Exhibit 10.14

 

CASINO MANAGEMENT AGREEMENT

 

CASINO MANAGEMENT AGREEMENT (the “Agreement”) made and entered into as of
October 28, 1993 by and among RAINBOW CASINO PARTNERSHIP-VICKSBURG, L.P., a
Mississippi limited partnership (the “Partnership”), MISSISSIPPI VENTURES, INC.,
a Nevada corporation (the “Manager”), and THE RAINBOW CASINO CORPORATION, a
Mississippi corporation (“Rainbow”).

 

RECITALS :

 

Rainbow, United Gaming, Inc., a Nevada corporation and the indirect parent
corporation of the Manager (“United”), John A. Barrett, Jr. and Leigh Seippel
are parties to a Basic Agreement dated as of the date hereof (as amended at any
time, the “Basic Agreement”).  Capitalized terms not defined herein have the
meanings ascribed to them in the Basic Agreement.

 

The Partnership is a Mississippi limited partnership, the sole partners of which
on the date hereof are Rainbow, as general partner, and John A. Barrett, Jr. and
Leigh Seippel, as limited partners, and from and after the Completion Date,
subject to the provisions of the Basic Agreement, the sole partners of which
shall be Rainbow, as sole general partner (in such capacity, the “General
Partner”), and United Gaining Rainbow, a Nevada corporation and affiliate of the
Manager, as sole limited partner (the “Limited Partner”), pursuant to (from and
after the Completion Date) an Amended and Restated Agreement of Limited
Partnership to be dated as of the Completion Date and to be substantially in the
form of Exhibit C-1 to the Basic Agreement (as amended at any time, the
“Partnership Agreement”). The Partnership shall acquire the Project site and
certain other related assets and rights from the General Partner pursuant to the
Basic Agreement.

 

The Partnership, Rainbow and the Manager have agreed that the Manager shall, as
provided in this Agreement, serve through the personal services of the President
of United and the Manager (who is on the date hereof Mr. Shannon L. Bybee) as
Chief Operating Officer of the Casino and that under the supervision of such
Chief Operating Officer the Manager shall serve as the independent contractor
manager of operations of the Casino in accordance with the terms and conditions
of this Agreement. As provided herein, the Manager and the General Partner shall
consult with each other on a collegial basis from time to time as to all matters
materially affecting the business, financial or

 

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legal condition of the Casino to the effect that each shall be kept reasonably
well informed thereof at all times.

 

AGREEMENT:

 

The parties hereto agree as follows:

 

1.                                    Engagement of the Manager.

 

1.1                              The Manager’s Hiring.  Rainbow hereby engages
the Manager on an exclusive basis to furnish consulting services and development
assistance to Rainbow prior to the Completion Date. From and after the
Completion Date, the President of United shall serve as the Chief Operating
Officer of the Casino (the “COO”) and, under the direct supervision of the COO,
as provided herein, the Manager shall serve as the manager of all operations of
the Casino, in the name and for the account of the Partnership. Notwithstanding
any other term of this Agreement, the COO and the Manager are employed and
authorized hereunder only in respect of the Casino operations and not any other
operations of the Partnership or Rainbow in Vicksburg, Mississippi or elsewhere.

 

1.2                              The Casino.  The Casino shall include certain
land and other assets owned by the Partnership in Vicksburg, Mississippi, all as
set forth in the Basic Agreement, and all improvements, furniture, fixtures and
equipment (the last three items above, collectively, “F/F/E”), appurtenances,
facilities, parking, amenities, and related rights, privileges and properties
existing, to be constructed thereon or subsequently added during the Term (as
defined in Section 2) in connection with a gaming casino and related activities
thereon as described in the Basic Agreement.

 

1.3                              Rainbow’s Construction and Pre-Opening
Obligations.  Rainbow shall, at its sole cost and expense, in compliance with
the Construction Contracts, Construction Costs, Pre-Opening Costs, Plans and
applicable laws and regulations, construct and open the Casino in accordance
with the Basic Agreement.

 

2.                                    Term.  The term of this Agreement shall
commence on the date hereof and shall continue perpetually thereafter, subject
to Section 2(d) of the Basic Agreement, unless otherwise terminated in
accordance with the terms and conditions of the Basic Agreement or the terms
hereof (the “Term”); provided, that the Manager shall be permitted to terminate
this Agreement at any time upon 90 days’ prior written notice to the
Partnership.

 

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3.                                    Pre-Opening and Opening Activities.

 

3.1                              Pre-Opening Services.  Prior to the Completion
Date, the Manager, through the direct personal services of the COO, as assisted
by such qualified employees of the Manager and such non-employee consultants as
the COO may select and directly supervise, shall provide the following
assistance to Rainbow from time to time at the reasonable request of Rainbow,
all at the request and expense of Rainbow as to all reasonable out of pocket
costs incurred:

 

(a)                              advise Rainbow with respect to the planning,
construction, organization and opening of the Casino;

 

(b)                             recruit, select and hire employees and implement
training programs, if required;

 

(c)                              advise as to selection and purchase or lease of
the initial gaming equipment, inventories and supplies with funds provided by
the Partnership;

 

(d)                             develop and supervise the installation of
management accounting, security and regulatory compliance systems and controls
for the Casino; and

 

(e)                              establish a pre-opening and post-opening sales
and marketing program for the Casino and organize opening ceremonies.

 

Any such services performed after the Completion Date shall be at the reasonable
request of the General Partner from time to time and at the expense of the
Partnership.

 

Rainbow acknowledges that the COO is President and Chief Operating Officer of
United, which is a diversified gaming company engaged in other businesses in
addition to the operation of the Casino, and that the COO shall have other
commitments and accordingly shall not devote full time or any specified minimum
amount of time relating to the duties of the Manager under this Agreement.

