TABLE OF CONTENTS

ARTICLE I. DEFINITIONS				1
1.1		Specific Definitions		1
ARTICLE II. CONSTRUCTION MANAGEMENT SERVICES				4
2.1		Appointment as Construction Manager		4
2.2		Work to be Performed		4
2.3		Use of Contractors		4
ARTICLE III. GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER				5
3.1		Standard of Performance		5
3.2		Construction Manager’s Employees, Consultants and Contractors		6
3.3		Payments Pursuant to Agreements		6
3.4		Ownership and Custody of and Access to Data		6
3.5		Inspection and Rejection by Owner		6
3.6		Disclosure to Owner		7
3.7		Work Budget		7
3.8		Offsite Disposal		7
3.9		Environmental Report		7
ARTICLE IV. COMMENCEMENT OF WORK				7
ARTICLE V. ACCOUNTING AND COMPENSATION				7
5.1		Accounting Records		7
5.2		Contract Price		8
5.3		Request for Payment		8
5.4		Payments		9
5.5		Retainage		10
5.6		Taxes		10
ARTICLE VI. CHANGES				10
6.1		General		10
6.2		Minor Modifications		10
6.3		Owner Requested Change Order		11
6.4		Change Orders		11
6.5		Construction Manager Requested Change Order		11
6.6		Owner’s Directive		12
6.7		General Requirements and Limitations		12
ARTICLE VII. COMPLETION				13
7.1		Final Request for Payment		13
7.2		Completion		13
ARTICLE VIII. REPRESENTATIONS AND WARRANTIES				14
8.1		General Representations and Warranties		14
8.2		Construction Manager Representations and Warranties		14
8.3		Warranties Related to the Work		15
8.4		Contractor Warranties		15
8.5		Warranty Period		15

 

ii

 

 

ARTICLE IX. TERMINATION				16
9.1		Term		16
9.2		Termination		16
9.3		Suspension by Owner		16
9.4		Effects of Termination		16
ARTICLE X. FORCE MAJEURE				17
10.1		Suspension of Obligations		17
10.2		Notice		17
10.3		Resolution		17
ARTICLE XI. Indemnity				17
11.1		Damages		17
11.2		Indemnity		18
11.3		Claims		20
11.4		Insurance		20
ARTICLE XII. MISCELLANEOUS				21
12.1		Entire Agreement		21
12.2		Amendment and Modification		22
12.3		Counterparts		22
12.4		Parties Bound by Agreement		22
12.5		Terminology		22
12.6		Laws and Regulations		22
12.7		Governing Law		22
12.8		Exhibits and Schedules		22
12.9		Notices		22
12.10		Further Assurances		23
12.11		Survival of Representations, Warranties, Covenants and Agreements		23
12.12		Severability		23
12.13		Assignmen.		24
12.14		Waivers		24
12.15		Cumulative Rights, Obligations and Remedies		24
12.16		No Third Party Beneficiaries		24
12.17		Confidentiality		24

 

iii

 

SCHEDULES AND EXHIBITS

Schedule 1 :            Scope of Work

Schedule 2 :            Project Schedule

Schedule 3 :            Project Budget

Schedule 4 :            Contractor Insurance Requirements

Exhibit A :               Form of Construction Manager Partial Lien Waiver

Exhibit B :               Form of Contractor Partial Lien Waiver

Exhibit C :               Form of Change Order

Exhibit D :               Form of Construction Manager Final Lien Waiver

Exhibit E :                Form of Contractor Final Lien Waiver

iv

 

CONSTRUCTION MANAGEMENT AGREEMENT

This Construction Management Agreement is made as of May 9, 2006 (the “Effective Date” ), by and between Seneca Construction Management Corporation (“ Construction Manager ”) and Seneca Erie Gaming Corporation (“ Owner ”).

RECITALS

A.            Construction Manager has expertise and experience in providing construction management services.

B.            Owner desires to retain Construction Manager to provide management services and act as the construction manager in connection with the Project (as defined in Section 1.1 ), and Construction Manager desires to perform such services in accordance with the terms of this Agreement.

