Document:

Exhibit
10.1

Execution
version

AGREEMENT

THIS AGREEMENT
is made and entered into on the              
day of October, 2006 between the City of Buffalo, New York (“City”), the Seneca
Gaming Corporation (“Corporation”), Seneca Erie Gaming Corporation (“SEGC”)
and, solely for purposes of Sections 4(a), 8, 9(c), 10 and 11 hereof, but
subject to Sections 1, 2 and 3 hereof, the Seneca Nation of Indians (the “Seneca
Nation” or the “Nation”), and shall be effective as set forth in Section 2
hereof.

WHEREAS, the
Corporation was formed on August 1, 2002 and is wholly owned, and tribally
chartered, by the Nation; and

WHEREAS, the
Nation is a sovereign Indian nation recognized by the federal government of the
United States of America and possessing all sovereign rights and powers
pertaining thereto; and

WHEREAS, the
Nation and the United States have entered into various treaties over time
recognizing the Nation’s sovereign status and rights; and

WHEREAS, under
the Indian Gaming Regulatory Act of 1988 (“IGRA”), federally recognized Indian
tribes are permitted to conduct class III casino operations on Indian lands,
subject to, among other things, the negotiation of a compact with the affected
state; and

WHEREAS,
pursuant to IGRA, the Nation entered into the Compact, as that term is defined
herein, on August 18, 2002; and

WHEREAS, the
Compact provides the Nation the exclusive right to build and operate three
class III gaming facilities in Western New York, including in Erie County; and

WHEREAS, under
the Compact, in consideration of this exclusivity and in consideration of the
other undertakings and agreements therein set forth, the Nation agreed to
contribute to the State of New York a portion of the proceeds from the
operation and conduct of each category of gaming device for which exclusivity
exists, based on the net drop of such machines (money dropped into machines,
after payout but before expense) (the “State Contribution”); and

WHEREAS, the
State Contribution to the State of New York for years 1-4 of the Compact is
18.0% paid on an annual basis; thereafter, the State Contribution is 22.0% for
years 5-7 of the Compact payable on a semi-annual basis and 25.0% for years
8-14 of the Compact payable on a quarterly basis; and

WHEREAS, the
Compact also provides that “host municipalities should be compensated to be
able to adjust to the economic development expected to result from the gaming
facilities authorized” by the Compact and that , consistent with that goal, “the
State shall reach financial agreements with the host municipal governments, and
any payment pursuant to such agreements shall be made by the State” (such
compensation, the “Host Community Share”), which compensation may consist of a
share of the State Contribution to be paid by the State to the “host
municipality”; and

 

WHEREAS, the
New York State Legislature subsequently enacted legislation setting the minimum
level of such Host Community Share to be paid to the host municipality at
twenty-five percent (25%) of the total State Contribution paid in any given
year with respect to gaming device revenue derived from the gaming facility to
be located in the County of Erie; and

WHEREAS, the
Nation chartered the Corporation to operate and manage the Nation’s gaming
operations and for the purpose of developing, constructing, leasing, operating,
managing, maintaining, promoting and financing all of the Nation’s gaming
facilities; and

WHEREAS, the
Nation’s Tribal Council, at the request of the Corporation’s Board of
Directors, chartered three subsidiary corporations of the Corporation to
operate the three sites authorized by the Compact; and

WHEREAS, the
subsidiary corporations are Seneca Niagara Falls Gaming Corporation, which
operates Seneca Niagara Casino & Hotel, Seneca Territory Gaming
Corporation, which operates Seneca Allegany Casino and SEGC which was chartered
on August 9, 2003 to develop and operate a gaming facility in Erie County; and

WHEREAS, the
City is a subdivision of the State of New York, possessing all rights and
powers pertaining thereto; and

WHEREAS, the Buffalo
Fiscal Stability Authority (“BFSA”) was created by the State of New York in
2003 with certain powers over the finances of the City of Buffalo including the
power to approve certain contracts entered into by the City of Buffalo; and

WHEREAS, the BFSA
has determined that all contracts involving the City of Buffalo that have a
contract value of $50,000 or more must obtain BFSA approval; and

WHEREAS, this
Agreement exceeds the threshold of BFSA approval authority and must therefore
be referred to the BFSA for action prior to the City of Buffalo executing this
Agreement; and

WHEREAS, on October 3, 2005, the Nation acquired approximately nine
acres of land in the Inner Harbor Area of downtown Buffalo and designated that
land as its preferred site in Erie County for constructing a class III gaming
facility; and

WHEREAS,
pursuant to and by operation of federal law, the Nation holds the Seneca
Buffalo Creek Territory as restricted fee property and the Seneca Buffalo Creek
Territory constitutes “Indian country” within the meaning of 18 U.S.C. Section
1151, and gaming eligible “Indian lands” under IGRA; and

WHEREAS, the
Compact requires that, in order to preserve the Nation’s exclusive right to
establish and operate a class III gaming facility in Erie County, New York, the
Nation must have commenced construction of a class III gaming facility in Erie
County by December 9, 2005; and

WHEREAS, the
Nation has made the Seneca Buffalo Creek Territory available to the SEGC for
its use in developing a class III gaming facility; and

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WHEREAS, the
SEGC commenced construction of a class III gaming facility on the Seneca
Buffalo Creek Territory on December 8, 2005, and, as indicated by the Nation
and the Corporation, construction of the casino on the Seneca Buffalo Creek
Territory (the “Seneca Buffalo Creek Casino” or “Casino”), will be completed
whether or not the City transfers the Fulton Street Section to the Corporation;
and

WHEREAS, in
order to obtain the benefits and to enter into the obligations of this
Agreement, the Nation has agreed to, and has authorized the Corporation and
SEGC to agree to, the limited waiver of sovereign immunity set forth in this
Agreement; and

WHEREAS, in
order to obtain the benefits and to enter into the obligations of this
Agreement, the City has agreed to the alternative dispute resolution process
specified in this Agreement; and

WHEREAS, in
recognition of the rights and responsibilities of the Parties in accordance
with applicable federal, Nation and New York State law, and in order to ensure
their mutual benefit, the Parties wish to set forth their understandings with
respect to certain matters pertaining to their ongoing relationship;

NOW,
THEREFORE, the Parties hereby enter into this Agreement.

1.                                       Definitions.

For purposes
of this Agreement, including the Appendices, terms defined in the preamble,
recitals and other Sections of this Agreement shall have the meanings set forth
therein and the following terms shall have the meanings set forth below:

(a)           “Agreement”
means this Agreement and all Appendices attached hereto, as it may be amended
from time to time in accordance with its terms.

(b)           “Appendix”
means an appendix to this Agreement, each of which is incorporated into this
Agreement by reference and made a part hereof. 
“Appendices” means more than one Appendix.

(c)           “Casino”
means the facility described in Appendix E.

(d)           “Certified
Mail” means certified or registered mail, Federal Express, United Parcel
Service, Express Mail or any similar mail delivery service generating a return
receipt or a signature of the recipient, confirming delivery of that mail.  Certified Mail does not include electronic
mail.

(e)           “City”
has the meaning set forth in the preamble to this Agreement.

