Document:

Exhibit 10(a)

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT is made and entered into as of March 13, 2003 between
CHURCHILL DOWNS INCORPORATED, a Kentucky corporation (“Company”) and THOMAS H.
MEEKER (the “Executive”).

 

WHEREAS,
the Board of Directors of Churchill Downs Incorporated (the “Board), has
determined that it is in the best interest of the Company and its shareholders,
to retain the Executive as its President and Chief Executive Officer; and

 

WHEREAS,
the Executive is currently willing and competent to serve the Company as its
President and Chief Executive Officer under the terms and conditions of this
Employment Agreement (the “Agreement”).

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                       Employment.  The Company hereby employs the Executive,
and the Executive hereby accepts employment, in the capacity of President and
Chief Executive Officer of the Company. 
Subject to the general direction, approval and control of the Board, the
Executive shall exert his best efforts and devote his full time and attention
to the business and affairs of the Company. 
The Executive shall be in complete charge of the operation of the
Company, shall have all powers and responsibilities as provided in the
Company’s current bylaws attendant to the position of President and Chief
Executive Officer, and shall have full
authority and responsibility for formulating and executing the business
policies and managing and supervising the business of the Company in all
respects.  At all time during the Term
or any Renewal Term (both hereinafter defined) the Executive’s position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with those held, exercised and assigned on the date this Agreement was
first executed.  The Executive’s office
shall be located at the Company’s headquarters in Louisville, Kentucky.  Further, at no time during the term or any
renewal term shall the Executive’s office be located more than 35 miles from
700 Central Avenue, Louisville, Kentucky.

 

2.                                       Term.  The term of this Employment
Agreement shall be for three (3) years commencing on the date hereof unless
terminated earlier as herein provided (the “Term”).  The term of this Agreement shall be automatically renewed for
three (3) year periods at the end of each of the Company’s fiscal years unless
the Board determines affirmatively not to so renew this Agreement not later
than ninety (90) days prior to the end of such fiscal year (the “Renewal Term”).  If the Board of Directors elects not to
renew this Agreement, the Executive shall retain his position for the balance
of the existing three-year Term or the Renewal Term, as the case may be.

 

3.                                       Compensation and Perquisites. 
During the Term and any Renewal Term:

 

A.                                   Base Salary.  As
compensation for the services rendered by

 

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the Executive hereunder, the Company shall
pay to the Executive a base salary of $450,000
a year, payable in arrears in semi-monthly installments (the “Base Salary”).
Base Salary adjustments, if any, shall be made, in the discretion of the Board
of Directors, at any time, but in no event may the Executive’s Base Salary be
reduced below that paid in the preceding year. 
All payments or other compensation to the Executive shall be subject to
appropriate withholding.

 

B.                                     Incentive Compensation. In addition to any other compensation
provided under this Agreement, the Executive shall be entitled to participate
in any Company sponsored annual or long-term, cash or equity based, incentive
plan or other such arrangement, now in existence or hereafter created, made
available to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements.  The plans
currently in existence include:  The
Incentive Compensation Plan, Long Term Incentive Compensation Plan, Stock Option
Plan and the Deferred Compensation Plan. 
The Company may, from time to time, amend the provisions of these plans
prospectively.

 

C.                                     Travel and Entertainment Expenses. The Company shall reimburse the Executive
for all reasonable and necessary travel and other out-of-pocket expenses
incurred by him in the performance of his duties. The Company shall pay the
Executive’s reasonable travel and entertainment expenses and other reasonable
expenses incurred on behalf of the Company’s business. The Company also shall
pay for such expenses for the Executive’s wife when she travels with him on the
Company’s business. The Executive shall present to the Company on a timely
basis an itemized account of such expenses in such form as may be required by
the Company and the reimbursement of such expenses shall be subject to the
customary policies of the Company.

 

D.                                    Supplemental Benefit Plan. The Company shall provide the Executive
various retirement benefits under the provisions of the Company’s Supplemental
Benefit Plan as described in Exhibit A attached hereto.  The Company may, from time to time, amend
the Supplemental Benefit Plan prospectively.

 

E.                                      Automobile. The Company shall provide the Executive with an automobile and shall
pay for maintenance, repairs, insurance and all operating costs incident
thereto.

 

F.                                      Life Insurance. The Company shall provide the Executive a
$250,000 life insurance policy with a reputable and respon­sible insurance
company acceptable to the Company and the Executive, with all premiums being
paid by the Company.

 

G.                                     Dues. The Company shall pay for the Executive’s dues for one country club
and for all appropriate professional or business associations to which he may
belong.

 

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4.                                       Other Employee Benefits.

 

A.                                   Welfare Benefit Plans. 
During the Term and any Renewal Term, the Executive and/or the
Executive’s family, as the case may be, shall be eligible to participate in and
shall receive all benefits under all welfare benefit plans, practices, policies
and programs provided by the Company (including, without limitation, disability,
group life, accidental death) to the extent applicable generally to other
executives of the Company.

 

B.                                     Profit Sharing Plan. 
During the Term and any Renewal Term, the Executive shall be entitled to
participate in the Company’s 401 (k) Profit Sharing Plan or any other similar
plan, program, policy or practice generally made available to other executives
of the Company.

 

C.                                     Health Insurance. 
During the Term and any Renewal Term, the Company shall provide the
Executive and his wife, as the case may be, major medical and health insurance
coverage consistent with that provided to other employees of the Company. All
premiums shall be paid by the Company.

 

D.                                    Vacation.  the Executive shall be awarded
paid time off (PTO) consistent with the Company’s then established policy.  The Executive shall consult with the
Chairman of the Board prior to scheduling PTO days.

 

5.                                       Termination of Employment.

 

A.                                   Termination Due to Death.  In
the event of the Executive’s death during the Term or any Renewal Term, the
Executive’s estate or his beneficiaries, as the case may be, shall be entitled
to receive:

 

(1)                                  Base Salary through the date of death;

 

(2)                                  Any pro rata annual bonus for the year in
which the Executive’s death occurs, based, at a minimum, on the Target Bonus (as
defined in any Incentive Compensation Plan maintained by the Company at that
time) but calculated as provided for in the Plan and subject to and payable in
accordance with the customary practices of the Company for other executives;

 

(3)                                  The balance of any annual or long-term cash
incentive awards, if any, earned but not yet paid pursuant to any Long Term
Incentive Compensation Plan maintained by the Company in which the Executive
participated at the time of his death, subject to and payable in accordance
with the plan and the customary practices of the Company for other executives;

 

(4)                                  All outstanding stock option, restricted
stock or other equity based award at the time of death shall be governed by the
applicable plan or agreement maintained by the Company;

 

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(5)                                  All accrued vacation or PTO pay due to the
Executive; and

 

(6)                                  Any other benefits or payments due to the
Executive under and subject to applicable plans or programs maintained by the
Company in which the Executive participated at the time of his death, including
without limitation, any benefits due under the Supplemental Benefit Plan.

 

B.                                      Termination Due to Disability.  If
the Executive shall become disabled (as defined by law) during the Term or any
Renewal Term, he shall be entitled to the payment of his Base Salary and
benefits being paid or provided at the time of the commencement of such
disability and such shall continue for the duration of such disability but in
no event for a period longer than six (6) consecutive months or an aggregate of
six (6) months in any 12-month period. 
If such disability continues for a period of six (6) consecutive months,
the Company, at its option, may thereafter, upon written notice to the
Executive or his personal representative, terminate his employment.  For purposes of this Agreement, “disability”
shall mean a mental or physical illness or condition rendering the Executive
incapable of performing his normal duties with the Company and cannot be
reasonably accommodated.  If a
termination occurs on account of a disability, the Executive shall be entitled
to receive:

 

(1)                                  Base Salary through the date of termination;

 

(2)                                  A pro rata annual bonus for the year in
which the Executive’s termination occurs, based, at a minimum, on the Target
Bonus (as defined in any Incentive Compensation Plan maintained by the Company
at that time) but calculated as provided for in the Plan and subject to and
payable in accordance with the customary practices of the Company for other
executives;

 

(3)                                  The balance of any annual or long-term cash
incentive awards, if any, earned but not yet paid pursuant to any Long Term
Incentive Compensation Plan maintained by the Company in which the Executive
participated at the time of his termination subject to and payable in
accordance with the Plan and the customary practices of the Company for other
executives;

 

(4)                                  All outstanding stock option, restricted
stock or other equity based award at the time of termination shall be governed
by the applicable plan or agreement maintained by the Company;

 

(5)                                  All accrued vacation or PTO pay due to the
Executive; and

 

(6)                                  Any other benefits or payments due to the
Executive under and subject to applicable plans or programs maintained by the
Company, including without limitation, any benefits due under the Supplemental
Benefit Plan.

 

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C.                                     Termination for Cause. 
The Company may terminate the Executive’s employment during the Term or
any Renewal Term for cause.  For
purposes of this Agreement, “Cause” shall mean:  (i) the willful and continued failure of the Executive to perform
substantially the duties of president and chief executive officer (other than
any such failure resulting from incapacity due to disability), after a written
demand for substantial performance improvement is delivered to the Executive by
the Chairman of the Board which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed the duties of
president and chief executive officer, or (ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is materially and
demonstrably injurious to the business or reputation of the Company.   For purposes of this paragraph, no act or
failure to act, on the part of the Executive , shall be considered “willful”
unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the
best interests of the Company. Any act, or failure to act, based upon specific
authority given pursuant to a resolution duly adopted by the Board or upon
instructions of the Chairman of the Board or based upon the advice of counsel
of the Company which the Executive honestly believes is within such counsel’s
competence shall be conclusively presumed to be done, or omitted to be done, by
the Executive in good faith and in the best interests of the Company. In the
event the Company terminates the Executive for cause, he shall be entitled to
receive:

 

(1)                                  Base Salary through the date of termination;

 

(2)                                  The balance of any annual or long term
awards, if any, earned but not yet paid pursuant to any Long Term Incentive
Compensation Plan maintained by the Company in which the Executive participated
at the time of his termination subject to and payable in accordance with the
Plan and the customary practices of the Company for other executives; and

 

(3)                                  Any other benefits or payments due to the
Executive under and subject to applicable plans or programs maintained by the
Company in which the Executive participated at the time of termination,
including without limitation, any benefits due under the Supplemental Benefit
Plan.

 

D.                                    Termination Without Cause or By Constructive
Termination.

 

(1)                                  Termination Without Cause. 
The Company may terminate the Executive’s employment with the Company,
other than pursuant to Paragraphs 5.A, 5.B, or C, or through non-renewal of the
Agreement under Paragraph 2, and such termination shall be deemed a termination
“without cause.”

 

(2)                                  Constructive Termination.  The
Executive may, in his sole discretion, terminate his employment with the
Company by virtue of the Company’s Constructive Termination of his
employment.  For purposes of the
Agreement, “Constructive Termination” shall mean:  (i) The assignment to the Executive of any duties inconsistent in
any material respect with those of the president and chief executive officer
(including

 

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status, office, title and reporting
requirements), or the authority, duties or responsibilities as contemplated by
Paragraph 1 of this Agreement, or any other diminution in any material respect
in such position, authority, duties or responsibilities unless agreed to by the
Executive; (ii) the Company’s requiring the Executive to be based at any office
or location other than as provided in Paragraph 1 hereof; (iii) reduction of
Base Salary or material reduction of other compensation or perquisites
described in Paragraph 3; (iv) a reduction in the Executive’s Other Employee
Benefits including incentive opportunities, benefits or perquisites described
in Paragraph 4 unless other senior executives suffer a comparable reduction;
and (v) any purported termination of the Executive’s employment under this
Agreement by the Company for other than pursuant to Paragraphs 5.A, 5.B or 5.C
or through non-renewal of the Agreement under Paragraph 2.  Prior to the Executive’s right to terminate
this Agreement, he shall give written notice to the Company of his intention to
terminate his employment on account of a Constructive Termination.  Such notice shall state in detail the
particular act or acts of the failure or failures to act that constitute the grounds
on which the Executive’s Constructive Termination is based and such notice
shall be given within six (6) months of the occurrence of the act or acts or
the failure or failures to act which constitute the grounds for the
Constructive Termination.  The Company
shall have sixty (60) days upon receipt of the notice in which to cure such
conduct, to the extent such cure is possible.

 

(2)                                  Severance Benefits Due Upon Termination
Without Cause or Constructive Termination.  In the event the Executive’s
employment is terminated by the Company without Cause, other than due to
Disability or death, or in the event there is a Constructive Termination, the
Executive shall be entitled to the following benefits and payments (the
“Severance Benefits”):

 

a.                                       Base Salary, at the monthly rate in effect
on the date of termination of the Executive’s employment (or in the event a
reduction in Base Salary is the basis for a Constructive Termination, then the
Base Salary in effect immediately prior to such reduction), payable each month
in arrears for a period of thirty-six (36) months following the date of
termination (the “Severance Period”); provided, however, the Company may pay
him the present value of such salary continuation payments in a lump sum using,
as the discount rate, the federal rate for short-term Treasury obligations as
published by the Internal Revenue Service for the month in which such
termination occurs;

 

b.                                      Any pro rata annual bonus for the year in
which the Executive’s termination occurs, based, at a minimum, on the Target
Bonus (as defined in an Incentive Compensation Plan maintained by the Company
at that time) but calculated as provided for in the Plan and subject to and
payable in accordance with the Plan and the customary practices of the Company
for other executives;

 

c.                                       An amount equal to one-twelfth (1/12) of the
greater of (i) any Target Bonus amount for the year in which the termination
occurs or the highest annual bonus paid to the Executive within the past three
years of employment with the Company which shall be payable each month over the
Severance Period, provided that

 

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the Company may pay him the present value of
such bonus amount in a lump sum using, as the discount rate, the federal rate
for short-term Treasury obligations as published by the Internal Revenue
Service for the month in which such termination occurs;

 

d.                                      The balance of any annual or long-term cash
incentive awards, if any, earned (but not yet paid) subject to and pursuant to
the terms of the applicable plan or program maintained by the Company and in
which the Executive participated at the time of the termination;

 

e.                                       Any outstanding stock option, restricted
stock or other similar equity based award shall be governed by the applicable
plan or agreement maintained by the Company;

 

f.                                         Continued participation in all life
insurance coverage and in other employee benefits described in Paragraph 4,
above in which the Executive participated from the date of termination until
the end of the Severance Period; provided however, the Company’s obligation
under this Paragraph 5.D.(3).f. shall be reduced or eliminated, as applicable,
to the extent that the Executive receives similar coverage and/or benefits
under plans and programs of a subsequent employer; and provided, further, that
if the Executive is precluded, by operation of law, from continuing his
participation in any employee benefit plan or program as provided in this
Paragraph 5.D.(3).f, he shall be provided with the after-tax economic
equivalent of the benefits provided under the plan or program in which he is
unable to participate;

 

g.                                      Any other benefit or perquisite made
available to him by the Company as of the date of termination with such benefit
or perquisite continuing to be provided to the Executive during the first year
subject to the terms and conditions thereof; and

 

h.                                      All benefits due under any Supplemental
Benefit Plan which benefits, subject to the terms and conditions of the Plan,
shall be paid commencing upon the ending date of the Severance Period and the
benefits calculated as though the Executive had been employed by the Company
during the Severance Period.

 

E.                                      Termination of Employment Following a Change
of Control.

If, within two (2) years following a Change
of Control in the Company, as that term is defined below, the Company
terminates his employment without Cause (other than due to death or Disability)
or there is a Constructive Termination, the Executive shall be entitled to the
Severance Benefits set forth in Paragraph 5.D., above, provided that all cash
payments due to the Executive shall be paid in a lump sum without any
discount.  All accrued benefits and
payments under such plans and programs shall be paid as a lump-sum cash
payment.  Said payment shall be made
within thirty (30) days following the date of termination under this Paragraph
5.E.

 

(1)                                  Definition.  For
purposes of this Agreement, a Change in Control

 

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shall be deemed to have occurred
on the happening of the first of the following events (the “Effective Date”):

 

(i)                                     excluding
entities owned by Richard L. Duchossois and/or his immediate family members,
the acquisition by any individual, entity or group (within the meaning of
Section 13 (d) (3) or 14 (d) (2) of the Securities  Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of    Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either the then outstanding voting securities of the
Company (the “Outstanding Company Common Stock”) or the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”);

 

(ii)                                  individuals
who, as of the date of this Agreement, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date of this Agreement whose election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

 

(iii)                               consummation
of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company or the acquisition of
assets of another entity (a “Corporate Transaction), in each case, unless,
immediately following such Corporate Transaction, (a) all or substantially all
of the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Voting Securities immediately
prior to such Corporate Transaction beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of

 

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directors, as the
case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Corporate
Transaction of the Outstanding Company Common Stock and outstanding Company
Voting Securities, as the case may be, (b) no Person (excluding any employee
benefit plan (or related trust) of the Company or such corporation resulting
from such Corporate Transaction) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then Outstanding Shares of Common Stock of the
Company resulting from such Corporate Transaction or the Outstanding Voting
Securities of the Company except to the extent that such ownership existed
prior to the Corporate Transaction and (c) at least a majority of the members
of the Board of Directors of the Company resulting from such Corporate
Transaction were members of the Incumbent Board at the time of the execution of
the initial plan or of the action of the Board, providing for such Corporate
Transaction; or

 

(iv)                              approval by
the shareholders of the Company of a complete liquidation or dissolution of the
Company.

 

(v)                                 Notwithstanding
the foregoing, actions taken in compliance with the Shareholder’s Agreement
dated as of September 8, 2000, among the Company, Duchossois Industries, Inc.
and subsequent signatories thereto, as amended from time to time, shall not be
deemed a Change in Control.

 

(2)                                  Gross Up Payment.  In
the event this Agreement is terminated by the Executive, the Company terminates
the Agreement without Cause or there is a Constructive Termination within two
(2) years following a Change of Control, as defined above, and all Severance
Benefits made or provided to the Executive under this Paragraph 6 and under all
other plans and programs of the Company (the “Aggregate Payment”) is determined
to constitute a Parachute Payment, as such term is defined in Section
280G(b)(2) of the Internal Revenue Code, as amended, the Company shall pay to
the Executive, prior to the time any excise tax imposed by section 4999 of the
Internal Revenue Code (the “Excise Tax”) is payable with respect to such
Aggregate Payment, an additional amount which, after the imposition of all
federal, state and local income and excise taxes thereon, is equal to the
Excise Tax on the Aggregate Payment. 
The determination of whether the Aggregate Payment constitutes a
Parachute Payment and, if so, the amount to be paid to the Executive and the
time of payment pursuant to this Paragraph 5.E. shall be made by an independent
auditor (the

 

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“Auditor”) jointly selected by the Company
and the Executive and paid by the Company. The Auditor shall be a nationally
recognized United States public accounting firm which has not acted in any way
on behalf of the Company.  If the
Executive and Company cannot agree on the firm to serve as the Auditor, then
the Executive and the Company shall each select one accounting firm and those
firms shall jointly select the accounting firm to serve as the Auditor.

 

F.                                      Retirement by The Executive. 
During the Term of this Agreement and any Renewal Term, the Executive
may, on his own initiative, elect to retire by giving the Company not less than
ninety (90) days prior written notice of the effective date of his
retirement.  Any such retirement shall
not be deemed to be a breach by the Executive of this Agreement.  In such event, the Executive shall be
entitled to receive:

 

(1)                                  Base Salary through the date of retirement;

 

(2)                                  Any pro rata annual bonus for the year in
which the Executive’s retirement occurs, based, at a minimum, on the Target
Bonus (as defined in any Incentive Compensation Plan maintained by the Company
at that time) but calculated as provided for in the Plan and subject to and
payable in accordance with the Plan and the customary practices of the Company
for other executives;

 

(3)                                  The balance of any annual or long-term cash
incentive awards, if any, earned but not yet paid pursuant to any Long Term
Incentive Compensation Plan maintained by the Company in which the Executive
participated at the time of retirement, payable in accordance with the Plan and
the customary practices of the Company for other executives;

 

(4)                                  All outstanding restricted stock, stock option
or other equity based award at the time of retirement shall be governed by the
applicable plan or agreement maintained by the Company;

 

(5)                                  All accrued vacation or PTO pay due to the
Executive;

 

(6)                                  All benefits due under and subject to the
Supplemental Retirement Plan maintained by the Company; and

 

(7)                                  Any other benefits or payments due to
retirees under and subject to applicable plans or programs maintained by the
Company in which the Executive participated at the time of his retirement.

 

G.                                     No Obligation to Mitigate; No Right to
Offset.  In the event of any termination of
employment under the this Paragraph 5, the Executive shall be under no
obligation to seek other employment and, except as specifically provided
herein, there shall be no offset against amounts due to the Executive under
this Agreement on account of any remuneration attributable to any subsequent
employment that he may

 

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obtain or for any claims the Company may have
against the Executive except claims for breach or violation of Paragraphs 8 or
9 of this Agreement.

 

H.                                    Nature of Severance Benefits.  All
Severance Benefits due and payable under this Agreement are considered to be
reasonable by the Company and are not in the nature of a penalty.

 

I.                                         Stock Options. 
The Company and the Executive acknowledge that the Company intends to
amend the Company’s 1997 Stock Option Plan, as currently amended, subject to
the approval of the Company’s shareholders. 
The Company shall submit a proposed amended stock option plan to the
Company’s shareholders at the 2003 shareholder’s annual meeting.  The proposed stock option plan shall contain
provisions that allow the Executive to exercise his options upon retirement
subject to applicable laws, so long as there are no adverse financial
consequences to the Company.

 

J.                                        Exclusivity of Severance Benefits. 
Upon the termination of the Executive’s employment, he shall not be
entitled to any other severance or other payments or severance or other
benefits from the Company, other than as provided under the terms of this
Agreement. Nor shall the Executive have any right to any payments by the
Company on account of any claim by him of wrongful termination, including
claims under any federal, state or local human and civil rights or labor laws,
other than the payments and benefits provided under this Agreement, it being
the intention of the parties that such payments and benefits shall be the
Executive’s sole and exclusive remedy.

 

6.                                       Release of Claims.  As
a condition of the Executive’s entitlement to Severance Benefits under this
Agreement, the Executive shall, on the date of his termination, execute a
release of claims substantially in the form set forth in Exhibit B, attached
hereto.

 

7.                                       Termination at Will.  Notwithstanding
anything herein to the contrary, the Executive’s employment with the Company is
terminable at will with or without Cause or notice; provided, however, that a
termination of the Executive’s employment shall be governed by the terms and
conditions of this Agreement.

 

8.                                       Restrictive Covenants.  For
and in consideration of the compensation and benefits to be provided by the
Company hereunder, and further in consideration of the Executive’s exposure to
and knowledge of the proprietary information of the Company, the Executive
agrees that he shall not, during the Term or Renewal Term and for a period of
two (2) years following any termination of employment, engage in any of the
activities or take any action inconsistent with the provisions set forth below.

 

A.                                   Non Competition.  For
any reason, without the express written approval of the Board of Directors of
the Company, the Executive shall not, directly or indirectly, own, manage,
operate, join, control, be employed by, or participate in the ownership,

 

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management, operation or control of or be
connected or associated in any manner, including, but not limited to, holding
the positions of officer, director, manager, shareholder, consultant,
independent contractor, employee, partner, or investor, with any Competing
Enterprise; provided, however, that the Executive may invest in stocks, bonds,
or other securities of any corporation or other entity (but without
participating in the business thereof) if such stocks, bonds, or other
securities are listed for trading on a national stock exchange and the
Executive’s investment does not exceed 5% of the issued and outstanding shares
of capital stock, or in the case of bonds or other securities, 5% of the aggregate
principal amount thereof issued and outstanding.  “Competing Enterprise “ shall mean and be limited to any entity
whose principal business involves the operation of a pari-mutuel or casino
gaming business within the continental United States.

 

B.                                     Nonsolicitation.  For
any reason, without the express written approval of the Board of Directors of
the Company, the Executive shall not (i) directly or indirectly, in on or a
series of transactions, recruit, solicit or otherwise induce or influence any
employee of the Company to terminate his or her employment with the Company or,
(ii) employ or seek to employ or cause any Competing Enterprise to employ or
seek to employ any employee of the Company.

 

9.                                       Confidential Information.  
At no time shall the Executive divulge or furnish to anyone (other than
the Company or any persons employed by or designated by the Company) any
knowledge or information of any type whatsoever of a confidential or
proprietary nature obtained by the Executive during his employment with the
Company, including, without limitation, all types of trade secrets, contractual
information or non-public financial or other information regarding the Company.

 

10.                                 Attorneys’ Fees.  In
the event any person or entity causes or attempts to cause the Company to
refuse to comply with its obligations under this Agreement, or may cause or
attempt to cause the Company to institute litigation seeking to have this
Agreement declared unenforceable, or take, or attempt to take, any action to
deny the Executive the benefits intended under this Agreement, then, in such
event, the Company irrevocably authorizes the Executive to retain counsel of
his choice at the sole expense of the Company to represent the Executive in
connection with the initiation or defense of any litigation or other legal
action in connection with the enforcement of the terms of this Agreement.  All expenses shall be fully paid by the
Company if the Executive prevails in the final, binding, non-appealable outcome
of the litigation or other legal action. 
The Company agrees to reimburse the Executive for his expenses under
this Paragraph 10 on a regular basis upon presentation by the Executive of a
statement prepared by such counsel in accordance with the customary practices,
up to a maximum aggregate amount of $500,000. 
The Executive agrees to repay all reimbursed expenses under this
Paragraph 10 in the event the Company prevails in the final, binding,
non-appealable outcome of the litigation or other legal action.

 

12

 

11.                                 Successors; Binding Agreement.

 

A.                                   To the Company. The Company may assign this Agreement and
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.

 

B.                                     To the Executive. This Agreement is personal to the Executive
and may not be assigned by the Executive. 
All rights of the Executive hereunder shall inure to the benefit of and
be enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees. If the
Executive should die while any amounts would still be payable to him hereunder
if he had continued to live, all such amounts, unless other otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive’s devisee, legatee, or other designee designated by the Executive and
communicated to the Company or, if there be no such designee, to the
Executive’s estate.

 

12.                                 Notices.   All notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
sufficiently given if and when mailed in the continental United States by
registered or certified mail or personally delivered to the party entitled
thereto at the address stated below or to such changed address as the addressee
may have given by a similar notice:

 

	
   

  	
  To
  the Company:

  	
  Churchill
  Downs Incorporated

  
	
   

  	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  	
  700 Central Avenue

  
	
   

  	
   

  	
  Louisville,
  Kentucky 40208

  
	
   

  	
   

  	
   

  
	
   

  	
  To the Executive:

  	
  Thomas H. Meeker

  
	
   

  	
   

  	
  1110 Red Fox Road

  
	
   

  	
   

  	
  Louisville, Kentucky 40205

  

 

13.                                 Amendment
or Modification; Waiver.  No
provision of this Agreement may be amended, modified or waived unless such amendment,
modification or waiver shall be authorized by the Board of Directors of the
Company or any authorized committee of the Board of Directors and shall be
agreed to in writing, and signed by the Executive and by a duly authorized
officer of the Company.  Except as
otherwise specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
a subsequent breach of such condition or provision or a waiver of a similar or
dissimilar provision or condition at the same or at any prior or subsequent
time.

 

13

 

14.                                 Severability.  In the event that any provision or portion
of this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions and portions of this agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

 

15.                                 Survival.  The respective rights and obligations of the
parties to this Agreement shall survive any termination of the Executive’s
employment to the extent necessary to the intended preservation of such rights
and obligations.

 

16.                                 Applicable
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the Common­wealth of
Kentucky.  The parties agree that any
litigation involving this Agreement shall be brought in Jefferson County,
Kentucky Circuit Court or the United States District Court, Western District of
Kentucky and hereby waive any objection to the jurisdiction or venue of such
courts.

 

IN WITNESS WHEREOF, the parties have executed
this Agreement the day and year first above written.

 

	
   

  	
  CHURCHILL DOWNS INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Craig J. Duchossois

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/Thomas H. Meeker

  	
   

  
	
   

  	
  Thomas H. Meeker

  	
   

  
				

 

14Exhibit

10(b)

 

CREDIT

AGREEMENT

 

This Agreement, dated as of April 3, 2003, is among

CHURCHILL DOWNS INCORPORATED, the GUARANTORS party hereto, the LENDERS party

hereto and BANK ONE, KENTUCKY, NA, a national banking association having its

principal office in Louisville, Kentucky, as AGENT.  The parties hereto agree as follows:

 

ARTICLE

I

 

DEFINITIONS

 

As used in this Agreement:

 

“Acquisition” means any transaction, or any series of

related transactions, consummated on or after the date of this Agreement, by

which the Borrower or any other Loan Party (i) acquires any going business or

all or substantially all of the assets of any Person, or division thereof,

whether through purchase of assets, merger or otherwise or (ii) directly or

indirectly acquires (in one transaction or as the most recent transaction in a

series of transactions) at least a majority (in number of votes) of the

securities of a corporation which have ordinary voting power for the election

of directors (other than securities having such power only by reason of the

happening of a contingency) or a majority (by percentage or voting power) of

the outstanding ownership interests of a partnership or limited liability

company.

 

“Acquisition Compliance Certificate” has the meaning

given it in Section 6.13.

 

“Adjusted EBITDA” of any Person or 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.

 

“Advance” means a borrowing hereunder, (i) made by the

Lenders on the same Borrowing Date, or (ii) converted or continued by the

Lenders on the same date of conversion or continuation, consisting, in either

case, of the aggregate amount of the several Loans of the same Type and, in the

case of Eurodollar Loans, for the same Interest Period.  The term “Advance” shall include Swing Line

Loans unless otherwise expressly provided.

 

“Affected Lender” has the meaning given it in Section

2.21.

 

“Affiliate” of any Person means any other Person

directly or indirectly controlling, controlled by or under common control with

such Person.  A Person shall be deemed

to control another Person if the controlling Person owns 10% or more of any

class of voting securities (or other ownership interests) of the controlled

Person or possesses, directly or indirectly, the power to direct or cause the

direction of the management or policies of the controlled Person, whether

through ownership of stock, by contract or otherwise.

 

“Agent” means Bank One in its capacity as contractual

representative of the Lenders pursuant to Article X, and not in its individual

capacity as a Lender, and any successor Agent appointed pursuant to Article X.

 

“Aggregate Commitment” means the aggregate of the

Commitments of all the Lenders, as reduced or increased from time to time

pursuant to the terms hereof.

 

“Aggregate Outstanding Credit Exposure” means, at any

time, the aggregate of the Outstanding Credit Exposure of all the Lenders.

 

“Agreement” means this Credit Agreement, as it may be

amended or modified and in effect from time to time.

 

1

 

“Agreement Accounting Principles” means generally

accepted accounting principles as in effect from time to time, applied in a

manner consistent with that used in preparing the financial statements referred

to in Section 5.4.

 

“Alternate Base Rate” means, for any day, a rate of

interest per annum equal to the higher of (i) the Prime Rate for such day or

(ii) the sum of the Federal Funds Effective Rate for such day plus 1/2% per

annum.

 

“Applicable Fee Rate” means, at any time, the

percentage rate per annum at which the Commitment Fee is accruing on the unused

portion of the Aggregate Commitment at such time as set forth in the Pricing

Schedule.

 

“Applicable Margin” means, with respect to Advances of

any Type at any time, the percentage rate per annum which is applicable at such

time with respect to Advances of such Type as set forth in the Pricing

Schedule.

 

“Approved Fund” means any Fund that is administered or

managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an

Affiliate of an entity that administers or manages a Lender.

 

“Arranger” means, collectively, Banc One Capital

Markets, Inc., a Delaware corporation, and its successors, and PNC Capital

Markets, Inc., a Pennsylvania corporation, and its successors, in their

capacity as Co-Lead Arrangers and Joint Book Runners.

 

“Assignment of Patents, Trademarks and Copyrights”

shall mean the Assignment of Patents, Trademarks and Copyrights, dated as of

the date of this Agreement, executed by the Loan Parties in favor of the

Collateral Agent.

 

“Article” means an article of this Agreement unless

another document is specifically referenced.

 

“Authorized Officer” means any of the chief executive

officer, chief financial officer, any executive vice president, any senior vice

president, the treasurer, and any other officer designated as such by the board

of directors of the Borrower, acting singly.

 

“Available Aggregate Commitment” means, at any time,

the Aggregate Commitment then in effect minus the Aggregate Outstanding Credit

Exposure at such time.

 

“Bank One” means Bank One, Kentucky, NA, a national

banking association having its principal office in Louisville, Kentucky, in its

individual capacity, and its successors.

 

“Benefit Arrangement” shall mean at any time an

“employee benefit plan,” within the meaning of Section 3(3) of ERISA,

which is neither a Plan nor a Multiemployer Plan and which is maintained,

sponsored or otherwise contributed to by any member of the Controlled Group.