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereby stipulate and agree as follows:

ARTICLE I.
DEFINITIONS

1.1           Specific Definitions .   The following capitalized terms shall have the meanings ascribed to them in this Section 1.1 .

“ Affiliate ” means, with respect to any relevant Person, any other Person that directly or indirectly controls, is controlled by or is under common control with, the relevant Person. For purposes of this definition, the term “control” (including its derivatives and similar terms) means owning, directly or indirectly, more than 25% of the voting interest in the relevant Person.

“ Agreement ” means this Construction Management Agreement (including any exhibits, supplements and other attachments), as amended, restated, supplemented or otherwise modified from time to time.

“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the government of the Nation, the United States or the State of New York shall not be regarded as a Business Day.

“ Change ” is defined in Section 6.3 .

“ Change of Law ” means the enactment, adoption, promulgation, issuance, modification, revision, change, repeal or cancellation after the date of this Agreement of or to any Law, that prevents Construction Manager from performing its obligations under this Agreement.

“ Change Order ” is defined in Section 6.4 .

“ Completion ” is defined in Section 7.2 .

1

 

“ Completion Certificate ” shall have the meaning ascribed to it in Section 7.2 .

“ Completion Date ” is defined in Section 7.2 .

“ Construction Manager ” is defined in the Preamble .

“ Construction Manager Estimate ” is defined in Section 6.2 .

“ Contract Price ” is defined in Section 5.2 .

“ Contractor ” means any Person performing all or any portion of the Work, or performing any other services, or providing goods, equipment, materials, supplies, or labor services related to the Work under contract with Construction Manager, including contractors, subcontractors (and every tier of subcontractors), vendors, suppliers, agents and representatives of Construction Manager.

“ Costs ” means all verifiable, direct, out-of-pocket costs incurred by Construction Manager in performing the Work, but shall not include any costs or expenses (i) for general or overhead expenses of Construction Manager or (ii) that would not have been incurred absent the bad faith, gross negligence, or willful misconduct of Construction Manager or any Contactor, or any of their respective employees, agents, or representatives.

“ Damages ” is defined in Section 11.1(a) .

“ Data ” is defined in Section 3.4 .

“ Day ” means a period of twenty-four (24) consecutive hours beginning at 7:00 a.m., Eastern Time, or at such other hour as Construction Manager and Owner mutually agree.

“ Defect ” means any Work performed or provided by, or within the responsibility of Construction Manager or any Contractor which (i) fails to conform to the Scope of Work or is of improper or inferior workmanship; (ii) could reasonably be expected to adversely effect the completion of the Project; (iii) results in damages to the Property; or (iv) otherwise fails to meet the warranties set forth in Section 8.3 .

“ Effective Date ” is defined in the Preamble .

“ Environmental Reports ” is defined in Section 3.9 .

“ Estimated Contract Price ” is defined in Section 3.7 .

“ Event of Default ” or “ Default ” means the occurrence of any of the following events, circumstances or conditions: (i) the failure by either Party to perform or comply with any material agreement, covenant, obligation or other provision contained in this Agreement when such failure has not been remedied (after delivery of written notice thereof) within thirty (30) Days following delivery of such notice; (ii) either Party (A) files a petition for relief under any present or future law regarding bankruptcy, reorganization or other relief to debtors, or, makes a general assignment for the benefit of its creditors, or applies for a receiver, trustee, custodian or

2

 

liquidator of its property, or files a petition, or commences any other procedure to liquidate or dissolve its existence, or (B) fails to effect a full dismissal of any involuntary petition under any present or future law regarding bankruptcy, reorganization or other relief to debtors, that is filed against such Party, within sixty (60) Days of such filing; or (iii) the inaccuracy or breach of any material representation or warranty contained in Article VIII .

“ Force Majeure ” is defined in Section 10.1 .

