REAL ESTATE TAX
ESCROW AND SECURITY AGREEMENT
(Sam Houston Race Park, Ltd.)<PAGE>
TABLE OF CONTENTS
TO
REAL ESTATE TAX ESCROW
AND SECURITY AGREEMENT
1. Parties In Interest1
2. Recitals1
3. Escrow Holder2
4. Deposits into Escrow2
5. Withdrawal Terms3
a. Payment of Taxes3
b. Right of Contest4
c. No Other Disbursements4
6. Interest4
7. Default Provisions4
8. Security Interest4
a. Grant of Security Interest4
b. UCC Rights5
c. Acknowledgment of Security Interest5
9. Warranties5
10. Termination of Escrow5
11. Investment of Funds in Tax Escrow Account5
a. The Partnership's Right to Request Investments6
b. Permitted Investments6
c. Risk of Loss7
12. Responsibilities of Escrow Holder7
a. Books, Records, and Statements7
b. Escrow Holder's Right to Resign7
c. Standard of Care of Escrow Holder8
d. Reliance on Instructions8
13. Fees and Expenses8
14. Liability of Parties9
15. Hold Harmless9
16. Waiver of Offset9
17. Collateral Document; Curative Rights9
18. Notices9
19. Applicable Law10
20. Headings10
22. Attorneys' Fees and Expenses11
23. Assignment11
24. Agency11<PAGE>
REAL ESTATE TAX
ESCROW AND SECURITY AGREEMENT
Sam Houston Race Park, Ltd.
Parties In Interest:
THIS REAL ESTATE TAX ESCROW AND SECURITY AGREEMENT (this
"Agreement") is entered into as of July 1, 1997 (the "Effective Date") by
and among SAM HOUSTON RACE PARK, LTD. (the "Partnership"),a Texas
limited partnership, whose managing general partner is SHRP GENERAL
PARTNER, INC. ("General Partner"), a Texas corporation, FIRST BANK
NATIONAL ASSOCIATION ("Trustee"), a national banking association,
as Trustee under the New Indenture (as hereinafter defined) and SOUTHWEST
BANK OF TEXAS, N.A. ("Escrow Holder"), a national banking association
domiciled in Texas. Capitalized terms used but not defined herein shall have
the meanings given such terms in the New Indenture.
Recitals:
The Partnership is the owner of those certain tracts of land (the
"Site") upon which is located a Class 1 horse racing facility (the "Racing
Facility") operated by the Partnership pursuant to a Class 1 racetrack
license (the "License") issued to the Partnership by the Texas Racing
Commission pursuant to the Texas Racing Act.
To finance the construction of the Racing Facility, the Partnership
and SHRP Capital Corp., a New York corporation, issued 11-3/4% Senior Secured
Notes Due 1999 (the "Original Notes") pursuant to that certain Indenture,
dated as of July 7, 1993, by and among the Partnership, SHRP Capital Corp.,
SHRP, Inc. and Chemical Bank, as Trustee (the "Indenture").
The Partnership defaulted on an interest payment with respect to
the Original Notes and the Partnership, SHRP Capital Corp. and other
entities subsequently filed for protection under Chapter 11 of the United
States Bankruptcy Court.
The Plan of Reorganization confirmed pursuant to such Chapter 11
proceedings provided for a variety of modifications with respect to the
Indenture for the Original Notes, said modifications being reflected in
an Amended and Restated Indenture (the "New Indenture") by and among the
Partnership, New SHRP Capital Corp., SHRP General Partner, Inc. and First
Bank National Association, as Trustee.
To secure the payment and performance of all of the agreements,
covenants and provisions under the New Indenture and the indebtedness
represented by the 11% Senior Secured Extendible Notes Due 2001 issued
pursuant to the New Indenture (the "Notes"), and the related documents
(which indebtedness and payment and performance obligations are collectively
referred to herein as the "Obligations"), the Partnership has duly
authorized the execution and delivery of that certain Amended and Restated
Deed of Trust, Assignment, Security Agreement and Financing Statement (the
"Original Deed of Trust") and a Deed of Trust, Assignment, Security Agreement
and Financing Statement (the "New Deed" and, together with the Original
Deed of Trust, the "Deeds of Trust"), both dated as of October 5, 1997. The
Deeds of Trust cover the Racing Facility and certain adjoining property and
all other real and personal property interests of the Partnership.
Under the provisions of the Deeds of Trust, the Partnership must
make monthly deposits into an escrow account, such deposits to be of
sufficient funds to permit the payment in full of the next maturing real
estate taxes and assessments and all municipal utility district assessments
and any other ad valorem impositions levied by any other taxing or assessing
districts or bodies (hereinafter collectively referred to as "Taxes") before
any penalty or interest for the nonpayment thereof attaches or accrues.
The parties hereto are entering into this Agreement to provide for
said deposits for Taxes, and Escrow Holder is willing to act as holder of the
deposits so made by the Partnership on the terms and conditions hereinafter
et forth.
The foregoing recitals are incorporated herein by reference.
AGREEMENT Escrow Holder: Escrow Holder has been appointed as the agent
and bailee of Trustee to hold, invest, reinvest, administer and disburse the
Tax Account Pledged Assets (as hereinafter defined). Escrow Holder hereby
accepts such appointment and agency subject to the terms of this Agreement,
and acknowledges that it shall hold the Tax Escrow Account (as hereinafter
defined) and the Tax Account Pledged Assets subject to the terms of this
Agreement.
Deposits into Escrow:
Tax Deposit Account. All sums deposited by or on behalf of the
Partnership with Escrow Holder under this Agreement will be deposited by
Escrow Holder in a separate interest-bearing escrow account with Escrow
Holder in the name of First Bank National Association Tax Escrow Account,
in trust for the benefit of the Holders (the "Tax Escrow Account"), which
escrow account is pledged to Trustee. The Tax Escrow Account number is
escrow account number 9055134.
Initial and Subsequent Deposits. As of the Effective Date, at least
$600,000 is on deposit in the Tax Escrow Account, representing 7/12ths of the
Taxes which the Partnership estimates will be due for calendar 1997 as
evidenced by a certificate from the Partnership to Escrow Holder dated as of
the Effective Date. Beginning July 1, 1997 and continuing on the first day
of each ensuing calendar month thereafter, the Partnership shall make monthly
deposits to Escrow Holder for deposit into the Tax Escrow Account (with a copy
of the Partnership's transmittal letter evidencing the amount deposited being
delivered to Trustee) equal to 1/12th of the Taxes estimated by the
Partnership to be due for the then current calendar year, which deposits
shall be adjusted in accordance with the following provisions of this
paragraph 4. The Partnership's calculation of monthly tax deposits shall not
be reduced to take into account interest projected to be earned on invested
funds, but may take into account interest earned on funds in the Tax Escrow
Account in prior years which the Partnership elects in writing to retain in
the Tax Escrow Account. The Partnership shall provide with its deposit due
on or before January 1 of each year a certificate from an authorized officer
of the Partnership stating that its monthly deposits to be made beginning
with the deposit due January 1 through and including the deposit due December
1 will be sufficient to fully discharge the Taxes for such year based on
information then known to the Partnership. The Partnership shall
concurrently provide a calculation of estimated Taxes due for such calendar
year, indicating such deposits are sufficient.
Adjustments. The Partnership shall be responsible for determining the
sufficiency of its monthly deposits to ensure sufficient funds are deposited
into the Tax Escrow Account by December 31 of each calendar year to pay the
Taxes due for that calendar year in full. Notwithstanding the foregoing, if
the Partnership receives tax statements from any taxing authority after
December 31 of any year, the Partnership shall have fifteen (15) Business
Days (as defined in the New Indenture) after receipt of such statements to
deposit with Escrow Holder any additional sum required to pay such Taxes in
full. If the Partnership at any time determines its monthly deposits are
insufficient, or if it receives written notice from the Trustee that its
deposits are insufficient, the Partnership shall with its next payment due
(i) deposit an amount equal to the difference between the deposits
previously made for such calendar year and the amount such deposits would
have been had the actual amount of such Taxes, or the Partnership's revised
estimate, been used as the basis for such deposits, and (ii) adjust its
deposit for that month accordingly. Subsequent monthly deposits for that
calendar year will also be adjusted by the Partnership. The Partnership shall
provide at the time of such adjustment a new certificate as to the sufficiency
of its deposits as so revised and a new calculation indicating such
sufficiency. Trustee for the sole benefit of the Trustee and the Holders,
will use good faith efforts to instruct the Partnership to adjust its
deposits in accordance with the foregoing provisions of this paragraph 4c.
Trustee's failure to do so, or any underestimate of Taxes payable made by
Trustee, shall not limit or affect the Partnership's obligations hereunder
and under the Deeds of Trust to deposit sufficient funds to pay Taxes and
to pay, or cause to be paid, all Taxes due not later than 20 days prior to
delinquency.
Change in Payment. If for any reason the Taxes or any component
thereof become payable at any time other than annually in arrears, the
Partnership shall adjust its escrow payments accordingly to ensure that
sufficient amounts are deposited at least 60 days prior to the time
penalties and interest can be assessed for late payment for each Tax payment
due.
Withdrawal Terms:
Payment of Taxes: Escrow Holder shall after receipt of the appropriate
Tax bills from the Partnership issue and deliver checks within three (3)
business days against the funds in the Tax Escrow<PAGE>
Account for the amount of
said installment, to the extent there exists such funds in the Tax Escrow
Account, and made payable to the appropriate taxing authorities, providing
a copy of its transmittals and the enclosed checks to Trustee and the
Partnership. If there are insufficient funds in the Tax Escrow Account,
Escrow Holder shall notify the Partnership of such deficiency and the
Partnership shall within five (5) Business Days deposit funds with Escrow
Holder in the amount of such deficiency. Nothing herein shall (i) relieve
the Partnership of its obligation to timely pay Taxes in full or (ii)
require Escrow Holder to pay Taxes from its own funds.
Right of Contest: The Partnership may in good faith elect to contest
any Tax assessment in accordance with applicable Requirements. The
Partnership shall notify Escrow Holder and Trustee of such election and
provide them with such information regarding such contest as either may
request. The Partnership shall deposit with Escrow Holder such additional sums
as Trustee may require to cover penalties and/or interest which would become
payable in connection with such contest if the Partnership did not prevail.
Trustee's determination as to such additional deposit shall be final as to
all parties hereto, but shall not relieve the Partnership from its
obligation to timely pay Taxes in full if such amount is insufficient. In
all events such Taxes shall be paid by the Partnership, and if unpaid, upon
written notification from the Trustee to the Escrow Holder, shall be
immediately paid by Escrow Holder, to the extent there are funds in the
Tax Escrow Account.
