Document:

Exhibit 10.57

 

MANAGEMENT AGREEMENT

 

BY AND BETWEEN

 

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

 

AND

 

HARRINGTON RACEWAY, INC.

 

 

JANUARY 31, 1996

 

 

TABLE OF CONTENTS

 

	

  ARTICLE 1

  DEFINITIONS

  
	

   

  
	

  Definitions

  
	

   

  	

   

  
	

  ARTICLE 2

  EXCLUSIVITY

  
	

   

  	

   

  
	

  2.1

  	

  Exclusivity

  
	

   

  	

   

  
	

  ARTICLE 3

  TERM

  
	

   

  	

   

  
	

  3.1

  	

  Term

  
	

   

  	

   

  
	

  ARTICLE 4

  DUTY AND AUTHORITY OF GED

  
	

   

  	

   

  
	

  4.1

  	

  GED’s Duties in Connection with Operation

  
	

  4.2

  	

  No

  Liability

  
	

  4.3

  	

  Marketing and Advertising

  
	

  4.4

  	

  Busing

  Programs

  
	

  4.5

  	

  Contracting

  
	

  4.6

  	

  Internal Control Systems

  
	

   

  	

   

  
	

  ARTICLE 5

  EMPLOYMENT PRACTICES & DELEGATION OF DUTIES

  
	

   

  	

   

  
	

  5.1

  	

  GED Responsibility

  
	

  5.2

  	

  Employee Policies

  
	

  5.3

  	

  Management Employees

  
	

  5.4

  	

  Off-Site Employees

  
	

  5.5

  	

  No GED Officer/Director Salaries

  
	

  5.6

  	

  Employee Background Checks

  
	

  5.7

  	

  Local Hiring Preference

  
	

  5.8

  	

  Delegation of Duties

  
	

   

  	

   

  
	

  ARTICLE 6

  ACCOUNTING AND CASH MANAGEMENT

  
	

   

  	

   

  
	

  6.1

  	

  Depository Accounts

  
	

  6.2

  	

  Deposits to Depository Accounts

  
	

  6.3

  	

  Disbursement

  Accounts

  
	

  6.4

  	

  No

  Cash Disbursements

  
	

  6.5

  	

  Reserve Funds and

  Petty Cash Fund

  
	

  6.6

  	

  Transfers Between Accounts

  
	

  6.7

  	

  Disbursement of

  Management Fees

  
	

  6.8

  	

  Nature of

  Accounts

  
	

  6.9

  	

  Payment of Fees and

  Disbursements

  
	

  6.10

  	

  Operative Dates

  

 

i

 

	

  6.11

  	

  Financial

  Statements

  
	

  6.12

  	

  Books of Account

  
	

   

  	

   

  
	

  ARTICLE 7

  MANAGEMENT FEES

  
	

   

  
	

  7.1

  	

  Base

  Management Fees

  
	

  7.2

  	

  Deferral of Base

  Management Fee

  
	

  7.3

  	

  Target Bonus

  
	

  7.4

  	

  Annual

  Reconciliation

  
	

  7.5

  	

  Off-Site Employees, Travel and Out-of-Pocket

  Expenses

  
	

  7.6

  	

  Start-Up Advances

  
	

  7.7

  	

  Continuing

  Advances

  
	

   

  	

   

  
	

  ARTICLE 8

  INSURANCE

  
	

   

  	

   

  
	

  8.1

  	

  Obligation

  to Insure

  
	

  8.2

  	

  Construction

  Period

  
	

  8.3

  	

  Insurance

  Minimums

  
	

   

  	

   

  
	

  ARTICLE 9

  LIENS AND ENCUMBRANCES

  
	

   

  	

   

  
	

  9.1

  	

  Sale, Transfers, Mortgages and Liens by HRI

  
	

  9.2

  	

  Sale, Transfers, Mortgages and Liens by GED

  
	

   

  	

   

  
	

  ARTICLE

  10

  DAMAGE, CONDEMNATION OR IMPOSSIBILITY

  
	

   

  	

   

  
	

  10.1

  	

  Generally

  
	

  10.2

  	

  Release

  and Forgiveness

  
	

   

  	

   

  
	

  ARTICLE 11

  TRADE NAMES, MARKS AND CONFIDENTIAL INFORMATION

  
	

   

  	

   

  
	

  11.1

  	

  Project Name

  
	

  11.2

  	

  Trade Names, Trade Marks and Service Marks

  
	

  11.3

  	

  GED Marks

  
	

  11.4

  	

  Confidential Information

  
	

  11.5

  	

  Proprietary Information

  of GED

  
	

  11.6

  	

  Employment

  Solicitation Restriction Upon Termination

  
	

   

  	

   

  
	

  ARTICLE 12

  REPRESENTATIONS AND WARRANTIES

  
	

   

  	

   

  
	

  12.1

  	

  Representations

  and Warranties of HRI

  
	

  12.2

  	

  Representations

  and Warranties of GED

  

 

ii

 

	

  ARTICLE 13

  ADDITIONAL, COVENANTS OF HRI AND GED

  
	

   

  	

   

  
	

  13.1

  	

  Avoidance of Breach of Representations,

  Warranties, Etc.

  
	

  13.2

  	

  Taxes and Other

  Liabilities

  
	

  13.3

  	

  Certain Notices

  
	

  13.4

  	

  Other Agreements

  
	

  13.5

  	

  Comply with Laws

  
	

  13.6

  	

  File Reports

  
	

  13.7

  	

  Further

  Assurances

  
	

  13.8

  	

  Future Acts

  
	

  13.9

  	

  No Amendments

  
	

  13.10

  	

  No

  Damage to Property

  
	

  13.11

  	

  Notice of

  Defaults

  
	

  13.12

  	

  Litigation

  
	

  13.13

  	

  Records

  
	

   

  	

   

  
	

  ARTICLE 14

  OTHER CONDITIONS

  
	

   

  	

   

  
	

  14.1

  	

  Other Conditions

  
	

   

  	

   

  
	

  ARTICLE 15

  TERMINATION; DEFAULT; REMEDIES

  
	

   

  	

   

  
	

  15.1

  	

  Termination

  
	

  15.2

  	

  Notice

  and Cure Periods

  
	

  15.3

  	

  Remedies

  
	

  15.4

  	

  Conclusion

  of Term

  
	

   

  	

   

  
	

  ARTICLE 16

  ARBITRATION AND ENFORCEMENT

  
	

   

  	

   

  
	

  16.1

  	

  Arbitration

  
	

  16.2

  	

  Judicial Enforcement

  of Arbitration

  
	

  16.3

  	

  Trial

  By Jury; Venue

  
	

  16.4

  	

  Legal Fees

  
	

   

  	

   

  
	

  ARTICLE 17

  INDEMNIFICATION

  
	

   

  	

   

  
	

  17.1

  	

   

  
	

  17.2

  	

   

  
	

   

  	

   

  
	

  ARTICLE 18

  MISCELLANEOUS

  
	

   

  	

   

  
	

  18.1

  	

  Successors

  and Assigns

  
	

  18.2

  	

  Entire Agreement

  
	

  18.3

  	

  Amendments

  
	

  18.4

  	

  Notices

  
	

  18.5

  	

  Expenses

  

 

iii

 

	

  18.6

  	

  Waiver

  
	

  18.7

  	

  Severability

  
	

  18.8

  	

  Construction

  Generally

  
	

  18.9

  	

  Titles

  and Headings

  
	

  18.10

  	

  Choice of Law

  
	

  18.11

  	

  Counterparts

  
	

  18.12

  	

  Time

  is of the Essence

  
	

  18.13

  	

  No Partnership

  
	

  18.14

  	

  Termination

  
	

  18.15

  	

  Recording

  
	

  18.16

  	

  Exhibits

  
	

  18.17

  	

  Curative Moneys Expended

  
	

   

  	

   

  
	

  ARTICLE 19

  GUARANTY

  
	

   

  
	

  19.1

  	

  Guaranty

  

 

iv

 

MANAGEMENT AGREEMENT

 

THIS MANAGEMENT AGREEMENT (this

“Agreement”) is made this 31st day of January, 1996 by and Between HARRINGTON RACEWAY, INC. (“HRI”) having as

its address P.O. Box 28, Harrington, Delaware 19952 and GAMING ENTERTAINMENT (DELAWARE), L.L.C.

(“GED”) having as its address 55 Technology Way, West Greenwich, Rhode Island

02817.  Terms used herein and not

otherwise defined shall have the meanings as set forth in Article I.

 

WITNESSETH:

 

WHEREAS, HRI under

a lease (“the DSF/HRI Lease”) between HRI, as tenant, and Delaware State Fair,

Inc. (“DSF”), as landlord, currently leases certain Property from DSF for the

purpose of conducting live harness horse racing; and

 

WHEREAS, the

General Assembly of the State of Delaware enacted the Horse Racing Development

Act (the “Act”) which permits HRI to serve as the lottery agent with respect to

Video Lottery Machines placed on and operated at the Property;

 

WHEREAS, HRI

desires to operate Video Lottery Machines to the fullest extent allowed by law;

 

WHEREAS, GED has

subleased from HRI certain portions of the Property (the “GED Premises”) and

intends to improve the GED Premises to include facilities (“the Entertainment

Center”) to, inter  alia, house the Video Lottery Machines; and

 

WHEREAS, by means

of that certain Sublease and Leaseback Agreement executed coincident herewith

between HRI and GED, GED has leased back the Entertainment Center and Related

Improvements to HRI to allow HRI to operate Video Lottery Machines at the

Entertainment Center in compliance with the Act and to conduct other related Commercial

Activities; and

 

WHEREAS, DSF and

GED entered into a Nondisturbance Agreement dated as of January 31, 1996,

with respect to the DSF/HRI Lease and related matters; and

 

WHEREAS, in

accordance with the terms and conditions of this Agreement, HRI has retained

the services of GED to manage the operation of the Entertainment Center and the

other Commercial Activities; and

 

WHEREAS, all of

the aforesaid enumerated documents, together with such other documents,

agreements and instruments as the parties from time to time deem necessary to

further effectuate the operation of the Entertainment Center and the other

Commercial Activities on the terms and conditions set forth herein or therein

 

1

 

are

collectively hereinafter referred to as the “Transaction Documents”; and

 

WHEREAS, except as

otherwise provided in this Agreement, all fees and expenses relating to

operation of the Entertainment Center and Related Improvements (including,

without limitation, the fees and reimbursements due GED from time to time under

the terms of this Agreement) are to be paid solely from the revenues generated

by the Entertainment Center and Related Improvements (the intention being that

neither HRI nor DSF shall be subject to any liability in the event the

Entertainment Center and Related Improvements do not generate sufficient

revenues to pay Management Fees, Operating Expenses or other payments

associated with the operation of the Entertainment Center and Related

Improvements; and

 

WHEREAS, each of

the Transaction Documents are each being executed in consideration of the

execution of the other Transaction Documents.

 

NOW, THEREFORE, in

consideration of the mutual covenants and promises contained herein, and for

other good and valuable consideration, the receipt, validity and sufficiency of

which are hereby acknowledged, HRI and GED hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The following terms used in this Agreement

shall, unless the context requires, have the meanings specified in this Article

I.  Any defined term used in this

document which is not defined herein but which is defined in the HRI/GED

Sublease and Leaseback Agreement or the DSF/HRI Lease shall have the meaning

ascribed to it therein.

 

“Act” means the

Horse Racing Redevelopment Act enacted by the General Assembly of the State of

Delaware.

 

“Affiliate” means any

person or entity which directly or indirectly controls a party, or which is

controlled by or is under common control with such specified person.  The term “control”

means the possession, directly or indirectly, of the power to direct or cause

the direction of the management and policies of a person or entity, whether

through the ownership of voting securities, by contract or otherwise.

 

“Agent Commission” means all

amounts which the Operator is entitled to be paid by the Delaware State Lottery

as a commission pursuant to the Act for serving as a video lottery agent

thereunder.

 

“Bank Accounts” means the

bank accounts established by HRI and/or GED pursuant to this Agreement for the

operation of the

 

2

 

Entertainment

Center and the Related Improvements including, without limitation, the

Depository Accounts, the Disbursement Account, the Cash Contingency Reserve

Fund and the Petty Cash Fund.

 

“Base Management Fee” means the

management fee calculated and payable to GED pursuant to Section 7.1.

 

“Cash Contingency Reserve

Fund” means the fund established pursuant to Section 6.5.

 

“Commencement Date” means the

earlier of:  (i) the date on which

Video Lottery Machines become operational at the Entertainment Center Premises,

or (ii) 12 months from the date hereof. 

In the event HRI and GED determine to open a temporary facility prior to

the date a permanent facility is completed and open to the public (i) for

purposes of calculating the Term set forth in Section 3.1, the Commencement

Date shall be deemed to have occurred on the date Video Lottery Machines may

become operational at the permanent facility, which date shall not be earlier

than the date on which the permanent facility is completed and open to the

public and (ii) for purposes of all other Sections of this Agreement, the

Commencement Date shall be deemed to have occurred on the date which GED gives

written notice to HRI that Video Lottery Machines may become operational at the

temporary facility.

 

“Commercial Activities” means any

commercial activity conducted within or in connection with the operation of,

the Entertainment Center, including, without limitation, gaming activities,

other commercial activities and the rental or leasing of space within the

Entertainment Center or any improvements therein or any portion thereof.

 

“Common Areas” means all

portions of the Property made available by HRI for use in connection with the

operation of the Entertainment Center and the other Commercial Activities, such

portions to include, without limitation, driveways, entrances and exits,

service corridors, alleys, sign frontage and parking areas made available by

HRI to the aforesaid operation.

 

“Default” or “Event of Default” shall have the meaning

as set forth in Article 15.

 

“Depository Accounts” means the

separate bank accounts established pursuant to Section 6.1 into which all

receipts from Commercial Activities and Agent Commissions shall be deposited.

 

“Disbursement Accounts” means the

bank accounts established pursuant to Section 6.3.

 

“DSF/HRI Lease” means the

Lease Agreement entered into between DSF, as lessor, and HRI, as lessee,

involving the larger premises of which the Property is a part.

 

3

 

“Enterprise Name” shall

have the meaning ascribed to it in Section 11.1.

 

“Entertainment Center” means

those certain facilities intended to house the Video Lottery Machines and conduct

Commercial Activities, including related parking areas, all to be accessed and

serviced by means of rights of way and easements with respect to the Property

and reasonably necessary to the operation of the Entertainment Center and

Related Improvements (all of the same being more particularly described by Exhibit

“A”).

 

“Furniture, Fixtures and

Equipment” means the furniture, fixtures and equipment described in Exhibit

“E” attached hereto and made a part hereof.

 

“GED Premises” shall

mean those premises more particularly identified by Exhibit “B”.

 

“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 derived from goods

sold, services performed or Commercial Activities conducted in connection with

the Entertainment Center and the Related Improvements, 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.

 

“Gross Win” means the

amount remaining after payment of, and accrual for, prizes to players.

 

“Improvements” means the

improvements to be constructed by GED at the Entertainment Center in accordance

with the Plans.

 

“Initial Installment Date” means the

first day of the first calendar month following the Commencement Date.

