-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gl9HwEj2yyPqy//zf9tpJ+SI7OB16oyY4fnAiK4Ic2RIz7byQVtWNJtapYHeT6fP oD3I8hzZmMIS7oMRxWiZDw== 0000898430-96-003759.txt : 19960814 0000898430-96-003759.hdr.sgml : 19960814 ACCESSION NUMBER: 0000898430-96-003759 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HOLLYWOOD PARK INC/NEW/ CENTRAL INDEX KEY: 0000356213 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953667491 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10619 FILM NUMBER: 96610380 BUSINESS ADDRESS: STREET 1: P O BOX 369 CITY: INGLEWOOD STATE: CA ZIP: 90301 BUSINESS PHONE: 3104191500 MAIL ADDRESS: STREET 1: P O BOX 369 CITY: INGLEWOOD STATE: CA ZIP: 90306 10-Q 1 FORM 10-Q DATED JUNE 30, 1996 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 Commission file number 0-10619 HOLLYWOOD PARK, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 95-3667491 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1050 South Prairie Avenue, Inglewood, California 90301 (Address of Principal Executive Offices) (Zip Code) (310) 419-1500 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant: (a) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] The number of outstanding shares of the registrant's common stock, as of the date of the close of business on August 12, 1996: 18,445,298. Hollywood Park, Inc. Table of Contents Part I Item 1. Financial Information Consolidated Balance Sheets as of June 30, 1996 and December 31, 1995............................ 1 Consolidated Statements of Operations for the three months ended June 30, 1996 and 1995........ 2 Consolidated Statements of Operations for the six months ended June 30, 1996 and 1995.............. 3 Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995.............. 4 Notes to Consolidated Financial Statements........ 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............... 13
Part II Item 1. Legal Proceedings................................. 17 Item 3. Default Upon Senior Securities.................... 18 Item 5. Other Information................................. 18 Item 6.a Exhibits.......................................... 18 Other Financial Information....................... 21 Signatures........................................ 26
Hollywood Park, Inc. Consolidated Balance Sheets
June 30, December 31, 1996 1995 ------------ ------------ (unaudited) ASSETS Current Assets: Cash and cash equivalents $30,830,000 $22,406,000 Restricted cash 10,154,000 3,126,000 Short term investments 4,053,000 6,447,000 Other receivables, net of allowance for doubtful accounts of $960,000 in 1996 and $1,841,000 in 1995 8,906,000 8,147,000 Prepaid expenses and other assets 4,201,000 3,888,000 Deferred tax assets 2,204,000 4,888,000 Current portion of notes receivable 36,000 34,000 ------------ ------------ Total current assets 60,384,000 48,936,000 Notes receivable 839,000 857,000 Property, plant and equipment, net 121,043,000 174,717,000 Lease with TRAK East, net 0 1,195,000 Goodwill, net 20,640,000 26,829,000 Long term gaming assets 13,191,000 19,063,000 Other assets 7,704,000 11,706,000 ------------ ------------ $223,801,000 $283,303,000 ============ ============ ========================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $13,147,000 $12,518,000 Accrued lawsuit settlement 2,750,000 5,232,000 Accrued liabilities 9,646,000 13,607,000 Accrued workers' compensation 2,054,000 2,277,000 Accrued slip and fall claims 1,679,000 1,543,000 Gaming liabilities 2,791,000 3,998,000 Amounts due to horsemen for purses, stakes and awards 12,030,000 709,000 Outstanding pari-mutuel tickets 3,004,000 2,757,000 Current portion of notes payable 3,406,000 32,310,000 ------------ ------------ Total current liabilities 50,507,000 74,951,000 Notes payable 256,000 15,629,000 Gaming liabilities 11,620,000 16,894,000 Deferred tax liabilities 4,770,000 10,083,000 ------------ ------------ Total liabilities 67,153,000 117,557,000 Commitments and contingencies -- -- Stockholders' Equity: Capital stock -- Preferred - $1.00 par value, authorized 250,000 shares; 27,499 issued and outstanding 28,000 28,000 Common - $.10 par value, authorized 40,000,000 shares; 18,504,798 issued and outstanding 1,850,000 1,850,000 Capital in excess of par value 168,479,000 168,479,000 Accumulated deficit (13,709,000) (4,611,000) ------------ ------------ Total stockholders' equity 156,648,000 165,746,000 ------------ ------------ $223,801,000 $283,303,000 ============ ============
- ------- See accompanying notes to consolidated financial statements. 1 Hollywood Park, Inc. Consolidated Statements of Operations
For the three months ended June 30, ------------------------------------- 1996 1995 ----------- ----------- (unaudited) REVENUES: Pari-mutuel commissions $21,989,000 $21,371,000 Lease and management fee - Sunflower 0 1,638,000 Lease - Casino 0 6,288,000 Gaming - Casino 12,962,000 0 Admissions, programs, and other racing income 5,200,000 5,799,000 Concession sales 4,463,000 5,947,000 Other income 1,813,000 1,785,000 ----------- ----------- 46,427,000 42,828,000 ----------- ----------- EXPENSES: Salaries, wages and employee benefits 16,013,000 12,573,000 Operations of facilities 2,096,000 2,847,000 Cost of concession sales 5,882,000 7,593,000 Professional services 2,308,000 2,542,000 Rent 419,000 409,000 Utilities 975,000 1,190,000 Marketing 2,811,000 2,121,000 Administrative 4,294,000 2,426,000 ----------- ----------- 34,798,000 31,701,000 ----------- ----------- Income before interest, income taxes, depreciation, amortization and write off of investment in subsidiary 11,629,000 11,127,000 Write off of investment in Sunflower 66,000 0 Depreciation and amortization 2,487,000 2,862,000 Interest expense 54,000 974,000 ----------- ----------- Income before income tax expense 9,022,000 7,291,000 Income tax expense 3,773,000 2,434,000 ----------- ----------- Net income $5,249,000 $4,857,000 =========== =========== ===================================================================================================== Dividend requirements on convertible preferred stock $481,000 $481,000 Net income available to common shareholders $4,768,000 $4,376,000 Per common share: Net income - primary $0.26 $0.24 Net income - fully diluted $0.25 $0.24 Cash dividend per common share $0.00 $0.00 Number of shares - primary 18,612,850 18,369,634 Number of shares - fully diluted 20,904,342 20,661,126
- ------- See accompanying notes to consolidated financial statements. 2 Hollywood Park, Inc. Consolidated Statements of Operations
For the six months ended June 30, ----------------------------------- 1996 1995 ----------- ----------- (unaudited) REVENUES: Pari-mutuel commissions $28,707,000 $27,679,000 Lease and management fee - Sunflower 1,071,000 3,145,000 Lease - Casino 0 12,670,000 Gaming - Casino 24,803,000 0 Admissions, programs, and other racing income 8,636,000 9,272,000 Concession sales 7,637,000 10,805,000 Other income 3,426,000 3,713,000 ----------- ----------- 74,280,000 67,284,000 ----------- ----------- EXPENSES: Salaries, wages and employee benefits 28,614,000 20,437,000 Operations of facilities 4,404,000 5,308,000 Cost of concession sales 10,750,000 13,466,000 Professional services 4,568,000 4,520,000 Rent 701,000 678,000 Utilities 1,973,000 2,149,000 Marketing 3,684,000 2,684,000 Administrative 7,561,000 4,083,000 ----------- ----------- 62,255,000 53,325,000 ----------- ----------- Income before interest, income taxes, depreciation, amortization and write off of investment in subsidiary 12,025,000 13,959,000 Write off of investment in Sunflower 11,412,000 0 Depreciation and amortization 5,400,000 5,654,000 Interest expense 898,000 1,928,000 ----------- ----------- Income (loss) before income tax expense (5,685,000) 6,377,000 Income tax expense 2,444,000 2,114,000 ----------- ----------- Net income (loss) ($8,129,000) $ 4,263,000 =========== =========== ========================================================================================================== Dividend requirements on convertible preferred stock $962,000 $962,000 Net income (loss) available to (allocated to) common shareholders ($9,091,000) $3,301,000 Per common share: Net income (loss) - primary ($0.49) $0.18 Net income (loss) - fully diluted ($0.49) $0.18 Cash dividend per common share $0.00 $0.00 Number of shares - primary 18,612,850 18,369,634 Number of shares - fully diluted 20,904,342 20,661,126
- ------- See accompanying notes to consolidated financial statements. 3 Hollywood Park, Inc. Consolidated Statements of Operations
For the six months ended June 30, ----------------------------------- 1996 1995 ----------- ----------- (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) ($8,129,000) $ 4,263,000 Adjustment to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 4,901,000 5,653,000 Changes in accounts due to deconsolidation of subsidiary in bankruptcy: Property, plant and equipment 58,380,000 0 Secured notes payable (28,904,000) 0 Unsecured notes payable (15,373,000) 0 Goodwill and lease with TRAK East 6,908,000 0 Unrealized loss on short term bond investing (7,000) 0 (Gain) loss on sale or disposal of property, plant and equipment (5,000) 66,000 Increase in restricted cash (7,028,000) (10,931,000) Increase in casino lease and related interest receivable, net 0 (7,054,000) (Increase) decrease in other receivables, net (759,000) 112,000 Decrease (increase) in prepaid expenses and other assets 3,689,000 (2,407,000) Decrease in deferred tax assets 2,684,000 185,000 Increase in accounts payable 629,000 3,161,000 Decrease in accrued lawsuit settlement (2,482,000) 0 Decrease in gaming liabilities (1,207,000) 0 (Decrease) increase in accrued liabilities (3,961,000) 2,458,000 (Decrease) increase in accrued workers' compensation (223,000) 95,000 Increase in accrued slip and fall claims 136,000 130,000 Increase in amounts due to horsemen for purses, stakes and awards 11,321,000 11,249,000 Increase in outstanding pari-mutuel tickets 247,000 1,239,000 (Decrease) increase in deferred tax liabilities (5,313,000) 2,553,000 ----------- ----------- Net cash provided by operating activities 15,504,000 10,772,000 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (9,132,000) (4,233,000) Receipts from sale of property, plant and equipment 6,000 96,000 Principal collected on notes receivable 16,000 16,000 Purchase of short term investments (11,154,000) (12,538,000) Proceeds from short term investments 13,548,000 8,846,000 Long term gaming assets 598,000 0 ----------- ----------- Net cash used in investing activities (6,118,000) (7,813,000) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from unsecured notes payable 0 1,681,000 Payment of unsecured notes payable 0 (3,566,000) Payment of secured notes payable 0 (1,458,000) Payments under capital lease obligations 0 (53,000) Dividends paid to preferred stockholders (962,000) (962,000) ----------- ----------- Net cash used for financing activities (962,000) (4,358,000) ----------- ----------- Increase (decrease) in cash and cash equivalents 8,424,000 (1,399,000) Cash and cash equivalents at the beginning of the period 22,406,000 37,122,000 ----------- ----------- Cash and cash equivalents at the end of the period $30,830,000 $35,723,000 =========== ===========
- ------- See accompanying notes to consolidated financial statements. 4 HOLLYWOOD PARK, INC. Notes to Consolidated Financial Statements NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial information included herein has been prepared in conformity with generally accepted accounting principles as reflected in the financial statements included in the consolidated annual report on Form 10-K of Hollywood Park, Inc. (the "Company" or "Hollywood Park") filed with the Securities and Exchange Commission for the year ended December 31, 1995. This financial information does not include certain footnotes and financial presentations normally presented annually, and therefore, should be read in conjunction with the Company's 1995 Form 10-K. The information furnished herein is unaudited; however, in the opinion of management it reflects all recurring adjustments that are necessary to present a fair statement of the results for the interim periods. All such adjustments are of a normal and recurring nature. It should be understood that accounting measurements at the interim dates inherently involve greater reliance on estimates than at year end. The interim racing results of operations are not indicative of the results for the full year due to the seasonality of the horse racing business. The Company owns and operates the Hollywood Park race track, a premier thoroughbred racing facility located in California, Sunflower Racing, Inc. ("Sunflower"), operating as the Woodlands, a greyhound and thoroughbred racing facility located in Kansas, and Turf Paradise, Inc. ("Turf Paradise"), a thoroughbred racing facility located in Arizona. On the same property as the Hollywood Park race track, the Company owns and operates the Hollywood Park- Casino (the "Casino"). SUNFLOWER On May 2, 1996, the Kansas Legislature adjourned without passing legislation that would have allowed additional gaming at Sunflower, thereby permitting Sunflower to more effectively compete with Missouri riverboat gaming. As a result of the outcome of the Kansas Legislative session, Hollywood Park wrote off its approximately $11,412,000 investment in Sunflower. There was no cash involved with the write off of this investment. On May 17, 1996, Sunflower filed for reorganization under Chapter 11 of the Bankruptcy Code. Sunflower is operating during the reorganization, but Sunflower's operating results from April 1, 1996, forward were not consolidated with Hollywood Park's operating results. ACQUISITION OF PACIFIC CASINO MANAGEMENT, INC. The Hollywood Park-Casino was opened in July 1994 under a third party leasing arrangement with Pacific Casino Management, Inc. ("PCM"). In 1994 under the California Gaming Registration Act, it was the position of the California Attorney General that as a publicly traded company, Hollywood Park was not eligible to register as an operator of a card club, but could lease the site to a registered operator unaffiliated with the Company. On August 3, 1995, Senate Bill ("SB") 100 was enacted into law. SB 100 does the following: (i) allows for a publicly traded racing association, or a subsidiary thereof, (hereafter the "Racing Association") to operate a gaming club on the premises of its race track; (ii) requires the officers, directors and shareholders of 5.0% or more of a Racing Association (excluding institutional investors) to be licensed by the Attorney General; (iii) provisionally licenses a Racing Association and its officers, directors, and 5.0% shareholders to operate a gaming club on the premises of its race track pending licenses pursuant to sub-paragraph (ii) above; (iv) allows a Racing Association and its officers, directors and 5.0% shareholders to have an interest in gaming activities located outside California that are not legal in California. The provisions of SB 100 are repealed effective January 1, 1999, unless prior thereto the California legislature enacts a comprehensive scheme for the regulation of gaming under the jurisdiction of a gaming control commission (see Item 5. Other Information). Pursuant to the authority provided by SB 100, on November 17, 1995, Hollywood Park acquired substantially all the assets, property and business of PCM, and assumed substantially all of PCM's liabilities. Prior to the acquisition, under a lease with the Company, PCM operated the gaming floor activities of the Hollywood 5 Park-Casino. Immediately following the acquisition, PCM was dissolved and the gaming floor operations were incorporated into Hollywood Park's Gaming Division. The purchase price of PCM's net assets was an aggregate $2,640,000, payable in shares of Hollywood Park common stock, in three installments: (i) shares of Hollywood Park common stock having a value of $1,600,000, or 135,164 common shares, issued on November 17, 1995; (ii) shares of Hollywood Park common stock having a value of $540,000 on the first anniversary of the execution of the acquisition; and (iii) shares of Hollywood Park common stock having a value of $500,000 on the second anniversary of the execution of the acquisition; provided that Hollywood Park may accelerate the payments; provided further, the aggregate number of shares to be paid under clauses (ii) and (iii) may not exceed the number of shares issued on November 17, 1995. Shares to be issued in the remaining two installments will be valued at the average market price of Hollywood Park's common stock for the ten trading days immediately preceding the payment date. Virtually all of the approximately $21,568,000 of excess acquisition cost over the recorded value of the net assets acquired was allocated to goodwill and will be amortized over 40 years. The amortization of the goodwill is not deductible for income tax purposes. BOOMTOWN, INC. On April 23, 1996, the respective Board of Directors of Hollywood Park and of Boomtown, Inc. ("Boomtown") approved and signed the Agreement and Plan of Merger (the "Merger") among Hollywood Park, Inc., HP Acquisition, Inc. and Boomtown, Inc., where by way of a merger with HP Acquisition, Inc. (a wholly owned subsidiary of Hollywood Park) Boomtown will become a wholly owned subsidiary of the Company. The Merger is expected to be finalized by December 31, 1996, but in no event may it be finalized later than June 30, 1997. The Merger will be accounted for under the purchase method of accounting, with each issued and outstanding share of Boomtown common stock converted into 0.625 shares of Hollywood Park common stock. Approximately 5,774,000 newly issued shares of the Company's common stock will be issued in the Merger. The Merger is subject to, among other things, the approval of the common shareholders of both Hollywood Park and Boomtown, the consent of to the Merger, and the Blue Diamond Swap (as defined below) by the holders of a majority of the outstanding principal amount of Boomtown's outstanding bonds, and upon Hollywood Park, its management and Board of Directors and Boomtown's management acquiring all required regulatory approvals and gaming permits. As of the effective date of the Merger, a total of eleven persons will serve on the Board of Directors of the combined companies, four of whom will be former directors of Boomtown. Dates have not been set for the Hollywood Park and Boomtown shareholder meeting. The application process for the required regulatory approvals and gaming permits is in progress. Boomtown owns and operates land-based, dockside and riverboat gaming operations in Verdi, Nevada ("Boomtown Reno"), Las Vegas, Nevada ("Boomtown Las Vegas"), Biloxi, Mississippi ("Boomtown Biloxi"), and Harvey, Louisiana ("Boomtown New Orleans"). Boomtown's properties offer hotel accommodations (at Boomtown Reno and Boomtown Las Vegas only), gaming and other entertainment amenities to primarily middle income, value oriented customers. The Boomtown properties have an "old west" theme by incorporating western memorabilia in their interior decor, country/western music and western dress of their employees. Boomtown Reno has been operating for over a quarter century and is located seven miles west of Reno on Interstate 80, the major highway connecting northern California and Reno. Boomtown Reno is situated on 569 acres with approximately 61 acres used for current operations. Boomtown Reno's customer base is primarily drawn from Interstate 80 traffic. Boomtown Reno offers its guests a 40,000 square foot casino, including 1,433 slot machines and 43 table games, a 122-room hotel, a 16-acre truck stop, a full-service recreational vehicle park, a service station, a mini-mart and other related amenities. In addition, Boomtown Reno offers a 35,000 square foot family entertainment center featuring a dynamic motion theater, an indoor 18-hole western-themed miniature golf course, a restaurant and a replica of an 1800's Ferris Wheel. 6 Boomtown Las Vegas began operations in May 1994 on a 56-acre site at the interchange of Blue Diamond Road and Interstate 15, the principal thoroughfare connecting Southern California to Las Vegas. Boomtown Las Vegas is four miles from the exit for Circus Circus, Excalibur, Luxor, and MGM. Boomtown Las Vegas includes a 30,000 square foot casino with 1,100 slot machines and 28 gaming tables, 300 hotel rooms, a full-service recreational vehicle park, two restaurants and a replica of an old mine where customers can pan for real gold. On August 12, 1996, Boomtown, Blue Diamond Hotel and Casino Inc. (a wholly owned subsidiary of Boomtown, Inc.), Hollywood Park, Industry Hills Visitor Accommodation Center ("IVAC") (the owner/lessor of Boomtown Las Vegas), Edward P. Roski, Jr. (a general partner of IVAC), and another affiliate of Mr. Roski entered into the Blue Diamond Swap Agreement (the " Swap Agreement") pursuant to which the parties agreed that, upon consummation of the Merger, Boomtown and Blue Diamond (or any subsidiary thereof as set forth in the Swap Agreement) would exchange their entire interest in Boomtown Las Vegas (including Boomtown's note receivable, from IVAC, in the amount of $27,300,000) in exchange for a $5,000,000 unsecured promissory note (the "First Note") and a $3,465,000 unsecured promissory note (the "Second Note") (the "Blue Diamond Swap") and the termination of the Boomtown Las Vegas lease. The First Note has an interest rate equal to the prime rate plus 1.5% per annum and provides for annual principal payments of $1,000,000 over five years. The Second Note has an interest rate equal to the prime rate plus 0.5% per annum and provides for a payment of all principal on the third anniversary of the closing. In accordance with the terms of the Swap Agreement, with certain exceptions set forth in the Swap Agreement, Boomtown and Blue Diamond will be responsible for the liabilities of Boomtown Las Vegas prior to the Blue Diamond Swap and Mr. Roski will be responsible for the liabilities of Boomtown Las Vegas subsequent to the Blue Diamond Swap. The consent of the Boomtown bondholders is required for Boomtown to consummate the Blue Diamond Swap. On August 12, 1996, Hollywood Park and Mr. Roski further entered into a Stock Purchase Agreement (the "Stock Purchase Agreement") pursuant to which Hollywood Park will concurrently with the Blue Diamond Swap and the Merger, purchase 714,386 shares of Boomtown commons stock held by Mr. Roski for a purchase price of approximately $3,465,000 paid in the form of a Hollywood Park unsecured promissory note having an interest rate equal to the prime rate plus one percent per annum and providing for five equal annual principal payments after the closing. Boomtown Biloxi, a limited partnership majority owned and controlled by Boomtown, occupies nine acres on Biloxi, Mississippi's back bay. Boomtown Biloxi is located one-half mile from Interstate 110, the main highway connecting Interstate 10 (the main thoroughfare connecting New Orleans and Mobile, Alabama) and the Gulf of Mexico. The facility, which began operations in July 1994, consists of a land-based facility that houses non-gaming operations and a 33,000 square foot casino constructed on a 400 x 100 foot barge permanently moored to the land-based building. The casino offers 985 slot machines, 42 table games and other gaming amenities including restaurants, a western dance hall/cabaret and a 20,000 square foot family entertainment center. Boomtown New Orleans, a limited partnership majority owned and controlled by Boomtown, began operations in August 1994 on a 50 acre site in Harvey, Louisiana, approximately ten miles from the French Quarter of New Orleans. Gaming operations are conducted from a 250 foot replica of a paddle wheel riverboat, offering 865 slot machines and 51 table games in a 30,000 square foot casino. The land-based facility next to the riverboat dock is composed of a western-themed 88,000 square foot entertainment center 7 and a western saloon/dance hall. On November 5, 1996, local parish votes regarding the continuation of gaming will be held. Boomtown New Orleans is located in Jefferson Parish. Boomtown's management has no reason, at this time, to believe that the voters of Jefferson Parish will vote against riverboat gaming. If riverboat gaming is voted down, Boomtown would have to discontinue its riverboat gaming operations in June 1999. Boomtown is actively seeking to expand its operations into jurisdictions that have legalized casino gaming at sites that are near interstate highways or major thoroughfares near major population or tourist centers. Boomtown is currently exploring a project in Switzerland County, Indiana through a joint venture with Hilton Gaming Corporation. The gaming license application for this project will be heard on August 19 and 20, 1996. CRYSTAL PARK HOTEL AND CASINO Construction is well underway on the Crystal Park Hotel and Casino ("Crystal Park"), California's first hotel/casino. Crystal Park is expected to open in the fourth quarter 1996, with 110 gaming tables, with no limit on the number of gaming tables that can be added, and approximately 282 hotel rooms. 0n June 27, 1996, the Company signed a 20 year License Agreement with Radisson Hotels International, Inc. to, among other things, consult on operations and marketing of the hotel. Hollywood Park can terminate the agreement with Radisson, at not cost, at the end of year three, year five or year ten. Crystal Park will also include a gift shop, massage center, a full service health spa with an outdoor pool, a state-of-the-art air filtration system, lobby sports bar and lounge, 24 hour cafe and room service. On July 14, 1995, the Company and Compton Entertainment, Inc. ("CEI") executed an Amended and Restated Agreement Respecting Pyramid Casino (the "Crystal Park Agreement") (subsequently changed to Crystal Park Hotel and Casino), finalizing the terms concerning the development, ownership and operation of a card club in the city of Compton (the "City"). CEI entered into an Amended and Restated Disposition and Development Agreement (the "DDA") with the City to lease or purchase land located within the City as the card club site. Under the terms of the Crystal Park Agreement, on August 3, 1995, the Company paid CEI $2,000,000 for the real property rights and assignment of the DDA to Hollywood Park. On August 3, 1995, the Company paid CEI an additional $500,000 to exercise the five year right to purchase CEI's City gaming license. If at the end of the five year term of the option to purchase the City gaming license, Hollywood Park is not able to own and operate a card club at the Compton site, CEI can elect to either negotiate a new lease, or acquire Hollywood Park's rights to the card club site for a purchase price as determined by the Agreement. Upon opening the card club, Hollywood Park will pay CEI up to an additional $2,500,000, under certain conditions detailed in the Agreement. As required by the DDA, on August 2, 1995, Hollywood Park paid approximately $2,006,000 to the City to purchase the convention center to house the card club operations and entered into a 50 year lease with the City for the hotel, parking, and expansion parcels at the same site. Initial improvements made by Hollywood Park to construct, install and equip Crystal Park will be credited against the annual base rent. No cash rent payments are expected to be made until after the nineteenth year of the lease, or 2014. If Crystal Park opens under current California law, (see Item 5. Other Information) which does not allow publicly traded companies, such as Hollywood Park, to operate a card club (other than on the same property as the race track), the Company will commence a 60 month lease with CEI. Under the terms of the lease, as the landlord, Hollywood Park is building and furnishing a card club suitable for CEI to operate. Hollywood Park will not be responsible for any segment of the daily operations. Over the 60 month term, CEI will pay the Company monthly rent of 2.65% of Hollywood Park's total investment in the card club. If there is a change in California law, allowing the Company to operate card clubs at sites other than its race track property, Hollywood Park would operate the card club in partnership with CEI, with Hollywood Park owning 67% of the business, which will be subject to the partnership described below. CEI has received all the required City gaming licenses necessary for operation of Crystal Park, and on April 1, 1996, received a Provisional Registration from the California Attorney General. Hollywood Park, Redwood Gaming LLC (controlled by the Edward J. DeBartolo Family) and First Park Investments LLC (controlled by Leo Chu and Ivy Chu) have are forming a 88%/8%/4% partnership, respectively, to build and operate (per the terms and conditions outlined above) the Crystal Park property. 8 OTHER CARD CLUB ACTIVITY The Company is a 50% partner with DeBartolo Entertainment, in a 30 table Casino and Night Club to be located in Palm Springs, California. Hollywood Park and DeBartolo Entertainment will be landlords in a third party leasing arrangement. Any investment required for this project would be modest and timing has not been finalized for development. Without legislation to expand the types of gaming which could be offered at the Palm Springs casino, this site is not expected to generate material income, due to the full casino gaming on nearby Indian Reservations. The Company continues to have discussions with other card clubs as to possible business combinations of mutual interest. PRO FORMA RESULTS OF OPERATIONS The following pro forma results of operations were prepared under the assumption that the acquisition of PCM had occurred on July 1, 1994, (PCM's inception). The following pro forma adjustments were made: the elimination of lease rent revenue due to Hollywood Park from PCM and concession sales made to PCM at acquisition; lease rent expense recorded by PCM; other operating expenses including consulting fees, legal and audit services and other miscellaneous duplicate expenses; and increases for amortization of the excess purchase price allocated to goodwill, interest expense on the unpaid rent and income taxes. Pro forma earnings per share reflect the 135,164 shares of Hollywood Park common stock issued to the former PCM shareholders and an estimated 108,052 shares of common stock due to the former PCM shareholders, based on the closing market price of Hollywood Park's common stock on June 28, 1996. Hollywood Park, Inc. Unaudited Pro Forma Combined Consolidated Results of Operations
For the three months ended June 30, --------------------------------------- 1996 (a) 1995 ------------------ ------------------- Revenues: Hollywood Park, Inc. and race tracks $31,254,000 $34,001,000 Hollywood Park, Inc. - Casino Division 15,173,000 13,099,000 ------------------ ------------------- 46,427,000 47,100,000 ------------------ ------------------- Operating income before interest, income taxes, depreciation, amortization and write off of 11,629,000 8,381,000 investment in subsidiary Net income $ 5,249,000 $ 2,033,000 ================== =================== Dividend requirements on convertible $ 481,000 $ 481,000 preferred stock Net income available to common $ 4,768,000 $ 1,552,000 shareholders Per common share: Net income - primary $ 0.26 $ 0.08 Net income - fully diluted $ 0.25 $ 0.08
9 Hollywood Park, Inc. Unaudited Pro Forma Combined Consolidated Results of Operations (continued)
For the six months ended June 30, ------------------------------------ 1996(a) 1995 ------------------ ---------------- Revenues: Hollywood Park, Inc. and race tracks $ 45,334,000 $ 48,868,000 Hollywood Park, Inc. - Casino Division 28,946,000 26,165,000 74,280,000 75,033,000 ------------------ ---------------- Operating income before interest, income taxes, depreciation, amortization and write off of 12,025,000 7,668,000 investment in subsidiary Net loss $ (8,129,000) $ (2,101,000) ================== ================ Dividend requirements on convertible $ 962,000 $ 962,000 preferred stock Net loss allocated to common $ (9,091,000) $ (3,063,000) shareholders Per common share before write off of investment in subsidiary: Income - primary $ 0.59 $ 0.36 Income - fully diluted $ 0.58 $ 0.36 Per common share: Net loss - primary $ (0.49) $ (0.16) Net loss - fully diluted $ (0.49) $ (0.16) _____ (a) The results for these periods are actual.
