Document:

EXHIBIT
10.1

 

REINSURANCE AGREEMENT

 

between

 

AMERICAN HERITAGE LIFE INSURANCE COMPANY

 

and

 

ALLSTATE LIFE INSURANCE COMPANY

 

RECITALS

 

This Reinsurance
Agreement dated October 1, 2008 (hereinafter “Agreement”) is made and
entered into by and between AMERICAN HERITAGE LIFE INSURANCE COMPANY, a life
insurance company domiciled in the State of Florida (hereinafter “Ceding
Company”) and ALLSTATE LIFE INSURANCE COMPANY, a life insurance company
domiciled in the State of Illinois (hereinafter the “Reinsurer”).

 

WHEREAS, Ceding Company
and Reinsurer desire to enter this Agreement, whereby Ceding Company will cede
on a yearly renewable term basis 100% of the life insurance and supplemental
benefit liabilities of the Ceding Company arising under the Policies, except
for certain excluded liabilities.

 

NOW THEREFORE, in
consideration of the above stated premises and the promises and the mutual
agreements set forth below the Ceding Company and the Reinsurer agree as
follows.

 

ARTICLE I

DEFINITIONS

 

Unless otherwise defined
herein, as used in this Agreement the following terms shall have the meanings
ascribed to them below:

 

A.           “Affiliate”
shall mean, with respect to any person, any other person controlling,
controlled by or under common control with such person.  For purposes of the foregoing, “control,”
including the terms “controlling,” “controlled by” and “under common control
with,” shall mean the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract, as trustee or executor or
otherwise.

 

1

 

B.             “Annual
Statement” shall mean the Ceding Company’s Life and Accident and Health
Companies Annual Statement for the General Account as filed with the Florida
Insurance Department.

 

C.             “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

D.            “Effective
Date” shall mean the effective date of this Agreement, which shall be 12:01 am
on October 1, 2008.

 

E.              “Excluded
Liabilities” shall mean liabilities ceded by Ceding Company under Third-Party
Reinsurance Agreements.

 

F.              “Extra-Contractual
Obligations” shall mean all liabilities and
obligations for consequential, extra-contractual, exemplary, punitive, special
or similar damages or any other amounts due or alleged to be due (other than
those arising under the express terms and conditions of the Policies) which
arise from any real or alleged act, error or omission, whether or not
intentional, in bad faith or otherwise, including without limitation, any act,
error or omission relating to: (i) the marketing, underwriting,
production, issuance, cancellation or administration of the Policies; (ii) the
handling of claims or disputes in connection with the Policies; or (iii) the
failure to pay or the delay in payment of benefits or claims, under or in
connection with the Policies.

 

G.             “Net
Benefits” shall mean the actual amounts paid or incurred by the Ceding Company
with respect to the Policies for all death benefits and payments on
supplemental benefits, net of Excluded Liabilities.

 

H.            “Net
Ceded Liabilities” shall mean any and all liabilities of the Ceding Company
arising under the Policies, but shall not include Excluded Liabilities.

 

I.                 “Policy
or Policies” shall mean the life insurance policies defined in Exhibit A
which are issued or reinsured by the Ceding Company.

 

J.                “Third-Party
Reinsurance Agreements” shall mean any written reinsurance agreements under
which Ceding Company has ceded liabilities with respect to the Policies, other
than this Agreement.

 

K.            “Net
Amount at Risk” shall mean the amount calculated by subtracting the account
value from death benefit of the Policy.

 

ARTICLE II

BASIS OF REINSURANCE

 

The
Ceding Company agrees to cede and the Reinsurer agrees to accept Net Ceded
Liabilities. 

 

2

 

The
reinsurance provided hereunder shall be on a 100% yearly renewable term basis.

 

3

 

ARTICLE III

LIABILITY OF REINSURER

 

A.                                   All
of the Net Ceded Liabilities shall be reinsured pursuant to the terms of this
Agreement as of the Effective Date.

 

B.                                     The
liability of the Reinsurer with respect to Policies in force on the Effective
Date will begin on the Effective Date. 
The liability of the Reinsurer with respect to any application received
or any contract issued after the Effective Date and reinsured hereunder will
begin simultaneously with that of the Ceding Company.  The Reinsurer’s liability with respect to any
Policy will terminate on the date the Ceding Company’s liability on such
contract terminates.  However,
termination of this Agreement will not terminate the Reinsurer’s liability for
Net Benefits paid or incurred by the Ceding Company on or after the Effective
Date and prior to the date of termination. If any of the Policies are reduced
or terminated by payment of a death benefit, withdrawal or surrender, the
reinsurance will be reduced proportionately or terminated.

 

C.                                     The
reinsurance provided under this Agreement is subject to the same limitations
and conditions as set forth in the Policies.

 

D.                                    Ceding
Company shall not make any changes in the terms and conditions of any Policy,
including, but not limited to any changes to comply with any applicable law, rule or
regulation unless it has given Reinsurer written notice of any proposed change
at least thirty (30) days prior to the proposed effective date.  .

 

E.                                      Ceding
Company shall not make any changes or modifications to any of its underwriting,
claims or administrative practices, procedures or systems for the Policies, nor
waive or exercise any of its rights under any of the Policies unless it has
given Reinsurer written notice of any proposed change at least thirty (30) days
prior to the proposed effective date.

 

F.                                      Conversions,
exchanges, or replacements of Policies shall continue to be reinsured under
this Agreement so long as it is a covered plan as defined in Exhibit A.

 

ARTICLE IV

CLAIMS

 

A.                                   Except
as provided below, Reinsurer shall pay its proportionate share of all
Extra-Contractual Obligations.

 

B.                                     Reinsurer
shall not be liable to pay Ceding Company for any Extra-Contractual Obligations
to the extent such liabilities or obligations arise directly from and are 

 

4

 

proximately caused
by the gross negligence or willful acts or omissions of Ceding Company, its
agents, contractors or employees in the performance of Ceding Company’s duties
and obligations under this Agreement.

 

In the event of a change
in the amount of the Ceding Company’s liability on a Policy due to a
misstatement of age or sex, the Reinsurer’s liability will be changed
proportionately.

 

ARTICLE V

REINSURANCE PREMIUMS

 

The consideration to be
paid to Reinsurer for life reinsurance shall be the rates shown in Exhibit B
attached hereto.  The rates in Exhibit B
are guaranteed for one (1) year. 
After the initial one year period, the rates are guaranteed to be less
than the 2001 CSO Male Composite Ultimate mortality rates.  Any increase in reinsurance premiums will be
commensurate with the actual experience or reasonably expected future
performance on the underlying business.

 

ARTICLE VI

SETTLEMENT AND REPORTING

 

A.            Within
sixty (60) days after the end of each calendar month while this Agreement is in
effect, Ceding Company shall pay to Reinsurer, with respect to the Policies, a
monthly reinsurance premium in accordance with Article V.

 

B.            Within
sixty (60) days after the end of each calendar month while this Agreement is in
effect, Reinsurer shall pay to Ceding Company Net Benefits paid or incurred
during the settlement period by Ceding Company with respect to the Policies.