 

3.2                              Pre-Opening Budget.  The Manager will assist
Rainbow in preparing a comprehensive budget for activities relating to
construction of the Casino from the date hereof to the Completion Date (the
“Pre-Opening Budget”), setting forth a reasonable estimate of the costs for all
items which the Manager considers necessary or desirable to prepare the Casino
for opening and initial operations, including without limitation, pre-opening
working capital, gaming equipment, F/F/E, supplies, hiring, training and housing
(whether on or off-site) of personnel, advertising and promotion, office
overhead and office space (whether on or off-site) and travel and business

 

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entertainment. Any and all expenses within the Pre-Opening Budget for such types
of expenditures accruing or relating to periods or activities prior to the
Completion Date shall be paid promptly or reimbursed, as the case may be, by
Rainbow, and all expenses accruing or relating to all periods commencing on the
Completion Date shall be paid promptly or reimbursed by the Partnership.  The
Manager and Rainbow shall use their best efforts to develop a final Pre-Opening
Budget within 60 days after the date hereof.

 

4.                                    Manager’s Management of Casino.

 

4.1                              General Responsibilities and Authorization. 
From and after the Completion Date, the COO shall have overall senior executive
authority for the day-to-day management and operation of the business of the
Casino by delegation from the Partnership hereunder. The COO, as assisted by
such qualified employees of the Manager as the COO may select, subject to his
direct and continued supervision (subject to the final sentence of Section 3.1),
shall exercise such authority in the specific areas of responsibility set forth
below and such other areas as are reasonably within the general scope of
delegated authority of this Agreement:

 

(1)                              preparing and distributing agenda for periodic
meetings with the Partnership, and maintaining the minutes of such meetings;

 

(2)                              signing checks drawn on the Partnership’s bank
accounts to satisfy obligations of the Partnership (subject to all conditions of
budgetary limits and the General Partner’s co-signature or sole signature as
required in this Agreement);

 

(3)                              keeping the financial and other books and
records of the Casino;

 

(4)                              consulting with the Partnership on matters of
fundamental policy in advance of any material action and keeping the Partnership
informed with respect to all matters of material interest to it, including
reporting to the General Partner not less frequently than monthly by means of
the Monthly and Annual Statement provided for in Section 8 and a monthly
personal or telephonic conference following the submission of such reports
attended by the COO and the Chairman or President of the General Partner
regarding the Partnership and any proposed strategic initiatives or changes in
operations of the Casino; and

 

(5)                              transacting such other operations-related
business on behalf of the Partnership as the COO shall deem necessary or
appropriate or as may be reasonably directed by the Partnership from time to
time (subject in all cases to conditions

 

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of budgetary limits and the General Partner’s required co-signature or sole
signature as required in this Agreement).

 

The Partnership hereby agrees that the Manager, as it shall act at all times
through the COO or his directly supervised assistants, shall have day-to-day
control and senior operating executive authority and responsibility for the
Casino during the Term.  Matters which thereby shall come under the Manager’s
authority (on the direct premises of the Casino only, expressly excluding all
entertainment park, hotel, off-site restaurant or other activities of the
Partnership or Rainbow) shall include without limitation: prices of items sold
in the Casino; the issuance of credit; the granting of complimentaries; the
terms of admittance to the Casino for purposes of entertainment; the labor
policies of the Casino; the type and character of publicity and promotion; the
direction of all phases of sales, marketing, advertising and promotion relating
to the Casino; the engagement of agents or consultants; and determination of
Casino policies regarding (i) labor and personnel matters (including the
recruiting, selection, hiring, compensation, training and discharge of all
Casino employees, entering into employment contracts on behalf of the
Partnership, and negotiating collective bargaining agreements with any
applicable labor union or organization); (ii) credit card acceptance, including
entering into agreements with credit card issuers, service organizations and
financial institutions for recognition and processing; (iii) on-site Casino
entertainment services and prices; (iv) on-site Casino food and beverage
services and prices, concessions and space or function leasing; and (v) all
other items customary for dockside casinos.

 

Notwithstanding the foregoing or any other term of this Agreement, in no event
shall the Manager be authorized or entitled to incur any indebtedness of the
Partnership for borrowed money or create any guaranty or Lien (other than
customary Liens incurred in the ordinary course of business) by or through any
person against the Partnership or Rainbow, nor shall the Manager be authorized
or entitled to enter into any contract on behalf of the Casino or the
Partnership or Rainbow (including without limitation, any employment contact),
except as and to the extent expressly permitted by Section 6.4.

 

4.2                              The Manager’s Services.  After the Completion
Date, the Manager undertakes to do and perform, and the Partnership authorizes
the Manager to act on its behalf and to perform in such capacity, to the extent
and at the times the Manager deems appropriate, solely with funds provided by
the Partnership or from operations of the Casino, the following specific actions
and functions:

 

(a)                              The COO has been appointed to the office of
Chief Operating Officer of the Casino. In the event of such

 

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person’s death, prolonged incapacitation or discharge or retirement from the
employ of the Manager, the Manager shall have the right to nominate a successor
COO as set forth in the Basic Agreement. The initial and any successor COO shall
be the principal officer in charge of all Casino operations, staffing, casino
equipment choice and layout, operating systems (cash processing, security and
other or similar functions), regulatory compliance, marketing matters and other
areas customarily under the direct executive authority of the chief operating
officer of a casino business, all upon the terms and conditions of this
Agreement and the Basic Agreement.

 

(b)                             Unless otherwise agreed in writing by Rainbow as
General Partner, all personnel of the Casino except the COO shall be personnel
of the Partnership. The Manager, including the COO, shall act as independent
contracting agent for the Partnership. As agent for the Partnership, however,
the Manager, subject to the Basic Agreement and this Agreement, shall have
discretion to hire, supervise, direct the work of, discharge and determine (but
in each case within the limits of the Annual Budget for employees of the type
involved) the compensation and other benefits of all personnel working in the
Casino; provided: that senior staff hiring and any staff discharges shall be
subject to the General Partner’s prior approval unless the determination to
discharge any person other than the resident general manager or senior resident
financial officer of the Casino shall be made personally by or through the COO,
in which case the COO shall have authority to take such action on behalf of the
Partnership without prior approval of the General Partner. Except as otherwise
provided in this Section 4.2 (b), the Manager shall determine the fitness and
qualification of such personnel without prior approval of the General Partner.
The Manager shall not be liable to such personnel or to the Partnership for any
and all claims for wages, compensation or other benefits (including without
limitation, severance, pension, superannuation, retirement and termination pay)
asserted by or on behalf of such personnel.

