Exhibit 10.1


 


AGREEMENT BETWEEN THE DOWNS RACING, INC.  AND PENNSYLVANIA HARNESS HORSEMEN’S ASSOCIATION, INC.


 


THIS AGREEMENT
is made and entered into on the 15 day of March,
2004, by and between The Downs Racing, Inc. situate at
RT 315, Wilkes-Barre, Pa. (hereinafter called “The Downs”) and The
Pennsylvania Harness Horsemen’s Association, Inc., a Pennsylvania Corporation
(hereinafter called “PHHA”) and,


 


WITNESSETH
THAT: WHEREAS, The Downs is licensed to conduct and is engaged in the business
of conducting harness racing meetings, simulcasting and account wagering of
races to and from other locations, at, to and from The Downs, and


 


WHEREAS,
PHHA’s membership consists of owners, trainers, and drivers of harness horses
participating in harness race meetings at The Downs and elsewhere in the United
States and Canada, and PHHA has been organized and exists for the purpose of
promoting the sport of harness racing; improving the lot of owners, trainers,
drivers, breeders and grooms of harness racing horses participating in race
meetings; establishing health, welfare and insurance programs for drivers,
trainers and grooms of harness racing horses; negotiating with harness racing
tracks on behalf of owners, trainers, drivers and grooms of harness racing
horses; and generally rendering assistance to them whenever and wherever
possible; and


 


WHEREAS, the
parties hereto believe that the amount of pari-mutuel wagering at The Downs is
the best basis upon which to fix the financial arrangements between the
parties, and


 


WHEREAS, the
parties have agreed that all existing agreements shall remain in full force and
effect until the effective date of this agreement (January 15, 2004
-12:01 AM).


 


NOW,
THEREFORE, in consideration of the promises and covenants contained herein, it is
agreed as follows:


 


1.                                       TERM
OF AGREEMENT


 


The provisions
of this Agreement shall apply to and govern every harness racing meeting, and
all simulcasting, and account wagering conducted at, from or to The Downs from
12:00 AM on January 15,
2004 (Effective Date) through 12:00 AM January 15, 2005.


 


2.                                       PURSE
DISTRIBUTION


 


A.                                   The
parties hereto have agreed that The Downs shall pay to the PHHA horsemen’s
account a fixed percentage of 4.3% (for the term through January 15,
2004 through January 15, 2005) of total system
handle.  Total system handle shall mean
all PARI-MUTUEL wagering conducted at
the primary location, all non-primary locations, all telephone-


 

















 


ACCOUNT
WAGERING AND ALL INTERACTIVE ACCOUNT wagering.


 


(1)                                  Interactive
Wagering - All interactive wagering conducted via an authorized personal
computer connection to The Downs (eBetUSA or its equivalent) will NOT BE HANDLED SEPARATELY FROM THE TOTAL SYSTEM
HANDLED.


 


B.                                     AGREEMENT
FOR PHHA EXPENSES AND PERCENTAGES


 


(1)                                  During
the Term of this Agreement, The Downs shall pay to the PHHA the sum of Four
Hundred Twenty Thousand Dollars ($420,000) to be used for the purposes
described in paragraph 5 below.


 


(2)                                  Each
Contract Year, the balance of the amounts determined under paragraph 2A,
after deducting the amounts payable under (1) above, shall be paid in racing
purses.


 


(3)                                  The
amount due to the PHHA annually shall be accrued at the rate of Thirty Five
Thousand Dollars ($35,000) per month every Contract year.  Payment shall be made in equal monthly
payments to the PHHA to be used for purposes described in paragraph 5
below.  At the written request of the
PHHA, The Downs shall make direct payments for insurance or for other purposes
allowed under paragraph 5 below, or shall make direct payment to the PHHA
up to any amount payable to the PHHA. 
However, the total amount paid out in any Contract Year to or on behalf
of the PHHA for purposes described in paragraph 5 below may EXCEED Four
Hundred Twenty Thousand Dollars ($420,000).


 


(4)                                  A MAXIMUM OF THREE  (3) percent of
the total overnight purse payments in each Contract Year may be paid out in
racing purses for early and late closing events and stake event.


 


C.                                     INTERSTATE
SIMULCASTING


 


(1)                                  In
addition to the amounts otherwise provided for in this Agreement, The Downs
shall distribute in racing purses of total handle during each Contract Year
throughout the Term of this Agreement,
1.1% in fees earned by The Downs for live programs simulcast
to wagering locations outside Pennsylvania (export signal).


