NOTE
IS BEING ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR (ii) A QIB ACTING ON BEHALF OF ITSELF OR ANOTHER
QIB, AND (B) AGREES THAT ANY RESALE OF THIS CP NOTE WILL BE
MADE ONLY IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT (INCLUDING, IN THE CASE OF A SALE BY A QIB, A
TRANSACTION EXEMPT PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT), AND, IN EACH CASE, ONLY (i) TO A DEALER (EACH, A "DEALER"
AUTHORIZED BY MIRAGE RESORTS, INCORPORATED (THE "COMPANY"),
(ii) TO THE COMPANY. (iii) THROUGH A DEALER TO AN INSTITUTIONAL
INVESTOR APPROVED BY THE DEALER AS AN INSTITUTIONAL ACCREDITED
INVESTOR, (iv) TO A QIB OR (v) IN A TRANSACTION PREVIOUSLY
APPROVED IN WRITING BY THE COMPANY IN ITS SOLE AND ABSOLUTE
DISCRETION AS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
Series A Commercial Paper Note
$_______________ No. A-_______________
New York, New York
____________, 19__
For value received, Mirage Resorts, Incorporated, a Nevada
corporation (the "Company"), promises to pay to the order of
_______________________ the sum of __________________ Dollars on
__________, 19__ at the office of First Trust of New York,
National Association (the "Issuing and Paying Agent") at 100 Wall
Street, Suite 1600, Corporate Trust Administration, New York, New
York 10005.
This note has been issued pursuant to, and is subject to the
terms of, the Issuing and Paying Agency Agreement, dated
________, 1997, between the Company and the Issuing and Paying
Agent (as from time to time amended, supplemented or otherwise
modified, the "Issuing and Paying Agency Agreement").
EXHIBIT 10.2
<PAGE>
Reference is made to the Issuing and Paying Agency Agreement and
the other related documents, which, as from time to time amended,
are on file with the Issuing and Paying Agent at its aforesaid
office. This note shall be governed by, and construed in
accordance with, the laws of the State of New York.
MIRAGE RESORTS, INCORPORATED
By: DANIEL R. LEE
----------------------------------------
Authorized Signature
Countersigned for authentication only by:
FIRST TRUST OF NEW YORK, NATIONAL ASSOCIATION
as Issuing and Paying Agent
By:
----------------------------------------
Authorized Signature
This Note is not valid for any purpose unless countersigned by
First Trust of New York, National Association, as Issuing and
Paying Agent.
-2-
COMMERCIAL PAPER DEALER AGREEMENT
July 24, 1997
BancAmerica Securities, Inc.
555 California Street
San Francisco, California 94104
Dear Sirs:
Mirage Resorts, Incorporated, a Nevada corporation (the
"Company"), hereby appoints you as its agent on a non-exclusive
basis for the purpose of soliciting and receiving offers to
purchase from the Company from time to time its Series A commer-
cial paper notes, maturing not later than nine months from date
of issue (the "CP Notes") in an aggregate principal amount
outstanding not to exceed the amount authorized from time to time
by the Board of Directors of the Company. The CP Notes will be
issued under an Issuing and Paying Agency Agreement dated July
24, 1997 (the "Paying Agency Agreement") between the Company
and First Trust of New York, National Association, as Issuing and
Paying Agent (the "Paying Agent"), and will be issued in
denominations of $250,000 and integral multiples of $1,000 in
excess thereof. The Company may sell CP Notes directly to you as
principal for resale to others.
SECTION 1. ISSUANCE AND PURCHASE OF THE CP NOTES. If
you and the Company shall agree upon the sale of any CP Notes to
or through you (including, but not limited to, agreement with
respect to the price, principal amount, maturity and interest or
discount rate thereof), (i) instructions to the Paying Agent to
complete, authenticate and deliver the CP Notes shall be given in
the manner described in the Paying Agency Agreement and (ii) the
authentication and delivery to you of such CP Notes by the Paying
Agent against payment of the purchase price therefor shall
constitute the issuance of such CP Notes by the Company.
EXHIBIT 10.3
<PAGE>
SECTION 2. OFFERING OF THE CP NOTES; RESTRICTIONS ON
TRANSFER. You agree with the Company that (i) you will deliver
a Private Placement Memorandum (as hereinafter defined) to each
prospective investor in the CP Notes prior to the initial offer
to purchase a CP Note or CP Notes by such investor, (ii) you will
not solicit offers for, or offer or sell, CP Notes by any form of
general solicitation or general advertising or in any manner
involving a public offering within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act"),
and Rule 506 thereunder, and (iii) you will solicit offers for CP
Notes only from, and will offer CP Notes only to, (x)
institutional investors that you reasonably believe are
"accredited investors" within the meaning of Rule 501(a) under
the Securities Act or (y) persons that you reasonably believe are
"qualified institutional buyers," as defined in Rule 144A under
the Securities Act ("QIBs"), and, in either case, who, in pur-
chasing CP Notes, may be deemed to have represented and agreed as
provided in paragraphs (1) through (7) of Section 2(b).
(b) Each Private Placement Memorandum shall
contain paragraphs in substantially the following form:
"Each purchaser of a CP Note will be deemed to have
represented and agreed as follows:
(1) It understands that the CP Notes are being issued
only in transactions not involving any public
offering within the meaning of the Securities Act;
(2) It is (A) an institutional investor which is an
"Accredited Investor," as defined in Rule 501(a)
of Regulation D under the Securities Act (an
"Institutional Accredited Investor"), or a
"bank," as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association
or other institution of the type referred to in
Section 3(a)(5)(A) of the Securities Act, that is
acting as a fiduciary in purchasing the CP Notes
for the account of an Institutional Accredited
Investor, which has such knowledge and experience
(or, if such Institutional Accredited Investor is
acting as a fiduciary, it is a fiduciary with sole
investment discretion having such knowledge and
experience) in financial and business matters that
it is capable (whether acting for its own account
or in such fiduciary capacity) of evaluating the
merits and risks of investing in such CP Notes,
has had access to such information as it deems
necessary in order to make an informed investment
decision and is not purchasing the CP Notes with a
view to, or for sale in connection with, any
distribution; or (B) in the case of sales of CP
Notes pursuant to Rule 144A under the Securities
Act, a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act (a
"QIB"), or a QIB purchasing the CP Notes on
behalf of one or more other QIBs;
-2-
<PAGE>
(3) If in the future it (or any other investor or any
other fiduciary or agent representing it) decides
to sell such CP Notes prior to maturity, said CP
Notes will be sold only in a transaction exempt
from registration under the Securities Act and
only to (i) you or another dealer (each, a
"Dealer") authorized by the Company, (ii) to the
Company, (iii) to a QIB, (iv) through a Dealer to
an institutional investor approved by the Dealer
as an Institutional Accredited Investor or (v) in
a transaction previously approved in writing by
the Company as exempt from registration under the
Securities Act;
(4) It understands that, although you (or any other
Dealer) or the Company may repurchase CP Notes,
none of such entities is obligated to do so, and,
accordingly, the purchaser (or any such other
investor) should be prepared to hold the CP Notes
until maturity;
(5) It acknowledges that the CP Notes sold to it by
you may be sold to it pursuant to Rule 144A under
the Securities Act;
(6) It understands that the CP Notes will bear a
legend substantially as follows:
THIS CP NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE INITIAL SALE OF THIS
CP NOTE MAY BE MADE ONLY TO AN INSTITUTIONAL
"ACCREDITED INVESTOR," AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR A "QUALIFIED
INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT (A "QIB"). BY ITS
ACCEPTANCE OF THIS CP NOTE, THE PURCHASER HEREOF
(A) REPRESENTS THAT IT IS (i) AN INSTITUTIONAL
ACCREDITED INVESTOR OR A "BANK," AS DEFINED IN
SECTION 3(a)(2) OF THE SECURITIES ACT, OR A
SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION
OF THE TYPE REFERRED TO IN SECTION 3(a)(5)(A) OF
THE SECURITIES ACT, THAT IS ACTING AS A FIDUCIARY
ON BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR
AND THAT THIS CP NOTE IS BEING ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
(ii) A QIB ACTING ON BEHALF OF ITSELF OR ANOTHER
QIB, AND (B) AGREES THAT ANY RESALE OF THIS CP
NOTE WILL BE MADE ONLY IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
(INCLUDING, IN THE CASE OF A SALE BY A QIB, A
TRANSACTION EXEMPT PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT), AND, IN EACH CASE, ONLY TO (i)
-3-
<PAGE>
BANCAMERICA SECURITIES, INC. OR ANOTHER DEALER
(EACH, A "DEALER") AUTHORIZED BY MIRAGE RESORTS,
INCORPORATED (THE "COMPANY"), (ii) TO THE
COMPANY, (iii) THROUGH A DEALER TO AN
INSTITUTIONAL INVESTOR APPROVED BY A DEALER AS AN
INSTITUTIONAL ACCREDITED INVESTOR, (iv) TO A QIB
OR (v) IN A TRANSACTION PREVIOUSLY APPROVED IN
WRITING BY THE COMPANY IN ITS SOLE AND ABSOLUTE
DISCRETION AS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT;
and
(7) It has received the Private Placement Memorandum
relating to the offering of the CP Notes and has
had full opportunity (i) to ask questions and
receive answers concerning the terms and
conditions of the offering made pursuant to such
Private Placement Memorandum and (ii) to request
from the Company and to review, and has received,
all additional information necessary to verify the
accuracy of the information contained in such
Private Placement Memorandum or incorporated
therein by reference that the Company could
provide without unreasonable effort or expense."
SECTION 3. REPRESENTATIONS AND WARRANTIES. The
Company represents and warrants to and agrees with you as of the
date hereof, as of each date on which you solicit offers to
purchase CP Notes, as of each date on which the Company accepts
an offer to purchase CP Notes (including any purchase by you as
principal), as of each date the Company issues and delivers CP
Notes and as of each date the Private Placement Memorandum is
amended or supplemented, as follows (it being understood that
such representations, warranties and agreements shall be deemed
to relate to the Private Placement Memorandum as amended or
supplemented to each such date):
(a) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws
of the State of Nevada and has full power and authority to
execute, deliver and perform this Agreement. The Company has
full power and authority to execute, deliver and perform its
obligations under the CP Notes and the Paying Agency Agreement.
(b) The CP Notes have been duly authorized by the
Company and, when executed and authenticated in accordance with
the provisions of the Paying Agency Agreement and delivered to
and paid for by the purchasers thereof, will be entitled to the
benefits of the Paying Agency Agreement and will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except that
(i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
-4-
<PAGE>
hereafter in effect relating to or affecting creditors' rights
generally, (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability, (iii) rights to indemnity and contribution
may be limited by state or federal laws relating to securities or
by the policies underlying such laws and (iv) no representation,
warranty or agreement is made with respect to any purported
waivers of rights or defenses.
(c) This Agreement has been duly authorized,
executed and delivered by the Company.
(d) The Paying Agency Agreement has been duly
authorized, executed and delivered by the Company and, assuming
the due authorization, execution and delivery by the Paying
Agent, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting
creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability, (iii) rights to indemnity
and contribution may be limited by state or federal laws relating
to securities or by the policies underlying such laws and (iv) no
representation, warranty or agreement is made with respect to any
purported waivers of rights or defenses.
(e) The execution and delivery by the Company of,
and the performance by the Company of its obligations under, this
Agreement, the CP Notes and the Paying Agency Agreement will not
contravene any provision of applicable law or the Articles of
Incorporation or Bylaws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary of the Company, the contravention of which would have
a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole, and no consent, approval, au-
thorization or order of or qualification with any governmental
body or agency is required for the performance by the Company of
its obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the CP Notes.
(f) The issuance and sale of the CP Notes under
the circumstances contemplated hereby and by the Paying Agency
Agreement do not require registration of the CP Notes under the
Securities Act, pursuant to the exemption from registration
contained in Section 4(2) thereof and the regulations promulgated
thereunder and do not require compliance with any provision of
the Trust Indenture Act of 1939, as amended.
-5-
<PAGE>
(g) The Company is not an "investment company"
or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Compan y Act of 1940, as
amended.
(h) There has not occurred any material adverse
change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the
Private Placement Memorandum.
(i) The CP Notes satisfy the requirements set
forth in Rule 144A(d)(3) under the Securities Act.
SECTION 4. AGREEMENTS. The Company agrees with you
that:
(a) The Company will promptly deliver to you
copies of all (i) filings by the Company with the Securities and
Exchange Commission and any United States securities exchange on
which securities of the Company are listed and (ii) all material
information generally supplied by the Company to its shareholders
or by the Company to any of Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. or Duff & Phelps Credit Rating
Co. (collectively, the "Rating Agencies").
(b) The Company will provide to you as soon as
practicable a Private Placement Memorandum containing business
and financial information concerning the Company and a de-
scription of the CP Notes which (with any amendments or
supplements provided by the Company) may be used by you in con-
nection with the sale of the CP Notes until the Company provides
you with an updated or revised memorandum (such Private Placement
Memorandum, together with any amendments or supplements thereto,
including information incorporated therein by reference, if any,
is herein referred to as the "Private Placement Memorandum").
(c) If, at any time when you are offering CP
Notes or any CP Notes are outstanding, any event occurs or
condition exists as a result of which the Private Placement
Memorandum as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances existing when such Private Placement
Memorandum is delivered to a purchaser, not misleading, or if, in
your opinion or the opinion of the Company, it is necessary at
any time to amend or supplement the Private Placement Memorandum
as then amended or supplemented to comply with applicable law,
the Company will notify you as promptly as practicable and will
prepare and furnish to you a revision or supplement to the
Private Placement Memorandum satisfactory in all material
respects to you, that will correct such statement or omission or
effect such compliance.
-6-
<PAGE>
(d) The Company will, whether or not any sale of
CP Notes is consummated, pay all reasonable out-of-pocket
expenses incurred by you incident to the performance of its
obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, including, without limitation, reasonable fees
and expenses of your counsel.
(e) The Company will notify you promptly in
writing of any downgrading, or of its receipt of any notice of
any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any of the Rating Agencies.
(f) The Company agrees promptly from time to time
to take such action as you may reasonably request to qualify the
CP Notes for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you may reasonably request and to
maintain such qualifications for as long as you shall reasonably
request. The Company also agrees to reimburse you for any
reasonable fees or costs (including reasonable out-of-pocket fees
and disbursements of counsel) incurred in so qualifying the CP
Notes.
(g) The Company will not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be
integrated with the sale of the CP Notes in a manner which would
require the registration under the Securities Act of the offer
and sale of such CP Notes.
(h) The Company will not solicit any offer to buy
or offer to sell CP Notes by means of any form of general
solicitation or general advertising, within the meaning of Rule
502(c) under the Securities Act or otherwise, including: (x) any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio; and (y) any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
(i) The Company will furnish to you such
additional information as you may reasonably request.
(j) At any time when the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Company shall make available, upon request, to any
holder, beneficial owner or prospective purchaser of any CP Notes
the information required to be delivered to such persons pursuant
to Rule 144A(d)(4) under the Securities Act and will furnish to
you, upon request, copies of such information.
-7-
<PAGE>
SECTION 5. INDEMNITY AND CONTRIBUTION. The Company
agrees to (i) indemnify and hold harmless you and each person, if
any, who controls you within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act
of 1934, as amended (you and each such other person are
collectively referred to herein as "you"), from and against any
and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Private Placement Memorandum (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (ii) reimburse you for all reasonable out-of-
pocket expenses (including reasonable counsel fees) as they are
incurred by you in connection with investigating or defending any
such loss, claim, damage or liability. The foregoing indemnity
and reimbursement obligation shall not apply in respect of any
statement in or omission from the Private Placement Memorandum
(as so amended or supplemented) based on information pertaining
to you furnished to the Company by you, or on your behalf. The
Company shall not, without your prior written consent, effect any
settlement of any pending or threatened proceeding in respect of
which you are or could have been a party and indemnity could have
been sought hereunder by you, unless such settlement (i) includes
an unconditional release of you from all liability on claims that
are the subject matter of such proceeding and for which indemnity
could have been sought hereunder and (ii) does not include a
statement as to or an admission of fault, culpability or failure
to act, by or on behalf of you. If the indemnification provided
for in this Section 5 is unavailable or insufficient in respect
of any losses, claims, damages or liabilities referred to herein,
then you, on the one hand, and the Company, on the other hand,
shall contribute to the amount paid or payable by you as a result
of such losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative benefits received by
you, on the one hand, and the Company, on the other hand, or, if
such allocation is not permitted by applicable law, to reflect
not only the relative benefits referred to above but also the
relative fault of each of the parties and any other relevant
equitable considerations.
SECTION 6. PAYMENT AND DELIVERY. Payment for CP
Notes sold to or through you pursuant to this Agreement shall be
made by you in immediately available funds payable to the Paying
Agent for the account of the Company in such manner and at such
time as provided in the Paying Agency Agreement, at the offices
of the Paying Agent. Delivery of CP Notes sold to or through
you hereunder shall be made against payment of the purchase price
therefor by the Paying Agent to you through the facilities of The
Depository Trust Company or in definitive form payable to the
bearer (and in such denominations as may reasonably be requested
by you) by 2:15 p.m. New York time on the date agreed upon for
delivery.
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<PAGE>
(b) In the event the Company shall direct the
Paying Agent to cease issuing CP Notes, the Paying Agent shall be
instructed by the Company to issue such CP Notes as you shall
certify were sold within sixty (60) minutes after your receipt of
written notice of such cessation and for which you had the prior
agreement of the Company pursuant to Section 1 of this Agreement.
You agree upon receipt of any such cessation notice to
immediately cease effecting transactions in CP Notes; provided,
however, that this provision shall have no effect with respect to
CP Notes purchased by you as principal from the Company.
SECTION 7. CONDITIONS OF YOUR OBLIGATION. If you and
the Company shall agree upon the sale of any CP Notes pursuant to
Section 1 of this Agreement, your obligation to purchase CP Notes
as principal and the obligation of any other purchaser to pur-
chase CP Notes will be subject to the accuracy of the repre-
sentations and warranties on the part of the Company herein and
to the performance and observance by the Company of all
agreements herein contained on its part to be performed and
observed (in the case of your obligation to solicit offers to
purchase CP Notes, at the time of such solicitation, and, in the
case of your or any other purchaser's obligation to purchase CP
Notes, at the time the Company accepts the offer to purchase such
CP Notes and at the time of purchase) and (in each case) to the
following additional conditions precedent when and as specified:
(a) Prior to such solicitation or purchase:
(i) there shall not have occurred any
change, or any development involving a prospective
change, in the condition, financial or otherwise,
or in the earnings, business or operations of the
Company and its subsidiaries from that set forth
in the Private Placement Memorandum, as amended or
supplemented, that, in your reasonable judgment,
is material and adverse to the Company and its
subsidiaries, taken as a whole, and that makes it,
in your reasonable judgment, impracticable to
market the CP Notes; and
(ii) there shall not have occurred any
downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any
review for a possible change that does not
indicate the direction of the possible change, in
the rating accorded any of the Company's
securities by any of the Rating Agencies;
except, in each case described in paragraph (a)(i) or (ii) above,
as disclosed to you in writing by the Company prior to such
solicitation or, in the case of a purchase of CP Notes, as
disclosed to you before the offer to purchase such CP Notes was
made.
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<PAGE>
(b) The following documents shall have been
provided to you at or promptly following the execution of this
Agreement:
(i) an executed copy of the Paying Agency
Agreement;
(ii) a certified copy of resolutions of the
Board of Directors of the Company authorizing (a)
the issuance of the CP Notes and (b) the execution
and delivery of this Agreement and the Paying
Agency Agreement;
(iii) opinions of counsel to the Company
substantially in the forms of Exhibits A-1 and A-2
hereto; and
(iv) all other documents reasonably requested
by you.
SECTION 8. NOTICES. All communications hereunder will
be in writing and effective only on receipt, and, if sent to you,
will be mailed, delivered or telecopied and confirmed to
BancAmerica Securities, Inc. at 555 California Street, Twelfth
Floor, San Francisco, California 94104, Attention: Christopher
Piron (telecopy number: 415-622-3429), or, if sent to the
Company, will be mailed, delivered, or telecopied and confirmed
to the Company at 3400 Las Vegas Boulevard South, Las Vegas,
Nevada 89109, Attention: Chief Financial Officer (telecopy
number: (702) 792- 7628), or to either of the foregoing parties,
or their successors, at such other address as such party or
successor may designate from time to time by notice duly given in
accordance with the terms of this Section 8 to the other party
hereto.
SECTION 9. AMENDMENTS; SUCCESSORS. This Agreement
may be amended or supplemented if, but only if, such amendment or
supplement is in writing and is signed by the Company and you.
This Agreement is not assignable by either party hereto without
the written consent of the other party.
(b) This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and the controlling persons referred to in Section 5
and the purchasers of CP Notes (to the extent expressly provided
in Section 7), and no other person will have any right or obliga-
tion hereunder.
(c) The Company will give you notice of any
proposed cancellation, amendment, supplement, waiver or consent
to or under the Paying Agency Agreement at least seven (7) days
prior to the effective date thereof.
-10-
<PAGE>
SECTION 10. TERMINATION. This Agreement may be
terminated at any time by either party hereto upon the giving of
written notice of such termination to the other party hereto, but
without prejudice to any rights, obligations or liabilities of
either party hereto accrued or incurred prior to such termina-
tion. If this Agreement is terminated, the provisions of
Sections 3, 4(d), 4(f), 4(g) and 5 shall survive and continue in
full force and effect. Upon execution of this Agreement by the
Company and you, the Commercial Paper Dealer Agreement between
the Company and you, dated November 13, 1995 (the "Prior
Agreement"), shall terminate, except that the provisions of
Section 5 of the Prior Agreement shall survive such termination.
SECTION 11. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 12. COUNTERPARTS. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 13. HEADINGS. The headings of the sections
of this Agreement have been inserted for convenience of reference
only and shall not be deemed a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter and your
acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
MIRAGE RESORTS, INCORPORATED
By: /s/ DANIEL R. LEE
-----------------------
Daniel R. Lee
Chief Financial Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
BANCAMERICA SECURITIES, INC.
By: /s/ ROBERT J. PORTER
--------------------
Name: Robert J. Porter
Title: Managing Director
-12-
COMMERCIAL PAPER DEALER AGREEMENT
July 24, 1997
Credit Suisse First Boston Corporation
11 Madison Avenue
New York, New York 10010
Dear Sirs:
Mirage Resorts, Incorporated, a Nevada corporation (the
"Company"), hereby appoints you as its agent on a non-exclusive
basis for the purpose of soliciting and receiving offers to
purchase from the Company from time to time its Series A commer-
cial paper notes, maturing not later than nine months from date
of issue (the "CP Notes") in an aggregate principal amount
outstanding not to exceed the amount authorized from time to time
by the Board of Directors of the Company. The CP Notes will be
issued under an Issuing and Paying Agency Agreement dated July
24, 1997 (the "Paying Agency Agreement") between the Company
and First Trust of New York, National Association, as Issuing and
Paying Agent (the "Paying Agent"), and will be issuing in
denominations of $250,000 and integral multiples of $1,000 in
excess thereof. The Company may sell CP Notes directly to you as
principal for resale to others.
SECTION 1. ISSUANCE AND PURCHASE OF THE CP NOTES. If
you and the Company shall agree upon the sale of any CP Notes to
or through you (including, but not limited to, agreement with
respect to the price, principal amount, maturity and interest or
discount rate thereof), (i) instructions to the Paying Agent to
complete, authenticate and deliver the CP Notes shall be given in
the manner described in the Paying Agency Agreement and (ii) the
authentication and delivery to you of such CP Notes by the Paying
Agent against payment of the purchase price therefor shall
constitute the issuance of such CP Notes by the Company.
SECTION 2. OFFERING OF THE CP NOTES; RESTRICTIONS ON
TRANSFER. You agree with the Company that (i) you will deliver
a Private Placement Memorandum (as hereinafter defined) to each
prospective investor in the CP Notes prior to the initial offer
to purchase a CP Note or CP Notes by such investor, (ii) you will
not solicit offers for, or offer or sell, CP Notes by any form of
general solicitation or general advertising or in any manner
involving a public offering within the meaning of Section 4(2) of
EXHIBIT 10.4
<PAGE>
the Securities Act of 1933, as amended (the "Securities Act"),
and Rule 506 thereunder, and (iii) you will solicit offers for CP
Notes only from, and will offer CP Notes only to, (x)
institutional investors that you reasonably believe are
"accredited investors" within the meaning of Rule 501(a) under
the Securities Act or (y) persons that you reasonably believe are
"qualified institutional buyers," as defined in Rule 144A under
the Securities Act ("QIBs"), and, in either case, who, in
purchasing CP Notes, may be deemed to have represented and agreed
as provided in paragraphs (1) through (7) of Section 2(b).
(b) Each Private Placement Memorandum shall
contain paragraphs in substantially the following form:
"Each purchaser of a CP Note will be deemed to have
represented and agreed as follows:
(1) It understands that the CP Notes are being issued
only in transactions not involving any public
offering within the meaning of the Securities Act;
(2) It is (A) an institutional investor which is an
"Accredited Investor," as defined in Rule 501(a)
of Regulation D under the Securities Act (an
"Institutional Accredited Investor"), or a
"bank," as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association
or other institution of the type referred to in
Section 3(a)(5)(A) of the Securities Act, that is
acting as a fiduciary in purchasing the CP Notes
for the account of an Institutional Accredited
Investor, which has such knowledge and experience
(or, if such Institutional Accredited Investor is
acting as a fiduciary, it is a fiduciary with sole
investment discretion having such knowledge and
experience) in financial and business matters that
it is capable (whether acting for its own account
or in such fiduciary capacity) of evaluating the
merits and risks of investing in such CP Notes,
has had access to such information as it deems
necessary in order to make an informed investment
decision and is not purchasing the CP Notes with a
view to, or for sale in connection with, any
distribution; or (B) in the case of sales of CP
Notes pursuant to Rule 144A under the Securities
Act, a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act (a
"QIB"), or a QIB purchasing the CP Notes on
behalf of one or more other QIBs;
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<PAGE>
(3) If in the future it (or any other investor or any
other fiduciary or agent representing it) decides
to sell such CP Notes prior to maturity, said CP
Notes will be sold only in a transaction exempt
from registration under the Securities Act and
only to (i) you or another dealer (each, a
"Dealer") authorized by the Company, (ii) to the
Company, (iii) to a QIB, (iv) through a Dealer to
an institutional investor approved by the Dealer
as an Institutional Accredited Investor or (v) in
a transaction previously approved in writing by
the Company as exempt from registration under the
Securities Act;
(4) It understands that, although you (or any other
Dealer) or the Company may repurchase CP Notes,
none of such entities is obligated to do so, and,
accordingly, the purchaser (or any such other
investor) should be prepared to hold the CP Notes
until maturity;
(5) It acknowledges that the CP Notes sold to it by
you may be sold to it pursuant to Rule 144A under
the Securities Act;
(6) It understands that the CP Notes will bear a
legend substantially as follows:
THIS CP NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE INITIAL SALE OF THIS
CP NOTE MAY BE MADE ONLY TO AN INSTITUTIONAL
"ACCREDITED INVESTOR," AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR A "QUALIFIED
INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT (A "QIB"). BY ITS
ACCEPTANCE OF THIS CP NOTE, THE PURCHASER HEREOF
(A) REPRESENTS THAT IT IS (i) AN INSTITUTIONAL
ACCREDITED INVESTOR OR A "BANK," AS DEFINED IN
SECTION 3(a)(2) OF THE SECURITIES ACT, OR A
SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION
OF THE TYPE REFERRED TO IN SECTION 3(a)(5)(A) OF
THE SECURITIES ACT, THAT IS ACTING AS A FIDUCIARY
ON BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR
AND THAT THIS CP NOTE IS BEING ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
(ii) A QIB ACTING ON BEHALF OF ITSELF OR ANOTHER
QIB, AND (B) AGREES THAT ANY RESALE OF THIS CP
NOTE WILL BE MADE ONLY IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
(INCLUDING, IN THE CASE OF A SALE BY A QIB, A
TRANSACTION EXEMPT PURSUANT TO RULE 144A UNDER THE
-3-
<PAGE>
SECURITIES ACT), AND, IN EACH CASE, ONLY TO (i)
CREDIT SUISSE FIRST BOSTON CORPORATION OR ANOTHER
DEALER (EACH, A "DEALER") AUTHORIZED BY MIRAGE
RESORTS, INCORPORATED (THE "COMPANY"), (ii) TO
THE COMPANY, (iii) THROUGH A DEALER TO AN
INSTITUTIONAL INVESTOR APPROVED BY A DEALER AS AN
INSTITUTIONAL ACCREDITED INVESTOR, (iv) TO A QIB
OR (v) IN A TRANSACTION PREVIOUSLY APPROVED IN
WRITING BY THE COMPANY IN ITS SOLE AND ABSOLUTE
DISCRETION AS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT;
and
(7) It has received the Private Placement Memorandum
relating to the offering of the CP Notes and has
had full opportunity (i) to ask questions and
receive answers concerning the terms and
conditions of the offering made pursuant to such
Private Placement Memorandum and (ii) to request
from the Company and to review, and has received,
all additional information necessary to verify the
accuracy of the information contained in such
Private Placement Memorandum or incorporated
therein by reference that the Company could
provide without unreasonable effort or expense."
SECTION 3. REPRESENTATIONS AND WARRANTIES. The
Company represents and warrants to and agrees with you as of the
date hereof, as of each date on which you solicit offers to
purchase CP Notes, as of each date on which the Company accepts
an offer to purchase CP Notes (including any purchase by you as
principal), as of each date the Company issues and delivers CP
Notes and as of each date the Private Placement Memorandum is
amended or supplemented, as follows (it being understood that
such representations, warranties and agreements shall be deemed
to relate to the Private Placement Memorandum as amended or
supplemented to each such date):
(a) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws
of the State of Nevada and has full power and authority to
execute, deliver and perform this Agreement. The Company has
full power and authority to execute, deliver and perform its
obligations under the CP Notes and the Paying Agency Agreement.
(b) The CP Notes have been duly authorized by the
Company and, when executed and authenticated in accordance with
the provisions of the Paying Agency Agreement and delivered to
and paid for by the purchasers thereof, will be entitled to the
benefits of the Paying Agency Agreement and will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except that
(i) the enforceability thereof may be limited by bankruptcy,
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<PAGE>
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally, (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability, (iii) rights to indemnity and contribution
may be limited by state or federal laws relating to securities or
by the policies underlying such laws and (iv) no representation,
warranty or agreement is made with respect to any purported
waivers of rights or defenses.
(c) This Agreement has been duly authorized,
executed and delivered by the Company.
(d) The Paying Agency Agreement has been duly
authorized, executed and delivered by the Company and, assuming
the due authorization, execution and delivery by the Paying
Agent, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting
creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability, (iii) rights to indemnity
and contribution may be limited by state or federal laws relating
to securities or by the policies underlying such laws and (iv) no
representation, warranty or agreement is made with respect to any
purported waivers of rights or defenses.
(e) The execution and delivery by the Company of,
and the performance by the Company of its obligations under, this
Agreement, the CP Notes and the Paying Agency Agreement will not
contravene any provision of applicable law or the Articles of
Incorporation or Bylaws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary of the Company, the contravention of which would have
a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole, and no consent, approval, au-
thorization or order of or qualification with any governmental
body or agency is required for the performance by the Company of
its obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the CP Notes.
(f) The issuance and sale of the CP Notes under
the circumstances contemplated hereby and by the Paying Agency
Agreement do not require registration of the CP Notes under the
Securities Act, pursuant to the exemption from registration
contained in Section 4(2) thereof and the regulations promulgated
thereunder and do not require compliance with any provision of
the Trust Indenture Act of 1939, as amended.
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<PAGE>
(g) The Company is not an "investment company"
or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as
amended.
(h) There has not occurred any material adverse
change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the
Private Placement Memorandum.
(i) The CP Notes satisfy the requirements set
forth in Rule 144A(d)(3) under the Securities Act.
SECTION 4. AGREEMENTS. The Company agrees with you
that:
(a) The Company will promptly deliver to you
copies of all (i) filings by the Company with the Securities and
Exchange Commission and any United States securities exchange on
which securities of the Company are listed and (ii) all material
information generally supplied by the Company to its shareholders
or by the Company to any of Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. or Duff & Phelps Credit Rating
Co. (collectively, the Rating Agencies").
(b) The Company will provide to you as soon as
practicable a Private Placement Memorandum containing business
and financial information concerning the Company and a de-
scription of the CP Notes which (with any amendments or
supplements provided by the Company) may be used by you in con-
nection with the sale of the CP Notes until the Company provides
you with an updated or revised memorandum (such Private Placement
Memorandum, together with any amendments or supplements thereto,
including information incorporated therein by reference, if any,
is herein referred to as the "Private Placement Memorandum").
(c) If, at any time when you are offering CP
Notes or any CP Notes are outstanding, any event occurs or
condition exists as a result of which the Private Placement
Memorandum as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances existing when such Private Placement
Memorandum is delivered to a purchaser, not misleading, or if, in
your opinion or the opinion of the Company, it is necessary at
any time to amend or supplement the Private Placement Memorandum
as then amended or supplemented to comply with applicable law,
the Company will notify you as promptly as practicable and will
prepare and furnish to you a revision or supplement to the
Private Placement Memorandum satisfactory in all material
respects to you, that will correct such statement or omission or
effect such compliance.
-6-
<PAGE>
(d) The Company will, whether or not any sale of
CP Notes is consummated, pay all reasonable out-of-pocket
expenses incurred by you incident to the performance of its
obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, including, without limitation, reasonable fees
and expenses of your counsel.
(e) The Company will notify you promptly in
writing of any downgrading, or of its receipt of any notice of
any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any of the Rating Agencies.
(f) The Company agrees promptly from time to time
to take such action as you may reasonably request to qualify the
CP Notes for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you may reasonably request and to
maintain such qualifications for as long as you shall reasonably
request. The Company also agrees to reimburse you for any
reasonable fees or costs (including reasonable out-of-pocket fees
and disbursements of counsel) incurred in so qualifying the CP
Notes.
(g) The Company will not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be
integrated with the sale of the CP Notes in a manner which would
require the registration under the Securities Act of the offer
and sale of such CP Notes.
(h) The Company will not solicit any offer to buy
or offer to sell CP Notes by means of any form of general
solicitation or general advertising, within the meaning of Rule
502(c) under the Securities Act or otherwise, including: (x) any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio; and (y) any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
(i) The Company will furnish to you such
additional information as you may reasonably request.
(j) At any time when the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Company shall make available, upon request, to any
holder, beneficial owner or prospective purchaser of any CP Notes
the information required to be delivered to such persons pursuant
to Rule 144A(d)(4) under the Securities Act and will furnish to
you, upon request, copies of such information.
-7-
<PAGE>
SECTION 5. INDEMNITY AND CONTRIBUTION. The Company
agrees to (i) indemnify and hold harmless you and each person, if
any, who controls you within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act
of 1934, as amended (you and each such other person are
collectively referred to herein as "you"), from and against any
and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Private Placement Memorandum (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (ii) reimburse you for all reasonable out-of-
pocket expenses (including reasonable counsel fees) as they are
incurred by you in connection with investigating or defending any
such loss, claim, damage or liability. The foregoing indemnity
and reimbursement obligation shall not apply in respect of any
statement in or omission from the Private Placement Memorandum
(as so amended or supplemented) based on information pertaining
to you furnished to the Company by you, or on your behalf. The
Company shall not, without your prior written consent, effect any
settlement of any pending or threatened proceeding in respect of
which you are or could have been a party and indemnity could have
been sought hereunder by you, unless such settlement (i) includes
an unconditional release of you from all liability on claims that
are the subject matter of such proceeding and for which indemnity
could have been sought hereunder and (ii) does not include a
statement as to or an admission of fault, culpability or failure
to act, by or on behalf of you. If the indemnification provided
for in this Section 5 is unavailable or insufficient in respect
of any losses, claims, damages or liabilities referred to herein,
then you, on the one hand, and the Company, on the other hand,
shall contribute to the amount paid or payable by you as a result
of such losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative benefits received by
you, on the one hand, and the Company, on the other hand, or, if
such allocation is not permitted by applicable law, to reflect
not only the relative benefits referred to above but also the
relative fault of each of the parties and any other relevant
equitable considerations.
SECTION 6. PAYMENT AND DELIVERY. Payment for CP
Notes sold to or through you pursuant to this Agreement shall be
made by you in immediately available funds payable to the Paying
Agent for the account of the Company in such manner and at such
time as provided in the Paying Agency Agreement, at the offices
of the Paying Agent. Delivery of CP Notes sold to or through
you hereunder shall be made against payment of the purchase price
therefor by the Paying Agent to you through the facilities of The
Depository Trust Company or in definitive form payable to the
bearer (and in such denominations as may reasonably be requested
by you) by 2:15 p.m. New York time on the date agreed upon for
delivery.
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<PAGE>
(b) In the event the Company shall direct the
Paying Agent to cease issuing CP Notes, the Paying Agent shall be
instructed by the Company to issue such CP Notes as you shall
certify were sold within sixty (60) minutes after your receipt of
written notice of such cessation and for which you had the prior
agreement of the Company pursuant to Section 1 of this Agreement.
You agree upon receipt of any such cessation notice to
immediately cease effecting transactions in CP Notes; provided,
however, that this provision shall have no effect with respect to
CP Notes purchased by you as principal from the Company.
SECTION 7. CONDITIONS OF YOUR OBLIGATION. If you and
the Company shall agree upon the sale of any CP Notes pursuant to
Section 1 of this Agreement, your obligation to purchase CP Notes
as principal and the obligation of any other purchaser to pur-
chase CP Notes will be subject to the accuracy of the repre-
sentations and warranties on the part of the Company herein and
to the performance and observance by the Company of all
agreements herein contained on its part to be performed and
observed (in the case of your obligation to solicit offers to
purchase CP Notes, at the time of such solicitation, and, in the
case of your or any other purchaser's obligation to purchase CP
Notes, at the time the Company accepts the offer to purchase such
CP Notes and at the time of purchase) and (in each case) to the
following additional conditions precedent when and as specified:
(a) Prior to such solicitation or purchase:
(i) there shall not have occurred any
change, or any development involving a
prospective change, in the condition, financial
or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries
from that set forth in the Private Placement
Memorandum, as amended or supplemented, that, in
your reasonable judgment, is material and adverse
to the Company and its subsidiaries, taken as a
whole, and that makes it, in your reasonable
judgment, impracticable to market the CP Notes;
and
(ii) there shall not have occurred any
downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any
review for a possible change that does not
indicate the direction of the possible change, in
the rating accorded any of the Company's
securities by any of the Rating Agencies;
except, in each case described in paragraph (a)(i) or (ii) above,
as disclosed to you in writing by the Company prior to such
solicitation or, in the case of a purchase of CP Notes, as
disclosed to you before the offer to purchase such CP Notes was
made.
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<PAGE>
(b) The following documents shall have been
provided to you at or promptly following the execution of this
Agreement:
(i) an executed copy of the Paying Agency
Agreement;
(ii) a certified copy of resolutions of the
Board of Directors of the Company authorizing (a)
the issuance of the CP Notes and (b) the execution
and delivery of this Agreement and the Paying
Agency Agreement;
(iii) opinions of counsel to the Company
substantially in the forms of Exhibits A-1 and A-2
hereto; and
(iv) all other documents reasonably requested
by you.
SECTION 8. NOTICES. All communications hereunder will
be in writing and effective only on receipt, and, if sent to you,
will be mailed, delivered or telecopied and confirmed to Credit
Suisse First Boston Corporation at 11 Madison Avenue, New York,
New York 10010, Attention: Helena M. Willner (telecopy number:
212-325-8183), or, if sent to the Company, will be mailed,
delivered, or telecopied and confirmed to the Company at 3400 Las
Vegas Boulevard South, Las Vegas, Nevada 89109, Attention: Chief
Financial Officer (telecopy number: (702) 792-7628), or to
either of the foregoing parties, or their successors, at such
othr address as such party or successor may designate from time
to time by notice duly given in accordance with the terms of this
Section 8 to the other party hereto.
SECTION 9. AMENDMENTS; SUCCESSORS. This Agreement
may be amended or supplemented if, but only if, such amendment or
supplement is in writing and is signed by the Company and you.
This Agreement is not assignable by either party hereto without
the written consent of the other party.
(b) This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and the controlling persons referred to in Section 5
and the purchasers of CP Notes (to the extent expressly provided
in Section 7), and no other person will have any right or obliga-
tion hereunder.
(c) The Company will give you notice of any
proposed cancellation, amendment, supplement, waiver or consent
to or under the Paying Agency Agreement at least seven (7) days
prior to the effective date thereof.
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<PAGE>
SECTION 10. TERMINATION. This Agreement may be
terminated at any time by either party hereto upon the giving of
written notice of such termination to the other party hereto, but
without prejudice to any rights, obligations or liabilities of
either party hereto accrued or incurred prior to such termina-
tion. If this Agreement is terminated, the provisions of
Sections 3, 4(d), 4(f), 4(g) and 5 shall survive and continue in
full force and effect. Upon execution of this Agreement by the
Company and you, the Commercial Paper Dealer Agreement between
the Company and you, dated November 13, 1995 (the "Prior
Agreement"), shall terminate , except that the provisions of
Section 5 of the Prior Agreement shall survive such termination.
SECTION 11. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 12. COUNTERPARTS. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 13. HEADINGS. The headings of the sections of
this Agreement have been inserted for convenience of reference
only and shall not be deemed a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter and your
acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
MIRAGE RESORTS, INCORPORATED
By: /s/ DANIEL R. LEE
-----------------------
Daniel R. Lee
Chief Financial Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ HELENA M. WILLNER
------------------------------
Name: Helena M. Willner
Title: Vice President
-12-
COMMERCIAL PAPER DEALER AGREEMENT
July 24, 1997
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, New York 10036
Dear Sirs:
Mirage Resorts, Incorporated, a Nevada corporation (the
"Company"), hereby appoints you as its agent on a non-exclusive
basis for the purpose of soliciting and receiving offers to
purchase from the Company from time to time its Series A
commercial paper notes, maturing not later than nine months from
date of issue (the "CP Notes") in an aggregate principal amount
outstanding not to exceed the amount authorized from time to time
by the Board of Directors of the Company. The CP Notes will be
issued under an Issuing and Paying Agency Agreement dated July
24, 1997 (the "Paying Agency Agreement") between the Company
and First Trust of New York, National Association, as Issuing and
Paying Agent (the "Paying Agent"), and will be issued in
denominations of $250,000 and integral multiples of $1,000 in
excess thereof. The Company may sell CP Notes directly to you as
principal for resale to others.
SECTION 1. ISSUANCE AND PURCHASE OF THE CP NOTES. If
you and the Company shall agree upon the sale of any CP Notes to
or through you (including, but not limited to, agreement with
respect to the price, principal amount, maturity and interest or
discount rate thereof), (i) instructions to the Paying Agent to
complete, authenticate and deliver the CP Notes shall be given in
the manner described in the Paying Agency Agreement and (ii) the
authentication and delivery to you of such CP Notes by the Paying
Agent against payment of the purchase price therefor shall
constitute the issuance of such CP Notes by the Company.
SECTION 2. OFFERING OF THE CP NOTES; RESTRICTIONS ON
TRANSFER. You agree with the Company that (i) you will deliver
a Private Placement Memorandum (as hereinafter defined) to each
prospective investor in the CP Notes prior to the initial offer
to purchase a CP Note or CP Notes by such investor, (ii) you will
not solicit offers for, or offer or sell, CP Notes by any form of
general solicitation or general advertising or in any manner
EXHIBIT 10.5
<PAGE>
involving a public offering within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act"),
and Rule 506 thereunder, and (iii) you will solicit offers for CP
Notes only from, and will offer CP Notes only to, (x)
institutional investors that you reasonably believe are
"accredited investors" within the meaning of Rule 501(a) under
the Securities Act or (y) persons that you reasonably believe are
"qualified institutional buyers," as defined in Rule 144A under
the Securities Act ("QIBs"), and, in either case, who, in pur-
chasing CP Notes, may be deemed to have represented and agreed as
provided in paragraphs (1) through (7) of Section 2(b).
(b) Each Private Placement Memorandum shall
contain paragraphs in substantially the following form:
"Each purchaser of a CP Note will be deemed to have
represented and agreed as follows:
(1) It understands that the CP Notes are being issued
only in transactions not involving any public
offering within the meaning of the Securities Act;
(2) It is (A) an institutional investor which is an
"Accredited Investor," as defined in Rule 501(a)
of Regulation D under the Securities Act (an
"Institutional Accredited Investor"), or a
"bank," as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association
or other institution of the type referred to in
Section 3(a)(5)(A) of the Securities Act, that is
acting as a fiduciary in purchasing the CP Notes
for the account of an Institutional Accredited
Investor, which has such knowledge and experience
(or, if such Institutional Accredited Investor is
acting as a fiduciary, it is a fiduciary with sole
investment discretion having such knowledge and
experience) in financial and business matters that
it is capable (whether acting for its own account
or in such fiduciary capacity) of evaluating the
merits and risks of investing in such CP Notes,
has had access to such information as it deems
necessary in order to make an informed investment
decision and is not purchasing the CP Notes with a
view to, or for sale in connection with, any
distribution; or (B) in the case of sales of CP
Notes pursuant to Rule 144A under the Securities
Act, a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act (a
"QIB"), or a QIB purchasing the CP Notes on
behalf of one or more other QIBs;
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<PAGE>
(3) If in the future it (or any other investor or any
other fiduciary or agent representing it) decides
to sell such CP Notes prior to maturity, said CP
Notes will be sold only in a transaction exempt
from registration under the Securities Act and
only to (i) you or another dealer (each, a
"Dealer") authorized by the Company, (ii) to the
Company, (iii) to a QIB, (iv) through a Dealer to
an institutional investor approved by the Dealer
as an Institutional Accredited Investor or (v) in
a transaction previously approved in writing by
the Company as exempt from registration under the
Securities Act;
(4) It understands that, although you (or any other
Dealer) or the Company may repurchase CP Notes,
none of such entities is obligated to do so, and,
accordingly, the purchaser (or any such other
investor) should be prepared to hold the CP Notes
until maturity;
(5) It acknowledges that the CP Notes sold to it by
you may be sold to it pursuant to Rule 144A under
the Securities Act;
(6) It understands that the CP Notes will bear a
legend substantially as follows:
THIS CP NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE INITIAL SALE OF THIS
CP NOTE MAY BE MADE ONLY TO AN INSTITUTIONAL
"ACCREDITED INVESTOR," AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR A "QUALIFIED
INSTITUTIONAL BUYER," AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT (A "QIB"). BY ITS
ACCEPTANCE OF THIS CP NOTE, THE PURCHASER HEREOF
(A) REPRESENTS THAT IT IS (i) AN INSTITUTIONAL
ACCREDITED INVESTOR OR A "BANK" AS DEFINED IN
SECTION 3(a)(2) OF THE SECURITIES ACT, OR A
SAVINGS AND LOAN ASSOCIATION OR OTHER INSTITUTION
OF THE TYPE REFERRED TO IN SECTION 3(a)(5)(A) OF
THE SECURITIES ACT, THAT IS ACTING AS A FIDUCIARY
ON BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR
AND THAT THIS CP NOTE IS BEING ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
(ii) A QIB ACTING ON BEHALF OF ITSELF OR ANOTHER
QIB, AND (B) AGREES THAT ANY RESALE OF THIS CP
NOTE WILL BE MADE ONLY IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
(INCLUDING, IN THE CASE OF A SALE BY A QIB, A
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<PAGE>
TRANSACTION EXEMPT PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT), AND, IN EACH CASE, ONLY TO (i)
MORGAN STANLEY & CO. INCORPORATED OR ANOTHER
DEALER (EACH, A "DEALER") AUTHORIZED BY MIRAGE
RESORTS, INCORPORATED (THE "COMPANY"), (ii) TO
THE COMPANY, (iii) THROUGH A DEALER TO AN
INSTITUTIONAL INVESTOR APPROVED BY A DEALER AS AN
INSTITUTIONAL ACCREDITED INVESTOR, (iv) TO A QIB
OR (v) IN A TRANSACTION PREVIOUSLY APPROVED IN
WRITING BY THE COMPANY IN ITS SOLE AND ABSOLUTE
DISCRETION AS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT;
and
(7) It has received the Private Placement Memorandum
relating to the offering of the CP Notes and has
had full opportunity (i) to ask questions and
receive answers concerning the terms and
conditions of the offering made pursuant to such
Private Placement Memorandum and (ii) to request
from the Company and to review, and has received,
all additional information necessary to verify the
accuracy of the information contained in such
Private Placement Memorandum or incorporated
therein by reference that the Company could
provide without unreasonable effort or expense."
SECTION 3. REPRESENTATIONS AND WARRANTIES. The
Company represents and warrants to and agrees with you as of the
date hereof, as of each date on which you solicit offers to
purchase CP Notes, as of each date on which the Company accepts
an offer to purchase CP Notes (including any purchase by you as
principal), as of each date the Company issues and delivers CP
Notes and as of each date the Private Placement Memorandum is
amended or supplemented, as follows (it being understood that
such representations, warranties and agreements shall be deemed
to relate to the Private Placement Memorandum as amended or
supplemented to each such date):
(a) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws
of the State of Nevada and has full power and authority to
execute, deliver and perform this Agreement. The Company has
full power and authority to execute, deliver and perform its
obligations under the CP Notes and the Paying Agency Agreement.
(b) The CP Notes have been duly authorized by the
Company and, when executed and authenticated in accordance with
the provisions of the Paying Agency Agreement and delivered to
and paid for by the purchasers thereof, will be entitled to the
benefits of the Paying Agency Agreement and will be valid and
binding obligations of the Company, enforceable against the
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<PAGE>
Company in accordance with their respective terms, except that
(i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally, (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability, (iii) rights to indemnity and contribution
may be limited by state or federal laws relating to securities or
by the policies underlying such laws and (iv) no representation,
warranty or agreement is made with respect to any purported
waivers of rights or defenses.
(c) This Agreement has been duly authorized,
executed and delivered by the Company.
(d) The Paying Agency Agreement has been duly
authorized, executed and delivered by the Company and, assuming
the due authorization, execution and delivery by the Paying
Agent, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting
creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability, (iii) rights to indemnity
and contribution may be limited by state or federal laws relating
to securities or by the policies underlying such laws and (iv) no
representation, warranty or agreement is made with respect to any
purported waivers of rights or defenses.
(e) The execution and delivery by the Company of,
and the performance by the Company of its obligations under, this
Agreement, the CP Notes and the Paying Agency Agreement, will not
contravene any provision of applicable law or the Articles of
Incorporation or Bylaws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary of the Company, the contravention of which would have
a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole, and no consent, approval, au-
thorization or order of or qualification with any governmental
body or agency is required for the performance by the Company of
its obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the CP Notes.
(f) The issuance and sale of the CP Notes under
the circumstances contemplated hereby and by the Paying Agency
Agreement do not require registration of the CP Notes under the
Securities Act, pursuant to the exemption from registration
contained in Section 4(2) thereof and the regulations promulgated
thereunder and do not require compliance with any provision of
the Trust Indenture Act of 1939, as amended.
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<PAGE>
(g) The Company is not an "investment company"
or an entity "controlled" by an "investment company," as such
terms are defined in the Investment Company, Act of 1940, as
amended.
(h) There has not occurred any material adverse
change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the
Private Placement Memorandum.
(i) The CP Notes satisfy the requirements set
forth in Rule 144A(d)(3) under the Securities Act.
SECTION 4. AGREEMENTS. The Company agrees with you
that:
(a) The Company will promptly deliver to you
copies of all (i) filings by the Company with the Securities and
Exchange Commission and any United States securities exchange on
which securities of the Company are listed and (ii) all material
information generally supplied by the Company to its shareholders
or by the Company to any of Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. or Duff & Phelps Credit Rating
Co. (collectively, the "Rating Agencies").
(b) The Company will provide to you as soon as
practicable a Private Placement Memorandum containing business
and financial information concerning the Company and a de-
scription of the CP Notes which (with any amendments or
supplements provided by the Company) may be used by you in con-
nection with the sale of the CP Notes until the Company provides
you with an updated or revised memorandum (such Private Placement
Memorandum, together with any amendments or supplements thereto,
including information incorporated therein by reference, if any,
is herein referred to as the "Private Placement Memorandum").
(c) If, at any time when you are offering CP
Notes or any CP Notes are outstanding, any event occurs or
condition exists as a result of which the Private Placement
Memorandum as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances existing when such Private Placement
Memorandum is delivered to a purchaser, not misleading, or if, in
your opinion or the opinion of the Company, it is necessary at
any time to amend or supplement the Private Placement Memorandum
as then amended or supplemented to comply with applicable law,
the Company will notify you as promptly as practicable and will
prepare and furnish to you a revision or supplement to the
Private Placement Memorandum satisfactory in all material
respects to you, that will correct such statement or omission or
effect such compliance.
-6-
<PAGE>
(d) The Company will, whether or not any sale of
CP Notes is consummated, pay all reasonable out-of-pocket
expenses incurred by you incident to the performance of its
obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, including, without limitation, reasonable fees
and expenses of your counsel.
(e) The Company will notify you promptly in
writing of any downgrading, or of its receipt of any notice of
any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any of the Rating Agencies.
(f) The Company agrees promptly from time to time
to take such action as you may reasonably request to qualify the
CP Notes for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you may reasonably request and to
maintain such qualifications for as long as you shall reasonably
request. The Company also agrees to reimburse you for any
reasonable fees or costs (including reasonable out-of-pocket fees
and disbursements of counsel) incurred in so qualifying the CP
Notes.
(g) The Company will not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be
integrated with the sale of the CP Notes in a manner which would
require the registration under the Securities Act of the offer
and sale of such CP Notes.
(h) The Company will not solicit any offer to buy
or offer to sell CP Notes by means of any form of general
solicitation or general advertising, within the meaning of Rule
502(c) under the Securities Act or otherwise, including: (x) any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio; and (y) any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
(i) The Company will furnish to you such
additional information as you may reasonably request.
(j) At any time when the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Company shall make available, upon request, to any
holder, beneficial owner or prospective purchaser of any CP Notes
the information required to be delivered to such persons pursuant
to Rule 144A(d)(4) under the Securities Act and will furnish to
you, upon request, copies of such information.
-7-
<PAGE>
SECTION 5. INDEMNITY AND CONTRIBUTION. The Company
agrees to (i) indemnify and hold harmless you and each person, if
any, who controls you within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act
of 1934, as amended (you and each such other person are
collectively referred to herein as "you"), from and against any
and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Private Placement Memorandum (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (ii) reimburse you for all reasonable out-of-
pocket expenses (including reasonable counsel fees) as they are
incurred by you in connection with investigating or defending any
such loss, claim, damage or liability. The foregoing indemnity
and reimbursement obligation shall not apply in respect of any
statement in or omission from the Private Placement Memorandum
(as so amended or supplemented) based on information pertaining
to you furnished to the Company by you, or on your behalf. The
Company shall not, without your prior written consent, effect any
settlement of any pending or threatened proceeding in respect of
which you are or could have been a party and indemnity could have
been sought hereunder by you, unless such settlement (i) includes
an unconditional release of you from all liability on claims that
are the subject matter of such proceeding and for which indemnity
could have been sought hereunder and (ii) does not include a
statement as to or an admission of fault, culpability or failure
to act, by or on behalf of you. If the indemnification provided
for in this Section 5 is unavailable or insufficient in respect
of any losses, claims, damages or liabilities referred to herein,
then you, on the one hand, and the Company, on the other hand,
shall contribute to the amount paid or payable by you as a result
of such losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative benefits received by
you, on the one hand, and the Company, on the other hand, or, if
such allocation is not permitted by applicable law, to reflect
not only the relative benefits referred to above but also the
relative fault of each of the parties and any other relevant
equitable considerations.
SECTION 6. PAYMENT AND DELIVERY. Payment for CP
Notes sold to or through you pursuant to this Agreement shall be
made by you in immediately available funds payable to the Paying
Agent for the account of the Company in such manner and at such
time as provided in the Paying Agency Agreement, at the offices
of the Paying Agent. Delivery of CP Notes sold to or through you
hereunder shall be made against payment of the purchase price
therefor by the Paying Agent to you through the facilities of The
Depository Trust Company or in definitive form payable to the
bearer (and in such denominations as may reasonably be requested
by you) by 2:15 p.m., New York time, on the date agreed upon for
delivery.
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<PAGE>
(b) In the event the Company shall direct the
Paying Agent to cease issuing CP Notes, the Paying Agent shall be
instructed by the Company to issue such CP Notes as you shall
certify were sold within sixty (60) minutes after your receipt of
written notice of such cessation and for which you had the prior
agreement of the Company pursuant to Section 1 of this Agreement.
You agree upon receipt of any such cessation notice to
immediately cease effecting transactions in CP Notes; provided,
however, that this provision shall have no effect with respect to
CP Notes purchased by you as principal from the Company.
SECTION 7. CONDITIONS OF YOUR OBLIGATION. If you and
the Company shall agree upon the sale of any CP Notes pursuant to
Section 1 of this Agreement, your obligation to purchase CP Notes
as principal and the obligation of any other purchaser to pur-
chase CP Notes will be subject to the accuracy of the repre-
sentations and warranties on the part of the Company herein and
to the performance and observance by the Company of all
agreements herein contained on its part to be performed and
observed (in the case of your obligation to solicit offers to
purchase CP Notes, at the time of such solicitation, and, in the
case of your or any other purchaser's obligation to purchase CP
Notes, at the time the Company accepts the offer to purchase such
CP Notes and at the time of purchase) and (in each case) to the
following additional conditions precedent when and as specified:
(a) Prior to such solicitation or purchase:
(i) there shall not have occurred any
change, or any development involving a prospective
change, in the condition, financial or otherwise,
or in the earnings, business or operations of the
Company and its subsidiaries from that set forth
in the Private Placement Memorandum, as amended or
supplemented, that, in your reasonable judgment,
is material and adverse to the Company and its
subsidiaries, taken as a whole, and that makes it,
in your reasonable judgment, impracticable to
market the CP Notes; and
(ii) there shall not have occurred any
downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any
review for a possible change that does not
indicate the direction of the possible change, in
the rating accorded any of the Company's
securities by any of the Rating Agencies;
except, in each case described in paragraph (a)(i) or (ii) above,
as disclosed to you in writing by the Company prior to such
solicitation or, in the case of a purchase of CP Notes, as
disclosed to you before the offer to purchase such CP Notes was
made.
(b) The following documents shall have been
provided to you at or promptly following the execution of this
Agreement:
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<PAGE>
(i) an executed copy of the Paying Agency
Agreement;
(ii) a certified copy of resolutions of the
Board of Directors of the Company authorizing (a)
the issuance of the CP Notes and (b) the execution
and delivery of this Agreement and the Paying
Agency Agreement;
(iii) opinions of counsel to the Company
substantially in the forms of Exhibits A-1 and A-2
hereto; and
(iv) all other documents reasonably requested
by you.
SECTION 8. NOTICES. All communications hereunder will
be in writing and effective only on receipt, and, if sent to you,
will be mailed, delivered or telecopied and confirmed to Morgan
Stanley & Co. Incorporated at 1585 Broadway, Second Floor, New
York, New York 10036 (telecopier number: (212) 761-0780), or, if
sent to the Company, will be mailed, delivered, or telecopied and
confirmed to the Company at 3400 Las Vegas Boulevard South, Las
Vegas, Nevada 89109, Attention: Chief Financial Officer
(telecopy number: (702) 792-7628), or to either of the foregoing
parties, or their successors, at such other address as such party
or successor may designate from time to time by notice duly given
in accordance with the terms of this Section 8 to the other party
hereto.
SECTION 9. AMENDMENTS; SUCCESSORS. This Agreement
may be amended or supplemented if, but only if, such amendment or
supplement is in writing and is signed by the Company and you.
This Agreement is not assignable by either party hereto without
the written consent of the other party.
(b) This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and the controlling persons referred to in Section 5
and the purchasers of CP Notes (to the extent expressly provided
in Section 7), and no other person will have any right or obliga-
tion hereunder.
(c) The Company will give you notice of any
proposed cancellation, amendment, supplement, waiver or consent
to or under the Paying Agency Agreement at least seven (7) days
prior to the effective date thereof.
SECTION 10. TERMINATION. This Agreement may be
terminated at any time by either party hereto upon the giving of
written notice of such termination to the other party hereto, but
without prejudice to any rights, obligations or liabilities of
either party hereto accrued or incurred prior to such termina-
tion. If this Agreement is terminated, the provisions of
-10-
<PAGE>
Sections 3, 4(d), 4(f), 4(g) and 5 shall survive and continue in
full force and effect. Upon execution of this Agreement by the
Company and you, the Commercial Paper Dealer Agreement between
the Company and you, dated November 13, 1995 (the "Prior
Agreement"), shall terminate, except that the provisions of
Section 5 of the Prior Agreement shall survive such termination.
SECTION 11. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 12. COUNTERPARTS. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 13. HEADINGS. The headings of the sections
of this Agreement have been inserted for convenience of reference
only and shall not be deemed a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-11-
<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter and your
acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
MIRAGE RESORTS, INCORPORATED
By: /s/ DANIEL R. LEE
-------------------------
Daniel R. Lee
Chief Financial Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
MORGAN STANLEY & CO. INCORPORATED
By: /s/ MICHAEL FUSCO
-----------------------
Name: Michael Fusco
Title: Vice President
-12-
COMMERCIAL PAPER DEALER AGREEMENT
July 24, 1997
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Dear Sirs:
Mirage Resorts, Incorporated, a Nevada corporation (the
"Company"), hereby appoints you as its agent on a non-exclusive
basis for the purpose of soliciting and receiving offers to
purchase from the Company from time to time its Series A commer-
cial paper notes, maturing not later than nine months from date
of issue (the "CP Notes") in an aggregate principal amount
outstanding not to exceed the amount authorized from time to time
by the Board of Directors of the Company. The CP Notes will be
issued under an Issuing and Paying Agency Agreement dated July
24, 1997 (the "Paying Agency Agreement") between the Company
and First Trust of New York, National Association, as Issuing and
Paying Agent (the "Paying Agent"), and will be issued in
denominations of $250,000 and integral multiples of $1,000 in
excess thereof. The Company may sell CP Notes directly to you as
principal for resale to others.
SECTION 1. ISSUANCE AND PURCHASE OF THE CP NOTES. If
you and the Company shall agree upon the sale of any CP Notes to
or through you (including, but not limited to, agreement with
respect to the price, principal amount, maturity and interest or
discount rate thereof), (i) instructions to the Paying Agent to
complete, authenticate and deliver the CP Notes shall be given in
the manner described in the Paying Agency Agreement and (ii) the
authentication and delivery to you of such CP Notes by the Paying
Agent against payment of the purchase price therefor shall
constitute the issuance of such CP Notes by the Company.
EXHIBIT 10.6
<PAGE>
SECTION 2. OFFERING OF THE CP NOTES; RESTRICTIONS ON
TRANSFER. You agree with the Company that (i) you will deliver
a Private Placement Memorandum (as hereinafter defined) to each
prospective investor in the CP Notes prior to the initial offer
to purchase a CP Note or CP Notes by such investor, (ii) you will
not solicit offers for, or offer or sell, CP Notes by any form of
general solicitation or general advertising or in any manner
involving a public offering within the meaning of Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act"),
and Rule 506 thereunder, and (iii) you will solicit offers for CP
Notes only from, and will offer CP Notes only to, (x)
institutional investors that you reasonably believe are
"accredited investors" within the meaning of Rule 501(a) under
the Securities Act or (y) persons that you reasonably believe
are "qualified institutional buyers," as defined in Rule 144A
under the Securities Act ("QIBs"), and, in either case, who, in
purchasing CP Notes, may be deemed to have represented and agreed
as provided in paragraphs (1) through (7) of Section 2(b).
(b) Each Private Placement Memorandum shall
contain paragraphs in substantially the following form:
"Each purchaser of a CP Note will be deemed to have
represented and agreed as follows:
(1) It understands that the CP Notes are being issued
only in transactions not involving any public
offering within the meaning of the Securities Act;
(2) It is (A) an institutional investor which is an
"Accredited Investor," as defined in Rule 501(a)
of Regulation D under the Securities Act (an
"Institutional Accredited Investor"), or a
"bank," as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association
or other institution of the type referred to in
Section 3(a)(5)(A) of the Securities Act, that is
acting as a fiduciary in purchasing the CP Notes
for the account of an Institutional Accredited
Investor, which has such knowledge and experience
(or, if such Institutional Accredited Investor is
acting as a fiduciary, it is a fiduciary with sole
investment discretion having such knowledge and
experience) in financial and business matters that
it is capable (whether acting for its own account
or in such fiduciary capacity) of evaluating the
merits and risks of investing in such CP Notes,
has had access to such information as it deems
necessary in order to make an informed investment
decision and is not purchasing the CP Notes with a
view to, or for sale in connection with, any
distribution; or (B) in the case of sales of CP
Notes pursuant to Rule 144A under the Securities
Act, a "qualified institutional buyer," as
defined in Rule 144A under the Securities Act (a
"QIB"), or a QIB purchasing the CP Notes on
behalf of one or more other QIBs;
-2-
<PAGE>
(3) If in the future it (or any other investor or any
other fiduciary or agent representing it) decides
to sell such CP Notes prior to maturity, said CP
Notes will be sold only in a transaction exempt
from registration under the Securities Act and
only to (i) you or another dealer (each, a
"Dealer") authorized by the Company, (ii) to the
Company, (iii) to a QIB, (iv) through a Dealer to
an institutional investor approved by the Dealer
as an Institutional Accredited Investor or (v) in
a transaction previously approved in writing by
the Company as exempt from registration under the
Securities Act;
(4) It understands that, although you (or any other
Dealer) or the Company may repurchase CP Notes,
none of such entities is obligated to do so, and,
accordingly, the purchaser (or any such other
investor) should be prepared to hold the CP Notes
until maturity;
(5) It acknowledges that the CP Notes sold to it by
you may be sold to it pursuant to Rule 144A under
the Securities Act;
(6) It understands that the CP Notes will bear a
legend substantially as follows:
THIS CP NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE INITIAL SALE OF THIS
CP NOTE MAY BE MADE ONLY TO AN INSTITUTIONAL
"ACCREDITED INVESTOR," AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR A "QUALIFIED INSTITU-
TIONAL BUYER," AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT (A "QIB"). BY ITS ACCEPTANCE
OF THIS CP NOTE, THE PURCHASER HEREOF (A) REPRE-
SENTS THAT IT IS (i) AN INSTITUTIONAL ACCREDITED
INVESTOR OR A "BANK" AS DEFINED IN SECTION 3(a)(2)
OF THE SECURITIES ACT, OR A SAVINGS AND LOAN
ASSOCIATION OR OTHER INSTITUTION OF THE TYPE
REFERRED TO IN SECTION 3(a)(5)(A) OF THE
SECURITIES ACT, THAT IS ACTING AS A FIDUCIARY ON
BEHALF OF AN INSTITUTIONAL ACCREDITED INVESTOR
AND THAT THIS CP NOTE IS BEING ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
(ii) A QIB ACTING ON BEHALF OF ITSELF OR ANOTHER
QIB, AND (B) AGREES THAT ANY RESALE OF THIS CP
NOTE WILL BE MADE ONLY IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
(INCLUDING, IN THE CASE OF A SALE BY A QIB, A
TRANSACTION EXEMPT PURSUANT TO RULE 144A UNDER THE
-3-
<PAGE>
SECURITIES ACT), AND, IN EACH CASE, ONLY TO (i)
GOLDMAN, SACHS & CO. OR ANOTHER DEALER (EACH, A
"DEALER") AUTHORIZED BY MIRAGE RESORTS,
INCORPORATED (THE "COMPANY"), (ii) TO THE
COMPANY, (iii) THROUGH A DEALER TO AN
INSTITUTIONAL INVESTOR APPROVED BY A DEALER AS AN
INSTITUTIONAL ACCREDITED INVESTOR, (iv) TO A QIB
OR (v) IN A TRANSACTION PREVIOUSLY APPROVED IN
WRITING BY THE COMPANY IN ITS SOLE AND ABSOLUTE
DISCRETION AS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT;
and
(7) It has received the Private Placement Memorandum
relating to the offering of the CP Notes and has
had full opportunity (i) to ask questions and
receive answers concerning the terms and
conditions of the offering made pursuant to such
Private Placement Memorandum and (ii) to request
from the Company and to review, and has received,
all additional information necessary to verify the
accuracy of the information contained in such
Private Placement Memorandum or incorporated
therein by reference that the Company could
provide without unreasonable effort or expense."
SECTION 3. REPRESENTATIONS AND WARRANTIES. The
Company represents and warrants to and agrees with you as of the
date hereof, as of each date on which you solicit offers to
purchase CP Notes, as of each date on which the Company accepts
an offer to purchase CP Notes (including any purchase by you as
principal), as of each date the Company issues and delivers CP
Notes and as of each date the Private Placement Memorandum is
amended or supplemented, as follows (it being understood that
such representations, warranties and agreements shall be deemed
to relate to the Private Placement Memorandum as amended or
supplemented to each such date):
(a) The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws
of the State of Nevada and has full power and authority to
execute, deliver and perform this Agreement. The Company has
full power and authority to execute, deliver and perform its
obligations under the CP Notes and the Paying Agency Agreement.
(b) The CP Notes have been duly authorized by the
Company and, when executed and authenticated in accordance with
the provisions of the Paying Agency Agreement and delivered to
and paid for by the purchasers thereof, will be entitled to the
benefits of the Paying Agency Agreement and will be valid and
binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except that
(i) the enforceability thereof may be limited by bankruptcy,
-4-
<PAGE>
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally, (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of
general applicability, (iii) rights to indemnity and contribution
may be limited by state or federal laws relating to securities or
by the policies underlying such laws and (iv) no representation,
warranty or agreement is made with respect to any purported
waivers of rights or defenses.
(c) This Agreement has been duly authorized,
executed and delivered by the Company.
(d) The Paying Agency Agreement has been duly
authorized, executed and delivered by the Company and, assuming
the due authorization, execution and delivery by the Paying
Agent, is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except that (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws now or hereafter in effect relating to or affecting
creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability, (iii) rights to indemnity
and contribution may be limited by state or federal laws relating
to securities or by the policies underlying such laws and (iv) no
representation, warranty or agreement is made with respect to any
purported waivers of rights or defenses.
