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                                                                  Exhibit 10.14

                      FIRST AMENDMENT OF LETTER AGREEMENT

          THIS FIRST AMENDMENT OF LETTER  AGREEMENT  (this  "Amendment") is made
and entered  into as of April 30, 2004 (the  "Effective  Date"),  by and between
EMPIRE  RESORTS,  INC.  and  CATSKILL  DEVELOPMENT,  L.L.C.,  having  address at
Monticello  Raceway,  P.O.  Box  5013,  Route  17B,  Monticello  New York  12701
(collectively, "Monticello"),   and  CAYUGA   NATION  OF  NEW  YORK  and  CAYUGA
CATSKILL GAMING  AUTHORITY,  having an address at 24 East Main Street,  Gowanda,
New York  (collectively,  "Cayuga"  ).  This  Amendment  is  entered  into  with
reference to the following facts:

          A.  Catskill  Development,   L.L.C.,  Alpha  Hospitality   Corporation
(predecessor  to  Empire  Resorts,  Inc.)  and  Cayuga  entered  into  a  Letter
Agreement,  dated as of April 3,  2003 (a copy of which is  attached  hereto  as
Exhibit "A", the "Letter Agreement").

          B. Monticello and Cayuga on behalf of themselves and their  respective
successors and assignees  desire to amend certain of the terms and provisions of
the Letter Agreement, upon the terms and conditions set forth in this Amendment.

          NOW,  THEREFORE,  for Ten  Dollars  ($10) and other good and  valuable
consideration   the   receipt  and  legal   sufficiency   of  which  are  hereby
acknowledged,  Monticello  and Cayuga  agree as follows (all  capitalized  turns
defined in the Letter Agreement shall,  have the same meanings in this Amendment
except to the extent that this Amendment sets forth some other  definition for a
particular term):

1.   Dates.

          In Paragraphs 11 and 12 of the Letter Agreement, in each instance, (A)
the date "April 30, 2004" is deleted and replaced  with the date  "December  31,
2004";  and (B) the date "May 1, 2004" is  deleted  and  replaced  with the date
"December 31, 2004."

2.   No Other Changes.

          Except for the foregoing changes to the Letter Agreement,  the parties
ratify and confirm the Letter Agreement.  Monticello and Cayuga  acknowledge and
agree that the Letter Agreement,  as hereby amended, is in full force and effect
in accordance with its terms. Any  inconsistency  between this Amendment and the
Letter  Agreement  (as it existed  before this  Amendment)  shall be resolved in
favor of this  Amendment.  Wherever  the Letter  Agreement  refers to the Letter
Agreement,  such reference  shall be deemed to refer to the Letter  Agreement as
modified by this Amendment.

3.   Certain Confirmations.

     Each of Monticello and Cayuga confirms and acknowledges on its own behalf:

          3.1. Full Force and Effect.  The Letter Agreement is in full force and
effect  and has  not  been  supplemented,  modified  or  otherwise  amended,  or
canceled, terminated,  or surrendered,  except  pursuant to this Amendment.  The
Letter Agreement is binding and enforceable as against  Monticello and Cayuga in

accordance  with its terms.  The Letter  Agreement as modified by this Amendment
represents the entire agreement and understanding  between Cayuga and Monticello
with respect to the subject matter thereof.

     3.2. No Default.  To each party's best knowledge,  as of the Effective Date
neither  Cayuga nor  Monticello is in default in the  performance  of any of its
covenants,  agreements or conditions  contained in the Letter  Agreement nor has
any event occurred  that,  with the passage of time or giving of notice or both,
would constitute a default under the Letter Agreement.   Neither  Monticello nor
Cayuga has given any notice of any uncured default to the other party.

4.   Miscellaneous.

     4.1 Representations and Warranties. Each party represents and warrants that
it has the legal  power and  authority  to enter  into  this  Amendment  without
consent or  approval by any third  party,  and that this  Amendment  is a valid,
legal, and binding  obligation of such party  enforceable in accordance with its
terms.

     4.2.  Further  Assurances.  Each party shall take such  further  actions as
shall be reasonably  necessary from time to time to implement and effectuate the
intentions of the parties expressed in this Amendment.

     4.3.  Amendments.   The  Letter  Agreement  may  not  be  further  amended,
discharged or terminated except by a written instrument executed by the parties.

     4.4. Counterparts.  This Amendment may be executed in counterparts, each of
which  shall  be an  original,  but  all of  which  shall  constitute  a  single
agreement.

                                       2

     IN WITNESS  WHEREOF,  Monticello and Cayuga have executed this Amendment as
of the Effective Date.

EMPIRE RESORTS, INC.                         CAYUGA NATION OF NEW YORK

/s/ Robert Berman                            /s/ Timothy H. Twoguns
-------------------------------              ----------------------------------
By: Robert Berman                            By:  Timothy H. Twoguns
Its: CEO                                     Its: Representative

                                             CAYUGA CATSKILL
CATSKILL DEVELOPMENT, L.L.C.                 GAMING AUTHORITY

/s/ Morad Tahbaz                             /s/ Irene B. Jimewon
--------------------------------             -----------------------------------
By: Morad Tahbaz                             By:  Irene B. Jimewon
its:  President                              Its  Director

/s/ Robert A. Berman
--------------------------------
Robert A. Berman, individually

/s/ Morad Tahbaz
--------------------------------
Morad Tahbaz, individually

          Attachments:

          Exhibit A = Letter Agreement

                                       3

                                   EXHIBIT A

                         ALPHA HOSPITALITY CORPORATION

                          CATSIILL DEVELOPMENT L.L.C.

                                                             As of April 3, 2003

Cayuga Nation of New York
Cayuga Catskill Gaming Authority
24 East Main Street
Gowanda, New York
Attention: Clint Halftown

Ladies and Gentlemen:

     This letter sets forth the agreements and  understandings  among the Cayuga
Nation of New York (the  "Nation"),  the Cayuga Catskill  Gaming  Authority,  an
instrumentality of the Nation (the "Authority"),  Catskill  Development,  L.L.C.
("Catskill"),  Alpha Hospitality Corporation (individually and collectively with
its  subsidiaries,   "Alpha"),   Robert  A.  Berman  ("Berman"),   Morad  Tahbaz
("Tahbaz"),  the other  principals  and affiliates of Catskill or  Alpha who are
listed on Schedule 1 annexed hereto and made a part hereof and who individually,
directly or indirectly, own ten (10%) percent or more of the equity interests in
Catskill  (such  principals  and  affiliates  are referred to  individually  and
collectively  as the  "Principals"),  Monticello  Raceway  Development  Company,
L.L.C. ("Developer") and Monticello Casino Management,  L.L.C. ("Manager").  For
purposes of this letter,  Catskill and Alpha are  referred to  individually  and
collectively  as  "Monticello",  and  Catskill,  Alpha,  Berman,  Tahbaz and the
Principals are referred to individually and collectively as "CAP".

     The Nation intends to apply for approval of conveyance of an  approximately
30 acre parcel of land (the "Property")  currently forming a portion of the site
of the Monticello  Raceway located in Sullivan  County,  New York to the  United
States  Government in trust for the Nation's  benefit in order to facilitate the
development  of a Class III gaming  facility  (the "Gaming  Enterprise")  on the
Property.  The Gaming  Enterprise  is to be developed on behalf of the Nation by
Developer and its affiliates.  In connection therewith,  among other things, the
Nation, the Authority and Manager are entering into a gaming facility management
agreement  (the  "Management  Agreement")  with respect to the  development  and
operation of the Gaming Enterprise.

     As an outgrowth of the  foregoing  transactions  and in order to induce the
Nation,  the  Authority,  and  Catskill  and its  affiliates  to enter into such
transactions,  the Nation  and the  individuals  and  entities  included  in the
definition of CAP have  discussed and agreed to certain  aspects  thereof and to
the structure of certain future joint business activities, as follows:

Cayuga Nation of New York
As of April 3, 2003
Page 2

     1. In order to fund the costs and expenses of the Nation in connection with
acquiring  the Property and  developing  the Gaming  Enterprise,  the Nation and
Catskill agree  to formulate a mutually  acceptable written budget within thirty
(30) days  after the date  hereof  encompassing  the costs and  expenses  of the
Nation  (including  services  to be  performed  by  members  of the  Nation)  in
connection with such acquisition and development, and the fees and disbursements
to  be  paid  to  legal  counsel,  accountants  and  such  other  professionals,
consultants  and  specialists  engaged  by or on  behalf  of the  Nation  or the
Authority in connection therewith. The parties further agree that Catskill shall
fund all amounts  contemplated by such budget as required thereby,  but not less
frequently  than  monthly,  until  ninety (90) days after the  Opening  Date (as
hereinafter  defined) with the  understanding  that Catskill would be reimbursed
for such amounts  solely out of (x) the third party  construction  financing and
(y) to the extent  such  financing  is  insufficient,  distributions  to Manager
pursuant to Section 6.4 Third of the Management  Agreement.  The parties further
agree that neither the Nation nor the  Authority  shall have any  obligation  to
fund any of the costs and expenses of acquiring the Property or  developing  the
Gaming Enterprise, except as expressly contemplated by the Management Agreement,
as amended from time to time.

     2. Catskill  further  agrees on behalf of itself and Developer that (i) the
maximum amount they (and their  affiliates on their  behalf),  in the aggregate,
will be reimbursed for pre-development  costs and  expenses shall be $10,000,000
(exclusive of the purchase price for the Property) and such reimbursement  shall
be funded  solely (x) out of the third party  construction  financing and (y) to
the extent such financing is insufficient,  distributions to Manager pursuant to
Section  6.4 Third of the  Management  Agreement,  and (ii)  such  reimbursement
shall,  in no event  include  any costs and  expenses  incurred by them or their
affiliates in connection with the litigation with Park Place Entertainment Corp.
or amounts  paid by them  or their affiliates to the St. Regis Mohawk Tribe, its
members, affiliates and/or their respective legal counsel, accountants and their
other professionals, consultants and specialists.

     3.  Subject to paragraph 4 and the other terms and  conditions  hereinafter
set forth,  from,  the date hereof  through and  including  the date that is the
tenth (10th)  anniversary of the date of the opening to the public of the Gaming
Enterprise (the "Opening Date"), the Nation and CAP have agreed that CAP and the
Nation,  respectively,  will  have the  right  to  participate  in the  proposed
development   and  operation   directly  or   indirectly  by  the  Nation,   its
instrumentalities  and agencies and/or its and their respective  affiliates (the
Nation  and  such  instrumentalities,  agencies  and  its and  their  respective
affiliates are referred to individually and collectively as "Nation Group"),  or
by CAP  and/or  its or their  respective  affiliates  (CAP  and/or  its or their
respective  affiliates are referred to individually and collectively as the "CAP
Group"):

          (a)  of one  or  more  hotels,  motels  or  other  similar  facilities
               providing overnight accommodations  including ancillary beverage,
               food,  entertainment,  commercial  and/or retail services (each a
               "Hotel  Facility")  within a  fifteen  (15)  mile  radius  of the
               Property; and

Cayuga Nation of New York
As of April 3, 2003
Page 3

          (b)  any  other   entertainment,   sports   and/or   retail   facility
               (including,  but not limited to the  placement  of video  lottery
               terminals and/or slot machines on the real estate currently owned
               by Catskill  upon which  Monticello  Raceway is located)  (each a
               "Non-Hotel  Facility")  within  a  five-mile  (5)  radius  of the
               Property.

For  purposes of this  letter,  a Hotel  Facility  and/or a  Non-Hotel  Facility
are/is referred  to individually  and  collectively as a "Facility".  The Nation
acknowledges  and understands that the CAP Group has no current plans to develop
and/or operate a Hotel  Facility.  CAP  acknowledges  and  understands  that the
Nation Group has no current plans to develop  and/or  operate a Hotel  Facility.
Notwithstanding the foregoing provisions of this paragraph 3 to the contrary,

          (x)  the term Hotel  Facility  shall not include  any hotel,  motel or
               other  similar  facilities  providing  overnight   accommodations
               including ancillary  beverage,  food,  entertainment,  commercial
               and/or retail  services  developed by the Nation Group or the CAP
               Group in conjunction or their respective development of any Class
               III or Class II gaming facility other than the Gaming Enterprise;

          (y)  the term  Facility  shall  not  include  the  Gaming  Enterprise,
               residential housing  developments such as single-family homes, or
               condominium,  cooperative  or  rental  apartments,  or  office or
               professional buildings and

          (z)  the term  Facility  shall not  include  the   Exempt  Transaction
               (hereinafter defined).

     4.  Notwithstanding  any other provision of this Agreement to the contrary,
the rights  afforded to the Nation and CAP under paragraph 3 shall vest when the
Property  has been  acquired  by the  United  States in trust  for the  Nation's
benefit but shall not become  exercisable  until the Opening Date.  Accordingly,
while the parties shall be obligated to provide each other with the  information
contemplated  by paragraph 9, no party can compel or obligate any other party to
make a decision  under  paragraph  9 until the  Opening  Date,  and the right to
commence  the  running of all time  periods  set forth in  paragraph 9 is tolled
until the Opening Date and the  requirements of paragraph 9 have been satisfied.
Upon the occurrence of the Opening Date, the rights  afforded under  paragraph 3
shall become  exercisable as to any Facility  developed between the date of this
letter and the Opening Date.

     5. Subject to paragraph 4, the Nation and CAP hereby agree that

          (a)  the Nation or its designee, provided that such designee is a 100%
               owned agency, authority or  instrumentality of, or otherwise 100%
               controlled by, the Nation, or

Cayuga Nation of New York
As of April 3, 2003
Page 4

          (b)  the entities and  individuals  included in the definition of CAP,
               or their  designees,  provided  such  designees are 100% owned or
               controlled by one or more of such entities and individuals,

in each case, in the aggregate, will have the right to purchase, in each case at
its or their option and sole discretion,  an interest (the "Acquired  Interest")
of up to one-third  (33.33%) of the equity in each Facility developed by the CAP
Group,  or the Nation Group,  respectively.  The purchase price for the Acquired
Interest  shall be a pro rata share of the costs,  as  calculated  in accordance
with  paragraph 6, of such Facility  less the amount  advanced by any lender for
any mortgage or other loan secured by such Facility's  property or cash flow. If
the Nation,  or CAP, as the case may be, does not exercise  such right as to any
Facility,  it or they shall  nevertheless  retain the right with  respect to any
other Facility  developed by the CAP Group, or the Nation Group, as the case may
be, in accordance with the terms of this Agreement.

