Document:

Exhibit 10.59

 

AMENDMENT TO MANAGEMENT AGREEMENT

BY AND BETWEEN

GAMING ENTERTAINMENT (DELAWARE), L.L.C.

AND HARRINGTON RACEWAY, INC.

 

This Amendment

is entered into as of July 1, 1999 by and between Gaming Entertainment

(Delaware), L.L.C. (“GED”) and Harrington Raceway, Inc. (“HRI”).

 

Witnesseth

 

WHEREAS, on January

31, 1996, GED and HRI executed a Management Agreement (the “Agreement”)

relating to the management by GED on behalf of HRI of the Entertainment Center

and other Commercial Activities, as those terms are more particularly defined

pursuant to the terms of the Agreement; and

 

WHEREAS, pursuant to

that certain amendment dated as of March 18, 1998, GED and HRI modified the

terms of the Agreement in certain respects; and

 

WHEREAS, incident to

a proposed expansion of the Entertainment Premises by HRI, GED and HRI now

desire further to modify the terms of the Agreement in certain respects.

 

NOW, THEREFORE, in

consideration of the sum of Ten and no/100 Dollars ($10.00) and other valuable

consideration, the receipt and sufficiency of which is hereby acknowledged, GED

and HRI hereby agree, effective as of the date when the currently proposed 1999

expansion to the GED Premises first opens for business to the general public

(the “Expansion Effective Date” for purposes of this Amendment”) further to

modify the terms of the Agreement, as heretofore amended by instrument dated as

of March 18, 1998, as follows:

 

ARTICLE I

DEFINITIONS

 

Article 1 of

the Agreement shall be modified to redefine the terms “GED Premises” and “Gross

Revenues”, respectively, as follows:

 

“GED Premises” shall

mean those premises more particularly identified by Exhibit “B-l” (which

exhibit shall, commencing with the Expansion Effective Date, supersede Exhibit

“B” to the Agreement in all respects.)

 

“Gross Revenues”

means all revenues, rental income (other than rental payments under the DSF/HRI

Lease or the Sublease and Leaseback Agreement), sales or other income

(exclusive of interest, dividends and other passive investment earnings

realized from time to time with respect to funds invested by HRI, and

regardless of the source of

 

 

such invested

funds) derived from goods sold, services performed or Commercial Activities,

including, without limitation, Gross Win derived from Video Lottery Machines

operated within the Entertainment Center, other income and sales derived from

gaming and vending equipment, sales of food, beverages, non-food merchandise,

OTB Revenue; revenue derived on the GED Premises from programs conducted by

and/or with the consent of, and/or at the direction of GED and all other

revenues, rental income, sales or other income derived from operation of the

Entertainment Center and the related Improvements, net of payments of, and

accruals for, payments of winnings to players, and prior to deduction for

expenses of any kind or nature including, without limitation, (i) gaming

taxes, (ii) payments to the Delaware State Lottery for Video Lottery

Machines and services, and (iii) statutory purse supplements payable from Video

Lottery Machines.  Commencing with the

Expansion Effective Date and continuing for the remainder of the Term, the term

“Gross Revenues” shall not include any amounts relating to the actual costs or

other value associated with promotional allowances and/or complimentary goods

or services or the price of complimentary admission tickets with respect to

entertainment shows provided or issued in connection with the Entertainment

Center and the Related Improvements (collectively, “Comps”) or other indirect,

overhead or administrative costs associated with the provisions of Comps;

provided, however, that, in the context of calculating Target Bonus for

purposes of Section 7.3, this sentence shall not be interpreted to

preclude consideration of the cost of goods provided and the salary and/or

wages, payroll taxes, and benefits with respect to personnel employed in

connection with providing of Comps.

 

ARTICLE 6

ACCOUNTING AND CASH MANAGEMENT

 

Article 6 of

the Agreement shall be modified with the addition of the following new provision:

 

6.13         Supply

Inventory.      GED shall maintain an

appropriate inventory level of operating supplies in keeping with the

objectives of providing customer service and taking advantage of volume

discounts.  (Supply inventory shall not

include items held for resale such as food, beverage and gift shop items.)  As supply items are consumed they will be

charged to operating expenses. 

Notwithstanding anything to the contrary, the supply inventory shall not

exceed One Hundred Thousand and no/100 Dollars ($100,000.00).

