AGREEMENT BETWEEN THE DOWNS RACING, INC. AND
PENNSYLVANIA HARNESS HORSEMEN'S ASSOCIATION, INC.
THIS AGREEMENT is made and entered into on the 17 day of December, 1999, by
and between THE DOWNS RACING, INC. (hereinafter called "The Downs") and THE
PENNSYLVANIA HARNESS HORSEMEN'S ASSOCIATION, INC., a Pennsylvania Corporation
(hereinafter called "PHHA") and,
WITNESSETH THAT: WHEREAS, The Downs is licensed to conduct and is engaged
in the business of conducting harness racing meetings, simulcasting and account
wagering of races to and from other locations, at, to and from The Downs, and
WHEREAS, PHHA's membership consists of owners, trainers, and drivers of
harness horses participating in harness race meetings at The Downs and elsewhere
in the United States and Canada, and PHHA has been organized and exists for the
purpose of promoting the sport of harness racing; improving the lot of owners,
trainers, drivers, breeders and grooms of harness racing horses participating in
race meetings; establishing health, welfare and insurance programs for drivers,
trainers and grooms of harness racing horses; negotiating with harness racing
tracks on behalf of owners, trainers, drivers and grooms of harness racing
horses; and generally rendering assistance to them whenever and wherever
possible; and
WHEREAS, the parties hereto believe that the amount of pari-mutuel
wagering at The Downs is the best basis upon which to fix the financial
arrangements between the parties, and
WHEREAS, the parties have agreed that all existing agreements shall
remain in full force and effect until the effective date of this agreement
(January 16, 2000 - 12:01 AM).
NOW, THEREFORE, in consideration of the promises and covenants
contained herein, it is agreed as follows:
1. TERM OF AGREEMENT
The provisions of this Agreement shall apply to and govern every harness racing
meeting and all simulcasting conducted at, from or to The Downs from 12:00 AM on
January 16, 2000 (Effective Date) through 12:00AM January 15, 2003.
2. PURSE DISTRIBUTION
A. The parties hereto have agreed that The Downs shall pay to the PHHA
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horsemen's account a fixed percentage of 4.25% (for the term through
January 15, 2002 with the sum elevating to 4.3% for
the balance of the term beginning January 15, 2002
through January 15, 2003) of total system handle.
Total system handle shall mean all wagering conducted
at the primary location, all non-primary locations
and all telephone wagering.
(1) Interactive Wagering - All interactive
wagering conducted via an authorized personal
computer connection to The Downs (eBetUSA or its
equivalent) will be handled.
Separately from the formula for
total system handle. The parties
hereto agree that net commissions
for this purpose will also be less
host fees paid to other tracks or
trade organizations and less any
service charges from an interactive
company. For this section only, The
Downs agrees to pay PHHA purses
equal to the following percentages
of the net commissions for this
product:
Year 1 - 32%
Year II - 32 2/3%
Year III - 33 1/3%
B. RACES CONDUCTED AT POCONO DOWNS RACETRACK
Throughout the Term of this Agreement, The Downs shall distribute to the
PHHA purse account fifty percent (50%) of breakage from wagering at The Downs on
live races conducted at The Downs.
(1) Each Contract Year, (12:00 AM January 16, 2000 through 12:00AM on
January 15, 2003) during the Term of this Agreement, The Downs shall pay to the
PHHA the sum of Three Hundred Sixty Thousand Dollars ($360,000) to be used for
the purposes described in paragraph 5 below.
(2) Each Contract Year, the balance of
the amounts determined under
paragraph 2A, after deducting the
amounts payable under (1) above,
shall be paid in racing purses.
(3) The amount due to the PHHA annually
shall be accrued at the rate of
Thirty Thousand Dollars ($30,000)
per month every Contract year.
Payment shall be made in equal
monthly payments to the PHHA to be
used for purposes described in
paragraph 5 below and shall not
exceed the amounts stated in (1)
above. At the written request of
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the PHHA, The Downs shall make direct payments for insurance or for other
purposes allowed under paragraph 5 below, or shall make direct payment to the
PHHA up to any amount payable to the PHHA. However, the total amount paid out in
any Contract Year to or on behalf of the PHHA for purposes described in
paragraph 5 below may, by mutual agreement of the parties hereto, exceed Three
Hundred Sixty Thousand Dollars ($360,000).
(4) A maximum of three percent (3%) of
the total overnight purse payments
in each Contract Year may be paid
out in racing purses for early and
late closing events and stake
events. Stake events requiring
funding exceeding the three percent
(3%) limit herein may be scheduled
if agreed to by both parties.