 

C.            Ceding
Company will provide Reinsurer with accounting reports on a time schedule
determined by Reinsurer, which schedule shall be no less frequently than
quarterly within fifteen (15) days following the end of each calendar
quarter.  These reports will contain
sufficient information about the Policies to enable the Reinsurer to prepare
its quarterly and annual financial reports.

 

D.            Within
sixty (60) days following the end of each calendar month, Ceding Company shall
provide Reinsurer a list of all policies reinsured under this agreement and in
force at the beginning of such calendar month.

 

5

 

ARTICLE VII

TAX MATTERS

 

With respect to this
Agreement, the Ceding Company and the Reinsurer hereby make the election as set
forth in Exhibit C and as provided for in section 1.848-2(g)(8) of
the Treasury Regulations.  Each of the
parties hereto agrees to take such further actions as may be necessary to
ensure the effectiveness of such election.

 

ARTICLE VIII

RESERVE CREDIT

 

To the extent the
Reinsurer becomes unadmitted, unauthorized, or unaccredited in the state of
Florida, it shall take any steps necessary, pursuant to the requirements of
Florida for the Ceding Company to take appropriate statutory credit for
reinsurance ceded.

 

ARTICLE IX

OVERSIGHTS

 

Unintentional clerical
errors, oversights, omissions or misunderstandings in the administration of
this Agreement by either the Ceding Company or the Reinsurer shall not be
deemed a breach of this Agreement provided the clerical error, oversight,
omission or misunderstanding is corrected promptly after discovery.  Both the Ceding Company and the Reinsurer
shall be restored to the positions they would have occupied had such error,
oversight, omission, or misunderstanding not occurred.

 

ARTICLE X

INSPECTION OF RECORDS

 

Either party, their
respective employees or authorized representatives, may audit, inspect and
examine, during regular business hours, at the home office of either party, any
and all books, records, statements, correspondence, reports, trust accounts and
their related documents or other documents that relate to the Policies covered
under this Agreement.  The audited party
agrees to provide a reasonable workspace for such audit, inspection or
examination and to cooperate fully and to faithfully disclose the existence of
and produce any and all necessary and reasonable materials requested by such
auditors, investigators, or examiners. The party performing a routine audit
shall provide no less than five (5) working days advance notice to the
other party. The expense of the respective party’s employee(s) or
authorized representative(s) engaged in such activities will be borne
solely by such party.

 

6

 

ARTICLE XI

INSOLVENCY

 

A.                                   The portion of any risk or obligation
reinsured by the Reinsurer under this Agreement, when such portion is ascertained,
shall be payable on demand of the Ceding Company at the same time as the Ceding
Company shall pay its net retained portion of such risk or obligation, and the
reinsurance shall be payable by the Reinsurer on the basis of the liability of
the Ceding Company under the Policies without diminution because of the
insolvency of the Ceding Company.  In the
event of the insolvency of the Ceding Company and the appointment of a
conservator, liquidator or statutory successor of the Ceding Company, such
portion shall be payable to such conservator, liquidator or statutory successor
immediately upon demand, on the basis of claims allowed against the Ceding
Company by any court of competent jurisdiction or, by any conservator,
liquidator or statutory successor of the Ceding Company having authority to
allow such claims, without diminution because of such insolvency or because
such conservator, liquidator or statutory successor has failed to pay all or a
portion of any claims.  Payments by the
Reinsurer as above set forth shall be made directly to the Ceding Company or
its conservator, liquidator or statutory successor.

 

B.                                     Further,
in the event of the insolvency of the Ceding Company, the liquidator, receiver
or statutory successor of the insolvent Ceding Company shall give written
notice to the Reinsurer of the pendency of any obligation of the insolvent
Ceding Company on any Net Ceded Liability, whereupon the Reinsurer may
investigate such claim and interpose at its own expense, in the proceeding
where such claim is to be adjudicated, any defense or defenses which it may
deem available to the Ceding Company or its liquidator or statutory
successor.  The expense thus incurred by
the Reinsurer shall be chargeable, subject to court approval, against the
insolvent Ceding Company as part of the expenses of liquidation to the extent
of a proportionate share of the benefit which may accrue to the Ceding Company
solely as a result of the defense undertaken by the Reinsurer.

 

C.                                     In
the event of the Reinsurer’s insolvency, any payments due the Reinsurer from
the Ceding Company pursuant to the terms of this Agreement will be made
directly to the Reinsurer or its conservator, liquidator, receiver or statutory
successor.

 

ARTICLE XII

ARBITRATION

 

A.                                   Prior
to initiation of arbitration, the Reinsurer and Ceding Company agree that they
will first negotiate diligently and in good faith to agree on a mutually
satisfactory resolution of any dispute. 
Provided, however that if any such dispute cannot be resolved within
sixty (60) days (or such longer period as the parties may agree) after written
notice invoking the negotiation period of this Article is delivered by
either party, the Reinsurer and the 

 

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Ceding Company agree that they will
submit this dispute to arbitration as described below.

 

B.                                     The
Reinsurer and the Ceding Company intend that any and all disputes between them
under or with respect to this Agreement be resolved without resort to any
litigation.  Any and all disputes or differences
between the Ceding Company and the Reinsurer arising out of this Agreement,
including, but not limited to, disputes or differences relating to the
interpretation or performance of this Agreement, its formation or validity, or
any transaction under this Agreement, whether arising before or after
termination, shall be submitted to arbitration. 
Arbitration shall be the sole method of dispute resolution, regardless
of the insolvency of either party, unless the conservator, receiver, liquidator
or statutory successor is specifically exempted from arbitration proceeding by
applicable state law of the insolvency.

 

C.                                     Arbitration
shall be initiated by the delivery of written notice of demand for arbitration
(“Arbitration Notice”) by one party to another.  Such written notice shall contain a brief
statement of the issue(s), remedies sought, and the failure of the parties to
reach amicable agreement as provided in Paragraph A above.

 

D.                                    The
arbitrators and umpire shall be present or former disinterested officers of
life reinsurance or insurance companies other than the two parties to this
Agreement or any company owned by, or affiliated with, either party.  Each party shall appoint an individual as
arbitrator and the two so appointed shall then appoint the umpire.  If either party refuses or neglects to
appoint an arbitrator within thirty (30) days after delivery of the Arbitration
Notice, the other party may appoint the second arbitrator.  If the two arbitrators do not agree on an
umpire within thirty (30) days of the appointment of the second appointed
arbitrator, each of the two arbitrators shall nominate three individuals.  Each arbitrator shall then decline two of the
nominations presented by the other arbitrator. 
The umpire shall be chosen from the remaining two nominations by drawing
lots.

 

E.                                      The
arbitration hearings shall be held in the city in which the Reinsurer’s head
office is located or any such other place as may be mutually agreed.  Each party shall submit its case to the
arbitrators and umpire within one hundred and eighty (180) days of the
selection of the umpire or within such longer period as may be agreed.

 

F.                                      The
arbitration panel shall make its decision with regard to the custom and usage
of the insurance and reinsurance business. 
The arbitration panel shall interpret this Agreement as an honorable
engagement; they are relieved of all judicial formalities and may abstain from
following strict rules of law.  The
arbitration panel shall be solely responsible for determining what evidence shall
be considered and what procedure they deem appropriate and necessary in the
gathering of such facts or data to decide the dispute.