 

(c)                              The Manager shall cause to be employed, on
behalf of the Partnership, and at Rainbow’s sole expense prior to the Completion
Date, and at the Partnership’s sole expense after the Completion Date, a general
manager, senior resident controller and other key personnel, and a support staff
of a size and nature appropriate to the Casino, all as reasonably deemed by the
Manager necessary to be employed by the Manager for the successful operation of
the Casino. The Partnership (after the Completion Date) shall pay the salaries,
other compensation and benefits of all such personnel (it being understood that
Rainbow shall be solely responsible for the foregoing prior to the Completion
Date). Notwithstanding the foregoing, all salary, benefits and other staff
overhead shall be incurred by the Manager only within the maximum limit as to
each type of employee

 

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set forth in the Annual Budget except as otherwise specifically agreed upon in
advance in writing by the General Partner.

 

(d)                             The Manager shall employ and pay, and Rainbow,
if such costs are incurred prior to the Completion Date, or the Partnership, if
such costs are incurred after the Completion Date, shall reimburse the Manager
for, such reasonable pro rata wages of the Manager’s own employees who are
engaged in the performance of duties hereunder to the extent (but only to the
extent) not duplicative of the resident staff duties and services of employees
of the Partnership in the reasonable opinion of the General Partner (with regard
to which the Manager shall consult in advance in respect of any such use of
employees of the Manager). The Partnership shall pay monthly to the Manager all
reasonable travel, lodging and meal costs and expenses incurred by the COO and,
to the extent their services are permissible charges pursuant to the immediately
preceding sentence, a reasonable number of others of the Manager’s employees in
the performance of duties hereunder, all to the extent within the Pre-Opening
Budget, or any Annual Budget, in the case of costs incurred after the Completion
Date, or if in excess thereof as approved in advance by the General Partner.

 

(e)                              The Manager shall establish and supervise an
accounting function with appropriate Casino accounting systems (consistent with
Section 8) and personnel (located at the Casino or elsewhere), that will prepare
and timely file all necessary reports and returns for federal, state and local
withholding taxes, FICA and FUTA taxes, unemployment insurance, disability
insurance, State regulatory periodic and special reports, and all other
statements and reports pertaining to the Casino and its employees, and provide
all bookkeeping, accounting and clerical services for the Casino.

 

(f)                                The Manager shall receive, consider and
resolve the complaints of customers or users of any of the services or
facilities of the Casino.

 

(g)                             The Manager shall (subject to the prior written
approval of the Partnership in the case of all material contracts as provided in
Section 6) pay and perform, in the name of and at the expense of Rainbow prior
to the Completion Date and the Partnership after the Completion Date, all
contracts, leases, concessions, licenses, permits and other undertakings for the
operation of the Casino.

 

(h)                             Subject to Sections 6 and 12, the Manager shall
arrange for the Partnership to contract, at the Partnership’s expense and in the
name of the Partnership, for all alterations, repairs, replacements,
restorations, F/F/E or installations to the Casino which the Manager considers
to be necessary or desirable in accordance with and to the extent

 

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provided for in any Annual Budget or as may be otherwise approved by the General
Partner in advance.

 

(i)                                 The Manager shall receive and collect all
cash and accounts generated from the operation of the Casino and its facilities,
convert all accounts to cash, and deposit such amounts, along with all funds
furnished by the Partnership as working capital and all other monies received by
the Manager for or on behalf of the Partnership, in the Working Capital Account
for retention or disposition pursuant to Section 7.

 

(j)                                 The Manager shall pay and disburse on behalf
and for the account of the Partnership, all disbursements of every type not
otherwise expressly authorized or limited under this Agreement that the Manager
considers to be necessary or desirable for the operation of the Casino to the
extent provided for within the then current Annual Budget or as may be otherwise
approved by the General Partner in advance.

 

(k)                              The Manager shall establish, supervise and
implement policies relating to (i) the number and type of gaming tables (which
initially shall be approximately 30) and gaming machines (which initially shall
be at least 450), (ii) the location and arrangement of such tables and machines
in the Casino and (iii) gaming policies, rules and procedures.

 

4.3                              Annual Budget.  Rainbow shall provide to the
Manager at least 60 days’ advance written notice of the expected Completion
Date. By no later than 45 days prior to the Completion Date and thereafter no
less than 45 days prior to the expiration of each fiscal year, the Manager shall
prepare and deliver to the Partnership a draft detailed annual budget (the
“Annual Budget”) for the Casino during the first fiscal year of actual
operations and thereafter for each next succeeding fiscal year.  Each Annual
Budget shall include, without limitation, the Manager’s forecast of revenues,
expenses and Cash Flow for the Casino for such fiscal year, presented on a
monthly basis, and shall address any proposed expenditures for capital
improvements, replacements, renovations and major repairs to be paid from a
reserve fund. The Partnership’s approval of the Annual Budget shall not be
unreasonably withheld and shall be deemed given unless a specific written
objection thereto is delivered by the Partnership to the Manager within 30 days
after the receipt thereof. If the Partnership does not approve a proposed Annual
Budget then the approved Annual Budget of the current fiscal year plus 5% in
respect of each line item shall remain in effect. The Manager may revise the
budget from time to time to reasonably reflect any unpredicted significant
changes, variables or events or include significant additional unanticipated
items of income or expense. Any such revision shall be submitted to the
Partnership for approval, which approval shall not be unreasonably withheld, and
which approval shall be deemed given

 

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unless a specific written objection thereto is delivered to the Manager by the
Partnership within 15 days after receipt thereof, and if not approved the Annual
Budget shall remain in effect unchanged.

 

4.4                              Employee Meals.  The Manager, in its reasonable
discretion, may provide from time to time free or discounted meals to Casino
employees.

