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CONSTRUCTION MANAGEMENT AGREEMENT

Construction Agreement

CONSTRUCTION MANAGEMENT AGREEMENT | Document Parties: SENECA TERRITORY GAMING CORP | SENECA NIAGARA FALLS GAMING CORPORATION  | SENECA CONSTRUCTION MANAGEMENT CORPORATION You are currently viewing:
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SENECA TERRITORY GAMING CORP | SENECA NIAGARA FALLS GAMING CORPORATION | SENECA CONSTRUCTION MANAGEMENT CORPORATION

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Title: CONSTRUCTION MANAGEMENT AGREEMENT
Date: 1/17/2006
Law Firm: Harter, Secrest & Emery LLP    

CONSTRUCTION MANAGEMENT AGREEMENT, Parties: seneca territory gaming corp , seneca niagara falls gaming corporation  , seneca construction management corporation
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Exhibit 10.21

         CONSTRUCTION MANAGEMENT AGREEMENT


BETWEEN

         SENECA NIAGARA FALLS GAMING CORPORATION

as Owner


AND

         SENECA CONSTRUCTION MANAGEMENT CORPORATION

as Construction Manager

ENTERED INTO JANUARY 12, 2006
AND EFFECTIVE AS OF SEPTEMBER 1, 2005

[CONFIDENTIAL]



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

 

Addition and Removal of Projects from the Scope of Work

 

5

 

 

  2.4

 

Use of Contractors

 

5


ARTICLE III. GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER


 


6

 

 

  3.1

 

Standard of Performance

 

6

 

 

  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

 

6

 

 

  3.7

 

Owner's Right to Perform Work

 

7

 

 

  3.8

 

Care, Custody and Control of Materials in Transit; Risk of Loss

 

7


ARTICLE IV. COMMENCEMENT OF WORK


 


7


ARTICLE V. ACCOUNTING AND COMPENSATION


 


7

 

 

  5.1

 

Accounting Records

 

7

 

 

  5.2

 

Contract Price

 

7

 

 

  5.3

 

Request for Payment

 

8

 

 

  5.4

 

Payments

 

8

 

 

  5.5

 

Retainage

 

9

 

 

  5.6

 

Progress Reports

 

9

 

 

  5.7

 

Taxes

 

9


ARTICLE VI. GUARANTEES AND DELAY LIQUIDATED DAMAGES


 


10

 

 

  6.1

 

Guarantee

 

10

 

 

  6.2

 

Liquidated Damages for Delay

 

10


ARTICLE VII. PERFORMANCE SECURITY


 


10


ARTICLE VIII. CHANGES


 


10

 

 

  8.1

 

General

 

10

 

 

  8.2

 

Minor Modifications

 

10

 

 

  8.3

 

Owner Directed Change Order

 

10

 

 

  8.4

 

Change Orders

 

11

 

 

  8.5

 

Construction Manager Requested Change Order

 

11

 

 

  8.6

 

Owner's Directive

 

11

 

 

  8.7

 

General Requirements and Limitations

 

12


ARTICLE IX. INDIVIDUAL PROJECT COMPLETION


 


12

 

 

  9.1

 

Final Request for Payment

 

12

 

 

  9.2

 

Project Completion

 

13


ARTICLE X. FINAL COMPLETION OF PROJECTS


 


13

 

 

10.1

 

Final Request for Payment

 

13

 

 

10.2

 

Final Completion

 

14

 

 

 

 

 

 

 

 

i



ARTICLE XI. REPRESENTATIONS AND WARRANTIES


 


15

 

 

11.1

 

General Representations and Warranties

 

15

 

 

11.2

 

Construction Manager Representations and Warranties

 

15

 

 

11.3

 

Warranties Related to the Work

 

15

 

 

11.4

 

Contractor Warranties

 

16

 

 

11.5

 

Warranty Period

 

16


ARTICLE XII. TERMINATION


 


16

 

 

12.1

 

Term

 

16

 

 

12.2

 

Termination

 

16

 

 

12.3

 

Effects of Termination

 

16


ARTICLE XIII. FORCE MAJEURE


 


17

 

 

13.1

 

Suspension of Obligations

 

17

 

 

13.2

 

Notice

 

17

 

 

13.3

 

Resolution

 

17


ARTICLE XIV. INDEMNITY


 


17

 

 

14.1

 

Damages

 

17

 

 

