EXHIBIT 10.1
2004B AMENDMENT TO LOAN DOCUMENTS
This is a 2004B Amendment to Loan Documents dated as of October 14,
2004 (the "Amendment"), among CHURCHILL DOWNS INCORPORATED (the "Borrower"), the
GUARANTORS (defined below), and BANK ONE, NA, headquartered in Chicago, Illinois
(successor by merger to Bank One, Kentucky, NA) a national banking association
with an office in Louisville, Kentucky, as contractual representative for the
LENDERS (defined below) as provided in the Credit Agreement (defined below) (in
such capacity, the "Agent").
RECITALS
A. The Borrower, the Agent, the Guarantors (defined in the Credit
Agreement), and the Lenders (defined in the Credit Agreement), entered into a
Credit Agreement dated as of April 3, 2003, as amended by the 2004A Amendment to
Loan Documents, dated as of June 1, 2004 with PNC Bank, National Association, as
Syndication Agent, National City Bank as Documentation Agent, and J. P. Morgan
Securities, Inc., (successor to Banc One Capital Markets, Inc.) ("JP Morgan")
and PNC Capital Markets, Inc. as Co-Lead Arrangers and Joint Book Runners (as
amended, and as it may be further amended from time to time, the "Credit
Agreement").
B. The Loans described in the Credit Agreement, among other
obligations, are secured by the Collateral (defined in the Credit Agreement and
other Loan Documents).
C. The Borrower issued a Notice of Acquisition pursuant to 6.13(iii)(b)
of the Credit Agreement indicating the intent to acquire the assets of Fair
Grounds Corporation, a Louisiana corporation ("Fair Grounds") and Finish Line
Management Corp., a Louisiana corporation ("Finish Line") and all of the
outstanding shares of Video Services, Inc., a Louisiana corporation ("VSI")
(collectively, the acquisition of the assets of Fair Grounds and Finish Line and
the stock of VSI, the "Fair Grounds Acquisition"). In order to accomplish the
Fair Grounds Acquisition, the Borrower, through one of its Guarantors, Churchill
Downs Management Company, Inc., created two new subsidiaries, Churchill Downs
Louisiana Horseracing Company, L.L.C., a Louisiana limited liability company
("CDLHC"), which will acquire the assets of Fair Grounds and Finish Line, and
Churchill Downs Louisiana Video Poker Company, L.L.C., a Louisiana limited
liability company ("CDLVP"), which will acquire the stock of VSI.
D. CDLHC, CDLVP and VSI, together with the Borrower and the other
Guarantors, are entering into, among other documents, a 2004B Guarantor Joinder,
dated as of the date hereof.
E. The Borrower has requested the Agent and the Lenders to make certain
modifications of and amendments to the Credit Agreement and certain other Loan
Documents in connection with the Fair Grounds Acquisition.
NOW, THEREFORE, the Borrower, the Guarantors and the Agent agree as
follows:
1. DEINITIONS. Capitalized terms used but not otherwise defined in
this Amendment shall have the meanings given them in the Credit Agreement.
2. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:
(a) AMENDMENT OF ARTICLE I DEFINITIONS. The following
definitions set forth in Article I of the Credit Agreement are hereby amended
and restated to read in their entirety as follows:
"Adjusted EBITDA" of any person for any period means
the EBITDA for that Person for that period adjusted on a pro
forma basis for the EBITDA of acquired or divested operations,
provided that any EBITDA of CDLHC, CDLVP and VSI (whether
positive or negative) for any period prior to October 14, 2004
will not be included in the Adjusted EBITDA of those entities.
"Collateral Documents" means, collectively, all of
the instruments, documents and agreements by which any Person
grants a security interest in Collateral, including without
limitation, those documents referenced in Section 6.25 of this
Agreement, which in turn includes without limitation, the
Pledge and Security Agreement, the Mortgages, the Negative
Pledge Agreement, the Assignment of Patents, Trademarks and
Copyrights, the Intercompany Subordination Agreement, the
Collateral Sharing Agreement, the 2004B Collateral Documents,
and all other documents or instruments executed as security
for the Secured Obligations from time to time, including,
without limitation, those entered into pursuant to Section
6.29 of this Agreement.
"EBITDA" for any Person for any period of
determination means that Person's net income PLUS, to the
extent deducted from revenues in determining net income, (i)
interest expense, (ii) expense for taxes paid or accrued,
(iii) depreciation, (iv) amortization, (v) extraordinary
losses incurred other than in the ordinary course of business,
and (vi) in the case of Ellis Park Race Course, Inc., (a) the
impairment charge deducted from the net income of Ellis Park
Race Course, Inc. with respect to the fourth fiscal quarter
2002, and (b) the LESSER of (1) the one-time non-cash
impairment charge, if any, deducted from the net income of
Ellis Park Race Course, Inc. with respect to either the third
fiscal quarter 2004 or the fourth fiscal quarter 2004 (but not
both quarters), OR (2) $6,200,000.00; MINUS, to the extent
included in net income, that Person's extraordinary gains
realized other than in the ordinary course of business, in
each case for such period determined, in accordance with
Agreement Accounting Principles.