 

ARTICLE 7

MANAGEMENT FEES

 

Article 7 of

the Agreement shall be modified with the addition of the following new

provision:

 

2

 

7.8           Management Fee

Rebate.      Commencing with the first

day of the calendar month coincident with the Expansion Effective Date or

during which the Expansion Effective Date occurs, and continuing throughout the

remaining term of this Agreement, HRI shall be entitled to an annual rebate

with respect to the aggregate Base Management Fees and Target Bonus

(collectively the “Fees”) otherwise due GED for the same annual period (the

“Rebate Period”) pursuant to the terms of Sections 7.1 and 7.3,

respectively.

(a)           Minimum Amount.      The

annual rebate shall be calculated by multiplying (i) the percentage (the

“Rebate Percentage”) set forth in subsection (b) of this Section 7.8 times

(ii) the difference between (A) the aggregate Fees otherwise due GED for

the pertinent Rebate Period and (b) a Minimum Amount established as follows:

 

(1)      For the

Rebate Period which commences with the Rebate Effective Date and expires on the

first anniversary of that date, the Minimum Amount above which the rebate shall

accrue shall be the amount of Six Million and no/100 Dollars ($6,000,000.00).

 

(2)      For the

Rebate Period which commences with the first anniversary of the Rebate

Effective Date and expires on the second anniversary of that date, the Minimum

Amount above which the rebate shall accrue shall be the amount of Six Million

Five Hundred Thousand and no/100 Dollars ($6,500,000.00).

 

(3)      For the

Rebate Period which commences with the second anniversary of the Rebate

Effective Date and expires on the third anniversary of that date as well as for

each succeeding Rebate Period, the Minimum Amount above which the rebate shall

accrue shall be the amount of Seven Million and no/100 Dollars ($7,000,000.00);

provided, however, that if the final Rebate Period expiring coincident with the

expiration of the Term of this Agreement is a period of less than 365 days, the

minimum amount established by this subsection shall be an amount equal to the

product of (a) $7,000,000.00 times (b) a fraction, the numerator of

which is the duration of such final Rebate Period expressed in terms of days

and the denominator of which shall be 365.

 

(b)           Rebate Percentages.      For

purposes of this Section 7.8, the amount as to which the aggregate Fees

otherwise due GED for a particular Rebate Period exceed the minimum amount

applicable to the same Rebate Period shall be referred to as the ‘‘Excess Fees”

and the rebate percentage applicable to each Rebate Period shall be determined

as follows:

 

(1)      For the

initial three (3) Rebate Periods, the rebate percentages shall be sixty percent

(60%) with respect to the aggregate Excess Fees equal to or less than the

amount of One Million Six Hundred Sixty Six Thousand Six Hundred Sixty Seven

and no/100 Dollars ($1,666,667.00) and forty percent (40%) with respect to

 

3

 

the aggregate

Excess Fees greater than the amount of One Million Six Hundred Sixty Six

Thousand Six Hundred Sixty Seven and no/100 Dollars ($1,666,667.00).

 

(2)      For

each Rebate Period subsequent to the initial three such periods the rebate

percentage shall be fifty percent (50%).

 

All provisions of the Management Agreement not specifically cited and

modified in this Amendment shall remain in full force and effect, and all terms

used herein and not otherwise defined herein shall have the respective meanings

set forth in the Management Agreement. 

In the event of an irreconcilable conflict among the terms of this

Amendment and those of either the Agreement or the March 18, 1998 Amendment,

the terms of the most recent of the instruments shall control.

 

IN  WITNESS WHEREOF, HRI and GED have caused

this Amendment to be executed and delivered under their respective seals as of

this 19th day of OCTOBER, 1999.

 

	

  HARRINGTON RACEWAY, INC.

  	

  GAMING ENTERTAINMENT

  (DELAWARE), L.L.C., by its Members, as

  follows:

  
	

   

  	

   

  
	

   

  	

   

  
	

  By:

  	

  /s/ Jack

  Walls

  	

   

  	

  DREAMPORT, INC.

  
	

  Its:

  	

  President

  	

  (formerly,

  GTECH Gaming Subsidiary

  Corporation)

  
	

  Date:

  	

  10/19/99

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Michael

  C. Lightman

  	

   

  
	

   

  	

  Its:

  	

  Vice

  President, Operations

  
	

   

  	

  Date:

  	

  10/19/99

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  FULL HOUSE SUBSIDIARY, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Michael

  P. Shaunnessy

  	

   

  
	

   

  	

  Its:

  	

  Exec. V.P.