RESTRICTED CASH Restricted cash as of June 30, 1996, was for amounts due to horsemen for purses, stakes and awards. The balance as of December 31, 1995, included approximately $2,482,000 related to the Class Action lawsuits (see Item 1. Legal Proceedings) and approximately $644,000 related to amounts due to horsemen for purses, stakes and awards. In March 1996, amounts due for the Class Action lawsuits were placed in an escrow account according to the settlement agreement, and therefore are no longer reflected in the Company's accounts. CASINO REVENUE AND PROMOTIONAL ALLOWANCES Casino gaming revenue consisted of fees collected from patrons on a per seat or per hand played basis. Revenues in the accompanying statements of operations exclude the retail value of food and beverage provided to players on a complimentary basis. The estimated cost of providing these promotional allowances during the six months ended June 30, 1996, was $1,668,000. There were no such costs for the six months ended June 30, 1995. ESTIMATES Financial statements prepared according to generally accepted accounting principles require the use of management estimates, including estimates used to evaluate the recoverability of property, plant and equipment, to determine the fair value of financial instruments, to account for the valuation allowance for deferred tax assets, and to determine litigation related obligations. EARNINGS PER SHARE Primary earnings per share were computed by dividing net income (loss) available to (allocated to) common shareholders (net income (loss) less preferred dividend requirements) by the weighted average number of common shares outstanding during the period, inclusive of the estimated future shares of the Company's common stock to be issued to the former PCM shareholders. Fully diluted per share amounts were similarly computed, but include the effect, when dilutive, of the conversion of the convertible preferred shares and exercise of stock options. CASH FLOWS Cash and cash equivalents consisted of certificates of deposit and short term investments with remaining maturities of 90 days or less. TREASURY STOCK On July 22, 1996, the Company announced its intention to repurchase (and retire) up to 2,000,000 shares of its common stock on the open market or in negotiated transactions. As of the August 12, 1996, the Company had repurchased approximately 59,500 shares at a cost of approximately $510,000. 10 RECLASSIFICATIONS Certain reclassifications have been made to the 1995 balances to be consistent with the 1996 financial statement presentation. NOTE 2 -- SHORT TERM INVESTMENTS Short term investments as of June 30, 1996, consisted of corporate bonds valued at $4,053,000. The corporate bond portfolio consisted of bonds rated from Ba2 to B3 by Moody's, and from BB+ to B- by Standard and Poors, with some bonds not rated by either agency. Investments in corporate bonds typically carry a greater amount of principal risk than investments previously made by the Company and yield a correspondingly higher return. The corporate bond investments, as of June 30, 1996, had a weighted average maturity of 1.5 years, and because the Company reasonably expects to liquidate this investment in its normal operating cycle this investment was classified as short term. This short term investment is held as available for sale, and was recorded in the accompanying financial statements at fair value, determined by the quoted market price. For the six months ended June 30, 1996, proceeds from the sale of corporate bonds were approximately $3,387,000, all of which was reinvested, with gross realized gains and losses of approximately $15,000 and $8,000, respectively. The net unrealized holding loss, as of June 30, 1996, was $7,000. NOTE 3 -- PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment held at June 30, 1996, and December 31, 1995, consisted of the following:
June 30, December 31, 1996 (a) 1995 --------------- -------------- Land and land improvements $ 29,378,000 $ 42,490,000 Buildings and building improvements 134,795,000 175,960,000 Equipment 24,968,000 36,003,000 Construction in progress 11,027,000 8,394,000 --------------- -------------- 200,168,000 262,847,000 Less accumulated depreciation 79,125,000 88,130,000 --------------- -------------- $121,043,000 $174,717,000 =============== ==============
_____ (a) The June 30, 1996 figures do not include Sunflower's property, plant and equipment. NOTE 4 -- SECURED AND UNSECURED NOTES PAYABLE Notes payable as of June 30, 1996, and December 31, 1995, consisted of the following:
June 30, December 31, 1996 (a) 1995 --------------- -------------- Secured notes payable (b) $ 0 $ 28,667,000 Unsecured notes payable (b) 0 15,574,000 Secured note payable - Texaco 3,358,000 3,358,000 Unsecured note payable - Gold Cup 304,000 340,000 --------------- -------------- 3,662,000 47,939,000 Less current maturities 3,406,000 32,310,000 --------------- -------------- $ 256,000 $ 15,629,000 =============== ==============
_____ (a) The June 30, 1996, balances do not include Sunflower's notes payable. (b) These notes relate to Sunflower and are non-recourse to Hollywood Park. This table does not include the Crystal Park capital lease obligations discussed in Note 5. 11 NOTE 5 -- LONG TERM GAMING ASSETS The Company purchased the convention center parcel at the Crystal Park site, which is currently under renovation to house the card club, and entered into a capital lease with the city of Compton covering the adjoining hotel, surrounding parking lot and expansion parcel. The capital lease was valued at approximately $13,741,000. The lease was entered into on August 3, 1995, and has a term of up to 50 years. The annual rent payments start at $600,000 and increase every fifth year until year 46 when they stabilize at $2,850,000. Hollywood Park will receive a rent payment credit equal to the costs incurred to renovate the card club and hotel. No cash rent payments are expected to be made until the nineteenth year of the lease, or 2014. The balance of the long term gaming assets was related to the costs incurred for the operating lease between Hollywood Park and CEI, and will be amortized over the five year term of the lease. NOTE 6 -- LONG TERM GAMING LIABILITIES Long term gaming liabilities consisted of the Company's capital lease obligation associated with the lease of the hotel, surrounding parking lot and the expansion parcel from the city of Compton for Crystal Park. This liability will be reduced as the construction disbursements are made, and upon submission of any purchase option payment. NOTE 7 -- SUPPLEMENTAL BALANCE SHEET INFORMATION In 1995, Statement of Financial Accounting Standards No. 121 ("SFAS 121") Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, was issued which established accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets. SFAS 121, which became effective for Hollywood Park in the quarter ended March 31, 1996, addresses when impairment losses should be recognized and how impairment losses should be measured. Whenever there are recognized events or changes in circumstances that indicate the carrying amount of an asset may not be recoverable, management reviews the asset for possible impairment. In accordance with current accounting standards, management uses estimated expected future net cash flows (undiscounted and excluding interest costs, and grouped at the lowest level for which there are identifiable cash flows that are as independent as possible of the cash flows of other asset groups) to measure the recoverability of the asset. If the expected future net cash flows are less than the carrying amount of the asset an impairment loss would be recognized. An impairment loss would be measured as the amount by which the carrying amount of the asset exceeded the fair value of the asset, with fair value measured as the amount at which the asset could be bought or sold in a current transaction between willing parties, other than in a forced liquidation sale. The estimation of expected future net cash flows is inherently uncertain and relies to a considerable extent on assumptions regarding current and future net cash flows and market conditions, and the availability of capital. If, in future periods, there are changes in the estimates or assumptions incorporated into the impairment review analysis, the changes could result in an adjustment to the carrying amount of the asset, but at no time would previously recognized impairment losses be restored. NOTE 8 -- DEVELOPMENT EXPENSES Included in Administrative expenses were development costs of approximately $349,000 for the three months ended June 30, 1996, and approximately $705,000 for the six months ended June 30, 1996. These expenses consisted primarily of costs related to the proposed stadium, the Inglewood site master plan and card clubs in California. Included in Administrative expenses were development costs of approximately $252,000 for the three months ended June 30, 1995, and approximately $401,000 for the six months ended June 30, 1995. These expenses consisted primarily of costs related to Kansas gaming surveys, the proposed stadium and card clubs in California. 12 NOTE 9 -- ACCOUNTING FOR STOCK-BASED COMPENSATION Statement of Financial Accounting Standards No. 123, ("SFAS 123") Accounting for Stock-Based Compensation, requires that the Company disclose additional information about employee stock-based compensation plans. The objective of SFAS 123 is to estimate the fair value, based on the stock price at the grant date, of the Company's stock options to which employees become entitled when they have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the stock options. The fair market value of a stock option is to be estimated using an option-pricing model that takes into account, as of the grant date, the exercise price and expected life of the option, the current price of the underlying stock and its expected volatility, expected dividends on the stock and the risk-free interest rate for the expected term of the options. The Company has calculated the pro forma financial results as required under the implementation rule of SFAS 123 and noted that the impact on net income for the six months ended June 30, 1996 and 1995 was immaterial. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - ------- ----------------------------------------------------------------------- OF OPERATIONS ------------- RESULTS OF OPERATIONS Three months ended June 30, 1996, compared to the three months ended June 30, ----------------------------------------------------------------------------- 1995 ---- Except for the historical information contained herein, the matters addressed in this Item 2 constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed in this Report on Form 10-Q, that could cause actual results to differ materially from those anticipated by the Company's management. The Private Securities Litigation Reform Act of 1995 (the "Act") provides certain "safe harbor" provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the Act. The results of operations for the three months ended June 30, 1996, included the results of Hollywood Park operating all aspects of the Casino, including the gaming floors, whereas, during the three months ended June 30, 1995, the Company leased the gaming floor activities to PCM for a fixed monthly rent, and directly operated all other aspects of the business. The results of operations for the three months ended June 30, 1996, exclude the results of operations for Sunflower, as this subsidiary is no longer consolidated due to Hollywood Park's non-cash write off of its approximately $11,412,000 investment in Sunflower, and Sunflower's May 17, 1996, filing for reorganization under Chapter 11 of the Bankruptcy code. Total revenues increased by $3,599,000, or 8.4%, during the three months ended June 30, 1996, as compared to the three months ended June 30, 1995. Pari-mutuel commissions increased by $618,000 or 2.9%, primarily due to three additional 1996 live race days at Hollywood Park. Gaming - Casino revenues of $12,962,000 were generated from the gaming floor activities, which Hollywood Park acquired from PCM on November 17, 1995. While there are no comparable gaming floor revenues in the 1995 results, during the three months ended June 30, 1995, the Company recorded Lease - Casino revenue of $6,288,000, and concession sales to the former lessee of approximately $548,000. Admissions, programs and other racing income declined by $599,000, or 10.3%, with $409,000 of the decline related to the exclusion of Sunflower's 1996 operating results. Concession sales decreased by $1,484,000, or 25.0%, with $777,000 of the decline a result of the exclusion of Sunflower's 1996 results, with the remainder primarily due to the 1995 financial results including sales to the former Casino lessee, PCM, (as mentioned earlier) with no such revenues in the 1996 results. Total operating expenses, inclusive of Casino gaming floor operating expenses (with no corresponding gaming floor operating expenses in the 1995 results) and with the 1996 financial results exclusive of 13 Sunflower's operating expenses, increased by $3,097,000, or 9.8%, for the three months ended June 30, 1996, as compared to the three months ended June 30, 1995. Salaries, wages and employee benefits increased by $3,440,000, or 27.3%, primarily because of wages and benefits associated with the gaming floor staff (hired November 17, 1995). Operations of facilities costs decreased by $751,000, or 26.4%, primarily due to the exclusion of Sunflower's expenses in the 1996 results. Cost of concession sales decreased by $1,711,000, or 22.5%, with $640,000 of the decrease related to the exclusion of Sunflower's 1996 operating expenses, with the remainder due to cost saving measures implemented at the Hollywood Park race track and Casino. Professional services decreased by $234,000, or 9.2%, primarily due to the exclusion of Sunflower's results and efforts at Turf Paradise and Hollywood Park to reduce racing related costs. Utilities decreased by $215,000, or 18.1%, primarily due to the exclusion of Sunflower's 1996 results. Marketing costs increased by $690,000, or 32.5%, mainly due to Casino marketing costs. Administrative expenses increased by $1,868,000, or 77.0%, primarily due to costs associated with the operation of the gaming floors, including the city of Inglewood monthly gaming license fee. Depreciation and amortization decreased by $375,000, or 13.1%, primarily due to the exclusion of Sunflower's 1996 expenses, netted against the amortization of the goodwill associated with the PCM acquisition. Interest expense decreased by $920,000, or 94.5%, due entirely to the exclusion of Sunflower's 1996 interest expense. Income tax expense increased by $1,339,000, or 55.0%, due to higher pre-tax income in 1996, and an anticipated slightly higher effective tax rate in 1996. Six months ended June 30, 1996, compared to the six months ended June 30, 1995 ------------------------------------------------------------------------------ The results of operations for the six months ended June 30, 1996, included the results of Hollywood Park operating all aspects of the Casino, including the gaming floors whereas, during the six months ended June 30, 1995, the Company leased the gaming floor activities to PCM for a fixed monthly rent, and directly operated all other aspects of the business. The results of operations for the six months ended June 30, 1996, excluded the second quarter results of operations for Sunflower, as this subsidiary is no longer consolidated due to Hollywood Park's non-cash write off of its approximately $11,412,000 investment in Sunflower, and Sunflower's May 17, 1996, filing for reorganization under Chapter 11 of the Bankruptcy Code. Sunflower's results of operations are included in the financial statements for the six months ended June 30, 1995. Total revenues increased by $6,996,000, or 10.4%, during the six months ended June 30, 1996, as compared to the six months ended June 30, 1995. Pari-mutuel commissions increased by $1,028,000, or 3.7%, primarily due to three additional 1996 live race days at Hollywood Park. Gaming - Casino revenues of $24,803,000 were generated from the gaming floor activities, which Hollywood Park acquired from PCM on November 17, 1995. While there are no comparable gaming floor revenues in the 1995 results, during the six months ended June 30, 1995, the Company recorded Lease - Casino revenue of $12,670,000, and concession sales to the former lessee of approximately $1,766,000. Lease and management fee - Sunflower, decreased by $2,074,000, or 65.9%, with $1,638,000 of the decrease attributable to the exclusion of Sunflower's second quarter 1996 results and the remainder of the decline was due to the continued competition from riverboat gaming on the nearby Missouri River. Admissions, programs and other racing income declined by $636,000 or 6.9%, with $409,000 of the decline related to the exclusion of Sunflower's second quarter 1996 results, with the balance primarily due to a 4.9% decrease in on-track attendance at Hollywood Park. Concession sales decreased by $3,168,000, or 29.3%, with $1,051,000 of the decline due to (i) the exclusion of Sunflower's second quarter 1996 results and riverboat gaming competition in Missouri, and (ii) the fact that the 1995 results included sales to PCM, the former gaming floor lessee (as mentioned earlier), with no such sales in the 1996 results. Other income decreased by $287,000, or 7.7%, primarily due to the cancellation of the initial Forum Parking Agreement, and a decrease in interest income earned on excess cash reserves. A new Forum Parking Agreement was executed on October 24, 1995, covering the one year from October 1, 1995, through September 30, 1996, providing for a minimum annual rent of $1,200,000, compared to $1,800,000 under the prior Forum Parking Agreement. The one year term of the new Forum Parking Agreement, which is substantially shorter than the twelve year term of the prior Forum Parking Agreement, is intended to provide flexibility regarding the proposed stadium development and to gain other cross marketing benefits. 14 Total operating expenses, inclusive of Casino gaming floor expenses (with no corresponding gaming floor operating expenses in the 1995 results) and with the 1996 financial results exclusive of Sunflower's second quarter 1996 operating expenses, increased by $8,930,000, or 16.7%, for the six months ended June 30, 1996, as compared to the six months ended June 30, 1995. Salaries, wages and employee benefits increased by $8,177,000, or 40.0%, primarily because of wages and benefits associated with the gaming floor staff (hired November 17, 1995). Operations of facilities costs decreased by $904,000, or 17.0%, with $533,000 of the decline attributable to the exclusion of Sunflower's second quarter 1996 results, and with the balance primarily due to reduction in property taxes at Hollywood Park. Cost of concession sales decreased by $2,716,000, or 20.2%, principally due to staff reductions at the Casino and the exclusion of Sunflower's second quarter 1996 results. Marketing costs increased by $1,000,000, or 37.3%, primarily due to Casino marketing costs. Administrative costs increased by $3,478,000, or 85.2%, due primarily to costs associated with the operation of the gaming floors, including the city of Inglewood monthly gaming license fee. Depreciation and amortization decreased by $254,000, or 4.5%, due primarily to the exclusion of Sunflower's second quarter 1996 results, netted against the amortization of the goodwill associated with the PCM acquisition. Interest expense decreased by $1,030,000, or 53.4%, due to the exclusion of Sunflower's second quarter 1996 results. Income tax expense increased by $330,000, or 15.6%, due to higher pre-tax income in 1996, and an anticipated slightly higher effective tax rate in 1996. LIQUIDITY AND CAPITAL RESOURCES Hollywood Park's principal source of liquidity at June 30, 1996, was cash and cash equivalents of approximately $30,830,000 which reflected an increase of $8,424,000 from December 31, 1995. The increase was primarily a result of a seasonally strong second quarter, maturity of short term investments, and the release of the Company's workers' compensation self insurance deposit, netted against Crystal Park construction disbursements and the convertible preferred dividend payments. Cash and cash equivalents decreased by $1,399,000 during the six months ended June 30, 1995, primarily due to debt service payments on secured and unsecured loan facilities, netted against increases in accounts payable and accrued liabilities. HOLLYWOOD PARK As a condition of the April 23, 1996, Merger Agreement with Boomtown, Hollywood Park must secure adequate funding to repurchase Boomtown's First Mortgage notes (if required to be redeemed) and at least $60,000,000 to fund various gaming projects; the Company has appointed Bank of America to act as lead bank in securing a credit agreement in excess of $165,000,000. During the six months ended June 30, 1996, Hollywood Park did not draw any funds under its credit facilities with Bank of America National Trust and Savings Association ("Bank of America"), except for the issuance of a standby letter of credit on May 1, 1996, mentioned below. On April 14, 1995, the Company executed an unsecured loan facility of up to $75,000,000 with Bank of America (the "Business Loan Agreement"). The loan facility consists of a $60,000,000 line of credit (the "Line of Credit") and a $15,000,000 revolver (the "Revolver"). The Line of Credit is an interest only, revolving facility, under which the Company may borrow, pay and reborrow principal amounts without penalty. On or before September 1, 1996, per Amendment Two (as defined below) the Company has the option to convert the Line of Credit to a term repayment line of credit, at a maximum amount of $60,000,000, with a seven year term period from the date of conversion, which would require repayment in eighty-four successive equal monthly installments. The Line of Credit bears interest at the option of the Company at Bank of America's prime rate plus 0.25% or the offshore rate plus 2.0%, and the Company may further elect an agreed upon fixed rate. The Revolver, inclusive of a within line facility for standby letters of credit of up to a maximum of $5,000,000, is available during the two years ending May 1, 1997, during which the Company can borrow, pay and reborrow principal amounts without penalty. The Revolver bears interest at the option of the Company at 15 Bank of America's prime rate or the offshore rate plus 1.75%, and the Company may further elect an agreed upon fixed rate. On May 1, 1996, Hollywood Park issued a standby letter of credit in the amount of $2,617,000, as security for its self insurance workers' compensation program with the state of California. On July 1, 1996, Hollywood Park and Bank of America executed Amendment Two to the Business Loan Agreement, which among other things, extended the date for drawing down on the line of credit from July 1, 1996, to September 1, 1996. On April 30, 1996, Hollywood Park and Bank of America executed Amendment One to the Business Loan Agreement, which among other things, extended the date for drawing down on the Line of Credit from May 1, 1996, to July 1, 1996, and adjusted the tangible net worth covenant requirement for December 31, 1996. As of March 31, 1996, Hollywood Park did not meet the quick assets to current liabilities bank covenant contained in the Business Loan Agreement, and as of December 31, 1995, did not meet the tangible net worth and quick ratio covenants in the Business Loan Agreement. On May 10, 1996, Bank of America waived compliance with the quick ratio covenant, through June 29, 1996, and on March 20, 1996, the Bank waived compliance with both covenants. As of June 30, 1996, the Company was in compliance with all financial covenants. Capital expenditures of $9,132,000, for the six months ended June 30, 1996, were primarily related to construction of Crystal Park. With Hollywood Park increasing its ownership interest in Crystal Park to 88% from 40%, the Company will be responsible for the corresponding greater amount of the construction costs. Dividends of $962,000 were paid on the convertible preferred stock during the six months ended June 30, 1996. Such dividends were made in payments of approximately $481,000 (representing $17.50 per convertible preferred share) on May 15, 1996, and February 15, 1996. On July 1, 1996, the Company declared its regular preferred quarterly dividend of $481,000, payable on August 15, 1996. As of January 1, 1996, shares of the convertible preferred stock can be redeemed at the option of the Company, though at no time will the convertible preferred stock be redeemed for cash. The Company may exercise this option, only if, among other requirements, for 20 trading days, within any period of 30 consecutive trading days, the closing price of the Company's common stock exceeds $15.00, subject to adjustments in certain circumstances. The conversion price is equal to 83.33 common shares for each convertible preferred share. The Company anticipates converting the convertible preferred stock into common stock at the earliest possible date. In 1995, the Company began investing in corporate bonds, with approximately $4,053,000 invested as of June 30, 1996, with Moody's ratings of Ba2 to B3 and Standard and Poors ratings of BB+ to B-, though some of the bonds are not rated by either agency. Investments in corporate bonds carry a greater amount of principal risk than investments historically made by the Company and yield a correspondingly higher return. The corporate bond investments, as of June 30, 1996, had a weighted average maturity of 1.5 years, and because the Company reasonably expects to liquidate this investment in its normal operating cycle this investment was classified as short term. This short term investment is held as available for sale, and was recorded in the accompanying financial statements at fair value, determined by the quoted market price. SUNFLOWER On March 24, 1994, an Amended and Restated Credit and Security Agreement (the "Senior Credit") was executed between Sunflower and five banks (the "Banks") in connection with the Company's acquisition of Sunflower. The Senior Credit has been amended three times, most recently in October 1995 by the Standstill Agreement (discussed below). The Senior Credit was non-recourse to Hollywood Park, except for the Company's guarantee of the interest payments required under the Standstill Agreement. The guarantee was terminated, without any payments by the Company, by reason of the termination of the Standstill Agreement. As of June 30, 1996, the Senior Credit had an outstanding balance of $28,667,000. 16 In December 1994, Sunflower executed a promissory note to Hollywood Park, allowing for the advancement of up to $3,000,000, for the payment of its Senior Credit obligations. In 1995, Hollywood Park advanced $2,500,000 to Sunflower, which along with accrued interest is subordinated to the Senior Credit obligations. In October 1995, Sunflower and the Banks executed a Standstill Agreement, which among other things, provided for the extension of the Senior Credit maturity. The Standstill Agreement provided for the deferral of 100% of the principal payments and 50% of the interest payments due under the Senior Credit from April 1995 through the termination date of the Standstill Agreement. The Standstill Agreement terminated on May 2, 1996, because the Kansas Legislature concluded its 1996 session without passing legislation that would have permitted slot machines or other casino gaming at Kansas race tracks, including Sunflower. On May 17, 1996, Sunflower filed for reorganization under Chapter 11 of the Bankruptcy Code. GENERAL Hollywood Park is continually evaluating future growth opportunities in the gaming, sports and entertainment industries. The Company expects that funding for growth opportunities, dividend requirements on the convertible preferred stock, payments on notes payable or capital expenditure needs will come from existing cash balances, cash generated from operating activities and borrowings from the credit facilities. In the opinion of management, these resources will be sufficient to meet the Company's anticipated cash requirements for the foreseeable future (in any event for at least the next 12 months). PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- As previously reported by the Company, and described in the Company's Annual Report on Form 10-K for 1994, six purported class actions (the "Class Actions") were filed beginning in September 1994, against the Company and certain of its directors and officers in the United States District Court, Central District of California (the "District Court") and consolidated in a single action entitled In re Hollywood Park Securities Litigation. On September 15, 1995, a related - ------------------------------------------ stockholder derivative action, entitled Barney v. Hubbard, et al. (the ------------------------- "Derivative Action"), was filed in the California Superior Court for the County of San Diego (the "State Court"). The Company and other defendants each denied any liability or wrongdoing and asserted various defenses. The District Court ordered the parties to engage in non-binding mediation in an effort to settle all related claims. As previously reported, as a result of the court ordered mediation, the parties reached an agreement-in-principle to settle all claims raised in the Class and Derivative Actions. The Company entered into the settlements in order to avoid the expense, uncertainty and distraction of further litigation. On November 6 and 13, 1995, respectively, the parties executed definitive settlement agreements in the Derivative and Class Actions. Those agreements provided for the release and dismissal of all claims raised or which might have been raised in the Class and Derivative actions, subject to approval by each of the respective courts. In settlement of the Class Actions, a settlement fund in the principal amount of $5,800,000 has been created for the benefit of the alleged class with contributions from the Company and the insurance carrier for its directors and officers. After giving consideration to the amounts to be received by the Company in settlement of the Derivative Action, the Company's net settlement payment in the Class Actions was less than $2,500,000. Under settlement of the Derivative Action, the Company will receive a $2,000,000 payment from the insurance carrier which the Company will use to pay plaintiff's attorneys fees and expenses and partially to defray the Company's payment in the settlement of the Class Actions. The Derivative Action settlement also includes provisions enhancing the Company's financial controls and modifying certain terms of its acquisition of Sunflower. On February 26, 1996, the District Court approved the settlement of the Class Actions and entered a judgment dismissing the Class Actions in their entirety. On May 6, 1996, the State Court approved the settlement of the Derivative Action and entered a judgment dismissing the Derivative Action in its entirety. On or about July 2, 17 1996, a notice of appeal was filed in connection with the Derivative Action judgment. The Company intends to oppose the purported appeal. The Company also executed a separate settlement as to all purported claims against the Company and its officers and directors by the former controlling stockholder of Turf Paradise (the "Walkers") in connection with the Company's acquisition of Turf Paradise. Under the terms of the consummation of the settlement of the Class and Derivative Actions, the Walkers were excluded from participating in the Class Actions settlement fund, agreed to release all of their potential threatened claims, and are to receive a payment in the principal amount of $2,750,000. The accrued lawsuit settlement recorded in the accompanying financial statements as of June 30, 1996, of $2,750,000 represents the settlement with the Walkers. ITEM 3. DEFAULT UPON SENIOR SECURITIES - ------- ------------------------------ On May 17, 1996, Sunflower filed for reorganization under chapter 11 of the Bankruptcy Code. As of May 17, 1996, the outstanding balance of Sunflower's Senior Credit was $28,667,000. The Senior Credit is non-recourse to the parent company, Hollywood Park, Inc. On May 2, 1996, the Kansas Legislature concluded its 1996 legislative session without adoption of legislation permitting slot machines or other casino gaming at Kansas race tracks. This resulted in the termination of the Standstill Agreements (see Liquidity and Capital Resources) as of May 2, 1996. ITEM 5. OTHER INFORMATION - ------- ----------------- As of June 30, 1996, there were several bills pending in the California State Legislature that could have an effect on the Company. SB 1887 is a comprehensive card gaming regulatory bill which would, among other things: (i) establish a gaming commission to comprehensively regulate card club gaming in California; (ii) remove the sunset clause in SB 100 (see Note 1, Acquisition of PCM); (iii) allow the Company to operate Crystal Park in addition to the Hollywood Park-Casino; (iv) establish an annual regulatory fee to be paid by all card clubs in California, and (v) place a moratorium on the passage of local ordinances authorizing new card clubs until January 1, 2001. There can be no assurance that SB 1887 will be enacted this year or that it will be enacted in its present form. The Company is supporting SB 1887 in its present form. SB 2000 and Assembly Bill ("AB") 3205, both seek to reduce the state tax on pari-mutuel wagers made in California and to distribute the savings: (i) to the horsemen by way of purses and (ii) to the race track's by allowing them to retain higher pari-mutuel commissions. Again, it is too soon to determine whether either of these bills will be enacted this year, and if so, to what extent the tax will be reduced. The Company supports both SB 2000 and AB 3205. ITEM 6.a EXHIBITS - -------- -------- Exhibit Number Description of Exhibit - ------- ---------------------- 2.1 Agreement and Plan of Reorganization, by and among Hollywood Park, Inc., and Pacific Casino Management, Inc., dated November 17, 1995, is hereby incorporated by reference to the Company's Current Report on Form 8-K, filed November 30, 1995, and to the Company's Current Report on Form 8-K/A, filed January 25, 1996. 2.2 Agreement and Plan of Merger, by and among Hollywood Park, Inc., HP Acquisition, Inc. and Boomtown, Inc., dated April 23, 1996, is hereby incorporated by reference to the Company's Current Report of Form 8-K, filed May 3, 1996. 3.1 Certificate of Incorporation of Hollywood Park, Inc., is hereby incorporated by reference to the Company's Registration Statement on Form S-1 dated January 29, 1993. 3.2 Amended By-laws of Hollywood Park, Inc., are hereby incorporated by reference to the Company's Registration Statement on Form S-1 dated January 29, 1993. 18 4.5 Convertible Preferred Stock Depository Stock Agreement between Hollywood Park, Inc. and Chemical Trust Company of California, dated February 9, 1993, is hereby incorporated by reference to the Company's Registration Statement on Form S-1 dated January 29, 1993. 4.6 Hollywood Park Stock Option Plan is hereby incorporated by reference to Exhibit A to the Notice of Annual Meeting of Stockholders and Proxy Statement relating to the Annual Meeting of Stockholders of Hollywood Park, Inc., held on May 17, 1993. 10.1 Directors Deferred Compensation Plan for Hollywood Park, Inc., is hereby incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.2 Lease Agreement dated January 1, 1989, by and between Hollywood Park Realty Enterprises, Inc. and Hollywood Park Operating Company, as amended, is hereby incorporated by reference to the Joint Annual Report on Form 10-K for the fiscal year ended December 31, 1989, of Hollywood Park Operating Company and Hollywood Park Realty Enterprises, Inc. 10.3 Aircraft rental agreement dated November 1, 1993, by and between Hollywood Park, Inc., and R.D. Hubbard Enterprises, Inc., is hereby incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.4 Amended and Restated Credit Agreement dated March 23, 1994, by and between Sunflower Racing, Inc. and First Union National Bank of North Carolina, Bank One Lexington, Texas Commerce Bank, Home State Bank of Kansas City and Intrust Bank, N.A., is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994. 10.5 Pledge Agreement dated March 23, 1994, by and between Hollywood Park, Inc., First Union National Bank of North Carolina, (as agent for the ratable benefit of itself and the Banks named in the Amended and Restated Credit Agreement included as Exhibit 10.4) is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for quarter ended June 30, 1994. 10.6 Agreement Respecting Pyramid Casino dated December 3, 1994, by and between Hollywood Park, Inc. and Compton Entertainment, Inc., is hereby incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 10.7 Amendment of Oil and Gas Lease dated January 10, 1995, by and among Hollywood Park, Inc., Casex Co., Nunn Ltd., and Votex Energy & Mineral is hereby incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 10.8 Business Loan Agreement dated April 14, 1995, by and between Hollywood Park, Inc., and Bank of America National Trust and Savings Association, is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. 10.9 Amendment No. One, dated April 30, 1996, by and between Hollywood Park, Inc. and Bank of America National Trust and Savings Association, to the Business Loan Agreement dated April 14, 1995, is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996. 10.10 Amendment No. Two, dated July 1, 1996, by and between Hollywood Park, Inc., and Bank of America National Trust and Savings Association, to the Business Loan Agreement dated April, 14, 1995. 10.11 Amendment to Agreement Respecting Pyramid Casino dated April 14, 1995, by and between Hollywood Park, Inc. and Compton Entertainment, Inc., is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. 10.12 Amended and Restated Agreement Respecting Pyramid Casino dated July 14, 1995, by and between Hollywood Park, Inc. and Compton Entertainment, Inc., is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. 10.13 Amended and Restated Disposition and Development Agreement of Purchase and Sale, and Lease with Option to Purchase, dated August 2, 1995, by and between The Community Redevelopment Agency of the City of Compton and Compton Entertainment, Inc., is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. 19 10.14 Guaranty, dated July 31, 1995, by Hollywood Park, Inc. in favor of the Community Redevelopment Agency of the City of Compton, is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. 10.15 Lease, by and between HP Compton, Inc. and Compton Entertainment, Inc., dated August 3, 1995, is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. 10.16 Standstill Agreement, dated October 27, 1995, by and between Sunflower Racing, Inc., and First Union National Bank of Florida, Bank One Lexington, N.A., Bank Midwest, N.A., Intrust Bank, N.A., and FCLT Loans, L.P., is hereby incorporated by reference to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. 10.17 License Agreement, dated June 27, 1996, by and between HP Compton, Inc. and Radisson Hotels International, Inc. 10.18 Blue Diamond Swap Agreement, dated August 12, 1996, by and among Boomtown, Inc., Blue Diamond Hotel and Casino, Inc., Hollywood Park, Inc., Edward P. Roski, Jr., Industry Hills Visitor Accommodation Center, and Majestic Realty, Co. 10.19 Stock Purchase Agreement, dated August 12, 1996, by and between Hollywood Park, Inc. and Edward P. Roski, Jr. 22.1 Subsidiaries of Hollywood Park, Inc.: HP Compton, Inc., a California corporation, HP Casino, Inc., a California corporation, Hollywood Park Operating Company, a Delaware corporation (and its subsidiaries: Hollywood Park Fall Operating Company, a Delaware corporation and Hollywood Park Food Services, Inc., a California corporation): Sunflower Racing, Inc., a Kansas corporation (and its subsidiary SR Food and Beverage, Inc., a Kansas corporation): and Turf Paradise, Inc., an Arizona corporation. 27.1 Financial Data Schedule (b) Reports on Form 8-K A Current Report on Form 8-K was filed on May 3, 1996, to report the April 23, 1996, execution of the Agreement and Plan of Merger relating to the strategic combination of Hollywood Park, Inc. and Boomtown, Inc. 20 HOLLYWOOD PARK, INC. Racing Data
HOLLYWOOD PARK RACE TRACK 1996 1995 ------------------------------ ------------------------------ LIVE RACING DATES: Spring/Summer meeting ("S/S") April 26 through July 22 April 28 through July 24 Autumn meeting ("A") Nov. 11 through Dec. 22 Nov. 15 through Dec. 24 LIVE RACE DAYS INCLUDING CHARITY DAYS (a): Spring/Summer meeting 67 67 Autumn meeting 36 30 -------- -------- 103 97 ======== ======== LIVE RACE DAYS BY QUARTER: First quarter 0 0 Second quarter (S/S) 51 48 Third quarter (S/S) 16 19 Fourth quarter (A) 36 30 -------- -------- 103 97 ======== ======== SIMULCAST RACE days by quarter 1996: 1Q 2Q 3Q 4Q TOTAL -------- -------- -------- -------- -------- Santa Anita thoroughbred 66 16 0 4 86 Del Mar thoroughbred 0 0 43 0 43 Fairplex Pomona thoroughbred 0 0 18 0 18 Oak Tree from Santa Anita thoroughbred 0 0 0 27 27 Los Alamitos Harness - night races 51 4 0 0 55 Los Alamitos Quarter Horse - night races 0 45 52 48 145 Cal Expo Harness - night races 0 35 9 0 44 Bay Meadows - northern California (b) 40 0 23 26 89 Golden Gate Fields - northern California (b) 5 59 0 35 99 Fairs - northern California (b) 0 15 53 10 78 -------- -------- -------- -------- -------- TOTAL 162 174 198 150 684 ======== ======== ======== ======== ======== SIMULCAST RACE DAYS BY QUARTER 1995: 1Q 2Q 3Q 4Q TOTAL -------- -------- -------- -------- -------- Santa Anita thoroughbred 65 19 0 5 86 Del Mar thoroughbred 0 0 43 0 43 Fairplex Pomona thoroughbred 0 0 17 2 19 Oak Tree from Santa Anita thoroughbred 0 0 0 32 32 Los Alamitos Harness - night races 36 0 0 5 41 Los Alamitos Quarter Horse - night races 0 45 54 53 152 Cal Expo Harness - night races 1 36 11 16 64 Bay Meadows - northern California (b) 19 11 28 45 103 Golden Gate Fields - northern California (b) 44 55 0 15 114 Fairs - northern California (b) 0 16 60 12 88 -------- -------- -------- -------- -------- TOTAL 165 182 213 185 745 ======== ======== ======== ======== ========
______ (a) There are three charity days in both the Spring/Summer and Autumn meetings, for a total of six charity days per year. (b) Simulcasting from northern California runs year round and is simulcast concurrently with either live on-track racing or with southern California simulcasting. TURF PARADISE Turf Paradise has one continuous live thoroughbred race meet that starts in September and runs through May. During 1996 Turf Paradise raced live for the period January 1 through May 7 and resumes live racing on September 28 and will run through December 31. Turf Paradise operates as a simulcast facility for Arizona's 21 Prescott Downs during the period May 24 through September 2. In 1995, Turf Paradise raced live from January 1 through May 22, operated as a simulcast facility for the period May 26 through September 4, and resumed live racing on September 30 running through December 31. Along with running live thoroughbred races, Turf Paradise offers two quarter horse races a day during the first three months of the live meet (September through November) and a limited number of Arabian races each spring. Turf Paradise also typically accepts simulcast signals during live racing on Fridays, Saturdays and Sundays, and operates as a simulcast facility during the two dark days (days without live racing during the live race meet) of each week during the live on-track racing season.
