**Exhibit 10.1**

**CONSTRUCTION MANAGEMENT AGREEMENT**

**(BUFFALO CREEK CASINO DEMOLITION PROJECT)**

 

**BETWEEN**

 

**SENECA ERIE GAMING CORPORATION**

**as Owner**

 

**AND**

 

**SENECA CONSTRUCTION MANAGEMENT CORPORATION**

**as Construction Manager**

** **

** **

**MAY 9, 2006**

----

**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 ManagerPartial Lien Waiver

Exhibit B:               Form of Contractor PartialLien Waiver

Exhibit C:               Form of Change Order

Exhibit D:               Form of Construction ManagerFinal Lien Waiver

Exhibit E:                Form of Contractor FinalLien Waiver

iv

----

**CONSTRUCTIONMANAGEMENT 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 SenecaErie Gaming Corporation (“**Owner**”).

**RECITALS**

A.            Construction Manager has expertiseand experience in providing construction management services.

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

NOW, THEREFORE, for and in consideration of thepremises and the mutual covenants and agreements contained herein, the partieshereby stipulate and agree as follows:

# **ARTICLEI.DEFINITIONS**

## 1.1           SpecificDefinitions.   The following capitalized terms shall have the meaningsascribed to them in this Section 1.1.

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

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

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

“Change” is defined in Section 6.3.

“Change of Law” means the enactment, adoption,promulgation, issuance, modification, revision, change, repeal or cancellationafter the date of this Agreement of or to any Law, that prevents ConstructionManager 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 meaningascribed 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 orany portion of the Work, or performing any other services, or providing goods,equipment, materials, supplies, or labor services related to the Work undercontract with Construction Manager, including contractors, subcontractors (andevery tier of subcontractors), vendors, suppliers, agents and representativesof 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 overheadexpenses of Construction Manager or (ii) that would not have been incurredabsent the bad faith, gross negligence, or willful misconduct of ConstructionManager or any Contactor, or any of their respective employees, agents, orrepresentatives.

“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 otherhour as Construction Manager and Owner mutually agree.

“Defect” means any Work performed or providedby, or within the responsibility of Construction Manager or any Contractorwhich (i) fails to conform to the Scope of Work or is of improper orinferior workmanship; (ii) could reasonably be expected to adverselyeffect the completion of the Project; (iii) results in damages to theProperty; 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” meansthe occurrence of any of the following events, circumstances or conditions: (i) thefailure by either Party to perform or comply with any material agreement,covenant, obligation or other provision contained in this Agreement when suchfailure has not been remedied (after delivery of written notice thereof) withinthirty (30) Days following delivery of such notice; (ii) either Party (A) filesa petition for relief under any present or future law regarding bankruptcy,reorganization or other relief to debtors, or, makes a general assignment forthe benefit of its creditors, or applies for a receiver, trustee, custodian or

2

----

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

“Force Majeure” is defined in Section 10.1.

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

“Hazardous Materials” shall mean any hazardousmaterials, hazardous wastes, hazardous constituents, hazardous or toxicsubstances, 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 othergovernmental bodies having relevant jurisdiction, whether such now exist orhereafter come into effect.

“Management Fee” is defined in Section 5.2.

“Nation” means the Seneca Nation of Indians, afederally 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 ofOwner and Construction Manager, individually or collectively, as the contextmay 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 agencyor administrative group thereof) or other entity.

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

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

“Project Schedule” is set forth on Schedule2 (as may be amended pursuant to the terms of this Agreement).

3

----

“Property” means the areas designated in theScope 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) themaximum 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.

# **ARTICLEII.CONSTRUCTION MANAGEMENT SERVICES**

## 2.1           Appointmentas Construction Manager.   Subject to the terms and conditions of thisAgreement, Owner hereby appoints Construction Manager to act hereunder as anindependent contractor to manage the Project, and Construction Manager herebyaccepts such appointment and agrees to act pursuant to the provisions of thisAgreement. Construction Manager is an independent contractor. NeitherConstruction Manager nor any of its officers, directors, employees, agents orrepresentatives shall be deemed to be the agents, representatives or employeesof Owner. Nothing herein is intended to, or shall be deemed to, create apartnership, joint venture, agency or other relationship creating fiduciary orquasi fiduciary duties or similar duties and obligations or otherwise subjectthe Parties to joint and several or vicarious liability or to impose any duty,obligation or liability that would arise therefrom with respect to either orboth of the Parties.

## 2.2           Workto be Performed.

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

## 2.3           Use of Contractors.

### (a)           Forthe purpose of providing the Work, Construction Manager may use independentcontractors, who are not employees of either Owner or Construction Manager, toperform the Work in accordance with this Agreement. Construction Manager

4

----

### shall not engage any Contractor to performpart of the Construction Work hereunder unless Construction Manager has awritten agreement with that Contractor which meets the requirements set forthin Section 2.3(b). If any proposed written agreement betweenConstruction Manager and any Contractor fails to meet any of the requirementsset forth in Section 2.3(b), Construction Manager must submit theproposed agreement to Owner for review and approval. Construction Manager shallnot have the right to waive any of the requirements of Section 2.3(b) withoutthe prior written consent of Owner.

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

#### (i)            conformto and require Contractor to perform in accordance with the requirements, termsand conditions of this Agreement;

#### (ii)           be assignable to Owner upon Owner’swritten request and at no cost to Owner;

#### (iii)          preserveand protect the rights of Owner under this Agreement and with respect to theWork to be performed;

#### (iv)          require that the Contractor provideand maintain the insurance specified in Schedule 4;

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

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

### (c)           Prior to entering into any contractwith any Contractor, Construction Manager shall have performed a reasonablelevel of due diligence to determine whether, for the portion of the Work theContractor is to perform, such Contractor is (i) fully experienced,properly qualified, properly licensed, properly equipped and properlyorganized; (ii) financially solvent at the time such Contractor entersinto a contract with Construction Manager; (iii) authorized to do businessin the jurisdictions in which such Contractor will perform; and (iv) familiarwith the portion of the Work to be performed.

### (d)           Construction Manager shall provide toOwner a copy of each contract entered into with a Contractor within two (2) BusinessDays of execution.

