ex101to10q05558_06302009.htm


    Exhibit 10.1

     

    
      


      


      


      MANAGEMENT
SERVICES AGREEMENT

      


      


      by
and between

      


      


      MONTICELLO
RACEWAY MANAGEMENT, INC.

      


      and

      


      SPORTSYSTEMS
GAMING MANAGEMENT AT MONTICELLO, LLC

      


      


      


      


      


      dated
as of June 10, 2009

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      TABLE
OF CONTENTS

      


      
        


        
          
            	
                    ARTICLE
      I : DEFINITIONS

                  	
                    4

                  
	
                    1.01

                  	
                    Definitions

                  	
                    4

                  
	
                    1.02

                  	
                    References
      and Interpretations

                  	
                    12

                  
	
                    ARTICLE
      II : EXCLUSIVE MANAGEMENT SERVICE RIGHTS

                  	
                    12

                  
	
                    2.01

                  	
                    Exclusivity

                  	
                    12

                  
	
                    2.02

                  	
                    Reserved
      Rights and Responsibilities of MRMI

                  	
                    13

                  
	
                    ARTICLE
      III : RESPONSIBILITIES OF THE MANAGER AFTER THE COMMENCEMENT
      DATE

                  	
                    13

                  
	
                    3.01

                  	
                    Duties
      of the Manager

                  	
                    13

                  
	
                    3.02

                  	
                    Specific
      Responsibilities of the Manager

                  	
                    13

                  
	
                    3.03

                  	
                    No
      Liability for Certain Violations

                  	
                    15

                  
	
                    3.04

                  	
                    Operating
      Budgets

                  	
                    16

                  
	
                    3.05

                  	
                    Defective
      Conditions

                  	
                    18

                  
	
                    ARTICLE
      IV : RETAINED RIGHTS, AUTHORITY AND RESPONSIBILITIES OF
    MRMI

                  	
                    18

                  
	
                    4.01

                  	
                    Retained
      Rights of MRMI

                  	
                    18

                  
	
                    4.02

                  	
                    Authority
      and Responsibilities of MRMI

                  	
                    18

                  
	
                    ARTICLE
      V : ACCOUNTING AND CASH MANAGEMENT

                  	
                    21

                  
	
                    5.01

                  	
                    Bank
      Accounts

                  	
                    21

                  
	
                    5.02

                  	
                    Collection
      and Disbursement of Funds

                  	
                    21

                  
	
                    5.03

                  	
                    Financial
      Statements

                  	
                    22

                  
	
                    5.04

                  	
                    Books
      of Account

                  	
                    22

                  
	
                    ARTICLE
      VI : MANAGEMENT FEES AND REIMBURSEMENT OF EXPENSES

                  	
                    23

                  
	
                    6.01

                  	
                    Management
      Fees

                  	
                    23

                  
	
                    6.02

                  	
                    Payment
      of Base Management Fee

                  	
                    24

                  
	
                    6.03

                  	
                    Annual
      Payment of the Incentive Fee, and Reconciliation of the Base Management
      Fee

                  	
                    24

                  
	
                    6.04

                  	
                    Reimbursement
      of Expenses

                  	
                    25

                  
	
                    6.05

                  	
                    Renegotiation
      of the Management Fee

                  	
                    25

                  
	
                    ARTICLE
      VII : INSURANCE

                  	
                    25

                  
	
                    7.01

                  	
                    Insurance
      Coverage

                  	
                    25

                  
	
                    7.02

                  	
                    Responsibility
      to Maintain Insurance

                  	
                    26

                  
	
                    7.03

                  	
                    General
      Requirements

                  	
                    26

                  
	
                    7.04

                  	
                    Policies
      and Endorsements

                  	
                    26

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

                  	
                    28

                  
	
                    8.01

                  	
                    Business
      Name

                  	
                    28

                  
	
                    8.02

                  	
                    Trade
      Names, Trademarks and Service Marks

                  	
                    28

                  
	
                    8.03

                  	
                    Confidential
      Information

                  	
                    28

                  
	
                    8.04

                  	
                    Restriction
      on Employee Solicitation

                  	
                    29

                  
	
