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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 1-6697
MIRAGE RESORTS, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 88-0058016
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3400 LAS VEGAS BOULEVARD SOUTH
LAS VEGAS, NEVADA 89109
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 791-7111
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock ($.008 par value per share) New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K: _X_
The aggregate market value of the Registrant's Common Stock held by
non-affiliates (all persons other than executive officers or directors) of the
Registrant on March 1, 1996 (based on the closing sale price per share on the
New York Stock Exchange Composite Tape on that date) was $3,567,731,496.
The Registrant's Common Stock outstanding at March 1, 1996 was 92,039,541
shares.
Portions of the Registrant's definitive Proxy Statement for its May 23, 1996
Annual Meeting of Stockholders (which has not been filed as of the date of this
filing) are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
GENERAL
Mirage Resorts, Incorporated (the "Registrant" or the "Company") was
incorporated in Nevada in 1949 as the successor to a partnership that began
business in 1946. The Registrant, through wholly owned subsidiaries, owns and
operates (i) The Mirage, a hotel-casino and destination resort on the Las Vegas
Strip, (ii) Treasure Island at The Mirage ("Treasure Island"), a hotel-casino
resort adjacent to The Mirage, (iii) the Golden Nugget, a hotel-casino in
downtown Las Vegas and (iv) the Golden Nugget-Laughlin, a hotel-casino in
Laughlin, Nevada.
The Registrant, through a wholly owned subsidiary, is constructing
"Bellagio," a major new 3,000-guest room luxury hotel, casino and resort
facility on 120 acres near the center of the Las Vegas Strip. Additionally, the
Registrant, through a wholly owned subsidiary, is a 50% partner in a joint
venture that is constructing "Monte Carlo," a 3,024-guest room, mid-priced
resort on 46 acres located adjacent to the Bellagio site.
THE MIRAGE
The Registrant's wholly owned subsidiary, THE MIRAGE CASINO-HOTEL ("MCH"),
owns and operates The Mirage. The Mirage opened in 1989 and is located on
approximately 120 acres near the center of the Las Vegas Strip.
The Mirage is a luxurious, tropically themed destination resort containing
approximately 3.1 million square feet in a 29-story Y-shaped hotel tower and an
expansive low-rise complex. The Mirage features a 95,500-square foot casino,
3,044 hotel rooms (including 265 suites and 14 villa and lanai suites),
approximately 82,000 square feet of meeting, convention and banquet space, a
parking garage with space for approximately 2,200 vehicles, a valet parking
garage with space for approximately 1,830 vehicles shared with Treasure Island,
surface parking for approximately 1,650 vehicles, a 1,500-seat showroom
showcasing the world-famous illusionists Siegfried & Roy, five gourmet
restaurants, a California-style pizza restaurant, a coffee shop, a buffet, four
bars (two featuring live entertainment), two snack bars, an ice cream parlor, a
health spa and beauty salon, a swimming pool and cabana area, a white tiger
display and extensive retail facilities. During 1995, all of the standard guest
rooms and 61 of the suites were extensively refurbished and enhanced. The
exterior of the resort is landscaped with palm trees, abundant foliage and more
than four acres of lagoons and other water features centered around a 54-foot
simulated volcano and waterfall. Each evening, the volcano erupts at regular
intervals, spectacularly illuminating the front of the resort. Inside the front
entrance is an atrium with a tropical garden and additional water features
capped by a 100-foot-high glass dome. The atrium has an advanced environmental
control system and creative lighting and other special effects designed to
replicate the sights, sounds and fragrances of the South Seas. Located at the
rear of the hotel, adjacent to the swimming pool area, is a dolphin habitat with
seven Atlantic bottlenose dolphins.
As of March 1, 1996, The Mirage's casino offered 119 table games (including
blackjack, craps, roulette, baccarat, mini-baccarat, let it ride, pai gow, pai
gow poker, Caribbean stud poker and big six), keno, poker, a race and sports
book and approximately 2,255 slot machines or similar coin-operated devices.
TREASURE ISLAND
The Registrant, through Treasure Island Corp. ("TI Corp."), a wholly owned
subsidiary of MCH, owns and operates Treasure Island. Treasure Island opened on
October 26, 1993 and is located on the same site as The Mirage.
Treasure Island is a pirate-themed hotel-casino resort featuring a
78,400-square foot casino, 2,900 hotel rooms (including 212 suites), two gourmet
restaurants, an Italian specialties grill, a coffee shop, a buffet, three snack
bars, an ice cream parlor, five bars (two featuring live entertainment), a
1,500-seat showroom featuring "Mystere" (a production developed by the creators
of the world-renowned Cirque du Soleil) and
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an 18,000-square foot amusement arcade. Treasure Island also offers extensive
retail facilities, approximately 18,000 square feet of meeting and banquet
space, two wedding chapels, a swimming pool with a 230-foot water slide, a
parking garage with space for approximately 2,400 vehicles and the previously
mentioned valet parking garage shared with The Mirage. The front of Treasure
Island, facing the Las Vegas Strip, is an elaborate pirate village in which
full-scale replicas of a pirate ship and a British frigate periodically engage
in a pyrotechnic and special effects sea battle, culminating with the sinking of
the frigate.
As of March 1, 1996, Treasure Island's casino offered 82 table games
(including blackjack, craps, roulette, baccarat, mini-baccarat, let it ride, pai
gow, pai gow poker, Caribbean stud poker and big six), keno, poker, a race and
sports book and approximately 2,160 slot machines or similar coin-operated
devices.
GOLDEN NUGGET
The Registrant's wholly owned subsidiary, GNLV, CORP. ("GNLV"), owns and
operates the Golden Nugget. The Golden Nugget, together with its parking
facilities, occupies approximately two and one-half square blocks in downtown
Las Vegas, approximately five miles from The Mirage and Treasure Island. The
Golden Nugget features a 38,000-square foot casino, 1,907 hotel rooms (including
102 suites), two gourmet restaurants, a California-style pizza restaurant, a
coffee shop, a buffet, a snack bar, three bars, an entertainment lounge, a
ballroom/showroom, approximately 23,000 square feet of meeting and banquet
space, two gift and retail shops, two hotel lobbies with guest registration
facilities, a swimming pool and lounge area, a health spa, a beauty salon and
two parking garages with space for approximately 1,050 vehicles.
As of March 1, 1996, the Golden Nugget's casino offered 65 table games
(including blackjack, craps, roulette, baccarat, mini-baccarat, pai gow poker,
Caribbean stud poker, red dog and big six), keno, a race and sports book and
approximately 1,305 slot machines or similar coin-operated devices.
GOLDEN NUGGET-LAUGHLIN
The Registrant's wholly owned subsidiary, GNL, CORP. ("GNL"), owns and
operates the Golden Nugget-Laughlin, a hotel-casino in Laughlin, Nevada,
approximately 90 miles south of Las Vegas. The hotel-casino is located on
approximately 13 acres with 600 feet of Colorado River frontage near the center
of Laughlin's tourist strip. The Golden Nugget-Laughlin features a 32,000-square
foot casino, 300 hotel rooms (including four suites), three restaurants, three
bars, an entertainment lounge, a deli and a gift and retail shop. Other
facilities at the Golden Nugget-Laughlin include a swimming pool, a parking
garage with space for approximately 1,585 vehicles and approximately four and
one-half acres of surface parking for recreational vehicles. GNL also owns and
operates a 78-room motel in Bullhead City, Arizona, across the Colorado River
from Laughlin.
As of March 1, 1996, the Golden Nugget-Laughlin's casino offered 24 table
games (including blackjack, craps, roulette, let it ride, pai gow poker and
Caribbean stud poker), keno, a race and sports book and approximately 1,175 slot
machines or similar coin-operated devices.
FUTURE EXPANSION
LAS VEGAS
In January 1993, the Registrant, through a wholly owned subsidiary,
purchased the approximately 164 acres on the Las Vegas Strip between Flamingo
Road and Tropicana Avenue formerly occupied by the Dunes Hotel, Casino and
Country Club (the "Dunes"). In April 1995, the Registrant contributed 44 acres
of such property to the joint venture partnership that is constructing Monte
Carlo.
In November 1995, the Registrant began construction of Bellagio on the
northern 120 acres of the Dunes property at the corner of Flamingo Road and the
Strip. Bellagio is designed to be the Registrant's most ambitious and elegant
destination resort and will include a 35-story hotel tower with approximately
3,000 lavishly appointed guest rooms (including 270 suites) and a large casino,
overlooking a 12-acre lake inspired by Lake Como in Northern Italy. Several
times each day the lake's fountains will come alive in a choreographed ballet of
water, music and lights. Bellagio will feature a wide variety of casual and
internationally known restaurants in both indoor and outdoor settings, upscale
retail boutiques and extensive meeting, convention and banquet space. Cirque du
Soleil will perform in an all-new production in a specially
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designed showroom. The resort will be lushly landscaped with classical gardens
and European fountains and pools. A monorail will connect Bellagio and Monte
Carlo, and a second monorail is proposed between Bellagio and The Mirage.
Bellagio is currently expected to cost approximately $1.1 billion (excluding
land and capitalized interest) and is scheduled to open in the spring of 1998.
The project is being financed by borrowings under the Registrant's $1 billion
bank credit facility and internally generated funds.
In April 1995, Victoria Partners, a joint venture in which the Registrant is
a 50% partner, began construction of Monte Carlo, a value-oriented hotel-casino
resort. The new facility is being constructed adjacent to Bellagio on the
southern 44 acres of the Dunes property and two additional acres acquired by the
joint venture. The French Victorian-themed facility will offer 3,024 guest rooms
and a 90,000-square foot casino. The Registrant's partner in the venture, a
subsidiary of Circus Circus Enterprises, Inc., is supervising the construction
and will manage the resort without fee. Monte Carlo is scheduled to open in June
1996.
Based on the current budget, the total cost of Monte Carlo is anticipated to
be approximately $300 million. This amount excludes the estimated value of the
44 acres of land contributed by the Registrant. The joint venture has obtained a
$200 million reducing revolving credit facility from a group of commercial banks
to fund a substantial portion of the construction costs. The credit facility is
collateralized by a first mortgage on all existing and future assets of the
venture and is non-recourse to the Registrant. Under the joint venture
agreement, the joint venture's debt is limited to the lesser of $210 million or
70% of the project cost, inclusive of land. The balance of the construction
costs is being provided by equity contributions from the Registrant's partner
and by equity contributions from the Registrant of up to $20 million, $5 million
of which has already been contributed.
As with any major construction project, the Bellagio and Monte Carlo
projects involve many risks, including shortages of materials and labor, work
stoppages, labor disputes, weather interference, unforeseen engineering,
environmental or geological problems and unanticipated cost increases, any of
which could give rise to delays or cost overruns. Construction, equipment or
staffing problems or difficulties in obtaining any of the requisite licenses,
permits, allocations or authorizations from regulatory authorities could
increase the cost or delay the construction or opening of the facilities or
otherwise affect their design and features. It is possible that the existing
budget and construction plans for either project may be changed for competitive
or other reasons. Accordingly, there can be no assurance that either project
will be completed within the time periods or budgets which are currently
contemplated. In the case of Monte Carlo, the Registrant's partner is obligated
to fund any cost overruns.
BILOXI, MISSISSIPPI
In November 1995, the Registrant acquired approximately 18 acres of land in
Biloxi, Mississippi, where Interstate 110 meets the Gulf Coast beachfront.
Subject to the receipt of requisite licenses, permits, allocations and
authorizations from the Mississippi Gaming Commission and other federal, state
and local authorities, the Registrant intends to develop a major casino-based
destination resort on the site. The planned facility is envisioned to be a
luxurious Golden Nugget resort featuring a waterfront casino, approximately
1,200 hotel rooms, a variety of restaurants and other amenities. The project is
still in the design process, but the Registrant anticipates that the project
will cost approximately $300 million (excluding land and capitalized interest)
and that major construction will commence in the summer of 1996, with completion
scheduled for late 1997. The project will be financed by borrowings under the
Registrant's bank credit facility and internally generated funds.
ATLANTIC CITY, NEW JERSEY
In June 1995, the New Jersey Casino Control Commission found the Registrant
qualified to own the stock of a casino licensee. In September 1995, the
Registrant was selected by the City of Atlantic City, New Jersey as the
redeveloper of a 178-acre redevelopment district, 150 acres of which are owned
by the City, in the Marina area of Atlantic City. In March 1996, the Registrant
and the City entered into a redevelopment agreement providing for the City to
convey the 150-acre parcel to the Registrant in exchange for the Registrant
agreeing to develop a casino-based destination resort on the site and
undertaking certain other obligations, including remediation of environmental
contamination and the relocation of City-owned facilities currently located on
the site. Closing under the redevelopment agreement requires the satisfaction of
a
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number of conditions, including the receipt by the Registrant of all requisite
licenses, permits, allocations and authorizations, resolution of real estate
title issues, the Registrant determining that the costs of environmental
remediation are not unreasonable and the approval by the State of New Jersey of
funding for certain roadway improvements affecting the site. Accordingly, there
can be no assurance as to whether or when the Registrant will proceed with the
project.
The Registrant's proposed project includes a luxury hotel-casino featuring
approximately 2,000 guest rooms, a 115,000-square foot casino, a variety of
restaurants, a large entertainment and retail concourse and other amenities.
Management currently expects the project to cost approximately $700 million and
hopes to begin construction in the fall of 1996. Construction is expected to
require 24 to 30 months to complete. However, because the project has not yet
been designed, the actual project cost may be significantly different and the
construction schedule may vary from that which is currently contemplated.
OTHER
The Registrant regularly evaluates and pursues potential expansion and
acquisition opportunities in both the domestic and international markets. Such
opportunities may include the ownership, management and operation of gaming and
other entertainment facilities in states other than Nevada or outside of the
United States, either alone or with joint venture partners. Development and
operation of any gaming facility in a new jurisdiction is subject to numerous
contingencies, several of which are outside of the Registrant's control and may
include the enactment of appropriate gaming legislation, the issuance of
requisite permits, licenses and approvals, the availability of appropriate
financing and the satisfaction of other conditions. There can be no assurance
that the Registrant will elect or be able to consummate any such acquisition or
expansion opportunity.
SALE OF INTEREST IN CASINO IGUAZU VENTURE
In February 1996, the Registrant sold its 50% equity interest in an
Argentine corporation that owns and operates Casino Iguazu, a casino near Iguazu
Falls, Argentina, for $12.5 million. The Registrant realized an after-tax gain
on the sale of approximately $5.2 million.
MARKETING
All of the Registrant's hotel-casinos operate 24 hours a day, every day of
the year. Management does not consider the Registrant's business to be
particularly seasonal.
The level of gaming activity at its casinos is the single largest factor in
determining the Registrant's revenues and operating income. The Registrant also
receives significant revenues from lodging, food and beverage, entertainment and
retail operations.
The principal segments of the Nevada gaming market are tour and travel,
leisure travel, high-level wagerers and conventions (including small meetings
and corporate incentive programs). The Registrant believes that The Mirage's
hotel occupancy and gaming revenues can be maximized through a balanced
marketing approach addressing each market segment. The Registrant's marketing
strategy for Treasure Island and the Golden Nugget is aimed at attracting
middle- to upper-middle-income wagerers, largely from the leisure travel and, to
a lesser extent, the tour and travel segment. The Registrant believes that the
success of its hotel-casinos is also affected by the level of walk-in customers
and, accordingly, has designed its facilities to maximize their attraction to
guests of other hotels.
The Golden Nugget-Laughlin appeals primarily to patrons from the
middle-income strata of the gaming populace. Many of the Golden
Nugget-Laughlin's customers are retired individuals who are attracted by
lodging, food and beverage and entertainment prices that are lower than those
offered by the major Las Vegas hotel-casinos. The predominant portion of the
Golden Nugget-Laughlin's casino revenues (86% in 1995) is derived from slot
machine play.
The Registrant, through wholly owned subsidiaries, owns approximately 730
acres of real property located approximately 10 miles north of The Mirage and
Treasure Island and five miles north of the Golden Nugget. The Registrant has
developed an exclusive world-class golf course and related facilities known as
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"Shadow Creek" on approximately 240 acres of such property. In connection with
its marketing activities, the Registrant makes the course and related facilities
available for use, by invitation only, by high-level-wagerer patrons.
CREDIT
Credit play represents a significant portion of the table games volume at
The Mirage. The Registrant's other facilities do not emphasize credit play to
the same extent as The Mirage, although credit is made available.
The Registrant maintains strict controls over the issuance of credit and
aggressively pursues collection of its customer receivables. These collection
efforts parallel those procedures commonly followed by most large corporations,
including the mailing of statements and delinquency notices, personal and other
contacts, the use of outside collection agencies and civil litigation. Nevada
gaming debts evidenced by credit instruments are enforceable under the laws of
Nevada. All other states are required to enforce a judgment on a gaming debt
entered in Nevada pursuant to the Full Faith and Credit Clause of the United
States Constitution. Although gaming debts are not legally enforceable in some
foreign countries, the United States assets of foreign debtors may be reached to
satisfy a judgment entered in the United States.
SUPERVISION OF GAMING ACTIVITIES
In connection with the supervision of gaming activities at its casinos, the
Registrant maintains stringent controls on the recording of all receipts and
disbursements. These audit and cash controls include the following: locked cash
boxes; personnel independent of casino operations to perform the daily cash and
coin counts; floor observation of the gaming area; observation of gaming and
certain other areas through the use of closed-circuit television; computer
tabulation of receipts and disbursements for each of the slot machines and table
games; and timely analysis of discrepancies or deviations from normal
performance.
INSURANCE AND FIRE SAFETY MEASURES
The Registrant maintains extensive property damage, business interruption
and general liability insurance. Safety and protection have been, and continue
to be, of maximum concern in the construction and expansion of the Registrant's
facilities. The Mirage, Treasure Island, the high-rise towers of the Golden
Nugget and the Golden Nugget-Laughlin were constructed pursuant to modern
stringent fire codes, and generally exceed such codes. The Mirage, Treasure
Island and the Golden Nugget is each rated by insurance companies as a "highly
protected risk."
COMPETITION
The Mirage, Treasure Island and the Golden Nugget compete with a number of
other hotel-casinos in Las Vegas. Currently, there are approximately 27 major
hotel-casinos located on or near the Las Vegas Strip, nine major hotel-casinos
located in the downtown area and several major facilities located elsewhere in
the Las Vegas area. As of March 1, 1996, there were approximately 86,500 hotel
and motel rooms in Las Vegas. Las Vegas room capacity is expected to increase
significantly during the next three years upon the completion and opening of
several new hotel-casinos and expansion projects, including Bellagio and Monte
Carlo.
Management believes that The Mirage primarily competes with other large
hotel-casinos located on or near the Strip that offer amenities and marketing
programs appealing to the upper-middle and higher-income strata of the gaming
populace. The Mirage competes on the basis of the elegance and excitement
offered by the facility, the desirability of its location, the quality and
relative value of its hotel rooms and restaurants, its entertainment, customer
service, its balanced marketing strategy and special marketing and promotional
programs.
Management believes that Treasure Island primarily competes with the other
large hotel-casinos located on or near the Strip that offer amenities and
marketing programs that appeal to the middle- to upper-middle-income strata of
the gaming populace. Treasure Island competes on the basis of the excitement
offered by the facility, the desirability of its location (including its
proximity to The Mirage), the quality of its hotel rooms, the variety, quality
and attractive pricing of its food and beverage outlets, its unique
entertainment offerings, customer service and its marketing and promotional
programs.
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Management believes that the Golden Nugget primarily competes with the large
hotel-casinos located on or near the Strip, particularly those offering
amenities and marketing programs that appeal primarily to the middle- and
upper-middle-income strata of the gaming populace. The Golden Nugget competes
for gaming customers primarily on the basis of the elegance, intimacy and
excitement offered by the facility, the quality and relative value of its hotel
rooms and restaurants, customer service and its marketing and promotional
programs. In order to compete more effectively with the Strip hotel-casinos, a
coalition of several major downtown Las Vegas hotel-casinos (including the
Golden Nugget), in conjunction with the City of Las Vegas, developed the
"Fremont Street Experience," a major tourist attraction in the downtown area
which opened in December 1995. This new attraction converts Fremont Street into
a four-block-long pedestrian mall, topped with a 90-foot by 1,400-foot special
effects canopy. Within the canopy are 2.1 million computer-controlled,
four-color lights and a 540,000-watt sound system. The Fremont Street Experience
also includes retail facilities and a 1,432-space parking garage.
The Golden Nugget-Laughlin competes with eight nearby hotel-casinos in
Laughlin, as well as with hotel-casinos in Las Vegas, Jean and Stateline, Nevada
and casinos on Indian reservations in Laughlin's regional market, particularly
in Arizona. As of March 1, 1996, there were approximately 11,100 hotel rooms in
Laughlin.
The Registrant's facilities also compete for gaming customers with
hotel-casino operations located in other areas of Nevada, Atlantic City and
other parts of the world, and for vacationers with non-gaming tourist
destinations such as Hawaii and Florida. The Registrant's hotel-casinos compete
to a lesser extent with state-sponsored lotteries, off-track wagering, card
parlors, riverboat and Indian gaming ventures and other forms of legalized
gaming in the United States, as well as with gaming on cruise ships. In recent
years, certain states have legalized, and several other states are currently
considering legalizing, casino gaming. Management does not believe that such
legalization of casino gaming in those jurisdictions will have a material
adverse impact on the Registrant's operations. However, management believes that
the legalization of large-scale land-based casino gaming in or near certain
major metropolitan areas, particularly in California, could have a material
adverse effect on the Las Vegas market.
EMPLOYEES AND LABOR RELATIONS
As of March 1, 1996, the Registrant and its subsidiaries had approximately
14,600 full-time and 2,200 part-time employees. At that date, the Registrant had
collective bargaining contracts with unions covering approximately 7,100 of its
Las Vegas employees, expiring in May 1997. Management considers its employee
relations to be excellent.
REGULATION AND LICENSING
The ownership and operation of casino gaming facilities in Nevada are
subject to (i) the Nevada Gaming Control Act and the regulations promulgated
thereunder (collectively, the "Nevada Act") and (ii) various local ordinances
and regulations. The Registrant's gaming operations are subject to the licensing
and regulatory control of the Nevada Gaming Commission (the "Nevada
Commission"), the Nevada State Gaming Control Board (the "Nevada Board"), the
City of Las Vegas and the Clark County Liquor and Gaming Licensing Board (the
"Clark County Board"). The Nevada Commission, the Nevada Board, the City of Las
Vegas and the Clark County Board are collectively referred to as the "Nevada
Gaming Authorities." To the best knowledge of management, the Registrant and its
subsidiaries are presently in material compliance with all applicable laws,
regulations and supervisory procedures described herein.
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention
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of cheating and fraudulent practices; and (v) providing a source of state and
local revenues through taxation and licensing fees. Change in such laws,
regulations and procedures could have an adverse effect on the Registrant's
gaming operations.
The Registrant's direct and indirect subsidiaries that conduct gaming
operations are required to be licensed by the Nevada Gaming Authorities. The
gaming licenses require the periodic payment of fees and taxes and are not
transferable. MCH is registered as an intermediary company and has been found
suitable to own the stock of TI Corp. MCH has also been licensed to conduct
nonrestricted gaming operations at The Mirage. TI Corp. has been licensed to
conduct nonrestricted gaming operations at Treasure Island. GNLV has been
registered as an intermediary company and has been found suitable to own the
stock of Golden Nugget Manufacturing Corp. ("GNMC"), its inactive subsidiary
which is licensed as a manufacturer and distributor of gaming devices. GNLV has
also been licensed to conduct nonrestricted gaming operations at the Golden
Nugget. GNL has been licensed to conduct nonrestricted gaming operations at the
Golden Nugget-Laughlin. The Registrant is registered by the Nevada Commission as
a publicly traded corporation (a "Registered Corporation") and has been found
suitable to own the stock of MCH, GNLV and GNL, each of which, together with TI
Corp. and GNMC, is a corporate licensee (individually, a "Gaming Subsidiary" and
collectively, the "Gaming Subsidiaries") under the Nevada Act. Victoria
Partners, the joint venture which will own and operate Monte Carlo, and certain
subsidiaries of the Registrant and Circus Circus Enterprises, Inc. which are
involved in the ownership of Victoria Partners, are required to be licensed by
the Nevada Gaming Authorities and have filed applications for such licenses.
As a Registered Corporation, the Registrant is required periodically to
submit detailed financial and operating reports to the Nevada Commission and
furnish any other information which the Nevada Commission may require. No person
may become a stockholder of, or receive any percentage of profits from, the
Gaming Subsidiaries without first obtaining licenses and approvals from the
Nevada Gaming Authorities. The Registrant and the Gaming Subsidiaries have
obtained from the Nevada Gaming Authorities the various registrations, findings
of suitability, approvals, permits and licenses required in order to engage in
gaming activities in Nevada.
All gaming devices that are manufactured, sold or distributed for use or
play in Nevada, or for distribution outside of Nevada, must be manufactured by
licensed manufacturers and distributed or sold by licensed distributors. All
gaming devices manufactured for use or play in Nevada must be approved by the
Nevada Commission before distribution or exposure for play. The approval process
for gaming devices includes rigorous testing by the Nevada Board, a field trial
and a determination as to whether the gaming device meets strict technical
standards that are set forth in the regulations of the Nevada Commission.
Associated equipment must be administratively approved by the Chairman of the
Nevada Board before it is distributed for use in Nevada.
The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Registrant or the
Gaming Subsidiaries in order to determine whether such individual is suitable or
should be licensed as a business associate of a gaming licensee. Officers,
directors and certain key employees of the Gaming Subsidiaries must file
applications with the Nevada Gaming Authorities and may be required to be
licensed or found suitable by the Nevada Gaming Authorities. Officers, directors
and key employees of the Registrant who are actively and directly involved in
gaming activities of the Gaming Subsidiaries may be required to be licensed or
found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities
may deny an application for licensing for any cause which they deem reasonable.
A finding of suitability is comparable to licensing, and both require submission
of detailed personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of suitability must pay
all the costs of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities, and in addition to their authority to
deny an application for a finding of suitability or licensure, the Nevada Gaming
Authorities have jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Registrant or the Gaming Subsidiaries, the
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companies involved would have to sever all relationships with such person. In
addition, the Nevada Commission may require the Registrant or the Gaming
Subsidiaries to terminate the employment of any person who refuses to file
appropriate applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in Nevada.
The Registrant and the Gaming Subsidiaries are required to submit detailed
financial and operating reports to the Nevada Commission. Substantially all
material loans, leases, sales of securities and similar financing transactions
entered into by the Gaming Subsidiaries must be reported to or approved by the
Nevada Commission.
If it were determined that the Nevada Act was violated by a Gaming
Subsidiary, the licenses it holds could be limited, conditioned, suspended or
revoked, subject to compliance with certain statutory and regulatory procedures.
In addition, the Registrant, the Gaming Subsidiaries and the persons involved
could be subject to substantial fines for each separate violation of the Nevada
Act at the discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate The Mirage, Treasure Island, the
Golden Nugget and the Golden Nugget-Laughlin and, under certain circumstances,
earnings generated during the supervisor's appointment (except for the
reasonable rental value of the casino) could be forfeited to the State of
Nevada. Limitation, conditioning or suspension of the gaming license of a Gaming
Subsidiary or the appointment of a supervisor could (and revocation of any
gaming license would) materially adversely affect the Registrant's gaming
operations.
Any beneficial holder of the Registrant's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated and have his suitability as a beneficial holder of the Registrant's
voting securities determined if the Nevada Commission has reason to believe that
such ownership would be inconsistent with the declared policies of the State of
Nevada. The applicant must pay all costs of investigation incurred by the Nevada
Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of a Registered
Corporation's voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of more than 10% of a
Registered Corporation's voting securities apply to the Nevada Commission for a
finding of suitability within 30 days after the Chairman of the Nevada Board
mails a written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires more than
10%, but not more than 15%, of a Registered Corporation's voting securities may
apply to the Nevada Commission for a waiver of such finding of suitability
requirement if such institutional investor holds the voting securities for
investment purposes only. An institutional investor shall not be deemed to hold
voting securities for investment purposes unless the voting securities were
acquired and are held in the ordinary course of business as an institutional
investor and not for the purpose of causing, directly or indirectly, the
election of a majority of the members of the board of directors of the
Registered Corporation, any change in the corporate charter, bylaws, management,
policies or operations of the Registered Corporation or any of its gaming
affiliates or any other action which the Nevada Commission finds to be
inconsistent with holding the Registered Corporation's voting securities for
investment purposes only. Activities which are not deemed to be inconsistent
with holding voting securities for investment purposes only include: (i) voting
on all matters voted on by stockholders; (ii) making financial and other
inquiries of management of the type normally made by securities analysts for
informational purposes and not to cause a change in its management, policies or
operations; and (iii) such other activities as the Nevada Commission may
determine to be consistent with such investment intent. The City of Las Vegas
and the Clark County Board have the authority to approve all persons owning or
controlling the stock of any corporation controlling a gaming licensee. If the
beneficial holder of voting securities who must be found suitable is a
corporation, partnership or trust, it must submit detailed business and
financial information, including a list of beneficial owners. The applicant is
required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or a
license within 30 days after being ordered to do so by the Nevada Commission or
the Chairman of the Nevada Board may be found unsuitable. The same restrictions
apply to a record owner if the record owner, after request, fails to identify
the
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<PAGE>
beneficial owner. Any stockholder found unsuitable who holds, directly or
indirectly, any beneficial ownership of the common stock beyond such period of
time as may be prescribed by the Nevada Commission may be guilty of a criminal
offense. The Registrant is subject to disciplinary action if, after it receives
notice that a person is unsuitable to be a stockholder or to have any other
relationship with the Registrant or the Gaming Subsidiaries, the Registrant: (i)
pays such person any dividend or interest upon voting securities of the
Registrant; (ii) allows such person to exercise, directly or indirectly, any
voting right conferred through securities held by that person; (iii) pays
remuneration in any form to such person for services rendered or otherwise; or
(iv) fails to pursue all lawful efforts to require such person to relinquish his
voting securities including, if necessary, the immediate purchase of the voting
securities for cash at fair market value.
The Nevada Commission may, in its discretion, require the holder of any debt
security of a Registered Corporation to file applications, be investigated and
be found suitable to own the debt security if it has reason to believe that such
ownership would be inconsistent with the declared policies of the State of
Nevada. If the Nevada Commission determines that a person is unsuitable to own
such security, then pursuant to the Nevada Act, the Registered Corporation can
be sanctioned, including the loss of its approvals, if without the prior
approval of the Nevada Commission, it: (i) pays to the unsuitable person any
dividend, interest or any distribution whatsoever; (ii) recognizes any voting
right by such unsuitable person in connection with such securities; (iii) pays
the unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.
The Registrant is required to maintain a current stock ledger in Nevada
which may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or nominee, the record holder may be
required to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Registrant is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Registrant's stock certificates to bear
a legend indicating that the securities are subject to the Nevada Act. To date,
the Nevada Commission has not imposed such a requirement on the Registrant.
The Registrant may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada or to retire or extend obligations incurred for such purposes. In May
1995, the Nevada Commission granted the Registrant prior approval to make public
offerings for a period of one year, subject to certain conditions (the "Shelf
Approval"). However, the Shelf Approval may be rescinded for good cause without
prior notice upon the issuance of an interlocutory stop order by the Chairman of
the Nevada Board. The Shelf Approval also applies to any affiliated company
wholly owned by the Registrant (an "Affiliate") which is a publicly traded
corporation or would thereby become a publicly traded corporation pursuant to a
public offering. The Shelf Approval also includes approval for the Gaming
Subsidiaries to guarantee any security issued by, or to hypothecate their assets
to secure the payment or performance of any obligations issued by, the
Registrant or an Affiliate in a public offering under the Shelf Approval. The
Shelf Approval does not constitute a finding, recommendation or approval by the
Nevada Commission or the Nevada Board as to the accuracy or adequacy of the
prospectus or the investment merits of the securities offered. Any
representation to the contrary is unlawful. The Registrant has filed an
application for renewal of the Shelf Approval, which it anticipates will be
considered by the Nevada Board and the Nevada Commission in May 1996.
Changes in control of the Registrant through merger, consolidation, stock or
asset acquisitions, management or consulting agreements or any act or conduct by
a person whereby he obtains control may not occur without the prior approval of
the Nevada Commission. Entities seeking to acquire control of a Registered
Corporation must satisfy the Nevada Board and Nevada Commission with respect to
a variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control to be investigated and
licensed as part of the approval process relating to the transaction.
9
<PAGE>
The Nevada Legislature has declared that some corporate acquisitions opposed
by management, repurchases of voting securities and corporate defensive tactics
affecting Nevada corporate gaming licensees, and Registered Corporations that
are affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming licensees and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environment for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the Nevada
Commission before the Registered Corporation can make exceptional repurchases of
voting securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Registered
Corporation's board of directors in response to a tender offer made directly to
the Registered Corporation's stockholders for the purpose of acquiring control
of the Registered Corporation.
License fees and taxes, computed in various ways depending on the type of
gaming or activity involved, are payable to the State of Nevada and to Clark
County and the City of Las Vegas, in which the Gaming Subsidiaries' respective
operations are conducted. Depending upon the particular fee or tax involved,
these fees and taxes are payable either monthly, quarterly or annually and are
based upon either: (i) a percentage of the gross revenues received; (ii) the
number of gaming devices operated; or (iii) the number of table games operated.
A casino entertainment tax is also paid by casino operations where entertainment
is furnished in connection with the selling of food, refreshments or
merchandise. Nevada licensees that hold a manufacturer's or distributor's
license, such as GNMC, also pay certain fees to the State of Nevada.
Any person who is licensed, required to be licensed, registered, required to
be registered or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside of
Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation by
the Nevada Board of its participation in such foreign gaming. The revolving fund
is subject to increase or decrease at the discretion of the Nevada Commission.
Thereafter, Licensees are required to comply with certain reporting requirements
imposed by the Nevada Act. Licensees are also subject to disciplinary action by
the Nevada Commission if they knowingly violate any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fail to conduct the
foreign gaming operation in accordance with the standards of honesty and
integrity required of Nevada gaming operations, engage in activities that are
harmful to the State of Nevada or its ability to collect gaming taxes and fees
or employ a person in the foreign operation who has been denied a license or
finding of suitability in Nevada on the ground of personal unsuitability.
The sale of alcoholic beverages at The Mirage, Treasure Island and the
Golden Nugget-Laughlin, and the sale of alcoholic beverages at the Golden
Nugget, are subject to licensing, control and regulation by the Clark County
Board and the City of Las Vegas, respectively. All licenses are revocable and
are not transferable. The agencies involved have full power to limit, condition,
suspend or revoke any such license, and any such disciplinary action could (and
revocation would) have a material adverse effect on the operations of the Gaming
Subsidiaries.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-K and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward-looking, such as statements 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 uncertainties 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
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<PAGE>
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, 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).
ITEM 2. PROPERTIES
The Mirage and Treasure Island share approximately 120 acres owned by the
Registrant near the center of the Las Vegas Strip. At March 1, 1996, both The
Mirage and Treasure Island were subject to an encumbrance of approximately
$106.6 million, representing the accreted value of zero coupon first mortgage
notes issued by a subsidiary of the Registrant.
The Golden Nugget occupies approximately seven and one-half acres in
downtown Las Vegas. The improvements and approximately 90% of the underlying
land are owned by the Registrant. The remaining land is held under three
separate ground leases that expire (after giving effect to renewal options) on
dates ranging from 2025 to 2046.
The Golden Nugget-Laughlin, including the motel in Bullhead City, Arizona,
occupies an aggregate of approximately 15 1/2 acres. All of the property is
owned by the Registrant.
The Bellagio site comprises approximately 120 acres owned by the Registrant
on the Las Vegas Strip.
The Registrant owns a 50% equity interest in Victoria Partners, the joint
venture that is constructing and will own and operate Monte Carlo. At February
29, 1996, Monte Carlo was subject to an encumbrance of approximately $134.1
million. See "Business -- Future Expansion -- Las Vegas" in Item 1 of this Form
10-K.
The Registrant owns approximately 730 acres of land in North Las Vegas,
including 240 acres occupied by Shadow Creek.
The Registrant also owns or leases various improved and unimproved property
in Las Vegas, Atlantic City, Biloxi and other locations in the United States and
certain foreign countries.
ITEM 3. LEGAL PROCEEDINGS
On April 26, 1994, a complaint in a purported class action lawsuit was filed
in the United States District Court for the Middle District of Florida against
41 manufacturers, distributors and casino operators of video poker and
electronic slot machines, including the Registrant. On May 10, 1994, a complaint
in a purported class action lawsuit alleging substantially identical claims was
filed by another plaintiff in the same court against 48 defendants, including
the Registrant. The two lawsuits have been consolidated into a single action and
transferred to the United States District Court for the District of Nevada. On
September 26, 1995, a complaint in a purported class action lawsuit alleging
substantially identical claims was filed by a third plaintiff in the United
States District Court for the District of Nevada against 45 defendants,
including the Registrant. The complaints allege that the defendants have engaged
in a course of fraudulent and misleading conduct intended to induce persons to
play video poker and electronic slot machines by collectively misrepresenting
how the gaming machines operate, as well as the extent to which there is an
opportunity to win. The complaints allege violations of the Racketeer Influenced
and Corrupt Organizations Act, as well as claims of common law fraud, unjust
enrichment and negligent misrepresentation, and seek unspecified compensatory
and punitive damages. The Registrant and other defendants have moved to dismiss
the complaints for failure to state a claim. No hearing has been set on these
motions. Management believes that the claims against the Registrant are without
merit and intends to defend the cases vigorously.
On August 23, 1995, an amended complaint in a purported class action lawsuit
was filed in the United States District Court for the District of New Jersey,
Camden Division, against 80 defendants, including the Registrant and other
hotel-casino operators. The complaint alleges that the defendants have engaged
in a course of conduct involving conspiracy among casinos in the United States
to refuse to deal to blackjack players who are capable of winning money at the
casinos' blackjack tables in violation of various statutory provisions,
including the Sherman Act, the Fair Credit Reporting Act and state antitrust and
consumer fraud laws. The complaint also asserts pendant causes of action under
the tort and contract laws of states where it
11
<PAGE>
is alleged that refusal to deal to such players is illegal. The complaint seeks
unspecified compensatory damages as well as punitive damages, including treble
damages for alleged violations of the Sherman Act. The Registrant and other
defendants have moved to dismiss the complaint for failure to state a claim. No
hearing has been set on this motion. Management believes that the claims against
the Registrant are without merit and intends to defend the case vigorously.
The Registrant (including its subsidiaries) is also a defendant in various
other lawsuits, most of which relate to routine matters incidental to its
business. Management does not believe that the outcome of such pending
litigation, in the aggregate, will have a material adverse effect on the
Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of 1995.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Registrant's common stock is traded on the New York and Pacific Stock
Exchanges under the symbol MIR. The following table sets forth, for the calendar
quarters indicated, the high and low sale prices of the common stock on the New
York Stock Exchange Composite Tape.
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
HIGH LOW HIGH LOW
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
First quarter............................................... $ 28 5/8 $ 19 3/4 $ 27 $ 19 3/8
Second quarter.............................................. 33 3/8 25 3/4 21 3/4 16 3/4
Third quarter............................................... 35 1/8 28 1/8 22 5/8 17 1/2
Fourth quarter.............................................. 34 3/4 28 5/8 23 1/2 18 1/8
</TABLE>
There were approximately 12,000 record holders of the Registrant's common
stock as of March 29, 1996.
The Registrant paid no dividends in 1995 or 1994. The Registrant's bank
credit agreement contains a covenant restricting the ability of the Registrant
to pay cash dividends on or repurchase shares of its common stock. At March 15,
1996, pursuant to such covenant, the Registrant was permitted to expend a total
of $200.2 million. Refer to Exhibits 10(ll) and 10(qq) to this Form 10-K, and
Note 3 of Notes to Consolidated Financial Statements referred to in Item
14(a)(1) of this Form 10-K.
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<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------------------------------
1995 1994 1993 (A) 1992 1991
--------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Gross revenues........................................ $ 1,453.7 $ 1,370.9 $ 1,053.4 $ 920.6 $ 901.6
Promotional allowances................................ (123.0) (116.7) (100.1) (87.6) (78.7)
Net revenues.......................................... 1,330.7 1,254.2 953.3 833.0 822.9
Operating income...................................... 284.1 237.8 131.7 125.8 163.5
Income before extraordinary item and cumulative effect
of change in accounting principle (b)................ 169.9 124.7 48.1 36.9 44.5
Net income............................................ 163.2 114.3 29.2 28.4 46.8
Income per share before extraordinary item and
cumulative effect of change in accounting principle
(b).................................................. $ 1.77 $ 1.32 $ .58 $ .53 $ .80
Net income per share.................................. $ 1.70 $ 1.21 $ .35 $ .41 $ .84
OTHER DATA
Interest expense...................................... $ 23.2 $ 44.2 $ 63.5 $ 99.2 $ 113.7
Cash provided by operating activities................. 325.3 286.8 180.8 84.6 155.0
Capital expenditures.................................. 179.4 69.1 432.4 220.8 66.1
YEAR-END STATUS
Total assets.......................................... $ 1,791.7 $ 1,641.4 $ 1,705.3 $ 1,594.9 $ 1,327.0
Long-term debt........................................ 248.5 359.6 535.0 831.2 797.8
Stockholders' equity (c).............................. 1,209.3 1,030.9 910.9 553.6 300.6
Shares outstanding.................................... 91.7 91.0 90.6 74.6 54.9
</TABLE>
- ---------------
(a) Treasure Island opened on October 26, 1993.
(b) Before extraordinary gains and losses on early retirements of debt and a
one-time credit of $3.6 million in 1992 for the cumulative effect of a
change in method of accounting for income taxes.
(c) The Company paid no dividends during the five-year period ended December 31,
1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company achieved record operating results during 1995. Income before
extraordinary and non-recurring items of $169.9 million ($1.77 per share) was
36% greater than the previous record of $124.7 million ($1.32 per share)
achieved on the same basis in 1994. After deducting extraordinary charges on
early retirements of debt, the Company had net income of $163.2 million ($1.70
per share) in 1995, versus $114.3 million ($1.21 per share) in the prior year.
The Company's net revenues during 1995 increased $76.6 million, or 6%,
reflecting substantial growth in both casino and non-casino revenues. The
Company's casinos achieved a 15% increase in table games revenues attributable
almost equally to a higher win percentage and a strong increase in the level of
activity, particularly baccarat play. The Company-wide table games win
percentage for the year was 20.2%, compared to 18.8% in 1994.
Slot revenues increased 1% over 1994. However, the Company's other casino
revenues declined due primarily to a lower sports book win percentage.
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<PAGE>
The Company's 1995 non-casino revenues net of promotional allowances
increased by $21.4 million, or 4%. A major contributor to this was a 23%
increase in entertainment revenues. This growth partially reflects a 16%
increase in the number of performances by Siegfried & Roy, whose performance
schedule was curtailed during 1994 due to knee surgery required by one of the
principal performers. Furthermore, the "Mystere" production achieved higher
occupancy and a higher average ticket price for the year. Both Siegfried & Roy
and "Mystere" played to average occupancy of nearly 100% during 1995. The
increase in ticket prices and showroom occupancy resulted in an improvement in
gross margins and profitability.
Company-wide net room revenues increased 5% for the year. This was
particularly notable as the number of available room nights declined 4%, due to
construction relating to the enhancement and refurbishment of many of the guest
rooms at The Mirage and the Golden Nugget-Las Vegas. Net revenues per available
room night at the Company's four hotels increased 8% over 1994. Company-wide
occupancy of standard guest rooms remained steady, at approximately 98%. The
increase in average room rate helped the Company achieve an increase in the
gross margin on room revenues.
Treasure Island was the principal contributor to the substantial growth in
the Company's operating results in 1994. This exciting pirate-themed facility
opened on October 26, 1993, and contributed net revenues and operating income of
$343.0 million and $69.7 million, respectively, during its first full year of
operation. Treasure Island's 1994 net revenues consisted of casino revenues of
$152.5 million and non-casino revenues of $190.5 million.
During its 66 days of operations in 1993, Treasure Island contributed net
revenues of $59.0 million and operating income (before preopening and related
promotional expense) of $8.5 million. Net revenues included casino revenues of
$30.6 million and non-casino revenues of $28.4 million.
The combined net revenues and operating income of The Mirage and the
Company's two Golden Nugget properties increased 2% and 11%, respectively,
during 1994. Combined casino revenues of the three properties increased $19.4
million, or 3%, primarily resulting from a 5% improvement in table games
activity at The Mirage. Combined slot revenue of the three properties was up
$9.2 million, or 4%. Management attributes the improvement in part to the
mid-1994 completion of a program to install new upgraded slot machines at the
three facilities.
Net non-casino revenues, excluding Treasure Island, were relatively
unchanged in 1994. This result was achieved despite approximately 16% fewer
performances by Siegfried & Roy and the November 1993 conclusion of Cirque du
Soleil's engagement at The Mirage.
OTHER FACTORS AFFECTING EARNINGS
General and administrative expense in 1994 includes abandonment charges
totaling $12.4 million, principally reflecting an $11.0 million charge
associated with the room enhancement program at The Mirage. Various smaller
projects resulted in similar charges of $3.6 million in 1995 and $0.5 million in
1993. The Company's depreciation and amortization expense during 1995 declined
8%, principally due to certain equipment at The Mirage having five-year
depreciable lives becoming fully depreciated near the end of 1994.
Corporate expense was essentially flat in 1995, after having increased 19%
from 1993 to 1994. The 1994 increase was primarily due to additional costs
associated with the Company's evaluation and pursuit of opportunities in new
gaming jurisdictions. Such activities diminished during 1995, but were offset by
general growth of the Company and various other factors.