14.2

 

Indemnity

 

18

 

 

14.3

 

Claims

 

19

 

 

14.4

 

Insurance

 

20


ARTICLE XV. MISCELLANEOUS


 


20

 

 

15.1

 

Entire Agreement

 

20

 

 

15.2

 

Amendment and Modification

 

20

 

 

15.3

 

Counterparts

 

20

 

 

15.4

 

Parties Bound by Agreement

 

21

 

 

15.5

 

Terminology

 

21

 

 

15.6

 

Laws and Regulations

 

21

 

 

15.7

 

Time of the Essence

 

21

 

 

15.8

 

Governing Law

 

21

 

 

15.9

 

Exhibits and Schedules

 

21

 

 

15.10

 

Notices

 

21

 

 

15.11

 

Further Assurances

 

22

 

 

15.12

 

Survival of Representations, Warranties, Covenants and Agreements

 

22

 

 

15.13

 

Severability

 

22

 

 

15.14

 

Assignment

 

22

 

 

15.15

 

Waivers

 

22

 

 

15.16

 

Cumulative Rights, Obligations and Remedies

 

23

 

 

15.17

 

No Third Party Beneficiaries

 

23

 

 

15.18

 

Confidentiality

 

23


Exhibit A:


 


Scope of Work


 


 

Exhibit B-1:

 

Form of Construction Manager Partial Lien Waiver

 

 

Exhibit B-2:

 

Form of Contractor Partial Lien Waiver

 

 

Exhibit C:

 

Form of Change Order

 

 

Exhibit D-1:

 

Form of Construction Manager Final Lien Waiver

 

 

Exhibit D-1:

 

Form of Contractor Final Lien Waiver

 

 

Exhibit E-1:

 

Form of Project Completion Certificate

 

 

Exhibit E-2:

 

Form of Final Completion Certificate

 

 

Exhibit F:

 

Contractor Insurance Requirements

 

 

ii



CONSTRUCTION MANAGEMENT AGREEMENT

        This Construction Management Agreement is made and entered into on January 12, 2006, but is effective as of September 1, 2005 (the "Effective Date" ), by and between Seneca Construction Management Corporation (" Construction Manager ") and Seneca Niagara Falls 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 its development and construction of the Seneca Niagara Casino and Hotel (as defined in Section 1.1 ), and Construction Manager desires to perform such services in accordance with the terms of this Agreement.


AGREEMENT

        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, schedules, supplements and other attachments), as amended, restated, supplemented or otherwise modified from time to time.

        "Architect" is defined in Section 2.2 .

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

        "Change" is defined in Section 8.3 .

        "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 8.4 .

        "Construction Manager" is defined in the Preamble .

        "Construction Manager Estimate" is defined in Section 8.3 .

        "Contract Price" is defined in Section 5.2 .

1


 

        "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 14.1(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 equipment, materials, tools, supplies, installation or other 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 design or operation of any Project; or (iii) otherwise fails to meet the warranties set forth in Section 11.3 .

        "Delay Liquidated Damages" is defined in Section 6.2(a) .

        "Effective Date" is defined in the Preamble .

        "Event of 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 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 XI .

        "Final Completion" is defined in Section 10.2 .

        "Final Completion Certificate" is defined in Section 10.1(f) .

        "Final Completion Date" is defined in Section 10.2 .

        "Force Majeure" is defined in Section 13.1 .

        "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 Seneca Niagara Casino and Hotel, the Work or the Parties.

        "Guaranteed Maximum Project Costs" means for each Project, the amount, if any, specified as the Guaranteed Maximum Project Costs in the Scope of Work.

2


 

        "Guaranteed Project Completion Date" means for each Project, the date, if any, specified as the Guaranteed Project Completion Date in the Scope of Work.

        "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.

        "Loss" or "Losses" means any actions, claims, settlements, judgments, demands, liens, losses, damages, fines, penalties, interest, costs, expenses (including, without limitation, expenses attributable to the defense of any actions or claims), attorneys' fees and liabilities related to the construction of the Seneca Niagara Casino and Hotel ; provided, however, that as between the Parties, the term Loss shall not include damages which one Party has waived or released its right to seek from the other Party pursuant to Article XIV .

        "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 8.6 .

        "Owner Indemnified Party" is defined in Section 14.2(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 5.6 .

        "Project Commencement Date" means for each Project, the date specified as the Project Commencement Date in the Scope of Work.

