AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT

 

 

 

 

THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”) is made as of May 2, 2007 by and among Churchill Downs Incorporated, a Kentucky corporation (the “Borrower”), the Guarantors, the financial institutions listed on the signature pages hereto as the “Lenders” referred to below and JPMorgan Chase Bank, National Association, as the agent and the collateral agent for the Lenders (the “Agent”). Capitalized terms used but not otherwise defined herein shall have the respective meanings given to them in the “Credit Agreement” referred to below.

 

 

WHEREAS, the signatories hereto are parties to that certain Amended and Restated Credit Agreement, dated as of September 23, 2005, by and among the Borrower, the Guarantors, the financial institutions from time to time parties thereto (the “Lenders”) and the Agent (as the same may from time to time be amended, restated, supplemented or otherwise modified, the “Credit Agreement”);

 

WHEREAS, certain existing Lenders (the “Departing Lenders”) identified on the signature pages hereof as Departing Lenders have decided to cease acting as Lenders;

 

WHEREAS, the parties hereto have agreed to amend the Credit Agreement on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Guarantors, the Lenders and the Administrative Agent have agreed to the following amendment to the Credit Agreement.

 

1.   Amendments. Effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows:

 

(a)   Section 1.1 of the Credit Agreement is hereby amended to insert the following new definitions thereto in the appropriate alphabetical order as follows:

 

“ContentCo” means CD ContentCo HC, LLC, a Delaware limited liability company existing to hold Borrower’s interest in TrackNet Media Group, LLC, a Delaware limited liability company and joint venture formed by Borrower and Magna Entertainment Corp., a Delaware corporation (“Magna”), which joint venture will consolidate racing signals, wagering rights, account wagering and related businesses of the Borrower and its Subsidiaries and third parties, including without limitation, Magna.

 

“Florida Casino Project” means the real property located in Miami-Dade County, Florida and the construction and development of a gaming and/or slot machine establishment thereon and related improvements, and other property and assets directly related or ancillary thereto or used in connection therewith, including, without limitation, any building, restaurant, hotel, theater, parking facilities, retail shops, land, golf courses, and other recreation and entertainment facilities, marina, vessel, barge, ship and equipment, and all other property related thereto to the extent required under applicable gaming laws, liquor laws or any other applicable laws to be registered with, or approved by, or not disapproved by, all applicable gaming authorities or liquor authorities or any other governmental authorities, as the case may be.

“HRTV” means CD HRTV HC, LLC, a Delaware limited liability company existing to hold Borrower’s fifty percent (50%) interest in Magna’s horse racing channel HRTV™, which channel engages or will engage in the production of television broadcast of racing signals and related businesses of the Borrower and its Subsidiaries and third parties, including without limitation, Magna.

(b)   Section 1.1 of the Credit Agreement is hereby amended to restate the definition of “Permitted Investment” in its entirety as follows:

 

“Permitted Investment” means (i) a possible investment of up to $90,000,000 in Wagerco; (ii) a possible investment of up to $10,000,0000 in ContentCo; and (iii) a possible investment of up to $10,000,000 in HRTV.

(c)   Section 1.1 of the Credit Agreement is hereby amended to restate the following definitions in their entirety as follows:

 

“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. The Indebtedness of any Excluded Subsidiary shall not be included in Consolidated Indebtedness.

“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. The net income (or loss) of any Excluded Subsidiary shall not be included in Consolidated Net Income.

“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. The total stockholders’ equity of any Excluded Subsidiary shall not be included in Consolidated Net Worth.

“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. The Rentals of any Exlcuded Subsidiary shall not be included in Consolidated Rentals.

“Excluded Subsidiaries” means any Excluded Entity which is a Subsidiary of any of the Loan Parties. The Excluded Subsidiaries on the date of Amendment No. 1 to this Agreement are: Churchill Downs Pennsylvania Company (formerly known as Churchill Downs California Foodservices Company), Tracknet, LLC, Churchill Downs California Company, Churchill Downs California Fall Operating Company, Fair Grounds International Ventures, L.L.C., a Louisiana limited liability company, F.G. Staffing Services, Inc., a Louisiana corporation, CD ContentCo HC, LLC, a Delaware limited liability company and CD HRTV HC, LLC, a Delaware limited liability company.

(d)   Section 2.1 is hereby amended to (x) delete in its entirety the sentence reading as follows: “On the date of this Agreement, the amount of the Aggregate Commitment is $200,000,000.” and (y) delete the reference to “$250,000,000” appearing therein and substitute “$170,000,000” in lieu thereof.

 

(e)   Each of Section 2.22.1 and Section 2.22.5 of the Credit Agreement is hereby amended to delete the reference to “$250,000,000” appearing therein and substitute “$170,000,000” in lieu thereof.

 

(f)   Section 5.5 of the Credit Agreement is hereby amended to delete the reference to “December 31, 2004” appearing therein and substitute “December 31, 2006” in lieu thereof.

 

(g)   Section 6.24.2 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

6.24.2 Leverage Ratio. The Borrower will not permit the Leverage Ratio, determined as of the end of each of its fiscal quarters, of (i) Consolidated Funded Indebtedness to (ii) Consolidated Adjusted EBITDA for the then most-recently ended four fiscal quarters to be greater than 3.25 to 1.0; provided that, during the term of this Agreement, for a single period of eight (8) consecutive fiscal quarters, such period beginning with the fiscal quarter during which the Borrower’s aggregate amount of Capital Expenditures in respect of the Florida Casino Project (from the inception of such project) exceeds $10,000,000, the Leverage Ratio may be greater than 3.25 to 1.0 but less than or equal to 4.0 to 1.0; provided that from and after the end of such period of consecutive fiscal quarters, the Leverage Ratio shall not be greater than 3.25 to 1.0.

(h)   Section 6.24.3 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

6.24.3 Minimum Net Worth. The Borrower will at all times maintain Consolidated Net Worth of not less than (a) $190,000,000 as of the Closing Date, and (b) beginning with Borrower’s fiscal year ending December 31, 2006, the sum of (i) $290,000,000 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.

(i)   A new Section 6.37 is hereby inserted into the Credit Agreement immediately following the existing Section 6.36 as follows:

 

6.37 Florida Casino Project Capital Expenditures. The Borrower will not, nor will it permit any of its Subsidiaries to, expend, or be committed to expend, an aggregate amount in excess of $100,000,000 for Capital Expenditures in connection with the Florida Casino Project. As used herein, “Capital Expenditures” means, without duplication, any expenditure or commitment to expend money for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP.

(j)   Section 7.3 of the Credit Agreement is hereby amended to insert a reference to “and/or 6.37” at the end thereof.

 

(k)   The Commitments of the Lenders are amended and restated as set forth on Exhibit A hereto. Each Departing Lender shall cease to be a Lender for all purposes under the Credit Agreement. The Borrower hereby agrees to compensate each Lender (including each Departing Lender) for any and all losses, costs and expenses incurred by such Lender in connection with the sale and assignment of any Eurodollar Loans and the reallocation described in Section 2(a) below, in each case on the terms and in the manner set forth in Section 3.4 of the Credit Agreement.

 

(l)   The Pricing Schedule is hereby amended and restated in its entirety as set forth on Exhibit B hereto. Such Pricing Schedule shall be effective as of the first Monday following the date hereof and, beginning on such date, the Applicable Margin and the Applicable Fee Rate shall be calculated by reference to such Pricing Schedule based on the Leverage Ratio reflected in the most recent financial statements and compliance certificate delivered pursuant to Section 6.1 of the Credit Agreement and adjustments to the applicable Level shall thereafter be effected in accordance with the Pricing Schedule.

 

(m)   Schedules 1, 2, 3, 4.1(i)(p), 4.1(i)(q), 5.22, 5.23, 5.24, 5.25 and 5.26 of the Credit Agreement are hereby amended and restated in their entirety as set forth on Annex I hereto.