(e) The execution and delivery by the Company of,
and the performance by the Company of its obligations under, this
Agreement, the CP Notes and the Paying Agency Agreement will not
contravene any provision of applicable law or the Articles of
Incorporation or Bylaws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company or any
subsidiary of the Company, the contravention of which would have
a material adverse effect on the business of the Company and its
subsidiaries, taken as a whole, and no consent, approval, au-
thorization or order of or qualification with any governmental
body or agency is required for the performance by the Company of
its obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection
with the offer and sale of the CP Notes.
(f) The issuance and sale of the CP Notes under
the circumstances contemplated hereby and by the Paying Agency
Agreement do not require registration of the CP Notes under the
Securities Act, pursuant to the exemption from registration
contained in Section 4(2) thereof and the regulations promulgated
thereunder and do not require compliance with any provision of
the Trust Indenture Act of 1939, as amended.
-5-
<PAGE>
(g) The Company is not an "investment company"
or an entity "controlled" by an "investment company" as such
terms are defined in the Investment Company Act of 1940, as
amended.
(h) There has not occurred any material adverse
change, or any development involving a prospective material
adverse change, in the condition, financial or otherwise, or in
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the
Private Placement Memorandum.
(i) The CP Notes satisfy the requirements set
forth in Rule 144A(d)(3) under the Securities Act.
SECTION 4. AGREEMENTS. The Company agrees with you
that:
(a) The Company will promptly deliver to you
copies of all (i) filings by the Company with the Securities and
Exchange Commission and any United States securities exchange on
which securities of the Company are listed and (ii) all material
information generally supplied by the Company to its shareholders
or by the Company to any of Standard & Poor's Ratings Group,
Moody's Investors Service, Inc. or Duff & Phelps Credit Rating
Co. (collectively, the "Rating Agencies").
(b) The Company will provide to you as soon as
practicable a Private Placement Memorandum containing business
and financial information concerning the Company and a de-
scription of the CP Notes which (with any amendments or
supplements provided by the Company) may be used by you in con-
nection with the sale of the CP Notes until the Company provides
you with an updated or revised memorandum (such Private Placement
Memorandum, together with any amendments or supplements thereto,
including information incorporated therein by reference, if any,
is herein referred to as the "Private Placement Memorandum").
(c) If, at any time when you are offering CP
Notes or any CP Notes are outstanding, any event occurs or
condition exists as a result of which the Private Placement
Memorandum as then amended or supplemented would include an
untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances existing when such Private Placement
Memorandum is delivered to a purchaser, not misleading, or if, in
your opinion or the opinion of the Company, it is necessary at
any time to amend or supplement the Private Placement Memorandum
as then amended or supplemented to comply with applicable law,
the Company will notify you as promptly as practicable and will
prepare and furnish to you a revision or supplement to the
Private Placement Memorandum satisfactory in all material
respects to you, that will correct such statement or omission or
effect such compliance.
-6-
<PAGE>
(d) The Company will, whether or not any sale of
CP Notes is consummated, pay all reasonable out-of-pocket
expenses incurred by you incident to the performance of its
obligations under this Agreement, the CP Notes and the Paying
Agency Agreement, including, without limitation, reasonable fees
and expenses of your counsel.
(e) The Company will notify you promptly in
writing of any downgrading, or of its receipt of any notice of
any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's
securities by any of the Rating Agencies.
(f) The Company agrees promptly from time to time
to take such action as you may reasonably request to qualify the
CP Notes for offer and sale under the securities or Blue Sky laws
of such jurisdictions as you may reasonably request and to
maintain such qualifications for as long as you shall reasonably
request. The Company also agrees to reimburse you for any
reasonable fees or costs (including reasonable out-of-pocket fees
and disbursements of counsel) incurred in so qualifying the CP
Notes.
(g) The Company will not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be
integrated with the sale of the CP Notes in a manner which would
require the registration under the Securities Act of the offer
and sale of such CP Notes.
(h) The Company will not solicit any offer to buy
or offer to sell CP Notes by means of any form of general
solicitation or general advertising, within the meaning of Rule
502(c) under the Securities Act or otherwise, including: (x) any
advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over
television or radio; and (y) any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
(i) The Company will furnish to you such
additional information as you may reasonably request.
(j) At any time when the Company is not subject
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the Company shall make available, upon request, to any
holder, beneficial owner or prospective purchaser of any CP Notes
the information required to be delivered to such persons pursuant
to Rule 144A(d)(4) under the Securities Act and will furnish to
you, upon request, copies of such information.
-7-
<PAGE>
SECTION 5. INDEMNITY AND CONTRIBUTION. The Company
agrees to (i) indemnify and hold harmless you and each person, if
any, who controls you within the meaning of either Section 15 of
the Securities Act or Section 20 of the Securities Exchange Act
of 1934, as amended (you and each such other person are
collectively referred to herein as "you"), from and against any
and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Private Placement Memorandum (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (ii) reimburse you for all reasonable out-of-
pocket expenses (including reasonable counsel fees) as they are
incurred by you in connection with investigating or defending any
such loss, claim, damage or liability. The foregoing indemnity
and reimbursement obligation shall not apply in respect of any
statement in or omission from the Private Placement Memorandum
(as so amended or supplemented) based on information pertaining
to you furnished to the Company by you, or on your behalf. The
Company shall not, without your prior written consent, effect any
settlement of any pending or threatened proceeding in respect of
which you are or could have been a party and indemnity could have
been sought hereunder by you, unless such settlement (i) includes
an unconditional release of you from all liability on claims that
are the subject matter of such proceeding and for which indemnity
could have been sought hereunder and (ii) does not include a
statement as to or an admission of fault, culpability or failure
to act, by or on behalf of you. If the indemnification provided
for in this Section 5 is unavailable or insufficient in respect
of any losses, claims, damages or liabilities referred to herein,
then you, on the one hand, and the Company, on the other hand,
shall contribute to the amount paid or payable by you as a result
of such losses, claims, damages or liabilities in such proportion
as is appropriate to reflect the relative benefits received by
you, on the one hand, and the Company, on the other hand, or, if
such allocation is not permitted by applicable law, to reflect
not only the relative benefits referred to above but also the
relative fault of each of the parties and any other relevant
equitable considerations.
SECTION 6. PAYMENT AND DELIVERY. Payment for CP
Notes sold to or through you pursuant to this Agreement shall be
made by you in immediately available funds payable to the Paying
Agent for the account of the Company in such manner and at such
time as provided in the Paying Agency Agreement, at the offices
of the Paying Agent. Delivery of CP Notes sold to or through
you hereunder shall be made against payment of the purchase price
therefor by the Paying Agent to you through the facilities of The
Depository Trust Company or in definitive form payable to the
bearer (and in such denominations as may reasonably be requested
by you) by 2:15 p.m. New York time on the date agreed upon for
delivery.
-8-
<PAGE>
(b) In the event the Company shall direct the
Paying Agent to cease issuing CP Notes, the Paying Agent shall be
instructed by the Company to issue such CP Notes as you shall
certify were sold within sixty (60) minutes after your receipt of
written notice of such cessation and for which you had the prior
agreement of the Company pursuant to Section 1 of this Agreement.
You agree upon receipt of any such cessation notice to
immediately cease effecting transactions in CP Notes; provided,
however, that this provision shall have no effect with respect to
CP Notes purchased by you as principal from the Company.
SECTION 7. CONDITIONS OF YOUR OBLIGATION. If you and
the Company shall agree upon the sale of any CP Notes pursuant to
Section 1 of this Agreement, your obligation to purchase CP Notes
as principal and the obligation of any other purchaser to pur-
chase CP Notes will be subject to the accuracy of the repre-
sentations and warranties on the part of the Company herein and
to the performance and observance by the Company of all
agreements herein contained on its part to be performed and
observed (in the case of your obligation to solicit offers to
purchase CP Notes, at the time of such solicitation, and, in the
case of your or any other purchaser's obligation to purchase CP
Notes, at the time the Company accepts the offer to purchase such
CP Notes and at the time of purchase) and (in each case) to the
following additional conditions precedent when and as specified:
(a) Prior to such solicitation or purchase:
(i) there shall not have occurred any
change, or any development involving a prospective
change, in the condition, financial or otherwise,
or in the earnings, business or operations of the
Company and its subsidiaries from that set forth
in the Private Placement Memorandum, as amended or
supplemented, that, in your reasonable judgment,
is material and adverse to the Company and its
subsidiaries, taken as a whole, and that makes it,
in your reasonable judgment, impracticable to
market the CP Notes; and
(ii) there shall not have occurred any
downgrading, nor shall any notice have been given
of any intended or potential downgrading or of any
review for a possible change that does not
indicate the direction of the possible change, in
the rating accorded any of the Company's
securities by any of the Rating Agencies;
except, in each case described in paragraph (a)(i) or (ii) above,
as disclosed to you in writing by the Company prior to such
solicitation or, in the case of a purchase of CP Notes, as
disclosed to you before the offer to purchase such CP Notes was
made.
-9-
<PAGE>
(b) The following documents shall have been
provided to you at or promptly following the execution of this
Agreement:
(i) an executed copy of the Paying Agency
Agreement;
(iii) a certified copy of resolutions of the
Board of Directors of the Company authorizing (a)
the issuance of the CP Notes and (b) the execution
and delivery of this Agreement and the Paying
Agency Agreement;
(iii) opinions of counsel to the Company
substantially in the forms of Exhibits A-1 and A-2
hereto; and
(iv) all other documents reasonably requested
by you.
SECTION 8. NOTICES. All communications hereunder will
be in writing and effective only on receipt, and, if sent to you,
will be mailed, delivered or telecopied and confirmed to Goldman,
Sachs & Co., 85 Broad Street, New York, New York 10004,
Attention: David S. Keller (telecopy number: 212-902-0683), or,
if sent to the Company, will be mailed, delivered, or telecopied
and confirmed to the Company at 3400 Las Vegas Boulevard South,
Las Vegas, Nevada 89109, Attention: Chief Financial Officer
(telecopy number: (702) 792-7628), or to either of the foregoing
parties, or their successors, at such other address as such party
or successor may designate from time to time by notice duly given
in accordance with the terms of this Section 8 to the other party
hereto.
SECTION 9. AMENDMENTS; SUCCESSORS. This Agreement
may be amended or supplemented if, but only if, such amendment or
supplement is in writing and is signed by the Company and you.
This Agreement is not assignable by either party hereto without
the written consent of the other party.
(b) This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and the controlling persons referred to in Section 5
and the purchasers of CP Notes (to the extent expressly provided
in Section 7), and no other person will have any right or obliga-
tion hereunder.
(c) The Company will give you notice of any
proposed cancellation, amendment, supplement, waiver or consent
to or under the Paying Agency Agreement at least seven (7) days
prior to the effective date thereof.
-10-
<PAGE>
SECTION 10. TERMINATION. This Agreement may be
terminated at any time by either party hereto upon the giving of
written notice of such termination to the other party hereto, but
without prejudice to any rights, obligations or liabilities of
either party hereto accrued or incurred prior to such termina-
tion. If this Agreement is terminated, the provisions of
Sections 3, 4(d), 4(f), 4(g) and 5 shall survive and continue in
full force and effect.
SECTION 11. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York.
SECTION 12. COUNTERPARTS. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
SECTION 13. HEADINGS. The headings of the sections of
this Agreement have been inserted for convenience of reference
only and shall not be deemed a part of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
-11-
<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter and your
acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
MIRAGE RESORTS, INCORPORATED
By: /s/ DANIEL R. LEE
-----------------------
Daniel R. Lee
Chief Financial Officer
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
GOLDMAN, SACHS & CO.
By: /s/ VINCENT J. DIMASSIMO
------------------------
Name: Vincent J. DiMassimo
Title: Vice President
-12-
EXECUTION COPY
FIRST AMENDMENT
made as of the 31st day of July, 1997
to
ROAD DEVELOPMENT AGREEMENT
made as of the 10th day of January, 1997
by and among
STATE OF NEW JERSEY
AND
SOUTH JERSEY TRANSPORTATION AUTHORITY AND
ATLANDIA DESIGN AND FURNISHINGS, INC.
EXHIBIT 10.7
<PAGE>
FIRST AMENDMENT TO ROAD DEVELOPMENT AGREEMENT ("First
Amendment") made as of this 31st day of July, 1997, by and
among the STATE OF NEW JERSEY, acting through the
Department of Transportation, 1035 Parkway Avenue, CN 600,
Trenton, New Jersey 08625-0600 (the "State"), the SOUTH
JERSEY TRANSPORTATION AUTHORITY, a public body having an
office at Farley Service Plaza, P.O. Box 351, Hammonton,
New Jersey 08037 ("SJTA") and ATLANDIA DESIGN AND
FURNISHINGS, INC., a New Jersey corporation, having an
office and place of business at 3260 South Industrial
Road, Las Vegas, Nevada 89109 ("Developer").
W I T N E S S E T H:
WHEREAS, as of January 10, 1997 the State, SJTA and
Mirage Resorts, Incorporated ("MRI"), as "Developer",
executed and delivered a Road Development Agreement (the
"Agreement") pursuant to which they agreed to proceed with
the Road Project (as defined in the Agreement), subject to
the provisions of the Agreement; and
WHEREAS, concurrently with the execution and delivery
of the Agreement, MRI assigned all of its right, title and
interest in and to the Agreement to Developer, which
assumed the obligations of the assignor thereunder; and
WHEREAS, the State, SJTA and Developer have
determined that it is necessary and, pursuant to the
2
<PAGE>
provisions of N.J.S.A. 27:1A-5, 27:7-21 and 27:25A-23 that
it is in the public interest, to amend the Agreement as
hereinafter provided.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Definitions.
1.1 All terms, the initial letters of which are
capitalized and not otherwise defined in this First
Amendment shall have the respective meanings ascribed to
them in the Agreement.
2. Amendment to Article 12 (Termination)
2.1 Sections 12.1.9 and 12.2.7 are each hereby
amended by deleting the date "July 31, 1997" and replacing
each such date with the date "August 28, 1997".
3. Miscellaneous.
3.1 This First Amendment may not be modified, except
by an instrument in writing signed by the State, SJTA and the
Developer and shall be binding on the parties, their successors
and assigns, but shall not enure to the benefit of any other
Person.
3.2 This First Amendment may be executed in any number of
counterparts, all of which together shall constitute a single
instrument.
3.3 Except as amended by this First Amendment, all of the
terms and conditions of the Agreement except for the
representations and warranties (a) by the State and SJTA set
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forth in Sections 2.4 and 2.5 (and the reference thereto in
Section 2.9.1) and (b) by Developer set forth in Sections 3.5
and 3.6 (and the reference thereto in Section 3.9) are
ratified, confirmed and approved.
[SIGNATURE PAGE TO FOLLOW]
4
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IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be executed as of the date first set forth
above by their duly authorized representatives.
STATE OF NEW JERSEY
BY: DEPARTMENT OF TRANSPORTATION
By: JOHN J. HALEY, JR.
John J. Haley, Jr.
Commissioner
SOUTH JERSEY TRANSPORTATION
AUTHORITY
By: JAMES A. CRAWFORD
James A. Crawford
Executive Director
ATLANDIA DESIGN AND
FURNISHINGS, INC.
By: BRUCE A. LEVIN
Bruce A. Levin
Secretary
THIS DOCUMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM ON
THIS 31st DAY OF JULY, 1997
PETER VERNIERO
ATTORNEY GENERAL OF NEW JERSEY
By: SUSAN R. ROOP
Deputy Attorney General
5
September 16, 1997
Mr. Frank Visconti
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard, South
Las Vegas, NV 89109
Dear Frank:
This confirms our agreement that your August 18, 1992
Employment Agreement (the "Initial Agreement") has been
extended for five (5) years, commencing September 6, 1997.
You have been appointed President, Mirage Resorts Retail
Division, at an annual salary of $400,000. The Board of
Directors today authorized the grant of an additional
150,000 options to you, at an exercise price of 26-11/16
(the closing price on August 13, 1997), vesting 33-1/3%
on a cumulative basis at the end of each of the third,
fourth and fifth years of your extended employment period
(the "Options"). I will be providing you shortly with a
stock option agreement governing the Options.
Except as expressly provided herein, the provisions of the
Initial Agreement shall remain in full force and effect.
Please date and sign the additional enclosed copy of this
letter where indicated below to confirm your agreement to
the foregoing and return to me. Congratulations and keep
up the great work!
Very truly yours,
Mirage Resorts, Incorporated
By: /s/ BRUCE A. LEVIN
Bruce A. Levin
Vice President, General
Counsel and Secretary
I agree to the foregoing:
/s/ FRANK VISCONTI
Frank Visconti September 17, 1997
cc: Stephen A. Wynn
EXHIBIT 10.8
AMENDMENT NO. 1 TO AMENDED AND RESTATED LOAN AGREEMENT
This Amendment No. 1 (the "Amendment") to Amended and
Restated Loan Agreement dated as of September 19, 1997 is
entered into with reference to the Amended and Restated Loan
Agreement (the "Loan Agreement") dated as of March 7, 1997
among Mirage Resorts, Incorporated, a Nevada corporation
("Borrower"), the Banks, Co-Arrangers, Co-Agents and
Documentation Agent referred to therein, and Bank of America
National Trust and Savings Association, as Administrative
Agent. Capitalized terms used herein are used with the
meanings set forth for those terms in the Loan Agreement.
Borrower and the Administrative Agent (acting with
the consent of the Requisite Banks) agree as follows:
1. AMENDMENT TO LEVERAGE RATIO. Section 6.6 of the Loan
Agreement is hereby amended to read in full as follows:
"6.6 LEVERAGE RATIO. Permit the Leverage Ratio, as of
the last day of any Fiscal Quarter described below, to be
greater than the ratio set forth opposite that Fiscal
Quarter:
PERIOD OR FISCAL QUARTER RATIO
________________________ _____
Fiscal Quarters ending during the
period from Closing Date through
and including December 31, 1997 4.00 to 1.00
Fiscal Quarters ending March 31,
1998 and June 30, 1998 5.00 to 1.00
Fiscal Quarter ending September 30,
1998 5.85 to 1.00
Fiscal Quarter ending December 31,
1998 5.00 to 1.00
Later Fiscal Quarters 4.00 to 1.00."
2. CERTAIN ADJUSTMENTS TO LEVERAGE RATIO. In the event
that as of the last day of the Fiscal Quarter ending December
31, 1998, Bellagio has been open for business for less than a
full Fiscal Quarter (and the Adjusted EBITDA of Bellagio is
therefore not included in Annualized Adjusted EBITDA pursuant
EXHIBIT 10.9
<PAGE>
to clause (b) of the definition thereof) but has been open for
business for at least 30 days, Annualized Adjusted EBITDA
shall, for purposes of computation of the Leverage Ratio as of
that date, be increased by an amount equal to (a) Adjusted
EBITDA of Bellagio for the period for which Bellagio has then
been open for business, divided by (b) the integral number of
days in the period for which Bellagio has been open for
business, times (c) 182.5.
3. CONDITIONS PRECEDENT. This effectiveness of this
Amendment shall be conditioned upon the receipt by the
Administrative Agent of written consents hereto from the
Requisite Banks.
4. REPRESENTATION AND WARRANTY. Borrower represents and
warrants to the Administrative Agent and the Banks that no
Default or Event of Default has occurred and remains
continuing.
5. CONFIRMATION. In all other respects, the terms of
the Loan Agreement and the other Loan Documents are hereby
confirmed.
IN WITNESS WHEREOF, Borrower and the Administrative
Agent have executed this Amendment as of the date first written
above by their duly authorized representatives.
MIRAGE RESORTS, INCORPORATED
By: DANIEL R. LEE
Daniel R. Lee, Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent
By: JANICE HAMMOND
Janice Hammond, Vice President
2
EXECUTION COPY
SECOND AMENDMENT
made as of the 10th day of October, 1997
to
ROAD DEVELOPMENT AGREEMENT
made as of the 10th day of January, 1997
by and among
STATE OF NEW JERSEY
AND
SOUTH JERSEY TRANSPORTATION AUTHORITY
AND
ATLANDIA DESIGN AND FURNISHINGS, INC.
EXHIBIT 10.10
<PAGE>
SECOND AMENDMENT TO ROAD DEVELOPMENT AGREEMENT ("Second
Amendment") made as of this 10th day of October, 1997, by
and among the STATE OF NEW JERSEY, acting through the
Department of Transportation, 1035 Parkway Avenue, CN 600,
Trenton, New Jersey 08625-0600 (the "State"), the SOUTH
JERSEY TRANSPORTATION AUTHORITY, a public body having an
office at Farley Service Plaza, P.O. Box 351, Hammonton,
New Jersey 08037 ("SJTA") and ATLANDIA DESIGN AND
FURNISHINGS, INC., a New Jersey corporation, having an
office and place of business at 3260 South Industrial
Road, Las Vegas, Nevada 89109 ("Developer").
W I T N E S S E T H:
WHEREAS, as of January 10, 1997 the State, SJTA and
Mirage Resorts, Incorporated ("MRI"), as "Developer",
executed and delivered a Road Development Agreement which
Agreement (the "Original Agreement") was, by a first
amendment thereto made as of July 31, 1997, thereafter
amended (said Original Agreement, as so amended, the
"Agreement"); and
WHEREAS, concurrently with the execution and delivery
of the Original Agreement, pursuant to Section 13.1
thereof, MRI assigned all of its right, title and interest
in and to the Original Agreement to Developer, which
assumed the obligations of the assignor thereunder; and
WHEREAS, the State, SJTA and Developer have
determined that it is necessary and, pursuant to the
provisions of N.J.S.A. 27:1A-5, 27:7-21 and 27:25A-23 that
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<PAGE>
it is in the public interest, to amend further the
Original Agreement as hereinafter provided.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Definitions.
1.1 All terms, the initial letters of which are
capitalized and not otherwise defined in this Second
Amendment, shall have the respective meanings ascribed to
them in the Agreement.
1.2 There are added to Article 1 of the Agreement
the following definitions:
Bond Purchase Agreement shall mean the agreement of
MRI to purchase from SJTA and the agreement of SJTA to
sell to MRI up to $55 million principal amount of special
revenue bonds to be issued by SJTA and secured by and
repayable from CRDA future investment alternative tax
obligations of Casinos on the Marina Land, such agreement
to be substantially in the form of Exhibit D.
Contingency shall have the meaning set forth in the
D/B Road Contract.
Contingency Change Order shall have the meaning set
forth in the D/B Road Contract.
Contract Documents shall have the meaning set forth
in the D/B Road Contract.
Contract Price shall mean $190,595,000.
Developer's Account shall have the meaning set forth
in the Escrow Fund Agreement.
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<PAGE>
Directed Change shall have the meaning set forth in
the D/B Road Contract.
Escrow Agent shall have the meaning set forth in the
Escrow Fund Agreement.
Escrow Fund shall have the meaning set forth in the
Escrow Fund Agreement.
Escrow Fund Agreement shall mean the agreement to be
entered into at or prior to Closing among Developer, SJTA,
State and Escrow Agent providing for the deposit,
investment and disposition of the Escrow Fund, such
agreement to be in the form of Exhibit E.
Guaranteed Completion Date shall have the meaning set
forth in the D/B Contract.
Major Permit shall have the meaning set forth in the
D/B Road Contract.
NTP 1 shall have the meaning set forth in the D/B
Road Contract.
NTP 2 shall have the meaning set forth in the D/B
Road Contract.
Retainage shall have the meaning set forth in the D/B
Road Contract.
Road Account shall have the meaning set forth in
Exhibit F to this Second Amendment.
SJTA Account shall have the meaning set forth in the
Escrow Fund Agreement.
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<PAGE>
SJTA Special Revenue Bonds shall mean the bonds
issued by SJTA pursuant to the SJTA Special Revenue Bond
Resolution.
SJTA Special Revenue Bond Resolution shall mean the
resolution of SJTA dated October 10, 1997 authorizing SJTA
to issue special revenue bonds relating to the Road Project.
State - SJTA Memorandum shall mean the memorandum dated
September 8, 1997 signed by Commissioner of Transportation
John J. Haley, Jr. and SJTA Executive Director James A.
Crawford relating to funding by the State and SJTA of the
Road Project.
Work shall have the meaning set forth in the D/B Road
Contract.
2. Amended Schedules.
2.1 The State hereby substitutes for Schedules 2.2.1
(Schedule of Required State Consents), Schedule 2.3.1
(Schedule of State Breaches), Schedule 2.4.1 (Schedule of
State Contracts) and Schedule 2.5.1 (Schedule of State
Litigation) heretofore delivered to SJTA and Developer
Schedule 2.2.1 (Amended) (Schedule of Required State
Consents), Schedule 2.3.1 (Amended) (Schedule of State
Breaches), Schedule 2.4.1 (Amended) (Schedule of State
Contracts) and Schedule 2.5.1 (Amended) (Schedule of
State Litigation) annexed hereto. The Developer and SJTA
acknowledge receipt of copies of all documents heretofore
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<PAGE>
filed in the actions referred to in Schedule 2.5.1
(Amended). The State shall deliver to Developer and SJTA
copies of all documents referred to in the other amended
Schedules on or before October 24, 1997.
2.2 SJTA hereby substitutes for Schedule 2.2.2
(Schedule of Required SJTA Consents), Schedule 2.3.2
(Schedule of SJTA Breaches), Schedule 2.4.2 (Schedule of
SJTA Contracts) and Schedule 2.5.2 (Schedule of SJTA
Litigation) heretofore delivered to the State and
Developer Schedule 2.2.2 (Amended) (Schedule of Required
SJTA Consents), Schedule 2.3.2 (Amended) (Schedule of
SJTA Breaches), Schedule 2.4.2 (Amended) (Schedule of SJTA
Contracts) and Schedule 2.5.2 (Amended) (Schedule of SJTA
Litigation) annexed hereto. The Developer and State
acknowledge receipt of copies of all documents heretofore
filed in the actions referred to in Schedule 2.5.2
(Amended). SJTA shall deliver to the State and Developer
copies of all documents referred to in the other amended
Schedules on or before October 24, 1997.
2.3 Developer hereby (a) amends Schedule 3.5
(Schedule Developer's Contracts, etc.) by adding the
contract set forth as Schedule 3.5 (Amended) (Schedule of
Developer's Contracts) and (b) amends and restates
Schedule 3.6 (Schedule of Developer Litigation) with
6
<PAGE>
Schedule 3.6 (Amended) (Schedule of Developer Litigation)
annexed hereto. The State and SJTA acknowledge receipt of
copies of all documents referred to in Schedule 3.5
(Amended) and filed in each action or proceeding referred
to in Schedule 3.6 (Amended).
3. Program Management Agreement.
3.1 Concurrently herewith the State, SJTA and
Developer have executed and delivered the First Amendment
to the Program Management Agreement pursuant to which,
among other matters, the State and SJTA became parties to
the Program Management Agreement and agreed that Road
Project Funding Sources shall be applied to pay for the
entire compensation of the Program Manager, which shall
not include any compensation for construction inspection
services, which construction inspection services shall,
prior to the issuance of NTP2, be procured by SJTA, in
consultation with Developer and State, in accordance with
Law, from a qualified Person other than Program Manager,
pursuant to an agreement to be executed by Developer,
SJTA, the State and such Person which agreement shall be
in form and content approved by SJTA, the State and
Developer, such approval not to be unreasonably withheld,
conditioned or delayed. The services of the Program
Manager and such Person performing construction inspection
services shall be paid for with Road Project Funding
7
<PAGE>
Sources; provided, however, the foregoing
shall not result in the Road Project Budget exceeding, in
the aggregate, $330,000,000.
3.2 Section 5.2.3 of the Agreement is hereby
modified in its entirety to read as follows:
"If the D/B Road Contract referred to in
Section 6.1.2 of this Second Amendment is not
executed and delivered by Developer and the D/B
Contractor on or before October 15, 1997, or
such later date as the State, SJTA and Developer
may approve, reimburse the State as required by
the Memorandum."
3.3 In order to promote efficient and consistent
communication with the Program Manager, the Developer,
State and SJTA agree as follows:
3.3.1 If the State or SJTA wishes Developer
to communicate any information or suggestions to Program
Manager with which Developer does not agree, State, SJTA
and Developer shall endeavor in good faith, during the
next five (5) business days following Developer's advice
to the State and SJTA of its disagreement, to resolve
those differences.
3.3.2 If the efforts of the parties to resolve
the differences are unavailing, Developer shall nevertheless
8
<PAGE>
immediately transmit such information or suggestions to
Program Manager accompanied by a statement from Developer
setting forth its reasons for not endorsing or approving such
information or suggestions, it being agreed that Program
Manager may, but is not required to act on such information
or suggestions.
3.3.3 State and SJTA acknowledge and agree
that the transmittal by Developer of information or
suggestions pursuant to Section 3.3.2 shall not constitute
an amendment or waiver of any of the provisions of either
the Program Management Agreement or of the D/B Road
Contract, both of which require Program Manager to follow
the directions of only Developer.
3.3.4 The foregoing provisions shall not
reduce, modify or amend the rights of the State and SJTA
under this Agreement.
4. Road Project Budget and Schedules.
4.1 In accordance with the provisions of Sections 4.2
and 5.3 of the Agreement, the State, SJTA and Developer
hereby agree that annexed hereto as Schedule 4.2A (Road
Project Budget) is the Road Project Budget.
4.2 In accordance with Sections 4.2 and 5.3 of the
Agreement, the State, SJTA and Developer hereby agree that
annexed hereto as Schedule 4.2B (Schedule for Road Project
and Casino Project) is the currently anticipated schedule
9
<PAGE>
for the construction of the Road Project and the Casino
Project. Although the State, SJTA and Developer shall
proceed reasonably and in good faith to endeavor to meet
those schedules, the foregoing does not constitute any
guarantee by Developer, State or SJTA that those schedules
will be met.
4.3 Sections 12.1.1 and 12.2.1 of the Agreement are
hereby deleted.
5. Funding of Road Project.
5.1 To implement the provisions of Section 4.4 of the
Agreement, at the Closing (a) SJTA shall deposit into the
Escrow Fund in immediately available funds the sum of $125
million inclusive of financing costs of $4.15 million
constituting all of the direct and indirect financing
costs of SJTA in connection with the Road Project which
are payable from Road Project Funding Sources and which
shall be applied in the manner set forth on Exhibit F to
this Second Amendment, (b) the State shall provide a
certificate of the Treasurer of New Jersey that the
1996/97 and 1997/98 appropriations of the Transportation
Trust Fund in the aggregate amount of $95 million (i) have
not been repealed or modified, in whole or in part, (ii) are
encumbered in accordance with Law and (iii) therefore cannot
be applied except for the Road Project, unless the $95 million
appropriation is subsequently repealed or modified by the
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<PAGE>
Legislature of the State of New Jersey in whole or in
part, (c) SJTA and State shall execute and deliver to
Developer and Escrow Agent the Escrow Fund Agreement, (d)
SJTA shall (i) adopt and deliver the SJTA Special Revenue
Bond Resolution and (ii) execute and deliver (x) the Bond
Purchase Agreement and (y) the Pledge Agreement with CRDA
described in the Bond Purchase Agreement and (e) CRDA
shall have executed and delivered the Pledge Agreement and
the Donation Agreement referred to in the Bond Purchase
Agreement. Developer agrees that compliance by State and
SJTA with this Section 5.1 will constitute compliance with
the provisions of Section 6.1.4 of the Agreement.
5.2 Section 5.4 of the Agreement is hereby modified
by (a) deleting from Section 5.4.1 the words "the State,
SJTA and CRDA," and (b) deleting from the second line of
each of Section 5.4.1.1 and Section 5.4.1.2 the words "the
State and SJTA, but".
5.3 To implement the provisions of Section 5.4 of
the Agreement, Developer shall, at the Closing, (a)
deposit into the Escrow Fund in immediately available
funds the sum of $110 million inclusive of financing costs
of $6.269 million, constituting all of the direct and
indirect financing costs of Developer and its Affiliates
in connection with the Road Project which are payable from
Road Project Funding Sources, (b) execute and deliver to
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<PAGE>
the State, SJTA and Escrow Agent the Escrow Fund Agreement
and (c) cause MRI to execute and deliver to SJTA the Bond
Purchase Agreement and cause MAC, Corp. to execute and deliver
to CRDA the Donation Agreement referred to in the Bond Purchase
Agreement. State and SJTA agree that compliance by Developer
with the provisions of this Section 5.3 will constitute
compliance with the provisions of Section 7.1.4 of the
Agreement.
5.3.1 Upon the giving of any notice under
Section 7 of Schedule A to the Escrow Fund Agreement that
funds are to be remitted to SJTA from the Developer's
Account to purchase SJTA Special Revenue Bonds, SJTA shall
forthwith issue to MRI, against payment by Escrow Agent of
the purchase price therefor, its SJTA Special Revenue
Bonds in certificated form and otherwise in complete
accordance with the Bond Purchase Agreement and the SJTA
Special Revenue Bond Resolution and in strict compliance
with the conditions thereunder in the principal amount of
the payment from the Developer's Account pursuant to such
Section 7 (but the SJTA Special Revenue Bonds shall not be
issued in any single denomination of less than $5 million)
and execute and deliver, or cause to be executed and
delivered, all other documents and instruments required to
be executed and delivered by SJTA and CRDA, and each of
them, and by their respective bond counsel at a "Delivery
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<PAGE>
Date" pursuant to the Bond Purchase Agreement or the SJTA
Special Revenue Bond Resolution.
6. D/B Road Contract.
6.1 Pursuant to Section 4.5.2 of the Agreement, the
State and SJTA each hereby approves (a) the version of the
D/B Road Contract dated June 20, 1997, as the same was
amended by Addenda Nos. 1-9 and Clarification Notice Nos.
1-13 issued by Program Manager and (b) the issuance of the
other documents issued to qualified bidders on April 22,
1997 and each hereby:
6.1.1 Ratifies the issuance to Yonkers
Contracting Company, Inc./Granite Construction Company, a
Joint Venture, on September 2, 1997 of the Notice of
Intent to Award the D/B Road Contract and a letter from
Developer dated September 4, 1997 with respect thereto;
and
6.1.2 Authorizes the execution and delivery
by Developer of the D/B Road Contract, in the form of the
version thereof prepared under date of August 20, 1997,
which version was delivered to the D/B Contractor with the
Notice of Intent to Award and was executed by the D/B
Contractor and dated September 8, 1997.
6.2 In order to promote the efficient administration
of the D/B Road Contract, the State and SJTA agree as
follows:
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<PAGE>
6.2.1 Neither the State nor SJTA will
directly communicate with the D/B Contractor with respect
to the Road Project. All communications intended by the
State and SJTA, or either, for the D/B Contractor shall be
in writing and sent to the Developer and the Program
Manager. If Developer and Program Manager are in
agreement with such communication, Developer will instruct
Program Manager to forward such communication to the D/B
Contractor. If Developer or Program Manager has a
reasonable basis for not transmitting such communication
to the D/B Contractor, Developer and Program Manager shall
upon receipt of such communication, consult in good faith
with the State or SJTA, as the case may be, concerning
such communication and advise the State and SJTA, if such
is the case, of the basis for not transmitting such
communication to the D/B Contractor. If the Developer or
Program Manager has a reasonable basis for not
transmitting such communication to the D/B Contractor,
Developer shall not be required to do so. However, if
Developer and Program Manager receive a Notice from either
(a) the State which is signed by its Commissioner of
Transportation or (b) SJTA which is signed by its Executive
Director, which Notice in any such case requires the Program
Manager to order corrective action or the temporary cessation
of Work or a portion of the Work either (i) for the failure
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of the D/B Contractor to comply with (x) a material provision
of the Contract Documents, or (y) a Major Permit or (ii) based
upon the written advice of the Person retained by Developer,
SJTA and State in accordance with Section 3.1 of this Second
Amendment to inspect the construction of the Road Project that
continued Work will either produce an unsafe road or result in
an unreasonable risk of injury or damage to persons or property,
Program Manager shall, promptly after receipt of such Notice,
transmit to the D/B Contractor such Notice and any related
communication from the State or SJTA which is intended for
the D/B Contractor, and order either a stoppage in Work or
the performance of corrective Work as directed by the State
or SJTA and send a Notice to the Developer, State and SJTA
of such order, and if Program Manager fails for five (5) days
after receipt of the Notice from the State or SJTA referred to
in clause (a) or (b) above to do so, the State or SJTA may
transmit such Notice and any related communication
directly to the D/B Contractor.
6.2.2 Prior to enforcing any of the rights
that either the State or SJTA may have under the D/B Road
Contract against the D/B Contractor, except for their
rights under Section 6.2.1 of this Second Amendment, the
State and SJTA will send a Notice to Developer (with a
copy to the Program Manager) stating that the State and
SJTA, or either, as the case may be, intend to enforce
such right, which Notice shall set forth the right sought
15
<PAGE>
to be enforced, the intended method of enforcement and the
reasons therefor. During the following five (5) business days
and prior to taking any further action to enforce such rights,
the State and SJTA, and each, as applicable, shall consult
in good faith with Developer and Program Manager as to the
action they plan to take. The State and SJTA will not
unreasonably fail to accommodate any reasonable request by
Developer and Program Manager to delay notifying the D/B
Contractor of its intention to enforce such right or its
actual commencement of such enforcement activities against
the D/B Contractor.
6.2.3 Where the D/B Road Contract or the
Agreement requires the consent or approval of the State
and SJTA, or either, or requires or permits other
performance by the State and SJTA, or either, and
Developer is willing to provide its consent, approval or
other performance with respect to the matter at issue,
such consent, approval or other performance shall not be
unreasonably withheld, conditioned or delayed by the State
and SJTA, and each of them, and shall be provided by the
State and SJTA within ten (10) days after receipt of a
notice from Developer, Program Manager or the D/B
Contractor requesting such consent, approval or other
performance, unless prior to such date the State or SJTA
sends a Notice to Developer setting forth in reasonable
detail the reasons for withholding such approval, consent
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<PAGE>
or other performance. Upon receipt of such a Notice from
the State or SJTA, the Developer, State and SJTA shall
consult in good faith during the following five (5)
business days to attempt to agree upon a course of action
which will take into account public safety, the
requirements of Law and the necessity to complete the Road
Project by the Guaranteed Completion Date and for the
Contract Price. If either the State or SJTA fails, within
the ten (10) day period set forth above, to provide such
consent, approval or other performance or a timely Notice
setting forth in reasonable detail its reason(s) for not so
consenting, approving or otherwise performing, or if the State
or SJTA provides such timely Notice and the parties are unable
to reach agreement during such five (5) business day
consultation period and the Program Manager certifies to
Developer, State and SJTA in writing that such consent,
approval, or other performance will not (i) impair public
safety or (ii) result in any material deviation from the
requirements of the Contract Documents or (iii) result in
a violation of a Major Permit, the State and SJTA shall
thereupon be deemed to have provided such consent,
approval or other performance and the Program Manager
shall act in accordance therewith; provided, however, if
the Program Manager does not so certify to Developer,
State and SJTA, or if State or SJTA timely delivers a
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Notice setting forth in reasonable detail its reason(s)
for not so consenting, approving or otherwise performing,
establishing in such Notice that the requested consent,
approval or performance would impair public safety or
result in any material deviation from the requirements of
the Contract Documents, or result in a violation of a
Major Permit, the Developer shall withdraw its previously
granted consent, approval or willingness to provide other
performance.
6.2.4 With respect to funding the Contract
Price or any amount by which the Contract Price may be
increased pursuant to a Contingency Change Order or a
Directed Change pursuant to the D/B Road Contract, the
parties agree as follows:
6.2.4.1 The State and SJTA shall, pursuant
to Section 12.2.1 of the D/B Road Contract, review and
approve each draft invoice submitted by the D/B
Contractor. Upon the signing by the Program Manager of the
draft invoice pursuant to such Section, such invoice shall
be submitted to the State which shall then forward such
invoice to the Escrow Agent, together with (i) a Notice to
Developer and SJTA setting forth the allocation, among
Developer, the State and SJTA, of the amount set forth on
the invoice as the "Current Amount Due", which allocation
shall be in accordance with the Agreement and (ii) a
notice to Escrow Agent in accordance with Section 1(a) of
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Schedule A to the Escrow Fund Agreement directing Escrow
Agent to pay from the Developer's Account and, if
applicable, from the SJTA Account the respective amounts
set forth in the Notice sent under clause (i). Upon the
submission by the State of such invoice to Escrow Agent,
except as otherwise provided in Section 6.2.4.2, (a) the
State and SJTA collectively will be deemed incontestably
committed to the deposit in the Road Account of two-thirds
(2/3) of the amount so invoiced, such deposit to be made
in accordance with the Notice sent under clause (i) and
(b) upon the remitting by the Escrow Agent to the Road
Account of funds under Sections 1.1 and 1.2 of Schedule A
to the Escrow Fund Agreement and the making by the State
of the deposit into the Road Account of that portion of
the two-thirds (2/3) of the amount for which the State and
SJTA are collectively responsible pursuant to the
Agreement and which was, pursuant to the Notice sent under
clause (i), allocated to the State, (which deposit the
State shall make concurrently with its sending of the
Notice under clause (i)), the State shall (x) be deemed to
have irrevocably authorized the release to Developer for
payment to the D/B Contractor of all of such sums from the
Road Account, and (y) immediately take all necessary steps
to effectuate such release; provided, however, such funds
shall not be paid to Developer from the Road Account for
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payment to the D/B Contractor in excess of any sums due
the D/B Contractor under the D/B Road Contract.
6.2.4.2 If either the Developer, State or
SJTA desires a Directed Change, such party shall forthwith
deposit into the Road Account from sources other than the
Road Project Funding Sources the full amount of the cost
thereof, including all direct and indirect costs referred
to in Section 4.9 of the Agreement, whereupon (i) the
State shall forthwith (x) issue an irrevocable
authorization to release to Developer for payment to the
D/B Contractor all such funds so deposited in the Road
Account, less, if applicable, Retainage, and (y) take all
necessary steps to effectuate such release and (ii) the
Developer shall authorize the Directed Change; provided,
however, such funds shall not be paid to the Developer
from the Road Account for payment to the D/B Contractor
except when such sums are due the D/B Contractor under the
D/B Road Contract and, in such instance, only upon
compliance with the provisions of Section 12.2 of the D/B
Road Contract.
6.2.4.3 If either the State or SJTA
desires to or is required to approve a Contingency Change
Order which Developer is willing to approve, the State and
SJTA, collectively, shall be deemed incontestably
committed to the deposit in the Road Account of two-thirds
(2/3) of the amount due under the Contingency Change Order
20
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and Developer shall be incontestably committed to the
deposit in the Road Account of one-third (1/3) of such
amount and (a) the State shall deposit into the Road
Account the difference between two-thirds (2/3) of the
amount of the Contingency Change Order and the portion (if
any) to be remitted by Escrow Agent under Section 1.2 of
Schedule A to the Escrow Fund Agreement from the SJTA
Account, (b) concurrently with such deposit by the State,
the State shall send Escrow Agent a notice pursuant to
Section 1(b) of Schedule A to the Escrow Fund Agreement to
deposit into the Road Account (i) from the Developer's
Account, one-third (1/3) of the amount due under the
Contingency Change Order and (ii) from the SJTA Account,
the difference between two-thirds (2/3) of such amount (or
such greater amount, as the case may be) and the portion
deposited by the State and (c) concurrently with the remitting
of funds by the Escrow Agent to the Road Account in accordance
with the notice referred to in clause (b), (x) the State shall
forthwith issue an irrevocable authorization to release to
Developer for payment to the D/B Contractor all such funds so
deposited in the Road Account, less, if applicable,
Retainage, (y) the State shall immediately take all
necessary steps to effectuate such release, and (z) the
Developer shall thereupon approve such Contingency Change
Order; provided, however, such funds shall not be paid to
Developer from the Road Account for payment to the D/B
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Contractor except when such sums are due the D/B
Contractor under the D/B Road Contract and, in such
instance, only upon compliance with the provisions of
Section 12.2 of the D/B Road Contract.
6.2.4.4 In the event (a) of any increase
in the Contract Price or (b) that any amounts are required
to be paid pursuant to or arising out of the D/B Road
Contract in excess of the Contract Price and the Contingency
and the responsibility for the payment of such increase or
additional amounts is not expressly provided for in either
the Agreement or the D/B Road Contract or pursuant to a
judgment entered against Developer, State or SJTA, such
sums shall be paid into the Road Account in the ratio of 2:
(State and SJTA) :1 (Developer); whereupon the State shall
(i) be deemed to have irrevocably authorized the release
to Developer for payment to the D/B Contractor of such
sums from the Road Account and (ii) immediately take all
necessary steps to effectuate such release; provided
however, such funds shall not be paid to Developer from
the Road Account for payment to the D/B Contractor except
when such sums are due the D/B Contractor under the D/B
Road Contract and, in such instance, only upon compliance
with the provisions of Section 12.2 of the D/B Road
Contract.
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6.2.4.5 Nothing set forth in Section
6.2.4 (other than Section 6.2.4.4, if applicable) shall be
construed to require the State to spend over $95 million,
SJTA to spend over $125 million (inclusive of the
financing costs set forth in Section 5.1 of this Second
Amendment) or Developer to spend over $110 million
(inclusive of the financing costs set forth in Section 5.3
of this Second Amendment) pursuant to the Agreement;
provided, however, the parties hereby agree that the $95
million commitment of the State shall be expended in
accordance with the provisions set forth in the State -
SJTA Memorandum (and all notices to the Escrow Agent shall
be prepared in a manner to comply with this Section), such
expenditures by the State to be accompanied by the
concurrent expenditures by Developer of sums due from it
pursuant to the Agreement.
6.2.5 Set forth as Exhibit F (Road Account
Procedures) are the procedures required by Section 4.6 of
the Agreement with respect to the Road Account which
procedures the State, SJTA and Developer agree to observe.
6.2.6 Should any of the State, SJTA or
Developer desire (a) the Program Manager to either suspend,
delay or interrupt the Work or any portion thereof pursuant
to the first sentence of Section 14.1 of the D/B Road
Contract or (b) Developer to terminate the D/B Road Contract
pursuant to Section 15.1 of the D/B Road Contract, no such
23
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notice shall be sent unless the State, SJTA and the
Developer jointly agree to send such notice and the manner
of allocating responsibility for all costs incurred as a
result thereof, each party agreeing not to unreasonably
withhold, delay or condition its approval of the sending
of a notice under the first sentence of Section 14.1 but
reserving to itself the absolute right in its sole
discretion not to agree to send any such notice under
Section 15.1; provided, however, each of the Developer,
the State and SJTA hereby approves the sending of a notice
by Developer under Section 15.1 of the D/B Road Contract
if the party requesting the sending of such notice then
has the right to send, and concurrently therewith sends, a
Notice of Termination under Article 12 (Termination) of
the Agreement.
6.2.7 In the event that at any time an
action or proceeding is commenced against Developer or any
Affiliate of Developer, or both, for any claim or cause of
action arising out of or in connection with the Road
Project and SJTA and the State, whether or not named as
defendants in such action, have not appeared in the action
or proceeding and submitted to the jurisdiction of the
court or tribunal:
6.2.7.1 Developer, and each Affiliate, as
the case may be, may implead whichever of the State or
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SJTA, or both, has not so appeared and submitted, or
commence a third party action against the State or SJTA,
or both, as the case may be, as permitted by Law; and
6.2.7.2 If the State and SJTA have
appeared in any action or proceeding and submitted to the
jurisdiction of the court or tribunal or if, in accordance
with Section 6.2.7.1 of this Second Amendment, such
impleading occurs or such third party action is commenced,
the State or SJTA, or both, as the case may be, shall
appear in the action or proceeding, and shall, together
with the Developer, and each such Affiliate, as the case
may be, request the court or tribunal to allocate among
Developer, each such Affiliate, the State and SJTA their
respective legal responsibility for the damages and other
monetary liability, if any, which may become payable by
Developer, each such Affiliate, the State or SJTA, as the
case may be, to plaintiff(s) by entering separate
judgments against Developer, each such Affiliate, the
State and SJTA. The failure of the court or tribunal to
grant such request shall not, except as otherwise required
by Law, bar the commencement of a separate action or the
taking of any action in the pending proceeding by State,
SJTA or Developer to establish the separate
responsibilities of the parties.
7. State Allocation Notice Obligation
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7.1 Every notice to the Escrow Agent containing
a direction to transfer funds from the Developer's Account
shall be in accordance with Section 7 of Schedule A to the
Escrow Fund Agreement and the allocation set forth in such
notice shall be based solely on the written instructions
of Developer.
8. Amendment to Other Provisions
8.1 There is added to Section 4.4 of the Original
Agreement the following language: "After the Closing, the
State shall neither directly nor indirectly seek or
support any act or action of any Person which would or
might result in the reallocation of funds appropriated for
the Road Project to any other use."
8.2 Section 4.10 of the Original Agreement is hereby
amended by deleting the period at the end of the last
sentence of said Section and by adding thereto the
following: "; provided, however, (a) the State shall not
pay for any such land and rights of way from the line item
in the Road Project Budget entitled "Land and Right of Way
Acquisition Contingency" until the entire amount of the
line item in the Road Project Budget entitled "Land and
Right of Way Acquisition" is fully exhausted, (b) any
funds remaining in the line item entitled "Land and Right
of Way Acquisition Contingency" which are not so utilized
shall be available, if required, for payment of any other
26
<PAGE>
costs incurred with respect to the Road Project (other
than costs incurred in connection with a Directed Change)
which are approved by the State, Developer and SJTA, and
(c) if, after the Road Project is completed, there still
remain any unexpended funds in the line item entitled
"Land and Right of Way Acquisition Contingency", said
funds shall be applied in accordance with Section 4.7.2 of
the Agreement.
8.3 Section 4.17 of the Original Agreement is hereby
amended by deleting in line 8 on page 40 of the Original
Agreement the words "neither take nor" and replacing them
with the words "not, and shall not".
8.4 There is added to Article 4 (Covenants of The
State and SJTA) of the Original Agreement a new Section
4.20 to read as follows:
"Section 4.20 Performance of
Escrow Fund Agreement. The State and SJTA
shall perform all of their respective
obligations under the Escrow Fund Agreement in a
timely manner."
8.5 Section 5.12 of the Original Agreement is hereby
amended by (a) deleting in line 8 on page 50 of the
Original Agreement the words "neither take nor shall" and
replacing them with the words "not, and shall not" and (b)
deleting the word "nor" in said line 8 and replacing it with
the word "or".
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8.6 There is added to Article 5 (Covenants of
Developer) of the Original Agreement a new Section 5.17 to
read as follows:
"Section 5.17 Performance of
Escrow Fund Agreement. The
Developer shall perform all of its
obligations under the Escrow Fund
Agreement in a timely manner."
9. Miscellaneous.
9.1 No consent, approval or other action taken or
omitted to be taken by Developer, State or SJTA pursuant
to the Agreement or the D/B Road Contract in reliance upon
any direction, advice or other action of the Program
Manager shall create or be deemed to create any liability
on the part of Developer, State or SJTA.
9.2 No party shall commence any action or proceeding
for injunctive or similar relief to prevent or delay the
performance by the Escrow Agent of its obligations under
the Escrow Fund Agreement.
9.3 In the event of the Bankruptcy of SJTA or
Developer and the entry of an order rejecting the
Agreement, and provided that (a) the Casino Project
Schedule set forth on Schedule 4.2B to the Second
Amendment is, in all material respects, being maintained
as of the time of the entry of such order, and (b) the
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Bankruptcy of SJTA or Developer and the entry of such
order will not have the effect of preventing Affiliates of
Developer from proceeding with the Casino Project, the
State and such of SJTA or the Developer which is not the
debtor in the Bankruptcy case shall (i) continue to perform
all of their respective obligations under the Agreement, the
Escrow Fund Agreement and the Program Management Agreement
and (ii) proceed immediately to modify the Agreement, the
Escrow Fund Agreement, the Program Management Agreement and
all other documents which such debtor theretofore executed
and delivered in connection with the Road Project in such
manner as the State and such of SJTA or Developer which is
not such debtor, each proceeding in good faith, may reasonably
request so that the Bankruptcy of either SJTA or Developer
and the entry of the order of rejection will not delay or
prevent the timely completion of the Road Project.
Notwithstanding the above, the State may elect to
terminate the Agreement, the Escrow Fund Agreement and the
Program Management Agreement upon the entry of an order
rejecting the Agreement in the event the amounts on
deposit in the Escrow Fund are not available for the
payment of costs relating to the Road Project in
accordance with this Agreement, the Program Management
Agreement and the Escrow Fund Agreement. Each of
Developer and SJTA hereby irrevocably consents, to the
maximum extent permitted by Law, that in the event of such
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<PAGE>
Bankruptcy and the entry of such order of rejection, the
Escrow Agent under the Escrow Fund Agreement is
irrevocably authorized and directed to disburse such funds
pursuant to the Escrow Fund Agreement in the manner
directed by the State and such of SJTA or Developer which
is not the debtor in such Bankruptcy case and, upon the
execution and delivery of the modification of such Escrow
Fund Agreement, in accordance with such modification.
9.4 In the event of any inconsistency between either
(a) the provisions of the Agreement and this Second Amendment
or (b) the provisions of the D/B Road Contract and the other
Contract Documents and this Second Amendment, the
provisions of this Second Amendment shall control as among
the Developer, State and SJTA.
9.5 This Second Amendment may not be modified,
except by an instrument in writing signed by the State,
SJTA and the Developer, and shall be binding on the
parties, their successors and assigns, but shall not enure
to the benefit of any other Person.
9.6 This Second Amendment may be executed in any
number of counterparts, by manual or by facsimile
signature, all of which counterparts together shall
constitute a single instrument.
9.7 Except as amended by this Second Amendment, all
of the terms and conditions of the Agreement are ratified,
confirmed and approved.
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[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused
this Second Amendment to be executed as of the date first
set forth above by their duly authorized representatives.
STATE OF NEW JERSEY
BY: DEPARTMENT OF TRANSPORTATION
By: JOHN J. HALEY, JR.
John J. Haley, Jr.
Commissioner
SOUTH JERSEY TRANSPORTATION
AUTHORITY
By: JAMES A. CRAWFORD
James A. Crawford
Executive Director
ATLANDIA DESIGN AND
FURNISHINGS, INC.
By: BRUCE A. LEVIN
Bruce A. Levin
Secretary
THIS DOCUMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM ON
THIS 10TH DAY OF OCTOBER, 1997
PETER VERNIERO
ATTORNEY GENERAL OF NEW JERSEY
By: SUSAN R. ROOP
Deputy Attorney General
31
EXECUTION COUNTERPART
DATED OCTOBER 10, 1997
FIRST AMENDMENT
made as of October 10, 1997
to
PROGRAM MANAGEMENT AGREEMENT
dated November 19, 1996
by and among
ATLANDIA DESIGN AND FURNISHINGS, INC.
Developer,
AND
PARSONS BRINCKERHOFF-FG, INC.,
Program Manager,
AND WITH
STATE OF NEW JERSEY
AND
SOUTH JERSEY TRANSPORTATION AUTHORITY,
ADDITIONAL PARTIES
EXHIBIT 10.11
<PAGE>
FIRST AMENDMENT TO PROGRAM MANAGEMENT AGREEMENT
made as of this 10th day of October, 1997, by and among
ATLANDIA DESIGN AND FURNISHINGS, INC., a New Jersey
corporation having an office at 3260 South Industrial
Road, Las Vegas, Nevada 89109 ("Developer"); PARSONS
BRINCKERHOFF-FG, INC., a Delaware corporation having an
office at 506 Carnegie Center Boulevard, Princeton, New
Jersey 08540 ("Program Manager"); the STATE OF NEW
JERSEY, acting through the Department of
Transportation, 1035 Parkway Avenue, CN 600, Trenton,
New Jersey 08625-0600 (the "State"); and the SOUTH
JERSEY TRANSPORTATION AUTHORITY, a public body having
an office at Farley Service Plaza, P.O. Box 351,
Hammonton, New Jersey 08037 ("SJTA").
With respect to the Atlantic City/Brigantine Connector
Project (the "Project"), Atlantic City, New Jersey.
The parties hereto agree as follows:
1. Reference is made to that certain Program
Management Agreement dated November 19, 1996 (the
"Program Management Agreement"), between Mirage
Resorts, Incorporated ("MRI" -- the predecessor to
Developer by virtue of an assignment/assumption
agreement dated as of November 19, 1996, between MRI,
as assignor, and Developer, as assignee), named therein
as Developer, and Program Manager. All terms utilized
in this Agreement which are defined in the Program
2
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Management Agreement and/or, where the context so
indicates (and only where no definitional conflicts
exist between any terms, as defined and utilized in the
Road Development Agreement and/or in the related Escrow
Fund Agreement, and the same or similar terms, as
defined and utilized in the Program Management
Agreement), in the Road Development Agreement and the
Escrow Fund Agreement, shall have the same meanings as
are provided in the Program Management Agreement and/or
in the Road Development Agreement and/or in the Escrow
Fund Agreement, except where the context of utilization
in this Agreement, or in the Road Development Agreement
or the Escrow Fund Agreement, clearly requires a
modified or a secondary meaning. The term "this
Agreement", when utilized herein, shall mean this
amendatory agreement. The term "Program Management
Agreement" shall at all times be construed to encompass
both the Terms and Conditions and the Standard Terms
and Conditions comprising the Program Management
Agreement (hereinafter the "Terms and Conditions" and
the "Standard Terms and Conditions"), and all Exhibits
and Attachments thereto, as hereby modified and
amended. The term "Road Development Agreement" shall
have the meaning provided in Paragraph 2(a) of this
Agreement. The term "Escrow Fund Agreement" shall mean
3
<PAGE>
the escrow agreement dated and executed concurrently
herewith (and concurrently as well with the Second
Amendment to the Road Development Agreement), between
Corestates Bank, N.A., SJTA, the State and Developer,
as same may hereafter be amended. The term
"Design/Build Contract", as utilized in this Agreement,
is used interchangeably with the term "Design/Build
Agreement", as defined in Article 1 of the Standard
Terms and Conditions. The term "Contract Documents"
shall have the meaning provided in Appendix 1 to the
Design/Build Contract. The term "Construction
Inspector" shall mean the independent third party
procured by SJTA to perform construction inspection
services, as contemplated under Section 3.1 of the
Second Amendment to the Road Development Agreement.
The term "State", wherever utilized in the Program
Management Agreement, shall also be deemed to refer to
and shall include the South Jersey Transportation
Authority ("SJTA"). The State and SJTA shall be deemed
and construed for all purposes as signatories to and
under the Program Management Agreement, with the same
force and effect as if the State and SJTA had been
initially named as parties in and to the Program
Management Agreement, and had initially joined in the
execution and delivery thereof. The State and SJTA
4
<PAGE>
shall have the benefit of all of the same rights,
warranties, representation, indemnities and limitations
against liabilities as are available to Developer under
the Program Management Agreement without regard to
whether the State and/or SJTA are specifically named in
the applicable paragraphs or sections of the Program
Management Agreement, except where expressly provided
to the contrary; it being understood, however that the
generic use of the term "Developer" shall not be
construed as such an express provision to the contrary.
2. (a) The Memorandum of Understanding (the
"MOU") dated September 17, 1996, between Developer and
the State, has been superseded and replaced by the so-
called "Definitive Agreement" referred to in the MOU
and in Part II of the Program Management Agreement
(such "Definitive Agreement has been generally referred
to by the parties as, and, as same has been heretofore
and as may hereafter be amended, is hereinafter
referred to as the "Road Development Agreement"), dated
as of January 10, 1997, by and among Developer, the
State and SJTA, as amended by First Amendment thereto
and by Second Amendment thereto, dated, respectively,
as of July 31, 1997, and as of October 10, 1997, each
of which Program Manager has received and reviewed,
5
<PAGE>
and, with respect to those provisions contained in the
Road Development Agreement relating to Program
Manager's obligations and/or requiring or contemplating
performance thereof by Program Manager, Program Manager
has approved such provisions and has agreed to comply
with and to perform such obligations, as is therein
provided.
(a) In order to promote efficient and consistent
administration of the Program Management Agreement and
the Design/Build Contract, Sections 3.3 and 6.2 of the
Road Development Agreement set forth certain procedures
and impose certain requirements to be followed and
observed by the parties in connection with the issuance
of directions and instructions to Program Manager
and/or to the Design/Build Contractor and as to the
initiation of direct communications between them.
Program Manager accepts, approves and shall implement
and observe such procedures and requirements; it being
understood that if Program Manager independently
determines during the course of the Construction
Administration Phase that the Design/Build Contractor's
Work materially violates the Contract Documents or
materially fails to comply with the Contract Documents,
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<PAGE>
or that continued Work by the Design/Build Contractor
will violate a Major Permit, Program Manager shall
report such determination to the State and to SJTA, as
well as to Developer.
3. (a) In conjunction with its services during
the Preliminary Design Phase, Program Manager has
issued to bidders the contemplated Design/Build
Contract and bids have been elicited and obtained.
Such Design/Build Contract has been dated September 8,
1997, has been executed and submitted for ultimate
delivery to Developer by the Design/Build Contractor,
and has been executed and delivered contemporaneously
herewith by Developer. Program Manager shall perform
each and all of the activities and services and each
and all of the other obligations, commitments and
undertakings contemplated and required to be performed
by Program Manager under the Program Management
Agreement, as hereby amended (including, without
limitation, those provided in the Scope of Services
exhibit thereto annexed as Exhibit A, as modified and
supplemented by the Description of Services --
Construction Administration Phase exhibit which is
annexed hereto as Exhibit A-1) and under the Road
Development Agreement, with respect to and under the
7
<PAGE>
Design/Build Contract and with respect to the Project.
(a) The compensation arrangements for Program
Manager for the Construction Administration Phase,
inclusive of (x) all Inter-Phase Extra Services
Compensation for the period commencing April 23, 1997
and continuing until the date of execution and delivery
of this Agreement by Developer, the State and SJTA and
(y) compensation for all services and all additional
services as are provided and contemplated to be
performed for or with respect to the Construction
Administration Phase under Exhibit A to the Program
Management Agreement, and under the annexed Exhibit A-
1, shall constitute compensation under an increased,
all-inclusive NTE-Fee of $8,699,908 (i.e., the
$4,297,152 NTE-Fee provided in such Part II of the
Program Management Agreement for the Construction
Administration Phase, plus $4,402,756 for all Inter-
Phase Extra Services and all additional services
provided and contemplated to be performed under the
annexed Exhibit A-1 and hereunder), payments of which
shall remain subject in all events to the limitations
and conditions contained and provided in such Part II
of the Program Management Agreement, and shall be paid
by application of and solely from Road Project Funding
8
<PAGE>
Sources, as provided in the Road Development Agreement
and in this Paragraph 3. Subject to such limitations
and conditions, the State, SJTA, and Developer shall
arrange for compensation of Program Manager for the
services performed by it, inclusive of all direct,
indirect and all otherwise reimbursable costs and
expenses incurred by, at the request or for the aid and
benefit of Program Manager, the State, SJTA, Developer
and/or the Project, based solely upon the NTE Fees
enumerated on the Schedule of Fees and Values/NTE-Fee
for Construction Administration Phase appended as
Schedule A-2 to the Scope of Services exhibit (Exhibit
A) annexed to the Program Management Agreement, as
supplemented by the Schedule of Fees and Values/NTE-Fee
for Inter-Phase Extra Services and additional services
for the Construction Administration Phase appended as
Schedule A to the annexed Description of Services
exhibit (Exhibit A-1), in full, up to, but (except only
as and to the extent expressly provided to the contrary
in subparagraph (e) of this Paragraph 3) in no event
beyond the amount of such increased NTE-Fee, if and to
the extent to which the additional services covered
under such Exhibit A-1 are directed to be performed by
Developer and are in fact performed by Program Manager,
without any reallocation of the line item amounts set
9
<PAGE>
forth on such Schedule A for Tasks 2.3b and 2.10b or
with respect to the project-specific insurance referred
to in Section 2.13 of the annexed Exhibit A-1 (Task
2.13 on such Schedule A).
(b) Subject in all events to the foregoing
payment limitations and conditions, when progress
payments become payable to and are invoiced by Program
Manager under Paragraph A of Part II of the Program
Management Agreement, Developer and SJTA shall submit
to the State, for the State's approval, an invoice from
Program Manager which they have each approved; and the
State shall then forward such invoice to the Escrow
Agent under the Escrow Fund Agreement, together with
(i) a Notice to Developer and SJTA setting forth the
allocation, among Developer, the State and SJTA, of the
amount set forth on the invoice as the amount due,
which allocation shall be in accordance with the Road
Development Agreement and, with respect to the
Developer's Account, in accordance with the provisions
of clause (ii) of this Paragraph 3(c), and (ii) a
Notice to such Escrow Agent in accordance with Section
2.1 of Schedule A to the Escrow Fund Agreement
directing such Escrow Agent to pay from the Developer's
Account (in the manner approved in writing by Developer
10
<PAGE>
as set forth in the Notice from Developer to the State
which accompanied the invoice) and, if applicable, from
the SJTA Account, the amounts set forth in the Notice
sent under clause (i) of this Paragraph 3(c). Upon the
submission of such invoice to the Escrow Agent, (a) the
State and SJTA, collectively, will be deemed
incontestably and irrevocably committed to the deposit
in the Road Account of two-thirds (2/3) of the amount
so invoiced, such deposit to be made in accordance with
such Notice, and (b) upon the remitting by such Escrow
Agent of funds under Sections 2.1 and 2.2 of Schedule A
to the Escrow Fund Agreement and the making by the
State of the deposit into the Road Account of that
portion of the two-thirds (2/3) of the amount for which
the State and SJTA are collectively responsible
pursuant to the Road Development Agreement and which
was, pursuant to the Notice sent under clause (i),
allocated to the State, the State shall (i) be deemed
to have incontestably and irrevocably authorized the
release to Developer for payment to Program Manager of
such sums from the Road Account, and (ii) immediately
take all necessary steps to effectuate such release;
provided, however, that such funds shall not be
released from the Road Account for payment to Program
Manager in excess of any sums due to Program Manager
11
<PAGE>
under the Program Management Agreement. In all other
respects, the provisions for progress payments
contained in such Paragraph A of Part II of the Program
Management Agreement shall be and remain applicable to
such progress payments.
(c) The compensation arrangements for additional
services for the Construction Administration Phase, as
provided in this Paragraph 3, are all-inclusive; such
additional services shall not be deemed Extra Services
under Paragraph B of such Part II; nor shall any delays
beyond May 7, 1997 in commencement of the Construction
Administration Phase be deemed a suspension of services
under such Paragraph B, or under Article 41 of the
Standard Terms and Conditions, entitling Program
Manager to any additional compensation other than as is
expressly provided with respect to the increased NTE-
Fee under this Paragraph 3.
(d) Concurrently with and conditioned upon
payment by and/or collection from the Design/Build
Contractor of any "Liquidated Damages" payable by the
Design/Build Contractor pursuant to Section 17.1 or
17.2 of the Design/Build Contract, by reason of delays
in achieving "Final Acceptance" (as such noted terms
are defined and utilized in the Design/Build Contract),
12
<PAGE>
Program Manager shall be entitled to reimbursement for
any additional work required to be performed by Program
Manager on account of such delays at a rate not to
exceed 29.4% of the net amounts actually paid by or
collected from the Design/Build Contractor on account
of Liquidated Damages for such delays, less all costs
and expenses incurred in effecting such collections, up
to a maximum of whichever is the lesser of (x) the
reasonable value (on a per diem basis, averaged to
reflect the number of days of such delays) of Program
Manager's services in connection with the additionally-
required work, if any, on account of such delays, in
accordance with the Hourly-Rate Schedule annexed as
Exhibit E to the Program Management Agreement, plus all
direct expense costs and disbursements necessarily
incurred by Program Manager by reason of such
additionally-required work (on such averaged per diem
basis, based upon the number of days of such delays),
or (y) $2,500 per day for each day of such delay.
4. (a) The Commercial General Liability
Insurance and the Professional Liability Insurance
furnished by Program Manager under Article 13 of the
Standard Terms and Conditions shall provide limits of
coverage which are specific to and available
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exclusively for this Project only; and such limits of
coverage shall not be subject to any reduction or
dilution by reason of any acts, actions or occurrences
relating to any other projects on which Program Manager
or any of its principals, officers or employees, any of
its independent contractors or any of its affiliated or
related firms or entities may have been or may
hereafter be involved, or to any claims, actions or
proceedings heretofore or hereafter asserted or
commenced against Program Manager, or any of such
principals, officers, employees or independent
contractors or any of its affiliated or related firms
or entities. The limits of the project-specific
coverage provided under the Professional Liability
Insurance to be furnished by Program Manager shall be
$20,000,000, commencing with commencement of the
Construction Administration Phase.
(a) Article 13 (captioned "Insurance") of the
Standard Terms and Conditions is hereby amended as
follows:
(i) The third sentence of such Article 13 is
hereby amended to read as follows: "Such policies
shall be primary to and non-contributory with any non-
project-specific coverage as may be separately and
14
<PAGE>
independently maintained by Developer, by SJTA or by
the State."
(ii) The following sentence shall be inserted immediately
following the third sentence of such Article 13, as amended
by the immediately preceding subsection (i): "Such policies
shall be excess of and non-contributory with any project-
specific coverage as may be separately maintained or
provided by the Design/Build Contractor under the Design/
Build Agreement naming Program Manager as an insured or
including Program Manager as an additional insured."
5. Notwithstanding any other term, provision or
condition contained in, or as might otherwise be construed from,
the Program Management Agreement, as hereby amended, or any other
instrument or agreement between or among any of the parties hereto,
the indemnification provided and required under Article 12 of the
Standard Terms and Conditions shall continue to cover and include
all suits, claims, losses, demands, damages, costs and expenses, of
whatever kind or nature, including, without limitation, attorneys'
fees and disbursements, expert witness and consultant fees and
court costs, to the extent arising out of or claimed to arise out
of (x) any willful or negligent act, error or omission of Program
Manager, its agents, servants, employees, subcontractors or
subconsultants, or (y) any failure or default by any of them in
the performance of (or in the failure to perform) any of
15
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the services and functions contemplated or required to
be performed under the Program Management Agreement, as
hereby amended, including, without limitation, any act,
error or omission of Program Manager, its agents,
servants, employees, subcontractors or subconsultants,
in or in connection with, or while acting as
Developer's agent, or otherwise, under, in connection
with or pursuant to the Design/Build Contract; or (z)
any failure or default by any of them in the
performance of (or in the failure to perform) any term,
provision or condition of the Program Management
Agreement, as hereby amended; such indemnification
shall continue and shall remain in full force and
effect; and neither such indemnification, nor any such
other term, provision or condition shall in any event
be construed to limit, negate, abridge or reduce
Developer's, the State's or SJTA's rights or Program
Manager's obligations or liabilities under the Program
Management Agreement, nor to relieve Program Manager
from any liability, or to preclude Developer, the State
or SJTA from taking any other actions or seeking and
obtaining any other relief or remedies available to
them, or to any thereof, whether under any other
provisions of the Program Management Agreement, or
otherwise at law or in equity.
