GUARANTEED MAXIMUM PRICE AMENDMENT TO
CONSTRUCTION MANAGEMENT AGREEMENT
THIS GUARANTEED MAXIMUM PRICE AMENDMENT (this "GMP Amendment") is made
and entered into as of June 17, 1998, by and between VENETIAN CASINO RESORT,
LLC, a Nevada limited liability company having its office at 3355 Las Vegas
Boulevard South, Las Vegas, NV 89109 ("Owner"), and LEHRER McGOVERN BOVIS, INC.,
a New York corporation having its office at 200 Park Avenue, New York, NY 10166
("Construction Manager") (collectively referred to herein as "the Parties").
WHEREAS, Construction Manager and Las Vegas Sands, Inc., a Nevada
corporation having its office at 3355 Las Vegas Boulevard South, Las Vegas, NV
89109 ("LVSI") entered into a Construction Management Agreement (the
"Agreement"), dated February 15, 1997, regarding the project known as the Grand
Venetian Hotel/Casino; and
WHEREAS, the Parties, LVSI and others executed an Assignment, Assumption
and Amendment of Construction Management Agreement (the "Amendment"), dated
November 14, 1997, by virtue of which Owner became the successor in interest to
LVSI with respect to the Agreement and other provisions of the Agreement were
amended; and
WHEREAS, the Agreement further provides that the Parties shall execute
an amendment to the Agreement setting forth the Final Guaranteed Maximum Price
("Final GMP") and the Assumptions; and
WHEREAS, the Parties now desire to establish the Final GMP and to set
forth other contract provisions which are necessary to effectuate the Parties'
intended agreement on the Final GMP;
NOW, THEREFORE, the Parties agree as follows:
1. Defined Terms All capitalized terms used and not defined herein shall
have the respective meanings ascribed thereto in the Agreement.
2. Agreement as Amended "Agreement" as used herein shall be deemed to
include amendments thereto effected by the Amendment.
3. Final GMP The Final GMP shall be $624,375,494. This sum is comprised
of:
a. Trade Costs of $583,000,000;
b. Reimbursable Costs of $31,375,494; and
c. Contingency of $10,000,000.
The Parties have agreed to the Final GMP based upon the Anticipated Cost Report
dated June 17, 1998, rev.1 ("ACR"), which report is attached hereto as Appendix
10 for the specific purpose set forth in Paragraph 11, herein, and the primary
components of which are summarized in Appendix 1, attached hereto.
4. Trade Costs The Trade Costs component of the Final GMP shall be
$583,000,000, which shall include all trade contracts, labor, materials and
services necessary to accomplish the Work (as defined in Paragraph 12, herein,
and Appendix 7, attached hereto) and shall be deemed, along with the
Reimbursable Costs as a lump sum amount for the completion of the Work, in
accordance with Paragraph 11 of this GMP Amendment, subject to adjustment in
accordance with the terms of the Agreement and this Amendment, including but not
limited to adjustment for allowances, as set forth in Section 7 below.
a. Reimbursable Costs Section 6.3, paragraph B, of the Agreement is
hereby deleted in its entirety and the following sentence is hereby added in
lieu thereof: "The Reimbursable Costs component of the Final GMP shall be
$31,375,494 and shall be deemed to include $18,985,494 for Construction
Manager's General Conditions and $12,390,000 for Construction Manager's Staff
Costs, and shall be deemed, along with the Trade Costs as a lump sum amount."
b. The lump sum amount referred to above is $614,375,494.
5. Contingency Section 6.3, paragraph C, of the Agreement is hereby
amended as follows:
a. Delete the first sentence in its entirety and add the following
sentence in lieu thereof: "A Contingency sum of $10,000,000."
b. Add at the end of the last sentence: "If final Work Charges are less
than the Final GMP, as may be amended in accordance with the Agreement, savings
are split 75% to Construction Manager and 25% to Owner, provided that to the
extent final Work Charges are less than the sum of 3(a) and 3(b) above, then
Construction Manager shall receive 100% of the savings."