 

“Borrower” means Churchill Downs Incorporated, a

Kentucky corporation, and its successors and assigns.

 

“Borrowing Date” means a date on which an Advance is

made hereunder.

 

“Borrowing Notice” is defined in Section 2.10, and

shall be in a form satisfactory to the Agent, generally in the form of Exhibit

R.

 

“Business Day” means (i) with respect to any

borrowing, payment or rate selection of Eurodollar Advances, a day (other than

a Saturday or Sunday) on which banks generally are open in Louisville and New

York City for the conduct of substantially all of their commercial lending

activities, interbank wire transfers can be made on the Fedwire system and

dealings in United States dollars are carried on in the London interbank market

and (ii) for all other purposes, a day (other than a Saturday or Sunday) on

which banks generally are open in Louisville for the conduct of substantially

all of their commercial lending activities and interbank wire transfers can be

made on the Fedwire system.

 

“CDMC” shall mean Churchill Downs Management Company,

a Kentucky corporation, and wholly owned subsidiary of the Borrower.

 

2

 

“Calder” means Calder

Race Course, Inc., a Florida corporation.

 

“Calder Financing

Statements” is defined in Section 6.21.

 

“Calder Mortgage” means

the Mortgage executed by Calder in favor of the Collateral Agent with respect

to the Real Property owned by Calder. 

Calder shall execute the Calder Mortgage and deliver such Calder

Mortgage to the Agent on the Closing Date in a form sufficient for recordation

and the Agent may thereafter record such Mortgage at any time pursuant to

Section 6.21.

 

“Capital Expenditures” means, without duplication, any

expenditures for any purchase or other acquisition of any asset which would be

classified as a fixed or capital asset or a Capitalized Lease Obligation on a

consolidated balance sheet of the Borrower and its Subsidiaries prepared in

accordance with Agreement Accounting Principles, including without limitation those

expenditures under the Master Plan for Capital Expenditures.

 

“Capitalized Lease” of a Person means any lease of

Property by such Person as lessee which would be capitalized on a balance sheet

of such Person prepared in accordance with Agreement Accounting Principles.

 

“Capitalized Lease Obligations” of a Person means the

amount of the obligations of such Person under Capitalized Leases which would

be shown as a liability on a balance sheet of such Person prepared in

accordance with Agreement Accounting Principles.

 

“Cash Equivalent Investments” means (i) short-term

obligations of, or fully guaranteed by, the United States of America, (ii)

commercial paper rated A-1 or better by S&P or P-1 or better by Moody’s,

(iii) demand deposit accounts maintained in the ordinary course of business,

and (iv) certificates of deposit issued by and time deposits with commercial

banks (whether domestic or foreign) having capital and surplus in excess of

$100,000,000; provided in each

case that the same provides for payment of both principal and interest (and not

principal alone or interest alone) and is not subject to any contingency

regarding the payment of principal or interest.

 

“Change in Control” means the occurrence of any of the

following:  Any person (as such term is

used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in

effect on the date of the Closing Date) or related Persons constituting a group

(as such term is used in Rule 13d-5 under the Exchange Act), other than a

group including, and under the general supervision of, the Excluded Group:  (i) become the “beneficial owners” (as such

term is used in Rule 13d-3 under the Exchange Act as in effect on the date

of the Closing Date), directly or indirectly, of more than 50% of the total

voting power of all classes then outstanding of the voting stock or membership

or other equity interests of the Borrower, or (ii) acquire after the date of

the Closing Date (x) the power to elect, appoint or cause the election or

appointment of at least a majority of the members of the board of directors of

the Borrower, through beneficial ownership of the capital stock of the Borrower

or otherwise, or (y) all or substantially all of the properties and assets of

the Borrower.

 

“Change” has the meaning given it in Section 3.2.

 

“Closing Date” means the Business Day on which the

first Loan shall be made, which shall be April 3, 2003.

 

“Code” means the Internal Revenue Code of 1986, as

amended, reformed or otherwise modified from time to time.

 

“Collateral” means and includes, collectively but

without limitation, all property and assets in which the Loan Parties grant the

Collateral Agent for the benefit of the Lenders an interest as collateral or

other security for all or any of the Secured Obligations, whether real or personal

property, whether granted directly or indirectly, whether granted now or in the

future, and whether granted in the form of a security interest, mortgage, deed

of trust, assignment, pledge, chattel mortgage, chattel trust, factor’s lien,

equipment trust, conditional sale, trust receipt, lien, charge, lien or title

retention, contract, lease or consignment agreement intended as a security

device, or any other security or lien interest whatsoever, whether created by

law, contract or otherwise and is intended to and shall include all real and

personal property, tangible and intangible, of the Loan Parties; provided, however, the term Collateral

shall not include (i) the Horseman’s Account, (ii) the bond issued under the

Master Plan Bond Transaction and payments owed by one Loan Party to another

Loan Party in connection with the Master Plan Bond Transaction, (iii) ownership

interests of any

 

3

 

Loan Party in any (a) Excluded Subsidiary, (b) any Excluded Entity, and

(c) those Persons listed on Schedule 3 hereto in which, as of the

Closing Date, a Loan Party directly or indirectly owns less than 100% of the

outstanding interest of such Person and in which the organizational agreements

governing such Person prohibit the applicable Loan Party from granting a

security interest in such ownership interest, and (iv) any chattel paper,

contract rights or other general intangibles which are now held or hereafter

acquired by any Loan Party to the extent that such chattel paper, contract

rights or other general intangibles (including, but not limited to, licenses)

are not assignable or capable of being encumbered (a) as a matter of law or (b)

under the terms of any agreement applicable thereto (but solely to the extent

that any such restriction is enforceable and not ineffective under applicable

law) without the consent of the other party to such agreement where such

consent has not been obtained after the applicable Loan Party has made a

reasonably diligent effort satisfactory to the Agent to obtain such consent.

 

“Collateral Agent” means Bank One in its capacity as

contractual representative of the Lenders and the Term Note Purchasers as

Collateral Agent under the Collateral Sharing Agreement, and not in its

individual capacity as a Lender, and any successor Collateral Agent appointed

under the Collateral Sharing Agreement.

 

“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 and all other documents or

instruments executed as security for the Secured Obligations from time to time.

 

“Collateral Sharing Agreement” means that certain

Collateral Sharing Agreement dated as of April 3, 2003, with Bank One as

Collateral Agent, in the form of Exhibit G, as it may be amended or

supplemented from time to time.

 

“Collateral Shortfall Amount” is defined in Section

8.1.

 

“Commitment” means, for each Lender, the obligation of

such Lender to make Revolving Loans to, and participate in Facility LCs issued

upon the application of, the Borrower in an aggregate amount not exceeding the

amount set forth opposite its signature below, as it may be modified as a result

of any assignment that has become effective pursuant to Section 12.3.2 or as

otherwise modified from time to time pursuant to the terms hereof.

 

“Commitment Fee” is defined in Section 2.7.

 

“Consolidated Capital Expenditures” means, with

reference to any period, the Capital Expenditures of the Loan Parties

calculated on a consolidated basis for such period in accordance with Agreement

Accounting Principles.

 

“Consolidated Adjusted

EBITDA”  for any Period means the

consolidated Adjusted EBITDA of all of the Loan Parties for that period,

consolidated in accordance with Agreement Accounting Principles.  The EBITDA of the Excluded Subsidiaries

shall not be included in Consolidated Adjusted EBITDA.

 

“Consolidated Fixed

Charges” means for any period of determination the consolidated Fixed Charges

of all of the Loan Parties for that period, consolidated in accordance with

Agreement Accounting Principles.  The

Fixed Charges of the Excluded Subsidiaries shall not be included in

Consolidated Fixed Charges.

 

“Consolidated Funded Indebtedness” means at any time

the aggregate dollar amount of Consolidated Indebtedness which has actually

been funded and is outstanding at such time, whether or not such amount is due

or payable at such time.

 

“Consolidated Indebtedness” means at any time the

Indebtedness of the Loan Parties calculated on a consolidated basis as of such

time in accordance with Agreement Accounting Principles.

 

“Consolidated Interest Expense” means, with reference

to any period, the interest expense of the Loan Parties calculated on a

consolidated basis for such period in accordance with Agreement Accounting

Principles.

 

4

 

“Consolidated Net Income” means, with reference to any

period, the net income (or loss) of all of the Loan Parties calculated on a

consolidated basis for such period in accordance with Agreement Accounting

Principles.

 

“Consolidated Net Worth” means as of any date of

determination total stockholders’ equity of all of the Loan Parties as of such

date determined and consolidated in accordance with Agreement Accounting

Principles.

 

“Consolidated Rentals” means, with reference to any

period, the Rentals of the Loan Parties calculated on a consolidated basis for

such period in accordance with Agreement Accounting Principles.

 

“Contingent Obligation” of a Person means any

agreement, undertaking or arrangement by which such Person assumes, guarantees,

endorses, contingently agrees to purchase or provide funds for the payment of,

or otherwise becomes or is contingently liable upon, the obligation or

liability of any other Person, or agrees to maintain the net worth or working

capital or other financial condition of any other Person, or otherwise assures

any creditor of such other Person against loss, including, without limitation,

any guaranty, comfort letter, operating agreement, take-or-pay contract or the

obligations of any such Person as general partner of a partnership with respect

to the liabilities of the partnership.

 

“Controlled Group” means all members of a controlled

group of corporations or other business entities and all trades or businesses

(whether or not incorporated) under common control which, together with the

Borrower or any of its Subsidiaries, are treated as a single employer under Section

414 of the Code.

 

“Conversion/Continuation Notice” is defined in Section

2.11, and shall be in a form satisfactory to this Agent, generally in the form

of Exhibit S.

 

“Credit Extension” means the making of an Advance or

the issuance of a Facility LC hereunder.

 

“Credit Extension Date” means the Borrowing Date for

an Advance or the issuance date for a Facility LC.

 

“Current Fields of Enterprise” means those fields of

enterprise that each Loan Party is engaged in as of the date of this Agreement,

and activities related thereto, including, but not limited to the acquisition

of Persons that provide wagering platforms, and shall not include any

mode of gambling other than pari-mutuel wagering on horse racing and Permitted

Alternative Gaming which, in each case, is conducted in full compliance with

applicable law.

 

“Default” means one or more of the events described in

Article VII.

 

“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) the impairment charge deducted from the net income of Ellis

Park Race Course, Inc. with respect to the fourth fiscal quarter 2002 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.

 

“Environmental Laws” means all applicable federal,

provincial, state and local laws, rules, regulations, reported and publicly

available orders, reported judicial determinations, and reported and publicly

available decisions of an executive body or any governmental or

quasi-governmental entity, whether in the past, the present or the future,

pertaining to health and/or the environment in effect in any and all

jurisdictions in which the Borrowers are at any time leasing equipment pursuant

to a Lease or otherwise doing business. The Environmental Laws shall include,

but shall not be limited to, the following: (1) the Comprehensive Environmental

Response, Compensation, and Liability Act, 42 U.S.C. Sections 9601, et seq.;

the Superfund Amendments and Reauthorization Act, Public Law 99-499, 100 Stat.

1613; the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901, et

seq.; the National Environmental Policy Act, 42 U.S.C. Section 4321; the Safe

Drinking Water Act, 42 U.S.C. Sections 300F, et seq.; the Toxic

Substances Control Act, 15 U.S.C. Section 2601; the Hazardous Materials

Transportation Act, 49 U.S.C. Section 1801; the Federal Water Pollution Control

Act, 33 U.S.C. Sections 1251; et seq.; the Clean Air Act, 42 U.S.C.

Section 7401, et seq.; and the regulations promulgated in connection

therewith; and (2) Environmental Protection Agency regulations

 

5

 

pertaining to asbestos (including 40 C.F.R. Part 61, Subpart M);

Occupational Safety and Health Administration regulations pertaining to

asbestos (including 29 C.F.R. Sections 1910.1001 and 1926.58); and any state,

province and local laws and regulations pertaining to Hazardous Materials and/or

asbestos.

 

“ERISA” means the Employee Retirement Income Security

Act of 1974, as amended from time to time, and any rule or regulation issued

thereunder.

 

“Eurodollar Advance” means an Advance which, except as

otherwise provided in Section 2.13, bears interest at the applicable Eurodollar

Rate.

 

“Eurodollar Base Rate” means, with respect to a

Eurodollar Advance for the relevant Interest Period, the applicable British

Bankers’ Association LIBOR rate for deposits in U.S. dollars as reported by any

generally recognized financial information service as of 11:00 a.m. (London

time) two Business Days prior to the first day of such Interest Period, and

having a maturity equal to such Interest Period, provided that, if no such British Bankers’ Association LIBOR

rate is available to the Agent, the applicable Eurodollar Base Rate for the

relevant Interest Period shall instead be the rate determined by the Agent to

be the rate at which Bank One, N.A. or one of its Affiliate banks offers to

place deposits in U.S. dollars with first-class banks in the London interbank

market at approximately 11:00 a.m. (London time) two Business Days prior to the

first day of such Interest Period, in the approximate amount of Bank One,

N.A.’s relevant Eurodollar Loan and having a maturity equal to such Interest

Period.

 

“Eurodollar Loan” means a Loan which, except as

otherwise provided in Section 2.13, bears interest at the applicable Eurodollar

Rate.

 

“Eurodollar Rate” means, with respect to a Eurodollar

Advance for the relevant Interest Period, the sum of (i) the quotient of (a)

the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one

minus the Reserve Requirement (expressed as a decimal) applicable to such

Interest Period, plus (ii) the Applicable Margin.

 

“Exchange Act” means the Securities Exchange Act of

1934.

 

“Excluded Entities” means

any corporation, partnership, limited liability company or other Person in

which the Loan Parties hold an ownership interest, either directly or

indirectly, and which is not a Loan Party.

 

“Excluded Group” means and includes Duchossois

Industries, Inc. and its Affiliates and Brad M. Kelly and his Affiliates.

 

“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.,

Charlson Broadcast Technologies LLC, Churchill Downs California Food Services

Company, Tracknet, LLC, and Anderson Park, Inc.

 

“Excluded

Taxes” means, in the case of each Lender or applicable Lending Installation and

the Agent, taxes imposed on its overall net income, and franchise taxes imposed

on it, by (i) the jurisdiction under the laws of which such Lender or the Agent

is incorporated or organized or (ii) the jurisdiction in which the Agent’s or

such Lender’s principal executive office or such Lender’s applicable Lending

Installation is located.

 

“Exhibit” refers to an exhibit to this Agreement,

unless another document is specifically referenced.

 

“Facility LC” is defined in Section 2.3.1.

 

“Facility LC Application” is defined in Section 2.3.3.

 

“Facility LC Collateral Account” is defined in Section

2.3.11.

 

“Facility Termination Date” means March 31, 2008, or

any earlier date on which the Aggregate Commitment is reduced to zero or

otherwise terminated pursuant to the terms hereof.

 

6

 

“Federal Funds Effective Rate” means, for any day, an

interest rate per annum equal to the weighted average of the rates on overnight

Federal funds transactions with members of the Federal Reserve System arranged

by Federal funds brokers on such day, as published for such day (or, if such

day is not a Business Day, for the immediately preceding Business Day) by the

Federal Reserve Bank of New York, or, if such rate is not so published for any

day which is a Business Day, the average of the quotations at approximately

10:00 a.m. (Louisville time) on such day on such transactions received by the

Agent from three Federal funds brokers of recognized standing selected by the

Agent in its sole discretion.

 

“Financial Contract” of a Person means (i) any

exchange-traded or over-the-counter futures, forward, swap or option contract

or other financial instrument with similar characteristics, and/or (ii) any

Rate Management Transaction.

 

“Fixed Charge Coverage

Ratio” means, as of any date of calculation, the ratio of Consolidated Adjusted

EBITDA to Consolidated Fixed Charges, in each instance computed as provided in

Section 6.24.1 and in accordance with Agreement Accounting Principles.

 

“Fixed Charges” means for any period of determination,

the sum of interest expense, income tax expenses, scheduled principal

installments on Indebtedness with maturities greater than one year (as adjusted

for prepayments), dividend payments, scheduled payments under Capitalized

Leases and Capital Expenditures (excluding (a) Capital Expenditures consisting

solely of consideration paid or payable for Permitted Acquisitions, and (b)

Capital Expenditures expended under and in compliance with the Master Plan for

Capital Expenditures)  for such period.

 

“Floating Rate” means, for any day, a rate per annum

equal to (i) the Alternate Base Rate for such day plus (ii) the Applicable

Margin, in each case changing when and as the Alternate Base Rate changes.

 

“Floating Rate Advance” means an Advance which, except

as otherwise provided in Section 2.13, bears interest at the Floating Rate.

 

“Floating Rate Loan” means a Loan which, except as

otherwise provided in Section 2.13, bears interest at the Floating Rate.

 

“Fund” means any Person (other than a natural person)

that is (or will be) engaged in making, purchasing, holding or otherwise

investing in commercial loans and similar extensions of credit in the ordinary

course of its business.

 

“Guarantor Joinder” is defined in Section 9.14.

 

“Guarantors” means, subject to Section 6.12(iii)

collectively, Churchill Downs Management Company, Churchill Downs Investment

Company, Racing Corporation of America, Calder Race Course, Inc., Tropical

Park, Inc., Churchill Downs California Company, Churchill Downs California Fall

Operating Company, Arlington Park Racecourse, LLC, Arlington Management

Services, LLC, Arlington OTB Corp., Quad City Downs, Inc., CDIP, LLC, CDIP

Holdings, LLC, and Ellis Park Race Course, Inc., any Person who becomes a

Guarantor under Section 9.14, and the successors and assigns of any of them,

and “Guarantor” means any one or more of these.

 

“Guaranty” means that certain Guaranty dated as of the

date of this Agreement, executed by the Guarantors in favor of the Collateral

Agent, entered into pursuant to this Agreement, as it may be amended or

modified and in effect from time to time.

 

“Hazardous Materials” means any substance, chemical,

wastes (medical or otherwise), or contaminants, including, without limitation,

asbestos, polychlorinated biphenyls (“PCBs”), paint containing lead, gasoline

or other petroleum products, radioactive material, urea formaldehyde foam

insulation, and discharges of sewage or effluent that is designated or defined

(either by inclusion in a list of materials or by reference to exhibited

characteristics) as hazardous, toxic or dangerous, or as a designated or

prohibited substance, in any federal, state, provincial, municipal or local

law, by-law, code having the force of law, or ordinance, including, without limitation,

the applicable Environmental Laws, now existing or hereafter in effect, and all

rules having the force of law and regulations promulgated thereunder.

 

7

 

“Horseman’s Account” means refundable deposits and

amounts held by a Loan Party for the benefit of horsemen, ownership of which

deposits and amounts is vested in such horsemen.

 

“Indebtedness” of a Person means such Person’s (i)

obligations for borrowed money, (ii) obligations representing the deferred

purchase price of Property or services (other than accounts payable arising in

the ordinary course of such Person’s business payable on terms customary in the

trade), (iii) obligations, whether or not assumed, secured by Liens or payable

out of the proceeds or production from Property now or hereafter owned or

acquired by such Person, (iv) obligations which are evidenced by notes,

acceptances, or other instruments, (v) obligations of such Person to purchase

securities or other Property arising out of or in connection with the sale of

the same or substantially similar securities or Property, (vi) Capitalized

Lease Obligations, (vii) LC Obligations, (viii) aggregate undrawn stated amount

under Letters of Credit that are not Facility LCs, plus the aggregate amount of

all reimbursement obligations in connection therewith, and (ix) any other

obligation for borrowed money or other financial accommodation which in

accordance with Agreement Accounting Principles would be shown as a liability

on the consolidated balance sheet of such Person, but the term “Indebtedness”

does not include trade payables and accrued expenses, deferred revenue related

to the annual running of the Kentucky Derby, deferred revenue from the leasing

or licensing of personal seat licenses, and obligations not exceeding

$3,000,000 under outstanding pari-mutuel tickets that are payable with respect

to races run not more than one year prior to the date of determination which

were incurred in the ordinary course of business, which are not represented by

a promissory note or other evidence of indebtedness and (other than pari-mutuel

tickets) which are not more than thirty (30) days past due, all determined in

accordance with Agreement Accounting Principles.

 

“Indemnity Agreement” shall mean the Environmental

Indemnity Agreement, dated as of April 3, 2003, among the Agent, the Borrower

and the Guarantors.

 

“Intercompany Subordination Agreement” shall mean a

subordination agreement among the Loan Parties in the form attached hereto as Exhibit

H.

 

“Interest Period” means, with respect to a Eurodollar

Advance, a period of one, two, three or six months commencing on a Business Day

selected by the Borrower pursuant to this Agreement.  Such Interest Period shall end on the day which corresponds

numerically to such date one, two, three or six months thereafter, provided, however, that if there is no

such numerically corresponding day in such next, second, third or sixth

succeeding month, such Interest Period shall end on the last Business Day of

such next, second, third or sixth succeeding month.  If an Interest Period would otherwise end on a day which is not a

Business Day, such Interest Period shall end on the next succeeding Business

Day, provided, however, that if

said next succeeding Business Day falls in a new calendar month, such Interest

Period shall end on the immediately preceding Business Day.

 

“Investment” of a Person means any loan, advance

(other than commission, travel and similar advances to officers and employees

made in the ordinary course of business), extension of credit (other than

accounts receivable arising in the ordinary course of business on terms

customary in the trade) or contribution of capital by such Person; stocks,

bonds, mutual funds, partnership interests, notes, debentures or other

securities owned by such Person; any deposit accounts and certificate of

deposit owned by such Person; and structured notes, derivative financial

instruments and other similar instruments or contracts owned by  such Person.

 

“LC Fee” is defined in Section 2.3.4.

 

“LC Issuer” means PNC Bank (or any subsidiary or

affiliate of PNC Bank designated by PNC Bank) in its capacity as issuer of

Facility LCs hereunder.

 

“Investment Compliance Certifcate” is defined in

Section 6.13(ii)(c).

 

“LC Obligations” means, at any time, the sum, without

duplication, of (i) the aggregate undrawn stated amount under all Facility LCs

outstanding at such time (including without limitation increases, if any, in

the stated amount provided in any Facility LC, whether or not the time for such

increase has occurred) plus (ii) the aggregate unpaid amount at such time of

all Reimbursement Obligations.

 

8

 

“LC Payment Date” is defined in Section 2.3.5.

 

“LC Reimbursement Agreement” is defined in Section

2.3.3.

 

“Lenders” means the lending institutions listed on the

signature pages of this Agreement and their respective successors and assigns,

together with any lending institution that becomes a Lender under Section

12.3.  Unless otherwise specified, the

term “Lenders” includes PNC Bank in its capacity as Swing Line Lender.

 

“Lending Installation” means, with respect to a Lender

or the Agent, the office, branch, subsidiary or Affiliate of such Lender or the

Agent listed on the signature pages hereof or on a Schedule or otherwise

selected by such Lender or the Agent pursuant to Section 2.19.

 

“Letter of Credit” of a Person means a letter of

credit or similar instrument which is issued upon the application of such

Person or upon which such Person is an account party or for which such Person

is in any way liable.

 

“Leverage Ratio” means, as of any date of calculation,

the ratio of (i) Consolidated Funded Indebtedness outstanding on such date to

(ii) Consolidated Adjusted EBITDA, in each instance computed in accordance with

Section 6.24.2 and Agreement Accounting Principles.

 

“Lien” means any lien (statutory or other), mortgage,

pledge, hypothecation, assignment, deposit arrangement, encumbrance or

preference, priority or other security agreement or preferential arrangement of

any kind or nature whatsoever (including, without limitation, the interest of a

vendor or lessor under any conditional sale, Capitalized Lease or other title

retention agreement).

 

“Loan” means a Revolving Loan or a Swing Line Loan.

 

“Loan Documents” means this Agreement, the Facility LC

Applications, the LC Reimbursement Agreement, any Notes issued pursuant to

Section 2.15, the Collateral Documents, the Guaranty, and all other documents

(excluding the Working Cash Sweep Rider) and/or instruments executed and

delivered pursuant to and/or in connection with this Agreement.

 

“Loan Parties” means the Borrower and the Guarantors

from time to time.

 

“Master Plan Bond Rentals” means rentals payable under

the Master Plan Bond Transaction.

 

“Master Plan Bond Transaction” means the transaction

through which the City of Louisville, Kentucky (n/k/a Louisville/Jefferson

County Metro Government) Taxable Industrial Building Revenue Bond, Series 2002

(Churchill Downs Incorporated Project) was issued.

 

“Master Plan for Capital Expenditures” means those

certain plans, specifications and cost summaries of the Borrower which provide

for the renovation and improvement of certain portions of the Borrower’s

Property located generally on Central Avenue in Louisville, Kentucky, and known

as the Churchill Downs racetrack facility, together with contiguous parcels

used in connection with that racetrack facility, including, without limitation,

the renovation of the clubhouse, grandstands and the Jockey Club, the addition

of approximately 66 new corporate suites, the installation of certain new

elevators, a mechanical system upgrade, and the addition of new space for

catered functions.

 

“Material Adverse Effect” means a material adverse

effect on (i) the business, Property, condition (financial or otherwise),

results of operations, or prospects, of the Loan Parties taken as a whole, (ii)

the ability of the Borrower to perform its obligations under the Loan Documents

to which it is a party, or (iii) the validity or enforceability of any of the

Loan Documents or the rights or remedies of the Agent, the LC Issuer, the

Collateral Agent or the Lenders thereunder.

 

9

 

“Material Indebtedness” means Indebtedness in an outstanding

principal amount of $3,000,000.00  or

more in the aggregate (or the equivalent thereof in any currency other than

U.S. dollars).

 

“Material Indebtedness Agreement” means any agreement

under which any Material Indebtedness was created or is governed or which

provides for the incurrence of Indebtedness in an amount which would constitute

Material Indebtedness (whether or not an amount of Indebtedness constituting

Material Indebtedness is outstanding thereunder).

 

“Modify” and “Modification” are defined in Section

2.3.1.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgages” shall mean the Mortgages and Deeds of

Trust in substantially the form of collective Exhibit I executed and

delivered by each of the applicable Loan Parties with respect to each of the

parcels of Real Property Collateral to the Collateral Agent for the benefit of

the Lenders, subject to the terms of the Collateral Sharing Agreement.  The Calder Mortgage with respect to the Real

Property in Florida will not be recorded on the Closing Date, but the Agent may

cause the Collateral Agent to record the Calder Mortgage at any time pursuant

to Section 6.21.

 

“Multiemployer Plan” means a Plan maintained pursuant

to a collective bargaining agreement or any other arrangement to which the Borrower

or any member of the Controlled Group is a party to which more than one

employer is obligated to make contributions.

 

“Negative Pledge Agreement” means that certain

Negative Pledge Agreement in substantially the form of Exhibit J

executed and delivered by Calder and all the Loan Parties in favor of the Agent

with respect to all interest of the Loan Parties in any Property of Calder,

including without limitation any Property subject to the Calder Mortgage and/or

any Calder Financing Statements.

 

“Non-U.S. Lender” is defined in Section 3.5(iv).

 

“Note” is defined in Section 2.15(iv).

 

“Note Purchase Agreement” means, collectively, the

Note Purchase Agreements each dated April 3, 2003, among the Borrower and the

Term Note Purchasers.

 

“Notice of Acquisition” is defined in Section

6.13(iii)(b).

 

“Obligations” means, collectively,  all unpaid principal of and accrued and

unpaid interest on the Loans, all obligations, contingent or otherwise, under

and/or in connection with any Notes and/or to or for the benefit of any Lender

and/or the LC Issuer under and/or in connection with the other Loan Documents,

all Reimbursement Obligations, all accrued and unpaid fees and all expenses,

reimbursements, indemnities and other obligations of the Borrower to the Lenders

or to any Lender, the Agent, the Collateral Agent for the benefit of any Lender

or the LC Issuer, the LC Issuer or any indemnified party arising under the Loan

Documents, whether they exist on the date of this Agreement, or arise or are

created or acquired after the date of this Agreement.

 

“Off-Balance Sheet Liability” of a Person means (i)

any repurchase obligation or liability of such Person with respect to accounts

or notes receivable sold by such Person, (ii) any liability under any Sale and

Leaseback Transaction which is not a Capitalized Lease, (iii) any liability

under any so-called “synthetic lease” transaction entered into by such Person,

or (iv) any obligation arising with respect to any other transaction which is

the functional equivalent of or takes the place of borrowing but which does not

constitute a liability on the balance sheets of such Person, but excluding from

this clause (iv) Operating Leases.

 

“Operating Lease” of a Person means any lease of

Property (other than a Capitalized Lease) by such Person as lessee which has an

original term (including any required renewals and any renewals effective at

the option of the lessor) of one year or more.

 

10

 

“Other Taxes” is defined in Section 3.5(ii).

 

“Outstanding Credit Exposure” means, as to any Lender

at any time, the sum of (i) the aggregate principal amount of its Loans

outstanding at such time, plus (ii) an amount equal to its Pro Rata Share of

the LC Obligations at such time, plus (iii) an amount equal to its Pro Rata

Share of the aggregate principal amount of Swing Line Loans outstanding at such

time.

 

“Participants” is defined in Section 12.2.1.

 

“Payment Date” means the last day of each calendar

quarter.

 

“PBGC” means the Pension Benefit Guaranty Corporation,

or any successor thereto.

 

“Permitted Acquisitions” has the meaning given it in

Section 6.13(iii).

 

“Permitted Alternative Gaming” means slot machines

and/or video lottery terminals and/or electronic gaming machines operated by

one or more of the Loan Parties at a facility owned or leased by, and operated

by one or more of the Loan Parties, and at which either (1) live horse racing

is underway at that facility and pari-mutuel wagering is being conducted with

respect to those races; and/or (2) live horse racing is being simulcast at that

facility and pari-mutuel wagering is being conducted with respect to those

races.

 

“Permitted Liens” is defined in Section 6.16.

 

“Permitted Secured Rate Management Transaction” has

the meaning given it in Section 6.16(vii).

 

“Person” means any natural person, corporation, firm,

joint venture, partnership, limited liability company, association, enterprise,

trust or other entity or organization, or any government or political

subdivision or any agency, department or instrumentality thereof.

 

“Plan” means an employee pension benefit plan which is

covered by Title IV of ERISA or subject to the minimum funding standards under

Section 412 of the Code as to which the Borrower or any member of the

Controlled Group may have any liability.

 

“Pledge and Security Agreement” means the Pledge and

Security Agreement in substantially the form of Exhibit K executed and

delivered by each of the applicable Loan Parties to the Collateral Agent for

the ratable benefit of the Lenders, subject to the provisions of the Collateral

Sharing Agreement.

 

“PNC Bank” means PNC Bank, National Association, a

national banking association having its principal office in Pittsburgh,

Pennsylvania, and having an office in Louisville, Kentucky, in its individual

capacity, and its successors.

 

“Pricing Schedule” means the Schedule attached hereto

identified as such.

 

“Prime Rate” means a rate per annum equal to the prime

rate of interest announced from time to time by Bank One or its parent (which is

not necessarily the lowest rate charged to any customer), changing when and as

said prime rate changes.

 

“Prior Credit Facility” means the credit facility

provided to the Borrower under, and all of the obligations of the Borrower and

all or any of the Guarantors, under that certain Credit Agreement dated as of

April 23, 1999, among the Borrower, the Guarantors (as such term is defined

therein) party thereto, the Banks, (as such term is defined therein) party

thereto, and PNC Bank, in its capacity as Agent for the Banks thereunder, as

amended, modified and/or supplemented through the date of this Agreement.

 

“Prohibited Transaction” shall mean any prohibited

transaction as defined in Section 4975 of the Internal Revenue Code or

Section 406 of ERISA for which neither an individual nor a class exemption

has been issued by the United States Department of Labor.

 

11

 

“Pro Rata Share” means, with respect to a Lender, a

portion equal to a fraction the numerator of which is such Lender’s Commitment

and the denominator of which is the Aggregate Commitment.

 

“Property” of a Person means any and all property,

whether real, personal, tangible, intangible, or mixed, of such Person, or

other assets owned, leased or operated by such Person.

 

“Purchasers” is defined in Section 12.3.1.

 

“Rate Management Obligations” of a Person means any

and all obligations of such Person, whether absolute or contingent and

howsoever and whensoever created, arising, evidenced or acquired (including all

renewals, extensions and modifications thereof and substitutions therefor),

under (i) any and all Rate Management Transactions, and (ii) any and all

cancellations, buy backs, reversals, terminations or assignments of any Rate

Management Transactions.