     6. The costs may include (i) land costs  (acquisition,  lease,  etc.,  site
development and other costs and expenses  incurred in connection  therewith) and
(ii) so-called "hard" and "soft" costs and expenses  incurred in connection with
the  planning,  development,  construction,  equipping  and  furnishing  of such
Facility,  including,  reasonable financing,  development and carrying costs, as
agreed to by the  parties,  but shall in no event be less than  $1.00  provided,
however,  that such  costs  shall in no event  include  any  costs and  expenses
incurred in connection with the operation of the Nation's or the Authority's, or
CRP's,  businesses,  including,  without limitation,  salaries, rent, insurance,
utility  charges  and any other  type of  general,  administrative  or  overhead
expense.

     7. Except as permitted by the following sentence, the purchase price for an
Acquired  Interest  shall be paid in cash at the time the  Acquired  Interest is
purchased. With respect to any Acquired Interest purchased by the Nation (or its
permitted  designee) prior to  the second (2nd) anniversary of the Opening Date,
in lieu of paying cash, the  obligations of the Nation (or such designee) to pay
for such Acquired  Interest,  may, at the option of the Nation,  be satisfied in
whole or in, part by the  execution  and delivery of a  non-recourse  promissory
note having an interest rate equal to the composite prime interest rate publicly
announced  from time to time by The Wall Street  Journal  until such time as the
financing to construct such Facility is obtained at which time the interest rate
then and thereafter  will be changed  to the interest rate charged by the lender
providing such  financing,  (ii)  providing for (A) monthly  payments based on a
thirty (30) year amortization  schedule, (B) no monthly payments until the first
(1st) anniversary  of the date the Note is issued,  with monthly  payments to be
made over the ensuing  five (5) years and (C) the  payment of the entire  unpaid
principal balance, together with accrued and unpaid interest thereon, at the end
of such five (5) year period;  (iii)  providing for the prepayment of the unpaid
principal amount in whole or in part, at any time and from time to time, without
premium or  penalty,  but with  accrued  interest on the amount  being  prepaid,

Cayuga Nation of New York
As of April 3, 2003
Page 5

(iv)providing  for the  payment  obligations  under the Note are to be a general
obligation of or  guaranteed by the  Authority,  and (v)  containing  such other
reasonable terms and conditions as are agreed to by the parties.

     8. In consideration for the option to obtain the Acquired  Interests as set
forth  above,  the Nation  agrees  that the first  Hotel  Facility  shall be the
so-called  "preferred provider" Hotel Facility for the Gaming Enterprise for the
period  commencing on the  completion of such Hotel  Facility and  ending on the
retirement of the initial first mortgage indebtedness with respect to such Hotel
Facility.  For purposess of this Agreement,  the term "preferred provider" means
that the Nation will cause the Gaming Enterprise to refer and recommend rooms in
such Hotel  Facility to the guests and clients of the Gaming Enterprise to the
extent such  accommodations  are available in the Hotel Facility;  provided that
such Hotel Facility agrees to use commercially reasonable efforts to accommodate
such guests and clients at the most favorable corporate discount rates.

     9. Whenever the Nation Group or CAP Group,  as the case may be,  identifies
and  determines  to proceed  with a specific  Facility  (the party  making  such
identification and determination is referred to as the Facility  "Developer" and
the other party is referred to as the "Prospective  Participant"),  the Facility
Developer  shall provide the  Prospective  Participant  with a written  analysis
containing in reasonable  detail the material  terms of the proposed.  Facility,
including,  but not limited to copies of the  contract or option to purchase the
property  upon  which  such  Facility  will  be   constructed,   and  copies  of
applications fled for requisite  building and other permits,  and business plans
and marketing studies, if any (collectively, the "Analysis"), together with such
other  information  as  the  Prospective  Participant  then  or  thereafter  may
reasonably  request,  to the extent in the possession of the Facility Developer.
The Prospective  Participant may thereafter notify the Facility Developer of the
Prospective  Participant's  decision to  purchase  an Acquired  Interest in such
Facility. In such event, the Prospective  Participant and the Facility Developer
shall enter into a definitive  purchase and sale  agreement (a  "Contract"),  in
form  and  substance  reasonably  and  mutually  satisfactory  to  the  parties,
providing  for  the  purchase  by the  Prospective  Participant  of an  Acquired
Interest in such  Facility.  The  Contract  is to be  prepared  by  Monticello's
attorneys  who, will be instructed to begin the  preparation of the form thereof
(which shall include customary provisions regarding  governance,  management and
disposition of an equity interest by an owner, and a form of the Note, customary
closing  conditions,  including  opinions  of counsel  as to the  authorization,
binding effect and availability of commercially reasonable judicial remedies for
the  enforceability  thereof) upon the execution and delivery hereof,  and which
form shall be negotiated in good faith and fair dealing by the parties,  subject
to such  changes in the form once a Facility  is  identified  as are  reasonably
required and are otherwise  acceptable to the parties. If the parties through no
fault of the  Facility  Developer  have not  entered  into a  Contract  within a
reasonable time, not to be less than ninety (90) days from the date the Facility
Developer  delivers the Analysis to the  Prospective  Participant,  the Facility
Developer may thereafter submit a written request to the Prospective Participant
for  confirmation   from  the  Prospective   Participant  that  the  Prospective
Participant intends to purchase an Acquired

Cayuga Nation of New York.
As of April 3, 2003
Page 6

Interest  in such  Facility  (the  "Confirmation").  If the  Developer  does not
receive the Confirmation  within thirty (30) days after the Developer  submits a
request therefor, the Prospective  Participant will be deemed to have elected to
forgo his, her or its right to purchase an Acquired  Interest in such  Facility.
If the Prospective  Participant  confirms that he, she or it intends to purchase
an Acquired Interest in such Facility, such Confirmation shall be accompanied by
a fully executed Contract (together with such documentation  as is then provided
for therein)  within thirty (30) days after the Facility  Developer  submits the
demand for the Confirmation.

     10. If there is any  material  change in the  proposed  development  of any
Facility,  the Facility  Developer thereof shall promptly notify the Prospective
Participant of all such changes. Further, if the Prospective Participant has not
previously  exercised his, her or its right to purchase an Acquired  Interest in
such Facility,  the Facility Developer shall again offer, in accordance with the
procedures set forth in paragraph 9, the Prospective Participant the opportunity
to purchase an Acquired Interest in such Facility.

     11. In  consideration  of the  agreements and  undertakings  of the parties
hereto set forth herein, the Nation Group and the CAP Group severally agree that
for a period  ending on the earliest of (i) approval (A) by the Secretary of the
Interior  of the  United  States  of the  Application  and (B)  approval  by the
National  Indian  Gaming  Commission  of  the  Management  Agreement,  (ii)  the
termination of the Management  Agreement by reason of Manager's (as such term is
defined  in  the  Management  Agreement)  material  breach  of  its  obligations
thereunder,  (iii) the termination of the Development and Construction Agreement
(as  such  term  is  defined  in the  Management  Agreement)  by  reason  of the
Developer's  material breach of its obligations  thereunder,  and (iv) April 30,
2004, the Nation Group and the CAP Group, respectively, will refrain from having
discussions  regarding the  development of another Class III gaming  facility in
Sullivan  County,  New York.  If the approvals set forth in clause (i) above are
not obtained by April 30, 2004 or the  Management  Agreement or the  Development
and  Construction  Agreement  (or both) is (are) so  terminated  prior to May 1,
2004,  this Agreement and the  transactions  contemplated  or referenced  herein
shall terminate and the partiess hereto shall have no obligation to proceed with
any of such  transactions,  or to each other,  except that Catskill shall remain
liable for, and  reimburse  the Nation for,  any amounts  expended by the Nation
prior to May 1, 2004 in  accordance  with the  budget  established  pursuant  to
paragraph 1.

     12. In  consideration  of the agreements and undertakings of the Nation set
forth herein, and notwithstanding  any provision of the Management  Agreement to
the contrary,  Monticello  and Manager shall use their  commercially  reasonable
efforts to (i) identify  and enter into a joint  venture,  partnership  or other
similar  arrangement  (which  may  include a direct or  indirect  investment  in
Monticello or Manager) with one or more  individuals or entities,  (ii) identify
and employ or  otherwise  retain the  services  of one or more  individuals,  or
entities,  or (iii) enter into a contractual  arrangement with one or more third
parties, in each case in Monticello's and Manager's sole discretion, and in each
case by no later than April 30, 2004; provided that such individuals, entities

Cayuga Nation of New York
As of April 3, 2003
Page 7

or third  parties as the case may be,  (x) have the  expertise,  experience  and
ability to (1) obtain financing to construct,  and, (2) develop manage,  operate
and maintain,  the Gaming  Enterprise,  as well as to instruct the Authority and
others in the operation of a first-class  gaming  facility and (y), are approved
in advance by the Authority,  in its sole and absolute discretion.  In addition,
promptly  after  the  approval  of  the  Authority  has  been   obtained,   such
individuals, entities or third parties, as the case may be, acting through or on
behalf of Monticello and Manager,  as the case may be, shall (i) have the day to
day  responsibility for and, in consultation with the other persons and entities
comprising the Manager, the overall performance of, all of Manager's obligations
under the  Management  Agreement,  and (ii) join with  Monticello and Manager in
furnishing  a  a  written   certificate   to  the  Authority   confirming   such
responsibility.  If  the  Authority  does  not  approve  of and  consent  to the
performance of such obligations by such individuals,  entities or third parties,
as  the  case  may  be,   Monticello  and  Manager  shall  forthwith  use  their
commercially reasonable efforts to identify and accept such other individuals or
entities,  as the case may be, who satisfy the  conditions  set forth in clauses
(x) and (y) above of this paragraph 12.

     13.  Alpha is hereby  added as a party to the  Letter of Intent  previously
entered into between  Catskill and the Nation,  dated  October 22, 2002,  and in
consideration  thereof and of the Nation's agreement that a Hotel Facility shall
become the  "preferred  provider"  to the Gaming  Enterprise,  Alpha has made an
award to the Nation of 300,000 shares of its Common Stock (the  "Stock"),  to be
valued at the  closing  price of Alpha's  Common  Stock on the  Nasdaq  SmallCap
Market on such  grant  date,  which is to become  vested in the  Nation in three
installments,  in each case  assuming  that the  Nation  has not  withdrawn  the
Application  from the Bureau of Indian Affairs and/or the National Indian Gaming
Commission:

     (a)  the first  installment  will consist of 100,000 shares and will become
          vested on the date of the filing (the "Filing  Date") by the Nation of
          an Application  for the Acquisition of Land to be Placed in Trust (the
          "Application")  for the Property with the United States  Department of
          the Interior

     (b)  the second  installment will consist of 100,000  additional shares and
          become vested on the six month anniversary of the Filing Date; and

     (c)  the third  installment will consist of 100,000  additional  shares and
          become vested on the one-year anniversary of the Filing Date.

     14.  The  Stock  is to  be  held  in  escrow  by  the  Nation's  attorneys,
Sonnenschein  Nath  &  Rosenthal  (the  "Escrow  Agent").  Compliance  with  all
conditions  for release  thereof as of the date of each release may be evidenced
by  the  filing  with  such  escrow  agent  of a  certificate  of an  authorized
representative  of the Nation stating that the Nation has complied with all such
conditions.  The escrow agent and the transfer  agent for Alpha's  common shares
will be fully  protected in relying on such  certification.  The transfer  agent

Cayuga  Nation of
New York As of April 3, 2003
Page 8

shall be entitled to assume that any such certificate presented with the related
shares is valid and genuine.

     15. On or immediately  following each vesting date  prescribed by paragraph
13, Alpha will file a registration  statement on Form S-3 (or, if Alpha does not
meet the  conditions  to use Form  S-3,  on Form S-1)  with the  Securities  and
Exchange  Commission  with  respect to the  100,000  shares of Stock  first then
vested and shall take any and all other  steps  necessary  for all the shares of
Stock theretofore and then vested to be immediately, and remain, registered (and
the registration  statement and prospectus  current) under the Securities Act of
1933 and qualified  under state  securities  laws,  all of the above at Alpha's.
expense (including the fees of counsel to the Nation).  Alpha will indemnify the
Nation  against any  liabilities  with respect to or in connection  with actions
taken or omitted to be  taken, or  statements  made or omitted to be made, by or
on behalf of Alpha with respect to such registration to which the Nation and its
affiliates or associates  may become  subject as a result of such  registration,
and will remain current in Alpha's filings under the Securities  Exchange Act of
1934.

     16.  The Nation  will be a  stockholder  of Alpha  only to the extent  that
shares have vested in the Nation as provided herein and, in the event the Nation
withdraws the  Application,  any portion of the Stock which has not vested as of
the date the  Application  is  withdrawn  will cease to be vestable  and will be
cancelled by Alpha (the  certificates of which shall be returned to Alpha by the
Escrow Agent),  but no such cancellation will have any effect on the validity or
ownership of any shares which have already vested.

     17.  Monticello  represents and warrants that no individual or entity other
than Berman and the other  individuals or entities listed on Schedule 1 directly
or  indirectly  owns or currently  has the right to acquire ten (10%) percent or
more of the equity interests in Catskill,  Alpha,  Developer or Manager,  except
that Alpha  presently  has the right to acquire all direct and  indirect  equity
interests  in Catskill,  Developer  and Manager as described in Exhibit J to the
Management Agreement (the "Exempt Transaction").

     18.  Any notice(s),  consent(s) or other communications  required hereunder
shall be sent to the parties hereto at the addresses for such parties prescribed
by,  and  become  effective  as  provided  in,  Section  7.1 of  the  Management
Agreement,  and in the case of the Nation,  notice  shall be sent to the address
set forth at the  beginning  of this  Agreement  and in the case of  Monticello,
notices and other communications shall be sent to the address of the Manager set
forth in the Management Agreement. In addition, CAP agrees that a notice sent to
Monticello  shall be deemed a notice to each  individual and entity  encompassed
within the definition of CAP.