No Other Disbursements: Except for the payment of interest as
provided in paragraph 6 below, and except upon termination of this Agreement
as contemplated by paragraph 10 below, Escrow Holder shall not disburse or
otherwise pay any funds from the Tax Escrow Account other than in accordance
with this paragraph 5.
Interest: So long as (i) payments of Taxes are paid in full prior
to the date when any penalty or interest attaches or accrues (subject to the
Partnership's right of contest under paragraph 5b), and (ii) Escrow Holder
has not received a Default Notice (as defined in paragraph 7 below), Escrow
Holder shall pay directly to the Partnership within five (5) Business Days
of Escrow Holder's receipt of a written request from the Partnership and
written authorization and consent from the Trustee made not earlier than
the date of payment of Taxes to the taxing authorities or later than 30
days after such payment is made, all interest earned on the funds in the
Tax Escrow Account, less Expenses (as defined in paragraph 13 below) on each
date when Tax payments are made in full from the Tax Escrow Account (provided
account funds are otherwise sufficient to pay the Taxes due and Expenses
incurred), and upon termination of this Agreement pursuant to paragraph 10
below.
Default Provisions: Upon receipt by Escrow Holder of written notice
from Trustee that an Event of Default (as defined in the New Indenture) has
occurred under the New Indenture (a "Default Notice"), Escrow Holder shall
not permit any withdrawal from the Tax Escrow Account until it is instructed
in writing to do so by Trustee. At the written request of Trustee and
following receipt of a Default Notice from the Trustee stating that an Event
of Default has occurred, Escrow Holder shall within three (3) Business Days
pay over to Trustee after payment to the Escrow Holder of any and all fees,
expenses and amounts due the Escrow Holder, all of the Tax Account Pledged
Assets (as hereinafter defined), including principal and interest and all
investments. The Partnership agrees that Trustee shall be entitled to apply
the proceeds of the Tax Account Pledged Assets to the Indebtedness (as
defined in the Deeds of Trust) in any manner which Trustee deems appropriate.
Upon such payment by Escrow Holder to Trustee, this Agreement shall terminate.
Escrow Holder shall have no responsibility with respect to the application of
any Tax Account Pledged Assets paid by Escrow Holder to Trustee.
Security Interest:
Grant of Security Interest: This Agreement is intended to provide
additional security for the payment of all amounts now and in the future
payable under the Notes, the New Indenture, the Deeds of Trust and the
Transaction Documents. To that end, the Partnership hereby grants, pledges,
transfers and assigns to Trustee a continuing security interest in the
following, whether now existing or hereafter acquired or arising: all of
(i) the Tax Escrow Account, and all instruments, securities, documents,
accounts, general intangibles, money and other property and contents
herein and thereof, and all rights relating thereto and proceeds therefrom
and thereof, including, without limitation, the deposits made into the Tax
Escrow Account from time to time and all earnings thereon at any time or
from time to time in the possession or control of Escrow Holder, (ii) all
books and records relating to the types and items of property described in
the foregoing clause (i) and (iii) all proceeds (whether cash or non-cash,
and including, without limitation,<PAGE>
insurance proceeds) and products of the
property described in the foregoing clause (i), and all replacements and
substitutions therefor and all additions and accessions thereto (collectively
called the "Tax Account Pledged Assets").
UCC Rights: In addition to all rights and remedies given to Trustee
by this Agreement, Trustee shall have the rights and remedies of a secured
party under the Uniform Commercial Code and any other applicable law. The
Partnership shall be responsible for timely executing all financing
statements, continuation statements and other documents as may be necessary
to perfect, continue or otherwise evidence said security interest, and, upon
notice from Trustee, the Partnership will promptly execute such financing
statements, continuation statements and other documents as may be requested
(but which do not materially increase the Partnership's obligations under
this Agreement) to perfect, continue or otherwise evidence said security
interest. The Partnership shall pay all expenses and fees for the
preparation and filing thereof.
Acknowledgment of Security Interest: Escrow Holder acknowledges
receipt of notice of Trustee's security interest in the Tax Account Pledged
Assets.
Warranties: The Partnership does hereby warrant and represent to
Trustee and Escrow Holder that the Partnership is the owner of all of the
Tax Account Pledged Assets, and (i) the Partnership has not heretofore
made any assignment or pledge of, granted a security interest in, or
otherwise transferred or encumbered all or any part of its interest in all
or any part of the Tax Account Pledged Assets, and (ii) the Tax Account
Pledged Assets are free and clear of any security interest, pledge,
assignment or other encumbrance other than the security interest created
hereby. Escrow Holder does hereby warrant and represent to Trustee that
Escrow Holder has not received notice from any individual or entity, except
Trustee, claiming an interest in the Tax Account Pledged Assets.
Termination of Escrow: Provided this Agreement has not been
terminated pursuant to paragraph 7 hereof, this Agreement, and the escrow
provided for herein, shall automatically terminate when Escrow Holder
receives written notification from Trustee that all amounts due from the
Partnership to Trustee and the Holders have been paid in full, the Notes
have been fully paid and cancelled, and the Deeds of Trust discharged. Upon
termination of this Agreement as provided in this paragraph, Escrow Holder
shall deliver the remaining Tax Account Pledged Assets to the Partnership
after payment of any and all outstanding fees, expenses and amounts due the
Escrow Holder.
Investment of Funds in Tax Escrow Account: Until Escrow Holder
shall have received a Default Notice, any monies held as a part of the Tax
Escrow Account shall be invested or reinvested by Escrow Holder in the
One Group U.S. Treasury Money Market Fund or other Permitted Investments as
directed in writing by the Partnership (as hereinafter defined) in the name
of the Tax Escrow Account in trust for the Trustee and Holders.
The Partnership's Right to Request Investments: All investments shall
be held in the name of Tax Escrow Account in trust for the benefit of the
Trustee and Holders, free and clear of all Liens. Escrow Holder shall make
each requested Permitted Investment within one (1) Business Day after Escrow
Holder's receipt of the written request from the Partnership, unless the
nature of the Permitted Investment reasonably requires a longer period to
complete the investment. Except as provided in the next sentence, the
Partnership may not make more than five (5) requests for investments per
calendar month. There shall be no limit to the number of requests for
investments under paragraph 11b(3) hereof.
Permitted Investments: the term "Permitted Investments" as used
herein shall mean:
U.S. Government Obligations (as such term is defined in the New
Indenture);
any certificate of deposit or bankers' acceptance, in each case,
maturing not more than 180 days after the date of acquisition, issued by,
or, in the case of bankers' acceptances, accepted by, or time deposit of,
any bank or trust company organized under the laws of the United States of
America or any state thereof or the District of Columbia or any United
States branch office or agency of any foreign depository institution, in
each case that has combined capital and surplus and undivided profits of
not less than $200 million or whose unsecured, unguaranteed long-term debt
obligations are rated "A" (or higher) by S&P and "Aa2" (or higher) by Moody's
, or whose unsecured, unguaranteed commercial paper obligations are rated
"A-2" (or higher) by S&P and "P-2" (or higher) by Moody's;
Repurchase agreements entered into with entities whose unsecured,
unguaranteed long-term debt obligations are rated "A" (or higher) by S&P and
"A2" (or higher) by Moody's, or whose unsecured, unguaranteed commercial
paper obligations are rated "A-2" (or higher) by S&P and "P-2" (or higher)
by Moody's, pursuant to a written agreement with respect to any obligation
described in clauses (1), (2) or (4) of this subparagraph 11b;
Commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 180 days after the date of acquisition),
issued by a corporation (other than an Affiliate or Subsidiary of the
Partnership) organized and existing under the laws of the United States of
America with a rating, at the time as of which any investment thereof
is made, of "P-2" (or higher) according to Moody's or "A-2" (or higher)
according to S&P;
Adjustable rate preferred stock that is rated "A" (or higher) by
Moody's or S&P;
Taxable or non-taxable auction rate securities which have interest
rates reset on periodic short-term intervals (typically each 7, 14, 21, 28
or 49 days via a Dutch auction process) and which at the time of purchase
have been rated and the ratings for which (A) for direct issues, must not
be less than "P2" if rated by Moody's and not less than "A2" if rated by S&P,
or (B) for collateralized issues which follow the asset coverage tests set
forth in the Investment Company Act of 1940, as amended, must have long-term
ratings of at least "AAA" if rated by S&P and "Aaa" if rated by Moody's;
Money market deposit accounts issued or offered by any bank or trust
company organized under the laws of the United States of America or any state
thereof or the District of Columbia, in each case having capital and surplus
in excess of $500 million;
Non-taxable securities, maturing not later than one year after the date
of acquisition, issued by any state or municipality and having ratings of at
least "A" if rated by S&P and "A-2" if rated by Moody's; and
The One Group U.S. Treasury Money Market Fund or equivalent
investment.
Risk of Loss. The Partnership shall be solely responsible for any
loss of investments or breakage costs with respect to invested funds.
Escrow Holder does not guaranty or have responsibility or liability for any
minimum return on investment of invested funds. The Partnership shall be
solely responsible for matching maturity of investments with disbursements.
Within two (2) Business Days after Trustee becomes aware of any loss of
principal on invested funds, Trustee shall notify the Partnership in writing
and the Partnership shall restore such loss within five (5) Business Days of
receipt of such notice by payment to Escrow Holder for deposit into the Tax
Escrow Account.
Responsibilities of Escrow Holder.
Books, Records, and Statements: Escrow Holder shall at all times
during the term of this Agreement keep and maintain accurate, complete and
up to date books and records with respect to the Tax Escrow Account,
investments thereof, earnings thereon and disbursements therefrom. Escrow
Holder shall provide monthly statements to Trustee and the Partnership
showing the balance of the Tax Escrow Account, the earnings thereof
and the disposition of said earnings.
Escrow Holder's Right to Resign: Escrow Holder reserves the right
to resign hereunder by 60 days' prior written notice to Trustee and the
Partnership and at such time as a replacement escrow holder has been
identified which will enter into an agreement substantially similar to this
agreement and provide substantially the same services. Escrow Holder shall
pay over to the replacement escrow holder (or, if Trustee so directs, to
Trustee) all funds in the Tax Escrow Account. If such funds are paid to
Trustee, such funds shall be held by the Trustee pursuant to the terms of
the Deeds of Trust. Upon the delivery of such funds, this Agreement shall
terminate and Escrow Holder shall not have any further liability or rights
under this Agreement, except any claims against Escrow Holder for its
willful misconduct or negligence relating to events occurring prior to such
termination. In the event Escrow Holder does resign pursuant to this
provision, the indemnity provided in paragraph 15 shall survive such
termination. Escrow Holder shall have the right to cause a new Escrow Holder
to be appointed if (i) such appointment is directed by a Federal
District or state court judge with competent jurisdiction or (ii) Escrow
Holder obtains a replacement Escrow Holder that is a national bank with a
lending office in Houston, Texas that has capital and surplus equal or
greater than that of Escrow Holder as of the time the replacement is to be
effective, as evidenced by the<PAGE>
most recent audited financial statements
available for the then current and proposed Escrow Holder, and in
the case of either (i) or (ii), the replacement Escrow Holder joins Trustee
and the Partnership in executing a new agreement on substantially the same
terms as this Agreement, with the Partnership solely responsible
for any increase in the fee of such replacement Escrow Holder.