                    ARTICLE
      IX : REPRESENTATIVES OF THE PARTIES

                  	
                    29

                  
	
                    9.01

                  	
                    Designation
      of Representatives

                  	
                    29

                  


             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

             

            
              
                
                

              

              
                1

                
                  

                

              

              
                
                

              

            

             

            	
                    ARTICLE
      X : TERM OF AGREEMENT

                  	
                    29

                  
	
                    10.01

                  	
                    Term
      of the Agreement

                  	
                    29

                  
	
                    10.02

                  	
                    Termination
      by MRMI Without Cause

                  	
                    29

                  
	
                    10.03

                  	
                    Termination
      by MRMI for Cause

                  	
                    30

                  
	
                    10.04

                  	
                    Termination
      by the Manager for Cause

                  	
                    31

                  
	
                    10.05

                  	
                    Effect
      of Termination of this Agreement, and Consequences of a
      Default

                  	
                    31

                  
	
                    10.06

                  	
                    Extraordinary
      Events

                  	
                    32

                  
	
                    ARTICLE
      XI : SALE OF THE GAMING BUSINESS

                  	
                    32

                  
	
                    11.01

                  	
                    Sale
      of the Gaming Business

                  	
                    32

                  
	
                    11.02

                  	
                    Consequences
      in the Event of a Sale

                  	
                    33

                  
	
                    ARTICLE
      XII : ARBITRATION AND ENFORCEMENT

                  	
                    33

                  
	
                    12.01

                  	
                    Arbitration

                  	
                    33

                  
	
                    12.02

                  	
                    Judicial
      Enforcement of Arbitration

                  	
                    33

                  
	
                    12.03

                  	
                    Tria1
      by Jury; Venue

                  	
                    33

                  
	
                    12.04

                  	
                    Recovery
      of Fees and Costs

                  	
                    34

                  
	
                    12.05

                  	
                    Period
      of Limitations

                  	
                    34

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

                  	
                    34

                  
	
                    13.01

                  	
                    Representations
      and Warranties of MRMI

                  	
                    34

                  
	
                    13.02

                  	
                    Representations
      and Warranties of the Manager

                  	
                    36

                  
	
                    13.03

                  	
                    Additional
      Affirmative Covenants of the Parties

                  	
                    37

                  
	
                    ARTICLE
      XIV : INDEMNIFICATION

                  	
                    38

                  
	
                    14.01

                  	
                    Indemnification
      of the Manager

                  	
                    38

                  
	
                    14.02

                  	
                    Indemnification
      of MRMI

                  	
                    39

                  
	
                    14.03

                  	
                    Indemnified
      Parties

                  	
                    39

                  
	
                    14.04

                  	
                    Survival

                  	
                    39

                  
	
                    ARTICLE
      XV : MISCELLANEOUS PROVISIONS

                  	
                    39

                  
	
                    15.01

                  	
                    Manager
      as Independent Contractor and Agent for MRMI

                  	
                    39

                  
	
                    15.02

                  	
                    Preparation
      of Agreement

                  	
                    39

                  
	
                    15.03

                  	
                    Costs
      and Expenses

                  	
                    40

                  
	
                    15.04

                  	
                    Survival

                  	
                    40

                  
	
                    15.05

                  	
                    Entire
      Agreement, No Collateral Representations

                  	
                    40

                  
	
                    15.06

                  	
                    No
      Oral Modification or Waiver

                  	
                    40

                  
	
                    15.07

                  	
                    Remedies
      Cumulative

                  	
                    40

                  
	
                    15.08

                  	
                    Severability

                  	
                    40

                  
	
                    15.09

                  	
                    No
      Third Party Beneficiaries

                  	
                    41

                  
	
                    15.10

                  	
                    No
      Reliance on Prior Representations

                  	
                    41

                  
	
                    15.11

                  	
                    Headings

                  	
                    41

                  
	
                    15.12

                  	
                    Applicable
      Law

                  	
                    41

                  
	
                    15.13

                  	
                    Notices

                  	
                    41

                  
	
                    15.14

                  	
                    Assignment
      and Delegation; Successors and Assigns

                  	
                    42

                  
	
