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EXHIBIT 10.1
(Rev8-04-5)
AGREEMENT
Agreement made as of December 1, 2003, by and between Mid-State
Raceway, Inc. with a mailing address at
P.O. Box 860 Vernon, New York 13476
(hereinafter referred to as "Raceway") and
Harness Horse Association of Central
New York, Inc. with a mailing address at
P.O. Box 586 Vernon, New York 13476
(hereinafter referred to as the
"Association").
WITNESSETH:
Whereas, Raceway was licensed in 2003 and believes that it will
be
licensed in 2004 to conduct and engage in
the business of conducting harness
race meetings at a race track owned and
operated by Raceway in Vernon, New York
known as "Vernon Downs" (hereinafter
"Vernon Downs"); and
Whereas, the Association consists of owners, trainers and drivers
of
harness horses who participate in meetings
both at Vernon Downs and elsewhere in
United States and Canada; the Association
was organized and exists for the
purpose of promoting the sport of harness
racing; and the Association has been
recognized as the exclusive bargaining
agent for all owners, trainers, and
drivers engaged in harness racing at Vernon
Downs; and
Whereas, the parties desire to promote harness racing at Vernon
Downs
by providing reasonable compensation to the
owners, trainers and drivers
participating at meetings at Vernon Downs,
increasing overall interest in
harness racing by encouraging top quality
competitive harness racing at Vernon
Downs, and providing exciting and enjoyable
harness racing for the general
public, and
Whereas, the pari-mutuel retention derived from harness race meets
and
simulcasts and from other forms of legally
permissible wagering conducted at
Vernon Downs constitutes a reasonable basis
for the determination of the
financial arrangement between the
parties.
NOW THEREFORE, in consideration of the premises and the
covenants,
terms and conditions hereincontained and
for other good and valuable
consideration each to the other in hand
paid, the receipt and sufficiency of
which is hereby jointly acknowledged, the
parties hereto do hereby agree as
follows:
1. Quality and Integrity of Racing.
(a) General. Raceway and the Association agree to use their
best efforts to encourage and induce owners
of harness horses, whether or not
such owners are members of the
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Association, to participate in meetings
conducted by Raceway at Vernon Down or
elsewhere. The parties further agree to use
their best efforts to promote the
interests of Vernon Downs in order to
increase the attendance and handle and
thereby increase the profitability to
Raceway, the amount of funds available to
participating horsemen, and the quality and
excitement of the harness racing
provided to the general public. The
benefits set forth in this agreement
("Agreement") shall inure to the benefit of
Raceway, the Association and all
owners, trainers and drivers who
participate at Vernon Downs (whether or not
such owners, trainers and drivers are
members of the Association) except as
herein expressly provided to the
contrary.
(b) Race Program. Raceway will employ a competent Director of
Racing (designated by, and upon terms and
conditions acceptable to, Raceway in
its sole and absolute discretion) and the
Association will support the efforts
of said Director of Racing to write
conditions as appropriate for the benefit of
the entire program. Raceway shall notify an
Association representative prior to
reopening events or altering race
conditions. Neither the Association nor its
designated representatives will interfere
in any way with the normal operations
of the Racing Office or Vernon Downs.
(c) Integrity of Racing. In an effort to further the
professionalism of the sport and increase
the confidence of the racetrack
patron, any licensed owner, trainer, or
driver who receives a suspension of 30
days or more from any state or
international racing authority shall not be
permitted to race at Vernon Downs until
such time as the suspension has been
served or lifted. In the event of an
appeal, said driver, trainer or owner shall
not be permitted to race at Vernon Downs
while the appeal is pending.