 

“Rate Management

Transaction” means any transaction (including an agreement with respect

thereto) now existing including, without limitation, those transactions

described on Schedule 6.22 or hereafter entered by the Borrower which is

a rate swap, basis swap, forward rate transaction, commodity swap, commodity

option, equity or equity index swap, equity or equity index option, bond

option, interest rate option, foreign exchange transaction, cap transaction,

floor transaction, collar transaction, forward transaction, currency swap

transaction, cross-currency rate swap transaction, currency option or any other

similar transaction (including any option with respect to any of these

transactions) or any combination thereof, whether linked to one or more interest

rates, foreign currencies, commodity prices, equity prices or other financial

measures.

 

“Real Property” means, collectively, each of the

parcels of owned and/or leased real property of any of the Loan Parties, all of

which is listed on Schedule 5.23.

 

“Real Property Collateral” means each of the parcels

of owned Real Property listed on Schedule 5.23 except as set forth on

such Schedule.

 

“Recorded Mortgages” means each of the Mortgages,

except for the Calder Mortgage, but if the Calder Mortgage is subsequently

recorded in accordance with Section 6.21, Recorded Mortgage shall include such

Calder Mortgage on and after the date of such recordation.

 

“Regulation D” means Regulation D of the Board of

Governors of the Federal Reserve System as from time to time in effect and any

successor thereto or other regulation or official interpretation of said Board

of Governors relating to reserve requirements applicable to member banks of the

Federal Reserve System.

 

“Regulation U” means Regulation U, T, G or X of the

Board of Governors of the Federal Reserve System as from time to time in effect

and any successor or other regulation or official interpretation of said Board

of Governors relating to the extension of credit by banks for the purpose of

purchasing or carrying margin stocks applicable to member banks of the Federal

Reserve System.

 

“Reimbursement Obligations” means, at any time, the

aggregate of all obligations of the Borrower then outstanding under Section 2.3

to reimburse the LC Issuer for amounts paid by the LC Issuer in respect of any

one or more drawings under Facility LCs.

 

“Rentals” of a Person means the aggregate fixed

amounts payable by such Person under any Operating Lease but shall not include

Master Plan Bond Rentals or Tote Rentals.

 

“Reportable Event” means a reportable event as defined

in Section 4043 of ERISA and the regulations issued under such section, with

respect to a Plan, excluding, however, such events as to which the PBGC has by

regulation waived the requirement of Section 4043(a) of ERISA that it be

notified within 30 days of the occurrence of such event, provided, however, that a failure to meet

the minimum funding standard of Section 412 of the Code and of Section 302 of

ERISA shall be a Reportable Event regardless of the issuance of any such waiver

of the notice requirement in accordance with either Section 4043(a) of ERISA or

Section 412(d) of the Code.

 

12

 

“Reports” is defined in Section 9.6.

 

“Required Lenders” means

Lenders in the aggregate having at least fifty-one percent (51%) of the

Aggregate Outstanding Credit Exposure, or if the Aggregate Commitment has been

terminated, Lenders in the aggregate holding at least fifty-one percent (51%)

of the aggregate principal amount of all of the Loans plus all of the LC

Obligations.

 

“Reserve Requirement” means, with respect to an

Interest Period, the maximum aggregate reserve requirement (including all

basic, supplemental, marginal and other reserves) which is imposed under

Regulation D on Eurocurrency liabilities.

 

“Restricted Assets” has the meaning given it in

Section 6.13.

 

“Revolving Loan” means, with respect to a Lender, such

Lender’s Loan made pursuant to its Commitment to lend set forth in Section 2.1

(or any conversion or continuation thereof).

 

“Risk-Based Capital Guidelines” has the meaning given

it in Section 3.2

 

“S&P” means Standard and Poor’s Ratings Services,

a division of The McGraw Hill Companies, Inc.

 

“Sale and Leaseback Transaction” means any sale or

other transfer of Property by any Person with the intent to lease such Property

as lessee.

 

“Schedule” refers to a specific schedule to this

Agreement, unless another document is specifically referenced.

 

“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 2004 by

$20,000,000, and (ii) the first fiscal quarter of the Borrower’s fiscal year

2005 by $20,000,000.

 

“Section” means a numbered section of this Agreement,

unless another document is specifically referenced.

 

“Secured Obligations” means, collectively, (i) all

Obligations, (ii) all Rate Management Obligations owing to one or more Lenders,

and (iii) any and all other indebtedness and/or obligations to or for the

benefit of the Agent and/or one or more Lenders and/or the LC Issuer secured by

and/or in all or any of the Collateral Documents, in each case whether they

exist on the date of this Agreement, or arise or are created or acquired after

the date of this Agreement.

 

“Single Employer Plan” means a Plan maintained by the

Borrower or any member of the Controlled Group for employees of the Borrower or

any member of the Controlled Group.

 

“Subsidiary” of a Person means (i) any corporation

more than 50% of the outstanding securities having ordinary voting power of

which shall at the time be owned or controlled, directly or indirectly, by such

Person or by one or more of its direct or indirect Subsidiaries or by such

Person and one or more of its direct or indirect Subsidiaries, or (ii) any

partnership, limited liability company, association, joint venture or similar

business organization more than 50% of the ownership interests having ordinary

voting power of which shall at the time be so owned or controlled.  Unless otherwise expressly provided, all

references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.

 

“Swing Line Borrowing Notice” is defined in Section

2.2.2.

 

“Swing Line Commitment”

means the obligation of the Swing Line Lender in Section 2.2 to make Swing Line

Loans up to a maximum principal amount of $15,000,000.

 

“Swing Line Lender” means PNC Bank, or such other

Lender which may succeed to its rights and obligations as Swing Line Lender

pursuant to the terms of this Agreement.

 

13

 

“Swing Line Loan” means a

Loan made available to the Borrower by the Swing Line Lender pursuant to

Section 2.2.3.

 

“Taxes” means any and all present or future taxes,

duties, levies, imposts, deductions, charges or withholdings, and any and all

liabilities with respect to the foregoing, but excluding

Excluded Taxes and Other Taxes.

 

“Term Note Purchasers” means the holders of the Term

Notes from time to time, and their successors and assigns.

 

“Term Notes” means the Floating Rate Senior Secured

Notes due March 31, 2010, issued by the Borrower under the Note Purchase

Agreement.

 

“Term Substantial Portion” means, with respect to the

Property of the Borrower and the other Loan Parties, collectively, Property which

represents 20% or more of Consolidated Net Worth or Property which is

responsible for 20% of the Consolidated Net Income, in each case, as would be

shown in the consolidated financial statements of the Loan Parties as at the

end of the fiscal month next preceding the Closing Date (or if financial

statements have not been delivered hereunder for that month, then the financial

statements delivered hereunder for the quarter ending immediately prior to that

month).  For purposes of determining

Term Substantial Portion of the Property of the Borrower and the other Loan

Parties, the value of any Property of Ellis Park Race Course, Inc. and/or

Racing Corporation of America sold, transferred or otherwise disposed of in

connection with the sale, transfer or other disposition of Ellis Park Race

Course, Inc. or Racing Corporation of America in compliance with this Agreement

shall not be considered.

 

“Title Insurer” is defined in Section 4.1.

 

“Tote Rentals” means all amounts paid by a Person for

rental of equipment and/or the provision of services under any agreement

between such Person and a totalisator company.

 

“Transferee” is defined in Section 12.4.

 

“Twelve Month Substantial Portion” means, with respect

to the Property of the Borrower and the other Loan Parties, collectively,

Property which represents 10% or more of Consolidated Net Worth or Property

which is responsible for 10% of the Consolidated Net Income, in each case, as

would be shown in the consolidated financial statements of the Loan Parties as

at the beginning of the twelve-month period ending with the month in which such

determination is made (or if financial statements have not been delivered

hereunder for that month which begins the twelve-month period, then the

financial statements delivered hereunder for the quarter ending immediately

prior to that month).  For purposes of

determining Twelve Month Substantial Portion of the Property of the Borrower

and the other Loan Parties, the value of any Property of Ellis Park Race

Course, Inc., and/or Racing Corporation of America sold, transferred or

otherwise disposed of in connection with the sale, transfer or other

disposition of Ellis Park Race Course, Inc. or Racing Corporation of America,

in compliance with this Agreement shall not be considered.

 

“Type” means, with respect to any Advance, its nature

as a Floating Rate Advance or a Eurodollar Advance and with respect to any

Loan, its nature as a Floating Rate Loan or a Eurodollar Loan.

 

“Unfunded Liabilities” means the amount (if any) by

which the present value of all vested and unvested accrued benefits under all

Single Employer Plans exceeds the fair market value of all such Plan assets

allocable to such benefits, all determined as of the then most recent valuation

date for such Plans using PBGC actuarial assumptions for single employer plan

terminations.

 

“Unmatured Default” means an event which but for the

lapse of time or the giving of notice, or both, would constitute a Default.

 

“Wholly-Owned Subsidiary” of a Person means (i) any

Subsidiary all of the outstanding voting securities of which shall at the time

be owned or controlled, directly or indirectly, by such Person or one or more

Wholly-Owned Subsidiaries of such Person, or by such Person and one or more

Wholly-Owned Subsidiaries of such Person, or (ii) any

 

14

 

partnership, limited liability company, association, joint venture or

similar business organization 100% of the ownership interests having ordinary

voting power of which shall at the time be so owned or controlled.

 

“Working Cash Sweep Rider” is defined in Section

2.2.5.

 

The foregoing definitions shall be equally applicable

to both the singular and plural forms of the defined terms.

 

ARTICLE

II

 

THE

CREDITS

 

2.1                                 Revolving

Loan Commitment.  From and including

the date of this Agreement and prior to the Facility Termination Date, each

Lender severally agrees, on the terms and conditions set forth in this

Agreement, to make Loans to the Borrower from time to time in amounts not to

exceed in the aggregate at any one time outstanding the amount of its

Commitment.  On the date of this

Agreement, the amount of the Aggregate Commitment is $200,000,000.  Subject to the terms of this Agreement, the

Borrower may borrow, repay and reborrow at any time prior to the Facility

Termination Date.  The Commitments to

lend hereunder shall expire on the Facility Termination Date.  The Aggregate Commitment may be increased up

to a total of $250,000,000 upon compliance with Section 2.22 below.  No Lender shall have any obligation to

increase its Commitment; any such increase shall be at the sole discretion of

such Lender.

 

2.2                                 Swing

Line Loans.

 

2.2.1                        Amount

of Swing Line Loans.  Upon the

satisfaction of the conditions precedent set forth in Section 4.2 and, if such

Swing Line Loan is to be made on the date of the initial Advance hereunder, the

satisfaction of the conditions precedent set forth in Section 4.1 as well, from

and including the date of this Agreement and prior to the Facility Termination

Date, the Swing Line Lender agrees, on the terms and conditions set forth in

this Agreement, to make Swing Line Loans to the Borrower from time to time in

an aggregate principal amount not to exceed the Swing Line Commitment, provided that the Aggregate Outstanding

Credit Exposure (including without limitation Swing Line Loans) shall not at

any time exceed the Aggregate Commitment, and provided

further that at no time shall the sum of (i) the Swing Line Lender’s

Pro Rata Share of the Swing Line Loans, plus

(ii) the outstanding Revolving Loans made by the Swing Line Lender pursuant to

Section 2.1, exceed the Swing Line Lender’s Commitment at such time.  Subject to the terms of this Agreement, the

Borrower may borrow, repay and reborrow Swing Line Loans at any time prior to

the Facility Termination Date.

 

2.2.2                        Borrowing

Notice.  The Borrower shall deliver

to the Agent and the Swing Line Lender irrevocable notice (a “Swing Line

Borrowing Notice”) not later than noon (Louisville time) on the Borrowing Date

of each Swing Line Loan, specifying (i) the applicable Borrowing Date (which

date shall be a Business Day), and (ii) the aggregate amount of the requested

Swing Line Loan which shall be an amount not less than $100,000.  The Swing Line Loans shall bear interest at

a rate per annum equal to the prime rate of interest announced by the Swing

Line Lender from time to time, plus the Applicable Margin set forth in the

Pricing Schedule for the Floating Rate at that time.

 

2.2.3                        Making

of Swing Line Loans.  Promptly after

receipt of a Swing Line Borrowing Notice, the Agent shall notify each Lender by

fax, or other similar form of transmission, of the requested Swing Line

Loan.  Not later than 2:00 p.m.

(Louisville time) on the applicable Borrowing Date, the Swing Line Lender shall

make available the Swing Line Loan, in funds immediately available in

Louisville, to the Agent at its address specified pursuant to Article

XIII.  The Agent will promptly make the

funds so received from the Swing Line Lender available to the Borrower on the

Borrowing Date at the Agent’s aforesaid address.

 

2.2.4                        Repayment

of Swing Line Loans.  Each Swing

Line Loan shall be paid in full by the Borrower on or before the fifth (5th)

Business Day after the Borrowing Date for such Swing Line Loan.  In addition, the Swing Line Lender (i) may

at any time in its sole discretion with respect to any outstanding Swing Line

Loan,

 

15

 

or (ii) shall, except

when a Working Cash Sweep Rider is in effect, on the fifth (5th) Business Day

after the Borrowing Date of any Swing Line Loan, require each Lender (including

the Swing Line Lender) to make a Revolving Loan in the amount of such Lender’s

Pro Rata Share of such Swing Line Loan (including, without limitation, any

interest accrued and unpaid thereon), for the purpose of repaying such Swing

Line Loan.  Not later than noon

(Louisville time) on the date of any notice received pursuant to this Section

2.2.4, each Lender shall make available its required Revolving Loan, in funds

immediately available in Louisville to the Agent at its address specified

pursuant to Article XIII.  Revolving

Loans made pursuant to this Section 2.2.4 shall initially be Floating Rate

Loans and thereafter may be continued as Floating Rate Loans or converted into

Eurodollar Loans in the manner provided in Section 2.11 and subject to the

other conditions and limitations set forth in this Article II.  Unless a Lender shall have notified the

Swing Line Lender, prior to its making any Swing Line Loan, that any applicable

condition precedent set forth in Sections 4.1 or 4.2 had not then been

satisfied, such Lender’s obligation to make Revolving Loans pursuant to this

Section 2.2.4 to repay Swing Line Loans shall be unconditional, continuing,

irrevocable and absolute and shall not be affected by any circumstance,

including, without limitation, (a) any setoff, counterclaim, recoupment,

defense or other right which such Lender may have against the Agent, the Swing

Line Lender or any other Person, (b) the occurrence or continuance of a Default

or Unmatured Default, (c) any adverse change in the condition (financial or

otherwise) of the Borrower, or (d) any other circumstance, happening or event

whatsoever.  In the event that any

Lender fails to make payment to the Agent of any amount due under this

Section 2.2.4, the Agent shall be entitled to receive, retain and apply

against such obligation the principal and interest otherwise payable to such

Lender hereunder until the Agent receives such payment from such Lender or such

obligation is otherwise fully satisfied. 

In addition to the foregoing, if for any reason any Lender fails to make

payment to the Agent of any amount due under this Section 2.2.4, such Lender

shall be deemed, at the option of the Agent, to have unconditionally and

irrevocably purchased from the Swing Line Lender, without recourse or warranty,

an undivided interest and participation in the applicable Swing Line Loan in

the amount of such Revolving Loan, and such interest and participation may be

recovered from such Lender together with interest thereon at the Federal Funds

Effective Rate for each day during the period commencing on the date of demand

and ending on the date such amount is received.  On the Facility Termination Date, the Borrower shall repay in full

the outstanding principal balance of the Swing Line Loans.

 

2.2.5                        Working

Cash Sweep Rider.  Any provision of

this Section 2.2 to the contrary notwithstanding, the Agent and each Lender

acknowledges that, at the request of the Borrower, the Swing Line Lender has

linked the Swing Line Loans to the Borrower’s demand deposit account with the

Swing Line Lender.  The Agent and the

Lenders further acknowledge that the Borrower has entered into a Working Cash,

Line of Credit, Investment Sweep Rider (“Working Cash Sweep Rider”) with the

Swing Line Lender, pursuant to which certain cash management activities,

including the making of Swing Line Loans, will occur automatically in amounts

that may be less than the stated minimum Swing Line Loan set forth in Section 2.2.2

above, and without the need for a Swing Line Borrowing Notice. Each Lender

agrees that it shall be obligated, pursuant to and in accordance with the third

and fourth sentences of Section 2.2.4, 

to fund such Lender’s Pro Rata Share of any such automatically-made

Swing Line Loans on the fifth (5th) Business Day following the day

such advances are made, unless the Agent

shall have given the Swing Line Lender written notice prior to the date the

Swing Line Loan was made that any applicable condition precedent set forth in

Sections 4.1 or 4.2 had not then been satisfied, and the Swing Line Lender has

had a reasonable amount of time, not to exceed two (2) Business Days from such

notice, within which to act.  In the event

of termination of the Working Cash Sweep Rider by either the Borrower or the

Swing Line Lender, the Swing Line Lender will promptly notify the Agent of such

termination.

 

2.3                                 Letter

of Credit Subfacility.

 

2.3.1                        Issuance.

The LC Issuer hereby agrees, on the terms and conditions set forth in this

Agreement, to issue standby and commercial letters of credit (each, a “Facility

LC”) and to renew, extend, increase, decrease or otherwise modify each Facility

LC (“Modify,” and each such action a “Modification”), from time to time from

and including the date of this Agreement and prior to the Facility Termination

Date upon the request of the Borrower; provided

that immediately after each such Facility LC is issued or Modified, (i) the

aggregate amount of the outstanding LC Obligations shall not exceed $15,000,000

and (ii) the Aggregate Outstanding Credit Exposure shall not exceed the

Aggregate Commitment.  No Facility LC

shall have an expiry date later than the earlier of (x) the fifth Business Day

prior to the Facility Termination Date

 

16

 

and (y) one year after

its issuance; provided that any

Facility LC with an expiry date one year after issuance may provide for the

renewal thereof for additional one-year periods (which shall in no event extend

beyond the date referred to in clause (x) above).  The Borrower and the Guarantors represent and warrant that the

Letters of Credit described and listed on Schedule 2.3.1 constitute all

the Letters of Credit issued by the LC Issuer for and on behalf of the Borrower

and the Guarantors under the Prior Credit Facility; and all parties to this

Agreement agree that on the Closing Date those Letters of Credit shall become

Facility LCs.

 

2.3.2                        Participations.  Upon the issuance or Modification by the LC

Issuer of a Facility LC in accordance with this Section 2.3, the LC Issuer

shall be deemed, without further action by any party hereto, to have

unconditionally and irrevocably sold to each Lender, and each Lender shall be

deemed, without further action by any party hereto, to have unconditionally and

irrevocably purchased from the LC Issuer, a participation in such Facility LC

(and each Modification thereof) and the related LC Obligations in proportion to

its Pro Rata Share.

 

2.3.3                        Notice.  Subject to Section 2.3.1, the Borrower shall

give the LC Issuer and the Agent notice prior to 10:00 a.m. (Louisville time)

at least three Business Days, or such shorter period of time as may be

acceptable to the LC Issuer in its discretion, prior to the proposed date of

issuance or Modification of each Facility LC, specifying the beneficiary, the

proposed date of issuance (or Modification) and the expiry date of such

Facility LC, and describing the proposed terms of such Facility LC and the

nature of the transactions proposed to be supported thereby.  Upon Agent’s receipt of such notice, the

Agent shall promptly notify the LC Issuer if the proposed amount of such

Facility LC will cause the Aggregate Outstanding Credit Exposure to equal or

exceed the Aggregate Commitment. The issuance or Modification by the LC Issuer

of any Facility LC shall, in addition to the conditions precedent set forth in

Article IV (the satisfaction of which the LC Issuer shall have no duty to

ascertain), be subject to the conditions precedent that such Facility LC shall

be satisfactory to the LC Issuer and that the Borrower shall have executed and

delivered a Reimbursement Agreement (“LC Reimbursement Agreement”) in the form

of Exhibit Q, and such application agreement and/or such other

instruments and agreements relating to such Facility LC as the LC Issuer shall

have reasonably requested (each, a “Facility LC Application”).  The terms of the LC Reimbursement Agreement

and Facility LC Application shall supplement the terms of this Agreement, but

in the event of any conflict between the terms of this Agreement and the terms

of any LC Reimbursement Agreement and/or any Facility LC Application, the terms

of this Agreement shall control.  On the

date of issuance or Modification by the LC Issuer of any Facility LC, the LC Issuer

shall notify the Agent, and the Agent shall promptly notify each Lender of the

issuance or Modification of each Facility LC, specifying the beneficiary, the

date of issuance (or Modification) and the expiry date of such Facility LC, the

terms of the Facility LC and the nature of the transactions supported by the

Facility LC.

 

2.3.4                        LC Fees.  The Borrower shall pay to the Agent, for the

account of the Lenders ratably in accordance with their respective Pro Rata

Shares, with respect to each Facility LC, a letter of credit fee at a per annum

rate equal to the Applicable Margin for Eurodollar Loans in effect from time to

time on the average daily undrawn stated amount under such Facility LC, such

fee to be payable in arrears on each Payment Date, and such fee to be payable

on the date of such issuance or increase (each such fee described in this

sentence an “LC Fee”).  The Borrower

shall also pay to the LC Issuer for its own account (x) at the time of issuance

of each Facility LC, a fronting fee equal to 0.125% of the face amount of each

Facility LC, and (y) documentary and processing charges in connection with the

issuance or Modification of and draws under Facility LCs in accordance with the

LC Issuer’s standard schedule for such charges as in effect from time to time.

 

2.3.5                        Administration;

Reimbursement by Lenders.  Upon

receipt from the beneficiary of any Facility LC of any demand for payment under

such Facility LC, the LC Issuer shall notify the Agent and the Agent shall

promptly notify the Borrower and each other Lender as to the amount to be paid

by the LC Issuer as a result of such demand and the proposed payment date (the

“LC Payment Date”).  The responsibility

of the LC Issuer to the Borrower and each Lender shall be only to determine

that the documents (including each demand for payment) delivered under each

Facility LC in connection with such presentment shall be in conformity in all

material respects with such Facility LC. 

The LC Issuer shall endeavor to exercise the same care in the issuance

and administration of the Facility LCs as it does with respect to letters of

credit in which no participations are granted, it being understood that in the

absence of any gross negligence or willful misconduct by the LC Issuer, each

Lender shall be unconditionally and irrevocably liable without regard to the

 

17

 

occurrence of any Default

or any condition precedent whatsoever, to reimburse the LC Issuer on demand for

(i) such Lender’s Pro Rata Share of the amount of each payment made by the LC

Issuer under each Facility LC to the extent such amount is not reimbursed by

the Borrower pursuant to Section 2.3.6 below, plus (ii) interest on the

foregoing amount to be reimbursed by such Lender, for each day from the date of

the LC Issuer’s demand for such reimbursement (or, if such demand is made after

11:00 a.m. (Louisville time) on such date, from the next succeeding Business

Day) to the date on which such Lender pays the amount to be reimbursed by it,

at a rate of interest per annum equal to the Federal Funds Effective Rate for

the first three days and, thereafter, at a rate of interest equal to the rate

applicable to Floating Rate Advances.

 

2.3.6                        Reimbursement

by Borrower.  The Borrower shall be

irrevocably and unconditionally obligated to reimburse the LC Issuer on or

before the applicable LC Payment Date for any amounts to be paid by the LC

Issuer upon any drawing under any Facility LC, without presentment, demand,

protest or other formalities of any kind; provided

that neither the Borrower nor any Lender shall hereby be precluded from

asserting any claim for direct (but not consequential) damages suffered by the

Borrower or such Lender to the extent, but only to the extent, caused by (i)

the willful misconduct or gross negligence of the LC Issuer in determining

whether a request presented under any Facility LC issued by it complied with

the terms of such Facility LC or (ii) the LC Issuer’s failure to pay under any

Facility LC issued by it after the presentation to it of a request strictly

complying with the terms and conditions of such Facility LC.  All such amounts paid by the LC Issuer and

remaining unpaid by the Borrower shall bear interest, payable on demand, for

each day until paid at a rate per annum equal to (x) the rate applicable to

Floating Rate Advances for such day if such day falls on or before the

applicable LC Payment Date and (y) the sum of 2% plus the rate applicable to

Floating Rate Advances for such day if such day falls after such LC Payment

Date.  The LC Issuer will pay to each

Lender ratably in accordance with its Pro Rata Share all amounts received by it

from the Borrower for application in payment, in whole or in part, of the

Reimbursement Obligation in respect of any Facility LC issued by the LC Issuer,

but only to the extent such Lender has made payment to the LC Issuer in respect

of such Facility LC pursuant to Section 2.3.5. 

Subject to the terms and conditions of this Agreement (including without

limitation the submission of a Borrowing Notice in compliance with Section 2.10

and the satisfaction of the applicable conditions precedent set forth in

Article IV), the Borrower may request an Advance hereunder for the purpose of

satisfying any Reimbursement Obligation.

 

2.3.7                        Obligations

Absolute.  The Borrower’s

obligations under this Section 2.3.7 shall be absolute and unconditional under

any and all circumstances and irrespective of any setoff, counterclaim or

defense to payment which the Borrower may have or have had against the LC

Issuer, any Lender or any beneficiary of a Facility LC.  The Borrower further agrees with the LC

Issuer and the Lenders that the LC Issuer and the Lenders shall not be

responsible for, and the Borrower’s Reimbursement Obligation in respect of any

Facility LC shall not be affected by, among other things, the validity or

genuineness of documents or of any endorsements thereon, even if such documents

should in fact prove to be in any or all respects invalid, fraudulent or

forged, or any dispute between or among the Borrower, any of its Affiliates,

the beneficiary of any Facility LC or any financing institution or other party

to whom any Facility LC may be transferred or any claims or defenses whatsoever

of the Borrower or of any of its Affiliates against the beneficiary of any

Facility LC or any such transferee.  The

LC Issuer shall not be liable for any error, omission, interruption or delay in

transmission, dispatch or delivery of any message or advice, however

transmitted, in connection with any Facility LC.  The Borrower agrees that any action taken or omitted by the LC

Issuer or any Lender under or in connection with each Facility LC and the

related drafts and documents, if done without gross negligence or willful

misconduct, shall be binding upon the Borrower and shall not put the LC Issuer

or any Lender under any liability to the Borrower.  Nothing in this Section 2.3.7 is intended to limit the right of

the Borrower to make a claim against the LC Issuer for damages as contemplated

by the proviso to the first sentence of Section 2.3.6.

 

2.3.8                        Actions

of LC Issuer.  The LC Issuer shall

be entitled to rely, and shall be fully protected in relying, upon any Facility

LC, draft, writing, resolution, notice, consent, certificate, affidavit,

letter, cablegram, telegram, telecopy, telex or teletype message, statement,

order or other document believed by it to be genuine and correct and to have

been signed, sent or made by the proper Person or Persons, and upon advice and

statements of legal counsel, independent accountants and other experts selected

by the LC Issuer.  The LC Issuer shall

be fully justified in failing or refusing to take any action under this

Agreement unless it shall first have received such advice or concurrence of the

Required Lenders as it reasonably deems appropriate or it

 

18

 

shall first be

indemnified to its reasonable satisfaction by the Lenders against any and all

liability and expense which may be incurred by it by reason of taking or

continuing to take any such action. Notwithstanding any other provision of this

Section 2.3, the LC Issuer shall in all cases be fully protected in acting, or

in refraining from acting, under this Agreement in accordance with a request of

the Required Lenders, and such request and any action taken or failure to act

pursuant thereto shall be binding upon the Lenders and any future holders of a

participation in any Facility LC.

 

2.3.9                        Indemnification.  The Borrower hereby agrees to indemnify and

hold harmless each Lender, the LC Issuer and the Agent, and their respective

directors, officers, agents and employees from and against any and all claims

and damages, losses, liabilities, costs or expenses which such Lender, the LC

Issuer or the Agent may incur (or which may be claimed against such Lender, the

LC Issuer or the Agent by any Person whatsoever) by reason of or in connection

with the issuance, execution and delivery or transfer of or payment or failure

to pay under any Facility LC or any actual or proposed use of any Facility LC,

including, without limitation, any claims, damages, losses, liabilities, costs

or expenses which the LC Issuer may incur by reason of or in connection with

(i) the failure of any other Lender to fulfill or comply with its

obligations to the LC Issuer hereunder (but nothing herein contained shall

affect any rights the Borrower may have against any defaulting Lender) or

(ii) by reason of or on account of the LC Issuer issuing any Facility LC

which specifies that the term “Beneficiary” included therein includes any

successor by operation of law of the named Beneficiary, but which Facility LC

does not require that any drawing by any such successor Beneficiary be

accompanied by a copy of a legal document, satisfactory to the LC Issuer,

evidencing the appointment of such successor Beneficiary; provided that the Borrower shall not be

required to indemnify any Lender, the LC Issuer or the Agent for any claims,

damages, losses, liabilities, costs or expenses to the extent, but only to the

extent, caused by (x) the willful misconduct or gross negligence of the LC

Issuer in determining whether a request presented under any Facility LC

complied with the terms of such Facility LC or (y) the LC Issuer’s failure to

pay under any Facility LC after the presentation to it of a request strictly

complying with the terms and conditions of such Facility LC. Nothing in this  Section 2.3.9 is intended to limit the

obligations of the Borrower under any other provision of this Agreement.

 

2.3.10                  Lenders’

Indemnification.  Each Lender shall,

ratably in accordance with its Pro Rata Share, indemnify the LC Issuer, its

affiliates and their respective directors, officers, agents and employees (to

the extent not reimbursed by the Borrower) against any cost, expense (including

reasonable counsel fees and disbursements), claim, demand, action, loss or

liability (except such as result from such indemnitees’ gross negligence or

willful misconduct or the LC Issuer’s failure to pay under any Facility LC

after the presentation to it of a request strictly complying with the terms and

conditions of the Facility LC) that such indemnitees may suffer or incur in

connection with this Section 2.3 or any action taken or omitted by such

indemnitees hereunder.

 

2.3.11                  Facility LC

Collateral Account.  The Borrower

agrees that it will, upon the request of the Agent or the Required Lenders and

until the final expiration date of any Facility LC and thereafter as long as

any amount is payable to the LC Issuer or the Lenders in respect of any

Facility LC, maintain a special collateral account pursuant to arrangements

satisfactory to the Agent (the “Facility LC Collateral Account”) at the Agent’s

office at the address specified pursuant to Article XIII, in the name of the

Borrower but under the sole dominion and control of the Agent, for the benefit

of the Lenders and the LC Issuer and in which the Borrower shall have no

interest other than as set forth in Section 8.1.  The Borrower hereby pledges, assigns and grants to the Agent, on

behalf of and for the ratable benefit of the Lenders, and the LC Issuer, a

security interest in all of the Borrower’s right, title and interest in and to

all funds which may from time to time be on deposit in the Facility LC

Collateral Account to secure the prompt and complete payment and performance of

the Obligations.  The Agent will invest

any funds on deposit from time to time in the Facility LC Collateral Account in

certificates of deposit of Bank One having a maturity not exceeding 30 days.  Nothing in this Section 2.3.11 shall either

obligate the Agent to require the Borrower to deposit any funds in the Facility

LC Collateral Account or limit the right of the Agent to release any funds held

in the Facility LC Collateral Account in each case other than as required by

Section 8.1.

 

2.3.12                  Rights as a

Lender.  In its capacity as a

Lender, the LC Issuer shall have the same rights and obligations as any other

Lender.

 

19

 

2.4                                 Required

Payments; Termination.  Any

outstanding Advances and all other unpaid Obligations shall be paid in full by

the Borrower on the Facility Termination Date.

 

2.5                                 Ratable

Loans.  Each Advance hereunder shall

consist of Loans made from the several Lenders ratably according to their Pro

Rata Shares.

 

2.6                                 Types

and Number of Eurodollar Advances. 

The Advances may be Floating Rate Advances or Eurodollar Advances, or a

combination thereof, selected by the Borrower in accordance with Sections 2.10

and 2.11, or Swing Line Loans selected by Borrower in accordance with Section

2.2.  The Borrower may have no more than

six (6) Eurodollar Advances outstanding at any one time.

 

2.7                                 Commitment

Fee; Reductions in Aggregate Commitment. 

The Borrower agrees to pay to the Agent for the account of each Lender

according to its Pro Rata Share a commitment fee (the “Commitment Fee”) in

arrears at a per annum rate equal to the Applicable Fee Rate in effect from

time to time on the average daily Available Aggregate Commitment of such Lender

from the date hereof to and including the Facility Termination Date, payable on

each Payment Date hereafter and on the Facility Termination Date.  Swing Line Loans shall not count as usage of

any Lender’s Commitment for the purpose of calculating the commitment fee due

hereunder.  The Borrower may permanently

reduce the Aggregate Commitment in whole, or in part ratably among the Lenders

in integral multiples of $5,000,000, upon at least one Business Days’ written

notice to the Agent, which notice shall specify the amount of any such

reduction, provided, however, that

the amount of the Aggregate Commitment may not be reduced below the Aggregate

Outstanding Credit Exposure.  All

accrued Commitment Fees shall be payable on the effective date of any

termination of the obligations of the Lenders to make Credit Extensions

hereunder.