LIVE ON-TRACK RACE DARK DAY SIMULCASTING - DAYS SIMULCASTING PRESCOTT ---------------------- ----------------------- --------------------- 1996 1995 1996 1995 1996 1995 --------- --------- --------- --------- --------- --------- First quarter 71 67 20 23 0 0 Second quarter 27 37 24 14 33 30 Third quarter 3 1 18 18 56 56 Fourth quarter 66 66 24 25 0 0 --------- --------- --------- --------- --------- --------- 167 171 86 80 89 86 ========= ========= ========= ========= ========= =========
22 Hollywood Park, Inc. Calculation of Earnings Per Share
For the three months ended June 30, -------------------------------------------------------- Primary Assuming full dilution (a) ------------------------- -------------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Average number of common shares outstanding 18,612,850 18,369,634 18,612,850 18,369,634 Average common shares due to assumed conversion of convertible preferred shares 0 0 2,291,492 2,291,492 ---------- ---------- ---------- ---------- Total shares 18,612,850 18,369,634 20,904,342 20,661,126 ========== ========== ========== ========== Net income $5,249,000 $4,857,000 $5,249,000 $4,857,000 Less dividend requirements on convertible preferred shares 481,000 481,000 0 0 ---------- ---------- ---------- ---------- Net income available to common shareholders $4,768,000 $4,376,000 $5,249,000 $4,857,000 ========== ========== ========== ========== Net income per share $0.26 $0.24 $0.25 $0.24 ========== ========== ========== ==========
For the six months ended June 30, --------------------------------------------------------- Primary Assuming full dilution (a) -------------------------- --------------------------- 1996 1995 1996 1995 ---------- ----------- ----------- ---------- Average number of common shares outstanding 18,612,850 18,369,634 18,612,850 18,369,634 Average common shares due to assumed conversion of convertible preferred shares 0 0 2,291,492 2,291,492 ---------- ---------- ----------- ---------- Total shares 18,612,850 18,369,634 20,904,342 20,661,126 ========== ========== =========== ========== Net income (loss) ($8,129,000) $4,263,000 ($8,129,000) $4,263,000 Less dividend requirements on convertible preferred shares 962,000 962,000 0 0 ----------- ---------- ----------- ---------- Net income (loss) available to (allocated to) common shareholders ($9,091,000) $3,301,000 ($8,129,000) $4,263,000 =========== ========== =========== ========== Net income (loss) per share ($0.49) $0.18 ($0.39) $0.21 =========== ========== =========== ==========
- ------- (a) The computed values assuming full dilution are anti-dilutive; therefore, the primary share values are presented on the face of the consolidated statements of operations. 23 Hollywood Park, Inc. Selected Financial Data by Operational Site
For the six months ended For the three months ended June 30, June 30, ------------------------- -------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- (unaudited) REVENUES: Hollywood Park, Inc. and Race Track $33,736,000 $33,328,000 $28,035,000 $27,542,000 Sunflower Racing, Inc. 1,782,000 5,473,000 0 2,835,000 Turf Paradise, Inc. 9,816,000 10,067,000 3,219,000 3,624,000 Hollywood Park, Inc. - Casino Division 28,946,000 18,416,000 15,173,000 8,827,000 ----------- ----------- ----------- ----------- 74,280,000 67,284,000 46,427,000 42,828,000 ----------- ----------- ----------- ----------- EXPENSES: Hollywood Park, Inc. and Race Track 28,857,000 28,214,000 19,522,000 19,697,000 Sunflower Racing, Inc. 1,703,000 4,602,000 0 2,337,000 Turf Paradise, Inc. 6,822,000 7,678,000 2,700,000 3,148,000 Hollywood Park, Inc. - Casino Division 24,873,000 12,831,000 12,576,000 6,519,000 ----------- ----------- ----------- ----------- 62,255,000 53,325,000 34,798,000 31,701,000 ----------- ----------- ----------- ----------- INCOME BEFORE INTEREST, INCOME TAXES, DEPRECIATION, AMORTIZATION AND WRITE OFF OF INVESTMENT IN SUBSIDIARY: Hollywood Park, Inc. and Race Track 4,879,000 5,114,000 8,513,000 7,845,000 Sunflower Racing, Inc. 79,000 871,000 0 498,000 Turf Paradise, Inc. 2,994,000 2,389,000 519,000 476,000 Hollywood Park, Inc. - Casino Division 4,073,000 5,585,000 2,597,000 2,308,000 ----------- ----------- ----------- ----------- 12,025,000 13,959,000 11,629,000 11,127,000 ----------- ----------- ----------- ----------- WRITE OFF OF INVESTMENT IN SUBSIDIARY: Write off of investment in Sunflower Racing, Inc. 11,412,000 0 66,000 0 DEPRECIATION AND AMORTIZATION: Hollywood Park, Inc. and Race Track 2,843,000 2,719,000 1,450,000 1,368,000 Sunflower Racing, Inc. 536,000 1,237,000 0 616,000 Turf Paradise, Inc. 610,000 698,000 301,000 369,000 Hollywood Park, Inc. - Casino Division 1,411,000 1,000,000 736,000 509,000 ----------- ----------- ----------- ----------- 5,400,000 5,654,000 2,487,000 2,862,000 ----------- ----------- ----------- ----------- INTEREST EXPENSE: Hollywood Park, Inc. and Race Track 117,000 98,000 54,000 49,000 Sunflower Racing, Inc. 781,000 1,810,000 0 922,000 Turf Paradise, Inc. 0 20,000 0 3,000 ----------- ----------- ----------- ----------- 898,000 1,928,000 54,000 974,000 ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE INCOME TAX EXPENSE: Hollywood Park, Inc. and Race Track 1,919,000 2,297,000 7,009,000 6,428,000 Write off of Investment in Sunflower Racing, Inc. (11,412,000) 0 (66,000) 0 Sunflower Racing, Inc. (1,238,000) (2,176,000) 0 (1,040,000) Turf Paradise, Inc. 2,384,000 1,671,000 218,000 104,000 Hollywood Park, Inc. - Casino Division 2,662,000 4,585,000 1,861,000 1,799,000 ----------- ----------- ----------- ----------- (5,685,000) 6,377,000 9,022,000 7,291,000 Income tax expense 2,444,000 2,114,000 3,773,000 2,434,000 ----------- ----------- ----------- ----------- Net income (loss) ($8,129,000) $4,263,000 $5,249,000 $4,857,000 =========== =========== =========== =========== Dividend requirements on convertible preferred stock $962,000 $962,000 $481,000 $481,000 ----------- ----------- ----------- ----------- Net income (loss) available to (allocated to) common shareholders ($9,091,000) $3,301,000 $4,768,000 $4,376,000 =========== =========== =========== =========== Per common share: Net income (loss) - primary ($0.49) $0.18 $0.26 $0.24 Net income (loss) - fully diluted ($0.49) $0.18 $0.25 $0.24 Number of shares - primary 18,612,850 18,369,634 18,612,850 18,369,634 Number of shares - fully diluted 20,904,342 20,661,126 20,904,342 20,661,126
24 Hollywood Park, Inc. Pari-mutuel Wagering Data
For the six months ended For the three months ended June 30, June 30, ------------------------------ ---------------------------- 1996 1995 1996 1995 ------------ ------------ ------------ ------------ (unaudited) HOLLYWOOD PARK -------------- Pari-mutuel handle: On-track $90,716,000 $94,351,000 $90,716,000 $94,351,000 Off-track - shared handle wagering 277,802,000 229,650,000 277,802,000 229,650,000 Simulcast 191,516,000 194,042,000 105,358,000 111,636,000 ------------ ------------ ------------ ------------ Total $560,034,000 $518,043,000 $473,876,000 $435,637,000 ============ ============ ============ ============ Pari-mutuel commissions: On-track $5,860,000 $5,985,000 $5,860,000 $5,985,000 Off-track - shared handle wagering 8,105,000 7,436,000 8,105,000 7,436,000 Off-track - independent handle 1,214,000 1,076,000 1,214,000 1,076,000 Simulcast 6,022,000 5,794,000 4,353,000 4,192,000 ------------ ------------ ------------ ------------ Total $21,201,000 $20,291,000 $19,532,000 $18,689,000 ============ ============ ============ ============ TURF PARADISE ------------- Pari-mutuel handle: On-track $16,193,000 $18,268,000 $4,421,000 $6,291,000 Off-track - shared handle wagering 69,189,000 46,492,000 20,224,000 15,979,000 Simulcast 31,203,000 29,124,000 13,272,000 12,284,000 ------------ ------------ ------------ ------------ Total $116,585,000 $93,884,000 $37,917,000 $34,554,000 ============ ============ ============ ============ Pari-mutuel commissions: On-track $1,926,000 $2,483,000 $539,000 $1,131,000 Off-track - shared handle wagering 2,958,000 2,956,000 857,000 1,303,000 Off-track - independent handle 103,000 507,000 49,000 139,000 Simulcast 2,519,000 1,442,000 1,012,000 109,000 ------------ ------------ ------------ ------------ Total $7,506,000 $7,388,000 $2,457,000 $2,682,000 ============ ============ ============ ============ COMBINED -------- Pari-mutuel handle: On-track $106,909,000 $112,619,000 $95,137,000 $100,642,000 Off-track - shared handle wagering 346,991,000 276,142,000 298,026,000 245,629,000 Simulcast 222,719,000 223,166,000 118,630,000 123,920,000 ------------ ------------ ------------ ------------ Total $676,619,000 $611,927,000 $511,793,000 $470,191,000 ============ ============ ============ ============ Pari-mutuel commissions: On-track $7,786,000 $8,468,000 $6,399,000 $7,116,000 Off-track - shared handle wagering 11,063,000 10,392,000 8,962,000 8,739,000 Off-track - independent handle 1,317,000 1,583,000 1,263,000 1,215,000 Simulcast 8,541,000 7,236,000 5,365,000 4,301,000 ------------ ------------ ------------ ------------ Total $28,707,000 $27,679,000 $21,989,000 $21,371,000 ============ ============ ============ ============
25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HOLLYWOOD PARK, INC. (Registrant) By: /s/ R.D. Hubbard --------------------------- Dated: August 13, 1996 R.D. Hubbard Chairman of the Board and Chief Executive Officer (Principal Executive Officer) By: /s/ G. Michael Finnigan ---------------------------- Dated: August 13, 1996 G. Michael Finnigan Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 26 HOLLYWOOD PARK, INC. EXHIBIT INDEX
Exhibit Description Page - ------- ----------- ---- 10.10 Amendment No. Two, dated July 1, 1996, by 1 and between Hollywood Park, Inc. and Bank of America National Trust and Savings Association, to the Business Loan Agreement dated April 14, 1995. 10.17 License Agreement, dated June 27, 1996, 3 by and between HP Compton, Inc. and Radisson Hotels International, Inc. 10.18 Blue Diamond Swap Agreement, dated August 36 12, 1996, by and among Boomtown, Inc., Blue Diamond Hotel and Casino, Inc., Hollywood Park, Inc., Edward P. Roski, Jr., Industry Hills Visitor Accommodation Center, and Majestic Realty, Co. 10.19 Stock Purchase Agreement, dated August 50 12, 1996, by and between Hollywood Park, Inc. and Edward P. Roski, Jr. 27.1 Financial Data Schedule
EX-10.10 2 BUSINESS LOAN AGREEMENT DATED APRIL 14, 1995 EXHIBIT 10.10 TO HOLLYWOOD PARK'S JUNE 30, 1996, FORM 10-Q AMENDMENT NO. TWO TO BUSINESS LOAN AGREEMENT This Amendment No. Two (the "Amendment") dated as of July 1, 1996, is between Bank of America National Trust and Savings Association (the "Bank") and Hollywood Park, Inc. (the "Borrower"). RECITALS -------- A. The Bank and the Borrower entered into a certain Business Loan Agreement dated as of April 14, 1995, as modified by an amendment dated as of April 30, 1996 (as amended, the "Agreement"). B. The Bank and the Borrower desire to further amend the Agreement. AGREEMENT --------- 1. Definitions. Capitalized terms used but not defined in this Amendment ----------- shall have the meaning given to them in the Agreement. 2. Amendments. The Agreement is hereby amended as follows: ---------- 2.1 In Paragraph 2.2, the date "July 1, 1996" is amended to read "September 1, 1996." 2.2 Subparagraph 2.4(b) is amended and restated in its entirety to read as follows: "(b) The Borrower will repay the principal amount outstanding on the Expiration Date Facility No. 2 in eighty-four successive equal monthly installments starting October 1, 1996. On September 1, 2003, the Borrower will repay the remaining principal balance plus any interest then due." 3. Representations and Warranties. When the Borrower signs this ------------------------------ Amendment, the Borrower represents and warrants to the Bank that: (a) there is no event which is, or with notice or lapse of time or both would be, a default under the Agreement, except that -1- the Borrower has notified the Bank that it may not be in compliance with the provisions of Paragraph 7.4 A. of the Agreement, as of June 30, 1996, (b) the representations and warranties in the Agreement are true as of the date of this Amendment as if made on the date of this Amendment, (c) this Amendment is within the Borrower's powers, has been duly authorized, and does not conflict with any of the Borrower's organizational papers, and (d) this Amendment does not conflict with any law, agreement, or obligation by which the Borrower is bound. 4. Effect of Amendment. Except as provided in this Amendment, all of the ------------------- terms and conditions of the Agreement shall remain in full force and effect. This Amendment is executed as of the date stated at the beginning of this Amendment. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ Sheryl Bond --------------------------- Sheryl Bond, Vice President HOLLYWOOD PARK, INC. By: /s/ R.D. Hubbard --------------------------- R.D. Hubbard, Chairman of the Board and Chief Executive Officer By: /s/ G. Michael Finnigan --------------------------- G. Michael Finnigan, Executive Vice President and Chief Financial Officer -2- EX-10.17 3 LICENSE AGREEMENT DATED JUNE 27, 1996 EXHIBIT 10.17 TO HOLLYWOOD PARK, INC.'S JUNE 30, 1996, FORM 10-Q LICENSE AGREEMENT ----------------- License Agreement effective as of June 27 , 1996, RADISSON HOTELS ------------------ -- INTERNATIONAL, INC., a Delaware corporation, 12755 State Highway 55, Minneapolis, Minnesota 55441 ("Licensor") and HP/COMPTON, INC., ----------------- a Delaware corporation, 1050 South Prairie Avenue, Inglewood, CA 90301 - ---------------------------------------------------------------------- ("Licensee"). 1. Radisson System. Licensor and its affiliates (collectively "Radisson") --------------- own and license a system of various types of Radisson hotels employing a proprietary and distinctive system ("System") described in this Agreement and in the Operating Manual, and identified by certain trademarks (the "Marks," listed in Exhibit A). The System and Marks are subject to change periodically by Licensor. The System and Marks as they now exist or may be changed in the future are collectively referred to as the "Distinguishing Characteristics." Licensee is authorized to use the Distinguishing Characteristics strictly in accordance with this Agreement and the Operating Manual. 2. The Hotel. The "Hotel" includes the real property and all improvements --------- located at 111 East Artesia Boulevard, Compton, California 90221. The ----------------------------------------------------- improvements include all buildings, facilities, appurtenances, improvements, landscaping, furniture, furnishings, fixtures, equipment and signs and all entry, exit and parking areas. Licensee represents that it has fee title or leasehold title for the above described site and the Hotel, without any restrictions that would interfere with the performance of this Agreement. The Hotel is a[(n)*] Hotel class Radisson Hotel containing 245 guest rooms. Licensee ----- --- shall designate the Hotel as the "Radisson Crystal Park Hotel & Casino or other ------------------------------------ name authorized in writing by Licensor. 3. Grant and Term of License. Licensor grants Licensee and Licensee accepts ------------------------- a non-exclusive License subject to the provisions of this Agreement to operate the Hotel using the System and identified by one of the Marks (the "License"). The License commences on the date on which the Hotel opens for business as a Radisson Hotel. The Hotel shall open for business as a Radisson Hotel no later than January 31,1997. The License and this Agreement expire on December 31, of ---------------- the year in which the 20th anniversary of the opening occurs. The License includes the right to operate the Hotel at the above described location using the System and the name "Radisson" in the name of the Hotel; to use the Distinguishing Characteristics to identify the services offered by Licensee at the Hotel, and to promote and advertise the Hotel, only in the form and manner set forth in the Operating Manual or as otherwise authorized by Licensor. 4. Development. Licensee shall design, and build, rebuild or renovate, the ----------- Hotel in accordance with the Project Rider attached to this Agreement as Exhibit B. Licensee acknowledges (i) that other System licensees operate under different forms of agreement and that the rights and duties of the parties to those agreements may vary materially from those provided hereunder, and (ii) complete uniformity under various market circumstances may not always be possible or desirable and that Licensor reserves the right at its discretion to vary System standards for various hotels based upon local conditions, law or other circumstances, without obligation to Licensee. - ---------- * Bracketed copy indicates strike-through. 3 a. Licensor acknowledges receipt of an initial, non-refundable License Fee of $36,750. If the number of guest room units of the Hotel is increased, ------- Licensee shall pay an additional fee of $150 for each rentable guest room unit in the expansion before Licensee opens the additional units to the public. b. For any period in which Licensee claims, holds or exercises any rights under this License, Licensee shall pay (without invoice) to Licensor on or before the 15th day of each following month a Continuing Franchise Fee in an amount equal to 4% of Licensee's gross room revenue ("Gross Room Sales") exclusive of sales tax and room tax and as gross room revenue is determined in accordance with the "Uniform System of Accounts for Hotels" (Hotel Association of New York City, Inc., Eighth Revised Edition, 1986) as revised periodically (the "Uniform System"). c. For any period in which Licensee claims, holds or exercises any rights under this License, Licensee shall pay (without invoice) to the Radisson Marketing Association ("RMA") on or before the 15th day of each following month, an amount equal to 3 1/2% of Licensee's Gross Room Sales (the "RMA Fee"). Licensor shall collect, manage and disburse RMA fee collections on behalf of RMA, account for RMA funds in separate books of account, and furnish Licensee, upon request, an annual statement of receipts and disbursements of RMA funds. d. /1/Licensee will not cause Gross Room Sales to be reduced in order to increase business or revenues from activities other than those which are part of the Hotel. e. Amounts due under this Agreement which are not paid when due shall bear interest at the lesser of 1 1/2% per month or the maximum contract rate of interest permitted by applicable law. Licensor may also assess a late payment fee of up to $100 for each month/2/ [an amount*] due under this Agreement remains delinquent to reimburse Licensor for Licensor's collection expenses, provided however, if legal action is necessary Licensee may have to pay additional amounts pursuant to the last subparagraph of Paragraph 12. Licensor is relieved of any obligation to Licensee under Paragraph 6 of this Agreement during any period that an amount due from Licensee remains delinquent/3/ 6. Licensor's Services. Licensor shall: ------------------- a. Consult with Licensee periodically on operating and marketing issues concerning the Hotel. b. Have the right to inspect the Hotel/4/ periodically/5/ to determine whether the Licensee is operating and maintaining the Hotel in compliance with this Agreement and the Operating Manual. After such inspection, Licensor will provide Licensee a written Quality Performance Review of the Hotel. Periodic inspections shall be for the sole purpose of protecting Licensor's interest in the Distinguishing Characteristics and shall in no way be /1/ Subject to Paragraph 1 of the Addendum attached hereto and made a part hereof, /2/ any amounts /3/ after written notice to Licensee and passage of fifteen (15) days without receipt of payment by Licensor, provided that so long as Licensee timely pays all undisputed amounts, such fifteen (15) day period shall be extended with respect to any delinquent amount as to which Licensee gives to Licensor written notice of a good faith dispute within such fifteen (15) days period, through resolution of the dispute. /4/ (provided that inspection of guest rooms shall be limited to those which are not occupied by registered guests) /5/ on reasonable notice, - ---------- * Bracketed copy indicates strike-through. 4 construed as the assumption of any duty to control day-to-day operation and maintenance of the Hotel. c. Provide Licensee access to the Radisson Reservation System. d. Include the Hotel in the next and subsequent printings of Licensor's appropriate national and regional directories and other appropriate promotional material selected by Licensor, and in appropriate national or regional group advertising and promotion of Radisson Hotels. e. Solicit for the Hotel group meeting, convention, incentive, and travel agency business through Licensor's National Sales system, where applicable. f. At Licensee's request, assist Licensee with its grand opening ceremony for the Hotel and provide consultation on public relations for the Hotel. g. Provide orientation training at a comparable System hotel in System procedures for the Hotel's general manager, assistant manager (if any), director of sales and front office manager. Licensee shall pay the wages, travel, lodging (not to exceed 50% of the "rack rate" of the designated hotel), food, and incidental expenses for trainees. h. Offer periodic general meetings and training in specialized fields, at a System hotel or Licensor's headquarters. Licensee shall pay wages, travel, lodging ([a*]/1/ 50% of the then-prevailing rack rate), food and incidental expenses for trainees. Licensor may assess reasonable fees to recover its costs of such meetings and training. i. Loan to Licensee and revise periodically a System Operating Manual covering: operating policies; architectural and construction standards; public relations, marketing and advertising policies and standards; promotional programs; "Yes I Can!" meetings and other matters. Licensee acknowledges that Licensor may change System standards, specifications, and procedures and Licensee agrees to implement any such modifications, revisions and additions prescribed periodically by Licensor/2/ j. Aid the RMA in performing marketing, training and reservation services in accordance with RMA's marketing plan. k. At Licensee's request/3/ and to the extent available, furnish: (1) Technical consulting advice in regard to: (i) front office, food and beverage, housekeeping, telephone and other operational department supervisory and control services; (ii) maintenance and engineering services; (iii) accounting and claim services; (iv) personnel and labor relation services; (v) advertising, marketing and consulting projects; and (vi) security and safety matters. Licensee agrees to pay Licensor its then-current charges for such services and its related travel and living expenses, for services provided at the Hotel. Any procedures or practices recommended through such consultation shall be subject to Licensee's approval. Licensor, in furnishing such services, shall not have the right to or be deemed to be in exercise, control or supervision of Licensee. /1/ not to exceed /2/ provided that such modifications, revisions and/or additions are also required of and enforced with respect to similarly situated System hotels of the class of Hotel. /3/ at its discretion - ---------- * Bracketed copy indicates strike-through. 5 (2) Programs for purchase on a pooled or group basis of various operating supplies, equipment, signage, furniture and furnishings, at prices and on terms established periodically by Licensor. 7. Licensee's Duties. In all matters relating to the management and operation ----------------- of the Hotel, Licensee as an independent contractor is solely responsible for the manner and means by which the Hotel is operated and for achieving the various end results required by this Agreement and the Operating Manual. Licensee shall have the sole duty and right to employ, supervise and discharge Licensee's employees at the Hotel. Licensee shall operate the Hotel to achieve conformity with System standards of quality and uniformity, and to do so Licensee shall: a. Operate the Hotel as a System Hotel, and use the Distinguishing Characteristics only as prescribed by the Operating Manual. Licensee shall use no other name or trademark in connection with the operation of the Hotel and related facilities without Licensor's consent. Licensee shall discontinue any use of any Distinguishing Characteristic which does not comply with Licensor's requirements upon notice from Licensor. b. Equip, furnish, operate and maintain the Hotel and related facilities appropriate to the class of the Hotel set forth in Paragraph 2 in accordance with this License Agreement and the Operating Manual, in conformity with the high service, moral and ethical standards of the System, and in compliance with the requirements of governmental authorities. Licensee shall maintain and conduct its business in accordance with sound business and financial practice. Licensee shall hire, discharge and set the conditions of employment for employees at the Hotel. c. Participate in all System advertising and marketing programs and otherwise comply with Licensor's requirements and specifications as to services and products to be used or offered at the Hotel, including compliance with the requirements and specifications of the marketing programs adopted for System hotels, including payment of all assessments adopted by the RMA related to such programs. Such programs are subject to change by Licensor. A partial list of programs currently in effect include those listed on Exhibit C. d. Permit inspection of the Hotel by Licensor's representatives at any reasonable time and provide such representatives with free room and board at the Hotel during such inspection. If the Hotel fails any two consecutive Quality Performance Review inspections, Licensee shall pay Licensor's travel, lodging, meal and professional costs associated with the following inspection. e. Pay all amounts due to Licensor or its affiliates within ten days after invoice. f. Advertise and promote the Hotel and related facilities on a local or regional basis, including the use of the Radisson "800" number, solely and strictly in accordance with standards and specifications set periodically by Licensor, using only materials and programs authorized by Licensor or RMA. 6 g. Refer guests and customers, whenever possible, only to other System hotels, and use every reasonable means to encourage use of System hotels by the traveling public; display all brochures, promotional and other material provided with respect to System hotels and allow advertising and promotion only of System hotels on the Hotel premises. h. Use the Radisson Reservation System on the terms set forth in the Operating Manual and honor and give first priority on available rooms to confirmed reservations referred to the Hotel through the Radisson Reservation System. i. Purchase and install Licensor's specified property management system ("HARMONY") on or before January 1, 1999. For the purposes of this Agreement, HARMONY shall be defined as the Licensor specified computer software generally referred to as a hotel front office system as well as the Radisson Reservation System interface and all necessary and appropriate computer hardware, network connectivity, cabling and training in order to successfully operate HARMONY. Prior to installing HARMONY, Licensee will purchase and use a printer and other necessary data processing and telecommunications devices specified by Licensor and compatible with the Radisson Reservation System. j. Honor those credit cards designated periodically in the Operating Manual, and enter into all necessary credit card arrangements. k. Feature in guest rooms and public areas of the Hotel, on articles specified in the Operating Manual, including the brochure rack, and in advertising and promotional material, the name "Radisson" and one or more of the Distinguishing Characteristics, strictly in accordance with the Operating Manual as to color, form and content. Licensee shall provide a guest amenity package prescribed by Licensor in each guest room. l. Erect, install and maintain Radisson signage in complete working order on the exterior of the Hotel. All such signs shall include the name "Radisson" and other Distinguishing Characteristics as prescribed in the Operating Manual. Licensee shall obtain Licensor's prior authorization for the plans and specifications for exterior signs. m. Participate in the SMART program of joint marketing as a member of a "SMART Group" which consists of other System hotels having common geographic, class or business orientation interests, in strict accordance with the Operating Manual. Upon opening for business as a Radisson Hotel and thereafter for any period in which Licensee claims, holds or exercises any rights under this License, Licensee shall pay to the RMA a SMART program assessment determined periodically by Licensor or RMA, which is currently $0.50 per occupied guest room per night. Such assessments are due (without invoice) and payable in the same manner as RMA fees under Paragraph 5c, on or before the 15th day of each following month and shall be collected, managed and disbursed by Licensor on behalf of RMA and Licensee's SMART Group. Before opening for business as a Radisson Hotel, Licensee may participate in its SMART Group upon payment of a lump sum, prorated assessment, as established for the Hotel by Licensor or RMA. 7 n. Identify itself as a licensed independently owned and operated entity with respect to the ownership and operation of the Hotel on all purchase orders, invoices and other dealings with suppliers and persons other than guests, to make clear that Licensee is an independent entity and Licensor has no liability for Licensee's debts or conduct. o. Operate the Hotel continuously throughout the term of this Agreement, either directly or through a management company authorized by Licensor./1/ p. Employ as general manager/2/ (and other key employees designated by Licensor) only persons who have completed successfully Licensor's orientation training program, at a place designated by Licensor./3/ Licensee shall employ as general manager of the Hotel only such person(s) as Licensor approves. The Hotel's general manager shall attend periodic meetings designated by Licensor. Licensee shall pay an RMA assessment equal to the Hotel's pro rata share of the cost of meals, guest speakers and trainers, media presentations and similar items in connection with such meetings. q. Make no major structural change or changes in the appearance of the Hotel without Licensor's consent; rehabilitate the Hotel periodically in accordance with the Operating Manual and periodically modernize and upgrade the Hotel to conform with standards applicable generally to similar hotels in the System./4/ r. Maintain the Hotel in a clean, safe, attractive and orderly condition, and provide efficient, courteous and high-quality service to guests and visitors in accordance with standards, specifications and procedures set forth in the Operating Manual, including high quality food and beverage service in accordance with the Operating Manual. s. Participate in "Yes I Can!," or other similar employee motivational training programs, and pay Licensor's standard program charge and expenses assessed to System hotels. t. Participate in the Radisson Corporate Scrip program and accept scrip (room certificates) in payment for rooms, subject to the requirements of the Operating Manual. u. Promptly deliver to Licensor a copy of any notice of default received from any mortgagee, trustee under any deed of trust, or ground lessor with respect to the Hotel and, upon request of Licensor, provide additional information with respect to such alleged default or any action or proceeding in connection therewith. v. Comply with all provisions of the Operating Manual as it exists from time to time. If Licensor gives Licensee notice of deficiencies in a Quality Performance Review or other notice of non-compliance with the requirements of the Operating Manual or the License Agreement, Licensee promptly shall take steps necessary to correct any deficiencies or non-compliance. w. Licensee acknowledges that the information contained in the Operating Manual is confidential and proprietary. Licensee will keep its copy of the Operating Manual current and up to date with contents as prescribed by Licensor. During and after the term of this Agreement, Licensee shall refrain absolutely from disclosing to a third party or using, except to operate the /1/ Licensor hereby approves Compton Entertainment, Inc. as management company for the Hotel. /2/ of the Hotel /3/ Licensor's right to reasonably approve certain key employees of the Hotel shall not apply to any employees of the Crystal Park Casino. /4/ Licensor's right to reasonably withhold consent to major structural change or changes in the appearance of the Hotel or to require rehabilitation to the Hotel shall not apply to the Crystal Park Casino. 8 Hotel, any confidential or proprietary information, or trade secret owned or disclosed to Licensee by Licensor in any form, including the contents of the Operating Manual (past or current). Licensee shall return to Licensor or incinerate superseded pages from the Operating Manual and related software and return the entire Operating Manual to Licensor promptly upon termination or expiration of this Agreement, or a transfer (as defined in Paragraph 10). x. Licensee shall use at, and for the Hotel, and for reservations offered by and from the Hotel to other hotels, only the Radisson Reservation System. y. Participate only in third party reservation systems available through Licensor and pay all charges made in connection therewith. z. Operate the Radisson PMS (when installed) in accordance with the standards and procedures established by Licensor in the Standards of Service and Operation manual. aa. Display the Radisson License Agreement Plaque behind the front desk in the registration area. bb. Licensee shall post notice to Hotel employees on the employee bulletin board, identifying the correct name of the employer of the employees and clearly stating that neither Radisson Hotels International, Inc. nor Radisson Hotel Corporation is the employer. Such notice shall remain posted for the information of the employees during the entire term of this License Agreement. cc. Licensee shall not offer Hotel rooms or suites for sale or lease as condominium or time share units without the prior written consent of Licensor in its sole discretion. dd. Have operational at the Hotel by no later than/2/ [January 1, 1997,*] a reprogrammable card key locking system on all guest room doors that has the ability to be reprogrammed with each new guest. The locking system can be either mechanical or electronic, preferably electronic. 