 

8

 

G.                                     The
decision in writing of the majority of the arbitration panel shall be final and
binding upon the parties.  Judgment may
be entered upon the final decision of the arbitration panel in any court having
jurisdiction.

 

H.                                    The
jointly incurred costs of the arbitration are to be borne equally by both
parties.  Jointly incurred costs are
specifically defined as any costs that are not solely incurred by one of the
parties (e.g., attorneys’ fees, expert witness fees, travel to the hearing
site, etc.).  Costs incurred solely by
one of the parties shall be borne by that party.  Once the panel has been selected, the panel
shall agree on one billable rate for each of the arbitrators and umpire and
that sole cost shall be disclosed to the parties and become payable as a
jointly incurred cost as described above.

 

ARTICLE XIII

PARTIES TO AGREEMENT

 

This Agreement is solely
between the Ceding Company and the Reinsurer.   
Except as otherwise provided herein, the terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto, and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other person, and no
such rights shall be conferred upon any person or entity not a party to this
Agreement.  Ceding Company shall be and remain
directly and solely liable to any insured, contract owner, or beneficiary under
any contract reinsured hereunder.

 

ARTICLE XIV

DURATION OF AGREEMENT AND
TERMINATION

 

A.                                   Duration.  This agreement will be effective as of the
Effective Date, and shall terminate immediately upon Ceding Company and
Reinsurer ceasing to be Affiliates.

 

B.                                     Termination
for New Business.  This agreement may
be terminated for new business by either party with sixty (60) days prior
written notice.

 

C.                                     Recapture:  Ceding Company may recapture a proportionate
share of up to 100% of the Net Ceded Liabilities by providing Reinsurer with
sixty (60) days prior written notice. 
Any such recapture shall apply to all Policies reinsured under this Agreement.

 

Reinsurer
shall be liable for Net Benefits associated with recaptured amounts, as well as
for other claims as specified in Article IV, for Extra-Contractual
Obligations, each as incurred prior to the effective date of the recapture.

 

9

 

ARTICLE XV

GENERAL PROVISIONS

 

A.                                   Entire
Agreement.  This Agreement supercedes
any and all prior discussions and understandings between the parties and
constitutes the entire Agreement between the Reinsurer and the Ceding Company
with respect to the Policies.  There are
no understandings between the parties other than as expressed in this
Agreement.

 

B.                                     Notices.  Any notice or communication given pursuant to
this Agreement must be in writing and (1) delivered personally, (2) sent
by facsimile transmission, (3) delivered by overnight express, or (4) sent
by registered or certified mail, postage prepaid, to such address or addresses
each party may designate from time to time for receipt of notices or
communications.  The initial notice
addresses are as follows:

 

	
  If to the
  Reinsurer:

  	
  Allstate Life
  Insurance Company

  
	
   

  	
  3100 Sanders Rd.

  
	
   

  	
  Northbrook,
  Illinois 60062

  
	
   

  	
  Attn: John
  Pintozzi, Chief Financial Officer

  
	
   

  	
  Facsimile No.:
   (847) 326-7315

  
	
   

  	
   

  
	
  If to the Ceding
  Company:

  	
  American
  Heritage Life Insurance Company

  
	
   

  	
  1776 American
  Heritage Life Drive

  
	
   

  	
  Jacksonville,
  Florida 32224-6688

  
	
   

  	
  Attention: Laura
  Clark, Senior Vice President

  
	
   

  	
  Facsimile No.: 
  (904) 992-3125

  

 

All
notices and other communications required or permitted under the terms of this
Agreement that are addressed as provided in this Article XV shall: (1) if
delivered personally or by overnight express, be deemed given upon delivery; (2) if
delivered by facsimile transmission, be deemed given when electronically
confirmed; and (3) if sent by registered or certified mail, be deemed
given when received.  Any party from time
to time may change its address for notice purposes by giving a similar notice
specifying a new address, but no such notice shall be deemed to have been given
until it is actually received by the party sought to be charged with the
contents thereof.

 

C.                                     Expenses.  Except as may be otherwise expressly provided
in this Agreement, whether or not the transactions contemplated hereby are
consummated, each of the parties hereto shall pay its own costs and expenses
incident to preparing for, entering into and carrying out this Agreement and
the consummation of the transactions contemplated hereby.

 

D.                                    Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.

 

10

 

E.                                      Amendment.  Any modification or modification to this
Agreement shall be null and void unless made by a written instrument executed
by both parties hereto.

 

F.                                      Assignment;
Bind Effect.  Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by either of the parties hereto without the
prior written consent of the other party, which consent shall not be
unreasonably withheld, and any such assignment that is attempted without such
consent shall be null and void.  Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the parties and their respective successors
and permitted assigns.

 

G.                                     Invalid
Provisions.  If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under any present or
future law, and if the rights or obligations of the parties hereto under this
Agreement will not be materially and adversely affected thereby, (1) such
provision shall be fully severable; (2) this Agreement shall be construed
and enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part hereof; and (3) the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by
the illegal, invalid, or unenforceable provision or by its severance herefrom.

 

H.                                    Waiver.  Any term or condition of this Agreement may
be waived in writing at any time by the party that is entitled to the benefit
thereof.  A waiver on one occasion shall
not be deemed to be a waiver of the same or any other breach or nonfulfillment
on a future occasion.  All remedies,
either under the terms of this Agreement, or by law or otherwise afforded,
shall be cumulative and not alternative, except as otherwise provided by law.

 

I.                                         Headings,
etc.  The headings used in this
Agreement have been inserted for convenience and do not constitute matter to be
construed or interpreted in connection with this Agreement.  Unless the context of this Agreement
otherwise requires, (1) words using the singular or plural number also
include the plural or singular number, respectively; (2) the terms “hereof,”
“herein,” “hereby,” “hereto,” “hereunder,” and
derivative or similar words refer to this entire Agreement (including the
exhibits hereto); (3) the term “Article” refers to the specified Article of
this Agreement; (d) the term “Exhibit” refers to the specified Exhibit attached
to this Agreement; and (e) the term “party” means, on the one hand,
the Ceding Company, and on the other hand, the Reinsurer.

 

J.                                        Offset.  Any debits or credits incurred after the
Effective Date in favor of or against either the Ceding Company or the
Reinsurer with respect to this Agreement are deemed mutual debits or credits,
as the case may be, and shall be set off against each other dollar for dollar.

 

K.                                    Compliance
with Laws.  The parties hereto shall
at all times comply with all applicable laws in performing their obligations
under this Agreement.

 

11

 

L.                                      Survival. All
provisions of this Agreement shall survive its termination to the extent
necessary to carry out the purposes of this Agreement or to ascertain and
enforce the parties’ rights or obligations hereunder existing at the time of
termination.

 

M.                                 Calendar
Days.  Unless otherwise
specified, all references to “day” in this Agreement shall mean calendar days.

 

IN WITNESS HEREOF, the
parties to this Agreement have caused it to be duly executed in duplicate by
their respective officers on the dates shown below.