# **ARTICLEIII.GENERAL OBLIGATIONS OF CONSTRUCTION MANAGER**

## 3.1           Standardof Performance.   Construction Manager shall perform the Work and carryout its other obligations hereunder, and shall require all of its employees,Contractors, agents, 

5

----

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

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

## 3.3           PaymentsPursuant to Agreements.   Construction Manager shall promptly pay, whendue, all undisputed amounts due and payable to (a) all Contractors inaccordance with the terms of applicable Contractor contract, and (b) anyother third party providing goods or services in connection with the Work.

## 3.4           Ownershipand Custody of and Access to Data.   Owner shall be the sole andexclusive owner of all reports, filings, agreements, instruments and otherdocuments (collectively, “**Data**”),whether prepared by Construction Manager, Owner, any Contractor or any otherPerson, related to the Work and any such Data shall be made available to Ownerat Construction Manager’s office during reasonable business hours on provisionof reasonable notice. Within a reasonable period of time after delivery ofthe  Completion Certificate, orimmediately upon the termination of this Agreement, Construction Manager shalldeliver originals of all Data to Owner.

## 3.5           Inspectionand 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 activitiesundertaken by Construction Manager in connection with this Agreement. Owner shall have the right to reject, or todirect Construction Manager to reject, at any time, any such portion of theWork 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 asgiving rise to such rejection. Owner’s exercise of any right of inspection, observation,rejection or approval shall not limit or reduce Construction Manager’sobligations under this Agreement or constitute an acceptance by Owner.

6

----

## 3.6          Disclosure to Owner.

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

## 3.7           WorkBudget.

Construction Manager has submitted to Owner for Owner’sapproval a budget for the Work, a copy of which is attached hereto as Schedule3.  Such budget provides for anestimated Contract Price of $2,530,345.47 (the “**EstimatedContract Price**”).

## 3.8           OffsiteDisposal.   Construction Manager shall be solely responsible for theselection of the offsite disposal facilities to which it transfers allmaterials to be removed from the Property.

## 3.9           EnvironmentalReports.   Construction Manager shall require its Contractors to prepareor obtain all environmental assessments, reports, audits, and other documentsthat relate to the environmental condition of the Property required underenvironmental Law or pursuant to ASTM standard practices (or other standardpractices governing the performance of comparable services) that may benecessary to complete the Project (the “**EnvironmentalReports**”). Construction Manager shall provide Owner with copiesof all such Environmental Reports, as well as all correspondence with anyGovernmental Authority related to the environmental conditions on the Propertyor the compliance of the activities conducted thereon with environmental Law. ConstructionManager shall further require its Contractors to provide copies of the resultsof any environmental investigations, monitoring, or sampling conducted on theProperty, including without limitation, certificates of analysis, chain ofcustody reports, certificates of inspection, laboratory analysis, and samplingdata.

# **ARTICLEIV.COMMENCEMENT OF WORK**

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

# **ARTICLEV.ACCOUNTING AND COMPENSATION**

## 5.1           AccountingRecords.   Construction Manager shall keep complete and accuraterecords of all costs, expenses and expenditures in connection with thisAgreement, to the reasonable satisfaction of Owner. To the extent necessary orappropriate 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 havethe right during normal business hours to audit or examine all books andrecords maintained by Construction Manager relating to the Project, includingall documents and records relating to Invoices submitted by ConstructionManager pursuant to Section 5.3. Such right shall include the rightto meet with Construction Manager’s internal auditors to discuss mattersrelevant to the audit or examination. Construction Manager agrees to implementany reasonable practices or procedures recommended by Owner as a result of anysuch audit for purposes of improving support for the payment of ConstructionManager’s billings to Owner. Owner shall have three (3) years after thetermination of this Agreement to initiate, at Owner’s expense, an audit ofConstruction Manager’s records for any Work performed during the term of thisAgreement. Owner shall make every reasonable effort to conduct audits in amanner that will result in a minimum of inconvenience to Construction Manager.

## 5.2           ContractPrice.

For the performance of the Work during the term ofthis Agreement, Owner agrees to pay Construction Manager, an amount (the “**Contract Price**”) equal to the sumof (a) the Costs plus (b) an amount equal to four percent (4%) of theCosts (the “**Management Fee**”).In no event will the Contract Price exceed the Estimated Contract Price, andOwner shall have no obligation to reimburse Construction Manager for any Costsincurred 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 theWork whether the Work is performed by Construction Manager’s personnel or byContractors.

## 5.3           Requestfor Payment.

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

### (a)           an invoice for the Costs incurred forthe Work performed during the previous calendar month (or, if applicable, priormonths in case of third party invoices received during the previous month), ifany, prepared in a form reasonably acceptable to Owner and supported by recordsevidencing the actual Costs incurred, plus the Management Fee associated withsuch Costs (an “**Invoice**”);

### (b)           a certification that (i) suchRequest for Payment represents the amount to which Construction Manager isentitled to pursuant to the terms of this Agreement; and (ii) ConstructionManager has paid all amounts that are due and owing to the Contractors (otherthan amounts for Work included on any unpaid Invoice, which will be paid by ConstructionManager upon receipt of Owner’s payment of such Invoice), subject only to suchdisputed amounts as are specified by Construction Manager in the ProgressReport;

### (c)           a partial lien waiver in the form of Exhibit Afrom Construction Manager ;

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

8

----

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

#### (i)            a description of the Work performedduring the prior month;

#### (ii)           a description of the Work to beperformed during the next month and an estimate of the Costs to be incurred inconnection with such Work;

#### (iii)          a list of all Change Orders approvedas of the end of the prior month;

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

#### (v)           a description of any payment or otherdisputes with any Contractors or Governmental Authorities.

If, in connection with any Request for Payment,Construction Manager fails to provide Owner with Invoices or any supportingmaterials required under this Section 5.3 in a form satisfying thecriteria mutually agreed upon by Owner and Construction Manager, and (i) suchfailure is not cured by Construction Manager within ten (10) Days afterConstruction 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 orrelated materials provided by Construction Manager for purposes of processingany Invoice, then the Management Fee payable by Owner to Construction Managerwith respect to any Costs included on such Invoice for which adequatesupporting documentation was not provided shall be reduced from four percent(4%) to two percent (2%) of such Costs.