The Company's policy is to expense as incurred all costs (except for land
acquisition costs) associated with potential new ventures until the likelihood
of construction is relatively certain. Currently, the Company is capitalizing
preopening costs relating only to the Bellagio and Biloxi projects, which
totaled $1.7 million at December 31, 1995.
Preopening and related promotional expense in 1993 represents the write-off
of the costs associated with the development and opening of Treasure Island.
14
<PAGE>
Reflecting management's continuing efforts to reduce the Company's overall
cost of capital, interest cost declined by $36.5 million, or 41%, from 1993 to
1994, and further declined by $19.2 million, or 37%, in 1995. Total debt at
December 31, 1995 was $249.1 million, versus $363.6 million and $566.6 million
at year-end 1994 and 1993, respectively. Interest capitalized declined from
$25.1 million in 1993 to $7.8 million in 1994 as a result of the October 1993
completion of Treasure Island. Continuing development of Bellagio was the
primary reason for the small increase in interest capitalized to $9.6 million
during 1995.
Non-operating items include the Company's former 50% joint venture interest
in the operations of Casino Iguazu. The facility, located near Iguazu Falls,
Argentina, opened in July 1994. The "Other" caption includes the Company's $1.4
million share of the earnings of Casino Iguazu during 1995, versus a $1.0
million loss in 1994. Such loss was principally attributable to the Company's
proportionate share of the facility's preopening costs. The Company sold its
interest in Casino Iguazu in February 1996 for $12.5 million, resulting in a net
after-tax gain in the first quarter of 1996 of approximately $5.2 million on the
Company's original $4.0 million investment.
During all three years, the Company retired some of its more expensive debt
prior to its scheduled maturities. Although these retirements were financially
advantageous to the Company, the call premiums and the write-off of the related
unamortized debt issuance costs resulted in extraordinary charges.
REGULATION AND TAXES
The Company is subject to extensive regulation by the Nevada gaming
authorities and will be subject to regulation, which may or may not be similar
to that in Nevada, by the appropriate authorities in any other jurisdiction in
which it may conduct gaming activities in the future. Changes in applicable laws
or regulations could have a significant impact on the Company's operations. In
March 1996, the U.S. House of Representatives passed a bill which would
establish a federal commission to study the gaming industry.
The gaming industry represents a significant source of tax revenues,
particularly to the State of Nevada and its counties and municipalities. From
time to time, various state and federal legislators and officials have proposed
changes in tax law, or in the administration of such law, affecting the gaming
industry. Proposals in recent years that have not been enacted included a
federal gaming tax and increases in state or local gaming taxes. Other issues
under consideration by the Internal Revenue Service include limitations on the
federal income tax deductibility of furnishing complimentary promotional items
to customers, as well as various measures that would require withholding on
amounts won by customers or on discounts negotiated with foreign customers on
amounts owed to the Company.
Management believes that the Company's recorded tax balances are adequate.
However, it is not possible to determine with certainty the likelihood of
possible changes in tax law or in the administration of such law. Such changes,
if adopted, could have a material adverse effect on the Company's operating
results.
CAPITAL RESOURCES, CAPITAL SPENDING AND LIQUIDITY
The Company used its operating cash flow to fund its capital expenditures,
debt retirements, investments and other corporate requirements during 1995. Cash
provided by operating activities (as shown in the Consolidated Statements of
Cash Flows) increased to $325.3 million in 1995 from $286.8 million in 1994 and
$180.8 million in 1993. This increase essentially parallels the growth in the
Company's net income.
Capital expenditures totaled $179.4 million in 1995. Included in this amount
is $59.3 million associated with the room enhancement and refurbishment projects
at The Mirage and the Golden Nugget. Capital expenditures in 1995 also include
$25.1 million, including capitalized interest of approximately $6.9 million,
relating to the design and construction of Bellagio and cash expenditures of
$23.2 million associated with the acquisition of land in Biloxi, Mississippi.
The remaining capital expenditures of $71.8 million during 1995 primarily
reflect various enhancement projects and maintenance capital spending at the
Company's four facilities. Capital expenditures do not include amounts
associated with the construction of Monte Carlo, as such project is being built
by a 50%-owned unconsolidated joint venture.
During 1994 and 1993, capital expenditures totaled $69.1 million and $432.4
million, respectively. Included in the 1994 amount is $16.6 million expended to
upgrade the slot machines at The Mirage and the
15
<PAGE>
two Golden Nugget properties, $13.1 million related to the completion of various
projects at Treasure Island and $7.8 million of capitalized interest associated
with the Dunes site. Capital expenditures during 1993 primarily reflect $307.4
million related to the construction of Treasure Island and $70.0 million
associated with the acquisition of the Dunes site.
Management expects the Company's future capital spending to increase
significantly with the ongoing construction of Bellagio and the commencement of
construction of its planned resort hotel-casino in Biloxi. Bellagio is currently
expected to cost approximately $1.1 billion (excluding land and capitalized
interest) and is scheduled to open in the spring of 1998. At December 31, 1995,
the Company had incurred approximately $19.6 million of such amount. The Biloxi
facility is still in the design process, but major construction is anticipated
to begin in the summer of 1996 with completion scheduled for late 1997 at a
total cost, excluding land and capitalized interest, of approximately $300
million. Including land and capitalized interest, Bellagio is expected to cost
between $1.2 billion and $1.3 billion and the Biloxi project is expected to cost
approximately $350 million.
The level of future capital spending will increase further should the
Company proceed with its proposed Atlantic City resort hotel-casino. Management
currently expects the project to cost approximately $700 million and hopes to
begin construction in the fall of 1996. Construction is expected to require 24
to 30 months to complete. However, because the project has not yet been
designed, the actual project cost may be significantly different and the
construction schedule may vary from that which is currently contemplated.
The growth in operating cash flow together with lower capital expenditure
requirements during 1995 and 1994 allowed the Company to significantly reduce
its outstanding indebtedness. During 1995, the Company redeemed the remaining
$126.0 million principal amount of the 9 7/8% first mortgage notes associated
with The Mirage and Treasure Island and repaid the remaining $22.1 million
principal amount of its floating rate aircraft loan. The 9 7/8% notes
(originally scheduled to mature in October 2000) were redeemed in April at the
initial stated redemption price of 106.5% of the principal amount. These
obligations were partially replaced by lower-cost bank credit facility and
commercial paper borrowings totaling $21.9 million.
During 1994, the Company retired $211.3 million principal amount of first
mortgage notes associated with The Mirage and Treasure Island. These retirements
included the repurchase of $174.0 million principal amount of the 9 7/8% notes,
$10.3 million accreted value ($15.0 million face amount) of the zero coupon
notes and the March 15 maturity of $27.0 million principal amount of floating
rate notes.
In 1993, due to greater capital expenditure requirements associated with the
construction of Treasure Island, the Company completed two offerings of
securities. In March, a wholly owned subsidiary of the Company issued $100.0
million principal amount of 9 1/4% senior subordinated notes, generating net
proceeds of $97.5 million. In November, the Company received $303.6 million net
proceeds from an underwritten public offering of 13,750,000 shares of its common
stock. The net proceeds from these two offerings allowed the Company to retire
$133.4 million aggregate principal amount of first and second mortgage notes
associated with The Mirage and Treasure Island and $223.0 million aggregate
principal amount of first mortgage and uncollateralized notes associated with
the Golden Nugget-Las Vegas. The debt securities retired had a combined weighted
average interest rate of approximately 12.5%, resulting in substantial future
interest savings to the Company. The Company also reduced net borrowings under
its bank credit facility during 1993 by $28.0 million.
In April 1995, the borrowing capacity under the Company's revolving bank
credit facility was increased from $525 million to $1 billion. Additionally, in
November 1995, the Company initiated a commercial paper program, providing a
low-cost alternative to manage future capital requirements.
Management believes that the Company's existing cash balances, anticipated
operating cash flow and amounts available under its bank credit facility will be
sufficient to meet its future debt obligations and fund construction of the
Bellagio and Biloxi projects. Depending on which projects become feasible and
are undertaken by the Company as well as the ultimate size and timing of such
projects, construction of facilities in New Jersey or other jurisdictions may
require additional financing.
16
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes to Consolidated Financial
Statements of Mirage Resorts, Incorporated and Subsidiaries, referred to in Item
14(a)(1) of this Form 10-K, are included at pages 24 to 39.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is incorporated by reference the information appearing under the
caption "Directors and Executive Officers" in the Registrant's definitive Proxy
Statement for its May 23, 1996 Annual Meeting of Stockholders, to be filed with
the Securities and Exchange Commission (the "Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
There is incorporated by reference the information appearing under the
caption "Executive Compensation" in the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated by reference the information appearing under the
caption "Stock Ownership of Major Stockholders and Management" in the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference the information appearing under the
caption "Compensation Committee Interlocks and Insider Participation" in the
Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1). FINANCIAL STATEMENTS.
Included in Part II of this Report:
Reports of Independent Public Accountants
Consolidated Balance Sheets -- December 31, 1995 and 1994
Years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a)(2). FINANCIAL STATEMENT SCHEDULES.
Included in Part IV of this Report:
For the years ended December 31, 1995, 1994 and 1993
Schedule II -- Valuation and Qualifying Accounts
Schedules other than that listed above are omitted because they are not
required or are not applicable, or the required information is shown in the
financial statements or notes to the financial statements.
(a)(3). EXHIBITS.
<TABLE>
<S> <C>
3(i)(a) Restated Articles of Incorporation of Registrant. Incorporated by
reference to Exhibit 3(i) to Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1993.
3(i)(b) Amended and Restated Certificate of Division of Shares into Smaller
Denominations Pursuant to N.R.S. Section 78.207 of Registrant.
Incorporated by reference to Exhibit 2.2 to Amendment No. 3 to
Registrant's Registration Statement on Form 8-A dated October 19,
1993.
3(ii) Amended and Restated Bylaws of Registrant. Incorporated by reference
to Exhibit 99 to Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 1994.
4(a) Indenture, dated as of March 15, 1988, with respect to GNS FINANCE
CORP.'s ("Finance") Zero Coupon First Mortgage Notes Due March 15,
1998, together with exhibits (the "Zero Coupon Notes Indenture").
Incorporated by reference to Exhibit 4(c) to the Registration
Statement filed by Finance and MCH on Form S-1 under the Securities
Act of 1933 (No. 33-22369) (the "MCH Form S-1").
4(b) First Supplemental Indenture, dated as of August 1, 1988, to the Zero
Coupon Notes Indenture. Incorporated by reference to Exhibit 4(f) to
Amendment No. 1 to the MCH Form S-1.
4(c) Second Supplemental Indenture, dated as of January 15, 1990, to the
Zero Coupon Notes Indenture. Incorporated by reference to Exhibit 4(q)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989 (the "1989 Form 10-K").
4(d) Third Supplemental Indenture, dated as of October 15, 1990, to the
Zero Coupon Notes Indenture. Incorporated by reference to Exhibit 4(r)
to Amendment No. 1 to the Annual Report on Form 10-K of Finance for
the fiscal year ended December 31, 1990.
</TABLE>
18
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4(e) Fourth Supplemental Indenture, dated as of June 15, 1992, to the Zero
Coupon Notes Indenture. Incorporated by reference to Exhibit 19.4 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1992.
4(f) Indenture, dated as of March 31, 1993, with respect to Finance's
9 1/4% Senior Subordinated Notes Due March 15, 2003, together with
exhibits. Incorporated by reference to Exhibit 4 to Registrant's
Current Report on Form 8-K dated March 31, 1993.
10(a)* Forms of Incentive Stock Option Agreement and Non-Qualified Stock
Option Agreement. Incorporated by reference to Exhibit 10(b) to the
1989 Form 10-K.
10(b) Management Agreement, dated as of January 1, 1988, between Registrant
and MCH. Incorporated by reference to Exhibit 10(i) to the MCH Form
S-1.
10(c) Tax Allocation Agreement, dated as of January 1, 1988, between
Registrant and MCH. Incorporated by reference to Exhibit 10(h) to the
MCH Form S-1.
10(d) Tax Allocation Agreement, dated as of March 9, 1988, between
Registrant and Finance. Incorporated by reference to Exhibit 10(g) to
the MCH Form S-1.
10(e)* 1983 Stock Option and Stock Appreciation Rights Plan, as amended.
Incorporated by reference to Exhibit 4.3 to the Registration Statement
filed by Registrant on Form S-8 under the Securities Act of 1933 (No.
33-16037) (the "Form S-8").
10(f)* 1984 Stock Option and Stock Appreciation Rights Plan, as amended.
Incorporated by reference to Exhibit 4.2 to the Form S-8.
10(g) Management Agreement, dated as of January 1, 1985, between Registrant
and GNLV. Incorporated by reference to Exhibit 10(g) to Amendment No.
2 to the Registration Statement filed by GNLV FINANCE CORP. and GNLV
on Form S-1 under the Securities Act of 1933 (No. 33-5694) (the "GNLV
Form S-1").
10(h) Tax Allocation Agreement, dated as of January 1, 1985, between
Registrant and GNLV. Incorporated by reference to Exhibit 10(h) to the
GNLV Form S-1.
10(i)* 1986 Stock Option and Stock Appreciation Rights Plan, as amended.
Incorporated by reference to Exhibit 4.1 to the Form S-8.
10(j)* 1992 Stock Option and Stock Appreciation Rights Plan. Incorporated by
reference to Exhibit 10(n) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1991 (the "1991 Form 10-K").
10(k)* 1993 Stock Option and Stock Appreciation Rights Plan. Incorporated by
reference to Exhibit 10(m) to Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992 (the "1992 Form 10-K").
10(l)* Executive Retirement Plan Agreement, dated as of December 1, 1986,
between Registrant and Kenneth R. Wynn. Incorporated by reference to
Exhibit 10(hh) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1986 (the "1986 Form 10-K").
10(m)* Executive Retirement Plan Agreement, dated as of December 1, 1986,
between Registrant and James E. Pettis. Incorporated by reference to
Exhibit 10(mm) to the 1986 Form 10-K.
10(n)* 1992 Non-Employee Director Stock Option Plan. Incorporated by
reference to Exhibit 10(t) to the 1991 Form 10-K.
10(o) Management Agreement, dated as of January 1, 1992, between Registrant
and TI Corp. Incorporated by reference to Exhibit 10(oo) to Amendment
No. 2 to the Registration Statement filed by Treasure Island Finance
Corp., TI Corp. and MCH on Form S-1 under the Securities Act of 1933
(No. 33-45415) (the "TI Corp. Form S-1").
</TABLE>
19
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<TABLE>
<S> <C>
10(p) Deed of Trust, Assignment of Rents and Security Agreement, dated as of
March 23, 1988, from MCH in favor of First Interstate Bank of Nevada,
N.A. ("FIBN"), as trustee. Incorporated by reference to Exhibit 10(xx)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1987.
10(q) Tax Allocation Agreement, dated as of January 1, 1992, between
Registrant and TI Corp. Incorporated by reference to Exhibit 10(pp) to
Amendment No. 2 to the TI Corp. Form S-1.
10(r) Tax Allocation Agreement, dated as of January 1, 1992, between
Registrant and Treasure Island Finance Corp. Incorporated by reference
to Exhibit 10(qq) to Amendment No. 2 to the TI Corp. Form S-1.
10(s) Management Agreement, dated as of September 30, 1988, between
Registrant and GNL. Incorporated by reference to Exhibit 10(yy) to the
1989 Form 10-K.
10(t) Tax Allocation Agreement, dated as of September 30, 1988, between
Registrant and GNL. Incorporated by reference to Exhibit 10(zz) to the
1989 Form 10-K.
10(u) Ground Lease, dated as of March 1, 1992, between MCH and TI Corp.
Incorporated by reference to Exhibit 10(nn) to Amendment No. 2 to the
TI Corp. Form S-1.
10(v) Amendment Agreement, dated as of October 4, 1990, between MCH, as
trustor, and FIBN, as beneficiary. Incorporated by reference to
Exhibit 4.12 to Registrant's Current Report on Form 8-K dated October
4, 1990.
10(w) Easement, dated December 28, 1990, from MH, INC. ("MH") in favor of
Stephen A. Wynn. Incorporated by reference to Exhibit 10(ll) to
Amendment No. 1 to the Registration Statement filed by Finance and MCH
on Form S-1 under the Securities Act of 1933 (No. 33-38496).
10(x) Leasehold Deed of Trust, Assignment of Rents and Security Agreement,
dated as of March 25, 1992, from TI Corp. in favor of FIBN, as
trustee. Incorporated by reference to Exhibit 10(cc) to the Annual
Report on Form 10-K of Finance for the fiscal year ended December 31,
1991 (the "Finance 1991 Form 10-K").
10(y)* Employment Agreement, dated as of August 18, 1992, between Registrant
and Frank Visconti. Incorporated by reference to Exhibit 19.4 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1992.
10(z)* Employment Agreement, dated August 16, 1995, between Registrant and
James E. Pettis. Incorporated by reference to Exhibit 10.5 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995 (the "September 1995 Form 10-Q").
10(aa)* Employment Agreement, dated December 16, 1992, between Registrant and
Stephen A. Wynn. Incorporated by reference to Exhibit 10(zz) to the
1992 Form 10-K.
10(bb) Amendment Agreement, dated as of November 24, 1992, between MCH, as
trustor, and FIBN, as beneficiary. Incorporated by reference to
Exhibit 10(ddd) to the 1992 Form 10-K.
10(cc) First Amendment to Ground Lease, dated as of March 1, 1993, between
MCH and TI Corp. Incorporated by reference to Exhibit 10(ggg) to the
1992 Form 10-K.
10(dd) Second Amendment to Deed of Trust, dated as of February 21, 1992,
between MCH, as trustor, and FIBN, as beneficiary. Incorporated by
reference to Exhibit 10(z) to the Finance 1991 Form 10-K.
10(ee) Lease, dated September 4, 1962, and Agreement, dated March 25, 1975,
between the Trustees of the Fraternal Order of Eagles, Las Vegas Aerie
1213, and Registrant. Incorporated by reference to Exhibit 10(c) to
the GNLV Form S-1.
10(ff) Lease Agreement, dated July 1, 1973, and Amendment to Lease, dated
February 27, 1979, between First National Bank of Nevada, Trustee
under Private Trust No. 87, and Registrant. Incorporated by reference
to Exhibit 10(d) to the GNLV Form S-1.
</TABLE>
20
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<TABLE>
<S> <C>
10(gg) Lease, dated April 30, 1976, between Elizabeth Properties Trust,
Elizabeth Zahn, Trustee, and Registrant. Incorporated by reference to
Exhibit 10(e) to the GNLV Form S-1.
10(hh) Land Sales Contract, dated March 26, 1993, between MH and Stephen A.
Wynn, together with exhibits. Incorporated by reference to Exhibit
10(yy) to the Registration Statement filed by Finance and MCH on Form
S-4 under the Securities Act of 1933 (No. 33-62514).
10(ii) Second Amendment to Ground Lease, dated as of October 26, 1993,
between MCH and TI Corp. Incorporated by reference to Exhibit 10(bbb)
to Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (the "1993 Form 10-K").
10(jj)* First Amendment to Executive Retirement Plan Agreement, dated as of
December 1, 1993, between Registrant and Kenneth R. Wynn. Incorporated
by reference to Exhibit 10(ccc) to the 1993 Form 10-K.
10(kk)* Amended and Restated 1994 Cash Bonus Plan. Incorporated by reference
to Exhibit 10(qq) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (the "1994 Form 10-K").
10(ll) Reducing Revolving Loan Agreement, dated as of May 25, 1994, among
Registrant, MCH, TI Corp., MR Realty, MH, each bank party thereto,
Bank of America National Trust and Savings Association, Bankers Trust
Company, The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency
and Societe Generale, as Co-Agents, and Bank of America National Trust
and Savings Association, as Administrative Co-Agent (without schedules
or exhibits) (the "MRI Loan Agreement"). Incorporated by reference to
Exhibit 99 to Registrant's Current Report on Form 8-K dated May 25,
1994.
10(mm) Joint Venture Agreement of Victoria Partners, dated as of December 9,
1994, among MRGS Corp., Gold Strike L.V. and Registrant (without
exhibit) (the "Joint Venture Agreement"). Incorporated by reference to
Exhibit 99.1 to Registrant's Current Report on Form 8-K dated December
9, 1994 (the "December 1994 Form 8-K").
10(nn) Reducing Revolving Loan Agreement, dated as of December 21, 1994,
among Victoria Partners, each bank party thereto, The Long-Term Credit
Bank of Japan, Ltd., Los Angeles Agency and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings Association,
as Administrative Agent (without schedules or exhibits) (the "Victoria
Partners Loan Agreement"). Incorporated by reference to Exhibit 99.2
to Amendment No. 1 to the December 1994 Form 8-K on Form 8-K/A.
10(oo) Amendment No. 1 to the Victoria Partners Loan Agreement, dated as of
January 31, 1995. Incorporated by reference to Exhibit 10(uu) to the
1994 Form 10-K.
10(pp)* 1995 Stock Option and Stock Appreciation Rights Plan. Incorporated by
reference to Exhibit A to Registrant's definitive Proxy Statement
filed on April 18, 1995 under cover of Schedule 14A.
10(qq) Amendment No. 1 to the MRI Loan Agreement, dated as of April 6, 1995
(without schedules or exhibits). Incorporated by reference to Exhibit
10(b) to Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1995 (the "March 1995 Form 10-Q").
10(rr) Amendment No. 1 to the Joint Venture Agreement, dated as of April 17,
1995. Incorporated by reference to Exhibit 10(c) to the March 1995
Form 10-Q.
10(ss) Agreement between Denny's, Inc. and Beau Rivage, dated as of March 31,
1995 (without exhibits). Incorporated by reference to Exhibit 10(d) to
the March 1995 Form 10-Q.
10(tt) Amended and Restated Lease, dated as of April 26, 1995, between MKB
Company and Beau Rivage (without exhibits). Incorporated by reference
to Exhibit 10(e) to the March 1995 Form 10-Q.
10(uu) Amendment No. 2 to the Victoria Partners Loan Agreement, dated as of
June 30, 1995 (without exhibit). Incorporated by reference to Exhibit
10.1 to Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1995 (the "June 1995 Form 10-Q").
</TABLE>
21
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10(vv) Stock Purchase Agreement, dated July 24, 1995, among Registrant,
Capital Gaming International, Inc. and Crescent City Capital
Development Corporation (the "Stock Purchase Agreement"). Incorporated
by reference to Exhibit 10.2 to the June 1995 Form 10-Q.
10(ww) Amendment No. 3 to the Victoria Partners Loan Agreement, dated as of
July 28, 1995. Incorporated by reference to Exhibit 10.3 to the June
1995 Form 10-Q.
10(xx) Amendment No. 2 to the MRI Loan Agreement, dated as of August 30, 1995
(without exhibits). Incorporated by reference to Exhibit 10.1 to
Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995 (the "September 1995 Form 10-Q").
10(yy) Amendment No. 3 to the MRI Loan Agreement, dated as of August 30, 1995
(without exhibits). Incorporated by reference to Exhibit 10.2 to the
September 1995 Form 10-Q.
10(zz) Amendment No. 4 to the MRI Loan Agreement, dated as of September 5,
1995 (without exhibits). Incorporated by reference to Exhibit 10.3 to
the September 1995 Form 10-Q.
10(aaa) Amendment No. 2 to the Joint Venture Agreement, dated as of September
25, 1995. Incorporated by reference to Exhibit 10.4 to the September
1995 Form 10-Q.
10(bbb)* Employment Agreement, dated as of December 29, 1995, between
Registrant and Thomas L. Sheer.
10(ccc) Amendment No. 5 to the MRI Loan Agreement, dated as of October 16,
1995 (without exhibits).
10(ddd) Amendment No. 1 to the Stock Purchase Agreement, dated as of December
5, 1995.
10(eee) Amendment No. 4 to the Victoria Partners Loan Agreement, dated as of
October 16, 1995. Incorporated by reference to Exhibit 10(a) to the
Quarterly Report on Form 10-Q of Circus Circus Enterprises, Inc. for
the fiscal quarter ended October 31, 1995.
10(fff) Aircraft Purchase Agreement, dated as of November 21, 1995, between
Aero Lloyd Flugreisen GmbH & Co. Luftverkehrs-KG and Golden Nugget
Aviation Corp. (without schedules).
10(ggg) Amendment No. 6 to the MRI Loan Agreement, dated as of November 30,
1995 (without exhibits).
10(hhh)* Executive Medical Reimbursement Plan.
10(iii) Issuing and Paying Agency Agreement, dated November 13, 1995, between
Registrant, MCH, TI Corp., Bellagio, GNLV and MH, as issuers, and
BankAmerica National Trust Company, as issuing and paying agent
(without exhibit). Incorporated by reference to Exhibit 4.1 to
Registrant's Current Report on Form 8-K dated November 20, 1995 (the
"November 1995 Form 8-K").
10(jjj) Form of Commercial Paper Note of Registrant, MCH, TI Corp., Bellagio,
GNLV and MH. Incorporated by reference to Exhibit 4.2 to the November
1995 Form 8-K.
10(kkk) Commercial Paper Dealer Agreement, dated November 13, 1995, between
Registrant and CS First Boston Corporation (without exhibits).
Incorporated by reference to Exhibit 99.1 to the November 1995 Form
8-K.
10(lll) Commercial Paper Dealer Agreement, dated November 13, 1995, between
Registrant and BA Securities, Inc. (without exhibits). Incorporated by
reference to Exhibit 99.2 to the November 1995 Form 8-K.
10(mmm) Commercial Paper Dealer Agreement, dated November 13, 1995, between
Registrant and Morgan Stanley & Co. Incorporated (without exhibits).
Incorporated by reference to Exhibit 99.3 to the November 1995 Form
8-K.
10(nnn) Amendment No. 3 to the Joint Venture Agreement, dated as of February
28, 1996.
10(ooo) Agreement, dated as of March 7, 1995, between Atlandia Design and
Furnishings, Inc. and Marnell Corrao Associates (without schedules).
</TABLE>
22
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11 Computation of net income per share of common stock.
21 List of subsidiaries of Registrant.
23(a) Consent of Arthur Andersen LLP.
23(b) Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule.
</TABLE>
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*Constitutes an executive compensation plan or agreement.
(b). REPORTS ON FORM 8-K.
On December 5, 1995, the Registrant filed a Current Report on Form
8-K, dated November 20, 1995. The Registrant reported under Item 5 (i)
the commencement of a commercial paper program providing for the
issuance, on a revolving basis, of up to $350 million outstanding
principal amount of unsecured short-term notes and (ii) the
acquisition of approximately 18.2 acres of land in Biloxi, Mississippi
where the Registrant is currently developing plans for a major new
casino-based destination resort.
23
<PAGE>
MIRAGE RESORTS, INCORPORATED
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Directors and Stockholders
of Mirage Resorts, Incorporated
We have audited the accompanying consolidated balance sheets of Mirage
Resorts, Incorporated (a Nevada corporation) and subsidiaries (the "Company") as
of December 31, 1995 and 1994, and the related consolidated statements of
income, stockholders' equity and cash flows for the years ended December 31,
1995 and 1994. These consolidated financial statements and the schedule referred
to below are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and schedule
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Mirage Resorts,
Incorporated and subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule for the
years ended December 31, 1995 and 1994 listed in Item 14(a)(2) is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
February 9, 1996
24
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MIRAGE RESORTS, INCORPORATED
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Stockholders
of Mirage Resorts, Incorporated
Las Vegas, Nevada
We have audited the consolidated statements of income, stockholders' equity
and cash flows of Mirage Resorts, Incorporated and subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Mirage Resorts, Incorporated and subsidiaries for the year ended December 31,
1993 in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The financial statement schedule listed
in Item 14(a)(2) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
information included in the schedule for the year ended December 31, 1993 has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, when considered in relation to the
basic financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND
Los Angeles, California
February 11, 1994
25
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
AT DECEMBER 31
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents....................... $ 48,026 $ 47,142
Receivables, net of allowance for doubtful
accounts of
$47,161 and $37,937............................ 76,859 60,192
Inventories..................................... 25,601 26,374
Deferred income taxes........................... 42,553 27,906
Prepaid expenses and other...................... 21,777 17,901
---------- ----------
Total current assets.......................... 214,816 179,515
Property and equipment, net....................... 1,439,517 1,374,992
Other assets, net................................. 137,380 86,932
---------- ----------
$1,791,713 $1,641,439
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable................................ $ 84,831 $ 74,361
Accrued payroll................................. 39,375 29,782
Other accrued expenses.......................... 49,630 43,962
Current maturities of long-term debt............ 515 3,986
---------- ----------
Total current liabilities..................... 174,351 152,091
Long-term debt, net of current maturities......... 248,548 359,584
Other liabilities, including deferred income taxes
of $148,615 and $90,400.......................... 159,471 98,842
---------- ----------
Total liabilities............................. 582,370 610,517
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, par value $0.008: authorized
562,500,000 shares; issued 117,573,825 shares;
outstanding 91,670,747 and 90,995,638 shares... 940 940
Additional paid-in capital and other............ 710,816 699,116
Retained earnings............................... 650,170 487,007
Treasury stock, at cost: 25,903,078 and
26,578,187 shares.............................. (152,583) (156,141)
---------- ----------
Total stockholders' equity.................... 1,209,343 1,030,922
---------- ----------
$1,791,713 $1,641,439
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
26
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
REVENUES
Casino................................................................ $ 782,812 $ 727,648 $ 586,403
Rooms................................................................. 268,734 256,711 180,936
Food and beverage..................................................... 208,943 206,128 158,889
Entertainment......................................................... 87,478 71,198 56,950
Retail................................................................ 63,187 67,016 48,151
Other................................................................. 42,562 42,240 22,084
----------- ----------- -----------
1,453,716 1,370,941 1,053,413
Less -- promotional allowances........................................ (122,972) (116,764) (100,111)
----------- ----------- -----------
1,330,744 1,254,177 953,302
----------- ----------- -----------
COSTS AND EXPENSES
Casino................................................................ 387,243 361,421 300,377
Rooms................................................................. 82,863 81,322 55,586
Food and beverage..................................................... 136,868 136,925 103,541
Entertainment......................................................... 73,107 63,139 46,263
Retail................................................................ 40,728 42,773 32,292
Other................................................................. 24,119 24,874 14,800
Provision for losses on receivables................................... 23,024 20,520 19,819
General and administrative............................................ 156,454 156,314 114,957
Depreciation and amortization......................................... 86,223 93,441 74,147
Corporate expense..................................................... 36,028 35,609 29,999
Preopening and related promotional expense............................ -- -- 29,793
----------- ----------- -----------
1,046,657 1,016,338 821,574
----------- ----------- -----------
OPERATING INCOME........................................................ 284,087 237,839 131,728
----------- ----------- -----------
OTHER INCOME AND (EXPENSES)
Interest and other income............................................. 5,123 5,117 5,299
Interest cost......................................................... (32,799) (52,030) (88,545)
Interest capitalized.................................................. 9,616 7,815 25,080
Other................................................................. (766) (2,737) (1,259)
----------- ----------- -----------
(18,826) (41,835) (59,425)
----------- ----------- -----------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM....................... 265,261 196,004 72,303
Provision for income taxes............................................ (95,313) (71,265) (24,234)
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM........................................ 169,948 124,739 48,069
Extraordinary item -- loss on early retirements of debt,
net of applicable income tax benefit................................. (6,785) (10,415) (18,837)
----------- ----------- -----------
NET INCOME.............................................................. $ 163,163 $ 114,324 $ 29,232
----------- ----------- -----------
----------- ----------- -----------
INCOME PER SHARE OF COMMON STOCK
Income before extraordinary item...................................... $ 1.77 $ 1.32 $ .58
Extraordinary item -- loss on early retirements of debt,
net of applicable income tax benefit................................. (.07) (.11) (.23)
----------- ----------- -----------
NET INCOME PER SHARE OF COMMON STOCK.................................... $ 1.70 $ 1.21 $ .35
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
27
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------- PAID-IN
SHARES CAPITAL RETAINED TREASURY
OUTSTANDING AMOUNT AND OTHER EARNINGS STOCK TOTAL
------------ ----------- ---------- ---------- ----------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCES, JANUARY 1, 1993........................ 74,599,645 $ 940 $ 453,666 $ 343,451 $ (244,446) $ 553,611
Issuance of common stock....................... 13,750,000 -- 229,575 -- 74,020 303,595
Exercise of common stock options............... 2,098,208 -- 2,082 -- 11,470 13,552
Tax benefit from stock option exercises........ -- -- 9,147 -- -- 9,147
Issuance of restricted common stock in
satisfaction of deferred compensation
obligations................................... 182,191 -- 695 -- 1,052 1,747
Other.......................................... (23,436) -- 422 -- (442) (20)
Net income..................................... -- -- -- 29,232 -- 29,232
------------ ----- ---------- ---------- ----------- ------------
BALANCES, DECEMBER 31, 1993...................... 90,606,608 940 695,587 372,683 (158,346) 910,864
Exercise of common stock options............... 392,751 -- 291 -- 2,296 2,587
Tax benefit from stock option exercises........ -- -- 2,234 -- -- 2,234
Other.......................................... (3,721) -- 1,004 -- (91) 913
Net income..................................... -- -- -- 114,324 -- 114,324
------------ ----- ---------- ---------- ----------- ------------
BALANCES, DECEMBER 31, 1994...................... 90,995,638 940 699,116 487,007 (156,141) 1,030,922
Exercise of common stock options............... 573,250 -- 1,889 -- 3,352 5,241
Tax benefit from stock option exercises
and the vesting of restricted common stock.... -- -- 5,969 -- -- 5,969
Other.......................................... 101,859 -- 3,842 -- 206 4,048
Net income..................................... -- -- -- 163,163 -- 163,163
------------ ----- ---------- ---------- ----------- ------------
BALANCES, DECEMBER 31, 1995...................... 91,670,747 $ 940 $ 710,816 $ 650,170 $ (152,583) $ 1,209,343
------------ ----- ---------- ---------- ----------- ------------
------------ ----- ---------- ---------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
28
<PAGE>
MIRAGE RESORTS, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................................. $ 163,163 $ 114,324 $ 29,232
Adjustments to reconcile net income to net cash provided by operating
activities
Provision for losses on receivables....................................... 23,024 20,520 19,819
Depreciation and amortization of property and equipment, including amounts
reported as corporate expense............................................ 90,575 97,178 76,965
Amortization of debt discount and issuance costs.......................... 13,172 13,280 13,745
Other amortization........................................................ 3,714 4,540 4,034
Loss on disposal and abandonment of property and equipment................ 3,424 13,635 347
Loss on early retirements of debt......................................... 10,439 16,024 28,980
Deferred income taxes..................................................... 43,568 29,135 2,337
Changes in assets and liabilities
Increase in receivables and other current assets........................ (42,794) (11,775) (16,467)
Increase (decrease) in trade accounts payable and accrued expenses...... 24,284 (9,831) 27,488
Other..................................................................... (7,283) (269) (5,655)
---------- ---------- ----------
Net cash provided by operating activities............................. 325,286 286,761 180,825
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures........................................................ (179,385) (69,111) (432,388)
Decrease in non-current cash equivalents restricted for construction........ -- -- 157,196
Joint venture and other equity investments.................................. (22,455) (22,810) (1,877)
Proceeds from sales of investments.......................................... 8,249 21,321 --
Increase (decrease) in construction accounts payable........................ 1,447 (1,797) (20,043)
Other....................................................................... (6,280) 273 9,173
---------- ---------- ----------
Net cash used for investing activities................................ (198,424) (72,124) (287,939)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Early retirements of long-term debt......................................... (134,180) (193,990) (377,698)
Proceeds from issuance of long-term debt.................................... -- -- 97,500
Net increase (decrease) in bank credit facility and
commercial paper borrowings................................................ 21,882 3,000 (28,000)
Other additions to (reductions in) debt..................................... (21,985) (32,217) 4,904
Proceeds from issuance of common stock...................................... -- -- 303,595
Exercise of common stock options, including related income tax benefit...... 9,458 4,821 22,699
Other....................................................................... (1,153) (6,571) (1,407)
---------- ---------- ----------
Net cash provided by (used for) financing activities.................. (125,978) (224,957) 21,593
---------- ---------- ----------
CASH AND CASH EQUIVALENTS
Increase (decrease) for the year............................................ 884 (10,320) (85,521)
Balance, beginning of year.................................................. 47,142 57,462 142,983
---------- ---------- ----------
Balance, end of year........................................................ $ 48,026 $ 47,142 $ 57,462
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid (received) during the year for
Interest, net of amounts capitalized...................................... $ 13,325 $ 34,818 $ 60,923
Income taxes.............................................................. 37,000 31,500 (6,080)
Contribution of land in exchange for partnership interest................... 23,170 -- --
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
29
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. Mirage Resorts, Incorporated (the "Company"),
through wholly owned Nevada subsidiaries, owns and operates some of the most
successful 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 constructing Bellagio, a major new 3,000-guest room luxury
hotel, casino and resort facility, on 120 acres near the center of the Las Vegas
Strip. Additionally, the Company is a 50% partner in a joint venture that is
constructing Monte Carlo, a 3,024-guest room, mid-priced resort on 46 acres
located adjacent to the Bellagio site.
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Those principles require management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated. Investments in 50% or less owned
entities, including joint ventures, over which the Company has the ability to
exercise significant influence are accounted for using the equity method.
CASINO REVENUES AND PROMOTIONAL ALLOWANCES. The Company recognizes as
casino revenues the net win from gaming activities, which is the difference
between gaming wins and losses. Revenues include the estimated retail value of
rooms, food and beverage and other goods and services provided to customers on a
complimentary basis as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Rooms.................................................... $ 52,592 $ 49,900 $ 45,153
Food and beverage........................................ 63,664 61,389 49,701
Other.................................................... 6,716 5,475 5,257
---------- ---------- ----------
$ 122,972 $ 116,764 $ 100,111
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Such amounts are then deducted as promotional allowances. The estimated
costs of providing these promotional allowances of $87,203,000 in 1995,
$83,227,000 in 1994 and $69,449,000 in 1993 have been classified primarily as
casino costs and expenses.
CASH AND CASH EQUIVALENTS. The Company classifies as cash equivalents all
highly liquid debt instruments with a maturity of three months or less when
purchased. Cash equivalents are carried at cost which approximates fair value.
CONCENTRATIONS OF CREDIT RISK. Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
short-term investments and receivables.
The Company's short-term investments typically consist of U.S.
Government-backed repurchase agreements with maturities of 30 days or less. Such
investments are made with financial institutions having a high credit quality
and the Company limits the amount of its credit exposure to any one financial
institution. Due to the short-term nature of the instruments, the Company does
not take possession of the securities, which are instead held in a custodial
account.
30
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company extends credit to a limited number of casino patrons, but only
following background checks and investigations of creditworthiness. At December
31, 1995, a substantial portion of the receivables was due from foreign
customers. The collectibility of these receivables could be affected by future
business or economic trends or other significant events in the countries in
which such customers reside. At December 31, 1995, no individual customer
accounted for more than five percent of the Company's total receivables.
The Company maintains an allowance for doubtful accounts to reduce its
receivables to their carrying amount, which approximates fair value. Management
believes that as of December 31, 1995, no significant concentrations of credit
risk existed for which an allowance had not already been determined and
recorded.
INVENTORIES. Inventories are stated at the lower of cost or market value.
Cost is determined by the first-in, first-out and specific identification
methods.
PROPERTY AND EQUIPMENT. Property and equipment are stated at cost.
Depreciation is provided over the estimated useful lives of the assets using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes.
The costs of significant improvements are capitalized. Costs of normal
repairs are charged to expense as incurred. The cost and accumulated
depreciation of property and equipment retired or otherwise disposed of are
eliminated from the respective accounts and any resulting gain or loss is
included in income.
CAPITALIZED INTEREST. The Company capitalizes interest costs associated
with major construction projects. When no debt is incurred specifically for a
project, interest is capitalized on amounts expended on the project at the
weighted average cost of the Company's outstanding borrowings. The amount of
interest capitalized in any accounting period cannot exceed the Company's total
interest cost in such period. Capitalization of interest ceases when the project
is substantially complete.
DEBT DISCOUNT AND ISSUANCE COSTS. Debt discount and issuance costs are
capitalized and amortized to expense based on the terms of the related debt
agreements using the effective interest method or a method which approximates
the effective interest method.
CORPORATE EXPENSE. Corporate expense represents unallocated payroll costs,
professional fees, costs associated with operating and maintaining the Company's
aircraft and various other expenses not directly related to operating the
Company's hotel-casinos. Corporate expense includes the costs associated with
the Company's evaluation and pursuit of new gaming opportunities. Such costs are
expensed as incurred until construction of a specific project has become
relatively certain.
PREOPENING EXPENSE. Preopening expense, representing primarily direct
personnel and other operating costs incurred prior to the opening of a new
hotel-casino, are capitalized as incurred and amortized to expense on a
straight-line basis over the 60-day period following opening of the related
facility. As a result, the capitalized preopening costs associated with the
development of Treasure Island were fully charged to expense during 1993
following the October 26 commencement of operations.
INCOME PER SHARE OF COMMON STOCK. Income per share of common stock is
computed based on the weighted average number of shares of common stock and
dilutive common stock equivalents outstanding during the period. Common stock
equivalents included in the computation consist of those shares issuable upon
the assumed exercise of dilutive common stock options as determined under the
treasury stock method. The number of shares used in the computation of income
per share of common stock was 96,165,707 in 1995, 94,695,036 in 1994 and
83,409,411 in 1993.
Fully diluted per share amounts are substantially the same as primary per
share amounts for the periods presented.
31
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS. Certain amounts in the 1994 and 1993 consolidated
financial statements have been reclassified to conform with the 1995
presentation. These reclassifications had no effect on the Company's net income.
NOTE 2 -- PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------------
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Land.............................................................. $ 225,888 $ 201,590
Land improvements................................................. 117,258 120,775
Buildings......................................................... 888,402 871,980
Furniture, fixtures and equipment................................. 597,254 560,299
Construction in progress.......................................... 84,516 25,313
------------ ------------
1,913,318 1,779,957
Less accumulated depreciation..................................... (473,801) (404,965)
------------ ------------
$ 1,439,517 $ 1,374,992
------------ ------------
------------ ------------
</TABLE>
NOTE 3 -- LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
--------------------------
1995 1994
------------ ------------
(IN THOUSANDS)
<S> <C> <C>
Zero coupon first mortgage notes (effective interest rate of 11%),
due March 1998................................................... $ 104,700 $ 93,935
9 7/8% first mortgage notes, redeemed in April 1995............... -- 125,991
9 1/4% senior subordinated notes, due March 2003.................. 100,000 100,000
Bank credit facility at a floating interest rate (6.448% at
December 31, 1995)............................................... 25,000 20,000
Commercial paper at a weighted average effective interest rate of
6.34%............................................................ 16,882 --
Floating rate aircraft loan, repaid in August 1995................ -- 22,134
Other notes bearing interest at rates between 7% and 12% at
December 31, 1995, maturities to September 2007.................. 2,481 1,510
------------ ------------
249,063 363,570
Less current maturities........................................... (515) (3,986)
------------ ------------
$ 248,548 $ 359,584
------------ ------------
------------ ------------
</TABLE>
The zero coupon first mortgage notes were issued in March 1988 by GNS
FINANCE CORP. ("Finance"), a wholly owned subsidiary of the Company. The notes
are collateralized by first liens on The Mirage and Treasure Island and are
guaranteed by The Mirage operating subsidiary. The net proceeds from the
offering were used to fund a portion of the cost of the development and
construction of The Mirage. The notes are shown in the above table at their
accreted value rather than their face amount, as the holders of the notes are
not entitled to the face amount upon default or other accelerated maturity, but
only to the accreted value. The unamortized debt discount was $28,300,000 and
$39,065,000 at December 31, 1995 and 1994, respectively.
32
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- LONG-TERM DEBT (CONTINUED)
The 9 1/4% senior subordinated notes were issued by Finance in March 1993.
As required by the indenture governing the notes, the net proceeds from the
offering were used to retire senior indebtedness related to The Mirage and
Treasure Island. The notes are guaranteed by The Mirage operating subsidiary and
are redeemable at the option of the Company, in whole or in part, on or after
March 15, 1998 at prices set forth in the indenture.
On April 6, 1995, the Company's $525 million revolving bank credit facility
maturing in May 1999 was amended to increase the total availability to $1
billion (as so amended, the "Facility").
Borrowings under the Facility bear interest at a specified premium over, at
the Company's option, the prime rate or the one-, two-, three- or six-month
London Interbank Offered Rate ("LIBOR"). The premium is based on the Company's
Annualized Funded Debt Ratio (as defined) and the rating of its zero coupon
first mortgage notes. The premium is currently zero for prime rate borrowings
and 75 basis points for LIBOR borrowings. Alternatively, the Company may request
bids from the participating banks, which in the past has resulted in borrowings
at less than these premiums. The Company incurs an annual commitment fee on the
unused portion of the Facility, which is also based on the Company's Annualized
Funded Debt Ratio and the rating of its first mortgage notes. The commitment fee
is currently 0.1625% per annum. The Company pays an additional fee of 0.15% per
annum on the portion of the Facility supporting outstanding commercial paper
borrowings discussed below.
The Company and its significant subsidiaries, excluding the subsidiary that
owns and operates the Golden Nugget-Laughlin and certain other subsidiaries (the
"Excluded Subsidiaries"), are directly liable for or have guaranteed the
repayment of borrowings under the Facility. Borrowings under the Facility are
currently uncollateralized. If the Company's Leverage Ratio (as defined) were to
exceed 2.75 to 1.0, or if the rating of its first mortgage notes were to decline
to below investment grade, the banks would be granted a first lien on the
Company's Golden Nugget, Bellagio and Shadow Creek Golf Course properties and
certain other assets, including The Mirage and Treasure Island properties if the
first mortgage notes are then no longer outstanding. The Company has agreed,
with certain limited exceptions, not to dispose of or further encumber such
properties and assets without the approval of its bank group.