6. Construction Management Fee Section 2.1 of the Agreement is hereby
amended as follows: Delete the phrase "set forth on Schedule A attached hereto
and made a part hereof" from the second sentence and add in lieu thereof the
phrase "according to Section 6.1." Section 6.1 of the Agreement is hereby
deleted in its entirety and the following sentence is hereby added in lieu
thereof: "The Construction Management Fee shall be a lump sum fee of $9,000,000,
of which $4,637,534.72 has been paid or invoiced to date and the balance of
which shall be paid according to Appendix 2 to the GMP Amendment. This fee is
paid in full and final settlement of all outstanding preconstruction phase
charges and fees."
7. Allowances a. The Allowances provided for in Exhibit B of the
Agreement are substituted for by the Allowance Items set forth in Appendix 3
hereto which sets out the amounts remaining to be purchased for allowance items.
These items along with commitments already made for Allowance Items are included
in the Final GMP. As said Allowance Items are replaced with binding components
of the Guaranteed Maximum Price, as set forth in the last sentence of Article
6.3 (A) of the Agreement, the Final GMP will be adjusted accordingly.
b. The Trade Costs component of the Final GMP is net of OCIP Allowances.
OCIP credits for future commitments have been calculated at an estimated rate of
2.5% of bid prices. To the extent that the total of all achieved OCIP credits
after trades are closed varies from the credits recorded to date and the
anticipated additional credits, the Final GMP shall be adjusted accordingly.
Appendix 9 provides a detailed analysis of the OCIP credits as of June 17, 1998.
Appendix 9a supplies the agreed upon terms of Schedule F, Insurance Contract
Language, which Exhibit is referred to in the Agreement and is effective as of
May 1, 1998. It also includes the agreed upon Description of AON and Lehrer
McGovern Bovis, Inc.'s Responsibilities and Duties.
8. Value Engineering The Parties recognize that the Trade Costs
component of the Final GMP contains certain Value Engineering savings which the
Parties have achieved or have anticipated achieving as reflected in the ACR and
as identified in Appendix 4. The Parties will cooperate with each other with the
aim of realizing these Value Engineering savings. If these planned Value
Engineering items are or have been implemented by Owner and issued in a timely
fashion for construction by the design team then Construction Manager shall bear
the risk or the benefit of achieving the amount of Value Engineering savings set
forth for these items in Appendix 4, with no adjustment to the GMP. If the
potential Value Engineering items are not so implemented, the Final GMP shall be
increased accordingly.
9. Early Completion of Parts of the Work Construction Manager shall
exert its best efforts to achieve Substantial Completion of the parts of the
Work described in Appendix 5 on or before April 13, 1999. If Substantial
Completion of those Appendix 5 parts of the Work cannot be achieved on or before
April 13, 1999, Construction Manager will so notify Owner on or before December
14, 1998. The Work to be substantially completed by April 13, 1999 (in
accordance with Appendix 5 or as modified by any notice given on or before
December 14, 1998) shall be incorporated within the schedule referred to below,
which shall be amended accordingly. Construction Manager
understands and agrees that Owner is relying upon and shall be entitled to rely
upon such schedule. Owner agrees that Construction Manager shall have no
liability for its failure to meet the April 13, 1999 early completion date so
long as it has exerted its best efforts to do so.
10. Date for Substantial Completion It remains the obligation of
Construction Manager (subject to the provisions of this paragraph) to achieve
Substantial Completion of the Work on or before April 21, 1999, in accordance
with the Schedule attached as Appendix 8 and made a part hereof. Construction
Manager shall achieve Substantial Completion on or before that date, except for
those limited portions of the Project identified in Appendix 6. With respect to
those areas identified in Appendix 6, Construction Manager will exert its best
efforts to achieve Substantial Completion of the same on or before April 21,
1999 and shall guarantee the Substantial Completion of all of these areas no
later than June 21, 1999, phased in accordance with Appendix 6.