 

“Interest Rate” shall

mean the prime rate of interest as announced in the Wall Street Journal on the

last business day of the preceding calendar month plus one percent (1%);

provided, however, that if a Default has occurred and is continuing, then interest

shall accrue at a rate of the lesser of (i) the maximum

 

4

 

lawful

rate of interest permitted by law, or (ii) prime plus four percent (4%).

 

“Lease/Leaseback

Agreement” shall mean that certain agreement between GED and HRI

referenced in the fifth recital to this Agreement.

 

“Management Fees” mean the

Base Management Fees and Target Bonus payable to GED pursuant to this

Agreement.

 

“Net Operating

Profit”

means Gross Revenues less Operating Expenses.

 

“Operating Expenses” means all

expenses incurred by or at the direction of GED, subject to the prior consent

of HRI or within the parameters hereafter established by mutual agreement of

HRI and GED, in connection with the operation of the Entertainment Center and

Related Improvements and/or the other Commercial Activities, including, without

limitation, the expenses of GED in performing GED’s duties under this

Agreement, the cost of goods sold and materials and supplies used in respect of

the Commercial Activities, administration, salaries, wages, training,

employment taxes and benefit programs for persons employed to conduct the

Commercial Activities (including the general manager), license fees assessed,

and gross receipts taxes, sales taxes, or excise taxes in connection with the

operation of the Entertainment Center and Related Improvements including those

incurred by the parties in connection with the Entertainment Center and Related

Improvements, police and security services, utility services (including heat,

power, light, sewer, water, garbage removal, maintenance, telephone and air

conditioning), ordinary remodeling, repairs and maintenance, insurance costs

related to the Entertainment Center and Related Improvements, property taxes

relating only to the Entertainment Center and Related Improvements, bonding,

advertising, marketing and promotional expenses (including without limitation,

costs relating to busing or other customer transportation and complementary

services or goods given to customers), accounting fees, legal and other

professional fees, travel expenses for the officers and directors of GED

incurred in connection with performance of this Agreement, uninsured judgments,

fines and penalties rendered against any business conducted by GED at the Entertainment

Center (and not the result of willful misconduct or gross negligence on the

part of GED or others acting under or through GED), payments of fees in lieu of

taxes, payments to or charges by, the City of Harrington, the County of Kent,

the State of Delaware or the United States including, without limitation,

(i) gaming taxes payable to the State of Delaware, (ii) payments to

the Delaware State Lottery for Video Lottery Machines and services, and

(iii) statutory purse supplements payable from the net win of Video

Lottery Machines pursuant to the Act, or any other expenses designated as

Operating Expenses upon the mutual agreement of the parties, but

specifically excluding the following:

 

5

 

debt

service, payments or distributions of any kind to DSF or HRI, Base Management

Fees, Lease/Leaseback Agreement payments, Target Bonuses, depreciation,

property, income, excise or other taxes payable to Federal, State and local

governments (other than those specifically set forth above as an expense),

expenses associated with operation, and up-keep and maintenance of the horse

racing or any other facility and Common Areas, except to the extent that such

expenses for operations, up-keep and maintenance of the Common Areas are

directly attributable or necessary for the operation of the Entertainment

Center and Related Improvements, in which case such expenses shall be deemed

Operating Expenses.

 

“OTB Revenue” means

off-track betting lease payments derived from simulcasting on the Property.

 

“Petty Cash Fund” means the

fund established pursuant to Section 6.5.

 

“Plans” means the

plans to be prepared by GED for the construction and/or improvement of the

Entertainment Center and related facilities.

 

“Property” means the

real property together with all buildings, structures, fixtures and

improvements located thereon or thereunder or to be located thereon or

thereunder, in Kent County, Delaware, leased by HRI from DSF and commonly known

as the Delaware State Fairgrounds, together with such other parcels, rights of

way and easements acquired or leased by HRI or otherwise available to HRI to

enhance the businesses operated by HRI from time to time on the Delaware State

Fairgrounds all as more particularly described on Exhibit “C” hereto.

 

“Related Improvements” mean

those improvements constructed and to be constructed or installed on the GED

Premises and/or Common Areas outside the boundaries of the Entertainment Center

for the benefit of the GED Premises, including, without limitation,

improvements to the infrastructure, access ways and roadways, parking areas,

signage, drainage, utility lines and landscaping.

 

“Rental payments” means all

rental payments to be made pursuant to the Lease/Leaseback Agreement.

 

“Target Bonus” means any

bonus paid to GED pursuant to Section 7.3.

 

“Transfer” means any

sale, pledge, assignment, mortgage, encumbrance, security interest, consensual

lien, hypothecation, transfer or divestiture, the effect of which is to grant

to another an interest in the Entertainment Center or any asset related to the

operation of the Entertainment Center either directly or indirectly, including

any interest taken as security and including any change in the legal or

equitable title of the Entertainment

 

6

 

Center or in the beneficial ownership of the Entertainment Center

whether or not of record and whether or not for consideration.

 

“Video Lottery

Machines”

mean any gaming machine, device and/or associated equipment authorized by

Delaware law.

 

ARTICLE 2

EXCLUSIVITY

 

2.1          Exclusivity.  Unless GED shall have previously agreed in writing and except as

may relate to live harness racing or Delaware State Fair activities currently

conducted on the Property, HRI shall neither lease or sublease any portion of

the Property to anyone other than GED to operate, nor itself operate or retain

the business services of any manager or agent other than GED to operate any

gaming activities on the Property, nor acquire any interest in, or conduct, any

other gaming enterprise on, or within 100 miles of the Property.

 

ARTICLE 3

TERM

 

3.1          Term.  This Agreement shall be effective for a term

(“the Term”) commencing on the date of final execution and continuing until the

earlier of:  (i) fifteen (15) years

from the Initial Installment Date; (ii) the expiration of the Act (unless

the Act is extended or replaced by a substantially similar Act within one (1)

year following expiration of the same, in which event the Act shall not be

deemed to have expired for purposes of this provision); or

(iii) termination of this Agreement as otherwise hereinafter provided.

 

ARTICLE 4

DUTY AND AUTHORITY OF GED

 

4.1          GED’s Duties in Connection with

Operation.   HRI hereby grants GED the exclusive right, on

behalf of HRI, to manage and operate the day-to-day operation, management and

maintenance of the Entertainment Center and Related Improvements.  GED  shall

use its reasonable best efforts to perform GED’s duties in connection with this

Agreement including the following (the cost of which shall constitute Operating

Expenses):

 

(a)           To

collect, deposit and maintain all Gross Revenues received in connection with

operation of the Entertainment Center and Related Improvements in such

designated agency accounts as GED shall determine and HRI approve (which

approval shall not be unreasonably withheld) in accordance with Article VI.

 

(b)           To

undertake, directly or through third party providers, for the general

administration, management and operation of the Entertainment Center and Related

Improvements (including,

 

7

 

without limitation, providing for (i) water, heat, light and other

utility services, (ii) recurring services such as  trash removal,

pest extermination, decorating, gardening, laundry, telephone service, snow

removal and any other customary and commercially reasonable contracts or

services (all such contracts being cancelable upon no more than thirty (30)

days prior notice to the vendor, unless GED determines that cost savings justify

a longer term), (iii) purchases herein contemplated using reasonable best

efforts to obtain provisions in such contracts and purchases which are

beneficial to the operation of the Entertainment Center and Related

Improvements, (iv) marketing and promotional programs or services,

(v) personnel services, (vi) accounting, bookkeeping and cash

management services, and (vii) security). 

GED shall not contract, directly or indirectly, with any Affiliate of

GED, unless GED shall first obtain the written consent of HRI.

 

(c)           To

terminate contracts and recover possession of property and to otherwise enforce

all the rights of any party with respect to any contract or dispute related to

the Entertainment Center and Related Improvements, and to institute and prosecute

legal actions against third parties and to determine when to settle, compromise

and/or release any such actions or suits.

 

(d)           To

maintain the Entertainment Center, the Related Improvements and the Common

Areas (to the extent necessary or appropriate for the operation of the

Entertainment Center, the Related Improvements and the Common Areas) in a good

state of repair and condition, and to cause to be made such ordinary repairs,

alterations and improvements to the Entertainment Center and Related Improvements,

including the purchase of and payment for such maintenance and repairs and such

supplies and equipment as are reasonably necessary with respect thereto.

 

(e)           To

cause replacement or substitution of equipment, furnishings, fixtures and the

like comprising the Entertainment Center and Related Improvements as the same

are damaged, destroyed or become obsolete or as otherwise necessary in the best

interests of the Entertainment Center and Related Improvements.  With the consent of HRI (which consent shall

not be unreasonably withheld) GED may, as GED determines necessary or

desirable, make such further alterations, improvements and changes to the

Entertainment Center and Related Improvements including any existing landscape,

building or other structure, and make construct, repair or replace any

component of the Related Improvements. 

All work undertaken by or through GED shall be completed in a timely,

good and workmanlike manner.  GED shall

have the right to enter onto the Property as reasonably necessary to facilitate

any of the foregoing and the same shall include the making of all purchases,

and in general, doing and performing all acts and things, including the

execution of contracts, incident to such replacement or substitution.

 

8

 

(f)            To

obtain and keep current all licenses and permits required for GED to perform

GED’s obligations hereunder.

 

(g)           To

disburse or remit, as permitted by this Agreement, out of the Disbursement

Account, in the order of priority set forth herein and, if not set forth

herein, in such manner and priority as GED (with HRI’s consent, which shall not

be unreasonably withheld) shall determine, all Operating Expenses and Soft

Costs incurred in the operation, management and maintenance of the

Entertainment Center, and/or the Related Improvements, including, without

limitation:

 

(i)            Expense reimbursements payable to

GED as provided by Article 6 and all other sums, costs, fees and expenses

payable to GED as provided herein;

 

(ii)           Repairs, decorating costs and

alterations as GED may determine are reasonable (subject to such parameters as

are hereafter established by the parties) in connection with the operation,

management and maintenance of the Entertainment Center and Related Improvements;

 

(iii)          Employee costs as set forth more fully

in Article 5, including payroll, payroll taxes, workers compensation,

unemployment insurance, medical insurance and employer’s liability insurance

premiums at limits no less than those required by law, employer’s non-owned

auto liability insurance premiums and fidelity bond coverage for on-site

personnel engaged in cash management activities;

 

(iv)          Reasonable legal costs, soft costs,

and expenses incurred by GED and HRI in connection with the Transaction

Documents;

 

(v)           Payments

due GED or HRI under any

Transaction Document; and

 

(vi)          Such other Operating Expenses as GED

may determine are reasonable (subject to such parameters as are hereafter

mutually established by the parties) and necessary for proper operation of the

Entertainment Center and Related Improvements.

 

(h)           To

remit to the taxing authority levying any taxes, assessments or levies from the

Disbursement Account, amounts sufficient to pay real estate taxes and other

charges, assessments or levies of whatever kind or nature imposed upon or

against the Entertainment Center or Related Improvements.

 

(i)            To

remit from the Disbursement Accounts to any insurance carrier(s) selected by

GED and approved by HRI, or to remit to HRI amounts sufficient to purchase

insurance to protect

 

9

 

the

interests of HRI, GED and, as the case may be, DSF, in connection with the

Entertainment Center and Related Improvements.

 

(j)            To

retain all books and records for at least four (4) years following expiration

or termination of GED’s duties pursuant to this Agreement and to furnish, at

any time or times, copies thereof to HRI or HRI’s designee, as HRI reasonably

directs (the cost of doing so being an Operating Expense).

 

(k)           To

promptly notify

HRI and DSF, in writing, of any personal injury, property damage or other claim

(including a claim of unlawful or discriminatory acts in connection with the

operation of the Entertainment Center) occurring on, or claimed by any party on

or with respect to, the Entertainment Center or the Related Improvements, and

to promptly forward to HRI and DSF any summons, subpoena or other like legal

document served upon GED relating to actual or alleged potential liability of

HRI, DSF or GED (whether or not in connection with the Entertainment Center or

the Related Improvements, or the operation of the foregoing).

 

(1)           To

use all reasonable efforts to prevent violations of, and otherwise comply with,

the provisions of any laws, ordinances or regulations applicable to use

and occupancy of the Entertainment Center and the Related Improvements.

 

(m)          To

provide financial and advisory services to HRI, as HRI may reasonably request

from time to time, in respect of the activities conducted pursuant to this Agreement

(including services related to financial reporting, obtaining and maintaining

licenses, obtaining and maintaining insurance policies, and coordinating and

resolving eminent domain or condemnation proceedings and insurance claims).

 

(n)           To

provide appropriate security for the operation of the Entertainment Center and

Related Improvements.  Any security

officer whom GED retains or contracts for shall be bonded and insured in an

amount reasonably satisfactory to HRI (it being agreed that such amount shall

be commensurate with such officer’s enforcement duties and obligations).

 

4.2          No Liability.  GED assumes no liability whatsoever for any

acts or omissions of DSF, HRI or any previous owners of the Property or any

previous management or other agent of either. 

Except as otherwise provided for herein, GED assumes no liability for

violations currently existing with respect to applicable laws or regulations,

including without limitation, laws or regulations relating to health, taxes or

the environment or hereafter with respect to any environmental laws or

regulations and HRI agrees to indemnify and hold GED harmless from and against

any and all claims, fines, costs, fees and expenses arising in respect

thereof.  GED shall promptly notify DSF

and HRI in writing of any such violation discovered by GED but the failure to

so notify shall not

 

10

 

be a

waiver of GED’s rights hereunder. 

Within five (5) days after receipt of notice of such occurrence from

GED, HRI shall undertake or cause others to undertake all actions required to

correct or comply with any applicable codes, statutes, ordinances, law or

regulations.  Notwithstanding anything

in the foregoing to the contrary, GED shall be responsible for all violations

of applicable laws as a direct result of any act or omissions by GED or others

acting under or through GED and shall indemnify and hold HRI and DSF harmless

from and against any and all claims, fines, costs, fees and expenses

(including, without limitation, all court and arbitration costs and all

reasonable attorneys fees paid by or chargeable to HRI) arising in respect to

matters encompassed by the foregoing indemnity obligation of GED.

 

4.3          Marketing

and Advertising.  GED shall

advertise and promote the operations of Entertainment Center and may do so in

coordination with the sales and marketing programs of GED  and other gaming establishments managed

by GED or its Affiliates.  All such

sales and marketing programs shall be conducted in compliance with Delaware law

and the rules and regulations promulgated thereunder.  GED may participate in sales and promotional campaigns and

activities involving complimentary food, beverage, shows, chips and tokens.  GED shall have the right, to an extent

commensurate with the prospective benefit accruing therefrom to the operations

of the Entertainment Center, to use and to be reimbursed for the reasonable

cost of marketing and advertising services of the employees of GED and its

Affiliates not located at the Property.

 

4.4          Busing

Programs.  GED shall assess the feasibility of

development and utilization of busing programs designed to promote the

Entertainment Center in a cost effective manner.  The costs of any such program which is implemented may be shared

among HRI and the operations of the Entertainment Center, as determined by

mutual agreement of GED and HRI.