8. Operating Reports; Accounting Standards. Licensee shall record all sales and revenues and maintain records as required by the Operating Manual. Licensee shall submit to Licensor by the 15th of each succeeding month a statement and operating report/3/ in form and content designated periodically by Licensor, showing amounts due to Licensor under Paragraph 5 and 7(m) for the preceding month(s) and room revenues, occupancy data and average room rates. The report shall be certified by either the Controller or Chief Financial Officer of Licensee. Licensee shall supply to Licensor electronic access to Licensor designated data stored in the Radisson PMS (when installed), including but not limited to statistical information, revenues, guest history and reservations information/4/ Licensee shall prepare on a current basis financial records as required by the Operating Manual which fully and accurately reflect all aspects of the operation of the Hotel. Such records shall be kept under the Uniform System (defined in Paragraph 5) and shall be preserved for not less than three years. Such records shall include books of account, tax returns, governmental reports, register tapes, daily reports and complete monthly and annual financial statements. /1/ and except for information required to be disclosed by process of law and information which is already a matter of public knowledge by virtue of disclosure not attributable to Licensee, /2/ the date of opening the Hotel as a Radisson /3/ (not including the operations of the Crystal Park Casino), /4/ for the Hotel. - ---------- * Bracketed copy indicates strike-through. 9 Licensee shall deliver to Licensor as soon as available, but not later than 90 days after the end of Licensee's fiscal year, copies of Licensee's annual financial statements, certified at Licensee's cost by a Certified Public Accountant. Licensor will accept the certification of Licensee's Chief Financial Officer if certification by a Certified Public Accountant is not obtained by Licensee in the ordinary course. During the term of this Agreement and for 3 years afterward, Licensor or its designees may inspect, copy and audit such records and any other information required to be kept pursuant to this License Agreement (including records of any tenant, management company or concessionaire of Licensee) during normal business hours where the records are kept. If an audit discloses a deficiency in any payments due hereunder, Licensee shall immediately pay the deficiency. If the deficiency is willful or exceeds 5% of the correct/1/ amount, Licensee shall also immediately reimburse Licensor's entire cost of the audit, including travel, lodging, meals, reasonable professional fees, salaries and other expenses of the auditing personnel. Licensee will submit to Licensor as soon as available but not later than 105 days after the end of Licensee's fiscal year, a statement of Licensee's Gross Room Sales, occupancy and average room rates for such year, certified as correct by Licensee's Chief Financial Officer. 9. Insurance and Indemnification. Licensee shall secure and maintain a ----------------------------- commercial general liability insurance policy providing coverage for personal injury and bodily injury, property damage, products liability, liquor liability, contractual liability and comprehensive automobile liability, with a combined single limit of not less than $15,000,000 per occurrence, or better, or in such other amounts or coverage as Licensor periodically may require./2/ Licensee will name Licensor and Radisson Hotel Corporation in said policy or policies as additional insureds, and such policy or policies shall stipulate that Licensor shall receive 30-day written notice of cancellation or material change of the policy. Licensee also shall secure and maintain: a. worker's compensation insurance as prescribed by applicable law, and employer's liability coverage with a limit of not less than $1,000,000 each accident or disease; b. dram shop insurance, naming Licensor and Radisson Hotel Corporation as additional insureds with limits of not less than $10,000,000 per occurrence; c. fire insurance with extended coverage in replacement cost endorsements covering the Hotel and the improvements thereon for not less than 80% of the full replacement value; and d. insurance required under any lease, mortgage or deed of trust covering the Hotel. Licensee shall mail original certificates of insurance and evidence of policy renewals 30 days before expiration to Licensor, Attention: Business Systems Department. All policies shall be written by insurance companies having a Best Rating of A-5 or better. Licensee shall have all policies of insurance provide that the insurance company will have no right of subrogation against either party hereto or their respective agents or employees. Licensee assumes all risks in connection with the adequacy of any insurance or self-insurance program, waives any claim against Licensor for any liability, costs or expenses arising out of any claim not adequately insured or self insured, in part or in full, of any nature whatsoever. /1/ aggregate twelve (12) month /2/ For the purpose of required insurance coverage and the indemnification provision contained in this Paragraph 9 only, the define term "Hotel" shall include the Crystal Park Casino operated by Compton Entertainment, Inc. or its successor. 10 Since Licensee is solely responsible for the day to day operation of the Hotel, Licensee assumes sole and complete responsibility for and will indemnify and hold harmless Licensor and its affiliates from all fines, penalties, taxes,/4/ expenses, claims, causes of action, demands, losses or damages originating in or about the Hotel or in connection with the development or operation of the Hotel, any occurrence at the Hotel, for any act, omission or obligation of anyone associated with Licensee or at the Hotel and for all liability and expenses with respect to mechanic's lien claims for material or labor in connection with the Hotel; and Licensee will reimburse Licensor and its affiliates for any payments, including reasonable attorney's fees or expenses, by reason of the above or by reason of attorneys' fees or expenses for pursuing the right to indemnification granted herein. Licensee will also defend Licensor against the same except Licensor, using its own counsel, by notice to Licensee may control any matter in which Licensor is named or directly affected/2/. All such indemnifications survive termination or expiration of this License Agreement. The indemnification provided in this Paragraph does not apply to/3/ the direct consequences of Licensor's/4/ active negligence or willful misconduct, so long as claims or demands are not asserted on the basis of theories of vicarious liability, including but not limited to agency, apparent agency or employment or claim of negligent failure to compel Licensee's compliance with the provisions of the Operating Manual or this License Agreement. 10. Transfer. -------- a. For purposes of this Agreement, a "transfer" is any change in ownership or control of Licensee's interest in (i) this Agreement or (ii) the Hotel or, if Licensee is an entity rather than a natural person, any change in ownership or control of Licensee, in any of the foregoing instances whether in whole or in part, by any means or device, directly or indirectly, including by pledge, delegation, will or management agreement, voluntarily, involuntarily or by operation of law. For purposes of this Agreement a transfer shall not include/5/ any transfer in which the owner(s) of the controlling interest in Licensee ("Holders") transfer or assign part or all of Licensee (if not a natural person), the License Agreement or the Hotel to a corporation in which the Holders own 51% or more of the voting stock, or a partnership in which Holder(s) are general partners, so long as the Holder(s) remain fully liable for all of Licensee's financial and other obligations as provided in this Agreement, and provide management for the Hotel acceptable to Licensor. (1) Licensor has entered into this Agreement in specific reliance upon the personal experience, skills and managerial and financial qualifications of Licensee (or if Licensee is an entity, Licensee's principals) as being essential to the satisfactory conduct of the business licensed hereunder. Consequently, Licensee (and, if Licensee is an entity, its shareholders or owners) shall [not*] make or permit a transfer to another person or entity (the "transferee"), [unless Licensee (or its owner(s)) first tenders to Licensor the right of first refusal in accordance with Paragraph 10(e) to acquire such interest, and if Licensor fails to exercise such right,*] only with the prior written consent of Licensor and upon payment of the transfer fee. At Licensor's absolute discretion, Licensor may require the transferee to enter into the form of agreement then being issued to new licensees (with the initial fee due thereunder waived). /1/ (except income, gross receipts, sales or other similar taxes attributable to the fees paid by the Hotel to Licensor), /2/ , provided however, that Licensor will not exercise its right of control nor require reimbursement of its non-internal attorney fees (if any) in such cases, so long as Licensee is vigorously defending, is not in default under the License Agreement and provided that Licensor has approved Licensee's retained counsel. /3/ liability imposed as a result of Licensee's strict compliance with the requirements of the Operating Manual or Licensor, nor to /4/ , Radisson Hotel Corporation's or their corporate employees /5/ any transfer described in Paragraph 6 of the Addendum attached hereto and made a part hereof, nor - ---------- * Bracketed copy indicates strike-through. 11 (2) Licensor will not unreasonably withhold its consent to a transfer if the proposed transfer is of all of Licensee's interest herein and substantially all of the business operated pursuant to this Agreement and if the proposed transferee in Licensor's opinion is qualified to supervise personally (or otherwise furnishes satisfactory assurance of) the continued operation of the Hotel in compliance with this Agreement, and possesses sufficient net worth and sources of capital which meet Licensor's standards for the business conducted hereunder. Upon Licensee's insolvency or the filing of any petition by or against Licensee under any provisions of any bankruptcy or insolvency law, if Licensee's legal representative, successor, receiver or trustee desires to assume or succeed to Licensee's interest in this Agreement or the business conducted hereunder, that person shall first apply for Licensor's consent and satisfy the other requirements of this Agreement as in the case of any other proposed transfer. (3) Licensee shall apply for Licensor's consent to a transfer by submitting Licensor's form of application, fully completed, signed by Licensee and by the proposed transferee, and accompanied by a complete copy of the proposed purchase or other transfer agreement signed by the parties thereto, and payment of the transfer fee. b. If the transferee is or includes any person or entity other than Licensee's spouse or child or an entity which is controlled by Licensee (or Licensee's spouse, child or principals), Licensee shall pay to Licensor as a transfer fee a sum equal to 50% of the total initial license fee paid by Licensee pursuant to paragraph 5a. If Licensor declines to consent to a proposed transfer, or releases the Hotel under Paragraph 10(e) [or exercises its right of first refusal*] it shall return to Licensee the transfer fee, less any expenditures or disbursements made by Licensor in direct connection with evaluating the proposed transfer. The transfer fee is not refundable in whole or in part under any circumstances except as expressly stated in this Agreement. c. Licensor may condition its consent to any proposed transfer upon the following: (i) all amounts owed by Licensee to Licensor or its affiliates or to Licensee's suppliers or lessor(s) or upon which Licensor (or its affiliates) has any contingent liability shall be paid in full; (ii) Licensee shall complete at Licensee's expense such reasonable refurbishing, modernization, repair or renovation of the Hotel facility, fixtures, furnishings, equipment, motor vehicles, signage or grounds as Licensor may designate to bring the Hotel into reasonable conformity with then existing System standards; and (iii) Licensee's execution and delivery of Licensor's form of mutual general release (excluding incurred or accrued liabilities of Licensee and post-termination obligations of Licensee hereunder.) d. The transferee must attend and successfully complete Licensor's orientation training program. If the transferee is an entity, a designated general manager acceptable to Licensor, and each successor thereto, and other key employees designated by Licensor, must so complete training. e. If Licensee proposes to make a transfer (except a transfer solely to a partnership entity controlled by Licensee's principals or to Licensee's spouse or child or a corporation all of whose stock or other securities are owned by Licensee, its principals or the spouse(s) or children of Licensee's principals) in response to a bona fide offer from a third party, [Licensee shall first offer*] - ---------- * Bracketed copy indicates strike-through. 12 the transfer to Licensor as provided herein. Licensee shall apply for consent to the proposed transfer as required by Paragraph 10(a)(3). Licensor has 30 days from its receipt of the completed application to [accept the offer by notice to Licensee. The acceptance shall be on the same price and terms stated in the third party offer except that Licensor may confer with Licensee and the proposed transferee and negotiate the terms of the proposed transfer without thereby impairing the right of first refusal, and Licensor may substitute cash in the fair market value of non- cash consideration offered by the third party. If Licensor fails to accept the offer within the 30-day period and has*] consent[ed*] to the transfer[, Licensee may for 60 days after such period effect the transfer described in the application delivered to Licensor; but Licensee shall make no other or subsequent transfer without first offering the same to Licensor in accordance with this Paragraph.*] Within the 30-day period, [in lieu of accepting the offer,*] Licensor may instead give Licensee notice of its election to cancel this Agreement and release the Hotel from the License granted hereunder and enable Licensee to effect the transfer of the Hotel but not the License, free of any further obligation to Licensor apart from Paragraphs 7(w), 9 and the de-identification obligations of Paragraph 12 hereof and payment of all sums incurred or owing to Licensor. Cancellation will be effective on closing of the transfer without penalty or damages related to early termination. Failure to elect cancellation within the 30- day period shall be deemed consent, subject to compliance with Paragraphs 10(c)(i) and (iii) and 10(d) hereof. f. Licensee shall keep Licensor fully informed at all times of the identities and percentage interest of each direct or indirect owner, legal and beneficial, of a 5% or greater equity interest in Licensee. g. Licensor may effect a transfer of Licensor's interest in the License Agreement by notice to Licensee./1/ h. Publicly-traded securities of Licensee that have been previously registered under federal securities laws may be transferred without Licensor's consent if (i) the transferor owns less than 25% of such securities before the transfer, (ii) the transferee will own less than 25% of such securities after transfer, and (iii) the transfer is exempt from registration under federal securities laws. Licensee must apply for Licensor's consent before making a public offering or private placement of any debt or equity securities in Licensee, and Licensee will pay Licensor, upon application for consent, a non-refundable fee/2/ [of*] $10,000. Licensee, the underwriters and all participants in the registration must fully indemnify Licensor with respect to the registration; make clear in any offering material that Licensor is not participating in or endorsing the offering, and use Radisson's name or Distinguishing Characteristics only as directed by Licensor. 11. Third Party Operators. The engagement of third party operators of the --------------------- Hotel's restaurants, cocktail lounges or other supplementary departments/3/ whether through leases, management agreements or otherwise, shall be subject to Licensor's prior written approval. In addition, whether by inclusion of appropriate provisions in applicable documents or otherwise, Licensee shall require all third party operators of the referenced operations and retail shops and other facilities open to the public to operate and maintain them in the same manner as Licensee would be required if Licensee were operating them directly. /1/ See Page 11a at (i) /2/ See Page 11a at (ii) /3/ See Page 11a at (iii) - ---------- * Bracketed copy indicates strike-through. 13 12. Default. The following events constitute a default and good cause for ------- Licensor to terminate the License and this Agreement: a. Licensee becomes insolvent, or is adjudicated bankrupt, or files a voluntary petition or pleading under the Federal Bankruptcy Code or under any other state or federal bankruptcy or insolvency laws, or an involuntary petition is filed with respect to Licensee under the Code or any such laws, or a permanent or temporary conservator, receiver or trustee for the Hotel or all or substantially all of Licensee's property is appointed by any court, or Licensee makes an assignment for the benefit of creditors or makes a written statement to the effect that Licensee is unable to pay its debts as they become due, or a levy, execution, or attachment is issued against all or part of the Hotel and/1/ is not released,/2/ stayed or satisfied within/3/ [15*] days, or a final judgment against Licensee remains unsatisfied for/3/ [30*] days or longer without being discharged, vacated, reversed or stayed. b. Except as provided in Paragraph 13, Licensee ceases to operate the Hotel, ceases to operate the Hotel as part of the System, defaults under any lease or sublease of the Hotel, or loses possession or the right to possession of all or a significant part of the Hotel through sale or otherwise. c. A transfer occurs [or is attempted*] in violation of Paragraph 10 hereof. d. Licensee or an officer, director, partner or principal shareholder of Licensee is convicted of a felony or other crime of moral turpitude likely to adversely affect or reflect upon the Hotel or the parties or to impair the goodwill associated with the Distinguishing Characteristics. e. Licensee breaches or fails to comply with this License Agreement or the requirements of the Operating Manual, and Licensee fails to cure such breach or non-compliance within 30 days after notice from Licensor specifying the breach. Upon termination or expiration of this Agreement, Licensee immediately shall cease all use of the System and the Distinguishing Characteristics. Licensee shall make physical changes to the Hotel to remove the Distinguishing Characteristics and to preclude a likelihood of confusion by the public as to the status or affiliation of the Hotel, including removal of all signs containing the word "Radisson" or any Radisson logo or mark. Licensee authorizes Licensor to enter the premises of the Hotel to make such changes, at Licensee's expense, if Licensee fails to complete the changes within 30 days after termination or expiration. Upon termination (but not expiration) of this Agreement/4/ Licensee will immediately pay Licensor upon receipt of a statement or statements from Licensor an amount equal to all actual and consequential damages to Licensor resulting from such premature termination of this Agreement./5/ /1/ any of the above described events /2/ discharged, /3/ sixty (60) /4/ for a default specified in subparagraphs a., b., c. or e. (but not d.) of this Section 12, /5/ For purposes of determining the foregoing, only such damages as are the natural and proximate consequences, and not the remote consequences, of the termination of the License Agreement shall be considered and, specifically there shall not be included damages (if any) to Licensor relating to, or arising out of loss of business opportunity (including, without limitation, any loss of market position within a geographic territory); loss of future profits (except the then present value of foregone franchise fees); or (except for claims related to slander or libel) injury to its financial or business reputation. - ---------- * Bracketed copy indicates strike-through. 14 In addition to any other remedies Licensor may have, upon any of the events of default by Licensee as set forth in (a) through (e) above, Licensor may, upon fourteen (14) days written notice to Licensee, suspend the services of the reservation system of the RMA until the default is cured by Licensee. 15 Licensee/1/ will pay all costs, expenses and reasonable attorneys' fees incurred by/2/ Licensor in enforcing the terms and conditions of this Agreement. 13. Condemnation or Casualty. If the Hotel or a substantial part ------------------------ thereof is taken by eminent domain, Licensee ceases to operate the Hotel, and Licensee is otherwise in good standing under the License, Licensee may transfer the License to a new hotel at a location selected by Licensee (subject to the consent of Licensor) for the remainder of the term of this Agreement. Licensor will respond to Licensee's application for such new location within six months of the taking, and the new hotel, constructed in accordance with Licensor's then-current specifications, must open for business within two years of the closing. If the Hotel is damaged or destroyed by fire or other casualty, Licensee will promptly repair the damage (in accordance with Licensor's then- current standards). If the casualty requires closing the Hotel, Licensee shall, within 45 days of such closing, provide Licensor with written notice of Licensee's election to either (i) repair the damage and reopen the Hotel, or (ii) terminate the License Agreement without liability for damages related to premature termination. If Licensee elects to terminate, all fees and other amounts due or incurred through the cessation of operation shall be paid at the time notice of the election is given, and Licensee shall comply with all other post termination obligations. If, within 2 years of Licensee's election to terminate pursuant to (ii) above, Licensee decides to [relocate*] or repair and reopen the Hotel, this License Agreement shall be deemed to have been terminated for default, with consequent liability of Licensee to Licensor for consequential damages, unless Licensor and Licensee mutually agree to the reinstatement of this License Agreement. If Licensee elects to repair and reopen pursuant to (i) above, Licensee will, within six months after closing commence reconstruction of the Hotel upon the premises or a new location selected by Licensee subject to Licensor's consent. In either event, the renovation or reconstruction is subject to the consent of Licensor as to design and construction standards in accordance with Licensor's standard Project Rider and the Hotel must reopen for business within two years after closing. Closing of the Hotel due to condemnation or casualty does not extend the term of the License. 14. Rights to the System. Licensee acknowledges and will not contest -------------------- Licensor's right, title and interest to the Distinguishing Characteristics or the goodwill derived from them. Licensee disclaims any right or interest in the Distinguishing Characteristics beyond the qualified License granted herein. All present and future Distinguishing Characteristics, improvements and additions to or associated with the System by Licensor or others, shall be Licensor's property and inure to its benefit, and Licensee shall not use or permit others to use any of the same without Licensor's written consent. Licensee shall not use the name "Radisson" or another element of the Distinguishing Characteristics in or as its corporate or trade name, but shall file appropriate notices required under an applicable fictitious or assumed name law. Licensor has the sole right to manage and resolve disputes with third parties concerning the System and the Distinguishing Characteristics. Licensee will not advertise or permit the advertising of any other hotel that is not part of the System on the Hotel premises and agrees not to promote, without the consent of Licensor, the Hotel in conjunction with other non-System hotels or motels in which Licensee or its affiliates have any interest. /1/ The non-prevailing party /2/ the prevailing party - ---------- * Bracketed copy indicates strike-through. 16 15. Relationship of Parties; Interference with Others. Licensor retains -------------------------------------------------- the right to regulate Licensee's conduct only to the extent necessary to protect Licensor's interest in the Distinguishing Characteristics through promotion of standardization, uniformity of service, and public goodwill for the benefit of both contracting parties. The power to regulate the day-to-day operation of the Hotel, including daily maintenance, safety concerns, working conditions and personnel matters are vested solely and exclusively in Licensee. Licensee is an independent contractor. Neither party is the agent, legal representative, partner, subsidiary, joint venturer or employee of the other. Neither party shall obligate the other or represent any right to do so. This Agreement does not reflect or create a fiduciary relationship or a relationship of special trust and confidence. Licensor's consent, authorization or approval of any matter hereunder is a permission only and not a representation, warranty or assurance. Approvals, consents and authorizations by Licensor will not be unreasonably withheld or delayed unless specifically stated otherwise, but will not be effective unless in writing and duly executed on behalf of Licensor, unless specifically stated otherwise. [Licensee shall not solicit or employ any person who is employed by Licensor or another System licensee.*] Neither party will interfere with contractual relations of the other. 16. Miscellaneous Provisions. Paragraph headings are for convenience and ------------------------ do not limit or qualify the terms of this Agreement. Terms used in any number or gender include any other number or gender where appropriate./1/ This License Agreement and other documents pertaining to the Hotel executed concurrently herewith collectively constitute the entire agreement between the parties and supersede all prior representations, agreements or understandings with respect to the Hotel. Failure to require strict performance or to exercise any right or remedy contained herein will not preclude any future requirement of strict performance or the exercise of such right or remedy or any other right or remedy. Any right or remedy contained herein is cumulative to other rights or remedies available pursuant to this Agreement, at law or in equity. No change in this License Agreement will be valid unless signed in writing by both parties. Notices to be effective must be in writing, signed, and either delivered personally, sent by overnight express, courier, telecopier, other expedited mail service or by certified mail, postage prepaid, addressed to the appropriate party at its address first stated above or to such other address as either party may from time to time designate in writing to the other. Notices are effective when delivered personally or telecopied, or two business days after being sent by other means authorized above. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first stated above. LICENSOR: LICENSEE: RADISSON HOTELS INTERNATIONAL, INC. ------------------------------------ ------------------------------------ By: /s/ T. Peter Blyth By: /s/ G. Michael Finnigan ---------------------------- ------------------------------- Print Name: T. Peter Blyth Print Name: G. Michael Finnigan -------------------- ------------------------ Its: President-Development Division Its: President, Sports and ------------------------------ Entertainment, CFO ------------------------------ /1/ The laws of the state of California shall govern this Agreement. - ---------- * Bracketed copy indicates strike-through. 17 EXHIBIT A TO LICENSE AGREEMENT Licensor hereby grants to Licensee and Licensee hereby accepts a non- exclusive license, subject to the terms and conditions of this License Agreement, to use the following trademarks and service marks as appropriate for Licensee's Hotel: 1. RADISSON 2. RADISSON & DESIGN 3. Flaming "R" 4. Flaming "R" with Circle 5. The Radisson Inn 6. Radisson Adventure 7. Radisson Plaza 8. Radisson Plaza Club 9. Radisson Assured Tour 10. Yes I Can! 11. Radisson Hotels Worldwide 12. Radisson Hotels International 13. Worldwide World Class 14. The Radisson Suite Hotels 15. Radisson Adventure Weekend 16. Radisson 800 17. Napolizza 18. Catering to Success 19. Bolero's 20. We Cover the World 21. A Welcome Change 22. Why Get a Room, When You Can Get a Radisson 23. SMART 24. The Big Name in Small Meetings 25. Worldwide Hospitality Program Corporate Savings Executive Comfort and Design 26. Shades of Summer 27. When You've Seen One Radisson, You've Seen One 28. BARS 29. Look to Book 30. Look to Book & Design 31. This Must Be The Place 32. Harmony LICENSOR: LICENSEE: RADISSON HOTELS INTERNATIONAL, INC. HP/COMPTON, INC. ------------------------------------ ------------------------------------ By: /s/ T. Peter Blyth By: /s/ G. Michael Finnigan ---------------------------- ------------------------------- Print Name: T. Peter Blyth Print Name: G. Michael Finnigan -------------------- ------------------------ Its: President-Development Division Its: President, Sports and ------------------------------ Entertainment, CFO ------------------------------ 18 EXHIBIT B PROJECT RIDER TO LICENSE AGREEMENT 1. General. Licensee shall design and build, renovate, rebuild or ------- substantially alter the Hotel, (the "Project") in accordance with Licensor's requirements as set forth in the License Agreement, this Rider and any Exhibits or Addenda thereto, the Operating Manual, approved Plans and other System information issued by Licensor in the ordinary course of business ("Licensor's Requirements"). 2. Cooperation. Licensee will cooperate with Licensor in the exchange of all ----------- information regarding the Project and will ensure the cooperation of others under its direction or control. [At Licensor's request, Licensee and such others engaged by Licensee on the Project as Licensor may reasonably request, will attend a Project meeting at Licensor's offices in Minneapolis, Minnesota.*] [3. Design and Construction Services. The engagement of the architect, -------------------------------- engineer, contractor and other design and construction professionals by Licensee for the Project after the execution of this Rider is subject to Licensor's approval. Prior to their engagement, Licensee shall furnish Licensor with information in such detail as will enable Licensor to evaluate their qualifications and capabilities. If Licensor does not object to their engagement within thirty (30) days of the receipt of that information, or such other information as Licensor may reasonably request, their engagement shall be deemed approved.*] 4. Approval of Plans. Before starting the Project, Licensee shall submit ----------------- proposed preliminary and final plans, specifications, scheme boards and drawings for the Project, including proposed equipment, furnishings, facilities, landscaping, and signs with such detail and containing such information as Licensor may reasonably request (the "Plans"), for Licensor's consent. Licensee shall not begin the Project unless and until Licensor gives its consent to the Plans. Thereafter, Licensee shall make no/1/ change to the Plans without Licensor's consent. Licensee shall cause the Hotel to be constructed or renovated/2/ according to the Plans as consented to by Licensor. 5. Scheduling. Licensee shall begin the Project on or before/3/ [ , ---------- 19 *,] by excavation for footings in the case of new construction or major reconstruction, or initiation of removal of prior fixtures, equipment and decor in the case of rehabilitation. Once the Project has begun, Licensee shall diligently pursue the Project to completion (subject to delay due to unforeseen causes beyond Licensee's control, but not to exceed the limit set forth below). Irrespective of any intervening delays, Licensee shall bring the Project to completion with the Hotel furnished, equipped and otherwise ready to open for business in accordance with the License Agreement not later than January 31, ---------- 1997. - ---- 6. Inspection; Cooperation. Licensor shall have access to the Hotel and the ----------------------- Project at all reasonable times/4/ to determine whether the Project is proceeding on schedule and in accordance with the approved Plans and for any other purpose reasonably related to the exercise of its rights and obligations. Licensee shall cooperate fully, and require others involved in the Project to cooperate fully, with Licensor in the exercise of Licensor's rights and obligations hereunder. 7. Acquisition of Equipment, Furnishings and Supplies. Licensee shall acquire -------------------------------------------------- and install all fixtures, equipment, furnishings, furniture, signs and related equipment, supplies, landscaping, and other items /1/ material /2/ substantially /3/ the date of execution of the License Agreement, /4/ and on reasonable notice to Licensee - ---------- * Bracketed copy indicates strike-through. 19 required by the Plans, the License Agreement and the Operating Manual, and such other equipment, furnishings and supplies as may be necessary in order to prepare the Hotel to open for business in accordance with the License Agreement. 