Exhibit 10.1
 

MANAGEMENT SERVICES AGREEMENT

by and between

MONTICELLO RACEWAY MANAGEMENT, INC.

and

SPORTSYSTEMS GAMING MANAGEMENT AT MONTICELLO, LLC

dated as of June 10, 2009
 

--------------------------------------------------------------------------------

 
TABLE OF CONTENTS

ARTICLE I : DEFINITIONS
4
1.01
Definitions
4
1.02
References and Interpretations
12
ARTICLE II : EXCLUSIVE MANAGEMENT SERVICE RIGHTS
12
2.01
Exclusivity
12
2.02
Reserved Rights and Responsibilities of MRMI
13
ARTICLE III : RESPONSIBILITIES OF THE MANAGER AFTER THE COMMENCEMENT DATE
13
3.01
Duties of the Manager
13
3.02
Specific Responsibilities of the Manager
13
3.03
No Liability for Certain Violations
15
3.04
Operating Budgets
16
3.05
Defective Conditions
18
ARTICLE IV : RETAINED RIGHTS, AUTHORITY AND RESPONSIBILITIES OF MRMI
18
4.01
Retained Rights of MRMI
18
4.02
Authority and Responsibilities of MRMI
18
ARTICLE V : ACCOUNTING AND CASH MANAGEMENT
21
5.01
Bank Accounts
21
5.02
Collection and Disbursement of Funds
21
5.03
Financial Statements
22
5.04
Books of Account
22
ARTICLE VI : MANAGEMENT FEES AND REIMBURSEMENT OF EXPENSES
23
6.01
Management Fees
23
6.02
Payment of Base Management Fee
24
6.03
Annual Payment of the Incentive Fee, and Reconciliation of the Base Management
Fee
24
6.04
Reimbursement of Expenses
25
6.05
Renegotiation of the Management Fee
25
ARTICLE VII : INSURANCE
25
7.01
Insurance Coverage
25
7.02
Responsibility to Maintain Insurance
26
7.03
General Requirements
26
7.04
Policies and Endorsements
26
ARTICLE VIII : TRADE NAMES, CONFIDENTIAL INFORMATION, AND NON-SOLICITATION
28
8.01
Business Name
28
8.02
Trade Names, Trademarks and Service Marks
28
8.03
Confidential Information
28
8.04
Restriction on Employee Solicitation
29
ARTICLE IX : REPRESENTATIVES OF THE PARTIES
29
9.01
Designation of Representatives
29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1

--------------------------------------------------------------------------------

 
ARTICLE X : TERM OF AGREEMENT
29
10.01
Term of the Agreement
29
10.02
Termination by MRMI Without Cause
29
10.03
Termination by MRMI for Cause
30
10.04
Termination by the Manager for Cause
31
10.05
Effect of Termination of this Agreement, and Consequences of a Default
31
10.06
Extraordinary Events
32
ARTICLE XI : SALE OF THE GAMING BUSINESS
32
11.01
Sale of the Gaming Business
32
11.02
Consequences in the Event of a Sale
33
ARTICLE XII : ARBITRATION AND ENFORCEMENT
33
12.01
Arbitration
33
12.02
Judicial Enforcement of Arbitration
33
12.03
Tria1 by Jury; Venue
33
12.04
Recovery of Fees and Costs
34
12.05
Period of Limitations
34
ARTICLE XIII : WARRANTIES, REPRESENTATIONS AND ADDITIONAL COVENANTS OF THE
PARTIES
34
13.01
Representations and Warranties of MRMI
34
13.02
Representations and Warranties of the Manager
36
13.03
Additional Affirmative Covenants of the Parties
37
ARTICLE XIV : INDEMNIFICATION
38
14.01
Indemnification of the Manager
38
14.02
Indemnification of MRMI
39
14.03
Indemnified Parties
39
14.04
Survival
39
ARTICLE XV : MISCELLANEOUS PROVISIONS
39
15.01
Manager as Independent Contractor and Agent for MRMI
39
15.02
Preparation of Agreement
39
15.03
Costs and Expenses
40
15.04
Survival
40
15.05
Entire Agreement, No Collateral Representations
40
15.06
No Oral Modification or Waiver
40
15.07
Remedies Cumulative
40
15.08
Severability
40
15.09
No Third Party Beneficiaries
41
15.10
No Reliance on Prior Representations
41
15.11
Headings
41
15.12
Applicable Law
41
15.13
Notices
41
15.14
Assignment and Delegation; Successors and Assigns
42
15.15
Calculating Time Periods
43
15.16
Counterparts
43
15.17
Electronically Transmitted Documents
43

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2

--------------------------------------------------------------------------------

 
MANAGEMENT SERVICES AGREEMENT

           THIS MANAGEMENT SERVICES AGREEMENT is made as of June 10, 2009, by
and between MONTICELLO RACEWAY MANAGEMENT, INC., a New York corporation having
its principal office and place of business located at 204 State Route 17B,
Monticello, New York 12701 (“MRMI”); and SPORTSYSTEMS GAMING MANAGEMENT AT
MONTICELLO, LLC, a New York limited liability company having its principal
office and place of business located at 40 Fountain Plaza, Buffalo, New York
14202 (the “Manager”).

RECITALS

           A.           MRMI is licensed pursuant to the New York Racing,
Pari-Mutuel Wagering and Breeding Law (the “Racing Law”) to conduct a harness
racing business, and MRMI owns a harness racing facility in Monticello, New York
(the “Racetrack”), consisting of, among other things, a racing oval, exercise
tracks, grandstand/clubhouse buildings, pari-mutuel betting equipment, barns,
grounds, food service equipment, and other facilities and improvements.

           B.           In addition to the live racing conducted at the
Racetrack, MRMI also uses the Racetrack for conducting the business of
simulcasting races to and from other racetracks and off-track betting facilities
in the manner authorized by the Racing Law, and MRMI operates a food service
business at the Racetrack in which MRMI serves meals, snacks and beverages to
its customers.

           C.           In its capacity as the licensed owner and operator of a
harness racetrack, MRMI is authorized pursuant to Section 1617-a of the New York
Tax Law to obtain a license from the Division of the Lottery, New York State
Department of Taxation and Finance (the “NYS Lottery”) for the conduct of a
video lottery machine gaming business at the Racetrack.  The ability of MRMI to
operate video lottery machines was conditioned on the prior approval and
authorization of such operations by the County of Sullivan, State of New York,
and such approval and authorization was granted by the County of Sullivan
without qualification, limitation or restriction.

           D.           MRMI desires to engage the services of a manager
experienced in video lottery gaming operations, food service, and related
hospitality businesses in order to ensure that such business activities will be
operated in a manner designed to increase their revenues and customer appeal.

           E.           The Manager’s personnel have extensive experience and
expertise in the management of video gaming operations, food service facilities,
and related hospitality businesses, and the Manager is well qualified to provide
the benefit of such experience and expertise to MRMI.

           F.           MRMI has selected the Manager to provide MRMI with
management and consulting services in connection with the video gaming, food
service, and related hospitality businesses conducted by MRMI at the Racetrack
upon the terms and conditions set forth in this Agreement.
 
3

--------------------------------------------------------------------------------

           NOW, THEREFORE, in view of the foregoing Recitals and in
consideration of the mutual promises and covenants contained herein, the parties
agree as follows:          
 
ARTICLE I
DEFINITIONS

1.01         Definitions.  The following capitalized terms and phrases used in
this Agreement shall, unless the context otherwise requires, have the meanings
specified in this Article I:

1.01.1  Affiliate(s).  With respect to any entity, an “Affiliate” is a natural
person or firm, corporation, partnership, association, trust, limited liability
company or other entity which directly or indirectly Controls, is Controlled by,
or is under common Control with, the subject entity. The term “Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract or otherwise.

1.01.2  Agreement.  The “Agreement” means this Management Services Agreement and
any modifications or extensions thereto, together with all of the schedules and
exhibits to this Management Services Agreement.

1.01.3  Annual Statements.  The “Annual Statements” means the audited financial
statements of the Gaming Business, the Hospitality Business and the Racing
Business as determined by MRMI’s independent accountants after the close of each
Operating Year pursuant to Section 5.03 of this Agreement.

1.01.4  Bank Accounts.  References to the “Bank Accounts” mean the bank accounts
established by MRMI pursuant to Section 5.01 of this Agreement for the deposit
of the receipts derived from the Gaming Business, the Hospitality Business and
the Racing Business, and from which bank accounts money will be disbursed to pay
Expenses.

1.01.5  Base Management Fee.  The “Base Management Fee” refers to the annual
amount equal to three quarters of one percent (0.75%) of MRMI’s Gross Gaming
Revenue payable to the Manager for its services hereunder pursuant to the
provisions of Section 6.01.1 of this Agreement.

1.01.6  Commencement Date.  The “Commencement Date” means  the date of execution
and delivery of this Agreement, as noted in the first paragraph above.  The
“Commencement Date” will be the date on which the Manager assumes its
responsibilities under this Agreement.

1.01.7  Common Areas.  The “Common Areas” are all portions of the Racetrack to
be made available by MRMI to the Manager on a non-exclusive basis for use in
connection with the operation of the Gaming Business and the Hospitality
Business, such areas to include, without limitation, driveways, entrances and
exits, restrooms, elevators and escalators, service corridors, alleys, sign
frontage and parking areas.
 
4

--------------------------------------------------------------------------------

1.01.8  Default or Event of Default.  A “Default” or an “Event of Default” is
any occurrence that, with the giving of notice, the passage of time, or both,
gives rise to the right by either party to terminate its obligations of further
performance under this Agreement in the manner described in Section 10.03 or
Section 10.04 of this Agreement.

1.01.9  Earnings Before Interest, Taxes, Depreciation and Amortization. The
“Earnings Before Interest, Taxes, Depreciation and Amortization” generally
refers to the Gross Revenues of the Gaming Business, the Hospitality Business
and the Racing Business less amounts paid or accrued for the Expenses of those
businesses.  For purposes of this Agreement, MRMI and the Manager agree that
“Earnings Before Interest, Taxes, Depreciation and Amortization” will be
determined in the manner generally set forth in the pro forma income statement
attached hereto as Exhibit E and made a part hereof.  The Manager’s Base
Management Fee shall be deducted from Gross Revenues as an Expense in computing
“Earnings Before Interest, Taxes, Depreciation and Amortization”, and none of
the revenues or expenses of the Excluded Businesses will be taken into account
in the computation of such amount.

1.01.10  Equipment.  The “Equipment” refers to all furniture, furnishings,
fixtures, wall-mounted art, and other machines and equipment situated in the
Gaming Center, the Hospitality Facilities and the Racing Facilities, or used in
connection with the operation of the Gaming Business, the Hospitality Business
and the Racing Business.  Included within the definition of “Equipment” are: (i)
all equipment relating to the operation of the Video Lottery Machines; (ii) all
computer and communications equipment and software required for the conduct of
the Gaming Business, the Hospitality Business and the Racing Business; (iii)
fixtures, systems, apparatus and other personal property used in, or held in
storage for use in connection with the operation of, the Gaming Business, the
Hospitality Business and the Racing Business; (iv) money counting equipment,
safes, automatic teller machines, and cash dispensing machines; (v) all
equipment used for storing inventories of food and beverage products and for
preparing, cooking, serving, receiving, holding, selling, and vending food and
beverage items; (vi) ware washing equipment; (vii) all display cabinets,
counters, wrap stands and shelving for retail merchandise outlets; (viii) all
inventory control, register and point of sale equipment; (ix) all security and
surveillance equipment; (x) personal computers and computer servers; (xi)
telephones and telecommunications equipment; (xii) lifts, loaders and
transports; (xiii) bar and beverage equipment, refrigeration equipment, coolers
and walk-ins; (xiv) all smallwares, utensils, crockery, glassware, dishware and
cutlery; and (xv) all furniture, furnishings and decorations, office furniture
and equipment and all other fixed assets located in the Gaming Center, the
Hospitality Facilities and the Racing Facilities, from time to time, such as
signage, graphics and menu boards.

1.01.11  Excluded Businesses.  The “Excluded Businesses” refers to (i) any
commercial activities conducted by MRMI at the Racetrack related to the revenues
and expenses associated with any Indian casino, any business activities related
to, or operated in support of or conjunction with, any Indian casino, and any
agreements related thereto, (ii) any payments made or received by MRMI relating
to periods prior to the Commencement Date, and (iii) any payments received by
MRMI from Concord Associates, L.P. or its affiliates.
 