 

4.5                              Contract Information to the Manager.  The
Partnership shall furnish to the Manager, at least 45 days prior to the
Completion Date, true, complete and correct copies of all material contracts and
financial obligations of the Partnership with respect to the Casino that the
Manager shall be directed to pay from the Casino’s working capital account, and
shall so supply to the Manager a copy of all material contracts and financial
obligations it may incur thereafter together with payment authorization.

 

5.                                    Representative Capacity.  The Manager is
an independent contractor. The Manager shall be responsible to the Partnership
only for the faithful and diligent performance of its obligations under this
Agreement, and shall not be liable to the Partnership for errors of commission
or omission in the exercise of its business judgment so long as it acts in good
faith, and engages in no gross negligence, willful misconduct or fraud.  In
addition, the Manager shall not be liable for unforeseen circumstances, failure
of the Casino to achieve budgets or any other unforeseen or unanticipated
circumstance or event. Nothing herein shall constitute or be construed to be or
create a partnership or joint venture between the Partnership and the Manager,
or be construed to create a lease by the Partnership to the Manager of the
Casino. All debts and liabilities to third persons incurred by the Manager
pursuant to and in accordance with the terms of this Agreement (including
without limitation, Section 6.4) shall be the debts and liabilities of the
Partnership, to be paid only from the Casino’s Working Capital Account or other
funds and the Manager shall not be personally liable for any such obligations by
reason of its management, supervision and direction of the operation of the
Casino if incurred pursuant to this Agreement, the Basic Agreement or the
Partnership Agreement.

 

6.                                    Operating Expenses and Contracts.

 

6.1                              The Partnership Bears Expenses; the Partnership
Executes All Material Contracts.  In performing its duties hereunder, the
Manager shall act solely in the name and for the account of the Partnership. All
expenses incurred by the Manager in performing its duties hereunder, to the
extent provided in the then current Annual Budget or otherwise properly incurred
under this Agreement, shall be borne exclusively by the Partnership

 

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(except as they shall be borne by Rainbow pursuant to Section 1 and as otherwise
provided for in this Agreement). To the extent the funds necessary therefor are
not generated by the operation of the Casino, they shall be supplied by the
Partnership to the Manager.  Notwithstanding any other provision of this
Agreement, the Basic Agreement or the other Implementing Agreements, without
limiting any of the Manager’s or United’s other rights hereunder or adding to
any of the Manager’s other liabilities or obligations hereunder, explicitly or
implicitly, in no event shall the Manager or United or any of United’s
affiliates be responsible for any failure in performance of the Casino, in any
respect, if sufficient funds therefor shall not be available.

 

6.2                              Advances.  The Manager and/or United shall in
no event be required to advance any of its own funds for the operation of the
Casino, nor to incur any liability in connection therewith.  If the Manager
elects (but it shall not be obligated to) at any time to advance any funds for
payment of operating expenses subject to this Agreement, it shall do so upon
prior consultation with the Partnership and subject to prior written approval of
the General Partner upon terms for reimbursement.  The Partnership shall
promptly reimburse the Manager for any such advance promptly in accordance with
the terms agreed by it with the Manager prior thereto.

 

6.3                              Purchasing.  The Manager is authorized by the
Partnership to purchase replacement F/F/E, textiles, goods, and other items in
accordance with this Agreement through or from affiliates, subsidiaries or
divisions of the Manager; provided, however, that the price and terms shall not
be less favorable to the Partnership than the Manager could have obtained in the
public marketplace for similar products and/or services of the same quality and
quantity from independent third parties. Any purchases of services in excess of
$50,000 shall be subject to the prior approval of the General Partner.

 

6.4                              Contracts.  Notwithstanding any other provision
of this Agreement, the Manager shall not be and shall not purport to be
authorized to enter into any contractual undertaking binding upon the
Partnership in aggregate obligation or liability for payment in excess of
$50,000 in any transaction or related series of transactions except by written
agreement signed or countersigned by the Partnership prior to its taking effect.
Any contract which the Manager may so enter into without signature by the
Partnership may be executed only by the COO.  The Manager shall have no
authority to enter into contracts under this Agreement prior to the Completion
Date.

 

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7.                                    Working Capital Account; Payments and
Distributions.

 

7.1                              Initial Deposit.  At least 90 days prior to the
expected Completion Date, Rainbow shall provide the Manager with sufficient
working capital for the uninterrupted and efficient completion of preparations
for and commencement of operation of the Casino, consistent with the Pre-Opening
Budget and the first Annual Budget on a timely basis as expenditures thereunder
are reasonably required for due payment. As used herein, “working capital”
includes funds for the maintenance of adequate cash balances and house banks,
and to finance receivables, payrolls, inventories and such other expenditures as
shall be deemed necessary or appropriate by the Manager and as provided for in
the Pre-Opening Budget and the first Annual Budget.

 

7.2                              Deposits; Payments and Distributions.  All
funds to be made available to the Manager by Rainbow prior to the Completion
Date and by the Partnership after the Completion Date for the operation of the
Casino and all funds derived from the operation of the Casino shall be deposited
and invested in federally-insured accounts of a type and with financial
institutions selected by the General Partner (collectively, the “Working Capital
Account”).  The Working Capital Account shall be under the control of the
Manager, subject to the Manager’s obligation of accounting to the Partnership as
and when required herein. All monies received from the operation of the Casino,
and any and all expenses paid by the Manager on account of the operation of the
Casino, shall be deposited into and disbursed from such account. The Manager may
pay creditors of the Partnership such amounts as may be necessary from time to
time to pay and discharge debts of the Partnership so as to prevent the
attachment, creation or imposition of any lien, claim, security interest or
encumbrance on the Casino, the Working Capital Account or any other interest
created by this Agreement; provided, that if the General Partner shall deliver
to the Manager a written notice that the Partnership is disputing any such
obligation, the Manager shall not make any such payment until so directed by the
General Partner or a court of competent jurisdiction.  Checks or other
instruments of withdrawal shall be signed only by authorized representatives of
the Manager, or by the resident general manager of the Casino or by authorized
representatives of the Partnership. The COO shall establish such other dual
signature requirements as he deems appropriate from time to time.
Notwithstanding any other term of this Agreement (a) any check (or checks in
substantially the same payment occasion or use) in an amount in excess of
$50,000 shall be mandatorily co-signed by the Chairman or President of the
General Partner and (b) any check representing payment (i) to HFS, or its
subsidiary pursuant to its loan and investment in respect of the Casino or (ii)
of any fee of the Manager under this Agreement, and any reimbursement of
expenses of the Manager in excess of

 

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$3,000 per month in aggregate, shall be mandatorily co-signed by the Chairman or
President of the General Partner.

