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THOROUGHBRED HORSEMEN'S AGREEMENT
THIS AGREEMENT is entered into this 16th day of June, 1999, effective as
of January 1, 1999, by and between COLONIAL DOWNS, L.P., a limited partnership
("Colonial Downs"), and the VIRGINIA HORSEMEN'S BENEVOLENT AND PROTECTIVE
Association., a Virginia not-for-profit corporation (the "VaHBPA")
WHEREAS, Colonial Downs owns and operates (through its affiliate Stansley
Racing Corp.) in New Kent County, Commonwealth of Virginia, the facility
known as the Colonial Downs racetrack (the "Racetrack") and four satellite
wagering facilities located in Brunswick, Chesapeake, Hampton and Richmond,
Virginia (the "SWFs");
WHEREAS, the VaHBPA is a trade organization composed of owners, trainers,
owner-trainers, and owner-breeders (the "Members") of thoroughbred race
horses;
WHEREAS, the VaHBPA provides benevolence programs and other services for
its Members and their employees who are and will be engaged in live racing at
the Racetrack; and
WHEREAS, the parties hereto desire to bring about a close and
understanding relationship among owners and trainers of thoroughbred race
horses (the "Horsemen"), including the Members, the VaHBPA, Colonial Downs,
and the public;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties desiring to be legally bound agree as follows:
1. Term of Agreement.
A. Effective Date. This Agreement shall become effective as
12:01 a.m. January 1, 1999 and shall remain in effect through midnight,
December 31, 2001 (the "Initial Term"), unless otherwise terminated as
provided herein.
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B. Renewal. This Agreement shall continue in full force and
effect on January 1, 2002 for an additional period of three years (the
"Renewal Term" and together with the Initial Term, the "Term") upon either
party hereto delivering written notice of renewal to the other party no later
than 60 days in advance of scheduled expiration (November 1, 2001); provided
that in event of renewal by either party, Colonial Downs shall continue to
contribute to the Thoroughbred Partners' Account (as defined herein) at least
5.25% of SWF Thoroughbred Handle (as defined herein) for the Renewal Term.
Upon such election this Agreement shall continue to be in full force and
effect for the Renewal Term. This provision will become inoperative in the
event of bankruptcy by Colonial Downs.
2. Scope of Agreement. Except as specifically set forth herein,
this Agreement shall only apply to the live thoroughbred race meetings ("Race
Meetings") and pari-mutuel wagering conducted on thoroughbred horse racing at
the Racetrack and the SWFs during the Term.
3. Exclusive Representation. During the Term, the VaHBPA shall be
the exclusive representative of its Members with respect to the matters set
forth herein. VaHBPA hereby warrants and represents that it is the majority
Horsemen's group for Horsemen that have and are expected to race at the
Racetrack, and Colonial Downs hereby recognizes it as such.
4. Accounts.
A. Thoroughbred Partners' Account. Colonial Downs maintains
Accounts 455823207609 and 45823207601 maintained at Wachovia Bank, Account
102071401 maintained at Citizens and Farmers Bank and an account at Virginia
National Bank, Charlottesville branch (collectively, the "Thoroughbred
Partners' Account").
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The parties agree to promptly consolidate these accounts
into a single account at Virginia National Bank, Charlottesville branch, and
that the financial institutions at which the Thoroughbred Partners' Account
are maintained may be changed at any time by agreement of the parties.
Colonial Downs and VaHBPA agree that all funds maintained in the Thoroughbred
Partners' Account are funds that are to be maintained in trust on behalf of
and for the benefit of recipients of the thoroughbred purse account funds
distributed, according to the regulations promulgated by the Virginia Racing
Commission from time to time and by agreement between the parties hereto, to
participants engaging in thoroughbred horse racing at the Racetrack. In
furtherance of such purpose, the parties hereto have executed a trust
agreement substantially in the form of Exhibit A attached hereto and shall
take such further action as may be necessary to have the Thoroughbred
Partners' Account designated a trust account by the financial institution at
which the Thoroughbred Partners' Account is maintained. In addition, either
party may elect upon written notice to the other party to have a third-party
trustee, acceptable to both parties, appointed as trustee of each Account.
All interest or earnings whatsoever on the amounts paid to the Thoroughbred
Partners' Account shall accrue solely to the benefit of the Thoroughbred
Partners' Account. All funds deposited to the Thoroughbred Partners' Account
shall be invested in an interest-bearing account which provides market rates
of return, or government or bank securities, and Colonial Downs shall provide
all reasonable assurances of the security of the investments made.
B. Horsemen's Account. Monies payable to Horsemen as purses
under this Agreement as purses shall be deposited into such account not less
often than weekly. The appropriate portions of purse money shall be made
available to the earners thereof within seventy-two (72) hours (dark days and
Sundays excluded) after the result of the race in which such money was earned
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has been declared official; provided, that in the event of any dispute as to
the result of a race due to a drug test or other regulatory inquiry, the purse
money shall not be made available until final resolution thereof by the
stewards, the Virginia Racing Commission or the courts, as the case may be.
