Exhibit 10.13
BUSINESS LOAN AGREEMENT
This Agreement is entered into as of April 14, 1995, between Bank of
America National Trust and Savings Association, a national banking association
(the "Bank") and Hollywood Park, Inc., a Delaware corporation ("Borrower").
1. FACILITY NO. 1 CREDIT AMOUNT AND TERMS
1.1 Revolving Line of Credit Amount.
(a) During the availability period described below, the Bank
will provide a revolving line of credit to the Borrower. The principal
amount of the revolving line of credit (the "Facility No. 1") is Fifteen
Million Dollars ($15,000,000).
(b) This is a revolving line of credit with a within line
facility for standby letters of credit. During the availability period,
the Borrower may repay principal amounts, without any premium or penalty
except as expressly set forth herein, and reborrow them.
(c) Each advance requested by the Borrower must be for at least
One Hundred Thousand Dollars ($100,000), or for the amount of the remaining
available line of credit, if less.
(d) The Borrower agrees not to permit the outstanding principal
balance of the line of credit plus the outstanding undrawn amounts of any
standby letters of credit, including amounts drawn on letters of credit and
not yet reimbursed, to exceed Facility No. 1.
1.2 Availability Period. The line of credit shall be available to the
Borrower from the date of this Agreement until May 1, 1997 (the "Expiration Date
Facility No. 1") unless the Bank has elected to stop making additional credit
available to the Borrower or to terminate the line of credit, in each instance,
following the occurrence and during the continuance of an Event of Default, it
being acknowledged and agreed by the Borrower that the occurrence of an Event of
Default under
1
paragraph 9.3 of this Agreement shall automatically terminate the line of
credit available hereunder.
1.3 Interest Rate.
(a) Unless the Borrower elects an optional interest rate as
described below, the interest rate is the Bank's Reference Rate.
(b) The "Reference Rate" is the rate of interest publicly
announced from time to time by the Bank in San Francisco, California, as
its Reference Rate. The Reference Rate is set by the Bank based on various
factors, including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing
some loans. The Bank may price loans to its customers at, above, or below
the Reference Rate. Any change in the Reference Rate shall take effect at
the opening of business on the day specified in the public announcement of
a change in the Bank's Reference Rate.
1.4 Repayment Terms.
(a) The Borrower will pay interest on the outstanding principal
balance of this line of credit on the last banking day of the calendar
month in which the first advance is made and on the last banking day of
each calendar month thereafter until payment in full of any principal
outstanding under this line of credit.
(b) The Borrower will repay in full all principal and any unpaid
interest or other charges outstanding under this line of credit no later
than the Expiration Date Facility No. 1. Any amount bearing interest at an
optional interest rate (as described below) may be repaid at the end of the
applicable interest period, which shall be no later than the Expiration
Date Facility No. 1.
1.5 Optional Interest Rates. Instead of the interest rate based on
the Bank's Reference Rate, the Borrower may elect to have all or portions of
this line of credit bear interest at the rates described below during an
interest period agreed to by the Bank and the Borrower. Each interest rate is a
rate per year. Interest will be paid on the last banking day of every calendar
month and on the last day of each interest period. If any interest period would
end on a day which is not a banking
2
day, that interest period shall be extended to the next succeeding banking day.
At the end of any interest period, the interest rate will revert to the rate
based on the Reference Rate, unless the Borrower shall have designated another
optional interest rate for the portion.
1.6 Fixed Rate. The Borrower may elect to have all or portions of
the principal balance of this line of credit bear interest at the Fixed Rate,
subject to the following requirements:
(a) The "Fixed Rate" means the fixed interest rate the Bank and
the Borrower agree will apply to the elected portion of the outstanding
principal balance of this line of credit during the applicable interest
period.
(b) The interest period during which the Fixed Rate will be in
effect will be no shorter than 15 days and no longer than one year.
(c) Each Fixed Rate portion will be for an amount not less than
Five Hundred Thousand Dollars ($500,000).
(d) The Borrower may not elect a Fixed Rate with respect to any
portion of the principal balance of the line of credit which is scheduled
to be repaid before the last day of the applicable interest period.
(e) Any portion of the principal balance of the line of credit
already bearing interest at the Fixed Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of a Fixed Rate portion, whether voluntary,
by reason of acceleration or otherwise, will be accompanied by the amount
of accrued interest on the principal amount prepaid, and a prepayment fee
equal to the amount (if any) by which:
(i) the additional interest which would have been payable on
the principal amount prepaid had it not been paid until the last day
of the interest period, exceeds
(ii) the interest which would have been recoverable by the
Bank by placing the principal amount prepaid on deposit in the
certificate of deposit market
3
for a period starting on the date on which it was prepaid and ending
on the last day of the interest period for such portion.
1.7 Offshore Rate. The Borrower may elect to have all or portions of
the principal balance of this line of credit bear interest at the Offshore Rate
plus 1.75 percentage points.
Designation of an Offshore Rate portion is subject to the following
requirements:
(a) The interest period during which the Offshore Rate will be
in effect will be one year or less. The last day of the interest period
will be determined by the Bank using the practices of the offshore dollar
inter-bank market.
(b) Each Offshore Rate portion will be for an amount not less
than Five Hundred Thousand Dollars ($500,000) for interest periods of 30
days or longer. For shorter maturities, each Offshore Rate portion will be
for an amount which when multiplied by the number of days in the applicable
interest period, is not less than fifteen million (15,000,000) dollar-days.
(c) The "Offshore Rate" means the interest rate determined by
the following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)
Offshore Rate = Grand Cayman Rate
---------------------------
(1.00 - Reserve Percentage)
Where,
(i) "Grand Cayman Rate" means the interest rate (rounded
upward to the nearest 1/16th of one percent) at which the Bank's Grand
Cayman Branch, Grand Cayman, British West Indies, would offer U.S.
dollar deposits for the applicable interest period to other major banks
in the offshore dollar inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum
reserve percentages for determining the
4
reserves to be maintained by member banks of the Federal Reserve System
for Eurocurrency Liabilities, as defined in Federal Reserve Board
Regulation D, rounded upward to the nearest 1/100 of one percent. The
percentage will be expressed as a decimal, and will include, but not be
limited to, marginal, emergency, supplemental, special, and other
reserve percentages, all as required by Regulation D or any replacement
thereof or similar law or regulation.
(d) The Borrower may not elect an Offshore Rate with respect to
any portion of the principal balance of the line of credit which is
scheduled to be repaid before the last day of the applicable interest
period.
(e) Any portion of the principal balance of the line of credit
already bearing interest at the Offshore Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether
voluntary, by reason of acceleration or otherwise, will be accompanied by
the amount of accrued interest on the amount prepaid, and a prepayment fee
equal to the amount (if any) by which
(i) the additional interest which would have been payable on
the principal amount prepaid had it not been paid until the last day of
the interest period, exceeds
(ii) the interest which would have been recoverable by the
Bank by placing the principal amount prepaid on deposit in the offshore
dollar market for a period starting on the date on which it was prepaid
and ending on the last day of the interest period for such portion.
(g) The Bank will have no obligation to accept an election for an
Offshore Rate portion if any of the following described events has occurred
and is continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of an Offshore Rate portion are not
available in the offshore Dollar inter-bank market; or
5
(ii) the Offshore Rate does not accurately reflect the cost
of an Offshore Rate portion.
1.8 Standby Letters of Credit. This line of credit may be used for
standby letters of credit subject to the following limitations:
(i) the maximum maturity of each such letter of credit may not
exceed 395 days beyond its date of issuance.
(ii) The aggregate undrawn amount of such standby letters of
credit outstanding at any one time (including amounts drawn on such letters
of credit and not yet reimbursed) may not exceed Five Million Dollars
($5,000,000).
The Borrower agrees:
(a) prior to the Expiration Date Facility No. 1, any sum drawn
under a standby letter of credit may, at the option of the Borrower, be
added to the principal amount outstanding under this Agreement provided no
Event of Default has occurred and is continuing or would result from an
extension of credit under this Agreement. Any amount so added to the
principal amount outstanding will bear interest at the Reference Rate or
other rate selected by the Borrower pursuant to the provisions hereof and
be due as provided in this Agreement with respect to the revolving line of
credit.
(b) if the Bank declares an Event of Default under this
Agreement, and if additional credit is not available to the Borrower under
this Agreement, at the Bank's request, to immediately deliver cash
collateral to the Bank in an amount not less than the undrawn amount of the
outstanding standby letters of credit (including amounts drawn and not yet
reimbursed).
(c) the issuance of any standby letter of credit and any
amendment to a standby letter of credit must be in form and content
reasonably satisfactory to the Bank and in favor of a beneficiary
reasonably acceptable to the Bank.
(d) to sign the Bank's Application and Agreement for Standby
Letters of Credit in the form of Exhibit A
6
attached hereto or any such Standard Application and Agreement than in use
by the Bank. The provisions of this Agreement shall prevail over any
conflicting provisions in any such Standby Letter of Credit Application
and Agreement.