 

2.   Conditions of Effectiveness. This Amendment shall become effective and be deemed effective as of the date hereof, if, and only if, (a) the Agent and the Lenders shall have administered the reallocation of the Aggregate Outstanding Credit Exposure among the Lenders such that after giving effect to the amendments to the Commitments pursuant hereto, each Lender’s Pro Rata Share of the Aggregate Outstanding Credit Exposures is equal to such Lender’s Pro Rata Share of the total Commitments, (b) the Agent shall have received (i) executed copies of this Amendment from the Borrower, the Guarantors and the Lenders (including each Departing Lender) and (ii) for the account of each Lender (other than a Departing Lender) an amendment fee in the amount of $7,500.

 

3.   Representations and Warranties of the Loan Parties. The Loan Parties jointly and severally hereby represent and warrant as follows:

 

(a)   Each Loan Party has the power and authority and legal right to execute and deliver this Amendment and the Credit Agreement (as modified hereby) and to perform its obligations hereunder and thereunder. The execution and delivery by each Loan Party of this Amendment and the performance of its obligations hereunder and under the Credit Agreement (as modified hereby) have been duly authorized by proper corporate proceedings, and this Amendment and the Credit Agreement (as modified hereby) constitute legal, valid and binding obligations of such Loan Party, enforceable against such Loan Party in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting creditors’ rights generally.

 

(b)   As of the date hereof and giving effect to the terms of this Amendment, (i) no Default or Unmatured Default has occurred and is continuing and (ii) the representations and warranties of the Loan Parties set forth in the Credit Agreement (as modified hereby) and the other Loan Documents are true and correct in all material respects 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.

 

4.   Reference to and Effect on the Credit Agreement and Loan Documents.

 

(a)   Upon the effectiveness of this Amendment, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as modified hereby. This Amendment is a Loan Document pursuant to the Credit Agreement and shall (unless expressly indicated herein or therein) be construed, administered, and applied, in accordance with all of the terms and provisions of the Credit Agreement.

 

(b)   Each Loan Party, by its signature below, hereby (i) agrees that this Amendment and the transactions contemplated hereby shall not limit or diminish the obligations of the Company arising under or pursuant to the Credit Agreement and the other Loan Documents to which it is a party, (ii) reaffirms all of its obligations under the Credit Agreement and each and every other Loan Document to which it is a party (including, without limitation, each applicable Collateral Document), (iii) reaffirms all Liens on the Collateral which have been granted by it in favor of the Administrative Agent (for itself and the Lenders) pursuant to any of the Loan Documents, and (iv) acknowledges and agrees that, except as specifically modified above, the Credit Agreement and all other Loan Documents executed and/or delivered in connection therewith shall remain in full force and effect and are hereby reaffirmed, ratified and confirmed.

 

(c)   The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of or consent to any modification of any provision of the Credit Agreement or any other Loan Documents executed and/or delivered in connection therewith.

 

5.   GOVERNING LAW. THIS AMENDMENT 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.

 

6.   Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

7.   Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts (including by means of facsimile or electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument.

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

 

	Borrower:   CHURCHILL DOWNS INCORPORATED   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    VP Finance & Treasurer
	Guarantors:   CHURCHILL DOWNS MANAGEMENT COMPANY   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	CHURCHILL DOWNS INVESTMENT COMPANY   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	CHURCHILL DOWNS SIMULCAST PRODUCTIONS, LLC   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	CHARLSON INDUSTRIES, INC.   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer

 

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	CALDER RACE COURSE, INC.   By:  /s/ Steven P. Sexton____________ Name:  Steven P. Sexton Title:    Vice President
	TROPICAL PARK, INC.   By:  /s/ Steven P. Sexton____________ Name:  Steven P. Sexton Title:    Vice President
	ARLINGTON PARK RACECOURSE, LLC   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	ARLINGTON OTB CORP.   By:  /s/ Debra A. Wood____________ Name:  Debbie A. Wood Title:    Secretary
	QUAD CITY DOWNS, INC.   By:  /s/ Debra A. Wood____________ Name:  Debbie A. Wood Title:    Secretary

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	CDIP, LLC   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	CDIP HOLDINGS, LLC   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	CHURCHILL DOWNS LOUISIANA HORSERACING COMPANY, L.L.C.   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	CHURCHILL DOWNS LOUISIANA VIDEO POKER COMPANY, L.L.C.   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer
	VIDEO SERVICES, INC.   By:  /s/ Michael Anderson__________ Name:  Michael Anderson Title:    Treasurer

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JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as a Lender, as Agent and as Collateral Agent   By:  /s/ H. J. Brenner______________ Name:  H. J. Brenner Title:    S.V.P.