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"Excluded Subsidiaries" means any Excluded Entity
which is a Subsidiary of the Borrower. The Excluded
Subsidiaries on the Closing Date are Hoosier Park, L.P.,
Churchill Downs Simulcast Productions, LLC (formerly known as
Charlson Broadcast Technologies LLC), Churchill Downs
Pennsylvania Company (formerly known as Churchill Downs
California Foodservices Company), Tracknet, LLC, and Anderson
Park, Inc. Fair Grounds International Ventures, L.L.C., a
Louisiana limited liability company, F.G. Staffing Services,
Inc., a Louisiana corporation and Charlson Industries, Inc.,
an Ohio corporation shall become Excluded Subsidiaries on the
date the Fair Grounds Acquisition is effected.
"Fixed Charge Coverage Ratio" means, as of any date
of calculation, the ratio of (a) Consolidated Adjusted EBITDA
less Capital Expenditures (excluding (1) Capital Expenditures
consisting solely of consideration paid or payable for
Permitted Acquisitions, (2) Capital Expenditures expended
under and in compliance with the Master Plan for Capital
Expenditures, and (3) Capital Expenditures of CDLHC, CDLVP and
VSI expended by them, in the aggregate, in connection with
facilities used in connection with horse racing and/or gaming
activities in Louisiana, in an amount not to exceed
$30,300,000), to (b) Consolidated Fixed Charges, in each
instance computed as provided in Section 6.24.1 and in
accordance with Agreement Accounting Principles.
"Pricing Schedule" means the Pricing Schedule
attached to the 2004B Amendment and identified as such.
"Seasonal Borrowing Needs Adjustment" means the
reduction of the Consolidated Funded Indebtedness as of the
end of (i) the first fiscal quarter of the Borrower's fiscal
year 2005 by $25,000,000, (ii) the first fiscal quarter of the
Borrower's fiscal year 2006 by $25,000,000 and the (iii) first
fiscal quarter of the Borrower's fiscal year 2007 by
$25,000,000.
(b) ADDITIONS TO ARTICLE I DEFINITIONS. Article I of the
Credit Agreement is hereby supplemented to add the following definitions which
shall read in their respective entireties as follows:
"2004B Amendment" means the 2004B Amendment to Loan
Documents, dated as of October 14, 2004, among the Agent, the
Guarantors and the Borrower.
"2004B Amendment to Pledge and Security Agreement"
means the 2004B Amendment to Pledge and Security Agreement,
dated as of October 14, 2004, among the applicable Loan
Parties and the Collateral Agent for the benefit of the
Lenders, subject to the provisions of the Collateral Sharing
Agreement, as they may be amended and/or supplemented from
time to time.
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"2004B Assignments of Patent, Trademarks and
Copyrights" shall mean the Assignment of Patent, Trademarks
and Copyrights, dated as of October 14, 2004, executed by
CDIP, L.L.C. in favor of the Collateral Agent and the
Assignment of Patent, Trademarks and Copyrights, dated as of
October 14, 2004, executed by Churchill Downs Louisiana
Horseracing Company, L.L.C. in favor of the Collateral Agent..
"2004B Collateral Documents" means, collectively, all
of the instruments, documents and agreements by which any
Person grants a security interest in any Collateral pursuant
to the 2004B Amendment, including without limitation, those
documents referenced in Sections 6.25 and 6.29 of this
Agreement, which in turn includes without limitation, the
2004B Amendment to the Pledge and Security Agreement, the
2004B Louisiana Addendum to Pledge and Security Agreement (as
defined in the 2004B Amendment to Pledge and Security
Agreement), the 2004B Consent Joinder and Reaffirmation, the
Louisiana Mortgages, the 2004B Assignments of Patents,
Trademarks and Copyrights, the Fair Grounds Assignment and
Subordination of Lease and Management Agreement, the Jazz Fest
Subordination Agreement and Estoppel, and all other documents
or instruments executed as security for the Secured
Obligations in connection with the 2004B Amendment from time
to time, as they may be amended and/or supplemented from time
to time.
"2004B Consent Joinder and Reaffirmation" shall mean
the Consent Joinder and Reaffirmation, dated October 14, 2004,
among the Collateral Agent, the Borrower and the Guarantors.
"2004B Guarantor Joinder" shall mean the Guarantor
Joinder, dated October 14, 2004, among the Collateral Agent,
the Borrower and the Guarantors.
"Fair Grounds Acquisition" shall have the meaning
given it in Recital C of the 2004B Amendment.
"Fair Grounds Acquisition Documents" shall mean all
of the documents through which the Fair Grounds Acquisition is
consummated, including, without limitation, (a) the Third
Amended Plan of Reorganization, filed in the United States
Bankruptcy Court for the Eastern District of Louisiana,
Bankruptcy Case No 03-16222, by Fair Grounds Corporation, as
Debtor and Debtor-in-possession; (b) the Order, dated
September 28, 2004, entered by the United States Bankruptcy
Court for the Eastern District of Louisiana in Bankruptcy Case
No 03-16222, confirming the Third Amended Plan of
Reorganization of Fair Grounds Corporation; (c) the Asset
Purchase Agreement, dated as of August 31, 2004, as amended by
the First Amendment, dated as September 17, 2004,
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among the Borrower, on behalf of one of its wholly owned
subsidiary to be formed, Fair Grounds Corporation and the
Borrower; (d) the Asset Purchase Agreement, dated as of
October 14, 2004, between Churchill Downs Louisiana
Horseracing Company, L.L.C. and Finish Line Management Corp.;
and (e) the Stock Purchase Agreement, dated October 14, 2004,
between Churchill Downs Louisiana Video Poker Company, L.L.C.
and Steven M. Rittvo, Ralph Capitelli, T. Carey Wicker III and
Louisiana Ventures, Inc..