2. Purse Account and Purse Payment.
(a) Purse Account. Raceway has opened and designated Account
No.946-1352632 at the Fleet Bank as the
"Purse Account": (i) into which shall be
deposited Raceway's Annual Purse Payment
(as defined), sums paid by the
Breeder's Fund (the "Breeder's Payments")
and fees paid by the horsemen; (the
"Horsemen's Payments") and (ii) from which
shall only be paid purses, Driver
Minimums (as defined) and the
Administrative Distribution (as defined). Raceway
will provide the Association with a weekly
accounting of contributions (both in
the aggregate and by source) into and
distributions from the Purse Account
substantially in the form annexed hereto as
Exhibit "A"; the first of which
weekly accountings shall be for the first
full week during which live races are
tun at Vernon Downs during each of 2004 and
2005, respectively, and the last of
which weekly accountings shall be for the
week ending immediately following
November 30, 2004 and the expiration of the
Term (as defined), respectively.
(b) Raceway Annual Purse Payment. The payment to be made by
Raceway into the Purse Account for payment
in each of 2004 and 2005,
respectively, of purses, Driver Minimums
(as defined) and Administrative
Distribution (the "Annual Purse Payment")
shall be in the sum determined in
accordance with the provisions of Exhibit
"B" annexed hereto and made a part
hereof.
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(c) Initial Determination of Purses and Purse Adjustments.
Purses for races run in the first month
during which live racing shall be held
at Vernon Downs during each of 2004 and
2005, respectively, shall be calculated
by Raceway (and payments to the Purse
Account for such month's races made by, or
on behalf of, Raceway) as if Raceway had
guaranteed purse payments for the
entire year 2004 in the amount of
$1,900,000 and there were 96 race days in
number. Purses for races run in each of the
succeeding months of 2004 and 2005,
respectively, during which races are run
shall be calculated by Raceway (and
payments to the Purse Account for such
month's races made by Raceway): (i) in
accordance with Exhibit "B"; (ii) based
upon the actual live racing, simulcast
and OTB revenues and VLT Revenues for the
immediately preceding month, or, if
not available, the most recent available
monthly period; and (iii) based upon
the number of race days remaining in the
Racing Season (as defined) for 2004 and
2005, respectively. Using the foregoing as
a guide, Raceway shall use its best
efforts in good faith to adjust purses
during the course of each meet taking
into account seasonal business trends so as
to minimize the fluctuation of
purses during each meet and to attempt to
limit any balance due to the Purse
Account at the conclusion of any meet (the
"Annual Carry Over") to no more than
$100,000. The purse payments will be
reviewed monthly by the President of
Raceway and the President of the
Association.
(d) Underpayments. To the extent that the actual amount paid
into the Purse Account by Raceway during
either of 2004 or 2005, as the case may
be, is less than the Annual Purse Payment,
as finally determined, the full
amount of any such deficiency
("Underpayment") shall be paid by Raceway into the
Purse Account . To the extent that the
Underpayment is either (i) $100,000 or
less, or (ii) if more than $100,000, in an
amount consented to in writing by the
Association, it shall be retained in the
Purse Account and utilized for the
payments from the Purse Account in the next
succeeding year, subject to the
provisions of subparagraph 16(b) hereof.
Subject to the written consent of the
Association pursuant to clause 2(d) (ii)
hereof, to the extent that the
Underpayment exceeds the sum of $100,000
then and in that event any such excess
("Excess Underpayment") shall be
distributed to the owners of horses which
participated in races run during the 2004
or 2005 Racing Season, as the case may
be, as follows: (A) The Excess Underpayment
shall be divided by the total number
of races run during the subject Racing
Season in order to determine the "Per
Race Amount"; and (B) the Per Race Amount
shall be allocated to each race run
during the Racing Season and shall be paid
out to the participants therein in
the same proportions as were distributions
of the original purse allocable to
such race.
(e) Overpayments. To the extent that the actual amount paid
into the Purse Account by Raceway during or
with respect to 2004 or 2005, as the
case may be, is in excess of the Annual
Purse Contribution applicable to such
calendar year, as finally determined, the
full amount of any such excess shall
be credited against Raceway's Annual Purse
Contribution for the next succeeding
year or years, as the case may be,
irrespective of the termination or expiration
of this Agreement.
(f) Purse Allocations.
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(i) Not less than 90% of the money available for the
payment of purses (exclusive of the
Administrative Distribution) shall be
allocated and paid during the 2004 and 2005
Racing Season, respectively,
exclusively for purses for overnight
races.