 

4.5          Contracting.  In

entering into contracts for the supply of goods and services related to the

operations of the Entertainment Center and Related Improvements, GED shall give

preference to local businesses if GED determines that such businesses can

supply goods and services at a competitive quality, cost, or time of

performance and/or in a manner or upon other terms acceptable to GED.

 

4.6          Internal

Control Systems.  GED shall develop and install controls (the

“Internal Control Systems”) for the monitoring of all funds generated in

connection with the operations of the Entertainment Center and Related

Improvements as required by the Act in order to minimize the opportunity for

loss of proceeds from such operations and to comply with applicable law.  HRI, as HRI elects, shall have the right, at

anytime and from time to time, to review the operation and results of all Internal

Control Systems.  As part of the Internal

Control Systems, GED shall install a  closed

 

11

 

circuit

television system to monitor cash handling activities of the Entertainment

Center and Related Improvements and HRI shall have full access to that system

and its records.

 

ARTICLE 5

EMPLOYMENT PRACTICES & DELEGATION OF DUTIES

 

5.1          GED

Responsibility.  GED shall have exclusive responsibility and

authority for selecting, controlling and discharging employees who perform

services in connection with the performance of GED’s responsibilities under

this Agreement involving the Entertainment Center and Related

Improvements.  Unless prohibited by the

Act, all such employees will be GED’s employees.

 

5.2          Employee Policies.  As soon as reasonably practicable, GED shall prepare a draft of

personnel policies and procedures (the “Employee Policies”), including a job

classification system with salary levels and scales.  The Employee Policies shall include a grievance procedure in

order to establish fair and uniform standards for the employees of the

Entertainment Center.  GED shall submit

the Employee Policies to HRI for prior approval and such approval shall not be

unreasonably withheld.  The Employee

Policies shall be administered by GED and the grievance procedure shall be

administered by a Grievance Committee established by GED.  All such Employee Policies shall comply with

applicable law.

 

5.3          Management

Employees.  It is anticipated that GED shall initially

hire persons holding the following job titles in connection with the operation

of the Entertainment Center and Related Improvements:  General Manager, Chief Accounting Officer, Director of

Construction, Director of Operations, Director of Marketing and Director of Human

Resources.  Nothing contained herein is

intended to limit GED’s right to expand, consolidate or eliminate any of these

positions as reasonably necessary to operate the Entertainment Center and

Related Improvements.  GED also shall be

authorized to employ such employees directly and to be reimbursed, as an

Operating Expense, for all costs and expenses reasonably incurred incident to

such employment.

 

5.4          Off-Site Employees.   In performing its obligations hereunder, GED

shall have the right to use employees of GED and affiliated companies (“Off-site

Employees”) and to allocate and charge as Operating Expenses the actual costs

and expenses reasonably incurred with respect to such Off-Site Employees

(including reasonable gross salaries, bonuses, benefits, additional pay or

severance pay plus all related federal and state payroll taxes, insurance and

worker’s compensation) to the extent such employee’s services are necessary in

the performance of GED’s obligations hereunder.

 

12

 

5.5          No

GED Officer/Director Salaries. 

Operating Expenses shall not include the compensation of any officer or

director of GED, DSF or HRI, except for expense reimbursements as permitted by

this Agreement.

 

5.6          Employee

Background Checks.  A background investigation, in compliance

with applicable law, shall be conducted, as soon as reasonably practicable, by

GED with respect to each applicant selected for employment.  All costs associated with such background

investigations shall constitute an Operating Expense.

 

5.7          Local

Hiring Preference.  GED shall, to the extent permitted by

applicable law, give preference in recruiting, training and employment to

persons residing in the vicinity of the Property.  GED shall provide training programs for all employees as

necessary and the costs of such training shall be an Operating Expense.  Final determination of the qualification of

all persons for employment shall be made by GED.

 

5.8          Delegation

of Duties.  GED may, with the prior consent of HRI

(which consent shall not be unreasonably withheld), subcontract the duties to

be performed by GED pursuant to this Agreement to such third parties as GED may

from time to time determine and sublease space within the Entertainment Center

to concessionaires or such other third parties.  No subcontract of GED’s duties or sublease of space shall relieve

GED of GED’s obligations under this Agreement.

 

ARTICLE 6

ACCOUNTING AND CASH MANAGEMENT

 

6.1          Depository

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 a custodial account (“the Custodial Account”) into which all

Agent Commissions shall be deposited in a timely manner.  HRI shall not make withdrawals from such

account and shall cause all account balances to be electronically transferred

not less than weekly to such operating accounts established with the Bank as

GED deems appropriate to administer the activities conducted on the Property (these

accounts are collectively referred to as the “Depository Accounts”).  All such accounts may be subaccounts of a

master depository account.

 

6.2          Deposits

to Depository 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 Account

established by HRI pursuant to Section 6.1 and, for this purpose, GED may

obtain a bonded transportation service to effect the safe

 

13

 

transportation

of the receipts to the Bank.  The cost

of such transportation service shall be an Operating Expense.

 

6.3          Disbursement

Accounts.  GED shall establish one or more Disbursement

Accounts with the Bank and, consistent with and pursuant to this Agreement,

have responsibility and authority to make all payments and disbursements

authorized by this Agreement.  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 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 Bank Account signed or authorized in the manner provided in

Section 6.3.

 

6.5          Reserve

Funds and Petty Cash Fund.   GED shall establish, using funds deposited into the Depository

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

operations, a Cash Contingency Reserve Fund, a Cash Prize Reserve Fund and a

Petty Cash Fund, each in an amount determined by GED and reasonable to

accommodate the purpose of such accounts. 

The Cash Contingency Reserve Fund shall be used to make transfers as

necessary to the Disbursement Account and the Cash Prize Reserve Fund.  The Cash Prize Reserve Fund shall be

established to pay prizes to players of the Video Lottery Machines.  The Petty Cash Fund shall be used for

miscellaneous small expenditures relating to the operations of the

Entertainment Center and Related Improvements and shall be maintained at the

Entertainment Center under the control of the general manager.

 

6.6          Transfers

Between Accounts.  GED shall have the authority to cause the

transfer of funds from the Depository Accounts to the Disbursement Accounts in

order to maintain balances in the Disbursement Accounts to pay Operating Expenses,

Management Fees, Rental Payments, to service outstanding indebtedness, to make

appropriate disbursements to HRI, and to pay all fees and reimbursements

payable to GED pursuant to this Agreement. 

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.

 

14

 

6.7          Disbursement of Management Fees.  On or before the

fifteenth (15th) day of each calendar month after the Initial Installment Date,

GED is authorized by HRI to pay itself the Management Fees from the Disbursement

Accounts and to pay other fees and expenses payable to GED pursuant to this

Agreement.

 

6.8          Nature of

Accounts.  All Bank Accounts established pursuant to

this Article 6 shall be agency accounts maintained by GED on behalf of

HRI.  GED may, in GED’s sole discretion,

establish depository accounts with the Bank as depository institution wherein

the Bank, as the named depository, shall hold and disburse fees and expenses

payable pursuant to this Agreement and distributions to HRI as provided herein

pursuant to depository instructions established by GED.  In the event GED determines to establish

such depository accounts, HRI agrees to execute such

depository or other agreements as are necessary to effectuate the intent of

this Section 6.8.

 

6.9          Payment of Fees and Disbursements.  The Gross Revenues 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 Improvements into the Custodial Account 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 as 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, within one (1) business day of receipt of the net proceeds from the

State Lottery Fund, deliver such net proceeds to GED.  GED shall use all net proceeds from the foregoing to first pay

Operating Expenses as and when they arise. 

The remaining funds (the Net Operating Profit) shall be disbursed from

the Disbursement Accounts on or prior to the tenth (10th) day of each month for

the scheduled items, in the priority listed, set forth below to the extent the

same are due, payable and earned:

 

(i)            To

pay GED any

accrued and unpaid Interest Payments, and Base Rent Preference Payments;

 

15

 

(ii)           To

pay Base Management Fees, Target Bonuses and reimbursable costs and expenses

payable pursuant to this Agreement including advances made for Operating Costs

pursuant to section 7.6(b) and advances made pursuant to section 18.5 (first to

amounts due and owing from prior periods and then to amounts due and owing for

the current period);

 

(iii)          To

pay one third (1/3) of the Monthly Land Rental;

 

(iv)          To

establish the Cash

Contingency Reserve in such amounts as GED may determine;

 

(v)           To

establish the Petty

Cash Fund in such amounts as GED may determine;

 

(vi)          To

prepay Base Rent

Preference Payments in inverse order of maturity until the Outstanding Rental Preference

Payment Balance has been reduced to the following amounts: (i) on or prior

to the first anniversary of the Commencement Date - sixty percent (60%) of the

Outstanding Rental Preference Payment Balance as of the Commencement Date;

(ii) on or prior to the second anniversary of the Commencement Date -

twenty percent (20%) of the Outstanding Rental Preference Payment Balance as of

the Commencement Date; and (iii) on or prior to the third anniversary of

the Commencement Date - payment in full;

 

(vii)         To

make payments,

as follows: (i) eighty percent (80%) of such remaining funds to prepay the

Outstanding Rental Preference Payment Balance, until the same is satisfied; and

(ii) twenty percent (20%) of such remaining funds to pay HRI the balance

of the Monthly Land Rental (or, upon satisfaction of the same, as the case may

be) to be applied otherwise by HRI as HRI shall determine;

 

(viii)        Subject to

reimbursement to GED of all advances theretofore made by GED to HRI pursuant to

Section 7.7 of this Agreement, to distribute all remaining Net Operating

Profits, if any, to HRI.

 

6.10        Operative

Dates.  For purposes of this Article 6, the first

year of operations shall begin on the Commencement Date and will end on

December 31 of that calendar year.  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).

 

6.11        Financial

Statements.  GED shall prepare and provide to HRI on a monthly, quarterly and

annual basis, financial statements,

 

16

 

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. 

The parties hereto shall select a nationally recognized 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

and of all contracts for supplies, services or concessions which comprise the

Operating Expenses.  The cost of such

audits shall be an Operating Expense. 

HRI also shall have the right, at its sole cost and expense, to perform

special or independent audits of all financial records of GED as HRI

elects.  Audits of the financial

statements of GED 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.

 

6.12        Books of

Account.  GED shall maintain the books and records

required hereunder in accordance with the accounting practices of GED (provided

that the same are in conformity with generally accepted accounting principles)

consistently applied and shall adopt and follow the fiscal accounting periods

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

fiscal year).  Such books of account

shall be maintained at a location at the Entertainment Center and at such other

locations as may be determined by GED. 

Duly authorized agents of HRI shall have access to the daily operations

of the Entertainment Center and shall have the right to inspect, examine, and

copy all such books and supporting business records as HRI reasonably

requests.  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 accounting systems and procedures

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) be susceptible to audit;

(iv) permit the calculation and payment of Base Management Fees, Target

Bonuses and expense reimbursements in accordance with the terms 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.

 

ARTICLE 7

MANAGEMENT FEES

 

7.1          Base

Management Fees.   In

consideration for the services rendered pursuant to this Agreement, GED shall

be entitled to the

 

17

 

following

Base Management Fees to be paid in accordance with Section 6.9:

 

(1)           Three

percent (3.0%) of the first Four Hundred Sixteen Thousand Six Hundred Sixty Six

and 00/100 Dollars ($416,666.00) of any Gross Revenues generated by

the operations of the Entertainment Center and Related Improvements during any

calendar month; plus

 

(2)           Three and one-half percent (3.5%) of any

Gross Revenues between Four Hundred Sixteen Thousand Six Hundred Sixty Six and

00/100 Dollars ($416,666.00) and Eight Hundred Thirty Three Thousand Three Hundred

Thirty Three and 00/100 Dollars ($833,333.00) generated by the operations of

Entertainment Center and Related Improvements during any calendar month; plus

 

(3)           Four percent (4.0%) of any Gross

Revenues exceeding Eight Hundred Thirty Three Thousand Three Hundred Thirty

Three and 00/100 Dollars ($833,333.00) generated by the operations of the

Entertainment Center and Related Improvements during any calendar month.

 

7.2          Deferral

of Base Management Fee.  The Base Management Fee shall be deferred

and not paid in any month in which the Net Operating Profit is less than One

Hundred Twenty Five Thousand and 00/100 Dollars ($125,000.00).  Base Management Fees which are deferred

pursuant to this Section 7.2 shall be paid in the next month in which there is

Net Operating Profit after payment of obligations having priority pursuant to

Section 6.9(c).

 

7.3          Target Bonus.  In addition to the Base Management Fee, GED

shall be paid the following Target Bonuses:

 

(1)           Ten

percent (10%) of any Net Operating Profit between One Hundred Twenty Five

Thousand and 00/100 Dollars ($125,000.00) and Four Hundred Sixteen Thousand Six

Hundred Sixty Six and 00/100 Dollars ($416,666.00) generated by the operations

of Entertainment Center and Related Improvements during any calendar month,

plus

 

(2)           Twelve

and one-half percent (12.5%) of any Net Operating Profit between Four Hundred

Sixteen Thousand Six Hundred Sixty Six and 00/100 Dollars ($416,666.00) and

Eight Hundred Thirty Three Thousand Three Hundred Thirty Three and 00/100

Dollars ($833,333.00) generated by the operations of the Entertainment Center

and Related Improvements during any calendar month, plus

 

(3)           Fifteen

percent (15.0%) of any Net Operating Profit exceeding Eight Hundred Thirty

Three Thousand Three Hundred

 

18

 

Thirty

Three and 00/100 Dollars ($833,333.00) during any calendar month.

 

The Target Bonus shall be calculated

at the end of each calendar month for which this Agreement is effective and

shall be paid in accordance with Section 6.9.

 

7.4          Annual

Reconciliation.  Within ninety (90) days after the end of

each calendar year during the term hereof, GED shall furnish to HRI a written

statement setting forth the amounts paid pursuant to this Agreement, including

the Base Management Fee, Target Bonus, payments actually made for the

applicable year under the Lease/Leaseback Agreement, the Net Operating Profit

for that year, and the Base Management Fee, Target Bonus, Lease/Leaseback

payment payable for that year when calculated on an annualized basis.  To the extent that GED has not actually

received the Base Management Fee and Target Bonus payments due for the

particular calendar year when calculated on an annualized basis, or any other

charges due for that year, HRI, to the extent HRI has received funds under

Section 6.9(c)(vii) and (viii) shall pay to GED the deficiency at the time the

annual statement is due together with interest, at the Interest Rate, accruing

from the date of such deficient payment. 

To the extent that the total Management Fees actually paid in the

applicable year exceed the Management Fees payable on an annualized basis, or

other charges actually due that year, such excess first shall be paid to GED

(together with interest thereon accruing at the Interest Rate from the date of

any such excess) to the extent of accrued but unpaid amounts due GED under this

Agreement for prior years (with priority being given to the earliest such year

and, within that year, to amounts owed when classified pursuant to Section

6.9(c)).

 

7.5          Off-Site

Employees, Travel and Out-of-Pocket Expenses. 

