Document:

EX-10.12

 EXHIBIT (10)(xii) 
  
 LIFE INSURANCE 
  
 ENDORSEMENT METHOD SPLIT DOLLAR PLAN 
  
 AGREEMENT 
  

			
	Insurer:	  	Mass Mutual Life Insurance Company
		
	 	  	New York Life Insurance Company
		
	Policy Number:	  	0053xxx
	 	  	56603xxx
		
	Bank:	  	Home Savings Bank of Albemarle, SSB
		
	Insured:	  	R. Ronald Swanner
		
	Relationship of Insured to Bank:	  	Director
		
	Trust:	  	Rabbi Trust for the Executive Supplemental Retirement Plan Agreement, Director Supplemental Retirement Plan Agreement, and the Endorsement Method Split Dollar Plan Agreement

  
 The respective rights and duties of
the Bank and the Insured in the above-referenced policy shall be pursuant to the terms set forth below: 
  

	I.	DEFINITIONS 

  
 Refer to the policy contract for the definition of any terms in this Agreement that are not defined herein. If the definition of a term in the policy is
inconsistent with the definition of a term in this Agreement, then the definition of the term as set forth in this Agreement shall supersede and replace the definition of the terms as set forth in the policy. 
  

	II.	POLICY TITLE AND OWNERSHIP 

  
 Title and ownership shall reside in the Trustee for the Rabbi Trust for the Executive Supplemental Retirement Plan Agreement, Director Supplemental
Retirement Plan Agreement, and the Endorsement Method Split Dollar Plan Agreement for its use and for the use of the Insured all in accordance with this Agreement. The Trustee at the direction of the Bank may, to the extent of its interest, exercise
the right to borrow or withdraw on the policy cash values. Where the Trustee at the direction of the Bank and the Insured (or assignee, with the consent of the Insured) mutually agree to exercise the right to increase the coverage under the subject
Split Dollar policy, then, in such event, the rights, duties and benefits of the parties to such increased coverage shall continue to be subject to the terms of this Agreement. 

	III.	BENEFICIARY DESIGNATION RIGHTS 

  
 The Insured (or assignee) shall have the right and power to designate a beneficiary or beneficiaries to receive the Insured’s share of the proceeds
payable upon the death of the Insured, and to elect and change a payment option for such beneficiary, subject to any right or interest the Trustee at the direction of the Bank or the Trust may have in such proceeds, as provided in this Agreement.

  

	IV.	PREMIUM PAYMENT METHOD 

  
 Subject to the Bank’s absolute right to surrender or terminate the policy at any time and for any reason, the Bank or the Trustee at the direction of
the Bank shall pay an amount equal to the planned premiums and any other premium payments that might become necessary to keep the policy in force. 
  

	V.	TAXABLE BENEFIT 

  
 Annually the Insured will receive a taxable benefit equal to the assumed cost of insurance as required by the Internal Revenue Service. The Bank or the
Trustee at the direction of the Bank will report to the Insured the amount of imputed income each year on Form W-2 or its equivalent. 
  

	VI.	DIVISION OF DEATH PROCEEDS 

  
 Subject to Paragraphs VII and IX herein, the division of the death proceeds of the policy is as follows: 
  

	 	A.	Upon the death of the Insured, the Insured’s beneficiary(ies), designated in accordance with Paragraph III, shall be entitled to an amount equal to eighty percent (80%) of the
net-at-risk insurance portion of the proceeds. The net-at-risk insurance portion is the total proceeds less the cash value of the policy. 

  

	 	B.	The Bank shall be entitled to the remainder of such proceeds. 

  

	 	C.	The Bank and the Insured (or assignees) shall share in any interest due on the death proceeds on a pro rata basis as the proceeds due each respectively bears to the total proceeds,
excluding any such interest. 

  

	VII.	DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY 

  
 The Bank or the Trust shall at all times be entitled to an amount equal to the policy’s cash value, as that term is defined in the policy contract,
less any policy loans and unpaid interest or cash withdrawals previously incurred by the Bank or the Trustee at the direction of the Bank and any applicable surrender charges. Such cash value shall be determined as of the date of surrender or death
as the case may be. 

	VIII.	RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS 

  
 In the event the policy involves an endowment or annuity element, the Bank’s or the Trust’ right and interest in any endowment proceeds or
annuity benefits, on expiration of the deferment period, shall be determined under the provisions of this Agreement by regarding such endowment proceeds or the commuted value of such annuity benefits as the policy’s cash value. Such endowment
proceeds or annuity benefits shall be considered to be like death proceeds for the purposes of division under this Agreement. 
  

	IX.	TERMINATION OF AGREEMENT 

  
 This Agreement shall terminate upon the occurrence of any one of the following: 
  

	 	A.	The Insured shall be discharged from service with the Bank for cause. The term “for cause” shall mean any of the following that result in an adverse effect on the Bank:
(i) gross negligence or gross neglect; (ii) the commission of a felony or gross misdemeanor involving moral turpitude, fraud, or dishonesty; (iii) the willful violation of any law, rule, or regulation (other than a traffic violation or similar
offense); (iv) an intentional failure to perform stated duties; or (v) a breach of fiduciary duty involving personal profit; or 

  

	 	B.	Surrender, lapse, or other termination of the Policy by the Bank. 

  
 Upon such termination, the Insured (or assignee) shall have a fifteen (15) day option to receive from the Bank or the Trustee at the direction of the Bank
an absolute assignment of the policy in consideration of a cash payment to the Bank or the Trustee at the direction of the Bank, whereupon this Agreement shall terminate. Such cash payment referred to hereinabove shall be the greater of: 

 

	 	A.	The Bank’s or the Trust’s share of the cash value of the policy on the date of such assignment, as defined in this Agreement; or 

  

	 	B.	The amount of the premiums which have been paid by the Bank or the Trustee at the direction of the Bank prior to the date of such assignment. 

  
 If, within said fifteen (15) day period, the Insured fails to exercise said
option, fails to procure the entire aforestated cash payment, or dies, then the option shall terminate and the Insured (or assignee) agrees that all of the Insured’s right, interest and claim in the policy shall terminate as of the date of the
termination of this Agreement. 
  
 The Insured expressly agrees
that this Agreement shall constitute sufficient written notice to the Insured of the Insured’s option to receive an absolute assignment of the policy as set forth herein. 
  
 Except as provided above, this Agreement shall terminate upon distribution of the death benefit proceeds in accordance with
Paragraph VI above. 
  

	X.	INSURED’S OR ASSIGNEE’S ASSIGNMENT RIGHTS 

  
 The Insured may not, without the written consent of the Bank or the Trustee at the direction of the Bank, assign to any individual, trust or other
organization, any right, title or interest in the subject policy nor any rights, options, privileges or duties created under this Agreement. 

	XI.	AGREEMENT BINDING UPON THE PARTIES 

  
 This Agreement shall bind the Insured and the Bank or the Trustee at the direction of the Bank, their heirs, successors, personal representatives and
assigns. 
  

	XII.	ERISA PROVISIONS  

  
 The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974
(“ERISA”): 
  

	 	A.	Named Fiduciary and Plan Administrator. 

  
 The “Named Fiduciary and Plan Administrator” of this Endorsement Method Split Dollar Agreement shall be Home Savings Bank of Albemarle, SSB
until its resignation or removal by the Board of Directors. As Named Fiduciary and Plan Administrator, the Bank or the Trustee at the direction of the Bank shall be responsible for the management, control, and administration of this Split Dollar
Plan as established herein. The Named Fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Plan, including the employment of advisors and the delegation of any ministerial duties to qualified
individuals. 
  

	 	B.	Funding Policy. 

  
 Subject to the Bank’s absolute right to surrender or terminate the policy at any time and for any reason, the funding policy for this Split Dollar
Plan shall be to maintain the subject policy in force by paying, when due, all premiums required. 
  

	 	C.	Basis of Payment of Benefits. 

  
 Direct payment by the Insurer is the basis of payment of benefits under this Agreement, with those benefits in turn being based on the payment of
premiums as provided in this Agreement. 
  

	 	D.	Claim Procedures. 

  
 Claim forms or claim information as to the subject policy can be obtained by contacting Benmark, Inc. (800-544-6079). When the Named Fiduciary has a
claim which may be covered under the provisions described in the insurance policy, it should contact the office named above, and they will either complete a claim form and forward it to an authorized representative of the Insurer or advise the named
Fiduciary what further requirements are necessary. The Insurer will evaluate and make a decision as to payment. If the claim is payable, a benefit check will be issued in accordance with the terms of this Agreement. 
  
 In the event that a claim is not eligible under the policy, the Insurer
will notify the Named Fiduciary of the denial pursuant to the requirements under the terms of the policy. If the Named Fiduciary is dissatisfied with the denial of the claim and wishes to contest such claim denial, they should contact the office
named above and they will assist in making an inquiry to the Insurer. All objections to the Insurer’s actions should be in writing and submitted to the office named above for transmittal to the Insurer. 

	XIII.	GENDER 

  
 Whenever in this Agreement words are used in the masculine or neuter gender, they shall be read and construed as in the masculine, feminine or neuter
gender, whenever they should so apply. 
  

	XIV.	INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT 

  
 The Insurer shall not be deemed a party to this Agreement, but will respect the rights of the parties as herein developed upon receiving an executed copy
of this Agreement. Payment or other performance in accordance with the policy provisions shall fully discharge the Insurer from any and all liability. 
  

	XV.	CHANGE OF CONTROL 

  
 Change of Control shall be deemed to be the cumulative transfer of more than fifty percent (50%) of the voting stock of the Bank from the date of this
Agreement. For the purposes of this Agreement, transfers on account of death or gifts, transfers between family members, or transfers to a qualified retirement plan maintained by the Bank shall not be considered in determining whether there has been
a Change of Control. Upon a Change of Control, if the Insured’s service is subsequently terminated, except for cause, then the Insured shall be one hundred percent (100%) vested in the benefits promised in this Agreement. 
  

	XVI.	AMENDMENT OR REVOCATION 

  
 Subject to the Bank’s absolute right to surrender or terminate the policy at any time and for any reason, it is agreed by and between the parties
hereto that, during the lifetime of the Insured, this Agreement may be amended or revoked at any time or times, in whole or in part, by the mutual written consent of the Insured and the Bank. 
  

	XVII.	EFFECTIVE DATE 

  
 The Effective Date of this Agreement shall be February 18, 2003. 
  

	XVIII.	SEVERABILITY AND INTERPRETATION 

  
 If a provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nonetheless be enforceable according to their
terms. Further, in the event that any provision is held to be over broad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to law and enforced as amended.

  

	XVIX.	APPLICABLE LAW 

  
 The validity and interpretation of this Agreement shall be governed by the laws of the State of North Carolina. 

 Executed at Albemarle, North Carolina this 27th day of June, 2003. 
  

					
	 	 	 HOME SAVINGS BANK OF ALBEMARLE, SSB

	 	 	 Albemarle, North Carolina

			
	  

	 	 By:
	 	  

	 Witness
	 	 	 	 Title

			
	  

	 	 	 	 /s/ R. Ronald Swanner

	 Witness
	 	 	 	 R. Ronald Swanner

 BENEFICIARY DESIGNATION FORM 
 FOR LIFE INSURANCE ENDORSEMENT METHOD 
 SPLIT DOLLAR PLAN AGREEMENT

  

	I.	PRIMARY DESIGNATION 

 (You may refer to the
beneficiary designation information prior to completion.) 
  

