Agreement Between Owner And Architect

AGREEMENT BETWEEN OWNER AND ARCHITECT


Agreement is executed this: November 14, 1997


and dated and effective as of: January 1, 1996


BETWEEN:


the Owner: VENETIAN CASINO RESORT, LLC
3355 Las Vegas Boulevard, South
Las Vegas, Nevada 89109


and the Architect: a collaboration between the firms of:
TSA of Nevada, LLP
WAT & G, Inc. Nevada


The Project:


A mixed use hotel/casino complex (the "Project") which will be constructed in two phases, most of which is generally described, with respect to Phase I, in the Design Development documents dated March 31, 1997 and the "Architectural Area Summary" dated June 20, 1997, and with respect to Phase II, in the Square Footage Facilities Program attached hereto as Appendix A:


Phase I (to be constructed on the south portion of the site) will
have: a hotel tower with approximately 3,000 hotel suites; a podium
structure which will contain a casino of approximately 100,000 gross
square feet (gsf), banquet and meeting facilities, a showroom, and
support spaces, which will be shared by this hotel and a Phase II
hotel; a second level retail complex of approximately 485,000 gsf
(approximately 250,000 sf of gross leasable area (gla)) with an
upper


2


retail level approximately 485,000 gsf (approximately 250,000
gla); and a pool deck with public areas at the roof;
a parking structure for approximately 3,500 to 4,500 vehicles; a
two-level retail annex structure of approximately 28,000 gsf;
expansion to the Sands Exposition Center; a central utility plant to
serve both the south and north portions of the site; and site
improvements and infrastructure related to both the north and south
portions of the site. Phase II (to be constructed on the north
portion of the site) will have: a second hotel tower with
approximately 3,000 suites, substantially identical to the first
phase hotel tower for those portions of the tower above the podium;
a podium structure which will contain a casino of approximately
100,000 gsf, a showroom, support spaces, which will be shared by
this hotel and the Phase I hotel; a second level retail complex of
approximately 265,000 gsf (approximately 150,000 sf of gla) with an
upper retail level of approximately 265,000 gsf (approximately
120,000 gla); and a pool deck with public areas at the roof; a
parking structure for approximately 4,000 vehicles; and site
improvements and infrastructure related to both the north and the
south portions of the site. The site for this complex is the site of
the former Sands Hotel/Casino.


3


The Design Development Documents were, as scheduled, prepared and submitted on March 31, 1997.


The Owner and the Architect have agreed as set forth below.


AGREEMENT BETWEEN OWNER AND ARCHITECT


TABLE OF CONTENTS


Page


ARTICLE 1 ARCHITECT'S RESPONSIBILITIES.............................1


ARTICLE 2 SCOPE OF ARCHITECT'S BASIC SERVICES......................8


ARTICLE 3 ADDITIONAL SERVICES.....................................20


ARTICLE 4 OWNER'S RESPONSIBILITIES................................24


ARTICLE 5 CONSTRUCTION COST.......................................28


ARTICLE 6 USE OF ARCHITECT'S DRAWINGS
AND OTHER DOCUMENTS.....................................29


ARTICLE 7 TERMINATION, SUSPENSION OR ABANDONMENT..................31


ARTICLE 8 MISCELLANEOUS PROVISIONS................................36


ARTICLE 9 PAYMENTS TO THE ARCHITECT...............................44


ARTICLE 10 BASIS OF COMPENSATION...................................51


i


APPENDICES


APPENDIX A SQUARE FOOTAGE FACILITIES PROGRAM


APPENDIX B FORM OF PAYMENT REQUEST


APPENDIX C PROJECT DESIGN SCHEDULE


APPENDIX D CONSULTANTS


APPENDIX E DUTIES, RESPONSIBILITIES AND LIMITATIONS OF
AUTHORITY OF THE ARCHITECT'S PROJECT
REPRESENTATIVE


APPENDIX F INSURANCE REQUIREMENTS


APPENDIX G HOURLY BILLING RATE


APPENDIX H CONSTRUCTION DOCUMENT PACKAGES


APPENDIX I APPROVED ADDITIONAL SERVICES


APPENDIX J ASSUMPTIONS


ii


1


TERMS AND CONDITIONS OF AGREEMENT
BETWEEN OWNER AND ARCHITECT


ARTICLE 1


ARCHITECT'S RESPONSIBILITIES


1.1 Architect's Services.


1.1.1 The Architect's services consist of those services performed by the Architect, the Architect's employees and the Architect's consultants (the "Architect's Consultants") as enumerated in this Agreement. Except as set forth in Appendix D, no Architect's Consultant shall be engaged by Architect without Owner's prior written approval, provided that as of the execution date of this Agreement, the identity of the Architect's Consultants described in paragraph 2 of Appendix D and the terms of their engagement have been approved by Owner. Whenever an Architect's Consultant performs any Basic Service (as defined in Article 2.1), Architect shall be fully responsible for the performance of such Basic Service in accordance with the provisions hereof as if Architect itself had performed such Basic Service.