8. Opening the Hotel; Prior Consent. Licensee shall not open the Hotel for -------------------------------- business as a System Hotel unless: (a) Licensor has accepted in writing (i) completion of the Project or, if applicable, all pre-opening requirements of any Exhibit attached hereto, in accordance with the Plans, and (ii) the installation of all equipment, furniture, furnishings, signs and related equipment, supplies, landscaping, and other items as required by paragraph 7: (b) Licensee executes and delivers to Licensor the License Agreement and related documents; and (c) Licensee pays all amounts due Licensor and its affiliates. Licensee shall give Licensor written notice that, in Licensee's opinion, Licensee has complied with all of the terms and conditions of the License Agreement, the Operating Manual and the Plans, and the Hotel is ready to open for business as a System hotel. Licensor shall [use its best efforts*] within 15 days after receipt of such notice to inspect the Hotel and to determine whether to [issue this License Agreement, or if the License Agreement has previously been issued, to*] authorize opening the Hotel for business as a System hotel[, but Licensor shall not be liable for delays or loss occasioned by Licensor's inability to complete its investigation and to make such determination within said 15 days.*]/1/ 9. Cost of Project. Licensee shall bear the entire cost of the Project, --------------- including the Plans, professional fees, licenses and permits, equipment, furniture, furnishings and supplies. 10. Limitation on Licensor Liability. Licensee acknowledges that Licensor's -------------------------------- right to inspect, review and approve the Project and the Plans are exercised primarily to determine their compliance with Licensor's Requirements relating to operational considerations and aesthetic aspects of the Project such as architectural and interior design, landscaping, color schemes, sizes, finishes and materials. Notwithstanding the right of Licensor to consent to or authorize the Plans, the architect, engineer, contractor and other design and construction professionals and to inspect and accept the construction or renovation work at the Hotel, Licensor's review and consent or approval of all or any part of the Project is a permission only, and not an assurance, representation or warranty of the qualifications, capabilities, suitability, adequacy, legality or performance of any persons, design, item, or system, even though the Plans and Licensor's inspections and consent may relate to architectural, engineering, safety, code compliance or other matters. Licensor is not responsible for reviewing nor shall its review or consent to any plan or design be deemed approval of any plan or design from the standpoint of structural safety or conformance with building or other codes. Licensor shall have no liability or obligation to Licensee, the architect, engineer, contractor, subcontractors, suppliers or third parties with respect to construction or renovation of the Hotel, Licensor's rights being reserved and exercised solely for the purpose of assuring itself of Licensee's compliance with the terms and conditions of this License Agreement insofar as they relate to conformity to System standards. Dated: June 27, 1996 ----- ---------------- LICENSOR: LICENSEE: RADISSON HOTELS INTERNATIONAL, INC. HP/COMPTON, INC. ------------------------------------ ------------------------------------ By: /s/ T. Peter Blyth By: /s/ G. Michael Finnigan ---------------------------- ------------------------------- Print Name: T. Peter Blyth Print Name: G. Michael Finnigan -------------------- ------------------------ /1/ Failure of Licensor to complete its investigation within said fifteen (15) days shall be deemed approval of all that portion of the Project as to which Licensor has not notified Licensee of deficiencies. - ---------- * Bracketed copy indicates strike-through. 20 Its: President-Development Division Its: President, Sports and ------------------------------ Entertainment, CFO ------------------------------ 21 EXHIBIT C Frequent Flyer Program Worldwide Hospitality Program (WHP) Yes I Can Meetings SMART regional marketing Book Another Radisson Today (BART) CARLSON VOYAGEUR Esprit Employee Magazine Radisson Adventure Package Plans Travel Agent No Show Card Domestic Voucher Program Shades of Summer Bed and Breakfast Breakaways Look to Book Travel Agent Program "Winning Edge" Sales Training Program "Yes I Can!" Training Program Business Class Family Magic (i) If such transfer is to a transferee who does not continue to operate the System under the name "Radisson" and in a manner comparable to the way the System was operate prior to such transfer, License may terminate this License Agreement upon ninety (90) days written notice given not later than the expiration of one (1) year after the date of such transfer, without payment to Licensor or its transferee of any penalty or damages related to breach on account of such termination, on compliance with the other conditions set forth at Addendum Paragraph 4. (ii) equal to the lesser of Licensor's directly related professional costs for review of the offering or placement, or 22 (iii) by entities other than Compton Entertainment, Inc. 11a EXHIBIT 1 TO PROJECT RIDER FOR RADISSON CRYSTAL PARK HOTEL & CASINO COMPTON, CALIFORNIA 1. The following product improvements must be completed before the Hotel opens as a "Radisson" or comes on-line with the Radisson Reservation System: (a) Obtain a signage survey, submit signage Plans and Specifications in accordance with the terms of the License Agreement, the Standards of Advertising Graphics Manual and the Operating Manual, for Licensor's approval and execute a purchase order (with copy to Licensor) for said signage. Licensee shall also provide temporary exterior signage and all interior signage in accordance with the terms of the License Agreement, the Standards of Advertising Graphics Manual and the Operating Manual. Permanent exterior signage shall be installed not later than ninety (90) days after execution of the License Agreement; (b) Purchase and install Harmony, as specified in Paragraph 7.i. of the License Agreement or install a printer compatible with the Radisson Reservation System; purchase and install a brochure rack in accordance with Licensor's specifications; purchase start-up supplies and assure the completion of all initial orientation and "on-line" check list items. Purchase of start-up supplies will require Licensee to provide Licensor, in advance, with a check for $4,550 (c) Furnish Licensor with all necessary certificates of insurance as provided by the License Agreement and Operating Manual; (d) Purchase and install all necessary "Radisson" amenities required by the Operating Manual; 2. Before the Hotel opens as a "Radisson") or comes on-line with the Radisson Reservation System, License shall also complete the renovation project currently in process, in accordance with the architectural plans which Licensor reviewed and approved on or about May 29, 1996. Interior design plans and the specifications for furniture, fixtures and equipment shall be submitted to Licensor for approval prior to purchase or installation of the same, and Licensee shall complete the renovation in accordance with Licensor's approvals, with the following additions: 23 (a) Guestrooms: ---------- (1) Provide activity table suitable for room service; (2) Provide floor lamp to be used in conjunction with activity table; (3) Replace entry light with more decorative light; (4) Provide artwork on bathroom wall in place of artwork above bed; (5) Provide base switches on all lamps; (6) Utilize carpet with color which will conceal cigarette burns; and (b) Guest Bath: ---------- (1) Provide marble threshold at bathroom entry: (2) Install towel shelf on tub wall opposite controls and a towel bar at vanity; (3) Provide a piece of artwork above toilet; (4) Change light lens above vanity to an eggcrate type; (5) Reduce height of vanity apron by at least 4", preferably 8". This Product Improvement Plan does not intend to address issues related to the Americans with Disabilities Act. It is the responsibility of ownership and management to contact the appropriate professionals for their review and recommendations and take all actions necessary to ensure that the property is in compliance with the Americans with Disabilities Act. ADDENDUM TO LICENSE AGREEMENT FOR RADISSON CRYSTAL PARK HOTEL & CASINO COMPTON, CALIFORNIA This Addendum to the License Agreement between Radisson Hotels International, Inc. ("Licensor") and HP/Compton, Inc. ("Licensee") is dated and effective June 27, 1996. 1. Notwithstanding anything in the foregoing License Agreement to the contrary, Licensee, as a promotional offer, or otherwise, shall have the right to grant discounted or complimentary room rates to patrons of the Crystal Park Casino, provided that Licensee shall include the "Casino Room Night Rate", as hereafter defined, in Licensee's reports of Gross Room Sales to Licensor. During Agreement Year 1 (defined as any partial calendar month and the first twelve (12) calendar months after opening as a "Radisson"), the Casino Room Night Rate shall be the greater of the sum of $25.00 per room night or the discounted room rate paid for each 24 such discounted or complimentary room night. During subsequent Agreement Years (defined as the successive twelve (12) month calendar periods following Agreement Year 1), the minimum rate of $25.00 will increase at the rate of five percent (5%) per Agreement Year beginning on the first day of each subsequent Agreement Year following Agreement Year 1, and the Casino Room Night Rate for each such Agreement Year will be the greater of the discounted room rate paid or the then applicable minimum rate, for each such discounted or complimentary room night. 2. Licensor agrees to reimburse or cause the RMA to reimburse Licensee for Qualified Advertising expenses incurred during Agreement Year 1 in an amount not to exceed fifty thousand dollars ($50,000), to the extent that Licensee complies with the requirements of the RMA Local Qualified Advertising Reimbursement Program (the "Program") in effect at the time the expenditures are made. A copy of the current Program is attached hereto as Exhibit D and made a part hereof. Such reimbursement shall be given in the form of a credit memo applied to Licensee's account payable to Licensor, only after: (a) The full 3.50% RMA Fee has been paid as and when due; and (b) Licensor has examined and approved the advertising and proof of payment therefore which Licensee submits in accordance with Program requirements. Any entitlement to reimbursement of the RMA Fee will be suspended if Licensee fails to comply with the provisions hereof, is in default of the License Agreement, or if a condition exists which would be a default if notice were given. 3. Notwithstanding the provisions of Exhibit D to the contrary: (a) The actual initial cost of first purchase and installation of exterior Hotel signage will qualify for the reimbursement granted in Paragraph 2 of this Addendum, upon completion of installation in accordance with Plans and Specifications approved by Licensor. Licensee shall submit to Licensor either (i) documentary proof of payment in cash for purchase and installation of such permanent exterior signage, with copies of the purchase and installation agreement, or (ii) a copy of a lease for such permanent exterior signage, together with copies of the canceled checks evidencing payment pursuant to the lease; and (b) The actual initial cost to Licensee for first production and printing of the Rack Brochure, Meeting Brochure and similar marketing collateral paper goods for the Radisson Crystal Park Hotel & Casino which prominently references or displays 25 the Radisson 800# in compliance with Licensor's specifications and Licensor's prior written approval shall also qualify for the reimbursement granted in Paragraph 2 of this Addendum on submission of proof of payment. 4. Notwithstanding any provision of the foregoing License Agreement or of the Operating Manual to the contrary, so long as HP/Compton, Inc. or an entity referred to in Paragraph 6 of this Addendum is the Licensee, Licensee shall have the right to: (a) refer the traveling public guests and customers of the Hotel or the Crystal Park Casino to other hotel/casino operations owned or operated by Licensee or Compton Entertainment, Inc. ("CEI") which are not affiliated with another franchise system; and (b) display in the lobby and guestrooms of the Hotel (but not in the Radisson Brochure Rack) a hotel brochure which lists all of the hotel/casino operations in which Licensee or any entity referred to in Paragraph 6 of this Addendum holds an equity interest; (c) conduct marketing promotions and advertising campaigns which cross promote the Hotel and its casino operations with other hotel/casino operations owned or operated by Licensee or CEI which are not affiliated with another franchise system; and (d) display in the lobby a separate brochure rack containing brochures describing other hotel/casino operations owned or operated by Licensee or CEI which are not affiliated with another franchise system. Any advertising or marketing materials referenced above which include the Hotel or any of the Licensor's Marks shall comply with Licensor's standards of advertising graphics with respect thereto. Licensee acknowledges and agrees that no advertising or marketing materials referenced above shall in any event be eligible for the Qualified Advertising Reimbursement established at Paragraph 2 of this Addendum. 5. Notwithstanding the provisions of the foregoing License Agreement, Licensee shall have three (3) options to terminate this License Agreement, without payment of a termination fee or damages related to early termination ("Termination Windows"). Such Termination Windows shall commence on the last day of Agreement Years three (3), five (5) and ten (10) and shall each continue for sixty (60) days. The License Agreement may be terminated by Licensee in conjunction with any such Termination Window upon compliance with the following conditions: 26 (a) Not less than sixty (60) days prior written notice to Licensor setting forth the termination date, received within a Termination Window; (b) Payment by Licensee of all obligations incurred or accrued under the License Agreement through the effective date of termination; and (c) Compliance with Licensor's other reasonable requirements related to termination, such as cessation of the use of the Radisson(R) name, logo or any Radisson Mark in connection with the operation of the Hotel or any advertising and directory listings in any manner; removal of exterior and interior signage; cessation of use of operating supplies and amenities which bear the Radisson Name, logo or Marks; reaffirmance of the survival of Paragraph 9 of the License Agreement and reasonable restrictions regarding publication of notice of the termination to the media. Licensee and Licensor shall enter into a Termination Agreement which addresses Licensee's payment obligations and Licensor's reasonable requirements related to termination as set forth in (b) and (c) above. 6. Notwithstanding anything in the foregoing License Agreement to the contrary, the Licensee and the shareholders or other equity owners of the Licensee may make the following transfers upon notification to, but without the consent of, or payment of a transfer fee to, Licensor: (a) A transfer by Licensee of the Hotel and of Licensee's rights and obligations under this Agreement to a limited liability company composed of Licensee, DeBartolo Entertainment and Leo Chu (or an entity formed by him to hold his ownership interest in such limited liability company) (the"LLC"); (b) A transfer by a member of the LLC of its or his interest in the LLC to any other member of the LLC; (c) A transfer of a five percent (5%) or less equity interest in Licensee or in the LLC to any person; (d) A transfer of an equity interest in Licensee or the LLC to CEI; (e) A transfer of the Hotel and of Licensee's rights and obligations under this Agreement to CEI pursuant to the exercise by CEI of an option to purchase the Hotel. As of the effective date of any approved transfer of the Hotel and of Licensee's rights and obligations under this Agreement (including any 27 transfers approved in this Paragraph 5), the term "Licensee" whenever used in this License Agreement shall thereafter include and refer to such transferee. 7. Licensor has approved CEI as the management company for the Hotel and acknowledges that Licensee intends to have CEI manage all operations of the Hotel and of the Crystal Park Casino. Accordingly, Licensor agrees that all responsibilities of Licensee hereunder may be discharged and performed by CEI or CEI's officers and employees as agents of Licensee, including but not limited to the delivery and certification by CEI's officers of financial statements and operating reports for the Hotel. Notwithstanding the foregoing, Licensee shall assure that Licensor's operating standards, policies and procedures falling within CEI's scope of authority and within its control will be maintained in compliance with the standards set forth in the terms and provisions of the License Agreement, and Licensee will not withhold or delay any approval or consent which must be given or authorized by Licensee in order to enable CEI to fulfill such obligations. 8. Notwithstanding anything in the License Agreement to the contrary, if Licensor establishes or implements restrictions or requirements upon the System or upon Licensee's operations at the Hotel which Licensee can prove, to Licensor's reasonable satisfaction, will jeopardize the gaming license for the Crystal Park Casino, Licensor will cooperate in good faith with Licensee to limit or waive such restrictions or requirements so as to rectify the problem, if permitted by law. If such course of action is not permitted by applicable law, Licensee shall have the right to terminate the License Agreement, without payment of a termination fee or damages related to early termination, upon sixty (60) days prior written notice and compliance with the provisions of Paragraph 5 (b) and (c) of this Addendum. RADISSON HOTELS INTERNATIONAL, INC. HP/COMPTON, INC. ------------------------------------ ------------------------------------ By: /s/ T. Peter Blyth By: /s/ G. Michael Finnigan ---------------------------- ------------------------------- Print Name: T. Peter Blyth Print Name: G. Michael Finnigan -------------------- ------------------------ Its: President-Development Division Its: President, Sports and ------------------------------ Entertainment, CFO ------------------------------ 28 RADISSON HOTEL CORPORATION Submitted By ADVERTISING EXPENDITURE REPORT From Radisson For Month/Year of ---------------- For Corp. Use
Promotion DESCRIPTION OF PROMOTION MEDIA DATES AMOUNT OF EXPENDITURE Number (subject, size, offering (Name of the Newspaper, Magazine, Station) of placement (Attach invoice) Attach tearsheet, scrip, photo, videotape, cassette - -------------------------------------------------------------------------------------------------------------------------------- 1 - -------------------------------------------------------------------------------------------------------------------------------- 2 - -------------------------------------------------------------------------------------------------------------------------------- 3 - -------------------------------------------------------------------------------------------------------------------------------- 4 - -------------------------------------------------------------------------------------------------------------------------------- 5 - -------------------------------------------------------------------------------------------------------------------------------- 6 - -------------------------------------------------------------------------------------------------------------------------------- Total $
29 (For corporate use only) TOTAL APPROVED FOR AD CREDIT TOTAL$ INSTRUCTIONS FOR ATTACHING DOCUMENTATION 1) Attach a copy of the invoice for each eligible promotion. 2) Attach a copy of each promotion. Number each promotion in the lower right- hand corner of the invoice copy, as well as tearsheets, etc., to correspond to the numbers above (ie: Promotion 1, Promotion 2, etc.). In the case of broadcast promotions include a copy of the Invoice, Affidavit of performance, and a cassette or a script of the commercial. For outdoor advertising, submit photo of the outdoor paint and/or poster billboard. 3) If multiple expenses are on the invoice, circle the specific amount that applies to the promotion. 4) Attach this cover report to all documentation and submit to Radisson Hotel Corporation. 30 RADISSON HOTEL CORPORATION ADVERTISING EXPENDITURE REPORT INSTRUCTIONS FOR ATTACHING DOCUMENTATION 1. Please fill in hotel name and complete name of person submitting report. A memo will then be sent to this person detailing total credit the hotel will receive, along with explicit reasons some expenditures were not approved. 2. Attach a copy of the invoice for each eligible promotion. If multiple expenses are on the invoice, circle the specific amount that applies to the promotion. We must have a copy of an invoice not a pre-pay statement, purchase order or proposal. If an invoice was not received, please submit a copy of your canceled check with a copy of the proposal. 3. Attach a copy of each promotion. Number each promotion in the lower right- hand corner of the invoice copy, as well as tearsheets, etc., to correspond to the numbers as listed on the Advertising Expenditure Report (i.e.: Promotion 1, Promotion 2, etc.). In the case of broadcast promotions include a copy of the invoice, Affidavit of Performance, and a cassette or a script of the commercial. For outdoor advertising, submit photo of the outdoor paint and/or poster billboard. Billboard and airport diorama photos need only to be sent once and we will keep them on file. 4. REMEMBER: WE MUST HAVE A ACTUAL TEARSHEET FOR EACH AD PLACED EVEN IF THE -------------- SAME AD HAS RUN ON MULTIPLE DATES. Please do not cut the ad out; rather, send the whole tearsheet so we can verify date and publication. 5. REMEMBER: ALL ADVERTISING MUST BE IN THE PROPER RADISSON FORMAT AND ------ INCLUDE THE 800# TO BE ELIGIBLE FOR ADVERTISING REIMBURSEMENT. 6. Trade out barter is reimbursed at 30% of the tradeout retail value. 7. If a submission has not been approved because of a missing invoice or tearsheet, please resubmit tearsheet and/or copy of invoice along with copy of original expenditure report detailing reason not previously approved. 31 8. Attach this cover report to all documentation and submit to: Radisson Hotel Corporation, Attention: Alice Anderson, Director Marketing Resources, Carlson Parkway, P.O. Box 59159, Minneapolis, MN 55459-8204. 9. If you have any questions concerning the submission of your Advertising Expenditure Report please call Alice at 612-540-5503 or Karen Odenthal at 612-449-3343. LOCAL QUALIFIED ADVERTISING --------------------------- REIMBURSEMENT ------------- In some instances, RMA may permit hotels temporary local control of a portion of the RMA fee. This is done in the form of a "reimbursement" to the hotel upon submittal of an "Advertising Expenditure Report" form. Such reimbursement will be given in the form of a credit memo applied to your receivable account, only after: a) the full 3.50% RMA fee has been paid as and when due, and b) the Director-Marketing Resources has examined and approved the advertising and proof of payment which you submit in accordance with Program requirements. A copy of the form and instructions for submittal are attached. THE "REIMBURSEMENT" REFERRED TO IN YOUR LICENSE AGREEMENT FOR "QUALIFIED ADVERTISING" CREDIT APPLIES ONLY TO LOCAL, REGIONAL AND NATIONAL CONSUMER ROOMS ADVERTISING, WHICH INCLUDES MEETINGS/GROUP, AND TRAVEL AGENT ADVERTISING THAT INCORPORATES PROPER USE OF THE RADISSON NAME, LOGO, AND THE RADISSON 800 NUMBER. THE ADVERTISING MUST BE IN A FORMAT ESTABLISHED BY THE RADISSON MARKETING COMMUNICATIONS AND SERVICES DEPARTMENT. Acceptable media includes newspapers, magazines, in-flight publications, radio, TV, outdoor/airport diorama display and direct mail. (In essence, reimbursement is given for the same type of advertising and promotional programs that are normally supported by RMA.) The following is a chart that further clarifies what is and is not eligible for reimbursement: Examples of Advertising that IS ELIGIBLE for Reimbursement - --------------------------------------- . Production & space charges associated with eligible advertising which is in the approved -------- Radisson format for local, regional and national publications . Adventure Weekend radio or print ads . Travel Agent, Wholesaler & Meeting Ads . General rooms advertising . Direct mail to travel agents/meeting planners/corporate travel planners (includes production, labels) Examples of Advertising that IS NOT ELIGIBLE for Reimbursement - -------------------------------------------- . Food and beverage advertising . Adventure Rack Cards (Includes Business Class) . Brochures . Directories (OAG, Hotel & Travel Index, OHG, OMFG, etc.) . In-room table tents, guest room directories . Telephone yellow pages . Premiums (key tags, balloons, mugs and other gifts). . SMART advertising fees, etc. . Agency Retainers/Commissions 32 Examples of Advertising that IS ELIGIBLE for Reimbursement - ---------------------------------------- . Co-op advertising with other Radisson hotels. Only your portion of cost allowed. All SMART advertising EXCLUDED. . Outdoor paint and poster billboards . AAA Tour Book advertising . Airport advertising display/diorama . Sports-arena signage . Voyageur" Magazine ads . Guest Informant, "Travelhost," "Where" ads . Preview" ads . Electronic Media/CRS (eligible after 4/1/93) Apollo/Spectrum Apollo/Headlines Sabre/Jaguar Select Plus (AMEX) Examples of Advertising that IS NOT ELIGIBLE for Reimbursement - -------------------------------------------- . Stationary, post cards . Sales supplies/support collateral . Co-op advertising with competitive hotels . Airport courtesy phones -- direct line/phone board display . Audio visual/slide presentations . Van/cabs/trucks/buses/park benches/banners . In-house video . Any advertising with another 800# included . Postage (for direct mail, etc.) . Telemarketing . Fax blasts . Bulk purchase of awards points . Collateral fulfillment costs . Research/survey services . Maps . On Hold" message/music . Posters . Highway Exit Traveller Service Information Signage Failure to comply with the Program Requirements for any item may result in disqualification for reimbursement of the advertising expense for that item. The final determination of what constitutes Qualified Advertising and whether the Program's requirements have been met shall be in the RMA's sole discretion. Qualified advertising that is placed on a tradeout (barter) arrangement will be reimbursed at 30% of the tradeout retail value. We do not want to jeopardize our barter relationships. Hotels paying full cash on publications where barter is available will receive reimbursement only for the dollars they would have paid if barter had been utilized. The full cash reimbursement will not be given. If you have any questions concerning the eligibility of proposed advertising or whether barter is available, contact the Director-Marketing Resources, as described below. Proposed copy for promotions, advertising or broadcast should be submitted for pre-approval if not clearly contained in the examples of advertising eligible for reimbursement. The "Advertising Expenditure Report" and its attachments when properly prepared, includes attachments: copy of paid invoices, ad tear sheets, script, cassette or video for broadcast commercials with copy of the Affidavit of Performance, and promotion collateral for direct mail. The Advertising Expenditure Report, its attachments, and other evidence which may be required by licensor shall be submitted to: Alice Anderson Director - Marketing Resources RADISSON HOTELS INTERNATIONAL, INC. Carlson Parkway, P.O. Box 59159 Minneapolis, MN 55459-8204 (612) 540-5503 33 The "Advertising Expenditure Report," together with all supporting documentation for each item of advertising for which reimbursement is being sought, must be submitted each month as it becomes available but in any event within ninety (90) days of the date the first invoice is received for that item or within ninety (90) days of the end of the Agreement Year (as defined in the License Agreement) in which the advertising first ran -- whichever is earlier. The maximum qualified advertising reimbursement allowance ("Reimbursement Allowance") for any Agreement Year is determined by the Gross Room Sales at the Hotel during that Agreement Year times the applicable percentage of Maximum Available Qualified Advertising Reimbursement. If you do not submit evidence of Qualified Advertising in an amount at least equal to the Reimbursement Allowance for any Agreement Year in that Agreement Year (or within 90 days of the first invoice date for the item, if the advertising is placed during the Agreement Year but evidence is submitted after the end of the Agreement Year), any balance of Reimbursement Allowance for that Agreement Year will be deemed waived. It may not be carried over to subsequent --- years. If you submit evidence of Qualified Advertising in an amount greater than the Reimbursement Allowance for any Agreement Year ("Excess Advertising") and a Reimbursement Allowance is or becomes available in the following Agreement Year, (a) credit memo(s) will be issued for the amount of Excess Advertising, up to the Reimbursement Allowance available. RADISSON 800 NUMBERS -------------------- Attached are examples showing how you will correctly display the appropriate ----------- Radisson 800 number. There are three numbers to choose from when you advertise. To ensure the effectiveness of these numbers, make absolutely sure that each of these three numbers are displayed in the correct advertising and in the format illustrated. 1. The 800-333-3333 number is for advertising to the general public that includes consumers, meeting planners, wholesale tour groups, and Official Airline Guide (OAG) ads. Within reason, show this 800 number everywhere you can... brochures, vans, softball jerseys, confirmations, letterhead, billboards, giveaway gift items, etc. After all, our primary goal is to make the phone ring. 2. The 800-777-7800 number should be used when advertising to travel agents ------------- and/or wholesalers Please note that, in all TRAVEL AGENT advertising, the ----------- --- airline access code must 34 be included along with the travel agent 800 number. The airline systems bring us high volumes of business at excellent rates, so you can appreciate the reason for focusing on this. This number 800-777-7800 should also be used in all communications targeting the wholesale tour audience. PLEASE NOTE THAT WHILE THE NUMBER IS THE SAME FOR THESE AUDIENCES, THE FORMAT IS DIFFERENT. PLEASE USE THE CORRECT FORMAT. 3. The 800-444-3344 number should be used when advertising to meeting planners for group business only. Please include this number when advertising in trade publications and on any group collateral/promotion pieces produced. Please make no changes to these 800-number formats. The consistency of these formats is essential in order to make Radisson's advertising effective. REMEMBER: ALL LOCAL ADVERTISING SUBMITTED FOR AD CREDIT MUST INCLUDE ONE OF THESE 800 NUMBERS, IN THE CORRECT FORMAT, TO RECEIVE CREDIT. --------------------- 35 EX-10.18 4 BLUE DIAMOND SWAP AGREEMENT DATED AUGUST XX,1996 EXHIBIT 10.18 BLUE DIAMOND SWAP AGREEMENT DATED AS OF AUGUST 12, 1996 BY AND AMONG BOOMTOWN, INC., BLUE DIAMOND HOTEL & CASINO, INC., HOLLYWOOD PARK, INC., EDWARD P. ROSKI, JR., IVAC AND MAJESTIC REALTY CO. TABLE OF CONTENTS
PAGE ---- 1. DEFINITIONS AND RULES OF INTERPRETATION............................... 2 1.1 Definitions...................................................... 2 1.2 Rules of Interpretation.......................................... 7 2. TRANSFER OF ROSKI NOTES............................................... 8 2.1 Transfer of Roski Notes on the Exchange Date..................... 8 2.2 Excluded Assets.................................................. 8 2.3 No Liabilities Assumed; Excluded Liabilities..................... 8 3. TRANSFER OF BD INTEREST............................................... 8 3.1 Transfer of BD Interest on the Exchange Date..................... 8 3.2 Excluded Assets.................................................. 9 3.3 Liabilities Assumed.............................................. 9 4. CASH PAYMENT.......................................................... 9 5. EXCHANGE OF ASSETS.................................................... 9 5.1 Exchange Date.................................................... 9 5.2 Cash Payment; Proration.......................................... 10 5.3 Deliveries by BD Transferor...................................... 10 5.4 Deliveries by Roski.............................................. 11 5.5 Additional Undertakings by Roski................................. 12 5.6 Additional Undertakings by Boomtown, Blue Diamond, Hollywood Park and BD Transferor................................. 13 6. REPRESENTATIONS AND WARRANTIES........................................ 14 6.1 Representations and Warranties of the Roski Entities............. 14 6.2 Representations and Warranties of Boomtown, Blue Diamond, Hollywood Park and BD Transferor................................. 16 7. CONDITIONS PRECEDENT.................................................. 17 7.1 Conditions to Execution and Delivery of this Agreement by Boomtown...................................................... 17 7.2 Conditions to Execution and Delivery of this Agreement by Roski......................................................... 17 7.3 Conditions to Exchange by BD Transferor.......................... 17 7.4 Conditions to Exchange by Roski.................................. 18
-i- TABLE OF CONTENTS (CONTINUED)