## 5.4           Payments.   Ownershall pay to Construction Manager the amount of each Invoice (less theRetainage described in Section 5.5) within thirty (30) Days of receiptof each such Invoice. If Owner fails to make timely payments of any Invoiceamount, or portion thereof, then Construction Manager shall be entitled tocollect such unpaid amount, together with interest at the Stated Rate on anyunpaid amount. If Owner’s failure to pay is a result of a good faith dispute ofany Invoice amount and Owner has given notice to Construction Manager that itdisputes such amount, and has paid any undisputed amount, within thirty (30)Days of receipt of such Invoice, then interest will be payable only on theunpaid 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 paymentdue date of the applicable Invoice and ending upon payment of such amount(together with the interest thereon); provided, however, that interest shallnot accrue with respect to any Invoice if Construction Manager has failed tosupply, in accordance with Section 5.3, the required supportingdocumentation for such Invoice, unless such Invoice is not paid within  thirty (30) Days of Owner’s receipt of allsuch supporting documentation. Payment and failure to object to all or anyportion of an Invoice amount shall not be construed as an acceptance ofdefective Work or a waiver of any right under this Agreement by Owner.

9

----

## 5.5           Retainage.

To secure Construction Manager’s performance of itsobligations hereunder, Owner will withhold an aggregate amount of up to tenpercent (10%) of the Contract Price (the “**Retainage**”),by withholding from each payment paid to Construction Manager by Owner (otherthan the final payment and any payments due to Construction Manager that aredesignated as payments for general conditions, for which there shall be noRetainage) an amount equal to ten percent (10%) of the amount invoiced byConstruction Manager. Each Invoice submitted by Construction Manager shallspecify the amount of Retainage attributable to, and to be withheld from,amounts due under such Invoice. Notwithstanding the foregoing, at such time asthe Project is deemed to be ninety percent (90%) complete, Owner shall inaccordance with the payment terms set forth in Section 5.4, pay toConstruction Manager an amount equal to fifty percent (50%) of the full amountof Retainage (not including Retainage attributable to Management Fees) withheldby Owner to date, and thereafter the amount to be withheld from each payment(other than the final payment and any payments due to Construction Manager thatare designated as payments for general conditions, for which there shall be noRetainage) due hereunder shall be five percent (5%), rather than ten percent(10%); provided, however, that the Retainage amount applicable to theManagement Fee shall remain at ten percent (10%). In the event that amounts aredue under this Agreement from Construction Manager to Owner, and such amountsare not paid when due, Owner shall have the right to withhold additionalamounts from Owner’s payments to Construction Manager equal to the amount owingby Construction Manager. Owner will pay the remaining Retainage for the Projectto Construction Manager in accordance with the payment terms set forth in Section 5.4upon receipt of the final Request for Payment pursuant to Section 7.1.

## 5.6           Taxes.

Construction Manager shall pay all applicable taxes of any kind,including sales, use, excise, unemployment, income taxes and any and all othertaxes on any item or service that is part of the Work, whether such tax isnormally included in the price of such item or service or is normally statedseparately and any other taxes imposed by any Governmental Authorities on anyequipment, materials, labor and services furnished by Construction Manager orits Contractors, or otherwise arising out of Construction Manager’s performanceof the Work, including any increases in any such taxes during the term of thisAgreement; and any duties, fees, and royalties imposed with respect to anyequipment, materials, labor or services.

# **ARTICLEVI.CHANGES**

## 6.1           General.   Exceptas set forth in Sections 6.2 and 6.6, no change or adjustment to theScope of Work will be valid except as agreed to by the Parties in accordancewith a duly issued Change Order executed in writing by Owner and ConstructionManager. All such changes shall be made in accordance with this Article VIand shall be considered, for all purposes of this Agreement, as part of theWork and shall not affect the validity of this Agreement.

## 6.2           MinorModifications.   Minor modifications or adjustments that do not involvean increase to the Estimated Contract Price, do not affect the Project Scheduleand do not affect

10

----

## Construction Manager’s performance of the Work as specified in thisAgreement, may be made by Construction Manager and shall not require a ChangeOrder; *provided, however,* thatConstruction Manager shall notify Owner thereof in writing prior toConstruction Manager effecting any such modification.

## 6.3           OwnerRequested Change Order.   Owner, at any time or from time to time, mayrequest a change to the Scope of Work (a “**Change**”)by issuing a notice to Construction Manager. Within five (5) Business Daysof receipt of such notice, Construction Manager shall prepare and deliver toOwner a detailed written estimate (the **“ConstructionManager Estimate”**) relating to the contemplated change, whichshall include:

### (a)           any proposed change in the EstimatedContract Price resulting from such Change;

### (b)           any effect such Change could beexpected to have on the Project Schedule;

### (c)           any potential effect of such Changeon Construction Manager’s ability to comply with any of its obligationshereunder; and

### (d)           documentation reasonably sufficientto enable Owner to evaluate the impact of the Change or potential effects whichConstruction Manager estimates the Change Order will have on the ContractPrice, the Project Schedule and any other provision of this Agreement affectedthereby, as the case may be.

## 6.4           ChangeOrders.

Owner shall review the Construction Manager Estimateand if the Parties reach agreement on the matters listed in the ConstructionManager Estimate, Owner and Construction Manager shall execute a change orderwhich reflects the nature of such agreement (a “**ChangeOrder**”), which Change Order shall be in the form set forth in Exhibit Cand shall constitute an amendment to this Agreement.

## 6.5           ConstructionManager Requested Change Order.

### (a)           Construction Manager may submit arequest for a Change Order with respect to:

#### (i)            a Force Majeure Event; or

#### (ii)           a Change of Law, unless such Changeof Law is due to an act or omission of Construction Manager.

### (b)           Construction Manager shall usereasonable efforts to mitigate the adverse effects of any Force Majeure Eventor a Change of Law that is the subject of a Change Order request. No such eventshall excuse Construction Manager’s continuing obligation to perform the Work,as affected by such event, while such request is pending, except as set forthin Article X or if cessation of performance is required by aGovernmental Authority.

11

----

### (c)           Any Change Order request under this Section 6.5shall be processed in accordance with Sections 6.3 and 6.4; *provided, however,* that no notice from Owner shall berequired and Construction Manager’s Change Order request shall include thedetailed written Construction Manager Estimate relating to the requested changethat is required by Section 8.3, without the need for Owner torequest same.