 

Upon the payment on a current monthly basis of all due operating costs of the
Casino, all due payments to HFS and all due payments to the Manager under this
Agreement and the Basic Agreement, the Manager and the General Partner shall
mutually approve retention of funds reasonably estimated to suffice for the next
month of future scheduled obligations and reasonably estimated non-scheduled
obligations in such period based upon the then current Annual Budget. After
retaining the provision for the total reserve thereby resulting, by checks
signed solely by the General Partner a distribution then shall be made of the
balance otherwise remaining in the Working Capital Account (irrespective of the
source of any such funds) respectively to each of the General Partner and the
Limited Partner on the basis of sharing then in effect pursuant to the Basic
Agreement and the Partnership Agreement of the Partnership (such sharing on the
date hereof being on the basis of 55% to the General Partner and 45% to the
Limited Partner). All such monthly distributions shall be made no later than the
21st day following the conclusion of each month and shall be accompanied by the
Monthly Statement (as defined in Section 8.1) and a detailed listing of all
computations of payments due in respect of such month to the Manager, United,
HFS, and the Partnership and its partners, respectively.

 

7.3                              Exclusive Use.  The Working Capital Account
shall be used exclusively in connection with the operation of the Casino and the
performance of the terms and conditions of this Agreement, and the Manager shall
at all times segregate all monies, receipts, accounts and records pertaining to
the operation of the Casino and shall not commingle such items with any other
business or activities of the Manager. The Working Capital Account shall be
maintained by an institutional depository selected by the General Partner, which
shall at all times have signatory powers thereto in addition to a duly
authorized representative of the Manager (who shall be the only authorized
signatories of the Manager), the resident general manager of the Casino and
certain designated employees of the Partnership.

 

8.                                    Books, Records and Statements.

 

8.1                              System of Accounts.  The Manager shall keep
books of account and other records reflecting the results of operation of the
Casino on an accrual basis, all in accordance with generally accepted accounting
principles consistently applied (“GAAP”), and as applied within the gaming
casino industry. The books of account and all other records relating to or
reflecting the operation of the Casino shall be maintained on the premises of
the Casino at all times and shall be available to the

 

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Partnership and its representatives at all times, for examination, audit,
inspection and transcription (at the Partnership’s expense). Upon termination of
this Agreement for any reason, the Partnership shall be permitted to utilize the
computer hardware and software located at the Casino for such a period of time
as is reasonable necessary to transfer all data records relating to the
operation of the Casino, subject to the requirements of any software license
under which the Manager utilizes any such software.  In such event, the Manager
may furnish hard copy printouts of such accounting records or generally used
storage media containing such records together with instruction on access
thereto. The Manager may retain a copy of any accounting records for the Casino
after termination of this Agreement.

 

8.2                              Monthly and Annual Statement.  The Manager
shall prepare and deliver to the Partnership, within 20 days after the end of
each calendar month, financial statements (the “Monthly Statement”) including
(a) a profit and loss statement showing the results of operations of the Casino
for such preceding calendar month and for the portion of the fiscal year ended
on the last day of such preceding calendar month, (b) a balance sheet, (c) a
statement of Cash Flow and EBITDAR, (d) an itemized statement of sources and
uses of capital during such month (including without limitation payment of and
provision for taxes and franchise fees), (e) a narrative discussion and analysis
of the Casino’s monthly and year to date attendance, win, marketing, competitive
experience, regulatory interactions and performance against projections in the
Annual Budget, (f) a summary of pending or threatened litigation, (g) a summary
of employee relations, and (h) such other matters as the Partnership may
reasonably request within the scope of this Agreement. The Monthly Statement
shall also set forth computation of all payments due in respect of such month to
(i) the Manager pursuant to this Agreement and the Basic Agreement, (ii) to HFS
in respect of its financing of the Casino and (iii) to the Partnership and its
partners respectively as a distribution after establishment of the operating
reserve provided for in Section 7.2. Within 90 days after the end of each fiscal
year, the Manager shall furnish the Partnership with a financial statement for
the preceding fiscal year containing a statement for such year for each of the
preceding categories of information on an annualized basis and comparing it to
the comparable data for the preceding fiscal year (the “Annual Statement”). All
such annual financial statements shall be accompanied by a report thereon of an
independent accounting firm of national standing selected by the General
Partner, the fees of which shall be included in the operating expenses of the
Casino and paid by the General Partner (not the Manager) from the Working
Capital Account on behalf of the Partnership. Any disputes as to the contents of
any Monthly Statement or Annual Statement shall be referred for determination to
an independent accounting firm having no direct or indirect business with either

 

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the General Partner or the Manager for its recommended determination, which
shall become final and binding automatically unless either party files
litigation over the matter within 30 days after receipt of such recommended
determination in final written form.

 

9.                                    Manager’s Fees and Payments to the
Partnership.

 

9.1                              Pre-Opening Services Fee.  In consideration of
the Manager’s or its affiliates’ agreement to perform the above-described
services prior to the Completion Date, Rainbow shall reimburse to the Manager
from time to time against its itemized invoicing the Manager’s reasonable and
actual out-of-pocket costs and expenses incurred in connection with its
authorized pre-opening services under this Agreement, including pro rata
salaries and expenses for the Manager’s officers and employees and consultants
utilized in performing such services.

 

9.2                              Base and Incentive Fees.  From and after the
Completion Date, the Partnership shall pay to the Manager for its services
provided under this Agreement the compensation set forth in Section 2 of the
Basic Agreement.

