**Exhibit 10.14**

 

CASINO MANAGEMENT AGREEMENT

 

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

 

RECITALS :

 

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

 

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

 

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

 

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

 

AGREEMENT:

 

The parties hereto agree as follows:

 

1.                                    Engagement of theManager.

 

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

 

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

 

1.3                              Rainbow’sConstruction and Pre-OpeningObligations.  Rainbow shall, at its sole cost and expense,in compliance with the Construction Contracts, Construction Costs, Pre-OpeningCosts, Plans and applicable laws and regulations, construct and open the Casinoin accordance with the Basic Agreement.

 

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

 

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3.                                    Pre-Opening and Opening Activities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.                                    Manager’s Managementof Casino.

 

4.1                              GeneralResponsibilities and Authorization.  Fromand after the Completion Date, the COO shall have overall senior executiveauthority for the day-to-day management and operation of the business of theCasino by delegation from the Partnership hereunder. The COO, as assisted bysuch qualified employees of the Manager as the COO may select, subject to hisdirect and continued supervision (subject to the final sentence of Section 3.1),shall exercise such authority in the specific areas of responsibility set forthbelow and such other areas as are reasonably within the general scope ofdelegated authority of this Agreement:

 

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

 

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

 

(3)                              keeping the financial and other books and recordsof the Casino;

 

(4)                              consulting with the Partnership on matters of fundamentalpolicy in advance of any material action and keeping the Partnership informedwith respect to all matters of material interest to it, including reporting tothe General Partner not less frequently than monthly by means of the Monthlyand Annual Statement provided for in Section 8 and a monthly personal or telephonicconference following the submission of such reports attended by the COO and theChairman or President of the General Partner regarding the Partnership and anyproposed strategic initiatives or changes in operations of the Casino; and

 

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

 

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

 

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

 

Notwithstanding the foregoing or any other termof this Agreement, in no event shall the Manager be authorized or entitled toincur any indebtedness of the Partnership for borrowed money or create anyguaranty or Lien (other than customary Liens incurred in the ordinary course ofbusiness) by or through any person against the Partnership or Rainbow, norshall the Manager be authorized or entitled to enter into any contract onbehalf of the Casino or the Partnership or Rainbow (including withoutlimitation, any employment contact), except as and to the extent expresslypermitted by Section 6.4.

 

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

 

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

 

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person’s death, prolonged incapacitation or dischargeor retirement from the employ of the Manager, the Manager shall have the rightto nominate a successor COO as set forth in the Basic Agreement. The initialand any successor COO shall be the principal officer in charge of all Casinooperations, staffing, casino equipment choice and layout, operating systems(cash processing, security and other or similar functions), regulatorycompliance, marketing matters and other areas customarily under the directexecutive authority of the chief operating officer of a casino business, allupon the terms and conditions of this Agreement and the Basic Agreement.

 

(b)                             Unless otherwise agreed in writing by Rainbow asGeneral Partner, all personnel of the Casino except the COO shall be personnel ofthe Partnership. The Manager, including the COO, shall act as independentcontracting agent for the Partnership. As agent for the Partnership, however,the Manager, subject to the Basic Agreement and this Agreement, shall have discretionto hire, supervise, direct the work of, discharge and determine (but in eachcase within the limits of the Annual Budget for employees of the type involved)the compensation and other benefits of all personnel working in the Casino; *provided:* that senior staff hiringand any staff discharges shall be subject to the General Partner’s priorapproval unless the determination to discharge any person other than theresident general manager or senior resident financial officer of the Casinoshall be made personally by or through the COO, in which case the COO shallhave authority to take such action on behalf of the Partnership without priorapproval of the General Partner. Except as otherwise provided in this Section 4.2(b), the Manager shall determine the fitness and qualification of suchpersonnel without prior approval of the General Partner. The Manager shall notbe liable to such personnel or to the Partnership for any and all claims forwages, compensation or other benefits (including without limitation, severance,pension, superannuation, retirement and termination pay) asserted by or onbehalf of such personnel.