No portion of such money payable as purses to any earner thereof (other than
jockey and gate fees) shall be deducted by Colonial Downs unless requested in
writing by the person to whom such monies are payable or his duly authorized
representative or as required by order of the stewards. The Thoroughbred
Partners' Account and the Horsemen's Account and the investment or deposit
schedules of Colonial Downs with respect to such account during any Race
Meeting shall be subject to examination at any reasonable time by the
President of VaHBPA or his nominee. Interest earned on the Thoroughbred
Partners' Account and Horsemen's Account shall be distributed fifty percent
(50%) thereof to each of (a) Colonial Downs, to help defray the costs of
maintaining such account, including, but not limited to, the Horsemen's
bookkeeper and any third-party trustee fees; and (b) the Backstretch Life
Improvement Fund (as defined in Section 16 hereof).
Purse Amounts.
A. On-Track Wagering. Colonial Downs shall pay to the Horsemen
whose horses race at Colonial Downs as purses the amount specified for purses
in Section 59.1-392 of the Code of Virginia (the "Purse Monies"). Nomination,
sustaining, starting, and entry fees paid by Horsemen, funds provided by the
Virginia Breeders Fund or by race sponsors and SWF Thoroughbred Handle (as
defined in Paragraph 5.C) shall not be considered purses paid by Colonial
Downs for purpose of determining the applicable amounts for Purse Monies.
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B. 1999 Amount. For 1999, Colonial Downs shall pay or guarantee
payment of $3,125,000 to the Thoroughbred Partners' Account established by the
Trust Agreement between these parties dated August 31, 1998, for use as purses
and other permitted uses as set forth below, which amount is (i) premised upon
25 days of live racing and average daily purses of no less than $125,000 per
day for each day of live racing at the Racetrack, exclusive of payments from
the Virginia Breeders' Fund and (ii) includes all funds due such Account
in repayment of a Promissory Note, dated November 1, 1998. Colonial Downs
agrees that the amount of purses to be paid with respect to the Virginia Derby
shall be fixed with the consent of the VaHBPA, which consent shall not be
unreasonably withheld, delayed or conditioned, and, subject to the approval of
the Maryland Jockey Club, any funds generated by sponsorship(s) or promotional
fees paid to Colonial Downs, from whatever source derived, with respect to the
Virginia Derby, shall be paid in their entirety to the Thoroughbred Partners'
Account for use as purses in addition to $3,125,000.00 specified above.
Colonial Downs will endeavor in good faith to secure the Maryland Jockey
Club's consent to the foregoing.
(ii) Deposits. Colonial Downs shall commence to deposit funds to
the Thoroughbred Partners' Account immediately, which deposits shall not be
less than $100,000.00 per month. On or before August 31, 1999, Colonial Downs
shall have deposited funds into the Thoroughbred Partners' Account such that
the Account balance shall not be less than $2,000,000.00. One half of the
interest income from all funds so deposited shall be applied to the
Backstretch Life Improvement Fund and used in a manner consistent with Section
16 of this Agreement.
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(iii) NTRA Dues. The VaHBPA may, at its discretion, designate a
portion of total purse monies to be paid, as the VaHBPA dues payable to the
NTRA. If so designated, those dues to be paid from the total purse monies
available shall be paid within the second quarter of each calendar year of the
Agreement including any renewal.
(iv) Advances. Of the total $3,125,000 in payments guaranteed to
be paid to the Thoroughbred Partners' Account for purses, $1,500,000.00 shall
consist of an advance to the Thoroughbred Partners' Account from purse monies
to be made available in the year 2000 and 2001. CD Entertainment Ltd., an
affiliate of Jeffrey Jacobs ("CD Entertainment"), shall arrange for $900,000
of the $1,500,000 to be advanced, and Maryland-Virginia Racing Circuit, Inc.,
a subsidiary of the Maryland Jockey Club ("MVRC"), shall arrange for $600,000
of the $1,500,000 to be advanced. Such advance from MVRC or its affiliate
shall bear interest at the Prime Rate as published in the Eastern edition of
the Wall Street Journal from time to time. Such advance from CD Entertainment
or its affiliate shall bear interest at the lesser of (i) its or its
affiliate's cost of funds based upon evidence reasonably satisfactory to the
VaHBPA or (ii) the Prime Rate as published in the Eastern addition of the Wall
Street Journal from time to time. Those sums shall be advanced for purses in
1999, and shall be repaid to CD Entertainment Ltd. and MVRC in equal
installments from sums due the Thoroughbred Partners' Account for purses
during the years 2000 and 2001, on a "first dollar in, first dollar out"
basis.
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C. 2000-2001.
(i) Amount. Effective January 1, 2000 and continuing each
year throughout the term of this Agreement and any continuation of this
Agreement as may occur, Colonial Downs shall contribute to the Thoroughbred
Partners' Account maintained for purse monies, 5.25% of all revenue generated
from pari-mutuel wagering on simulcast thoroughbred races (other than
simulcast broadcasts of races held at the Racetrack) at the SWFs (the "SWF
Thoroughbred Handle").