  & CEO

  
	

   

  	

  Date:

  	

  October 19,

  1999

  
						

 

4Exhibit 10.60

 

AMENDMENT TO MANAGEMENT AGREEMENT

BY AND BETWEEN

GAMING ENTERTAINMENT (DELAWARE), L.L.C.

AND HARRINGTON RACEWAY, INC.

 

This Amendment

is entered into as of February 4, 2002, by and between GAMING ENTERTAINMENT

(DELAWARE), L.L.C. (“GED”) and HARRINGTON RACEWAY, INC. (“HRI”)

 

WHEREAS, on

January 31, 1996, GED and HRI executed a Management Agreement (the

“Agreement”), relating to GED’s management, on behalf of HRI, of the

Entertainment Center and Related Improvements owned by HRI and located in the

Town of Harrington, in Kent County, Delaware; and

 

WHEREAS,

pursuant to those certain amendments dated as of March 18, 1998 and July 1,

1999, GED and HRI modified the terms of the Agreement in certain respects; and

 

WHEREAS, GED

and HRI now desire further to modify the terms of the Agreement in certain

respects.

 

NOW,

THEREFORE, the parties hereto, in consideration of mutual promises and other

valuable consideration, the receipt and sufficiency of which are hereby

acknowledged, hereby agree, as follows, to wit:

 

1.             New Article 3A.  There

shall be added to the Agreement a new Article 3A, as follows:

 

ARTICLE 3A

HRI AUTHORITY AND RESPONSIBILITY

 

3A.1        HRI Executive.  In compliance with the Act, HRI, as video

lottery licensee, bears primary responsibility for the video lottery license in

relation to the Delaware State Lottery Office (the “Lottery Office”).  In furtherance of this responsibility, HRI

shall retain at its own cost and expense a full time employee (the “HRI

Executive”) to oversee GED’s management, on behalf of HRI, of the Entertainment

Center and Related Improvements in accordance with GED’s management and

compliance obligations under the terms of this Agreement.  The intention is that the HRI Executive shall

endeavor, with the full cooperation of GED, to become and remain fully informed

about GED’s daily operation of the Entertainment Center and Related

Improvements and, also, shall be the primary contact person with the Lottery

Office and with the Delaware State Police Video Enforcement Unit, with respect

to its video lottery license.  GED

hereby acknowledges that the performance or non-performance by the HRI

Executive of such individual’s responsibilities, as hereinabove anticipated,

shall not, to any extent, relieve GED of GED’s management responsibilities,

under the terms of this Agreement, with respect to the Entertainment Center and

Related Improvements.

 

 

3A.2        HRI Authority Over Hiring.  HRI

shall have the right to approve (which approval shall not be unreasonably

withheld or delayed) GED’s hiring of the general manager and the following

director level managers to implement GED’s management and compliance

obligations under the terms of this Agreement with respect to the Entertainment

Center and the Related Improvements:

 

•              General Manager

•              Security Director

•              Surveillance Director

•              Marketing Director

•              Finance Director

•              Facilities Director

•              Food and Beverage Director

•              Any other Director reporting directly to the

General Manager

 

For the avoidance of doubt,

HRI hereby approves the hiring of each GED employee who, as of the date of this

Amendment, has any of the respective titles set forth above.

 

3A.3        HRI Authority Over Employee Policies. 

HRI shall have the right, as set forth in this Section 3A.3, to review

and shall have reasonable opportunity to consult with GED respecting any

proposed modification or amendment to GED’s Employee Policies, as they exist on

the execution date hereof (Exhibit C), including, without limitation, as to the

adoption of any new Employee Policy. 

All such new Employee Policies, and any proposed modifications or

amendments to an existing Employee Policy, shall comply with existing law.  GED shall provide to HRI, at least ten (10)

days prior to adoption by GED of any new Employee Policy, or any substantive

modification or amendment to an existing Employee Policy, with a copy of such

new, or modified or amended, Employee Policy, along with GED’s best estimate of

any financial impact of the new policy not reflected in the current operating

or capital budgets.  HRI’s review of and

consultation with respect to and receipt of a copy of any new or modified or

amended Employee Policy shall not be deemed to constitute approval by HRI of

such new or modified or amended Employee Policy.

 

3A.4       HRI Financial Oversight Authority. 

