UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934
Date of Report January 24, 1996
INTERNATIONAL THOROUGHBRED BREEDERS, INC. AND SUBSIDIARIES
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
22-2332039
(I.R.S. Employer Identification No.)
P.O. Box 1232, Cherry Hill, New Jersey, 08034
(Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (609) 488-3838
<PAGE>
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On January 24, 1996, the Registrant through a newly formed wholly owned Nevada
subsidiary, Orion Casino Corporation ("Orion") completed the purchase of the
El Rancho Hotel and Casino property in Las Vegas, Nevada (the "Property") from
an unaffiliated third party, Las Vegas Entertainment Network, Inc.
The El Rancho Property consists of approximately 21 acres located on the Las
Vegas strip and includes a hotel which has not operated since 1992. The
purchase price aggregating $43.5 million included the assumption of a $14
million debt secured by a first mortgage on the property payable with interest
at the rate of 13% per annum on December 20, 1996, the payment by Orion at the
closing of $12.5 million in cash (provided from the Registrant's working
capital), the delivery of the Registrant and Orion's joint $6.5 million
promissory note (the "A Note") payable with interest at the rate of 8% per
annum on March 15, 1996, and the delivery of the Registrant and Orion's joint
secured $10.5 million promissory note (the "B Note") payable with accrued
interest at the rate of 8% per annum provided any one of certain specified
events occur, including receipt by Orion of proceeds from any debt financing
relating to the Property in excess of $55 million or if Orion has not received
commitments for certain specified types of financing by October 25, 1996, the
sale of the Property or the arrangement for same by the holder of the B note
at its option for a certain minimum specified amount during the fourth quarter
of a one year option period commencing on October 25, 1996. The B Note is
secured by a lien on the Property. The Seller is also entitled to contingent
consideration of up to $160 million from any future "adjusted cash flow" from
the Property as contractually defined.
Orion also executed a separate Entertainment Management Agreement with an
affiliate of the Seller, Las Vegas Communications Corporation ("LVCC")
engaging LVCC as the Entertainment Manager to arrange for entertainment and
advertising at the Property at an annual fee of $800,000 plus certain
commissions based on profits and a booking fee.
The Registrant and Orion are presently considering various development options
for the Property.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Statement.
Pro Forma Financial Statements are attached hereto.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
PRO FORMA
BALANCE SHEET
AS OF DECEMBER 31, 1995
ASSETS
(UNAUDITED)
<TABLE>
Historicals
International
Thoroughbred Pro Forma
Breeders Inc. Adjustments
<CAPTION>
CURRENT ASSETS:
<S> <C> <C>
Cash and Cash Equivalents $ 19,097,769 $ (13,000,000)[A]
Restricted Cash and Investments 417,137 --
Accounts Receivable 3,319,527 --
Prepaid Expenses 517,559 --
Other Current Assets 26,133 --
TOTAL CURRENT ASSETS 23,378,125 (13,000,000)
LAND, BUILDINGS, EQUIPMENT
AND LIVESTOCK:
Land and Buildings 75,416,206 37,100,000 [A]
Construction in Progress 858,720 --
Equipment 3,911,937 --
Livestock 17,517 --
TOTALS 80,204,380 37,100,000
LESS: Accumulated Depreciation 2,238,419 --
TOTAL LAND, BUILDINGS, EQUIPMENT
AND LIVESTOCK - NET 77,965,961 37,100,000 [A]
OTHER ASSETS:
Deposits and Other Assets 386,495 --
Goodwill - Net 3,207,168 6,900,000 [A]
TOTAL OTHER ASSETS 3,593,663 6,900,000
TOTAL ASSETS $ 104,937,749 $ 31,000,000
</TABLE>
See Notes to Pro Forma Financial Statements.
<TABLE>
Pro Forma
Combined
<CAPTION>
CURRENT ASSETS:
<S> <C>
Cash and Cash Equivalents $ 6,097,769
Restricted Cash and Investments 417,137
Accounts Receivable 3,319,527
Prepaid Expenses 517,559
Other Current Assets 26,133
TOTAL CURRENT ASSETS 10,378,125
LAND, BUILDINGS, EQUIPMENT
AND LIVESTOCK:
Land and Buildings 112,516,206
Construction in Progress 858,720
Equipment 3,911,937
Livestock 17,517
TOTALS 117,304,380
LESS: Accumulated Depreciation 2,238,419
TOTAL LAND, BUILDINGS, EQUIPMENT
AND LIVESTOCK - NET 115,065,961
OTHER ASSETS:
Deposits and Other Assets 386,495
Goodwill - Net 10,107,168
TOTAL OTHER ASSETS 10,493,663
TOTAL ASSETS $ 135,937,749
</TABLE>
See Notes to Pro Forma Financial Statements.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
PRO FORMA
BALANCE SHEET
AS OF DECEMBER 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
Historicals
International
Thoroughbred Pro Forma
Breeders Inc. Adjustments
<CAPTION>
CURRENT LIABILITIES:
<S> <C> <C>
Accounts Payable and Accrued Expenses $ 7,113,243 $ --
Notes & Mortgages Payable - Current Portion 3,211,421 20,500,000 [A]
Deferred State Income Taxes Payable -
Current Portion 56,294 --
TOTAL CURRENT LIABILITIES 10,380,958 20,500,000
DEFERRED INCOME 1,618,561 --
NOTES AND MORTGAGES PAYABLE -
LONG-TERM PORTION 14,411,632 10,500,000 [A]
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY:
Series A (Convertible) Preferred Stock 36,246,075 --
Common Stock 22,902,905 --
Capital in Excess of Par 13,596,570 --
Retained Earnings (Subsiquent to
June 30, 1993,
date of quasi-reorganization, total
deficit eliminated $102,729,936) 5,781,048 --
TOTAL SHAREHOLDERS' EQUITY 78,526,598 --
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 104,937,749 $ 31,000,000
</TABLE>
See Notes to Pro Forma Financial Statements.
