BAY MEADOWS
LAND COMPANY

1200 Park Place
San Mateo, CA 94403
TEL: 650.524.1201
Fax: 650.524.1211
www.bmlc.com

 
August 1, 2005

Churchill Downs California Company
c/o Churchill Downs Incorporated
700 Central Avenue
Louisville, KY 40208
Attn: Rebecca C. Reed

Re: Extension of Phase II Period

Ladies and Gentlemen:

Reference is made to the Asset Purchase Agreement, dated as of July 6, 2005,
(the "APA"), between Bay Meadows Land Company, LLC ("Buyer") and Churchill Downs
California Company ("Seller"). Capitalized terms not defined herein shall have
the meanings ascribed thereto in the APA.

Pursuant to Section 13.4 of the APA, Buyer and Seller agree to amend
Section 12.1(a) of the APA to extend the Phase II Period. The Phase II Period
shall end on August 8, 2005.

This letter agreement, once Buyer and Seller shall have executed and delivered a
counterpart hereof, shall become effective and binding as of August 1, 2005.
Except as expressly provided above, the APA shall remain in full force and
effect and nothing contained in this letter agreement shall be deemed to waive,
alter or otherwise amend any provision of the APA. This letter agreement and the
APA constitute the entire agreement between the parties with respect to the
subject matter of this letter agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this letter agreement. This letter agreement shall be governed
by and construed in accordance with the law of the State of California.

--------------------------------------------------------------------------------

 
BAY MEADOWS LAND COMPANY, LLC
         
By:  /s/ Terrence E. Fancher
 
Name: Terrence E. Fancher
 
Title: President

Agreed:
     
CHURCHILL DOWNS CALIFORNIA
 
COMPANY
         
By:  /s/ Michael E. Miller
 
Name: Michael E. Miller
 
Title: Vice President
 

 
[Signature page to Letter Agreement dated August 1, 2005]
 

 

 

 

2

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BAY MEADOWS
LAND COMPANY

1200 Park Place
San Mateo, CA 94403
TEL: 650.524.1201
Fax: 650.524.1211
www.bmlc.com

 
August 8, 2005

Churchill Downs California Company
c/o Churchill Downs Incorporated
700 Central Avenue
Louisville, KY 40208
Attn: Rebecca C. Reed

Re: Extension of Phase II Period

Ladies and Gentlemen:

Reference is made to the Asset Purchase Agreement, dated as of July 6, 2005,
(the "APA"), between Bay Meadows Land Company, LLC ("Buyer") and Churchill Downs
California Company ("Seller"). Capitalized terms not defined herein shall have
the meanings ascribed thereto in the APA.

Pursuant to Section 13.4 of the APA, Buyer and Seller agree to amend
Section 12.1(a) of the APA to extend the Phase II Period. The Phase II Period
shall end on August 11, 2005.

This letter agreement, once Buyer and Seller shall have executed and delivered a
counterpart hereof, shall become effective and binding as of August 8, 2005.
Except as expressly provided above, the APA shall remain in full force and
effect and nothing contained in this letter agreement shall be deemed to waive,
alter or otherwise amend any provision of the APA. This letter agreement and the
APA constitute the entire agreement between the parties with respect to the
subject matter of this letter agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this letter agreement. This letter agreement shall be governed
by and construed in accordance with the law of the State of California.

--------------------------------------------------------------------------------

 
BAY MEADOWS LAND COMPANY, LLC
         
By:  /s/ Terrence E. Fancher
 
Name: Terrence E. Fancher
 
Title: President

Agreed:
     
CHURCHILL DOWNS CALIFORNIA
 
COMPANY
         
By:  /s/ Michael E. Miller
 
Name: Michael E. Miller
 
Title: Vice President
 

 
[Signature page to Letter Agreement dated August 1, 2005]
 

2

--------------------------------------------------------------------------------

 

BAY MEADOWS
LAND COMPANY

1200 Park Place
San Mateo, CA 94403
TEL: 650.524.1201
Fax: 650.524.1211
www.bmlc.com

August 12, 2005

Churchill Downs California Company
c/o Churchill Downs Incorporated
700 Central Avenue
Louisville, KY 40208
Attn: Rebecca C. Reed
 
Re: Certain Waste Disposal Matters and Extension of Phase II Period

Ladies and Gentlemen:

Reference is made to that certain Asset Purchase Agreement dated as of July 6,
2005 (as amended and in effect on the date hereof, the "APA"), between Bay
Meadows Land Company, LLC ("Buyer") and Churchill Downs California Company
("Seller"). Capitalized terms not defined herein shall have the meanings
ascribed thereto in the APA.