(ii) Purses. Purses for thoroughbred racing in the year 2000
and beyond shall paid based upon amounts available in the Thoroughbred
Partners' Account after repayment of one-half of the advance on purses in the
amount of $1,500,000 referenced above and all accrued interest thereon, and
after payment of administrative fees and NTRA dues as may be designated by
the VaHBPA, and shall include amounts received from live handle generated at
the Racetrack as required by statute.
(iii) Other Revenues. Colonial Downs, Jeffrey P. Jacobs, or
any affiliated legal entity shall pay 25% of annual net income (calculated
according to generally accepted accounting principles consistently applied)
from wagers placed on thoroughbred races through any national account wagering
system operated by Colonial Downs, Jeffrey Jacobs, or any affiliated entity,
but not in excess of 3% of gross income from such wagers, to the Thoroughbred
Partners' Account for purse monies each year this Agreement is in effect.
Estimated payments shall be made quarterly and reconciled annually, and
sufficient financial data supporting the payments and reconciliation shall be
provided the VaHBPA to allow verification of the amounts paid as accurate.
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(iv) Other Contributions to Thoroughbred Partners' Account.
Colonial Downs shall be considered to have satisfied its contribution of 5.25%
of SWF Handle by contribution of any amounts received from the Maryland Jockey
Club or any affiliate thereof as contributions to the Thoroughbred Partners'
Account for purse monies, and contribution of any amounts realized by a
reduction of the pari-mutuel taxes currently in effect to the Thoroughbred
Partners' Account during each year this Agreement remains in effect. The
primary obligation to fund the Thoroughbred Partners' Account for purse monies
with 5.25% of all SWF Thoroughbred Handle shall remain at all times with
Colonial Downs; nothing in this Agreement shall be considered or construed to
relieve Colonial Downs of that obligation.
(v) Sliding Scale. Colonial Downs may, upon written notice
to the VaHBPA given no less than 60 days prior to January 1 of each year of
this Agreement, elect to adopt a sliding scale funding mechanism as set forth
in Exhibit B to this Agreement. Notice shall be provided separately for each
year that the sliding scale is utilized. The sliding scale set forth in
Exhibit B is for illustration purposes only; actual amounts may vary according
to actual receipts for each period. Under no circumstances may the gross
percentage paid to the Thoroughbred Partners' Account for purse monies for
each year fall below 5.25%. In the event Colonial Downs elects to adopt the
sliding scale mechanism set forth in Exhibit B to this Agreement, all amounts
due shall be paid to the Thoroughbred Partners' Account no later than 24 hours
after receipt by Colonial Downs. Should any payment(s) not be made on a
timely basis, all amounts as would be due the Thoroughbred Partners' Account
for purse monies under a strict 5.25% formula shall become due and payable
immediately.
D. Stakes Race Purses. The percentage of the purse monies under
Subsections 5.A, B, and C above to be paid to Horsemen participating in stakes
races held at the Racetrack shall be limited to twenty-five percent (25%) of
the total purses paid unless a higher percentage is agreed between the parties
in good faith negotiations. Agreement on this matter will not be unreasonably
withheld by either party.
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E. Administrative Fee. The administrative fee paid to the
VaHBPA for services rendered to horsemen as the majority horsemen's group
shall be 2% of total purses paid with respect to live racing at the Racetrack,
exclusive of Virginia Breeders' Fund payments. For the years 2000 and 2001,
that amount shall include all monies paid into the Thoroughbred Partners'
Account without consideration of amounts repaid as advances made to the 1999
purses. The parties will agree on advance payments of the administrative fee
prior to live racing at the Racetrack in recognition of the VaHBPA's year
round service to horsemen, obligations with respect to horsemen's interests
before the Virginia Racing Commission, and the VaHBPA efforts at assistance to
Colonial Downs on legislative issues.
F. Other Legalized Wagering. Except as otherwise specifically
provided herein, in the event that wagers other than on thoroughbred horse
racing (including but not limited to the sale of lottery tickets and/or
participation in other wagering enterprises on Colonial Downs' premises) are
authorized by legislative action and a portion of the proceeds is provided for
thoroughbred racing, the parties shall be bound by the allocations in such
legislation. In the event the allocation of revenues is not addressed by
legislative action, the parties shall negotiate in good faith a written
agreement as to the allocation of the revenue to be received therefrom by
Colonial Downs and the Horsemen.
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6. Purse Mechanics.
A. Purses Schedules and Condition Books. Colonial Downs shall
use its reasonable judgment to estimate attendance, pari-mutuel handle and
breakage. Using that information and after consultation with a designated
representative of VaHBPA, Colonial Downs shall establish a tentative average
daily overnight purse schedule and a tentative stakes purse schedule for each
Race Meeting in accordance with the terms hereof. Colonial Downs shall
exercise reasonable care to try to avoid significant underpayments or
overpayments of purses at all Race Meetings. Colonial Downs will send to the
VaHBPA before each Race Meeting its first condition book and proposed purse
schedules.