<TABLE>
Pro Forma
Combined
<CAPTION>
CURRENT LIABILITIES:
<S> <C>
Accounts Payable and Accrued Expenses $ 7,113,243
Notes & Mortgages Payable - Current Portion 23,711,421
Deferred State Income Taxes Payable -
Current Portion 56,294
TOTAL CURRENT LIABILITIES 30,880,958
DEFERRED INCOME 1,618,561
NOTES AND MORTGAGES PAYABLE -
LONG-TERM PORTION 24,911,632
COMMITMENTS AND CONTINGENCIES --
SHAREHOLDERS' EQUITY:
Series A (Convertible) Preferred Stock 36,246,075
Common Stock 22,902,905
Capital in Excess of Par 13,596,570
Retained Earnings (Subsiquent to
June 30, 1993,
date of quasi-reorganization, total
deficit eliminated $102,729,936) 5,781,048
TOTAL SHAREHOLDERS' EQUITY 78,526,598
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 135,937,749
</TABLE>
See Notes to Pro Forma Financial Statements.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
PRO FORMA
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
Historicals
International
Thoroughbred Pro Forma
Breeders Inc. Adjustments
<CAPTION>
REVENUES:
<S> <C> <C>
Revenue from Operations $ 34,148,787 $ --
Investment Income 103,630 (325,000)[4]
TOTAL REVENUES 34,252,417 (325,000)
EXPENSES:
Cost of Revenues 11,208,117 400,000 [1]
Operating Expenses 16,957,041 --
Depreciation & Amortization 730,256 172,500 [5]
General & Administrative Expenses 3,809,075 --
[2]
Interest Expense 568,653 1,135,000 [3]
TOTAL EXPENSES 33,273,142 1,707,500
INCOME (LOSS) BEFORE TAXES 979,275 (2,032,500)
STATE INCOME TAX EXPENSE 122,275 --
NET INCOME (LOSS) $ 857,000 $ (2,032,500)
NET INCOME (LOSS) PER SHARE $ 0.09
AVERAGE NUMBER OF SHARES 9,603,043
</TABLE>
See Notes to Pro Forma Financial Statements.
<TABLE>
Pro Forma
Combined
<CAPTION>
REVENUES:
<S> <C>
Revenue from Operations $ 34,148,787
Investment Income (221,370)
TOTAL REVENUES 33,927,417
EXPENSES:
Cost of Revenues 11,608,117
Operating Expenses 16,957,041
Depreciation & Amortization 902,756
General & Administrative Expenses 3,809,075
Interest Expense 1,703,653
TOTAL EXPENSES 34,980,642
INCOME (LOSS) BEFORE TAXES (1,053,225)
STATE INCOME TAX EXPENSE 122,275
NET INCOME (LOSS) $ (1,175,500)
NET INCOME (LOSS) PER SHARE $ (0.12)
AVERAGE NUMBER OF SHARES 9,603,043
</TABLE>
See Notes to Pro Forma Financial Statements.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
PRO FORMA
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
Historicals
International
Thoroughbred Pro Forma
Breeders Inc. Adjustments
<CAPTION>
REVENUES:
<S> <C> <C>
Revenue from Operations $ 55,094,950 --
Investment Income 3,487,788 (650,000)[4]
TOTAL REVENUES 58,582,738 (650,000)
EXPENSES:
Cost of Revenues 17,342,134 800,000 [1]
Operating Expenses 29,892,282 --
Depreciation & Amortization 965,026 345,000 [5]
General & Administrative Expenses 7,312,445 --
[2]
Interest Expense 556,799 2,270,000 [3]
TOTAL EXPENSES 56,068,686 3,415,000
INCOME (LOSS) BEFORE TAXES 2,514,052 (4,065,000)
STATE INCOME TAX EXPENSE 115,600 --
NET INCOME (LOSS) $ 2,398,452 $ (4,065,000)
NET INCOME (LOSS) PER SHARE $ 0.25
AVERAGE NUMBER OF SHARES 9,551,369
</TABLE>
See Notes to Pro Forma Financial Statements.
<TABLE>
Pro Forma
Combined
<CAPTION>
REVENUES:
<S> <C>
Revenue from Operations $ 55,094,950
Investment Income 2,837,788
TOTAL REVENUES 57,932,738
EXPENSES:
Cost of Revenues 18,142,134
Operating Expenses 29,892,282
Depreciation & Amortization 1,310,026
General & Administrative Expenses 7,312,445
Interest Expense 2,826,799
TOTAL EXPENSES 59,483,686
INCOME (LOSS) BEFORE TAXES (1,550,948)
STATE INCOME TAX EXPENSE 115,600
NET INCOME (LOSS) $ (1,666,548)
NET INCOME (LOSS) PER SHARE $ (0.17)
AVERAGE NUMBER OF SHARES 9,551,369
See Notes to Pro Forma Financial Statements.
</TABLE>
(c) Exhibits
10.1 ( 96) Letter Agreement dated as of January 22, 1996 among Las Vegas
Entertainment Network, Inc., the Registrant and Orion.
SIGNATURES
Pursuant to the requirements of the Securites Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
(Registrant)
Dated: February 7, 1996
By: /s/ Arthur Winkler, President
Arthur Winkler, President
<PAGE>
INTERNATIONAL THOROUGHBRED BREEDERS, INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS [UNAUDITED]
The following pro forma balance sheet as of December 31, 1995 and statements
of operations for the six months ended December 31, 1995 and the year ended
June 30, 1995 give effect to the purchase by International Thoroughbred
Breeders, Inc. ["ITB"] [the "Company"} on January 24, 1996, through a newly
formed subsidiary, Orion Casino Corporation, of property in Las Vegas, Nevada
from Las Vegas Entertainment Network, Inc. ["LVEN"]. The acquisition was for
$43.5 million in cash and notes, plus contingent consideration of up to $160
million which is dependent upon future "adjusted cash flow" as contractually
defined. Also on January 24, 1996, the Company entered into an Entertainment
Contract for an annual base fee of $800,000 plus specified commissions.
The pro forma information has been prepared by management based on the
historical financial statements of ITB giving effect to the transactions under
the purchase method of accounting and the assumptions and adjustments in the
accompanying notes to the pro forma financial statements. The pro forma
information may not be indicative of the results that actually would have
occurred if the combination had been in effect on the dates indicated or which
may be obtained in the future.
The acquisition will be accounted for using the purchase method. The pro
forma statements of operations give effect to these transactions as if they
had occurred at the beginning of the fiscal year presented. The historical
statements of operations will reflect the effects of these transactions from
the date on which they occurred. The pro forma statements are based on the
historical financial statements of ITB and should be read in conjunction with
the historical financial statements as filed under Forms 10K and 10Q.
NOTES TO PRO FORMA FINANCIAL STATEMENTS [UNAUDITED]
BALANCE SHEET:
[A] To reflect purchase price of which $12,500,000 is in cash, $6,500,000 in
an 8% unsecured note payable due March 15, 1996, $10,500,000 in a 8% secured
note payable due on demand under certain circumstances and the assumption of
$14,000,000 refinance loan with interest of 13% due December 20, 1996.
Cash $12,500,000
Estimated Acquisitions Costs 500,000
Unsecured Note Payable 6,500,000
Secured Note Payable 10,500,000
Refinance Loan Assumed 14,000,000
Purchase Cost $44,000,000
To allocate purchased cost of acquired Las Vegas property to acquired assets
and to reflect resulting goodwill:
Land [includes cost of building,
which will be razed to construct
a new building] $37,100,000
Goodwill 6,900,000
$44,000,000
The buyer may have to pay additional amounts [up to $160,000,000] in the
future, contingent upon the Las Vegas operation generating a positive cash
flow, called "adjusted cash flow" as modified by contractual agreement. Any
such additional consideration is usually charged to goodwill and is amortized
over its estimated remaining life. Such amortization would generate
additional expense for the Company.
