This Assignment and Plan of Distribution Agreement (this " Agreement ") is entered into and effective as of the 5th day of May, 2004 by and between Seneca Nation of Indians of New York, a sovereign nation (the " Nation ") and Seneca Gaming Corporation (" SGC ").
WHEREAS, SGC was created by the Nation for the purposes of developing, owning, financing, managing, operating and conducting the business of gaming facilities within the territory prescribed by the Nation;
WHEREAS, SGC has the ability to exercise its powers through the control, operation and management of subsidiary companies or other entities created by the Nation;
WHEREAS, each of Seneca Territory Gaming Corporation, Seneca Erie Gaming Corporation and Seneca Niagara Falls Gaming Corporation, each a wholly-owned subsidiary of SGC, (each, a " Subsidiary " and collectively, the " Subsidiaries ") was created to operate and maintain certain gaming facilities in specified territories designated by the Nation;
WHEREAS, SGC intends to issue $300,000,000 of 7 1 / 4 % senior unsecured notes due 2012 (the " Notes "), the proceeds of which will be used primarily to expand the Seneca Niagara Casino and to make a $25,000,000 distribution to the Nation;
WHEREAS, pursuant to Section 17 of the Charter of each of the Subsidiaries, in the event of the dissolution or final liquidation of the Subsidiaries, after all liabilities and obligations of the Subsidiaries have been paid, all remaining property and assets of the Subsidiaries shall be distributed to the Nation or, at the Nation's direction, to one or more organizations designated pursuant to a plan of distribution; and
WHEREAS, in order to induce third parties to purchase the Notes, the proceeds of which will benefit the Nation directly and indirectly through SGC and the Subsidiaries, the Nation wishes to assign to SGC all of its right, title and interest in and to the Liquidation Proceeds (defined below) that may be distributed to the Nation in connection with a dissolution or final liquidation of any of the Subsidiaries and that such proceeds shall be paid directly to SGC by the applicable Subsidiary.
NOW, THEREFORE, in consideration of the premises and the mutual agreements, covenants, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Nation and SGC, intending to be legally bound, hereby agree as follows:
1. Plan of Distribution . The Nation, in accordance with Section 17 of each Subsidiary Charter, hereby adopts a plan of distribution (the " Plan of Distribution ") providing that in the event of the dissolution or final liquidation of a Subsidiary, after all liabilities and obligations of such Subsidiary have been paid, satisfied and discharged, or adequate provision made therefore, all remaining property and assets of such Subsidiary (the " Liquidation Proceeds ") shall be distributed directly to SGC.
2. Assignment by the Nation . The Nation hereby irrevocably transfers and assigns to SGC all of the Nation's right, title and interest in and to the Liquidation Proceeds in connection with a dissolution or final liquidation of any of the Subsidiaries and agrees that all such Liquidation Proceeds shall be paid directly to SGC by the Subsidiaries as set forth in the Plan of Distribution; provided , further , that if
a Subsidiary distributes Liquidation Proceeds to the Nation, the Nation shall as soon as reasonably practicable, but in no event later than 2 business days after receipt of such Liquidation Proceeds, transfer such Liquidation Proceeds to SGC.
3. Acceptance by SGC . SGC hereby accepts the foregoing assignment.
4. Representations and Warranties of the Nation . The Nation represents and warrants to SGC as follows:
(a) The Nation is a federally recognized Indian tribe, organized pursuant to the Constitution of the Seneca Nation of Indians of 1848, as amended (the "Constitution").
(b) The Nation has full power, authority and legal right to execute, deliver and perform this Agreement, and has taken all necessary governmental and other action to authorize the execution, delivery and performance by the Nation of this Agreement. This Agreement has been duly executed and delivered by a duly authorized officer of the Nation, and this Agreement constitutes the valid, legal and binding obligations of the Nation, enforceable against the Nation in accordance with its terms, subject, as to enforcement, to the availability of equitable remedies and limitations imposed by bankruptcy, insolvency, reorganization and other similar Laws and related court decisions relating to or affecting creditors' rights generally. The Nation has adopted such authorizing resolutions as are appropriate for it to execute, deliver and perform its obligations under this Agreement.