        "Project Completion" is defined in Section 9.2 .

        "Project Completion Certificate" is defined in Section 9.1(d) .

        "Project Completion Date" is defined in Section 9.2 .

        "Projects" means, collectively, all components of the development and construction service related to or in connection with the development and construction of the Seneca Niagara Casino and Hotel, and all facilities and properties related thereto, and which are more specifically described in the Scope of Work.

        "Property" means the Seneca Niagara Casino and Hotel and each area therein designated by Owner for performance of the Work.

3


 

        "Repair" is defined in Section 11.3(a) .

        "Request for Payment" is defined in Section 5.3 .

        "Retainage" is defined in Section 5.5 .

        "Scope of Work" means the descriptions of all Projects including with respect to each Project, if applicable, (i) a description of the services to be performed and the materials and equipment to be supplied, (ii) the Project Commencement Date, (iii) the Guaranteed Project Completion Date, (iv) the Guaranteed Maximum Project Cost; (iv) the Delay Liquidated Damages, (v) the Warranty Period, and (vi) any other information the parties deem to be relevant in connection with the Project, attached hereto as Exhibit A .

        "Seneca Niagara Casino and Hotel" means the 604 room hotel and casino with restaurants, bar(s), health club, spa, pool, retail space, entertainment area, meeting/conference rooms, banquet areas, the porte-cochere, and the associated back-of-house support spaces and related site work located in Niagara Falls, New York (Niagara Territory).

        "Stated Rate" means an annual rate of interest (compounded monthly) equal to the lesser of (i) sum of the one year LIBOR rate quoted in the Wall Street Journal (or, in its absence, a similar publication) on the first Day of the applicable month plus two percent (2%) and (ii) the maximum rate permitted under applicable law.

        "Substantial Completion" is defined in Section 11.5 .

        "Term" is defined in Section 12.1 .

        "Warranty Period" is defined in Section 11.5 .

        "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 Projects, 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 provide Owner with the Seneca Niagara Casino and Hotel in complete and in full operating condition, completed in every detail according to the Scope of Work, and to do and furnish everything necessary in connection therewith. Without limiting the generality of the foregoing, Construction Manager shall perform, directly or through the use of Contractors in accordance with Section 2.4, all activities to be undertaken in connection with the Projects as set forth in the Scope of Work (the " Work "). Notwithstanding anything in this Agreement to the contrary, Owner and Construction Manager acknowledge that Owner has retained or will retain one or more architects to perform services in connection with the Projects (collectively, the " Architect "). Owner shall deliver to Construction Manager a copy of each written

4


 

agreement for services between Owner and Architect with respect to each Project, which agreements shall set forth the duties and responsibilities of the Architect. The Parties acknowledge and agree that the services to be performed by the Architect are separate from, and not a part of, the Work and will be performed by or on behalf of the Architect. Construction Manager shall not be responsible for any actions taken by, or for any omissions of, the Architect pursuant to such agreements when rendering such services; provided, however, that Construction Manager agrees to notify Owner in a timely manner if Construction Manager becomes aware of any errors or omissions of the Architect, or any defects in the services provided by the Architect, in connection with any Project.

        2.3     Addition and Removal of Projects from the Scope of Work.     

        Subject to the provisions of Article VIII , Owner may, from time to time, add new Projects to, or remove existing Projects from, the Scope of Work. Any addition or removal shall be considered a Change and shall be governed by the terms and conditions of Article VIII .

        2.4     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 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 2.4(b) . If any proposed written agreement between Construction Manager and any Contractor fails to meet any of the requirements set forth in Section 2.4(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 2.4(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 the 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 Exhibit F ;

        (v)    require that the Contractor provide the indemnification required by Section 14.2(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.

5



ARTICLE III.
GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER

        3.2     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, materialmen and vendors furnishing labor, materials or services in any way relating to this Agreement or affecting the Projects 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 Projects and the completion thereof.

        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 the 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 each Project Completion Certificate, and immediately upon the removal of any Project from the Scope of Work or the termination of this Agreement, Construction Manager shall deliver originals of all Data pertaining to the relevant Project 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, including any design, engineering, materials, equipment, installation, tools or supplies, which in Owner's reasonable judgment does not conform to this Agreement 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.

        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

6


 

Construction Manager has knowledge and which could reasonably be expected to have a material adverse effect on the completion of any Project pursuant to this Agreement.