     19.(a) Subject to the provisions of this paragraph 19, the Nation expressly
waives sovereign immunity for the sole purpose of consenting to the jurisdiction
of any federal court located in the State of New York (or any federal  appellate
court  having  jurisdiction  thereover)  or any  State of New York  court of any
level, in each case, of competent jurisdiction only for the purpose of enforcing

Cayuga Nation of New
York As of April 3, 2003
Page 9

remedies  permitted  hereunder arising out of its obligations under paragraphs 3
through 11  (inclusive),  13, 14, 16, and 20 and this Paragraph 19 and then only
to the extent that the judicial remedy being sought in such judicial  proceeding
is injunctive relief, specific performance,  or any other similar remedy that is
equitable  in nature and that does not  involve the payment by the Nation of any
monetary damages,  it being understood and agreed by the parties hereto that the
Nation in no event shall be liable or otherwise  responsible  for the payment of
any award of monetary  damages.  In the event that any court or  Arbitrator  (as
hereinafter defined), as applicable,  determines that a breach of the provisions
of paragraphs 3 through 11  (inclusive),  13,14,  16 and 20 by the Nation caused
CAP economic  harm for which an award of monetary  damages from the Nation,  but
for the  foregoing  provisions of this  paragraph  19, would be the  appropriate
judicial  remedy,  the Authority (but in no event the Nation) shall,  subject to
the applicable terms and provisions of this paragraph 19, pay the amount of such
award to CAP.

          (b) Subject to the  provisions  of this  paragraph  19, the  Authority
waives  sovereign  immunity for the sole  purpose of  permitting  or  compelling
arbitration as provided in this paragraph 19 and consenting to the  jurisdiction
of any federal court located in the State of New York (or any federal  appellate
court  having  jurisdiction  thereover)  or any  State of New York  court of any
level, in each case, of competent jurisdiction for the purpose of any mediation,
arbitration or lawsuit (including enforcing awards and other remedies on account
thereof),  as applicable,  pursuant to the  provisions  hereof or arising out of
this Agreement. Without in any way limiting the generality of the foregoing, the
Authority expressly  authorizes any governmental  authorities who have the right
and duty under  applicable  law to take any action  authorized or ordered by any
court,  to take such action.  In no instance  shall any  enforcement of any kind
whatsoever be allowed  against any assets of the Nation or the  Authority  other
than the limited assets of the Authority specified in paragraph 19(g).

          (c) The  following  disputes  between  the  parties  hereto  shall  be
resolved by the United States  District  Court for the Southern  District of New
York (or any federal appellate court having jurisdiction  thereover) or, if such
United States District Court cannot hear or refuses to hear such dispute, by the
New York State Supreme Court, sitting in New York County (or any state appellate
court having jurisdiction thereover):  (a) any material monetary dispute and (b)
any dispute in which injunctive relief,  specific performance or another similar
equitable remedy is one of the remedies being sought by any party (such disputes
being  referred to as "Judicially  Resolved  Matters").  The following  disputes
between the parties  hereto shall be determined by mediation or  arbitration  as
set forth in  paragraph  19(d):  (a) any dispute as to whether any party  hereto
acted reasonably (if and only if that is the standard by which such action is to
be judged),  or used commercially  reasonable  efforts,  when required to so act
under  the terms  and  provisions  of this  Agreement  and (b) any  non-material
monetary  dispute (such disputes being referred to as "JAMS Resolved  Matters").
In the event that any dispute,  controversy or claim arising between the parties
hereto is  notoencompassed  within the  foregoing  definitions  of a  Judicially
Resolved Matter or a JAMS Resolved Matter,  such dispute shall be deemed to be a
Judicially Resolved Matter, notwithstanding the definition of such term.

Cayuga Nation of New York
As of April 3, 2003
Page 10

Anything to the contrary  contained  herein  notwithstanding,  in the event that
both the United States District Court for the Southern  District of New York (or
any federal  appellate  court having  jurisdiction  thereover)  and the New York
State Supreme Court,  sitting in New York County (or any state  appellate  court
having jurisdiction thereover), cannot or refuse to hear any Judicially Resolved
Matter,  such  dispute  shall be brought in the New York  State  Supreme  Court,
sitting in Sullivan  County (or any state  appellate  court having  jurisdiction
thereover)  (or if such  court  cannot or  refuses  to hear such  dispute,  such
dispute shall be resolved as if it were a JAMS Resolved Matter).

          (d) All JAMS  Resolved  Matters  shall be  resolved  by  mediation  or
arbitration, to be held in the County, City and State of New York, or such other
location as the parties may agree, before a single  mediator/arbitrator  who has
at least  five  years of  knowledge  and  experience  in the  casino,  hotel and
real estate  industries   ("Arbitrator"),  the  identity of whom shall be agreed
upon by the  parties   from the panel  of  mediators  and  arbitrators  of JAMS.
Failing agreement between the parties concerning the identity of the Arbitrator,
JAMS shall  appoint  such  person.  The  Arbitrator  shall  immediately  conduct
mediation  between the parties to attempt to resolve the  dispute.  Failing such
mediation,  the Arbitrator shall determine the dispute through arbitration.  The
parties  recognize  that  disputes  could arise which will  require  expeditious
determination.  In such  cases,  the  Arbitrator  shall  render a  determination
expeditiously,  and in the exercise of discretion, on a summary basis. Except in
such exigent circumstances,  arbitration are to be conducted in  accordance with
the rules of JAMS.

          (e) In determining any matter the court or Arbitrator,  as applicable,
shall  apply  the terms of this  Agreement,  without  adding  to,  modifying  or
changing the terms in any respect,  and shall apply New York law and  applicable
federal  and  Nation  law.  New York law shall  govern  the  interpretation  and
construction of this Agreement.

          (f) The  parties  (and,  in the case of a JAMS  Resolved  Matter,  the
Arbitrator) shall maintain strict  confidentiality  with respect to the judicial
proceeding or arbitration,  as  applicable,   subject  to  the  requirements  of
applicable law, including the federal securities laws.

          (g) The  waiver  of  immunity  from suit in this  paragraph  19 by the
Authority  shall  be  specifically   limited  to  injunctive  relief,   specific
performance and  other similar  equitable  relief,  and to the enforcement of an
award of money damages by judicial proceeding or arbitration;  provided that the
Arbitrator  and/or the court shall have no  authority or  jurisdiction  to order
execution  against any assets or revenues of the Nation and may execute  only as
to the Authority  against (i) undistributed or future Net Revenues (as such term
is defined in the Management Agreement) of the Gaming Enterprise;  or (ii) if it
has been  specifically  found by an  Arbitrator  that, by exercise of regulatory
authority  pursuant to the Nation Gaming  Ordinance (as such  term is defined in
the Management  Agreement) or otherwise,  or any rules, actions, or decisions of
the Authority pursuant thereto,  the Authority has prejudiced CAP Group's rights
under this  Agreement,  the  future Net Revenues of any other gaming  operations
conducted  by the  Authority,  or any  other  entity  of the  Authority,  on the

Cayuga Nation of New York
As of April 3, 2003
Page 11

Property.  Notwithstanding  any  other  provision  of this  paragraph  19 to the
contrary, in no instance shall any enforcement of any kind whatsoever be allowed
against any assets of the Nation or the Authority  other than the limited assets
of the Authority specified in this paragraph 19(g).

          (h)  Neither  the Nation  nor any  officer,  office-holder,  employee,
agent,  representative  or member of the  Nation or of the  Authority,  as such,
shall have any personal  liability for  obligations of the Authority  under this
Agreement  or for any claim  based  on, in  respect  of, or by reason  of,  such
obligations  or their  creation.  Further,  no member,  nor any officer,  office
holder,  employee,  agent,  representative,  or member of any  member of the Cap
Group shall have any personal liability, for the obligations of Monticello under
this  Agreement  or for any claim based on, in respect of, or by reason of, such
obligations or their creation.

     20. Each party  represents  and  warrants  that it has engaged no broker or
finder in connection with any of the transactions contemplated by this Agreement
nor to its knowledge is  any broker or finder in  any way connected  with any of
such transactions and will indemnify the other against any claim based thereon.

     21. This  Agreement  and the matters set forth  herein  shall not be deemed
merged into or  superceded  by any other  agreement  or contract by or among the
Nation, the Authority or CAP, whether such agreement or contract was previously,
is  now,  or is  hereafter  executed  in  connection  with  the  Application  or
otherwise,  notwithstanding  the fact that such other  agreement or contract may
contain a merger or similar clause unless this  Agreement is expressly  referred
to in such  clause and such  clause  expressly  states  that this  Agreement  is
superceded or terminated by such agreement, or contract.

     22. This Agreement may be executed in counterparts, each of which shall for
all purposes be deemed to be an original and all of  which shall constitute  the
same  instrument.  Any  such  counterpart  may  be  executed  and  delivered  by
telecopier or other facsimile  transmission,  all with the same force and effect
as if the same was a  manually executed and delivered original counterpart.  Any
such counterpart  signature page may be attached to the body of one copy of this
Agreement to form a complete integrated whole.

     23. New York law shall govern the  interpretation  and construction of this
Agreement.

     24. The  Nation  acknowledges  and  agrees  that  Berman  and  Tahbaz  have
executed this  Agreement to  acknowledge  their  agreements  with respect to the
provisions of paragraphs 3-11 (inclusive) and paragraph 18.

      [balance of page intentionally left blank; signature pages follow]

Cayuga nation of New York
April 3 2003

     If these terms are  acceptable,  please sign in the space  provided  below.

                                             Very truly yours,

ALPHA HOSPITALITY CORPORATION                CATSKILL DEVELOPMENT, L. L. C.

By: /s/ Robert A. Berman                     By: /s/ Morad Tahbaz
   ----------------------------------           --------------------------------
   Name:  Robert A. Berman                      Name:  Morad Tahbaz
   Title: Chairman                              Title: Chairman

/s/ Robert A. Berman                         /s/ Morad Tahbaz
-------------------------------------        -----------------------------------
Robert A. Berman, individually               individually

Cayuga Nation of New York
As of April 3, 2003
Page 13

ACCEPTED AND AGREED:

CAYUGA NATION OF NEW YORK

By: /s/ Clint Halftown
    -----------------------------------
Name: Clint Halftown
Title: Authorized Representative

CATSKILL GAMING AUTHORITY

By: /s/ Clint Halftown
   --------------------------------------
Name:  Clint Halftown
Title:

                               PRELTMINARY BUDGET

                Pursuant to April 3, 2003 Letter Agreement among
          Alpha Hospitality Corporation, Catslall Development, L.L,C.,
        Cayuga Nation of new York and Cayuga Catskil1 Gamining Authority

As contemplated by paragraph I of the above  identified  letter  agreement,  the
parties  thereto,  by  having  their  authorized  representatives  initial  this
preliminary budget in the spaces provided below, agree to the following payments
with  the  understanding  that the  amount  set  forth  in Item I below  will be
reviewed and revised  periodically  to reflect  actual  experience and increased
activity as the development of the Gaming Enterprise on the Property progresses.

I.   Monthly payments on the first day                 $35,000 per month
     of each month on account of the
     expenses of the Nation and its
     instrumentalities and agencies,
     including salaries to be paid to
     individuals involved in rendering
     services to the Nation, or its
     instrumentalities or agencies, and
     the costs of equipment supplies,
     etc.

II.  Payment of travel, lodging, meals                 To be reimbursed upon
     and related expenses incurred by                  submission to Catskill of
     individuals rendering services to                 documents evidencing
     instrumentalities or agencies of the              such expenses
     Nation in furtherance of this
     project; provided that the
     incurrence of any material expense
     has been approved by Catskill, such
     approval not to be unrrasonably
     withheld

III. Expenses of legal counsel,                        To be billed directly to
     accountants, and other                            Catskill and paid by it
     professionals, consultants and
     specialists engaged to render
     advice or assistance to the Nation
     and its instrumentalities and
     agencies, provided that the
     incurrence of any material expense
     has been approved by Catskill, such
     approval not to be unreasonably
     withheld

The parties agree that the $35,000 monthly payment provided for in Item I above
will be made by wire transfer from Catskill's bank to the Authotity's account at
HSBC Bank USA,  and other payments shall be either, wired to such account or
otherwise paid as directed by the Nation or the Authority from time to time.

Initialed by authorized reprosentatives of:

Alpha                Catskill            Cayuga                Cayuga
Hospitality          Development         Nation                Catskill
Corporation          L.L.C.              of New York           Gaming
                                                               Authority

/s/ Robert Berman    /s/ Morad Tahbaz   /s/ Clint Halftown     /s/ Clint Halftown
-----------------    ----------------   ------------------     ------------------sec document

                                                                   EXHIBIT 10.10

================================================================================

                           SHARED FACILITIES AGREEMENT

                                 by and between

                        CAYUGA CATSKILL GAMING AUTHORITY

                                       and

                          CATSKILL DEVELOPMENT, L.L.C.

