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Profit Participation Agreement- Hp/masm, Dtd 7/14/97

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Sectors: Leisure and Entertainment
Governing Law: Washington, View Washington State Laws
Effective Date: July 14, 1997
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Hollywood Park, Inc.
Exhibit 10.40


PROFIT PARTICIPATION AGREEMENT


THIS PROFIT PARTICIPATION AGREEMENT (the "AGREEMENT") dated as of July 14, 1997, is made and entered into by and between Hollywood Park, Inc., a Delaware corporation ("HP"), and North American Sports Management, Inc., a Florida corporation ("NORAM"), with reference to the following facts:


A. NORAM and the Confederated Tribes and Bands of the Yakama Indian Nation (the "NATION") have entered into that certain Memorandum of Understanding dated August 16, 1996, as extended by the parties (the "MOU"), pursuant to which NORAM agreed to provide (i) financial, development, construction and consulting services to the Nation in connection with the construction of a bingo hall and casino (the "FACILITY"), together with all related infrastructure, parking, landscaping, interior design, engineering, architectural and other services, on the Nation's lands in Toppenish, Washington, and (ii) consulting services in connection with the Nation's operation, management and maintenance of the gaming operations and ancillary business activities conducted at the Facility (collectively, the "CONSULTING SERVICES"). Capitalized terms used but not defined herein shall have the same meanings given to them in the MOU.


B. Subject to the terms and conditions described herein, NORAM and HP have determined that in order to most efficiently finance and obtain the necessary licensing to finance the Facility, and provide the Consulting Services, (i) HP will fully finance the Facility, (ii) NORAM will relinquish all its rights to pursue the construction of the Facility and render Consulting Services, whether under the MOU or otherwise, except for those items identified herein as NORAM Services, (iii) HP will obtain all of NORAM's rights under the MOU, including, without limitation, the right to 100% of the profit participation interest granted in the MOU, and HP will be responsible for obtaining the financier's license, and (iv) HP and NORAM shall provide the Consulting Services in the manner described herein; all as contemplated by the MOU as the same may be subsequently modified by HP and the Nation.


NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereby agree as follows:


1. Relinquishment of Rights. In consideration of the agreements made by HP
------------------------ herein, NORAM and all of its affiliates hereby relinquish any and all rights and interest with respect to the provision of Consulting Services to, and the establishment of a Facility for, the Nation, including, without limitation, any and all rights and interests pursuant to the MOU. Concurrently with the execution of this Agreement, NORAM shall provide HP with copies of all documentation and information relating to the Facility and NORAM's actual and contemplated relationship with the Nation.


NORAM acknowledges that HP intends to enter into an agreement with the Nation to provide Consulting Services to the Nation with respect to the development, construction and operation of the Facility, and HP intends to fund or cause to be funded a loan to the Nation to fund the construction and development of the Facility (the "LOAN") and otherwise succeed to the rights and responsibilities of NORAM under the MOU. NORAM further acknowledges and agrees that HP or its affiliates shall be entitled to receive 100% of the Consulting Fee or profit participation interest, however structured, other than principal or interest payments on loans to the Nation (the "PROFIT PARTICIPATION INTEREST") and any other remuneration payable by the Nation in respect of the development, construction or operation of the Facility; and except as provided by Sections 3 and 4 herein, neither NORAM nor any of its affiliates shall be entitled to receive any portion of the Profit Participation Interest or such other remuneration nor to receive any payments of any kind whatsoever with respect to the Facility or the Consulting Services, whether from HP, the Nation or otherwise. If HP or its affiliates determine not to provide the Consulting Services to the Nation as contemplated by the MOU, NORAM may, upon prior notice to HP, seek to negotiate and enter into an arrangement with the Nation regarding the development, construction and operation of the Facility.


2. Activities of HP Yakama, Inc. HP and NORAM acknowledge that HP Yakama,
----------------------------- Inc., a wholly-owned subsidiary of HP (the "SUBSIDIARY"), will enter into such agreements and contracts as the parties may deem necessary to establish the relationship with the Nation and consummate the transactions contemplated by the MOU. HP shall be primarily responsible for, and NORAM shall participate in, the drafting and negotiation of such agreements and contracts. In addition, NORAM shall provide Consulting Services with respect to the construction of the Facility and regulatory issues ("NORAM SERVICES"). NORAM hereby covenants that the construction costs of the Facility, which costs shall include those items listed on the budget dated July 8, 1997 and approved by HP and NORAM prior to the execution of this Agreement, shall not exceed $9 million. (A copy of such budget dated July 8, 1997 is attached hereto as Exhibit A.) Notwithstanding the foregoing covenant, NORAM shall not be responsible for any cost increases due to changes in the plans or specifications for construction made by the Nation, HP, HP's affiliates or the Subsidiary without the approval of NORAM, which approval shall not be a prerequisite to making any such changes. HP shall be wholly responsible for financing the Facility and for providing all Consulting Services (other than NORAM Services) and any other services to be provided pursuant to the MOU. Subject to its obligations pursuant to Sections 3 and 4 hereof, HP shall receive from the Nation all payments required by the MOU, including, without limitation, payments of principal and interest related to the Loan and payment of the Profit Participation Interest.


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3. Repayment of Expenses. The parties acknowledge that prior to entering into
--------------------- this Agr
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