EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of June 29, 2009 (the “Commencement Date”), by and between Empire Resorts, Inc., a Delaware corporation (the “Company”), and Cliff Ehrlich (the “Executive”, and the Company and the Executive collectively referred to herein as “the Parties”).

WHEREAS, the Company desires to continue to employ the Executive as President and General Manager of Monticello Raceway Management, Inc., a wholly-owned subsidiary of the Company, and to enter into an agreement embodying the terms of such employment (this “Agreement”), and the Executive desires to continue employment with the Company, subject to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises of the Parties contained herein, the Parties, intending to be legally bound, hereby agree as follows:

1.            Term .  The term of employment under this Agreement shall be for the period beginning on the Commencement Date and ending on the third (3 ^rd ) anniversary of the Commencement Date (the “Term”), or such earlier date upon which the Executive’s employment is terminated by either Party in accordance with the provisions of this Agreement.

2.             Employment .

(a)            Position .  As of the Commencement Date, the Executive shall continue to be employed as President and General Manager of Monticello Raceway Management, Inc.  The Executive shall perform all of the duties normally accorded to such position, as reasonably directed by the Company’s Chief Executive Officer.  The Executive shall report to the Company’s Chief Executive Officer.

(b)            Obligations .  The Executive agrees to perform his duties faithfully and devote substantially all of his full business time and attention to the business and affairs of the Company. Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from: (i) serving on the boards of directors of trade associations and/or charitable organizations; (ii) engaging in charitable activities and community affairs; and (iii) managing his personal investments and affairs, provided that the activities described in the preceding clauses (i) through (iii) do not materially interfere with the proper performance of his duties and responsibilities hereunder and do not prevent him from devoting substantially all of his full business time and attention to the affairs of the Company.

3.             Base Salary .  The Company agrees to pay or cause to be paid to the Executive during the Term a base salary at the rate of Two Hundred Twenty-Five Thousand Dollars ($225,000) per year for the first year of the Term which shall increase to Two Hundred Forty Three Thousand Five Hundred Dollars ($243,500) per year on the first anniversary of the Commencement Date and then Two Hundred Fifty Thousand Dollars ($250,000) per year on the second anniversary of the Commencement Date which rate shall remain in effect through the third anniversary of the Commencement Date (unless increased by the Company’s Board of Directors (the “Board”) in its sole discretion) (the base salary in effect shall be referred to herein as, the “Base Salary”).  Such Base Salary shall be payable, less applicable withholdings and deductions, in accordance with the Company’s reasonable and customary payroll practices applicable to its executive officers.

4.            Bonus .  The Executive shall be entitled to participate in any annual bonus plan maintained by the Company for its senior executives on such terms and conditions as may be determined from time to time by the Compensation Committee of the Board.  The payment of any such bonus shall be in the absolute discretion of the Company.

5.            Additional Incentive .

(a)           The Compensation Committee of the Board approved the grant to Executive of an option to purchase 300,000 shares of the Company’s common stock (the “Options”) on April 23, 2009 (the “Grant Date”) pursuant to the Company’s 2005 Equity Incentive Plan (the “Plan”).  The per share exercise price applicable to the Options is $1.11 100% of the Fair Market Value (as defined in the Plan) of a share of the Company’s common stock on the grant date.  The Options vest as follows: 100,000 Options on the grant date, 100,000 Options on the first (1 ^st ) anniversary of the Grant Date, and 100,000 Options on the second (2 ^nd ) anniversary of the Grant Date, subject to earlier vesting as provided herein and in the Plan.  The Options shall expire on the fifth anniversary of the Commencement Date.  Upon the occurrence of a Change in Control (as defined below), the Options shall be deemed fully vested and exercisable.  In the event of any conflict between the terms and provisions of this Section 5 and the Plan, the Plan shall govern.

(b)           For the purposes of this Agreement, “Change in Control” shall have the same meaning as in the Plan.