B. Overpayment of Purses. Colonial Downs and the VaHBPA will
cooperate to the fullest extent possible to avoid overpayment of purses to
Horsemen as of the end of any year during the Term. If Colonial Downs makes
an overpayment in excess of the amount computed under Section 5, the
overpayment may be offset against any underpayment in any succeeding or
preceding Race Meeting.
C. Underpayment of Purses. During any Race Meeting, Colonial
Downs will increase purses as appropriate to minimize underpayment. If, at
the end of any Race Meeting, during the Term there exists an underpayment of
purses, the underpayment shall be distributed as additional purse distribution
in the next succeeding race meet. Colonial Downs shall use its reasonable best
efforts to help assure that there are no underpayments or overpayments of
purses at any Race Meeting.
D. Purse Notices. The pari-mutuel handle, pari-mutuel handle
commission, and purse distribution figures, as well as the percentage figures
which represent the relationship between purses and the total of pari-mutuel
income and breakage shall be posted on the bulletin board in the Racing
Secretary's office each day of a Race Meeting.
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7. Virginia-Bred Races. Colonial Downs shall include in its
conditions book a minimum of one ( 1) race per day devoted to Virginia-breds,
for each day of racing conducted at the Racetrack unless sufficient horses are
not available therefor. Races devoted to Virginia-breds shall be run if no
less than six (6) betting interests have been entered therein.
8. Stalls and Track Facilities.
A. Stalls and Track Facilities, During and After Race Meetings.
Colonial Downs shall make available at least one thousand (1,000) stalls to
Horsemen during each Race Meeting. Access to the racing strip, barns, track
kitchen facilities, dormitories, and related backside facilities at the
Racetrack (collectively, the "Backside Facilities") necessary for training
purposes shall be made available by Colonial Downs without charge to Horsemen
who have horses training for the immediately upcoming live Race Meeting for at
least ten (10) days prior to the opening of each Race Meeting. The Backside
Facilities shall also be made available by Colonial Downs without charge to
Horsemen who had raced at the Racetrack, for at least ten (10) days following
the last day of each Race Meeting. Notwithstanding the foregoing, such
periods may be shortened if the Backside Facilities are then needed for a live
standardbred racing meet, and Colonial Downs will provide advance notice to
the Horsemen in any such event. During the aforesaid periods, Colonial Downs
will, at its own expense, make water and electricity available to each barn in
use and keep the racing surfaces properly harrowed and watered.
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B. Off-Season Stabling. During the Term of this
Agreement,Colonial Downs and the VaHBPA, on or before March 1 of each year,
shall meet and discuss the terms under which the Horsemen may be permitted to
rent stalls at Colonial Downs for those periods not referred to in Section 8.A
above when such facilities are not needed for standardbred racing meets
(the"Off-Season"). Colonial Downs will notify Horsemen by March 1 of each year
of its decision and the criteria for occupation of stalls during the Off
Season for the coming year.
C. Vendors. Colonial Downs will not impose upon Horsemen any
exclusive arrangement concerning farriers, feedmen, tack supplies, or any
other suppliers or providers of service customarily used by owners and
trainers; provided, that if Colonial Downs permits the use of bedding material
other than straw it may require the use of an exclusive supplier in order to
facilitate removal of such used material. Notwithstanding the foregoing
Colonial Downs reserves the right to impose reasonable non-discriminatory
requirements for security, safety and environmental reasons. Colonial Downs
will use its reasonable best efforts to keep unlicensed persons in the above
categories off its premises.
D. Stall Applications. Prior to each Race Meeting, Colonial
Downs shall establish a cut-off date for the submission of stall applications.
Colonial Downs shall, in the exercise of its sole business judgment, determine
the terms for and approve or disapprove applications for stalls. Colonial
Downs may consider, among other things, the following criteria in allocating
stalls to Horsemen for use during Race Meetings:
(1) The overall quality of the horses listed on the stall
application;
(2) The quality of the racetrack(s) where the horses listed on
the stall applications have previously raced;
(3) The number of starts a trainer listed on the application
has made at past Colonial Downs Race Meetings (where applicable);
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(4) The financial and professional integrity of the trainer
listed on the stall application;
(5) The total number of stalls requested by a trainer in
relation to the number of available stalls; and
(6) The best interests of Colonial Downs and thoroughbred
racing. Each Horsemen accepting a stall at the Racetrack shall be required to
use his or her best efforts to run his or her horses at the Racetrack during the
Race Meeting consistent with the horses' physical condition, fitness and race
conditions.
9. Racing Committee. Colonial Downs and the VaHBPA shall organize
and maintain a joint committee to be known as the "Racing Committee." The
VaHBPA and Colonial Downs shall each appoint not more than four (4)
representatives to the Racing Committee. The Racing Committee shall meet at
least once not more than thirty (30) days, nor less than fourteen (14) days,
prior to each of Race Meeting, and at least once within seven (7) days after
the conclusion of each Race Meeting and otherwise at the written request of
any two members of the Racing Committee. The Racing Committee shall at its
meetings discuss such things as: design and construction of stable area,
barns, tack rooms, dormitories, promotion, publicity, track conditions (bad
weather closing), racing-related programs, reserved seats and passes for
Horsemen, maintenance of stable areas, number of races, purse schedules, track
kitchen, other matters which related to attendance, pari-mutuel handle or the
quality of racing, and health benefit programs, death benefits, drug and
alcohol abuse programs, and any other program which will aid and assist the
racing industry in Virginia to hire, retain and care for its personnel at the
highest possible level.