(c) The execution, delivery and performance by the Nation of this Agreement and the enforcement by SGC of this Agreement will not result in the creation or imposition of any lien, charge or encumbrance upon any of the assets of the Nation pursuant to the terms of, or conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement, lease or other material agreement or instrument to which the Nation is a party or by which it is bound, which breach or default would have a material adverse effect on the business, operations, assets or financial or other condition of the Nation, or the ability of Nation to perform its obligations under this Agreement, nor will such actions result in any violation of the provisions of the Constitution or other organizational documents, the Nation's ordinances, codes, previously adopted Tribal Council resolutions or any statute, or any order, rule or regulation of any court or governmental or tribal agency or body having jurisdiction over the Nation or any of its assets. Any consent, approval, authorization, order, registration or qualification of or with or notice to any court or any such governmental or tribal agency or body required for the execution, delivery and performance by the Nation of this Agreement and the enforcement by SGC of this Agreement, has been validly obtained and is in full force and effect.
(d) The Nation is not in default under any agreement to which it is a party, including, without limitation, agreements for borrowed money, which default could have a material adverse effect on the business, operations, assets or financial or other condition of the Nation, as contemplated hereby, or the ability of the Nation to perform its obligations under this Agreement.
(e) The Tribal Council of the Nation has taken all required action, and has duly adopted appropriate resolutions, in order to provide for the Nation's waiver of sovereign immunity and consent to jurisdiction contained herein.
(f) The Nation is and will be the sole legal, record and beneficial owner of all of the Liquidation Proceeds free and clear of any lien, security interest, assignment, option or other charge or encumbrance, except for the interest created by this Agreement.
(g) The Nation shall not (i) sell, convey, assign or otherwise dispose of, or grant any option with respect to, any of the Liquidation Proceeds assigned to SGC by it hereunder or (ii) create or
permit to exist any lien upon or with respect to any of the Liquidation Proceeds assigned by it to SGC hereunder.
5. Resolution of Disputes .
(a) Direct Negotiation. The parties encourage the prompt and equitable settlement of all controversies or claims (a " Dispute ") between the parties including those arising out of this Agreement. At any time, any party may give the other party written notice that it desires to settle a Dispute. Within ten (10) days of delivery of such notice, each party agrees to cause an officer having authority to resolve such Dispute (a " Senior Representative "), to meet (either by telephone or in person in Niagara Falls, New York (Nation Territory)) with the other Senior Representative and attempt to resolve the differences causing the Dispute. If the Dispute is not settled within one (1) week of such Senior Representatives' meeting (whether by telephone or in person), then, the parties agree to submit the Dispute to mediation in accordance with Section 5(b) below. The period from the date of the delivery of notice of dispute under this section through the termination of the meeting between the Senior Representatives is referred to as the " Negotiation Period ".
(b) Mediation. If the Dispute is not resolved during the Negotiation Period, the parties agree to submit the Dispute to a single mediator for seven (7) days mediation under the American Arbitration Association (" AAA ") Mediation Rules. Such mediator will be selected from the AAA panel of mediators by mutual agreement of the Nation and SGC. If the parties are unable to agree on a mediator, the parties may submit the selection of such mediator to the Western District of New York (or such other court as mutually agreed) for the selection of same on behalf of the parties. Unless otherwise agreed, the mediation proceedings shall be conducted by telephone or in person in Niagara Falls, New York (Nation Territory), and the parties shall bear their respective costs incurred in connection with the mediation, except that the parties, subject to the mediation, shall equally bear the costs for the mediator and any expenses related to the mediation. Such mediation shall occur no later than the twentieth (20 th ) day following the date on which one party makes a demand for mediation on the other party. The mediation will be terminated upon the first to occur of the following: (A) execution of a settlement agreement resolving the Dispute; or (B) a written declaration of a party or parties, after completion of two (2) days of mediation sessions, that mediation proceedings are terminated. The mediation shall be conducted in English. All negotiations conducted in accordance with this provision shall be treated as confidential information in accordance with the terms of this Agreement and shall also be treated as compromise and settlement negotiations.
(i) Any controversy or claim arising out of or related to this Agreement (including without limitation any dispute relating to its validity or termination, or the performance or breach thereof) which remains unresolved for longer than ten (10) Banking Days after completion or termination of the above referenced mediation period shall be finally settled by binding arbitration by a panel of arbitrators in accordance with the AAA Commercial Arbitration Rules (" AAA Rules ") in effect at the time of the arbitration, except as modified in this Section 5 or as subsequently agreed by the parties hereto.