The Company is also contingently liable for the first $600,000 of any asbestos
removal/abatement.
[B] To reflect annual Entertainment Contract of $800,000.
STATEMENT OF OPERATIONS:
[1] To reflect expense of Entertainment Contract of $800,000 annually.
[2] To accrue interest expense at 8% on $17,000,000 notes payable of
$1,360,000 annually.
[3] To accrue interest expense at 13% on $14,000,000 refinancing note payable
of $1,820,000 annually. The Company is responsible for 50% of the interest,
the seller is responsible for the remaining 50%.
[4] To reflect decrease in interest income annually of $650,000
[5] To reflect amortization on goodwill of $6,900,000 over 20 years under the
straight-line method.
Las Vegas Entertainment Network, Inc.
1801 Century Park East
Suite 2300
Los Angeles, California 90067
(310) 551-0011
Fax (310) 551-1942
As of January 22, 1996
International Thoroughbred Breeders, Inc.
Route 70
Haddonfield Road
P. O. Box 1232
Cherry Hill, New Jersey 08034-0147
Orion Casino Corporation
600 East Charleston Boulevard
Las Vegas, Nevada 89104
Gentlemen:
This letter agreement, when countersigned as indicated below (this
"Agreement"), will confirm and memorialize the agreement by and among Las
Vegas Entertainment Network, Inc., a Delaware corporation ("LVEN"), and
CountryLand Properties, Inc., a Nevada corporation and a direct, wholly-owned
subsidiary of LVEN ("CLP" and, together with LVEN, the "LVEN Entities"), on
the one hand, and International Thoroughbred Breeders, Inc., a Delaware
corporation ("ITB"), and Orion Casino Corporation, a Nevada corporation and an
indirect, wholly-owned subsidiary of ITB ("Orion" and, together with ITB, the
"ITB Entities"), on the other hand, to enter into the within-described series
of transactions (collectively, the "Transaction") whereby Orion (or its
designee) will purchase and acquire from CLP for the consideration specified
herein all of CLP's real and personal property assets comprising the former El
Rancho Hotel & Casino, Las Vegas, Nevada, all upon and subject to the
following terms and conditions.
1. Principal Purchase Terms.
(a) Subject to satisfaction (or waiver) of the terms and conditions contained
herein, at the Closing (as herein defined) CLP will sell, transfer and convey
to Orion, and Orion will purchase and acquire from CLP, the Assets (as defined
in Schedule 1(a) attached hereto and incorporated herein by this reference)
for consideration of Forty-Three Million Five Hundred Thousand Dollars
($43,500,000) (the "Purchase Price"), payable as follows:
(i) Twelve Million Five Hundred Thousand Dollars ($12,500,000), payable at the
Closing in cash, by Cashier's or Title Company check, or by wire-transfer of
immediately available funds, as CLP may direct;
(ii) Execution and delivery to CLP at the Closing of ITB's and Orion's
joint and several 8% unsecured promissory note in the principal amount of Six
Million Five Hundred Thousand Dollars ($6,500,000) substantially in the form
of Exhibit "A" attached hereto and incorporated herein by this reference (the
"`A' Note");
(iii) Execution and delivery to CLP at the closing of ITB's and Orion's
joint and several 8% secured promissory Note in the principal amount
of Ten Million
Five Hundred Thousand Dollars ($10,500,000), substantially in the form of
Exhibit "B" attached hereto and incorporated herein by this reference (the
"'B' Note");
(iv) Execution, delivery and recordation at the Closing of a Deed of Trust and
Assignment of Rents made by Orion, as trustor, to National Title Company, a
Nevada corporation, as trustee, for the benefit of CLP, as beneficiary,
substantially in the form of Exhibit "C" attached hereto and incorporated
herein by this reference (the "Deed of Trust"), collateralizing the "B" Note
with a lien on the Real Estate and the other Assets, junior to the first
priority lien of the Deed of Trust, Fixture Filing and Financing Statement and
Security Agreement with Assignment of Rents, dated as of the date hereof,
executed by CLP, to Nevada Title Company, for the benefit of SunAmerica Life
Insurance Company, as Collateral Agent ("SunAmerica" or the "Refinance
Lender") (the "Refinance Deed of Trust"), all present and future obligations
and instruments described in and as provided in the Subordination Agreement,
dated as of the date hereof, executed by CLP, LVEN, ITB, Orion and SunAmerica
(as amended, modified or supplemented from time to time, the "Subordination
Agreement") and the various title exceptions to which the Refinance Deed of
Trust is subject;
(v) Execution and delivery at the Closing of such instruments, documents and
agreements, in form and substance acceptable to the parties hereto, SunAmerica
and their respective counsel, as may be necessary to evidence the assumption
by Orion of the Refinance Loan (as defined below).
(b) Upon and subject to ITB's and Orion's timely satisfaction or waiver of the
payment and performance obligations set forth in the preceding clauses (a)(i)
through (a)(v) to be satisfied at the Closing pursuant to Section 7(b), CLP
will sell, transfer and convey the Assets to Orion, subject only to the
following (the "Permitted Title Exceptions"):
(i) the first priority lien of the Refinance Deed of Trust securing a loan
(the "Refinance Loan") evidenced by one or more notes in the aggregate
principal amount of Fourteen Million Dollars ($14,000,000);
(ii) the Subordination Agreement and the Assignment and Amendment Agreement
(as defined in the Subordination Agreement);
(iii) the second priority lien of the Deed of Trust;
(iv) existing easements, covenants and similar restrictions of record which do
not materially and adversely affect the use or occupancy of the Property,
including, without limitation, those items identified on Schedule 1(b)(iv)
attached hereto and incorporated herein by this reference;
(v) the lien of taxes, assessments, impositions and similar items and
obligations, in each case not yet due and payable; and
(vi) other matters created by or with the concurrence of Orion and/or ITB and
the Refinance Lender.
(c) In addition to the consideration specified in Paragraph 1(a) above, and as
additional consideration for entering into this Agreement, but not as a part
of the Purchase Price, CLP will be entitled to receive the contingent Profit
participation described in Paragraph 2(c) below.