5

--------------------------------------------------------------------------------

1.01.12  Expenses.  Any reference to “Expenses” means the following costs and
expenses incurred after the Commencement Date in connection with the management
and operation of the Gaming Business, the Hospitality Business and the Racing
Business, or associated with the maintenance of the Gaming Center, the
Hospitality Facilities and the Racing Facilities:

 
(a)
The total payroll costs of the employees of MRMI who work in the Gaming
Business, the Hospitality Business and the Racing Business;

 
(b)
General and administrative expenses of the Gaming Business, the Hospitality
Business and the Racing Business, general facility cleaning, laundry and trash
removal expenses, employee hiring and training expenses, the cost of marketing
and promoting the Gaming Center (net of any statutory marketing allowances
recognized by MRMI), costs associated with the operation and maintenance of
automatic teller machines and cash dispensing machines throughout the Racetrack,
routine repairs and maintenance (but not the replacement of capital items), and
the cost of all utility services (including heat, telephone, air conditioning,
light, power, water and sewage treatment and disposal) utilized by the Gaming
Business, the Hospitality Business and the Racing Business and the services of
cleaning and removing snow from parking lots, driveways and walkways from the
Common Areas;

 
(c)
The cost of food and beverage items, gaming supplies, food service supplies,
cleaning supplies, stationery, uniforms, fuel and other consumable items used or
sold in connection with the Gaming Business, the Hospitality Business and the
Racing Business;

 
(d)
The cost of acquiring or leasing the Equipment, and the cost of replacing the
Equipment when damaged beyond repair or rendered obsolete (but not the cost of
replacing capital items);

 
(e)
The amount of any accounts receivable with respect to the Gaming Business, the
Hospitality Business and the Racing Business that are deemed uncollectible, or
in the alternative, a reasonable reserve for doubtful accounts receivable
established by mutual agreement of MRMI and the Manager in the preparation of
the annual Operating Budgets;

 
(f)
The fees and expenses of independent accountants, independent legal counsel, and
other independent professional advisors;

 
(g)
The fees and expenses of independent technical, operational and other
consultants, experts, and advisors for specified services in connection with
non-routine work required by the Gaming Business, the Hospitality Business and
the Racing Business to the extent included in the Operating Budget or otherwise
approved by MRMI and the Manager;

 
6

--------------------------------------------------------------------------------

 
 
(h)
The handling and service charges imposed by third parties in connection with the
purchase of goods;

 
(i)
The amount of out-of-pocket costs and other disbursements incurred by the
Manager which are reimbursed by MRMI pursuant to Section 6.04 of this Agreement;

 
(j)
The costs and expenses of operating computer systems and communication lines
used by the Gaming Business, the Hospitality Business and the Racing Business;

 
 

 
(k)
Insurance premium expenses and deductibles associated with the insurance
coverages described in Section 7.01 of this Agreement;

 
(l)
Any taxes, duties, levies, assessments, fees or other charges of any nature that
are imposed on, or assessed against, the Gaming Business, the Hospitality
Business, the Racing Business, the Gaming Center, the Hospitality Facilities,
the Racing Facilities or the Equipment, or are otherwise related to any of the
agreements between MRMI and the Manager or to the management, operation or
promotion of the Gaming Business, the Hospitality Business and the Racing
Business (including without limitation, any statutory assessments payable by
MRMI to the State of New York or standardbred racing industry stakeholders
pursuant to the Gaming Law or the Racing Law); provided however, that excluded
from treatment as an Expense will be any income or similar tax imposed on the
Manager or MRMI, including any gain or loss incurred by MRMI from the sale
of  the Racetrack or any part thereof, or the Equipment and the related tax
imposed as a result of such sale;

 
(m)
The costs and expenses of obtaining and maintaining operating licenses, permits,
authorizations and approvals required for the conduct of the Gaming Business,
the Hospitality Business or the Racing Business;

 
(n)
Such other costs and expenses as are specifically provided for elsewhere in this
Agreement or in any approved annual Operating Budget, or are otherwise approved
by MRMI and the Manager as being reasonably necessary for the management and
operation of the Gaming Business, the Hospitality Business or the Racing
Business, or the maintenance of the Gaming Center, the Hospitality Facilities or
the Racing Facilities; and

 
(o)
Solely for purposes of computing Earnings Before Interest, Taxes, Depreciation
and Amortization and the resulting Incentive Fee, the Base Management Fee paid
or payable for the period in question shall be considered an Expense.

 
7

--------------------------------------------------------------------------------

 
Any costs and expense associated with (i) MRMI’s corporate headquarters or home
office, (ii) the Excluded Businesses (including without limitation, any expenses
associated with the negotiation, design, development, construction, furnishing
or operation of any Indian casino), (iii) the purchase of or accrual for capital
items, and (iv) any depreciation or amortization of capital items incurred by
the Gaming Business, the Hospitality Business and the Racing Business, shall not
be included within the definition of “Expenses” for purposes of this Agreement.

1.01.13  Extraordinary Event.  An “Extraordinary Event” is any condition of
force majeure that prevents the performance by a party of its obligations (other
than obligations for the payment of a sum of money) set forth in this Agreement,
for reasons beyond the reasonable control of such party.  Any of the following
events, regardless of where it occurs or its duration, is an “Extraordinary
Event”: (i) acts of nature without the interference of any human agency
(including hurricanes, typhoons, tornados, cyclones, other severe storms, winds,
lightning, floods, earthquakes, volcanic eruptions, fires, explosions, disease,
or epidemics); (ii) fires and explosions caused wholly or in part by human
agency; (iii) acts of war, attack, invasion, or other acts of hostility by
foreign enemies; (iv) civil war, rebellion, revolution, insurrection or
usurpation of sovereign power; (v) riots or other civil commotion; (vi)
terrorism (including hijacking, sabotage, bombing, murder, assault and
kidnapping); (vii) strikes or similar labor disturbances; (viii) lack of
availability of critical materials or supplies; (ix) action or inaction of
governmental authorities having jurisdiction over the Gaming Business, the
Hospitality Business or the Racing Business; and (x) any other events beyond the
reasonable control of MRMI or the Manager.

1.01.14  Gaming Business.  Any reference to the “Gaming Business” means (i) the
business of operating the Video Lottery Machines and any other gaming devices,
and the conduct of gaming or gambling operations of any type; (ii) any and all
other business activities conducted in or associated with the Gaming Center; and
(iii) the rental or leasing of space or licensing of other commercial activities
within the Gaming Center.  However, the “Gaming Business” does not include any
of the business activities within the definition of the “Excluded Businesses”.

1.01.15  Gaming Center.  The “Gaming Center” means that portion of the Racetrack
which now or hereafter houses the Video Lottery Machines, the areas at the
Racetrack to be used for the conduct of the Gaming Business, and all
gaming-related Equipment, provided, however, that the Gaming Center shall not
include facilities used in connection with the operations of an Indian casino
located at the Racetrack.  A layout overview of the Gaming Center is set forth
on Exhibit B attached hereto and made a part hereof.

1.01.16  Gaming Law.  The “Gaming Law” means those provisions of the New York
Tax Law (including without limitation, Sections 1612 and 1617-a of the New York
Tax Law) which authorize and regulate the operation of video lottery machines at
pari-mutuel racetracks located in the State of New York, the regulations adopted
by the NYS Lottery with respect thereto, and any modification, amendment or
replacement thereof.
 
8

--------------------------------------------------------------------------------

1.01.17  Gross Gaming Revenue.  The phrase “Gross Gaming Revenue” means the
total amount realized from the operation of the Video Lottery Machines after the
payment of, or accrual or provision for, all winnings and prizes paid to patrons
of the Gaming Business.

                1.01.18  Gross Revenues.  The phrase “Gross Revenues” refers to
the gross amount of all revenues and receipts of every kind (whether from cash
or credit transactions), determined on an accrual basis, derived by MRMI from
goods sold, services performed or other commercial activities conducted in
connection with the Gaming Business (including without limitation, the Gross
Gaming Revenue derived from the Gaming Business), the Hospitality Business and
the Racing Business, together with any proceeds from business interruption
insurance or other “loss of income” insurance.  However, Gross Revenues shall
not include: (i) tips, service charges, or gratuities received by employees of
the Gaming Business, the Hospitality Business or the Racing Business; (ii)
proceeds from the sale of the Racetrack, any portion thereof, or the Equipment;
(iii) proceeds under property loss, casualty or general liability insurance
policies (other than the business interruption insurance to the extent such
proceeds relate to the Gaming Business, the Hospitality Business and the Racing
Business); (iv) the gross receipts realized by subtenants and licensees; (v)
excise, sales, or use taxes or similar charges collected directly from patrons
or included as part of the sales price of any goods or services; (vi) revenues
collected from entertainment or special events that are paid directly to the
performer or promoter; (vii) any capital awards received from New York State by
MRMI pursuant to the Gaming Law; or (viii) revenues from any Excluded Business
as defined in Section 1.01.11 hereof (which for the avoidance of doubt includes
any revenues received by MRMI which relate to periods prior to the Commencement
Date and any revenues received from Concord Associates, L.P. or its affiliates).

1.01.19  Hospitality Business.  The “Hospitality Business” includes the
following commercial activities conducted at the Gaming Center, the Hospitality
Facilities, the Racing Facilities and throughout the Racetrack: (i) the sale of
food, beverages and other refreshments from fixed concession stands,
restaurants, bars, booths, kiosks, mobile stands, vending machines, and any
other areas in which concession items are sold; (ii) catering services and the
sale of food, beverages and other refreshments on a group basis where one
invoice is tendered for the services rendered; (iii) the sale of food and
beverage items at any special events conducted at the Racetrack, unless such
concession rights have been granted by MRMI to the organizer or promoter of a
special event on an exclusive basis; (iv) the sale of retail merchandise to
patrons of the Gaming Center, the Hospitality Facilities, the Racing Facilities
and the Racetrack; (v) the provision of valet parking services to patrons of the
Gaming Center, the Hospitality Facilities, the Racing Facilities and the
Racetrack; (v) the operation of automatic teller machines and cash dispensing
machines throughout the Racetrack; and (vi) the rental of space at the Racetrack
to third party vendors, service providers and concessionaires selected by the
Manager with the prior consent of MRMI.  However, the “Hospitality Business”
does not include any of the commercial activities within the definition of the
“Excluded Businesses”.
 
9

--------------------------------------------------------------------------------

1.01.20  Hospitality Facilities.  The phrase “Hospitality Facilities” refers to
all areas within the Racetrack to be occupied and used in connection with the
conduct of the Hospitality Business.  The Hospitality Facilities include, but
are not limited to, (i) commissary and food and beverage service and storage
areas; (ii) food and beverage wash areas; (iii) vending and pantry areas; (iv)
kitchens, food preparation and food and beverage cleaning areas; (v) change
rooms for concession and retail sales personnel; (vi) concession stands,
condiment stands, booths, bars, public and service bars and grills; (vii)
restaurant areas and dining rooms; (viii) retail sales locations and gift shops;
and (ix) concession and retail sales offices, money counting rooms and
record-keeping rooms dedicated for use by the Manager.  Layout overviews of the
Hospitality Facilities are set forth on Exhibit D attached hereto and made a
part hereof.  Those areas of the Racetrack to be served by mobile stands will
also be considered part of the Hospitality Facilities, although the precise
location of the mobile stands will be determined from time to time by MRMI after
consultation with the Manager. For the sake of clarity, the Hospitality
Facilities shall not include facilities used in connection with an Indian casino
located at the Racetrack.  

1.01.21  Incentive Fee.  The “Incentive Fee” is the percentage of Earnings
Before Interest, Taxes, Depreciation and Amortization (after deduction of the
Manager’s Base Management Fee) realized by MRMI from the conduct of the Gaming
Business, the Racing Business and the Hospitality Business that is payable to
the Manager pursuant to the provisions of Section 6.01.2 of this Agreement.

                1.01.22  Legal Requirements.  The “Legal Requirements” are all
public laws, statutes, ordinances, judgments, orders, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
governments and governmental authorities, which now or hereafter may be
applicable to the Gaming Business, the Hospitality Business, the Racing
Business, the Gaming Center, the Hospitality Facilities, the Racing Facilities
and the operation thereof, including those legal requirements relating to
zoning, building, public safety, environment and health, or employee benefits.

1.01.23  Management Fees.  Reference to the “Management Fees” means the Base
Management Fee and the Incentive Fee referred to in Section 6.01 of this
Agreement.

1.01.24  Manager.  The “Manager” is Sportsystems Gaming Management at
Monticello, LLC, a New York limited liability company, and its successors and
assigns.

1.01.25  Monthly Statements.  The “Monthly Statements” are the statements of
income and expense to be prepared by MRMI on a monthly basis pursuant to Section
5.03 hereof, and which will reflect the results of operation of the Gaming
Business, the Hospitality Business and the Racing Business.

1.01.26  MRMI.  Any reference to “MRMI” means Monticello Raceway Management,
Inc., a New York corporation, and its successors and assigns.

1.01.27  NYS Lottery.  References to the “NYS Lottery” mean the Division of the
Lottery, New York State Department of Taxation and Finance.
 
10

--------------------------------------------------------------------------------

 
1.01.28 NYS Racing and Wagering Board.  References to the “NYS Racing and
Wagering Board” mean the New York State Racing and Wagering Board.

1.01.29 Operating Budget.  The “Operating Budget” refers to the budget of income
and expense for the Gaming Business, the Hospitality Business and the Racing
Business to be prepared by MRMI on an annual basis, as more particularly
described in Section 3.04 of this Agreement.

1.01.30 Operating Year.  An “Operating Year” generally refers to each fiscal
year of operation of the Gaming Business, the Hospitality Business and the
Racing Business.  The first Operating Year will begin on the Commencement Date
and will continue until the close of business on December 31, 2009.  Thereafter,
each Operating Year will commence on the next succeeding January 1 and will
continue for a period of twelve months thereafter, except that the final
Operating Year will continue through and end on the date that is the third (3rd)
anniversary of the Commencement Date (unless this Agreement is terminated
earlier in the manner provided herein).

1.01.31 Racetrack.  The “Racetrack” is the standardbred horse harness racetrack
property, together with all buildings, structures, fixtures and improvements
associated therewith, located on the 232 acres of real property owned by MRMI
and located at 204 Route 17B,  Monticello, New York.  The Racetrack is more
particularly identified on Exhibit A attached hereto and made a part hereof.

1.01.32  Racing Business. Any reference to the “Racing Business” means (i) the
business of holding live race meetings and the export simulcasting of the MRMI
racing program to other locations; (ii) the importation of simulcast racing
signals from thoroughbred and standardbred racetracks owned by parties other
than MRMI; (iii) the conduct of pari-mutuel wagering operations with respect to
live and simulcast horse races; (iv) the business of processing compost and
selling manure, fertilizer and other organic products; (v) ticket sales,
admission charges, revenue shares from sales of tee shirts and promotional
items, and rentals associated with special events conducted at the Racetrack;
(vi) any payments made to MRMI by the Monticello Harness Horsemen’s Association
or any similar association of horse owners; (vii) fees from stall rentals;
(viii) fees relating to shop rental for the buildings currently used as a
blacksmith shop and tack shop; (ix) fees relating to equine activities and
events (including without limitation, horse shows and polo matches); and (x) all
other business activities conducted in or associated with the Racing
Facilities.  However, the “Racing Business” does not include any of the business
activities within the definition of the “Excluded Businesses”.

1.01.33  Racing Facilities. The “Racing Facilities” means that portion of the
Racetrack which now or hereafter is used to conduct the Racing Business and all
racing related Equipment.  A layout overview of the Racing Center is set forth
on Exhibit C attached hereto and made a part hereof.  For the sake of clarity,
the Racing Facilities shall not include facilities used in connection with an
Indian casino located at the Racetrack.  