 

9.3                              Additional Fee.  Notwithstanding any other
provision of this Agreement, the Basic Agreement or the other Implementing
Agreements, on the date which is three years after the date hereof, or, in the
event that this Agreement is terminated within three years of the date hereof,
for any reason whatsoever (including without limitation, any termination at the
option of the Manager), Rainbow will pay to or as directed by the Manager,
without reduction, counterclaim or setoff, for any reason or of any kind, on
such third year anniversary or such earlier date of termination, as applicable,
the amount of $275,000.

 

10.                              Repairs And Maintenance; Capital Improvements.

 

10.1                        Routine Items.  The Manager shall from time to time
make expenditures (solely from monies available in the Working Capital Account
and in accordance with the Annual Budget) for such routine repairs and
maintenance as it deems necessary or appropriate to keep the Casino in good
operating condition (excluding structural repairs and extraordinary repairs to
or replacement of F/F/E) up to a maximum of $50,000 for any transaction in
excess of the reserves for such expenditures in the Annual Budget for any fiscal
year, it being agreed that the prior consent of the Partnership shall be
required for any such expenditure in excess thereof. If any such repairs or
maintenance shall be made necessary by any condition against the occurrence of
which the Partnership has received the guarantee or warranty of any supplier of
labor or materials for the Casino, then the Manager may invoke such guarantees
or warranties in the

 

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Partnership’s name and the Partnership will cooperate fully with the Manager in
the enforcement thereof.

 

10.2                        The Partnership’s Improvements.  The Partnership may
from time to time at its sole expense, to the extent permitted in the Basic
Agreement and the Partnership Agreement, make such alterations, additions or
improvements in or to the Casino as the Partnership may so elect (as provided in
the Basic Agreement and the Partnership Agreement), and the consent of the
Manager shall not be required therefor.  Except as provided for in an approved
Annual Budget, the Manager shall not make any material alterations, additions or
improvements without the Partnership’s and the Manager’s approval except as
required by law or in an emergency.

 

11.                              Insurance.

 

11.1                        Coverages.  During the term of this Agreement, the
Manager shall use commercially reasonable efforts to provide and maintain, at
Rainbow’s sole cost and expense, prior to the Completion Date, and the
Partnership’s sole cost and expense, after the Completion Date, insurance of
such kinds and amounts as is prudent for the business of casino operations.  The
Manager shall use its reasonable efforts to obtain such insurance at competitive
rates consistent with local standards and coverages.

 

11.2                        Insurers.  All insurance shall be in such form and
amounts and with such companies as shall be reasonably satisfactory to the
Partnership and the Manager and by all interested parties thereunder and shall
be purchased at the expense of Rainbow, for coverage prior to the Completion
Date, and the Partnership, for coverage after the Completion Date. All policies
insuring against damage to the Casino or portions thereof or interruptions of
business or the like shall name the Partnership, the Manager and such other
parties as may be required by the provisions of any mortgage, lease or other
agreement affecting the Casino as the insureds thereunder, as their respective
interests may appear. All policies of hazard insurance shall include loss
payment clauses in the form required by any mortgage, lease or other agreement
affecting the Casino and the Partnership shall advise the Manager of the
respective requirements of each such agreement prior to opening of the Casino.
All policies of liability insurance shall name the Partnership, the Manager and
such other parties required above as the insureds thereunder, and shall contain
riders and endorsements adequately protecting the interests of the Manager.
Certificates of all policies of insurance shall be delivered to the Partnership
and to all such other parties as the Partnership shall reasonably direct.
Deductible items shall be paid from the Working Capital Account, if sufficient,
and directly by the Partnership otherwise.

 

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11.3                        Subrogation.  The Manager shall cause (to the extent
possible without incurring undue expense) all policies of insurance to provide
that the insurer will have no right to subrogation against the Partnership, the
Manager or any of its agents or employees or affiliates except for gross
negligence or willful misconduct.  The Partnership assumes all risks
inconnection with the adequacy of any insurance or self-insurance program, and
waives any claim against the Manager for any liability, cost or expense
(including without limitation, attorneys’ fees and disbursements) arising out of
any uninsured claim, in part or in full, of any nature whatsoever unless the
Manager has willfully caused the event(s) giving rise to such claims. All
policies of insurance to be procured by the Manager shall permit the foregoing
waiver (to the extent possible without incurring undue expense).

 

11.4                        Construction Period.  As provided in the Basic
Agreement, Rainbow shall be solely responsible for obtaining and maintaining
appropriate insurance coverage during any period prior to the Completion Date,
and such responsibility shall thereafter be that of the Partnership.

 

12.                              Damage. Destruction and Condemnation.

 

12.1                        Casualty.  If the Casino or any portion thereof
shall be damaged or destroyed at any time or times during the term of this
Agreement by fire, casualty or any other cause, the Partnership will, with the
proceeds from insurance, subject to the provisions of the HFS Agreement or other
mortgage or similar agreement then in effect, use its best efforts to repair,
rebuild or replace the same so that after such repairing, rebuilding or
replacing, the Casino shall be substantially the same (or better) as prior to
such damage or destruction.

 

12.2                        Full Condemnation.  If the whole of the Casino shall
be taken, condemned (or sold in lieu thereof to the condemning authority) in any
eminent domain, condemnation, compulsory acquisition or similar proceeding by
any competent authority or if such a substantial portion thereof shall be taken
or condemned as to make it, in the reasonable mutual judgment of the Manager and
the Partnership, unreasonable or imprudent to operate the remaining portion as a
casino, then this Agreement shall terminate as of the date of vesting or
conveyance of title on such taking or sale and, except as to liabilities or
claims which shall have accrued or arisen prior to or on account of such
termination, all obligations hereunder shall cease.

 

12.3                        Partial Condemnation.  If only part of the Casino
shall be taken or condemned (or sold in lieu thereof to the condemning
authority) and the taking, sale or condemnation of such part does not, in the
reasonable mutual judgment of the Manager and the Partnership, make it
unreasonable or imprudent to

 

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operate the remaining portion as a casino, then this Agreement shall not
terminate, and the Partnership shall, at its own cost and expense and with due
diligence, make all such alterations or modifications to the Casino, or any part
thereof, as shall be reasonably necessary so as to make the remainder a
satisfactory architectural unit for a casino.