"Fair Grounds Assignment and Subordination of Lease
and Management Agreement" shall mean the Assignment and
Subordination of Lease and Management Agreement, dated as of
October 14, 2004, between Churchill Downs Louisiana
Horseracing Company, L.L.C., as Landlord, and Fair Grounds
Corporation, as Tenant.
"Jazz Fest Subordination Agreement and Estoppel"
shall mean the Subordination, Non-Disturbance and Attornment
Agreement dated October 13, 2004, between The New Orleans Jazz
and Heritage Foundation, Inc., as Tenant, and the Collateral
Agent as mortgagee under the Mortgage defined therein,
together with the Estoppel Certificate by The New Orleans Jazz
and Heritage Foundation, Inc. in favor of the Agent and the
Collateral Agent.
"Louisiana Mortgages" means the Mortgages,
Assignments of Rents and Security Agreements and the Leasehold
Mortgages, Assignments of Rents and Security Agreements and
Deeds of Trust encumbering the Loan Parties' fee or leasehold
interest in those properties listed on 6(a) of the 2004B
Amendment and delivered by each of the applicable Loan Parties
with respect to each of the parcels of real property listed on
SCHEDULE 6(a) to the Collateral Agent for the benefit of the
Lenders, subject to the terms of the Collateral Sharing
Agreement, as they may be amended and/or supplemented from
time to time.
(c) AMENDMENT OF SECTION 6.1(iv). Section 6.1(iv) of the
Credit Agreement is hereby amended and restated in its entirety as follows:
(iv) Together with the financial statements required under
Sections 6.1(i) and (ii), a compliance certificate, in
substantially the form of EXHIBIT D attached to the 2004B
Amendment, signed by its chief financial officer or treasurer
showing the calculations necessary to determine compliance
with this Agreement and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof.
(d) AMENDMENT TO SECTION 6.13(iii)(g). Section 6.13(iii)(g) of
the Credit Agreement is hereby amended and restated in its
entirety as follows:
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(g) The Loan Parties shall demonstrate, including, in
appropriate circumstances determined by and acceptable to the
Agent, through representations by the Loan Parties, that they
shall be in compliance with (i) the covenants contained in
Sections 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18,
6.19, 6.23, 6.24, 6.25, 6.26, 6.30, 6.32, 6.33 and 6.34
(including in such computation Indebtedness, Contingent
Obligations, Sale and Leaseback Transactions and all other
liabilities and/or obligations assumed or incurred by a Loan
Party or such Person in connection with such Permitted
Acquisition), and (ii) all other provisions of this Agreement
after giving effect to any Permitted Acquisition, by
delivering at least five (5) Business Days prior to such
Permitted Acquisition a certificate in the form of EXHIBIT E
to the 2004B Amendment (each an "Acquisition Compliance
Certificate") evidencing such compliance.
(e) AMENDMENT OF SECTION 6.24.2-LEVERAGE RATIO. Section 6.24.2
of the Credit Agreement is hereby amended and restated to read
in its entirety as follows:
6.24.2 LEVERAGE RATIO. The Borrower will not permit the
Leverage Ratio, determined as of the end of each of its fiscal
quarters, of (i) Consolidated Funded Indebtedness, as adjusted
by the Seasonal Borrowing Needs Adjustment in appropriate
fiscal quarters, to (ii) Consolidated Adjusted EBITDA for the
then most-recently ended four fiscal quarters to be greater
than:
LEVERAGE RATIO PERIOD
5.0 to 1.0 October 14, 2004 through June 29, 2005
4.25 to 1.0 June 30, 2005 through June 29, 2006
3.75 to 1.0 June 30, 2006 through June 29, 2007
3.25 to 1.0 June 30, 2007 and thereafter
(f) REFERENCES TO PRICING SCHEDULE AND SCHEDULES 1, 2, 3,
2.3.1, 5.22, 5.23, 5.24, 5.25, 5.26, 6.22. All references in
the Credit Agreement to the Pricing Schedule and Schedules 1,
2, 3, 2.3.1, 5.22, 5.23, 5.24, 5.25, 5.26, 6.22 shall be
deemed to be references to the Pricing Schedule and Schedules
1, 2, 3, 2.3.1, 5.22, 5.23, 5.24, 5.25, 5.26, 6.22 attached to
the 2004B Amendment. Without limiting the foregoing, the
Pricing Schedule attached to the 2004B Amendment shall become
effective on the date the 2004B Amendment is executed and
delivered, and by the terms of that Pricing Schedule,
adjustments, if any, to the Applicable Margin or the
Applicable Fee Rate shall be effective five Business Days
after the Agent has received the applicable Financials (as
those terms are defined in the Pricing Schedule) after the
date of the 2004B Amendment. And also as provided in that
Pricing Schedule, if the Borrower fails to deliver the
Financials to the Agent at the time required pursuant to
Section 6.1, then the Applicable Margin and Applicable Fee
Rate shall be the highest Applicable Margin and Applicable Fee
Rate set forth on the table in the Pricing Schedule until five
days after such Financials are so delivered.