 

 

 

PNC BANK, NATIONAL ASSOCIATION, as a Lender, as LC Issuer and as Syndication Agent   By:  /s/ Shelly B. Stephenson_________ Name:  Shelly B. Stephenson Title:    Vice President

 

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NATIONAL CITY BANK (successor in interest to National City Bank of Kentucky), as a Lender and as Documentation Agent   By:  /s/ Rob King____________________ Name:  Rob King Title:    Senior Vice President

 

FIFTH THIRD BANK, KENTUCKY, INC., as a Lender   By:  /s/ David O'Neal________________ Name:  David O'Neal Title:    Vice President

 

 

U.S. BANK NATIONAL ASSOCIATION, as a Lender   By:  /s/ Mark Wheeler______________ Name:  Mark Wheeler Title:    Executive Vice President

 

 

BANK OF AMERICA, N.A., as a Departing Lender   By:  /s/ Lisa B. Barksdale___________ Name:  Lisa B. Barksdale Title:    V.P.

 

 

BRANCH BANKING & TRUST COMPANY, as a Departing Lender   By:  /s/ Johnny L. Perry_______________ Name:   Johnny L. Perry Title:     Senior Vice President

 

 

COMERICA BANK, as a Departing Lender   By:  /s/ Heather Whiting_____________ Name:  Heather Whiting Title:    Vice President

 

 

 

SUNTRUST BANK, as a Departing Lender   By:  /s/ Kap Yarbrough_____________ Name:  Kap Yarbrough Title:    Vice President

 

Lender	Commitment
JPMorgan Chase Bank, National Association	$30,000,000
PNC Bank, National Association	$30,000,000
National City Bank	$20,000,000
Fifth Third Bank, Kentucky, Inc.	$20,000,000
U.S. Bank National Association	$20,000,000
TOTAL:	$120,000,000

PRICING SCHEDULE

Applicable Margin	Level I Status	Level II Status	Level III Status	Level IV Status	Level V Status	Level VI Status	Level VII Status
Eurodollar Rate	0.50%	0.625%	0.75%	0.875%	1.00%	1.25%	1.50%
Floating Rate	0%	0%	0%	0%	0%	0%	0%

Applicable Fee Rate	Level I Status	Level II Status	Level III Status	Level IV Status	Level V Status	Level VI Status	Level VII Status
Commitment Fee	0.10%	0.12%	0.15%	0.15%	0.20%	0.20%	0.25%

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 1.00 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 greater than or equal to 1.00 to 1.00 and less than 1.50 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 greater than or equal to 1.50 to 1.00 and less than 2.00 to 1.00.

“Level IV Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Leverage Ratio is greater than or equal to 2.00 to 1.00 and less than 2.50 to 1.00.

“Level V Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Leverage Ratio is greater than or equal to 2.50 to 1.00 and less than 3.00 to 1.00.

“Level VI Status” exists at any date if, as of the last day of the fiscal quarter of the Borrower referred to in the most recent Financials, (i) the Borrower has not qualified for Level I Status or Level II Status and (ii) the Leverage Ratio is greater than or equal to 3.00 to 1.00 and less than 3.25 to 1.00.

“Level VII Status” exists at any date if the Borrower has not qualified for Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status or Level VI Status.

“Status” means either Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status, Level VI Status and Level VII Status.

The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower’s Status, adjusted quarterly and measured on the most recent four fiscal quarters ending on the determination date as reflected in the then most recent Financials. Adjustments, if any, to the Applicable Margin or Applicable Fee Rate shall be effective five Business Days after the Agent has received the applicable Financials. If the Borrower fails to deliver the Financials to the Agent at the time required pursuant to Section 6.1, then the Applicable Margin and Applicable Fee Rate shall be the highest Applicable Margin and Applicable Fee Rate set forth in the foregoing table until five days after such Financials are so delivered.