Construction Agency Agreement

CONSTRUCTION AGENCY AGREEMENT


dated as of May 1, 1997


between


ATLANTIC-PACIFIC LAS VEGAS, LLC


and


VENETIAN CASINO RESORT, LLC


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TABLE OF CONTENTS


Page


1. DEFINITIONS...............................................................2
1.1 Defined Terms......................................................2


2. APPOINTMENT OF CONSTRUCTION AGENT.........................................2
2.1 Appointment........................................................2
2.2 Acceptance; Construction...........................................2
2.3 Commencement and Completion of Construction........................3
2.4 Term...............................................................3
2.5 Construction Documents and Related Agreements......................3
2.6 Scope of Authority.................................................6
2.7 Covenants of the Construction Agent................................8


3. AMENDMENTS; MODIFICATIONS................................................10
3.1 Amendments; Modifications.........................................10


4. PAYMENT OF FUNDS.........................................................10
4.1 Funding of Total Energy Improvements Costs........................10


5. CONSTRUCTION AGENCY EVENTS OF DEFAULT....................................11
5.1 Construction Agency Agreement Events of Default...................11
5.2 Damages...........................................................13
5.3 Remedies; Remedies Cumulative.....................................13


6. NO CONSTRUCTION AGENCY FEE...............................................14
6.1 ESA as Fulfillment of Owner's Obligations.........................14


7. NO OBLIGATION CURE CONSTRUCTION AGENT' EVENT OF DEFAULT..................14


8. MISCELLANEOUS............................................................15
8.1 Notices...........................................................15
8.2 Assignment........................................................15
8.3 GOVERNING LAW.....................................................16
8.4 Amendments and Waivers............................................16
8.5 Counterparts......................................................16
8.6 Severability......................................................16
8.7 Headings and Table of Contents....................................17
8.8 Limitations on Recourse...........................................17
8.9 Knowledge of Owner................................................17


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CONSTRUCTION AGENCY AGREEMENT


CONSTRUCTION AGENCY AGREEMENT, dated as of May 1, 1997 (this "Agreement"), between ATLANTIC-PACIFIC LAS VEGAS, LLC, a Delaware limited liability company ("Owner"), and VENETIAN CASINO RESORT, LLC, a Delaware Limited Liability Company (in its capacity as construction agent, the "Construction Agent").


PRELIMINARY STATEMENT


A. Construction Agent and Owner are parties to that certain Energy Services Agreement, dated of even date herewith (as amended, supplemented or otherwise modified from time to time pursuant thereto, the ("ESA)"), pursuant to which the Agent has agreed to accept from Owner, and Owner has agreed to provide to the Construction Agent, various energy and energy related services in accordance with the terms and conditions specified therein.


B. Subject to the terms and conditions hereof, (i) Owner desires to appoint the Construction Agent as its sole and exclusive agent for the design, construction and acquisition of the Energy Improvements and the Other Customers Facilities, and (ii) the Construction Agent desires, for the benefit of Owner, to cause the Energy Improvements and the Other Customers Facilities to be designed and constructed in accordance with and pursuant to the ESA, the Funding Agents' Disbursement and Administration Agreement and this Agreement, in each case in accordance with the terms therein and herein set forth.


NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:


1. DEFINITIONS


1.1 Defined Terms.
Capitalized terms used, but not otherwise defined, in this Agreement shall have the meanings set forth in the ESA.


2. APPOINTMENT OF CONSTRUCTION AGENT
2.1 Appointment.
Pursuant to and subject to the terms and conditions set forth herein, Owner hereby designates and appoints the Construction Agent as its exclusive agent for the design and construction of the Energy Improvements and the Other Customers Facilities in accordance with this Agreement, the Funding Agents' Disbursement and Administration Agreement and the ESA.


2.2 Acceptance; Construction.


The Construction Agent hereby unconditionally accepts such designation and appointment. The Construction Agent will cause the Energy Improvements and the other Customer Facilities to be designed and constructed in accordance with this Agreement, the ESA and in compliance with all applicable laws and insurance requirements.


2.3 Commencement and Completion of Construction.


The Construction Agent hereby agrees, unconditionally and for the benefit of Owner, to complete or cause to be completed the design, construction, installation, start-up, testing and completion of the Energy Improvements and the Other Customers Facilities.


2.4 Term.


This Agreement shall commence on the date hereof and shall terminate upon the first to occur of:


(a) termination of the ESA;


(b) termination of this Agreement pursuant to Article V hereof; or


(c) the date "Final Completion" is achieved, as defined and pursuant
to the provisions of the Construction Management Agreement ("Final
Completion Date").


2.5 Construction Documents and Related Agreements.


(a) The Construction Agent may execute any of its duties under this
Agreement by or through agreements with the Contractor, TSA of Nevada, LLP
and WAT&G, INC., NEVADA (collectively the "Contractors") for the design,
construction, start-up and testing of the Energy Improvements and the
Other Customers Facilities pursuant hereto (collectively the "Construction
Agreements"); provided, however, that no such delegation shall limit or
reduce in any way the Construction Agent's duties and obligations under
this Agreement and/or the ESA; provided, further, that


contemporaneously with the execution and delivery of this Agreement, the
Construction Agent has executed and delivered to Owner the Assignment of
Construction Agreements in the form of Exhibit A attached hereto, pursuant
to which the Construction Agent assigns to Owner effective upon the Final
Completion Date, among other things, all of the Construction Agent's rights
under and interest in, and Contractor's obligations to Construction Agent
with respect to, the Energy Improvements and the Other Customers Facilities
under such Construction Agreements (as hereinafter defined). In addition,
Construction Agent shall amend the Construction Management Agreement,
effective as of the Date of the ESA, to provide that title to any of the
equipment, material or facilities constituting any portion of the Energy
Improvements or the Other Customer Facilities shall be vested in Owner as
of the date of payment of the costs thereof pursuant to this Agreement, the
ESA and the Funding Agents Disbursement and Administration Agreement.


(b) The Construction Agent shall direct the Contractors to prepare,
or cause to be prepared, those additional technical, commercial, and
administrative documents and agreements (the "Construction Documents")
deemed reasonably necessary and desirable by Owner, and which are
otherwise permitted by the Construction Agreements, for the design,
construction, start-up and testing and operation of the Energy
Improvements and the Other Customers Facilities as contemplated by the
ESA. The Construction Documents shall include, but not be limited to,
plans, drawings, sketches, schematics, studies, reports, calculations,
specifications, bids, bid evaluations, purchase orders, subcontracts,
drawdown schedules, payment requisitions and construction schedules.


(c) Owner shall have the right to review all Construction Agreements
and Construction Documents for the purpose of advising the Construction
Consultant and the Contractors of methods of improving the design and
operation of the Energy Improvements and the Other Customers Facilities
based on Owner's experience in developing, designing, constructing,
owning, and operating similar facilities. Subject to any limitations set
forth in the Funding Agents' Disbursement and Administration Agreement,
Owner shall have the right to approve any amendments to any existing
Construction Documents and/or Construction Agreements related to the
Energy Improvements and/or the Other Customer ...