GED shall be reimbursed for all of the

reasonable and actual costs incurred by GED with respect to services performed

by Off-Site Employees as set forth in Section 5.4, and for all reasonable

travel and out-of-pocket expenses of GED’s directors, officers, employees or

agents reasonably incurred in the performance of this Agreement.  Such reimbursement shall be in addition to

all other fees, expenses or costs which are reimbursable or payable pursuant to

this Agreement or the other Transaction Documents.  Unless otherwise specified herein or therein, all such expenses

shall be capitalized or charged as Operating Expenses of the Entertainment

Center consistent with generally accepted accounting principles.  Such fees, expenses or costs shall be

calculated and paid to GED on a monthly basis.

 

7.6          Start-Up

Advances.

 

(a)           All

initial Soft Costs associated with planning, constructing and developing the

Entertainment Center and Related Improvements, including all costs and expenses

incurred by GED in

 

19

 

furtherance

thereof, shall be charged as a cost of developing the Entertainment Center.

 

(b)           Thereafter,

payment by GED of all costs, fees and expenses provided for herein are

conditioned upon the existence of sufficient Gross Revenues to enable GED to

pay all such costs, fees and expenses. 

If Gross Revenues are not sufficient to pay all costs, fees and expenses

required to operate the Entertainment Center, GED may advance funds to pay such

costs, fees and expenses.  GED shall be

paid or reimbursed with interest in accordance with Section 6.9 and from the

next available Gross Revenues, for money paid or property or services

contributed or advanced by GED pursuant to this Agreement or the other

Transaction Documents.  Interest shall

be calculated at the Interest Rate.

 

7.7          Continuing Advances.  Annually during the Term, GED shall advance to HRI the sum of One

Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) toward the costs

incurred by HRI incident to conducting live harness racing activities on the

Harness Racing Premises.  Such aggregate

annual advance shall be disbursed to HRI in nine (9) weekly installments, the

first such installment - in the amount of Thirty Thousand and 00/100 Dollars

($30,000.00) - being payable to HRI on or before noon, local time, on Friday of

the first racing week-end after Labor Day, and subsequent installments - each

in the amount of Fifteen Thousand and 00/100 Dollars ($15,000.00) - being

payable to HRI on or before noon, local time, on Friday of each succeeding

week.

 

ARTICLE 8

INSURANCE

 

8.1          Obligation

to Insure.  HRI, directly or through DSF, shall be

obligated to insure the Property including the Entertainment Center and Related

Improvements in such amounts as may be required by this Agreement.  The cost of insurance in respect of the

Entertainment Center and Related Improvements shall be an Operating Expense and

shall be paid from or reimbursed from the Disbursement Account.  The cost of insurance covering all other

areas of the Property shall not be an Operating Expense or otherwise chargeable

to GED.  All such insurance policies

shall name GED as an additional loss payee during the term of this Agreement.

 

8.2          Construction

Period.  During the course of new construction or

substantial remodeling on the GED Premises, GED shall obtain builders risk

insurance, on an “all risk” basis (including collapse) and on a non-reporting

form, for the full replacement value covering the interests of HRI and GED in

all work incorporated into the GED Premises, all material and equipment on or

about the GED Premises or environs, and all new construction and remodeling in

respect of the Entertainment Center and Related Improvements.  All material and equipment in any off-site

storage

 

20

 

location

intended for permanent use in the Entertainment Center or the Related

Improvements, or incident to the construction thereof, shall be insured on an

“all risk” basis as soon as the same are delivered to such off-site

locations.  The cost of the insurance

required pursuant to this Section shall be an Operating Expense.

 

8.3          Insurance

Minimums.  The insurance obtained pursuant to Section

8.1 shall meet at least the following minimum types and amounts of insurance

(which may be included under a blanket insurance policy if all other terms

hereof are satisfied), in addition to such other coverages as HRI and GED shall

mutually determine:

 

(a)           Insurance

against loss, damage or destruction by fire and other casualty, including

theft, vandalism and malicious mischief, flood (if the GED Premises

are in a location designated by the Federal Secretary of Housing and Urban

Development as a flood hazard area), earthquakes (if the GED Premises are in an

area subject to destructive earthquakes within recorded history), boiler

explosion (if there is any boiler upon the GED Premises), sprinkler damage, all

matters covered by a standard extended coverage endorsement and such other

risks as GED may require, insuring the GED Premises, the equipment and all

improvements thereon for not less than their full insurable replacement cost.

 

(b)           Comprehensive

public liability and property damage insurance, including a products liability

clause and pollution legal liability insurance, covering bodily

injury liability, property damage liability, automobile bodily injury and

property damage liability, and tank leakage for sudden and accidental as well

as gradual occurrences (to the extent that such insurance can be obtained at

non-prohibitive rates), including, without limitation, any liability arising

out of the ownership, maintenance, repair, condition or operation of the

Property or adjoining ways, streets or sidewalks and insurance insuring against

liability arising from the sale of liquor, beer or wine on the GED

Premises.  Such insurance policy or

policies referred to in these subparagraphs 

(a) and  (b) shall contain a

“severability of interest” clause or endorsement which precludes the insurer

from denying the claim as a result of the negligence or other acts of the

other, shall be in amounts of not less than $10,000,000 per personal injury and

occurrence with respect to any insured liability, whether for personal injury

or property damage, or such higher limits as HRI and GED mutually establish

from time to time, and shall be in form and substance satisfactory to HRI and

to GED.

 

(c)           Workmen’s

compensation,

employer’s liability and such other insurance as may be necessary to comply

with applicable laws.

 

(d)           Fidelity

bonds covering

all officers, employees and other persons handling funds in connection with the

operations of

 

21

 

the

Entertainment Center and Related Improvements against all losses, including all

losses, including theft, embezzlement and fraud, in an amount of not less than

$100,000.

 

(e)           Rent,

loss or

business interruption insurance, upon completion of the Entertainment Center,

covering the exposures referred to above, in the amount of not less than

$5,000,000 plus the fees payable pursuant to the Agreement.

 

(f)            All

insurance policies

required to be obtained by either HRI or GED hereunder shall:

 

(i)            Provide

for a  waiver of subrogation by

the insurer as to claims against GED or HRI, as the case may be, or their

respective employees and agents;

 

(ii)           Provide

that such insurances cannot be unreasonably canceled, invalidated or suspended

on account of the conduct of HRI,  GED,

or their respective officers, directors, employees or agents;

 

(iii)          Provide that any “no other insurance” clause in the

insurance policy shall exclude any policies of insurance maintained by either

HRI or GED, as the case may be, and that the insurance policy shall not be

brought into contribution with insurance maintained by HRI or GED, as the case

may be;

 

(iv)          Provide

that the policy of insurance shall not be terminated, canceled or substantially

modified without at least thirty (30) days prior written notice to HRI, GED and

any lender covered by any standard mortgage clause endorsement in effect;

 

(v)           Provide

that the insurer shall not have the option to restore the GED Premises if HRI

or GED elects to terminate this Agreement in accordance with the terms hereof;

 

(vi)          Be

issued by insurance companies having a rating in Best’s Insurance Guide of

Class VI or better and a minimum credit rating of A- or better at the time of

issuance and any renewal; and

 

(vii)         Provide that HRI or GED, whichever is not the policy owner

under such insurance, be designated as an additional named insured and loss

payee as the interests of HRI or GED, as the case may be, may appear.

 

HRI shall provide or cause others to

provide to GED certification of insurance or copies of insurance policies

maintained by HRI, directly or through others, evidencing that insurance

satisfying the requirements of this Agreement is in

 

22

 

effect at

all times.  Otherwise, GED may, upon

written notification to HRI, directly undertake to obtain any or all such

insurance required of HRI by this Article, and HRI shall reimburse GED for

insurance required on all areas of the GED Premises other than those areas

occupied by the Entertainment Center and Related Improvements.

 

GED shall provide or cause others to

provide to HRI certification of insurance or copies of insurance policies

maintained by GED, directly or through others, evidencing that insurance

satisfying the requirements of this Agreement is in effect at all times.  Otherwise, HRI may, upon written

notification to GED, directly undertake to obtain any or all such insurance

required of GED by this Article, and GED shall reimburse HRI for the cost to

HRI of the same as an Operating Expense.

 

ARTICLE 9

LIENS AND ENCUMBRANCES

 

9.1          Sale, Transfers,

Mortgages and Liens by HRI. 

HRI shall not transfer HRI’s rights under this Agreement or in the

Entertainment Center or any asset related thereto or any interest of HRI

therein or hereto whether voluntarily, involuntarily, or by operation of law,

unless:  (a) GED shall have previously

consented thereto in writing; or (b) if such Transfer involves a pledge,

mortgage, encumbrance, security interest, consensual lien or hypothecation, the

party in whose favor such interest is created enters into an agreement with GED

providing that for so long as GED performs in accordance with the terms of this

Agreement, such party shall recognize the rights of GED and take no action to

disturb the interests of GED hereunder, in each case in form and substance

satisfactory to GED; or (c) if such Transfer involves a sale, assignment,

transfer or divestment of any of HRI’s interest hereunder, in each case in form

and substance satisfactory to GED, the purchaser, assignee, transferee or

recipient of such interest enters into an agreement with GED providing that

such assignee shall take no action which would interfere with the rights of GED

hereunder.  A consent of GED to any one

Transfer shall not be deemed a consent to or waiver of GED’s right to condition

any future Transfer upon GED’s consent to the same.

 

9.2          Sale, Transfers,

Mortgages and Liens by GED. 

GED shall not Transfer GED’s rights hereunder, in whole or in part,

without HRI’s prior written consent (which consent HRI may not unreasonably

withhold) and any purported Transfer by GED, without the prior consent of HRI,

shall be null and void and without legal effect.  A consent of HRI to any one Transfer shall not be deemed a

consent to or waiver of HRI’s right to condition any future Transfer upon HRI’s

consent to the same.

 

23

 

ARTICLE 10

DAMAGE, CONDEMNATION OR IMPOSSIBILITY

 

10.1        Generally.  If, during the term of this Agreement, the

Entertainment Center or the Related Improvements are damaged or destroyed, in

whole or in part, by fire, war, or other casualty, or by an Act of God, or

taken by condemnation or sold under threat of condemnation, or if the operation

of Video Lottery Machines at the Entertainment Center is prohibited as a result

of legislation (including failure to extend or reenact the Act) or decision of

a court of competent jurisdiction, GED shall have the right either:  To terminate this Agreement or, in the

context of a casualty or condemnation, to utilize or cause HRI to utilize any

insurance for condemnation proceeds to restore or replace the Entertainment

Center and Related Improvements and to reopen the operations of the same.  If GED elects to reconstruct the

Entertainment Center and if the insurance proceeds or condemnation awards are

insufficient to reconstruct the Entertainment Center and Related Improvements,

GED may, in GED’s sole discretion, supply such additional funds as are

necessary to reconstruct the Entertainment Center and Related Improvements as

provided in the Lease/Leaseback Agreement. 

If the insurance proceeds are not used to repair the Entertainment

Center, HRI and GED shall jointly adjust and settle any and all claims for such

insurance proceeds or condemnation awards, and such proceeds or awards shall be

applied first to resolve all obligations under the Lease/Leaseback, second, to

pay any accrued but unpaid Management Fees; third, to repay any other monies

extended by, or payable to, GED pursuant to this Agreement; fourth to repay any

other loans obtained by GED in connection with the Entertainment Center; and,

fifth, to repay any applicable termination fee to GED.  Any remaining amounts shall be paid over to

HRI.

 

If, within one (1) year after a period of

cessation of operation of Video Lottery Machines at the Entertainment Center

pursuant to Section 10.1 or a default by HRI, the re-commencement of operation

of Video Lottery Machines becomes possible, the period of such cessation shall

not be deemed to have been part of the Term and the date of expiration of the

Term shall be extended by the number of days of such cessation period.

 

10.2        Release

and Forgiveness.  Until all amounts due to GED under the

Lease/Leaseback are repaid in full, GED shall have the right to determine

whether and to what extent the Entertainment Center is economically viable and

the highest and best use of the Entertainment Center.  In order to maintain economic viability of the Entertainment

Center, GED shall have the right, with the prior consent of HRI (which consent

shall not be unreasonably withheld) and subject to the terms of the DSF/HRI

Lease and the terms of the Lease/Leaseback, to determine the size and scope of

(i) the Entertainment Center and (ii) the business conducted by or on

any portion of the Entertainment Center. 

In the event GED reasonably determines that all or any portion of the

Entertainment Center is

 

24

 

not

economically viable or cannot otherwise determine a highest and best use of the

Entertainment Center, GED may, upon forty-five (45) days prior written notice

to HRI, terminate GED’s prospective obligations under this Agreement first

accruing after the effective date of such termination.

 

ARTICLE 11

TRADE NAMES, MARKS AND CONFIDENTIAL INFORMATION

 

11.1        Project Name. 

The Entertainment Center shall be operated under the name Delaware State

Fair Entertainment Center or such other business name as the parties may agree

(the “Enterprise Name”).

 

11.2        Trade Names, Trade

Marks and Service Marks.  Prior to the Commencement Date, the parties shall determine the

trade names, trade marks and service marks (“the “Marks”) to be used in

connection with the operation of the Entertainment Center and from time to time

during the Term, GED agrees to erect and install, and HRI agrees to allow or

cause others to allow, GED, subject to HRI’s consent which shall not be

unreasonably withheld, to install, in accordance with local codes and

regulations, all signs GED deems necessary in, on or about the Property

(including, without limitation, signs bearing one or more of the Marks) to

facilitate the operation of the Entertainment Center and Related

Improvements.  The costs of purchasing,

leasing, transporting, constructing, maintaining and installing any such signs

and systems shall constitute an Operating Expense.  To the extent the Marks are not GED Marks (as determined pursuant

to the terms of Section 11.3), ownership of the Marks shall, for all purposes,

belong exclusively to HRI.

 

11.3        GED Marks.  HRI agrees, subject to HRI’s ownership

rights in the Marks referenced in Section 11.2, to recognize the exclusive

ownership of GED or its Affiliates in and to all of GED’s or such Affiliates’

respective service marks, trademarks, copyrights, trade names, patents or

similar rights or registrations now or hereafter held or applied for in

connection therewith (collectively, the “GED Marks”).  HRI hereby disclaims any right or interest in the GED Marks

regardless of any legal protection afforded thereto and acknowledges that the

GED Marks may not be used in connection with the Entertainment Center without

the prior consent of GED and that GED shall have sole discretion to determine

which of GED Marks shall be so used. 

HRI covenants that, in the event of termination, cancellation or expiration

of this Agreement, whether as a result of a default by GED or otherwise, HRI

shall not hold itself out as, or continue operation of the Entertainment Center

as a facility managed by GED nor shall HRI utilize any GED Marks or any variant

thereof in the operation of the Entertainment Center.  HRI further agrees that GED may, on reasonable terms established

by HRI, thereafter enter the GED Premises and remove all signs, furnishings,

printed material, emblems, slogans or other

 

25

 

distinguishing

characteristics which are now or hereafter may be connected or identified with

GED or which carry any GED Mark.  HRI

further agrees that HRI shall not, without the prior written consent of GED,

use the GED Marks or GED name or any variation thereof, directly or indirect,

in connection with (a) a private or public sale of securities or other

comparable means of financing, or (b) press releases or other public

communications.