 

 

ALLSTATE LIFE INSURANCE
COMPANY

 

 

	
  By

  	
     /s/
  Samuel H. Pilch

  	
   

  
	
   

  	
  Samuel H. Pilch

  	
   

  
	
  Title

  	
  Group Vice
  President and Controller

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
     October 22,
  2008

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   AMERICAN HERITAGE LIFE INSURANCE COMPANY

  
	
   

  	
   

  
	
  By

  	
     /s/
  Samuel H. Pilch

  	
   

  
	
   

  	
  Samuel H. Pilch

  	
   

  
	
  Title

  	
  Group Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
     October 22,
  2008

  	
   

  
				

 

12

 

EXHIBIT A

ELIGIBLE AND
INELIGIBLE POLICIES

 

Policies reinsured under
this Agreement shall include all individual life insurance policies and all
group life insurance policies with the exception of group life insurance
administered on the Genelco administration system.  Additional insured riders, child term riders,
supplemental accidental death benefits, and supplemental accelerated benefits
attached to a reinsured policy as described above shall be reinsured under this
Agreement.

 

No credit life insurance
policies shall be reinsured under this Agreement.

 

13

 

EXHIBIT B

REINSURANCE
PREMIUM CALCULATION

 

Reinsurance premiums
shall be calculated by multiplying the Policy’s Net Amount at Risk, the
reinsurance Premium Factors, and the Underlying Table, using the insured’s
attained age last birthday at the time of the calculation.

 

The Underlying Table is a
blend of gender-specific, tobacco use-specific 2001 CSO Ultimate mortality
using the following distribution as of the Effective Date:

 

Male Smoker:  13%

Male Non-Smoker:  39%

Female Smoker:  10%

Female Non-Smoker:  38%

 

Upon written notice,
Reinsurer may request an update to the existing Underlying Table distribution
for the purpose of calibrating to changes in the gender and tobacco use
distribution of the Policies. 
Prospective reinsurance premiums shall reflect the updated Underlying
Table distribution.

 

Premium Factors

 

	
  Duration

  	
   

  	
  Premium
  Factor

  
	
  1

  	
   

  	
  0.71

  
	
  2

  	
   

  	
  0.77

  
	
  3+

  	
   

  	
  0.92

  

 

14

 

EXHIBIT C

TAX ELECTION

 

The Ceding Company and
the Reinsurer hereby make an election pursuant to Treasury Regulations Section 1.848-2(g)(8).  This election shall be effective for the tax
year during which the Effective Date falls and all subsequent taxable years for
which this Agreement remains in effect. 
Unless otherwise indicated, the terms used in this Exhibit are
defined by reference to Treasury Regulations Section 1.848-2 as in effect
on the date hereof.  As used below, the
term “party” or “parties” shall refer to the Ceding Company or
the Reinsurer, or both, as appropriate.

 

1.                                       The
party with the Net Positive Consideration (as defined in Section 848 of
the Code and related Treasury Regulations) with respect to the transactions
contemplated under this Agreement for any taxable year covered by this election
will capitalize specified policy acquisition expenses with respect to such
transactions without regard to the general deductions limitation of Section 848(c)(1) of
the Code.

 

2.                                       The
parties agree to exchange information pertaining to the amount of Net
Consideration (as defined in Section 848 of the Code and related Treasury
Regulations) under this Agreement each year to ensure consistency or as is
otherwise required by the Internal Revenue Service.  The exchange of information each year will
follow the procedures set forth below:

 

(a)                                  By
April 1 of each year, the Ceding Company will submit a schedule to the
Reinsurer of its calculation of the Net Consideration for the preceding
calendar year.  This schedule of
calculations will be accompanied by a statement signed by an authorized representative
of the Ceding Company stating the amount of the Net Consideration the Ceding
Company will report in its tax return for the preceding calendar year.

 

(b)                                 Within
thirty (30) days of the Reinsurer’s receipt of the Ceding Company’s
calculation, the Reinsurer may contest such calculation by providing an
alternative calculation to the Ceding Company in writing.  If the Reinsurer does not notify the Ceding
Company that it contests such calculation within said 30-day period, the
calculation will be presumed correct and the Reinsurer shall also report the
Net Consideration as determined by the Ceding Company in the Reinsurer’s tax
return for the preceding calendar year.

 

(c)                                  If
the Reinsurer provides an alternative calculation of the Net Consideration pursuant
to clause (b), the parties will act in good faith to reach an agreement as to
the correct amount of Net Consideration within thirty (30) days of the date the
Ceding Company receives the alternative calculation from the Reinsurer.  When the Ceding Company and the Reinsurer
reach agreement on an amount of Net Consideration, each party shall report the
applicable amount in their respective tax returns for the preceding calendar
year.

 

15Exhibit 10.1

 

EXECUTION
COPY

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is dated as of this 1st day of July, 2008, by and between the Seneca Gaming
Corporation (“Parent”), a governmental
instrumentality of the Seneca Nation of Indians of New York (the “Nation”) and David Sheridan (“Executive”).

 

WHEREAS, Parent desires that Executive serve as the
Chief Financial Officer of Parent and each of the Seneca Niagara Falls Gaming
Corporation (“SNFGC”), the Seneca Territory
Gaming Corporation (“STGC”), and the
Seneca Erie Gaming Corporation (“SEGC”), each a
wholly-owned subsidiary of Parent and a governmental instrumentality of the
Nation (collectively, the “Subsidiaries”
and together with Parent, “Employer”); and

 

WHEREAS, Executive desires to serve as the Chief
Financial Officer of Employer in accordance with the terms and conditions of
this Agreement.

 

IT IS HEREBY AGREED AS FOLLOWS:

 

1.             Employment. Employer hereby employs Executive as its Chief Financial
Officer.  Executive shall report and be
accountable to and work under the authority of the President and Chief
Executive Officer and the Board of Directors of Parent (the “Board”). 
Executive shall perform such duties and have such responsibilities that
are customary for such position and including those that may be specified from
time to time by the President and Chief Executive Officer and/or the Board that
are not inconsistent with such position.

 

2.             Term.  The term of this
Agreement shall commence on July 1, 2008 (the “Commencement Date”) and terminate on June 30, 2011 (the “Termination Date”), unless renewed by a
subsequent written agreement of the parties. 
The parties agree that they shall enter into good faith discussions
regarding renewal/non-renewal of this Agreement no later than twelve (12)
months prior to the Termination Date.  In
the event such discussions are ongoing as of the Termination Date, this
Agreement shall renew on a month-to-month basis, provided, that, under all
circumstances, the other party shall be entitled to no less than one hundred
eighty (180) days notice prior to the effectiveness of the other party’s
non-renewal, if applicable.

 

3.             Compensation.

 

(a)           Executive shall be paid an annual base salary (“Base Compensation”) of Three Hundred
Twenty-Five Thousand Dollars ($325,000) for Employer’s fiscal year ending September 30,
2008.  Employer shall review said salary
on an annual basis (prior to or in connection with the close of its fiscal
year) at which time Employer shall determine in its sole discretion whether or
not said salary shall be increased and the timing thereof.  Said salary shall be payable in periodic
payments in accordance with Employer’s regular payroll practices.