(f)            “Compact”
means the Nation-State Gaming Compact between the Nation and the State of New
York executed on August 18, 2002, which was deemed approved by the U.S.
Secretary of the Interior, to the extent consistent with IGRA, and became
effective on its publication in the Federal Register on December 9, 2002,
including all amendments, modifications and supplements thereto.

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(g)           “Corporation”
has the meaning set forth in the preamble to this Agreement but, except in the
recitals and Section 2 hereto, shall also include SEGC, it being recognized
that all rights and obligations of the Corporation hereunder shall also be
rights and obligations of its subsidiary SEGC and that the City shall have the
right to enforce this Agreement against the Corporation, SEGC or both of them
in the manner specified in this Agreement.

(h)           “Effective
Date” has the meaning set forth in Section 2 of this Agreement.

(i)            “Fulton
Street Payment” means a payment from the Corporation to the City, in
immediately available funds, in
the amount of six hundred thirty one thousand six hundred dollars ($631,600),
which is the purchase price for the Fulton Street Section as determined by the
City pursuant to the process set forth in the City of Buffalo Charter and
ordinances.

(j)            “Fulton
Street Section” means that section of Fulton Street between Michigan Avenue
and Marvin Streets but not including any portion of the right of way of
Michigan Street or Marvin Street as delineated in Appendix A hereto; for
the avoidance of any doubt, the Fulton Street Section includes any right, title
or interest in the airspace above or the lands below said Section.

(k)          
“Governmental Authority” means any nation, country, commonwealth,
territory, government, state, federally recognized Indian nation or tribe,
county, parish, municipality, or other political subdivision and any entity,
whether federal, state, local or otherwise, exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.

(l)            “Host
Community Share” has the meaning set forth in the recitals to this
Agreement.

(m)          Infrastructure
Improvements” means the improvements listed on Appendix C hereto.

(n)           “Inner
Harbor Area” means the area described in Appendix D hereto.

(o)           “Material
Breach” means a material, uncured breach of this Agreement.

(p)           “Opening”
means the date on which all the elements of the Casino are opened to the
general public.

(q)           “Party”
means any signatory to this Agreement.

(r)            “Parties”
means all the signatories to this Agreement unless the context specifically
requires otherwise.

(s)           “Person”
means an individual, corporation, partnership, trust, limited liability
company, limited liability partnership, unincorporated organization,
Governmental Authority, any agency or political subdivision of any government,
or any other form of entity.

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(t)            “Seneca
Buffalo Creek Territory” means the approximately nine acre site owned by
the Nation in restricted fee status and bounded by Perry Street, Marvin Street,
South Park Avenue and Michigan Avenue, and “Seneca Buffalo Creek Territory”
shall include the Fulton Street Section if and when it is converted to
restricted fee status pursuant to federal law.

(u)           “State
Contribution” has the meaning set forth in the recitals to this Agreement.

2.              Effectiveness of Agreement.     This Agreement shall be effective upon the
latest to occur of (i) execution of this Agreement by the Mayor of the City
after authorization from the Buffalo Common Council, (ii) execution of this
Agreement by a duly authorized officer of the Corporation and SEGC after
adoption of resolutions of the Boards of Directors of the Corporation and SEGC
approving the execution, delivery and performance by the Corporation and SEGC
of this Agreement, (iii) approval of this Agreement by the BFSA and (iv)
execution of this Agreement by a duly authorized officer of the Nation after
adoption of resolutions of the Nation’s Tribal Council approving the execution,
delivery and performance by the Corporation, SEGC, and the Nation of this
Agreement) (the latest to occur of such dates, the “Effective Date”).  The City shall promptly notify the
Corporation when the execution and approvals referenced in clauses (i) and
(iii) of the preceding sentence have been obtained and the Corporation shall
promptly notify the City when the execution and approvals referenced in clauses
(ii) and (iv) of the preceding sentence have been obtained.

3.                                       Term
of Agreement.

(a)           Termination
Date.  This Agreement shall terminate
upon expiration or termination of the Compact in accordance with its terms,
taking into account any automatic renewal term set forth therein and any
renewal term agreed upon by the parties thereto.

(b)           Effect
of Termination.   No termination or
expiration of this Agreement shall affect (i) the obligation of any Party to
pay any amount owed to any other immediately prior to such termination or
expiration or (ii) any remedies of any Party hereto for breach of this
Agreement.  Termination or expiration of
this Agreement shall not serve as the basis for a Party to seek repayment of
any consideration paid or undoing of any obligation fulfilled as of the date of
such termination or expiration.

4.                                       Joint
Efforts.

(a)           New
York State Matters.  The Nation
agrees to work with the City, in accordance with all applicable laws:

(i)            to
facilitate dialogue between the City and New York State to have the City
designated by New York State as the sole “host municipality” for the gaming
facility on the Seneca Buffalo Creek Territory under, and as contemplated by,
the Compact and Section 99-h of New York State Finance Law;

(ii)           to
facilitate a dialogue between the City and New York State with the goal of
assisting the City to obtain at least twenty-five percent (25%) of the portion
of the State Contribution derived from net gaming device drop in the gaming
facility on the Seneca Buffalo Creek Territory; provided that in no event shall
the Nation have any obligation to pay more than the State Contribution it is
required to pay under the Compact attributable to net gaming device drop in the
gaming facility located on the Seneca Buffalo Creek Territory; and

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(iii)          to
facilitate dialogue between the City and New York State  concerning the possibility of the enactment
of legislation by the New York State Legislature and/or an appropriate contract
or agreement with the State of New York that would allow the Nation to pay the
Host Community Share attributable to net gaming device drop from the gaming
facility located on the Seneca Buffalo Creek Territory directly to the City
instead of to the State of New York as currently required by the Compact and,
with respect to persons and entities other than the Nation, the Corporation and
any other Nation entity, New York State Finance Law.

(b)           Fire.  The Corporation and the City agree to work
together to seek to maximize the safety of Casino employees and visitors to the
Casino.   In furtherance of the
foregoing, the Corporation and the Fire Commissioner of the City of Buffalo
will maintain a cooperative relationship and the Corporation will provide
opportunities for City fire protection personnel to familiarize themselves with
the floor plans of the Casino and any other improvements on the Seneca Buffalo
Creek Territory and permission for such personnel to enter the Seneca Buffalo
Creek Territory in the event of a fire emergency.

(c)           Police.  Should the Corporation need traffic or crowd
control assistance for special events, the Corporation shall request in writing
such assistance from the City and the City shall provide such assistance.  The Corporation agrees to reimburse the City
for its out of pocket costs therefor plus the City’s administrative review
costs in the same amount and in the same manner as applies to other special
events in the City of Buffalo.  The
Corporation shall maintain at the Seneca Buffalo Creek Territory its in-house
security service to provide substantial protection to the Seneca Buffalo Creek
Casino and its employees and patrons and their property.  The Nation shall provide for police
protection on the Seneca Buffalo Creek Territory in accordance with the Compact
and applicable law.   It is recognized
and agreed that the Seneca Nation Marshals or other police services of the
Nation or private security services engaged by the Nation or Corporation shall
not have any police or enforcement powers within the exterior limits of the
City except on the Seneca Buffalo Creek Territory where they shall have such
powers as are afforded by applicable law.