 

11.4        Confidential

Information.   HRI

and GED each agree that any information received concerning the other party

hereto during the performance of this Agreement, regarding such other party’s

organization, financial matters, marketing plans or other information of a

propriety nature, shall be treated by both parties in full confidence and shall

not be disclosed to any third party other than the Delaware State Lottery

Commission, any other gaming commission which has jurisdiction over either

party, the Securities and Exchange Commission, the NASD or as otherwise

expressly required by the laws or regulations of any legal authority having

jurisdiction, direct or indirect, over any party hereto.  HRI acknowledges that certain of GED’s

Affiliates are publicly traded companies, that certain gaming licenses are

currently issued to and held by GED or its Affiliates, and that GED or its

Affiliates may, in the future, apply for additional gaming licenses.  Accordingly, GED is subject to certain laws

or regulations, which may require GED to disclose private or otherwise

confidential information about HRI or the operations of the Entertainment

Center.  HRI hereby consents to such

disclosure as long as the same, in each instance, is approved, in advance and

in writing, by HRI, the Delaware State Lottery Commission and every

governmental authority having jurisdiction over HRI in the context of HRI

operations with respect to which disclosure by GED is proposed.  HRI further agrees to refrain from any

action which may affect the licenses issued to GED or its Affiliates by

jurisdictions other than Delaware.

 

11.5        Proprietary

Information of GED.  HRI agrees that GED has the sole and

exclusive right, title and ownership to (i) certain proprietary

information, techniques and methods of administration, management and operation

of gaming enterprises; (ii) certain proprietary information, techniques

and methods of training employees; and (iii) certain proprietary business

plans, projections and marketing, advertising and promotion plans, strategies,

and systems, all of which will or have been developed and/or acquired through

the expenditure of time, money and effort and which GED and its Affiliates

maintain as confidential and as a trade secret(s) (collectively, the

“Proprietary Information”).  HRI shall

maintain the confidentiality of such Proprietary Information and, upon

termination of this Agreement, shall return the same to GED (including, without

limitation, documents, notes, memoranda, lists, computer programs and any

summaries of such Proprietary Information) to the extent the same then remains

in HRI’s possession, custody or control.

 

26

 

11.6        Employment Solicitation Restriction

Upon Termination.   HRI

agrees that HRI, without GED’s prior written approval, shall not solicit at any

time during the Term of this Agreement the employment of GED’s employees or any

individuals employed at the Entertainment Center.  HRI further agrees, absent a GED default, that HRI shall not

employ GED’s management personnel within twelve (12) months immediately

following expiration of this Agreement.

 

ARTICLE 12

REPRESENTATIONS AND WARRANTIES

 

12.1        Representations and Warranties of

HRI.  As an inducement to GED to execute this

Agreement, HRI represents, warrants and covenants to GED the truth and accuracy

of the matters set forth in this Section 12.1.

 

(a)           Due

Organization.  HRI is duly formed and

validly existing in good standing as a corporation in the State of Delaware.

 

(b)           Authority.  HRI has full power and authority under its

Certificate of Incorporation, by-laws, the Act or otherwise to execute, deliver

and perform HRI’s obligations the Transaction Documents and HRI’s execution of

the same has been duly authorized.

 

(c)           Licenses,

Permits and Authorizations.  To the best

of HRI’s knowledge and belief, all certificates, permits, licenses, approvals

and other authorizations of any other government bodies or authorities

(including all permits, licenses and approvals required by the Gaming

Regulations) currently available to HRI and necessary for HRI’s execution,

delivery and performance of this Agreement or any of the other Transaction

Documents have been obtained and are in full force and effect.  HRI further agrees that HRI shall use best

efforts to obtain any and all of the foregoing not currently available to HRI

but necessary to fulfill HRI’s obligations under the Transaction Documents.

 

(d)           No

Conflict.  To the best of HRI’s

knowledge and belief, the execution, delivery and performance of this Agreement

will not result in a material breach of or constitute a default under any

mortgage, deed of trust, lease, loan or credit agreement, or any other

agreement to which HRI is a party or by which HRI or any of HRI’s assets may be

bound or affected, nor will the execution of, delivery of and performance of

this Agreement and the other Transaction Documents conflict with, or result in

a material breach of, any present order, rule or regulation applicable to HRI.

 

(e)           Title

to Property.  HRI holds good and

marketable leasehold title to the Property, free and clear of all liens, claims

and encumbrances.

 

27

 

(f)            Good

Standing.  HRI  is not in material violation of its Certificate of

Incorporation, bylaws or other organization documents and, to the best of HRI’s knowledge and belief, is

not in default under or in breach of, or know of the occurrence of any event

which, with the giving of notice or the lapse of time or both, would constitute

a default under or breach of, any term or condition of any agreement or

instrument to which HRI is a party or by which any HRI assets are bound.

 

(g)           Litigation.  Except as otherwise disclosed to GED in

writing, there are no judgments filed, or actions, suits, investigations or

proceedings pending or, to the knowledge of HRI, threatened, against or

affecting HRI, at law or in equity, which would have a material adverse effect

on the business, assets, financial condition, of HRI (including, without

limitation, HRI’s operation of the Entertainment Center).

 

(h)           Violations. 

HRI has no knowledge of any violations or notices of violations of any

federal or state law or municipal ordinance or order or requirement of the

state of Delaware or any municipal or department or other governmental

authority having, or claiming to have jurisdiction over the GED Premises which

in any way relate to or affect the GED Premises and, to the best of HRI’s

knowledge, HRI is in compliance with all Gaming Regulations now in effect.

 

(i)            Hazardous Wastes. Except as otherwise

disclosed to GED in writing: (i) In respect of the GED Premises, HRI has

neither used nor permitted the use of, and shall not use or permit the use of,

whether directly or through contractors, agents or tenants and to the best of

HRI’s knowledge, the GED Premises have not at any time been used for

generating, transporting, treating, storing, manufacturing, emitting, or

disposing of any dangerous, toxic or hazardous pollutants, chemicals, wastes or

substances as defined in any Environment Law (“Hazardous Materials”).  (ii) Neither HRI nor the GED Premises

has been the subject of any investigation or report, which in any way pertain

to Hazardous Materials.  (iii) In

connection with the proposed Entertainment Center, HRI, to the best of HRI’s

knowledge, has not violated nor is currently violating any Environmental Law

and the GED Premises are not listed in the United States Environmental

Protection Agency’s National Priorities List of Hazardous Waste Sites nor any

other list, schedule, log, inventory or record of Hazardous Materials or

hazardous waste sites, whether maintained by the United States Government or

any state or local agency, nor do the existing improvements on the GED Premises

contain any formaldehyde, urea or asbestos. 

(iv) To the best of HRI’s knowledge and belief, no asbestos or

asbestos-containing materials have been installed, used, incorporated into or

disposed of on the GED Premises in violation of any Environmental Laws or which

in their current state are in violation of any Environmental Laws and no

polychlorinated biphenyls (“PCBs”) are located on the GED Premises in the form

of

 

28

 

electrical

transformers, cooling oils or any other device or form which, in their current

state, are in violation of any Environmental Laws.  (v) To the best of HRI’s knowledge and belief, no

underground storage tanks are presently located or were located on the GED

Premises and subsequently removed or filled, except those tanks which HRI has

disclosed in writing to GED (by size, location, age and substance contained

therein, whether in existence, removed or filled).  (vi) Likewise, to the best of HRI’s knowledge and belief, no

dump, sanitary landfill or gasoline service station is or was located on the

GED Premises nor are the GED Premises located in a 100-year flood plain, as

determined by the Federal Emergency Management Agency (“FEMA”) or the Federal

Insurance Administration (“FIA”).

 

HRI agrees to indemnify and reimburse GED,

its successors and assigns, for any breach of these representations and

warranties and from any loss, damage, expense or cost arising out of or

incurred by GED which is the result of a breach of, misstatement of or

misrepresentation of the above covenants, representations and warranties, or

for any loss, damage, expense or cost sustained as a result of there being

located on the GED Premises any dangerous, toxic or hazardous pollutants,

chemicals, wastes or substances, or any formaldehyde, urea or asbestos,

together with reasonable attorneys’ fees incurred in connection with the

defense of any action against GED arising out of the above.  These covenants, representations, warranties

and indemnities shall be deemed continuing covenants, representations,

warranties and indemnities running with the land for the benefit of GED, and

any successors and assigns of GED notwithstanding the termination of this

Agreement.

 

(j)            DSF/HRI

Lease.  A true and complete copy of the

DSF/HRI Lease is attached hereto as Exhibit “D” and such lease is in

good standing and free from default. 

HRI hereby agrees not to surrender, terminate, alter or amend the

DSF/HRI Lease without the prior written consent of GED.

 

(k)           Authorization

and Enforceability.  This Agreement has

been duly authorized, executed and delivered by HRI and is the legal, valid and

binding obligation of HRI, enforceable against HRI in accordance with the terms

set forth herein, subject to all legal and equitable rights, remedies, and

defenses available to HRI.

 

12.2        Representations and Warranties of

GED.  As an inducement to HRI to execute this

Agreement, GED represents, warrants and covenants to HRI the truth and accuracy

of the matters set forth in this Section 12.2.

 

(a)           Due

Organization.  GED is duly formed and validly existing in

good standing as a limited liability company in the State of Delaware.

 

29

 

(b)           Authority of

GED.  GED has full power and authority

under its Certificate of Formation, Limited Liability Company Agreement and

otherwise to execute, deliver and perform its obligations under this Agreement.

 

(c)           Authorization and

Enforceability.  This Agreement has been

duly authorized, executed and delivered by GED and is the legal, valid and

binding obligation of GED, enforceable against GED in accordance with the terms

set forth herein, subject to all legal and equitable rights, remedies, and

defenses available to GED.

 

(d)           Licenses,

Permits and Authorizations.  To the best

of GED’s knowledge and belief, all certificates, permits, licenses, approvals

and other authorizations which are necessary for the execution, delivery and

performance of this Agreement by GED have been obtained and are in full force

and effect or good faith efforts shall be used to obtain the same as

appropriate.

 

(e)           No

Conflict.  To the best of GED’s knowledge and belief,

execution of, delivery of and performance of this Agreement shall not result in

a breach of or constitute a default under any mortgage, deed of trust, lease,

loan or credit agreement, or any other agreement to which GED is a party or by

which GED may be bound or affected, nor shall the execution of, delivery of and

performance of this Agreement conflict with or result in a breach of any

present order, rule or regulation applicable to GED.

 

(f)            Good

Standing.  GED is not in material

violation of its Certificate of Formation, Limited Liability Company Agreement,

bylaws or other organizational documents and is not in default under or in

breach of, or knows of the occurrence of, any event which, with the giving of

notice or the lapse of time or both, would constitute a default under or breach

of, any term or condition of any agreement or instrument to which GED is a

party or by which GED’s assets is bound or which would have a material adverse

effect upon GED or GED’s assets.

 

ARTICLE 13

ADDITIONAL COVENANTS OF HRI AND GED

 

As an inducement

to the execution of this Agreement and the other Transaction Documents, the

parties hereby covenant and agree that, so long as this Agreement is in force

and effect:

 

13.1        Avoidance of Breach of Representations, Warranties, Etc.

 

(a)           HRI

shall not take or suffer any action which will cause the HRI representations,

warranties, covenants and agreements contained herein or in the other

Transaction Documents to be untrue in any material respect and shall inform GED

of any material change to information previously provided by HRI to GED.

 

30

 

(b)           GED shall not take or suffer any

action which will cause the GED representations, warranties, covenants and

agreements contained herein or in the other Transaction Documents to be untrue

in any material respect and shall inform HRI of any material change to

information previously provided by GED to HRI.

 

13.2        Taxes and Other Liabilities.

 

(a)           To the extent that the funds

originating from the operations of the Entertainment Center and Related

Improvements are within the control of HRI under the terms of this Agreement,

HRI shall pay and discharge, before the same become delinquent and before

penalties accrue thereon, all taxes, assessments and governmental charges upon

or against HRI or the GED Premises or the operation of Video Lottery Machines;

provided however, that taxes and assessments made against the Entertainment

Center or Related Improvements shall be paid or reimbursed as an Operating

Expense.

 

(b)           To the extent that the funds

originating from the operations of the Entertainment Center and Related

Improvements are within the control of GED under the terms of this Agreement,

GED shall pay and discharge, before the same become delinquent and before

penalties accrue thereon, all taxes, assessments and governmental charges upon

or against GED or the GED Premises, the operation of Video Lottery Machines;

provided however, that taxes and assessments made against the Entertainment

Center or Related Improvements shall be paid or reimbursed as an Operating

Expense.

 

13.3        Certain Notices.

 

(a)           HRI shall promptly notify GED of the

occurrence of any event or condition which, if not remedied, could result in a

material adverse change in the financial condition of HRI.  HRI shall furnish to GED as soon as possible

and in any event within seven (7) days after HRI has obtained actual knowledge

of the occurrence of an Event of Default, or an event which with the giving of

notice or lapse of time or both would constitute an Event of Default, which is

continuing on the date of such statement, a statement signed by HRI setting

forth details of such Event of Default or event and the action which HRI has

taken, is taking or proposes to take to correct the same.

 

(b)           GED shall promptly notify HRI of the

occurrence of any event or condition which, if not remedied, could result in a

material adverse change in the financial condition of GED.  GED shall furnish to HRI as soon as possible

and in any event within seven (7) days after GED has obtained actual knowledge

of the occurrence of an Event of Default, or an event which with the giving of

notice or lapse of time or both would constitute an Event of Default, which is

continuing on the date of such statement, a statement signed by GED setting forth

details of such Event of

 

31

 

Default or event and the

action which GED has taken, is taking or proposes to take to correct the same.

 

13.4        Other Agreements.

 

(a)           As reasonably

requested by GED, HRI shall execute, deliver and perform under such additional

agreements, contracts, powers of attorney, permits, licenses and other

documents and instruments and otherwise hereafter participate as reasonably

necessary to facilitate the operation and improvement of the Entertainment

Center and Related Improvements (including, but not limited to, assistance to

GED in obtaining necessary permits).  In

addition, HRI agrees at all times during the term of this Agreement to conduct

harness racing activities in accordance with applicable law so as to permit HRI

to conduct gaming activities under the Act and at all times to comply

materially with all of the provisions of this Agreement and the other

Transaction Documents.

 

(b)         As reasonably requested by HRI, GED

shall execute, deliver and perform under such additional agreements, contracts,

powers of attorney, permits, licenses and other documents and instruments and

otherwise hereafter participate as reasonably necessary to facilitate the

operation and improvement of the Entertainment Center and Related Improvements

(including, but not limited to, assistance to HRI in obtaining necessary

permits).  GED agrees at all times to

comply materially with all of the provisions of this Agreement and the other

Transaction Documents.