 

(b)           Executive shall be provided with coverage under
Employer’s employee benefit insurance programs and retirement programs, if any,
at least equal to the coverage provided to other senior executive officers of
Employer.

 

 

(c)           Executive shall
also be eligible to receive performance or incentive compensation, which is
approved by the Board in its sole discretion. 
Said additional performance or incentive compensation, if any, shall be
in addition to and shall not lessen or reduce the Base Compensation.

 

(d)           Should
Executive become unable to perform the duties required under this Agreement as
a result of temporary, documented medical disability, he shall be eligible to
continue to receive his Base Compensation for a period of up to one hundred and
eighty (180) days.

 

4.             Licensing
Issues.  Executive represents and warrants to Employer
that he shall maintain in good standing such licenses as may be required
pursuant to the Nation-State Gaming Compact between the Nation and the State of
New York (the “Compact”) and/or the Nation’s or Employer’s gaming ordinances as
in effect on the date hereof, as may be necessary to enable him to engage in
his employment hereunder.

 

5.             Termination.

 

(a)           Executive’s
employment hereunder may be terminated by Parent only under the following
circumstances and such termination by Parent shall be a termination with respect
to Parent and each of the Subsidiaries, unless otherwise determined by the
Board:

 

(i)            upon revocation, disapproval
or suspension of such license(s) for Executive as are required pursuant to
the Compact and/or by the Nation’s gaming ordinance(s), provided, that, in the
event Executive appeals the grounds for such revocation, disapproval or
suspension, Employer shall suspend Executive without compensation during the
pendency of such appeal, with reinstatement of Executive and reimbursement of
such compensation by Employer in the event such appeal is successful.  The foregoing shall not act as a limitation
on the rights and/or obligations of the parties otherwise included in this
Agreement;

 

(ii)           Executive shall commit an
act constituting “Cause,” which is defined to mean an act of dishonesty by
Executive intended to result in gain or personal enrichment of Executive or
others at Employer’s expense, or the deliberate and intentional refusal by
Executive (except by reason of disability) to perform his duties hereunder, or
by acts constituting gross negligence in the performance of such duties, or the
failure to perform any material term or condition of this Agreement after
written notice thereof from Company and a reasonable opportunity to cure such
failure (as determined by Company and specified in the notice of breach); or

 

2

 

(iii)          Executive shall die or
Employer shall for any reason within Employer’s or the Nation’s control
permanently cease to conduct casino gaming on Nation Territory.  For purposes of this Agreement, “Nation
Territory” shall include current or future Nation territory where Employer
conducts or will conduct its gaming operations as of the date Executive’s
employment is terminated.

 

(b)           If Executive’s
employment should be terminated under Section 5(a) above (or any
subsection) then Employer shall at that time pay Executive (or his estate, as
applicable) Base Compensation earned through the date Executive is terminated,
whereupon Employer shall have no further liability or obligation to Executive
under this Agreement or otherwise.

 

(c)           If Executive’s
employment should be terminated by Parent for any reason other than those
specified in Section 5(a) above (it being understood that a purported
termination for Cause which is contested by Executive and finally determined
not to have been proper shall be treated as a termination under this Section 5(c)),
then Employer shall: (i) pay Executive his Base Compensation earned, but
unpaid, through the date Executive is terminated, (ii)  continue to pay
Executive his Base Compensation in effect as of the date of termination for a
period following his termination (the “Severance Period”) equal to the lesser
of (A) eighteen (18) months or (B) the remainder of the period ending
on the Termination Date, and (iii) to the extent elected by Executive, pay
for the cost of (A) Executive’s premiums for continuation healthcare
coverage under Section 4980B of the Internal Revenue Code of 1986, as
amended (“COBRA”), and (B) the premiums for Exec-u-Care® or any similar
executive medical reimbursement insurance plan maintained by Employer on the
date Executive’s employment is terminated, for the lesser of (1) the
Severance Period, (2) until Executive is no longer eligible for COBRA
continuation coverage, or (3) until Executive obtains comparable
healthcare benefits from any other employer during the Severance Period,
whereupon Employer shall have no further liability or obligation to Executive
under this Agreement or otherwise; provided, however, that
Executive shall have a duty to mitigate damages as follows: during the
Severance Period, Executive shall endeavor to mitigate damages by seeking
employment with duties and salary comparable to those provided for herein, and
if he shall obtain such employment, he shall reimburse Employer the amount of
the compensation he has received from such other entity for such period, but
not to exceed the amount of the compensation Employer shall have paid him for
such period.

 

(d)           Executive may
terminate his employment for any reason upon one-hundred-twenty (120) days
written notice to Parent.  If Executive
terminates his employment pursuant to this paragraph 5(d), Employer shall pay
Executive the Base Compensation earned through the date of termination,
whereupon Employer shall have no further liability or obligation to Executive
under this Agreement or otherwise.

 

3

 

(e)           Executive
acknowledges and agrees that the payments set forth in this section 5
constitute liquidated damages for termination of his employment during the
employment term and such liquidated damages shall be his only remedy with
respect to any claim, including, without limitation, breach of contact, he may
have under this Agreement and that prior to receiving any such payments under Section 5
and as a material condition thereof, Executive shall sign and agree to be bound
by a general release of claims against Employer related to Executive’s
employment (and termination of employment) with Employer in substantially the
form as attached hereto as Exhibit A as may be modified by Employer
in good faith to reflect changes in law or its employment practices.  Notwithstanding any other provision of this
Agreement to the contrary, Executive acknowledges and agrees that other than
any claim for the liquidated damages contemplated hereunder, he waives any
rights to be awarded any other damages with respect to any claim he may have
under this Agreement, including, without limitation, compensatory or punitive
damages.

 

6.             Restrictive
Covenants.

 

(a)           Executive acknowledges
that:  (i) as a result of Executive’s
employment  with Employer, he will obtain
secret, proprietary and confidential information concerning the business of
Employer, including, without limitation, business and marketing plans,
strategies, employee lists, patron lists, operating procedures, business
relationships (including persons, corporations or other entities performing
services on behalf of or otherwise engaged in business transactions with
Employer), accounts, financial data, know-how, computer software and related
documentation, trade secrets, processes, policies and/or personnel, and other
information relating to Employer (“Confidential Information”);
(ii) the Confidential Information has been developed and created by
Employer at substantial expense and the Confidential Information constitutes
valuable proprietary assets and Employer will suffer substantial damage and
irreparable harm which will be difficult to compute if, during the Restricted
Period, Executive should enter a Competitive Business (as defined herein) in
violation of the provisions of this Agreement; (iii) Employer will suffer
substantial damage which will be difficult to compute if, during the Restricted
Period, Executive should solicit or interfere with Employer’s employees or
patrons, or should divulge Confidential Information relating to the business of
Employer; (iv) the provisions of this Section 6 are reasonable and
necessary for the protection of the business of Employer; (v) Employer
would not have hired or employed Executive unless he signed this Agreement; and
(vi) the provisions of this Agreement will not preclude Executive from
other gainful employment.  “Competitive Business” shall mean any gaming establishment
which provides to its patrons games of chance such as slot machines, card
games, roulette, and similar games in the State of New York or within the 100
mile radius of Nation Territory.