	 	A.	Person(s) as a Primary Designation: 

 (Please indicate the percentage for each beneficiary.) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                                
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  

	 	B.	Estate as a Primary Designation: 

  
 My Primary Beneficiary is The Estate of
                                        
                     as set forth in the last will and testament dated the      day of
                    ,              and any codicils thereto. 
  

	 	C.	Trust as a Primary Designation: 

  
 Name of the Trust:
                                        
                                        
                                        
                                        
       
  
 Execution Date of the
Trust:      /      /              
  
 Name of the Trustee:
                                        
                                        
                                        
                                        
   
  
 Beneficiary(ies) of the Trust (please indicate
the percentage for each beneficiary): 
  
 ______________________________________________________________________________________________________ 
  
 ______________________________________________________________________________________________________ 
  
 Is this an Irrevocable Life Insurance Trust?
             Yes              No 
 (If yes and this designation is for a Split Dollar agreement, an Assignment of Rights form should be completed.) 
  

	II.	SECONDARY (CONTINGENT) DESIGNATION 

  

	 	A.	Person(s) as a Secondary (Contingent) Designation: 

 (Please indicate the percentage for each beneficiary.) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 

 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  
 Name                                      
                                        
              
Relationship                                      
                   /             % 
  
 Address:                                     
                                        
                                        
                                        
                          
                                        
             (Street)                          
                                      (City) 
                               (State)        
            (Zip) 
  

	 	B.	Estate as a Secondary (Contingent) Designation: 

  
 My Secondary Beneficiary is The Estate of
                                        
                     as set forth in my last will and testament dated the      day of
                    ,              and any codicils thereto. 
  

	 	C.	Trust as a Secondary (Contingent) Designation: 

  
 Name of the Trust:
                                        
                                        
                                        
                                        
       
  
 Execution Date of the
Trust:      /      /              
  
 Name of the Trustee:
                                        
                                        
                                        
                                        
   
  
 Beneficiary(ies) of the Trust (please indicate
the percentage for each beneficiary): 
  
 ______________________________________________________________________________________________________ 
  
 ______________________________________________________________________________________________________ 
  
 All sums payable under the Life Insurance Endorsement Method Split Dollar
Plan Agreement by reason of my death shall be paid to the Primary Beneficiary(ies), if he or she survives me, and if no Primary Beneficiary(ies) shall survive me, then to the Secondary (Contingent) Beneficiary(ies). This beneficiary designation is
valid until the participant notifies the bank in writing. 
  

			
	  

	  	

	 R. Ronald Swanner
	  	DateStandardbred Horsemen's Contract

 EXHIBIT 10.7 
  
 Standardbred Horsemen’s Agreement 
  
 between Colonial Downs, L.P., 
 Stansley Racing Corp. and 
 The Virginia Harness Horse Association 
  
 April 2, 2003 

 TABLE OF CONTENTS 
  

							
	 	  	Page

			
	 1.
	  	Effective Date and Term of Agreement	  	2
			
	 2.
	  	Scope of Agreement	  	2
			
	 3.
	  	Exclusive Representation	  	3
			
	 4.
	  	Accounts	  	3
				
	 	  	A.	  	Standardbred Partners’ Account	  	3
	 	  	B.	  	Horsemen’s Account	  	4
	 	  	C.	  	Availability of Information on Accounts	  	5
	 	  	D.	  	Distribution of Interest and Other Earnings on Accounts; Disbursement to Colonial Downs	  	5
			
	 5.
	  	Administration of Accounts	  	6
				
	 	  	A.	  	Amounts To Be Deposited	  	6
	 	  	B.	  	Transfers from the Standardbred Partners’ Account to the Horsemen’s Account and Colonial Downs’ Account	  	6
	 	  	C.	  	Signal Sales	  	6
	 	  	D.	  	Account Wagering	  	7
	 	  	E.	  	Stakes Race Purses	  	7
	 	  	F.	  	Administrative Fee	  	8
	 	  	G.	  	Other Legalized Wagering	  	8
			
	 6.
	  	Purse Mechanics	  	9
				
	 	  	A.	  	Purse Schedules and Condition Sheets	  	9
	 	  	B.	  	Overpayment of Purses	  	9
	 	  	C.	  	Underpayment of Purses	  	10
	 	  	D.	  	Purse Notices	  	10
			
	 7.
	  	Live Standardbred Racing	  	10
				
	 	  	A.	  	Number of Days, Dates and Average Daily Purses	  	10
	 	  	B.	  	Promotion of the Colonial Downs Meet	  	12
	 	  	C.	  	Sponsorships	  	13
			
	 8.
	  	Races and Awards for Virginia-Bred, Virginia-Owned and Virginia-Sired Horses	  	13
			
	 9.
	  	Satellite Wagering Facility Expansion	  	14
				
	 	  	A.	  	Licensing and Opening of New Richmond SWF and New Chesapeake SWF	  	14
	 	  	B.	  	Distribution of Funds from the New Richmond SWF and the New Chesapeake SWF	  	17
	 	  	C.	  	SWF Referenda in Central-Southside Virginia Region	  	17

							
	 	  	D.	  	Northern Virginia SWF	  	20
	 	  	E.	  	Efforts in Northern Virginia	  	20
	 	  	F.	  	Opening of Brunswick SWF on Mondays	  	21
	 	  	G.	  	Incorporation of Terms in SWF Licenses	  	22
			
	 10.
	  	Stalls and Track Facilities	  	22
				
	 	  	A.	  	Availability of Stalls and Track Facilities Before, During and After Race Meetings	  	22
	 	  	B.	  	Vendors	  	23
	 	  	C.	  	Stall Applications	  	24
	 	  	D.	  	Racetrack Kitchen	  	25
	 	  	E.	  	Temporary Building	  	25
			
	 11.
	  	Racing Committee	  	25
			
	 12.
	  	Representations and Warranties	  	26
				
	 	  	A.	  	VHHA	  	26
	 	  	B.	  	Colonial Downs	  	27
			
	 13.
	  	VHHA Office	  	28
			
	 14.
	  	Racing Officials	  	29
			
	 15.
	  	Governmental Approval	  	29
			
	 16.
	  	Authorization for Out-of-State Simulcasting	  	29
			
	 17.
	  	Copies of Documents	  	30
			
	 18.
	  	Horsemen’s Backstretch Improvements and Programs	  	30
			
	 19.
	  	Right to Terminate	  	31
			
	 20.
	  	Indemnification	  	31
			
	 21.
	  	Mediation; Arbitration	  	32
				
	 	  	A.	  	Attempt to Resolve Disputes	  	32
	 	  	B.	  	Administration	  	32
	 	  	C.	  	Notice to Arbitrate	  	32
	 	  	D.	  	Selection of Arbitrator(s)	  	33
	 	  	E.	  	Pre-Hearing Conference	  	33
	 	  	F.	  	Discovery	  	33
	 	  	G.	  	Additional Conference	  	35
	 	  	H.	  	Arbitration Hearing	  	35
	 	  	I.	  	Arbitration Award	  	36
	 	  	J.	  	Default	  	36
	 	  	K.	  	Costs	  	36
			
	 22.
	  	Contribution Adjustments	  	37
				
	 	  	A.	  	Changes in Applicable Law	  	37

  

 ii 

							
	 	  	B.	  	Duration	  	38
			
	 23.
	  	Additional License	  	38
			
	 24.
	  	Consents, Approvals, Agreements or Assurances	  	39
			
	 25.
	  	Counterparts	  	39
			
	 26.
	  	Notices	  	39
			
	 27.
	  	Waivers	  	41
			
	 28.
	  	Applicable Law; Venue	  	41
			
	 29.
	  	Headings	  	41
			
	 30.
	  	Severability	  	41
			
	 31.
	  	Entire Agreement; Modification	  	42
			
	 32.
	  	Conditions Precedent to Effectiveness of this Agreement	  	42
				
	 	  	A.	  	Commission Approval	  	42
	 	  	B.	  	Amendment of Management and Consulting Agreement	  	43
			
	 Exhibit A
	  	    Form of Trust Agreement	  	 
			
	 Exhibit B
	  	    Annual Transfers of Funds from Standardbred Partners’ Account to Horsemen’s Account	  	 
			
	 Exhibit C
	  	    Anticipated Development Schedule	  	 
			
	 Exhibit D
	  	    Central-Southside Virginia Region	  	 

  
  

 iii 

 STANDARDBRED HORSEMEN’S AGREEMENT 
  
 THIS AGREEMENT is entered into this 2nd day of April 2003, effective as of March 1, 2003, by and among COLONIAL DOWNS, L.P., a Virginia limited partnership, STANSLEY RACING CORP., a
Virginia corporation (collectively, “Colonial Downs”), and the VIRGINIA HARNESS HORSE ASSOCIATION, a Virginia not-for-profit corporation (the “VHHA”). 
  
 WHEREAS, Colonial Downs owns and operates in New Kent County, Virginia, the facility known as the Colonial Downs racetrack
(the “Racetrack”) and four (4) satellite wagering facilities located in Brunswick, Chesapeake, Hampton and Richmond, Virginia (the “SWFs”); 
  

WHEREAS, the VHHA is a trade organization composed of owners, trainers, drivers, grooms, breeders, owner-trainers, and owner-breeders, or any
combination thereof, (its “Members”) of standardbred racehorses; 
  
 WHEREAS, the VHHA develops and provides programs and other services for its Members, their employees and other participants in standardbred horse racing who are and will be engaged in live racing at the Racetrack
(such racing a “Race Meeting”); 
  
 WHEREAS, the parties
hereto desire to continue and enhance a close and understanding relationship among breeders, owners, trainers, drivers and grooms of standardbred race horses (the “Horsemen”), including VHHA Members, the VHHA, Colonial Downs, and the
public; 

 WHEREAS, the parties desire to expand the network of SWFs throughout the Commonwealth of Virginia beyond
the four (4) existing SWFs and the currently statutorily authorized six (6) SWFs to support more days of live quality standardbred racing at the Racetrack; and 
  

WHEREAS, the parties are party to an existing agreement (the “Existing Agreement”), dated January 16, 2002 and effective January 1, 2002, and
desire to terminate the Existing Agreement in its entirety and replace it with this Agreement. 
  
 NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, the parties desiring to be legally bound agree as follows: 
  
 1. Effective Date and Term of Agreement. Upon the satisfaction or waiver of all conditions set forth in Section 32
hereof, this Agreement shall become effective as of 12:01 a.m. on March 1, 2003, and shall remain in effect through midnight on December 31, 2005 (the “Term”), unless otherwise terminated as provided herein, with the exception of
Subsection 5.B., Section 9, and Section 22, which shall continue in effect as stated therein. 
  
 2. Scope of Agreement. This Agreement shall be applicable to (i) revenues generated from pari-mutuel wagering on live standardbred races at the Racetrack and on all simulcast standardbred races,
including simulcast broadcasts of live standardbred races held at the Racetrack, broadcast to the Racetrack and to all SWFs owned and operated by Colonial Downs in Virginia, to (ii) revenues 
  

 2 

 generated by simulcast broadcasts to locations outside the Commonwealth of Virginia of live standardbred races held at
the Racetrack, and to (iii) the live standardbred race meetings conducted at the Racetrack, during the Term of this Agreement. 
  