1.01.34 Racing Law.  Any reference to the “Racing Law” means the New York State
Racing, Pari-Mutuel Wagering and Breeding Law, and any modification, amendment
or replacement thereof.
 
11

--------------------------------------------------------------------------------

1.01.35 Termination Payment.  Reference to the “Termination Payment” means the
lump sum amount  payable by MRMI to the Manager in the event that the Manager
terminates this Agreement as a result of an Event of Default by MRMI pursuant to
Section 10.04 of this Agreement.  The “Termination Payment” will be calculated
in the following manner.

 
(i)
The parties will mutually determine the amount of the future monthly payments to
which the Manager is entitled, which will be equal to the average monthly
Management Fees earned by the Manager during the twelve (12) month period of
time preceding the effective date of termination of this Agreement (or such
lesser number of months in the event that the effective date of termination
occurs within the first twelve months of the Commencement Date).

 
(ii)
On or before the effective date of termination of this Agreement, MRMI will pay
to the Manager a Termination Payment equal to the sum of the present values
(using a seven percent (7%) discount rate) of each of the monthly payments
determined above for the period from the effective date of termination through
the third (3rd) anniversary of the Commencement Date.

1.01.36 Video Lottery Machines.  The “Video Lottery Machines” are the gaming
machines, terminals or devices, and any associated equipment, authorized by the
Gaming Law for operation at the Racetrack, together with any upgrades,
modifications and replacements to such machines, terminals, devices and
associated equipment.

1.02           References and Interpretations.  References to this Agreement
shall include the exhibits attached hereto and all amendments or renewals
thereof.  Unless expressly stated to the contrary, reference in this Agreement
to any article or section includes all subsections thereof.  Any exhibit
referenced in this Agreement shall be construed to be incorporated in this
Agreement by such reference.  All references to dollars mean the lawful currency
of the United States of America.  Any reference to statutes or laws will include
all amendments, modifications, or replacements of the specific sections and
provisions concerned.  The words “herein,” “hereof,” “hereunder,” “hereinafter”
and words of similar import refer to this Agreement as a whole and not to any
particular article, section or subsection hereof.  The terms “include” and
“including” shall each be construed as if followed by the phrase “without being
limited to.”  This Agreement will be interpreted without interpreting any
provision in favor of or against either party by reason of the drafting of the
provision.

ARTICLE II
EXCLUSIVE MANAGEMENT SERVICE RIGHTS

                2.01           Exclusivity.  During the term of this Agreement,
the Manager will have the exclusive right to provide management services in
connection with the operation of the Gaming Business and the Hospitality
Business.  MRMI agrees to provide the employees and agents of the Manager and
its Affilates with reasonable access to the Gaming Center, the Hospitality
Facilities, and the Common Areas during the term of this Agreement so that the
Manager can perform its duties described herein.  MRMI will not engage in the
Gaming Business or the Hospitality Business at the Racetrack except in
accordance with the terms of this Agreement, and MRMI will not lease, license or
permit the use of any part of the Racetrack to anyone other than the Manager for
the operation of the Gaming Business or the Hospitality Business.
 
12

--------------------------------------------------------------------------------

2.02           Reserved Rights and Responsibilities of MRMI.  Notwithstanding
the provisions of Section 2.01 above, MRMI and the Manager acknowledge and agree
that (i) MRMI shall retain the exclusive right and responsibility to supervise
and manage the Racing Business, although the Manager may from time to time
suggest best practices in the pari-mutuel racing industry for consideration by
MRMI based on the racing business experience of the Manager’s affiliated
companies, and (ii) MRMI shall likewise retain all rights with respect to the
Excluded Businesses, and all revenues and expenses associated with the Excluded
Businesses will accrue solely to MRMI.

ARTICLE III
RESPONSIBILITIES OF THE MANAGER
AFTER THE COMMENCEMENT DATE

                 3.01           Duties of the Manager.  MRMI hereby grants to
the Manager the sole and exclusive right to assist and advise MRMI in the
management of the day-to-day operations of the Gaming Business and the
Hospitality Business during the term of this Agreement.  Except as otherwise
specified in this Agreement, MRMI grants to the Manager the full scope of
authority necessary to perform its obligations under this Agreement.  In
connection therewith, the Manager shall have the authority and responsibility,
subject to the provisions of this Agreement and the rules and regulations of the
NYS Lottery, to assist and advise MRMI with respect to (i) determination of the
operating policy, standards of operation, quality of service, maintenance and
physical appearance of the Gaming Center and the Hospitality Facilities, and any
other matters affecting the operation and management of the Gaming Business and
the Hospitality Business; (ii) supervision and direction of all phases of
advertising, marketing and promotion for the Gaming Business and the Hospitality
Business, consistent with the advertising and marketing expenditures set forth
in the current annual Operating Budget; and (iii) implementation of all programs
contemplated by the Operating Budgets hereafter described in Section 3.04.  The
performance of all activities by the Manager pursuant to this Agreement shall be
on behalf of MRMI and for its exclusive account and benefit. MRMI agrees to
cooperate reasonably with the Manager so that the Manager is able to carry out
its duties hereunder, including without limitation, any assistance from MRMI
that the Manager might need in connection with the obtaining of all licenses,
permits and approvals required for the operation of the Gaming Business and the
Hospitality Business.  The Manager agrees to cooperate reasonably with MRMI so
that the recommendations of the Manager in exercising the authority described
above are consistent with the current annual Operating Budget, and are also
consistent with practices in gaming facilities reasonably comparable to the
Gaming Center.

3.02           Specific Responsibilities of the Manager.  From and after the
Commencement Date, the Manager will use its reasonable best efforts to assist
MRMI in the performance of its management and supervisory duties with respect to
the Gaming Business and the Hospitality Business, including the following
specific duties:
 
13

--------------------------------------------------------------------------------

 
(a)
To assist in supervision of the employees of MRMI engaged in the collection and
deposit of all Gross Revenues received from operation of the Gaming Business and
the Hospitality Business, with cash deposits to be made to such Bank Accounts as
are designated by MRMI;

 
(b)
To assist in overseeing the employees of MRMI, or third party vendors and
service providers, in connection with the general administration, management and
operation of the Gaming Business and the Hospitality Business, including without
limitation, providing for (i) water, heat, light and other utility services;
(ii) recurring services such as trash removal, pest extermination, decorating,
gardening, laundry, telephone service, snow removal and any other customary and
commercially reasonable contracts or services; (iii) purchases contemplated by
this Agreement using reasonable best efforts to obtain provisions in such
contracts and purchases which are beneficial to the operation of the Gaming
Business and the Hospitality Business (it being understood that the Manager will
provide MRMI with the benefit of discounts available to the Manager under
national purchasing contracts where possible); (iv) marketing and promotional
programs or services; (v) personnel services; (vi) accounting, bookkeeping and
cash management services, and (vii) security services;

 
(c)
To advise and assist MRMI in the negotiation or termination of contracts, the
recovery of possession of property, and to otherwise assist in enforcing all the
rights of MRMI with respect to any contract or dispute related to the Gaming
Business and the Hospitality Business, and in connection with the prosecution by
MRMI of legal actions against third parties or the determination of when to
settle, compromise and/or release any such actions or suits;

 
(d)
To assist in supervision of the employees of MRMI responsible for maintaining
the Gaming Center and the Hospitality Facilities in a good state of repair and
condition, and to assist in ensuring that ordinary repairs, alterations and
improvements to the Gaming Center and the Hospitality Facilities are made,
including advising MRMI of the necessity and estimated cost of such maintenance
and repairs;

 
 

 
(e)
To recommend and assist in overseeing the placement, replacement and
substitution of the Equipment and other furnishings located in the Gaming Center
and the Hospitality Facilities as the same are damaged, destroyed or become
obsolete, or as is otherwise necessary to the successful operation of the Gaming
Business and the Hospitality Business;

 
(f)
To assist MRMI in obtaining and maintaining all licenses, permits,
authorizations and approvals required for the conduct of the Gaming Business or
the Hospitality Business;

 
14

--------------------------------------------------------------------------------

 
(g)
To assist in supervision of the employees of MRMI responsible for remitting to
the NYS Lottery all amounts realized from the conduct of the Video Lottery
Machine operations of the Gaming Business, to the extent required by law;

 
(h)
To promptly notify MRMI of any personal injury, property damage or other claim
occurring on, or claimed by any party with respect to, the Gaming Center or the
Hospitality Facilities, and to promptly forward to MRMI any summons, subpoena or
other legal document served upon the Manager relating to actual or alleged
potential liability of MRMI or the Manager (whether or not in connection with
the Gaming Center or the Hospitality Facilities, or the operation of the Gaming
Business or the Hospitality Business);

 
(i)
To assist MRMI in making all reasonable efforts to prevent violations of, and
otherwise comply with, the provisions of any Legal Requirements applicable to
the use and occupancy of the Gaming Center and the Hospitality Facilities, or
the conduct of the Gaming Business and the Hospitality Business;

 
(j)
To assist in the supervision of the employees of MRMI in their performance of
all financial reporting functions with respect to the Gaming Business and the
Hospitality Business and in their maintaining of the licenses, permits,
authorizations, approvals and insurance coverages required for such businesses
or as contemplated by this Agreement;

 
(k)
To assist MRMI as reasonably requested with the preparation of information to be
included in any regulatory reports or filings pertaining to the Gaming Business
or the Hospitality Business; and

 
(l)
To assist MRMI in making arrangements for appropriate security for the operation
of the Gaming Business and the Hospitality Business.

In addition to the foregoing, the Manager may from time to advance monies to
MRMI for mutually agreed upon capital projects identified by the Manager which
clearly provide a substantial return on investment and which are projected to be
repaid within an agreed upon timeframe.

            3.03           No Liability for Certain Violations.  The Manager
assumes no liability whatsoever for any acts or omissions of MRMI or any
previous owners of the Racetrack.  Except as otherwise provided for herein, the
Manager assumes no liability for violations currently existing at the Racetrack
with respect to applicable Legal Requirements, including without limitation,
Legal Requirements relating to health, taxes or the environment or hereafter
with respect to any environmental laws or regulations, and MRMI agrees to
indemnify, defend and hold the Manager harmless from and against any and all
claims, fines, costs, fees and expenses arising in respect thereof.  The Manager
shall promptly notify MRMI in writing of any such violation discovered by the
Manager, but the failure to so notify shall not be a waiver of the Manager’s
rights pursuant to this Section 3.03.  Notwithstanding the foregoing, the
Manager shall be responsible for all violations of applicable Legal Requirements
as a direct result of any act or omission by the Manager or others acting under
or through the Manager, and the Manager shall indemnify and hold MRMI harmless
from and against any and all claims, fines, costs, fees and expenses arising in
respect to any of such matters for which the Manager is responsible.
 
15

--------------------------------------------------------------------------------

            3.04           Operating Budgets.  MRMI will prepare an Operating
Budget covering the prospective operations of the Gaming Business, the
Hospitality Business and the Racing Business for each Operating Year, for review
and approval by the Manager in accordance with the provisions of this Section
3.04.

3.04.1  Preparation of the Budgets. MRMI will submit to the Manager, not less
than forty-five (45) days in advance of each Operating Year (except for the
first Operating Year which will be submitted to the Manager within forty-five
(45) days following the Commencement Date), a forecast composed of an estimate
of profit and loss by month, an estimated cash flow projection by month, and a
forecast of the operations of the Gaming Business, the Hospitality Business and
the Racing Business by department (collectively the “Operating Budget”).

3.04.2  Review of the Budgets.  In connection with its annual submission of the
Operating Budget, representatives of MRMI will meet with representatives of the
Manager to have an in-depth discussion thereof, including a comparison of such
budgets with the previous year’s performance of the Gaming Business, the
Hospitality Business and the Racing Business, a discussion of marketing
strategies, identification of potential markets, and the proposed expenditures
contained in the Operating Budget.

3.04.3  Approval of the Budgets.  The Operating Budget shall be subject to the
approval of the Manager, it being contemplated that each such Operating Budget
shall be agreed upon by the parties within thirty (30) days after the submission
of the same by MRMI to the Manager.  If the Manager shall fail to approve any
Operating Budget within thirty (30) days after its receipt from MRMI, and if the
Manager fails to submit written objections to the Operating Budget to MRMI
within such thirty (30) day period of time, then the Manager shall be deemed to
have approved the same.  In case of a dispute with regard to any Operating
Budget, pending the resolution of such dispute MRMI shall be entitled to
continue to fund the Gaming Business, the Hospitality Business and the Racing
Business in accordance with the standards set forth herein and shall be entitled
to make expenditures which are contemplated by and consistent with the Operating
Budget proposed by MRMI for such Operating Year; provided however, that, the
maximum approved amount of such expenditures shall be equal to (a) the aggregate
of all items set forth in the Operating Budget which are not disputed by the
Manager, plus (b) with respect to all items in the Operating Budget which are
disputed or objected to by the Manager, the amount allocated to such item(s) in
the Operating Budget for the immediately preceding Operating Year increased by
five percent (5%).  The Manager shall act reasonably and exercise prudent
business judgment in approving or disapproving each portion of the Operating
Budget, and will act in a manner that shall permit the continued functioning and
operation of the Gaming Business, the Hospitality Business. and the Racing
Business.

3.04.4  Performance under the Operating Budget.  MRMI agrees to conduct the
Gaming Business, the Hospitality Business and the Racing Business in accordance
with the Operatings Budgets jointly approved by MRMI and the Manager in the
manner described in Section 3.04.3 above.  The Manager will use commercially
reasonable efforts to assist MRMI in achieving the results set forth in the
Operating Budget with respect to any Operating Year; provided however, that MRMI
acknowledges each Operating Budget is a composition of estimates and, therefore,
the Manager cannot guarantee or warrant that the actual operation of the Gaming
Business, the Hospitality Business and the Racing Business for any Operating
Year will be as set forth in the Operating Budget for such Operating
Year.  During each Operating Year, the Manager will also use commercially
reasonable efforts to assist MRMI in the operation of the Gaming Business and
the Hospitality Business within the approved Operating Budget (subject, in the
case of any disputed items, to the provisions of Section
3.04.3).  Notwithstanding the foregoing, MRMI understands and agrees as follows:
 
16

--------------------------------------------------------------------------------

 
(a)
Certain expenses provided for in the Operating Budget for any Operating Year
will vary based on the number of patrons served by the Gaming Business, the
Hospitality Business and the Racing Business, and accordingly, to the extent
that patronage of the Gaming Center, the Hospitality Facilities and the Racing
Facilities for any Operating Year exceeds the patronage projected in the
approved Operating Budget for such Operating Year, such approved Operating
Budget shall be deemed to include corresponding increases in such variable
expenses.

 
 

 
(b)
The amount of certain Expenses such as real estate taxes, utilities, insurance
premiums, license and permit fees, and charges assessed by professional advisers
or provided for in contracts and leases entered into by MRMI pursuant to this
Agreement are not within the ability of the Manager to control.  All of such
uncontrollable Expenses shall be paid without regard to the estimated amounts
provided with respect thereto in the approved Operating Budget for any Operating
Year.

 
(c)
If any expenditures are required on an emergency basis to avoid damage to the
Gaming Center, the Hospitality Facilities and the Racing Facilities or injury to
persons or property, MRMI may direct the payment of such amounts as may
reasonably be required to avoid or mitigate such damage or injury, even if the
amounts of such expenditures are not specified in, or are not within the amounts
provided for in, the approved Operating Budget for the Operating Year in
question.  MRMI will notify the Manager as promptly as reasonably possible of
the making any such expenditures.

 
 

 
(d)
If any expenditures are required to comply with any Legal Requirements or to
cure or prevent any violation thereof, MRMI may direct the payment of such
amounts as may be necessary to comply with such Legal Requirements or to remove
or prevent the violation thereof even if the amounts of such expenditures are
not specified in, or are not within the amounts provided for in, the approved
Operating Budget for the Operating Year in question.

 
17

--------------------------------------------------------------------------------

 
 
(e)
The Manager shall have the right from time to time during each Operating Year to
propose modifications to the approved Operating Budget then in effect based on
actual operations during the elapsed portion of the Operating Year in
question.  Any such modification will be based on the judgment of the Manager as
to what will transpire during the remainder of such Operating Year, and such
modifications shall be subject to the approval of MRMI.

3.05          Defective Conditions.  If the design or construction of the Gaming
Center and the Hospitality Facilities is defective, and the defective condition
causes material damage or disruption to the Gaming Business or the Hospitality
Business, poses a risk of injury to people or property, materially interferes
with the ability of the Manager to assist MRMI with respect to supervision of
the operation of the Gaming Business and the Hospitality Business, or is not in
compliance with one or more Legal Requirements, the Manager will notify MRMI of
such circumstance and MRMI shall as expeditiously as possible remedy such
defect.  The obligation of MRMI to proceed expeditiously to correct such
condition shall apply regardless of whether or when insurance proceeds may be
available to cover the necessary expenditures.  Any amounts expended by MRMI in
effecting the remedy of any such defect shall not be treated as Expenses for
purposes of this Agreement.

ARTICLE IV
RETAINED RIGHTS, AUTHORITY AND
RESPONSIBILITIES OF MRMI

4.01         Retained Rights of MRMI.  All legal and equitable interest in the
Racetrack, the Gaming Center, the Hospitality Facilities, the Racing Facilities
and the improvements made thereto from time to time shall belong exclusively to
MRMI.  Subject to the obligation of MRMI to pay the Management Fees described in
Section 6.01 of this Agreement, MRMI retains the exclusive right to receive and
retain all of the Gross Revenues of the Gaming Business, the Hospitality
Business and the Racing Business, subject to the obligation on the part of MRMI
to pay the Expenses.

4.02         Authority and Responsibilities of MRMI.  MRMI expressly retains the
following authority and responsibilities with respect to the conduct of the
Gaming Business, the Hospitality Business and the Racing Business:

4.02.1  Collection of Gross Revenues.  MRMI will collect all of the Gross
Revenues realized from the conduct of the Gaming Business, the Hospitality
Business and the Racing Business.

4.02.2  Provision of Working Capital.  MRMI will provide the Gaming Business,
the Hospitality Business and the Racing Business with sufficient working capital
required for the normal conduct of the Gaming Business, the Hospitality Business
and the Racing Business; including without limitation, the currency and coin
required to be maintained on site in connection with the operation of the Video
Lottery Machines (i.e., the Gaming Center bankroll).
 
18

--------------------------------------------------------------------------------

4.02.3  Payment of Amounts Owed to the NYS Lottery, Monticello Harness
Horseman’s Association, Inc., Expenses, Taxes and Other Charges.  MRMI will
collect and remit to the NYS Lottery all amounts required to be paid over to the
NYS Lottery pursuant to the Gaming Law and all amounts payable to the Monticello
Harness Horseman’s Association, Inc.  MRMI will promptly pay all Expenses
incurred in the operation of the Gaming Business, the Hospitality Business and
the Racing Business. In addition, MRMI will pay when due all taxes and other
governmental charges and assessments incurred in connection with the Gaming
Business, the Hospitality Business and the Racing Business or which pertain to
the ownership, use and occupation of the Racetrack, the Gaming Center, the
Hospitality Facilities and the Racing Facilities.

4.02.4  Payment for Capital Renewals.  MRMI will be responsible for the payment
of all capital items required to ensure the good working condition of the Gaming
Center, the Hospitality Facilities and the Racing Facilities.  Such capital
reinvestment, and the depreciation or amoritzation with respect thereto, shall
not be considered Expenses for purposes of this Agreement.

4.02.5  Employment of Personnel.  MRMI will hire, promote and discharge all
employees of the Gaming Business, the Hospitality Business and the Racing
Business, with such employees to be supervised and directed in the performance
of their day-to-day duties by MRMI with the assistance of the Manager to the
extent provided in this Agreement.  Notwithstanding the reserved right of MRMI
to hire and discharge its employees who work in the Gaming Business, the
Hospitality Business and the Racing Business, MRMI will consider the suggestions
and recommendations of the Manager with respect to the hiring, promotion and
discharge of such employees.

4.02.6  Labor Relations.  MRMI will control and be responsible for all
negotiations with any labor union which represents employees of the Gaming
Business, the Hospitality Business and the Racing Business, and the Manager
agrees to assist MRMI in such negotiations to the extent reasonably requested by
MRMI, and to comply with the terms of any collective bargaining agreement that
MRMI may enter into with its employees.

4.02.7  Marketing and Advertising.  MRMI will implement the marketing,
advertising and promotial programs for the Gaming Business and the Racing
Business developed with the assistance of the Manager and any third party
marketing consultants that may be retained by MRMI to promote the Gaming
Business and the Racing Business, provided the expenditures for such programs
are within the limits contained in the current Operating Budget.  The annual
Operating Budgets will establish the cost of complimentary items provided to
patrons of the Gaming Center and the Racing Facilities in connection with the
promotion of the Gaming Business and the Racing Business, respectivly.

4.02.8   Maintenance and Repair.  MRMI will be responsible for the maintenance,
repair and upkeep of the Racetrack (including the Gaming Center, the Hospitality
Facilities and the Racing Facilities) in order to make sure that the Racetrack
remains an attractive venue for video lottery gaming.
 
19

--------------------------------------------------------------------------------

4.02.9  Utility Services.  MRMI will arrange with local utility companies for
the delivery and hook-up of electricity, heat, lighting, natural gas, water,
sewer, telephone and other utility services required for the operation of the
Gaming Business, the Hospitality Business and the Racing Business.

4.02.10  Security.  MRMI will provide all surveillance systems and security
personnel required by any Legal Requirements, or otherwise consistent with good
business practices, for the operation of the Gaming Business, the Hospitality
Business and the Racing Business.

4.02.11  Licenses and Permits.  MRMI will apply for, and use its commercially
reasonable best effort to obtain and maintain, all licenses, permits,
authorizations and approvals required for the operation of the Gaming Business,
the Hospitality Business and the Racing Business, including without limitation,
all licenses, permits, approvals and authorizations required for (i) the conduct
of harness racing and pari-mutuel wagering at the Racetrack, (ii) the conduct of
video lottery gaming operations at the Racetrack, and (iii) the sale of
alcoholic beverages for on-premises consumption at the Racetrack.  MRMI agrees
to execute and deliver any and all applications and other documents and to
provide all disclosures of information to governmental agencies as shall be
reasonably required, and the Manager agrees to cooperate with MRMI in all
reasonable respects, in applying for, obtaining and maintaining such licenses,
permits, approvals and authorizations, including without limitation, providing
information requested by any governmental agency having jurisdiction over the
operations of the Gaming Business, the Hospitality Business and the Racing
Business as to the employees, directors or owners of Manager or any Affiliate of
Manager.

4.02.12  Contracts and Leases. MRMI will enter into any contracts for goods or
services required by the Gaming Business, the Hospitality Business and the
Racing Business, and any leases for Equipment used in the Gaming Business, the
Hospitality Business and the Racing Business that is not purchased outright and
owned by MRMI.

4.02.13  Compliance with Loan Agreements and Mortgages. MRMI will use its
commercially reasonable best efforts to cause the Gaming Business, the
Hospitality Business and the Racing Business to comply with all applicable
covenants and provisions of all loan agreements and mortgages to which MRMI is a
party or by which its assets are bound, and pay, when due, the principal and
interest due pursuant to such loan agreements and mortgages.

4.02.14  Legal Requirements.  MRMI will use its commercially reasonable best
efforts to do, or cause to be done, all such acts and things in and about the
Gaming Center, the Hospitality Facilities and the Racing Facilities as shall be
reasonably necessary to comply with Legal Requirements and the terms of all
insurance policies contemplated in Article VII of this Agreement, provided that
the Manager shall cooperate with MRMI in this respect and shall notify MRMI of
any violation of such Legal Requirements with respect to which the Manager
receives written notice, or otherwise obtains actual notice.
 
20

--------------------------------------------------------------------------------

4.02.15  Legal Proceedings.  MRMI will, in its reasonable business judgment,
institute and diligently pursue any and all legal actions or proceedings to
collect charges, rent or other income derived from the operation of the Gaming
Business, the Hospitality Business and the Racing Business, or to terminate any
contract or lease.  MRMI shall take appropriate steps to challenge, protest,
appeal and/or litigate to final decision in any appropriate court or forum any
action or proposed action in which MRMI is a party and which would result in the
suspension of the Gaming Business or the Racing Business or would materially and
adversely impact the revenues or expenses of the Gaming Business or Racing
Business.

4.02.16  Final Determination.  Subject to its compliance with the terms of this
Agreement and the Operating Budgets provided for herein, MRMI will make all
final determinations with respect to the operation of the Gaming Business, the
Hospitality Business and the Racing Business.

ARTICLE V
ACCOUNTING AND CASH MANAGEMENT

                5.01         Bank Accounts.  MRMI shall select a bank or banks
(collectively, the “Bank”) to receive and maintain the Gross Revenues generated
by the operation of the Gaming Business, the Hospitality Business and the Racing
Business.  All amounts realized from the conduct of the Gaming Business, the
Hospitality Business and the Racing Business shall be deposited at least once
daily (or at such other frequency as MRMI and the Manager shall mutually
establish) into one or more accounts at the Bank established by MRMI (the “Bank
Accounts”).  Payment of all Expenses and Management Fees shall be made by MRMI
from the Bank Accounts by check or wire transfer.

                5.02         Collection and Disbursement of Funds.  The funds
generated by the operation of the Gaming Business, the Hospitality Business and
the Racing Business will be dealt with as follows:

5.02.1  Deposit of Gaming Business and Hospitality Business Revenues.  At least
once each day (or at such other frequency as MRMI and the Manager shall mutually
establish), MRMI shall arrange for the deposit of all amounts realized from the
conduct of the Gaming Business, the Hospitality Business and the Racing Business
into the Bank Accounts established in accordance with Section 5.01.  MRMI shall
arrange for a bonded transportation service to effect the safe transportation of
the receipts of the Gaming Business, the Hospitality Business and the Racing
Business realized at the Racetrack to the Bank, and the cost of such
transportation service shall be an Expense.

5.02.2  Payment of Amounts Owed under the Gaming Law.  MRMI shall arrange for
the transfer of the amount realized from the operation of the Video Lottery
Machines which, after the payment of winnings and prizes to customers, is
required to be remitted to the NYS Lottery or any other third party in
accordance with the Gaming Law, with such frequency as is set forth in the
Gaming Law or in any other Legal Requirements.
 
21

--------------------------------------------------------------------------------

5.02.3  Application of Gross Revenues.  The Gross Revenues realized by MRMI from
the operation of the Gaming Business, the Hospitality Business and the Racing
Business will be applied as follows:

 
(a)
First, to the payment of, or provision for, all Expenses incurred or anticipated
to be incurred in connection with the Gaming Business, the Hospitality Business
and the Racing Business;

 
(b)
Second, to the payment of the monthly Base Management Fee described in Section
6.01.1 of this Agreement;

 
(c)
Third, to the payment of the annual Incentive Fee described in Section 6.01.2 of
this Agreement; and

 
(d)
Thereafter, any remaining amount of Gross Revenues generated by the Gaming
Business, the Hospitality Business and the Racing Business not required to meet
the foregoing Expenses and Management Fees will be retained by MRMI.

                5.03          Financial Statements.  MRMI, with the assistance
of the Manager, will prepare income and expense statements on a monthly basis
which reflect the results of operation of the Gaming Business and the
Hospitality Business, supplemented by a statement reflecting the Earnings Before
Income, Taxes, Depreciation and Amortization of the Gaming Business, the
Hospitality Business and the Racing Business (the “Monthly Statements”).  Each
Monthly Statement will be provided by MRMI to the Manager on or before the
twentieth (20th) day following the end of the month to which such Monthly
Statement relates.  If the NYS Lottery requires monthly reports, then the
Monthly Statements shall be in the same format as is prescribed by the NYS
Lottery, provided such format discloses information sufficient to allow
computation of the Incentive Fee.  In addition, MRMI’s independent accountants
will prepare statements of the financial condition and results of operation of
the Gaming Business, the Hospitality Business and the Racing Business within
seventy-five (75) days after the close of each Operating Year (the “Annual
Statements”).  The Annual Statements will include balance sheets, income and
expense statements setting forth in reasonable detail all Gross Revenues and
Expenses, statements of changes in cash position, a computation of Earnings
Before Income, Taxes, Depreciation and Amortization, a computation of the
Management Fees payable by MRMI to the Manager pursuant to Section 6.01 of this
Agreement for the Operating Year, and any other schedules as may be agreed upon
by MRMI and the Manager pursuant to proper auditing and financial reporting
requirements.  After the first full year of operations, the Monthly Statements
shall be prepared to reflect comparative results with the same month of the
prior year, and the Annual Statements shall compare results with the prior
Operating Year.

                 5.04         Books of Account.  MRMI will maintain accurate
books and records that reflect the financial activity of the Gaming Business,
the Hospitality Business and the Racing Business in conformity with generally
accepted accounting principles consistently applied.  The books of account shall
reflect detailed day-to-day operations of the Gaming Business, the Hospitality
Business and the Racing Business and shall utilize accounting systems and
procedures which, at a minimum, (i) include a system of internal accounting
controls, (ii) permit the preparation of financial statements in accordance with
generally accepted accounting principles, (iii) be susceptible to audit, and
(iv) permit the calculation and payment of Management Fees and expense
reimbursements to the Manager in accordance with the terms of this
Agreement.  Such books of account shall be maintained at the Racetrack, and duly
authorized representatives of the Manager shall have access to the records of
the daily operations of the Gaming Business, the Hospitality Business and the
Racing Business and the right to inspect, examine, and copy all such books and
supporting business records.  The Manager shall also have the right, at its sole
cost and expense, to perform special or independent audits of all financial
records relating to the Gaming Business, the Hospitality Business and the Racing
Business as the Manager elects.
 
22

--------------------------------------------------------------------------------

ARTICLE VI
MANAGEMENT FEES AND
REIMBURSEMENT OF EXPENSES

                6.01          Management Fees.  In consideration for the
management services to be provided by the Manager pursuant to this Agreement,
MRMI will pay the following amounts to the Manager:

6.01.1  Base Management Fee.  The Manager shall receive a Base Management Fee
equal to three quarters of one percent (0.75%) of the Gross Gaming Revenue
realized by MRMI.  The Base Management Fee will be payable in monthly
installments.

6.01.2  Incentive Fee.  The Manager shall receive an Incentive Fee in an amount
equal to twenty percent (20%) of the amount by which Earnings Before Interest,
Taxes, Depreciation and Amortization is greater Nine Million Four Hundred
Thousand Dollars ($9,400,000) (hereafter, the “Base EBITDA”).  The Incentive Fee
shall be prorated for the first and last Operating Years under this Agreement
based on the portion of MRMI’s fiscal year that the Manager is providing
services to MRMI.  An example of the manner in which Earnings Before Interest,
Taxes, Depreciation and Amortization is to be calculated is attached hereto as
Exhibit E.  However, in computing Earnings Before Interest, Taxes, Depreciation
and Amortization, the amount of the Base Management Fee paid or payable for such
period shall be deducted from Gross Revenues, as a part of the Expenses.  The
Incentive Fee will be payable on an annual basis.

6.01.3  Adjustments to Incentive Fee Calculation.  The manner in which the
Incentive Fee is calculated pursuant to Section 6.01.2 above shall be subject to
adjustment in the following respects:

 
(a)
If the statutory video lottery agent vendor fee received by MRMI pursuant to the
Gaming Law is increased or decreased from its current forty-two percent (42%)
rate, such percentage change shall be multiplied by the sum of Fifty-Three
Million Three Hundred and Sixty Thousand Dollars ($53,360,000), which amount
represents the Gross Gaming Revenue component of MRMI’s Earnings Before
Interest, Taxes, Depreciation and Amortization used to establish the Base EBITDA
set forth in Section 6.01.2 above, and the resulting amount shall be prorated
(if necessary) to reflect an adjustment applicable to a partial Operating Year
and then added to or deducted from the Base EBITDA, as the case may be, for
purposes of establishing the prospective Incentive Fee payable to the Manager.

 
23

--------------------------------------------------------------------------------

 
 
(b)
If the statutory retainage (“take-out”) on pari-mutuel wagering pools and/or the
statutory racing signal commissions received by MRMI pursuant to the Racing Law
are increased or decreased from their current rates, such percentage change
shall be multiplied by the respective pari-mutuel handle or income that is a
component of MRMI’s Earnings Before Interest, Taxes, Depreciation and
Amortization used to establish the Base EBITDA set forth in Section 6.01.2
above, and the resulting amount shall be prorated (if necessary) to reflect an
adjustment applicable to a partial Operating Year and then added to or deducted
from the Base EBITDA, as the case may be, for purposes of establishing the
prospective Incentive Fee payable to the Manager.

 
(c)
Except to the extent provided in this Section 6.01.3 and in Section 6.05 below,
the method of calculating the Incentive Fee will not be subject to adjustment
for any other reason or cause.  Without limiting the generality of the
foregoing, the Base EBITDA will not be adjusted or altered in the event that (i)
the hours of operation of the Gaming Business, the Hospitality Business or the
Racing Business are increased or reduced, (ii) MRMI is authorized to operate
gaming devices or conduct gaming operations which supplement or replace its
Video Lottery Machines, or (iii) the NYS Lottery grants MRMI the right to offer
non-taxable “free play” to its patrons, or authorizes MRMI to benefit from other
marketing and promotional incentives.

Management Fees shall not accrue, or be payable with respect to any services
provided by the Manager, prior to the Commencement Date.  The liability of MRMI
to make payment of Management Fees shall begin on the Commencement Date.

6.02          Payment of Base Management Fee.  After the Commencement Date, the
Base Management Fee shall be payable by MRMI on or before the twentieth (20th)
day following the end of the month to which such Base Management Fee relates,
and will be remitted to the Manager with the Monthly Statement for such month
prepared in accordance with Section 5.03 of this Agreement.  The first
installment of the Base Management Fee shall be prorated if the first month is a
partial month, and the final installment of the Base Management Fee shall
likewise be prorated if this Agreement expires or is terminated on a date other
than at the end of a month.

                6.03          Annual Payment of the Incentive Fee, and
Reconciliation of Base Management Fees.  The Incentive Fee for an Operating Year
shall be payable by MRMI on or before the twentieth (20th) day after the receipt
by MRMI and the Manager of the Annual Statements for such Operating Year.  At
the time of payment of such Incentive Fee, MRMI and the Manager will also make
any adjusting payment required in order to reconcile the amount of Base
Management Fees received by the Manager during the course of such Operating Year
with the amount determined to be actually payable by MRMI based on the Annual
Statements.  To the extent that the Manager has not received the full amount of
the Base Management Fees payable by MRMI for such Operating Year, MRMI shall
immediately pay to the Manager the amount of such deficiency.  To the extent
that the total Base Management Fees actually paid by MRMI during such Operating
Year exceed the amount of Base Management Fees which should have been paid, MRMI
shall have the right to either (i) apply the amount of such excess to the future
Base Management Fees owed to the Manager in the succeeding Operating Year, (ii)
require the Manager to immediately refund such excess amount, or (iii) offset
such excess amount against any Incentive Fee.  A comparable final reconciliation
of the Base Management Fees will be made by MRMI and the Manager within sixty
(60) days following the expiration or termination of this Agreement.
 
24

--------------------------------------------------------------------------------

6.04          Reimbursement of Expenses.  MRMI will reimburse all reasonable
out-of-pocket expenses incurred by the Manager in providing the management
services described in this Agreement, including without limitation, any (i)
reasonable out-of-pocket travel and lodging expenses incurred by employees of
the Manager and its Affiliates who travel to the Racetrack to assist in the
operation of the Gaming Center and the Hospitality Facilities, (ii) from and
after the Commencement Date, the payroll cost of the supervisory, support and
training personnel of the Manager and its Affiliates who are based at the
Racetrack for one week or longer with the prior consent of MRMI (which consent
will not be unreasonably withheld), it being understood that such reimbursement
will not apply to any executive and senior management personnel of the Manager
and its Affiliates, including, but not limited to, Christian Riegle, Steven
Martin and Therrin Protze, (even if based at the  Racetrack for longer than one
week), and (iii) expenses incurred in retaining third party professionals and
other service providers, subject to the prior approval of MRMI.  In no event
will MRMI be required to reimburse the Manager or its Affiliates for any of
their normal general and administrative expenses, or any costs associated with
their employees who are not based at the Gaming Center except to the extent
expressly described above.

6.05          Renegotiation of the Management Fee.  Should the planned Concord
Hotel and Casino commence gaming operations in competition with MRMI’s Gaming
Business during the term of this Agreement, the impact on MRMI’s Gross Revenues
and Expenses is expected to be substantial.  In such event, MRMI and the Manager
will negotiate in good faith to make such changes to the method by which the
Management Fees are calculated as are reasonable, appropriate and equitable
under the circumstances; provided however, that in no event shall the dollar
amount of the monthly Base Management Fee payable to the Manager following the
opening of the Concord Hotel and Casino be less than the dollar amount of the
Base Management Fee received by the Manager during the full calendar month
immediately preceding the month in which the Concord Hotel and Casino opened.

ARTICLE VII
INSURANCE

7.01          Insurance Coverage.  The following insurance shall be secured and
maintained with respect to the Gaming Center, the Hospitality Facilities and the
Racing Facilities at all timesduring the term of this Agreement:
 
25

--------------------------------------------------------------------------------

 
(a)
Property insurance provided by an all risk policy form, including coverage for
the perils of fire, windstorm, flood, earthquake and other risks covered by
extended coverage endorsements on the Gaming Center, Hospitality Facilities and
Racing Facilities and contents in an amount equal to the full replacement value
thereof;

 
(b)
Business interruption insurance provided by an all risk policy form, including
business interruption resulting from the perils of fire, windstorm, flood,
earthquake and other risks covered by extended coverage endorsements for full
recovery of the net profits and continuing expenses of the Gaming Business, the
Hospitality Business and the Racing Business for the entire period of any such
business interruption;

 
(c)
Insurance against loss from accidental damage to, or from the explosion of,
boilers, electrical apparatus, air conditioning systems, including refrigeration
and heating apparatus, pressure vessels and pressure pipes in an amount equal to
the full replacement value of such items;

 
(d)
Commercial general liability, commercial automobile liability insurance
including coverage for owned, non-owned and leased automobiles, garage keepers
liability, products and completed operations, contractual liability, and liquor
liability in an amount not less than $1,000,000.00 per occurrence in primary
coverage and $10,000,000.00 in umbrella coverage, for a total of $11,000,000.00
in liabilty coverage;

 
(e)
Comprehensive crime insurance in an amount equal to not less than $1,000,000.00;

 
(f)
Workers’ compensation providing statutory benefits and employers'’ liability
insurance in an amount not less than $1,000,000.00 each accident, $1,000,000.00
each disease-policy limit and $1,000,000.00 each disease - each employee; and

 
(g)
Employment practices liability insurance in the amount of $1,000,000.00 per
claim.

7.02         Responsibility to Maintain Insurance.  From and after the
Commencement Date, MRMI shall procure and maintain the insurance policies
described in Section 7.01 above.  In either event, the cost of such insurance
shall be treated as an Expense for purposes of this Agreement.

7.03         General Requirements.  All policies of insurance shall be written
on an "occurrence" basis, if possible, and if any policy is written on a "claims
made" basis, then such policy must, if possible, be continued in effect for a
three (3) year period following the expiration or early termination of this
Agreement.

7.04          Policies and Endorsements.  The following provisions will apply to
the policies of insurance to be maintained during the term of this Agreement:
 
26

--------------------------------------------------------------------------------

7.04.1  Policies.  All insurance provided for under Section 7.01 shall be
effected by policies issued by insurance companies of good reputation and of
sound and adequate financial responsibility.  The party procuring such insurance
shall deliver to the other party certificates of insurance with respect to all
of the policies of insurance so procured, including existing, additional and
renewal policies, and in the case of insurance about to expire, shall deliver
certificates of insurance with respect to the renewal policies to the other
party not less than thirty (30) days after the respective dates of expiration.

7.04.2  Endorsements.  All policies of insurance provided for under this Article
VII shall provide that such policy shall not be canceled or materially changed
without at least thirty (30) days prior written notice to MRMI and the
Manager.  All insurance policies procured pursuant to Section 7.01 shall also
contain an endorsement to the effect that such insurance is primary to any
similar insurance maintained by the Manager.

7.04.3  Named Insureds.  All policies of insurance required under clauses (a)
through (g) of Section 7.01 (excluding clause (f), which shall be carried in the
name of MRMI only) shall indicate that MRMI and the Manager are the named
insureds.  Losses thereunder shall be payable to the parties as their respective
interests may appear.  All insurance policies required in clauses (a), through
(g) (excluding clause (f)) of Section 7.01 shall name the respective Affiliates
of MRMI and the Manager, and the directors, officers, agents and employees of
MRMI, the Manager and each of their Affiliates, as additional insureds, if such
parties may be named as additional insureds without the payment of an additional
premium.

7.04.4  Evidence of Insurance.  As soon as practicable prior to the effective
date of the applicable coverages, the party which obtains the insurance
coverages under this Article VII shall provide the other party with binders
evidencing that the applicable insurance requirements of this Agreement have
been satisfied and, as soon as practicable thereafter, shall provide true and
complete copies of policies for such insurance.  As soon as practicable prior to
the expiration date of each such policy, the party obtaining such insurance
shall provide the other party with binders evidencing renewal of existing or
acquisition of new coverages.  True and complete copies of renewed or new
policies or certificates of insurance shall be provided by the party obtaining
insurance coverage under this Article VII to the other party as soon as
practicable after renewed or new coverages become effective.