“ Governmental Authority ” means applicable tribal, national, state and local governments and all agencies, authorities, departments, instrumentalities, courts, corporations or the other subdivisions of each having or claiming a regulatory interest in or jurisdiction over the Project, the Work or the Parties

“ Hazardous Materials ” shall mean any hazardous materials, hazardous wastes, hazardous constituents, hazardous or toxic substances, petroleum products (including crude oil or any fraction thereof), defined or regulated as such under any applicable environmental Law.

“ Invoice ” is defined in Section 5.3(a) .

“ Laws ” means the laws, rules, regulations, decrees and orders of the United States of America, the Nation and all other governmental bodies having relevant jurisdiction, whether such now exist or hereafter come into effect.

“ Management Fee ” is defined in Section 5.2 .

“ Nation ” means the Seneca Nation of Indians, a federally recognized Indian Tribe.

“ Owner ” is defined in the Preamble .

“ Owner Directive ” is defined in Section 6.6 .

“ Owner Indemnified Party ” is defined in Section 11.2(a) .

“ Party ” and “ Parties ” means each of Owner and Construction Manager, individually or collectively, as the context may require.

“ Person ” means any individual or entity, including, without limitation, any corporation, limited liability company, joint venture, joint stock company, general or limited partnership, trust, agency, association, organization, government authority (including any agency or administrative group thereof) or other entity.

“ Progress Report ” is defined in Section 5.3(e) .

“ Project ” means the demolition of certain structures located on the Property, as set forth on the Scope of Work .

“ Project Schedule ” is set forth on Schedule 2 (as may be amended pursuant to the terms of this Agreement).

3

 

“ Property ” means the areas designated in the Scope of Work for performance of the Work

“ Repair ” is defined in Section 8.3(a) .

“ Request for Payment ” is defined in Section 5.3 .

“ Retainage ” is defined in Section 5.5 .

“ Scope of Work ” is set forth on Schedule 1 (as may be amended pursuant to the terms of this Agreement).

“ Stated Rate ” means an annual rate of interest (compounded monthly) equal to the lesser of (i) two percent (2%) and (ii) the maximum rate permitted under applicable law.

“ Substantial Completion ” is defined in Section 8.5 .

“ Term ” is defined in Section 9.1 .

“ Warranty Period ” is defined in Section 8.5 .

“ Work ” is defined in Section 2.2 .

ARTICLE II.
CONSTRUCTION MANAGEMENT SERVICES

2.1           Appointment as Construction Manager .   Subject to the terms and conditions of this Agreement, Owner hereby appoints Construction Manager to act hereunder as an independent contractor to manage the Project, and Construction Manager hereby accepts such appointment and agrees to act pursuant to the provisions of this Agreement. Construction Manager is an independent contractor. Neither Construction Manager nor any of its officers, directors, employees, agents or representatives shall be deemed to be the agents, representatives or employees of Owner. Nothing herein is intended to, or shall be deemed to, create a partnership, joint venture, agency or other relationship creating fiduciary or quasi fiduciary duties or similar duties and obligations or otherwise subject the Parties to joint and several or vicarious liability or to impose any duty, obligation or liability that would arise therefrom with respect to either or both of the Parties.

2.2           Work to be Performed .

Construction Manager’s obligation is to perform all work necessary to complete the Project in every detail according to the Scope of Work (the “ Work ” ), in accordance with the Project Schedule and the terms of this Agreement.

2.3           Use of Contractors .

(a)           For the purpose of providing the Work, Construction Manager may use independent contractors, who are not employees of either Owner or Construction Manager, to perform the Work in accordance with this Agreement. Construction Manager

4

 

shall not engage any Contractor to perform part of the Construction Work hereunder unless Construction Manager has a written agreement with that Contractor which meets the requirements set forth in Section 2.3(b) . If any proposed written agreement between Construction Manager and any Contractor fails to meet any of the requirements set forth in Section 2.3(b) , Construction Manager must submit the proposed agreement to Owner for review and approval. Construction Manager shall not have the right to waive any of the requirements of Section 2.3(b)  without the prior written consent of Owner.