 3. Exclusive Representation. During the Term of this Agreement, the VHHA shall be the exclusive representative of its Members with respect to the
matters set forth herein. The VHHA hereby warrants and represents that it is the Horsemen’s organization representing a majority of the Horsemen racing at the Racetrack, and Colonial Downs hereby recognizes it as such. 
  
 4. Accounts. 
  
 A. Standardbred Partners’ Account. Colonial Downs and the VHHA
currently maintain an account at Citizens and Farmers Bank in Providence Forge, Virginia (the “Standardbred Partners’ Account” or the “Account”). The parties agree that the financial institution(s) at which the Standardbred
Partners’ Account is maintained may be changed at any time by agreement of the parties. Colonial Downs and the VHHA agree that all funds maintained in the Standardbred Partners’ Account are funds that are to be maintained in trust on
behalf of and for the benefit of the Horsemen, less those funds to be distributed to Colonial Downs, as provided herein, and distributed according to regulations promulgated by the Virginia Racing Commission (the “Commission”) from time to
time or by agreement between the parties to this Agreement. In furtherance of such purpose, the parties hereto have executed the trust agreement attached as Exhibit 
  

 3 

 A and have had the Standardbred Partners’ Account designated a trust account by the financial institution at which
the Standardbred Partners’ Account is maintained. The parties shall take similar steps to have the Standardbred Partners’ Account designated as a trust account by any other financial institution(s) to which the Account is moved. In
addition, either party may elect upon written notice to the other party to have a third-party trustee, acceptable to both parties, appointed as trustee of the Account. All interest and other earnings whatsoever on the amounts paid or deposited into
the Standardbred Partners’ Account shall accrue solely to the benefit of the Standardbred Partners’ Account. All funds paid or deposited into the Standardbred Partners’ Account (i) shall be invested in an interest-bearing account that
provides market rates of return, or government or bank securities, and (ii) shall be used for purses and for such other purposes as the parties may agree and the Commission may approve. 
  
 B. Horsemen’s Account. Monies payable to Horsemen as purses under this Agreement shall be deposited from the
Standardbred Partners’ Account into a separate account (the “Horsemen’s Account”) as needed to pay purses. The amounts to be transferred from the Standardbred Partners’ Account to the Horsemen’s Account are set forth
herein. The transfer of funds from the Standardbred Partners’ Account to the Horsemen’s Account shall be made, and the appropriate portions of purse money shall be made available to the earners thereof, within seventy-two (72) hours (dark
days and Sundays excluded) after the result of the race in which such money was earned has been declared official; provided, that 
  

 4 

 in the event of any dispute as to the result of a race due to a drug test or other regulatory inquiry, the purse money
shall not be made available until final resolution of the dispute by the stewards, the Commission or the courts, as the case may be. No portion of such money payable as purses to any earner thereof shall be deducted by Colonial Downs unless
requested in writing by the person to whom such monies are payable or his duly authorized representative or as required by order of the stewards or a court. 
  
 C. Availability of Information on Accounts. The Standardbred Partners’ Account and the Horsemen’s Account and the investment or deposit
schedules of Colonial Downs with respect to such accounts shall be subject to examination at any reasonable time by the President of the VHHA or his or her designee. 
  
 D. Distribution of Interest and Other Earnings on Accounts; Disbursement to Colonial Downs. All interest or earnings
whatsoever on the amounts paid or deposited into the Standardbred Partners’ Account and the Horsemen’s Account shall accrue solely to the benefit of Colonial Downs. Additionally, to help defray the costs of the Horsemen’s bookkeeper
and of providing year-round office space to the VHHA, Colonial Downs shall be entitled to disburse from funds in the Standardbred Partner Account to itself $7,500 each calendar year, such funds to be disbursed on the last business day of each month
in the amount of $625 per month. A final accounting of this disbursement shall be made on January 31 of each year for the prior calendar year. 
  

 5 

 5. Administration of Accounts. 
  
 A. Amounts To Be Deposited. Colonial Downs shall deposit into the Standardbred Partners’ Account the amounts
specified in paragraph 13 of § 59.1-369 of the Code of Virginia and shall deposit into the Horsemen’s Account the amounts specified for purses in Subsections D(1) and G(1) of § 59.1-392 of the Code of Virginia. 
  
 B. Transfers from the Standardbred Partners’ Account to the
Horsemen’s Account and Colonial Downs’ Account. With respect to all deposits to the Standardbred Partners’ Account derived from handle at all satellite wagering facilities, the parties agree that transfer of funds from the
Standardbred Partners’ Account to the Horsemen’s Account shall be made as set forth in Exhibit B hereto, subject to the terms and conditions set forth in Section 9 hereof. The VHHA shall authorize the weekly payment from the Standardbred
Partners’ Account to Colonial Downs of an amount equal to the difference between (i) the amounts deposited into the Standardbred Partners’ Account pursuant to Paragraph 13 of § 59.1-369 of the Code of Virginia and (ii) the amounts
transferred to the Horsemen’s Account as set forth in Exhibit B. 
  
 C. Signal Sales. For the term hereof, Colonial Downs shall deposit into an account designated and exclusively controlled by the VHHA fifty percent (50%) of all revenues in excess of $2,100 per day it receives from the sale of its
live standardbred race signal to entities outside Virginia. Such amount of $2,100 per day shall be reimbursement to Colonial Downs to cover Colonial Downs’ direct 
  

 6 

 operational costs associated with that sale. Revenues from signal sales shall be based on information provided by
Colonial Downs to the VHHA using accounting practices generally accepted in the horse racing industry. 
  
 D. Account Wagering. Neither Colonial Downs nor the VHHA shall enter into an agreement, without the prior written consent of the other, which
consent shall not be unreasonably withheld, delayed or conditioned, regarding telephone account or other electronic media wagering systems pursuant to which Colonial Downs or the VHHA would receive any fee from Television Games Network or any other
telephone or other electronic media account wagering entities for the right to accept wagers from account holders located in Virginia on standardbred races simulcast from within or outside of Virginia. The foregoing sentence shall not apply to
Colonial Downs’ existing and future agreements for the sale of its live standardbred racing signals to simulcast venues to which the VHHA’s consent is governed by Section 16 of this Agreement. 
  
 E. Stakes Race Purses. The percentage of the purse monies available
under Subsections A through D of this Section, excluding promotional fees and sponsorships, to be paid to Horsemen participating in stakes races held at the Racetrack shall be limited to eight percent (8%) of the total purses paid. The parties agree
that the foregoing eight-percent (8%) limit may be increased by one dollar for every one dollar that Colonial Downs secures for additional purse monies from sponsors of live standardbred races at the Racetrack, up to a total of twelve percent (12%)
of total purses paid; provided, however, that not more than ten 
  

 7 

 percent (10%) of the amounts payable as purses under Subsections A through D of this Section shall be used for purses for
stakes races. Notwithstanding the foregoing, a higher percentage may be agreed upon by the parties in good faith negotiations. For purposes of this subsection, the term “stakes races” shall not include early or late closure races or
Virginia Standardbred Breeder’s Fund stakes. 
  
 F.
Administrative Fee. The administrative fee paid to the VHHA for services rendered to Horsemen as the majority Horsemen’s group shall be as provided in Subsection S of § 59.1-392 of the Code of Virginia. The parties shall
agree on advance payments of the administrative fee between live standardbred Race Meetings at the Racetrack in recognition of the VHHA’s year-round service to Horsemen, obligations with respect to Horsemen’s interests before the
Commission, and the VHHA’s efforts to assist Colonial Downs on legislative issues. 
  
 G. Other Legalized Wagering. Except as otherwise specifically provided herein, in the event that wagers other than on standardbred horse racing, including, but not limited to, the sale of lottery tickets and/or
participation in other wagering enterprises at the Racetrack and/or the SWFs, are authorized by legislative action and a portion of the proceeds is provided by that legislation for standardbred racing, the parties shall be bound by the allocations
in such legislation. In the event the allocation of revenues is not addressed by such legislative action, the parties shall negotiate in good faith a written agreement governing the allocation between them of the revenues to be received for
standardbred racing from that legislative action. 
  

 8 

 6. Purse Mechanics. 
  
 A. Purse Schedules and Condition Sheets. Colonial Downs shall use its reasonable judgment to estimate attendance,
pari-mutuel handle and breakage for standardbred racing. Using that information and after consultation with a designated representative of the VHHA, Colonial Downs shall establish a tentative average daily overnight purse schedule and a tentative
stakes purse schedule for each Race Meeting in accordance with the terms of this Agreement. Nomination, sustaining, starting, and entry fees paid by standardbred Horsemen, and funds provided by the Virginia Breeders Fund or by race sponsors shall
not be considered to be portions of the purses paid by Colonial Downs. Colonial Downs shall exercise reasonable care to avoid significant underpayments or overpayments of purses at all Race Meetings. Colonial Downs shall send to the VHHA its first
condition sheet and proposed purse schedules for each Race Meeting before they are sent to the printer. 
  
 B. Overpayment of Purses. Colonial Downs and the VHHA shall cooperate to the fullest extent possible to avoid overpayment of purses to Horsemen as
of the end of any year during the Term of this Agreement. If Colonial Downs makes an overpayment in excess of the amount computed under Section 5 hereof, the overpayment shall be repaid to Colonial Downs from funds accruing to the Standardbred
Partners’ Account commencing on January 1 of the following calendar year on a “first dollar in first dollar out” basis. 
  

 9 

 C. Underpayment of Purses. During any Race Meeting, Colonial Downs shall increase purses as
reasonable and appropriate based upon deposits to the Horsemen’s Account pursuant to Subsections D(1) and G(1) of § 59.1-392 of the Code of Virginia to minimize the possibility of underpayment of purses to Horsemen. Colonial Downs shall
use its reasonable best efforts to help assure that there are no underpayments of purses at any Race Meeting based upon deposits to the Horsemen’s Account pursuant to Subsections D(1) and G(1) of § 59.1-392 of the Code of Virginia. In the
event that funds remain in (i) the Standardbred Partners’ Account that are subject to transfer to the Horsemen’s Account pursuant to Exhibit B, or (ii) the Horsemen’s Account after payment of purses, such funds shall be applied to the
next Race Meeting. 
  
 D. Purse Notices. The pari-mutuel
handle, pari-mutuel handle commission, and purse distribution figures, as well as the percentage figures that represent the relationship between purses and the total of pari-mutuel income and breakage shall be posted on the bulletin board in the
Racing Secretary’s office each day of a Race Meeting. 
  