(e) to pay an issuance fee on the undrawn amount of each standby
letter of credit at the rate of one percent (1.0%) per annum and such other
customary, incidental fees in the ordinary course such as for amendments,
payments and processing and the Bank's reasonable out of pocket expenses at
the times and in the amounts the Bank advises the Borrower from time to
time as being applicable to the Borrower's standby letters of credit.
(f) to allow the Bank to automatically charge the Borrower's
account number 14174-02000 at Bank's Century City Regional Commercial
Banking Office (the "Designated Account") for fees and other charges
applicable to any standby letter of credit pursuant to the provisions
hereto.
2. FACILITY NO. 2 LINE OF CREDIT, TERM LOAN, AMOUNT AND TERMS.
2.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of credit (the
"Facility No. 2") is equal to (i) Thirty Million Dollars ($30,000,000)
("Facility No. 2 Option No. 1"), or (ii) Sixty Million Dollars ($60,000,000)
("Facility No. 2 Option No. 2"). During the availability period the Borrower
may chose Facility No. 2 Option 2 if the following conditions are met:
(1) Sunflower Racing, Inc., and SR Food & Beverage, Inc.
guaranty the obligations of Borrower hereunder in the amount of Seventy-
Five Million Dollars ($75,000,000).
(2) The proceeds of Facility No. 2 Option No. 2 are to be used
to repay the debts of Sunflower Racing, Inc.
(3) The Subordination Agreement described in Paragraph 5.2(b)
has been received by the Bank.
7
(b) This is a revolving line of credit for advances with a term
repayment option. During the availability period, the Borrower may repay
principal amounts and reborrow them.
(c) Each advance must be for at least One Hundred Thousand Dollars
($100,000), or for the amount of the remaining available line of credit, if
less.
(d) The Borrower agrees not to permit the outstanding principal
balance of the line of credit to exceed the Facility No. 2.
2.2 Availability Period. The line of credit is available from the date of
this Agreement until May 1, 1996 (the "Expiration Date Facility No. 2") unless
the Bank has elected to stop making additional credit available to the Borrower
or to terminate this line of credit, in each instance, upon the occurrence and
during the continuance of an Event of Default, it being acknowledged and agreed
by the Borrower that occurrence of an Event of Default under paragraph 9.3 of
this Agreement shall automatically terminate the line of credit available
hereunder.
2.3 Interest Rate
(a) Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Reference Rate plus twenty-five basis
points.
(b) The "Reference Rate" is the rate of interest publicly announced
from time to time by the Bank in San Francisco, California, as its Reference
Rate. The Reference Rate is set by the Bank based on various factors, including
the Bank's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans. The Bank may
price loans to its customers at, above, or below the Reference Rate. Any change
in the Reference Rate shall take effect at the opening of business on the day
specified in the public announcement of a change in the Bank's Reference Rate.
2.4 Repayment Terms
(a) The Borrower will pay the interest on the outstanding principal
balance outstanding hereunder on the last banking day of the calendar month in
which the first advance is made and on the last banking day of each calendar
month
8
thereafter until payment in full of any principal outstanding under this line
of credit.
(b) The Borrower will repay the principal amount outstanding on the
Expiration Date Facility No. 2 in eighty-four successive equal monthly
installments starting June 1, 1996. On May 1, 2003 the Borrower will repay the
remaining principal balance plus any interest then due.
(c) The Borrower may prepay the loan in full or in part at any time.
Without premium or penalty whatsoever except as specifically provided herein.
The prepayment will be applied to the most remote installment of principal due
under this Agreement.
2.5 Optional Interest Rates. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect to have all or portions of the
line of credit (during the availability period and during the term repayment
period) bear interest at the rates described below during an interest period
agreed to by the Bank and the Borrower. Each interest rate is a rate per year.
Interest will be paid on the last banking day of each calendar month and on the
last day of each interest period. If any interest period would end on a day
which is not a banking day, that interest period shall be extended to the next
succeeding banking day. At the end of any interest period, the interest rate
will revert to the rate based on the Reference Rate, unless the Borrower has
designated another optional interest rate for the portion.
2.6 Fixed Rate. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Fixed Rate, subject
to the following requirements:
(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrower agree will apply to the elected portion during the applicable interest
period.
(b) The interest period during which the Fixed Rate will be in effect
will be no shorter than 15 days and no longer than one year.
(c) Each Fixed Rate portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
9
(d) The Borrower may not elect a Fixed Rate with respect to any
portion of the principal balance of the line of credit which is scheduled to be
repaid before the last day of the applicable interest period.
(e) Any portion of the principal balance of the line of credit
already bearing interest at the Fixed Rate will not be converted to a different
rate during its interest period.
(f) Each prepayment of a Fixed Rate portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the principal amount prepaid, and a prepayment fee equal to
the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the principal amount prepaid had it not been
prepaid, exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the principal amount prepaid on deposit in the certificate of
deposit market for a period starting on the date on which it was prepaid
and ending on the last day of the interest period for such portion (or the
scheduled payment date for the principal amount prepaid, if earlier).
2.9 Offshore Rate. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Offshore Rate plus
two percentage points:
Designation of an Offshore Rate portion is subject to the following
requirements:
(a) The interest period during which the Offshore Rate will be
in effect will be one year or less. The last day of the interest period
will be determined by the Bank using the practices of the offshore dollar
inter-bank market.
(b) Each Offshore Rate portion will be for an amount not less
than Five Hundred Thousand Dollars ($500,000) for interest periods of 30
days or longer. For shorter maturities, each Offshore Rate portion will be
for an amount which, when multiplied by the number of days in
10
the applicable interest period, is not less than fifteen million
(15,000,000) dollar-days.
(c) The "Offshore Rate" means the interest rate determined by
the following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)
Offshore Rate = Grand Cayman Rate
---------------------------
(1.00 - Reserve Percentage)
Where,
(i) "Grand Cayman Rate" means the interest rate (rounded
upward to the nearest 1/16th of one percent) at which the Bank's Grand
Cayman Branch, Grand Cayman, British West Indies, would offer U.S.
dollar deposits for the applicable interest period to other major banks
in the offshore dollar inter-bank market.
(ii) "Reserve Percentage" means the total of the maximum
reserve percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D, rounded
upward to the nearest 1/100 of one percent. The percentage will be
expressed as a decimal, and will include, but not be limited to,
marginal, emergency, supplemental, special, and other reserve
percentages as are required by Regulation D or any replacement thereof
or similar law or regulation.
(d) The Borrower may not elect an Offshore Rate with respect to
any portion of the principal balance of the line of credit which is
scheduled to be repaid before the last day of the applicable interest
period.
(e) Any portion of the principal balance of the line of credit
already bearing interest at the Offshore Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether
voluntary, by reason of acceleration or otherwise,
11
will be accompanied by the amount of accrued interest on the amount
prepaid, and a prepayment fee equal to the amount (if any) by which
(i) the additional interest which would have been payable on
the amount prepaid had it not been paid until the last day of the
interest period, exceeds
(ii) the interest which would have been recoverable by the
Bank by placing the amount prepaid on deposit in the offshore dollar
market for a period starting on the date on which it was prepaid and
ending on the last day of the interest period for such portion.
(g) The Bank will have no obligation to accept an election for an
Offshore Rate portion if any of the following described events has occurred
and is continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of an Offshore Rate portion are not
available in the offshore Dollar inter-bank market; or
(ii) the Offshore Rate does not accurately reflect the cost
of an Offshore Rate portion.
3. FEES, EXPENSES AND DEPOSITS
3.1 Facility Fee. The Borrower agrees to pay a fee of Eighteen
Thousand Seven Hundred Fifty Dollars ($18,750) as a fee for Facility No. 1, and
a fee of Twenty-Five Thousand Dollars ($25,000) for the Facility No. 2, both
upon execution of this Agreement.
3.2 Conversion Fee. The Borrower agrees to pay a fee of Seventy-Five
Thousand Dollars ($75,000) upon converting the outstanding principal of Facility
No. 2 to a term loan.
3.3 Expenses. The Borrower agrees to reimburse the Bank for any
reasonable expenses it incurs in the preparation of this Agreement and any
agreement or instrument required by this Agreement. Expenses include, but are
not limited to, reasonable attorneys' fees, including any allocated costs of the
Bank's in-house counsel.
12
4. DISBURSEMENTS, PAYMENTS AND COSTS
4.1 Requests for Credit. Except as permitted in paragraph 4.3 below,
each request for an extension of credit will be made in writing in the form of
the Borrowing Request attached hereto as Exhibit B.
4.2 Disbursements and Payments. Each disbursement by the Bank and
each payment by the Borrower will be:
(a) made at the Bank's Century City Regional Commercial Banking
Office, or other location reasonably selected by the Bank from time to time
after not less than 15 banking days prior written notice to the Borrower;
(b) made for the account of the Bank's branch selected by the
Bank from time to time;
(c) made in immediately available funds;
(d) evidenced by records kept by the Bank absent manifest error.
In addition, the Bank may, at its discretion, require the Borrower to sign
one or more promissory notes to evidence either Facility No. 1 or Facility
No. 2 and the principal balance outstanding thereunder which promissory
notes shall be made expressly subject to all of the terms and conditions of
this Agreement.