(b)           Use of any Contractor by Construction Manager shall not relieve Construction Manager of any of its obligations under this Agreement and Construction Manager shall, at all times, be responsible for the performance and completion of the Work. All Work performed by a Contractor shall be pursuant to a written agreement between Contractor and Construction Manager which shall:

(i)            conform to and require Contractor to perform in accordance with the requirements, terms and conditions of this Agreement;

(ii)           be assignable to Owner upon Owner’s written request and at no cost to Owner;

(iii)          preserve and protect the rights of Owner under this Agreement and with respect to the Work to be performed;

(iv)          require that the Contractor provide and maintain the insurance specified in Schedule 4 ;

(v)           require that the Contractor provide the indemnification required by Section 11.2(b) ; and

(vi)          obligate Contractor to execute a waiver and release with respect to any lien rights for each payment received by such Contractor for the Work.

(c)           Prior to entering into any contract with any Contractor, Construction Manager shall have performed a reasonable level of due diligence to determine whether, for the portion of the Work the Contractor is to perform, such Contractor is (i) fully experienced, properly qualified, properly licensed, properly equipped and properly organized; (ii) financially solvent at the time such Contractor enters into a contract with Construction Manager; (iii) authorized to do business in the jurisdictions in which such Contractor will perform; and (iv) familiar with the portion of the Work to be performed.

(d)           Construction Manager shall provide to Owner a copy of each contract entered into with a Contractor within two (2) Business Days of execution.

ARTICLE III.
GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER

3.1           Standard of Performance .   Construction Manager shall perform the Work and carry out its other obligations hereunder, and shall require all of its employees, Contractors, agents,

5

 

materialmen and vendors furnishing labor, materials or services in any way relating to this Agreement or affecting the Project to carry out their respective responsibilities in accordance with (a) the terms of this Agreement, (b) safe, sound, efficient, workmanlike, economically prudent, and environmentally sound practices, and (c) all Laws, permits and licenses applicable to the Project and the completion thereof. Construction Manager agrees to, and shall require its Contractors to, (i) use its best professional judgment in the performance of the Work, and (ii) use the degree of care and skill ordinarily exercised, under similar circumstances, by reputable contractors performing comparable services.

3.2           Construction Manager’s Employees, Consultants and Contractors .   Construction Manager shall pay all expenses in connection with employing, retaining and supervising the Contractors and any other Persons necessary or required for the performance of the Work, including compensation, salaries, wages, overhead and administrative expenses incurred by Construction Manager, and as applicable, FICA and Medicare taxes, workers’ compensation insurance, retirement and insurance benefits and other such expenses. All services performed or materials supplied by any Affiliate of Construction Manager shall be performed or supplied at terms and rates that are reasonably competitive with the terms and rates known to Construction Manager to be prevailing in the industry at the time for the area of operations.

3.3           Payments Pursuant to Agreements .   Construction Manager shall promptly pay, when due, all undisputed amounts due and payable to (a) all Contractors in accordance with the terms of applicable Contractor contract, and (b) any other third party providing goods or services in connection with the Work.

3.4           Ownership and Custody of and Access to Data .   Owner shall be the sole and exclusive owner of all reports, filings, agreements, instruments and other documents (collectively, “ Data ”), whether prepared by Construction Manager, Owner, any Contractor or any other Person, related to the Work and any such Data shall be made available to Owner at Construction Manager’s office during reasonable business hours on provision of reasonable notice. Within a reasonable period of time after delivery of the  Completion Certificate, or immediately upon the termination of this Agreement, Construction Manager shall deliver originals of all Data to Owner.

3.5           Inspection and Rejection by Owner .   Owner, and its designated representatives, shall have the right to inspect all Work including, without limitation, testing, inspection, repairs, construction, installation, removal of equipment, meetings or other communications with any Person, or similar activities undertaken by Construction Manager in connection with this Agreement. Owner shall have the right to reject, or to direct Construction Manager to reject, at any time, any such portion of the Work which in Owner’s reasonable judgment does not conform to this Agreement, including the Work Scope, or which contains Defects. Upon such rejection, Construction Manager shall promptly remedy any condition identified by Owner as giving rise to such rejection. Owner’s exercise of any right of inspection, observation, rejection or approval shall not limit or reduce Construction Manager’s obligations under this Agreement or constitute an acceptance by Owner.