11. The Work The Work to be completed shall be as defined herein and by
Appendix 7 hereto. It is expressly agreed that Architect's Instructions (ASI's)
numbers 102B, 106A, 111, and 119, and any and all ASI's or other Owner
instructed changes to the Work received by Construction Manager on or after June
17, 1998 shall be deemed changes in the Work. To further clarify the definition
and scope of the Work, it is agreed that the order of precedence to determine
the definition of the Work is first, the language of this Amendment including
Appendix 3 - Summary of Allowances and Appendix 4 Schedule of Value Engineering
included in Anticipated Cost Report Dated June 17, 1998, rev.1, and then,
second, Appendix 7 - List of Documents and then third Appendix 10 - Anticipated
Cost Report dated June 17, 1998, rev.1. The Anticipated Cost Report (ACR) dated
June 17, 1998, rev.1 is included for the specific purpose of providing further
definition of the Work and so as to include those items not specifically shown
on any of the drawings and specifications included in the List of Documents, but
which are included within the ACR and therefore are part of the Trade Costs
amount of $583,000,000. Section 1.6 of the Agreement is hereby amended as
follows: Delete "the plans, drawings, and specifications prepared, approved or
re-evaluated by Architect; all approved written or graphic interpretations,
clarifications, amendments, and changes to any of the foregoing documents;
change orders; and scope changes" and add in lieu thereof "those documents
and/or drawings identified in Appendix 7 to the GMP Amendment and any change
orders or Scope Changes issued pursuant to and in accordance with the terms of
this Agreement in respect thereof." Paragraph 5, Amendment to the Agreement,
subparagraph (b), of the Amendment is hereby deleted in its entirety and the
following sentence is hereby added in lieu thereof: "The `List of Documents' set
forth as Section 3 of Exhibit B of the Agreement is hereby deleted and replaced
in its entirety by Appendix 7 to the GMP Amendment."
12. Further Modifications The Parties further agree to the following
changes in the terms and conditions of the Agreement:
a. The second sentence of Section 3.3.10 is deleted in its entirety.
b. The following language is added to the end of Section 6.6:
"Owner and Construction manager recognize that achievement of
Substantial Completion within the contract period requires the
expedited review and approval of any new or revised Drawing(s)
received by Construction Manager on or after June 17, 1998.
Therefore and notwithstanding any other provision of this Agreement,
the following provisions shall apply to the same:
6.6.1 Within four (4) business days of Construction Manager's
receipt of any such new or revised Drawing(s), Owner and
Construction Manager will endeavor to meet jointly with
Architect to obtain Architect's explanation of all revisions
to the Work which would be required to implement the subject
Drawing(s). Owner, Construction Manager and Architect will
simultaneously engage in discussions with a view to
establishing an order of magnitude assessment of the cost and
time implications of such Drawing(s) and Owner will render a
written decision within one (1) business day as to whether the
Drawing(s) should be implemented. Owner shall use diligent
efforts to obtain Architect's cooperation in respect of the
foregoing,
6.6.2 For any new or revised Drawing(s) with respect to which it is
not possible for Owner and Construction Manager to obtain a
timely presentation from Architect as to the resultant
revisions to the Work, Construction Manager shall provide
Owner with an order of magnitude assessment of the cost and
time implications of the same within four (4) business days of
Construction Manager's receipt of the subject Drawing(s).
Within one (1) business day of receipt by Owner of any such
order of magnitude assessment, Owner shall instruct
Construction Manager in writing either to implement the
subject Drawing(s) or to disregard the same. Owner shall use
its best efforts to have the Architect precisely identify any
revisions to any Drawing(s) and provide a written description
of each change introduced by any revised Drawing(s).