 

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

 

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

 

(d)                             The Manager shall employ and pay, and Rainbow, if such costs are incurred prior to theCompletion Date, or the Partnership, if such costs are incurred after theCompletion Date, shall reimburse the Manager for, such reasonable pro ratawages of the Manager’s own employees who are engaged in the performance ofduties hereunder to the extent (but only to the extent) not duplicative of theresident staff duties and services of employees of the Partnership in thereasonable opinion of the General Partner (with regard to which the Managershall consult in advance in respect of any such use of employees of theManager). The Partnership shall pay monthly to the Manager all reasonabletravel, lodging and meal costs and expenses incurred by the COO and, to theextent their services are permissible charges pursuant to the immediatelypreceding sentence, a reasonable number of others of the Manager’s employees inthe performance of duties hereunder, all to the extent within the Pre-OpeningBudget, or any Annual Budget, in the case of costs incurred after theCompletion Date, or if in excess thereof as approved in advance by the GeneralPartner.

 

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

 

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

 

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

 

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

 

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

 

(i)                                 The Manager shallreceive and collect all cash and accountsgenerated from the operation of the Casino and its facilities, convert allaccounts to cash, and deposit such amounts, along with all funds furnished bythe Partnership as working capital and all other monies received by the Managerfor or on behalf of the Partnership, in the Working Capital Account forretention or disposition pursuant to Section 7.

 

(j)                                 The Manager shall payand disburse on behalf and for the account of the Partnership, alldisbursements of every type not otherwise expressly authorized or limited underthis Agreement that the Manager considers to be necessary or desirable for theoperation of the Casino to the extent provided for within the then currentAnnual Budget or as may be otherwise approved by the General Partner inadvance.

 

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

 

4.3                              Annual Budget.  Rainbow shall provide to the Manager at least60 days’ advance written notice of the expected Completion Date. By no laterthan 45 days prior to the Completion Date and thereafter no less than 45 daysprior to the expiration of each fiscal year, the Manager shall prepare anddeliver to the Partnership a draft detailed annual budget (the “Annual Budget”)for the Casino during the first fiscal year of actual operations and thereafterfor each next succeeding fiscal year.  EachAnnual Budget shall include, without limitation, the Manager’s forecast ofrevenues, expenses and Cash Flow for the Casino for such fiscal year, presentedon a monthly basis, and shall address any proposed expenditures for capitalimprovements, replacements, renovations and major repairs to be paid from areserve fund. The Partnership’s approval of the Annual Budget shall not beunreasonably withheld and shall be deemed given unless a specific writtenobjection thereto is delivered by the Partnership to the Manager within 30 daysafter the receipt thereof. If the Partnership does not approve a proposedAnnual Budget then the approved Annual Budget of the current fiscal year plus5% in respect of each line item shall remain in effect. The Manager may revisethe budget from time to time to reasonably reflect any unpredicted significantchanges, variables or events or include significant additional unanticipateditems of income or expense. Any such revision shall be submitted to thePartnership for approval, which approval shall not be unreasonably withheld,and which approval shall be deemed given

 

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unless a specific written objection theretois delivered to the Manager by the Partnership within 15 days after receiptthereof, and if not approved the Annual Budget shall remain in effectunchanged.

 

4.4                              Employee Meals.  TheManager, in its reasonable discretion, may provide from time to time free or discountedmeals to Casino employees.