GED shall prepare on behalf of HRI, and provide to HRI, within sixty

(60) days prior to the expiration of each fiscal year end of HRI and covering

the immediately next ensuing fiscal year of HRI, an overall budget for the

Entertainment Center and Related Improvements. 

Such budget shall include an operating budget, capital budget, and

projected cash flows, presented in such detail as HRI shall reasonably request,

and shall include such supporting schedules as HRI shall reasonably

request.  Such budget also shall set

forth the income and expenditures (“Budgeted Expenditures”) anticipated by such

budget on a month-to-month basis determined by GED’s expectations as to when

such income will be realized during such ensuing fiscal year and when such

expenditures will be incurred during such ensuing fiscal year.  Such budget shall be updated, as and if

needed, throughout the ensuing fiscal year of HRI based upon actual performance

and changing expectations of future business conditions (as jointly determined

by HRI and GED).  HRI shall approve

(which approval shall not be unreasonably withheld or delayed), each month, any

and all controllable / discretionary expenditures, in advance of the same being

incurred, which for a given budget line item, as reflected on Exhibit A, would

exceed the budgeted line item amount for such month by an amount in excess of

Ten Thousand Dollars ($10,000.00), as anticipated

 

2

 

by the budgets hereinabove referenced as most

recently modified, as the case may be, and accepted by HRI.

 

On

a monthly basis, GED shall provide to HRI a cash flow forecast, setting forth

the anticipated cash needs of the Entertainment Center and Related Improvements

for the upcoming month along with the expected payment dates.  Such forecast will include

(1) anticipated Operating Expense payments, including payroll,

(2) anticipated capital expenditure payments, and (3) anticipated

Management Fees.

 

3A.5        HRI Contract Oversight Authority. 

GED shall, to the extent the same is not expressly prohibited by this

Agreement but subject to HRI’s approval rights as set forth below, have the

right to enter into contracts with third parties in furtherance of GED’s duties

and obligations under this Agreement. 

All such contracts, except employee related contracts, shall be in the

name of HRI d/b/a Midway Slots, and no such contract, written or verbal,

anticipating a payment in excess of Fifty Thousand Dollars ($50,000.00), or

having a term in excess of six (6) consecutive calendar months, shall be

entered into without HRI’s prior written consent, which consent shall not be

unreasonably withheld or delayed.

 

3A.6        HRI Audit Authority.  HRI shall

select an independent certified public accounting firm to perform an annual

audit of the books and records of the operations of the Entertainment Center

and Related Improvements.  The cost of

this annual audit, and any related interim work, shall be an Operating Expense.  HRI also shall have the right to perform

special or independent audits and inspections as long as the same do not

unreasonably disrupt the conduct of business – including spot audits and

inspections on an ongoing basis, - of all books and records of the

Entertainment Center and Related Improvements, and of GED (or others acting

under or through GED), inclusive of personnel records (by way of example and

not limitation), pertaining to the Entertainment Center, Related Improvements,

GED’s management of the same, compliance regarding the operation of the same,

and of any and all of the physical assets comprising the Entertainment Center

and Related Improvements.  The cost of

any special or independent audits and inspections will be the sole

responsibility of HRI.

 

3.A7        HRI Access to Records.  GED

shall maintain, on the Entertainment Center Premises (or at an alternative

storage site mutually acceptable to HRI and GED), the originals of all books

and records of HRI pertaining to the Entertainment Center and Related

Improvements, and of GED (or others acting under or through GED), inclusive of

personnel records (by way of example and not limitation), pertaining to the

Entertainment Center, Related Improvements, GED’s management of the same, or

compliance regarding the operation of the same; and duly authorized agents of

HRI shall have access to such books and records and, further, shall have the

right to inspect, examine and copy all such books and records as HRI reasonably

requests.  Personnel records, for

purposes of this Article 3A, shall include GED hiring and employment policies,

salary levels (inclusive of bonuses and other special compensatory

arrangements) and benefit packages - both as available for each employee

position and as, in fact, awarded to each employee, and periodic evaluation

reports with respect to each employee.

 

3

 

After the completion of the

annual audit for each fiscal year, the originals of all books and records,

except employee records, of HRI pertaining to the Entertainment Center and

Related Improvements, shall be stored by HRI, with GED retaining such copies as

it deems necessary to perform its obligations under this agreement, and GED

shall have all necessary access to such original books and records to perform

its obligations under this agreement

 

3A.8        HRI Right to Require GED Attendance at Oversight Meetings.  GED representatives shall attend, upon

reasonable notice, such Oversight Meetings as HRI may reasonably require.