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3. PERMITTED ACQUISITION. Upon the satisfaction of all of the
requirements of (a) the Credit Agreement, including, without limitation,
Sections 6.13 and 6.29 thereof, and (b) this Amendment, including without
limitation, Section 6 hereof, the Borrower may effect the Fair Grounds
Acquisition. In connection therewith, upon effecting the Fair Grounds
Acquisition, Fair Grounds Ventures, L.L.C., a Louisiana limited liability
company, whose sole member shall then be CDLHC, and F.G. Staffing Services,
Inc., a Louisiana corporation wholly owned by CDLHC, shall be and become
Excluded Entities. It is agreed that for purposes of Fixed Charge Coverage
Ratio, the Capital Expenditures consisting solely of consideration paid or
payable for the Fair Grounds Acquisition is $59,700,000.
4. CERTAIN LICENSES. Without limiting anything in the Credit Agreement
or other Loan Documents, including without limitation Sections 6.4, 6.7 and 6.28
of the Credit Agreement, on or before April 14, 2005:
(a) The Loan Parties doing business in, and/or having offices
and/or facilities and/or employees in, the State of Louisiana shall have
obtained from the appropriate administrative agency or other governmental
authorities of the United States of America and/or the State of Louisiana any
and all consents, approvals, licenses and/or other authorizations as may be
necessary for the operation of the businesses of the Loan Parties in the State
of Louisiana, including without limitation, the operation of horse racing
facilities with pari-mutuel wagering, Off Track Betting facilities, applicable
gaming operations (for example, without limitation, video poker), and the sale
of alcohol and tobacco; and
(b) The Borrower shall deliver to the Agent the legal opinion
of counsel for the Borrower and Guarantors addressed to the Agent and the
Lenders, in scope, form, and substance satisfactory to the Agent and its
counsel, and addressing the matters in EXHIBIT F to this Amendment, along with
any other matters required by the Agent.
5. CERTAIN REFERENCES IN THE LOAN DOCUMENTS.
(a) REFERENCES TO GUARANTORS AND LOAN PARTIES. All references
in all Loan Documents to "Guarantors" and "Loan Parties" shall include, without
limitation, Churchill Downs Louisiana Horseracing Company, L.L.C., Churchill
Downs Louisiana Video Poker Company, L.L.C. and Video Services, Inc.
(b) REFERENCES TO LOAN DOCUMENTS. All references in the Loan
Documents to the "Loan Documents" shall include, without limitation, a reference
to this Amendment, the 2004B Collateral Documents, the 2004B Guarantor Joinder
and any and all other agreements, instruments and documents executed and/or
delivered in connection with this Amendment. All references to the "Credit
Agreement" in the Loan Documents shall include, without limitation, references
to the Credit Agreement as amended by this Amendment.
6. CONDITIONS. The Lenders and the Agent shall not have any obligations
under this Amendment, and this Amendment shall not become effective, until and
unless all of the following conditions shall have been fulfilled:
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(a) REPRESENTATIONS AND WARRANTIES. Each and every
representation and warranty made by or on behalf of the Borrower and/or any
Guarantor relating to this Amendment or any of the other Loan Documents, as
modified by this Amendment shall be true, complete and correct in all material
respects on and as of the date of this Amendment and as of the date this
Amendment is actually executed and delivered.
(b) EXECUTED AMENDMENT. The Borrower and the Guarantors shall
have delivered to the Agent duly authorized and fully executed originals of this
Amendment.
(c) EXECUTED 2004B GUARANTOR JOINDER. The Borrower and the
Guarantors shall have delivered to the Agent duly authorized and fully executed
originals of the 2004B Guarantor Joinder, satisfactory to the Agent in all
respects, among other things, including CDLHC, CDLVP and VSI as Guarantors.
(d) NOTICE OF ACQUISITION. The Borrower shall have delivered a
Notice of Acquisition with respect to the Fair Grounds Acquisition to the Agent
as required by the Credit Agreement.
(e) COLLATERAL DOCUMENTS AND OTHER LOAN DOCUMENTS. The
Borrower and the Guarantors shall have delivered all Collateral Documents and
other Loan Documents, necessary to effectuate this Amendment, executed by the
Borrower, the Guarantors and/or the Obligors, as the case may be, including,
without limitation, all of the 2004B Collateral Documents.
(f) COLLATERAL TO BE DELIVERED TO THE COLLATERAL AGENT. The
Borrower and the Guarantors shall deliver any and all Collateral required to be
delivered to the Collateral Agent, including, but not limited to, any and all
stock certificates of Video Services, Inc., together with stock powers executed
in blank.
(g) ACQUISITION COMPLIANCE CERTIFICATE. The Borrower shall
have delivered an Acquisition Compliance Certificate with respect to the Fair
Grounds Acquisition to the Agent not less than five (5) days prior to the
closing of the Fair Grounds Acquisition.