Standard of Care of Escrow Holder. Escrow Holder undertakes to
perform such duties and only such duties as are specifically set forth in
this Agreement, and no implied covenants or obligations shall be read
into this Agreement against Escrow Holder. No provision of this Agreement
shall be construed to relieve Escrow Holder from liability for its own
negligent act, its own negligent failure to act or its own misconduct,
except that (i) this sentence shall not be construed to limit the effect of
the preceding sentence, (ii) Escrow Holder shall have no liability under
this Agreement for actions taken in its reasonable judgment (unless Escrow
Holder was negligent in ascertaining the pertinent facts), and (iii) no
provision of this Agreement shall require Escrow Holder to expend or risk
its funds or otherwise incur any financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that the repayment
of such funds or adequate indemnity against the risk or liability is not
reasonably assured to it. Escrow Holder shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement at the
request of the Trustee, unless the Trustee shall have offered Escrow Holder
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in connection with such request or direction.
Escrow Holder may rely without further investigation on the Partnership's
calculations of estimated Taxes payable for the then current year, the
Partnership's corresponding calculation of the monthly deposits due
under this Agreement, and any statements of valuations or tax bills it
receives.
Reliance on Instructions: If any disagreement arises under this
Agreement, Escrow Holder shall rely solely on written instructions from
Trustee.
Fees and Expenses: In consideration for its duties under this
Agreement, the Partnership shall pay Escrow Holder a fee of $2,500.00 per
year in advance upon the opening of the account and upon the anniversary
date of the opening of the account in each calendar year during the term of
this Agreement. If this Agreement commences during a calendar year, the fee
for such partial year shall be paid promptly on a pro rata basis. The
Partnership shall also be responsible for all out-of-pocket costs and
expenses of Escrow Holder as may be incurred by Escrow Holder in connection
with the administration of this Agreement, including reasonable attorneys'
fees, including a reasonable fee paid to Escrow Holder for the services of
attorneys employed by Escrow Holder. Said fee, attorneys' fees, out-of-
pocket expenses and other costs are collectively referred to hereinafter as
the "Expenses." Any Expenses may be offset against interest earned, and
only against such interest, on the Tax Escrow Account. The Partnership is
absolutely responsible for the prompt payment of Expenses whether or not
the interest earned on invested funds is sufficient to pay same and
will pay all invoices received by it when due.
Liability of Parties: The Partnership shall have sole liability
for the Taxes and shall be responsible for seeing that sufficient funds are
made available to Escrow Holder in adequate time for payment of the Taxes
before same become delinquent.
15. HOLD HARMLESS: THE PARTNERSHIP HEREBY AGREES TO INDEMNIFY, PROTECT,
SAVE AND HOLD HARMLESS ESCROW HOLDER AND TRUSTEE, AND THEIR RESPECTIVE
SUCCESSORS AND ASSIGNS AND AGENTS PURSUANT TO THIS AGREEMENT, FROM
ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, CLAIMS, ACTIONS,
SUITS, COSTS OR EXPENSES, INCLUDING, WITHOUT LIMITATION, REASONABLE
ATTORNEYS' FEES, EXPENSES, CHARGES, DISBURSEMENTS AND ADVANCES, OF WHATSOEVER
KIND OR NATURE (COLLECTIVELY, "LOSSES"), IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST ESCROW HOLDER AND/OR TRUSTEE WHICH IN ANY WAY RELATE TO OR ARISE OUT
OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND ANY ACTION TAKEN OR
OMITTED TO BE TAKEN HEREUNDER; PROVIDED, HOWEVER, THAT THE PARTNERSHIP SHALL
HAVE NO SUCH OBLIGATION TO INDEMNIFY, SAVE AND HOLD HARMLESS ESCROW HOLDER
OR TRUSTEE, AS THE CASE MAY BE, FOR ANY LIABILITY INCURRED BY, IMPOSED UPON
OR ESTABLISHED AGAINST ESCROW HOLDER OR TRUSTEE, AS THE CASE MAY BE, FOR
ITS WILLFUL MISCONDUCT OR GROSS NEGLIGENCE. HOWEVER, ESCROW HOLDER AND
TRUSTEE SHALL BE SPECIFICALLY INDEMNIFIED BY THE PARTNERSHIP FROM AND HELD
HARMLESS AGAINST LOSSES WHICH ARE CAUSED IN WHOLE OR IN PART BY ITS OWN
NEGLIGENCE, REGARDLESS OF WHETHER THE SAME SHALL BE SOLE, JOINT CONCURRENT
OR CONTRIBUTORY.
16. Waiver of Offset: Except for the Expenses due Escrow
Holder as provided in paragraph 13 above, Escrow Holder specifically and
irrevocably waives any and all rights Escrow Holder now has or may in the
future have to offset any amounts due from the Partnership to Escrow Holder
against the funds in the Tax Escrow Account. Except to the extent of
interest earned on invested funds expressly provided for in<PAGE>
paragraph 13
above, Escrow Holder further agrees not to pay or attempt to pay to itself
any funds in the Tax Escrow Account to satisfy any claims Escrow Holder may
have against the Partnership or Trustee.
17. Collateral Document; Curative Rights: This Agreement is a
"Collateral Document" for purposes of the New Indenture. The notice and
curative provisions contained in the Deeds of Trust and the New Indenture
shall be applicable to any default or failure of performance by the
Partnership under this Agreement; however, Escrow Holder shall not be
deemed to have knowledge of a default unless it receives notice of such
default from the Trustee as provided in Section 7.
18. Notices: Any notice, demand, request, statement or consent
made hereunder shall be in writing, signed by the party giving such notice,
request, demand, statement or consent, and shall be effective upon receipt
or refusal of service and may be delivered personally, by overnight or
messenger delivery or by deposit in the United States mail, postage prepaid
and registered or certified return receipt requested, or by facsimile (with
a copy sent by one of the aforementioned methods). Unless changed by
written notice to the other parties in accordance with this Agreement,
notice shall be given to the following addresses:
If to the
Partnership: Sam Houston Race Park, Ltd.
5847 San Felipe, Suite 2600
Houston, Texas 77057
Attention: Corporate Secretary
Phone No.: (713) 267-3670
Fax No.: (713) 267-3703
With a copy to: Sam Houston Race Park, Ltd.
P.O. Box 2323
Houston, Texas 77252-2323
Attention: Michael J. Vitek
Vice President of Accounting
Phone No.: (281) 807-8809
Fax No.: (281) 807-8703
If to
Trustee: First Bank National Association
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
Phone No.: (612) 244-0721
Fax No.: (612) 244-0711
If to Escrow
Holder: Southwest Bank of Texas
P.O. Box 27459
Houston, Texas 77227-7459
Attention: Dave Farres
Executive Vice President/
Chief Financial Officer
Phone No.: (713) 235-8800
Fax No.: (713) 439-5994
19. APPLICABLE LAW: THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICT OF LAWS, EXCEPT THE PROVISIONS OF THIS AGREEMENT
RELATING TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OR FORECLOSURE
OF THE LIENS, ASSIGNMENTS AND SECURITY INTERESTS GRANTED HEREUNDER IN THE TAX
ACCOUNT PLEDGED ASSETS TO TRUSTEE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. <PAGE>
20. Headings: The paragraph headings used herein are for convenience
only and are not to be used in interpreting this Agreement.
21. Amendments: This Agreement is irrevocable and may only be
amended by a written amendment executed by all the parties hereto.
22. Attorneys' Fees and Expenses: Any reference to "attorney
fees", "attorneys' fees" or "attorney's fees" in this Agreement includes all
reasonable fees, charges, disbursements, advancements and costs incurred by
Escrow Holder for both outside and in-house counsel in connection with the
administration of this Agreement and the collection or enforcement of any
obligations, or the defense of any actions, arising under this Agreement or
otherwise with respect to any of the Tax Account Pledged Assets, including,
without limitation, in connection with any proceeding under Title 11, United
States Code.
23. Assignment: This Agreement may not be assigned by the
Partnership or Escrow Holder without the prior written consent of Trustee.
Should an assignment be permitted hereunder, this Agreement shall inure to
the benefit of and bind the successors and assigns of the parties hereto.
24. Agency: Escrow Holder may not appoint an agent to perform
its obligations under this Agreement without the prior written consent of
the Partnership.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first above written.
SAM HOUSTON RACE PARK, LTD.
By:/s/ Michael J. Vitek
Name: Michael J. Vitek
Title: Vice President of Accounting
The "Partnership"
FIRST BANK NATIONAL ASSOCIATION
By:/s/Richard H. Prokosch
Name: Richard H. Prokosch
Title: Trust Officer
"Trustee"
SOUTHWEST BANK OF TEXAS, N.A.
By:/s/Dave Farries
Name: Dave Farries
Title: Executive Vice President/Chief Financial Officer
"Escrow Holder"
[Signature Page to Real Estate Tax Escrow and Security Agreement]
ADDENDUM
This addendum ("Addendum") to that certain horsemen's agreement
between the Texas Thoroughbred HBPA, Inc. and Sam Houston Race Park, Ltd.,
effective as of January 1, 1997 ("Contract"), made and effective as of
December 1, 1997, represents the understandings and agreements by and between
Sam Houston Race Park, Ltd., a racing association ("Association") which holds
the license granted by the Texas Racing Commission ("Commission") to operate
Sam Houston Race Park, and the Texas Thoroughbred HBPA, Inc. ("TTHBPA"
WHEREAS, the Commission has formally recognized the Texas Horsemen's
Partnership, L.L.P. ("Partnership") as the officially-recognized horsemen's
organization to represent all owners and trainers racing horses in Texas; and
WHEREAS, the Partnership has authorized the TTHBPA to negotiate,
execute and deliver this Addendum to the Contract; and
WHEREAS, the Contract heretofore specified a percentage deduction
from the Association's horsemen's purse allocation, subject to adjustment by
mutual consent, to be paid monthly to the Partnership for operational
expenses and benevolence; and
WHEREAS, the parties now desire to enter into this Addendum to the
Contract which will set forth modified terms and conditions relating to the
percentage of funding for the Partnership's expenses and benevolence;
NOW, THEREFORE, the TTHBPA and the Association do hereby agree to
provide funding for the Partnership's expenses and benevolence as follows:
1. The TTHBPA agrees that, beginning December 1, 1997, and
continuing until time as a difference percentage may be agreed upon by both
parties to this Addendum, funding of the Partnership shall be provided by
deducting and paying to the Partnership on a monthly basis (within 10 days
for the preceding month) an amount equal to three (3) percent (.03) of all
purse revenues generated from both live and simulcast wagering; provided that
such deduction shall not reduce the Association's commission from any such
live or simulcast wagering below the amount the Association would receive in
the absence of this Addendum. Furthermore, in addition to the above funding,
Sam Houston Race Park agrees to pay $150.00 per each live race day in 1998,
beginning on July 3, 1998, to the Horsemen's Bookkeeper Inc. For the
operation of a centralized bookkeeping system.