(d) At the Closing, CLP will place in an appropriate interest bearing escrow
or other account (or will otherwise segregate) for the benefit of the
Refinance Lender, all upon customary terms and conditions to be agreed to by
and between CLP and the Refinance Lender, a sum equal to the amount of
interest of the Refinance Loan which will be due and payable to the Refinance
Lender on July 25, 1996, which amount the parties estimate will be
approximately Nine Hundred and Ten Thousand Dollars ($910,000) (the "Interest
Payment"). Not later than fifteen (15) days prior to the date on which the
Interest Payment becomes due, Orion will pay to
CLP an amount equal to one-half 1/2 of the Interest Payment, and on the date
that the Interest Payment
becomes due the escrow holder (or other person or entity holding such funds)
will pay to the Refinance Lender an amount equal to the actual amount of
interest due and payable at such time under the terms of the Refinance Loan.
In the event that the amount actually paid to the Refinance Lender is less
than the amount of the Interest Payment, the excess Interest Payment, together
with all interest earned on the entire Interest Payment shall be paid over to
CLP, and CLP shall refund to Orion a pro rata portion of the funds previously
paid by Orion to CLP. In the event that the amount actually paid to the
Refinance Lender is more than the amount of the Interest Payment, then a
portion of the interest earned on the Interest Payment will be paid to Orion
in satisfaction of such shortfall, with the balance of such interest to be
paid to CLP, and Orion will pay to CLP its pro rata share of such shortfall,
it being the intention of Orion and CLP that each of them will be responsible
for one-half (1/2) of the interest on the Refinance Loan (limited to its
original stated maturity). Not later than fifteen (15) days prior to the
stated maturity of the Refinance Loan, each of Orion and CLP will deposit into
escrow an amount equal to such party's one-half (1/2) share of the interest
component of the full principal and interest payment due at the maturity of
the Refinance Loan.
2. Development of Property and Profit Participation.
(a) Commencing on the date of the Closing, Orion will continuously and
diligently through the expiration of the Option Period (as hereinafter
defined) use reasonable commercial efforts:
(i) to secure permanent financing ("Permanent Financing") and all gaming and
other regulatory approvals necessary for the development (including
redevelopment) and opening of the Property under Orion's proprietary "Starship
Orion" theme, and to obtain appropriate leasing commitments, upon commercially
reasonable terms and conditions, from at least four qualified tenants (who
have received gaming approvals in Nevada or in other jurisdictions), to lease
and operate casino space therein ("Leasing Commitments"); and/or
(ii) to secure commercially reasonable alternative financing ("Alternative
Financing") and all gaming and other regulatory approvals necessary for the
development and opening of the Property under a more modest and less time
consuming development plan.
(b) If by October 25, 1996, Orion (i) has not closed on or received a firm
commitment for the Permanent Financing and obtained the required Leasing
Commitments, and (ii) has not closed on or received a firm commitment for the
Alternative Financing, then if CLP, by October 25, 1996, has arranged for the
refinancing of the Refinance Loan and paid all costs and expenses associated
with such refinancing, and deposited into an escrow account under the
fiduciary control of Orion an amount equal to not less than six months' and up
to one year's interest on the refinanced or replaced Refinance Loan
(approximately $1.8 Million) and the aggregate amount of estimated carrying
costs on the Property, including taxes, assessments, ordinary and reasonable
maintenance costs, and insurance, then for up to a one-year period, determined
with reference to the amount of interest and costs so escrowed and the
maturity date of the refinancing, ending not later than October 25, 1997 (the
"Option Period"), CLP may either:
(y) during the last quarter of the Option Period, on behalf of Orion, as its
duly authorized agent and attorney in fact, appoint and authorize a licensed
reputable commercial real estate broker for such period to either sell or
enter into a binding contract for the sale of the Property (provided that such
closing takes place prior to the end of the Option Period) for all cash in any
amount, net of any sales commissions and/or closing costs, in excess of the
sum of (i) debt secured by the Property (including debt secured by the
Refinance Deed of Trust and debt evidenced by the "B" Note) and debt evidenced
by the "A" Note (collectively, "Debt"), and (ii) the aggregate of documented
unrecovered or unreimbursed amounts invested by the LVEN Entities and the ITB
Entities in the acquisition, holding and development of the Property;
provided, however, that such agent will be permitted to sell the Property for
less than such amount, but for more than the aggregate of Debt and documented
unrecovered or unreimbursed amounts invested by the ITB Entities in the
acquisition, holding and development of the Property upon the prior written
consent of the LVEN Entities, with the proceeds of such sale to be paid in the
following order of priority: first, to pay in full all principal, interest
and other amounts and costs of whatever nature owing under the Refinance Loan
and then the amounts borrowed pursuant to Section 2(g) hereof; second, to
repay Orion for its investment in the Property in the amount of all
unrecovered or unreimbursed cash payments applied against the Purchase Price
(including prior payments of principal and/or interest under the "A" Note
and/or the "B" Note), plus $2,000,000 and all reasonable documented costs,
expenses and any additional investment in, or debt incurred in furtherance of
the development of the Property, after the Closing, and expenses incurred in
furtherance thereof, together with an accrued return in the amount of eight
percent (8%) per annum; third, to pay CLP the outstanding balances owing under
the "A" Note and the "B" Note, including accrued interest thereon, plus
$4,000,000 and any other reasonable documented costs, expenses and any
additional investment in, or debt incurred in furtherance of the development
of, the Property after the Closing and approved by Orion, together with an
accrued return thereon in the amount of eight percent (8%) per annum; fourth,
$2,000,000 to Orion, together with an accrued return thereon in the amount of
eight percent (8%) per annum from Closing; and fifth, any excess to be divided
fifty percent (50%) to Orion and fifty percent (50%) to CLP; or
(z) arrange on behalf of Orion, in conformity with prevailing financing terms
and conditions for major Las Vegas hotel/casino projects, Alternative
Financing in the amount of not less than Fifty-Five Million Dollars
($55,000,000), such amount representing the minimum amount necessary to open
and operate the Property under a more modest theme and pursuant to a business
plan deemed acceptable by the financing source, and to cause Orion to accept
such Alternative Financing, following which Orion shall apply such Alternative
Financing to such development of the Property and shall have the right to
determine the theme and to manage the Property.
During the Option Period, Orion shall retain the right to pursue the financing
discussed in Paragraph 2(a) above, and if Orion complies with the conditions
of Paragraph 2(b)(i) or 2(b)(ii) hereof prior to CLP securing a binding
contract for sale pursuant to paragraph (y) above or closing on a financing
pursuant to paragraph (z) above, the Option Period and CLP's rights thereunder
shall terminate immediately.
Orion agrees not to sell the Property prior to the end of the Option Period
without the consent of CLP.