PAGE ---- 8. INDEMNIFICATION....................................................... 19 8.1 Indemnification by the Roski Entities........................... 19 8.2 Indemnification by Boomtown, Blue Diamond and BD Transferor..... 20 8.3 Procedure....................................................... 20 9. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES.................... 21 9.1 Approvals....................................................... 21 9.2 Consents, Authorizations and Waivers............................ 21 9.3 Transfer Taxes.................................................. 21 9.4 Additional Deliveries; Further Assurances....................... 21 9.5 Maintenance of Resort Business.................................. 22 9.6 Director's Insurance............................................ 22 10. TERMINATION.......................................................... 22 10.1 Termination.................................................... 22 10.2 Other Merger................................................... 22 11. MISCELLANEOUS........................................................ 23 11.1 Changes, Waivers, etc.......................................... 23 11.2 Payment of Fees and Expenses................................... 23 11.3 Notices........................................................ 23 11.4 Entire Agreement............................................... 24 11.5 Survival of Representations and Warranties, etc................ 24 11.6 Headings; References to Agreement.............................. 24 11.7 Choice of Law; Interpretation.................................. 24 11.8 Counterparts................................................... 24 11.9 Severability................................................... 24 11.10 Successors and Assigns......................................... 24 11.11 No third Party Beneficiaries................................... 24 11.12 Waiver of Jury Trial........................................... 25
-ii- LIST OF EXHIBITS AND SCHEDULES ------------------------------ EXHIBIT A RELEASE EXHIBIT B ROSKI NOTE EXHIBIT C TERMINATION AGREEMENT SCHEDULE 1-A NOTES AND LEASES SCHEDULE 1-B MAINTENANCE CONTRACTS SCHEDULE 1-C OUTDOOR SIGNS SCHEDULE 1-D LICENSE AND PROGRESSIVE SERVICE AGREEMENTS -iii- BLUE DIAMOND SWAP AGREEMENT This Blue Diamond Swap Agreement (this "Agreement") is made as of the 12th day of August, 1996 by and among Boomtown, Inc., a Delaware corporation ("Boomtown"), Blue Diamond Hotel & Casino, Inc., a Nevada corporation and a wholly-owned subsidiary of Boomtown ("Blue Diamond"), Hollywood Park, Inc., a Delaware corporation ("Hollywood Park"), Edward P. Roski, Jr., an individual residing in the State of California ("Roski"), IVAC, a California general partnership of which Roski is a partner ("IVAC") and Majestic Realty Co., a California corporation ("Majestic"). WHEREAS, IVAC owns certain real property in Las Vegas, Nevada, on which a resort consisting of a casino, hotel, restaurant, recreational vehicle park and related facilities (as more fully defined below, the "Resort") is being operated by Blue Diamond as Boomtown Las Vegas; WHEREAS, Boomtown has advanced certain funds to IVAC to enable IVAC to complete development and construction of the Resort, which advances are evidenced by certain promissory notes issued by IVAC, which notes are governed by loan agreements and secured by deeds of trust on the Resort site and certain related property; WHEREAS, Blue Diamond has entered into a lease with IVAC for the Resort site, and has purchased and installed certain trade fixtures in the Resort; WHEREAS, Hollywood Park intends to enter into a strategic combination (the "Merger") with Boomtown pursuant to an Agreement and Plan of Merger dated as of April 23, 1996 by and among Hollywood Park, Boomtown and HP Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Hollywood Park (as amended and in effect from time to time, the "Merger Agreement"); WHEREAS, subject to consummation of the Merger pursuant to the Merger Agreement, Boomtown and Blue Diamond intend either (a) to effect any one or combination of the following transfers of their respective interests in the Resort (i) a transfer to a subsidiary of Boomtown (an "SPC") created for the purpose and designated as an "Unrestricted Subsidiary" under the Boomtown Indenture (as defined below), or (ii) as set forth in Section 3.1, any other transfer which would achieve the result contemplated by this Agreement or (b) to retain their respective interests in the Resort, for the purpose of entering directly into the transactions contemplated by this Agreement; WHEREAS, it is the intent of the parties hereto that, upon consummation of the Merger pursuant to the Merger Agreement, subject to the terms and conditions set forth in this Agreement, the holder of such interests in the Resort, regardless of whether such holder is then Boomtown, Blue Diamond, Hollywood Park, any designated Affiliate (as defined below) of Hollywood Park, any SPC or other designated subsidiary of Boomtown or any combination thereof (any such holder(s), "BD Transferor") would either exchange such interests in the Resort for the Roski Notes (as defined below) or effect the same result through a series of related transactions, and, in any such case, Roski would exchange the Roski Notes for such interests in the Resort (such exchange, however effected, the "Blue Diamond Swap"); NOW THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Boomtown, Blue Diamond, Hollywood Park, Roski, IVAC and Majestic hereby agree as follows: 1. DEFINITIONS AND RULES OF INTERPRETATION --------------------------------------- 1.1 Definitions. The following terms shall have the respective ----------- meaning set forth below, or in the Sections of this Agreement respectively referred to below: "Affiliate" of any person or entity organized as a corporation, partnership, joint venture, business trust or other non-individual person, shall mean (i) any person or entity which directly or indirectly owns fifty percent (50%) or more of the stock, partnership or other beneficial interest of such person or entity, (ii) any corporation, partnership or other entity of which fifty percent (50%) or more of the stock, partnership or other beneficial interest is owned directly or indirectly by such person or entity, and (iii) any corporation, partnership or entity of which fifty percent (50%) or more of the stock, partnership or other beneficial interest is owned directly or indirectly by any person or entity that owns fifty percent (50%) or more of the stock, partnership or other beneficial interest of such person or entity. "Affiliate Loan Agreement" shall mean the Affiliate Loan Agreement dated as of June 30, 1993, by and among IVAC, Majestic and Boomtown. "Affiliate Note" shall mean the Affiliate Loan Note dated as of June 30, 1993, made by IVAC in favor of Boomtown. "Affiliate Loan Deed of Trust" shall mean the Deed of Trust and Assignment of Rents and Security Agreement dated as of June 30, 1993, by and among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee and Boomtown and Majestic as tenants in common, as beneficiaries. "Approvals" shall mean all governmental approvals, consents, licenses, findings of suitability, and permits, including without limitation, any approvals of Gaming Authorities, as may be required to effect the Blue Diamond Swap. "Assumed Contracts" shall mean (i) the leases and notes identified on Schedule 1-A hereto, (ii) the gift shop leases and the sports book agreement - ------------ between Boomtown and Leroy's Horse and Sports Place, dated November 30, 1995, (iii) the agreement for the family -2- amusement center at the Resort, (iv) the maintenance contracts listed on Schedule 1-B hereto, (v) the outdoor sign agreements listed on Schedule 1-C - ------------ ------------ hereto, (vi) the license and progressive service agreements listed on Schedule 1-D hereto and (vii) the agreements for entertainment at the Resort - ------------ in effect on the Exchange Date. "BD Interest" shall mean all of BD Transferor's right, title and interest in and to (i) the Affiliate Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan Agreement, the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase Option Deed of Trust, (ii) the mortgage liens on, and other rights in, the Resort site and related properties respectively conveyed in trust under the Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase Option Deed of Trust, (iii) the Blue Diamond Lease, the Assumed Contracts, the FF&E and the Specified Assets and (iv) security systems, customer lists, telephone numbers, books and records, user manuals, plans, surveys, liquor and other licenses and inventories which are located at, or used principally in connection with, the Resort; provided, however, that the BD Interest shall include all interests of Boomtown and Blue Diamond in the foregoing as of the Exchange Date. "BD Transferor" shall have the meaning ascribed thereto in the recitals hereto. "Blue Diamond" shall have the meaning ascribed to such term in the recitals hereto. "Blue Diamond Lease" shall mean the Lease dated as of June 30, 1993, as amended by a First Amendment to Lease dated as of November 10, 1993, by and between IVAC as lessor and Blue Diamond as lessee, pursuant to which IVAC has agreed to lease to Blue Diamond, and Blue Diamond has agreed to lease from IVAC, the real property in Las Vegas, Nevada on which the Resort is situated. "Blue Diamond Swap" shall have the meaning ascribed thereto in the recitals hereto. "Boomtown" shall have the meaning ascribed thereto in the preamble hereto. "Boomtown Indenture" shall mean the Indenture dated as of November 1, 1993, by and among Boomtown, Blue Diamond, certain of their Affiliates and the Trustee. "Bridge Loan Agreement" shall mean the Bridge Loan Agreement dated as of June 30, 1993, by and between IVAC and Boomtown, as amended by an Amendment No. 1 to Bridge Loan Agreement dated as of November 10, 1993. "Bridge Note" shall mean the Amended and Restated Promissory Note (Bridge) dated as of June 30, 1993, made by IVAC in favor of Boomtown. -3- "Bridge Loan Deed of Trust" shall mean the Deed of Trust and Assignment of Rents and Security Agreement dated as of June 30, 1993, by and among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee and Boomtown as beneficiary. "Designated Roski Entity" shall mean an entity designated by Roski and either (i) reasonably acceptable to Boomtown and Hollywood Park or (ii) the obligations of which hereunder and under the Related Documents, including all indemnities for which such Roski Entity is liable, shall have been unconditionally guaranteed by Roski pursuant to the Roski Guaranty. "Effective Date" shall mean the date of this Agreement. "Employees" shall mean the employees of Boomtown, Blue Diamond or their Affiliates employed at or in connection with the Resort exclusively and not employed at other facilities. "Exchange Date" shall mean the date on which the conditions precedent specified in Sections 7.3 and 7.4 hereof have been satisfied or waived. "FF&E" shall mean all trade fixtures, other fixtures and equipment located at or used principally in connection with the Resort, including, in any event, those assets (however characterized) listed on the fixed asset register of Blue Diamond as of the Effective Date and those assets (however characterized) leased or purchased under the leases and notes listed on Schedule -------- 1-A; provided, however, that FF&E shall be deemed to include any replacements of - --- any such assets and any similar assets acquired for use at or principally in connection with the Resort by Boomtown, Blue Diamond or BD Transferor during the period from the Effective Date until the Exchange Date and shall be deemed to exclude any such assets that no longer exist as of the Exchange Date due to obsolescence or use in the ordinary course of business. "Fixture Filings" shall mean the fixture filings with respect to the Resort listed as of the Exchange Date on Schedule 1 to the Termination -------- - Agreement. "GAAP" shall mean generally accepted accounting principles as in effect on the relevant date of determination, consistently applied. "Gaming Authority" shall mean the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board and any other state, county or other governmental authority having responsibility for, jurisdiction over, or regulatory authority, oversight or supervisory responsibilities in respect of, any gaming related business operated or contemplated to be operated at or in connection with the Resort. "Gaming Law" shall mean all applicable provisions (i) the Nevada Gaming Control Act and the statutes rules, and regulations promulgated thereunder and (ii) all interpretations, decisions, judgments, orders and decrees of any Gaming Authority. -4- "Hollywood Park" shall have the meaning ascribed to such term in the preamble hereto. "IVAC" shall have the meaning ascribed to such term in the preamble hereto. "Majestic" shall have the meaning ascribed to such term in the preamble hereto. "Merger" shall have the meaning ascribed to such term in the recitals hereto. "Merger Agreement" shall have the meaning ascribed to such term in the recitals hereto. "Permitted Liens" shall mean (a) liens and encumbrances, including rights of consent to assignment, arising under the Assumed Contracts in accordance with the terms thereof, (b) restrictions imposed by Gaming Laws and other applicable governmental authorities and (c) other encumbrances arising in the ordinary course of business in connection with the operation of the Resort. "Perishable Inventory" shall mean all liquor, beverages, foodstuff and other consumable or perishable inventory purchased by Blue Diamond or any of its Affiliates for consumption or use at the Resort, valued at cost on a FIFO basis. "Purchase Option Agreement" shall mean the Purchase Option Agreement dated as of June 30, 1993 by and among IVAC, Boomtown and Blue Diamond. "Purchase Option Deed of Trust" shall mean the Deed of Trust and Assignment of Rents and Security Agreement dated as of June 30, 1993, by and among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee and Blue Diamond, as beneficiary. "Related Agreements" shall mean the Termination Agreement, the Roski Notes, the Roski Guaranty, if applicable, the Release and all of the other documents, instruments and agreements executed and delivered in connection with any of the foregoing, and the transactions respectively contemplated hereby and thereby. "Release" shall mean the general release by each of (i) the Roski Entities of BD Transferor, Boomtown, Blue Diamond and their respective Affiliates of the obligations related to the Resort created by or contained in the Blue Diamond Lease, the Assumed Contracts, the Specified Liabilities and all obligations, liabilities and claims relating to the Resort arising or accruing prior to the date on which Boomtown or Blue Diamond took possession of the "Premises" (as defined in the Blue Diamond Lease) or arising or accruing on or after the Exchange Date and (ii) BD Transferor, Boomtown and Blue Diamond of the Roski Entities of all obligations, liabilities and claims arising under the Affiliate Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan Agreement, the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase Option Deed of Trust in substantially the form of Exhibit A hereto. --------- -5- "Resort" shall mean the facility located at 3333 Blue Diamond Road, Las Vegas, Nevada consisting of a casino, hotel, restaurant, recreational vehicle park and related facilities, and all assets located at, used principally in connection with, or arising principally from such facilities, including the FF&E, the Specified Assets, certain rights under the Assumed Contracts, security systems, customer lists, telephone numbers, books and records, user manuals, plans, surveys, liquor and other licenses and inventories. "Retained Employees" shall have the meaning ascribed thereto in Section 5.6(a) of this Agreement. "Roski" shall have the meaning ascribed to such term in the preamble hereto. "Roski Entities" shall mean collectively, Roski, IVAC (including Edward P. Roski, Sr. as a general partner of IVAC) and Majestic. "Roski Guaranty" shall mean a guaranty by Roski of the obligations of the Designated Roski Entity hereunder and under the other Related Agreements to which the Designated Roski Entity is a party, if required by Boomtown and Hollywood Park, in form and substance satisfactory to Boomtown and Hollywood Park. "Roski Notes" shall mean (i) an unsecured promissory note made by the Designated Roski Entity, in an initial principal amount of five million dollars ($5,000,000) having an interest rate equal to the Prime Rate, as announced by Bank of America from time to time, plus one and one half percent (1.5%) per annum and providing for annual principal payments of one million dollars ($1,000,000) plus accrued interest and maturing on the date that is five years after the Exchange Date, in substantially the form of Exhibit B-1 hereto and ----------- (ii) an unsecured promissory note, made by the Designated Roski Entity, in an initial principal amount of $3,464,287 having an interest rate equal to the Prime Rate, as announced by Bank of American from time to time, plus one-half percent (.5%) per annum and providing for a payment of all principal plus accrued interest on the date that is three (3) years after the Exchange Date, in substantially the form of Exhibit B-2 hereto. "Roski Stock" shall mean 714,386 shares of the common stock of Boomtown held, as of the Effective Date, by Roski, and all shares of the common stock of Hollywood Park into which such Boomtown common stock had then converted, or which Roski then had a right to receive in exchange for such Boomtown common stock. "Roski Stock Purchase Agreement" means an agreement of even date herewith between Roski and Hollywood Park pursuant to which Roski is selling, transferring and conveying the Roski Stock to Hollywood Park, and Hollywood Park is purchasing and acquiring the Roski Stock for the Roski Stock Purchase Price. "Roski Stock Purchase Price" shall mean a note to be issued by Hollywood Park to Roski in the principal amount of $3,464,287 pursuant to the Roski Purchase Agreement as consideration for the purchase of the Roski Stock. -6- "SPC" shall have the meaning ascribed to such term in the preamble hereto. "Specified Assets" shall mean (i) prepaid deposits with utilities with respect to the Resort, security deposits and any other prepaid expenses, (ii) cash in the Resort, whether in machines, gaming tables, change stations, the gaming control center or at the hotel front desk, the restaurant or the recreational vehicle park, (iii) Perishable Inventory (iv) applicable property tax refunds accrued prior to the Exchange Date and not included in the tax proration contemplated by Section 5.2 and (v) all trade receivables and all other liquid assets other than markers (i.e., receivables and other uncontingent payment rights convertible into cash within 90 days after the respective issuance dates thereof), in each case, accruing or arising through the last day prior to the Exchange Date. "Specified Liabilities" shall mean (i) trade payables, (ii) players points (Players Club), (iii) progressive slot winnings liability as shown on Boomtown's books and records, (iv) caribbean stud liability, (v) advance deposits, (vi) outstanding tokens and (vii) pre-sold concerts, with respect to the Resort, in each case, accruing or arising through the last day prior to the Exchange Date. "Termination Agreement" shall have the meaning ascribed to such term in Section 5.3(a) hereof. "Trustee" shall mean First Trust National Association, as trustee under the Boomtown Indenture. 1.2 Rules of Interpretation ----------------------- (a) A reference to any document or agreement shall, unless otherwise provided, include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and, if applicable, as permitted by this Agreement. (b) The singular includes the plural and the plural includes the singular. (c) A reference to any law includes any applicable amendment or modification to such law, or any applicable successor law. (d) A reference to any person or entity includes its permitted successors and permitted assignees. (e) Accounting terms not otherwise defined herein have the respective meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer. -7- (f) The words "include," "includes" and "including" are not limiting. (g) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the State of Nevada, shall have the respective meanings assigned to them therein. (h) Reference to a particular "Section" refers to that section of this Agreement unless otherwise indicated. (i) The words "herein," "hereof," "hereunder" and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement. 2. TRANSFER OF ROSKI NOTES. ----------------------- 2.1 Transfer of Roski Notes on the Exchange Date. Subject to the -------------------------------------------- terms and conditions of this Agreement, (i) the Designated Roski Entity agrees, on the Exchange Date, to issue the Roski Notes to BD Transferor and (ii) BD Transferor agrees, on the Exchange Date, to acquire and accept from Roski the Roski Notes. 2.2 Excluded Assets. No other assets of the Roski Entities, --------------- except those specifically listed in Section 2.1 and the cash payments respectively contemplated by Sections 3.1 and 5.2, if applicable, shall be transferred or deemed to be transferred hereby. 2.3 No Liabilities Assumed; Excluded Liabilities. BD Transferor -------------------------------------------- is not assuming and shall not be responsible for any liability or obligation of any Roski Entity, any Specified Liabilities, any obligations under Assumed Contracts accruing on or after the Exchange Date or any other claims or liabilities with respect to the Resort arising or accruing on or after the Exchange Date, or any liability or obligation arising from or relating to any of the following: (a) any costs or expenses, including, but not limited to, legal fees, accounting fees, consulting, other finder, broker and financing costs incurred by Roski or his Affiliates in connection with this Agreement or the Related Agreements or the consummation of the transactions contemplated hereby or thereby; or (b) any taxes owed by any Roski Entity or assessed as a result of or in connection with the transactions contemplated hereby, including, without limitation, any income, property, sales, use or withholding taxes. In no event shall Hollywood Park be deemed to have assumed, or otherwise become liable for, any liability whatsoever of any Roski Entity (regardless of whether Hollywood Park is designated as BD Transferor). -8- 3. TRANSFER OF BD INTEREST. ----------------------- 3.1 Transfer of BD Interest on the Exchange Date. Subject to the -------------------------------------------- terms and conditions of this Agreement, BD Transferor agrees, on the Exchange Date, to transfer, convey, assign and deliver to Roski, or the Designated Roski Entity, and Roski agrees to acquire, accept and assume (or cause the Designated Roski Entity to acquire, accept and assume) from the BD Transferor, all right, title and interest of BD Transferor in and to the BD Interest. The parties intend that this exchange shall occur by means of a series of contemporaneous steps as follows: (a) Boomtown and Blue Diamond would transfer the BD Interest to the SPC, (b) the Designated Roski Entity would convey the Roski Notes and any cash payments to be made hereunder to the SPC and assume the liabilities described herein, (c) the SPC would transfer and convey the BD Interest to the Designated Roski Entity as contemplated herein, subject to the Assumed Contracts and (d) the SPC would transfer the Roski Notes and any cash payments to be made hereunder to Boomtown. The parties acknowledge and agree that Boomtown and Hollywood Park may mutually agree without the consent of Roski, to utilize a structure other than the foregoing structure, to accomplish the objectives of the parties set forth herein, provided that such structure is economically equivalent to the contemplated structure set forth above. It is further acknowledged that as part of such alternative structure, Boomtown and Hollywood Park may require Roski to continue to own and hold the Roski Stock. 3.2 Excluded Assets. No other rights, interests or assets of BD --------------- Transferor or any of its Affiliates, except those specifically listed in Section 3.1 and the cash payment contemplated by Section 5.2, if applicable, shall be transferred or deemed to be transferred hereby. 3.3 Liabilities Assumed. Upon and after the Exchange Date, the ------------------- Designated Roski Entity shall be solely liable for the Specified Liabilities, accrued liabilities relating to vacation, earned but unused under the Blue Diamond employee benefits policy in effect as of the date hereof associated with the employees hired by Roski pursuant to Section 5.5(F) and liabilities arising under the Assumed Contracts and all other costs, expenses, claims, liabilities and obligations of the Resort, of every kind and nature, in each case, arising or accruing on or after the Exchange Date. The Designated Roski Entity shall take such actions to assume the liabilities of the Resort accruing after the Exchange Date under the Assumed Contracts as may be necessary to substitute the Designated Roski Entity for BD Transferor or, as applicable, any of its Affiliates, and/or shall relieve BD Transferor and its Affiliates of all liability thereunder. Except for the Specified Liabilities, amounts accruing under the Assumed Contracts on or after the Exchange Date and all of the other costs, expenses, claims, liabilities and obligations arising on or after the Exchange Date in connection with the Resort, the Designated Roski Entity will not assume or otherwise become responsible for any liability or obligation of Boomtown, Blue Diamond, Hollywood Park or any of their respective Affiliates, or any other claims or liabilities whatsoever, including, any costs or expenses, including, but not limited to, legal fees, accounting fees, consulting, other finder, broker and financing costs incurred by Boomtown, Blue Diamond, Hollywood Park, BD Transferor or any of their -9- Affiliates in connection with this Agreement or the Related Agreements or the consummation of the transactions contemplated hereby or thereby. 4. CASH PAYMENT. Subject to the terms and conditions of this Agreement, ------------ each of the parties agrees to make the cash payments respectively contemplated to be made by such party in Sections 3.1 and 5.2, as applicable. 5. EXCHANGE OF ASSETS. ------------------ 5.1 Exchange Date. Subject to a restructuring in accordance with ------------- Section 3.1, on the Exchange Date, (a) BD Transferor shall transfer, convey, assign and deliver to Roski, and Roski shall acquire, accept and assume from BD Transferor, the BD Interest and (b) Roski shall deliver to BD Transferor, and BD Transferor shall acquire and accept from Roski, the Roski Notes. Each party shall deliver to the other such endorsements, assignments, releases and other instruments as the other party shall reasonably request or as necessary to vest in the other party valid and marketable title, free and clear of all liens or encumbrances (except, with respect to the BD Interest, Permitted Liens) to the BD Interest, in the case of Roski, and to the Roski Notes, in the case of BD Transferor. 5.2 Cash Payment; Proration. On the Exchange Date, if the amount ----------------------- of Specified Assets is greater than the amount of Specified Liabilities as of the Exchange Date, then Roski shall pay to BD Transferor an amount equal to the amount of Specified Assets less the amount of Specified Liabilities. On the Exchange Date, if the amount of Specified Liabilities is greater than the amount of Specified Assets as of the Exchange Date, then BD Transferor shall pay to Roski an amount equal to the amount of Specified Liabilities less the amount of Specified Assets. In addition, all outstanding taxes, rent, utilities and payments under the Assumed Contracts shall be pro rated as of the Exchange Date, so that all such amounts accruing prior to the Exchange Date shall be for the account of Blue Diamond or Boomtown and all such amounts accruing from and after the Exchange Date shall be for the account of the applicable Roski Entity. 5.3 Deliveries by BD Transferor. On the Exchange Date, subject to --------------------------- the terms and conditions hereof, BD Transferor shall deliver to Roski each of the following: (a) a termination agreement in substantially the form of Exhibit C hereto (the "Termination Agreement"), duly executed by BD Transferor, - --------- Boomtown and Blue Diamond terminating all of the respective rights and obligations of BD Transferor and the Roski Entities under the Affiliate Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan Agreement, the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust, the Purchase Option Deed of Trust, the Blue Diamond Lease and all or other documents relating to the Resort and the relationship among Boomtown, Blue Diamond and any one or more of the Roski Entities, providing, inter alia, for the acceptance by Roski of BD Transferor's transfer of the BD Interest in a condition which complies with the terms of the Blue Diamond Lease and this Agreement; -10- (b) the Affiliate Note, marked canceled; (c) the Bridge Note, marked canceled; (d) a discharge of the Affiliate Loan Deed of Trust, in recordable form; (e) a discharge of the Bridge Loan Deed of Trust, in recordable form; (f) a discharge of the Purchase Option Deed of Trust, in recordable form; (g) a quitclaim deed, in recordable form, regarding the Resort (including BD Transferor's interest under the Blue Diamond Lease and the Purchase Option Agreement); (h) a discharge in recordable form of the Construction and Permanent Deed of Trust, Security Agreement and Fixture Filing with Assignment of Rents dated as of November 10, 1993, among Blue Diamond, as trustor, Nevada Title Company, as trustee, and the Trustee, as beneficiary; (i) a discharge in recordable form of the Construction and Permanent Deed of Trust, Security Agreement and Fixture Filing with Assignment of Rents (Subordinated) dated as of November 10, 1993, among Blue Diamond, as trustor, Nevada Title Company, as trustee, and Boomtown, as beneficiary; (j) a termination in recordable form of the Collateral Assignment of Deed of Trust dated as of November 10, 1993, between Boomtown and the Trustee; (k) UCC-3 termination statements, terminating the Fixture Filings; (l) the Release, duly executed by BD Transferor, Blue Diamond and Boomtown; (m) assignment agreements and any such other documents, consents, authorizations and waivers as may be reasonably required by Roski, lessors or other contracting parties, to assign all of BD Transferor's rights and obligations under the Assumed Contracts; (n) bills of sale for all personal property owned by BD Transferor and included in the BD Interest; (o) vehicle certificates of title and appropriate transfer documents for all automobiles or other vehicles owned by BD Transferor and included in the BD Interest; -11- (p) a list of all Employees employed at the Resort as of the business day prior to the Exchange Date; (q) an accounting of all cash on hand and Perishable Inventory on the premises of the Resort on the business day prior to the Exchange Date; and (r) an accounting of Specified Assets and Specified Liabilities. 5.4 Deliveries by Roski. On the Exchange Date, subject to the ------------------- terms and conditions hereof, Roski shall deliver to BD Transferor each of the following: (a) the Termination Agreement, duly executed by Roski and each other affected Roski Entity; (b) the Roski Notes; (c) the Release, duly executed by each affected Roski Entity; and (d) assumption agreements and other documents as may be reasonably required by BD Transferor to cause Roski to assume the obligations of BD Transferor under the Assumed Contracts. 5.5 Additional Undertakings by Roski. In addition to the transfer -------------------------------- of the property listed in Section 2.1 and the deliveries listed in Section 5.4, each applicable Roski Entity agrees as follows: (a) Roski shall resign as a director of Boomtown, effective as of the Exchange Date. (b) Roski shall take such action as is necessary to cancel the options on the stock of Boomtown received by Roski in connection with his service as a director of Boomtown, effective as of the Exchange Date. (c) From and after the Exchange Date, Roski shall maintain the confidentiality of any non-public information pertaining to Boomtown, Blue Diamond, Hollywood Park or BD Transferor acquired by him in his capacity as a director of Boomtown; provided, however, that Roski shall not be obligated to maintain the confidentiality of any information which is already in the public domain through no act of Roski or which is required to be disclosed by court order or applicable law. (d) No Roski Entity shall use the name "Boomtown," or any other trademark, trade name, service mark or similar property of Boomtown or any of its Affiliates, after the 180th day following the Exchange Date, and no Roski Entity shall at any time use the name "Hollywood Park" or any other trademark, tradename, service mark or similar property of Hollywood Park or any of its Affiliates, except by agreement with Hollywood Park or such -12- Affiliates. So long as any Roski Entity uses the name "Boomtown", the Roski Entities shall maintain the condition, service and operations of the Resort in substantial conformity with those maintained by Blue Diamond and Boomtown prior to the Exchange Date. The applicable Roski Entities and BD Transferor shall enter into a trademark license agreement on the Exchange Date, including the protections to Boomtown set forth in the Trademark License Agreement dated as of June 30, 1993, by and between Boomtown and Blue Diamond. (e) After the Exchange Date, the Roski Entities shall allow the BD Transferor, its Affiliates and designees or appropriate governmental agencies reasonable access to all books and records kept in connection with the Resort prior to the Exchange Date, as reasonably requested by the BD Transferor for legitimate business purposes. The parties will develop and follow a mutually agreed upon retention policy with respect to the books and records of the Resort. (f) Prior to the Exchange Date, the Designated Roski Entity, shall make offers of employment to substantially all of the Employees; provided, however, that no Roski Entity shall attempt to solicit, or interfere in any manner with, the employment of the Retained Employees. (g) Each Roski Entity agrees, if Boomtown determines that it is appropriate to solicit the consents to the Blue Diamond Swap from the holders of the notes issued pursuant to the Boomtown Indenture, to cooperate as reasonably requested by Boomtown in such consent solicitation and to cooperate reasonably in any other actions which may be necessary to effect the transactions contemplated hereby, regardless of the structure or form of the Blue Diamond Swap; provided, that no Roski Entity shall be required to incur any expense or liability in connection therewith. (h) Roski or the Designated Roski Entity agrees to give such notices as may be required by the Worker Adjustment and Retraining Notification Act. (i) The Designated Roski Entity, if not a party to this Agreement, shall become a party to this Agreement. 