2. This funding mechanism supersedes and replaces all previous
and existing contractual provisions for funding the Partnership and/or the
TTHBPA, including without limitation Paragraph 4 of the Contract which is
hereby deleted along with the reference "In addition to the .0015 (.15%)
provided for in Paragraph 4 of this agreement" in the last sentence of
Paragraph 5 of the Contract. Notwithstanding the above, the percentage
deduction specified in the Contract shall remain in effect from January 1,
1997 through November 30, 1997 (or such date as Commission approval is
obtained). Except as amended by this Addendum, the Contract shall remain in
full force and effect.
3. This Addendum to the Contract is duly authorized by the Board
of Directors of the TTHBPA, and shall be binding on and inure to the benefit of
the parties hereto and their successors and assigns.
Executed in multiple copies on the dates indicated.
IN WITNESS WHEREOF, the parties have caused this Addendum to the
Contract to be executed by their duly authorized officers and representatives.
TEXAS THOROUGHBRED HBPA, INC.
/S/ JOHN ROARK
Dated: 02/26/98 By: JOHN ROARK, President
SAM HOUSTON RACE PARK, LTD.
By SHRP General Partner, Inc.
/S/ ROBERT L. BORK
Dated: 02/24/98 By: Robert L. Bork
Senior Vice-President and
General Manager
This Addendum is hereby ratified and approved by the Management
Committee of the Texas Horsemen's Partnership, L.L.P., acting through its
duly authorized representative.
TEXAS HORSEMEN'S PARTNERSHIP, L.L.P.
/S/ DAVID GRAHAM
Dated: 02/26/98 By: DAVID GRAHAM, Chairman <PAGE>
HORSEMEN'S AGREEMENT
BETWEEN TEXAS HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION
AND SAM HOUSTON RACE PARK, LTD.
This contract made as of January 1, 1997, the "Effective Date,"
represents the understandings and agreements by and between Sam Houston Race
Park, Ltd. a racing association (hereinafter "SHRP") which holds
the license to operate a horse racetrack Sam Houston Race Park (the
"Racetrack"), and the Texas Horsemen's Benevolent and Protecive Association,
(hereinafter "THBPA").
SHRP and the THBPA agree that they are each interested in: (1) the
advancement, maintenance, promotion and improvement of quarter horse racing,
in particular, and horse racing in general in the State of Texas; (2) the
generation and retention of good will of the public toward horse racing;
(3) the conduct of horse racing in the State of Texas and at SHRP on the
highest possible plane of integrity through the establishment and maintenance
of high standards of fairness, honesty and accountability, and (4) the orderly
commencement and conduct of horse racing at SHRP without disruption,
interference or distraction.
The parties further agree to the following terms and conditions:
1. TERM OF CONTRACT
A. This contract shall be in effect and binding upon the
parties for all of the thoroughbred race meetings conducted by SHRP
commencing from and after the Effective Date of this agreement and extending
through December 31, 1999 unless earlier terminated by agreement of the
parties. The agreement also may be extended pursuant to Section 2B contained
herein.
B. A live quarter horse/mixed race meeting or meet shall mean
those consecutive weeks approved for live racing by the Texas Racing
commission during which SHRP is authorized to conduct a live racing program
on specified days during those weeks, together with simulcasting conducted
during that period, and shall include a reasonable period of time not to
exceed 30 days before the commencement of such meet and after the ending of
such meet to effectuate the purposes of this agreement.
C. A dark day simulcast meeting or meet shall be defined as the
period of time during which no live racing is being conducted, and SHRP is not
authorized by the Texas Racing Commission to conduct live racing.
D. THBPA is a partner in Texas Horsemen's Partnership, L.L.P.,
which is the officially recognized horsemen's organization in the State of
Texas.
2. EXCLUSIVE REPRESENTATIVE
A. The parties further agree that the THBPA, Inc. is the
representative group for owners and trainers ("Horsemen") running quarter
horses, Arabians, Paints and Appaloosas in the State of Texas. SHRP
agrees to recognize the THBPA as the exclusive and sole representative of the
owners and trainers starting quarter horses, Arabians, Paints and Appaloosas
in races at SHRP during the term of this agreement, and further agrees that
with respect to all matters pertaining to quarter horse, Arabian, Paint and
Appaloosa racing at SHRP, as the same shall affect owners and trainers, THBPA
shall be deemed by SHRP to be the appropriate party in interest to represent
the interests of quarter horse, Arabian, Paint and Appaloosa horsemen. THBPA
acknowledges that SHRP grants said exclusive and sole representation based on
THBPA's assertion that it does in fact represent a majority of the owners and
trainers starting horses in races at SHRP during the term of this agreement.
B. Prior to the conclusion of this agreement, SHRP and THBPA
will meet to attempt in good faith to negotiate a successor agreement. Absent
a successor agreement, this agreement shall continue to govern the relationship
between the parties unless terminated by any party hereto, provided that such
termination shall be upon thirty (30) days written notice.
C. THBPA agrees that during the term of this agreement THBPA
will not utilize nor counsel or encourage its members to strike, embargo,
boycott or employ similar tactics in dealing with SHRP on matters<PAGE>
concerning
or affecting Horsemen and their relationship to SHRP.
D. SHRP agrees to provide the THBPA with adequate office space
near the racing office accessible to the Horsemen. (All THBPA furniture,
telephone and other office expenses shall be the sole responsibility of THBPA.)
THBPA shall have the right to control access to this space during the term of
this agreement, subject to the rules and regulations of the Texas Racing
Commission, other governmental entities, and rules and security procedures of
SHRP in effect from time to time.
E. THBPA agrees that it will encourage its members and employees
to abide by rules enacted by SHRP with respect to conduct and appearance on the
SHRP premises.
F. THBPA agrees that it will encourage its own personnel and
others at the barns, dorms and on other premises of SHRP to properly care for
the premises and the improvements thereon and to comply with applicable laws
and SHRP's "pollution prevention program" including the removal of manure and
trash and the placement of the same in assigned containers, and the compliance
of all horse owners, trainers, and their employees with the rules and
regulations of the Texas Racing Commission, including rules with respect to
drug and alcohol use.
G. THBPA has reviewed SHRP's form of stall application and will
act consistent with the terms thereof and will encourage all horse owners and
trainers assigned stalls at SHRP to honor and abide by the terms of such stall
application.
H. THBPA hereby consents to SHRP televising, broadcasting,
preserving on film, replaying or rebroadcasting races to the public for
promotional purposes and using the images of its members, employees
and staff, provided such consent is not deemed an agreement for simulcasting
or for any use involving any form of wagering. SHRP will disclose upon
request to THBPA the direct revenue SHRP receives from any broadcast, rights,
or distribution fees generated from live or taped races.
3. DISTRIBUTION OF PURSE MONIES
A. The purse funds from each race meeting shall be distributed as
set forth in Section 3 and Section 4 of this agreement.
B. The "Horsemen's Purse Allocation" includes (1) all funds
generated from the percentage of the daily live handle payable to owners of
horses under the Texas Racing Act, (2) all funds attributed to purses
resulting from distribution under provisions of the Texas Racing Act as a
result of simulcasting, and (3) simulcasting revenue directed to purses from
fees collected from export of SHRP's live racing signal and shall be paid as
herein provided subject only to the overpayment/underpayment provisions of
this section.
C. The "Horsemen's Purse Allocation" and the Horsemen's Purse
Account are recognized as trust funds held in a fiduciary capacity for benefit
of persons who may become entitled to receive purses or who may otherwise
become entitled thereto under this agreement or by operation of law.
The "Horsemen's Purse Allocation" shall be deposited to the Horsemen's
Purse Account or other separate trust accounts designated for the escrow of
funds not required to be distributed during the current live meeting within
three (3) business days after the end of the week's racing program in which
the funds are accrued.
Funds accrued during the term of this agreement, which are to be
distributed to the owners of any breed of horse not participating during a
particular live race meeting, shall be maintained in the appropriate trust
funds for race meetings which include the appropriate breed of horses.
Purse funds may be used only in accordance with the written agreement
of the parties, if different from the provision herein set forth. Any such
agreement, when executed, is incorporated herein by reference
as if fully set forth
No part of any funds allocated to any races from the purse fund shall
be subject to any surcharge, expense, charge or deduction by SHRP for any
reason whatsoever except the payments set forth in Sections 4, 5 and 10
hereinafter.
SHRP shall account to THBPA for purse funds, and the books of account
for purse funds shall be open to inspection by THBPA at reasonable times and
upon reasonable notice. Reasonable notice is defined as not less than 72 hours
prior to inspection, unless the 72-hour period falls on a weekend or holiday in
which case reasonable notice would include not less than two full business days.
THBPA shall have the right to audit<PAGE>
such books and records upon reasonable
notice at the expense of the THBPA.
In the event a discrepancy is discovered by audit, which requires an
increase in the amount paid by SHRP to the Horsemen's Purse Account of at least
seven and one-half percent (7.5%), SHRP shall reimburse THBPA for the actual
expense of such audit. It is further agreed that the maximum liability for
reimbursement of audit expense shall not be more than Five Thousand Dollars
($5,000.00).
D. In addition to the funds representing the Horsemen's Purse
Allocation that shall be deposited tot he Horsemen's Purse Account as set forth
above, SHRP shall, at the same time, deposit such funds as are necessary to the
Horsemen's Purse Account to fulfill its contractual commitment to the Horsemen
for the races conducted in the prior week.
In the case of a sponsored stakes race or other prepayment race
administered by a person or organization other than SHRP, the funds provided
from a source outside SHRP shall be deposited in the Horsemen's Purse Account
prior to the running of the race. In the event such race/races have either
eliminations or trials, the total amount due from sources other than SHRP shall
be deposited prior to the running of any eliminations or trials in connection
with the race event. In the event sponsor money is not deposited prior to the
running of the race, SHRP shall notify the THBPA. SHRP shall assume no
liability with respect to sponsorship contributed purse money.
E. SHRP shall make available purse monies earned in individual
races within 24 hours after a race is completed for all owners of horses that
were not subjected to blood or urine testing, or that the stewards have not
placed an official hold, by order, upon the purses involved in a specific
race. Purse monies shall be made available to owners immediately after
stewards have released and declared that the race is "Official" and/or the
blood and urine tests are completed and cleared. Funds may not be deducted
from a horsemen's account to pay pending purse expenses until the race is
"Official."