 

2.8                                 Minimum

Amount of Each Advance.  Each

Eurodollar Advance shall be in the minimum amount of $500,000 (and in multiples

of $100,000 if in excess thereof), and each Floating Rate Advance (other than

an advance to repay Swing Line Loans) shall be in the minimum amount of

$500,000 (and in multiples of $100,000 if in excess thereof), provided, however, that any Floating Rate

Advance may be in the amount of the Available Aggregate Commitment.

 

2.9                                 Optional

Principal Payments.  The Borrower

may from time to time pay, without penalty or premium, all outstanding Floating

Rate Advances (other than Swing Line Loans), or, in a minimum aggregate amount

of $1,000,000 or any integral multiple of $1,000,000 in excess thereof, any

portion of the outstanding Floating Rate Advances (other than Swing Line Loans)

upon one Business Day’s prior notice to the Agent.  The Borrower may at any time pay, without penalty or premium, all

outstanding Swing Line Loans, or, in a minimum amount of $100,000 and

increments of $50,000 in excess thereof, any portion of the outstanding Swing

Line Loans, with notice to the Agent and the Swing Line Lender by 11:00 a.m.

(Louisville Time) on the date of repayment. 

The Borrower may from time to time pay, subject to the payment of any funding

indemnification amounts required by Section 3.4 but without penalty or premium,

all outstanding Eurodollar Advances or any portion of the outstanding

Eurodollar Advances upon three (3) Business Days’ prior notice to the Agent.

 

2.10                           Method

of Selecting Types and Interest Periods for New Advances.  Each Type of Advance shall bear interest

according to its Type, from the date the Advance is made until it is

repaid.  The Borrower shall select the

Type of Advance and, in the case of each Eurodollar Advance, the Interest

Period applicable thereto from time to time. 

The Borrower shall give the Agent irrevocable notice (a “Borrowing

Notice”) not later than 11:00 a.m. (Louisville time) at least one Business Day

before the Borrowing Date of each Floating Rate Advance and three Business Days

before the Borrowing Date for each Eurodollar Advance, specifying:

 

(i)                                   the

Borrowing Date, which shall be a Business Day, of such Advance,

 

(ii)                                the

aggregate amount of such Advance,

 

(iii)                             the

Type of Advance selected, and

 

(iv)                            in the

case of each Eurodollar Advance, the Interest Period applicable thereto.

 

20

 

Not later than 1:00 p.m.

(Louisville time) on each Borrowing Date, each Lender shall make available its

Loan or Loans in funds immediately available in Louisville to the Agent at its

address specified pursuant to Article XIII. 

The Agent will make the funds so received from the Lenders available to

the Borrower at the Agent’s aforesaid address.

 

2.11                           Conversion

and Continuation of Outstanding Advances. 

Floating Rate Advances (other than Swing Line Loans) shall continue as

Floating Rate Advances unless and until such Floating Rate Advances are

converted into Eurodollar Advances pursuant to this Section 2.11 or are repaid

in accordance with Section 2.9.  Each

Eurodollar Advance shall continue as a Eurodollar Advance until the end of the

then applicable Interest Period therefor, at which time such Eurodollar Advance

shall be automatically converted into a Floating Rate Advance unless (x) such

Eurodollar Advance is or was repaid in accordance with Section 2.9 or (y) the

Borrower shall have given the Agent a Conversion/Continuation Notice (as

defined below) requesting that, at the end of such Interest Period, such

Eurodollar Advance continue as a Eurodollar Advance for the same or another

Interest Period.  Subject to the terms

of  Section 2.10, the Borrower may elect

from time to time to convert all or any part of a Floating Rate Advance (other

than a Swing Line Loan) into a Eurodollar Advance.  The Borrower shall give the Agent irrevocable notice (a

“Conversion/Continuation Notice”) of each conversion of a Floating Rate Advance

into a Eurodollar Advance or continuation of a Eurodollar Advance not later

than 11:00 a.m. (Louisville time) at least three Business Days prior to the

date of the requested conversion or continuation, specifying:

 

(i)                                     the

requested date, which shall be a Business Day, of such conversion or

continuation,

 

(ii)                                  the

aggregate amount and Type of the Advance which is to be converted or continued,

and

 

(iii)                               the

amount of such Advance which is to be converted into or continued as a

Eurodollar Advance and the duration of the Interest Period applicable thereto.

 

2.12                           Changes

in Interest Rate, etc. Each Floating Rate Advance (other than a Swing Line

Loan) shall bear interest on the outstanding principal amount thereof, for each

day from and including the date such Advance is made or is automatically

converted from a Eurodollar Advance into a Floating Rate Advance pursuant to

Section 2.11, to but excluding the date it is paid or is converted into a

Eurodollar Advance pursuant to Section 2.11 hereof, at a rate per annum equal

to the Floating Rate for such day.  Each

Swing Line Loan shall bear interest on the outstanding principal amount

thereof, for each day from and including the day such Swing Line Loan is made

to but excluding the date it is paid, at a rate per annum equal to the Floating

Rate for such day.  Changes in the rate

of interest on that portion of any Advance maintained as a Floating Rate

Advance will take effect simultaneously with each change in the Alternate Base

Rate.  Each Eurodollar Advance shall

bear interest on the outstanding principal amount thereof from and including

the first day of the Interest Period applicable thereto to (but not including)

the last day of such Interest Period at the interest rate determined by the

Agent as applicable to such Eurodollar Advance based upon the Borrower’s

selections under Sections 2.10 and 2.11 and otherwise in accordance with the

terms hereof.  No Interest Period may

end after the Facility Termination Date.

 

2.13                           Rates

Applicable After Default. 

Notwithstanding anything to the contrary contained in Section 2.10, 2.11

or 2.12, during the continuance of a Default or Unmatured Default the Required

Lenders may, at their option, by notice to the Borrower (which notice may be

revoked at the option of the Required Lenders notwithstanding any provision of

Section 8.2 requiring unanimous consent of the Lenders to changes in interest

rates), declare that no Advance may be made as, converted into or continued as

a Eurodollar Advance.  During the

continuance of a Default the Required Lenders may, at their option, by notice

to the Borrower (which notice may be revoked at the option of the Required

Lenders notwithstanding any provision of Section 8.2 requiring unanimous

consent of the Lenders to changes in interest rates), declare that (i) each

Eurodollar Advance shall bear interest for the remainder of the applicable Interest

Period at the rate otherwise applicable to such Interest Period plus 2% per

annum, and (ii) each Floating Rate Advance shall bear interest at a rate per

annum equal to the Floating Rate in effect from time to time plus 2% per annum

and (iii) the LC Fee shall be increased by 2% per annum, provided that, during the continuance of a

Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i)

and (ii) above and the increase in the LC Fee set forth in clause (iii) above

shall be applicable to all Credit Extensions without any election or action on

the part of the Agent or any Lender.

 

2.14                           Method

of Payment.  All payments of the

Obligations hereunder shall be made, without setoff, deduction, or

counterclaim, in immediately available funds to the Agent at the Agent’s

address specified pursuant to Article XIII, or at any other Lending

Installation of the Agent specified in writing by the Agent to the Borrower, by

 

21

 

noon (local time) on the

date when due and shall (except with respect to repayments of Swing Line Loans,

and in the case of Reimbursement Obligations for which the LC Issuer has not

been fully indemnified by the Lenders, or as otherwise specifically required

hereunder) be applied ratably by the Agent among the Lenders.  Each payment delivered to the Agent for the

account of any Lender shall be delivered promptly by the Agent to such Lender,

in the same type of funds that the Agent received, at such Lender’s address

specified pursuant to Article XIII or at any Lending Installation specified in

a notice received by the Agent from such Lender.  The Agent is hereby authorized to charge the account of the

Borrower maintained with Bank One for each payment of principal, interest

Reimbursement Obligations and fees as it becomes due hereunder. Each reference

to the Agent in this Section 2.14 shall also be deemed to refer, and shall

apply equally, to the LC Issuer, in the case of payments required to be made by

the Borrower to the LC Issuer pursuant to Section 2.3.6.

 

2.15                           Noteless

Agreement; Evidence of Indebtedness.

 

(i)                                  Each

Lender shall maintain in accordance with its usual practice an account or

accounts evidencing the indebtedness of the Borrower to such Lender resulting

from each Loan made by such Lender from time to time, including the amounts of

principal and interest payable and paid to such Lender from time to time

hereunder.

 

(ii)                               The

Agent shall also maintain accounts in which it will record (a) the amount of

each Loan made hereunder, the Type thereof and the Interest Period (if

applicable) with respect thereto, (b) the amount of any principal or interest

due and payable or to become due and payable from the Borrower to each Lender

hereunder, (c) the original stated amount of each Facility LC and the amount of

LC Obligations outstanding at any time, and (d) the amount of any sum received

by the Agent hereunder from the Borrower and each Lender’s share thereof.

 

(iii)                            The

entries maintained in the accounts maintained pursuant to paragraphs (i) and

(ii) above shall be prima facie

evidence of the existence and amounts of the Obligations therein recorded; provided, however, that the failure of the

Agent or any Lender to maintain such accounts or any error therein shall not in

any manner affect the obligation of the Borrower to repay the Obligations in

accordance with their terms.

 

(iv)                           Any

Lender may request that its Loans be evidenced by a promissory note or, in the

case of the Swing Line Lender, promissory notes representing its Revolving Loans

and Swing Line Loans, respectively, substantially in the form of Exhibit E,

with appropriate changes for notes evidencing Swing Line Loans (each, a

“Note”).  In such event, the Agent shall

prepare and forward to the Borrower for execution and delivery to such Lender a

Note or Notes payable to the order of such Lender.  Thereafter, the Loans evidenced by each such Note and interest

thereon shall at all times (prior to any assignment pursuant to Section 12.3)

be represented by one or more Notes payable to the order of the payee named

therein, except to the extent that any such Lender subsequently returns any

such Note for cancellation and requests that such Loans once again be evidenced

as described in paragraphs (i) and (ii) above.

 

2.16                           Telephonic

Notices.  The Borrower hereby

authorizes the Lenders and the Agent to extend, convert or continue Advances,

effect selections of Types of Advances and to transfer funds based on

telephonic notices made by any person or persons the Agent or any Lender in

good faith believes to be acting on behalf of the Borrower, it being understood

that the foregoing authorization is specifically intended to allow Borrowing

Notices and Conversion/Continuation Notices to be given telephonically.  The Borrower agrees to deliver promptly to

the Agent a written confirmation signed by an Authorized Officer, if such

confirmation is requested by the Agent or any Lender, of each telephonic

notice.  If the written confirmation

differs in any material respect from the action taken by the Agent and the

Lenders, the records of the Agent and the Lenders shall govern absent manifest

error.

 

2.17                           Interest

Payment Dates; Interest and Fee Basis. 

Interest accrued on each Floating Rate Advance shall be payable on each

Payment Date, commencing with the first such date to occur after the date

hereof, on each date set forth in the Working Cash Sweep Rider, on any date on

which the Floating Rate Advance is prepaid, whether due to acceleration or

otherwise, and on the Facility Termination Date.  Interest accrued on that portion of the outstanding principal

amount of any Floating Rate Advance converted into a Eurodollar Advance on a

day other than a Payment

 

22

 

Date shall be payable on

the date of conversion.  Interest

accrued on each Eurodollar Advance shall be payable on the last day of its

applicable Interest Period, on any date on which the Eurodollar Advance is

prepaid, whether by acceleration or otherwise, and on the Facility Termination

Date.  Interest accrued on each

Eurodollar Advance having an Interest Period longer than three months shall

also be payable on the last day of each three-month interval during such

Interest Period.  Interest, Commitment

Fees and LC Fees shall be calculated for actual days elapsed on the basis of a

360-day year, except for interest payable on Advances at the Alternate Base

Rate which shall accrue on the basis of the actual number of days elapsed over

a year of 365 or 366 days, as appropriate. 

Interest shall be payable for the day an Advance is made but not for the

day of any payment on the amount paid if payment is received prior to noon

(local time) at the place of payment. 

If any payment of principal of or interest on an Advance shall become

due on a day which is not a Business Day, such payment shall be made on the

next succeeding Business Day and, in the case of a principal payment, such

extension of time shall be included in computing interest in connection with

such payment.

 

2.18                           Notification

of Advances, Interest Rates, Prepayments and Commitment Reductions.  Promptly after receipt thereof, the Agent

will notify each Lender of the contents of each Aggregate Commitment reduction

notice, Borrowing Notice, Conversion/Continuation Notice, and repayment notice

received by it hereunder. Promptly after notice from the LC Issuer, the Agent

will notify each Lender of the contents of each request for issuance of a

Facility LC hereunder.  The Agent will

notify each Lender of the interest rate applicable to each Eurodollar Advance

promptly upon determination of such interest rate and will give each Lender

prompt notice of each change in the Alternate Base Rate.

 

2.19                           Lending

Installations.  Each Lender may book

its Loans and its participation in any LC Obligations and the LC Issuer may

book the Facility LCs at any Lending Installation selected by such Lender or

the LC Issuer, as the case may be, and may change its Lending Installation from

time to time.  All terms of this

Agreement shall apply to any such Lending Installation and the Loans, Facility

LCs, participations in LC Obligations and any Notes issued hereunder shall be

deemed held by each Lender or the LC Issuer, as the case may be,  for the benefit of any such Lending

Installation.  Each Lender and the LC

Issuer may, by written notice to the Agent and the Borrower in accordance with

Article XIII, designate replacement or additional Lending Installations through

which Loans will be made by it or Facility LCs will be issued by it and for

whose account Loan payments or payments with respect to Facility LCs are to be

made.

 

2.20                           Non-Receipt

of Funds by the Agent.  Unless the

Borrower or a Lender, as the case may be, notifies the Agent prior to the date

on which it is scheduled to make payment to the Agent of (i) in the case of a Lender,

the proceeds of a Loan or (ii) in the case of the Borrower, a payment of

principal, interest or fees to the Agent for the account of the Lenders, that

it does not intend to make such payment, the Agent may assume that such payment

has been made.  The Agent may, but shall

not be obligated to, make the amount of such payment available to the intended

recipient in reliance upon such assumption. 

If such Lender or the Borrower, as the case may be, has not in fact made

such payment to the Agent, the recipient of such payment shall, on demand by

the Agent, repay to the Agent the amount so made available together with

interest thereon in respect of each day during the period commencing on the

date such amount was so made available by the Agent until the date the Agent

recovers such amount at a rate per annum equal to (x) in the case of payment by

a Lender, the Federal Funds Effective Rate for such day for the first three

days and, thereafter, the interest rate applicable to the relevant Loan or (y)

in the case of payment by the Borrower, the interest rate applicable to the

relevant Loan.

 

2.21                           Replacement

of Lender.  If the Borrower is

required pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to

any Lender or if any Lender’s obligation to make or continue, or to convert

Floating Rate Advances into, Eurodollar Advances shall be suspended pursuant to

Section 3.3 (any Lender so affected an “Affected Lender”), the Borrower may

elect, if such amounts continue to be charged or such suspension is still

effective, to replace such Affected Lender as a Lender party to this Agreement,

provided that no Default or

Unmatured Default shall have occurred and be continuing at the time of such

replacement, and provided further

that, concurrently with such replacement, (i) another bank or other entity

which is reasonably satisfactory to the Borrower and the Agent shall agree, as

of such date, to purchase for cash the Advances and other Obligations due to

the Affected Lender pursuant to an assignment substantially in the form of Exhibit

C and to become a Lender for all purposes under this Agreement and to

assume all obligations of the Affected Lender to be terminated as of such date

and to comply with the requirements of Section 12.3 applicable to assignments,

and (ii) the Borrower shall pay to such Affected Lender in same day funds on

the day of such replacement (A) all interest, fees and other amounts then

accrued but unpaid to such Affected Lender by the Borrower hereunder to and

including the date of termination, including without limitation payments due

 

23

 

to such Affected Lender

under Sections 3.1, 3.2 and 3.5, and (B) an amount, if any, equal to the

payment which would have been due to such Lender on the day of such replacement

under Section 3.4 had the Loans of such Affected Lender been prepaid on such

date rather than sold to the replacement Lender.

 

2.22                           Increase

in Commitments.  

 

2.22.1               Amount of

Increase in Commitments.  The

Borrower may at any time, with the consent of the Agent but without the consent

of the Lenders except as provided in Sections 2.22.2 and 2.22.5.1, increase the

Aggregate Commitment up to an amount not to exceed $250,000,000, subject to

satisfaction of each and all of the requirements contained in this

Section 2.22.

 

2.22.2               Eligibility.  Each Lender who provides an increase in the

Aggregate Commitment (each a “New Commitment Provider”) shall be either an

existing Lender at the time of the increase (each an “Existing Lender”) or a

financial institution reasonably acceptable to the Agent and the Borrower (and

the Borrower’s acceptance shall not be unreasonably withheld) that is not then

currently a Lender (each a “New Lender”) provided, that the Borrower shall

first offer any increase in the Commitments to the Existing Lenders by giving

notice thereof to each of the Existing Lenders and fifteen (15) Business Days

to respond to such notice (failure to respond on a timely basis shall be deemed

a rejection).  Any notice given

hereunder shall not be deemed to be a request for, or requirement of, consent

from any Existing Lender who is not a New Commitment Provider to the increase

in the Aggregate Commitment.

 

2.22.3               Notice.  The Borrower and the Agent jointly shall

notify the Lenders at least fifteen (15) Business Days before the date

(“Commitment Increase Effective Date”) any increase in the Aggregate Commitment

shall become effective.  Such notice

shall state the amount of the increase in the Aggregate Commitment, the names

of the Lenders providing the additional Commitments and the Commitment Increase

Effective Date.

 

2.22.4               Minimum Amount.  Any increase in the Aggregate Commitment

provided by any individual Lender shall be in an amount not less than

$5,000,000 and integral multiples of $1,000,000 in excess thereof.

 

2.22.5               Implementation

of Increase.  On the Commitment

Increase Effective Date:

 

(i)                                     Joinder.  Each New Commitment Provider shall execute

and deliver to the Agent two Business Days prior to the Commitment Increase

Effective Date a Joinder in the form attached as Exhibit L (“Lender

Joinder”), which shall become effective on the Commitment Increase Effective

Date. The Lender Joinder shall set forth the Commitment provided by the New

Commitment Provider if it is a New Lender and the new amount of the Commitment

and the increase in the Commitment to be provided if it is an Existing Lender.

If the New Commitment Provider is a New Lender it shall on the Effective Date

join and become a party to this Agreement and the other Loan Documents as a Lender

for all purposes hereunder and thereunder, subject to the provisions of this

Section 2.22, having a Commitment as set forth in the Lender Joinder tendered

by the same.  Any Lender whose

Commitment shall remain unaffected shall be deemed to have consented and agreed

to such Lender Joinder.

 

(ii)                                  Floating

Rate Loans.  Each New Commitment

Provider shall (i) purchase from the other Lenders such New Commitment

Provider’s Pro Rata Share in any Floating Rate Loans outstanding on the

Commitment Increase Effective Date, and (ii) share ratably in all Floating Rate

Loans borrowed by the Borrower after the Commitment Increase Effective Date.

 

(iii)                               Eurodollar

Rate Loans.  Each New Commitment

Provider shall (a) purchase from the other Lenders such New Commitment Provider’s

Pro Rata Share in each outstanding Eurodollar Loan on the date on which the

Borrower either renews its Eurodollar Loan election with respect to the

Eurodollar Loan in question or converts such Eurodollar Loan to a Floating Rate

Loan, provided that the New

Commitment Providers shall not

 

24

 

purchase an interest in

such Loans from the other Lenders on the Commitment Increase Effective Date

(unless the Commitment Increase Effective Date is a renewal or conversion date,

as applicable, in which case the preceding sentence shall apply), and (b) shall

participate in all new Eurodollar Loans borrowed by the Borrower on and after

the Commitment Increase Effective Date.

 

(iv)                              Facility

LCs.  Each New Commitment Provider

shall participate in all Facility LCs outstanding on the Commitment Increase

Effective Date according to its Pro Rata Share and in accordance with the terms

of this Agreement.

 

(v)                                 Limit

on Amount.  Any increase in the

Commitments pursuant to this Section 2.22 may not cause the total amount of the

Commitments to exceed $250,000,000.

 

(vi)                              No

Default or Unmatured Default; Representations and Warranties.  There shall exist no Default or Unmatured

Default on the Commitment Increase Effective Date.  Without limiting that sentence, the representations and

warranties contained in Article V must be true and correct in all material

respects as of such Commitment Increase Effective Date except to the extent any

such representation is stated to relate solely to an earlier date, in which

case such representation shall have been true and correct on and as of such

earlier date.  If a Default or Unmatured

Default exists on such Commitment Increase Effective Date, or such representations

and warranties are not true and correct to the extent and as required in the

second sentence of this Section 2.22.5(vi), the Borrower shall not request an

increase of, and may not increase, the Aggregate Commitment.

 

(vii)                           No

Obligation.  No Existing Lender

shall be required to increase its Commitment in the event that the Borrower

asks such Existing Lender to provide all or a portion of any increase in the

Aggregate Commitment desired by the Borrower.

 

ARTICLE

III

 

YIELD

PROTECTION; TAXES

 

3.1                                 Yield

Protection.  If, on or after the

date of this Agreement, the adoption of any law or any governmental or

quasi-governmental rule, regulation, policy, guideline or directive (whether or

not having the force of law), or any change in the interpretation or

administration thereof by any governmental or quasi-governmental authority,

central bank or comparable agency charged with the interpretation or

administration thereof, or compliance by any Lender or applicable Lending

Installation or the LC Issuer with any request or directive (whether or not

having the force of law) of any such authority, central bank or comparable

agency:

 

(i)                                     subjects

any Lender or any applicable Lending Installation or the LC Issuer to any

Taxes, or changes the basis of taxation of payments (other than with respect to

Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurodollar

Loans, Facility LCs or participations therein, or

 

(ii)                                  imposes

or increases or deems applicable any reserve, assessment, insurance charge,

special deposit or similar requirement against assets of, deposits with or for

the account of, or credit extended by, any Lender or any applicable Lending

Installation or the LC Issuer (other than reserves and assessments taken into

account in determining the interest rate applicable to Eurodollar Advances), or

 

(iii)                               imposes

any other condition the result of which is to increase the cost to any Lender

or any applicable Lending Installation or the LC Issuer of making, funding or

maintaining its

 

25

 

Eurodollar Loans, or of

issuing or participating in Facility LCs, 

or reduces any amount receivable by any Lender or any applicable Lending

Installation or the LC Issuer in connection with its Eurodollar Loans, Facility

LCs or participations therein, or requires any Lender or any applicable Lending

Installation or the LC Issuer to make any payment calculated by reference to

the amount of Eurodollar Loans, Facility LCs or participations therein held or

interest received by it, by an amount deemed material by such Lender or the LC

Issuer, as the case may be,

 

and the result of any of

the foregoing is to increase the cost to such Lender or applicable Lending

Installation Lender or the LC Issuer, as the case may be, of making or

maintaining its Eurodollar Loans or Commitment or of issuing or participating

in Facility LCs or to reduce the return received by such Lender or applicable

Lending Installation or the LC Issuer, as the case may be, in connection with

such Eurodollar Loans, Commitment, Facility LCs or participations therein,

then, within 15 days of demand by such Lender or the LC Issuer, as the case may

be, the Borrower shall pay such Lender or the LC Issuer, as the case may be,

such additional amount or amounts as will compensate such Lender, or the LC Issuer,

as the case may be, for such increased cost or reduction in amount received.

 

3.2                                 Changes

in Capital Adequacy Regulations.  If

a Lender or the LC Issuer determines the amount of capital required or expected

to be maintained by such Lender or the LC Issuer, any Lending Installation of

such Lender or the LC Issuer or any corporation controlling such Lender or the

LC Issuer is increased as a result of a Change, then, within 15 days of demand

by such Lender or the LC Issuer, the Borrower shall pay such Lender or the LC

Issuer the amount necessary to compensate for any shortfall in the rate of

return on the portion of such increased capital which such Lender or the LC

Issuer determines is attributable to this Agreement, its Outstanding Credit

Exposure or its Commitment to make Loans and issue or participate in Facility

LCs, as the case may be, hereunder (after taking into account such Lender or

the LC Issuer’s policies as to capital adequacy).  “Change” means (i) any change after the date of this Agreement in

the Risk-Based Capital Guidelines or (ii) any adoption of or change in any

other law, governmental or quasi-governmental rule, regulation, policy,

guideline, interpretation, or directive (whether or not having the force of

law) after the date of this Agreement which affects the amount of capital

required or expected to be maintained by any Lender or the LC Issuer or any

Lending Installation or any corporation controlling any Lender or the LC

Issuer.  “Risk-Based Capital Guidelines”

means (i) the risk-based capital guidelines in effect in the United States on

the date of this Agreement, including transition rules, and (ii) the

corresponding capital regulations promulgated by regulatory authorities outside

the United States implementing the July 1988 report of the Basle Committee on

Banking Regulation and Supervisory Practices Entitled “International

Convergence of Capital Measurements and Capital Standards,” including

transition rules, and any amendments to such regulations adopted prior to the

date of this Agreement.

 

3.3                                 Availability

of Types of Advances.  If any Lender

determines that maintenance of its Eurodollar Loans at a suitable Lending

Installation would violate any applicable law, rule, regulation, or directive,

whether or not having the force of law, or if the Required Lenders determine

that (i) deposits of a type and maturity appropriate to match fund Eurodollar

Advances are not available or (ii) the interest rate applicable to Eurodollar

Advances does not accurately reflect the cost of making or maintaining

Eurodollar Advances, then the Agent shall suspend the availability of

Eurodollar Advances and require any affected Eurodollar Advances to be repaid

or converted to Floating Rate Advances, subject to the payment of any funding

indemnification amounts required by Section 3.4.

 

3.4                                 Funding

Indemnification.  If any payment of

a Eurodollar Advance occurs on a date which is not the last day of the

applicable Interest Period, whether because of acceleration, prepayment or

otherwise, or a Eurodollar Advance is not made on the date specified by the

Borrower for any reason other than default by the Lenders, the Borrower will

indemnify each Lender for any loss or cost incurred by it resulting therefrom,

including, without limitation, any loss or cost in liquidating or employing

deposits acquired to fund or maintain such Eurodollar Advance.

 

3.5                                 Taxes.

 

(i)                                     All

payments by the Borrower to or for the account of any Lender, the LC Issuer or

the Agent hereunder or under any Note or Facility LC Application shall be made

free and clear of and without deduction for any and all Taxes.  If the Borrower shall be required by law to

deduct any Taxes from or in respect of any sum payable hereunder to any Lender,

the LC Issuer or the

 

26

 

Agent, (a) the sum

payable shall be increased as necessary so that after making all required

deductions (including deductions applicable to additional sums payable under

this Section 3.5) such Lender, the LC Issuer or the Agent (as the case may be)

receives an amount equal to the sum it would have received had no such

deductions been made, (b) the Borrower shall make such deductions, (c) the

Borrower shall pay the full amount deducted to the relevant authority in

accordance with applicable law and (d) the Borrower shall furnish to the Agent

the original copy of a receipt evidencing payment thereof within 30 days after

such payment is made.

 

(ii)                                  In

addition, the Borrower hereby agrees to pay any present or future stamp or

documentary taxes and any other excise or property taxes, charges or similar

levies which arise from any payment made hereunder or under any Note or

Facility LC Application or from the execution or delivery of, or otherwise with

respect to, this Agreement or any Note or any Facility LC Application  (“Other Taxes”).

 

(iii)                               The

Borrower hereby agrees to indemnify the Agent, the LC Issuer and each Lender

for the full amount of Taxes or Other Taxes (including, without limitation, any

Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by

the Agent, the LC Issuer or such Lender as a result of its Commitment, any

Loans made by it hereunder, or otherwise in connection with its participation

in this Agreement and any liability (including penalties, interest and expenses)

arising therefrom or with respect thereto. 

Payments due under this indemnification shall be made within 30 days of

the date the Agent, the LC Issuer or such Lender makes demand therefor pursuant

to Section 3.6.

 

(iv)                              Each

Lender that is not incorporated under the laws of the United States of America

or a state thereof (each a “Non-U.S. Lender”) agrees that it will, not more

than ten Business Days after the date of this Agreement, (i) deliver to the

Agent two duly completed copies of United States Internal Revenue Service Form

W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to

receive payments under this Agreement without deduction or withholding of any

United States federal income taxes, and (ii) deliver to the Agent a United

States Internal Revenue Form W-8 or W-9, as the case may be, and certify that

it is entitled to an exemption from United States backup withholding tax.  Each Non-U.S. Lender further undertakes to

deliver to each of the Borrower and the Agent (x) renewals or additional copies

of such form (or any successor form) on or before the date that such form

expires or becomes obsolete, and (y) after the occurrence of any event

requiring a change in the most recent forms so delivered by it, such additional

forms or amendments thereto as may be reasonably requested by the Borrower or

the Agent.  All forms or amendments

described in the preceding sentence shall certify that such Lender is entitled

to receive payments under this Agreement without deduction or withholding of

any United States federal income taxes, unless

an event (including without limitation any change in treaty, law or regulation)

has occurred prior to the date on which any such delivery would otherwise be

required which renders all such forms inapplicable or which would prevent such

Lender from duly completing and delivering any such form or amendment with

respect to it and such Lender advises the Borrower and the Agent that it is not

capable of receiving payments without any deduction or withholding of United

States federal income tax.

 

(v)                                 For

any period during which a Non-U.S. Lender has failed to provide the Borrower

with an appropriate form pursuant to clause (iv), above (unless such failure is

due to a change in treaty, law or regulation, or any change in the

interpretation or administration thereof by any governmental authority,

occurring subsequent to the date on which a form originally was required to be

provided), such Non-U.S. Lender shall not be entitled to indemnification under

this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender

which is otherwise exempt from or subject to a reduced rate of withholding tax

become subject to Taxes because of its failure to deliver a form required under

clause (iv), above, the Borrower shall take such steps as such Non-U.S. Lender

shall reasonably request to assist such Non-U.S. Lender to recover such Taxes.

 

27

 

(vi)                              Any

Lender that is entitled to an exemption from or reduction of withholding tax

with respect to payments under this Agreement or any Note pursuant to the law

of any relevant jurisdiction or any treaty shall deliver to the Borrower (with

a copy to the Agent), at the time or times prescribed by applicable law, such

properly completed and executed documentation prescribed by applicable law as

will permit such payments to be made without withholding or at a reduced rate.

 

(vii)                           If the

U.S. Internal Revenue Service or any other governmental authority of the United

States or any other country or any political subdivision thereof asserts a

claim that the Agent did not properly withhold tax from amounts paid to or for

the account of any Lender (because the appropriate form was not delivered or

properly completed, because such Lender failed to notify the Agent of a change

in circumstances which rendered its exemption from withholding ineffective, or

for any other reason), such Lender shall indemnify the Agent fully for all

amounts paid, directly or indirectly, by the Agent as tax, withholding

therefor, or otherwise, including penalties and interest, and including taxes

imposed by any jurisdiction on amounts payable to the Agent under this

subsection, together with all costs and expenses related thereto (including

attorneys fees and time charges of attorneys for the Agent, which attorneys may

be employees of the Agent).  The

obligations of the Lenders under this Section 3.5(vii) shall survive the

payment of the Obligations and termination of this Agreement.

 

3.6                                 Lender

Statements; Survival of Indemnity. To the extent reasonably possible, each

Lender shall designate an alternate Lending Installation with respect to its

Eurodollar Loans to reduce any liability of the Borrower to such Lender under

Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances

under Section 3.3, so long as such designation is not, in the judgment of such

Lender, disadvantageous to such Lender. 

Each Lender shall deliver a written statement of such Lender to the Borrower

(with a copy to the Agent) as to the amount due, if any, under Section 3.1,

3.2, 3.4 or 3.5.  Such written statement

shall set forth in reasonable detail the calculations upon which such Lender

determined such amount and shall be final, conclusive and binding on the

Borrower in the absence of manifest error. 

Determination of amounts payable under such Sections in connection with

a Eurodollar Loan shall be calculated as though each Lender funded its

Eurodollar Loan through the purchase of a deposit of the type and maturity

corresponding to the deposit used as a reference in determining the Eurodollar

Rate applicable to such Loan, whether in fact that is the case or not.  Unless otherwise provided herein, the amount

specified in the written statement of any Lender shall be payable on demand

after receipt by the Borrower of such written statement.  The obligations of the Borrower under

Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination

of this Agreement.