(d)           Water.  Recognizing the requirement to provide water
service to all eligible customers under existing applicable federal law, the
City shall provide local water service to the Corporation at the Seneca Buffalo
Creek Territory.  The Corporation shall
purchase water from the City for the Seneca Buffalo Creek Territory and shall
pay water invoices on the same due dates and at the same rate as is charged
from time to time to other similarly situated customers using the same volume
of water.  The Corporation shall arrange
for and pay for connection to water service under the same terms and conditions
as applies to other similarly situated customers seeking similar connections to
sewer service, including the requirement to use a licensed plumber to make the
connections.  The City shall arrange for
the Seneca Buffalo Creek Territory to be connected to local water in accordance
with its customary procedures and such connection shall be accessed and
maintained on the same terms as other similarly customers.

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(e)           Sewer.  Recognizing the requirement to provide sewer
service to all eligible customers under existing applicable federal law, the
City shall provide local sewer service to the Corporation at the Seneca Buffalo
Creek Territory.  The Corporation shall
purchase sewer service from the City for the Seneca Buffalo Creek Territory and
shall pay sewer invoices on the same due dates and at the same rate as is
charged from time to time to other similarly situated customers.  The Corporation shall arrange for and pay for
connection to sewer service under the same terms and conditions as applies to
other similarly situated customers seeking similar connections to sewer
service, including the requirement to use a licensed plumber to make the
connections.  The City shall arrange for
the Seneca Buffalo Creek Territory to be connected to the local sewer in
accordance with its customary procedures and such connection shall be accessed
and maintained on the same terms as other similarly situated customers.

(f)            Refuse
collection.  It is understood and
agreed by the Parties that the Corporation will not be relying upon the City to
provide refuse collection services to the Seneca Buffalo Creek Territory but
that the Corporation will instead engage the services of a licensed private
contractor under applicable laws.

5.              Environmental Matters.  Although not required to do so, the
Corporation will voluntarily cooperate in the preparation of such environmental
reviews or reports that are required of the City by state or federal laws,
including, but not limited to, the City’s compliance with the New York State
Environmental Quality Review Act (“SEQRA”) with respect to the approval of this
Agreement.

6.              Covenants of the City.  In exchange for the commitments of the
Corporation and the Nation in this Agreement, the City shall:

(a)           Fulton
Street Section.  (i) Promptly take
such steps as are necessary under applicable law to abandon and sell to the Corporation
the Fulton Street Section, using the appraisal method provided for in the
Charter and ordinances of the City of Buffalo and (ii) within thirty (30) days
after the Effective Date, deliver to the Corporation, upon receipt of the
Fulton Street Payment, a duly executed quitclaim deed in the form of Appendix
B hereto, together with an RP 5217 form, executed by the City, and a TP-584
form, both completed with respect to the City to the extent required.  The sale of the Fulton Street Section shall
be free and clear of any encumbrances. 
The City agrees to allow the Corporation to cap off, and to cooperate in
any reasonable manner with such capping off, in each case at the expense of the
Corporation and in accordance with applicable law, all public utility lines and
facilities currently located within or under the Fulton Street Section.  Upon delivery to the Corporation of the
executed quitclaim deed to the Fulton Street Section, the City shall, at the
request of the Corporation or the Nation, transmit a letter to the U.S.
Secretary of the Interior supporting the Nation’s submission to have the Fulton
Street Section taken into restricted fee status in accordance with the Seneca
Nation Land Claims Settlement Act.

(b)           Infrastructure
Improvements.  Cooperate in good
faith with the Corporation in any reasonable manner requested by the
Corporation to assist in the expeditious completion of the Infrastructure
Improvements and to hold regular meetings with the Corporation for the purposes
set forth in Section 7(d) of this Agreement.

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(c)           Host
Community Share.  Deposit an amount
equal to fifteen percent (15%) of each of the first eight and a half annual
Host Community Share payments, within ten (10) days of receipt by the City, if
any, received by the City after Opening of the Casino, into a segregated
account established by the City in the City’s general fund designated solely
for the purposes discussed below. 
Decisions as to expenditures from this designated segregated account
shall be made by the City, after consultation with and advice by a board that
consists of four individuals as follows: 
one individual designated by the Mayor of the City, one individual
designated by the City’s Common Council, one individual designated by the
Nation’s Tribal Council, and one individual designated by the Corporation.  The advisory board will recommend
expenditures of those funds in the segregated account for use in the Inner
Harbor Area.  The funds in the designated
segregated account shall only be used to stimulate business and economic
development in the Inner Harbor Area in order to create a critical mass of
tourism and visitors to such Area.  In
order to achieve such critical mass, the proceeds in the designated segregated
account shall be used to (1) stimulate the development of middle and upper
income housing and (2) fund improvements to roadways, signage and pedestrian
areas, tourism and recreation initiatives, and any other initiative designed to
stimulate tourism and visitors to the Inner Harbor Area.  This advisory board shall meet on a regular
basis but no less than once every three months after creation of the designated
segregated account and may meet at any time at the request of at least two (2)
members of the board.  The advisory board
shall be established no later than one (1) year after the effectiveness of this
Agreement as set forth in Section 2 and shall remain in existence until all
funds deposited in the segregated account have been expended in accordance with
this Section.  For the avoidance of
doubt, any amounts received by the City from the State Contribution that are
not deposited in the segregated account referenced in the first sentence of
this Section shall be for use by the City without any obligation to consult
with or obtain the approval of the advisory board, the Corporation or the
Nation.

(d)           Marketing.  Through the Buffalo Convention and Visitors
Bureau (“CVB”), cooperate in good faith with the Corporation to promote tourism
in the Inner Harbor Area.  Such marketing
efforts of the CVB shall include marketing of the Corporation’s facilities on
the Seneca Buffalo Creek Territory.

7.              Covenants of the Corporation.  In exchange for the commitments of the City
in this Agreement, the Corporation shall:

(a)           Build
the Casino.  Build, on the Seneca
Buffalo Creek Territory, a casino and parking ramp substantially in accordance
with the design that was publicly unveiled on or about June 1, 2006, with an
aggregate capital investment by the Corporation of at least one hundred
twenty-five million dollars ($125,000,000) and which will include 1,900 to
2,200 slot machines and 30 to 50 table games, all as more fully described in Appendix
E.

(b)           Fulton
Street Payment.  The Corporation will
pay the Fulton Street Payment to the City in cash, in immediately available
funds, upon receipt of the deed referenced in Section 6(a).

(c)           Construction.  The Corporation agrees to dispose of
construction debris from the construction of the Casino in accordance with
federal, Seneca Nation, state and local laws, if and to the extent applicable.

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(d)           Infrastructure
Improvements.  The Corporation
agrees, at its expense, to undertake and complete the Infrastructure
Improvements in a timely and expeditious manner.  Completion of the Infrastructure Improvements
is expected to occur no later than six (6) months following the Opening of the
Casino.  The Infrastructure Improvements
are expected to cost between $5 and $7 million. The City and the Corporation
acknowledge the Infrastructure Improvements to be made on the streets and
rights of way of the City of Buffalo will be completed in accordance with all
applicable laws and ordinances (including, without limitation, any requirement
that the Corporation require its contractors to indemnify and hold the City
harmless and to provide primary insurance coverage naming the City and its
relevant affiliated entities as additional insureds).  The City and the Corporation will hold
regular meetings to review progress on the Infrastructure Improvements.