 

3A.9        Notwithstanding anything in Article 16 (respecting arbitration and

enforcement) or Section 6.7, as amended (respecting the disbursement of

Management Fees) to the contrary, in the event of a material default by GED

hereunder, which material default causes HRI to be in breach of, or in default

under, its Delaware video lottery license or Delaware laws or regulations

applicable to video lottery licensees, HRI may, pursuant to this Section 3A.9,

withhold payment of all Management Fees otherwise payable to GED during the

continuance of such material GED default and HRI breach or default, and may

thereafter continue to hold such withheld Management Fees pending

determination, as provided below, of the amount of damages (“Damages”), if any,

GED owes HRI by reason of such material default, provided however,

that:  (a) HRI shall not withhold payment

of any Management Fees unless: 

(i) HRI shall have first provided GED with written notice,

specifying in appropriate detail GED’s material default and HRI’s intention to

withhold Management Fees pursuant to Section 3A.9; (ii) such GED default

shall remain uncured thirty (30) days after provision of such written notice;

and (iii) HRI shall have obtained either an order or judgment from a court

having proper jurisdiction over the subject matter and parties (a “Court”)

authorizing HRI to withhold payment of such Management Fees to GED, or a

finding by arbitrators, proceeding in accordance with Section 16, that HRI is

authorized to withhold Management Fees in accordance with this Section

3A.9.  Management Fees withheld by HRI

pursuant to this Section 3A.9, net of Damages, if any, shall be paid to GED

promptly after adjudication as to such Damages, if any, by  a Court (in a proceeding permitted by

this Section 3A.9) or by arbitration (in a proceeding in accordance with

Article 16).  Any failure by HRI to pay

GED Management Fees in accordance with the terms and conditions of this Section

3A.9 shall only constitute an Event of Default by HRI within the meaning of

Section 15.1 (c)(i) if such failure to pay is continuing for at least 60 days.

 

2.             Other Amendments.

 

A.            Effective as of the date hereof, the

following provisions of the Agreement terminate and shall have no further force

or effect:

 

(i)            Section 5.2; and

 

(ii)           the definition of “Depository Accounts” set forth in Article 1; and

 

(iii)          Section 7.7.

 

4

 

B.            Effective as of the date hereof, the

following provisions shall be added at the end of the definition of “Operating

Expenses”:

 

“Notwithstanding

the foregoing, the following shall not constitute Operating Expenses but shall

be exclusively for the account of GED: 

(i) commencing January 1, 2002, any salary, bonus (other than bonus

amounts payable in fiscal 2002 with respect to fiscal 2001, which amounts shall

constitute Operating Expenses) or other current or deferred compensation

expense (including fringe benefits, severance or termination payments and taxes

and other governmental assessments thereon) payable to or for the account of

the General Manager (or other person, howsoever titled, assigned by GED with

overall on-site responsibility for the day-to-day operations of the

Entertainment Center and Related Improvements); and (ii) unless otherwise

agreed by HRI, including with respect to use by the chief executive officer of

HRI or any HRI director, any expense or other charge incurred after January 1,

2002 relating to those certain  “skybox”

or similar suites currently or from time to time hereafter under lease at:  (a) First Union Center and Veterans

Stadium or (b) any other sporting venue.

 

C.            Effective as of the date hereof, Article 6 of

this Agreement shall be amended, superceded and restated to read in its

entirety as provided on Exhibit B.

 

3.             Notices.      The

notice and address information set forth in Section 18.4 of the Agreement (i.e.

that portion of Section 18.4 which follows the first two paragraphs of Section

18.4) is hereby amended, superseded and restated in its entirety to read as

follows:

 

A.            Each notice to GED shall be addressed as

follows:

 

Gaming Entertainment

(Delaware), L.L.C.

C/O Full House Resorts, Inc.

2300 West Sahara Avenue

Suite 450-Box 23

Las Vegas, NV 89102

 

5

 

With a copies to:

 

General Counsel

Full House Resorts, Inc.

2300 West Sahara Avenue

Suite 450-Box 23

Las Vegas, NV 89102

 

General Counsel

GTECH Corporation

55 Technology Way

West Greenwich, RI 02817

 

B.            Each notice to FHR, Guarantor, shall be

addressed as follows:

 

Full House

Resorts, Inc.

