CKX, Inc. 650 Madison Avenue New York, New York 10022 September 26, 2007
Exhibit 10.23
CKX, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 26, 2007
FX Real Estate and Entertainment Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
| Re: | Line of Credit Agreement |
Gentlemen:
This letter agreement sets forth the terms and conditions under which CKX, Inc., a Delaware
corporation (the “Lender”), agrees to make available to FX Real Estate and Entertainment
Inc., a Delaware corporation (the “Borrower”), a line of credit (the “Line of
Credit”) pursuant to which, subject to the terms and conditions herein provided, the Borrower
may from time to time borrow from the Lender loans and advances (collectively, “Advances”)
in an aggregate principal amount not to exceed $7,000,000 at any time outstanding (the “Maximum
Loan Amount”).
1. Borrowing Procedures.
(a) The Line of Credit will be available to the Borrower commencing on the date hereof and
continuing until such time as the Advances shall become due and payable in accordance with the Note
(as such term is hereinafter defined). Within the limit of the Maximum Loan Amount, the Borrower
may borrow hereunder from time to time, and may repay the outstanding Advances at any time and from
time to time. For the avoidance of doubt, any Advances repaid by the Borrower shall not be subject
to re-borrowing under this Line of Credit.
(b) In order to borrow Advances under the Line of Credit, the Borrower shall give written
notice to the Lender, specifying the amount of the requested Advance, not less than two (2)
business days prior to the date of the proposed borrowing. Provided that this agreement has not
previously expired or been terminated and no Event of Default (or event that, with notice or the
passage of time or both, would constitute an Event of Default) has then occurred and is then
continuing, the Lender will fund the requested Advance (or so much thereof as may be available
within the limit of the Maximum Loan Amount) on or before the date of funding as requested by the
Borrower, such funds to be wire transferred to such account as may be designated by the Borrower in
its borrowing request.
2. The Note.
(a) All Advances shall be represented by a Line of Credit Promissory Note dated as of the date
of the Advance (the “Note” or “Notes”) in the form attached hereto as Exhibit
A.
(b) The Advances shall bear interest at the rate(s) in effect from time to time as provided in
the Note, and accrued interest on the Advances shall be payable as provided in the Note.
(c) The principal amount of all outstanding Advances, together with all unpaid accrued
interest thereon, shall be payable as provided in the Note (whether upon maturity, by acceleration
or otherwise).
3. Collateral Pledge and Other Documents. The obligations of the Lender to make
Advances at any time and from time to time are and shall be subject to (i) the continued full force
and effect of the Note; (ii) the continued truth and accuracy of all of the Borrower’s
representations and warranties pursuant to paragraph 4 below; and (iii) the continued full force
and effect of that certain Pledge Agreement (the “Pledge Agreement”), of even date
herewith, by and between the Lender, the Borrower and Flag Luxury Properties, LLC (the
“Pledgor”). For the avoidance of doubt, Lender expressly acknowledges that it shall have
no recourse against the Pledgor in connection with the Advances beyond the collateral pledged
pursuant to the Pledge Agreement.
4. Borrower’s Representations and Warranties. The Borrower hereby represents and
warrants to the Lender that:
(a) The Borrower is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) The execution, delivery and performance by the Borrower of this agreement and the Note
have been duly authorized by all necessary corporate action on the part of the Borrower, and have
been duly executed and delivered by the authorized officers of the Borrower in each instance.
(c) This agreement and the Note constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors’ rights generally, and by general principles of equity.
(d) The execution, delivery and performance by the Borrower of this Agreement and the Note do
not violate or constitute a breach of any provision of the Borrower’s certification of
incorporation or by-laws, or any material agreement to which the Borrower is a party or by which
any of its property or assets is bound; and, except for the consent required by Column Financial,
Inc. pursuant to that certain Promissory Note, dated June 1, 2007, which consent the Borrower has
already obtained, no consent of any other person is required for the Borrower’s execution, delivery
and performance of this Agreement and the Note.
5. Use of Proceeds. All proceeds of the Advances will be utilized solely for the
purpose of: (i) funding the exercise of options to purchase shares of Riviera Holdings
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Corporation pursuant to that certain Agreement, dated March 21, 2007, between Riv Acquisition
Holdings, Inc., Triple Five Investco LLC and Dominion Financial LLC, currently held by subsidiaries
of the Borrower (the “Riv Option”); and (ii) for the satisfaction from time to time of
margin maintenance requirements under that certain margin loan between Flag Luxury Riv, LLC and
Bear Xxxxxxx & Co. Inc. (the “Margin Loan”); not to exceed $7,000,000 from and after the
date hereof.