1.1.2 The Architect's services shall be performed as expeditiously as is consistent with professional skill and care and the orderly progress of the Work. Because parts of the Project will proceed under a "fast track" schedule, it is understood that the phases of service will overlap, and construction of some Project components will commence before the completion of Construction Documents (as defined in Article 2.5.1) for the applicable phase of the Project. Supplementing


2


Article 1.1.7, the Architect shall use diligent, professional efforts to minimize changes, inconsistencies, coordination errors, and similar problems which may occur as a result of the fast track process.


1.1.3 The Architect's services hereunder include the architectural and engineering services necessary to design the Project in compliance with all laws, rules, codes, regulations, orders and ordinances of any kind whatsoever issued or enacted by any governmental entity applicable to or affecting the Project ("Legal Requirements") and, to the extent reasonably required or reasonably requested by Owner or Owner's lenders, providing certificates to any such governmental entity, Owner and/or Owner's lenders attesting that to the best of Architect's information, knowledge and belief the documents prepared by Architect or at Architect's direction comply with Legal Requirements.


1.1.4 Architect has prepared and Owner has approved a project design schedule (the "Schedule") for the performance of the Architect's services and the services of Owner's Consultants. The Schedule was established based on (a) the fact that construction on the south portion (Phase I) will precede construction on the north portion (Phase II) and (b) the Owner's intent to occupy Phase I of the Project during the second quarter of 1999, and the Architect shall provide its services in strict conformity with these dates. Bovis (as defined in Article 1.1.7) shall coordinate and integrate the Project Schedule (as defined in the Bovis Agreement (as defined in Article 1.1.7)) with the Schedule. The Schedule identifies the design tasks with estimated dates of start and completion, relationships and dependencies, respon sibilities and milestone dates, and is attached hereto as Appendix C. The Schedule


3


includes allowances for periods of time required for the Owner's review and approvals, for the activities described in Article 1.1.7, and for approval of submissions by authorities having jurisdiction over the Project. If the actual period of time required for any such item is longer than the applicable allowance by reason of any act or failure to act of any person or entity (including Owner, Bovis and any Owner's Consultant or trade contractor) other than Architect and Architect's Consultants, the Schedule shall be appropriately adjusted, provided that Architect shall use diligent efforts to minimize the impact and duration of any such delay. The Schedule shall be updated and submitted by Architect to the Owner and Bovis for review and approval by Owner (which approval shall not be unreasonably withheld) periodically based on the Project demands and status to reflect current progress, additions, reductions, and other changes to the scope of the Architect's and Owner's Consultants' services. Architect shall comply with the Schedule, and if overtime work or any other special actions are required in order for Architect to comply with the Schedule, such work or other actions shall be at the expense of Architect. Subject to certain limitations on liability expressly set forth in this Agreement, and notwithstanding any of the foregoing, Architect shall in all events be responsible for all delays attributable to breaches by Architect of any provision hereof.


1.1.5 Owner intends to enter into contracts with various third party consultants ("Owner's Consultants") to perform various design functions in conjunction with Architect's services and/or to review Architect's services. All amounts paid to Owner's Consultants shall not reduce Architect's compensation hereunder. Owner's Consultants may include, without limitation, all consultants


4


described in paragraph 3 of Appendix D attached hereto. As a part of its duties, the Architect shall assist the Owner in the selection of Owner's Consultants by preparing requests for proposals, interviews, analysis of proposals, and recommendations. After selection, the Architect shall cooperate with, schedule, and coordinate the services and assist in the management of Owner's Consultants as set forth in more detail below. If Architect complies with the preceding sentence, Architect shall not be responsible for any delay in the Schedule caused by acts or omissions of Bovis and Owner's Consultants. The Architect shall advise the Owner regarding the quality, accuracy, timeliness, and technical sufficiency of the services provided by Owner's Consultants; provided, however, that the Owner recognizes that Owner's Consultants (and not Architect) are ultimately responsible for their work. Architect shall review and recommend payments to the Owner's Consultants, but shall not be responsible for their payment.