C. INTERSTATE SIMULCASTING
(1) In addition to the amounts otherwise provided for in this Agreement, The
Downs shall distribute in racing purses during each Contract Year
throughout the Term of this Agreement, 1% of the first Twelve Million
Dollars ($12,000,000) in fees earned by The Downs for live programs
simulcast to wagering locations outside Pennsylvania (export signal) and
50% of any amount over Twelve Million Dollars ($12,000,000).
(2) It is also specifically understood
and agreed that if the host track
(e.g. the track from which the live
racing is being broadcast) requires
written agreement or permission from
PHHA for receipt of a simulcast for
any race(s), then PHHA will normally
automatically and immediately
provide its written agreement and/or
permission (whichever is required)
on the forms required. The PHHA's
granting of such agreement or
permission or its prompt execution
of the forms supplied to it, as
referenced above, will not be
unreasonably withheld or delayed. If
The Downs believes that PHHA has
unreasonably withheld or delayed
such agreement or permission or
execution, then it shall have the
right to initiate an immediate
expedited arbitration to resolve
such dispute.
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D. INTRASTATE SIMULCASTING
In addition to the amount (s) otherwise provided for
in Paragraph 2, The Downs shall distribute in racing
purses the following amounts based upon handle on
racing conducted within Pennsylvania and simulcast to
Primary Locations within Pennsylvania.
(1) Two and one-half (2 1/2%) percent of the
total handle on The Downs live races
simulcast to the Primary Location of another
Pennsylvania Racetrack shall be distributed,
throughout the entire Term of this
Agreement.
E. NON-PRIMARY LOCATIONS
The percentage to be applied to the purses from wagering at other
Pennsylvania Racing Associations Non-Primary Locations is as provided by
applicable Pennsylvania statute.
3. MINIMUM PURSES/MAXIMUM PURSES
A. During the Term of this Agreement the minimum purse
payable by The Downs for any pari-mutuel betting race
shall be One Thousand Two Hundred Dollars ($1,200.00)
unless circumstances warrant a change which shall be
mutually agreeable to both parties.
B. During the Term of this Agreement, the maximum purse payable by The Downs
for any overnight pari-mutuel race from the purse account created by this
Agreement shall be Ten Thousand Dollars ($10,000.00) unless circumstances
warrant a change which shall be mutually agreed upon by both parties.
4. RACING SCHEDULE
A. The Downs will schedule a minimum of one hundred
thirty-five (135) race days and one thousand three
hundred fifty (1,350) live overnight races at The
Downs during each race season during the Term of this
Agreement, subject however to conditions beyond its
control. The PHHA membership waives the provisions of
the Race Horse Industry Reform Act to require more
than one thousand three hundred fifty (1,350) live
overnight races
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annually. The PHHA membership also waives the
provisions of the Race Horse Industry Reform Act to
require more than one hundred thirty-five (135) race
days annually.
The parties hereto agree that said waiver shall
continue for the life of this Contract only and
agreed upon extensions scheduling a minimum of one
hundred thirty-five (135) race days and one thousand
three hundred fifty (1,350) live overnight races at
The Downs in accordance with this Sub- paragraph A of
Paragraph 4 of this Agreement.
B. The Downs management will prepare a weekly schedule
showing the number of live races and simulcast races
to be presented each day during a given week. That
schedule will be presented to the PHHA at least two
weeks prior to the first racing day of the scheduled
week. If the live overnight races do not fill, then
his will be considered a condition beyond the control
of The Downs and the minimum number of 1,350 live
overnight races will be reduced by the number of
races not filled.
5. ARRANGEMENTS WITH PHHA
A. As per Paragraph 2 (B) (3) of this Agreement said
amounts shall be used for:
(1) To defray PHHA's operating expenses;
(2) To pay PHHA's dues to any national organization of horsemen to
which it belongs;
(3) To pay premiums for a group health and medical insurance policy
for drivers, trainers and grooms;
(4) To pay premiums for an accident and
disability insurance policy which covers
trainers and drivers that are involved in
accidents while training or racing;
B. The Downs shall provide an office for the use of the PHHA representative on
its racing grounds.
C. Representatives of The Downs and PHHA will be available to consult with
each other at reasonably convenient times concerning any matters pertaining
to the operation of race meetings of The Downs or the provisions of this
Agreement. Specifically, representatives of The
Downs and PHHA shall meet before each racing season and
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throughout the same on a bi-weekly basis whenever
possible to discuss and agree on racing dates, purse
structures and races offered on the condition sheet
and qualifying standards.
6. STALL ASSIGNMENTS
Nothing in this Agreement shall be deemed to limit or restrict
in any manner the absolute discretion of The Downs to assign
stalls to owners and trainers whether or not members of PHHA,
except that stall space shall not be denied by reason of
membership in, or activity on behalf of, PHHA or duly
constituted horsemen's committees, or as otherwise prohibited
or restricted by law.