(c)            Employee Benefits .  The Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to senior level executive officers generally and as may be in effect from time to time, including any medical and health plans and any equity-based incentive programs that may be put into place.  The Executive’s participation in such plans, practices and programs shall be on the same basis and terms as are applicable to senior level executive officers of the Company generally.  Such level of benefits shall be at a level commensurate with his position.

6.            Other Benefits .

(a)            Vacation .  During each calendar year of the Term, the Executive shall earn twenty (20) days of paid vacation in accordance with the Company’s vacation policy for senior level executive officers.

(b)            Perquisites . The Executive shall be entitled to perquisites on the same basis as provided to other senior level executive officers at the Company.

7.            Expenses .  The Executive shall be entitled to receive prompt reimbursement on not less than a monthly basis for all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company (including but not limited to travel costs, dining and entertainment), in each case in accordance with policies established by the Board from time to time and upon receipt of appropriate documentation of such expenses (which policies comply with the Section 409A Rules (defined below in Section 11).

8.            Termination .

(a)            Death .  The Executive’s employment hereunder shall terminate automatically upon the Executive’s death.

(b)            Disability .  If during the Term of this Agreement, Executive becomes physically or mentally unable to perform his duties for the Company hereunder and such incapacity has continued for a total of ninety (90) consecutive days or any one hundred twenty (120) days in a period of three hundred sixty-five (365) consecutive days (“Disability”), then the Company shall have the right to terminate Executive’s employment with the Company upon written notice to Executive.

(c)            Cause .  The Company shall be entitled to terminate the Executive’s employment for “Cause.” For purposes of this Agreement, “Cause” shall mean that the Executive: (i) pleads “guilty” or “no contest” to or is convicted of an act which is defined as a felony under federal or state law or as a crime under federal or state law which involves Executive’s fraud or dishonesty; (ii) in carrying out his duties, engages in conduct that constitutes willful neglect or willful misconduct; provided such plea, conviction, neglect or misconduct results in material economic harm to the Company; (iii) fails to obtain or maintain required licenses in the jurisdiction where the Company currently operates or has plans to operate; (iv) willfully and intentionally fails to reasonably perform the material responsibilities of the Executive’s position, (v) engages in any conduct that is reasonably likely to cause harm to the reputation of the Company; or (vi) materially breaches any term of this Agreement.  In the event any of the occurrences in (i) through (vi) above have occurred, the Executive shall be given written notice by the Company of its intention to so terminate his employment, such notice; (i) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (ii) to be given within sixty (60) days after the Board knew of such acts or failures to act.  In the event such notice is timely given by the Company, the Executive shall have thirty (30) days after the date that the notice is given in which to cure such conduct, to the extent such cure is possible.  For the avoidance of doubt, any of the occurrences constituting Cause set forth in clause (i) above cannot be cured.  No act or failure to act on Executive’s part will be considered “willful” unless done, or omitted to be done by Executive not in good faith and without reasonable belief that his action or omission was in the best interests of the Company.

(d)            Good Reason .  The Executive may terminate his employment hereunder for “Good Reason”, which is defined to include the following events arising without the consent of the Executive: (A) a diminution in the Executive’s Base Salary; (B) a material diminution in the Executive’s authority, duties or responsibilities under this Agreement; or (C) any other action or inaction that constitutes a material breach of the terms of this Agreement, as permitted under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).  In the event any of the occurrences in (A) through (C) above have occurred, the Company shall be given written notice by the Executive of his intention to so terminate his employment, such notice; (i) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Good Reason is based and (ii) to be given within thirty (30) days after the Executive knew of such acts or failures to act.  In the event such notice is timely given by the Executive, the Company shall have thirty (30) days after the date that the notice is given in which to cure such conduct, to the extent such cure is possible.  The Executive shall have sixty (60) days from the date Executive knew of such acts or failures to act that constitute the grounds on which the proposed termination for Good Reason is based to terminate his employment for Good Reason.

(e)            Without Cause .  The Company may terminate the Executive’s employment hereunder without Cause at any time and for any reason (or for no reason) by giving the Executive a Notice of Termination (as defined below).