                            Dated as of April 3, 2003

================================================================================

                                TABLE OF CONTENTS

ARTICLE 1  DEFINITIONS; UNDEFINED TERMS........................................2
    Section 1.1  Definitions...................................................2

ARTICLE 2  TERM................................................................5

ARTICLE 3  COVENANTS OF THE AUTHORITY..........................................5

    Section 3.1  Operating Covenants of the Authority..........................5
    Section 3.2  Construction Covenant of Authority............................5

ARTICLE 4  OPERATING COVENANTS OF CATSKILL.....................................5

ARTICLE 5  SHARED FACILITIES BUSINESS BOARD....................................6

ARTICLE 6  MAINTENANCE, OPERATION, AND MANAGEMENT OF COMMON AREAS;
           ALLOCATION OF COSTS.................................................7

    Section 6.1  Maintenance of Common Areas...................................7
    Section 6.2  Lighting......................................................8
    Section 6.3  Maintenance of Gaming Facility................................8
    Section 6.4  Maintenance of Track Facility.................................9
    Section 6.5  Use/Maintenance Easement Area E (Pedestrian Sky Bridge).......9
    Section 6.6  Security......................................................9
    Section 6.7  Employment of Contractors or Personnel........................9
    Section 6.8  Parking.......................................................9
    Section 6.9  Allocation of Costs..........................................10
    Section 6.10  Rights of Authority to Common Areas.........................10

ARTICLE 7  JOINT MARKETING AND ADVERTISING....................................10

    Section 7.1  Joint Marketing..............................................10
    Section 7.2  Promotion Fund...............................................10

ARTICLE 8  CONDEMNATION.......................................................11

    Section 8.1  Notice of Condemnation.......................................11
    Section 8.2  Condemnation of Casino Property..............................11
    Section 8.3  Condemnation of Track Property...............................11
    Section 8.4  Restoration or Replacement Obligation of Catskill............11
    Section 8.5  Condemnation Award...........................................11
    Section 8.6  Condemnation Disputes........................................12

                                       (i)

ARTICLE 9  INSURANCE..........................................................12

    Section 9.1  Casualty Insurance...........................................12
    Section 9.2  Liability Insurance..........................................12
    Section 9.3  Insurance Carriers: Form of Insurance Policies...............12
    Section 9.4  Responsible for Respective Lots..............................13
    Section 9.5  Waiver of Subrogation........................................13
    Section 9.6  Blanket Policy...............................................13

ARTICLE 10  CASUALTY..........................................................14

    Section 10.1  Notice and Restoration Obligations..........................14
    Section 10.2  Insurance Proceeds..........................................14
    Section 10.3  Razing of Damaged Property..................................14

ARTICLE 11  TRADE AND SERVICE MARKS...........................................15

    Section 11.1  The Authority's Trade and Service Marks.....................15
    Section 11.2  Catskill's Trade and Service Marks..........................15
    Section 11.3  Confidentiality; Exclusivity................................16

ARTICLE 12  DEFAULT, TERMINATION, DISPUTES AND ARBITRATION....................16

    Section 12.1  Default.....................................................16
    Section 12.2  Mutual Termination..........................................17
    Section 12.3  Waiver of Sovereign Immunity; Disputes; Arbitration.........17
    Section 12.4  Indemnity...................................................18
    Section 12.5  No Personal Liability.......................................19

ARTICLE 13  MECHANIC'S LIENS..................................................19

ARTICLE 14  INTENTIONALLY DELETED ARTICLE.....................................19

ARTICLE 15  MISCELLANEOUS PROVISIONS..........................................19

    Section 15.1  Government Savings Clause...................................19
    Section 15.2  Third Party Beneficiary.....................................19
    Section 15.3  Authorization...............................................20
    Section 15.4  Relationship................................................20
    Section 15.5  Notices.....................................................20
    Section 15.6  No Waiver...................................................20
    Section 15.7  Successors and Assigns......................................21
    Section 15.8  Article and Section Headings................................21
    Section 15.9  Choice of Law...............................................21
    Section 15.10  Termination and Amendment..................................21
    Section 15.11  Excusable Delays...........................................21
    Section 15.12  Severability...............................................22
    Section 15.13  Counterparts...............................................22
    Section 15.14  Effective Date.............................................23

                                    EXHIBITS

Exhibit A   Track Property
Exhibit B   Casino Property
Exhibit C   Site Plan

                                      (ii)

                             INDEX OF DEFINED TERMS

Arbitrator......................17      IGRA..................................3
Authority .....................1,2      Improvements..........................3
Authority's Marks...............15      Insurance Proceeds...................14
Award...........................11      Insured Casualty.....................14
Casino Property..................1      Landscape Improvements................3
Catskill.........................1      Lot...................................3
Catskill's Marks................15      Management Agreement..................4
Common Areas.....................2      Manager...............................4
Common Utility Facilities........2      Marketing Program....................10
Compact..........................2      Nation................................1
Condemn .........................2      Obligation ...........................4
Condemnation ....................2      Occupant..............................4
Condemnee ......................11      Parking Areas ........................4
Condemnor.......................11      Permitees ............................4
Declaration of Covenants.........2      Person................................4
Development Agreement ...........2      Plans and Specifications .............4
Easement Areas...................2      Promotion Fund ......................10
Enterprise ......................3      Property..............................4
Exclusive Use Area...............2      Restrictions..........................4
Gaming...........................2      Shared Costs.........................10
Gaming Authority.................2      Shared Facilities Business Board......4
Gaming Enterprise ...............3      Site Plan ............................4
Gaming Facility................1,3      Track Facility .....................1,4
Government Regulations...........3      Track Property........................1

                                     (iii)

                           SHARED FACILITIES AGREEMENT

THIS SHARED FACILITIES  AGREEMENT (this "AGREEMENT") has been entered into as of
April 3, 2003, by and between CAYUGA  CATSKILL GAMING  AUTHORITY,  together with
its permitted successors and assigns, having an address c/o Cayuga Nation of New
York, Post Office Box 11,  Versailles,  NY 14168, (the "AUTHORITY") and CATSKILL
DEVELOPMENT,  L.L.C., together with its permitted successors and assigns, having
an  address  at Route  17B,  P.O.  Box  5013,  Monticello,  New  York  12701-553
("CATSKILL").

                                    RECITALS

WHEREAS,  Catskill  is  the  owner  of  certain  land  located  in the  city  of
Monticello, County of Sullivan, State of New York as shown by shading on EXHIBIT
A attached hereto and made a part hereof (the "TRACK PROPERTY");

WHEREAS,  contemporaneously  with the effectiveness of this Agreement,  Catskill
shall  convey  land  adjacent  to the  Track  Property  located  in the  city of
Monticello, County of Sullivan, State of New York as shown by shading on EXHIBIT
B attached  hereto and made a part hereof (the "CASINO  PROPERTY") to the United
States of  America to be held in trust for the  benefit of The Cayuga  Nation of
New York(the "NATION");

WHEREAS,  the Nation has established the Authority,  an  instrumentality  of the
Nation,  to which it has assigned its authority over the development and conduct
of Gaming (hereafter defined) on the Casino Property;

WHEREAS,  the Nation and the Authority  contemplate  entering into a Land Lease,
pursuant to which the Nation shall lease its interest in the Casino  Property to
the Authority;

WHEREAS, it is intended by the Nation and the Authority that the Authority shall
construct  and develop or cause to be  constructed  and  developed on the Casino
Property certain  buildings,  improvements and fixtures (the "GAMING  FACILITY")
for the purposes of  operating a Gaming  Enterprise  (hereafter  defined) on the
Casino Property;

WHEREAS,  Catskill  intends to operate and improve,  or cause the  operation and
improvement  of, the  existing  horse  racing  track and  incidental  facilities
located upon the Track Property (the "TRACK FACILITY");

WHEREAS, prior to the execution and delivery of this Agreement,  Catskill as the
owner of the  Property  (hereinafter  defined)  has  recorded a  Declaration  of
Covenants; and

WHEREAS,  the  parties  intend  that if there is a conflict  between  the terms,
conditions  and  provisions  of this  Agreement  and the terms,  conditions  and
provisions of the  Declaration,  the terms,  conditions,  and provisions of this
Agreement shall govern.

NOW,  THEREFORE,  in  consideration  of the  payment of Ten ($10) and the mutual
covenants,  conditions and promises herein contained and other good and valuable
consideration,  the receipt and sufficiency of which are expressly acknowledged,
the Authority and Catskill hereby agree as follows:

ARTICLE 1.  DEFINITIONS; UNDEFINED TERMS

Section 1.1  DEFINITIONS.  For purposes of this  Agreement,  the following terms
shall have the following  meanings.  All capitalized terms used herein,  but not
otherwise defined in this Agreement, shall have the respective meanings ascribed
to them in the Management Agreement.

            A. "COMPACT" shall mean the nation-state compact, and any amendments
or modifications thereto, to be entered into between the Nation and the State of
New York pursuant to IGRA, or such other Compact as may be substituted therefor.

            B. "COMMON AREAS" shall mean those  portions of the Casino  Property
and Track  Property  that are  available  for the common  use,  convenience  and
benefit of the parties hereto including, without limitation, the Easement Areas,
the Parking  Areas,  Common  Utility  Facilities,  and any walkways,  connecting
passageways,  lobbies,  public conveniences or sidewalks  incidental thereto and
all other Improvements thereon, all as shown on the Site Plan.

            C.  "COMMON  UTILITY  FACILITIES"  shall  mean  all  storm  drainage
facilities,  sanitary sewer systems, gas systems, water systems, fire protection
installations,  electrical  power  cables and  telephone  lines  situated on the
Property used for the joint service of the Lots.

            D.  "CONDEMNATION"  or "CONDEMN"  shall mean a taking of property or
possession thereof pursuant to the power of eminent domain, or any conveyance in
lieu of eminent domain made by a party under the threat of condemnation.

            E. "DECLARATION OF COVENANTS" shall mean that certain Declaration of
Covenants,  Conditions and  Restrictions,  dated as of the date as of which this
Agreement is made, executed by Catskill Development, L.L.C.

            F.   "DEVELOPMENT   AGREEMENT"   shall  mean  the  Gaming   Facility
Development and  Construction  Agreement,  dated as of the date as of which this
Agreement is made,  among the  Authority,  the Nation,  and  Monticello  Raceway
Development Company, L.L.C., as the same may be amended from time to time.

            G.  "EASEMENT  AREAS"  shall mean,  collectively,  Easement  Area A,
Easement  Area B,  Easement Area C, Easement Area D, Easement Area E (Pedestrian
Sky  Bridge),  Easement  Area F,  Easement  Area G (the Bus Staging Area and Bus
Drop-off Area), all as shown on the Site Plan.

            H.  "EXCLUSIVE  USE AREA" shall mean those  portions of the Property
which are or may  become for the  exclusive  use of the  Occupant  of the Lot on
which they are located, as shown on the Site Plan.

            I. "GAMING" shall mean any and all activities defined as Class II or
Class III Gaming under the IGRA or authorized under the Compact.

            J. "GAMING  AUTHORITY"  or  "AUTHORITY"  shall mean Cayuga  Catskill
Gaming Authority.

                                       2

            K. "GAMING  ENTERPRISE"  or  "ENTERPRISE"  shall mean any commercial
enterprise of the  Authority  authorized by IGRA and/or the Compact and operated
on the Casino  Property;  and any other lawful  commercial  activity  related to
Gaming allowed in the Gaming Facility  including,  but not limited to, automatic
teller  machines  and  subject to any  applicable  governmental  or  contractual
limitations,  the sale for individual  consumption of food, beverages,  tobacco,
gifts and souvenirs but excluding any  franchised or licensed  vendors  paying a
fee to the Gaming  Enterprise.  It is  acknowledged  by the parties  hereto that
"Gaming Enterprise" shall exclude any wagering activities related to the outcome
of any  horse  racetrack  or  horse  racing  contest  conducted  off the  Casino
Property;  PROVIDED,  however, that if a horse racetrack or horse racing contest
has not been  conducted on the racetrack  that  comprises a portion of the Track
Property at any time during a  consecutive  twenty-four  (24) month period or if
such racetrack has been abandoned and not reoccupied within seven (7) days after
notice  from the  Authority  to the  record  owner of the  Track  Property,  the
foregoing  prohibition  against  racetrack  wagering  activities  on the  Casino
Property shall (subject to applicable Legal Requirements) be of no further force
or effect. The Gaming Enterprise includes any building or accommodation used for
Gaming on the Casino  Property and related  on-site retail sales and services on
the Casino Property.  The Authority shall have the sole proprietary  interest in
and  responsibility  for the  conduct  of all  Gaming  conducted  by the  Gaming
Enterprise subject to the rights and  responsibilities  of the Manager under the
Management Agreement.

            L. "GAMING  FACILITY"  shall mean the buildings,  improvements,  and
fixtures,  now or  hereafter  located on the Casino  Property  within  which the
Gaming Enterprise will be housed.

            M.  "GOVERNMENT  REGULATIONS"  shall  mean all  present  and  future
governmental laws, statutes, codes, ordinances, rules, regulations, limitations,
restrictions,  orders, judgments and other governmental  requirements applicable
to the Property.

            N. "IGRA" shall mean the Indian  Gaming  Regulatory  Act of 1988, PL
100-497,  25 U.S.C. ss. 2701 et seq. as same may, from time to time, be amended.

            O.  "IMPROVEMENTS"  shall  mean  all  structures  and  appurtenances
thereto  of every  type and kind,  including,  but not  limited  to,  buildings,
outbuildings,  huts, horse racing tracks, kiosks, garages, tunnels,  underground
installations,  irrigation and drainage devices or systems,  fountains,  fences,
screening  walls,   retaining  walls,  gateways,   porte  cocheres,   skybridges
(including  the skybridge  anticipated to be located in Easement Area D shown on
the Site Plan),  Parking Areas, Bus Staging Areas,  Bus Drop-off Areas,  loading
areas,  poles,  stairs,  escalators,  decks,  light standards,  signs,  benches,
walkways and Landscape Improvements.

            P. "LANDSCAPE IMPROVEMENTS" shall mean any plantings,  ground cover,
trees and  shrubbery  now or hereafter  existing in Easement Area A and Easement
Area B shown on the Site Plan, all foundation planting areas and the Bus Staging
Area and the Bus Drop-off  Area  together  with any  alterations,  systems,  and
equipment  installed  in order to enable  reasonable  irrigation,  lighting  and
maintenance of the plantings, ground cover, trees and shrubbery.

            Q. "LOT" shall mean either the Casino Property or the Track Property
as the context requires,  but shall not include streets or alleys that have been
dedicated to and accepted by any governmental  agency having jurisdiction in the
matter.

                                       3

            R. "MANAGER" shall mean Monticello Casino Management, L.L.C., or any
successor thereto pursuant to the Management Agreement.

            S. "MANAGEMENT  AGREEMENT" shall mean the Gaming Facility Management
Agreement,  dated as of the date as of which this  Agreement is made,  among the
Authority, Manager and the Nation, as the same may be amended from time to time.

            T.  "OBLIGATION"  shall  have  the  meaning  ascribed  to it in  the
Declaration of Covenants.

            U. "OCCUPANT" shall mean,  collectively,  the record owner of either
Lot and any Person from time to time  entitled to the use and  occupancy  of any
portion of the Property  under any lease,  license or concession  agreement,  or
other similar instrument or arrangement.