(ii) Up to 10% of the money available for the payment
of purses (exclusive of the Administrative
Distribution) may, in the sole and
absolute discretion of Raceway be allocated
and paid during the 2004 and 2005
Racing Season, respectively, exclusively
for purses for non- overnight races.
(iii) The amount of any purse in excess of $7,500
payable with respect to a race shall be
charged against the 10% described in
subparagraph 3(f)(ii) hereof unless (A)
such race is an overnight race and prior
to the running of such race the Association
waives such "charge", or (B) Raceway
contributes any such excess to the Purse
Account.
(iv) An "overnight race" shall be and mean a race
which is listed on the weekly (or more
frequently prepared) condition sheet
prepared by Raceway's Race Secretary
setting forth: (A) the races for a horse
for which a horse may be entered; (B) the
closing day and hour for entries in
such races; (C) where no prior nomination,
declaration or commitment is required
before making the entry; and (D) where no
nominating, sustaining or starting
fees are required.
(g) Net Accrual
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(i) Subject to the provisions of subparagraph
2(g)(ii) hereof, on or before the first day
when live racing is conducted in the
2004 and 2005 Racing Season, respectively,
the parties hereto shall cause the
Net Accrual (as defined) to be deposited in
the Purse Account for disposition
pursuant to the provisions of Paragraph 2
hereof; which Net Accrual shall be and
be deemed to be a portion (and credited
against the obligation of Raceway for
the payment) of the Annual Purse Payment
for 2004 or 2005, as the case may be;
(ii) If live racing does not commence at Vernon Downs
on or before May 1st during 2004 or 2005,
as the case may be, then and in that
event, Raceway shall thereafter promptly
take such actions and execute such
documents as shall be reasonably necessary
to disburse the Net Accrual (together
with any interest earned thereon) to the
Association; and in connection
therewith the Association shall: (1) retain
the Net Accrual, as trustee, for and
on behalf of the Horsemen participating in
harness horse races at Vernon Downs;
(2) deposit the Net Accrual in the purse
account of the entity first conducting
harness horse races at Vernon Downs
subsequent to the Association's receipt of
such Net Accrual; and (3) indemnify and
hold harmless Raceway from and against
any and all costs, expenses, losses,
liabilities, judgments, awards and demands
(including reasonable attorneys fees)
arising out of or relating to the payment
of the Net Accrual to the Association
and/or claims of any horsemen
participating (in the past or future) in
harness horse races at Vernon Downs for
or with respect to the Net Accrual and/or
the actions of the Association with
respect thereto; and
(iii) For purposes of this Agreement the terms: "Net
Accrual" shall be and mean the payment
which would be required to be made by
Raceway to the Purse Account (a) with
respect to the 2004 Racing Season for the
months of December 2003 and January,
February and March, 2004 and until the
earlier of either the first day when live
racing is conducted at Vernon Downs or
May 1st of such year, and (b) with respect
to the 2005 Racing Season for the
months of December 2004 and January,
February and March, 2005, and until the
earlier of either the first day when live
racing is conducted at Vernon Downs or
May 1st of such year, as the case may be,
in each case pursuant to the Formula
Amount as defined and determined in
accordance with (and subject to the
limitations set forth in) the provisions of
Schedule 1 of Exhibit "B";
(h) ) With respect to each month in 2004 or 2005,
respectively, subsequent to April 2004 or
2005, as the case may be, and prior to
December 2004 or 2005, as the case may be,
during or prior to which live racing
does not or has not commenced at Vernon
Downs, as the case may be, Raceway shall
pay over to the Association (in lieu and
instead of deposit in the Purse
Account) the payment which would be
required to be made by Raceway to the Purse
Account for such month pursuant to the
Formula Amount as defined and determined
in accordance with (and subject to the
limitations set forth in) the provisions
of Schedule 1 of Exhibit "B"; such payment
to be made prior to the end of the
next succeeding calendar month; and the
amounts paid over to the Association
pursuant to this subparagraph 2(h) hereof
shall be retained and disposed of in
the same manner (and subject to the same
rights and obligations of the
Association) as set forth in subparagraph
2(g)(ii) hereto;.