 

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

 

5.                                    Representative Capacity.  TheManager is an independent contractor. The Manager shall be responsible to the Partnershiponly for the faithful and diligent performance of its obligations under thisAgreement, and shall not be liable to the Partnership for errors of commissionor omission in the exercise of its business judgment so long as it acts in goodfaith, and engages in no gross negligence, willful misconduct or fraud.  In addition, the Manager shall not be liablefor unforeseen circumstances, failure of the Casino to achieve budgets or any otherunforeseen or unanticipated circumstance or event. Nothing herein shallconstitute or be construed to be or create a partnership or joint venturebetween the Partnership and the Manager, or be construed to create a lease bythe Partnership to the Manager of the Casino. All debts and liabilities tothird persons incurred by the Manager pursuant to and in accordance with theterms of this Agreement (including without limitation, Section 6.4) shallbe the debts and liabilities of the Partnership, to be paid only from theCasino’s Working Capital Account or other funds and the Manager shall not bepersonally liable for any such obligations by reason of its management, supervisionand direction of the operation of the Casino if incurred pursuant to thisAgreement, the Basic Agreement or the Partnership Agreement.

 

6.                                    Operating Expenses and Contracts.

 

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

 

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(except as they shall be borne by Rainbow pursuant to Section 1and as otherwise provided for in this Agreement). To the extent the fundsnecessary therefor are not generated by the operation of the Casino, they shallbe supplied by the Partnership to the Manager. Notwithstanding any other provision of this Agreement, the BasicAgreement or the other Implementing Agreements, without limiting any of theManager’s or United’s other rights hereunder or adding to any of the Manager’sother liabilities or obligations hereunder, explicitly or implicitly, in noevent shall the Manager or United or any of United’s affiliates be responsiblefor any failure in performance of the Casino, in any respect, if sufficientfunds therefor shall not be available.

 

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

 

6.3                              Purchasing.  The Manager is authorized by the Partnershipto purchase replacement F/F/E, textiles, goods, and other items in accordancewith this Agreement through or from affiliates, subsidiaries or divisions ofthe Manager; provided, however, that the price and terms shallnot be less favorable to the Partnership than the Manager could have obtainedin the public marketplace for similar products and/or services of the samequality and quantity from independent third parties. Any purchases of servicesin excess of $50,000 shall be subject to the prior approval of the GeneralPartner.

 

6.4                              Contracts.  Notwithstanding any other provision of thisAgreement, the Manager shall not be and shall not purport to be authorized toenter into any contractual undertaking binding upon the Partnership inaggregate obligation or liability for payment in excess of $50,000 in anytransaction or related series of transactions except by written agreementsigned or countersigned by the Partnership prior to its taking effect. Any contractwhich the Manager may so enter into without signature by the Partnership may beexecuted only by the COO.  The Manager shallhave no authority to enter into contracts under this Agreement prior to theCompletion Date.

 

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7.                                    Working CapitalAccount; Payments and Distributions.

 

7.1                              Initial Deposit.  At least 90 days prior to the expectedCompletion Date, Rainbow shall provide the Manager with sufficient workingcapital for the uninterrupted and efficient completion of preparations for andcommencement of operation of the Casino, consistent with the Pre-Opening Budgetand the first Annual Budget on a timely basis as expenditures thereunder are reasonablyrequired for due payment. As used herein, “working capital” includes funds forthe maintenance of adequate cash balances and house banks, and to financereceivables, payrolls, inventories and such other expenditures as shall bedeemed necessary or appropriate by the Manager and as provided for in thePre-Opening Budget and the first Annual Budget.

 