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10. Representations and Warranties.
A. VaHBPA. In addition to the representations and warranties
contained elsewhere in this Agreement, the VaHBPA warrants, represents to and
covenants with Colonial Downs that during the Term:
(1) This Agreement has been approved by the Board of Directors
of the VaHBPA;
(2) This Agreement is valid and enforceable against it
according to its terms;
(3) The VaHBPA and its officials shall not participate in,
delay, interrupt, dispute, or bring about temporary or permanent cessation or
suspension of racing at Colonial Downs during any Race Meeting;
(4) Each VaHBPA official shall utilize all of his or her powers
of persuasion and all legal means at their disposal to ensure that all VaHBPA
Members and other backside personnel comply with the terms of this Agreement;
(5) The VaHBPA and its officials shall respond to requests for
consents and other approvals by Colonial Downs in a timely and business-like
manner, giving due consideration for the need of Colonial Downs to move
quickly and decisively;
(6) This Agreement will be made available for review by Members
of the VaHBPA and all other licensed owners, trainers, employees and backside
personnel at the VaHBPA office; and
(7) The VaHBPA shall use its best efforts to ensure that the
backside area of the Racetrack is maintained in a safe, clean, and orderly
condition.
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B. Colonial Downs. In addition to the representations and
warranties contained in this Agreement, Colonial Downs warrants, represents to
and covenants with the VaHBPA that during the Term:
(1) This Agreement has been approved by its General Partners;
(2) This Agreement is valid and enforceable against it
according to its terms;
(3) Colonial Downs shall use its reasonable best efforts to
keep the Backside Facilities in a safe, clean and orderly condition when in
use: and
(4) Colonial Downs shall use its reasonable best efforts
to assist the VaHBPA in developing health and welfare programs for backstretch
personnel; provided, this section imposes no obligation on either party to
fund any such program.
11. VaHBPA Office. Colonial Downs will provide the VaHBPA, without
charge, a suitable office located on the grounds of the Racetrack. Colonial
Downs will furnish said office with appropriate office furniture and one or
more telephones. VaHBPA will pay the applicable long-distance charges for
usage of such telephones.
12. Racing Officials. Colonial Downs will mail to the President of
the VaHBPA a written list of the persons appointed by Colonial Downs to serve
as racing of officials during any Race Meeting at the same time as it submits
said list to the Virginia Racing Commission in accordance with the provisions
of Regulations.
13. Governmental Approval. Nothing contained in this Agreement
shall be construed as requiring either party to perform any term when such
performance is contrary to law or requires prior governmental approval;
provided, however, both parties shall use their best efforts to obtain
governmental approval if such is required and shall submit a copy of
this Agreement to the Virginia Racing Commission.
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14. Out-of-State Simulcasting. During the term of this Agreement,
the VaHBPA as authorized representative of the Horsemen for interstate
simulcasting purposes, consents and authorizes Colonial Downs to negotiate and
contract with simulcast and receiving facilities, including off-track wagering
facilities, for the conduct of off-track wagering on live thoroughbred races
emanating from the Racetrack, pursuant to the Interstate Horse Racing Act of
1978, P.L. 95-515. Colonial Downs will consider the best interests of live
racing when simulcasting. To the extent required by law, out-of-state
simulcasting for all of Colonial Downs' races shall be subject to the consent
of the VaHBPA, which consent shall not be unreasonably withheld, delayed or
conditioned. In the event consent is withheld, the VaHBPA shall set forth its
reasons for withholding the consent within a reasonable time in advance of the
intended simulcast.
15. Copies of Documents; Database. Colonial Downs will send a copy
of its stall application blank, stakes purse program and condition book for
each race meeting to the VaHBPA, on or before the first day they are
distributed to Horsemen. Additionally, Colonial Downs shall provide the
VaHBPA copies of all filings it makes with the U. S. Securities and Exchange
Commission promptly after such filings are made. Colonial Downs shall share
with and coordinate all information and data on horsemen racing at the track
with the VaHBPA. The parties will work jointly to develop and maintain an
effective database of horsemen racing in Virginia.
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16. Backstretch Improvement Fund.
A. Establishment of Fund. Colonial Downs shall establish a
Backstretch Life Improvement Fund (the "Fund") into which shall be deposited
(a) interest income as provided in Section 4 above, (b) funds representing
unclaimed Horsemen's accounts with Colonial Downs and (c) such additional
amounts as may be contributed by Colonial Downs, any Horseman or any other
person. Monies in the Fund shall be invested in interest bearing accounts and
certificates of deposit in federally insured commercial institutions.