(e)           MWBE/Workforce
Matters.

(i)            The
Corporation agrees to provide to the City, within sixty (60) days after the end
of the Corporation’s fiscal year, an annual written report itemized in a manner
consistent with the categories set forth in Section 9(a)(ii) and (vi), which
set forth the Corporation’s intentions regarding hiring of Buffalo residents,
minorities and females and  includes
information regarding (x) the total number of people employed by the
Corporation and Subsidiary at the gaming facility on the Seneca Buffalo Creek
Territory and (y) the numbers of such employees who are minorities and
women.  The Corporation shall also make
available a human resources manager of the Corporation to attend a Common
Council meeting once annually, if requested, to make a presentation regarding
such annual report.

(ii)           The
Corporation agrees to work with the agencies listed in Appendix F hereto
to increase economic opportunity/employment opportunities for minorities and
women including, without limitation, giving to such agencies advance written
notice of job fairs and conducting job fairs in economically disadvantaged
areas of the City, as identified by the City.

(f)            Marketing
Covenants.  Recognizing that it is in
the best interests of the Parties that the Seneca Buffalo Creek Casino draw
visitors from outside the Western New York area, and maximize the amount of
tourist dollars coming to the City and the Corporation from outside of the
Western New York area, the Corporation agrees to:

(i)            Work
with the board of the Buffalo Convention and Visitors Bureau (“CVB”) any other
marketing committee or board created by the City to coordinate marketing of the
City as a tourist destination in its own right.   Such efforts will include marketing of the
facilities located on the Seneca Buffalo Creek Territory.

(ii)           Spend,
annually, more than the CVB’s budget for fiscal year 2005 on marketing the
Corporation’s development project on the Seneca Buffalo Creek Territory to
people outside of the eight counties of Western New York, including on
marketing strategies which would market the development project on the Seneca
Buffalo Creek Territory as a package with other attractions in the City.  Within ninety (90) days of the end of each
fiscal year of the Corporation following Opening of the Casino, the Corporation
shall deliver to the City a certificate of an officer of the Corporation
confirming compliance with this Section 7(f)(ii).

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(iii)          Have
a marketing executive from the Corporation make a presentation on an annual
basis to the City of Buffalo Common Council to report on the foregoing marketing
efforts.

  (iv)          Nothing contained in this Section 7(f)
shall be deemed to limit the Corporation’s ability and right to market the
Casino and the City as tourist destinations.

8.              Covenant of the
Nation.  Each of the Corporation and
Nation will designate an individual to participate on the board of directors
described in  Section 6(c) above.

9.              Intentions.  With no legal obligation of each to the other
(except to the extent expressly set forth elsewhere in this Agreement) but as a
confirmation of their respective good faith intentions:

(a)           Corporation.  The Corporation declares its intention to (i)
be a good neighbor to the City, (ii) employ approximately one thousand (1,000)
people at the facilities located on the Seneca Buffalo Creek Territory after Opening
of the Casino , with first and secondary preference given to qualified members
of the Seneca Nation and Native Americans, respectively, in accordance with
Nation law, and then consistent with existing human resource policies of the
Seneca Gaming Corporation to provide a preference for qualified local
residents, which in the case of the Seneca Buffalo Creek Casino would be the
residents of the City of Buffalo, but with due regard for diversity within the
workforce at all levels and with special efforts to recruit in high
unemployment areas of the City of Buffalo, as designated by the City and such
hiring goals acknowledge the City’s preference that 50% of the employees at the
Casino shall be local residents to the extent practicable, (iii) use local construction
companies in construction of the facilities located on the Seneca Buffalo Creek
Territory and local vendors and suppliers to purchase the majority of its
supplies and services (recognizing that they must first be licensed under
applicable Nation procedures and that the contracting and procurement processes
are subject to Nation law), (iv) explore non-gaming economic development
projects in the City on land not taken into restricted fee status, (v) build
the Casino and all other improvements on the Seneca Buffalo Creek Territory to
building code requirements that are at least as high as those analogous but
otherwise inapplicable New York State building codes, acknowledging that New
York State building codes are not otherwise applicable to such construction,
(vi) continue to follow policies with the goal of having a workforce to be
employed at the gaming facility on the Seneca Buffalo Creek Territory that is
composed of at least 25% minorities (which term includes, for purposes of this
Section 9(a) and Section 7(e) above, members of the Nation and Native
Americans) and at least 8% women; and (vii) to use good faith efforts to
maintain in effect, during the construction phase and during the operation of
the facility on the Seneca Buffalo Creek Territory, policies designed to
achieve the goal that at all times 25% and 8% of such facility’s suppliers of
goods and services (by number and dollar volume) will be minority and female
owned businesses, respectively, (recognizing that, in each case, they must first
be licensed under applicable Nation procedures and that the contracting and
procurement processes are subject to Nation law).

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(b)           City.  The City of Buffalo declares its intention
to:  (i) be a good neighbor to the
Corporation and the Seneca Nation, (ii) make such additional infrastructure
improvements in the area of the Seneca Buffalo Creek Territory as may be
determined at a future date to support the Corporation’s development project on
the Seneca Buffalo Creek Territory as well as Inner Harbor Area projects, (iii)
to the extent permitted by applicable law, cooperate with and assist the
Corporation and the Nation in their activities on the Seneca Buffalo Creek
Territory, and (iv) if the City of Buffalo is successful in obtaining a portion
or all of the State Contribution allocate a portion of such State Contribution
to gambling addiction and cultural programs..

(c)           Nation
and Corporation.  The Corporation and
Nation confirm that consistent with the Compact, except for the Seneca Buffalo
Creek Territory, no land in the City of Buffalo will be acquired utilizing the
provisions of the Seneca Nation Land Claims Settlement Act to implement Compact
requirements, including requirements of any successor compact, to build and
construct their class III gaming operation in the City of Buffalo.

10.                                 Party
Dispute Resolution.

(a)           Purpose.  The Parties intend to resolve disputes in a
manner that will foster a spirit of cooperation and efficiency in the
administration of and compliance by each Party with the provisions of this
Agreement.

(b)           Negotiation:  In the event of any dispute, claim, question,
or disagreement arising from or relating to this Agreement or the breach
hereof, the involved Parties shall use their best efforts to settle the
dispute, claim, question, or disagreement. 
To this end, any Party may provide written notice of a claim to the
other in accordance with Section 10(a) hereof. 
Upon receipt of such written notice, the involved Parties shall then
meet within fourteen (14) days, shall negotiate in good faith and shall attempt
to reach a just and equitable solution satisfactory to all involved Parties.

(c)           Method
of dispute resolution.  If the
involved Parties do not reach such resolution within a period of thirty (30)
days after such meeting, or if the involved Parties fail to meet and thirty
(30) days pass after the written notice of a claim is received, then, upon
notice by either involved Party to the other, either involved Party may submit
the dispute, claim, question, or disagreement to binding arbitration.