4.3 Telephone Authorization.
(a) The Bank may honor telephone instructions for advances,
issuance of standby letters of credit or repayments or for the designation
of optional interest rates given by any one of the individual signer(s) of
this Agreement or a person or persons authorized by any one of the
signer(s) of this Agreement.
(b) Advances will be deposited in and repayments will be
withdrawn from Borrower's account number 14174-02000, at the Bank's Century
City Regional Commercial Banking Office or such other accounts with the
Bank as designated in writing by the Borrower.
(c) The Borrower will provide written confirmation to the Bank
of any telephone instructions
13
within 7 days. If there is a discrepancy and the Bank has already acted
on the telephone instructions, the telephone instructions will prevail
over the written confirmation.
(d) The Borrower will indemnify and excuse the Bank (including
its officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone instructions for advances,
issuance of standby letters of credit, repayments or for the designation of
optional interest rates it reasonably believes are made by any individual
authorized by the Borrower to give such instructions; provided, however,
that the Bank shall not be indemnified for its own gross negligence or
wilful misconduct. This indemnity and excuse will survive this Agreement's
termination.
4.4 Direct Debit (Pre-Billing)
(a) The Borrower agrees that the Bank will debit the Designated
Account on the date each payment of interest from the Borrower becomes due
(the "Due Date"). If the Due Date is not a banking day, the Designated
Account will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will
mail to the Borrower a statement of the amounts that will be due on that
Due Date (the "Billed Amount"). The calculation will be made on the
assumption that no new extensions of credit or payments will be made
between the date of the billing statement and the Due Date, and that there
will be no changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed
Amount, regardless of the actual amount due on the Due Date (the "Accrued
Amount"). If the Billed Amount debited to the Designated Account differs
from the Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount,
the Billed Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrower will not be in default by
reason of any such discrepancy.
14
(ii) If the Billed Amount is more than the Accrued Amount,
the Billed Amount for the following Due Date will be decreased by the
amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The
Bank will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated
Account to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debit authorized by this
Agreement, the full amount of the debit will be reversed. The Borrower
shall receive notice of such reversal in the Borrower's BAMTRACK report
from the Bank.
4.5 Banking Days. Unless otherwise provided in this Agreement, a
banking day is a day other than a Saturday or a Sunday on which the Bank is open
for business in California. All payments and disbursements which would be due
on a day which is not a banking day will be due on the next succeeding banking
day. All payments received on a day which is not a banking day will be applied
to the credit on the next succeeding banking day.
4.6 Taxes. The Borrower will not deduct any taxes from any payments
it makes to the Bank. If any government authority imposes any taxes or charges
on any payments made by the Borrower, the Borrower will pay the taxes or
charges. Upon request by the Bank, the Borrower will confirm that they have
paid the taxes by giving the Bank official tax receipts (or notarized copies)
within 30 days after the due date of such taxes. This paragraph shall not apply
with respect to any taxes which are imposed on or measured by the Bank's net
income by any jurisdiction.
4.7 Additional Costs. The Borrower will pay the Bank, on written
demand setting forth in reasonable detail the basis therefor and the calculation
thereof, for the Bank's costs or losses arising from any change in any statute
or regulation or the interpretation thereof, or any request or requirement of a
regulatory agency made after the date of this Agreement and which is applicable
to all national banks or a class of all national banks including the Bank and
allocable to the loan in a
15
manner reasonably determined by the Bank. The costs include any reserve or
deposit requirements and any capital requirements relating to the Bank's assets
and commitments for credit.
4.8 Interest Calculation. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis of a
360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used.
4.9 Interest on Late Payments. Provided the default rate set forth
in paragraph 4.10 of this Agreement is not in effect, at the Bank's sole option
in each instance, upon prior written notice to the Borrower, any amount not paid
when due under this Agreement (including interest) shall bear interest from the
due date until paid at the Bank's Reference Rate plus 2 percentage points. This
may result in compounding of interest.
4.10 Default Rate. Upon the occurrence and during the continuation of
any Event of Default under this Agreement, and provided the interest rate set
forth in paragraph 4.9 of this Agreement is not in effect, advances under this
Agreement will, at the option of the Bank, bear interest at the Bank's Reference
Rate plus 3 percentage points. This will not constitute a waiver of any default.
5. CONDITIONS
5.1 Conditions For Extension of Initial Credit. The Bank must
receive each of the following, in form and content acceptable to the Bank,
before it is required to extend initial credit to the Borrower under this
Agreement:
(a) Authorizations. Corporate resolutions and certificates of
incumbency evidencing that the execution, delivery and performance by the
Borrower and each guarantor of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized.
(b) Fees. Payment of the fees required pursuant to paragraph 3.1
of this Agreement
(c) Amended Articles. Certified copies of the Borrower's and each
guarantor's Articles of Incorporation or amended Articles of Incorporation
reflecting the Borrower's and each guarantor's current name.
16
(d) Good Standing Certificate. A good standing certificate for the
Borrower and each guarantor of recent date, certified by the Secretary of the
State of the States of Delaware and California for the Borrower and each State
of incorporation for each guarantor and each state and where each guarantor is
required to be qualified to conduct its business.
(e) Guaranties. Guaranties signed by Hollywood Park Operating
Company, Hollywood Park Fall Operating Company, Hollywood Park Food Services,
Inc. and Turf Paradise, Inc., each in the amount of Seventy-Five Million Dollars
($75,000,000).
5.2 Conditions For Extension of Credit For Facility No. 2 Option No.
2. The Bank must receive the following in form and substance satisfactory to the
Bank prior to extending any credit under Facility No. 2 Option No. 2.
(a) Guaranties. Guaranties signed by Sunflower Racing, Inc., and
SR Food & Beverage, Inc., provided for in subparagraph 2.(a)(1) hereof.
(b) Subordination Agreement. A Subordination Agreement executed by
R.D. Hubbard and acknowledged by the Borrower and Sunflower Racing, Inc.
relating to the obligations of Sunflower Racing, Inc. due to R.D. Hubbard.
6. REPRESENTATIONS AND WARRANTIES
The Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a renewed representation that:
6.1 Organization of Borrower. The Borrower and each guarantor is a
corporation duly formed and existing under the laws of their respective states
of incorporation.
6.2 Authorization. This Agreement, and any instrument or agreement
required to be executed by the Borrower or any guarantor, pursuant to this
Agreement, are within the Borrower's and the appropriate guarantor's powers,
have been duly authorized, and do not conflict with any of the organizational
documents of the party executing same.
6.3 Enforceable Agreement. This Agreement is a legal, valid and
binding agreement of the Borrower, enforceable
17
against the Borrower in accordance with its terms, and any instrument or
agreement required to be executed by the Borrower, or either of them, pursuant
to this Agreement, when executed and delivered, will be similarly legal, valid,
binding and enforceable.
6.4 Good Standing. In each state in which the Borrower and each
guarantor does business, it is properly licensed, in good standing, and in
compliance with fictitious name statutes in each instance where failure to
comply will have a material adverse effect on the business of the Borrower and
the guarantors taken as a whole.
6.5 No Conflicts. The execution, delivery and performance of this
Agreement by the Borrower and any guaranty by any guarantor does not violate any
law, material agreement, or obligation by which the Borrower or any guarantor is
bound or affected.
6.6 Financial Information. All financial and other information that
has been or will be supplied to the Bank has been or will be prepared in
accordance with GAAP and presents or will present fairly the financial condition
of the Borrower or any applicable guarantor. Subject, however, to year-end
adjustments with respect to interim financial statements.
6.7 Lawsuits. To the knowledge of the Borrower, there is no lawsuit,
tax claim or other dispute pending or threatened against the Borrower or any
guarantor which, if lost, would materially impair the financial condition of the
Borrower and the guarantors taken as a whole or their collective ability to
repay the loan, except as have been disclosed in writing to the Bank including,
without limitation, disclosure in the financial statements of the Borrower.
6.8 Permits, Franchises. The Borrower and each guarantor possesses
all material permits, memberships, franchises, contracts and licenses required
and all material trademark rights, trade name rights, patent rights and
fictitious name rights necessary to enable it to conduct the business in which
it is now engaged; provided that, any failure by the Borrower or any guarantor
to have any of the foregoing rights, licenses and/or privileges shall not
constitute a breach of this representation and warranty if such failure would
not materially impair the collective ability of the Borrower and the guarantors
to repay the loan.
18
6.9 Income Tax Returns. The Borrower does not have any knowledge of
any pending material assessments or material adjustments of its income tax for
any year, except as have been disclosed in writing to the Bank including,
without limitation, disclosure in the financial statements of the Borrower.
6.10 No Event of Default. No event has occurred and is continuing or
would result from the extension of credit under this Agreement which constitutes
or would constitute an Event of Default or which, upon a lapse of time or notice
or both, would become an Event of Default.
6.11 ERISA Plans.
(a) The Borrower has fulfilled its obligations, if any, under the
minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and has not incurred any liability with
respect to any Plan under Title IV of ERISA.
(b) No reportable event has occurred under Section 4043(c) of
ERISA for which the PBGC requires 30 day notice.
(c) No action by the Borrower to terminate or withdraw from any
Plan has been taken and no notice of intent to terminate a Plan has been
filed under Section 4041 of ERISA.
(d) No proceeding has been commenced with respect to a Plan under
Section 4042 of ERISA, and no event has occurred or condition exists which
might constitute grounds for the commencement of such a proceeding.
(e) The following terms have the meanings indicated for purposes
of this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(ii) "ERISA" means the Employee Retirement Income Act of
1974, as amended from time to time.
19
(iii) "PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
(iv) "Plan" means any employee pension benefit plan
maintained or contributed to by the Borrower and insured by the
Pension Benefit Guaranty Corporation under Title IV of ERISA.
6.12 Location of Borrower. The Borrower's place of business (or, if
the Borrower has more than one place of business, its chief executive office) is
located at the address listed in paragraph 10.9 of this Agreement, unless
otherwise indicated by the Borrower in a notice to the Bank pursuant to
paragraph 7.12 of this Agreement.
7. COVENANTS
The Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full, unless the Bank waives
compliance in writing:
7.1 Use of Proceeds. To use the proceeds of Facility No. 1 only for
working capital and general corporate purposes and the proceeds of the Facility
No. 2 only and for acquisition/build out of operating race tracks and/or card
clubs including gaming expansion at such race tracks and card clubs, and for
working capital and general corporation purposes, provided, that, Borrower may
only use the proceeds of Facility No. 2 Option No. 2 to repay in full the
existing debts of Sunflower Racing, Inc.
7.2 Financial Information. To provide the following financial
information and statements and such additional information as reasonably
requested by the Bank from time to time:
(a) Within 90 days after the end of each fiscal year of
Borrower, Borrower's consolidated financial statements for such year
audited by an independent certified public accountant together with an
unqualified opinion of such certified public accountant and with
consolidating schedules prepared by the Borrower.
(b) Within 45 days after the end of each quarterly accounting
period of Borrower, Borrower's
20
consolidated financial statements for such period prepared by Borrower
and with consolidating schedules prepared by the Borrower.
(c) Within 45 days after the end of each quarterly accounting
period and within 90 days after the end of each fiscal year of Borrower, a
Compliance Certificate certified by the Chief Financial Officer of Borrower
substantially in the form of Exhibit C to this Agreement and any Current
Report on Form 8-K filed during such quarterly accounting period.
(d) Within 30 days after the end of each fiscal year of the
Borrower, a one-year operating plan on a consolidated and consolidating
basis and by business unit as determined by the Borrower, to include a
balance sheet and an income statement presented on a quarterly and annual
basis.
(e) Within 45 days after the end of each quarter of the
Borrower, a listing of all capital expenditures of the Borrower segregating
maintenance from construction or acquisition expenditures involving new
ventures or developments.
(f) Within 3 days after filing, copies of Borrower's Annual
Report on Form 10-K and Borrower's Quarterly Report on Form 10-Q.
(g) Promptly, but no later than 10 banking days following
written request therefor, such financial information concerning the
Borrower's or any guarantor's business activities and financial condition
as may be reasonably required by the Bank following the occurrence of an
event, which, in the Bank's reasonable judgement as set forth in detail in
said written request, materially adversely impairs the ability of Borrower
or any guarantor to perform their respective obligations under this
Agreement.
7.3 Tangible Net Worth.
A. If Facility No. 2 Option No. 1 is in effect, to maintain on a
basis with all of its subsidiaries, except Sunflower Racing, Inc. and its
subsidiaries, tangible net worth equal to at least the amounts indicated
for each period specified below:
21
Quarter Ending Amount
----------------- ------------
December 31, 1994 $145,000,000
December 31, 1995 $149,500,000
December 31, 1996 $144,500,000
Thereafter on a
quarterly basis $144,500,000 plus the sum of
65% of net profits with no
adjustment for net losses.
For the above "tangible net worth" means the gross book value of the assets
(excluding goodwill, patents, trademarks, trade names, organization
expense, treasury stock, unamortized debt discount and expense, deferred
research and development costs, deferred marketing expenses, and other like
intangibles), less total liabilities as reported on the Borrower's balance
sheet, including but not limited to accrued and deferred income taxes, and
any reserves against assets.
B. If Facility No. 2 Option No. 2 is in effect to maintain on a
consolidated basis (including Sunflower Racing, Inc. and its subsidiaries
for purposes hereof) tangible net worth equal to at least the amounts
indicated for each period specified below:
Quarter Ending Amount
----------------- ------------
December 31, 1994 $164,000,000
December 31, 1995 $170,000,000
December 31, 1996 $165,000,000
Thereafter on a
quarterly basis $165,000,000 plus the sum of
65% of net profits with no
adjustment for net losses.
For the above "tangible net worth" means the gross book value of the assets
(excluding goodwill, patents, trademarks, trade names, organization
expense, treasury
22
stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, and other like
intangibles), plus debt subordinated to the obligations of the Borrower
hereunder in a manner reasonably acceptable to the Bank less total
liabilities as reported on the Borrower's balance sheet, including but not
limited to accrued and deferred income taxes, and any reserves against
assets.
7.4 Leverage Ratio.
A. If Facility No. 2 Option No. 1 is in effect to maintain on a
consolidated basis with all of its subsidiaries, except Sunflower Racing,
Inc. and its subsidiaries, a ratio of total liabilities tangible net worth
not exceeding 0.50:1.00.
"Total liabilities" means the sum of current liabilities plus long term
liabilities, less liabilities due for Horseman's Purses, Stakes and Awards
(as set forth on the balance sheet) not to exceed an amount equal to
Restricted Cash (as set forth on the balance sheet) held by the Borrower as
reserve for such liabilities.
"Tangible net worth" has the same meaning as in Paragraph 7.3.A.
B. If Facility No. 2 Option No. 2 is in effect to maintain on a
consolidated basis a ratio of total liabilities not subordinated to
tangible net worth not exceeding the amounts indicated for each period
specified below:
Period Ratio
------ -----
December 31, 1994
through December 31, 1995 .70:1.00
March 31, 1996 through
December 31, 1996 .65:1.00
March 31, 1997 through
December 31, 1997 .55:1.00
March 31, 1998 and
thereafter .50:1.00
23
"Total liabilities not subordinated" means the sum of current liabilities
plus long term liabilities, excluding liabilities subordinated to the
Borrower's obligations to the Bank in a manner acceptable to the Bank, or
using the Bank's standard form less liabilities due for Horseman's Purses,
Stakes and Awards (as set forth on the balance sheet) not to exceed an
amount equal to Restricted Cash (as set forth on the balance sheet) held by
the Borrower as reserve for such liabilities.
"Tangible net worth" has the same meaning as in Paragraph 7.3B.
7.5 Fixed Charge Coverage Ratio.
A. If Facility No. 2 Option No. 1 is in effect to maintain on a
consolidated basis with all of its subsidiaries, except Sunflower Racing,
Inc. and its subsidiaries, Fixed Charge Coverage Ratio of at least the
amounts indicated for each period specified below:
Period Ratio
------ ---------
March 31, 1995 through
December 31, 1995 1.05:1.00
March 31, 1996 through
June 30, 1996 .75:1.00
September 30, 1996 .90:1.00
December 31, 1996 .95:1.00
March 31, 1997 and
quarterly thereafter 1.15:1.00
"Fixed Charge Debt Coverage Ratio" means the ratio of earnings before
interest expense, income taxes, depreciation and amortization divided by the
sum of interest expense, cash income taxes paid, current portion of long-
term debt, cash dividends paid and maintenance capital expenditures. For
1994 only, non-recurring charges of $2,964,000 associated with the purchase
of Turf Paradise and the opening of the Hollywood Park Casino are eliminated
24
from the calculation. This ratio will be calculated at the end of each
fiscal quarter, using the results of that quarter and each of the 3
immediately preceding fiscal quarters. The current portion of long term
liabilities will be measured as of the last day of the preceding fiscal
year.
B. If Facility No. 2 Option No. 2 is in effect to maintain on a
consolidated basis a Fixed Charge Coverage Ratio of at least the amounts
indicated for each period specified below:
Period Ratio
------ ---------
March 31, 1995 through
December 31, 1995 1.05:1.00
March 31, 1996 through
June 30, 1996 .75:1.00
September 30, 1996 .90:1.00
December 31, 1996 .95:1.00
March 31, 1997 and
quarterly thereafter 1.15:1.00
"Fixed Charge Debt Coverage Ratio" means the ratio of earnings before
interest expense, income taxes, depreciation and amortization divided by the
sum of interest expense, cash income taxes paid, current portion of long-
term debt, cash dividends paid and maintenance capital expenditures. For
1994 only, non-recurring charges of $2,964,000 associated with the purchase
of Turf Paradise and the opening of the Hollywood Park Casino are eliminated
from the calculation. This ratio will be calculated at the end of each
fiscal quarter, using the results of that quarter and each of the 3
immediately preceding fiscal quarters. The current portion of long term
liabilities will be measured as of the last day of the preceding fiscal
year.
7.6 Quick Ratio.
25
A. If Facility No. 2 Option No. 1 is in effect to maintain on a
consolidated basis with all of its subsidiaries, except Sunflower Racing,
Inc. and its subsidiaries, a ratio of quick assets to current liabilities,
on a quarterly basis, of at least the amounts indicated during each period
specified below:
Period Ratio
------ ---------
Through December 31, 1995 1.00:1.00
March 31, 1996
through December 31, 1996 .90:1.00
March 31, 1997 through
December 31, 1997 1.25:1.00
Commencing March 31, 1998
and every quarter
thereafter 1.50:1.00
"Quick assets" means, without duplication, cash, cash equivalents, short-
term investments, restricted cash, net Casino lease receivables and related
interest receivables, other receivables and marketable securities not
classified as long-term investments. Any outstandings under Facility No. 1,
excluding issued and outstanding standby letters of credit, shall be
included in current liabilities for the purpose of this calculation.
B. If Facility No. 2 Option No. 2 is in effect to maintain on a
consolidated basis a ratio of quick assets to current liabilities, on a
quarterly basis, of at least the amounts indicated during each period
specified below:
Period Ratio
----- ----
Commencing March 31, 1997
and every quarter
thereafter 1.00:1.00
26
"Quick assets" means, without duplication, cash, cash equivalents, short-
term investments, restricted cash, net Casino lease receivables and related
interest receivables, other receivables and marketable securities not
classified as long-term investments. Any outstandings under Facility No. 1,
excluding issued and outstanding standby letters of credit, shall be
included in current liabilities for the purpose of this calculation.
7.7 Current Ratio. If Facility No. 2 Option No. 2 is in effect to
maintain on a consolidated basis a ratio of current assets to current
liabilities of at least the amounts indicated for each period specified below:
Period Ratio
----- -----
December 31, 1994
through December 31, 1995 1.00:1.00
March 31, 1996
through December 31, 1996 .75:1.00
Any outstandings under Facility No. 1, excluding issued and outstanding standby
letters of credit, shall be included in current liabilities for the purpose of
this calculation.
7.8 Cash and Short Term Cash Equivalents. During the Borrower's
fiscal year 1996 only, maintain on a quarterly consolidated basis cash and short
term cash equivalents, and short term investments, excluding Restricted Cash,
minus the amounts outstanding on the revolving lines of credit under Facility
No. 1 (but excluding issued and outstanding letters of credit for purposes
hereof) of at least Ten Million Dollars ($10,000,000).
7.9 Other Debts. Not to have outstanding or incur any direct or
contingent debts for borrowed money (other than to the Bank), or become liable
for the debts of others without the Bank's written consent. As to the Borrower,
this does not prohibit:
(a) Acquiring goods, supplies, or merchandise on the Borrower's
usual trade credit terms.
27
(b) Endorsing negotiable instruments received in the ordinary
course of its business.
(c) Obtaining or executing surety bonds or other similar
undertakings in the ordinary course of its business.
(d) Maintaining debts and lines of credit in existence on the
date of this Agreement disclosed in writing to the Bank including, without
limitation, any disclosure in the financial statements of the Borrower
provided, however, that the proceeds of Facility No. 2 Option No. 2 may
only be used to repay the debt of Sunflower Racing, Inc. in the approximate
principal amount of $30,000,000.
(e) Incurring additional secured debts for the acquisition of
fixed or capital assets, to the extent permitted in paragraphs 7.4, 7.5
and, if applicable, 7.10 of this Agreement.
7.10 Other Liens. Not to create, assume, or allow the security
interest or lien (including judicial liens) on property Borrower now or later
owns, except:
(a) Security interests or liens, if any, in favor of the Bank.
(b) Liens for taxes not yet delinquent and for which adequate
reserves are maintained.
(c) Liens outstanding on the date of this Agreement disclosed in
writing to the Bank including, without limitation, any disclosure in the
financial statements of the Borrower.
(d) Additional liens in property acquired by the Borrower after
the date of this Agreement to the extent permitted pursuant to paragraphs
7.4, 7.5 and 7.9 of this Agreement not to exceed $5,000,000 annually in the
aggregate.
(e) Additional liens for self insurance by Hollywood Park
Operating Company for California State Workers Compensation Plan.
28
7.11 Out of Debt Period; Facility No.1. To repay any advances in
full, and not to draw any additional advances on the Borrower's revolving line
of credit under Facility No. 1, for a period of at least 30 consecutive days in
each 12 calendar months' period commencing as from the date of this Agreement.
For the purposes of this paragraph, "advances" does not include undrawn amounts
of outstanding standby letters of credit.
7.12 Notices to Bank. To promptly notify the Bank in writing upon
becoming aware of:
(a) the commencement of any litigation where the amount claimed
is over Two Million Dollars ($2,000,000) affecting the Borrower or any
guarantor.
(b) any substantial dispute between the Borrower or any
guarantor and any government authority the adverse determination of which
would materially impair the Borrower's or any guarantor's financial
condition or ability to repay its obligations under this Agreement or any
guaranty.
(c) any Event of Default or an event which upon a lapse of time
or notice or both would become an Event of Default.
(d) any material adverse change in the Borrower's or any
guarantor's financial condition or operations.
(e) any change in the Borrower's name, legal structure, place of
business, or chief executive office if the Borrower has more than one place
of business.
7.13 Books and Records. To maintain adequate books and records.
7.14 Audits. To allow the Bank and its agents to inspect the
Borrower's properties and examine, audit and make copies of Borrower's books and
records at any reasonable time during normal business hours and upon reasonable
prior written notice. If any of the Borrower's properties, books or records are
in the possession of a third party, the Borrower authorize that third party to
permit the Bank or its agents to have access to perform inspections or audits
concerning such properties, books and records as permitted under this paragraph
7.14,
29
provided the Bank notifies the Borrower before any such inspections and
offers the Borrower an opportunity to be present at such inspections.
7.15 Compliance with Laws. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business which are applicable to the Borrower's
business where failure to comply would result in a material adverse change in
the Borrower's financial condition, operations or ability to repay its
obligations under this Agreement.
7.16 Preservation of Rights. To maintain and preserve all material
rights, privileges, and franchises the Borrower now has which are necessary for
the conduct of the Borrower's business.
7.17 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's properties which are necessary for the
conduct of its business in good working condition.
7.18 Cooperation. To take any action reasonably requested by the Bank
to carry out the provisions of this Agreement.
7.19 Insurance. To maintain insurance reasonably satisfactory to the
Bank as to amount, nature and carrier covering property damage (including loss
of use and occupancy) to any of the Borrower's properties, public liability
insurance including coverage for contractual liability, product liability and
workers' compensation (self insurance is expressly permitted for worker's
compensation), and any other insurance which is usual for the Borrower's
business, but excluding earthquake insurance unless it becomes generally
available at reasonable premiums and is maintained by owners of similar real
property.
7.20 Additional Negative Covenants. Not to, and cause each guarantor
not to, without the Bank's prior written consent which consent shall not be
unreasonably withheld:
(a) engage in any business activities substantially different
from the Borrower's or any guarantor's business which presently includes
the development of real estate holdings in connection with or related to
race track and/or
30
card rooms; race track and/or card room operations; gaming operations at
race track and/or card rooms as legally permitted and recreation
activities related to any of the foregoing.
(b) liquidate or dissolve the Borrower's or any guarantor's
business or any material portion of the Borrower's or any guarantor's
business, provided, however, Borrower may dissolve, liquidate or otherwise
dispose of Sunflower Racing, Inc., unless Facility No. 2 Option No. 2 is in
place.
(c) enter into any consolidation or merger unless the Borrower is
the surviving entity with respect to mergers or consolidations involving
the Borrower and unless a guarantor is the surviving entity with respect to
merger or consolidations involving a guarantor or guarantors, and the
merger or consolidation is (i) Friendly, (ii) the Borrower is in compliance
with all terms of this Agreement upon completion of the consolidation or
merger and (iii) the acquisition is within the scope of the business
activities maintained in 7.20(a) above.
(d) enter into any pool, joint venture, syndicate or other
combination (an "acquisition") unless such acquisition is (i) Friendly,
(ii) the Borrower is in compliance with all terms of this Agreement once
the acquisition is completed and (iii) the acquisition is within the scope
of the business activities maintained in 7.20(a) above.
"Friendly" means such acquisition is not opposed by the acquired entity's
board of directors or governing body or by a shareholder or shareholders
controlling a significant portion of the voting shares of such entity, or
is not made with knowledge of facts or circumstances that such acquisition
is likely to be unfriendly.
(e) If Facility No. 2 Option No. 1 is in effect, downstream more
than Three Million Dollars ($3,000,000) in the aggregate to Sunflower
Racing, Inc., and SR Food & Racing, Inc.
7.21 ERISA Plans. To give prompt written notice to the Bank of the
occurrence of any reportable event under Section 4043(c) of ERISA for which the
PBGC requires 30 day notice; any action by the Borrower to terminate or withdraw
from a Plan or
31
the filing of any notice of intent to terminate under Section 4041 of ERISA; any
notice of noncompliance made with respect to a Plan under Section 4041(b) of
ERISA; or the commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
7.22 Sale of Assets. Not, and cause all guarantors not to (i) sell,
lease or dispose of any business or assets; provided that a breach of this
provision shall not occur by reason of aggregate sales of assets by Borrower and
the guarantors in any given year for up to $2,000,000 below the aggregate fair
market value of such assets (ii) enter into any sale and leaseback agreements.
7.23 Modification of Lease. Not amend that certain Oil and Gas Lease,
dated February 12, 1981, originally between Hollywood Park, Incorporated, as
lessor, and Casex Company, as lessee, in any manner that would reduce the
Borrower's rights regarding lessee's abandonment of the well or other rights
involving the condition of the drilling site, the control or removal of
hazardous substances or other environmental matters.
7.24 Loans to Officers. Not to make any loans, advances or other
extensions of credit to any of the Borrower's executives, officers, or directors
or shareholders (or any relatives of any of the foregoing).
7.25 Subsidiary Guaranty. Cause any new subsidiary of the Borrower to
guaranty the obligations of the Borrower hereunder in the amounts, and in form
and substance satisfactory to the Bank, provided that the guaranty of any new
subsidiary in which the Borrower's investment is less than Two Hundred Fifty
Thousand Dollars ($250,000) or less will not be required if the total investment
of Borrower in all such subsidiaries is not in excess of One Million Dollars
($1,000,000) in the aggregate.
7.26 Subsidiary Dividends. Not allow any guarantor to enter into any
agreement which would prevent it from making distributions and/or dividends of
its net income to Borrower.
8. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss
or liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a
32
hazardous substance on, under or about the Borrower's property or operations or
property leased to the Borrower. The indemnity includes but is not limited to
attorneys' fees (including the reasonable estimate of the allocated cost of in-
house counsel and staff). The indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. For these purposes, the term "hazardous
substances" means any substance which is or becomes designated as "hazardous" or
"toxic" under any federal, state or local law. This indemnity will survive
repayment of the Borrower's obligations to the Bank.
9. DEFAULT
If any of the following events (each an "Event of Default") occur and
is continuing, the Bank may do one or more of the following: declare the
Borrower in default, stop making any additional credit available to the
Borrower, and declare all obligations of the Borrower to the Bank under or in
respect of this Agreement and any instrument or agreement required under this
Agreement immediately due and payable, without notice of default (unless
expressly required elsewhere under this Agreement), presentment or demand for
payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character. If an Event of Default occurs under the
paragraph entitled "Bankruptcy" below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.
9.1 Failure to Pay. The Borrower fails to pay: (i) within 5 banking
days of the date due, any installment of interest; (ii) when due, any
installment of principal, or (iii) within 5 banking days after written demand,
any other sum due under this Agreement in accordance with the terms of this
Agreement.
9.2 False Information. Any information delivered to the Bank by the
Borrower proves to be false or misleading in any material respect as of when
delivered.
9.3 Bankruptcy. The Borrower or any guarantor files a bankruptcy
petition, a bankruptcy petition is filed against the Borrower or any guarantor,
or the Borrower or any guarantor makes a general assignment for the benefit of
creditors unless any such petition or assignment is dismissed within a period of
60 days after the filing.
33
9.4 Receivers. A receiver or similar official is appointed to take
possession of the properties of the Borrower or any guarantor unless such
appointment is set aside or withdrawn or ceases to be in effect within 60 days
after the filing or appointment.
9.5 Judgments. Any judgments or arbitration awards in the amount of
Five Million Dollars ($5,000,000) or more in excess of any available insurance
coverage are entered against the Borrower or any guarantor and such judgment or
award shall not have been vacated or discharged by other than payment, stayed or
bonded pending appeal within 60 days of its entry, or the Borrower or any
guarantor enters into any settlement agreements with respect to any litigation
or arbitration, obligating the Borrower or any one or more guarantors to pay an
aggregate amount of Five Million Dollars ($5,000,000) or more in excess of any
available insurance coverage.
9.6 Government Action. Any government authority takes action that
the Bank reasonably believes materially impairs the financial condition of the
Borrower and guarantors taken as a whole, or their collective ability to repay
the obligations under this Agreement.
9.7 Material Adverse Change. A material adverse change occurs in the
financial condition, properties or prospects, of the Borrower and the guarantors
and which impairs their collective ability to repay the obligations under this
Agreement.
9.8 Cross-default. Any default occurs under any agreement in
connection with any indebtedness for borrowed money which the Borrower or any
guarantor has obtained from anyone else or which the Borrower or any guarantor
has guaranteed in the principal amount of One Million Dollars ($1,000,000) or
more if the default consists of failing to make a payment when due or gives the
other lender the right to accelerate the obligation after expiration of any
applicable notice, grace or cure periods.
9.9 Other Bank Agreements. The Borrower or any guarantor fails to
meet the conditions of, or fails to perform any obligation under any other
agreement the Borrower or any guarantor has with the Bank or any affiliate of
the Bank, and
34
such failure continues without cure for 15 banking days after the Borrower or
any guarantor becomes aware of such failure.
9.10 ERISA Plans. The occurrence of any one or more of the following
events with respect to the Borrower, provided such event or events could
reasonably be expected, in the reasonable judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of the Borrower with respect to a Plan or impair the Borrower's
ability to repay its obligations under this Agreement:
(a) A reportable event shall occur with respect to a Plan which
is, in the reasonable judgment of the Bank likely to result in the
termination of such Plan for purposes of Title IV of ERISA.
(b) Any Plan termination (or commencement of proceedings to
terminate a Plan) or the Borrower's full or partial withdrawal from a Plan.
9.11 Other Breach Under Agreement. The Borrower fails to meet the
conditions of, or fails to perform any obligation under, any term of this
Agreement not specifically referred to in this Article and such failure
continues without cure after 15 banking days after written notice to the
Borrower; provided, however, that the Bank will not be obligated to extend any
additional credit to the Borrower during that period.
10. ENFORCING THIS AGREEMENT; MISCELLANEOUS
10.1 GAAP. Except as otherwise stated in this Agreement, all
financial information provided to the Bank and all financial covenants will be
made under generally accepted accounting principles, consistently applied;
provided, that if there shall be a change in GAAP so as to affect the premises
on which the financial covenants are predicated, the Bank agrees to negotiate
with the Borrower to make proper adjustments to the financial covenants.
10.2 California Law. This Agreement is governed by California law.
10.3 Successors and Assigns. This Agreement is binding on the
Borrower's and the Bank's successors and
35
assignees. The Borrower agrees not to assign this Agreement without the Bank's
prior consent. The Bank may sell participations in or assign this loan, and may
exchange financial information about the Borrower with actual or potential
participants or assignees, provided such actual or potential participants or
assignees shall agree in writing to treat all non-public financial information
exchanged as confidential. If a participation is sold or the loan is assigned
and the Bank has provided the Borrower with written notice of such participation
or assignment and the identity of the purchaser, the purchaser will thereafter
have the right of set-off against the Borrower. The Bank acknowledges and agrees
that it will nevertheless remain liable to fund loans and issue standby letters
of credit hereunder to or for the benefit of Borrower notwithstanding any
participations and/or assignments of its interest in the loan.
10.4 Arbitration.
(a) This paragraph concerns the resolution of any controversies
or claims between the Borrower and the Bank, arising under this Agreement
(including any renewals, extensions or modifications of this Agreement);
any document, agreement or procedure related to or delivered in connection
with this Agreement; any violation of this Agreement.
(b) At the request of the Borrower or the Bank, any such
controversies or claims will be settled by arbitration in accordance with
the United States Arbitration Act. The United States Arbitration Act will
apply even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of
limitations, the filing of an arbitration pursuant to this paragraph is the
equivalent of the filing of a lawsuit, and any claim or controversy which
may be arbitrated under this paragraph is subject to any applicable statute
of limitations. The arbitrators will have the authority to decide whether
any such claim or
36
controversy is barred by the statute of limitations and, if so, to
dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable,
the arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may
be submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the
controversy or claim, at the time of the proposed submission to
arbitration, arises from or relates to an obligation to the Bank secured by
real property located in California. In this case, both the Borrower and
the Bank must consent to submission of the claim or controversy to
arbitration. If all parties do not consent to arbitration, the controversy
or claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or
a panel of referees) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are selected
in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will
be appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel)
will be an active attorney or a retired judge; and
(iv) The award that results from the decision of the
referee (or the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of California
Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or
the Bank to exercise self-help remedies such as setoff; foreclose against
or sell any real or personal property collateral; or act in a court of law,
before, during or after the arbitration proceeding to
37
obtain: (A) an interim remedy; and/or (B) additional or supplementary
remedies.
(i) The pursuit of or a successful action for interim,
additional or supplementary remedies, or the filing of a court action, does
not constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if the
other party contests the lawsuit. However, if the controversy or claim
arises from or relates to an obligation to the Bank which is secured by
real property located in California at the time of the proposed submission
to arbitration, this right is limited according to the provision above
requiring the consent of both the Borrower and the Bank to seek resolution
through arbitration.
(j) If the Bank forecloses against any real property securing
this Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
10.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
10.6 Administration Costs. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
10.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and including
any amendment, waiver, "workout" or restructuring under this Agreement. In the
event of a lawsuit or arbitration proceeding, the prevailing party is entitled
to recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. As
used in this paragraph, "attorneys' fees" includes the allocated costs of in-
house counsel.
38
10.8 One Agreement. This Agreement and the agreements required by
this Agreement, collectively represent the sum of the understandings and
agreements between the Bank and the Borrower concerning this credit; replace any
prior oral or written agreements between the Bank and the Borrower concerning
this credit; and are intended by the Bank and the Borrower as the final,
complete and exclusive statement of the terms agreed to by them. In the event
of any conflict between this Agreement and any other agreements required by this
Agreement, including, without limitation, any Application and Agreement for
Standby Letters of Credit, this Agreement will prevail.
10.9 Notices. All notices required under this Agreement shall be in
writing and personally delivered, faxed or sent by first class mail, postage
prepaid, to the addresses set forth below, or to such other addresses as the
Bank and/or the Borrower may specify from time to time in writing. Notice shall
be effective upon receipt if personally delivered or faxed, or 3 banking days
after deposited as first class mail, postage prepaid.
Hollywood Park, Inc.
1050 South Prairie
Inglewood, California 90301
Attention: G. Michael Finnigan
Fax #: (310) 673-2582
With a copy to:
Irell & Manella
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067-42676
Attention: Alvin G. Segel
Fax #: (310) 203-7199
Bank of America National Trust
and Savings Association
Century City Commercial Banking
2049 Century Park East. suite 300
Los Angeles, California 90067
Attention: Sheryl Bond
Fax #: (310) 785-6100
With a copy to:
39
Bank of America National Trust
and Savings Association
Legal Department
555 South Flower Street, Suite 800
Los Angeles, California 90071
Attention: Alice A. Herald
Fax#: (213) 228-2086
10.10 Headings. Article and paragraph headings are for reference
only and shall not affect the interpretation or meaning of any provisions of
this Agreement.
10.11 Counterparts. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
10.12 Prior Agreement Superseded. This Agreement supersedes the
Business Loan Agreement entered into as of August 1, 1993, between the Bank and
the Borrower, any amounts or letters of credit outstanding thereunder shall be
deemed to be outstanding under this Agreement.
40
This Agreement is executed as of the date stated at the top of the
first page.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: \s\ Scott Aney
----------------------
Title: Vice President
HOLLYWOOD PARK, INC.
By: \s\ R.D. Hubbard
-----------------------
R. D. Hubbard
Title: Chairman of the Board and
Chief Executive Officer
By: \s\ G. Michael Finnigan
-----------------------
G. Michael Finnigan
Title: Executive Vice President and
Chief Financial Officer
41
Exhibit A
Bank of America
Application and Agreement for Standby Letter of Credit
TO: Bank of America National Trust and Savings Association ("Bank")
For Bank Use Only
L/C No.
A. Application.
________________________("Customer") requests Bank to issue an irrevocable
standby letter of credit ("Letter of Credit") as follows:
__ Full text teletransmission __ Airmail with brief preliminary
teltransmission advice __ Airmail __ Courier
For account of (Customer Name and Address)
In favor of (Beneficiary Name and Address)
Advising Bank
Amount (in words and figures)___________________(____________)
Currency
Expiration Date: Drafts to be drawn on and presented at Bank's issuing unit
on or before:________________________,19___
Available by drafts drawn at sight on Bank's issuing unit when accompanied by
the following documentation:
1. The original standby letter of credit.
2. The signed statement of the beneficiary worded as follows (state exact
wording that is to appear in the statement accompanying the draft):
Special Instructions:
Customer understands that the risk to the Customer is greater if Customer
requests a standby letter of credit which requires only a draft rather than an
standby letter of credit which requires supporting documentation. Customer
understands that the final form of the Letter of Credit may be subject to such
revisions and changes as are deemed necessary or appropriate by Bank's letter
of credit issuing unit and Customer hereby consents to such revisions and
changes.
B. Agreement
In consideration of Bank issuing for the account of Customer the Letter of
Credit, Customer agrees to the following:
1. Customer shall pay Bank, on demand, all amounts paid by Bank under or in
respect to the Letter of Credit.
42
2. On each fee payment date, so long as any undrawn amount of Letter of Credit
remains available, Customer shall pay Bank a Letter of Credit fee. The fee
payment dates shall be the dates as Customer and Bank may agree or in the
absence of such agreement the fee payment date shall be the date on which the
Bank issues such Letter of Credit. The fee shall be at such rate per annum as
Customer and Bank may agree, or in the absence of such agreement, at the rate
customarily charged by Bank at the time such fee is payable. The applicable
Letter of Credit fee shall be calculated and payable on the undrawn amount of
the Letter of Credit as of such fee payment date, and shall be for the period
commencing on such fee payment date and ending on the day preceding the next fee
payment date (or the expiration date of the Letter of Credit, as the case
maybe), both dates inclusive. The Letter of Credit fee will be computed on the
basis of a 365 day year and actual days elapsed. Bank shall not be required to
refund any portion of the Letter of Credit fee paid for any period during which
(a) the Letter of Credit expires or otherwise terminates, or (b) the undrawn
amount of the Letter of Credit is reduced by drawing or by amendment.
3. Customer shall pay Bank, on demand, commissions and fees for amendments to
the Letter of Credit, payments under the Letter of Credit, extensions of the
Letter of Credit, cancellation of the Letter of Credit, and other services in
the amounts Customer and Bank may agree, or, in the absence of such agreement,
in the amounts customarily charged by Bank on the date of the Bank's demand.
4. All payments and deposits by Customer under this Application and Agreement
shall be made at the branch or office Bank may designate from time to time. Bank
shall have no obligation to pay Customer interest on any deposit made by
Customer under this Application and Agreement.
5. (a) All payments and deposits by Customer under this Application and
Agreement shall be in the currency in which the Letter of Credit is payable,
except that the Bank may , at its option, require payments and deposits by
Customer under this Application and Agreement to be made in U.S. Dollars if the
Letter of Credit is payable in a foreign currency. (b) The amount of each
payment and each deposit by Customer under this Application and Agreement in
U.S. dollars for a Letter of Credit payable in a foreign currency shall be
determined by converting the relevant amount to U.S. Dollars at the Conversion
Rate in effect: (i) with respect to each payment under Paragraph B.1., on the
date the payment is made by Bank under or in respect of the Letter of Credit;
and (ii) with respect to each payment not falling under the preceding clause(i)
and each deposit, on the date of Bank's demand for such payment or deposit. (c)
If a U.S. Dollar deposit by Customer under this Application and Agreement for a
Letter of Credit payable in a foreign currency becomes less than the U.S. Dollar
equivalent of the undrawn amount of the Letter of Credit because of any
variation in rates of exchange, Customer shall deposit with Bank, on demand,
additional amounts in U.S. Dollars so that the total amount deposited by
Customer under this Application and Agreement is not less than the U.S. Dollar
equivalent of the undrawn amount of the Letter of Credit, determined by using
the Conversion Rate on the date of Bank's latest demand. (d) "Conversion Rate"
means the rate quoted by Bank in San Francisco, California for the purchase from
Bank of the relevant foreign currency with U.S. Dollars.
43
6. Customer shall reimburse or compensate Bank, on demand, for all costs
incurred, losses suffered and payments made by bank which are applied or
allocated by Bank to the Letter of Credit (as determined by Bank) by reason of
any and all present or future reserve, deposit, assessment or similar
requirements against (or against any class of or change in or in the amount of)
assets or liabilities of, or commitments or extensions of credit by Bank.
7. If Bank determines that any law, rule, regulation or guideline regarding
capital adequacy affects or would affect the amount of capital required to be
maintained by Bank or any corporation controlling Bank and that (taking into
consideration Bank's policies with respect to capital adequacy and Bank's
desired return on capital) that amount of required capital is increased as a
result of Bank's obligations under the Letter of Credit, then, on demand,
Customer shall pay Bank additional amounts sufficient as specified by Bank to
compensate Bank for such increase.
8. Upon the occurrence of any of the following event, Customer shall deposit
with Bank, on demand and as cash security for Customer's obligations to Bank
under this Application and Agreement, an amount equal to the undrawn amount of
the Letter of Credit: (a) Customer defaults under any provision of this
Application and Agreement; (b) Any bankruptcy or similar proceedings is
commenced with respect to Customer; (c) Any default occurs under any other
agreement involving the borrowing of money or the extension of credit under
which Customer may be obligated as borrower, installment purchaser or guarantor,
if such default consists of the failure to pay any indebtedness when due or if
such default permits or causes the acceleration of any indebtedness or the
termination of any commitment to lend or extend credit;(d) Customer defaults on
any other obligation to Bank; (e)In the opinion of Bank, any material adverse
change occurs in Customer's business, operations, financial condition or ability
to perform its obligations under this Application or Agreement; (f) Any court
order, injunction or other legal process is issued restraining or seeking to
restrain drawing or payment under the Letter of Credit; (g) Any person other
than Beneficiary attempts, or in any way claims any right, to draw under the
Letter of Credit, including, without limitation, any debtor in possession,
custodian, receiver, trustee, assignee for benefit of creditors, personal
representative or other successor.