F. Prior to the start of each live meet, SHRP shall estimate the
projected handle and other sources of horsemen's purse allocation utilizing the
best information available that is deemed by SHRP and THBPA to be reliable.
Such information shall be provided to the THBPA and SHRP agrees to consult
with THBPA in determining the daily allocation for distribution of purse funds
projected to be available during the live meet.
G. The parties agree that during any race meeting during the
term of this agreement the racing secretary shall submit to the THBPA a purse
distribution schedule detailing the purse level for each class and category of
races to be conducted during each race meeting not less than 60 days prior to
the beginning of the live race meeting accompanied by a proof of the proposed
first condition book.
Prior to the publication of the first condition book and each successor
condition book for each race meet, the THBPA shall be in receipt of a prof at
least 72 hours prior to publication in order to have an opportunity to
recommend any changes for consideration. Any recommendations shall be
presented to the racing secretary within 72 hours of receipt of the proof.
H. During the term of this agreement, the parties agree that of
the total monies allocated annually to purses pursuant to Section 3 for each
breed participating in a live race meeting, not more than twenty-five percent
(25%) shall be allocated for payment in stakes races provided, however, that
any race which is denominated as a stakes race with a purse allocation above
the highest published overnight race and is the minimum requirement for black
type for thoroughbreds shall not be charged against the stakes allocation as
set forth herein. Not more than fifteen percent (15%) of the total stakes
allocation shall be used to supplement any single race without the consent of
the THBPA.
SHRP shall provide to THBPA its projected stakes program at least 30
days prior to the publication of the (stakes) condition book for each live race
meeting during the term of this agreement and consistent with the above
defined formula.
The stakes schedule shall represent the total amount of guaranteed
and/or added money to be distributed from the Horsemen's Purse Allocation
for stakes races.
It is further understood that all money generated from nomination
and entry fees for races sponsored and conducted by SHRP with guaranteed
purses will be used first to cover the guaranteed purse amount. In the
event the fees collected are insufficient to meet the guaranteed purse
requirement, the balance shall be debited against the Horsemen's Purse
Allocation.
I. In the event the amount generated for the Horsemen's Purse
Allocation is significantly higher or lower than amounts projected, SHRP may
adjust the purse schedule in an attempt to bring the amount generated for
purses in line with the amount paid to horsemen. In the event a decrease in
purses is<PAGE>
necessary, SHRP shall adjust overnight purses on a pro-rata basis
of the original purse distribution schedule and still maintain the
proportionate allocation of overnight purses to stakes purses as set forth in
paragraph H after consultation with THBPA.
J. SHRP shall maintain an account for thoroughbred purses funds
during the term of the agreement on an annual basis. At such annual
accounting, SHRP shall not have overpaid thoroughbred purses by more than
$300,000 for that year's meetings. To the extent the overpayment exceeds
the above calculation, such shortage over $300,000 shall be paid by SHRP,
except in the event the overpayment is in excess of $300,000 as a result of
SHRP being unable to conduct live racing or an approved simulcasting program
as a result of an act of "force majeure" Force majeure shall be defined as
acts beyond the reasonable control of SHRP that prevent the conduct of live
racing or an approved simulcasting program at, including, by way of
illustration and not in limitation, destruction of the premises, civil
strife, hurricane or other such event.
The amount under $300,000 represented by the overpayment shall be
carried forward to the next live race meeting conducted by SHRP for the
particular breed.
Should an underpayment exist for any breed's purse account in
excess of $300,000 at the end of any meet, such underpayment shall be paid
as hereinafter provided, unless SHRP and THBPA reach an agreement to carry
forward an amount greater than $300,000.
If paid retroactively, the underpayment shall be paid to the
Horsemen having horses that ran in the meet that earned overnight money
finishing first through fifth, inclusively (60%-20%-11%-6%-3%).
To the extent that the underpayment is less than $300,000 such sums
shall be carried forward to the next meet at SHRP.
K. All money held and carried over shall be deposited in an
insured, interest-bearing account until it is needed for the payment of
purses in the next meet of the particular breed. All interest earned
on such account, less reasonable and customary bank charges, shall be paid
monthly to the Texas Horsemen's Partnership, L.L.P.
L. SHRP will provide complete weekly information to the THBPA
regarding daily pari-mutuel handle, average daily handle to date, stakes
percentages, purse percentages, etc. (Complete daily payout sheet), as
requested by the THBPA.
4. THBPA EXPENSES AND BENEVOLENCE
A. SHRP shall deduct from the total gross interstate guest
handle derived from simulcasting an amount equal to .0015 (.15%) to be paid
monthly to the Texas Horsemen's Partnership, L.L.P. for operational
expenses and benevolence within 10 days for the preceding month. Such amount
shall come from the purse allocation set forth in Section 10(B). By mutual
consent, the .0015 may be adjusted.
5. HORSEMEN'S PURSE ACCOUNT
As designated by the THBPA, all Horsemen's monies inclusive of the
Horsemen's Purse Allocation, simulcasting purse allocation, and monies owed
by SHRP shall be deposited or invested in an interest-bearing account and in
accordance with Section 3C hereof and Section 309.199 of the Texas Rules of
Racing, or in other investments, which the THBPA and SHRP consider reasonable
in light of available interest rates and needed liquidity of the account.
Monies derived as interest from these investments, less reasonable and
customary bank charges, will be paid to the Texas Horsemen's Partnership,
L.L.P. In addition to the .0015 (.15%) provided for in Paragraph 4 of this
agreement, said interest will be paid monthly to the Texas Horsemen's
Partnership, L.L.P. no later than the 10th day of each month.
6. OPENING OF FACILITIES
A. SHRP will open its facilities at least twenty (20) days
prior to the first meet of the year for use by Horsemen. From the time
backside facilities (kitchen, barns, main track, horse walkers, etc.) are
opened, the track will be maintained six (6) days a week so that it is in
racing condition for use by the Horsemen. The barn area will remain open
for use by Horsemen five (5) days after each race meeting is concluded.
B. SHRP agrees to provide bathrooms and a track kitchen in the
stable area or the area immediately adjacent. The track kitchen will
maintain hours of operation consistent with race day schedules and backside
training hours.
7. UNIFORM SCRATCH RULE
The scratch rules will be in each condition book. Scratch rules will
not be changed with less than seven (7) days advance notice to Horsemen without
the agreement of the THBPA.
8. INVESTIGATIONS AND SEARCHES
SHRP agrees that SHRP personnel will not conduct any searches of
any Horsemen, their employees, servants and/or agents or their property
without the attendance of a Horsemen's representative and/or supervision of
officials of the Texas Racing Commission or other governmental agencies
having jurisdiction, except in an emergency situation which constitutes a
threat to the security of the premises, a threat to life or limb of a person
or animal, or a threat to the integrity of racing.
9. RACE CANCELLATION
A. SHRP shall use the conditions published in the condition
book prior to using any races written as substitutes or extras whenever there
are sufficient entries, according to Texas Racing Commission rules, in
setting the card for each day's racing program.
B. Upon cancellation of any race in the condition book, the
number of horses which were enteredin such race shall be posted, or announced
in the SHRP Race office before each day's draw following the cancellation.
C. Cancellation of a race other than an overnight race, if any,
shall be accomplished with as much notice by SHRP to the entrants and the THBPA
as reasonably possible.
10. SIMULCASTS
A. All simulcasting shall be governed by the rules of the Texas
Racing Commission, the Interstate Horse Racing Act, and the provisions of
this agreement. The THBPA hereby approves interstate and intrastate
simulcasting, both import and export, subject to withdrawal of approval only
for matters involving the integrity or the best interests of racing providing
SHRP conducts at least 60 live racing programs during a calendar year.
B. SHRP shall allocate for purses the following percentage of
the total commissions from any simulcast:
a. for a simulcast race conducted in 1997, 30.0%
b. for a simulcast race conducted in 1998, 31.0%
c. for a simulcast race conducted in 1999, 32.5%
The parties to this agreement acknowledge that there was some
discussion of a possible 5-year arrangement at the meeting of the Texas
Racing Commission held on Friday, November 1, 1996. The parties intend this
agreement to cover only the periods herein specified and each disclaims any
agreement concerning simulcasting beyond the periods herein stated.
C. No rebroadcasting of a signal received by SHRP shall be
allowed without the express written agreement of the THBPA nor shall SHRP
permit any location receiving its signal to rebroadcast or distribute
that signal as it relates to wagering without the consent of the THBPA
11. THOROUGHBRED PURSE OVERPAYMENT
(Not applicable to this contract)
12. HORSEMEN'S SEATING AREA
SHRP shall provide free of charge to Horsemen not less than 27 seats
located in reasonable proximity to the Winner's Circle for use by Horsemen and
their employees. Said seats shall be clearly designated and policed by SHRP for
Horsemen only.
13. GUEST PASSES
SHRP shall provide, free of charge, six (6) daily guest passes to the
grandstand for guests of those owners or trainers who are licensed and currently
have horses running at SHRP. Owners or trainers will sign for these passes
and accept responsibility for those guests, subject to the rules and
regulations of the Texas Racing Commission and SHRP.
14. CHAPLAIN SERVICES
SHRP and THBPA agree to pay equal amounts to help support the
Chaplain's services at SHRP. This contribution shall be in addition to any
special events or "Charity Days" scheduled to benefit the Chaplaincy
program. All sums due pursuant to this provision shall be paid to the Race
Track Chaplaincy of Texas monthly by the parties.
15. FIRST AID STATION
SHRP agrees to provide emergency first aid to all backstretch
personnel and ambulance service in accordance with Texas Racing Commission
regulations. (Such treatment shall be subject to a release and
waiver of liability from the treated party and without any liability to
either SHRP or the THBPA.
16. ADDRESSING OF PROBLEMS
The THBPA dn SHRP shall address all material concerns of the Horsemen.
Any problem or alleged breach of this agreement shall be brought to the
attention of the other party in writing as soon a s practicable and the
parties shall make a reasonable effort to amicably and equitably adjust and
resolve problems which may arise.
17. AMENDMENTS
A. The terms and conditions of this contract may be modified or
amended only by mutual consent of the parties in writing, signed by the
appropriate authority of SHRP, and the President of the THBPA, together with
the Chairman of the Horsemen's Committee at SHRP.
B. Should additional forms of gaming be legalized by the State of
Texas during the term of this contract, both parties agree that a portion of the
incremental revenue derived from the gaming proceeds of any such venture
conducted at SHRP will go to thoroughbred purses to be paid at SHRP. The
division of such proceeds shall be subject to negotiation between THBPA and
SHRP should THBPA and SHRP fail to reach agreement on the division of such
proceeds prior to the effective date of the legislation which legalizes the
additional forms of gaming, then the parties agree that this contract shall
become null and void the day prior to the effective date of the legislation.
However, if legislation permitting additional forms of gaming becomes
effective in less than 90 days from its enactment, this contract shall
continue in full force and effectiveness until the 90th day following such
enactment.
18. COMMISSION APPROVAL
The terms and conditions of this contract shall be subject to approval
in accordance with theappropriate procedures of the Texas Racing commission.
If the terms and conditions of this agreement are inconsistent with the Texas
Racing Act or the Texas Racing Commission's rules governing pari-mutuel racing,
either current or as amended, the Act or Rules will control unless both parties
to this agreement agree to renegotiate any provisions which are determined to
be inconsistent.
19. INSURANCE
There is presently in existence a Fire and Disaster Insurance Plan
under the auspices of the National HBPA, whereby insurance is provided by a
reputable insurance company selected by the National HBPA, which, with
certain limitations, protects the owners of horses against the loss of their
race horses, tack, etc., due to fire or disaster. Racing associations assist
in providing financing for this program, and for the purpose of determining
the amount of contribution, are grouped into categories on the basis of
volume or handle SHRP, as signatory to this agreement, agrees to participate
in a proportionate share of the annual premium for the National HBPA Fire and
Disaster Program in effect during the term of this agreement.
20. NON-DISCRIMINATION
SHRP and THBPA expressly agree that neither of them will discriminate
for or against any person because of such person's race, color, creed, origin,
sex, religious preference or affiliation. The parties expressly agree that
there shall be no acts, direct, indirect or subtle, that in any manner can be
interpreted as retaliation or retribution against any person for any
affiliation, statement, position or action, other than as may be expressly
permitted by law.
21. GENDER REFERENCES
The parties agree that any reference herein to "horsemen" includes
horsewoman as well and all masculine references and pronouns used herein
include the female equivalent. The masculine references are used merely in
order to reflect language used in the industry and currently incorporated
into the governing document of the THBPA and the Texas Racing Act and Rules
of Racing.
22. BINDING
This agreement shall be binding on and inure to the benefit of the
parties and their successors and assigns.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed by
their duly authorized officers.
TEXAS HORSEMEN'S BENEVOLENT
AND PROTECTIVE ASSOCIATION
Dated: January 1, 1997 S/ TOM DURANT
Tom Durant, President
SAM HOUSTON RACE PARK, LTD.
Dated: March 6, 1997 /S/ ROBERT L. BORK
Robert L. Bork
Senior Vice President/General Manager<PAGE>
ADDENDUM
This addendum ("Addendum") to that certain horsemen's agreement between
the Texas Horsemen's Benevolent and Protective Association, Inc. and Sam Houston
Race Park, Ltd., effective as of January 1, 1997 ("Contract"), made and
effective as of December 1, 1997, represents the understandings and agreements
by and between Sam Houston Race Park, Ltd., a racing association ("Association")
which holds the license granted by the Texas Racing Commission ("Commission") to
operate Sam Houston Race Park, and the Texas Horsemen's Benevolent and
Protective Association, Inc. ("THBPA")
WHEREAS, the Commission has formally recognized the Texas Horsemen's
Partnership, L.L.P. ("Partnership") as the officially-recognized horsemen's
organization to represent all owners and trainers racing horses in Texas; and
WHEREAS, the Partnership has authorized the THBPA to negotiate, execute
and deliver this Addendum to the Contract; and
WHEREAS, the Contract heretofore specified a percentage deduction from
the Association's horsemen's purse allocation, subject to adjustment by mutual
consent, to be paid monthly to the Partnership for operational expenses and
benevolence; and
WHEREAS, the parties now desire to enter into this Addendum to the
Contract which will set forth modified terms and conditions relating to the
percentage of funding for the Partnership's expenses and benevolence;
NOW, THEREFORE, the THBPA and the Association do hereby agree to
provide funding for the Partnership's expenses and benevolence as follows:
1. The THBPA agrees that, beginning December 1, 1997, and
continuing until time as a difference percentage may be agreed upon by both
parties to this Addendum, funding of the Partnership shall be provided
by deducting and paying to the Partnership on a monthly basis (within 10
days for the preceding month) an amount equal to three (3) percent (.03) of
all purse revenues generated from both live and simulcast wagering; provided
that such deduction shall not reduce the Association's commission from any
such live or simulcast wagering below the amount the Association would
receive in the absence of this Addendum. Furthermore, in addition to the
above funding, Sam Houston Race Park agrees to pay $150.00 per each live race
day in 1998, beginning on July 3, 1998, to the Horsemen's Bookkeeper Inc. For
the operation of a centralized bookkeeping system.
2. This funding mechanism supersedes and replaces all previous and
existing contractual provisions for funding the Partnership and/or the THBPA,
including without limitation Paragraph 4 of the Contract which is hereby
deleted along with the reference "In addition to the .0015 (.15%) provided
for in Paragraph 4 of this agreement" in the last sentence of Paragraph 5 of
the Contract. Notwithstanding the above, the percentage deduction specified
in the Contract shall remain in effect from January 1, 1997 through November
30, 1997 (or such date as Commission approval is obtained). Except as
amended by this Addendum, the Contract shall remain in full and fore and
effect.
3. This Addendum to the Contract is duly authorized by the Board
of Directors of the THBPA, andshall be binding on and inure to the benefit of
the parties hereto and their successors and assigns.
Executed in multiple copies on the dates indicated.
IN WITNESS WHEREOF, the parties have caused this Addendum to the
Contract to be executed by their duly authorized officers and representatives.
TEXAS HORSEMEN'S BENEVOLENT
AND PROTECTIVE ASSOCIATION, INC.
/S/ DAVID GRAHAM
Dated: 02/26/98 By: DAVID GRAHAM, President
SAM HOUSTON RACE PARK, LTD.
/S/ ROBERT L. BORK
Dated: 02/24/98 By: Robert B. Bork
Senior Vice-President
and General Manager
This Addendum is hereby ratified and approved by the Management
Committee of the Texas Horsemen's Partnership, L.L.P., acting through its duly
authorized representative.
TEXAS HORSEMEN'S PARTNERSHIP, L.L.P.
/S/ DAVID GRAHAM
Dated: 02/26/98 By: DAVID GRAHAM, Chairman
SIMULCASTING SERVICES AGREEMENT
AGREEMENT made this 24th day of February, 1998, by and between AUTOTOTE
COMMUNICATION SERVICES, INC. with its principal place of business at 100
Bellevue Road, P.O. Box 6009, Newark, DE 19714-6009 (hereinafter referred to
as "ACSI") and SAM HOUSTON RACE PARK, LTD., (hereinafter referred to as
"SHRP") with its principal place of business at One Sam Houston Place, P.O.
Box 2323, Houston Texas 77252-2323.
WITNESSETH:
WHEREAS SHRP wishes to grant and ACSI wishes to acquire the right to
disseminate live audio-visual telecasts of races on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties hereto agree as follows:
1. LICENSE
SHRP hereby grants to ACSI, and ACSI hereby accepts from SHRP the right
and license (the "License") to disseminate live audio-visual telecasts of races
via satellite transmission (the "Simulcasts") from SHRP ("Track"), solely to
tracks (including the Track) and other authorized off-Track sites (collectively,
"End Users") in the United States and internationally.
2. THE SIMULCASTS
The simulcasts shall consist of telecasts of all live races on which
betting is conducted at the Track on all days set forth on its respective
Schedule A hereto (each such scheduled day's races in totality being referred
to as a "Card").
The normal Simulcast race schedule at the Track during the term of this
Agreement is set forth on the Schedule A attached hereto. ACSI acknowledges
that the Track may need to reschedule race days and times. The Track will
notify ACSI in writing at least 20 days in advance as to any change in the
schedule of race dates or transmission times. If less than 20 days notice is
received, ACSI will use its commercially reasonable efforts to accommodate
the Track's requirements provided that the Track will pay any additional
direct costs incurred by such change. In addition, if ACSI incurs additional
charges including, without limitation, additional transponder time and/or
personnel overtime due to acts of, or on behalf of, the Track, including,
without limitation, charges resulting from races running longer than usual,
the Track shall pay to ACSI such reasonable additional charges upon receipt
of billing and any reasonably requested documentation.
3. PROVISION OF SIGNAL; SIMULCAST SECURITY; DUTIES OF ACSI AND THE TRACK
a. ACSI shall furnish satellite uplink transmission facilities and
uplink services, including one trained operator and a compressed video
channel service on Galaxy 6 or equivalent C-band satellite for each
Card and shall be responsible, at its sole cost and expense, for the
transmission of the Simulcast signal at the Track, and for the compression,
encoding, uplinking and satellite transmission of the Simulcast to downlink
facilities of End Users. Onsite facilities shall include an encoder,
C-Band antenna, a fully redundant C-Band transmitter and such other equipment
necessary to provide the uplink services. ACSI shall transmit Simulcast
signals and shall take such actions as are reasonably necessary, whether by
coded transmission or otherwise, to ensure that, during the term hereof, no
unauthorized person or entity shall tap, cut into, alter or misappropriate
the Simulcast signal to the downlink facility. ACSI shall not be responsible
for the production, programming or content of the Track's signal.
b. ACSI shall obtain all permits and licenses necessary to perform the
services and otherwise provide the services in compliance with all applicable
local, state and federal laws, including, without limitation, licenses and
permits required by the FCC.
c. ACSI shall provide all necessary system integration, operation
and maintenance of satellite<PAGE>
transmission systems in accordance with FCC and
other applicable rules and regulations.
d. ACSI shall provide all necessary system integration, operation
and maintenance of video compression systems in accordance with the Track's
requirements and specifically to meet or exceed broadcast television
standards as outlined in specifications RS-170A for video/audio signals and
RS 250-C for satellite transmission parameters.
e. ACSI shall provide all necessary facilities management including
transponder inventory, uplinkfacility and human resource management/scheduling.