2300 West

Sahara Avenue

Suite 450-Box

23

Las Vegas, NV

89102

 

With a copies

to:

 

General Counsel

Full House

Resorts, Inc.

2300 West Sahara Avenue

Suite 450-Box

23

Las Vegas, NV

89102

 

General

Counsel

GTECH

Corporation

55 Technology

Way

West

Greenwich, RI 02817

 

C.            Each notice to GTECH, Guarantor, shall be

addressed as follows:

 

GTECH

Corporation

55 Technology

Way

West

Greenwich, RI 02817

Attn: Chief

Executive Officer

 

6

 

With a copies

to:

 

General

Counsel

GTECH

Corporation

55 Technology

Way

West

Greenwich, RI 02817

 

General

Counsel

Full House Resorts,

Inc.

2300 West

Sahara Avenue

Suite 450-Box

23

Las Vegas, NV

89102

 

D.            Each notice to HRI shall be addressed as

follows:

 

Harrington

Raceway, Inc.

15 West Ryder

Road

Harrington, DE

19952

Attention:

President

 

With a copy

to:

 

Robert L.

Thomas, Esquire

Young Conaway

Stargatt & Taylor, LLP

addressed as

follows:

 

P.O. Box 391

Wilmington, DE

19899

(if sent by

means of traditional mail)

 

or

 

110 W. Pine

Street

Georgetown, DE

19947

(if sent by

means of courier or overnight delivery service)

 

4.             Interpretation.  In the event of any irreconcilable conflict

between the terms of this Amendment and the terms of the Agreement (as

heretofore amended) exclusive of this Amendment, the terms of this Amendment

shall prevail.  All capitalized terms in

this Amendment shall have the same meaning ascribed to such terms,

respectively, by the Agreement.

 

5.             General.  Except as specifically provided herein, all

terms, conditions and provisions of the Agreement, as amended, shall continue

unchanged and remain in full force and effect.

 

7

 

IN WITNESS

WHEREOF, HRI and GED have caused this Amendment to be executed and delivered

under their respective seals as of

the          day of February

2002.

 

	

  HARRINGTON RACEWAY, INC.

  
	

   

  
	

   

  
	

  By:

  	

  /s/ Jack

  Walls

  	

   

  
	

   

  
	

  Its:

  President

  
	

   

  
	

  Date: 2/4/02

  
	

   

  
	

  GAMING ENTERTAINMENT

  (DELAWARE), L.L.C., by its Members

  
	

   

  
	

  GTECH GAMING SUBSIDIARY 2 CORPORATION

  
	

   

  
	

   

  
	

  By:

  	

  /s/ Joseph

  Gendron

  	

   

  
	

   

  
	

  Its:

  Director of Video Operations

  
	

   

  
	

  Date: 2/4/02

  
	

   

  
	

  FULL HOUSE SUBSIDIARY, INC.

  
	

   

  
	

   

  
	

  By:

  	

  /s/ Michael

  P. Shaunnessy

  	

   

  
	

   

  
	

  Its: Exec VP

  & CFO

  
	

   

  
	

  Date: 2-4-02

  

 

8

 

	

  GUARANTORS:

  	

   

  
	

   

  	

   

  
	

   

  	

  FULL HOUSES RESORTS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ William

  J. DiMondi

  	

   

  	

  By:

  	

  /s/ Michael

  P. Shaunnessy

  	

   

  
	

  Witness

  	

  Name:

  	

  Michael P.

  Shaunnessy

  
	

   

  	

  Title:

  	

  Exec. VP

  & CFO

  
	

   

  	

   

  
	

   

  	

  GTECH CORPORATION

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ William

  J. DiMondi

  	

   

  	

  By:

  	

  /s/ Joseph

  Gendron

  	

   

  
	

  Witness

  	

  Name:

  	

  Joseph

  Gendron

  
	

   

  	

  Title:

  	

  Dir. of

  Video Operations

  
									

 

9

 

AMENDMENT

TO MANAGEMENT AGREEMENT

BY AND BETWEEN

GAMING ENTERTAINMENT (DELAWARE), L.L.C.

AND HARRINGTON RACEWAY, INC.

“Line Item” Operating Expenses

Exhibit A

 

Printing

Insurance

Postage

Equipment

Rental

Maintenance

Contract

Services

Operating

Supplies

Other

Expenses

Entertainment

Bus

Rentals

Promo

Prizes

Media

Advertising

Fair

Admissions

Customer

Development

Production

Utilities

Gross Receipts Taxes

 

10

 

AMENDMENT

TO MANAGEMENT AGREEMENT

BY AND BETWEEN

GAMING ENTERTAINMENT (DELAWARE), L.L.C.