If Orion sells the Property prior to the commencement of casino operations or
if the Property is sold through foreclosure or other forced sale, the proceeds
of such sale shall be paid in the following order of priority:
(i) first, to pay in full all principal, interest and other amounts and costs
of whatever nature owing under the Refinance Loan or any substitution or
refinancing thereof and then amounts borrowed pursuant to Paragraph 2(g)
below;
(ii) second, to repay Orion for its investment in the Property or any
additions thereto in the amount of all cash payments comprising a part of the
Purchase Price plus $2,000,000 and any and all reasonable documented costs,
expenses and any additional investment in, or debt incurred in furtherance of
the development of, the Property after the Closing, together with an accrued
return thereon in the amount of eight percent (8%) per annum;
(iii) third, to pay CLP the outstanding balance of principal and accrued
interest owing under the "B" Note, plus $4,000,000 and any documented costs,
expenses, and any additional investment in, or debt incurred in furtherance of
the carrying or development of, the Property after the Closing and approved by
Orion, determined in accordance with generally accepted accounting principles,
consistently applied, together with an accrued return thereon in the amount of
eight percent (8%) per annum;
(iv) fourth, to pay Orion $2,000,000 together with an accrued return thereon
in the amount of eight percent (8%) per annum from Closing; and
(v) fifth, any excess to be divided fifty percent (50%) to Orion and fifty
percent (50%) to CLP; provided, however, that if the Property is sold after
January 25, 2001, in order for CLP to receive its fifty percent (50%) share
from and after such date CLP must pay on an ongoing basis fifty percent (50%)
of the carrying costs of the Property, including interest, taxes, maintenance,
insurance and an 8% per annum charge for the amount Orion has invested in the
Property.
(c) If there are any "Profits" earned prior to the opening of the first
casino, Profits shall be credited 75% to Orion and 25% to CLP and such sums
shall remain as investments in the Property. "Profits" shall mean net income
calculated on an accrual basis in accordance with generally accepted
accounting principles. Following development of the Property under the
Starship Orion theme or under a more modest development program as provided
herein, the ITB Entities agree and guarantee that CLP will receive as
additional consideration for entering into this Agreement (but not as part of
the Purchase Price for the Assets) a fifty percent (50%) interest in Adjusted
Cash Flow (as herein defined) from the operation of the property as so
developed for a period of six (6) years following the opening of the first
casino on the Property and the commencement of operations, and thereafter a
twenty-five percent (25%) interest in Adjusted Cash Flow until such time as it
has received an aggregate of One Hundred Sixty Million Dollars ($160,000,000)
under this Paragraph 2(c) (exclusive of any amounts received under clause (ii)
below), but only after (i) Orion has first received one hundred percent (100%)
of Adjusted Cash Flow until such time as it has recouped, the aggregate amount
of cash payments applied to the Purchase Price and payments, if any, made
under the "A" Note and/or the "B" Note, and $2,000,000 plus any amounts that
are invested in the Property after the Closing, together with interest thereon
at the rate of eight percent (8%) per annum from the date of investment,
(ii) CLP has then received one hundred percent (100%) of Adjusted Cash Flow
until such time as it has been paid all principal and interest, if any,
remaining outstanding under the "A" Note and/or the "B" Note and has in
addition recouped the aggregate amount of $4,000,000 plus any amounts that are
invested in the Property after the Closing and approved by Orion, together
with interest thereon at the rate of eight percent (8%) per annum from the
date of investment and (iii) Orion has received an additional $2,000,000
together with interest thereon at the rate of eight percent (8%) per annum
from Closing. For purposes of this Paragraph 2(c), the term "Adjusted Cash
Flow" shall mean and refer to cash flow of Orion from the Property provided by
or (used) from operating activities as presented on the statements of cash
flows, prepared on an accrual basis of accounting, in accordance with
generally accepted accounting principles, consistently applied and presented
with Orion's audited financial statements, plus any income taxes accrued on
the financial statement, less the (a) payment of any debt retirements and
capital lease payments and (b) any fees received or accrued for the initial
rent or lease payments from the approximately seven (7) tenants or partners
participating in the Orion Starship casinos or the CountryLand concept should
partners be obtained for that development. Should there be any substantial
change in the required debt payments during the next fiscal year (i.e.,
required balloon note payment), said adjusted cash flow payment amount will be
made only to the extent that sufficient cash (at least 80% of required note
payment should be reserved) will be left remaining for such required payment.
If in any year there is a negative cash flow from the calculation made above,
such negative cash flow will carry forward to future years to offset future
cash flow calculations. The calculation of net income as presented on the
statement of cash flows shall include all hotel, casino, recreation,
entertainment and other directly or indirectly related operations of Orion (or
any affiliate) on, from or related to the Property, but excluding any income
from the operation of a "pod" operated by Orion or its subsidiaries or any
related company under the Starship Orion concept, and shall include
appropriate and reasonable charges for corporate, administrative and
management costs of the operation, in each case determined in accordance with
Generally Accepted Accounting Principles consistently applied. Without
limiting the generality of the foregoing, in the determination of Adjusted
Cash Flow the only items of costs and expenses which shall be included therein
shall be those items specifically directly related to the operation of the
Property and shall specifically exclude ITB overhead not related to the
Property. In all instances only such costs and expenses as are standard in
the hotel and gaming industry shall be charged to the Property. Payment on
the profit participation calculation, if required, will be paid the later of:
100 days after Orion's year end or 10 days after the filing of Orion's 10-K if
said due date is extended. The Adjusted Cash Flow participations provided for
herein shall be payable to CLP notwithstanding any sale or transfer of the
Assets to another party if the sale occurs after the Property has been
developed and opened for operations. As a condition to any such sale
(including any sale of all or substantially all of the capital stock of Orion
or any merger, consolidation or similar transaction in which Orion is not the
surviving entity), Orion will cause the purchaser or an affiliate of the
purchaser (in either case having a net worth or shareholder's equity of at
least Seventy Million Dollars ($70,000,000)) to irrevocably assume or
guarantee the obligation to pay to CLP the ongoing Profit participations
provided herein, whereupon the guarantee of the ITB Entities shall cease. If
the Property is sold prior to the opening of the first casino, CLP's rights to
any Profit Participation shall cease upon the closing of the sale and CLP will
immediately record a termination of the Memorandum of Agreement (as
hereinafter defined). CLP shall have the right of audit, annually, and at its
own expense.
(d) [Intentionally omitted].
(e) In connection with any development of the Property, Orion, will be
responsible for the first Six Hundred Thousand Dollars ($600,000) for the
removal/abatement of asbestos-containing materials to the extent necessary to
permit the operation of the Property as a hotel/casino facility, and CLP will
be responsible for any excess, which excess may be offset by Orion or ITB
against Profit participations owing to CLP.