6.6           Owner’sDirective.   In the event (i) Owner requests a Change under Section 6.3,and (ii) Owner and Construction Manager are unable to agree in a timelymanner with respect to a Construction Manager Estimate, and (iii) theChange is not technically impossible or illegal to implement, and (iv) Ownerhas determined that it is in the best interests of the Project to implement theChange, then Owner may direct Construction Manager in a written notice toproceed in accordance with the Change (an “**OwnerDirective**”), prior to determining any adjustment to the Scope ofWork (and, if applicable, any proposed change to the Estimated Contract Priceor the Project Schedule) and Construction Manager shall proceed with the Workin accordance with such Owner Directive. In the event that Owner issues anOwner Directive with respect to the Project, then Construction Manager maymodify the Estimated Contract Price and/or the Project Schedule to the extentappropriate, as follows:

### (a)           To the extent the Change requested inan Owner Directive would cause the Contract Price to exceed the EstimatedContract Price due to an increase in Construction Manager’s Costs foradditional Work or materials, then the Estimated Contract Price may be adjustedupward by an amount equal to the Costs attributable to the Change (plus theManagement Fee associated with such Costs).

### (b)           To the extent the Change requested inan Owner Directive adversely affects Construction Manager’s ability to completethe Project in accordance with the Project Schedule, and such effect could notbe avoided or mitigated by Construction Manager’s reasonable efforts, thenConstruction Manager may be entitled to an equitable adjustment of the ProjectSchedule on a Day-for-Day basis (or part thereof) for the impact of such Changeon Construction Manager’s performance of the Work.

## 6.7           GeneralRequirements and Limitations.

### (a)           No addition,deletion, comment, modification or amplification by Owner to the Scope of Workshall require a Change Order if such addition, deletion, comment, modificationor amplification is for the purpose of curing a Construction Manager Defect oris required in connection with a Construction Manager Event of Default.

### (b)           Notwithstanding anydispute, Construction Manager shall be required to implement any OwnerDirective and in no event shall any disputes related to a Change, a proposedChange Order or an Owner Directive entitle Construction Manager to stop, delayor suspend the performance of the Work.

### (c)           Construction Manager shall notifyOwner in writing in advance of its intended use of the contingency portion ofthe budget established by Owner and Construction Manager for the Project.

12

----

# **ARTICLEVII. COMPLETION**

## 7.1           FinalRequest for Payment.   Upon Completion, Construction Manager shallsubmit to Owner a final Request for Payment, which shall include:

### (a)           the final Invoice;

### (b)           original copies of permits, licensesand other authorizations to the extent that such items are issued in the nameof or otherwise provided to Construction Manager;

### (c)           a Final Lien Waiver from ConstructionManager in the form of Exhibit D;

### (d)           a Final Lien Waiver from eachContractor in the form of Exhibit E; and

### (e)           a Completion Certificate which shallinclude:

#### (i)            a statement that ConstructionManager’s obligations with respect to Project are complete;

#### (ii)           a statement that no ConstructionManager Event of Default shall have occurred and be continuing;

#### (iii)          representations and warranties thatConstruction Manager has obtained all permits, licenses and otherauthorizations necessary or appropriate for the completion of the Project(other than those obtained by Owner) and that such authorizations are in fullforce and effect;

#### (iv)          representations and warranties thatthe Property is free and clear of all liens, security interests, or otherencumbrances upon Owner’s title arising by virtue of the actions or inactionsof Construction Manager or its Contractors or other representatives arisingfrom or related to the Work; and

#### (v)           representations and warranties thatConstruction Manger has paid all amounts due, or which may become due (otherthan amounts for Work included on any unpaid Invoice, which will be paid by Construction Manager upon receipt ofOwner’s payment of such Invoice), to all Contractors.

## 7.2           Completion.

Upon Owner’s (a) determination that the Projecthas been completed in accordance with the Scope of Work, and otherwise inaccordance with the terms of this Agreement (“**Completion**”);and (b) approval of the form of Completion Certificate submitted byConstruction Manager (the “**Completion Certificate**”),an authorized representative of Owner will sign the Completion Certificateevidencing Owner’s acceptance that the Project has been completed in accordancewith the terms of this Agreement. Promptly after receipt of a proposed

13

----

Completion Certificate, Owner shall (i) conductsuch tests and inspections as may be necessary to determine whether the Projecthas been completed in accordance with the terms of this Agreement, and (ii) adviseConstruction Manager as to whether Owner accepts the Completion Certificatesubmitted by Construction Manager. The “**Completion Date**”shall be the date on which the Completion Certificate is duly executed anddelivered by Owner. Owner’s execution of the Completion Certificate shall notlimit, waive or otherwise affect any right or remedy Owner may have pursuant tothis Agreement, any Law or otherwise, including any right Owner may haveagainst Construction Manager for failure to perform the Work in accordance withthe terms of this Agreement. Upon receipt of final payment, ConstructionManager will assign to Owner all permits, licenses and title to any materialsused and paid for by Owner in the completion of the Project that were in thename of Construction Manager.

# **ARTICLEVIII.REPRESENTATIONS AND WARRANTIES**

## 8.1           GeneralRepresentations and Warranties.

Each Party represents and warrants to the other Partythat on and as of the date hereof:

### (a)           it is duly formed and validlyexisting and in good standing under the laws of its jurisdiction of formation,with power and authority to carry on the business in which it is engaged and toperform its respective obligations under this Agreement;

### (b)           the execution and delivery of thisAgreement have been duly authorized and approved by all requisite corporate,limited liability company, partnership or similar action;

### (c)           it has all the requisite corporate,limited liability company, partnership or similar power and authority to enterinto this Agreement and perform its obligations hereunder;

### (d)           the execution and delivery of thisAgreement do not, and the consummation of the transactions contemplated hereinwill not, violate any of the provisions of the organizational documents of suchParty, any agreement pursuant to which such Party or its property is bound or,to its knowledge, any applicable Laws; and

### (e)           this Agreement is valid, binding andenforceable against such Party in accordance with its terms, subject tobankruptcy, moratorium, insolvency and other Laws generally affecting creditors’rights and general principles of equity (whether applied in a proceeding in acourt of law or equity).

## 8.2           ConstructionManager Representations and Warranties.

Construction Manager represents and warrants to Ownerthat:

### (a)           it has substantial experience,knowledge and professional competence in the procurement, project managementand construction management of projects similar to the Project;

14

----

### (b)           it has the resources and personnel toperform the Work; and

### (c)           it is fully experienced, properlyqualified and properly licensed, equipped and organized to perform the Work.