6

 

3.6           Disclosure to Owner .

Construction Manager shall promptly notify Owner of any (i) Defect, or (ii) other event, circumstance or condition known to Construction Manager constituting or which reasonably could be expected to constitute a material breach of this Agreement, or a violation of any Law, of which Construction Manager has knowledge. Construction Manager shall promptly notify Owner of any significant circumstance, event, occurrence or condition (whether then existing or, in Construction Manager’s opinion, expected to exist in the near future), including issues related to the acquisition (including eminent domain proceedings) of rights of way and similar matters, of which Construction Manager has knowledge and which could reasonably be expected to have a material adverse effect on the completion of the Project pursuant to this Agreement.

3.7           Work Budget .

Construction Manager has submitted to Owner for Owner’s approval a budget for the Work, a copy of which is attached hereto as Schedule 3 .  Such budget provides for an estimated Contract Price of $2,530,345.47 (the “ Estimated Contract Price ”).

3.8           Offsite Disposal .   Construction Manager shall be solely responsible for the selection of the offsite disposal facilities to which it transfers all materials to be removed from the Property.

3.9           Environmental Reports .   Construction Manager shall require its Contractors to prepare or obtain all environmental assessments, reports, audits, and other documents that relate to the environmental condition of the Property required under environmental Law or pursuant to ASTM standard practices (or other standard practices governing the performance of comparable services) that may be necessary to complete the Project (the “ Environmental Reports ”). Construction Manager shall provide Owner with copies of all such Environmental Reports, as well as all correspondence with any Governmental Authority related to the environmental conditions on the Property or the compliance of the activities conducted thereon with environmental Law. Construction Manager shall further require its Contractors to provide copies of the results of any environmental investigations, monitoring, or sampling conducted on the Property, including without limitation, certificates of analysis, chain of custody reports, certificates of inspection, laboratory analysis, and sampling data.

ARTICLE IV.
COMMENCEMENT OF WORK

Promptly after receipt of Owner’s approval of the budget for the Work (or on such other date as agreed upon by the Parties), Construction Manager shall commence and continuously and diligently pursue and perform the Work in compliance with this Agreement and in accordance with the Project Schedule.

ARTICLE V.
ACCOUNTING AND COMPENSATION

5.1           Accounting Records .   Construction Manager shall keep complete and accurate records of all costs, expenses and expenditures in connection with this Agreement, to the reasonable satisfaction of Owner. To the extent necessary or appropriate to verify the amounts billed to Owner pursuant to this Agreement, Owner or its designated representatives, after five

7

 

(5) Days’ prior written notice to Construction Manager, shall have the right during normal business hours to audit or examine all books and records maintained by Construction Manager relating to the Project, including all documents and records relating to Invoices submitted by Construction Manager pursuant to Section 5.3 . Such right shall include the right to meet with Construction Manager’s internal auditors to discuss matters relevant to the audit or examination. Construction Manager agrees to implement any reasonable practices or procedures recommended by Owner as a result of any such audit for purposes of improving support for the payment of Construction Manager’s billings to Owner. Owner shall have three (3) years after the termination of this Agreement to initiate, at Owner’s expense, an audit of Construction Manager’s records for any Work performed during the term of this Agreement. Owner shall make every reasonable effort to conduct audits in a manner that will result in a minimum of inconvenience to Construction Manager.

5.2           Contract Price .

For the performance of the Work during the term of this Agreement, Owner agrees to pay Construction Manager, an amount (the “ Contract Price ”) equal to the sum of (a) the Costs plus (b) an amount equal to four percent (4%) of the Costs (the “ Management Fee ”). In no event will the Contract Price exceed the Estimated Contract Price, and Owner shall have no obligation to reimburse Construction Manager for any Costs incurred in connection with the Work in excess of the Estimated Contract Price, except as otherwise agreed in connection with any Change pursuant to Article VI . The Contract Price will be Construction Manager’s complete compensation for the Work whether the Work is performed by Construction Manager’s personnel or by Contractors.