B. Use of Funds. Fifty percent (50%) of the Fund shall be
allocated to services and programs for Horsemen, including but not limited to
a drug/alcohol rehabilitation program, a GED program, a recreational program,
employment education services, and the chaplaincy program. The remaining
fifty percent (50%) shall be allocated to capital improvements in the amount
of $30,000 for 1999, and for each prior year in which such funds have not been
expended, for construction and provision of the following facilities on the
backside: additional bathrooms; creation of a recreation center and/or an
outside recreation facility; and other projects as may be mutually agreed upon
by the Racing Committee. Colonial Downs shall match the $30,000 for 1999 and
for any year for which the term of this Agreement is extended. Colonial Downs
shall provide an annual accounting of all such expenditures to the VaHBPA
within a reasonable time after the close of the meet during each year of this
Agreement.
C. Gap. Colonial Downs shall design and determine the price
and feasibility of moving the "gap" in the railing on the track, or of
creating an additional gap located in a position more convenient to actual use
of the track by horsemen.
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17. Right to Terminate. Either party may terminate this Agreement
upon the other party's failure to substantially perform as required under
this Agreement and such failure continues for thirty (30) days following the
date written notice of default is mailed in accordance with Section 22. Such
termination shall not constitute an election of remedy, nor shall it
constitute a waiver of a party's other remedies at law or equity.
Additionally, Colonial Downs may terminate this Agreement upon written notice
to the VaHBPA if the Racetrack and all SWFs are closed for ninety (90)
continuous days.
18. Indemnification. The VaHBPA shall indemnify and save harmless
Colonial Downs, its agents, representatives, employees, officers, directors
and stockholders, their respective successors and assigns, and all persons
acting by, through, under, or in concert with any of them, from and against
any and all demands, liabilities, loss, costs, damages, or expenses of
whatever nature or kind, including fees of attorneys and all other expenses,
arising out of or in any way related to or occasioned by Colonial Downs'
performance under Section 5.C. (Administrative Fee).
19. Mediation; Arbitration. In the event of any disputes or
differences arising out of this Agreement, which the parties have been unable
to resolve after reasonable efforts to do so, either party may refer the
dispute or difference to a mediator mutually acceptable to the parties. In
the event such mediation is unsuccessful, or the parties are unable to agree
on a mediator, either party may refer the dispute or difference for final
settlement to arbitration in accordance with the following procedures:
A. By the Commission. The party so desiring to refer the
matter shall request the Commission to arbitrate the dispute or difference by
a panel comprised of either one (1) or three (3) of its members, as its
Chairman shall designate, in accordance with such rules as the Chairman of the
Commission determines, including, but not limited to, the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") in
effect on the date of this Agreement.
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B. By Another Arbitrator. If the Commission declines to
arbitrate the dispute or difference, the arbitration shall be conducted by a
single arbitrator designated by the Chairman of the Commission; and if the
chairman declines to designate an arbitrator, the arbitration shall be
conducted by a single arbitrator selected by Colonial Downs and the VaHBPA in
accordance with the rules of the AAA.
C. General. The arbitration shall take place in Richmond,
Virginia, unless the parties otherwise mutually agree, and shall be governed
by the substantive contract law of the Commonwealth of Virginia and the
arbitration rules as determined pursuant to Section 19.A. The arbitration
award shall be final, binding and conclusive on the parties, and not subject
to any appeal. No party nor the arbitrator may disclose the existence or
results of any arbitration hereunder except as may be necessary in litigation
to enforce the award or as may be required by the Commission. Judgment upon
the award rendered may be entered in any court having jurisdiction, or
application may be made to such court for judicial recognition of the award or
any order of enforcement thereof, as the case may be. This Section 19.C shall
not be construed to limit the right of either party to apply to a court of
competent jurisdiction for other equitable relief to preserve the status quo
or prevent irreparable harm. The costs of the arbitration incurred the parties
for hearing reporting fees, rental of a hearing room and all AAA fees, costs
and services charges and of the arbitrator shall be paid by Colonial Downs,
except that hearing postponement or cancellation fees charges by AAA or the
arbitrator shall be borne exclusively by the canceling or postponing party.
Conversely, with respect to all other matters, unless the arbitrator otherwise
so determines and provides in the arbitration award, each party shall bear its
own costs and expenses incurred by that party in connection with arbitration,
including without limitation each party's own travel expenses, hearing witness
expenses and attorney's fees.
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20. Further Assurances. The VaHBPA and Colonial Downs shall
execute such instruments and documents, and shall give such further
assurances, as may be necessary to accomplish the purpose and intent of this
Agreement. Additionally, upon execution of this Agreement, the VaHBPA
immediately shall notify its national affiliate and affiliates in other states
that it has entered into this Agreement.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
22. Notices. All notices, requests, demands or other
communications as may be required by this Agreement shall be in writing and,
if mailed, shall be by certified mail, return receipt requested, and shall be
deemed to have been given when received by personal delivery or otherwise. A
courtesy copy of such communication shall also be sent via telefax to the last
known telefax number of the other parties. The current addresses of persons
to whom communications are to be sent are as follows:
Colonial Downs: Jeffrey P. Jacobs, CEO
Colonial Downs Holdings, Inc.