 

(b)           Executive acknowledges and agrees that the
unauthorized disclosure or misuse of Confidential Information will cause
substantial damage to Employer. 
Therefore, Executive agrees not to, at any time, either during the term
of the Agreement or 

 

4

 

thereafter, divulge, use, publish or in any other manner reveal,
directly or indirectly, to any person, firm or corporation any Confidential
Information obtained or learned by Executive during the course of his
employment with Employer, with regard to the operational, financial, business
or other affairs and activities of Employer, their officers, directors or
employees and the entities with which they have business relationships, except (i) as
may be necessary to the performance of Executive’s duties with Employer, (ii) with
Parent’s express written consent, (iii) to the extent that any such
information is in the public domain other than as a result of Executive’s
breach of any of obligations hereunder, or (iv) where required to be
disclosed by court order, subpoena or other government process and, in such
event, Executive shall cooperate with Employer in attempting to keep such
information confidential.

 

(c)           During Executive’s employment with Employer
and for eighteen (18) months after his termination of employment for any reason
(the “Restricted Period”), Executive,
without the prior written permission of Parent, shall not, directly or
indirectly, (i) enter into the employ of or render any services to any
person, engaged in a Competitive Business; or (ii) become associated with
or interested in any Competitive Business as an individual, partner,
shareholder, member, creditor, director, officer, principal, agent, employee,
trustee, consultant, advisor or in any other relationship or capacity.   This paragraph 6(c) shall not prevent
Executive from owning common stock in a publicly traded corporation which owns
or manages a casino provided Executive does not take an active role in the
ownership or management of such corporation and his ownership interest
represents less than 3% of the voting securities and/or economic value of such
corporation.

 

(d)           By executing this Agreement, Executive
acknowledges that he understands that Employer’s ability to operate its
business depends upon its ability to attract and retain skilled people and that
Employer has and will continue to invest substantial resources in training such
individuals.  Therefore, during the
Restricted Period, Executive shall not, without the prior written permission of
Parent, directly or indirectly solicit, employ or retain, or have or cause any
other person or entity to solicit, employ or retain, any person who is employed
or is providing personal services to Employer.

 

(e)           By executing this Agreement,
Employee acknowledges that Executive understands that Employer’s ability to
operate its business depends upon its ability to attract and retain vendors and
patrons.  Therefore, during the
Restricted Period, Executive shall not, directly or indirectly, solicit,
contact, interfere with, or endeavor to entice away from Employer any of its
current or potential patrons or any such persons or entities that were patrons
of Employer within the one year period immediately prior to Executive’s
termination of employment.  Executive
further agrees that, during the Restricted Period, Executive shall not,
directly or indirectly, endeavor to entice away from Employer any of its
current or potential 

 

5

 

vendors or any such persons
or entities that were vendors of Employer within the one year period
immediately prior to Employee’s termination of employment.

 

(f)            Executive acknowledges and agrees during
his employment and for all time thereafter that he will not defame or publicly
criticize the services, business, integrity, veracity or personal or
professional reputation of Employer and its officers, directors, employees,
affiliates, or agents thereof in either a professional or personal manner.  Employer acknowledges and agrees that during
Executive’s employment and for all time thereafter, Employer will not defame or
publicly criticize Executive either in a professional or personal manner,
except as may be necessary to defend Employer from comments made by or on
behalf of Executive.

 

(g)           If Executive commits a breach, or threatens
to commit a breach, of any of the provisions of this paragraph 6 of the
Agreement, Employer shall have the right and remedy to have the provisions
specifically enforced by any court having jurisdiction, it being acknowledged
and agreed by Executive that the services being rendered hereunder to Employer
are of a special, unique and extraordinary character and that any such breach
or threatened breach will cause irreparable injury to Employer and that money
damages will not provide an adequate remedy to Employer.  Such right and remedy shall be in addition
to, and not in lieu of, any other rights and remedies available to Employer at
law or in equity.  Accordingly, Executive
consents to the issuance of an injunction, whether preliminary or permanent,
consistent with the terms of this Agreement.

 

(h)           If, at any time, the provisions of this
Agreement shall be determined to be invalid or unenforceable under any
applicable law, by reason of being vague or unreasonable as to area, duration
or scope of activity, this Agreement shall be considered divisible and shall
become and be immediately amended to only such area, duration and scope of
activity as shall be determined to be reasonable and enforceable by the court
or other body having jurisdiction over the matter and Executive and Employer
agree that this Agreement as so amended shall be valid and binding as though
any invalid or unenforceable provision had not been included herein.

 

7.             Miscellaneous.

 

(a)           Executive agrees that during
the term of this Agreement
unless earlier terminated, he will commit his full time and energies to
the duties imposed hereby; provided, that, with the prior written
approval of the Board, Executive may expend as much of his personal time on his
own ventures or investments, so long as: (i) such time is not substantial
and does not interfere with his ability to perform his duties hereunder; (ii) such
activities do not compete or conflict with the business of Employer or create a
personal conflict of interest to Executive and (iii) such venture or investment
does not transact any business with Employer without prior disclosure to, and
approval by, the Board.

 

6

 

(b)           Executive represents to
Employer that there are no restrictions or agreements to which he is a party
which would be violated by his execution of this Agreement and his employment
hereunder.

 

(c)           No
provisions of this Agreement may be amended, modified, or waived unless such
amendment or modification is agreed to in writing signed by Executive and by a
duly authorized officer of Parent, and such waiver is set forth in writing and
signed by the party to be charged.  No
waiver by any party hereto at any time of any breach by the other party hereto
of any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this
Agreement.  The respective rights and
obligations of the parties hereunder of this Agreement shall survive Executive’s
termination of employment and the termination of this Agreement to the extent
necessary for the intended preservation of such rights and obligations.

 

(d)           The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New York without regard to its
conflicts of law principles.

 

(e)           Except as provided in
paragraph 6(g) of this Agreement, any dispute, controversy or claim
arising out of or relating to this Agreement shall be settled by binding
arbitration in Niagara Falls, New York in accordance with the Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in the United States District Court for the
Western District of New York.  The
parties agree that the only remedies available to Executive under this
Agreement are those that are set forth in paragraph 5 and the arbitrator shall
have no authority to award any other damages, including, without limitation,
punitive and/or compensatory damages.

 

(f)            For
the purposes of this Agreement, notices, demands and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered either personally or by United States certified
or registered mail, return receipt requested, postage prepaid, addressed as
follows:

 

	
   

  	
  If to Executive:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

7

 

If to Parent:

 

310 4th Street

P.O. Box 77

Niagara Falls, New York (Seneca Nation Territory)
14303

Attn:  General
Counsel

 

or
to such other address as any party may have furnished to the others in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

(g)           The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

 

(h)           This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.

 

(i)            Except
as otherwise provided herein, this Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto in respect of such
subject matter.  Except as otherwise
provided herein, the Original Employment Agreement and any other prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.