 

13.5        Comply with Laws.

 

(a)           HRI shall comply with all applicable

laws, ordinances, orders and regulations and shall deliver to GED copies of,

and comply with, all notices of violations of law, ordinances, orders,

regulations or the like that are issued by, filed by or served by, any

governmental authority having (or claiming to have) jurisdiction over HRI or

the GED Premises.  HRI shall use

reasonable efforts to obtain any necessary licenses and remain licensed and

shall assist GED or such third persons as GED may determine to become licensed

and shall assist GED or such third persons as GED may determine to become

licensed and shall take such other reasonable action as necessary to conduct

gaming on the GED Premises to the fullest extent authorized by Delaware law and

in a manner which will maximize Gross Revenues, and/or Net Operating

Profits.  HRI shall not take any action

which materially interferes with the operation of the Entertainment Center or

Related Improvements or with the conduct of gaming at the Property whether

pursuant to the Act, this Agreement, the other Transaction Documents or

otherwise.

 

(b)           GED shall comply with all applicable

laws, ordinances,  orders and

regulations and shall deliver to HRI copies of, and comply with, all notices of

violations of law, ordinances,

 

32

 

orders,

regulations or the like that are issued by, filed by or served by, any

governmental authority having (or claiming to have) jurisdiction over GED or

the GED Premises.  GED shall use

reasonable efforts to obtain any necessary licenses and remain licensed and

shall assist HRI or such third persons as HRI may determine to become licensed

and shall assist HRI or such third persons as HRI may determine to become

licensed and shall take such other reasonable action as necessary to perform

under the terms of this Agreement to the fullest extent authorized by Delaware

law and in a manner which will maximize Gross Revenues, and/or Net Operating

Profits.  GED shall not take any action

which materially interferes with the operation of the Entertainment Center or

Related Improvements or with the conduct of gaming at the Property whether

pursuant to the Act, this Agreement, the other Transaction Documents or

otherwise.

 

13.6        File Reports.

 

(a)           HRI shall promptly

and timely file any and all filings, reports, certificates and applications and

obtain any and all approvals of governmental agencies which GED reasonably

determines necessary or appropriate for HRI to enter into and perform this

Agreement and the other Transaction Documents.

 

(b)           GED shall promptly

and timely file any and all filings, reports, certificates and applications and

obtain any and all approvals of governmental agencies which HRI reasonably

determines necessary or appropriate for GED to enter into and perform this

Agreement and the other Transaction Documents.

 

13.7        Further Assurances.

 

(a)           HRI shall execute

and deliver from time to time, promptly after any reasonable request therefor

by GED, any and all instruments, agreements and documents necessary and shall

take such other action as GED may, from time to time, reasonably deem necessary

or desirable to accomplish the intent of this Agreement and the other

Transaction Documents.  It is the

understanding and intention of the parties that operation of the Entertainment

Center shall conform to and comply with all applicable gaming statutes in the

State of Delaware, including the Act. 

The parties agree to execute such additional amendments or agreements to

conform to any requirements of Delaware law as GED may determine.  Except as otherwise set forth in the DSF/HRI

Lease and the Sublease and Leaseback Agreement, HRI has made no agreements with

any third party which would adversely affect the operation of the Entertainment

Center.

 

(b)           GED shall execute

and deliver from time to time, promptly after any reasonable request therefor

by HRI, any and all instruments, agreements and documents necessary and shall

take such other action as HRI may, from time to time, reasonably deem

 

33

 

necessary or desirable to accomplish the

intent of this Agreement and the other Transaction Documents.  It is the understanding and intention of the

parties that management of the Entertainment Center shall conform to and comply

with all applicable gaming statutes in the State of Delaware, including the

Act.  The parties agree to execute such

additional amendments or agreements to conform to any requirements of Delaware

law as HRI may determine.  Except as

otherwise set forth in the DSF/HRI Lease and the Sublease and Leaseback

Agreement, GED has made no agreements with any third party which would

adversely affect the operation of the Entertainment Center.

 

13.8        Future Acts.

 

(a)           HRI shall not, without the prior

written consent of the GED, take any action which will or would be likely to

adversely affect the operation of the Entertainment Center, the ability of GED

to perform hereunder and/or GED’s rights under this Agreement or the other

Transaction Documents.  HRI also shall

defend and maintain HRI’s title interest, to the extent thereof (following

final execution of the Transaction Documents) to the GED Premises, the

Entertainment Center and the other Improvements.

 

(b)           GED shall not, without the prior

written consent of the HRI, take any action which will or would be likely to

adversely affect the operation of the Entertainment Center, the ability of HRI

to perform hereunder and/or HRI’s rights under this Agreement or the other

Transaction Documents.  GED also shall

defend and maintain GED’s title interest, to the present extent thereof

(following final execution of the Transaction Documents) to the GED Premises,

the Entertainment Center and the other Improvements.

 

13.9        No Amendments.

 

(a)           HRI shall not knowing consent or

acquiesce in any amendment of any Transaction Document or take any action

affecting the rights or obligations between the parties and shall not act or

agree to knowingly waive or affect any such rights except in each case with the

prior written consent of GED.

 

(b)           GED shall not knowing consent or

acquiesce in any amendment of any Transaction Document or take any action

affecting the rights or obligations between the parties and shall not act or

agree to knowingly waive or affect any such rights except in each case with the

prior written consent of HRI.

 

13.10      No Damage to Property.

 

(a)           HRI shall not willfully or

negligently take any action or fail to take any action, the result of which is

to impair the structural integrity, operating efficiency, economic value or

 

34

 

aesthetic quality of the Entertainment Center

or the Related Improvements.

 

(b)           GED shall not willfully or

negligently take any action or fail to take any action, the result of which is

to impair the structural integrity, operating efficiency, economic value or

aesthetic quality of the Entertainment Center or the Related Improvements.

 

13.11      Notice of Defaults.

 

(a)           HRI shall provide GED with prompt

written notice of any material default or violation of any agreement to which

HRI is a party and as to which HRI has notice, including any mortgage or

security agreement encumbering any real or personal property of HRI.

 

(b)           GED shall provide HRI with prompt

written notice of any material default or violation of any agreement to which

GED is a party and as to which GED has notice, including any mortgage or

security agreement encumbering any real or personal property of GED.

 

13.12      Litigation.

 

(a)           HRI shall provide GED with notice of

any pending, threatened or contemplated action, suit or proceeding before or by

any court or any federal, state or local governmental authority or agency which

may have jurisdiction over HRI, or to which the GED Premises may be subject,

which may result in any material adverse change in the condition (financial or

otherwise), business or prospects of the transactions proposed herein or might

materially adversely affect any of the property or assets to be constructed or

managed in connection with this Agreement.

 

(b)           GED shall provide HRI with notice of

any pending, threatened or contemplated action, suit or proceeding before or by

any court or any federal, state or local governmental authority or agency which

may have jurisdiction over GED, or to which the GED Premises may be subject,

which may result in any material adverse change in the condition (financial or

otherwise), business or prospects of the transactions proposed herein or might

materially adversely affect any of the property or assets to be constructed or

managed in connection with this Agreement.

 

13.13      Records.  GED

shall, in a manner acceptable to HRI and in compliance with the Gaming

Regulations, set up and maintain accurate and complete books, accounts and

records pertaining to the operation, of the Entertainment Center and Related

Improvements.  Such records shall be

kept and maintained according to generally acceptable accounting principles and

practices applied on a basis consistent with prior periods.  HRI or its designated

 

35

 

representatives

shall have access to such books, accounts and records at all reasonable times.

 

ARTICLE 14

OTHER CONDITIONS

 

14.1        The parties each agree to use best

efforts to satisfy the following conditions within the respective time frames

designated:

 

(a)           Respective counsel

for HRI and for GED shall deliver opinion letters, in form and substance

satisfactory to counsel for the recipient party, within sixty (60) days after

the date hereof.

 

(b)           HRI and GED shall

deliver to one another their respective organizational documents within sixty

(60) days after the date hereof.

 

(c)           HRI shall furnish to

GED, within sixty (60) days after the date hereof, evidence satisfactory to GED

that DSF holds good, marketable and insurable fee simple title to the Property

and that HRI holds a good, marketable and insurable leasehold estate to HRI’s

interest in the Property (including proof of the existence of appurtenant

easements to serve the Entertainment Center as GED may require), free of any

lien or encumbrance subject only to such exceptions as may be approved in

writing by GED.

 

(d)           Within thirty (30)

days after the completion of the construction of the Improvements, each party

shall receive evidence satisfactory to such party that the Entertainment Center

and Related Improvements, as well as the intended operation thereof, comply

with applicable zoning ordinances, building codes, environmental laws, Gaming

Regulations, developmental and subdivision regulations, any applicable

restrictive covenants, and other ordinances, laws and regulations.

 

(e)           Within three (3)

months after the date hereof, each party shall have approved the Plans and

received satisfactory evidence that the Plans, including any modifications

thereof, have been approved by all requisite governmental authorities prior to

commencement of any work pursuant thereto and that all such approvals are in

full force and effect.

 

(f)            Each party, within

thirty (30) days after completion of the Improvements and Related Improvements,

shall receive an “as-built” survey, prepared by a registered land surveyor or

engineer, of the Entertainment Center and the Common Areas or such other

satisfactory assurances of title and use of the Entertainment Center, the

Related Improvements and Common Areas as may be acceptable to such party.  All surveys required hereunder shall contain

a certificate in favor of, and be in a form and substance

 

36

 

satisfactory to, each party (the costs of obtaining

such surveys and assurances of title to be an Operating Expense).

 

(g)           Within one hundred twenty (120) days

after the date hereof, each party shall receive satisfactory evidence that all

permits required in order to construct the Improvements within the budget

established by GED shall be available when necessary.

 

(h)           Within thirty (30) days after final

completion of the Improvements and Related Improvements, each party shall have

received satisfactory evidence that all permits, including, without limitation,

occupancy permits, required by any governmental authority to authorize the

occupancy and use of the Improvements and the Related Improvements, as

contemplated by this Agreement, have been issued.

 

(i)            Within thirty (30) days after

completion of the Improvements and Related Improvements, HRI shall receive all

necessary licenses and take all other necessary action to comply with the

Gaming Regulations and to permit the conduct of gaming permitted by the Act to

the fullest extent permitted by law.

 

ARTICLE 15

TERMINATION; DEFAULT; REMEDIES

 

15.1        Termination.

 

(a)           This Agreement may be terminated upon

the mutual written consent of the parties upon such terms and conditions as the

parties may agree in writing.

 

(b)           GED may terminate this Agreement on forty-five

(45) days prior written notice if, in its reasonable opinion, Video Lottery

Machines cannot be operated at the Entertainment Center in a manner which will

provide an acceptable return to GED.  In

the event that GED terminates this Agreement pursuant to this Section 15.1(b),

GED shall remain liable for all expenses related to the operation of the

Entertainment Center and Related Improvements for which GED has committed prior

to the effective date of termination.

 

(c)           For purposes of this Agreement, the

occurrence of any one or more of the following shall constitute a Default or an

Event of Default under this Agreement:

 

(i)            Failure to Pay When

Due.  The failure to pay any sums when due hereunder or under the

other Transaction Documents

except when such failure is the result of the Entertainment Center failing to

generate sufficient Gross Revenues

to make such payment.

 

37

 

(ii)           Breach of

Agreements.  The material breach (and

failure to cure after notice) of any term or condition of this Agreement or any

other Transaction Document.

 

(iii)          Bankruptcy or

Insolvency.  The bankruptcy or

insolvency of either party hereto which involves any of the following:

 

(A)          A party, admits in

writing, such party’s inability to pay its debts when due, or makes an

assignment for the benefit of creditors; or a party hereto, applies for or

consents to the appointment of any receiver, trustee or similar officer for a

party hereto to cover all or any portion of such party’s assets; or a party

hereto institutes (by petition, application, answer, consent or otherwise) any

bankruptcy, insolvency, reorganization, arrangement or readjustment or debts,

dissolution, liquidation or similar proceedings relating to such party under

the laws of any jurisdiction;

 

(B)           If a receiver,

trustee or similar officer is appointed for a party hereto, and for all or any

portion of the assets of such party without the application or consent of the

other party hereto, and such appointment continues undischarged for a period of

fifteen (15) days (whether or not consecutive); or any bankruptcy, insolvency,

reorganization, arrangement, readjustment of debt, dissolution, liquidation or

similar proceedings is instituted (by petition, application or otherwise)

against such debtor party hereto and remains undismissed for a period of

fifteen (15) days (whether or not consecutive); or

 

(C)           If any governmental

authority, or any court takes possession of any substantial part of the

Entertainment Center or Related Improvements or assumes control over, the

affairs or operations of, or a receiver or trustee is appointed over, all or

any substantial part of, or a writ or order of attachment or garnishment is

issued or made against the Entertainment Center or Related Improvements, and

any such writ or order of attachment or garnishment remains undischarged for a

period of fifteen (15) days,

 

(iv)          Representation or

Warranty.  Any representation or

warranty made by a party hereto in connection with this Agreement or any other

Transaction Document is materially false or, although true when made, becomes

materially false.

 

(v)           Injunction.  An order or decree shall be entered in any

court of competent jurisdiction enjoining or restraining the consummation of

the transactions contemplated

 

38

 

by this Agreement or any

other Transaction Document, which order or decree is not vacated within sixty

(60) days after such order is entered.

(vi)          Wrongful Acts.  If any officer, director, employee or agent

of GED, or HRI is convicted of, or commits any act which constitutes (a) fraud,

embezzlement, misappropriation, dishonesty or breach of trust, or (b) a felony

or any action involving moral turpitude, provided however, a breach pursuant to

this Section shall be deemed cured when GED or HRI terminates any such person

within ten (10) days after receipt of notice of the conviction.

 

(vii)         Gaming

Regulations.  HRI shall violate any term

or provision of the Gaming Regulations or the Gaming Regulations are amended,

repealed or are no longer in existence, the effect of which impairs the

continued operation of the Entertainment Center; provided, however, that such

violation shall not be an Event of Default by HRI if such violation is a direct

result of a violation of such Gaming Regulations by GED.

 

(viii)        Litigation.  Any suit shall be filed against either party

which, if adversely determined, could impair the ability of that party to

perform each and every one of such party’s obligations under and by virtue of

this Agreement and the other Transaction Documents.

 

15.2        Notice and Cure Periods.  Except for defaults involving

Events of Default described in Section 15.1(c)(iii), any default is curable and

shall be deemed cured, if the defaulting party cures such default within thirty

(30) days after receipt of notice of default; provided, however, that if a

default cannot reasonably be cured within thirty (30) days, the party alleged

to have defaulted shall have an additional period of thirty (30) days to cure

the default if the party alleged to have defaulted immediately commenced

efforts to cure such default and diligently continued such cure efforts to

completion.  The discontinuance or

correction of a breach shall constitute a cure thereof.  Breach of an obligation to pay money shall

give rise to an Event of Default upon the expiration of any applicable cure

period referenced in this Article 15.