(f) If the Property is developed under Orion's Starship Orion (or any other
multi-casino) theme, CLP will have the option, exercisable at any time after
the commencement of substantive negotiations with other prospective lessees
but before the later to occur of ninety (90) days thereafter (which shall be
extended to one hundred eighty (180) days if at the 90th day CLP has obtained
a financing commitment) or the date on which the penultimate lease is
executed, to become a lessee of space in the Property and to develop and
operate one of the casino "pods" under such theme as CLP should determine, all
upon terms and conditions comparable to those under which other casino "pods"
are operated, and CLP will have the right to assign such right to any party
approved by Orion, such approval not to be unreasonably withheld.
(g) Following the Closing but prior to the receipt and application of
Permanent Financing or Alternative Financing to the development of the
Property, Orion shall have the right, subject to rights of approval of senior
lienholders (including the Refinance Lender), to borrow or otherwise finance
up to Twenty Million Dollars ($20,000,000) to be applied to the development of
the Property (including for the purchase of adjacent parcels of land to be
consolidated with the Property), and CLP agrees to subordinate the lien of the
Deed of Trust to such borrowing and/or financing; provided, however, that
(i) no such borrowings shall be permitted unless in connection therewith Orion
has used reasonable commercial efforts to structure such borrowings (and the
collateralization thereof) such that they will not cause the LVEN Entities to
"write down" the value of the "A" Note and/or the "B" Note (or if such a
"write-down" does result, then that the amount of the "write-down" is
minimized to the greatest extent practicable), (ii) no more than ten percent
(10%) of such amount shall consist of "soft" costs, and (iii) with respect to
the acquisition of any adjacent parcels, Orion shall first use its best
efforts to collateralize any financed portion of the purchase price therefor
with the parcels so acquired.
(h) Notwithstanding anything to the contrary contained herein, the parties
hereto acknowledge and agree that in order to arrange the Permanent Financing
or the Alternative Financing, as the case may be, or to proceed with a
different development of the Property, it may be necessary to expend sums and
incur costs in excess of those presently contemplated on and in connection
with various pre-development activities. Should the expenditure of such
additional funds become necessary, as agreed by Orion in its sole discretion,
then Orion will attempt to raise such funds in the following manner and order
of priority:
1. First, Orion will attempt to arrange for the borrowing of such funds from
independent third party lending sources upon commercially reasonable terms, as
determined by Orion in its sole discretion;
2. Second, in the event that the Property is being developed under the
Starship Orion theme, Orion will attempt to arrange for contributions by
lessees of Starship Orion casino "pods" upon such terms and conditions as
Orion deems appropriate in its sole discretion (including the application of
lessee deposits to the extent permitted under agreements with such lessees);
3. Third, the ITB Entities and the LVEN Entities may contribute any remaining
necessary funds in the same ratio of investment in the Property as hereinbelow
set forth, upon such terms and in such manner as they may agree among
themselves;
4. Fourth, in the event that the LVEN Entities determine that they are unable
or unwilling to contribute the amounts set forth in subparagraph 3 immediately
above, the ITB Entities may contribute any remaining funds as determined to be
necessary in their sole discretion.
5. Fifth, if Orion has not secured the necessary funds pursuant to the above
subparagraphs and Orion deems it necessary to grant participations in the
revenues or profits of the Property in order to raise any remaining necessary
funds, then Orion's and the LVEN Entities' respective interests in the Profits
shall be reduced as stated below; provided, however, that if such investment
would cause the Profit participation of the LVEN Entities to be reduced to
below 42 1/2% during the first five years of operation and below 20% thereafter,
Orion will obtain the consent of CLP to such investment.
To the extent that additional funds are invested in the Property and are not
obtained by way of loans from third party lending sources, then the LVEN
Entities and the ITB Entities' entitlement to share in Profits as set forth in
the preceding subparagraph 2(c) hereof shall be adjusted to provide that the
party(s) investing such funds shall be entitled to a percentage of the Profits
in the same ratio to the whole of the funds invested by all parties in the
Property as was to have been shared by Orion and CLP as set forth in the
preceding subparagraph 2(c).
For purposes of determining the various investor parties' respective
entitlements to share in Profits, Orion will be deemed to have invested
Thirty-Three Million Dollars ($33,000,000) and the LVEN Entities to have
invested Ten Million Five Hundred Thousand Dollars ($10,500,000). As
additional equity is invested, the investor(s) of such additional funds will
be entitled to a pro rata share of Profits based upon the percentage that the
new contribution bears to the above contributions, and the respective
interests of Orion and the LVEN Entities shall be decreased by the same
percentage amount. By way of illustration, if an additional Ten Million
Dollars ($10,000,000) is contributed to the Property, the party investing same
shall receive 10/53.5 (18.69%) of the Profits and Orion's interest in Profits
shall be reduced by 18.69% of its interest in Profits (50% x .8131 for the
first 5 years and then 75% x .8113 thereafter) and the LVEN Entities' interest
in Profits shall be reduced by 18.69% of their interest in Profits (50% x
.8131 for the first 5 years and then 25% x .8131 thereafter).
(i) The parties hereby acknowledge and agree that the development and
operation of the Property as contemplated herein will be subject to (i) the
approval of the Clark County Liquor and Gaming Licensing Board, the State of
Nevada Gaming Control Board, the State of Nevada Gaming Commission and/or the
Clark County Liquor and Gaming Licensing Board (collectively, the "Gaming
Authorities"), and other appropriate regulatory authorities, and (ii) all
requirements imposed under the Nevada Gaming Control Act (NRS Chapter 463) and
the regulations promulgated thereunder and any local laws, ordinances or
regulations. In the event that any party hereto (or any assignee thereof), as
a result of a communication or action by the Gaming Authorities or on the
basis of consultations with its gaming counsel and other professional
advisors, reasonably believes that the Gaming Authorities will: (i) fail to
approve the development of the Property as contemplated herein; (ii) fail to
permit or allow the transactions contemplated under this Agreement; (iii) fail
to grant required gaming licensing and/or approval or grant such gaming
licensing and/or approval only upon terms and conditions which are
unacceptable to the LVEN Entities or the ITB Entities; or (iv) significantly
delay the development of the Property as contemplated herein due to concerns
of any aspect of the proposed development plans for the Property or the
suitability of the LVEN Entities and/or the ITB Entities, their respective
stockholders, directors, officers, employees, representatives, agents or
affiliates, then the parties hereto agree to work together in good faith or
otherwise take such unilateral action as may be necessary to satisfy
conditions imposed by the Gaming Authorities and/or otherwise to comply with
all applicable laws and regulations, including without limitation terminating
all relationships with any person or persons believed to be unacceptable to
the Gaming Authorities upon such terms and conditions, if any, as the Gaming
Authorities may impose or the parties' respective professional advisors may
recommend.