(d)           Arbitration
notice.  The notice for arbitration
shall specify with particularity the nature of the dispute, the particular
provision of the Agreement at issue and the proposed relief sought by the Party
demanding arbitration; provided, however, that no involved Party may seek
monetary damages, other than specific performance, for any alleged dispute,
claim, question or disagreement.

(e)           Selection
of arbitrators.  Each involved Party
shall select one arbitrator and the two arbitrators shall select the third;
provided, however, that if a dispute involves two or more of the Corporation,
SEGC and the Nation as involved Parties, then these involved Parties shall only
be entitled to select one arbitrator from amongst them.

 11
 

 

(f)            Procedures
for arbitration.  Arbitration under
this Section shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association or such other rules as the
involved Parties mutually agree.  Three
arbitrators shall preside and shall be selected by the involved Parties in
accordance with the commercial arbitration rules of the American Arbitration
Association.  The arbitration shall take
place at a location agreed upon by the involved Parties or, in the absence of
such agreement, determined in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. 
The arbitrator(s) shall render a decision within forty-five (45) days
after the conclusion of the arbitration.

(g)           Arbitration
costs.  The cost of the arbitration
shall be shared equally by the involved Parties, but the involved Parties shall
bear their own costs and attorneys’ fees associated with their participation in
the arbitration.

(h)           Remedies.  For Material Breaches, the arbitrators may
impose as a remedy only specific performance or termination of the
Agreement.  For all other breaches other
than Material Breaches, the arbitrators may impose as a remedy only specific
performance.  In no event shall monetary
damages, other than specific performance, be available as a remedy to any Party
for any alleged breaches of this Agreement, including Material Breaches.

(i)            Arbitration
decision.  The decision of the
arbitrators shall be final, binding and non-appealable.  Failure to comply with the arbitration award
within the time specified therein for compliance, or should a time not be
specified, then forty-five (45) days from the date on which the arbitration
award is rendered, shall be deemed a breach of the Agreement.  The prevailing party in an arbitration proceeding
may bring an action solely and exclusively in the U.S. District Court for the
Western District of New York to (i) compel arbitration under this Agreement or
(ii) enforce an arbitration decision. 
The Nation and the Corporation and SEGC, irrevocably agree to waive
their respective sovereign immunity on a limited basis, to consent to the
jurisdiction of such federal court and any federal court having appellate
jurisdiction over actions of such court and to consent to suit in such courts
solely and exclusively for the strictly limited purpose of such an action in
such courts as described in the previous sentence and for no other
purpose.   The Nation and the Corporation
hereby expressly and irrevocably waive any right they may have to seek tribal
proceedings or jurisdiction for resolution of a dispute related to this
Agreement or the subject matter hereof.

11.                                 Miscellaneous.

(a)           Official
notices and communications.

All notices and communications required or authorized to be served in
accordance with this Agreement shall be served by Certified Mail at each of the
following addresses:

Seneca Gaming Corporation

President

Seneca Gaming Corporation

310 Fourth Street

Niagara Falls, New York (Seneca Nation Territory) 14303

 12
 

 

With a copy to:

General Counsel

Seneca Gaming Corporation

310 Fourth Street

Niagara Falls, New York (Seneca Nation Territory) 14303

Seneca Nation of Indians

President

Seneca Nation of Indians

William Seneca Building

12837 Route 438

Irving, New York  14081

With a copy to:

Seneca Nation of Indians

Department of Justice

P.O. Box 231

Salamanca, New York  14779

City of Buffalo, New York

Mayor

City of Buffalo

Room 201 City Hall

Buffalo, New York 14202

With a copy to:

Corporation Counsel

City of Buffalo

Room 201 City Hall

Buffalo, New York 14202

(b)           Further
Assurances.  The Parties shall
execute and deliver all further instruments and documents and take any further
action that may be reasonably necessary to implement the intent and the terms
and conditions of this Agreement. 
Without limitation of the foregoing, the Parties will each seek, in a
timely manner, any further ratification of this Agreement that may be required.

 13
 

 

(c)           Successors
and Assigns.  All covenants and
agreements herein contained by or on behalf of the Parties shall be binding
upon and inure to the benefit of the 
Parties and their respective legal representatives, successors, and
assigns.

(d)           No
Assignment.  Neither this Agreement
nor any rights, responsibilities or obligations hereunder can be transferred or
assigned, whether by operation of law or otherwise, without the prior written
consent of the non-assigning parties.

(e)           No
Third Party Beneficiaries.  All
provisions herein are imposed solely and exclusively for the benefit of the
Parties hereto.  No other Person shall
have any right, benefit, priority, or interest hereunder or as a result hereof
or have standing to require satisfaction of provisions hereof in accordance
with their terms.

(f)            Governing
Law.  Solely and exclusively for the
limited purposes of this Agreement, this Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State, without reference to
any conflict of laws provisions thereof except Sections 5-1401 and 5-1402 of
the New York General Obligations Law.

(g)           Severability.  In the event any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision of this Agreement.

(h)           Modifications
and Amendments.  This Agreement may
be amended only by an agreement in writing executed by all of the Parties
hereto, with any approval which may be required by applicable law.

(i)            References.
References in this Agreement to Section or Appendix numbers or letters shall be
to Sections of or Appendices to this Agreement, unless expressly stated to the
contrary.  References in this Agreement
to “hereby,” “herein,” “hereinafter,” “hereof,” “hereunder” and words of
similar import shall be to this Agreement in its entirety and not only to the
particular Section or Appendix in which such reference appears.

(j)            Compact.  Nothing in this Agreement shall limit the
rights of any party to the Compact or be deemed to supersede the terms of the
Compact.  In the event of a conflict
between the terms of this Agreement and the terms of the Compact, the terms of
the Compact shall control.

(k)           No
taxes or assessments.  Nothing in
this Agreement shall authorize or provide for any form of tax or assessment of
any kind to be levied by the City or any other State instrumentality, political
subdivision or entity on the Nation, the Corporation, Nation members, or any
Nation corporation, instrumentality or entity.

(l)            Survival.  The provisions of Section 9(c) of this
Agreement shall survive the termination or expiration of this Agreement.

 14
 

 

(m)          Counterparts.  For the convenience of the Parties, this
Agreement may be executed in multiple counterparts, each of which for all
purposes shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Agreement.

[NEXT PAGE IS SIGNATURE PAGE]

 15
 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and

year first set forth
above.

	
  CITY OF BUFFALO

  	
   

  	
   

  	
   

  	
  SENECA GAMING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Byron W. Brown

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ John Pasqualoni

  
	
  Name:

  	
   

  	
  Byron W. Brown

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  John Pasqualoni

  
	
  Title:

  	
   

  	
  Mayor of Buffalo

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SENECA ERIE GAMING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ John Pasqualoni

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  John Pasqualoni

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Chief Executive Officer

  

 

For purposes of
Sections 4(a), 8, 9(c), 10 and 11 only, but subject to Sections 1, 2 and 3,

	
  THE SENECA NATION OF INDIANS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/ Barry E. Snyder, Sr.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Barry E. Snyder, Sr.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 16Exhibit 10.1

SECOND AMENDMENT

AGREEMENT, made this  12th day of
September, 2006 entered into between MACK-CALI CW REALTY ASSOCIATES
L.L.C., a New York limited liability
company, having its principal office at 100 Clearbrook Road, Elmsford, New York
10523 (herein referred to as “Owner”), and AMERICAN BANKNOTE HOLOGRAPHICS,
INC., a Delaware corporation, having an office at 2 Applegate Drive,
Robbinsville, New Jersey 08691 (herein
referred to as “Tenant”).