Pursuant to Section 13.4 of the APA, Buyer and Seller agree to amend the APA as
follows:

1. Section 3.4.10 of the APA is hereby deleted and replaced in its entirety with
the following:

3.4.10 Certain Environmental Liabilities. Any and all liabilities, claims,
demands, losses, costs, damages, injuries, obligations, judgments, actions,
causes of action, fines, assessments, penalties or expenses, including
consultants' and attorneys' fees resulting from (a) the direct or indirect
disposal or arrangement for the disposal of Hazardous Substances from the Real
Property to, at or onto a location other than the Real Property from September
10, 1999 through the Closing Date, including without limitation to the Dominguez
Channel Watershed/Consolidated Slip, (b) any property owned, leased or operated
by Seller (other than the Real Property) or (c) the disposal, depositing,
placing, presence, storage, dumping or other release of any material or
substance in, to, at, onto, from or under any waste pits located at the
northeast corner of the training track on the Real Property prior to the Closing
Date including, without limitation, any related investigation, remediation,
clean-up, removal, disposal, transportation of waste and closure activities
("Remedial Activities") relating to the contamination identified in the sampling
conducted of the waste pits in July 2005.

2. A new Section 9.3.6 is hereby added to the APA as follows:

9.3.6. Control of Certain Environmental Liabilities: (a) Seller shall have the
right to control the Remedial Activities relating to those matters for which it
has accepted responsibility pursuant to Section 3.4.10(c), provided that all
such Remedial Activities shall (i) comply with all applicable Environmental
Laws, (ii) be performed at a time and in a manner that does not unreasonably
interfere with the operation or future redevelopment of the Real Property and
(iii) be undertaken promptly and concluded as expeditiously as practicable using
commercially reasonable efforts, subject to the schedules and approvals of the
applicable Governmental Authorities. The obligations of Seller in respect
thereof shall survive the Closing Date, and the completion of such Remedial
Activities shall not be a condition to the Closing. Seller shall have the
exclusive right in its sole discretion to challenge, appeal or seek amendment,
modification, repeal or termination of any order issued by a Governmental
Authority in connection with the Remedial Activities, including a suspension or
stay of any required work while such action is pending.

(b) Seller shall promptly provide to Buyer copies of all work plans, laboratory
and other reports, analytical results and final data and shall engage in
reasonable consultation with Buyer, including considering in good faith any
comments of Buyer relating to any requirements of Environmental Laws and
relating to any submissions to Governmental Authorities. Buyer may observe and
be present during the performance of any Remedial Activities and may participate
in meetings or discussions with Governmental Authorities. Neither Buyer nor its
authorized representatives shall, nor shall Buyer or its representatives attempt
to, lobby, demand, or interfere with, Seller's discussions with Governmental
Authorities regarding the Remedial Activities in an effort to influence those
Governmental Authorities with regard to what Seller is required to do in
completing the Remedial Activities. Buyer may contact Governmental Authorities
as appropriate in Buyer's reasonable discretion to obtain permits and approvals,
including those related to future site use. Buyer may contact other Governmental
Authorities as appropriate in Buyer's reasonable discretion to obtain permits
and approvals, including those related to future site use (e.g., the planning
department, building department), without prior notice or consent if the subject
of the Remedial Activities is not expected to be discussed. In the event that
the subject is addressed, Buyer shall use reasonable efforts to avoid any
substantive discussions with the relevant Governmental Authority and will
instead refer the Governmental Authority to Seller; provided that, with respect
to any discussions Seller may have with the Governmental Authorities, Buyer may
be present at or during such discussions.

3. Section 12.1(a) of the APA is hereby deleted and replaced in its entirety
with the following:

(a) After approval by Seller of the Work Plan (which shall occur prior to the
date hereof), Buyer or Buyer's agents shall be given access to the Real Property
to undertake and complete its Phase II Testing (described in the Work Plan) and
its Phase II Report (as defined below). The Phase II Testing and Phase II Report
shall be completed by August 22, 2005 (the period commencing on the date hereof
and ending on August 22, 2005 shall be referred to herein as the "Phase II
Period"); provided, however, that with respect to all items other than the Open
Phase II Items (as defined below), any Environmental Remediation Cost Estimate
as defined in Section 12.1(e) shall be submitted to Seller on August 15, 2005,
together with all supporting documentation relating to such Environmental
Remediation Cost Estimates. As used herein, the term "Open Phase II Items" means
(i) the "Former Impoundment Area" listed as Item #4 in the Draft Table 1,
Identified Environmental Issues, Remedial Actions, and Estimated Costs, prepared
by EKI and dated August 1, 2005 ("Draft Table"), and (ii) the "Methane
Investigation, Remediation, and Mitigation in Former Oil Field Area", listed as
Item #8 in the Draft Table.