 7.
Live Standardbred Racing. 
  
 A. Number of Days, Dates
and Average Daily Purses. For 2003, Colonial Downs applied for twenty-eight (28) days of live standardbred racing with targeted average daily purses of at least $50,000 per day, and the Commission orally approved such application at its meeting
on February 25, 2003. Such 28 days of live standardbred racing shall be conducted from October 3 to November 17, 
  

 10 

 2003, at the Racetrack four days a week on Fridays through Mondays (the “Colonial Downs Meet”), unless the
parties otherwise agree and the Commission approves those other agreed upon dates. For 2004 and 2005, Colonial Downs shall apply for not less than twenty-eight (28) days of standardbred racing plus that number of days equal to the quotient of the
total amount contributed to the Horsemen’s Account from the New Richmond SWF, the new Chesapeake SWF (for handle in excess of $7,915,121) and any new SWFs in the Central Southside Region (as such terms are defined in Section 8 hereof) divided
by the targeted average daily purse amount, which daily purse amount shall not be less than $50,000.00 and shall be of an amount that will attract a competitive field. Factors to be considered in determining the appropriate purse amount shall
include, but not be limited to, purses paid by similarly situated harness tracks in the Mid-Atlantic region, recommendations from the VHHA, and input from the Maryland-Virginia Racing Circuit, Inc. (“MVRC”). By way of example, if the
handle at a new SWF is $20,000,000 annually, yielding a contribution of $243,750.00 to the Horsemen’s Account, and the targeted daily purse amount is $55,000.00 per day, then Colonial Downs shall apply for 28 days plus 4.3 days (which shall be
rounded, using standard rounding conventions, to the next whole day). Racing shall be conducted at any time during the period from mid-September to mid-November, unless the parties otherwise agree. Not less than thirty (30) days prior to the
deadline for submission of a race day request to the Commission, Colonial Downs and the VHHA shall make reasonable efforts to agree upon the number of days of standardbred 
  

 11 

 racing based upon an average daily purse amount for the following calendar year pursuant to the foregoing formula, and
shall then present such agreed upon schedule and average daily purse amount to the Commission for approval. If the parties are unable to agree upon an targeted average daily purse amount for live standardbred racing for any such calendar year,
Colonial Downs shall submit to the Commission its requested number of days (but not less than twenty-eight (28) days) of, dates for, and targeted average daily purse amount for live standardbred racing for that calendar year, and the VHHA also shall
convey to the Commission its requested number of days (but not less than twenty-eight (28) days) of, dates for, and targeted average daily purse amount for live standardbred racing for that calendar year, based upon the formula set out in this
Section 6.A. After 2005, the parties intend that if Colonial Downs is successful in opening additional SWFs (as described in Section 9 hereof) to employ the same formula as set out this Section 6.A. for calculating the number of days to apply for in
future years for live standardbred racing days. 
  
 B.
Promotion of the Colonial Downs Meet. The VHHA shall provide $20,000 annually for the term of this Agreement for the marketing and promotion of the Colonial Downs Meet. Additionally, Colonial Downs and the VHHA shall collaborate to market and
promote the Colonial Downs Meet, including, but not limited to, events such as food promotion nights and advertisements in local newspapers. The parties shall agree on benchmarks in order to evaluate the effectiveness of such promotions and
advertisements and to determine whether such promotions and advertisements should continue for future years. 
  

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 Additionally, Colonial Downs hereby agrees to continue to: (i) place in the front portion of each
standardbred horse race program distributed at the Racetrack and its SWFs (the “Program”) an information section entitled “How to Read a Harness Program”; (ii) include driver and trainer rankings in the Program; (iii) provide
comparative speed ratings of every standardbred track listed in the Program; and (iv) carry a minimum of two (2) standardbred race signals at all times at each SWF, provided at least two (2) such signals are available. 
  
 C. Sponsorships. Colonial Downs agrees to use commercially reasonable
efforts to secure sponsorships for major stakes races. The VHHA agrees to provide such assistance to Colonial Downs’ efforts as Colonial Downs may reasonably request and to use its best efforts to secure sponsorships for smaller stakes races.

  
 8. Races and Awards for Virginia-Bred, Virginia-Owned and
Virginia-Sired Horses. Colonial Downs shall include in its condition sheets opportunities to race for Virginia-bred, Virginia-owned and Virginia-sired standardbred horses, including those that typically race for lower purses as well as those
that typically race for higher purses. To the extent reasonably possible, in filling races, Colonial Downs shall give preference to Virginia-bred and Virginia-sired horses that are stabled at the Racetrack or elsewhere in Virginia. Awards from the
Virginia Breeders Fund for Virginia-bred, Virginia-owned and Virginia-sired horses shall continue to be distributed according to guidelines approved by the Commission. 
  

 13 

 9. Satellite Wagering Facility Expansion. Colonial Downs and the VHHA agree that a greater dollar
volume in annual handle is necessary to increase the number of days of quality standardbred racing in Virginia, and that increased handle will most likely occur by opening additional SWFs beyond the four (4) existing SWFs, and beyond the current
statutorily authorized six (6) SWFs. The parties further agree that a goal of achieving $45,000,000 of total standardbred handle within five (5) years from the effective date of this Agreement is reasonable and desire to set forth certain actions
intended to lead to the achievement of this goal to which they are committed. Accordingly, the parties agree: 
  
 A. Licensing and Opening of New Richmond SWF and New Chesapeake SWF. Colonial Downs shall pursue simultaneously the opening of a new SWF in
Chesapeake and a new SWF in Richmond as set forth herein, either one of which may open before the other. 
  
 (1) Colonial Downs shall open in 2003 an additional SWF in the Richmond area (the “New Richmond SWF”), subject to Force Majeure Events (as
defined herein). Upon approval of this Agreement by the Commission, Colonial Downs shall seek to secure a site and address any concerns relating to compliance with all municipal laws and regulations (including zoning compliance). Upon securing a
site and satisfying all applicable municipal laws and regulations, Colonial Downs shall apply expeditiously to the Commission for owner’s and operator’s licenses for the New 
  

 14 

 Richmond SWF. Upon issuance of the licenses, Colonial Downs shall immediately commence build out or construction of the
New Richmond SWF and prosecute completion using all commercially reasonable means. It is anticipated that the New Richmond SWF will open no later than four (4) to six (6) months after the Commission issues Colonial Downs licenses to own and operate
the New Richmond SWF. An anticipated development schedule is set forth in Exhibit C hereto. 
  
 (2) Colonial Downs also shall relocate in 2003 the existing Chesapeake SWF to a location closer to Virginia Beach (the “New Chesapeake SWF”), subject to Force Majeure Events. Upon approval of this Agreement
by the Commission, Colonial Downs shall seek to secure a site and address any concerns relating to compliance with all municipal laws and regulations (including zoning compliance). Upon securing a site and satisfying all applicable municipal laws
and regulations, Colonial Downs shall apply expeditiously to the Commission for owner’s and operator’s licenses for the New Chesapeake SWF. Upon issuance of the licenses, Colonial Downs shall immediately commence build out or construction
of the New Chesapeake SWF and prosecute completion using all commercially reasonable means. It is anticipated that the New Chesapeake SWF will open no later than four (4) to six (6) months after the Commission issues Colonial Downs licenses to own
and operate the New Chesapeake SWF. An anticipated development schedule is set forth in Exhibit C hereto. 
  
 (3) “Force Majeure Events” shall mean: (a) acts of God (including flood, landslide, earthquake, hurricane, or tornado); (b) delay caused by
acts or neglect of the Commission or the Commonwealth in issuing required permits 
  

 15 

 or other administrative approvals regarding Colonial Downs’ proposed SWF; (c) acts of war or terrorism affecting the
proposed SWF; (d) strikes or labor disputes affecting the proposed SWF; (e) any legal action initiated by third parties that challenge any permit, approval, license, or similar governmental action that is necessary for the renovation, construction,
or operation of an SWF or any such action initiated by Colonial Downs to overturn a ruling denying any permit, approval, license, or similar necessary governmental action; (f) materially adverse weather conditions at the site not reasonably
anticipated; (g) fire or other unavoidable casualties at the site; (h) Colonial Downs’ inability to obtain materials or the unavailability of specified materials where there are no reasonable substitutes available or no alternative methods or
means available of obtaining such materials on a timely basis; (i) construction delays caused by subsurface or otherwise concealed physical conditions at the site differing materially from those indicated in the plans and specifications, or from
those originally encountered, which were not ascertainable by Colonial Downs prior to the grant of the licenses; and (j) delays caused solely by the failure of any governmental agency, department, or organization to timely issue building permits or
other construction-related permits that could not be secured prior to the date of the licenses or to timely perform inspections that cannot be completed prior to construction on matters necessary for the proper execution and completion of the work
necessary to build or complete the SWF, provided that Colonial Downs has taken all actions reasonably available to it, including the filing and aggressive prosecution of legal action, to compel such agencies, departments, or organizations to issue
such permits and to timely perform such inspections. 
  
  

 16 

 (4) The deadlines specified in this Subsection A shall be suspended for each day that a delay specified
in this Subsection A occurs and continues, provided that Colonial Downs exercises all reasonable diligence during such time to overcome the delay. 
  
 B. Distribution of Funds from the New Richmond SWF and the New Chesapeake SWF. Upon the opening of the New Richmond SWF or the New Chesapeake SWF,
Colonial Downs and the VHHA agree to distribute funds from the Standardbred Partners’ Account for each such facility in such a fashion as set forth in Exhibit B hereto. The effective contribution rates for the New Richmond SWF and the New
Chesapeake SWF set forth in Exhibit B hereto shall continue for the term of Colonial Downs’ licenses for such facilities. 
  
 C. SWF Referenda in Central-Southside Virginia Region. Colonial Downs shall conduct not less than three (3) statutory SWF referenda during the
period from January 1, 2003 to December 31, 2004, two (2) referenda during the period from January 1, 2005 to December 31, 2006, and one (1) referendum during the period from January 1, 2007 to December 31, 2007 in the Central-Southside Virginia
region as set forth in Exhibit D hereto (the “Central-Southside Virginia Region”); provided however, upon total standardbred handle (as calculated as provided in this Subsection C) equaling or exceeding $45,000,000, Colonial Downs’
obligations to conduct additional referenda in the Central-Southside Virginia Region shall automatically terminate. 
  

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 (1) Upon the opening of the New Richmond SWF or the New Chesapeake SWF, Colonial Downs and the VHHA
agree to distribute funds from the Standardbred Partners’ Account in such a fashion so that Colonial Downs’ effective rate of contribution into the Horsemen’s Account shall be as set forth in Exhibit B hereto at each new SWF for which
Colonial Downs applies for licenses in the Central-Southside Virginia Region, not including any relocation or relicensing within that region of an SWF formerly licensed outside that region. The effective rate of contributions into the
Horsemen’s Account as set forth in Exhibit B hereto shall be available for any SWF in the Central-Southside Virginia Region for which a license application has been made within the ten-year period commencing on the effective date of this
Agreement or, if later, the date on which all conditions set forth in Section 32 are satisfied or waived. 
  
 (2) Each year after December 1, 2004, the parties shall determine if Colonial Downs has conducted the minimum number of referenda required by this
Agreement. In the event that Colonial Downs fails to conduct the minimum number of referenda in the time periods specified above, the contribution rate for standardbred handle to the payment of purses set forth in Exhibit B hereto shall be suspended
for all SWFs operating in the Central-Southside Virginia Region and for the New Richmond SWF and the New Chesapeake SWF, and the purse contribution rate shall be that rate specified in Exhibit B hereto for “All Other 
  

 18 

 SWFs” until such time as Colonial Downs conducts the minimum number of referenda specified in this Subsection C
regardless of the time periods specified above (e.g., conducting an additional referendum in 2005 after conducting only two referenda during the period from January 1, 2003 to December 31, 2004). Upon Colonial Downs conducting such minimum number of
referenda, the purse contribution rates shall be reinstated to the rates set forth in Exhibit B hereto for SWFs located in the Central-Southside Virginia Region, the New Richmond SWF, and the new Chesapeake SWF. No adjustment (either higher or
lower) to the purse contribution rate shall be retroactive. 
  