6.6.3 If Construction Manager fails to provide Owner with any order
of magnitude assessment, required under Section 6.6.2, within
the proscribed four (4) business day period then Construction
Manager shall be responsible for any resulting additional
costs and/or delays, but only to the extent that such
additional costs and/or delays are attributable to
Construction Manager's delayed submission of the subject order
of magnitude assessment. If Owner fails to provide
Construction Manager with instructions, required under Section
6.6.2, as to the implementation of any new or revised
Drawing(s) within the proscribed one (1) business day time
period then Construction Manager shall be entitled to a
day-for-day extension of time equal to the duration of Owner's
delay in providing such instructions to the extent that
Construction Manager can demonstrate a delay to the completion
of the Work attributable to such Owner's delay.
6.6.4 If, subsequent to Owner's approval of any new or revised
Drawings under Section 6.6.1 or Section 6.6.2, Owner
determines not to implement the subject Drawing(s) then Owner
shall bear the costs of any out-of-pocket expenses reasonably
incurred by Construction Manager and/or by any Trade
Contractor(s) in connection with the same and prior to Owner's
cancellation of the work."
c. The following phrase is added to the end of the second sentence
of Section 6.8: ", and/or as provided in the GMP Amendment."
d. The following phrase is added to the end of the second
parenthetical of Section 6.9, paragraph (b): ", and/or as provided in the GMP
Amendment."
e. The following sentence is added after the second sentence of Section
10.7, paragraph (a): "ASI's 102B, 106A, 111, and 119, and any and all ASI's
and/or other Owner instructed changes received by Construction Manager on or
after June 17, 1998 shall be deemed changes in the Work."
13. Work Charges Savings Section 6.9, paragraph (a) of the Agreement is
deleted in its entirety and the following sentences added in lieu thereof: "Upon
Final Completion of the Work, if the total actual Work Charges are less than the
Final Guaranteed Maximum Price (as established pursuant to Section 6.8 and this
GMP Amendment and as may be adjusted in accordance with Section 10.7 and/or as
otherwise provided in the GMP Amendment), then one-hundred percent (100%) of the
difference ("savings") shall be allocated to Construction Manager except for any
savings which result from additional Value Engineering or savings which accrue
on any of the Allowances set forth in Appendix 3, which shall be allocated to
the Owner, and except for and subject to the provisions of Paragraph 5(b) of
this GMP Amendment. Owner shall pay savings to Construction Manager as
additional compensation simultaneously with the final Construction Management
Fee installment payment pursuant to Appendix 2 of the GMP Amendment."
14. Modification of the Agreement The Agreement shall be deemed modified
as necessary to give effect to the terms of this GMP Amendment and the failure
to specify herein any amendment to any provision of the Agreement which contains
terms contrary to the terms of this GMP Amendment shall not be construed as a
waiver of such amendment and shall not be asserted by either party as a defense
to the enforcement of the terms of this GMP Amendment. Accordingly, the
following phrase is hereby added at the end of the last sentence of Section 2.5
of the Agreement: ", except as otherwise provided in the GMP Amendment." All
other provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this GMP Amendment has been entered into as of the
date first written above.
LEHRER McGOVERN BOVIS, INC. VENETIAN CASINO RESORT, LLC
By: /s/ Pete Marchetto By: /s/ W. P. Weidner
--------------------------------- ---------------------------------
Pete Marchetto W. P. Weidner
President President and Chief
Operating Officer
Reviewed and Approved By:
/s/ M. E. Bennett
- ---------------------------------------------
M. E. Bennett
President and Chief Executive Officer
Pinnacle One, Inc.
On behalf of the Insurers listed collectively
In C.J. Coleman & Company Ltd. Cover Notes
No's P43917 and P00256097, which Insurers
Issued the Liquidated Damage Insurance
Policies for this Project
This approval is subject to the condition that the term "Substantial Completion"
as defined in the Agreement, as amended by the GMP Amendment, shall not include
the Work relating to the areas identified in Appendix 6 to the GMP Amendment.