3. Representations and Warranties of LVEN and CLP.
In order to induce ITB and Orion to enter into this Agreement and to purchase
the Property hereunder, each of LVEN and CLP hereby jointly and severally
makes and gives, as of the date hereof, the representations, warranties and
covenants set forth on Schedule 3 attached hereto and incorporated herein by
this reference, which representations, warranties and covenants shall survive
the Closing and shall not be deemed merged into the deed of conveyance.
Except as specifically provided herein (including the Schedules and Exhibits
hereto), Orion and ITB acknowledge and agree that Orion will conclude its
purchase of the Assets based solely upon Orion's and ITB's inspection and
investigation of the Assets, and that Orion will acquire the Assets on an
"As-Is, Where-Is" basis, with all faults and defects,
latent and patent. Without
limiting the generality of the foregoing, each of ITB and Orion acknowledges
that, except as otherwise expressly represented or warranted herein, LVEN and
CLP have not made, are not making, and hereby expressly disclaim and negate
any representations or warranties of any kind whatsoever, express, implied or
statutory, as to the condition of title to the Assets or any matters
concerning the Assets, including, without limitation, with respect to
licensing, gaming matters, permissible uses, taxes, covenants, conditions and
restrictions, water or water rights, topography, utilities, soil and subsoil
conditions, drainage, zoning, environmental or building laws, rules or
regulations. In connection with the foregoing, ITB and Orion acknowledge that
the Property was acquired by CLP in November, 1993, as a non-operational
facility, and that neither LVEN, CLP nor any affiliate has ever conducted any
business activities thereon or therefrom.
The representations, warranties and covenants set forth in this Paragraph 3
shall survive the Closing and shall not be deemed merged into the deed of
conveyance.
4. Representations and Warranties of ITB and Orion.
Each of ITB and Orion (but only as to itself) makes the following
representations and warranties to LVEN and CLP:
(a) Organization and Standing. Each of ITB and Orion is a corporation duly
organized, validly existing and in good standing under the laws of the State
of its incorporation, and has full corporate power and authority, and all
requisite governmental licenses, permits and franchises, to own, lease and
operate its assets and to carry on its business as presently conducted.
(b) Corporate Authority and Action. Each of ITB and Orion has all requisite
corporate power and authority to execute and deliver this Agreement and all
other agreements, documents, instruments and certificates to be executed and
delivered hereunder (collectively, the "Purchaser Documents") and to perform
its obligations hereunder and thereunder. All corporate action required to be
taken by ITB and Orion in connection with the execution, delivery and
performance of this Agreement and each of the Purchaser Documents has been
duly taken. The officers of ITB and Orion who have executed and delivered
this Agreement have been duly authorized to so act by all requisite corporate
action on their part;
(c) Enforceability. Each of the Purchaser Documents when executed and
delivered by ITB and/or Orion, will be, a valid and binding agreement of ITB
and/or Orion, as the case may be, enforceable against it in accordance with
its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally or (ii) general principles
of equity (regardless of whether such enforcement is considered in a
proceeding at law or in equity).
(d) No Conflicts. Neither the execution and delivery of any of this Agreement
or the Purchaser Agreements, nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by ITB and/or Orion with any of
the provisions hereof or thereof will (a) violate, conflict with, or result in
a breach of any provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, result in a
modification, termination or forfeiture of any right or obligation under or
result in the creation of any lien, security interest, charge or encumbrances
upon any of the material properties or assets of ITB and/or Orion, any of the
terms, conditions or provisions of (i) their charters or bylaws or (ii) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
contract, agreement or other instrument or obligation to which they are a
party or to which they, or any of their properties or assets, may be subject;
or (b) violate any judgment, ruling, order, writ, injunction, decree, statute,
rule, regulation, ordinance, judgment, decree or requirement of any federal,
state or local governmental authority applicable to Purchaser or to which any
of their properties or assets may be subject.
(e) Required Consents. No notice to, filing with, or authorization, consent
or approval of any public body or authority is necessary for consummation by
ITB and Orion of the transactions contemplated hereby.
(f) No Misstatements or Omissions. Neither this Agreement, nor any document
contemplated hereby or furnished by or on behalf of ITB or Orion to the LVEN
Entities in connection with the execution and delivery of this Agreement and
consummation of the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to ITB or
Orion which they have not disclosed to the LVEN Entities which materially
adversely affects, or insofar as they can reasonably foresee will materially
adversely affect, the properties, business, prospects, operations, earnings,
assets, liabilities or condition (financial or otherwise) of Orion or of ITB
taken as a whole.
6. Escrow.
The Transaction shall be closed through the escrow previously opened by CLP
and SunAmerica (the "Escrow") with National Title Company (the "Escrowee").
The parties hereto shall deliver to the Escrowee a fully-executed copy of this
Agreement, which, together with appropriate recording instructions prepared by
the parties hereto and Escrowee (the "Recording Instructions"), shall
constitute joint escrow instructions to Escrowee. In addition, the LVEN
Entities and the ITB Entities agree to execute and be bound by such other
reasonable and customary escrow instructions as may be necessary or reasonably
required by Escrowee or the parties hereto in order to consummate the
transactions contemplated hereby, or otherwise to distribute and pay the funds
and other items held in Escrow as provided herein; provided, however, that in
the event of any inconsistency between such supplemental escrow instructions
and the terms and provisions of this Agreement and the Recording Instructions,
the terms and conditions of this Agreement and the Recording Instructions
shall control, absent an express written agreement between all of the parties
hereto to the contrary which acknowledges this Paragraph 6.
7. Closing.
The consummation of the purchase and sale of the Assets pursuant to this
Agreement (the "Closing") shall occur immediately following, and at the same
location as the closing of, the Refinance Loan, or on such later date and at
such location as the parties may agree in writing. The matters and deliveries
hereafter described in this Paragraph 7 shall be deemed accomplished
concurrently. The recordation of the Deed (as herein defined), the Deed of
Trust and any financing statements shall be accomplished not later than the
Closing.