16
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6. The first sentence of Article 37 of the
Standard Terms and Conditions is hereby amended to read
as follows:
"Without in any way limiting,
abridging or reducing any of its obligations under this
Agreement, as same may be from time-to-time amended,
Program Manager shall be required to perform and shall
perform its obligations hereunder in accordance with
professionally and commercially-recognized standards of
care, good faith and due diligence and performance,
with the understanding that Developer shall have the
ongoing and unfettered right to detailed and
comprehensive review, and that Developer must be
satisfied with and find to be acceptable, in good
faith, the services performed hereunder, and all
Documents."
7. The words ". . . the State (except where and
to the extent expressly so provided) . . .", which
appear in the second and third lines of
Article 7 of the Standard Terms and Conditions, are
hereby deleted therefrom.
17
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8. In addition to the termination rights
afforded to Developer under the Program Management
Agreement, as provided in Part V of the Terms and
Conditions, the Program Management Agreement shall
terminate upon termination of the Road Development
Agreement.
9. The sixth sentence of Article 12 (captioned
"Indemnification") of the Standard Terms and Conditions
is hereby amended to read as follows: "As soon as is
reasonably practicable after a claim has been made or a
suit commenced against Developer, for which Developer
believes it is entitled to indemnification under this
Article 12, Developer shall give written notice thereof
to Program Manager, along with full and complete
particulars of such claim or suit, unless the claim is
fully covered without enforcement or
collection risk by insurance maintained by Design/Build
Contractor under the Design/Build Agreement."
10. In the event of the Bankruptcy of SJTA or
Developer and the entry of an order rejecting the
Program Management Agreement and the Road Development
Agreement, and provided that (a) the Casino Project
Schedule set forth on Schedule 4.2B annexed to the
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<PAGE>
Second Amendment to the Road Development Agreement is,
in all material respects, being maintained as of the
time of the entry of such order, and (b) the Bankruptcy
of SJTA or Developer and the entry of such order will
not have the effect of preventing Affiliates of
Developer from proceeding with the Casino Project, the
State and such of SJTA or Developer which is not the
debtor in the Bankruptcy case shall (i) continue to
perform all of their respective obligations under the
Road Development Agreement, the Escrow Fund Agreement
and the Program Management Agreement and (ii) proceed
immediately to modify the Road Development Agreement,
the Escrow Fund Agreement, the Program Management
Agreement and all other documents which such debtor
theretofore executed and delivered in connection with
the Project in such manner as the State and such of
SJTA or Developer which is not such debtor, each
proceeding in good faith, may reasonably request, so
that the Bankruptcy of either SJTA or Developer and the
entry of the order of rejection will not delay or
prevent the timely completion of the Project.
Notwithstanding the above, the State may elect to
terminate the Agreement, the Escrow Fund Agreement and
the Program Management Agreement upon the entry of an
order rejecting the Agreement in the event the amounts
19
<PAGE>
on deposit in the Escrow Fund are not available for the
payment of costs relating to the Road Project in
accordance with this Agreement, the Program Management
Agreement and the Escrow Fund Agreement. Each of
Developer and SJTA hereby irrevocably consents, to the
maximum extent permitted by Law, that in the event of
such Bankruptcy and the entry of such an order of
rejection, the Escrow Agent under the Escrow Fund
Agreement is irrevocably authorized and directed to
disburse such funds pursuant to the Escrow Fund
Agreement in the manner directed by the State and such
of SJTA or Developer which is not the debtor in such
Bankruptcy case and, upon the execution and delivery of
the modification of such Escrow Fund Agreement, in
accordance with such modification.
11. The Program Management Agreement, as hereby
amended, constitutes the entire and integrated
agreement between and among Developer, Program Manager,
the State and SJTA with respect to the subject matter
hereof, and supersedes all prior negotiations,
representations or agreements, whether written or oral.
The Program Management Agreement, as hereby amended, is
to be interpreted and construed solely on the basis of
those terms and provisions as are contained in the
20
<PAGE>
final form and format of the Program Management
Agreement, as amended by this Agreement, as executed
and delivered by, between and among the parties hereto;
it being understood that the Program Management
Agreement, in such final form and format, and this
Agreement, in such final form and format, also
supersede all prior drafts or earlier versions of the
Program Management Agreement and of this Agreement, and
any notes or memoranda concerning or relating to the
Program Management Agreement and/or to this Agreement,
and that no assumptions, inferences or presumptions
shall be drawn or derived from or may be predicated
upon any changes, omissions, deletions or additions
from or to any prior drafts or pre-execution earlier
versions of the Program Management Agreement or this
Agreement in construing either the Program Management
Agreement, as hereby amended, or this Agreement, or any
instrument or document delivered pursuant to the
Program Management Agreement, as hereby amended. In
the event of any inconsistencies between the provisions
of the Program Management Agreement and this Agreement,
the provisions of this Agreement shall control. The
parties agree that any rule or premise of
interpretation or construction to the effect that
ambiguous provisions of any agreement shall be
21
<PAGE>
interpreted or construed against the draftsman shall be
inapplicable. The Program Management Agreement, as
hereby amended, may be further amended only by written
instrument signed by each of the parties hereto, and
shall be binding on the parties hereto and their
respective successors and assigns, but shall not inure
to the benefit of any other person or entity.
12. All express representations, indemnifications
or limitations of liability made or given in the
Program Management Agreement, as hereby amended, shall
survive the completion of the Program Management
Agreement, as hereby amended, or of the services to be
performed thereunder (including completion of the
Project), or the termination of the Program Management
Agreement, as hereby amended, for any reason.
13. Program Manager has attached a certification
by its Secretary/Treasurer of corporate resolutions by
its Board of Directors, authorizing the President/Vice
President to execute this Agreement and thereby to bind
Program Manager; and Program Manager's Secretary shall
attest to the execution of this Agreement and shall
affix the corporate seal. This Agreement shall not
become binding on Developer, the State or SJTA unless
22
<PAGE>
and until it is fully and duly executed by or on behalf
of Developer, the State, SJTA and Program Manager, and
unless and until a fully-executed counterpart thereof
has been delivered to Program Manager.
14. Except only as and to the extent hereby
modified or amended, the Program Management Agreement
shall continue and remain in full force and effect, and
is hereby ratified and confirmed.
This Agreement (including any handwritten and
mutually-initialed modifications) has been executed as
of the date first set forth above, each party having
caused it to be duly signed/attested/witnessed/sealed.
PROGRAM MANAGER:
PARSONS BRINCKERHOFF-FG, INC.
By: RICHARD T. FISCHER
Richard T. Fischer
Vice President
DEVELOPER:
ATLANDIA DESIGN AND
FURNISHINGS, INC.
By: BRUCE A. LEVIN
Bruce A. Levin
Secretary
23
<PAGE>
STATE OF NEW JERSEY
BY: DEPARTMENT OF TRANSPORTATION
By: JOHN J. HALEY, JR.
John J. Haley, Jr.
Commissioner
SOUTH JERSEY TRANSPORTATION
AUTHORITY
By: JAMES A. CRAWFORD
James A. Crawford
Executive Director
THIS DOCUMENT HAS BEEN REVIEWED
AND APPROVED AS TO FORM ON
THIS 10th DAY OF OCTOBER, 1997
PETER VERNIERO
ATTORNEY GENERAL OF NEW JERSEY
By: SUSAN R. ROOP
Deputy Attorney General
24
AIRCRAFT PURCHASE AGREEMENT
AGREEMENT dated as of October 10, 1997 between Ivanhoe
Capital Aviation L.L.C., a Delaware limited liability company
(the "Seller"), and Golden Nugget Aviation Corp., a Nevada
corporation (the "Buyer").
1.Definitions. (a) Each of the following terms, when
capitalized, is used herein with the meaning set forth in the
Section or other part of this Agreement identified opposite such
term below:
Broker 14(a)
Buyer Preamble
Delivery Date 4(a)
Deposit 3(b)
Escrow Agent 3(b)
Event of Loss 11
Force Majeure Event 11(a)
Outside Date 4(a)
Purchase Price 3(a)
Seller Preamble
Specified Discrepancy 5(b)
Warranties 4(e)
(b) Each of the following terms, when capitalized, is
used herein with the meaning set forth below:
"Aircraft" means, collectively, the Airframe with the
Engines installed thereon and the Aircraft Documents.
"Aircraft Documents" means the log books, system and
component manuals, flight and operation manuals, checklists and
other records and documents pertaining to the operation and
maintenance of the Aircraft, including without limitation any FAA
certificates (including without limitation the Certificate of
Airworthiness with respect to the Aircraft, which will be on
board the Aircraft at delivery to the Buyer), all service tags
relating to components on board the Aircraft and all records
required by applicable FAA regulations to be maintained by the
operator of the Aircraft.
"Airframe" means one used Falcon DA2000 aircraft bearing
manufacturer's serial number 011 and FAA registration number
N101NS, together with all appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment or
property installed on or attached to such airframe, including
without limitation the items listed on Exhibit A. The "Airframe"
does not include the Engines (or any other engines) installed
thereon.
EXHIBIT 10.12
<PAGE>
"Dollars" and "$" refer to United States Dollars.
"Engine" means each of two used AlliedSignal CFE738-1-1B
aircraft engines bearing manufacturer's serial numbers 105126 and
105127 (or another engine substituted therefor pursuant to
Section 11), together in each case with all appliances, parts,
instruments, appurtenances, accessories, furnishings or other
equipment or property installed on or attached to such engine
(each of which engines has 750 or more rated takeoff horsepower
or the equivalent thereof).
"FAA" means the United States Federal Aviation
Administration.
"FAAct" means Part A of Subtitle VII of the United States
Transportation Code (49 U.S.C. pp 40101 et. seq. ), as amended
from time to time.
2.Purchase and Sale. On the terms and subject to the
conditions set forth in this Agreement, the Seller will sell and
deliver to the Buyer, and the Buyer will purchase and accept from
the Seller, the Aircraft.
3.Purchase Price and Payment Terms. (a) The purchase
price for the Aircraft will be Nineteen Million, Three Hundred
Thousand Dollars ($19,300,000) (the "Purchase Price"). The
Purchase Price will be paid to the Seller on the Delivery Date.
All payments will be paid in Dollars and immediately available
funds, and will be made by wire transfer to an account of the
Seller designated by notice to the Buyer or in another manner
specified by the Seller by notice to the Buyer
(b) Not later than October 14, 1997, the Buyer will
deposit with AIC Title Service, Oklahoma City, Oklahoma (the
"Escrow Agent") $1,900,000 as a deposit (the "Deposit") against
full payment of the Purchase Price at delivery of the Aircraft.
If the Buyer fails to make the Deposit when due, the Buyer will
have materially breached this Agreement and the Seller may
terminate its obligation to sell the Aircraft to the Buyer by
notice to the Buyer (which termination will be without prejudice
to the Seller's remedies for the Buyer's breach of its
obligations hereunder, including the obligation to purchase the
Aircraft). If the Buyer repudiates this Agreement or fails to
accept the Aircraft and pay the Purchase Price on the Delivery
Date, notwithstanding the satisfaction or waiver of each of the
conditions set forth in Section 6(b), the Escrow Agent will pay
the entire Deposit over to the Seller, and thereafter the Seller
may apply the Deposit at any time (or in part from time to time)
against the Seller's damages for the Buyer's breach of this
Agreement, and may retain the Deposit until the Seller has
2
<PAGE>
ascertained the amount of such damages by selling the Aircraft to
another party or otherwise. If at the end of the Outside Date the
Seller has failed to deliver the Aircraft to the Buyer,
notwithstanding the satisfaction or waiver of each of the
conditions set forth in Section 6(a), the Escrow Agent will
return the Deposit to the Buyer and the Buyer will have such
other rights and remedies as it may have at law or in equity as a
result of the Seller's breach of its obligations hereunder. Buyer
and Seller will each bear one-half of the Escrow Agent's fee.
4.Delivery. (a) The Seller will deliver the Aircraft to
the Buyer in Las Vegas, Nevada or another delivery location in
the United States designated by the Seller and reasonably
acceptable to the Buyer, against payment of the Purchase Price,
and the Buyer will accept delivery of the Aircraft from the
Seller at the delivery location, on a business day mutually
agreed upon by the Seller and the Buyer (the "Delivery Date"),
which will be on or about October 21, 1997 and in any event not
later than the Outside Date. The "Outside Date" means October 31,
1997 or if, as a result of a Force Majeure Event referred to in
Section 11(a), the Seller is not able to deliver the Aircraft
until after October 31, 1997, such later date (but not, in any
event, later than December 1, 1997) when the Seller is able to
deliver the Aircraft.
(b) On the Delivery Date the Seller will execute and
deliver to the Buyer, against payment of the Purchase Price:
(i) a long-form bill of sale in substantially the form of
Exhibit B and (ii) an FAA bill of sale (FAA Form 8050-2)
identifying the Aircraft, in each case naming as transferee the
Buyer or another person designated by the Buyer. On the Delivery
Date the Seller will deliver to the Buyer, with the Aircraft, the
FAA Certificate of Airworthiness with respect to the Aircraft.
(c) On the Delivery Date, upon tender of delivery of
the Aircraft, the Buyer will deliver to the Seller a duly
executed certificate of acceptance in substantially the form of
Exhibit C.
(d) Upon delivery of the Aircraft, payment of the
Purchase Price, and delivery of the documents described in
subsections (b) and (c) above, title to the Aircraft and the risk
of loss thereof will pass from the Seller to the Buyer.
(e) The Seller hereby assigns to the Buyer, effective
upon delivery of the Aircraft, payment of the Purchase Price and
delivery of the documents described in subsections (b) and (c)
above, all of the Seller's right, title and interest in, to and
3
<PAGE>
under all warranties, guaranties, indemnities and product
agreements of manufacturers of the Aircraft, any Engine included
therein or any part or component thereof ("Warranties"), but
only to the extent that such Warranties are in effect and are
assignable to the Buyer without cost to the Seller (other than
any cost paid by the Buyer in advance, at the Buyer's option).
The Seller shall enforce on the Buyer's behalf such Warranties as
are not assignable to the Buyer, but the Buyer shall pay any
costs and expenses incurred by the Seller in rendering such
assistance.
5.Delivery Condition; Inspection. (a) At delivery:
(i) the Aircraft will be airworthy and clean in accordance with
normal standards for executive aircraft;
(ii) the Aircraft will include all parts and equipment
required for normal operation by the Seller and such parts and
equipment shall be functional per manufacturer's specifications;
(iii) each Engine will be installed on the Aircraft and
functional per manufacturer's specifications;
(iv) the Aircraft and each Engine will be in the same
condition as when last inspected by the Buyer prior to the date
of this Agreement, ordinary wear and tear excepted;
(v) all FAA Airworthiness Directives and Mandatory Service
Bulletins relating to the Aircraft and requiring compliance
before the Delivery Date will have been complied with, and the
Aircraft will be current with all required inspections (if any);
(vi) the Aircraft will comply with applicable FAA
requirements for continued operation under Part 91 of the United
States Federal Aviation Regulations;
(vii) the Aircraft shall have no record of accidents or
damage;
(viii) all discrepancies that affect the airworthiness, or
otherwise materially affect the value or utility of the Aircraft,
shall have been corrected at Seller's expense or (only in the
case of such discrepancies that do not affect the airworthiness
of the Aircraft) the Seller shall have agreed in writing to
remedy such discrepancies at its expense within one year after
the Delivery Date;
(ix) the Aircraft shall have no evidence of corrosion, other
than small amounts of surface corrosion typically found on used
aircraft;
4
<PAGE>
(x) the Seller shall have maintained the Aircraft Documents
as required by applicable law and applicable FAA regulations, and
the information therein shall be true, correct and complete in
all material respects; and
(xi) the information set forth on Exhibit A shall be true
and correct in all material respects and the Airframe shall have
not more than 1,050 flight hours since original delivery from the
manufacturer (excluding flight hours during the Buyer's pre-
purchase inspection and en route from Little Rock, Arkansas to
the delivery location).
(b) The Seller will permit the Buyer to conduct, at
the Buyer's expense, a customary pre-purchase inspection of the
Aircraft at the manufacturer's facility in Little Rock, Arkansas.
The Buyer will cause such inspection to be completed as
expeditiously as reasonably possible, and in any event not later
than October 24, 1997. The Buyer will describe to the Seller in
writing and in reasonable detail each discrepancy that, if
unremedied, would cause the Aircraft not to be in the condition
required by subsection (a) above as promptly as practicable, and
in any event not later than the first business day after
completion of the pre-purchase inspection (each such discrepancy
so described by the Buyer to the Seller is referred to herein as
a "Specified Discrepancy").
6.Conditions Precedent. (a) The Seller's obligation to
sell the Aircraft and to deliver the Aircraft to the Buyer is
subject to satisfaction of the following conditions precedent:
(i) payment of the Purchase Price, (ii) tender of delivery of the
document to be delivered by the Buyer pursuant to Section 4(c)
and (iii) the fact that the representations and warranties of the
Buyer set forth in this Agreement are true and correct in all
respects on the Delivery Date and that the Buyer has performed
all of its covenants and agreements hereunder to be performed on
or before the Delivery Date.
(b) The Buyer's obligation to purchase the Aircraft
and to pay the Purchase Price to the Seller is subject to
satisfaction of the following conditions precedent: (i) tender of
delivery of the Aircraft in compliance with this Agreement,
(ii) tender of delivery of the documents to be delivered by the
Seller pursuant to Section 4(b), (iii) the fact that the
representations and warranties of the Seller set forth in this
Agreement are true and correct in all respects on the Delivery
Date and that the Seller has performed all of its covenants and
agreements hereunder to be performed on or before the Delivery
Date and (iv) the fact that each Specified Discrepancy has either
has been corrected or (only in the case of Specified
Discrepancies that do not affect the airworthiness of the
5
<PAGE>
Aircraft) the Seller has agreed in writing to remedy such
Specified Discrepancy at its expense within one year after the
Delivery Date. The Buyer will have a reasonable opportunity to
confirm satisfaction of the conditions precedent, including a
"walk-around" visual inspection of the Aircraft at the delivery
location.
7.Representations of the Seller. The Seller represents
and warrants to the Buyer that:
(a) The Seller is a limited liability company duly
formed, validly existing and in good standing under the laws of
the State of Delaware, and has all company power and all material
governmental licenses, authorizations, consents and approvals
required to carry on its business as now conducted and to perform
its obligations hereunder.
(b) The execution, delivery and performance by the
Seller of this Agreement are within the Seller's company power,
have been duly authorized by all necessary company action,
require no action by or in respect of any governmental body,
agency or official and do not contravene applicable law or
regulation, the certificate of formation or limited liability
company agreement of the Seller, or any agreement or other
instrument binding upon the Seller.
(c) This Agreement constitutes a valid and binding
agreement of the Seller, enforceable against the Seller in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting
creditors' rights generally and to general equitable principles,
whether considered in an action at law or in equity.
(d) There is no action, suit or proceeding pending
against, or to the knowledge of the Seller threatened against or
affecting, the Seller before any court or arbitrator or any
governmental body, agency or official which, if adversely
determined, would adversely affect the Seller's ability to
perform its obligations hereunder.
(e) The Seller is the sole owner of the Aircraft and
on the Delivery Date the Seller will have, and will transfer to
the Buyer, good and marketable title to the Aircraft, free and
clear of all liens, security interests, charges and encumbrances,
other than liens, security interests, charges and encumbrances
arising from acts or omissions of the Buyer.
8.Representations of the Buyer. The Buyer represents and
warrants to the Buyer that:
6
<PAGE>
(a) The Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate power and
all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and
to perform its obligations hereunder.
(b) The Buyer (or, if the Buyer has designated another
person or entity to be named as transferee in the documents to be
delivered by the Seller on the Delivery Date, such other person
or entity) is a "citizen of the United States" within the meaning
of the FAAct.
(c) The execution, delivery and performance by the
Buyer of this Agreement are within the Buyer's corporate power,
have been duly authorized by all necessary corporate action,
require no action by or in respect of any governmental body,
agency or official and do not contravene applicable law or
regulation, the articles of incorporation or by-laws of the
Buyer, or any agreement or other instrument binding upon the
Buyer.
(d) This Agreement constitutes a valid and binding
agreement of the Buyer, enforceable against the Buyer in
accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization and similar laws affecting
creditors' rights generally and to general equitable principles,
whether considered in an action at law or in equity.
(e) There is no action, suit or proceeding pending
against, or to the knowledge of the Buyer threatened against or
affecting, the Buyer before any court or arbitrator or any
governmental body, agency or official which, if adversely
determined, would adversely affect the Buyer's ability to perform
its obligations hereunder.
9.NO OTHER WARRANTIES BY THE SELLER. (A) THE AIRCRAFT AND
ALL OTHER ITEMS DELIVERED BY THE SELLER TO THE BUYER HEREUNDER
WILL BE DELIVERED TO THE BUYER "AS IS." THE EXPRESS WARRANTIES OF
THE SELLER SET FORTH IN SECTION 7 OF THIS AGREEMENT ARE EXCLUSIVE
AND IN LIEU OF ALL OTHER WARRANTIES BY THE SELLER, WHETHER
WRITTEN, ORAL OR IMPLIED. THE SELLER WILL NOT BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY AS TO THE MERCHANTABILITY,
FITNESS, DESIGN OR CONDITION OF, OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP IN, THE AIRCRAFT OR ANY OTHER ITEM. THE
SELLER DISCLAIMS AND THE BUYER WAIVES ALL WARRANTIES, GUARANTIES
AND LIABILITIES OF THE SELLER, EXPRESS OR IMPLIED, ARISING BY
OPERATION OF LAW. IN NO EVENT WILL THE SELLER BE LIABLE FOR (i)
INJURIES TO PERSONS OR PROPERTY, (ii) INCIDENTAL OR CONSEQUENTIAL
DAMAGES (INCLUDING WITHOUT LIMITATION ANY LOSS OF PROFITS,
REVENUE, BUSINESS OR OPPORTUNITY) OR (iii) ANY OTHER LOSS OR
DAMAGE WHATSOEVER AFTER DELIVERY OF THE AIRCRAFT TO THE BUYER
(EXCEPT AS SET FORTH IN SECTION 12), IT BEING AGREED AND
UNDERSTOOD THAT ALL SUCH RISKS ARE TO BE BORNE BY THE BUYER AFTER
DELIVERY.
7
<PAGE>
(B) All of the following descriptions of the Aircraft
are expressly excluded from, and are not a part of this
Agreement: (i) any description not set forth in this Agreement
(including without limitation any description included in the
Seller's or any broker's sales material, any sample provided by
the Seller or any broker or any description provided by the
Buyer) and (ii) any description in this Agreement or elsewhere
stated as an estimate or an approximation, referred to as not
guaranteed or constituting a general description of quality
(which is understood to be an expression of the Seller's opinion
only). None of such descriptions are warranted, and the Buyer
will not rely on any such description in entering into or
performing this Agreement.
10. Registration. The Buyer will cause the Aircraft to
be registered in its name with the FAA on the Delivery Date.
11. Force Majeure; Casualty Before Delivery. (a) The
Seller will not be responsible for any failure or delay in
performing its obligations hereunder (including without
limitation its obligation to sell and deliver the Aircraft) to
the extent arising out of causes beyond the Seller's control,
including without limitation: acts of God, war, armed
hostilities, riots, fires, floods, storms, earthquakes,
explosions, accidents, governmental acts or failures to act
(whether or not under legal authority), strikes or labor troubles
or failure or delay in transportation (a "Force Majeure Event").
If, as a result of a Force Majeure Event, the Seller is not able
to deliver the Aircraft until after the Outside Date, the Deposit
will be returned by the Escrow Agent to the Buyer and neither the
Buyer not the Seller will have any further obligations hereunder.
(b) If, before the Delivery Date, there is an Event of
Loss: (i) with respect to the Airframe, the Deposit will be
returned by the Escrow Agent to the Buyer and neither the Buyer
nor the Seller will have any further obligations hereunder or
(ii) with respect to an Engine, the Seller will attempt to
substitute therefor another engine of the same make and model
that has a value, utility, modification status and remaining
useful life equal to or better than the Engine that suffered an
Event of Loss.
"Event of Loss" with respect to the Airframe or any
Engine means any loss, damage or destruction that renders the
Airframe or such Engine (as the case may be) unfit for normal use
or such that repairs are not commercially feasible, or any
condemnation, confiscation, appropriation or seizure of the
Airframe or such Engine (as the case may be).
8
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12. Title Warranty. The Seller will indemnify and hold
harmless the Buyer from and against all claims, damages, losses,
liabilities and judgments (including reasonable attorneys' fees
and expenses) arising out of the breach of the representation and
warranty of title set forth in Section 7(e).
13. Taxes. The Buyer will be solely responsible for
the payment of all federal, state and local sales, use, value
added, transfer, property or other taxes, assessments, charges,
fees or duties which may be applicable to the purchase, sale or
delivery of the Aircraft or payment therefor (other than taxes
levied upon the Seller's net income, or upon the Seller's gross
receipts, in lieu of taxes imposed upon net income), whether
levied against or payable by the Buyer or the Seller, and will
indemnify and hold harmless the Seller against any such tax.
14. Miscellaneous. (a) Brokerage. Seller will be
responsible for the fees of Peerless Aviation Services Ltd. (the
"Broker") in connection with the sale of the Aircraft by the
Seller to the Buyer. Each of the Buyer and the Seller represents
and warrants to the other that the negotiations relative to this
Agreement and the transaction contemplated hereby have been
carried on in such manner as not to give rise to any valid claims
against either of the parties hereto for brokerage commission,
finder's fees, or any other like payment to any person (other
than the Broker). In the event that a claim is made, the party
responsible for the breach of this paragraph will indemnify the
other for any damages, including reasonable attorneys' fees,
arising therefrom.
(b) Notices. All notices and communications hereunder
will be in writing (including facsimile transmission or similar
writing) and will be given to the following address:
If to the Seller
9th floor, Waterfront Centre
200 Burrard Street
Vancouver, BC V6C 3L6
Canada
Attention: A.P. Singh
Telecopier: 604-687-7140
with a copy to
Bogle & Gates P.L.L.C.
Two Union Square
601 Union Street
Seattle, Washington 98101-2346
Attention: Scot J. Johnston
Telecopier: 206-621-2660
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If to the Buyer
6005 Las Vegas Boulevard South
Las Vegas, Nevada 89119
Attention: Robert Hecht
Telecopier: 702-736-6356
with a copy to
Mirage Resorts, Incorporated
3260 South Industrial Road
Las Vegas, Nevada 89109
Attention: Peter C. Walsh
Telecopier: 702-792-4868
or such other address or telecopier number as such party may
hereafter specify for the purpose by notice to the other. Each
such notice, request or other communication will be effective
when delivered at the address specified in this Section. Failure
to provide a copy of any notice to a person that is not a party
to this Agreement will not affect the effectiveness of the notice
to such party.
(c) Survival. Each of the representations, warranties
and obligations of the Buyer and the Seller will survive the
Delivery Date, except as otherwise provided herein or in any
other document delivered on the Delivery Date.
(d) Amendment and Waivers. The provisions of this
Agreement may not be waived, modified or amended except by an
instrument in writing signed by both parties hereto. No failure
or delay on the part of either party in exercising any of its
powers or rights hereunder, nor any partial or single exercise
thereof, will constitute a waiver thereof or will preclude any
other or future exercise of any other power or right.
(e) Governing Law; Submission to Jurisdiction. This
Agreement will be governed by and construed in accordance with
the laws of the State of Washington. The parties hereby submit to
the nonexclusive jurisdiction of the United States District Court
for the Western District of Washington and of any Washington
state court sitting in King County for purposes of all legal
proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Each party irrevocably waives,
to the fullest extent permitted by law, any objection which it
may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
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(f) Successors and Assigns. This Agreement will inure
to the benefit of and be binding upon each of the parties hereto
and their respective successors, but may not be assigned by
either party without the prior written consent of the other
party, in such party's sole discretion.
(g) Headings and Captions. The headings and captions
in this Agreement are included for convenience of reference only
and will be ignored in the construction or interpretation hereof.
(h) Counterparts; Integration. This Agreement may be
signed in any number of counterparts, by manual or facsimile
signature, each of which counterparts will be an original, with
the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement (including the Exhibits
hereto) and the documents to be delivered hereunder on the
Delivery Date constitute the entire agreement and understanding
among the parties hereto and supersede any and all prior
agreements and understandings, oral or written, relating to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
GOLDEN NUGGET AVIATION CORP.
By /s/ STEPHEN A. WYNN
Title: President
IVANHOE CAPITAL AVIATION L.L.C.
By /s/ A.P. SINGH
Title: Manager
11
ATLANTIC CITY/BRIGANTINE CONNECTOR
CONTRACT
Exhibit 10.13
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. CONTRACT COMPONENTS; INTERPRETATION OF CONTRACT DOCUMENTS 2
1.1 CERTAIN DEFINITIONS; RECITALS 2
1.2 CONTRACT DOCUMENTS 2
1.3 ORDER OF PRECEDENCE 2
1.4 INTERPRETATION 3
1.5 REFERENCED STANDARDS 3
1.6 EXPLANATIONS; OMISSIONS AND MISDESCRIPTIONS 3
1.7 COMPUTATION OF PERIODS 4
1.8 APPROVALS 4
ARTICLE 2. OBLIGATIONS OF CONTRACTOR; EFFECT OF REVIEWS, INSPECTIONS
AND TESTS 5
2.1 DESIGN AND CONSTRUCTION 5
2.2 CONTRACTOR OBLIGATIONS 5
2.3 EFFECT OF REVIEWS, INSPECTIONS, TESTS AND APPROVALS 7
ARTICLE 3. INFORMATION SUPPLIED TO CONTRACTOR; DISCLAIMER; LIMITATION
OF LIABILITY; REPRESENTATIONS AND WARRANTIES; OPINION OF
COUNSEL 8
3.1 INFORMATION SUPPLIED; DISCLAIMER; LIMITATION OF LIABILITY 8
3.1.1 NO RIGHT TO RELY ON DOCUMENTS AND INFORMATION 8
3.1.2 LIMITATION OF LIABILITY 8
3.2 REPRESENTATIONS, WARRANTIES AND COVENANTS BY CONTRACTOR 9
3.2.1 AUTHORITY AND CAPACITY 9
3.2.2 DESIGN CONFORMITY 9
3.2.3 FEASIBILITY 9
3.2.4 ACCEPTANCE OF SITE CONDITIONS 9
3.2.5 GOVERNMENTAL RULES AND APPROVALS 10
3.2.6 QUALITY MANAGEMENT PROGRAM 10
3.2.7 DESIGN PERSONNEL 10
3.2.8 SCHEDULING 11
3.2.9 PERFORMANCE AS DIRECTED 11
3.2.10 CONTRACTOR ORGANIZATION 11
3.2.11 AUTHORIZATION 11
3.2.12 BINDING OBLIGATION 11
3.3 REPRESENTATIONS, WARRANTIES AND COVENANTS BY DEVELOPER 11
3.4 LEGAL OPINION 12
ARTICLE 4. DEADLINES FOR PROJECT COMPLETION; PROJECT SCHEDULE AND
PROGRESS 13
4.1 TIME OF ESSENCE 13
4.2 GUARANTEED COMPLETION 13
4.2.1 DEADLINES FOR SUBSTANTIAL COMPLETION AND FINAL ACCEPTANCE 13
4.2.2 NO TIME EXTENSIONS 13
4.3 SCHEDULING OF DESIGN, PROCUREMENT, CONSTRUCTION AND PAYMENT 13
4.3.1 GENERAL REQUIREMENTS APPLICABLE TO THE PROJECT SCHEDULE 14
4.3.2 FLOAT 15
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4.3.3 PREPARATION OF SCHEDULES 16
4.3.4 APPROVAL OF SCHEDULES 17
4.4 PROGRESS MEETINGS 17
4.4.1 MEETINGS 17
4.4.2 PROGRESS SUMMARY 18
4.5 RECOVERY SCHEDULE 19
4.5.1 PREPARATION OF RECOVERY SCHEDULE 19
4.5.2 ALTERNATIVE CHANGE ORDERS 19
4.5.3 FAILURE TO PROVIDE RECOVERY SCHEDULE 19
ARTICLE 5. DESIGN WORK 20
5.1 COMMENCEMENT OF DESIGN WORK 20
5.2 SUBMITTAL SCHEDULE 20
5.3 SUBMITTAL REVIEW PROCESS 20
5.4 TITLE 20
5.5 EXPEDITED SUBMITTAL REVIEW 20
5.6 KEY PERSONNEL; CHARACTER OF EMPLOYEES 21
5.6.1 KEY PERSONNEL 21
5.6.2 CHARACTER OF EMPLOYEES 21
ARTICLE 6. ACQUISITION OF REAL PROPERTY; COMMENCEMENT OF
CONSTRUCTION; CONSTRUCTION PROCEDURES; RELOCATIONS;
MITIGATION 22
6.1 REAL PROPERTY ACQUISITION 22
6.1.1 PROVISION OF ACCESS 22
6.1.2 CONTRACTOR RESPONSIBILITIES 22
6.2 COMMENCEMENT OF CONSTRUCTION 23
6.2.1 CONDITIONS PRECEDENT 23
6.2.2 COMMENCEMENT "AT RISK" 23
6.3 SUPERVISION AND CONSTRUCTION PROCEDURES 23
6.3.1 RESPONSIBILITY 23
6.3.2 SAFETY PROGRAM 23
6.3.3 SECURITY 24
6.3.4 ADJOINING PROPERTY 24
6.3.5 DIFFERING SITE CONDITIONS 24
6.4 INSPECTION AND TESTING 25
6.4.1 PERFORMANCE OF INSPECTION AND TESTING 25
6.4.2 RIGHT OF PROGRAM MANAGER, STATE AND SJTA TO CONDUCT
INSPECTION AND TESTING 25
6.4.3 UNCOVERING OF WORK 25
6.5 CORRECTION OF NONCONFORMING WORK 26
6.6 UTILITIES 26
6.6.1 COMMENCEMENT OF UTILITY WORK 26
6.6.2 CONTRACTOR'S RELOCATION OBLIGATIONS 27
6.6.3 LEGAL ACTIONS 27
6.6.4 UTILITY CHANGE ORDERS 27
6.7 ENVIRONMENTAL COMPLIANCE 28
6.7.1 PERFORMANCE OF ENVIRONMENTAL MITIGATION MEASURES 28
6.7.2 MAJOR PERMIT MODIFICATIONS 29
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ARTICLE 7. SUBCONTRACTS 30
7.1 ASSIGNMENT OF SUBCONTRACTS TO DEVELOPER, STATE AND SJTA 30
7.2 RESPONSIBILITY FOR WORK PERFORMED BY SUBCONTRACTORS 30
7.3 APPROVAL OF SUBCONTRACTORS 30
7.4 MANDATORY TERMS OF SUBCONTRACTS 30
7.5 SUBCONTRACT RECORDS 31
7.6 PAYMENTS TO SUBCONTRACTORS 31
ARTICLE 8. PERFORMANCE AND PAYMENT BONDS 32
9.3 ENDORSEMENTS AND WAIVERS 35
9.4 COVERAGE TO BE PROVIDED BY CONTRACTOR DURING WARRANTY PERIOD 36
9.5 SUBCONTRACTOR INSURANCE REQUIREMENTS 36
9.6 DISCLAIMER 36
9.7 VERIFICATION OF COVERAGE 36
9.8 CHANGES IN REQUIREMENTS 37
9.9 NO RECOURSE 37
9.10 RIGHT TO REMEDY BREACH BY CONTRACTOR 37
9.11 DEDUCTIBLES AND SELF-INSURED RETENTIONS 37
ARTICLE 10. RESPONSIBILITY FOR LOSS OR DAMAGE; TITLE 38
10.1 LOSS OR DAMAGE 38
10.2 TITLE 38
10.3 TRANSFER OF CONTROL TO SJTA 39
ARTICLE 11. WARRANTIES 40
11.1 WARRANTIES 40
11.2 EXTENSION OF WARRANTIES 41
11.3 SUBCONTRACTOR WARRANTIES 41
11.4 NO LIMITATION OF LIABILITY 41
11.5 ASSIGNMENT OF WARRANTIES 41
11.6 DAMAGES FOR BREACH OF WARRANTY 42
ARTICLE 12. PAYMENT FOR SERVICES 43
12.1 CONTRACT PRICE 43
12.1.1 CONTRACT AMOUNT 43
12.1.2 CONTINGENCY 43
12.1.3 DELAY IN ISSUANCE OF NTP2 43
12.1.4 ITEMS INCLUDED IN CONTRACT PRICE 44
12.2 PAYMENTS 44
12.2.1 DRAFT INVOICE AND PROGRESS MEETING 44
12.2.2 DELIVERY OF INVOICE 44
12.2.3 FORM OF INVOICE 45
12.2.4 PAYMENT BY DEVELOPER 45
12.2.5 CONTINUED PERFORMANCE DURING DISPUTES 45
12.2.6 RETAINAGE 45
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12.2.7 DEDUCTIONS 46
12.2.8 UNINCORPORATED MATERIALS 47
12.2.9 MOBILIZATION 48
12.2.10 EQUIPMENT 48
12.2.11 BOND AND INSURANCE PREMIUMS 48
ARTICLE 13. CHANGES IN THE WORK 49
13.1 CIRCUMSTANCES UNDER WHICH CHANGE ORDERS MAY BE ISSUED 49
13.1.1 DEFINITION OF AND REQUIREMENTS RELATING TO CHANGE ORDERS 49
13.1.2 RIGHT OF DEVELOPER AND PROGRAM MANAGER TO ISSUE CHANGE
ORDERS 51
13.2 PROCEDURE FOR ISSUANCE OF CHANGE ORDERS ISSUED BY DEVELOPER
OR PROGRAM MANAGER 51
13.2.1 NOTICE OF PROPOSED DIRECTED CHANGE 51
13.2.2 UNILATERAL CHANGE ORDERS FOR DIRECTED CHANGES 52
13.2.3 NOTICE OF PROPOSED CONTINGENCY CHANGE 52
13.2.4 UNILATERAL CONTINGENCY CHANGE ORDERS 53
13.3 CONTRACTOR-INITIATED CHANGE ORDERS 53
13.3.1 ELIGIBLE CHANGES 53
13.3.2 CONDITIONS PRECEDENT 54
13.3.3 SUBMISSION OF REQUEST FOR CHANGE ORDER 57
13.3.4 PERFORMANCE OF DISPUTED WORK 57
13.2.4 UNILATERAL CONTINGENCY CHANGE ORDERS 53
13.3 CONTRACTOR-INITIATED CHANGE ORDERS 53
13.3.1 ELIGIBLE CHANGES 53
13.3.2 CONDITIONS PRECEDENT 54
13.3.3 SUBMISSION OF REQUEST FOR CHANGE ORDER 57
13.3.4 PERFORMANCE OF DISPUTED WORK 57
13.4 CONTENTS OF CHANGE ORDERS 57
13.4.1 FORM OF CHANGE ORDER 57
13.4.2 INFORMATION REGARDING EFFECT OF CHANGE 57
13.4.3 JUSTIFICATION 58
13.4.4 CONTRACTOR REPRESENTATION 58
13.5 DETERMINATION OF TERMS OF CHANGE ORDER 58
13.5.1 CATEGORIES OF COSTS AND MARK-UPS 58
13.5.2 LIMITATION ON CONTRACT PRICE INCREASES 58
13.5.3 LIMITATION ON DELAY DAMAGES 58
13.5.4 LIMITATION ON TIME EXTENSIONS 59
13.5.5 WORK PERFORMED WITHOUT DIRECTION 59
13.6 PRICING OF CHANGE ORDERS 59
13.6.1 COST PROPOSAL 60
13.6.2 IDENTIFICATION OF CONDITIONS 60
13.6.3 CONTENTS 60
13.6.4 ADDED WORK 60
13.6.5 DELETED WORK 60
13.6.6 WORK BOTH ADDED AND DELETED 61
13.7 TIME AND MATERIALS CHANGE ORDERS 61
13.7.1 LABOR COSTS 61
13.7.2 MATERIAL COSTS 62
13.7.3 EQUIPMENT 62
13.7.4 PERMIT FEES 64
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13.7.5 OTHER DIRECT COSTS 64
13.7.6 CONTRACTOR'S OVERHEAD AND PROFIT 65
13.7.7 OVERHEAD 66
13.8 UNIT PRICED CHANGE ORDERS 66
13.9 CONTINGENCY 66
13.9.1 AVAILABILITY OF CONTINGENCY 66
13.9.2 CONTINGENCY CHANGE ORDERS 67
13.9.3 MEASUREMENT AND PAYMENT FOR REMEDIATION WORK 67
13.9.4 AGREEMENT REGARDING NJSA 2A:58B-3 67
13.10 CHANGE ORDER RECORDS 68
13.10.1 DAILY WORK REPORTS AND DATA COLLECTION 68
13.10.2 VENDOR'S INVOICES 68
13.10.3 EXECUTION OF REPORTS 69
13.10.4 ADJUSTMENT 69
13.11 MATTERS NOT ELIGIBLE FOR CHANGE ORDERS 69
13.12 DISPUTES 70
13.13 CHANGES NOT REQUIRING CHANGE ORDER 71
13.14 NO RELEASE OR WAIVER 71
ARTICLE 14. SUSPENSION OF ALL OR PART OF WORK 72
14.1 SUSPENSION FOR CONVENIENCE 72
14.2 SUSPENSION FOR OTHER REASONS, INCLUDING COMPLIANCE WITH
MAJOR PERMITS 72
14.3 TRAFFIC SAFETY 72
ARTICLE 15. TERMINATION FOR CONVENIENCE 73
15.1 NOTICE OF TERMINATION 73
15.2 CONTRACTOR'S RESPONSIBILITIES AFTER RECEIPT OF NOTICE OF
TERMINATION 73
15.3 INVENTORY 74
15.4 SETTLEMENT PROPOSAL 74
15.5 AMOUNT OF TERMINATION SETTLEMENT 74
15.6 NO AGREEMENT AS TO AMOUNT OF CLAIM 75
15.7 REDUCTION IN AMOUNT OF CLAIM 76
15.8 PAYMENT 76
15.9 INCLUSION IN SUBCONTRACTS 76
15.10 AMOUNTS PAYABLE TO SUBCONTRACTORS 76
15.11 NO CONSEQUENTIAL DAMAGES 77
15.12 NO WAIVER 77
15.13 DISPUTE RESOLUTION 77
ARTICLE 16. DEFAULT 78
16.1 DEFAULT OF CONTRACTOR 78
16.2 REMEDIES FOR CONTRACTOR EVENT OF DEFAULT 79
16.3 DELAY IN ISSUANCE OF NTP2; FAILURE TO DELIVER PAYMENT 79
ARTICLE 17. LIQUIDATED DAMAGES 81
17.1 LIQUIDATED DAMAGES 81
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17.2 OFFSET; REDUCTION; WAIVER 81
17.3 PAYMENT TERMS 81
17.4 LIMITATION OF CONTRACTOR'S LIABILITY 81
ARTICLE 18. INDEMNIFICATION 83
18.1 INDEMNIFICATIONS BY CONTRACTOR 83
18.2 NO EFFECT ON OTHER RIGHTS 84
18.3 CERCLA AGREEMENT 85
ARTICLE 19. DISPUTE RESOLUTION 86
19.1 DECISION BY PROGRAM MANAGER; CONDITIONS PRECEDENT TO
ADJUDICATION 86
19.2 CONSENT TO JURISDICTION 86
19.3 CONTINUANCE OF WORK DURING DISPUTE 87
19.4 PARTNERING 87
19.4.1 OBJECTIVES 87
19.4.2 COSTS 87
19.4.3 LEGAL EFFECT 87
ARTICLE 20. ACCEPTANCE 88
20.1 SUBSTANTIAL COMPLETION 88
20.2 FINAL ACCEPTANCE 88
20.3 ASSIGNMENT OF CAUSES OF ACTION 89
20.4 PAYMENTS TO UTILITIES 89
ARTICLE 21. DOCUMENTS AND RECORDS 91
21.1 ESCROWED BID DOCUMENTS 91
21.2 SUBCONTRACTOR BID DOCUMENTS 92
21.3 MAINTENANCE OF, ACCESS TO AND AUDIT OF RECORDS 92
21.4 RETENTION OF RECORDS 93
21.5 PUBLIC RECORDS 93
ARTICLE 22. VALUE ENGINEERING 95
22.1 DESCRIPTION OF VECP'S 95
22.2 INFORMATION TO BE PROVIDED 95
22.3 REVIEW OF VECP'S 96
22.4 APPROVAL OF VECP'S 96
22.5 CONTRACT PRICE ADJUSTMENT 96
22.6 FLOAT 98
ARTICLE 23. COOPERATION AND COORDINATION WITH OTHER CONTRACTORS,
LOCAL AGENCIES AND DEVELOPERS 99
23.1 COOPERATION WITH CONTRACTORS 99
23.2 INTERFERENCE BY OTHER CONTRACTORS 99
23.3 COORDINATION WITH LOCAL AGENCIES AND DEVELOPERS 99
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ARTICLE 24. MISCELLANEOUS PROVISIONS 100
24.1 ROLES OF PROGRAM MANAGER, STATE AND SJTA 100
24.2 WAIVER 100
24.3 INDEPENDENT CONTRACTOR 100
24.4 SUCCESSORS AND ASSIGNS 101
24.5 DESIGNATION OF REPRESENTATIVES; COOPERATION WITH
REPRESENTATIVES 101
24.6 GRATUITIES 101
24.7 PAYMENT OF TOLLS 102
24.8 LIMITATION ON ACTIONS AGAINST STATE, SJTA AND PROGRAM
MANAGER; THIRD PARTY BENEFICIARIES 102
24.9 GOVERNING LAW 102
24.10 NOTICES AND COMMUNICATIONS 102
24.11 FURTHER ASSURANCES 105
24.12 SEVERABILITY 105
24.13 HEADINGS 105
24.14 ENTIRE AGREEMENT; AMENDMENTS 105
24.15 SURVIVAL 105
APPENDIX 1 - ABBREVIATIONS AND DEFINITIONS 1
APPENDIX 2 - LEGAL OPINION 1
APPENDIX 3 - INVOICE AND CONSTRUCTION CERTIFICATE 1
APPENDIX 4 - DESIGNATION OF INITIAL REPRESENTATIVES 5
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DESIGN/BUILD CONTRACT
This Design/Build Contract (the "Contract") is made and entered
into this 8th day of September, 1997, by and between Atlandia
Design and Furnishings, Inc., a New Jersey corporation
("Developer"), and Yonkers Contracting Company, Inc./Granite
Construction Company, a Joint Venture ("Contractor"), with
reference to the definitions contained in Appendix 1 hereto and
the following facts:
A. Developer (as assignee of Mirage Resorts, Incorporated) is a
party to that certain Road Development Agreement dated as of
January 10, 1997 (as it may be amended from time to time, the
"Road Development Agreement") with the State of New Jersey,
acting through its Department of Transportation (the "State") and
South Jersey Transportation Authority ("SJTA"), regarding
development of certain traffic infrastructure improvements in
Atlantic City, New Jersey on property to be owned by SJTA. In
accordance with the Road Development Agreement, Developer issued
an Invitation for Bids (the "IFB") on April 4, 1997. Contractor
submitted a Bid in response to the IFB and has been awarded this
Contract.
B. The parties intend for this Contract to be a lump sum
design/build contract obligating Contractor to perform all Work
necessary to obtain completion of the Project by the deadline
specified herein, for the Contract Price, subject only to certain
specified limited exceptions. Developer, State and SJTA have
determined, and Contractor has acknowledged, that this approach
is necessary due to the need to obtain timely completion of the
Project and the fact that limited funds are available for the
Project. Accordingly, subject only to Contractor's right to
receive certain specified payments from the Contingency and to be
compensated for Directed Changes as provided in Section 12.1.2
and Article 13, the Contract Price is not subject to increase for
any reason; and the Contractor's right to obtain an extension of
the Guaranteed Completion Date is subject to strict limitations.
Contractor has agreed in this Contract to assume all risks of
cost overruns, both direct and indirect, which are not due to
Directed Changes or which are not covered by the Contingency, and
has reflected the assumption of such risks in its Bid Price.
C. If Contractor fails to complete the Project in accordance
with the time limitations set forth in the Contract Documents,
then Developer, State and SJTA will suffer losses and damages
which are extremely difficult, if not impossible, to ascertain.
The Contract thus provides that Contractor shall be liable for
Liquidated Damages in the event such completion is delayed.
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D. The IFB includes a conceptual design for the Project which
is to be the basis for the design to be furnished by Contractor.
The IFB also includes a number of Reference Documents. It is
intended that Contractor will assume full responsibility and
liability with respect to design of the Project, including
correction of any errors, omissions, inconsistencies or other
defects in the Concept Design Documents, and will indemnify and
hold harmless Developer, the Program Manager, State, SJTA and
others with respect to any defects in the Project which may
relate to errors, omissions, inconsistencies or other defects
therein. It is also intended that Contractor will be entitled to
flexibility in the design process, provided that the design must
comply with all applicable requirements of the Contract
Documents, and provided that any deviation from the Concept
Design will require approval of the Program Manager, Developer,
State and SJTA.
NOW, THEREFORE, in consideration of the foregoing premises and
the covenants and agreements set forth herein, the parties hereby
agree as follows:
ARTICLE 1. CONTRACT COMPONENTS;
INTERPRETATION OF CONTRACT DOCUMENTS
1.1 Certain Definitions; Recitals
Appendix 1 hereto contains the meaning of certain terms used in
the Contract Documents. Recitals A through D are hereby
incorporated by reference herein.
1.2 Contract Documents
The term "Contract Documents" shall mean this Design/Build
Contract, including all appendices, the Scope of Work, the Major
Permits, the Special Provisions, the General Provisions, the
Design Criteria, the Concept Design Documents (subject to
Contractor's obligation to correct errors, omissions,
inconsistencies and other defects contained therein), and the
Final Design Documents, including all amendments to any of the
foregoing and all Change Orders issued.
1.3 Order of Precedence
Each of the Contract Documents is an essential part of this
Contract, and a requirement occurring in one is as binding as
though occurring in all. The Contract Documents are intended to
be complementary and to describe and provide for a complete
contract. In the event of any conflict among the Contract
Documents, this Contract and all Change Orders shall in all
events control. With respect to the other Contract Documents the
order of precedence shall be as set forth below.
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(a) For design Work:
1. Design Criteria
2. Major Permits
3. Scope of Work
4. Special Provisions
5. General Provisions
6. Concept Design Documents
(b) For all other matters:
1. Final Design Documents, with specifications
contained therein having precedence over plans,
and excluding any deviations from requirements of
the other Contract Documents contained therein
which have not been approved in writing as such by
Program Manager, State and SJTA
2. Design Criteria
3. Major Permits
4. Scope of Work
5. Special Provisions
6. General Provisions
7. Concept Design Documents
1.4 Interpretation
In the Contract Documents, where appropriate: the singular
includes the plural and vice versa; references to statutes or
regulations include all statutory or regulatory provisions
consolidating, amending or replacing the statute or regulation
referred to; the words "including," "includes" and "include"
shall be deemed to be followed by the words "without limitation";
unless otherwise indicated references to articles, sections,
appendices or schedules are to this Contract; words such as
"herein," "hereof" and "hereunder" shall refer to the entire
document in which they are contained and not to any particular
provision or section; words not otherwise defined which have well-
known technical or construction industry meanings, are used in
accordance with such recognized meanings; references to Persons
include their respective permitted successors and assigns and, in
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the case of Governmental Persons, Persons succeeding to their
respective functions and capacities; and words of any gender used
herein shall include each other gender where appropriate. When
two or more potential interpretations of the same requirement of
the Work exist, the most stringent (as determined by Program
Manager in its sole discretion) shall apply. Unless otherwise
specified, lists contained in the Contract Documents defining the
Project or the Work shall not be deemed all-inclusive. This
Contract shall not be construed as if it was prepared by
Developer but rather as if both parties had prepared it. The
final answers to the questions posed during the bidding process
for this Contract shall in no event be deemed part of the
Contract Documents and shall not be relevant in interpreting the
Contract Documents except as they may clarify provisions otherwise
considered ambiguous.
1.5 Referenced Standards
Unless otherwise specified by Program Manager (which
specification will be made only if required by State or SJTA) any
reference in the Contract Documents to a described publication
affecting any portion of the Project shall be deemed to mean the
latest edition or revision thereof and amendments and supplements
thereto in effect on the Bid Date.
1.6 Explanations; Omissions and Misdescriptions
Should it appear that the Work to be done or any of the matters
relative thereto is not sufficiently detailed or explained
in the Contract Documents, Contractor shall apply to the Program
Manager in writing for such further written explanations as may be
necessary and shall conform to the explanation provided.
Contractor shall promptly notify the Program Manager of all
errors, omissions, inconsistencies or other defects (including
inaccuracies and inconsistencies) which it may discover in the
Contract Documents, provide written recommendations regarding
changes or corrections to resolve any such error, omission or
defect which impacts the Basic Configuration, and obtain the
Program Manager's approval before proceeding with the design Work
affected thereby. Omission from the Scope of Work or the
misdescription of details of Work which are necessary to carry
out the intent of the Contract Documents, or which are
customarily performed, shall not relieve Contractor from
performing such omitted Work (no matter how extensive) or
misdescribed details of the Work and they shall be performed as
if fully and correctly set forth and described in the Scope of
Work, without entitlement to a Change Order hereunder. Refer
also to Section 105.02 of the General Provisions.
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1.7 Computation of Periods
References to "days" contained in the Contract Documents shall
mean Calendar Days unless otherwise specified; provided that if
the date to perform any act or give any notice specified in the
Contract Documents (including the last date for performance or
provision of notice "within" a specified time period) falls on a
non-business day, such act or notice may be timely performed on
the next succeeding day which is a business day. Notwithstanding
the foregoing, requirements contained in the Contract Documents
relating to actions to be taken in the event of an emergency,
requirements contained in Section 6.3.5, and other
requirements for which it is clear that performance is intended
to occur on a non-business day, shall be performed as specified,
even though the date in question may fall on a non-business day.
The term "business days" shall mean days other than Saturdays,
Sundays and Holidays.
1.8 Approvals
In all cases where approvals, consents or determinations are
required to be provided hereunder, such approvals or consents
shall not be withheld unreasonably and such determinations shall
be made reasonably except in cases where a different standard
(such as, by way of example only, sole discretion) is specified.
In cases where sole discretion is specified for an approval,
consent, determination or other decision, the decision shall not
be subject to dispute resolution hereunder.
ARTICLE 2. OBLIGATIONS OF CONTRACTOR; EFFECT OF REVIEWS,
INSPECTIONS AND TESTS
2.1 Design and Construction
Contractor shall furnish the design of the Project and shall
construct the Project as designed, in accordance with all
professional engineering principles and construction practices
generally accepted as standards of the industry in the State of
New Jersey, in a good and workmanlike manner, free from defects
and in accordance with the terms and conditions set forth in the
Contract Documents. Except as otherwise specifically provided in
this Contract or the Scope of Work, providing all materials,
labor, services and efforts necessary to achieve Substantial
Completion and Final Acceptance of the Project on or before the
deadlines set forth herein shall be Contractor's sole responsibility;
and, subject only to the terms of Article 13, the cost of all such
materials, labor, services and efforts is included in the Contract
Price.
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2.2 Contractor Obligations
Contractor hereby covenants as follows:
2.2.1 Contractor shall furnish all design and other
services, provide all materials, equipment and labor and
undertake all efforts necessary or appropriate (excluding only
those materials, equipment, labor, services and efforts which
this Contract and/or the Scope of Work specify will be undertaken
by other Persons) to construct the Project in accordance with the
requirements of the Contract Documents, the Project Schedule, all
Governmental Approvals, the approved Quality Management Program,
the approved Contractor's Safety Program, the approved
Construction Documents and all other applicable safety,
environmental and other requirements, taking into account the
Right of Way Limits and other physical limits resulting from
constraints affecting the Project, so as to achieve Substantial
Completion and Final Acceptance by the deadlines specified
herein, and otherwise to do in a timely manner everything
required by and in accordance with the Contract Documents.
2.2.2 Contractor shall not change its pre-approved
design Subcontractor(s), and shall not permit changes in the
designated key design personnel or shift Work from one design
firm to another without the prior written approval of Program
Manager. Such approval by Program Manager shall not be withheld
provided that Program Manager shall first have determined that
the newly designated firm has the demonstrated competence,
integrity, responsibility and professional qualifications
necessary for the satisfactory performance of the required design
services, and that the designated key personnel at such firm have
sufficient experience with State projects and with the design
criteria and other requirements which apply to the Project.
2.2.3 Contractor shall at all times provide a Project
Manager approved by Program Manager in its sole discretion who
will have full responsibility for the prosecution of the Work and
who will act as a single point of contact in all matters on behalf
of Contractor. Contractor shall not change the Project Manager
without the prior written approval of Program Manager in its
sole discretion. In the event that Contractor fails to obtain
Program Manager's approval of a replacement before the existing
Project Manager leaves, Contractor shall not be entitled to receive
any progress payments hereunder until such time as the approved
replacement has started work.
2.2.4 Contractor shall obtain and pay the cost of
obtaining all Governmental Approvals required in connection with
the Project (other than the Major Permits). Prior to beginning
any construction activities in the field, Contractor shall
furnish Program Manager with fully executed copies of all
Governmental Approvals (other than the Major Permits) required as
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a matter of law for such construction activities and shall provide
written confirmation to Program Manager that all conditions of such
Governmental Approvals which are a legal prerequisite to
commencement of such construction have been satisfied.
2.2.5 Contractor shall undertake and properly perform
all actions required by and all actions necessary to maintain in
full force and effect all Governmental Approvals, including
performance of all environmental mitigation measures required by
the Contract Documents.
2.2.6 Contractor shall provide such assistance as is
reasonably requested by Program Manager in dealing with any
Governmental Person and/or in prosecuting or defending lawsuits
in any and all matters relating to the Project. Such assistance
may include providing information and reports regarding the
Project as well as executing declarations and attending meetings
and hearings conducted by any Governmental Person. In no event
shall Contractor be required to provide legal services as part of
such assistance. Following Final Acceptance Contractor's
obligations under this Section 2.2.6 shall be limited to matters
relating to the Work.
2.2.7 Contractor shall comply with, and shall ensure
that all Subcontractors comply with, all requirements of all
applicable Governmental Rules, including:
(a) the New Jersey Prevailing Wage Act, as more
specifically provided in Sections 1300 et seq. of the Special
Provisions;
(b) all Environmental Laws, including requirements
regarding the handling, generation, treatment, storage,
transportation and disposal of Hazardous Substances and
associated reporting requirements; and
(c) the requirement that Contractor advise the New
Jersey Division of Gaming Enforcement of the names of all
Subcontractors, and that Contractor not employ any Subcontractor
included on the List of Disqualified Entities published by the
Division of Gaming Enforcement and, if required by the New Jersey
Casino Control Commission, that Contractor and all Subcontractors
apply for and receive a Casino Service Industry License issued by
the Casino Control Commission.
2.2.8 Contractor shall provide and maintain field
offices as described in Section 105.15 of the General Provisions,
which facilities shall be for the exclusive use of Developer,
Program Manager, State, SJTA and other Persons reasonably
designated by Program Manager.
2.2.9 Contractor shall cooperate with Developer,
Program Manager, State, SJTA and local agencies in all matters
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relating to the Project, including review of the design of the
Project and conducting inspections during the construction of the
Project.
2.2.10 Contractor shall supervise and be responsible
for acts and omissions of Contractor's employees, agents, officers
and Subcontractors and other Persons performing portions of the
Work, as though all such Persons were directly employed by
Contractor.
2.2.11 Contractor shall mitigate delay to the Project in
all circumstances, to the extent reasonably possible, including
by resequencing, reallocating or redeploying its forces to other
portions or pieces of the Work, as appropriate.
2.3 Effect of Reviews, Inspections, Tests and Approvals
Contractor shall not be relieved of obligations to perform the
Work in accordance with the Contract Documents by reviews, tests,
inspections or approvals performed by any Persons, or by any
failure of any Person to take such action. The reviews,
inspections, tests and approvals conducted by Program Manager,
State, SJTA and others do not constitute acceptance of the
materials or Work reviewed, tested or inspected, and Program
Manager, State and/or SJTA may reject or accept any Work or
materials, request changes and/or identify additional Work which
must be done at any time prior to the Final Acceptance Date,
whether or not previous reviews, inspections, tests or approvals
were conducted by any such Persons. Notwithstanding the
foregoing, the Program Manager will promptly advise Contractor if
any review, inspection or test results in a conclusion that the
Work does not conform to the requirements of the Contract Documents.
ARTICLE 3. INFORMATION SUPPLIED TO CONTRACTOR; DISCLAIMER;
LIMITATION OF LIABILITY; REPRESENTATIONS AND WARRANTIES;
OPINION OF COUNSEL
3.1 Information Supplied; Disclaimer; Limitation of Liability
Contractor was provided with certain information and documents
prior to the Bid Due Date, including the Concept Design
Documents.
3.1.1 No Right to Rely on Documents and Information
Contractor shall have no right to rely on any of the
documentation or information provided by Developer, Program
Manager, State, SJTA or other Persons, other than the Contract
Documents. Contractor shall have full responsibility for the
design of the Project. Contractor represents that it has
independently determined that the Concept Design Documents
present a feasible concept for the Project which can and shall be
used as the basis for the design to be furnished by Contractor,
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and agrees that it shall have no right to seek additional
compensation or a time extension, except as specifically
permitted by Article 13.
NO REPRESENTATION OR WARRANTY IS MADE BY DEVELOPER, STATE, SJTA
OR ANY OTHER PERSON THAT THE INFORMATION CONTAINED IN THE CONCEPT
DESIGN DOCUMENTS OR REFERENCE DOCUMENTS IS EITHER COMPLETE OR
ACCURATE OR THAT SUCH INFORMATION IS IN CONFORMITY WITH THE
REQUIREMENTS OF THE MAJOR PERMITS OR OTHER CONTRACT DOCUMENTS.
3.1.2 Limitation of Liability
3.1.2.1 Contractor acknowledges that it has reviewed
and is familiar with the terms of the Road Development Agreement.
Developer covenants that it will make all payments to the Road
Account required in accordance with and subject to Section 4.6 of
the Road Development Agreement, which shall aggregate not more
than one-third of the Contract Price and Contingency, plus any
amounts payable by Developer with respect to Directed Changes.
Contractor acknowledges that payment by State and SJTA to the
Road Account, and release to Developer of such funds from the
Road Account, all in accordance with the Road Development
Agreement, are conditions precedent to Developer's obligation to
make any payments to Contractor hereunder. In the event of a
delay, failure or refusal by State or SJTA to deposit into the
Road Account funds due to Contractor in accordance with Articles
12 and 13, or in the event of a delay or the failure or refusal
by State to release funds therein to Developer for any reason
other than Developer's failure to make required deposits into the
Road Account, Contractor shall have no recourse against Developer
until such funds are actually deposited and released by State and
SJTA. Upon disbursement of funds from the Road Account to
Developer in accordance with the Road Development Agreement,
Developer will remit such funds to Contractor. Developer shall
promptly notify Contractor of any failure by State or SJTA to
provide required funds within the timeframes specified in the
Road Development Agreement.
CONTRACTOR FURTHER ACKNOWLEDGES AND AGREES THAT EXCEPT AS
SPECIFICALLY PROVIDED IN THIS SECTION 3.1.2.1, DEVELOPER, STATE
AND SJTA SHALL HAVE NO LIABILITY TO CONTRACTOR HEREUNDER OR IN
CONNECTION WITH THE PROJECT, AND CONTRACTOR HEREBY WAIVES ITS
RIGHT TO MAKE ANY CLAIM OR BRING ANY ACTION AGAINST DEVELOPER,
STATE, SJTA OR THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
SHAREHOLDERS OR AGENTS.
3.1.2.2 Contractor further understands and agrees
that Developer, State, SJTA and Program Manager shall not be
responsible or liable in any respect for any loss, damage,
injury, liability, cost, expense or cause of action whatsoever
suffered by Contractor, its employees, agents, officers or
Subcontractors or any other Persons for whom Contractor may be
legally or contractually responsible, by reason of any use of any
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information contained in the Reference Documents or any action or
forbearance in reliance thereon, except to the extent that Article
13 provides for an increase in the Contract Price and/or
extension of the Guaranteed Completion Date with respect to such
matter. Contractor further acknowledges and agrees that (a) if
and to the extent Contractor or anyone on Contractor's behalf
uses any of said information in any way, such use is made on the
basis that Contractor, not Developer, State, SJTA or Program
Manager, has approved of such use and information and is
responsible for said information, and (b) Contractor is capable
of conducting and is obligated hereunder to conduct any and all
studies, analyses and investigations as it deems advisable to
verify or supplement said information, and that any use of said
information is entirely at Contractor's own risk and at its own
discretion.
3.1.2.3 The Project budget includes a Contingency for
the benefit of Contractor, Developer, State and SJTA to cover
unanticipated costs as described in Section 13.9. ONCE THE
CONTINGENCY IS EXHAUSTED, CONTRACTOR SHALL HAVE NO RIGHT TO A
CONTRACT PRICE INCREASE FOR ANY REASON OTHER THAN A DIRECTED
CHANGE. CONTRACTOR ACKNOWLEDGES THAT DEVELOPER WOULD NOT HAVE
ENTERED INTO THIS CONTRACT EXCEPT IN MATERIAL RELIANCE ON THIS
PROVISION AND THE OTHER PROVISIONS LIMITING DEVELOPER'S, STATE'S
AND SJTA'S LIABILITY HEREUNDER.
3.2 Representations, Warranties and Covenants by Contractor
Contractor represents, warrants and covenants for the benefit of
Developer, State, SJTA and Program Manager that:
3.2.1 Authority and Capacity
Contractor has and throughout the term of this Contract
shall maintain all required authority, license status, professional
ability, skills and capacity to perform Contractor's obligations
hereunder and shall perform them in accordance with the
requirements contained in the Contract Documents.
3.2.2 Design Conformity
The design for the Project can and shall be based on the
Concept Design; and the Project can and shall be built in
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conformity with the Contract Documents, all applicable standards
and Governmental Approvals.
3.2.3 Feasibility
Contractor has carefully evaluated the feasibility of
performing the Work within the deadlines specified herein and for
the Bid Price, without relying on the Reference Documents or any
matter other than the Contract Documents, and has reasonable
grounds for believing and does affirmatively believe that such
performance (including achievement of Substantial Completion of
the Project by the Guaranteed Completion Date for the Contract
Price) is feasible and practicable.
3.2.4 Acceptance of Site Conditions
Contractor has, prior to submitting its Bid, in accordance
with prudent and generally accepted engineering practices,
reviewed the preliminary geotechnical, hydrology and
environmental reports included in the IFB Documents, inspected
and examined the Site and surrounding locations and undertaken
other appropriate activities sufficient to familiarize itself
with surface conditions and subsurface conditions discernible
from the surface affecting the Project to the extent Contractor
deemed necessary or advisable for bidding the Project, and as a
result of such review, inspection, examination and other
activities Contractor is familiar with and accepts the physical
requirements of the Work. Contractor acknowledges that the
reports provided in the IFB Documents cover only limited areas
within the Site but agrees that the testing evidenced by such
reports constitutes a sufficient basis for bidding the Project.
Contractor further acknowledges and agrees that changes in
conditions at the Site may occur after the Bid Date, and that
Contractor shall not be entitled to any Change Order in
connection therewith except as specifically permitted under
Article 13. Before commencing any Work on a particular aspect of
the Project, Contractor shall verify all governing dimensions at
the Site, and shall examine all adjoining work which may have an
impact on such Work. Contractor shall be responsible for ensuring
that Construction Documents accurately depict all governing and
adjoining dimensions.
3.2.5 Governmental Rules and Approvals
Contractor acknowledges and agrees that it has familiarized
itself with the requirements of any and all applicable
Governmental Rules and the conditions of all Governmental
Approvals prior to entering into this Contract. Contractor shall
be responsible for complying with the foregoing at its sole cost
and expense and without any increase in Contract Price or
extension of the Guaranteed Completion Date on account of such
compliance, regardless of whether such compliance would require
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additional time for performance or additional labor, equipment
and/or materials not expressly provided for in the Contract
Documents. Contractor has no reason to believe that any
Governmental Approval required to be obtained by Contractor will
not be granted in due course and thereafter remain in effect so
as to enable the Work to proceed in accordance with the Contract
Documents. In the event that any Governmental Approvals required
to be obtained by Contractor must formally be issued in the name
of Developer, State or SJTA, Contractor shall undertake all
efforts to obtain such approvals subject to Developer's, State's
and/or SJTA's reasonable cooperation with Contractor, including
execution and delivery of appropriate applications and other
documentation in form approved by Developer, State and/or SJTA.
Contractor shall assist Program Manager in obtaining the Major
Permits and any amendments thereto, including providing
information requested by State and SJTA and participating in
meetings regarding such approvals.
3.2.6 Quality Management Program
Contractor shall have full responsibility for quality
assurance and quality control for the Project, including
provision of and compliance with a Quality Management Program
meeting all requirements contained in Section 1200 of the
Special Provisions.
3.2.7 Design Personnel
All design and engineering Work furnished by Contractor
shall be performed by or under the supervision of Persons licensed
to practice architecture, engineering or surveying (as
applicable) in the State of New Jersey, by personnel who are
careful, skilled, experienced and competent in their respective
trades or professions, who are professionally qualified to
perform the Work in accordance with the Contract Documents and
who shall assume professional responsibility for the accuracy and
completeness of the Construction Documents prepared or reviewed
by them.
3.2.8 Scheduling
Contractor shall at all times schedule and direct its Work
to provide an orderly progression of the Work to achieve
completion within the specified time for completion and in
accordance with the Project Schedule, including furnishing such
employees, materials, facilities and equipment and working such
hours, including extra shifts, overtime operations, Sundays and
Holidays (provided that Contractor shall obtain Program Manager's
written approval before performing any construction Work on
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Sundays and Holidays) as may be necessary to achieve such goal,
all at Contractor's own expense except as otherwise specifically
provided in Article 13.
