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EXHIBIT 2.2
FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT
This First Amendment is made as of April 19, 1999 by and between KE
Acquisition Corp. ("Shareholder") and Churchill Downs Incorporated and Churchill
Downs Management Company (collectively "Buyer") with respect to that certain
Stock Purchase Agreement by and between Shareholder and Buyer dated as of
January 21, 1999 (the "Purchase Agreement").
WHEREAS, Buyer and Shareholder have agreed to resolve certain
objections raised by Buyer with respect to the Extended Review Litigation on the
terms set forth below in this Amendment; and
WHEREAS, Shareholder and Buyer have agreed to extend the Closing Date
as set forth in the Purchase Agreement as set forth below:
NOW, THEREFORE, Shareholder and Buyer hereby agree that the Purchase
Agreement remains in full force and effect, with the following amendments:
1. The Closing Date as defined in Section 1.11 of the Purchase
Agreement is hereby amended to be April 23, 1999, or such earlier
date as is mutually agreed between Shareholder and Buyer.
2. Shareholder is acknowledged to be a Florida corporation, and all
references in the Purchase Agreement or any amendment thereto to
the contrary are hereby deemed to be revised to reflect the
status of Shareholder as a Florida corporation.
3. The Buyer hereby confirms and agrees that, except as set forth
below and except such conditions to be satisfied at Closing, the
following conditions in Section 3.3 of the Agreement (those set
forth in Sections 3.3.3, 3.3.4, and 3.3.6, but not those set
forth in Sections 3.3.1 and 3.3.2 of the Purchase Agreement), as
well as the conditions set forth in Sections 4.1 and 4.2 of the
Purchase Agreement have been satisfied or waived by Buyer,
subject only to:
(a) the absence of the occurrence of an event described in
Sections 3.3.5 or 3.3.7 of the Purchase Agreement (which
conditions are understood and agreed to continue to such
date as the Closing Date occurs);
(b) the due performance and satisfaction of the conditions set
forth in Sections 3.6, 3.7 and 3.8 of the Purchase
Agreement.
4. Shareholder hereby agrees, subject to the Closing of the
transaction described in the Purchase Agreement and subject to
the limitations applicable to amounts indemnified pursuant to
subsection (i) of Section 25 of the Purchase Agreement, to
indemnify the Corporations for (a) up to $500,000.00 of the
liability amounts payable by the Corporations in the event of a
final judgment in favor of (i) the Investment Corporation of Palm
Beach and its co-defendants on the merits in Calder Race Course,
Inc. v. Investment Corporation of Palm Beach, et al., Case Number
98-14519, Circuit Court of Broward County requiring repayment by
Calder and/or Tropical of amounts received and/or recorded as
income by Calder
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or Tropical as breakage or uncashed ticket revenues for 1996,
1997 or 1998<F1>, (ii) the Division of Pari-Mutue Wagering on
the merits in INVESTMENT CORPORATION OF PALM BEACH, CALDER RACE
COURSE, INC. ET AL. V. DEPARTMENT OF BUSINESS AND PROFESSIONAL
REGULATION, Case Numbers 97-3414 and 97-2926, District Court of
Appeal of Florida, Third District<F2>, requiring payment or
escheat by Calder and/or Tropical of amounts received and/or
recorded as income by Calder or Tropical as breakage or uncashed
ticket revenues for 1996, 1997 or 1998, or (iii) the plaintiffs
in the EEOC litigation<F3> requiring payment by Calder of damages
to such plaintiffs, provided, however, that the maximum amount
subject to indemnification by shareholder in respect of the EEOC
litigation shall be $150,000; and (b) subject to the aggregate
$500,000 maximum indemnification amount, up to $50,000 of any
amount awarded as a part of a judgment against the Corporations
and required to be paid by the Corporations in respect of
out-of-pocket costs and attorneys fees paid by the plaintiffs in
the EEOC Litigation or the defendants in the Guest Track
Litigation. The aggregate maximum indemnification amount payable
by Shareholder shall be $500,000, of which the maximum amount
subject to indemnification in respect of the EEOC litigation
(including any amounts payable pursuant to clause (b) above)
shall be $150,000 (or such lesser amount as may be available
under the $500,000 aggregate limit, after deduction of any
amounts paid in respect of the Escheats Litigation), and the
maximum amount subject to indemnification in respect of the
Escheats Litigation (including any amounts payable pursuant to