9. Customer shall pay interest, on demand, on any amount not paid when due under
this Application and Agreement from the due date until payment in full at a rate
per annum equal to the rate of interest publicly announced from time to time by
Bank in San Francisco, California, as its reference rate plus three percentage
points. The reference rate is set by Bank based on various factors, including
Bank's costs and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some credits. Bank may price credit
at, above or below the reference rate. Any change in Bank's reference rate shall
take effect at the opening of business on the day specified in Bank's public
announcement of a change in Bank's reference rate. Interest will be computed on
the basis of a 365 day year and actual days elapsed.
10. Customer authorizes Bank to charge any of Customer's accounts with Bank for
all amounts then due and payable to Bank under this Application and Agreement.
44
11. Customer shall pay, on demand, all costs, expenses and attorney's fees
(including allocated costs for in-house legal services) incurred by Bank in
connection with (a) any dispute concerning the Letter of Credit or this
Application and Agreement, or (b) the enforcement of this Application and
Agreement.
12. If any arbitration award, judgment or order is given or made for the payment
of any amount due under this Application and Agreement and such arbitration
award, judgment or order is expressed in a currency other than the currency
required under this Application and Agreement, Customer shall indemnify Bank
against and hold Bank harmless from all loss and damage incurred by Bank as a
result of any variation in rates of exchange between the date of such
arbitration award, judgment or order and the date of payment (or, in the case of
partial payments, the date of each partial payment) thereof. This indemnity
shall constitute an obligation separate and independent from the other
obligations contained in this Application and Agreement, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by Bank from time to time, and shall continue in full force
and effect notwithstanding any arbitration award, judgment or order for a
liquidated sum in respect of an amount due under this Application and Agreement.
13. The work "Customer" in this Application and Agreement refers to each signer
(other than Bank) of this Application and Agreement. If this Application and
Agreement is signed by more than one Customer, their obligations under this
Application and Agreement shall be joint and several.
14. Subject to the laws, customs and practices of the trade in the area where
the beneficiary is located, the Letter of Credit will be subject to, and
performance under the Letter of Credit by Bank, its correspondents, and the
beneficiary will be governed by, the "Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500," or by later Uniform Customs and Practice fixed by later
Congresses of the International Chamber of Commerce as in effect of on the date
the Letter of Credit is issued.
15. This Application and Agreement shall be governed by and construed under the
laws of the State of California, to the jurisdiction of which the parties hereto
submit.
16. Any controversy among the parties arising out of or relating to this
Application and Agreement or the Letter of Credit shall at the request of any
party be determined by arbitration. The arbitration shall be conducted in San
Francisco, California, under the United States Arbitration Act (Title 9, U.S.
Code), notwithstanding any choice of law provision in the Application and
Agreement or the Letter of Credit, and pursuant to the Commercial Rules of the
American Arbitration Association. The arbitrator shall give effect to statues of
limitation in determining any claim. Any controversy concerning whether an issue
is arbitrable shall be determined by at arbitrator. Judgment upon the
arbitration award may be entered in any court having jurisdiction. This
Paragraph shall not limit the right of any party to this Application and
Agreement or the Letter of Credit to exercise lawful self-help remedies or to
obtain provisional or ancillary remedies from a court of competent
45
jurisdiction before, during, or after the pendency of any arbitration. The
seeking, obtaining or exercising of such a remedy does not waive the right of
any party, including the party who sought such remedy, to resort to arbitration.
Notwithstanding the foregoing, no controversy shall be submitted to arbitration
under this Paragraph without the consent of all parties, if at the time of the
proposed submission, such controversy arises from or relates to an obligation to
Bank which is secured by real property collateral.
17. Customer represents and warrants to Bank the Customer has obtained all
import and export licenses and other governmental approvals required for the
goods and the documents described in the Letter of Credit. Without limiting the
generality of the foregoing, Customer further expressly represents and warrants
to Bank that the transactions underlying the Letter of Credit are not prohibited
under the Foreign Asset Control Regulation of the United States Treasury
Department.
This Application and Agreement is executed by Customer on______________, 19___
Name of Customer
By______________________________________ Title______________________________
By______________________________________ Title______________________________
46
EXHIBIT "B"
BORROWING REQUEST
(Letter of Credit)
Reference is hereby made to the Business Loan Agreement dated as of
April 14, 1995 ("Loan Agreement"), by and between Bank of America National Trust
and Savings Association, and Hollywood Park. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings ascribed
thereto in the Loan Agreement.
Borrower hereby requests issuance of a letter of credit as follows:
Face Amount of Letter of Credit $
Issuance Date:
Beneficiary of Letter of Credit:
Maturity Date of Letter of Credit:
Other terms and/or conditions, if any, are as stated on attachments
hereto.
HOLLYWOOD PARK, INC.
By:
Its:
47
EXHIBIT "B"
BORROWING REQUEST
(Loan)
Reference is hereby made to the Business Loan Agreement dated as of
April 14, 1995 ("Loan Agreement"), by and between Bank of America National
Trust and Savings Association, and Hollywood Park, Inc., a Delaware
corporation. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed thereto in the Loan Agreement.
Borrower hereby requests extension of credit as follows:
Amount of Loan: $
Funding Date:
Fixed Rate Portion (if any):
Fixed Rate Interest Period:
Offshore Rate Portion (if any):
Offshore Rate Interest Period:
HOLLYWOOD PARK, INC.
By:
Its:
48
COMPLIANCE CERTIFICATE
TO: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Reference is made to the Business Loan Agreement dated as of April 14,
1995 between Bank of America National Trust and Savings Association ("Bank")
and Hollywood Park, Inc. ("Borrower"), as it may be amended from time to time
(the "Agreement"). Terms defined in the Agreement and not otherwise defined
in this Compliance Certificate shall have the meanings defined for them in the
Agreement. This Compliance Certificate is delivered in accordance with
paragraph 7.2(c) of the Agreement.
Compliance with Financial Covenants
As of , 19
Computations showing compliance with paragraphs 7.3, 7.4, 7.5, 7.6, 7.7,
7.8, 7.9 and 7.11 of the Agreement are as follows:
(A) Paragraph 7.3 Tangible Net Worth.
(1) Tangible Net Worth as of
Compliance Date $
(2) Minimum Net Worth Required $
(2) must be greater than
or equal to (1)
(B) Paragraph 7.4 Leverage Ratio.
(1) Total liabilities $
(2) Tangible Net Worth $
(1) divided by (2)
Maximum Permitted Ratio :1.00
(C) Paragraph 7.5 Fixed Charge Coverage Ratio. For the period: four
quarters ending , 19__:
(1) Earnings (before interest expense,
income taxes, depreciation and
amortization) $
divided by
(2) Interest expense, cash income taxes
paid, current portion of long
term debt, cash dividends paid and
capital maintenance expenditures $
Interest Coverage Ratio
(1) divided by (2)
Minimum Permitted Ratio
:1.00
49
This ratio shall be calculated using the quarter most recently ended and the
three immediately preceding quarterly accounting periods.
(D) Paragraph 7.6 Quick Ratio. For the period
___________, 19__ through _____________, 19__:
(1) Cash, cash equivalents, short-term
investments, restricted cash, net
Casino lease receivables and related
interest receivables, other receivables
and marketable securities not classified
as long term investments $
divided by
(2) Current Liabilities $
Quick Ratio
(1) divided by (2)
Minimum Permitted Ratio :1:00
(E) Paragraph 7.7 Current Ratio. For the period ___________, 19__
through _____________, 19__:
(1) Current Assets $
divided by
(2) Current Liabilities $
Current Ratio
(1) divided (2)
Minimum Permitted Ratio ______:1:00
(F) Paragraph 7.8 Cash and Short Term Cash Equivalents for the fiscal year
1996.
(1) Cash and short term cash equivalents,
and short term investments, excluding
Restricted Cash, minus the amounts
outstanding on the revolving lines of
credit under Facility No. 1 $
(2) required $10,000,000
(2) must be greater than
or equal to (1)
50
(G) Paragraph 7.9 Other Debts.
Additional secured debt for fixed or capital assets since date of
last Compliance Certificate $
(H) Paragraph 7.11 Out of Debt Requirement.
Calendar year 19__:
Dates out of debt:
A review of the activities of Borrower during the fiscal period covered by
this Compliance Certificate has been made under the supervision of the
undersigned with a view to determining whether during such fiscal period
Borrower performed and observed all of their respective obligations under the
Agreement. The representations and warranties contained in the Agreement are
true and correct on the date hereof as if made on the date hereof. No Event of
Default or any event which, upon a lapse of time or notice or both, would
become an Event of Default has occurred and is continuing.
The undersigned hereby certifies that each and every matter contained
herein is derived from the books and records of Borrower and is, to the best
knowledge of the undersigned, true and correct.
Dated: , 19 HOLLYWOOD PARK, INC.
By:
Title: Chief Financial Officer
51