7.2                              Deposits; Paymentsand Distributions.  All funds to be made availableto the Manager by Rainbow prior to the Completion Date and by the Partnershipafter the Completion Date for the operation of the Casino and all funds derivedfrom the operation of the Casino shall be deposited and invested in federally-insuredaccounts of a type and with financial institutions selected by the GeneralPartner (collectively, the “Working Capital Account”).  The Working Capital Account shall be underthe control of the Manager, subject to the Manager’s obligation of accountingto the Partnership as and when required herein. All monies received from theoperation of the Casino, and any and all expenses paid by the Manager onaccount of the operation of the Casino, shall be deposited into and disbursed fromsuch account. The Manager may pay creditors of the Partnership such amounts asmay be necessary from time to time to pay and discharge debts of thePartnership so as to prevent the attachment, creation or imposition of anylien, claim, security interest or encumbrance on the Casino, the WorkingCapital Account or any other interest created by this Agreement; provided,that if the General Partner shall deliver to the Manager a written notice thatthe Partnership is disputing any such obligation, the Manager shall not makeany such payment until so directed by the General Partner or a court ofcompetent jurisdiction.  Checks or otherinstruments of withdrawal shall be signed only by authorized representatives ofthe Manager, or by the resident general manager of the Casino or by authorized representativesof the Partnership. The COO shall establish such other dual signaturerequirements as he deems appropriate from time to time. Notwithstanding anyother term of this Agreement (a) any check (or checks in substantially thesame payment occasion or use) in an amount in excess of $50,000 shall be mandatorilyco-signed by the Chairman or President of the General Partner and (b) anycheck representing payment (i) to HFS, or its subsidiary pursuant to itsloan and investment in respect of the Casino or (ii) of any fee of the Managerunder this Agreement, and any reimbursement of expenses of the Manager inexcess of

 

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

 

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

 

7.3                              Exclusive Use.  The Working Capital Account shall be usedexclusively in connection with the operation of the Casino and the performanceof the terms and conditions of this Agreement, and the Manager shall at alltimes segregate all monies, receipts, accounts and records pertaining to theoperation of the Casino and shall not commingle such items with any otherbusiness or activities of the Manager. The Working Capital Account shall bemaintained by an institutional depository selected by the General Partner,which shall at all times have signatory powers thereto in addition to a dulyauthorized representative of the Manager (who shall be the only authorizedsignatories of the Manager), the resident general manager of the Casino andcertain designated employees of the Partnership.

 

8.                                    Books, Records andStatements.

 

8.1                              System of Accounts.  The Manager shall keep books of account andother records reflecting the results of operation of the Casino on an accrualbasis, all in accordance with generally accepted accounting principlesconsistently applied (“GAAP”), and as applied within the gaming casinoindustry. The books of account and all other records relating to or reflectingthe operation of the Casino shall be maintained on the premises of the Casinoat all times and shall be available to the

 

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Partnership and its representatives at all times, forexamination, audit, inspection and transcription (at the Partnership’sexpense). Upon termination of this Agreement for any reason, the Partnershipshall be permitted to utilize the computer hardware and software located at theCasino for such a period oftime as is reasonable necessary to transfer all data records relating to theoperation of the Casino, subject to the requirements of any software licenseunder which the Manager utilizes any such software.  In such event, the Manager may furnish hardcopy printouts of such accounting records or generally used storage mediacontaining such records together with instruction on access thereto. TheManager may retain a copy of any accounting records for the Casino aftertermination of this Agreement.

 

8.2                              Monthly and AnnualStatement.  The Manager shall prepare anddeliver to the Partnership, within 20 days after the end of each calendarmonth, financial statements (the “Monthly Statement”) including (a) a profitand loss statement showing the results of operations of the Casino for suchpreceding calendar month and for the portion of the fiscal year ended on thelast day of such preceding calendar month, (b) a balance sheet, (c) astatement of Cash Flow and EBITDAR, (d) an itemized statement of sourcesand uses of capital during such month (including without limitation payment ofand provision for taxes and franchise fees), (e) a narrative discussionand analysis of the Casino’s monthly and year to date attendance, win,marketing, competitive experience, regulatory interactions and performanceagainst projections in the Annual Budget, (f) a summary of pending orthreatened litigation, (g) a summary of employee relations, and (h) suchother matters as the Partnership may reasonably request within the scope ofthis Agreement. The Monthly Statement shall also set forth computation of allpayments due in respect of such month to (i) the Manager pursuant to thisAgreement and the Basic Agreement, (ii) to HFS in respect of its financingof the Casino and (iii) to the Partnership and its partners respectivelyas a distribution after establishment of the operating reserve provided for in Section 7.2.Within 90 days after the end of each fiscal year, the Manager shall furnish thePartnership with a financial statement for the preceding fiscal year containinga statement for such year for each of the preceding categories of informationon an annualized basis and comparing it to the comparable data for thepreceding fiscal year (the “Annual Statement”). All such annual financialstatements shall be accompanied by a report thereon of an independentaccounting firm of national standing selected by the General Partner, the feesof which shall be included in the operating expenses of the Casino and paid bythe General Partner (not the Manager) from the Working Capital Account onbehalf of the Partnership. Any disputes as to the contents of any MonthlyStatement or Annual Statement shall be referred for determination to an independentaccounting firm having no direct or indirect business with either

 

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

 

9.                                    Manager’s Fees andPayments to the Partnership.

 

9.1                              Pre-Opening ServicesFee.  In consideration of the Manager’s or itsaffiliates’ agreement to perform the above-described services prior to theCompletion Date, Rainbow shall reimburse to the Manager from time to timeagainst its itemized invoicing the Manager’s reasonable and actualout-of-pocket costs and expenses incurred in connection with its authorizedpre-opening services under this Agreement, including pro rata salaries andexpenses for the Manager’s officers and employees and consultants utilized inperforming such services.

 

9.2                              Base and IncentiveFees. From and after the Completion Date, thePartnership shall pay to the Manager for its services provided under thisAgreement the compensation set forth in Section 2**of the BasicAgreement.

 

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

 

10.                              Repairs AndMaintenance; Capital Improvements.

 

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

 

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

 

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

 

11.                              Insurance.

 

11.1                        Coverages.  During the term of thisAgreement, the Manager shall use commercially reasonable efforts to provide andmaintain, at Rainbow’s sole cost and expense, prior to the Completion Date, andthe Partnership’s sole cost and expense, after the Completion Date, insuranceof such kinds and amounts as is prudent for the business of casinooperations.  The Manager shall use itsreasonable efforts to obtain such insurance at competitive rates consistentwith local standards and coverages.

 

11.2                        Insurers.  All insurance shall be in suchform and amounts and with such companies as shall be reasonably satisfactory tothe Partnership and the Manager and by all interested parties thereunder andshall be purchased at the expense of Rainbow, for coverage prior to theCompletion Date, and the Partnership, for coverage after the Completion Date.All policies insuring against damage to the Casino or portions thereof orinterruptions of business or the like shall name the Partnership, the Managerand such other parties as may be required by the provisions of any mortgage,lease or other agreement affecting the Casino as the insureds thereunder, as theirrespective interests may appear. All policies of hazard insurance shall includeloss payment clauses in the form required by any mortgage, lease or otheragreement affecting the Casino and the Partnership shall advise the Manager ofthe respective requirements of each such agreement prior to opening of the Casino.All policies of liability insurance shall name the Partnership, the Manager andsuch other parties required above as the insureds thereunder, and shall containriders and endorsements adequately protecting the interests of the Manager. Certificatesof all policies of insurance shall be delivered to the Partnership and to allsuch other parties as the Partnership shall reasonably direct. Deductible itemsshall be paid from the Working Capital Account, if sufficient, and directly bythe Partnership otherwise.

 

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

 

11.4                        Construction Period.  As provided in the Basic Agreement, Rainbowshall be solely responsible for obtaining and maintaining appropriate insurancecoverage during any period prior to the Completion Date, and suchresponsibility shall thereafter be that of the Partnership.

 

12.                              Damage. Destructionand Condemnation.

 

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

 

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

 

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

 

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

 

13.                              Events of Termination.

 

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

 

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

 

(2)                              the Partnership or the Manager shall fail to remedyfully any other material breach of its obligations under this Agreement within60 days (or such longer time as the other party may in writing allow) afterreceipt of written notice from the other party specifying one or more breachesof this Agreement;

 

(3)                              the Partnership shall lose possession or the rightto possession of all or a significant part of the Casino except pursuant to aproper disposition under Section 12.2 or a sale pursuant to the BasicAgreement;

 

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

 

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

 

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

 

13.2                        Bankruptcy.  ThisAgreement shall terminate without notice (solely at the option of thenon-bankrupt party) if any involuntary proceeding in bankruptcy is filedagainst either party which is not dismissed within 90 days of filing, any voluntaryproceeding in bankruptcy is filed by either party, either party is dissolved orliquidated, a receiver is appointed for either party or the Casino, or eitherparty makes any assignment for the benefit of creditors.

 

13.3                        Effect of Termination Event.  (a) Upon any Event of Termination oroccurrence described in Section 13.2, this Agreement shall terminate (atthe option of the non-bankrupt or non-insolvent party or party which has notcommitted the Event of Termination, as applicable), and except as toliabilities or claims which shall have accrued or arisen prior to or on accountof such termination, all obligations hereunder shall cease upon an Event ofTermination, except liabilities resulting from such Event of Termination.  In any judicial proceeding in which the validityof termination is at issue, neither party will be limited to the reasons setforth in any notice given under this Section.

 

**(b)  Inno event shall a termination of this Agreement affect the rights and benefitsof the Limited Partner as a limited partner of the Partnership or United’arights under the Basic Agreement.  In noevent shall the Manager or any of its affiliates be liable for damages as aresult of any Event of Termination except in the case of its willfulmisconduct.**

 

13.4                        Post-Termination Procedures.  Upon valid termination of this Agreement byeither party, the Manager shall turn over to the Partnership all books andrecords of the Casino. The Partnership, Rainbow and the Manager shall fully andreasonably cooperate with each other in connection with all matters relating tothe Casino which occurred prior to such termination. The Manager shall (i) surrenderto the Partnership any and all licenses, permits and/or other authorizations orproperty required for the operation of the Casino and terminate any of the foregoingregistered in the name of the Manager in accordance with the directions of thePartnership and with applicable governmental laws, regulations, orders or otherprovisions, (ii) deliver to the Partnership any and all equipment, supplies,keys, lock and safe combinations, reservation lists, ledgers, bank statementson the Working Capital Account, budgets, accounting

 

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books and records, Casino-only insurance policies,bonds and other documents, correspondence, records and other propertiesrequired for the operation of the Casino and/or required to be developed,maintained or kept by the Manager pursuant to the terms and provisions of thisAgreement; provided, that all such books, records and otherdocumentation shall thereafter be made available to the Manager upon itsrequest, at all reasonable times for inspection, audit, examination andtranscription of particulars relating to the period in which the Managermanaged the Casino, and (iii) following payment to the Manager of allamounts due to the Manager hereunder, deliver to the Partnership all cash onhand at the Casino and at the option of the Partnership either deliver to thePartnership checks for the balance in the Working Capital Account or join inthe execution of appropriate instruments which eliminate all of the Manager’spersonnel as signatories on such accounts.

 

13.5                        Rights Cumulative.  The rights granted under this Section shallnot be in substitution for, but shall be, except as otherwise provided in thisAgreement, in addition to any and all rights and remedies granted by applicablelaw.

 

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

 

If to the Partnership:

 
| Rainbow  Casino Partnership, L.P.                               |
|-----------------------------------------------------------------|
| c/o  Barrett Refining Corporation                               |
| P.O. Box 820058                                            |
| Old  Highway 61 South                                           |
| Vicksburg,  Mississippi 39182-0058                              |
| Telephone:  (601)   638-4973                     |
| Telecopy:   (601)  638-1405                 |
| Attention:   Mr. John  A. Barrett, Jr. |
|                                                            |
| And                                                             |
|                                                            |
| The  Rainbow Casino Corporation                                 |
| 55  East 59th Street                                            |
| Suite 1300                                                 |
| New  York, New York 10022                                       |
| Attention:    Mr. Leigh Seippel, President       |
| Telephone:   (212)  838-3401                |
| Telecopy:     (212)  371-8098     |

 