5.6 Additional Undertakings by Boomtown, Blue Diamond, Hollywood ------------------------------------------------------------ Park and BD Transferor. In addition to the transfer of the property listed in - ---------------------- Section 5.3, Boomtown, Blue Diamond, Hollywood Park and BD Transferor agree as follows: (a) Boomtown, Blue Diamond and the BD Transferor recognize that the Designated Roski Entity will generally need to retain the services of the Employees (other than the Retained Employees as defined below) in order to operate the Resort in a businesslike and efficient manner following the Exchange Date. Accordingly, Boomtown, Blue Diamond and BD Transferor agree not to transfer any Employees from the Resort to their other operations after the Effective Date and agree to terminate, as of the Exchange Date, all Employees. Notwithstanding the foregoing, Boomtown, Blue Diamond or BD Transferor may designate, by means of a written notice received by Roski within thirty (30) days after the -13- Effective Date, up to five (5) Employees as "Retained Employees" and Boomtown, Blue Diamond and BD Transferor shall have the right to transfer the Retained Employees from the Resort to their other operations and shall have no obligation to terminate the Retained Employees. Following the Exchange Date, none of Boomtown, Blue Diamond or BD Transferor, nor any of their Affiliates, shall attempt to solicit from the Designated Roski Entity the Employees hired by the Designated Roski Entity or otherwise interfere in their employment at the Resort; provided that this Section 5.6 shall not be construed to restrain Boomtown, Blue Diamond, BD Transferor or their Affiliates from hiring former employees of the Designated Roski Entity. (b) Boomtown, Blue Diamond, Hollywood Park and BD Transferor shall maintain the confidentiality of any nonpublic information pertaining to the Resort, including Resort-specific customer lists and other information relating to patrons of the Resort; provided, however, that Boomtown, Blue Diamond, Hollywood Park and BD Transferor shall not be obligated to maintain the confidentiality of any information which is already in the public domain through no act of Boomtown, Blue Diamond, Hollywood Park or BD Transferor or which is required to be disclosed by court order or applicable law. (c) Boomtown, Blue Diamond, and BD Transferor shall not extend any Assumed Contract by a period of greater than one (1) year, or otherwise amend any Assumed Contract, without obtaining the consent of Roski, which consent shall not be unreasonably withheld. (d) Boomtown, Blue Diamond, and BD Transferor agree to allow Roski reasonable access to all books and records necessary to verify the amount of Specified Assets and Specified Liabilities as of the Exchange Date, to participate in taking a joint inventory with Roski of cash in the Resort, FF&E and Perishable Inventory on the Exchange Date and to assist Roski in making a general inspection of the Resort on the Exchange Date. (e) If applicable, BD Transferor shall be designated by Boomtown and Hollywood Park to facilitate, in Hollywood Park's and Boomtown's judgment, the consummation of the Blue Diamond Swap. Once designated, if not a party to this Agreement, Boomtown and Hollywood Park shall cause BD Transferor to become a party to this Agreement. (f) Boomtown, Blue Diamond and BD Transferor acknowledge the need for Roski to obtain the information necessary to effect a smooth transition of the operations of the Resort and agree to permit designees of the Roski Entities access at reasonable times during customary business hours onto the premises of the Resort; provided that no activities by such designees shall materially interfere with the operations of the Resort. (g) Blue Diamond agrees to change its name to a name not including the words "Blue Diamond" prior to the Exchange Date so as to permit the use of such a name by Roski. -14- (h) Boomtown and Hollywood Park shall take appropriate steps to comply with the Boomtown Indenture so as to effect the transactions contemplated hereby, by, at Boomtown and Hollywood Park's sole election, any of the following means: (i) soliciting, commencing no later than 45 days prior to the scheduled termination date of the Merger Agreement, as the same may be extended from time to time, the consent of the holders of the notes issued pursuant to the Boomtown Indenture to the Blue Diamond Swap or (ii) such other means, utilizing such other transactional structure, as Boomtown and Hollywood Park may devise, in compliance with the Boomtown Indenture (including without limitation, effecting, prior to or contemporaneously with the Exchange Date, an asset disposition from Boomtown and Blue Diamond to Hollywood Park or an Affiliate of Hollywood Park, in compliance with the asset sale restrictions contained in the Boomtown Indenture). (i) Boomtown and Blue Diamond shall cooperate with the Roski Entities in providing such notice to the employees of Blue Diamond as may be required by the Worker Adjustment and Retraining Notification Act. 6. REPRESENTATIONS AND WARRANTIES ------------------------------ 6.1 Representations and Warranties of the Roski Entities. Each ---------------------------------------------------- Roski Entity (except Edward P. Roski, Sr. and Roski hereby represents and warrants on behalf of Edward P. Roski, Sr.) represents and warrants to BD Transferor and its Affiliates, as of the Effective Date and the Exchange Date (unless a specific date is referenced below), jointly and severally, as follows: (a) Legal Capacity. Roski is an individual with capacity to -------------- contract; he has all requisite power and authority and is entitled to carry on his business as now being conducted, and to own, lease or operate his properties in the places where his business is now conducted and where his properties are now owned, leased or operated. Each other Roski Entity (other than Edward P. Roski, Sr.) is duly organized and validly existing under the laws of its jurisdiction of organization. Such Roski Entity has all requisite power and authority to, and is entitled to, carry on its business as now conducted and to own or lease its properties as and in the places where such business is now conducted and such properties are now owned, leased or operated. Such Roski Entity is qualified to do business in all foreign jurisdictions in which it is required to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the business or assets of such Roski Entity. (b) Authorization, etc. Each Roski Entity has all requisite ------------------ power and full legal right to enter into this Agreement and the Related Agreements to which such Roski Entity is a party and to consummate the transactions contemplated hereby and thereby. This Agreement and each of the Related Agreements to which such Roski Entity is a party have been duly executed and delivered by and constitute the valid and binding obligations of such Roski Entity, enforceable in accordance with their respective terms, except insofar as the enforceability thereof may be limited by applicable bankruptcy, insolvency, receivership, -15- reorganization, moratorium or other laws providing relief to debtors, or laws or principles of equity generally. (c) Execution, Delivery and Performance. Subject to ----------------------------------- obtaining the Approvals, neither execution and delivery nor performance of this Agreement or any of the Related Agreements to which any Roski Entity is a party by such Roski Entity will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate by any other party to, require any consent not obtained prior to the Exchange Date with respect to, or result in the creation of any lien, charge or encumbrance pursuant to any provisions of any material indenture, bond, note, loan agreement, guaranty, franchise, mortgage, deed of trust, lease or other agreement by which such Roski Entity is bound or conflict with, result in a default, right to accelerate by any other party to, or result in the creation of any lien, charge or encumbrance pursuant to any law, ordinance, rule or regulation, or any order, judgment, award or decree to which such Roski Entity is a party or by which it or any part of the Roski Notes may be bound or affected. (d) Roski Notes etc. The Roski Notes will, on the Exchange --------------- Date, be the valid and binding obligations of the Designated Roski Entity, enforceable against the Designated Roski Entity in accordance with its terms. The Roski Guaranty, if required by Boomtown and Hollywood Park, will be the valid and binding obligation of Roski, enforceable against Roski in accordance with its terms. No part of the Roski Notes on the Exchange Date will be subject to any mortgage, deed of trust, pledge, lien, charge, security interest, encumbrance, restriction, lease, license, easement, shop rights, covenants not to sue, or adverse claim of any kind or nature, or other encumbrances of any kind, rights of use or occupancy, or any other rights or privileges, other than as set forth in the Related Agreements. In addition to the Roski Stock, 5,001 shares of Boomtown common stock held by Roski and the options to acquire Boomtown common stock held by Roski in his capacity as a Boomtown director, as of the Effective Date no Roski Entity owns any other securities of Boomtown or any of its Affiliates, or rights (contingent or otherwise) to acquire securities of Boomtown or any of its Affiliates. (e) Representations Complete. There is no fact known to ------------------------ Roski which could reasonably be expected to affect in a materially adverse manner, the enforceability of the Roski Notes or the ability of any Roski Entity to carry out the transactions contemplated by this Agreement and the Related Agreements or for the Designated Roski Entity to satisfy such Person's obligations under the Roski Notes. 6.2 Representations and Warranties of Boomtown, Blue Diamond, --------------------------------------------------------- Hollywood Park and BD Transferor. Each of Boomtown, Blue Diamond and BD - -------------------------------- Transferor (other than Hollywood Park) jointly and severally represents and warrants to the Roski Entities, and, with respect to Subsections 6.2(a)-(c), Hollywood Park severally represents and warrants to the Roski Entities as to itself, as of the Effective Date and the Exchange Date (unless a specific date is referenced below), as follows: -16- (a) Organization. Such entity is duly organized and validly ------------ existing under the laws of its jurisdiction of incorporation. Such entity has all requisite power and authority to, and is entitled to, carry on its business as now conducted and to own or lease its properties as and in the places where such business is now conducted and such properties are now owned, leased or operated. Such entity is qualified to do business in all foreign jurisdictions in which it is required to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the business or assets of such entity. (b) Authorization, etc. Such entity has all requisite ------------------ corporate power and authority to enter into this Agreement and the Related Agreements to which it is or is to become a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Related Agreements to which it is or is to become a party by such entity and the consummation by such entity of the transactions contemplated hereby and thereby have been duly authorized by all requisite action of such entity. This Agreement has been, and the Related Agreements to which such entity is or is to become a party have been or will be, duly executed and delivered by and constitute the valid and binding obligations of such entity, enforceable in accordance with their respective terms, except insofar as the enforceability thereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, moratorium or other laws providing relief for debtors or principles of equity generally. (c) Execution, Delivery and Performance. Subject to ----------------------------------- obtaining the Approvals and compliance prior to the Exchange Date with the Boomtown Indenture, neither execution and delivery nor performance of this Agreement by such entity will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate by any other party to, or result in the creation of any lien, charge or encumbrance pursuant to any provisions of such person's organizational documents or by-laws or any material franchise, mortgage, deed of trust, lease, license, agreement or understanding, or conflict with, result in a default, right to accelerate by any other party to, or result in the creation of any lien, charge or encumbrance pursuant to any law, ordinance, rule or regulation, or any order, judgment, award or decree to which such entity is a party or by which it may be bound or affected. (d) Title to BD Interest. BD Transferor will on the Exchange -------------------- Date, immediately prior to the transfer to Roski contemplated hereby, have valid and marketable title to, and unrestrained right to transfer, all of the BD Interest. No part of the BD Interest will, prior to such transfer on the Exchange Date, be subject to any mortgage, deed of trust, pledge, lien, charge, security interest, encumbrance, restriction, lease, license, easement, shop rights, covenants not to sue, or adverse claim of any kind or nature, or other encumbrances of any kind, rights of use or occupancy, or any other rights or privileges other than Permitted Liens. BD Transferor makes no representation or warranty as to any interest in the Resort owned by any Roski Entity prior to the Exchange Date or the effect of any encumbrance created by any Roski Entity on the Resort. -17- (e) Liabilities. Other than the Specified Liabilities and ----------- the liabilities of Blue Diamond and Boomtown arising under the Boomtown Indenture and the Blue Diamond Lease and certain related documents, the Assumed Contracts constitute all of the indebtedness and lease obligations of Boomtown, Blue Diamond, Hollywood Park and BD Transferor incurred in connection with the Resort. 7. CONDITIONS PRECEDENT. -------------------- 7.1 Conditions to Execution and Delivery of this Agreement by --------------------------------------------------------- Boomtown. This Agreement shall not take effect until Boomtown, Blue Diamond - -------- and Hollywood Park shall have received an original or facsimile counterpart of this Agreement, duly executed and delivered by the appropriate Roski Entities. 7.2 Conditions to Execution and Delivery of this Agreement by --------------------------------------------------------- Roski. This Agreement shall not take effect until each of the Roski Entities - ----- (excluding Edward P. Roski, Sr.) shall have received an original or facsimile counterpart of this Agreement, duly executed and delivered by Boomtown, Blue Diamond and Hollywood Park. 7.3 Conditions to Exchange by BD Transferor. The obligation of BD --------------------------------------- Transferor to transfer to Roski the BD Interest in exchange for the Roski Notes is subject to the satisfaction (or waiver by BD Transferor) of the conditions set forth below: (a) The representations and warranties made by the Roski Entities in this Agreement and the Related Agreements shall be true and correct in all material respects on and as of the Exchange Date with the same effect as if made on and as of the Exchange Date, except as otherwise contemplated by this Agreement and the Related Agreements. Each Roski Entity shall have performed and complied with all agreements, covenants and conditions on the part of such Roski Entity required to be performed or complied with on or prior to the Exchange Date in all material respects. (b) The execution, delivery and performance of this Agreement and the Related Agreements and the consummation of the transactions contemplated by this Agreement and the Related Agreements shall not violate any law, rule or regulation applicable to BD Transferor, including without limitation, Gaming Laws, federal and state securities laws or any order, decree or judgment of any court or governmental body having competent jurisdiction, and no order shall have been issued by a court of competent jurisdiction restraining, prohibiting or rendering unlawful the execution, delivery and performance of this Agreement or the Related Agreements or the consummation of the transactions contemplated by this Agreement and the Related Agreements. No default or breach by any Roski Entity shall have occurred and be continuing in respect of any document, instrument or agreement comprising a part of the BD Interest, except as would not be material after giving effect to the transactions contemplated hereby as of the Exchange Date. (c) All Approvals necessary to effect the transactions hereunder and under the Related Agreements shall have been obtained and shall be in full force and effect. -18- No Gaming Authority shall have indicated to the parties hereto that in, the opinion of such Gaming Authority, any Approvals required for the consummation of the transactions contemplated hereby are likely to be revoked or rejected. No registration with any governmental authority or agency (except for filing and recording of UCC statements and real estate documents) which has not been effected shall be necessary to effect the transactions contemplated hereby. (d) Roski shall have duly delivered each item listed in Section 5.4. (e) All of the conditions precedent to the Merger shall have been satisfied or waived and the Merger shall have been consummated. (f) The consummation of the transactions contemplated by this Agreement and the Stock Purchase Agreement shall not, as a result of any changes in tax law occurring after the Effective Date (including without limitation statutory, regulatory, administrative or judicial changes) create a material risk that the contemplated treatment of the Merger as a tax-free reorganization would be impaired or adversely affected in the view of either Boomtown or Hollywood Park, based upon advise of its respective tax counsel. (g) Subject to a restructuring in accordance with Section 3.1, the transactions contemplated by the Roski Stock Purchase Agreement, including the sale and transfer of the Roski Stock to Hollywood Park, shall have been consummated. 7.4 Conditions to Exchange by Roski. The obligation of Roski to ------------------------------- transfer to BD Transferor the Roski Notes in exchange for the BD Interest hereunder shall be subject to the satisfaction (or waiver by Roski) of the conditions set forth below: (a) The representations and warranties made by Boomtown, Blue Diamond, Hollywood Park and BD Transferor in this Agreement and the Related Agreements shall be true and correct in all material respects on and as of the Exchange Date with the same effect as if made on and as of the Exchange Date, except as otherwise contemplated by this Agreement and the Related Agreements. Each of Boomtown, Blue Diamond, Hollywood Park and BD Transferor, as applicable, shall have performed and complied with all agreements, covenants and conditions on the part of such entity required to be performed or complied with on or prior to the Exchange Date in all material respects. (b) The execution, delivery and performance of this Agreement and the Related Agreements and the consummation of the transactions contemplated by this Agreement and the Related Agreements shall not violate any law, rule or regulation applicable to the Roski Entities, including, without limitation, Gaming Laws, federal and state securities laws, or any order, decree or judgment of any court or governmental body having competent jurisdiction, and no order shall have been issued by a court of competent jurisdiction restraining, prohibiting or rendering unlawful the execution, delivery and performance of this Agreement or the Related Agreements or the consummation of the transactions contemplated by this Agreement and the Related Agreements. No default or breach on the part of -19- Boomtown, Blue Diamond, Hollywood Park or BD Transferor shall have occurred and be continuing in respect of any document, instrument or agreement comprising a part of the BD Interest, except as would not be material after giving effect to the transactions contemplated hereby as of the Exchange Date. (c) All Approvals necessary to effect the transactions contemplated hereby and by the Related Agreements and for the Designated Roski Entity (or its designee) to operate the Resort shall have been obtained. No Gaming Authority shall have indicated to the parties hereto that the opinion of such Gaming Authority, any Approvals required for the consummation of the transactions contemplated hereby are likely to be revoked or rejected. No registration or filing with any governmental agency or authority (other than UCC filings and recordings in the real estate records) which has not been effected shall be necessary to effect the transaction contemplated hereby. (d) BD Transferor shall have duly delivered each item listed in Section 5.3 and any other documents of transfer Roski may reasonably request to effect the transfer of the BD Interest. 8. INDEMNIFICATION. --------------- 8.1 Indemnification by the Roski Entities. The Roski Entities ------------------------------------- party hereto jointly and severally agree to indemnify and hold harmless Boomtown, Blue Diamond and BD Transferor and their respective Affiliates, officers, directors, employees, agents and attorneys against all claims, losses, liabilities, damages, deficiencies, costs and expenses, including reasonable attorneys' fees and expenses of investigation incurred by any of them (a) as a result of any inaccuracy of a representation or breach of any warranty by any Roski Entity contained herein, in any Related Agreement delivered pursuant hereto or in the Roski Stock Purchase Agreement by any Roski Entity, or any failure by any Roski Entity to perform or comply with any covenant of such Roski Entity contained herein, in any Related Agreement or in the Roski Stock Purchase Agreement or any other document delivered by any Roski Entity pursuant hereto or thereto, (b) related to any costs, expenses, claims, liabilities or obligations incurred in connection with the Resort arising or accruing prior to the "Original Term" of the Blue Diamond Lease (as defined therein) or arising or accruing on or after the Exchange Date (including, but not limited to, any costs, expenses, claims, liabilities or obligations arising in connection with the Assumed Contracts or Hazardous Substances) or in connection with the Specified Liabilities as of the Exchange Date, other than the consequences of any act or omission by Boomtown, Blue Diamond or any of their respective Affiliates, officers, directors, agents, employees or attorneys, (c) related to any guaranties made by Boomtown, Blue Diamond or any of their Affiliates of any obligations of IVAC or any of its Affiliates under construction or development financing relating to the Resort or any bond or similar obligations with Clark County, Nevada, or (d) as a result of acts or omissions of the Roski Entities, including but not limited to acts or omissions related to the construction of the Resort. -20- 8.2 Indemnification by Boomtown, Blue Diamond and BD Transferor. ----------------------------------------------------------- Boomtown, Blue Diamond and BD Transferor jointly and severally agree to indemnify and hold harmless the Roski Entities and their respective Affiliates, officers, directors, employees, agents and attorneys against all claims, losses, liabilities, damages, deficiencies, costs and expenses, including reasonable attorneys' fees and expenses of investigation incurred by any of them (a) as a result of any inaccuracy of a representation or breach of any warranty by Boomtown, Blue Diamond or BD Transferor contained herein or in any Related Agreement delivered pursuant hereto by Boomtown, Blue Diamond or BD Transferor, or any failure by Boomtown, Blue Diamond or BD Transferor to perform or comply with any covenant of Boomtown, Blue Diamond or BD Transferor contained herein or in any Related Agreement, or any such other document delivered by Boomtown, Blue Diamond or BD Transferor pursuant hereto or thereto and (b) related to any costs, expenses, claims, liabilities or obligations of the Resort both accruing during the "Original Term" of the Blue Diamond Lease (as defined therein) and arising or accruing prior to the Exchange Date (including, but not limited to, any costs, expenses, claims, liabilities, or obligations arising in connection with the Assumed Contracts or, except as set forth below, Hazardous Substances) other than (i) the Specified Liabilities as of the Exchange Date, (ii) obligations accruing under the Assumed Contracts on or after the Exchange Date and (iii) the consequences of any act or omission by any of the Roski Entities or any of their respective Affiliates, officers, directors, employees, agents or attorneys. Notwithstanding the foregoing, (i) in no event shall the BD Transferor (other than Blue Diamond and Boomtown) have any liability or responsibility for any "Hazardous Substances" (as defined in the Blue Diamond Lease) or any other environmental matters with respect to the Resort, (ii) in no event shall the liability of Boomtown for any such Hazardous Substances or any other environmental matters with respect to the Resort exceed the remaining principal amount of the Note the form of which is attached hereto as Exhibit B-1 as of the date a claim for indemnity is made hereunder, and (iii) the extent of the liability of Boomtown and Blue Diamond for all Hazardous Substances or other environmental matters shall be limited to applicable law or to the extent of liability under Blue Diamond's paragraph 6.2(c) of the Blue Diamond Lease. In addition, from and after the Exchange Date, Boomtown shall continue at all times to indemnify Roski with respect to his actions as a director of Boomtown to the same extent as it is obligated to provide such indemnification immediately prior to the Exchange Date. In no event shall the provisions of this section 8.2 subject Hollywood Park to any indemnity obligation or other liability, contingent or otherwise, regardless of whether Hollywood Park is designated as BD Transferor. 8.3 Procedure. Upon obtaining knowledge of the institution of any --------- action, proceeding, or other event which could give rise to a claim of indemnity pursuant to this Section 8, the party seeking indemnification (the "indemnified party") shall promptly give written notice thereof to the other party (the "indemnifying party"); provided, however, that the failure to give such notice -------- ------- shall not relieve the indemnifying party of its obligations under this Section 8 unless it is materially prejudiced by such failure. Each party will cooperate with the other in determining the validity of any such claim or assertion. If such claim or demand relates to a claim or demand asserted by a third party, the indemnifying party shall have the right at its expense to employ counsel satisfactory to the indemnified party to defend such claim or demand and the indemnified party shall have the right, but not the obligation, to -21- participate in the defense of any such claim or demand at its expense. Each party agrees not to settle or compromise any such third party suit, claim or proceeding without the prior written consent of the other, which consent shall not be unreasonably withheld. The indemnified party shall make available to the indemnifying party all records and other materials reasonably required by it in contesting a claim or demand asserted by a third party against the indemnified party and shall cooperate in the defense thereof. 9. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES. -------------------------------------------------- 9.1 Approvals. The parties agree to use their best efforts and to --------- cooperate with each other to obtain the Approvals necessary to effect the transactions hereunder. 9.2 Consents, Authorizations and Waivers. The parties agree to use ------------------------------------ their best efforts and to cooperate with each other to obtain, prior to the Exchange Date, all consents, authorizations or waivers necessary to assign the Assumed Contracts to the Designated Roski Entity. If the parties are unable to obtain any consents, authorizations or waivers necessary to assign any of the Assumed Contracts, the Designated Roski Entity shall indemnify the BD Transferor against any claims or losses resulting from the failure to obtain such consents, authorizations or waivers. The parties agree that any failure to so obtain such consents, authorizations or waivers shall not prevent the parties from, or relieve the parties from the obligation of, consummating the transactions contemplated hereunder. 9.3 Transfer Taxes. The parties acknowledge and agree that all -------------- transfer, stamp, recording and similar taxes assessed or otherwise payable by reason of the conveyances contemplated hereby, or in connection with the Blue Diamond Swap, shall be for the account of the Roski Entities. The parties agree to cooperate with each other to the extent legally permitted to minimize any such taxes and charges. 9.4 Additional Deliveries; Further Assurances. After the Effective ----------------------------------------- Date, each party to this Agreement shall, at the request of the other, furnish, execute, and deliver such documents, instruments, certificates, notices or other further assurances as the requesting party shall reasonably request as necessary or desirable to effect complete consummation of this Agreement, the Related Agreements and the transactions contemplated hereby and thereby. After the Exchange Date, Roski and its Affiliates shall, at the request of BD Transferor, (a) execute and deliver and file or record, such further instruments of sale, conveyance, transfer and assignment, and (b) take such other actions as BD Transferor may reasonably request in order to effectuate the purposes hereof. After the Exchange Date, BD Transferor and its Affiliates shall, at the request of Roski, (a) take such further actions as may be reasonably necessary to vest in the applicable Roski Entity title to the BD Interest, (b) execute and deliver and file or record, such further instruments of sale, conveyance, transfer and assignment, and (c) take such other actions, as Roski may reasonably request in order effectively to sell, convey, transfer and assign the BD Interest to Roski and otherwise to effectuate the purposes hereof. -22- 9.5 Maintenance of Resort Business. During the period from the ------------------------------ Effective Date until the Exchange Date, Boomtown, Blue Diamond and BD Transferor (but not Hollywood Park, regardless of whether Hollywood Park is designated as BD Transferor) agree to operate the Resort in all material respects in the ordinary course of business at not less than the same standards of operation, maintenance, services and advertising as are in effect as of the Effective Date and agree to remain in compliance in all material respects with the Blue Diamond Lease at all times. Without limiting the foregoing, from the Effective Date until the Exchange Date Boomtown, Blue Diamond and BD Transferor agree not to transfer from the Resort any material assets thereof. 9.6 Director's Insurance. Boomtown shall continue to provide -------------------- insurance covering Roski with respect to his actions as a director of Boomtown, to the extent that such insurance is provided for directors or former directors of Boomtown, as set forth in the Merger Agreement. 10. TERMINATION. ----------- 10.1 Termination. If (a) the Exchange Date has not occurred prior ----------- to or on June 30, 1997, or, if the Merger Agreement is extended, such later date as may then be the scheduled termination date of the Merger Agreement, or such later date as may have been agreed to by the parties in writing, or (b) the Merger Agreement has terminated in accordance with its terms, then this Agreement and the Related Agreements shall, on such date, automatically and without further action by either party, terminate and have no further force and effect. In addition, if any representation or warranty made by any party herein or in any Related Agreement shall prove to have been false, inaccurate or misleading in any material respect when made, then the party to whom such representation or warranty is made may terminate this Agreement and the Related Agreements by notice to the breaching party any time prior to the Exchange Date. In the event that this Agreement shall terminate by reason of the material falsity, inaccuracy or misleading character of any representation or warranty, the party to whom such representation or warranty is made shall retain, both before and after such termination, all rights and remedies available under applicable law. 10.2 Other Merger. Notwithstanding any other provision of this ------------ Agreement, if Boomtown enters into a merger or similar transaction with any person or entity other than Hollywood Park, the failure of the Merger to be consummated shall not result in the termination of this Agreement or any of the Related Agreements except as to Hollywood Park. Boomtown shall cause any such person or entity with which it plans to enter into a merger or similar transaction to become a party to this Agreement and the Related Agreements and to assume the obligations of Hollywood Park hereunder and thereunder. Nothing in this Agreement shall alter the rights or obligations of Hollywood Park and Boomtown under the Merger Agreement. -23- 11. MISCELLANEOUS. ------------- 11.1 Changes, Waivers, etc. Neither this Agreement nor any --------------------- provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing which references this Agreement and is signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. 11.2 Payment of Fees and Expenses. Each of the parties hereto shall ---------------------------- pay its own respective fees and expenses incurred in connection herewith. In the event of any litigation or other proceeding resulting from a dispute hereunder, the legal fees, costs and expenses of the prevailing party shall be paid by the losing party. 