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Exhibit 10.6
GUARANTY OF COMPLETION
FOR VALUE RECEIVED, this GUARANTY OF COMPLETION (this "Guaranty") is
entered into this 22nd day of December, 1997 by X.X. Xxxxx, Inc., a Delaware
corporation ("Guarantor") in favor of (i) the lenders to a certain Credit
Agreement dated as of ___ of December ____, 1997, including Glaicher Natwest,
Inc., as Arranging Agent, National Westminster Bank PLC as Administrative Agent
(collectively "Lenders"), and (ii) the Resort at Xxxxxxxxx X.X., a Nevada
Limited Partnership (the "Owner").
WHEREAS, Owner has entered into a Guaranteed Maximum Price Construction
Management Contract dated as of December 22, 1997 (the "Construction Management
Contract") pursuant to which X.X. Xxxxx Construction, a North Carolina
Corporation (the "Construction Manager") has agreed to act as agent for the
Owner and to provide certain construction services on behalf of Owner with
respect to the construction of the Resort at Xxxxxxxxx (the "Project") located
in Las Vegas, Nevada; and
WHEREAS, Guarantor is executing this Guaranty to induce Owner to retain
Construction Manager to construct the Project in accordance with the
Construction Management Contract and to induce the Lenders to make various loans
to Owner to finance said Project; and
WHEREAS, Owner agrees to use the proceeds obtained from Lenders (together
with contributed equity) to finance the construction of the Project including
Owner's monetary and non-monetary obligations to Construction Manager pursuant
to the Construction Management Contract; and
WHEREAS, Guarantor is executing this Guaranty in reliance upon Lenders
providing financing for the benefit of the Project in a sum not less than two
hundred million dollars ($200,000,000) and Owner contributing equity for the
benefit of the Project in a sum not less than sixty seven million dollars
($67,000,000).
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Guarantor hereby agrees as follows:
1. The Guarantor hereby binds itself, its successors and assigns to
the Owner and Lenders for the performance and completion of the Construction
Management Contract, which is incorporated herein by reference.
2. If the Construction Manager performs and completes the
Construction Management Contract, the Guarantor shall have no obligation under
this Guaranty, except to participate in conferences as provided in Subparagraph
3.1.
3. If there is no Owner Default, the Guarantor's obligation under
this Guaranty shall arise after:
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3.1 The Owner has notified the Construction Manager (at the address
set forth in the Construction Management Contract) and the Guarantor at its
address set forth below that the Owner is considering declaring a Construction
Manager Default and has requested and attempted to arrange a conference with
the Construction Manager and the Guarantor to be held not later than fifteen
days after receipt of such notice to discuss methods of performing the
Construction Management Contract. If the Owner, the Construction Manager and the
Guarantor agree, the Construction Manager shall be allowed a reasonable time to
perform the Construction Management Contract, but such an agreement shall not
waive the Owner's right, if any, subsequently to declare a Construction Manager
Default; and
3.2 The Owner has declared a Construction Manager Default and
formally terminated the Construction Manager's right to complete the Contract
in accordance with the terms of the Construction Management Contract. Such
Construction Manager Default shall not be declared earlier than twenty days
after the Construction Manager and the Guarantor have received notice as
provided in Subparagraph 3.1; and
3.3 The Owner has agreed to pay the Balance of the Contract Price to
the Guarantor in accordance with the terms of the Construction Management
Contract.
4. When the Owner has satisfied the conditions of Paragraph 3, the
Guarantor shall promptly and at the Guarantor's cost and expense take one of the
following actions:
4.1 Arrange for the Construction Manager, with consent of the Owner,
to perform and complete the Construction Management Contract; or
4.2 Undertake to perform and complete the Construction Management
Control itself, through its agents or through independent contractors; or
4.3 Obtain bids or negotiated proposals from qualified contractors
acceptable to Owner for a contract for performance and completion of the
Construction Management Contract, arrange for a contract to be prepared for
execution by the Owner and the contractor selected with the Owner's concurrence
to be secured with performance and payment bonds executed by a qualified
surety, and pay to the Owner the amount of damages (if any) as described in
Paragraph 6 in excess of the Balance of the Contract Price incurred by the
Owner resulting from the Construction Manager's default; or
4.4 Waive its right to perform and complete, arrange for completion,
or obtain a new contractor and with reasonable promptness under the
circumstances:
.1 After investigation, determine the amount for which it may
be liable to the Owner and, as soon as practicable after the
amount is determined, tender payment therefor to the Owner; or
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.2 Deny liability in whole or in part and notify the Owner
citing reasons therefor.