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witha copy to:

 
| Daniel  H. Hise, Esq.                                  |
|-------------------------------------------------------------|
| Butler,  Snow, O’Mara, Stevens & Cannada      |
| Deposit  Guaranty Plaza                                     |
| Jackson, Mississippi 39925                                  |
| Telephone:    (601)  948-5711 |
| Telecopier:   (601)  949-4555      |

 

Ifto the Manager:

 
| Mississippi  Ventures, Inc.                                 |
|------------------------------------------------------------------|
| c/o  United Gaming, Inc.                                    |
| 4380  Boulder Highway                                            |
| Las  Vegas, Nevada 89121                                         |
| Attention:  General Counsel                                      |
| Telephone:   (702)  435-4200            |
| Telecopy:     (702)  454-0478 |

 

witha copy to:

 
| Paul  K. Johnson, Esq.                            |
|--------------------------------------------------------|
| Phelps  Dunbar                                         |
| Suite 500                                         |
| 200  South Lamar Street                                |
| Jackson, Mississippi 39225                             |
| Telephone:   (601)  360-97715 |
| Telecopier:   (601)  360-9777 |

 

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

 

15.                              Indemnifications.

 

15.1                        Standard of Performance.  The Manager shall not, in the performance ofthis Agreement, be liable to the Partnership or to any other person or entityas a result of any act or omission, negligent, tortious or otherwise, of anyagent or employee of the Partnership or any such act or omission of theManager, its agents or employees, unless such act or omission of the Managerconstitutes gross negligence, willful misconduct or fraud and the damagesresulting therefrom are not covered by insurance. The Manager agrees toindemnify and hold the Partnership harmless from all liability, loss, damages,costs, claims or other expenses, including without limitation, reasonableattorney’s fees and disbursements, arising out of the Manager’s grossnegligence, willful misconduct or fraud in the performance of its duties underthis Agreement. The foregoing

 

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

 

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

 

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

 

16.                              Miscellaneous.

 

16.1                        Additional Documentation.  The Partnership, Rainbow and the Manager shallexecute and deliver all other appropriate supplemental agreements and otherinstruments, and take any other action necessary to make this Agreement fullyand legally effective, binding and enforceable as between them and as againstthird parties.

 

16.2                        Headings.  Theheadings of the titles to the several sections of this Agreement are insertedfor convenience only and are not intended to affect the meaning of any of the provisionshereof.

 

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

 

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

 

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

 

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

 

16.7                        Governing Law.  ThisAgreement shall be governed by, interpreted under and construed and enforced inaccordance with, the internal laws of the State of Mississippi, without regardto principles of conflict of laws.

 

16.8                        Invalidity.  In theevent that any one or more of the phrases, sentences, clauses or paragraphscontained in this Agreement shall be declared invalid by the final andunappealable order, decree or judgment of any court, this Agreement shall be construedas if such phrases, sentences, clauses or paragraphs had not been includedherein; provided. that the economic basis of this Agreement is notthereby altered.

 

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

 

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

 
|   | RAINBOW CASINO PARTNERSHIP L.P. |
|--------|---------------------------------|
|   |                            |
|   |                            |
|   | By:                             | Rainbow/Casino Corporation,  its general partner |
|   |                            |
|   |                            |
|   |                            | By: |    /s/ Leigh  Seippel |   |
|   |                            | Leigh  Seippel |
|   |                            | President |
|   |                            |
|   |                            |
|   | THE  RAINBOW CASINO CORPORATION |
|   |                            |
|   |                            |
|   | By:                             |    /s/ Leigh Seippel |   |
|   |                            | Leigh  Seippel |
|   |                            | President |
|   |                            |
|   |                            |
|   | MISSISSIPPI VENTURES, INC.      |
|   |                            |
|   |                            |
|   | By:                             |    /s/ Shannon  L. Bybee |   |
|   |                            | Shannon  L. Bybee |
|   |                            | President |
|        |                                 |  |  |  |  |  |  |  |  |  |

 

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