11.3 Notices. All notices, requests, consents and other ------- communications required or permitted hereunder shall be in writing and shall be delivered, or mailed first-class postage prepaid, registered or certified mail, or delivered via overnight courier; If to Hollywood Park: Hollywood Park, Inc. 1050 South Prairie Avenue Inglewood, California 90301 Attention: Michael Finnigan with copy to: Irell & Manella LLP 1800 Avenue of the Stars Suite 900 Los Angeles, CA 90067 Attention: Al Segel, Esq. If to Boomtown or Boomtown, Inc. Blue Diamond: Interstate 80/Garson Road Verdi, Nevada 89439 Attention: Timothy J. Parrott with copy to: Wilson Sonsini Goodrich & Rosati 650 Page Mill Road Palo Alto, California 94306 Attention: John V. Roos, Esq. If to any Roski Entity: Edward P. Roski, Jr. Majestic Realty Co. 13191 Crossroads Parkway North 6th Floor City of Industry, California 91746 -24- with a copy to: Latham & Watkins 633 West Fifth Street, Suite 4000 Los Angeles, California 90071 Attention: David B. Rogers, Esq. Such notices and other communications shall for all purposes of this Agreement be treated as being effective or having been given on the date of delivery, if delivered personally, one (1) day following the date of delivery, if delivered by overnight courier or, if sent by mail, five (5) days thereafter. 11.4 Entire Agreement. This Agreement and the Related Agreements, ---------------- including the schedules and exhibits which are incorporated into and made an integral part of this Agreement or any of the Related Agreements by reference, set forth the entire understanding of the parties and supersede all prior agreements of the parties with respect to the subject matter hereof and thereof. 11.5 Survival of Representations and Warranties, etc. All ----------------------------------------------- representations and warranties contained herein shall survive the execution and delivery of this Agreement. 11.6 Headings; References to Agreement. The headings of the --------------------------------- sections of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement. References herein to "this Agreement" shall include all exhibits and schedules hereto. 11.7 Choice of Law; Interpretation. THIS AGREEMENT SHALL FOR ALL ----------------------------- PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEVADA (WITHOUT REFERENCE TO CONFLICTS OF LAW). 11.8 Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original, but which shall together constitute but one and the same instrument. To make proof of this Agreement, it shall only be necessary to produce one such counterpart. 11.9 Severability. To the extent any provision of this Agreement ------------ shall be invalid or unenforceable, it shall be considered deleted from this Agreement and the remaining provisions of this Agreement shall be unaffected and shall continue in full force and effect. 11.10 Successors and Assigns. This Agreement shall be binding upon ---------------------- and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that neither party may assign its rights or obligations hereunder other than to an Affiliate without the prior written approval of the other party. -25- 11.11 No third Party Beneficiaries. This Agreement is not intended to ---------------------------- confer upon any person or entity other than each party hereto (and their successors and assigns permitted hereby) any rights or remedies hereunder. 11.12 Waiver of Jury Trial. EACH PARTY HERETO KNOWINGLY, ABSOLUTELY -------------------- AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS IT MAY OTHERWISE HAVE HAD TO A TRIAL BY JURY WITH RESPECT TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATED DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY. -26- IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date and year first above written. BOOMTOWN, INC. By: ------------------------------- ------------------------ EDWARD P. ROSKI, JR. Title: ---------------------------- BLUE DIAMOND HOTEL & CASINO, INC. IVAC By: EDWARD P. ROSKI, JR. its General Partner By: ------------------------------- ------------------------ Title: EDWARD P. ROSKI, JR. ---------------------------- HOLLYWOOD PARK, INC. MAJESTIC REALTY CO. By: By: ------------------------------- -------------------- Title: Title: ---------------------------- ----------------- -27- EX-10.19 5 STOCK PURCHASE AGREEMENT DATED AUGUST XX, 1996 EXHIBIT 10.19 TO HOLLYWOOD PARK, INC.'S JUNE 30, 1996, FORM 10-Q STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (this "Agreement") is made as of the _____ day of August, 1996 by and between Hollywood Park, Inc., a Delaware corporation ("Hollywood Park"), and Edward P. Roski, Jr., an individual residing in the State of California ("Roski"). WHEREAS, Hollywood Park intends to enter into a strategic combination (the "Merger") with Boomtown, Inc., a Delaware corporation ("Boomtown"), pursuant to an Agreement and Plan of Merger dated as of April 23, 1996 by and among Hollywood Park, Boomtown and HP Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of Hollywood Park (as amended and in effect from time to time, the "Merger Agreement"); and WHEREAS, subject to consummation of the Merger pursuant to the Merger Agreement and certain other conditions set forth herein, Hollywood Park intends to purchase from Roski, and Roski intends to sell to Hollywood Park, the Roski Stock (as defined herein). NOW THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Hollywood Park and Roski hereby agree as follows: 1. DEFINITIONS AND RULES OF INTERPRETATION --------------------------------------- 1 Definitions. The following terms shall have the ----------- respective meaning set forth below, or in the Sections of this Agreement respectively referred to below: "Affiliate" of any person or entity organized as a corporation, partnership, joint venture, business trust or other non-individual person, shall mean (i) any person or entity which directly or indirectly owns fifty percent (50%) or more of the stock, partnership or other beneficial interest of such person or entity, (ii) any corporation, partnership or other entity of which fifty percent (50%) or more of the stock, partnership or other beneficial interest is owned directly or indirectly by such person or entity, and (iii) any corporation, partnership or entity of which fifty percent (50%) or more of the stock, partnership or other beneficial interest is owned directly or indirectly by any person or entity that owns fifty percent (50%) or more of the stock, partnership or other beneficial interest of such person or entity. "Approvals" shall mean all governmental approvals, consents, licenses, findings of suitability, and permits, including without limitation, any approvals of Gaming Authorities, as may be required to effect the transactions contemplated hereby. 36 "Boomtown" shall have the meaning ascribed thereto in the recitals hereto. "Effective Date" shall mean the date of this Agreement. "Exchange Date" shall mean the date on which the conditions precedent specified in Sections 5.3 and 5.4 hereof have been satisfied or waived. "GAAP" shall mean generally accepted accounting principles as in effect on the relevant date of determination consistently applied. "Gaming Authority" shall mean the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board and any other state, county or other governmental authority having responsibility for, jurisdiction over, or regulatory authority, oversight or supervisory responsibilities in respect of, any gaming related business operated or contemplated to be operated at or in connection with the Resort. "Gaming Laws" shall mean (i) all applicable provisions of the Nevada Gaming Control Act and the statutes rules, and regulations promulgated thereunder and (ii) all interpretations, decisions, judgments, orders and decrees of any Gaming Authority. "Hollywood Park" shall have the meaning ascribed to such term in the preamble hereto. "IVAC" shall mean IVAC, a California general partnership. "Merger" shall have the meaning ascribed to such term in the recitals hereto. "Merger Agreement" shall have the meaning ascribed to such term in the recitals hereto. "Resort" shall mean the facility located at 3333 Blue Diamond Road, Las Vegas, Nevada consisting of a casino, hotel, restaurant, recreational vehicle park and related facilities, and all assets located at, used principally in connection with, or arising principally from such facilities. "Roski" shall have the meaning ascribed to such term in the preamble hereto. "Roski Stock" shall mean 714,386 shares of the common stock of Boomtown held, as of the Effective Date, by Roski, and all shares of the common stock of Hollywood Park into which such Boomtown common stock may hereafter be converted in the Merger, or which Roski may hereafter have a right to receive in exchange for such Boomtown common stock. 37 "Roski Stock Value" shall mean the average per share closing price of the Boomtown common stock on the Nasdaq National Market over the five trading days preceding the date of signing this Agreement multiplied by the number of shares of Roski Stock. "Swap Agreement" shall mean that certain Blue Diamond Swap Agreement, dated as of even date herewith, by and among Boomtown, Hollywood Park, Roski, IVAC and certain other Affiliates of such parties. 2 Rules of Interpretation ----------------------- (a) A reference to any document or agreement shall, unless otherwise provided, include such document or agreement as amended, modified or supplemented from time to time in accordance with its terms and, if applicable, as permitted by this Agreement. (b) The singular includes the plural and the plural includes the singular. (c) A reference to any law includes any applicable amendment or modification to such law, or any applicable successor law. (d) A reference to any person or entity includes its permitted successors and permitted assignees. (e) Accounting terms not otherwise defined herein have the respective meanings assigned to them by GAAP applied on a consistent basis by the accounting entity to which they refer. (f) The words "include," "includes" and "including" are not limiting. (g) All terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect shall have the respective meanings assigned to them therein. (h) Reference to a particular "Section" refers to that section of this Agreement unless otherwise indicated. (i) The words "herein," "hereof," "hereunder" and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement. 2. TRANSFER OF ROSKI STOCK ----------------------- Subject to the terms and conditions of this Agreement, (i) Roski agrees, on the Exchange Date, to transfer, convey, assign and deliver to Hollywood Park all of Roski's right, title and interest in and to the Roski Stock and (ii) Hollywood Park agrees, on the Exchange Date, to acquire and 38 accept from Roski all of Roski's right, title and interest in and to the Roski Stock, in exchange for a promissory note to be issued by Hollywood Park in the principal amount of the Roski Stock Value in the form attached as Exhibit A hereto (the "Hollywood Park Note"). 3. EXCHANGE DATE DELIVERIES ------------------------ On the Exchange Date, subject to the terms and conditions hereof, (a) Roski shall transfer, convey, assign, and deliver to Hollywood Park, and Hollywood Park shall acquire and accept from Roski, the Roski Stock and (b) Hollywood Park shall deliver to Roski the Hollywood Park Note. Each party shall deliver to the other such endorsements, assignments, stock powers, releases and other instruments as the other party shall reasonably request or as necessary to vest in the other party valid and marketable title, free and clear of all liens or encumbrances to the Hollywood Park Note, in the case of Roski, and to the Roski Stock, in the case of Hollywood Park. 4. REPRESENTATIONS AND WARRANTIES ------------------------------ 1 Representations and Warranties of Roski. Roski represents and --------------------------------------- warrants to Hollywood Park, as of the Effective Date and the Exchange Date (unless a specific date is referenced below), as follows: (a) Legal Capacity. Roski is an individual with capacity to -------------- contract; he has all requisite power and authority and is entitled to carry on his business as now being conducted, and to own, lease or operate his properties in the places where his business is now conducted and where his properties are now owned, leased or operated. (b) Authorization, etc. Roski has all requisite power and full ------------------ legal right to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by and constitutes the valid and binding obligation of Roski, enforceable in accordance with its terms, except insofar as the enforceability hereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, moratorium or other laws providing relief to debtors, or laws or principles of equity generally. (c) Execution, Delivery and Performance. Neither execution and ----------------------------------- delivery nor performance of this Agreement by Roski will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate by any other party to, require any consent not obtained prior to the Exchange Date with respect to, or result in the creation of any lien, charge or encumbrance pursuant to any provisions of any material indenture, bond, note, loan agreement, guaranty, franchise, mortgage, deed of trust, lease or other agreement by which Roski is bound or conflict with, result in a default, right to accelerate by any other party to, or result in the creation of any lien, charge or encumbrance pursuant to any law, ordinance, rule or regulation, or any order, judgment, award or decree to which Roski is a party or by which Roski or any portion of the Roski Stock may be bound or affected. 39 (d) Title to Roski Stock, etc. Roski has, and will on the ------------------------- Exchange Date, immediately prior to the transfer to Hollywood Park contemplated hereby, have, valid and marketable title to, and unrestrained right to transfer, all of the Roski Stock. No part of the Roski Stock on the Exchange Date will be subject to any mortgage, deed of trust, pledge, lien, charge, security interest, encumbrance, restriction, lease, license, easement, shop rights, covenants not to sue, or adverse claim of any kind or nature, or other encumbrances of any kind, rights of use or occupancy, or any other rights or privileges, other than those imposed by Gaming Laws on the Roski Stock. In addition to the Roski Stock and 5,001 shares of Boomtown common stock held by Roski as of the Effective Date and the options to acquire shares of Boomtown common stock in his capacity as a Boomtown director, neither Roski nor any of his Affiliates owns any other securities of Boomtown or any of its Affiliates, or rights (contingent or otherwise) to acquire securities of Boomtown or any of its Affiliates. (e) Representations Complete. There is no fact known to Roski ------------------------ which could reasonably be expected to affect, in a materially adverse manner, the transferability of the Roski Stock or otherwise to carry out the transactions contemplated by this Agreement. 2 Representations and Warranties of Hollywood Park. Hollywood Park ------------------------------------------------ represents and warrants to Roski, as of the Effective Date and the Exchange Date (unless a specific date is referenced below), as follows: (a) Organization. Hollywood Park is duly organized and validly ------------ existing under the laws of its jurisdiction of incorporation. Hollywood Park has all requisite power and authority to, and is entitled to, carry on its business as now conducted and to own or lease its properties as and in the places where such business is now conducted and such properties are now owned, leased or operated. Hollywood Park is qualified to do business in all foreign jurisdictions in which it is required to be so qualified, except where the failure to be so qualified would not have a material adverse effect on the business or assets of Hollywood Park. (b) Authorization, etc. Hollywood Park has all requisite ------------------ corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Hollywood Park and the consummation by Hollywood Park of the transactions contemplated hereby have been duly authorized by all requisite action of Hollywood Park. This Agreement has been duly executed and delivered by and constitutes the valid and binding obligation of Hollywood Park, enforceable in accordance with its terms, except insofar as the enforceability hereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, moratorium or other laws providing relief for debtors or principles of equity generally. (c) Execution, Delivery and Performance. Neither execution, ----------------------------------- delivery nor performance of this Agreement by Hollywood Park will, with or without the giving of notice or the passage of time, or both, conflict with, result in a default, right to accelerate by any other party to, or result in the creation of any lien, charge or encumbrance pursuant to any provisions of such person's organizational documents or by-laws or any material franchise, mortgage, deed of trust, 40 lease, license, agreement or understanding, or conflict with, result in a default, right to accelerate by any other party to, or result in the creation of any lien, charge or encumbrance pursuant to any law, ordinance, rule or regulation, or any order, judgment, award or decree to which Hollywood Park is a party or by which it may be bound or affected. (d) Validity of Note. The Hollywood Park Note will, on the ---------------- Exchange Date, be the valid and binding obligation of Hollywood Park, enforceable against Hollywood Park in accordance with its terms. 5. CONDITIONS PRECEDENT -------------------- 1 Conditions to Execution and Delivery of this Agreement by --------------------------------------------------------- Hollywood Park. This Agreement shall not take effect until Hollywood Park -------------- shall have received a facsimile or an original counterpart of this Agreement, duly executed and delivered by Roski. 2 Conditions to Execution and Delivery of this Agreement by --------------------------------------------------------- Roski. ----- This Agreement shall not take effect until Roski shall have received a facsimile or an original counterpart of this Agreement duly executed and delivered by Hollywood Park. 3 Conditions to Exchange by Hollywood Park. The obligation of ---------------------------------------- Hollywood Park to transfer to Roski the Hollywood Park Note in exchange for the Roski Stock is subject to the satisfaction (or waiver by Hollywood Park) of the conditions set forth below: (a) The representations and warranties made by Roski in this Agreement shall be true and correct in all material respects on and as of the Exchange Date with the same effect as if made on and as of the Exchange Date, except as otherwise contemplated by this Agreement. Roski shall have performed and complied with all agreements, covenants and conditions on his part required to be performed or complied with on or prior to the Exchange Date in all material respects. (b) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement shall not violate any law, rule or regulation applicable to Hollywood Park, including without limitation, Gaming Laws, federal and state securities laws, or any order, decree or judgment of any court or governmental body having competent jurisdiction, and no order shall have been issued by a court of competent jurisdiction restraining, prohibiting or rendering unlawful the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement. (c) All Approvals necessary to effect the transactions hereunder and to vest valid and marketable title to the Roski Stock in Hollywood Park shall have been obtained and shall be in full force and effect. No Gaming Authority shall have indicated to any party hereto that in, the opinion of such Gaming Authority, any Approvals required for the consummation of the transactions contemplated hereby are likely to be revoked or rejected. No registration with any governmental authority or agency which has not been effected shall be necessary to effect the transactions contemplated hereby. 41 (d) Roski shall have duly delivered the Roski Stock as set forth in Section 3 and any other documents of transfer Hollywood Park may reasonably request to effect the transfer of the Roski Stock. (e) All of the conditions precedent to the Merger shall have been satisfied or waived and the Merger shall have been consummated. (f) Each of the transactions contemplated by the Swap Agreement shall have been consummated under the terms of the Swap Agreement. (g) The consummation of the transactions contemplated by this Agreement and the Swap Agreement shall not, as a result of any changes in tax law occurring after the signing of this Agreement (including without limitation statutory, regulatory, administrative, or judicial changes), create a material risk that the contemplated treatment of the Merger as a tax-free reorganization would be impaired or adversely affected in the view of either Hollywood Park or Boomtown, based upon advice of its respective tax counsel. 4 Conditions to Exchange by Roski. The obligation of Roski to ------------------------------- transfer to Hollywood Park the Roski Stock in exchange for the Hollywood Park Note hereunder shall be subject to the satisfaction (or waiver by Roski) of the conditions set forth below: (a) The representations and warranties made by Hollywood Park in this Agreement shall be true and correct in all material respects on and as of the Exchange Date with the same effect as if made on and as of the Exchange Date, except as otherwise contemplated by this Agreement. Hollywood Park shall have performed and complied with all agreements, covenants and conditions on the part of such entity required to be performed or complied with on or prior to the Exchange Date in all material respects. (b) The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement shall not violate any law, rule or regulation applicable to Roski, including, without limitation, Gaming Laws, federal and state securities laws, or any order, decree or judgment of any court or governmental body having competent jurisdiction, and no order shall have been issued by a court of competent jurisdiction restraining, prohibiting or rendering unlawful the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated by this Agreement. (c) All Approvals necessary to effect the transactions contemplated hereby shall have been obtained. No Gaming Authority shall have indicated to any party hereto that, in the opinion of such Gaming Authority, any Approvals required for the consummation of the transactions contemplated hereby are likely to be revoked or rejected. No registration with any governmental authority or agency which has not been effected shall be necessary to effect the transactions contemplated hereby. 42 (d) Hollywood Park shall have duly delivered the Hollywood Park Note as set forth in Section 3 and any other documents of transfer Roski may reasonably request to effect the issuance of the Hollywood Park Note. (e) Each of the transactions contemplated by the Swap Agreement shall have been consummated under the terms of the Swap Agreement. 6. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES. -------------------------------------------------- 1 Approvals. The Parties agree to use their best efforts and --------- to cooperate with each other to obtain the Approvals necessary to effect the transactions hereunder. 2 Transfer Taxes. The parties acknowledge and agree that -------------- all transfer, stamp, recording and similar taxes assessed or otherwise payable by reason of the conveyance contemplated hereby shall be for the account of Roski. The parties agree to cooperate with each other to the extent legally permitted to minimize any such taxes and charges. 3 Additional Deliveries; Further Assurances. After the Effective ----------------------------------------- Date, each party to this Agreement shall, at the request of the other, furnish, execute, and deliver such documents, instruments, certificates, notices or other further assurances as the requesting party shall reasonably request as necessary or desirable to effect complete consummation of this Agreement and the transactions contemplated hereby. After the Exchange Date, Roski and his Affiliates shall, at the request of Hollywood Park, (a) take such further actions as may be reasonably necessary to vest in Hollywood Park marketable title to the Roski Stock, (b) execute and deliver and file or record, such further instruments of sale, conveyance, transfer and assignment, and (c) take such other actions, as Hollywood Park may reasonably request in order effectively to sell, convey, transfer and assign the Roski Stock to Hollywood Park and otherwise to effectuate the purposes hereof. After the Exchange Date, Hollywood Park and its Affiliates shall take such further actions as Roski may reasonably request in order effectively to issue the Hollywood Park Note to Roski and otherwise to effectuate the purposes hereof. 7. TERMINATION. ----------- If (a) the Exchange Date has not occurred prior to or on June 30, 1997, or, if the Merger Agreement is extended, such later date as may then be the scheduled termination date of the Merger Agreement, or such later date as may have been agreed to by the parties in writing, or (b) the Merger Agreement has terminated in accordance with its terms, then this Agreement shall, on such date, automatically and without further action by either party, terminate and have no further force and effect. In addition, if any representation or warranty made by any party herein shall prove to have been false, inaccurate or misleading in any 43 material respect when made, then the party to whom such representation or warranty is made may terminate this Agreement by notice to the breaching party any time prior to the Exchange Date. In the event that this Agreement shall terminate by reason of the material falsity, inaccuracy or misleading character of any representation or warranty, the party to whom such representation or warranty is made shall retain, both before and after such termination, all rights and remedies available under applicable law. Furthermore, in the event that Boomtown and Hollywood Park elect to utilize an alternate structure to effect the transactions contemplated by the Blue Diamond Swap Agreement in accordance with such agreement, which structure involves Roski retaining the Roski Stock, then Hollywood Park may terminate this Agreement without any liability to Roski. If Roski is so required to retain the Roski Stock, the shares of Hollywood Park common stock he would be entitled to receive in the Merger will be covered by the same Registration Statement on Form S-4 as the other shares of Hollywood Park common stock issuable in the Merger. 8. MISCELLANEOUS. ------------- 1 Changes, Waivers, etc. Neither this Agreement nor any --------------------- provision hereof may be changed, waived, discharged or terminated orally, except by a statement in writing which references this Agreement and is signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. 2 Payment of Fees and Expenses. Each of the parties hereto shall ---------------------------- pay its own respective fees and expenses incurred in connection herewith. In the event of any litigation or other proceeding resulting from a dispute hereunder, the legal fees, costs and expenses of the prevailing party shall be paid by the losing party. 3 Notices. All notices, requests, consents and other ------- communications required or permitted hereunder shall be in writing and shall be delivered, or mailed first-class postage prepaid, registered or certified mail, or delivered via overnight courier; If to Hollywood Park: Hollywood Park, Inc. 1050 South Prairie Avenue Inglewood, CA 90301 Attention: Michael Finnigan with copy to: Irell & Manella LLP 1800 Avenue of the Stars Suite 900 Los Angeles, CA 90067 Attention: Al Segel, Esq. 44 If to Roski: Edward P. Roski, Jr. Majestic Realty Co. 13191 Crossroads Parkway North 6th Floor City of Industry, California 91746 with a copy to: Latham & Watkins 633 West Fifth Street, Suite 4000 Los Angeles, California 90071 Attention: David B. Rogers, Esq. Such notices and other communications shall for all purposes of this Agreement be treated as being effective or having been given on the date of delivery, if delivered personally, one (1) day following the date of delivery, if delivered by overnight courier or, if sent by mail, five (5) days thereafter. 4 Entire Agreement. This Agreement, including the exhibits which ---------------- are incorporated into and made an integral part of this Agreement by reference, set forth the entire understanding of the parties and supersede all prior agreements of the parties with respect to the subject matter hereof. 5 Survival of Representations and Warranties, etc. All ----------------------------------------------- representations and warranties contained herein shall survive the execution and delivery of this Agreement. 6 Headings; References to Agreement. The headings of the --------------------------------- sections of this Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement. References herein to "this Agreement" shall include all exhibits hereto. 7 Choice of Law; Interpretation. THIS AGREEMENT SHALL FOR ALL ----------------------------- PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO CONFLICTS OF LAW). 8 Counterparts. This Agreement may be executed in one or ------------ more counterparts, each of which shall be deemed an original, but which shall together constitute but one and the same instrument. To make proof of this Agreement, it shall be necessary to produce one such counterpart. 9 Severability. To the extent any provision of this Agreement ------------ shall be invalid or unenforceable, it shall be considered deleted from this Agreement and the remaining provisions of this Agreement shall be unaffected and shall continue in full force and effect. 45 10 Successors and Assigns. This Agreement shall be binding upon ---------------------- and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that neither party may assign its rights or obligations hereunder other than to an Affiliate without the prior written approval of the other party. 11 Waiver of Jury Trial. EACH PARTY HERETO KNOWINGLY, ABSOLUTELY -------------------- AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS IT MAY OTHERWISE HAVE HAD TO A TRIAL BY JURY WITH RESPECT TO OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY. 46 IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered as of the date and year first above written. /s/ Edward P. Roski, Jr.__________________ EDWARD P. ROSKI, JR. HOLLYWOOD PARK, INC. By:/s/ G.Michael Finnigan__________________ Title: President, Sports and Entertainment, CFO_________ 47 Exhibit A --------- FORM OF PROMISSORY NOTE _________$ Los Angeles, California _______________, 1996 FOR VALUE RECEIVED, Hollywood Park, Inc., a Delaware corporation (the "Maker") hereby absolutely and unconditionally promises to pay to Edward J. Roski, Jr. (the "Holder"), or order, in accordance with the payment schedule set forth below, in immediately available funds, the principal amount of ___________ ______________________ ($_________), and to pay interest on the unpaid principal amount hereof at an annual rate of interest equal to the rate announced by Bank of America from time to time as its "reference rate", adjusted on the first business day of the next succeeding calendar month after any change to such rate is announced, plus one percent (1.0%), in immediately available funds, payable annually in arrears on the anniversaries of the issuance date of this Note, provided, that interest on any amounts not paid when due hereunder shall accrue at an annual rate which is two percent (2%) above the rate otherwise payable hereunder; and provided, further, that in no event shall the interest rate of this Note exceed the maximum rate permitted by applicable law. This Note is issued pursuant to the Stock Purchase Agreement dated as of August __, 1996 (the "Purchase Agreement") by and among the Maker and the Holder and constitutes the "Hollywood Park Note" described therein. Capitalized terms defined in the Purchase Agreement, whether directly or indirectly by reference, shall have the respective meanings herein assigned to such terms in the Purchase Agreement. Principal obligations of the Maker evidenced hereby shall be paid in four (4) equal installments of $_________ each [20% of the principal amount], on each anniversary of the issuance date of this Note, and an additional, final payment on the fifth anniversary thereof in an amount equal to all obligations of the Maker then outstanding hereunder. Upon the occurrence and during the continuance of any of the following events (each, an "Event of Default"): (i) failure to pay any interest accrued hereunder within five days following the date such payment was due, or the failure to pay any principal amount owing by the Maker hereunder when due and payable, (ii) material falsity of any representations or warranties by the Maker in the Purchase Agreement, (iii) initiation of any bankruptcy, insolvency, moratorium, receivership or reorganization by or against the Maker, or (iv) acceleration of any indebtedness in excess of $1,000,000 by other creditors of the Maker, the entire unpaid principal balance of this Note, all of the unpaid interest accrued thereon and 48 all other amounts owing in respect thereof may automatically become, in the case of a default under clauses (iii) or (iv), or may be declared to be, in the case of a default under clauses (i) or (ii), immediately due and payable. Thereupon, the Holder may proceed to enforce its rights and remedies under this Note and applicable law, all of such remedies being cumulative and not exclusive. No delay or omission on the part of the Holder or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or any other right of the Holder, nor shall any delay, omission or waiver of any one occasion be deemed a bar to or waiver of the same or any other right or any other occasion. The Maker and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person or entity primarily or secondarily liable. All costs incurred in any litigation arising from this Note shall be borne by the prevailing party. All other expenses of enforcement of the Holder's rights hereunder (including reasonable legal and other professional fees) shall be for the account of the Maker. THIS NOTE SHALL FOR ALL PURPOSES BY GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REFERENCE TO CONFLICTS OF LAW). This Note shall be binding upon the Maker's successors and assigns, and shall inure to the benefit of the Holder's successors and assigns. IN WITNESS WHEREOF, the Maker has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written. "Maker" Hollywood Park, Inc. By: /s/ G. Michael Finnigan ------------------------------ G. Michael Finnigan Chief Financial Officer 49 EX-27.1 6 ARTICLE 5 - FDS
5 1,000 6-MOS DEC-31-1996 APR-01-1996 JUN-30-1996 30,830 4,053 10,741 960 0 60,384 200,168 79,125 223,801 50,507 3,662 0 28,000 1,850 154,770 223,801 7,637 74,280 10,750 62,255 16,812 253 898 (5,685) 2,444 (8,129) 0 0 0 (8,129) (.049) (.049)
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