Exhibit 10.14


 


CASINO MANAGEMENT AGREEMENT


 


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


 


RECITALS :


 


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


 


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


 


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


 





















 


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


 


AGREEMENT:


 


The parties hereto agree as follows:


 


1.                                    Engagement of the
Manager.


 


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


 


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


 


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


 


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


 


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3.                                    Pre-Opening and Opening Activities.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4.                                    Manager’s Management
of Casino.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6.                                    Operating Expenses and Contracts.


 


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


 


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


 


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


 


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


 


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


 


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7.                                    Working Capital
Account; Payments and Distributions.


 


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


 


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


 


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


 


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


 


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


 


8.                                    Books, Records and
Statements.


 


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


 


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


 


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


 


13





















 


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


 


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


 


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


 


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


 


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


 


10.                              Repairs And
Maintenance; Capital Improvements.


 


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


 


14





















 


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


 


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


 


11.                              Insurance.


 


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


 


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


 


15





















 


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


 


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


 


12.                              Damage. Destruction
and Condemnation.


 


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


 


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


 


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


 


16





















 


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


 


13.                              Events of Termination.


 


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


 


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


 


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


 


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


 


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


 


17





















 


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


 


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


 


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


 


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


 


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


 


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


 


18





















 


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


 


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


 


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


 


If to the Partnership:


 


	
  Rainbow
  Casino Partnership, L.P.

  
	
  c/o
  Barrett Refining Corporation

  
	
  P.O. Box 820058

  
	
  Old
  Highway 61 South

  
	
  Vicksburg,
  Mississippi 39182-0058

  
	
  Telephone:  (601)
   638-4973

  
	
  Telecopy:   (601)  638-1405

  
	
  Attention:   Mr. John
  A. Barrett, Jr.

  
	
   

  
	
  And

  
	
   

  
	
  The
  Rainbow Casino Corporation

  
	
  55
  East 59th Street

  
	
  Suite 1300

  
	
  New
  York, New York 10022

  
	
  Attention:
    Mr. Leigh Seippel, President

  
	
  Telephone:   (212)  838-3401

  
	
  Telecopy:     (212)  371-8098

  



 


19





















 


with
a copy to:


 


	
  Daniel
  H. Hise, Esq.

  
	
  Butler,
  Snow, O’Mara, Stevens & Cannada

  
	
  Deposit
  Guaranty Plaza

  
	
  Jackson, Mississippi 39925

  
	
  Telephone:    (601)  948-5711

  
	
  Telecopier:   (601)  949-4555

  



 


If
to the Manager:


 


	
  Mississippi
  Ventures, Inc.

  
	
  c/o
  United Gaming, Inc.

  
	
  4380
  Boulder Highway

  
	
  Las
  Vegas, Nevada 89121

  
	
  Attention:
  General Counsel

  
	
  Telephone:   (702)  435-4200

  
	
  Telecopy:     (702)  454-0478

  



 


with
a copy to:


 


	
  Paul
  K. Johnson, Esq.

  
	
  Phelps
  Dunbar

  
	
  Suite 500

  
	
  200
  South Lamar Street

  
	
  Jackson, Mississippi 39225

  
	
  Telephone:   (601)  360-97715

  
	
  Telecopier:   (601)  360-9777

  



 


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


 


15.                              Indemnifications.


 


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


 


20





















 


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


 


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


 


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


 


16.                              Miscellaneous.


 


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


 


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


 


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


 


21





















 


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


 


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


 


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


 


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


 


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


 


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


 


22





















 


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


 


	
   

  	
  RAINBOW CASINO PARTNERSHIP L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Rainbow/Casino Corporation,

  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/ Leigh
  Seippel

  	
   

  
	
   

  	
   

  	
  Leigh
  Seippel

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  RAINBOW CASINO CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Leigh Seippel

  	
   

  
	
   

  	
   

  	
  Leigh
  Seippel

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MISSISSIPPI VENTURES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Shannon
  L. Bybee

  	
   

  
	
   

  	
   

  	
  Shannon
  L. Bybee

  
	
   

  	
   

  	
  President

  
											



 


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