## 8.3           WarrantiesRelated to the Work.

### (a)           Construction Manager represents,warrants and agrees as follows: (i) the Work will be of high quality, freefrom Defects and in specific conformity with this Agreement; (ii) the Workwill be performed and the Project will be completed in accordance with therequirements of this Agreement, and (iii) upon Completion, the Propertyshall meet the standards set forth in the Scope of Work and shall have passedall environmental or other testing required therein. Construction Manager shallbe required to repair, correct, refinish, or if insufficient, to re-perform theWork, and generally take or cause to be taken such action as may be required,to fully remedy (**“Repair”**)any Defects discovered during the Term of this Agreement at no cost to Owner. Thecost to Repair any Defect shall not be part of the Contract Price. ConstructionManager’s warranties hereunder exclude remedy for damage or defect caused byabuse, modifications not executed by Construction Manager or its agents orContractors, improper or insufficient maintenance, improper operation or normalwear and tear under normal usage.

### (b)           Upon notice by Owner to ConstructionManager of any Defect, Construction Manager shall Repair such Defect or causethe Repair of such Defect; *provided, however,*that no such notice shall be required in the event of a Defect discovered byConstruction Manager or any Contractor (notice of which Defect shall promptlybe given to Owner).

### (c)           Construction Manager shall, at alltimes during the Warranty Period, maintain sufficient personnel to respondpromptly to Owner’s request for warranty work.

### (d)           Upon Completion, Construction Managershall cause any tools, equipment or materials placed on the Property to beremoved.

## 8.4           ContractorWarranties.

Construction Manager shall obtain for Ownercommercially available warranties from all Contractors. Such warranties shallextend for not less than the Warranty Period and shall obligate the respectiveContractors to Repair any Defects in the Work in substantially the same mannerand on terms and conditions substantially similar to those contained herein. Duringthe Term of this Agreement (including the Warranty Period) Construction Managershall be responsible at its own expense for enforcing all Contractorwarranties.

## 8.5           WarrantyPeriod.

Construction Manager’s warranty obligations andliabilities under this Article VIII shall commence on the date of Substantial Completion of the Project, and shall cease upon the

15

----

expiration of one year thereafter  (the “**Warranty Period**”).For purposes of this Agreement, “**Substantial Completion**”of the Project is the stage in the progress of the Work when the Work (ordesignated portion thereof) is sufficiently complete in accordance with thisAgreement so that Owner can occupy or utilize for its intended use the Property(or designated portion thereof) on which such Work was to be performed. TheWarranty Period for any Work requiring Repair under this Article VIIIshall be extended, solely with respect to the portion of the Work so Repaired,for a period equal to the original Warranty Period after the date of completionof such Repair.

# **ARTICLEIX.TERMINATION**

## 9.1           Term.   Unlessterminated in accordance with Section 9.2, this Agreement shall beeffective as of the Effective Date and shall continue in effect through theexpiration of the Warranty Period (the “**Term**”).

## 9.2           Termination.   ThisAgreement may be terminated or canceled prior to the end of the Term:

### (a)           at any time, during an ongoing Eventof Default which was not cured during the applicable cure period and which hasnot been waived by the non-defaulting Party upon the delivery of a notice oftermination by the non-defaulting Party to the defaulting Party;

### (b)           at any time, by mutual writtenagreement of the Parties; or

### (c)           at any time, by Owner, in its solediscretion upon thirty (30) Days notice to Construction Manager.

## 9.3           Suspensionby Owner.

Owner may, uponwritten notice to Construction Manager, require Construction Manager tosuspend, delay or interrupt the Work, in whole or in part, for any reasonincluding, without limitation, the issuance of an order by a court or otherpublic authority having jurisdiction or the enactment of any law, regulation orrule prohibiting the completion of the Project, for such period of time asmay be directed by Owner. Notwithstanding the foregoing, if the Work issuspended in accordance with this Section 9.3 for a period ofninety (90) days or more, Construction Manager may, on written notice toConstruction Manager, terminate this Agreement.

9.4           Effectsof Termination. Termination or cancellation of this Agreement shall notrelieve the Parties from any obligation accruing or accrued to the date of suchtermination or deprive the Party not in default of any remedy otherwiseavailable to such Party. In the event this Agreement is terminated by Ownerpursuant to Section 9.2(a), Owner’s shall only be required to payConstruction Manager for the Costs incurred for Work completed as of the dateof termination; provided, however, that if it is determined thatOwner’s termination under Section 9.2(a) was improper, suchtermination shall be deemed to be a termination under Section 9.2(c) andOwner shall pay Construction Manager the unpaid Management Fee and any

16

----

Retainage, together with interest at the Stated Ratefrom the time the payment would have otherwise been due. In the event thisAgreement is terminated by Owner pursuant to Section 9.2(b) above,or by Construction Manager pursuant to Section 9.3, Owner shall payConstruction Manager the payments owed as of the date of termination for Workcompleted (including all Costs incurred in connection with such Work plus theManagement Fee and any Retainage). In the event this Agreement is terminatedpursuant to Section 9.2(c) above, Owner shall pay ConstructionManager (i) the payments owed as of the date of termination for Workcompleted (including all Costs incurred in connection with such Work plus theManagement Fee and any Retainage), and (ii) Construction Manager’s costsreasonably incurred incident to the termination, including actual andreasonable Contractor cancellation costs.

# **ARTICLEX.FORCE MAJEURE**

## 10.1         Suspension of Obligations.   NeitherParty shall be liable to the other Party for failure to perform any of itsobligations under this Agreement to the extent such performance is hindered,delayed or prevented by Force Majeure. For purposes of this Agreement, “ForceMajeure” shall mean causes, events or circumstances which are beyond thereasonable control of the Party claiming Force Majeure which cause such Party’sperformance hereunder to be hindered, delayed or prevented. Such causes orevents shall include, without limitation, acts of God, war (declared orundeclared), insurrections, hostilities, riots, lockouts, strikes, labordisputes, floods, fire, or hurricanes. Notwithstanding anything in thisAgreement to the contrary, a claim of Force Majeure shall not extend orotherwise enlarge the term of this Agreement.

## 10.2         Notice.   A Party which isunable, in whole or in part, to carry out its obligations under this Agreementdue to Force Majeure shall promptly give written notice to that effect to theother Party stating in reasonable detail the circumstances underlying suchForce Majeure.

## 10.3         Resolution.   A Partyclaiming Force Majeure shall diligently use all reasonable efforts to removethe cause, event or circumstance of such Force Majeure, shall promptly givewritten notice to the other Party of the termination of such Force Majeure andshall resume performance of any suspended obligation as soon as reasonablypossible after termination of such Force Majeure; *provided, however,* that neither Party shall be required tosettle a labor dispute against its own best judgment.