                    15.15

                  	
                    Calculating
      Time Periods

                  	
                    43

                  
	
                    15.16

                  	
                    Counterparts

                  	
                    43

                  
	
                    15.17

                  	
                    Electronically
      Transmitted Documents

                  	
                    43

                  


          

        

        


        


        


      

      


      


       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      
 

      MANAGEMENT
SERVICES AGREEMENT

      


      


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

      


      RECITALS


      
        


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

        


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

        


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

        


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

        


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

        


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

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

        


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

      

       

      ARTICLE
I

      DEFINITIONS

      


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

      


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

      


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

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      


      
        	
                 
      

              	
                (e)

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

              


      

      


      
        	
                 
      

              	
                (f)

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

              


      

      


      
        	
                 
      

              	
                (g)

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

              


      

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (h)

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

              


      

      


      
        	
                 
      

              	
                (i)

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

              


      

      


      
        	
                 
      

              	
                (j)

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

              


      

      
        	
                 
      

              	 


      

      
        	
                 
      

              	
                (k)

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

              


      

      


      
        	
                 
      

              	
                (l)

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

              


      

      


      
        	
                 
      

              	
                (m)

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

              


      

      


      
        	
                 
      

              	
                (n)

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

              


      

      


      
        	
                 
      

              	
                (o)

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

              


      

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

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

      


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

      


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

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

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

      


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

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      


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

      


      
        	
                 
      

              	
                (i)

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

              


      

      


      
        	
                 
      

              	
                (ii)

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

              


      

      


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

      


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

      


      ARTICLE
II

      EXCLUSIVE
MANAGEMENT SERVICE RIGHTS

      


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

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

      


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

      


      ARTICLE
III

      RESPONSIBILITIES
OF THE MANAGER

      AFTER
THE COMMENCEMENT DATE

      


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

      


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

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      
        	
                 
      

              	 


      

      
        	
                 
      

              	
                (e)

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

              


      

      


      
        	
                 
      

              	
                (f)

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

              


      

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                (g)

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

              


      

      


      
        	
                 
      

              	
                (h)

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

              


      

      


      
        	
                 
      

              	
                (i)

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

              


      

      


      
        	
                 
      

              	
                (j)

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

              


      

      


      
        	
                 
      

              	
                (k)

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

              


      

      


      
        	
                 
      

              	
                (l)

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

              


      

      


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

      


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

       

      
        
          
          

        

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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                (a)

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

              


      

      
        	
                 
      

              	 


      

      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      
        	
                 
      

              	 


      

      
        	
                 
      

              	
                (d)

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

              


      

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (e)

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

              


      

      


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

      


      ARTICLE
IV

      RETAINED
RIGHTS, AUTHORITY AND

      RESPONSIBILITIES
OF MRMI

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      


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

      


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

      


      ARTICLE
V

      ACCOUNTING
AND CASH MANAGEMENT

      


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

      


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

      


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

      


      


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

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      


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

      


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

       

      
        
          
          

        

        
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      ARTICLE
VI

      MANAGEMENT
FEES AND

      REIMBURSEMENT
OF EXPENSES

      


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

      


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

      


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

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


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

      


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

      


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

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      


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

      


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

      


      ARTICLE
VII

      INSURANCE

      


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

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      


      
        	
                 
      

              	
                (e)

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

              


      

      


      
        	
                 
      

              	
                (f)

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

              


      

      


      
        	
                 
      

              	
                (g)

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

              


      

      


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

      


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

      


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

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

      


      ARTICLE
VIII

      TRADE
NAMES, CONFIDENTIAL INFORMATION,

      AND
NON-SOLICITATION

      


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

      


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

      


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

       

      
        
          
          

        

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

      


      ARTICLE
IX

      REPRESENTATIVES
OF THE PARTIES

      


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

      


      ARTICLE
X

      TERM
OF AGREEMENT

      


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

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


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

       

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      
        	
                 
      

              	 


      

      
        	
                 
      

              	
                (d)

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

              


      

      


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

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


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

      


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

       

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

      


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

      


      ARTICLE
XI

      SALE
OF THE GAMING BUSINESSES

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      


      
        	
                 
      

              	
                (e)