            V.  "PARKING  AREAS"  shall mean those  portions of the Property set
forth on the Site Plan used for parking of motor  vehicles,  including,  without
limitation,  incidental and interior roadways and driveways, walkways, curbs and
landscaping  within  the  areas  used  for  such  parking,   together  with  all
improvements  which at any time are erected thereon (as the same may be expanded
or diminished).

            W.  "PERMITEES"  shall  mean  all  Persons  which  may  utilize  the
Property,   including,  without  limitation,   Occupants  and  their  respective
employees, agents, contractors, service people, customers and invitees.

            X. "PERSON"  shall mean any  individual,  corporation,  partnership,
limited liability  company,  joint venture,  association,  joint-stock  company,
trust,  unincorporated  organization,  government  or any  agency  or  political
subdivision thereof or any other entity.

            Y. "PLANS AND SPECIFICATIONS" shall have the meaning assigned in the
Development Agreement.

            Z. "PROPERTY" shall mean, collectively,  the Casino Property and the
Track Property.

            AA. "RESTRICTIONS" shall mean the easements, covenants,  conditions,
restrictions,  liens  and  charges  and  other  encumbrances,  now or  hereafter
established or imposed by or pursuant to the Declaration of Covenants.

            BB.  "SHARED  FACILITIES  BUSINESS  BOARD" shall mean the  committee
established pursuant to Article 5 hereof.

            CC. "SITE PLAN" shall mean that certain plan for the  development of
the  Property  attached  hereto and made a part hereof as EXHIBIT C, as the same
may be changed from time to time.

            DD. "TRACK  FACILITY"  shall have the meaning  ascribed to it in the
Recitals.

                                       4

ARTICLE 2   TERM

The term of this Agreement shall commence on the  Commencement  Date (as defined
in the Management  Agreement) and, unless otherwise  terminated  pursuant to the
terms  of  this  Agreement,  shall  terminate  on  the  original  expiration  or
termination of the Management Agreement.

ARTICLE 3   COVENANTS OF THE AUTHORITY

Section 3.1 OPERATING  COVENANTS OF THE AUTHORITY.  Subject to the provisions of
Articles 8 and 10 hereof and to interruptions reasonably incident to the conduct
of Gaming on the Casino Property, the Authority shall:

            A.  continually  operate  or  cause  the  Gaming  Enterprise  to  be
continually  operated  on a  year-round  basis,  seven  (7)  days a  week  or as
otherwise operated pursuant to the terms of the Management Agreement;

            B. operate or cause the Gaming  Enterprise to be operated in a first
class manner  (including,  without  limitation,  the  maintenance  of sufficient
parking facilities);

            C.  manage  and  operate  the  Gaming  Facility  under  a name to be
determined  by the  Shared  Facilities  Business  Board and under no other  name
without the prior  written  approval of Catskill,  which  approval  shall not be
unreasonably withheld; and

            D. not use the Casino  Property for any other purpose other than the
conduct of Gaming  and any  incidental  entertainment,  parking,  restaurant  or
retail facilities in connection therewith.

Section 3.2 CONSTRUCTION COVENANT OF AUTHORITY.  The Authority covenants that it
shall develop and construct  the Gaming  Facility and make certain  renovations,
improvements  or  alterations  to the Track  Facility  free of defects  and in a
workerlike manner in accordance with the terms and provisions of the Development
Agreement.  Catskill agrees that it shall look solely to the General  Contractor
to insure  that such work shall be free of defects and shall be  performed  in a
workerlike manner.

ARTICLE 4   OPERATING COVENANTS OF CATSKILL

Subject to the  provisions  of Articles 8 and 10 hereof and provided that Gaming
is being continuously  conducted on the Casino Property as provided in Article 3
hereof, Catskill shall:

            A. from and after the date the Authority  completes the construction
contemplated  by the provisions of SECTION 3.2 hereof,  continually  operate the
Track Facility in a first-class  manner  consistent with operators of similar or
comparable racetrack facilities with a reasonable number of racing days per year
and for other lawful purposes such as hotel,  entertainment,  retail, restaurant
and other similar uses other than Gaming as conducted on the Casino Property and
industrial uses; provided that Catskill may conduct or operate any lottery games
permitted  under  state law (e.g.  Quick Draw,  Pick 6, etc.) and slot  machines

                                       5

permitted by state law provided the same is  incidental  to the use of the Track
Facility  as a racing  venue and such uses are  housed and  operated  within the
existing improvements; and

            B. manage and operate the Track Facility under the name  "Monticello
Racetrack" or any  derivative  thereof and under no other name without the prior
written  approval of the Authority,  which  approval  shall not be  unreasonably
withheld.

Notwithstanding the above, Authority acknowledges that if at any time during the
term hereof it is no longer commercially practical to operate the Track Facility
as a racing  venue,  Catskill  may use the Track  Property  for any other lawful
purpose such as hotel, entertainment,  retail, restaurant and other similar uses
other than Gaming as  conducted  on the Casino  Property  and  industrial  uses,
provided  the same  does not  materially  adversely  interfere  with the use and
operation of the Casino Property and the Common Areas.

ARTICLE 5   SHARED FACILITIES BUSINESS BOARD

On or prior to the Issuance Date (as defined in the Development Agreement),  the
Authority and Catskill shall establish the Shared Facilities Business Board. The
Shared  Facilities  Business  Board  shall  be a  committee  consisting  of four
representatives,  two of whom are  appointed  by the  Authority,  one of whom is
appointed by Catskill  and one of whom is appointed by the Manager.  The members
of the Shared  Facilities  Business  Board  appointed by (a) the  Authority  and
Manager  shall (i) with  respect to the  Authority,  consist of the same members
appointed by it to the  Management  Business Board (as defined in the Management
Agreement)  and (ii) with  respect to Manager,  the member  appointed by Manager
shall be one of the same  members  appointed  by it to the  Management  Business
Board, and (b) Catskill shall be one of the same members  appointed by it to the
Development Business Board (as defined in the Development Agreement). The Shared
Facilities  Business  Board  shall have the rights,  obligations  and powers set
forth  in  this  Agreement.  Except  as  otherwise  expressly  provided  in this
Agreement,  actions of the Shared  Facilities  Business  Board shall require the
affirmative vote of three members of the Shared  Facilities  Business Board. The
attendance  of three  members of the  Shared  Facilities  Business  Board at any
meeting  shall  constitute a quorum.  The Nation,  Catskill and Manager may each
change its respective  representatives to such board at any time,  provided this
Article 5 is complied with and notice is given in  accordance  with SECTION 15.5
hereof. Members of the Shared Facilities Business Board may designate a proxy to
act on behalf of a named representative in the absence of such representative to
the Shared  Facilities  Business  Board,  provided that such  designation  be in
writing by (x) in the case of the Authority,  the chairman of the Authority, (y)
in the  case  of  Catskill,  its  managing  director  or (z) in the  case of the
Manager, its managing director,  and that notice of such designation be provided
pursuant  to SECTION  15.5 of this  Agreement.  Such  proxy  shall have the full
authority to act,  vote or consent on behalf of such  representative.  Except as
otherwise  expressly provided in this Agreement,  in order to be effective,  any
action of the Shared  Facilities  Business Board must be the result of agreement
by at least  three  (3)  members  of the  Shared  Facilities  Business  Board or
designees.  The Shared Facilities  Business Board shall remain active during the
entire term of this  Agreement.  The parties  hereby  agree to ensure that their
respective  representatives  to  the  Shared  Facilities  Business  Board  shall
cooperate  fully and to reach  agreement or compromise on all matters before the
Shared Facilities Business Board. In the event such agreement cannot be reached,
the appropriate  action shall be determined in the manner provided in Article 12

                                       6

hereof.  The parties shall cooperate in setting meeting schedules for the Shared
Facilities   Business   Board   during  the  term   hereof.   Any  two  or  more
representatives of the Shared Facilities  Business Board shall have authority to
call a special  meeting of the  Shared  Facilities  Business  Board on three (3)
days' written notice (by facsimile or otherwise) to other  representatives  that
comprise the Shared Facilities Business Board on such date.

ARTICLE 6   MAINTENANCE, OPERATION, AND MANAGEMENT OF COMMON
            AREAS; ALLOCATION OF COSTS

Section 6.1 MAINTENANCE OF COMMON AREAS.

            A. The  Authority  shall,  or shall  cause the  Manager to, keep and
maintain the Common Areas on the entire Property including,  without limitation,
the Landscape Improvements between the Lots (and the Authority shall have access
to the Track Facility for such purpose,  pursuant to and otherwise in accordance
with this  Agreement and the  Declaration of Covenants) in a good and safe state
of repair and in a clean and  orderly  condition  in keeping  with  commercially
prudent  standards  which  shall  include  (but  shall  not be  limited  to) the
following:

                (i) All hard  surfaced  portions  of the Common  Areas  shall be
            swept at  intervals  sufficient  to maintain the same in a clean and
            safe  condition  and shall be kept  reasonably  clear of ice,  snow,
            surface water, and debris before the Gaming  Enterprise or the Track
            Facility   shall  open  for  business  to  the  general  public  and
            thereafter during such operation.

                (ii) All sidewalks in the Common Areas shall be swept and washed
            at  intervals  sufficient  to maintain  the same in a clean and safe
            condition.

                (iii) All trash and  rubbish  containers  located  in the Common
            Areas  for the use of  Occupants  or  Permitees,  shall be washed at
            intervals sufficient to maintain the same in a clean condition.

                (iv) All  landscaping  in the  Common  Areas  shall be  properly
            maintained,  including  removal of dead plants,  weeds,  and foreign
            matter and such  replanting  and  replacement  as the  occasion  may
            require.

                (v) All hard surfaced markings  (including all parking striping)
            in the Common  Areas shall be  inspected  at regular  intervals  and
            promptly  repainted as the same shall become unsightly or indistinct
            from wear and tear or other cause.

                (vi) All sewer catch basins in the Common Areas shall be cleaned
            on a  schedule  sufficient  to  maintain  all sewer  lines in a free
            flowing condition.  All mechanical  equipment and storm and sanitary
            sewer  facilities  shall be regularly  inspected  and kept in proper
            working order.

                (vii) All asphalt  paving in the Common Areas shall be inspected
            at regular  intervals and  maintained  in a  first-class  condition,
            which  maintenance  shall include patching and repair of chuckholes,

                                       7

            potholes  and  cracks  as they  appear  from  time to time and shall
            include repaving if necessary.

                (viii)  All  Common  Utility  Facilities  (including  all Common
            Utility  Facilities in the Common Areas) shall be kept in good order
            and repair.

                (ix) All  directional  signs and  pavement  signs in the  Common
            Areas shall be kept distinct and legible.

                (x) All  lighting  and light poles in the Common  Areas shall be
            kept in good order and repair (including repainting), and all tubes,
            ballasts, and bulbs shall be replaced as necessary.

                (xi) All Common Area  stairways,  paths and  entrances,  if any,
            shall be (a) swept and washed at  intervals  sufficient  to maintain
            the same in a clean and safe  condition,  (b)  inspected  at regular
            intervals,  and (c) promptly  repaired  upon the  occurrence  of any
            irregularities or worn portions thereof.

The plan  pursuant to which the Authority  shall  perform the above  obligations
(e.g.  commencement,  frequency)  shall  be  adopted  by the  Shared  Facilities
Business  Board from the plan  proposed  by the  Management  Business  Board (as
defined in the Management Agreement) for the Gaming Facility.

            B. All  Improvements on and to the Common Areas shall be repaired or
replaced by the Manager with materials,  apparatus, and facilities of quality at
least equal to the quality of the materials,  apparatus, and facilities repaired
or replaced.

            C. The parties hereto agree that the  maintenance  and repair of all
other  portions of the  Property  not covered by this Article 6 shall remain the
sole cost and  responsibility  of, with respect to the Casino Property only, the
Authority,  and with  respect  to the Track  Property  only,  Catskill  or their
designees;  PROVIDED HOWEVER, Catskill and the Authority shall maintain and keep
the Track Property and Casino Property,  respectively,  in a good and safe state
of repair and in a clean and orderly  condition in accordance with  commercially
prudent business standards.

Section 6.2 LIGHTING.  During any period when the Gaming  Enterprise is open for
business  and for  commercially  reasonable  periods  of time  when  the  Gaming
Enterprise  is  closed,  if any,  Catskill  shall  keep or  cause to be kept the
Parking  Areas on the Track  Facility  well lighted  during the period from dusk
until dawn,  with a minimum  maintained  intensity of not less than one (1) foot
candle measured at ground level.

Section 6.3 MAINTENANCE OF GAMING FACILITY.  The Authority shall (or shall cause
the same to be performed) (a) keep and maintain the interior and exterior of the
Gaming  Facility  in a good and safe state of repair and in a clean and  orderly
condition,  and (b) during any hours when (i) the Track  Facility  shall be open
for business or when Occupants occupying  seventy-five  percent (75%) or more of
the  floor  area of any  building  located  on the Track  Property  are open for
business  and  (ii)  the  Gaming  Enterprise  is open  for  business,  and for a
reasonable  period of time before and after such hours,  provide adequate light,
heat, ventilation and air conditioning to the Gaming Facility in accordance with
commercially prudent standards.

                                       8

Section 6.4 MAINTENANCE OF TRACK FACILITY.  Catskill shall keep and maintain the
interior and  exterior of the Track  Facility in a good and safe state of repair
and in a clean and orderly  condition,  subject to the other  provision  of this
Agreement.  During any hours when the Track Facility shall be open for business,
and for a reasonable period of time before and after such hours,  Catskill shall
provide  adequate light,  heat,  ventilation  and air  conditioning to the Track
Facility in accordance with commercially prudent standards.