        3.7     Owner's Right to Perform Work.     

        If Construction Manager defaults or neglects to carry out all or any portion of the Work or correct any Defects in accordance with the terms and conditions of this Agreement, the Owner, without prejudice to any other right or remedy under this Agreement, upon providing five (5) Days written notice to Construction Manager, may perform the Work or correct such Defects, or any part thereof, by whatever methods or means it may deem expedient.

        3.8     Care, Custody and Control of Materials in Transit; Risk of Loss.     

        It is contemplated that all materials, equipment and supplies incorporated into, or used in connection with, the Seneca Niagara Casino and Hotel will be purchased or furnished for Owner's account. Notwithstanding the foregoing or any passing of title to Owner, as between Owner and Construction Manager, Construction Manager shall retain care, custody and control of, and bear the risk of physical loss or damage to the materials, equipment and supplies that are (a) to be incorporated into, or used in connection with, the Seneca Niagara Casino and Hotel and (b) in transit to the Property, to the extent that such loss is not covered by the insurance required to be maintained by Owner pursuant to Section 14.4(d) .


ARTICLE IV.
COMMENCEMENT OF WORK

        Construction Manager shall commence and continuously and diligently pursue and perform the Work in connection with each Project on the applicable Project Commencement Date, and otherwise in compliance with this Agreement.


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 (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 Projects, 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 which 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 "). Construction Manager guarantees that in no event will the Costs (not including the Management Fee) associated with any Project exceed the Guaranteed Maximum Project Costs, if any, set forth in the Scope of Work for such Project. Except as otherwise agreed in connection with any Change Order

7


 

pursuant to Article VIII , Construction Manager shall be solely responsible for the payment of all Costs incurred in connection with any Project that are in excess of the Guaranteed Maximum Project Costs for such Project without reimbursement from Owner, and Construction Manager shall not be entitled to collect the Management Fee on any such Costs that are in excess of such Guaranteed Maximum Project Costs. The Contract Price will be Construction Manager's complete compensation for the Work.

        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 (itemized separately for each Project) 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 B-1 from Construction Manager;

        (d)    a partial lien waiver in the form of Exhibit B-2 from each Contractor for which payment is included in the Invoice; and

        (e)    all Progress Reports then required to be delivered pursuant to Section 5.6 .

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 Owner shall be reimbursed, or the Management Fee shall be reduced, in the following manner. With respect to any Invoice submitted to Owner before January 1, 2006, Owner may charge Construction Manager a reasonable fee (based on a reasonable hourly rate) for the use of such accounting personnel, professionals and resources, which fee may be offset by Owner against the Management Fee attributable to such Invoice. With respect to any Invoice submitted to Owner on or after January 1, 2006, the Management Fee payable 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

8


 

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.

        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. Notwithstanding the foregoing, at such time as any Project is deemed to be ninety percent (90%) complete, Owner shall pay to Construction Manager an amount equal to fifty percent (50%) of the full amount of Retainage (not including Retainage attributable to Management Fees) withheld by Owner to date with respect to such Project, and thereafter the amount to be withheld from each payment (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) with respect to such Project shall be five percent (5%), rather than ten percent (10%); provided, however, that the Retainage amount applicable to the Management Fee shall remain at ten percent (10%). In the event that amounts are due under this Agreement from Construction Manager to Owner, and such amounts are not paid when due, Owner shall have the right to withhold additional amounts from Owner's payments to Construction Manager equal to the amount owing by Construction Manager. The remaining Retainage for each Project will be paid by Owner to Construction Manager within ten (10) Business Days of the Project Completion Date relating to such Project, or in the case of Final Completion, within ten (10) Business Days of the Final Completion Date.

        5.6     Progress Reports.     

        Until Final Completion, Construction Manager shall deliver to Owner on a weekly basis a progress report (a " Progress Report ") which shall be in such form as may reasonably be requested by Owner, and which shall include for each Project, without limitation:

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

        (ii)    a description of the Work to be performed during the next week 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 week;

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

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

        5.7     Taxes.     Construction Manager shall pay all applicable taxes of any kind, including sales, use, excise, unemployment, income taxes and any and all other taxes on any item or service that is part of the Work, whether such tax is normally included in the price of such item or service or is normally stated separately and any other taxes imposed by any Governmental Authorities on any equipment,


 
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