1.1.6 In the process of performing the services set forth in Articles 2.2-2.5, Architect shall issue drawings in accordance with the Schedule. Copies of each drawing will be made available to Bovis, accompanied by a transmittal letter stating which parties should receive a copy of such drawing; Bovis, and not Architect, shall then be responsible for dissemination to all such parties.


1.1.7 Architect's Relationship With Construction Manager.


(a) Owner has entered into an agreement (the "Bovis Agreement") with Lehrer McGovern Bovis, Inc. ("Bovis") pursuant to which Bovis shall perform construction management services in connection with Phase I of the Project. Architect acknowledges and confirms that the Bovis Agreement provides for


5


an at-risk Guaranteed Maximum Price ("GMP") for Phase I of the Project, that the GMP will be adjusted from time-to-time, and that the GMP is based on certain qualifications, assumptions, exclusions and allowances which may change from time-to-time in accordance with the Bovis Agreement. The above-described qualifications, assumptions, exclusions and allowances as of the execution date of this Agreement that are relevant for purposes of this Agreement (collectively, the "Assumptions") are attached to this Agreement as Exhibit J, and Owner shall promptly inform Architect of any changes to the GMP or Assumptions.


(b) Unless otherwise directed by Owner, all Construction Documents (as defined below) (including all revisions of same) shall be consistent with the Assumptions then in effect and the approved Design Development Documents (as defined below). Architect shall promptly advise Bovis and Owner upon Architect becoming aware of any inconsistencies between one or more of the Assumptions and the approved Design Development Documents, and shall follow Owner's directions with respect to whether the Construction Documents shall be consistent with such Assumptions or with the approved Design Development Documents.


(c) All drawings and other documents prepared by Architect pursuant to Articles 2.3-2.5 (including all revisions of same) (collectively, the "Drawings") shall be reviewed by Owner and Bovis, are subject to Owner's approval and shall, subject to subsection 1.1.7(d), be revised as Owner directs (all such approvals and directions to be in accordance with Article 4.3). In addition, Bovis shall consult with Architect in connection with the preparation of all Drawings


6


and shall supervise, manage and coordinate the "value engineering" process pursuant to which, among other things, (i) Owner and Bovis shall provide Architect with information that will enable Architect (to the extent feasible) to prepare Drawings that are consistent with all allowances (as defined in the Bovis Agreement) (subject to any changes desired by Owner), (ii) Architect shall prepare Construction Documents in accordance with Article 1.1.7(b), (iii) Architect shall study and consider cost savings, value engineering and similar proposals made by Owner or Bovis, shall itself make such proposals as appropriate, and shall, with Owner's approval, implement such proposals, (iv) during the design phases of the Project, Architect shall promptly advise Owner and Bovis in writing whenever, in Architect's best judgment as a design professional familiar with the construction industry, the information contained in a Drawing is inconsistent with any cost estimates or cost information previously provided to Architect by Owner or Bovis, (v) whenever Architect makes a modification to a Construction Document that has been "sealed" and submitted to the applicable governmental authority, such modification shall "bubble" the changes made, (vi) Architect shall, promptly following Architect's submission of each Construction Document (or revision thereto) with respect to which the foregoing clause (v) does not apply, and promptly following Architect's submission of any revision of a Design Development Document, verbally describe to Owner and Bovis, at a meeting attended by Owner, Bovis and Architect, all material differences between such Construction Document and the approved Design Development Document(s) covering the same components of the Project, or between the revision and the prior version of the applicable Drawing, as applicable (Owner acknowledging and