6. Expenses. The Borrower shall reimburse the Lender on demand for all reasonable
attorneys’ fees and other expenses incurred by the Lender in connection with the preparation and
negotiation of this agreement and the other agreements, instruments and documents referred to
herein, and any amendments or waivers hereunder or thereunder from time to time. To the extent
that any such reasonable fees and other expenses are not paid by the Borrower to the Lender on
demand, the Borrower hereby authorizes the Lender to collect same by charging the amount thereof as
an Advance under the Line of Credit.
7. Notices. All notices, requests, demands and other communications pursuant to this
agreement shall be in writing and delivered personally or sent by telecopier, recognized overnight
courier service, or certified mail (return receipt requested) to the party being notified at its
address first set forth above. Either party may change its address for notice by means of notice
given in a like manner.
8. Miscellaneous.
(a) This agreement, together with the other agreements, instruments and documents referred to
herein, represents the entire agreement and understanding between the parties with respect to the
subject matter hereof, and supersedes all prior discussions and understandings with respect to such
subject matter.
(b) Neither any provision of this agreement nor any performance hereunder may be amended or
waived except by an agreement in writing executed by the party to be charged therewith.
(c) This agreement shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns, provided that the Borrower shall have no right to
assign any of its rights or obligations hereunder without the prior written consent of the Lender.
(d) This agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.
(e) This agreement shall be governed by and construed in accordance with the laws of the State
of New York, without giving effect to principles of conflicts of laws.
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(f) The Borrower hereby consents to the jurisdiction of all courts (state and/or federal)
sitting in the State of New York in connection with any action or proceeding arising out of or
relating to this agreement or the transactions contemplated hereby, and waives any objection to
such venue on the grounds of forum non conveniens or otherwise. The
Borrower hereby further waives all right to trial by jury in any such action or proceeding.
[Signatures on succeeding page]
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Kindly confirm your agreement to the foregoing by countersigning and return a copy of this
agreement to the Lender, together with the other agreements, instruments and documents referred to
herein.
| Very truly yours, | ||
| CKX, INC. | ||
| By: /s/ Xxxxxx X. Xxxxxx | ||
| Name: Xxxxxx X. Xxxxxx | ||
| Title: Chief Financial Officer | ||
| Acknowledged, Confirmed and | ||
| Agreed To: | ||
| FX REAL ESTATE AND ENTERTAINMENT INC., | ||
| as Borrower | ||
By: /s/ Xxxxxxxx X. Xxxxxx |
||
Name: Xxxxxxxx X. Xxxxxx |
||
Title: Vice President |
||
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Exhibit A
LINE OF CREDIT
PROMISSORY NOTE
PROMISSORY NOTE
$[ ]
|
[ ], 200 |
FOR VALUE RECEIVED, FX Real Estate and Entertainment Inc., a Delaware corporation (the
“Payor”), hereby unconditionally promises to pay to the order of CKX, Inc., a Delaware
corporation (the “Payee”), in lawful money of the United States of America in immediately
available funds, the principal sum of [ ] ($[ ]), together with interest
thereon, compounded annually, from the date hereof through maturity at the rate of LIBOR, plus
6.00% per annum (calculated on the actual number of days elapsed and an assumed year of 360 days)
(the “Stated Rate”). For purposes hereof, LIBOR shall initially be calculated on the basis
of the one, two or three month period ending after the date hereof (the “Interest Period”),
as selected by the Payee, and thereafter each period commencing on the last day of the next
preceding Interest Period and ending one, two or three months thereafter, as selected by the Payee
pursuant to a written notice delivered to the Payor at least three business days prior to the
expiration of the then current Interest Period (or if no such written notice is delivered, it shall
automatically renew on the same terms as the then current Interest Period). This principal amount,
together with interest accrued thereon at the Stated Rate commencing on the date hereof, shall be
due and payable in full on the earlier of (a) the two (2) year anniversary of the date hereof, (b)
the closing of any equity financing transaction pursuant to which the Payor receives gross proceeds
of at least $90 million or (c) following the sale of shares of Riviera Holdings Corporation held by
the Payor or any subsidiary thereof, but only to the extent net proceeds from the sale of such
shares exceed amounts necessary to satisfy in full that certain loan from Column Financial, Inc. in
the principal amount of $23 million and that certain margin loan from Bear Xxxxxxx & Co. Inc.,
dated as of the date hereof (the “Scheduled Maturity Date”).