The operator shall be onsite at the Track two hours prior to the start of the
first post time.
f. ACSI shall provide all necessary (i) network management (where
requested or required), which includes, but is not limited to the inventory,
distribution and maintenance of IRD population (ii) and satellite network
operations management, which includes, but is not limited to uplink facility
operation and maintenance.
g. ASCI shall provide all satellite network maintenance on site at the
Track. ACSI shall bear the cost of shipping and receiving components located
in the uplink unit in the event any components must be sent to ACSI's repair
facility.
h. ACSI agrees that all employees hired by ACSI in connection with the
Track shall be licensed under Section 305, Subchapter B, of the Texas Racing
Commission Rules (the "Rules"), shall at all times while working at the Track
prominently display its license badge and otherwise comply with all rules and
regulations of the Texas Racing Commission.
i. If employees hired by ACSI shall possess or have present in his or
her system while performing his or her duties at the Track, a "dangerous drug"
as defined in Section 311, Subchapter C of the Rules, in violation of those
Rules, then, said conduct shall be grounds for immediate termination of that
employee's employment at the Track. Employees shall submit to drug and
alcohol testing as required by said Rules.
j. The Track will furnish or cause to be furnished at its own
expense the following:
1. On site production facilities for, and production of, the audio/
visual coverage of each Card including any necessary cameras, audio equipment,
tape recorders and playback machines, monitors, test equipment, terminals and
other associated technical equipment required to produce a broadcast standard
signal that meets or exceeds the technical requirements of the FCC and any
common carrier that operates the satellite being used for the transmission
of the Simulcasts;
2. All necessary production and technical personnel required to
produce the audio/visual coverage of the Cards and to operate and maintain
the origination and recording equipment;
3. Two telephone lines installed at the uplink unit to be used for
business communications by the uplink operator;
4. Sufficient power to operate and maintain the uplink;
5. Adequate space at an appropriate site within the Track for the
location of the uplink facilities. Said designated site shall permit and
allow the transmission of the Simulcast signal without interference and
shall be in close proximity to the production unit;
6. Two audio and two video cables (primary and secondary) between
the Track's production unit and the uplink facilities;
7. Security at the Track in accordance with the Track's normal
security procedures to protect ACSI's facilities and equipment at all times.
4. THE FEE
a. In consideration of the facilities and services to be provided by
ACSI during the term hereof, the Track shall pay to ACSI a fee (the "Fee") of
One Thousand, One hundred seventy five dollars ($1175) per Card during the
term of this agreement. In the event of racing being canceled due to
national emergency, inclement weather, labor dispute, fire, failure of
equipment, or other similar occurrence beyond the reasonable control of ACSI
or the Track (a "Force Majeure Event"), the Fee will be reduced to 75% or
Eight Hundred Eighty dollars ($880) per canceled card during the continuance
of the Force Majeure Event but not to exceed thirty days. In the event of
such Force Majeuer Event(s), ACSI will use reasonable efforts to resell
the transponder time allowed the Track pursuant to this Agreement and if
successful in doing so, ACSI will credit the Track any such amounts
received during the period of the Force Majeure Event(s), not to exceed
thirty days.
The above fees are based in part upon a reservation of six (6) hours
of compressed transponder time for each Card during the term of this Agreement
as set forth on Schedule A hereto. Any extended use of facilities and services,
if available, in excess of such reserved time will be billed to the Track in
quarter hour increments at the rate of $87.00 for each additional fifteen
minutes (or portion thereof) of usage.
If ACSI does not, due to acts and omissions of ACSI other than a Force
Majeure Event (including satellite pre-emption), transmit an entire Card, ACSI
shall pay to the Track an amount equal to the difference of the revenues the
Track would have received had ACSI transmitted the entire Card.
Notwithstanding the foregoing, ACSI's liability is limited to $50,000 during
the term of this Agreement. If such liability limitation is exceeded during
the term of this Agreement, the Track has the right to terminate the Agreement.
b. The Track shall be billed weekly at the beginning of each week for
the previous week's scheduled cards and payment will be due net thirty days upon
receipt of billing. In the event a credit or surcharge is due, pursuant to the
provisions of paragraph 4.a, these will be reflected within the subsequent two
billings.
If the Track fails to remit payments when due, the Track will pay a
finance charge at the rate of one (1%) percent per month on all unpaid charges
that are in excess of forty five days past due.
If the Track fails to remit payment of any invoice within forty five
days of the receipt of such invoice, ACSI may, upon ten days prior written
notice to the Track, discontinue providing facilities and services to the
Track as herein provided, except that if the Track remits payment of such
unpaid charges to ACSI within said ten day period, such facilities and
services will continue to be provided by ACSI as though no breach had
occurred.
d. ACSI agrees that no racetrack provided satellite broadcast
services by ACSI of a comparable size in terms of number of annual race
days and average number of IRDs will be afforded a contractual arrangement
more favorable than that of the Track. The Track agrees that ACSI IRDs
located in the New York State Off Track Betting Corporations will not be used
for analysis of comparable size of average number of IRDs for the purpose of
adhering to or adjudicating this provision.
5. END USERS: INTEGRATED RECEIVER/DECODERS
a. The Track retains the sole right, authority and license to
negotiate and enter into contracts with End Users which shall authorize such
End Users to downlink and commercially display the Simulcasts ("End User
Agreements"). All proceeds or consideration received by the Track pursuant
to End User Agreements shall be the sole property of the Track, and ACSI
shall have no claim to any such proceeds or consideration, except IRD rental
fees as described in 5.d., 5.e., 5.f. and 5.g. below. ACSI shall refrain
from all direct or indirect interference with such contracts or contractual
negotiations which the Track may undertake in accordance with the foregoing
provisions.
b. All End User Agreements shall provide that (i) the End Users shall, at their
sole cost and expense, downlink and commercially display the Simulcast only to
authorized End Users, (ii) in no event shall any End User utilize or transmit
the Simulcast except as expressly permitted by the laws, rules and regulations
of its respective State or any governmental body with jurisdiction over such
End User, ACSI, or the Simulcast, (iii) the End Users shall take all steps
as are reasonably necessary to insure that no unauthorized person or entity
shall tap, cut into, alter or misappropriate the Simulcast signal from the time
the signal is received by the downlink facility and (iv) payment will be made
to ACSI for IRD rental fees as described in 5.d., 5.e., 5.f. and 5.g. below.
c. In addition to the facilities and services described above, ACSI
shall also furnish all necessary Integrated Receiver/Decoders (IRDs) required
by the Track at each End User site that has been authorized by the Track to
receive and commercially display the Simulcast. Attached to this Agreement
as Schedule B is a list of such End User sites for the Track. The Track may
add sites to its Schedule B upon 3 day's prior written notice to ACSI but
shall not move any IRD from its End User sites as set forth on said schedule
without the prior written consent of ACSI.
d. ACSI will provide the IRDs to the Track's authorized End Users at a monthly
rental rate determined by the Track and billed by ACSI directly to the End
Users. ACSI will provide fifteen (15) IRDs to the Track for use in the State
of Texas only at no charge. In each case, the End User shall be responsible
for all IRD shipping charges incurred between the Track's authorized End
Users and ACSI or its authorized shipping and receiving agent or between ACSI
and End Users so long as the Track's simulcast contract with the End Users
stipulates that the End User shall be responsible for such shipping costs.
In the absence of such stipulation, the Track agrees to pay shipping costs
both ways on behalf of the End Users. Of such rental fee, during the period
of the Track's live meets only, ACSI will remit to the Track, all paid
individual IRD rental fees per month in excess of $150 in the form of a
credit to the uplink invoice, the reconciliation of such rental fees due the
Track to be provided at the end of each respective race meeting during the
term of this Agreement. The Track will pay to ACSI the difference of any IRD
monthly rental rates determined by the Track to be less than $150 per month
and will be reconciled against the monthly credit given to the Track.
Notwithstanding the foregoing, if at the time that an End User Agreement
becomes effective, if such End User is already using a compatible IRD
furnished by ACSI, ACSI may allow use of such IRD by the End User for the
reception of the Track's signal as well, but the End User(s) shall pay to
ACSI a piggyback services fee of $100 net per each such End User per month
subject to permission of ACSI, which will not be unreasonably withheld. No
IRD rental revenue from such piggybacked IRDs will be credited to SHRP and
SHRP will not be financially responsible to ACSI for the difference less
than $150 per month. A list of such piggyback End Users must be provided to
ACSI ten days before the beginning of each successive race meeting during the
term of this Agreement and on an ongoing basis during each race meet
detailing those IRDs to be authorized or de-authorized for use for that
coming month.
e. Rates quoted for IRD rental charges and piggyback fees are minimum monthly
charges based on use in a calendar month or any part thereof. IRD rental
charges and piggyback fees will be billed at the beginning of a calendar
month for that month's usage. Additional charges or fees for End Users
scheduled and placed in-service during a month will be billed in the
following month.
If the End User fails to remit payments when due, the End User will pay a
finance charge at the rate of one and one half percent (1 -1/2%) per month
on all unpaid charges that are in excess of thirty days past due. All
payments received from the End User will first be credited to any of the
End User's unpaid finance charges and the balance of such remittance, if
any, shall be credited to its open unpaid charges. In the event that
collection or legal costs are incurred relative to unpaid charges, the End
User shall be liable for reasonable costs directly associated therewith.
f. All IRDs provided to the Track and the End Users shall remain at all times
the property of ACSI and shall be returned by the Track and the End Users (all
shipping and packaging prepaid) to ACSI's place of business or other United
States location designated by ACSI within 10 days of the completion of the
current meet at<PAGE>
the Track, or upon expiration or termination of this
Agreement, in the same condition as received, reasonable
wear and tear excepted. If the Track or other End User fails to return the
IRDs within 10 days, ACSI will send notice of such to the Track and End User
and the Track or other End User will pay to ACSI a fee of $10.00 per day
beyond the 10 days, until such time as proof that the IRD is returned is
supplied to ACSI or the IRD is declared lost. In the event that the Track
or other End User returns an IRD in an damaged condition, the Track or other
End User shall pay to ACSI the cost of the repair of the IRD plus a service
fee of $200.00. In the case that an IRD is lost or damaged such that it
cannot be repaired, the Track or other End User will pay to ACSI a "lost or
damaged decoder" fee of One Thousand Seven Hundred fifty dollars ($1750.00)
per IRD.
g. All quoted rates are net of any applicable sales tax or use taxes which may
be imposed during the term of this Agreement.
6. TERM
The term of this Agreement shall be a period of time commencing on
April 6, 1998 and continue throughand including April 5, 2000 unless sooner
terminated with the provisions hereof.
The Track hereby grants to ACSI the exclusive right of refusal with
reference to a simulcasting services agreement for the period commencing
January 1, 2000 and ending December 31, 2002 (the "Extended Term"). The
term "right of refusal" as used herein shall mean ACSI's right to accept the
same material terms and conditions that the Track has been able to negotiate
with one or more third parties for the services and facilities to be provided
during the Extended Term. ACSI shall have a period of five (5) business days
commencing on the first business day after ACSI receives written notice from
the Track of the details of such material terms and conditions together with
the Track's acknowledgment that they are willing to accept such proposed
terms and conditions in which to exercise its right of refusal. If ACSI
elects not to, or fails to, exercise its right of refusal as provided herein,
the Track shall be free to enter into an agreement with such third party on
such material terms and conditions, provided, however, that if the Track
fails or refuses for any reason whatsoever to enter into an agreement with
said third party or parties on terms and conditions consistent in all
material respects with those set forth in the notice to ACSI, ASCI's right
of refusal shall continue and shall apply to any arrangements negotiated or
agreed upon with such third party or other third parties for the provision of
facilities and services during the Extended Term.