WITNESSETH:

WHEREAS, Owner’s predecessor in
interest, Robert Martin Company, and Tenant entered into a written lease
agreement dated July 23, 1992, as amended by First Amendment dated August 19,
1993 (herein collectively referred to as the “Lease”) wherein and whereby Owner
currently leases to Tenant and Tenant currently hires from Owner approximately
58,934 square feet in the building known as 399 Executive Boulevard, Elmsford,
New York, for a term which currently expires on December 31, 2007 (the “Expiration
Date”), and

WHEREAS, the parties hereto
desire to amend the Lease pursuant to the terms and provisions set forth below;

NOW, THEREFORE, in consideration
of the mutual covenants herein contained and other good and valuable
consideration, each to the other in hand paid, IT IS AGREED as follows:

1.            Effective as of April 1, 2006, through and
including December 31, 2007, the Fixed Annual Rent shall be decreased from “$745,515.10
per annum” to “$670,963.59 per annum,” as follows:

	
  Period

  	
   

  	
  Annual Rent

  	
   

  	
  Monthly Rent

  	
   

  	
  Annual Per Sq. Ft.

  Rent

  	
   

  
	
  4/1/06 – 12/31/07

  	
   

  	
  $

  	
  670,963.59

  	
   

  	
  $

  	
  55,913.63

  	
   

  	
  $

  	
  11.39

  	
   

  
											

 

2.            Tenant
shall pay the sum of $100,000.00 to Owner, upon the execution and delivery of
this Second Amendment by Tenant, which sum shall be applied towards the
demolition and/or restoration work to be performed by Owner in the demised
premises, as hereinafter provided. Each of Owner and Tenant acknowledges that
(a) Tenant is currently not operating its business in the demised premises and
(b) such failure to operate its business in the demised premises shall not
constitute an event of default under the Lease. Tenant hereby grants to Owner
the right, at Owner’s option, in its sole discretion, to enter upon the demised
premises at any time from and after the date of this Second Amendment, upon 24
hours notice to Tenant, to perform such demolition and restoration work as
Owner may desire. Entry by Owner and the performance of work by Owner in the
demised premises shall not entitle Tenant to any claim against Owner for
interruption of business or to any abatement in rent, shall not constitute a
constructive or partial eviction and shall not constitute an acceptance of
possession of the demised premises by Owner, nor a release of Tenant from any
liability of Tenant under the Lease except as provided for herein. Owner will
indemnify and hold Tenant harmless from all loss, cost, and expenses,
including, without limitation, reasonable attorney’s fees and disbursements,
arising from any property damage or personal injury occurring from the date
hereof to the extent caused by the entry of Owner, its agents or employees into
the demised premises. Tenant shall continue to be liable for all terms and
conditions to be performed by Tenant under the Lease including, without limitation, the obligation to maintain the
demised premises including, without
limitation, maintaining its service contracts on the HVAC units serving
exclusively the demised premises (except as hereinafter provided), to maintain
insurance, to pay for utilities, and to pay rent through and including December
31, 2007, the current expiration date of the Lease. Notwithstanding anything herein to the contrary, Owner hereby
acknowledges its understanding and agreement that Tenant is hereby released,
effective from the date hereof, from any and all accrued and unaccrued
obligations provided for in the Lease 
with respect to  repair and
restoration of the demised premises at the expiration or earlier termination of
the term. In 

 1
 

 

addition to the
foregoing, in the event Owner performs demolition in any part of the demised
premises, Tenant shall be released of its obligation to maintain those HVAC
units serving that portion of the demised premises affected by the demolition.
The cost of all utility services in the demised premises  shall continue to be paid by Tenant directly
to the utility company, provided, however, in the event Owner enters the
demised premises and performs demolition and/or restoration work therein and as
a result the utility bills for the demised premises shall increase as a result
of said usage (as opposed to electric rate increase), Owner shall reimburse
Tenant for the excess cost of utilities within thirty (30) days after Tenant’s
written request therefor, which request shall be accompanied by past and
present utility bills evidencing the increased usage and cost thereof. Notwithstanding anything herein to the contrary,
Owner shall have no obligation whatsoever to spend all or any portion of Tenant’s
aforesaid contribution to demolish and/or restore the demised premises. Notwithstanding anything herein to the contrary,
all of Owner’s obligations under the Lease shall remain in full force and
nothing herein shall be deemed or construed as a release of Owner from any of
its obligations and liabilities respecting repair and maintenance, as set forth
with greater specificity in Article 4, footnote 3 of the Lease.

3.            In consideration of Tenant’s aforesaid
$100,000.00 Tenant contribution toward the cost of demolition and restoration,
Owner shall accept the premises in its current as-is condition, and
notwithstanding anything in the Lease to the contrary, Tenant shall have no
obligation to repair or restore the premises upon the expiration or earlier
termination of the term. Notwithstanding anything herein to the
contrary, the release of Tenant from its obligation to demolish, repair or
restore the premises upon the expiration or earlier termination of the Lease,
as provided for in the immediately preceding sentence, shall, in no event, be
deemed or construed as a release of Tenant from any of its obligations and
liabilities respecting Hazardous Materials, as set forth with greater
specificity in Section 58(l) of the Lease. 
The foregoing sentence shall not be deemed or construed as increasing or
diminishing, in any respect, any of the obligations and liabilities of Tenant
respecting Hazardous Materials as set forth in Section 58(l) of the Lease.

4.            Owner shall have the right, at its option, at any
time, exercisable upon giving Tenant at least five (5) days advance
written notice (“Surrender Notice”), to
elect to delete from the demised premises all or any portion of the demised
premises, as designated in Owner’s notice (“Surrendered Premises”) and upon the
expiration of said five (5) day period (said date being the “Surrender
Date”), the Surrendered Premises shall be
deemed deleted from the demised premises. 
For the initial ninety (90) day period following the Surrender Date,
Tenant shall pay one hundred percent (100%) of all Fixed Annual Rent (as
set forth in Paragraph 1 above) and additional rent  payable under the Lease for the Surrendered
Premises that would otherwise have been due and payable for the Surrendered
Premises for the aforesaid ninety (90) day period, as said Fixed Annual Rent
and additional rent would have come due in monthly installments under the Lease
had Owner not exercised its rights hereunder with respect to the Surrendered
Premises,   and on said ninetieth (90th) day following the Surrender
Date (or the first business day thereafter if such 90th day is not a business day), Tenant shall pay
to Owner one hundred percent (100%) of all Fixed Annual Rent (as set forth in
Paragraph 1 above) and additional rent payable under the Lease for the
Surrendered Premises that would otherwise have been due and payable for the
Surrendered Premises for the balance of the term of the Lease had Owner not
exercised its rights hereunder (conclusively presuming the additional rent to
be the same as was payable for the year immediately preceding such termination)
(the payment covering the initial 90 days and the payment covering the balance
of the term is hereinafter referred ton together as the “Surrender Payment”),
time being of the essence with respect to Tenant’s payment of the Surrender
Payment on or before said ninetieth (90th) day,  (ii) if
the Surrendered Premises are a portion of the demised premises, from and after
the Surrender Date, the Fixed Annual Rent payable under the Lease shall be
decreased by an amount equal to the Fixed Annual Rent that would otherwise have
been due and payable for the Surrendered Premises for the balance of the term
of the Lease had Owner not exercised its rights hereunder and Tenant’s
Proportionate Share shall be proportionately reduced (and Tenant’s obligation
to pay additional rent including, without limitation, Common Area Maintenance
Charge and Tax Escalation shall be appropriately adjusted) to reflect the
deletion of the Surrendered Premises from the demised premises, and (iii) all
other terms and provisions set forth in the Lease shall apply. Owner shall
perform all work necessary to delete the Surrendered Premises from the demised
premises at Owner’s cost and 