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

              


      

       

      
        
          
          

        

        
          32

          
            

          

        

        
          
          

        

      

       

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

      


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

      


      ARTICLE
XII

      ARBITRATION
AND ENFORCEMENT

      


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

      


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

      


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

       

      
        
          
          

        

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

      


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

      


      ARTICLE
XIII

      WARRANTIES,
REPRESENTATIONS,

      AND
ADDITIONAL COVENANTS OF THE PARTIES

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

       

      
        
          
          

        

        
          34

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      


      
        	
                 
      

              	
                (e)

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

              


      

      


      
        	
                 
      

              	
                (f)

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

              


      

      


      
        	
                 
      

              	
                (g)

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

              


      

      


      
        	
                 
      

              	
                (h)

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

              


      

      


      
        	
                 
      

              	
                (i)

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

              


      

      


      
        	
                 
      

              	
                (j)

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

              


      

       

      
        
          
          

        

        
          35

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (k)

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

              


      

      


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

      


      
        	
                 
      

              	
                (a)

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

              


      

      


      
        	
                 
      

              	
                (b)

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

              


      

      


      
        	
                 
      

              	
                (c)

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

              


      

      


      
        	
                 
      

              	
                (d)

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

              


      

      


      
        	
                 
      

              	
                (e)

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

              


      

      


      
        	
                 
      

              	
                (f)

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

              


      

       

      
        
          
          

        

        
          36

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                 (g)

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

              


      

      


      
        	
                 
      

              	
                (h)

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

              


      

      


      
        	
                 
      

              	
                (i)

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

              


      

      


      
        	
                 
      

              	
                (j)

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

              


      

      


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

      


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

      


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

       

      
        
          
          

        

        
          37

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


      ARTICLE
XIV

      INDEMNIFICATION

      


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

       

      
        
          
          

        

        
          38

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


      ARTICLE
XV

      MISCELLANEOUS
PROVISIONS

      


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

      


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

       

      
        
          
          

        

        
          39

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          41

          
            

          

        

        
          
          

        

      

       

      
        
          
            
              	
                      To
      MRMI:

                    	
                      To the
      Manager:

                    
	 
      	 
      
	
                      Monticello
      Raceway Management, Inc.

                    	
                      Delaware
      North Companies

                    
	
                      204
      State Route 17B

                    	
                      Gaming
      & Entertainment, Inc.

                    
	
                      Monticello,
      NY 12701

                    	
                      40
      Fountain Plaza

                    
	
                      Attention:  President

                    	
                      Buffalo,
      NY 14202

                    
	 
      	
                      Attention:  General
      Counsel

                    


            

             

          

        

      

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

      


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

      


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

      


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

      


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

       

      
        
          
          

        

        
          42

          
            

          

        

        
          
          

        

      

      


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

      


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

      


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

      


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

      
        


        
          
            
              
                
                  	 
      	
                          MONTICELLO RACEWAY MANAGEMENT,
      INC.

                        
	 
      	 
      
	 
      	 
      
	 
      	
                          By:

                        	/s/
      Bruce Berg
	 
      	
                          Name:

                        	Bruce
      Berg
	 
      	
                          Title:

                        	Director
	 
      	 
      
	 
      	 
      
	 
      	
                          SPORTSYSTEMS
      GAMING MANAGEMENT

                        
	 
      	
                          AT
      MONTICELLO, LLC

                        
	 
      	 
      
	 
      	 
      
	 
      	
                          By:

                        	/s/
      Ron Sultemeier
	 
      	
                          Name:

                        	Ron
      Sultemeier  
	 
      	
                          Title:

                        	VP
      Strategic Development 



                

              

            

          

        

      

       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          

        

      

       

      LIST
OF EXHIBITS

      ____________________________

      


      


                 Exhibit
A                                Legal
Description and Site Map of the Racetrack

      


                 Exhibit
B                                 Layout
of the Gaming Center at the Racetrack

      


                 Exhibit
C                                Layout
of the Racing Facilities at the Racetrack

      


                 Exhibit
D                                Layout
of the Hospitality Facilities at the Racetrack

      


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


      


      
        
          
          

        

        
          44