 (3) Upon winning a referendum, Colonial Downs shall use its commercially reasonable efforts to apply expeditiously for licenses to own and operate an SWF in the locality in which the referendum was won; provided, however, if more than one
(1) referendum is won in adjacent localities or in localities in which two (2) SWFs would compete with each other, Colonial Downs shall be obligated to apply for licenses in only one (1) such locality. Upon the grant of the licenses, Colonial Downs
shall use its commercially reasonable efforts to open the licensed facility expeditiously. 
  
 (4) Colonial Downs’ obligation to conduct the referenda for the 2003-2004, 2005-2006, and 2007 time periods specified in this Subsection C shall be temporarily suspended, but not terminated, for each year in
which there are no statutorily authorized SWFs available for initial licensing. 
  

 19 

 (5) For purposes of determining whether total standardbred handle equates to $45,000,000 for a
particular calendar year, the following calculation shall be made: (i) total live standardbred handle; plus (ii) total SWF standardbred handle from all SWFs operating for at least 12 months; and plus (iii) for each SWF open less than 12 months, the
product of (a) the last three (3) months’ standardbred handle and (b) four (4). 
  
 D. Northern Virginia SWF. Upon the opening of the New Richmond SWF or the New Chesapeake SWF, Colonial Downs and the VHHA agree to distribute funds from the Standardbred Partners’ Account in such a fashion
as set forth in Exhibit B hereto for an SWF opened by Colonial Downs in Northern Virginia during the five (5)-year period commencing on the effective date of this Agreement. For the purposes of this Agreement, Northern Virginia is defined as the
counties of Loudoun, Prince William, Fairfax and Arlington and the cities of Manassas, Manassas Park, Fairfax City, Falls Church, and Alexandria. 
  
 E. Efforts in Northern Virginia. Because the parties agree on the importance to Virginia racing of a Northern Virginia SWF, they further agree to
undertake the following, in consultation with the MVRC and its parent, the Maryland Jockey Club: 
  
 (1) Political advance work with local government officials and business leaders in Northern Virginia; 
  
 (2) Interest polling in Northern Virginia; 
  
  

 20 

 (3) Periodic meetings between the principals of Colonial Downs and MVRC and their respective staffs to
discuss and consider the feasibility of referenda and SWF construction in Northern Virginia; and 
  
 (4) Not later than January 1, 2004, presenting to the Board of Directors of the VHHA a report by the principals of Colonial Downs and MVRC setting forth
the feasibility and cost of referenda and SWF construction in Northern Virginia, including handle estimates for all SWF sites considered by Colonial Downs and MVRC. Such report shall give due consideration to providing meaningful information to the
VHHA without jeopardizing the chances for success by premature disclosure of strategic non-public information. 
  
 F. Opening of Brunswick SWF on Mondays. The existing SWF located in Brunswick, Virginia (the “Brunswick Facility”) will open on a test
basis on Mondays commencing April 7, 2003 according to the following schedule: 
  
 (1) The first 60-day period commencing April 7, 2003 will be a ramp-up period; 
  
 (2) During the next 30-day period thereafter, the Brunswick Facility must average daily handle of $20,000 per Monday to remain open on Mondays for an
additional 90-day period; 
  
 (3) During the next 90-day period
thereafter, the Brunswick Facility must average daily handle of $25,000 per Monday to remain open on Mondays for an additional 90-day period; and 
  

 21 

 (4) During the last 90-day period thereafter, if the Brunswick Facility averages daily handle of $28,000
per Monday, it will remain open indefinitely, provided average daily handle exceeds $25,000 per Monday. If daily average handle for Mondays measured over a 90-day period is below $25,000, Colonial Downs shall have the right to close the Brunswick
Facility on Mondays thereafter. 
  
 G. Incorporation of
Terms in SWF Licenses. Colonial Downs and the VHHA agree that in order for any and all owner’s and operator’s licenses for the additional SWFs referenced herein (including but not limited to the New Richmond SWF, the New Chesapeake
SWF, SWFs in the Central-Southside Virginia Region and SWFs in Northern Virginia) to be effective for purposes of this Agreement, such licenses shall contain or incorporate the provisions of this Agreement relating to adjustments to contributions
from the Standardbred Partners’ Account to the Horsemen’s Account and Section 22 hereof. The parties agree to use their best efforts to have the SWF licenses issued by the Commission contain or incorporate such provisions. 
  
 10. Stalls and Track Facilities. 
  
 A. Availability of Stalls and Track Facilities Before, During and After
Race Meetings. Colonial Downs shall make available at least one thousand (1,000) stalls to Horsemen during each Race Meeting. Access to the racing strip, barns, track kitchen facilities, dormitories, and related backside facilities at the
Racetrack (collectively, the “Backside Facilities”) necessary for training purposes 
  

 22 

 shall be made available by Colonial Downs without charge (i) prior to each live Race Meeting, to Horsemen who have horses
training for that live Race Meeting, and (ii) following each live Race Meeting, to Horsemen who have raced at the Racetrack during that Race Meeting. The Backside Facilities shall be made available by Colonial Downs prior to and following each Race
Meeting for an aggregate total of 20 days, the exact number of days before and number of days after each Race Meeting to be agreed upon each year by Colonial Downs and the VHHA. Notwithstanding the foregoing, such periods may be shortened if the
Backside Facilities are needed for a live thoroughbred race meeting, and Colonial Downs shall provide advance notice to the Horsemen in any such event. During the aforesaid periods, Colonial Downs, at its own expense, shall make water and
electricity available to each barn in use and keep the racing surfaces properly harrowed and watered. 
  
 B. Vendors. Except as expressly provided elsewhere in this Agreement, Colonial Downs shall not impose upon Horsemen any exclusive arrangement
concerning farriers, feedmen, tack supplies, or any other suppliers or providers of services customarily used by owners and trainers; provided, however, that if Colonial Downs permits the use of bedding material other than straw, it may require the
use of an exclusive supplier in order to facilitate removal of such used material. Notwithstanding the foregoing, Colonial Downs reserves the right to impose reasonable non-discriminatory requirements for security, safety and environmental reasons.
Colonial Downs shall use its reasonable best efforts to keep unlicensed persons in the above categories off its premises. 
  
  

 23 

 C. Stall Applications. Colonial Downs shall publish and distribute stall applications to the
Horsemen. Each completed application will contain the name, permanent address, telephone number, and electronic mail (e-mail) address of the owner and trainer of each horse expected to be stabled on the grounds of the Racetrack during that Race
Meeting. Colonial Downs shall, in the exercise of its sole business judgment, determine the terms for and approve or disapprove applications for stalls, but to the extent reasonably possible, preference shall be given to stall applications for
Virginia-bred horses, Virginia-owned horses, and Virginia-sired horses. Colonial Downs may consider, among other things, the following criteria in allocating stalls to Horsemen for use during Race Meetings: 
  
 (1) The financial and professional integrity of the trainer listed on the
stall application; 
  
 (2) The total number of stalls requested
by a trainer in relation to the number of available stalls; and 
  
 (3) The best interests of Colonial Downs and standardbred racing. 
  
 Each Horsemen accepting a stall at the Racetrack shall be required to use his or her best efforts to run his or her horses at the Racetrack during the Race Meeting consistent with the horses’ physical condition and fitness, and race
conditions. 
  

 24 

 D. Racetrack Kitchen. Colonial Downs shall provide a Racetrack kitchen for use by Horsemen and
others, with the terms, conditions and provisions thereof to be mutually agreed upon on an annual basis by the VHHA and Colonial Downs. Joint approval of Colonial Downs and the VHHA shall be required concerning, but not limited to, management of the
facility, cleanliness of the facility, palatability and cost of food, adequacy of hours of operation, and adequacy of premises insurance coverage. 
  
 E. Temporary Building. Colonial Downs shall continue to provide a suitable location on the backstretch for the temporary placement of a temporary
building, currently anticipated to be a double-wide office trailer, to be used during the 2003, 2004 and 2005 Race Meetings for a classroom facility, an office for the chaplaincy program, a counseling office, a chapel, recreation, and a secure
storage facility for VHHA supplies. Colonial Downs shall continue to furnish electrical service and telephone hook-up for the office trailer. The VHHA shall save and hold harmless and shall indemnify Colonial Downs against any expenses, costs,
claims, or demands, including attorney’s fees, arising out of the installation, use, or removal of the temporary building, electrical service, and telephone hookup. 
  
 11. Racing Committee. Colonial Downs and the VHHA have organized and shall maintain a joint committee to be known as
the “Standardbred Racing Committee.” The VHHA and Colonial Downs shall each continue to appoint not more than four (4) representatives to the Racing Committee. The Racing Committee (i) shall meet at the request of either Colonial Downs or
the VHHA on at 
  

 25 

 least five (5) days notice to the other party, and (ii) may consider such matters as the stable area, barns, tack rooms,
dormitories, promotion, publicity, track conditions (bad weather closing), racing-related programs, reserved seats and passes for Horsemen, number of races, purse schedules, track kitchen, other matters related to attendance, pari-mutuel handle or
the quality of racing, and health benefit programs, death benefits, drug and alcohol abuse programs, and any other program that will aid and assist the racing industry in Virginia in hiring, retaining and caring for its personnel at the highest
level. 
  
 12. Representations and Warranties. 

 
 A. VHHA. In addition to the representations and warranties
contained elsewhere in this Agreement, the VHHA warrants, represents to and covenants with Colonial Downs that during the Term of this Agreement: 
  
 (l) This Agreement has been approved by the Board of Directors of the VHHA as authorized by the Bylaws of the VHHA; 
  
 (2) This Agreement is valid and enforceable against the VHHA according to
its terms; 
  
 (3) Each VHHA officer, director and other official
shall utilize all of his or her powers of persuasion and shall take all reasonable action within their power, including all legal means at their disposal, to ensure that all VHHA Members, their employees, other related personnel, and other
backstretch personnel comply with the terms of this Agreement; 
  

 26 

 (4) The VHHA shall seek to alter its share of the amounts described in Section 5 above only through good
faith negotiations with Colonial Downs and shall not engage in or support, directly or indirectly, any action to influence the Commission, the Governor of Virginia or the General Assembly of Virginia to increase its share of the amounts described in
Section 5 above or contained in any applicable provision of the Code of Virginia or the Commission’s regulations by rule, regulation, order, executive order, statute, amendment of statute, or otherwise; 
  
 (5) The VHHA shall use its best efforts to ensure that the backstretch area
of the Racetrack is maintained in a safe, clean, and orderly condition; and 
  
 (6) This Agreement shall be made available for review and copying by Members of the VHHA and all other licensed owners, trainers, employees and backside personnel at the VHHA office. 
  
 B. Colonial Downs. In addition to the representations and warranties
contained elsewhere in this Agreement, Colonial Downs warrants, represents to and covenants with the VHHA that during the Term of this Agreement: 
  
 (1) This Agreement has been approved by its General Partner; 
  
 (2) This Agreement is valid and enforceable against Colonial Downs according to its terms; 
  

 27 

 (3) Colonial Downs shall seek to alter the VHHA’s share of the amounts described in Section 5 above
only through good faith negotiations with the VHHA and shall not engage in or support, directly or indirectly, any action to influence the Commission, the Governor of Virginia or the General Assembly of Virginia to decrease the VHHA’s share of
the amounts described in Section 5 above or contained in any applicable provision of the Code of Virginia or the Commission’s regulations by rule, regulation, order, executive order, statute, amendment of statute, or otherwise; 
  
 (4) Colonial Downs shall use its reasonable best efforts to ensure that the
backside area of the Racetrack is maintained in a safe, clean and orderly condition when in use; and 
  
 (5) Colonial Downs shall use its reasonable best efforts to assist the VHHA in developing health and welfare programs for backstretch personnel; provided
that, this Section imposes no obligation on either party to fund any such program. 
  
