EXHIBIT 10.40
BI-LATERAL AGREEMENT
THIS BI-LATERAL AGREEMENT (this "Agreement"), dated as of May 23, 1997,
by and between International Thoroughbred Breeders, Inc. a Delaware corporation
("ITB"), and Las Vegas Entertainment Network, Inc., a Delaware corporation
("LVEN") with reference to the following:
(a) that certain Loan Agreement, dated as of even date herewith, by and
among ITB, certain of ITB's subsidiaries (together with ITB, the "Borrowers"),
and Credit Suisse First Boston Mortgage Capital LLC ("CSFB") (the "Loan
Agreement"),
(b) that certain Tri-Party Agreement, dated as of even date herewith,
by and among LVEN, ITB, and CSFB (the "Tri-Party Agreement"), and
In order to induce ITB and LVEN to enter into the Tri-Party Agreement,
ITB and LVEN each have agreed to set forth their further agreement as follows:
1. In the event that the Permitted Acquisition (as that term is defined
in the Tri-Party Agreement) is not consummated for any reason the respective
rights and obligations of LVEN, Casino- Co Corporation ("Casino-Co"), ITB, and
Orion Casino Corporation ("Orion") with respect to the profit participation
payable to Casino-Co pursuant to Section 2(c) of that certain Letter Agreement
dated as of January 22, 1996, by and among such parties (the "Letter Agreement")
are hereby confirmed and/or clarified, and restated as follows:
For purposes of computing the Adjusted Cash Flow (as that term is
defined in the Letter Agreement) amounts of which Casino-Co initially will
receive a fifty percent (50%) interest, and thereafter will receive a
twenty-five percent (25%) interest, subject to the other terms and conditions of
the Letter Agreement, (i) the term Adjusted Cash Flow shall mean and refer to
adjusted cash flow from the operation of the Property (as that term is defined
in the Letter Agreement), before any provision for federal or state income
taxes, depreciation and/or amortization, and (ii) without the consent of
Casino-Co, the amount of debt service to be netted against cash flow from
operations of the Property in computing Adjusted Cash Flow shall be limited to a
maximum of $65 Million. At the time of the closing of the $55 Million loan by
CSFB under the Loan Agreement (the "CSFB Loan") the amount of debt service to be
netted against cash flow from operations in computing Adjusted Cash Flow shall
be $27 Million. The parties agree that, as of the date hereof, the amount which
Orion is entitled to recoup pursuant to clause (i) of the third sentence of
Section 2(c) of the Letter Agreement is $35 Million.
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2. ITB agrees that the CSFB Loan has been arranged by Casino-Co as the
"Alternative Financing" contemplated by, pursuant to, and in satisfaction of,
the provisions of Section 2(b)(z) of the Letter Agreement; provided, however,
that LVEN (for itself and on behalf of Casino-Co) acknowledges and agrees that
no fee or commission is payable to anyone in connection therewith.
3. If, within 90 days of the date hereof, ITB has not received the
proceeds of a construction loan of $50 Million, or more, respecting the El
Rancho Property, or has not otherwise arranged alternative financing for the
opening of the hotel and casino at the El Rancho Property, and if and only if
the Permitted Conversion and Permitted Acquisition have not occurred, then LVEN
shall have the right, for a period of 180 days, to make a $30 Million loan to
Orion the proceeds of which would be used to repay a portion of the CSFB Loan.
If it were to make such a $30 Million loan to Orion, the loan would mature on
the date that the CSFB Loan is scheduled to mature and would bear interest at
the rate applicable to the CSFB Loan. ITB agrees with LVEN (for their own
benefit and not for the benefit of CSFB) that, in such circumstances, ITB would
be obligated to prepay the balance of the indebtedness owed to CSFB with respect
to the CSFB Loan (including principal, interest, premium, exit fees, fees,
costs, and expenses). Any financing arranged by ITB for the prepayment of the
CSFB Loan would be entitled to obtain a first lien on ITB's subsidiary's Garden
State Race Track and a second lien (junior to the lien of Mr. ▇▇▇ ▇▇▇▇▇▇▇) on
ITB's subsidiary's Freehold Race Track and a second lien (junior to the $30
Million loan made by LVEN) with respect to the El Rancho Property. If LVEN makes
the $30 Million loan to Orion and ITB prepays the balance of the CSFB Loan, the
$30 Million loan by LVEN to Orion would be secured by a first priority lien on
the El Rancho Property, and LVEN would thereafter have the right to oversee the
development of the El Rancho Property (without any change in ownership or
economics).
4. If LVEN is unsatisfied with the fair market value of Casino-Co as
established by the greater of the ITB Value or the LVEN Value, LVEN shall have
the right, within 180 days of the date hereof, to make a loan to ITB in an
amount sufficient to repay in full the CSFB Loan and the proceeds of which would
be used to repay the CSFB Loan in full. If it were to make such a loan to ITB,
the loan would mature on the date that the CSFB Loan is scheduled to mature and
would bear interest at the rate applicable to the CSFB Loan. ITB agrees with
LVEN (for their own benefit and not for the benefit of CSFB) that, in such
circumstances, ITB would be obligated to use such loan proceeds to prepay all of
the indebtedness owed to CSFB with respect to the CSFB Loan (including
principal, interest, premium, exit fees, fees, costs, and expenses). Any such
loan made by LVEN to ITB would be entitled to obtain a first lien on ITB's
subsidiary's Garden State Race Track, a second lien (junior to the lien of Mr.
▇▇▇ ▇▇▇▇▇▇▇) on ITB's subsidiary's Freehold Race Track, and a first lien
(assuming the Conversion has occurred) with respect to the El Rancho Property.
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5. As a result of changes in the development plans for the El Rancho
Property, and as a material inducement to LVEN to enter into this Agreement and
the Subordination Agreement, LVEN and ITB have agreed to cause their
subsidiaries to amend and restate the Entertainment Management Agreement (as
defined in the Letter Agreement) to reflect the scope and nature of such
changes, it being the intention of such parties to effect, upon commercially
reasonable terms and conditions, the leasing by Orion to LVCC of space within
the El Rancho Property of space on or from which all food, beverage and retail
activities will be conducted (exclusive of certain mezzanine space, the rights
to which will be retained by Orion. LVEN and ITB hereby agree to cause their
subsidiaries to embody such modifications in definitive documentation at the
earliest practicable time.
6. If any legal action or proceeding is brought by any party hereto to
enforce or construe a provision of this Agreement, the unsuccessful party in
such action or proceeding, irrespective of whether such actin or proceeding is
settled or prosecuted to final judgment, shall pay all of the reasonable
attorneys fees and costs incurred by the prevailing party.
7. No amendment, modification, supplement, termination, consent, or
waiver of or to any provision of this Agreement nor any consent to any departure
therefrom shall in any event be effective unless the same shall be in writing
and signed by or on behalf of each of the parties hereto.
8. This Agreement is intended by the parties as a final expression of
their agreement and is intended as a complete and integrated statement of the
terms and conditions of their agreement.
9. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, admissible into evidence, and all of
which together shall be deemed to be a single instrument. Delivery of an
executed counterpart of this Agreement by telefacsimile shall be as effective as
delivery of a manually executed counterpart. Any party delivering an executed
counterpart of this Agreement by telefacsimile also shall deliver a manually
executed counterpart of this Agreement, but the failure to deliver a manually
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
LAS VEGAS
ENTERTAINMENT
NETWORK, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman/CEO
INTERNATIONAL
THOROUGHBRED BREEDERS,
INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO
