THIRD AMENDMENT, WAIVER AND CONSENT
to
$250,000,000 REVOLVING CREDIT FACILITY
CREDIT AGREEMENT
by and among
CHURCHILL DOWNS INCORPORATED, as the Borrower,
and
THE GUARANTORS PARTY HERETO
and
THE BANKS PARTY HERETO
and
PNC BANK, NATIONAL ASSOCIATION, As Agent,
and
CIBC OPPENHEIMER CORP., As Syndication Agent.
and
BANK ONE, KENTUCKY, N.A., As Documentation Agent
Dated as of February 23, 2000
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THIS THIRD AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT (the
"Third Amendment") dated as of February 23, 2000, by and among CHURCHILL DOWNS
INCORPORATED, as the Borrower (the "Borrower"), the GUARANTORS party to the
Credit Agreement (as hereinafter defined), the BANKS party to the Credit
Agreement (as hereinafter defined) and PNC BANK, NATIONAL ASSOCIATION, as the
Agent (the "Agent"), and CIBC OPPENHEIMER CORP., as Syndication Agent. and BANK
ONE, KENTUCKY, N.A., as Documentation Agent
WHEREAS, reference is made to the Credit Agreement dated April 23,
1999, as amended prior to the date hereof (the "Credit Agreement") described
above;
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit Agreement; and
WHEREAS, reference is made to that certain memorandum from PNC Bank to
Churchill Downs Bank Group dated October 12, 1999 attached hereto as Exhibit A
(the "October 12, 1999 Memorandum").
NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
1. Sale of Kentucky Horse Center and Release of Liens
A. Recital.
Attached hereto as Exhibit 1(A) is a letter dated December 21,
1999 from the Borrower to the Agent describing the proposed sale of the Kentucky
Horse Center (the "KHC") by Racing Corporation of America ("RCA"). Attached to
such letter is a description of the personal property and other assets to be
sold (together with the applicable real property comprising the KHC, the "KHC
Assets") and a summary of the financial performance and projections relating to
the KHC. Under such transaction, Borrower will guaranty the obligations of RCA
under the applicable transaction documents. Under the terms described in such
letter, RCA will sell the KHC Assets for a price of approximately $5,000,000.
RCA may engage in a "deferred like kind exchange" under Section 1031 of the
Internal Revenue Code (the "Code") and currently intends to employ Bank One
Exchange Corporation as the "qualified intermediary" under Regulation Section
1.1031(k)-1(g)(4) (the "Intermediary") to hold the proceeds of such sale pending
identification and purchase of "replacement assets" (as defined in the Code). It
is also possible that RCA will not engage in a "deferred like-kind of exchange".
B. Consent; Authorization to Release.
The Banks hereby approve of such sale and authorize the Agent
to execute such documents as are necessary to release the Liens of the Banks in
the KHC Assets subject to the following:
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(a) Sales Price.
The sales price for the KHC Assets shall be approximately
$5,000,000 and the other terms of the sale shall be substantially as set forth
in the first paragraph of this Section 1;
(b) Terms of Intermediary Agreement; Delivery of
Intermediary Agreement.
If RCA engages in a "deferred like kind exchange", the
Loan Parties shall deliver to the Agent a copy of the agreement between KHC
and the Intermediary (the "Intermediary Agreement") at least 3 Business Days
before the date of RCA's sale of the KHC Assets. The Intermediary Agreement
shall (1) be substantially consistent with the first paragraph of this Section
1, (2) comply with the requirements of a deferred like-kind exchange using
a qualified intermediary pursuant to Section 1031 of the Code, (3) provide that
the proceeds held by the Intermediary shall be returned to RCA if either (a)
RCA fails to identify "replacement property" within 45 days of the date of the
sale of the KHC Assets or (b) RCA fails to purchase replacement property within
180 days after the sale of the KHC Assets, and (4) provide that any net
proceeds held by the Intermediary in excess of the purchase price for the
replacement property shall be returned to RCA;
(c) Release Terms.
The Agent shall not be required to release its Liens on
the KHC Assets until it has satisfactory assurance that the proceeds of such
sale have been, or simultaneously with such release will be, received by the
Intermediary;
(d) Exclusion of KHC Assets from Financial Covenant
Computations After Sale.
The parties hereto acknowledge that on any computations
of the financial ratios listed below pursuant to the Credit Agreement made
after the date on which RCA sells the KHC Assets (including quarterly
computations for quarters ending prior to the date of such sale if the due date
for the Compliance Certificate setting forth such computation is after the
date of such sale), the operations of KHC shall be excluded from all income and
expense items in the computations of such ratios. For purposes of the preceding
sentence "Income and expense items" shall include without limitation
Consolidated EBITDA and both the numerators and denominators of the Interest
Coverage Ratio and the Fixed Charge Coverage Ratio (and each component of such
numerators and denominators).
---------------------------------------------------------
Section/Ratio
---------------------------------------------------------
Section 7.2.17 Maximum Total Leverage Ratio
---------------------------------------------------------
Section 7.2.18 Maximum Senior Leverage Ratio
---------------------------------------------------------
Section 7.2.19 Minimum Interest Coverage Ratio
---------------------------------------------------------
Section 7.2.21 Minimum Fixed Charge Coverage Ratio
---------------------------------------------------------
; and
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(e) Compliance with Section 7.2.5 (Liquidations,
Mergers, Consolidations, Acquisitions) in
Connection With Purchase of Replacement Property.
The purchase by the Loan Parties of replacement property
shall be subject to Section 2.5 (Liquidations, Mergers, Consolidations,
Acquisitions) and the Loan Parties shall comply with the requirements of such
Section.
2. Amendment to Permit Pledge of Assets by Charlson Broadcast
Technologies, LLC
A new clause (xii) is hereby added to the definition
of "Permitted Liens" to follow immediately after the last clause of such
definition to read as set forth below. Such last clause is renumbered to read
"(xi)" instead of "(x)" (correcting the numerical sequence--such definition now
has two clauses numbered "(x)") :
"(xii) Liens granted by Charlson Broadcast
Technologies, LLC provided that the Indebtedness secured
thereby is permitted under clause (i) of Section 7.2.1(Limitation
on Indebtedness) (and such Indebtedness shall reduce the amount
of availability under the $5,000,000 limit on Indebtedness of
Excluded Subsidiaries permitted under such clause (i))."
3. Amendments to Create a $10 Million "Basket" for Guarantees and
Indebtedness.
A. Indebtedness (Section 7.2.1)
A new clause (xi) is hereby added to Section 7.2.1 to follow
immediately after clause (x) and to read as follows:
"(xi) other Indebtedness provided that the total
amount of Indebtedness included under this clause (xi) and
Guarantees included under clause (iii) of Section 7.2.3 shall
not exceed $10,000,000."
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B. Guaranties (Section 7.2.3)
Section 7.2.3 is hereby amended and restated to read as
follows:
"7.2.3 Guaranties.
Each of the Loan Parties shall not, and shall not
permit any of its Subsidiaries to, at any time, directly or
indirectly, become or be liable in respect of any Guaranty, or
assume, guarantee, become surety for, endorse or otherwise
agree, become or remain directly or contingently liable upon
or with respect to any obligation or liability of any other
Person, except for (i) the Guaranty Agreement (ii) other
Guaranties entered into in the ordinary course of business on
behalf of a Loan Party or any of its Subsidiaries (subject in
the case of Guaranties on behalf of the Excluded Subsidiaries
to the limitation on Restricted Investments contained in
Section 7.2.4(vii)) provided that such other Guaranties do not
to exceed $5,000,000 in the aggregate and are otherwise
permitted hereunder, (iii) other Guaranties provided that the
total amount of Guaranties included in this clause (iii) plus
the amount of Indebtedness included in clause (xi) of Section
7.2.1 shall not exceed $10,000,000, and (iv) Guarantees by any
Loan Party of Indebtedness or other obligations of any other
Loan Party permitted hereunder."
C. Acknowledgments Related to The Foregoing Amendments.
(a) $5,000,000 Loan From Triple Crown Productions, LLC.
The $5,000,000 loan to the Borrower from Triple Crown
Productions, LLC referenced in Section I of the October 12, 1999 Memorandum is
Indebtedness permitted under clause (xi) of Section 7.2.1 of the Credit
Agreement and shall be included under such clause (xi).
(b) $1,500,000 Loan to Kentucky Derby Museum.
The $1,500,000 loan from the Borrower to the Kentucky
Derby Museum referenced in Section II of the October 12, 1999 Memorandum shall
(as provided in such October 12, 1999 Memorandum) be included as a Permitted
Investment under the last clause of the definition of such term (beginning "and
in addition, the Borrower shall be allowed to invest") in the Credit Agreement
(and accordingly such loan shall reduce from $5,000,000 to $3,500,000 the amount
of "similar cash investments"
which may be treated as "Permitted Investments" under the last clause of such
definition).
4. Landlord's Waiver and Consent--Calder Satellite Uplink.
A. Recital:
Calder entered into that certain Agreement of Lease
dated as of July 1, 1995 pursuant
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to which Calder leased to The Satlink Corporation ("Satlink") space on the
premises of Calder's racetrack facility for the construction of a satellite
communications uplink facility. Roberts Communications Network, Inc.
("Roberts"), is the successor by merger to Satlink. Roberts' lender, General
Electric Capital Corporation ("GECC"), has requested that Calder enter into that
certain Landlord's Waiver and Consent (the "GECC Waiver") in the form attached
as Exhibit 4(A) hereto pursuant to which among other things, the Agent
acknowledges the validity of GECC's liens in the personal property and trade
fixtures of Roberts some of which is located on Calder's premises.
B. Waiver and Consent.
The Banks hereby permit Calder to enter into the GECC
Waiver in substantially the form attached hereto and waive any provisions of the
Calder Mortgage, the related assignment of leases executed by Calder or any
of the other Loan Documents to the extent that such documents would otherwise
prohibit Calder from executing such GECC Waiver or require consent for the same.
5. Landlord's Waiver and Consent--Calder Satellite Tower.
A. Recital:
Calder desires to enter into a certain Option and Lease
Agreement with AT&T Wireless Services of Florida, Inc. ("AT&T") pursuant to
which Calder will lease to AT&T space for the construction of towers or other
facilities for transmission and reception of communications signals on Calder's
premises. AT&T has requested that Calder enter into that certain
Subordination, Non-Disturbance and Attornment Agreement (the " AT&T Waiver")
in substantially the form attached as Exhibit 5(A) hereto pursuant to which
among other things, the Agent acknowledges it will acquire no interest and it
waives any interest it may have or acquire in the personal property of AT&T some
of which is located on Calder's premises.
B. Waiver and Consent.
The Banks hereby permit Calder to enter into the AT&T
Waiver in substantially the form attached hereto and waive any provisions of
the Calder Mortgage, the related assignment of leases executed by Calder or
any of the other Loan Documents to the extent that such documents would
otherwise prohibit Calder from executing such AT&T Waiver or require consent for
the same.
6. Lease For Equine Hospital--Hollywood Park.
A. Recital:
Hollywood Park, Inc. entered into a certain lease (the
"Prior Lease") agreement pursuant to which Hollywood Park, Inc. leased to
Southern California Equine Foundation a portion of its premises located at the
Hollywood Park racetrack for the operation of an Equine Hospital. The Prior
Lease expired and Hollywood Park, Inc. continued to lease the real estate
114
comprising the Equine Hospital on a month-to month basis. Churchill Downs
California Company purchased the Hollywood Park racetrack assets of Hollywood
Park, Inc. on September 10, 1999, including Hollywood Park, Inc.'s rights under
its month to month lease with Southern California Equine Foundation. Churchill
Downs California Company entered into a written new Ground Lease Agreement
dated December 1, 1999 (the "Ground Lease") with Southern California Equine
Foundation replacing its month to month lease with Southern California Equine
Foundation.
B. Waiver and Consent.
The Agent and the Banks hereby consent to Churchill Downs
California Company entering into a written lease agreement with Southern
California Equine Foundation. The Agent and the Banks waive any provisions of
their Mortgage on the Hollywood Park property and the related Assignment of
Leases and Rents, each dated as of September 10, 1999, to the extent that such
documents would otherwise prohibit Churchill Downs California Company from
executing such lease or require consent for the same.
7. Amendment to Schedule of Existing Indebtedness (Section 7.2.1).
A. Recital:
The parties desire to amend Schedule 7.2.1 (Permitted
Indebtedness) to the Credit Agreement to reflect the potential maximum principal
amount of Indebtedness of Hoosier Park under the Second Amended Secured
Promissory Note dated as of November 1, 1994, as amended ("Hoosier Park/CDMC
Note"), in favor of Churchill Downs Management Company. Such Indebtedness was
heretofore also reflected on Schedule 7.2.4 (Restricted Investments on the
Closing Date).
B. Waiver and Amendment.
Schedule 7.2.1 to the Credit Agreement is hereby amended and
restated to read as set forth on Schedule 7.2.1 hereto. The Agent and the Banks
hereby waive any alleged breach of the Credit Agreement which may be alleged to
have occurred between the Closing Date and the date hereof resulting from any
failure of Schedule 7.2.1 to reflect correctly the amount of the Indebtedness
under the Hoosier Park/CDMC Note.
8. Amendment to Section 7.2.5 (Liquidations, Mergers,
Consolidations, Acquisitions); Amendments to Mortgages.
A. Amendment to Section 7.2.5.
A new clause (4) is hereby added to Section 7.2.5
(Liquidations, Mergers, Consolidations, Acquisitions) to follow immediately
after existing clause (3) to read as follows:
115
"(4) Any Loan Party may acquire by purchase, lease or
otherwise all or substantially all of the assets of any other Person
(without complying with the requirements of clause (3) of this Section
7.2.5) provided that:
(i) the total Consideration paid or given by
such Loan Party in connection with such acquisition does not
exceed $500,000;
(ii) the total Consideration paid or given
by such Loan Party in connection with acquisitions under this
clause (4) of Section 7.2.5 over the term of this Agreement
shall not exceed $10,000,000, and
(iii) the Borrower shall send to the Agent
written notice of each acquisition under this Section 7.2.5(4)
within five (5) Business Days after such acquisition and such
report shall contain
(a) a certification in the form of Section 9
of the quarterly Compliance Certificate (as
amended by the Third Amendment to this Agreement)
demonstrating the Loan Parties' compliance with
the requirements of subclauses (i) and (ii)
of this clause (4) and
(b) an updated Schedule 7.2.5(4)
(Acquisitions Under Section 7.2.5(4)) listing all
of the acquisitions made by the Loan Parties
under clause (4) of Section 7.2.5 between February
23, 2000 (date of Third Amendment) and the date
of such acquisition.
(iv) the Borrower shall report all such
acquisitions under this clause (4) of Section 7.2.5 in each
quarter on its Compliance Certificate for such quarter."
B. New Schedule 7.2.5(4)
A new Schedule 7.2.5(4) is hereby added to the Credit
Agreement to be in the form attached as Schedule 7.2.5(4). Such Schedule shall
list all of the acquisitions all of the acquisitions made by the Loan Parties
under clause (4) of Section 7.2.5 after February 23, 2000 (date of Third
Amendment):
C. Amendment to (Exhibit 7.3.3) Quarterly Compliance
Certificate (Exhibit 7.3.3).
Exhibit 7.3.3 (Quarterly Compliance Certificate) is
hereby amended and restated to read as set forth on Exhibit 7.3.3 hereto.
D. Amendments to Mortgages.
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The Agent and the Banks shall not require the Borrower to
amend the applicable Mortgages to include within the Collateral thereunder Real
Property acquired pursuant to acquisitions described in and permitted under
Section 7.2.5 (4) (added to the Credit Agreement pursuant to the Third
Amendment thereto), provided that such Loan Parties shall at any time promptly
upon the request of the Agent or the Required Banks amend such Mortgages to
include such Real Property (and any other similar Real Property owned by the
Loan Parties and not then included in such Collateral, including the Schedule
9.E) Parcels (as such term is defined in Section 9.E))) and obtain
appropriate amendments or endorsements to the title insurance policies relating
to the same.
E. Waiver.
Subject to the covenant contained in Section 8.D, the
Agent and the Banks waive any requirement that the Loan Parties have, prior
to the date of this Third Amendment, amended the Mortgages to include the
Schedule 9.E) Parcels (as such term is defined in Section 9.E) in the Collateral
thereunder.
9. Warranties
The Loan Parties, jointly and severally, represent and warrant
as follows:
A. Recitals.
The recitals hereto are true, correct and complete.
B. Warranties Under the Credit Agreement
The representations and warranties of Loan Parties contained
in the Credit Agreement, after giving effect to the amendments thereto on the
date hereof, are true and correct on and as of the date hereof with the same
force and effect as though made by the Loan Parties on such date, except to the
extent that any such representation or warranty expressly relates solely to a
previous date. The Loan Parties are in compliance with all terms, conditions,
provisions, and covenants contained in the Credit Agreement.
C. Power and Authority; Validity and Binding Effect; No
Conflict.
Each Loan Party has full power to enter into, execute, deliver
and carry out this Third Amendment, and such actions have been duly authorized
by all necessary proceedings on its part. This Third Amendment has been duly and
validly executed and delivered by each Loan Party. This Third Amendment
constitutes the legal, valid and binding obligation of each Loan Party which is
enforceable against such Loan Party in accordance with its terms. Neither the
execution and delivery of this Third Amendment nor the consummation of the
transactions herein contemplated will conflict with, constitute a default under
or result in any breach of (i) the terms and conditions of any organizational
documents of any Loan Party or (ii) any Law or any material agreement or
instrument or other obligation to which any Loan Party or any of its
117
Subsidiaries is a party or by which it or any of its Subsidiaries is bound, or
result in the creation or enforcement of any Lien upon any property of any Loan
Party or any of its Subsidiaries other than as set forth herein.
D. Consents and Approvals; No Event of Default.
No consent, approval, exemption, order or authorization
of any Person other than the parties hereto is required by any Law or any
agreement in connection with the execution, delivery and carrying out of this
Third Amendment. No event has occurred and is continuing and no condition exists
or will exist after giving effect to this Third Amendment which constitutes
an Event of Default or Potential Default.
E. Schedule of Properties Acquired Since Closing.
Attached as Schedule 9.E to this Third Amendment is a list of
the properties (the "Schedule 9.E Parcels") purchased by the Borrower between
the Closing Date and the date of this Third Amendment which are located in
Jefferson County, Kentucky and which have not been included in the Collateral
under the Mortgages filed in such County.
10. Conditions to Effectiveness.
The effectiveness of this Third Amendment is subject to
satisfaction of each of the following conditions on or before the date hereof:
A. Representations and Warranties.
Each of the representations and warranties under Section 9 hereof
are true and correct on the date hereof.
B. Execution by Required Banks, Agent and Loan Parties.
This Third Amendment shall have been executed by all of the
Banks, the Agent and the Loan Parties on or before the date hereof.
C. Opinion of Counsel.
The Loan Parties shall have delivered an opinion of their counsel confirming the
warranties in Section 9 hereof.