 13. VHHA Office. Colonial Downs shall provide the VHHA on a year-round basis, without charge, a suitable private office located on the grounds of the Racetrack; provided, however, that during any thoroughbred
race meeting conducted at the Racetrack and for a reasonable time before and after any such meeting, the recognized thoroughbred horsemen’s group shall have use of and priority in the use of that office. Colonial Downs shall furnish said office
with appropriate office furniture and telephone lines. The VHHA shall pay the applicable charges for use of such telephone lines. 
  

 28 

 14. Racing Officials. Colonial Downs shall send to the President of the VHHA a written list of the
persons whom Colonial Downs has requested the Commission to approve as racing officials for each Race Meeting at the same time it submits that list to the Commission in accordance with the Commission’s regulations. 
  
 15. Governmental Approval. Nothing contained in this Agreement shall
be construed as requiring either party to perform any term when such performance is contrary to law or requires prior governmental approval; provided, however, both parties shall use their best efforts to obtain governmental approval if such is
required. 
  
 16. Authorization for Out-of-State
Simulcasting. During the Term of this Agreement, the VHHA as the authorized representative of the Horsemen for interstate simulcasting purposes, hereby consents and authorizes Colonial Downs to negotiate and contract with simulcast and receiving
facilities, including off-track wagering facilities outside the Commonwealth of Virginia, for (i) the conduct of off-track wagering at the Racetrack and the SWFs, and (ii) off-track wagering on live standardbred races emanating from the Racetrack,
pursuant to the Interstate Horse Racing Act of 1978, P.L. 95-515 (the “Interstate Horse Racing Act”). The foregoing consent and authorization shall constitute all consents required from the VHHA for simulcast wagering under the Interstate
Horse Racing Act, and all simulcast wagering shall conform to that Act. 
  

 29 

 17. Copies of Documents. Colonial Downs shall send a copy of its stall application form, stakes
purse program, and condition sheet for each Race Meeting to the VHHA on or before the first day they are distributed to Horsemen. 
  
 18. Horsemen’s Backstretch Improvements and Programs . Colonial Downs and the VHHA agree to expend for the benefit of Horsemen certain funds
during calendar years 2003 and 2004 for the improvement of backstretch working and living conditions and for educational, recreational, and counseling programs. Pursuant to the Thoroughbred Horsemen’s Agreement, dated as of December 23, 2002
(the “Thoroughbred Agreement”), Colonial Downs has agreed to provide $50,000 to be used solely for capital improvements and to be provided no later than June 1st of each year. Similar to Colonial Downs’ agreement with the Virginia Horsemen’s Benevolent and Protective Association, Inc. (the “VHBPA”)
as reflected in the Thoroughbred Agreement, the VHHA and Colonial Downs shall use their best efforts to ensure that at least $150,000 is provided annually from the legitimate breakage deposited into the Racing Benevolence Fund pursuant to §
59.1-392(T)(2) of the Code of Virginia for the foregoing improvements and programs. Regarding the latter Fund, the VHHA and Colonial Downs agree to use their best efforts to obtain any necessary authorization to use part of the legitimate breakage
for such improvements and programs as agreed to by the VHBPA and otherwise described in the Thoroughbred Agreement. All of the above funds shall be deposited into the 
  

 30 

 Backstretch Improvement Escrow Account, which shall be established at a financial institution mutually acceptable to
Colonial Downs, the VHBPA and the VHHA, and shall be expended as mutually agreed by Colonial Downs and the VHHA and subject to Commission approval pursuant to Section 32 hereof. At the conclusion of each Race Meeting, Colonial Downs shall within
sixty (60) days provide the VHHA with an accounting of all expenditures made from the Backstretch Improvement Escrow Account. 
  
 19. Right to Terminate. Either party may terminate this Agreement upon the other party’s failure to substantially perform as required under
this Agreement and such failure continues for thirty (30) days following the date written notice of default detailing the perceived failure to perform is sent to and received by the allegedly defaulting party in accordance with Section 26 below.
Such termination shall not constitute an election of remedy, nor shall it constitute a waiver of a party’s other remedies at law or in equity. Additionally, Colonial Downs may terminate this Agreement upon written notice to the VHHA if the
Racetrack and all the SWFs are closed for ninety (90) continuous days. 
  
 20. Indemnification. The VHHA shall indemnify and save harmless Colonial Downs, its agents, representatives, employees, officers, directors and stockholders, their respective successors and assigns, and all persons acting by,
through, under, or in concert with any of them, from and against any and all demands, liabilities, loss, costs, damages, or expenses of whatever nature or kind, including fees of attorneys and all other expenses, arising out of or in any way related
to or occasioned by Colonial Downs’ performance under Subsection 5.F. hereof (Administrative Fee). 
  

 31 

 21. Mediation; Arbitration. 
  
 A. Attempt to Resolve Disputes. In the event of any disputes or differences arising out of this Agreement, which the
parties have been unable to resolve after reasonable efforts to do so, either party may refer the dispute or difference to a mediator mutually acceptable to the parties. The parties shall split equally the cost of the mediator. In the event such
mediation is unsuccessful, or the parties are unable to agree on a mediator, either party may refer the dispute or difference for final settlement to arbitration in accordance with the following procedures. 
  
 B. Administration. The arbitration shall be administered by the
American Arbitration Association (“AAA”), or its successor, pursuant to the expedited procedures (irrespective of the amount in controversy) of the AAA’s then-prevailing Commercial Arbitration Rules (the “Rules”), subject to
the limitations and modifications set forth herein. The laws of the Commonwealth of Virginia will govern all matters arising from the arbitration without giving effect to the choice of law principles thereunder. The arbitration will be held in
Virginia unless the parties otherwise agree. 
  
 C. Notice to
Arbitrate. Notice of a demand for arbitration pursuant to this procedure (the “Notice to Arbitrate”) shall be made in writing and delivered to all other affected parties as provided in Section 26 hereof. The Notice to 
  

 32 

 Arbitrate shall be accompanied by a short and plain statement of the party’s claim(s), the grounds for same and the
relief sought. Within ten (10) days of receipt of the Notice to Arbitrate, the other party shall set forth in writing and deliver to all other affected parties as provided in Section 26 hereof, an answer setting forth its response to the claim for
relief, as well as any affirmative defenses and counterclaims. 
  
 D. Selection of Arbitrator(s). The arbitration shall be before one (1) neutral arbitrator (the “Arbitrator”) to be selected in accordance with the Rules (as modified herein). In the event the parties cannot agree upon an
Arbitrator within ten (10) business days from receipt of the Notice to Arbitrate, each party shall select one (1) Arbitrator. The Arbitrators so selected shall select a third arbitrator at the Pre-Hearing Conference (as defined herein), who shall be
the chairperson of the three member panel. 
  
 E. Pre-Hearing
Conference. The Arbitrator(s), within ten (10) days of his, her or their appointment, shall conduct a pre-hearing conference (the “Pre-Hearing Conference”). The parties shall be prepared to discuss discovery matters, schedule the
Additional Conference and Arbitration Hearing (as defined herein), decide procedural matters and address all other questions that may be presented. 
  
 F. Discovery. The parties shall have the right to conduct and enforce pre-hearing discovery in accordance with the Federal Rules of Civil Procedure
then in effect for the Eastern District of Virginia (Richmond Division), including any Local Rules for the Eastern District of Virginia (Richmond Division) (collectively, the “Court Rules”), subject to the following: 
  
 (1) The parties shall make the voluntary disclosures described in the Court
Rules (except those applicable to expert witnesses) within fifteen (15) days after the appointment of the Arbitrator(s). The identity and report of each expert witness, as well as all other disclosures described in the Court Rules, shall be
disclosed to the other parties no later than thirty (30) days after the appointment of the Arbitrator(s). 
  

 33 

 (2) Each party may serve a request for production of tangible and documentary evidence. Responses to a
request for production shall be due fifteen (15) days after receipt. 
  
 (3) Each party may serve no more than one set of interrogatories limited to no more than thirty (30) questions, including subparts. Answers to interrogatories shall be due fifteen (15) days after receipt. 
  
 (4) Each party may depose up to, but no more than, three (3) witnesses;
provided, however, that each party is limited to no more than a total of eighteen (18) hours of deposition time in the aggregate. 
  
 (5) All discovery must be completed within forty-five (45) days after appointment of the Arbitrator(s) (the “Discovery Deadline”). 

 
 (6) The Arbitrator(s), for good cause shown, upon motion and three (3)
days’ notice to all parties, may extend any of the discovery deadlines set forth herein for a period not to exceed fourteen (14) days. The Arbitrator(s) shall 
  

 34 

 have the right and authority to decide any and all discovery disputes. The Arbitrator(s) shall be empowered to issue
subpoenas and any and all process and orders permitted under the Rules to compel cooperation in discovery and otherwise enforce the discovery rights and obligations of the parties. 
  
 G. Additional Conference. Within ten (10) days after the Discovery Deadline, the Arbitrator(s) shall hold an
additional conference (the “Additional Conference”) to set dates for the exchange of witness and exhibit lists, deposition testimony designations, testimony summaries and arbitration briefs; determine the length of the Arbitration Hearing;
and address any and all other questions that may be presented. 
  
 H. Arbitration Hearing. The arbitration hearing (the “Arbitration Hearing”) shall commence within twenty (20) days after the date of the Additional Conference, unless otherwise agreed by the parties. For good cause shown,
the Arbitrator(s) may grant no more than one (1) continuance per party of a duration not to exceed ten (10) days each; provided, however, no party shall be entitled to any other continuances. Unless otherwise agreed by the parties or ordered by the
Arbitrator(s) for good cause shown, the Arbitration Hearing shall continue from day-to-day for such period of time (not to exceed five (5) days) as may be set by the Arbitrator(s). Each party shall have equal time for presentation and rebuttal,
unless otherwise agreed by the parties. The parties may present evidence, at their option, in the form of testimony (live and/or by deposition), documents and other tangible evidence, or testimony summaries, or any combination thereof. The

  

 35 

 Arbitrator(s), upon timely request by a party or if otherwise required by law, shall require witnesses to testify under
oath administered by any duly qualified person. Any party, at its own cost and three (3) days’ notice to all other parties, may arrange for a stenographic record of the proceedings. Such record shall be made available for inspection and copying
by all other parties and the Arbitrator(s). 
  
 I. Arbitration
Award. Notwithstanding the foregoing, it is the parties’ intent that the arbitration shall be completed and resolved within one hundred and twenty (120) days of the commencement of such proceeding. The Arbitrator(s) shall issue and deliver
to each party a written and signed award (the “Arbitration Award”) within thirty (30) days of the closing of the record. The Arbitration Award shall contain the factual and legal bases for such award. The Arbitration Award, in addition to
the relief granted therein, may award attorneys’ fees and costs to the prevailing party as the Arbitrator(s) may determine in light of all of the circumstances. The Arbitration Award shall be final and binding upon the parties in accordance
with its terms and Section 8.01-577 et seq. of the Code of Virginia. 
  