# **ARTICLE XI.INDEMNITY**

## 11.1         Damages.

### (a)           Asused in this Article XI, the term “**Damages**”shall mean any and all (i) obligations; (ii) liabilities; (iii) compensatorydamages (including, but not limited to, damages for injury to or death ofpersons and damages to or destruction or loss of property); (iv) to thelimited extent permitted under Section 11.1(b), punitive, indirect,special, consequential, incidental and exemplary damages; (v) costs,losses, liabilities, damages, and expenses in any way associated with thecontainment, removal, or

17

----

### remediation of environmental (as to allmedia) pollution or contamination pursuant to any current, past, or futurefederal, state, or local laws, rules, permits, regulations, orders orordinances; (vi) fines; (vii) penalties; (viii) losses; (ix) actions;(x) suits; (xi) claims; (xii) judgments, orders, directives, injunctions,decrees or awards of any federal, state, or local court or administrative orgovernmental authority, bureau or agency; and (xiii) costs and expenses (including,but not limited to, reasonable attorney’s fees) incurred in the defense of anyof the foregoing.

### (b)           ASBETWEEN THE PARTIES, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THISAGREEMENT, A PARTY’S DAMAGES RESULTING FROM A BREACH OR VIOLATION OF ANY REPRESENTATION,WARRANTY, COVENANT, AGREEMENT OR CONDITION CONTAINED HEREIN OR ANY ACT OROMISSION ARISING FROM OR RELATED TO THIS AGREEMENT SHALL BE LIMITED TO ACTUALDIRECT DAMAGES AND SHALL NOT INCLUDE ANY OTHER DAMAGES, INCLUDING, WITHOUTLIMITATION, INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL, EXEMPLARY OR PUNITIVEDAMAGES AND EACH PARTY EXPRESSLY RELEASES THE OTHER FROM ALL SUCH CLAIMS FORDAMAGES OTHER THAN ACTUAL DIRECT DAMAGES.

### (c)           Except as otherwise expressly limitedherein, it is the intent of the Parties that all release and indemnityobligations in this Article XI be without monetary limit. Except asotherwise expressly provided for in this Article XI, a Party’sobligation to indemnify and hold the indemnified Parties harmless againstliability as provided for herein shall apply to liability based, in whole or inpart, upon any and all theories of law including, without limitation bydesignation, liability based upon:  (i) anynegligent act, grossly negligent act, or omission; (ii) strict liability; (iii) breachof warranty arising out of the alleged supplying of a defective or unreasonablydangerous product; or (iv) noncompliance with any law, rule, regulation,order, permit or policy.

## 11.2         Indemnity.   Without limiting other rights and remedies ofOwner under this Agreement, to the fullest extent permitted by law, ConstructionManager does hereby assume liability for,and does hereby agree to indemnify, protect and defend, save and hold harmlessOwner and its respective employees, affiliates, successors, assigns, agents,officers and directors, and anyone else acting for or on behalf of any of theforegoing Persons (each, an **“OwnerIndemnified Party”**) from and against any and all Damages that may be imposed on, suffered or incurred by,or asserted against, any Owner Indemnified Party, that arise out of, or resultfrom, events or circumstances in any way related to, or arising out of:

#### (i)            Construction Manager’s (or anyContractor’s) fraud, negligence, intentional act or omission, willfulmisconduct or breach of Law relating to the Work, the Project and/or thisAgreement;

#### (ii)           materials,construction or workmanship of Construction Manager or any Contractor or theexecution of the Work;

#### (iii)          breachof this Agreement by Construction Manager;

18

----

#### (iv)          any third-party claims (including lien claims)relating to the Work and/or Construction Manager’s obligations under thisAgreement;

#### (v)           losses and liabilities arising from any legalobligation that Owner may have to withhold amounts from, or deduct any tax atthe source from, payments due to Construction Manager (which in each case shallbe treated as paid to Construction Manager for purposes of this Agreement) orthe assertion of any tax payable by Construction Manager or any Contractoragainst Owner;

#### (vi)          the performance of the Work under any workers’compensation, disability or similar benefit act;

#### (vii)         the vitiation of any insurance policies due toConstruction Manager’s or any Contractor’s breach of warranty, declaration orcondition contained in any insurance policy, including the provision of falseand misleading information;

#### (viii)        anyamount that Construction Manager shall have failed to pay to any Contractor ascompensation for the performance of any Work (to the extent that ConstructionManager received payment from Owner for such Work), and Construction Managershall assume the defense of any suit or proceeding in connection therewith;

#### (ix)           any and all claims against Owner by any employeeof Construction Manager or any Contractor or by anyone directly or indirectlyemployed by Construction Manager or any Contractor or anyone for whose actsConstruction Manager or any Contractor may be liable (except for claimsarising from the negligence or willful misconduct of Owner or its employees,agents or representatives); and

#### (x)            (i) HazardousMaterials brought onto the Property by Construction Manager or any Contractoror any of their respective representatives, agents or employees; (ii) off-sitetreatment, storage, transportation, disposal, clean-up or remediation byConstruction Manager or any Contractor (or any of their respectiverepresentatives, agents or employees) of any Hazardous Materials thatoriginated from the Property, or (iii) a violation of any environmentalLaw by Construction Manager or any Contractor or any of their respectiverepresentatives, agents or employees.

### (b)           ConstructionManager shall require all Contractors to indemnify, defend, and hold harmlessthe Owner Indemnified Parties and Construction Manager from and against allDamages, including but not limited to, (i) Damages that may be imposed on,suffered or incurred by , or asserted against any Owner Indemnified Party, thatarise out of, or result from, events or circumstances in any way related to, orarising from any of the events listed in Section 11.2(a)(i) through(x), and (ii) claims for personal injury or

19

----

### death of any Contractor employees, arisingout of the Work performed by any such Contractor. Construction Manager shallnot have the right to waive or alter any of the requirements of this Section 11.2(b).

## 11.3         Claims.

### (a)           Wheneverany claim shall arise for indemnification hereunder, the indemnified Partyshall promptly notify the indemnifying party of the claim and, when known, thefacts constituting the basis for such claim, except that in the event of anyclaim for indemnification hereunder resulting from or in connection with anyclaim or legal proceedings by a third party, except as otherwise expresslyprovided in this Article XI such notice shall specify, if known, theamount or an estimate of the amount of the liability asserted by such thirdparty.