 

ARTICLE

IV

 

CONDITIONS

PRECEDENT

 

4.1.                              Initial

Credit Extension.  The Lenders shall

not be required to make the initial Credit Extension hereunder unless:

 

(i)                                     the

Borrower has furnished to the Agent, with sufficient copies for the Lenders,

the following, in each case satisfactory to the Agent, in its discretion, and

its counsel:

 

(a)                                  Copies

of the articles or certificate of incorporation of the Borrower and each other

Loan Party, together with all amendments, and a certificate of good standing

(or comparable certificate in the case of those governmental offices which do

not issue good standing certificates), each certified by the appropriate

governmental officer in its jurisdiction of incorporation or formation.

 

28

 

(b)                                 Copies,

certified by the Secretary or Assistant Secretary (or Person serving an

equivalent function) of the Borrower and each other Loan Party, of its by-laws

or operating agreement, as applicable, and of its board of directors’

resolutions and of resolutions or actions of any other body authorizing the

execution of the Loan Documents to which the Borrower and each other Loan Party

is a party.

 

(c)                                  An

incumbency certificate, executed by the Secretary or Assistant Secretary (or

Person serving an equivalent function) of, as applicable, the Borrower and each

other Loan Party, which shall identify by name and title and bear the

signatures of the Authorized Officers and any other officers or Persons of the

Borrower and each other Loan Party authorized to sign the Loan Documents to

which, as applicable, the Borrower and each other Loan Party is a party, upon

which certificate the Agent and the Lenders shall be entitled to rely until

informed of any change in writing by the Borrower and each other Loan Party.

 

(d)                                 A

certificate, signed by the chief financial officer of the Borrower, in the form

of Exhibit P stating that on the initial Credit Extension Date no

Default or Unmatured Default has occurred and is continuing.

 

(e)                                  A

written opinion of the Borrower’s and the Guarantors’ counsel, addressed to the

Lenders in substantially the form of Exhibit A.

 

(f)                                    Any

Notes requested by a Lender pursuant to Section 2.15 payable to the order of

each such requesting Lender.

 

(g)                                 Written

money transfer instructions from the Borrower, in substantially the form of Exhibit

D, addressed to the Agent and signed by an Authorized Officer, together

with such other related money transfer authorizations as the Agent may have

reasonably requested.

 

(h)                                 If

the initial Credit Extension will be the issuance of a Facility LC, a properly

completed Facility LC Application.

 

(i)                                     All

Collateral Documents and other Loan Documents executed by the Borrower or the

Guarantors, as the case may be, including without limitation the Pledge and

Security Agreement, the Guaranty, the Mortgages, the  Negative Pledge Agreement, the Indemnity Agreement, the

Assignment of Patents, Trademarks and Copyrights, the Intercompany

Subordination Agreement and the Collateral Sharing Agreement.

 

(j)                                     Evidence

satisfactory to the Agent (including without limitation copies of executed

originals of the Note Purchase Agreement and all documents and instruments

related thereto, certified by the Borrower to be true, correct and complete)

that the closing contemplated in Section 3 of the Note Purchase Agreement has

occurred and Term Note Purchasers have purchased and scheduled to fund not less

than $75,000,000 in Term Notes.

 

(k)                                  Sufficient

originals of the Collateral Sharing Agreement for each Lender executed and

delivered by the Collateral Agent, the Agent on behalf of the Lenders and all

of the Term Note Purchasers.

 

(l)                                     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 (except in the case of the Calder Mortgage), delivered by

the Loan

 

29

 

Parties, issued by

Commonwealth Land Title Insurance Company (the “Title Insurer”) and insuring

the Recorded Mortgages 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 Mortgages except for the Calder

Mortgage.  The Loan Parties shall

purchase title insurance for the Calder Mortgage in accordance with Section

6.21.

 

(m)                               The

Borrower shall deliver surveys of the properties listed on Schedule

4.1(i)(m) not later than three (3) days prior to the Closing Date.  Such surveys shall be prepared by surveyors

listed on such Schedule 4.1(i)(m). 

Such surveys shall be reasonably satisfactory to the Agent and shall be

certified to the Collateral Agent, each Lender and the Title Insurer.  Each survey shall evidence to the

satisfaction of the Agent that all of the Real Property Collateral included in

the applicable Mortgage is owned by the applicable Loan Party free and clear of

defects of title, obstructions or hindrances, except for Permitted Liens, and

be sufficient to allow the Title Insurer to issue loan policies without survey

exceptions.

 

(n)                                 The

insurance certificate described in Section 5.20 and 6.6(ii).

 

(o)                                 Existing

Environmental audits and/or Phase I Environmental assessments performed on each

parcel of Real Property Collateral listed on Schedule 4.1(i)(o), with

the results of such environmental audits and/or 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 Collateral, 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 and/or audits 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 Collateral, provide the historical ownership and use of the Real

Property Collateral, describe the current use of the Real Property Collateral,

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 Collateral

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 Collateral has been adversely affected by any Hazardous Materials or

substances, the Lenders shall be excused from any obligation to provide the

Credit Extensions.

 

(p)                                 Reports

of searches of personal property of records from the appropriate reporting

agencies listed on Schedule 4.1(i)(p). 

The 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 the Loan Parties’ personal property prior to the Collateral

Agent’s security interest therein other than Permitted Liens.

 

30

 

(q)                                 All

material third-party consents required to effectuate the transactions under the

Loan Documents, including without limitation those described on Schedule

4.1(i)(q).

 

(r)                                    Evidence

satisfactory to the Agent that no action, proceeding, investigation, regulation

or legislation shall have been instituted, threatened or proposed before any

court, governmental agency or legislative body to enjoin, restrain or prohibit,

or to obtain damages in respect of, this Agreement, the other Loan Documents or

the consummation of the transactions contemplated hereby or thereby or which,

in the Agent’s sole discretion, would make it inadvisable to consummate the

transactions contemplated by this Agreement or any of the other Loan Documents.

 

(s)                                  Evidence

satisfactory to the Agent with respect to the proper perfection and priority of

all of the Liens created in favor of the Collateral Agent securing all of the

Secured Obligations including such consents, approvals and agreements as the

Agent may require from the Louisville/Jefferson County Metro Government with

respect to the Borrower’s property subject to the Master Plan Bond Transaction.

 

(t)                                    Evidence

satisfactory to the Agent that prior to, or simultaneously with the closing of

the transactions described herein, the Borrower has paid all of the outstanding

loans, interest and other obligations under the Prior Credit Facility (except

in the case of the Letters of Credit described in Section 2.3.1) and shall have

delivered to the Agent a copy of a payoff letter, in a form satisfactory to the

Agent, in its discretion, signed by PNC Bank, as agent under the Prior Credit

Facility and evidencing the payoff and termination of such Prior Credit

Facility, as well as termination of any Liens in connection therewith.

 

(u)                                 [Reserved]

 

(v)                                 Unqualified

audited financial statements for the Borrower dated as of December 31, 2002.

 

(w)                               A

certificate in the form of Exhibit P signed by the chief financial

officer of the Borrower stating that at the initial Credit Extension no

Material Adverse Effect has occurred since December 31, 2002 or is occurring,

and all of the representations and warranties made by or on behalf of any of

the Loan Parties relating to this Agreement and/or any of the other Loan

Documents remain true, correct and complete.

 

(x)                                   Payment

or reimbursement of expenses as and to the extent required under Section 9.6

and payment of fees under Section 10.13.

 

(y)                                 Such

other documents as the Agent, any Lender or their counsel may have reasonably

requested.

 

(ii)                                  The

Agent and the Lenders shall have determined to their satisfaction:

 

(a)                                  There

exists no Default or Unmatured Default.

 

(b)                                 No

Material Adverse Effect shall have occurred since December 31, 2002.

 

(c)                                  The

Loan Parties have complied with all applicable requirements of Regulation U.

 

(d)                                 All

legal and regulatory matters (including those relating to taxes) are

satisfactory.

 

31

 

(e)                                  No

injunctions or temporary restraining orders against any Loan Party exist which

would prohibit a Credit Extension.

 

(f)                                    No

existing or potential environmental liability with respect to any Loan Party

and/or any Collateral exists that would have a Material Adverse Effect.

 

4.2                                 Each

Credit Extension.  The Lenders shall

not be required to make any Credit Extension unless on the applicable Credit

Extension Date:

 

(i)                                     There

exists no Default or Unmatured Default.

 

(ii)                                  The

representations and warranties contained in Article V are true and correct in

all material respects as of such Credit Extension Date except to the extent any

such representation or warranty is stated to relate solely to an earlier date,

in which case such representation or warranty shall have been true and correct

on and as of such earlier date.

 

(iii)                               All

legal matters incident to the making of such Credit Extension shall be

satisfactory to the Lenders and their counsel.

 

Each Borrowing Notice or request for issuance of a

Facility LC with respect to each such Credit Extension shall constitute a

representation and warranty by the Borrower that the conditions contained in

Sections 4.2(i) and (ii) have been satisfied.

 

ARTICLE

V

 

REPRESENTATIONS

AND WARRANTIES

 

The Loan Parties jointly and severally represent and

warrant to the Agent and the Lenders that:

 

5.1                                 Existence

and Standing.  Each of the Loan

Parties and its Subsidiaries is a corporation, partnership (in the case of

Subsidiaries only) or limited liability company duly and properly incorporated

or organized, as the case may be, validly existing and (to the extent such

concept applies to such entity) in good standing under the laws of its

jurisdiction of incorporation or organization and has all requisite authority to

conduct its respective business in each jurisdiction in which its respective

business is conducted and where the failure to do so would cause a Material

Adverse Effect.

 

5.2                                 Authorization

and Validity.  Each Loan Party has

the power and authority and legal right to execute and deliver the Loan

Documents to which it is a party and to perform its obligations

thereunder.  The execution and delivery

by the Loan Party of the Loan Documents to which it is a party and the performance

of its obligations thereunder have been duly authorized by proper corporate

proceedings, and the Loan Documents to which the Loan Party is a party

constitute legal, valid and binding obligations of the applicable Loan Party

enforceable against the applicable Loan Party in accordance with their terms,

except as enforceability may be limited by bankruptcy, insolvency or similar

laws affecting the enforcement of creditors’ rights generally.

 

5.3                                 No

Conflict; Government Consent. 

Neither the execution and delivery by a Loan Party of the Loan Documents

to which it is a party, nor the consummation by it of the transactions therein

contemplated, nor compliance with the provisions thereof by it will violate (i)

any law, rule, regulation, order, writ, judgment, injunction, decree or award

binding on any such Loan Party or (ii) any such Loan Party’s articles or

certificate of incorporation, partnership agreement, certificate of

partnership, articles or certificate of organization, by-laws, or operating or

other management agreement, as the case may be, or (iii) the provisions of any

indenture, instrument or agreement to which any such Loan Party is a party or

is subject, or by which it, or its Property, is bound, or conflict with or

constitute a default thereunder, or except for the Liens required by the terms

of Loan Documents, result in, or require, the creation or imposition of any

Lien in, of or on the Property of any such Loan Party pursuant to the terms of

any such indenture, instrument or agreement. 

Except for the recordation of any applicable Collateral Documents with

any applicable

 

32

 

governmental authority, no order, consent, adjudication, approval,

license, authorization, or validation of, or filing, recording or registration

with, or exemption by, or other action in respect of any governmental or public

body or authority, or any subdivision thereof, which has not been obtained by

any Loan Party, is required to be obtained by any Loan Party in connection with

the execution and delivery of the Loan Documents, the borrowings under this

Agreement, the payment and performance by the Borrower of the Obligations or

the legality, validity, binding effect or enforceability of any of the Loan

Documents.  Notwithstanding anything in

this Agreement or the other Loan Documents to the contrary, the parties to this

Agreement and the other Loan Documents acknowledge that (i) the transfer,

assignment, change of ownership or interest, foreclosure or realization on any

of the Collateral or the stock of Churchill Downs Management Company or (ii)

any transfer, assignment, or change of ownership or interest in any pari-mutuel

permits or licenses must comply with applicable law, which may require prior

approval by the Florida Division of Pari-Mutuel Wagering or comparable

governmental authority in the applicable State.

 

5.4                                 Financial

Statements.  The December 31, 2002

consolidated financial statements of the Loan Parties heretofore delivered to

the Lenders were prepared in accordance with generally accepted accounting

principles in effect on the date such statements were prepared and fairly

present the consolidated financial condition and operations of the Loan Parties

at such date and the consolidated results of their operations for the period

then ended.

 

5.5                                 Material

Adverse Change.  Since December 31,

2002 there has been no change in the business, Property, prospects, condition

(financial or otherwise) or results of operations of the Loan Parties taken as

a whole, which could reasonably be expected to have a Material Adverse Effect.

 

5.6                                 Taxes.  Each Loan Party has filed all United States

federal tax returns and all other tax returns which are required to be filed

and has paid all taxes due pursuant to said returns or pursuant to any

assessment received by such Loan Party, except such taxes, if any, as are being

contested in good faith and as to which adequate reserves have been provided in

accordance with Agreement Accounting Principles and as to which no Lien

exists.  The United States income tax

returns of each Loan Party and the other Loan Parties have been audited by the

Internal Revenue Service through the fiscal year ended December 31, 1998.  No tax liens have been filed and no claims

are being asserted with respect to any such taxes.  The charges, accruals and reserves on the books of each Loan

Party in respect of any taxes or other governmental charges are adequate.

 

5.7                                 Litigation

and Contingent Obligations.  There

is no litigation, arbitration, governmental investigation, proceeding or

inquiry pending or, to the knowledge of any of their officers, threatened

against or affecting any Loan Party which could reasonably be expected to have

a Material Adverse Effect or which seeks to prevent, enjoin or delay the making

of any Credit Extensions. Other than any liability incident to any litigation,

arbitration or proceeding which could not reasonably be expected to have a

Material Adverse Effect, the Loan Parties have no material contingent

obligations not provided for or disclosed in the financial statements referred

to in Section 5.4.

 

5.8                                 Subsidiaries.  Schedule 1 contains an accurate list

of all Subsidiaries of the Loan Parties as of the date of this Agreement,

setting forth their respective jurisdictions of organization and the percentage

of their respective capital stock or other ownership interests owned by each

Loan Party.  All of the issued and

outstanding shares of capital stock or other ownership interests of such

Subsidiaries have been (to the extent such concepts are relevant with respect

to such ownership interests) duly authorized and issued and are fully paid and

non-assessable.

 

5.9                                 ERISA.  Except for any Multiemployer Plan, none of

the Loan Parties sponsors or contributes to a Plan that is covered by Title IV

of ERISA or that is subject to the minimum funding standards under Section 412

of the Code.  Neither any Loan Party nor

any other member of the Controlled Group has incurred, or is reasonably

expected to incur, any withdrawal liability to Multiemployer Plans in excess of

$10,000,000.00 in the aggregate.  No

Loan Party has any knowledge that any Plan fails to comply in all material

respects with all applicable requirements of law and regulation.  Neither the Borrower nor any other member of

the Controlled Group has withdrawn from any Plan or initiated steps to do so,

and no steps have been taken to reorganize or terminate any Plan.

 

5.10                           Accuracy

of Information.  No information,

exhibit or report furnished by the Borrower or any of the other Loan Parties to

the Agent or to any Lender in connection with the negotiation of, or compliance

with, the Loan Documents contained any misstatement of material fact or omitted

to state a material fact necessary to make the statements contained therein not

misleading.

 

33

 

5.11                           Regulation

U.  Margin stock (as defined in

Regulation U) constitutes less than 25% of the value of those assets of the

Loan Parties which are subject to any limitation on sale, pledge, or other

restriction hereunder.

 

5.12                           Material

Agreements.  Neither the Borrower

nor any Subsidiary is a party to any agreement or instrument or subject to any

charter or other corporate restriction which could reasonably be expected to

have a Material Adverse Effect.  Neither

the Borrower nor any Subsidiary is in default in the performance, observance or

fulfillment of any of the obligations, covenants or conditions contained in (i)

any agreement to which it is a party, which default could reasonably be

expected to have a Material Adverse Effect or (ii) any agreement or instrument

evidencing or governing Indebtedness.

 

5.13                           Compliance

With Laws.  The Loan Parties have

complied with all applicable statutes, rules, regulations, orders and

restrictions of any domestic or foreign government or any instrumentality or agency

thereof having jurisdiction over the conduct of their respective businesses or

the ownership of their respective Property except for any failure to comply

with any of the foregoing which could not reasonably be expected to have a

Material Adverse Effect.

 

5.14                           Ownership

of Properties.  Except as set forth

on Schedule 2, on the date of this Agreement, the Loan Parties will have

good title, free of all Liens other than Permitted Liens, to all of the

Property and assets reflected in the Borrower’s most recent consolidated

financial statements provided to the Agent as owned by the Loan Parties.

Subject to the terms of the Collateral Sharing Agreement and except for the

Permitted Liens, liens granted to the Collateral Agent for the benefit of the

Lenders pursuant to the Mortgages will constitute valid first priority Liens

under applicable law.  Borrower will

take all such action as will be necessary or advisable to establish such Lien

of the Collateral Agent and its priority as described in the preceding sentence

at or prior to the time required for such purpose, and there will be as of the

date of execution and delivery of the Mortgages no necessity for any further

action in order to protect, preserve and continue such Lien and such priority

except for (i) the filing of continuation statements to continue financing

statements (filed as fixture filings) upon the expiration thereof and (ii) for

the recordation of the Calder Mortgage and for the recording of the Mortgages

(other than the Calder Mortgage) all of which recordation of such Mortgages

(other than the Calder Mortgage) shall have occurred on the Closing Date (or

within one Business Day following the Closing Date provided that the title insurance policy relating to such

Mortgages (other than the Calder Mortgage) provides coverage as of the Closing

Date based on pro forma policies delivered and accepted on or before the

Closing Date).

 

5.15                           Plan

Assets; Prohibited Transactions. 

The Borrower (a) is not an entity deemed to hold “plan assets” within

the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined

in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan

(within the meaning of Section 4975 of the Code), and assuming the source of

the Loans does not in any case include the assets of any employee benefit plan,

neither the execution of this Agreement nor the making of Credit Extensions

hereunder gives rise to a prohibited transaction within the meaning of Section

406 of ERISA or Section 4975 of the Code, and (b) the Borrower is an “operating

company” as defined in 29 C.F.R 2510-101 (c) or “benefit plan investors” (as

defined in 29 C.F.R. § 2510.3-101(f)) do not own 25% or more of the value of

any class of equity interests in the Borrower.

 

5.16                           Environmental

Matters. In the ordinary course of its business, the officers of the

Borrower consider the effect of Environmental Laws on the business of the Loan

Parties, in the course of which they identify and evaluate potential risks and

liabilities accruing to the Borrower due to Environmental Laws.  On the basis of this consideration, the

Borrower has concluded that Environmental Laws cannot reasonably be expected to

have a Material Adverse Effect.  Neither

the Borrower nor any Subsidiary has received any notice to the effect that its

operations are not in material compliance with any of the requirements of

applicable Environmental Laws or are the subject of any federal or state

investigation evaluating whether any remedial action is needed to respond to a

release of any toxic or hazardous waste or substance into the environment,

which non-compliance or remedial action could reasonably be expected to have a

Material Adverse Effect.

 

5.17                           Investment

Company Act.  Neither the Borrower

nor any Subsidiary is an “investment company” or a company “controlled” by an

“investment company”, within the meaning of the Investment Company Act of 1940,

as amended.

 

34

 

5.18                           Public

Utility Holding Company Act. 

Neither the Borrower nor any Subsidiary is a “holding company” or a

“subsidiary company” of a “holding company”, or an “affiliate” of a “holding

company” or of a “subsidiary company” of a “holding company”, within the

meaning of the Public Utility Holding Company Act of 1935, as amended.

 

5.19                           Post-Retirement

Benefits.  The present value of the

expected cost of post-retirement medical and insurance benefits payable by the

Loan Parties to their employees and former employees, as estimated by the

Borrower in accordance with procedures and assumptions deemed reasonable by the

Required Lenders, does not exceed $10,000,000.00.

 

5.20                           Insurance.  The certificate signed by the President or

chief financial officer of the Borrower, that attests to the existence and

adequacy of, and summarizes, the property and casualty insurance program

carried by the Borrower with respect to itself and the other Loan Parties and

that has been furnished by the Borrower to the Agent and the Lenders, is

complete and accurate.  This summary

includes the insurer’s or insurers’ name(s), policy number(s), expiration

date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and

deductibles.  This summary also includes

similar information, and describes any reserves, relating to any self-insurance

program that is in effect.

 

5.21                           Solvency.  (i) Immediately after the consummation of

the transactions to occur on the date hereof and immediately following the

making of each Loan, if any, made on the date hereof and after giving effect to

the application of the proceeds of such Loans, (a) the fair value of the assets

of the Loan Parties on a consolidated basis, at a fair valuation, will exceed

the debts and liabilities, subordinated, contingent or otherwise, of the Loan

Parties on a consolidated basis; (b) the present fair saleable value of the

Property of the Loan Parties on a consolidated basis will be greater than the

amount that will be required to pay the probable liability of the Loan Parties

on a consolidated basis on their debts and other liabilities, subordinated, contingent

or otherwise, as such debts and other liabilities become absolute and matured;

(c) the Loan Parties on a consolidated basis will be able to pay their debts

and liabilities, subordinated, contingent or otherwise, as such debts and

liabilities become absolute and matured; and (d) the Loan Parties on a

consolidated basis will not have unreasonably small capital with which to

conduct the businesses in which they are engaged as such businesses are now

conducted and are proposed to be conducted after the date hereof.

 

(ii)                                  The

Borrower does not intend to, or to permit any of the other Loan Parties to, and

does not believe that it or any of the other Loan Parties will, incur debts

beyond such Person’s ability to pay such debts as they mature, taking into account

the timing of and amounts of cash to be received by it or any such Loan Party

and the timing of the amounts of cash to be payable on or in respect of its

Indebtedness or the Indebtedness of any such Loan Party.

 

5.22                           Intellectual

Property. Schedule 5.22 sets forth a true and complete list,

differentiated by each Loan Party, of all of the patents, trademarks, licenses

not included in Schedule 5.25, copyrights and other intellectual property owned

by any of the Loan Parties or which any of them has an interest.

 

5.23                           Properties.

Schedule 5.23 sets forth a true and complete list, differentiated by

each Loan Party, of the addresses of all Real Property.

 

5.24                           Operating

Locations. Schedule 5.24 sets forth a true and complete list,

differentiated by each Loan Party, of the street addresses of each of the Loan

Parties’ operating locations.

 

5.25                           Certain

Licenses. Schedule 5.25 sets forth a true and complete list,

differentiated by each Loan Party of all licenses or other authorities under

which any Loan Party is a licensee from any racing commission or authority or

holder of other racing rights.

 

5.26                           Predecessor

Entities of the Loan Parties.  Schedule

5.26 sets forth a list of any and all predecessors and/or prior names of

any Loan Party within the past five (5) years, including any entity or entities

which may no longer exist, whether by reason of merger, acquisition,

consolidation, sale of its material assets, dissolution, bankruptcy,

reorganization, which may have or had an interest in the Collateral or any part

thereof, together with such predecessor’s (1) state of incorporation, (2) the

jurisdictional location of all of such entities offices and locations and (3)

all jurisdictional locations where any Collateral may have been kept.

 

35

 

ARTICLE

VI

 

COVENANTS

 

From and after the date of this Agreement, unless the

Required Lenders shall otherwise consent in writing:

 

6.1                                 Financial

Reporting.  The Borrower will

maintain, for itself and each Subsidiary, a system of accounting established

and administered in accordance with Agreement Accounting Principles, and

furnish to the Lenders:

 

(i)                                     Within

ninety (90) days after the close of each of Borrower’s fiscal years, an

unqualified (except for qualifications relating to changes in Agreement

Accounting Principles or practices reflecting changes in generally accepted

accounting principles and required or approved by the Borrower’s independent

certified public accountants) audit report certified by PriceWaterhouseCoopers

or such other independent certified public accountants acceptable to the

required Lenders, prepared in accordance with Agreement Accounting Principles

on a consolidated basis for itself and the other Loan Parties, including

consolidated balance sheets as of the end of such period, related consolidated

profit and loss and reconciliation of surplus statements, and a consolidated

statement of cash flows, accompanied by any management letter prepared by said

accountants, provided that

satisfaction of the requirements of this Section 6.1(i) shall be deemed to have

been met by delivery within the time frame specified above of (a) copies of the

Borrower’s Annual Report on Form 10-K for such fiscal year prepared in

accordance with the requirements therefor and filed with the Securities and

Exchange Commission, and (b) the financial statements and reports otherwise

required in this Section 6.1(i), consolidated as to the Borrower and the other

Loan Parties, except that such financial statements and reports need not be audited

and may be internally prepared.

 

(ii)                                  Within

forty-five (45) days after the close of the first three quarterly periods of

each of its fiscal years, for itself and the other Loan Parties, consolidated

unaudited balance sheets as at the close of each such period and consolidated

profit and loss statements and a consolidated statement of cash flows for the

period from the beginning of such fiscal year to the end of such quarter, all

certified by its chief financial officer, provided

that satisfaction of the requirements of this Section 6.1(ii) shall be deemed

to have been met by delivery within the time frame specified above of copies of

(a) the Borrower’s Quarterly Report on Form 10-Q prepared in accordance with

the requirements therefor and filed with the Securities and Exchange

Commission, and (b) the financial statements and reports otherwise required in

this Section 6.1(ii), consolidated as to the Borrower and the other Loan

Parties.

 

(iii)                               As

soon as available, but in any event within ninety (90) days after the beginning

of each fiscal year of the Borrower, a copy of the plan and budget (including,

at a minimum, a projected consolidated balance sheet for the following fiscal

year end and projected quarterly income statements) of the Borrower and the other

Loan Parties for such fiscal year.

 

(iv)                              Together

with the financial statements required under Sections 6.1(i) and (ii), a

compliance certificate in substantially the form of Exhibit B 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.

 

(v)                                 Within

two hundred seventy (270) days after the close of each fiscal year, a statement

of the Unfunded Liabilities of each Single Employer Plan, if any, certified as

correct by an actuary enrolled under ERISA.

 

36

 

(vi)                              If

the Borrower has established a Plan, as soon as possible and in any event

within 10 days after the Borrower knows that any Reportable Event has occurred

with respect to any Plan, a statement, signed by the chief financial officer of

the Borrower, describing said Reportable Event and the action which the

Borrower proposes to take with respect thereto.

 

(vii)                           As soon

as possible and in any event within 10 days after receipt by the Borrower, a

copy of (a) any notice or claim to the effect that the Borrower or any of the

other Loan Parties is or may be liable to any Person as a result of the release

by the Borrower, any of the other Loan Parties, or any other Person of any

Hazardous Materials into the environment, and (b) any notice alleging any

violation of any Environmental Laws by the Borrower or any of the other Loan

Parties, which, in either case, could reasonably be expected to have a Material

Adverse Effect.

 

(viii)                        Promptly

upon the furnishing thereof to the shareholders of the Borrower, copies of all

annual reports to shareholders (including without limitation annual reports to

shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act),

financial statements, reports and proxy statements so furnished.

 

(ix)                                Promptly

upon the filing thereof, copies of all registration statements and annual,

quarterly, monthly or other regular reports which any of the Loan Parties files

with the Securities and Exchange Commission.

 

(x)                                   Such

other information (including non-financial information) as the Agent or any

Lender may from time to time reasonably request.

 

6.2                                 Use

of Proceeds.  The Borrower and each

other Loan Party will, and will cause each Subsidiary to, use the proceeds of

the Credit Extensions to (a) refinance the Prior Credit Facility and (b) for

general corporate purposes, including for working capital and Acquisition

needs.  The Borrower will not, nor will

it permit any Subsidiary to, use any of the proceeds of the Advances to

purchase or carry any “margin stock” (as defined in Regulation U).

 

6.3                                 Notice

of Default.  The Borrower and each

other Loan Party will give prompt notice in writing to the Agent of the

occurrence of any Default or Unmatured Default and of any other development,

financial or otherwise, which could reasonably be expected to have a Material

Adverse Effect.

 

6.4                                 Conduct

of Business.  The Borrower and each

other Loan Party will, and will cause each Subsidiary (other than the Excluded

Subsidiaries) to, carry on and conduct its respective business in substantially

the same manner and in substantially the Current Fields of Enterprise and do

all things necessary to remain duly incorporated or organized, validly existing

and (to the extent such concept applies to such entity) in good standing as a

domestic corporation, partnership or limited liability company in its

jurisdiction of incorporation or organization, as the case may be, and maintain

all requisite authority to conduct its business in each jurisdiction in which

its respective business is conducted in each case in which the failure to so

maintain such authority would have a Material Adverse Effect.

 

6.5                                 Taxes.  The Borrower and each other Loan Party will,

and will cause each Subsidiary to, timely file complete and correct United

States federal and applicable foreign, state and local tax returns required by

law and pay when due all taxes, assessments and governmental charges and levies

upon such Loan Party or such Loan Party’s income, profits or Property, except

those which are being contested in good faith by appropriate proceedings and

with respect to which adequate reserves have been set aside in accordance with

Agreement Accounting Principles.

 

6.6                                 Insurance.

 

(i)                                     The

Borrower and each other Loan Party will, and will cause each Subsidiary to,

maintain with financially sound and reputable insurance companies insurance on

all their Property in such amounts and covering such risks as is consistent

with sound business practice, and the Borrower will furnish to any Lender upon

request full information as to the insurance carried.

 

37

 

(ii)                                  All

insurance which the Loan Parties are required to maintain shall be satisfactory

to the Agent in form, amount and insurer. 

Such insurance shall provide that any loss thereunder shall be payable

notwithstanding any action, inaction, breach of warranty or condition, breach

of declarations, misrepresentation or negligence of any of the Loan

Parties.  Each policy shall contain an

agreement by the insurer that, notwithstanding lapse of a policy for any

reason, or right of cancellation by the insurer or any cancellation by any Loan

Party such policy shall continue in full force for the benefit of the

Collateral Agent for at least thirty (30) days after written notice thereof to

the Agent and the applicable Loan Party, and no alteration in any such policy

shall be made except upon thirty (30) days written notice of such proposed

alteration to the Agent and the applicable Loan Party and written approval by

the Agent.  At or before the making of

the first Credit Extension, each Loan Party shall provide the Agent with

certificates evidencing its due compliance with the requirements of this

Section.

 

6.7                                 Compliance

with Laws.  The Borrower and each

other Loan Party will, and will cause each Subsidiary to, comply with all laws,

rules, regulations, orders, writs, judgments, injunctions, decrees or awards to

which such party may be subject including, without limitation, all

Environmental Laws, provided that

it shall not be deemed to be a violation of this Section 6.7 if any

failure to comply with any law would not result in fines, penalties,

remediation costs, other similar liabilities or injunctive relief which in the

aggregate would constitute a Material Adverse Effect.

 

6.8                                 Maintenance

of Properties.  The Borrower and

each other Loan Party will, and will cause each Subsidiary (other than the

Excluded Subsidiaries) to, do all things necessary to maintain, preserve,

protect and keep its Property in good repair, working order and condition,

normal wear and tear excepted and taking into account the age and condition of

such Property and make all necessary and proper repairs, renewals and

replacements so that its business carried on in connection therewith may be

properly conducted at all times.

 

6.9                                 Inspection.  The Borrower and each other Loan Party will,

and will cause each Subsidiary to, permit the Agent, the Collateral Agent and

the Lenders, by their respective representatives and agents, to inspect any of

the Property, books and financial records of the Borrower and each Subsidiary,

to examine and make copies of the books of accounts and other financial records

of the Borrower and each Subsidiary, and to discuss the affairs, finances and

accounts of the Borrower and each Subsidiary with, and to be advised as to the

same by, their respective officers at such reasonable times and intervals as

the Agent, the Collateral Agent or any Lender may designate; provided, however,

so long as no Default or Unmatured Default has occurred or is continuing, no

such inspections, examinations, or discussions shall occur during the two week

period preceding, or on the day of, the running of the [i] Kentucky Derby or

[ii] Breeder’s Cup, if the Breeder’s Cup is to be held at Churchill Downs.

 

6.10                           Indebtedness.  The Borrower and the other Loan Parties will

not, nor will they permit any Subsidiary (other than Excluded Subsidiaries) to,

create, incur or suffer to exist any Indebtedness, except:

 

(i)                                     The

Loans and the Reimbursement Obligations.

 

(ii)                                  Indebtedness

existing on the date hereof and described in Schedule 2.

 

(iii)                               Indebtedness

arising under Rate Management Transactions related to the Loans to the extent

permitted under Section 6.22.