7.04.5  Waiver of Liability.  Neither the Manager nor MRMI shall assert against
the other, and do hereby waive with respect to each other, or against any other
entity or person named as additional insureds on any policies carried under this
Article VII, any claims for any losses, damages, liability or expenses
(including attorneys'’ fees) incurred or sustained by either of them on account
of injury to persons or damage to property arising out of the ownership,
development, construction, completion, operation or maintenance of the Gaming
Center, the Hospitality Facilities and the Racing Facilities, to the extent that
the same are covered by the insurance required under this Article VII.  Each
policy of insurance shall contain a specific waiver of subrogation reflecting
the terms of this Section 7.04.5, and a provision to the effect that the
existence of the preceding waiver shall not affect the validity of any such
policy or the obligation of the insurer to pay the full amount of any loss
sustained.
 
27

--------------------------------------------------------------------------------

ARTICLE VIII
TRADE NAMES, CONFIDENTIAL INFORMATION,
AND NON-SOLICITATION

                 8.01        Business Name.  The Gaming Business and the Racing
Business shall be operated under such name as MRMI shall designate from time to
time.

                 8.02        Trade Names, Trademarks and Service Marks.  MRMI
and the Manager will determine the trade names, trademarks and service marks
(the “Marks”) to be used in connection with the operation of the Gaming Business
and the Racing Business.  MRMI will arrange for the purchase and installation of
signage throughout the Gaming Center and Racing Facilities which makes use of
the Marks, with such signage and its placement to be subject to consultation
with the Manager, and the Marks will be used in connection with the promotion
and marketing of the Gaming Business and the Racing Business.  The costs of
purchasing and installing such signage are capital items and therefore shall not
be treated as Expenses hereunder, but the general costs of promoting and
marketing the Gaming Business and the Racing Business shall be treated as
Expenses for purposes of this Agreement.  Ownership of the Marks shall, for all
purposes, belong exclusively to MRMI.

                8.03         Confidential Information.  MRMI and the Manager
each agree that any information received concerning the other party hereto
during the performance of this Agreement, regarding such other party’s
organization, financial matters, marketing plans or other information of a
propriety nature, shall be treated by the parties in full confidence, will be
used solely for the purpose of performing the parties’ respective duties under
this Agreement, will not be used in any way detrimental to the party which
discloses such proprietary information, and will be kept confidential by each of
MRMI and the Manager; provided, however, that such proprietary information may
be disclosed to the employees and other representatives of MRMI and the Manager
who need to know such information for the purpose of performing this
Agreement.  Without limiting the generality of the foregoing, MRMI and the
Manager agree that such proprietary information shall not be disclosed to any
third party other than (i) the NYS Lottery, (ii) any other governmental agency
having jurisdiction over the Gaming Business, the Hospitality Business or the
Racing Business or the use and operation of the Gaming Center, the Hospitality
Facilities or the Racing Facilities, or (iii) as otherwise expressly required by
Legal Requirements applicable to any party hereto.  MRMI acknowledges that
certain gaming and pari-mutuel racing licenses are currently issued to and held
by Affiliates of the Manager, and that the Affiliates of the Manager may, in the
future, apply for additional gaming licenses.  Accordingly, certain Legal
Requirements may require the Affiliates of the Manager to disclose private or
otherwise confidential information about MRMI or the operations of the Gaming
Business or the Racing Business.  MRMI hereby consents to such disclosure as
long as the same, in each instance, is approved, in advance and in writing, by
MRMI.  MRMI further agrees to refrain from any action that may affect the
licenses issued to the Affiliates of the Manager, so long as the same will not
unduly interfere with MRMI’s operation of its various businesses at the
Racetrack facility.
 
28

--------------------------------------------------------------------------------

                 8.04         Restriction on Employee Solicitation.  Each of the
parties agrees to refrain from soliciting the employment of, or hiring or
otherwise retaining the service of, the employees of the other party hereto or
such parties’ Affiliates during the term of this Agreement and for a period of
twelve (12) months after the expiration or termination of this Agreement,
provided however that each of the parties shall not be prohibited from hiring an
employee of the other party as a result of a response by such employee or his
agent to a non-targeted general solicitation through a public medium such as
media advertisements and the use of professional search firms.

ARTICLE IX
REPRESENTATIVES OF THE PARTIES

                 9.01        Designation of Representatives.   Each of MRMI and
the Manager will designate one representative and one alternate representative
to act in the event the primary representative is unavailable or refuses to act
within a reasonable time.  Such representative will act as the primary contact
person of such party during the performance of this Agreement, and shall
administer such party’s obligations under this Agreement.  The representatives
of MRMI and the Manager will meet regularly throughout the term of this
Agreement, with such frequency as may reasonably be determined by MRMI and the
Manager to be necessary.

ARTICLE X
TERM OF AGREEMENT

                10.01       Term of the Agreement.  The term of this Agreement
shall commence as of the date of its execution, and shall continue until the
third (3rd) anniversary of the Commencement Date, subject to earlier termination
as provided below.

10.02       Termination by MRMI Without Cause.  MRMI may terminate this
Agreement, without regard to the existence or absence of “cause”, under either
of the following circumstances:

 
(a)
At any time on or prior to September 30, 2009, for any reason or for no reason,
subject to the obligation of MRMI to make payment of all Management Fees accrued
for periods prior to the date of termination plus the sum of One Million Dollars
($1,000,000) contemporaneously with the exercise of such right to terminate this
Agreement;

 
(b)
At any time following the first anniversary of the Commencement Date, if MRMI’s
Earnings Before Interest, Taxes, Depreciation and Amortization has not increased
over the immediately preceding twelve month period at the annual cumulative rate
of at least three percent (3%); or

 
(c)
In the event that the operation of the Gaming Business results in MRMI incurring
an operating loss (i.e., a financial loss to MRMI after the payment of the
Expenses and the Management Fees) over a period of twelve consecutive months.

Early termination of this Agreement pursuant to this Section 10.02 shall be
effected by written notice given by MRMI to the Manager.
 
29

--------------------------------------------------------------------------------

                10.03       Termination by MRMI for Cause.  MRMI may terminate
its obligation to retain and pay for the services of the Manager pursuant to
this Agreement by written notice to the Manager upon the occurrence of any of
the following events (“Events of Default”):

 
(a)
If the Manager fails, in a material manner, to perform or observe any provision
of this Agreement to be performed or observed by the Manager, and further fails
to cure such default within fifteen (15) business days after the receipt of
written notice of default from MRMI, which notice shall state the nature of the
default in reasonable detail.  Notwithstanding the foregoing, if the default is
of such a nature that it cannot reasonably be cured within such fifteen (15) day
period, then the default shall be deemed to have been timely cured if the
Manager commences a cure within such fifteen (15) days, and thereafter
diligently prosecutes such cure and completely cures such default within a
reasonable period of time.

 
(b)
If the Manager files a voluntary petition in bankruptcy, or if there is filed
against the Manager any involuntary bankruptcy petition or other insolvency
proceeding initiated by the Manager’s creditors, which involuntary filing is not
dismissed within sixty (60) days after it is filed.

 
(c)
If any supervisory employee of Manager commits any fraud, malfeasance, gross
negligence, material misrepresentation in connection with the operation of the
Gaming Business or the Hospitality Business, unless within five (5) business
days after written notice from MRMI, the Manager terminates the employment of
such supervisory employee at the Racetrack and makes MRMI whole with respect to
any direct out-of-pocket loss caused by such employee.

 
 

 
(d)
If any state or federal court or other governmental agency having jurisdiction
over the Gaming Business, the Racing Business or the Manager (i) suspends or
revokes any gaming license held by the Manager; or (ii) orders MRMI to
discontinue the retention of the Manager pursuant to this Agreement; or (iii)
advises MRMI that its authority to operate the Gaming Business or the Racing
Business will be suspended or revoked unless the affiliation between MRMI and
the Manager is terminated.  MRMI shall promptly give the Manager written notice
of any order or advisory directive received by MRMI that compels or recommends
the termination of this Agreement, and the Manager shall be entitled to contest
such action to the fullest extent permitted by law before such termination
becomes effective.  Notwithstanding the foregoing sentence, MRMI may suspend
performance of the Manager’s services hereunder as well as the obligation to pay
for such services, during the pendency of any such contest, unless the Manager
obtains an order from a court of competent jurisdiction staying application of
the order or directive of the court or government agency which issued such order
or directive.

           Should any of the foregoing conditions exist, then MRMI shall have
the right to terminate the Manager’s retention under this Agreement by written
notice to the Manager given at any time following the occurrence of such event
and the expiration of any applicable grace period specified above, and this
Agreement shall terminate upon the date specified therein, which date shall be
not less than thirty (30) days nor more than seventy-five (75) days after the
date of the giving of such final notice of termination unless a court or
governmental agency requires earlier termination of the Manager’s services in
accordance with the provisions of Section 10.03(d) hereof.
 
30

--------------------------------------------------------------------------------

                10.04       Termination by the Manager for Cause.  The Manager
may terminate its obligation to continue to perform its obligations set forth in
this Agreement by written notice to MRMI upon the occurrence of any of the
following events (“Events of Default”):

 
(a)
If MRMI fails to pay the undisputed amount of any Management Fees on a monthly
basis when due, and such failure continues for fifteen (15) business days after
receipt of written notice of default from the Manager.

 
(b)
If MRMI fails, in a material manner, to perform or observe any other provision
of this Agreement to be performed or observed by MRMI, and further fails to cure
such default within fifteen (15) business days after the receipt of written
notice of default from the Manager, which notice shall state the nature of the
default in reasonable detail.  Notwithstanding the foregoing, if the default is
of such a nature that it cannot reasonably be cured within such fifteen (15) day
period, then the default shall be deemed to have been timely cured if MRMI
commences a cure within such fifteen (15) days, and thereafter diligently
prosecutes such cure and completely cures such default within a reasonable
period of time.

 
(c)
If MRMI files a voluntary petition in bankruptcy, or if there is filed against
MRMI any involuntary bankruptcy petition or other insolvency proceeding
initiated by the creditors of MRMI, and MRMI thereafter fails to assume this
Agreement as an executory contract pursuant to the provisions of 11 U.S.C. §365
(or any successor section of the U.S. Bankruptcy Code) within ninety (90) days
after the commencement of such bankruptcy proceeding.

                 Should any of the foregoing conditions exist, then the Manager
shall have the right to terminate this Agreement by written notice to MRMI given
at any time following the occurrence of such event and the expiration of any
applicable grace period specified above, and this Agreement shall terminate upon
the date specified therein, which date shall be not less than thirty (30) days
nor more than seventy-five (75) days after the date of the giving of such final
notice oftermination.  In the event that this Agreement is terminated by the
Manager pursuant to this Section 10.04, MRMI shall pay the Termination Payment
to the Manager in accordance with the provisions of Section 10.05 hereof.

10.05       Effect of Termination, and Consequences of a Default.  Upon the
termination of this Agreement by either party, the Manager will surrender
possession and control of the Gaming Center and the Hospitality Facilities to
MRMI.  No obligation of either MRMI or the Manager to pay any amount or perform
and duty which became accrued prior to the date of termination shall expire or
be released as a result of the termination of this Agreement, and such
obligation shall only be satified when the same has been fully paid or
performed.  In the event of termination of this Agreement by MRMI pursuant to
the provisions of Section 10.03 hereof, MRMI shall have the right to recover all
direct out-of-pocket costs incurred by MRMI as a result of the Manager’s
Default.  In the event of termination of this Agreement by the Manager pursuant
to the provisions of Section 10.04 hereof, the Manager shall have the right to
recover all direct out-of-pocket costs incurred by the Manager as a result of
the Default by MRMI, plus the Termination Payment.  Notwithstanding the use of
the phrase “termination of this Agreement” any termination shall affect only the
parties’ respective duties of performance after the effective date of
termination, and the terms of this Agreement shall continue to govern (i) the
damages recoverable and other remedies available to an aggrieved party in the
event of a Default, and (ii) the respective rights and obligations of the
parties as to matters arising prior to the effective date of termination.
 
31

--------------------------------------------------------------------------------

10.06       Extraordinary Events.  Notwithstanding any provision of this
Agreement to the contrary, if the failure of MRMI or the Manager to conform to,
keep, perform, fulfill or satisfy any representation, warranty, covenant,
undertaking, obligation, standard, test, or condition set forth in this
Agreement is caused in whole or in part by one or more Extraordinary Events,
then such failure shall not constitute an Event of Default or Default under this
Agreement, and such failure shall be excused for as long as the failure is
caused in whole or in part by such Extraordinary Event.  In order to have any
failure by a party be excused pursuant to this Section 10.06, the party claiming
that an Extraordinary Event caused such failure must notify the other party
within sixty (60) days after the Extraordinary Event first begins to affect
performance under or other compliance with the terms of this Agreement.

ARTICLE XI
SALE OF THE GAMING BUSINESSES

11.01       Sale of the Gaming Business.  MRMI expressly reserves the right to
sell the Gaming Business during the term of this Agreement.  For purposes of
this Article XI, each of the following events shall be deemed to constitute a
“sale” of the Gaming Business:

 
(a)
The conveyance by MRMI of all or substantially all of its fee ownership interest
in the Racetrack or the Gaming Center, whether voluntarily or involuntarily;

 
(b)
The lease by MRMI or all or substantially all of its interest in the Racetrack
or the Gaming Center, regardless of the terms or duration of such lease;

 
(c)
The surrender of possession and control of all or substantially all of the
Racetrack or the Gaming Center by MRMI (including without limitation, the
closure of the Racetrack or the Gaming Center), however evidenced;

 
(d)
The change in ownership of fifty percent (50%) or more of the voting equity
shares of MRMI or Empire Resorts, Inc., a Delaware corporation (“Empire”) as
currently constituted on the date of this Agreement, or any other change which
results in the transfer of voting control of MRMI or Empire, either as a result
of one transaction or in the aggregate as the result of a series of
transactions; or

 
(e)
A merger, consolidation or other form of business combination to which MRMI or
Empire is a party, in which the current holders of equity ownership interests in
MRMI or Empire, as the case may be, do not continue to hold at least fifty
percent (50%) of the equity ownership interests in the entity which survives or
results from such merger, consolidation or other form of business combination.