### (b)           Inconnection with any claim giving rise to indemnity hereunder resulting from orarising out of any claim or legal proceeding by a Person who is not a Party,the indemnifying Party may, upon written notice to the indemnified Party,assume the defense of any such claim or legal proceeding. Except with theconsent of the indemnified Party, the indemnifying Party shall not consent tothe entry of any judgment arising from any such claim or legal proceedingswhich, in each case, does not include as an unconditional term thereof of thegiving by the claimant or the plaintiff to the indemnified Party of a releasefrom all liability in respect thereof, unless the indemnifying Party hasactually paid to the indemnified Party the full amount of such judgmentsettlement. Any indemnified Party shall be entitled to participate in (but notcontrol) the defense of any such claim or litigation resulting therefrom. Ifthe indemnifying Party does not elect to control the litigation as providedabove, the indemnified Party may defend against such claim or litigation insuch manner as it may deem appropriate, including, but not limited to, settlingsuch claim or litigation, after giving notice of the same to the indemnifyingParty, on such terms as such indemnified Party may deem appropriate, and theindemnifying Party shall promptly reimburse the indemnified Party. Allindemnification hereunder shall be effected by payment of cash or delivery of acertified or official bank check in the amount of the indemnificationliability.

### (c)           Tothe extent Construction Manager or an Owner Indemnified Party elects not topursue any legal remedies it has against other Persons, but relies on theindemnities provided for in this Agreement, Construction Manager or OwnerIndemnified Party will assign its legal remedies to the maximum extent allowedby law to Owner or Construction Manager, as appropriate.

## 11.4         Insurance.

### (a)           ConstructionManager, without limiting its obligations or liabilities hereunder, shallobtain and maintain the following insurance with limits not less than thoseindicated. Construction Manager shall procure a waiver of subrogation in favorof

20

----

### Owner or any other Owner Indemnified Party orany other person to the extent indemnified by Construction Manager and nameOwner as an additional insured.

#### (i)            Workers’Compensation Insurance covering all employees engaged in the Work hereunder inaccordance with the statutory requirements of the jurisdiction in which suchservices are to be performed.

#### (ii)           Employer’sLiability Insurance with limits not less than one million dollars ($1,000,000)for each accident or death of an employee engaged in Work hereunder.

#### (iii)          AutomobileLiability insurance covering all motor vehicles owned or leased by ConstructionManager engaged in the performance of Work hereunder. Limits of liability shallnot be less than one million dollars ($1,000,000) for the accidental injury toor death of one or more persons or damage to or destruction of property as aresult of one accident.

### (b)           Exceptas otherwise specifically requested and approved by the Parties, no otherinsurance shall be carried by Construction Manager for the benefit of Owner.

### (c)           ConstructionManager shall require all Contractors employed by it under this Agreement toobtain the insurance identified in Schedule 4. If any proposed writtenagreement contains language different than what is contained in Schedule 4,Construction Manager shall submit the proposed insurance language to Owner forreview and approval.

### (d)           Ownershall purchase and maintain, in a company or companies authorized to dobusiness in the jurisdiction in which the Property is located, propertyinsurance upon the Work and the Property to the full insurable value thereof.Such property insurance shall be maintained, unless otherwise agreed to inwriting by all persons and entities who are beneficiaries of such insurance,until final payment has been made or until no person or entity other than Ownerhas an insurable interest in the Property. This insurance shall include theinterests of Owner, Construction Manager and the Contractors. Such propertyinsurance shall be on an all-risk policy form and shall insure against theperils of fire and extended coverage and physical loss or damage including,without duplication of coverage, theft, vandalism, malicious mischief,collapse, temporary buildings and debris removal including demolitionoccasioned by enforcement of any applicable legal requirements.

# **ARTICLE XII.MISCELLANEOUS**

## 12.1         Entire Agreement.   ThisAgreement constitutes the entire agreement and supersedes (i) all priororal or written proposals or agreements, (ii) all contemporaneous oralproposals or agreements and (iii) all previous negotiations and all othercommunications or understandings between the Parties with respect to thesubject matter hereof.

21

----

## 12.2         Amendment and Modification.   Nomodifications of the terms and provisions of this Agreement shall be or becomeeffective except by the execution by each of the Parties of a supplementary writtenagreement.

## 12.3         Counterparts.   ThisAgreement may be executed in counterparts and each counterpart shall for allpurposes be an original and may be executed and delivered by telelcopier orfacsimile, but all such counterparts together shall constitute one and the sameinstrument.

## 12.4         Parties Bound by Agreement.   ThisAgreement shall be binding upon and shall inure to the benefit of the Partiesand their respective successors and assigns.

12.5         Terminology.   All personalpronouns used in this Agreement, whether used in the masculine, feminine orneuter gender, shall include all other genders; the singular shall include theplural, and vice versa. Articles and other titles or headings are forconvenience only, and neither limit nor amplify the provisions of the Agreementitself, and all references herein to articles, sections or subdivisions thereofshall refer to the corresponding article, section or subdivision thereof ofthis Agreement unless specific reference is made to such articles, sections orsubdivisions of another document or instrument.

12.6         Laws and Regulations.   ThisAgreement and all of the terms and conditions contained herein, and therespective obligations of the Parties, are subject to all valid and applicableLaws.

## 12.7         Governing Law.   ThisAgreement shall in all respects be governed by and construed in accordance withthe laws of the Nation including all matters of construction, validity andperformance, without giving effect to any choice of law rules thereofwhich may direct the application of the laws of another jurisdiction.

12.8         Exhibits and Schedules.   Allexhibits, schedules and the like contained herein or attached hereto areintegrally related to this Agreement, and are hereby made a part of thisAgreement for all purposes. To the extent of any ambiguity, inconsistency orconflict between the body of this Agreement and any of the exhibits, schedulesand the like attached hereto, the terms of the body of this Agreement shallprevail.

## 12.9         Notices.   Unlessspecifically provided in this Agreement, any written notice or othercommunication shall be deemed given when received by the Party entitled tonotice. Notices shall be directed as follows:

### (a)           if to Construction Manager, to:

Seneca ConstructionManagement Corporation

Attn: Clayton Seneca,President & CEO

345 Third Street, Suite 610

Niagara Falls, New York  14303

Telephone: (716) 713-1723

Facsimile: (716) 282-3636

22

----

with a copy to:

Harter, Secrest &Emery LLP

Twelve Fountain Plaza, Suite 400

Buffalo, New York  14202

Facsimile:  (716) 853-1617

Attn:  PhillipA. Delmont, Esq.