 

(iv)                              Indebtedness

secured by any purchase money security interests not exceeding $5,000,000;

 

(v)                                 Capitalized

Lease Obligations in an amount not exceeding $5,000,000;

 

(vi)                              Indebtedness

to sellers in connection with Permitted Acquisitions in an aggregate amount not

to exceed $10,000,000 provided

that such Indebtedness is subordinated to the Indebtedness hereunder pursuant

to subordination provisions acceptable to the Required Lenders in the Required

Lenders’ reasonable discretion;

 

38

 

(vii)                           Indebtedness

secured by any Lien permitted pursuant to Section 6.16;

 

(viii)                        Indebtedness

of not greater than $100,000,000 in principal, plus accrued interest not yet

due and payable, under the Term Notes;

 

(ix)                                Indebtedness

of not greater than $153,000,000 under the Master Plan Bond Transaction;

 

(x)                                   Indebtedness

permitted under Section 6.15, reduced by the amounts of Indebtedness actually

outstanding at any time that is described in or subject to clauses (iv), (v)

and/or (vi) of this Section 6.10.

 

6.11                           Merger.  Without the consent of the Required Lenders,

the Borrower will not, nor will it permit any Subsidiary (other than the

Excluded Subsidiaries) to, merge or consolidate with or into any other Person,

except that a Loan Party may merge into the Borrower or a Wholly-Owned

Subsidiary that is or becomes a Loan Party provided

that at least ten (10) Business Days before the date of such consolidation or

merger, the applicable parties shall have delivered to the Agent all of the new

Mortgages, amendments to Mortgages, financing statements, amendments thereto

and other amendments to the Loan Documents and the schedules thereto required

to reflect such consolidation or merger and to perfect or confirm the Liens of

the Collateral Agent for the benefit of the Lenders in the assets of the Loan

Parties which are parties thereto.

 

6.12                           Sale

of Assets.

 

(i)                                     The

Borrower will not, nor will it permit any Subsidiary (other than the Excluded

Subsidiaries) to, lease, sell or otherwise dispose of its Property to any other

Person, except:

 

(a)                                  Sales

of inventory in the ordinary course of business (subject to subsection (ii)

below).

 

(b)                                 Leases,

sales or other dispositions of its Property (including ownership interests in

Guarantors described in Subsection 6.12(iii)(a) and/or (b)) that, together with

all other Property of the Loan Parties previously leased, sold or disposed of

(other than inventory in the ordinary course of business) as permitted by this

Section, in the aggregate, (1) during the twelve-month period ending with the

month in which any such lease, sale or other disposition occurs, do not

constitute a Twelve Month Substantial Portion of the Property of the Loan

Parties, or (2) from and after the Closing Date does not constitute a Term

Substantial Portion of the Property of the Loan Parties, in each case (subject

to subsection (ii) below); provided

that prior to and upon completion of such lease, sale or other disposition no

Default or Unmatured Default would exist, including after giving effect to such

sale, transfer or other disposition.

 

(c)                                  Without

regard to, and in addition to the limits of Section 6.12(i)(b), the sale,

transfer or other disposition of the assets of, or ownership interests in,

Ellis Park Race Course and/or Racing Corporation of America, provided that prior to and upon completion

of such sale, transfer or other disposition no Default or Unmatured Default

would exist, including after giving effect to such sale, transfer or other

disposition, and provided further

that the full amount of the cash proceeds realized on such sale, transfer or

other disposition are applied to reduce the Aggregate Outstanding Credit

Exposure.

 

(ii)                                  The

sales of assets permitted under (i) (a), and (b) above would be permitted only

on the condition that for leases, sales or other dispositions that, in any

single transaction or related series of transactions, generate $1,000,000 or

more of lease, sale or disposition proceeds, immediately upon completion of the

sale the full amount of the proceeds realized on the lease, sale or other

disposition are applied to reduce the Aggregate Outstanding Credit Exposure.

 

39

 

(iii)                               (a)                                  Upon the sale of

Property permitted under and in accordance with Subsection 6.12(i)(c) above,

the Agent is hereby authorized by the Lenders to instruct the Collateral Agent

to cause Racing Corporation of America and Ellis Park Race Course, Inc. to be

released from their obligations under the Guaranty without the need for any

further authorization from the Lenders, to the extent the Agent may do so

under, and subject to the terms of, the Collateral Sharing Agreement.

 

(b)                                 Upon

consummation of the sale or other disposition of Property that (1) consists of

(A) all of the interests of all Loan Parties in a Guarantor, including, without

limitation, all of the capital stock, LLC or partnership (as applicable) and

other equity interests in that Guarantor, or (B) all of the Property of a

Guarantor, and (2) is permitted under and consummated in accordance with

Subsections 6.12(i)(b) and (ii) above, the Agent is hereby authorized by the

Lenders instruct the Collateral Agent to cause that particular Guarantor to be

released from its obligations under the Guaranty without the need for any

further authorization from the Lenders, to the extent the Agent may do so

under, and subject to the terms of, the Collateral Sharing Agreement, provided that no Default or Unmatured

Default shall exist and be continuing or result from that sale or other

disposition of that Property and/or the release of that Guarantor from its

obligations under the Guaranty, and provided

further that Guarantor is simultaneously released from any and all guaranty

and/or other obligations with respect to the Term Notes and/or the Note

Purchase Agreement.

 

Notwithstanding the foregoing provisions of this Section 6.12, nothing

contained in this Section 6.12 or this Agreement shall prevent the Borrower nor

any other Loan Party or any Subsidiary from conducting its revenue producing

activities in the ordinary course of its respective business, including, but

not limited to, the (a) leasing or licensing of parking facilities, banquet

facilities, boxes, suites or other facilities to the patrons of the Borrower,

each Loan Party and each Subsidiary (collectively, the “Patrons”), (b) granting

of personal suite licenses to Patrons, (c) granting of licenses to Patrons to

use space in the “marquee village” and other similar facilities, and (d) the

license or use for a fee of simulcast signals, trademarks, copyrights, and

other similar assets, and (e) prepaying and/or forgiving any amounts owed under

or canceling the bond or the Lease issued or entered into in connection with

the Master Plan Bond Transaction.

 

6.13                           Investments

and Acquisitions.  The Borrower will

not, nor will it permit any other Loan Party to, make or suffer to exist any

Investments (including without limitation, loans and advances to, and other

Investments in, Subsidiaries), or commitments therefor, or to create any

Subsidiary or to become or remain a partner in any partnership or joint

venture, or to make any Acquisition of any Person, except:

 

(i)                                     Cash

Equivalent Investments.

 

(ii)                                  Any

Investment (a) in existence on the date hereof (including without limitation

existing Investments in Subsidiaries) and described in Schedule 1, (b)

in any Subsidiary that is a Loan Party if such Investment is not an Acquisition,

and (c) so long as no Default or Unmatured Default has occurred and is

continuing, in an Excluded Entity that is not an Acquisition if, but only if,

the aggregate amount of all Investments in all Excluded Entities under this

clause (ii)(c) after the date of this Agreement, when aggregated with all of

the Acquisitions and/or Investments under clauses (iii)(d)(4), (iii)(e) and

(iii)(f) of this Section 6.13 made after the date of this Agreement (including

such proposed Investment), shall not exceed 20% of Consolidated Net Worth at

the time of the proposed Investment in such Excluded Entity.  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 all provisions of this Agreement after giving effect to any

Investment permitted by this clause 6.13 (ii)(c) by delivering, at least five

(5) Business Days prior to making or closing such Investment a certificate in

the form of Exhibit O (each an “Investment Compliance Certificate”)

evidencing such compliance.

 

40

 

(iii)                               The

Borrower or any Loan Party may effect an Acquisition through a merger,

consolidation or by purchase, lease or otherwise of the capital stock or

ownership interest of another Person, or of Property of another Person (each a

“Permitted Acquisition”), to the extent, but only to the extent, such Loan

Party shall have complied with all of the applicable following provisions:

 

(a)                                  In

the case of a Permitted Acquisition by the Borrower, the Borrower shall be the

surviving entity in any merger or consolidation.

 

(b)                                 At

least thirty (30) Business Days before the date of the proposed Acquisition,

the Borrower shall have delivered to the Agent a notice of acquisition

substantially in the form of Exhibit F attached hereto (a “Notice of

Acquisition”) describing in detail the proposed Acquisition.

 

(c)                                  (1)

Such Person is either (A) an existing Guarantor or (B) has executed a Guarantor

Joinder to join this Agreement as a Guarantor pursuant to Section 9.14, or

shall have done so on or before the date of such Permitted Acquisition, or, (2)

in the alternative, upon request provided in the Notice of Acquisition of the

Loan Party acquiring such Person, on or before the date of closing of such

Permitted Acquisition, the Required Lenders shall have consented, in their

discretion, in writing, to permit such acquired Person to be an Excluded

Entity.

 

(d)                                 If

the Person to be acquired is not to be an Excluded Entity, then clauses (1),

(2), (3) and (4) of this subsection apply:

 

(1)                                  The

Loan Party which acquires such ownership interest in such Person shall pledge

such ownership interests to the Collateral Agent pursuant to the Pledge and

Security Agreement and Section 9.14 on or before the date of the closing of

such Permitted Acquisition, except as provided in clauses (iii)(d)(3) or

(iii)(e) below; and such Person shall, on or before the date of the closing of

such Permitted Acquisition execute and deliver a Guarantor Joinder and

otherwise comply with the requirements of Section 9.14;

 

(2)                                  No

Default or Unmatured Default shall exist prior to and/or after giving effect to

such Permitted Acquisition;

 

(3)                                  If

such Person is engaged in a Current Field of Enterprise and applicable laws

relating to horse racing or gaming prohibit the pledge of the ownership

interests of such Person or the grant of Liens in one or more assets of such

Person (such stock and assets, collectively, the “Restricted Assets”), such

Person and its owners shall not be obliged to grant Liens in the Restricted

Assets, provided that the Loan

Parties shall use their best efforts with respect to the matters within their

respective control to obtain, within ninety (90) days after the date of such

Permitted Acquisition (A) the consent of the applicable regulatory authority to

the pledge or grant of first and prior Liens in the Restricted Assets of such

Person to the Collateral Agent, or (B) the acknowledgement by such regulatory authority

that such a pledge or grant of security interests does not require such

consent; and the applicable Loan Parties shall within ten (10) days after

receiving any such acknowledgement or consent take all steps necessary or

appropriate to pledge and grant first and prior Liens, other than Permitted

Liens, in favor of the Collateral Agent in, as applicable, the Restricted

Assets pursuant to the Pledge and Security Agreement and any other applicable

Collateral Documents, other Loan Documents, and/or other documents in the form

of the Collateral Documents except for the name of the applicable Loan Party

and the description of the Property; and

 

41

 

(4)                                  If

such Person is not engaged in a Current Field of Enterprise, the aggregate

consideration paid for the Acquisition of and Investment in that Person,

together with all other Acquisitions under this clause (iii)(d)(4) previous to

the Acquisition in question, when aggregated with all of the Investments under clause(ii)(c)

and Acquisitions under clauses (iii)(e) and (iii)(f) of this Section 6.13,

shall not exceed 20% of Consolidated Net Worth at the time of the proposed

Acquisition of such Person.

 

(e)                                  If

the acquired Person is to be an Excluded Entity, then clauses (1), (2), (3) and

(4) of this subsection apply:

 

(1)                                  The

board of directors or other equivalent governing body of such Person shall have

approved such Permitted Acquisition and, if the Loan Parties shall use any

portion of the Loans to fund such Permitted Acquisition, the Loan Parties shall

also have delivered to the Lenders written evidence of the approval of the

board of directors (or equivalent body) of such Person for such Permitted

Acquisition;

 

(2)                                  No

Default or Unmatured Default shall exist prior to and/or after giving effect to

such Permitted Acquisition;

 

(3)                                  The

Loan Parties shall have delivered to the Agent at least five (5) Business Days

before such Permitted Acquisition copies of any agreements entered into or

proposed to be entered into by such Loan Parties in connection with such

Permitted Acquisition and shall deliver to the Agent for its review such other

information about such Person or its Property as the Agent may reasonably

require; and

 

(4)                                  The

aggregate consideration paid for the Acquisition of and Investment in all

Persons pursuant to this clause (iii)(e) of this Section 6.13, when aggregated

with all other consideration paid for the Acquisition of and Investments in any

Person under this clause (iii)(e) and when aggregated with all Investments

under clause (ii)(c) and all Acquisitions under clauses (iii)(d)(4) and

(iii)(f) of this Section, shall not exceed 20% of Consolidated Net Worth at the

time of the Proposed Acquisition of such Person.

 

(f)                                    If

the Permitted Acquisition is through purchase, lease or other acquisition of

Property of a Person by a Loan Party, then clauses (1), (2) and (3) of this

subsection apply:

 

(1)                                  No

Default or Unmatured Default shall exist prior to and/or after giving effect to

such Permitted Acquisition.

 

(2)                                  That

Loan Party shall pledge such Property pursuant to the Pledge and Security

Agreement and/or Mortgage(s), as appropriate, and Section 6.29, unless such

Loan Party is engaged in a Current Field of Enterprise and applicable laws

relating to horse racing or gaming cause the Property, or some part of it,

being acquired to be Restricted Assets, in which case such Loan Party shall not

be obliged to grant Liens in the Restricted Assets, provided that the Loan Parties shall use their best efforts

with respect to the matters within their respective control to obtain, within

ninety (90) after the date of such Permitted Acquisition (A) the consent of the

applicable regulatory authority to the pledge or grant of first and prior

Liens, other than Permitted Liens, in the Restricted Assets of such Loan Party

to the Collateral Agent, or (B) the acknowledgement by such regulatory

authority that such a pledge or

 

42

 

grant of security

interests does not require such consent, and that Loan Party shall within ten

(10) days after receiving any such acknowledgement or consent take all steps

necessary or appropriate to pledge and grant first and prior Liens, other than

Permitted Liens, in favor of the Collateral Agent in, as applicable, the

Restricted Assets pursuant to the Pledge and Security Agreement and any other

applicable Collateral Documents, other Loan Documents, and/or documents

consistent with the Collateral Documents.

 

(3)                                  If

that Loan Party is not engaged in a Current Field of Enterprise both before and

after the Permitted Acquisition, the aggregate consideration paid for the

Acquisition of Property of such Person by such Loan Party pursuant to this

clause (iii)(f) of this Section 6.13, when aggregated with all other consideration

paid for the Investment in any Person under clause (ii)(c) and when further

aggregated with all other Acquisitions and Investments under clauses

(iii)(d)(4) and (iii)(e) of this Section, shall not exceed 20% of Consolidated

Net Worth at the time of the proposed Acquisition of such Property.

 

(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

M (each an “Acquisition Compliance Certificate”) evidencing such

compliance.

 

6.14                           Subsidiaries.  Each Loan Party shall not, and shall not

permit any of its Subsidiaries to, own or create, directly or indirectly, any

Subsidiaries other than (a) any Subsidiary on the Closing Date, and (b) any

Subsidiary formed or acquired after the Closing under this Agreement pursuant

to a Permitted Acquisition.  Unless the

Subsidiary so acquired is an Excluded Entity with respect to which the Loan

Parties have complied with Section 6.13, such newly formed or acquired

Subsidiary and the applicable Loan Party, as applicable, shall grant and cause

to be perfected first and prior Liens (other than Permitted Liens) in favor of

the Collateral Agent in the assets held by, and stock of or other ownership

interest in, such Subsidiary, subject to Section 6.13(iii)(d)(3).  Except as otherwise permitted under Section

6.13 of this Agreement, each of the Loan Parties shall not become or agree to

become (1) a general or limited partner in any general or limited partnership,

except that Loan Parties may be general or limited partners in other Loan

Parties, (2) become a member or manager of, or hold a limited liability company

interest in, a limited liability company, except that the Loan Parties may be

members or managers of, or hold limited liability company interest in, other

Loan Parties, or (3) become a joint venturer or hold a joint venture interest

in any joint venture.

 

6.15                           Certain

Transactions. Except for the Sale and Leaseback Transaction that is a part

of the Master Plan Bond Transaction, the Borrower and the other Loan Parties

collectively, in the aggregate, may not incur Indebtedness under Sections

6.10(x) or Off Balance Sheet Liabilities under Section 6.23 (ii), which, at any

one time, aggregate for the Borrower and all of the other Loan Parties,

collectively, in an amount more than $40,000,000.00.

 

6.16                           Liens.  The Borrower will not, nor will it permit

any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the

Property of the Borrower or any of its Subsidiaries, except (collectively,

“Permitted Liens”):

 

(i)                                     Liens

for taxes, assessments or governmental charges or levies on such Loan Party’s

Property if the same shall not at the time be delinquent or thereafter can be

paid without penalty, or are being contested in good faith and by appropriate

proceedings and for which adequate reserves

 

43

 

in accordance with

Agreement Accounting Principles shall have been set aside on such Loan Party’s

books.

 

(ii)                                  Liens

imposed by law, such as carriers’, warehousemen’s and mechanics’ liens and

other similar Liens arising in the ordinary course of business which secure

payment of obligations not more than sixty (60) days past due or which are

being contested in good faith by appropriate proceedings and for which adequate

reserves in accordance with Agreement Accounting Principles shall have been set

aside on such Loan Party’s books.

 

(iii)                               Liens

arising out of pledges or deposits under worker’s compensation laws,

unemployment insurance, old age pensions, or other social security or

retirement benefits, or similar legislation.

 

(iv)                              Utility

easements, building restrictions and such other encumbrances or charges against

real property as are of a nature generally existing with respect to properties

of a similar character and which do not in any material way affect the

marketability of the same or interfere with the use thereof in the business of

the Borrower or its Subsidiaries.

 

(v)                                 Liens

existing on the date hereof and described in Schedule 2 and any Lien

filed or which arises, at any time solely against Property of any Excluded

Subsidiary.

 

(vi)                              Liens

in favor of the Collateral Agent, for the benefit of the Lenders and subject to

the terms of the Collateral Sharing Agreement, granted pursuant to any

Collateral Document.

 

(vii)                           Liens,

security interests and mortgages for the benefit of any individual Lender which

provides a Rate Management Transaction permitted under Section 6.22 (each a

“Permitted Secured Lender Rate Management Transaction”) between one or more of

the Loan Parties and such Lender, provided

that any such Liens shall be pari passu with the Liens securing the other

Secured Obligations hereunder and be subject to the collateral sharing

provisions contained in the Collateral Sharing Agreement.  The parties to a “Permitted Secured Rate Management

Transaction” shall state in the documentation governing such agreement that

such agreement is intended to be a “Permitted Secured Rate Management

Transaction” hereunder, and upon doing so such agreement shall be treated as a

“Permitted Secured Rate Management Transaction” for all purposes hereunder and

under each of the other Loan Documents and such agreement shall be entitled to

share in the Collateral as more fully provided for herein and therein.

 

(viii)                        Liens

created in connection with assets leased under Capitalized Leases described in

and permitted under Section 6.10(v).

 

(ix)                                Purchase

money security interests described in and permitted under Section 6.10(iv).

 

(x)                                   So

long as, (A)  the validity or amount thereof is being contested in good

faith by appropriate and lawful proceedings diligently conducted and so long as

levy and execution thereon have been stayed and continue to be stayed or

(B) if a final judgment is entered, such judgment is discharged within

thirty (30) days of entry, and in either case they do not in the aggregate, materially

impair the ability of the Borrower to perform its Obligations hereunder and

under the other Loan Documents, then the following:

 

(a)                                  Claims

or Liens for taxes, assessments or charges due and payable and subject to

interest or penalty, provided that

the applicable Loan Party maintains such reserves or other appropriate

provisions as shall be required by Agreement Accounting Principles and pays all

such taxes, assessments or charges forthwith upon the commencement of

proceedings to foreclose any such Lien provided

that, notwithstanding any such reserves, the Loan Parties shall pay any Liens

related to recording or related taxes

 

44

 

(including documentary

stamp taxes or intangible taxes), immediately upon the existence of any Default

or immediately upon the request of the Agent if the Collateral Agent has

recorded or is recording a Mortgage with respect to such realty;

 

(b)                                 Claims,

Liens or encumbrances upon, and defects of title to, real or personal property

other than the Collateral, including any attachment of personal or real

property or other legal process prior to adjudication of a dispute on the

merits;

 

(c)                                  Claims

or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory

nonconsensual Liens; or

 

(d)                                 Claims

or Liens resulting from judgments or orders which, in the aggregate, do not

exceed $5,000,000.00.

 

(xi)                                Liens

permitted under the title policies referred to in Section 4.1(i) hereof.

 

6.17                           Capital

Expenditures.  The Borrower will

not, nor will it permit any Subsidiary to, expend, or be committed to expend,

funds for Capital Expenditures under the Borrower’s Master Plan for Capital

Expenditures in an amount exceeding $125,000,000.00 for the Borrower and its

Subsidiaries in the aggregate.

 

6.18                           Rentals.  The Borrower will not, nor will it permit

any Loan Party to, create, incur or suffer to exist obligations for

Consolidated Rentals in excess of $10,000,000.00 in any one fiscal year for the

Borrower and its Subsidiaries in the aggregate.

 

6.19                           Affiliates.  The Borrower will not, and will not permit

any Subsidiary to, enter into any transaction (including, without limitation,

the purchase or sale of any Property or service) with, or make any payment or

transfer to, any Affiliate except (i) in the ordinary course of business and

pursuant to the reasonable requirements of the Borrower’s or such Subsidiary’s

business and (ii) upon fair and reasonable terms no less favorable to the

Borrower or such Subsidiary than the Borrower or such Subsidiary would obtain

in a comparable arms-length transaction.

 

6.20                           No

Prepayment of Material Indebtedness. The Loan Parties shall not, nor will

any of them permit any Subsidiary to, prepay, anticipate, defease, purchase,

redeem or acquire any Material Indebtedness (other than Obligations hereunder),

either in whole or in part, directly or indirectly, prior to the scheduled

maturity thereof, except for payment of regularly scheduled installments of

principal and/or interest thereon as and when those installments come due in

the regular course, and not by acceleration thereof, provided that nothing in

this Section 6.20 shall prohibit an Excluded Subsidiary to prepay any

Indebtedness with respect to which it, but not any Loan Party, is obligated.

 

6.21                           Recordation

of Calder Mortgage.  The Agent may,

and at the direction of the Required Lenders shall, direct the Collateral Agent

to record the Calder Mortgage; and appropriate UCC fixture filings.  The other financing statements for filing in

Florida (the “Calder Financing Statements”) will be filed concurrently with the

Closing. The Loan Parties shall take all such steps as the Agent, the

Collateral Agent or the Required Lenders request and shall otherwise cooperate

in connection with the recordation of the Calder Mortgage, and related

documents pursuant to the preceding sentence, including (i) obtaining title

insurance for the benefit of the Collateral Agent and the Lenders in an amount

not less than the appraised value of the property covered by such Calder Mortgage  (which the Loan Parties shall be required to

pay for) and (ii) if a Default exists at the time of such recordation or if a

Default should occur following such recordation, the Loan Parties shall pay (or

reimburse the Agent for) all documentary stamp taxes, intangible asset taxes or

other fees and expenses associated with such recordation.  The Calder Mortgage shall be treated as a

“Recorded Mortgage” for purposes of this Agreement including the warranty in Section

5.14 relating to the Recorded Mortgages.

 

6.22                           Financial

Contracts.  The Borrower has entered

into the transactions of the type described in the definition of “Rate

Management Transactions” described on Schedule 6.22, and may enter into

one or more transactions of the type described in the definition of “Rate

Management Transactions” with one or more of the Lenders after the date of this

Agreement, but the Borrower shall not, nor will it permit any Subsidiary to

enter into or remain liable under any Financial Contract that is speculative in

nature.

 

45

 

6.23                           Sale

and Leaseback Transactions and other Off-Balance Sheet Liabilities.  The Borrower will not, nor will it permit

any Subsidiary to, enter into or suffer to exist any (i) Sale and Leaseback

Transaction except the Sale and Leaseback Transaction that is a part of the

Master Plan Bond Transaction or (ii) any other transaction pursuant to which it

incurs or has incurred Off-Balance Sheet Liabilities, except for (a) Rate

Management Obligations permitted to be incurred under the terms of Section 6.22

and (b) as provided in Section 6.15.

 

6.24                           Financial

Covenants.

 

6.24.1                  Fixed Charge

Coverage Ratio.  The Borrower will

not permit the Fixed Charge Coverage Ratio, determined as of the end of each of

its fiscal quarters for the then most-recently ended four fiscal quarters of

(i) Consolidated Adjusted EBITDA to (ii) Consolidated Fixed Charges, all

calculated for the Loan Parties on a consolidated basis, to be less than 1.35

to 1.0.

 

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

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  3.5 to 1.0

  	

   

  	

  Closing Date through

  June 29, 2005

  	

   

  
	

  3.0 to 1.0

  	

   

  	

  June 30, 2005 through

  June 29, 2006

  	

   

  
	

  2.5 to 1.0

  	

   

  	

  June 30, 2006 and

  thereafter

  	

   

  

 

6.24.3                  Minimum Net

Worth. The Borrower will at all times maintain Consolidated Net Worth of

not less than (a) $195,000,000 as of the Closing Date, and (b) beginning with

Borrower’s fiscal year ending December 31, 2003, the sum of (i) $195,000,000

plus (ii) 50% of Consolidated Net Income earned in each fiscal year (without

deduction for losses), plus (iii) 100% of the proceeds from any public and/or

private offering and/or sale of any common and/or preferred stock and/or other

equity security, and/or any note, debenture, or other security convertible, in

whole or in part, to common and/or preferred stock and/or other equity

security, net of reasonable expenses, commissions and fees associates with such

sale, from and after the date of this Agreement.

 

6.25                           Loan

Parties shall enter into Collateral Documents.  The Borrower and each of the other Loan Parties shall grant to

the Collateral Agent, for the benefit of the Lenders, subject to the terms of

the Collateral Sharing Agreement, a first priority perfected security interest

in all of the Property of the Borrower and each of the Loan Parties, provided that (i) recordation of the

Calder Mortgage and UCC fixture filings for filing in Florida may be delayed

pursuant to and in accordance with Section 6.21, and (ii) Racing Corporation of

America and Ellis Park Race Course, Inc. shall not be required to execute or

deliver any Collateral Document other than the Guaranty.  To that end, each of the Loan Parties shall

duly authorize, execute and promptly deliver the Guaranty to the Agent and

deliver to the Collateral Agent the Mortgages, the Pledge and Security

Agreement, the Assignments of Patents, Trademarks and Copyrights, the

Collateral Sharing Agreement, the Intercompany Subordination Agreement and any

and all other Collateral Documents, including without limitation all documents

or instruments necessary or appropriate to create and/or perfect or otherwise

protect the Liens in the Collateral in favor of the Collateral Agent for the

benefit of the Lenders, subject to the terms of the Collateral Sharing

Agreement.

 

6.26                           Maintenance

of Patents, Trademarks, Etc.  Each

Loan Party shall, and shall cause each of its Subsidiaries  (except for the Excluded Subsidiaries) to,

maintain in full force and effect all patents, trademarks, service marks, trade

names, copyrights, licenses, franchises, permits and other authorizations

necessary for the ownership and operation of its properties and business if the

failure so to maintain the same would constitute a Material Adverse Effect.

 

6.27                           Plans

and Benefit Arrangements.  The

Borrower shall, and shall cause each other member of the Controlled Group to,

comply with ERISA, the Code and other applicable Laws applicable to Plans, or

Benefit

 

46

 

Arrangements except where such failure, alone or in conjunction with

any other failure, would not result in a Material Adverse Effect.  Without limiting the generality of the

foregoing, the Borrower shall make, and cause each member of the Controlled

Group to make, in a timely manner, all contributions due to Plans, Benefit

Arrangements and Multiemployer Plans.

 

6.28                           Compliance

with Laws.  Each Loan Party shall,

and shall cause each of its Subsidiaries to, comply with all applicable all

applicable statutes, rules, regulations, orders and restrictions of any

domestic or foreign government or any instrumentality or agency thereof having

jurisdiction over the conduct of their respective businesses or the ownership

of their respective Property, including all Environmental Laws, in all

respects, provided that it shall

not be deemed to be a violation of this Section 6.28 if any failure to

comply with any of the foregoing would not result in fines, penalties,

remediation costs, other similar liabilities or injunctive relief which in the

aggregate would constitute a Material Adverse Effect.

 

6.29                           Further

Assurances.  Each Loan Party shall,

from time to time, at its expense, (i) take such steps as may be necessary

and/or appropriate to faithfully preserve and protect the Lien in favor of the

Collateral Agent, for the benefit of the Lenders pursuant to and subject to the

terms of the Collateral Sharing Agreement, on and security interest in the

Collateral more fully described in the Collateral Documents as a continuing

first priority perfected Lien, subject only to Permitted Liens, (ii) shall do

such other acts and things as the Agent in its sole discretion may deem

necessary or advisable from time to time in order to preserve, perfect and

protect the Liens granted under the Loan Documents and to exercise and enforce

its rights and remedies thereunder with respect to the Collateral, and (iii) as

Property is acquired and as required by the other provisions of this Agreement,

enter into additional documents from time to time in the form of the Collateral

Documents (except as to the applicable Loan Party and the Property subject

thereto) and take such other steps to grant and perfect first priority Liens on

those assets to the Collateral Agent, for the benefit of the Lenders pursuant

to and subject to the Collateral Sharing Agreement.

 

6.30                           Subordination

of Intercompany Loans.  Each Loan

Party shall cause any intercompany Indebtedness, and loans or advances owed by

any Loan Party to any other Loan Party to be subordinated pursuant to the terms

of the Intercompany Subordination Agreement.

 

6.31                           Plans

and Benefit Arrangements.  Each of

the Loan Parties shall not, and shall not permit any of its Subsidiaries to:

 

(i)                                     engage

in a Prohibited Transaction with any Plan, Benefit Arrangement or Multiemployer

Plan which, alone or in conjunction with any other circumstances or set of

circumstances resulting in liability under ERISA, would constitute a Material

Adverse Effect;

 

(ii)                                  fail

to make when due any contribution to any Multiemployer Plan that the Borrower

or any member of the Controlled Group may be required to make under any

agreement relating to such Multiemployer Plan, or any Law pertaining thereto;

 

(iii)                               withdraw

(completely or partially) from any Multiemployer Plan where any such withdrawal

is likely to result in a material liability under Section 4063 of ERISA of the

Borrower or any member of the Controlled Group that would constitute a Material

Adverse Effect;

 

(iv)                              terminate,

or institute proceedings to terminate, any Plan, where such termination is

likely to result in a material liability to the Borrower or any member of the

Controlled Group that would constitute a Material Adverse Effect;

 

(v)                                 make

any amendment to any Plan with respect to which security is required under

Section 307 of ERISA;

 

(vi)                              fail

to give any and all notices and make all disclosures and governmental filings

required under ERISA or the Code, where such failure is likely to result in a

Material Adverse Effect; or

 

47

 

(vii)                           create

or enter into any Plan subject to the minimum funding requirements of ERISA,

without the prior written consent of the Required Lenders.

 

6.32                           Issuance

of Stock. Except as may be permitted in Section 6.13, each of the Loan

Parties other than the Borrower shall not issue any additional shares of such

Loan Party’s capital stock or any options, warrants or other rights in respect

thereof to any Person not a Loan Party, provided

that the Borrower shall deliver stock powers and the original certificates

evidencing such new shares in such Loan Party and shall take any other steps

necessary to grant security interests in such shares in favor of the Collateral

Agent prior to issuing such shares.

 

6.33                           Changes

in Organizational Documents.  Except

as provided in the next sentence, each of the Loan Parties shall not, and shall

not permit any of its Subsidiaries to, amend in any respect its certificate of

incorporation (including any provisions or resolutions relating to capital

stock), by-laws, certificate of limited partnership, partnership agreement,

articles or certificate of formation, limited liability company agreement or

other organizational documents without providing at least ten (10) calendar

days’ prior written notice to the Agent and, in the event such change would be

materially adverse to the Lenders as determined by the Agent in its sole

discretion, obtaining the prior written consent of the Required Lenders.  The Borrower may amend its articles of

incorporation to do any or all of the following:  (1) in connection with a public offering of shares of its capital

stock to provide for an increase in the number of authorized shares of such

stock or (2) in connection with such a public offering to increase the total number

of shares issuable as Series 1998 Preferred Stock to reflect the increase in

the number of shares of the Borrower’s common stock outstanding, and (3) delete

any provisions related to cumulative voting by shareholders in the election or

removal of directors.

 

6.34                           Contingent

Obligations.  The Borrower will not,

nor will it permit any Subsidiary (except for the Excluded Subsidiaries) to,

make or suffer to exist any Contingent Obligation (including, without

limitation, any Contingent Obligation with respect to the obligations of a

Subsidiary), except (i) by endorsement of instruments for deposit or collection

in the ordinary course of business, (ii) the Reimbursement Obligations, (iii)

for the Guaranty; and (iv) guaranties of the obligations of Loan Parties not to

exceed $10,000,000 at any one time in the aggregate for all such guaranties.