Section 6.5 USE/MAINTENANCE EASEMENT AREA E (PEDESTRIAN SKY BRIDGE). The parties
hereto have agreed that Easement Area E shown on the Site Plan  constitutes part
of the Common Areas and,  accordingly,  the Manager shall be responsible to keep
and  maintain the  Improvements  located in Easement  Area E including,  without
limitation,  the connection to, the building  materials  surrounding the opening
and the structural support features of, that portion of the Track Facility shown
on Easement Area E as shown on the Site Plan.  Notwithstanding  such  obligation
however,  and otherwise  supplementing the provisions of PARAGRAPH 6.1.C hereof,
each party hereto shall have the exclusive  right to use the portion of Easement
Area E allocated to it,  respectively,  for retail and other attendant  purposes
(as shown on the Site Plan,  which will be based upon a fraction  expressed as a
percentage, (x) the numerator of which will be the length thereof that begins at
a party's  property  line and ends at such party's  building  line,  and (y) the
denominator of which will be the total length of the pedestrian skybridge,  e.g.
to the extent the pedestrian  skybridge  spans and otherwise  encroaches  upon a
party's Lot,  such party will have the  exclusive use of a portion of the bridge
for retail  purposes  designated as such. The exclusive areas will be maintained
at the sole cost and  responsibility  of the party enjoying and otherwise  using
such area for retail  purposes.  The area within the  pedestrian  bridge  (size)
which may be utilized  for retail  purposes  shall be  determined  by the Shared
Facilities Business Board.

Section 6.6 SECURITY.  The Authority shall provide security for the Common Areas
pursuant to a plan to be adopted by the Shared  Facilities  Business  Board from
the plan proposed by the Manager.  Each of the parties  hereto shall provide for
security  services  based  on  commercially   reasonable   standards  for  their
respective facilities. Each of the parties hereto shall cooperate with the other
to assure that reasonably adequate and coordinated  security is provided for the
Property and the uses thereon, including traffic control and night patrols.

Section 6.7 EMPLOYMENT OF CONTRACTORS OR PERSONNEL. The Authority or the Manager
may engage  outside  contractors or hire  personnel,  in adequate  numbers,  and
during  business  hours and such  other  hours as are  prudent  for the safe and
orderly operation of the Common Areas and on commercially reasonable and prudent
terms in order to carry out its  obligations  under this  Article 6. The parties
hereto  shall share in the expenses of the  Authority or the Manager  under this
SECTION  6.7 hereof in the manner and to the extent  provided  in SECTION 6.9 of
this Agreement.

Section 6.8 PARKING.  The parties hereto agree that no charge shall be collected
from and/or time limit imposed upon any Occupant or Permitee for parking  unless
the parties hereto have otherwise mutually agreed in writing. The parties hereto
also  agree  that they may  jointly  promulgate  mutually  acceptable  rules and
regulations with respect to the use of the Common Areas.

Section  6.9  ALLOCATION  OF  COSTS.  During  the  term of this  Agreement,  the
Authority  agrees that it shall pay for  ninety-five  percent (95%) of all costs
and  expenses  incurred by or on behalf of the  Authority  in  carrying  out its

                                       9

obligations  under this Article 6 (the "SHARED COSTS").  During the term of this
Agreement, but only during those periods when Catskill is open to the public for
business,  Catskill agrees that it shall pay for five percent (5%) of all Shared
Costs;  provided however,  if either party desires to recalculate its percentage
of Shared Costs  because such party  believes  that the then current  allocation
percentage  is no longer  equitable  based on each party's then current use, the
parties  hereto  shall  in good  faith  negotiate  to  mutually  agree  on a new
percentage  and if the parties  hereto  shall fail to reach an agreement on such
percentage,  then either  party  shall have the right to submit such  dispute to
arbitration in accordance  with the terms of Article 12 hereof.  Notwithstanding
the above,  with respect to Easement Area E shown on the Site Plan,  the parties
hereto shall share the maintenance  costs and expenses (as opposed to the repair
costs and expenses which will be the  Authority's  obligation as provided above)
as  provided  in SECTION  6.5.  In  addition,  the  foregoing  is subject to the
applicable provisions of ARTICLE 10 and SECTION 12.4.

Section 6.10 RIGHTS OF AUTHORITY TO COMMON  AREAS.  During the term hereof,  the
rights and  benefits  accruing to each owner of a Lot under the  Declaration  of
Covenants  shall inure to the benefit of the Authority.  (In no event shall this
Agreement  restrict  the  rights  of the  Authority  under  the  Declaration  of
Covenants).

ARTICLE 7   JOINT MARKETING AND ADVERTISING

Section 7.1 JOINT MARKETING.  In addition to the rights,  obligations and powers
of the  Shared  Facilities  Business  Board set forth in  Article 5 hereof,  the
Shared  Facilities  Business Board shall be  responsible  for  establishing  and
maintaining a joint marketing and advertising program (the "MARKETING  PROGRAM")
that will  maximize  the joint  promotion  of the Gaming  Facility and the Track
Facility which program may include,  without limitation,  special events, shows,
displays, institutional advertising, promotional literature, special promotional
programs  including,  players clubs,  VIP services,  monthly  newsletters,  tour
packages and other direct and media  marketing  programs and the  engagement  of
outside  consultants or companies to assist in carrying out the  foregoing.  The
Shared  Facilities  Business  Board  shall  have  exclusive  responsibility  for
determining  the  content,  format and length of all joint  promotion  print and
electronic  media  advertising  and the  location and size of all signage in the
Common Areas.  The Marketing  Program shall be adopted by the Shared  Facilities
Business  Board  from  the  marketing  and  advertising  plan  proposed  by  the
Management Business Board.  Notwithstanding the above,  nothing contained herein
shall or shall  be  deemed  to  restrict  either  party  from  establishing  and
maintaining its own separate  advertising and marketing  program with respect to
the activities conducted on its Lot.

Section 7.2 PROMOTION FUND. During the term of this Agreement, the Authority and
Catskill may (but neither party shall be under any  obligation to) contribute in
accordance  with the  percentages  set forth in SECTION 6.9  hereof,  funds (the
"PROMOTION  FUND") to be utilized to pay for all costs and  expenses  associated
with the formulation and carrying out the Marketing Program  administered by the
Shared Facilities  Business Board.  Upon the reasonable  request of either party
hereto, the Shared Facilities  Business Board shall provide an accounting of all
expenditures  made out of the Promotion Fund for the preceding  calendar year in
which such request is made.

                                       10

ARTICLE 8   CONDEMNATION

Section 8.1 NOTICE OF CONDEMNATION.  If any party hereto (the "CONDEMNEE") shall
receive  notice from a condemning  authority (the  "CONDEMNOR")  of the proposed
Condemnation  of any of the  Condemnee's  Property,  such party  shall  promptly
inform the other party by written  notice of such fact,  together with copies of
all papers  served in connection  with such  Condemnation,  and when known,  the
portion or portions of its Property so to be  condemned  and the date upon which
it is anticipated  that the Condemnee  will be required to surrender  possession
thereof to the Condemnor.

Section 8.2 CONDEMNATION OF CASINO PROPERTY.  Subject to the terms of the Senior
Secured  Note  Indenture,  if  any  portion  of the  Casino  Property  shall  be
Condemned,  the Authority shall promptly restore, replace or rebuild the same to
the  extent  economically  feasible  to  be of  at  least  equal  value  and  of
substantially the same character as prior to such Condemnation.

Section 8.3  CONDEMNATION OF TRACK PROPERTY.  If all or any portion of the Track
Property  shall  be  Condemned  and in  the  good  faith  judgment  of  Catskill
reasonably  exercised in accordance with commercially prudent business standards
it shall not be  economically  feasible  to  restore  or  replace  the same to a
complete  architectural  unit capable of being operated as previously used prior
to such  Condemnation,  then Catskill shall have the right and option to exclude
such  portion  of the  Track  Property  from the  operation  and  effect of this
Agreement by specifying in a written notice  delivered to the Authority at least
forty-five  (45) days prior to the date that it must  surrender  such  condemned
property to the  Condemnor  that it has elected to so exclude such property from
this  Agreement,  provided that any future use of such property shall be for any
lawful  purpose  such as  hotel,  entertainment,  retail,  restaurant  and other
similar  uses  other  than  Gaming  as  conducted  on the  Casino  Property  and
industrial uses, provided that Catskill may conduct or operate any lottery games
permitted  under  state law (e.g.  Quick Draw,  Pick 6, etc.) and slot  machines
permitted by state law provided the same is  incidental  to the use of the Track
Facility  as a racing  venue and such uses are  housed and  operated  within the
existing improvements.

Section 8.4 RESTORATION OR REPLACEMENT OBLIGATION OF CATSKILL. If as a result of
a Condemnation, Catskill either (a) is not entitled to exclude its property from
the  operation and effect of this  Agreement,  or (b) being so entitled does not
elect to do so or fails to do so in accordance  with the terms and provisions of
SECTION 8.3 hereof,  regardless  of whether any award or payment is collected or
made in connection with such  Condemnation,  Catskill shall promptly  proceed to
restore,  repair,  replace  or rebuild  such  Condemned  property  to the extent
possible to be of at least equal value and of  substantially  the same character
as prior to such Condemnation.

Section 8.5 CONDEMNATION  AWARD.  Subject to the terms of this Agreement and any
Financing  Agreements,  the entire award or payment (the  "AWARD")  made for any
Condemnation of any land,  building(s) or other improvements shall belong to the
party upon whose Lot such land,  building(s) or other improvements were located.
Notwithstanding  anything to the contrary  contained in the preceding  sentence,
with respect to any Award made in connection  with a Condemnation  of all or any
portion of the Casino Property, such Award shall be deposited with a bank, trust
company or other similar  entity to be held and disbursed in a manner similar to
the procedures set forth in the Disbursement and Escrow Agreement (as defined in

                                       11

the Senior Secured Note Indenture) and any balance remaining thereafter shall be
paid to the Authority.  The Occupant of each Lot shall have the right at its own
cost and expense to make any  compromises and settlements in connection with any
Condemnation  of any property on its  respective  Lots  provided  that any party
hereto may participate and join in any such Condemnation proceedings but only to
the extent necessary to maintain its own claim.  Notwithstanding anything to the
contrary  contained in the  preceding  sentence,  subject to the approval of the
Shared Facilities  Business Board, the Manager shall have the right to negotiate
and make any compromises and settlements in connection with any  Condemnation of
any Easement Areas and the costs of making any such settlements shall be paid by
Catskill and the Authority in accordance  with the  respective  percentages  set
forth in Section 6.9 hereof

Section 8.6  CONDEMNATION  DISPUTES.  Any disputes  under this Article 8 between
Catskill and the Authority shall be determined by arbitration in accordance with
the provisions of Article 12 hereof.

ARTICLE 9   INSURANCE

Section  9.1  CASUALTY  INSURANCE.   Subject  to  the  terms  of  the  Financing
Agreements,  each  party  hereto  shall  keep at its own cost and  expense,  the
buildings  and  other  structures  on its  respective  Lot,  including,  without
limitation,  Common Areas on its respective Lot,  insured against loss or damage
by fire and other perils commonly covered under an extended coverage endorsement
in an amount  equal to the full  replacement  cost of such  buildings  and other
structures,  such insurance to be written on a full  replacement cost basis. The
cost of such  insurance  reasonably  allocable  to the  Common  Areas  shall  be
allocated in accordance with the terms of SECTION 6.9 hereof.

Section 9.2 LIABILITY INSURANCE. The Authority shall, or shall cause the Manager
to, at all times  during the term of this  Agreement,  maintain,  or cause to be
maintained, in full force and effect,  comprehensive general liability insurance
covering the Casino  Property and the Common Areas,  including  coverage for any
accident   resulting  in  personal   injury  to  or  death  of  any  person  and
consequential  damages  arising  therefrom,  in an amount  not less  than  Fifty
Million  Dollars  ($50,000,000)  per occurrence and One Hundred  Million Dollars
($100,000,000) in the aggregate.  All costs of any general  liability  insurance
for the Common Areas shall be allocated in accordance  with the terms of SECTION
6.9  hereof.  The Track  Manager  shall,  at all times  during  the term of this
Agreement,  maintain  or cause  to be  maintained,  in full  force  and  effect,
comprehensive  general  liability  insurance  covering  the  Track  Property  in
coverage and amounts equal to those maintained by owners of comparable racetrack
properties  in the  exercise of its good faith  judgment  based on  commercially
prudent standards. [BEING DISCUSSED WITH CONSULTANT.]

Section 9.3 INSURANCE  CARRIERS:  FORM OF INSURANCE  POLICIES.  On or before the
effective  date of any insurance  policy  required to be maintained  pursuant to
this  Article 9, the parties  hereto shall  furnish  evidence to the other party
that such  insurance  coverage is in full force and effect and that the premiums
therefor  have been  paid.  Subject  to the  terms of the  Senior  Secured  Note
Indenture,  all insurance  policies  required to be maintained  pursuant to this
Article 9 shall (a) name the other party hereto, as applicable, as named insured
thereunder,  (b) provide that such insurance policy may not be canceled, reduced
or amended without at least thirty (30) days prior written notice being given by

                                       12

the insurer to all the parties  hereto,  (c) contain  severability  of interests
endorsements,  (d) be issued by responsible  insurance  companies licensed to do
business in the State of New York with a claims  paying  ability  rating of A or
higher and a financial size category of not less than X as listed in the current
Best's Insurance Reports or if such carrier is not rated by A.M. Best & Company,
Inc., having the financial stability and size deemed appropriate as certified by
a reputable  insurance  broker and (e) include a provision  which  prohibits any
insurance carrier from invoking the Authority's  sovereign immunity as a defense
to any action within the limits of such policy.  Any insurance policies required
to be  maintained  pursuant  to this  Article 9 may also be made  payable to the
holder of any first  mortgage  which is a lien  upon all or any  portion  of the
property  of any  insured  under a  standard  mortgagee  clause,  provided  such
mortgagee is a bank,  trust  company,  insurance  company,  or a pension fund or
retirement  fund having a bank or trust  company as trustee,  and agrees that it
will, in the event of loss,  apply the proceeds  toward the costs of restoration
in accordance with the terms of this Agreement.  All insurance policies required
to be  maintained  under this  Article 9 which  affect any  Common  Areas  shall
contain a provision which prohibits any cancellation,  amendment or modification
thereto  without the prior written  consent of Catskill,  which consent  (except
with respect to  cancellation)  shall not be unreasonably  withheld.  Each party
hereto shall, upon request, deliver to the other party certificates of insurance
and other  evidence of renewal of all policies  required to be maintained  under
this Article 9.