 

15.3        Remedies.

 

(a)           Upon the occurrence of an Event of

Default with respect to HRI, GED, as GED’s exclusive alternative remedies for

breach of this Agreement, may either: 

(i) terminate this Agreement; (ii) petition a court of competent

jurisdiction for an injunction to cause the Owner and/or HRI, as the case may

be, to take or refrain from taking any and all such action as shall be

necessary or appropriate to cure such Event of Default; or (iii)

 

39

 

require HRI to pay to GED, until the earlier

of:  (A) the Outstanding Rental

Preference Payment Balance shall have been repaid in full or (B) fifteen (15)

years after the Commencement Date, any and all net revenues received by HRI

which are in any way related to the Entertainment Center Premises.  For the purposes of this Section, the term

“revenues” shall include, but not be limited to, all rentals, royalties,

licenses or other payments with respect to the use of the Entertainment Center

Premises or any revenues received as a result of a Transfer of any interest in

the Entertainment Center Premises and the term “net revenues” shall mean

revenues net of all expenses directly attributable to revenues.  With respect to the remedies granted by this

Section, HRI hereby acknowledges that GED will, by virtue of the limitation of

liability of HRI hereunder and the limitation of GED’s remedies for an Event of

Default, have insufficient monetary remedies for the breach of covenants and

conditions of HRI contained in this Agreement. 

As a result, HRI hereby acknowledges that GED shall be entitled, if HRI

defaults with respect to HRI’s obligations under this Agreement, to petition

for and receive such injunctive relief as a court of competent jurisdiction

shall deem appropriate.  HRI hereby

further irrevocably agrees, upon the occurrence of an Event of Default

attributable to HRI, to take no such action which shall in any way contest

GED’s right to such injunctive relief.

 

(b)           In the event GED properly terminates

operation of the Entertainment Center in accordance with the terms of this

Agreement, GED shall be entitled to the return of the Furniture, Fixtures and

Equipment (or any replacements thereof by GED during the Term).  Provided, however, HRI shall receive credit

against any Outstanding Rental Preference Balance for the then fair market value

of the Furniture, Fixtures and Equipment returned to GED.  If the parties cannot agree upon the then

fair market value of the Furniture, Fixtures and Equipment, the then fair

market value shall be determined by arbitration as provided for herein and the Furniture,

Fixtures and Equipment shall not be removed from the Entertainment Center

Premises until the then fair market value is so determined.

 

(c)           Subject to the provisions of this

Agreement, all rights and remedies of the parties provided for in this

Agreement are cumulative and shall be in addition to any and all of the rights

and remedies available under any other Transaction Document.  No exercise by either party of any right or

remedy shall in any way constitute a cure or a waiver of any Event of Default

hereunder, or invalidate any action pursuant to any notice of default, or

prejudice such party in the exercise of any other available right or

remedy.  No failure on the part of

either party to exercise, and no delay in exercising, any right or remedy shall

operate as a waiver or otherwise preclude enforcement of any of such party’s

rights or remedies, nor shall any single or partial exercise of any right or

remedy preclude any further exercise thereof or of any other right or

remedy.  An election to pursue specific

performance

 

40

 

of this Agreement or other

equitable remedies or to require payments as set forth in 15.3(a)(iii) above

shall not preclude GED from providing notice of termination pursuant to

Subsection 15.3(a)(i) of this Section.  GED shall in no event be entitled, directly or indirectly, by way

of an action for damages or otherwise, to

obtain a judgment or other lien against the Property (or any portion or

component thereof).

 

(d)           Upon the occurrence

of an Event of Default, GED, may, but shall not be required to perform any

further services under this Agreement. 

In the event GED properly discontinues operation of the Entertainment

Center in accordance with the terms of this Agreement, GED shall not be subject

to any liability of any nature whatsoever relating to the Entertainment

Center.  Each party hereby agrees to

execute all documents and take such other action as the other party may request

to enforce such other party’s rights under this Agreement.

 

(e)           All remedies shall

survive termination of this Agreement.

 

15.4        Conclusion of Term. 

Upon expiration or earlier termination of the Term or the termination of

this Agreement, in addition to other rights under this Agreement:

 

(a)           Transition.  If termination occurs at any time other than

upon the conclusion of its Term, GED shall, within a reasonable period of not

less than sixty (60) days, transition management of the Entertainment Center to

HRI or HRI’s designee.  In addition,

funds in any Bank accounts described in Article VI shall be used

(i) first, to pay all current and accrued Operating Expenses,

(ii) second, to pay amounts then due GED under the Lease/Leaseback,

(iii) third, to pay accrued but unpaid Management Fees; and

(iv) fourth, to pay or reimburse GED for other sums due under this

Agreement or any other Transaction Document.

 

(b)           Undistributed Net

Operating Profits.  With respect to net

Operating Profits which have accrued but have not been distributed under this

Agreement on conclusion of the Term, GED shall receive the same Base Management

Fee and Target Bonus which GED would have received had the distribution

occurred during the Term.

 

ARTICLE 16

ARBITRATION AND ENFORCEMENT

 

16.1        Arbitration. 

All controversies or claims arising out of or relating to this Agreement

or the any other document entered into in connection with the transaction

contemplated herein, whether sounding in contract, tort or otherwise, shall be

adjudicated exclusively by binding arbitration conducted in accordance with the

Commercial Arbitration Rules of the American

 

41

 

Arbitration Association (the

“AAA”) then in effect.  The

arbitration hearing shall take place in Dover, Delaware or such other place as

the parties may agree.  In such an

arbitration proceeding, each party shall appoint an arbitrator within ten (10)

days of receipt of demand for arbitration and the two arbitrators shall

mutually appoint a third arbitrator within ten (10) days of their

appointment.  If either party fails or

refuses to appoint an arbitrator within such ten (10) day period, the

arbitrator appointed by the other party shall be the sole arbitrator.  If the two arbitrators are unable to agree

on the appointment of a third arbitrator within ten (10) days, the third

arbitrator shall be appointed by the AAA. 

All arbitrators appointed pursuant to this Section 16.1 shall be

experienced and knowledgeable in gaming generally.  The decision of a majority of the members of the arbitration

panel (or a single arbitrator, as the case may be due to a default in

appointment) shall be final, binding and unappealable.

 

16.2        Judicial Enforcement of Arbitration.  If

judicial proceedings are brought to compel arbitration or enforce binding

arbitration as set forth in the Commercial Arbitration Rules of the American

Arbitration Association to enforce the obligations of the parties under this

Agreement or the other Transaction Documents, such proceedings shall be brought

in any court of competent jurisdiction with preference for a United States District

Court.  This Agreement may be enforced

as set forth in this Section and in Section 16.1.

 

16.3        Trial by Jury; Venue.  EACH PARTY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY

IN ANY ACTION WITH REGARD TO OR ARISING UNDER THIS AGREEMENT.  IN THE EVENT ANY PARTY COMMENCES ANY ACTION

IN ANOTHER JURISDICTION OR VENUE EXCEPT TO ENFORCE AN ARBITRATION AWARD SUCH

CASE SHALL BE DISMISSED WITH PREJUDICE.

 

16.4        Legal Fees.  Except as otherwise set forth herein, GED and HRI each agree to

pay their respective attorneys’ fees and legal expenses incurred in connection

with negotiation of this Agreement.  The

prevailing party in any litigation or arbitration commenced as a result of this

Agreement or the other Transaction Documents shall be entitled to receive from

the nonprevailing party, as directed by the judge or arbitrator as the case may

be, payment of reasonable legal fees and other expenses incurred by the

prevailing party as a result of such proceeding.

 

ARTICLE 17

INDEMNIFICATION

 

17.1        HRI shall and hereby agrees to,

indemnify and save GED, its legal representatives, members, employees,

successors and assigns harmless from and against any and all claims, fees,

charges, actions, expenses, liabilities, damages or losses whatsoever

including, without limitation, reasonable attorney’s

 

42

 

fees, arising

from any wrongful acts or omissions of HRI or any of the agents or

representatives of HRI in connection with this Agreement.  The indemnities and obligations herein

provided shall continue in full force and effect notwithstanding the

termination of this Agreement.  HRI

shall give GED prompt written notice of any matter with respect to which GED is

entitled to indemnification hereunder.

 

17.2        GED

shall, and hereby agrees to, indemnify and save HRI, its legal representatives,

successors and assigns harmless from and against any and all claims, fees,

charges, actions, expenses, liabilities, damages or losses whatsoever

including, without limitation, reasonable attorney’s fees, arising from any

wrongful acts or omissions of GED or any of GED’s agents or representatives in

connection with this Agreement.  The

indemnities and obligations herein provided shall continue in full force and

effect notwithstanding the termination of this Agreement.  GED shall give HRI prompt written notice of

any matter with respect to which HRI is entitled to indemnification hereunder.

 

ARTICLE 18

MISCELLANEOUS

 

18.1        Successors and Assigns.

 

(a)           GED may assign this

Agreement and/or the other Transaction Documents or any of GED’s rights

hereunder or thereunder without the prior consent of HRI, but in all events, no

such assignment shall relieve GED or the Guarantors hereinafter identified and

signatory to this Agreement of liability for performance of GED’s obligations

hereunder or thereunder unless HRI otherwise agrees in writing.  Subject to the foregoing, the terms and

provisions of this Agreement and all of the other Transaction Documents shall

be binding upon and inure to the benefit of GED and HRI as well as their

respective permitted successors and assigns.

 

(b)           “Assign” for

purposes of this Section 18.1, shall mean any sale, pledge, assignment,

mortgage, encumbrance, security interest, consensual lien, hypothecation,

transfer or divestiture, the effect of which is to grant to another an interest

in GED’s rights (or attempt to transfer GED’s rights) under this Agreement or

to impose upon another (or attempt to impose upon another) GED’s obligations

hereunder, either directly or indirectly, and shall include, without

limitation, any change in the identify of GED by way of merger or otherwise.

 

18.2        Entire Agreement. 

This Agreement and the other Transaction

Documents, constitute the entire agreement between the parties and there are no

other representations, warranties or agreements except as herein provided.

 

43

 

18.3        Amendments.  This Agreement may not be amended or modified

in any manner nor may any provision be waived without the written consent of

both parties hereto.

 

18.4        Notices.  Any notice, request, demand or other

communication permitted or required hereunder shall be in writing, shall be

given to all other parties hereto, and shall be deemed duly given (i) on

the day of delivery if hand delivered by courier or otherwise, (ii) on the

second business day after mailing if sent via overnight mail, or

(iii) three business days after the post marked date if mailed postage

prepaid, certified or registered, addressed to the address of a party set forth

below.

 

Rejection

or other refusal to accept or the inability to deliver because of changed

address for which no notice was given shall be deemed to be receipt of the

notice sent.  By giving to the other

parties hereto at least ten (10) days’ notice thereof, any party hereto shall

have the right from time to time and at any time during the term of this

Agreement to change such party’s address and shall have the right to specify as

such party’s address any other address in the United States of America.

 

Each

notice to GED shall be address as follows:

 

Gaming

Entertainment (Delaware), L.L.C.

55

Technology Way

West

Greenwich, RI 02817

Attn:  Chairman, GTECH Corporation

 

With

copies to:

 

Mary

V.  Brennan, Esq.

Gaming

Entertainment (Delaware), L.L.C.

74900

Highway 111, Suite 125

Indian

Wells, California 92210; and

 

Office

of General Counsel

GTECH

Corporation

55

Technology Way

West

Greenwich, RI 02817

 

Each

notice to GTECH, Guarantor, shall be addressed as follows:

 

GTECH

Corporation

55

Technology Way

West

Greenwich, RI 02817

Attn:  Chairman, GTECH Corporation

 

44

 

With

copies to:

 

Mary

V.  Brennan, Esq.

Gaming

Entertainment (Delaware), L.L.C.

74900

Highway 111, Suite 125

Indian

Wells, California 92210; and

 

Office

of General Counsel

GTECH

Corporation

55

Technology Way

West

Greenwich, RI 02817

 

Each

notice to FHR, Guarantor, shall be addressed as follows:

 

Full

House Resorts

c/o

Deadwood Gulch Resort

Highway

85 South

Deadwood

Gulch, SD 57732

 

With

a copy to;

 

Paul

Berkowitz, Esq.

Greenberg,

Traurig

1221

Brickell Ave.

Miami,

FL 33131

 

Each

notice to HRI shall be addressed as follows:

 

Harrington

Raceway, Inc.

P.O.

Box 28

Harrington,

DE 19952

Attn:  President

 

With

a copy to:

 

Craig

A.  Karsnitz, Esquire

E.

Scott Bradley, Esquire

110

W. Pine Street

P.O.

Box 594

Georgetown,

DE 19947

 

18.5        Expenses.  If the Related Improvements extend beyond the

foot print of the Entertainment Center, HRI agrees to pay, or otherwise to

provide for payment, to GED a pro rata portion of the cost of such Related

Improvements to the extent HRI or other tenants of the Property (other than

tenants acting under or through GED) will benefit from such improvements.  To the extent GED or the Entertainment

Center provides services or programs which the DSF, HRI and/or other tenants of

the Property (other than tenants acting under or through GED) will benefit, HRI

agrees to pay, or to cause others to reimburse the operations of the

Entertainment Center a portion of such expenditure commensurate with the extent

to which

 

45

 

DSF, HRI or such other tenants

can reasonably be expected to benefit from such services or programs.  To the extent that GED has and will continue

(with the prior written approval of HRI) to advance sums prior to the

Commencement Date, including, without limitation, a $150,000 advance for

operating costs not related to the Entertainment Center and $25,000 to be

advanced for legal services related to structuring the transactions set forth

herein, HRI agrees that all such expenditures and/or disbursements shall be

Operating Expenses or shall be considered an advance under Section 3.5 of the

SubLease and Leaseback Agreement.

 

18.6        Waiver.  Waiver

of any matter shall not be deemed a waiver of the same or any other matter on

any future occasion.  No failure or

delay on the part of any party in the exercise of any power, right or privilege

hereunder shall operate as a waiver thereof, nor shall any single or partial

exercise of any such power, right or privilege preclude other or further

exercise thereof or of any other rights, powers or privileges.

 

18.7        Severability.  The

provisions of this Agreement are severable. 

If any provision in this Agreement is found invalid, illegal or unenforceable,

such provision shall be severable from the remainder of this Agreement and the

validity, legality and enforceability of the remaining provisions shall not in

anyway be affected or impaired thereby. 

Any unenforceable provisions may be reformed in accordance with the

dispute resolution provisions set forth in this Agreement.

 

18.8        Construction Generally.  This Agreement is a

long-term commercial agreement between sophisticated parties which has been

entered into by the parties in reliance upon the economic and legal bargains

contained herein.  This Agreement shall

be interpreted and construed in a fair and impartial manner without regard to

which party prepared the instruments, the relative bargaining powers of the

parties or the domicile of any party.

 

18.9        Titles and Headings.  The various headings used in this

Agreement are inserted for convenience only and shall not in any way affect the

meaning or construction of this Agreement or any provision hereof.

 

18.10      Choice of Law.  This

Agreement and the rights and obligations of the parties hereto shall be

governed by the internal laws of the State of Delaware.

 

18.11      Counterparts.  This

Agreement may be executed in any number of counterparts, each of which shall be

deemed an original, but all such counterparts together shall constitute but one

agreement.

 

18.12      Time is of the Essence.  Time is of the

essence of this Agreement and each and very provision hereof.