 2
 

 

expense. Promptly after Owner’s giving of the
Surrender Notice, upon request of either party, the parties shall execute an
amendment to the Lease confirming the deletion of the Surrendered Premises from
the demised premises.  Except as set forth herein, all lease
provisions applicable as of the natural expiration of the Lease shall apply to
the Surrender Date with respect to the Surrendered Premises (as if the
Surrender Date were the expiration date of the Lease).

5.            As security for Tenant’s obligation to pay Fixed
Annual Rent and additional rent under the Lease (including, without limitation,
the Surrender Payment described in Paragraph 4 hereinabove), Tenant shall
deliver to Owner simultaneously with the execution of this Second Amendment, an
irrevocable negotiable letter of credit issued by and drawn upon such
commercial bank selected by Tenant and acceptable to Owner (at its sole
discretion) and in form and content acceptable to Owner (also at its sole
discretion) (the form attached hereto as Exhibit A and the issuing bank shown
thereon are deemed acceptable to Owner) for the account of Owner, in the sum of
SEVEN HUNDRED EIGHTY-NINE THOUSAND SIX HUNDRED SIX  AND 80/100 DOLLARS ($789,606.80).  Said letter of credit shall be for a term of
not less than one (l) year and shall be renewed by Tenant (without notice from
Owner) no later than thirty (30) days prior to its expiration, and the
expiration of each replacement thereof, until Owner shall be required to return
the security to Tenant pursuant to the terms of this Lease but in no event
earlier than ten (10) days after the Expiration Date, and each such renewed
letter of credit shall be delivered to Owner no later than thirty (30) days prior
to the expiration of the letter of credit then held by Owner.  If Tenant shall default in any of its payment
of Fixed Annual Rent or additional rent (including,
without limitation, the Surrender Payment described in Paragraph 4 hereinabove),
and any portion of the security deposit shall be utilized by Owner to cure such
non-payment (it being agreed and acknowledged Owner may access such security
deposit solely in the event of any such non-payment), Tenant shall, within five
(5) days after request by Owner, replenish the security account by depositing
with Owner, in cash or by letter of credit, an amount equal to that utilized by
Owner.  Failure of Tenant to comply
strictly with the provisions of this Article shall constitute a material breach
of this Lease and Owner shall be entitled to present the letter of credit then
held by it for payment (without notice to Tenant) in the event of any breach by
Tenant of this Section 5 of this Amendment or any of Tenant’s obligations to
pay Fixed Annual Rent and additional rent (including,
without limitation, the Surrender Payment described in Paragraph 4 hereinabove)
under the lease. In the event of a bank failure or insolvency affecting
the letter of credit, Tenant shall replace same within twenty (20) days after being
requested to do so by Owner.

Notwithstanding anything herein to the contrary,
during the last twelve (12) months of the term of the Lease, said letter of
credit shall be reduced on the 15th day of each month by $65,800.57, provided
Tenant has paid to Owner the monthly installment of Fixed Annual Rent and
additional rent for said month by the 5th day of said month. In the event Owner
shall give Tenant a Surrender Notice for a Surrender Date that occurs during
the last twelve (12) months of the term of the Lease, said letter of credit
shall be reduced by an amount equal to Tenant’s payment of the Surrender
Payment to Owner for the Surrendered Premises, pursuant to Paragraph 4 hereof.
Owner shall consent to said reductions of the letter of credit and shall
furnish written notification of such consent in the form required by the
issuing bank within five (5) days following Owner’s receipt of the aforesaid
payments from Tenant.

6.            Section 59(d)(1) of the Lease is amended by
deleting “provided however, that Tenant shall first obtain the consent of Owner
which consent shall not be unreasonably withheld or delayed” and inserting in
its place “provided however, that, notwithstanding anything in the Lease to the
contrary, Tenant shall first obtain the written consent of Owner in each
instance, which consent shall be granted or denied in Owner’s sole discretion.”
Tenant hereby unconditionally waives any and all claims against Owner in
connection with Tenant’s proposed sublease of the demised premises to Portable
Storage LLC d/b/a PODS.

7.          Articles 61 (Option for Additional Space) and 62
(Option to Renew) of the Lease are hereby deleted in their entireties.

 3
 

 

8.            Tenant agrees not to disclose the terms,
covenants, conditions or other facts with respect to this Second Amendment,
including, but not limited to, the Fixed Annual Rent, to any person,
corporation, partnership, association, newspaper, periodical or other entity
except to Tenant’s counsel, accountants, financial advisors and as may be
otherwise required by law or judicial decision. 
This non-disclosure and confidentiality agreement shall be binding upon
Tenant without limitation as to time, and a breach of this paragraph shall
constitute a material breach under the Lease.

9.            Each of Owner and Tenant represents that it has
dealt with no broker in connection with this Second Amendment and agrees
to indemnify and hold the other harmless from any and all claims of any broker
arising out of or in connection with any claim that such broker dealt with the
indemnifying party in connection with the representation and negotiations of,
or entering into of, this Second Amendment.

10.      Tenant hereby represents to Owner that
except as otherwise provided for in this Amendment, to Tenant’s knowledge (i)
there exists no default under the Lease either by Tenant or Owner; (ii) Tenant
is entitled to no credit, free rent or other offset or abatement of the rents
due under the Lease; and (iii) there exists no offset, defense or counterclaim
to Tenant’s obligation under the Lease.

11.      Except as otherwise set forth herein, all the
other terms and provisions contained in the Lease shall remain in full force
and effect.

12.      It is understood and agreed that this Second
Amendment is submitted to Tenant for
signature with the understanding that it shall not bind either of the parties
hereto unless and until fully executed original copies thereof have been
exchanged by Owner and Tenant.

13.      The Lease, as hereby amended, shall be binding
upon the parties hereto, their successors and assigns.

IN WITNESS WHEREOF, the parties
hereto have hereunto set their hands and seal the day and year first above
written.