5.3           Request for Payment .

No later than the tenth (10 th ) Day of each calendar month, Construction Manager shall submit to Owner a Request for Payment (a “ Request for Payment ”) which shall include:

(a)           an invoice for the Costs incurred for the Work performed during the previous calendar month (or, if applicable, prior months in case of third party invoices received during the previous month), if any, prepared in a form reasonably acceptable to Owner and supported by records evidencing the actual Costs incurred, plus the Management Fee associated with such Costs (an “ Invoice ”);

(b)           a certification that (i) such Request for Payment represents the amount to which Construction Manager is entitled to pursuant to the terms of this Agreement; and (ii) Construction Manager has paid all amounts that are due and owing to the Contractors (other than amounts for Work included on any unpaid Invoice, which will be paid by Construction Manager upon receipt of Owner’s payment of such Invoice), subject only to such disputed amounts as are specified by Construction Manager in the Progress Report;

(c)           a partial lien waiver in the form of Exhibit A from Construction Manager ;

(d)           a partial lien waiver in the form of Exhibit B from each Contractor; and

8

 

(e)           a progress report (a “ Progress Report ”) which shall be in such form as may reasonably be requested by Owner, and which shall include, without limitation:

(i)            a description of the Work performed during the prior month;

(ii)           a description of the Work to be performed during the next month and an estimate of the Costs to be incurred in connection with such Work;

(iii)          a list of all Change Orders approved as of the end of the prior month;

(iv)          a discussion of any problems encountered during the prior month and remedies effected or planned; and

(v)           a description of any payment or other disputes with any Contractors or Governmental Authorities.

If, in connection with any Request for Payment, Construction Manager fails to provide Owner with Invoices or any supporting materials required under this Section 5.3 in a form satisfying the criteria mutually agreed upon by Owner and Construction Manager, and (i) such failure is not cured by Construction Manager within ten (10) Days after Construction Manager’s receipt of written notice from Owner of such failure, and (ii) Owner is thereafter required to use its own accounting personnel, professionals and resources to correct any deficiencies in any Invoice or related materials provided by Construction Manager for purposes of processing any Invoice, then the Management Fee payable by Owner to Construction Manager with respect to any Costs included on such Invoice for which adequate supporting documentation was not provided shall be reduced from four percent (4%) to two percent (2%) of such Costs.

5.4           Payments .   Owner shall pay to Construction Manager the amount of each Invoice (less the Retainage described in Section 5.5 ) within thirty (30) Days of receipt of each such Invoice. If Owner fails to make timely payments of any Invoice amount, or portion thereof, then Construction Manager shall be entitled to collect such unpaid amount, together with interest at the Stated Rate on any unpaid amount. If Owner’s failure to pay is a result of a good faith dispute of any Invoice amount and Owner has given notice to Construction Manager that it disputes such amount, and has paid any undisputed amount, within thirty (30) Days of receipt of such Invoice, then interest will be payable only on the unpaid portion that is found or agreed by the Parties to be ultimately due. Interest shall accrue on unpaid amounts for the period beginning on the payment due date of the applicable Invoice and ending upon payment of such amount (together with the interest thereon); provided, however, that interest shall not accrue with respect to any Invoice if Construction Manager has failed to supply, in accordance with Section 5.3 , the required supporting documentation for such Invoice, unless such Invoice is not paid within  thirty (30) Days of Owner’s receipt of all such supporting documentation. Payment and failure to object to all or any portion of an Invoice amount shall not be construed as an acceptance of defective Work or a waiver of any right under this Agreement by Owner.

9

 

5.5           Retainage .

To secure Construction Manager’s performance of its obligations hereunder, Owner will withhold an aggregate amount of up to ten percent (10%) of the Contract Price (the “ Retainage ”), by withholding from each payment paid to Construction Manager by Owner (other than the final payment and any payments due to Construction Manager that are designated as payments for general conditions, for which there shall be no Retainage) an amount equal to ten percent (10%) of the amount invoiced by Construction Manager. Each Invoice submitted by Construction Manager