3.2.9 Performance as Directed
At all times during the term hereof, including during the
course of, and notwithstanding the existence of, any dispute, but
subject to Contractor's rights under Section 16.3.2, Contractor
shall perform as directed by Program Manager or Developer, in a
diligent manner and without delay, shall abide by Program
Manager's or Developer's decision or order, and shall comply with
all applicable provisions of the Contract Documents.
3.2.10 Contractor Organization
Contractor is a joint venture duly organized and validly
existing under the laws of the State of New York, with all
requisite power to own its properties and assets and to carry on
its business as now conducted or proposed to be conducted.
Contractor is composed of Yonkers Contracting Company, Inc., a
New York corporation, and Granite Construction Company, a
California corporation (each, a "member" of Contractor). Each
member of Contractor is duly qualified to do business, and is in
good standing, in the State of New Jersey, and shall remain in
good standing throughout the term of this Contract and for as
long thereafter as any obligations remain outstanding under the
Contract Documents.
3.2.11 Authorization
The execution, delivery and performance of this Contract
have been duly authorized by all necessary action of Contractor
and Contractor's members and will not result in a breach of or a
default under the organizational documents of Contractor and its
members or any indenture or loan or credit agreement or other
material agreement or instrument to which Contractor or any
member of Contractor or any of its members is a party or by which
its properties and assets may be bound or affected.
3.2.12 Binding Obligation
This Contract constitutes the legal, valid and binding
obligation of Contractor and of each member of Contractor,
enforceable in accordance with its terms.
3.3 Representations, Warranties and Covenants by Developer
Developer represents, warrants and covenants for the benefit of
Contractor that Developer will not issue NTP1 until it has
received assurances from State and SJTA (satisfactory to
Developer in its sole discretion) that sufficient funds will be
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available and committed to the Project to fund State's and SJTA's
share of the costs of the NTP1 Work, and that Developer will not
issue NTP2 until it has received assurances from State and SJTA
(satisfactory to Developer in its sole discretion) that sufficient
funds will be available and committed to the Project to fund
State's and SJTA's share of the costs of the NTP2 Work. Such
representations, warranties and covenants, however, shall
not constitute a guarantee by Developer that such funds from
State and SJTA will actually be available or create any
liability on the part of Developer if funds from State or SJTA
are not in fact committed or available.
3.4 Legal Opinion
Concurrently with Contractor's execution of this Contract,
Contractor shall deliver to Developer a written opinion in
substantially the form attached hereto as Appendix 2 from counsel
acceptable to Developer.
ARTICLE 4. DEADLINES FOR PROJECT COMPLETION; PROJECT SCHEDULE
AND PROGRESS
4.1 Time of Essence
Time is of the essence of this Contract.
4.2 Guaranteed Completion
4.2.1 Deadlines for Substantial Completion and Final
Acceptance
Contractor shall achieve Substantial Completion of the
Project on or before the date which is 28 months from the date of
issuance of NTP2 (which date for Substantial Completion, as it
may be extended by Change Order, is referred to herein as the
"Guaranteed Completion Date"), and shall achieve Final Acceptance
of the Project within 60 days after Substantial Completion
thereof. Failure to achieve Substantial Completion by the
Guaranteed Completion Date or Final Acceptance within 60 days
after Substantial Completion will result in the application of
Liquidated Damages in accordance with the provisions of Article
17.
4.2.2 No Time Extensions
Except as otherwise specifically provided in Article 13,
Developer shall have no obligation to extend the Guaranteed
Completion Date and Contractor shall not be relieved of its
obligation to achieve Substantial Completion of the Project by
the Guaranteed Completion Date and Final Acceptance within
60 days after Substantial Completion for any reason.
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4.3 Scheduling of Design, Procurement, Construction and Payment
Scheduling of design and construction Work is and shall be
Contractor's responsibility. Therefore, Contractor shall
determine the most feasible order of Work commensurate with the
requirements of the Contract Documents. The planning, design,
construction, development and completion of the Project shall be
undertaken and completed in accordance with the critical path
method and payment schedule prepared by Contractor and approved
by Program Manager as described in this Section 4.3. Contractor
shall provide a Baseline Schedule as provided in Section 4.3.3.1.
Contractor shall thereafter provide Revised Schedules on a
monthly basis as provided in Section 4.3.3.2. The term "Project
Schedule" as used herein shall mean the most recent schedule
provided hereunder that has been approved by Program Manager (the
approved Baseline Schedule initially and thereafter the most
recent approved Revised Schedule). The Project Schedule shall,
among other things, provide that Substantial Completion of the
Project shall be achieved by the Guaranteed Completion Date. The
Project Schedule shall be subject to review and approval by
Program Manager, and shall be updated monthly and revised
periodically as described below. It shall be used by the parties
for planning and monitoring the progress of the Work and as the
basis for determining the amount of monthly progress payments to
be made to Contractor. The purposes of the Baseline Schedule and
the monthly Revised Schedules include provision of assurance that
Contractor is conducting adequate planning and is properly
executing the Work, as well as to assist the Program Manager,
State and SJTA in appraising Contractor's compliance with the
Contract Documents.
4.3.1 General Requirements Applicable to the Project
Schedule
4.3.1.1 Software
Contractor shall use Primavera 2.0 for Windows or such
other software acceptable to Program Manager for preparation and
management of the Project Schedule. All reports, charts and
other documents to be provided by Contractor pursuant to this
Section 4.3 shall be in form acceptable to Program Manager.
4.3.1.2 Development and Contents of Schedule
The Project Schedule:
(a) shall be developed based on Precedence
Diagramming Method (PDM) scheduling,
(b) shall incorporate a work breakdown structure
for defining the schedule hierarchy to be used in planning,
executing and reporting the progress of the Work,
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(c) shall be fully resource loaded and leveled
with respect to design and construction Work, defining all
scheduled construction Work in terms of labor hours, equipment
and earthmoving quantities. Resources shall be coded for design
disciplines, construction craft, major equipment and earthmoving
classifications for reporting purposes,
(d) shall expressly indicate scheduled work hours
and shift and hour assumptions for all Work (including non-
construction Work),
(e) shall indicate the schedules for identification
and Relocation of utility facilities by Contractor or by the
utility owners and for Contractor's acquisition of temporary
easements and other real property interests necessary in connection
with such Relocations,
(f) shall indicate the schedules for obtaining
Governmental Approvals for which Contractor is responsible,
(g) shall indicate the schedules for performance
of Work relating to satisfaction of environmental mitigation
measures and other requirements of the Major Permits,
(h) shall include specified times for delivery
to, review and/or approval by Program Manager, State, SJTA and/or
local agencies of all Construction Documents,
(i) shall include Program Manager's projected
schedules for obtaining all Major Permits which have not been
provided prior to development of the schedule,
(j) shall indicate the schedule (if any) for
provision of access to each parcel within the Project Right of
Way to be acquired following NTP2, and the schedule for
acquisition of any interests in real property by Contractor,
including Contractor's projected schedule for use of each parcel,
(k) shall show Float as required by Section 4.3.2,
(l) shall account for and show all activities
that are restrained in any manner by any requirement of the
Contract Documents and/or applicable Governmental Rules,
(m) shall show the percentage of completion as of
the date thereof,
(n) shall include progress status (percent complete)
verified by activity, and weighted average backup reports used to
calculate payments, and
(o) shall include allocations of the Contract Price
among the scheduled activities as described in Section 4.3.3.
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4.3.1.3 Schedule Activities
The Project Schedule shall provide information
detailing and describing all activities required to complete the
Work and their duration and scheduled sequence. Each activity
shown on the Project Schedule shall be described by its type,
work breakdown structure element, duration, scheduled occurrence,
predecessor and successor activities, and relationship to other
elements of the Work. Each activity must be capable of being
quantitatively measured in terms of progress. The Project
Schedule must include a sorting capability with respect to the
established work breakdown structure elements, performing
organizations, dates, Float and activity numbers. It shall
incorporate as activities the preparation, review and approval of
all proposed Construction Documents and all other submittals that
will be required for the Project.
4.3.2 Float
4.3.2.1 Project Float
All Float contained in the Baseline Schedule shall be
considered a Project resource available to either party or both
parties as needed to achieve schedule milestones, interim
completion dates and/or the Guaranteed Completion Date ("Project
Float"). Any Float generated thereafter shall also be considered
Project Float except to the extent that it falls within the
parameters set forth in Section 4.3.2.2 or 4.3.2.3. All Project
Float shall be shown as such in the Project Schedule on each
affected schedule path. Identification of (or failure to
identify) Project Float on the schedule shall be examined by
Program Manager in determining whether to approve the overall
schedule. Once identified, Project Float shall be monitored,
accounted and maintained in accordance with critical path
methodology. Project Float during the period following NTP2
shall be accounted for separately from Project Float during the
period preceding NTP2.
4.3.2.2 Developer Float
Whenever a specific item of Work is eliminated due
to a Value Engineering Change, Contractor shall identify, by
Activity/Payment Item number on the Project Schedule, the
specific items of Work removed therefrom. This will be deemed to
create Developer Float in the path(s) from which such Work was
removed. Additional Developer Float shall be generated whenever
Developer directs a deductive change or completes an activity in
less than the time specified, including returning Program
Manager's comments to design submittals (consolidated with any
comments received from State, SJTA and others within that period)
prior to the end of the review period described in Sections
1204.3.2, 1204.3.7 and 1204.3.9 of the Special Provisions.
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Developer Float shall be available for use by Developer but not
Contractor. Contractor shall identify Developer Float in the
schedule by including separate activities approved by Program
Manager labeled "Developer Float" on each affected schedule path.
Developer Float shall be monitored, accounted and maintained in
accordance with critical path methodology.
4.3.2.3 Contractor Float
In the event that Contractor generates Float by
undertaking additional efforts not contemplated by the Project
Schedule ("Contractor Float"), such Float shall be available to
Contractor but not Developer. Contractor shall identify
Contractor Float in the schedule by including separate activities
approved by Program Manager labeled "Contractor Float" on each
affected schedule path. Contractor shall provide justification
acceptable to Program Manager regarding any characterization of
Float as Contractor Float as opposed to Project Float. Contractor
Float shall be monitored, accounted and maintained in
accordance with critical path methodology.
4.3.3 Preparation of Schedules
Contractor shall prepare and deliver the Baseline Schedule
and Revised Schedules to Program Manager as provided in this
Section 4.3.3. Each schedule submittal hereunder shall include:
(a) a reproducible copy of the time-scaled critical
path network plot;
(b) an activity report sorted by payment item, Float
and work breakdown structure designation;
(c) an expenditure projection, including a brief
narrative summary of assumptions, expenditure projection curves
by overall Project and Contract, and other appropriate graphics
and supporting cash flow and cash expenditure data, with each
curve supported by a tabular report;
(d) a copy of the data diskettes (3.50-inch DS,
HD and DOS 5.0 or higher) from which the schedules and reports were
prepared; and
(e) four copies of the revised timescaled network
logic diagram plot.
Contractor shall allocate the total Contract Price
among the activities scheduled on the Project Schedule. Such
allocation shall accurately reflect Contractor's cost for each
activity and shall not artificially inflate, imbalance or "front-
load" line items. The price for each activity shall be all-
inclusive, i.e. it shall include all direct and indirect costs,
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overhead, risks and profit. Each schedule shall also incorporate
and fully specify all appropriate information from prior approved
schedules, the current schedule for real property acquisition,
changes in status of Governmental Approvals and other matters
requested by Program Manager.
4.3.3.1 Preparation of Baseline Schedule
Within 30 days after NTP1, Contractor shall
prepare and deliver to Program Manager for review and approval as
provided below six copies of a draft Baseline Schedule. The Baseline
Schedule shall schedule Substantial Completion of the Project to
occur on the Guaranteed Completion Date. The Baseline Schedule
shall employ the entire Contract duration between the date of
issuance of NTP1 and the Guaranteed Completion Date (based on an
assumption that NTP2 will be issued on October 1, 1998) for
completion of activities necessary to attain Substantial
Completion, and shall fully, completely and accurately depict all
Project Float. Each activity shall be defined, detailed and
delineated such that no activity has a duration of more than
60 days. This schedule, following written approval thereof by
Program Manager, shall be the Baseline Schedule for the Project.
4.3.3.2 Revised Schedules
Contractor shall provide monthly revisions of the
Project Schedule (a "Revised Schedule"). A draft Revised
Schedule shall be provided with each draft invoice. Each Revised
Schedule shall serve the purpose of providing greater definition
and detail to activities and durations as provided below.
4.3.3.2.1 Draft Revised Schedules
The draft Revised Schedule provided with each
draft invoice shall describe and detail all Work activities
scheduled to start within the period commencing on the first of
the following month (the "schedule data date") and ending one
year thereafter (or the scheduled date for issuance of NTP2, if
later) and showing lesser detail for subsequent activities. Each
Revised Schedule shall be in compliance with the existing Project
Schedule in terms of logic and shall be consistent with durations
of activities shown on the existing schedule. Any proposed
deviation shall be individually listed and separately described
and explained as to its necessity and benefit to the Project.
4.3.3.2.2 Definition of Activities
In no event shall any additional detail and
description included in a Revised Schedule change the Guaranteed
Completion Date, other than changes in such items which are
approved by a Change Order and such changes which are otherwise
permitted in writing by Developer, which permission may be
withheld in its sole discretion.
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4.3.4 Approval of Schedules
At the initial Progress Meeting Program Manager shall return
the draft Baseline Schedule with comments. At each monthly
Progress Meeting thereafter, Program Manager shall return the
draft Revised Schedule to Contractor with comments. In the event
any deficiencies are noted in the draft schedule, Contractor
shall deliver a revised schedule resolving such deficiencies
within five business days. Program Manager shall then have five
business days (or such longer period as is approved by
Contractor) to approve or comment on the revised schedule. This
process shall be followed until Contractor has provided a
schedule which is approved by Program Manager.
4.4 Progress Meetings
4.4.1 Meetings
Progress Meetings will be held at Program Manager's local
field office at a time designated by the Program Manager on or
about the 5th business day following delivery of the draft
invoice as described in Section 12.2.1 as well as the progress
summary described in Section 4.4.2 and draft Revised Schedule
described in Section 4.3. Each Progress Meeting shall be
attended by Contractor and the Program Manager and may also be
attended by Developer, State and/or SJTA. Actual progress during
the previous month will be recorded and future activities will be
reviewed. Contractor shall consult with its Subcontractors as
Contractor deems advisable in connection with the Revised
Schedules. Contractor shall keep written minutes of each
Progress Meeting and shall, no later than 48 hours following the
Progress Meeting, deliver a draft copy to Program Manager for
approval. Program Manager shall have the right to comment on the
minutes provided, and Contractor shall promptly incorporate all
such comments into revised minutes. Within two business days
following approval thereof by Program Manager, Contractor shall
deliver copies of the Progress Meeting minutes to each individual
who attended the meeting and any other individuals designated by
Program Manager.
4.4.2 Progress Summary
Contractor is responsible for having information and data at
each monthly Progress Meeting to verify all schedule progress.
Contractor shall prepare and provide at each monthly Progress
Meeting one copy of a timescaled network logic diagram isolating
all of the Project's Critical Paths as well as other Float paths
with less than 30 days total Float and five copies of the Project
Schedule indicating the physical status of all activities as of
date of the update. Contractor shall also submit five copies of
a written narrative progress summary with exhibits setting forth
the following:
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(a) plans for the forthcoming report period,
including Design Document submittals,
(b) all potential delays and problems, their effect
on schedule and overall completion, and an explanation of
corrective action taken or proposed and its expected effect,
(c) percentage of total schedule period consumed,
(d) tabular reports listing all activities with 10
days or less Float,
(e) whether on, ahead of or behind schedule, and by
how much,
(f) amount of available Float on each major path,
(g) goals for next reporting period (such as progress
on activities, problems or mediation),
(h) proposed revisions to logic and relationships of
non-critical activities,
(i) 60-day look ahead narrative report on all
Governmental Approvals required (with two copies of the narrative
progress report to be provided to Program Manager),
(j) computerized bar chart schedule sorted by (i)
Contractor's design sections, (ii) Contractor's working sections,
(iii) payment items and (iv) early start date,
(k) a tabular computer report which compares
Contractor's actual progress in terms of percent complete and
invoiced dollars to progress planned on the Project Schedule by
working section and major payment item,
(l) an expenditure projection for the remainder of
the Project, including a brief narrative summary of assumptions,
cash expenditure curves, other appropriate tabular reports,
graphics and supporting cash flow and cash expenditure data,
(m) a copy of the data diskettes (3.50-inch DS, HD
and DOS 5.0 or higher) for the entire schedule file, and
(n) an incremental payment report for the covered
period reporting earned costs for the period by Project Schedule
activity, payment item and work breakdown structure.
4.5 Recovery Schedule
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4.5.1 Preparation of Recovery Schedule
If the Work is lagging on any Critical Path for a period
which exceeds the greater of (a) ten days in the aggregate or
(b) that number of days in the aggregate equal to 2% of the days
remaining to the Guaranteed Completion Date, then Contractor
shall include as part of the next Revised Schedule a Recovery
Schedule demonstrating Contractor's program and proposed plan to
regain lost schedule progress and to achieve Substantial
Completion and Final Acceptance of the Project in accordance with
Section 4.2 and the Project Schedule. (For example, if there are
600 days remaining to the Guaranteed Completion Date, 2% of that
number would be 12 days, and Contractor would be thus obligated
to provide a Recovery Schedule if Contractor was behind schedule
by more than 12 days.)
4.5.2 Alternative Change Orders
In the event that Contractor requests a time extension under
Section 13.3.1.1, Developer shall have the right in its sole
discretion to decide whether to allow a time extension or to
require implementation of the Recovery Schedule without such time
extension. In such event Contractor shall submit to Program
Manager at least two alternative Change Order forms, one of which
shall include a Recovery Schedule and show the proposed
Acceleration Costs associated with the Recovery Schedule, and the
other of which shall provide for an extension of the Guaranteed
Completion Date without any increase in the Contract Price except
as provided in Sections 13.3.1.2 and 13.5.4.
4.5.3 Failure to Provide Recovery Schedule
In the event that a Recovery Schedule is required hereunder,
Contractor shall have no right to receive progress payments until
such time as Contractor has prepared and Program Manager has
approved such Recovery Schedule.
ARTICLE 5. DESIGN WORK
5.1 Commencement of Design Work
Contractor shall commence performance of design and other non-
construction Work which it will perform, and shall ensure that
performance of such Work is commenced by its Subcontractors,
promptly following issuance of NTP1.
5.2 Submittal Schedule
Refer to Section 1204 of the Special Provisions for requirements
regarding Contractor's submittal schedule.
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5.3 Submittal Review Process
Contractor shall cause all Construction Documents to be produced
and delivered to Program Manager within the time periods set
forth in the Project Schedule. Program Manager, State and SJTA
shall have the right to review and comment on all Design Documents
or compliance with the requirements of the Contract Documents,
in accordance with the procedures described in Section 1204 of
the Special Provisions. All such comments shall be delivered to
the Program Manager to be coordinated and delivered to Contractor.
Contractor shall notify Program Manager in writing within seven days
after receipt of any such comments if Contractor believes
incorporation of the comments is not required by the terms of the
Contract Documents, would render the design erroneous, defective or
deficient in any respect or would otherwise adversely affect in any
manner the design or construction of the Project or the Project
Schedule, and Program Manager shall have the right to modify its
comments. Any failure of Contractor to so notify Program Manager
shall constitute Contractor's full acceptance of all responsibility
for changes made to the Construction Documents in response to such
Program Manager comments and shall be treated for all purposes
hereunder as if Contractor had initiated such changes. Within 10
days of receipt of comments (including modifications to previous
comments) Contractor shall revise and modify all such documents
or materials so as to fully reflect all such comments and shall
deliver to Program Manager the number of copies of each such
submittal as is specified by Program Manager, to permit Program
Manager to distribute the submittal for review.
5.4 Title
Provided Developer has made payment to Contractor therefor, (a)
Design Documents shall become the property of Developer, State
and SJTA upon preparation, (b) all other Construction Documents
shall become the property of Developer, State and SJTA upon
delivery to Program Manager, and (c) information obtained or
produced by Contractor in connection with the performance of its
obligations under this Contract, including studies, technical and
other reports and the like, shall become the property of
Developer, State and SJTA upon Contractor's preparation or
receipt thereof. Copies of all such information shall be
furnished to Program Manager upon preparation or receipt thereof
by Contractor. Contractor shall furnish Program Manager, State
and SJTA with the original Working Drawings, Shop Drawings and
final as-built drawings for the Project as a condition to Final
Acceptance.
5.5 Expedited Submittal Review
Program Manager shall use reasonable efforts to accommodate
requests by Contractor for specific design submittals to be
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processed faster than specified in Section 1204.3.2 of the
Special Provisions. Contractor acknowledges that expediting the
review of prioritized submittals may result in a delay in review
of lower priority submittals. Program Manager and Contractor
shall work cooperatively to prioritize the different submittals
and achieve an acceptable review schedule. Contractor
acknowledges and agrees that no acceleration of the submittal
review schedule by Program Manager under this Section 5.5 shall
have any impact on the limits on submittals to State or SJTA
review periods.
5.6 Key Personnel; Character of Employees
5.6.1 Key Personnel
The Scope of Work identifies certain job categories of "key
personnel" for the Project. Contractor may at any time elect to
add job categories to the "key personnel" list. Program Manager
shall have the right to review the qualifications and character
of each individual to be appointed to a key position (including
personnel employed by Subcontractors) and to approve or
disapprove, in its sole discretion, use of such person in such
position prior to the commencement of any Work by such
individual. Contractor shall notify Program Manager in writing
of any proposed changes in any key personnel. Contractor shall
not change any key personnel without the prior written consent of
Program Manager.
5.6.2 Character of Employees
All employees of Contractor and of each Subcontractor shall
have the skill and experience and any licenses and other
Governmental Approvals required to perform the Work assigned to
them. If Program Manager determines in its sole discretion that
any Person employed by Contractor or by any Subcontractor is not
performing the Work in a proper and skillful manner, then at the
written request of Program Manager made in its sole discretion,
Contractor or such Subcontractor shall remove such Person and
such Person shall not be re-employed on the Project without the
prior written approval of Program Manager, which may be withheld
in its sole discretion. If Contractor or the Subcontractor fails
to remove such Person or Persons or fails to furnish skilled and
experienced personnel for the proper performance of the Work,
then Program Manager may suspend the affected portion of the Work
by delivery of written notice of such suspension to Contractor.
Such suspension shall in no way relieve Contractor of any
obligation contained in the Contract Documents or entitle
Contractor to a Change Order. Once compliance is achieved,
Contractor shall be entitled to and shall promptly resume such
portion of the Work.
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ARTICLE 6. ACQUISITION OF REAL PROPERTY; COMMENCEMENT OF
CONSTRUCTION; CONSTRUCTION PROCEDURES; RELOCATIONS;
MITIGATION
6.1 Real Property Acquisition
6.1.1 Provision of Access
Pursuant to the Road Development Agreement, State and SJTA
have committed to use best efforts to provide access to the real
property within the Right of Way Limits on or before the date
scheduled for issuance of NTP2.
6.1.1.1 Subject to Section 6.1.2, the design of
the Project furnished by Contractor shall not require any additional
permanent interests in real property.
6.1.1.2 Contractor acknowledges and agrees that it
may not be feasible for all of the property within the Right of
Way Limits to be acquired prior to Developer's issuance of NTP2.
If NTP2 is issued before access to all parcels has been obtained,
Program Manager shall keep Contractor apprised as to the status
of the acquisitions so as to enable efficient scheduling by
Contractor. Contractor shall work around the missing parcels
with the goals of minimizing delay to the Critical Path and
minimizing additional costs. Contractor's additional costs
associated with such efforts shall be eligible for reimbursement
solely through a Contingency Change Order, and delays to the
Critical Path shall be eligible for a time extension, subject to
the limitations and requirements contained in Article 13. If
Developer wishes to consider issuing NTP2 before access to all
parcels has been obtained, it will first ask Program Manager to
consult with Contractor regarding how the missing parcels affect
the Project Schedule. In such event Developer will issue NTP2
only if Program Manager determines, in its sole discretion, that
it is possible to work around the missing parcels without
unreasonable changes to the Project Schedule.
6.1.2 Contractor Responsibilities
6.1.2.1 Contractor shall be responsible, at its own
cost and expense, for acquisition of any property or temporary
easements or other property rights outside of the Right of Way
Limits which Contractor determines is necessary to accommodate
its construction methods, or to facilitate temporary utility
Relocations.
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Developer's, State's and SJTA's prior written consent
is required for any changes in the Right of Way Limits. If
Contractor wishes to revise Right-of-Way Limits for any reason,
including any plan to Relocate a utility facility outside of the
Right-of-Way Limits, Contractor shall only do so in the context
of a VECP. Any additional acquisitions will be undertaken by
State, which shall be reimbursed as specified in Section 22.5.4.
Contractor shall provide support services in connection with such
acquisitions (including provision of legal descriptions and
appraisals, if requested by State), and shall bear all risk of
schedule delays associated with any such additional acquisitions.
6.1.2.2 Contractor shall prepare all documents
necessary to evidence any easements or other real property
interests to be granted to utility owners.
6.2 Commencement of Construction
6.2.1 Conditions Precedent
Contractor shall not commence construction of any portion of
the Project prior to occurrence of all the following events
except with the prior written approval of Developer and Program
Manager in their sole discretion, and Contractor shall commence
such construction promptly following occurrence of all such events:
6.2.1.1 NTP2 shall have been delivered.
6.2.1.2 Program Manager shall have approved the
most current Project Schedule, Quality Management Program and
Contractor's Safety Program.
6.2.1.3 Contractor's Quality Assurance Manager
shall have reviewed the applicable Construction Documents and
approved their "release for construction."
6.2.1.4 All Governmental Approvals necessary for
construction of the applicable portion of the Project shall have
been obtained and all conditions of such Governmental Approvals
which are a legal prerequisite to commencement of such
construction shall have been performed.
6.2.1.5 All insurance policies and bonds required
to be delivered by Contractor hereunder prior to commencement of
construction shall have been received and approved by Developer,
State and SJTA.
6.2.1.6 State, SJTA or Contractor shall have
obtained all necessary rights of access for such portion of the
Project.
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6.2.2 Commencement "At Risk"
Contractor may start construction of certain elements of the
Project prior to approval of the Design Documents by Program
Manager only as specified in Section 1204.3.6 of the Special
Provisions. Contractor shall undertake such early construction
"at risk," and shall be obligated at its own expense to correct
any work not conforming to the Final Design Documents in
accordance with Section 6.5.
6.3 Supervision and Construction Procedures
6.3.1 Responsibility
Contractor shall be solely responsible for and have control
over construction means, methods, techniques, sequences, procedures
and Site safety and for coordinating all portions of the Work under
the Contract Documents, subject, however, to all requirements
contained in the Contract Documents.
6.3.2 Safety Program
Contractor shall have full responsibility for jobsite safety,
including provision of and compliance with a Contractor's
Safety Program meeting all requirements set forth in Section 1700
of the Special Provisions. Program Manager will advise
Contractor of situations which the Program Manager deems unsafe
and shall have the right to require Work to be stopped as
specified in Section 14.2. Contractor shall take all reasonable
precautions and be solely responsible for the safety of, and
shall provide protection to prevent damage, injury or loss to: (a)
all employees of Contractor and its Subcontractors performing
the Work and other persons (including employees of Program
Manager) who are on Site or would reasonably be expected to be
affected by the Work; (b) the Work and materials and equipment to
be incorporated therein; and (c) other property at or adjacent to
the Site.
6.3.3 Security
Until the Final Acceptance Date, Contractor shall provide
full-time security for the Site and shall be responsible for
damage or loss to all property at the Site owned by Contractor,
State, SJTA, Program Manager, Developer or any other Person.
6.3.4 Adjoining Property
Contractor shall ensure that all of its activities and the
activities of its employees, agents, officers and Subcontractors
and all other Persons for whom Contractor may be legally or
contractually responsible are undertaken in a manner that will
minimize the effect on surrounding property and the public.
Contractor's activities shall include:
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(a) Subject to any applicable homeowner's
permission, Contractor shall conduct videotaped inspections of homes
adjacent to the Project's construction, both before and after such
construction occurs, to determine whether such homes have
sustained damage attributable to the construction. Copies of the
before and after inspections shall be furnished to Program Manager.
(b) Contractor shall shield the areas of
construction along the Penrose Canal and Horace Bryant, Jr. Drive
by a landscaped berm (subject to design and construction review by
Program Manager, State and SJTA) on both sides of the
construction area.
6.3.5 Differing Site Conditions
The procedures set forth in this Section 6.3.5 shall apply in
the event of Contractor's discovery of (a) any on-Site material that
Contractor believes may be a Hazardous Substance that is required
to be removed to a Class I, Class II or Class III disposal site,
(b) any archaeological, paleontological, biological or cultural
resources or (c) any Differing Site Conditions.
6.3.5.1 Notification to Program Manager; Work Stoppage
If Contractor believes that any such discovery may be
cause for an increase in the Contract Price or extension of the
Guaranteed Completion Date, as a condition precedent to
Contractor's right to file any such Claim, Contractor shall
immediately notify Program Manager thereof telephonically or in
person, to be followed immediately by written notification. Contractor
shall immediately stop Work in and secure the affected area. In such
event, Program Manager shall view the location within 24 hours of
receipt of notification. Following the viewing by Program Manager,
Contractor may proceed with the Work, provided it can do so in
compliance with all applicable Governmental Rules, Governmental
Approvals and requirements of the Contract Documents (including
requirements of the Remedial Action Work Plan described in Section
1100 of the Special Provisions). Contractor shall keep Program
Manager apprised regarding actions which it is taking to assure
compliance with all such requirements.
6.3.5.2 Assumption of Risk
CONTRACTOR ACKNOWLEDGES AND AGREES THAT IT SHALL NOT BE
ENTITLED TO ANY INCREASE IN THE CONTRACT PRICE FOR ADDITIONAL
COSTS OF PERFORMING THE WORK ASSOCIATED WITH ANY OF THE ABOVE-
DESCRIBED MATERIALS, RESOURCES AND CONDITIONS, EXCEPT TO THE
EXTENT OF ANY CONTINGENCY CHANGE ORDER ISSUED UNDER SECTION 13.9.
Contractor hereby acknowledges and agrees that it has assumed all
risks of additional costs associated with materials, resources
and conditions described in this Section 6.3.5 in excess of any
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available Contingency and that Contractor's right to obtain a
time extension with respect to delays caused by such materials,
resources or conditions is subject to the limitations and
conditions contained in Section 13.3.1.
6.3.5.3 Disposal of Hazardous Substances
Except for Hazardous Substances which Contractor
introduced to the Site or which were negligently removed, handled
or released by Contractor or its employees, agents, officers or
Subcontractors or any other Persons for whom Contractor may be
contractually or legally responsible, for purposes of this
Contract only, (a) Contractor shall not be required to execute
any hazardous waste manifests as a "generator" and (b) Hazardous
Substances encountered in the performance of the Work shall be
disposed of, if at all, utilizing a State EPA Identification
Number that will be obtained for the Project within four weeks of
receipt by Program Manager of a written request therefor from
Contractor. Nothing in any of the Contract Documents shall be
deemed to absolve any third parties from liability for such
Hazardous Substances.
6.4 Inspection and Testing
6.4.1 Performance of Inspection and Testing
Contractor shall perform whatever inspection, sampling and
testing Contractor deems appropriate in order to comply with its
obligations under the Contract Documents, provided that Acceptance
Testing will be accomplished by Program Manager as more
specifically described in Sections 1204 and 1205 of the Special
Provisions. At all points in performance of the Work at which
specific inspections or approvals are required by the Contract
Documents, Contractor shall not proceed beyond that point until
such inspection or approval has been made or waived in writing.
6.4.2 Right of Program Manager, State and SJTA To
Conduct Inspection and Testing
All materials and each part or detail of the Work shall be
subject to inspection and testing by Program Manager, State and/or
SJTA. Contractor hereby consents to such inspection and testing.
Upon request from Program Manager, Contractor shall furnish
information to such persons as are designated in such request
and shall permit such persons access to all parts of the Work.
6.4.3 Uncovering of Work
At all times before Final Acceptance of the Project,
Contractor shall remove or uncover such portions of the finished
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construction Work as directed by Program Manager. After
examination by Program Manager, State and/or SJTA, Contractor
shall restore the Work to the standard required by the Contract
Documents. If the Work exposed or examined is not in conformance
with the requirements of the Contract Documents, then uncovering,
removing and restoring the Work and recovery of any delay to any
Critical Path occasioned thereby shall be at Contractor's
expense. Furthermore, any Work done or materials used without
adequate notice to and opportunity for prior inspection by
Program Manager, State and/or SJTA may be ordered uncovered,
removed and restored at Contractor's expense, even if the Work
proves acceptable after uncovering. Except with respect to Work
done or materials used as described in the foregoing two
sentences, if Work exposed or examined under this Section 6.4.4
is in conformance with the requirements of the Contract
Documents, then any delay in any Critical Path from uncovering,
removing and restoring Work requested by Program Manager shall be
eligible for a Contingency Change Order and a time extension,
subject to the conditions and limitations in Article 13; provided
that if Contractor establishes that the request to uncover was
made in bad faith or was the result of gross negligence or
comparable tortious conduct by Developer, State, SJTA or Program
Manager, then it shall be considered a Directed Change.
6.5 Correction of Nonconforming Work
Nonconforming Work is Work that Program Manager, State or SJTA
determines does not conform to the requirements of the Contract
Documents. Nonconforming Work shall be removed and replaced so
as to be acceptable to Program Manager, State and SJTA, at
Contractor's expense; and Contractor shall promptly take all
action necessary to prevent similar deficiencies from occurring
in the future. The fact that Program Manager, State or SJTA may
not have discovered the nonconforming Work shall not constitute
an acceptance of such nonconforming Work. If Contractor fails to
correct any nonconforming Work within ten days of receipt of
notice from Program Manager requesting correction, then Program
Manager, State and SJTA may cause the nonconforming Work to be
remedied or removed and replaced and may deduct the cost of doing
so from any moneys due or to become due Contractor and/or obtain
reimbursement from Contractor for such cost.
6.6 Utilities
This Section 6.6 sets forth provisions relating to utility
facilities affected by the Project (that is, public, private,
cooperative, municipal and/or government utility facilities used
for the carriage, transmission and/or distribution of cable
television, electric power, telephone, telegraph, water, gas,
oil, petroleum products, steam, chemicals, sewage, drainage and
similar utility lines). The term "utility" shall specifically
exclude storm water facilities. Storm water lines shall be
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removed, relocated and/or protected in place by Contractor as
part of the Work as necessary or appropriate in order to complete
the Project without the need to refer to the requirements of the
Contract Documents applicable to utilities. A preliminary survey
of utilities likely to be impacted by the Project has been performed
and the results are shown in the Concept Design. Contractor bears
full responsibility for ascertaining the existence and exact
location and size of all affected facilities.
6.6.1 Commencement of Utility Work
Contractor shall commence its Work relating to utility
Relocations promptly upon issuance of NTP1. In general, utility
construction Work shall not commence until the conditions set
forth in Section 6.2.1 have been satisfied, except that Developer
agrees to issue early notices to proceed with utility construction
Work upon receipt of a request from Contractor provided the
conditions set forth in Sections 6.2.1.2 through 6.2.1.6 have been
met and provided that Contractor shall have no right to invoice
any amounts in excess of $15 million with respect to utility
construction Work unless and until NTP2 is issued.
6.6.2 Contractor's Relocation Obligations
Contractor is responsible for causing the removal,
relocation and/or protection in place (including provision of
temporary services as necessary) of any and all utility
facilities that have to be removed, relocated and/or protected
in place in order to permit construction of the Project. Each
such removal, relocation and/or protection and/or provision of
temporary services is referred to herein as a "Relocation."
Contractor is responsible for causing Relocations to occur in all
cases where Relocations are necessitated by the Project, even if
the facility required to be relocated was not indicated with
reasonable accuracy in the documentation provided to Contractor
prior to the Bid Due Date. Although Contractor is obligated to
cause Relocations to occur and to pay for design and construction
work for each Relocation except to the extent that it includes a
Betterment (refer to SP 1602.2 regarding arrangements to be made
by the Contractor with the utilities in connection with Betterments),
Contractor should not assume that Contractor will in fact furnish
the design of, or perform construction work with respect to,
any Relocations.
6.6.2.1 General Scope
All efforts and costs necessary in order to cause
Relocations to occur are included in Contractor's Work and,
except as specified in Section 6.6.4.1, are included in the
Contract Price. State and SJTA have agreed to assist in
negotiations with utility owners. Contractor shall have no right
to enter into any agreement with a utility owner which purports
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to bind Developer, State or SJTA to its terms. In no event shall
Developer, State or SJTA be required to make any payment to any
utility owner. In no event shall any agreement with a utility
owner be deemed to modify the terms of this Contract, and in the
event of any conflict between the terms of any such agreement and
the terms of the Contract Documents, the Contract Documents shall
prevail as between Developer and Contractor.
6.6.2.2 Avoiding Relocations
The location of utility facilities and potential
impact of Relocation of such facilities shall be considered in
finalizing the design of the Project, with the following goals:
(a) avoiding Relocations to the extent practicable, (b) if a
Relocation is not reasonably avoidable, protecting the facility
in place to the extent practicable, and (c) otherwise minimizing
the potential costs and delays relating to Relocations to the
extent practicable.
6.6.3 Legal Actions
State and SJTA have agreed to consider requests by Contractor
to exercise any legal rights that they have (as deemed appropriate
by State and/or SJTA in their sole discretion) with respect to any
owner of a utility facility. Contractor may make such request only
if Contractor reasonably believes such owner will not undertake or
permit Relocation of its facility in a timely manner, and such
request shall be accompanied by evidence reasonably satisfactory
to State and SJTA that Contractor has made diligent efforts to
obtain the owner's cooperation but has not been able to obtain
such cooperation.
6.6.4 Utility Change Orders
6.6.4.1 Subject to the conditions and limitations
contained in Article 13:
(a) Contractor shall have the right to obtain a
Change Order extending the Guaranteed Completion Date in the
event of delays in completing a Utility Relocation to the extent
that the delay impacts the Critical Path so as to delay Substantial
Completion beyond the Guaranteed Completion Date, and shall also be
entitled to reimbursement solely through a Contingency Change Order
for its costs directly attributable to such delay; provided that
Contractor shall have made all reasonable efforts to obtain
cooperation of the utility owner, and provided further that no
Change Order shall be available for any avoidable delay.
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(b) Contractor shall be entitled to reimbursement
solely through a Contingency Change Order for its additional
costs directly attributable Relocation of any Major Utility
Facilities which were not accurately indicated in the Concept
Design, to the extent that such costs would not have been
incurred had the facility been located as indicated. In
determining whether a utility has been accurately indicated it
is irrelevant whether it is shown on the Concept Design as being
relocated, protected in place, or not affected by the Project. A
utility shall be considered accurately indicated to the extent
that (a) the facility's actual location is within 15 feet of the
approximate horizontal location indicated on the Concept Design
(with no limitation on vertical location), and (b) the facility's
actual size does not differ from the size indicated on the
Concept Design by more than 25% of the size originally indicated.
For example, if the Concept Design shows a 4 inch pipeline which
is in fact a 5 inch pipeline actually located twelve feet away
from the location shown, such facility shall be deemed to be
accurately indicated. If any such inaccuracy results in an
overall cost savings, Contractor shall be entitled to the benefit
thereof without any obligation to provide a credit to Developer.
6.6.4.2 Except as specified in this Section
6.6.4, Contractor specifically assumes all risk of schedule delays
associated with Utility Relocations, and Contractor specifically
assumes all cost risks associated with required Utility
Relocations. Accordingly, except as specified in this
Section 6.6.4, Contractor shall not be entitled to any time
extension and/or increase in the Contract Price associated with
any Utility Relocations.
6.7 Environmental Compliance
Contractor shall comply with all applicable Environmental Laws in
performance of the Work and shall comply with all requirements
set forth in Section 1400 of the Special Provisions.
6.7.1 Performance of Environmental Mitigation Measures
Contractor shall be responsible for performance of all
environmental mitigation measures (which phrase shall be deemed
to include all requirements of the Major Permits and similar
Governmental Approvals, regardless of whether such requirements
would be considered to fall within a strict definition of the
phrase) for the Project. The Bid Price includes compensation for
Contractor's performance of all environmental mitigation measures
described in the Contract Documents and for performance of all
environmental mitigation measures arising from a modification to
a Major Permit obtained by Contractor for its convenience.
Contractor shall be entitled to reimbursement solely through a
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Contingency Change Order for any additional costs which it incurs
associated with additional environmental mitigation requirements
contained in the final form of the Major Permits. In certain
cases the Contract Documents include specific assumptions
regarding the mitigation requirements; in other cases only
limited assumptions are included. If no assumptions are
provided, Contractor shall be responsible for making its own
assumptions, and shall not be entitled to additional compensation
if its assumptions ultimately prove incorrect. For example, the
wetlands mitigation provisions include an assumption that three
acres must be planted, but no assumptions are provided regarding
the specific planting requirements. If more than three acres of
plantings are required by the final permit, Contractor's
incremental costs directly attributable to the increased acreage
will be eligible for reimbursement solely through a Contingency
Change Order. Conversely, if the final permit requirements
result in more costly plantings than originally assumed by
Contractor, Contractor shall not be entitled to reimbursement for
its additional costs. Furthermore, no reimbursement shall be
available for any additional mitigation requirements to the
extent that they are satisfied by requirements found elsewhere in
the Contract Documents.
6.7.2 Major Permit Modifications
Contractor acknowledges and agrees that constraints
established by the Major Permits were (and will be) set based on
certain assumptions regarding the alignment of the Project, and
agrees that the Project can be designed and constructed within
the constraints identified in the IFB Documents. If Contractor
wishes to revise the design of the Project in any manner which
would require a modification to a Major Permit, Contractor shall
first consult with Program Manager, State and SJTA. If Program
Manager, State and SJTA, in their sole discretion, agree to
permit the design revision to be made, Program Manager will so
notify Contractor, who shall then proceed to prepare and provide
to State or SJTA (as appropriate) all documentation required in
connection with such modification, provide such other assistance
in connection therewith as may be requested by State or SJTA and
comply with the requirements of the modification at its own
expense, without any entitlement to reimbursement for its
additional expenses associated therewith or a time extension. If
it becomes apparent that a modification to a Major Permit is
required for the Project for any other reason, Contractor shall
prepare and provide to State or SJTA (as appropriate) all
documentation required in connection with such modification,
provide such other assistance in connection therewith as may be
requested by State or SJTA, and comply with the requirements of
the modification. In such event Contractor shall be entitled to
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reimbursement solely through a Contingency Change Order for its
additional expenses associated therewith, and shall be entitled
to a time extension, subject to the requirements contained in
Article 13.
ARTICLE 7. SUBCONTRACTS
7.1 Assignment of Subcontracts to Developer, State and SJTA
Each instrument evidencing any agreement of Contractor with any
Subcontractor shall provide that, pursuant to terms in form and
substance satisfactory to Program Manager, (a) the rights (but
not the obligations) of Contractor under such instrument are
assigned to Developer, State and SJTA and their respective
successors and assigns (contingent only upon written acceptance
of the assignment from the assignee(s) or its (their) successor(s)
or assign(s) following default by Contractor or termination or
expiration of this Contract), and (b) all warranties (express and
implied) of such Subcontractor shall inure to the benefit of
Developer, State and SJTA and their respective successors and
assigns.
7.2 Responsibility for Work Performed by Subcontractors
Notwithstanding any Subcontract or agreement with any
Subcontractor, Contractor shall be fully responsible for all of
the Work. Developer, State and SJTA shall not be bound by any
Subcontract, and no Subcontract shall include a provision
purporting to bind them.
7.3 Approval of Subcontractors
7.3.1 As soon as a potential Subcontractor has been
identified by Contractor, but in no event less than 14 days prior
to the scheduled initiation of Work by such proposed
Subcontractor, Contractor shall notify Program Manager, in
writing, of the name and address of such Subcontractor, and shall
request that Program Manager, State and SJTA approve such
Subcontractor. Within ten days after receipt of such request and
any additional information which Program Manager may request,
Program Manager will notify Contractor whether the Subcontractor
has been approved, and in the event that a Subcontractor is not
approved Program Manager will advise Contractor of the reasons
for the disapproval. If a potential Subcontractor is disapproved,
Contractor may submit another candidate for approval.
7.3.2 Contractor acknowledges the right of Program
Manager, State and SJTA to reasonably object to Subcontractors
and agrees that Developer, Program Manager, State and SJTA shall
not be liable for any delays or damages incurred by Contractor
as a result of such objections, nor shall Contractor be entitled
to reimbursement or time extensions in connection with such
objections.
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7.3.3 No Subcontractor shall perform any Work on the
Project until such Subcontractor has been approved pursuant to
Section 7.3.1.
7.4 Mandatory Terms of Subcontracts
Each Subcontract shall include terms that are substantially
similar to those terms required by Sections 2.2.7, 3.1.2, 3.2.5,
3.2.9, 6.3, 9.5, 10.2 and 13.7, Articles 14, 15, 18 and 19 and
Section 20.3 hereof; and each Subcontract other than Subcontracts
with Suppliers shall include terms that are substantially similar
to those contained in Sections 2.2.6 and 2.2.7, Article 11,
Sections 13.10.1.1, 21.2 (as appropriate), 21.3 and 21.4 and
Article 23 hereof. In addition, Contractor shall include in each
Subcontract terms and conditions sufficient to ensure compliance
by the Subcontractor with all applicable requirements of the
Contract Documents. Contractor shall give assurance that, when
minimum wage rates are specified, they shall apply to labor
performed on all work subcontracted, assigned or otherwise
disposed of in any way.
7.5 Subcontract Records
Contractor shall, each month and from time to time upon request,
provide Program Manager with a list of all Subcontractors, shall
allow Program Manager access to all Subcontracts and records
regarding Subcontracts and shall deliver to Program Manager,
within ten days after receipt of a request from Program Manager,
copies of all Subcontracts as may be requested.
7.6 Payments to Subcontractors
Contractor shall comply with the provisions of N.J.S.A. 52:32-40
and 52:32-41, concerning the prompt payment of Subcontractors,
which are hereby made a part of this Contract. Contractor shall
pay all of its Subcontractors all invoiced amounts (less
retainage) due and owing in accordance with the Subcontract,
within the time allowed for payment in the Subcontract, provided
and to the extent that Contractor has received payment from
Developer for such Work. Each descending tier Subcontractor
shall be paid all invoiced amounts (less retainage) due and owing
in accordance with the Subcontract, within the time allowed for
payment in the Subcontract, provided and to the extent that the
above-tiered Subcontractor's invoice has been paid.
ARTICLE 8. PERFORMANCE AND PAYMENT BONDS
Concurrently with execution of this Contract, Contractor has
provided Payment and Performance Bonds, each in the amount of
100% of the Contract Price, guaranteeing due and punctual
performance of all obligations of Contractor under the Contract
Documents, including all of its obligations to pay Liquidated
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Damages in accordance with Article 17. The Payment Bond shall
remain in full force and effect until the later to occur of 100
days after the Final Acceptance Date or resolution of all claims
filed thereunder. The Performance Bond shall remain in full
force and effect until expiration of Contractor's Warranties
following the Final Acceptance Date, subject to Contractor's
right to provide a replacement bond as provided in Section 20.2.3.
ARTICLE 9. INSURANCE
Contractor shall procure at its own expense insurance acceptable
to Developer, State and SJTA as described herein and shall
maintain such insurance in full force and effect as specified
herein. All insurance is to be placed with insurers admitted as
such in the State of New Jersey with an A.M. Best and Company
rating level of A- or better, Class VII or better, or as
otherwise approved by Developer, State and SJTA, at their sole
discretion.
9.1 Liability Insurance
Contractor shall procure and maintain liability insurance as
specified below, to protect Contractor, Developer, State, SJTA,
Program Manager and Mirage Resorts, Incorporated, and their
respective members, shareholders, directors, officers, employees
and agents against claims of or relating to personal injury
(including death) to persons or damage to property which may
arise from or in connection with the performance of the Work
(whether performed on-Site or off-Site) by Contractor, its
employees, officers, agents or Subcontractors (including design
professionals) or any other Person for whom Contractor may be
contractually or legally responsible during the period from the
date of issuance of NTP1 until the Final Acceptance Date (or
other period specified below).
(a) Workers' Compensation Insurance in statutory
limits under the Workers' Compensation Law of the State of New
Jersey, Employer's Liability with unlimited coverage and Maritime
coverage limits of not less than $1,000,000. The Workers'
Compensation insurance policy shall contain an endorsement
extending the policy to cover the liability of the insureds under
the U.S. Longshoremen's and Harbor Workers' Compensation Act and
an Other States Coverage endorsement.
(b) Commercial General Liability Insurance on ISO
Form CG 001 10/93 or its equivalent with the following limits of
liability and coverage:
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$50,000,000 Each Occurrence
$50,000,000 Personal and Advertising Injury
$50,000,000 Products/Completed Operations Aggregate
$50,000,000 General Aggregate Per Project
The insurance shall contain coverage for premises operations and
contractual liability with the railroad exclusion removed and
with no exclusion for explosion, collapse or underground, flood,
earthquake, subsidence, landslide or any other earth movement,
and for environmental liability. Products/Completed Operations
coverage shall be maintained for three years after the Final
Acceptance Date.
(c) Commercial Motorized Vehicle Liability
Insurance on ISO Form CA 0001 12/93 or its equivalent with limits
of liability not less than the following:
$25,000,000 Bodily Injury - per person
$25,000,000 Bodily Injury - per accident
$25,000,000 Property Damage - per accident
$25,000,000 Combined Single Limit - per accident
(d) Professional Liability Insurance with limits of
liability not less than $15,000,000 per claim, $15,000,000
aggregate limit, protecting against any negligent act, error or
omission arising out of design or engineering activities with
respect to the Project that includes coverage for acts by others
for whom Contractor is legally or contractually responsible. The
policy shall include as insureds Contractor (in the event that
any design professionals are employed directly by Contractor),
all Subcontractors providing design and engineering services and
Program Manager to the extent that it provides design and
engineering services. A five-year extended reporting and claim
assertion period will apply with respect to events which actually
or allegedly occurred but were not reported (and with respect to
claims predicated thereon but not actually asserted) during the
term of the policy.
(e) Railroad Protective Liability Insurance as
requested by the railroad operator as a condition of the
railroad's consent for entry onto railroad facilities or property
in connection with the Work, in a form and at limits acceptable
to the railroad operator.
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(f) If the Work may involve the handling,
generation, treatment, storage, transportation or disposal of
Hazardous Substances, Contractor shall provide environmental
impairment insurance on an "occurrence" basis, with limits of at
least $10,000,000 per loss and $10,000,000 aggregate, with a
deductible not to exceed $100,000, covering in substance
acceptable to Developer, State and SJTA: (i) injuries to persons
due to actual or alleged exposure to Hazardous Substances and
(ii) damage to soil, water, air or other property from Hazardous
Substances (including any and all response and/or remediation costs).
9.2 Builder's Risk Insurance
Contractor shall provide builder's risk insurance insuring the
interest of Developer, State, SJTA, Program Manager, Mirage
Resorts, Incorporated, Contractor, and Subcontractors of all
tiers (and their respective members, shareholders, directors,
officers, employees and agents) covering all real and personal
property for "all risks" of loss, including, but not limited to,
coverage against fire, lightning, wind damage, hail, explosion,
riot or civil commotion, aircraft and other vehicles, collapse,
flood, earthquake, subsidence, landslide or any other earth
movement and coverage available under the so-called Installation
Floater.
Contractor shall maintain such coverage during the period starting
on the date of issuance of NTP2 and ending on the Final Acceptance
Date.
Coverage shall include all materials, supplies and equipment that
are intended for specific installation in the Project while such
materials, supplies, and equipment are located at the Site, in
transit and while temporarily located away from the Site for the
purpose of repair, adjustment or storage at the risk of one of
the insured parties.
Coverage shall include property of others in the care, custody
and control of any insured for which such insured may be liable.
Coverage shall include structures, excavations and foundations,
including pilings, demolition, re-excavation and debris removal
and operational testing.
The coverage for transit and storage away from the Site may be
subject to a sublimit approved by Developer. Contractor must
report the value, time and means/location of any such transit or
storage to Developer or its designee prior to transit or storage.
Contractor shall be responsible for any loss that is uninsured or
underinsured arising out of such failure to notify Developer or
its designee.
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The builder's risk insurance policy shall be endorsed (a) waiving
the carrier's rights of recovery under subrogation against
Developer, State, SJTA, Program Manager, Mirage Resorts,
Incorporated, Contractor and all Subcontractors of any tier whose
interest is insured under such policy, and (b) so as to provide
that the insurance company will not cancel such insurance without
giving 60 days' prior written notice to Developer.
Any loss insured under the builder's risk insurance is to be
adjusted with Contractor and made payable to Contractor as
trustee for the insureds, as their interests may appear, subject
to the requirements of any applicable mortgagee clause.
Contractor shall pay each affected Subcontractor a just share of
any insurance moneys received by Contractor, and by appropriate
agreement, written where legally required for validity, shall
require each such Subcontractor to make payments to its
Subcontractors in similar manner.
Deductibles or self-insured retentions with respect to the
builder's risk insurance shall be no greater than $25,000 per
claim for flood and earthquake, and no greater than $10,000 per
claim for all other property losses. Contractor shall bear the
cost of all deductibles and self-insured retentions. However,
Contractor shall be entitled to reimbursement solely through a
Contingency Change Order for deductibles paid, provided that no
Change Order shall be issued in the event that Contractor or its
employees, agents, officers or Subcontractors or any other
Persons for whom Contractor may be contractually or legally
responsible was either a primary or a contributing cause of the
loss incurred.
9.3 Endorsements and Waivers
All general and motorized vehicle liability insurance policies
required to be provided by Contractor hereunder shall contain or
be endorsed to contain the following provisions (a) through (f),
and all Professional Liability, workers' compensation and
employer's liability policies are to contain or be endorsed to
contain the following provisions (e) and (f):
(a) Developer, State, SJTA, Program Manager and Mirage
Resorts, Incorporated (and their respective members,
shareholders, directors, officers, employees and agents) shall be
covered as additional insureds as respects any and all liability
arising out of the Work or this Contract.
(b) For any claims related to the Project, Contractor's
insurance coverage shall be primary insurance with respect to
Developer, State, SJTA, Program Manager and Mirage Resorts,
Incorporated (and their respective members, shareholders,
directors, officers, employees and agents), and shall specify
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that coverage continues notwithstanding the fact that Contractor
has departed from the Site. Any insurance or self-insurance
maintained by Developer, State, SJTA, Program Manager or Mirage
Resorts, Incorporated (or their respective members, shareholders,
directors, officers, employees and agents) shall be excess of
Contractor's insurance and shall not contribute with it.
Furthermore, any additional insurance which Contractor may elect
to maintain shall not contribute with any coverage required to be
maintained by Contractor hereunder.
(c) Any failure on the part of Contractor to comply with
reporting provisions or other conditions of the policies, any
breach of warranty, any action or inaction of Contractor or
others, any foreclosure relating to the Project or any change in
ownership of all or any portion of the Project shall not affect
coverage provided to Developer, State, SJTA, Program Manager and
Mirage Resorts, Incorporated (and their respective members,
shareholders, directors, officers, employees and agents).
(d) Contractor's insurance shall apply separately to
each insured against whom a claim is made or suit is brought,
except with respect to the limits of the insurer's liability.
(e) Each policy (including the Professional Liability,
workers' compensation and employer's liability policies) shall
include a waiver of any right of subrogation against Developer,
State, SJTA, Program Manager and Mirage Resorts, Incorporated
(and their respective members, shareholders, directors, officers,
employees and agents).
(f) Each policy shall be endorsed to state that coverage
shall not be suspended, voided, canceled or reduced in coverage
or in limits except after 60 days prior written notice by
certified mail, return receipt requested, has been given to
Developer, State, SJTA, Program Manager and Mirage Resorts,
Incorporated. Such endorsement shall not include any limitation
of liability of the insurer for failure to provide such notice.
9.4 Coverage To Be Provided by Contractor During Warranty Period
During the period following the Final Acceptance Date and prior
to expiration of Contractor's Warranty, Contractor shall maintain
in full force and effect all insurance as specified in
Sections 9.1. Copies of such policies shall be received and
approved by Developer, State and SJTA as a condition to Final
Acceptance.
9.5 Subcontractor Insurance Requirements
Each Subcontract (excluding Subcontracts with Suppliers) shall
provide that the Subcontractor agrees to comply with requirements
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for Contractor-provided insurance on the same terms as does
Contractor, provided that, following consultation with Program
Manager, Contractor shall have sole responsibility for
determining the limits of coverage required to be obtained by
Subcontractors, which determination shall be made in accordance
with reasonable and prudent business practices. Contractor shall
require each Subcontractor to include Developer, State, SJTA,
Program Manager and Mirage Resorts, Incorporated (and their
respective shareholders directors, officers, employees and
agents) as additional insureds under such Subcontractor's general
liability and motorized vehicle liability insurance policies.
Program Manager shall have the right to contact Subcontractors
directly in order to verify the above coverages.
9.6 Disclaimer
Contractor and each Subcontractor have the responsibility to make
sure that their insurance programs fit their particular needs,
and it is their responsibility to arrange for and secure any
insurance coverage which they deem advisable, whether or not
specified herein.
9.7 Verification of Coverage
Contractor shall deposit with Program Manager, at least 30 days
before the date that coverage is required to commence under the
terms of the Contract Documents, binders or certificates
evidencing the required coverage. Contractor agrees to deposit
with Program Manager, on or before the date that coverage is
required to commence under the terms of the Contract Documents,
certified duplicate copies of all such policies evidencing the
required coverage, provided that if such documents are not then
available they shall be provided as soon as they become available.
Not less than 15 days prior to the expiration date of any policy
of insurance required to be provided by Contractor, Contractor
shall deliver to Program Manager a binder or certificate of
insurance with respect to each renewal policy, bearing a notation
evidencing payment of the premium therefor, or accompanied by
other proof of payment satisfactory to Program Manager.
Certified duplicate copies of the renewal policy shall be
delivered to Program Manager within 30 days of the renewal date,
or as soon as reasonably possible thereafter.
9.8 Changes in Requirements
Developer may at any time notify Contractor in writing of any
changes in the insurance requirements. Such action shall be
deemed a Directed Change. Contractor shall provide to Developer
such information or records as may be required or helpful in
determining any increased cost to Contractor.
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9.9 No Recourse
There shall be no recourse against Developer, State or SJTA for
payment of premiums or other amounts with respect to the insurance
required to be provided by Contractor hereunder.
9.10 Right to Remedy Breach by Contractor
If Contractor fails to provide insurance as required herein,
Developer or its assignees shall have the right, but not the
obligation, to purchase such insurance. In such event, the
Contract Price shall be reduced by the amount paid for such
insurance.
9.11 Deductibles and Self-Insured Retentions
Any deductibles or self-insured retentions must be declared to
and approved by Developer, State and SJTA. At the option of
Developer, the insurer shall either reduce or eliminate such
deductibles or self-insured retentions with respect to Developer,
State, SJTA, Program Manager and Mirage Resorts, Incorporated
(and their respective members, shareholders, directors, officers,
employees and agents), or Contractor shall procure a bond
acceptable to Developer, State and SJTA guaranteeing payment of
losses and related investigations, claims administration and
defense expenses.
ARTICLE 10. RESPONSIBILITY FOR LOSS OR DAMAGE; TITLE
10.1 Loss or Damage
10.1.1 Contractor shall maintain, rebuild, repair,
restore or replace all Work (including Construction Documents,
materials, equipment, supplies and maintenance equipment which
are purchased for permanent installation in, or for use during
construction of, the Project regardless of who has title thereto
under the Contract Documents) that is injured or damaged prior to
Substantial Completion, at no additional cost to Developer, State
or SJTA except as expressly provided in Article 13. During the
period following Substantial Completion of the Project,
Contractor shall also maintain, rebuild, repair, restore or
replace all elements of the Work excluded from acceptance at
Substantial Completion, at no additional cost to Developer, State
or SJTA except as expressly provided in Article 13. Contractor
shall also have full responsibility for rebuilding, repairing and
restoring all other property at the Site whether owned by
Developer, Contractor, State, SJTA, Program Manager or any other
Person. If insurance proceeds with respect to any loss or damage
are paid to Developer, State or SJTA, then Developer shall
arrange for such proceeds to be paid to Contractor to the extent
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of any repair or replacement work performed by Contractor if
Developer has not previously paid for such repair or replacement
work; provided, however, that release of such proceeds to
Contractor shall not be a condition precedent to its performing
such replacement or repair work.
10.1.2 If requested by SJTA, Developer may require
Contractor to continue to have responsibility for maintaining,
rebuilding, repairing, restoring and replacing Work which has
already been accepted by SJTA, during the period after
Substantial Completion thereof until the Final Acceptance Date,
and shall do so through a Directed Change.
10.1.3 During periods that Work is suspended,
Contractor shall continue to be responsible for the Work and shall
prevent damage or injury to the Project, provide for drainage and
shall erect necessary temporary structures, signs or other
facilities required to maintain the Project. During any suspension
period, during the establishment period applicable to habitat
plantings (from initial planting until the later to occur of one
year after the planting date or the date of Substantial Completion
of the Project, subject to extension as provided in Section 11.2)
and during the one-year establishment period required for all other
landscaping, Contractor shall maintain in a growing condition all
newly established plantings, seedings and soddings furnished
under the Contract Documents and shall protect new tree growth
and other vegetative growth against injury, replacing all dead
plants requiring replacement during the establishment period.
10.2 Title
Contractor warrants that it owns, or will own, and has, or will
have, good and marketable title to all materials, equipment,
tools and supplies furnished, or to be furnished, by it and its
Subcontractors that become part of the Project or are purchased
for the operation, maintenance or repair thereof, free and clear
of all Liens. Title to all of such materials, equipment, tools
and supplies which shall have been delivered to the Site shall
pass to SJTA, free and clear of all Liens, upon the sooner of
(a) incorporation into the Project, or (b) payment to Contractor
of invoiced amounts pertaining thereto. Notwithstanding any such
passage of title, Contractor shall retain sole care, custody and
control of, and shall bear full responsibility for, such
materials, equipment, tools and supplies and shall exercise due
care with respect thereto until the Final Acceptance Date or
until Contractor is removed from the Project.
10.3 Transfer of Control to SJTA
Notwithstanding the foregoing, upon acceptance of control of any
portion of the Project by SJTA following Substantial Completion
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thereof, SJTA and not Contractor shall have responsibility for
any subsequent loss or damage to all completed Work and property
located on such portion of the Project except for property owned,
leased or used by Contractor or any Subcontractor.
ARTICLE 11. WARRANTIES
11.1 Warranties
11.1.1 Contractor warrants to Developer, State and SJTA
that (a) all design Work performed pursuant to the Contract
Documents shall conform to all professional engineering
principles generally accepted as standards of the industry in the
State of New Jersey, (b) the Project shall be free of defects,
including design defects, errors and omissions, (c) the Project
shall be fit for use for the intended function, (d) materials and
equipment furnished under the Contract Documents shall be of good
quality and new, and (e) the Work shall meet all of the
requirements of the Contract Documents.
11.1.2 Warranties shall commence on the Final Acceptance
Date. Subject to Section 11.2, the Warranties for the tunnel
structure, the tunnel approach structure and all systems,
equipment, fixtures and other appurtenances of the tunnel
structure and tunnel approach structure shall remain in effect
for a five-year period. Subject to Section 11.2, the Warranties
for all other Work shall remain in effect for a one-year period.
If any of the Work fails to meet the standards set forth in
Section 11.1 at any time within the applicable warranty period,
then Contractor shall correct such Work to meet the standards of
Section 11.1.1, even if the performance of such corrective work
extends beyond the stated warranty period.
11.1.3 SJTA, as the owner of the Project, shall have
full authority to undertake enforcement of the Warranties. SJTA
may delegate certain responsibilities in connection therewith to
Program Manager, in which event Program Manager shall have
authority to require corrective action. Within seven days of
receipt by Contractor of notice specifying a failure of any of
the Work to satisfy Contractor's Warranties, the Person which
provided the notice will consult with Contractor and SJTA to
determine and provide direction as to when and how Contractor
shall remedy such violation; provided, however, that in case of
an emergency requiring immediate curative action, Contractor
shall implement such action as it deems necessary and shall
notify SJTA and the Person which provided the notice of the
urgency of an expedited decision. Contractor, SJTA and the
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Person which provided the notice shall agree on such remedy as
soon as reasonably practicable. If Contractor does not use its
best efforts to proceed promptly to effectuate such remedy within
the directed time, or should no such agreement be reached within
such seven-day period (or immediately, in the case of emergency
conditions), Developer, State and/or SJTA, after notice to
Contractor, shall have the right to perform or have performed by
third parties the necessary remedy, and the costs thereof shall
be borne by Contractor.
11.1.4 Contractor shall be responsible for obtaining
any required encroachment permit from SJTA and for payment of all
tolls in connection with any such corrective Work. Contractor
shall bear all costs of correcting any rejected Work, including
additional testing and inspections, and shall reimburse Program
Manager, Developer, State and SJTA or pay Program Manager's,
Developer's, State's and SJTA's expenses made necessary thereby
within 10 days after Contractor's receipt of invoices therefor.
If State and SJTA agree to accept any nonconforming Work without
requiring it to be fully corrected, Developer (on behalf of
itself, State and SJTA) shall be entitled to reimbursement of a
portion of the Contract Price in an amount equal to the greater
of the diminution in the value of the Project caused by such
nonconforming Work or Contractor's cost savings in failing to
perform the Work in accordance with the requirements of the
Contract Documents. Such reimbursement shall be payable to
Developer within 10 days after Contractor's receipt of an invoice
therefor. Any disagreement relating to this Section 11.1.4 shall
be subject to the dispute resolution provisions contained in
Article 19, provided that Contractor shall proceed as directed by
Program Manager or SJTA pending resolution of the dispute.
11.2 Extension of Warranties
Contractor's Warranties shall apply to all Work re-done pursuant
to the terms of this Contract. Contractor's Warranty for re-done
elements of the Work shall extend beyond the original warranty
period if necessary to provide at least a two-year warranty
period following acceptance of re-done Work which otherwise would
fall into the five-year warranty category and to provide at least
a one-year warranty period for any other re-done Work.
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11.3 Subcontractor Warranties
11.3.1 Without in any way derogating from Contractor's
own representations and warranties (including the Warranties) and
other obligations with respect to all of the Work, Contractor
shall obtain from all Subcontractors and cause to be extended to
Developer, State and SJTA appropriate representations, warranties
(for periods at least co-extensive in duration with Contractor's
Warranties for such Work), guarantees and obligations with
respect to design, materials, workmanship, equipment, tools and
supplies furnished by such Subcontractors. All representations,
warranties, guarantees and obligations of Subcontractors (a)
shall be written so as to survive all inspections, tests and
approvals hereunder, and (b) shall run directly to and be jointly
and severally enforceable by Contractor, Developer, State and/or
SJTA and their respective successors and assigns. Contractor
hereby assigns to Developer, State and SJTA all of Contractor's
rights and interest in all extended warranties for periods
exceeding the applicable Warranty period which are received by
Contractor from any of its Subcontractors.
11.3.2 Upon receipt from Developer, State or SJTA of
notice of a failure of any of the Work to satisfy any Subcontractor
warranty, representation, covenant, guarantee or obligation,
Contractor shall be responsible for enforcing in the name of and on
behalf of Developer, State and SJTA, if so directed, or performing
any such representation, warranty, covenant, guarantee or obligation,
in addition to Contractor's other obligations hereunder. Developer's,
State's and SJTA's rights under this Section 11.3.2 shall commence at
the time such representation, warranty, guarantee or obligation is
furnished and shall continue until the expiration of Contractor's
relevant Warranty (including extensions for redone Work). Until such
expiration, the cost of any equipment, material, labor (including
re-engineering) or shipping shall be for the account of
Contractor if such cost is covered by such a Warranty and
Contractor shall be required to replace or repair defective
equipment, material or workmanship furnished by Subcontractors.
11.4 No Limitation of Liability
The foregoing warranties are in addition to all rights and
remedies available under the Contract Documents or applicable
law, and shall not limit Contractor's liability or responsibility
imposed by the Contract Documents or applicable law with respect
to the Work, including liability for design defects, latent
construction defects, strict liability, negligence or fraud.
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11.5 Assignment of Warranties
Contractor's Warranties (including warranties for re-done Work)
and all Subcontractor warranties shall be assignable by
Developer, State or SJTA without approval by Contractor or any
Subcontractor, which assignment shall be effective upon delivery
of notice to Contractor of the assignment.
11.6 Damages for Breach of Warranty
Subject to Section 17.4, Contractor shall be liable for actual
damages resulting from any breach of an express or implied
warranty (including warranties made by Subcontractors) or any
defect in the Work.
ARTICLE 12. PAYMENT FOR SERVICES
12.1 Contract Price
12.1.1 Contract Amount
As full compensation for the Work and all other obligations
to be performed by Contractor under this Contract, and subject to
the limitations contained herein, Developer shall pay to
Contractor the sum of $190,595,000 (such amount, as it may be
adjusted from time to time to account for Change Orders, is
referred to herein as the "Contract Price"). The Contract Price
shall be paid in accordance with Section 12.2. The Contract
Price shall be increased or decreased only in accordance with
Article 13. Contractor assumes each and every risk of cost
overruns, both direct and indirect, and of every nature
whatsoever, except for cost overruns directly attributable to
Directed Changes and cost overruns which are eligible for a
Contingency Change Order (to the extent the Contingency has not
been exhausted), and has fully reflected the assumption of all
such risks in the Bid Price. To the fullest extent permitted by
law, but not otherwise, Contractor irrevocably waives and
renounces any right or rights it might otherwise have to any
compensation whatsoever in excess of Contract Price.
12.1.2 Contingency
12.1.2.1 If upon achievement of Final Acceptance and
resolution of all Claims of Contractor and all claims, Liens and
stop notices of Subcontractors and laborers, funds remain
available in the Contingency, the Contract Price shall be
increased by an amount equal to 85% of such remaining Contingency
amount, and the Contingency shall thereupon be reduced to zero;
provided, however, that if Contractor fails to achieve
Substantial Completion on or before the Guaranteed Completion
Date, Contractor's share of such remaining Contingency amount
shall be reduced as follows: if Substantial Completion is late
by one week or less, Contractor's share shall be reduced by 5% to
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equal 80%, and for each week (or portion of a week) of delay
thereafter, Contractor's share shall be reduced by an additional 5%.