The credit agreement governing the Facility contains covenants requiring the
Company and its subsidiaries (other than the Excluded Subsidiaries) to maintain
a specified tangible net worth and certain financial ratios. The credit
agreement also contains covenants that limit to various permitted amounts the
ability of the Company and its subsidiaries (other than the Excluded
Subsidiaries) to, among other things, incur additional debt, commit funds to
capital expenditures or new business ventures, make investments, merge or sell
assets or pay dividends on or repurchase the Company's capital stock. At
December 31, 1995, the credit agreement limited dividend payments on and
repurchases of the Company's common stock to a total of $200.2 million.
The Company has established a commercial paper program that provides for the
issuance, on a revolving basis, of up to $350 million outstanding principal
amount of uncollateralized short-term notes. The Company is required to maintain
credit availability under the Facility equal to the outstanding principal amount
of commercial paper borrowings.
Borrowings under the Facility and commercial paper have been classified as
long-term debt because management intends to replace such borrowings as they
come due and to have such borrowings outstanding for a period greater than one
year. However, the amount of outstanding borrowings is expected to fluctuate and
may be reduced from time to time.
33
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 -- LONG-TERM DEBT (CONTINUED)
During the three years ended December 31, 1995, the Company retired, prior
to scheduled maturities, certain of the publicly held debt securities issued by
its wholly owned subsidiaries. The debt securities and respective principal
amounts retired, and the resulting aggregate extraordinary losses, were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
NOTES ASSOCIATED WITH THE MIRAGE AND TREASURE ISLAND
13 3/4% first mortgage notes..................................... $ -- $ -- $ 100,000
Zero coupon first mortgage notes(a).............................. -- 10,320 --
9 7/8% first mortgage notes...................................... 125,991 174,009 --
12% second mortgage notes........................................ -- -- 33,350
NOTES ASSOCIATED WITH THE GOLDEN NUGGET-LAS VEGAS
11 1/4% first mortgage notes..................................... -- -- 110,050
12 3/4% uncollateralized notes................................... -- -- 112,941
---------- ---------- ----------
Total principal amount......................................... $ 125,991 $ 184,329 $ 356,341
---------- ---------- ----------
---------- ---------- ----------
EXTRAORDINARY LOSS
Gross extraordinary loss......................................... $ (10,439) $ (13,028) $ (28,980)
Income tax benefit............................................... 3,654 4,560 10,143
---------- ---------- ----------
Net extraordinary loss......................................... $ (6,785) $ (8,468) $ (18,837)
---------- ---------- ----------
---------- ---------- ----------
- ----------------
(A) REPRESENTS THE ACCRETED VALUE OF THE NOTES ON THE DATE OF RETIREMENT. THE FACE AMOUNT OF THE NOTES
RETIRED WAS $15.0 MILLION.
</TABLE>
During 1994, the Company incurred an additional extraordinary loss of
$1,947,000, net of applicable income tax benefit of $1,049,000, in connection
with the write-off of the unamortized deferred financing costs associated with a
previous bank credit facility.
Maturities of the Company's long-term debt during the next five years are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 (IN THOUSANDS)
- ------------------------------------------------------------------------------ --------------
<S> <C>
1996.......................................................................... $ 515
1997.......................................................................... 204
1998.......................................................................... 133,218
1999.......................................................................... 42,115
2000.......................................................................... 203
</TABLE>
The estimated fair value of the Company's long-term debt at December 31,
1995 was approximately $268 million, versus its book value of approximately $249
million. At December 31, 1994, the estimated fair value of the Company's
long-term debt was approximately $373 million, versus its book value of
approximately $364 million. The estimated fair value amounts were based on
quoted market prices on or about December 31, 1995 and 1994 for the Company's
debt securities that are traded. For the debt securities that are not traded,
fair value was estimated based on the quoted market prices for similar issues or
on the current rates offered to the Company for debt having the same remaining
maturities.
34
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- INCOME TAXES
The provision for income taxes for financial reporting purposes consisted of
the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1995 1994 1993
--------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Income from continuing operations........................... $ 95,313 $ 71,265 $ 24,234
Tax benefit from extraordinary losses on early retirements
of debt.................................................... (3,654) (5,609) (10,143)
--------- --------- ----------
$ 91,659 $ 65,656 $ 14,091
--------- --------- ----------
--------- --------- ----------
</TABLE>
The provision for income taxes attributable to income from continuing
operations consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CURRENT
Federal.................................................... $ 51,564 $ 39,538 $ 17,054
State...................................................... (33) 188 1
--------- --------- ---------
51,531 39,726 17,055
DEFERRED
Federal.................................................... 43,782 31,539 7,179
--------- --------- ---------
$ 95,313 $ 71,265 $ 24,234
--------- --------- ---------
--------- --------- ---------
</TABLE>
The provision for income taxes attributable to income from continuing
operations differs from the amount computed at the federal income tax statutory
rate as a result of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Amount at statutory rate..................................... $ 92,841 $ 68,601 $ 25,306
Settlement of examinations................................... -- -- (1,336)
Change in statutory rate..................................... -- -- 1,386
Other........................................................ 2,472 2,664 (1,122)
--------- --------- ---------
$ 95,313 $ 71,265 $ 24,234
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company increased its 1993 income tax provision and deferred tax
liability as a result of legislation enacted in August 1993 which increased the
federal income tax statutory rate from 34% to 35% effective January 1, 1993.
The Internal Revenue Service has completed examinations of the Company's
federal income tax returns through 1990. An examination of the years 1991 and
1992 is currently in process. In the opinion of management, any tax liability
arising from the current examination will not have a material adverse effect on
the Company's financial position or results of operations.
35
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- INCOME TAXES (CONTINUED)
The components of the deferred tax liability consisted of the following:
<TABLE>
<CAPTION>
AT DECEMBER 31
----------------------
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX LIABILITIES
Temporary differences related to property and equipment............. $ 143,234 $ 129,092
Other temporary differences......................................... 19,199 16,199
---------- ----------
Gross deferred tax liabilities.................................... 162,433 145,291
---------- ----------
DEFERRED TAX ASSETS
Provision for losses on receivables................................. 16,506 13,278
Alternative minimum tax credit(a)................................... 15,402 42,769
Deferred compensation............................................... 4,395 4,406
Preopening expense, net of amortization............................. 4,204 5,733
Other temporary differences......................................... 15,864 16,611
---------- ----------
Gross deferred tax assets......................................... 56,371 82,797
---------- ----------
Net deferred tax liabilities...................................... $ 106,062 $ 62,494
---------- ----------
---------- ----------
- ----------------
(A) THE EXCESS OF THE ALTERNATIVE MINIMUM TAX OVER THE REGULAR FEDERAL INCOME TAX IS A TAX
CREDIT WHICH CAN BE CARRIED FORWARD INDEFINITELY TO REDUCE FUTURE FEDERAL INCOME TAX
LIABILITIES.
</TABLE>
NOTE 5 -- EMPLOYEE BENEFIT PLANS
Employees of the Company who are members of various unions are covered by
union-sponsored, collectively bargained, multi-employer health and welfare and
defined benefit pension plans. The Company recorded an expense of $29,751,000 in
1995, $25,692,000 in 1994 and $24,223,000 in 1993 under such plans. Sufficient
information is not available from the plans' sponsors to permit the Company to
determine its share of unfunded vested benefits, if any.
The Company has a retirement savings plan under Section 401(k) of the
Internal Revenue Code covering its non-union employees. The plan allows
employees to defer up to the lesser of the Internal Revenue Code-prescribed
maximum amount ($9,240 for 1995) or 15% of their income on a pre-tax basis
through contributions to the plan. The Company matches 50% of eligible
employees' contributions up to a maximum of 4% of their individual earnings
(provided that, for such purpose, earnings may not exceed $150,000 per year).
The Company recorded charges for matching contributions of $3,469,000 in 1995,
$2,583,000 in 1994 and $2,458,000 in 1993.
The Company also has a deferred compensation plan for the benefit of certain
of its key executives. Under the terms of the plan, each executive will be
entitled to a retirement benefit payable in 120 equal monthly installments
commencing in the month following the vesting date. Vesting is based upon age
and years of service. The amount of the annual benefit payable to each executive
will be equal to his annual salary on the date he entered the plan increased by
8% per year from the later of the effective date or the date the executive has
completed 10 years of full-time service to the vesting date, or to the date
payment commences if the executive remains employed on a full-time basis by the
Company and elects to defer payment. Benefits payable under the plan represent
unfunded and unsecured liabilities of the Company, and the present value of such
benefits is being charged ratably to expense over the respective vesting period
of each executive.
The Company has entered into amendments to the original plan agreements with
certain of the executives. Pursuant to certain of the amendments, executives
received restricted shares of the Company's common stock in lieu of future
monthly cash payments. During the vesting period, the shares may not be
36
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- EMPLOYEE BENEFIT PLANS (CONTINUED)
transferred or encumbered, except in limited circumstances, and are subject to
risk of forfeiture. The number of shares issued to each executive was based upon
the estimated value of the executive's interest in the plan and the value of the
shares on the date of amendment, taking into account the transferability and
forfeiture restrictions on the shares. The Company issued 182,191 restricted
shares of common stock in 1993 pursuant to an amendment. Deferred compensation
expense based upon the difference between the market price of the common stock
on the date of amendment and the amount previously accrued for the executive's
original retirement benefit is recorded on a straight-line basis over the
respective vesting period of each executive.
The total expense for the plan was $2,336,000 in 1995, $2,751,000 in 1994
and $1,830,000 in 1993.
NOTE 6 -- COMMITMENTS AND CONTINGENCIES
LEASES. The Company leases real estate and various equipment under
operating lease arrangements. Certain real estate leases provide for escalation
of rent based upon a specified price index. Future minimum lease commitments in
effect at December 31, 1995 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 (IN THOUSANDS)
- ------------------------------------------------------------------------------ --------------
<S> <C>
1996.......................................................................... $ 4,031
1997.......................................................................... 2,844
1998.......................................................................... 1,780
1999.......................................................................... 1,517
2000.......................................................................... 1,329
Thereafter.................................................................... 16,781
-------
$ 28,282
-------
-------
</TABLE>
Aggregate rent expense was $3,576,000 in 1995, $3,223,000 in 1994 and
$3,207,000 in 1993.
ENTERTAINMENT SERVICES. The Company has entered into two agreements for
major productions appearing in the showrooms at The Mirage and Treasure Island.
These agreements expire in 1998 and 1999, respectively. Under the terms of the
agreements, the Company is required to pay the producers of the shows a total of
approximately $28 million per year and a percentage of show revenues in excess
of a specified amount or a percentage of show profits. The producers are
responsible for paying the talent and most other costs of presenting the shows.
Future minimum payments remaining under the agreements at December 31, 1995
total approximately $94 million. However, such payments are contingent upon the
actual performance of shows and under certain conditions, including failure of
the respective show to achieve specified financial results, the Company may
terminate the agreements without material financial obligation. The Company made
payments pursuant to the agreements and a previous agreement totaling
approximately $46.7 million in 1995, $46.8 million in 1994 and $31.6 million in
1993. The agreements can be extended at the Company's option until 2001 for the
production at The Mirage and until 2004 for the production at Treasure Island.
LITIGATION. The Company is a party to various legal proceedings, most of
which relate to routine matters incidental to its business. Management does not
believe that the outcome of such proceedings will have a material adverse effect
on the Company's financial position or results of operations.
NOTE 7 -- STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company has various stock option plans under which stock options may be
granted to officers, directors, employees, agents or independent contractors of
the Company. Stock options may be exercised using cash or the Company's common
stock. Although certain of the plans also permit the granting of stock
appreciation rights ("SARs"), no SARs are outstanding.
37
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- STOCK OPTIONS AND STOCK APPRECIATION RIGHTS (CONTINUED)
Summarized information for the stock option plans is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Options outstanding, beginning of year........................ 12,629,334 13,013,335 13,743,043
Granted....................................................... 5,785,000 52,500 1,446,000
Exercised..................................................... (573,250) (392,751) (2,098,208)
Terminated.................................................... (95,834) (43,750) (77,500)
------------ ------------ ------------
Options outstanding, end of year.............................. 17,745,250 12,629,334 13,013,335
------------ ------------ ------------
------------ ------------ ------------
Options and SARs available for grant at end of year........... 2,356,084 5,045,250 5,059,707
Options exercisable at end of year............................ 9,176,750 7,376,666 6,817,331
Average exercise price of options exercised
during the year.............................................. $ 9.14 $ 6.59 $ 6.46
Average exercise price of options outstanding
at end of year............................................... $17.99 $11.39 $11.20
</TABLE>
Most stock options granted during 1995 become exercisable either ratably
over a five-year period or at a single date approximately ten years from the
date of grant.
NOTE 8 -- CAPITAL STOCK
In September 1993, the Board of Directors declared a five-for-two split of
the Company's common stock which was distributed October 29, 1993 to holders of
record on October 15, 1993. All references to share and per share data herein
have been adjusted retroactively to give effect to the stock split.
In July 1994, the Company's Board of Directors approved a program to
repurchase up to 5,000,000 shares of the Company's common stock from time to
time in the open market. At December 31, 1995, 10,000 shares had been
repurchased pursuant to this program. The timing and amount of future share
repurchases, if any, will depend on various factors, including market
conditions, available alternative investments and the Company's financial
position.
The Company's articles of incorporation authorize 5,000,000 shares of
preferred stock, none of which has been issued.
38
<PAGE>
MIRAGE RESORTS, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
---------- ---------- ---------- ---------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1995
Gross revenues................................... $ 383,413 $ 326,699 $ 366,739 $ 376,865 $ 1,453,716
Promotional allowances........................... (30,475) (27,569) (31,586) (33,342) (122,972)
Net revenues..................................... 352,938 299,130 335,153 343,523 1,330,744
Operating income................................. 85,557 50,317 73,125 75,088 284,087
Other expenses, net.............................. (4,367) (5,793) (3,039) (5,627) (18,826)
Income before extraordinary item................. 51,661 28,618 45,195 44,474 169,948
Extraordinary loss on early retirements
of debt......................................... (6,785) -- -- -- (6,785)
Net income....................................... 44,876 28,618 45,195 44,474 163,163
Income per share before extraordinary item....... .54 .30 .47 .46 1.77
Extraordinary loss per share..................... (.07) -- -- -- (.07)
Net income per share............................. .47 .30 .47 .46 1.70
1994
Gross revenues................................... $ 331,074 $ 333,959 $ 365,769 $ 340,139 $ 1,370,941
Promotional allowances........................... (30,620) (27,546) (29,424) (29,174) (116,764)
Net revenues..................................... 300,454 306,413 336,345 310,965 1,254,177
Operating income................................. 48,267 56,873 74,929 57,770 237,839
Other expenses, net.............................. (11,357) (9,463) (13,054) (7,961) (41,835)
Income before extraordinary item................. 23,348 30,162 39,505 31,724 124,739
Extraordinary loss on early retirements
of debt......................................... -- (4,564) (2,773) (3,078) (10,415)
Net income....................................... 23,348 25,598 36,732 28,646 114,324
Income per share before extraordinary item....... .24 .32 .42 .34 1.32
Extraordinary loss per share..................... -- (.05) (.03) (.04) (.11)
Net income per share............................. .24 .27 .39 .30 1.21
</TABLE>
In the fourth quarter of 1994, the Company recorded an $11.0 million
abandonment charge in connection with a guest room enhancement program at The
Mirage that was completed in August 1995.
Because income (loss) per share amounts are calculated using the weighted
average number of common and dilutive common equivalent shares outstanding
during each quarter, the sum of the per share amounts for the four quarters may
not equal the total income (loss) per share amounts for the year.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ STEPHEN A. WYNN
-----------------------------------
Stephen A. Wynn, President
Dated: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------------------------------------------- ----------------------------------------------- -----------------
<C> <S> <C>
/s/ STEPHEN A. WYNN
------------------------------------ Chairman of the Board, President and Chief March 29, 1996
Stephen A. Wynn Executive Officer (Principal Executive Officer)
Senior Vice President -- Finance and
/s/ DANIEL R. LEE Development, Chief Financial Officer and
------------------------------------ Treasurer (Principal Financial and Accounting March 29, 1996
Daniel R. Lee Officer)
/s/ ELAINE P. WYNN
------------------------------------ Director March 29, 1996
Elaine P. Wynn
/s/ GEORGE J. MASON
------------------------------------ Director March 29, 1996
George J. Mason
/s/ MELVIN B. WOLZINGER
------------------------------------ Director March 29, 1996
Melvin B. Wolzinger
/s/ RONALD M. POPEIL
------------------------------------ Director March 29, 1996
Ronald M. Popeil
/s/ DANIEL B. WAYSON
------------------------------------ Director March 29, 1996
Daniel B. Wayson
/s/ RICHARD D. BRONSON
------------------------------------ Director March 29, 1996
Richard D. Bronson
</TABLE>
40
<PAGE>
SCHEDULE II
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
ADDITIONS
--------------------------
BALANCE AT CHARGED TO CASH
BEGINNING COSTS AND RECOVERIES BALANCE AT
DESCRIPTION OF YEAR EXPENSES (A) DEDUCTIONS (B) END OF YEAR
- --------------------------------------------- ----------- ----------- ------------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts
Year Ended December 31, 1995............... $ 37,937 $ 23,024 $ 1,423 $ 15,223 $ 47,161
Year Ended December 31, 1994............... $ 26,876 $ 20,520 $ 1,314 $ 10,773 $ 37,937
Year Ended December 31, 1993............... $ 34,915 $ 19,819 $ 1,327 $ 29,185 $ 26,876
</TABLE>
- ---------------
(a) Recoveries of accounts previously charged off.
(b) Accounts charged off.
41
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of December 29, 1995,
by and between Mirage Resorts, Incorporated, a Nevada corporation ("Employer"),
and Thomas L. Sheer ("Employee").
1. Employer hereby employs Employee as its Senior Vice President of
Government and External Affairs, to perform such executive,
supervisory, managerial or administrative duties as may be
specified from time to time by, and to report to, the Chairman of
Employer's Board of Directors. Without limiting the foregoing,
Employee shall be primarily responsible for corporate compliance
and security matters. Employee's office and primary place of
business shall be in Las Vegas, Nevada. Employee acknowledges
that he will be required to periodically travel outside Las
Vegas, Nevada in performing his duties hereunder.
2. The term of this Agreement shall be three (3) years, commencing
January 15, 1996 (the "Employment Period").
3. Employee shall receive an annual salary of $200,000, such raises
or bonuses as Employer's Board of Directors may determine in its
discretion, and reimbursement for all reasonable business and
travel expenses incurred by Employee in performing his duties
hereunder. While Employee is not eligible to participate in
Employer's 1994 Cash Bonus Plan, Employer's Board of Directors
shall exercise its discretion with respect to the payment of
annual bonuses to Employee in the same manner as if Employee were
eligible under such 1994 Cash Bonus Plan. Employee shall be
provided with coverage under Employer's group major medical
policy, paid vacation and such other benefits as Employer makes
available to its executives of similar status.
Employee shall also be granted fifty thousand (50,000)
nonqualified stock options (the "Options") pursuant to and in
accordance with Employer's 1995 Stock Option and Stock
Appreciation Rights Plan (the "Plan"), with an exercise price
equal to the closing price of a share of Employer's common stock
on the New York Stock Exchange on January 15, 1996. The Options
shall vest in full on January 15, 1999. The Options shall be
governed by the standard form of agreement utilized under the
Plan.
4. Employee acknowledges and agrees that the laws of Nevada and
other jurisdictions in which Employer may propose to, or engage
in, business activities during the term hereof may require that
Employee be investigated for suitability and licensing. Employee
shall fully cooperate with the appropriate governmental
authorities in order that Employer and he may obtain all
certificates, permits and licenses required in connection with
his employment hereunder or otherwise desired by Employer during
the term hereof. Employee further acknowledges and agrees that
in the event he fails to so cooperate or he or Employer, for any
reason attributable to Employee, fails to obtain, within the time
specified by the Nevada Gaming Commission and all other
governmental authorities having jurisdiction, or thereafter
<PAGE>
maintain, in good standing and in full force and effect, during
the term hereof, all required certificates, permits and licenses
in connection with his employment hereunder or Employer's desired
activities, or Employee commits any criminal or other improper
act which could result in the suspension or revocation of any
such certificate, permit or license, Employer may terminate this
Agreement, in which event Employer shall have no further
liability or obligation whatsoever to Employee hereunder,
notwithstanding anything to the contrary contained herein.
5. In consideration hereof, Employee covenants and agrees that
during the Employment Period, Employee shall devote his full
business time and best efforts to the performance of his duties
hereunder and shall not directly or indirectly engage in,
participate in, consult for or otherwise be connected in any way
with any firm, person, corporation or other entity engaged in
gaming. In addition to all other rights and remedies provided to
Employer hereunder, if Employee breaches any of the obligations
contained in the preceding sentence or fails to cooperate as
specified in paragraph 4 hereof, Employer shall have the right to
terminate this Agreement, but any such termination shall in no
event be deemed an election of remedies and Employer expressly
reserves all other legal and equitable remedies. The foregoing
restrictions on Employee shall not apply if Employee is
wrongfully terminated by Employer without good cause. Employee
further covenants and agrees that he shall not at any time during
the term of this Agreement or thereafter, without Employer's
prior written consent, disclose to other persons or business
entities any trade secrets or other confidential information
concerning Employer, including without limitation, Employer's
customers or its casino, hotel or marketing practices, procedures
or management policies, or utilize any such trade secrets or
confidential information in any way or communicate with or
contact any such customers other than in connection with his
employment hereunder. Employee hereby confirms that such trade
secrets, confidential information and all information concerning
Employer's customers constitute Employer's exclusive property,
that all of the restrictions on his activities contained in this
Agreement are required for Employer's reasonable protection and
that in the event of any breach of this Agreement by him,
Employer will be entitled, if it so elects, to institute and
prosecute proceedings at law or in equity to obtain damages with
respect to such breach, to enforce the specific performance of
this Agreement or to enjoin Employee from engaging in any
activity in violation hereof.
6. This Agreement may be terminated by Employer at any time during
the Employment Period for good cause and upon any such
termination, Employer shall have no further liability or
obligation whatsoever to Employee hereunder except with respect
to any salary earned by Employee and not paid by Employer prior
to the date of termination. Good cause shall include, but not be
limited to:
(a) Employee's death or disability, which is hereby defined to
mean his incapacity for medical reasons certified to by a
licensed physician designated by Employer which precludes the
substantial performance of his duties
-2-
<PAGE>
hereunder for a substantially consecutive period of three (3)
months or more; or
(b) Employee's dishonesty, criminal misconduct, willful or
habitual insubordination, inattention to Employer's
business, failure to substantially perform his duties or
other material breach of this Agreement, which, if curable,
is not cured by Employee within a reasonable time after
written notice thereof from Employer.
7. If Employer terminates Employee's employment hereunder in
violation of the terms of this Agreement, or if Employee resigns
as a result of a material breach of this Agreement by Employer
which is not cured by Employer within a reasonable time after
written notice thereof from Employee, Employee shall be entitled
to receive all amounts which would have been payable through the
stated term of this Agreement (but Employee shall have the duty
to mitigate damages), and all then-unvested Options shall vest on
the date of termination of Employee's employment and shall remain
exercisable for one (1) year thereafter.
8. Employee represents and warrants to Employer that Employee is not
a party or otherwise subject to any agreement or restriction
which would be breached or violated by Employee's execution of
this Agreement or his employment hereunder.
9. If any provision hereof is unenforceable, illegal or invalid for
any reason whatsoever, such fact shall not affect the remaining
provisions hereof. If any of the provisions hereof which impose
restrictions on Employee are, with respect to such restrictions,
determined by a final judgment of any court of competent
jurisdiction to be unenforceable or invalid because of the
geographic scope or time duration of such restrictions, such
provisions shall be deemed retroactively modified to provide for
the maximum geographic scope and time duration which would make
such provisions enforceable and valid. However, no such
retroactive modification shall affect any of Employer's rights
hereunder arising out of the breach of any such restrictive
provisions, including without limitation, Employer's right to
terminate this Agreement.
10. No failure or delay on the part of Employer or Employee in
exercising any right, power or remedy hereunder shall operate as
a waiver thereof nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
11. No amendment, modification, termination or waiver of any
provision of this Agreement nor consent to any departure by
Employee or Employer therefrom shall in any event be effective
unless the same shall be in writing and signed by a duly
authorized officer of Employer or by Employee, as the case may
be. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
-3-
<PAGE>
12. This Agreement sets forth the entire agreement of the parties
with respect to the subject matter hereof and supersedes any and
all prior negotiations, agreements or understandings, whether
oral or written.
13. This Agreement shall be controlled, construed and enforced in
accordance with the laws of Nevada.
IN WITNESS WHEREOF, Employer and Employee have entered into this Agreement in
Las Vegas, Nevada, as of the date first above written.
MIRAGE RESORTS, INCORPORATED
/s/ Thomas L. Sheer By: /s/ Stephen A. Wynn
- ------------------------- -----------------------
THOMAS L. SHEER STEPHEN A. WYNN
Chairman of the Board
-4-
<PAGE>
AMENDMENT NO. 5 TO REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 5 to Reducing Revolving Loan Agreement (this
"Amendment") dated as of October 16, 1995 is entered into with reference to the
Reducing Revolving Loan Agreement dated as of May 25, 1994, among Mirage
Resorts, Incorporated, a Nevada corporation ("Parent"), THE MIRAGE CASINO-HOTEL,
a Nevada corporation ("Company"), Treasure Island Corp., a Nevada corporation
("TI"), Bellagio, a Nevada corporation formerly known as MR Realty ("MRR"),
MH, INC., a Nevada corporation ("MHI" and collectively with Parent, Company, TI
and MRR, the "Borrowers"), the Banks party thereto, Bank of America National
Trust and Savings Association, Bankers Trust Company, The Long-Term Credit Bank
of Japan, Ltd., Los Angeles Agency and Societe Generale, as Co-Agents, and Bank
of America National Trust and Savings Association, as Administrative Co-Agent.
The Loan Agreement referred to above has been amended by an
Amendment No. 1 thereto dated as of April 6, 1995, pursuant to which GNLV,
CORP., a Nevada corporation, became a party to the Loan Agreement as an
additional Borrower, as well as by Amendments No. 2 through 4 thereto dated
August 30, 1995, August 30, 1995 and September 5, 1995. References herein to
the Loan Agreement mean the Loan Agreement, as so amended. Other capitalized
terms used but not defined herein are used with the meanings set forth for
those terms in the Loan Agreement.
Borrowers and the Administrative Co-Agent, acting with the consent
of the Requisite Banks in accordance with Section 11.2 of the Loan Agreement,
hereby amend the Loan Agreement as follows:
1. AMENDMENT TO SECTION 8.2(c). Section 8.2(c) of the Loan
Agreement is amended to read in full as follows:
"(c) other than matters described in SCHEDULE 4.10 or not required
as of the Closing Date to be therein described, there shall not be then
pending or threatened any action, suit, proceeding or investigation
against or affecting Borrowers or any of the Restricted Subsidiaries or
any Property of any of them before any Governmental Agency that
constitutes a Material Adverse Effect, PROVIDED that no Advance which is
a Commercial Paper Advance shall be conditioned upon the fulfillment of
the condition described in this clause (c);"
-1-
<PAGE>
2. CONDITIONS PRECEDENT. The effectiveness of this Amendment
shall be conditioned upon the receipt by the Administrative Co-Agent of the
following:
a. Counterparts of this Amendment executed by all parties
hereto;
b. Written consents of each of the Subsidiary Guarantors to
the execution, delivery and performance hereof, substantially in the form
of Exhibit A to this Amendment; and
c. Written consents to the execution, delivery and
performance hereof from Banks constituting the Requisite Banks.
3. REPRESENTATION AND WARRANTY. Borrowers represent and warrant
to the Administrative Co-Agent and the Banks that no Default or Event of Default
has occurred and remains continuing.
4. CONFIRMATION. In all other respects, the terms of the Loan
Agreement and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, Borrowers and the Administrative Co-Agent have
executed this Amendment as of the date first written above by their duly
authorized representatives.
MIRAGE RESORTS, INCORPORATED
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Chief Financial Officer
THE MIRAGE CASINO-HOTEL
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Assistant Treasurer
TREASURE ISLAND CORP.
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Treasurer
-2-
<PAGE>
BELLAGIO (formerly, MR Realty)
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Assistant Treasurer
MH, INC.
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Treasurer
GNLV, CORP.
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Treasurer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Co-Agent
By: /s/ Peggy A. Fujimoto
---------------------------------
Peggy A. Fujimoto, Vice President
-3-
<PAGE>
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
This Amendment, dated as of December 5, 1995 (the "Amendment"), is entered
into among Mirage Reports, Incorporated ("MRI"), Capital Gaming International,
Inc. ("CGII") and Crescent City Capital Development Corporation ("CCCDC") and
amends the Stock Purchase Agreement, dated July 24, 1995 (the "Agreement"),
among MRI, CGII and CCCDC. Capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Agreement. Each of the parties
hereto recognizes that the operation by MRI of CCCDC's riverboat under the
authority of the riverboat gaming license owned by CCCDC is subject to the prior
approval of the State of Louisiana through the Department of Public Safety and
Corrections, Riverboat Gaming Enforcement Division of the Office of State Police
and the Riverboat Gaming Commission pursuant to applicable provisions of La.R.S.
4:501 at seq, and applicable provisions of the Louisiana Administrative Code.
1. Paragraph 1 of the Agreement is hereby amended by inserting the following
sentence at the end of such section: "At the Closing, CCCDC shall own the
assets set forth on Schedule 1 attached hereto." Schedule 1 is attached to
this Amendment.
2. Paragraph 3 of the Agreement is hereby amended so that it reads, in its
entirety, as follows:
"PAYMENT OF PURCHASE PRICE. Within five business days following the entry
of an order of the Bankruptcy Court approving (i) an escrow agreement
acceptable to MRI and CCCDC, and (ii) the overbid fee provided for in
Paragraph 10 of the Agreement, MRI shall deposit $2,000,000 as a refundable
good faith deposit (the "Deposit") with First American Title Company, New
Orleans, Louisiana, to be held in an interest-bearing escrow account (the
"Escrow"). The Deposit, and any interest earned thereon, shall be refunded
to MRI in the event that the Closing does not occur on or prior to January
24, 1996 for any reason other than as a result of a breach of this
agreement by MRI. At the Closing, the Deposit and any interest earned
thereon shall be paid to CCCDC and credited against the Purchase Price in
Escrow to be paid to CCCDC, subject to Paragraph 4 hereof.
3. The last two sentences of Paragraph 4 of the Agreement are hereby amended
to increase the 90-day period to a 1-year period.
4. Clause (c) of Paragraph 6 of the Agreement is hereby amended to delete
"Lake Charles" on the sixth and seventh lines of
<PAGE>
the clause and insert in lieu thereof "Bossier City" and to delete "the
City of Lake Charles, Calcasieu Parish, the Lake Charles Harbor and
Terminal District" on the tenth through twelfth lines and insert in lieu
thereof "the appropriate local governmental agencies."
5. Clause (a) of Paragraph 6 of the Agreement is hereby amended to insert "at
or" on the fourth line of such clause before the word "prior".
6. Clause (i) of Paragraph 6 of the Agreement is hereby amended to delete the
words "and the assets owned by CCCDC" on the fourth and fifth lines of such
clause.
7. Clause (a) of Paragraph 15 of the Agreement is hereby amended so that such
clause reads, in its entirety, as follows:
"(a) failure of the Closing to take place on or before January 24,
1996";
8. Clause (b) of Paragraph 15 of the Agreement is hereby deleted.
9. Paragraph 22 of the Agreement is hereby deleted.
10. A new paragraph 24 shall be inserted as follows:
"24. TAXES. The parties agree that all of the tax benefits and tax
obligations of CCCDC prior to the Closing shall be for the account of
CCCDC and shall be satisfied, discharged or otherwise provided for in
connection with the plan. Upon the request of CGII, MRI agrees to
cooperate with CGII and CCCDC to file Form 8033 in order to
effectuate the joint election by CCCDC, CGII and MRI Under Section 5
338(g) and 338(h)(10) of the Internal Revenue Code of 1985, as
amended."
11. MRI, on the one hand, and CGII and CCCDC, on the other hand, hereby release
each other from and waive any and all breaches of or claims arising under
the Agreement which may have occurred prior to the date of this Amendment.
12. This Amendment shall become effective only upon its execution by the
parties hereto; PROVIDED, HOWEVER, as to CCCDC, this Amendment shall be
treated, for all purposes, as having been executed prior to the
commencement by CCCDC of its chapter 11 case and shall be subject to
Section 365 of the Bankruptcy Code. The failure of CCCDC to assume
pursuant to Section 365 the Agreement, as amended by this Amendment, shall
not affect in any manner the obligations of CGII and
-2-
<PAGE>
MRI under the Agreement as amended by this Amendment. Except as modified
by this Amendment, the Agreement continues in full force and effect, and
may not be further amended except by a writing signed by each of the
parties.
This Amendment may be executed in counterparts, by the manual or facsimile
signature of each party, and all such counterparts are hereby deemed to
constitute one and the same instrument.
CAPITAL GAMING INTERNATIONAL, INC.
BY: /s/ Illegible
-------------------------
NAME:
TITLE:
CRESCENT CITY CAPITAL DEVELOPMENT
CORPORATION
BY: /s/ Illegible
-------------------------
NAME:
TITLE:
MIRAGE RESORTS, INCORPORATED
BY: /s/ Barry A. Shier
-------------------------
NAME:
TITLE: EXEC V.P.
-3-
<PAGE>
AIRCRAFT PURCHASE AGREEMENT
DATED AS OF NOVEMBER 21, 1995
between
AERO LLOYD FLUGREISEN GMBH & CO. LUFTVERKEHRS-KG
and
GOLDEN NUGGET AVIATION CORP.
_______________________________________
IN RESPECT OF
ONE (1) MCDONNELL DOUGLAS MD-87 AIRCRAFT
MANUFACTURER'S SERIAL NUMBER 49767
GERMAN REGISTRATION MARK D-ALLI
_______________________________________
Clifford Chance
Frankfurt
<PAGE>
TABLE OF CONTENTS
CLAUSE PAGE
1. Definitions and Interpretation.......................................... 1
2. Agreements to Sell and Purchase......................................... 4
3. Payments................................................................ 4
4. Delivery and Transfer of Title.......................................... 4
5. Inspections and Flight Tests............................................ 5
6. Undertakings............................................................. 6
7. Representations and Warranties........................................... 8
8. Conditions Precedent.....................................................10
9. Waivers................................................................. 12
10. Amendments; Severability; Entire Agreement.............................. 12
11. Notices................................................................. 12
12. Assignments and Transfers............................................... 13
13. Governing Law and Jurisdiction.......................................... 14
14. Counterparts............................................................ 14
15. Indemnity.............................................................. 14
Schedule 1: Description of Aircraft....................................... 17
Schedule 2: General Condition of Aircraft..................................18
Schedule 3: Part Life Condition of Aircraft................................20
Schedule 4: Form of FAA Bill of Sale...................................... 22
Schedule 5: Form of Warranty Bill of Sale..................................25
Schedule 6: Form of Certificate of Acceptance............................. 26
Schedule 7: Form of Receipt of Payment.................................... 27
<PAGE>
AN AIRCRAFT PURCHASE AGREEMENT made the day of November, 1995
BETWEEN:
(1) AERO LLOYD FLUGREISEN GMBH & CO. LUFTVERKEHRS KG, a limited partnership
organised and existing under the laws of the Federal Republic of Germany
(the "SELLER"); and
(2) GOLDEN NUGGET AVIATION CORP., a corporation organised and existing under
the laws of the State of Nevada, United States of America (the "BUYER").
WHEREAS
The Seller wishes to sell and transfer title to the Aircraft to the Buyer in
return for the payment by the Buyer of the Purchase Price in accordance with the
terms of this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement (including the Recitals):
"AERONAUTICS AUTHORITY" means, as the context requires, the Federal
Aviation Administration (in the case of the United States of America) or
the Federal Aviation Authority (Luftfahrtbundesamt) (in the case of the
Federal Republic of Germany), or any person, governmental department,
bureau, commission or agency succeeding to the functions of any of the
foregoing;
"AGREEMENT" means this aircraft purchase agreement together with the
Recitals and Schedules hereto (which form an integral part hereof) as
originally executed by the parties hereto, as the same may be amended,
modified, novated, replaced or supplemented from time to time;
"AIRCRAFT" means collectively, the Airframe to be delivered hereunder
together with the two Engines installed thereon, on the Delivery Date,
together with all Parts delivered to the Buyer on the Delivery Date and all
related Records, each as more particularly described in Schedule 1 hereto;
"AIRFRAME" means the McDonnell Douglas MD-87 airframe described in Schedule
1 (excluding the Engines installed thereon) together with any and all Parts
incorporated in, installed on or attached to such Airframe on the Delivery
Date;
"BILL OF SALE" means a warranty bill of sale for the Aircraft substantially
in the form set forth in Schedule 5 executed by the Seller in favour of the
Buyer and dated the Delivery Date and delivered to the Buyer on the
Delivery Date;
<PAGE>
"CERTIFICATE OF ACCEPTANCE" means the certificate of acceptance
substantially in the form set forth in Schedule 3;
"DELIVERY DATE" means 21 November 1995 or such other date as the parties
may agree in writing on which transfer of title to the Aircraft by the
Seller to the Buyer hereunder is to take place pursuant to Clause 4;
"DEPOSIT" means the sum of US$ 250,000 paid by the Buyer to the Seller
prior to the date of this Agreement in contemplation of the purchase by the
Buyer of the Aircraft pursuant to the terms of this Agreement;
"ENGINE" means each of the two (2) Pratt & Whitney JT8D-219 aircraft
engines described in Schedule 1 hereto and which will be installed on the
Airframe on the Delivery Date and title to which will on the Delivery Date
be vested in the Seller, and any and all Parts incorporated in, installed
on or attached to any such engine on the Delivery Date;
"EQUIPMENT CREDIT AMOUNT" means the aggregate of the sum of US$ 10,700 in
respect of the nose landing gear of the Aircraft and the sum of US$ 9,130
(being a sum of US$ 4,565 for each wheel unit) in respect of the main
landing gear of the Aircraft;
"FAA" means the United States Federal Aviation Administration;
"FAA BILL OF SALE" means a bill of sale for the Aircraft in the form set
forth in Schedule 4 or such other form of bill of sale as may be approved
by the Aeronautics Authority in the United States of America on the
Delivery Date;
"FAR" means the Federal Aviation Regulations promulgated by the FAA;
"GENERAL PARTNER" means Aero Lloyd Flugreisen GmbH, a corporation
incorporated with limited liability in the Federal Republic of Germany,
the general partner of the Seller;
"ITEM OF EQUIPMENT" or "ITEM" means the Airframe, any Engine or any Part;
"LIEN" shall mean any mortgage, pledge, lien, charge, encumbrance, exercise
of rights, security interest or claim;
"LIEN PAYMENT" means the sum of US$ 12,500,000 paid or to be paid by the
Buyer to the Outgoing Lender on behalf of the Seller in accordance with the
provisions of Clause 3.1 on the Delivery Date in order to effect
satisfaction of the Mortgage in contemplation of the purchase of the
Aircraft by the Buyer pursuant to the terms of this Agreement;
"MANUFACTURER" shall mean, (a) as to the Engines, the Pratt & Whitney
division of United Technologies Corporation, and (b) as to the Airframe,
McDonnell Douglas Corporation;
"MORTGAGE" means the German aircraft mortgage in respect of the Aircraft
dated 10 May 1989 and executed by the Seller in favour of the Outgoing
Lender;
<PAGE>
"MPD" means the maintenance planning document relating to the Aircraft
and published by the Manufacturer of the Airframe;
"NET PURCHASE PRICE" means the Purchase Price LESS the aggregate amount
of the Deposit, the Lien Payment and the Equipment Credit Amount
actually received by the Seller, being a sum of US$ 3,230,170;
"OUTGOING LENDER" means Bayerische Landesbank, Frankfurt, Federal
Republic of Germany;
"PARTS" means any and all appliances, parts, instruments, accessories,
furnishings, seats and other equipment of whatever nature which are
installed on the Airframe or the Engines or delivered with the Aircraft
on the Delivery Date (other than the Engines);
"PURCHASE PRICE" means the purchase price of the Aircraft payable by the
Buyer to the Seller (or as otherwise directed by the Seller) under this
Agreement, which is the sum of US$ 16,000,000;
"RECORDS" means the historical records relating to the Aircraft
maintained by the Seller during the period prior to the Delivery Date;
"SRM" means the MD-87 Structural Repair Manual applicable to the
Airframe published by the Manufacturer;
"SUPPLIER" shall mean the manufacturer, vendor or supplier of any Item
of Equipment other than the Manufacturer.
1.2 In this Agreement, unless the context otherwise requires, any reference
to:
(a) any "CLAUSE" or "SCHEDULE" is a reference to such Clause of, or
Schedule to, this Agreement (and any reference to any "SCHEDULE"
shall be construed as a reference to such Schedule as
incorporated in this Agreement at the date hereof and any
schedule that may be substituted therefor in accordance with the
terms of this Agreement) and any reference to a "SUB-CLAUSE" is,
unless otherwise stated, a reference to the sub-clause of the
Clause in which the reference appears;
(b) any document, instrument or agreement means such document,
instrument or agreement as originally implemented or executed, or
as mutually modified, amended, varied, novated, replaced or
supplemented from time to time;
(c) "HEREOF", "HEREIN" and "HEREUNDER" and other words of similar
import means this Agreement as a whole and not any particular
part hereof; and
(d) words importing the singular number include the plural and vice
versa.
1.3 "US DOLLARS" and "US$" denotes the lawful currency of the United States
of America from time to time.
<PAGE>
1.4 Clause and Schedule headings are for ease of reference only and shall
not affect the interpretation of any of the provisions hereof.
2. AGREEMENTS TO SELL AND PURCHASE
2.1 Upon and subject to the terms and conditions of this Agreement, the
Seller hereby agrees to sell, deliver and transfer title to the Aircraft
in accordance with the terms of this Agreement to the Buyer on the
Delivery Date in consideration of the payment by the Buyer of the
Purchase Price.
2.2 Upon and subject to the terms and conditions of this Agreement, it is
hereby agreed by the Buyer with the Seller:
(a) that on the Delivery Date, it will purchase, take title and
accept delivery of the Aircraft from the Seller; and
(b) that on the Delivery Date, it will pay the Lien Payment and the
Net Purchase Price to the Seller.
2.3 Notwithstanding any other provision of this Agreement or any other
document executed by the parties in connection with the transaction
herein, the risk of loss of the Aircraft shall pass to the Buyer on the
Delivery Date following either compliance with or waiver of the
requirements of Clause 8 hereof.
3. PAYMENTS
3.1 The Buyer shall, subject to the terms and conditions of this Agreement
and, in particular, subject to fulfilment of the conditions precedent
referred to in Clause 8 hereof, pay the Lien Payment to the Seller on
the Delivery Date.
3.2 The Buyer shall, subject to the terms and conditions of this Agreement,
and, in particular subject to fulfilment of the conditions precedent
referred to in Clause 8 hereof, pay the Net Purchase Price to the Seller
on the Delivery Date. Following receipt of the Lien Payment and the Net
Purchase Price, the Seller shall provide to the Buyer a receipt of the
Seller, in substantially the form of Schedule 7 hereto, dated the
Delivery Date.
3.3 All payments to be made by the Buyer to the Seller under Clause 3.1 and
Clause 3.2 shall be made by crediting the same in US$, in immediately
available funds, to the Seller by crediting the account of Bayerische
Landesbank, New York Chips ABA 333 in favour of Bayerische Landesbank,
Munich, UID 3520 for credit in favour of account number 17/50810 in the
name of the Seller or to such other account as may be designated by the
Seller.
4. DELIVERY AND TRANSFER OF TITLE
4.1 The Buyer shall take delivery of the Aircraft from the Seller on the
Delivery Date in Frankfurt am Main, Federal Republic of Germany, at an
exact time and location as may
<PAGE>
be agreed between the parties. For the avoidance of doubt, the Seller
shall be liable for any taxes imposed in the Federal Republic of Germany
in connection with such delivery.
4.2 On the Delivery Date the Buyer shall effect payment to the Seller of the
Lien Payment and the Net Purchase Price in the manner provided in Clause
3.3 and simultaneously with such payment of the Lien Payment and the Net
Purchase Price by the Buyer, the Seller shall deliver the Aircraft to
the Buyer and deliver to the Buyer a duly executed FAA Bill of Sale and
a Bill of Sale duly conveying to the Buyer good title to the Aircraft
free of all Liens whereupon such title in and to the Aircraft shall pass
from the Seller to the Buyer. The transfer of possession from the Seller
to the Buyer shall occur simultaneously.
5. INSPECTIONS AND TEST FLIGHTS
5.1 The Aircraft and documentation, records and manuals relating thereto may
be inspected by a duly authorized representative of the Buyer prior to
the Delivery Date at any reasonable time during normal business hours of
the Seller and at any location agreed to by the Buyer and the Seller.
All inspections by the representative of the Buyer (which may include,
but shall not be limited to, a full systems function and operational
inspection as well as other types of reasonable inspections based upon
the type, age, use and other known factors with respect to the Aircraft)
shall be made in such a way that the Seller's ordinary course of
business is not disturbed. The Seller shall provide at no cost to the
Buyer, if so requested by the Buyer, office space for a representative
of the Buyer at its premises at Oberursel, Federal Republic of Germany.
The Buyer shall inform the Seller of the dates on which the office space
is required at least four days prior to the date of arrival of the
Seller's representative.
5.2 At a time and location agreed to by the Seller and the Buyer immediately
prior to delivery of the Aircraft under this Agreement, the Seller shall
exclusively (and, if so requested by the Buyer, with a representative of
the Buyer present aboard the Aircraft) perform a flight test for
acceptance of the Aircraft in order to demonstrate to the Buyer the
proper functioning of the Aircraft. Such flight test shall comply with
any check flight operation procedures stipulated by the Manufacturer as
standard for the purposes of flight tests of this nature and shall be of
a duration of not less than two hours, the costs (including but not
limited to, fuel costs) and expenses of such flight test to be borne by
the Seller.