7. INDEMNIFICATION
a. SHRP, its successors and assigns shall jointly and severally
indemnify, defend and hold harmless ACSI, its directors, officers,
shareholders, representatives, employees, successors and assigns from and
against all liabilities, obligations, costs and expenses (including, without
limitation, reasonable legal fees and expenses) suffered or paid as a result
of any claims, demands, actions, causes of action, or suits, of whatever
nature, arising under or in connection with: (i) the Track's breach or
alleged breach of any representation, warranty, undertaking or agreement
hereunder; (ii) the Track's performance or nonperformance of its obligations
hereunder or its distribution of the Simulcast or use of the transponder time
other than in accordance with the terms of this agreement; (iii) the failure
of the Track to comply with all laws, rules or regulations promulgated by any
governmental body having jurisdiction over the Track or the Simulcasts; or
(iv) any other negligent acts or omissions of, or attributable to, the Track
in connection herewith.
b. ACSI, its successors and assigns, shall indemnify, defend and hold
harmless SHRP, its directors, officers, shareholders, representatives,
employees, successors and assigns from and against all liabilities,
obligations, costs and expenses (including, without limitation, reasonable
legal fees ands expenses) suffered or paid as a result of any claims,
demands, actions, causes of action, or suits, of whatever nature, arising
under or in connection with (i) ACSI's breach or alleged breach of any
representation, warranty, undertaking or agreement hereunder; (ii) ACSI's
performance or nonperformance of its obligations hereunder; (iii) the failure
of ACSI to comply with all laws, rules or regulations promulgated by any
governmental body having jurisdiction over ACSI or the Simulcasts; or (iv)
any other acts or omissions, or attributable to, ACSI in connection herewith.
Notwithstanding any other provision of this Agreement, ACSI shall not
be liable to SHRP for any direct, incidental or consequential damages due to,
caused by or resulting from the temporary or permanent pre-emption, failure
or interruption (in whole or in part) of Simulcast services, the quality of
the transponder service provided or ACSI's inability to provide the
transponder time reserved pursuant to this Agreement due to a Force Majeure
Event, In the event of a satellite transponder preemption, ACSI shall make
reasonable efforts to secure satellite time on another transponder.
c. The respective indemnities set forth above shall survive the
expiration, termination or suspension of this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF SAM HOUSTON RACE PARK
The Track hereby represents and warrants that:
a. SHRP is a limited partnership, duly organized, validly existing and
in good standing under the laws of the State of Texas.
b. The Track has full power and authority to execute this Agreement
and the execution and performance of this Agreement by the Track does not and
will not violate any provision of its charter, by laws or any contract to
which it is a party or by which it may be bound;
c. The Track has been granted all the necessary authority, license,
permits and releases required to transmit and distribute the Simulcast
signals as contemplated herein, and has received or will receive prior to the
effective date of this Agreement, the permission of the State of Texas Racing
Commission and/or any other government authorities which have jurisdiction
over the transmission and reception of the Simulcast signals within their
respective jurisdictions.
9. REPRESENTATIONS AND WARRANTIES OF ACSI
ACSI hereby represents and warrants that:
a. ACSI is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware.
b. ACSI has full power and authority to execute this Agreement, and
the execution and performance of this Agreement by ACSI does not and will not
violate any provision of its charter, by laws or any contract to which it is
party or by which it may be bound;
c. ACSI has obtained or will obtain all necessary licenses, permits
and authorization required by any governmental body having jurisdiction over
ACSI and its activities in connection with its transmission of the Simulcast.
10. EVENTS OF DEFAULT; REMEDIES; TERMINATION
a. ACSI shall be in default hereunder and the Track shall have the
right to terminate this agreement upon notice to ACSI if (i) ACSI shall be
in breach of any representation or warranty set forth in Section 9 hereof;
of (ii) ACSI shall be in breach of any other covenant set forth herein,
which breach continues without ACSI commencing in good faith to remedy such
breach for 5 days following delivery by the Track to ACSI of notice thereof.
b. The Track shall be in default hereunder and ACSI shall have the
right to terminate this Agreement upon notice to the Track if (i) the Track
shall fail to pay to ACSI any Fees or other charges imposed by ACSI
on the Track when and as due and the expiration of any applicable cure
periods; (ii) the Track shall breach any representation or warranty set
forth in Section 8 hereof; or (iii) the Track shall breach any other
provision of this Agreement, which breach continues without the Track
commencing in good faith to remedy such breach for 15 days following the
delivery of ACSI to the Track of written notice thereof, provided if the
Track is diligently prosecuting said cure or remedy, it shall have
commercially reasonable time beyond said 15 days.
c. If any governmental agency or body or any other entity with
jurisdiction over the Track, ACSI, the Simulcasts or the activities of
either party in connection therewith, direct the Track or ACSI to terminate
the Simulcasts, for whatever reason, this Agreement shall terminate and
neither party shall have any further obligation hereunder except for the
Track's obligation to pay any fees or other charges for services performed
or facilities and/or equipment furnished prior to the date of such
termination and the obligation for the Track to return all equipment
furnished by ACSI in good condition and except for the obligation of the
Track and ACSI to indemnify each other in accordance with Section 7 of this
Agreement.
11. INSURANCE
a. ACSI shall secure and maintain with one or more insurance companies,
satisfactory to SHRP, the following insurance:
1. Worker's Compensation covering all employees of ACSI in accordance
with the laws of the State of Texas, including employer's liability, in an
amount not less than $1,000,000, including coverage for occupational diseases.
2. Comprehensive General Liability with limits of not less than
$1,000,000 combined single limit including liability a contractual liability
endorsement covering the indemnifications by ACSI to SHRP under this
Agreement.
b. A certificate for all insurance to be obtained by ACSI shall be
delivered by ACSI to SHRP and shall include an endorsement that SHRP will be
given at least 30 days prior written notice of cancellation or any material
change in coverage and name SHRP as an "Additional Insured" with respect to
the Comprehensive General Liability.
c. Neither SHRP or ACSI shall be liable (by way of subrogation or
otherwise) to and hereby waives its rights against the other parties (or to
any insurance company insuring the other parties) for any loss or damage
covered by insurance to the extent of that coverage only required to be
carried by that party as provided in this Agreement.
12. GENERAL
a. SHRP shall not have the right to sell, lease, license, assign,
barter, give, transfer or otherwise dispose of all or any portion of its
right to use the transponder time or any other Simulcast facilities or
services reserved, except as herein provided and under identical fee
structures, terms and conditions of this contract, nor to change the
location of any IRD provided hereunder without, in each case, the prior
written consent of ACSI.
b. This Agreement may not be modified except by written Amendment
signed by all parties.
c. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas applicable to contracts made
and to be entirely performed therein without reference to its conflict of
laws principles.
d. This Agreement contains the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersedes all
prior or contemporaneous agreements with respect to such subject matter.
e. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
f. Delivery of all notices, invoices or communications provided for
herein shall be sufficient ifmade in person or after three days if mailed by
first class registered or certified mail, return receipt requested and
postage paid to the parties at their addresses set forth below or at such
other addresses as they may designate by notice in accordance with this
paragraph.
TO ACSI: Autotote Communications Services, Inc.
100 Bellevue Rd.
Newark, Delaware 19714
Attn: Mark Sillcox, President
TO SHRP: Sam Houston Race Park, Ltd.
One Sam Houston Place
Houston, Texas 77252-2323
Attn: Robert L. Bork, Senior Vice President
With a copy to: MAXXAM, Inc,
5847 San Felipe
Suite 2600
Houston, Texas 77057
Attn: Byron L. Wade
g. The section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
h. No course of dealing between the parties or any delay on the part
of any party in exercising any rights hereunder shall operate as a waiver of
any rights of such party, except to the extent expressly waived in writing by
such party.
i. ACSI has the right to refuse to perform any of its obligations
under this Agreement if, in its opinion, such performance violates or aids
in the violation of any law, regulation, or satellite license agreement
governing ACSI, SHRP, an End User or the Simulcast.
j. This Agreement may be executed in one or more counterparts, each of
which shall, for all purposes, deemed an original, but all of such
counterparts shall constitute one and the same instrument.
k. Except as expressly provided in this Agreement (including Section
4a.), neither ACSI nor the Track shall be responsible for or deemed to be in
default under this Agreement on account of delays in performance or failure
to perform due to causes beyond it control and not occasioned by its fault or
negligence, including, but not limited to, civil war, insurrections, strikes
or other labor disputes, disputes with the Texas Horse Breeder's Association
or similar associations, riots, fires, floods, hurricanes, interplanetary or
atmospheric conditions, satellite pre-emption, explosions, earthquakes,
accidents, any act, demand, requirement priority or war activities of
government including the Texas Racing Commission, allocation regulations or
orders of government affecting materials; acts of God or the public
enemy, delay in transportation, shortage of fuel or other materials,
epidemics, quarantine restrictions,<PAGE>
embargo (collectively "Force Majeure").
l. In the event the Track shall forfeit or for any reason no longer
owns the rights to the Class I horse racing license issued by the Texas
Racing Commission (the "Commission") or sells a controlling interest in the
Track, SHRP shall have the right to terminate this Agreement by giving not
less than 30 days notice of termination to ACSI, in which case SHRP shall be
automatically released from all further liability under this Agreement, after
the expiration of the 30 day period.
m. If any of the provisions of this Agreement is or becomes invalid,
illegal or unenforceable, the validity, legality or unenforceability of the
remaining provisions shall not in any way be affected or impaired.
Notwithstanding the foregoing, the parties shall thereupon negotiate in good
faith in order to agree to the terms of a mutually satisfactory provision,
achieving as nearly as possible the same commercial effect to be substituted
for the provision(s) so found to be void or unenforceable.
n. SHRP's obligations under this Agreement are subject to and
conditioned upon approval by the Texas Racing Commission in accordance with
the provisions of the Texas Rules of Racing (the "Rules") included in
the Laws and Rules Governing Pari-Mutuel Racing and any other applicable
sections and ACSI agrees to provide any information reasonably requested by
the commission so as to facilitate the approval of this Agreement.
ACSI recognizes that this Agreement is subject to approval by the Commission
and that this Agreement shall be deemed void ab initio if it is not approved
by the Commission.
IN WITNESS WHEREOF, the parties have hereunto set forth their respective hands
and seals as of the date first written above,
Autotote Communication Services, Inc. Sam Houston Race Park, Ltd.
By:/s/Mark Silcox By:Robert Bork
SCHEDULE A
SHRP Transmission Schedule
Racing Simulcast Dates
Transmission Times
Matinees
Evenings
Special
SCHEDULE B
SHRP IRD Sites
Site Name Address Telephone Contact Person