 J. Default. If a party fails to proceed with arbitration or defaults in his obligation to arbitrate, such default shall not prevent the other party from proceeding with such arbitration and the party who fails to proceed with such
arbitration shall be bound by the arbitration. 
  
 K.
Costs. The costs of the arbitration incurred by the parties for hearing reporting fees, rental of a hearing room and all AAA fees, costs and services 
  

 36 

 charges and of the arbitrator shall be paid by Colonial Downs, except that hearing postponement or cancellation fees or
charges by the AAA or the arbitrator(s) shall be borne exclusively by the canceling or postponing party. Conversely, with respect to all other matters, unless the arbitrator(s) otherwise so determines and provides in the arbitration award, each
party shall bear its own costs and expenses incurred by that party in connection with arbitration, including without limitation each party’s own travel expenses, hearing witness expenses and attorney’s fees. 
  
 22. Contribution Adjustments. 
  
 A. Changes in Applicable Law. The parties have negotiated the
relevant transfers from the Standardbred Partners’ Account to the Horsemen’s Account (the “Purse Amounts”) from expected handle at the New Richmond SWF, the New Chesapeake SWF, and future SWFs located in the Central-Southside
Virginia Region and Northern Virginia based upon those statutes, regulations, administrative proceedings, common law and other accepted sources of rules and regulations applicable to the parties that are in effect as of the date hereof
(collectively, “Applicable Law”). Under Applicable Law, certain allocations of rights and entitlements have been made to Colonial Downs (such as uncashed tickets) and the VHHA (such as a portion of breakage), and the parties do not intend
to alter such existing rights and entitlements by this Agreement generally or by application of this Section 22, in particular, to future events. Nonetheless, in the event there is a change in Applicable Law or a ruling or action of the Commission
that alters contributions to the Standardbred Partners’ Account or transfers to the Horsemen’s 
  

 37 

 Account, or otherwise inures to the benefit or detriment of the VHHA or its successors in the form of purses, operating
funds or awards, then the parties agree that the Purse Amounts shall be adjusted to restore the parties to the economic terms set forth in this Agreement. By way of example and not limitation, if Applicable Law is changed to provide that a
percentage of breakage or uncashed tickets is applied to increase purses for standardbred racing, then the Purse Amounts shall be adjusted downward such that in any fiscal year the amount contributed to purses pursuant to the terms hereof shall be
reduced by an amount equal to the contribution to purses from breakage. By way of further example, if the percentage of handle paid to the Commonwealth of Virginia as a pari-mutuel tax increases, there shall be no change in the Purse Amounts under
this Agreement unless such increased pari-mutuel tax is used to supplement purses or is used for the exclusive activities of the representative horsemen group or groups for Horsemen racing at Colonial Downs. 
  
 B. Duration. The terms and provisions of this Section 22 shall remain
in full force and effect for as long as the licenses for the New Richmond SWF, the New Chesapeake SWF, or the SWFs located in the Central-Southside Virginia Region remain in effect. 
  
 23. Additional License. Colonial Downs hereby reserves the right, and the VHHA hereby recognizes such right, of
Colonial Down’s to apply for licenses from the Commission enabling Colonial Downs to seek an available racetrack devoted to standardbred racing, subject to consultation with the VHHA. Once Colonial Downs 
  

 38 

 obtains the necessary licenses, the VHHA hereby agrees to (i) race standardbred horses at, and promote, such racetrack
and (ii) to cease racing the New Kent Racetrack. Colonial Downs shall be under no obligation to obtain, or attempt to obtain, such licenses. 
  
 24. Consents, Approvals, Agreements or Assurances. Wherever this Agreement requires the consent, approval, agreement, or assurance of Colonial
Downs and/or the VHHA, (1) a request for such consent, approval, agreement, or assurance from one party shall be responded to by the other party in a timely and businesslike manner, and (ii) such consent, approval, agreement, or assurance shall not
be unreasonably withheld, delayed or conditioned unless otherwise specifically provided in this Agreement. 
  
 25. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument. 
  
 26. Notices.
All notices, requests, demands or other communications as may be required by this Agreement shall be in writing, shall be signed by an authorized representative of the party providing the communication, shall be sent to each of the persons listed
below, may be sent by certified mail, return receipt requested, or by telephone facsimile, and shall be deemed to have been given or made when received by personal delivery or otherwise. A courtesy hard copy of any communication that is sent by
telephone facsimile also shall be sent by certified 
  

 39 

 mail, return receipt requested. The current addresses of persons to whom communications are to be sent are as follows:

  

			
	 Colonial Downs:
	  	Mr. Jeffrey P. Jacobs
	 	  	Colonial Downs, L.P.
	 	  	10515 Colonial Downs Parkway
	 	  	New Kent, VA 23124
		
	 	  	Mr. Ian M. Stewart
	 	  	President
	 	  	Colonial Downs, L.P.
	 	  	10515 Colonial Downs Parkway
	 	  	New Kent, VA 23124
		
	 Copy to:
	  	James L. Weinberg, Esq.
	 	  	Hirschler Fleischer
	 	  	The Federal Reserve Bank Building
	 	  	P. O. Box 500 (23218-0500)
	 	  	701 E. Byrd Street, 15th floor
	 	  	Richmond, VA 23219
		
	 	  	Mr. John E. Mooney
	 	  	President
	 	  	Maryland-Virginia Racing Circuit, Inc.
	 	  	10515 Colonial Downs Parkway
	 	  	New Kent, VA 23124
		
	 	  	H. Lane Kneedler, Esq.
	 	  	Reed Smith LLP
	 	  	901 East Byrd Street, Suite 1700
	 	  	Richmond, VA 23219-4069
		
	 VHHA:
	  	R. C. Dunavant, Jr., D.V.M., President
	 	  	Virginia Harness Horse Association
	 	  	c/o Lunenburg Animal Hospital
	 	  	Highway 40
	 	  	Kenbridge, Virginia 23944

  

 40 

			
	 Copy to:
	  	Wirt P. Marks, IV, Esq.
	 	  	Hancock, Daniel, Johnson & Nagle, P.C.
	 	  	4112 Innslake Drive
	 	  	Glen Allen, VA 23060

  
 27. Waivers. No
waiver by a party to this Agreement of any breach of this Agreement or any of its terms shall be effective unless, and only to the extent, such waiver is in writing signed by the party providing or making such waiver and delivered to the other party
as provided in Section 26 above. No waiver of any breach shall be deemed to be a waiver of any other or any subsequent breach. 
  
 28. Applicable Law; Venue. This Agreement is being executed and delivered in the Commonwealth of Virginia and shall be construed and enforced in
accordance with the law of Virginia without regard to its conflict of laws rules and provisions. In all court proceedings brought in connection with this Agreement, the parties hereto irrevocably consent to exclusive personal jurisdiction by, and
venue in, the Circuit Court for the City of Richmond, Virginia, or the United States District Court for the Eastern District of Virginia, Richmond Division. 
  
 29. Headings. Any headings preceding the text of the several sections, subsections, paragraphs and subparagraphs hereof are inserted solely for
convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction, or effect. 
  
 30. Severability. If any provision of this Agreement is declared invalid by any tribunal, or becomes invalid or inoperative by operation of law,
the remaining provisions of this Agreement shall not be affected thereby and shall remain in full force and effect. 
  

 41 

 31. Entire Agreement; Modification. This Agreement contains the entire Agreement between the
parties and supersedes all prior agreements, including, but not limited to, the Existing Agreement, and understandings, both written and oral, between the parties with respect to the subject matter of this Agreement. This Agreement shall be binding
upon and inure to the benefit of each party hereto, its legal representatives and successors, including, but not limited to, any successor group to the VHHA that is the recognized majority standardbred horsemen’s group. No modification,
variation or amendment of this Agreement or of any attachment or exhibit to this Agreement shall be effective unless such modification, variation or amendment is in writing and has been signed by the parties to this Agreement. This Agreement may be
assigned by Colonial Downs in its sole discretion, subject to applicable law. 
  
 32. Conditions Precedent to Effectiveness of this Agreement. This Agreement shall become effective only upon the satisfaction, or waiver by the parties, of the following conditions precedent: 
  
 A. Commission Approval. The parties acknowledge that this Agreement
and the expenditures from the Racing Benevolence Fund detailed in Section 18 above are subject to the approval of the Commission. If this Agreement in its entirety and such expenditures are not approved by the Commission, this Agreement shall be
null and void. 
  

 42 

 B. Amendment of Management and Consulting Agreement. The Management and Consulting Agreement shall
have been amended such that Section 4.1.1 of the Management and Consulting Agreement substantively provides as follows and such amendment shall have been approved by the Commission: 
  
 4.1.1 Southern Virginia. For the Racetrack and all OTB Facilities not located in the Virginia
counties of Loudoun, Fairfax, Prince William, and Arlington and the Virginia cities of Manassas, Manassas Park, Fairfax City, Falls Church and Alexandria, Owner shall pay Manager a Management Fee as set forth herein based upon the aggregate of the
gross amounts wagered (“Handle”) in any calendar year in the Commonwealth of Virginia, whether at the Racetrack, at the OTB Facilities or in any other form (including but not limited to account, telephone and home wagering) on all races
run live in Virginia, or received by simulcast in Virginia, excluding only (1) Handle generated at racetracks, offtrack betting facilities or in any other form licensed to persons or entities other than Colonial Downs and in which Colonial Downs or
any of its affiliates has no ownership, financial or other interest, and (2) Handle generated at any racetrack in addition to the Racetrack licensed by the Commission to persons or entities other than Colonial Downs (as well as at off-track betting
facilities licensed to such other racetrack licensee or licensees) in which an affiliate of Colonial Downs has a passive, non-controlling interest so long as such interest was not designed or intended to circumvent this Agreement. Handle, subject to
the foregoing exclusions, is referred to herein as “Adjusted Handle.” Adjusted Handle shall be comprised of Adjusted Handle from (i) amounts wagered at the Racetrack, the four OTB Facilities currently licensed to Colonial Downs in
Richmond, Chesapeake, Hampton and Brunswick, Virginia, and certain future OTB Facilities proposed by Colonial Downs in a Thoroughbred Horsemen’s Agreement with the Virginia Horsemen’s Benevolent and Protective Association, dated December
23, 2002, and effective as of January 1, 2003, such future OTB Facilities being referred to in that Thoroughbred Horsemen’s Agreement as the New Richmond SWF, the New Chesapeake SWF, and the proposed Central-Southside Virginia Region SWFs (such
aggregate Adjusted Handle referred to herein as the “Horsemen’s Agreement Adjusted Handle”), plus (ii) amounts wagered at any OTB Facilities licensed to Colonial Downs (other than OTB Facilities licensed to Colonial Downs that are
located in the Virginia counties of Loudoun, Fairfax, Prince William, and Arlington and the Virginia cities of Manassas, Manassas Park, Fairfax City, Falls Church and Alexandria) that are not listed in subdivision (i) of this sentence or wagered in
any other form (including but not limited to account, telephone and home wagering) (such aggregate Adjusted Handle referred to herein as “Additional Adjusted Handle”), and plus 
  

 43 

 (iii) amounts wagered at OTB Facilities located in the Virginia counties of Loudoun, Fairfax, Prince
William, and Arlington and the Virginia cities of Manassas, Manassas Park, Fairfax City, Falls Church and Alexandria. Owner shall pay Manager an annual Management Fee equal to (i) one percent (1%) of the first $75 million per calendar year of
Horsemen’s Agreement Adjusted Handle; plus (ii) two percent (2%) of the next $50 million per calendar year of Horsemen’s Agreement Adjusted Handle; plus (iii) one and one-half percent (1 1/2%) of all Horsemen’s Agreement Adjusted Handle in excess of $125 million per calendar year; and plus (iv) two percent (2%) per calendar year of all
Additional Adjusted Handle. 
  