clause (b) above) shall be $450,000 (or such lesser amount as may
be available under the $500,000 aggregate limit, after deduction
of any amounts paid in respect of the EEOC Litigation). From and
after the Closing, Buyer shall have the right to conduct the
Escheats Litigation and the EEOC Litigation in the best interest
of the Corporations, as reasonably determined by Buyer. Prior to
the Closing, Shareholder shall not agree to any settlement or
compromise of the EEOC Litigation or the Escheats Litigation
without the prior written consent of Buyer, which consent shall
not be unreasonably withheld, and after the Closing Shareholder
may not settle or compromise such matters. Subject to clause (b)
above, the foregoing indemnification does not include any
indemnification or sharing of the costs associated with legal
fees and expenses in such litigation (whether or not decisions on
the merits of such litigation are rendered adverse to Calder and
Tropical), and is subject to the limitations and procedures
applicable to claims indemnified pursuant to subsection (i) of
Section 25 of the Purchase Agreement. The obligations of
Shareholder set forth above are understood and agreed by
Guarantor to be included within the Guaranteed Obligations which
are the subject
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<F1> (which litigation is referred to herein as the "Guest Track Litigation")
<F2> (which litigation is referred to herein as the "Division Litigation").
(The Guest Track Litigation and the Division Litigation are collectively
referred to herein as the "Escheats Litigation").
<F3> EQUAL EMPLOYMENT OPPORTUNITY COMMISSION V. CALDER RACE COURSE, INC.,
Case Number 97-4223, United States District Court for the Southern District of
Florida, Miami Division; and POER ET AL. V. CALDER RACE COURSE, INC.
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of the Guaranty (and are subject to the limitation on Guarantor's
liability thereunder and otherwise subject to all terms and
conditions of such Guaranty).
5. Buyer and Shareholder hereby agree that adjustments shall be made
to the Calder Race Course, Inc. and Tropical Park, Inc. Audited
1998 Annual Financial Statements, to (i) record a reserve in
respect of outs and escheats receivables in the amount of $
246,000.00 and (ii) record a reserve in respect of certain check
receivables in the amount of $ 93,000 (the "Churchill
Adjustments"), on the condition that such Churchill Adjustments
shall have no force or effect for purposes of any of the
financial calculations to be performed pursuant to the Purchase
Agreement. For purposes of the EBITDA, Net Working Capital or
Average Net Working Capital determinations to be performed
pursuant to Section 2.2 of the Purchase Agreement, and any other
adjustment which requires reference to the financial performance
of either Calder, Tropical or the Corporations (each term as
defined in the Purchase Agreement), such determinations shall be
based on the financial statements and performance of Calder and
Tropical assuming that the Churchill Adjustments had not been
made.
6. The Closing of the transaction described in the Purchase
Agreement is intended to Close after the closing of the
transaction described in Section 31 of the Purchase Agreement.
Shareholder and Buyer shall continue to cooperate in their mutual
efforts to cause the closing of such other transaction to occur
before April 16, 1999.
This First Amendment shall be effective as of March 18, 1999.
Capitalized terms not otherwise expressly defined in this First Amendment shall
have the same meanings set forth for such term in the Purchase Agreement. In the
event of any conflict between the terms of this First Amendment and the terms of
the Purchase Agreement, this First Amendment shall control. The Purchase
Agreement remains in full force and effect and is not modified except as
expressly set forth herein.
"SHAREHOLDER" "BUYER"
KE ACQUISITION CORP., CHURCHILL DOWNS INCORPORATED
a Florida corporation a Kentucky corporation
By: /S/ K. NISHIKAWA By: /S/ REBECCA C. REED
Its: PRESIDENT Its: SR. VICE PRESIDENT, GENERAL COUNSEL
and Secretary
CHURCHILL DOWNS MANAGEMENT
COMPANY, a Kentucky corporation
By: /S/ REBECCA C. REED
Its: ASSISTANT SECRETARY
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Guarantor acknowledges and agrees to the terms and conditions set forth in
Paragraph 4 of the foregoing First Amendment.
"GUARANTOR"
KAWASAKI LEASING (USA), INC.
a Delaware corporation
By: /S/ K. NISHIKAWA
Its: PRESIDENT
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