AND HARRINGTON RACEWAY, INC.

Article 6 Revised Language

Exhibit B

 

“ARTICLE 6

ACCOUNTING AND CASH MANAGEMENT

 

6.1           The

Custodial Accounts.  HRI shall select a

bank or banks (collectively, the “Bank”) which shall receive deposits and

maintain the funds generated by operation of the Entertainment Center and

Related Improvements and shall establish custodial accounts (the “Custodial

Accounts”) into which all Gross Revenues shall be deposited, from which the

Delaware State Lottery will withdraw the appropriate funds, and into which all

Agent Commissions shall be deposited.

 

6.2           Deposits

to Custodial Accounts.  All Gross

Revenues and other proceeds arising from the operation of the Entertainment

Center and Related Improvements shall be deposited at least once daily (or at

such other frequency as HRI and GED shall mutually establish in writing) by GED

into the Custodial Accounts established by HRI pursuant to Section 6.1 and, for

this purpose, GED may obtain a bonded transportation service to effect the safe

transportation of the receipts to the Bank. 

The cost of such transportation service shall be an Operating Expense.

 

6.3           Disbursement

Accounts.  HRI shall establish one or

more disbursement accounts (collectively, the “Disbursement Accounts”) with the

Bank and, subject to the funding of such accounts by HRI as provided in Section

6.6 and consistent with and pursuant to all other terms and conditions of this

Agreement, GED shall have responsibility and authority to make all payments and

disbursements authorized by this Agreement. 

Any such accounts, with the exception of any payroll accounts, shall be

HRI accounts.  Except as set forth

below, all disbursements shall be made by check or wire transfer and, in the

case of disbursements in excess of $5,000, shall be made by check or wire

transfer bearing two signatures or verified by two persons who are employees of

GED, one being an accounting officer employed in connection with the operation

of the Entertainment Center and one being the general manager employed in

connection with the operations of the Entertainment Center.

 

6.4           No

Cash Disbursements.  GED shall not make

any disbursements of currency or coin from the Disbursement Accounts except for

the payment of cash prizes and expenditures from the Cash Contingency Reserve

Fund and Petty Cash Fund described below and except as otherwise set forth in

this Agreement.  Except as otherwise set

forth herein, all other payments or disbursements by GED shall be made by check

drawn or wire transfer against a Disbursement Account signed or authorized in

the manner provided in Section 6.3.

 

11

 

6.5           Prize Fund. 

GED shall establish, using funds deposited into the Disbursement

Accounts, and shall maintain for the benefit of the Entertainment Center

operations, a Prize Fund in an amount reasonable to accommodate the purpose of

such account.  The Prize Fund shall

initially be funded at one hundred thousand dollars ($100,000.00).  This account shall be maintained on an impress

basis.

 

6.6           Transfers between Accounts.

 

(a)           GED shall have the authority to cause the transfer of funds between the

Disbursement Accounts in order to maintain balances in the Disbursement

Accounts to pay Operating Expenses and other Budgeted Expenditures and to

maintain the Prize Fund.  Subject to

Section 6.3, GED is authorized to make any transfers authorized by this Agreement by check or by wire, in GED’s

discretion.  GED also may provide for

payments by means of automatic withdrawal; however, arrangements in this regard

shall require the prior reasonable written approval of HRI.

 

(b)           HRI shall, upon request of GED, cause sufficient funds to be

transferred to the Disbursement Accounts to enable GED to pay all Operating

Expenses and other Budgeted Expenditures as determined in accordance with

Section 3A.4 of this Agreement.  GED

will provide HRI, at least 48 (forty eight) hours in advance, with a request

for funding supported by a current accounts payable or payroll run indicating

the amount of funding required.  HRI

shall insure that adequate funds are transferred to the Disbursement Accounts

to cover the intended payment of such Operating Expenses and other Budgeted

Expenditures.  Should HRI fail to

adequately and timely fund the Disbursement Accounts, HRI shall be liable for

all amounts payable under Section 17.1 by reason of such failure, including,

but not limited to all consequential and special damages incurred by GED, its

legal representatives, members, employees, successors and assigns by reason of

such failure.