The principal and accrued interest balance of this Note may be prepaid in whole or in part at
any time without a premium or penalty of any kind.
If any payment of principal and accrued interest is not made within five (5) business days
after same becomes due hereunder, or if any other Acceleration Event (as defined below) shall occur
for any reason then and in any such event, in addition to all rights and remedies of the Payee
under this Note, applicable law or otherwise, all such rights and remedies being cumulative, not
exclusive and enforceable alternatively, successively and concurrently, the Payee may, at its
option, declare due any or all of the Payor’s obligations, liabilities and indebtedness owing to
the Payee under this Note whereupon the then unpaid balance hereof shall immediately be due and
payable, together with all expenses of collection hereof, including, but not limited to, attorneys’
fees and legal expenses (for this purpose, the Payor shall pay all trial and appellate attorneys’
fees, costs and expenses, paid or incurred by the Payee in connection with collection of this
Note). If the foregoing unpaid balances, expenses and collection costs (collectively, the
“Unpaid Amounts”) are not paid upon demand upon the occurrence of
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an Acceleration Event, as defined below , such Unpaid Amounts shall bear interest until paid
in full at the Stated Rate plus 5.00% per annum or the maximum interest rate then permitted under
applicable law (whichever is less) (the “Default Rate”). From and after maturity of this
Note (whether upon the Scheduled Maturity Date, or by acceleration or otherwise, the Unpaid Amounts
shall bear interest until paid in full at the Default Rate. For purposes hereof, “Acceleration
Event” means the first to occur of the following: (i) if any portion of this Note is not paid
when due, (ii) the Payor having made an assignment for the benefit of creditors, filed a petition
in bankruptcy, applied to or petitioned any tribunal for the appointment of a custodian, receiver,
intervener or trustee for the Payor, or commenced any proceeding for any arrangement or
readjustment of its debts, (iii) any such petition or application having been filed or proceeding
having commenced against the Payor and the Payor not having interposed a defense thereto within the
time permitted under applicable law, (iv) the sale or other disposition of all or substantially all
of Payor’s assets or (v) the dissolution of Payor.
The Payor (i) waives diligence, demand, presentment, protest and notice of any kind, and (ii)
agrees that it will not be necessary for the Payee to first institute suit in order to enforce
payment of this Note.
The validity, interpretation and enforcement of this Note and any dispute arising in
connection herewith or therewith shall be governed by the internal laws of the State of New York
(without giving effect to principles of conflicts of law).
The Payor irrevocably consents and submits to the exclusive jurisdiction of the state courts
of the State of New York located in the County of New York and the United States District Court
whose district covers such county, and waives any objection based on venue or forum non conveniens
with respect to any action instituted therein arising under this Note.
THE PAYOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER THIS NOTE, AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY.
The Payor may not assign this Note and/or delegate any of its obligations hereunder without
the written consent of the Payee. This Note is subject to that certain Pledge Agreement of even
date herewith, by and between the Payor, the Payee and Flag Luxury Properties, LLC.
The Payor shall be solely responsible for any necessary tax or assessment relating to this
Note; provided, however, that the Payor shall not be responsible for Payee’s tax
obligations arising from receipt of funds set forth herein.
If any term or provision of this Note shall be held invalid, illegal or unenforceable, the
validity of all other terms and provisions hereof shall in no way be affected thereby.
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The waiver by the Payee of the Payor’s prompt and complete performance of, or default under,
any provision of this Note shall not operate nor be construed as a waiver of any subsequent breach
or default, and the failure by the Payee to exercise any right or remedy which it may possess
hereunder or under applicable law shall not operate nor be construed as a bar to the exercise of
any such right or remedy upon the occurrence of any subsequent breach or default.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Payor has executed this Note the day and year first written above.
| FX REAL ESTATE AND | ||||||
| ENTERTAINMENT INC. | ||||||
| By: | /s/ Xxxxxxxx X. Xxxxxx | |||||
| Name: | Xxxxxxxx X. Xxxxxx | |||||
| Title: | Vice President | |||||
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