11. References to Credit Agreement, Loan Documents.
Any reference to the Credit Agreement or other Loan Documents
in any document, instrument, or agreement shall hereafter mean and include the
Credit Agreement or such Loan Document, including such schedules and exhibits,
as amended hereby. In the event of irreconcilable inconsistency between the
terms or provisions hereof and the terms or provisions of the Credit Agreement
or such Loan Document, including such schedules and exhibits, the terms and
provisions hereof shall control.
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12. Force and Effect.
The Borrower reconfirms, restates, and ratifies the Credit
Agreement and all other documents executed in connection therewith except to the
extent any such documents are expressly modified by this Third Amendment and
Borrower confirms that all such documents have remained in full force and effect
since the date of their execution.
13. Governing Law.
This Third Amendment shall be deemed to be a contract under
the laws of the Commonwealth of Kentucky and for all purposes shall be governed
by and construed and enforced in accordance with the internal laws of the
Commonwealth of Kentucky without regard to its conflict of laws principles.
14. Counterparts; Effective Date.
This Third Amendment may be signed 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. This Third Amendment
shall become effective when it has been executed by the Agent, the Loan Parties
and all of the Banks and each of the other conditions set forth in Section 10 of
this Third Amendment has been satisfied.
[SIGNATURE PAGES TO FOLLOW]
119
[SIGNATURE PAGE 1 OF 4 TO THIRD AMENDMENT]
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed this Third Amendment as of the day and year above
written.
BORROWER:
CHURCHILL DOWNS INCORPORATED
By:
Title:
GUARANTORS:
CHURCHILL DOWNS MANAGEMENT COMPANY
By:
Title:
CHURCHILL DOWNS INVESTMENT COMPANY
By:
Title:
RACING CORPORATION OF AMERICA
By:
Title:
ELLIS PARK RACE COURSE, INC.
By:
Title:
120
[SIGNATURE PAGE 2 OF 4 TO THIRD AMENDMENT]
CALDER RACE COURSE, INC.
By:
Title:
TROPICAL PARK, INC.
By:
Title:
BANKS AND AGENT
PNC BANK, NATIONAL ASSOCIATION,
individually and as Agent
By:
Title:
BANK ONE, KENTUCKY, NA
By:
Title:
121
[SIGNATURE PAGE 3 OF 4 TO THIRD AMENDMENT]
CIBC INC.
By:
Title:
COMERICA BANK
By:
Title:
FIFTH THIRD BANK
By:
Title:
NATIONAL CITY BANK OF KENTUCKY
By:
Title:
FIRSTAR BANK, N.A.
By:
Title:
BANK OF LOUISVILLE
By:
Title:
122
[SIGNATURE PAGE 4 OF 4 TO THIRD AMENDMENT]
CIVITAS BANK
By:
Title:
WELLS FARGO BANK
By:
Title:
123
Schedules and Exhibits to Third Amendment
Schedules
Schedule 9.E - Kentucky Properties Acquired Since Closing
Schedule 7.2.1 - Permitted Indebtedness
Schedule 7.2.5(4) - Acquisitions Under Section 7.2.5(4)
Exhibits
Exhibit A - October 12, 1999 Memorandum
Exhibit 1.A - Letter dated December 21, 1999 re sale of the
Kentucky Horse Center
Exhibit 4.A - GECC Waiver
Exhibit 5.A - AT&T Waiver
Exhibit 7.3.3 - Form of Compliance Certificate (changed
pages only)
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Schedule 7.2.5(4)
Acquisitions Under Section 7.2.5(4)
The following is a list of all of the acquisitions made by the Loan Parties
under clause (4) of Section 7.2.5 between February 23, 2000 (date of Third
Amendment) and the Report Date:
- ---------------------------------------------------------------------
Name of Seller Description of Assets Consideration Paid by
Acquired the Loan Parties
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
$
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
$
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Total (may not exceed $
$10,000,000)
- ---------------------------------------------------------------------
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Schedule 9.E
Kentucky Properties Acquired Since Closing
(Not Included in the Mortgages)
126