 

(j)            All
payments hereunder shall be subject to any required withholding of federal,
state and local taxes pursuant to any applicable law or regulation.

 

(k)           The
section headings in this Agreement are for convenience of reference only, and
they form no part of this Agreement and shall not affect its interpretation.

 

8.             Waiver
of Sovereign Immunity.

 

(a)           Parent grants a waiver of its sovereign immunity from suit
exclusively to Executive (and his estate in the event of his death) for the
purpose of enforcing this Agreement, or permitting or compelling arbitration
and other remedies as provided herein. 
This waiver is solely for the benefit of the aforesaid parties and for
no other person or entity.  For this
limited purpose, Parent consents to be sued solely with respect to the
enforcement of any decision by an arbitrator relating to this Agreement as
provided in paragraph 7(e) of this Agreement in the United States District
Court for the Western District of New York.

 

(b)           Parent hereby waives any requirement of exhaustion of tribal
remedies, and agrees that it will not present any affirmative defense in any
dispute based on any alleged failure to exhaust such remedies.  Without in any way limiting the 

 

8

 

generality of the foregoing, Parent
expressly authorizes any governmental authorities who have the right and duty
under applicable law to take any action authorized or ordered by any court, to
take such action, including, without limitation, repossessing any property and
equipment subject to a security interest or otherwise giving effect to any
judgment entered; provided, however that Parent does not hereby
waive the defense of sovereign immunity with respect to any action by third
parties.

 

(c)           Parent’s
waiver of immunity from suit is irrevocable and specifically limited to the
remedies provided in paragraph 5 of this Agreement regarding liquidated
damages.  Any monetary award related to
any such action shall be satisfied solely from the net income of Parent.

 

(d)           Notwithstanding
anything in this Agreement to the contrary, this waiver is to be interpreted in
a manner consistent with Parent’s ability to enter into this Agreement,
including, without limitation, this paragraph 8, as provided in the Charter of
Parent, as it may be amended from time to time. 
Accordingly, the Nation shall not be liable for the debts or obligations
of Parent, and Parent shall have no power to pledge or encumber the assets of
the Nation.  Furthermore, this paragraph
8 does not constitute a waiver of any immunity of the Nation or a delegation to
Parent of the power to make any such waiver. This paragraph 8 shall be strictly
construed with a view toward protecting the Nation’s assets from the reach of
creditors and others.

 

 

EXECUTED, as of the date first
written above.

 

 

SENECA
GAMING CORPORATION

 

 

	
  By

  	
   

  	
   

  
	
  Name:  E.
  Brian Hansberry

  	
   

  
	
  Title:  President
  and CEO

  	
   

  

 

 

EXECUTIVE

 

	
   

  	
   

  
	
  Name:  David
  Sheridan

  	
   

  

 

9

 

EXECUTION COPY

 

Exhibit A

 

Form of Release

 

See Attached.

 

 

EXECUTION COPY

 

MUTUAL RELEASE OF ALL
CLAIMS

 

Release of Claims by Executive.

 

                                                It is
understood and agreed by the Seneca Gaming Corporation, on behalf of itself and
each of its wholly-owned subsidiaries (collectively, the “Company”), a
governmental instrumentality of the Seneca Nation of Indians of New York, and
                                      
(“Executive”), that in consideration of the mutual promises and covenants
contained in this general release of all claims (the “Release Agreement”),
Executive, on behalf of Executive and Executive’s agents, representatives,
administrators, receivers, trustees, estates, heirs, devisees, assignees, legal
representatives, and attorneys, past or present (as the case may be), hereby
irrevocably and unconditionally releases, discharges, and acquits all the
Released Parties (as defined below) from any and all claims, promises, demands,
liabilities, contracts, debts, losses, damages, attorneys’ fees and causes of
action of every kind and nature, known and unknown, up to and including the
Effective Date (as defined below), provided, however, that any claims arising
after the Effective Date from the then present effect of acts or conduct
occurring on or before the Effective Date shall be deemed released under this
agreement, including but not limited to causes of action, claims or rights
arising out of, or which might be considered to arise out of or to be connected
in any way with (i) Executive’s employment or service with the Company
and, to the extent applicable, a Released Party, or the termination thereof; (ii) the
Employment Agreement dated as of
                              
between the Company and Executive, or the termination thereof; (iii) any
treatment of Executive by any of the Released Parties, which shall include,
without limitation, any treatment or decisions with respect to hiring,
placement, promotion, discipline, work hours, demotion, transfer, termination,
compensation, performance review, or training; (iv) any statements or
alleged statements by the Company or any of the Released Parties regarding
Executive, whether oral or in writing; (v) any damages or injury that
Executive may have suffered, including without limitation, emotional or physical
injury, compensatory damages, or lost wages; (vi) employment
discrimination, which shall include, without limitation, any individual or
class claims of discrimination on the basis of age, disability, sex, race,
religion, national origin, citizenship status, marital status, sexual
preference, or any other basis whatsoever; or (vii) all such other claims
that Executive could assert against any, some, or all of the Released Parties
in any forum, whether such claims are known or unknown, accrued or unaccrued,
liquidated or contingent, direct or indirect.

 

                                                Said release
shall be construed as broadly as possible and shall also extend to release the
Released Parties, without limitation, from any and all claims that Executive
has alleged or could have alleged, whether known or unknown, accrued or
unaccrued, against any Released Party for violation(s) of any of the
following, to the extent applicable:  the
National Labor Relations Act, as amended; Title VII of the Civil Rights Act of
1964, as amended; the Age Discrimination in Employment Act; the Civil Rights
Act of 1991; Sections 1981-1988 of Title 42 of the United States Code; the
Equal Pay Act; the Employee Retirement Income Security Act of 1974, as amended;
the Immigration Reform Control Act, as amended; the Americans with Disabilities
Act of 1990, as amended; the Fair Labor Standards Act, as amended; the
Occupational Safety and 

 

 

Health Act, as amended; the New York Human Rights
Law; the New York City Human Rights Law; the New York Labor Law; the New York
Whistleblower Protection Law; the New York Wage and Hour Laws; the New York
City Administrative Code; any other tribal, federal, state, or local law or
ordinance; any public policy, whistleblower, contract, tort, or common law; and
any demand for costs or litigation expenses, including but not limited to
attorneys’ fees.

 

                                                The term “Released
Parties” or “Released Party” as used herein shall mean and include: the Company
and the Company’s parents, subsidiaries, affiliates, and all of their
predecessors and successors (collectively, the “Released Entities”), and with
respect to each such Released Entity, all of its former, current, and future
officers, directors, agents, representatives, employees, servants, owners,
shareholders, partners, joint venturers, attorneys, insurers, administrators,
and fiduciaries, and any other persons acting by, through, under, or in concert
with any of the persons or entities listed herein.