Section 9.4  RESPONSIBLE  FOR RESPECTIVE  LOTS.  Each party hereto  covenants to
defend, and does hereby, indemnify and hold harmless each other from and against
all  claims  and all  costs,  expenses  and  liabilities  (including  reasonable
attorneys' fees) incurred in connection with all claims, including any action or
proceedings brought thereon, arising from or as a result of the death of, or any
accident, injury, loss or damage whatsoever caused, to any natural Person, or to
the property of any Person,  as shall occur on its  respective  Lot,  except for
claims  caused by the active  negligence  or willful act or willful  omission of
such indemnified Person, or its Permitees.

Section 9.5 WAIVER OF  SUBROGATION.  Each of the parties  hereto  shall,  to the
extent such insurance  endorsement  is available,  obtain for the benefit of the
other, a waiver of any right of subrogation which the fire and extended coverage
insurer or any other  insurance  carrier may acquire against the other by virtue
of the payment of any loss covered by such insurance. The foregoing waiver shall
be  operative  only so long as the same shall not  preclude the other party from
obtaining insurance,  and shall have no effect to the extent that it diminishes,
reduces,  or impairs the liability of any insurer to provide coverage to a party
hereunder  or  the  scope  of any  coverage  under  any  policy  required  to be
maintained pursuant to this Article 9 (collectively, an "IMPAIRMENT"); PROVIDED,
however, that in such event, the party otherwise obligated to obtain such waiver
shall notify the other party of such Impairment prior to such Impairment  taking
effect and such other party shall have the option to procure  such waiver at its
sole cost and expense.

Section 9.6 BLANKET POLICY. Any party hereto may carry any insurance required to
be  maintained  under this  Article 9 under a "blanket  policy"  covering  other
properties of such party and/or Person  provided  that, the other party shall be
furnished evidence  reasonably  satisfactory to it that the protection  afforded
under such blanket  insurance policy is not less than that which would have been
obtained  and  available  under  separate  policies  and that such  coverage  is
consistent with prudent commercial business practices.

                                       13

ARTICLE 10  CASUALTY

Section 10.1     NOTICE AND RESTORATION OBLIGATIONS.

            A. If all or any portion of the Casino  Property shall be damaged or
destroyed,  in  whole  or in  part,  by  fire or  other  casualty  (an  "INSURED
CASUALTY"),  the  Authority  shall  give  prompt  notice  thereof  to  Catskill.
Following the occurrence of an Insured Casualty,  the Authority shall,  provided
that  insurance  proceeds are available,  at its own cost and expense,  promptly
proceed to restore,  repair, replace or rebuild (if commercially  practical) the
same to be of at least equal value and of  substantially  the same  character as
prior to such damage or destruction.

            B. If all or any portion of the Track  Property  shall be damaged or
destroyed in whole or in part, by fire or other  casualty,  Catskill  shall give
prompt notice  thereof to the  Authority.  Following the  occurrence of any such
casualty,  Catskill  shall,  at its own cost and  expense,  promptly  proceed to
restore,  repair,  replace or rebuild (if  possible)  the same to be of at least
equal value and of  substantially  the same character as prior to such damage or
destruction   provided  that  in  the  good  faith  judgment  of  Catskill  such
restoration,  repair,  replacement or rebuilding is economically  practicable or
otherwise  such repair and  restoration  shall be performed to render the same a
complete  architectural  unit.  Notwithstanding  anything to the contrary in the
preceding sentence,  Catskill shall not be required to restore,  repair, replace
or rebuild any property damaged by fire or other casualty if the failure to make
such restoration,  repair,  replacement or rebuilding will not have a materially
adverse economic effect on the operation of the Gaming Enterprise in which event
the provisions of Article 4 shall control.

Section 10.2 INSURANCE PROCEEDS.  Any insurance proceeds or other settlements in
lieu  thereof  ("INSURANCE  PROCEEDS")  made  with  respect  to  the  damage  or
destruction of any land,  building(s) or other  improvements shall belong to the
party  upon  whose Lot such  building(s)  or other  improvements  were  located,
subject to the provisions of any Financing Agreement.  Notwithstanding  anything
to the  contrary  contained  in the  preceding  sentence,  with  respect  to any
Insurance  Proceeds paid in connection  with a casualty of all or any portion of
the Casino Property, such Award shall be deposited with a bank, trust company or
other  similar  entity  to be held  and  disbursed  in a manner  similar  to the
procedures set forth in the  Disbursement  and Escrow  Agreement and any balance
remaining  thereafter  shall be paid to the Authority.  The Occupant of each Lot
shall  have the right at its own cost and  expense to make any  compromises  and
settlements  in connection  with any casualties or losses of any property on its
respective Lots (subject to the provisions of any Financing  Agreement) provided
that,  any  party  hereto  may  participate  and  join  in any  such  settlement
proceedings  but  only to the  extent  necessary  to  maintain  its  own  claim.
Notwithstanding  anything to the contrary  contained in the preceding  sentence,
subject to the approval of the Shared  Facilities  Business  Board,  the Manager
shall have the right to negotiate and make any  compromises  and  settlements in
connection  with any  casualties  or losses of property  located on any Easement
Areas and the costs of making any such settlements shall be paid by Catskill and
the Authority in accordance with the respective percentages set forth in SECTION
6.9 hereof.

Section  10.3  RAZING OF DAMAGED  PROPERTY.  To the  extent  that a party is not
required  to,  and does not  elect to,  restore,  replace  or repair  all or any
portion of a building or other  improvement  which has been damaged or destroyed

                                       14

by any  casualty or taken by  Condemnation,  such party shall raze the  portions
thereof which are not to be restored,  replaced, repaired or rebuilt, clear away
all  debris  and leave  said area in a clean,  orderly  and  sightly  condition;
provided,  however,  that nothing contained herein shall prevent said party from
subsequently  constructing  a building on said area subject to the terms of this
Agreement.

ARTICLE 11     TRADE AND SERVICE MARKS

Section 11.1   THE AUTHORITY'S TRADE AND SERVICE MARKS.

            A. Catskill  agrees to recognize the exclusive right of ownership of
the Authority to all the  Authority's  service  marks,  trademarks,  copyrights,
trade names,  designs,  logos,  company name,  fictitious  business name,  trade
styles  and/or  other  sources  and/or  business  identifiers  and  applications
pertaining thereto, including,  without limitation, the use of all marks and the
Nation's logo (collectively, the "AUTHORITY'S MARKS"). Catskill hereby disclaims
any right or  interest  therein,  regardless  of any legal  protection  afforded
thereto.  Catskill  acknowledges  that all of the Authority's Marks might not be
used in connection with the Gaming Enterprise, and the Authority shall have sole
discretion  to  determine  which  of the  Authority's  Marks  shall  be so used.
Catskill shall not use the Authority's name, or any variation thereof,  directly
or  indirectly,  in  connection  with (a) a private  placement or public sale of
securities  or other  comparable  means of financing  or (b) press  releases and
other  public  communications,   without  the  prior  written  approval  of  the
Authority.

            B. In the event the Authority  and/or  Catskill is (are) the subject
of any  litigation  or action  brought by any party seeking to restrain the use,
for or with respect to the Gaming  Enterprise,  by the Authority and/or Catskill
of any of the  Authority's  Marks used by Catskill for or in connection with the
Gaming  Enterprise,  any such litigation or action shall be defended entirely at
the expense of Authority,  notwithstanding  that Authority may not be named as a
party thereto.  In the event Catskill  desires to bring suit against any user of
any of the  Authority's  Marks,  seeking to restrain such user from using any of
the Authority's  Marks, then such suit shall be brought only with the consent of
Authority and at the expense of Catskill,  notwithstanding that such user may be
a prior or subsequent user. In all cases the conduct of any suit whether brought
by the  Authority  and/or  Catskill or instituted  against the Authority  and/or
Catskill shall be under the absolute  control of the Authority,  notwithstanding
that the Authority may not be a party to such suit. Catskill,  at its sole cost,
shall have the right to engage its own legal counsel and  Catskill's own counsel
shall have the right to  non-controlling  participation  in any such litigation.
Catskill  shall have the right at any time during the course of such  litigation
to withdraw from participation therein.

Section 11.2     CATSKILL'S TRADE AND SERVICE MARKS.

            A.  The  Authority  agrees  to  recognize  the  exclusive  right  of
ownership of Catskill to all Catskill's service marks,  trademarks,  copyrights,
trade names,  designs,  logos,  company name,  fictitious  business name,  trade
styles  and/or  other  sources  and/or  business  identifiers  and  applications
pertaining  thereto,  including,  without  limitation,  the  use  of  the  marks
"Monticello  Race  Track" now or  hereafter  held or applied  for in  connection
therewith (collectively, the "CATSKILL'S MARKS"). The Authority hereby disclaims

                                       15

any right or interest in Catskill's  Marks,  regardless of any legal  protection
afforded thereto. The Authority  acknowledges that all of Catskill's Marks might
not be used in  connection  with the race track,  and  Catskill  shall have sole
discretion to determine which  Catskill's  Marks shall be so used. The Authority
agrees that Catskill or its  representative  may, at any reasonable time after a
termination of this Agreement, enter the Gaming Facility for the sole purpose of
removing all signs,  furnishings,  printed material,  emblems,  slogans or other
distinguishing  characteristics  which are now or hereafter  may be connected or
identified with Catskill's  Marks or which carry any of Catskill's  Marks.  Such
removal  shall be  accomplished  in a  manner  that  leaves  the  premises  in a
condition  suitable for appropriate  commercial use. The Authority shall not use
Catskill's name, or any variation thereof, directly or indirectly, in connection
with (a) a private  placement or public sale of securities  or other  comparable
means of  financing  or (b)  press  releases  and other  public  communications,
without the prior written approval of Catskill.

            B. In the event the Authority  and/or  Catskill is (are) the subject
of any  litigation or action brought by a party seeking to restrain the use, for
or with respect to the Gaming  Enterprise,  by the Authority  and/or Catskill of
any of  Catskill's  Marks used by Catskill for or in  connection  with the Track
Property,  any such  litigation  or action  shall be  defended  entirely  at the
expense of Catskill,  notwithstanding  that Catskill may not be named as a party
thereto.  In the event the  Authority  desires to bring suit against any user of
any  Catskill's  Mark,  seeking to restrain such user from using any  Catskill's
Mark,  then such suit shall be brought  only with the consent of Catskill and at
the expense of the Authority,  notwithstanding  that such user may be a prior or
subsequent  user.  In all cases the conduct of any suit  whether  brought by the
Authority  and/or Catskill or instituted  against the Authority  and/or Catskill
shall be under the absolute control of Catskill,  notwithstanding  that Catskill
may not be a party to such suit. The Authority, at its sole cost, shall have the
right to engage its own legal counsel and the Authority's own counsel shall have
the right to non-controlling participation in any such litigation. The Authority
shall  have the  right at any time  during  the  course  of such  litigation  to
withdraw from participation therein.

Section  11.3  CONFIDENTIALITY;  EXCLUSIVITY.  Subject  to  the  terms  of  this
Agreement and any disclosure requirements of applicable law, including,  federal
securities  laws, the Authority and Catskill  covenant to keep  confidential and
exclusive the trademarks and other  proprietary  information that it may possess
during the term hereof of the other party hereto.

ARTICLE 12     DEFAULT, TERMINATION, DISPUTES AND ARBITRATION

Section 12.1   DEFAULT.

            A. Catskill may terminate this Agreement for any material  breach or
the failure to perform any material duty or  obligation by the Authority  within
sixty (60) days after the  Authority's  receipt of any notice  from  Catskill of
Authority's  material  breach and default  PROVIDED  THAT,  if the Authority has
commenced  to cure such  default  within  such  sixty  (60) day  period and such
default is not reasonably  susceptible of cure within such sixty (60) day period
then the Authority  shall have an additional  reasonable  period of time to cure
such default so long as the Authority is diligently  and  continuously  pursuing
such cure.

                                       16

            B. The  Authority  may  terminate  this  Agreement  for any material
breach or the failure to perform any  material  duty or  obligation  by Catskill
within sixty (60) days after Catskill's receipt of any notice from the Authority
of  Catskill's  material  breach and default  PROVIDED  THAT,  if  Catskill  has
commenced  to cure such  default  within  such  sixty  (60) day  period and such
default is not reasonably  susceptible of cure within such sixty (60) day period
then Catskill  shall have an additional  reasonable  period of time to cure such
default so long as Catskill is diligently and  continuously  pursuing such cure.
The Authority may also terminate this Agreement in the event that the Management
Agreement  has  terminated  on account of a material  breach  thereof by Manager
pursuant thereto or if the Development  Agreement has terminated on account of a
material breach thereof by Developer (as defined therein) pursuant thereto.

Section  12.2  MUTUAL  TERMINATION.  Notwithstanding  anything  to the  contrary
contained in this Agreement, this Agreement may be terminated at any time during
the term hereof by mutual  consent  between the Authority  and  Catskill,  which
consent may be granted or withheld in either party's sole discretion.

Section 12.3   WAIVER OF SOVEREIGN IMMUNITY; DISPUTES; ARBITRATION.

            A. Subject to the terms of this Article 12, the Authority  expressly
waives   sovereign   immunity  for  the  purpose  of  permitting  or  compelling
arbitration as provided in subparagraph (B) below, and to be sued in any federal
or state  court  of  competent  jurisdiction  by  Catskill  for the  purpose  of
compelling  arbitration or enforcing any arbitration  award or judgment  arising
out of this Agreement or the termination or purported termination thereof or any
rules,  actions or decisions of the  Authority  which have a materially  adverse
effect on the rights of  Catskill  hereunder.  Without in any way  limiting  the
generality of the foregoing, the Authority expressly authorizes any governmental
authorities who have the right and duty under  applicable law to take any action
authorized  or ordered by any court,  to take such  action,  including,  without
limitation,  entering the Casino  Property and  repossessing  any  furniture and
equipment  subject to a security interest or otherwise giving effect to any such
judgment entered. In no instance shall any enforcement of any kind whatsoever be
allowed against any assets of the Authority other than the limited assets of the
Authority specified herein.