4. Section 12.1(e) of the APA is hereby deleted and replaced in its entirety
with the following:

(e) Upon the expiration of the Phase II Period, Buyer may elect to (i) waive its
rights under this Article 12 to seek a purchase price reduction; or (ii) deliver
to Seller a Phase II Report (as defined below); or (iii) terminate this
Agreement and receive the full amount of the Deposit from Seller, provided that
Buyer shall not be permitted to terminate this Agreement pursuant to this
Section 12.1(e) unless the Final Environmental Remediation Cost Estimate exceeds
$20 million as determined either by Buyer and Seller together or by LLF. An
"Environmental Remediation Cost Estimate" shall mean a written estimate of the
anticipated costs, if any, to investigate or remediate environmental or
Hazardous Substance conditions (in air, soil, soil gas or groundwater) on, at,
under, in or from the Real Property in order to complete Buyer's planned
redevelopment of the Real Property provided that those costs for redevelopment
activities shall not include costs for redevelopment activities unrelated to
environmental contamination, including, but not limited to, grading, compliance
with the California Environmental Quality Act, demolition, removal of any
subsurface structures (e.g. pipelines or tanks) or special handling for
contaminated demolition debris (e.g. asbestos, lead-based paint or contaminated
concrete). In connection with the written submission of any Environmental
Remediation Cost Estimate to Seller, Buyer shall provide to Seller copies of all
final data, laboratory reports or analytical results of its sampling (unless
already provided pursuant to Section 12.1(b)) and an explanation of how Buyer
arrived at the estimate and why such costs are necessary to bring the Real
Property into compliance with all Environmental Laws applicable to investigation
and remediation of the ' Real Property if it were redeveloped consistent with
Buyer's redevelopment plans. Buyer may, but is not obligated to, provide to
Seller on or prior to the end of the Phase II Period a submission (the "Phase II
Report") which may consist of (A) as to any items which are not Open Phase II
items, an Environmental Remediation Cost Estimate, which shall be in the same
form delivered to Seller on August 15, 2005, (B) additional Environmental
Remediation Cost Estimates relating to the Open Phase II Items (together with
the Environmental Remediation Cost Estimates referred to in clause (A), the
"Buyer Environmental Remediation Cost Estimate") and (C) all supporting
documentation relating to such Environmental Remediation Cost Estimates and
otherwise required by this Agreement. If, within six business days following
Seller's receipt of the Phase II Report by Buyer, Seller does not approve the
Buyer Environmental Remediation Cost Estimate, Seller shall so notify Buyer in
writing and either, at Seller's option, (i) Seller shall terminate this
Agreement, in which case Buyer shall receive the full amount of the Deposit from
Seller, or (ii) the dispute resolution provisions of Section 12.3 below will be
used to reach an agreed upon Final Environmental Remediation Cost Estimate. If
Seller does approve the Buyer Environmental Remediation Cost Estimate, Seller
shall, within six business days following receipt of such estimate, so notify
Buyer in writing, such estimate shall be deemed a final Environmental
Remediation Cost Estimate (the "Final Remediation Cost Estimate") and Buyer and
Seller shall allocate the Final Remediation Cost Estimate as provided in Section
12.2 below, subject to Buyer's right to terminate pursuant to Section 12.1(e).
Seller shall exercise its rights pursuant to this subsection no later than
August 30, 2005, six business days following the end of the Phase 11 Period.

5. While this letter agreement does not amend Section 12.3 of the APA, Buyer and
Seller agree that, pursuant to Section 12.3, the time period for Buyer and
Seller to either agree on the Final Remediation Cost Estimate or submit their
respective cost estimates to LLF ends on September 7, 2005 and the time period
for LLF to review both submissions and prepare a brief summary of its analysis
of the cost estimates and its conclusion regarding the correct cost estimate to
both Buyer and Seller ends on September 14, 2005.

6. A new Section 12.4 is hereby added to the APA as follows:

12.4 All time periods in Article 12 shall end at 5:00 PM (PST) on the dates
referenced therein.

Nothing in this Amendment shall prevent Buyer or its authorized representatives
from complying with any independent obligation to which they may be subject
under any Law.