 


(2)                                  It
is also specifically understood and agreed that if the host track (e.g., the
track from which the live racing is being broadcast) requires written agreement
or permission from PHHA for receipt of a simulcast for any race(s), then PHHA
will automatically and


 


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immediately
provide its written agreement and/or permission (whichever is required) on the
forms required.  The PHHA’s granting of
such agreement or permission or its prompt execution of the forms supplied to it,
as referenced above, will not be unreasonably withheld or delayed.  If The Downs believes that PHHA has
unreasonable withheld or delayed such agreement or permission or execution,
then it shall have the right to initiate an immediate expedited arbitration to
resolve such dispute.


 


D.                                    INTRASTATE
SIMULCASTING


 


In addition to
the amount(s) otherwise provided for in Paragraph 2, The Downs shall
distribute in racing purses the following amounts based upon handle on racing
conducted within Pennsylvania and simulcast to Primary Locations within
Pennsylvania.


 


(1)                                  Two
and one-half (2 1/2%) percent of the total handle on The Downs live races
simulcast to the Primary Location of another Pennsylvania Racetrack shall be
distributed, throughout the entire Term of this Agreement.


 


E.                                      NON-PRIMARY
LOCATIONS


 


The percentage
to be applied to the purses from wagering at other Pennsylvania Horse Racing
Association Non-Primary Locations is as provided by applicable Pennsylvania
statute.  All revenue from
sections 2A, 2A1, C1, Dl, and E shall be paid to the horsemen’s purse
account on a daily basis.


 


3.                                       MINIMUM
PURSES/MAXIMUM PURSES


 


A.                                   During
the Term of this Agreement the minimum purse payable by The Downs for any
pari-mutuel betting race shall be One Thousand Two Hundred Dollars ($1,200.00)
unless circumstances warrant a change which shall be mutually agreeable to both
parties.


 


B.                                     During
the Term of this Agreement, the maximum purse payable by The Downs for any
overnight pari-mutuel race from the purse account created by this Agreement
shall be Ten Thousand Dollars ($10,000.00) unless circumstances warrant a
change which shall be mutually agreeable to both parties.


 


4.                                       RACING
SCHEDULE


 


A.                                   The
Downs will schedule a minimum of one hundred twenty-five (125) race days and
one thousand five hundred twelve (1,512) live overnight races at The Downs
during each race season during the Term of this Agreement, subject however to
conditions beyond its control.  Additional 


 


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race days
beyond one hundred twenty five (125) and additional races beyond one thousand
five hundred and twelve (1,512) may be allowed only with the consent of PHHA.


 


B.                                     The
Downs management will prepare a weekly schedule showing the number of live
races and simulcast races to be presented each day during a given week.  That schedule will be presented to the PHHA
at least two weeks prior to the first racing day of the scheduled week.  If the live overnight races do not fill,
then this will be considered a condition beyond the control of The Downs and
the minimum number of 1,512 live overnight races will be reduced by the number
of races not filled.


 


5.                                       ARRANGEMENTS
WITH PHHA


 


A.                                   As
per Paragraph 2(B)(3) of this Agreement said amounts shall be used for:


 


(1)                                  To
defray PHHA’s operating expenses;


 


(2)                                  To
pay PHHA’s dues to any national organization of horsemen to which it belongs;


 


(3)                                  To
pay premiums for a group health and medical insurance policy for drivers,
trainers and grooms;


 


(4)                                  To
pay premiums for any accident and disability insurance policy which covers
trainers and drivers that are involved in accidents while training or racing;


 


(5)                                  To
cover the cost for marketing and promotional items.


 


B.                                     The
Downs shall provide an office for the use of the PHHA representative on its
racing grounds,


 


C.                                     Representatives
of The Downs and PHHA will be available to consult with each other at
reasonable convenient times concerning any matters pertaining to the operation
of race meetings of The Downs or the provisions of this Agreement.  Specifically, representatives of The Downs
and PHHA shall meet before each racing season and throughout the same on a
bi-weekly basis whenever possible to discuss and agree on racing dates, purse
structures and races offered on the condition sheet and qualifying standards.


 


6.                                       STALL
ASSIGNMENTS


 


Nothing in
this Agreement shall be deemed to limit or restrict in any manner the absolute
discretion of The Downs to assign stalls to owners and trainers whether or not
members of PHHA, except that stall space shall not be denied by reason of


 


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membership in,
or activity on behalf of, PHHA or duly constituted horsemen’s committees, or as
otherwise prohibited or restricted by law.


 


7.                                       RACING
APPLICATION


 


Each owner
and/or trainer having horses racing at The Downs shall be required to complete
a racing application that details the complete inventory of horses in that
owner’s or trainer’s racing stable. 
Such form may be required to be updated on a monthly basis.