12.1.2.2 Following Final Acceptance, Contractor shall
notify Program Manager when all Claims of Contractor and all
claims, Liens and stop notices of Subcontractors and laborers
have been resolved, and shall provide such written evidence as
Program Manager may require regarding resolution of all such
matters. Within ten days after receipt of such notice and
evidence, Program Manager shall notify Contractor of the total
remaining amount of the Contingency (if any) and of Contractor's
share. If Contractor does not agree with the amount stated in
the Program Manager's notice, it shall so notify Program Manager
and shall work with Program Manager to reach agreement as to the
amount, if any, to be paid. Within 30 days after Program Manager
and Contractor have reached agreement as to the amount owing,
subject to Section 12.2.7, Developer shall pay Contractor any
amount owing.
12.1.3 Delay in Issuance of NTP2
12.1.3.1 The parties anticipate that NTP2 will be
issued by October 1, 1998. If NTP2 is issued after October 1,
1998 and on or before December 31, 1998, then as of the date of
issuance of NTP2 the Contract Price will be increased by an
amount equal to 2% per annum times the portion of the Contract
Price allocated to construction Work (Form N-B, Line 38),
prorated based on the number of days from October 1, 1998 to the
actual date of issuance of NTP2.
12.1.3.2 If NTP2 is not issued by December 31, 1998,
Contractor shall have the option to terminate this Contract at
any time prior to issuance of NTP2, by delivery of notice to such
effect to Developer, State, SJTA and Program Manager. If no such
termination has occurred prior to issuance of NTP2, then as of
the date of issuance of NTP2 the Contract Price shall be
increased by an amount equal to 2% per annum times the portion of
the Contract Price allocated to construction Work, prorated based
on the number of days from October 1, 1998 to the actual date of
issuance of NTP2.
12.1.3.3 Any price increase under this Section 12.1.3
shall be paid solely through a Contingency Change Order, shall be
amortized proportionally over all Work then remaining to be
performed hereunder, and shall be evidenced by a Change Order
accompanied by a revised Project Schedule.
12.1.4 Items Included in Contract Price
Contractor acknowledges and agrees that, subject only to
Contractor's rights under Article 13, the Contract Price includes
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(a) all designs, equipment, materials, labor, insurance and bond
premiums, home office, jobsite and all other overhead, profit and
services relating to Contractor's performance of its obligations
under the Contract Documents (including all Work, equipment,
materials, labor and services provided by Subcontractors and all
intellectual property rights necessary to perform the Work);
(b) performance of each and every portion of the Work; (c) the
cost of obtaining all Governmental Approvals other than the Major
Permits; and (d) payment of any duties, permit and other fees
and/or royalties imposed with respect to the Work and any
equipment, materials, labor or services included therein.
12.2 Payments
No payment will be processed or owing to Contractor for Work at
any time that Contractor has failed to provide a Project Schedule
acceptable to Program Manager or at any time that an Event of
Default has been declared or as otherwise stated herein. Payment
to Contractor of the Contract Price shall be made as follows:
12.2.1 Draft Invoice and Progress Meeting
Contractor shall deliver a draft invoice to Program Manager
on or about the first business day of each month for all Work
performed for which Contractor believes it is entitled to
payment. At each Progress Meeting, Contractor, Program Manager,
State and SJTA will ascertain the progress of the Work and review
the draft invoice and certificate reflecting the value in
accordance with the Project Schedule of all invoiced Work
completed as of the date of the meeting. Contractor and Program
Manager shall mark changes on and sign the draft invoice,
indicating that, subject to the changes so marked, it has been
approved and setting forth the proposed total payment amount,
which shall be the value of the invoiced Work then completed,
calculated in accordance with the Project Schedule, less
Retainage and progress payments previously made. The amounts set
forth in the draft invoice shall be used by Contractor in
preparation of its monthly payment request described in
Section 12.2.2.
12.2.2 Delivery of Invoice
Within seven days after each Progress Meeting, Contractor
shall submit to Program Manager five copies of an invoice in the
form attached hereto as Appendix 3 consistent with the approved
draft invoice. No invoice shall be considered complete unless it
(a) describes the status of completion as it relates to the
Project Schedule, (b) sets forth the related payments which are
then due in accordance with the Project Schedule, as of the date
of the most recent Progress Meeting, (c) includes all information
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required for the M/FBE program, (d) includes the documents and
diskettes described in Section 4.4.2 and (e) satisfies the
requirements set forth in Section 12.2.3. Contractor acknowledges
that funding for portions of the Work may be obtained from multiple
sources, and shall segregate billings for separately funded items in
a format reasonably requested by Developer and with detail and
information as reasonably requested by Program Manager. Within
seven business days after Program Manager's receipt of the invoice,
Program Manager will review the invoice and all attachments thereto
for consistency with the draft invoice prepared at the most recent
Progress Meeting and conformity with all requirements of the
Contract Documents, and shall notify Contractor of the amount
approved for payment and the reason for disapproval of any remaining
invoiced amounts. Contractor may include such disapproved amounts
in the next month's invoice after correction of the deficiencies
noted by Program Manager (all such disapproved amounts shall be
deemed in dispute unless otherwise agreed).
12.2.3 Form of Invoice
Each invoice submitted by Contractor shall include the
construction certificate in the form included in Appendix 3
hereto, with no additions or deletions other than those approved
by Program Manager. Each invoice and construction certificate
shall be executed by a designated representative of Contractor
appointed by Contractor to have such authority in accordance with
Section 24.5.1.
12.2.4 Payment by Developer
Within 25 days after receipt by Program Manager of each
invoice and the related construction certificate, Developer
shall, subject to the limitations specified in Sections 3.1.2.1
and 12.2.7, pay Contractor the amount of the invoice approved for
payment less any applicable Retainage and less any amounts which
Developer is otherwise entitled to withhold. In no event shall
Developer have any obligation to pay Contractor any amount
(a) which would result in payment for any activity in excess of
the product of the value of the activity and the percentage of
completion of such activity, or (b) which would result in
aggregate payments hereunder in excess of the overall percentage
of completion for the Project multiplied by the Contract Price.
12.2.5 Continued Performance During Disputes
Failure by Developer to pay any amount in dispute shall not
postpone, alleviate, diminish or modify in any respect
Contractor's obligation to perform under the Contract Documents,
including Contractor's obligation to achieve Final Acceptance of
the Project and all Work in accordance with the Contract
Documents, and Contractor shall not cease or slow down its
performance under the Contract Documents on account of any such
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amount. Any dispute regarding such payment shall be resolved
pursuant to Article 19. Upon resolution of any such dispute,
subject to the limitations specified in Sections 3.1.2.1 and
12.2.7, Developer shall promptly pay to Contractor any amount
owing. If payment is made after the 60th day following the
proper submission of the invoice, then the payment shall, subject
to the limitations specified in Sections 3.1.2.1 and 12.2.7,
include interest on the amount owing, from the date that the
payment was due (based on the agreement of the parties or the
decision of the judge) until the date of payment, which shall
accrue at the rate specified in N.J.S.A. 52:32-35.
12.2.6 Retainage
12.2.6.1 Except as provided below, Developer shall
withhold funds (the "Retainage") from each payment to be made to
Contractor as described in Sections 12.2.4. The Retainage shall
initially be an amount equal to 10% of the invoiced amount. Except
as otherwise provided herein, provided that Developer, State and
SJTA determine in their sole discretion that satisfactory progress
is being made, once Developer holds Retainage equal to 5% of the
Contract Price, Developer shall cease withholding Retainage from
future payments owing to Contractor hereunder. Notwithstanding any
such determination, if, in Developer's, State's or SJTA's sole
discretion, the manner of the completion of the Work does not
remain satisfactory, or if the Surety withholds consent to the
Retainage reduction, or for other good and sufficient reason,
Developer may elect at any time to withhold additional funds from
payments to Contractor so as to increase the total Retainage
withheld to an amount equal to 10% of all invoiced amounts, and
thereafter to withhold the full 10% of each invoiced amount.
12.2.6.2 The Retainage shall be held in the Road Account
until all events described in Section 12.2.6.3 have occurred, but
at least until 30 days after the Final Acceptance Date. At such
time Developer shall release to Contractor all Retainage other
than amounts applied to the payment of Liquidated Damages or which
Developer deems advisable, in its sole discretion, to retain to
cover any existing or threatened claims, Liens and stop notices
relating to the Project, or any amounts due Developer under
Section 11.1.4, or the cost of any Punch List items or other
uncompleted Work. Final payment of such Retainage not applied to
Liquidated Damages, or to any amounts due Developer under Section
11.1.4 shall be made upon Contractor's showing, to Developer's,
State's and SJTA's reasonable satisfaction, that all such matters
have been resolved, including delivery to Developer of a
certification that there are no outstanding existing or threatened
claims of Contractor or any claims, Liens or stop notices of any
Subcontractor, Supplier or laborer with respect to the Work.
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12.2.6.3 No portion of the Retainage shall be released
unless and until all of the following conditions have been met:
(a) Liquidated Damages shall not then be payable to Developer;
(b) Contractor shall have established to Developer's reasonable
satisfaction that Liquidated Damages are not anticipated to be
payable to Developer; (c) Contractor shall have applied in
writing for such release; and (d) such release shall have been
approved in writing by the Surety, State and SJTA.
12.2.6.4 Contractor shall have the right to substitute
marketable securities for all or any portion of the Retainage,
provided that no such substitution shall be accepted until
(a) such securities have been approved in writing by Developer,
(b) the value of such securities has been established to
Developer's, reasonable satisfaction, to be at least 125% of the
required Retainage amount, (c) the parties have entered into an
escrow agreement (if the securities are to be held in escrow) in
mutually agreeable form, and (d) all documentation necessary for
assignment of the securities to Developer or to the escrow agent,
as appropriate, has been delivered in form reasonably
satisfactory to Developer, State and SJTA and if applicable, to
the escrow agent.
12.2.6.5 If Contractor has substituted marketable
securities for any of the Retainage, then Developer may request
that such securities be revalued from time to time, but not more
often than monthly. Such revaluation shall be established to
Developer's reasonable satisfaction to be at least 125% of the
required Retainage amount. If such revaluation results in a
determination that such securities have a market value which is
less than 125% of the amount of Retainage for which they are a
substitute, then notwithstanding anything to the contrary
contained herein, the amount of the Retainage required under this
Contract shall be increased by such difference in market value.
Such increased Retainage shall be withheld from the next progress
payment due Contractor hereunder.
12.2.7 Deductions
In addition to the deductions provided for under Sections
12.2.6 and 12.2.8.3, Developer may deduct from each progress
payment the following:
(a) Any Liquidated Damages which have accrued as of
the date of the application for payment,
(b) Any sums expended by Developer, State or SJTA in
performing any of Contractor's obligations under this Contract
which Contractor has failed to perform, and
(c) Any other sums which Developer, State or SJTA is
entitled to recover from Contractor under the terms of the
Contract Documents.
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The failure by Developer to deduct any of these sums from a
progress payment shall not constitute a waiver of Developer's
right to recover such sums or to deduct such funds from future
progress payments.
12.2.8 Unincorporated Materials
Developer will pay for material not yet incorporated in the
Work only under the following circumstances:
12.2.8.1 Developer will give consideration to
requests for payment for materials and equipment stored off-Site on a
case-by-case basis, subject to the following conditions precedent:
(a) Contractor shall provide Program Manager with
at least 40 days' prior notice of Contractor's plan to request
payment for off-Site stored materials and equipment. Such
request shall include a description of the off-Site location, a
listing of all materials and equipment covered by the request,
the individual value of the materials and equipment, the status
of the fabrications of the material and/or equipment and the
required dates of delivery at the Site.
(b) Evidence of insurance coverage of the stored
material and equipment and related transit, including a loss-
payable clause endorsement to Contractor's insurance policy
providing payment to Developer in the event of loss of the
specified stored materials and equipment.
(c) A written statement from the Surety consenting
to payment for materials and equipment stored off-Site.
(d) Such other documentation satisfactory to
Program Manager to establish SJTA's title to such material and
equipment or otherwise protect Developer's, State's and SJTA's
interest.
(e) Program Manager will review the documentation
for completeness and accuracy. If the documentation presented
does not satisfy the aforementioned conditions precedent, or if
for any other reason Program Manager is not satisfied, in its
sole discretion, that Developer's, State's and SJTA's interest is
fully protected, the request for payment for stored materials
shall be denied.
(f) Developer specifically reserves the right to
discontinue payment for material or equipment stored off-Site at
any time for any reason during the course of the Work.
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(g) Contractor shall bear all costs of Program
Manager associated with inspection of off-Site materials stored
outside of the County.
12.2.8.2 Following payment therefor, all such
materials so accepted shall become the property of SJTA. Contractor
at its own expense shall promptly execute, acknowledge and deliver to
Program Manager proper bills of sale or other instruments in writing
in a form acceptable to SJTA conveying and assuring to SJTA title to
such material included in any invoice, free and clear of all Liens.
Contractor at its own expense shall conspicuously mark or paint such
material as the property of SJTA, shall not permit such materials to
become commingled with non-SJTA-owned property and shall take such
other steps, if any, as Program Manager or SJTA may require or regard
as necessary to vest title to such material in SJTA free and clear of
Liens.
12.2.8.3 Material included in an invoice but which is
subsequently lost, as determined by Contractor, or which is
damaged or unsatisfactory, as determined by Program Manager,
shall be deducted from succeeding invoices.
12.2.8.4 Payment for material furnished and delivered
as indicated in this Section 12.2.8 will not exceed the amount
paid by Contractor as evidenced by a bill of sale supported by
paid invoice. Developer shall withhold Retainage from such
payment as specified in Section 12.2.6.
12.2.9 Mobilization
Payment for the cost of mobilizing following issuance of
NTP1 shall not exceed $500,000. Payment for the cost of mobilizing
for the start of construction following issuance of NTP2 shall not
exceed the amount set forth for the mobilization line item on Bid
Price Form N-B less the amount previously paid.
12.2.10 Equipment
Developer shall not pay for direct costs of equipment used
in constructing the Project. Payment for such equipment, whether
new, used or rented, shall be allocated to and paid for as part
of the activities with which the equipment is associated, in a
manner which is consistent with the requirement of Section 13.7.3.
12.2.11 Bond and Insurance Premiums
The amount payable for bond and insurance premiums shall be
a dollar-for-dollar passthrough of Contractor's costs (not to
exceed the line item for such premiums set forth on Bid Price
Form N-B), with any excess portion of the line item for such
premiums to be paid upon achievement of Substantial Completion.
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The foregoing limitation shall not apply to any insurance
premiums required by Section 2.3.9 of the Instructions to Bidders
to be included in other line items.
ARTICLE 13. CHANGES IN THE WORK
This Article 13 sets forth the requirements for obtaining all
Change Orders under this Contract. Contractor hereby
acknowledges and agrees that the Contract Price constitutes full
compensation for performance of all of the Work, subject only to
those exceptions specified in this Article 13, and that Developer
is subject to financing constraints which have resulted in strict
limitations on its ability to increase the Contract Price or
extend the Guaranteed Completion Date. CONTRACTOR HEREBY WAIVES
THE RIGHT TO MAKE ANY CLAIM FOR A TIME EXTENSION OR FOR ANY
MONETARY COMPENSATION IN ADDITION TO THE CONTRACT PRICE AND OTHER
COMPENSATION SPECIFIED IN THIS CONTRACT FOR ANY REASON WHATEVER,
EXCEPT AS SPECIFICALLY SET FORTH IN THIS ARTICLE 13. CONTRACTOR
IS ADVISED THAT STATE'S AND SJTA's APPROVAL IS REQUIRED FOR EACH
CHANGE ORDER, AND THAT CONTRACTOR MAY AND SHALL RELY ON EXECUTION
OF THE CHANGE ORDER BY PROGRAM MANAGER OR DEVELOPER (AS PROVIDED
HEREIN) AS EVIDENCE THAT SUCH APPROVAL HAS BEEN OBTAINED.
13.1 Circumstances Under Which Change Orders May Be Issued
13.1.1 Definition of and Requirements Relating to Change
Orders
13.1.1.1 The term "Change Order" shall mean a written
amendment to the terms and conditions of the Contract Documents
issued in accordance with this Article 13. Program Manager has
limited authority to issue certain types of Change Orders, and
Developer and Program Manager may each issue unilateral Change
Orders as specified below. Change Orders may be requested by
Contractor only pursuant to Section 13.3. A Change Order shall
not be effective for any purpose unless executed either by
Developer or Program Manager, as specified herein. Change Orders
may be issued for the following purposes (or combination thereof):
(a) to modify the scope of the Work;
(b) to revise the Guaranteed Completion Date;
(c) to revise the Contract Price;
(d) to approve a material change in Basic
Configuration; and
(e) to revise other terms and conditions of the
Contract Documents.
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Upon Developer's or Program Manager's approval of the
matters set forth in the Change Order form (whether it is
initiated by Developer, Program Manager or Contractor), Developer
or Program Manager shall sign such Change Order form indicating
approval thereof. A Change Order may, at the sole discretion of
Developer or Program Manager, (as appropriate) direct Contractor
to proceed with the Work with the amount of any such adjustment
to be determined in the future.
13.1.1.2 Program Manager may at any time issue a
Directive Letter to Contractor in the event of any desired change
in the Work or in the event of any dispute regarding the scope of
Contractor's Work. However, Program Manager's authority to issue
Directive Letters is limited to situations which (a) do not
require an extension of the Guaranteed Completion Date, (b) do
not involve a material change in Basic Configuration, and
(c) either will not result in an increase in the Contract Price
or will be payable solely from the Contingency. The Directive
Letter will describe the work in question and will state the
basis for determining compensation, if any. If Contractor
believes that the Work described in the Directive Letter should
be considered a Directed Change, Contractor shall respond within
two business days with notice to that effect, and in such event
Contractor shall have no obligation to proceed with such Work
unless and until it has received a Directive Letter signed by
Developer. Otherwise Contractor shall be deemed to have agreed
that the Work should not be considered a Directed Change, and
Contractor shall proceed immediately with the Work as directed,
pending the execution of a formal Change Order (or, if the letter
states that the Work is within Contractor's original scope of
Work, Contractor will proceed with the Work as directed but shall
have the right to submit the question of entitlement to a Change
Order and the amount of allowable compensation and time to
dispute resolution in accordance with Article 19).
13.1.1.3 Developer may at any time issue a Directive
Letter to Contractor in the event of any desired change in the
Work or in the event of any dispute regarding the scope of
Contractor's Work. The Directive Letter will describe the Work
in question and will state the basis for determining
compensation, if any. Contractor will proceed immediately with
the Work as directed, pending the execution of a formal Change
Order (or, if the letter states that the Work is within
Contractor's original scope of Work, Contractor will proceed with
the Work as directed but shall have the right to submit the
question of entitlement to a Change Order and the amount of
allowable compensation and time to dispute resolution in
accordance with Article 19).
13.1.1.4 Before starting to work on any item which
Contractor considers to be outside of its original scope of Work,
as a condition precedent to its right to receive additional
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payment therefor or an extension of the Guaranteed Completion
Date in connection with such Work, Contractor shall have received
one of the following:
(a) a Directive Letter from Program Manager
stating that it is issued pursuant to Section 13.1.1.2;
(b) a Contingency Change Order for such Work
signed by Program Manager;
(c) a Directive Letter from Developer stating
that it is issued pursuant to Section 13.1.1.3; or
(d) a Change Order for such Work signed by
Developer.
In addition to provision of a PCO Notice and
subsequent Change Order request pursuant to Section 13.3.2, receipt
of a Directive Letter from Developer shall be a condition precedent to
Contractor's right to make a Claim that a Directed Change has
occurred, provided that no Directive Letter shall be required for
alleged Directed Changes directly attributable to delays caused
by bad faith actions, active interference, gross negligence or
comparable tortious conduct by Developer, State, SJTA or Program
Manager. The fact that a Directive Letter was issued by
Developer shall not be considered evidence that in fact a
Directed Change occurred. The determination whether a Directed
Change in fact occurred shall be based on an analysis of the
original Contract requirements and a determination whether the
Directive Letter in fact constituted a change in those
requirements.
13.1.1.5 Clarifications of Contract Documents shall be
handled as set forth in Section 105.02 of the General Provisions.
13.1.2 Right of Developer and Program Manager to Issue
Change Orders
In accordance with the procedures set forth in this
Article 13:
(a) Developer may, at any time and from time to
time, without notice to any Surety, authorize and/or require
changes in the Work within the general scope of the Contract pursuant
to a Change Order, and
(b) Program Manager may, at any time and from
time to time, without notice to any Surety, authorize and/or require
changes in the Work within the general scope of the Contract
pursuant to a Contingency Change Order.
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All additions, deductions or changes to the Work as directed
by Change Orders shall be executed under the conditions of the
original Contract Documents. Contractor shall obtain the prior
written approval of Program Manager for any changes in the Project
design.
13.2 Procedure for Issuance of Change Orders Issued by Developer
or Program Manager
This Section 13.2 concerns Change Orders issued by Developer or
Program Manager following a Notice of Proposed Change and Change
Orders unilaterally issued by Developer or Program Manager.
Program Manager shall have no right to issue any Change Orders
under Section 13.2.1 or 13.2.2.
13.2.1 Notice of Proposed Directed Change
13.2.1.1 If Developer desires to issue a Directed
Change or to evaluate whether to initiate such a change, then
Developer may, at its discretion, issue a Notice of Proposed
Directed Change. Program Manager may at any time ask Contractor
to provide two alternative Change Order forms in accordance with
Section 13.3.1. Directed Changes will be identified as having
been requested by State, SJTA and/or Developer, in order to
establish the respective liabilities of State, SJTA and Developer
for the costs of such change in accordance with Section 4.9 of
the Road Development Agreement.
13.2.1.2 Within five business days after Contractor's
receipt of a Notice of Proposed Directed Change, Program Manager
and Contractor shall arrange an initial consultation (at no charge
to Developer, State or SJTA) to define the proposed scope of work.
Within five days after completion of the initial consultation,
Program Manager and Contractor shall consult concerning the estimated
cost and time impacts. Contractor shall provide data regarding such
matters as requested by Program Manager.
13.2.1.3 After the initial consultation and provision
of data as described in Section 13.2.1.2, Developer shall notify
Contractor whether Developer (a) wishes to issue a Change Order,
(b) wishes to request Contractor to prepare a Change Order form
as discussed at the meeting, (c) wishes to request Contractor to
modify the work plan and prepare a Change Order form based on the
modified plan, or (d) no longer wishes to issue a Change Order.
13.2.1.4 If so requested, Contractor shall, within
ten business days after receipt of the notification described in
Section 13.2.1.3, prepare and submit to Developer for review and
approval by Developer a Change Order form for the requested
change, complying with all applicable requirements of
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Section 13.6.1, incorporating and fully reflecting all requests
made by Developer. If Contractor determines that it cannot meet
the time allowed, Contractor shall notify Developer in writing of
Contractor's proposed deadline for providing the Change Order
form, which deadline shall be subject to approval by Developer. The
cost of developing the Change Order form, including any modifications
thereto requested by Developer, shall be made at Contractor's cost
and expense, except that costs of design and engineering work required
for preparation of plans or exhibits necessary to the Change Order
form shall be included in the Change Order as reimbursable items.
13.2.1.5 In the event that the parties agree that a
change in the requirements relating to the Work has occurred but
disagree as to whether the change justifies additional compensation
or time or disagree as to the amount of any increase to be made to
the Contract Price or extension of the Guaranteed Completion Date to
be made, Developer may, in its sole discretion, order Contractor to
proceed with the performance of the Work in question notwithstanding
such disagreement. Such order may, at Developer's option, be in the
form of: (a) a Time and Materials Change Order as provided in
Section 13.7 or (b) a Directive Letter under Section 13.1.1.3. Any
such Change Order or Directive Letter as referred to in this Section
13.2.1.5 shall state whether State, SJTA, and/or Developer will bear
responsibility for Contractor's allowable costs in the event that
it is ultimately determined that Contractor is entitled to
additional compensation for the Work in question
13.2.2 Unilateral Change Orders for Directed Changes
Developer may issue a Change Order for a Directed Change at
any time, regardless of whether it has issued a Notice of
Proposed Directed Change. Contractor shall be entitled to
compensation in accordance with Section 13.7 for additional Work
which is required to be performed as the result of any unilateral
Change Order, and shall have the right to submit the issue of
entitlement to an extension of a Guaranteed Completion Date (or
Float) to dispute resolution in accordance with Article 19.
13.2.3 Notice of Proposed Contingency Change
13.2.3.1 If Program Manager desires to issue a Contingency
Change Order or to evaluate whether to initiate a change in the Work
which will be payable solely from the Contingency, then Program
Manager may at its discretion issue a Notice of Proposed Contingency
Change.
13.2.3.2 Within five business days after Contractor's
receipt of a Notice of Proposed Contingency Change, Program
Manager and Contractor shall arrange an initial consultation (at
no charge to Developer, State or SJTA) to define the proposed
change in the Work. Within five days after completion of the
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initial consultation, Program Manager and Contractor shall
consult concerning the estimated cost and time impacts.
Contractor shall provide data regarding such matters as requested
by Program Manager.
13.2.3.3 After the initial consultation and provision
of data as described in Section 13.2.3.2, Program Manager shall
notify Contractor whether Program Manager (a) wishes to issue a
Contingency Change Order, (b) wishes to request Contractor to
prepare a Contingency Change Order form as discussed at the
meeting, (c) wishes to request Contractor to modify the proposed
work plan and prepare a Contingency Change Order form based on
the modified plan, or (d) no longer wishes to issue a Change
Order.
13.2.3.4 If so requested, Contractor shall, within ten
business days after receipt of the notification described in
Section 13.2.3.3, prepare and submit to Program Manager for
review and approval by Program Manager a Change Order form for
the requested change, incorporating and fully reflecting all
requests made by Program Manager. If Contractor determines that
it cannot meet the time allowed, Contractor shall notify Program
Manager in writing of Contractor's proposed deadline for
providing the Change Order form, which deadline shall be subject
to approval by Program Manager. The cost of developing the
Change Order form, including any modifications thereto requested
by Program Manager, shall be made at Contractor's cost and
expense, except that costs of design and engineering work
required for preparation of plans or exhibits necessary to the
Change Order form shall be included in the Change Order as
reimbursable solely from the Contingency.
13.2.3.5 In the event that Contractor and Program
Manager agree that a change in the requirements relating to the
Work has occurred which is appropriate for a Contingency Change
Order but disagree as to the amount of Contingency to be
allocated to the change, Program Manager may, in its sole
discretion, order Contractor to proceed with the performance of
the Work in question notwithstanding such disagreement. Such
order may, at Program Manager's option, be in the form of: (a) a
Contingency Change Order based on time and materials as provided
in Section 13.7, or (b) a Directive Letter under Section 13.1.1.2
pending further discussions regarding issuance of a Contingency
Change Order.
13.2.3.6 Program Manager has no authority to extend
the Guaranteed Completion Date. Notwithstanding anything to the
contrary contained herein, in the event that the subject matter
of a Contingency Change Order necessitates an extension of the
Guaranteed Completion Date, Developer's signature shall be
required on such Change Order as a condition to its
effectiveness.
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13.2.4 Unilateral Contingency Change Orders
Program Manager may issue a Contingency Change Order at any
time, regardless of whether it has issued a Notice of Proposed
Contingency Change. Contractor shall be entitled to compensation
in accordance with Section 13.7, solely from the Contingency, for
additional Work which is required to be performed as the result
of any unilateral Contingency Change Order. In the event that
Contractor contends that the subject matter of any unilateral
Contingency Change Order constitutes a Directed Change or that
the change justifies an extension of the Guaranteed Completion
Date, Contractor shall immediately notify Program Manager of such
fact, and shall thereupon have no obligation to perform the work
described in the unilateral Contingency Change Order unless and
until Developer signs the Change Order form or issues a Directive
Letter with respect to such work.
13.3 Contractor-Initiated Change Orders
13.3.1 Eligible Changes
13.3.1.1 Contractor may request a Change Order to
extend the Guaranteed Completion Date only for the following
excusable delays changing the duration of a Critical Path so as
to delay Substantial Completion of the Project beyond the
Guaranteed Completion Date:
(a) Eligible Delays,
(b) delays which are directly attributable to
Force Majeure events or Differing Site Conditions, and
(c) certain delays relating to Utility
Relocations, as described in Section 6.6.4, to the extent
provided therein.
In the event that Contractor requests a time extension, Program
Manager may require Contractor to provide two alternative Change
Order requests, one of which shall provide for a time extension
and any additional costs permitted hereunder, and the other of
which shall show all Acceleration Costs associated with meeting
the original completion deadline, as well as any additional costs
permitted hereunder.
13.3.1.2 Contractor may request a Change Order to
increase the Contract Price, subject to strict compliance with
the requirements of this Section 13.3, only for increased costs
in Contractor's Work as follows:
(a) in response to a Notice of Proposed Change;
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(b) for additional costs directly attributable to
additional Work resulting from Directed Changes for which
Developer has not submitted a Change Order or a Notice of
Proposed Change; or
(c) subject to availability of the Contingency,
and solely from the Contingency, for additional costs as
specified in Section 13.9.1.
13.3.2 Conditions Precedent
The following requirements constitute conditions precedent
to Contractor's entitlement to request a Change Order in all
circumstances except those involving a Notice of Proposed Change
or involving a price increase under Section 12.1.3. Contractor
agrees that the filing of PCO Notices and subsequent filing of
requests for Change Orders with the Program Manager pursuant to
this Section 13.3.2 are necessary in order to begin the
administrative process for the resolution of Contract disputes.
In addition, filing of PCO Notices and requests for Change Order
shall constitute the only means of complying with applicable
notice requirements in the New Jersey Contractual Liability Act,
NJSA 59:13-5, and Contractor shall not claim that any other
documents sent or delivered to the Program Manager, Developer,
State or SJTA, or any of its officers or employees satisfy such
notice requirement. Contractor understands that it shall be
forever barred from recovering against Developer, State and SJTA
if it fails to give notice of any act, or failure to act, by the
Program Manager, Developer, State or SJTA or the happening of any
event, thing or occurrence pursuant to a proper PCO Notice, and
thereafter complies with the remaining requirements of this
Section 13.3.2.
13.3.2.1 PCO Notice
Contractor shall deliver to Program Manager written
notice (a "PCO Notice") stating that an event or situation has
occurred within the scope of Section 13.3.1.1 or 13.3.1.2 which
Contractor believes constitutes a Directed Change, an Eligible
Delay or a Contingency Event. The first notice shall be labeled
"PCO No. 1" and subsequent notices shall be numbered
sequentially.
13.3.2.1.1 Each PCO Notice shall be delivered as
promptly as possible after the occurrence of such event or situation.
In the event that any PCO Notice is delivered later than ten days
after Contractor first discovered (or should have discovered in the
exercise of reasonable prudence) the occurrence which is described
therein, Contractor shall be deemed to have waived the right to
collect any and all costs incurred prior to the date of delivery of
the written notice, and shall be deemed to have waived the right to
seek an extension of any Guaranteed Completion Date with respect to
any delay in any Critical Path which accrued prior to the date of
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delivery of the written notice. Furthermore, in the event that
any PCO Notice concerns any condition or material described in
Section 6.3.5, Contractor shall be deemed to have waived the
right to collect any and all costs incurred in connection
therewith to the extent that Program Manager is not afforded the
opportunity to inspect such material or condition before it is
disturbed. Contractor's failure to provide a PCO Notice within
30 days after Contractor first discovered (or should have
discovered in the exercise of reasonable prudence) the occurrence
of a given event or situation shall preclude Contractor from any
relief, unless Contractor can show, based on a preponderance of
the evidence, that (a) Developer was not materially prejudiced by
the lack of notice, or (b) Program Manager's Project Director had
actual knowledge, prior to the expiration of the 30-day period,
of the event or situation and that the Contractor believed it was
entitled to a Change Order with respect thereto.
13.3.2.1.2 The PCO Notice shall: (a) state in
detail the facts underlying the potential claim, the reasons why
Contractor believes additional compensation or time will or may be
due and the date of occurrence, (b) state the name, title, and
activity of each Program Manager and Developer representative
knowledgeable of the claimed change, (c) identify any documents
and the substance of any oral communication involved in the claimed
change, (d) state in detail the basis for a claim of necessary
accelerated schedule performance, if applicable, (e) state in
detail the basis for a claim that the work is not required by the
Contract, if applicable, and (f) identify particular elements of
Contract performance for which additional compensation may be
sought under this Article 13.
13.3.2.1.3 The elements of Contract performance
to be addressed in each PCO Notice shall include: (a) price element(s)
that have been or may be affected by the claimed change, (b) labor or
materials, or both, that will be added, deleted or wasted by the
claimed change and what equipment will be idled or required, (c) an
impacted delay analysis regarding delay and disruption in the manner
and sequence of performance that has been or will be caused, (d)
adjustments to the Contract Price, delivery schedules, staging, and
completion deadlines estimated due to the claimed change, and (e) an
estimate of the time within which a response to the notice is
required to minimize cost, delay, or disruption of performance.
13.3.2.1.4 If the claim relates to a decision of
the Program Manager, State, SJTA or Developer which the Contract
leaves to the discretion of such Person or as to which the Contract
provides that such Person's decision is final, the PCO Notice shall
set out in detail all facts supporting the Contractor's objection
to the decision, including all facts supporting any contention that
the decision was capricious or arbitrary or is not supported by
substantial evidence.
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13.3.2.1.5 The written notification described
in Section 6.3.5.1 may also serve as a PCO Notice provided it meets
the requirements for PCO Notices.
13.3.2.1.6 Within ten days after receipt of a
PCO Notice, Program Manager may respond in writing to Contractor
to: (a) confirm that a change has occurred or (b) deny that a
change has occurred or (c) advise Contractor that the necessary
information has not been submitted to decide which of the above
alternatives applies, and indicate the needed information and date
by which it is to be received for further review. Failure of
Program Manager to respond shall not affect Contractor's obligation
to provide a request for Change Order within the time periods
specified in Section 13.3.2.2.
Any adjustments made to the Contract shall not include increased
costs or time extensions for delay resulting from Contractor's
failure to provide requested additional information under this
Section 13.3.2.1.
13.3.2.2 Request for Change Order
Contractor shall deliver all requests for Change Orders
under this Section 13.3 to Program Manager within 30 days after
delivery of the PCO Notice, or such longer period of time as may
be allowed in writing by Program Manager. Program Manager may
require design and construction costs to be covered by separate
Change Order requests. If Contractor fails to deliver a complete
or incomplete request for Change Order within the appropriate
time period, Contractor shall be required to provide a new PCO
Notice before it may submit a request for Change Order.
13.3.2.3 Provision of Incomplete Change Orders
Each request for Change Order provided under Section 13.3.2.2
shall meet all requirements set forth in Section 13.4; provided
that if any such requirements cannot be met due to the nature of
the occurrence, Contractor shall provide an incomplete Change
Order which fills in all information capable of being ascertained
and which shall include a list of those Change Order requirements
which are not fulfilled together with an explanation reasonably
satisfactory to Program Manager stating why such requirements
cannot be met, shall provide such information regarding projected
impact on the Critical Path as is requested by Program Manager
and in all events shall include sufficient detail to ascertain
the basis for the proposed Change Order and for any ascertainable
amounts with respect thereto.
Contractor shall furnish, when requested by Program
Manager, such further information and details as may be required
to determine the facts or contentions involved. Contractor
agrees that it shall give Program Manager access to any and all
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of Contractor's books, records and other materials relating to
the Work, and shall cause its Subcontractors to do the same, so
that Program Manager can investigate the basis for such proposed
request for Change Order. Contractor shall provide Program
Manager with a monthly update to each outstanding incomplete
request for Change Orders, describing the status of all
previously unfulfilled requirements and stating any changes in
projections previously delivered to Developer, time expenditures
to date and time anticipated for completion of the activities for
which the time extension is claimed. Program Manager may reject
Contractor's claim at any point in the process. Once a complete
request for Change Order is provided, Developer's failure to
respond thereto within 21 days of delivery of the request shall
be deemed a rejection of such request. Although Developer
intends for Program Manager to review incomplete Change Orders
for the purposes described in Section 13.3.2.4, Program Manager
shall have no obligation to review the back-up associated with
any request for Change Order until a complete Change Order is
provided.
13.3.2.4 Importance of Timely Response
Contractor acknowledges and agrees that, due to the
limited availability of funds for the Project, timely delivery of
notification of such events and situations and requests for
Change Orders and updates thereto are of vital importance to
Developer. Developer is relying on Contractor to evaluate
promptly, upon the occurrence of any event or situation, whether
the event or situation will affect a Critical Path and, if so,
whether Contractor believes a time extension and/or claim on the
Contingency is appropriate. If an event or situation occurs
which may affect the Contract Price or a Critical Path, Developer
and Program Manager will evaluate the situation and determine
whether it wishes to make any changes to the definition of the
Project so as to bring it within Developer's funding and time
restraints. The following matters (among others) shall be
considered in determining whether Developer has been prejudiced
by Contractor's failure to provide notice in a timely fashion:
the effect of the delay on alternatives available to Developer
(that is, a comparison of alternatives which are available at the
time notice was actually given and alternatives which would have
been available had notice been given within ten days after
occurrence of the event or when such occurrence should have been
discovered in the exercise of reasonable prudence) and the impact
of the delay on Developer's and Program Manager's ability to
obtain and review objective information contemporaneously with
the event.
13.3.2.5 Compliance With Section 6.3.5 Requirements
Contractor shall comply with all applicable requirements contained
in Section 6.3.5, unless precluded from doing so by emergency
circumstances.
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13.3.2.6 Review of Subcontractor Claims
Prior to submission by Contractor of any request for a
Change Order which is based in whole or in part on any facts
alleged in a submittal by any Subcontractor to Contractor,
Contractor shall have reviewed all such Subcontractor claims and
determined in good faith whether the claims are justified as to
both entitlement and amount, and Contractor's request for a
Change Order shall include only those items which Contractor has
determined are so justified and which otherwise meet all
requirements hereunder for Contractor-initiated Change Orders.
Each request for a Change Order involving Subcontractor Work, and
each update to an incomplete Change Order request involving such
Work shall include a summary of Contractor's analysis of all
Subcontractor claims components and shall include a certification
signed by Contractor's Project Manager stating that Contractor
has reviewed and approved any audit data included in the request.
Any request for Change Order involving Subcontractor Work which
is not accompanied by such an analysis and certification shall be
considered incomplete.
13.3.3 Submission of Request for Change Order
Contractor shall initiate each request for a Change Order,
after satisfaction of all conditions precedent set forth above,
by submitting a Change Order form and supporting documentation to
Program Manager for review. If Contractor submits a request for
Change Order requesting an extension of the Guaranteed Completion
Date as permitted by Section 13.3.1.1, then Contractor shall also
provide an alternative Change Order including a Recovery Schedule
in accordance with Section 4.5.
13.3.4 Performance of Disputed Work
In the event that Developer refuses to issue a Change Order
based on Contractor's request, Contractor shall nevertheless
promptly perform all work as specified in an appropriate Directive
Letter, with the right to submit the issue of entitlement to a
Change Order to dispute resolution in accordance with Article 19.
13.4 Contents of Change Orders
13.4.1 Form of Change Order
Each Change Order and request for Change Order shall be
prepared in form acceptable to Program Manager, and shall
otherwise meet all applicable requirements of this Article 13.
Each Change Order shall specify whether it is the result of a
Directed Change, whether it is a Contingency Change Order and
whether it is the result of an Eligible Delay. If a Change Order
is the result of a Directed Change, Developer shall advise
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Contractor whether Developer, State, or SJTA is responsible under
the Road Development Agreement for the allowable costs associated
therewith, and the Change Order shall identify the responsible
party(ies).
13.4.2 Information Regarding Effect of Change
Each request for Change Order prepared by Contractor shall
include as attachments a detailed cost estimate relating thereto
setting forth all consequences of the event, situation or proposed
change giving rise to the proposed Change Order, and including (a)
if Contractor claims that such event, situation or change requires
a modification to the Work, the proposed modification of the
Contract Price and payment portion of the Project Schedule (if any)
occasioned by such change and all facts justifying such modification
in a format acceptable to Program Manager, and (b) if Contractor
claims that such event, situation or change affects a Critical Path,
an impacted delay analysis indicating all activities represented or
affected by the change, with activity numbers, durations,
predecessor and successor activities, resources and cost, with a
narrative report, in form satisfactory to Program Manager, which
compares the proposed new schedule to the current approved schedule.
13.4.3 Justification
For all requests for Change Orders initiated by Contractor
hereunder, the Change Order form shall include an attachment
containing a detailed narrative justification therefor,
describing the circumstances underlying the proposed change,
identifying the specific provision(s) of Article 13 which permit
a Change Order to be issued, and describing the data and
documents (including data and reports prepared pursuant to
Section 13.10.1.1) which establish the necessity and amount
of such proposed change.
13.4.4 Contractor Representation
Each Change Order form shall contain a written
representation by Contractor that the amount of time and/or
compensation requested includes all known and anticipated impacts
or amounts, direct, indirect and consequential, which may be
incurred as a result of the event or matter giving rise to
such proposed change.
13.5 Determination of Terms of Change Order
13.5.1 Categories of Costs and Mark-Ups
The amount of each Change Order, whether established
pursuant to Section 13.6 or Section 13.7, shall be calculated
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based on and shall be limited to the categories of costs and
the mark-ups thereon specified in Section 13.7.
13.5.2 Limitation on Contract Price Increases
Any increase in the Contract Price allowed hereunder shall
exclude: (a) costs caused by the breach of contract or fault or
negligence, or act or failure to act of Contractor, its
employees, agents, officers or Subcontractors or any other
Persons for whom Contractor may be contractually or legally
responsible; (b) costs which could reasonably be avoided by
Contractor, including by resequencing, reallocating or
redeploying its forces to other portions of the Work or to other
activities unrelated to the Work (including in the equation any
additional costs reasonably incurred in connection with such
reallocation or redeployment); and (c) costs for any rejected
Work which was unacceptable to Program Manager, State or SJTA and
any necessary remedial Work.
13.5.3 Limitation on Delay Damages
The amount allowed (if any) for additional or extended
overhead or other indirect costs arising from delays shall be
limited to the amount described in Section 13.7.6 unless Program
Manager determines in its sole discretion that such amount would
result in a gross inequity, in which event Program Manager shall
determine an appropriate equitable adjustment. Except for
Directed Changes, such amount shall be payable solely from the
Contingency. In addition, before Contractor may obtain any
increase in the Contract Price to compensate for additional or
extended overhead, Acceleration Costs or other damages relating
to delay, Contractor shall be required to demonstrate to Program
Manager's satisfaction (for Contingency Change Orders only) or to
Developer's and Program Manager's satisfaction (for all other
Change Orders) that (a) the change in the Work or other event or
situation which is the subject of the request for Change Order
has caused or will result in an identifiable and measurable
disruption of the Work which impacted a Critical Path activity,
consumed all available Project and Developer Float, and extended
the Work required for Substantial Completion beyond the
Guaranteed Completion Date, (b) the delay or damage was not due
to any breach of contract or fault or negligence, or act or
failure to act of Contractor, its employees, agents, officers or
Subcontractors or any other Persons for whom Contractor may be
contractually or legally responsible, and could not reasonably
have been avoided by Contractor, or due to other activities
unrelated to the Work, including by resequencing, reallocating or
redeploying its forces to other portions of the Work (including
in the equation any additional costs reasonably incurred in
connection with such reallocation or redeployment), (c) the delay
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for which compensation is sought is not concurrent with any delay
for which Contractor is responsible; and (d) Contractor has
suffered or will suffer actual costs due to such delay, each of
which costs shall be documented in a manner satisfactory to
Developer and Program Manager.
13.5.4 Limitation on Time Extensions
Any extension of the Guaranteed Completion Date allowed
hereunder shall exclude any delay to the extent that it (a) was
due to the fault or negligence, or act or failure to act of
Contractor, its employees, agents, officers or Subcontractors or
any other Persons for whom Contractor may be contractually or
legally responsible, or (b) could reasonably have been avoided by
Contractor, including by resequencing, reallocating or
redeploying its forces to other portions of the Work. Contractor
shall be required to demonstrate to Developer's and Program
Manager's satisfaction that the change in the Work or other event
or situation which is the subject of the request for Change Order
seeking a change in the Guaranteed Completion Date has caused or
will result in an identifiable and measurable disruption of the
Work so as to delay completion thereof and change the duration of
a Critical Path which was not due to any such fault or negligence
and could not reasonably have been avoided by Contractor,
including by resequencing, reallocating or redeploying its forces
to other portions of the Work.
13.5.5 Work Performed Without Direction
To the extent that Contractor undertakes any work that is
not part of the Work, unless Contractor has received a Directive
Letter to perform such work Contractor shall be deemed to have
performed such work voluntarily and shall not be entitled to a
Change Order in connection therewith. In addition, Contractor
may be required to remove or otherwise undo any such work, at its
sole cost and expense.
13.6 Pricing of Change Orders
Program Manager and Contractor (on its own behalf and on behalf
of its Subcontractors) shall endeavor to negotiate a reasonable
cost for each Change Order other than unilateral Change Orders
under Section 13.2.2. The price of a Change Order shall be (a) a
negotiated lump sum price as provided below in this Section 13.6,
(b) based on negotiated unit prices as provided in Section 13.8
or (c) based on time and materials records pursuant to Section
13.7. Contractor shall maintain concurrent time and materials
records for all Work performed which it believes constitutes
extra work, pending issuance of a Change Order or resolution of
any dispute in accordance with Article 19.
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13.6.1 Cost Proposal
Upon receipt of a Notice of Proposed Change, Contractor
shall submit a detailed cost proposal identifying all categories
of costs in accordance with the requirements of Section 13.7,
supported by documentation satisfactory to Program Manager
(a) showing all impacts on the Contract from Work additions,
deletions and modifications shown in the Change Order being
priced and (b) setting out the proposed costs in such a way that
a fair evaluation can be made. Program Manager shall have the
right to require that any or all of the information contained in
the EBDs be used in evaluating the proposal. Contractor shall
submit a detailed estimate of the cost of the change to Program
Manager. This estimate must include a breakdown for labor,
materials, equipment, overhead (which includes all indirect
costs) and profit. If the work is to be performed by
Subcontractors and if the work is sufficiently defined to obtain
Subcontractor quotes, Contractor shall obtain quotes (with
breakdowns showing cost of labor, materials, equipment, overhead
and profit) on the Subcontractor's stationery and shall include
such quotes as back-up for Contractor's estimate. No mark-up
shall be allowed in excess of the percentages specified in
Section 13.7.6.
13.6.2 Identification of Conditions
Contractor shall identify all conditions with respect to
prices or other aspects of the proposal, such as pricing
contingent on firm orders being made by a certain date or the
occurrence or non-occurrence of an event.
13.6.3 Contents
A negotiated Change Order shall specify scheduling
requirements, time extensions and all costs of any nature arising
out of the Work covered by the Change Order. Notwithstanding the
foregoing, Contractor and Program Manager may mutually agree to
use a multiple-step process involving issuance of a Change Order
which includes an estimated construction cost and which provides
for a revised Change Order to be issued after a certain design
level has been reached, thus allowing a refinement and further
definition of the estimated construction cost.
13.6.4 Added Work
When the Change Order adds Work to Contractor's scope,
Contractor shall submit a price add. The price add shall be
based upon estimated or actual costs of labor, material and
equipment. Markups for profit and overhead shall be as specified
in Section 13.7.6. The items included in overhead are stated in
Section 13.7.7.
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13.6.5 Deleted Work
When the Change Order deletes Work from Contractor's scope,
Contractor shall submit a price deduction. The price deduction
shall be based upon an estimate including a bill of material, a
breakdown of labor and equipment costs and overhead and profit
associated with the deleted work. The markups in the EBDs shall
be added to the price deduction for profit and overhead. When
the entire work is deleted for a particular line item shown on
the Bid Forms, the total line item price shall be deducted from
the Contract Price. When a deduction is involved, documented
cancellation and restocking charges may be included in costs and
subtracted from the price deduction.
13.6.6 Work Both Added and Deleted
When the Change Order includes both added and deleted Work,
Contractor shall prepare a statement of the cost of labor,
material and equipment for both added and deleted work. If the
cost of labor, material and equipment for the work added and
deleted results in a:
(a) Net increase in cost, the change shall be
treated as work added and the provisions of Section 13.6.4 shall be
used to determine mark-ups for overhead and profit. Mark-ups for
overhead and profit will be allowed only for the net increase in
cost in order to establish the amount to be added to the Contract
Price.
(b) Net decrease in cost, the change shall be treated
as work deleted and the provisions of Section 13.6.5 shall be
used on the net decrease in cost in order to establish the price
deduct to the Contract Price.
(c) Net change of zero, there will be no change in
the Contract Price.
13.7 Time and Materials Change Orders
Program Manager (for Contingency Change Orders only) and
Developer may each at its discretion issue a Time and Materials
Change Order following a determination that a Time and Materials
Change Order is advisable. The Time and Materials Change Order
shall instruct Contractor to perform the Work, indicating
expressly the intention to treat the items as changes in the
Work, and setting forth the kind, character, and limits of the
Work as far as they can be ascertained, the terms under which
changes to the Contract Price will be determined and the
estimated total change in the Contract Price anticipated
thereunder. Upon final determination of the allowable costs, the
Change Order shall be finalized to set forth the final adjustment
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to the Contract Price. The following costs and mark-ups (and no
others) shall be used for calculating the change in the Contract
Price:
13.7.1 Labor Costs
The cost of labor included in the Change Order shall be
separated into construction-related Work and non-construction-
related Work as described below:
13.7.1.1 The cost of labor for workers used in the
actual and direct performance of construction-related Work,
whether provided by Contractor or a Subcontractor, will equal the
sum of the following:
(a) For necessary labor and foremen in direct
charge of the specific operations, the rate of wage (or scale)
actually paid to the employee as shown in its certified payrolls
for each and every hour that said labor and foremen are actually
engaged in such Work.
(b) The actual costs paid to, or on behalf
of, workers by reason of health and welfare benefits, pension fund
benefits or other benefits, when such amounts are required by
collective bargaining agreements or other employment contracts
generally applicable to the classes of labor employed on the Work.
(c) The actual cost paid to applicable State
and federal agencies and insurance carriers for Worker's Compensation
Insurance, Federal Insurance Compensation Act (FICA, Social
Security), Unemployment Insurance and Contractor's General
Liability and Worker's Disability.
13.7.1.2 The cost of labor for non-construction-
related Work (that is, design, surveying, permits, Utility
coordination, environmental and similar aspects of the Work),
whether provided by Contractor or a Subcontractor, will equal the
sum of the following:
(a) Actual wages (i.e. the base wage paid to the
employee exclusive of any fringe benefits), plus
(b) A labor surcharge of 140% on the amount
established by Section 13.7.1.2(a), which shall constitute full
compensation for all state and federal payroll, unemployment and
other taxes, insurance, fringe benefits (including health
insurance, retirement plans, vacation, sick leave and bonuses)
and all other payments made to, or on behalf of, the workers, in
excess of actual wages.
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13.7.2 Material Costs
Material costs included in the Change Order shall be the
cost of all materials to be used in the performance of construction
Work including normal wastage allowance as per industry standards
(such as standards contained in manuals published by State or SJTA),
subject to the requirements set forth in this Section 13.7.2. The
material prices shall be supported by valid quotes/invoices from the
suppliers. The cost shall include sales taxes, freight and delivery
charges and any allowable discounts. Program Manager shall have the
right to approve materials and sources of supply of materials to be
furnished by Contractor or Subcontractors, and shall have the
right to furnish such materials as it deems advisable. The price
allowed for materials shall be adjusted as follows:
13.7.2.1 If the materials are obtained from a supply
or source owned in whole or in part by Contractor or a
Subcontractor, the cost of such materials shall not exceed the
lesser of the lowest price charged by Contractor or such
Subcontractor (as applicable) for similar materials furnished to
other jobs or the current wholesale price for such materials
delivered to the jobsite.
13.7.2.2 If the cost of such materials is, in the sole
opinion of Program Manager, excessive, then the cost of such
materials shall be deemed to be the lowest current wholesale
price at which such materials were available, in the quantities
needed and delivered to the jobsite.
13.7.2.3 If the Contractor or Subcontractor (as
applicable) does not furnish satisfactory evidence of the cost of
such materials from the actual supplier thereof within 30 days
after the date of delivery of the material, Program Manager shall
have the right to establish the cost of such materials at the
lowest current wholesale prices at which such materials were
available, in the quantities needed and delivered to the jobsite.
13.7.3 Equipment
13.7.3.1 Contractor will be paid for the use of
Contractor- and Subcontractor-owned equipment (and that owned by
any Affiliate of Contractor or Subcontractor) and for equipment
rented by Contractor or any Subcontractor for actual use in the
Change Order Work as specified in this Section 13.7.3. There
shall be no compensation for equipment on standby, except as
provided in Section 13.7.3.8.
13.7.3.1.1 The hourly rates for equipment and
plant owned by Contractor or any Affiliate of Contractor, or
owned by the Subcontractor performing the Work in question or any
Affiliate of such Subcontractor, will be determined from the
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applicable volume of the Rental Rate Blue Book (referred to
hereafter as the "Blue Book"), published by Nielsen/DATAQUEST,
Inc. of Palo Alto, California. Contractor acknowledges and
agrees that, due to the long-term nature of the Project and the
number of options available to Contractor for obtaining
equipment, such rates constitute fair compensation for equipment
used. The Blue Book will be used in the following manner:
(a) The hourly rate will be determined by
dividing the monthly rate by 176. The weekly, hourly, and daily
rates will not be used.
(b) The number of hours to be paid for will be
the number of hours that the equipment or plant is actually used
on a specific force account activity.
(c) The current revisions will be used in
establishing rates. The current revision applicable to specific
force account work is as of the first day of work performed and
that force account work and that rate applies throughout the
period the force account work is being performed.
(d) Area adjustment will not be made. Equipment
life adjustment will be made in accordance with the rate
adjustment tables.
(e) Overtime shall be charged at the same hourly
rate indicated in (a) above.
(f) The estimated operating costs per hour will
be used for each hour that the equipment or plant is in operation
on the force account work. Such costs do not apply to idle time
regardless of the cause of the idleness.
(g) Idle time for equipment will not be paid for,
except where the equipment has been held on the Site on a standby
basis at the request of the Program Manager and but for this
request, would have left the Site. Such payment will be at one-
half the rate established pursuant to (a) above.
(h) Operator costs will be paid only as provided
in (a) above.
The rates established above include the cost of fuel,
oil, lubrication, supplies, small tools, necessary attachments,
repairs, overhaul, and maintenance of any kind, depreciation,
storage, overhead, profits, insurance, all costs (including labor
and equipment) of moving equipment or plant on to and away from
the site, and all incidentals.
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In the event that a rate is not established in the Blue Book
for a particular piece of equipment or plant, the Program Manager will
establish a rate for that piece of equipment or plant that is
consistent with its cost and use in the industry.
All equipment shall, in the opinion of the Quality
Assurance Manager, be in good operating condition. Equipment
used by the Contractor shall be specifically described and be of
suitable size and suitable capacity required for the Work to be
performed. In the event the Contractor elects to use equipment
of a higher rental value than that suitable for the Work, payment
will be made at the rate applicable to the suitable equipment.
The equipment actually used and the suitable equipment paid for
will be made a part of the record for force account work.
Contractor's Quality Assurance Manager shall determine the
suitability of the equipment. If there is a differential in the
rate of pay of the operator of oversize or higher rate equipment,
the rate paid for the operator is to be that for the suitable
equipment.
13.7.3.1.2 In the event that a specific
type of equipment is required which is not available from
Contractor or the Subcontractor performing the Work, or from any
of their Affiliates, Contractor shall inform the Program Manager
of the need to rent the equipment and of the rental rate for that
equipment prior to using it on the Work. Contractor will be paid
the actual rental for the equipment for the time that the
equipment is actually used to accomplish the Work, provided that
the rate is reasonable, plus the cost of moving this equipment on
to and away from the job. Contractor shall provide a copy of the
paid receipt or canceled check for the rental expense incurred.
13.7.3.2 If Contractor deems it necessary to use
specialized equipment not listed in the above-described publication,
Program Manager shall determine the rate allowed. Upon request by
Program Manager, Contractor shall furnish all necessary cost data
to Program Manager for its use in establishment of the rate allowed.
13.7.3.3 The rates paid as above provided shall be
deemed to include compensation for the cost of fuel, oil, lubricants,
supplies, small tools, necessary attachments, repairs and maintenance
of all kinds, depreciation, storage, insurance and all incidentals.
13.7.3.4 Equipment operators will be paid for as
stipulated in Section 13.7.1.
13.7.3.5 All equipment shall be in good working
condition and suitable for the purpose for which the equipment is
to be used.
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13.7.3.6 Unless otherwise specified, manufacturer's
ratings and manufacturer-approved modifications shall be used to
classify equipment for the determination of applicable rental rates.
Equipment which has no direct power unit shall be powered by a unit of
at least the minimum rating recommended by the manufacturer of that
equipment.
13.7.3.7 Individual pieces of equipment or tools not
listed in the Blue Book and having an individual replacement value of
$1,000 or less, whether or not consumed by use, shall be considered to
be small tools and no payment will be made therefor.
13.7.3.8 The time to be paid for use of equipment on
the Site shall be the time the equipment is in operation on the Time and
Materials Change Order Work being performed. The time shall include the
reasonable time required to move the equipment to the location of the
Time and Materials Work and return it to the original location or to
another location requiring no more time than that required to return
it to its original location. Moving time will not be paid for if the
equipment is also used at the Site other than for Time and Materials
work. Loading and transporting costs will be allowed, in lieu of
moving time, when the equipment is moved by means other than its own
power. No payment for loading and transporting will be made if the
equipment is also used at the Site other than for Time and Materials
Work. Time will be computed in half and full hours. In computing
the time for use of equipment, less than 30 minutes shall be
considered one-half hour.
13.7.4 Permit Fees
Contractor will be reimbursed for the cost of any additional
permit fees payable as the result of the change in the Work. Back-up
documentation supporting each cost item for this category shall be
provided by Contractor and approved by Program Manager prior to any
payment authorization being granted.
13.7.5 Other Direct Costs
Contractor will be reimbursed for the cost of any justified
change-related cost not covered by the categories of costs contained
in Sections 13.7.1 through 13.7.4. Back-up documentation supporting
each cost item for this category shall be provided by Contractor and
approved by Program Manager prior to any payment authorization being
granted.
13.7.6 Contractor's Overhead and Profit
In addition to the added costs as determined above, Contractor
will be paid only the following predetermined mark-ups on Change
Order Work: 10% for labor costs as per Section 13.7.1 above, 10%
for material costs as per Section 13.7.2 above, 10% for equipment
use costs as per Section 13.7.3 above, 5% for permit fees as per
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Section 13.7.4 above, and 10% for other direct costs as per Section
13.7.5 above, subject to the following:
(a) These mark-ups are full and complete compensation
for all overhead, small tools (as defined in Section 13.7.3.7),
consumables (items which are consumed in the performance of the
Work which are not a part of the finished product) and other indirect
costs of the added or changed Work, as well as for profit thereon,
including any and all costs and expenses incurred due to any delay
in connection with the added or changed Work, except as otherwise
provided in Section 13.5.3. Contractor's mark-up percentages shall
be considered to include, among other costs, incidental job burdens,
bonuses not otherwise covered, field, jobsite and general home
office expenses of all types, supervisory expenses of all types and
all other overhead, general condition and indirect costs and expenses.
(b) The foregoing mark-ups will be paid to Contractor only
for Work it performs; in the case of Work that is subcontracted, these
will be allowed to the Subcontractor who actually performs the Work.
(c) In the case of subcontracted Work, Contractor shall be
allowed a predetermined mark-up of 5% of the compensation allowed for
the Subcontractor, provided that only one such mark-up shall be
allowed, notwithstanding the actual number of intervening
Subcontractors.1/ This mark-up shall fully compensate Contractor
for overhead and profit with respect to subcontracted Work.
(d) No mark-up will be paid to Contractor for any
materials furnished by Developer, Program Manager, State or SJTA.
(e) Where Contractor's or any Subcontractor's portion
of a change involves credit items, or the proposed change is a
net deductive change, Contractor shall include all Contractor's
and Subcontractor's overhead and profits in computing the value
of the credit.
____________________________
1/ For example, if 50% of any Work which is subject to this
Section 13.7 is subcontracted and 50% is performed by
Contractor's own forces, then the compensation for such
Work shall include a mark-up on Contractor's costs as
computed in Section 13.7.6 for the 50% performed by
Contractor's own forces, a mark-up on the Subcontractor's
costs as computed in Setion 13.7.6 for the remaining 50%,
plus an additional 5% mark-up on the 50% of the Work
performed by the Subcontractor (that is, 5% of the sum
of the Subcontractor's cost and the mark-up thereon).
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13.7.7 Overhead
Subject to Section 13.5.3, the following items are included
in the Change Order mark-up for overhead:
(a) Salary and expenses of executive officers,
supervising officers or supervising employees and technical or
engineering employees;
(b) Contractor's superintendent (general foreman);
(c) Clerical or stenographic employees;
(d) Charges for minor equipment, such as small tools,
including shovels, picks, axes, saws, bars, sledges, lanterns, jacks,
cables, pails, wrenches, etc., consumables, and other miscellaneous
supplies and services;
(e) Drafting room accessories such as paper, tracing
cloth, blue printing, etc.;
(f) Any and all field and home office overhead and
operating expenses whatsoever;
(g) Subsistence and travel expenses for all
personnel; and
(h) All bond and insurance premiums.
13.8 Unit Priced Change Orders
Program Manager (for Contingency Change Orders) and Developer
(for Directed Changes) may agree at their sole discretion to
negotiate unit prices for added Work. The unit prices shall be
deemed to include all costs for labor, material, overhead
and profit. Measurement of quantities will be in accordance
with Section 109.01 of the General Provisions. Unit prices shall
not be subject to change regardless of any change in the estimated
quantities. Unit-priced Change Orders shall initially include an
estimated increase in the Contract Price based on estimated
quantities. Upon final determination of the quantities, Program
Manager or Developer, as appropriate, shall issue a modified
Change Order setting forth the final adjustment to the Contract
Price.
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13.9 Contingency
13.9.1 Availability of Contingency
The Contingency is intended to be available to cover any and
all unanticipated costs incurred by Contractor in completing the
Work directly attributable to the following (and only the
following) events ("Contingency Events") and for no other purpose:
(a) Eligible Delays (excluding any delays from
Directed Changes, which shall be reimbursable as part of the
Change Orders for such Directed Changes, and excluding any delays
which are directly attributable to negligence of Developer,
State, SJTA or Program Manager),
(b) Eligible Delays which are directly attributable
to negligence of Developer, State, SJTA or Program Manager,
(c) Differing Site Conditions,
(d) Force Majeure events (including insurance
deductibles paid by Contractor for reasons beyond Contractor's
control),
(e) delays in issuance of NTP2 as specified in
Section 12.1.3,
(f) certain utility Relocation costs as specified in
Section 6.6.4,
(g) addition of environmental mitigation requirements
to the Work by changes in the requirements of the Major Permits
as specified in Section 6.7, and
(h) any other matters which this Contract specifies
are payable from the Contingency.
Contractor's right to reimbursement of costs from the
Contingency is subject to the all applicable restrictions and
limitations contained in Article 3 and elsewhere in this
Article 13.
13.9.2 Contingency Change Orders
As with Change Orders for Directed Changes, Contingency
Change Orders shall either be negotiated or shall proceed on a
time and materials basis, pursuant to Section 13.6 or 13.7.
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13.9.3 Measurement and Payment for Remediation Work
In the event that Hazardous Substances are discovered
which qualify as a Force Majeure event, unless the parties agree
to a lump sum price in advance of performing required remediation
Work, the procedure for measuring quantities shall be established
by Program Manager following its review of the site. The
procedure shall be based on State's standard provisions for
measurement of quantities. In all cases Contractor shall give
Program Manager notice of Contractor's activities so as to allow
Program Manager the opportunity to verify the Contractor's basis
for costs included in the Contingency Change Order. Recoverable
costs (subject to availability of the Contingency) shall include
any increased costs directly attributable to implementation of
special procedures as well as any increased costs directly
attributable to removal, disposal and replacement of the
materials.
13.9.4 Agreement Regarding NJSA 2A:58B-3
13.9.4.1 The parties intend to conform strictly
to applicable laws regarding payment of damages for delay, including
NJSA 2A:58B-3 to the extent that it may be considered to apply to
this Contract. Developer and Contractor have determined that
NJSA 2A:58B-3 is not applicable to this Contract since neither of
them is a public agency. However, to the extent that NJSA 2A:58B-3
is determined to apply to this Contract, Contractor agrees that
the total amount of the original Contingency shall be allocated
(or reallocated to the extent that payments have previously been
made from the Contingency) to first pay for costs arising from
Eligible Delays to which NJSA 2A:58B-3 is applicable, and shall
be available to pay for other Contingency Events only after all
such costs arising from Eligible Delays have been paid in full.
13.9.4.2 Contractor agrees that all events,
conditions or occurrences which this Contract contemplates could be
the basis for payment of delay damages from the Contingency shall be
considered "reasons contemplated by the parties" pursuant to NJSA
2A:58B-3(c).
13.10 Change Order Records
Contractor shall maintain its records in such a manner as to
provide a clear distinction between the direct costs of Work for
which it is entitled (or for which it believes it is entitled) to
an increase in the Contract Price and the costs of other
operations. Contractor shall contemporaneously collect, record
in writing, segregate and preserve (a) all data necessary to
determine the costs of all Work which is the subject of a Change
Order or a requested Change Order, but specifically excluding
negotiated and issued Change Orders, and (b) all data necessary
to show the actual impact (if any) of the change on each Critical
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Path with respect to all Work which is the subject of a Change
Order or a proposed Change Order, if the impact on the Project
Schedule is in dispute. Such data shall be provided to
Developer, State, SJTA, Program Manager and any authorized
representative of such Persons reviewing any Claim or dispute
regarding compensation for such Work as provided in Section 21.3.2.
The cost of furnishing such reports is included in Contractor's
predetermined overhead and profit mark-ups.
13.10.1 Daily Work Reports and Data Collection
13.10.1.1 Contractor shall collect and preserve data in
written form for all Work contemporaneously with Contractor's
performance thereof as specified in Section 1205.7 of the Special
Provisions. At reasonable times as requested by Program Manager,
Contractor shall provide Program Manager with a copy of each item
described in said provision, provided, however, that the provision
of such information shall not constitute a PCO Notice under Section
13.3.2.
13.10.1.2 From the records described in Section 1205.7
of the Special Provisions, Contractor shall furnish Program Manager
completed daily work reports for each day's Work to be paid for on a
time and material basis. The daily time and material Work reports
shall be detailed as follows:
(a) Name, classification, date, daily hours, total
hours, rate, and extension for each worker (including both
construction and non-construction personnel) for whom reimbursement
is requested.
(b) Designation, dates, daily hours, total hours,
rental rate, and extension for each unit of machinery and equipment.
(c) Quantities of materials, prices, and extensions.
(d) Transportation of materials.
(e) For construction labor, the cost of property
damage, liability, and worker's compensation insurance premiums,
unemployment insurance contributions, bonds, and social security
tax.
The reports shall also state the total costs to date for the Time
and Materials Work.
13.10.2 Vendor's Invoices
Material charges shall be substantiated by valid copies of
vendor's invoices. Such invoices shall be submitted with the
daily time and material Work reports, or if not available, they
shall be submitted with subsequent daily time and material Work
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reports. Should said vendor's invoices not be submitted within
60 days after the date of delivery of the material, Program
Manager shall have the right to establish the cost of such
materials at the lowest current wholesale prices at which said
materials are available, in the quantities concerned delivered to
the location of Work less any discounts, above.
13.10.3 Execution of Reports
All Time and Materials reports shall be signed by
Contractor's Project Manager.
13.10.4 Adjustment
Program Manager will compare its records with the completed
daily time and material Work reports furnished by Contractor and
make any necessary adjustments. When these daily time and material
Work reports are agreed upon and signed by both parties, said
reports shall become the basis of payment for the Work performed,
but shall not preclude subsequent adjustment based on a later audit
by Developer, State and/or SJTA. Contractor's cost records
pertaining to Work paid for on a time and material basis shall be open,
during all regular business hours, to inspection or audit by
representatives of Developer, State and/or SJTA during the life of the
Contract and for a period of not less than five years after the Final
Acceptance Date, and Contractor shall retain such records for that
period. Where payment for materials or labor is based on the cost
thereof to any Person other than Contractor, Contractor shall make
every reasonable effort to insure that the cost records of each such
other Person will be open to inspection and audit by representatives
of Developer, State and/or SJTA on the same terms and conditions as the
cost records of Contractor. Payment for such costs may be deleted if
the records of such third parties are not made available to Developer's
representatives. If an audit is to be commenced more than 60 days after
the acceptance date of the Contract, Contractor will be given a
reasonable notice of the time when such audit is to begin.
13.11 Matters Not Eligible for Change Orders
Contractor acknowledges and agrees that no increase in the Contract
Price is available except in circumstances expressly provided for in
this Contract, and that such price increases shall be available only
as the result of either a Contingency Event (payable solely from the
Contingency) or a Directed Change, and that Contractor shall bear
full responsibility for the costs of all other changes. Matters
which are Contractor's exclusive responsibility include the
following:
(a) errors, omissions, inconsistencies or other
defects in the Construction Documents;
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(b) any design changes requested by Program Manager,
State or SJTA as part of the process of approving the Design
Documents for consistency with the requirements of the Contract
Documents, including any design changes relating to Project safety
(except to the extent that they arise from a change in Governmental
Rules, in which case the costs associated therewith would be payable
solely through a Contingency Change Order);
(c) defective or incorrect schedules of Work or
changes in the planned sequence of performance of the Work;
(d) the action or inaction of Subcontractors;
(e) the action or inaction of other contractors
(including failure to organize and integrate their work with
Contractor's Work);
(f) correction of nonconforming Work and review and
acceptance thereof by Program Manager, State and SJTA (including
rejected design submittals);
(g) obtaining all Governmental Approvals except the
Major Permits, and, except as specified in Section 6.7, compliance
with the terms and conditions of all Governmental Approvals
including the Major Permits;
(h) failure by Contractor to comply with the Contract;
(i) delays not on a Critical Path;
(j) delays in issuance of any permit or approval by
any entity with jurisdiction over the subject matter of such
permit or approval that is required to be obtained by Contractor;
(k) costs covered by proceeds of insurance provided
hereunder; and
(l) costs resulting from Contingency Events,
following exhaustion of the Contingency.