425 Lakeside Avenue
Cleveland, OH 44113
Ian M. Stewart, President
Colonial Downs Holdings, Inc.
10501 Horsemen's Drive
Providence Forge, VA 23124
Copy to: James L. Weinberg, Esq.
Hirschler, Fleischer, Weinberg, Cox & Allen
The Federal Reserve Bank Building
701 E. Byrd Street, 15th floor
Richmond, VA 23219
Martin Jacobs, Esq.
General Counsel
The Maryland Jockey Club
P. O. Box 130
Laurel, MD 20725
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VaHBPA: C. B. Woodberry Payne, President
Virginia Horsemen's Benevolent and
Protective Association, Inc.
36 Garrett Street
Warrenton, VA 22186
Copy to: David M. Cook, Esq.
Manley, Burke, Lipton & Cook
225 W. Court Street
Cincinnati, OH 45202
23. Waivers. No waiver or any breach of this Agreement or any term
hereof shall be effective unless such waiver is claimed. No waiver or any
breach shall be deemed to be a waiver of any other or any subsequent breach.
24. Applicable Law This agreement is being executed and delivered
in the Commonwealth of Virginia and shall be construed and enforced in
accordance with the laws of that state.
25. Severability. If any provision of this Agreement is declared
invalid by any tribunal, or becomes invalid or inoperative by operation of
law, the remaining provisions of this Agreement shall not be affected thereby
and shall remain in full force and effect.
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26. Entire Agreement: Modification. This Agreement contains the
entire Agreement between the parties and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof; provided. No modification, variation or amendment of
this Agreement shall be effective unless such modification, variation or
amendment is in writing and has been signed by the parties. Colonial Downs
shall be bound by this Agreement if and only if the VaHBPA enters into a
Letter Agreement, dated as of the date hereof, with Colonial Downs. In the
event the VaHBPA does not enter into such side letter, this Agreement shall be
null and void.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first stated above.
VIRGINIA HORSEMEN'S COLONIAL DOWNS, L.P.
BENEVOLENT AND PROTECTIVE
ASSOCIATION, INC. By: Stansley Racing Corp., its
general partner
By: ________________________________ By:_________________________
C. B. Woodberry Payne, President Ian M. Stewart, President
For purposes of Section 5.B(iv) only and for no other provision:
MARYLAND-VIRGINIA RACING CIRCUIT CD ENTERTAINMENT LTD.
__________________________________________ _____________________________
Joseph A. DeFrancis, President Jeffrey P. Jacobs, Manager
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EXHIBIT A
FORM OF
TRUST AGREEMENT
THIS TRUST AGREEMENT is entered into this ___ day of __________, 1999, by
and between COLONIAL DOWNS, L.P., a Virginia limited partnership (the
"Trustee"), and VIRGINIA HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION,
INC., a not-for-profit corporation ("VaHBPA"), on behalf of the thoroughbred
horsemen engaging in thoroughbred racing at Colonial Downs' racetrack (the
"Track") (collectively, the "Beneficiaries").
W I T N E S S E T H:
WHEREAS, pursuant to prior agreements that have expired and an Agreement,
dated as of June __, 1999 ("Horsemen Agreement"), relating to live
thoroughbred racing at Colonial Downs, among other matters, the Trustee has
and will make deposits into an account of Virginia National Bank,
Charlottesville branch (the "Thoroughbred Partners' Account") which will be
used to fund purses and related payments to the Beneficiaries participating in
racing at the Track during the 1999 thoroughbred racing season and other years
governed by the Horsemen Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. The Account. The Trustee shall maintain the Thoroughbred Horsemens'
Account at a financial institution which is insured by an agency of the United
States government.
2. Deposits. The Trustee shall deposit all funds required by the
Horsemen Agreement into the Thoroughbred Horsemens' Account. The funds so
deposited into the Thoroughbred Horsemens' Account, exclusive of interest
earned thereon, are hereinafter referred to as the "Trust Account Funds." No
other funds shall be deposited into the Thoroughbred Horsemens' Account, and
the Trustee shall not commingle any other funds with the Trust Account Funds.
3. Withdrawals. The VaHBPA, on behalf of the Beneficiaries, grants
the Trustee the authority to withdraw funds from the Horsemen's Accounts to
make payments required to be made pursuant to the terms and provisions of the
Horsemen Agreements, including, without limitation, to provide for the payment
of purses and related awards to the Beneficiaries.
4. Title to Funds in the Account. The Trustee shall hold only legal
title to the Trust Account Funds and shall not have any equitable or
beneficial interest in such Funds. Accordingly, the Trust Account Funds are
excluded from the Trustee's estate for purposes of 11 U.S.C. Section 541(d),
as amended.
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5. Interest. The Trustee understands and accepts that interest, if
any, earned on the Funds will be reported under its employer identification
number, that such reporting is done as a matter of convenience for the
administration of the Thoroughbred Partners' Account and that the receipt of
such interest does not affect the beneficial and equitable title that the
parties have to such interest and is not in derogation of the rights and
entitlements of the parties as set forth herein and in the Horsemen Agreement.