 

6.35                           Other

Agreements.  The Loan Parties will

not enter into any agreement containing any provision which would be violated

or breached by the performance of their obligations hereunder or under any

instrument or document delivered or to be delivered by them hereunder or in

connection herewith.  In addition, the

Loan Parties covenant that they shall not, and shall not cause or permit any

Subsidiary to, deliver any guaranty or any other collateral, in each case,

securing or with respect to obligations of the Borrower or any other Subsidiary

in respect of the Note Purchase Agreement unless any such guaranty or

additional collateral is in favor of the Collateral Agent under the Collateral

Sharing Agreement.

 

6.36                           Preservation

of Existence. Each Loan Party shall, and shall cause each of its

Subsidiaries (other than the Excluded Subsidiaries) to maintain its legal

existence as a corporation, limited partnership or limited liability company

and its license or qualification and good standing in each jurisdiction in

which its ownership or lease of property or the nature of its business makes

such license or qualification necessary, except (i) as otherwise may be

expressly be permitted in Sections 6.11, 6.12. 6.13 and/or 6.14, (ii) upon a

sale of Ellis Park Race Course, Inc., Racing Corporation of America, or their

respective assets as contemplated in Section 6.12(i)(c), Racing Corporation of

America and/or Ellis Park Race Course, Inc. would no longer be subject to the

requirements and/or limitations of this Section 6.36, and (iii) where such

failure to do so shall not have a Material Adverse Effect.

 

ARTICLE

VII

 

DEFAULTS

 

The occurrence of any one or more of the following

events shall constitute a Default:

 

48

 

7.1                                 Any

representation or warranty made or deemed made by or on behalf of the Loan

Parties to the Lenders or the Agent under or in connection with this Agreement,

any Credit Extension, or any certificate or information delivered in connection

with this Agreement or any other Loan Document shall be materially false on the

date as of which made.

 

7.2                                 Nonpayment

of principal of any Loan when due, or nonpayment of any Reimbursement Obligation

in or of any interest upon any Loan or Reimbursement Obligation within one

Business Day after the same becomes due, or of any commitment fee, LC Fee or

other obligations under any of the Loan Documents within five days after the

same becomes due.

 

7.3                                 The

breach by the Borrower and/or any Loan Party of any of the terms or provisions

of Sections 6.2, 6.3, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, 6.18,

6.19, 6.20, 6.22, 6.23, 6.24, 6.25, 6.26, 6.27, 6.28, 6.29, 6.30, 6.31, 6.32,

6.33, 6.34, 6.35 and/or 6.36.

 

7.4                                 The

breach by the Borrower and/or any Loan Party (other than a breach which

constitutes a Default under another Section of this Article VII) of any of the

terms or provisions of this Agreement and/or any other Loan Document which is not

remedied within five days after written notice from the Agent or any Lender.

 

7.5                                 Failure

of the Borrower or any of the other Loan Parties to pay when due any Material

Indebtedness; or the default by the Borrower or any of the other Loan Parties

in the performance (beyond the applicable grace period with respect thereto, if

any) of any term, provision or condition contained in any Material Indebtedness

Agreement, or any other event shall occur or condition exist, the effect of

which default, event or condition is to cause, or to permit the holder(s) of

such Material Indebtedness or the lender(s) under any Material Indebtedness

Agreement to cause, such Material Indebtedness to become due prior to its

stated maturity or any commitment to lend under any Material Indebtedness

Agreement to be terminated prior to its stated expiration date; or any Material

Indebtedness of the Borrower or any of the other Loan Parties shall be declared

to be due and payable or required to be prepaid or repurchased (other than by a

regularly scheduled payment) prior to the stated maturity thereof; or the

Borrower or any of its Subsidiaries or any Guarantor shall not pay, or admit in

writing its inability to pay, its debts generally as they become due.

 

7.6                                 The

Borrower or any of the other Loan Parties shall (i) have an order for relief

entered with respect to it under the Federal bankruptcy laws as now or

hereafter in effect, (ii) make an assignment for the benefit of creditors,

(iii) apply for, seek, consent to, or acquiesce in, the appointment of a

receiver, custodian, trustee, examiner, liquidator or similar official for it

or any Term Substantial Portion or Twelve Month Substantial Portion of its

Property, (iv) institute any proceeding seeking an order for relief under the

Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate

it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,

reorganization, arrangement, adjustment or composition of it or its debts under

any law relating to bankruptcy, insolvency or reorganization or relief of

debtors or fail to file an answer or other pleading denying the material

allegations of any such proceeding filed against it, (v) take any corporate or

partnership action to authorize or effect any of the foregoing actions set

forth in this Section 7.6 or (vi) fail to contest in good faith any appointment

or proceeding described in Section 7.7.

 

7.7                                 Without

the application, approval or consent of the Borrower or any of the other Loan

Parties, a receiver, trustee, examiner, liquidator or similar official shall be

appointed for the Borrower or any of the other Loan Parties or any Term

Substantial Portion or Twelve Month Substantial Portion of its Property, or a

proceeding described in Section 7.6(iv) shall be instituted against the

Borrower or any of the other Loan Parties and such appointment continues

undischarged or such proceeding continues undismissed or unstayed for a period

of 60 consecutive days.

 

7.8                                 Any

court, government or governmental agency shall condemn, seize or otherwise

appropriate, or take custody or control of, all or any portion of the Property

of any of the Loan Parties which, when taken together with all other Property

of the Loan Parties so condemned, seized, appropriated, or taken custody or

control of, during the twelve-month period ending with the month in which any

such action occurs, constitutes a Term Substantial Portion or Twelve Month

Substantial Portion.

 

7.9                                 The

Borrower or any of the other Loan Parties shall fail within thirty (30) days to

pay, bond or otherwise discharge one or more (i) judgments or orders for the

payment of money in excess of $5,000,000.00 (or the

 

49

 

equivalent thereof in

currencies other than U.S. Dollars) in the aggregate, or (ii) nonmonetary

judgments or orders which, individually or in the aggregate, could reasonably

be expected to have a Material Adverse Effect, which judgment(s), in any such

case, is/are not stayed on appeal or otherwise being appropriately contested in

good faith.

 

7.10                           Nonpayment

by the Borrower or any Loan Party of any Rate Management Obligation when due or

the breach by the Borrower or any Subsidiary of any term, provision or

condition contained in any Rate Management Transaction or any transaction of

the type described in the definition of “Rate Management Transactions,” whether

or not any Lender or Affiliate of a Lender is a party thereto.

 

7.11                           Any

Change in Control shall occur.

 

7.12                           The

Borrower or any other member of the Controlled Group shall have been notified

by the sponsor of a Multiemployer Plan that it has incurred withdrawal

liability to such Multiemployer Plan in an amount which, when aggregated with

all other amounts required to be paid to Multiemployer Plans by the Borrower or

any other member of the Controlled Group as withdrawal liability (determined as

of the date of such notification), exceeds $10,000,000.00 or requires payments

exceeding $10,000,000.00 per annum.

 

7.13                           The

Borrower or any other member of the Controlled Group shall have been notified

by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in

reorganization or is being terminated, within the meaning of Title IV of ERISA,

if as a result of such reorganization or termination the aggregate annual

contributions of the Borrower and the other members of the Controlled Group

(taken as a whole) to all Multiemployer Plans which are then in reorganization

or being terminated have been or will be increased over the amounts contributed

to such Multiemployer Plans for the respective plan years of each such

Multiemployer Plan immediately preceding the plan year in which the

reorganization or termination occurs by an amount exceeding $10,000,000.00.

 

7.14                           The

Borrower or any of the other Loan Parties shall (i) be the subject of any

proceeding or investigation pertaining to the release by the Borrower, any of

the other Loan Parties or any other Person of any toxic or hazardous waste or

substance into the environment, or (ii) violate any Environmental Law, which,

in the case of an event described in clause (i) or clause (ii), could

reasonably be expected to have a Material Adverse Effect.

 

7.15                           The

occurrence of any “default,” as defined in any Loan Document (other than this

Agreement) or the breach of any of the terms or provisions of any Loan Document

(other than this Agreement), which default or breach continues beyond any

period of grace therein provided.

 

7.16                           Any

Guaranty shall fail to remain in full force or effect or any action shall be

taken to discontinue or to assert the invalidity or unenforceability of any

Guaranty, or any Guarantor shall fail to comply with any of the terms or

provisions of any Guaranty to which it is a party, or any Guarantor shall deny

that it has any further liability under any Guaranty to which it is a party, or

shall give notice to such effect.

 

7.17                           Any

Collateral Document shall for any reason fail to create a valid and perfected

first priority security interest in any Collateral purported to be covered

thereby, except as permitted by the terms of any Collateral Document, or any

Collateral Document shall fail to remain in full force or effect or any action

shall be taken to discontinue or to assert the invalidity or unenforceability

of any Collateral Document, or the Borrower shall fail to comply with any of

the terms or provisions of any Collateral Document.

 

7.18                           The

representations and warranties set forth in Section 5.15 (Plan Assets;

Prohibited Transactions) shall at any time not be true and correct.

 

7.19                           The

Borrower or any Loan Party shall fail to pay when due any Operating Lease

Obligation, obligation with respect to a Letter of Credit, obligation under a

Sale and Leaseback Transaction or Contingent Obligation which in any of those

cases involves a Material Indebtedness.

 

7.20                           The

occurrence of any “Default” or “Event of Default, “ as defined in the Note

Purchase Agreement, or the breach of any of the terms or provisions of the Note

Purchase Agreement beyond any period of grace therein provided.

 

50

 

7.21                           The

occurrence of any default under or breach of any of the terms or provisions of

the applicable documents in the Master Plan Bond Transaction, which default or

breach continues beyond any period of grace therein provided.

 

ARTICLE

VIII

 

ACCELERATION,

WAIVERS, AMENDMENTS AND REMEDIES

 

8.1                                 Acceleration;

Facility LC Collateral Account.

 

(i)                                     If

any Default described in Section 7.6 or 7.7 occurs with respect to the

Borrower, the obligations of the Lenders to make Loans hereunder and the

obligation and power of the LC Issuer to issue Facility LCs shall automatically

terminate and the Obligations shall immediately become due and payable without

any election or action on the part of the Agent, the Collateral Agent, the LC

Issuer or any Lender and the Borrower will be and become thereby

unconditionally obligated, without any further notice, act or demand, to pay to

the Collateral Agent an amount in immediately available funds, which funds

shall be held in the Facility LC Collateral Account, equal to the difference of

(x) an amount equal to the lesser

of (1) $30,000,000.00, or (2) the quotient of (A) the amount of LC Obligations

at such time divided by (B) the aggregate of the Pro Rata Obligation Shares of

all of the Lenders under the Collateral Sharing Agreement at the time of the

determination, less (y) the amount on deposit in the Facility LC Collateral

Account at such time which is free and clear of all rights and claims of third

parties and has not been applied against the Obligations (such difference, the

“Collateral Shortfall Amount”).  If any

other Default occurs, the Required Lenders (or the Agent with the consent of

the Required Lenders) may (a) terminate or suspend the obligations of the Lenders

to make Loans hereunder and the obligation and power of the LC Issuer to issue

Facility LCs, or declare the Obligations to be due and payable, or both,

whereupon the Obligations shall become immediately due and payable, without

presentment, demand, protest or notice of any kind, all of which the Borrower

hereby expressly waives, and (b) upon notice to the Borrower and in addition to

the continuing right to demand payment of all amounts payable under this

Agreement, make demand on the Borrower to pay, and the Borrower will, forthwith

upon such demand and without any further notice or act, pay to the Collateral

Agent the Collateral Shortfall Amount, which funds shall be deposited in the

Facility LC Collateral Account.

 

(ii)                                  If

at any time while any Default is continuing, the Agent determines that the

Collateral Shortfall Amount at such time is greater than zero, the Agent may

make demand on the Borrower to pay, and the Borrower will, forthwith upon such

demand and without any further notice or act, pay to the Collateral Agent the

Collateral Shortfall Amount, which funds shall be deposited in the Facility LC

Collateral Account.

 

(iii)                               The

Collateral Agent may at any time or from time to time after funds are deposited

in the Facility LC Collateral Account, apply such funds to the payment of the

Obligations and any other amounts as shall from time to time have become due

and payable by the Borrower to the Lenders or the LC Issuer pursuant to and in

accordance with the Collateral Sharing Agreement.

 

(iv)                              At

any time while any Default is continuing, neither the Borrower nor any Person

claiming on behalf of or through the Borrower shall have any right to withdraw

any of the funds held in the Facility LC Collateral Account.  After all of the Obligations have been indefeasibly

paid in full and the Aggregate Commitment has been terminated, any funds

remaining in the Facility LC Collateral Account shall be distributed in

accordance with Section 9 of the Collateral Sharing Agreement.

 

51

 

(v)                                 If,

within 30 days after acceleration of the maturity of the Obligations or

termination of the obligations of the Lenders to make Loans and the obligation

and power of the LC Issuer to issue Facility LCs hereunder as a result of any

Default (other than any Default as described in Section 7.6 or 7.7 with respect

to the Borrower) and before any judgment or decree for the payment of the

Obligations due shall have been obtained or entered, the Required Lenders (in

their sole discretion) shall so direct, the Agent shall, by notice to the

Borrower, rescind and annul such acceleration and/or termination.

 

(vi)                              The

Collateral Agent shall have the right to exercise the remedies and other rights

with respect to the Collateral provided in and subject to the Collateral

Documents.

 

8.2                                 Amendments.  Subject to the provisions of this Section

8.2 and the Collateral Sharing Agreement, the Required Lenders (or the Agent

with the consent in writing of the Required Lenders) and the Borrower may enter

into agreements supplemental hereto for the purpose of adding or modifying any

provisions to the Loan Documents or changing in any manner the rights of the

Lenders or the Borrower hereunder or waiving any Default hereunder; provided, however, that no such

supplemental agreement shall, without the consent of all of the Lenders:

 

(i)                                     Extend

the final maturity of any Loan, or extend the expiry date of any Facility LC to

a date after the Facility Termination Date or postpone any regularly scheduled

payment of principal of any Loan or forgive all or any portion of the principal

amount thereof or any Reimbursement Obligation related thereto, or reduce the

rate or extend the time of payment of interest or fees thereon or Reimbursement

Obligation related thereto.

 

(ii)                                  Reduce

the percentage specified in the definition of Required Lenders.

 

(iii)                               Extend

the Facility Termination Date, or reduce the amount or extend the payment date

for, the mandatory payments required under Section 2.4, or increase the amount

of the Aggregate Commitment, except as provided in Section 2.22, or of the

Commitment of any Lender hereunder or the commitment to issue Facility LCs, or

permit the Borrower to assign its rights under this Agreement.

 

(iv)                              Amend

this Section 8.2.

 

(v)                                 Release

any Guarantor except as provided in Section 6.12(iii) or, except as provided in

the Collateral Sharing Agreement and/or the other Collateral Documents, agree

to subordinate the Lenders’ Liens with respect to all or substantially all of

the Collateral.

 

(vi)                              Release

substantially all of the Collateral, provided

that the Lenders acknowledge that the Agent may alone instruct the Collateral

Agent to release any Collateral as and to the extent provided in Section 10.16,

and to the extent the Agent may do so under, and subject to the terms of, the

Collateral Sharing Agreement.

 

No amendment of any

provision of this Agreement relating to the Agent shall be effective without

the written consent of the Agent, and no amendment of any provision relating to

the LC Issuer shall be effective without the written consent of the LC

Issuer.  The Agent may (i) waive payment

of the fee required under Section 12.3.3 and (ii) implement any flex pricing

provisions contained in the fee letter described in Section 10.13 or any

commitment letter delivered in connection with the transaction which is the

subject of this Agreement without obtaining the consent of any other party to

this Agreement so long as, in the case of any implementation of any

flex-pricing provisions, the Agent’s actions would not require consent of all

of the Lenders pursuant to the foregoing provisions of this Section.

 

8.3                                 Preservation

of Rights.  No delay or omission of

the Lenders, the LC Issurer, the Agent or the Collateral Agent to exercise any

right under the Loan Documents shall impair such right or be construed to be a

waiver of any Default or an acquiescence therein, and the making of a Credit

Extension notwithstanding the existence of a Default or the inability of the

Borrower to satisfy the conditions precedent to such Credit Extension shall not

constitute any waiver or acquiescence. 

Any single or partial exercise of any such right shall not preclude

other or further exercise

 

52

 

thereof or the exercise of any other right, and no waiver, amendment or

other variation of the terms, conditions or provisions of the Loan Documents

whatsoever shall be valid unless in writing signed by the Lenders required

pursuant to Section 8.2, and then only to the extent in such writing

specifically set forth.  All remedies

contained in the Loan Documents or by law afforded shall be cumulative and all

shall be available to the Agent, the LC Issuer, the Lenders and the Collateral

Agent until the Secured Obligations have been paid in full.

 

ARTICLE

IX

 

GENERAL

PROVISIONS

 

9.1                                 Survival

of Representations.  All

representations and warranties of the Borrower contained in this Agreement

shall survive the making of the Credit Extensions herein contemplated.

 

9.2                                 Governmental

Regulation.  Anything contained in

this Agreement to the contrary notwithstanding, neither the LC Issuer nor any

Lender shall be obligated to extend credit to the Borrower in violation of any

limitation or prohibition provided by any applicable statute or regulation.

 

9.3                                 Headings.  Section headings in the Loan Documents are

for convenience of reference only, and shall not govern the interpretation of

any of the provisions of the Loan Documents.

 

9.4                                 Entire

Agreement.  The Loan Documents

embody the entire agreement and understanding among the Borrower, the Agent,

the LC Issuer and the Lenders and supersede all prior agreements and

understandings among the Borrower, the Agent, the LC Issuer and the Lenders

relating to the subject matter thereof other than those contained in the fee

letter described in Section 10.13 and any flex pricing provisions contained in

any commitment letter entered into in connection with the transactions that are

the subject of this Agreement, all of which survives and remains in full force

and effect during the term of this Agreement.

 

9.5                                 Several

Obligations; Benefits of this Agreement. 

The respective obligations of the Lenders hereunder are several and not

joint and no Lender shall be the partner or agent of any other (except to the

extent to which the Agent is authorized to act as such).  The failure of any Lender to perform any of

its obligations hereunder shall not relieve any other Lender from any of its

obligations hereunder.  This Agreement

shall not be construed so as to confer any right or benefit upon any Person

other than the parties to this Agreement and their respective successors and

assigns, provided, however, that

the parties hereto expressly agree that the Arranger shall enjoy the benefits

of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically

set forth therein and shall have the right to enforce such provisions on its

own behalf and in its own name to the same extent as if it were a party to this

Agreement.

 

53

 

9.6                                 Expenses;

Indemnification.

 

(i)                                     The

Borrower shall reimburse the Agent and Banc One Capital Markets, Inc. for any

costs, internal charges and out-of-pocket expenses (including reasonable

attorneys’ fees and time charges of attorneys for the Agent, which attorneys

may be employees of the Agent) paid or incurred by the Agent or the Arranger in

connection with the preparation, negotiation, execution, delivery, syndication,

distribution (including, without limitation, via the internet), review,

amendment, modification, and administration of the Loan Documents.  The Borrower also agrees to reimburse the

Agent, Banc One Capital Markets, Inc., the LC Issuer and the Lenders for any

costs, internal charges and out-of-pocket expenses (including reasonable

attorneys’ fees and time charges of attorneys for the Agent, Banc One Capital

Markets, Inc., the LC Issuer and the Lenders, which attorneys may be employees

of the Agent, Banc One Capital Markets, Inc., or the Lenders) paid or incurred

by the Agent, Banc One Capital Markets, Inc., the LC Issuer or any Lender in connection

with the collection and enforcement of the Loan Documents.  Expenses being reimbursed by the Borrower

under this Section include, without limitation, the cost and expense of

obtaining an appraisal, if any, of any parcel of real property or interest in

real property described in any relevant Collateral Documents which appraisal,

if any, shall be in conformity with the applicable requirements of any law or

any governmental rule, regulation, policy, guideline or directive (whether or

not having the force of law), or any interpretation thereof, including, without

limitation, the provisions of Title XI of the Financial Institutions Reform,

Recovery and Enforcement Act of 1989, as amended, reformed or otherwise

modified from time to time, and any rules promulgated to implement such

provisions and costs and expenses incurred in connection with the Reports

described in the following sentence. 

The Borrower acknowledges that from time to time the Agent may prepare

and may distribute to the Lenders (but shall have no obligation or duty to

prepare or to distribute to the Lenders) certain audit reports (the “Reports”)

and/or the Collateral Agent may prepare and distribute Reports to the Agent

(but the Collateral Agent shall have no obligation or duty to prepare or

distribute such Reports, nor shall the Agent have any obligation or duty to

distribute such Reports to the Lenders as it may receive from the Collateral

Agent) pertaining to the Borrower’s Property for internal use by the Agent from

information furnished to it by or on behalf of the Borrower, after the Agent or

the Collateral Agent has exercised its rights of inspection pursuant to this

Agreement.

 

(ii)                                  The

Borrower hereby further agrees to indemnify the Agent, the Arranger, the LC

Issuer and each Lender, their respective affiliates, and each of their

directors, officers and employees against all losses, claims, damages,

penalties, judgments, liabilities and expenses (including, without limitation,

all expenses of litigation or preparation therefor whether or not the Agent,

the Arranger, the LC Issuer any Lender or any affiliate is a party thereto)

which any of them may pay or incur arising out of or relating to this

Agreement, the other Loan Documents, the transactions contemplated hereby or

the direct or indirect application or proposed application of the proceeds of

any Credit Extension hereunder except to the extent that they are determined in

a final non-appealable judgment by a court of competent jurisdiction to have

resulted from the gross negligence or willful misconduct of the party seeking

indemnification.

 

(iii)                               The

Agent and the Lenders shall not be liable for, and the Loan Parties agree that

they shall immediately pay to the Agent and the Lenders when incurred and shall

indemnify, defend and hold the Lenders harmless from and against, all loss,

cost, liability, damage and expense (including, without limitation, reasonable

attorneys’ fees and costs incurred in the investigation, defense and settlement

of claims) that the Agent or the Lenders may suffer or incur as mortgagees as a

result of, or in connection in any way with any applicable Environmental Laws

(including the assertion that any lien existing pursuant to the Environmental

Laws takes priority over the lien or security interests of the Collateral Agent

or Lenders), or any environmental assessment or study from time to time

reasonably undertaken or requested by the Agent or any Lenders or breach of any

covenant or undertaking by the

 

54

 

Loan Parties.  The obligations of the Loan Parties under

this Section 9.6 shall survive the termination of this Agreement.

 

9.7                                 Numbers

of Documents.  All statements,

notices, closing documents, and requests hereunder shall be furnished to the

Agent with sufficient counterparts so that the Agent may furnish one to each of

the Lenders.

 

9.8                                 Accounting.  Except as provided to the contrary herein,

all accounting terms used herein shall be interpreted and all accounting

determinations hereunder shall be made in accordance with Agreement Accounting

Principles, except that any calculation or determination which is to be made on

a consolidated basis shall be made for the Borrower and the other Loan Parties.

 

9.9                                 Severability

of Provisions.  Any provision in any

Loan Document that is held to be inoperative, unenforceable, or invalid in any

jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or

invalid without affecting the remaining provisions in that jurisdiction or the

operation, enforceability, or validity of that provision in any other

jurisdiction, and to this end the provisions of all Loan Documents are declared

to be severable.

 

9.10                           Nonliability

of Lenders.  The relationship

between the Borrower on the one hand and the Lenders, the LC Issuer and the

Agent on the other hand shall be solely that of borrower and lender.  Neither the Agent, the Arranger, the LC

Issuer nor any Lender shall have any fiduciary responsibilities to the

Borrower.  Neither the Agent, the

Arranger, the LC Issuer nor any Lender undertakes any responsibility to the

Borrower to review or inform the Borrower of any matter in connection with any

phase of the Borrower’s business or operations.  The Borrower agrees that neither the Agent, the Arranger, the LC

Issuer nor any Lender shall have liability to the Borrower (whether sounding in

tort, contract or otherwise) for losses suffered by the Borrower in connection

with, arising out of, or in any way related to, the transactions contemplated

and the relationship established by the Loan Documents, or any act, omission or

event occurring in connection therewith, unless it is determined in a final

nonappealable judgment by a court of competent jurisdiction that such losses

resulted from the gross negligence or willful misconduct of the party from

which recovery is sought.  Neither the

Agent, the Arranger, the LC Issuer nor any Lender shall have any liability with

respect to, and the Borrower hereby waives, releases and agrees not to sue for,

any special, indirect, consequential or punitive damages suffered by the

Borrower in connection with, arising out of, or in any way related to the Loan

Documents or the transactions contemplated thereby.

 

9.11                           Confidentiality.  Each Lender agrees to, and to cause its

Affiliates to, hold any confidential information which it may receive from the

Borrower pursuant to this Agreement in confidence, except for disclosure (i) to

its Affiliates and to other Lenders and their respective Affiliates, (ii) to

legal counsel, accountants, and other professional advisors to such Lender or

to a Transferee, (iii) to regulatory officials, (iv) to any Person as requested

pursuant to or as required by law or regulation, (v) to any Person in

connection with any legal proceeding to which such Lender is a party, to the extent

required by law or legal process, provided

that such Lender shall have used its best reasonable efforts to

provide notice to the Borrower of the legal process requesting disclosure of

such confidential information prior to disclosure, (vi) to such Lender’s direct

or indirect contractual counterparties in swap agreements or to legal counsel,

accountants and other professional advisors to such counterparties, provided  that

such Lender is a party to a Rate Management Transaction with the Borrower,

(vii) permitted by Section 12.4, and (viii) to rating agencies if requested or

required by such agencies in connection with a rating relating to the Advances

hereunder.

 

9.12                           Nonreliance.  Each Lender hereby represents that it is not

relying on or looking to any margin stock (as defined in Regulation U of the

Board of Governors of the Federal Reserve System) for the repayment of the

Credit Extensions provided for herein.

 

9.13                           Disclosure.  The Borrower and each Lender hereby

acknowledge and agree that the Agent and/or its Affiliates from time to time

may hold investments in, make other loans to or have other relationships with

the Borrower and its Affiliates.

 

9.14                           Joinder

of Guarantors.  If a Subsidiary is

required to join this Agreement as a Guarantor pursuant to Section 6.14

(regarding Subsidiaries) and/or 6.13 (regarding Permitted Acquisitions) then

(a) such Subsidiary shall execute and deliver to the Agent (1) a Guarantor

Joinder in substantially the form attached hereto as Exhibit N (a

“Guarantor Joinder”) pursuant to which it shall join as a Guarantor each of the

documents to which the Guarantors are

 

55

 

parties; (2) documents in the forms described in Section 4.1 modified

as appropriate to relate to such Subsidiary, including opinions of counsel with

respect to each Subsidiary; (3) documents necessary to grant and perfect first

and prior Liens (other than Permitted Liens) in favor of the Collateral Agent

in all property and assets held by such Subsidiary and in the ownership

interests in such Subsidiary, and (b) to the extent required under this

Agreement, the Loan Party which holds the ownership interest in such Subsidiary

shall take such steps as are necessary to pledge such interests pursuant to the

Pledge and Security Agreement and grant to the Collateral Agent first and prior

Liens (other than Permitted Liens) therein, except to the extent such grant of

security interests is excused or delayed under Section 6.13(iii)(d)(3) of this

Agreement.  In the case of any

Subsidiary formed after the date of this Agreement, the Loan Parties shall

deliver such Guarantor Joinder and related documents to the Agent within five

(5) business days after the date of the filing of such Subsidiary’s Articles of

Incorporation if the Subsidiary is a corporation, the date of the filing of its

certificate of limited partnership if it is a limited partnership, or the date

of its organization if it is an entity other than a limited partnership or

corporation, or the closing date of the acquisition agreement in the case of a

Permitted Acquisition.

 

9.15                           Business

Days. Except as provided in the definition of “Interest Period” in Article

I above, if any provision of this Agreement or any of the other Loan Documents

requires that the Borrower perform any act (other than to make a payment) on a

day that is not a Business Day, then the action shall be deemed to be due on

the first day thereafter that is a Business Day; and in the case of a payment,

shall be due on the last Business Day prior to the date that is not a Business

Day but upon which the payment is due.

 

9.16                           No

Course of Dealing. No course of dealing between the Borrower and the

Lenders, the Agent or the Collateral Agent shall operate as a waiver of any of

the rights of the Lenders, the Agent and the Collateral Agent under any of the

Loan Documents.

 

9.17                           Waivers

by the Borrower. The Borrower hereby waives, to the extent permitted by

applicable law, (a) all presentments, demands for performances, notices of

nonperformance (except to the extent specifically required by this Agreement or

any other of the Loan Documents), protests, notices of protest and notices of

dishonor in connection with this Agreement or any Notes, (b) any

requirement of diligence or promptness on the part of any Lender in enforcement

of rights under the provisions of any of the Loan Documents, and (c) any

requirement of marshaling assets or proceeding against Persons or assets in any

particular order.

 

9.18                           Incorporation

by Reference. All schedules, annexes or other attachments to this Agreement

are incorporated into this Agreement as if set out in full at the first place

in this Agreement that reference is made thereto.

 

ARTICLE

X

 

THE

AGENT

 

10.1                           Appointment;

Nature of Relationship.  Bank One is

hereby appointed by each of the Lenders as its contractual representative

(herein referred to as the “Agent”) hereunder and under each other Loan

Document, and each of the Lenders irrevocably authorizes the Agent to act as

the contractual representative of such Lender with the rights and duties

expressly set forth herein and in the other Loan Documents.  The Agent agrees to act as such contractual

representative upon the express conditions contained in this Article X.  Notwithstanding the use of the defined term

“Agent,” it is expressly understood and agreed that the Agent shall not have

any fiduciary responsibilities to any Lender by reason of this Agreement or any

other Loan Document and that the Agent is merely acting as the contractual

representative of the Lenders with only those duties as are expressly set forth

in this Agreement and the other Loan Documents.  In its capacity as the Lenders’ contractual representative, the

Agent (i) does not hereby assume any fiduciary duties to any of the Lenders,

and (ii) is acting as an independent contractor, the rights and duties of which

are limited to those expressly set forth in this Agreement and the other Loan

Documents.  Each of the Lenders hereby

agrees to assert no claim against the Agent on any agency theory or any other

theory of liability for breach of fiduciary duty, all of which claims each

Lender hereby waives.

 

10.2                           Powers.  The Agent shall have and may exercise such

powers under the Loan Documents as are specifically delegated to the Agent by

the terms of each thereof, together with such powers as are reasonably

incidental

 

56

 

thereto, subject to the terms of the Collateral Sharing Agreement.  The Agent shall have no implied duties to

the Lenders, or any obligation to the Lenders to take any action thereunder

except any action specifically provided by the Loan Documents to be taken by

the Agent.

 

10.3                           General

Immunity.  Neither the Agent nor any

of its directors, officers, agents or employees shall be liable to the Borrower,

the Lenders or any Lender for any action taken or omitted to be taken by it or

them hereunder or under any other Loan Document or in connection herewith or

therewith except to the extent such action or inaction is determined in a final

non-appealable judgment by a court of competent jurisdiction to have arisen

from the gross negligence or willful misconduct of such Person.

 

10.4                           No

Responsibility for Loans, Recitals, etc Neither the Agent nor any of its

directors, officers, agents or employees shall be responsible for or have any

duty to ascertain, inquire into, or verify (a) any statement, warranty or

representation made in connection with any Loan Document or any borrowing

hereunder; (b) the performance or observance of any of the covenants or agreements

of any obligor under any Loan Document, including, without limitation, any

agreement by an obligor to furnish information directly to each Lender; (c) the

satisfaction of any condition specified in Article IV, except receipt of items

required to be delivered solely to the Agent; (d) the existence or possible

existence of any Default or Unmatured Default; (e) the validity,

enforceability, effectiveness, sufficiency or genuineness of any Loan Document

or any other instrument or writing furnished in connection therewith; (f) the

value, sufficiency, creation, perfection or priority of any Lien in any

collateral security; or (g) the financial condition of the Borrower or any

Guarantor of any of the Obligations or of any of the Borrower’s or any such

Guarantor’s respective Subsidiaries. 

The Agent shall have no duty to disclose to the Lenders information that

is not required to be furnished by the Borrower to the Agent at such time, but

is voluntarily furnished by the Borrower to the Agent (either in its capacity

as Agent, or as Collateral Agent, or in its individual capacity).