Contractor hereby assumes responsibility and accepts the
allocated, sole risk for all matters described in this Section
13.11, and acknowledges and agrees that assumption and acceptance
by Contractor of responsibility and allocation for all such
risks, costs, expenses and delays, and the consequences and costs
and expenses resulting therefrom, is reasonable under the
circumstances of this Contract and that contingencies included in
the Bid Price, in combination with the Contingency, in
Contractor's sole judgment, constitute sufficient consideration
for its acceptance and assumption of said risks and
responsibilities. CONTRACTOR HEREBY EXPRESSLY WAIVES ALL RIGHTS
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TO ASSERT ANY AND ALL CLAIMS BASED ON ANY CHANGE IN THE WORK,
DELAY OR ACCELERATION (INCLUDING ANY CONSTRUCTIVE CHANGE, DELAY,
SUSPENSION OR ACCELERATION) FOR WHICH CONTRACTOR FAILED TO
PROVIDE PROPER AND TIMELY NOTICE OR FAILED TO PROVIDE A TIMELY
CHANGE ORDER, AND AGREES THAT IT SHALL BE ENTITLED TO NO
COMPENSATION OR DAMAGES WHATSOEVER IN CONNECTION WITH THE WORK
EXCEPT TO THE EXTENT THAT THE CONTRACT DOCUMENTS EXPRESSLY
SPECIFY THAT CONTRACTOR IS ENTITLED TO A CHANGE ORDER OR OTHER
COMPENSATION OR DAMAGES.
13.12 Disputes
If Developer (or Program Manager with respect to Contingency
Change Orders) and Contractor agree that a request to increase
the Contract Price or extend the Guaranteed Completion Date by
Contractor has merit, but are unable to agree as to the amount of
such price increase or time extension, Developer (or Program
Manager with respect to Contingency Change Orders) agrees to mark
up the Change Order request provided by Contractor to reduce the
amount of the price increase or time extension as deemed
appropriate by Developer or Program Manager, as the case may be,
and to execute and deliver the marked-up Change Order to
Contractor, within a reasonable period after receipt of a request
by Contractor to do so, and thereafter to make payment based on
such marked-up Change Order. The failure of Developer (or
Program Manager with respect to Contingency Change Orders) and
Contractor to agree to any Change Order under this Article 13
(including agreement as to the amount of compensation allowed
under a Time and Materials Change Order and the disputed amount
of the increase in the Contract Price or extension of the
Guaranteed Completion Date in connection with a Change Order
described in the preceding sentence) shall be a dispute to be
resolved in accordance with Article 19. Except as otherwise
specified in the Change Order, execution of a Change Order by
both parties shall be deemed accord and satisfaction of all
claims of any nature arising from or relating to the Work covered
by the Change Order. If the courts of the State of New Jersey
determine that Contractor is entitled to be paid for any work
which is the subject of a dispute, Contractor's Claim and the
award of the court shall be limited to the incremental costs
incurred by Contractor with respect to the disputed matter
(crediting Developer for any corresponding reduction in
Contractor's other costs) and shall in no event exceed the
amounts allowed by Section 13.7 with respect thereto.
Contractor's execution of any Contingency Change Order shall
constitute Contractor's agreement that any change in the Work
described therein is appropriate for a Contingency Change Order
and does not constitute a Directed Change.
13.13 Changes Not Requiring Change Order
Design exceptions which have no net cost effect on the Contract
Price shall not require a Change Order provided such exception
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is approved by Program Manager, State and SJTA through the design
review process. Any other change in the requirements of the
Contract Documents shall require either a Directive Letter or a
Change Order.
13.13.1 Contractor may propose a material change in Basic
Configuration only in the context of a VECP in accordance with
Article 22,
13.13.2 Any non-material changes in the Basic
Configuration shall be the responsibility of Contractor with the
exception of Directed Changes. Contractor acknowledges and
agrees that constraints set forth in the Major Permits and other
Contract Documents, as well as the Site conditions and the Right
of Way Limits, will impact Contractor's ability to make non-
material changes in the Basic Configuration.
13.14 No Release or Waiver
13.14.1 Work shall continue and be carried on in
accordance with all the provisions of the Contract and the
Contract shall be and shall remain in full force and effect
during the continuance and until the completion and Final
Acceptance of the Project unless formally suspended or terminated
by Developer or Program Manager in accordance with the terms
hereof. Permitting Contractor to finish the Work or any part
thereof after the Guaranteed Completion Date, or the making of
payments to Contractor after such date, shall not constitute a
waiver of any of Developer's rights under the Contract.
13.14.2 Neither the grant of an extension of time
beyond the date fixed for the completion of any part of the Work,
nor the performance and acceptance of any part of the Work or
materials specified by the Contract after the Guaranteed
Completion Date, shall be deemed to be a waiver of Developer's
right to abrogate the Contract for abandonment or failure to
complete within the time specified or to impose and deduct
damages as may be provided.
ARTICLE 14. SUSPENSION OF ALL OR PART OF WORK
14.1 Suspension for Convenience
Program Manager may order Contractor in writing to suspend,
delay, or interrupt all or any part of the Work for a period of
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time not to exceed 24 hours, as Program Manager may determine to
be appropriate for the convenience of Developer, State or SJTA.
Any suspension for convenience in excess of 24 hours shall
require Developer's signature and will be considered a Directed
Change.
14.2 Suspension for Other Reasons, Including Compliance with
Major Permits
14.2.1 Program Manager has the authority to suspend the
Work wholly or in part, for such period as Program Manager deems
necessary because of the failure on the part of the Contractor to
carry out orders given, or to perform any requirements of the
Contract Documents. Contractor shall promptly comply with the
written order of Program Manager to suspend the Work wholly or in
part. The suspended Work shall be resumed when appropriate
corrective action has been taken.
14.2.2 State and SJTA each has the right to require
Program Manager to undertake appropriate efforts to cause
Contractor to perform any and all requirements of the Major
Permits. Actions which may be undertaken by the Program Manager
in connection with any such failure include the right to direct
Contractor to take specified corrective action or to stop Work.
14.2.3 Contractor shall not be entitled to any increase
in the Contract Price or extension of the Guaranteed Completion
Date in connection with any suspension under this Article 14,
including for the work described in Section 14.3, except to the
extent that the suspension is considered to be a Directed Change.
14.3 Traffic Safety
In the event that a suspension of Work is ordered under this
Article 14, Contractor shall undertake all work necessary to
provide a safe, smooth, and unobstructed passageway through the
construction area for use by public traffic during the period of
such suspension.
ARTICLE 15. TERMINATION FOR CONVENIENCE
15.1 Notice of Termination
Developer may terminate this Contract and the performance of the
Work by Contractor at any time prior to the date of Substantial
Completion if Developer, State and SJTA jointly determine, in
their sole discretion, that a termination is in its best
interest. Developer shall notify Contractor of the decision to
terminate by delivering to Contractor a written Notice of
Termination specifying the extent of termination and its
effective date. Termination of this Contract shall not relieve
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the Surety of its obligation for any just claims arising out of
or relating to the Work.
15.2 Contractor's Responsibilities After Receipt of Notice of
Termination
After receipt of a Notice of Termination, and except as directed
by Developer, Contractor shall immediately proceed as follows,
regardless of any delay in determining or adjusting any amounts
due under this Article 15:
15.2.1 Stop Work as specified in the notice;
15.2.2 Enter into no further Subcontracts and place no
further orders for materials, services or facilities, except as
necessary to complete the continued portion of the Work, if any,
or for mitigation of damages;
15.2.3 Unless instructed otherwise by Developer,
terminate all Subcontracts to the extent they relate to the Work
terminated and except to the extent that continuation of the
Subcontract is necessary in order to mitigate damages;
15.2.4 Assign to Developer or its designee in the
manner, at the times, and to the extent directed by Developer,
all of the right, title, and interest of Contractor under the
Subcontracts so terminated, in which case Developer will have the
right, in its sole discretion, to accept performance, settle or
pay any or all claims under or arising out of the termination of
such Subcontracts;
15.2.5 Settle outstanding liabilities and claims arising
out of such termination of Subcontracts, with the approval or
ratification of Developer, to the extent it may require, which
approval or ratification shall be final;
15.2.6 Transfer title and deliver to SJTA or its designee,
as directed by Program Manager, (a) the Work in process, completed
Work, supplies and other materials produced or acquired for the Work
terminated, and (b) the Construction Documents and all other completed
or partially completed drawings (including plans, elevations, sections,
details and diagrams), specifications, records, samples, information
and other property that would have been required to be furnished to
SJTA if the Work had been completed;
15.2.7 Complete performance in accordance with the
Contract Documents of all Work not terminated;
15.2.8 Take all action that may be necessary, or that
Developer may direct, for the protection and preservation of the
property related to the Contract Documents that is in the
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possession of Contractor and in which Developer, State and/or
SJTA has or may acquire an interest; and
15.2.9 As authorized by Program Manager, use its best
efforts to sell at reasonable prices any property of the types
referred to in Section 15.2.6 above, provided, however, that
Contractor (a) shall not take any such action with respect to any
items for which title has previously transferred to SJTA, (b) is
not required to extend credit to any purchaser, and (c) may
acquire the property itself, under the conditions prescribed and
at prices approved by Program Manager. The proceeds of any
transfer or disposition will be applied to reduce any payments to
be made by Developer under the Contract Documents or paid in any
other manner directed by Developer.
15.3 Inventory
Contractor shall submit to Developer a list of termination
inventory not previously disposed of and excluding items
authorized for disposition by Developer; and within 30 days of
receipt of the list, Contractor shall deliver such inventory to
Developer and Developer, State or SJTA shall accept title to such
inventory as appropriate.
15.4 Settlement Proposal
After termination, Contractor shall submit a final termination
settlement proposal to Program Manager in the form and with the
certification prescribed by Program Manager. Contractor shall
submit the proposal promptly, but no later than 60 days from the
effective date of termination unless Contractor has requested a
time extension in writing within such 60-day period and Program
Manager has agreed in writing to allow such an extension. If
Contractor fails to submit the proposal within the time allowed,
Developer may determine, on the basis of information available,
the amount, if any, due Contractor because of the termination and
shall pay Contractor the amount so determined.
15.5 Amount of Termination Settlement
Contractor and Developer may agree, as provided in Section 15.4,
upon the whole or any part of the amount or amounts to be paid to
Contractor by reason of the termination of Work pursuant to this
Article 15. Such negotiated settlement may include an allowance
for profit solely on Work which has been completed as of the
termination date. If a full termination occurs before six months
after the date of issuance of NTP2 the negotiated settlement
shall not include compensation for risks assumed by Contractor
hereunder or for contingencies which did not occur,
notwithstanding the fact that Contractor may have, in the Project
Schedule, allocated risks or contingencies to Work which has
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already been performed. The foregoing shall not preclude
Contractor from recovering its actual expenses incurred prior to
the termination relating to such risks and contingencies. Such
agreed amount or amounts payable for the terminated Work, exclusive
of settlement costs, shall not exceed the total Contract Price as
reduced by the Contract Price of Work not terminated. Upon
determination of the settlement amount this Contract will be
amended accordingly, and Contractor will be paid the agreed amount
as described in this Section 15.5. Nothing in Section 15.6,
prescribing the amount to be paid to Contractor in the event that
Contractor and Developer fail to agree upon the whole amount to be
paid to Contractor by reason of the termination of Work pursuant
to this Article 15, shall be deemed to limit, restrict or otherwise
determine or affect the amount or amounts which may be agreed upon
to be paid to Contractor pursuant to this Section 15.5. Developer's
execution and delivery of any settlement agreement shall not be
deemed to affect any of its rights with respect to compliance of the
completed Work with all applicable Contract requirements, any of
its rights under the Performance Bond or any of its rights against
Subcontractors.
15.6 No Agreement as to Amount of Claim
In the event of failure of Contractor and Developer to agree upon
the amount to be paid Contractor by reason of the termination of
Work pursuant to this Article 15, the amount payable (exclusive
of interest charges) shall be determined in accordance with the
following:
15.6.1 In the event of a termination prior to six months
after the issuance of NTP2 Developer will pay Contractor 100% of
the total of the following amounts for Work performed prior to
the effective date of the Notice of Termination, as such amounts
are determined by Developer, and without duplication of any items
or of any amounts agreed upon in accordance with Section 15.4:
(a) Contractor's actual reasonable out-of-pocket cost
(including equipment costs only to the extent permitted by
Section 13.7.3) for all Work performed, including reasonable
overhead, less accounting for any refunds payable with respect to
insurance premiums, deposits or similar items, as established to
Developer's satisfaction;
(b) A sum, as profit on (a) above, determined by
Developer to be fair and reasonable; provided, however, that if
it appears that Contractor would have sustained a loss on the
entire Contract had it been completed, no profit shall be included
or allowed under this Section 15.6.1(b) and an appropriate
adjustment shall be made by reducing the amount of the settlement
to reflect the indicated rate of loss;
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(c) The cost of settling and paying claims arising
out of the termination of Work under Subcontracts as provided in
Section 15.2.5, exclusive of the amounts paid or payable on
account of supplies or materials delivered or services furnished
by the Subcontractor prior to the effective date of the Notice of
Termination for convenience of Work under this Contract, which
amounts shall be included in the cost on account of which payment
is made under (a) above; and
(d) The reasonable out-of-pocket cost (including
reasonable overhead) of the preservation and protection of
property incurred pursuant to Section 15.2.8 and any other
reasonable out-of-pocket cost (including overhead) incidental to
termination of Work under this Contract, including expense
incidental to the determination of the amount due to Contractor
as the result of the termination of Work under this Contract.
15.6.2 In the event of a termination occurring on or
after six months after the issuance of NTP2, the amount to be
paid to Contractor for Work performed prior to the termination
date shall be determined based on the Project Schedule. In such
event all invoices previously submitted, Change Orders requested
and claims submitted pursuant to Section 107.02 of the General
Provisions shall be processed in accordance with the terms
hereof. In addition, Contractor shall be paid its reasonable
costs of termination of Subcontracts and otherwise winding down
the terminated Work, in accordance with Sections 15.6.1(c) and
(d). However, the total amount to be paid to Contractor,
exclusive of costs described in Sections 15.6.1(c) and (d), may
not exceed the total Contract Price less the amount of payments
previously made. Furthermore, in the event that any refund is
payable with respect to insurance premiums, deposits or similar
items which were previously passed through to Developer by
Contractor, such refund shall be paid directly to Developer or
otherwise credited to Developer.
15.6.3 Contractor acknowledges and agrees that it shall
not be entitled to any compensation in excess of the value of the
Work performed (determined as provided in Section 15.6.1 or
15.6.2 above) plus its settlement costs, and that items such as
lost or anticipated profits, unabsorbed overhead and opportunity
costs shall not be recoverable by it upon termination of this
Contract. Except for normal spoilage, and except to the extent
that Developer will have otherwise expressly assumed the risk of
loss, there will be excluded from the amounts payable to
Contractor under Section 15.6.1 or 15.6.2, the fair value, as
determined by Developer, of property which is destroyed, lost,
stolen, or damaged so as to become undeliverable to Developer, or
to a buyer pursuant to Section 15.2.9. The amount bid by
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Contractor for the Work terminated shall be a factor to be analyzed
in determining the value of the Work terminated. Upon determination
of the amount of the termination payment, this Contract shall be
amended to reflect the agreed termination payment, Contractor shall
be paid the agreed amount, subject to the limitations contained
herein on Developer's obligations to make payments, and the Contract
Price shall be adjusted to deduct the portion thereof which is
allocable to the terminated Work.
15.6.4 Contractor acknowledges and agrees that it is
not entitled to any share of the unused Contingency under Section
12.1.2.1 in the event of a termination under this Section 15.6.
If a termination occurs at any time following 14 months after
issuance of NTP2, Developer may allow Contractor to receive a
share of the unused Contingency, in an amount to be determined in
Developer's sole discretion.
15.7 Reduction in Amount of Claim
The amount otherwise due Contractor under this Article 15 shall
be reduced by (a) the amount of any claim which Developer, State
and/or SJTA may have against Contractor in connection with this
Contract and (b) the agreed price for, or the proceeds of sale
of, materials, supplies or other things acquired by Contractor or
sold, pursuant to the provisions of this Article 15, and not
otherwise recovered by or credited to Developer.
15.8 Payment
Developer may from time to time, under such terms and conditions
as it may prescribe and in its sole discretion, make partial
payments on account against costs incurred by Contractor in
connection with the terminated portion of this Contract, whenever
in the opinion of Developer the aggregate of such payments shall
be within the amount to which Contractor will be entitled
hereunder. If the total of such payments is in excess of the
amount finally agreed or determined to be due under this
Article 15, such excess shall be payable by Contractor to
Developer upon demand together with interest at a variable rate
per annum equal to the reference rate announced by Bank of
America, NT&SA from time to time, plus 1%.
15.9 Inclusion in Subcontracts
Contractor shall insert in all Subcontracts that the Subcontractor
shall stop Work on the date of and to the extent specified in a
Notice of Termination from Developer and shall require that
Subcontractors insert the same provision in each Subcontract at
all tiers. Contractor shall communicate, immediately upon receipt
thereof, any Notice of Termination issued by Developer to all
affected Subcontractors.
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15.10 Amounts Payable to Subcontractors
For the purposes of Sections 15.5 and 15.6, upon termination of
Work under Section 15.2.3 which would have entitled a particular
Subcontractor to gross proceeds of $100,000 or more had it not
been terminated, then Contractor will not be entitled to
reimbursement for that portion of a termination settlement with
such Subcontractor which constitutes anticipatory or unearned
profit on Work terminated or partly terminated, or which
constitutes consequential damages on account of the termination.
15.11 No Consequential Damages
Under no circumstances shall Contractor or any Subcontractor be
entitled to anticipatory, unearned profits or consequential or
other damages as a result of a termination under this Article 15.
The payment to Contractor determined in accordance with this
Article 15 constitutes Contractor's exclusive remedy for a
termination hereunder.
15.12 No Waiver
Anything contained in this Contract to the contrary notwithstanding,
a termination under this Article 15 shall not waive any right or
claim to damages which Developer, State and/or SJTA may have and
Developer, State and/or SJTA may pursue any cause of action which
it may have by law or under this Contract.
15.13 Dispute Resolution
The failure of the parties to agree on amounts due under Sections
15.6 and 15.10, shall be a dispute to be resolved in accordance
with Article 19.
ARTICLE 16. DEFAULT
16.1 Default of Contractor
16.1.1 Contractor shall be in default under this
Contract upon the occurrence of any one or more of the following
events or conditions, following notice and opportunity to cure
(if applicable) as specified in Section 16.1.2.
(a) Contractor fails either (i) to promptly begin the
Work under the Contract Documents or (ii) to prosecute the Work
in accordance with the Project Schedule; or
(b) Contractor fails to perform the Work in accordance
with the Contract Documents, including conforming to
applicable standards in constructing the Project, or refuses to
remove and replace rejected materials or unacceptable Work; or
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(c) Contractor discontinues the prosecution of the
Work (exclusive of Work stoppage (i) due to termination by
Developer, or (ii) due to and during the continuance of a Force
Majeure event or suspension by Developer); or
(d) Contractor fails to resume performance of Work
which has been suspended or stopped, within a reasonable time
after receipt of notice from Developer to do so or (if
applicable) after cessation of the event preventing performance; or
(e) Contractor shall have become insolvent, or
generally does not pay its debts as they become due, or admits in
writing its inability to pay its debts or makes an assignment for
the benefit of creditors; or
(f) Insolvency, receivership, reorganization or
bankruptcy proceedings shall have been commenced by or against
Contractor; or
(g) Any representation or warranty made by Contractor
in its Statement of Qualifications, the Bid, the Contract Documents
or any certificate, schedule, instrument or other document delivered
by Contractor pursuant to the Contract Documents shall have been
materially false or misleading when made; or
(h) Contractor breaches any material agreement
contained in the Contract Documents; or
(i) Contractor shall have assigned or transferred the
Contract Documents or any right or interest herein or any Major
Participant shall have assigned or transferred all or any portion
of its interest in Contractor without Developer's prior written
consent; or
(j) Contractor fails to discharge or obtain a stay of
any judgment(s) or order for the payment of money against it in
excess of $100,000 in the aggregate arising out of the
prosecution of the Work (provided that for purposes hereof
posting of a bond in the amount of 125% of such judgment or order
shall be deemed an effective stay); or
(k) Contractor shall have failed, absent a valid
dispute, to make payment when due for labor, equipment or
materials in accordance with its agreements with Subcontractors
and applicable law, or shall have failed to comply with any
Governmental Rule or failed reasonably to comply with the
instructions of Developer or Program Manager consistent with the
Contract Documents.
16.1.2 Contractor and Surety shall be entitled to 15
days' notice and opportunity to cure any breach described in (a)
through (d) and (h) through (k) above (excluding any such breach
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which by its nature cannot be cured); provided that if such
breach is capable of cure but by its nature cannot be cured
within 15 days, such additional period of time shall be allowed
as may be reasonably necessary to cure the breach, provided
Contractor or Surety commences such cure within such 15-day
period and thereafter diligently prosecutes such cure to
completion; and provided further that in the case of an emergency
Program Manager shall have the right to shorten the 15-day cure
period by so specifying in the notice of breach.
16.2 Remedies for Contractor Event of Default
If any breach described in Section 16.1 is not subject to
cure or is not cured within the period (if any) specified in
Section 16.1.2, Developer may declare that an "Event of Default"
has occurred and notify Contractor to discontinue the Work. The
declaration of an Event of Default shall be in writing and given
to Contractor and Surety. Developer may appropriate any or all
materials and equipment on the Site as may be suitable and
acceptable and may direct the Surety to complete this Contract or
may enter into an agreement for the completion of this Contract
according to the terms and provisions thereof with another
contractor or the Surety, or use such other methods as may be
required for the completion of this Contract, including completion
of the Work by Developer. In the event that this Contract is
terminated for grounds which are later determined not to justify
a termination for default, such termination shall be deemed to
constitute a termination for convenience pursuant to Article 15.
Contractor and Surety shall not be relieved of liability for
continuing Liquidated Damages on account of a breach or default
by Contractor or by Developer's declaration of an Event of
Default, or by actions taken by Developer under this
Section 16.2.
All costs and charges incurred by Developer, together with
the cost of completing the Work, will be deducted from any monies
due or that may become due Contractor and the Surety. If such
expense exceeds the sum which would be available from such
monies, then Contractor and the Surety shall be liable and shall
pay to Developer the amount of such excess.
The rights and remedies of Developer are in addition to any
other rights and remedies provided by law or equity or provided
under this Contract or the Performance Bond.
16.3 Delay in Issuance of NTP2; Failure to Deliver Payment
16.3.1 If NTP2 has not been issued on or before
December 31, 1998, then Contractor's sole and exclusive remedy
for such failure shall be to terminate this Contract or accept a
Contingency Change Order as specified in Section 12.1.3.
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16.3.2 Contractor agrees that Developer shall not be
considered in breach of this Contract as the result of any failure
to make any payment which results from failure or refusal by State
or SJTA to provide funds in accordance with the Road Development
Agreement. In the event that Contractor fails to receive a payment
in the amount approved under Section 12.2.4 by the date specified
for payment in Section 12.2.4, Contractor may request written
assurances from Developer that payment will be made. Unless
Contractor receives reasonably acceptable assurances from
Developer within five business days after delivery of such
request to Developer, with a copy to Program Manager, Contractor
shall have the right to stop Work, provided that Contractor shall
have provided a separate written notice to Program Manager, Developer,
State and SJTA stating that Contractor is not satisfied with the
assurances and describing the reasons for such dissatisfaction,
which notice shall have been delivered at least three business days
before stopping Work. Contractor shall take all appropriate measures
to ensure Project safety, including those specified in Section 14.3.
In the event Contractor stops Work pursuant to this Section 16.3.2,
the delay shall be considered the result of a Directed Change.
16.3.3 Except as otherwise provided in Sections 16.3.1
and 16.3.2, and in all events subject to Section 3.1.2, in the
event of any alleged breach of this Contract by Developer,
Contractor shall provide Developer written notice describing the
alleged breach and 30 days' opportunity to cure the same, as a
condition precedent to exercising any remedies to which Contractor
is entitled at law or in equity with respect thereto.
ARTICLE 17. LIQUIDATED DAMAGES
Contractor understands and agrees that if Contractor fails to
complete the Work in accordance with the Contract Documents,
Developer, State and SJTA will suffer substantial losses and
damages. Contractor agrees that it shall be liable for all such
losses and damages, subject only to the limitation in
Section 17.4. Contractor and Developer (on its own behalf and on
behalf of State and SJTA) have agreed to liquidate damages with
respect to certain types of losses and damages. Contractor
acknowledges and agrees that the Liquidated Damages are intended
to compensate Developer solely for Contractor's failure to meet
the deadlines for completion of the Project which are set forth
in Section 4.2, and shall not excuse Contractor from liability
for any other breach of Contract requirements, including any
failure of the Work to conform to applicable requirements.
17.1 Liquidated Damages
Contractor acknowledges and agrees that because of the unique
nature of the Project and the unavailability of a substitute
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therefor, it is impracticable and extremely difficult to
ascertain and determine the actual damages which will be
sustained by Developer, State and SJTA in the event of
Contractor's failure to achieve Substantial Completion of the
Project on or before the Guaranteed Completion Date or to achieve
Final Acceptance by the specified deadline. Contractor therefore
agrees to pay Developer (for the benefit of Developer, State and
SJTA) a liquidated amount (the "Liquidated Damages") as deemed
compensation to Developer for such damages, in the amount of
$64,600 for each day after the Guaranteed Completion Date and
through the date of Substantial Completion, and in the amount of
$8,500 per day for each day after the required date for Final
Acceptance and through the Final Acceptance Date. It is
understood and agreed by Contractor that any Liquidated Damages
payable in accordance with this Section 17.1 are in the nature of
liquidated damages and not a penalty and that such sums are
reasonable under the circumstances existing as of the date of
execution and delivery of this Contract. Contractor further
acknowledges and agrees that Liquidated Damages may be owing even
though no Event of Default has occurred or been declared.
17.2 Offset; Reduction; Waiver
17.2.1 Developer shall have the right to deduct any
amount owed by Contractor to Developer under the Contract
Documents, including Liquidated Damages, from any amounts owed by
Developer to Contractor, including any Retainage which may be
payable by Developer to Contractor pursuant to Section 12.2.6.
17.2.2 Permitting or requiring Contractor to continue
and finish the Work or any part thereof after the Guaranteed
Completion Date shall not act as a waiver of Developer's right to
receive Liquidated Damages hereunder or any rights or remedies
otherwise available to Developer.
17.3 Payment Terms
Liquidated Damages, to the extent not paid as provided in Section
17.2, shall be payable by Contractor to Developer within ten days
after Contractor's receipt of an invoice therefor from Developer.
17.4 Limitation of Contractor's Liability
Contractor's liability to Developer for damages resulting from
breach of this Contract shall be limited to the sum of (a) all
those costs reasonably incurred by Developer or any party acting
on Developer's behalf in completing or correcting the Work or
having the Work completed or corrected by another Person and
(b) the amount of $30,000,000 (which amount shall specifically
include any Liquidated Damages paid pursuant to this Article 17).
This limitation of liability shall not apply to liabilities
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incurred by Contractor arising out of its agreement under
Article 18 to defend, indemnify and hold the Indemnified Parties
harmless from and against third party claims, causes of action,
suits, legal or administrative proceedings, damages, losses,
liabilities, response costs, costs and expenses.
ARTICLE 18. INDEMNIFICATION
18.1 Indemnifications by Contractor
18.1.1 Subject to Section 18.1.3, Contractor shall
release, defend, indemnify and hold harmless Developer,
Developer's Affiliates, the Program Manager, the Program Manager's
subcontractors and Affiliates, Mirage Resorts, Incorporated, State,
SJTA and their respective successors and assigns and their
respective members, shareholders, officers, directors, agents and
employees and each of them (collectively referred to in this
Section 18.1 as the "Indemnified Parties" and severally referred
to as an "Indemnified Party") from and against any and all claims,
causes of action, suits, legal or administrative proceedings,
damages, losses, liabilities, response costs, costs and expenses,
including any injury to or death of persons or damage to or loss
of property, and including attorneys' and expert witness fees and
costs as they are incurred in connection with the enforcement of
this indemnity, arising out of, relating to or resulting from each
of the following:
(a) The breach or alleged breach of this Contract by
Contractor, its employees, agents, officers or Subcontractors or
any other Persons for whom Contractor may be contractually or
legally responsible; or
(b) The failure or alleged failure by Contractor or
its employees, agents, officers or Subcontractors or any other
Persons performing any of the Work for whom Contractor may be
contractually or legally responsible, to comply with any
applicable Environmental Laws or Governmental Rule (including
Governmental Rules regarding handling, generation, treatment,
storage, transportation and disposal of Hazardous Substances and
associated reporting requirements) in performing the Work or any
Relocation work; or
(c) Any patent or copyright infringement or alleged
patent or copyright infringement or other improper or allegedly
improper appropriation or use of trade secrets, patents,
proprietary information, know-how, copyright rights or inventions
in performance of the Work, or arising out of any use in
connection with the Project of methods, processes, designs,
information, or other items furnished or communicated to
Developer or another Indemnified Party pursuant to this Contract;
provided that this indemnity shall not apply to any infringement
resulting from Developer's failure to comply with specific
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written instructions regarding use provided to Developer by
Contractor; or
(d) Any negligent act or omission or willful misconduct,
or alleged negligent act or omission or willful misconduct, of
Contractor, its employees, agents, officers or Subcontractors or
any other Persons performing any of the Work for whom Contractor
may be contractually or legally responsible; or
(e) Any and all claims by any Governmental Person
claiming taxes based on gross receipts, purchases or sales, the
use of any property or income of Contractor or any of its
Subcontractors or any of their respective agents, officers or
employees with respect to any payment for the Work made to or
earned by Contractor or any of its Subcontractors or any of their
respective agents, officers or employees under the Contract
Documents; or
(f) Any and all claims, stop notices and/or Liens
filed by any Subcontractor or laborer in connection with the
Work, including all expenses and attorneys' fees incurred in
discharging any stop notice or Lien, provided that Developer is
not in default in payments owing to Contractor with respect to
such Work; or
(g) Any release or threatened release of a Hazardous
Substance which was removed or handled by Contractor or its
employees, agents, officers or Subcontractors or any other
Persons for whom Contractor may be contractually or legally
responsible; or
(h) The claim or assertion by any Subcontractor or
other Person of inconvenience, disruption, delay or loss caused
by interference by Contractor (or its employees, agents, officers
or Subcontractors or any other Persons for whom Contractor may be
contractually or legally responsible) with or hindering the
progress or completion of work being performed by such
Subcontractor or other Person as described in Section 23.1, or
failure of Contractor or its employees, agents, officers or
Subcontractors or any other Persons for whom Contractor may be
contractually or legally responsible to cooperate reasonably with
other contractors in accordance therewith.
18.1.2 Subject to Section 18.1.3, Contractor shall
release, defend, indemnify and hold harmless each Indemnified
Party from and against any and all claims, damages, losses,
liabilities, costs and expenses, including attorneys' fees as
they are incurred, arising out of, relating to or resulting from
errors, omissions, inconsistencies or other defects in the Design
Documents, regardless of whether such errors, omissions,
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inconsistencies or defects were also included in the Concept
Design or Reference Documents. Contractor agrees that, because
the Concept Design and Reference Documents are preliminary and
conceptual in nature and are subject to review and modification
by Contractor, Contractor shall have no right to claim that any
Indemnified Party is responsible for any errors, omissions,
inconsistencies or other defects contained therein.
18.1.3 Contractor's indemnity obligation to any
Indemnified Party shall not extend to any loss, damage or expense
arising solely from the gross negligence or willful misconduct of
such Indemnified Party, as finally determined by a court of
competent jurisdiction, without imputation of any gross
negligence or willful misconduct of any Indemnified Party to any
other Indemnified Party.
18.1.4 In claims by an employee of Contractor, a
Subcontractor, anyone directly or indirectly employed by them or
anyone for whose acts they may be liable, the indemnification
obligation under this Section 18.1 shall not be limited by a
limitation on the amount or type of damages, compensation or
benefits payable by or for Contractor or a Subcontractor under
workers' compensation, disability benefit or other employee
benefits laws.
18.1.5 Contractor hereby acknowledges and agrees that
it is Contractor's obligation to cause the Project to be designed
and to construct the Project in accordance with the Contract
Documents and that the Indemnified Parties described above are
fully entitled to rely on Contractor's performance of such
obligation. Contractor further agrees that any review and/or
approval by Program Manager and/or others hereunder shall not
relieve Contractor of any of its obligations under the Contract
Documents or in any way diminish its liability for performance of
such obligations or its obligations to provide indemnities hereunder.
18.2 No Effect on Other Rights
The foregoing obligations shall not be construed to negate, abridge,
or reduce other rights or obligations which would otherwise exist in
favor of an Indemnified Party hereunder or under applicable law.
18.3 CERCLA Agreement
Without limiting their generality, the indemnity set forth in
Section 18.1.1(g) is intended to operate as an agreement pursuant
to Section 107(e) of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9607(e), to
insure, protect, hold harmless and indemnify the Indemnified
Parties.
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ARTICLE 19. DISPUTE RESOLUTION
19.1 Decision by Program Manager; Conditions Precedent to Adjudication
19.1.1 Disputes arising in the performance of this
Contract (excluding any disagreement regarding matters subject to
a sole discretion standard hereunder) which are not resolved
informally, whether through the partnering process described in
Section 19.4 or otherwise, shall be decided in writing by a
decision of Program Manager under this Article 19, by issuance of
a Directive Letter by Developer under Section 13.1.1.3, or by
issuance of a marked-up Change Order under Section 13.12. Contractor
may request at any time that a decision be issued, or Program Manager
may issue a decision without having received any such request.
Program Manager's failure to respond to a request for a decision
within 14 days after request shall be deemed a rejection. Program
Manager's decision shall be final and conclusive unless within ten
days from the date of receipt of a copy of the decision, Contractor
delivers a written appeal to the Program Manager's Project Director.
19.1.2 If a written appeal is timely received, the
Program Manager's Project Director will either hear the appeal or
appoint a representative to hear the appeal (who shall not be the
same individual who made the original decision). In connection
with any such appeal, Contractor shall be afforded an opportunity
to be heard and to offer evidence in support of its position.
The final decision of the Program Manager shall be issued within
14 days after the hearing or such longer period as is mutually
agreeable to the parties. Such final decision shall be binding
upon Contractor and Contractor shall abide by the decision,
subject only to its right to bring a court action as specified in
Section 19.1.3.
19.1.3 As conditions precedent to Contractor's right to
bring any court action regarding a dispute hereunder:
(a) all notices required under Section 13.3.2 shall
have been properly delivered;
(b) a final decision of Program Manager shall have
been issued under Section 19.1.2 or Developer shall have issued a
Directive Letter under Section 13.1.1.3; and
(c) Contractor shall have provided Program Manager
with written notice rejecting Program Manager's final decision under
Section 19.1.2 or stating that Contractor objects to Developer's
Directive Letter (as appropriate) within 30 days after issuance
thereof.
If at any time in the process a dispute is resolved, whether
by mutual agreement or by Contractor's failure to proceed to the
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next step in the dispute resolution process, Contractor must sign
an unconditional release as to any and all matters arising from
the dispute.
19.1.4 The New Jersey Contractual Liability Act,
N.J.S.A. 59:13-1 et seq., shall govern any action which may be
brought by Contractor as a result of Program Manager's decision.
19.2 Consent To Jurisdiction
Each party hereto, by entering into this Contract, consents and
submits to the exclusive jurisdiction of the courts of New Jersey
over any action at law, suit in equity or other proceeding that
may arise out of this Contract, and Contractor agrees, during the
period of performance hereunder (including during the Warranty
period), to maintain within the State of New Jersey an agent to
accept service of legal process on its behalf. Absent
notification to the contrary the agent for service of process for
each party shall be deemed to be the individual identified in
Section 24.10 for delivery of notices.
19.3 Continuance of Work During Dispute
At all times during the course of the dispute resolution process,
but subject to Contractor's rights under Section 16.3.2, Contractor
shall continue with the Work as directed, in a diligent manner and
without delay, and shall be governed by all applicable provisions of
the Contract Documents. Records of the Work shall be kept in
sufficient detail to enable payment in accordance with applicable
provisions in the Contract Documents, if this should become necessary.
19.4 Partnering
19.4.1 Objectives
Developer intends to encourage partnering among Developer,
State, SJTA, Program Manager, Contractor and Subcontractors. The
partnering process will be structured to draw on the strengths of
each organization to identify and achieve reciprocal goals. The
objectives are effective, efficient, quality contract performance
and completion within budget, on schedule and in accordance with
the Contract Documents. Contractor agrees to seek to obtain a
solution through the partnering process before making any request
for a Program Manager decision under Section 19.1.
19.4.2 Costs
Contractor shall be responsible for engaging a facilitator
acceptable to Developer to conduct the initial team-building
workshop and any follow-up workshops agreeable to Developer and
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Contractor. Other than the cost of the facilitator, Developer
and Contractor will each be responsible for any expense incurred
by its respective organization for salary, meals, travel, and
lodging of participants and similar items.
19.4.3 Legal Effect
The establishment of a partnering charter will not change
the legal relationship of the parties to the Contract nor relieve
either party from any of the terms of the Contract.
ARTICLE 20. ACCEPTANCE
20.1 Substantial Completion
20.1.1 Contractor shall provide a notice of anticipated
Substantial Completion to Program Manager when all of the
following conditions to Substantial Completion have occurred:
(a) Contractor has completed the Project (except for
Punch List items and final cleanup);
(b) All construction associated with the Project has
been performed in accordance with the requirements of the
Contract Documents; and
(c) The Project may be operated without damage to the
Project or any other property on or off the Site, and without
injury to any Person.
20.1.2 As promptly as is practicable after receipt of
the notice of anticipated Substantial Completion pursuant to
Section 20.1.1, Program Manager shall, after consultation with
the State and SJTA, advise Contractor in writing of any of the
following of which Program Manager then has knowledge: (a) defects
in the Project, and/or (b) deficiencies in the Project relating to
any of the items described in Section 20.1.1(a), (b) or (c) , and/or
(c) deviations of any installed equipment, materials and workmanship
from the requirements of the Contract Documents. Contractor shall,
at its own cost and expense, correct such defects, deficiencies and
deviations to Program Manager's, State's and SJTA's satisfaction.
"Substantial Completion" will be deemed to have occurred once
such corrections have been made and a "Certification of Substantial
Completion" has been issued by Program Manager to Developer, State
and SJTA, with a copy to Contractor.
20.1.3 Refer to Sections 105.21 and 107.18 of the
General Provisions regarding possible early opening of portions
of the Project.
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20.2 Final Acceptance
20.2.1 Promptly after Substantial Completion of the
Project, Contractor shall perform all Punch List items and all
Work, if any, which was waived for purposes of Substantial
Completion, and shall satisfy all of its other obligations under
the Contract Documents, including ensuring that the Project has
been completed and all components have been properly adjusted and
tested. Final Acceptance of the Project shall be deemed to have
occurred when all of the following have occurred:
(a) All requirements for Substantial Completion of
the Project shall have been fully satisfied.
(b) Program Manager and SJTA shall have received all
Construction Documents, as-built drawings of the Project,
manufacturers' data, catalogues, and all maintenance manuals for
all equipment throughout the Project, right-of-way record maps,
surveys, test data and other deliverables required under the
Contract Documents.
(c) All special tools purchased by Contractor as
provided in the Contract Documents shall have been delivered to
SJTA and all replacement spare parts shall have been purchased
and delivered to SJTA free and clear of Liens.
(d) All of Contractor's and Subcontractors'
personnel, supplies, equipment, waste materials, rubbish and
temporary facilities shall have been removed from the Site.
(e) Contractor shall have delivered to Program
Manager, State and SJTA satisfactory evidence that there are no
outstanding claims of Contractor or claims, Liens or stop notices
of any Subcontractor or laborer with respect to the Work, other
than any previously submitted unresolved claims of Contractor and
any claims, Liens or stop notices of a Subcontractor or laborer
being contested by Contractor (in which event Contractor shall
provide a certification listing all such matters with such detail
as is requested by Program Manager and, with respect to all
Subcontractor and laborer claims, Liens and stop notices, shall
include a representation of Contractor that it is diligently and
in good faith contesting such matters by appropriate legal
proceedings which shall operate to prevent the enforcement or
collection of the same). For purposes of such certificate, the
term "claim" shall include all matters or facts which may give
rise to a claim.
(f) The Punch List items shall have been completed to
the satisfaction of Program Manager, State and SJTA, all of
Contractor's other obligations under the Contract Documents
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(other than obligations which by their nature are required to be
performed after Final Acceptance) shall have been satisfied in
full or waived, and Program Manager, State and SJTA shall have
delivered to Contractor a Notice of Final Acceptance to the
effect of the foregoing.
(g) Program Manager shall have delivered to Developer,
State and SJTA a "Certification of Final Acceptance," with a copy to
Contractor. Said certification shall state that the Work has been
constructed in accordance with the Final Design Documents, subject
only to the exceptions noted in said certification and set forth in
the as-built drawings.
20.2.2 The occurrence of the Final Acceptance Date shall
not relieve Contractor, any Subcontractor or the Surety from any
continuing obligations under the Contract Documents.
20.2.3 Provided that all conditions to Final Acceptance
have occurred, Contractor shall have the right to replace the
Performance Bond with a replacement performance bond in an amount
and in form satisfactory to Developer, State and SJTA in their
sole discretion (provided that it shall not be required to exceed
$15,000,000 for the first year of the warranty period and may be
further reduced to $5,000,000 on the first anniversary of the Final
Acceptance Date provided Contractor is not then in default hereunder)
or with such other security as is approved by Developer, State and
SJTA in their sole discretion, guaranteeing due and punctual
performance of all obligations of Contractor under the Contract
Documents which survive Final Acceptance.
20.3 Assignment of Causes of Action
Contractor hereby offers and agrees to assign to Developer, State
and SJTA all rights, title, and interest in and to all causes of
action it may have under Section 4 of the Clayton Act (15 U.S.C.
Sec. 15), arising from purchases of goods, services or materials
pursuant to this Contract. This assignment shall be deemed made
and shall become effective at the time final payment is tendered
to Contractor, without further acknowledgment by the parties.
20.4 Payments to Utilities
Contractor shall use all reasonable efforts to obtain final
invoices from Utility Owners prior to the Final Acceptance Date.
In the event that any invoices have not yet been received as of
such date, Contractor shall provide Program Manager with
sufficient information to determine the amount to withhold from
final payment pending receipt of such invoices. Contractor shall
remain obligated to pay the full amount of any such invoice as
and when received, regardless of the amount withheld.
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ARTICLE 21. DOCUMENTS AND RECORDS
21.1 Escrowed Bid Documents
Prior to execution of this Contract, Contractor delivered into
escrow one copy of all documentary information used in
preparation of its Bid for the Project (the "Escrowed Bid Documents"
or "EBD"). Concurrently with approval of each Change Order, if
requested by Program Manager, one copy of all documentary
information used in preparation of the Change Order shall be added
to the Escrowed Bid Documents. The EBD will be held in escrow until
all of the following have occurred: (a) 180 days have elapsed from
Final Acceptance or termination of the Work, as applicable, (b) all
disputes regarding this Contract have been settled, and (c) final
payment on this Contract has been made by Developer and accepted by
Contractor.
21.1.1 The EBD shall be available during business hours
for joint review by representatives of Contractor, Developer, State,
SJTA and Program Manager in connection with the resolution of
disputes and as described in Section 21.1.5 below. The EBD are,
and shall always remain, the property of Contractor, subject to
Program Manager's right to review the EBD as provided herein.
Copies of the EBD shall be provided to the courts of the State of
New Jersey and other dispute resolvers upon request by Developer.
21.1.2 Contractor represents and warrants that the EBD
delivered into escrow prior to execution hereof constitute all of
the information used in the preparation of its Bid and agrees
that no other Bid preparation information will be considered in
resolving disputes or claims related thereto, including in any
judicial proceeding to resolve such disputes or claims.
Contractor also agrees that the EBD are not part of this Contract
and that nothing in the EBD shall change or modify this Contract.
21.1.3 Contractor represents and warrants that:
(a) the EBD clearly itemize the estimated costs of
performing the Work required by the Contract Documents, all Work
is separated into sub-items as required to present a complete and
detailed estimate of all costs, and crews, equipment, quantities
and rates of production are detailed;
(c) estimates of costs are divided into Contractor's
usual cost categories such as direct labor, repair labor, equipment
ownership and operation, expendable materials, permanent materials
and subcontract costs as appropriate, plant and equipment and
indirect costs are detailed in Contractor's usual format, and
Contractor's allocation of plant and equipment, indirect costs,
contingencies, markup and other items such as overhead and profit
to each direct cost item shall be clearly identified;
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(d) the EBD include all assumptions, quantity
takeoffs, rates of production and progress calculations, quotes
from Subcontractors and suppliers, memoranda, narratives and all
other information used by Contractor to arrive at the Contract
Price or Change Order.
21.1.4 It is not intended that Contractor perform any
significant extra work in the preparation of the EBD prior to
delivery thereof into escrow. However, Contractor represents and
warrants that the EBD provided prior to execution of this Contract
were personally examined prior to delivery to escrow by authorized
officers of Contractor and that they meet the requirements of
Section 21.1.3 and are adequate to enable a complete understanding
and interpretation of how Contractor arrived at its Bid Price.
Contractor also represents and warrants that the EBD provided in
connection with Change Orders will be personally examined prior
to delivery to escrow by authorized officers of Contractor and
that they will meet the requirements of Section 21.1.3 and will
be adequate to enable a complete understanding and interpretation
of how Contractor arrived at its Change Order.
21.1.5 Upon request by Program Manager at any time
following issuance of NTP1, representatives of Program Manager
and Contractor shall jointly review the EBD to determine whether
it is complete, and shall organize the EBD and label each page so
that it is obvious that the page is a part of the EBD and so as
to enable a person reviewing a page out of context to determine
where it can be found within the EBD. The representatives shall
also compile an index listing each document included in the EBD
and briefly describing the document and its location in the EBD,
which shall be kept with the EBD. In the event that, following
the initial organization, Program Manager determines that the EBD
is incomplete, Program Manager may request Contractor to supply
data to make the EBD complete. Contractor shall provide all such
data within three business days of the request, and at that time
it will be date stamped, labeled to identify it as supplementary
EBD information, and added to the EBD. Contractor shall have no
right to add documents to the EBD except upon Program Manager's
request. At Program Manager's option, which may be exercised at
any time, the EBD associated with any Change Order shall be
reviewed, organized and indexed in the same manner as set forth
in this Section 21.1.5.
21.1.6 The EBD shall at all times be treated as
proprietary and confidential information and shall be used only
for purposes described in Section 21.1.1.
21.2 Subcontractor Bid Documents
Contractor shall require each Subcontractor whose Subcontract
price equals or exceeds $5,000,000 to submit to Contractor a copy
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of all documentary information used in preparing its sub-bid,
immediately prior to executing the Subcontract, to be held by the
same escrow depository which is holding the EBD and which shall
be accessible by Contractor and its successors and assigns
(including Developer, State and SJTA), the courts of the State of
New Jersey and other dispute resolvers, on terms substantially
similar to those contained herein. Each such Subcontract shall
include a representation and warranty from the Subcontractor
stating that its EBD constitute all the documentary information
used in preparation of its sub-bid. Each Subcontract with a
Subcontractor whose Subcontract price is less than $5,000,000
shall require the Subcontractor to preserve all documentary
information used in preparing its sub-bid and to provide such
documentation to Contractor and/or Program Manager in connection
with any claim exceeding $250,000 made by such Subcontractor.
21.3 Maintenance of, Access to and Audit of Records
Contractor shall maintain at the Project Manager's office a
complete set of all books and records prepared or employed by
Contractor in its management, scheduling, cost accounting and
otherwise with respect to the Project. Contractor shall also
maintain such additional records as Developer may reasonably
request from time to time. Until the date specified in
Section 21.4, Contractor shall grant to Program Manager,
Developer, State and/or SJTA such audit rights and allow
Developer such access to and the right to copy such books and
records as any such Person may request in connection with the
issuance of Change Orders, the resolution of disputes and such
other matters as Developer, State and/or SJTA reasonably deem
necessary for purposes of verifying compliance with this Contract
and applicable law.
21.3.1 Where the payment method for any Work is on a
cost-plus basis, such examination and audit rights shall include
all books, records, documents and other evidence and accounting
principles and practices sufficient to reflect properly all
direct and indirect costs of whatever nature claimed to have been
incurred and anticipated to be incurred for the performance of
such Work. If audit indicates Contractor has been overcredited
under a previous progress report or progress payment, that
overcredit will be credited against current progress reports or
payments.
21.3.2 For cost and pricing data submitted in connection
with pricing Change Orders, unless such pricing is based on adequate
price competition, established catalog or market prices of commercial
items sold in substantial quantities to the public, or prices set by
law or regulation, Developer, State, SJTA and their representatives
have the right to examine all books, records, documents and other
data of Contractor related to the negotiation of or performance of
Work under such Change Orders for the purpose of evaluating the
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accuracy, completeness and currency of the cost or pricing data
submitted. The right of examination shall extend to all documents
deemed necessary by such Persons to permit adequate evaluation of the
cost or pricing data submitted, along with the computations and
projections used therein.
21.4 Retention of Records
Contractor shall maintain all records and documents relating to
this Contract and the Project (including copies of all original
documents delivered to Program Manager, Developer, State and/or
SJTA) for six years after the Final Acceptance Date or
termination date, as applicable, and shall notify Developer,
State and SJTA where such records and documents are kept.
Notwithstanding the foregoing, all records which relate to Claims
being processed or actions brought under the dispute resolution
provisions or which are relevant to any ongoing inquiry by any
Governmental Person shall be retained and made available until
such actions, Claims and inquiries have been finally resolved.
Records to be retained include the EBD and all books and other
evidence bearing on Contractor's costs and expenses under the
Contract Documents. Contractor shall make these records and
documents available for audit and inspection to Developer, State
and SJTA, at Contractor's office, at all reasonable times,
without charge, and shall allow such Persons to make copies of
such documents (at no expense to Contractor). If approved by
Developer, State and SJTA, photographs, microphotographs or other
authentic reproductions may be maintained instead of original
records and documents.
21.5 Public Records
21.5.1 Contractor acknowledges and agrees that all
records, documents, drawings, plans, specifications and other
materials in Developer's or Program Manager's possession relating
to the Project, including materials submitted by Contractor, may
be subject to statutes and common law allowing access to public
records. Contractor shall be solely responsible for all
determinations regarding whether information provided is entitled
to confidentiality under such laws, and for clearly and
prominently marking each and every page or sheet of materials
with "Trade Secret" or "Confidential" as it determines to be
appropriate. Contractor is advised to contact legal counsel
concerning such laws and their application to Contractor.
21.5.2 If any of the materials submitted by Contractor
are clearly and prominently labeled "Trade Secret" or
"Confidential" by Contractor, Developer will notify Contractor in
the event that State and/or SJTA notifies Developer of any
request for the disclosure of such materials. Under no
circumstances, however, will Developer, Program Manager, State or
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SJTA be responsible or liable to Contractor or any other Person
for the disclosure of any such labeled materials, whether the
disclosure is required by law, by court order or occurs through
inadvertence, mistake or negligence on the part of Developer,
State, SJTA or Program Manager.
21.5.3 In the event of litigation concerning the
disclosure of any material submitted by Contractor to Developer
or Program Manager, Developer's, Program Manager's, State's and
SJTA's sole involvement will be as a stakeholder retaining the
material until otherwise ordered by a court, and Contractor shall
be fully responsible for otherwise prosecuting or defending any
action concerning the materials at its sole expense and risk.
ARTICLE 22. VALUE ENGINEERING
This Article 22 sets forth the requirements applicable to
preparation, review and approval of Value Engineering Change
Proposals ("VECP's") submitted by Contractor for the purpose of
enabling Contractor and Developer to take advantage of potential
cost savings from changes in the requirements of the Contract
Documents. Contractor is encouraged to submit VECP's whenever it
identifies potential savings or improvement. Program Manager may
also request Contractor to develop and submit a specific VECP.
Contractor has the right to refuse to consider such Program
Manager-ordered VECP.
22.1 Description of VECP's
A VECP is a proposal developed and documented by Contractor which:
(a) Requires a change in the requirements of the Contract
Documents in order to be implemented; and
(b) Reduces the Contract Price without impairing essential
functions or characteristics of the Work, including the meeting
of requirements pertaining to functionality contained in the
Special Provisions and all Governmental Approvals, and provided
that it is not based solely upon a change in quantities.
22.2 Information to be Provided
At a minimum, the following information shall be submitted by
Contractor with each VECP:
(a) Description of the existing Contract requirements which
are involved in the proposed change;
(b) Description of the proposed change;
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(c) Discussion of differences between existing requirements
and the proposed change, together with advantages and
disadvantages of each changed item;
(d) Itemization of the Contract requirements which must be
changed if the VECP is approved (e.g., drawing numbers and
specifications);
(e) Justification for changes in function or characteristics
of each item, and effect of the change on the performance of the end
item, as well as on the meeting of requirements contained in the
Contract Documents;
(f) Date or time by which a Change Order adopting the VECP
must be issued in order to obtain the maximum cost reduction,
noting any effect on the Project Schedule;
(g) Cost estimate for existing Contract requirements compared
to Contractor's cost estimate of the proposed changes;
(h) Costs of development and implementation by the Contractor.
22.3 Review of VECP's
Contractor shall submit VECP's to the Program Manager. Program
Manager will endeavor to process proposals expeditiously, but
Developer, State, SJTA and Program Manager shall not be liable
for any delay in acting upon any proposal submitted pursuant to
this Article 22. Contractor may withdraw all or part of any VECP
at any time prior to approval by Developer, but shall, in any
such case, be liable for costs incurred by Developer, State
and/or SJTA in reviewing the proposal. In all other situations
each party shall bear its own costs in connection with
preparation and review of VECP's.
22.4 Approval of VECP's
Developer may approve, in its sole discretion, in whole or in
part, by Change Order, any VECP submitted. Designs for approved
VECP's shall be prepared by Contractor for incorporation into the
Design Documents. Until a Change Order is issued on a VECP,
Contractor shall remain obligated to perform in accordance with
the Final Design Documents and other Contract Documents. The
decision of Developer as to rejection or approval of any VECP
shall be at the sole discretion of Developer and shall be final
and not subject to review by the courts.
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22.5 Contract Price Adjustment
If Developer accepts a VECP submitted by Contractor pursuant to
this Article 22, the Contract Price shall be adjusted in
accordance with the following:
22.5.1 The term "estimated net savings" as used herein
shall mean (a) the difference between the cost of performing the
Work according to the Contract Documents and the actual cost to
perform it according to the proposed change, less (b) the costs
of studying and preparing the VECP as proven by Contractor and
approved by Developer in accordance with the Change Order
procedures set forth herein, less (c) any additional costs
incurred by Developer resulting from the VECP. Contractor's
profit shall not be considered part of the cost.
22.5.2 Except as specified in Section 22.5.4, Contractor
is not entitled to share in either collateral or future Contract
savings. The term "collateral savings" means those measurable
net reductions in costs of operation resulting from the VECP,
including maintenance and logistics. The term "future Contract
savings" shall mean reductions in the cost of performance of
future construction contracts for essentially the same item
resulting from a VECP submitted by the Contractor.
22.5.3 Subject to Section 22.5.4, the Contract Price
shall be reduced by an amount equal to 50% of estimated net
savings, provided that Contractor's profit shall not be reduced
by application of the VECP. In such event 50% of the savings
amount shall be added to the Contingency and the remaining 50%
shall be held as Retainage.
22.5.4 In a case where Contractor proposes that an
adjustment be made to the planned acquisition of real property or
to the area which has not been environmentally cleared for the
Project in order to result in an overall cost savings to the
Project (such as a proposal that additional real property be
purchased outside of the Right of Way Limits in order to save on
the cost of building a wall, or a proposal which would enable a
reduction in the portion of the Project budget allocated to real
property acquisitions by incurring additional construction
costs): the VECP shall compare (a) the incremental reduction in
costs (such as for not designing and building a wall) and (b) the
costs involved in adjusting the real property limits or
environmental clearances (which shall be based on Contractor's
additional costs, such as for providing real property acquisition
support services (including profit) plus additional costs of
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Developer, State, SJTA and Program Manager, including costs of
personnel as well as out-of-pocket costs such as the price of the
additional real property and/or environmental clearances and
attorneys' fees) or shall compare (y) the incremental reduction
in costs (if any) for not acquiring the unnecessary real property
and (z) the additional construction costs to be incurred. The
estimated net savings shall be shared so as to achieve the same
result as other VECP's (i.e., 50% shall go to the Contingency and
50% shall be held as Retainage). Developer, State, SJTA and
Program Manager shall be reimbursed for their costs and expenses
associated with the acquisition and the change in the Work, with
the amount of the reimbursement to be deducted from the Contract
Price. Footnote 2 sets forth an example of how the estimated net
savings would be determined.2/
__________________________
2/ The following example concerns a proposal by Contractor to
acquire additional Right of Way in lieu of wall construction.
<TABLE>
CALCULATION OF VECP SAVINGS
<S> <C> <C> <C>
Existing VECP Cost Net Savings
Category Contract Calculations From VECP
Cost of Wall $250,000
Cost of Preparing VECP ($ 10,000)
Contractor's Expenses ( 15,000)
Program Manager Costs ( 10,000)
Costs of property acquisition ( 150,000)
__________
Total $250,000 less ($185,000) equals $65,000
CONTRACT ADJUSTMENT
Cost of Wall in Existing Contract ($250,000)
Cost of VECP Preparation $10,000
Contractor's Additional Costs $15,000
Reimbursement of acquisition costs $150,000
Reimbursement to Program Manager $10,000
Amount added to Contingency $32,500
__________
Total Reduction in Contract Price ($32,500)
Additional Retainage Required $32,500
(Contractor's 50% share of savings)
</TABLE>
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22.6 Float
If an approved VECP results in a time savings to the Contract,
Developer shall be entitled to the benefit of Float derived
therefrom in accordance with Section 4.3.2.2.
ARTICLE 23. COOPERATION AND COORDINATION WITH OTHER CONTRACTORS,
LOCAL AGENCIES AND DEVELOPERS
23.1 Cooperation with Contractors
Developer reserves the right to contract for and perform other or
additional work on or near the Site. State and/or SJTA may also
contract for and perform other or additional work. Contractor
shall cooperate with such other contractors to the extent
reasonably necessary for the performance by such other
contractors of their work, and shall cause its employees, agents,
officers and Subcontractors and other Persons for whom Contractor
may be contractually or legally responsible to so cooperate. If
other separate contracts are awarded by Developer, State or SJTA
which affect the Work, Contractor shall conduct its Work without
unreasonably interfering with or hindering the progress or
completion of the work being performed by other contractors.
23.2 Interference by Other Contractors
If Contractor asserts that any of Developer's other contractors
or any of State's or SJTA's contractors have hindered or interfered
with the progress or completion of the Work, then Contractor's sole
remedy shall be to seek recourse against such other contractors.
In any event, Contractor shall notify Program Manager within 24 hours
of such interference by other contractors. Contractor shall have the
right to ask Program Manager to act as an arbitrator for resolution of
such dispute, provided the other contractor and its sureties have
agreed to submit the dispute to Program Manager, and provided that
such proceeding shall be conducted at no cost to Program Manager.
23.3 Coordination with Local Agencies and Developers
Contractor shall coordinate with local agencies and with owners
of property adjoining the Project, as more particularly described
in the Scope of Work.
ARTICLE 24. MISCELLANEOUS PROVISIONS
24.1 Roles of Program Manager, State and SJTA
24.1.1 The Contract Documents specify that Program
Manager will undertake certain activities with respect to the
Project. In undertaking such activities Program Manager is
acting as the agent for Developer, State and SJTA. Program
Manager has authority to sign Contingency Change Orders but has
no authority to agree to an increase in the Contract Price except
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for amounts payable solely from the Contingency, or to agree to
any extension of the Guaranteed Completion Date, or to direct
Contractor to take any action which would entitle Contractor to
an increase in the Contract Price from any source other than the
Contingency or to any extension of the Guaranteed Completion
Date. Developer shall have the right to designate another
Program Manager at any time, or to undertake directly any of
Program Manager's tasks. Any change in such designation shall be
effective upon delivery to Contractor, with copies to all other
interested parties, of notification regarding the change.
Contractor acknowledges and agrees that Developer is relying
exclusively on Program Manager to administer and supervise this
Contract and the Work and except for the payments required from
Developer in this Contract (subject to the limitations contained
in this Contract), Developer has no responsibilities or liability
to Contractor hereunder,
24.1.2 Notwithstanding the approval and other rights of
State and SJTA referred to in the Contract Documents, Contractor
is not authorized or required to and shall not accept directions,
decisions or orders from State, SJTA or anyone else other than
Developer or Program Manager.
24.2 Waiver
Either party's waiver of any breach or failure to enforce any of
the terms, covenants, conditions or other provisions of the
Contract Documents at any time shall not in any way limit or
waive that party's right thereafter to enforce or compel strict
compliance with every term, covenant, condition or other
provision, any course of dealing or custom of the trade
notwithstanding. Furthermore, if the parties make and implement
any interpretation of the Contract Documents without documenting
such interpretation by an instrument in writing signed by both
parties, such interpretation and implementation thereof will not
be binding in the event of any future disputes.
24.3 Independent Contractor
Contractor is an independent contractor, and nothing contained in
the Contract Documents shall be construed as constituting any
other relationship with Developer, State or SJTA. In no event
shall the relationship among Developer, State and SJTA, on the
one hand, and Contractor, on the other, be construed as creating
any relationship whatsoever between Developer, State or SJTA and
Contractor's employees. Neither Contractor nor any of its
employees is or shall be deemed to be an employee of Developer,
State or SJTA. Except as otherwise specified in the Contract
Documents, Contractor has sole authority and responsibility to
employ, discharge and otherwise control its employees and has
complete and sole responsibility as a principal for its agents,
for all Subcontractors and for all other Persons that Contractor
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or any Subcontractor hires to perform or assist in performing the
Work.
24.4 Successors and Assigns
The Contract Documents shall be binding upon and inure to the
benefit of Developer and Contractor and their permitted
successors, assigns and legal representatives.
24.4.1 Contractor hereby consents to any assignment or
delegation of the obligations of this Contract, or both, in whole
or in part by Developer to State, SJTA or any Affiliate of Mirage
Resorts, Incorporated. In the event of such an assignment and
delegation, the term "Developer" as used in this Contract shall
be deemed to mean such assignee.
24.4.2 Developer may assign all or part of its right,
title and interest in and to, and delegate its obligations under,
the Contract Documents, including rights with respect to the
Payment and Performance Bonds, to any other Person, with the
prior written approval of Contractor.
24.4.3 Contractor may assign only its rights to receive
payment under the Contract Documents. The assignment instrument
shall incorporate Section 3.1.2 in its entirety, and a copy of
said instrument shall be delivered to Developer, State and SJTA
as a condition to its effectiveness. Contractor may not delegate
any of its duties hereunder, except to Subcontractors to the
extent expressly permitted in the Contract Documents. Contractor's
assignment or delegation of any of its Work under the Contract
Documents shall be ineffective to relieve Contractor of its
responsibility for the Work assigned or delegated, unless
Developer, in its sole discretion, has expressly approved such
relief from responsibility in writing.
24.5 Designation of Representatives; Cooperation with Representatives
24.5.1 Developer and Contractor shall each designate an
individual or individuals who shall be authorized to make
decisions and bind the parties on matters relating to the Contract
Documents. Appendix 4 hereto provides the initial designations.
Such designations may be changed by a subsequent writing delivered
to the other party in accordance with Section 24.10. The parties
may also designate technical representatives who shall be authorized
to investigate and report on matters relating to the construction of
the Project and negotiate on behalf of each of the parties but who
do not have authority to enter into binding agreements.
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24.5.2 Contractor shall cooperate with Developer and all
representatives of Developer designated as described above.
Contractor shall provide such data, reports, certifications,
opinions of counsel regarding matters such as existence and
authorization, and other documents or assistance as may be
reasonably requested in connection with funding for the Project,
provided, however, that provision of this information shall not
in any manner diminish Contractor's rights or obligations under
any other provision of the Contract Documents.
24.6 Gratuities
Neither Contractor nor any of its employees, agents and
representatives shall offer or give to an officer, official or
employee of Developer, Program Manager, State or SJTA gifts,
entertainment, payments, loans or gratuities. Additional
prohibitions governing gifts to State and SJTA employees or their
relatives are contained in Section 109.15 of the General
Provisions. Contractor represents and warrants that it has not
previously offered or given any gifts, entertainment, payments,
loans or gratuities in violation of such prohibitions.
24.7 Payment of Tolls
Contractor acknowledges and agrees that individuals working on
the Project for Contractor will be required to pay tolls when
using toll roads, including tolls for use of the Project after
Substantial Completion if it is used as a toll road. Contractor
shall not be entitled to reimbursement for any such tolls.
24.8 Limitation on Actions Against State, SJTA and Program
Manager; Third Party Beneficiaries
24.8.1 Contractor acknowledges that the Project is being
constructed for the benefit of State and SJTA as well as Developer
and others, and accordingly, subject to the provisions of Sections
3.2.9 and 24.1.2, State and SJTA, and each of them, may enforce all
of the terms of the Contract against Contractor as if State and SJTA
were signatories to this Contract. Contractor acknowledges that
Contractor has no right of action against State or SJTA. All limits
of liability and defenses afforded to Developer under this Contract
shall apply equally to and be available to SJTA and State in regard
to any claims made by Contractor.
24.8.2 Contractor acknowledges and agrees that neither
it nor any of its Subcontractors has or will have a contractual
relationship with Program Manager hereunder, and therefore that
neither Contractor nor any of its Subcontractors has any right of
action against Program Manager hereunder with respect to any
action or failure to act of Program Manager.
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24.8.3 It is not intended by any of the provisions of
the Contract Documents to create any third party beneficiary
hereunder, except to the extent specified in Section 24.8.1, or
to authorize anyone else not a party hereto to maintain a suit
for personal injury or property damage pursuant to the terms or
provisions hereof. The duties, obligations and responsibilities
of the parties to the Contract Documents with respect to such
third parties shall remain as imposed by law. The Contract
Documents shall not be construed to create a contractual
relationship of any kind between Developer and a Subcontractor or
any other Person except Contractor.
24.9 Governing Law
The Contract Documents shall be governed by and construed in
accordance with the laws of the State of New Jersey.
24.10 Notices and Communications
24.10.1 Notices under the Contract Documents shall be in
writing and (a) delivered personally, or (b) sent by certified mail,
return receipt requested, or (c) sent by a recognized overnight mail
or courier service, with delivery receipt requested, or (d) sent by
facsimile communication followed by a hard copy or with receipt
confirmed by telephone, to the following addresses (or to such other
address as may from time to time be specified in writing by such
Person):
All correspondence with Contractor shall be sent to Contractor's
Project Manager or as otherwise directed by Project Manager. The
address for such communications shall be:
Yonkers Contracting Company, Inc./Granite Construction Co.
A Joint Venture
ATTN: Lawrence W. Klein
969 Midland Avenue
Yonkers, NY 10704
In addition, copies of all notices to proceed and suspension,
termination and default notices shall be sent as follows:
Yonkers Contracting Company, Inc./Granite Construction Co.
A Joint Venture
ATTN: Lawrence W. Klein
969 Midland Avenue
Yonkers, NY 10704
All communications to Developer or to Program Manager shall be
delivered to the following address:
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Parsons Brinckerhoff - FG, Inc.
506 Carnegie Center Drive, Suite 200
Princeton, NJ 08540
FAX: (609) 734-6900
Attn: Richard T. Fischer, Program Manager
Copies of default notices and notices relating to termination by
Contractor or to failure of Contractor to receive any undisputed
payment shall also be sent to:
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, NV 89109
FAX: (702) 791-5787
Attn: Bruce A. Levin, Esq.
Atlandia Design and Furnishings, Inc.
3260 South Industrial Road
Las Vegas, NV 89109
FAX: (702) 792-4790
Attn: Kenneth R. Wynn, President
State of New Jersey Department of Transportation
Commissioner of Transportation
CN600
Trenton, NJ 08625
FAX: (609) 530-3894
Attn: John J. Haley, Jr.
South Jersey Transportation Authority
P.O. Box 351
Hammonton, NJ 08037
FAX: (609) 965-7597
Attn: James A. Crawford, Executive Director
24.10.2 Notices shall be deemed received when actually
received in the office of the addressee (or by the addressee if
personally delivered) or when delivery is refused, as shown on
the receipt of the U. S. Postal Service, private carrier or other
Person making the delivery. Notwithstanding the foregoing,
notices sent by facsimile after 4:00 p.m. Eastern Standard or
Eastern Daylight Time (as applicable) and all other notices
received after 5:00 p.m. shall be deemed received on the first
business day following delivery (that is, in order for a fax to
be deemed received on the same day, at least the first page of
the fax must have been received before 4:00 p.m. on a business
day). Any technical or other communications pertaining to the
Work shall be handled by Contractor's Project Manager, the
Program Manager and representatives designated by State and SJTA.
Contractor's representatives shall be available at all reasonable
times for consultation. Except as otherwise provided in
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Section 24.5.1, each party's representative shall be authorized
to act on behalf of such party in matters concerning the Work.
24.10.3 Contractor shall copy Program Manager on all
written correspondence pertaining to this Contract between
Contractor and any Person other than Contractor's Subcontractors,
consultants and attorneys.
24.11 Further Assurances
Contractor shall promptly execute and deliver and cause each
Subcontractor to promptly execute and deliver to Developer all
such instruments and other documents and assurances as are
reasonably requested by Developer to further evidence the
obligations of Contractor hereunder, including assurances
regarding assignments of Subcontracts contained herein.
24.12 Severability
If any clause, provision, article, section or part of this
Contract is ruled invalid by a court of competent jurisdiction,
then the parties shall: (a) promptly meet and negotiate a
substitute for such clause, provision, article, section or part,
which shall, to the greatest extent legally permissible, effect
the original intent of the parties, including an equitable
adjustment to the Contract Price to account for any change in the
Work resulting from such invalidated portion (provided that in no
event shall any such adjustment require any payments to be made
to Contractor exceeding the original Contract Price as adjusted
by previously approved Change Orders plus the amount of any
remaining Contingency); and (b) if necessary or desirable, apply
to the court which declared such invalidity for a judicial
construction of the invalidated portion to guide the
negotiations. The invalidity or unenforceability of any such
clause, provision, article, section or part shall not affect the
validity or enforceability of the balance of this Contract, which
shall be construed and enforced as if this Contract did not contain
such invalid or unenforceable clause, provision, article, section or
part.