7


confirming that with respect to initial submissions of Construction Documents, progressions, refinements and detailings that are natural when architectural drawings advance from the design development phase to the construction phase are not material differences for purposes of this clause (vi)), and shall promptly prepare or cause the appropriate Architect's Consultants to promptly prepare (and distribute to Owner and Bovis) a written list of all such material differences covered by each such verbal description, and (vii) subject to Section 2.6.7, whenever Bovis submits to Architect a plan, proposal, specification, drawing or request for information or clarification, Architect shall respond promptly, and in all events within seven (7) days, either graphically or in writing (as appropriate), with such information, clarification, approval, rejection or other decision, provided that if it is not reasonably feasible for Architect to so respond within seven (7) days, Architect shall, within such 7-day period, give Bovis a written explanation as to why such response is not reasonably feasible, and shall in all events so respond within seven (7) days after the expiration of said 7-day period. In addition, if Bovis notifies Architect that (1) the implementation of a proposed Drawing would violate applicable Legal Requirements, (2) any portion of a drawing is not constructible, and/or (3) a Drawing is inconsistent with any of the Assumptions, Architect shall, unless Owner otherwise directs, and taking into account all advice and information given to it by Owner and Bovis, promptly (and in accordance with the Schedule) revise the applicable Drawing as necessary and appropriate so as to make it constructible and/or consistent with both the Assumptions or Legal Requirements, as applicable, and Owner's requirements for the Project, provided that if the notification from Bovis is made after the applicable


8


Drawing has been approved by Owner, Architect shall not so revise such Drawing unless requested to do so by Owner in writing in accordance with Article 4.3. Architect shall cooperate and work with Owner and Bovis as contemplated by the foregoing. Notwithstanding any term or provision of this Agreement, Owner acknowledges that Architect shall have no obligation or legal responsibility with respect to the establishment of the GMP, or any construction costs, pricing or compliance with the GMP, except as expressly set forth in this Agreement.


(d) Modifications of Drawings shall not be deemed an Additional Service if either (i) Owner's direction to make such modification is received (or, in the case of Article 2.5.2 only, the necessity to make such modification first arises), before such Drawing is approved by Owner (unless, with respect to a Construction Document, such modification involves a material change in the design intent of the Project as indicated by the approved Design Development Documents); (ii) such modification, in the case of a Design Development Document, is not a change in quality or scope; or (iii) such modification is necessitated by a change in Legal Requirements effectuated before the applicable Drawing is approved by Owner or that Architect should, in the exercise of due diligence, have anticipated.


ARTICLE 2


SCOPE OF ARCHITECT'S BASIC SERVICES


2.1 Definition. The Architect's basic services ("Basic Services") consist of those services described in Article 1, this Article 2 and all other provisions


9


of this Agreement other than Article 3, and includes necessary and appropriate structural, mechanical, plumbing and electrical engineering services.


2.2 Pre-Schematic Design Phase. Prior to the execution of this Agreement, Architect, beginning on January 2, 1996, provided Pre-Schematic Design Services, including Master Planning, Programming and Thematic Design under separate letter agreements dated February 1 and April 17, 1996. The Master Plan, Program, and Theme Concept which were developed generally define the requirements of each component of the Project and were approved by Owner prior to the execution of this Agreement.


2.3 Schematic Design Phase.


2.3.1 The Architect has provided a preliminary evaluation of the Owner's program, planning, and schedule requirements, each in terms of the other.


2.3.2 Supplementing Article 1.1.7, the Architect has prepared and reviewed with the Owner alternative approaches to design and construction of the Project and has submitted this information to Owner and Bovis in a reasonable format. Architect has assisted, and shall continue to assist, in evaluating the functional, cost, and time benefit of alternative approaches to design and construction, whether such alternative was proposed by the Architect, Bovis or by others.


2.3.3 Based on the mutually agreed upon Master Plan, Program, and Theme Concept, and directions from Owner, Architect has prepared, and Owner approved prior to the execution date of the Agreement, Schematic Design Documents consisting of drawings and other documents to establish the scope and


10


quality of the Work, and illustrating the scale and relationship of Project components. Subject to the provisions of Article 1.1.5, the Architect has incorporated into the Schematic Design Documents the documentation and services performed by Owner's Consultants.


2.3.4 Architect has engaged in a series of "charettes" with Owner to complete the Schematic Design phase. Appropriate senor design staff of Architect were available in Las Vegas during these periods.


2.4 Design Development Documents Phase.


2.4.1 On March 31, 1997, the Architect submitted, for approval by the Owner, Design Development Documents consisting of drawings and other documents to fix and describe the size and character of the Project as to architectural, structural, mechanical and electrical systems, materials and such other elements as may be required or appropriate to complete the Project. Subject to Owner's comments and clarifications, the Design Development Documents have been approved by Owner and were based on the approved Schematic Design Documents and directions from Owner and, subject to the provisions of Article 1.1.5, incorporated the documentation and services that at the time had been performed by Owner's Consultants.