 


8.                                       PENNSYLVANIA-OWNED
AND/OR SIRED RACES OR HORSES WHO HAVE RACED A NUMBER OF TIMES AT THE MEET


 


A.                                   At
the request of PHHA, The Downs shall offer on each weekly condition
sheet Pennsylvania-Owned and/or Sired Races or races for
horses that have started a certain number of times at the meet per live race
week during the Term of this Agreement. 
The number of those races SHALL BE FOURTEEN (14) PER
WEEK. 
“Pennsylvania-Owned Races” when used above means races restricted to
horses which are (a) wholly owned and declared by Pennsylvania resident(s)
or (b) wholly owned by Pennsylvania resident(s) and declared by a
Pennsylvania resident lessee of the horse. 
“Pennsylvania-Sired Races”: 
Pennsylvania Harness Racing Commission Regulations/definitions shall
govern.


 


“Pennsylvania
Residence” shall be established by presentation, on request of The Downs and/or
PHHA representative, (a) a valid Pennsylvania Vehicle Registration and a
valid Pennsylvania Driver’s License or (b) Pennsylvania State Income Tax
Return showing permanent domicile in Pennsylvania for the previous two (2)
years.


 


9.                                       PHHA
INSURANCE PROGRAM


 


A.                                   PHHA
hereby agrees to provide, at its expense, on track insurance to cover trainers
and drivers participating in training and racing activities at The Downs.  The coverage will be $200,000 accident
medical, $25,000 accidental death and dismemberment, and $250 weekly disability
with a maximum of 104 weeks.


 


10.                                 CONTROLLING
LAW AND REGULATIONS:  ARBITRATION


 


A.                                   The
interpretation of the provision of this Agreement shall be governed by the laws
of Pennsylvania.


 


B.                                     The
performance and operation of this Agreement during the entire term hereof,
shall be subject in all respects to the provisions of the Pennsylvania Race
Horse Industry Reform Act, all the Commonwealth’s rules and regulations, and
subject to the approval of the Pennsylvania State Harness Racing Commission.


 


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C.                                     This
is the entire agreement between the parties. 
Any modification or amendment to this Agreement must be in writing and
signed by the parties or their duly authorized representatives.


 


D.                                    Any
and all disputes between the parties hereto arising out of or relating to this
Agreement or any breach thereof shall be resolved by arbitration to be held in
Wilkes-Barre, Pennsylvania, in accordance with the Rules of the American
Arbitration Association then in effect. 
Any award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof.  The costs
of such arbitration shall be borne equally by the parties hereof.


 


11.                                 ASSIGNMENT,
TRANSFER, ADOPTION OF AGREEMENT


 


Any assignment
of all the rights and obligations of The Downs or transfer or adoption of this
Agreement shall require PHHA’s consent and upon such assignment, transfer or
adoption, such assignee of transferee shall be substituted as a party to this
Agreement.


 


12.                                 NINE
HORSE FIELDS


 


Nine horse or
larger fields may be permitted in any overnight, early or late closer or stake
race only with the permission of the PHHA. 
There will be no nine horse fields for maidens or non-winners of two (2)
pari-mutuel races life, unless approved by the PHHA.  All two year olds will be limited to eight in a field unless
approved by the PHHA.


 


13.                                 NEW
INCOME SOURCES


 


If The Downs
becomes aware of a new source of wagering or simulcasting income not addressed
in this Agreement, The Downs will notify the PHHA of such income source and
PHHA will enter negotiations concerning such income.  In the event legislation is passed to allow slot machines at the
Pennsylvania Race tracks and exercising its rights under paragraph 6
above, The Downs shall take into consideration when assigning stalls the
history of each applicant racing at The Downs. 
In exercising such considerations all things being approximately equal,
The Downs shall use best efforts to assign stalls and to allow applicants to
continue with the number of stalls substantially consistent with the average
over the previous 3 years.


 


14.                                 The
parties will negotiate in good faith and mutually agree to establish a formula
concerning the assignment of stalls.


 


IN WITNESS
WHEREOF, with the intentions of being legally bound, the parties by their
respective chief officers who are authorized and empowered to bind the
respective parties, have caused this Agreement to be duly executed as of this
15 day of March, 2004.


 


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  THE DOWNS,
  INC.

  	
  PENNSYLVANIA
  HARNESS HORSEMEN’S

  ASSOCIATION, INC.

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Richard
  Orbann

  	
   

  	
  BY:

  	
  /s/ Earl E.
  Beal, Jr.

  	
   

  
	
   

  	
  PRESIDENT

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  	
   

  
	
  SECRETARY

  	
  SECRETARY

  
	
   

  	
   

  
	
  (CORPORATE
  SEAL)

  	
  (CORPORATE
  SEAL)

  
	
   

  	
   

  
	
  ATTEST:

  	
    /s/
  Camilla Grube

  	
   

  	
  ATTEST:

  	
    /s/
  Ronald P. Battoni

  	
   

  
								



 


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