24.13 Headings
The captions of the articles and sections of the Contract
Documents are for convenience only and shall not be deemed part
of the Contract Documents or considered in construing the
Contract Documents.
24.14 Entire Agreement; Amendments
The Contract Documents contain the entire understanding of the
parties with respect to the subject matter hereof and supersede
all prior agreements, understandings, statements, representations
and negotiations between the parties with respect to its subject
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matter. The Contract Documents may be amended only through a
Change Order pursuant to Article 13.
24.15 Survival
All covenants, warranties and representations contained herein
shall survive the termination of this Contract and the Final
Acceptance Date.
"Developer" ATLANDIA DESIGN AND FURNISHINGS,
INC., a New Jersey corporation
By: KENNETH R. WYNN
Name: Kenneth R. Wynn
Title: President
"Contractor" Yonkers Contracting Company, Inc./
Granite Construction Co.,
A Joint Venture
By: PATRICK D. MULLEN
Name: Patrick D. Mullen
Title: Attorney-in-Fact
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APPENDIX 1 - ABBREVIATIONS AND DEFINITIONS
As used in the Contract Documents, the following abbreviations
and terms shall have the following meanings:
ABBREVIATIONS
AAN American Association of Nurserymen
AAR Association of American Railroads
AASHTO American Association of State Highway and Transportation
Officials
ACE Atlantic City Expressway
ACI American Concrete Institute
ADA Americans With Disabilities Act (42 U.S.C. Sections 12101
et seq.)
ADU's "All Design Unit Memoranda" as distributed by NJDOT
from time to time
AGC Associated General Contractors
AI Asphalt Institute
AIA American Institute of Architects
AISC American Institute of Steel Construction
AISI American Iron and Steel Institute
ANSI American National Standards Institute
API American Pipe Institute
ARA American Railway Association
AREA American Railway Engineering Association
ASCE American Society of Civil Engineers
ASLA American Society of Landscape Architects
ASTM American Society for Testing and Materials
ATMS Advanced Traffic Management System
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AWPA American Wood Preservers' Association
AWWA American Water Works Association
AWS American Welding Society
BCD Baseline Change Documents (NJDOT)
BDC Bridges and Structures Design Criteria (Book III)
CAFRA Coastal Area Facilities Review Act
CIAP Construction Industry Advancement Program of New Jersey
CPM Critical path method
CRSI Concrete Reinforcing Steel Institute
DBE Disadvantaged Business Enterprise
EBD Escrowed Bid Documents
EEI Edison Electrical Institute
EPA Environmental Protection Agency of the United States
Government
FBE Female Business Enterprise
FHWA Federal Highway Administration
FRA Federal Railroad Administration
FSS Federal Specifications and Standards
IA Independent Assurance
ICEA Insulated Cable Engineers Association
IFB Invitation for Bids
IMSA International Municipal Signal Association
IPCEA Insulated Power Cable Engineers Association
ISO International Organization for Standardization
MBE Minority Business Enterprise
MUTCD Manual on Uniform Traffic Control Devices
NEC National Electric Code
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NEMA National Electrical Manufacturers Association
NIST National Institute for Standards and Technology
NJAC New Jersey Administrative Code
NJDEP New Jersey Department of Environmental Protection
NJDOT New Jersey Department of Transportation
NJSA New Jersey Statutes Annotated
NJSP New Jersey State Police
NJT New Jersey Transit Corporation
NVLAP National Verification Laboratory Acceptance Program,
(Bureau of Standards)
OSHA Occupational Safety and Health Administration
PCA Portland Cement Association
PCI Prestressed Concrete Institute
PCO Potential Change Order
RDC Roadway Design Criteria (Book III)
SAE Society of Automotive Engineers
SI's Standard Input for Supplemental Specifications (NJDOT)
SSPC Steel Structures Painting Council
UL Underwriter's Laboratory
USACE United States Army Corps of Engineers
USCG United States Coast Guard
USASI United States of American Standard Institute
VECP Value Engineering Change Proposal
WBS Work breakdown structure
DEFINITIONS
"AASHTO Standards" shall mean the requirements and standards
applicable to performance of the Work which are set forth in
publications of the American Association of State Highway and
Transportation Officials.
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"Acceleration Costs" shall mean those fully documented increased
costs reasonably incurred by Contractor (that is, costs over and
above what Contractor would otherwise have incurred) which are
directly attributable to increasing the performance level of the
Work in an attempt to complete necessary segments of the Work
earlier than otherwise anticipated, such as for additional
equipment, additional crews, lost productivity, overtime and
shift premiums, increased supervision and any unexpected
material, equipment or crew movement necessary for resequencing
in connection with acceleration efforts. Profit, overhead and
indirect costs in connection with acceleration efforts shall not
exceed the limits set forth in Section 13.7 of the Contract.
"Acceptance Testing" shall mean the inspection, sampling and/or
testing performed by Program Manager on material entering the
Work, whether on-Site or off-Site, to determine compliance with
the requirements of the Contract Documents. Such testing is a
factor in Program Manager's acceptance or rejection of the Work.
The term "Acceptance Testing" specifically includes specialty
testing, off-Site source inspection and testing and type approval
of asphalt and concrete plants.
"Affiliate" shall mean, with respect to Contractor, any Person
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with,
(a) Contractor or any Major Participant or (b) any Affiliate
(under part (a)) of Contractor or any Major Participant. With
respect to Developer and other Persons, the term "Affiliate"
shall mean any Person which directly or indirectly through one or
more intermediaries controls, is controlled by, or is under
common control with such Person. For purposes of this definition
the term "control" means the possession, directly or indirectly,
of the power to cause the direction of the management of a
Person, whether through voting securities, by contract, family
relationship or otherwise.
"As-Built Documents" shall mean the documents to be provided by
Contractor as described in Section 109.10 of the General
Provisions.
"Backfill" means material used to replace or the act of replacing
material removed during construction, or both, as the context
indicates.
"Base Course" means one or more layers of specified material and
thickness placed on a subbase or a subgrade to support a surface
course.
"Baseline Schedule" means Contractor's proposed work plan for the
Work, submitted in accordance with Section 4.3 of the Contract.
"Basic Configuration" shall mean the following elements defining
the Project as shown on the Concept Design Documents:
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(a) the mainline horizontal and mainline vertical
alignments, and
(b) the general location of interchanges and the type of
interchanges.
In determining whether a material change in Basic Configuration
to the mainline alignment (item (a) of the Basic Configuration
definition) has occurred, the following standards shall apply:
no material change in Basic Configuration shall be deemd to have
occurred as the result of any horizontal alignment shift of the
mainline of less than 30 feet and/or any vertical alignment shift
of the mainline of less than 6 feet from the alignment shown on
the Concept Design Documents.
"Betterment" shall mean upgrading or expanding the capacity of a
Utility facility being Relocated that is not attributable to
construction of the Project or that is made solely for the benefit
of and at the election of the Utility Owner. The primary
aim of Betterment is to make the Utility facility more useful,
functional, durable, efficient or of greater capacity. However,
the term "Betterment" shall not include modifications to a
Utility facility which enable achievement of greater usefulness,
functionality, durability, efficiency or capacity at costs equal
to or less than the costs of a "like-for-like" replacement or
relocation.
"Bid" shall mean Contractor's bid delivered in response to the IFB.
"Bid Date" or "Bid Due Date" shall mean May 23, 1997.
"Bid Price" shall mean the total price set forth in the Contractor's
Bid.
"Book" shall mean any of the books included in the IFB Documents.
"Bridge" means any structure, other than a culvert, including
supports, erected over a depression or an obstruction, as water,
highway, or railway, and having a track or passageway for carrying
traffic or other moving loads and having a length measured along
the center of the structure of more than 20 feet between undercopings
of abutments or extreme ends of openings for multiple boxes.
Structure dimensions are defined as follows:
Bridge length - The length of a bridge structure is the
overall length measured along the line of survey stationing
back to back of backwalls of abutments, if present,
otherwise end to end of the bridge floor; but, in no case
less than the total clear opening of the structure.
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Bridge width - The clear width measured at right angles to
the longitudinal centerline of the bridge between the bottom
or curbs, or in the case of multiple height of curbs, between
the bottoms of the lower risers or, if curbs are not used,
between inner faces of parapet or railing.
"Calendar Day" means every day shown on the calendar, beginning
and ending at midnight.
"Certificate of Compliance" means a document containing a
certified statement from the manufacturer or supplier verifying
the quality and quantity of material delivered, which shall be
accepted in certain cases as specified under Section 106.04 of
the General Provisions
"Change Order" shall have the meaning set forth in Section 13.1
of the Contract.
"Claim" shall mean a separate demand by Contractor for (a) a time
extension which is disputed by Developer, or (b) payment of money
or damages arising from work done by or on behalf of Contractor
in connection with this Contract which is disputed by Developer.
A Claim will cease to be a Claim upon resolution thereof,
including resolution by withdrawal or release thereof or delivery
of a Change Order or Contract amendment signed by all parties.
"Concept Design" shall mean the design concepts set forth in the
Concept Design Documents.
"Concept Design Documents" shall mean the drawings included in
the IFB Documents entitled "Atlandia Design and Furnishings
Concept Plans for the Atlantic City/Brigantine Connector," Sheets
1 through 119.
"Conformity" means compliance with the most stringent customary
manufacturing and construction tolerances where working tolerances
are not specified. Where working tolerances are specified, conformity
means compliance with the most stringent of such tolerances.
"Construction Documents" shall mean all Design Documents, Shop
Drawings and Working Drawings catalog cuts and samples necessary
for construction of the Project in accordance with the Contract
Documents and to inspect that construction.
"Construction Drawings" shall mean the drawings prepared by
Contractor's engineer of record for the Project who is licensed
in the State of New Jersey.
"Construction Quality Management Plan" shall mean the plan
described in Special Provisions Section 1200.
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"Construction Specifications" shall mean the specifications
prepared by Contractor's engineer of record for the Project.
"Constructive," when used in connection with the terms "change in
the Work," "delay," "suspension" or "acceleration," shall mean
that change in the Work, delay, suspension or acceleration which,
but for the express terms of the Contract Documents, could be
inferred or implied at law.
"Contingency" shall mean the amount available for payment of
Project costs in excess of the Bid Price, as more specifically
described in Section 13.9 of the Contract. The initial amount of
the Contingency is $28 million, subject to increase in connection
with approved VECPs and subject to decrease as Contingency Change
Orders are issued. Following Final Acceptance any remaining
Contingency amount will be shared with Contractor as specified in
Section 12.1.2.
"Contingency Change Order" shall mean a Change Order issued which
is payable solely from, and to the extent of available funds
remaining in, the Contingency, as more specifically described in
Section 13.9 of the Contract.
"Contingency Event" shall mean any of the events listed in Section
13.9.1 of the Contract.
"Contract" or "Design/Build Contract" shall mean the agreement
between Developer and Contractor to which this Appendix 1 is
attached.
"Contract Documents" shall have the meaning set forth in Section
1.2 of the Contract.
"Contract Price" shall have the meaning set forth in Section 12.1
of the Contract.
"Contractor" shall have the meaning set forth in the first
paragraph of the Contract.
"Contractor Assurance Testing (CAT)" means testing that Contractor
or its representative performs, in accordance with standard
procedures, to assure that material used on the Project meets the
quality requirements of the Contract. CAT is testing performed by
Contractor as the material is being placed into its final position
or after it has been placed in its final position and is ready for
Final Acceptance. The frequency of CAT is normally specified for
each type of work in the Contract or Design Documents and in
applicable standards.
"Contractor Float" shall have the meaning set forth in Section
4.3.2.3 of the Contract.
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"Contractor's Safety Program" shall mean Contractor's approved
safety program meeting the requirements set forth in Section 1700
of the Special Provisions.
"County" shall mean Atlantic County, New Jersey.
"Critical Path" shall mean the longest non-intermittent path
between the first and the last event of the Project shown on
the Project Schedule (or, if more than one such path exists, each
such path).
"Culvert" means any structure not classified as a bridge which
provides an opening to carry water under a roadway.
"Design Criteria" shall mean the Roadway Design Criteria and the
Bridges/Structural Design Criteria contained in Parts 2 and 3 of
Book III.
"Design Documents" shall mean all Design Drawings and all
specifications, reports, calculations, records and submittals
necessary for design of the Project furnished by Contractor as
described in Section 1204 of the Special Provisions.
"Design Drawings" shall mean drawings (including plans, elevations,
sections, details and diagrams) furnished by Contractor showing the
sizes, shapes and location of component elements comprising the
Project.
"Design Quality Management Plan" shall mean the plan described in
Section 1204 of the Special Provisions.
"Developer" shall have the meaning set forth on page 1 of the
Contract, as modified by Section 24.4.1.
"Developer Float" shall have the meaning set forth in Section
4.3.2.2 of the Contract.
"Differing Site Conditions" shall mean (a) subsurface or latent
physical conditions encountered at the Site differing materially
from those indicated in the Geotechnical Reports, (b) surface
conditions encountered at the Site differing materially from
those indicated in the survey data and maps included in these
documents provided in all cases such conditions were not
reasonably discernable as of the Bid Date by an inspection of the
Site, or (c) physical conditions of an unusual nature, differing
materially from those ordinarily encountered and generally
recognized as inherent in the type of work provided for in the
Contract. The term does not apply to and specifically excludes
Utility facilities not identified or incorrectly identified in
the IFB Documents.
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"Directed Change" shall mean any change in the Work (including
changes in the standards applicable to the Work) which Developer
has directed Contractor to perform by Directive Letter pursuant
to Section 13.1.1.3 or by Change Order under Section 13.2 of the
Contract. The term shall also include changes in the Work which
are directly attributable to delays caused by bad faith actions,
active interference, gross negligence or comparable tortious
conduct by Developer, State, SJTA or Program Manager. The fact
that Developer has delivered a Directive Letter does not
necessarily mean that a change in the Work has occurred.
"Directive Letter" shall mean each letter issued by Program
Manager (which has no authority to issue a Directive Letter with
respect to Work requiring a time extension or a non-Contingency
price increase) or by Developer pursuant to Section 13.1.1.2 or
13.1.1.3 of the Contract.
"Disadvantaged Business Enterprise (DBE)" shall have the meaning
set forth in Special Provisions, Section 1300. The term "DBE"
encompasses both Minority and Female Business Enterprises.
"Early Construction" shall mean a portion of a larger part or
piece of the Project released for construction where the design,
shop and/or working drawings, specifications, catalog cuts and/or
samples for that portion are 100% complete and have been approved.
"Eligible Delays" shall mean unavoidable delays arising from the
following matters and no others:
(a) Directed Changes,
(b) delay in provision of access to real property as
specified in Section 6.1 of the Contract,
(c) delays caused by changes in environmental mitigation
requirements contained in the final form of the Major Permits as
described in Section 6.7.1,
(d) uncovering, removing and restoring Work, to the
extent provided in Section 6.4.4 of the Contract, and
(e) failure or inability of Program Manager, State,
SJTA or Developer to provide responses to proposed schedules,
plans, Design Documents, Construction Documents and other
submittals and matters for which response by such Person is
required, within the time periods indicated in the Contract
Documents.
"Escrowed Bid Documents (EBD)" shall have the meaning set forth
in Section 21.1 of the Contract.
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"Environmental Laws" shall mean all Governmental Rules now or
hereafter in effect relating to the environment or to emissions,
discharges, releases or threatened releases of Hazardous
Substances into the environment including into the air, surface
water or ground water or onto land, or relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances or
otherwise relating to the protection of public health, public
welfare or the natural environment (including protection of
nonhuman forms of life, land, surface water, groundwater and air)
including the statutes listed in the definition of Hazardous
Substances; the National Environmental Policy Act, as amended, 42
U.S.C. 4321 et seq.; the Occupational Safety and Health Act,
as amended, 29 U.S.C. 651 et seq.; the Hazardous Materials
Transportation Act, as amended, 49 App. U.S.C. 1801 et seq.;
the Endangered Species Act, as amended, 16 U.S.C. 1531 et seq.;
the Clean Water Act, as amended, 33 U.S.C. 1251 et seq.;
and the Migratory Bird Treaty Act, 16 U.S.C. 703 et seq.
"Equipment" means all machinery, tools, apparatus, and supplies
necessary for the upkeep, maintenance, construction, and
completion of the Project.
"Event of Default" shall have the meaning set forth in Section
16.2 of the Contract.
"Final Acceptance" shall mean occurrence of the events described
in paragraphs (a) through (g) inclusive as set forth in Section
20.2.1 of the Contract.
"Final Acceptance Date" shall mean the date on which Final
Acceptance occurs.
"Final Design Documents" shall mean the 100% completed Design
Documents as approved by Program Manager, State and SJTA.
"Float" shall generally mean the difference between early
completion times and late completion times for activities as
shown on the Project Schedule, and shall include any float
contained within an activity as well as any period containing an
artificial activity (that is, one which is not encompassed with
the meaning of the word "Work").
"Force Majeure" shall mean any event beyond the control of
Contractor which is not due to an act or omission of Contractor
(or any Subcontractor or other Person for whom Contractor may be
contractually or legally responsible) which materially and
adversely affects Contractor's obligations hereunder, to the
extent that such event (or the effects thereof) could not have
been avoided or mitigated by due diligence and use of reasonable
efforts by Contractor, but specifically excluding:
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[i] Directed Changes;
[ii] any risk for which coverage is to be provided through
insurance required hereunder; provided, however, the
definition of "Force Majeure" shall not exclude such
risks for purposes of determining eligibility for
extensions of the Guaranteed Completion Date; and
[iii]strikes, labor disputes, work slowdowns, work
stoppages, secondary boycotts, walkouts or other
similar occurrences.
"General Provisions" means the document entitled "General
Provisions" contained in Book II.
"Geotechnical Reports" means the reports contained in Book V of
the IFB.
"Governmental Approval" shall mean any approval, authorization,
certification, consent, decision, exemption, filing, lease,
license, permit, registration or ruling, required by (or claimed
to be required by) or with any Governmental Person in order to
design and construct the Project, including the Major Permits.
"Governmental Person" shall mean any federal, state, local or
foreign government and any political subdivision or any
governmental, quasi-governmental, judicial, public or statutory
instrumentality, administrative agency, authority, body or
entity.
"Governmental Rule" shall mean any statute, law, regulation,
ordinance, rule, judgment, order, decree, permit, concession,
grant, franchise, license, agreement, directive, guideline,
policy requirement or other governmental restriction or any
similar form of decision of or determination by, or any
interpretation or administration of any of the foregoing by, any
Governmental Person, which is claimed by a Governmental Person to
be applicable to the Work, the Project, Contractor or any
Subcontractor, whether now or hereafter in effect.
"Guaranteed Completion Date" shall have the meaning set forth in
Section 4.2 of the Contract.
"Hazardous Substance" shall have the meaning provided in NJSA
58:10-23.11 B(K).
"Hazardous Waste" shall mean material identified by Program
Manager and / or NJDEP as unsuitable for reuse on-site and
containing Hazardous Substances at concentrations that classify
the material as hazardous waste under the Resource Conservation
and Recovery Act (RCRA) (40 CFR 261.3) and New Jersey Codes (NJAC
7:26-8) and Toxic Substance Control Act (TSCA) (40 CFR 761-766).
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"Highway, freeway, street, or road" is a general term denoting a
public way for purposes of vehicular travel, including the entire
area within the right-of-way.
"Holidays" means:
New Year's Day Labor Day
Martin Luther King's Birthday Columbus Day
Lincoln's Birthday Presidential Election Day
Washington's Birthday Veteran's Day
(President's Day)
Memorial Day Thanksgiving Day
Independence Day Christmas Day
When the Holiday falls on a Saturday, Friday will be the Holiday;
when the Holiday falls on Sunday, Monday will be the Holiday.
"IFB Documents" shall mean the set of documents issued by
Developer to prospective bidders for the Project in conjunction
with the IFB. The contents of the IFB Documents are listed in
Book I thereof.
"Indemnified Parties" shall have the meaning set forth in
Section 18.1 of the Contract.
"Independent Assurance (IA)" means an unbiased and independent
audit of the Quality Assurance system used and independent
verification of the reliability of the test results obtained in
the regular sampling and testing activities. The results of IA
tests are not to be used as a basis of material or acceptance of
Work.
"Inspection" means the act of viewing or looking carefully at
construction, manufacturing and design and maintenance practices,
processes and products, including document control and shop
drawing review, to ensure the practices, processes and products
comply with the quality requirements contained in the Contract
Documents.
"Inspector" means an authorized representative of the Contractor's
Quality Control/Quality Assurance team, of State, SJTA, the
Program Manager's staff, Atlantic City, or any Utility Owner.
"Invitation for Bids (IFB)" shall mean the Invitation for Bids
regarding the Project issued by Developer on April 4, 1997,
including all attachments thereto.
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"Laboratory" means the testing laboratory of Contractor, Program
Manager or any other certified testing laboratory.
"Lien" shall mean any pledge, lien, security interest, mortgage,
deed of trust or other charge or encumbrance of any kind, or any
other type of preferential arrangement (including any agreement
to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature of a security
instrument and the filing of or agreement to file any financing
statement under the New Jersey Uniform Commercial Code).
"Liquidated Damages" shall have the meaning set forth in Section
17.1 of the Contract.
"Major Participant" means any of the following entities:
1. Each general partner or joint venture member of
Contractor;
2. Each Person holding (directly or indirectly) a 10% or
greater interest in Contractor; and
3. The lead engineering/design firm(s) for the Project as
well as each engineering/design subconsultant that will
perform 20% or more of the design work for the Project.
"Major Permits" shall mean (a) the Governmental Approvals for the
Project required from the U.S. Army Corps of Engineers for
encroachment upon waters regulated under the Rivers and Harbors
Act of 1899 and for dredging and filling of navigable waters
pursuant to Section 404 of the Clean Water Act, (b) bridge
construction permits for the two pedestrian bridges from the
United States Coast Guard, and (c) the CAFRA, waterfront
development, individual fresh water wetlands, coastal wetlands
permits and water quality certifications required from the NJDEP.
"Major Utility Facility" means underground water lines greater
than 10" in diameter, underground sanitary sewer lines greater
than 18" in diameter and underground gas, oil or jet fuel lines
greater than 6" in diameter.
"Materials" or "materials" means any substances specified for
incorporation in the completed Project.
"Median" means that portion of a divided highway separating the
paved sections, said paved sections including both the shoulders
and the traveled way.
"Minority/Female Business Enterprise (M/FBE)" shall have the
meaning set forth in Special Provisions, Section 1300.
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"NJDOT Standards" shall mean the Standard Plans, the Standard
Specifications and all other provisions of publications, manuals,
handbooks, rules and regulations and standards in practice but
not documented of NJDOT which are applicable to the type of Work
required hereunder.
"Non-hazardous Waste" shall mean material identified by NJDEP as
unsuitable for reuse on-site and containing Hazardous Substances
at concentrations that classifies the material as non-hazardous
waste under the Resource Conservation and Recovery Act (RCRA) (40
CFR 261.3) and ID-27 Solid Waste under the State of New Jersey
Codes (NJAC 7:26-2.13).
"Notice of Final Acceptance" shall mean the notice delivered to
Contractor pursuant to Section 20.2.1(f) of the Contract, stating
that Final Acceptance has occurred.
"Notice of Proposed Contingency Change" shall mean a notice
issued by Program Manager concerning a possible Contingency
Change Order, as specified in Section 13.2.3 of the Contract.
"Notice of Proposed Directed Change" shall mean a notice issued
by Developer concerning a possible Directed Change, as specified
in Section 13.2.1 of the Contract.
"Notice of Proposed Change" shall mean a Notice of Proposed
Directed Change or a Notice of Proposed Contingency Change.
"Notice of Termination" shall mean a notice issued by the
Developer to terminate this Contract and the performance of the
Work by Contractor pursuant to Article 15 of the Contract.
"Notice to Proceed" means written notice from the Developer to
Contractor to proceed with specified Work.
"NTP1" shall mean the Notice to Proceed to be issued by Developer
directing Contractor to proceed only with non-construction Work,
including Utility Relocation Work.
"NTP2" shall mean the Notice to Proceed to be issued by Developer
directing Contractor to proceed with construction Work.
Developer anticipates that NTP2 should be issued by October 1,
1998.
"Overburden" means any material that overlays material designated
for road or bridge construction.
"Pavement Structure" means the combination of surface course and
base course, and when specified, a subbase course, placed on a
subgrade to support the traffic load and distribute it to the
road bed. These various courses are defined as follows:
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Surface course - One or more layers of specified material of
designed thickness on a base course or a subbase.
Base course - One or more layers of specified material of
designed thickness placed on the subgrade or subbase.
Subbase - One or more layers of specified material of
designed thickness placed on the subgrade.
"Payment Bond" shall mean the payment bond described in
Section 8.1 of the Contract.
"PCO Notice" shall have the meaning set forth in Section
13.3.2.1.1 of the Contract.
"Performance Bond" shall mean the performance bond described in
Section 8.1 of the Contract.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, trust, unincorporated
organization or Governmental Person.
"Procedures for Consultants" shall mean NJDOT's Procedures Manual
including the latest updates.
"Profile Grade" is a term related to the trace along the top
surface of the wearing surface, usually along the longitudinal
centerline of the roadbed. The term means either elevation or
gradient of such trace according to the context.
"Program Manager" shall mean Parsons Brinckerhoff-FG, Inc. or
such other Person as is designated in writing by Developer to
undertake the duties of the Program Manager set forth in the
Contract Documents.
"Progress Meeting" shall mean each meeting described in Section
4.4.1 of the Contract.
"Project" shall mean the alignment for the Atlantic
City/Brigantine Connector as generally described in
Sections 2.0.1.1, 2.0.1.2.2, and 2.0.2 of the Scope of Work, and
all other work product to be provided by Contractor as a
condition to Final Acceptance in accordance with the Contract
Documents.
"Project Float" shall have the meaning set forth in Section
4.3.2.1 of the Contract.
"Project Schedule" shall mean the most current schedule for the
Project approved by Program Manager as described in Section 4.3
of the Contract.
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"Protection in Place" shall mean any significant work required to
ensure that a Utility is not harmed by the Project, when the
Utility itself is not Relocated. Protection in Place shall not
include insignificant activities such as staking the location of
a Utility or avoidance of a Utility's location by construction
equipment, which insignificant activities shall be deemed to
constitute "no action".
"Punch List" shall mean the list of Work which remains to be
completed after achievement of Substantial Completion, and shall
be limited to minor incidental items of Work necessary to correct
imperfections which have no adverse effect on the safety or
operability of the Project.
"Quality Assurance (QA)" means all those planned and systematic
actions necessary to provide confidence that all Work fully
complies with the Contract and that all materials incorporated in
the Work, all equipment and all elements of the Work will perform
satisfactorily for the purpose intended. Actions include design
checks and reviews; document control; shop drawing review and
approval; materials sampling and testing at the production site
and the Project site; inspection of manufacturing/processing
facilities and equipment; inspection of on-site equipment,
calibration of test equipment, documentation of QA activities, etc.
"Quality Control (QC)" means the total of all activities performed
by Contractor, designer, producer, or manufacturer to ensure that
a product meets Contract requirements. For highway design,
construction and maintenance this includes design procedures and
checking, materials handling and construction procedures,
calibration and maintenance of equipment, shop drawing review,
document control, production process control, and any sampling,
testing, and inspection done for these purposes. QC also includes
documentation of QC efforts.
"Quality Management Plan" or "Quality Management Program" means
the three-part plan provided by Contractor and approved by
Program Manager as described in Section 1200 of the Special
Provisions, consisting of (1) a section dealing with ANSI/ASQC
Q9000-2 requirements, (2) a section which includes the Design
Quality Management Plan and the Construction Quality Management
Plan and (3) a section which sets forth QC and QA procedures for
material and equipment and certain other aspects of the Work.
"Quality Management Team" means the team of individuals working
under the direction of the Contractor's Design Quality Assurance
Manager (Section 1204.11 of the Special Provisions) or
Contractor's Project Construction Quality Assurance Manager
(Section 1205.21 of the Special Provisions).
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"Railroad" shall mean, depending on the context, either the right-
of-way, tracks and systems used for rail traffic in the vicinity
of the Project, or the owners and/or operators of such rail systems.
"Recovery Schedule" shall mean the schedule Contractor is required
to provide under Section 4.5 of the Contract.
"Reference Documents" shall mean the IFB Documents which are not
designated as Contract Documents in Section 1.2 of the Contract.
"Relocation" shall have the meaning set forth in Section 6.6.2 of
the Contract.
"Retainage" shall have the meaning set forth in Section 12.2.7 of
the Contract.
"Revised Schedule" shall mean the revised Project Schedules
provided from time to time as described in Section 4.3.3.2 of the
Contract.
"Right-of-Way" shall mean all real property (which term is inclusive
of all estates and interests in real property) which is necessary for
ownership and operation of the Project by SJTA. The term excludes
any temporary easements or other temporary real property interests
which Contractor deems necessary or advisable in connection with (i)
construction of the Project and/or (ii) Relocation of Utilities.
"Right of Way Limits" shall mean the boundaries of the parcels to
be acquired by NJDOT for the Project which are identified in the
IFB Documents under "Individual Parcel Maps." The Right of Way
Limits are intended to include all permanent property rights to
be acquired for the Project, but do not encompass any temporary
easements or other real property interests which Contractor deems
necessary or advisable with respect to construction of the
Project and Relocation of Utilities. The Right of Way Limits are
subject to change only as provided in Section 6.1 of the Contract.
"Road Account" shall mean the account established in accordance
with Section 4.6 of the Road Development Agreement.
"Road Development Agreement" shall mean the agreement identified
in Recital A to the Contract.
"Roadbed" means the graded portion of highway prepared as a
foundation for the pavement structure and shoulders.
"Roadbed Material" means material in cuts, embankments, and in
embankment foundations from the subgrade down that supports the
pavement structure.
"Roadside" is a general term including:
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The areas between the outside edges of the shoulders and the
right-of-way boundaries.
The unpaved median areas between inside shoulders of divided
highways.
Areas within interchanges.
Historic sites.
Viewpoints.
Scenic strips.
Junkyard screening over which the State retains maintenance
responsibilities.
"Roadside Development" means those items necessary for the
preservation or replacement of landscape materials and features
that may include suitable plantings and other improvements or
ground cover to preserve and enhance the appearance and stability
of the highway right-of- way or acquired easements for scenic
improvements.
"Roadway" means the portion of a highway within the limits of
construction.
"Scope of Work" shall mean the document entitled "Scope of Work"
contained in Book II.
"Service Line" shall mean a Utility line, the function of which
is to connect an individual service location (e.g., a single
family residence or an industrial warehouse) to another Utility
line which connects more than one such individual line to a
larger system.
"Shop Drawings" shall mean drawings showing the sizes, shapes and
locations of component elements comprising the Project.
"Shoulder" means the portion of the roadway adjacent to the
traveled way for accommodation of stopped vehicles for emergency
use, and for lateral support of base and surface courses.
"Sidewalk" means that portion of the roadway constructed for
pedestrian use.
"Site" shall mean those areas designated in writing by Program
Manager for performance of Work and such additional areas as may,
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from time to time, be designated in writing by Program Manager
for Contractor's use in performance of the Work. The Site
initially includes the area within the Right of Way Limits. For
purposes of insurance, indemnification, safety and security
requirements and payment for use of equipment the term "Site"
also includes any areas on which Utility Relocation work is
performed and any property being temporarily used by Contractor
for storage of equipment and/or construction Work.
"SJTA" shall mean South Jersey Transportation Authority.
"Special Provisions" means Special Provisions SP200 through
SP2000 contained in Book III, as well as any additional special
provisions included in the Final Design Documents.
"Stabilization" means modification of soils or aggregates by
incorporating materials that increases load-bearing capacity,
firmness, and resistance to weathering or displacement.
"Standard Drawings" means detailed plans issued by State for
general application and repetitive use in connection with State
projects, as set forth in Book III, Special Provisions. The
Standard Drawings will not apply to the Work except in connection
with any design furnished by Contractor which references the
Standard Drawings.
"Standard Specifications" means the book of specifications issued
by State for general application and repetitive use in connection
with State projects, known as the 1989 "Blue Book." The Standard
Specifications will not apply to the Work except in connection
with any design furnished by Contractor which references the
Standard Specifications.
"State" shall mean the State of New Jersey, acting by and
through the Department of Transportation.
"Structures" means bridges, culverts, inlets, retaining walls,
bulkheads, boat sections, cribbing, manholes, endwalls,
buildings, sewers, service pipes, underdrains, foundation drains
and other features which may be encountered in the work and not
otherwise classed herein.
"Subbase" means layer(s) of specified material thickness placed
on a subgrade to support a base course.
"Subcontract" shall mean any agreement by Contractor with any
other Person to perform any part of the Work or provide any
materials, equipment or supplies for any part of the Work, or
any such agreement at a lower tier, between a Subcontractor and
its lower tier Subcontractor.
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"Subcontractor" shall mean any Person with whom Contractor has
entered into any Subcontract to perform any part of the Work or
provide any materials, equipment or supplies for the Project on
behalf of Contractor (and any other Person with whom any
Subcontractor has further subcontracted any part of the Work).
"Subgrade" means the top surface of a roadbed upon which the
pavement structure, shoulders, and curbs are constructed.
"Subgrade Treatment" means modification of roadbed material by
stabilization.
"Substantial Completion" shall have the meaning set forth in
Section 20.1 of the Contract.
"Substructure" means all of the bridge or viaduct structure below
the bearings of simple and continuous spans, skewbacks of arches
and tops of footings or rigid frames; including backwalls,
wingwalls and wing protection railings.
"Superstructure" means all of that part of a structure above the
bearings of simple and continuous spans, skewbacks of arches and
tops of footings of rigid frames, excluding backwalls, wingwalls
and wing protection railing.
"Supplier" shall mean any Person not performing work at the Site
that supplies machinery, equipment, materials or systems in
connection with the performance of the Work. Persons who merely
transport, pick up, deliver or carry materials, personnel, parts
or equipment or any other items or persons to or from the Site
shall not be deemed to be performing work at the Site.
"Surety" shall mean each properly licensed surety company,
insurance company or other Person approved by the New Jersey
State Insurance Commissioner to do business in New Jersey, listed
in the U.S. Treasury Department Circular 570 and with an A.M.
Best and Company rating level of A- or better, Class VII or
better, or as otherwise approved by Developer, State and SJTA, at
their sole discretion, which has issued the Payment Bond or
Performance Bond.
"Surface Courses" means one or more layers of a pavement structure
designed to accommodate the traffic load, the top layer of which
resists skidding, traffic abrasion, and the disintegrating
effects of climate. The top layer is sometimes called the
"Wearing Course."
"Time and Materials Change Order" shall have the meaning set
forth in Section 13.7 of the Contract.
"Traveled Way" means the portion of the roadway designated for
the movement of vehicles, exclusive of shoulders.
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"Utility" or "utility" shall mean a public, private, cooperative,
municipal and/or government line, facility or system used for the
carriage, transmission and/or distribution of cable television,
electric power, telephone, telegraph, water, gas, oil, petroleum
products, steam, chemicals, sewage, storm water not connected
with the highway drainage and similar substances that directly or
indirectly serve the public. The term "Utility" specifically
excludes (a) storm water lines connected with the highway
drainage, and (b) traffic signals, street lights, and electrical
systems for roadways.
"Utility Owner" or "utility owner" shall mean the owner or
operator of any Utility (including both privately held and
publicly held entities, cooperative utilities, and municipalities
and other governmental agencies).
"Value Engineering Change Proposals (VECP's)" shall have the
meaning set forth in Article 22 of the Contract.
"Warranties" shall mean the warranties made by Contractor in
Article 11 of the Contract.
"Work" shall mean all of the administrative, design, engineering,
real property acquisition support services, Utility Relocation,
procurement, professional, manufacturing, supply, installation,
construction, supervision, management, testing, verification,
labor, materials, equipment, maintenance, documentation and
other duties and services to be furnished and provided by
Contractor as required by the Contract Documents, including all
efforts necessary or appropriate to achieve Final Acceptance except
for those efforts which such Contract Documents specify will be
performed by other Persons.
"Working Drawings" shall mean drawings needed to show things
associated with the construction of something to be constructed,
but which will not be part of the permanent construction, e.g.
formwork.
APPENDIX 2 - LEGAL OPINION
_______________, 1997
[Developer]
[Address]
Ladies and Gentlemen:
We have acted as counsel for _______________, a
_______________ ("Contractor") and [list partners/joint
venturers/members] in connection with that certain Design/Build
Contract for the Atlantic City/Brigantine Connector dated
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__________, 1997, entered into between Contractor and
________________________________________ ("Developer") (the
"Contract"). The capitalized terms used in this opinion shall
have the meanings ascribed to them in the Contract unless they
are otherwise defined herein or the context otherwise requires.
In connection with the foregoing we have examined
originals or copies of the Contract, the Articles of
Incorporation and Bylaws of [Contractor], minutes reflecting
proceedings of the board of directors of [Contractor],
certificates of public officials, certificates of one or more
officers of [Contractor] and such other documents as we deemed
relevant and necessary for purposes of this opinion. In such
examination we have assumed:
(a) The genuineness of all signatures on
documents which we have not seen executed, the authenticity of
all documents submitted to us as originals, and the conformity to
original documents of all copies thereof submitted to us; and
(b) The Contract has been or will be duly
authorized and validly executed and delivered by Developer, and
constitutes the legal, valid and binding obligation of Developer,
enforceable in accordance with its terms against Developer.
On the basis of the foregoing and in reliance
thereon and on all other matters that we deem relevant under
the circumstances, we are of the opinion that:
(1) Contractor is a _______________ which has
been duly organized and is validly existing and in good standing under
the laws of the State of _______________. Contractor has the
requisite power to own and operate its properties and to carry on
its business as presently operated, and it is duly qualified and
in good standing as a _______________ in the State of New Jersey.
[Provide same opinion for all partners/joint venturers/members of
Contractors.]
(2) The execution, delivery and performance of
the Contract have been duly authorized by Contractor.
(3) The Contract constitutes the legal, valid
and binding obligation of Contractor.
Respectfully submitted,
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APPENDIX 3 - INVOICE AND CONSTRUCTION CERTIFICATE
(Atlantic City/Brigantine Connector)
INVOICE NO.: Date:
[Developer] Name of Contractor:
[Address] FEIN:
________________________ Address:
________________________ City/State/Zip:
Attn: Accounting Department Contact Name:
Contractor Project No.:
Terms: __% prompt pay discount, net ___ days
Invoice for Services rendered for the period from ___ to ___
Total Contract Price $ ______
Physical Weighted
Percent Progress Less Cumulative Amount Invoiced (______)
Complete with this to Date, including this Period
Invoice: _____%
Balance of Contract Price $
Not Invoiced =======
Cumulative Amount Invoiced $ ______
Less Cumulative Amount as of (______)
Prior Month
Current Amount Invoiced $ _______
Less Current Retainage ( %) (______)
Current Amount Due $
=======
______________________________________________________________________
The following are submitted with this Invoice and Construction
Certificate and incorporated herein by reference:
Exhibit Title Contract Reference
_______ _____ __________________
A Computer Progress Report Sections 4.4.4(a), 12.2.2(d)
B Critical Path Plot Sections 4.4.4(b), 12.2.2(d)
C Bar Chart Forecast Sections 4.4.4(c), 12.2.2(d)
D Bar Chart History Sections 4.4.4(d), 12.2.2(d)
E Financial Report w/graphics Sections 4.4.4(e), 12.2.2(d)
F Data Diskettes Sections 4.4.4(f), 12.2.2(d)
G Narrative Progress Summary Sections 4.4.4(g), 12.2.2(d)
H M/FBE Report Section 12.2.2(c)
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CONTINGENCY ANALYSIS
As of the date of this invoice, $_________ of the Contingency has
been expended, leaving $__________ for future application in
accordance with the Contract.
CONSTRUCTION CERTIFICATE
In order to induce Atlandia Design and Furnishings,
Inc. ("Developer") to make payment as requested by this Invoice,
the undersigned Contractor hereby certifies, represents and
warrants to Developer, State and SJTA as follows:
1. Unless otherwise indicated, capitalized terms
used herein shall have the meanings set forth in that certain
Design/Build Contract between Contractor and Developer dated as
of_________________ (the "Contract").
2. The Work described in the exhibits attached
hereto has been fully performed in a prudent manner and in
compliance with the requirements of the Contract Documents; all
necessary materials to perform such Work have been provided in
accordance with the provisions of the Contract Documents; and
the information contained in such exhibits is true, complete and
correct in all material respects.
3. The Work is proceeding in accordance with the
approved Project Schedule, and will be completed within the
Guaranteed Completion Date.
4. No Event of Default or event which with the
giving of notice or the lapse of time would result in an Event
of Default has occurred and is continuing as of the date hereof,
and, to Contractor's knowledge based on inquiry of the Project
Manager, no Damage Event has occurred as of the date hereof
except as described in notices previously delivered to Developer
in accordance with Section 16.3 of the Contract.
5. Contractor has fully complied with all
requirements of the Quality Management Program.
6. Contractor has delivered all documents and
submittals required under the terms of the Contract Documents to
be delivered to Developer, the Program Manager, State and SJTA
on or prior to the date hereof.
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7. Contractor has analyzed the cash flow
requirements for the Project, and has determined the remainder
of the Contract Price is sufficient to complete the Project.
PROJECT MANAGER _____________________________
By:__________________________
Its: ________________________
Date:________________________
QUALITY ASSURANCE MANAGER _____________________________
By:__________________________
Its:_________________________
Date:________________________
APPENDIX 4 - DESIGNATION OF INITIAL REPRESENTATIVES
Developer Representatives:
Tom Leary
1650 Market Street, Suite 3000
Philadelphia, PA 19103
Telephone: 215/851-9401
Fax: 215/851-9301
State Representatives:
Frank Hellman, Project Manager
New Jersey Department of Transportation
CN 600
1035 Parkway Avenue
Trenton, NJ 08625
Telephone: 609/530-2501
Fax: 609/530-5787 or 5774
SJTA Representatives:
James A. Crawford, Executive Director
South Jersey Transportation Authority
PO Box 351
Hammonton, NJ 08037
Telephone: 609/965-6060
Fax: 609/965-7597
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Contractor Representatives:
Lawrence W. Klein
Yonkers Contracting Company, Inc./Granite Construction Co.
A Joint Venture
969 Midland Avenue
Yonkers, NY 10704
Telephone: 914/965-1500
Fax: 914/378-8880
147
ESCROW FUND AGREEMENT
made as of October 10, 1997
by and among
CORESTATES BANK, N.A., as
Escrow Agent
and
SOUTH JERSEY TRANSPORTATION AUTHORITY
and
THE STATE OF NEW JERSEY, acting by
and through the NEW JERSEY DEPARTMENT OF
TRANSPORTATION
and
ATLANDIA DESIGN AND FURNISHINGS, INC.
EXHIBIT 10.14
<PAGE>
ESCROW FUND AGREEMENT
ESCROW FUND AGREEMENT ("Agreement" or "Escrow Agreement"),
made as of October 10, 1997, by and among CORESTATES BANK, N.A.,
a national banking association ("Escrow Agent"), the SOUTH JERSEY
TRANSPORTATION AUTHORITY, a body corporate and politic and an
instrumentality of the State of New Jersey ("SJTA"), the STATE OF
NEW JERSEY ("State"), acting through the NEW JERSEY DEPARTMENT OF
TRANSPORTATION ("NJDOT"), and ATLANDIA DESIGN AND FURNISHINGS,
INC., a New Jersey business corporation ("Developer").
W I T N E S S E T H:
-------------------
WHEREAS, as of January 10, 1997, the State, SJTA and
Mirage Resorts, Incorporated ("MRI"), as "Developer", executed
and delivered a Road Development Agreement (said agreement, as
from time to time amended, the "Road Development Agreement")
pursuant to which they agreed to proceed with the Road Project
(as defined in the Road Development Agreement), subject to the
provisions of the Road Development Agreement; and
WHEREAS, concurrently with the execution and delivery of
the Road Development Agreement, MRI, pursuant to Section 13.1 of
the Road Development Agreement, assigned all of its right, title
and interest in and to the Road Development Agreement to
Developer, which assumed the obligations of the assignor
thereunder; and
WHEREAS, the Road Development Agreement was thereafter
amended, and is concurrently herewith being further amended to
provide, among other matters, for the deposit by SJTA of $125
million with the Escrow Agent and by Developer of $110 million
with the Escrow Agent, all pursuant to this Agreement.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
SECTION 1. DEFINITIONS.
1.1 All terms, the initial letters of which are
capitalized and not otherwise defined in this Agreement, shall
have the respective meanings ascribed to them in the Road
Development Agreement.
1.2 The following terms shall have the following
meanings:
DEVELOPER'S ACCOUNT shall mean the account so
designated and established in Section 3.1 hereof.
DISBURSEMENT PROCEDURES shall mean those
procedures for disbursement from the Escrow Fund set forth on
Schedule A annexed hereto and made a part hereof.
<PAGE>
ESCROW FUND shall mean the fund so designated
and established pursuant to Section 3.1 hereof, consisting of the
Developer's Account and the SJTA Account..
PERMITTED DEVELOPER INVESTMENTS shall mean
the investment securities and other investments set forth on
Schedule B annexed hereto and made a part hereof.
PERMITTED SJTA INVESTMENTS shall mean the
investment securities and other investments set forth on Schedule
C annexed hereto and made a part hereof.
ROAD ACCOUNT shall have the meaning set forth
in Exhibit F to the Second Amendment to the Road Development
Agreement.
SJTA ACCOUNT shall mean the account so
designated and established in Section 3.1 hereof
SJTA SPECIAL REVENUE BOND RESOLUTION shall
have the meaning set forth in the Second Amendment to the Road
Development Agreement.
SJTA SPECIAL REVENUE BONDS shall have the
meaning set forth in the Second Amendment to the Road
Development Agreement.
SJTA SPECIAL REVENUE BONDS TRUSTEE shall
mean the Trustee appointed and acting under the SJTA Special
Revenue Bond Resolution.
SJTA EARNINGS ACCOUNT shall mean the
account so designated and established with the Escrow Agent
pursuant to Section 4.3 hereof.
SECTION 2. ACCEPTANCE BY ESCROW AGENT.
2.1 The Escrow Agent agrees to act as escrow
agent hereunder. The Escrow Agent acknowledges that except as
expressly set forth in Section 3.3 and Section 4.3 hereof, the
Escrow Agent has no legal or equitable interest in the Escrow
Fund and has no right of offset with respect to the Escrow
Fund. Except with respect to the earnings and investment
income on the funds in the SJTA Account, the Escrow Agent
irrevocably waives any lien or right of offset or similar
right against the Escrow Fund.
SECTION 3. ESTABLISHMENT OF ESCROW FUND; DEPOSIT AND
RECEIPT OF MONIES BY ESCROW AGENT; STATE
DEPOSITORY ACCOUNT
-2-
<PAGE>
3.1 The Escrow Fund is hereby established with
the Escrow Agent and shall be held, invested and disbursed
strictly in accordance with this Escrow Agreement. The Escrow
Agent shall establish the Road Account as a separate State
depository account, separate and apart from the Escrow Fund,
which shall be held by the Escrow Agent. All funds in the Road
Account, including interest or other earnings thereon, shall,
during the term of this Agreement, be used solely for the
Road Project and shall constitute a portion of the Road
Project Funding Sources. The Escrow Agent shall establish the
Developer's Account and the SJTA Account as separate accounts
within the Escrow Fund having the respective account numbers
set forth on Schedule D annexed hereto and made a part
hereof. The Escrow Fund shall be held by the Escrow Agent
separate and apart from all other funds and accounts of the
State, the Developer and SJTA held at any time by the Escrow
Agent.
3.2 Developer hereby deposits with Escrow Agent
and Escrow Agent hereby acknowledges receipt from Developer of
$110 million in immediately available funds and the deposit
thereof in the Developer's Account. Developer, the State and
SJTA acknowledge and agree that all such funds are earmarked
for and are to be used solely for the Road Project, and none
of such funds is subject to any lien or other encumbrance.
Developer represents and warrants that all such funds are the
sole property of Developer and that none of such funds shall,
by virtue of any affirmative act or action of Developer, be
subjected at any time to any lien or other encumbrance.
3.3. SJTA hereby deposits with Escrow Agent and
Escrow Agent hereby acknowledges receipt from SJTA of $125
million in immediately available funds and the deposit thereof
in the SJTA Account. SJTA, the State and Developer acknowledge
and agree that all such funds are earmarked for and are to be
used solely for the Road Project. SJTA represents and warrants
that all such funds are the sole property of SJTA and that none
of such funds are subject to any lien or other encumbrance;
provided, however, that any and all investment income and
earnings on such funds have been pledged by SJTA to pay
interest on SJTA's obligations under that certain Loan and
Security Agreement, dated as of October 10, 1997 ("Loan Agree-
ment"), by and between SJTA, as Borrower, and CoreStates Bank,
N.A., as Lender ("Lender"). The Escrow Agent is hereby
irrevocably directed to transfer any and all investment income
and earnings on the funds in the SJTA Account to the SJTA
Earnings Account on the first business day of each calendar
month until all obligations of SJTA to Lender under the Loan
Agreement are paid in full. The State, SJTA and Developer
acknowledge and agree to Lender's claim on such investment
income and earnings and to such transfer. SJTA represents
and warrants that, except for the pledge of the income and
earnings on the funds in the SJTA Account granted by SJTA to
Lender, none of such funds shall, by virtue of any affirmative
act or action of SJTA, be subjected at any time to any lien or
other encumbrance.
-3-
<PAGE>
3.4 The Escrow Agent shall maintain the
Developer's Account and the SJTA Account as separate accounts of
the Escrow Fund and the Road Account as a separate account apart
from the Escrow Fund, and shall, each month, send to the State,
Developer and SJTA a statement of all transactions affecting the
Developer's Account, the SJTA Account, and the Road Account.
SECTION 4. INVESTMENT OF ESCROW FUND.
4.1 Escrow Agent shall invest the Developer's
Account for the sole benefit of Developer in such of the
Permitted Developer Investments as are listed on Schedule B as
Developer may, from time to time, direct in writing. If no
investment instructions are received by the Escrow Agent from
Developer, the Escrow Agent shall invest the Developer's Account
in the money market fund maintained by the Escrow Agent until
such investment instructions are received. Income and earnings on
the Developer's Account may be withdrawn by the Developer at any
time upon written notice to the Escrow Agent, which notice shall
include Developer's wire transfer instructions.
4.2 Escrow Agent shall invest the SJTA Account
for the sole benefit of SJTA in such of the Permitted SJTA
Investments as are listed on Schedule C as SJTA may, from time to
time, direct in writing. If no directions to invest the SJTA
Account are received by the Escrow Agent from SJTA, the Escrow
Agent shall invest amounts in the SJTA Account in the money
market fund maintained by Escrow Agent until such instructions
are received.
4.3 All income and earnings on the SJTA Account
shall be transferred to the SJTA Earnings Account, which is
hereby established by SJTA with the Escrow Agent, on the first
business day of each calendar month. The SJTA Earnings Account is
a separate account having the number specified on Schedule D
hereto and is not a part of the Escrow Fund. The SJTA Earnings
Account shall be held by the Escrow Agent separate and apart from
the Escrow Fund. The Escrow Agent shall send to the State and
SJTA a statement of the income and earnings so transferred on the
date of each transfer.
SECTION 5. APPLICATION OF ESCROW FUND.
5.1 All disbursements from the Escrow Fund,
except for the transfers to the SJTA Earnings Account and the
payment of investment income and earnings on the Developer's
Account to the Developer, shall be made by the Escrow Agent
strictly in accordance with the Disbursement Procedures annexed
hereto as Schedule A.
-4-
<PAGE>
SECTION 6. TERMINATION OF ESCROW FUND.
6.1 After all transfers by the Escrow Agent from
the Developer's Account have been made in accordance with the
Disbursement Procedures, all remaining moneys and any
investments, together with any income or earnings thereon, in the
Developer's Account not required for such payment, if any, shall
be transferred to the Developer.
6.2 After all transfers by the Escrow Agent from
the SJTA Account have been made in accordance with Section 3.3
hereof and the Disbursement Procedures, all remaining moneys and
any investments in the SJTA Account not required for such
payment, if any, shall be transferred to SJTA.
SECTION 7. FEES AND EXPENSES.
7.1 The Escrow Agent's fees and expenses for its
services hereunder, to the extent not paid on the date of this
Agreement, will be paid by the Developer and SJTA against
invoices presented by the Escrow Agent pursuant to separate
agreements between the Escrow Agent and the Developer and SJTA,
respectively, and no fees or expenses of the Escrow Agent will be
deducted from the amounts on deposit in the Escrow Fund.
7.2 The Escrow Agent shall have no lien or right
of set-off whatsoever upon any of the moneys, or the income or
interest thereon, on deposit in or credited to, the Escrow Fund
for the payment of fees and expenses for services rendered by the
Escrow Agent under this Agreement or otherwise.
SECTION 8. LIABILITY OF ESCROW AGENT.
8.1 The Escrow Agent shall not be liable for any
loss resulting from any investment made pursuant to this
Agreement in compliance with the provisions hereof.
8.2 The Escrow Agent may execute any powers
hereunder and perform any duties required of it through
attorneys, agents, officers or employees, and shall be entitled
to advice of counsel concerning all questions hereunder; and the
Escrow Agent shall not be answerable for the default or
misconduct of any attorney, agent or employee selected by it with
reasonable care. The Escrow Agent shall not be answerable for the
exercise of any discretion or power under this Agreement nor for
anything whatever in connection with this Agreement, except only
its own gross negligence or willful misconduct or the failure to
account for or apply, for any reason whatsoever, the moneys or
investments in the Escrow Fund as herein provided.
8.3 SJTA shall indemnify the Escrow Agent against
any liabilities which it may incur in the exercise and
performance of its powers and duties hereunder with respect to
the SJTA Account except with respect to the Escrow Agent's own
gross negligence or willful misconduct or failure to account for
or to apply the moneys or investments in the SJTA Account as
herein provided.
-5-
<PAGE>
8.4 The Developer shall indemnify the Escrow
Agent against any liabilities which it may incur in the exercise
and performance of its powers and duties hereunder with respect
to the Developer's Account except with respect to the Escrow
Agent's own gross negligence or willful misconduct or failure to
account for or apply the moneys or investments in the Developer's
Account as herein provided.
8.5 The Escrow Agent may act on any requisition,
resolution, notice, telegram request, consent, waiver,
certificate, statement, affidavit, voucher, bond, or other paper
or document which it in good faith believes to be genuine and to
have been passed or signed by the proper persons or to have been
prepared and furnished pursuant to any of the provisions hereof;
and the Escrow Agent shall be under no duty to make any
investigations as to any statement contained in any such
instrument, but may accept the same as conclusive evidence of the
accuracy of such statement.
SECTION 9. AMENDMENTS. This Agreement shall not
be altered or amended except in writing signed by all parties
hereto.
SECTION 10. RESIGNATION OR REMOVAL OF ESCROW AGENT.
10.1 The Escrow Agent at the time acting hereunder
may resign upon thirty (30) days' prior written notice to each of
the parties hereto of its intention to do so and, upon the
written request of the State, SJTA and Developer, shall resign;
provided, however, that no such resignation shall be effective
unless and until a successor Escrow Agent shall have been
appointed by the State, SJTA and the Developer, and shall have
accepted such appointment pursuant to a valid and binding written
agreement or instrument. In the event the Escrow Agent hereunder
shall be removed, or be dissolved, or shall be in the course of
dissolution or liquidation, or otherwise become incapable of
acting hereunder, or in case the Escrow Agent shall be taken
under the control of any public officer or officers, or of a
receiver appointed by a court, a successor, shall be appointed by
the State, SJTA and Developer pursuant to an instrument in
writing.
10.2 Each of the Developer, the State and SJTA
agree not to unreasonably refuse, upon the request of any of
them, to (a) request the resignation of the Escrow Agent pursuant
to Section 10.1, and (b) approve the appointment of a successor
Escrow Agent pursuant to Section 10.1.
10.3 In the event that no appointment of a
successor Escrow Agent shall have been made pursuant to the
foregoing provisions of this Section within thirty (30) days
after written notice of resignation of the Escrow Agent has been
given to the parties, any retiring Escrow Agent may apply to any
court of competent jurisdiction for the appointment of a
successor Escrow Agent, and such court may thereupon, after such
notice, if any, as it shall deem proper, appoint a successor
Escrow Agent.
-6-
<PAGE>
10.4 Every successor Escrow Agent appointed
hereunder shall execute, acknowledge and deliver to its
predecessor and to the parties hereto, an instrument in writing
accepting such appointment hereunder and thereupon such successor
Escrow Agent, without any further act, deed or conveyance, shall
become fully vested with all the rights, immunities, powers,
trusts, duties and obligations of its predecessor; but such
predecessor shall, nevertheless, on the written request of such
successor Escrow Agent or the parties hereto execute and deliver
an instrument transferring to such successor Escrow Agent all
securities and moneys held by it to its successor. Should any
transfer, assignment or instrument in writing from the parties be
required by any successor Escrow Agent for more fully and
certainly vesting in such successor Escrow Agent the estates,
rights, powers and duties hereby vested or intended to be vested
in the predecessor Escrow Agent, any such transfer, assignment
or instrument in writing shall, on request, be executed,
acknowledged and delivered by the parties.
10.5 Any corporation or association into which the
Escrow Agent, or any successor to it in the trusts created by
this Agreement, may be merged or converted or with which it or
any successor to it may be consolidated, or any corporation
resulting from any merger, conversion, consolidation or tax-free
reorganization to which the Escrow Agent or any successor to it
shall be a party shall be the successor Escrow Agent under this
Agreement without the execution or filing of any paper or any
other act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 11. TERM. This Agreement shall terminate when
all transfers from the Escrow Fund required to be made by the
Escrow Agent under the provisions hereof shall have been made.
SECTION 12. SEVERABILITY. If any one or more of the
covenants or agreements provided in this Agreement on the part of
the parties hereto to be performed should be determined by a
court of competent jurisdiction to be contrary to law, such
covenant or agreement shall be deemed and construed to be
severable from the remaining covenants and agreements herein
contained and shall in no way affect the remaining provisions of
this Agreement.
SECTION 13. PARTIES BENEFITTED. Nothing in this
Agreement is intended to or shall be construed to confer upon or
to give to any person or party other than the State, the
Developer, SJTA and the Escrow Agent, any rights, remedies or
claims under or by reason of this Agreement and this Agreement
shall be for the sole and exclusive benefit of the State, the
Developer, SJTA and the Escrow Agent. All the covenants,
promises and agreements in this Agreement contained by or on
behalf of the State, SJTA, the Developer or the Escrow Agent
shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed or not.
-7-
<PAGE>
SECTION 14. HEADINGS. The headings of the several
sections of this Agreement are included for ease of reference
only and shall not form a part of this Agreement.
SECTION 15. NOTICES.
15.1 Notices to any party to this Agreement shall
be in writing and shall be deemed to have been given or made when
personally delivered, sent by recognized overnight courier,
deposited in the mails, postage pre-paid, or sent by facsimile
transmission and addressed as set forth below or to such other
address as a party may by notice advise the other parties:
If to the State: New Jersey Department of Transportation
1035 Parkway Avenue, P.O. Box 600
Trenton, New Jersey 08625-0600
Attention: Commissioner
Telecopier No.: 609-530-3894
With a copy to: Attorney General
State of New Jersey
Richard J. Hughes Justice Complex
P.O. 112
Trenton, New Jersey 08625
Attention: Susan R. Roop
Deputy Attorney General
Telecopier No.: 609-292-0690
If to the Escrow Agent: CoreStates Bank, N.A.
3 Beaver Valley Road
Wilmington, Delaware
Attention: Deborah Bowers FC5-4-82-12
Telecopier No.: 302-
With a copy to: Blank Rome Comisky & McCauley
One Logan Square
Philadelphia, Pennsylvania 19103
Attention: Joan N. Stern, Esquire
Telecopier No.: 215-569-5698
If to the Developer: Atlandia Design and Furnishings, Inc.
3260 South Industrial Road
Las Vegas, Nevada 89109
Attention: Kenneth R. Wynn, President
Telecopier No.: 702-792-4790
With a copy to: Warshaw Burstein Cohen Schlesinger & Kuh LLP
555 Fifth Avenue
New York, New York 10017
Attention: Stanley Schlesinger, Esquire
Telecopier No.: 212-972-9150
If to SJTA: South Jersey Transportation Authority
Farley Service Plaza
Hammonton, New Jersey 08037
Attention: Executive Director
Telecopier No.: 609-965-7597
-8-
<PAGE>
With a copy to: Gilmore & Monahan
10 Allen Street
P.O. Box 1540
Toms River, New Jersey 07853
Attention: George Gilmore, Esquire
Telecopier No.: 908-244-1840
15.2 Any notice containing a change of address or
telecopier number shall be deemed given when actually received or
upon refusal to accept delivery thereof; all other notices shall
be deemed to have been given and received upon the earliest of:
(a) when actually first received or upon refusal to accept
delivery thereof, (b) on the date when delivered personally or
sent by telecopier, (c) one (1) business day after sending by
recognized overnight courier, or (d) four (4) business days after
mailing, as aforesaid.
SECTION 16. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State.
SECTION 17. COUNTERPARTS. This Agreement may be
executed in several counterparts, by manual or facsimile signa-
ture, all or any of which counterparts shall be regarded for all
purposes as one original and shall constitute and be but one and
the same instrument.
[SIGNATURE PAGE FOLLOWS]
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused
this Agreement to be executed by their duly authorized officers
as of the date first above written.
STATE OF NEW JERSEY, acting by and through
the Department of Transportation
By: /s/JOHN J. HALEY, JR.
______________________________________
JOHN J. HALEY, JR.
SOUTH JERSEY TRANSPORTATION AUTHORITY
By: /s/JAMES A. CRAWFORD
--------------------------------------
JAMES A. CRAWFORD
ATLANDIA DESIGN AND FURNISHINGS, INC.
By: /s/BRUCE A. LEVIN
--------------------------------------
Bruce A. LEVIN, Secretary
CORESTATES BANK, N.A., as Escrow Agent
By: /s/THOMAS J. CROSSETT
--------------------------------------
Authorized Officer
Approved as to form this
10th day of October, 1997
/s/SUSAN R. ROOP
----------------------------
Deputy Attorney General
Approved this 10th day of
October, 1997
/s/JAMES A. DIELEUTERIO, JR.
----------------------------
State Treasurer
-10-
BOND PURCHASE AGREEMENT
between
MIRAGE RESORTS, INCORPORATED
and
SOUTH JERSEY TRANSPORTATION AUTHORITY
Dated October 10, 1997
EXHIBIT 10.15
<PAGE>
The following Table of Contents has been inserted for con-
venience only and does not constitute a part of this Agreement.
TABLE OF CONTENTS
Page
1. Background 1
2. Definitions 2
3. Agreement to Purchase Bonds; Purchase Price 5
4. Details of Bonds. 6
5. Escrow Agreement 9
6. Initial Issuance of Bonds] 9
7. Representations and Warranties of the Purchaser 10
8. Expenses 10
9. Conditions Precedent 10
10. No Oral Change; Assignment 11
11. Notices 11
12. Law Governing 11
13. Headings 11
14. Counterparts 11
15. Limitation of Liability of the Authority 11
16. Other Agreements 11
-i-
<PAGE>
BOND PURCHASE AGREEMENT
THIS BOND PURCHASE AGREEMENT is dated October 10, 1997,
between MIRAGE RESORTS, INCORPORATED ("Mirage" or the
"Purchaser") and the SOUTH JERSEY TRANSPORTATION AUTHORITY (the
"Authority"), with respect to the purchase and sale of the
Authority's Road Development Special Revenue Bonds (Atlantic
City/Brigantine Connector Project - CRDA H-Tract Revenue Pledge
Agreement) (the "Bonds") in the maximum initial issuance amount
of $55,000,000 on the terms and subject to the conditions herein
set forth:
1. Background.
(A) The Authority was created pursuant to the South
Jersey Transportation Authority Act, L. 1991, C. 252, as amended
and supplemented (the "Act"), as a successor to the New Jersey
Expressway Authority and the Atlantic County Transportation
Authority, to provide more coordination of the region's
transportation system and to deal particularly with the highway
system, aviation facilities and the transportation problems of
Atlantic County through the acquisition, construction,
maintenance, operation and support of expressway and
transportation projects and economic development facilities
directly related to transportation projects authorized by the
Act. Pursuant to Section 7 of the Act, the Authority is
authorized, inter alia, to acquire, maintain, operate and support
projects, to acquire, construct, maintain and operate feeder
roads, to issue bonds or notes for the purposes of the Act and to
provide for the rights of the holders thereof as provided in the
Act.
(B) The Authority, the State of New Jersey, acting
through the Department of Transportation (the "State") and Mirage
propose to undertake a certain project (the "Project") consisting
of certain traffic infrastructure improvements to be constructed
in Atlantic City, New Jersey and, upon completion, to be
accepted, owned, maintained and operated by the Authority, all
pursuant to, as provided in and subject to the terms and
conditions of a Road Development Agreement, dated as of January
10, 1997, as amended (the "Road Development Agreement"), among
the Authority, the State and Mirage and thereafter assigned by
Mirage to Atlandia Design and Furnishings, Inc., a wholly owned
subsidiary of Mirage.
(C) Pursuant to the Road Development Agreement, a
portion of the financing for the Project is to be made available
by the Developer (as hereinafter defined), in a manner and on
terms and conditions satisfactory to the Developer, CRDA (as
hereinafter defined), the Authority and the State, repayable from
and collateralized by future investment alternative tax
obligations of casinos, whether owned by the Developer, any
affiliate of the Developer or others, on the Marina Land (as
hereinafter defined). The Developer, CRDA, the Authority and the
<PAGE>
State have determined to effectuate the foregoing portion of the
financing for the Project through the issuance by the Authority
of the Bonds in the maximum initial issuance amount of
$55,000,000, which bonds shall be purchased by Mirage and/or its
permitted assignee(s) pursuant to the Road Development Agreement
and shall be payable and secured by a donation (the "Donation")
to be received by the Casino Reinvestment Development Authority
("CRDA") from a casino licensee as to which Mirage is or will
become a holding company under N.J.S.A. 5:12-26, alone or
together with other casino licensees operating casino hotels on
the Marina Land (collectively, the "Donors"), to be made if and
when the Donors become casino licensees, in an amount equal to
the aggregate principal amount of such bonds, plus the equivalent
of interest thereon at a rate per annum not in excess of the CRDA
Bond Rate (as hereinafter defined) from the purchase date of such
bonds to the date of their repayment, the amount of such Donation
to be applied as a credit against the Donors' respective Atlantic
City non-housing investment alternative obligations pursuant to
the terms of such Donation, the related Donation Agreements (as
hereinafter defined) and the other documents and agreements to be
executed and delivered in connection therewith.
(D) Mirage and the Authority are entering into this
Agreement to evidence their agreement to purchase and sell the
Bonds as aforesaid and to induce each other to proceed to the
Closing (as defined in the Road Development Agreement) and to
take other actions in connection with the financing of the
Project.
2. Definitions. Capitalized terms used but not defined in
this Agreement shall have the meanings given to them in the
Resolution (as hereinafter defined). In addition, for purposes
of this Agreement the following terms shall have the meanings
specified below:
"Act" means the South Jersey Transportation Authority Act,
Ch.252,L, 1991, as the same may be amended and supplemented from
time to time.
"Agreement" means this Bond Purchase Agreement, as the same
may be amended from time to time.
"Authority" means the South Jersey Transportation Authority,
a public body corporate and politic, with corporate succession,
which pursuant to Section 4 of the Act constitutes an
instrumentality of the State and in the exercise of the powers
conferred by the Act shall be deemed and held to be performing an
essential governmental function of the State.
"Authorized Officer" means any member of the Authority or
any officer or employee of the Authority authorized to perform
specific acts or duties by the Authority's by-laws or by
resolution.
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<PAGE>
"Bond Counsel" means any lawyer or firm of lawyers
nationally recognized in the field of municipal finance and
satisfactory to the Authority.
"Bondholder" or "Holder" or "Owner" shall mean any person
who shall be the registered owner of any Bond or Bonds. In
addition, to the extent any payment of principal of or interest
on any Bonds shall have been made from the payments or drawings
made under the Guarantee or any Financing Facility, the issuer of
such Guarantee or Financing Facility shall be subrogated to the
rights of the Holders of such Bonds and shall be deemed to be a
Bondholder for all purposes of the Resolution.
"Bonds" means the Authority's Road Development Special
Revenue Bonds (Atlantic City/Brigantine Connector Project - CRDA
H-Tract Revenue Pledge Agreement) in the maximum initial issuance
amount of $55,000,000.
"Code" means the Internal Revenue Code of 1986, as amended,
or any successor thereof, and the Regulations promulgated
thereunder or applicable thereto, as the same may be in effect
from time to time and applicable to any Bonds issued under the
Resolution.
"Conversion Date" means January 1, 2005.
"Cost" or "Cost of the Project" means all or any part of the
expenses incurred in connection with the acquisition,
construction and maintenance of any real property, lands,
structures, real or personal property rights, rights-of-way,
franchises, easements, and interests acquired or used for the
Project; any financing charges and revenues for the payment of
principal or interest on the Bonds; the expenses of engineering,
appraisal, architectural, accounting, financial and legal
services; and other expenses as may be necessary or incident to
the acquisition, construction and maintenance of the Project, the
financing thereof and the placing of such Project into operation.
"CRDA" means Casino Reinvestment Development Authority, a
public body established in, but not of, the Department of the
Treasury of the State of New Jersey .
"CRDA Bond Rate" means (i) in the case of Bonds the
interest on which is, in the opinion of Bond Counsel to be
delivered simultaneously with the issuance and delivery of such
Bonds, excludable from gross income for federal income tax
purposes pursuant to Section 103 of the Code, the CRDA Tax-Exempt
Rate, and (ii) in all other cases, the CRDA Taxable Rate.
"CRDA Taxable Rate" means, as of any Delivery Date, an
interest rate per annum equal to sixty-six and two-thirds (66-
2/3%) percent of the average rate of Moodys' A-rated Utility
Index for bonds available for purchase during the last 26 weeks
preceding such Delivery Date.