5.3 In the event that, during the inspections referred to in Clause 5.1 and
the flight test referred to in Clause 5.2, the Aircraft or any part
thereof shall fail to comply with airworthiness standards as provided by
an Aeronautics Authority or shall fail to function, the Seller shall
prior to the Delivery Date correct such non-compliance or failure
promptly, without charge to the Buyer. Upon completion of such
correction, the Seller shall conduct additional tests as may be
reasonably necessary to demonstrate to the Buyer the proper correction
or the compliance of the Aircraft with such specifications as aforesaid.
5.4 At any time prior to the Delivery Date, the Seller shall demonstrate to
the satisfaction of the Buyer that the Aircraft and documentation,
records and manuals relating thereto comply with requirements for the
issue of a standard transport category airworthiness certificate,
certifying compliance with operating requirements stipulated by the
<PAGE>
Aeronautics Authority in the United States of America pursuant to FAR
Part 121, such demonstration to be effected by presentation by the
Seller to the Buyer of relevant documents acceptable to the Buyer and
signed by an FAR duly authorized representative;
6. UNDERTAKINGS
6.1 The Seller undertakes that:-
(a) immediately prior to the flight test referred to in Clause 5.2,
it shall, at a location agreed with the Buyer and approved by the
Aeronautics Authority in the United States of America for such
checks, engage the Aircraft in (i) a full and complete zonal,
systems and structural "C" check, (ii) a full and complete zonal,
systems and structural lower "A" check, and (iii) such other
maintenance and inspection checks as stipulated by the MPD to the
extent necessary to obtain MPD confirmation that the Aircraft is
not required to undergo such check mentioned in (i) for a period
of at least twelve months from the date thereof Provided that (x)
the Seller shall effect any modifications to the Aircraft
required subsequent to the performance of such check mentioned in
(i) in order to obtain such MPD confirmation, such modifications
to be effected at all times in accordance with any current
recommended procedures of the Manufacturer and (y) such checks
mentioned in (i), (ii) and (iii) shall be performed at a facility
approved by the Aeronautics Authority in the United States of
America and duly certified for MD-80 series aircraft;
(b) prior to the Delivery Date, it shall inspect the Aircraft for
internal and external corrosion and, in the event of such
corrosion being established in the course of such inspection,
take all reasonable steps to effect repairs thereof, such
requests to be effected at all times in accordance with any
current recommended procedures of the Manufacturer (including,
but not limited to, the SRM);
(c) prior to the Delivery Date, it shall inspect the Airframe for
paint blistering, peeling or excessive abrasion and, in the
course of such inspection, arrange for treatment thereof
(including but not limited to, cleaning, sanding, further
inspection, treatment and repainting) in accordance with any
current recommended procedures of either the Manufacturer or the
Supplier in preparation for painting the Airframe;
(d) prior to the Delivery Date, it shall inspect any external signs
and placards attached to the Aircraft and ensure that the same
are properly attached, free from damage, clean and legible;
(e) prior to the Delivery Date, it shall effect all repairs to the
Aircraft of a structural nature in accordance with the SRM, and,
without limiting the foregoing, all non-flush repairs will be
replaced by flush repairs;
<PAGE>
(f) prior to the Delivery Date, it shall (in the presence of a
representative of the Buyer) conduct a hot and cold section video
tape borescope inspection of the Engines, such inspection to be
conducted in accordance with any current recommended procedures
of the Manufacturer or the Supplier, and in the event of any
Engine defects being established thereby (including an
acceleration of Engine performance deterioration as evidenced by
any relevant Engine, the auxiliary power unit historical and
technical records or Engine trend monitoring data) it shall
arrange for the rectification of any such defects so established,
such rectification to be conducted in accordance with any current
recommended procedures of the Manufacturer and to the
satisfaction of the Buyer;
(g) prior to the Delivery Date, it shall (in the presence of a
representative of the Buyer) conduct maximum power assurance
runs, conditions checks and accumalation and bleed valve
scheduling checks in respect of the Engines and take such further
steps as may reasonably be necessary in order to demonstrate to
the Buyer that each Engine complies with the limits specified in
the relevant section of the maintenance manual of the
Manufacturer;
(h) in the event of a failure by the Buyer and the Seller to agree as
to (i) the establishment of Engine defects in the course of the
procedures described in Clause 6.1(f), (ii) the identification of
non-compliance with limits as described in Clause 6.1(g), (iii)
the nature of remedial steps (if any) required in respect thereof
or (iv) the condition of either Engine generally, it shall
consult with the relevant Manufacturer to ascertain the
recommendations in respect thereof by such Manufacturer and, as
soon as reasonably practicable following receipt of such
recommendations, take steps to effect the same in relation to the
Engines (including an Engine test cell run if so recommended by
the Manufacturer), the costs, if any, of obtaining any such
recommendation from the Manufacturer to be borne by the Seller;
(i) prior to the Delivery Date, it shall (in the presence of a
representative of the Buyer) conduct a full and complete
borescope inspection of the auxiliary power unit of the Aircraft,
such inspection to be conducted in accordance with any current
recommended procedures of the Manufacturer; and in the event of
auxiliary power unit defects being established, it shall arrange
for rectification of any such defects, such rectification to be
conducted in accordance with the relevant section of
Manufacturer's maintenance manual and to the satisfaction of the
Buyer; and
(j) it shall at any time and promptly on first demand of the Buyer
take all steps necessary to arrange for the full satisfaction of
any Lien on or affecting the Aircraft existing at the Delivery
Date and arising in respect of the period prior to the Delivery
Date, any costs relating to such steps to be borne by the Seller.
6.2 The Seller shall procure that on the Delivery Date:-
<PAGE>
(a) the Aircraft shall have the benefit of all applicable subsisting
Manufacturers' warranties;
(b) the Aircraft shall have a valid export certificate of
airworthiness, certifying compliance with the approval
requirements applicable for the United States of America issued
by the Aeronautics Authority in the Federal Republic of Germany,
any costs incurred in such procurement to be borne by the Buyer;
(c) the Aircraft shall have a valid standard transport category
airworthiness certificate, certifying compliance with
requirements stipulated by the Aeronautics Authority in the
United States of America for the issue thereof in accordance with
the provisions of FAR Part 21; and
(d) the Aircraft shall comply with operating requirements stipulated
in FAR Part 121 (except insofar as such requirements relate to
the installation of a Traffic Alert and Collision Avoidance
System and windshear systems).
7. REPRESENTATIONS AND WARRANTIES
7.1 The Seller hereby represents and warrants as follows:
(a) it is a limited partnership duly incorporated and validly
existing under the laws of the Federal Republic of Germany;
(b) it has full legal power and authority to enter into and perform
this Agreement;
(c) this Agreement has been duly authorised, executed and delivered
by the Seller, and the execution, delivery and performance of
this Agreement do not require any approval from any holders of
debt or other obligations of the Seller, execept such as has been
duly obtained and neither the making nor performance by the
Seller of this Agreement, nor the consummation of any of the
transactions by the Seller contemplated hereby requires the
consent or approval of, the giving of notice to, the registration
or filing for recordation with, or the taking of any other action
in respect of, any authority of or in the Federal Republic of
Germany, including any governmental or political agency,
subdivision or instrumentality thereof, except (i) such as have
been obtained and (ii) submission of appropriate documents to the
Aeronautics Authority in the Federal Republic of Germany in
connection with the application for de-registration;
(d) this Agreement constitutes the valid and legally binding
obligation of the Seller enforceable against the Seller in
accordance with the terms hereof, subject to applicable
bankruptcy, insolvency, reorganization or similar laws from time
to time in effect which affect creditors' rights generally;
(e) the General Partner is a corporation duly incorporated with
limited liability and validity existing under the laws of the
Federal Republic of Germany;
<PAGE>
(f) the General Partner has full legal power and authority to execute
this Agreement on behalf of the Seller;
(g) the execution of this Agreement on behalf of the Seller by the
General Partner does not require the consent or approval of, the
giving notice to, the taking of any other action in respect of,
any authority of or in the Federal Republic of Germany, including
any governmental or political agency, subdivision or
instrumentality thereof, except such as has been obtained;
(h) as at the Delivery Date:
(i) it will be the legal and beneficial owner of the Aircraft
and that the Buyer will acquire from the Seller on the
Delivery Date good title to the Aircraft, to the best of
the knowledge of the Seller after due enquiry, free from
Liens of which the Seller is aware;
(ii) the Aircraft will comply with the descriptions set out in
Schedule 1; and
(iii) the Aircraft will not be the subject of any lease
agreement or similar arrangement with a third party;
and
(i) except for the foregoing representations, the Seller does not
make and shall not be deemed to have made OR TO MAKE ANY
WARRANTIES, REPRESENTATIONS OR GUARANTEES OF ANY KIND, INCLUDING
( I ) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN OR OPERATION
OF, OR QUALITY OF THE MATERIAL OR WORKMANSHIP IN, OR ANY DEFECT
(whether hidden or not) IN, THE AIRCRAFT, ANY DATA OR ANY OTHER
THING DELIVERED OR TRANSFERRED HEREUNDER, ( II ) ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR USE OR FOR A
PARTICULAR PURPOSE, AGAINST INFRINGEMENT OR THE LIKE, OR ARISING
FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE,
( III ) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY IN TORT
WITH RESPECT TO THE AIRCRAFT, ANY DATA OR ANY OTHER THING
DELIVERED OR TRANSFERRED HEREUNDER, WHETHER OR NOT IN STRICT OR
ABSOLUTE LIABILITY OR ARISING FROM THE ACTUAL OR IMPUTED
NEGLIGENCE OF THE SELLER, OR ( IV ) ANY OBLIGATION, LIABILITY,
RIGHT, CLAIM OR REMEDY FOR LOSS OF, OR DAMAGE TO, ANY AIRCRAFT,
ANY AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER THING,
FOR ANY LOSS OF USE, REVENUE OR PROFIT, OR ANY OTHER DIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGES. Without limiting the
generality of the foregoing, the Buyer also waives the rights
under Sections Sections 462 and 463 (first sentence) of the
German Civil Code ("BURGERLICHES GESETZBUCH"). The Seller hereby
assigns to the Buyer such rights as the Seller may from time to
<PAGE>
time have under any warranty made by any Manufacturer or Supplier
with respect to the Aircraft or any Item of Equipment.
7.2 The Buyer hereby represents and warrants as follows:
(a) it is a corporation organized under the laws of the state of
Nevada, United States of America and is validly existing under
the laws of such jurisdiction and has full legal power and
authority to enter into and perform its obligations under this
Agreement.
(b) this Agreement has been duly authorized, executed and delivered
by the Buyer. This Agreement constitutes the legal, valid and
binding obligations of the Buyer, enforceable against the Buyer
in accordance with the terms hereof, subject to applicable
bankruptcy, insolvency, reorganization or similar laws from time
to time in effect which affect creditor's rights generally, and
the execution, delivery and performance of this Agreement do not
require any approval from any holders of debt or other
obligations of the Buyer, except such as has been duly obtained.
(c) the execution and delivery by the Buyer of this Agreement is not
and the performance by the Buyer of its obligations under this
Agreement will not be, inconsistent with the terms of its
articles of incorporation, do not and will not contravene any
law, governmental rule or regulation, judgment or order
applicable to it, and do not and will not contravene any
provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which the Buyer is a
party or by which it is bound or require the consent or approval
of, the giving of notice to, the registration with or the taking
of any action in respect of or by, any federal, state or local
governmental authority or agency or other person, except such as
have been obtained, given or accomplished.
8. CONDITIONS PRECEDENT
8.1 The obligations of the Buyer under this Agreement to pay the Lien
Payment and the Net Purchase Price and take delivery of the Aircraft on
the Delivery Date are subject to the following conditions precedent
being fulfilled to the satisfaction of, or waived by, the Buyer on or
before such date:
(a) receipt by the Buyer of a copy of the commercial register extract
(HANDELSREGISTERAUSZUG) of the Seller, such commercial register
extract to have been recently certified by an authorized officer
of the Seller;
(b) receipt by the Buyer of a copy of the commercial register extract
(HANDELSREGISTERAUSZUG) of the General Partner, and unless this
Agreement is signed by persons registered with the commercial
register, together with a power of attorney signed by the
registered officers as to the person or entity or persons
authorised to execute and deliver this Agreement, such commercial
<PAGE>
register extract to have been recently certified by an authorised
officer of the General Partner;
(c) the Aircraft being in a physical condition such that it complies
(in the absence of references to Aeronautics Authority standards
therein, insofar as reasonably practicable) with the descriptions
as to general condition set forth in Schedule 2 and the
descriptions as to part life condition set forth in Schedule 3,
such compliance to be evidenced by counter-signature by both the
Seller and the Buyer of a duly dated copy of such Schedule 2 and
Schedule 3 respectively;
(d) completion of such other modifications to the Aircraft as agreed
in writing by the Seller and the Buyer at a reasonable time prior
to the Delivery Date;
(e) receipt by the Buyer of a deletion certificate in respect of the
Aircraft ("NEGATIVBESCHEINIGUNG") from the local court
("AMTSGERICHT") in Braunschweig, Federal Republic of Germany;
(f) an opinion of counsel to the Seller, dated the Delivery Date, in
a form and substance reasonably satisfactory to the Buyer;
(g) execution and delivery by the Seller of this Agreement, the FAA
Bill of Sale and the Bill of Sale;
(h) receipt by the Buyer of all logs, manuals, certificates, data and
inspection, modification and overhaul records, required to be
maintained with respect thereto under the applicable rules and
regulations of the Aeronautics Authority in the Federal Republic
of Germany, including English language translations of those
maintainance and overhaul records of the Seller that had been
required to be maintained in the English language by the
Aeronautics Authority in the Federal Republic of Germany; and
(i) such other documents as the Buyer may reasonably request, in form
and substance satisfactory to the Buyer.
8.2 The obligations of the Seller under this Agreement to transfer
title to the Aircraft to the Buyer on the Delivery Date are
subject to the following conditions precedent being fulfilled to
the satisfaction of, or waived by, the Seller on or before such
date:
(a) receipt in full by the Seller of the Deposit, the Lien Payment,
the Net Purchase Price and any additional monies as are owing to
it by virtue of the written agreement referred to in Clause
8.1(d);
(b) receipt by the Seller of a power of attorney signed by a duly
authorized officer as to the person authorised to execute and
deliver this Agreement and any other documents to be executed by
or on behalf of the Buyer in connection with the transactions,
contemplated hereby, and the signatures of such person, each to
have been recently officially certified;
<PAGE>
(c) an opinion of counsel to the Buyer, dated the Delivery Date, in a
form and substance reasonably satisfactory to the Seller;
(d) execution and delivery by the Buyer of this Agreement and the FAA
Bill of Sale and initialling by the Buyer of the Bill of Sale;
and
(e) such other documents as the Seller may reasonably request, in
form and substance satisfactory to the Seller.
9. WAIVERS
No failure to exercise or enforce and no delay in exercising or
enforcing, on the part of the Buyer or the Seller, any right, remedy,
power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise or enforcement of any
such right, remedy, power or privilege preclude any other or further
exercise thereof, or the exercise of any other right, remedy, power or
privilege whether hereunder or otherwise. The rights, remedies, powers
and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by applicable law.
10. AMENDMENTS; SEVERABILITY; ENTIRE AGREEMENT
10.1 Neither this Agreement nor any provision hereof (including this Clause
10.1) may be amended, changed, waived, discharged or terminated orally,
but only by a statement in writing signed by both the Seller and the
Buyer.
10.2 Any term, condition, stipulation, provision, covenant or undertaking in
this Agreement which is or becomes illegal, void, prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such illegality, voidness, prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such illegality, voidness, prohibition or unenforceability in
any jurisdiction shall not invalidate or render illegal, void,
prohibited or unenforceable any such term, condition, stipulation,
provision, covenant or undertaking in any other jurisdiction and the
Buyer and Seller agree, as to such jurisdiction, to replace such
provision with a valid provision which has as nearly as possible the
same effect.
10.3 Except as otherwise specifically provided herein, this Agreement
contains the entire agreement between the parties with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings between the parties, whether written or oral.
11. NOTICES
11.1 All notices provided for herein shall be in writing and shall be deemed
to have been duly given or made when delivered personally or when
telefaxed and receipt confirmed and shall be deemed to have been
received 10 days after despatch by registered post (postage prepaid,
return receipt requested), and in each case addressed as follows:
<PAGE>
(i) if to the Seller:
Aero Lloyd Flugreisen GmbH & Co. Luftverkehrs-KG
Postfach 2029
Lessingstr. 7 - 9
61440 Oberursel
Federal Republic of Germany
Attention: General Manager
Facsimile No.: (++ 49 61 71) 64 11 29
Tel. No.: (++ 49 61 71) 64 11 22
copy to:
Aero Lloyd Flugreisen GmbH & Co. Luftverkehrs-KG
Technical Department
Gebaude 507, Tor 31
60549 Frankfurt/Main Airport
Federal Republic of Germany
Attention: Mr. Heinrich Schirach
Facsimile No.: (++ 49 69) 69 04 66 71
Tel. No.: (++ 49 69) 69 04 40 21
(ii) if to the Buyer:
Golden Nugget Aviation Corp.
6605 Las Vegas Boulevard South
Suite 111
Las Vegas, Nevada 89119
United States of America
Attention: Mr. Robert Hecht
Director, Flight Operations
Facsimile No.: (++1) 702 791 7194
Tel. No.: (++1) 702 791 7193
or to such other address and additional parties as the Seller or
the Buyer may reasonably specify in writing to the other.
12. ASSIGNMENTS AND TRANSFERS
12.1 This Agreement shall inure to the benefit of and be binding upon each of
the parties hereto and their respective successors and assigns, but
prior to the Delivery Date neither party shall assign or transfer the
benefit or obligations under this Agreement, in whole or in part,
without the prior consent of the other party hereto.
<PAGE>
13. GOVERNING LAW AND JURISDICTION
13.1 This Agreement shall take effect under and be governed by and construed
in accordance with the laws of the Federal Republic of Germany.
13.2 Each of the Buyer and the Seller hereby irrevocably and unconditionally
agrees that any suit, legal action or other proceeding with respect to
itself or concerning this Agreement or any document, instrument or
agreement required hereunder or entered into in connection herewith
shall be brought in the competent courts of Frankfurt am Main, Germany,
which shall have jurisdiction to settle any disputes arising out of or
in connection with this Agreement and each document, instrument or
agreement required hereunder or entered into in connection herewith.
14. COUNTERPARTS
14.1 This Agreement may be executed in one or more counterparts. Each such
counterpart shall constitute an original Agreement and all such
counterparts shall comprise one Agreement.
15. INDEMNITY
15.1 The Seller shall indemnify the Buyer and hold the Buyer harmless from
any liability, loss, claim, cause of action, proceeding, cost or
expense, including reasonable legal fees and expenses (hereinafter a
"CLAIM"), which results from (a) the material incorrectness of any
representation or breach of any warranty of the Seller contained in this
Agreement or in any of the documents to be delivered by the Seller in
connection with this transaction or (b) the material breach by the
Seller of any of its covenants or undertakings contained herein or
therein Provided that such an obligation to indemnify on the part of the
Seller shall not exist with respect to any Claim which is first asserted
beyond the date falling six months after the Delivery Date.
15.2 The Buyer shall indemnify the Seller and hold the Seller harmless from
any liability, loss, claim, cause of action, proceeding, cost or
expense, including reasonable legal fees and expenses which results from
(a) the material incorrectness of any representation or breach of any
warranty of the Buyer contained in this Agreement or in any of the
documents to be delivered by the Buyer in connection with this
transaction or (b) the material breach by the Buyer of any of its
covenants or undertakings contained herein or therein Provided that such
an obligation to indemnify on the part of the Buyer shall not exist with
respect to any claim which is first asserted on the date falling six
months after the Delivery Date.
15.3 A party seeking indemnification pursuant to Clause 15.1 or 15.2 above
(an "INDEMNIFIED PARTY") shall give prompt notice to the party from whom
such indemnification is sought (the "INDEMNIFYING PARTY") of the
assertion of any claim, or the commencement of any action, suit or
proceeding, in respect of which indemnity may be sought hereunder and
shall give the Indemnifying Party such information with respect thereto
as the Indemnifying Party may reasonably request, but no failure to give
such notice shall relieve the Indemnifying Party of any liability
hereunder (except to the extent the
<PAGE>
Indemnifying Party has suffered actual prejudice thereby). The
Indemnifying Party may, at its expense, participate in or assume the
defence of any such action, suit or proceeding involving a third party;
PROVIDED, HOWEVER, that such defence is conducted with legal counsel
mutually and reasonably satisfactory to the Indemnified Party and the
Indemnifying Party. The Indemnified Party and the Indemnifying Party
shall consult with each other regarding the conduct of such defence. If
the defence is assumed by the Indemnifying Party, the Indemnifying Party
shall submit any proposed settlement under this Clause 15.3 for the
Indemnified Party's approval, which approval may be made conditional to
the provision of proof reasonably satisfactory to the Indemnified Party
that the Indemnifying Party has the financial and other ability to
fulfil all obligations on its part to be performed in connection with
such settlement. The Indemnified Party shall have the right (but not the
duty) to participate in the defence hereof, and to employ legal counsel,
at its own expense (except that the Indemnifying Party shall pay the
fees and expenses of such legal counsel to the extent that the
Indemnified Party reasonably concludes that there is a conflict of
interest between the Indemnified Party in any such action. The
Indemnified Party shall be liable for fees and expenses of legal counsel
employed by the Indemnified Party if the Indemnifying Party has not
assumed the defence thereof. Whether or not the Indemnifying Party
chooses to defend or prosecute any Claim involving third party, all the
parties hereto shall cooperate in the defence or prosecution thereof and
shall furnish such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials and appeals, as may
be reasonably requested in connection therewith. The Indemnifying Party
shall not be liable under Section 15.1 or 15.2 for any settlement
effected without its consent, which consent shall not be unreasonably
withheld or delayed, of any Claim, litigation or proceeding in respect
of which indemnity may be sought hereunder.
<PAGE>
EXECUTION PAGE
SELLER
/s/ H. Schinach /s/ Illegible
- --------------------------- ---------------------------
AERO LLOYD FLUGREISEN GMBH
on behalf of
AERO LLOYD FLUGREISEN GMBH & CO. LUFTVERKEHRS KG
Name: H. Schinach Name: Illegible
Title: AEF DT Title: Commercial Director
BUYER
/s/ Robert A. Hecht
- ---------------------------------- ---------------------------
GOLDEN NUGGET AVIATION CORP.
Name: Robert A. Hecht Name:
Title: Director/Flight Ops. Title:
<PAGE>
AMENDMENT NO. 6 TO REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 6 to Reducing Revolving Loan Agreement (this
"Amendment") dated as of November 30, 1995 is entered into with reference to
the Reducing Revolving Loan Agreement dated as of May 25, 1994, among Mirage
Resorts, Incorporated, a Nevada corporation ("Parent"), THE MIRAGE CASINO-HOTEL,
a Nevada corporation ("Company"), Treasure Island Corp., a Nevada corporation
("TI"), Bellagio, a Nevada corporation formerly known as MR Realty ("MRR"),
MH, INC., a Nevada corporation ("MHI" and collectively with Parent, Company, TI
and MRR, the "Borrowers"), the Banks party thereto, Bank of America National
Trust and Savings Association, Bankers Trust Company, The Long-Term Credit Bank
of Japan, Ltd., Los Angeles Agency and Societe Generale, as Co-Agents, and Bank
of America National Trust and Savings Association, as Administrative Co-Agent.
The Loan Agreement referred to above has been amended by an Amendment
No. 1 thereto dated as of April 6, 1995, pursuant to which GNLV, CORP., a Nevada
corporation, became a party to the Loan Agreement as an additional Borrower, as
well as by Amendments No. 2 through 5 thereto dated August 30, 1995, August 30,
1995, September 5, 1995 and October 16, 1995. References herein to the Loan
Agreement mean the Loan Agreement, as so amended. Other capitalized terms used
but not defined herein are used with the meanings set forth for those terms in
the Loan Agreement.
Borrowers and the Administrative Co-Agent, acting with the consent of
the Requisite Banks in accordance with Section 11.2 of the Loan Agreement,
hereby amend the Loan Agreement as follows:
1. AMENDMENT TO SECTION 1.1. Section 1.1 of the Loan Agreement is
amended to delete the definitions of "Project Commencement Date" and "Project
Key Date."
2. AMENDMENT TO SECTION 6.13. Section 6.13 of the Loan Agreement is
amended to read in full as follows:
"6.13 INTEREST CHARGE COVERAGE. Permit Interest Charge Coverage
(a) as of the last day of any Fiscal Quarter ending during the period from
the Closing Date through the last day of the second full Fiscal Quarter
after the Dunes Project or Other Gaming Project opens for business, to be
less than 2.25 to 1.00, or (b) as of the last day of any subsequent Fiscal
Quarter, to be less than 3.00 to 1.00."
<PAGE>
3. AMENDMENT TO SECTION 6.14. Section 6.14 of the Loan Agreement is
amended to read in full as follows:
"6.14 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:
FISCAL QUARTER ENDING RATIO
Closing Date through
March 31, 1997 3.00 to 1.00
June 30, 1997 3.25 to 1.00
September 30, 1997 through
March 31, 1998 3.50 to 1.00
June 30, 1998 3.25 to 1.00
Thereafter 3.00 to 1.00"
4. AMENDMENT TO SECTION 6.15. Section 6.15(a) of the Loan Agreement
is amended to read in full as follows:
"(a) Capital Expenditures not in excess of $1,300,000,000 to develop
and construct the Dunes Project;"
5. CONDITIONS PRECEDENT. The effectiveness of this Amendment shall
be conditioned upon the receipt by the Administrative Co-Agent of the following:
a. Counterparts of this Amendment executed by all parties
hereto;
b. Written consents of each of the Subsidiary Guarantors to the
execution, delivery and performance hereof, substantially in the form of
Exhibit A to this Amendment; and
c. Written consents to the execution, delivery and performance
hereof from Banks constituting the Requisite Banks.
6. REPRESENTATION AND WARRANTY. Borrowers represent and warrant to
the Administrative Co-Agent and the Banks that no Default or Event of Default
has occurred and remains continuing.
-2-
<PAGE>
7. CONFIRMATION. In all other respects, the terms of the Loan
Agreement and the other Loan Documents are hereby confirmed.
IN WITNESS WHEREOF, Borrowers and the Administrative Co-Agent have
executed this Amendment as of the date first written above by their duly
authorized representatives.
MIRAGE RESORTS, INCORPORATED
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Chief Financial Officer
THE MIRAGE CASINO-HOTEL
By: /s/ Daniel R. Lee
----------------------------------
Daniel R. Lee
Assistant Treasurer
TREASURE ISLAND CORP.
By: /s/ Daniel R. Lee
----------------------------------
Daniel R. Lee
Treasurer
-3-
<PAGE>
BELLAGIO (formerly, MR Realty)
By: /s/ Daniel R. Lee
----------------------------------
Daniel R. Lee
Assistant Treasurer
MH, INC.
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Treasurer
GNLV, CORP.
By: /s/ Daniel R. Lee
---------------------------------
Daniel R. Lee
Treasurer
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Co-Agent
By: /s/ Peggy A. Fujimoto
----------------------------------
Peggy A. Fujimoto, Vice President
-4-
<PAGE>
MIRAGE RESORTS, INCORPORATED
EXECUTIVE MEDICAL REIMBURSEMENT PLAN
a. CLASSES ELIGIBLE FOR BENEFIT
Officers and Directors of Mirage Resorts, Incorporated and their
DEPENDENTS.
b. MEDICAL REIMBURSEMENT BENEFITS PAYABLE UNDER THE PLAN
Notwithstanding anything stated in the Policy to the contrary, it is
understood and agreed that whenever a Covered Person requires treatment as
the result of an INJURY or SICKNESS, or desires to obtain medical or dental
care, the EMPLOYER will pay, while this provision is in full force and
effect, one hundred per cent (100%) of the USUAL, REASONABLE AND CUSTOMARY
Charges of the COVERED EXPENSES, as defined below, for such treatment of
services, subject to the conditions hereinafter set forth.
No DEDUCTIBLE amounts, co-insurance percentages, individual benefits
amounts or time periods will be applicable to this provision. However,
the maximum amount payable for all treatment and services under this
provision for each insured Person and all of his/her DEPENDENTS insured
hereunder shall be limited to a maximum of $100,000.00 during each CALENDAR
YEAR.
Benefits provided under this provision will be payable to a Covered Person
after and only after such person has exhausted all other benefits that are
available for the treatment rendered or services provided under any
Employee Medical or Dental Benefit Plan whether insured or self-insured.
In addition, benefits will be payable hereunder for those expenses that
are either specifically excluded under the provisions of the Employee
Medical or Dental Benefit Plan, or are not eligible for benefit payment
because of the necessity of satisfying DEDUCTIBLE amounts or co-insurance
percentages, attainment of the individual maximum benefit amounts or
maximum time periods, or reaching the overall maximum amount payable under
such Employee Medical or Dental Benefit Plan.
c. COVERED EXPENSES
The following shall be considered COVERED EXPENSES under this provision:
1. Expenses for a Covered Person's lodging for the (1) night stay
immediately preceding admission to a HOSPITAL or other place of
treatment and subsequent nights if requested by a physician.
<PAGE>
2. Expenses incurred as the result of CONFINEMENT in a legally qualified
HOSPITAL or for CONFINEMENT in an institution especially designed for
the care and treatment of alcoholism, drug addiction or mental and
nervous disorders.
3. Expenses incurred for care and treatment rendered by a PHYSICIAN,
surgeon, DENTIST and any other practitioner of the healing arts who is
licensed under the Medical Practices Act of the state in which the
services are performed or who is recognized as medical practitioner
under the laws of such state, including private duty nursing services
by a Registered Nurse (R.N.) or Licensed Practical Nurse (L.P.N.).
Benefits will also be payable hereunder for surgical procedures of an
elective nature for the purpose of altering body design. Expenses can
be incurred both in and out of a HOSPITAL or similar institution.
4. Expenses incurred for diagnostic x-ray and laboratory tests, x-rays
and radioactive therapy treatment (including the cost of the
radioactive material) and all other tests and analyses made for
either diagnostic or treatment purposes.
5. Expenses incurred for prescription DRUGS dispensed by a licensed
pharmacist, blood and blood plasma, dental services (including
materials and appliances), vision care services (including lenses,
contact lenses, and frames), hearing aid services (including
appliances), artificial limbs and eyes, casts, splints, trusses,
crutches, braces, oxygen and the rental of equipment for its
administration, and rental or purchase of a wheelchair and hospital
type bed.
6. Expenses incurred in connection with a routine physical examination
and other preventive health care expenses, including the cost of tests
required in connection with preventive health care.
7. Expenses incurred for normal transportation to and from a Hospital or
other medical facility.
All travel expenses must be considered usual and reasonable charges
which have been incurred in connection with transportation to, or
from, the place where medical care is rendered.
8. Without limiting the generality of the above, benefits will be payable
under this provision for the care and treatment, including the cost of
materials, for all other necessary medical expense which is not
eligible for benefit payment under the Employee Medical or Dental
Benefit Plan nor excluded below.
2
<PAGE>
9. Expenses incurred for weight control programs, dietary programs, and
exercise fitness programs.
d. EXCLUSION AND LIMITATIONS
Benefits will not be payable under this provision for those expenses that
are incurred for the personal care and convenience of the Covered Person,
including but not limited to telephone, television, items of personal
hygiene, expenses incurred for stays at a spa or resort for rest or
relaxation and any other such expenses not directly attributable to the
medical or dental care and treatment of a Covered Person.
Benefits provided hereunder will not be payable for any expenses incurred
subsequent to the termination of the individual Covered Person's insurance
hereunder, except as provided under that section entitled "Extension of
Benefits", or termination of the Employee Medical or Dental Benefit Plan.
Benefits provided hereunder will not be payable for any expenses incurred
for any treatment or services for INJURY or SICKNESS not considered
NECESSARY TREATMENT.
Nothing herein contained shall be held to alter, vary or affect any of the
terms, provisions or conditions of said policy, other than as stated above.
e. EXTENSION OF BENEFITS
If a Covered Person is TOTALLY DISABLED on the date his/her insurance
terminates, and if expenses are then incurred in connection with the INJURY
or SICKNESS causing the TOTAL DISABILITY, benefits will be continued for
those expenses until either:
1. twelve months from the date of termination,
2. the date the maximum amount of benefits have been paid,
3. the date TOTAL DISABILITY ceases, or
4. the date the Policy terminates,
whichever first occurs. No benefits will be payable subsequent to the
foregoing date for that disability nor will any benefits be payable
hereunder with respect to separate disabilities commencing subsequent to
the date of termination of insurance.
3
<PAGE>
AMENDMENT NO.3 TO
JOINT VENTURE AGREEMENT OF
VICTORIA PARTNERS
This Amendment No. 3 to Joint Venture Agreement of Victoria Partners (the
"Amendment"), dated as of February 28, 1996, is entered into with reference to
the Joint Venture Agreement of Victoria Partners, dated as of December 9, 1994,
as amended by Amendment No. 1 thereto dated as of April 17, 1995, and Amendment
No. 2 thereto dated as of September 25, 1995 (as so amended, the "Joint Venture
Agreement"), by and between MRGS Corp., a Nevada corporation ("MR Sub"), and
Gold Strike L.V., a Nevada general partnership ("Gold Strike"). Capitalized
terms used but not defined in this Amendment are used with the meanings set
forth for such terms in the Joint Venture Agreement.
PREAMBLE
WHEREAS, MR Sub and Gold Strike desire to amend certain terms and
provisions of the Joint Venture Agreement as provided herein, and in all other
respects to confirm the terms and provisions of the Joint Venture Agreement.
NOW, THEREFORE, MR Sub and Gold Strike agree as follows:
1. AMENDMENT TO SECTION 9.5. The following is hereby added after the
third and before the fourth sentences of Section 9.5 of the Joint Venture
Agreement:
"The Managing Venturer may appoint, from time to time, certain
employees of the Managing Venture or its Affiliates to devote
essentially full time to the management of the Facility and retain
such employees on its payroll. In such event, the Joint Venture shall
reimburse the Managing Venturer or its Affiliate for the out-of-pocket
compensation (e.g., salary, bonus, direct cost of health and
retirement benefit plans) paid to such employee for performing
services to the Joint Venture on a full time basis. The terms of any
benefits offered to such an employee (including, without limitation,
health benefit plans, retirement plans, stock option grants) shall be
in the sole discretion of the Managing Venturer of its Affiliate."
2. CONFIRMATION. In all other respects, the terms and provisions of the
Joint Venture Agreement are hereby confirmed and shall remain unchanged and in
full force and effect.
[Signature page to follow]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
MRGS CORP., a Nevada corporation
By: /s/ Daniel R. Lee
---------------------
Daniel R. Lee
Chief Financial Officer
GOLD STRIKE L.V., a Nevada
general partnership
By: M.S.E. Investments, Incorporated,
a Nevada corporation,
Its: general partner
By: /s/ Michael S. Ensign
-------------------------
Michael S. Ensign,
President
2
<PAGE>
STANDARD FORM OF AGREEMENT BETWEEN OWNER AND CONTRACTOR WHERE THE BASIS OF
PAYMENT IS THE COST OF THE WORK PLUS A FEE WITH OR WITHOUT A GUARANTEED MAXIMUM
PRICE
[LOGO] AIA DOCUMENT A111
- --------------------------------------------------------------------------------
AGREEMENT
made as of the Seventh (7th) day of March in the year of Nineteen Hundred and
Ninety-Five (1995).
BETWEEN the Owner:
(NAME AND ADDRESS)
ATLANDIA DESIGN & FURNISHINGS, INC.
3260 South Industrial Road
Las Vegas, Nevada 89109
and the Contractor:
(NAME AND ADDRESS)
MARNELL CORRAO ASSOCIATES
4495 South Polaris Avenue
Las Vegas, Nevada 89103
the Project is:
(NAME AND ADDRESS)
BEAU RIVAGE
(ADF Project #92046)
3650 Las Vegas Boulevard South
Las Vegas, Nevada 89109
the Architect is:
(NAME AND ADDRESS)
ANTHONY A. MARNELL II, CHTD.
4495 South Polaris Avenue
Las Vegas, Nevada 89103
The Owner and Contractor agree as set forth below.
- --------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT
D401.
The 1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction, is adopted in this document by reference. Do not use with other
general conditions unless this document is modified. This document has been
approved and endorsed by The Associated General Contractors of America.
Copyright 1920, 1925, 1951, 1958, 1961, 1967, 1974, 1978, 1987 by The American
Institute of Architects, 1735 New York Avenue N.W., Washington D.C. 20006-5292.
Reproduction of the material herein or substantial quotation of its provisions
without written permission of the AIA violates the copyright laws of the United
States and will be subject to legal prosecution.
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 - OWNER-CONTRACTOR AGREEMENT - TENTH EDITION - AIA -
COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE
NW, WASHINGTON D.C. 20006-5292. WARNING: Unlicensed photocopying violates
U.S. copyright laws and is subject to legal prosecution. This document was
electronically produced under license number 795000146 and can be reproduced
without violation until 7/27/95.
Electronic Document Service A111-1987 1
<PAGE>
ARTICLE 1
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement, Conditions of the
Contract (General, Supplementary and other Conditions), Drawings,
Specifications, Addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and Modifications issued after execution of
this Agreement; these form the Contract, and are as fully a part of the
Contract as if attached to this Agreement or repeated herein. The Contract
represents the entire and integrated agreement between the parties hereto and
supersedes prior negotiations, representations or agreements, either written or
oral. An enumeration of the Contract Documents, other than Modifications,
appears in Article 16. If anything in the other Contract Documents is
inconsistent with this Agreement, this Agreement shall govern.
ARTICLE 2
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the Contract
Documents, except to the extent specifically indicated in the Contract
Documents to be the responsibility of others, for the General Construction of
Beau Rivage and any related mock-ups/models, including, but not limited to,
General Conditions, Sitework, Concrete, Masonry, Metals, Wood & Plastics,
Thermal & Moisture Protection, Doors & Windows, Finishes, Specialties,
Equipment, Furnishings, Special Construction, Conveying Systems, Mechanical
Systems & Specialties, Electrical Systems & Specialties, coordination of
certain Owner-purchased and installed items, installation of certain
Owner-purchased and Contractor-installed items, and coordination of Owner's
other contractors, and as further described in these Contract Documents.
The Owner reserves the right to assign any portion of the Work related to the
Project under separate contract to others.
ARTICLE 3
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the Architect
and utilize the Contractor's best skill, efforts and judgment in furthering the
interests of the Owner; to furnish efficient business administration and
supervision; to make best efforts to furnish at all times an adequate supply of
workers and materials; and to perform the Work in the best way and most
expeditious and economical manner consistent with the interests of the Owner.
The Owner agrees to exercise best efforts to enable the Contractor to perform
the Work in the best way and most expeditious manner by furnishing and approving
in a timely way information required by the Contractor and making payments to
the Contractor in accordance with requirements of the Contract Documents.
ARTICLE 4
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time of
Subparagraph 4.2 is measured; it shall be the date of this Agreement, as first
written above, unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(INSERT THE DATE OF COMMENCEMENT, IF IT DIFFERS FROM THE DATE OF THIS AGREEMENT
OR, IF APPLICABLE, STATE THAT THE DATE WILL BE FIXED IN A NOTICE TO PROCEED.)
The Date of Commencement shall be fixed in a written Notice to Proceed to be
issued by the Owner.
Unless the date of commencement is established by a notice to proceed issued by
the Owner, the Contractor shall notify the Owner in writing not less than five
days before commencing the Work to permit timely filing of mortgages, mechanic's
liens and other security interests.
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4.2 The Contractor shall achieve Substantial Completion of the entire Work
(INSERT THE CALENDAR DATE OR NUMBER OF CALENDAR DAYS AFTER THE DATE OF
COMMENCEMENT. ALSO INSERT ANY REQUIREMENTS FOR EARLIER SUBSTANTIAL COMPLETION
OF CERTAIN PORTIONS OF THE WORK, IF NOT STATED ELSEWHERE IN THE CONTRACT
DOCUMENTS.)
The Date of Substantial Completion shall be determined by mutual agreement
between the Owner and the Contractor.
, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(INSERT PROVISIONS, IF ANY, FOR LIQUIDATED DAMAGES RELATING TO FAILURE TO
COMPLETE ON TIME.)
ARTICLE 5
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Contractor's
performance of the Contract the Contract Sum consisting of the Cost of the Work
as defined in Article 7 and the Contractor's Fee determined as follows:
(STATE A LUMP SUM, PERCENTAGE OF COST OF THE WORK OR OTHER PROVISION FOR
DETERMINING THE CONTRACTOR'S FEE, AND EXPLAIN HOW THE CONTRACTOR'S FEE IS TO BE
ADJUSTED FOR CHANGES IN THE WORK.)
The Contractor's Fee shall be Four and Seven-Tenths Percent (4.7%) of the Cost
of the Work and shall include the Contractor's General Liability Insurance
costs. The Contractor's Fee shall be paid based on the Cost of the Work
completed to the date of each Application for Payment.
5.2 GUARANTEED MAXIMUM PRICE (IF APPLICABLE)
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is guaranteed by
the Contractor not to exceed
(INSERT SPECIFIC PROVISIONS IF THE CONTRACTOR IS TO PARTICIPATE IN ANY SAVINGS.)
the Guaranteed Maximum Price established pursuant to the Terms and Conditions
set forth in Schedule H, subject to additions and deductions by Change Order as
provided in the Contract Documents.
5.2.2 The Guaranteed Maximum Price is based upon the following alternates, if
any, which are described in the Contract Documents and are hereby accepted by
the Owner:
(STATE THE NUMBERS OR OTHER IDENTIFICATION OF ACCEPTED ALTERNATES, BUT ONLY IF A
GUARANTEED MAXIMUM PRICE IS INSERTED IN SUBPARAGRAPH 5.2.1. IF DECISIONS ON
OTHER ALTERNATES ARE TO BE MADE BY THE OWNER SUBSEQUENT TO THE EXECUTION OF THIS
AGREEMENT, ATTACH A SCHEDULE OF SUCH OTHER ALTERNATES SHOWING THE AMOUNT FOR
EACH AND THE DATE UNTIL WHICH THAT AMOUNT IS VALID.)
None.
5.2.3 The amounts agreed to for unit prices, if any, are as follows:
(STATE UNIT PRICES ONLY IF A GUARANTEED MAXIMUM PRICE IS INSERTED IN
SUBPARAGRAPH 5.2.1.)
None.
ARTICLE 6
CHANGES IN THE WORK
6.1 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
6.1.1 Adjustments to the Guaranteed Maximum Price on account of changes in the
Work may be determined by any of the methods listed in Subparagraph 7.3.3 of the
General Conditions.
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6.1.2 In calculating adjustments to subcontracts (except those awarded with the
Owner's prior consent on the basis of cost plus a fee), the terms "cost" and
"fee" as used in Clause 7.3.3.3 of the General Conditions and the terms "costs"
and "a reasonable allowance for overhead and profit" as used in Subparagraph
7.3.6 of the General Conditions shall have the meanings assigned to them in the
General Conditions and shall not be modified by Articles 5, 7 and 8 of this
Agreement. Adjustments to subcontracts awarded with the Owner's prior consent
on the basis of cost plus a fee shall be calculated in accordance with the terms
of the Contract Documents.
6.1.3 In calculating adjustments to this Contract, the terms "cost" and "costs"
as used in the above-referenced provisions of the General Conditions shall mean
the Cost of the Work as defined in Article 7 of this Agreement and the terms
"fee" and "a reasonable allowance for overhead and profit" shall mean the
Contractor's Fee as defined in Paragraph 5.1 of this Agreement.
6.2
6.2.1
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in Paragraph 5.1 for adjustment of the
Contractor's Fee in the case of changes in the Work, or if the extent of such
changes is such, in the aggregate, that application of the adjustment provisions
of Paragraph 5.1 will cause substantial inequity to the Owner or Contractor, the
Contractor's Fee shall be equitably adjusted on the basis of the Fee established
for the original Work.
ARTICLE 7
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at rates
not higher than the standard paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the items set
forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's agreement,
at off-site workshops.
7.1.1.2 Wages or salaries of the Contractor's supervisory and administrative
personnel when stationed at the site with the Owner's agreement.
7.1.1.2.1 Wages and Salaries of Contractor's Accounting Staff directly related
to this Project when stationed on site.
(IF IT IS INTENDED THAT THE WAGES OR SALARIES OF CERTAIN PERSONNEL STATIONED AT
THE CONTRACTOR'S PRINCIPAL OR OTHER OFFICES SHALL BE INCLUDED IN THE COST OF THE
WORK, IDENTIFY IN ARTICLE 14 THE PERSONNEL TO BE INCLUDED AND WHETHER FOR ALL OR
ONLY PART OF THEIR TIME.)
7.1.1.3 Wages and salaries of Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting the
production or transportation of materials or equipment required for the Work,
but only for that portion of their time required for the Work and only by
Owner's prior written Agreement.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective bargaining
agreements and, for personnel not covered by such agreements, customary benefits
such as sick leave, medical and health benefits, holidays, vacations and
pensions, provided such costs are based on wages and salaries included in the
Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the Contract Documents.