 Upon satisfaction or
waiver of the foregoing conditions, this Agreement shall be effective as of March 1, 2003, regardless of the date of the satisfaction or waiver of such conditions. 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first stated above. 
  

							
	 VIRGINIA HARNESS HORSE
	  	COLONIAL DOWNS, L.P.
	 ASSOCIATION
	  	By:	  	 Stansley Racing Corp., its General Partner

				
	 By:
	  	  

	  	By:	  	

	 	  	 R. C. Dunavant, Jr., D.V.M., President
	  	 	  	 Ian M. Stewart, President

			
	 	  	 	  	STANSLEY RACING CORP.
				
	 	  	 	  	By:	  	  

	 	  	 	  	 	  	 Ian M. Stewart, President

  
  

 44 

 EXHIBIT A 
  

FORM OF 
 TRUST AGREEMENT

  
 THIS TRUST AGREEMENT is entered into this
     day of             , 200    , by and between COLONIAL DOWNS, L.P., a Virginia limited partnership (the
“Trustee”), and the VIRGINIA HARNESS HORSE ASSOCIATION, a not-for-profit corporation (the “VHHA”), on behalf of the standardbred horsemen engaging in standardbred racing at Colonial Downs’ racetrack (the
“Track”) (collectively, the “Beneficiaries”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, pursuant to
prior agreements that have expired and an Agreement, dated as of April 2, 2003 (the “Horsemen’s Agreement”), relating to live standardbred racing at Colonial Downs, among other matters, the Trustee has and will make deposits into an
account currently maintained at                      Bank, N.A.,
                     branch (the “Standardbred Partners’ Account”) a portion of which will be used to fund purses and
related payments to the Beneficiaries participating in racing at the Track during the 2003 standardbred racing season and other years governed by the Horsemen’s Agreement; 
  
 NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 
  
 1. The Account. The Trustee shall maintain the Standardbred Partners’ Account at a financial institution mutually acceptable to the parties
and that is insured by an agency of the United States government. 
  
 2. Deposits. The Trustee shall deposit all funds required by the Horsemen’s Agreement into the Standardbred Partners’ Account. The funds so deposited into the Standardbred Partners’ Account, exclusive of interest
earned thereon and amounts payable to Colonial Downs therefrom, are hereinafter referred to as the “Trust Account Funds.” No other funds shall be deposited into the Standardbred Partners’ Account, and the Trustee shall not commingle
any other funds with the Trust Account Funds. 
  
 3.
Withdrawals. The VHHA, on behalf of the Beneficiaries, grants the Trustee the authority to withdraw funds from the Standardbred Partners’ Account to make payments required to be made pursuant to the terms and provisions of the
Horsemen’s Agreement, including, without limitation, to provide for the payment of purses and related awards to the Beneficiaries. 
  

 A-1 

 4. Title to Funds in the Account. The Trustee shall hold only legal title to the Trust Account
Funds and shall not have any equitable or beneficial interest in such Funds. Accordingly, the Trust Account Funds are excluded from the Trustee’s estate for purposes of 11 U.S.C. § 541(d), as amended. 
  
 5. Interest. The Trustee understands and accepts that interest, if
any, earned on the Funds will be reported under its employer identification number, that such reporting is done as a matter of convenience for the administration of the Standardbred Partners’ Account and that the receipt of such interest does
not affect the beneficial and equitable title that the parties have to such interest and is not in derogation of the rights and entitlements of the parties as set forth herein and in the Horsemen’s Agreement. 
  
 6. Trustee’s Duties. The duties of the Trustee under this
Agreement shall be limited to the safekeeping and disbursement of the Trust Account Funds and documents under the terms and conditions of this Agreement. The Trustee shall be entitled to rely on and may assume the genuineness and authenticity of any
signatures purported to be made by the parties hereto, their lawful representatives, and successors or assigns. Upon election of either party hereto, an independent third party may be appointed trustee of the Standardbred Partners’ Account and
the Trustee hereunder may be relieved of its duties as trustee but shall be bound by the other provisions of this Agreement. 
  
 7. Limitation on Liability. The Trustee shall not be liable for any claims, damages, liabilities, losses, costs, or expenses arising from the
Trustee’s acts or omissions with respect to the Trust Account Funds or its performance hereunder, unless such actions or omissions result from the Trustee’s negligence or willful misconduct. 
  
 8. Reimbursement of Expenses. The Trustee shall be reimbursed in the
form of one-half of the interest accruing on the Trust Account Funds for all costs and expenses reasonably incurred by it in connection with the administration of the Account, including payment of any trustee fees to a third-party trustee.

  
 9. Termination. This Agreement shall terminate on the
date on which all payments under the Horsemen’s Agreement have been made and the Horsemen’s Agreement is no longer in effect. 
  
 10. Notices. All notices, approvals, and other communications authorized or required to be given between the parties hereto shall be validly given
or made if in writing and sent in accordance with the terms and conditions of the Horsemen’s Agreement. 
  

 A-2 

 11. Governing Law. This Agreement shall be governed, construed, and enforced in accordance with
the laws of the Commonwealth of Virginia, without regard to any conflicts of law, rules or provisions thereof. 
  
 12. Miscellaneous. Any action, suit, or proceeding in respect of or arising out of this Agreement may be prosecuted as to any party hereto in
Richmond, Virginia. Each party hereto consents to the exercise of jurisdiction over its person by any court situated in Richmond, Virginia and having jurisdiction over the subject matter of any such action, suit, or proceeding. The invalidity or
unenforceability of any provision of this Agreement in any particular respect shall not affect the validity and enforceability of any other provision of this Agreement or of the same provision in any other respect. This Agreement and the
Horsemen’s Agreement set forth the entire understanding of the parties to this Agreement with respect to the operation of the trust for the Standardbred Partners’ Account and may not be amended except by a written instrument executed by
all parties hereto. Other than the Horsemen’s Agreement, any previous agreements or understandings among the parties hereto regarding the subject matter hereof are merged into and superseded by this Agreement. All of the covenants,
stipulations, terms, and conditions of this Agreement shall extend to and be binding upon the respective successors and assigns of the parties hereto, but this Agreement shall not be assigned by the Trustee without the prior written consent of the
Beneficiaries. 
  
 This Agreement or any amendment hereto may be
executed in two or more counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same Agreement. 
  

							
	 VIRGINIA HARNESS HORSE ASSOCIATION
	  	COLONIAL DOWNS, L.P.
				
	 	  	 	  	By:	  	 Stansley Racing Corp., its General Partner

				
	 By:
	  	  

	  	By:	  	  

	 	  	 R. C. Dunavant, Jr., D.V.M., President
	  	 	  	 Ian M. Stewart, President

  
  

 A-3 

 EXHIBIT B 
  

Annual Transfers of Funds from Standardbred 
 Partners’ Account to Horsemen’s Account 
  

			
	All SWFs located in the Central-Southside Virginia Region	  	 4.0625% of all standardbred handle in a calendar year at each such facility for ten (10) years from the opening date of each such
facility.
  
 After ten years from opening date, for each calendar
year:
  
 5% of the first $75,000,000 of standardbred handle at each such
facility; plus 6% of standardbred handle in excess of $75,000,000 up to $150,000,000 at each such facility; and plus 7% of standardbred handle in excess of $150,000,000 at each such facility.

		
	The New Chesapeake SWF	  	4.0625% of all standardbred handle in a calendar year in excess of $7,915,121 at such facility.
		
	The New Richmond SWF	  	 4. 0625% of the first $15,000,000 of standardbred handle in a calendar year at such facility;
  
 plus 4.5% of standardbred handle in excess of $15,000,000 up to $20,000,000 in a calendar
year at such facility;
  
 plus 5% of standardbred handle in excess of $20,000,000
up to $25,000,000 in a calendar year at such facility;
  
 plus 6% of standardbred
handle in excess of $25,000,000 in a calendar year at such facility; and
  
 plus
7% of standardbred handle in excess of $30,000,000 in a calendar year at such facility.

		
	Northern Virginia SWF	  	0% of all standardbred handle wagered at each such facility for the first 12 months of operation and thereafter as provided for “All Other SWFs” described below.

  

 B-1 

			
	 All Other SWFs and handle at
 the New Chesapeake SWF of up
 to $7,915,121
	  	5% of the first $75,000,000 of aggregate standardbred handle from such facilities; plus 6% of aggregate standardbred handle in excess of $75,000,000 up to $150,000,000 from such
facilities; plus 7% of standardbred handle in excess of $150,000,000 from such facilities less the amounts the VHHA is authorized to deduct from the Standardbred Partners’ Account pursuant to the Agreement.
		
	Adjustment for slot machines in Maryland	  	No adjustment to the foregoing amounts shall be made for slot machine revenues in Maryland.

  
  

 B-2 

 EXHIBIT C 
  

Anticipated Development Schedule 
  

					
	 	 	 Action Item

	  	 Time Period

	 1.
	 	Identify and bring under contract potential SWF site.	  	4 to 6 weeks from approval of Agreement.
			
	 2.
	 	Meeting with local government officials and neighbors; confirmation of zoning compliance.	  	3 to 6 weeks from having site under contract.
			
	 3.
	 	Application to the Virginia Racing Commission.	  	1 to 2 weeks from satisfaction of Item 2.
			
	 4.
	 	Action by the Virginia Racing Commission on application after filing.	  	6 to 12 weeks.
			
	 5.
	 	Application for permits to commence construction or renovation after grant of licenses.	  	Within 1 week after grant of licenses.
			
	 6.
	 	Construction or renovation period.	  	3 to 6 months.
			
	 7.
	 	Total time from identifying a site to opening.	  	7 to 13 months.

  
  

 C-1 

 EXHIBIT D 
  
 Central-Southside Virginia Region 
  

			
	 Counties

	  	 Cities

	 1.   Albemarle
 2.   Allegheny
 3.   Amherst
 4.   Augusta
 5.   Bath
 6.   Bedford County
 7.   Bland
 8.   Botetourt
 9.   Buchanan
 10. Campbell
 11. Carroll
 12. Craig
 13. Dickenson
 14. Floyd
 15. Franklin County
 16. Giles
 17. Grayson
 18. Greene
 19. Halifax
 20. Henry
 21. Highland
 22. Lee
 23. Montgomery
 24. Nelson
 25. Patrick
 26. Pittsylvania
 27. Pulaski
 28. Roanoke County
 29. Rockbridge
 30. Russell
 31. Scott
 32. Smyth
 33. Tazewell
 34. Washington
 35. Wise
 36. Wythe
	  	 1.   Bedford City
 2.   Bristol
 3.   Buena Vista
 4.   Charlottesville
 5.   Covington
 6.   Danville
 7.   Franklin City
 8.   Galax
 9.   Lexington
 10. Lynchburg
 11. Martinsville
 12. Norton
 13. Radford
 14. Roanoke City
 15. Salem
 16. South Boston
 17. Staunton
 18. Waynesboro

  
  

 D-1

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