 

                                                Pursuant to the
Older Workers Benefit Protection Act of 1990, Executive understands and acknowledges
that by executing this Release Agreement and releasing all claims against any
of the Released Parties, Executive has waived any and all rights or claims that
Executive has or could have against any Released Party under the Age
Discrimination in Employment Act, which includes any claim that any Released
Party discriminated against Executive on account of Executive’s age.  Executive also acknowledges the following:

 

(a)                                 The Company, by this written
Release Agreement, has advised Executive to consult with an attorney prior to
executing this Release Agreement;

 

(b)                                This Release Agreement does
not include claims arising after the Effective Date, provided, however, that
any claims arising after the Effective Date from the then present effect of
acts or conduct occurring on or before the Effective Date shall be deemed
released under this Release Agreement;

 

(c)                                 The Company has provided
Executive the opportunity to review and consider this Release Agreement for
twenty-one (21) days from the date Executive receives this Release
Agreement.  At Executive’s option and
sole discretion, Executive may waive the twenty-one (21) day review period and
execute this Release Agreement before the expiration of twenty-one (21)
days.  If Executive elects to waive the
twenty-one (21) day review period, Executive acknowledges and admits that
Executive was given a reasonable period of time within which to consider this
Release Agreement and Executive’s waiver is made freely and voluntarily,
without duress or any coercion by any other person; and

 

(d)                                Executive may revoke this
Release Agreement within a period of seven (7) days after execution of the
agreement.  Executive agrees that any
such revocation is not effective unless it is made in writing and delivered to
the Company, to the attention of the General Counsel of the Seneca Gaming
Corporation, 310 Fourth Street, Niagara Falls, New York (Seneca Nation
Territory) 14303, by the end of the seventh (7th) calendar day.  Under any such valid revocation, Executive
shall not be entitled to any benefits under 

 

12

 

this
Release Agreement and this Release Agreement shall become null and void.  This Release Agreement becomes effective on
the eighth (8th) calendar day after it is executed by both parties (the “Effective
Date”).

 

                                                Executive
confirms that no claim, charge, or complaint against any of the Released
Parties, brought by Executive, exists before any federal, state, or local court
or administrative agency.  Executive
hereby waives Executive’s right to accept any relief or recovery, including
costs and attorney’s fees, from any charge or complaint before any federal,
state, or local court or administrative agency against any of the Released
Parties, except as such waiver is prohibited by law.

 

                                                Executive
agrees that Executive will not, unless otherwise prohibited by law, at any time
hereafter, participate in as a party, or permit to be filed by any other person
on  Executive’s behalf or as a member of
any alleged class of persons, any action or proceeding of any kind, against the
Released Parties or any past, present or future employee benefit and/or pension
plans or funds of the Released Entities with respect to any act, omission,
transaction or occurrence up to and including the date of the execution of this
Release Agreement.  Executive further
agrees that Executive will not seek or accept any award or settlement from any
source or proceeding with respect to any claim or right covered by this paragraph
or by the Release Agreement and that this Release Agreement shall act as a bar
to recovery in any such proceedings.

 

                                                Executive
agrees that neither this Release Agreement nor the furnishing of the
consideration for the general release set forth in this Release Agreement shall
be deemed or construed at any time for any purpose as an admission by the
Released Parties of any liability or unlawful conduct of any kind.  Executive further acknowledges and agrees
that the consideration provided for herein is adequate consideration for
Executive’s obligations under this Release Agreement.

 

Release of Claims by Company.

 

                                                Subject to the
provisions of this Release Agreement and subject to Executive not exercising
Executive’s revocation rights hereunder, the Company hereby irrevocably and
unconditionally releases, waives and fully and forever discharges Executive,
from and against any and all claims, liabilities, obligations, covenants,
rights, demands and damages of any nature whatsoever, whether known or unknown,
anticipated or unanticipated, arising from, by reason of or in any way related
to any transaction, event or circumstance which occurred or existed prior to
and including the date of this Release Agreement arising out of or in any way
related to Executive’s employment with the Company and, to the extent
applicable, a Released Party, or the termination thereof, including, without
limitation, any demand for costs, litigation expenses, or attorneys’ fees
arising out of any such transaction, event or circumstance within the scope
this release.  Notwithstanding the
provisions of this paragraph, nothing in this waiver or release shall be
construed to constitute any release or waiver by the Company of its rights or
claims against Executive arising out of any intentional or willful misconduct
or fraudulent or criminal acts engaged in by Executive while in the course of
Executive’s employment or service.

 

13

 

Miscellaneous.

 

                                                This Agreement
and all questions relating to its validity, interpretation, performance and
enforcement shall be governed by and construed in accordance with the laws of
the Seneca Nation of Indians.  If any
provision of the Release Agreement other than the general release set forth
above, is declared legally or factually invalid or unenforceable by any court
of competent jurisdiction and if such provision cannot be modified to be
enforceable to any extent or in any application, then such provision
immediately shall become null and void, leaving the remainder of this Release
Agreement in full force and effect.  If
any portion of the general release set forth in this Release Agreement is
declared to be unenforceable by a court of competent jurisdiction in any action
in which Executive participates or joins, Executive agrees that all consideration
paid to Executive under this Release Agreement shall be offset against any
monies that Executive may receive in connection with any such action.

 

                                                This Release
Agreement sets forth the entire agreement between Executive and the Released
Parties and it supersedes any and all prior agreements or understandings with
respect to the subject matter hereof, whether written or oral, between the
parties, except as otherwise specified in this Release Agreement.  Executive acknowledges that Executive has not
relied on any representations, promises, or agreements of any kind made to her
in connection with Executive’s decision to sign this Release Agreement, except
for those set forth in this Release Agreement.

 

                                                This Release
Agreement may not be amended except by a written agreement signed by both
parties, which specifically refers to this Release Agreement.

 

                                                EXECUTIVE
ACKNOWLEDGES THAT EXECUTIVE CAREFULLY HAS READ THIS RELEASE AGREEMENT; THAT
EXECUTIVE HAS HAD THE OPPORTUNITY TO THOROUGHLY DISCUSS ITS TERMS WITH COUNSEL
OF EXECUTIVE’S CHOOSING; THAT EXECUTIVE FULLY UNDERSTANDS ITS TERMS AND ITS
FINAL AND BINDING EFFECT; THAT THE ONLY PROMISES MADE TO SIGN THIS RELEASE
AGREEMENT ARE THOSE STATED AND CONTAINED IN THIS RELEASE AGREEMENT; AND THAT
EXECUTIVE IS SIGNING THIS RELEASE AGREEMENT KNOWINGLY AND VOLUNTARILY.  EXECUTIVE STATES THAT EXECUTIVE IS IN GOOD
HEALTH AND IS FULLY COMPETENT TO MANAGE EXECUTIVE’S BUSINESS AFFAIRS AND
UNDERSTANDS THAT EXECUTIVE MAY BE WAIVING SIGNIFICANT LEGAL RIGHTS BY
SIGNING THIS RELEASE AGREEMENT.

 

[Signature Page Follows]

 

14

 

                                                IN
WITNESS WHEREOF, Executive has executed this Release Agreement as of the date
set forth below.

 

 

	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sworn to and subscribed before me

  	
   

  	
   

  	
   

  
	
  this        day of
                            ,
  20      .

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Notary Public

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACCEPTED AND ACKNOWLEDGED BY

  
	
   

  	
   

  	
  SENECA GAMING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
  Date:

  

 

15

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