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7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in excess
of those actually installed but required to provide reasonable allowance for
waste and for spoilage. Unused excess materials, if any, shall be handed over to
the Owner at the completion of the Work or, at the Owner's option, shall be sold
by the Contractor; amounts realized, if any, from such sales shall be credited
to the Owner as a deduction from the Cost of the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
ITEMS
7.1.4.1 Costs, including transportation, installation, maintenance, dismantling
and removal of materials, supplies, temporary facilities, machinery, equipment,
and tools not customarily owned by the construction workers, which are provided
by the Contractor at the site and fully consumed in the performance of the Work;
and cost less salvage value on such items if not fully consumed, whether sold to
others or retained by the Contractor. Cost for items previously used by the
Contractor shall mean fair market value.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment, and tools
not customarily owned by the construction workers, which are provided by the
Contractor at the site, whether rented from the Contractor or others, and costs
of transportation, installation, dismantling and removal thereof. Rates and
quantities of equipment rented shall be subject to the Owner's prior approval.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage and parcel
delivery charges at the site and Home Office, telephone service at the site and
reasonable petty cash expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence expenses of the
Contractor's personnel incurred while traveling in discharge of duties connected
with the Work outside the Las Vegas Metropolitan area. Air travel shall be at
the lowest available air fare. All travel arrangements shall be arranged by the
Owner's travel agent.
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums for
insurance and bonds, excluding Contractor's General Liability Insurance.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other permits,
licences and inspections for which the Contractor is required by the Contract
Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of defending
suits or claims for infringement of patent rights arising from such requirement
by the Contract Documents; payments made in accordance with legal judgments
against the Contractor resulting from such suits or claims and payments of
settlements made with the Owner's consent; provided, however, that such costs of
legal defenses, judgment and settlements shall not be included in the
calculation of the Contractor's Fee or of a Guaranteed Maximum Price, if any,
and provided that such royalties, fees and costs are not excluded by the last
sentence of Subparagraph 3.17.1 of the General Conditions or other provisions
of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to the extent
approved in advance in writing by the Owner.
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7.1.6.2 Cost of rental, maintenance and supplies for all copiers, fax machines
and telephone equipment at the Field Office.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in case of
an emergency affecting the safety of persons and property, as provided in
Paragraph 10.3 of the General Conditions.
7.2.2 In repairing or correcting Work damaged or improperly executed by
construction workers in the employ of the Contractor, provided such damage or
improper execution did not result from the fault or negligence of the Contractor
or the Contractor's foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in Subparagraph 7.2.2,
provided such damage did not result from the fault or negligence of the
Contractor or the Contractor's personnel, and only to the extent that the cost
of such repairs is not recoverable by the Contractor from others and the
Contractor is not compensated therefor by insurance or otherwise.
7.2.4 In correcting defective or nonconforming Work performed or supplied by a
Subcontractor or material supplier and not corrected by them, provided such
defective or nonconforming Work did not result from the fault or neglect of the
Contractor or the Contractor's personnel adequately to supervise and direct the
Work of the Subcontractor or material supplier, and only to the extent that the
cost of correcting the defective or nonconforming Work is not recoverable by the
Contractor from the Subcontractor or material supplier.
ARTICLE 8
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel stationed
at the Contractor's principal office or offices other than the site office,
except as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as may be
provided in Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than the
site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the Contractor's
capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically provided
in Clause 7.1.4.2 and Clause 7.1.6.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 of this Agreement,
costs due to the fault or negligence of the Contractor, Subcontractors, anyone
directly or indirectly employed by any of them, or for whose acts any of them
may be liable, including but not limited to costs for the correction of damaged,
defective or nonconforming Work, disposal and replacement of materials and
equipment incorrectly ordered or supplied, and making good damage to property
not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any, to be
exceeded, unless approved by the Owner in writing.
ARTICLE 9
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall accrue to
the Owner if (1) before making the payment, the Contractor included them in an
Application for Payment and received payment therefor from the Owner, or (2) the
Owner has deposited funds with the Contractor with which to make payments;
otherwise, cash discounts shall accrue to the Contractor. Trade discounts,
rebates, refunds and amounts received from sales of surplus materials and
equipment shall accrue to the Owner, and the Contractor shall make provisions so
that they can be secured.
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9.2 Amounts which accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost of
Work.
ARTICLE 10
SUBCONTRACTORS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily perform
with the Contractor's own personnel shall be performed under subcontracts or by
other appropriate agreements with the Contractor. The Contractor shall obtain
bids from Subcontractors and from suppliers of materials or equipment fabricated
especially for the Work and shall deliver such bids to the Owner. The Owner
will then determine, with the advice of the Contractor and subject to the
reasonable objection of the Architect, which bids will be accepted. The Owner
may designate specific persons or entities from whom the Contractor shall obtain
bids; however, if a Guaranteed Maximum Price has been established, the Owner may
not prohibit the Contractor from obtaining bids from others. The Contractor
shall not be required to contract with anyone to whom the Contractor has
reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a specific bidder
among those whose bids are delivered by the Contractor to the Owner (1) is
recommended to the Owner by the Contractor; (2) is qualified to perform that
portion of the Work; and (3) has submitted a bid which conforms to the
requirements of the Contract Documents without reservations or exceptions, but
the Owner requires that another bid be accepted; then the Contractor may require
that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by
the Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the payment provisions
of Paragraphs 12.7 and 12.8, and shall not be awarded on the basis of cost plus
a fee without the prior consent of the Owner.
ARTICLE 11
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract; the accounting and control systems shall be satisfactory to the Owner.
The Owner and the Owner's accountants shall be afforded access to the
Contractor's records, books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data relating to
this Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by law.
ARTICLE 12
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Owner and the
Architect by the Contractor and approved by the Owner, the Owner shall make
progress payments on account of the Contract Sum to the Contractor as provided
below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be one calendar
month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is received by the Owner and the
Architect not later than the Tenth (10th) day of a month, the Owner shall make
payment to the Contractor not later than the Twentieth (20th) day of the same
month. If an Application for Payment is received by the Owner after the
application date fixed above, payment shall be made by the Owner not later than
Ten (10) days after the Owner receives the Application for Payment.
12.4 With each Application for Payment the Contractor shall submit payrolls,
petty cash accounts, receipted invoices or invoices, and any other evidence
required by the Owner to demonstrate that cash disbursements already made by the
Contractor on account of the Cost of Work equal or exceed (1) progress payments
already received by the Contractor; less (2) that portion of those payments
attributable to the Contractor's Fee; plus (3) payrolls for the period covered
by the present Application for Payment; plus (4) retainage provided in
Subparagraph 12.5.4, if any, applicable to prior progress payments.
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12.5 CONTRACTS WITH A GUARANTEED MAXIMUM PRICE
12.5.1 Each Application for Payment shall be based upon the most recent schedule
of values submitted by the Contractor in accordance with the Contract
Documents. The schedule of values shall allocate the entire Guaranteed Maximum
Price among the various portions of the Work, except that the Contractor's Fee
shall be shown as a single separate item. The schedule of values shall be
prepared in such a form and supported by such data to substantiate its accuracy.
This schedule shall be used as a basis for reviewing the Contractor's
Applications for Payment.
12.5.2 Applications for Payment shall show the percentage completion of each
portion of the Work as of the end of the period covered by the Application for
Payment. The percentage completion shall be the percentage of that portion of
the Work which has actually been completed.
12.5.3 Subject to other provisions of the Contract Documents, the amount of each
progress payment shall be computed as follows:
12.5.3.1 Take that portion of the Guaranteed Maximum Price properly allocable to
completed Work as determined by multiplying the percentage completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to
that portion of the Work in the schedule of values.
12.5.3.2 Add that portion of the Guaranteed Maximum Price properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored off the site at a location agreed upon in writing.
12.5.3.3 The Contractor's Fee shall be at the rate stated in Paragraph 5.1.
12.5.3.4 Subtract the aggregate of previous payments made by the Owner.
12.5.3.5 Subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Paragraph 12.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner's
accountants in such documentation.
12.5.3.6 Subtract amounts, if any, for which the Owner has withheld or nullified
a Certificate for Payment as provided in Paragraph 9.5 of the General
Conditions.
12.5.4 Additional retainage, if any, shall be as follows:
(IF IT IS INTENDED TO RETAIN ADDITIONAL AMOUNTS FROM PROGRESS PAYMENTS TO
THE CONTRACTOR BEYOND (1) THE RETAINAGE FROM THE CONTRACTOR'S FEE PROVIDED IN
CLAUSE 12.5.3.3, (2) THE RETAINAGE FROM SUBCONTRACTORS PROVIDED IN PARAGRAPH
12.7 BELOW, AND (3) THE RETAINAGE, IF ANY, PROVIDED BY OTHER PROVISIONS OF THE
CONTRACT, INSERT PROVISION FOR SUCH ADDITIONAL RETAINAGE HERE. SUCH PROVISION,
IF MADE, SHOULD ALSO DESCRIBE ANY ARRANGEMENT FOR LIMITING OR REDUCING THE
AMOUNT RETAINED AFTER THE WORK REACHES A CERTAIN STAGE OF COMPLETION.)
None.
12.6
12.6.1
12.6.2
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12.6.2.1
12.6.2.2
12.6.2.3
12.6.2.4
12.6.2.5
12.6.3
12.7 Except with the Owner's prior approval, payments to Subcontractors included
in the Contractor's Applications for Payment shall not exceed an amount for each
Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable to completed
Work as determined by multiplying the percentage completion of each portion of
the Subcontractor's Work by the share of the total Subcontract Sum allocated to
that portion in the Subcontractor's schedule of values, less retainage of zero
percent (0%).
12.7.2 Add that portion of the Subcontract Sum properly allocable to materials
and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work or, if approved in advance by the Owner, suitably
stored and insured off the site at a location agreed upon in writing, less
retainage of zero percent (0%).
12.7.3 Subtract the aggregate of the previous payments made by the Contractor to
the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Owner has withheld or nullified a
Certificate for Payment by the Owner to the Contractor for reasons which are the
fault of the Subcontractor.
12.7.5 Add, upon Substantial Completion of the entire Work of the Contractor, a
sum sufficient to increase the total payments to the Subcontractor to One
Hundred percent (100%) of the Subcontract Sum, less amounts, if any, for
incomplete Work and unsettled claims; and, if final completion of the entire
Work is thereafter materially delayed through no fault of the Subcontractor, add
any additional amounts payable on account of Work of the Subcontractor in
accordance with Subparagraph 9.10.3 of the General Conditions.
(IF IT IS INTENDED, PRIOR TO SUBSTANTIAL COMPLETION OF THE ENTIRE WORK OF THE
CONTRACTOR, TO REDUCE OR LIMIT THE RETAINAGE FROM SUBCONTRACTORS RESULTING FROM
THE PERCENTAGES INSERTED IN SUBPARAGRAPHS 12.7.1 AND 12.7.2 ABOVE, AND THIS IS
NOT EXPLAINED ELSEWHERE IN THE CONTRACT DOCUMENTS, INSERT HERE PROVISIONS FOR
SUCH REDUCTION OR LIMITATION.)
12.7.6 Contractor shall hold retainage against Subcontractor payment in a
separate, segregated, Owner authorized, interest-bearing account. Subcontractor
retainage will not be released without written approval of the Owner; however,
all interest earned on these funds shall accrue to the Contractor.
The Subcontract Sum is the total amount stipulated in the subcontract to be paid
by the Contractor to the Subcontractor for the Subcontractor's performance of
the subcontract.
12.8 Except with the owner's prior approval, the Contractor shall not make
advance payments to suppliers for materials or equipment which have not been
delivered and stored at the site.
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12.9 In taking action on the Contractor's Applications for Payment, the Owner
shall be entitled to rely on the accuracy and completeness of the information
furnished by the Contractor and shall not be deemed to represent that the Owner
has made a detailed examination, audit or arithmetic verification of the
documentation submitted in accordance with Paragraph 12.4 or other supporting
data; that the Owner has made exhaustive or continuous on-site inspections or
that the Owner has made examinations to ascertain how or for what purposes the
Contractor has used amounts previously paid on account of the Contract. Such
examinations, audits and verifications, if required by the Owner, will be
performed by the Owner.
ARTICLE 13
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor pursuant to the
Terms and Conditions set forth in the Contract Documents.
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the Contractor's
final accounting and the Contractor's Fee.
13.2.2 Subtract amounts, if any, for which the Architect or Owner withholds, in
whole or in part, a final Certificate for Payment as provided in Subparagraph
9.5.1 of the General Conditions or other provisions of the Contract Documents.
13.2.3. Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount
due the Contractor, the Contractor shall reimburse the difference to the
Owner.
13.3
13.4
13.5
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ARTICLE 14
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of the General
Conditions or another Contract Document, the reference refers to that provision
as amended or supplemented by other provisions of the Contract Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from the
date payment is due at the rate stated below, or in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
(INSERT RATE OF INTEREST AGREED UPON, IF ANY.)
First Interstate Bank of Nevada: Prime Rate of Interest, plus One Percent (1%),
adjusted to a monthly rate and compounded monthly, except for the cost of items
which are in dispute between the Owner and the Contractor.
(USURY LAWS AND REQUIREMENTS UNDER THE FEDERAL TRUTH IN LENDING ACT, SIMILAR
STATE AND LOCAL CONSUMER CREDIT LAWS AND OTHER REGULATIONS AT THE OWNER'S AND
CONTRACTOR'S PRINCIPAL PLACES OF BUSINESS, THE LOCATION OF THE PROJECT AND
ELSEWHERE MAY AFFECT THE VALIDITY OF THIS PROVISION. LEGAL ADVICE SHOULD BE
OBTAINED WITH RESPECT TO DELETIONS OR MODIFICATIONS, AND ALSO REGARDING
REQUIREMENTS SUCH AS WRITTEN DISCLOSURES OR WAIVERS.)
14.3 Other provisions:
14.3.1 Any Documents, Drawings, and/or Specifications presently being prepared
or contemplated by the Owner's Consultants shall become a part of the Contract
Documents as they are completed and "Issued for Construction" by the Owner or
the Architect, provided that such Documents are consistent with the Scope of the
Work contemplated by the other Contract Documents referenced in this Agreement.
14.3.2 The Owner and Contractor recognize and accept the existing relationship
between the Architect (Anthony A. Marnell II, Chtd.) and the Contractor (Marnell
Corrao Associates). Any disputes or claims arising out of, or resulting from,
that relationship shall be subject to all remedies available to either party at
law or equity.
ARTICLE 15
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in Article 14
of the General Conditions; however, the amount to be paid to the Contractor
under Subparagraph 14.1.2 of the General Conditions shall not exceed the amount
the Contractor would be entitled to receive under Paragraph 15.3 below.
15.2 If a Guaranteed Maximum Price is established in Article 5, the Contract may
be terminated by the Owner for cause as provided in Article 14 of the General
Conditions; however, the amount, if any, to be paid to the Contractor under
Subparagraph 14.2.4 of the General Conditions shall not cause the Guaranteed
Maximum Price to be exceeded, nor shall it exceed the amount the Contractor
would be entitled to receive under Paragraph 15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5, the Contract
may be terminated by the Owner for cause as provided in Article 14 of the
General Conditions; however, the Owner shall then pay the Contractor an amount
calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor to the date of
termination.
15.3.2 Add the Contractor's Fee to the date of termination at the rate stated in
Paragraph 5.1.
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15.3.3 Subtract the aggregate of previous payments made by the Owner.
The Owner shall also pay the Contractor fair compensation, either by purchase
or rental at the election of the Owner, for any equipment owned by the
Contractor which the Owner elects to retain and which is not otherwise
included in the Cost of the Work under Subparagraph 15.3.1. To the extent
that the Owner elects to take legal assignment of subcontracts and purchase
orders (including rental agreements), the Contractor shall, as a condition of
receiving the payments referred to in this Article 15, execute and deliver
all such papers and take all such steps, including the legal assignment of
such subcontracts and other contractual rights of the Contractor, as the
Owner may require for the purpose of fully vesting in the Owner the rights
and benefits of the Contractor under such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in Article 14 of the
General Conditions.
ARTICLE 16
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after execution of
this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement Between Owner
and Contractor, AIA Document A111, 1987 Edition and its Schedules, Exhibits and
other Attachments.
16.1.2 The General Conditions are the General Conditions of the Contract for
Construction, AIA Document A201, 1987 Edition as modified and attached hereto.
16.1.3 The Supplementary and other Conditions of the Contract are as follows:
DOCUMENT TITLE PAGES
Special Conditions, dated March 7, 1995.
16.1.4 The Specifications are as follows:
(EITHER LIST THE SPECIFICATIONS HERE OR REFER TO AN EXHIBIT ATTACHED TO THIS
AGREEMENT.)
SECTION TITLE PAGES
The Specifications for the Project are presently being prepared by Anthony A.
Marnell II, Chtd., Architect, and the Architect's Consultants, which shall
become a part of the Contract Documents as they are completed, accepted in
writing by the Owner, and subsequently "Issued for Construction".
16.1.5 The Drawings are as follows:
(EITHER LIST THE DRAWINGS HERE OR REFER TO AN EXHIBIT ATTACHED TO THIS
AGREEMENT.)
NUMBER TITLE DATE
The Drawings for the Project are presently being prepared by Anthony A. Marnell
II, Chtd., Architect, and the Architect's Consultants, which shall become a part
of the Contract Documents as they are completed, accepted in writing by the
Owner, and subsequently "Issued for Construction".
16.1.6 The Addenda, if any, are as follows:
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NUMBER DATE PAGES
Not Applicable.
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in this
Article 16.
16.1.7 Other Documents, if any, forming part of the Contract Documents are as
follows:
(LIST HERE ANY ADDITIONAL DOCUMENTS WHICH ARE INTENDED TO FORM PART OF THE
CONTRACT DOCUMENTS. THE GENERAL CONDITIONS PROVIDE THAT BIDDING REQUIREMENTS
SUCH AS ADVERTISEMENT OR INVITATION TO BID, INSTRUCTIONS TO BIDDERS, SAMPLE
FORMS AND THE CONTRACTOR'S BID ARE NOT PART OF THE CONTRACT DOCUMENTS UNLESS
ENUMERATED IN THIS AGREEMENT. THEY SHOULD BE LISTED HERE ONLY IF INTENDED TO
BE PART OF THE CONTRACT DOCUMENTS.)
16.1.7.1 Schedule A - Labor Rates Governed by Collective
Bargaining Agreements, dated March 7, 1995;
16.1.7.2 Schedule B - Salaries and Wages Not Governed by Collective
Bargaining Agreements, dated March 7, 1995;
16.1.7.3 Schedule C - Equipment Rental/Lease Schedule, dated
March 7, 1995;
16.1.7.4 Schedule D - Additional Costs to be Reimbursed, dated
March 7, 1995;
16.1.7.5 Schedule E - Additional Costs Not to be Reimbursed,
dated March 7, 1995;
16.1.7.6 Schedule F - Items Excluded from the Contract, dated
March 7, 1995;
16.1.7.7 Schedule G - Substantial Completion, dated
March 7, 1995, and;
16.1.7.8 Schedule H - Guaranteed Maximum Price, dated March 7, 1995.
This agreement is entered into as of the day and year first written above and is
executed in at least three original copies of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
OWNER CONTRACTOR
/S/ KENNETH R. WYNN /S/ GLEN D. KAISER
- ------------------------------------ -----------------------------------
(SIGNATURE) (SIGNATURE)
Atlandia Design and Furnishings, Marnell Corrao Associates
Inc. Glen D. Kaiser
Kenneth R. Wynn President
President (PRINTED NAME AND TITLE)
(PRINTED NAME AND TITLE)
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GENERAL CONDITIONS OF THE CONTRACT
FOR CONSTRUCTION
AIA DOCUMENT A201 - ELECTRONIC FORMAT
- --------------------------------------------------------------------------------
1987 EDITION
TABLE OF ARTICLES
1. GENERAL PROVISIONS
2. OWNER
3. CONTRACTOR
4. ADMINISTRATION OF THE CONTRACT
5. SUBCONTRACTORS
6. CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
7. CHANGES IN THE WORK
8. TIME
9. PAYMENTS AND COMPLETION
10. PROTECTION OF PERSONS AND PROPERTY
11. INSURANCE AND BONDS
12. UNCOVERING AND CORRECTION OF WORK
13. MISCELLANEOUS PROVISIONS
14. TERMINATION OR SUSPENSION OF THE CONTRACT
- --------------------------------------------------------------------------------
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES; CONSULTATION WITH AN ATTORNEY
IS ENCOURAGED WITH RESPECT TO ITS MODIFICATION. AUTHENTIFICATION OF THIS
ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
This document has been approved and endorsed by the Associated General
Contractors of America.
Copyright 1911, 1915, 1918, 1925, 1927, 1951, 1958, 1961, 1963, 1967, 1970,
1976, 1987 by the American Institute of Architects, 1735 New York Avenue
N.W., Washington D.C. 20006-5292. Reproduction of the material herein or
substantial quotation of its provisions without written permission of the AIA
violates the copyright laws of the United States and will be subject to legal
prosecutions.
- ----------------------------------------------------------------------------AIA
DOCUMENT A201 - GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION -
FOURTEENTH EDITION - AIA - COPYRIGHT 1987 - THE AMERICAN INSTITUTE OF
ARCHITECTS, 1735 NEW YORK AVENUE N.W., WASHINGTON D.C. 20006-5292. WARNING:
Unlicensed photocopying violates U.S. copyright laws and is subject to legal
prosecution. This document was electronically produced under license number
795000146 and can be reproduced without violation until 7/27/95.
Electronic Document Service A201-1987 1
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INDEX
ACCEPTANCE OF NONCONFORMING WORK 9.6.6, 9.9.3, 12.3
Acceptance of work 9.6.6, 9.8.2, 9.9.3, 9.10.1, 9.10.3
ACCESS TO WORK 3.16, 6.2.1, 12.1
Accident prevention 4.2.3, 10
Acts and omissions 3.2.1, 3.2.2, 3.3.2, 3.12.8, 3.18, 4.2.3,
4.3.2, 4.3.9, 8.3.1, 10.1.4, 10.2.5, 13.4.2, 13.7, 14.1
Addenda 1.1.1, 3.11
Additional Costs, Claims for 4.3.6., 4.3.7, 4.3.9, 6.1.1, 10.3
Additional Inspections and Testing 4.2.6, 9.8.2, 12.2.1, 13.5
Additional Time, Claims for 4.3.6, 4.3.8, 4.3.9 , 8.3.2
ADMINISTRATION OF THE CONTRACT 3.3.3, 4,9.4, 9.5
Advertisement or Invitation to Bid 1.1.1
Aesthetic Effect 4.2.13, 4.5.1
ALLOWANCES 3.8
All-risk Insurance 11.3.1.1
APPLICATIONS FOR PAYMENT 4.2.5, 7.3.7, 9.2, 9.3, 9.4, 9.5.1,
9.6.3, 9.8.3, 9.10.1, 9.10.3, 9.10.4, 11.1.3, 14.2.4
Approvals 2.4, 3.3.3, 3.5, 3.10.2, 3.12.4 through 3.12.8,
3.18.3, 4.2.7, 9.3.2, 11.3.1.4, 13.4.2, 13.5
ARBITRATION 4.1.4, 4.3.2, 4.3.4, 4.4.4, 4.5, 8.3.1,
10.1.2, 11.3.9, 11.3.10
ARCHITECT 4.1
Architect, Definition of 4.1.1
Architect, Extent of Authority 2.4, 3.12.6, 4.2, 4.3.2, 4.3.6, 4.4,
5.2, 6.3, 7.1.2, 7.2.1, 7.3.6, 7.4, 9.2, 9.3.1, 9.4, 9.5,
9.6.3, 9.8.2, 9.8.3, 9.10.1, 9.10.3, 12.1,
12.2.1, 13.5.1, 13.5.2, 14.2.2, 14.2.4
Architect, Limitations of Authority and Responsibility 3.3.3,
3.12.8, 3.12.11, 4.1.2, 4.2.1, 4.2.2, 4.2.3, 4.2.6,
4.2.7, 4.2.10, 4.2.12, 4.2.13, 4.3.2, 5.2.1, 7.4, 9.4.2, 9.6.4, 9.6.6
Architect's Additional Services and Expenses 2.4, 9.8.2, 11.3.1.1,
12.2.1, 12.2.4, 13.5.2, 13.5.3, 14.2.4
ARCHITECT'S ADMINISTRATION OF THE CONTRACT 4.2, 4.36
4.3.7, 4.4, 9.4, 9.5
Architect's Approvals 2.4, 3.5.1, 3.10.2, 3.12.6,
3.12.8, 3.18.3, 4.2.7
Architect's Authority to Reject Work 3.5.1, 4.2.6, 12.1.2, 12.2.1
Architect's Copyright 1.3
Architect's Decisions 4.2.6, 4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.2,
4.3.6, 4.4.1, 4.4.4, 4.5, 6.3, 7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2,
9.4, 9.5.1, 9.8.2, 9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4
Architect's Inspections 4.2.2, 4.2.9, 4.3.6, 9.4.2, 9.8.2,
9.9.2, 9.10.1, 13.5
Architect's Instructions 4.2.6, 4.2.7, 4.2.8, 4.3.7,
7.4.1., 12.1, 13.5.2
Architect's Interpretations 4.2.11, 4.2.12, 4.3.7
Architect's On-Site Observations 4.2.2, 4.2.5, 4.3.6, 9.4.2,
9.5.1, 9.10.1, 13.5
Architect's Project Representative 4.2.10
Architect's Relationship with Contractor 1.1.2, 3.2.1, 3.2.2,
3.3.3, 3.5.1, 3.7.3, 3.11, 3.12.8, 3.12.11, 3.16, 3.18, 4.2.3,
4.2.4, 4.2.6, 4.2.12, 5.2, 6.2.2, 7.3.4,
9.8.2, 11.3.7, 12.1, 13.5
Architect's Relationship with Subcontractors 1.1.2, 4.2.3, 4.2.4,
4.2.6, 9.6.3, 9.6.4, 11.3.7
Architects Representations 9.4.2, 9.5.1, 9.10.1
Architect's Site Visits 4.2.2, 4.2.5, 4.2.9, 4.3.6, 9.4.2,
9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Asbestos 10.1
Attorneys' Fees 3.18.1, 9.10.2, 10.1.4
Award of Separate Contracts 6.1.1
AWARD OF SUBCONTRACTS AND OTHER CONTRACTS
FOR PORTIONS OF THE WORK 5.2
BASIC DEFINITIONS 1.1
Bidding Requirements 1.1.1, 1.1.7, 5.2.1, 11.4.1
BOILER AND MACHINERY INSURANCE 11.3.2
Bonds, Lien 9.10.2
Bonds, Performance and Payment 7.3.6.4, 9.10.3, 11.3.9, 11.4
Building permit 3.7.1
CAPITALIZATION 1.4
Certificate of Substantial Completion 9.8.2
CERTIFICATES FOR PAYMENT 4.2.5, 4.2.9, 9.3.3, 9.4, 9.5, 9.6.1,
9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
Certificates of Inspection, Testing or Approval 3.12.11, 13.5.4
Certificates of Insurance 9.3.2, 9.10.2, 11.1.3
CHANGE ORDERS 1.1.1, 2.4.1, 3.8.2.4, 3.11, 4.2.8, 4.3.3. 5.2.3,
7.1, 7.2, 7.3.2, 8.3.1, 9.3.1.1, 9.10.3, 11.3.1.2,
11.3.4, 11.3.9, 12.1.2
Changes Orders, Definition of 7.2.1
CHANGES 7.1
CHANGES IN THE WORK 3.11, 4.2.8, 7, 8.3.1, 9.3.1.1, 10.1.3
CLAIM, DEFINITION OF 4.3.1
CLAIMS AND DISPUTES 4.3, 4.4, 4.5, 6.2.5, 8.3.2, 9.3.1.2,
9.3.3, 9.10.4, 10.1.4
CLAIMS AND TIMELY ASSERTION OF CLAIMS 4.5.6
CLAIMS FOR ADDITIONAL COST 4.3.6, 4.3.7, 4.3.9, 6.1.1, 10.3
CLAIMS FOR ADDITIONAL TIME 4.3.6, 4.3.8, 4.3.9, 8.3.2
CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS 4.3.6
Claims for Damages 3.18, 4.3.9, 6.1.1, 6.2.5, 8.3.2,
9.5.1.2, 10.1.4
Claims Subject to Arbitration 4.3.2, 4.4.4, 4.5.1
CLEANING UP 3.15, 6.3
COMMENCEMENT OF STATUTORY LIMITATION PERIOD 13.7
Commencement of the Work, Conditions Relating to 2.1.2, 2.2.1,
3.2.1, 3.2.2, 3.7.1, 3.10.1, 3.12.6, 4.3.7, 5.2.1, 6.2.2,
8.1.2, 8.2.2, 9.2, 11.1.3, 11.3.6, 11.4.1
Commencement of the Work, Definition of 8.1.2
Communications Facilitating Contract Administration 3.9.1, 4.2.4,
5.2.1
Completion, Conditions Relating to 3.11, 3.15, 4.2.2, 4.2.9,
4.3.2, 9.4.2, 9.8, 9.9.1, 9.10, 11.3.5, 12.2.2, 13.7.1
COMPLETION, PAYMENTS AND 9
Completion, Substantial 4.2.9, 4.3.5.2, 8.1.1, 8.1.3, 8.2.3, 9.8,
9.9.1, 12.2.2, 13.7
Compliance with Laws 1.3, 3.6, 3.7, 3.13, 4.1.1, 10.2.2,
11.1, 11.3, 13.1, 13.5.1, 13.5.2, 13.6, 14.1.1, 14.2.1.3
Concealed or Unknown Conditions 4.3.6
Conditions of the Contract 1.1.1, 1.1.7, 6.1.1
Consent, Written 1.3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4, 4.5.5, 9.3.2,
9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3, 11.3.1,
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11.3.1.4, 11.3.11, 13.2, 13.4.2
CONSTRUCTION BY OWNER OR BY
SEPARATE CONTRACTORS 1.1.4, 6
Construction Change Directive, Definition of 7.3.1
CONSTRUCTION CHANGE DIRECTIVES 1.1.1, 4.2.8, 7.1, 7.3, 9.3.1.1
Construction Schedules, Contractor's 3.10, 6.1.3
CONTINGENT ASSIGNMENT OF SUBCONTRACTS 5.4
CONTINUING CONTRACT PERFORMANCE 4.3.4
Contract, Definition of 1.1.2
CONTRACT, TERMINATION OR SUSPENSION
OF THE 4.3.7, 5.4.1.1, 14
Contract Administration 3.3.3, 4, 9.4, 9.5
Contract Award and Execution, Conditions Relating to 3.7.1
3.10, 5.2, 9.2, 11.1.3, 11.3.6, 11.4.1
CONTRACT DOCUMENTS, THE 1.1, 1.2, 7
Contract Documents, Copies Furnished and Use of 1.3, 2.2.5, 5.3
Contract Documents, Definition of 1.1.1
Contract Performance During Arbitration 4.3.4, 4.5.3
CONTRACT SUM 3.8, 4.3.6, 4.3.7, 4.4.4, 5.2.3, 6.1.3,
7.2, 7.3, 9.1, 9.7, 11.3.1, 12.2.4, 12.3, 14.2.4
CONTRACT SUM, DEFINITION OF 9.1
Contract Time 4.3.6, 4.3.8, 4.4.4, 7.2.1.3, 7.3, 8.2.1,
8.3.1, 9.7, 12.1.1
Contract Time, Definition of 8.1.1
CONTRACTOR 3
Contractor, Definition of 3.1, 6.1.2
Contractor's Bid 1.1.1
CONTRACTOR'S CONSTRUCTION SCHEDULES 3.10, 6.1.3
Contractor's Employees 3.3.2, 3.4.2, 3.8.1, 3.9, 3.18, 4.2.3,
4.2.6, 8.1.2, 10.2, 10.3, 11.1.1, 14.2.1.1
CONTRACTOR'S LIABILITY INSURANCE 11.1
Contractor's Relationship with Separate Contractors
and Owner's Forces 2.2.6, 3.12.5, 3.14.2, 4.2.4, 6, 12.2.5
Contractor's Relationship with Subcontractors 1.2.4, 3.3.2,
3.18.1, 3.18.2, 5.2, 5.3, 5.4, 9.6.2, 11.3.7, 11.3.8, 14.2.1.2
Contractor's Relationship with the Architect 1.1.2, 3.2.1, 3.2.2,
3.3.3, 3.5.1, 3.7.3, 3.11, 3.12.8, 3.16, 3.18, 4.2.3, 4.2.4, 4.2.6,
4.2.12, 5.2, 6.2.2, 7.3.4, 9.8.2, 11.3.7, 12.1, 13.5
Contractor's Representations 1.2.2, 3.5.1, 3.12.7, 6.2.2,
8.2.1, 9.3.3
Contractor's Responsibility for Those Performing the Work 3.3.2,
3.18, 4.2.3, 10
Contractor's Review of Contract Documents 1.2.2, 3.2, 3.7.3
Contractor's Right to Stop the Work 9.7
Contractor's Right to Terminate the Contract 14.1
Contractor's Submittals 3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3,
7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3,
10.1.2, 11.4.2, 11.4.3
Contractor's Superintendent 3.9, 10.2.6
Contractor's Supervision and Construction Procedures 1.2.4, 3.3,
3.4, 4.2.3, 8.2.2, 8.2.3, 10
Contractual Liability Insurance 11.1.1.7, 11.2.1
Coordination and Correlation 1.2.2, 1.2.4, 3.3.1, 3.10. 3.12.7,
6.1.3, 6.2.1
Copies Furnished of Drawings and Specifications 1.3, 2.2.5, 3.11
Correction of Work 2.3, 2.4, 4.2.1, 9.8.2, 9.9.1,
12.1.2, 12.2, 13.7.1.3
Cost, Definition of 7.3.6, 14.3.5
Costs 2.4, 3.2.1, 3.7.4, 3.8.2, 3.15.2, 4.3.6, 4.3.7, 4.3.8.1,
5.2.3, 6.1.1, 6.2.3, 6.3, 7.3.3.3, 7.3.6, 7.3.7, 9.7, 9.8.2, 9.10.2,
11.3.1.2, 11.3.1.3, 11.3.4, 11.3.9, 12.1, 12.2.1, 12.2.4,
12.2.5, 13.5, 14
CUTTING AND PATCHING 3.14, 6.2.6
Damage to Construction of Owner or Separate Contractors 3.14.2,
6.2.4, 9.5.1.5, 10.2.1.2, 10.2.5, 10.3, 11.1, 11.3, 12.2.5
Damage to the Work 3.14.2, 9.9.1, 10.2.1.2, 10.2.5, 10.3, 11.3
Damages, Claims for 3.18, 4.3.9, 6.1.1, 6.2.5,
8.3.2, 9.5.1.2, 10.1.4
Damages for Delay 6.1.1, 8.3.3, 9.5.1.6, 9.7
Date of Commencement of the Work, Definition of 8.1.2
Date of Substantial Completion, Definition of 8.1.3
Day, Definition of 8.1.4
Decision of the Architect 4.2.6, 4.2.7, 4.2.11,
4.2.12, 4.2.13, 4.3.2, 4.3.6, 4.4.1. 4.4.4, 4.5, 6.3,
7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2, 9.4, 9.5.1, 9.8.2,
9.9.1, 10.1.2, 13.5.2, 14.2.2, 14.2.4
DECISIONS TO WITHHOLD CERTIFICATION 9.5, 9.7, 14.1.1.3
Defective or Nonconforming Work, Acceptance,
Rejection and Correction of 2.3, 2.4, 3.5.1, 4.2.1,
4.2.6, 4.3.5, 9.5.2, 9.8.2, 9.9.1, 10.2.5, 12, 13.7.1.3
Defective Work, Definition of 3.5.1
Definitions 1.1, 2.1.1, 3.1, 3.5.1, 3.12.1, 3.12.2, 3.12.3,
4.1.1, 4.3.1, 5.1, 6.1.2, 7.2.1, 7.3.1, 7.3.6, 8.1, 9.1, 9.8.1
DELAYS AND EXTENSIONS OF TIME 4.3.1, 4.3.8.1, 4.3.8.2,
6.1.1, 6.2.3, 7.2.1, 7.3.1, 7.3.4, 7.3.5, 7.3.8,
7.3.9, 8.1.1, 8.3, 10.3.1, 14.1.1.4
Disputes 4.1.4, 4.3, 4.4, 4.5, 6.2.5, 6.3, 7.3.8, 9.3.1.2
Documents and Samples at the Site 3.11
Drawings, Definition of 1.1.5
Drawings and Specifications, Use and Ownership of 1.1.1, 1.3,
2.2.5, 3.11, 5.3
Duty to Review Contract Documents and Field Conditions 3.2
Effective Date of Insurance 8.2.2, 11.1.2
EMERGENCIES 4.3.7, 10.3
Employees, Contractor's 3.3.2, 3.4.2, 3.8.1, 3.9, 3.18.1,
3.18.2, 4.2.3, 4.2.6, 8.1.2, 10.2, 10.3, 11.1.1, 14.2.1.1
Equipment, Labor, Materials and 1.1.3, 1.1.6, 3.4, 3.5.1,
3.8.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7,
6.2.1, 7.3.6, 9.3.2, 9.3.3, 11.3, 12.2.4, 14
Execution and Progress of the Work 1.1.3, 1.2.3, 3.2, 3.4.1,
3.5.1, 4.2.2, 4.2.3, 4.3.4, 4.3.8, 6.2.2, 7.1.3,
7.3.9, 8.2, 8.3, 9.5, 9.9.1, 10.2, 14.2, 14.3
EXECUTION, CORRELATION AND INTENT of the
Contract Documents 1.2, 3.7.1
Extensions of Time 4.3.1, 4.3.8, 7.2.1.3, 8.3, 10.3.1
Failure of payment by Contractor 9.5.1.3, 14.2.1.2
Failure of Payment by Owner 4.3.7, 9.7, 14.1.3
Faulty Work (See Defective or Nonconforming Work)
Final completion and Final Payment 4.2.1, 4.2.9, 4.3.2,
4.3.5, 9.10, 11.1.2, 11.1.3, 11.3.5, 12.3.1, 13.7
Financial Arrangements, Owner's 2.2.1
Fire and Extended Coverage Insurance 11.3
GENERAL PROVISIONS 1
GOVERNING LAW 13.1
Guarantees (See Warranty and Warranties)
Hazardous Materials 10.1, 10.2.4
Identification of Contract Documents 1.2.1
Identification of Subcontractors and Suppliers 5.2.1
INDEMNIFICATION 3.17, 3.18, 9.10.2, 10.1.4, 11.3.1.2, 11.3.7
INFORMATION AND SERVICES REQUIRED OF THE OWNER 2.1.2, 2.2,
4.3.4, 6.1.3, 6.1.4, 6.2.6, 9.3.2, 9.6.1, 9.6.4, 9.8.3, 9.9.2,
9.10.3, 10.1.4, 11.2, 11.3, 13.5.1, 13.5.2
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INJURY OR DAMAGE TO PERSON OR PROPERTY 4.3.9
Inspections 3.3.3, 3.3.4, 3.7.1, 4.2.2,
4.2.6, 4.2.9, 4.3.6, 9.4.2, 9.8.2, 9.9.2, 9.10.1, 13.5
Instructions to Bidders 1.1.1
Instructions to the Contractor 3.8.1, 4.2.8, 5.2.1, 7, 12.1, 13.5.2
Insurance 4.3.9, 6.1.1, 7.3.6.4, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 11
INSURANCE, BOILER AND MACHINERY 11.3.2
INSURANCE, CONTRACTOR'S LIABILITY 11.1
Insurance, Effective Date of 8.2.2, 11.1.2
INSURANCE, LOSS OF USE 11.3.3
INSURANCE, OWNER'S LIABILITY 11.2
INSURANCE, PROPERTY 10.2.5, 11.3
Insurance, Stored Materials 9.3.2, 11.3.1.4
INSURANCE AND BONDS 11
Insurance Companies, Consent to Partial
Occupancy 9.9.1, 11.3.11
Insurance Companies, Settlement with 11.3.10
Intent of the Contract Documents 1.2.3, 3.12.4,
4.2.6, 4.2.7, 4.2.12, 4.2.13, 7.4
INTEREST 13.6
INTERPRETATION 1.2.5, 1.4, 1.5, 4.1.1, 4.3.1, 5.1, 6.1.2, 8.1.4
Interpretations, Written 4.2.11, 4.2.12, 4.3.7
Joinder and Consolidation of Claims Required 4.5.6
JUDGMENT ON FINAL AWARD 4.5.1, 4.5.4.1, 4.5.7
LABOR AND MATERIALS, Equipment 1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2,
3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1,
4.2.7, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 12.2.4, 14
Labor Disputes 8.3.1
Laws and Regulations 1.3, 3.6, 3.7, 3.13, 4.1.1, 4.5.5
4.5.7, 9.9.1, 10.2.2, 11.1, 11.3, 13.1, 13.4, 13.5.1, 13.5.2, 13.6
Liens 2.1.2, 4.3.2, 4.3.5.1, 8.2.2, 9.3.3, 9.10.2
LIMITATION ON CONSOLIDATION OR JOINDER 4.5.5
Limitations, Statutes of 4.5.4.2, 12.2.6, 13.7
Limitations of Authority 3.3.1, 4.1.2, 4.2.1,
4.2.3, 4.2.7, 4.2.10, 5.2.2, 5.2.4, 7.4, 11.3.10
Limitations of Liability 2.3, 3.2.1, 3.5.1, 3.7.3, 3.12.8, 3.12.11,
3.17, 3.18, 4.2.6, 4.2.7, 4.2.12, 6.2.2, 9.4.2, 9.6.4, 9.10.4,
10.1.4, 10.2.5, 11.1.2, 11.2.1, 11.3.7, 13.4.2, 13.5.2
Limitations of Time, General 2.2.1, 2.2.4, 3.2.1, 3.7.3,
3.8.2, 3.10, 3.12.5, 3.15.1, 4.2.1, 4.2.7, 4.2.11, 4.3.2,
4.3.3, 4.3.4, 4.3.6, 4.3.9, 4.5.4.2, 5.2.1, 5.2.3, 6.2.4, 7.3.4, 7.4,
8.2, 9.5, 9.6.2, 9.8, 9.9, 9.10, 11.1.3, 11.3.1, 11.3.2, 11.3.5,
11.3.6, 12.2.1, 12.2.2, 13.5, 13.7
Limitations of Time, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11,
3.15.1, 4.2.1, 4.2.11, 4.3, 4.4, 4.5, 5.3, 5.4, 7.3.5, 7.3.9,
8.2, 9.2, 9.3.1, 9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2, 11.1.3,
11.3.6, 11.3.10, 11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14
LOSS OF USE INSURANCE 11.3.3
Material Suppliers 1.3.1, 3.12.1, 4.2.4, 4.2.6, 5.2.1,
9.3.1, 9.3.1.2, 9.3.3, 9.4.2, 9.6.5, 9.10.4
Materials, Hazardous 10.1, 10.2.4
Materials, Labor, Equipment and 1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2,
3.12.2, 3.12.3, 3.12.7, 3.12.11, 3.13, 3.15.1, 4.2.7, 6.2.1,
7.3.6, 9.3.2, 9.3.3, 12.2.4, 14
Means, Methods, Techniques, Sequences and
Procedures of Construction 3.3.1, 4.2.3, 4.2.7, 9.4.2
MINOR CHANGES IN THE WORK 1.1.1, 4.2.8, 4.3.7, 7.1, 7.4
MISCELLANEOUS PROVISIONS 13
Modifications, Definition of 1.1.1
Modifications to the Contract 1.1.1, 1.1.2, 3.7.3, 3.11,
4.1.2, 4.2.1, 5.2.3, 7, 8.3.1, 9.7
MUTUAL RESPONSIBILITY 6.2
NONCONFORMING WORK, ACCEPTANCE OF 12.3
Nonconforming Work, Rejection and Correction of 2.3.1,
4.3.5, 9.5.2, 9.8.2, 12, 13.7.1.3
Notice 2.3, 2.4, 3.2.1, 3.2.2, 3.7.3, 3.7.4, 3.9, 3.12.8,
3.12.9, 3.17, 4.3, 4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1,
9.5.1, 9.6.1, 9.7, 9.10, 10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2,
12.2.4, 13.3, 13.5.1, 13.5.2, 14,
NOTICE, WRITTEN 2.3, 2.4, 3.9, 3.12.8, 3.12.9, 4.3,
4.4.4, 4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10,
10.1.2, 10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3, 13.5.2, 14
Notice of Testing and Inspections 13.5.1, 13.5.2
Notice to Proceed 8.2.2
NOTICES, PERMITS, FEES AND 2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2
Observations, Architect's On-Site 4.2.2, 4.2.5,
4.3.6, 9.4.2, 9.5.1, 9.10.1, 13.5
Observations, Contractor's 1.2.2, 3.2.2
Occupancy 9.6.6, 9.8.1, 9.9, 11.3.11
On-Site Inspections by the Architect 4.2.2, 4.2.9, 4.3.6,
9.4.2, 9.8.2, 9.9.2, 9.10.1
On-Site Observations by the Architect 4.2.2, 4.2.5, 4.3.6,
9.4.2, 9.5.1, 9.10.1, 13.5
Orders, Written 2.3, 3.9, 4.3.7, 7, 8.2.2, 11.3.9, 12.1,
12.2, 13.5.2, 14.3.1
OWNER 2
Owner, DEFINITION of 2.1
OWNER, INFORMATION AND SERVICES REQUIRED OF THE 2.1.2,
2.2, 4.3.4, 6, 9, 10.1.4, 11.2, 11.3, 13.5.1, 14.1.1.5, 14.1.3
Owner's Authority 3.8.1, 4.1.3, 4.2.9, 5.2.1, 5.2.4, 5.4.1,
7.3.1, 8.2.2, 9.3.1, 9.3.2, 11.4.1, 12.2.4, 13.5.2, 14.2, 14.3.1
Owner's Financial Capability 2.2.1, 14.1.1.5
OWNER'S LIABILITY INSURANCE 11.2
Owner's Loss of Use Insurance 11.3.3
Owner's Relationship with Subcontractors 1.1.2, 5.2.1, 5.4.1, 9.6.4
Owner's Right to Carry Out the Work 2.4, 12.2.4, 14.2.2.2
OWNER'S RIGHT TO CLEAN UP 6.3
OWNER'S RIGHT TO PERFORM CONSTRUCTION AND TO AWARD
SEPARATE CONTRACTS 6.1
OWNER'S RIGHT TO STOP THE WORK 2.3, 4.3.7
Owner's Right to Suspend the Work 14.3
Owner's Right to Terminate the Contract 14.2
OWNERSHIP AND USE OF ARCHITECT'S DRAWINGS,
SPECIFICATIONS, AND OTHER DOCUMENTS 1.1.1, 1.3, 2.2.5, 5.3
PARTIAL OCCUPANCY OR USE 9.6.6, 9.9, 11.3.11
PATCHING, CUTTING AND 3.14, 6.2.6
PATENTS, ROYALTIES AND 3.17
PAYMENT, APPLICATIONS FOR 4.2.5, 9.2, 9.3, 9.4,
9.5.1, 9.8.3, 9.10.1, 9.10.3, 9.10.4, 14.2.4
PAYMENT, CERTIFICATES FOR 4.2.5, 4.2.9, 9.3.3, 9.4, 9.5,
9.6.1, 9.6.6, 9.7.1, 9.8.3, 9.10.1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
PAYMENT, FAILURE OF 4.3.7, 9.5.1.3, 9.7,
9.10.2, 14.1.1.3, 14.2.1.2
Payment, Final 4.2.1, 4.2.9, 4.3.2, 4.3.5, 9.10, 11.1.2
11.1.3, 11.3.5, 12.3.1
PAYMENT BOND, PERFORMANCE BOND AND 7.3.6.4, 9.10.3,
11.3.9, 11.4
Payments, Progress 4.3.4, 9.3, 9.6, 9.8.3, 9.10.3, 13.6, 14.2.3
PAYMENTS AND COMPLETION 9, 14
Payments to Subcontractors 5.4.2, 9.5.1.3,
9.6.2, 9.6.3, 9.6.4, 11.3.8, 14.2.1.2
PCB 10.1
Performance Bond and Payment Bond 7.3.6.4,
9.10.3, 11.3.9, 11.4
PERMITS, FEES AND NOTICES 2.2.3, 3.7, 3.13, 7.3.6.4, 10.2.2
PERSONS AND PROPERTY, PROTECTION OF 10
Polychlorinated Biphenyl 10.1
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Product Data, Definition of 3.12.2
PRODUCT DATA AND SAMPLES, SHOP DRAWINGS 3.11, 3.12, 4.2.7
PROGRESS AND COMPLETION 4.2.2, 4.3.4, 8.2
PROGRESS PAYMENTS 4.3.4, 9.3,
9.6, 9.8.3, 9.10.3, 13.6, 14.2.3
PROJECT, DEFINITION OF THE 1.1.4
PROJECT MANUAL, DEFINITION OF THE 1.1.7
Project Manuals 2.2.5
Project Representatives 4.2.10
PROPERTY INSURANCE 10.2.5, 11.3
PROTECTION OF PERSONS AND PROPERTY 10
Regulation and Laws 1.3, 3.6, 3.7, 3.13, 4.1.1, 4.5.5
4.5.7, 10.2.2, 11.1, 11.3, 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14
Rejection of Work 3.5.1, 4.2.6, 12.2
Releases of Waivers and Liens 9.10.2
Representations 1.2.2, 3.5.1, 3.12.7, 6.2.2, 8.2.1, 9.3.3,
9.4.2, 9.5.1, 9.8.2, 9.10.1
Representatives 2.1.1, 3.1.1, 3.9, 4.1.1,
4.2.1, 4.2.10, 5.1.1, 5.1.2, 13.2.1
RESOLUTION OF CLAIMS AND DISPUTES 4.4, 4.5
Responsibility for Those Performing the Work 3.3.2, 4.2.3, 6.1.3,
6.2., 10
Retainage 9.3.1, 9.6.2, 9.8.3, 9.9.1, 9.10.2, 9.10.3
REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY
CONTRACTOR 1.2.2, 3.2, 3.7.3, 3.12.7
Review of Contractor's Submittals by Owner and Architect 3.10.1,
3.10.2, 3.11, 3.12,
4.2.7, 4.2.9, 5.2.1, 5.2.3, 9.2, 9.8.2
Review of Shop Drawings, Product Data and Samples by
Contractor 3.12.5
RIGHTS AND REMEDIES 1.1.2, 2.3, 2.4, 3.5.1, 3.15.2,
4.2.6, 4.3.6, 4.5, 5.3, 6.1, 6.3, 7.3.1, 8.3.1, 9.5.1, 9.7, 10.2.5,
10.3, 12.2.2, 12.2.4, 13.4, 14
ROYALTIES AND PATENTS 3.17
RULES AND NOTICES FOR ARBITRATION 4.5.2
SAFETY OF PERSONS AND PROPERTY 10.2
SAFETY PRECAUTIONS AND PROGRAMS 4.2.3, 4.2.7, 10.1
Samples, Definition of 3.12.3
SAMPLES, SHOP DRAWINGS, PRODUCT DATA AND 3.11, 3.12, 4.2.7
SAMPLES AT THE SITE, DOCUMENTS AND 3.11
SCHEDULE OF VALUES 9.2, 9.3.1
Schedules, Construction 3.10
Separate Contracts and Contractors 1.1.4, 3.14.2, 4.2.4,
4.5.5, 6, 11.3.7, 12.1.2, 12.2.5
Shop Drawings, Definition of 3.12.1
SHOP DRAWINGS, PRODUCT DATA AND SAMPLES 3.11, 3.12, 4.2.7
SITE, USE OF 3.13, 6.1.1, 6.2.1
Site Inspections 1.2.2, 3.3.4, 4.2.2, 4.2.9,
4.3.6, 9.8.2, 9.10.1, 13.5
Site Visits, Architect's 4.2.2, 4.2.5, 4.2.9, 4.3.6,
9.4.2, 9.5.1, 9.8.2, 9.9.2, 9.10.1, 13.5
Special Inspections and Testing 4.2.6, 12.2.1, 13.5
SPECIFICATIONS, DEFINITION OF THE 1.1.6
SPECIFICATIONS, THE 1.1.1, 1.1.6, 1.1.7, 1.2.4, 1.3, 3.11
Statute of Limitations 4.5.4.2, 12.2.6, 13.7
Stopping the Work 2.3, 4.3.7, 9.7, 10.1.2, 10.3, 14.1
Stored Materials 6.2.1, 9.3.2, 10.2.1.2, 11.3.1.4, 12.2.4
Subcontractor, Definition of 5.1.1
SUBCONTRACTORS 5
Subcontractors, Work by 1.2.4, 3.3.2, 3.12.1, 4.2.3, 5.3, 5.4
SUBCONTRACTUAL RELATIONS 5.3, 5.4, 9.3.1.2, 9.6.2,
9.6.3, 9.6.4, 10.2.1, 11.3.7, 11.3.8, 14.1.1, 14.2.1.2, 14.3.2
Submittals 1.3, 3.2.3, 3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3,
7.3.6, 9.2, 9.3.1, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 11.1.3
SUBROGATION, WAIVERS OF 6.1.1, 11.3.5, 11.3.7
SUBSTANTIAL COMPLETION 4.2.9, 4.3.5.2, 8.1.1, 8.1.3,
8.2.3, 9.8, 9.9.1, 12.2.1, 12.2.2, 13.7
Substantial Completion, Definition of 9.8.1
Substitution of Subcontractors 5.2.3, 5.2.4
Substitution of the Architect 4.1.3
Substitutions of Materials 3.5.1
Sub-subcontractor, Definition of 5.1.2
Subsurface Conditions 4.3.6
SUCCESSORS AND ASSIGNS 13.2
SUPERINTENDENT 3.9, 10.2.6
SUPERVISION AND CONSTRUCTION PROCEDURES 1.2.4, 3.3, 3.4,
4.2.3, 4.3.4, 6.1.3, 6.2.4, 7.1.3, 7.3.4, 8.2, 8.3.1, 10, 12, 14
Surety 4.4.1, 4.4.4, 5.4.1.2, 9.10.2, 9.10.3, 14.2.2
Surety, Consent of 9.9.1, 9.10.2, 9.10.3
Surveys 2.2.2, 3.18.3
SUSPENSION BY THE OWNER FOR CONVENIENCE 14.3
Suspension of the Work 4.3.7, 5.4.2, 14.1.1.4, 14.3
Suspension or Termination of the Contract 4.3.7, 5.4.1.1, 14
TAXES 3.6, 7.3.6.4
TERMINATION BY THE CONTRACTOR 14.1
TERMINATION BY THE OWNER FOR CAUSE 5.4.1.1, 14.2
Termination of the Architect 4.1.3
Termination of the Contractor 14.2.2
TERMINATION OR SUSPENSION OF THE CONTRACT 14
TESTS AND INSPECTIONS 3.3.3, 4.2.6, 4.2.9, 9.4.2, 12.2.1, 13.5
TIME 8
TIME, DELAYS AND EXTENSIONS OF 4.3.8, 7.2.1, 8.3
Time Limits, Specific 2.1.2, 2.2.1, 2.4, 3.10, 3.11, 3.15.1,
4.2.1, 4.2.11, 4.3, 4.4, 4.5, 5.3, 5.4, 7.3.5, 7.3.9, 8.2, 9.2, 9.3.1,
9.3.3, 9.4.1, 9.6.1, 9.7, 9.8.2, 9.10.2, 11.1.3, 11.3.6, 11.3.10,
11.3.11, 12.2.2, 12.2.4, 12.2.6, 13.7, 14
TIME LIMITS ON CLAIMS 4.3.2, 4.3.3, 4.3.6, 4.3.9, 4.4, 4.5
Title to Work 9.3.2, 9.3.3
UNCOVERING AND CORRECTION OF WORK 12
UNCOVERING OF WORK 12.1
Unforeseen Conditions 4.3.6, 8.3.1, 10.1
Unit Prices 7.1.4, 7.3.3.2
Use of Documents 1.1.1, 1.3, 2.2.5, 3.12.7, 5.3
USE OF SITE 3.13, 6.1.1, 6.2.1
VALUES, SCHEDULE OF 9.2, 9.3.1
WAIVER OF CLAIMS: FINAL PAYMENT 4.3.5, 4.5.1, 9.10.3
Waiver of Claims by the Architect 13.4.2
Waiver of Claims by the Contractor 9.10.4, 11.3.7, 13.4.2
Waiver of Claims by the Owner 4.3.5, 4.5.1, 9.9.3,
9.10.3, 11.3.3, 11.3.5, 11.3.7, 13.4.2
Waiver of Liens 9.10.2
Waivers of Subrogation 6.1.1, 11.3.5, 11.3.7
WARRANTY AND WARRANTIES 3.5, 4.2.9,
4.3.5.3, 9.3.3, 9.8.2, 9.9.1, 12.2.2, 13.7.1.3
Weather Delays 4.3.8.2
WHEN ARBITRATION MAY BE DEMANDED 4.5.4
Work, Definition of 1.1.3
Written Consent 1.3.1, 3.12.8, 3.14.2, 4.1.2, 4.3.4,
4.5.5, 9.3.2, 9.8.2, 9.9.1, 9.10.2, 9.10.3, 10.1.2, 10.1.3
11.3.1, 11.3.1.4, 11.3.11, 13.2, 13.4.2
Written Interpretations 4.2.11, 4.2.12, 4.3.7
WRITTEN NOTICE 2.3, 2.4, 3.9, 3.12.8, 3.12.9, 4.3, 4.4.4,
4.5, 5.2.1, 5.3, 5.4.1.1, 8.2.2, 9.4.1, 9.5.1, 9.7, 9.10, 10.1.2,
10.2.6, 11.1.3, 11.3, 12.2.2, 12.2.4, 13.3, 13.5.2, 14
Written Orders 2.3, 3.9, 4.3.7,
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7, 8.2.2, 11.3.9, 12.1, 12.2, 13.5.2, 14.3.1
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GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
ARTICLE 1
GENERAL PROVISIONS
1.1 BASIC DEFINITIONS
1.1.1 THE CONTRACT DOCUMENTS
The Contract Documents consist of the Agreement between Owner and Contractor
(hereinafter the Agreement), Conditions of the Contract (General, Supplementary
and other Conditions), Drawings, Specifications, addenda issued prior to
execution of the Contract, other documents listed in the Agreement and
Modifications issued after execution of the Contract. A Modification is (1) a
written amendment to the Contract signed by both parties, (2) a Change Order,
(3) a Construction Change Directive or (4) a written order for a minor change in
the Work issued by the Architect. Unless specifically enumerated in the
Agreement, the Contract Documents include other documents such as bidding
requirements (advertisement or invitation to bid, Instructions to Bidders,
sample forms, the Contractor's bid or portions of addenda relating to bidding
requirements).