6. Trustee's Duties. The duties of the Trustee under this Agreement
shall be limited to the safekeeping and disbursement of the Trust Account
Funds and documents under the terms and conditions of this Agreement. The
Trustee shall be entitled to rely on and may assume the genuineness and
authenticity of any signatures purported to be made by the parties hereto,
their lawful representatives, and successors or assigns. Upon election of
either party hereto, an independent third party may be appointed trustee of
the Thoroughbred Horsemens' Account and the Trustee hereunder may be relieved
of its duties as trustee but shall be bound by the other provisions of this
Agreement.
7. Limitation on Liability. The Trustee shall not be liable for any
claims, damages, liabilities, losses, costs, or expenses arising from the
Trustee's acts or omissions with respect to the Trust Account Funds or its
performance hereunder, unless such actions or omissions result from the
Trustee's negligence or willful misconduct.
8. Reimbursement of Expenses. The Trustee shall be reimbursed in the
form of one-half of the interest accruing on the Trust Account Funds for all
costs and expenses reasonably incurred by it in connection with the
administration of the Account. including payment of any trustee fees to a
third party trustee.
9. Termination. This Agreement shall terminate on the date on which
all payments under the Horsemen Agreement have been made and the Horsemen
Agreement is no longer in effect. The parties hereto acknowledge and agree
that upon such termination, the balance of the Thoroughbred Partners' Account
should be zero.
10. Notices. All notices, approvals, and other communications
authorized or required to be given between the parties hereto shall be validly
given or made if in writing and sent in accordance with the terms and
conditions of the Horsemen Agreement.
11. Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the Commonwealth of Virginia, without
regard to any conflicts of law provisions thereof.
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12. Miscellaneous. Any action, suit, or proceeding in respect of or
arising out of this Agreement may be prosecuted as to any party hereto in
Richmond, Virginia. Each party hereto consents to the exercise of
jurisdiction over its person by any court situated in Richmond, Virginia and
having jurisdiction over the subject matter of any such action, suit, or
proceeding. The invalidity or unenforceability of any provision of this
Agreement in any particular respect shall no affect the validity and
enforceability of any other provision of this Agreement or of the same
provision in any other respect. This Agreement and the Horsemen Agreement set
forth the entire understanding of the parties to this Agreement with respect
to the operation of the trust for the Thoroughbred Partners' Account and may
not be amended except by a written instrument executed by all parties hereto.
Other than the Horsemen Agreement, any previous agreements or understandings
among the parties hereto regarding the subject matter hereof are merged into
and superseded by this Agreement. All of the covenants, stipulations, terms,
and conditions of this Agreement shall extend to and be binding upon the
respective successors and assigns of the parties hereto, but this Agreement
shall not be assigned by the Trustee without the prior written consent of the
Beneficiaries.
This Agreement or any amendment hereto may be executed in two or more
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same Agreement.
VIRGINIA HORSEMEN'S COLONIAL DOWNS, L.P.
BENEVOLENT AND PROTECTIVE
ASSOCIATION, INC. By: Stansley Racing Corp., its
General Partner
By: _________________________________ By: _______________________
C. B. "Woodberry" Payne, President Ian M. Stewart, President
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EXHIBIT B
SLIDING SCALE
Assuming:
$120,000,000 Total handle
$ 92,400,000 Thoroughbred handle (77%)
Monthly handle based roughly on 1998 actual figures.
Up to $23,000,000 (months 1-3) 2 1/2% = $ 575,000
$23,000,001-38,000,000 (months 4-5) 3 1/2% = 525,000
$38,000.001-46,000,000 (month 6) 4 1/2% = 360,000
$46,000,000-54,000,000 (month 7) 5 1/2% = 440,000
$54,000,000-69,000,000 (months 8-9) 7 1/2% = 1,125,000
Over 69,000,000 (months 10-12) 8% = 1,826,000
____________________________________ _______ ___________
Thoroughbred handle $92,400,000 X 5 1/4% = $ 4,851,000
Assuming:
$120,000,000 Total handle
$ 92,400,000 Thoroughbred handle (77%)
$ 7,700,000 Average monthly handle
Up to $ 23,100,000 (months 1-3) 2 1/2% = $ 577,500
$23,100,001-38,500,000 (months 4-5) 3 1/2% = 539,000
($15,400,000)
$38,500,001-46,200,000 (month 6) 4 1/2% = 346,000
($ 7,700,000)
$46,200,001-53,900,000 (month 7) 5 1/2% = 423,500
($ 7,700,000)
$53,900.001-69,300,000 (months 8-9) 7 1/4% = 1,116,500
($15,400,000)
Over $69,300,000 (months 10-12) 8% = 1,848,000
($23,100,000)
_____________________________________ _______ __________
Thoroughbred handle $92,400,000 X 5 1/4% = $ 4,851,000
#173984 v.4 16919.00204
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