### (b)           if to Owner, to:

Seneca Erie GamingCorporation

Attn: John Pasqualoni,President and Chief Executive Officer

310 Fourth Street

Niagara Falls, NewYork  14303

Telephone: (716) 299-1100

Facsimile: (716) 299-1200

with a copy to:

Seneca Niagara FallsGaming Corporation

Attn: Office of GeneralCounsel

310 Fourth Street

Niagara Falls, NewYork  14303

Telephone: (716) 299-1100

Facsimile: (716) 299-1200

In like manner either Party may change the address towhich notices to it should be directed.

## 12.10       FurtherAssurances. Subject to the terms and conditions set forth in thisAgreement, each of the Parties agrees to use all reasonable efforts to take, orto cause to be taken, all actions, and to do, or to cause to be done, allthings necessary, proper or advisable under applicable Laws to consummate andmake effective the transactions contemplated by this Agreement. In case, at anytime after the execution of this Agreement, any further action is necessary ordesirable to carry out its purposes, the proper officers or directors of theParties shall take or cause to be taken all such necessary action.

## 12.11       Survivalof Representations, Warranties, Covenants and Agreements. Subject to theprovisions of Section 8.5, the representations, warranties,covenants and agreements given by the Parties including in particular the termsand conditions of Article XI shall survive this Agreement withoutregard to any action taken pursuant to this Agreement.

## 12.12       Severability.Any term or provision of this Agreement that is invalid or unenforceable in anyjurisdiction shall be ineffective, as to such jurisdiction, to the extent ofsuch invalidity or unenforceability, without rendering invalid or unenforceablethe remaining terms and provisions of this Agreement or affecting the validityor enforceability of any terms and provisions of this Agreement in any otherjurisdiction. If any provision of this Agreement is so

23

----

broad as to be unenforceable, each provision shall beinterpreted to be only so broad as is enforceable. A bankruptcy or similartrustee must accept or, to the extent permitted by law, reject this Agreementin its entirety.

## 12.13       Assignment.   NoParty shall voluntarily or involuntarily, directly or indirectly transfer orotherwise alienate any or all of its rights, title or interest under thisAgreement to any other Person without the express prior written consent of theother Party, which consent may be granted or withheld in such Party’s solediscretion; *provided, however,*that either Party may (without seeking the consent of the other Party) transferor otherwise alienate any of its rights, title or interest under this Agreementin connection with (i) a transfer to an Affiliate which remains anAffiliate, (ii) the sale of all or substantially all of the assets of suchParty, (iii) participation in a merger, consolidation, share exchange, orother form of statutory reorganization with another Person if the Party is thesole surviving Person, (iv) the granting of a pledge, mortgage,hypothecation, lien or other security interest and (v) the foreclosure (judicialor non-judicial) or other settlement or rearrangement pursuant to or inconnection with any transfer made pursuant to item (iv) above. Eachtransferee shall expressly assume all obligations of the transferor under thisAgreement. An attempted transfer made without the prior written consent of thenon-transferring Party, where required, is invalid and ineffective. Unlessotherwise agreed to by all Parties, a transferring Party (other than atransferor pursuant to item (v) above) shall, nevertheless, continue to beresponsible and primarily liable for all obligations, liabilities and otherexpenses arising from or related to this Agreement.

## 12.14       Waivers.   Nowaiver by either Party of any one or more defaults by the other Party inperformance of any provisions of this Agreement shall be effective unless inwriting and signed by the Party against whom such waiver is sought to beenforced. Any waiver of the terms hereof shall be effective only in thespecific instance and for the specific purpose given and shall not operate orbe construed as a waiver of any future default or defaults, whether of a likeor a different character. The failure of a Party to insist, in any instance, onstrict performance of any of the terms and conditions hereof shall not beconstrued as a waiver of such Party’s right in the future to insist on suchstrict performance.

## 12.15       CumulativeRights, Obligations and Remedies.   Except as expressly providedherein, the rights, obligations and remedies created by this Agreement arecumulative and in addition to any other rights, obligations or remediesotherwise available at law or in equity.

## 12.16       NoThird Party Beneficiaries.   This Agreement is for the sole andexclusive benefit of the Parties. Except as expressly provided herein to thecontrary, nothing herein is intended to benefit any other Person not a Partyhereto, and no such Person shall have any legal or equitable right, remedy orclaim under this Agreement.

## 12.17       Confidentiality.   TheParties agree that this Agreement and all information and data exchanged bythem in accordance with this Agreement shall be maintained in strict andabsolute confidence, except upon prior written notice and with respect todisclosure (i) pursuant to the sale, disposition or other alienation(directly or indirectly) of a Party’s rights and interest in and to thisAgreement, (ii) pursuant to the sale or other disposition (directly orindirectly) of all or substantially all of the assets of a Party, (iii) inconjunction with a merger, consolidation, share exchange or other form ofstatutory reorganization involving a Party, (iv) to lenders, accountants

24

----

## and other representatives of the disclosing Party with a need to knowsuch information, (v) as required to make disclosure in compliance withany applicable Law, or under compulsion of judicial process, to comply withthis Agreement and its objectives or (vi) to those of a Parties’Affiliates that have a “need to know”; provided that the disclosing Party shallbe liable for any disclosure by the receiving Person to the extent suchdisclosure would not be permitted by this Section if made by thedisclosing Party.

[SIGNATURE PAGEFOLLOWS]

25

----

IN WITNESS WHEREOF, each Party has caused thisAgreement to be executed in its name by an officer thereunto duly authorized asof the date first set forth above.
|                     |   | SENECA ERIE GAMING CORPORATION             |
|---------------------|--------|--------------------------------------------|
|                |   |                                       |   |   |
|                |   |                                       |   |   |
|                |   | By:                                        |   | /s/ John Pasqualoni |
|                |   | Printed Name:                              |   | John Pasqualoni |
|                |   | Title:                                     |   | President & CEO |
| Dated: May 9,  2006 |   |                                       |   |   |
|                |   |                                       |   |   |
|                |   | SENECA CONSTRUCTION MANAGEMENT CORPORATION |
|                |   |                                       |   |   |
|                |   |                                       |   |   |
|                |   | By:                                        |   | /s/ Clayton Seneca |
|                |   | Printed Name:                              |   | Clayton Seneca |
|                |   | Title:                                     |   | President & CEO |

 

26

----