(a) At the Closing, CLP shall deliver to Orion and/or ITB, as the case may be:
(i) such bills of sale, assignment(s), or endorsement(s) of certificates of
title, as appropriate, for the Personal Property, the Intangible Property, the
Engineering Records, the FCC License and the Insurance Policies in favor of
Purchaser or its designee, all in form and substance acceptable to the parties
and their respective counsel;
(ii) a Grant, Bargain and Sale Deed conveying fee simple title to the Real
Estate to Orion, in the form commonly in use in the State of Nevada (the
"Deed");
(iii) a "non-foreign affidavit," properly executed by an officer of Orion,
containing such information as shall be required by Section 1445(b)(2) of the
Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder;
(iv) a true, complete and correct copy of LVEN's Certificate of Incorporation,
including all amendments thereto, certified by the Office of the Delaware
Secretary of State no earlier than five (5) business days prior to the
Closing;
(v) a "good standing" certificate with respect to LVEN, issued by the Office
of the Delaware Secretary of State no earlier than five (5) business days
prior to the Closing;
(vi) A true, complete and correct copy of LVEN's Bylaws, including all
amendments thereto, certified by LVEN's Secretary as of the date of the
Closing;
(vii) A true, complete and correct copy of Resolutions of the Board of
Directors of LVEN authorizing and approving the execution and delivery of this
Agreement and the consummation by LVEN of the Transaction, certified by LVEN's
Secretary as of the date of the Closing;
(viii) A true, complete and correct copy of CLP's Articles of Incorporation,
including all amendments thereto, certified by the Office of the Nevada
Secretary of State no earlier than five (5) business days prior to the
Closing;
(ix) A "good standing" certificate with respect to CLP, issued by the Office
of the Nevada Secretary of State no earlier than five (5) business days prior
to the Closing;
(x) A true, complete and correct copy of CLP's Bylaws, including all
amendments thereto, certified by CLP's Secretary as of the date of the
Closing;
(xi) A true, complete and correct copy of Joint Resolutions of the Board of
Directors and Sole Shareholder of CLP authorizing and approving the execution
and delivery of this Agreement and the consummation by CLP of the Transaction,
certified by CLP's Secretary as of the date of the Closing;
(xii) any other documents, instruments, data, records, correspondence,
consents, assignments or agreements called for under this Agreement which have
not previously been delivered.
(b) At the Closing, Orion and/or ITB, as the case may be, shall deliver to CLP
and/or LVEN, as the case may be:
(i) the cash portion of the Purchase Price;
(ii) the "A" Note, duly executed by Orion and ITB;
(iii) the "B" Note, duly executed by Orion and ITB;
(iv) the Deed of Trust, duly executed by Orion;
(v) A true, complete and correct copy of ITB's Certificate of Incorporation,
including all amendments thereto, certified by the Office of the Delaware
Secretary of State no earlier than five (5) business days prior to the
Closing;
(vi) A "good standing" certificate with respect to ITB, issued by the Office
of the Delaware Secretary of State no earlier than five (5) business days
prior to the Closing;
(vii) A true, complete and correct copy of ITB's Bylaws, including all
amendments thereto, certified by ITB's Secretary as of the date of the
Closing;
(viii) A true, complete and correct copy of Resolutions of the Board of
Directors of ITB authorizing and approving the execution and delivery of this
Agreement and the consummation by ITB of the Transaction, certified by ITB's
Secretary as of the date of the Closing;
(ix) A true, complete and correct copy of Orion's Articles of Incorporation,
including all amendments thereto, certified by the Office of the Nevada
Secretary of State no earlier than five (5) business days prior to the
Closing;
(x) A "good standing" certificate with respect to Orion, issued by the Office
of the Nevada Secretary of State no earlier than five (5) business days prior
to the Closing;
(xi) A true, complete and correct copy of Orion's Bylaws, including all
amendments thereto, certified by Orion's Secretary as of the date of the
Closing;
(xii) A true, complete and correct copy of Resolutions of the Board of
Directors of Orion authorizing and approving the execution and delivery of
this Agreement and the consummation by Orion of the Transaction, certified by
Orion's Secretary as of the date of the Closing;
(xiii) the Entertainment Contract, duly executed by Orion and ITB; and
(xiv) any other documents, instruments, data, records, correspondence,
consents, assignments or agreements called for under this Agreement which have
not previously been delivered.
(c) At the Closing, the LVEN Entities and the ITB Entities shall deliver to
the Refinance Lender such documents, certificates, opinions and instruments as
it may reasonably request, including, without limitation, the Subordination
Agreement, in form and substance acceptable to all parties.
(d) Title to and possession of the Assets shall be delivered to Orion as of
the Closing.
8. Prorations, Allocations and Closing Costs.
(a) CLP and Orion shall allocate and/or prorate between themselves as of the
Closing, and shall provide, where and as appropriate, for the payment by
separate check or otherwise of, the following items, without credit, offset or
other adjustment of the Purchase Price or any constituent part thereof:
(i) Non-delinquent real and personal property taxes and assessments (including
any supplemental assessments); and
(ii) Utilities, insurance and prepaid expenses related to the Assets. Orion
shall make appropriate arrangements for transfer of all necessary utility and
other services into its name to be effective as of the Closing.
9. Indemnification.
Each of the ITB Entities agrees to indemnify the LVEN Entities, and each of
them, and their respective officers, directors, shareholders, employees, and
other affiliate agents, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may at any time be
imposed on, incurred by or asserted against them or in any way relating to or
arising out of the requirement of SunAmerica that the LVEN Entities remain
liable, principally and/or as guarantors on the Refinance Loan.
10. Miscellaneous Provisions.
(a) Brokers and Finders. Each of the Company and Orion represent and warrant
to the other that it has not engaged or utilized the services of any broker or
finder in connection with the Transaction, and will indemnify and hold the
other harmless from any claim for brokerage commissions, finders fees or
similar compensation arising out of the Transaction.
(b) Fees and Costs. Except as may otherwise be provided for in the other
agreements executed in connection with this Letter Agreement and the
transactions contemplated thereby, each party shall bear its own legal,
accounting and other fees and expenses in connection with the Transaction.
(c) Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada, without regard to conflicts
of laws principles.
(d) Short-Form Memorandum. Immediately following the Closing, the parties
hereto will cooperate in recording in the real property records of Clark
County, Nevada, a short-form memorandum of this Agreement substantially in the
form of Exhibit "E" attached hereto and incorporated herein by this reference.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.
(f) Further Assurances. The parties hereto agree to execute any and all such
further agreements, instruments or documents, and to take any and all such
further action, as may be necessary or desirable to carry into effect the
purpose and intent of this Agreement.
(g) Subordination. This Agreement and all of the rights and obligations set
forth herein are expressly subject to the Subordination Agreement, which
Subordination Agreement, among other things, provides for the subordination of
certain rights and obligations set forth in this Agreement and certain other
obligations set forth in this Agreement and certain other obligations to the
Refinancing Deed of Trust and certain other rights, obligations and
agreements, all as set forth in the Subordination Agreement.
If the foregoing properly sets forth the agreement and understanding of the
parties, please countersign a copy of this Agreement in the space provided
below, and return such counter-signed copy to the Company by facsimile.
Las Vegas Entertainment Network, Inc.
By: /s/Joseph A. Corazzi, President
CountryLand Properties, Inc.
By: /s/Joseph A. Corazzi, President
AGREED AND ACCEPTED this 24th
day of January, 1996
International Thoroughbred Breeders, Inc.
By: /s/Robert J. Quigley, Chairman
Orion Casino Corporation
By: /s/ Francis W. Murray, President<PAGE>