 

10.5                           Action

on Instructions of Lenders.  The

Agent shall in all cases be fully protected in acting, or in refraining from

acting, hereunder and under any other Loan Document in accordance with written

instructions signed by the Required Lenders, and such instructions and any

action taken or failure to act pursuant thereto shall be binding on all of the

Lenders.  The Lenders hereby acknowledge

that the Agent shall be under no duty to take any discretionary action

permitted to be taken by it pursuant to the provisions of this Agreement or any

other Loan Document unless it shall be requested in writing to do so by the

Required Lenders.  The Agent shall be

fully justified in failing or refusing to take any action hereunder and under

any other Loan Document unless it shall first be indemnified to its

satisfaction by the Lenders pro rata against any and all liability, cost and

expense that it may incur by reason of taking or continuing to take any such

action.

 

10.6                           Employment

of Agents and Counsel.  The Agent

may execute any of its duties as Agent hereunder and under any other Loan

Document by or through employees, agents, and attorneys-in-fact and shall not

be answerable to the Lenders, except as to money or securities received by it

or its authorized agents, for the default or misconduct of any such agents or

attorneys-in-fact selected by it with reasonable care.  The Agent shall be entitled to advice of counsel

concerning the contractual arrangement between the Agent and the Lenders and

all matters pertaining to the Agent’s duties hereunder and under any other Loan

Document.

 

10.7                           Reliance

on Documents; Counsel.  The Agent

shall be entitled to rely upon any Note, notice, consent, certificate, affidavit,

letter, telegram, statement, paper or document believed by it to be genuine and

correct and to have been signed or sent by the proper person or persons, and,

in respect to legal matters, upon the opinion of counsel selected by the Agent,

which counsel may be employees of the Agent.

 

10.8                           Agent’s

Reimbursement and Indemnification. 

The Lenders agree to reimburse and indemnify the Agent ratably in

proportion to their respective Commitments (or, if the Commitments have been

terminated, in proportion to their Commitments immediately prior to such

termination) (i) for any amounts not reimbursed by the Borrower for which the

Agent is entitled to reimbursement by the Borrower under the Loan Documents,

(ii) for any other expenses incurred by the Agent on behalf of the Lenders, in

connection with the preparation, execution, delivery, administration and

enforcement of the Loan Documents (including, without limitation, for any

expenses incurred by the Agent in connection with any dispute between the Agent

and any Lender or between two or more of the Lenders) and (iii) for any

liabilities, obligations, losses, damages, penalties, actions, judgments,

suits, costs, expenses or disbursements of any kind and nature whatsoever which

may be imposed on, incurred by or asserted against the Agent

 

57

 

in any way relating to or arising out of the Loan Documents or any

other document delivered in connection therewith or the transactions

contemplated thereby (including, without limitation, for any such amounts

incurred by or asserted against the Agent in connection with any dispute

between the Agent and any Lender or between two or more of the Lenders), or the

enforcement of any of the terms of the Loan Documents or of any such other

documents, provided that (i) no

Lender shall be liable for any of the foregoing to the extent any of the

foregoing is found in a final non-appealable judgment by a court of competent

jurisdiction to have resulted from the gross negligence or willful misconduct

of the Agent and (ii) any indemnification required pursuant to Section 3.5(vii)

shall, notwithstanding the provisions of this Section 10.8, be paid by the

relevant Lender in accordance with the provisions thereof.  The obligations of the Lenders under this

Section 10.8 shall survive payment of the Obligations and termination of this

Agreement.

 

10.9                           Notice

of Default.  The Agent shall not be

deemed to have knowledge or notice of the occurrence of any Default or

Unmatured Default hereunder unless the Agent has received written notice from a

Lender or the Borrower referring to this Agreement describing such Default or

Unmatured Default and stating that such notice is a “notice of default”.  In the event that the Agent receives such a

notice, the Agent shall give prompt notice thereof to the Lenders.

 

10.10                     Rights as a Lender.  In the event the Agent is a Lender, the

Agent shall have the same rights and powers hereunder and under any other Loan

Document with respect to its Commitment and its Loans as any Lender and may

exercise the same as though it were not the Agent, and the term “Lender” or

“Lenders” shall, at any time when the Agent is a Lender, unless the context

otherwise indicates, include the Agent in its individual capacity.  The Agent and its Affiliates may accept

deposits from, lend money to, and generally engage in any kind of trust, debt,

equity or other transaction, in addition to those contemplated by this

Agreement or any other Loan Document, with the Borrower or any of its

Subsidiaries in which the Borrower or such Subsidiary is not restricted hereby

from engaging with any other Person. 

The Agent, in its individual capacity, is not obligated to be remain a

Lender.

 

10.11                     Lender Credit Decision.  Each Lender acknowledges that it has, independently

and without reliance upon the Agent, the Arranger or any other Lender and based

on the financial statements prepared by the Borrower and such other documents

and information as it has deemed appropriate, made its own credit analysis and

decision to enter into this Agreement and the other Loan Documents.  Each Lender also acknowledges that it will,

independently and without reliance upon the Agent, the Arranger or any other

Lender and based on such documents and information as it shall deem appropriate

at the time, continue to make its own credit decisions in taking or not taking

action under this Agreement and the other Loan Documents.

 

10.12                     Successor Agent.  The Agent may resign at any time by giving

written notice thereof to the Lenders and the Borrower, such resignation to be

effective upon the appointment of a successor Agent or, if no successor Agent

has been appointed, forty-five days after the retiring Agent gives notice of

its intention to resign.  The Agent may

be removed at any time with or without cause by written notice received by the

Agent from the Required Lenders, such removal to be effective on the date

specified by the Required Lenders.  Upon

any such resignation or removal, the Required Lenders shall have the right to

appoint, on behalf of the Borrower and the Lenders, a successor Agent.  If no successor Agent shall have been so

appointed by the Required Lenders within thirty days after the resigning

Agent’s giving notice of its intention to resign, then the resigning Agent may

appoint, on behalf of the Borrower and the Lenders, a successor Agent.  Notwithstanding the previous sentence, the

Agent may at any time without the consent of the Borrower or any Lender,

appoint any of its Affiliates which is a commercial bank as a successor Agent

hereunder.  If the Agent has resigned or

been removed and no successor Agent has been appointed, the Lenders may perform

all the duties of the Agent hereunder and the Borrower shall make all payments

in respect of the Obligations to the applicable Lender and for all other

purposes shall deal directly with the Lenders. 

No successor Agent shall be deemed to be appointed hereunder until such

successor Agent has accepted the appointment. 

Any such successor Agent shall be a commercial bank having capital and

retained earnings of at least $100,000,000. 

Upon the acceptance of any appointment as Agent hereunder by a successor

Agent, such successor Agent shall thereupon succeed to and become vested with

all the rights, powers, privileges and duties of the resigning or removed

Agent.  Upon the effectiveness of the

resignation or removal of the Agent, the resigning or removed Agent shall be

discharged from its duties and obligations hereunder and under the Loan

Documents.  After the effectiveness of

the resignation or removal of an Agent, the provisions of this Article X shall

continue in effect for the benefit of such Agent in respect of any actions

taken or omitted to be taken by it while it was acting as the Agent hereunder

and under the other Loan Documents.  In

 

58

 

the event that there is a successor to the Agent by merger, or the

Agent assigns its duties and obligations to an Affiliate pursuant to this

Section 10.12, then the term “Prime Rate” as used in this Agreement shall mean

the prime rate, base rate or other analogous rate of the new Agent.

 

10.13                     Agent and Arranger Fees.  The Borrower agrees to pay to the Agent and

the Arranger, for their respective accounts, the fees agreed to by the

Borrower, the Agent and the Arranger pursuant to that certain letter agreement

dated February 7, 2003, or as otherwise agreed from time to time.

 

10.14                     Delegation to Affiliates.  The Borrower and the Lenders agree that the

Agent may delegate any of its duties under this Agreement to any of its

Affiliates.  Any such Affiliate (and

such Affiliate’s directors, officers, agents and employees) which performs

duties in connection with this Agreement shall be entitled to the same benefits

of the indemnification, waiver and other protective provisions to which the

Agent is entitled under Articles IX and X.

 

10.15                     Execution of Collateral

Documents.  The Lenders hereby

empower and authorize the Agent to cause the Collateral Agent, to the extent

the Agent may do so under, and subject to the terms of, the Collateral Sharing

Agreement, to execute and deliver to the Borrower on their behalf the Security

Agreement(s) and all related financing statements and any financing statements,

agreements, documents or instruments as shall be necessary or appropriate to

effect the purposes of the Security Agreement(s).

 

10.16                     Collateral Releases.  The Lenders acknowledge that the Collateral

Agent is authorized, pursuant and subject to the terms of, the Collateral

Sharing Agreement (including, without limitation, any required consent or

authorization, in certain circumstances, of the “Requisite Creditors” as

defined in the Collateral Sharing Agreement), to execute and deliver to the

Borrower on their behalf any agreements, documents or instruments as shall be

necessary or appropriate to effect any releases of Collateral which shall be

permitted by the terms of this Agreement (including, for example, lease, sale

or other disposition of Property permitted in Section 6.12) or of any other

Loan Document or which shall otherwise have been approved by the Required

Lenders (or, if required by the terms of Section 8.2, all of the Lenders, or,

if required by the Collateral Sharing Agreement, the Requisite Creditors) in

writing (or as otherwise provided in the Collateral Sharing Agreement), without

further authorization or consent from the Lenders; and without limiting any

other consents or authorizations provided by the Lenders, the Lenders hereby

consent to the Collateral Agent having and exercising that authority.

 

10.17                     Co-Agents, Documentation Agent,

Syndication Agent, etc.  Neither any

of the Lenders identified in this Agreement as a “co-agent” nor the

Documentation Agent or the Syndication Agent shall have any right, power,

obligation, liability, responsibility or duty under this Agreement other than

those applicable to all Lenders as such. 

Without limiting the foregoing, none of such Lenders shall have or be

deemed to have a fiduciary relationship with any Lender.  Each Lender hereby makes the same

acknowledgments with respect to such Lenders as it makes with respect to the

Agent in Section 10.11.

 

10.18                     Collateral Sharing Agreement.  The Lenders acknowledge that Bank One is

entering into the Collateral Sharing Agreement as the Collateral Agent to act

as the contractual representative of the Lenders and the Term Note Purchasers

as provided in, and with the rights and duties expressly set forth in, the

Collateral Sharing Agreement.  The

Lenders consent to Bank One entering into that Collateral Sharing Agreement and

to Bank One having and exercising such powers and duties under the Collateral

Sharing Agreement and the other Loan Documents as are specifically delegated to

Bank One as Collateral Agent by the terms of each thereof, together with such

powers as are reasonably incidental thereto. 

Bank One shall have no implied duties to the Lenders, or any obligation

to the Lenders to take any action thereunder, except any action specifically

provided by the Collateral Sharing Agreement. 

The Agent shall have no duty to take, or refrain from taking, any action

under this Agreement if such action or restraint by the Agent would require

action by the Collateral Agent under the Collateral Sharing Agreement which the

Collateral Agent is not authorized to take. 

To the extent of any conflict between the Collateral Sharing Agreement

and this Agreement, the Collateral Sharing Agreement shall prevail and control.

 

59

 

ARTICLE

XI

 

SETOFF;

RATABLE PAYMENTS

 

11.1                           Setoff.  In addition to, and without limitation of,

any rights of the Lenders under applicable law, if the Borrower becomes

insolvent, however evidenced, or any Default occurs, any and all deposits

(including all account balances, whether provisional or final and whether or not

collected or available, but not including funds held by a Loan Party which are

held by that Loan Party only as custodian or trustee (and in which that Loan

Party does not have a beneficial interest) such as, (by way of example and not

limitation), Horseman’s Accounts, and which are clearly labeled to indicate

that such funds are so held by the Loan Party) and any other Indebtedness at

any time held or owing by any Lender or any Affiliate of any Lender to or for

the credit or account of the Borrower may be offset and applied toward the

payment of the Obligations owing to such Lender, whether or not the

Obligations, or any part thereof, shall then be due.

 

11.2.                        Ratable Payments.  If any Lender, whether by setoff or

otherwise, has payment made to it upon its Outstanding Credit Exposure (other

than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater

proportion than that received by any other Lender, such Lender agrees, promptly

upon demand, to purchase a portion of the Aggregate Outstanding Credit Exposure

held by the other Lenders so that after such purchase each Lender will hold its

Pro Rata Share of the Aggregate Outstanding Credit Exposure.  If any Lender, whether in connection with

setoff or amounts which might be subject to setoff or otherwise, receives

collateral or other protection for its Obligations or such amounts which may be

subject to setoff, such Lender agrees, promptly upon demand, to take such

action necessary such that all Lenders share in the benefits of such collateral

ratably in proportion to their respective Pro Rata Shares of the Aggregate

Outstanding Credit Exposure.  In case

any such payment is disturbed by legal process, or otherwise, appropriate

further adjustments shall be made.

 

ARTICLE

XII

 

BENEFIT

OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

 

12.1                           Successors

and Assigns.  The terms and

provisions of the Loan Documents shall be binding upon and inure to the benefit

of the Borrower, each other Loan Party and the Lenders and their respective

successors and assigns permitted hereby, except that (i) the Borrower shall not

have the right to assign its rights or obligations under the Loan Documents

without the prior written consent of each Lender, (ii) any assignment by any

Lender must be made in compliance with Section 12.3, and (iii) any transfer by

Participation must be made in compliance with Section 12.2.  Any attempted assignment or transfer by any

party not made in compliance with this Section 12.1 shall be null and void,

unless such attempted assignment or transfer is treated as a participation in

accordance with Section 12.3.3.  The

parties to this Agreement acknowledge that clause (ii) of this Section 12.1

relates only to absolute assignments and this Section 12.1 does not prohibit

assignments creating security interests, including, without limitation, (x) any

pledge or assignment by any Lender of all or any portion of its rights under

this Agreement and any Note to a Federal Reserve Bank or (y) in the case of a

Lender which is a Fund, any pledge or assignment of all or any portion of its

rights under this Agreement and any Note to its trustee in support of its

obligations to its trustee; provided,

however, that no such pledge or assignment creating a security

interest shall release the transferor Lender from its obligations hereunder

unless and until the parties thereto have complied with the provisions of

Section 12.3.  The Agent may treat the

Person which made any Loan or which holds any Note as the owner thereof for all

purposes hereof unless and until such Person complies with Section 12.3; provided, however, that the Agent may in

its discretion (but shall not be required to) follow instructions from the

Person which made any Loan or which holds any Note to direct payments relating

to such Loan or Note to another Person. 

Any assignee of the rights to any Loan or any Note agrees by acceptance

of such assignment to be bound by all the terms and provisions of the Loan

Documents.  Any request, authority or

consent of any Person, who at the time of making such request or giving such

authority or consent is the owner of the rights to any Loan (whether or not a

Note has been issued in evidence thereof), shall be conclusive and binding on

any subsequent holder or assignee of the rights to such Loan.

 

60

 

12.2                           Participations.

 

12.2.1                  Permitted

Participants; Effect.  Any Lender

may at any time sell to one or more banks or other entities (“Participants”)

participating interests in any Outstanding Credit Exposure of such Lender, any

Note held by such Lender, any Commitment of such Lender or any other interest

of such Lender under the Loan Documents. 

In the event of any such sale by a Lender of participating interests to

a Participant, such Lender’s obligations under the Loan Documents shall remain

unchanged, such Lender shall remain solely responsible to the other parties

hereto for the performance of such obligations, such Lender shall remain the

owner of its Outstanding Credit Exposure and the holder of any Note issued to

it in evidence thereof for all purposes under the Loan Documents, all amounts

payable by the Borrower under this Agreement shall be determined as if such

Lender had not sold such participating interests, and the Borrower, the Agent

and the Collateral Agent shall continue to deal solely and directly with such

Lender in connection with such Lender’s rights and obligations under the Loan

Documents.

 

12.2.2                  Voting Rights.  Each Lender shall retain the sole right to

approve, without the consent of any Participant, any amendment, modification or

waiver of any provision of the Loan Documents other than any amendment,

modification or waiver with respect to any Credit Extension or Commitment in

which such Participant has an interest which would require consent of all of the

Lenders pursuant to the terms of Section 8.2 or of any other Loan Document.

 

12.2.3                  Benefit of

Certain Provisions.  The Borrower

agrees that each Participant shall be deemed to have the right of setoff

provided in Section 11.1 in respect of its participating interest in amounts

owing under the Loan Documents to the same extent as if the amount of its

participating interest were owing directly to it as a Lender under the Loan

Documents, provided that each

Lender shall retain the right of setoff provided in Section 11.1 with respect

to the amount of participating interests sold to each Participant.  The Lenders agree to share with each

Participant, and each Participant, by exercising the right of setoff provided

in Section 11.1, agrees to share with each Lender, any amount received pursuant

to the exercise of its right of setoff, such amounts to be shared in accordance

with Section 11.2 as if each Participant were a Lender.  The Borrower further agrees that each

Participant shall be entitled to the benefits of and bound by the provisions of

Section 2.21 and Sections 3.1, 3.2, 3.4 and 3.5 to the same extent as if it

were a Lender and had acquired its interest by assignment pursuant to Section

12.3, provided that (i) a

Participant shall not be entitled to receive any greater payment under Section

3.1, 3.2 or 3.5 than the Lender who sold the participating interest to such

Participant would have received had it retained such interest for its own

account, unless the sale of such interest to such Participant is made with the

prior written consent of the Borrower, and (ii) any Participant not

incorporated under the laws of the United States of America or any State

thereof agrees to comply with the provisions of Section 3.5 to the same extent

as if it were a Lender.

 

12.3                           Assignments.

 

12.3.1                  Permitted

Assignments.  Any Lender may at any

time assign to one or more banks or other entities (“Purchasers”) all or any

part of its rights and obligations under the Loan Documents.  Such assignment shall be substantially in

the form of Exhibit C or in such other form as may be agreed to by the

parties thereto.  Each such assignment

with respect to a Purchaser which is not a Lender or an Affiliate of a Lender

or an Approved Fund shall either be in an amount equal to the entire applicable

Commitment and Loans of the assigning Lender or  (unless each of the Borrower and the Agent otherwise consents) be

in an aggregate amount not less than $5,000,000.  The amount of the assignment shall be based on the Commitment or

outstanding Loans (if the Commitment has been terminated) subject to the

assignment, determined as of the date of such assignment or as of the “Trade

Date,” if the “Trade Date” is specified in the assignment.

 

12.3.2                  Consents.  The consent of the Borrower and the Agent

shall be required prior to an assignment becoming effective unless the

Purchaser is a Lender, an Affiliate of a Lender or an Approved Fund, provided that the consent of the Borrower

shall not be required if a Default has occurred and is continuing.  The consent of the Agent shall be required

prior to an assignment becoming effective unless the Purchaser is a Lender, an

Affiliate of a Lender or an Approved Fund. 

Any consent required under this Section 12.3.2 shall not be unreasonably

withheld or delayed.

 

61

 

12.3.3                  Effect;

Effective Date.  Upon (i) delivery

to the Agent of an assignment, together with any consents required by Sections

12.3.1 and 12.3.2, and (ii) payment of a $3,500 fee to the Agent (payable by a

party other than a Loan Party) for processing such assignment (unless such fee

is waived by the Agent), such assignment shall become effective on the

effective date specified in such assignment. 

The assignment shall contain a representation by the Purchaser to the

effect that none of the consideration used to make the purchase of the

Commitment and Outstanding Credit Exposure under the applicable assignment

agreement constitutes “plan assets” as defined under ERISA and that the rights

and interests of the Purchaser in and under the Loan Documents will not be

“plan assets” under ERISA.  On and after

the effective date of such assignment, such Purchaser shall for all purposes be

a Lender party to this Agreement and any other Loan Document executed by or on

behalf of the Lenders and shall have all the rights and obligations of a Lender

under the Loan Documents, to the same extent as if it were an original party

thereto, and the transferor Lender shall be released with respect to the

Commitment and Outstanding Credit Exposure assigned to such Purchaser without

any further consent or action by the Borrower, the Lenders or the Agent.  In the case of an assignment covering all of

the assigning Lender’s rights and obligations under this Agreement, such Lender

shall cease to be a Lender hereunder but shall continue to be entitled to the

benefits of, and subject to, those provisions of this Agreement and the other

Loan Documents which survive payment of the Obligations and termination of the

applicable agreement.  Any assignment or

transfer by a Lender of rights or obligations under this Agreement that does

not comply with this Section 12.3 shall be treated for purposes of this

Agreement as a sale by such Lender of a participation in such rights and

obligations in accordance with Section 12.2. 

Upon the consummation of any assignment to a Purchaser pursuant to this

Section 12.3.3, the transferor Lender, the Agent and the Borrower shall, if the

transferor Lender or the Purchaser desires that its Loans be evidenced by

Notes, make appropriate arrangements so that new Notes or, as appropriate,

replacement Notes are issued to such transferor Lender and new Notes or, as

appropriate, replacement Notes, are issued to such Purchaser, in each case in

principal amounts reflecting their respective Commitments, as adjusted pursuant

to such assignment.

 

12.3.4                  Register.  The Agent, acting solely for this purpose as

an agent of the Borrower, shall maintain at one of its offices in Louisville,

Kentucky a copy of each Assignment and Assumption delivered to it and a

register for the recordation of the names and addresses of the Lenders, and the

Commitments of, and principal amounts of the Loans owing to, each Lender

pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be

conclusive, and the Borrower, the Agent and the Lenders may treat each Person

whose name is recorded in the Register pursuant to the terms hereof as a Lender

hereunder for all purposes of this Agreement, notwithstanding notice to the

contrary.  The Register shall be

available for inspection by the Borrower and any Lender, at any reasonable time

and from time to time upon reasonable prior notice.

 

12.4                           Dissemination

of Information.  The Borrower

authorizes each Lender to disclose to any Participant or Purchaser or any other

Person acquiring an interest in the Loan Documents by operation of law (each a

“Transferee”) and any prospective Transferee any and all information in such

Lender’s possession concerning the creditworthiness of the Borrower and its

Subsidiaries, including without limitation any information contained in any

Reports; provided that each

Transferee and prospective Transferee agrees to be bound by Section 9.11 of

this Agreement.

 

12.5                           Tax

Treatment.  If any interest in any

Loan Document is transferred to any Transferee which is not incorporated under

the laws of the United States or any State thereof, the transferor Lender shall

cause such Transferee, concurrently with the effectiveness of such transfer, to

comply with the provisions of Section 3.5(iv).

 

ARTICLE

XIII

 

NOTICES

 

13.1                           Notices.  Except as otherwise permitted by Section

2.10 with respect to borrowing notices, all notices, requests and other

communications to any party hereunder shall be in writing (including electronic

transmission,

 

62

 

facsimile transmission or similar writing) and shall be given to such

party: (x) in the case of the Borrower, any other Loan Party, or the Agent, at

the address of Borrower or facsimile number of Borrower set forth on the

signature pages hereof, (y) in the case of any Lender, at its address or

facsimile number set forth below its signature hereto, or (z) in the case of

any party, at such other address or facsimile number as such party may

hereafter specify for the purpose by notice to the Agent and the Borrower in

accordance with the provisions of this Section 13.1.  Each such notice, request or other communication shall be

effective (i) if given by facsimile transmission, when transmitted to the

facsimile number specified in this Section and confirmation of receipt is

received, (ii) if given by mail, 72 hours after such communication is deposited

in the mails with first class postage prepaid, addressed as aforesaid, or (iii)

if given by any other means, when delivered (or, in the case of electronic

transmission, received) at the address specified in this Section; provided that notices to the Agent under

Article II shall not be effective until received.

 

13.2                           Change

of Address.  The Borrower, any other

Loan Party, the Agent and any Lender may each change the address for service of

notice upon it by a notice in writing to the other parties hereto.

 

ARTICLE

XIV

 

COUNTERPARTS

 

This Agreement may be executed in any number of

counterparts, all of which taken together shall constitute one agreement, and

any of the parties hereto may execute this Agreement by signing any such

counterpart.  This Agreement shall be

effective when it has been executed by the Borrower, the Loan Parties, the

Agent, the LC Issuer and the Lenders and each party has notified the Agent by

facsimile transmission or telephone that it has taken such action.

 

ARTICLE

XV

 

CHOICE

OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

 

15.1                        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.

 

15.2                        CONSENT

TO JURISDICTION.  THE

BORROWER HEREBY IRREVOCABLY SUBMITS 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

DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT

OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND

IRREVOCABLY WAIVES ANY OBJECTION IT 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 THE BORROWER IN THE COURTS OF ANY

OTHER JURISDICTION.  ANY JUDICIAL

PROCEEDING BY THE BORROWER 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.

 

63

 

15.3                        WAIVER OF

JURY TRIAL.  THE BORROWER,

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 BLANK

AND

SIGNATURES BEGIN ON THE FOLLOWING PAGE.]

 

64

 

IN WITNESS WHEREOF, the Borrower, the Lenders, the LC

Issuer and the Agent have executed this Agreement as of the date first above

written.

 

	

   

  	

  CHURCHILL

  DOWNS INCORPORATED

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention:  General Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  GUARANTORS:

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CHURCHILL

  DOWNS MANAGEMENT

  COMPANY

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CHURCHILL

  DOWNS INVESTMENT

  COMPANY

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  RACING

  CORPORATION OF AMERICA

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
										

 

65

 

	

   

  	

  CALDER

  RACE COURSE, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  TROPICAL

  PARK, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CHURCHILL

  DOWNS CALIFORNIA

  COMPANY

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CHURCHILL

  DOWNS CALIFORNIA

  FALL OPERATING COMPANY

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
								

 

66

 

	

   

  	

  ARLINGTON

  PARK RACECOURSE, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ARLINGTON

  MANAGEMENT SERVICES,

  LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ARLINGTON

  OTB CORP.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Mary Ann Guenther

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  QUAD

  CITY DOWNS, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Mary Ann Guenther

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
							

 

67

 

	

   

  	

  CDIP,

  LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  CDIP

  HOLDINGS, LLC

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ELLIS

  PARK RACE COURSE, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Rebecca C. Reed

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

   

  	

  Secretary

  	

   

  
	

   

  	

   

  	

  700 Central Avenue

  
	

   

  	

   

  	

  Louisville, Kentucky

  40208

  
	

   

  	

  Attention: General

  Counsel

  
	

   

  	

   

  	

  Telephone:

  	

  (502) 636-4429

  
	

   

  	

   

  	

  FAX:

  	

  (502) 636-4439

  
							

 

68

 

	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $30,000,000.00

  	

   

  	

  BANK

  ONE, KENTUCKY, NA as Agent,

  Individually, as a Lender and as Agent

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ H. Joseph Brenner

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  H. Joseph Brenner

  
	

   

  	

   

  	

   

  	

   

  	

  First Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  416 W. Jefferson Street

  
	

   

  	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40202

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  H. Joseph Brenner

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 566-2789

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 566-8339

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  With a copy to:

  
	

   

  	

   

  	

   

  	

  Frost Brown Todd LLC

  
	

   

  	

   

  	

   

  	

  Suite 3200

  
	

   

  	

   

  	

   

  	

  400 W. Market Street

  
	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40202

  
	

   

  	

   

  	

   

  	

  Attention: Charles R.

  Keeton, Esq.

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 568-0257

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 581-1087

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $30,000,000.00

  	

   

  	

  PNC

  BANK, NATIONAL ASSOCIATION

  As a Lender, as LC Issuer and as Syndication Agent

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Richard M. Ellis

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Richard M. Ellis

  
	

   

  	

   

  	

   

  	

   

  	

  Senior Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  500 West Jefferson

  Street

  
	

   

  	

   

  	

   

  	

   

  	

  2nd Floor

  
	

   

  	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40296

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Shelly Stephenson, Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 581-4522

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 581-3355

  
								

 

69

 

	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $25,000,000.00

  	

   

  	

  NATIONAL

  CITY BANK OF KENTUCKY

  
	

   

  	

   

  	

   

  	

  As a Lender and as

  Documentation Agent

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Kevin L. Anderson

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Kevin L. Anderson

  
	

   

  	

   

  	

   

  	

   

  	

  Senior Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  101 South Fifth Street

  
	

   

  	

   

  	

   

  	

   

  	

  37th Floor

  
	

   

  	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40202

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Kevin L. Anderson

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 581-7894

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 581-4424

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $22,500,000.00

  	

   

  	

  FIFTH

  THIRD BANK, KENTUCKY, INC.

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Edward B. Martin

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Edward B. Martin

  
	

   

  	

   

  	

   

  	

   

  	

  Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  401 South 4th

  Avenue

  
	

   

  	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40202-3411

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Edward B. Martin

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 562-5536

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 562-5540

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $18,500,000.00

  	

   

  	

  BRANCH

  BANKING & TRUST COMPANY

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Frank R. Eckerd

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Frank R. Eckerd

  
	

   

  	

   

  	

   

  	

   

  	

  Senior Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  500 West Broadway

  
	

   

  	

   

  	

   

  	

   

  	

  7th Floor

  
	

   

  	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40202

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Frank R. Eckerd

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 562-5877

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 562-6990

  
										

 

70

 

	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $18,500,000.00

  	

   

  	

  COMERICA

  BANK

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Kathleen Kasperek

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Kathleen Kasperek

  
	

   

  	

   

  	

   

  	

   

  	

  Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  500 Woodward Avenue

  
	

   

  	

   

  	

   

  	

   

  	

  MC 3269 – 9th

  Floor

  
	

   

  	

   

  	

   

  	

   

  	

  Detroit, Michigan  48214

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Kathleen Kasperek

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (313) 222-3808

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (313) 222-9516

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $18,500,000.00

  	

   

  	

  U.S.

  BANK NATIONAL ASSOCIATION

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ David Wombwell

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  David Wombwell

  
	

   

  	

   

  	

   

  	

   

  	

  Senior Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  One Financial Square

  
	

   

  	

   

  	

   

  	

   

  	

  Louisville,

  Kentucky  40202-3322

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  David Wombwell

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (502) 565-6685

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (502) 565-6460

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $18,500,000.00

  	

   

  	

  SUN

  TRUST BANK

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Scott Corely

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Scott Corley

  
	

   

  	

   

  	

   

  	

   

  	

  Director

  
	

   

  	

   

  	

   

  	

   

  	

  201 4th

  Avenue N.

  
	

   

  	

   

  	

   

  	

   

  	

  3rd Floor

  
	

   

  	

   

  	

   

  	

   

  	

  Nashville,

  Tennessee  37219

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Scott Corley

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (615) 748-5715

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (615) 748-5269

  
								

 

71

 

	

  Commitment

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  $18,500,000.00

  	

   

  	

  BANK

  OF AMERICA

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

   

  	

  /s/ Bryan Hulker

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Bryan Hulker

  
	

   

  	

   

  	

   

  	

   

  	

  Senior Vice President

  
	

   

  	

   

  	

   

  	

   

  	

  414 Union Street

  
	

   

  	

   

  	

   

  	

   

  	

  TN1-100-04-01 – 4th

  Floor

  
	

   

  	

   

  	

   

  	

   

  	

  Nashville,

  Tennessee  37239

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Attention:  Bryan Hulker

  
	

   

  	

   

  	

   

  	

   

  	

  Telephone:

  	

  (615) 749-3001

  
	

   

  	

   

  	

   

  	

   

  	

  FAX:

  	

  (615) 749-4762

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Total    $200,000,000.00

  	

   

  	

   

  	

   

  	

   

  
								

 

The other schedules and other attachments to this agreement, which

disclose certain information responsive to provisions of the agreement or

reflect the terms of the agreement, have been omitted because they are

duplicative of information contained in the agreement and/or are not material.

The registrant agrees to furnish supplementally a copy of any such omitted

schedules or other attachments to the Commission upon request.

 

72

 

PRICING SCHEDULE

 

	

  APPLICABLE MARGIN

  	

   

  	

  LEVEL I

  STATUS

  	

   

  	

  LEVEL II

  STATUS

  	

   

  	

  LEVEL III

  STATUS

  	

   

  	

  LEVEL IV

  STATUS

  	

   

  
	

  Eurodollar Rate

  	

   

  	

  1.25

  	

  %

  	

  1.50

  	

  %

  	

  1.75

  	

  %

  	

  2.25

  	

  %

  
	

  Floating Rate

  	

   

  	

  0

  	

  %

  	

  0

  	

  %

  	

  0.25

  	

  %

  	

  0.75

  	

  %

  

 

	

  APPLICABLE FEE RATE

  	

   

  	

  LEVEL I

  STATUS

  	

   

  	

  LEVEL II

  STATUS

  	

   

  	

  LEVEL III

  STATUS

  	

   

  	

  LEVEL IV

  STATUS

  	

   

  
	

  Commitment Fee

  	

   

  	

  0.25

  	

  %

  	

  0.30

  	

  %

  	

  0.375

  	

  %

  	

  0.50

  	

  %

  

 

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 the Borrower

has not qualified for Level I Status, Level II Status or Level III Status.

 

“Status” means either Level I Status, Level II Status,

Level III Status or Level IV 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.

 

73

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]