1.1.2 THE CONTRACT
The Contract Documents form the Contract for Construction. The Contract
represents the entire and integrated agreement between the parties hereto and
supersedes prior negotiations, representations or agreements, either written or
oral. The Contract may be amended or modified only by a Modification. The
Contract Documents shall not be construed to create a contractual relationship
of any kind (1) between the Architect and Contractor, (2) between the Owner and
a Subcontractor or Sub-subcontractor or (3) between any persons or entities
other than the Owner and Contractor. The Architect shall, however, be entitled
to performance and enforcement of obligations under the Contract intended to
facilitate performance of the Architect's duties.
1.1.3 THE WORK
The term "Work" means the construction and services required by the Contract
Documents, whether completed or partially completed, and includes all other
labor, materials, equipment and services provided or to be provided by the
Contractor to fulfill the Contractor's obligations. The Work may constitute
the whole or a part of the Project.
1.1.4 THE PROJECT
The Project is the total construction of which the Work performed under the
Contract Documents may be the whole or a part and which may include construction
by the Owner or by separate contractors. The name of the Project is "BEAU
RIVAGE" and the Owner's Project Number is "ADF Project #92046".)
1.1.5 THE DRAWINGS
The Drawings are the graphic and pictorial portions of the Contract Documents,
wherever located and whenever issued, showing the design, location and
dimensions of the Work, generally including plans, elevations, sections,
details, schedules and diagrams.
1.1.6 THE SPECIFICATIONS
The Specifications are that portion of the Contract Documents consisting of the
written requirements for materials, equipment, construction systems, standards
and workmanship for the Work, and performance of related services.
1.1.7 THE PROJECT MANUAL
The Project Manual is the volume usually assembled for the Work which may
include the bidding requirements, sample forms, Conditions of the Contract and
Specifications.
1.2 EXECUTION, CORRELATION AND INTENT
1.2.1 The Contract Documents shall be signed by the Owner and Contractor as
provided in the Agreement. If either the Owner or Contractor or both do not
sign all the Contract Documents, the Architect shall identify such unsigned
Documents upon request.
1.2.2 Execution of the Contract by the Contractor is a representation that
the Contractor has visited the site, become familiar with local conditions
under which the Work is to be performed and correlated personal
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observations with requirements of the Contract Documents.
1.2.3 The intent of the Contract Documents is to include all items necessary
for the proper execution and completion of the Work by the Contractor. The
Contract Documents are complementary, and what is required by one shall be as
binding as if required by all; performance by the Contractor shall be required
only to the extent consistent with the Contract Documents and reasonably
inferable from them as being necessary to produce the intended results.
1.2.4 Organization of the Specifications into divisions, sections and articles,
and arrangement of Drawings shall not control the Contractor in dividing the
Work among Subcontractors or in establishing the extent of Work to be performed
by any trade.
1.2.5 Unless otherwise stated in the Contract Documents, words which have well-
known technical or construction industry meanings are used in the Contract
Documents in accordance with such recognized meanings.
1.3 OWNERSHIP AND USE OF ARCHITECT'S DRAWINGS, SPECIFICATIONS AND OTHER
DOCUMENTS
1.3.1 The Contractor may retain one contract record set. They are not to be
used by the Contractor or any Subcontractor, Sub-subcontractor or material or
equipment supplier on other projects or for additions to this Project outside
the scope of the Work without the specific written consent of the Owner. The
Contractor, Subcontractors, Sub-subcontractors and material or equipment
suppliers are granted a limited license to use and reproduce applicable
portions of the Drawings, Specifications and other documents prepared by the
Architect appropriate to and for use in the execution of their Work under the
Contract Documents.
INSERT A
1.3.2 All Drawings, Specifications and copies thereof furnished by the
Architect are and shall remain the property of the Owner. These documents are
to be used by the Contractor only with respect to this Project and are not to be
used by the Contractor on any other Project unless authorized by the Owner.
1.4 CAPITALIZATION
1.4.1 Terms capitalized in these General Conditions include those which are (1)
specifically defined, (2) the titles of numbered articles and identified
references to Paragraphs, Subparagraphs and Clauses in the document or (3) the
titles of other documents published by the American Institute of Architects.
1.5 INTERPRETATION
1.5.1 In the interest of brevity the Contract Documents frequently omit
modifying words such as "all" and "any" and articles such as "the" and "an," but
the fact that a modifier or an article is absent from one statement and appears
in another is not intended to affect the interpretation of either statement.
ARTICLE 2
OWNER
2.1 DEFINITION
2.1.1 The Owner is the person or entity identified as such in the Agreement and
is referred to throughout the Contract Documents as if singular in number. The
term "Owner" means the Owner or the Owner's authorized representative.
2.1.2 The Owner upon reasonable written request shall furnish to the Contractor
in writing information which is necessary and relevant for the Contractor to
evaluate, give notice of or enforce mechanic's lien rights.
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2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER
2.2.1 The Owner and Contractor agree that the Owner represents to the
Contractor that the Owner has made the financial arrangements necessary to
fulfill the Owner's obligations under the Contract.
2.2.2 The Owner shall furnish surveys describing physical characteristics,
legal limitations and utility locations for the site of the Project, and a legal
description of the site.
2.2.3 Except for permits and fees which are the responsibility of the
Contractor under the Contract Documents, the Owner shall secure and pay for
necessary approvals, easements, assessments and charges required for
construction, use or occupancy of permanent structures or for permanent changes
in existing facilities.
2.2.4 Information or services under the Owner's control shall be furnished by
the Owner with reasonable promptness to avoid delay in orderly progress of the
Work.
2.2.5 The Contractor shall be furnished free of charge one (1) set of
reproducible sepia prints of the construction drawings and fifteen (15) copies
of the specifications books. Additional sets of drawings and specifications, if
required by the Contractor shall be paid for by the Owner.
2.2.6 The foregoing are in addition to other duties and responsibilities of the
Owner enumerated herein and especially those in respect to Article 6
(Construction by Owner or by Separate Contractors), Article 9 (Payments and
Completion) and Article 11 (Insurance and Bonds).
2.3 OWNER'S RIGHT TO STOP THE WORK
2.3.1 If, after the Owner has provided written notice, the Contractor fails to
correct Work which is not in accordance with the requirements of the Contract
Documents as required by Paragraph 12.2 or persistently fails to carry out Work
in accordance with the Contract Documents, the Owner, by written order signed
personally or by an agent specifically so empowered by the Owner in writing, may
order the Contractor to stop the Work, or any portion thereof, until the cause
for such order has been eliminated; however, the right of the Owner to stop the
Work shall not give rise to a duty on the part of the Owner to exercise this
right for the benefit of the Contractor or any other person or entity, except to
the extent required by Subparagraph 6.1.3.
2.4 OWNER'S RIGHT TO CARRY OUT THE WORK
2.4.1 If the Contractor defaults or neglects to carry out the Work in
accordance with the Contract Documents and fails within seven-days after receipt
of written notice from the Owner to commence and continue correction of such
default or neglect with diligence and promptness, the Owner may after seven (7)
days following receipt by the Contractor of an additional written notice, and
without prejudice to any other remedy he may have, correct such deficiencies.
In such case an appropriate Change Order shall be issued deducting from payments
then or thereafter due the Contractor the cost of correcting such deficiencies,
including compensation for the Architect's additional services and expenses
made necessary by such default, neglect or failure. If payments then or
thereafter due the Contractor are not sufficient to cover such amounts, the
Contractor shall pay the difference to the Owner.
ARTICLE 3
CONTRACTOR
3.1 DEFINITION
3.1.1 The Contractor is the person or entity identified as such in the
Agreement and is referred to throughout the Contract Documents as if singular in
number. The term "Contractor" means the Contractor or the Contractor's
authorized representative.
3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR
3.2.1 The contractor shall carefully study and compare the Contract Documents
with each other and with
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information furnished by the Owner pursuant to Subparagraph 2.2.2 of the General
Conditions and shall at once report to the Architect and Owner errors,
inconsistencies or omissions discovered. The Contractor shall not be liable to
the Owner or Architect for damage resulting from errors, inconsistencies or
omissions in the Contract Documents unless the Contractor recognized such error,
inconsistency or omission and knowingly failed to report it to the Architect and
Owner. If the Contractor performs any construction activity knowing it involves
a recognized error, inconsistency or omission in the Contract Documents without
such notice to the Architect and Owner, the Contractor shall assume appropriate
responsibility for such performance and shall bear an appropriate amount of the
attributable costs for correction.
3.2.2 The Contractor shall take field measurements and verify field conditions
and shall carefully compare such field measurements and conditions and other
information known to the Contractor with the Contract Documents before
commencing activities. Errors, inconsistencies or omissions discovered shall be
reported to the Architect and Owner at once.
INSERT B
3.2.4 The Contractor shall perform no portion of the Work at any time without
Contract Documents or, where required, approved Shop Drawings, Product Data or
Samples for such portion of the Work, except as may be authorized in writing by
the Architect and/or the Owner.
3.2.3 The Contractor shall perform the work in accordance with the Contract
Documents and submittals approved pursuant to Paragraph 3.12.
3.3 SUPERVISION AND CONSTRUCTION PROCEDURES
3.3.1 The Contractor shall supervise and direct the Work, using the
Contractor's best skill and attention. The Contractor shall be solely
responsible for and have control over construction means, methods, techniques,
sequences and procedures and for coordinating all portions of the Work under the
Contract, unless Contract Documents give other specific instructions concerning
these matters.
3.3.2 The Contractor shall be responsible to the Owner for acts and omissions
of the Contractor's employees, Subcontractors and their agents and employees,
and other persons performing portions of the Work under a contract with the
Contractor when such acts or omissions are related to the Work.
3.3.3 The Contractor shall not be relieved of obligations to performing the
Work in accordance with the Contract Documents either by activities or duties of
the Architect in the Architect's administration of the Contract, or by tests,
inspections or approvals required or performed by persons other than the
Contractor.
3.3.4 The Contractor shall be responsible for inspection of portions of Work
already performed under this Contract to determine that such portions are in
proper condition to receive subsequent Work.
3.4 LABOR AND MATERIALS
3.4.1 Unless otherwise provided in the Contract Documents, the Contractor shall
provide and pay for labor, materials, equipment, tools, construction equipment
and machinery, water, heat, utilities, transportation, and other facilities and
services necessary for proper execution and completion of the Work, whether
temporary or permanent and whether or not incorporated or to be incorporated in
the Work.
3.4.2 The Contractor shall enforce strict discipline and good order among the
Contractor's employees and other persons carrying out the Work. The Contractor
shall not permit employment of unfit persons or persons not skilled in tasks
assigned to them. The Owner shall reserve the right to remove any employee of
the Contractor, his Subcontractors, or their agents from the Project if the
Owner, in his reasonable discretion, determines that the presence of such person
or persons is not in the best interest of the performance of the Work or
Project.
INSERT C
3.4.3 After the Agreement has been executed, the Owner and the Architect will
consider a formal request for the substitution of products in place of those
specified, under the following conditions:
3.4.3.1 The request is accompanied by complete data on the proposed
substitution substantiating compliance with the Contract Documents including
product identification and description, performance and test data, reference and
samples where requested by the Owner and the Architect, and an itemized
comparison of the proposed substitution with the products specified or named by
modification, with data relating to Contract time schedule, design and artistic
effect where applicable, and its relationship to the work of separate contracts;
and
3.4.3.2 The request is accompanied by accurate cost data on the proposed
substitution in comparison with the product specified, including cost of
modifying adjacent equipment and/or materials.
3.4.4 Requests for substitution based on the above Subparagraph 3.4.3, when
forwarded by the Contractor to the Architect and the Owner, shall mean that the
Contractor:
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3.4.4.1 represents that he has personally investigated the proposed substitute
product and is prepared to demonstrate and guarantee to the Architect and the
Owner that it is equal or superior in all respects to that Specified:
3.4.4.2 will provide the same guarantee for the substituted product that was
required for that specified;
3.4.4.3 certifies that the cost data presented is complete and includes all
related costs under the Agreement, but excludes costs under separate contracts
and the Architect's redesign costs, and that he waives all claims for additional
costs related to the Substitution which subsequently become apparent;
3.4.4.4 will coordinate the installation of the accepted substitution, making
such changes as may be required for the work to be complete in all respects; and
3.4.4.5 agrees that should any services of the Architect or another Owner's
Consultant be required as a result of the substitution, the Contractor will
reimburse the Owner for these services.
3.4.5 Substitutions may not be considered if:
3.4.5.1 those substitutions are indicated or implied on shop drawing
submissions without the formal request required in Subparagraph 3.4.3 above; or
3.4.5.2 those substitutions require a substantial revision of the Contract
Documents to accommodate their use or implementation.
3.5 WARRANTY
3.5.1 The Contractor warrants to the Owner and Architect that materials and
equipment furnished under the Contract will be of good quality and new unless
otherwise required or permitted by the Contract Documents, that the Work will be
free from defects not inherent in the quality required or permitted, and that
the Work will conform with the requirements of the Contract Documents. Work not
conforming to these requirements, including substitutions not properly approved
and authorized, may be considered defective. The Contractor's warranty excludes
remedy for damage or defect caused by abuse, modifications not executed by the
Contractor, his Subcontractors, his Materialmen and Suppliers, improper or
insufficient maintenance, improper operation, or normal wear and tear under
normal usage. If required by the Owner or the Architect, the Contractor shall
furnish satisfactory evidence as to the kind and quality of materials and
equipment.
3.6 TAXES
3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for the
Work or portions thereof provided by the Contractor which are legally enacted
when bids are received or negotiations concluded, whether or not yet effective
or merely scheduled to go into effect.
3.7 PERMITS, FEES AND NOTICES
3.7.1 Unless otherwise provided in the Contract Documents, the Contractor shall
secure and pay for the building permit and other permits and governmental fees,
licenses and inspections necessary for proper execution and completion of the
Work which are customarily secured after execution of the Contract and which are
legally required when bids are received or negotiations concluded.
3.7.2 The Contractor shall comply with and give notices required by laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on performance of the Work.
3.7.3 If is not the Contractor's responsibility to ascertain that the Contract
Documents are in accordance with applicable laws, statutes, ordinances, building
codes, and rules and regulations. However, if the Contractor observes that
portions of the Contract Documents are at variance therewith, the Contractor
shall promptly notify the Architect and Owner in writing, and necessary changes
shall be accomplished by appropriate Modification.
3.7.4 If the Contractor performs Work knowing it to be contrary to laws,
statutes, ordinances, building codes, and rules and regulations without such
notice to the Architect and Owner, the Contractor shall assume full
responsibility for such Work and shall bear the attributable costs.
3.8 ALLOWANCES
3.8.1 The Contractor shall include in the Contract Sum all allowances stated in
the Contract Documents.
3.8.2.1
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.2
.3
.4
3.9 SUPERINTENDENT
3.9.1 The Contractor shall employ a competent superintendent and necessary
assistants who shall be in continuous attendance at the Project site during
performance of the Work. The superintendent shall represent the Contractor, and
communications given to the superintendent shall be as binding as if given to
the Contractor. Important communications shall be confirmed in writing. Other
communications shall be similarly confirmed on written request in each case.
3.10 CONTRACTOR'S CONSTRUCTION SCHEDULES
3.10.1 The Contractor, promptly after being awarded the Contract, shall prepare
and submit for the Owner's and Architect's information a detailed Contractor's
construction schedule for the Work. The schedule shall not exceed time limits
current under the Contract Documents, nor modify the date of Substantial
Completion in this Agreement, and shall be revised at appropriate intervals as
required by the conditions of the Work and shall be related to the entire
Project to the extent required by the Contract Documents, and shall provide for
expeditious and practicable execution of the Work. This requirement is separate
from the Project Schedule required under other Contract Documents.
3.10.2 The Contractor shall prepare and keep current, for the Architect's
approval, a schedule of submittals which is coordinated with the Contractor's
construction schedule and allows the Architect reasonable time to review
submittals.
3.10.3 The Contractor shall conform to the most recent schedules.
INSERT D
3.10.4 The Contractor and his Subcontractors, suppliers and manufacturers shall
schedule materials, deliveries and installations to conform with the
Contractor's Construction Schedule and the Project Schedule for the Work.
3.11 DOCUMENTS AND SAMPLES AT THE SITE
3.11.1 The Contractor shall maintain at the site for the Owner one record copy
of the Drawings, Specifications, addenda, Change Orders and other Modifications,
in good order and marked currently to record changes and selections made during
construction, and in addition approved Shop Drawings, Product Data, Samples and
similar required submittals. These shall be available to the Architect and
shall be delivered to the Architect for submittal to the Owner upon completion
of the Work.
3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES
3.12.1 Shop Drawings are drawings, diagrams, schedules and other data specially
prepared for the Work by the Contractor or a Subcontractor, Sub-subcontractor,
manufacturer, supplier or distributor to illustrate some portion of the Work.
3.12.2 Product Data are illustrations, standard schedules, performance charts,
instructions, brochures, diagrams and other information furnished by the
Contractor to illustrate materials or equipment for some portion of the Work.
3.12.3 Samples are physical examples which illustrate materials, equipment or
workmanship and establish standards by which the Work will be judged.
3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not
Contract Documents. The purpose of their submittal is to demonstrate for those
portions of the Work for which submittals are required the way the Contractor
proposes to conform to the information given and the design concept expressed in
the Contract Documents. Review by the Architect is subject to the limitations
of Subparagraph 4.2.7 of the General Conditions. The Contractor shall submit
Shop Drawings, Product Data, Samples and similar submittals of sufficient
quantity as the Architect may specify or direct. In the event additional
quantities or submittals are required for appropriate review and approval by the
Architect and the Owner, the Contractor shall comply with all reasonable
requests for same.
3.12.5 The Contractor shall review, approve and submit to the Architect Shop
Drawings, Product Data, Samples and similar submittals required by the Contract
Documents with reasonable promptness and in such
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sequence as to cause no delay in the Work or in the activities of the Owner or
of separate contractors. Submittals made by the Contractor which are not
required by the Contract Documents may be returned without action.
3.12.6 The Contractor shall perform no portion of the Work requiring submittal
and review of Shop Drawings, Product Data, Samples or similar submittals until
the respective submittal has been approved by the Architect. Such Work shall be
in accordance with approved submittals.
3.12.7 By approving and submitting Shop Drawings, Product Data, Samples and
similar submittals, the Contractor represents that the Contractor has
determined and verified materials, field measurements and field construction
criteria related thereto, or will do so, and has checked and coordinated the
information contained within such submittals with the requirements of the Work
and of the Contract Documents.
3.12.8 The Contractor shall not be relieved of responsibility for deviations
from requirements of the Contract Documents by the Architect's approval of Shop
Drawings, Product Data, Samples or similar submittals unless (a) the Contractor
has specifically informed the Architect in writing of such deviation at the time
of submittal; (b) the Contractor has specifically provided comparative
information between the specified requirements and the deviation, including, but
not limited to, cost data, delivery schedules, performance data, impact
assessment to the Project, analyses, etc.; (c) the Contractor has received
written approval from the Architect for the specific deviation. The Contractor
shall not be relieved of responsibility for errors or omissions in Shop
Drawings, Product Data, Samples or similar submittals by the Architect's
approval thereof.
3.12.9 The Contractor shall direct specific attention, in writing or on
resubmitted Shop Drawings, Product Data, Samples or similar submittals, to
revisions other than those requested by the Architect on previous submittals.
3.12.10 Informational submittals upon which the Architect is not expected to
take responsive action may be so identified in the Contract Documents.
3.12.11 When professional certification of performance criteria of materials,
systems or equipment is required by the Contract Documents, the Architect shall
be entitled to rely upon the accuracy and completeness of such calculations and
certifications.
INSERT E
3.12.12 Shop Drawings and samples shall be dated and marked with the name of
the Owner, the Project, the Architect, the Contractor, originating
Sub-contractor, manufacturer or supplier and separate detailing service. Shop
Drawings shall completely identify materials as to item, finish, and/or
material designations as shown on the Drawings or in the Specifications and
the Specification Section and locations at which materials or equipment are
to be installed. Reproductions of Contract Documents are acceptable as Shop
Drawings only when specifically authorized in writing by the Architect.
3.12.12 Shop Drawings and samples shall be dated and marked with the name of
the Owner, the Project, the Architect, the Contractor, originating Sub-
contractor, manufacturer or supplier and separate detailing service. Shop
Drawings shall completely identify material as to item, finish, and/or material
designations as shown on the Drawings or in the Specifications and the
Specification Section and locations at which materials or equipment are to be
installed. Reproductions of Contract Documents are acceptable as Shop Drawings
only when specifically authorized in writing by the Architect.
3.12.13 Submission of Shop Drawings and samples shall be accompanied by a
transmittal letter containing the Project name, Contractor's name, number of
drawings and samples, titles and other pertinent data; and a letter from the
material manufacturer agreeing to the guarantee clauses of the Specifications.
3.12.14 Submit one (1) reproducible transparency and three (3) sets of prints,
unless otherwise specified by the Architect, of each Shop Drawing including,
fabrication, erection, lay-out and setting drawings and such other drawings as
required under the various sections of the Specifications until a final review
is obtained. Submit eight (8) copies of the manufacturer's descriptive data
including catalog sheets for materials, equipment and fixtures, showing
dimensions, performance characteristics and capacities, wiring diagrams and
controls, schedules and other pertinent information. Where printed materials
describe more than one product or model, clearly identify which is to be
furnished.
3.12.15 The Contractor is responsible for obtaining and distributing prints of
Shop Drawings to his Subcontractors and material suppliers. Prints of reviewed
Shop Drawings shall be made from transparencies returned by the Architect. One
set of approved Shop Drawings must be kept at the job site Field Office at all
times by the Contractor.
3.13 USE OF SITE
3.13.1 The Contractor shall confine operations at the site to areas
permitted by law, ordinances, permits and the Contract Documents and shall
not unreasonably encumber the site with materials or equipment. The
Contractor shall coordinate the use of the site with that of the Owner and
other contractors, and shall not unreasonably encumber or restrict the site
from use by other contractors.
3.14 CUTTING AND PATCHING
3.14.1 The Contractor shall be responsible for cutting, fitting or patching
required to complete the Work or to make its parts fit together properly.
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3.14.2 The Contractor shall not damage or endanger a portion of the Work or
fully or partially completed construction of the Owner or separate contractors
by cutting, patching or otherwise altering such construction, or by excavation.
The Contractor shall not cut or otherwise alter such construction by the Owner
or a separate contractor except with written consent of the Owner. Such consent
shall not be unreasonably withheld. The Contractor shall not unreasonably
withhold from the Owner or a separate contractor the Contractor's consent to
cutting or otherwise altering the Work.
3.15 CLEANING UP
3.15.1 The Contractor shall keep the premises and surrounding area free from
accumulation of waste materials or rubbish caused by operations under the
Contract. At completion of the Work the Contractor shall remove from and about
the Project waste materials, rubbish, the Contractor's tools, construction
equipment, machinery and surplus materials, in accordance with, but not limited
to, the following:
3.15.1.1 waste and rubbish shall be accumulated in trash bins and shall be
removed from the site as the bins are filled and as required by the Owner;
3.15.1.2 tools, equipment and surplus materials shall be removed from the site
at the completion of each portion of the Work; and
3.15.1.3 all waste, rubbish, tools, equipment and surplus materials shall be
removed from the site at completion of the Project.
3.15.2 After five (5) days' prior written notice by the Owner, if the
Contractor fails to clean up as provided in the Contract Documents, or if the
Contractor fails to adequately respond to such written notice, the Owner may do
so and the cost thereof shall be charged to the Contractor.
3.16 ACCESS TO WORK
3.16.1 The Contractor shall provide the Owner and Architect access to the Work
in preparation and progress wherever located.
3.17 ROYALTIES AND PATENTS
3.17.1 The Contractor shall pay all royalties and license fees. The Contractor
shall defend suits or claims for infringement of patent rights and shall hold
the Owner and Architect harmless from loss on account thereof, but shall not be
responsible for such defense or loss when a particular design, process or
product of a particular manufacturer or manufacturers is required by the
Contract Documents. However, if the Contractor has reason to believe that the
required design, process or product is an infringement of a patent, the
Contractor shall be responsible for such loss unless such information is
promptly furnished to the Architect.
3.18 INDEMNIFICATION
3.18.1 To the fullest extent permitted by law, the Contractor shall
indemnify and hold harmless the Owner, MIRAGE RESORTS, INCORPORATED, BEAU
RIVAGE, the Architect, Architect's consultants, and all of their agents and
employees (hereinafter collectively, "Indemnitees") from and against all
claims, damages, losses and expenses, including but not limited to attorneys'
fees and court costs, arising out of or resulting from performance of the
Work, provided that such claim, damage, loss or expense (1) is attributable
to bodily injury, sickness, disease or death, or to injury to or destruction
of tangible property (other than the Work itself) including loss of use
resulting therefrom, and (2) is caused by any negligent act or omission of
the Contractor, its Subcontractors, or anyone directly or indirectly employed
by them, or anyone for whose acts the Contractor may otherwise be legally
liable. This agreement to indemnify and hold the Indemnitees harmless shall
apply except to the extent that such claim, damage, loss or expense is
attributable to the negligent or willful act or omission of any of the
Indemnitees or anyone directly or indirectly employed by any of them or
anyone for whose acts any of the Indemnitees may be legally liable. Except
as provided herein, such obligation shall not be construed to negate,
abridge, or otherwise reduce any other rights or obligations of indemnity
which would otherwise exist as to a party or person described in this
Paragraph 3.18. This indemnification shall survive the termination or
expiration of the Agreement.
3.18.2 To the fullest extent permitted by law, the Owner, MIRAGE RESORTS,
INCORPORATED, BEAU RIVAGE, shall indemnify and hold harmless the Contractor,
its subcontractors and all of their agents and
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employees (hereinafter collectively "Indemnitees") from and against all claims,
damages, losses and expenses, including, but not limited to, attorneys' fees and
court costs, which arise out of or result from, the performance of the Work or
which are alleged to have occurred during the Owner's occupation or use of the
completed project, provided that any such claim, damage, loss or expense (1) is
attributable to bodily injury, sickness, disease or death, or injury to or
destruction of tangible property (other than the Work itself) including loss of
use resulting therefrom; and (2) is caused by any negligent act or omission of
the Owner, MIRAGE RESORTS, INCORPORATED, BEAU RIVAGE, or anyone directly or
indirectly employed by any of them or anyone for whose acts the Owner, MIRAGE
RESORTS, INCORPORATED, BEAU RIVAGE, may otherwise be legally liable. This
agreement to indemnify and hold the Indemnitees harmless shall apply except to
the extent that such claim, damage, loss or expense is attributable to the
negligent or willful act or omission of any of Indemnitees or anyone directly or
indirectly employed by any of them or anyone for whose acts any of the
Indemnitees may be legally liable. Except as provided herein, such obligation
shall not be construed to negate, abridge or otherwise reduce any other right or
obligation of indemnity which would otherwise exist as to any party or person
described in the Paragraph 3.18. This agreement to indemnify shall survive the
termination or expiration of the Agreement.
3.18.3
ARTICLE 4
ADMINISTRATION OF THE CONTRACT
4.1 ARCHITECT
4.1.1 The Architect is the person lawfully licensed to practice architecture or
an entity lawfully practicing architecture identified as such in the Agreement
and is referred to throughout the Contract Documents as if singular in number.
The term "Architect" means the Architect or the Architect's authorized
representative.
4.1.2 Duties, responsibilities and limitations of authority of the Architect as
set forth in the Contract Documents shall not be restricted, modified or
extended without written consent of the Owner, and Contractor. Consent shall
not be unreasonably withheld.
4.1.3 In case of termination of employment of the Architect, the Owner after
consultation with the Contractor, shall appoint an architect against whom the
Contractor makes no reasonable objection and whose status under the Contract
Documents shall be that of the former architect.
4.1.4 Disputes arising under Subparagraphs 4.1.2 and 4.1.3 above shall be
decided by any remedies available to either party at law or equity.
4.2 ARCHITECT'S ADMINISTRATION OF THE CONTRACT
4.2.1 The Architect may be an Owner's Representative (1) during construction,
(2) until final payment is due, and (3) with the Owner's concurrence, from time
to time during the correction period described in Paragraph 12.2. The Architect
will advise and consult with the Owner. The Architect will have authority to
act on behalf of the Owner only to the extent provided in the Contract
Documents, and only to the extent provided in the Owner-Architect Agreement,
unless otherwise modified by written instrument in accordance with other
provisions of this Contract.
4.2.2 The Architect will visit this site at intervals appropriate to the stage
of construction to become generally familiar with the progress and quality of
the completed portions 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 will not be
required to make exhaustive or continuous on-site inspections to check quality
or quantity of the Work, except as may be otherwise provided in the Owner-
Architect Agreement. On the basis of on-site observations as an architect, the
Architect will keep the Owner informed of progress of the Work, and will
endeavor to guard the Owner against defects and deficiencies in the Work of the
Contractor.
4.2.3 The Architect will not have control over or charge of and will not be
responsible for construction means, methods, techniques, sequences or
procedures, or for safety precautions and programs in connection with the Work,
since these are solely the Contractor's
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responsibility as provided in Paragraph 3.3. The Architect will not be
responsible for the Contractor's failure to carry out the Work in accordance
with the Contract Documents. The Architect will not have control over or
charge of and will not be responsible for acts or omissions of the
Contractor, Subcontractors, or their agents or employees, or of any other
persons performing portions of the Work.
4.2.4 COMMUNICATIONS FACILITATING CONTRACT ADMINISTRATION.
Except as otherwise provided in the Contract Documents or when direct
communications have been specially authorized, the Owner and Contractor shall
endeavor to communicate through the Architect. Communications by and with the
Architect's consultants shall be through the Architect. Communications by and
with Subcontractors and material suppliers shall be through the Contractor.
Communications by and with separate contractors shall be through the Owner.
This Paragraph shall not delete or abridge the Owner's right to communicate
directly with the Contractor, his Subcontractors, and the Architect's
consultants when the Owner deems it appropriate, nor shall this Paragraph delete
or abridge the Contractor's right to communicate directly with the Owner, the
Owner's separate contractors and the Architect.
4.2.5 Based on the Architect's observations and evaluations of the Contractor's
Applications for Payment, the Architect will review and certify the amounts due
the Contractor and will issue Certificates for Payment in such amounts for
approval by the Owner.
4.2.6 The Architect will have authority to reject Work which does not conform
to the Contract Documents. Whenever the Architect considers it necessary or
advisable for implementation of the intent of the Contract Documents, the
Architect will have authority to require additional inspection or testing of the
Work in accordance with Subparagraphs 13.5.2 and 13.5.3, whether or not such
Work is fabricated, installed or completed. However, neither this authority of
the Architect nor a decision made in good faith either to exercise or not to
exercise such authority shall give rise to a duty or responsibility of the
Architect to the Contractor, Subcontractors, material and equipment suppliers,
their agents or employees, or other persons performing portions of the Work.
4.2.7 The Architect will review and approve or take other appropriate action
upon the Contractor's submittals such as Shop Drawings, Product Data and
Samples, but only for the limited purpose of checking for conformance with
information given and the design concept expressed in the Contract Documents.
The Architect's action will be taken with such reasonable promptness as to
cause no delay in the Work or in the activities of the Owner, Contractor or
separate contractors, while allowing sufficient time in the Architect's
professional judgement to permit adequate review. Review of such submittals
is not conducted for the purpose of determining the accuracy and completeness
of other details such as dimensions and quantities, or for substantiating
instruction for installation or performance of equipment or systems, all of
which remain the responsibility of the Contractor as required by the Contract
Documents. The Architect's review of the Contractor's submittals shall not
relieve the Contractor of the obligations under Paragraphs 3.3, 3.5 and 3.12.
The Architect's review shall not constitute approval of safety precautions
or, unless otherwise specifically stated by the Architect, of any
construction means, methods, techniques, sequences or procedures. The
Architect's approval of a specific item shall not indicate approval of an
assembly of which the item is a component.
4.2.8 The Architect or the Owner will prepare Change Orders and Construction
Change Directives, and may authorize minor changes in the Work as provided in
Paragraph 7.4.
4.2.9 The Architect will conduct inspections to determine the date or dates of
Substantial Completion and the date of final completion, will receive and
forward to the Owner for the Owner's review and records written warranties and
related documents required by the Contract and assembled by the Contractor, and
will issue a final Certificate for Payment subject to the Owner's approval, upon
compliance with the requirements of the Contract Documents.
4.2.10 If the Owner and Architect agree, the Architect will provide one or
more project representatives to assist in carrying out the Architect's
responsibilities at the site. The duties, responsibilities and limitations of
authority of such project representatives shall be as set forth the
Owner-Architect Agreement.
4.2.11 The Architect will interpret and render opinions concerning performance
under and requirements of the Contract Documents on written request of either
the Owner or Contractor. The Architect's response to such requests will be made
with reasonable promptness and within any time limits agreed upon. If no
agreement is made concerning the time within which interpretations required of
the Architect shall be furnished in compliance with this Paragraph 4.2, then
delay shall not be recognized on account of failure by the Architect to furnish
such interpretations until ten (10) working days after written request is made
for them.
4.2.12 Interpretations and opinions of the Architect will be consistent with
the intent of and
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reasonably inferable from the Contract Documents.
4.2.13 The Architect's decisions on matters relating to aesthetic effect
will be final if consistent with the intent expressed in the Contract
Documents and consistent with the Owner's directives.