 

13.                              Events of Termination.

 

13.1                        Events of Termination.  It is understood and agreed
that the Manager is a diversified company not engaged full-time as manager of
the Casino and that the interests of the Partnership require that the Casino be
planned, staffed and operated on a basis of management consistent with prudent
standards of casino management in the industry at all times. Among other causes
of breach and justified termination shall be the breach, inability or failure of
the COO to dedicate adequate personal participation in the formative and early
operative states of the Casino to satisfy its need for effective and prudent and
competitive senior planning, coordinating, and operating expertise in the
reasonable opinion of the Partnership. Any material breach of such obligation
shall constitute an Event of Termination if such material breach, on written
notice of such breach giving particulars of such breach to the COO, remains
unremedied for a period of 30 days. Each of the following events additionally
shall constitute an Event of Termination under this Agreement:

 

(1)                              (i) the failure of either party to pay when due
and for a period of 30 days after written notice of nonpayment is received, any
amount payable to the other and provided for herein, or (ii) any material breach
by the Manager of its obligations in respect of maintenance of and payments from
the Working Capital Account for a period of 30 days after written notice of such
failure;

 

(2)                              the Partnership or the Manager shall fail to
remedy fully any other material breach of its obligations under this Agreement
within 60 days (or such longer time as the other party may in writing allow)
after receipt of written notice from the other party specifying one or more
breaches of this Agreement;

 

(3)                              the Partnership shall lose possession or the
right to possession of all or a significant part of the Casino except pursuant
to a proper disposition under Section 12.2 or a sale pursuant to the Basic
Agreement;

 

(4)                              the Partnership or the Manager, as the case may
be, generally fails to pay its debts, for a period of 90 days, as they fall due;

 

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(5)                              the Manager or the Partnership shall have
applicable gaming licenses under the State of Mississippi revoked or suspended;
or

 

(6)                              United Gaining, Inc. or its affiliate shall no
longer have the right to designate the COO pursuant to Section 2 of the Basic
Agreement.

 

13.2                        Bankruptcy.  This Agreement shall terminate without
notice (solely at the option of the non-bankrupt party) if any involuntary
proceeding in bankruptcy is filed against either party which is not dismissed
within 90 days of filing, any voluntary proceeding in bankruptcy is filed by
either party, either party is dissolved or liquidated, a receiver is appointed
for either party or the Casino, or either party makes any assignment for the
benefit of creditors.

 

13.3                        Effect of Termination Event.  (a) Upon any Event of
Termination or occurrence described in Section 13.2, this Agreement shall
terminate (at the option of the non-bankrupt or non-insolvent party or party
which has not committed the Event of Termination, as applicable), and except as
to liabilities or claims which shall have accrued or arisen prior to or on
account of such termination, all obligations hereunder shall cease upon an Event
of Termination, except liabilities resulting from such Event of Termination.  In
any judicial proceeding in which the validity of termination is at issue,
neither party will be limited to the reasons set forth in any notice given under
this Section.

 

(b)  In no event shall a termination of this Agreement affect the rights and
benefits of the Limited Partner as a limited partner of the Partnership or
United’a rights under the Basic Agreement.  In no event shall the Manager or any
of its affiliates be liable for damages as a result of any Event of Termination
except in the case of its willful misconduct.

 

13.4                        Post-Termination Procedures.  Upon valid termination
of this Agreement by either party, the Manager shall turn over to the
Partnership all books and records of the Casino. The Partnership, Rainbow and
the Manager shall fully and reasonably cooperate with each other in connection
with all matters relating to the Casino which occurred prior to such
termination. The Manager shall (i) surrender to the Partnership any and all
licenses, permits and/or other authorizations or property required for the
operation of the Casino and terminate any of the foregoing registered in the
name of the Manager in accordance with the directions of the Partnership and
with applicable governmental laws, regulations, orders or other provisions, (ii)
deliver to the Partnership any and all equipment, supplies, keys, lock and safe
combinations, reservation lists, ledgers, bank statements on the Working Capital
Account, budgets, accounting

 

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books and records, Casino-only insurance policies, bonds and other documents,
correspondence, records and other properties required for the operation of the
Casino and/or required to be developed, maintained or kept by the Manager
pursuant to the terms and provisions of this Agreement; provided, that all such
books, records and other documentation shall thereafter be made available to the
Manager upon its request, at all reasonable times for inspection, audit,
examination and transcription of particulars relating to the period in which the
Manager managed the Casino, and (iii) following payment to the Manager of all
amounts due to the Manager hereunder, deliver to the Partnership all cash on
hand at the Casino and at the option of the Partnership either deliver to the
Partnership checks for the balance in the Working Capital Account or join in the
execution of appropriate instruments which eliminate all of the Manager’s
personnel as signatories on such accounts.

 

13.5                        Rights Cumulative.  The rights granted under this
Section shall not be in substitution for, but shall be, except as otherwise
provided in this Agreement, in addition to any and all rights and remedies
granted by applicable law.

 

14.                              Notices.  Any notice, statement or demand
required to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or electronically or mailed by
certified or registered prepaid mail, return receipt requested, or by reputable
overnight delivery service, addressed, if to:

 

If to the Partnership:

 

Rainbow Casino Partnership, L.P.

c/o Barrett Refining Corporation

P.O. Box 820058

Old Highway 61 South

Vicksburg, Mississippi 39182-0058

Telephone:  (601)  638-4973

Telecopy:   (601)  638-1405

Attention:   Mr. John A. Barrett, Jr.

 

And

 

The Rainbow Casino Corporation

55 East 59th Street

Suite 1300

New York, New York 10022

Attention:   Mr. Leigh Seippel, President

Telephone:   (212)  838-3401

Telecopy:     (212)  371-8098

 

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with a copy to:

 

Daniel H. Hise, Esq.