(f)            Voluntary .  Notwithstanding anything contained elsewhere in this Agreement to the contrary, the Executive may terminate his employment hereunder at any time and for any reason whatsoever or for no reason at all in the Executive’s sole discretion by giving the Company a Notice of Termination.  Such termination shall not be deemed a breach of this Agreement.

(g)            Notice of Termination .  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which indicates the specific termination provision of this Agreement relied upon and which sets forth in reasonable detail, if applicable, the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  For purposes of this Agreement, no purported termination of employment which requires a Notice of Termination shall be effective without such Notice of Termination.  The Termination Date (as defined below) specified in such Notice of Termination shall be no less than thirty (30) days from the date the Notice of Termination is given.

(h)            Termination Date .  “Termination Date” shall mean the date of the termination of the Executive’s employment with the Company and specifically (i) in the case of the Executive’s death, his date of death; (ii) in the case of a termination of the Executive’s employment for Cause, the relevant date specified in Section 8(c) of this Agreement; (iii) in the case of a termination of the Executive’s employment for Good Reason, the relevant date specified in Section 8(d) of this Agreement; (iv) in the case of the expiration of the Term of this Agreement in accordance with Section 1, the date of such expiration; and (v) in all other cases, the date specified in the Notice of Termination.

9.             Compensation Upon Termination of Employment .

(a)            For Cause; Without Good Reason .  If during the Term of this Agreement, the Executive’s employment under this Agreement is terminated by the Company for Cause or by the Executive without Good Reason (and other than by reason of the Executive’s death or Disability), the Company’s sole obligation hereunder shall be to pay the Executive the following amounts earned hereunder but not paid as of the Termination Date:

(i)          the Executive’s Base Salary through the Termination Date;

(ii)         reimbursement of any and all reasonable expenses incurred in connection with the Executive’s duties and responsibilities under this Agreement; and

(iii)        other or additional benefits and entitlements in accordance with applicable plans, programs and arrangements of the Company (subsections (i) through (iii) collectively, the “Accrued Compensation”).

(b)            Without Cause or for Good Reason .  If the Executive’s employment hereunder is terminated by the Executive for Good Reason or by the Company without Cause, the Company’s sole obligation hereunder shall be to pay the Executive the following amounts:

(i)          the Accrued Compensation;

(ii)         a pro-rata portion (based on the days worked by the Executive during the applicable year) of any bonus awarded pursuant to any annual bonus plan maintained by the Company for its senior executives to which the Executive would have been entitled had he not been terminated, which shall be paid at such time as other participants in the bonus plan are paid their respective bonuses in respect of that fiscal year, but no later than March 15 of the calendar year following the Termination Date;

(iii)        The Executive’s Base Salary for the following period (the “Salary Continuation Period”): (A) in the event that Executive’s employment hereunder is terminated prior to the occurrence of a Change in Control, the lesser of (x) eighteen (18) months following such termination or (y) the remaining duration of the Term; or (B) in the event that Executive’s employment hereunder is terminated on or following the occurrence of a Change in Control, the greater of (x) twenty-four (24) months following such termination or (y) the remaining duration of the Term; in each instance such amount payable in equal installments in accordance with the Company’s payroll practices applicable to its executive officers which payments shall commence on the earlier of the first payroll date following the 75 ^th day after the Termination Date, or thirty (30) days after the effective date of the Release referenced below in Section 9(g).  The first payment pursuant to this Section 9(b)(iii) shall include those payments that would have previously been paid if the payments described in this Section had begun on the first payroll date following the Termination Date.  This timing of the commencement of payments pursuant to this Section 9(b)(iii) is subject to Section 11 below.  For the avoidance of doubt, if such termination occurs at a time when the Base Salary is less than $250,000, the Base Salary for purposes of this Section shall increase to $243,500 and $250,000, as applicable, at such time(s) as it would have increased  if he had remained in the employ of the Company; and

(iv)        that portion of the Options that is unvested on the Termination Date shall be deemed vested on the Termination Date and such Options shall remain outstanding through the remainder of the original 5 year term.