 
32

--------------------------------------------------------------------------------

 
Notwithstanding the foregoing, the transfer of fee title to the Racetrack or the
Gaming Center to an Affiliate of MRMI, or the execution by MRMI of a lease of
the Racetrack or the Gaming Center with any of its Affiliates, shall not
constitute a “sale” of the Gaming Business for purposes of this Article XI.

11.02       Consequences in the Event of a Sale.  In the event that the Gaming
Business is sold based on any of the events described in Section 11.01 above and
the successor to MRMI expressly assumes in writing, and in a form reasonably
acceptable to the Manager, all the obligations of MRMI set forth in this
Agreement, then this Agreement shall continue in full force and effect;
provided, however, that no sale of the Gaming Business by MRMI shall be deemed
to release MRMI from the payment of any liability or the performance of any
obligation under this Agreement that became accrued prior to the effective date
of such sale.  In the absence of such an express written assumption of this
Agreement by the successor to MRMI prior to the effective date of the sale, this
Agreement shall be deemed to have been automatically terminated by MRMI, and
MRMI shall pay the lesser of (i) the Termination Payment, or (ii) the sum of
Five Hundred Thousand Dollars ($500,000), to the Manager as liquidated damages
(and not a penalty), which sum the parties agree will reasonably compensate the
Manager for the loss of its opportunity to provide management services for the
full three year term of this Agreement.

ARTICLE XII
ARBITRATION AND ENFORCEMENT

                 12.01      Arbitration.  Except as provided in section 11.02,
all controversies or claims arising out of or relating to this Agreement or the
any other document entered into in connection with the transaction contemplated
herein, whether sounding in contract, tort or otherwise, shall be adjudicated
exclusively by binding arbitration conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the “AAA”) then in
effect.  The arbitration hearing shall take place in Monticello, New York or
such other place as the parties may agree.  The number of arbitrators shall be
three (3).  Arbitrators shall be chosen in accordance with the rules of the AAA
pertaining to commercial disputes, unless the parties agree otherwise in
writing.  The parties shall endeavor to have the AAA appoint arbitrators
experienced and knowledgeable in gaming generally.  The decision of a majority
of the members of the arbitration panel shall be final and binding except to the
extent that such award may be vacated under applicable law.

                12.02       Allowable Judicial Proceedings.  Either party may
commence a legal action or proceeding: (i) to compel arbitration if the other
party fails or refuses to participate in an arbitration initiated by either
party, (ii) to enforce an arbitration award, or (iii) to obtain injunctive
relief to enforce the provisions hereof.  Any such proceedings shall be brought
in a court of competent jurisdiction and venue shall lie in either the County of
Sullivan or such other place as the parties may agree. 

                12.03       Tria1 by Jury; Venue.  EACH PARTY HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION WITH REGARD TO OR ARISING
UNDER THIS AGREEMENT.  IN THE EVENT ANY PARTY COMMENCES ANY ACTION IN A
JURISDICTION OR VENUE OTHER THAN AS PROVIDED HEREIN (EXCEPT AN APPLICATION TO
ENFORCE AN ARBITRATION AWARD), SUCH CASE SHALL BE DISMISSED WITHOUT PREJUDICE TO
THE FILING OF A NEW ACTION OR PROCEEDING IN A COURT OF PROPER JURISDICTION OR
VENUE.
 
33

--------------------------------------------------------------------------------

                 12.04      Recovery of Fees and Costs.  If any action or
arbitration proceeding is brought to enforce or interpret this Agreement, to
recover damages for any alleged breach hereof, for a declaration of rights in
connection herewith, or for any other relief, the “prevailing party” (as defined
below) in any such action or proceeding shall be entitled to receive from the
non-prevailing party all fees, costs and expenses of enforcing any right of the
prevailing party (collectively, “fees and costs”), including without limitation,
(i) reasonable attorneys’ fees and costs, (ii) witness fees (including experts
engaged by the parties, but excluding shareholders, officers, employees or
partners of the parties), and (iii) fees and costs of accountants and other
professionals.  Any judgment, order or award entered in such action or
proceeding shall contain a specific provision for the recovery of the aforesaid
fees and costs, and an award of prejudgment interest from the date of the breach
at the rate of interest prescribed by New York law for contract claims.  The
term “prevailing party” is defined as the party who is determined to prevail by
the court or arbitrators after consideration of all damages and equities in the
action or proceeding, whether or not the action or proceeding continues to final
judgment, it being understood that the court or arbitrators may determine that
neither party is the “prevailing party”.

                12.05       Period of Limitations.  Any mediation and any
arbitration shall be brought within three (3) years after the date that the
dispute arose, and the arbitrators shall have no jurisdiction to hear or
determine a claim that is not brought within such three-year period.  No legal
action or proceeding permitted by Section 11.02 of this Agreement may be brought
after the expiration or three (3) years from the date that the dispute
arose.  In the case of accounting issues, the dispute shall be deemed to arise
at such time as the party bringing the claim first had access to written reports
or accountant work papers that contain sufficient detail that a reasonably
diligent business person would be able to discern that an issue exists as to the
treatment of any item of revenue or expense.

ARTICLE XIII
WARRANTIES, REPRESENTATIONS,
AND ADDITIONAL COVENANTS OF THE PARTIES

                 13.01      Representations and Warranties of MRMI.  As an
inducement to the Manager to execute this Agreement, MRMI represents, warrants
and covenants to the Manager the truth and accuracy of the matters set forth in
this Section 13.01.

 
(a)
MRMI is duly organized, validly existing and in good standing under the laws of
the State of New York, is duly qualified to conduct business in the State of New
York, and has full power, authority and legal right to execute, perform and
timely observe all of the provisions of this Agreement which are to be performed
or observed by MRMI.  The execution, delivery and performance of this Agreement
by MRMI have been duly authorized by all necessary action on the part of MRMI.

 
34

--------------------------------------------------------------------------------

 
 
(b)
This Agreement constitutes the valid and binding obligations of MRMI and does
not and will not constitute a breach of or default under any of the
organizational and governing documents of MRMI or the terms, conditions or
provisions of any law, order, rule, regulation, judgment, decree, loan
agreement, mortgage, or other agreement or instrument to which MRMI is a party
or by which it or any substantial portion of its assets (including the
Racetrack) is bound or affected.

 
(c)
No approval of any third party other than the NYS Lottery (including any ground
lessor or the holder of any mortgage) that has not been obtained prior to the
execution of this Agreement is required in connection with the execution and
performance of this Agreement by MRMI.

 
(d)
MRMI shall, at its own expense, maintain in full force and effect throughout the
term of this Agreement the legal existence of MRMI and the rights required for
it timely to observe and perform all of the terms and conditions of this
Agreement.

 
(e)
MRMI holds (or will hold prior to the Commencement Date) and shall cooperate
with the Manager in maintaining from and after the Comencement Date all permits,
licenses, authorizations and approvals necessary to the ownership and operation
of the Gaming Business, the Hospitality Business and the Racing Business in
accordance with the terms of the Agreement and any applicable Legal
Requirements.

 
(f)
There is no litigation or proceeding pending or threatened against MRMI that
seeks to prevent the parties from entering into this Agreement.

 
(g)
To the best of MRMI’s knowledge, (i) no hazardous or toxic materials are present
in, are stored upon, or have been released from the Racetrack except in
compliance with all applicable Legal Requirements, and (ii) there exist no soil,
water, mineral, chemical or environmental conditions in or at the Racetrack that
presently or with the passage of time will require notice or reporting to any
governmental authority, or pose any threat to the health and safety of the
employees or patrons of the Racetrack, or otherwise require (based on any Legal
Requirement) any monitoring or remedial action.

 
(h)
MRMI has filed or caused to be filed all material federal, state and local tax
returns and reports which are required to be filed, and has paid or caused to be
paid all taxes as shown on said returns or any assessment received by it, to the
extent that such taxes have become due.

 
(i)
MRMI is not in violation of any terms of any order, writ, judgment, injunction,
decree, statute, rule or regulation to which MRMI is subject which violation
would individually or in the aggregate have a material adverse effect upon
MRMI’s ability to perform its obligations under this Agreement.

 
(j)
To the best of its knowledge, MRMI has complied with and is in compliance in all
material respects with all federal, state, local and foreign statutes, laws,
ordinances, regulations, rules, judgments, orders and decrees applicable to MRMI
or its assets, business or operations, and there does not exist any valid basis
for any claim of default under or violation of any statute law, ordinance,
regulation, rule, judgment, order or decree which default or violation would
individually or in the aggregate have a material adverse effect upon MRMI.

 
35

--------------------------------------------------------------------------------

 
 
(k)
No representation or warranty contained herein by or on behalf of MRMI contains
or will contain an untrue statement of material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading.

                 13.02      Representations and Warranties of the Manager.  As
an inducement to MRMI to execute this Agreement, the Manager represents,
warrants and covenants to MRMI the truth and accuracy of the matters set forth
in this Section 13.02.

 
(a)
The Manager is duly organized, validly existing and in good standing under the
laws of the State of New York, is duly qualified to conduct business in the
State of New York, and has full power, authority and legal right to execute,
perform and timely observe all of the provisions of this Agreement which are to
be performed or observed by the Manager.  The execution, delivery and
performance of this Agreement by the Manger have been duly authorized by all
necessary action on the part of the Manager.

 
(b)
This Agreement constitutes the valid and binding obligation of the Manger and
does not and will not constitute a breach of or default under any of the
organizational and governing documents of the Manager or the terms, conditions
or provisions of any law, order, rule, regulation, judgment, decree, agreement
or instrument to which the Manager is a party or by which it or any substantial
portion of its assets is bound or affected.

 
(c)
No approval of any third party other than the NYS Lottery that has not been
obtained prior to the execution of this Agreement is required in connection with
the execution and performance of this Agreement by the Manager.

 
(d)
The Manager shall, at its own expense, maintain in full force and effect
throughout the term of this Agreement the legal existence of the Manager and the
rights required for it timely to observe and perform all of the terms and
conditions of this Agreement.

 
(e)
The Manager holds (or will hold prior to the Commencement Date) and shall
cooperate with MRMI in maintaining from and after the Comencement Date all
permits, licenses, authorizations and approvals necessary to the management of
the Gaming Business and the Hospitality Business in accordance with the terms of
the Agreement and any applicable Legal Requirements.

 
(f)
There is no litigation or proceeding pending or threatened against the Manager
that seeks to prevent the parties from entering into this Agreement.

 
36

--------------------------------------------------------------------------------

 
 
 (g)
The Manager has filed or caused to be filed all material federal, state and
local tax returns and reports which are required to be filed, and has paid or
caused to be paid all taxes as shown on said returns or any assessment received
by it, to the extent that such taxes have become due.

 
(h)
The Manager is not in default in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party which default would individually or in the
aggregate have a material adverse effect upon the Manager’s ability to perform
its obligations under this Agreement, nor is the Manager in violation of any
terms of any order, writ, judgment, injunction, decree, statute, rule or
regulation to which the Manager is subject which violation would individually or
in the aggregate have a material adverse effect upon the Manager’s ability to
perform its obligations under this Agreement.

 
(i)
To the best of its knowledge, the Manager has complied with and is in compliance
in all material respects with all federal, state, local and foreign statutes,
laws, ordinances, regulations, rules, judgments, orders and decrees applicable
to the Manager or its assets, business or operations, and there does not exist
any valid basis for any claim of default under or violation of any statute law,
ordinance, regulation, rule, judgment, order or decree which default or
violation would individually or in the aggregate have a material adverse effect
upon the Manager.

 
(j)
No representation or warranty contained herein by or on behalf of the Manager
contains or will contain an untrue statement of material fact or omits or will
omit to state a material fact necessary to make the statements contained therein
not misleading.

13.03       Additional Affirmative Covenants of the Parties.  MRMI and the
Manager further covenant and agree as follows:

13.03.1  Compliance with Laws.  Each of MRMI and the Manager agree to comply
with all applicable laws, ordinances, orders and regulations, and to deliver to
the other party hereto copies of any notices of violations of law, ordinances,
orders and regulations, that are issued by any governmental authority having
jurisdiction over the construction, ownership or operation of the Gaming Center,
the Hospitality Facilities or the Racing Facilities.  Each of MRMI and the
Manager shall use its commercially reasonable best efforts to obtain and
maintain any necessary licenses, permits, authorizations and approvals required
by it for the conduct of the Gaming Business and the Hospitality Business (and
in the case of MRMI, the Racing Business) in the manner contemplated in this
Agreement, and to assist the other party hereto when reasonably requested in
obtaining and maintaining any licenses, permits, authorizations and approvals
required by such other party.

13.03.2  Filing of Reports.  Each of MRMI and the Manager shall promptly and
timely file any and all filings, reports, certificates and applications with
governmental agencies which are necessary or appropriate for the parties to
operate the Gaming Business and the Hospitality Business (and in the case of
MRMI, the Racing Business) in the manner contemplated by this Agreement.
 
37

--------------------------------------------------------------------------------

13.03.3  Further Assurances.  Each of MRMI and the Manager shall execute and
deliver from time to time, promptly after any reasonable request therefor made
by the other party hereto, any and all instruments, agreements and documents
necessary, and shall take such other action, as the other party may reasonably
deem necessary or desirable to accomplish the purposes and intent of this
Agreement.  It is the understanding and intention of the parties that operation
of the Gaming Business and the Racing Business shall conform to and comply with
all applicable gaming statutes in the State of New York, including the Gaming
Law.  The parties agree to execute such additional amendments or agreements to
cause this Agreement to conform to any requirements of New York law as either
party may determine to be necessary in order to give effect to the spirit and
intent of this Agreement.

13.03.4  Future Acts.  Each of MRMI and the Manager agrees to refrain from
entering into any agreements with any third party that will have an adverse
effect on the management and operation of the Gaming Business, the Hospitality
Business or the Racing Business in the manner contemplated by this
Agreement.  Each of MRMI and the Manager further agree not to take any other
action which will or would be likely to adversely affect (i) the operation of
the Gaming Business, the Hospitality Business or the Racing Business in the
manner contemplated by this Agreement, (ii) the ability of MRMI or the Manager
to perform its obligations hereunder, or (iii) the rights of MRMI or the Manager
under this Agreement.  Notwithstanding the foregoing, nothing contained in this
Agreement shall be deemed to restrict the right of MRMI or the Manager to
engage, directly or indirectly, whether as an investor, owner, lender, manager
or in any other capacity, in any business venture which conducts operations in
competition with the Gaming Business, the Hospitality Business or the Racing
Business, subject to the parties’ continued compliance with all of the terms and
conditions of this Agreement.  MRMI also shall defend and maintain its fee title
interest to the Racetrack, the Gaming Center, the Hospitality Facilities and the
Racing Facilities.