(i) The Association shall have the right during normal
business hours, on reasonable notice and at
the location where the same are
normally kept, to audit the books and
records of Raceway
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relating to the receipt of proceeds from
pari-mutuel wagering, OTB Commissions,
Simulcast revenues and VLT Revenues, and to
make abstracts and copies thereof.
3. Racing Calendar.
(a) Subject to the provisions of subparagraph 3(f) hereof, the
live harness horse race meet (the "Racing
Season") for each of 2004 and 2005,
respectively, will commence (subject to the
receipt by Raceway of its 2004 and
2005 live racing licenses, as the case may
be) on April 1, 2004 and 2005, as the
case may be (the "Commencement Date") and
will conclude on October 31, 2004 and
2005, as the case may be ( the "Conclusion
Date"); provided however that if live
racing at Vernon Downs commences later than
April 3, 2004 or 2005, respectively,
then and in either such event the
Conclusion Date shall be extended for that
additional number of days as shall be equal
to the number of days elapsing
between April 3 of such year and the date
upon which live racing commences at
Vernon Downs. Raceway will guarantee 120
Race Days(as defined) during the 2004
Racing Season at the rate of at least four
Race Days per week. Raceway and the
Association shall agree upon the number of
Race Days for the 2005 Racing Season
which Race Days shall, be not less than 120
(subject to the availability of
horses) at the rate of at least four Race
Days per week unless otherwise agreed
to in writing by the parties. In the event
that either party seeks an increase
in number of Race
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Days during the 2005 Racing Season the
parties shall submit the issue of the
number of Race Days during the 2005 Racing
Season to negotiation pursuant to the
provisions of Paragraph 14 hereof; such
negotiation to be commenced by either
party by notice to the other no later that
October 31, 2004. Race Days during
the 2004 and 2005 Racing Seasons,
respectively, will be primarily Wednesday
through Saturday, with Monday races held on
Memorial Day and Labor Day (at the
times specified by Raceway in its sole and
absolute discretion); provided
however that any Race Days in excess of 90
Race Days during the 2004 or 2005
Racing Season will be primarily Monday,
Tuesday or Sunday (except as otherwise
provided in subparagraph 3(a) hereof).
(b) Anything in this Paragraph 3 hereof to the contrary
notwithstanding, Raceway shall have the
right (exercisable in its sole and
absolute discretion) to cancel (and
reschedule within the same week) from time
to time and on one or more occasions one or
more racing days for the purpose of
holding "special events" at Vernon Downs
provided that written notice of any
such cancellation shall be transmitted to
the Association at least 14 days prior
to the race date subject to such
cancellation.
(c) Anything in this Agreement to the contrary
notwithstanding, Raceway shall have no
liability to the Association, the
horsemen or anyone else claiming any rights
under this Agreement in the event
Raceway is unable to hold, or is required
to cancel any daily race meet, or part
thereof at Vernon Downs, during the term of
this Agreement because of
circumstances beyond its control including,
without limitation, fire, flood,
war, riot, civil insurrection, civil or
military authority, inclement weather or
other act of God, or, in any event, because
of circumstances resulting from work
stoppages, boycotts or other labor
disputes.
(d) A "Race Day" shall be and mean (i) a consecutive period of
24 hours during which, (ii) live harness
horse racing is conducted at Vernon
Downs and (iii) subject to the sufficiency
of applicants for participation in
races, at least 9 pari-mutuel races are
scheduled and (iv) no more than 13
pari-mutuel races are scheduled. All
overnight races will be conducted at a
distance of one mile unless agreed to in
writing by the Association.
(e) Raceway may conduct up to five Superfecta wagering events
on any Race Day, each containing 9 horses,
as shall be determined in Raceways'
sole and absolute discretion; provided
however that (i) during the 2004 and 2005
Racing Season, all 9 horse fields shall
have a total of 3% of the regular purse
added to the regular purse and such 3% will
be paid to the 6 place finisher, and
(ii) maiden trotters NW 1 PM cannot be
included in a 9 horse race; provided
further, however that the limit