Neither this letter agreement nor any of the parties' rights hereunder shall be
assignable by either party (other than to an Affiliate), without the prior
written consent of the other party, which consent shall be within such party's
sole discretion; provided, however, that any such permitted assignment shall not
discharge the assignor from its obligations under this letter agreement or the
APA.

This letter agreement, once Buyer and Seller shall have executed and delivered a
counterpart hereof, shall become effective and binding. Except as expressly
provided above, the APA is hereby ratified and confirmed and shall remain in
full force and effect and nothing contained in this letter agreement shall be
deemed to waive, alter or otherwise amend any provision of the APA. This letter
agreement and the APA constitute the entire agreement between the parties with
respect to the subject matter of this letter agreement and supersedes all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this letter agreement. This letter agreement
shall be governed by and construed in accordance with the law of the State of
California.
 
 
 
 

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BAY MEADOWS LAND COMPANY, LLC
         
By: /s/ Terrence E. Fancher
 
Name: Terrence E. Fancher
 
Title: President

Agreed to this 12th day of August, 2005:
     
CHURCHILL DOWNS CALIFORNIA
 
COMPANY
         
By: /s/ Rick Baedeker
 
Name: Rick Baedeker
 
Title: President
 

cc:    Darren Drake
    Stockbridge Capital Partners, LLC
712 5th Avenue, 21st Floor
New York, NY 10019

Thomas Patrick Dore, Jr., Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017

D. Eric Remensperger, Esq.
Gibson, Dunn & Crutcher, LLP
333 So. Grand Avenue
Los Angeles, CA 90071
 

 

--------------------------------------------------------------------------------

BAY MEADOWS
LAND COMPANY

1200 Park Place
San Mateo, CA 94403
TEL: 650.524.1201
Fax: 650.524.1211
www.bmlc.com
 

 
September 7, 2005

Churchill Downs California Company
c/o Churchill Downs Incorporated
700 Central Avenue
Louisville, KY 40208
Attn: Rebecca C. Reed

Re Extension of Section 12.3 Time Periods

Ladies and Gentlemen:

Reference is made to that certain Asset Purchase Agreement dated as of July 6,
2005, as modified by those certain letter agreements dated August 1, 2005,
August 8, 2005 and August 12, 2005 (as so amended and as in effect on the date
hereof, the "APA"), between Bay Meadows Land Company, LLC ("Buyer") and
Churchill Downs California Company ("Seller"). Capitalized terms not defined
herein shall have the meanings ascribed thereto in the APA.

Pursuant to Section 13.4 of the APA, Buyer and Seller agree to amend the APA as
follows:

Notwithstanding anything to the contrary set forth therein, Buyer and Seller
agree that, pursuant to Section 12.3 of the APA, the time period for Buyer and
Seller to either agree on the Final Remediation Cost Estimate or submit their
respective cost estimates to LLF ends on September 8, 2005 and the time period
for LLF to review both submissions and prepare a brief summary of its analysis
of the cost estimates and its conclusion regarding the correct cost estimate to
both Buyer and Seller ends on September 15, 2005.

The foregoing supersedes and replaces paragraph 5 of the letter agreement
amending the APA dated August 12, 2005.

Except as expressly provided above, the APA is hereby ratified and confirmed and
shall remain in full force and effect and nothing contained in this letter
agreement shall be deemed to waive, alter or otherwise amend any provision of
the APA (other than to the extent expressly provided herein).

This letter agreement and the APA constitute the entire agreement between the
parties with respect to the subject matter of this letter agreement and
supersedes all prior agreements and understandings, both oral and written,
between the parties with respect to the subject matter of this letter agreement.

--------------------------------------------------------------------------------

This letter agreement shall be governed by and construed in accordance with the
law of the State of California.
 

 
BAY MEADOWS LAND COMPANY, LLC
         
By: /s/ Charlene Kiley
 
Name: Charlene Kiley
 
Title: Secretary

Agreed to this 8th day of September, 2005:
     
CHURCHILL DOWNS CALIFORNIA
 
COMPANY
         
By: /s/ Michael E. Miller
 
Name: Michael E. Miller
 
Title:  Vice President
 

 cc:   Darren Drake
Stockbridge Capital Partners, LLC
712 5th Avenue, 21st Floor
New York, NY 10019

Thomas Patrick Dore, Jr., Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017

D. Eric Remensperger, Esq.
Gibson, Dunn & Crutcher, LLP
333 So. Grand Avenue
Los Angeles, CA 90071