2.5 Construction Documents Phase.


2.5.1 Based on the approved Design Development Documents and the Assumptions then in effect, but subject to any contrary directions from Owner, the Architect will proceed to prepare, for approval by Owner, the Construction Documents (i.e., the (a) graphic and pictorial descriptions of the Project,


11


showing the design, location and dimensions of each component thereof, generally including plans, elevations, sections, details, schedules and diagrams and (b) written requirements for materials, equipment, construction systems and standards of workmanship) required to construct the Project and covering the items set forth in Appendix H. Subject to the provisions of Article 1.1.5, Architect shall incorporate into the Construction Documents the documentation and services performed by Owner's Consultants.


2.5.2 If, during the Construction Documents or Construction Phase Owner elects to utilize a proprietary system or component, or to furnish a system or components for which final drawings and specifications will be furnished by Bovis, a trade contractor or an Owner's Consultant, Owner agrees that (a) such drawings and specifications shall bear the seal and signature of an appropriately registered design professional, and (b) Architect shall not be responsible for the accuracy, completeness, and technical sufficiency thereof. However, Architect shall be responsible for coordinating such work into the overall Project and the Construction Documents, provided that any modifications to Drawings necessitated by such work shall be governed by Article 1.1.7(d).


2.5.3 Architect understands that the second (north) hotel tower, to be constructed on the north portion of the site, will be substantially similar to the first (south) hotel tower for those portions of the tower above the podium; that construction of the north tower will begin later than the south tower; and that it shall not be "fast tracked." Therefore, the Construction Documents prepared for the design of the north hotel tower will reflect the approved Phase I Construction Documents,


12


any design changes made or incorporated during the Construction Phase for Phase I, and any further directions from Owner (which are likely to include a decision by Owner that the entire exterior of the north tower will be designed with a substantially different character and appearance than that of the south tower), and shall be submitted to Owner for approval when requested by Owner.


2.6 Construction Phase.


2.6.1 The Architect's responsibility to provide the Basic Services for the Construction Phase under this Agreement commences as of the date hereof and terminates, with respect to each phase of the Project, four (4) months after the Substantial Completion Date (as defined below) of such phase (but no later than August 21, 1999 for Phase I and the Phase II Outside Date (as defined in Article 3.4) for Phase II). As used herein, "Substantial Completion Date" shall mean the date, as agreed to by Owner and Bovis, on which substantial completion of such phase was achieved.


2.6.2 The Architect shall, as directed by the Owner and in a cooperative effort with Owner's Development Management Staff (as defined in Article 8.13), provide administration of construction as set forth below.


2.6.3 The Architect shall visit the site at least once a week (and shall cause Architect's Consultants to visit the site at least once a week during the stages of construction pertinent to their disciplines) to become generally familiar with the progress and quality of the Work and to determine in general if the Work is being performed in a manner indicating that the Work when completed will be in accordance with the Contract Documents. However, the Architect shall not be


13


required to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work. On the basis of on-site observations as an architect and any other available information, the Architect shall keep the Owner informed of the progress and quality of the Work, and shall endeavor to guard the Owner against, and inform the Owner of, defects and deficiencies in the Work, and, upon request by the Owner, shall advise about remedial measures. The Architect shall work in a cooperative effort with the Owner's Development Management Staff to represent the Owner's interests in regard to the construction of the Project.


2.6.4 The Architect shall not have control over or be in charge of, nor be responsible for construction means, methods, techniques, sequences or procedures, or for safety precautions and programs in connection with the Work. The Architect shall not be responsible for Bovis' or any trade contractor's schedules or failure to carry out the Work in accordance with the Contract Documents not caused by Architect, but shall be required to notify the Owner in writing if Architect learns of any such deviations. The Architect shall not have control over or charge of acts or omissions of Bovis, trade contractors, subcontractors, their agents or employees, or of any other persons performing portions of the Work.


2.6.5 The Architect shall at all times have access to the Work wherever it is in preparation or progress.


2.6.6 All communication from the Architect and Architect's Consultants to Bovis shall be forwarded through Owner except for communications pursuant to Article 1.1.7(c). Communications by and with the Architect's Consultants


14


shall be through the Architect, and the Architect shall copy the Owner on all communications with Architect's Consultants and Owner's Consultants.


2.6.7 The Architect shall review and approve or take other appropriate action upon submittals by Bovis such as Shop Drawings, Product Data and Samples, but only for the limited purpose of checking for conformance with the Contract Documents. Pursuant to Section 3.3.25 of the Bovis Agreement, (a) Bovis shall receive and review ...