	
  

  	
  MACK-CALI CW REALTY ASSOCIATES L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Mack-Cali Realty, L.P., member

  
	
   

  	
  By:

  	
  Mack-Cali Realty
  Corporation

  
	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Michael A. Grossman

  
	
   

  	
   

  	
  Executive Vice-President

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN BANKNOTE HOLOGRAPHICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
					

 

 4
 

 

EXHIBIT A

SAMPLE FORM – LETTER OF CREDIT

	
   

  	
  

  
	
   

  	
   

  	
  [DATE]

  
	
  TO:

  	
   

  	
   

  
	
  [Name of
  Beneficiary]

  	
   

  	
   

  
	
  [Address]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Re:

  	
  Irrevocable Letter of Credit

  

 

Gentlemen:

By order of our client,                                                              ,
we hereby establish our irrevocable Letter of Credit No.               
in your favor for a sum or sums not to exceed $                                  -
(                                  U.S.
Dollars) in the aggregate, effective immediately.

This Letter of Credit shall be
payable in immediately available funds in U.S. Dollars.  Funds under this credit are payable to you
upon your presentation to us a sight draft drawn on us in the form annexed
hereto.  All drafts must be marked: “Drawn
under Letter of Credit No.           
of [Name of Issuing Bank].

This
Letter of Credit shall expire twelve (12) months from the date hereof; but is
automatically extendable, so that this Letter of Credit shall be deemed
automatically extended, from time to time, without amendment, for one year from
the expiration date hereof and from each and every future expiration date,
unless at least sixty (60) days prior to any expiration date we shall notify
you by registered mail that we elect not to consider this Letter of Credit
renewed for any such additional period. 
The final expiration date hereof shall be no earlier than [fill
in suitable date after expiration of lease].

This
Letter of Credit is transferable and may be transferred one or more times.  However, no transfer shall be effective
unless advice of such transfer is received by us in our standard form.

We hereby
agree to honor each draft drawn under and in compliance with this Letter of
Credit, if duly presented at our offices at                                                              or
at any other of our offices.

This
Letter of Credit is subject to the International Standby Practices 1998,
International Chamber of Commerce Publication No. 590.

	
   

  	
  [Name of Bank]

  
	
   

  	
   

  
	
   

  	
  By:

  

 

[Annex Bank’s Form
of Sight Draft]

 5

 

Exhibit 1

	
  BENEFICIARY:

  	
  APPLICANT:

  
	
  MACK-CALI CW REALTY ASSOCIATES LLC

  	
  AMERICAN BANK NOTE HOLOGRAPHICS INC

  
	
  100 CLEARBROOK RD

  	
  2 APPLEGATE DRIVE

  
	
  ELMSFORD NY 10523

  	
  ROBBINSVILLE, N.J. 08691

  

 

IRREVOCABLE STANDBY LETTER OF CREDIT

	
  OUR REFERENCE:

  	
  18103596-00-000

  
	
  AMOUNT:

  	
  USD $789,606.80

  
	
  ISSUE DATE:

  	
  AUGUST 24, 2006

  
	
  EXPIRY DATE:

  	
  DECEMBER 15, 2007

  
	
  EXPIRY PLACE:

  	
  OUR COUNTERS

  

 

BY ORDER OF OUR CLIENT,
AMERICAN BANK NOTE HOLOGRAPHICS, INC., WE ESTABLISH OUR IRREVOCABLE STANDBY
LETTER OF CREDIT NO. 18103596-00-000 IN YOUR FAVOR FOR A SUM OR SUMS NOT TO
EXCEED US$789,606.80 (SEVEN HUNDRED EIGHTY NINE THOUSAND SIX HUNDRED SIX AND
80/100 UNITED STATES DOLLARS) IN THE AGGREGATE, EFFECTIVE IMMEDIATELY.

THIS LETTER OF CREDIT SHALL
BE PAYABLE IN IMMEDIATELY AVAILABLE FUNDS IN U.S. DOLLARS. FUNDS UNDER THIS
CREDIT ARE PAYABLE TO YOU UPON YOUR PRESENTATION TO US A SIGHT DRAFT DRAWN ON
US IN THE FORM ATTACHED HERETO AS ANNEX I ACCOMPANIED BY BENEFICIARY’S
STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE READING AS
FOLLOWS:

“I (STATE NAME AND TITLE)
HEREBY CERTIFY THAT I AM AN AUTHORIZED REPRESENTATIVE OF MACK-CALI CW REALTY
ASSOCIATES LLC AND I FURTHER CERTIFY THAT THE AMOUNT OF THE ACCOMPANYING DRAFT
REPRESENTS FUNDS DUE US AS AMERICAN BANK NOTE HOLOGRAPHICS, INC. HAS FAILED TO
COMPLY WITH THE TERMS AND CONDITIONS OF THE SECOND AMENDMENT TO THE LEASE
AGREEMENT DATED JULY 26, 2006 BETWEEN MACK-CALI CW REALTY ASSOCIATES LLC AND
AMERICAN BANK NOTE HOLOGRAPHICS, INC.”

ALL DRAFTS MUST BE MARKED: “DRAWN
UNDER LETTER OF CREDIT NO. 18103596-00-000 DATED AUGUST 24, 2006 OF PNC BANK,
NATIONAL ASSOCIATION.”

IT IS A CONDITION OF THE
LETTER OF CREDIT THAT THE TOTAL AMOUNT SHALL AUTOMATICALLY REDUCE WITHOUT
AMENDMENT IN ACCORDANCE WITH THE FOLLOWING SCHEDULE:

	
  DATE OF REDUCTION

  	
   

  	
  AMOUNT OF REDUCTION

  	
   

  	
  LC AMOUNT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JANUARY 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  723,806.23

  	
   

  
	
  FEBRUARY I5,
  2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  658,005.66

  	
   

  
	
  MARCH 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  592,205.09

  	
   

  
	
  APRIL 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  526,404.52

  	
   

  
	
  MAY 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  460,603.95

  	
   

  
	
  JUNE 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  394,803.38

  	
   

  
	
  JULY 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  329,002.81

  	
   

  
	
  AUGUST 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  263,202.24

  	
   

  
	
  SEPTEMBER 15,
  2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  197,401.67

  	
   

  
	
  OCTOBER 15, 2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  131.601.10

  	
   

  
	
  NOVEMBER 15,
  2007

  	
   

  	
  $

  	
  65,800.57

  	
   

  	
  $

  	
  65,800.53

  	
   

  
	
  DECEMBER 15, 2007

  	
   

  	
  $

  	
  65,800.53

  	
   

  	
  -0-

  	
   

  

 

 1
 

 

THIS LETTER OF CREDIT EXPIRES
WITH OUR CLOSE OF BUSINESS AT 5:00 P.M. EASTERN TIME AT THIS OFFICE ON DECEMBER
15, 2007.

WE
HEREBY ENGAGE WITH YOU THAT DRAFT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THIS LETTER OF CREDIT WILL BE DULY HONORED IF PRESENTED
TO US AT THIS OFFICE ON OR BEFORE THE EXPIRY DATE.

THIS LETTER OF CREDIT IS
SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES 1998, INTERNATIONAL CHAMBER OF
COMMERCE PUBLICATION NO. 590.

 

	
  

  	
   

  
	
  PNC BANK, NATIONAL ASSOCIATION

  
	
  GLOBAL TRADE SERVICE OPERATIONS

  

 

 2

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