(h) CERTIFICATE OF NO DEFAULT OR UNMATURED DEFAULT. The
Borrower shall have delivered a certificate, signed by the chief financial
officer of the Borrower, substantially in the form of EXHIBIT P to the Credit
Agreement.
(i) INCUMBENCY CERTIFICATES. The Agent shall have received
certificates certifying the names of the Persons of the Borrower and the
Guarantors authorized to sign this Amendment and the other Loan Documents that
each has signed or will sign in connection with this Amendment, together with
the true signatures of such Persons.
(j) RESOLUTIONS. The Borrower and the Guarantors shall have
delivered certified copies of appropriate resolutions (1) authorizing the
execution of this Amendment and any and all other documents, instruments and
agreements referred to herein which are required to
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be executed and delivered by the Borrower and the Guarantors as appropriate, and
(2) authorizing consummation of the transactions contemplated by this Amendment.
(k) PERSONAL PROPERTY SEARCHES. The Collateral Agent shall
have received reports of searches of personal property of records from the
appropriate reporting agencies listed on SCHEDULE 6(p) to this Amendment. The
Collateral Agent may obtain such reports but the Borrower shall pay all costs
associated with obtaining them. The reports of searches of the personal property
of records shall not disclose any security interest in CDLHC, CDLVP, VSI, Finish
Line and Fair Grounds' personal property other than the Collateral Agent's
security interest therein other than Permitted Liens.
(l) REGULATORY APPROVALS. The Borrower shall have provided
evidence satisfactory to the Agent of any regulatory approvals required from any
and all government agencies to consummate the Fair Grounds Acquisition and/or
otherwise required pursuant to the Credit Agreement and/or this Amendment.
(m) THIRD PARTY CONSENTS. The Borrower shall have provided to
the Agent all material third-party consents listed on SCHEDULE 6(q) to this
Amendment, and/or otherwise required to consummate the Fair Grounds Acquisition,
and/or otherwise required pursuant to the Credit Agreement and/or this
Amendment.
(n) INSURANCE CERTIFICATES. The Borrower shall have delivered
to the Agent insurance certificates as described in Section 5.20 and 6.6(ii) of
the Credit Agreement.
(o) TERMINATION STATEMENTS AND RELEASES. The Agent shall have
received termination and/or releases relating to claims, liens and/or other
rights regarding or that may otherwise affect any of the Collateral other than
the liens and/or security interests created in the Collateral Documents and
Permitted Encumbrances.
(p) FINANCING STATEMENTS. The Borrower and the Guarantors
shall authorize, and do hereby authorize, the Collateral Agent to file such
financing statements, amendments to financing statements, statutory declarations
or other documents for filing with public officials with respect to the Property
pledged in the 2004B Collateral Documents (including without limitation, fixture
financing statements) as the Collateral Agent may request.
(q) LEGAL OPINIONS. The Agent shall have received the legal
opinion of Rebecca C. Reed, Esq., General Counsel for the Borrower and the
Guarantors, Wyatt, Tarrant & Combs, LLP as counsel for the Borrower and the
Guarantors, and the legal opinion of Lemle & Kelleher, special Louisiana counsel
to the Borrower and the Guarantors, addressed to the Agent and the Lenders,
dated the date this Amendment is delivered, in scope, form and substance
satisfactory to the Agent and its counsel, and addressing the matters in
EXHIBITS A, B and C to this Amendment respectively, along with any other matters
required by the Agent.
(r) CLOSING OF FAIR GROUNDS ACQUISITION. The Borrower shall
have provided copies of all of the Fair Grounds Acquisition Documents certified
by either the Chief Financial Officer or Secretary of the Borrower to be true,
correct and complete, together with evidence
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satisfactory to the Agent of closing under the Fair Grounds Acquisition
Documents in accordance with their terms and in compliance with all applicable
laws, rules and regulations, including, without limitation, Title 11 of the
United States Code (the "Bankruptcy Code") and the Federal Rules of Bankruptcy
Procedure (the "Bankruptcy Rules").
(s) TITLE INSURANCE POLICIES. The Borrower and Guarantors
shall have delivered title insurance policies or an irrevocable commitment to
issue policies in the form of Lender approved pro-forma policies, in favor of
the Collateral Agent for the benefit of the Lenders, in ALTA 1992 Form B Loan
Policy form without creditor's rights exceptions, and in amounts agreed upon and
acceptable to the Agent, with premiums paid thereon, delivered by the Loan
Parties, issued by Stewart Title Guaranty Company (the "Title Insurer") and
insuring the Louisiana Mortgages on fee property as valid first priority Liens
upon the applicable Loan Parties' fee simple title to, or leasehold interest in,
the Real Property Collateral and all improvements and all appurtenances thereto
(including such easements and appurtenances as may be required by the Agent),
free and clear of any and all defects and encumbrances whatsoever, subject only
to such exceptions as may be approved in writing by the Agent, with endorsements
thereto as to such matters as the Agent may designate, purchased by the Loan
Parties on the closing date for each of the Louisiana Mortgages on fee
properties.