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"CRDA Tax-Exempt Rate" means, as of any Delivery Date, an
interest rate per annum equal to sixty-six and two-thirds (66-
2/3%) percent of the average rate of the Bond Buyer weekly 25
Revenue Bond Index for bonds available for purchase during the
last 26 weeks preceding such Delivery Date.
"Debt Service Fund" means the Fund so designated and
established pursuant to the Resolution.
"Debt Service Requirement" means, with reference to any
Interest Payment Date, interest payable on the Bonds on such
Interest Payment Date.
"Delivery Date" shall mean, with respect to any Bond, the
date on which such Bond is delivered to the Purchaser upon
initial issuance.
"Developer" means Atlandia Design and Furnishings, Inc.
"Donation" means the donation or donations to be received
from time to time by CRDA from the Donors, in an aggregate amount
equal to the initial issuance amount of the Bonds, plus the
equivalent of interest thereon at a rate per annum equal to the
CRDA Bond Rate from each Delivery Date of the Bonds to the date
of their repayment.
"Donation Agreement" means the agreement or agreements
entered into or to be entered between CRDA and each Donor,
pursuant to which each Donor shall agree to make a donation to
CRDA as set forth in its Donation Agreement, the amount of such
donation to be applied as a credit against such Donor's
respective Atlantic City non-housing investment alternative
obligations.
"Donors" means (i) a casino licensee as to which Mirage is
or will become a holding company under N.J.S.A. 5:12-26 that
operates a casino hotel on the Marina Land, and (ii) each other
casino licensee operating a casino hotel on the Marina Land that
executes a Donation Agreement with CRDA, in each case if and when
such Donor becomes a casino licensee.
"Escrow Agreement" shall mean the Escrow Fund Agreement
entered into or to be entered into by and among the Authority,
the State, the Developer, and CoreStates Bank, N.A., as Escrow
Agent, as the same may be amended from time to time.
"Financing Facility" means any letter of credit or municipal
bond insurance policy securing the payment of principal of and
interest on the Bonds which may be obtained by Mirage or any
other Donor as provided in Section 4(E)(ii) of this Agreement.
"General Resolution" means the General Resolution of the
Authority entitled, "Resolution Authorizing Revenue Bonds and
Other Obligations" adopted December 3rd, 1992 as Resolution No.
1992-64, as amended and supplemented.
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"Guarantee" shall have the meaning given to such term in
Section 4(E)(ii) of this Agreement.
"Interest Payment Date" means the January 1, April 1, July 1
or October 1 next following the Conversion Date and each January
1, April 1, July 1 and October 1 thereafter.
"Marina Land" shall have the meaning set forth in the Road
Development Agreement..
"Mirage" means Mirage Resorts, Incorporated, a Nevada
corporation.
"Pledge Agreement" means the Pledge Agreement entered into
or to be entered by the Authority and CRDA, pursuant to which
CRDA shall pledge to the Authority, as security for the payment
of the principal, premium, if any, and interest on the Bonds, any
and all amounts received by CRDA pursuant to the Donation
Agreement.
"Pledged Property" means the Pledge Agreement, the Guarantee
or any Financing Facility, if any, the Revenues and all moneys
and securities from time to time on deposit in the Funds and
Accounts established under the Resolution, other than the Rebate
Fund, including Investment Securities held in any such Fund or
Account thereunder, together with all proceeds and revenues of
the foregoing and all of the Authority's right, title and
interest in and to the foregoing, and all other moneys,
securities or funds pledged for the payment of the Bonds in
accordance with the terms and provisions of the Resolution.
"Prepayment Date" means each January 1, April 1, July 1 and
October 1.
"Project" means the traffic infrastructure improvements to
be constructed in Atlantic City, New Jersey and, upon completion,
to be accepted, owned, maintained and operated by the Authority,
all pursuant to, as provided in and subject to the terms and
conditions of the Road Development Agreement.
"Purchaser" means Mirage.
"Resolution" means the resolution of the Authority adopted
on October 8, 1997 and entitled "RESOLUTION OF SOUTH JERSEY
TRANSPORTATION AUTHORITY AUTHORIZING ROAD DEVELOPMENT SPECIAL
REVENUE BONDS (Atlantic City/Brigantine Connector Project - CRDA
H-Tract Revenue Pledge Agreement), as amended and supplemented,
authorizing the issuance and sale of the Bonds.
"Revenues" means (i) all receipts, revenues, income and
other moneys received or receivable by or on behalf of the
Authority or the Trustee pursuant to the Pledge Agreement, (ii)
all receipts, revenues, income and other moneys received or
receivable by or on behalf of the Authority or the Trustee
pursuant to the Guarantee or any Financing Facility, if any, and
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(iii) all earnings on the investment of moneys in the Funds and
Accounts (other than the "Rebate Fund") established under the
Resolution.
"Road Development Agreement" means the Road Development
Agreement, dated as of January 10, 1997, among the Authority, the
State and Mirage, and thereafter assigned by Mirage to the
Developer, as the same has been and may be amended from time to
time.
"Series Certificate" means a certificate executed by an
Authorized Officer of the Authority making certain determinations
in connection with the issuance of a Series of Bonds pursuant to
the Resolution providing for, among other items, the issuance of
such Series of Bonds. Each Series Certificate, upon execution
and delivery, shall be deemed to be a part of the Resolution.
"State" means the State of New Jersey, acting through the
Department of Transportation.
"Trustee" means the Trustee appointed or to be appointed
under the Resolution, and its successor or successors, and any
other corporation which may at any time be substituted in its
place pursuant to the Resolution.
3. Agreement to Purchase Bonds; Purchase Price.
(A) Purchase and Sale of Bonds; Purchase Price.
Subject to the terms and conditions contained in this Agreement,
the Purchaser hereby agrees to purchase from the Authority, and
the Authority hereby agrees to sell to the Purchaser, the Bonds
in the maximum aggregate initial issuance amount of $55,000,000
at a purchase price, as to each Bond, equal to the "Total
Principal Amount" thereof as set forth in such Bond, without
discount or premium, when and if issued by the Authority. The
Bonds shall be issued in the form described in the Resolution and
shall be issued pursuant to the Resolution.
(B) Closing. The sale of each Series of the Bonds
shall take place on the applicable Delivery Date at the offices
of Wolff & Samson, P.A., 5 Becker Farm Road, Roseland, New Jersey
07068 or at such other location as the Authority and the
Purchaser shall agree upon. The Purchaser shall make payment of
the purchase price for each Series of the Bonds on the applicable
Delivery Date of such Series of Bonds in immediately available
funds by wire transfer to the Trustee for the account of the
Authority, against delivery of one or more Bonds duly
authenticated by the Trustee having an aggregate "Total Principal
Amount" equal to such purchase price. Each Series of Bonds shall
be issued at such time and in such amount as shall be provided
for in the Road Development Agreement and the Escrow Agreement.
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4. Details of Bonds.
(A) Purpose of Bonds. The Bonds shall be issued in one
or more Series from time to time to pay for Costs of the Project.
(B) Denominations, Date, Issue Date, Interest Rate.
The Bonds shall be issued in denominations such that the Accreted
Value of each such Bond at the expiration of the Accretion Period
shall be $100,000 or any integral multiple of $5,000 in excess
thereof. During the Accretion Period, interest shall accrue on
the Bonds of each Series, commencing on the Delivery Date of the
Bonds of such Series, at the CRDA Bond Rate in effect on the
Delivery Date of the Bonds of such Series, and shall compound at
the CRDA Bond Rate in effect on the Delivery Date of such Series
on each Compounding Date. The Accreted Value of each Bond shall
accrue quarterly on the basis of a year of 360 days consisting of
twelve 30 day months. From and after the Conversion Date,
interest on the Principal Amount of each Bond shall accrue and
shall be payable on each Interest Payment Date, but only to the
extent that moneys are on deposit in the Debt Service Fund on
such Interest Payment Date, and on redemption prior to maturity,
at the CRDA Bond Rate in effect on the Delivery Date of such Bond
(calculated on the basis of a 360 day year consisting of twelve
30 day months). In the event that on any Interest Payment Date
there shall not be available on deposit in the Debt Service Fund
an amount sufficient to pay the interest payable on such Interest
Payment Date in full, interest shall accrue on the unpaid portion
of such interest at the CRDA Bond Rate in effect on the Delivery
Date of such Bond (calculated on the basis of a 360 day year
consisting of twelve 30 day months) until such unpaid interest is
paid in full. Prior to the Conversion Date, each Bond shall be
dated the Delivery Date thereof. Each Bond issued and
authenticated from and after the Conversion Date shall be dated
as of the Interest Payment Date next preceding the date of
authentication thereof by the Trustee, unless such date of
authentication shall be an Interest Payment Date, in which case
such Bond shall be dated as of such Interest Payment Date;
provided, however, that if, as shown by the records of the
Trustee, interest on the Bonds shall be in default, Bonds issued
in lieu of Bonds surrendered for transfer or exchange may be
dated as of the date to which interest has been paid in full on
the Bonds surrendered; provided, further, that if the date of
authentication shall be prior to the first Interest Payment Date
for the Bonds, each Bond authenticated after the Conversion Date
but before such first Interest Payment Date shall be dated the
Conversion Date.
If there shall occur a Determination of Taxability (as
defined below), the interest rate on the Bonds shall be increased
to the CRDA Taxable Rate, retroactive to the effective date of
such Determination of Taxability. "Event of Taxability" with
respect to the Bonds means a change of law or regulations or the
interpretation thereof or the occurrence of any other event or
the existence of any other circumstance (including without
limitation the fact that any representations or warranties of the
Authority made in connection with the issuance of the Bonds is or
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was untrue) which has the effect of causing interest payable on
the Bonds to be or become subject to federal income taxation.
"Determination of Taxability" with respect to Bonds the interest
on which is, in the opinion of Bond Counsel to be delivered
simultaneously with the issuance and delivery of such Bonds,
excludable from gross income for federal income tax purposes
pursuant to Section 103 of the Code shall be deemed to have been
made upon the first to occur of the following events:
(i) the date on which the Authority determines that an
Event of Taxability has occurred by filing with the Trustee
a statement to that effect supported by one or more tax
schedules, returns or documents which disclose that such an
Event of Taxability has occurred;
(ii) the date on which the Authority or the Trustee is
advised by private ruling, technical advice or any other
written communication from any authorized official of the
Internal Revenue Service that, based upon any filings of the
Authority or any other person or entity, or upon any review
or audit of the Authority or any other person or entity, or
upon any other grounds whatsoever, an Event of Taxability
has occurred;
(iii) the date on which the Trustee or the
Authority is advised that a court of competent jurisdiction
has issued an order, declaration, ruling or judgment to the
effect that an Event of Taxability has occurred;
(iv) the date the Trustee shall have received written
notice from any Bondholder that it has received a written
assertion or claim by any authorized official of the
Internal Revenue Service that an Event of Taxability has
occurred; or
(v) the date the Trustee shall have received written
notice of any change in law or regulations or the
interpretation thereof, or is notified that the Internal
Revenue Service has issued any private ruling, technical
advice or any other written communication, with or to the
effect that an Event of Taxability has occurred and, in
either case, receives a written opinion of nationally
recognized bond counsel satisfactory to the Trustee that an
Event of Taxability has occurred;
provided that no Determination of Taxability described in clause
(i) shall be deemed to have occurred unless the Trustee shall
have received a written opinion of nationally recognized bond
counsel satisfactory to the Trustee, in form and substance
satisfactory to the Trustee, to the effect that an Event of
Taxability has occurred, and provided further that if there shall
occur a Determination of Taxability described in clauses (ii),
(iii), (iv) and (v), the Authority shall have the right, but not
the obligation, to contest, at its own cost and expense, such
determination by appropriate proceedings, either through its own
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action (if permitted by law) or by or on behalf of the Trustee or
any Bondholder, and, in the event of any such contest, the
interest rate on the Bonds shall not increase to the CRDA Taxable
Rate unless and until such contest has been determined adversely
to the Authority by a final order of any administrative body or
court from which no appeal or review of right may be taken or
obtained by the Authority (whether by the lapse of time for
taking such appeal or applying for such review or otherwise);
provided, however, that if such Determination of Taxability is
retroactive, the interest on the Bonds shall increase to the CRDA
Taxable Rate as of the effective date of such Determination of
Taxability. The Trustee and the Bondholders shall cooperate with
the Authority in good faith in pursuing any contest of any
Determination of Taxability without expense or liability to the
Trustee or any Bondholder.
(C) Maximum Term. Forty (40) years.
(D) Redemption Provisions.
(i) Mandatory Sinking Fund Redemption. The Bonds
will be subject to quarterly mandatory sinking fund redemption on
each Prepayment Date, pro rata, at a redemption price equal to
the principal amount thereof, without premium, plus accrued
interest to the redemption date, to the extent the amount on
deposit in the Debt Service Fund on the immediately preceding
December 1, March 1, June 1 or September 1, as the case may be,
exceeds the Debt Service Requirement coming due on such
Prepayment Date. If so directed by the Authority, on the date
specified by the Authority, which date shall be at least thirty
days prior to the next Prepayment Date, the Trustee shall apply
any amount on deposit in the Debt Service Fund in excess of the
Debt Service Requirement coming due on such Prepayment Date to
the purchase of Bonds at prices not exceeding the outstanding
Principal Amount of such Bonds plus accrued interest, if any, and
such purchases shall be made by the Trustee as directed in
writing from time to time by the Authority.
(ii) Optional Redemption. The Bonds will be
subject to redemption at the option of the Authority, in whole at
any time or in part pro rata on any Interest Payment Date, at a
redemption price equal to the Principal Amount thereof, without
premium, plus accrued interest to the redemption date.
(E) Security for the Bonds. (i) The Bonds shall be
special, limited, obligations of the Authority payable solely
from the Pledged Property. THE BONDS SHALL NOT BE IN ANY WAY A
DEBT OR LIABILITY OF THE STATE OR OF ANY POLITICAL SUBDIVISION
THEREOF, INCLUDING CRDA, OTHER THAN THE AUTHORITY (TO THE LIMITED
EXTENT SET FORTH THEREIN AND IN THE RESOLUTION) AND SHALL NOT
CREATE OR CONSTITUTE ANY INDEBTEDNESS, LIABILITY OR OBLIGATION OF
THE STATE OR OF ANY POLITICAL SUBDIVISION THEREOF, INCLUDING
CRDA, OTHER THAN THE AUTHORITY (TO THE LIMITED EXTENT SET FORTH
THEREIN AND IN THE RESOLUTION) OR BE OR CONSTITUTE A PLEDGE OF
THE FAITH AND CREDIT OF THE STATE OR OF ANY POLITICAL SUBDIVISION
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THEREOF, INCLUDING CRDA. NEITHER THE STATE NOR ANY POLITICAL
SUBDIVISION THEREOF, INCLUDING CRDA, OTHER THAN THE AUTHORITY
(TO THE LIMITED EXTENT SET FORTH THEREIN AND IN THE RESOLUTION)
WILL BE OBLIGATED TO PAY THE PRINCIPAL OR REDEMPTION PRICE OF OR
INTEREST ON THE BONDS AND NEITHER THE FAITH AND CREDIT NOR THE
TAXING POWER OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF
WILL BE PLEDGED TO THE PAYMENT OF THE PRINCIPAL OR REDEMPTION
PRICE OF OR INTEREST ON THE BONDS. THE BONDS WILL BE SPECIAL,
LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE
REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY
PLEDGED UNDER THE RESOLUTION AND FROM ANY AMOUNTS OTHERWISE
AVAILABLE UNDER THE RESOLUTION FOR THE PAYMENT OF THE BONDS. THE
BONDS SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT
OR GENERAL REVENUES OF THE AUTHORITY. THE AUTHORITY HAS NO
TAXING POWER.
THE PURCHASER, BY ITS EXECUTION OF THIS AGREEMENT AND
PURCHASE OF THE BONDS, SHALL BE DEEMED TO AGREE AND ACKNOWLEDGE
THAT THE PAYMENTS TO BE MADE BY CRDA UNDER THE PLEDGE AGREEMENT
AND THE COLLECTION OF RECEIPTS TO MAKE SUCH PAYMENTS CANNOT BE
ACCELERATED FOR ANY REASON, AND THE AMOUNT OF RECEIPTS CANNOT BE
INCREASED TO ACCOMODATE SCHEDULED PAYMENTS ON THE BONDS OR FOR
ANY REASON. ACCORDINGLY, THE OBLIGATION OF THE AUTHORITY TO PAY
THE PRINCIPAL OR REDEMPTION PRICE OF AND INTEREST ON THE BONDS ON
EACH INTEREST PAYMENT DATE, PREPAYMENT DATE AND AT MATURITY SHALL
BE LIMITED TO THE AMOUNTS ON DEPOSIT IN THE DEBT SERVICE FUND ON
SUCH INTEREST PAYMENT DATE, PREPAYMENT DATE OR AT MATURITY, AS
THE CASE MAY BE.
(ii) Upon any sale of Bonds then held by a Donor,
such Donor shall have the right in its sole discretion, but not
the obligation, to deliver to the Trustee for the benefit of the
Bondholders, a guarantee of the payment of the principal of,
premium, if any, and interest on the Bonds executed by such
Donor and/or any of its affiliates (the "Guarantee") and/or a
Financing Facility, provided that such Donor shall first deliver
to the Trustee an opinion of Bond Counsel stating that the
execution and delivery of such Guarantee or Financing Facility
shall not adversely affect the exclusion from gross income of
interest on the Bonds for Federal income tax purposes. Any
Guarantee or Financing Facility executed and delivered to the
Trustee shall immediately become a part of the Pledged Property.
(iii) Nothing contained in this Agreement
shall be deemed a limitation upon the authority of the Authority
to issue bonds, notes or other obligations under the Act secured
by other income and funds other than the Pledged
Property. Without limiting the generality of the immediately
preceding sentence, Holders of the Bonds shall have no right or
claim on any of the revenues or other assets held by the trustee
under the General Resolution or any Special Project Bond
Resolution or pledged thereunder or be entitled to any of the
benefits of the General Resolution or any Special Project Bond
Resolution.
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(F) Tax Exemption. Interest on each Series of Bonds
shall, in the opinion of Bond Counsel to be delivered
simultaneously with the issuance and delivery of such Bonds, be
excludable from gross income for federal income tax purposes
pursuant to Section 103 of the Code.
5. Escrow Agreement. Mirage is simultaneously herewith
entering into the Escrow Agreement and depositing with the Escrow
Agent $110,000,000 to be held and applied as provided therein.
6. Initial Issuance of Bonds. The Authority shall, not
later than five (5) business days after the date hereof, appoint
a Trustee for the Bonds and cause its bond counsel to prepare and
furnish to the Purchaser a form of Tax Regulatory Agreement
setting forth the representations and procedures required in
order for bond counsel to render its opinion as to the exclusion
from gross income of interest on the Bonds for federal income tax
purposes.
7. Representations and Warranties of the Purchaser. By
its commitment to purchase of the Bonds, the Purchaser represents
and warrants to the Authority that:
(A) The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of investments of the general character of the
Bonds. The Purchaser has made an independent investigation and
evaluation of the Project, or has caused such investigation and
evaluation to be made by persons it deems competent to do so. The
Purchaser hereby expressly waives the right to receive any
information pertaining to the Project, the State or CRDA from the
Authority, the State or CRDA and relieves the Authority, the
State and CRDA and their agents, representatives and attorneys of
any liability for failure to provide such information.
(B) This Agreement has been duly executed and
delivered by the Purchaser and constitutes a valid and binding
agreement of the Purchaser, enforceable in accordance with its
terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or similar laws of general application
affecting the rights of creditors and by the application of
general equity principles.
(C) The Purchaser has not offered or sold and will not
offer or sell the Bonds by means of any form of general
advertising or solicitation. The Purchaser is purchasing the
Bonds for its own account for investment and not with a view to
the distribution or resale thereof, provided that the Purchaser
reserves the right to dispose of the Bonds in compliance with
federal and state securities laws, if in the future it is deemed
desirable by the Purchaser to do so.
8. Expenses. Costs of issuance of the Bonds shall be paid
for as set forth in the Road Development Agreement.
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9. Conditions Precedent. The Purchaser's obligation to
purchase each Series of Bonds under this Agreement shall be
subject to the continued satisfaction on each Delivery Date of
the following conditions, unless waived in writing by the
Purchaser:
(A) The Road Development Agreement and the Escrow
Agreement and the funding obligations of the Purchaser and the
Authority, respectively, thereunder shall be in full force and
effect.
(B) The Purchaser and CRDA shall have entered into the
Donation Agreement, and the Donation Agreement shall be in full
force and effect.
(C) The Authority and CRDA shall have entered into the
Pledge Agreement, and the Pledge Agreement shall be in full force
and effect, and the Purchaser shall have received a certified
copy of the Pledge Agreement.
(D) All of the conditions precedent to the issuance of
the Bonds set forth in the Resolution shall have been satisfied.
(E) The Resolution shall not have been amended or
supplemented without the consent of the Purchaser.
(F) There shall be delivered an opinion of bond
counsel to the Authority, addressed to the Trustee, CRDA and the
Purchaser, substantially in the form annexed hereto as Exhibit A.
10. No Oral Change; Assignment.
(A) This Agreement may not be changed orally, but only
by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is
sought.
(B) The Authority may not assign any of its rights
under this Agreement without the prior express written consent of
the Purchaser. The Purchaser shall have the right to assign its
obligation under this Agreement in whole or in part to any
affiliate or subsidiary of the Purchaser or to any other casino
licensee operating a casino hotel on the Marina Land, provided
such assignee shall enter into a Donation Agreement with CRDA.
11. Notices. Whenever notice is required to be given
pursuant to the provisions of this Agreement, such notice shall
be in writing and shall be deemed given when mailed by certified
mail, return receipt requested (A) if to the Authority, at
Milepost 21.3, Farley Service Plaza, Atlantic City Expressway,
Elwood, New Jersey 08217; or (B) if to the Purchaser, at 3400
Las Vegas Blvd. So., Las Vegas, Nevada 89109, Attention:
General Counsel with a copy to Warshaw Burstein Cohen Schlesinger
& Kuh, LLP, 555 Fifth Avenue, New York, New York 10017,
Attention: Stanley Schlesinger, Esq.
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12. Law Governing. This Agreement shall be construed in
accordance with and governed by the laws of the State.
13. Headings. The headings of the paragraphs and subpara-
graphs of this Agreement are inserted for convenience only and
shall not be deemed to constitute a part of this Agreement.
14. Counterparts. This Agreement may be executed simultan-
eously in counterparts, by manual or facsimile signatures each of
which counterparts shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
15. Limitation of Liability of the Authority. The
Authority's obligations hereunder are subject to the performance
by the Purchaser of its obligations hereunder, and there shall be
no recourse against the Authority (other than an action for
specific performance to compel the Authority to issue and sell
the Bonds as provided herein), the officers, members, agents and
employees of the Authority, as such, or any of the property now
or hereafter owned by it or them.
16. Other Agreements. Nothing contained in this Agreement
shall be deemed to limit the rights or remedies, at law or in
equity, or reduce the obligations, of any party hereto, under any
other agreement or instrument (including, without limitation, the
Road Development Agreement or the Escrow Agreement) to which the
parties hereto, or either of them, may be a party.
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IN WITNESS WHEREOF, the Purchaser and the Authority have
executed this Bond Purchase Agreement as of the day and year
first above written.
MIRAGE RESORTS, INCORPORATED
By: /s/ BRUCE A. LEVIN
--------------------------------
Name: BRUCE A. LEVIN
Title: VICE PRESIDENT
SOUTH JERSEY TRANSPORTATION
AUTHORITY
By: /s/ JAMES A. CRAWFORD
--------------------------------
Name: JAMES A. CRAWFORD
Title: EXECUTIVE DIRECTOR
DONATION AGREEMENT
Donation Agreement dated as of the 10th day of October, 1997
(the "Donation Agreement"), by and between the CASINO
REINVESTMENT DEVELOPMENT AUTHORITY (the "Authority"), a public
body established in, but not of, the Department of the Treasury
of the State of New Jersey, and MAC, Corp., a New Jersey
corporation with an address at 19 South Tennessee Avenue,
Atlantic City, New Jersey ("Mirage NJ").
WHEREAS, the Authority was requested to provide partial
funding to assist in the design and construction of traffic
infrastructure improvements for the Atlantic City area (the
"Project"); and
WHEREAS, pursuant to 5:12-160 of the Casino Control Act (the
"Act"), the purposes of the Authority are, among other things,
(i) to maintain public confidence in the casino gaming industry
as a unique tool of urban redevelopment for Atlantic City, (ii)
to provide a method of encouraging new capital investment in
Atlantic City, (iii) to provide, further and promote tourist
industries in New Jersey by providing financial assistance for
the planning, acquisition, construction and operation of
facilities for the recreation and entertainment of the public,
(iv) to assist in the financing of the construction of
infrastructure projects, including roads and highways, (v) to
cooperate with and assist local governmental units in financing
eligible projects, and (vi) to perform any combination of the
following; and
WHEREAS, pursuant to 5:12-161g of the Act, the Authority is
empowered to enter into any agreements or contracts, execute any
instruments, and do and perform any acts or things necessary,
convenient, or desirable for the purposes of the Authority,
including the entering into of agreements or contracts with any
governmental unit to provide for the payment of principal of and
interest on any obligation issued by that governmental unit, the
maintenance of necessary reserves in connection with these
obligations or the payments under any lease entered into in
connection with any eligible project; and
WHEREAS, pursuant to 5:12-161o of the Act, the Authority is
empowered to enter into all agreements or contracts with any
governmental unit or person, execute any instruments, and do and
Exhibit 10.16
<PAGE>
perform any acts or things necessary, convenient, or desirable
for the purposes of the Authority to carry out any power
expressly given in the Act; and
WHEREAS, the Project is in furtherance of an agreement
executed on January 10, 1997, as amended ("Road Development
Agreement") between the State of New Jersey (the "State"), South
Jersey Transportation Authority ("SJTA") and Mirage Resorts,
Incorporated ("Mirage") and thereafter, assigned by Mirage to
Atlandia Design and Furnishings, Inc., a wholly owned subsidiary
of Mirage ("Atlandia"); and
WHEREAS, Atlandia or an affiliate thereof will be the
developer for the Project and SJTA and/or the State will accept,
own, maintain and operate the Project upon its completion; and
WHEREAS, the total cost for the Project is estimated to be
$330 Million; and
WHEREAS, it is anticipated that the State will contribute
funds from the Transportation Trust Fund as well as funds to be
financed through the SJTA; and
WHEREAS, SJTA has authorized or will authorize the issuance
of bonds to assist in financing the Project; and
WHEREAS, the State requested that partial funding of the
Project costs be made available on terms and conditions
satisfactory to the Authority, Mirage, SJTA and the State; and
WHEREAS, the Authority is requested to fund, or assist in
funding, $120 Million; and
WHEREAS, one part of the Authority funding is to be from a
donation by a casino licensee, as to which Mirage is or will
become a holding company under N.J.S.A. 5:12-26, alone or
together with other casino licensees (collectively the "Donors")
operating casino hotels on the Marina Land as described on
Exhibit A and commonly referred to as the "H-Tract", to be made
if and when they become casino licensees and commence operation
of a casino on the H-Tract, in the aggregate amount of up to $55
Million (such aggregate principal sum of the Bonds at issuance
being the "Donation Principal Sum") plus the equivalent of
interest (including capitalized interest) at a rate per annum set
forth herein from the issue date of certain bonds to be issued by
the SJTA pursuant to that certain Resolution of SJTA adopted
October 8, 1997, authorizing Road Development Special Revenue
Bonds (the "Bonds") to the date of repayment of the Bonds (the
Donation Principal Sum together with such interest being the
"Donation") from their respective investment alternative tax
obligations, as set forth herein, which will be utilized to pay
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interest and retire the Bonds and which are the subject of a
pledge agreement between the Authority and SJTA ("Pledge
Agreement"); and
WHEREAS, Mirage desires to advance funds in an amount equal
to the Donation Principal Sum by buying up to $55 Million of the
Bonds to be issued by SJTA pursuant to the Bond Purchase
Agreement, dated of even date herewith, between SJTA and Mirage
(the "Bond Purchase Agreement") for use in funding the Project,
and Mirage NJ desires to enter into this Donation Agreement with
the Authority, providing, among other things, that if and when
Mirage NJ becomes a casino licensee and commences operation of a
casino on the H-Tract, it shall execute (1) a Securities Purchase
Contract in substantially the form of the agreement attached
hereto as Exhibit 1 (the "Securities Purchase Contract"), thereby
obligating it to purchase bonds of the Authority or make
alternative investments in lieu of purchasing bonds and (2) a
Credit Agreement in substantially the form of the agreement
attached hereto as Exhibit 2 (the "Credit Agreement"), thereby
setting forth the terms of the investment credit it will be
eligible to receive as a casino licensee for its portion of the
Donation to the Project; and
WHEREAS, the Authority made a preliminary determination of
eligibility of the Project at its meeting of February 18, 1997,
pursuant to Resolution No. 97-35; and
WHEREAS, a public hearing concerning the Project was held on
March 13, 1997; and
WHEREAS, the Authority, at its meeting of April 15, 1997,
pursuant to Resolution No. 97-75, determined the Project to be an
approved Project, authorized the reservation of funds for the
Project and authorized the Executive Director to negotiate and
enter into a Donation Agreement; and
WHEREAS, the Authority, at its meeting of August 26, 1997,
pursuant to Resolution No. 97-209, amended and supplemented its
Resolutions Nos. 97-75 through 97-78, adopted on April 15, 1997;
and
WHEREAS, as a casino licensee, Mirage NJ shall have an
obligation, pursuant to N.J.S.A. 5:12-144.1a.(2), to pay to the
State Treasurer on or before the 15th day of the first, fourth,
seventh and tenth months of each year as partial payment of the
investment alternative tax imposed pursuant to N.J.S.A. 5:12-
144.1a.(1) an amount equal to 1.25% of the estimated gross
revenues for the three-month period immediately preceding the
first day of those months (for purposes hereinafter, the
occurrence of each such date requiring payment to be made shall
be deemed the date upon which Mirage NJ incurs an Atlantic City
Obligation).
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NOW, THEREFORE, for and in consideration of the mutual
covenants and agreements set forth herein, and for other good and
valuable consideration, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
(a) The following shall have the meanings specified in the
foregoing recitals:
"Authority"
"Donation Agreement"
"Donation"
"Donation Principal Sum"
"Donors"
"H-Tract"
"Mirage"
"Mirage NJ"
"Pledge Agreement"
"Project"
"Road Development Agreement"
"SJTA"
"State"
(b) Terms defined elsewhere in this Donation Agreement
shall have the meanings ascribed to such terms in the sections in
which the definitions therefor appear.
(c) Terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Credit Agreement:
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MIRAGE NJ
SECTION 2.1. Representations and Warranties. Mirage NJ
represents, warrants and agrees that:
(a) It (i) is a corporation duly organized and validly
existing under the laws of the State of New Jersey, (ii) has the
corporate power and authority to carry on its business as now
being conducted, and (iii) has the corporate power to execute and
deliver this Donation Agreement and to perform its obligations
hereunder.
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(b) The execution and delivery of this Donation Agreement
has been duly authorized and this Donation Agreement constitutes
the valid and binding obligation of Mirage NJ enforceable in
accordance with its respective terms, subject only to bankruptcy,
insolvency, moratorium, reorganization or other similar laws or
to equitable principles relating to or affecting the enforcement
of creditors' rights generally.
(c) Except as noted on the litigation schedule attached
hereto as Exhibit 3, there is no action, suit or proceeding at
law or in equity or by any governmental instrumentality or other
agency now pending or, to the knowledge of Mirage NJ, threatened
against or affecting Mirage NJ that, if adversely determined,
would materially impair its right to carry on business
substantially as now conducted and as now contemplated by this
Donation Agreement or to perform its obligations under this
Donation Agreement or would materially adversely affect its
financial condition.
(d) It is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party,
which default would materially impair its right to carry on its
business substantially as now conducted and as now contemplated
by this Donation Agreement or to perform its obligations under
this Donation Agreement or would materially adversely affect its
financial condition and the execution of this Donation Agreement
and performance hereunder will not result in the violation of any
agreement or instrument to which Mirage NJ is a party.
(e) No representation or warranty made by it in this
Donation Agreement contains any material misstatement of fact.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE AUTHORITY
SECTION 3.1. Representations and Warranties. The Authority
represents, warrants and agrees that:
(a) It (i) is a public body established in, but not of, the
Department of Treasury of the State and an instrumentality of the
State established under the Act, and (ii) has the power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder.
(b) The execution and delivery of this Donation Agreement
has been duly authorized and this Donation Agreement constitutes
the valid and binding obligations of the Authority enforceable in
accordance with its terms, subject only to bankruptcy,
insolvency, moratorium, reorganization or other similar laws or
to equitable principles relating to or affecting the enforcement
of creditors' rights generally.
5
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(c) Except as noted on the litigation schedule attached
hereto as Exhibit 3, there is no action, suit or proceeding at
law or in equity or by any governmental instrumentality or other
agency now pending or, to the knowledge of the Authority,
threatened against or affecting the Authority that, if adversely
determined, would materially impair its ability to perform its
obligations under this Donation Agreement.
(d) It is not in material default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it
is a party and the execution of this Donation Agreement and
performance hereunder will not result in the violation of any
agreement or instrument to which the Authority is a party.
(e) No representation or warranty made by it in this
Donation Agreement contains any material misstatement of fact.
ARTICLE IV
PURCHASE OF SJTA SPECIAL REVENUE BONDS
SECTION 4.1. Pursuant to the Bond Purchase Agreement,
Mirage has agreed to purchase Bonds in a principal amount up to
the sum of Fifty-Five Million ($55,000,000.00) Dollars. The
Bonds shall bear interest calculated pursuant to the provisions
of the SJTA bond documents related thereto, which rate shall be
as set forth in Section 4.2 hereof.
SECTION 4.2. If the Bonds bear interest at a taxable rate,
such interest rate shall be 66 2/3 of the average rate of Moody's
A-rated Utility Index for bonds available for purchase during the
26 weeks preceding the date of issuance of such Bonds. If the
Bonds bear interest at a tax exempt rate, such interest rate
shall be 66 2/3 of the average rate of the Bond Buyer Weekly 25
Bond Index for bonds available for purchase during the last 26
weeks preceding the date of issuance of such Special Revenue
Bonds.
ARTICLE V
EXECUTION OF SECURITIES PURCHASE AGREEMENT AND
CREDIT AGREEMENT AND DONATION OF FUNDS
SECTION 5.1. If, and only if, Mirage NJ becomes a casino
licensee as defined in the Casino Control Act (N.J.S.A. 5:12-1,
et seq.) and commences operation of a casino on the H-Tract,
then, within fifteen (15) days after the commencement of such
operations, Mirage NJ and the Authority shall execute the
Securities Purchase Contract and the Credit Agreement. Subject
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to the transfer provisions of Article VI hereof, upon such
execution, Mirage NJ hereby agrees to make a donation to the
Project of its Atlantic City Obligations, as and when such
obligations are incurred and paid in accordance with N.J.S.A.
5:12-144.1a.(2), in an amount equal to its portion of the
Donation and the Authority hereby agrees to accept such donation
and treat it as such for purposes of Section 404(F)(2) of the
Securities Purchase Contract.
SECTION 5.2. The Authority shall not be under any
obligation to repay, reimburse or otherwise compensate Mirage NJ,
Mirage or, except as expressly stated in Article VI hereof, any
holders of the Bonds for any payment of principal and interest or
any costs incurred by them in connection with the purchase or
acquisition of the Bonds other than through credits applied
against the Atlantic City Obligations of Mirage NJ in accordance
with and subject to the terms and conditions of the executed
Credit Agreement. In furtherance of the Credit Agreement and as
provided in that certain Pledge Agreement between the Authority
and SJTA dated of even date herewith, the Authority shall
immediately transfer to SJTA, upon its receipt of any donation
from Mirage NJ under this Donation Agreement (and any donation
from any other Donor pursuant to a donation agreement executed
pursuant to Section 6.2(ii)), 100% of such donation.
ARTICLE VI
TRANSFERS OF SPECIAL REVENUE BONDS
AND DONATION OBLIGATIONS
SECTION 6.1. In the event Mirage NJ or Mirage sells or
otherwise transfers any of the Bonds to one or more Casino
Licensee Bondholders, the donation to be made by Mirage NJ under
this Donation Agreement shall be reduced such that its portion of
the Donation shall be an amount equal to the Donation less the
amount of investment alternative tax obligation payments received
by the Authority from Casino Licensee Bondholders for donations
for principal and interest payments on the Bonds made by such
Casino Licensee Bondholders pursuant to and consistent with their
respective donation agreements (said donations for principal and
interest payments on the Bonds in an amount equal to the
principal amount of the Bonds purchased or acquired by the Casino
Licensee Bondholder from Mirage or any other Casino Licensee
Bondholder, together with unpaid, accrued interest and future
interest on the transferred bonds being the "Transferred
Donation"). A sale or transfer of bonds to any person or entity,
shall not reduce the amount of the donation obligation of Mirage
NJ pursuant to Section 5.1, except, and to the extent, such
transfer is to a Casino Licensee Bondholder which (i) executes a
Donation Agreement committing to make a donation of its
investment alternative tax obligations, (ii) incurs such
obligations, and (iii) makes payments to the Authority in
satisfaction thereof.
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SECTION 6.2. For purposes of this Donation Agreement, a
Casino Licensee Bondholder shall mean a casino licensee or
prospective casino licensee (other than Mirage NJ) whose casino,
as defined in the Casino Control Act, is located or to be located
on the H-Tract, which: (i) becomes the holder of Bonds as a
result of the sale or transfer to it of such Bonds by Mirage NJ
or Mirage or any other Casino Licensee Bondholder; (ii) executes
an appropriate donation agreement with the Authority analogous to
this Donation Agreement, pursuant to which it agrees that upon
becoming a casino licensee and commencing operation of a casino
on the H-Tract, it shall execute an appropriate securities
purchase contract and a credit agreement, analogous to Exhibits 1
and 2, respectively, and commits to make a donation of its
"Atlantic City Obligations" to satisfy the Transferred Donation,
which Atlantic City Obligations shall be utilized to pay
interest and/or to retire the Bonds; and (iii) agrees to pay to
the Authority its administrative costs and all out-of-pocket fees
and expenses in connection with the subject sale or transfer.
The Authority shall execute the agreements referenced in Section
6.2(ii) upon execution of such agreements by a Casino Licensee
Bondholder. A sale or transfer by the Casino Licensee Bondholder
of the Bonds it has purchased or acquired to any other person or
entity shall not reduce the amount of the donation obligation of
the Casino Licensee Bondholder pursuant to this Section 6.2.
SECTION 6.3. The Authority shall not be under any
obligation to repay, reimburse or otherwise compensate a Casino
Licensee Bondholder or other bondholders for any costs incurred
by them in connection with the purchase of the Bonds other than
through credits against the Atlantic City Obligations of Mirage
NJ or Casino Licensee Bondholders in accordance with and subject
to the terms and conditions of the credit agreements executed by
Casino Licensee Bondholders. In furtherance of the Credit
Agreement, and as provided in that certain Pledge Agreement
between the Authority and SJTA dated of even date herewith, the
Authority shall immediately transfer to SJTA, upon the
Authority's receipt of the donations from the Donors, 100% of
such donations for payment to the holders of the Bonds in
accordance with this Donation Agreement, donation agreements
executed by Casino Licensee Bondholders, and the Pledge
Agreement.
SECTION 6.4. For purposes of subsections 6.2 and 6.3,
Atlantic City Obligations shall mean, as calculated at any time,
and from time-to-time, that portion of the subject Casino
Licensee Bondholder's Annual Investment Tax Credit (as defined
herein) attributable to a future Quarterly Payment Date which
constitutes funds available for projects in the City of Atlantic
City which are not Housing Projects. "Annual Investment Tax
Credit" shall mean, with respect to each calendar year commencing
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with the calendar year in which the subject Casino License
Bondholder becomes a casino licensee, an amount equal to one-half
of said Casino Licensee Bondholder's Tax Obligation, or such
other percentage as may be required by any amendment to N.J.S.A.
5:12-144.1.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Notices. All notices and other communications
hereunder shall be in writing and shall be hand delivered with
receipt acknowledged, sent by telecopy, telegraph, telex,
facsimile transmission or any other similar means of electronic
communication, mailed by first class mail, registered or
certified, return receipt requested, or sent by recognized
overnight carrier, postage prepaid and with acknowledgement of
delivery, to the parties at the addresses or numbers set forth
below or as to each party at such other or additional address or
numbers as shall be designated by such party in a written notice
to the other party thereto:
1. to the Authority at the following address:
1014 Atlantic Avenue
P.O. Box 749
Atlantic City, New Jersey 08401
Attn: Executive Director
Facsimile: 609-347-9049
2. to Mirage NJ at the following address:
c/o Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attn: Bruce A. Levin, Esq.
Vice President & General Counsel
Facsimile: 702-791-5787
Notice shall be deemed given when received. The
Authority or Mirage NJ may, by notice given hereunder, designate
any further or different addresses to which subsequent notices,
certificates or other communication shall be sent. Notices may
be given on behalf of a party by its attorney.
SECTION 7.2. Severability. If one or more provisions of
this Donation Agreement, or the application of any provision of
this Donation Agreement to any set of circumstances, shall be
determined to be invalid or ineffective for any reason, such
determination shall not affect the validity or enforceability of
the remaining provisions or the application of said provision or
any remaining provisions to a set of different circumstances.
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SECTION 7.3. Governing Law. This Donation Agreement shall
be governed by and construed as a contract negotiated, entered
into and performed in, and in accordance with the laws of the
State of New Jersey without regard to principles of conflicts of
law. Each party irrevocably consents to the exclusive
jurisdiction of the Superior Court of the State of New Jersey
venued in Atlantic County in any and all actions and proceedings
under this Donation Agreement. Any service of process and other
notice in any action, suit or proceeding shall be effective in
the manner set forth in Section 7.1 above.
SECTION 7.4. Execution of Counterparts. This Donation
Agreement may be simultaneously executed in several counterparts,
by manual or facsimile signatures, each of which counterparts
shall be an original and all of which shall constitute but one
and the same instrument.
SECTION 7.5. Amendments. This Donation Agreement may be
amended only with the concurrent written consents of the parties
hereto. In the event that the Act is amended, the Authority and
Mirage NJ hereby agree to amend this Donation Agreement provided
such amendment does not reduce or increase the obligations of
either party and is made to be consistent with the Act.
SECTION 7.6. Nature of Relationship. This Donation
Agreement constitutes a contractual agreement between the
Authority and Mirage NJ and is not intended nor shall it be
construed so as to create any form of a partnership, joint
venture or other business relationship as between the Authority
and Mirage NJ.
SECTION 7.7. Assignment. The interest of any party in this
Donation Agreement may not be assigned by any such party without
the prior written consent of all other parties to this Donation
Agreement.
SECTION 7.8. Additional Documents. The parties hereto
agree to execute such additional documents and to take such
additional actions as are necessary to effectuate the terms of
this Donation Agreement.
SECTION 7.9. Construction of Certain Terms. Wherever the
term "Authority" shall be used in this Donation Agreement, the
term shall include the Authority's successors and permitted
assigns.
SECTION 7.10. Fees and Expenses. Except as provided
otherwise in Section 6.2 hereof, each party hereto shall be
responsible for its own fees and expenses in connection with the
negotiations and consummation of the transactions contemplated by
this Agreement, including the transactions contemplated by the
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Bond Purchase Agreement. Nothing contained in this Section 7.10
shall limit the rights of either party to receive reimbursement
of its fees and expenses as may be provided in the Road
Development Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Donation Agreement to be executed by its duly authorized officers
and attested as of the date first above written.
ATTEST: CASINO REINVESTMENT DEVELOPMENT
AUTHORITY
/s/ [Illegible] BY:/s/ James B. Kennedy
---------------------------
JAMES B. KENNEDY
Executive Director
ATTEST: MAC, CORP.
/s/ Tanya M. Taylor BY:/s/ Bruce A. Levin
---------------------------
BRUCE A. LEVIN
Assistant Secretary
11
AIRCRAFT PURCHASE AGREEMENT
THIS AIRCRAFT PURCHASE AGREEMENT ("Agreement") is made
as of the 1st day of October, 1997 by and between Rifton
Enterprises, Inc. (the "Purchaser"), a New York corporation whose
principal address is Route 213, Rifton, New York, and Golden
Nugget Aviation Corp. (the "Seller"), a Nevada corporation whose
principal address is 6005 Las Vegas Boulevard South, Las Vegas,
Nevada, with reference to the following facts:
A. Seller is the owner and operator of a Gulfstream
G-IV aircraft, with engines more specifically described below.
B. Seller desires to sell, and Purchaser to pur-
chase, said aircraft upon the terms and conditions set forth
below.
NOW THEREFORE, the parties hereto agree as follows:
I
PURCHASE AND SALE OF AIRCRAFT
1.01 PURCHASE AND SALE OF AIRCRAFT AND ENGINES. The
Seller hereby agrees to sell, grant, convey, and set over to
Purchaser, and Purchaser agrees to purchase from Seller, at the
Closing, the aircraft and engines described below (collectively
with all equipment, manuals, log books and other records and
documents pertaining to their operation referred to as the
"Aircraft"), upon the terms and conditions set forth herein:
(a) Make & Model: Gulfstream G-IV
Serial Number: 1170
Registration Number: N711SW
Make & Model of Engines: Rolls Royce Tay 611-8
Serial Numbers of Engines: 16445 & 16446
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EXHIBIT 10.17
<PAGE>
together with all of the equipment, including avionics, set forth
in greater detail in the schedule which is annexed hereto and
made a part hereof as Exhibit "A" (the "Equipment"); together
with
(b) All manuals, log books, system and component
manuals, flight and operation manuals, checklists and other
records and documents pertaining to the operation and maintenance
of the Aircraft currently in the possession of Seller including,
without limitation, any Federal Aviation Administration ("FAA")
certificates (including the certificate of airworthiness, which
will be on board the Aircraft at delivery), all service tags
relating to components that may be on board the Aircraft, and all
records required by the Federal Aviation Regulations ("FAR") to
be maintained by the operator and those specified in FAR 91.419
(the "Books and Records").
1.02 PURCHASE PRICE. Purchaser agrees to pay to
Seller, and Seller agrees to accept from Purchaser, a total
purchase price of Twenty-Two Million Seven Hundred Fifty Thousand
Dollars ($22,750,000) (the "Purchase Price"), upon the transfer
of title to the Aircraft and delivery and transfer of possession
of the Aircraft to Purchaser at the Closing, in accordance with
the terms and conditions of this Agreement.
1.03 DEPOSIT AND DEMONSTRATION FLIGHTS.
Seller acknowledges that Purchaser has deposited the sum of
$3,000,000 ("Deposit") in escrow with AIC Title Service ("Escrow
Agent"), whose address is 4400 Will Rogers Parkway, Suite 106,
Oklahoma City, Oklahoma 73108. This Agreement shall constitute
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<PAGE>
the primary escrow instructions to Escrow Agent, and upon
execution of this Agreement Seller shall transmit an executed
copy to Escrow Agent, which shall acknowledge that it is holding
the Deposit as provided in this Agreement. Except as otherwise
provided for in this Agreement, in the event Purchaser shall
accept, or shall be deemed to have accepted the Aircraft pursuant
to the provisions of subsection 1.04(c) of this Agreement
following Purchaser's Pre-Purchase Inspection, the Deposit shall
become non-refundable.
1.04 PRE-PURCHASE INSPECTION AND ACCEPTANCE.
(a) Not later than October 3, 1997, Purchaser, at its
expense, shall be entitled to conduct an inspection ("Pre-
Purchase Inspection") of the Aircraft by KC Aviation in Appleton,
Wisconsin. Seller's crew have already flown the Aircraft on a
demonstration flight for Purchaser, and the cost for such flight
and any other demonstration flights or flight test(s) shall be
paid by Purchaser to Seller upon submission of Seller's invoice
at the rate of $2,500 per flight hour, the cost of fuel included
therein. Seller agrees to provide the Purchaser with all
necessary records for Purchaser's review and inspection including
all log books, yellow tags and maintenance records required to be
maintained by the FAA, CMP information and record review,
airframe, avionics, and engine inspections and functional tests
to verify, inter alia, the following:
(i) All FAA Airworthiness Directives and Mandatory
Service Bulletins have been complied with.
(ii) The Aircraft is in an airworthy condition and
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all systems and installed equipment are opera-
tional and functional per manufacturers' speci-
fications.
(iii) A flight test to be conducted by a Gulfstream
test pilot.
(iv) The status of life-limited parts.
(v) The compliance of maintenance and aircraft
records with applicable FARS.
The Pre-Purchase Inspection will be completed within ten (10)
business days after its commencement.
(b) Within three (3) business days following completion of
the Pre-Purchase Inspection, Purchaser will advise Seller in
writing whether it accepts or rejects the Aircraft, and disclose
the results of the Pre-Purchase Inspection to Seller. Purchaser
may reject the Aircraft only in the event that:
(i) the Aircraft does not comply with the
specifications attached hereto as Exhibit "A";
(ii) the Aircraft cannot be delivered by Seller: with
all systems functioning normally and within
manufacturers' specifications and specified limits; in
an airworthy condition with a current FAA certificate
of airworthiness; all ACB's, Mandatory CB's and AD's
complied with; all logs and records in accordance with
FAA requirements; current with all inspections; and no
record of accidents or damage;
(iii) the entity conducting the Pre-Purchase Inspec-
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<PAGE>
tion identifies "squawks," the cost of which exceeds
$100,000 to rectify; or
(iv) there is any evidence of corrosion, other than
small amounts of surface corrosion typically found on
any used aircraft.
If Purchaser rejects the Aircraft pursuant to this
subsection, the Escrow Agent shall release and return the Deposit
to Purchaser, within 48 hours after Purchaser provides notice
thereof to Seller and the Escrow Agent, less the following: (i)
the escrow fee; and (ii) the amounts invoiced by Seller to
Purchaser pursuant to subsection 1.04(a), which shall be paid by
the Escrow Agent to Seller. Upon such payments this Agreement
shall terminated and the obligations of the respective parties
hereto shall cease. In the event of termination of this Agreement
pursuant to this subsection, any escrow fees incurred shall be
paid by the Purchaser.
(c) In the event the Purchaser accepts the Aircraft after
the Pre-Purchase Inspection, or Purchaser fails timely to reject
the Aircraft as permitted in subsection 1.04(b) and is thereby
deemed to have accepted the Aircraft, Seller shall correct at its
expense all discrepancies discovered during the Pre-Purchase
Inspection (i) affecting airworthiness and (ii) of systems or
components whose operations are not within manufacturers'
specifications. Purchaser and Seller shall complete Exhibit "B"
annexed hereto and made a part hereof. Upon such acceptance or
deemed acceptance of the Aircraft, the Deposit shall become non-
refundable.
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<PAGE>
1.05 CLOSING AND DELIVERY.
(a) The closing of the transaction contemplated by this
Agreement and the delivery of the Aircraft (the "Closing") shall
be held in a timely manner (on the "Closing Date") on or after
October 9, 1997, but no later than November 4, 1997, except in
the event Seller shall not have corrected the discrepancies as
provided in subsection 1.04(c), in which case the time for
payment and Closing shall be extended until two (2) business days
after such discrepancies are corrected and Seller advises
Purchaser in writing thereof. The Closing shall be held at such
place as is mutually acceptable to Seller and Purchaser.
(b) Provided the Conditions Precedent in Article II have
been complied with, Purchaser agrees that if for any reason it
has not made all of the payments specified herein by November 4,
1997 and after Purchaser's acceptance or deemed acceptance of the
Aircraft after Pre-Purchase Inspection, Seller shall have the
right to place the Aircraft on the market free and clear of any
claim of Purchaser, and the Escrow Agent shall release the
Deposit to Seller. Purchaser and Seller acknowledge and agree
that the amount of the Deposit represents reasonable liquidated
damages and that Seller's actual damages would be extremely
difficult or impossible to ascertain. In such event, any escrow
fees incurred shall be paid by the Seller.
(c) The Aircraft shall be delivered to Purchaser at KC
Aviation, Appleton, Wisconsin, on the Closing Date free and clear
of all liens, security interests and encumbrances affecting title
thereto or possession thereof along with the Equipment and the
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<PAGE>
Books and Records. Possession shall be delivered immediately
after the Escrow Agent confirms that it has recorded the FAA Bill
of Sale with the FAA.
(d) Receipt of the Aircraft by Purchaser at Closing shall be
signified by the execution of a receipt acknowledging delivery of
the Aircraft in the form set forth in Exhibit "C", which is
annexed hereto and made a part hereof.
(e) At the Closing, Purchaser shall pay the balance of the
Purchase Price, Nineteen Million Seven Hundred Fifty Thousand
Dollars ($19,750,000), to the Escrow Agent by wire transfer of
immediately available funds or other means mutually acceptable to
Purchaser and Seller. The Escrow Agent shall wire the Purchase
Price, less one-half the escrow fees, which are to be borne
equally by Purchaser and Seller, to Seller immediately upon
recording the FAA Bill of Sale with the FAA.
1.06 FAA REGISTRATION.
Notwithstanding any provision to the contrary herein,
the current FAA Registration Number of the Aircraft, N711SW,
shall remain the property of Seller.
II
CONDITIONS PRECEDENT TO PURCHASER'S
OBLIGATION TO CLOSE
The following shall be conditions precedent to
Purchaser's obligation to purchase the Aircraft:
2.01 SELLER'S WARRANTIES, REPRESENTATIONS AND
COVENANTS. All of the Seller's warranties and representations
made herein shall be true, accurate and correct on the Closing
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<PAGE>
Date as when made on the date of the execution of this Agreement,
and Seller shall have complied with all of its covenants
contained herein.
2.02 BILL OF SALE. Seller shall have caused to be
executed and delivered to Purchaser a warranty bill of sale and
an FAA Bill of Sale for the Aircraft in a form acceptable for
filing and recording with the FAA, conveying free, good, clear,
unencumbered and defensible title to the Aircraft.
2.03 FAA AIRWORTHINESS CERTIFICATE. Seller shall have
delivered to Purchaser a current FAA Certificate of Airworthiness
for the Aircraft and the Aircraft shall have all ACBs, Mandatory
CBs, mandatory manufacturer's bulletins and ADs due as of the
date of commencement of the Pre-Purchase Inspection complied
with.
2.04 AIRCRAFT MAINTENANCE AND INSPECTION PROGRAM. The
Seller shall have assigned to Purchaser without recourse its
interest in any FAA-approved manufacturers' maintenance and
inspection program to which the Aircraft is subject.
2.05 ADDITIONAL MAINTENANCE PERFORMED. Any additional
maintenance required to be performed by Seller pursuant to the
terms of this Agreement shall have been satisfactorily completed.
Seller shall make the Aircraft available to Purchaser for
inspection at or prior to Closing to ensure that any such
additional maintenance has been satisfactory completed and
Purchaser shall immediately advise Seller in writing of any such
additional maintenance that has not been satisfactorily
completed.
- 8 -
<PAGE>
III
WARRANTIES, REPRESENTATIONS AND COVENANTS OF SELLER
Seller hereby warrants, covenants and represents to
Purchaser that:
3.01 ORGANIZATION AND STANDING. Seller is a corpor-
ation duly organized, validly existing and in good standing under
the laws of the State of Nevada.
3.02 CORPORATE AUTHORITY. The execution of this
Agreement by Seller, the delivery thereof to Purchaser and the
consummation by Seller of the transaction contemplated herein are
within Seller's corporate powers, have been duly authorized by
all necessary corporate action of Seller, have received all
necessary governmental approval (if any shall be required) and do
not and will not contravene or conflict with any provision of law
or of the charter or by-laws of Seller, and Seller has full
right, power and authority to execute this Agreement and to
consummate the transaction contemplated herein.
3.03 OWNERSHIP OF AIRCRAFT AND GOOD TITLE THERETO.
Seller is the sole owner of the Aircraft, and has not heretofore
transferred or sold the Aircraft or any of the rights in or to
the Aircraft, nor has Seller heretofore encumbered, mortgaged,
hypothecated or pledged the Aircraft or any of its rights
thereto. At the Closing, Seller shall transfer, or cause to be
transferred, to Purchaser free, good, clear, unencumbered and
defensible title in and to the Aircraft, free from any and all
liens, mortgages, encumbrances, pledges and charges of any kind
whatsoever.
- 9 -
<PAGE>
3.04 AIRCRAFT SPECIFICATIONS AND RECORDS. All of the
specifications, descriptions and other information set forth in
Exhibit "A" have been provided by Seller and are true and correct
in all material respects to the best of Seller's knowledge.
3.05 LOG BOOKS. Seller has maintained all manuals,log
books and other records and documents pertaining to the operation
and maintenance of the Aircraft as required by law and FAA
regulations. Said manuals, log books and other records and
documents to be delivered to Purchaser pursuant hereto, the Books
and Records, and the entries and information contained therein
are current, true and correct in all material respects to the
best of Seller's knowledge.
3.06 BINDING OBLIGATION. This Agreement, when execut-
ed, shall be a valid and binding obligation of Seller and shall
be enforceable in accordance with its terms, subject to applic-
able bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally and to general equitable
principles. Neither the execution, delivery nor the performance
of this Agreement by Seller will constitute a default under any
covenant or agreement to which Seller is a party or by which
Seller is bound.
3.07 SAME CONDITION. The Aircraft is, and shall be
maintained until delivery of the Aircraft, in substantially the
same condition, reasonable wear and tear accepted, as it was at
the time of Seller's demonstration flight for Purchaser.
3.08 TAXES AND OTHER CHARGES. No governmental author-
ity has or will at the date of the Closing have a lien or charge
- 10 -
<PAGE>
with respect to the Aircraft which accrued prior to the Closing
for which Purchaser is liable or to which the Aircraft is
subject. Seller will indemnify and hold Purchaser harmless from
any such lien or charge.
3.09 NO HIDDEN DEFECTS. There are no hidden defects
affecting airworthiness in the Aircraft of which Seller has
knowledge.
3.10 DISCLAIMERS AND LIMITATIONS.
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED FOR HEREIN, SELLER
HEREBY DISCLAIMS ALL WARRANTIES RELATING TO IT, TO ITS BUSINESS
OR PROPERTY OR TO THE AIRCRAFT, THE EQUIPMENT OR THE BOOKS AND
RECORDS. PURCHASER HAS HAD AND WILL HAVE AMPLE OPPORTUNITY TO
INSPECT THE AIRCRAFT, THE EQUIPMENT AND THE BOOKS AND RECORDS
PRIOR TO DELIVERY OF THE AIRCRAFT. PURCHASER AGREES THAT IT IS
PURCHASING THE AIRCRAFT, THE EQUIPMENT AND THE BOOKS AND RECORDS
"AS IS." PURCHASER HEREBY RELEASES, RENOUNCES AND DISCLAIMS ALL
WARRANTIES, OBLIGATIONS AND LIABILITIES OF SELLER AND ALL RIGHTS,
CLAIMS AND REMEDIES OF PURCHASER AGAINST SELLER, EXPRESS OR
IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY
NONCONFORMITY OR DEFECT (WHETHER LATENT OR DISCOVERABLE) IN THE
AIRCRAFT, INCLUDING, BUT NOT LIMITED TO: (i) ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, (ii) ANY
WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR
USAGE OF TRADE, (iii) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
REMEDY IN TORT OR STRICT-LIABILITY, WHETHER OR NOT ARISING FROM
THE NEGLIGENCE OF SELLER OR ANY PREDECESSOR TO SELLER, ACTUAL OR
IMPUTED AND (iv) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR
- 11 -
<PAGE>
REMEDY FROM LOSS OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF USE,
REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT OR FOR ANY
INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES RESULTING FROM ANY
SUCH NONCONFORMITY OR DEFECT.
IV
CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE
The following shall be conditions precedent to Seller's
obligation to deliver the Aircraft:
4.01 PURCHASER'S WARRANTIES, REPRESENTATIONS AND
COVENANTS. All of the Purchaser's warranties and representations
made herein shall be true, accurate and correct on the Closing
Date as when made on the date of the execution of this Agreement,
and Purchaser shall have complied with all of its covenants
contained herein.
4.02 PAYMENT. Escrow Agent shall have wired the
Purchase Price to Seller as provided for in subsection 1.05(e).
V
WARRANTIES, REPRESENTATIONS AND COVENANTS OF
PURCHASER
Purchaser hereby warrants, represents and covenants to
Seller that:
5.01 CORPORATE STANDING. Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the State of New York.
- 12 -
<PAGE>
5.02 CORPORATE AUTHORITY. The execution of this
Agreement and the consummation by Purchaser of the transaction
contemplated herein are within the Purchaser's corporate powers,
have been duly authorized by all necessary corporate action of
Purchaser, have received all necessary governmental approval (if
any shall be required) and do not and will not contravene or
conflict with any provision of law or of the charter or by-laws
of Purchaser, and Purchaser has full right, power and authority
to execute this Agreement and to consummate the transaction
contemplated herein.
5.03 BINDING OBLIGATION. This Agreement, when execut-
ed, shall be a valid and binding obligation of Purchaser and
shall be enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and other laws
affecting creditors' rights generally, and to general equitable
principles. Neither the execution, delivery nor the performance
of this Agreement by Purchaser will constitute a default under
any covenant or agreement to which Purchaser is a party or by
which Purchaser is bound.
5.04 TAXES AND OTHER CHARGES. Purchaser will pay all
taxes, assessments and penalties due and payable for the period
from and after the date of the Closing, if any, within the time
and manner prescribed by law as to this transaction, and
specifically, Purchaser will pay all sales, use, transfer, ad
valorem or similar tax, if any, due to any local, state or
federal agency arising out of this transaction and will indemnify
and hold Seller harmless therefrom. Notwithstanding the
- 13 -
<PAGE>
foregoing, nothing herein contained shall constitute an
acknowledgment that any taxes, assessments or penalties are due
as a result of this transaction.
VI
INDEMNIFICATION
6.01 INDEMNIFICATION. Each of the parties hereto
shall protect, indemnify and save the other party harmless from
and against any and all losses, costs and expenses, including
reasonable attorneys' fees, arising out of or relating to the
breach of any of the covenants, warranties or representations
made by said party hereunder.
VII
SURVIVAL OF COVENANTS, WARRANTIES AND REPRESENTATIONS
7.01 SURVIVAL. All of the covenants, warranties,
representations and agreements of the parties hereto made herein
shall survive the Closing of this transaction.
VIII
MANUFACTURERS' AND SERVICE WARRANTIES
8.01 MANUFACTURERS' AND SERVICE WARRANTIES. Seller
agrees, at Purchaser's expense, to assign, transfer, and set over
unto Purchaser upon Closing, without recourse, any and all
manufacturers' warranties pertaining to the Aircraft or any
equipment or components thereof, and to the extent that such
warranties are assignable they are hereby assigned upon Closing.
- 14 -
<PAGE>
Seller shall advise Purchaser of any such warranties of which it
is aware, but Purchaser shall be responsible for determining the
availability of and applying for any such warranties. Seller
agrees to execute all documents reasonably requested by Purchaser
to effect such assignments.
IX
MISCELLANEOUS
9.01 NOTICES. All notices, requests, demands and
other communications permitted or required hereunder shall be in
writing and shall be deemed to have been duly given if personally
delivered, sent by confirmed facsimile transmission, overnight
courier or mailed, postage prepaid via certified mail, return
receipt requested, as follows:
If to Purchaser: Rifton Enterprises, Inc.
Route 213
Rifton, New York 12471-0903
Attn: Christian P. Domer
If to Seller: Golden Nugget Aviation Corp.
6005 Las Vegas Boulevard South
Las Vegas, Nevada 89119
Attn: Robert A. Hecht, Chief Pilot
Fax: (702) 736-6356
with a copy to: Mirage Resorts, Incorporated
3260 South Industrial Road
Las Vegas, Nevada 89109
Attn: Peter C. Walsh, Esq.
Fax: (702) 792-4894
and to such other parties or addresses as the parties from time
to time designate in writing. Such notices, requests, demands
and other communications shall be deemed to have been duly given
and received on the date of delivery when personally delivered,
or on the date received if sent by confirmed facsimile
- 15 -
<PAGE>
transmission, overnight courier or certified mail.
9.02 TITLE AND RISK OF LOSS. Title and risk of loss
shall remain in Seller until delivery of the Aircraft and
recording of the FAA Bill of Sale, at which time and place title
and risk of loss shall pass to the Purchaser.
9.03 BROKERAGE FEES. Each party hereto shall be
responsible for its own brokerage fees, if any, in connection
with the sale and purchase of the Aircraft pursuant to this
Agreement, and shall indemnify and hold the other party harmless
from and against any brokerage or similar fees claimed to have
been incurred by or on behalf of such party.
9.04 APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York, without regard to the choice or conflict of law rules
thereof.
9.05 ENTIRE AGREEMENT. All of the Exhibits to this
Agreement are hereby incorporated by reference and this Agreement
and the Exhibits annexed hereto constitute the entire agreement
of the parties with respect to the subject matter hereof and
supersede any prior understandings, arrangements, commitments or
undertakings of the parties, whether written or oral, express or
implied.
9.06 ASSIGNMENT. This Agreement may not be assigned
by either party, by operation of law or otherwise, without the
prior written consent of the other, which consent shall not
be unreasonably withheld. A permitted assignment shall not
relieve Purchaser of its obligations hereunder.
- 16 -
<PAGE>
9.07 SEVERABILITY. If any one or more provisions of
this Agreement shall be found to be illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby and any such provisions shall be enforced as near as may
be permitted by law.
9.08 FORCE MAJEURE AND EXCUSABLE DELAYS. Except as
otherwise noted in this Agreement, neither the Seller nor
Purchaser shall be considered to be in default or breach of this
Agreement for delays in performance or failure or inability to
perform for reasons or causes totally out of their respective
control, including but not limited to, unscheduled maintenance or
repairs, lack of parts or service availability, war, embargo,
insurrection, natural disasters, riots, acts of God or the public
enemy, acts of terrorism, strikes, labor disturbances, or
compliance with federal, state or local law, regulation or court
order. Should any such delay continue for thirty (30) days, then
either party hereto shall have the option to terminate this
Agreement and the Deposit paid in escrow hereunder shall be
promptly returned to Purchaser with the escrow fees split evenly
between Seller and Purchaser.
9.09 AMENDMENT. This Agreement may not be amended,
nor shall any waiver, change, modification, consent or dis-
charge be effected, except by an instrument in writing executed
by the party against whom enforcement of any such amendment,
waiver, change, modification, consent or discharge is sought.
9.10 ADDITIONAL ACTIONS. The parties hereto will take
- 17 -
<PAGE>
any and all further actions and execute any and all additional
documents which may be necessary or desirable to carry out the
terms of this Agreement.
9.11 SECTION AND PARAGRAPH HEADINGS. The headings
contained in this Agreement are for reference only and shall have
no effect upon the meaning or interpretation of the Agreement.
9.12 COUNTERPARTS AND FACSIMILE SIGNATURES. This
Agreement may be executed in counterparts and each such
counterpart shall constitute one agreement. A confirmed facsimile
transmission of an executed signature page shall be effective as
an original.
- 18 -
<PAGE>
INTENDING TO BE LEGALLY BOUND, the parties have executed this
Agreement on the day and year first above written.
RIFTON ENTERPRISES, INC.
(Signature
Illegible)
- ------------------
Witness
By /s/ CHRISTIAN P. DOMER
--------------------------------
Christian P. Domer, President
GOLDEN NUGGET AVIATION CORP.
SUSAN M. WALKER
- ------------------
Witness
By /s/ BRUCE A. LEVIN
--------------------------------
Title Asst. Secretary
-----------------------------
Name Bruce A. Levin
------------------------------
- 19 -
<TABLE>
<CAPTION>
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE MIRAGE RESORTS, INCORPORATED
OF COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------
Three Months Nine Months
--------------------------- ----------------------------
For the periods ended September 30 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-average shares outstanding 178,842,310 182,787,603 178,654,609 183,669,140
Common stock equivalents 12,689,416 12,229,002 12,163,548 12,378,975
- ---------------------------------------------------------------------------------------------------------------
Weighted-average shares outstanding and
common stock equivalents used in the
computation of primary earnings per share 191,531,726 195,016,605 190,818,157 196,048,115
Additional common stock equivalents for
fully diluted calculation 2,901,362 2,199,432 3,427,230 2,049,459
- ---------------------------------------------------------------------------------------------------------------
Total shares outstanding assuming full dilution 194,433,088 197,216,037 194,245,387 198,097,574
===============================================================================================================
Net income $ 54,899,000 $ 48,736,000 $ 158,264,000 $ 153,922,000
Primary earnings per share $ 0.29 $ 0.25 $ 0.83 $ 0.79
Fully diluted earnings per share $ 0.28 $ 0.25 $ 0.81 $ 0.78
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 15
November 13, 1997
To Mirage Resorts, Incorporated
We are aware that Mirage Resorts, Incorporated has incorporated by
reference in its Registration Statements on Form S-8 (File No. 33-16037),
on Form S-8 (File No. 33-48394), on Form S-8 (File No. 33-63804), on Form
S-8 (File No. 33-60183), on Form S-3 (File No. 33-65317) and on Form S-3
(File No. 333-39029) its Form 10-Q for the quarter ended September 30,
1997, which includes our report dated November 13, 1997 covering the un-
audited interim financial information contained therein. Pursuant to
Regulation C of the Securities Act of 1933, that report is not considered a
part of these registration statements or a report prepared or certified by
our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997
AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF INCOME AND CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 100,863
<SECURITIES> 0
<RECEIVABLES> 123,586
<ALLOWANCES> 48,109
<INVENTORY> 28,903
<CURRENT-ASSETS> 258,106
<PP&E> 2,843,579
<DEPRECIATION> 616,938
<TOTAL-ASSETS> 2,901,168
<CURRENT-LIABILITIES> 227,184
<BONDS> 1,036,340
0
0
<COMMON> 940
<OTHER-SE> 1,458,206
<TOTAL-LIABILITY-AND-EQUITY> 2,901,168
<SALES> 0
<TOTAL-REVENUES> 1,075,553
<CGS> 0
<TOTAL-COSTS> 597,259
<OTHER-EXPENSES> 65,590
<LOSS-PROVISION> 12,441
<INTEREST-EXPENSE> 9,299
<INCOME-PRETAX> 248,451
<INCOME-TAX> 87,962
<INCOME-CONTINUING> 160,489
<DISCONTINUED> 0
<EXTRAORDINARY> (2,225)
<CHANGES> 0
<NET-INCOME> 158,264
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0
</TABLE>