 

6.7           Disbursement of Management Fees. 

Except as otherwise provided in Section 3A.9, on or before the 25th

(twenty fifth) day of each calendar month, HRI shall pay to GED, to such

account as GED may request from time to time in writing, all Management Fees,

and all other fees and expenses payable to GED pursuant to this Agreement.  Notwithstanding any other provision of this

Agreement to the contrary, if HRI shall fail to pay GED any Management Fees or

other fees and expense payable to GED pursuant to this Agreement, HRI shall be

liable for all amounts payable under Section 17.1 by reason of such failure,

including but not limited to all consequential and special damages incurred by

GED, its legal representatives, members, employees, successors and assigns by

reason of such failure.

 

6.8           Payment of Fees and Disbursements. 

The Gross Revenue shall be dealt with as follows:

 

(a)           At least once a day GED shall deposit all

Gross Revenues and other monetary proceeds arising from the operation of the

Entertainment Center and Related

 

12

 

Improvements

into the Custodial Accounts established in accordance with Section 6.1.

 

(b)           Each day GED shall transfer all of the Gross

Win to the State Lottery Fund in accordance with the Act.  The Delaware State Lottery Board shall

withdraw such amounts from such proceeds as necessary to pay on behalf of HRI

in accordance with the Act (i) gaming taxes, (ii) payments to the

Delaware State Lottery for Video Lottery Machines, and (iii) statutory

purse supplements payable from Video Lottery Machines and such other sums are

required by the Act incident to the operation of the Entertainment Center.  The parties anticipate that the State

Lottery Fund then will remit to HRI the net proceeds, after making deductions

in accordance with the Act.

 

(c)           HRI shall make disbursements to GED as

provided in Section 6.6 to enable GED to pay all Operating Expenses and other

Budgeted Expenditures as and when they arise.

 

6.9           Operative

Dates.  For purposes of this Article 6,

the first year of operations shall begin on January 1, 2002 and will end of

December 31, 2002.  Each subsequent

fiscal year will correspond to each full calendar year for the remainder of the

Term hereof (except that, if the Term expires or is otherwise terminated other

than on December 31 of a calendar year, the effective date of such

expiration or termination shall conclude the then current fiscal year.)

 

6.10         Financial

Statements.  GED shall prepare, on

behalf of HRI, and provide to HRI on a monthly, quarterly and annual basis,

financial statements of the Entertainment Center and Related Improvements,

including balance sheets, income and expense statements setting forth in

reasonable detail all Gross Revenues, Operating Expenses and Net Operating

Profit, statements of changes in cash position and any other schedules as may

be reasonably requested from time to time by HRI.  Monthly financial statements shall be provided to HRI within

thirty (30) days following the end of each month.  After the first full year of operations the financial statements

shall be prepared to reflect comparative results.  Audits of the financial statements of the Entertainment Center

and Related Improvements may be provided to all applicable federal and state

reporting agencies, as required by law, and may be used by GED for reporting

purposes under federal and state securities laws, if required.  GED will provide notice to HRI, concurrent

with any provision of any financial information as provided herein.

 

6.11         Books

of Account.  GED shall maintain the

books and records required hereunder in accordance with the accounting

practices of HRI, as currently in effect, (provided that the same are in

conformity with generally accepted accounting principles) consistently applied

and shall use the calendar year as the fiscal accounting period, as currently

utilized by HRI in its normal course of business (i.e. a fiscal quarter and

fiscal year).  Nothing contained herein

is intended to restrict GED’s right to utilize centralized accounting services

for the Entertainment Center.  The books

of account shall reflect detailed day-to-day operations of the Entertainment

Center and Related Improvements and shall utilize HRI’s accounting systems and

procedures as currently in effect, which, at a minimum:  (i) include a system of internal

accounting controls; (ii) permit preparation of financial statements in

accordance with generally accepted accounting principles; (iii) are

 

13

 

susceptible to audit; (iv) permit the

calculation and payment of Base Management Fees, Target Bonuses and expense

reimbursements in accordance with the term of this Agreement and all other sums

due GED pursuant to the Transaction Documents; and (v) provide for the

allocation of Operating Expenses allowed pursuant to this Agreement.”

 

14

 

AMENDMENT TO MANAGEMENT AGREEMENT

BY AND BETWEEN

GAMING ENTERTAINMENT

(DELAWARE), L.L.C.

AND HARRINGTON RACEWAY, INC.

GED Employer Policies as of February 4, 2002

Exhibit C

 

[Index listing of current policies]

 

15

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