4.3 CLAIMS AND DISPUTES
4.3.1 DEFINITION. A Claim is a demand or assertion by one of the parties
seeking, as a matter of right, adjustment or interpretation of Contract terms,
payment of money, extension of time or other relief with respect to the terms of
the Contract. The term "Claim" also includes other disputes and matters in
question between the Owner and Contractor arising out of or relating to the
Contract. Claims must be made by written notice. The responsibility to
substantiate Claims shall rest with the party making the Claim.
4.3.2 DECISION OF ARCHITECT. Claims, including those alleging an error or
omission by the Architect, shall be referred initially to the Owner and the
Architect for action as provided in Paragraph 4.4.
4.3.3 TIME LIMITS ON CLAIMS. Claims by either party must be made with ten (10)
working days after occurrence of the event giving rise to such Claim or within
ten (10) working days after the claimant first recognizes the condition giving
rise to the Claim, whichever is later. Claims must be made by written notice.
An additional Claim made after the initial Claim has been implemented by Change
Order will not be considered unless submitted in a timely manner.
4.3.4 CONTINUING CONTRACT PERFORMANCE. Pending final resolution of a Claim,
unless otherwise agreed in writing the Contractor shall proceed diligently with
performance of the Contract and the Owner shall continue to make payments in
accordance with the Contract Documents.
4.3.5 WAIVER OF CLAIMS: FINAL PAYMENT. The making of final payment shall
constitute a waiver of Claims by the Owner except those arising from:
.1 liens, Claims, security interests or encumbrances arising out of
the Contract and unsettled;
.2 failure of the Work to comply with the requirements of the
Contract Documents; or
.3 terms of special warranties required by the Contract Documents.
4.3.6 CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS. If conditions are
encountered at the site which are (1) subsurface or otherwise concealed
physical conditions which differ materially from those indicated in the
Contract Documents or (2) unknown physical conditions of an unusual nature,
which differ materially from those ordinarily found to exist and generally
recognized as inherent in construction activities of the character provided
for in the Contract Documents, then notice by the observing party shall be
given to the other party promptly before conditions are disturbed and in no
event later than ten (10) working days after first observance of the
conditions. The Architect will promptly investigate such conditions and, if
they differ materially and cause an increase or decrease in the Contractor's
cost of, or time required for, performance of any part of the Work, will
recommend an equitable adjustment in the Contract Sum or Contract Time, or
both. If the Architect determines that the conditions at the site are not
materially different from those indicated in the Contract Documents and that
no change in the terms of the Contract is recommended, the Architect shall so
notify the Owner and Contractor in writing, stating the reasons. Claims by
either party in opposition to such determination must be made within ten (10)
working days after the Architect has given notice of the decision. If the
Owner and Contractor cannot agree on an adjustment in the Contract Sum or
Contract Time, the adjustment shall be referred to the Architect and the
Owner for initial determination, subject to further proceedings pursuant to
Paragraph 4.4.
4.3.7 CLAIMS FOR ADDITIONAL COST. If the Contractor wishes to make Claim for
an increase in the Contract Sum, the Contractor shall give the Owner and the
Architect written notice thereof within ten (10) working days after the
occurrence of the event giving rise to such
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claim. This notice shall be given by the Contractor before proceeding
to execute the Work, except in an emergency endangering life or property in
which case the Contractor shall proceed in accordance with paragraph 10.3.
No such claim shall be valid unless so made. If the Owner and the Contractor
cannot agree on the amount of the adjustment in the Contract Sum, it shall be
determined as herein. Any change in the Contract Sum resulting from such
claim shall be authorized by Change Order.
4.3.8 CLAIMS FOR ADDITIONAL TIME
4.3.8.1 If the Contractor wishes to make Claim for all increase in the Contract
Time, written notice as provided herein shall be given. The Contractor's Claim
shall include an estimate of cost and of probable effect of delay on progress of
the Work. In the case of a continuing delay only one Claim is necessary.
4.3.8.2 If adverse weather conditions are the basis for a Claim for additional
time, such Claim shall be documented by data substantiating that weather
conditions were abnormal for the period of time and could not have been
reasonably anticipated, and that weather conditions had an adverse effect on the
scheduled construction.
4.3.9 INJURY OR DAMAGE TO PERSON OR PROPERTY. If either party to the Contract
suffers injury or damage to person or property because of an act or omission of
the other party, of any of the other party's employees or agents, or of others
for whose acts such party is legally liable, written notice of such injury or
damage, whether or not insured, shall be given to the other party within a
reasonable time not exceeding 21 days after first observance. The notice shall
provide sufficient detail to enable the other party to investigate the matter.
If a Claim for additional cost or time related to this Claim is to be asserted,
it shall be filed as provided in Subparagraphs 4.3.7 or 4.3.8.
4.4 RESOLUTION OF CLAIMS AND DISPUTES
4.4.1 The Architect and/or the Owner will review Claims and take one or more of
the following preliminary actions within five (5) working days of receipt of a
Claim: (1) request additional supporting data from the claimant, (2) submit a
schedule to the parties indicating when the Architect and/or the Owner expects
to take action, (3) reject the Claim in whole or in part, stating reasons for
rejection, (4) recommend approval of the Claim by the other party or (5) suggest
a compromise. The Architect and/or the Owner may also, but is not obligated to,
notify the surety, if any, of the nature and amount of the Claim.
4.4.2 If a Claim has been resolved, the Architect and/or the Owner will prepare
or obtain appropriate documentation.
4.4.3 If a Claim has not been resolved, the party making the Claim shall,
within five (5) working days after the Architect's and/or the Owner's response,
take one or more of the following actions: (1) submit additional supporting
data requested by the Architect and/or the Owner, (2) modify the initial Claim
or (3) notify the Architect and/or the Owner that the initial Claim stands.
4.4.4 If a Claim has not been resolved after consideration of the foregoing and
of further evidence presented by the parties or requested by the Architect
and/or the Owner, the Architect and/or the Owner will notify the parties in
writing that the Architect's and/or the Owner's decision will be made within
five (5) working days. Upon expiration of such time period, the Architect
and/or the Owner will render to the parties the Architect's and/or the Owner's
written decision relative to the Claim. If there is a surety and there appears
to be a possibility of a Contractor's default, the Architect and/or the Owner
may, but is not obligated to, notify the surety and request the surety's
assistance in resolving the controversy.
4.5 LEGAL REMEDIES
4.5.1 All claims, disputes and other matters in question between the
Contractor and the Owner arising out of, or relating to,
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the Contract Documents or the breach thereof except controversies or Claims
relating to aesthetic effect and except those waived as provided for in
Subparagraph 4.3.5 shall be decided by any remedies available to either party
at law or equity. The prevailing party in any such action shall be entitled
to full reimbursement of its attorneys' fees and costs.
4.5.2
4.5.3
4.5.4
4.5.4.1
4.5.4.2
4.5.5
4.5.6
4.5.7
ARTICLE 5
SUBCONTRACTORS
5.1 DEFINITIONS
5.1.1 A Subcontractor is a person or entity who has a direct contract with the
Contractor to perform a portion of the Work including furnishing materials used
at the site. The term "Subcontractor" is referred to throughout
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the Contract Documents as if singular in number and means a Subcontractor or an
authorized representative of the Subcontractor. The term "Subcontractor" does
not include a separate contractor or subcontractors of a separate contractor.
5.1.2 A Sub-subcontractor is a person or entity who has a direct or indirect
contract with a Subcontractor to perform a portion of the Work including
furnishing materials used at the site. The term "Sub-subcontractor" is referred
to throughout the Contract Documents as if singular in number and means a Sub-
subcontractor or an authorized representative of the Sub-subcontractor.
5.2 AWARD OF SUBCONTRACTORS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK
5.2.1 Unless otherwise required by the Contract Documents or the bidding
documents, the Contractor, as soon as practicable after award of the Contract,
shall furnish in writing to the Owner and the Architect the names of persons or
entities (including those who are to furnish materials or equipment fabricated
to a special design) proposed as Bidders for each principal portion of the Work.
Upon receipt of the proposed Bidders, the Owner or the Architect shall advise
the Contractor of any reasonable objection to any such proposed person or entity
performing work on the Project. The Owner shall, at this time, furnish to the
Contractor any person or entity the Owner proposes to be included as a Bidder on
the Project for that portion of the Work. Contractor shall be obligated to
receive Bids or negotiate with any such proposed person or entity whose name is
furnished by the Owner.
INSERT G
5.2.2 Upon receipt of Bids or conclusion of negotiations with an intended
Subcontractor, the Contractor shall advise the Owner, in writing, of his
recommendation for the award of such Subcontract and the cost of such portion of
the Work. Contractor shall at this time make available to Owner, all spread
sheets, bid analysis or other information on which his recommendation is based.
INSERT H
5.2.3 The Owner shall then advise the Contractor to award such work, if the
Owner agrees with the recommendation of the Contractor. In the event that the
Owner desires to award the portion of the Work to any Subcontractor other than
that recommended by the Contractor, then the Owner shall have the right to
increase or decrease the cost of that portion of the Work based on the
difference of the costs between the Subcontractor recommended by the Contractor
and the Subcontractor selected by the Owner.
INSERT I
5.2.4 The Owner shall have the right to have his authorized representative
present at all meetings, bid openings, negotiations, and other matters, between
the Contractor and his potential Subcontractors or vendors.
5.2.5 All communications between the Owner and Contractor relating to the
provisions of this Paragraph 5.2, shall be directly with the Owner.
5.2.6 Notwithstanding the provisions of Subparagraphs 5.2.1 through 5.2.5, the
Owner shall not force the Contractor to employ a Subcontractor to whom the
Contractor has reasonable objections.
5.3 SUBCONTRACTUAL RELATIONS
5.3.1 By appropriate agreement, written where legally required for validity, the
Contractor shall require each Subcontractor, to the extent of the Work to be
performed by the Subcontractor, to be bound to the Contractor by the terms of
the Contract Documents, and to assume toward the Contractor all the obligations
and responsibilities which the Contractor, by these Documents, assumes toward
the Owner and Architect. Each subcontract agreement shall preserve and
protect the rights of the Owner and Architect under the Contract Documents with
respect to the Work to be performed by the Subcontractor so that subcontracting
thereof will not prejudice such rights.
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Where appropriate, the Contractor shall require each Subcontractor to enter into
similar agreements with Sub-subcontractors. The Contractor shall make available
to each proposed Subcontractor, prior to the execution of the subcontract
agreement, copies of the Contract Documents to which the Subcontractor will be
bound. Subcontractors shall similarly make copies of applicable portions of
such documents available to their respective proposed Sub-subcontractors.
5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS
5.4.1 Each subcontract agreement for a portion of the Work is assigned by the
Contractor to the Owner provided that:
.1 assignment is effective only after termination of the Contract by the
Owner for cause pursuant to Paragraph 14.2 and only for those subcontract
agreements which the Owner accepts by notifying the Subcontractor in
writing; and
.2 assignment is subject to the prior rights of the surety, if any,
obligated under bond relating to the Contract.
5.4.2
ARTICLE 6
CONSTRUCTION BY OWNER OR BY
SEPARATE CONTRACTORS
6.1 OWNERS RIGHT TO PERFORM CONSTRUCTION AND TO AWARD SEPARATE CONTRACTS
6.1.1 The Owner reserves the right to perform construction or operations related
to the Project with the Owner's own forces, and to award separate contracts in
connection with other portions of the Project or other construction or
operations on the site under Conditions of the Contract identical or
substantially similar to these including those portions related to insurance and
waiver of subrogation. If the Contractor claims that delay or additional cost
is involved because of such action by the Owner, the Contractor shall make such
Claim as provided elsewhere in the Contract Documents.
6.1.2 When separate contracts are awarded for different portions of the Project
or other construction or operations on the site, the term "Contractor" in the
Contract Documents in each case shall mean the Contractor who executes each
separate Owner-Contractor agreement.
6.1.3 The Contractor shall provide for coordination of the activities of the
Owner's separate contractors as it pertains to the Contractor's Portion of the
Work and the integration of the Contractor's Work with others. The Contractor
shall participate with the Owner and other separate contractors in reviewing the
construction schedules. The Contractor and the Owner shall make any revisions
to the construction schedule deemed necessary after a review. The construction
schedules shall then constitute the schedules to be used by the Contractor,
separate contractors and the Owner until subsequently revised.
6.1.4 Unless otherwise provided in the Contract Documents, when the Owner
performs construction or operations related to the Project with the Owner's own
forces, the Owner shall be deemed to be subject to the same obligations and to
have the same rights which apply to the Contractor under the Conditions of the
Contract, including, without excluding others, those stated in Article 3, this
Article 6 and Articles 10, 11 and 12.
6.2 MUTUAL RESPONSIBILITY
6.2.1 The Contractor shall afford the Owner and separate contractors reasonable
opportunity for introduction and storage of their materials and equipment and
performance of their activities and shall connect and coordinate the
Contractor's construction and operations with theirs as required by the Contract
Documents.
6.2.2 If part of the Contractor's Work depends for proper execution or results
upon construction or operations by the Owner or a separate contractor, the
Contractor shall, prior to proceeding with that portion of the Work, promptly
report to the Owner and the Architect apparent discrepancies or defects in such
other construction that would render it unsuitable for such proper execution and
results. Failure of the Contractor so to report shall constitute an
acknowledgment that the Owner's or separate contractors' completed or partially
completed construction is fit and proper to receive the Contractor's
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Work, except as to defects not then reasonably discoverable.
6.2.3 Costs caused by delays or by improperly timed activities or defective
construction shall be borne by the party responsible therefor.
6.2.4 The Contractor shall promptly remedy damage wrongfully caused by the
Contractor to completed or partially completed construction or to property of
the Owner or separate contractors as provided in Subparagraph 10.2.5.
6.2.5 Claims and other disputes and matters in question between the Contractor
and a separate contractor shall be subject to the provisions of the Contract
Documents. Should the contractor wrongfully cause damage to the Work or
property of any separate contractor, the Contractor shall, upon due notice,
promptly attempt to settle with the separate contractor by agreement, or
otherwise to resolve the dispute. If such separate contractor sues or seeks any
legal remedy against the Owner on account of any damage alleged to have been
caused by the Contractor, and not the fault of the Owner, the Owner shall notify
the Contractor who shall defend, indemnify and hold harmless the Owner pursuant
to Paragraph 3.16 INDEMNIFICATION.
6.2.6 The Owner and each separate contractor shall have the same
responsibilities for cutting and patching as are described for the Contractor in
Paragraph 3.14.
6.3 OWNER'S RIGHT TO CLEAN UP
6.3.1 If a dispute arises among the Contractor, separate contractors and the
Owner as to responsibility under their respective contracts for maintaining the
premises and surrounding area free from waste materials and rubbish as described
in Paragraph 3.15, the Owner may clean up and allocate the cost among those
responsible and as the Owner determines.
ARTICLE 7
CHANGES IN THE WORK
7.1 CHANGES
7.1.1 Changes in the Work may be accomplished after the execution of the
Contract, and without invalidating the Contract, by Change Order, Construction
Change Directive or order for a minor change in the Work, subject to the
limitations stated in this Article 7 and elsewhere in the Contract Documents.
7.1.2 A Change Order shall be based upon agreement among the Owner, Contractor
and Architect; a Construction Change Directive requires agreement by the Owner
and Architect and may or may not be agreed to by the Contractor; an order for a
minor change in the Work may be issued by the Architect alone.
7.1.3 Changes in the Work shall be performed under applicable provisions of the
Contract Documents, and the Contractor shall proceed promptly, unless otherwise
provided in the Change Order, Construction Change Directive or order for a minor
change in the Work.
7.1.4 If unit prices are stated in the Contract Documents or subsequently agreed
upon, and if quantities originally contemplated are so changed in a proposed
Change Order or Construction Change Directive that application of such unit
prices to quantities of Work proposed will cause substantial inequity to the
Owner or Contractor, the applicable unit prices shall be equitably adjusted.
7.2 CHANGE ORDERS
7.2.1 A Change Order is a written instrument prepared by the Architect and
signed by the Owner, Contractor and Architect, stating their agreement upon all
of the following:
.1 a change in the Work;
.2 the amount of the adjustment in the Contract Sum, if any and
.3 the extent of the adjustment in the Contract Time, if any.
.4 the Contractor's reasonable allowance for overhead and profit, and shall
be in accordance with the Owner-Contractor Agreement. This allowance is
applicable to work performed by the Contractor's own forces. Should the
increase in the Contract Sum be caused by additional work performed by a
Subcontractor, then the Subcontractor's allowance for overhead and profit
shall be computed on the basis of no greater than Ten Percent (10%)
overhead and no greater than Ten Percent (10%) profit. The percentage of
profit shall not be calculated on top of the percentage of overhead. The
percentage of overhead shall not be computed as a mark-up above the sales
taxes, bond costs, and insurance costs that may have been involved in the
Change Order.
7.2.2 Methods used in determining adjustments to the Contract Sum may include
those listed in Subparagraph 7.3.3.
INSERT J
7.2.3 A Change Proposal is a written instrument
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prepared by the Contractor, submitted to the Owner and the Architect for a
Change in the Work, requesting a Change Order. A Change Proposal may be the
result of:
7.2.3.1 The Owner and/or the Architect requesting a change in the Work by
issuing to the Contractor a Request for Proposal (R.F.P.) or;
7.2.3.2 The Contractor notifying the Owner and the Architect of a pending Change
in the Work.
7.2.4 A Change Proposal, when approved by the Owner and the Architect, shall be
recorded as a Change Order.
7.2.5 If the Owner and the Contractor are not in total agreement on the content
and conditions of the Change Proposal and the Owner requests the Change in the
Work to commence, the Owner and the Architect shall issue a Construction Change
Directive pursuant to Paragraph 7.3 below.
7.3 CONSTRUCTION CHANGE DIRECTIVES
7.3.1 A Construction Change Directive is a written order prepared by the
Architect and signed by the Owner and/or Architect, directing a change in the
Work and stating a proposed basis for adjustment, if any, in the Contract Sum,
or Contract Time, or both. The Owner may by Construction Change Directive,
without invalidating the Contract, order changes in the Work within the general
scope of the Contract consisting of additions, deletions or other revisions, the
Contract Sum and Contract Time being adjusted accordingly.
7.3.2 A Construction Change Directive shall be used in the absence of total
agreement on the terms of a Change Order or a Change Proposal.
7.3.3 If the Construction Change Directive provides for an adjustment to the
Contract Sum, the adjustment shall be based on one of the following methods:
.1 mutual acceptance of a lump sum properly itemized and supported by
sufficient substantiating data to permit evaluation;
.2 unit prices stated in the Contract Documents or subsequently agreed
upon;
.3 cost to be determined in a manner agreed upon by the parties and a
mutually acceptable fixed or percentage fee; or
.4 as provided in Subparagraph 7.3.6.
7.3.4 Upon receipt of a Construction Change Directive, the Contractor shall
promptly proceed with the change in the Work involved and advise the Owner and
the Architect of the Contractor's agreement or disagreement with the method, if
any, provided in the Construction Change Directive for determining the proposed
adjustment in the Contract Sum or Contract Time.
7.3.5 A Construction Change Directive signed by the Contractor indicates the
agreement of the Contractor therewith, including adjustment in Contract Sum and
Contract Time or the method for determining them. Such agreement shall be
effective immediately and shall be recorded as a Change Order.
7.3.6 If the Contractor does not respond promptly or disagrees with the method
for adjustment in the Contract Sum, the method and the adjustment shall be
determined by the Owner on the basis of reasonable costs and savings of those
performing the Work attributable to the change, including, in case of an
increase in the Contract Sum, a reasonable allowance for overhead and profit.
In such case, and also under Clause 7.3.3.3, the Contractor shall keep and
present, in such form as the Owner may prescribe, an itemized accounting
together with appropriate supporting data. Unless otherwise provided in the
Contract Documents, costs for the purposes of this Subparagraph 7.3.6 shall be
limited to the following:
.1 costs of labor, including social security, old age and unemployment
insurance, fringe benefits required by agreement or custom, and workers' or
workmen's compensation insurance;
.2 costs of materials, supplies and equipment, including cost of
transportation, whether incorporated or consumed;
.3 rental costs of machinery and equipment, exclusive of hand tools,
whether rented from the Contractor or others;
.4 costs of premiums for all bonds and insurance, permit fees, and sales,
use or similar taxes directly related to the Work;
.5 additional costs of supervision and field office personnel directly
attributable to the change; and
.6 costs of subcontracts attributable to the change.
7.3.7 Pending final determination of cost to the Owner, amounts not in dispute
may be included in Applications for Payment. The amount of credit to be allowed
by the Contractor to the Owner for a deletion or change which results in a net
decrease in the Contract Sum shall be actual net cost. When both additions and
credits covering related Work or substitutions are involved in a change, the
allowance for overhead and profit shall be figured on the basis of net increase,
if any, with, respect to that change.
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7.3.8
7.3.9 When the Owner and Contractor agree concerning the adjustments in the
Contract Sum and Contract Time, or otherwise reach agreement upon the
adjustments, such agreement shall be effective immediately and shall be recorded
by preparation and execution of an appropriate Change Order.
7.4 MINOR CHANGES IN THE WORK
7.4.1 The Architect will have authority to order minor changes in the Work not
involving adjustment in the Contract Sum or extension of the Contract Time and
not inconsistent with the intent of the Contract Documents. Such changes shall
be effected by written order and shall be binding on the Owner and Contractor.
The Contractor shall carry out such written orders promptly.
INSERT K
7.5 RECOGNITION OF OWNER'S INVOLVEMENT
7.5.1 Owner and Contractor acknowledge and affirm Owner's desire to be
significantly involved in the process which determines changes in the Work. The
contractor further acknowledges the role of Owner, rather than Architect, as the
final and ultimate decision maker and authority over the Project and any Changes
in the Work of the Project.
ARTICLE 8
TIME
8.1 DEFINITIONS
8.1.1 Unless otherwise provided, Contract Time is the period of time, including
authorized adjustments, allotted in the Contract Documents for Substantial
Completion of the Work.
8.1.2 The date of commencement of the Work is the date established in the
Agreement. The date shall not be postponed by the failure to act of the
Contractor or of persons or entities for whom the Contractor is responsible.
8.1.3 The date of Substantial Completion is the date certified by the Architect
in accordance with Paragraph 9.8.
8.1.4 The term "day" as used in the Contract Documents shall mean calendar day
unless otherwise specifically defined.
8.2 PROGRESS AND COMPLETION
8.2.1 Time limits stated in the Contract Documents are of the essence of the
Contract. By executing the Agreement the Contractor confirms that the Contract
Time is a reasonable period for performing the Work.
8.2.2 The Contractor shall not knowingly, except by agreement or instruction of
the Owner in writing, prematurely commence operations on the site or elsewhere
prior to the effective date of insurance required by Article 11 to be furnished
by the Contractor. The date of commencement of the Work shall not be changed by
the effective date of such insurance. Unless the date of commencement is
established by a notice to proceed given by the Owner, the Contractor shall
notify the Owner in writing not less than five days or other agreed period
before commencing the Work to permit the timely filing of mortgages, mechanic's
liens and other security interests.
8.2.3 The Contractor shall proceed expeditiously with adequate forces and shall
achieve Substantial Completion within the Contract Time.
8.3 DELAYS AND EXTENSIONS OF TIME
8.3.1 If the Contractor is delayed at any time in progress of the Work by any
act or neglect of the Owner, or by any employee of Owner, or by any separate
contractor employed by the Owner, or by changes ordered in the Work, or by fire,
unavoidable casualties or other causes beyond the Contractor's control, or by
any other cause which may justify the delay, then the Contract Time shall be
extended by Change Order for such reasonable time as the Owner and Contractor
may determine. No extension of Contract Time shall be permitted under the term
of this Subparagraph for a work slowdown, stoppage or similar event arising from
any labor dispute or disagreement unrelated to the Work.
8.3.2
INSERT L
8.3.2 Unless otherwise provided in the Contract Documents, any claim for
extension of time shall be made in writing to the Owner and Architect not more
than five (5) working days after the commencement of the delay; otherwise, it
shall be waived. In the case of a continuing delay, only one (1) claim is
necessary. The Contractor shall provide an estimate of the probable
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effect of such delay on the progress of the work. If no agreement is made
stating the dates upon which interpretations as otherwise provided in the
Contract Documents shall be furnished, then no claim for delay shall be allowed
on account of failure to furnish such interpretation.
8.3.3 This Paragraph 8.3 does not preclude recovery of damages for delay by
either party under other provisions of the Contract Documents.
ARTICLE 9
PAYMENTS AND COMPLETION
9.1 CONTRACT SUM
9.1.1 The Contract Sum is stated in the Agreement and, including authorized
adjustments, is the total amount payable by the Owner to the Contractor for
performance of the Work under the Contract Documents.
9.2 SCHEDULE OF VALUES
9.2.1 Before the first Application for Payment, the Contractor shall submit to
the Architect and the Owner a schedule of values allocated in the Owner-
Contractor Agreement to various portions of the Work, prepared in such form and
supported by such data to substantiate its accuracy as the Architect and the
Owner may require. This schedule, unless objected to by the Owner, shall be used
as a basis for reviewing the Contractor's Applications for Payment. The Schedule
of Values shall be prepared in such a manner that each major item of work and
each subcontracted item of work is shown on a single line item, in accordance
with the Specification Sections, on A.I.A. Document G702, Application and
Certificate for Payment, and A.I.A. Document G703, Continuation Sheet, and shall
be modified and expanded from time to time.
9.3 APPLICATIONS FOR PAYMENT
9.3.1 At least ten days before the date established for each progress payment,
the Contractor shall submit to the Architect and the Owner an itemized
Application for Payment for operations completed in accordance with the schedule
of values. Such application shall be notarized, and supported by such data
substantiating the Contractor's right to payment.
9.3.1.1 Such applications may include requests for payment on account of changes
in the Work which have been properly authorized by Construction Change
Directives but not yet included in Change Orders.
9.3.1.2 Such applications may not include requests for payment of amounts the
Contractor does not intend to pay to a Subcontractor or material supplier
because of a dispute or other reason.
INSERT M
9.3.1.3 The Contractor and the Owner, if in agreement, will provide payment
of retention to selected Subcontractors within ninety (90) days after
completion of the Subcontractors' work.
9.3.1.4 The form of Application for Payment shall be A.I.A. Document G702,
Application and Certificate for Payment; supported by A.I.A. Document G703,
Continuation Sheet.
9.3.1.5 All subcontractor requests for payment shall be made on forms specified
in Subparagraph 9.3.1.4.
9.3.2 Unless otherwise provided in the Contract Documents, payments shall be
made on account of materials and equipment delivered and suitably stored at the
site for subsequent incorporation in the Work. If approved in advance by the
Owner, payment may similarly be made for materials and equipment suitably stored
off the site at a location agreed upon in writing. Payment for materials and
equipment stored on or off the site shall be conditioned upon compliance by the
Contractor with procedures satisfactory to the Owner to establish the Owner's
title to such materials and equipment or otherwise protect the Owner's interest,
and shall include applicable insurance, storage, and transportation to the site
for such materials and equipment stored off the site.
9.3.3 The Contractor warrants that title to all Work covered by an Application
for Payment will pass to the Owner no later than the time of payment. The
Contractor further warrants that upon submittal of an Application for Payment
all Work for which Certificates for Payment have been previously issued and
payments received from the Owner shall, to the best of the Contractor's
knowledge, information and belief, be free and clear of liens, claims, security
interests or encumbrances favor of the Contractor, Subcontractors, material
suppliers, or other persons or entities making a claim by reason of having
provided labor, materials and equipment relating to the Work.
9.4 CERTIFICATES FOR PAYMENT
9.4.1 The Architect will, within five (5) days after receipt of the Contractor's
Application for Payment, either issue to the Owner a Certificate for Payment,
with a copy to the Contractor, for such amount as the Architect recommends is
properly due, or
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notify the Contractor and Owner in writing of the Architect's reasons for
withholding a certificate as provided in Subparagraph 9.5.1. Upon completion of
the Architect's review of the Contractor's Application for Payment, the
Architect shall immediately forward to the Owner his recommendation by
submission of a Certificate for Payment.
9.4.2 The issuance of a Certificate for Payment will constitute a representation
by the Architect to the Owner, based on the Architect's observations at the site
and the data comprising the Application for Payment, that the Work has
progressed to the point indicated and that, to the best of the Architect's
knowledge, information and belief, quality of the Work is in accordance with the
Contract Documents. The foregoing representations are subject to an evaluation
of the Work for conformance with the Contract Documents upon Substantial
Completion, to results of subsequent tests and inspections, to minor deviations
from the Contract Documents correctable prior to completion and to specific
qualifications expressed by the Architect. The issuance of a Certificate for
Payment will further constitute a representation that the Contractor is entitled
to payment in the amount certified in the opinion of the Architect. However, the
issuance of a Certificate for Payment will not be a representation that the
Architect has (1) made exhaustive or continuous on-site inspections to check the
quality or quantity of the Work, (2) reviewed construction means, methods,
techniques, sequences or procedures, (3) reviewed copies of requisitions
received from Subcontractors and material suppliers and other data requested by
the Owner to substantiate the Contractor's right to payment or (4) made
examination to ascertain how or for what purpose the Contractor has used money
previously paid on account of the Contract Sum.
9.5 DECISIONS TO WITHHOLD CERTIFICATION
9.5.1 The Architect or the Owner may decide not to certify payment and may
withhold a Certificate for Payment in whole or in part, to the extent reasonably
necessary to protect the Owner, if in either the Owner's or the Architect's
opinion the representations to the Owner required by Subparagraph 9.4.2 cannot
be made. If the Architect is unable to certify payment in the amount of the
Application, the Architect will notify the Contractor and Owner as provided in
Subparagraph 9.4.1. If the Contractor and the Owner and Architect cannot agree
on a revised amount, the Architect will promptly issue a Certificate for Payment
for the amount for which the Architect is able to make such representations to
the Owner. The Architect or the Owner may also decide not to certify payment or,
because of subsequently discovered evidence or subsequent observations, may
nullify the whole or a part of a Certificate for Payment previously issued, to
such extent as may be necessary in the Architect's opinion to protect the Owner
from loss because of:
.1 defective Work not remedied;
.2 third party claims filed or reasonable evidence indicating probable
filing of such claims;
.3 failure of the Contractor to make payments properly to Subcontractors
or for labor, materials or equipment;
.4 reasonable evidence that the Work cannot be completed for the unpaid
balance of the Contract Sum;
.5 damage to the Owner or a separate contractor caused by the Contractor;
.6 reasonable evidence that the Work will not be completed within the
Contract Time, and that the unpaid balance would not be adequate to cover
actual or liquidated damages for the anticipated delay; or
.7 persistent failure to carry out the Work in accordance with the
Contract Documents.
9.5.2 When the above reasons for withholding certification are removed,
certification will be made for amounts previously withheld.
9.6 PROGRESS PAYMENTS
9.6.1 After the Architect has issued a Certificate for Payment, and subject to
the Owner's approval, the Owner shall make payment in the manner and within the
time provided in the Contract Documents.
9.6.2 The Contractor shall promptly pay each Subcontractor, upon receipt of
payment from the Owner, out of the amount paid to the Contractor on account of
such Subcontractor's portion of the Work, the amount to which said Subcontractor
is entitled in the Contractor's subcontract agreement. The Contractor shall, by
appropriate agreement with each Subcontractor, require each Subcontractor to
make payments to Sub-subcontractors in similar manner.
9.6.3 The Owner may, on request and at his discretion, furnish to any
Subcontractor, if practicable, information regarding percentages of completion
on the amounts applied for by the Contractor and action taken thereon by the
Architect and Owner on account of portions of the Work done by such
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Subcontractor.
9.6.4 Neither the Owner nor Architect shall have an obligation to pay or to see
to the payment of money to a Subcontractor except as may otherwise be required
by law.
9.6.5 Payment to material suppliers shall be treated in a manner similar to that
provided in Subparagraphs 9.6.2, 9.6.3 and 9.6.4.
9.6.6 A Certificate for Payment, a progress payment, or partial or entire use or
occupancy of the Project by the Owner shall not constitute acceptance of Work
not in accordance with the Contract Documents.
INSERT N
9.6.7 The Contractor has the right to withhold retention from his
Subcontractor payments even though the Owner has not retained these funds
from Contractor. These funds shall be held by Contractor, in a separate,
segregated, Owner-authorized, interest bearing account. Subcontractor
retainage will not be released to the Subcontractor without written approval
of the Owner. All interest earned on these funds shall accrue to the
Contractor.
9.7 FAILURE OF PAYMENT
9.7.1 If the Architect does not issue a Certificate for Payment, through no
fault of the Contractor, within five (5) days after receipt of the Contractor's
Application for Payment, or if the Owner does not pay the Contractor within
three (3) days after the date established in the Contract Documents the amount
certified by the Architect, then the Contractor may, upon one (1) additional
days' written notice to the Owner and Architect, stop the Work until payment of
the amount approved by the Owner as being owed has been received. The Contract
Sum shall be increased by the amount of the Contractor's reasonable costs of
shut-down, delay and start-up, which shall be effected by appropriate Change
Order, and the Contract Time shall be extended by the amount of time the
Contractor is delayed.
9.8 SUBSTANTIAL COMPLETION
9.8.1 Substantial Completion shall be defined as total Completion of the Work in
accordance with the Contract Documents, except for minor, incomplete items,
which shall not affect the Owner's beneficial use and occupancy of the Project
or a portion of the Project.
9.8.2 When the Contractor considers that the Work, or a portion thereof which
the Owner agrees to accept separately, is substantially complete, the Contractor
shall prepare and submit to the Architect and Owner a comprehensive list of
items to be completed or corrected. The Contractor shall proceed promptly to
complete and correct items on the list. Failure to include an item on such list
does not alter the responsibility of the Contractor to complete all Work in
accordance with the Contract Documents. Upon receipt of the Contractor's list,
the Architect and the Owner will make an inspection to determine whether the
Work or designated portion thereof is substantially complete. If the
Architect's inspection and/or the Owner's inspection discloses any item, whether
or not included on the Contractor's list, which is not in accordance with the
requirements of the Contract Documents, the Contractor shall, before issuance of
the Certificate of Substantial Completion, complete or correct such item, upon
notification by the Architect. The Contractor shall then submit a request for
another inspection by the Architect and the Owner to determine Substantial
Completion. When the Work or designated portion thereof is substantially
complete, the Architect will prepare a Certificate of Substantial Completion
which shall establish the responsibilities of the Owner and Contractor for
security, maintenance, heat, utilities, damage to the Work and insurance, and
shall fix the time within which the Contractor shall finish all items on the
list accompanying the Certificate. Warranties required by the Contract Documents
shall commence on the date of Substantial Completion of the Work or designated
portion thereof unless otherwise provided in the Certificate of Substantial
Completion. The Certificate of Substantial Completion shall be submitted to the
Owner and Contractor for their written acceptance of responsibilities assigned
to them in such Certificate.
9.8.3 Upon Substantial Completion of the Work or designated portion thereof and
upon application by the Contractor and certification by the Architect and
approval by the Owner, the Owner shall make payment, reflecting adjustment in
retainage, if any, for such Work or portion thereof as provided in the Contract
Documents.
9.9 PARTIAL OCCUPANCY OR USE
9.9.1 The Owner may occupy or use any completed or partially completed portion
of the Work at any stage when such portion is designated by separate agreement
with the Contractor, provided such occupancy or use is consented to by the
insurer as required under
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applicable portions of Article 11 - Insurance and Bonds and authorized by public
authorities having jurisdiction over the Work. Such partial occupancy or use
may commence whether or not the portion is substantially complete, provided the
Owner and Contractor have accepted in writing the responsibilities assigned to
each of them for payments, retainage if any, security, maintenance, heat,
utilities, damage to the Work and insurance, and have agreed in writing
concerning the period for correction of the Work and commencement of warranties
required by the Contract Documents. When the Contractor considers a portion
substantially complete, the Contractor shall prepare and submit a list to the
Architect and the Owner as provided under Subparagraph 9.8.2. Consent of the
Contractor to partial occupancy or use shall not be unreasonably withheld. The
stage of the progress of the Work shall be determined by written agreement
between the Owner and Contractor or, if no agreement is reached, by decision of
the Architect and the Owner.
9.9.2 Immediately prior to such partial occupancy or use, the Owner, Contractor
and Architect shall jointly inspect the area to be occupied or portion of the
Work to be used in order to determine and record the condition of the Work.
9.9.3 Unless otherwise agreed upon, partial occupancy or use of a portion or
portions of the Work shall not constitute acceptance of Work not complying with
the requirements of the Contract Documents.
9.10 FINAL COMPLETION AND FINAL PAYMENT
9.10.1 Upon receipt of written notice that the Work is ready for final
inspection and acceptance and upon receipt of a final Application for Payment,
the Architect will promptly make such inspection and, when the Architect finds
the Work acceptable under the Contract Documents and the Contract fully
performed, the Architect will promptly issue a final Certificate for Payment for
approval by the Owner stating that to the best of the Architect's knowledge,
information and belief, and on the basis of the Architect's observations and
inspections, the Work has been completed in accordance with terms and conditions
of the Contract Documents and that the entire balance found to be due the
Contractor and noted in said final Certificate is due and payable in the
Architect's opinion. The Architect's final Certificate for Payment will
constitute a further representation of the Architect's opinion that conditions
listed in Subparagraph 9.10.2 as precedent to the Contractor's being entitled to
final payment have been fulfilled.
9.10.2 Final payment shall not become due until the Contractor submits to the
Architect (1) an affidavit that payrolls, bills for materials and equipment, and
other indebtedness connected with the Work for which the Owner or the Owner's
property might be responsible or encumbered (less amounts withheld by Owner)
have been paid or otherwise satisfied, submitted on A.I.A. Document G706,
Contractor's Affidavit of Payment of Debts and Claims, (2) a certificate
evidencing that insurance required by the Contract Documents to remain in force
after final payment is currently in effect and will not be cancelled or allowed
to expire until at least sixty (60) days' prior written notice has been given to
the Owner, (3) a written statement that the Contractor knows of no substantial
reason that the insurance will not be renewable to cover the period required by
the Contract Documents, (4) all records, transparencies, and prints specified to
be prepared and maintained by the various subcontractors, (5) all manufacturer's
operation manuals, service manuals, schedules, etc., (6) all written guarantees
and warranties required by the Contract Documents, (7) consent of surety, if
any, to final payment, and (8) other data establishing payment or satisfaction
of obligations, such as receipts, releases and waiver of liens, claims, security
interests or encumbrances arising out of the Contract, including submission of a
completed A.I.A. Document G706A, Contractor's Affidavit of Release of Liens and
to the extent and in such form as may be designated by the Owner. If a
Subcontractor refuses to furnish a release or waiver required by the Owner, the
Contractor may furnish a bond satisfactory to the Owner to indemnify the Owner
against such a lien. If such lien remains unsatisfied after payments are made,
the Contractor shall refund to the Owner all money that the Owner may be
compelled to pay in discharging such lien, including all costs and reasonable
attorneys' fees.
9.10.3 If, after Substantial Completion of the Work, final completion thereof is
materially delayed through no fault of the Contractor or by issuance of Change
Orders affecting final completion, and the Architect so confirms, the Owner
shall, upon application by the Contractor and certification by the Architect,
and without terminating the Contract, make payment of the balance due for that
portion of the Work fully completed and accepted. If the remaining balance for
Work not fully completed or corrected is less than retainage stipulated in the
Contract Documents, and if bonds have been furnished, the written consent of
surety to payment of the balance due for that portion of the Work fully
completed and accepted shall be submitted by the Contractor to the Architect
prior to certification of such payment. Such payment shall be made under terms
and conditions governing final payment, except that it shall not constitute a
waiver of claims. The making of final payment shall constitute a waiver of
claims by the
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Owner as provided in Subparagraph 4.3.5. Final payment, constituting the entire
balance of the Cost of the Work, shall be paid by the Owner to the Contractor
provided the Work has been completed, the Contract fully performed, and final
payment has been recommended by the Architect and approved by the Owner, but in
no event later than thirty-nine (39) days after filing by the Owner of the
Notice of Completion.
9.10.4 Acceptance of final payment by the Contractor, a Subcontractor or
material supplier shall constitute a waiver of claims by that payee except those
previously made in writing and identified by that payee as unsettled at the time
of final Application for Payment. Such waivers shall be in addition to the
waiver described in Subparagraph 4.3.5.
ARTICLE 10
PROTECTION OF PERSONS AND PROPERTY
10.1 SAFETY PRECAUTIONS AND PROGRAMS
10.1.1 The Contractor shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the work, and
cooperate fully with those programs that may be reasonably required by the Owner
or Owner's Insurance Carriers or Underwriters.
10.1.2 In the event the Contractor encounters on the site material reasonably
believed to be asbestos or polychlorinated biphenyl (PCB) which has not been
rendered harmless, the Contractor shall immediately stop Work in the area
affected and report the condition to the Owner and Architect in writing. The
Work in the affected area shall not thereafter be resumed except by written
agreement of the Owner and Contractor if in fact the material is asbestos or
polychlorinated biphenyl (PCB) and has not been rendered harmless. The Work
in the affected area shall be resumed in the absence of asbestos or
polychlorinated biphenyl (PCB), or when it has been rendered harmless, by
written agreement of the Owner and Contractor, or in accordance with final
determination by the Architect.
10.1.3 The Contractor shall not be required pursuant to Article 7 to perform
without consent any Work relating to asbestos or polychlorinated biphenyl (PCB).
10.1.4 To the fullest extent permitted by law, the Owner shall indemnify and
hold harmless the Contractor, Architect, Architect's consultants and agents and
employees of any of them from and against claims, damages, losses and expenses,
including but not limited to attorneys' fees, arising out of or resulting from
performance of the Work in the affected area if in fact the material is asbestos
or polychlorinated biphenyl (PCB) and has not been rendered harmless, provided
that such claim, damage, loss or expense is attributable to bodily injury,
sickness, disease or death, or to injury to or destruction of tangible property
(other than the Work itself) including loss of use resulting therefrom, but only
to the extent caused in whole or in part by negligent acts or omissions of the
Owner, anyone directly or indirectly employed by the Owner or anyone for whose
acts the Owner may be liable, regardless of whether or not such claim, damage,
loss or expense is caused in part by a party indemnified hereunder. Such
obligation shall not be construed to negate, abridge, or reduce other rights or
obligations of indemnity which would otherwise exist as to a party or person
described in this Subparagraph 10.1.4.
10.2 SAFETY OF PERSONS AND PROPERTY
10.2.1 The Contractor shall take reasonable precautions for safety of, and shall
provide reasonable protection to prevent damage, injury or loss to:
.1 employees on the Work and other persons who may be affected thereby;
.2 the Work and materials and equipment to be incorporated therein, whether
in storage on or off the site, under care, custody or control of the
Contractor or the Contractor's Subcontractors or Sub-subcontractors; and
.3 other property at the site or adjacent thereto, such as trees, shrubs,
lawns, walks, pavements, roadways, structures and utilities not designated
for removal, relocation or replacement in the course of construction.
10.2.2 The Contractor shall give notices and comply with applicable laws,
ordinances, rules, regulations and lawful orders of public authorities bearing
on safety of persons or property or their protection from damage, injury or
loss.
10.2.3 The Contractor shall erect and maintain, as required by existing
conditions and performance of the Contract, reasonable safeguards for safety and
protection, including posting danger signs and other warnings against hazards,
promulgating safety regulations and notifying owners and users of adjacent sites
and utilities.
10.2.4 When use or storage of explosives or other hazardous materials or
equipment or unusual methods are necessary for execution of the Work, the
Contractor shall exercise utmost care and carry on such activities under
supervision of properly qualified personnel.
10.2.5 The Contractor shall promptly remedy damage and loss (other than damage
or loss insured under
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property insurance required by the Contract Documents) to property referred
to in Clauses 10.2.1.2 and 10.2.1.3 caused in whole or in part by the
Contractor, a Subcontractor, a Sub-subcontractor, or anyone directly or
indirectly employed by any of them, or by anyone for whose acts they may be
liable and for which the Contractor is responsible under Clauses 10.2.1.2 and
10.2.1.3, except damage or loss attributable to acts or omissions of the
Owner or Architect or anyone directly or indirectly employed by either of
them, or by anyone for whose acts they may be liable, and not attributable to
the fault or negligence of the Contractor. The foregoing obligations of the
Contractor are in addition to the Contractor's obligations under Paragraph
3.18.
10.2.6 The Contractor shall designate a responsible member of his organization
at the site whose duty shall be the prevention of accidents. This person shall
be the Contractor's superintendent unless otherwise designated by the Contractor
in writing to the Owner and Architect. If a separate or distinct Safety Officer
is required by the Owner or Owner's Insurance Carrier or Underwriter, the Owner
shall reimburse the Contractor at actual cost.
10.2.7 The Contractor shall not load or permit any part of the construction or
site to be loaded so as to endanger its safety.
10.3 EMERGENCIES
10.3.1 In an emergency affecting safety of persons or property, the Contractor
shall act, at the Contractor's discretion, to prevent threatened damage, injury
or loss. Additional compensation or extension of time claimed by the Contractor
on account of an emergency shall be determined as provided in Paragraph 4.3 and
Article 7.
ARTICLE 11
INSURANCE AND BONDS
11.1 CONTRACTOR'S LIABILITY INSURANCE
11.1.1
.1
.2
.3
.4
.5
.6
.7
11.1 CONTRACTOR'S LIABILITY INSURANCE
INSERT O 11.1.1 The Contractor shall purchase and maintain such insurance as
will protect him from claims set forth below which may arise out of, or
result from, the Contractor's operations under the Contract, whether such
operations be by himself or by any Subcontractor or by anyone directly or
indirectly employed by any of them, or by anyone for whose acts any of them
may be legally liable. The limits of the Contractor's liability insurance
required herein shall not be less than the following:
11.1.1.1 Worker's Compensation and Occupational Disease Insurance in accordance
with the applicable law or laws: Employer's Liability Insurance with Limits of
Liability of at least FIVE HUNDRED THOUSAND DOLLARS ($500,000.00).