(t) ENVIRONMENTAL AUDITS AND/OR PHASE I ENVIRONMENTAL
ASSESSMENTS. The Borrower and the Guarantors shall have delivered Phase I
environmental assessments performed on each parcel of real property listed on
SCHEDULE 6(o) to this Amendment, with the results of such environmental
assessments satisfactory to the Agent in its discretion. In the event Phase II
assessments, contamination assessment reports or remediation action plans have
been prepared for any real property listed on SCHEDULE 6(o), such plans,
assessments and reports, including recent updates and data submissions, shall be
provided to Agent and must be satisfactory to Agent in its discretion. Without
limiting the foregoing, such assessments shall be performed in accordance with
ASTM 1527 E standards for environmental assessments and shall determine whether
there are any Recognized Environmental Conditions (as defined in such standards)
on the real property listed on SCHEDULE 6(o), provide the historical ownership
and use of the real property listed on SCHEDULE 6(o), describe the current use
of the real property listed on SCHEDULE 6(o), provide any information available
in EPA records and state EPA records on previous investigations and litigation,
describe any adjacent properties which have been or could be potential hazards,
and locations of equipment containing PCBs and provide a conclusion and
recommendation statement. If any of the real property listed on SCHEDULE 6(o)
contains any Hazardous Materials (other than materials used by the Loan Parties
from time to time in the ordinary course of business), that might be potentially
Hazardous Materials if not handled, stored, and/or used in accordance with all
relevant Environmental Laws, rules and/or regulations dealing with Hazardous
Materials or potentially Hazardous Materials, but only to the extent it is
actually handled, stored and used in connection with all such Laws, rules and/or
regulations) or, in the Agent's discretion the real property listed on SCHEDULE
6(o) has been adversely affected by any Hazardous Materials or substances, the
Lenders shall be excused from any obligation to provide the Credit Extensions.
(u) SURVEY. The Borrower shall have delivered a survey of the
property listed on SCHEDULE 6(m) to this Amendment not later than three (3) days
prior to the date of this
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Amendment. Such survey shall be prepared by surveyor listed on such SCHEDULE
6(m). Such survey shall be reasonably satisfactory to the Agent and shall be
certified to the Collateral Agent, each Lender and the Title Insurer. The survey
shall evidence to the satisfaction of the Agent that all of the real property
listed on SCHEDULE 6(m) included in the applicable Mortgage is owned by the
applicable Loan Party free and clear of encroachments onto or by other
properties, defects of title, observable violations of restrictions or
encroachments into easements except for Permitted Liens, and be sufficient to
allow the Title Insurer to issue loan policies without survey exceptions.
(v) AMENDMENT OF NOTE PURCHASE AGREEMENTS. The Agent shall
have received signed copies of all of the documents relating to the First
Amendment Agreement to Note Purchase Agreements and the Subsidiary Guaranty
Supplement to Subsidiary Guaranty Agreement (collectively, the "Term Note First
Amendment Documents") certified by either the Chief Financial Officer or the
Secretary of the Borrower to be true, correct and complete, together with
evidence satisfactory to the Agent that all of the conditions precedent to the
First Amendment Agreement to Note Purchase Agreements and the other Term Note
First Amendment Documents have been satisfied, and such First Amendment
Agreement to Note Purchase Agreements and other Term Note First Amendment
Documents have become effective.
(w) AGENT'S COSTS AND EXPENSES. The Borrower shall have paid
to the Agent the Agent's fees and expenses as of the date of this Agreement in
accordance with Section 9 of this Amendment and Section 9.6 of the Credit
Agreement.
(x) PAYMENT OF CERTAIN FEES. The Borrower shall have paid to
the Agent, JP Morgan and each applicable Lender the fees required by Section 10
of this Amendment.
(y) CONSENTS UNDER THE COLLATERAL SHARING AGREEMENT. The
Collateral Agent shall have received any required consents and/or authorization
from the Lenders and Term Note Purchasers under the Collateral Sharing Agreement
through the 2004B Consent Joinder and Reaffirmation or otherwise satisfactory to
the Agent..
(z) ESTOPPEL CERTIFICATE AND SUBORDINATION AGREEMENTS.
Estoppel Certificates and Subordination, Non-Disturbance and Attornment
Agreements from such tenants at the Real Property Collateral as Agent shall
require.
(aa) OTHER DOCUMENTS. The Borrower shall have delivered to the
Agent any and all other agreements, instruments and documents as the Agent may
reasonably have requested in order to further protect its security or evidence
compliance by the Borrower and /or any other Loan Party with this Amendment and
the other Loan Documents.
7. REAFFIRMATIONS AND CONSENTS. The Borrower and the Guarantors:
(a) CONSENT. Consent to the transactions contemplated in this
Amendment.
11
(b) REAFFIRM. Reaffirm their respective obligations under any
and all of the Loan Documents and any and all other agreements, instruments and
documents to which any of them is a party and under which any Lender has any
rights or obligations and which is or may be related in any way to the
agreements, instruments and documents mentioned in or affected by this
Amendment, or the Credit Agreement or any of the other Loan Documents as amended
by this Amendment.
(c) AGREE. Agree that all of the Loan Documents remain in full
force and effect, as expressly modified or altered by or in connection with this
Amendment.
8. REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the Agent
to enter into this Amendment, the Borrower and the Guarantors agree that the
representations and warranties made by the Loan Parties, as set forth in the
Credit Agreement as amended by this Amendment, are hereby remade and are
incorporated by reference into this Amendment as if set out in full, PROVIDED
that Schedules 1, 2, 3, 2.3.1, 5.22, 5.23, 5.24, 5.25, 5.26 and 6.22 to the
Credit Agreement are amended, restated and replaced by Schedules 1, 2, 3, 2.3.1,
5.22, 5.23, 5.24, 5.25, 5.26 and 6.22 to the Amendment, respectively. It is
understood and agreed that any representation or warranty which operates as of a
specific date by its terms shall be required to be true and correct only as of
such specific date with respect to that operation.
9. COSTS AND EXPENSES. The Borrower agrees to reimburse the Agent for
the costs and expenses incurred by the Agent and the Lenders in connection with
the transactions contemplated by this Amendment, including, but not limited to,
the reasonable fees and disbursements of counsel for the Agent and the Lenders
incurred in preparing this Amendment and the documents to be executed pursuant
to this Amendment all in accordance with Section 9.6 of the Credit Agreement.
10. CERTAIN FEES.
(a) The Borrower shall pay each Lender who signs a Lender
Consent and Direction authorizing and directing the Agent to enter into this
Amendment and related documents a one time amendment fee in the amount of 0.125%
of such Lender's Commitment amount.
(b) The Borrower shall pay to JP Morgan the fees and other
amounts required by the fee letter dated September 23, 2004, among the Borrower,
the Agent and JP Morgan.
11. BREACH OF THIS AMENDMENT. Any failure of the Borrower or any other
Loan Party to observe and perform all of the terms, conditions and provisions of
this Amendment, which is not remedied within five days after written notice from
Agent or any Lender, shall constitute a Default.
12. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Amendment and the agreements,
instruments and other documents referred to herein, constitute the entire
agreement of the parties with respect to,
12
and supersede all prior understandings of the parties with respect to, the
subject matter hereof and thereof. No change, modification, addition, or
termination of this Amendment shall be enforceable unless in writing and signed
by the party against whom enforcement is sought.
(b) GOVERNING LAW. This Amendment and the related writings and
the respective rights and obligations of the parties shall be governed by, and
construed and enforced in accordance with, the laws (without regard to conflicts
of laws rules) of the Commonwealth of Kentucky, except to the extent the laws of
any other state, province or country where security for the Loans is located
dictate that the laws of such other state, province or country shall govern the
enforcement of the rights of the Agent or any Lender in such security.
(c) COUNTERPARTS. Each party to this Amendment may sign upon a
separate copy, in which case one counterpart of this Amendment shall consist of
enough of such signed copies to reflect the signature of all parties hereto.
This Amendment may be executed in two or more counterparts, each of which shall
be deemed an original, and it shall not be necessary in making proof of this
Amendment or the terms hereof to produce or account for more than one of such
counterparts.
(d) HEADINGS. The headings used in this Amendment have been
included solely for ease of reference and shall not be considered in the
interpretation or construction of this Amendment.
(e) SEVERABILITY. If any court shall finally determine that
any part, term or provision of this Amendment is in any way unenforceable, such
part, term or provision shall be reduced to the extent necessary to make such
provision enforceable to the greatest extent allowed by law. Consistent with the
foregoing, if any provision of this Amendment or its application shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of all other applications of that provision and of all other
provisions and applications of this Amendment shall not in any way be affected
or impaired.
(f) BINDING EFFECT. This Amendment shall be binding upon, and
shall inure to the benefit of, the Lenders, the Agent, the Borrower, and the
other Loan Parties, as well as their respective successors and assigns. Pursuant
to the provisions of Section 8.2 of the Credit Agreement, the Agent enters into
this Amendment with the consent in writing of the Required Lenders. Accordingly,
this Amendment amends the Credit Agreement and other Loan Documents as and to
the extent provided herein and is binding upon all of the Lenders.
(g) NO WAIVER OR COURSE OF DEALING. The execution and delivery
of this Amendment by the Lenders and the Agent does not waive any right that the
Lenders or the Agent might have under any of the Loan Documents except for the
specific modifications, waivers, and amendments contained in this Amendment.
Neither this Amendment, nor earlier amendments or modifications of any of the
Loan Documents, creates any course of dealing among the Lenders, the Agent, the
Loan Parties or any other Person, and none of the foregoing nor any other Person
should infer that the Agent or any Lender will enter into any other or future
amendment or modification of any of the Loan Documents in the future, whether
similar or dissimilar to this Amendment.
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(h) CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE COMMONWEALTH OF KENTUCKY, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
(i) CONSENT TO JURISDICTION. THE LOAN PARTIES HEREBY
IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR COMMONWEALTH OF KENTUCKY COURT SITTING IN LOUISVILLE, KENTUCKY IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT(S) AND THE
LOAN PARTIES HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY
WAIVE ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE
COLLATERAL AGENT, THE LC ISSUER OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY
LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
ANY LOAN PARTY AGAINST THE AGENT, THE LC ISSUER OR ANY LENDER OR ANY AFFILIATE
OF THE AGENT, THE LC ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN LOUISVILLE, KENTUCKY.