Butler, Snow, O’Mara, Stevens & Cannada

Deposit Guaranty Plaza

Jackson, Mississippi 39925

Telephone:    (601)  948-5711

Telecopier:   (601)  949-4555

 

If to the Manager:

 

Mississippi Ventures, Inc.

c/o United Gaming, Inc.

4380 Boulder Highway

Las Vegas, Nevada 89121

Attention: General Counsel

Telephone:   (702)  435-4200

Telecopy:     (702)  454-0478

 

with a copy to:

 

Paul K. Johnson, Esq.

Phelps Dunbar

Suite 500

200 South Lamar Street

Jackson, Mississippi 39225

Telephone:   (601)  360-97715

Telecopier:   (601)  360-9777

 

or to such other addresses as the Manager and the Partnership shall designate in
the manner herein provided, and shall be deemed to have been given on the day
delivered or, if mailed, three days after it shall have been mailed, as
aforesaid, in any regularly maintained government post office or branch post
office.

 

15.                              Indemnifications.

 

15.1                        Standard of Performance.  The Manager shall not, in
the performance of this Agreement, be liable to the Partnership or to any other
person or entity as a result of any act or omission, negligent, tortious or
otherwise, of any agent or employee of the Partnership or any such act or
omission of the Manager, its agents or employees, unless such act or omission of
the Manager constitutes gross negligence, willful misconduct or fraud and the
damages resulting therefrom are not covered by insurance. The Manager agrees to
indemnify and hold the Partnership harmless from all liability, loss, damages,
costs, claims or other expenses, including without limitation, reasonable
attorney’s fees and disbursements, arising out of the Manager’s gross
negligence, willful misconduct or fraud in the performance of its duties under
this Agreement. The foregoing

 

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indemnification shall not extend to liability, loss, damages, costs, claims, or
other expenses arising out of the Partnership’s or any of its agent’s or
independent contractor’s negligence or willful misconduct.

 

15.2                        The Partnership’s Indemnification.  The Partnership
and Rainbow shall indemnify and hold harmless the Manager and its affiliated
against any losses, liabilities, damages or claims (including without
limitation, reasonable attorneys’ fees and disbursements) against the Manager
arising out of (i) any gross negligence, willful misconduct or fraud of the
Partnership; or (ii) any breach of any representation or warranty of the
Partnership herein contained; (iii) any gross negligence, willful misconduct or
fraud in the design, construction, engineering, equipping and repair and
renovation of the Casino by the Partnership, its agents or independent
contractors; or (iv) any other cause whatsoever relating to the Casino or the
Manager’s duties hereunder, in each case, except as provided in the following
sentence. The foregoing indemnification shall not extend to liability, loss,
damages, costs, claims or other expenses arising out of the Manager’s or any of
its agent’s o rindependent contractor’s gross negligence, willful misconduct, or
fraud.

 

15.3                        Survival.  Notwithstanding any other provision of
this Agreement, the Basic Agreement or any Implementing Agreement, this
Section 15 shall survive the expiration or other termination of this Agreement.

 

16.                              Miscellaneous.

 

16.1                        Additional Documentation.  The Partnership, Rainbow
and the Manager shall execute and deliver all other appropriate supplemental
agreements and other instruments, and take any other action necessary to make
this Agreement fully and legally effective, binding and enforceable as between
them and as against third parties.

 

16.2                        Headings.  The headings of the titles to the several
sections of this Agreement are inserted for convenience only and are not
intended to affect the meaning of any of the provisions hereof.

 

16.3                        Amendments.  This Agreement may not be changed,
modified or terminated, nor may any provisions hereof be waived, except by a
writing signed by the party to be charged with any such change, modification,
termination or waiver. The waiver of any of the terms and conditions of this
Agreement on any occasion or occasions shall not be deemed a waiver of such
terms and conditions on a future occasion.

 

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16.4                        Assignment and Successors.  This Agreement may be
assigned by the Manager to United or any subsidiary of United. Other than as set
forth above, this Agreement shall not be assigned by either party without the
consent of the other parties. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the Partnership, Rainbow and the
Manager and their respective successors and/or permitted assigns.

 

16.5                        Entire Agreement.  This Agreement and the other
agreements executed in connection herewith constitute the entire Agreement
between the parties relating to the subject matter hereof, superseding all prior
agreements or undertakings, oral or written,

 

16.6                     No Reliance.  The Partnership and Rainbow
herebyrepresent that, in entering into this Agreement, the Partnership and
Rainbow nave not relied on any projection of earnings, statements as to
possibility of future success or other similar matters which may have been
prepared by the Manager as to the cost or the future financial success of the
Casino.

 

16.7                        Governing Law.  This Agreement shall be governed by,
interpreted under and construed and enforced in accordance with, the internal
laws of the State of Mississippi, without regard to principles of conflict of
laws.

 

16.8                        Invalidity.  In the event that any one or more of
the phrases, sentences, clauses or paragraphs contained in this Agreement shall
be declared invalid by the final and unappealable order, decree or judgment of
any court, this Agreement shall be construed as if such phrases, sentences,
clauses or paragraphs had not been included herein; provided. that the economic
basis of this Agreement is not thereby altered.

 

16.9                        Restrictive Covenant.  The Manager shall not manage
any other casino site within 50 miles of the Casino without the consent of the
Partnership.

 

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IN WITNESS WHEREOF, the Manager, Rainbow and the Partnership have duly executed
this Agreement as of the day and year first above written.

 

 

RAINBOW CASINO PARTNERSHIP L.P.

 

 

 

 

 

By:

Rainbow/Casino Corporation,
its general partner

 

 

 

 

 

 

By:

   /s/ Leigh Seippel

 

 

 

Leigh Seippel

 

 

President

 

 

 

 

 

THE RAINBOW CASINO CORPORATION

 

 

 

 

 

By:

   /s/ Leigh Seippel

 

 

 

Leigh Seippel

 

 

President

 

 

 

 

 

MISSISSIPPI VENTURES, INC.

 

 

 

 

 

By:

   /s/ Shannon L. Bybee

 

 

 

Shannon L. Bybee

 

 

President

 

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