 

46

 

18.13      No Partnership. 

No term of

this Agreement is intended, nor shall the same be deemed or construed, to create a partnership between or among

the Operator or the Owner, to make them joint venturers, nor to make GED in any

way responsible for the debts or losses of the Operator and/or the Owner.

 

18.14      Termination.  Upon termination of this Agreement, whether

resulting from expiration of the Term or otherwise, the only financial

obligation of HRI to GED shall be that obligation, if any, arising pursuant to

Section 15.3(a) of this Agreement; and, such termination shall not terminate

the respective obligations of the parties pursuant to Article 17 hereof, which

shall survive until all such obligations are satisfied.

 

18.15     Recording.  The

parties hereto agree that neither party shall record this Agreement or, without

the prior written consent of the other party hereto, any other document

referencing this Agreement, in the real property records where the Property is

located and, further agree that, if either party (“the recording party”) shall do

so, the other party hereto (“the other party”) shall be entitled, at any time

while this Agreement or such other document remains of record, to terminate

this Agreement effective on or after such recordation date (as established by

the other party in such other party’s notice to the recording party effected in

accordance with Section 18.4).

 

18.16     Exhibits.  All

Exhibits identified in this Agreement are incorporated herein by reference.

 

18.17     Curative Moneys Expended.  Under the DSF/GED Nondisturbance Agreement, GED has the right, but not

the obligation, to cure defaults by HRI under the DSF/HRI Lease.  Any moneys expended by GED with respect to

such curative actions shall be offset and deducted from any payment obligations

of GED to HRI under Section 6.9 hereof; provided, however, that any amounts

deducted by GED pursuant to Section 5.16 of the Sublease may not be again

deducted pursuant to this provision.

 

ARTICLE 19

GUARANTY

 

19.1        Guarantors

hereby guarantee, jointly and severally, the payment of all amounts or payments

due HRI under or pursuant to this Agreement and all other provisions of this

instrument, together with all financial obligations of GED under or pursuant to

the Sublease and Leaseback, and the performance of every covenant on the part

of GED to be performed under the terms of the Sublease and Leaseback as well as

every covenant on the part of GED to be performed under the terms of this

Agreement.

 

47

 

IN WITNESS WHEREOF, HRI and GED, and the undersigned Guarantors

have caused this Agreement to be executed and delivered under their respective

seals as of the date first above written.

 

	

  ATTEST:

  	

   

  	

  HARRINGTON RACEWAY, INC.

  
	

   

  	

   

  	

   

  
	

  /s/ Dennis

  S. Hazzard

  	

   

  	

  BY:

  	

  /s/ Jack

  Walls

  	

   (SEAL)

  
	

  Secretary

  	

   

  
	

   

  	

   

  
	

   

  	

   

  	

  GAMING ENTERTAINMENT (DELAWARE),

  L.L.C., by its Members, as follows:

  
	

   

  	

   

  
	

   

  	

   

  
	

  ATTEST:

  	

   

  	

  GTECH GAMING SUBSIDIARY

  2 CORPORATION

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ Michael

  C. Lightman

  	

   

  	

  BY:

  	

  /s/ John E.

  Taylor

  	

   (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  John E.

  Taylor

  
	

   

  	

   

  	

  Title:

  	

  Assistant to

  the Chairman

  
	

   

  	

   

  
	

   

  	

   

  
	

  ATTEST:

  	

   

  	

  FULL HOUSE SUBSIDIARY, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ William

  P. McComas

  	

   

  	

  BY:

  	

  /s/ Allen

  Paulson

  	

   (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Allen

  Paulson

  
	

   

  	

   

  	

  Title:

  	

  Chairman

  
	

   

  	

   

  
	

   

  	

   

  
	

  ATTEST:

  	

   

  	

  FULL HOUSE JOINT VENTURE SUBSIDIARY,

  INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ William

  P. McComas

  	

   

  	

  BY:

  	

  /s/ Allen

  Paulson

  	

   (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Allen

  Paulson

  
	

   

  	

   

  	

  Title:

  	

  Chairman

  
						

 

[JOINDER PAGE FOLLOWS]

 

	

  ATTEST:

  	

   

  	

  GTECH GAMING SUBSIDIARY

  1 CORPORATION

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ Michael

  C. Lightman

  	

   

  	

  BY:

  	

  /s/ John E.

  Taylor

  	

   (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  John E.

  Taylor

  
	

   

  	

   

  	

  Title:

  	

  Assistant to

  the Chairman

  
						

 

COUNTERPART 2 OF 8 COUNTERPARTS

 

48

 

Joinder

 

The

undersigned, in consideration of the benefits accruing to each of the same by

reason of the transaction documented by this Agreement (the receipt and

sufficiency of such consideration being hereby acknowledged by each of the

undersigned), join in the execution of this Agreement to confirm the respective

obligations of the undersigned, as guarantors, pursuant to the terms of Article

19 hereof.

 

GUARANTORS

 

	

  ATTEST:

  	

   

  	

  FULL HOUSE RESORTS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ William

  P McComas

  	

   

  	

  BY:

  	

  /s/ Allen

  Paulson

  	

   (SEAL)

  
	

   

  	

   

  	

  Name:

  	

  Allen

  Paulson

  
	

   

  	

   

  	

  Title:

  	

  Chairman

  
						

 

	

  ATTEST:

  	

   

  	

  GTECH CORPORATION

  
	

   

  	

   

  
	

   

  	

   

  
	

  /s/ Michael

  C. Lightman

  	

   

  	

  BY:

  	

  /s/ John E.

  Taylor

  	

   (SEAL)

  
	

   

  	

   

  	

  Name: 

  	

  John E.

  Taylor

  
	

   

  	

   

  	

  Title: 

  	

  Assistant to

  the Chairman

  
						

 

COUNTERPART 2 OF 8 COUNTERPARTS

 

49Exhibit 10.58

 

AMENDMENT TO MANAGEMENT AGREEMENT

BY AND BETWEEN

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

AND HARRINGTON RACEWAY, INC.

 

This

Amendment is entered into as of March 18, 1998.

 

For

valuable consideration, the receipt and sufficiency of which is hereby

acknowledged, Gaming Entertainment (Delaware), L.L.C. (“GED”) and Harrington

Raceway, Inc. (“HRI”), hereby modify, as set forth below that certain

Management Agreement by and between GED and HRI dated January 31, 1996 (the

“Management Agreement”).

 

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.

 

The

parties agree that the Management Agreement shall be modified as follows:

 

ARTICLE I

DEFINITIONS

 

There

shall be added to Article I new definitions, reading as follows:

 

“Grandstand Facility” means that certain multi-level structure

located on the premises adjacent to the Entertainment Center, as depicted by

Exhibit “A” attached hereto and incorporated herein by reference, and improved

to include (by way of example, and not limitation) a kitchen and buffet

facility, a simulcast facility, and operational facilities related to the

foregoing.

 

The definition of “Gross

Revenues is deleted in its entirety, and the following definition is

substituted therefore:

 

“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.

 

 

For the time period

commencing April 1, 1998, and continuing for the remainder of the Term, “Gross

Revenues” shall include 25% of the “Cost” of promotional allowances and/or

complimentary goods or services provided in connection with the Entertainment

Center and the Related Improvements (collectively, “Comps”).  The “Cost” of Comps shall be calculated as

the actual cost of the food, beverages and/or merchandise provided on a

complimentary basis, plus a “Proportionate Amount” of the salary and/or wages,

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

with providing Comps.  The

“Proportionate Amount” shall be determined by a fraction, the numerator of

which shall be the retail price of the Comps and the denominator of which shall

be retail price of total food, beverage, and/or merchandise sales during the

same time period.  The “Cost of Comps

shall not include indirect, overhead or administrative costs, except as

provided above, nor the price of complimentary admission tickets with respect

to entertainment shows occurring on the GED Premises.

 

ARTICLE 4

DUTY AND AUTHORITY OF GED

 

The existing Section

4.l(g)(ii) shall be deleted in its entirety, and a new Section 4.1(g)(ii)

substituted therefore, as follows:

 

(ii)           Repairs, decorating costs and

alterations as GED may determine are reasonable (subject to such parameters as

are hereafter established by the parties) in connection with the operation,

management and maintenance of the Entertainment Center and Related

Improvements; provided specifically,

that after March 18, 1998, GED

is authorized to utilize up to Five Hundred Thousand and no/100 Dollars

($500,000.00) from the Disbursement Accounts to fund (i) placement of one

hundred twenty-two (122) new Video Lottery Terminals in the former

Entertainment Center simulcast room, and (ii) construction of increased seating

capacity within the Midway Buffet restaurant.

 

ARTICLE 7

MANAGEMENT FEES

 

There shall be added to the

Management Agreement new Sections 7.3A and 7.3B, reading as follows:

 

7.3A Reduction of Management Fees/Target Bonus. 

Notwithstanding anything to the contrary contained within this Article

7, Management Fees and Target Bonus due GED in each of the five (5) succeeding

one-year periods commencing June 1, 1998, shall be reduced by an amount which

is the lesser of (i) the total amount of Management Fees and Target Bonus

(in the aggregate) due GED for that one-year period, or (ii) One Hundred

Eighty Thousand and no/100 Dollars ($180,000.00). The aggregate of the

Management Fees and Target Bonus for each such year shall be reduced, on a

monthly basis, in the amount of Fifteen Thousand and no/100 Dollars

($15,000.00) per each calendar month during the June 1 fiscal year under

consideration (first offsetting Management Fees, to the full extent thereof as

the case may be, and then offsetting Target Bonus); provided, however, that at

the conclusion of such fiscal year there shall be a reconciliation between the

aggregate monthly offset for such fiscal year thus realized by HRI against the

aggregate Management Fees and Target Bonus due GED for such period to ensure

that the reduction for that

 

2

 

fiscal year totals no more

than the reduction computed in accordance with the terms set forth in the first

sentence of this Section 7.3A and, further, that the aggregate annual Management

Fees and Target Bonus for any one (1) fiscal year shall never be reduced below

zero (-0-).

 

7.3B Management Fees and Target Bonus not Calculated Upon

Simulcast and Grandstand Facility Operations. 

Notwithstanding anything to the contrary contained within this

Article 7 (and in lieu of any “Prepayment Discount” to which HRI otherwise

may be entitled under the terms of that certain January 31, 1996 Sublease and

Leaseback Agreement by and among HRI, GED, Full House Resorts, Inc. and GTECH

Gaming Subsidiary 1 Corporation (now known as Dreamport, Inc.), as that term is

defined by and applied pursuant to the terms of the aforesaid agreement),

commencing June 1, 1998, revenues generated by activities (other than

gaming activities, defined to mean activities specifically, as opposed to

tangentially, regulated by the Delaware Gaming Commission) not conducted

exclusively within the confines of the Entertainment Center (such activities

being hereinafter referred to as “excluded activities”) shall not be considered

in calculating GED’s Management Fees and/or Target Bonus.  Excluded activities shall include, by way of

example and not limitation, simulcast operations and food and beverage sales

occurring within the Grandstand Facility, and, except as hereinafter provided,

all other non-gaming activities conducted beyond the confines of the

Entertainment Center.  Likewise, the

costs of operations undertaken to support excluded activities (such as those

support operations directly related to the operation of the Grandstand

Facility) shall not be considered Operating Expenses for the purpose of

calculating the Net Operating Profit from which GED’s Target Bonus is

calculated.  The terms of this Section

to the contrary notwithstanding: 

(i) any activity conducted outside of the confines of the

Entertainment Center but undertaken primarily to promote the business conducted

from time to time within the confines of the Entertainment Center (e.g., an

event conducted in any of the “special” purpose buildings situated on the larger

premises of which the GED Premises are a part and having as a purpose the

promotion of the Entertainment Center or otherwise related to activities

conducted within the confines of the Entertainment Center) shall not, if HRI so

consents in writing and, in each instance, prior to such activity first

occurring, constitute an “excluded activity” for purposes of this Section and

both the revenues realized from such related “off-site” activities and the

costs of operations to support such activities shall be considered in

calculating GED’s Management Fees and Target Bonus; and (ii) GED agrees

that GED shall make no claim against HRI for the Prepayment Discount already

credited to HRI in the amount of $93,584.91.

 

The existing 7.6(a) shall be

deleted in its entirety, and a new Section 7.6(a) substituted therefore, as

follows:

 

7.6 Start-Up Advances

 

(a) All initial Soft Costs

associated with planning, constructing and developing the Entertainment Center

and Related Improvements, including all costs and expenses incurred by GED in

furtherance thereof, shall be charged as a cost of developing the Entertainment

Center; provided, however, that all costs associated with

(i) constructing, including managing the construction of, the Grandstand

Facility, (ii) moving simulcast activities from the Entertainment Center

into the Grandstand Facility, and (iii) making

 

3

 

improvements to the

restaurant located within the Grandstand Facility shall not be Soft Costs and

shall be borne solely by HRI.

 

ARTICLE 8

INSURANCE

 

The existing Section 8.2 shall be deleted in

its entirety, and a new Section 8.2 substituted therefore, as follows:

 

8.2 Construction Period. 

During the course of new construction or substantial remodeling of the

GED Premises (excepting construction or remodeling related to the Grandstand

Facility), GED shall obtain builders’ risk insurance, on an “all risk” basis

(including collapse) and on a non-reporting form, for the full replacement

value covering the interests of HRI and GED in all work incorporated into the

GED Premises, all material and equipment on or about the GED Premises or

environs, and all new construction and remodeling in respect of the

Entertainment Center and Related Improvements. 

All material and equipment in any off-site storage location intended for

permanent use in the Entertainment Center or the Related Improvements, or

incident to the construction thereof, shall be insured on an “all risk” basis

as soon as the same are delivered to such off-site locations.  The cost of the insurance required pursuant

to this Section shall be an Operating Expense. 

It shall be the responsibility of HRI, rather than the responsibility of

GED, to obtain the insurance required herein as to any matters addressed within

this Section 8.2 which involve construction or remodeling of the Grandstand

Facility.

 

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

under their respective seals on

the       day of August, 1998.

 

	

  HARRINGTON

  RACEWAY, INC.

  	

  GAMING

  ENTERTAINMENT

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

  its Members,

  as follows:

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

   

  
	

  By: 

  	

  /s/ John S. Walls

  	

   

  	

  DREAMPORT,

  INC.

  
	

  Its: 

  	

  President

  	

  (formerly, GTECH Gaming Subsidiary

  Corporation)

  
	

  Date : 

  	

  February 1, 1999

  
	

   

  	

   

  
	

   

  	

  By :

  	

  /s/ John E. Taylor

  	

   

  
	

   

  	

  Its: 

  	

  President & CEO

  
	

   

  	

  Date:

  	

  February 4, 1999

  
	

   

  	

   

  
	

   

  	

  FULL

  HOUSE SUBSIDIARY, INC.

  
	

   

  	

   

  
	

   

  	

  By :

  	

  /s/ Gregg R. Guffria

  	

   

  
	

   

  	

  Its: 

  	

  President

  
	

   

  	

  Date:

  	

  2/2/99

  
						

 

4

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