14
(j) WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE AGENT, THE LC
ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
[THE BALANCE OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
15
IN WITNESS WHEREOF, the parties have executed and delivered this
Amendment as of the date set forth in the preamble hereto, but actually on the
dates set forth below.
CHURCHILL DOWNS INCORPORATED
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
GUARANTORS:
CHURCHILL DOWNS MANAGEMENT
COMPANY
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
CHURCHILL DOWNS INVESTMENT
COMPANY
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
RACING CORPORATION OF AMERICA
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
16
CALDER RACE COURSE, INC.
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
TROPICAL PARK, INC.
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
CHURCHILL DOWNS CALIFORNIA
COMPANY
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
CHURCHILL DOWNS CALIFORNIA
FALL OPERATING COMPANY
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
ARLINGTON PARK RACECOURSE, LLC
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
17
ARLINGTON MANAGEMENT
SERVICES, LLC
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
ARLINGTON OTB CORP.
By /s/ MARY ANN GUENTHER
Title: SECRETARY
Date: October 13, 2004
QUAD CITY DOWNS, INC.
By /s/ MARY ANN GUENTHER
Title: SECRETARY
Date: October 13, 2004
CDIP, LLC
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
CDIP HOLDINGS, LLC
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
18
ELLIS PARK RACE COURSE, INC.
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
CHURCHILL DOWNS LOUISIANA
HORSERACING COMPANY, L.L.C.
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
CHURCHILL DOWNS LOUISIANA
VIDEO POKER COMPANY, L.L.C.
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
VIDEO SERVICES, INC.
By /s/ REBECCA C. REED
Title: SECRETARY
Date: October 13, 2004
19
BANK ONE, NA,
as a Lender and as Agent
By /s/ H. JOSEPH BRENNER
H. Joseph Brenner
First Vice President
Date: October 13, 2004
20
PRICING SCHEDULE
================= ========== ========== =========== =========== ========== =========== ============
APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI LEVEL VII
MARGIN STATUS STATUS STATUS STATUS STATUS STATUS STATUS
- ----------------- ---------- ---------- ----------- ----------- ---------- ----------- ------------
EURODOLLAR RATE 1.25% 1.50% 1.75% 2.25% 2.50% 2.75% 3.00%
- ----------------- ---------- ---------- ----------- ----------- ---------- ----------- ------------
FLOATING RATE 0% 0% 0.25% .75% 1.00% 1.25% 1.50%
================= ========== ========== =========== =========== ========== =========== ============
================= ========== ========== =========== =========== ========== =========== ============
APPLICABLE LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V LEVEL VI LEVEL VII
FEE RATE STATUS STATUS STATUS STATUS STATUS STATUS STATUS
COMMITMENT FEE .25% .30% .375% .50% .50% .50% .50%
================= ========== ========== =========== ========== ========== =========== ============
For the purposes of this Schedule, the following terms have the
following meanings, subject to the final paragraph of this Schedule:
"Financials" means the annual or quarterly financial statements of the
Borrower delivered pursuant to Section 6.1(i) or (ii).
"Level I Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, the
Leverage Ratio is less than 2.00 to 1.00.
"Level II Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower has not qualified for Level I Status and (ii) the Leverage Ratio is
less than 2.50 to 1.00.
"Level III Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower has not qualified for Level I Status or Level II Status and (ii)
the Leverage Ratio is less than 3.00 to 1.00.
"Level IV Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower has not qualified for Level I Status, Level II Status, Level III
Status and (ii) the Leverage Ratio is less than 3.50 to 1.00.
"Level V Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower has not qualified for Level I Status, Level II Status, Level III
Status, or Level IV Status, and (ii) the Leverage Ratio is less than 4.00 to
1.00.
"Level VI Status" exists at any date if, as of the last day of the
fiscal quarter of the Borrower referred to in the most recent Financials, (i)
the Borrower has not qualified for Level I Status, Level II Status, Level III
Status, Level IV Status, Level V Status, and (ii) the Leverage Ratio is less
than 4.50 to 1.00.
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"Level VII Status" exists at any date if the Borrower has not qualified
for Level I Status, Level II Status, Level III Status, Level IV Status, Level V
Status or Level VI Status.
"Status" means either Level I Status, Level II Status, Level III
Status, Level IV Status, Level V Status, Level VI Status and Level VII Status.
The Applicable Margin and Applicable Fee Rate shall be determined in
accordance with the foregoing table based on the Borrower's Status, adjusted
quarterly and measured on the most recent four fiscal quarters ending on the
determination date as reflected in the then most recent Financials. Adjustments,
if any, to the Applicable Margin or Applicable Fee Rate shall be effective five
Business Days after the Agent has received the applicable Financials. If the
Borrower fails to deliver the Financials to the Agent at the time required
pursuant to Section 6.1, then the Applicable Margin and Applicable Fee Rate
shall be the highest Applicable Margin and Applicable Fee Rate set forth in the
foregoing table until five days after such Financials are so delivered.
22
Exhibits and schedules to the 2004B Amendment to Loan Documents have been
intentionally omitted because they are not material. The registrant agrees to
furnish such omitted exhibits and schedules supplementally to the Commission
upon request.
23