            B. All disputes,  controversies or claims arising out of or relating
to this  Agreement,  shall be settled by binding  arbitration in accordance with
the Expedited Procedures provisions (Rules 53 through 57 in the current edition)
of the commercial  arbitration  rules of the American  Arbitration  Association.
Arbitration  shall occur before a single  arbitrator,  or any greater  number of
arbitrators   if  mutually   agreed  to  by  the  Authority  and  Catskill  (the
"ARBITRATOR").  The Arbitrator(s)  shall possess relevant expertise and shall be
selected  jointly by Catskill and the  Authority.  If the owners of each Lot are
unable to agree on the selection of the Arbitrator(s),  the Arbitrator(s)  shall
be selected by the American  Arbitration  Association.  The Arbitrator(s)  shall
render a decision  promptly  after the submission of the dispute and shall apply
the standards of a reasonable,  prudent businessperson.  The Arbitrator(s) shall
have no  authority  to award  punitive  damages.  Unless  the owners of each Lot
mutually agree otherwise, binding arbitration shall be the sole remedy as to all
disputes arising out of this Agreement, except for disputes requiring injunctive
or declaratory  relief. In determining any matter, the Arbitrator(s) shall apply
the terms of this Agreement,  without adding to, modifying or changing the terms
in any respect,  and shall apply New York law and applicable  federal and Nation
law.  All  arbitration  hearings  shall  be held at a  place  designated  by the

                                       17

Arbitrator(s)  in New York  County,  New York.  The parties  hereto  covenant to
maintain strict confidentiality with respect to any arbitration,  subject to any
requirements of any applicable law, including, federal securities law.

            C. The  Authority's  waiver of immunity from suit granted under this
Article 12 shall be specifically  limited to the following  actions and judicial
remedies:

                (i) The enforcement of an award of money damages by arbitration;
            PROVIDED  THAT,  the  Arbitrator(s)  and/or the court  shall have no
            authority or jurisdiction  to order execution  against any assets or
            revenues of the  Authority  except (A)  undistributed  or future Net
            Revenues  (as  defined in the  Management  Agreement)  of the Gaming
            Enterprise;  or  (B)  if it  has  been  specifically  found  by  the
            Arbitrator(s) that, by the exercise of regulatory authority pursuant
            to the  Gaming  Authority  Ordinance  or  otherwise,  or any  rules,
            actions,  or decisions of the Authority pursuant thereto or by other
            action,  the  Authority  has  knowingly  and  purposely   prejudiced
            Catskill's  rights under this Agreement,  such award may be enforced
            against  the  future Net  Revenues  of any other  gaming  operations
            conducted by the  Authority or any other entity of the  Authority on
            the Casino  Property.  In no instance  shall any  enforcement of any
            kind whatsoever be allowed against any assets of the Authority other
            than the limited assets of the Authority specified herein.

                (ii) The  enforcement of a  determination  by the  Arbitrator(s)
            that the  Authority's  consent  or  approval  has been  unreasonably
            withheld contrary to the terms of this Agreement.

                (iii) The  enforcement of a determination  by the  Arbitrator(s)
            that (A) prohibits  the Authority  from taking any action that would
            adversely  impair  or  affect  any  rights of  Catskill  under  this
            Agreement, or (B) requires the Authority to specifically perform any
            of its obligations under this Agreement.

                (iv) An action to compel  arbitration  as  required  pursuant to
            this Article 12.

Section 12.4  INDEMNITY.  A.  Catskill  shall  indemnify  and save the Authority
harmless from and against all loss, cost, liability and expense,  including, but
not limited to, reasonable counsel fees and disbursements that may be occasioned
by any acts constituting theft, fraud, willful misconduct or gross negligence on
the part of  Catskill in the  performance  of its duties  under this  Agreement.
Except for the Authority's theft, fraud, willful misconduct or gross negligence,
Catskill shall indemnify,  defend and hold harmless the Authority from any loss,
cost, liability and expense,  including,  but not limited to, reasonable counsel
fees and  disbursements,  relating to the Track  Property  that results from the
Authority's performance of its obligations under this Agreement.

            B. The Authority shall indemnify and save Catskill harmless from and
against all loss, cost,  liability and expense,  including,  but not limited to,
reasonable  counsel fees and  disbursements  that may be  occasioned by any acts
constituting theft, fraud, willful misconduct or gross negligence on the part of
the Authority in the performance of its duties under this Agreement.  Except for
Catskill's theft, fraud,  willful misconduct or gross negligence,  the Authority

                                       18

shall  indemnify,  defend  and  hold  harmless  Catskill  from any  loss,  cost,
liability and expense,  including,  but not limited to, reasonable  counsel fees
and  disbursements,  relating to the Gaming  Enterprise or Gaming  Facility that
results from Catskill's performance of its obligations under this Agreement.

            C. The  indemnifications  and terms set forth in this section  shall
survive the expiration or earlier  termination of this Agreement.  The foregoing
provisions of this SECTION 12.4 are in addition to and not in  substitution  for
the indemnification provisions set forth in the Declaration of Covenants.

Section  12.5 NO  PERSONAL  LIABILITY.  Neither  the  Nation  nor  any  officer,
officeholder,  employee,  agent,  representative  or member of the Nation or the
Authority shall have any personal liability for the obligations of the Authority
under this  Agreement or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Further, no member, officer,  office-holder,
employee,  agent,  representative,  manager or member of Catskill shall have any
personal  liability for the  obligations of Catskill under this Agreement or for
any claim based on, in respect of, or by reason of,  such  obligations  or their
creation.

ARTICLE 13  MECHANIC'S LIENS

Neither Catskill nor the Authority shall permit any mechanic's, materialman's or
similar lien to stand against any portion of the other's  property for any labor
performed or material  furnished in connection with any work performed or caused
to be performed  pursuant to this Agreement.  Any party which is responsible for
the filing of such lien may bond and contest the  validity or amount of any such
lien but upon final  determination  as to the validity  and amount  thereof such
party shall promptly discharge said lien.

ARTICLE 14  INTENTIONALLY DELETED ARTICLE

ARTICLE 15  MISCELLANEOUS PROVISIONS

Section 15.1 GOVERNMENT  SAVINGS CLAUSE.  Each of the parties agrees to execute,
deliver  and,  if  necessary,   record  any  and  all  additional   instruments,
certifications,   amendments,  modifications  and  other  documents  as  may  be
reasonably  required by the United States Department of the Interior,  Bureau of
Indian Affairs,  the office of the Field  Solicitor,  the National Indian Gaming
Commission,  or any other  applicable  statute,  rule or  regulation in order to
effectuate,  complete,  perfect,  continue or preserve  the  respective  rights,
obligations and interests of the parties hereto to the fullest extent  permitted
by law; provided, that any such additional instrument, certification, amendment,
modification  or other  document  shall not  materially  change  the  respective
rights,  remedies  or  obligations  of the  Authority  or  Catskill  under  this
Agreement or any other agreement or document related hereto.

Section 15.2 THIRD PARTY  BENEFICIARY.  This  Agreement is  exclusively  for the
benefit of the parties hereto and it may not be enforced by any party other than
the parties to this  Agreement and shall not give rise to liability to any third
party other than the authorized successors and assigns of the parties hereto.

                                       19

Section 15.3  AUTHORIZATION.  The  Authority and Catskill  hereby  represent and
warrant to each other that each has the full power and authority to execute this
Agreement  and to be bound by and  perform  the terms  hereof.  Each party shall
furnish  evidence of such  authority  to the other upon the  reasonable  request
thereof.

Section 15.4 RELATIONSHIP.  Catskill and the Authority shall not be construed as
joint  venturers  or  partners  of each  other by reason of this  Agreement  and
neither  shall have the power to bind or obligate  the other except as set forth
in this Agreement.

Section 15.5  NOTICES.  Any notice  required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given to the
applicable  party (a) on the date of hand delivery with signed  receipt,  (b) on
the business day immediately  following  transmittal to Federal Express or other
nationally  recognized overnight commercial courier,  with signed receipt or (c)
five (5) days after deposit in the United States mail,  certified  mail,  return
receipt  requested,  postage  and fees  prepaid,  in any case  addressed  to the
address of the applicable  party set forth below,  or such other address as such
party may hereafter specify by notice to the other in accordance with the notice
procedures described in this paragraph. The parties also designate the following
persons as agents for receipt of service of process:

            If to the Authority:    Cayuga Catskill Gaming Authority
                                    c/o The Cayuga Nation of New York
                                    Post Office Box 11
                                    Versailles, NY 14168
                                    Attn: Chairman

           with a copy to:          Sonnenschein Nath & Rosenthal
                                    1221 Avenue of Americas
                                    New York, NY 10020
                                    Attn: Martin Gold, Esq.

           If to Catskill:          Catskill Development, L.L.C.
                                    Monticello Raceway, Route 17B
                                    P.O. Box 5013
                                    Monticello, New York 12701-5193
                                    Attn: Morad Tahbaz

           with a copy to:          Latham & Watkins LLP
                                    885 Third Avenue
                                    New York, New York 10022
                                    Attn: James I. Hisiger, Esq.

Section 15.6 NO WAIVER. No consent or waiver express or implied, by either party
to any  breach or default by the other  party in the  performance  of any of the
obligations  or conditions of this Agreement or any related  agreement  shall be
construed  to be a consent  to or waiver of any other  breach or default by such
party.  Failure on the part of a party to  complain of any act or failure to act

                                       20

by the  other  party,  or  failure  to  declare  the  other  party  in  default,
irrespective of how long such failure  continues,  shall not constitute a waiver
of the rights of such party.

Section 15.7  SUCCESSORS  AND ASSIGNS.  The  benefits  and  obligations  of this
Agreement  shall  inure to and be  binding  upon the  parties  hereto  and their
respective  permitted  successors  and  assigns.  Subject  to the  terms of this
Section 15.7, the  Authority's  prior written  consent shall not be required for
Catskill to assign all or any of its rights,  interests or obligations hereunder
to a third  party  acquiring  an  interest,  estate or other  right in or to the
Property or any portion thereof.  All proposed  assignees shall by acceptance of
such  assignment  be deemed to agree to be bound by the terms and  conditions of
this Agreement including, without limitation, Section 12.4 hereof and each party
that may from time to time be a party  hereto  shall  endeavor  in  confirmation
thereof to obtain a written  assumption of this  Agreement  from any  subsequent
purchaser  of any  portion  of the Lot owned by such  party.  In  addition,  the
assignment of a  controlling  interest in Catskill may be made without the prior
written  consent of the  Authority.  Notwithstanding  anything  to the  contrary
contained  in this  Agreement,  the  acquisition  of  Catskill  or any member of
Catskill by a third party shall not  constitute an assignment of this  Agreement
by Catskill and this Agreement shall remain in full force and effect between the
Authority and Catskill.  Subject to the terms of this  paragraph,  the Authority
shall,  without the prior written consent of Catskill,  have the right to assign
this Agreement and the assets of the Gaming Enterprise to an  instrumentality of
the  Authority or Nation or to a  corporation  or other  business  entity wholly
owned by the Authority or Nation organized to conduct the business of the Gaming
Enterprise  for the  Nation  provided  that  such  assignee  assumes  all of the
Authority's  obligations herein. Any assignment by the Authority or Nation shall
not  adversely  prejudice  the  rights of  Catskill  under  this  Agreement.  No
assignment  authorized hereunder shall be effective until all Legal Requirements
are met.

Section 15.8 ARTICLE AND SECTION HEADINGS.  Article and Section headings,  where
used herein, are inserted for convenience only and are not intended to be a part
of this  Agreement  or in any way to  define,  limit or  describe  the scope and
intent of the particular sections or paragraphs to which they refer.

Section 15.9 CHOICE OF LAW.  This  Agreement  shall be construed and enforced in
accordance with the laws of the State of New York.

Section  15.10  TERMINATION  AND  AMENDMENT.  This  Agreement  may be  canceled,
changed,  modified,  or amended in whole or in part only by written and recorded
instrument executed by each of the record owners of the Lots.

Section 15.11 EXCUSABLE  DELAYS.  Whenever  performance is required of any party
hereto, that party shall use all due diligence to perform and take all necessary
measures in good faith to perform;  provided,  however,  that if  completion  of
performance  shall be delayed at any time by reason of acts of God,  war,  civil
commotion,  terrorist acts, riots, strikes,  picketing, or other labor disputes,
or damage to work in  progress  by  reason of fire or other  casualty  or causes
beyond the  reasonable  control of such party then the time for  performance  as
herein  specified  shall be  appropriately  extended  by the amount of the delay
actually  so caused;  provided,  however,  that the  maximum  length of any such
extension shall in no event exceed twelve (12) months for any one cause. Failure

                                       21

by any party hereto to perform any obligation  under this Agreement shall not be
deemed to be a cause beyond the control of such party.

Section 15.12 SEVERABILITY.  Invalidation of any of the provisions  contained in
this  Agreement,  or of the  application  thereof to any person,  by judgment or
court  order  shall in no way affect any of the other  provisions  hereof or the
application  thereof to any other person and the same shall remain in full force
and effect.

Section 15.13 COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts.  Each counterpart shall be deemed to be an original, and
all such counterparts shall constitute one and the same instrument.

Section 15.14 EFFECTIVE DATE.  This Agreement  shall become  effective,  of full
force and effect and the parties hereto shall be bound hereby,  on the Effective
Date (as such term is defined in the Management Agreement).

                        SIGNATURE PAGES FOLLOW HEREAFTER.

                                       22

IN WITNESS  WHEREOF,  the Parties hereto have executed this Agreement on the day
and year first above written.

CATSKILL DEVELOPMENT, L.L.C

By: /s/
    ______________________________
    Name:
    Title: Authorized Signatory

                    SIGNATURE(S) CONTINUE ON FOLLOWING PAGE.

                                       23

CAYUGA CATSKILL GAMING
AUTHORITY

By: /s/
    __________________________
    Name:
    Title:

CERTIFICATION:  This is to hereby certify that the above was duly executed by an
officer of Cayuga Catskill  Gaming  Authority  pursuant to the authority  vested
therein.

By: /s/
    ________________________________

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