5. If the Guarantor does not proceed as provided in Paragraph 4 with
reasonable promptness, the Guarantor shall be deemed to be in default on this
Guaranty fifteen days after receipt of an additional written notice from the
Owner to the Guarantor demanding that the Guarantor perform its obligations
under this Guaranty, and the Owner shall be entitled to enforce any remedy
available to the Owner. If the Guarantor proceeds as provided in Subparagraph
4.4, and the Owner refuses the payment tendered or the Guarantor has denied
liability, in whole or in part, without further notice the Owner shall be
entitled to enforce any remedy available to the Owner.
6. After the Owner has terminated the Construction Manager's right to
complete the Construction Management Contract, and if the Guarantor elects to
act under Subparagraph 4.1, 4.2, or 4.3 above, then the responsibilities of the
Guarantor to the Owner shall not be greater than those of the Construction
Manager under the Construction Management Contract, and the responsibilities of
the Owner to the Guarantor shall not be greater than those of the Owner under
the Construction Management Contract. Subject to commitment by the Owner of the
Balance of the Contract Price to mitigation of costs and damages on the
Construction Management Contract, the Guarantor is obligated without duplication
for the liabilities of the Construction Manager under the Construction
Management Contract including:
6.1 The responsibilities of the Construction Manager for
correction of defective work and completion of the Construction Management
Contract:
6.2 Subject to the limitations of the Construction Manager
Contract, additional legal, design, professional and delay costs resulting from
the Construction Manager's Default, and resulting from the actions or failure of
the Guarantor under Paragraph 4; and
6.3 Liquidated damages, caused by delayed performance or
non-performance of the Construction Manager to the extent provided for in the
Construction Management Contract.
7. The Guarantor shall not be liable to the Owner or others for
obligations of the Construction Manager that are unrelated to the Construction
Management Contract, and the Balance of the Contract Price shall not be reduced
or set off on account of any such unrelated obligations. No right of action
shall accrue on this Guaranty to any person or entity other than the Owner,
Lenders or their heirs, executors, administrators or successors.
8. The Guarantor hereby waives notice of any change, including
changes of time, to the Construction Management Contract or to related
subcontractors, purchase orders and other obligations, provided any such changes
or changes of time were approved with the prior written consent of Lenders.
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9. Any proceeding, legal or equitable, under this Guaranty may be
instituted in any court of competent jurisdiction in the location in which the
work or part of the work is located and shall be instituted within two years
after the Construction Manager Default or within two years after the
Construction Manager ceased working or within two years after the Guarantor
refuses or fails to perform its obligations under this Guaranty, whichever
occurs first. Except to the extent set forth herein, any non-jurisdictional
defense which would be available to Construction Manager shall be available to
Guarantor in any action or proceeding by Owner or Lenders.
10. Notice to the Guarantor shall be mailed or delivered to the
address shown on the signature page. Notice on the Owner and the Construction
Manager shall be mailed or delivered to the addresses shown on the Construction
Management Contract. Notice to the Lenders shall be mailed or delivered as
follows: Xxxxxxxx Natwest, Inc., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx, 00000, Attention: Xxxxx Xxxx and National Westminster Bank PLC, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Xxxxx Xxxxx.
11. Assignment to Lenders.
11.1 Guarantor recognizes and agrees that the Construction
Management Contract may be assigned to the Lenders as provided for in the
Construction Management Contract provided Lenders agree to pay Construction
Manager all sums then due and owing and, in the event thereof, Guarantor hereby
consents to such assignment and agrees that the terms of this Guaranty shall
not be modified or impaired by any such assignment as Lenders are, and shall be,
express beneficiaries of this Guaranty.
12. Definitions.
12.1 Balance of the Contract Price: The total amount payable by
the Owner to the Construction Manager under the Construction Management Contract
after the proper adjustments have been made, including allowance to the
Construction Manager of any amounts received or to be received by the Owner in
settlement of insurance or other claims for damages to which the Construction
Manager is entitled, reduced by all valid and proper payments made to or on
behalf of the Construction Manager under the Construction Management Contract.
12.2 Construction Management Contract: The agreement between the
Owner and the Construction Manager, including all Contract Documents and changes
thereto.
12.3 Construction Manager Default: Failure of the Construction
Manager, which has neither been remedied nor waived, to perform or otherwise to
comply with the terms of the Construction Management Contract.
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12.4 Owner Default: Failure of the Owner, which has neither been
remedied nor waived, to pay the Construction Manager as required by the
Construction Management Contract or to perform and complete or comply with the
other terms thereof.
GUARANTOR
X.X. XXXXX, INC.
a Delaware Corporation
/s/ Xxxxx X. Xxxxxx
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Name and Title: Xxxxx X. Xxxxxx
Xx. V.P. & CFO
Address: X.X. Xxxxx Drive, Charlotte, NC
22 Dec 1997