13.03.5  Notice of Litigation.  Each of MRMI and the Manager shall provide the
other party hereto with notice of any pending, threatened or contemplated
action, suit or proceeding before or by any court or any federal, state or local
governmental authority or agency which may result in any material adverse change
in the condition (financial or otherwise), business or prospects of the
transactions proposed herein or might materially adversely affect any of the
property or assets to be constructed or managed in connection with this
Agreement.

ARTICLE XIV
INDEMNIFICATION

                 14.01      Indemnification of the Manager.  MRMI shall
indemnify, defend and hold the Manager harmless from and against any and all
claims, demands, actions (including enforcement proceedings initiated by any
government agency), penalties, suits and liabilities (including the cost of
defense, settlement, appeal, reasonable attorneys’ fees and disbursements and
any other amounts that the Manager is required to pay to third parties in
connection with such matters, but excluding consequential damages sustained by
the Manager) that the Manager may have alleged against it incur, become
responsible for or pay out by reason of, or to the extent caused by, (i) an
Event of Default by MRMI as described in Section 10.04 of this Agreement; (ii)
the contamination of or any adverse effects on the environment with respect to
the Racetrack, the Gaming Center, the Hospitality Facilities or the Racing
Facilities as the result of an event occuring before or after the date of this
Agreement unless caused by the negligence or intentional act of an employee of
the Manager; (iii) the breach by MRMI of any of its warranties or
representations set forth in this Agreement; or (iv) claims arising under
contracts or agreements entered into between MRMI and third parties in
accordance with the terms of this Agreement.
 
38

--------------------------------------------------------------------------------

14.02       Indemnification of MRMI.  The Manager shall indemnify, defend and
hold MRMI harmless from and against any and all claims, demands, actions
(including enforcement proceedings initiated by any government agency),
penalties, suits and liabilities (including the cost of defense, settlement,
appeal, reasonable attorneys’ fees and disbursements and any other amounts that
MRMI is required to pay to third parties in connection with such matters, but
excluding consequential damages sustained by MRMI) that MRMI may have alleged
against it, incur, become responsible for or pay out by reason of, or to the
extent caused by, (i) the negligence, willful misconduct or deliberate acts of
the Manager or its employees; (ii) an Event of Default by the Manager as
described in Section 10.03 of this Agreement;  (iii) a breach by the Manager of
any of its warranties or representations under this Agreement, or (iv) the
contamination of or any adverse effects on the environment with respect to the
Racetrack, the Gaming Center, the Hospitality Facilities or the Racing
Facilities as the result of an event occuring after the date of this Agreement,
to the extent caused by the negligence or intentional act of an employee of the
Manager.

14.03       Indemnified Parties.  The indemnities contained in this Article XIII
shall run to the benefit of the Manager, MRMI, and their respective Affiliates
and the directors, partners, members, managers, officers and employees of the
Manager and MRMI.

14.04       Survival.  The provisions of this Article XIV shall survive any
cancellation, termination or expiration of this Agreement and shall remain in
full force and effect until such time as the applicable statute of limitation
shall cut off all demands, claims, actions, damages, losses, liabilities or
expenses which are the subject of this Article XIV.

ARTICLE XV
MISCELLANEOUS PROVISIONS

                 15.01      Manager as Independent Contractor and Agent for
MRMI.  In the performance of its duties as the manager of the Gaming Business
and the Hospitality Business , the Manager shall act solely as the agent of
MRMI.  Nothing in this Agreement shall constitute or be construed to create a
partnership, joint venture or joint employer relationship between the Manager
and MRMI, and the Manager shall be an independent contractor of MRMI.

                 15.02      Preparation of Agreement.  Each of MRMI and the
Manager acknowledges that it received the advice of separate legal counsel in
the negotiation of this Agreement, and that the terms of the transactions
contemplated by this Agreement are fair and reasonable.  Each of MRMI and the
Manager agrees that no conflict, omission or ambiguity in this Agreement, nor
the interpretation of this Agreement, shall be construed against either party on
the basis that such party was responsible for the drafting of this Agreement.
 
39

--------------------------------------------------------------------------------

                 15.03      Costs and Expenses.  Except as expressly set forth
in this Agreement, each party shall pay all legal and other costs and expenses
incurred by such party in negotiating this Agreement, in performing any due
diligence with respect to the transactions contemplated hereby, in retaining
professional advisors in connection with such due diligence work, in performing
any of the transactions contemplated by this Agreement, or in complying with
such party’s covenants, agreements and conditions contained herein.

                15.04        Survival.  All of the representations and
warranties set forth in this Agreement shall survive the execution and delivery
of this Agreement.

                15.05        Entire Agreement; No Collateral
Representations.  This Agreement constitutes the final, complete and exclusive
statement of the parties’ agreement with respect to the subject matter
hereof.  This Agreement supersedes any prior or contemporaneous agreements,
memoranda, proposals, commitments, assurances, communications, discussions,
promises, representations, understandings, conduct, courses of dealing, or
warranties of any kind, whether oral or written (collectively and severally, the
“prior agreements”).  Any such prior agreements are of no force or effect.

                 15.06       No Oral Modification or Waiver.  This Agreement may
not be varied, supplemented or contradicted by evidence of prior agreements, or
by evidence of subsequent oral agreements.  Neither this Agreement nor any of
its terms or provisions may be amended, modified, supplemented, augmented,
rescinded, discharged or terminated (other than by performance), except by a
written instrument signed by all of the parties to this Agreement.  No waiver of
any breach or other nonperformance of any term or provision of this Agreement,
and no extension of time for performance of any  act or obligation, or of any
right granted under this Agreement, shall be effective and binding unless such
waiver or extension shall be in a written instrument signed by each party from
which such consent or waiver is required.  No written waiver of any breach shall
be deemed a waiver or relinquishment of any other or further breach.  No
forbearance by a party in seeking a remedy for any noncompliance or breach by
another party shall be deemed to be a waiver by the forbearing party of its
rights and remedies with respect to such noncompliance or breach, unless such
waiver shall be in a written instrument signed by the forbearing party.

                 15.07       Remedies Cumulative.  The remedies of each party
under this Agreement are cumulative and, except as otherwise herein provided,
shall not exclude any other remedies to which such party may be lawfully
entitled.

                 15.08       Severability.  If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to any
extent, be determined to be invalid, illegal or unenforceable under present or
future laws, then (a) the performance of the offending term or provision (but
only to the extent its application is invalid, illegal or unenforceable) shall
be excused as if it had never been incorporated into this Agreement, and, in
lieu of such excused provision, there shall be added a provision as similar in
terms and amount to such excused provision as may be possible and be legal,
valid and enforceable; and (b) the remainder of this Agreement shall not be
affected thereby, and shall continue in full force and effect to the fullest
legal extent.
 
40

--------------------------------------------------------------------------------

                 15.09       No Third Party Beneficiaries.  Nothing contained in
this Agreement shall confer any rights or remedies on any person or entity other
than the parties hereto and their respective successors and assigns, if any; nor
shall anything in this Agreement relieve or discharge the obligation or
liability of any third person to any party to this Agreement; nor shall any
provision of this Agreement give any third person any right of subrogation or
action over or against any party to this Agreement.

                15.10        No Reliance on Prior Representation.  Each of MRMI
and the Manager acknowledges and agrees that there are no oral representations
or promises which has induced such party to change its position to its
detriment, to partially perform, or to part with value in reliance upon such
representation or promise.

                 15.11       Headings.  The headings used in this Agreement are
for convenience of reference only, and shall not be used in construing or
interpreting the scope or intent of this Agreement or any provision
hereof.  References to this Agreement shall include all amendments or renewals
thereof.

                15.12        Applicable Law.  This Agreement and the rights and
remedies of each party arising out of or relating to this Agreement (including,
without limitation, equitable remedies) shall (with the exception of any
applicable federal laws) be solely governed by, interpreted under, and construed
and enforced in accordance with the substantive laws of the State of New York
(without regard to the conflicts of law principles).  This Agreement was made,
and its obligations are to be performed, wholly within the State of New York.

                15.13        Notices.  Unless otherwise specifically provided in
this Agreement, all notices, demands, requests, consents, approvals or other
communications (collectively, “notices”) required or permitted hereunder, shall
be in writing, and shall be given by: (i) personal delivery (which form of
notice shall be deemed to have been given upon delivery), (ii) by private
airborne/overnight delivery service (which forms of notice shall be deemed to
have been given upon confirmed delivery by the delivery agency), or (iii) by
mailing in the United States mail by registered or certified mail, return
receipt requested, postage prepaid (which forms of notice shall be deemed to
have been given upon the third (3rd) day following the date mailed.  Notices
shall be addressed at the addresses first set forth below, or to such other
address as the party shall have specified in a writing delivered to the other
parties in accordance with this paragraph.  Notice to another address shall
nevertheless constitute effective notice if it is established that such notice
was actually received by the party for whom it was intended.
 
41

--------------------------------------------------------------------------------

 
To MRMI:
To the Manager:
   
Monticello Raceway Management, Inc.
Delaware North Companies
204 State Route 17B
Gaming & Entertainment, Inc.
Monticello, NY 12701
40 Fountain Plaza
Attention:  President
Buffalo, NY 14202
 
Attention:  General Counsel

 
                15.14        Assignment and Delegation; Successors and
Assigns.  The following provisions will govern the assignment by MRMI or the
Manager of its rights, or the delegation by MRMI or the Manager of its duties,
provided for in this Agreement.

15.14.1  General Restriction of Assignment.  Except as provided in this Section
15.14, neither party may assign its rights nor delegate the performance of its
obligations under this Agreement.  Any purported assignment or delegation in
violation of the terms of this Section shall be null and void.

15.14.2  Assignment or Delegation by MRMI.  MRMI shall be entitled to (i) assign
its rights and delegate the performance of its duties and obligations under this
Agreement to any subsidiary controlled by MRMI, to any Affiliate of MRMI, or to
any third party which acquires all or substantially all of the assets of the
Racetrack or a fifty percent (50%) or greater interest in the voting stock of
MRMI, and (ii) to assign or pledge its right to receive the remaining Gross
Revenues of the Gaming Business and the Hospitality Business after the
application of such Gross Revenues in the manner contemplated in Section 5.02.3
of this Agreement.

15.14.3  Assignment or Delegation by the Manager.  The Manager acknowledges that
it has been selected to act as manager of the Gaming Business and the
Hospitality Business on account of its personal experience and capability, and,
accordingly, the Manager shall not be entitled to delegate performance of its
duties and obligations hereunder without the prior written consent of MRMI,
which consent may be withheld by MRMI in its sole and unfettered
discretion.  Notwithstanding the foregoing, (i) the Manager may, so long as it
is not then in default, assign and delegate its rights and obligations under
this Agreement to any of its Affiliates provided that the Manager remains liable
for performance of all obligations hereunder notwithstanding such assignment,
and (ii) the Manager shall have the right to assign or pledge its right to
receive Management Fees pursuant to this Agreement.

15.14.4  Effect of Assignment or Delegation.  Each and every representation,
warranty, covenant, condition and provision of this Agreement shall be binding
upon and shall inure to the benefit of such party and his, her or its respective
successors and permitted assigns, heirs, personal and legal representatives,
including without limitation any successor (whether direct or indirect, or by
merger, consolidation, conversion, purchase of assets, purchase of securities or
otherwise).  No assignment or delegation of all or any part of this Agreement
shall relieve the assignor or delegator of primary and direct responsibility and
liability for the performance by such assignor or delegator of its obligations
set forth in this Agreement.  In the event of such an assignment or delegation,
the assignor or delegator will be jointly and severally liable with the assignee
or delegatee for the performance of such obligations.
 
42

--------------------------------------------------------------------------------

                 15.15       Calculating Time Periods.  When calculating the
period of time within which or following which any act is to be done or step
taken pursuant to this Agreement, the date which is the reference day on
calculating such period shall be excluded.  If the last day of such period is
not a business day, the period in question shall end on the next business day.

                 15.16       Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument, binding on all parties
hereto.  Any signature page of this Agreement may be detached from any
counterpart of this Agreement and reattached to any other counterpart of this
Agreement that is identical in all material respects.  Any counterpart that is
signed by all parties may be introduced into evidence in any action or
proceeding without having to produce or account for the other counterparts.  The
existence of this Agreement may also be established by introducing into evidence
a number of separately signed counterparts which collectively contain the
signatures of all parties, and which are otherwise identical in all material
respects.

                15.17        Electronically Transmitted Documents.  If a copy or
counterpart of this Agreement is originally executed and such copy or
counterpart is thereafter transmitted electronically by facsimile or similar
device, such facsimile document shall for all purposes be treated as if manually
signed by the party whose facsimile signature appears.

           IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.

 
MONTICELLO RACEWAY MANAGEMENT, INC.
         
By:
/s/ Bruce Berg  
Name:
Bruce Berg  
Title:
Director          
SPORTSYSTEMS GAMING MANAGEMENT
 
AT MONTICELLO, LLC
         
By:
/s/ Ron Sultemeier  
Name:
Ron Sultemeier   
Title:
VP Strategic Development 

 
43

--------------------------------------------------------------------------------

 
LIST OF EXHIBITS
____________________________

           Exhibit A                                Legal Description and Site
Map of the Racetrack

           Exhibit B                                 Layout of the Gaming Center
at the Racetrack

           Exhibit C                                Layout of the Racing
Facilities at the Racetrack

           Exhibit D                                Layout of the Hospitality
Facilities at the Racetrack

           Exhibit E                                Example of the Calculation
of Earnings Before Income, Taxes, Depreciation and Amortization

44