11.1.1.2 Comprehensive General Liability with a combined Bodily Injury and
Property Damage limit of TEN MILLION DOLLARS ($10,000,000.00), including the
following perils:
1. Broad Form Blanket Contractual Liability for Liability assumed under
this Contract and all other contracts with the Contractor relative to the
Project;
2. Completed Operations Products Liability with two (2) year extension
beyond completion and Owner's acceptance of the Project.
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3. Broad Form Property Damage;
4. "XC&U" Perils, where applicable;
5. Personal Injury Liability A, B & C, with employee exclusion void;
6. Incidental Malpractice Insurance.
11.1.1.3 Comprehensive Automobile Liability Insurance covering the use of all
owned, non-owned, and hired automobiles with a Bodily Injury and Property Damage
limit of ONE MILLION DOLLARS ($1,000,000.00) Combined Single Limit.
11.1.1.4 The Owner may require the Contractor to purchase and maintain Owner's
and Contractor's Protective Liability Insurance with the Owner as named insured.
The Policy shall remain in force throughout the term of the Contract. The policy
limit shall be no less than TEN MILLION DOLLARS ($10,000,000.00) Combined Single
Limit.
INSERT P
11.1.2 Prior to the commencement of any work under this Contract and until
completion and final acceptance of the Work, the Contractor will furnish to the
Owner, Certificates of Insurance giving evidence of required Liability and
Worker's Compensation insurance. Certificates of Insurance, evidencing the
insurance required in this Article, shall include as "Additional Insureds",
MIRAGE RESORTS, INCORPORATED, BEAU RIVAGE, ATLANDIA DESIGN & FURNISHINGS, INC.,
the Owner's Consultants, and the Contractor. A list of the Owner's Consultants
shall be provided when it becomes available. It is agreed that this insurance
will not be cancelled, materially changed, or non-renewed without at least sixty
(60) days' prior written notice to all certificate holders.
11.1.3
11.2 OWNER'S LIABILITY INSURANCE
11.2.1 The Owner shall be responsible for purchasing and maintaining the Owner's
usual liability insurance. Optionally, the Owner may purchase and maintain other
insurance for self-protection against claims which may arise from operations
under the Contract. The Contractor shall not be responsible for purchasing and
maintaining this optional Owner's liability insurance unless specifically
required by the Contract Documents.
11.3 PROPERTY INSURANCE
INSERT Q
11.3.1 The Contractor shall purchase and maintain Property Insurance insuring
against the perils of fire and extended coverage and "All-Risk" physical damage,
including theft, vandalism and malicious mischief covering the equipment, tools,
temporary structures and interests of the Contractor, Subcontractors and Sub-
subcontractors, including work stored off-site or in transit. The Owner will
purchase and maintain "Builder's-Risk" Insurance on the entire Project,
including all materials, equipment and supplies which are to become a permanent
part of the construction, while awaiting erection at the site or until
completion of such erection. Coverage shall be provided on a
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replacement cost basis. All covered losses are subject to a deductible for
each occurrence, which shall be the responsibility of the Contractor if, in
the opinion of the Owner, the Contractor is at fault. The Owner shall name
the Contractor as "Additional Insured" on the "Builder's-Risk" Insurance.
11.3.1.1 Property insurance shall be on an all-risk policy form and shall
insure against the perils of fire and extended coverage and physical
loss or damage including, without duplication of coverage, theft, vandalism,
malicious mischief, collapse, false-work, temporary buildings and debris
removal including demolition occasioned by enforcement of any applicable
legal requirements, and shall cover reasonable compensation for Architect's
services and expenses required as a result of such insured loss. Coverage
for other perils shall not be required unless otherwise provided in the
Contract Documents.
11.3.1.2 If the Owner does not intend to purchase such property insurance
required by the Contract and with all of the coverages in the amount
described above, the Owner shall so inform the Contractor in writing prior to
commencement of the Work. The Contractor may then effect insurance which will
protect the interests of the Contractor, Subcontractors and
Sub-subcontractors in the Work, and by appropriate Change Order the cost
thereof shall be charged to the Owner. If the Contractor is damaged by the
failure or neglect of the Owner to purchase or maintain insurance as
described above, without so notifying the Contractor, then the Owner shall
bear all reasonable cost properly attributable thereto.
11.3.1.3 If the property insurance requires minimum deductibles and such
deductibles are identified in the Contract Documents, the Contractor shall
pay costs not covered because of such deductibles. If the Owner or insurer
increases the required minimum deductibles above the amounts so identified or
if the Owner elects to purchase this insurance with voluntary deductible
amounts, the Owner shall be responsible for payment of the additional costs
not covered because of such increased or voluntary deductibles. If
deductibles are not identified in the Contract Documents, the Owner shall pay
costs not covered because of deductibles.
11.3.1.4 Unless otherwise provided in the Contract Documents, this property
insurance shall cover portions of the Work stored off the site after written
approval of the Owner at the value established in the approval, and also
portions of the Work in transit.
11.3.2 BOILER AND MACHINERY INSURANCE. The Owner shall purchase and maintain
boiler and machinery insurance required by the Contract Documents or by law,
which shall specifically cover such insured objects during installation and
until final acceptance by the Owner; this insurance shall include interests
of the Owner, Contractor, Subcontractors, and Sub-subcontractors in the Work,
and the Owner and Contractor shall be named insureds.
11.3.3 LOSS OF USE INSURANCE. The Owner, at the Owner's option, may
purchase and maintain such insurance as will insure the Owner against loss of
use of the Owner's property due to fire or other hazards, however caused. The
Owner waives all rights of action against the Contractor for loss of use of the
Owner's property, including consequential losses due to fire or other hazards
however caused.
INSERT R
11.3.4 If the Contractor requests, in writing, that insurance for risks other
than described herein, or for other special hazards, be included in the property
insurance policy furnished by the Owner, the Owner shall, if possible, include
such insurance, and the cost thereof shall be charged to the Contractor by
appropriate Change Order.
11.3.5 If during the Project construction period the Owner insures
properties, real or personal or both, adjoining or adjacent to the site by
property insurance under policies separate from those insuring the Project,
or if after final payment property insurance is to be provided on the
completed Project through a policy or policies other than those insuring the
Project during the construction period, the Owner shall waive all rights in
accordance with the terms of Subparagraph 11.3.7 for damages caused by fire
or other perils covered by this separate property insurance. All separate
policies shall provide this waiver of subrogation by endorsement or otherwise.
11.3.6 Before an exposure to loss may occur, the Owner shall file with the
Contractor a copy of each policy that includes insurance coverages required by
this Paragraph 11.3. Each policy shall contain all generally applicable
conditions, definitions, exclusions and endorsements related to this Project.
Each policy shall contain a provision that the policy will not be cancelled or
allowed to expire until at least sixty (60) days' prior written notice has been
given to the Contractor.
11.3.7 WAIVERS OF SUBROGATION. The Owner and Contractor waive all rights against
(1) each other and any of their subcontractors, sub-subcontractors, agents and
employees, each of the other, and (2) the Architect, Architect's consultants,
separate contractors described in
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Article 6, if any, and any of their subcontractors, sub-subcontractors,
agents and employees, for damages caused by fire or other perils to the
extent covered by property insurance obtained pursuant to this Paragraph 11.3
or other property insurance applicable to the Work, except such rights as
they have to proceeds of such insurance held by the Owner as fiduciary. The
Owner or Contractor, as appropriate, shall require of the Architect,
Architect's consultants, separate contractors described in Article 6, if any,
and the subcontractors, sub-subcontractors, agents and employees of any of
them, by appropriate agreements, written where legally required for validity,
similar waivers each in favor of other parties enumerated herein. The
policies shall provide such waivers of subrogation by endorsement or
otherwise. A waiver of subrogation shall be effective as to a person or
entity even though that person or entity would otherwise have a duty of
indemnification, contractual or otherwise, did not pay the insurance premium
directly or indirectly, and whether or not the person or entity had an
insurable interest in the property damaged.
11.3.8 A loss insured under Owner's property insurance shall be adjusted by
the Owner as fiduciary and made payable to the Owner as fiduciary for the
insureds, as their interests may appear, subject to requirements of any
applicable mortgagee clause and of Subparagraph 11.3.10. The Contractor shall
pay Subcontractors their just shares of insurance proceeds received by the
Contractor, and by appropriate agreements, written where legally required for
validity, shall require Subcontractors to make payments to their
Sub-subcontractors in similar manner.
11.3.9
INSERT S
11.3.10 The Owner as fiduciary shall have power to adjust and settle a loss
with insurers unless one of the parties in interest shall object in writing
within five (5) days after occurrence of loss to the Owner's exercise of this
power.
11.3.11 Partial occupancy or use in accordance with Paragraph 9.9 shall not
commence until the insurance company or companies providing property
insurance have consented to such partial occupancy or use by endorsement or
otherwise. The Owner and the Contractor shall take reasonable steps to obtain
consent of the insurance company or companies and shall, without mutual
written consent, take no action with respect to partial occupancy or use that
would cause cancellation, lapse or reduction of insurance.
INSERT T
11.3.12 The carrying of the above Owner provided Builder's Risk Insurance
shall in no way be interpreted as relieving the Contractor of any
responsibility or liability under the Contract.
11.3.13 In the event of failure of the Contractor to furnish and maintain said
insurance as required in Article 11.1, and to furnish satisfactory evidence
thereof, the Owner shall have the right to take out and maintain same for all
parties on behalf of the Contractor who agrees to furnish all necessary
underwriting information.
11.3.14 Any policies effected by the Contractor on their own and/or rented
equipment and materials for use on the Project, shall contain a provision
requiring the insurance carriers to waive their rights of subrogation against
MIRAGE RESORTS, INCORPORATED, BEAU RIVAGE, ATLANDIA DESIGN & FURNISHINGS,
INC. and Owner's Consultants. A list of the Owner's Consultants shall be
provided when it becomes available.
11.4 PERFORMANCE BOND AND PAYMENT BOND
11.4.1 The Owner shall have the right to require the Contractor to furnish
bonds covering faithful performance of the Contract and payment of
obligations arising thereunder as stipulated in bidding requirements or
specifically required in the Contract Documents on the date of execution of
the Contract.
11.4.2 Upon the request of any person or entity appearing to be a potential
beneficiary of bonds covering payments of obligations arising under the
Contract, the Contractor shall promptly furnish a copy of the bonds or shall
permit a copy to be made.
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ARTICLE 12
UNCOVERING AND CORRECTION OF WORK
12.1 UNCOVERING OF WORK
12.1.1 If a portion of the Work is covered contrary to the Architect's
request or to requirements specifically expressed in the Contract Documents,
it must, if required in writing by the Architect, be uncovered for the
Architect's observation and be replaced at the Contractor's expense without
change in the Contract Time.
12.1.2 If a portion of the Work has been covered which the Architect has not
specifically requested to observe prior to its being covered, the Architect
may request to see such Work and it shall be uncovered by the Contractor. If
such Work is in accordance with the Contract Documents, costs of uncovering
and replacement shall, by appropriate Change Order, be charged to the Owner.
If such Work is not in accordance with the Contract Documents, the Contractor
shall pay such costs unless the condition was caused by the Owner or a
separate contractor in which event the Owner shall be responsible for payment
of such costs.
12.2 CORRECTION OF WORK
12.2.1 Upon the Owner or the Architect providing written notice to the
Contractor, the Contractor shall promptly correct Work shown to be defective
or which fails to conform to the Contract Documents, whether observed before
or after Substantial Completion and whether or not fabricated, installed or
completed. The Contractor shall bear all costs of correcting such rejected
Work, including additional testing and inspections and compensation for the
Architect's services and expenses made necessary thereby.
12.2.2 If, within one year after the date of Substantial Completion of the
Work or designated portion thereof, or after the date for commencement of
warranties established under Subparagraph 9.9.1, or by terms of an applicable
special warranty required by the Contract Documents, any of the Work is found
to be not in accordance with the requirements of the Contract Documents, the
Contractor shall correct it promptly after receipt of written notice from the
Owner to do so unless the Owner has previously given the Contractor a written
acceptance of such condition. This period of one year shall be extended with
respect to portions of Work first performed after Substantial Completion by
the period of time between Substantial Completion and the actual performance
of the Work. This obligation under this Subparagraph 12.2.2 shall survive
acceptance of the Work under the Contract and termination of the Contract.
The Owner shall give such notice promptly after discovery of the condition.
12.2.3 The Contractor shall remove from the site portions of the Work which
are not in accordance with the requirements of the Contract Documents and are
neither corrected by the Contractor nor accepted by the Owner.
12.2.4 If, after written notice is provided by the Owner, the Contractor
fails to correct nonconforming Work within a reasonable time, the Owner may
correct it in accordance with Paragraph 2.4. If the Contractor does not
proceed with correction of such nonconforming Work within a reasonable time
fixed by written notice from the Architect, the Owner may remove it and store
the salvable materials or equipment at the Contractor's expense. If the
Contractor does not pay costs of such removal and storage within ten (10)
days after written notice, the Owner may upon ten (10) additional days'
written notice sell such materials and equipment at auction or at private
sale and shall account for the proceeds thereof, after deducting costs and
damages that should have been borne by the Contractor, including compensation
for the Architect's services and expenses made necessary thereby. If such
proceeds of sale do not cover costs which the Contractor should have borne,
the Contract Sum shall be reduced by the deficiency. If payments then or
thereafter due the Contractor are not sufficient to cover such amount, the
Contractor shall pay the difference to the Owner.
12.2.5 The Contractor shall bear the costs of correcting destroyed or damaged
construction, whether completed or partially completed, of the Owner or separate
contractors caused by the Contractor's correction or removal of Work which is
not in accordance with the requirements of the Contract Documents.
12.2.6 Nothing contained in this Paragraph 12.2 shall be construed to
establish a period of limitation with respect to other obligations which the
Contractor might have under the Contract Documents. Establishment of the time
period of one year as described in Subparagraph 12.2.2 relates only to the
specific obligation of the Contractor to correct the Work, and has no
relationship to the time within which the obligation to comply with the
Contract Documents may be sought to be enforced, nor to the time within which
proceedings may be commenced to establish the Contractor's liability with
respect to the Contractor's obligations other than specifically to correct
the Work.
12.3 ACCEPTANCE OF NONCONFORMING WORK
12.3.1 If the Owner prefers to accept Work which is not in accordance with the
requirements of the Contract
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Documents, the Owner may do so instead of requiring its removal and correction,
in which case the Contract Sum will be reduced as appropriate and equitable.
Such adjustment shall be effected whether or not final payment has been made.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 GOVERNING LAW
13.1.1 The Contract shall be governed by the law of the place where the Project
is located and shall be the State of Nevada.
13.2 SUCCESSORS AND ASSIGNS
13.2.1. The Owner and Contractor each binds himself, his partners,
successors, assigns and legal representatives to the other party hereto and
to the partners, successors, assigns and legal representatives of such other
party with respect to all covenants, agreements and obligations contained in
the Contract Documents. Neither party to the Contract shall assign the
Contract or sublet it as a whole, except that the Owner shall have the right
to assign the Contract to any affiliated company without the written consent
of the Contractor, provided the Owner remains liable for payment to the
Contractor. The Contractor shall not assign any money due or to become due to
him hereunder, without the previous written consent of the Owner.
13.3 WRITTEN NOTICE
13.3.1 Written notice shall be deemed to have been duly served if delivered
in person to the individual or a member of the firm or entity or to an
officer of the corporation for which it was intended, or if delivered at or
sent by registered or certified mail to the last business address known to
the party giving notice.
INSERT U
13.3.2 The written notice referred to herein shall be sent to the Owner at:
ATLANDIA DESIGN & FURNISHINGS, INC.
3260 South Industrial Road
Las Vegas, NV 89109
Attention: Kenneth R. Wynn, President
And shall be sent to the Contractor at:
MARNELL CORRAO ASSOCIATES
4495 South Polaris Avenue
Las Vegas, NV 89103
Attention: Glen Kaiser, President
And shall be sent to the Architect at:
A.A. MARNELL II, CHTD.
4495 South Polaris Avenue
Las Vegas, NV 89103
Attention: Jon Sparer, Architect
Return Receipt Requested, or Hand Delivered.
13.4 RIGHTS AND REMEDIES
13.4.1 Duties and obligations imposed by the Contract Documents and rights and
remedies available thereunder shall be in addition to and not a limitation of
duties, obligations, rights and remedies otherwise imposed or available by law.
13.4.2 No action or failure to act by the Owner, Architect or Contractor shall
constitute a waiver of a right or duty afforded them under the Contract, nor
shall such action or failure to act constitute approval of or acquiescence in a
breach thereunder, except as may be specifically agreed in writing.
13.5 TESTS AND INSPECTIONS
13.5.1 Tests, inspections and approvals of portions of the Work required by
the Contract Documents or by laws, ordinances, rules, regulations or orders
of public authorities having jurisdiction shall be made at an appropriate
time. Unless otherwise provided, the Contractor shall make arrangements for
such tests, inspections and approvals with an independent testing laboratory
or entity acceptable to the Owner, or with the appropriate public authority.
The Contractor shall give the Architect timely notice of when and where tests
and inspections are to be made so the Architect may observe such procedures.
The owner shall bear costs of tests, inspections or approvals.
13.5.2 If the Architect, Owner or public authorities having jurisdiction
determine that portions of the Work require additional testing, inspection or
approval not included under Subparagraph 13.5.1, the Architect will, upon
written authorization from the Owner, instruct the Contractor to make
arrangements for such additional testing, inspection or approval by an entity
acceptable to
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the Owner, and the Contractor shall give timely notice to the Architect of when
and where tests and inspections are to be made so the Architect may observe such
procedures. The Owner shall bear such costs except as provided in Subparagraph
13.5.3.
13.5.3 If such procedures for testing, inspection or approval under
Subparagraphs 13.5.1 and 13.5.2 reveal failure of the portions of the Work to
comply with requirements established by the Contract Documents, the Contractor
shall bear all costs made necessary by such failure including those of repeated
procedures and compensation for the Architect's services and expenses.
13.5.4 Required certificates of testing, inspection or approval shall, unless
otherwise required by the Contract Documents, be secured by the Contractor and
promptly delivered to the Architect.
13.5.5 If the Architect is to observe tests, inspections or approvals required
by the Contract Documents, the Architect will do so promptly and, where
practicable, at the normal place of testing.
13.5.6 Tests or inspections conducted pursuant to the Contract Documents shall
be made promptly to avoid unreasonable delay in the Work.
13.6 INTEREST
13.6.1 Payments due and unpaid under the Contract Documents shall bear interest
as provided under the terms and conditions of the Owner-Contractor Agreement.
13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD
13.7.1 As between the Owner and Contractor:
.1 BEFORE SUBSTANTIAL COMPLETION. As to acts or failures to act
occurring prior to the relevant date of Substantial Completion, any
applicable statute of limitations shall commence to run and any alleged
cause of action shall be deemed to have accrued in any and all events
not later than such date of Substantial Completion;
.2 BETWEEN SUBSTANTIAL COMPLETION AND FINAL CERTIFICATE FOR PAYMENT. As
to acts or failures to act occurring subsequent to the relevant date of
Substantial Completion and prior to issuance of the final Certificate
for Payment, any applicable statute of limitations shall commence to run
and any alleged cause of action shall be deemed to have accrued in any
and all events not later than the date of issuance of the final
Certificate for Payment; and
.3 AFTER FINAL CERTIFICATE FOR PAYMENT. As to acts or failures to act
occurring after the relevant date of issuance of the final Certificate
for Payment, any applicable statute of limitations shall commence to run
and any alleged cause of action shall be deemed to have accrued in any
and all events not later than the date of any act or failure to act by
the Contractor pursuant to any warranty provided under Paragraph 3.5,
the date of any correction of the Work or failure to correct the Work by
the Contractor under Paragraph 12.2, or the date of actual commission of
any other act or failure to perform any duty or obligation by the
Contractor or Owner, whichever occurs last.
ARTICLE 14
TERMINATION OR SUSPENSION
OF THE CONTRACT
14.1 TERMINATION BY THE CONTRACTOR
14.1.1 The Contractor may terminate the Contract if the Work is stopped for a
period of sixty (60) days through no act or fault of the Contractor or a
Subcontractor, Sub-subcontractor or their agents or employees or any other
persons performing portions of the Work under Contract with the Contractor, for
any of the following reasons:
.1 issuance of an order of a court or other public authority having
jurisdiction;
.2 an act of government, such as a declaration of national emergency,
making material unavailable;
.3 because the Architect has not issued a Certificate for Payment and
has not notified the Contractor of the reason for withholding
certification as provided in Subparagraph 9.4.1, or because the Owner
has not made payment on a Certificate for Payment within the time
pursuant to the Contract Documents;
.4 if repeated suspensions, delays or interruptions by the Owner as
described in Paragraph 14.3 constitute in the aggregate more than 100
percent of the total number of days scheduled for completion, or 120
days in any 365-day period, whichever is less; or
.5 the Owner has failed to furnish to the Contractor promptly, upon the
Contractor's request, reasonable evidence as required by Subparagraph
2.2.1.
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14.1.2 If one of the above reasons exists, the Contractor may, upon seven
additional days' written notice to the Owner and Architect, terminate the
Contract and recover from the Owner payment for Work executed and for proven
loss with respect to materials, equipment, tools, and construction equipment and
machinery including the Contractor's Fee due to the date of termination.
14.1.3 If the Work is stopped for a period of 60 days through no act or fault
of the Contractor or a Subcontractor or their agents or employees or any
other persons performing portions of the Work under contract with the
Contractor because the Owner has persistently failed to fulfill the Owner's
obligations under the Contract Documents with respect to matters important to
the progress of the Work, the Contractor may, upon seven additional days'
written notice to the Owner and the Architect, terminate the Contract and
recover from the Owner as provided in Subparagraph 14.1.2.
14.2 TERMINATION BY THE OWNER FOR CAUSE
14.2.1 The Owner may terminate the Contract if the Contractor:
.1 persistently or repeatedly refuses or fails to supply enough properly
skilled workers or proper materials;
.2 fails to make payment to Subcontractors for materials or labor in
accordance with the respective agreements between the Contractor and the
Subcontractors;
.3 persistently disregards laws, ordinances, or rules, regulations or
orders of a public authority having jurisdiction; or
.4 otherwise is guilty of substantial breach of a provision of the
Contract Documents.
14.2.2 When any of the above reasons exist, the Owner, may without prejudice
to any other rights or remedies of the Owner, and after giving the Contractor
and the Contractor's surety, if any, seven days' written notice, terminate
employment of the Contractor and may, subject to any prior rights of the
surety:
.1 take possession of the site and of all materials, equipment, tools,
and construction equipment and machinery thereon owned by the
Contractor;
.2 accept assignment of subcontracts pursuant to Paragraph 5.4; and
.3 finish the Work by whatever reasonable method the Owner may deem
expedient.
14.2.3 When the Owner terminates the Contract for one of the reasons stated in
Subparagraph 14.2.1, the Contractor shall not be entitled to receive further
payment until the Work is finished.
14.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing
the Work, including compensation for the Architect's additional services made
necessary thereby, such excess shall reduce the Contract Sum. If such costs
exceed the unpaid balance, the Contractor shall pay the difference to the
Owner. The amount to be paid to the Owner, shall be certified by the
Architect in the manner provided for in the Contract Documents, and this
obligation for payments shall survive the termination of the Contract.
Provisions in this Paragraph shall not apply if the Owner assigns this
Agreement to a non-affiliated entity of either the Owner or an affiliate of
the Owner.
14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE
14.3.1 The Owner may, without cause, order the Contractor in writing to suspend,
delay or interrupt the Work in whole or in part for such period of time as the
Owner may determine.
14.3.2 An adjustment may be made for increases in the cost of performance of the
Contract, including profit on the increased cost of performance, caused by
suspension, delay or interruption. No adjustment shall be made to the extent:
.1 that performance is, was or would have been so suspended, delayed or
interrupted by another cause for which the Contractor is responsible; or
.2 that an equitable adjustment is made or denied under another
provision of this Contract.
14.3.3 Adjustments made in the cost of performance may have a mutually agreed
fixed or percentage fee.
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SPECIAL CONDITIONS
MARCH 7, 1995
(ADF PROJECT #92046)
--------------------
The following Special Conditions are a part of the Contract Documents and
shall apply to the General Conditions (A.I.A. Document A201, Fourteenth
Edition, 1987), and all other sections of the work, including, but not
limited to, the Contract Drawings and Specifications. If any conflict in
terms or conditions arises out of, or as a result of, these Special
Conditions, then these Special Conditions shall supersede and take precedent
over all other terms and conditions.
1. PERMITS, FEES AND NOTICES
1.1 Unless otherwise provided in the Contract Documents, the Owner shall pay
for all permits, fees and notices necessary for the proper execution and
completion of the Work which are legally required, such as Building Permits.
Unless otherwise provided in the Contract Documents, all special inspections and
special inspectors required by the Contract, as well as by the governing
authorities having or asserting jurisdiction over the Work, shall be provided
and paid for by the Contractor. The Owner reserves the right to pay for all
Permits, Fees, Plan Review Fees, Utility Connection Fees, etc., either directly
to the entity requesting such Fee, or to the Contractor. If the Contractor pays
for such Fee on the Owner's behalf, the Contractor shall be paid for such fee
within three (3) business days after Notice to the Owner for such payment, the
Owner shall reimburse the Contractor at actual cost and shall exclude the
Contractor's Fee.
1.2 Notification of Public Utilities: Each contractor whose work affects, or
is affected by, public utilities shall make all notifications to the public
utilities of impending work. Copies of written permission by public utilities
to commence work shall be transmitted to the Owner's Representative prior to
commencement of such work.
1.3 Special Notice:
1.3.1 The Contractor shall schedule his work such that the Owner's other
operations are not interrupted and he shall submit a schedule of construction
operations to the Owner's Representative for review and acceptance prior to
starting work.
1.3.2 Quiet and courtesy with respect to the Owner's employees and guests is
mandatory.
1.3.3 Power outages, mechanical shut-down and so forth shall be carefully
coordinated with the Owner's Representative.
1.3.4 All Life/Safety systems requiring shutdowns or tie-ins, in accordance with
the above clause, shall be coordinated with the Owner's Representative and shall
be performed at such a time to minimize any effect on the safety, health and
welfare of the building's occupants. At the conclusion of each work day, all
Life/Safety Systems shall be energized and operative.
1.3.5 No ceilings or walls are permitted to remain "open" after the normal work
day without special permission from the Owner's Representative.
2. TEMPORARY CONSTRUCTION
2.1 Walls and Fencing:
2.1.1 The Contractor shall be responsible for construction of temporary fencing
and/or walls around all areas of operations.
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2.1.2 Walls shall have a "finished" look, unless otherwise shown on the Drawings
or directed by the Owner.
2.1.3 The fence shall be neat and be well maintained for the duration of the
construction period.
2.1.4 Gates shall be closed and locked at the end of each day's operations.
Deliver six (6) sets of keys to the Owner's Representative at the start of
Construction.
2.2 Access to the Work Area: Access to the Project work area by
construction personnel shall be by the most inconspicuous route available, in
order that the Public and the Owner's personnel are not inconvenienced.
Access shall be arranged prior to the commencement of the work with the
Owner's Representative, unless shown otherwise. Access to restricted and/or
limited access areas required by the work shall be coordinated with the
Owner's Representative.
2.3 Toilet Facilities
2.3.1 Toilet facilities shall be provided by the Contractor within the
Construction area.
2.3.2 The Owner's toilet facilities and the Project's permanent toilet
facilities are not to be used by construction personnel.
2.4 Telephones:
2.4.1 The Contractor shall install his own telephone system, separate from the
Owner's, for construction use for the duration of construction.
2.4.2 The Contractor, his Subcontractors and all construction personnel
associated with the Project are strictly prohibited from using the Owner's
telephone system for paging, information, messages and outside telephone
connections.
2.5 Eating Privileges
2.5.1 All construction personnel shall be permitted to eat in any area within
the construction area as designated by the construction superintendent.
2.5.2 During the FF&E and finish phase of construction, construction personnel
are not permitted to eat where finish materials are in place nor use tables and
chairs or other furniture that are part of the Project. During this phase of
the Project the Owner's Representative will designate with the construction
superintendent, appropriate places for eating.
3. REFERENCE STANDARDS
3.1 Safety Standards:
3.1.1 Occupational Safety and Health Administration under the Federal William-
Steiger Occupational Safety and Health Act of 1970; and the Nevada Occupational
Safety and Health Act, as amended.
3.1.2 State of Nevada Occupational Safety and Health Standards for the
Construction Industry with Amendments as of November 1, 1993 (29 C.F.R. Part
1926) (29 C.F.R. Part 1910) as currently amended or amended during the term of
the Agreement.
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SPECIAL CONDITIONS
March 7, 1995
(ADF Project #92046)
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3.1.3 "Manual of Accident Prevention in Construction" published by
Associated General Contractors of America, latest edition, as amended.
3.1.4 All applicable regulations of governing authorities or such
authorities having or asserting jurisdiction over this Project.
3.2 Contractor acknowledges that throughout the Specifications, reference
is made to various widely published standard, commercial specifications. The
Contractor shall direct each of his Subcontractors to become familiar with the
contents of the pertinent portions of these referenced standards that are cited
and referred to throughout the Specifications.
3.3 When manufacturers of materials or fixtures used on this Project
provide installation or maintenance directions not covered in these
Specifications or detailed on the drawings, the Contractor furnishing the item
shall follow such directions, and shall issue appropriate copies to any other
affected contractors, subcontractors or sub-subcontractors.
4.1 TAKE-OFFS
The Contractor shall provide take-offs, including dimensions, quantities, square
footages, volumes and counts, of all Owner- furnished, Contractor-installed
items within a reasonable period of time. The above take-offs shall include,
but not be limited to, wallcoverings, floor coverings, lamps, architectural
light fixtures or any other Owner-supplied, Contractor-installed items. Fabric
quantities for pre-manufactured furniture items will not be supplied by the
Contractor, except where such fabric is a part of millwork being procured and
installed by the Contractor or a subcontractor to the Contractor.
5. DRAWINGS, SPECIFICATIONS AND MEASUREMENTS
5.1.1 The contractor shall follow figured dimensions given on the
construction drawings. The Contractor shall not scale drawings.
5.1.2 The Contractor shall verify dimensions shown on drawings before laying
out work, and be responsible for any corrections required.
5.1.3 In general, detail drawings take precedence over general drawings;
addenda or bulletins to Specifications take precedence over original
Specifications and earlier addenda.
5.1.4 Where specifications and drawings conflict or where detail references
have been omitted, Contractor shall be deemed to have estimated the most
expensive materials and construction involved unless he has asked for and
obtained a written decision from the Owner and the Architect on which method or
materials will be required before proceeding with the Work.
5.1.5 The Contractor shall use the Construction Documents furnished by the
Architect for construction purposes. Do not use the official set stamped by the
Building Department for routine construction purposes. The Contractor shall
maintain the stamped set for the primary use of the Building Inspector; and
maintain same at the project site in good condition for the duration of the
construction period.
5.2 Tolerances
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SPECIAL CONDITIONS
March 7, 1995
(ADF Project #92046)
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5.2.1 Certain tolerances are listed in the various Specification sections
and on the Construction Drawings. These tolerances are the maximum variation
allowed on the Project.
5.2.2 Each of the Contractors shall review the tolerance limits established
for their work as they relate to the other work on the Project. Should the
tolerance limits established for their work be in conflict with those limits
established for other adjoining work, the Architect shall be notified before
proceeding. It is the intention of the Specifications that, assuming work in
place is within the tolerance limits established, the subsequent work shall be
adjusted as required.
5.2.3 All materials such as granite and marble, acoustic tile, ceramic tile,
vinyl tile and so forth, are to meet flush with adjacent pieces of the same
material, unless otherwise shown on the drawings or required by the
specifications.
6. GUARANTEES
6.1 All Guarantees shall commence from the date of Notice of Substantial
Completion as defined in the Contract Documents.
6.2 Except as may be specified under other sections in the Specifications,
the Contractor shall guarantee all equipment furnished under the specifications
for a period of one (1) year from the date of acceptance or pursuant to the
manufacturer's guarantees, whichever is longer, against defective workmanship,
material and improper installation. Upon notification of failure, the
Contractor shall immediately correct deficiency at no cost to the Owner.
6.3 The Contractor shall furnish to the Owner printed manufacturer's
warranties complete with expiration dates of such warranties within thirty (30)
days of Notice of Substantial Completion.
7. TRADE NAMES
7.1 No trade name or other identification shall appear on any item where
it will be seen by the public except as specifically approved by the Owner in
advance.
8. CUTTING AND PATCHING
8.1 The Contractor shall cut walls and floors carefully, and neatly repair
them in an acceptable manner. Contractor shall consult the Architect in cases
where cutting into a structural portion of the building is required so that
satisfactory reinforcement may be provided.
8.2 Glass: The Contractor shall be responsible for replacing broken or
damaged glass permanently installed in the building until acceptance by Owner.
Where the breakage or damage is known to have been caused by a party not under
the jurisdiction of the Contractor, the breakage or damage shall be made good
and paid for by the party causing the damage.
8.3 Access Doors and Frames: Access doors and frames shall be flush with
the material in which it occurs, unless otherwise specified. Access doors and
frames shall be provided upon prior written approval of the Architect. Each
trade providing access doors and frames shall verify the need for fire-rated
doors on the Construction Drawings. Access doors in walls, partitions or
ceilings shall bear UL fire-rated labels of same fire rating. If access doors
and frames are required to be exposed to view, they shall be chrome, brass,
stainless steel,
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SPECIAL CONDITIONS
March 7, 1995
(ADF Project #92046)
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or other finish to match other finishes in the spaces in which they are to be
installed, unless otherwise specified. Obtain Architect's approval for location
of each access door prior to placement.
8.4 Acoustical Requirements: Certain partition, floor and ceiling
assemblies are required to have sound absorption and sound transmission loss
characteristics as required in the Specification sections or as indicated on the
Construction Drawings. Each Contractor shall coordinate his work in
constructing these assemblies and that of other contractors whose work adjoins,
connects to, or penetrates these assemblies to assure that such work does not
reduce acoustical characteristics of the assemblies.
9. STORAGE OF MATERIALS
9.1 The Contractor shall provide off-site storage facilities as required.
Such off-site storage shall be locked and secured, and shall provide appropriate
weather protection and security for the materials placed there.
9.2 Materials stored in off-site locations shall be segregated from all
other materials stored there and shall be identified as being for this Project.
9.3 Storage of materials, tools, equipment and so forth shall be within
the Project work area or another location designated and approved by the Owner's
Representative.
9.4 The Contractor shall provide adequate and appropriate insurance for
storage of such materials only when located off-site including, but not limited
to, the replacement value of same.
10. OWNER FURNISHED MATERIALS
10.1 All Owner-furnished Contractor-installed materials shall be obtained
by the Contractor at Owner's Las Vegas Warehouse. The Owner shall advise the
Contractor of the location of such Warehouse. All pick-ups shall be scheduled
with Owner's Representative and Warehouse Manager at least two (2) days prior to
the actual receipt.
10.2 The Contractor shall register his drivers with the Owner's warehouse
personnel. Drivers shall not be changed without notification to the Owner's
Representative and Warehouse Manager.
10.3 Owner shall reserve the right to have certain Owner furnished
materials shipped directly to the Project site to facilitate ease of
installation, provided that such delivery shall not impede the overall progress
of the Work.
10.4 The Contractor shall provide the Owner with access and use of all
means of vertical transportation, including exterior hoists, to facilitate the
timely and efficient installation of Owner-furnished/Owner-installed materials.
11. MEETINGS
11.1 Construction meetings shall be held at such times and places as the
Owner, Architect or the Contractor may designate.
11.1.1 The Contractor shall be responsible for the documentation of the
Meeting Minutes according to the specific format supplied by the Architect,
including:
(1) Meeting notes.
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(ADF Project #92046)
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(2) Contractor and Subcontractor progress reports.
(3) The Contractor shall immediately distribute to the Owner and
the Architect such Meeting Minutes.
11.1.2 Owner shall have the right to attend all meetings between the
Contractor, his Subcontractors, the Architect or his consultants concerning this
Project.
12. PUNCH LIST
12.1 Access to the Project for the purpose of completing Punch List/Close-
Out items after the Owner occupies the Project shall be approved by the Owner's
Representative and shall be performed at a time that is least inconvenient to
the Owner. All Punch List items are to be corrected when the Project area is
not open to the public and when the corrective work does not interrupt the
Owner's operations, except as may specifically be approved by the Owner's
Representative.
13. BENEFICIAL USE AND OCCUPANCY BY THE OWNER
13.1 The Owner reserves the right, at his option and convenience, to occupy
or otherwise make use of all or any part of the Project premises at any time
prior to completion. Beneficial Use and Occupancy prior to the Date of
Substantial Completion shall be subject to the following conditions:
(1) The Owner will use his best efforts to prevent his occupancy from
interfering with the prosecution of the Contractor's remaining
Work.
(2) The Contractor will not be required to repair damages caused by
the Owner's occupancy or use at Contractor's expense.
(3) Such occupancy or use shall not constitute acceptance by the
Owner or Architect of the completed Work or any responsibility
for correcting defective Work or materials found before
completion or acceptance of the Work or thereafter as specified
in the Contract Documents. Such occupancy or use shall not be
deemed to be the equivalent of completion.
13.2 Coordinate with the Owner to permit partial occupancy of any area to
expedite installation of furniture, fixtures, floor coverings, equipment, or
training of Owner's affiliate's personnel so as to insure a smooth and timely
opening to the General Public.
-END-
Page 6
<PAGE>
EXHIBIT 11
MIRAGE RESORTS, INCORPORATED AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------------------------
1995 1994 1993 (A)
-------------- -------------- --------------
<S> <C> <C> <C>
Weighted-average shares outstanding............................. 91,248,227 90,873,657 77,790,406
Common stock equivalents (b).................................... 4,917,480 3,821,379 5,619,005
-------------- -------------- --------------
Weighted-average shares outstanding and common stock equivalents
used in the computation of primary earnings per share.......... 96,165,707 94,695,036 83,409,411
Additional shares for fully diluted calculation (c)............. 632,630 98,686 1,544,679
-------------- -------------- --------------
Total shares outstanding assuming full dilution................. 96,798,337 94,793,722 84,954,090
-------------- -------------- --------------
-------------- -------------- --------------
Net income...................................................... $ 163,163,000 $ 114,324,000 $ 29,232,000
-------------- -------------- --------------
-------------- -------------- --------------
Primary earnings per share...................................... $ 1.70 $ 1.21 $ 0.35
-------------- -------------- --------------
-------------- -------------- --------------
Fully diluted earnings per share................................ $ 1.69 $ 1.21 $ 0.34
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
- ---------------
(a) The 1993 share and option data has been adjusted retroactively to give
effect to the five-for-two split of the Registrant's common stock effective
October 15, 1993.
(b) Shares issuable upon the assumed exercise of dilutive stock options, less
the number of treasury shares assumed to be purchased, at average market
price, from the proceeds of such exercises.
(c) Increase in net shares assumed to be issued upon the exercise of dilutive
stock options, based on the use of period-end market price in the
calculation of treasury shares assumed to be purchased.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF MIRAGE RESORTS, INCORPORATED
- --------------------------------------------------------------------------------
AC HOLDING CORP.
a Nevada corporation
AC HOLDING CORP. II
a Nevada corporation
ATLANDIA DESIGN AND FURNISHINGS, INC.
a New Jersey corporation
THE MIRAGE CASINO-HOTEL
a Nevada corporation
dba The Mirage
GNS FINANCE CORP.
a Nevada corporation
CAL INVESTMENTS, INC.
a Nevada corporation
GNLV, CORP.
a Nevada corporation
dba Golden Nugget
GNLV FINANCE CORP.
a Nevada corporation
THE MIRAGE-GOLDEN NUGGET LATIN AMERICA, LTD.
a Nevada corporation
GNRM, CORP.
a Nevada corporation
GOLDEN NUGGET (ASIA) LTD.
a Nevada corporation
THE MIRAGE-GOLDEN NUGGET HONG KONG, LTD.
a Nevada corporation
GOLDEN NUGGET AVIATION CORP.
a Nevada corporation
GOLDEN NUGGET MANUFACTURING CORP.*
a Nevada corporation
GNL, CORP.
a Nevada corporation
dba Golden Nugget-Laughlin
MIRAGE HAWAII MARKETING CORP.
a Nevada corporation
MIRAGE INDONESIA MARKETING CORP., LTD.
a Nevada corporation
TREASURE ISLAND CORP.**
a Nevada corporation
dba Treasure Island at The Mirage
SHADOW CREEK
a Nevada corporation
SNAK, CORP.
a Nevada corporation
GOLDEN NUGGET MARKETING CORP.
a Mississippi corporation
GOLDEN NUGGET MARKETING CORP.
a Georgia corporation
MIRAGE NORTHWEST, INC.
a Nevada corporation
GNLV MARKETING CORP. -- CANADA
a Nevada corporation
M.I.R. TRAVEL
a Nevada corporation
THE MIRAGE-GOLDEN NUGGET SINGAPORE, LTD.
a Nevada corporation
GOLDEN NUGGET MARKETING CORP.
a California corporation
GOLDEN NUGGET MARKETING CORP.
a Louisiana corporation
GN MARKETING CORP.
a New York corporation
GOLDEN NUGGET MARKETING CORP.
a Pennsylvania corporation
GOLDEN NUGGET MARKETING CORP.
a Texas corporation
GOLDEN NUGGET MARKETING CORP. -- ILLINOIS
a Nevada corporation
TYOH ADVERTISING, INC.
a Nevada corporation
MH, INC.**
a Nevada corporation
dba Shadow Creek
SEE SAW SIGN CORP. ***
a Nevada corporation
MIRAGE SPORTS
a Nevada corporation
THE MIRAGE-GOLDEN NUGGET TAIWAN, LTD.
a Nevada corporation
GOLDEN NUGGET FINANCE CORP.
a Nevada corporation
MIRAGE MIDWEST, INC.
a Nevada corporation
TREASURE ISLAND FINANCE CORP.****
a Nevada corporation
MIRAGE RIVERBOATS OF ILLINOIS, INC.
an Illinois corporation
MCH HOLDING CORP. **
a Nevada corporation
GNLV HOLDING CORP.*
a Nevada corporation
BELLAGIO
a Nevada corporation
MIRAGE LAUNDRY SERVICES CORP.
a Nevada corporation
MIRAGE CONNECTICUT, INC.
a Connecticut corporation
MIRAGE ARGENTINA, INC.
a Nevada corporation
TREASURE ISLAND PRODUCTIONS, INC.*****
a Nevada corporation
GOLDEN NUGGET EXPERIENCE CORP.*
a Nevada corporation
EGARIM, INC.
an Alabama corporation
MIRAGE RIVERBOATS OF INDIANA, INC.
an Indiana corporation
MIRAGE BUENOS AIRES, INC.
a Nevada corporation
GOLDEN NUGGET LAWRENCEBURG, INC.
an Indiana corporation
THREE RIVERS PLANNING CORP.
a Pennsylvania corporation
SHCR CORP.
a Texas corporation
MRGS CORP.******
a Nevada corporation
MIRAGE BRIDGEPORT, INC.
a Connecticut corporation
MIRAGE FLORIDA, INC.
a Florida corporation
GOLDEN NUGGET-LOUISIANA, INC.
a Louisiana corporation
LV CONCRETE CORP.
a Nevada corporation
BUNGALOW, INC.
a Mississippi corporation
GOLDEN NUGGET BILOXI, INC.*
a Mississippi corporation
MIRAGE RESORTS OF MARYLAND, INC.
a Maryland corporation
MAC, CORP.
a New Jersey corporation
MIRAGE SOUTH CHINA, INC.
a Nevada corporation
- ----------------------
* 100% of the voting securities are owned by GNLV, CORP.
** 100% of the voting securities are owned by THE MIRAGE CASINO-HOTEL.
*** 100% of the voting securities are owned by TYOH Advertising, Inc.
**** 100% of the voting securities are owned by GNS FINANCE CORP.
***** 100% of the voting securities are owned by Treasure Island Corp.
****** 100% of the voting securities are owned by Bellagio.
<PAGE>
EXHIBIT 23(A)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated February 9, 1996, included in this Form 10-K, into
Mirage Resorts, Incorporated's previously filed 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) and on Form S-3 (File No. 33-65317).
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
March 29, 1996
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Mirage Resorts, Incorporated 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) and on Form S-3 (File No. 33-65317) of our report dated February 11,
1994 on our audit of the consolidated financial statements and financial
statement schedule of Mirage Resorts, Incorporated for the year ended December
31, 1993, which report is included in this Form 10-K.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
March 29, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995 AND THE RELATED
CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995 AND NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 48,026
<SECURITIES> 0
<RECEIVABLES> 124,020
<ALLOWANCES> 47,161
<INVENTORY> 25,601
<CURRENT-ASSETS> 214,816
<PP&E> 1,913,318
<DEPRECIATION> 473,801
<TOTAL-ASSETS> 1,791,713
<CURRENT-LIABILITIES> 174,351
<BONDS> 248,548
0
0
<COMMON> 940
<OTHER-SE> 1,208,403
<TOTAL-LIABILITY-AND-EQUITY> 1,791,713
<SALES> 208,466
<TOTAL-REVENUES> 1,330,744
<CGS> 177,596
<TOTAL-COSTS> 744,928
<OTHER-EXPENSES> 86,223
<LOSS-PROVISION> 23,024
<INTEREST-EXPENSE> 23,183
<INCOME-PRETAX> 265,261
<INCOME-TAX> 95,313
<INCOME-CONTINUING> 169,948
<DISCONTINUED> 0
<EXTRAORDINARY> (6,785)
<CHANGES> 0
<NET-INCOME> 163,163
<EPS-PRIMARY> 1.70
<EPS-DILUTED> 0
</TABLE>