7. RACING APPLICATION
Each owner and/or trainer having horses racing at The Downs shall be
required to complete a racing application that details the complete inventory of
horses in that owner's or trainer's racing stable. Such form may be required to
be updated on a monthly basis.
8. PENNSYLVANIA-OWNED AND/OR SIRED RACES OR HORSES WHO
HAVE RACED A NUMBER OF TIMES AT THE MEET
A. At the request of PHHA, The Downs shall offer on each weekly condition
sheet up to six (6) Pennsylvania-Owned and/or Sired Races or races for
horses that have started a certain number of times at the meet per live
race week during the Term of this Agreement. Pennsylvania- Owned or Sired
Races shall carry a purse enhancement of a minimum of ten percent (10%)
over the base purse for such condition or claiming race.
"Pennsylvania-Owned Races" when used above means
races restricted to horses which are (a) wholly owned
and declared by Pennsylvania resident (s) or (b)
wholly owned by Pennsylvania resident (s) and
declared by a Pennsylvania resident lessee of the
horse.
"Pennsylvania Sired Races": Pennsylvania Harness Racing Commission
Regulations/definitions shall govern.
"Pennsylvania Residence" shall be established by
presentation, on request of The Downs and/or PHHA
representative, of (a) a valid Pennsylvania
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Vehicle Registration and a valid Pennsylvania
Driver's License or (b) Pennsylvania State Income Tax
Return showing permanent domicile in Pennsylvania.
9. INDEMNITY AND COOPERATION - HOLD HARMLESS
A. PHHA hereby agrees to indemnify and hold The Downs harmless of, from and
against any and all claims, losses, expenses, judgments, penalties or extra
distributions imposed upon or suffered by The Downs arising from claims
made by another organization that represents the horsemen participating in
any meeting of The Downs and is entitled to receive some or all of the
payments previously provided to PHHA, or in connection with, the payment
provided in Paragraphs 2 and 5 above. In the event any other organization
shall claim to represent the horsemen participating in any meeting of The
Downs during the Term of this Agreement, The Downs and PHHA shall there
upon take all necessary and proper steps to cooperate with and support each
other in sustaining and preserving the effectiveness of this Agreement.
B. The PHHA agrees to indemnify and save and hold The
Downs harmless from any liability for bodily injury
or property damage to any owner, driver, trainer or
his property, arising out of or related to practicing
for or participating in harness racing at The Downs
except where such damage or injury is the result of
gross negligence on the part of The Downs.
10. CONTROLLING LAW AND REGULATIONS: ARBITRATION
A. The interpretation of the provisions of this Agreement shall be governed by
the laws of Pennsylvania.
B. The performance and operation of this Agreement, during the entire term
hereof, shall be subject in all respects to the provisions of the
Pennsylvania Race Horse Industry Reform Act, all the Commonwealth's rules
and regulations, and subject to the approval of the Pennsylvania State
Harness Racing Commission.
C. This is the entire agreement between the parties. Any modification or
amendment to this Agreement must be in writing and signed by the parties or
their duly authorized representatives.
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D. Any and all disputes between the parties hereto
arising out of or relating to this Agreement or any
breach thereof shall be resolved by arbitration to be
held in Wilkes-Barre, Pennsylvania, in accordance
with the Rules of the American Arbitration
Association then in effect. Any award rendered by the
arbitrator (s) may be entered in any court having
jurisdiction thereof. The costs of such arbitration
shall be borne equally by the parties hereof.
11. ASSIGNMENT, TRANSFER, ADOPTION OF AGREEMENT
Any assignment of all the rights and obligations of The Downs
or transfer or adoption of this Agreement shall not require
PHHA's consent and upon such assignment, transfer or adoption,
such assignee of transferee shall be substituted as a party to
this Agreement.
12. NINE HORSE FIELDS
Nine horse or larger fields with one or more horse trailers
may be permitted in any overnight, early or late closer or stake race only with
the permission of the PHHA. The purse for a nine horses overnight race field
shall carry a ten percent (10%) increase on the base purse. There will be no
nine horse fields for maidens or non- winners of two (2) pari-mutuel races
lifetime.
13. NEW INCOME SOURCES
If The Downs becomes aware of a new source of wagering or
simulcasting income not addressed in this Agreement, The Downs
will notify the PHHA of such income source and PHHA will enter
negotiations concerning such income source.
IN WITNESS WHEREOF, with the intention of being legally bound, the
parties by their respective chief officers who are authorized and empowered to
bind the respective parties, have caused this Agreement to be duly executed as
of this _17____ day of December 1999.
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